RESTATED
UGLY DUCKLING CORPORATION
LONG-TERM INCENTIVE PLAN
ARTICLE 1 PURPOSE
1.1. GENERAL. The purpose of the Ugly Duckling Corporation Long-Term
Incentive Plan (the "Plan") is to promote the success, and enhance the value,
of Ugly Duckling Corporation and its subsidiaries (collectively, the
"Company") by linking the personal interests of its employees, consultants and
advisors to those of Company shareholders and by providing its employees,
consultants and advisors 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, consultants and
advisors 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
employees, consultants and advisors of the Company and any Subsidiary.
ARTICLE 2 EFFECTIVE DATE
2.1. EFFECTIVE DATE. The Plan is effective as of June 30, 1995 (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 General 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 restric-
tions 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.
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(c) "Board" means the Board of Directors of the Company or a
Committee thereof formed under Section 4, as the case may be.
(d) "Cause" means (except as otherwise provided in on Option
Agreement) if the Board, in its reasonable and good faith discretion,
determines that the employee, consultant or advisor (i) has developed or
pursued interests substantially adverse to the Company, (ii) materially
breached any employment, engagement or confidentiality agreement or otherwise
failed to satisfactorily discharge his or her duties, (iii) has not devoted
all or substantially all of his or her business time, effort and attention to
the affairs of the Company (or such lesser amount as has been agreed to in
writing by the Company), (iv) is convicted of a felony involving moral
turpitude, or (v) has engaged in activities or omissions that are detrimental
to the well-being of the Company.
(e) "Change of Control" means and includes each of the following
(except as otherwise provided in an Option Agreement):
(1) there shall be consummated any consolidation or merger of the Company in
which the Company is not the continuing or surviving entity, or pursuant to
which Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's Stock
immediately prior to the merger have the same proportionate ownership of
beneficial interest of common stock or other voting securities of the
surviving entity immediately after the merger;
(2) there shall be consummated any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of assets or earning
power aggregating more than 40% of the assets or earning power of the Company
and its subsidiaries (taken as a whole), other than pursuant to a sale-
leaseback, structured finance or other form of financing transaction;
(3) the shareholders of the Company shall approve any plan or proposal for
liquidation or dissolution of the Company;
(4) any person (as such term is used in Section 13(d) and 14(d)(2) of the
Exchange Act), other than any current shareholder of the Company or affiliate
thereof or any employee benefit plan of the Company or any subsidiary of the
Company or any entity holding shares of capital stock of the Company for or
pursuant to the terms of any such employee benefit plan in its role as an
agent or trustee for such plan, shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 20% or more of the Company's
outstanding Stock; or
(5) during any period of two consecutive years, individuals who at the
beginning of such period shall fail to constitute a majority thereof, unless
the election, or the nomination for election by the Company's shareholders, of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(g) "Committee" means the committee of the Board described in Article
4.
(h) "Disability" shall mean any illness or other physical or mental
condition of a Participant which renders the Participant incapable of
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performing his customary and usual duties for the Company, or any medically
determinable illness or other physical or mental condition resulting from a
bodily injury, disease or mental disorder which in the judgment of the
Committee is permanent and continuous in nature. The Committee may require
such medical or other evidence as it deems necessary to judge the nature and
permanency of the Participant's condition.
(i) "Dividend Equivalent" means a right granted to a Participant
under Article 11.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(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 Board in its discretion, under one of the following methods: (i) the
average of the closing bid and asked prices for the Stock as reported on any
national securities exchange on which the Stock is then listed (which shall
include the Nasdaq National Market) 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 (ii) the price as determined by
such methods or procedures as may be established from time to time by the
Board.
(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.
(p) "Participant" means a person who, as an employee of or consultant
or advisor to the Company or any Subsidiary, has been granted an Award under
the Plan. A "Participant" shall not include any Director of the Company or
any Subsidiary who is not also an employee of or consultant to the Company or
any Subsidiary.
(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 Ugly Duckling Corporation 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.
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(t) "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.
(u) "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.
(v) "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
4.1. BOARD/COMMITTEE. The Plan shall be administered by the Board of
Directors or, to the extent required to comply with Rule 16b-3 promulgated
under the Exchange Act, a Committee that is appointed by, and serves at the
discretion of, the Board. Any Committee shall consist of at least two
individuals who are members of the Board and are "disinterested persons," as
such term is defined in Rule 16b-3 promulgated under Section 16 of the
Exchange Act or any successor provision, except as may be otherwise permitted
under Section 16 of the Exchange Act and the regulations and rules promulgated
thereunder. For purposes of this Plan, the "Board" shall mean the Board of
Directors or the Committee, as the case may be.
4.2. ACTION BY THE BOARD. A majority of the Board 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 the Board in
lieu of a meeting shall be deemed the acts of the Board. Each member of the
Board 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 BOARD. The Board has the exclusive power, authority
and discretion to:
(b) Designate Participants;
(c) Determine the type or types of Awards to be granted to each
Participant;
(d) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(e) 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 Board in its sole discretion determines;
(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;
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(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 Board deems necessary or advisable to administer the
Plan.
4.4. DECISIONS BINDING. The Board's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Board 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 15.1,
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 1,800,000.
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, in each case to the full extent available pursuant to the
rules and interpretations of the Securities and Exchange Commission under
Section 16 of the Exchange Act, if applicable.
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. LIMITATIONS ON AWARDS TO ANY SINGLE PARTICIPANT. No single
Participant may receive Awards covering in the aggregate more than 250,000
shares of Stock during any single calendar year.
ARTICLE 6 ELIGIBILITY
6.1. GENERAL. Awards may be granted only to individuals who are
employees (including employees who also are directors or officers) of the
Company or a Subsidiary or to consultants or advisors thereto, as determined
by the Board.
ARTICLE 7 STOCK OPTIONS
7.1. GENERAL. The Board is authorized to grant Options to Participants
on the following terms and conditions:
(b) EXERCISE PRICE. The exercise price per share of Stock under an Option
shall be determined by the Board.
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(c) TIME AND CONDITIONS OF EXERCISE. The Board 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 months following the date of
the grant of such Option. The Board also shall determine the performance or
other conditions, if any, that must be satisfied before all or part of an
Option may be exercised.
(d) PAYMENT. The Board 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 Board pursuant to
the preceding sentence, the Board 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 Board.
(e) 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 Board.
7.2 INCENTIVE STOCK OPTIONS. The terms of any Incentive Stock
Options granted under the Plan must comply with the following additional
rules:
(b) EXERCISE PRICE. The exercise price per share of Stock shall be set
by the Board, 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.
(c) EXERCISE. In no event, may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(d) 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 Cause or for any other reason, other than the Participant's
death or Disability, unless the Committee determines in its discretion to
extend the exercise period for no more than ninety (90) days after the
Participant's termination of employment.
(3) In the case of the Participant's termination of employment due to
Disability or death, the Incentive Stock Option shall lapse upon termination
of employment, unless the Committee determines in its discretion to extend the
exercise period of the Incentive Stock Option for no more than twelve (12)
months after the date the Participant terminates employment. 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.
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(e) 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 One Hundred Thousand Dollars
($100,000.00).
(f) TEN PERCENT OWNERS. An Incentive Stock Option shall 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 only if, at the time such Option is granted, the Option price is
at least one hundred ten percent (110%) of the Fair Market Value of the Stock
and such Option by its terms is not exercisable after the expiration of five
(5) years from the date the Option is granted.
(g) 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.
(h) RIGHT TO EXERCISE. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.
(i) EMPLOYEES ONLY. Incentive Stock Options may be granted only to
Participants who are employees of the Company or any Subsidiary.
ARTICLE 8 STOCK APPRECIATION RIGHTS
8.1. GRANT OF SARs. The Board is authorized to grant SARs to
Participants on the following terms and conditions:
(b) 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
Board, 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.
(c) 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
Board 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 Board is authorized to grant
Performance Shares to Participants on such terms and conditions as may be
selected by the Board. The Board 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 Board, and payable to, or
exercisable by, the Participant to whom the Performance Shares are granted, in
whole or in part, as the Board shall establish at grant or thereafter. The
Board 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, provided that the time period during
which the performance goals must be met shall, in all cases, exceed six
months.
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
Board and reflected in the Award Agreement.
ARTICLE 10 RESTRICTED STOCK AWARDS
10.1. GRANT OF RESTRICTED STOCK. The Board 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 Board. 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 Board 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 Board
determines at the time of the grant of the Award or thereafter.
10.3. FORFEITURE. Except as otherwise determined by the Board 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 Board 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 Board 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 Board 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 Board is authorized to grant
Dividend Equivalents to Participants subject to such terms and conditions as
may be selected by the Board. 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 Board. The Board 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.
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ARTICLE 12 OTHER STOCK-BASED AWARDS
12.1. GRANT OF OTHER STOCK-BASED AWARDS. The Board 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 Board 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 Board 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 Board, 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
Board 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 Board 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
Board 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 Board, 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 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 Board 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 Board. The Board 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 or, with the consent of the Board in its sole
discretion and except in the case of an Incentive Stock Option, pursuant to a
court order that would otherwise satisfy the requirements to be a domestic
relations order as defined in Section 414(p)(1)(B) of the Code, if the order
satisfies Section 414(p)(1)(A) of the Code notwithstanding that such an order
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relates to the transfer of a stock option rather than an interest in an
employee benefit plan. In the Award Agreement for any Award other than an
Award that includes an Incentive Stock Option, the Board 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 or classes of individuals, subject
to such restrictions, limitations, or conditions as the Board deems to be
appropriate.
13.6 BENEFICIARIES. Notwithstanding Section 13.5, a Participant may, in
the manner determined by the Board, 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 Board. 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 50 percent
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 Board.
13.7. STOCK CERTIFICATES. All Stock certificates delivered under the
Plan are subject to any stop-transfer orders and other restrictions as the
Board 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 Board 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 Board 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. CHANGE OF CONTROL. A Change of Control shall, in the sole
discretion of the Board:
(a) Cause every Award outstanding hereunder to become fully
exercisable and all restrictions on outstanding Awards to lapse and allow each
Participant the right to exercise Awards prior to the occurrence of the event
otherwise terminating the Awards over such period as the Board, in its sole
and absolute discretion, shall determine. 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; or
(b) Cause every Award outstanding hereunder to terminate, provided
that the surviving or resulting corporation shall tender an option or options
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to purchase its shares or exercise such rights on terms and conditions, as to
the number of shares, rights or otherwise, which shall substantially preserve
the rights and benefits of any Award then outstanding hereunder.
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. Subject to Section 13.9, in the
event the Stock shall be changed into or exchanged for a different number or
class of shares of Stock or of shares of another corporation, whether through
reorganization, recapitalization, stock split-up or combination of shares,
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 Board may terminate, amend or
modify the Plan. However, without approval of the shareholders of the Company
or other conditions (as may be required by the Code, by the insider trading
rules of Section 16 of the Exchange Act, by any national securities exchange
or system on which the Stock is listed or reported, or by a regulatory body
having jurisdiction), no such termination, amendment, or modification may:
(b) Materially increase the total number of shares of Stock that may be
issued under the Plan, except as provided in Section 14.1;
(c) Materially modify the eligibility requirements for participation in
the Plan; or
(d) Materially increase the benefits accruing to Participants under the
Plan.
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 or consultant
shall have any claim to be granted any Award under the Plan, and neither the
Company nor the Board is obligated to treat Participants and employees or
consultants 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
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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, Participants may
elect, subject to the Board's approval, 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 Board establishes. The Board 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 Committee 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.
16.10. FRACTIONAL SHARES. No fractional shares of stock shall be issued
and the Board 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.
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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 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 Board fails to so comply, it
shall be void to the extent permitted by law and voidable as deemed advisable
by the Board, and such provision or action shall be deemed to be modified so
as to comply with Rule 16b-3.
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, 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 such 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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