Exhibit 10.01
GUMTECH INTERNATIONAL, INC.
2001 LONG-TERM INCENTIVE PLAN
(AS AMENDED AND RESTATED APRIL 16, 2002)
ARTICLE 1 PURPOSE
1.1 GENERAL. The purpose of the Gumtech International, Inc. 2001 Long-Term
Incentive Plan (the "Plan") is to promote the success, and enhance the value, of
Gumtech International, Inc. (the "Company") by linking the personal interests of
its key employees, non-employee directors, scientific advisory board members,
and consultants of the Company to those of Company stockholders and by providing
such individuals with an incentive for outstanding performance in order to
generate superior returns to shareholders of the Company. The Company also
intends that the Plan will provide it with the flexibility to motivate, attract,
and retain the services of these individuals upon whose judgment, interest, and
special effort the successful conduct of the Company's operation is largely
dependent.
ARTICLE 2 EFFECTIVE AND EXPIRATION DATES
2.1 EFFECTIVE DATE. The Plan is effective as of date the Plan is approved
by the Company's shareholders (the "Effective Date").
2.2 EXPIRATION DATE. The Plan will expire on, and no Award may be granted
under the Plan after the tenth anniversary of the Effective Date.
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 will 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 will have the following
meanings:
(a) "Award" means any Option, Restricted Stock Award, Performance
Share Award or Performance-Based Award 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 the occurrence of any of the following
events: (i) any sale, lease, exchange, or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of
the Company to any person or group of related persons for purposes of Section
13(d) of the Exchange Act (a "Group"), together with any affiliates thereof;
(ii) the approval by the holders of Stock and the consummation of any plan or
proposal for the liquidation or dissolution of the Company; (iii) any person or
Group becomes the beneficial owner, directly or indirectly, of shares
representing more than 50% of the aggregate voting power of the issued and
outstanding stock entitled to vote in the election of directors (the "Voting
Stock") of the Company and such person or Group has the power and authority to
vote such shares; (iv) the replacement of a majority of the Board over a
two-year period from the individual directors who constituted the Board at the
beginning of such period, and such replacement is not approved by a vote of at
least a majority of the Board then still in office who were members of such
Board at the beginning of such period; (v) any person or Group acquires shares
of Voting Stock of the Company such that such person or Group has the power and
authority to elect a majority of the members of the Board of Directors of the
Company; or (vi) the consummation of a merger or consolidation of the Company
with another entity in which holders of the Stock immediately prior to the
consummation of the transaction hold, directly or indirectly, immediately
following the consummation of the transaction, 50% or less of the common equity
interest in the surviving corporation in such transaction.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the committee of the Board described in Article
4.
(g) "Covered Employee" means an Employee who is a "covered employee"
within the meaning of Section 162(m) of the Code.
(h) "Disability" means a period of disability during which a
Participant qualifies for permanent disability benefits under the Participant's
employer's long-term disability plan, or if a Participant does not participate
in such a plan, a period of disability during which the Participant would have
qualified for permanent disability benefits under such a plan had the
Participant been a participant in such a plan, as determined in the sole
discretion of the Committee. If the Participant's employer does not sponsor such
a plan, or discontinues to sponsor such a plan, Disability shall mean permanent
and total disability for purposes of Social Security.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(j) "Fair Market Value" means, as of any given date, the fair market
value of stock on a particular date determined by such methods or procedures as
may be established from time to time by the Committee. Unless otherwise
determined by the Committee, the Fair Market Value of Stock as of any date will
be the closing price for the Stock as reported on the NASDAQ (or on any national
securities exchange on which the Stock is then listed) for that date or, if no
price is reported for that date, the closing price on the next preceding date
for which such price was reported.
(k) "Incentive Stock Option" means an Option that is intended to meet
the requirements of Section 422 of the Code or any successor provision thereto.
(l) "Non-Employee Director" means a member of the Company's Board who
is not a common-law employee of the Company. For purposes of Section 4.1, a
Non-Employee Director means a member of the Board who qualifies as a
"Non-Employee Director" as defined in Rule 16b-3(b)(3) of the Exchange Act, or
any successor definition adopted by the Board.
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(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 granted under Article 7 of the Plan may be either an Incentive Stock
Option or a Non-Qualified Stock Option.
(o) "Participant" means a person who, as a key employee, Non-Employee
Director, scientific advisory board member, or consultant of the Company or any
Subsidiary, has been granted an Award under the Plan.
(p) "Performance-Based Awards" means the Restricted Stock Awards and
Performance Share Awards granted to selected Covered Employees pursuant to
Articles 8 and 9, but which are subject to the terms and conditions set forth in
Article 10. All Performance-Based Awards are intended to qualify as
"performance-based compensation" under Section 162(m) of the Code.
(q) "Performance Criteria" means the criteria that the Committee
selects for purposes of establishing the Performance Goal or Performance Goals
for a Participant for a Performance Period. The Performance Criteria that will
be used to establish Performance Goals are limited to the following: net
operating income before taxes and extraordinary charges against income; pre- or
after-tax net earnings, sales growth, operating earnings, operating cash flow,
return on net assets, return on stockholders' equity, return on assets, return
on capital, Stock price growth, stockholder returns, gross or net profit margin,
earnings per share, price per share of Stock, and market share, any of which may
be measured either in absolute terms or as compared to any incremental increase
or as compared to results of a peer group. The Committee will, within the time
prescribed by Section 162(m) of the Code, define in an objective fashion the
manner of calculating the Performance Criteria it selects to use for such
Performance Period for such Participant.
(r) "Performance Goals" means, for a Performance Period, the goals
established in writing by the Committee for the Performance Period based upon
the Performance Criteria. Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a division, business
unit or an individual. The Committee, in its discretion, may, within the time
prescribed by Section 162(m) of the Code, adjust or modify the calculation of
Performance Goals for such Performance Period in order to prevent the dilution
or enlargement of the rights of Participants (i) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (ii) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.
(s) "Performance Period" means the one or more periods of time, which
may be of varying and overlapping durations, as the Committee may select, over
which the attainment of one or more Performance Goals will be measured for the
purpose of determining a Participant's right to, and the payment of, a
Performance-Based Award.
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(t) "Performance Share" means a right granted to a Participant
pursuant to Article 9, to receive cash, Stock, or other Awards, the payment of
which is contingent upon achieving certain performance goals established by the
Committee.
(u) "Plan" means the Gumtech International, Inc. 2001 Long-Term
Incentive Plan, as amended from time to time.
(v) "Restricted Stock Award" means Stock granted to a Participant
under Article 8 that is subject to certain restrictions and to risk of
forfeiture.
(w) "Stock" means the common stock of the Company and such other
securities of the Company that may be substituted for Stock pursuant to Article
11.
(x) "Subsidiary" means any corporation of which the Company
beneficially owns (directly or directly) a majority of the outstanding voting
stock or voting power.
ARTICLE 4 ADMINISTRATION
4.1 COMMITTEE. The Plan will be administered by the Board or a Committee
appointed by, and which serves at the discretion of, the Board. If the Board
appoints a Committee, the Committee will consist of at least two individuals,
each of whom qualifies as (i) a Non-Employee Director, and (ii) an "outside
director" under Code Section 162(m) and the regulations issued thereunder.
Reference to the Committee will refer to the Board if the Board does not appoint
a Committee.
4.2 ACTION BY THE COMMITTEE. A majority of the Committee will 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 the Committee in
lieu of a meeting will be deemed the acts of the Committee. Each member of the
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 COMMITTEE. The Committee has the exclusive power,
authority, and discretion to:
(a) Designate Participants to receive Awards;
(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
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the Committee in its sole discretion determines; provided, however, that the
Committee will not have the authority to accelerate the vesting, or waive the
forfeiture, of any Performance-Based Awards;
(e) Amend, modify, or terminate any outstanding Award, with the
Participant's consent unless the Committee has the authority to amend, modify or
terminate an Award without the Participant's consent under any other provision
of the Plan.
(f) 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;
(g) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(h) Decide all other matters that must be determined in connection
with an Award;
(i) Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan; and
(j) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to administer
the Plan.
4.4 DECISIONS BINDING. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement, and all decisions and
determinations by the Committee 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 12.1, the
aggregate number of shares of Stock reserved and available for grant under the
Plan is 1,000,000.
5.2 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 or other Awards settled in
cash will be available for the grant of an Award under the Plan.
5.3 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.
5.4 LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS. Notwithstanding any
provision in the Plan to the contrary, and subject to the adjustment in Section
12.1, the maximum number of shares of Stock with respect to one or more Awards
that may be granted to any one Participant who is a Covered Employee during the
Company's fiscal year is 300,000.
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ARTICLE 6 ELIGIBILITY AND PARTICIPATION
6.1 ELIGIBILITY.
(a) GENERAL. Persons eligible to participate in this Plan include all
key employees, and non-employee directors of, scientific advisory board members,
and consultants performing services for, the Company or a Subsidiary, as
determined by the Committee, including such individuals who are also members of
the Board.
(b) FOREIGN PARTICIPANTS. In order to assure the viability of Awards
granted to Participants employed in foreign countries, the Committee may provide
for such special terms as it may consider necessary or appropriate to
accommodate differences in local law, tax policy, or custom. Moreover, the
Committee may approve such supplements to, or amendments, restatements, or
alternative versions of the Plan as it may consider necessary or appropriate for
such purposes without affecting the terms of the Plan as in effect for any other
purpose; provided, however, that no such supplements, amendments, restatements,
or alternative versions will increase the number of shares of Stock available
under Section 5.1 of the Plan.
(c) ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from among all eligible individuals,
those to whom Awards will be granted and will determine the nature and amount of
each Award. No individual will have any right to be granted an Award under this
Plan.
ARTICLE 7 STOCK OPTIONS
7.1 GENERAL. The Committee 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 will be determined by the Committee and set forth in the Award Agreement;
provided, however, that the exercise price for any Option may not be less than
the Fair Market Value as of the date of grant.
(b) TIME AND CONDITIONS OF EXERCISE. The Committee will determine the
time or times at which an Option may be exercised in whole or in part. The
Committee may also determine the performance or other conditions, if any, that
must be satisfied before all or part of an Option may be exercised.
(c) LAPSE OF OPTION. An Option will lapse under the following
circumstances:
(1) The Option will lapse ten years from the date it is granted,
unless an earlier time is set in the Award Agreement;
(2) The Option will lapse upon termination of employment for any
reason other than the Participant's death or Disability, unless the Committee
(at the time of grant or thereafter) determines in its discretion to extend the
exercise period for a period of time after the Participant terminates employment
(not to exceed the Option's expiration date). To the extent that any portion of
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an Incentive Stock Option is exercised more than 90 days after the date the
Participant ceases to be an employee of the Company for reason (other than death
or Disability), the exercise of such portion will be considered the exercise of
a Non-Qualified Stock Option; and
(3) If the Participant terminates employment on account of
Disability or death before the Option lapses pursuant to paragraph (1) or (2)
above, the Option will lapse on the earlier of (i) the Option's expiration date,
or (ii) three years after the date the Participant terminates employment on
account of Disability or death. Upon the Participant's Disability or death, any
Options exercisable at the Participant's Disability or death 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 fails to make testamentary disposition or dies intestate, by
the person or persons entitled to receive the Option under the applicable laws
of descent and distribution. To the extent that any portion of an Incentive
Stock Option is exercised more than 12 months after the date the Participant
ceases to be an employee of the Company on account of Disability, the exercise
of such portion will be considered the exercise of a Non-Qualified Stock Option.
(d) PAYMENT. The Committee will 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 that has been held by the Participant for at
least six months (through actual tender or by attestation), or other property
(including broker-assisted "cashless exercise" arrangements), and the methods by
which shares of Stock will be delivered or deemed to be delivered to a
Participant.
(e) EVIDENCE OF GRANT. All Options will be evidenced by an Award
Agreement between the Company and the Participant. The Award Agreement will
include such additional provisions as may be specified by the Committee.
7.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options will be granted only
to employees and the terms of any Incentive Stock Options granted under the Plan
must comply with the following additional rules.
(a) EXERCISE PRICE. The exercise price per share of Stock will be set
by the Committee, 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 years from the date of its grant.
(c) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value
(determined as of the time an Award is made) of all shares of Stock with respect
to which Incentive Stock Options are first exercisable by a Participant in any
calendar year may not exceed $100,000.00 or such other limitation as imposed by
Section 422(d) of the Code, or any successor provision. To the extent that for
any reason Incentive Stock Options are first exercisable by a Participant in
excess of such limitation, the excess will be considered Non-Qualified Stock
Options.
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(d) TEN PERCENT OWNERS. An Incentive Stock Option will be granted to
any individual who, at the date of grant, owns Stock possessing more than ten
percent of the total combined voting power of all classes of Stock of the
Company only if such Option is granted at a price that is not less than 110% of
Fair Market Value on the date of grant and the Option is exercisable for no more
than five years from the date of grant.
(e) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an Incentive
Stock Option may be made pursuant to this Plan after the tenth anniversary of
the Effective Date.
(f) RIGHT TO EXERCISE. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.
ARTICLE 8 RESTRICTED STOCK AWARDS
8.1 GRANT OF RESTRICTED STOCK. The Committee 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 Committee. All Awards of Restricted
Stock will be evidenced by a Restricted Stock Award Agreement.
8.2 ISSUANCE AND RESTRICTIONS. Restricted Stock will be subject to such
restrictions on transferability and other restrictions as the Committee 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 Committee
determines at the time of the grant of the Award or thereafter.
8.3 FORFEITURE. Except as otherwise determined by the Committee at the time
of the grant of the Award or thereafter, upon termination of employment during
the applicable restriction period for any reason (other than death or
Disability), Restricted Stock that is at that time subject to restrictions will
be forfeited, provided, however, that the Committee may provide in any
Restricted Stock 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 Committee may in other
cases waive in whole or in part restrictions or forfeiture conditions relating
to Restricted Stock.
8.4 CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee will 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 may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.
ARTICLE 9 PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE SHARES. The Committee is authorized to grant
Performance Shares to Participants on such terms and conditions as may be
selected by the Committee. The Committee 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.
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9.2 RIGHT TO PAYMENT. A grant of Performance Shares gives the Participant
rights, valued as determined by the Committee, and payable to, or exercisable
by, the Participant to whom the Performance Shares are granted, in whole or in
part, as the Committee shall establish at grant or thereafter. Subject to the
terms of the Plan, the Committee 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
Committee and reflected in a written Performance Share Award Agreement.
ARTICLE 10 PERFORMANCE-BASED AWARDS
10.1 PURPOSE. The purpose of this Article 10 is to provide the Committee
the ability to qualify the Restricted Stock Awards under Article 8 and
Performance Shares under Article 9 as "performance-based compensation" under
Section 162(m) of the Code. If the Committee, in its discretion, decides to
grant a Performance-Based Award to a Covered Employee, the provisions of this
Article 10 will control over any contrary provision contained in Articles 8 and
9.
10.2 APPLICABILITY. This Article 10 will apply only to those Covered
Employees selected by the Committee to receive Performance-Based Awards. The
Committee may, in its discretion, grant Restricted Stock Awards or Performance
Share Awards to Covered Employees that do not satisfy the requirements of this
Article 10. The designation of a Covered Employee as a Participant for a
Performance Period will not in any manner entitle the Participant to receive an
Award for the period. Moreover, designation of a Covered Employee as a
Participant for a particular Performance Period will not require designation of
such Covered Employee as a Participant in any subsequent Performance Period and
designation of one Covered Employee as a Participant will not require
designation of any other Covered Employees as a Participant in such period or in
any other period.
10.3 DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE AWARDS. With
regard to a particular Performance Period, the Committee will have full
discretion to select the length of such Performance Period, the type of
Performance-Based Awards to be issued, the kind and/or level of the Performance
Goal, and whether the Performance Goal is to apply to the Company, a Subsidiary
or any division or business unit thereof.
10.4 PAYMENT OF PERFORMANCE AWARDS. Unless otherwise provided in the
relevant Award Agreement, a Participant must be employed by the Company or a
Subsidiary on the last day of the Performance Period to be eligible for a
Performance Award for such Performance Period. Furthermore, a Participant will
be eligible to receive payment under a Performance-Based Award for a Performance
Period only if the Performance Goals for such period are achieved. In
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determining the actual size of an individual Performance-Based Award, the
Committee may reduce or eliminate the amount of the Performance-Based Award
earned for the Performance Period, if in its sole and absolute discretion, such
reduction or elimination is appropriate.
10.5 MAXIMUM AWARD PAYABLE. The maximum Performance-Based Award payable to
any one Participant under the Plan for a Performance Period is 300,000 shares of
Stock, or in the event the Performance-Based Award is paid in cash, such maximum
Performance-Based Award will be determined by multiplying 300,000 by the Fair
Market Value of one share of Stock as of the date of grant of the
Performance-Based Award.
ARTICLE 11 PROVISIONS APPLICABLE TO AWARDS
11.1 STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted under the
Plan may, in the discretion of the Committee, 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
Committee 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.
11.2 EXCHANGE PROVISIONS. The Committee 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 11.1), based on the terms and conditions the Committee
determines and communicates to the Participant at the time the offer is made.
11.3 TERM OF AWARD. The term of each Award will be for the period as
determined by the Committee, provided that in no event will the term of any
Incentive Stock Option exceed a period of ten years from the date of its grant.
11.4 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 Committee determines at or after the time of grant, including
without limitation, cash, Stock that has been held by the Participant for at
least six months, 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 Committee.
11.5 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 will 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 by the Committee, no Award will be
assignable or transferable by a Participant other than by will or the laws of
descent and distribution.
11.6 BENEFICIARIES. Notwithstanding Section 11.5, a Participant may, in the
manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
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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 Committee. If the Participant is married and resides in a community property
state, a designation of a person other than the Participant's spouse as his
beneficiary with respect to more than 50 percent of the Participant's interest
in the Award will not be effective without the written consent of the
Participant's spouse. If no beneficiary has been designated or survives the
Participant, payment will 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 Committee.
11.7 STOCK CERTIFICATES. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Committee
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 with the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock.
11.8 ACCELERATION UPON A CHANGE OF CONTROL. If a Change of Control occurs,
unless otherwise provided in the Award Agreement, the Committee in its
discretion may provide that all outstanding Options, and other Awards shall
become fully exercisable and all restrictions on outstanding Awards shall lapse.
To the extent that this provision causes Incentive Stock Options to exceed the
dollar limitation set forth in Section 7.2(c), the excess Options shall be
deemed to be Non-Qualified Stock Options. Upon, or in anticipation of, such an
event, the Committee may cause every Award outstanding hereunder to terminate at
a specific time in the future and shall give each Participant the right to
exercise Awards during a period of time as the Committee, in its sole and
absolute discretion, shall determine.
ARTICLE 12 CHANGES IN CAPITAL STRUCTURE
12.1 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) will be increased proportionately without any change in the aggregate
purchase price therefor. If the Stock is 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 will be substituted for each such share of Stock
then subject to each Award the number and class of shares of Stock into which
each outstanding share of Stock is exchanged, all without any change in the
aggregate purchase price for the shares then subject to each Award.
ARTICLE 13 AMENDMENT, MODIFICATION AND TERMINATION
13.1 AMENDMENT, MODIFICATION AND TERMINATION. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that to the extent necessary and desirable
to comply with any applicable law, regulation, or stock exchange rule, the
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Company will obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required or as the Committee deems necessary.
13.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification
of the Plan will adversely affect in any material way any Award previously
granted under the Plan without the written consent of the Participant.
ARTICLE 14 GENERAL PROVISIONS
14.1 NO RIGHTS TO AWARDS. No Participant, employee, or other person will
have any claim to be granted any Award under the Plan, and neither the Company
nor the Committee is obligated to treat Participants, employees, and other
persons uniformly.
14.2 NO STOCKHOLDERS RIGHTS. No Award gives the Participant any of the
rights of a stockholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
14.3 WITHHOLDING. The Company or any Subsidiary will have the authority and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy Federal, state, and local income or
employment taxes required by law to be withheld with respect to any taxable
event arising as a result of this Plan.
14.4 NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any Award Agreement
will 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.
14.5 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an "unfunded"
plan for incentive 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 will give the Participant any rights that are greater than those of a
general creditor of the Company or any Subsidiary.
14.6 INDEMNIFICATION. To the extent allowable under applicable law, each
member of the Committee or of the Board will 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 will 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.
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14.7 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan will 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.
14.8 EXPENSES. The expenses of administering the Plan will be paid by the
Company and its Subsidiaries.
14.9 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, will control.
14.10 FRACTIONAL SHARES. No fractional shares of stock will be issued and
the Committee will determine, in its discretion, whether cash will be given in
lieu of fractional shares or whether such fractional shares will be eliminated
by rounding up or down as appropriate.
14.11 SECURITIES LAW COMPLIANCE. With respect to any person who is, on the
relevant date, obligated to file reports under Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, it will
be void to the extent permitted by law and voidable as deemed advisable by the
Committee.
14.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of awards in Stock or otherwise will be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company will 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.
14.13 GOVERNING LAW. The Plan and all Award Agreements will be construed in
accordance with and governed by the laws of the State of Arizona.
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