SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14c-
5(d)(2))
[ ] Definitive Information Statement
FIN SPORTS U.S.A., INC.
(Name of Registrant as Specified in its Charter)
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2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined): N/A
4) Proposed maximum aggregate value of transaction: N/A
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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previously. Identify the previous filing by registration number, or the Form
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<PAGE>
FIN SPORTS U.S.A., INC.
5525 South 900 East, #110
Salt Lake City, Utah 84117
Telephone No.: 801-262-8844
Facsimile No.: 801-262-6262
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND A PROXY
TABLE OF CONTENTS
Introduction
Dissenters' Rights of Appraisal
Interest of Certain Persons in Matters to be Acted Upon
Voting Securities and Principal Holders Thereof
Voting Securities
Security Ownership of Principal Holders and Management
Contractual Arrangements Regarding Changes in Control and Changes in
Control Since the Beginning of the Last Fiscal Year
Election of Directors
Business Experience of Nominees for Election of Directors
Family Relationships Between any Current Director or Executive Officer or
a Nominee to Become a Director
Compliance with Section 16(a) of the Exchange Act
Involvement in Certain Legal Proceedings
Certain Relationships and Related Transactions
Changes in Control
Executive Compensation
Amendments to the Articles of Incorporation
Forward Split, Capital Increase and Name Change
Fractional Shares and Stock Certificates
Fractional Shares
Stock Certificates
Lifef/x, Inc. 1999 Long Term Incentive Plan
General
Administration
Shares Subject to the Plan
Options
Restricted Stock Awards
SARs
Performance Units
Restrictions on Transfer
Adjustment Provisions
Effect of Corporate Events
Duration, Amendment and Termination
Federal Income Tax Consequences of Awards
Vote Required for Approval
Additional Information
Exhibit Index
19 10-KSB Annual Report of Fin for the year ended December 31, 1998
99 Lifef/x, Inc. 1999 Long Term Incentive Plan
<PAGE>
INTRODUCTION
This Information Statement is being furnished to stockholders of Fin
Sports U.S.A., Inc., a Nevada corporation ("Fin"), in connection with
resolutions of the Board of Directors and persons owning a majority of the
outstanding voting securities of Fin, for (1) the election of directors for
the coming year (the "Election of Directors"); (2) providing for amendments to
its Articles of Incorporation (i) to effect a forward split of 1.5384741
shares for one, which will increase the present outstanding shares of common
stock of Fin from 1,083,324 shares to 1,666,666 shares (the "Forward Split");
(ii) to increase the authorized capital of Fin from 50,000,000 shares of
$0.001 par value common stock to 100,000,000 shares of $0.001 par value common
stock (the "Capital Increase"); and (iii) to change the name of Fin to
"Lifef/x, Inc." or some similar name selected by the Board of Directors (the
"Name Change"); and to adopt the Lifef/x, Inc. 1999 Long Term Incentive Plan
(the "Incentive Plan").
Copies of the 10-KSB Annual Report of Fin for the year ended December 31,
1998, and the Incentive Plan, are attached hereto and incorporated herein by
reference. See the Exhibit Index.
The Board of Directors, unanimously, and Leonard W. Burningham, Esq.,
Duane S. Jenson and Sheryl Ross, persons who collectively own in excess of 95%
of the outstanding voting securities of Fin, have unanimously adopted,
ratified and approved resolutions for the Election of Directors, to effect the
Forward Split, the Capital Increase and the Name Change, and to adopt the
Incentive Plan; no other votes are required or necessary. See the captions
"Voting Securities and Principal Holders Thereof" and "Vote Required for
Approval," below.
The Forward Split and the Capital Increase will be effective on the 21st
day following the mailing of a definitive copy of this Information Statement
to the Fin Stockholders (the "Effective Date"). The Name Change, the Election
of Directors and the adoption of the Incentive Plan are subject to and will be
effective upon the closing of a triangular merger between Pacific
Title/Mirage, Inc., a Delaware corporation ("PTM"), and a wholly-owned
subsidiary of Fin to be formed in Delaware for the sole purpose of effecting
this merger (the "PTM Merger"). See the heading "Contractual Arrangements
Regarding Changes in Control and Changes in Control Since the Beginning of the
Last Fiscal Year," for information respecting present negotiations regarding
the PTM Merger.
In late 1998, Fin filed a 10-SB Registration Statement and related
amendments with the Securities and Exchange Commission, which, together with
all other reports previously filed by Fin with the Securities and Exchange
Commission, may be viewed on the Securities and Exchange Commission's web site
at www.sec.gov in the EDGAR Archives. Fin is presently "current" in the
filing of all reports required to be filed by it. See the caption "Additional
Information," below.
DISSENTERS' RIGHTS OF APPRAISAL
The Nevada Revised Statutes (the "Nevada Law") do not provide for
dissenters' rights of appraisal in connection with the Election of Directors,
the Forward Split, the Capital Increase, the Name Change or the adoption of
the Incentive Plan. Further, no stockholders' vote is required to complete
the PTM Merger, and no dissenters' rights of appraisal apply to the PTM
Merger.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No director, executive officer, nominee for election as a director,
associate of any director, executive officer or nominee or any other person
has any substantial present interest, direct or indirect, by security holdings
or otherwise, other than the election to office, in the Election of Directors,
the proposed amendments to Fin's Articles of Incorporation, the adoption of
the Incentive Plan or in any action covered by the related resolutions adopted
by the Board of Directors and the three majority stockholders, which is not
shared by all other stockholders; however, see the heading "Contractual
Arrangements Regarding Changes in Control and Changes in Control Since the
Beginning of the Last Fiscal Year," respecting present negotiations regarding
the PTM Merger. In the event of the completion of the PTM Merger, present
nominees for Election of Directors may qualify to participate in the Incentive
Plan. Also, see the heading "Lifef/x, Inc. 1999 Long Term Incentive Plan,"
below.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Voting Securities.
- ------------------
The securities that would have been entitled to vote if a meeting was
required to be held for the Election of Directors, to effect the Forward
Split, the Capital Increase and the Name Change, and to adopt the Incentive
Plan consist of shares of $0.001 par value common stock of Fin. Each share of
common stock is entitled to one vote. The number of outstanding shares of
common stock at the close of business on the date hereof, the record date for
determining stockholders who would have been entitled to notice of and to vote
on the proposed amendments to Fin's Articles of Incorporation, is 1,083,324.
Security Ownership of Principal Holders and Management.
- -------------------------------------------------------
To the knowledge of management and based upon a review of the stock
ledger maintained by Fin's transfer and registrar agent, American Registrar &
Transfer Co. of Salt Lake City, Utah, the following table sets forth the
beneficial ownership of persons who own more than 5% of Fin's common stock as
of the date hereof, and the share holdings of management, to-wit:
Positions Number and Percentage
Name and Address Held of Shares Beneficially Owned
- ---------------- ---- ----------------------------
Leonard W. Burningham, Esq. Stockholder 101,231 - 9.3%
455 E. 500 S. #205
SLC, UT 84111
Duane S. Jenson Stockholder 844,491 - 78.4%
5525 S. 900 E. #110
SLC, UT 84117
Sheryl Ross Stockholder 84,616 - 7.8%
455 E. 500 S. #205
SLC, UT 84111
Wayne Bassham Director and 0 0.0%
8867 S. Capella Way President
Sandy, UT 84093
Kent Faulkner Director and 0 0.0%
1667 E. Ensign Circle Secretary
SLC, UT 84121
Todd Albiston Director and 0 0.0%
8346 S. Viscounti Dr. Vice President
Sandy, UT 84093
* The directors, executive officers and three majority
stockholders (Messrs. Burningham, Jenson and Ms. Ross) have
adopted, ratified and approved resolutions to Elect the
Directors, to effect the Forward Split, the Capital
Increase and the Name Change and to adopt the Incentive
Plan; no other votes are required or necessary. See the
caption "Vote Required for Approval," below.
No nominee for Election of Directors presently owns any shares of common
stock of Fin; however, see the heading "Contractual Arrangements Regarding
Changes in Control and Changes in Control Since the Beginning of the Last
Fiscal Year," respecting present negotiations regarding the PTM Merger. The
present nominees are currently directors, executive officers or stockholders
of PTM.
Contractual Arrangements Regarding Changes in Control and Changes in Control
Since the Beginning of the Last Fiscal Year.
- --------------------------------------------
There are no present arrangements or understandings which may result in a
change in control of Fin, and there has been no change in control of Fin since
the beginning of its current fiscal year, January 1, 1999; however, Fin is
presently involved in negotiations to acquire PTM in a triangular merger with
a yet to be formed wholly-owned subsidiary of Fin. There presently is no
written agreement with PTM, and there are numerous conditions to be satisfied
before any such agreement can be finalized; accordingly, there can be no
assurance that these negotiations will result in the execution of a definitive
agreement. PTM's goal is to become the leading provider of branded photo
realistic 3D computer animation products and services that enhance digital
communication across a multitude of media platforms.
ELECTION OF DIRECTORS
Subject to the completion of the PTM Merger, the Board of Directors of
Fin will consist of five directors, each of whom will be elected on the later
of the closing of the PTM Merger or the Effective Date, to serve from the date
of election and for the year 2000 and until his or her successor is elected at
the next annual meeting of stockholders or until his or her prior death,
resignation or removal and the qualification of his or her successor. In the
event the PTM Merger is not completed, the present directors of Fin shall
continue in their capacities as directors, to serve until their successors are
elected at the next annual meeting of stockholders or until their prior death,
resignation or termination and the qualification of their successors.
Business Experience of Nominees for Election of Directors.
- ----------------------------------------------------------
Michael Rosenblatt. Mr. Rosenblatt has served as Vice Chairman of PTM
since October, 1998, and served as Co-President from 1997 to October, 1998.
He is the founding partner of Mirage Technologies, Inc.("Mirage
Technologies"). Mirage Technologies is the general partner of Mirage
Technologies, L.P. ("Mirage"), which together with Safeguard Scientifics, Inc.
("Safeguard") and Robert Verratti formed PTM in October 1997. In 1974, Mr.
Rosenblatt also founded the Atlantic Entertainment Group, Inc. ("Atlantic
Entertainment Group"), which became one of the largest privately held motion
picture production and distribution companies in the United States. Atlantic
Entertainment Group was sold by Mr. Rosenblatt in 1989. Mr. Rosenblatt also
serves as Co-Chairman of the Board of Organic Systems, Burlington,
Massachusetts and is on the board of EMC, Inc. of Wayne, Pennsylvania. He is
also a member of the Executive Branch of the Motion Picture Academy of Arts
and Science.
Lucille S. Salhany. Lucille Salhany is expected to be appointed Chief
Executive Officer, Co-President and a director of the Company upon or prior to
the PTM Merger. Ms. Salhany is currently President, JH Media, Ltd. an
advisory company with offices in Boston and LA. Ms. Salhany is past President
and CEO of UPN and currently serves on the UPN operating committee. Under her
guidance, UPN firmly established itself as the fifth broadcast network in
television history. Previously, Ms. Salhany was Chairman of the FOX
Broadcasting Company, Chairman of Twentieth Television and a member of the
FOX, Inc. Board of Directors. Ms. Salhany guided the networks expansion from
four to seven nights of programming and was instrumental in Fox's acquisition
of the NFL. Prior to that, Ms. Salhany was President, Paramount Domestic
Television. Ms. Salhany holds a seat on the Operating Committee of the United
Paramount Network and on the Board of Directors of Compaq (a Fortune 100
company), Avid Technologies , B.R.A. Corporation of Boston, Coty, Inc. and
Emerson College.
Richard Guttendorf. Mr. Guttendorf has served as Chairman and Chief
Executive Officer of PTM since October, 1998. Mr. Guttendorf is also Vice
President and Director of Research for Safeguard. Mr. Guttendorf was
previously Chief Executive Officer of Laser Communications, Inc.("LCI"), a
leading manufacturer of short haul, laser optic wireless communications
equipment. Prior to LCI, he was Chief Financial Officer of InterDigital
Communications Corporation, a manufacturer and licensor of digital wireless
telephone equipment and was Chief Financial Officer of Atlantic Financial, an
$8 billion financial institution. Mr. Guttendorf is a Certified Public
Accountant and has a Bachelor of Science degree in accounting from St. Francis
College and a Master of Science degree in finance and accounting from
Pennsylvania State University.
Ian Hunter. Dr. Hunter is the Director of Research and Development at
PTM. Dr. Hunter is also a Professor of Mechanical Engineering and Bio-
Engineering at the Massachusetts Institute of Technology.
Robert Verratti. Mr. Verratti served as Chief Executive Officer and
Chairman of the Board of PTM from 1997 to October, 1998. Mr. Verratti has
been the President of Charlestown Investments, Ltd., a company specializing in
investments in companies in turn around or undervalued situations since 1980.
Mr. Verratti is also a venture partner and consultant to the Chairman of
Safeguard and TL Ventures. Mr. Verratti serves on the Board of Directors of
CRWF Inc., Axcess Financial Inc., Net Effects, Inc. and Netsvision, Inc. Mr.
Verratti graduated from the U.S. Naval Academy in 1966 with a Bachelor of
Science degree in nuclear engineering.
Family Relationships Between any Current Director or Executive Officer or a
Nominee to Become a Director.
- -----------------------------
There are no family relationships between any current director or
executive officer or any nominee for the Election of Directors.
Compliance with Section 16(a) of the Exchange Act.
- --------------------------------------------------
Present directors, executive officers and 10% stockholders of Fin have
filed all beneficial ownership reports and/or forms required to be filed by
them with the Securities and Exchange Commission. No nominee for Election of
Directors presently owns any shares of common stock of Fin; however, see the
heading "Contractual Arrangements Regarding Changes in Control and Changes in
Control Since the Beginning of the Last Fiscal Year," respecting present
negotiations regarding the PTM Merger.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of
Fin:
(1) was a general partner or executive officer of any business
against which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil
action), the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended or vacated.
Certain Relationships and Related Transactions.
- -----------------------------------------------
There have been no material transactions, series of similar transactions
or currently proposed transactions to which Fin and any director, nominee for
Election of Directors, executive officer, 5% stockholder or associate of any
of these persons has been party during the past two calendar years; however,
see the heading "Contractual Arrangements Regarding Changes in Control and
Changes in Control Since the Beginning of the Last Fiscal Year," respecting
present negotiations regarding the PTM Merger. The present nominees for
Election of Directors are currently directors, executive officers or
stockholders of PTM.
Changes in Control.
- -------------------
There have been no changes in control of Fin during the past two calendar
years; however, see the heading "Contractual Arrangements Regarding Changes in
Control and Changes in Control Since the Beginning of the Last Fiscal Year,"
respecting present negotiations regarding the PTM Merger.
Executive Compensation.
- -----------------------
No compensation was paid by Fin to any director, nominee for Election of
Directors or executive officer of Fin during the past two calendar years, and
there were no bonus, deferred, pension or other compensations plans covering
any such person. If the PTM Merger is completed, the nominees for Election of
Directors may participate in the Incentive Plan. See the caption "Lifef/x,
Inc. 1999 Long Term Incentive Plan."
AMENDMENTS TO THE ARTICLES OF INCORPORATION
Forward Split, Capital Increase and Name Change.
- ------------------------------------------------
The Board of Directors has proposed the Forward Split, the Capital
Increase and the Name Change to assist it in connection with the present
negotiations to acquire PTM in a triangular merger with a yet to be formed
wholly-owned subsidiary of Fin; there presently is no written agreement with
PTM, and there are numerous conditions to be satisfied before any such
agreement can be finalized; accordingly, there can be no assurance that these
negotiations will result in the execution of a definitive agreement.
Regardless of current negotiations, Fin's management believes the Forward
Split will increase the potential "public float" of shares of common stock of
Fin owned by non-affiliated stockholders, and that the Capital Increase will
give Fin more flexibility in negotiating acquisitions, reorganizations or
mergers which will benefit Fin and its stockholders.
The resolutions of the Board of Directors and majority stockholders
resolutions contemplate a name change that assumes the PTM Merger will be
completed, and authorize the Board of Directors to select a new or similar
name to the proposed Name Change, in the event Fin or any proposed
acquisition, reorganization or merger candidate's business operations would be
better described by another name.
A Certificate of Amendment will be filed with the Secretary of State of
Nevada, reflecting the Forward Split, the Capital Increase and the Name
Change, and indicating that the Effective Date of the Forward Split and the
Capital Increase will be the 21st day following the mailing of a definitive
copy of this Information Statement to the Fin Stockholders, and the effective
date of Name Change will be if and when the PTM Merger is completed. If the
PTM Merger is not completed, Fin's name will remain the same until otherwise
changed by the Board of Directors pursuant to the authorization granted by the
consenting stockholders to the action provided herein or until changed by the
affirmative vote of persons owning a majority of the outstanding voting
securities of Fin.
Fractional Shares and Stock Certificates.
- -----------------------------------------
Fractional Shares.
------------------
All fractional shares resulting from the Forward Split will be rounded up
to the nearest whole share; Duane S. Jenson, one of the majority stockholders
who has consented to the Election of Directors, the Forward Split, the Capital
Increase, the Name Change and the Incentive Plan (see the captions "Voting
Securities and Principal Holders Thereof" and "Vote Required for Approval,"
herein), has agreed to convey to Fin from his personal holdings the shares
required for this rounding.
Stock Certificates.
-------------------
New stock certificates taking into account the Forward Split and
reflecting the Capital Increase, and if applicable, the Name Change may be
obtained from American Registrar & Transfer Co., whose address and telephone
number are as follows: 342 East 900 South Street, Salt Lake City, Utah 85111;
Telephone: 801-363-9065. A transfer fee of $15 must accompany each transfer
for each new stock certificate requested. Stock certificates being
transferred into the present owner's name need not be signed or guaranteed;
those being transferred to someone other than the present record owner must be
signed and bear a "Medallion Member" bank or broker/dealer signature
guarantee.
LIFEF/X, INC. 1999 LONG TERM INCENTIVE PLAN
Effective November ___, 1999, the Board of Directors adopted the
Incentive Plan, subject to stockholder approval and the completion of the PTM
Merger. The essential features of the Incentive Plan are outlined below.
This description is qualified in its entirety by the full text of the
Incentive Plan, which is attached and incorporated herein by reference. See
the Exhibit Index.
General.
--------
The Incentive Plan provides a means by which employees (including
officers) and consultants of Fin and its subsidiaries and other affiliates,
and members of the Board of Directors, may be given an opportunity to receive
or purchase common stock of Fin. The Incentive Plan provides for the grant or
issuance of stock options, stock appreciation rights ("SARs"), restricted
stock and performance units (collectively, "Awards") to employees, consultants
and non-employee directors. Fin, by means of the Incentive Plan, seeks to
retain the services of persons who are now employees, consultants or
directors, to secure and retain the services of new employees, consultants and
directors, and to provide incentives for such persons to exert maximum efforts
for the success of Fin and its affiliates.
Administration.
---------------
The Incentive Plan is administered by a committee appointed by the Board
of Directors (the "Committee"). It is anticipated that to the extent
necessary to satisfy the requirements of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and to exclude
compensation earned under the Incentive Plan from being treated as
nondeductible to Fin for federal income tax purposes, under Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), the Committee will
be composed of not fewer than two Board members, all of whom will be "non-
employee directors" under Rule 16b-3 under the Exchange Act and "outside
directors" under Code Section 162(m).
The Committee has the power to determine from time to time which eligible
persons will be granted Awards, the type of Awards to be granted, when and how
each Award will be granted, to construe and interpret the Incentive Plan and
Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. Grants to non-employee directors must,
however, be ratified or approved by the Board.
Shares Subject to the Plan.
---------------------------
The common stock that may be issued or transferred pursuant to Awards
under the Incentive Plan may not exceed in the aggregate 5,529,375 shares of
the Fin's common stock. Moreover, Awards covering no more than 2,000,000
shares of common stock may be granted to any individual in any calendar year.
If and to the extent that options or SARs terminate, expire or are canceled,
forfeited, exchanged or surrendered without having been exercised or if any
shares of restricted stock or performance units are forfeited, the shares of
common stock subject to such Awards will revert to and again become available
for issuance under the Incentive Plan. The common stock subject to the
Incentive Plan may be unissued shares or reacquired shares, bought on the
market or otherwise.
Options.
--------
The Incentive Plan provides for the granting of options which are
intended to qualify as "incentive stock options" within the meaning of Code
Section 422, as well as non-statutory stock options which are intended not to
qualify as incentive stock options under the Code. See the heading "Federal
Income Tax Consequences of Awards," for a discussion of the tax treatment of
the various Awards included in the Incentive Plan. The following is a
description of the permissible terms of options under the Incentive Plan.
Individual option grants may be more restrictive as to any or all of the
permissible terms described below.
Eligibility. Incentive stock options may be granted only to employees of
Fin and its subsidiary corporations. Non-statutory stock options may be
granted only to employees and consultants of Fin and its affiliates and to
non-employee directors of Fin.
No person is eligible for the grant of an incentive stock option if, at
the time of grant, such person owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company unless the
exercise prices of such option is at least 110% of the fair market value of
such common stock subject to the option at the date of grant and the option is
not exercisable after the expiration of five years from the date of grant.
Moreover, the aggregate fair market value, determined at the time of grant,
of the shares of common stock with respect to which incentive stock options
are exercisable for the first time by an optionee during any calendar year
(under all such plans of Fin and its affiliates) may not exceed $100,000.
Exercise Price. The exercise price of incentive stock options awarded
under the Incentive Plan may not be less than the fair market value of the
common stock subject to the option on the date of the option grant, and in
some cases (see the heading "Eligibility" above), may not be less than 110% of
such fair market value. The exercise price of non-statutory options awarded
under the Incentive Plan is determined by the Committee.
Option Term and Exercisability. The maximum term of an option granted
under the Incentive Plan is 10 years. Options may first become exercisable
(i.e., they may "vest") in cumulative increments, as determined by the
Committee, except that options granted to employees, other than officers,
directors and consultants, must vest at a rate of at least 20% per year. The
Committee has the power to accelerate the time at which an option may first be
exercised. Options may generally be exercised only if the optionee is still
employed or providing services to the Company or, if the termination is other
than for cause, within 90 days thereafter.
Option Exercise. The exercise price of options must be paid at exercise
in cash, by delivery of other common stock owned by the grantee for the period
necessary to avoid a charge to Fin's earnings for financial reporting
purposes, or by such other method as the Committee may approve.
Withholding. All Awards under the Incentive Plan, including options, are
subject to tax withholding requirements. To the extent permitted by the
Committee, an optionee may satisfy any applicable federal, state or local tax
withholding obligation relating to the exercise of an option by authorizing
Fin to withhold a portion of the stock otherwise issuable to the optionee,
having a value not in excess of the withholding obligation amount.
Restricted Stock Awards.
------------------------
The Committee may issue or transfer shares of common stock pursuant to a
restricted stock Award only to employees and consultants of Fin and its
affiliates and to non-employee directors of Fin. Such Awards may, but need
not, require that the recipient pay some consideration for the shares. The
Committee determines the conditions under which restrictions on the shares
lapse. If the Award recipient ceases to be employed or provide services
during the restriction period, or if other specified conditions are not met,
the restricted stock grant terminates and the shares must be immediately
returned to Fin. Subject to limited exceptions, during the restriction
period, the Award recipient may not transfer, pledge or otherwise dispose of
the restricted stock, but may vote the shares of restricted stock and receive
dividends thereon. All restrictions imposed on the shares lapse upon
expiration of the applicable restriction period and the satisfaction of the
conditions imposed by the Committee.
SARs.
-----
The Committee may grant SARs only to employees and consultants of Fin and
its affiliates and to non-employee directors of Fin. SARs may, but need not,
be granted in tandem with options. Tandem SARs are tied to an underlying
option and require the holder to elect whether to exercise the underlying
option or to surrender the option for an appreciation distribution equal to
the market price of the vested shares purchasable under the surrendered option
less the aggregate exercise price payable for such shares. Independent SARs
are granted independently of any option and generally entitle the holder to
receive upon exercise an appreciation distribution equal to the market price
of a number of shares equal to the number of share equivalents to which the
holder is vested under the independent SAR less the fair market value of such
number of shares of stock on the date of grant of the independent SARs.
Appreciation distributions payable upon exercise of SARs may, at the
Committee's discretion, be made in cash, in shares of the common stock or a
combination thereof.
Performance Units.
------------------
The Committee may grant performance units only to employees and
consultants of Fin and its affiliates. Each performance unit provides the
recipient with the right to receive an amount based on the value of the
performance unit if performance goals established by the Committee are met. A
performance unit is based on the value of a share of common stock or on such
other measurement base as the Committee deems appropriate. If the Award
recipient ceases to be employed or provide services during a performance
period, or if other conditions established by the Committee are not met, the
units are generally forfeited. The maximum amount that may be paid to an
employee with respect to a performance period under a performance unit that is
not based on the value of a share of Common Stock and is designed to satisfy
the requirements of Code Section 162(m) is $2,000,000. In the case of
performance units designed to satisfy the requirements of Code Section 162(m),
the Committee must use objectively determinable performance goals based on one
or more of the following criteria: stock price, earnings per share, net
earnings, operating earnings, return on assets, shareholder return, return on
equity, growth in assets, unit volume, sales, market share, or strategic
business criteria consisting of one or more objectives based on meeting
specific revenue goals, market penetration goals, geographic business
expansion goals, cost targets or goals relating to acquisitions or
divestitures.
Restrictions on Transfer.
-------------------------
Only an Award holder may exercise rights under an Award during the Award
holder's lifetime. Awards may not be transferred other than by will or by the
laws of descent and distribution.
Adjustment Provisions.
----------------------
If there is any change in the stock subject to the Incentive Plan or
subject to any Award granted under the Incentive Plan by reason of (i) a stock
dividend, split or similar event, (ii) a merger, consolidation or
reorganization in which Fin is the surviving corporation, (iii) a
reclassification or change in par value, or (iv) any other extraordinary event
affecting the outstanding common stock as a class without Fin's receipt of
consideration, the Incentive Plan and Awards outstanding thereunder will be
appropriately adjusted as to the class and the maximum number of shares
subject to the plan, the maximum number of shares which may be granted to an
employee during a calendar year and the class, number of shares and price per
share of stock subject to such outstanding Awards.
Effect of Certain Corporate Events.
-----------------------------------
Unless the Committee determines otherwise, in the event of a
"reorganization" (generally, a merger or consolidation of Fin with another
corporation where the stockholders of Fin, immediately prior to the
transaction, will not own immediately after the transaction shares entitling
such stockholders to more than 50% of all votes in the election of directors),
a sale of substantially all Fin's assets, or a liquidation or dissolution of
Fin, is approved, all outstanding options and SARs that are not exercised will
be assumed by or replaced with comparable options or rights by the surviving
corporation, if any. Unless the Committee determines otherwise, in the event
of a "change of control" (generally, if any person, other than PTM
stockholders or their affiliates, becomes a beneficial owner of securities of
Fin holding a majority of the voting power, other than a Board approved
acquisition) all outstanding options and SARs automatically vest, the
restrictions and conditions on all outstanding restricted stock immediately
lapse and holders of performance units receive a payment in settlement of
their Award, in an amount determined by the Committee based on performance
before the change of control. Notwithstanding the foregoing, in any corporate
event described in the two preceding sentences the Committee may instead (i)
require that Award holders surrender their outstanding options and SARs in
exchange for a payment by Fin, in cash or common stock, as determined by the
Committee, in an amount equal to the amount by which the then fair market
value of the shares of common stock subject to the Award holder's unexercised
options and SARs exceeds the exercise price of the options or the base amount
of the SARs, as applicable, or (ii) after accelerating all vesting and giving
option holders and SAR holders an opportunity to exercise their Awards,
terminate all unexercised Awards.
In the event that the division, subsidiary or other affiliated entity for
which an Award holder works is sold or transferred (other than in a change of
control transaction), the Committee may take any one or more of the following
actions: (i) provide that Awards will be assumed, or substantially equivalent
Awards will be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof) on such terms as the Committee determines to be
appropriate, (ii) upon written notice to Award holders, provide that all
unexercised options or SARs will terminate unless exercised by the Award
holder within a specified time period, (iii) require that Award holders
surrender their outstanding options and SARs in exchange for a payment by Fin,
in cash or common stock, as determined by the Committee, in an amount equal to
the amount by which the then fair market value of the shares of common stock
subject to the Award holder's unexercised options and SARs exceeds the
exercise price of the options or the base amount of the SARs, as applicable,
or (iv) make such other adjustments, if any, as the Committee determines to be
necessary or advisable to provide each such Award holder with a benefit
substantially similar to that to which the Award holder would have been
entitled had such event not occurred.
Duration, Amendment and Termination.
------------------------------------
The Board of Directors may amend or terminate the Incentive Plan at any
time and from time to time. If not terminated sooner, the Incentive Plan will
terminate on the tenth anniversary of its effective date. A plan amendment or
termination that occurs after an Award has been made may not materially impair
the rights of the Award holder without the consent of the Award holder.
Federal Income Tax Consequences of Awards.
------------------------------------------
The following is a brief summary of the Federal income tax rules
currently applicable to Awards.
Incentive Stock Options. Incentive stock options awarded under the
Incentive Plan are intended to be eligible for the favorable federal income
tax treatment accorded "incentive stock options" under the Code. There
generally are no federal income tax consequences to the optionee or Fin by
reason of the grant, vesting or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the optionee's
alternative minimum tax liability, if any. If an optionee holds stock
acquired through exercise of an incentive stock option for at least two years
from the date on which the option is granted and at least one year from the
date on which the shares are transferred to the optionee upon exercise of the
option, any gain or loss on a disposition of such stock will be either short-
term or long-term capital gain or loss, depending on the holding period.
Generally, if the optionee disposes of the stock before the expiration of
either of these holding periods (a "disqualifying disposition"), at the time
of disposition, the optionee will recognize taxable ordinary income equal to
the lesser of (i) the excess of the stock's fair market value on the date of
exercise over the exercise price, or (ii) the optionee's actual gain, if any,
on the purchase and sale. The optionee's additional gain, or any loss, upon
the disqualify disposition will be a capital gain or loss, which will be
short-term or long-term depending on the length of time the stock was held.
Capital gains currently are generally subject to lower tax rates than ordinary
income. Slightly different rules may apply to optionees who acquire stock
subject to certain restrictions. Subject to the requirement of
reasonableness, the provisions of Code Section 162(m) and the satisfaction of
a tax reporting obligation, to the extent the optionee recognizes ordinary
income by reason of a disqualifying disposition, Fin will generally be
entitled to a corresponding business expense deduction in the tax year in
which the disqualifying disposition occurs.
Non-statutory Stock Options. There are no tax consequences to the
optionee or Fin by reason of the grant or vesting of a non-statutory stock
option. Upon exercise of a non-statutory stock option, the optionee normally
will recognize taxable ordinary income equal to the excess of the stock's fair
market value on the date of exercise over the option exercise price.
Generally, with respect to employees, Fin is required to withhold from regular
wages or supplemental wage payments an amount based on the ordinary income
recognized. Subject to the requirement of reasonableness, the provisions of
Code Section 162(m) and the satisfaction of a reporting obligation, Fin will
generally be entitled to a business expense deduction equal to the taxable
ordinary income realized by the optionee. Upon disposition of the stock, the
optionee will recognize a capital gain equal in amount to the excess of the
amount realized on the disposition over the sum of the amount paid for the
stock plus and any amount recognized as ordinary income upon option exercise.
Such gain or loss will be short-term or long-term, depending on the length of
time that the stock was held. Slightly different rules may apply to optionees
who acquire stock subject to certain restrictions.
Restricted Stock. In the case of a restricted stock award, generally,
the excess of the fair market value of the stock (determined as of when the
stock is not subject to a substantial risk of forfeiture or, if earlier, when
it may be sold in an arms-length transaction, i.e., at vesting) over what the
employee or other Award recipient has paid for the stock, if anything, is
taxed to the recipient as ordinary income in the year that the stock vests.
However, the recipient may make an election under Code Section 83(b) to be
taxed in the year of grant on the excess of the fair market value of the stock
at the time of the grant (determined without regard to restrictions which will
lapse) over what the recipient has paid for the stock. Subject to the
requirement of reasonableness, Section 162(m) of the Code and the satisfaction
of a tax reporting obligation, Fin will generally be entitled to a business
expense deduction at the same time as and in the same amount as ordinary
income is recognized by the recipient. Upon disposition of the stock, the
recipient will recognize a capital gain or loss equal to the difference
between the selling price and the sum of the amount paid for such stock, if
any, plus any amount recognized as ordinary income upon acquisition or vesting
of the stock.
SARs and Performance Units. No taxable income is realized upon the
receipt of a SAR or a performance unit Award. Upon exercise of a SAR or the
receipt of payment under a performance unit, the cash and the fair market
value of shares received is treated as compensation taxable as ordinary income
to the recipient in the year of such exercise and receipt. Subject to the
requirement of reasonableness, Code Section 162(m) and the satisfaction of a
reporting obligation, Fin will be entitled to a business expense deduction
equal to the taxable ordinary income recognized by the recipient.
VOTE REQUIRED FOR APPROVAL
Person owning approximately 95% of the outstanding voting securities of
Fin have consent to and adopted the Election of Directors, the Forward Split,
the Capital Increase and the Name Change, and the Incentive Plan. No other
votes are required or necessary, as outlined below. See the caption "Security
Ownership of Principal Holders and Management," above.
Election of Directors, Forward Split, the Capital Increase, the Name Change
and Incentive Plan.
- -------------------
Election of Directors.
----------------------
Section 2.08 of Fin's Bylaws provides that one half of the total voting
power of the outstanding shares entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of the stockholders. If a
quorum is present, the affirmative vote of the majority of the voting power
represented by shares at the meeting and entitled to vote on the subject shall
constitute action by the stockholders, unless the vote of a greater number or
voting by classes is required by the laws of the state of incorporation or the
Articles of Incorporation. There is no similar governing provision in Fin's
Articles of Incorporation.
Section 78.330 of the Nevada Law provides that directors must be elected
at the annual meeting of stockholders by a plurality of the votes cast at the
election.
Section 78.320 provides that any action required to be taken at a special
or annual meeting of the stockholders of a Nevada corporation may be taken by
written consent, in lieu of a meeting, if the consent is signed by
stockholders owning at least a majority of the voting power.
The Forward Split, the Capital Increase and the Name Change.
------------------------------------------------------------
Section 78.385 of the Nevada Law provides an outline of the scope of
amendments that a Nevada corporation can make to its Articles of
Incorporation. These include the Forward Split, the Capital Increase and the
Name Change as proposed.
The procedure and requirements to effect an amendment to the Articles of
Incorporation of a Nevada corporation are set forth in Section 78.390 of the
Nevada Law. This Section provides that the proposed amendments must first be
adopted by the Board of Directors, submitted to the stockholders for their
consideration at a special or annual meeting and must be approved by persons
owning a majority of the outstanding voting securities.
Section 78.320 provides that any action required to be taken at a special
or annual meeting of the stockholders of a Nevada corporation may be taken by
written consent, in lieu of a meeting, if the consent is signed by
stockholders owning at least a majority of the voting power.
The Board of Directors of Fin and persons owning in excess of 95% of the
outstanding voting securities of Fin have adopted, ratified and approved the
Forward Split, the Capital Increase and the Name Change (see the heading
"Security Ownership of Principal Holders and Management," of the caption
"Voting Securities and Principal Holders Thereof," above). No further votes
are required or necessary to effect the proposed amendments.
The Incentive Plan.
-------------------
Under Section 78.211 of the Nevada Law, the Board of Directors has the
power to issue shares of a Nevada corporation and to set the consideration
paid for the issuance of shares.
Rule 16b-3(d)(2) of the Securities and Exchange Commission allows
"Employee Benefit Plan Transactions" to be approved by the affirmative votes
of a majority of the securities of the issuer present, or represented or
entitled to vote at the meeting.
ADDITIONAL INFORMATION
Additional information concerning Fin, including its annual and quarterly
reports for the past twelve months and its 10-SB Registration Statement, as
amended, which have been previously filed with the Securities and Exchange
Commission, may be accessed though the EDGAR Archives, at www.sec.gov.
EXHIBIT INDEX
19 10-KSB Annual Report of Fin for the year ended December 31, 1998 *
99 Lifef/x, Inc. 1999 Long Term Incentive Plan
* Incorporated herein by reference for filing purposes; however, the 10-
KSB will be mailed to stockholders with the Information Statement.
BY ORDER OF THE BOARD OF DIRECTORS
November 3, 1999 Wayne Bassham
President, CEO and Director
LIFEF/X, INC.
1999 LONG TERM INCENTIVE PLAN
The purpose of the Lifef/x, Inc. 1999 Long Term Incentive Plan (the
"Plan") is to provide (i) designated employees of Fin Sports U.S.A., Inc. (the
"Company") and its subsidiaries and affiliates, (ii) certain advisors who
perform services for the Company or its subsidiaries and affiliates and (iii)
non-employee members of the Board of Directors of the Company (the "Board")
with the opportunity to receive grants of incentive stock options,
nonqualified stock options, stock appreciation rights, restricted stock and
performance units. The Company believes that the Plan will encourage the
participants to contribute materially to the growth of the Company, thereby
benefiting the Company's shareholders, and will align the economic interests
of the participants with those of the shareholders.
1. Administration
(a) Committee. The Plan shall be administered and interpreted by a
committee appointed by the Board (the "Committee"). The Committee shall
consist of two or more persons appointed by the Board, all of whom may be
"outside directors" as defined under section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code") and related Treasury regulations and may
be "non-employee directors" as defined under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). However,
notwithstanding anything in the Plan to the contrary, the Board must ratify or
approve any grants made to Non-Employee Directors (as defined below in Section
4(a)). References in the Plan to the "Committee" shall be deemed to include
the Board, with respect to ratification or approval of grants made to
Non-Employee Directors.
(b) Committee Authority. The Committee shall have the sole
authority to (i) determine the individuals to whom grants shall be made under
the Plan, (ii) determine the type, size and terms of the grants to be made to
each such individual, (iii) determine the time when the grants will be made
and the duration of any applicable exercise or restriction period, including
the criteria for exercisability and the acceleration of exercisability and
(iv) deal with any other matters arising under the Plan.
(c) Committee Determinations. The Committee shall have full power
and authority to administer and interpret the Plan, to make factual
determinations and to adopt or amend such rules, regulations, agreements and
instruments for implementing the Plan and for the conduct of its business as
it deems necessary or advisable, in its sole discretion. The Committee's
interpretations of the Plan and all determinations made by the Committee
pursuant to the powers vested in it hereunder shall be conclusively binding on
all persons having any interest in the Plan or in any awards granted
hereunder. All powers of the Committee shall be executed in its sole
discretion, in the best interest of the Company, not as a fiduciary, and in
keeping with the objectives of the Plan and need not be uniform as to
similarly situated individuals.
2. Grants
Awards under the Plan may consist of grants of incentive stock options as
described in Section 5 ("Incentive Stock Options"), nonqualified stock options
as described in Section 5 ("Nonqualified Stock Options")(Incentive Stock
Options and Nonqualified Stock Options are collectively referred to as
"Options"), restricted stock as described in Section 6 (Restricted Stock"),
stock appreciation rights as described in Section 7 ("SARs"), and performance
units as described in Section 8 ("Performance Units") (hereinafter
collectively referred to as "Grants"). All Grants shall be subject to the
terms and conditions set forth herein and to such other terms and conditions
consistent with this Plan as the Committee deems appropriate and as are
specified in writing by the Committee to the individual in a grant instrument
(the "Grant Instrument") or an amendment to the Grant Instrument. The
Committee shall approve the form and provisions of each Grant Instrument.
Grants under a particular Section of the Plan need not be uniform as among the
grantees.
3. Shares Subject to the Plan
(a) Shares Authorized. Subject to the adjustment specified below,
the aggregate number of shares of common stock of the Company ("Company
Stock") that may be issued or transferred under the Plan is 5,529,375 shares.
The maximum aggregate number of shares of Company Stock that shall be subject
to Grants made under the Plan to any individual during any calendar year shall
be 2,000,000 shares. The shares may be authorized but unissued shares of
Company Stock or reacquired shares of Company Stock, including shares
purchased by the Company on the open market for purposes of the Plan. If and
to the extent Options or SARs granted under the Plan terminate, expire, or are
canceled, forfeited, exchanged or surrendered without having been exercised,
or if any shares of Restricted Stock or Performance Units are forfeited, the
shares subject to such Grants shall again be available for purposes of the
Plan.
(b) Adjustments. If there is any change in the number or kind of
shares of Company Stock outstanding (i) by reason of a stock dividend,
spinoff, recapitalization, stock split or combination or exchange of shares,
(ii) by reason of a merger, reorganization or consolidation in which the
Company is the surviving corporation, (iii) by reason of a reclassification or
change in par value, or (iv) by reason of any other extraordinary or unusual
event affecting the outstanding Company Stock as a class without the Company's
receipt of consideration, or if the value of outstanding shares of Company
Stock is substantially reduced as a result of a spinoff or the Company's
payment of an extraordinary dividend or distribution, the maximum number of
shares of Company Stock available for Grants, the maximum number of shares of
Company Stock that any individual participating in the Plan may be granted in
any year, the number of shares covered by outstanding Grants, the kind of
shares issued under the Plan, and the price per share or the applicable market
value of such Grants shall be appropriately adjusted by the Committee to
reflect any increase or decrease in the number of, or change in the kind or
value of, issued shares of Company Stock to preclude, to the extent
practicable, the enlargement or dilution of rights and benefits under such
Grants; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated. Any adjustments determined by the Committee
shall be final, binding and conclusive.
4. Eligibility for Participation
(a) Eligible Persons. All employees of the Company and its
subsidiaries and affiliates ("Employees"), including Employees who are
officers or members of the Board, and members of the Board who are not
Employees ("Non-Employee Directors") shall be eligible to participate in the
Plan. Advisors who perform services to the Company or any of its subsidiaries
and affiliates ("Key Advisors") shall be eligible to participate in the Plan
if the Key Advisors render bona fide services and such services are not in
connection with the offer or sale of securities in a capital- raising
transaction.
(b) Selection of Grantees. The Committee shall select the
Employees, Non- Employee Directors and Key Advisors to receive Grants and
shall determine the number of shares of Company Stock subject to a particular
Grant in such manner as the Committee determines. Employees, Key Advisors and
Non-Employee Directors who receive Grants under this Plan shall hereinafter be
referred to as "Grantees."
5. Granting of Options
(a) Number of Shares. The Committee shall determine the number of
shares of Company Stock that will be subject to each Grant of Options to
Employees, Non-Employee Directors and Key Advisors.
(b) Type of Option and Price.
(i) The Committee may grant Incentive Stock Options that
are intended to qualify as "incentive stock options"
within the meaning of section 422 of the Code or
Nonqualified Stock Options that are not intended so to
qualify or any combination of Incentive Stock Options
and Nonqualified Stock Options, all in accordance with
the terms and conditions set forth herein. Incentive
Stock Options may be granted only to employees of the
Company or a parent or subsidiary corporation (within
the meaning of section 424(f) of the Code).
Nonqualified Stock Options may be granted to
Employees, Non-Employee Directors and Key Advisors.
(ii) The purchase price (the "Exercise Price") of Company
Stock subject to an Option shall be determined by the
Committee and may be less than, greater than or equal
to the Fair Market Value (as defined below) of a share
of Company Stock on the date the Option is granted;
provided, however, that (x) the Exercise Price of an
Incentive Stock Option shall be equal to, or greater
than, the Fair Market Value of a share of Company
Stock on the date the Incentive Stock Option is
granted and (y) an Incentive Stock Option may not be
granted to an Employee who, at the time of grant, owns
stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the
Company or any parent or subsidiary of the Company,
unless the Exercise Price per share is not less than
110% of the Fair Market Value of Company Stock on the
date of grant.
(iii) If the Company Stock is publicly traded, then the
Fair
Market Value per share shall be determined as
follows:
(x) if the principal trading market for the Company
Stock is a national securities exchange or the Nasdaq
National Market, the last reported sale price thereof
on the relevant date or (if there were no trades on
that date) the latest preceding date upon which a
sale
was reported, or (y) if the Company Stock is not
principally traded on such exchange or market, the
mean between the last reported "bid" and "asked"
prices of Company Stock on the relevant date, as
reported on Nasdaq or, if not so reported, as
reported
by the National Daily Quotation Bureau, Inc. or as
reported in a customary financial reporting service,
as applicable and as the Committee determines. If
the
Company Stock is not publicly traded or, if publicly
traded, is not subject to reported transactions or
"bid" or "asked" quotations as set forth above, the
Fair Market Value per share shall be as determined by
the Committee.
(c) Option Term. The Committee shall determine the term of each
Option. The term of any Option shall not exceed ten years from the date of
grant. However, an Incentive Stock Option that is granted to an Employee who,
at the time of grant, owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company, or any parent or
subsidiary of the Company, may not have a term that exceeds five years from
the date of grant.
(d) Exercisability of Options. Options granted (i) to Employees
(other than officers. directors and consultants) shall be exercisable at the
rate of at least 20% per year over five years from the date of the Option and
(ii) to officers, directors, key employees or consultants may become fully
exercisable, at any time or during any period, in each case subject to
reasonable conditions, such as continued employment, consistent with the Plan,
as may be determined by the Committee and specified in the Grant Instrument or
an amendment to the Grant Instrument. The Committee may accelerate the
exercisability of any or all outstanding Options at any time for any reason.
(e) Restrictions Upon Exercise of Options. Upon a Grantee's
exercise of an Option, the Company may require that the shares of Company
Stock issued to such Grantee pursuant to such Option be subject to any
transfer restrictions then in effect between the Company and any other holder
of Company Stock. Such transfer restrictions may include, but are not limited
to, the prohibition against the issue, sale, offer to sell, grant of an option
for the sale of, assignment, transfer, pledge, hypothecation or any other
encumbrance or disposition of shares of Company Stock by the Grantee.
(f) Termination of Employment, Disability or Death.
(i) Except as provided below, an Option may only be
exercised while the Grantee is employed by the Company
as an Employee, Key Advisor or member of the Board.
In the event that a Grantee ceases to be employed by
the Company for any reason other than a "disability,"
death or "termination for cause," any Option which is
otherwise exercisable by the Grantee shall terminate
unless exercised within 90 days after the date on
which the Grantee ceases to be employed by the Company
(or within such other period of time as may be
specified by the Committee), but in any event no later
than the date of expiration of the Option term. Any
of the Grantee's Options that are not otherwise
exercisable as of the date on which the Grantee ceases
to be employed by the Company shall terminate as of
such date.
(ii) In the event the Grantee ceases to be employed by the
Company on account of a "termination for cause" by the
Company, any Option held by the Grantee shall
terminate as of the date the Grantee ceases to be
employed by the Company.
(iii) In the event the Grantee ceases to be employed by the
Company because the Grantee is "disabled", any Option
which is otherwise exercisable by the Grantee shall
terminate unless exercised within one year after the
date on which the Grantee ceases to be employed by
the
Company (or within such other period of time as may
be
specified by the Committee), but in any event no
later
than the date of expiration of the Option term. Any
of the Grantee's Options which are not otherwise
exercisable as of the date on which the Grantee
ceases
to be employed by the Company shall terminate as of
such date.
(iv) If the Grantee dies while employed by the Company or
within 90 days after the date on which the Grantee
ceases to be employed on account of a termination of
employment specified in Section 5(e)(i) above (or
within such other period of time as may be specified
by the Committee), any Option that is otherwise
exercisable by the Grantee shall terminate unless
exercised within one year after the date on which the
Grantee ceases to be employed by the Company (or
within such other period of time as may be specified
by the Committee), but in any event no later than the
date of expiration of the Option term. Any of the
Grantee's Options that are not otherwise exercisable
as of the date on which the Grantee ceases to be
employed by the Company shall terminate as of such
date.
(v) For purposes of Sections 5(e), 6, 7 and 8:
(A) "Company," when used in the phrase "employed by
the Company," shall mean the Company and its
parent and subsidiary corporations and
affiliates.
(B) "Employed by the Company" shall mean employment
or service as an Employee, Key Advisor or member
of the Board (so that, for purposes of
exercising Options and SARs and satisfying
conditions with respect to Restricted Stock and
Performance Units, a Grantee shall not be
considered to have terminated employment or
service until the Grantee ceases to be an
Employee, Key Advisor and member of the Board),
unless the Committee determines otherwise.
(C) "Disability" shall mean a Grantee's becoming
disabled within the meaning of Section 22(e)(3)
of the Code.
(D) "Termination for cause" shall mean, except to
the extent specified otherwise by the Committee,
a finding by the Committee that the Grantee has
breached his or her employment, service, non-
competition, non-solicitation or other similar
contract with the Company, or has been engaged
in disloyalty to the Company, including, without
limitation, fraud, embezzlement, theft,
commission of a felony or dishonesty in the
course of his or her employment or service, or
has disclosed trade secrets or confidential
information of the Company to persons not
entitled to receive such information.
Notwithstanding the foregoing, if the Grantee
has an employment agreement with the Company
defining "termination for cause," then such
definition shall supercede the foregoing
definition.
(vi) In the event a Grantee's employment is terminated for
cause, in addition to the immediate termination of all
Grants, the Grantee shall automatically forfeit all
shares underlying any exercised portion of an Option
for which the Company has not yet delivered the share
certificates, upon refund by the Company of the
Exercise Price paid by the Grantee for such shares.
(g) Exercise of Options. A Grantee may exercise an Option that has
become exercisable, in whole or in part, by delivering a notice of exercise to
the Company with payment of the Exercise Price. The Grantee shall pay the
Exercise Price for an Option as specified by the Committee (x) in cash, (y) by
delivering shares of Company Stock owned by the Grantee for the period
necessary to avoid a charge to the Company's earnings for financial reporting
purposes (including Company Stock acquired in connection with the exercise of
an Option, subject to such restrictions as the Committee deems appropriate)
and having a Fair Market Value on the date of exercise equal to the Exercise
Price or (z) by such other method as the Committee may approve, including
payment through a broker in accordance with procedures permitted by Regulation
T of the Federal Reserve Board. Shares of Company Stock used to exercise an
Option shall have been held by the Grantee for the requisite period of time to
avoid adverse accounting consequences to the Company with respect to the
Option. The Grantee shall pay the Exercise Price and the amount of any
withholding tax due (pursuant to Section 9) at the time of exercise.
(h) Limits on Incentive Stock Options. Each Incentive Stock Option
shall provide that, if the aggregate Fair Market Value of the stock on the
date of the grant with respect to which Incentive Stock Options are
exercisable for the first time by a Grantee during any calendar year, under
the Plan or any other stock option plan of the Company or a parent or
subsidiary, exceeds $100,000, then the option, as to the excess, shall be
treated as a Non-qualified Stock Option. An Incentive Stock Option shall not
be granted to any person who is not an employee of the Company or a parent or
subsidiary corporation (within the meaning of section 424(f) of the Code).
6. Restricted Stock Grants
The Committee may issue or transfer shares of Company Stock to an
Employee, Non- Employee Director or Key Advisor under a Grant of Restricted
Stock, upon such terms as the Committee deems appropriate. The following
provisions are applicable to Restricted Stock:
General Requirements. Shares of Company Stock issued or transferred pursuant
to Restricted Stock Grants may be issued or transferred for consideration or
for no consideration, as determined by the Committee. The Committee may
establish conditions under which restrictions on shares of Restricted Stock
shall lapse over a period of time or according to such other criteria as the
Committee deems appropriate. The period of time during which the Restricted
Stock will remain subject to restrictions will be designated in the Grant
Instrument as the "Restriction Period."
(a) Number of Shares. The Committee shall determine the number of
shares of Company Stock to be issued or transferred pursuant to a Restricted
Stock Grant and the restrictions applicable to such shares.
(b) Requirement of Employment. If the Grantee ceases to be
employed by the Company (as defined in Section 5(e)) during a period
designated in the Grant Instrument as the Restriction Period, or if other
specified conditions are not met, the Restricted Stock Grant shall terminate
as to all shares covered by the Grant as to which the restrictions have not
lapsed, and those shares of Company Stock must be immediately returned to the
Company. The Committee may, however, provide for complete or partial
exceptions to this requirement as it deems appropriate.
(c) Restrictions on Transfer and Legend on Stock Certificate.
During the Restriction Period, a Grantee may not sell, assign, transfer,
pledge or otherwise dispose of the shares of Restricted Stock except as
permitted under Section 11. Each certificate for a share of Restricted Stock
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the
stock certificate covering the shares subject to restrictions when all
restrictions on such shares have lapsed. The Committee may determine that the
Company will not issue certificates for shares of Restricted Stock until all
restrictions on such shares have lapsed, or that the Company will retain
possession of certificates for shares of Restricted Stock until all
restrictions on such shares have lapsed.
(d) Right to Vote and to Receive Dividends. Unless the Committee
determines otherwise, during the Restriction Period, the Grantee shall have
the right to vote shares of Restricted Stock and to receive any dividends or
other distributions paid on such shares, subject to any restrictions deemed
appropriate by the Committee.
(e) Lapse of Restrictions. All restrictions imposed on Restricted
Stock shall lapse upon the expiration of the applicable Restriction Period and
the satisfaction of all conditions imposed by the Committee. The Committee
may determine, as to any or all Restricted Stock Grants, that the restrictions
shall lapse without regard to any Restriction Period.
7. Stock Appreciation Rights
(a) General Requirements. The Committee may grant stock
appreciation rights ("SARs") to an Employee, Non-Employee Director, or Key
Advisor separately or in tandem with any Option (for all or a portion of the
applicable Option). Tandem SARs may be granted either at the time the Option
is granted or at any time thereafter while the Option remains outstanding;
provided, however, that, in the case of an Incentive Stock Option, SARs may be
granted only at the time of the Grant of the Incentive Stock Option. The
Committee shall establish the base amount of the SAR at the time the SAR is
granted. Unless the Committee determines otherwise, the base amount of each
SAR shall be equal to the per share Exercise Price of the related Option or,
if there is no related Option, the Fair Market Value of a share of Company
Stock as of the date of Grant of the SAR.
(b) Tandem SARs. In the case of tandem SARs, the number of SARs
granted to a Grantee that shall be exercisable during a specified period shall
not exceed the number of shares of Company Stock that the Grantee may purchase
upon the exercise of the related Option during such period. Upon the exercise
of an Option, the SARs relating to the Company Stock covered by such Option
shall terminate. Upon the exercise of SARs, the related Option shall
terminate to the extent of an equal number of shares of Company Stock.
(c) Exercisability. An SAR shall be exercisable during the period
specified by the Committee in the Grant Instrument and shall be subject to
such vesting and other restrictions as may be specified in the Grant
Instrument, provided, that SARs granted to Employees (other than officers,
directors or consultants) shall be exercisable at the rate of at least 20% per
year over five years from the date granted. The Committee may accelerate the
exercisability of any or all outstanding SARs at any time for any reason.
SARs may only be exercised while the Grantee is employed by the Company or
during the applicable period after termination of employment as described in
Section 5(e). A tandem SAR shall be exercisable only during the period when
the Option to which it is related is also exercisable. No SAR may be
exercised for cash by an officer or director of the Company or any of its
subsidiaries who is subject to Section 16 of the Exchange Act, except in
accordance with Rule 16b-3 under the Exchange Act.
(d) Value of SARs. When a Grantee exercises SARs, the Grantee
shall receive in settlement of such SARs an amount equal to the value of the
stock appreciation for the number of SARs exercised, payable in cash, Company
Stock or a combination thereof. The stock appreciation for an SAR is the
amount by which the Fair Market Value of the underlying Company Stock on the
date of exercise of the SAR exceeds the base amount of the SAR as described in
Subsection (a).
(e) Form of Payment. The Committee shall determine whether the
appreciation in an SAR shall be paid in the form of cash, shares of Company
Stock, or a combination of the two, in such proportion as the Committee deems
appropriate. For purposes of calculating the number of shares of Company
Stock to be received, shares of Company Stock shall be valued at their Fair
Market, Value on the date of exercise of the SAR. If shares of Company Stock
are to be received upon exercise of an SAR, cash shall be delivered in lieu of
any fractional share.
8. Performance Units
(a) General Requirements. The Committee may grant performance
units ("Performance Units") to an Employee or Key Advisor. Each Performance
Unit shall represent the right of the Grantee to receive an amount based on
the value of the Performance Unit, if performance goals established by the
Committee are met. A Performance Unit shall be based on the Fair Market Value
of a share of Company Stock or on such other measurement base as the Committee
deems appropriate. The Committee shall determine the number of Performance
Units to be granted and the requirements applicable to such Units.
(b) Performance Period and Performance Goals. When Performance
Units are granted, the Committee shall establish the performance period during
which performance shall be measured (the "Performance Period"), performance
goals applicable to the Units ("Performance Goals") and such other conditions
of the Grant as the Committee deems appropriate. Performance Goals may relate
to the financial performance of the Company or its operating units, the
performance of Company Stock, individual performance, or such other criteria
as the Committee deems appropriate.
(c) Payment with respect to Performance Units. At the end of each
Performance Period, the Committee shall determine to what extent the
Performance Goals and other conditions of the Performance Units are met and
the amount, if any, to be paid with respect to the Performance Units.
Payments with respect to Performance Units shall be made in cash, in Company
Stock, or in a combination of the two, as determined by the Committee.
(d) Requirement of Employment. If the Grantee ceases to be
employed by the Company (as defined in Section 5(e)) during a Performance
Period, or if other conditions established by the Committee are not met, the
Grantee's Performance Units shall be forfeited. The Committee may, however,
provide for complete or partial exceptions to this requirement as it deems
appropriate.
9. Qualified Performance-Based Compensation.
(a) Designation as Qualified Performance-Based Compensation. The
Committee may determine that Performance Units or Restricted Stock granted to
an Employee shall be considered "qualified performance-based compensation"
under Section 162(m) of the Code. The provisions of this Section 9 shall
apply to Grants of Performance Units and Restricted Stock that are to be
considered "qualified performance-based compensation" under Section 162(m) of
the Code.
(b) Performance Goals. When Performance Units or Restricted Stock
that are to be considered "qualified performance-based compensation" are
granted, the Committee shall establish in writing (i) the objective
performance goals that must be met in order for restrictions on the Restricted
Stock to lapse or amounts to be paid under the Performance Units, (ii) the
Performance Period during which the performance goals must be met, (iii) the
threshold, target and maximum amounts that may be paid if the performance
goals are met, and (iv) any other conditions, including without limitation,
provisions relating to death, disability, other termination of employment or
Reorganization, that the Committee deems appropriate and consistent with the
Plan and Section 162(m) of the Code. The performance goals may relate to the
Employee's business unit or the performance of the Company and its
subsidiaries as a whole, or any combination of the foregoing. The Committee
shall use objectively determinable performance goals based on one or more of
the following criteria: stock price, earnings per share, net earnings,
operating earnings, return on assets, shareholder return, return on equity,
growth in assets, unit volume, sales, market share, or strategic business
criteria consisting of one or more objectives based on meeting specific
revenue goals, market penetration goals, geographic business expansion goals,
cost targets or goals relating to acquisitions or divestitures.
(c) Establishment of Goals. The Committee shall establish the
performance goals in writing either before the beginning of the Performance
Period or during a period ending no later than the earlier of (i) 90 days
after the beginning of the Performance Period or (ii) the date on which 25% of
the Performance Period has been completed, or such other date as may be
required or permitted under applicable regulations under Section 162(m) of the
Code. The performance goals shall satisfy the requirements for "qualified
performance-based compensation," including the requirement that the
achievement of the goals be substantially uncertain at the time they are
established and that the goals be established in such a way that a third party
with knowledge of the relevant facts could determine whether and to what
extent the performance goals have been met. The Committee shall not have
discretion to increase the amount of compensation that is payable upon
achievement of the designated performance goals.
(d) Maximum Payment. If Restricted Stock, or Performance Units
measured with respect to the Fair Market Value of the Company Stock, are
granted, not more than 1,000,000 shares of the Company Stock may be granted to
an Employee under the Performance Units or Restricted Stock for any
Performance Period. If Performance Units are measured with respect to other
criteria, the maximum amount that may be paid to an Employee with respect to a
Performance Period is $2,000,000.
(e) Announcement of Grants. The Committee shall certify and
announce the results for each Performance Period to all Grantees immediately
following the announcement of the Company's financial results for the
Performance Period. If and to the extent that the Committee does not certify
that the performance goals have been met, the grants of Restricted Stock or
Performance Units for the Performance Period shall be forfeited.
10. Withholding of Taxes
(a) Required Withholding. All Grants under the Plan shall be
subject to applicable federal (including FICA), state and local tax
withholding requirements. The Company shall have the right to deduct from all
Grants paid in cash, or from other wages paid to the Grantee, any federal,
state or local taxes required by law to be withheld with respect to such
Grants. In the case of Options and other Grants paid in Company Stock, the
Company may require the Grantee or other person receiving such shares to pay
to the Company the amount of any such taxes that the Company is required to
withhold with respect to such Grants, or the Company may deduct from other
wages paid by the Company the amount of any withholding taxes due with respect
to such Grants.
(b) Election to Withhold Shares. If the Committee so permits, a
Grantee may elect to satisfy the Company's income tax withholding obligation
with respect to an Option, SAR, Restricted Stock or Performance Units paid in
Company Stock by having shares withheld up to an amount that does not exceed
the Grantee's maximum marginal tax rate for federal (including FICA), state
and local tax liabilities. The election must be in a form and manner
prescribed by the Committee and shall be subject to the prior approval of the
Committee.
11. Transferability of Grants. Except as provided below, only the
Grantee may exercise rights under a Grant during the Grantee's lifetime. A
Grantee may not transfer those rights except by will or by the laws of descent
and distribution. When a Grantee dies, the personal representative or other
person entitled to succeed to the rights of the Grantee ("Successor Grantee")
may exercise such rights. A Successor Grantee must furnish proof satisfactory
to the Company of his or her right to receive the Grant under the Grantee's
will or under the applicable laws of descent and distribution.
12. Reorganization of the Company.
(a) Reorganization. As used herein, a "Reorganization" shall be
deemed to have occurred if the shareholders of the Company approve (or, if
shareholder approval is not required, the Board approves) an agreement
providing for (i) the merger or consolidation of the Company with another
corporation where the shareholders of the Company, immediately prior to the
merger or consolidation, will not beneficially own, immediately after the
merger or consolidation, shares entitling such shareholders to more than 50%
of all votes to which all shareholders of the surviving corporation would be
entitled in the election of directors (without consideration of the rights of
any class of stock to elect directors by a separate class vote), (ii) the sale
or other disposition of all or substantially all of the assets of the Company,
or (iii) a liquidation or dissolution of the Company.
(b) Assumption of Grants. Upon a Reorganization where the Company
is not the surviving corporation (or survives only as a subsidiary of another
corporation), unless the Committee determines otherwise, all outstanding
Options and SARs that are not exercised shall be assumed by, or replaced with
comparable options or rights by, the surviving corporation.
(c) Other Alternatives. Notwithstanding the foregoing, in the
event of a Reorganization, the Committee may take one or both of the following
actions: the Committee may (i) require that Grantees surrender their
outstanding Options and SARs in exchange for a payment by the Company, in cash
or Company Stock as determined by the Committee, in an amount equal to the
amount by which the then Fair Market Value of the shares of Company Stock
subject to the Grantee's unexercised Options and SARs exceeds the Exercise
Price of the Options or the base amount of the SARs, as applicable, or (ii)
after accelerating all vesting and giving Grantees an opportunity to exercise
their outstanding Options and SARs, terminate any or all unexercised Options
and SARs at such time as the Committee deems appropriate. Such surrender or
termination shall take place as of the date of the Reorganization or such
other date as the Committee may specify.
(d) Limitations. Notwithstanding anything in the Plan to the
contrary, in the event of a Reorganization, the Committee shall not have the
right to take any actions described in the Plan (including without limitation
actions described in Subsection (b) above) that would make the Reorganization
ineligible for pooling of interests accounting treatment or that would make
the Reorganization ineligible for desired tax treatment if, in the absence of
such right, the Reorganization would qualify for such treatment and the
Company intends to use such treatment with respect to the Reorganization.
13. Change of Control of the Company.
(a) As used herein, a "Change of Control" shall be deemed to have
occurred if:
(i) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) other than Safeguard
Scientifics, Inc., Mirage Technologies Limited
Partnership, or any of their subsidiaries or
affiliates] becomes a "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing
a majority of the voting power of the then outstanding
securities of the Company except where the acquisition
is approved by the Board; or
(ii) Any person has commenced a tender offer or exchange
offer for a majority of the voting power of the then
outstanding shares of the Company.
(b) Notice and Acceleration. Upon a Change of Control, unless the
Committee determines otherwise, (i) the Company shall provide each Grantee
with outstanding Grants written notice of such Change of Control, (ii) all
outstanding Options and SARs shall automatically accelerate and become fully
exercisable, (iii) the restrictions and conditions on all outstanding
Restricted Stock shall immediately lapse, and (iv) Grantees holding
Performance Units shall receive a payment in settlement of such Performance
Units, in an amount determined by the Committee, based on the Grantee's target
payment for the Performance Period and the portion of the Performance Period
that precedes the Change of Control.
(c) Other Alternatives. Notwithstanding the foregoing, subject to
subsection (d) below, in the event of a Change of Control, the Committee may
take one or both of the following actions: the Committee may (i) require that
Grantees surrender their outstanding Options and SARs in exchange for a
payment by the Company, in cash or Company Stock as determined by the
Committee, in an amount equal to the amount by which the then Fair Market
Value of the shares of Company Stock subject to the Grantee's unexercised
Options and SARs exceeds the Exercise Price of the Options or the base amount
of the SARs, as applicable, or (ii) after giving Grantees an opportunity to
exercise their outstanding Options and SARs, terminate any or all unexercised
Options and SARs at such time as the Committee deems appropriate. Such
surrender or termination shall take place as of the date of the Change of
Control or such other date as the Committee may specify.
(d) Committee. The Committee making the determinations under this
Section 13 following a Change of Control must be comprised of the same members
as those on the Committee immediately before the Change of Control. If the
Committee members do not meet this requirement, the automatic provisions of
Subsection (b) of this Section shall apply in the case of such a Change of
Control, and the Committee shall not have discretion to vary them.
(e) Limitations. Notwithstanding anything in the Plan to the
contrary, in the event of a Change of Control, the Committee shall not have
the right to take any actions described in the Plan (including without
limitation actions described in Subsection (c) above) that would make the
Change of Control ineligible for pooling of interests accounting treatment or
that would make the Change of Control ineligible for desired tax treatment if,
in the absence of such right, the Change of Control would qualify for such
treatment and the Company intends to use such treatment with respect to the
Change of Control.
14. Disposition of Operating Unit
In the event that the division, subsidiary or other affiliated entity for
which a Grantee performs services is sold or transferred, whether such
transaction is effectuated by the transfer of stock, assets, by merger or
otherwise, in a transaction which does not constitute a Change of Control of
the Company, the Committee may, but shall not be required, to take any one or
more of the following actions as to outstanding Awards held by such Grantees:
(i) provide that such Awards shall be assumed, or substantially equivalent
Awards shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof) on such terms as the Committee determines to be
appropriate, (ii) upon written notice to Participants, provide that all
unexercised Options or SARs shall terminate immediately prior to the
consummation of such transaction unless exercised by the Participant within a
specified period following the date of such notice, (iii) require that
Grantees surrender their outstanding Options and SARs in exchange for a
payment by the Company, in cash or Company Stock as determined by the
Committee, in an amount equal to the amount by which the then Fair Market
Value of the shares of Company Stock subject to the Grantee's unexercised
Options and SARs exceeds the Exercise Price of the Options or the base amount
of the SARs, as applicable, or (iv) make such other adjustments, if any, as
the Committee determines to be necessary or advisable to provide each such
Grantee with a benefit substantially similar to that to which the Grantee
would have been entitled had such event not occurred.
15. Requirements for Issuance or Transfer of Shares
(a) Shareholder's Agreement. The Committee may require that a
Grantee execute a shareholder's agreement, with such terms as the Committee
deems appropriate, with respect to any Company Stock distributed pursuant to
this Plan.
(b) Limitations on Issuance or Transfer of Shares. No Company
Stock shall be issued or transferred in connection with any Grant hereunder
unless and until all legal requirements applicable to the issuance or transfer
of such Company Stock have been complied with to the satisfaction of the
Committee. The Committee shall have the right to condition any Grant made to
any Grantee hereunder on such Grantee's undertaking in writing to comply with
such restrictions on his or her subsequent disposition of such shares of
Company Stock as the Committee shall deem necessary or advisable as a result
of any applicable law, regulation or official interpretation thereof, and
certificates representing such shares may be legended to reflect any such
restrictions. Certificates representing shares of Company Stock issued or
transferred under the Plan will be subject to such stop-transfer orders and
other restrictions as may be required by applicable laws, regulations and
interpretations, including any requirement that a legend be placed thereon.
16. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at any
time.
(b) Termination of Plan. The Plan shall terminate on the day
immediately preceding the tenth anniversary of its effective date, unless the
Plan is terminated earlier by the Board or is extended by the Board with the
approval of the shareholders.
(c) Termination and Amendment of Outstanding Grants. A termination
or amendment of the Plan that occurs after a Grant is made shall not
materially impair the rights of a Grantee unless the Grantee consents. The
termination of the Plan shall not impair the power and authority of the
Committee with respect to an outstanding Grant. Whether or not the Plan has
terminated, an outstanding Grant may be terminated or amended in accordance
with the Plan or, may be amended by agreement of the Company and the Grantee
consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling
document. No other statements, representations, explanatory materials or
examples, oral or written, may amend the Plan in any manner. The Plan shall
be binding upon and enforceable against the Company and its successors and
assigns.
17. Funding of the Plan
This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
18. Rights of Participants
Nothing in this Plan shall entitle any Employee, Key Advisor or other
person to any claim or right to be granted a Grant under this Plan. Neither
this Plan nor any action taken hereunder shall be construed as giving any
individual any rights to be retained by or in the employ of the Company or any
other employment rights.
19. No Fractional Shares
No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan or any Grant. The Committee shall determine whether
cash, other awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
20. Information to Participants
Participants in the Plan shall receive financial statements of the
Company at least annually, except to the extent that issuance is limited to
key employees whose duties in connection with the Company assure them access
to equivalent information.
21. Headings
Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.
22. Effective Date of the Plan
Subject to the approval of the Company's shareholders within 12 months
after the Effective Date, the Plan shall be effective on [October __, 1999].
23. Miscellaneous
(a) Grants in Connection with Corporate Transactions and Otherwise.
Nothing contained in this Plan shall be construed to (i) limit the right of
the Committee to make Grants under this Plan in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association, including Grants
to employees thereof who become Employees of the Company, or for other proper
corporate purposes, or (ii) limit the right of the Company to grant stock
options or make other awards outside of this Plan. Without limiting the
foregoing, the Committee may make a Grant to an employee of another
corporation who becomes an Employee by reason of a corporate merger,
consolidation, acquisition of stock or property, reorganization or liquidation
involving the Company or any of its subsidiaries in substitution for a stock
option or restricted stock grant made by such corporation. The terms and
conditions of the substitute grants may vary from the terms and conditions
required by the Plan and from those of the substituted stock incentives. The
Committee shall prescribe the provisions of the substitute grants.
(b) Compliance with Law. The Plan, the exercise of Options and
SARs and the obligations of the Company to issue or transfer shares of Company
Stock under Grants shall be subject to all applicable laws and to approvals by
any governmental or regulatory agency as may be required. With respect to
persons subject to section 16 of the Exchange Act, it is the intent of the
Company that the Plan and all transactions under the Plan comply with all
applicable provisions of Rule 16b-3 or its successors under the Exchange Act.
The Committee may revoke any Grant if it is contrary to law or modify a Grant
to bring it into compliance with any valid and mandatory government
regulation. The Committee may also adopt rules regarding the withholding of
taxes on payments to Grantees. The Committee may, in its sole discretion,
agree to limit its authority under this Section.
(c) Governing Law. The validity, construction, interpretation and
effect of the Plan and Grant Instruments issued under the Plan shall
exclusively be governed by and determined in accordance with the law of the
State of California.
