Exhibit 4.1
INTER-TEL, INCORPORATED
1997 LONG-TERM INCENTIVE PLAN
ARTICLE 1 PURPOSE
1.1. GENERAL. The purpose of the Inter-Tel, Incorporated Long-Term
Incentive Plan (the "Plan") is to promote the success, and enhance the value, of
Inter-Tel, Incorporated, (the "Company") by linking the personal interests of
its key employees to those of Company shareholders and by providing its key
employees with an incentive for outstanding performance. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of employees upon whose judgment, interest, and
special effort the successful conduct of the Company's operation is largely
dependent. Accordingly, the Plan permits the grant of incentive awards from time
to time to selected officers and key employees of the Company and its
Subsidiaries.
ARTICLE 2 EFFECTIVE DATE
2.1. EFFECTIVE DATE. The Plan is effective as of February 24, 1997 (the
"Effective Date"). Within one year after the Effective Date, the Plan shall be
submitted to the shareholders of the Company for their approval. The Plan will
be deemed to be approved by the shareholders if it receives the affirmative vote
of the holders of a majority of the shares of stock of the Company present, or
represented, and entitled to vote at a meeting duly held (or by the written
consent of the holders of a majority of the shares of stock of the Company
entitled to vote) in accordance with the applicable provisions of the Arizona
Corporation Law and the Company's Bylaws and Articles of Incorporation. Any
Awards granted under the Plan prior to shareholder approval are effective when
made (unless the Committee specifies otherwise at the time of grant), but no
Award may be exercised or settled and no restrictions relating to any Award may
lapse before shareholder approval. If the shareholders fail to approve the Plan,
any Award previously made shall be automatically canceled without any further
act.
ARTICLE 3 DEFINITIONS AND CONSTRUCTION
3.1. DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Sections 1.1 or 2.1 unless a clearly different meaning is required
by the context. The following words and phrases shall have the following
meanings:
(a) "Award" means any Option, Stock Appreciation Right, Restricted Stock
Award, Performance Share Award, Dividend Equivalent Award, or Other Stock-Based
Award, or any other right or interest relating to Stock or cash, granted to a
Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Change of Control" means and includes each of the following:
(1) A change of control of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of the 1934 Act
regardless of whether the Company is subject to such reporting requirement;
(2) A change of control of the Company through a transaction or series
of transactions, such that any person (as that term is used in Section 13 and
14(d)(2) of the 1934 Act), excluding affiliates of the Company as of the
Effective Date, is or becomes the beneficial owner (as that term is used in
Section 13(d) of the 1934 Act) directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company's
then outstanding securities;
(3) Any merger, consolidation, dissolution or liquidation of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which Shares would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the Shares
immediately before the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger;
(4) The shareholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company; or
(5) Substantially all of the assets of the Company are sold or
otherwise transferred to parties that are not within a "controlled group of
corporations" (as defined in Section 1563 of the Code) in which the Company is a
member;
(6) A majority of the Board in office at the beginning of any
thirty-six (36) month period is replaced during the course of such thirty-six
(36) month period (other than by voluntary resignation of individual directors
in the ordinary course of business) and such replacement was not initiated by
the Board as constituted at the beginning of such thirty-six (36) month period.
The foregoing events shall not be deemed to be a Change in Control if the
transaction or transactions causing such change shall have been approved by the
affirmative vote of at least a majority of the members of the Board in office as
of the Effective Date ("Incumbents"), those serving on the Board pursuant to
nomination or appointment thereto by a majority of Incumbents ("Successors"),
and those serving on the Board pursuant to nomination or appointment thereto by
a majority of a Board composed of Incumbents and/or Successors.
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(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(f) "Committee" means the committee of the Board described in Article 4.
(g) "Consultant" means any natural person, including an advisor, engaged by
the Company or a parent or Subsidiary to render services to such entity.
(h) "Disability" shall mean a total and permanent disability as defined in
Section 22(e)(3) of the Code.
(i) "Dividend Equivalent" means a right granted to a Participant under
Article 11.
(j) "Employee" means any person, including officers employed by the Company
or any parent or Subsidiary of the Company. Neither service as a Director nor
payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(k) "Fair Market Value" means with respect to Stock or any other property,
the fair market value of such Stock or other property as determined by the
Committee in its discretion, under one of the following methods: (1) the average
of the closing bid and asked prices for the Stock as reported on the NASDAQ
National Market System (or any other national securities exchange on which the
Stock is then listed) for that date or, if no prices are so reported for that
date, such prices on the next preceding date for which closing bid and asked
prices were reported; or (2) the price as determined by such methods or
procedures as may be established from time to time by the Committee.
(l) "Incentive Stock Option" means an Option that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.
(m) "Non-Qualified Stock Option" means an Option that is not intended to be
an Incentive Stock Option.
(n) "Option" means a right granted to a Participant under Article 7 of the
Plan to purchase Stock at a specified price during specified time periods. An
Option may be either an Incentive Stock Option or a Non-Qualified Stock Option.
(o) "Other Stock-Based Award" means a right, granted to a Participant under
Article 12, that relates to or is valued by reference to Stock or other Awards
relating to Stock.
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(p) "Participant" means a person who, as an officer or key employee of the
Company or any Subsidiary, has been granted an Award under the Plan.
(q) "Performance Share" means a right granted to a Participant under
Article 9, to receive cash, Stock, or other Awards, the payment of which is
contingent upon achieving certain performance goals established by the
Committee.
(r) "Plan" means the Inter-Tel, Incorporated 1997 Long-Term Incentive Plan,
as amended from time to time.
(s) "Restricted Stock Award" means Stock granted to a participant under
Article 10 that is subject to certain restrictions and to risk of forfeiture.
(t) "Service Provider" means an Employee or Consultant.
(u) "Stock" means the common stock of the Company and such other securities
of the Company that may be substituted for Stock pursuant to Article 13.
(v) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the difference between
the Fair Market Value of a share of Stock as of the date of exercise of the SAR
over the grant price of the SAR, all as determined pursuant to Article 8.
(w) "Subsidiary" means any corporation, domestic or foreign, of which a
majority of the outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.
ARTICLE 4 ADMINISTRATION
4.l. COMMITTEE. The Plan shall be administered by the Board or one or more
Committees appointed by, and serving at the discretion of the Board (referred
herein collectively as the "Administrator").
(a) MULTIPLE ADMINISTRATIVE BODIES. The Plan may be administered by
different Committees with respect to different groups of employees.
(b) SECTION 162(M). To the extent that the Board determines it to be
desirable to qualify Options granted hereunder as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the Plan shall
be administered by a Committee of two or more "outside directors" within the
meaning of Section 162(m) of the Code.
(c) RULE 16B-3. To the extent desirable to qualify transactions hereunder
as exempt under Rule 16b-3 promulgated under Section 16 of the Securities
Exchange Act of 1934 ("Rule 16b-3"), the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule 16b-3.
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(d) OTHER ADMINISTRATION. Other than as provided above, the Plan shall be
administered by the Board or a Committee serving at the discretion of the Board,
which committee shall be constituted to satisfy all applicable laws. -
4.2. ACTION BY COMMITTEE. A majority of a Committee shall constitute a
quorum. The acts of a majority of the members present at any meeting at which a
quorum is present and acts approved in writing by a majority of a Committee in
lieu of a meeting shall be deemed the acts of such Committee. Each member of a
Committee is entitled to, in good faith, rely or act upon any report or other
information furnished to that member by any officer or other employee of the
Company or any Subsidiary, the Company's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Company to assist in the administration of the Plan.
4.3. AUTHORITY OF ADMINISTRATOR. The Administrator has the exclusive power,
authority and discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number of shares
of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted under the Plan
including but not limited to, the exercise price, grant price, or purchase
price, any restrictions or limitations on the Award, any schedule for lapse of
forfeiture restrictions or restrictions on the exercisability of an Award, and
accelerations or waivers thereof, based in each case on such considerations as
the Administrator in its sole discretion determines;
(e) Determine whether, to what extent, and under what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in, cash,
Stock, other Awards, or other property, or an Award may be canceled, forfeited,
or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be identical
for each Participant;
(g) Decide all other matters that must be determined in connection with an
Award;
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(h) Establish, adopt or revise any rules and regulations as it may deem
necessary or advisable to administer the Plan; and
(i) Make all other decisions and determinations that may be required under
the Plan or as the Administrator deems necessary or advisable to administer the
Plan.
4.4. DECISIONS BINDING. The Administrator's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Administrator with respect to the Plan are final, binding,
and conclusive on all parties.
ARTICLE 5 SHARES SUBJECT TO THE PLAN
5.1. NUMBER OF SHARES. Subject to adjustment provided in Section 1 5.1, the
aggregate number of shares of Stock reserved and available for Awards or which
may be used to provide a basis of measurement for or to determine the value of
an Award (such as with a Stock Appreciation Right or Performance Share Award)
shall be four million two hundred thousand fifty-four one hundred sixty-one
(4,254,161).
5.2. AUTOMATIC INCREASE. On the first day of each Company fiscal year the
amount of shares reserved under the Plan will automatically increase by the
lesser of (a) 2.5% of the outstanding shares on that date, (b) 750,000 shares
(subject to appropriate adjustment for all stock splits, dividends,
subdivisions, combinations, recapitalizations and like transactions) or (c) a
lesser amount as determined by the Board.
5.3. LAPSED AWARDS. To the extent that an Award terminates, expires or
lapses for any reason, any shares of Stock subject to the Award will again be
available for the grant of an Award under the Plan and shares subject to SARs or
other Awards settled in cash will be available for the grant of an Award under
the Plan.
5.4. STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.5. LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS. Notwithstanding any
provision in the Plan to the contrary, the maximum number of shares of Stock
with respect to one or more Awards that may be granted to any one Participant
over the term of the Plan shall be five hundred thousand (500,000).
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ARTICLE 6 ELIGIBILITY
6.1. GENERAL. Awards may be granted only to individuals who are officers or
other key employees (including employees who also are Directors or officers) of
the Company or a Subsidiary, as determined by the Administrator.
ARTICLE 7 STOCK OPTIONS
7.1. GENERAL. The Administrator is authorized to grant Options to
Participants on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of Stock under an Option
shall be determined by the Administrator.
(b) TIME AND CONDITIONS OF EXERCISE. The Administrator shall determine the
time or times at which an Option may be exercised in whole or in part, provided
that no Option may be exercisable prior to six (6) months following the date of
the grant of such Option. The Administrator also shall determine the performance
or other conditions, if any, that must be satisfied before all or part of an
Option may be exercised.
(c) PAYMENT. The Administrator shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including, without
limitation, cash, shares of Stock, or other property (including net issuance or
other "cashless" exercise arrangements), and the methods by which shares of
Stock shall be delivered or deemed to be delivered to Participants. Without
limiting the power and discretion conferred on the Administrator pursuant to the
preceding sentence, the Administrator may, in the exercise of its discretion,
but need not, allow a Participant to pay the Option price by directing the
Company to withhold from the shares of Stock that would otherwise be issued upon
exercise of the Option that number of shares having a Fair Market Value on the
exercise date equal to the Option price, all as determined pursuant to rules and
procedures established by the Administrator.
(d) EVIDENCE OF GRANT. All Options shall be evidenced by a written Award
Agreement between the Company and the Participant. The Award Agreement shall
include such provisions as may be specified by the Administrator.
7.2. INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
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(a) EXERCISE PRICE. The exercise price per share of Stock shall be set by
the Administrator, provided that the exercise price for any Incentive Stock
Option may not be less than the Fair Market Value as of the date of the grant.
(b) EXERCISE. In no event, may any Incentive Stock Option be exercisable
for more than ten (10) years from the date of its grant.
(c) LAPSE OF OPTION. An Incentive Stock Option shall lapse under the
following circumstances:
(1) The Incentive Stock Option shall lapse ten (10) years after it is
granted, unless an earlier time is set in the Award Agreement.
(2) The Incentive Stock Option shall lapse upon termination of a
Participant's status as a Service Provider for any reason, except that the
Administrator may in its discretion permit a Participant to exercise all or any
portion of the Incentive Stock Option for a period of up to ninety (90) days
after the termination of a Participant's status as a Service Provider, except in
the case of the Participant's termination of status as a Service Provider due to
Disability, in which case the Incentive Stock Option shall lapse twelve (12)
months after the date the Participant terminates status as a Service Provider.
(3) If the Participant dies before the Option lapses pursuant to
paragraph (1) or (2), above, the Incentive Stock Option shall lapse, unless it
is previously exercised, on the earlier of (i) the date on which the Option
would have lapsed had the Participant lived and had his status as a Service
Provider (i.e., whether the Participant was providing services to the Company on
the date of his death or had previously terminated status as a Service Provider)
remained unchanged; or (ii) fifteen (15) months after the date of the
Participant's death. Upon the Participant's death, any vested and otherwise
exercisable Incentive Stock Options may be exercised by the Participant's legal
representative or representatives, by the person or persons entitled to do so
under the Participant's last will and testament, or, if the Participant shall
fail to make testamentary disposition of such Incentive Stock Option or shall
die intestate, by the person or persons entitled to receive said Incentive Stock
Option under the applicable laws of descent and distribution.
(d) INCENTIVE STOCK OPTION LIMITATION. Notwithstanding the designation of
an Option as an Incentive Stock Option, to the extent that the aggregate Fair
Market Value of the shares of Stock with respect to which Incentive Stock
Options are exercisable for the first time by the Optionee during any calendar
year (under all plans of the Company and any Subsidiary) exceeds $100,000.00,
such Options shall be treated as Non-Qualified Stock Options. For purposes of
this Section 7.2(d), Incentive Stock Options shall be taken into account in the
order in which they were granted. The Fair Market Value of the shares of Stock
shall be determined as of the time the Option with respect to such shares of
Stock is granted.
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(e) TEN PERCENT OWNERS. An Incentive Stock Option shall not be granted to
any individual who, at the date of grant, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of Stock of the
Company.
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an Incentive Stock
Option may be made pursuant to this Plan after April 23, 2007.
(g) RIGHT TO EXERCISE. During a Participant's lifetime, an Incentive Stock
Option may be exercised only by the Participant.
ARTICLE 8 STOCK APPRECIATION RIGHTS
8.1. GRANT OF SARS. The Administrator is authorized to grant SARs to
Participants on the following terms and conditions:
(a) RIGHT TO PAYMENT. Upon the exercise of a Stock Appreciation Right, the
Participant to whom it is granted has the right to receive the excess, if any,
of:
(1) The Fair Market Value of one share of Stock on the date of
exercise; over
(2) The grant price of the Stock Appreciation Right as determined by
the Administrator, which shall not be less than the Fair Market Value of one
share of Stock on the date of grant in the case of any SAR related to any
Incentive Stock Option.
(b) OTHER TERMS. All awards of Stock Appreciation Rights shall be evidenced
by an Award Agreement. The terms, methods of exercise, methods of settlement,
form of consideration payable in settlement, and any other terms and conditions
of any Stock Appreciation Right shall be determined by the Administrator at the
time of the grant of the Award and shall be reflected in the Award Agreement.
ARTICLE 9 PERFORMANCE SHARES
9.1. GRANT OF PERFORMANCE SHARES. The Administrator is authorized to grant
Performance Shares to Participants on such terms and conditions as may be
selected by the Administrator. The Administrator shall have the complete
discretion to determine the number of Performance Shares granted to each
Participant. All Awards of Performance Shares shall be evidenced by an Award
Agreement.
9.2. RIGHT TO PAYMENT. A grant of Performance Shares gives the Participant
rights, valued as determined by the Administrator, and payable to, or
exercisable by, the Participant to whom the Performance Shares are granted, in
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whole or in part, as the Administrator shall establish at grant or thereafter.
The Administrator shall set performance goals and other terms or conditions to
payment of the Performance Shares in its discretion which, depending on the
extent to which they are met, will determine the number and value of Performance
Shares that will be paid to the Participant.
9.3. OTHER TERMS. Performance Shares may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Administrator and reflected in the Award Agreement.
ARTICLE 10 RESTRICTED STOCK AWARDS
10.1. GRANT OF RESTRICTED STOCK. The Administrator is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
terms and conditions as may be selected by the Administrator. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.
10.2. ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Administrator may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, or otherwise, as the Administrator
determines at the time of the grant of the Award or thereafter.
10.3. FORFEITURE. Except as otherwise determined by the Administrator at
the time of the grant of the Award or thereafter, upon termination of status as
a Service Provider during the applicable restriction period, Restricted Stock
that is at that time subject to restrictions shall be forfeited and reacquired
by the Company, provided, however, that the Administrator may provide in any
Award Agreement that restrictions or forfeiture conditions relating to
Restricted Stock will be waived in whole or in part in the event of terminations
resulting from specified causes, and the Administrator may in other cases waive
in whole or in part restrictions or forfeiture conditions relating to Restricted
Stock.
10.4. CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under the
Plan may be evidenced in such manner as the Administrator shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company shall retain physical possession of the certificate until such time
as all applicable restrictions lapse.
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ARTICLE 11 DIVIDEND EQUIVALENTS
11.1. GRANT OF DIVIDEND EQUIVALENTS. The Administrator is authorized to
grant Dividend Equivalents to Participants subject to such terms and conditions
as may be selected by the Administrator. Dividend Equivalents shall entitle the
Participant to receive payments equal to dividends with respect to all or a
portion of the number of shares of Stock subject to an Option Award or SAR
Award, as determined by the Administrator. The Administrator may provide that
Dividend Equivalents be paid or distributed when accrued or be deemed to have
been reinvested in additional shares of Stock, or otherwise reinvested.
ARTICLE 12 OTHER STOCK-BASED AWARDS
12.1. GRANT OF OTHER STOCK-BASED AWARDS. The Administrator is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Administrator
to be consistent with the purposes of the Plan, including without limitation
shares of Stock awarded purely as a "bonus" and not subject to any restrictions
or conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Subsidiaries. The Administrator shall determine the
terms and conditions of such Awards.
ARTICLE 13 PROVISIONS APPLICABLE TO AWARDS
13.1. STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted under the
Plan may, in the discretion of the Administrator, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Administrator may require the surrender of such other Award in consideration of
the grant of the new Award. Awards granted in addition to or in tandem with
other Awards may be granted either at the same time as or at a different time
from the grant of such other Awards.
13.2. EXCHANGE PROVISIONS. The Administrator may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Stock,
or another Award (subject to Section 13.1), based on the terms and conditions
the Administrator determines and communicates to the Participant at the time the
offer is made.
13.3. TERM OF AWARD. The term of each Award shall be for the period as
determined by the Administrator, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten (10) years from the date of its
grant.
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13.4. FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Company or a Subsidiary on the grant or exercise of an Award may be made in such
forms as the Administrator determines at or after the time of grant, including
without limitation, cash, Stock, other Awards, or other property, or any
combination, and may be made in a single payment or transfer, in installments,
or on a deferred basis, in each case determined in accordance with rules adopted
by, and at the discretion of, the Administrator. The Administrator may also
authorize payment in the exercise of an Option by net issuance or other cashless
exercise methods.
13.5 LIMITS ON TRANSFER. No right or interest of a Participant in any Award
may be pledged, encumbered, or hypothecated to or in favor of any party other
than the Company or a Subsidiary, or shall be subject to any lien, obligation,
or liability of such Participant to any other party other than the Company or a
Subsidiary. Except as otherwise provided below, no Award shall be assignable or
transferable by a Participant other than by will or the laws of descent and
distribution. In the Award Agreement for any Award other than an Award that
includes an Incentive Stock Option, the Administrator may allow a Participant to
assign or otherwise transfer all or a portion of the rights represented by the
Award to specified individuals or classes of individuals, or to a trust
benefiting such individuals, subject to such restrictions, limitations, or
conditions as the Administrator deems to be appropriate.
13.6. BENEFICIARIES. Notwithstanding Section 13.5, a Participant may, in
the manner determined by the Administrator, designate a beneficiary to exercise
the rights of the Participant and to receive any distribution with respect to
any Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Administrator. If the Participant is married and resides in a jurisdiction
in which community property laws apply, a designation of a person other than the
Participant's spouse as his beneficiary with respect to more than fifty percent
(50%) of the Participant's interest in the Award shall not be effective without
the written consent of the Participant's spouse. If no beneficiary has been
designated or survives the Participant, payment shall be made to the person
entitled thereto under the Participant's will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a Participant at any time provided the change or revocation is
filed with the Administrator.
13.7. STOCK CERTIFICATES. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the
Administrator deems necessary or advisable to comply with federal or state
securities laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on which the Stock is listed, quoted, or
traded. The Administrator may place legends on any Stock certificate to
reference restrictions applicable to the Stock.
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13.8. TENDER OFFERS. In the event of a public tender for all or any portion
of the Stock, or in the event that a proposal to merge, consolidate, or
otherwise combine with another company is submitted for shareholder approval,
the Administrator may in its sole discretion declare previously granted Options
to be immediately exercisable. To the extent that this provision causes
Incentive Stock Options to exceed the dollar limitation set forth in Section
7.2(d), the excess Options shall be deemed to be Non-Qualified Stock Options.
13.9 ACCELERATION UPON DEATH OR DISABILITY. Notwithstanding any other
provision in the Plan or any Participant's Award Agreement to the contrary, upon
the Participant's death or Disability, all outstanding Options, Stock
Appreciation Rights, and other Awards in the nature of rights that may be
exercised shall become fully exercisable and all restrictions on outstanding
Awards shall lapse. Any Option or Stock Appreciation Rights Awards shall then
lapse in accordance with the other provisions of this Plan and the Award
Agreement.
13.10 ACCELERATION UPON A CHANGE OF CONTROL. If a Change of Control occurs,
all outstanding Options, Stock Appreciation Rights, and other Awards in the
nature of rights that may be exercised shall become fully vested, exercisable
and all restrictions on outstanding Awards shall lapse; provided, however, that
with respect to any Change of Control in which the outstanding Options, Stock
Appreciation Rights, and other Awards in the nature of rights that may be
exercised shall terminate upon the occurrence of the Change of Control, each
Participant shall fully vest and have exercisable such Awards prior to the
occurrence of such Change of Control.
ARTICLE 14 CHANGES IN CAPITAL STRUCTURE
14.1. GENERAL. In the event a stock dividend is declared upon the Stock,
the shares of Stock then subject to each Award (and the number of shares subject
thereto) shall be increased proportionately without any change in the aggregate
purchase price therefor. In the event the Stock shall be changed into or
exchanged for a different number or class of shares of Stock or of another
corporation, whether through reorganization, recapitalization, stock split-up,
combination of shares, merger or consolidation, there shall be substituted for
each such share of Stock then subject to each Award (and for each share of Stock
then subject thereto) the number and class of shares of Stock into which each
outstanding share of Stock shall be so exchanged, all without any change in the
aggregate purchase price for the shares then subject to each Award.
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ARTICLE 15 AMENDMENT, MODIFICATION AND TERMINATION
15.1. AMENDMENT, MODIFICATION AND TERMINATION. With the approval of the
Board, at any time and from time to time, the Administrator may terminate, amend
or modify the Plan. However, without approval of the shareholders of the Company
(as may be required by the Code, a national securities exchange or quotation
system on which the stock can be listed or reported or any other applicable law
or regulation), no such termination, amendment, or modification may:
(a) Materially increase the total number of shares of Stock that may be
issued under the Plan, except as provided in Section 14.1;
(b) Materially modify the eligibility requirements for participation in the
Plan; or
(c) reprice outstanding options under the Plan, including the reduction of
the exercise price of any option, the grant of new options in exchange for
outstanding options where the new options have an exercise price per share less
than the exercise price per share of the outstanding options or the grant or
amendment of options which would be considered a repricing of such options, as
determined by the Board utilizing the rules under item 402 of Regulation S-K
promulgated under the Securities Act of 1933.
15.2. AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted under the Plan, without the written consent of the Participant.
ARTICLE 16 GENERAL PROVISIONS
16.1. NO RIGHTS TO AWARDS. No Participant or employee shall have any claim
to be granted any Award under the Plan, and neither the Company nor the
Administrator is obligated to treat Participants and employees uniformly.
16.2. NO STOCKHOLDERS RIGHTS. No Award gives the Participant any of the
rights of a shareholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
16.3. WITHHOLDING. The Company or any Subsidiary shall have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy United States Federal, state, and local
taxes (including the Participant's FICA obligation and any withholding
obligation imposed by any country other than the United States in which the
Participant resides) required by law to be withheld with respect to any taxable
event arising as a result of this Plan. With respect to withholding required
upon any taxable event under the Plan, the Administrator may, in its sole and
absolute discretion, permit a Participant to satisfy the withholding
requirement, in whole or in part, by having the Company or any Subsidiary
withhold shares of Stock having a Fair Market Value on the date of withholding
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equal to the amount to be withheld for tax purposes in accordance with such
procedures as the Administrator establishes. The Administrator may, at the time
any Award is granted, require that any and all applicable tax withholding
requirements be satisfied by the withholding of shares of Stock as set forth
above.
16.4. NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any Award Agreement
shall interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
Subsidiary.
16.5. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Subsidiary.
16.6. INDEMNIFICATION. To the extent allowable under applicable law, each
member of the Administrator or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act under the Plan and against and from any and all amounts paid by him or
her in satisfaction of judgment in such action, suit, or proceeding against him
or her provided he or she gives the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend
it on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or By-Laws, as a matter
of law, or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.
16.7. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or other benefit plan of the
Company or any Subsidiary.
16.8. EXPENSES. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.
16.9. TITLES AND HEADINGS. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
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16.10. FRACTIONAL SHARES. No fractional shares of stock shall be issued and
the Administrator shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
16.11. SECURITIES LAW COMPLIANCE. With respect to any person who is, on the
relevant date, obligated to file reports under Section 16 of the 1934 Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the Plan or action by the Administrator fails to so comply, it
shall be void to the extent permitted by law and voidable as deemed advisable by
the Administrator.
16.12. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register under the
Securities Act of 1933, as amended (the "1933 Act"), any of the shares of Stock
paid under the Plan. If the shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933 Act, the Company may
restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
16.13. GOVERNING LAW. The Plan and all Award Agreements shall be construed
in accordance with and governed by the laws of the State of Arizona.
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