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EXHIBIT 10.3
1996 NONQUALIFIED STOCK OPTION PLAN
This 1996 Nonqualified Stock Option Plan of MLC Holdings, Inc. is intended
to reward certain MLC Holdings, Inc. employees and key non-employee consultants
for their contributions to the Company's continued success by awarding those
individuals with non-compensatory stock options. These stock options do not
qualify as incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended.
ARTICLE 1
DEFINITIONS
The following words and terms, unless the context clearly indicates
otherwise, have the following meanings. Where appropriate in the context of
this 1996 MLC Holdings, Inc. Nonqualified Stock Option Plan, the singular shall
include the plural, the masculine gender shall include the feminine, and vice
versa:
1:01 "Board" means the Board of Directors of MLC Holdings, Inc.
1:02 "Committee" means the stock incentive committee appointed by the
Board to administer the 1996 Stock Incentive Plan of the Company, and the plans
adopted thereunder, including without limitation, this Plan.
1:03 "Common Stock" means the common stock of MLC Holdings, Inc.
1:04 "Company" means MLC Holdings, Inc. and any subsidiary thereof.
1:05 "Option" means the options granted pursuant to this Plan.
1:06 "Option Agreement" means an agreement provided for in Section
6:01.
1:07 "Participant" means an individual designated pursuant to Section
3:03 who has executed an Option Agreement.
1:08 "Permanent Disability" means the inability of an individual to
engage in any substantial gainful activity by reason of any
medically-determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months.
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1:09 "Plan" means this the 1996 MLC Holdings, Inc. Nonqualified Stock
Option Plan.
1:10 "Plan Administrator" means the Committee.
1:11 "SEC" means the United States Securities and Exchange Commission.
1:12 "Vesting" means 20% per year for each year.
ARTICLE 2
EFFECTIVE DATE OF THE PLAN
2:01 On September 1, 1996, the Board adopted this Plan subject to
approval by the Shareholders. The Plan shall become effective at the next
Special Meeting of Shareholders or by written consent of the Shareholders in
lieu of a special meeting, provided it is approved by a majority of the
Shareholders of the Company at that time. No Options granted prior to
Shareholder approval of the Plan shall be exercisable unless and until the
Shareholders of the Company approve this Plan and the Options granted prior to
such approval.
ARTICLE 3
ADMINISTRATION
3:01 The Plan shall be administered by the Committee.
3:02 The Committee shall establish from time to time, subject to the
limitations of the Plan as hereinafter set forth, such rules and regulations,
and amendments thereof, as it deems necessary to comply with applicable law and
regulation and for the proper administration of the Plan. Every decision and
action of the Committee shall be valid if approved by (i) a majority of the
Committee members then in office at a meeting, or (ii) all of the Committee
members then in office by unanimous written consent in lieu of meeting.
3:03 The Board, or any designee of the Board, may recommend employees
or non-employee consultants for participation in the Plan to the Committee.
Based on such recommendations, the Committee shall determine the persons
(including officers) who shall receive options, the time or times at which
options shall be granted, the number of shares for which Options are to be
granted to each participant and the term and price of each option. No member of
the Board or the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any Option.
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3:04 Options shall be granted only after prior designation by the
Committee and the execution of an Option Agreement. The Committee shall have
the flexibility to grant options under such reasonable terms and conditions as
the Committee determines in its sole discretion and may be. The Committee
shall report to the Secretary of the Company the names of persons granted
Options, the number of Options granted, and the terms and conditions of each
Option.
ARTICLE 4
PARTICIPATION IN THE PLAN
4:01 Participation in the Plan shall be limited to directors,
full-time officers and employees, non-employees and consultants of the Company
as the case may be who, from time to time, shall be recommended by the Board
and/or designated by the Committee in accordance with Section 3.03.
ARTICLE 5
STOCK SUBJECT TO PLAN
5:01 There are reserved for the granting of Options under the Plan,
and for subsequent issuance and sale pursuant to granted Options, of up to
eighty thousand (80,000) shares less any shares issued under The 1996 MLC
Holdings, Inc. Incentive Stock Option Plan of unissued but authorized Common
Stock or of Common Stock held in treasury. The combination of this Plan and The
1996 MLC Holdings, Inc. Incentive Stock Option Plan has a maximum number of
shares of eighty thousand (80,000). If for any reason shares for which an
Option has been granted lapses and is not subject to purchase thereunder, those
shares shall be available for the granting of Options.
5:02 Proceeds of the purchase of optioned shares shall be used for the
general business purposes of the Company.
5:03 In the event of reorganization, recapitalization, stock split,
stock dividend, stock combination, merger, consolidation, acquisition of
property or stock, any change in the capital structure of the Company, or
similar changes in the Company's Common Stock, the Committee shall make such
adjustments as may be appropriate in the number and kind of shares reserved for
purchase and in the number, kind and price of shares covered by Options granted
but not then exercised; provided, however, that any Options to purchase
fractional shares resulting from any such adjustment shall be eliminated.
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5:04 If the Company shall at any time merge or consolidate with or
into another corporation and (i) the Company is not the surviving entity, or
(ii) the Company is the surviving entity and the shareholders of the Company
are required to exchange their shares of Common Stock for property and/or
securities, the holder of each Option will thereafter receive, upon the
exercise thereof, the securities and/or property to which a holder of the
number of shares of Common Stock then deliverable upon the exercise of such
Option would have been entitled upon such merger or consolidation, and the
Company shall take such steps in connection with such merger or consolidation
as may be necessary to assure that the provisions of this Plan shall thereafter
be applicable, as nearly as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of such Option, provided,
however, that under no circumstance shall any Option exercise date be
accelerated in contemplation of such action. A sale of all or substantially all
the assets of the Company for consideration (apart from the assumption of
obligations) consisting primarily of securities shall be deemed a merger or
consolidation for the foregoing purposes. Notwithstanding the foregoing, the
provisions of this Section 5:04 shall be subject to Section 6:04.
The surviving entity following any reorganization may at any
time, in its sole discretion, tender substitute options as it may deem
appropriate. However, in no event may the substitute options entitle the
Participant to any fewer shares (or at any greater aggregate price) or any less
other property than the Participant would be entitled to under the immediately
preceding paragraph upon an exercise of the options held prior to the
substitution of the new option.
5:05 In the event of the proposed dissolution or liquidation of the
company, the Options granted hereunder shall terminate as of a date to be fixed
by the Committee, provided that not less than thirty (30) days prior written
notice of the date so fixed shall be given to the Participant, and the
Participant shall have the right, during the period of thirty (30) days
preceding such termination, to exercise his Options. Notwithstanding the
foregoing, the provisions of this Section shall be subject to section 6:04.
ARTICLE 6
TERMS AND CONDITIONS OF OPTIONS
6:01 Each Option shall be evidenced by an Option Agreement specifying
the number of shares of Common Stock covered thereby in such form as the
Committee from time to time may determine, provided that no provision of the
Option Agreement shall be inconsistent with this Plan and such Option Agreement
may incorporate all or any of the terms of this Plan by reference.
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6:02 The Option price per share shall not be less than 80% of the fair
market value of a share of the Common Stock on the date on which the Option is
granted. The Common Stock is not currently listed upon an established stock
exchange or traded in the over-the-counter market. Accordingly, until such time
as the Common Stock is listed upon an established stock exchange or traded in
the over-the-counter market, the fair market value of shares of the Common
Stock shall be determined in good faith by the Committee. When and if the
Common Stock is listed upon an established stock exchange or exchanges such
fair market value shall be deemed to be the highest closing price of the Common
Stock on such stock exchange or exchanges on the day the option is granted or
if no sale of the Common Stock shall have been made on any stock exchange on
that day, on the next preceding day on which there was a sale of such stock.
When and if shares of the Common Stock are traded in the over-the-counter
market but not on an established exchange or exchanges, the fair market value
per share shall be the mean between dealer "bid" and "asked" prices of the
Common Stock as reported by the National Association of Securities Dealers,
Inc., on the day the option is granted. Subject to the foregoing, the
Committee in fixing the Option price shall have full authority and discretion
and be fully protected in doing so.
6:03 No Option may be granted under this Plan after September 1, 2006.
6:04 The term of any Option granted under this Plan shall be up to ten
(10) years from the date on which it was granted. The Committee shall have the
right to set the time or times within which an Option shall be exercised, and
to accelerate the time or times of exercise; provided, however, that no Option
shall be exercisable until after the Shareholders of the company approve the
Plan.
6:05 Each option by its terms shall be non-transferable and
non-assignable except that valid Option rights may be transferred by
testamentary instrument (will), by the laws of descent and distribution, or
pursuant to a qualified domestic relations order as defined in the Internal
Revenue Code or Title I of the Employee Retirement Income Security Act or the
rules thereunder. Otherwise, an Option is exercisable only by such
Participant.
6:06 Each Option granted under the Plan shall terminate and may no
longer be exercised if the Participant ceases to be an employee of the Company,
except that (i) if the Participant dies while in the employ of the Company, or
within two (2) months after the termination of such employment, or within six
(6) months if determined to be permanently disabled, such Option may be
exercised on his behalf as set forth in 6:07 below; and (ii) if the
Participant's employment shall have been terminated for any reason other than
his death, or permanent disability, he may at any time within a period of two
(2) months after such termination exercise such
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Option to the extent that the Option was exercisable pursuant to Section 6:04
above by him on the date of the termination of his employment; provided,
however, that in the case of termination for cause by the Company of the
employment of the Participant or if a Participant shall terminate his
employment in violation of any employment agreement with the Company, then his
Option shall terminate and expire concurrently with the termination of his
employment and shall not thereafter be exercisable to any extent. The
definition of "cause" shall be as set forth in the Option Agreement with each
Participant.
6:07 If the Participant dies during the term of his Option while in
the employ of the Company, or within the two (2) month period after the
termination of employment or within six (6) months of becoming permanently
disabled, without having fully exercised his Option, the executor or
administrator of his estate or the person who inherits the right to exercise
the Option by bequest or inheritance shall have the right within twelve (12)
months after the Participant's death to purchase the number of shares which the
deceased Participant was entitled to purchase at the date of his death, after
which time the Option shall lapse.
6:08 A Participant may, at any time, elect in writing to abandon an
Option or any part thereof.
ARTICLE 7
METHODS OF EXERCISE OF OPTION
7:01 The Participant (or other person acting under Section 6:07)
desiring to exercise an Option as to all or part of the shares of Common Stock
subject to that option shall notify the Secretary of the Company in writing at
its principal office to that effect, specifying the number of shares to be
purchased. The Committee shall have the right to set the time or times within
which each Option shall be exercisable, and to accelerate the time or times of
exercise. Unless the Option Agreement executed by a Participant expressly
otherwise provides, the Option shall be exercisable at any time or from time to
time after the expiration of one year from the date of grant and prior to
termination of the Option. options mast be exercised in multiples of 100
shares, unless all Options theretofore granted are exercised at that time. An
Option may not be exercised to any extent, either by the Participant to whom it
was granted, or by any person after the Participant's death, unless the
Participant to whom the Option was granted has remained in the continuous
employ of the Company, and/or of a subsidiary, for not less than twelve (12)
months from the date the Option was granted.
7:02 The notice shall be accompanied by payment to the Company of the
full purchase price or the Committee in its sole and
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absolute discretion may accept an assignment of proceeds or funds or other
similar documents from a qualified brokerage company which trades on a national
or regional exchange or from a financial institution. With the prior consent of
the Company the Option may be exercised as to the number of shares specified in
the notice by tendering to the Company shares of Common Stock already owned by
the Participant which, together with any cash tendered therewith shall equal in
value the full purchase price. The value of the tendered shares for this
purpose shall be the fair market value (as determined in accordance with the
procedures set forth in Section 6:02) of such shares (valued as if unlegended
and freely transferable) on the date the Participant executes and dates the
notice provided in Section 7:01, and the Participant shall deliver only that
number of shares of Common Stock which, together with any cash delivered, has
an aggregate value of not less than the full purchase price for the Option.
7:03 A Participant shall have none of the rights of a Stockholder
until the shares of Common Stock covered by the Option are issued to him. If
the shares of Common Stock issuable pursuant to the exercise of an Option are
not registered under the Securities Act of 1933, as amended, the Company may
require that the Participant deliver an investment representation letter at the
time of exercise in form acceptable to the Company and its counsel, and the
Company may place appropriate legends restricting transfer under applicable
securities laws on the certificates for the shares of Common Stock to be
issued.
ARTICLE 8
AMENDMENTS AND DISCONTINUANCE OF THE PLAN
8:01 The Committee shall have the right at any time and from time to
time to amend, suspend, or terminate the Plan provided that, except as provided
in Section 5:03, no such amendment, suspension, or termination shall (i) revoke
or alter the terms of any valid Option previously granted in accordance with
this Plan; (ii) change the price determined pursuant to the provisions of
Section 6:02; (iii) change the class of eligible employees to whom Options may
be granted under this Plan; (iv) extend the term of the Plan beyond five (5)
years or provide for options exercisable more than two (2) years after the date
granted; (v) permit any member of the Committee to be eligible as a
Participant; or (vi) otherwise materially modify the Plan, except as provided
herein or as necessary to comply with applicable law, without Shareholder
approval.
8:02 This Plan shall terminate at midnight on September 1, 2006.
Options outstanding at the termination of the Plan shall not be affected by
such termination.
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8:03 The power to increase the number of shares is reserved under the
Plan to the Board of Directors. The increase in the reserved shares will become
effective based on a simple majority of the Board of Directors.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9:01 The Plan shall be construed, whenever possible, to be in
conformity with the requirements of all applicable federal law, including
without limitation the SEC's Rule l6b-3, as amended effective August 15, 1996.
To the extent not in conflict with the preceding sentence, the Plan shall be
construed, administered and governed in all respect under and by the laws of
the State of Delaware, except where preempted by federal law.
9:02 If any provision of the Plan is held invalid or unenforceable,
the invalidity or unenforceability shall not affect any other provisions and
the Plan shall be construed and enforced as if those provisions had not been
included.
9:03 This Plan shall be binding upon heirs, executors, administrators,
successors and assigns of all parties hereto, present and future.
9:04 The Plan shall not be deemed to constitute a contract between any
employee and the Company. Nothing in the Plan shall give any employee the right
to be retained in the employ of the Company, and all employees shall remain
subject to discharge, discipline or layoff to the same extent as if the Plan
had not been put into effect.
9:05 In addition to such other rights of indemnification as they may
have as directors or as members of the Committee, the members of the Committee
shall be indemnified by the Corporation against the reasonable expenses,
including attorney's fees actually and necessarily incurred in connection with
the defense of any action, suit, or proceeding, or in connection with any
appeal therein, to which they or any of them may be a party by reason of any
action taken or failure to act under or in connection with the Plan or any
option granted thereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Corporation) or paid by them in satisfaction of a judgment in
any such action, suit, or proceeding, except in relation to matters as to which
it shall be adjudged in such action, suit, or proceeding that such Committee
member is liable for negligence or misconduct in performance of his duties;
provided that within 60 days after institution of any such action, suit, or
proceeding a Committee member shall in writing
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offer the Corporation the opportunity, at its own expense, to handle and defend
the same.
9.06 The Option Agreement shall provide the employee shall upon each
exercise of a part or all of the option granted represent a warrant that his
purchase of stock pursuant to such option is for investment only, and not with
the view of distribution involving a public offering unless such shares are
provided for in such public offering or such shares are registered. At any time
the Board may waive the requirement of such provision and any option agreement
entered into under this Plan.
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