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.
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(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
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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.
(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) "Disability" shall mean a total and permanent
disability as defined in Section 22(e)(3) of the Code.
(h) "Dividend Equivalent" means a right granted to a
Participant under Article 11.
(i) "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.
(j) "Incentive Stock Option" means an Option that is
intended to meet the requirements of Section 422 of the Code
or any successor provision thereto.
(k) "Non-Qualified Stock Option" means an Option that
is not intended to be an Incentive Stock Option.
(l) "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.
(m) "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.
(n) "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.
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(o) "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.
(p) "Plan" means the Inter-Tel, Incorporated 1997
Long-Term Incentive Plan, as amended from time to time.
(q) "Restricted Stock Award" means Stock granted to a
participant under Article 10 that is subject to certain
restrictions and to risk of forfeiture.
(r) "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.
(s) "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.
(t) "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 COMM1TTEE. 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
thenumber 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;
(h) Establish, adopt or revise any rules and
regulations as it may deem necessary or advisable to
administer the Plan; and
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(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 one million two hundred thousand (1,200,000).
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 and shares subject
to SARs 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, 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).
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.
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(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:
(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 employment for any reason, except that the
Administrator may in its discretion permit a Participant to
exercise all or any portion of the Incentive
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Stock Option for a period of up to ninety (90) days after the
Participant's termination of employment, except in the case of
the Participant's termination of employment due to Disability,
in which case the Incentive Stock Option shall lapse twelve
(12) months after the date the Participant terminates
employment.
(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
employment status (i.e., whether the Participant was employed
by the Company on the date of his death or had previously
terminated employment) 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.
(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.
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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 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.
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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 employment 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.
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
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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.
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
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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.
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
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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.
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
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.
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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
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,
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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.
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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