SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-8
Registration Statement
Under the Securities Act of 1933
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SC&T INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
Arizona 86-0737579
(State or other jurisdiction (IRS Employer
of incorporation or Identification Number)
organization)
7625 E. Redfield Rd., Suite 200 A. Frederick Schaffer, Jr.
Scottsdale, Arizona 85260 2700 N. Central Ave., Suite 1500
(602) 368-9490 Phoenix, Arizona 85004
(Address, including zip code, and (602) 230-2880
telephone number, including (Name, address, including zip code,
area code, of registrant's and telephone number, including
principal executive offices) area code, of agent for service)
1999 STOCK OPTION PLAN
(Full Title of the Plans)
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COPY TO:
A. Frederick Schaffer, Jr.
A. F. Schaffer, P.C.
2700 North Central Avenue
Phoenix, Arizona 85004
Phone (602) 230-2880
Fax (602) 277-2806
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF OFFERING AGGREGATE AMOUNT OF
SECURITES TO BE AMOUNT BEING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
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<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share........... 200,000 $2.1875 $437,500 $129.06
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</TABLE>
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, the
number of shares of the issuer's Common Stock registered hereunder will be
adjusted in the event of stock splits, stock dividends or similar transactions.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h), on the basis of the high and low
prices of the Common Stock as reported by the OTC Electronic Bulletin Board on
June 10, 1999.
<PAGE>
PART ONE
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1(B). AVAILABLE INFORMATION
SC&T International, Inc. (the "Company" or the "Registrant") is subject to
the informational requirements of the Securities Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street NW,
Room 1024, Washington, D.C., 20549 and at its regional offices at Citicorp
Center, 300 West Madison Street, Chicago, Illinois, 60661, and Seven World Trade
Center, New York, New York, 10048. Copies of which material can be obtained at
prescribed rates from the Public Reference Section of the Commission, Room 1024,
450 Fifth Street NW, Washington, D.C., 20549. In addition, certain of such
materials are also available through the Commissions Electronic Date Gathering
and Retrieval System ("EDGAR").
ITEM1(B). SECURITIES TO BE OFFERED.
The Company hereby registers 200,000 shares of the Company's Common Stock,
par value $.01 per share (the "Common Stock"), in connection with the Company's
1999 Stock Option Plan (the "Plan"). The Plan was approved by the Company's
Board of Directors on June 1, 1999. A copy of the Plan is attached as an Exhibit
hereto.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by SC&T International, Inc., ("Company" or
"Registrant") with the Securities and Exchange Commission are incorporated in
this Form S-8 by reference:
1. The Company's latest annual report filed pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), or,
either (i) the Company's latest prospectus filed pursuant to Rule 424(b) under
the Securities Act of 1933, as amended ("Securities Act") that contains audited
financial statements for the Company's latest fiscal year for which such
statements have been filed, or (ii) the Company's effective Registration
Statement on Form 10 or Form 10-SB filed under the Exchange Act containing
audited financial statements for the Company's latest fiscal year;
2. All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the document referred
to in (1) above; and
3. The description of the Company common stock that is contained in a
registration statement or amendment to any registration statement filed under
Section 12 of the Exchange Act, including any amendment or report filed for the
purpose of updating the description.
All documents subsequently filed by the registrant pursuant to Sections
13(a), 13(c), 14, and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment to the Registration Statement that indicate that all
shares of common stock offered have been sold or that deregister all of the
shares then remaining unsold, shall be deemed to be incorporated by reference in
the Registration Statement and to be a part of it from the date of filing of the
documents.
<PAGE>
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 10-850 ET. SEQ. of the Arizona Revised Statutes requires the
Company to indemnify any director or officer who was or is threatened to be made
a party to any threatened, pending, or completed action, suit, or proceeding by
reason of the fact that he or she is or was a director, officer, employee, or
agent of the Company. The Company may advance expenses in connection with
defending any such proceeding, provided the indemnitee undertakes to pay any
amounts if it is later determined that the person was not entitled to be
indemnified by the Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable
ITEM 8. EXHIBITS
The following exhibits are filed as part of this Registration Statement:
Exhibit No. Identification of Exhibit
- ----------- -------------------------
4.1(1) -- Common Stock Specimen
5.1(1) -- Opinion Regarding Legality
10.1(1) -- 1999 Stock Option Plan
23.1(1) -- Consent of Counsel (included in Exhibit 5.1)
23.2(2) -- Consent of Evers & Company, Ltd., independent public accountants
(1) Filed with this Form S-8.
(2) To be filed by Amendment
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i. To include any prospectus required by Section 10(a)(3) of the
Securities Act;
ii. To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
iii. To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
<PAGE>
Provided, however, that paragraphs (a)(1)(i) and (ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining liability under the Securities Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 6 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Scottsdale, State of Arizona, on the 11th day of
June, 1999.
SC&T INTERNATIONAL, INC.
By: /s/ James L. Copland
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JAMES L. COPLAND
Chief Executive Officer
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
/s/ James L. Copland Chairman of the Board, June 11, 1999
- ------------------------ Chief Executive Officer,
JAMES L. COPLAND President, Treasurer, and Director
/s/ Catherine Copland Director and Assistant Secretary June 11, 1999
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CATHERINE COPLAND
/s/ Gregory Struthers Director, Executive Vice President June 11, 1999
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GREGORY STRUTHERS
/s/ Stephen Deckrow Director June 11, 1999
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STEPHEN DECKROW
SC&T
INTERNATIONAL INC
SC&T INTERNATIONAL, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF ARIZONA
AUTHORIZED SHARES 25,000,000 PAR VALUE $0.01
CUSIP 783975 10 5
SEE REVERSE
FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
Is The Owner of
Fully Paid and Non-Assessable Shares of Common Stock, Par Value $0.01, of
SC&T INTERNATIONAL, INC.
Transferable on the books of the Corporation by the holder hereof, in person or
by duly authorized attorney, upon surrender of this Certificate property
endorsed or accompanied by a proper assignment. This Certificate, and the shares
represented hereby are issued and shall be subject to all the provisions of the
Articles of Incorporation and the Bylaws of the Corporation, and all amendments
thereto, copies of which are on file and the principal office of the Corporation
and the Transfer Agent to all of which the holder of this Certificate by
acceptance thereof asserts. This Certificate is not valid unless countersigned
by the Transfer Agent.
IN WITNESS WHEREOF, the Corporation has caused the facsimile signatures
of its duly authorized officers and its facsimile seal to be hereunto affixed.
Dated: 04/03/1996
/s/ Timothy J. Stocker /s/ James Copland
SECRETARY PRESIDENT
SC&T INTERNATIONAL, INC.
INCORPORATED
June 23,
1993
ARIZONA
<PAGE>
SC&T INTERNATIONAL, INC.
The Corporation will furnish to any shareholder upon request and
without charge, a full statement of the designations preferences, imitations,
and relative rights of the shares of each other class of stock or series thereof
authorized to be issued.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties UNIF GIFT MIN ACT-_____Custodian_____
JT TEN-as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants Under Uniform Gifts to Minors Act
in common ___________________________________
(State)
Additional abbreviations may also be used though not in the above list.
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For Value Received,________________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES ACT AND ARE
"RESTRICTED SECURITIES" WITHIN THE MEANING OF SUCH ACTS. THE SHARES MAY NOT BE
SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION UNDER SUCH ACTS OR THE RECEIPTS OF AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
THE CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE,
A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS, AND RELATIVE
RIGHTS OF THE SHARES OF EACH CLASS AUTHORIZED TO BE ISSUED. Shares of the Common
Stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint ________________________________ attorney-in-fact to
transfer the said stock on the books of the within-named Corporation, with full
power of substitution in the premises
Dated
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NOTICE: The signature(s) to this assignment must correspond with the name
as written upon the face of the certificate in every particular, without
alteration or enlargement or any change whatever.
Signature(s) Guaranteed:
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The signature(s) should be guaranteed by an eligible guarantor institution
(Banks, Stockbrokers, Savings and Loan Associations and Credit Unions with
membership in an approved signature guarantee Medallion Program), pursuant to
S.E.C. Rule 17 Ad-15.
EXHIBIT 5.1
LAW OFFICES OF
A. FREDERICK SCHAFFER JR.
A PROFESSIONAL CORPORATION
2700 North Central Avenue, Suite 1500
Phoenix, Arizona 85004
Of Counsel to: TELEPHONE (602) 230-2880
Lerch, McDaniel & DePrima, PLC FACSIMILE (602) 240-6995
June 11, 1999
SC&T International, Inc.
7625 East Redfield Rd., Suite 200
Scottsdale, Arizona 85230
RE: SC&T INTERNATIONAL, INC.
REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
We have represented SC&T International, Inc., an Arizona corporation
("Company"), in connection with the preparation of a registration statement
filed with the Securities and Exchange Commission on Form S-8 "Registration
Statement") relating to the proposed issuance of 200,000 shares ("Shares") of
the Company's common stock, par value $.01 per share ("Common Stock") upon the
exercise of options issued pursuant to the Company's 1999 Stock Option Plan
("Plan") attached as an exhibit to the Registration Statement. In this
connection, we have examined originals or copies identified to our satisfaction
of such documents, corporate and other records, certificates, and other papers
as we deemed necessary to examine for purposes of this opinion, including but
not limited to the Plan, the Certificate of Incorporation of the Company, the
Bylaws of the Company, and resolutions of the Board of Directors of the Company.
We are of the opinion that the Shares will be, when issued pursuant to the
Plan, legally issued, fully paid and nonassessable.
We hereby consent to the filing of this Opinion as an Exhibit to the
Registration Statement.
Very truly yours,
A. F. Schaffer, P.C.
/s/ A. Frederick Schaffer, Jr.
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A. Frederick Schaffer, Jr.
AFS/rr
EXHIBIT 10.1
SC&T INTERNATIONAL, INC.
1999 STOCK OPTION PLAN
ARTICLE I - PLAN
1.1 Purpose. This Plan is a plan for key employees, officers, directors,
and consultants of the Company and its Affiliates and is intended to advance the
best interests of the Company, its Affiliates, and its stockholders by providing
those persons who have substantial responsibility for the management and growth
of the Company and its Affiliates with additional incentives and an opportunity
to obtain or increase their proprietary interest in the Company, thereby
encouraging them to continue in the employ of the Company or any of its
Affiliates.
1.2 Rule 16b-3 Plan. The Company is subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
therefore the Plan is intended to comply with all applicable conditions of Rule
16b-3 (and all subsequent revisions thereof) promulgated under the 1934 Act. To
the extent any provision of the Plan or action by the Board of Directors or
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee. In addition, the Board
of directors may amend the Plan from time to time, as it deems necessary in
order to meet the requirements of any amendments to Rule 16b-3 without the
consent of the shareholders of the Company.
1.3 Effective Date of Plan. The Plan shall be effective June 1, 1999 (the
"Effective Date"), provided that within one year of the Effective Date, the Plan
shall have been approved by at least a majority vote of stockholders voting in
person or by proxy at a duly held stockholders' meeting, or if the provisions of
the corporate charter, by-laws or applicable state law prescribes a greater
degree of stockholder approval for this action, the approval by the holders of
that percentage, at a duly held meeting of stockholders. No Incentive Option,
Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or
Performance Stock Award shall be granted pursuant to the Plan ten years after
the Effective Date.
ARTICLE II - DEFINITIONS
The words and phrases defined in this Article shall have the meaning set
out in these definitions throughout this Plan, unless the context in which any
such word or phrase appears reasonably requires a broader, narrower, or
different meaning.
2.1 "Affiliate" means any subsidiary corporation. The term "subsidiary
corporation" means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company if, at the time of the action or
transaction, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
2.2 "Award" means each of the following granted under this Plan: Incentive
Option, Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or
Performance Stock Award.
2.3 "Board of Directors" means the board of directors of the Company.
2.4 "Change in Control" shall mean and include the following transactions
or situations:
(a) A sale, transfer, or other disposition by the Company through a
single transaction or a series of transactions of securities of the Company
representing thirty (30%) percent or more of the combined voting power of the
Company's then outstanding securities to any "Unrelated Person" or "Unrelated
Persons" acting in concert with one another. For purposes of this definition,
the term "Person" shall mean
1
<PAGE>
EXHIBIT 10.1
and include any individual, partnership, joint venture, association, trust
corporation, or other entity (including a "group" as referred to in Section
13(d)(3) of the 1934 Act). For purposes of this definition, the term "Unrelated
Person" shall mean and include any Person other than the Company, a wholly-owned
subsidiary of the Company, or an employee benefit plan of the Company; provided
however, a sale to underwriters in connection with a public offering of the
Company's securities pursuant to a firm commitment shall not be a Change of
Control.
(b) A sale, transfer, or other disposition through a single transaction
or a series of transactions of all or substantially all of the assets of the
Company to an Unrelated Person or Unrelated Persons acting in concert with one
another.
(c) A change in the ownership of the Company through a single
transaction or a series of transactions such that any Unrelated Person or
Unrelated Persons acting in concert with one another become the "Beneficial
Owner," directly or indirectly, of securities of the Company representing at
least thirty (30%) percent of the combined voting power of the Company's then
outstanding securities. For purposes of this definition, the term "Beneficial
Owner" shall have the same meaning as given to that term in Rule 13d-3
promulgated under the 1934 Act, provided that any pledge of voting securities is
not deemed to be the Beneficial Owner thereof prior to its acquisition of voting
rights with respect to such securities.
(d) Any consolidation or merger of the Company with or into an
Unrelated Person, unless immediately after the consolidation or merger the
holders of the common stock of the Company immediately prior to the
consolidation or merger are the beneficial owners of securities of the surviving
corporation representing at least fifty (50%) percent of the combined voting
power of the surviving corporation's then outstanding securities.
(e) During any period of two years, individuals who, at the beginning
of such period, constituted the Board of Directors of the Company cease, for any
reason, to constitute at least a majority thereof, unless the election or
nomination for election of each new director was approved by the vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of such period.
(f) A change in control of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the 1934 Act, or any successor regulation of similar
importance, regardless of whether the Company is subject to such reporting
requirement.
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
2.6 "Committee" means the Compensation Committee of the Board of Directors
or such other committee designated by the Board of Directors. The Committee
shall be comprised solely of at least two members who are both Disinterested
Persons and Outside Directors.
2.7 "Company" means SC&T INTERNATIONAL, INC.
2.8 "Consultant" means any person, including an advisor, engaged by the
Company or Affiliate to render services and who is compensated for such
services.
2.9 "Disinterested Person" means a "disinterested person" as that term is
defined in Rule 16b-3 under the 1934 Act.
2.10 "Eligible Persons" shall mean, with respect to the Plan, those persons
who, at the time that an Award is granted, are (i) key personnel, including
officers and directors, of the Company or Affiliate, or (ii) Consultants or
independent contractors who provide valuable services to the Company or
Affiliate as determined by the Committee.
2.11 "Employee" means a person employed by the Company or any Affiliate to
whom an Award is granted.
2
<PAGE>
EXHIBIT 10.1
2.12 "Fair Market Value" of the Stock as of any date means (a) the average
of the high and low sale prices of the Stock on that date on the principal
securities exchange on which the Stock is listed; or (b) if the Stock is not
listed on a securities exchange, the average of the high and low sale prices of
the Stock on that date as reported on the NASDAQ National Market System; or (c)
if the Stock is not listed on the NASDAQ National Market System, the average of
the high and low bid quotations for the Stock on that date as reported by the
National Quotation Bureau Incorporated; or (d) if none of the foregoing is
applicable, an amount at the election of the Committee equal to (x), the average
between the closing bid and ask prices per share of Stock on the last preceding
date on which those prices were reported or (y) that amount as determined by the
Committee in good faith.
2.13 "Incentive Option" means an option to purchase Stock granted under
this Plan which is designated as an "Incentive Option" and satisfies the
requirements of Section 422 of the Code.
2.14 "Nonqualified Option" means an option to purchase Stock granted under
this Plan other than an Incentive Option.
2.15 "Option" means both an Incentive Option and a Nonqualified Option
granted under this Plan to purchase shares of Stock.
2.16 "Option Agreement" means the written agreement by and between the
Company and an Eligible Person, which sets out the terms of an Option.
2.17 "Outside Director" shall mean a member of the Board of Directors
serving on the Committee who satisfies Section 162(m) of the Code.
2.18 "Plan" means the SC&T INTERNATIONAL, INC. 1999 Stock Option Plan, as
set out in this document and as it may be amended from time to time.
2.19 "Plan Year" means the Company's fiscal year.
2.20 "Performance Stock Award" means an award of shares of Stock to be
issued to an Eligible Person if specified predetermined performance goals are
satisfied as described in Article VI.
2.21 "Restricted Stock" means Stock awarded or purchased under a Restricted
Stock Agreement entered into pursuant to this Plan, together with (i) all
rights, warranties or similar items attached or accruing thereto or represented
by the certificate representing the stock and (ii) any stock or securities into
which or for which the stock is thereafter converted or exchanged. The terms and
conditions of the Restricted Stock Agreement shall be determined by the
Committee consistent with the terms of the Plan.
2.22 "Restricted Stock Agreement" means an agreement between the Company or
any Affiliate and the Eligible Person pursuant to which the Eligible Person
receives a Restricted Stock Award subject to Article VI.
2.23 "Restricted Stock Award" means an Award of Restricted Stock.
2.24 "Restricted Stock Purchase Price" means the purchase price, if any,
per share of Restricted Stock subject to an Award. The Committee shall determine
the Restricted Stock Purchase Price. It may be greater than or less than the
Fair Market Value of the Stock on the date of the Stock Award.
2.25 "Stock" means the common stock of the Company, $.12 par value or, in
the event that the outstanding shares of common stock are later changed into or
exchanged for a different class of stock or securities of the Company or another
corporation, that other stock or security.
2.26 "Stock Appreciation Right" and "SAR" means the right to receive the
difference between the Fair Market Value of a share of Stock on the grant date
and the Fair Market Value of the share of Stock on the exercise date.
3
<PAGE>
EXHIBIT 10.1
2.27 "10% Stockholder" means an individual who, at the time the Option is
granted, owns Stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of any Affiliate. An individual shall
be considered as owning the Stock owned, directly or indirectly, by or for his
brothers and sisters (whether by the whole or half blood), spouse, ancestors,
and lineal descendants; and Stock owned, directly or indirectly, by or for a
corporation, partnership, estate, or trust, shall be considered as being owned
proportionately by or for its stockholders, partners, or beneficiaries.
ARTICLE III - ELIGIBILITY
The individuals who shall be eligible to receive Awards shall be those
Eligible Persons of the Company or any of its Affiliates as the Committee shall
determine from time to time. However, no member of the Committee shall be
eligible to receive any Award or to receive Stock, Options, Stock Appreciation
Rights, or any Performance Stock Award under any other plan of the Company or
any of its Affiliates, if to do so would cause the individual not to be a
Disinterested Person or Outside Director. The Board of Directors of Directors
may designate one or more individuals who shall not be eligible to receive any
Award under this Plan or under other similar plans of the Company.
ARTICLE IV - GENERAL PROVISIONS RELATING TO AWARDS
4.1 Authority to Grant Awards. The Committee may grant to those Eligible
Persons of the Company or any of its Affiliates, as it shall from time to time
determine, Awards under the terms and conditions of this Plan. The Committee
shall determine subject only to any applicable limitations set out in this Plan,
the number of shares of Stock to be covered by any Award to be granted to an
Eligible Person.
4.2 Dedicated Shares. The total number of shares of Stock with respect to
which Awards may be granted under the Plan shall be two million five hundred
thousand (2,500,000) shares. The shares may be treasury shares or authorized but
unissued shares. The number of shares stated in this Section 4.2 shall be
subject to adjustment in accordance with the provisions of Section 4.5. In the
event that any outstanding Award shall expire or terminate for any reason or any
Award is surrendered, the shares of Stock allocable to the unexercised portion
of that Award may again be subject to an Award under the Plan.
4.3 Non-transferability. Awards shall not be transferable by the Eligible
Person otherwise than by will or under the laws of descent and distribution, and
shall be exercisable, during the Eligible Person's lifetime, only by him.
Restricted Stock shall be purchased by and/or become vested under a Restricted
Stock Agreement during the Eligible Person's lifetime, only by him. Any attempt
to transfer an Award other than under the terms of the Plan and the Agreement
shall terminate the Award and all rights of the Eligible Person to that Award.
4.4 Requirements of Law. The Company shall not be required to sell or issue
any Stock under any Award if issuing that Stock would constitute or result in a
violation by the Eligible Person or the Company of any provision of any law,
statute, or regulation of any governmental authority. Specifically, in
connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or pursuant to any
Award, the Company shall not be required to issue any Stock unless the Committee
has received evidence satisfactory to it to the effect that the holder of that
Option or Award will not transfer the Stock except in accordance with applicable
law, including receipt of an opinion of counsel satisfactory to the Company to
the effect that any proposed transfer complies with applicable law. The
determination by the Committee on this matter shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to, register any
Stock covered by this Plan pursuant to applicable securities laws of any country
or any political subdivision. In the event the Stock issuable on exercise of an
Option or pursuant to an Award is not registered, the Company may imprint on the
certificate evidencing the Stock any legend that counsel for the Company
considers necessary or advisable to comply with applicable law. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or vesting under an Award, or the issuance of shares
pursuant thereto, to comply with any law or regulation of any governmental
authority.
4.5 Changes in the Company's Capital Structure.
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EXHIBIT 10.1
(a) The existence of outstanding Options or Awards shall not affect in
any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Stock or its rights, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise. If the Company shall effect a
subdivision or consolidation of shares or other capital readjustment, the
payment of a Stock dividend, or other increase or reduction of the number of
shares of the Stock outstanding, without receiving compensation for it in money,
services or property, then (a) the number, class, and per share price of shares
of Stock subject to outstanding Options under this Plan shall be appropriately
adjusted in such a manner as to entitle an Eligible Person to receive upon
exercise of an Option, for the same aggregate cash consideration, the equivalent
total number and class of shares he would have received had he exercised his
Option in full immediately prior to the event requiring the adjustment; and (b)
the number and class of shares of Stock then reserved to be issued under the
Plan shall be adjusted by substituting for the total number and class of shares
of Stock then reserved, that number and class of shares of Stock that would have
been received by the owner of an equal number of outstanding shares of each
class of Stock as the result of the event requiring the adjustment.
(b) If the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, or if the Company is
liquidated or sells or otherwise disposes of substantially all its assets while
unexercised Options remain outstanding under this Plan:
(i) Subject to the provisions of clause (c) below, after the
effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, each holder of an outstanding Option shall be
entitled, upon exercise of the Option, to receive, in lieu of shares of Stock,
the number and class or classes of shares of stock or other securities or
property to which the holder would have been entitled if, immediately prior to
the merger, consolidation, liquidation, sale, or other disposition, the holder
had been the holder of record of a number of shares of Stock equal to the number
of shares as to which the Option shall be so exercised;
(ii) The Board of Directors may waive any limitations set out in
or imposed under this Plan so that all Options, from and after a date prior to
the effective date of the merger, consolidation, liquidation, sale, or other
disposition, as the case may be, specified by the Board of Directors, shall be
exercisable in full; and
(iii) All outstanding Options may be canceled by the Board of
Directors as of the effective date of any merger, consolidation, liquidation,
sale, or other disposition, if (i) notice of cancellation shall be given to each
holder of an Option and (ii) each holder of an Option shall have the right to
exercise that Option in full (without regard to any limitations set out in or
imposed under this Plan or the Option Agreement granting that Option) during a
period set by the Board of Directors preceding the effective date of the merger,
consolidation, liquidation, sale, or other disposition and, if in the event all
outstanding Options may not be exercised in full under applicable securities
laws without registration of the shares of Stock issuable on exercise of the
Options, the Board of Directors may limit the exercise of the Options to the
number of shares of Stock, if any, as may be issued without registration. The
method of choosing which Options may be exercised, and the number of shares of
Stock for which Options may be exercised, shall be solely within the discretion
of the Board of Directors.
(c) After a merger of one or more corporations into the Company or
after a consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, each Eligible Person shall be
entitled to have his Restricted Stock and shares earned under a Performance
Stock Award appropriately adjusted based on the manner the Stock was adjusted
under the terms of the agreement of merger or consolidation.
(d) In each situation described in this Section 4.5, the Committee will
make similar adjustments, as appropriate, in outstanding Stock Appreciation
Rights.
(e) The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
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EXHIBIT 10.1
or warrants to subscribe for them, or upon conversion of shares or obligations
of the Company convertible into shares or other securities, shall not affect,
and no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to outstanding Awards.
4.6 Election under Section 83(b) of the Code. No Employee shall exercise
the election permitted under Section 83(b) of the Code without written approval
of the Committee. Any Employee doing so shall forfeit all Awards issued to him
under this Plan.
ARTICLE V - OPTIONS AND STOCK APPRECIATION RIGHTS
5.1 Type of Option. The Committee shall specify at the time of grant
whether a given Option shall constitute an Incentive Option or a Nonqualified
Option. Incentive Stock Options may only be granted to Employees.
5.2 Option Price. The price at which Stock may be purchased under an
Incentive Option shall not be less than the greater of: (a) 100% of the Fair
Market Value of the shares of Stock on the date the Option is granted or (b) the
aggregate par value of the shares of Stock on the date the Option is granted.
The Committee in its discretion may provide that the price at which shares of
Stock may be purchased under an Incentive Option shall be more than 100% of Fair
Market Value. In the case of any 10% Stockholder, the price at which shares of
Stock may be purchased under an Incentive Option shall not be less than 110% of
the Fair Market Value of the Stock on the date the Incentive Option is granted.
The price at which shares of Stock may be purchased under a Nonqualified Option
shall be such price as shall be determined by the Committee in its sole
discretion but in no event lower than the par value of the shares of Stock on
the date the Option is granted.
5.3 Duration of Options and SARS. No Option or SAR shall be exercisable
after the expiration of ten (10) years from the date the Option or SAR is
granted. In the case of a 10% Stockholder, no Incentive Option shall be
exercisable after the expiration of five years from the date the Incentive
Option is granted.
5.4 Amount Exercisable -- Incentive Options. Each Option may be exercised
from time to time, in whole or in part, in the manner and subject to the
conditions the Committee, in its sole discretion, may provide in the Option
Agreement, as long as the Option is valid and outstanding, and further provided
that no Option may be exercisable within six (6) months of the date of grant. To
the extent that the aggregate Fair Market Value (determined as of the time an
Incentive Option is granted) of the Stock with respect to which Incentive
Options first become exercisable by the optionee during any calendar year (under
this Plan and any other incentive stock option plan(s) of the Company or any
Affiliate) exceeds $100,000, the portion in excess of $100,000 of the Incentive
Option shall be treated as a Nonqualified Option. In making this determination,
Incentive Options shall be taken into account in the order in which they were
granted.
5.5 Exercise of Options. Each Option shall be exercised by the delivery of
written notice to the Committee setting forth the number of shares of Stock with
respect to which the Option is to be exercised, together with:
(a) cash, certified check, bank draft, or postal or express money order
payable to the order of the Company for an amount equal to the option price of
the shares;
(b) stock at its Fair Market Value on the date of exercise;
(c) an election to make a cashless exercise through a registered
broker-dealer (if approved in advance by the Committee);
(d) an election to have shares of Stock, which otherwise would be
issued on exercise, withheld in payment of the exercise price (if approved in
advance by the Committee); and/or
(e) any other form of payment which is acceptable to the Committee,
including without limitation, payment in the form of a promissory note, and
specifying the address to which the certificates for the shares are to be
mailed.
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EXHIBIT 10.1
As promptly as practicable after receipt of written notification and
payment, the Company shall deliver to the Eligible Person certificates for the
number of shares with respect to which the Option has been exercised, issued in
the Eligible Person's name. If shares of Stock are used in payment, the
aggregate Fair Market Value of the shares of Stock tendered must be equal to or
less than the aggregate exercise price of the shares being purchased upon
exercise of the Option, and any difference must be paid by cash, certified
check, bank draft, or postal or express money order payable to the order of the
Company. Delivery of the shares shall be deemed effected for all purposes when a
stock transfer agent of the Company shall have deposited the certificates in the
United States mail, addressed to the Eligible Person, at the address specified
by the Eligible Person.
Whenever an Option is exercised by exchanging shares of Stock owned by the
Eligible Person, the Eligible Person shall deliver to the Company certificates
registered in the name of the Eligible Person representing a number of shares of
Stock legally and beneficially owned by the Eligible Person, free of all liens,
claims, and encumbrances of every kind, accompanied by stock powers duly
endorsed in blank by the record holder of the shares represented by the
certificates (with signature guaranteed by a commercial bank or trust company or
by a brokerage firm having a membership on a registered national stock
exchange). The delivery of certificates upon the exercise of Options is subject
to the condition that the person exercising the Option provides the Company with
the information the Company might reasonably request pertaining to exercise,
sale or other disposition.
5.6 Stock Appreciation Rights. All Eligible Persons shall be eligible to
receive Stock Appreciation Rights. The Committee shall determine the SAR to be
awarded from time to time to any Eligible Person. The grant of a SAR to be
awarded from time to time shall neither entitle such person to, nor disqualify
such person from, participation in any other grant of awards by the Company,
whether under this Plan or any other plan of the Company. If granted as a
stand-alone SAR Award, the terms of the Award shall be provided in a Stock
Appreciation Rights Agreement.
5.7 Stock Appreciation Rights in Tandem with Options. Stock Appreciation
Rights may, at the discretion of the Committee, be included in each Option
granted under the Plan to permit the holder of an Option to surrender that
Option, or a portion of the part which is then exercisable, and receive in
exchange, upon the conditions and limitations set by the Committee, an amount
equal to the excess of the Fair Market Value of the Stock covered by the Option,
or the portion of it that was surrendered, determined as of the date of
surrender, over the aggregate exercise price of the Stock. The payment may be
made in shares of Stock valued at Fair Market Value, in cash, or partly in cash
and partly in shares of Stock, as the Committee shall decide in its sole
discretion. Stock Appreciation Rights may be exercised only when the Fair Market
Value of the Stock covered by the Option surrendered exceeds the exercise price
of the Stock. In the event of the surrender of an Option, or a portion of it, to
exercise the Stock Appreciation Rights, the shares represented by the Option or
that part of it which is surrendered, shall not be available for reissuance
under the Plan. Each Stock Appreciation Right issued in tandem with an Option
(a) will expire not later than the expiration of the underlying Option, (b) may
be for no more than 100% of the difference between the exercise price of the
underlying Option and the Fair Market Value of a share of Stock at the time the
Stock Appreciation Right is exercised, (c) is transferable only when the
underlying Option is transferable, and under the same conditions, and (d) may be
exercised only when the underlying Option is eligible to be exercised.
5.8 Conditions of Stock Appreciation Rights. All Stock Appreciation Rights
shall be subject to such terms, conditions, restrictions or limitations as the
committee deems appropriate, including by way of illustration but not by way of
limitation, restrictions on transferability, requirement of continued
employment, individual performance, financial performance of the Company, or
payment of any applicable employment or withholding taxes.
5.9 Payment of Stock Appreciation Rights. The amount of payment to which
the Eligible Person who reserves an SAR shall be entitled upon the exercise of
each SAR shall be equal to the amount, if any by which the Fair Market Value of
the specified shares of Stock on the exercise date exceeds the Fair Market Value
of the specified shares of Stock on the date of grant of the SAR. The SAR shall
be paid in either cash or Stock, as determined in the discretion of the
Committee as set forth in the SAR agreement. If the payment is in Stock, the
number of shares to be paid shall be determined by dividing the amount of such
payment by the Fair Market Value of Stock on the exercise date of such SAR.
7
<PAGE>
EXHIBIT 10.1
5.10 Exercise on Termination of Employment. Unless it is expressly provided
otherwise in the Option or SAR agreement, Options and SAR's granted to Employees
shall terminate one day less than three months after severance of employment of
the Employee from the Company and all Affiliates for any reason, with or without
cause, other than death, retirement under the then established rules of the
Company, or severance for disability. The Committee shall determine whether
authorized leave of absence or absence on military or government service shall
constitute severance of the employment of the Employee at that time.
5.11 Death. If, before the expiration of an Option or SAR, the Eligible
Person, whether in the employ of the Company or after he has retired or was
severed for disability, or otherwise dies, the Option or SAR shall continue
until the earlier of the Option's or SAR's expiration date or one year following
the date of his death, unless it is expressly provided otherwise in the Option
or SAR agreement. After the death of the Eligible Person, his executors,
administrators, or any persons to whom his Option or SAR may be transferred by
will or by the laws of descent and distribution shall have the right, at any
time prior to the Option's or SAR's expiration or termination, whichever is
earlier, to exercise it, to the extent to which he was entitled to exercise it
immediately prior to his death, unless it is expressly provided otherwise in the
Option or SAR's agreement.
5.12 Retirement. Unless it is expressly provided otherwise in the Option
Agreement, before the expiration of an Incentive Option, the Employee shall be
retired in good standing from the employ of the Company under the then
established rules of the Company, the Incentive Option shall terminate on the
earlier of the Option's expiration date or one day less than one year after his
retirement; provided, if an Incentive Option is not exercised within specified
time limits prescribed by the Code, it will become a Nonqualified Option by
operation of law. Unless it is expressly provided otherwise in the Option
Agreement, if before the expiration of a Nonqualified Option, the Employee shall
be retired in good standing from the employ of the Company under the then
established rules of the Company, the Nonqualified Option shall terminate on the
earlier of the Nonqualified Option's expiration date or one day less than one
year after his retirement. In the event of retirement, the Employee shall have
the right prior to the termination of the Nonqualified Option to exercise the
Nonqualified Option, to the extent to which he was entitled to exercise it
immediately prior to his retirement, unless it is expressly provided otherwise
in the Option Agreement. Upon retirement, a SAR shall continue to be exercisable
for the remainder of the term of the SAR agreement.
5.13 Disability. If, before the expiration of an Option or SAR, the
Employee shall be severed from the employ of the Company for disability, the
Option or SAR shall terminate on the earlier of the Option's or SAR's expiration
date or one day less than one year after the date he was severed because of
disability, unless it is expressly provided otherwise in the Option or SAR
agreement. In the event that the Employee shall be severed from the employ of
the Company for disability, the Employee shall have the right prior to the
termination of the Option or SAR to exercise the Option, to the extent to which
he was entitled to exercise it immediately prior to his retirement or severance
of employment for disability, unless it is expressly provided otherwise in the
Option Agreement.
5.14 Substitution Options. Options may be granted under this Plan from time
to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the Company
or any Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the Company
or any Affiliate of the assets of the employing corporation, or the acquisition
by the Company or any Affiliate of stock of the employing corporation as the
result of which it becomes an Affiliate of the Company. The terms and conditions
of the substitute Options granted may vary from the terms and conditions set out
in this Plan to the extent the Committee, at the time of grant, may deem
appropriate to conform, in whole or in part, to the provisions of the stock
options in substitution for which they are granted.
5.15 Reload Options. Without in any way limiting the authority of the Board
of Directors or Committee to make or not to make grants of Options hereunder,
the Board of Directors or Committee shall have the authority (but not an
obligation) to include as part of any Option Agreement a provision entitling the
Eligible Person to a further Option (a "Reload Option") in the event the
Eligible Person exercises the Option evidenced by the Option Agreement, in whole
or in part, by surrendering other shares of Stock in accordance with this Plan
and the terms and conditions of the Option Agreement. Any such Reload Option (a)
shall be for a number of shares equal to the number of shares surrendered as
part or all of the exercise price of such Option; (b) shall have an expiration
date which is the greater
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<PAGE>
EXHIBIT 10.1
of (i) the same expiration date of the Option the exercise of which gave rise to
such Reload Option or (ii) one year from the date of grant of the Reload Option;
and (c) shall have an exercise price which is equal to one hundred percent
(100%) of the Fair Market Value of the Stock subject to the Reload Option on the
date of exercise of the original Option. Notwithstanding the foregoing, a Reload
Option which is an Incentive Option and which is granted to a 10% Stockholder,
shall have an exercise price which is equal to one hundred ten percent (110%) of
the Fair Market Value of the Stock subject to the Reload Option on the date of
exercise of the original Option and shall have a term which is no longer than
five (5) years.
Any such Reload Option may be an Incentive Option or a Nonqualified Option,
as the Board of Directors or Committee may designate at the time of the grant of
the original Option; provided, however, that the designation of any Reload
Option as an Incentive Option shall be subject to the one hundred thousand
dollar ($100,000) annual limitation on exercisability of Incentive Stock Options
described in the Plan and in Section 422(d) of the Code. There shall be no
Reload Options on a Reload Option. Any such Reload Option shall be subject to
the availability of sufficient shares under Section 4.2 herein and shall be
subject to such other terms and conditions as the Board of Directors or
Committee may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.
5.16 No Rights as Stockholder. No Eligible Person shall have any rights as
a stockholder with respect to Stock covered by his Option until the date a stock
certificate is issued for the Stock.
ARTICLE VI - AWARDS
6.1 Restricted Stock Awards. The Committee may issue shares of Stock to an
Eligible Person subject to the terms of a Restricted Stock Agreement. The
Restricted Stock may be issued for no payment by the Eligible Person or for a
payment below the Fair Market Value on the date of grant. Restricted Stock shall
be subject to restrictions as to sale, transfer, alienation, pledge or other
encumbrance and generally will be subject to vesting over a period of time
specified in the Restricted Stock Agreement. The Committee shall determine the
period of vesting, the number of shares, the price, if any, of Stock included in
a Restricted Stock Award, and the other terms and provisions which are included
in a Restricted Stock Agreement.
6.2 Restrictions. Restricted Stock shall be subject to the terms and
conditions as determined by the Committee, including without limitation, any or
all of the following:
(a) a prohibition against the sale, transfer, alienation, pledge, or
other encumbrance of the shares of Restricted Stock, such prohibition to lapse
(i) at such time or times as the Committee shall determine (whether in annual or
more frequent installments, at the time of the death, disability, or retirement
of the holder of such shares, or otherwise);
(b) a requirement that the holder of shares of Restricted Stock
forfeit, or in the case of shares sold to an Eligible Person, resell back to the
Company at his cost, all or a part of such shares in the event of termination of
the Eligible Person's employment during any period in which the shares remain
subject to restrictions;
(c) a prohibition against employment of the holder of Restricted Stock
by any competitor of the Company or its Affiliates, or against such holder's
dissemination of any secret or confidential information belonging to the Company
or an Affiliate;
(d) unless stated otherwise in the Restricted Stock Agreement,
(i) if restrictions remain at the time of severance of employment
with the Company and all Affiliates, other than for reason of disability or
death, the Restricted Stock shall be forfeited; and
(ii) if severance of employment is by reason of disability or
death, the restrictions on the shares shall lapse and the Eligible Person or his
heirs or estate shall be 100% vested in the shares subject to the Restricted
Stock Agreement.
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EXHIBIT 10.1
6.3 Stock Certificate. Shares of Restricted Stock shall be registered in
the name of the Eligible Person receiving the Restricted Stock Award and
deposited, together with a stock power endorsed in blank, with the Company. Each
such certificate shall bear a legend in substantially the following form:
The transferability of this certificate and the shares of Stock
represented by it is restricted by and subject to the terms and
conditions (including conditions of forfeiture) contained in the SC&T
INTERNATIONAL, INC., 1999 Stock Option Plan, and an agreement entered
into between the registered owner and the Company. A copy of the Plan
and agreement is on file in the office of the Secretary of the Company.
6.4 Rights as Stockholder. Subject to the terms and conditions of the Plan,
each Eligible Person receiving a certificate for Restricted Stock shall have all
the rights of a stockholder with respect to the shares of Stock included in the
Restricted Stock Award during any period in which such shares are subject to
forfeiture and restrictions on transfer, including without limitation, the right
to vote such shares. Dividends paid with respect to shares of Restricted Stock
in cash or property other than Stock in the Company or rights to acquire stock
in the Company shall be paid to the Eligible Person currently. Dividends paid in
Stock in the Company or rights to acquire Stock in the Company shall be added to
and become a part of the Restricted Stock.
6.5 Lapse of Restrictions. At the end of the time period during which any
shares of Restricted Stock are subject to forfeiture and restrictions on sale,
transfer, alienation, pledge, or other encumbrance, such shares shall vest and
will be delivered in a certificate, free of all restrictions, to the Eligible
Person or to the Eligible Person's legal representative, beneficiary or heir;
provided the certificate shall bear such legend, if any, as the Committee
determines is reasonably required by applicable law. By accepting a Stock Award
and executing a Restricted Stock Agreement, the Eligible Person agrees to remit
when due any federal and state income and employment taxes required to be
withheld.
6.6 Restriction Period. No Restricted Stock Award may provide for
restrictions continuing beyond ten (10) years from the date of grant.
ARTICLE VII - PERFORMANCE STOCK AWARDS
7.1 Award of Performance Stock. The Committee may award shares of Stock,
without any payment for such shares, to designated Eligible Persons if specified
performance goals established by the Committee are satisfied. The terms and
provisions herein relating to these performance-based awards are intended to
satisfy Section 162(m) of the Code and regulations issued thereunder. The
designation of an employee eligible for a specific Performance Stock Award shall
be made by the Committee in writing prior to the beginning of the period for
which the performance is measured (or within such period as permitted by IRS
regulations). The Committee shall establish the maximum number of shares of
Stock to be issued to a designated Employee if the performance goal or goals are
met. The Committee reserves the right to make downward adjustments in the
maximum amount of an Award if in its discretion unforeseen events make such
adjustment appropriate.
7.2 Performance Goals. Performance goals determined by the Committee may be
based on specified increases in cash flow; net profits; Stock price; Company,
segment, or Affiliate sales; market share; earnings per share; return on assets;
and/or return on stockholders' equity.
7.3 Eligibility. The employees eligible for Performance Stock Awards are
the senior officers (i.e., chief executive officer, president, vice presidents,
secretary, treasurer, and similar positions) of the Company and its Affiliates,
and such other employees of the Company and its Affiliates as may be designated
by the Committee.
7.4 Certificate of Performance. The Committee must certify in writing that
a performance goal has been attained prior to issuance of any certificate for a
Performance Stock Award to any Employee. If the Committee certifies the
entitlement of an Employee to the Performance Stock Award, the certificate will
be issued to the Employee as soon as administratively practicable, and subject
to other applicable provisions of the Plan, including but not limited to,
10
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EXHIBIT 10.1
all legal requirements and tax withholding. However, payment may be made in
shares of Stock, in cash, or partly in cash and partly in shares of Stock, as
the Committee shall decide in its sole discretion. If a cash payment is made in
lieu of shares of Stock, the number of shares represented by such payment shall
not be available for subsequent issuance under this Plan.
ARTICLE VIII - ADMINISTRATION
The Committee shall administer the Plan. All questions of interpretation
and application of the Plan and Awards shall be subject to the determination of
the Committee. A majority of the members of the Committee shall constitute a
quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by a
majority of the members shall be as effective as if it had been made by a
majority vote at a meeting properly called and held. This Plan shall be
administered in such a manner as to permit the Options, which are designated to
be Incentive Options, to qualify as Incentive Options. In carrying out its
authority under this Plan, the Committee shall have full and final authority and
discretion, including but not limited to the following rights, powers and
authorities, to:
(a) determine the Eligible Persons to whom and the time or times at
which Options or Awards will be made;
(b) determine the number of shares and the purchase price of Stock
covered in each Option or Award, subject to the terms of the Plan;
(c) determine the terms, provisions, and conditions of each Option and
Award, which need not be identical;
(d) accelerate the time at which any outstanding Option or SAR may be
exercised, or Restricted Stock Award will vest;
(e) define the effect, if any, on an Option or Award of the death,
disability, retirement, or termination of employment of the Employee;
(f) prescribe, amend and rescind rules and regulations relating to
administration of the Plan; and
(g) make all other determinations and take all other actions deemed
necessary, appropriate, or advisable for the proper administration of this Plan.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive and
binding on all parties.
ARTICLE IX - AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Company may amend, terminate or suspend this
Plan at any time, in its sole and absolute discretion; provided, however, that
to the extent required to qualify this Plan under Rule 16b-3 promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended, no amendment that
would (a) materially increase the number of shares of Stock that may be issued
under this Plan, (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) otherwise materially increase the benefits
accruing to participants under this Plan, shall be made without the approval of
the Company's stockholders; provided further, however, that to the extent
required to maintain the status of any Incentive Option under the Code, no
amendment that would (a) change the aggregate number of shares of Stock which
may be issued under Incentive Options, (b) change the class of employees
eligible to receive Incentive Options, or (c) decrease the Option price for
Incentive Options below the Fair Market Value of the Stock at the time it is
granted, shall be made without the approval of the Company's stockholders.
Subject to the preceding sentence, the Board of Directors shall have the power
to make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of
counsel for the Company may be necessary or appropriate from time to time to
enable any Incentive
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EXHIBIT 10.1
Option granted under this Plan to continue to qualify as an incentive stock
option or such other stock option as may be defined under the Code so as to
receive preferential federal income tax treatment.
ARTICLE X - MISCELLANEOUS
10.1 No Establishment of a Trust Fund. No property shall be set aside nor
shall a trust fund of any kind be established to secure the rights of any
Eligible Person under this Plan. All Eligible Persons shall at all times rely
solely upon the general credit of the Company for the payment of any benefit
which becomes payable under this Plan.
10.2 No Employment Obligation. The granting of any Option or Award shall
not constitute an employment contract, express or implied, nor impose upon the
Company or any Affiliate any obligation to employ or continue to employ any
Eligible Person. The right of the Company or any Affiliate to terminate the
employment of any person shall not be diminished or affected by reason of the
fact that an Option or Award has been granted to him.
10.3 Forfeiture. Notwithstanding any other provisions of this Plan, if the
Committee finds by a majority vote after full consideration of the facts that an
Eligible Person, before or after termination of his employment with the Company
or an Affiliate for any reason (a) committed or engaged in fraud, embezzlement,
theft, commission of a felony, or proven dishonesty in the course of his
employment by the Company or an Affiliate, which conduct damaged the Company or
Affiliate, or disclosed trade secrets of the Company or an Affiliate, or (b)
participated, engaged in or had a material, financial, or other interest,
whether as an employee, officer, director, consultant, contractor, stockholder,
owner, or otherwise, in any commercial endeavor in the United States which is
competitive with the business of the Company or an Affiliate without the written
consent of the Company or Affiliate, the Eligible Person shall forfeit all
outstanding Options and all outstanding Awards, and including all exercised
Options and other situations pursuant to which the Company has not yet delivered
a stock certificate. Clause (b) shall not be deemed to have been violated solely
by reason of the Eligible Person's ownership of stock or securities of any
publicly owned corporation, if that ownership does not result in effective
control of the corporation.
The decision of the Committee as to the cause of an Employee's discharge,
the damage done to the Company or an Affiliate, and the extent of an Eligible
Person's competitive activity shall be final. No decision of the Committee,
however, shall affect the finality of the discharge of the Employee by the
Company or an Affiliate in any manner.
10.4 Tax Withholding. The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Eligible Person any sums required
by federal, state, or local tax law to be withheld with respect to the grant or
exercise of an Option or SAR, lapse of restrictions on Restricted Stock, or
award of Performance Stock. In the alternative, the Company may require the
Eligible Person (or other person exercising the Option, SAR or receiving the
Stock) to pay the sum directly to the employer corporation. If the Eligible
Person (or other person exercising the Option or SAR or receiving the Stock) is
required to pay the sum directly, payment in cash or by check of such sums for
taxes shall be delivered within 10 days after the date of exercise or lapse of
restrictions. The Company shall have no obligation upon exercise of any Option
or lapse of restrictions on Stock until payment has been received, unless
withholding (or offset against a cash payment) as of or prior to the date of
exercise or lapse of restrictions is sufficient to cover all sums due with
respect to that exercise. The Company and its Affiliates shall not be obligated
to advise an Eligible Person of the existence of the tax or the amount which the
employer corporation will be required to withhold.
10.5 Written Agreement. Each Option and Award shall be embodied in a
written agreement which shall be subject to the terms and conditions of this
Plan and shall be signed by the Eligible Person and by a member of the Committee
on behalf of the Committee and the Company or an executive officer of the
Company, other than the Eligible Person, on behalf of the Company. The agreement
may contain any other provisions that the Committee in its discretion shall deem
advisable which are not inconsistent with the terms of this Plan.
10.6 Indemnification of the Committee and the Board of Directors. With
respect to administration of this Plan, the Company shall indemnify each present
and future member of the Committee and the Board of Directors against, and each
member of the Committee and the Board of Directors shall be entitled without
further act on his part to
12
<PAGE>
EXHIBIT 10.1
indemnity from the Company for, all expenses (including attorney's fees, the
amount of judgments, and the amount of approved settlements made with a view to
the curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of any
action, suit, or proceeding in which he may be involved by reason of his being
or having been a member of the Committee and/or the Board of Directors, whether
or not he continues to be a member of the Committee and/or the Board of
Directors at the time of incurring the expenses, including, without limitation,
matters as to which he shall be finally adjudged in any action, suit or
proceeding to have been found to have been negligent in the performance of his
duty as a member of the Committee or the Board of Directors. However, this
indemnity shall not include any expenses incurred by any member of the Committee
and/or the Board of Directors in respect of matters as to which he shall be
finally adjudged in any action, suit or proceeding to have been guilty of gross
negligence or willful misconduct in the performance of his duty as a member of
the Committee and the Board of Directors. In addition, no right of
indemnification under this Plan shall be available to or enforceable by any
member of the Committee and the Board of Directors unless, within 60 days after
institution of any action, suit or proceeding, he shall have offered the
Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each member of the Committee and the Board of
Directors and shall be in addition to all other rights to which a member of the
Committee and the Board of Directors may be entitled as a matter of law,
contract, or otherwise.
10.7 Gender. If the context requires, words of one gender when used in this
Plan shall include the others and words used in the singular or plural shall
include the other.
10.8 Headings. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.
10.9 Other Compensation Plans. The adoption of this Plan shall not affect
any other stock option, incentive or other compensation or benefit plans in
effect for the Company or any Affiliate, nor shall the Plan preclude the Company
from establishing any other forms of incentive or other compensation for
employees of the Company or any Affiliate.
10.10 Other Options or Awards. The grant of an Option or Award shall not
confer upon the Eligible Person the right to receive any future or other Options
or Awards under this Plan, whether or not Options or Awards may be granted to
similarly situated Eligible Persons, or the right to receive future Options or
Awards upon the same terms or conditions as previously granted.
10.11 Governing Law. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Arizona.
13
<PAGE>
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is made and entered into this
5th day of June, 1999 ("Grant Date"), by and between SC&T INTERNATIONAL, INC, an
Arizona corporation (the "Company"), and Bruce Robinson (the "Optionee").
RECITALS
The Company, through its Board of Directors (the "Board"), has
determined that in order to obtain and maintain the best available services and
to reward the personnel responsible for such services which are key to the
development of the Company, it must offer a compensation package which provides
its officers, directors and key employees which includes certain consultants
and/or advisors, an opportunity to participate financially in the success of the
Company by investing and equity interest in it. By this Agreement, the Company
and the Optionee desire to establish the terms upon which the Company is willing
to grant to the Optionee, and upon which the Optionee is willing to accept from
the Company, an option to purchase shares of common stock, no par value, of the
Company ("Common Stock").
IN CONSIDERATION of the promises and of the mutual agreements
hereinafter set forth, the parties agree as follows:
1. Grant of Non-Statutory Stock Option. Subject to the terms and
conditions hereinafter set forth, the Company grants to the Optionee the right
and option (the "Option") to purchase from the Company all or any part of an
aggregate number of Two Hundred Thousand (200,000) shares of Common Stock,
authorized but unissued or, at the option of the Company, treasury stock if
available (the "Optioned Shares").
2. Purchase Price. The price to be paid for the Optioned Shares (the
"Purchase Price") upon exercise of the Option, or any part thereof, shall be
$.01 per Optional Share.
3. Vesting of Options; Exercise. The Options shall vest upon the Grant
Date. The Option may be exercised by the Optionee, in whole or in part from time
to time, for any number of shares up to the full amount of shares then vested.
4. Termination of Option. The Option shall not be exercisable as to any
shares not vested and will automatically terminate with respect to non-vested
shares if the continuous employment requirement is not satisfied, unless
Optionee is terminated by the Company. Vested Shares, to the extent not
exercised, shall terminate upon the tenth (10th) anniversary of the Grant date
(the "Option Term").
5. Exercise of Option. Subject to the terms and conditions of this
Agreement, the Option may be exercised only by completing and signing a written
notice to the Company in substantially the following form:
"I hereby exercise the Option granted to me by SC&T INTERNATIONAL,
INC. and elect to purchase _______________shares of no par value
Common Stock of SC&T INTERNATIONAL, INC. for (the purchase price set
forth in Paragraph 2 of this Stock Option Agreement). "
6. Payment of Purchase Price. Payment of the Purchase Price may be made
in United States dollars in cash or by check, bank draft or money order payable
to the Company; or
7. Adjustments. In the event of any stock split, reverse stock split,
stock dividend, combination or reclassification of shares of Common Stock or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company, the number and kind of
Optioned
Shares and the Purchase Price per share shall be proportionately and
appropriately, adjusted without any change in the aggregate Purchase Price to be
paid therefor upon exercise of the Option.
8. Liquidation, Sale of Assets or Merger. Provided that the Options
shall have been fully vested for at least 30 days, in the event of a dissolution
or liquidation of the Company, the Option will terminate immediately prior to
the consummation of such action, unless otherwise provided by the Board. In the
event of a proposed sale of all or
<PAGE>
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the option shall be assumed or an equivalent
option shall be substituted by such successor corporation.
9. Optionee Not A Shareholder. The Optionee shall not be deemed for any
purposes to be a shareholder of the Company with respect to any of the Optioned
Shares except to the extent that the Option herein granted shall have been
exercised and a stock certificate issued therefor.
I0. Covenants of the Company. The Company covenants and agrees that all
shares of Common Stock issued upon the exercise of the Option will, upon
issuance and payment therefor in accordance with the terms hereof, be validly
issued, fully paid and nonassessable.
11. Registration of Common Stock. The Company shall promptly cause
appropriate securities registration statements to be filed with respect to the
shares underlying the Option so that upon exercise of the Option the Common
Stock received may be freely tradable.
12. Notices. Any notice to be given under the terms of the Agreement
("Notice") shall be addressed to the Company in care of its Secretary at 7625
East Redfield Road, Suite 200, Scottsdale, Arizona, 85260, or at its then
current corporate headquarters, Notice to be given to the Optionee shall be
addressed to him at his then current residential address as appearing on the
records of the Company. Notice shall be deemed duly given when enclosed in a
properly sealed envelope and deposited by certified mall, return receipt
requested, in a post OFFICE or branch post office regularly maintained by the
United States Government.
13. Governing Law. This Agreement is executed pursuant to and shall be
governed by and construed in accordance with the laws of the State of Arizona.
14. Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and supersedes all
prior understandings and agreements written or oral of any party hereto. This
Agreement may not be mended, waived, discharged or terminated, except by a
written instrument signed by both the Company and the Optionee.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer, and the Optionee has hereunto affixed
his signature.
SC&T INTERNATIONAL, INC., an Arizona corporation
By:
/s/ James L. Copland /s/ Gregory Struthers
- -------------------------- ---------------------------
James L. Copland Gregory Struthers
/s/ Catherine Copland
- ---------------------------
Catherine Copland
Its: Compensation/Administrative Committee
OPTIONEE:
/s/ Bruce Robinson
- ---------------------------
Bruce Robinson
