EXHIBIT 99.1
YP.NET, INC.
2003 STOCK PLAN
ARTICLE 1
PURPOSE
1.1 GENERAL. The purpose of the YP.Net, Inc. 2003 Stock Plan (the
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"Plan") is to promote the success, and enhance the value, of YP.Net, Inc. (the
"Company") by linking the personal interests of its employees and non-employee
services providers to those of Company stockholders. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of its employees and non-employee services
providers upon whose judgment, interest, and special effort the successful
conduct of the Company's operation is largely dependent.
ARTICLE 2
EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan is effective as of the date the Plan is
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approved by the Company's Stockholders (the "Effective Date").
ARTICLE 3
DEFINITIONS AND CONSTRUCTION
3.1 DEFINITIONS. When a word or phrase appears in this Plan with the
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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 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) "Cause" means termination of employment or service as a result of
any of the following events: (1) the commission of an act of dishonesty,
fraud, embezzlement, theft or other similar acts of misconduct by the
Participant, whether within or outside the scope of the Participant's
employment or service with the Company, (ii) the breach of duty by the
Participant in the course of employment or service, unless waived in
writing by the Company, (iii) the neglect by the Participant of the
Participant's duties with the Company, unless waived in writing by the
Company, (iv) the Participant's disobedience or refusal or failure to
discharge the Participant's duties to the Company under any employment
agreement or otherwise, (v) the breach of obligations of the Participant to
the Company under this Agreement or any employment or other agreement with
the Company, unless waived in writing by the Company, (vi) the breach by
the Participant of
any fiduciary duty to the Company involving personal gain or profit,
including acceptance of gifts, gratuities, honorarium, lodging, and other
items of direct economic value in excess of One Hundred Dollars ($100.00)
from any one source, provided that this section does not apply to gifts or
items received from family members or other non-business or professional
persons, (vii) the violation by the Participant of any law, rule,
regulation, court order (other than a law, rule, or regulation relating to
a traffic violation or similar offense) or a final cease and desist order,
or (viii) the Participant economically committing the Company beyond the
Participant's expressly approved authority as communicated to the
Participant by the Company from time to time.
(e) "Change of Control" means any of the following:
(1) any 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) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of assets or earning power
aggregating more than 50% of the assets or earning power of the Company or
any major subsidiary, other than pursuant to a sale-leaseback, structured
finance or other form of financing transaction;
(3) the shareholders of the Company approve any plan or proposal
for liquidation or dissolution of the Company; or
(4) any person (as such term is used in Section 13(d) and
14(d)(2) of the Exchange Act), other than (A) any current shareholder of
the Company or affiliate thereof, or (B) an employee benefit plan of the
Company or any Subsidiary 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, or (C) any affiliate of
the Company as of the Effective Date becomes the beneficial owner (within
the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of the
Company's outstanding Stock.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the committee of the Board described in Article
4.
(h) "Covered Employee" means an Employee who is, or could be, a
"covered employee" within the meaning of Section 162(m) of the Code.
(i) "Disability" shall mean any illness or other physical or mental
condition of a Participant which renders the Participant incapable of
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
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require such medical or other evidence as it deems necessary to judge the
nature and permanency of the Participant's condition.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(k) "Fair Market Value" means, as of any given date, the fair market
value of Stock determined as follows:
(1) Where there exists a public market for the Stock, the Fair
Market Value shall be (A) the closing price for the Stock for the last
market trading day prior to the time of the determination (or, if no
closing price was reported on that date, on the last trading date on which
a closing price was reported) on the stock exchange determined by the
Committee to be the primary market for the Stock or the Nasdaq National
Market, whichever is applicable, or (B) if the Stock is not traded on any
such exchange or national market system, the average of the closing bid and
asked prices of the Stock on the Nasdaq Small Cap Market for the day prior
to the time of the determination (or, if no such prices were reported on
that date, on the last date on which such prices were reported), in each
case, as reported in The Wall Street Journal or such other source as the
Committee deems reliable; or
(2) In the absence of an established market for the Stock of the
type described in (1), above, the Fair Market Value thereof shall be
determined by the Committee in good faith.
(l) "Participant" means a person or entity who, as an employee or
non-employee services provider of the Company or any Subsidiary, has been
granted an Award under the Plan.
(m) "Performance-Based Awards" means the Restricted Stock or
Performance Share Awards granted to selected Covered Employees pursuant to
Articles 7 and 8, but which are subject to the terms and conditions set
forth in Article 9. All Performance-Based Awards are intended to qualify as
"performance-based compensation" pursuant to Section 162(m) of the Code.
(n) "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: number of customers, pre- or after-tax net earnings, sales or
revenue, operating earnings, operating cash flow, return on net assets,
return on stockholders' equity, return on assets, return on capital,
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 shall, 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.
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(o) "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.
(p) "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.
(q) "Performance Share" means a right granted to a Participant
pursuant to Article 8, 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 YP.Net, Inc. 2003 Stock Plan.
(s) "Restricted Stock" means Stock granted to a Participant under
Article 7 that is subject to certain restrictions and to risk of
forfeiture.
(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 11.
(u) "Subsidiary" means any corporation or other entity 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 COMMITTEE. The Plan shall be administered by a Committee appointed
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by, and which serves at the discretion of, the Board. If the Board does not
appoint a Committee to administer the Plan, the Plan shall be administered by
the Board and all references herein to the Committee shall refer to the Board.
4.2 ACTION BY THE COMMITTEE. A majority of the Committee shall
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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 shall 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
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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,
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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 purchase price, if any, 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 Committee in its sole discretion determines;
(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 purchase price of an Award, if any, 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) Interpret the terms of the Plan or any Award Agreement;
(j) Establish, adopt, or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan; and
(k) 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
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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.
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ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1 NUMBER OF SHARES. Subject to adjustment provided in Section 11.1,
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the aggregate number of shares of Stock reserved and available for grant under
the Plan shall be 3,000,000.
5.2 LAPSED AWARDS. To the extent that an Award terminates, expires, or
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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.
5.3 STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may
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consist, in whole or in part, of authorized and unissued Stock, treasury Stock,
or Stock purchased on the open market.
ARTICLE 6
ELIGIBILITY AND PARTICIPATION
6.1 ELIGIBILITY.
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(a) GENERAL. Persons eligible to participate in this Plan include
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employees and non-employee service providers of the Company or a
Subsidiary, as determined by the Committee.
(b) FOREIGN PARTICIPANTS. In order to assure the viability of Awards
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granted to Participants employed or providing services 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 thereby
affecting the terms of the Plan as in effect for any other purpose;
provided, however, that no such supplements, amendments, restatements, or
alternative versions shall increase the share limitations contained in
Section 5.1 of the Plan.
6.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
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Committee may, from time to time, select from among all eligible individuals,
those to whom Awards shall be granted and shall determine the nature and amount
of each Award. No individual shall have any right to be granted an Award under
this Plan.
ARTICLE 7
RESTRICTED STOCK
7.1 GRANT OF RESTRICTED STOCK. The Committee is authorized to make
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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 shall be evidenced by a Restricted Stock Award Agreement.
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7.2 ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to
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such restrictions on transferability, repurchase, 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.
7.3 FORFEITURE. Except as otherwise determined by the Committee at the
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time of the grant of the Award or thereafter, upon termination of employment or
services during the applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall 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.
7.4 CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under
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the Plan may be evidenced in such manner as the Committee 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 may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.
ARTICLE 8
PERFORMANCE SHARES
8.1 GRANT OF PERFORMANCE SHARES. The Committee is authorized to grant
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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.
8.2 RIGHT TO PAYMENT. A grant of Performance Shares gives the
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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.
8.3 OTHER TERMS. Performance Shares may be payable in cash, Stock, or
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other property, and have such other terms and conditions as determined by the
Committee and reflected in a written Performance Share Award Agreement. Unless
otherwise provided in an Award Agreement, Performance Shares will lapse
immediately if a Participant's employment or service is terminated for Cause.
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ARTICLE 9
PERFORMANCE-BASED AWARDS
9.1 PURPOSE. The purpose of this Article 9 is to provide the Committee
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the ability to qualify the Restricted Stock Awards pursuant to Article 7 and the
Performance Share Awards pursuant to Article 8 as "performance-based
compensation" pursuant to 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 9 shall control over any contrary provision
contained in Articles 7 or 8.
9.2 APPLICABILITY. This Article 9 shall apply only to those Covered
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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 9. The designation of a Covered Employee as a Participant for a
Performance Period shall 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 shall not require designation of
such Covered Employee as a Participant in any subsequent Performance Period and
designation of one Covered Employee as a Participant shall not require
designation of any other Covered Employees as a Participant in such period or in
any other period.
9.3 DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE AWARDS. With
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regard to a particular Performance Period, the Committee shall 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. Unless otherwise provided in an Award
Agreement, Performance-Based Awards will be forfeited if a Participant's
employment is terminated for Cause.
9.4 PAYMENT OR GRANT OF PERFORMANCE AWARDS. Unless otherwise provided
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in the relevant Award Agreement, a Participant must be employed by the Company
or a Subsidiary on the day a Performance Award for such Performance Period is
paid or granted to the Participant. Furthermore, a Participant shall be eligible
to receive payment pursuant to a Performance-Based Award for a Performance
Period only if the Performance Goals for such period are achieved. In
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.
9.5 MAXIMUM AWARD PAYABLE OR GRANTED. The maximum Performance-Based
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Award payable or granted to any one Participant pursuant to the Plan for a
Performance Period is 1,000,000 shares of Stock, or in the event the
Performance-Based Award is paid in cash, such maximum Performance-Based Award
shall be determined by multiplying 1,000,000 by the Fair Market Value of one
share of Stock as of the date of grant of the Performance-Based Award.
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ARTICLE 10
PROVISIONS APPLICABLE TO AWARDS
10.1 STAND-ALONE AND TANDEM AWARDS. Awards granted under the Plan may,
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in the discretion of the Committee, be granted either alone or in addition to or
in tandem with any other Award granted under the Plan. 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.
10.2 EXCHANGE PROVISIONS. The Committee may at any time offer to
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exchange or buy out any previously granted Award for a payment in cash, Stock,
or another Award (subject to Section 10.1), based on the terms and conditions
the Committee determines and communicates to the Participant at the time the
offer is made.
10.3 TERM OF AWARD. The term of each Award shall be for the period as
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determined by the Committee.
10.4 FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and
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any applicable law or Award Agreement, payments or transfers to be made by the
Company or a Subsidiary for the payment of an Award, if any, may be made in such
forms as the Committee determines at or after the time of grant, including
without limitation, cash, promissory note, 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 Committee.
10.5 LIMITS ON TRANSFER. No right or interest of a Participant in any
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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 by the Committee or as
otherwise provided in this Plan or in the applicable Award Agreement, no Award
shall be assignable or transferable by a Participant other than by will or the
laws of descent and distribution.
10.6 BENEFICIARIES. Notwithstanding Section 10.5, a Participant may, in
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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
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, 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 Committee.
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10.7 STOCK CERTIFICATES. All Stock certificates delivered under the
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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 which the Stock is listed, quoted, or
traded. The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock.
10.8 CHANGE OF CONTROL. Unless otherwise provided in an Award Agreement,
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if a Change of Control occurs, the Board shall have the discretion to remove all
restrictions on, or accelerate the vesting of, outstanding Awards. 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, if applicable,
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 11
CHANGES IN CAPITAL STRUCTURE
11.1 GENERAL. In the event a stock dividend is declared upon the
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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, the Committee has the authority
to substitute 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 shall be
so exchanged, all without any change in the aggregate purchase price for the
shares then subject to each Award.
ARTICLE 12
AMENDMENT, MODIFICATION AND TERMINATION
12.1 AMENDMENT, MODIFICATION AND TERMINATION. With the approval of the
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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
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.
12.2 AWARDS PREVIOUSLY GRANTED. Except as otherwise provided in the
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Plan, including without limitation, the provisions of Article 10, 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 13
GENERAL PROVISIONS
13.1 NO RIGHTS TO AWARDS. No Participant, employee, non-employee
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service provider, or other person shall have any claim to be granted any Award
under the Plan, and neither the Company nor the Committee is obligated to treat
Participants, employees, non-employee service providers, and other persons
uniformly.
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13.2 NO STOCKHOLDER RIGHTS. No Award gives the Participant any of the
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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.
13.3 WITHHOLDING. The Company or any Subsidiary shall have the
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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 taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of this Plan.
13.4 NO RIGHT TO EMPLOYMENT OR SERVICES. Nothing in the Plan or any
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Award Agreement shall interfere with or limit in any way the right of the
Company or any Subsidiary to terminate any Participant's employment or services
at any time, nor confer upon any Participant any right to continue in the employ
of, or to provide services to, the Company or any Subsidiary.
13.5 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an
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"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 shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Subsidiary.
13.6 INDEMNIFICATION. To the extent allowable under applicable law,
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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 Bylaws, as a matter of
law, or otherwise, or any power that the Company may have to indemnify them or
hold them harmless.
13.7 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
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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.
13.8 EXPENSES. The expenses of administering the Plan shall be borne by
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the Company and its Subsidiaries.
13.9 TITLES AND HEADINGS. The titles and headings of the Sections in
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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.
13.10 FRACTIONAL SHARES. No fractional shares of stock shall be issued
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and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional
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shares or whether such fractional shares shall be eliminated by rounding up or
down as appropriate.
13.11 SECURITIES LAW COMPLIANCE. With respect to any person who is, on
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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
shall be void to the extent permitted by law and voidable as deemed advisable by
the Committee.
13.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company
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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.
13.13 GOVERNING LAW. The Plan and all Award Agreements shall be
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construed in accordance with and governed by the laws of the State of Arizona.
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