EXHIBIT 99.17
EL PASO ELECTRIC COMPANY
STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
(NON-QUALIFIED STOCK OPTIONS)
El Paso Electric Company, a Texas corporation (the "Company"), hereby
-------
grants to ______________________ (the "Optionee") as of May 8, 1997 (the "Option
------
Date"), pursuant to the provisions of the El Paso Electric Company 1996 Long-
----
Term Incentive Plan (the "Plan"), a non-qualified option (the "Option") to
----
purchase from the Company 5,000 shares of its Common Stock, no par value
("Stock") at the price of $6.56 per share, upon and subject to the terms and
-----
conditions set forth below.
1. Options Subject to Acceptance of Agreement. The Options shall be
------------------------------------------
null and void unless the Optionee shall accept this Agreement by executing it in
the space provided below and returning such original execution copy to the
Company.
2. Time and Manner of Exercise of Option.
-------------------------------------
2.1. Maximum Term of Option. In no event may the Options be
----------------------
exercised, in whole or in part, after May 8, 2007 (the "Expiration Date").
---------------
2.2. Exercise of Options. (a) The Options are fully exercisable
-------------------
from and after the date hereof.
(b) If the Optionee shall cease for any reason to serve as a
Director of the Company, the Options may thereafter be exercised by the Optionee
or the Optionee's Legal Representative or Permitted Transferees, as the case may
be, until and including the earliest to occur of (i) the date which is 120 days
after the termination of such person's service on the Board and (ii) the
Expiration Date.
2.3 Method of Exercise. Subject to the limitations set forth in
------------------
this Agreement, the Options may be exercised by the Optionee (1) by giving
written notice to the Company specifying the Option or Options being exercised,
and the number of whole shares of Stock to be purchased and accompanied by
payment therefor in full (or arrangement made for such payment to the Company's
satisfaction) either (i) in cash, (ii) by delivery of previously owned whole
shares of Stock (which the Optionee has held for at least six months prior to
the delivery of such shares or which the Optionee purchased on the open market
and for which the Optionee has good title, free and clear of all liens and
encumbrances) having a Fair Market Value, determined as of the date of exercise,
equal to the aggregate purchase price payable pursuant to the Option by reason
of such exercise, (iii) in cash by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise, (iv) a
combination of (i) and (ii), and (2) by executing such documents as the Company
may reasonably request. The Committee may disapprove an election pursuant to any
of clauses (ii) - (iv) if the Committee determines, based on the opinion of
recognized securities counsel, that the method of exercise so elected would
result in liability to the Optionee under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the regulations promulgated thereunder. Any fraction of a share of
Stock which would be required to pay such purchase price shall be disregarded
and the remaining amount due shall be paid in cash by the Optionee. No
certificate representing a share of Stock shall be delivered until the full
purchase price therefor has been paid.
2.4 Termination of Options. (a) In no event may an Option be
----------------------
exercised after it terminates as set forth in this Section 2.4. The Option
shall terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of
the shares of Stock subject to the Option expire or are exercised, cancelled or
forfeited, the Optionee shall, upon the Company's request, promptly return this
Agreement to the Company for full or partial cancellation, as the case may be.
Such cancellation shall be effective regardless of whether the Optionee returns
this Agreement. If the Optionee continues to have rights to purchase shares of
Stock hereunder, the Company shall, within 10 days of the Optionee's delivery of
this Agreement to the Company, either (i) ▇▇▇▇ this Agreement to indicate the
extent to which the Option has expired or been exercised, cancelled or forfeited
or (ii) issue to the Optionee a substitute option agreement applicable to such
rights, which agreement shall otherwise be substantially similar to this
Agreement in form and substance.
3. Additional Terms and Conditions of Option.
-----------------------------------------
3.1. Nontransferability of Options. The Options may not be
-----------------------------
transferred by the Optionee other than (i) by will or the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company or (ii) as otherwise permitted under Rule 16b-3 under the Exchange Act
as may be set forth in an amendment to this Agreement. Except to the extent
permitted by the foregoing sentence, during the Optionee's lifetime the Options
are exercisable only by the Optionee or the Optionee's Legal Representative.
Except to the extent permitted by the foregoing, the Options may not be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to execution,
attachment or similar process. Upon any attempt to so sell, transfer, assign,
pledge, hypothecate, encumber or otherwise dispose of an Option, the Option and
all rights hereunder shall immediately become null and void.
3.2. Investment Representation. The Optionee hereby represents and
-------------------------
covenants that (a) any share of Stock purchased upon exercise of the Option will
be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
----------
Act"), unless such purchase has been registered under the Securities Act and any
---
applicable state securities laws; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any
-2-
applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Optionee shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of purchase of any shares
hereunder or (y) is true and correct as of the date of any sale of any such
shares, as applicable. As a further condition precedent to any exercise of the
Option, the Optionee shall comply with all regulations and requirements of any
regulatory authority having control of or supervision over the issuance or
delivery of the shares and, in connection therewith, shall execute any documents
which the Board or the Committee shall in its sole discretion deem necessary or
advisable.
3.3. Withholding Taxes. (a) As a condition precedent to the
-----------------
delivery of Stock upon exercise of the Option, the Optionee may, upon request by
the Company, pay to the Company in addition to the purchase price of the shares,
such amount of cash as the Company may be required, under all applicable
federal, state, local or other laws or regulations, to withhold and pay over as
income or other withholding taxes (the "Required Tax Payments") with respect to
---------------------
such exercise of the Option. If the Optionee shall fail to advance the Required
Tax Payments after request by the Company, the Company may, in its discretion,
deduct any Required Tax Payments from any amount then or thereafter payable by
the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation
to advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.3(a), (2) delivery to the Company
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the date the obligation to withhold or pay taxes first arises in connection
with the Option (the "Tax Date"), equal to the Required Tax Payments, (3)
--------
authorizing the Company to withhold whole shares of Stock which would otherwise
be delivered to the Optionee upon exercise of the Option having a Fair Market
Value, determined as of the Tax Date, equal to the Required Tax Payments, (4) a
cash payment by a broker-dealer acceptable to the Company to whom the Optionee
has submitted an irrevocable notice of exercise or (5) any combination of (1),
(2) and (3). The Committee may disapprove an election pursuant to any of clauses
(2)-(5) if the Committee determines, based on the opinion of recognized
securities counsel, that the method so elected would result in liability to the
Optionee under Section 16(b) of the Exchange Act or the regulations promulgated
thereunder. Shares of Stock to be delivered or withheld may not have a Fair
Market Value in excess of the minimum amount of the Required Tax Payments. Any
fraction of a share of Stock which would be required to satisfy any such
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the Optionee. No certificate representing a share of Stock shall be
delivered until the Required Tax Payments have been satisfied in full.
-3-
3.4 Adjustment. In the event of any stock split, stock dividend,
----------
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Options and the
purchase price per security shall be appropriately adjusted by the Committee
without an increase in the aggregate purchase price. If any adjustment would
result in a fractional security being subject to the Options, the Company shall
pay the Optionee, in connection with the first exercise of the Option, in whole
or in part, occurring after such adjustment, an amount in cash determined by
multiplying (i) the fraction of such security (rounded to the nearest hundredth)
by (ii) the excess, if any, of (A) the Fair Market Value on the exercise date
over (B) the exercise price of the Option. The decision of the Committee
regarding any such adjustment shall be final, binding and conclusive.
3.5. Compliance with Applicable Law. The Options is subject to
------------------------------
the condition that if the listing, registration or qualification of the shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, the Options may not be exercised, in whole or
in part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained, free of any conditions not acceptable to
the Company. The Company agrees to use reasonable efforts to effect or obtain
any such listing, registration, qualification, consent or approval.
3.6. Delivery of Certificates. Upon the exercise of the Option,
------------------------
in whole or in part, the Company shall deliver or cause to be delivered one or
more certificates representing the number of shares purchased against full
payment therefor. The Company shall pay all original issue or transfer taxes and
all fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.7. Options Confer No Rights as Stockholder. The Optionee shall
---------------------------------------
not be entitled to any privileges of ownership with respect to shares of Stock
subject to the Option unless and until purchased and delivered upon the exercise
of an Option, in whole or in part, and the Optionee becomes a stockholder of
record with respect to such delivered shares; and the Optionee shall not be
considered a stockholder of the Company with respect to any such shares not so
purchased and delivered.
3.8. Company to Reserve Shares. The Company shall at all times
-------------------------
prior to the expiration or termination of the Options reserve and keep
available, either in its treasury or out of its authorized but unissued shares
of Stock, the full number of shares subject to the Options from time to time.
3.9. Agreement Subject to the Plan. This Agreement is subject to
-----------------------------
the provisions of the Plan and shall be interpreted in accordance therewith.
The Optionee hereby acknowledges receipt of a copy of the Plan.
-4-
4. Miscellaneous Provisions.
------------------------
4.1. Designation as Stock Option. The Option is hereby designated
---------------------------
as not constituting an "incentive stock option" within meaning of Section 422 of
the Internal Revenue Code of 1986, as amended. This Agreement shall be
interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. As used herein, the term "Legal
------------------------ -----
Representative" shall include an executor, administrator, legal representative,
--------------
guardian or similar person and the term "Permitted Transferee" shall include any
--------------------
transferee (i) pursuant to a transfer permitted under Section 6.4 of the Plan
and Section 3.1 hereof or (ii) designated pursuant to beneficiary designation
procedures approved by the Company.
4.3. Successors. This Agreement shall be binding upon and inure
----------
to the benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of the Optionee, acquire any rights hereunder
in accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications
-------
provided for in this Agreement shall be made, if to the Company, to ▇▇▇▇▇▇
Building, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate
Secretary, and if to the Optionee, to ________________________________________.
All notices, requests or other communications provided for in this Agreement
shall be made in writing either (a) by personal delivery to the party entitled
thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the
United States mails to the last known address of the party entitled thereto or
(d) by express courier service. The notice, request or other communication shall
be deemed to be received upon personal delivery, upon confirmation of receipt of
facsimile transmission or upon receipt by the party entitled thereto if by
United States mail or express courier service; provided, however, that if a
notice, request or other communication is not received during regular business
hours, it shall be deemed to be received on the next succeeding business day of
the Company.
4.5. Governing Law. This Agreement, the Option and all
-------------
determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the laws of the United States, shall be governed by the laws of
the State of Texas and construed in accordance therewith without giving effect
to principles of conflicts of laws.
-5-
4.6. Counterparts. This Agreement may be executed in two
------------
counterparts each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.
EL PASO ELECTRIC COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
Accepted this 8th day of May, 1997
-------------------------------------
-6-