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EXHIBIT 99(A)
EXHIBIT A
SENSORY SCIENCE CORPORATION
2000 STOCK INCENTIVE PLAN
ARTICLE 1
PURPOSE
1.1 GENERAL. The purpose of the Sensory Science Corporation 2000 Stock
Incentive Plan (the "Plan") is to promote the success and enhance the value of
Sensory Science Corporation (the "Company") by linking the personal interests of
its employees, officers, and executives of, and consultants and advisors to, the
Company to those of Company stockholders and by providing such individuals with
an incentive for outstanding performance in order to generate superior returns
to shareholders of the Company. The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract, and retain the
services of employees, officers, and executives of, and consultants and advisors
to, the Company upon whose judgment, interest, and special effort the successful
conduct of the Company's operation is largely dependent.
ARTICLE 2
EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan is effective as of June 15, 2000 (the
"Effective Date"). Within 12 months of the Effective Date, the Plan must be
approved by the Company's shareholders. The Plan will be deemed to be approved
by the shareholders if it receives the affirmative vote of the holders of a
majority of the shares of stock of the Company present or represented and
entitled to vote at a meeting duly held in accordance with the applicable
provisions of the Company's Bylaws or by written consent of a majority of the
Company's shareholders in lieu of a meeting. Any awards granted under the Plan
prior to shareholder approval are effective when made (unless the Committee
specifies otherwise at the time of grant), but no Award may be exercised or
settled and no restrictions relating to any Award may lapse before the Plan is
approved by the shareholders as provided above. If the shareholders fail to
approve the Plan, any Award previously made shall be automatically canceled
without any further act.
ARTICLE 3
DEFINITIONS AND CONSTRUCTION
3.1 DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Sections 1.1 or 2.1 unless a clearly different meaning is required
by the context. The following words and phrases shall have the following
meanings:
(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Share Award, or Performance-Based Award granted to a
Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract, or
other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means (except as otherwise provided in an Award
Agreement) if the Committee, in its reasonable and good faith discretion,
determines that the Participant (i) fails to substantially perform his duties
(other than as a result of Disability), after the Board or the executive to
which the Participant reports delivers to the Participant a written demand for
substantial performance that specifically identifies the manner in which the
Participant has not substantially performed his duties; (ii) engages in willful
misconduct or gross negligence that is materially injurious to the Company or a
Subsidiary; (iii) breaches his duty of loyalty to the Company or a Subsidiary;
(iv) unauthorized removal from the premises of the Company or a Subsidiary of a
document (of any media or form) relating to the Company or a Subsidiary or the
customers of the Company or a Subsidiary; or (v) commits a felony or a serious
crime involving moral turpitude. Any rights the Company or any of its
Subsidiaries
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may have hereunder in respect of the events giving rise to Cause shall be in
addition to the rights the Company or any of its Subsidiaries may have under any
other agreement with the Participant or at law or in equity. If, subsequent to a
Participant's termination of employment or services, it is discovered that such
Participant's employment or services could have been terminated for Cause, the
Participant's employment or services shall, at the election of the Board, in its
sole discretion, be deemed to have been terminated for Cause retroactively to
the date the events giving rise to Cause occurred.
(e) "Change of Control" means any of the following:
(1) any merger of the Company in which the Company is not the
continuing or surviving entity, or pursuant to which the common stock of the
Company would be converted into cash, securities, or other property other than a
merger of the Company in which the holders of the Company's common stock
immediately prior to the merger have the same proportionate ownership of
beneficial interest of common stock or other voting securities of the surviving
entity immediately after the merger;
(2) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of assets or earning power
aggregating more than 80% of the assets or earning power of the Company and its
subsidiaries (taken as a whole), other than pursuant to a sale-leaseback,
structured finance, or other form of financing transaction;
(3) the shareholders of the Company approve any plan or
proposal for liquidation or dissolution of the Company;
(4) any person (as such term is used in Section 13(d) and
14(d)(2) of the Exchange Act), other than any employee benefit plan of the
Company or any subsidiary of the Company or any entity holding shares of capital
stock of the Company for or pursuant to the terms of any such employee benefit
plan in its role as an agent or trustee for such plan, shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
50% or more of the Company's outstanding common stock; or
(5) during any period of two consecutive years, individuals
who at the beginning of such period shall fail to constitute a majority of the
Board at the end of such period, unless the election, or the nomination for
election by the Company's shareholders, of any new director is approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the committee of the Board described in
Article 4.
(h) "Covered Employee" means an Employee who is a "covered employee"
within the meaning of Section 162(m) of the Code.
(i) "Disability" shall mean (unless otherwise defined in an
employment agreement between the Company or any of its Subsidiaries and the
Participant or in the Participant's Award Agreement) any illness or other
physical or mental condition of a Participant which renders the Participant
incapable of performing his customary and usual duties for the Company, or any
medically determinable illness or other physical or mental condition resulting
from a bodily injury, disease, or mental disorder which in the judgment of the
Committee is permanent and continuous in nature. The Committee may require such
medical or other evidence as it deems necessary to judge the nature and
permanency of the Participant's condition.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Fair Market Value" means, as of any given date, the fair market
value of Stock on a particular date determined by such methods or procedures as
may be established from time to time by the Committee. Unless otherwise
determined by the Committee, the Fair Market Value of Stock as of any date shall
be the closing price for the Stock as reported on the NASDAQ National Market
System (or on any national securities exchange on which the Stock is then
listed) for that date or, if no closing price is reported for that date, the
closing price on the next preceding date for which a closing price was reported.
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(l) "Incentive Stock Option" means an Option that is intended to
meet the requirements of Section 422 of the Code or any successor provision
thereto.
(m) "Non-Employee Director" means a member of the Board who
qualifies as a "Non-Employee Director" as defined in Rule 16b-3(b)(3) of the
Exchange Act, or any successor definition adopted by the Board.
(n) "Non-Qualified Stock Option" means an Option that is not
intended to be an Incentive Stock Option.
(o) "Option" means a right granted to a Participant under Article 7
to purchase Stock at a specified price during specified time periods. An Option
may be either an Incentive Stock Option or a Non-Qualified Stock Option.
(p) "Participant" means a person who, as a member of the Board,
employee, officer, or executive of, or consultant or advisor providing services
to, the Company or any Subsidiary, has been granted an Award under the Plan.
(q) "Performance-Based Awards" means the Performance Share Awards
and Restricted Stock Awards granted to selected Covered Employees pursuant to
Articles 9 and 10, but which are subject to the terms and conditions set forth
in Article 11. All Performance-Based Awards are intended to qualify as
"performance-based compensation" under Section 162(m) of the Code.
(r) "Performance Criteria" means the criteria that the Committee
selects for purposes of establishing the Performance Goal or Performance Goals
for a Participant for a Performance Period. The Performance Criteria that will
be used to establish Performance Goals are limited to the following: pre- or
after-tax net earnings, sales growth, operating earnings, operating cash flow,
return on net assets, return on stockholders' equity, return on assets, return
on capital, Stock price growth, stockholder returns, gross or net profit margin,
earnings per share, price per share of Stock, and market share, any of which may
be measured either in absolute terms or as compared to any incremental increase
or as compared to results of a peer group. The Committee shall, within the time
prescribed by Section 162(m) of the Code, define in an objective fashion the
manner of calculating the Performance Criteria it selects to use for such
Performance Period for such Participant.
(s) "Performance Goals" means, for a Performance Period, the goals
established in writing by the Committee for the Performance Period based upon
the Performance Criteria. Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a division, business
unit, or an individual. The Committee, in its discretion, may, within the time
prescribed by Section 162(m) of the Code, adjust or modify the calculation of
Performance Goals for such Performance Period in order to prevent the dilution
or enlargement of the rights of Participants (i) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (ii) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.
(t) "Performance Period" means the one or more periods of time,
which may be of varying and overlapping durations, as the Committee may select,
over which the attainment of one or more Performance Goals will be measured for
the purpose of determining a Participant's right to, and the payment of, a
Performance-Based Award.
(u) "Performance Share" means a right granted to a Participant under
Article 9, to receive cash, Stock, or other Awards, the payment of which is
contingent upon achieving certain performance goals established by the
Committee.
(v) "Plan" means the Sensory Science Corporation 2000 Stock
Incentive Plan.
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(w) "Restricted Stock Award" means Stock granted to a Participant
under Article 10 that is subject to certain restrictions and to risk of
forfeiture.
(x) "Stock" means the common stock of the Company and such other
securities of the Company that may be substituted for Stock pursuant to Article
13.
(y) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the difference between
the Fair Market Value of a share of Stock as of the date of exercise of the SAR
over the grant price of the SAR, all as determined pursuant to Article 8.
(z) "Subsidiary" means any corporation or other entity of which a
majority of the outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.
ARTICLE 4
ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by the Board or a Committee
appointed by, and which serves at the discretion of, the Board. If the Board
appoints a Committee, the Committee shall consist of at least two individuals,
each of whom qualifies as (i) a Non-Employee Director, and (ii) an "outside
director" under Code Section 162(m) and the regulations issued thereunder.
Reference to the Committee shall refer to the Board if the Board does not
appoint a Committee.
4.2 ACTION BY THE COMMITTEE. A majority of the Committee shall constitute
a quorum. The acts of a majority of the members present at any meeting at which
a quorum is present, and acts approved in writing by a majority of the Committee
in lieu of a meeting, shall be deemed the acts of the Committee. Each member of
the Committee is entitled to, in good faith, rely or act upon any report or
other information furnished to that member by any officer or other employee of
the Company or any Subsidiary, the Company's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Company to assist in the administration of the Plan.
4.3 AUTHORITY OF COMMITTEE. Subject to any specific designation in the
Plan, the Committee has the exclusive power, authority and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted under
the Plan including but not limited to, the exercise price, grant price, or
purchase price, any provisions related to non-competition and recapture of gain
on an Award, any restrictions or limitations on the Award, any schedule for
lapse of forfeiture restrictions or restrictions on the exercisability of an
Award, and accelerations or waivers thereof, based in each case on such
considerations as the Committee in its sole discretion determines; provided,
however, that the Committee shall not have the authority to accelerate the
vesting or waive the forfeiture of any Performance-Based Awards;
(e) Amend, modify, or terminate any outstanding Award, with the
Participant's consent unless the Committee has the authority to amend, modify,
or terminate an Award without the Participant's consent under any other
provision of the Plan.
(f) Determine whether, to what extent, and under what circumstances
an Award may be settled in, or the exercise price of an Award may be paid in,
cash, Stock, other Awards, or other property, or an Award may be canceled,
forfeited, or surrendered;
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(g) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(h) Decide all other matters that must be determined in connection
with an Award;
(i) Establish, adopt, or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan; and
(j) Interpret the terms of, and any matter arising under, the Plan
or any Award Agreement;
(k) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to administer
the Plan.
4.4 DECISIONS BINDING. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 5
SHARES SUBJECT TO THE PLAN
5.1 NUMBER OF SHARES. Subject to adjustment provided in Section 13.1, the
aggregate number of shares of Stock reserved and available for grant under the
Plan shall be 1,300,000.
5.2 LAPSED AWARDS. To the extent that an Award terminates, expires, or
lapses for any reason, any shares of Stock subject to the Award will again be
available for the grant of an Award under the Plan.
5.3 STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.4 LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS. Notwithstanding any
provision in the Plan to the contrary, and subject to the adjustment in Section
13.1, the maximum number of shares of Stock with respect to one or more Awards
that may be granted to any one Participant during the Company's fiscal year
shall be 500,000.
ARTICLE 6
ELIGIBILITY AND PARTICIPATION
6.1 ELIGIBILITY.
(a) GENERAL. Persons eligible to participate in this Plan include
all employees, officers, and executives of, and consultants and advisors to, the
Company or a Subsidiary, as determined by the Committee.
(b) FOREIGN PARTICIPANTS. In order to assure the viability of Awards
granted to Participants employed in foreign countries, the Committee may provide
for such special terms as it may consider necessary or appropriate to
accommodate differences in local law, tax policy, or custom. Moreover, the
Committee may approve such supplements to, or amendments, restatements, or
alternative versions of the Plan as it may consider necessary or appropriate for
such purposes without thereby affecting the terms of the Plan as in effect for
any other purpose; provided, however, that no such supplements, amendments,
restatements, or alternative versions shall increase the share limitations
contained in Section 5.1 of the Plan.
6.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from among all eligible individuals,
those to whom Awards shall be granted and shall determine the nature and amount
of each Award. No individual shall have any right to be granted an Award under
this Plan.
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ARTICLE 7
STOCK OPTIONS
7.1 GENERAL. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of Stock under an
Option shall be determined by the Committee and set forth in the Award
Agreement. It is the intention under the Plan that the exercise price for any
Option shall not be less than the Fair Market Value as of the date of grant;
provided, however that the Committee may, in its discretion, grant Options
(other than Options that are intended to be Incentive Stock Options or Options
that are intended to qualify as performance-based compensation under Code
Section 162(m)) with an exercise price of less than Fair Market Value on the
date of grant.
(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part. The
Committee shall also determine the performance or other conditions, if any, that
must be satisfied before all or part of an Option may be exercised. Unless
otherwise provided in an Award Agreement, an Option will lapse immediately if a
Participant's employment or services are terminated for Cause.
(c) PAYMENT. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including, without
limitation, cash, promissory note, shares of Stock (through actual tender or by
attestation), or other property (including broker-assisted "cashless exercise"
arrangements), and the methods by which shares of Stock shall be delivered or
deemed to be delivered to Participants.
(d) EVIDENCE OF GRANT. All Options shall be evidenced by a written
Award Agreement between the Company and the Participant. The Award Agreement
shall include such additional provisions as may be specified by the Committee.
7.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be granted only
to employees and the terms of any Incentive Stock Options granted under the Plan
must comply with the following additional rules:
(a) EXERCISE PRICE. The exercise price per share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive Stock
Option may not be less than the Fair Market Value as of the date of the grant.
(b) EXERCISE. In no event, may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(c) LAPSE OF OPTION. An Incentive Stock Option shall lapse under the
following circumstances.
(1) The Incentive Stock Option shall lapse ten years from the
date it is granted, unless an earlier time is set in the Award
Agreement.
(2) The Incentive Stock Option shall lapse upon termination of
employment for Cause or for any other reason, other than the
Participant's death or Disability, unless otherwise provided in the
Award Agreement.
(3) If the Participant terminates employment on account of
Disability or death before the Option lapses pursuant to paragraph
(1) or (2) above, the Incentive Stock Option shall lapse, unless it
is previously exercised, on the earlier of (i) the date on which the
Option would have lapsed had the Participant not become Disabled or
lived and had his employment status (i.e., whether the Participant
was employed by the Company on the date of his Disability or death
or had previously
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terminated employment) remained unchanged; or (ii) 12 months after
the date of the Participant's termination of employment on account
of Disability or death. Upon the Participant's Disability or death,
any Incentive Stock Options exercisable at the Participant's
Disability or death may be exercised by the Participant's legal
representative or representatives, by the person or persons entitled
to do so under the Participant's last will and testament, or, if the
Participant fails to make testamentary disposition of such Incentive
Stock Option or dies intestate, by the person or persons entitled to
receive the Incentive Stock Option under the applicable laws of
descent and distribution.
(d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value
(determined as of the time an Award is made) of all shares of Stock with respect
to which Incentive Stock Options are first exercisable by a Participant in any
calendar year may not exceed $100,000.00 or such other limitation as imposed by
Section 422(d) of the Code, or any successor provision. To the extent that
Incentive Stock Options are first exercisable by a Participant in excess of such
limitation, the excess shall be considered Non-Qualified Stock Options.
(e) TEN PERCENT OWNERS. An Incentive Stock Option shall be granted
to any individual who, at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of Stock of the
Company only if such Option is granted at a price that is not less than 110% of
Fair Market Value on the date of grant and the Option is exercisable for no more
than five years from the date of grant.
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an Incentive
Stock Option may be made pursuant to this Plan after the tenth anniversary of
the Effective Date.
(g) RIGHT TO EXERCISE. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.
ARTICLE 8
STOCK APPRECIATION RIGHTS
8.1 GRANT OF SARS. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(a) RIGHT TO PAYMENT. Upon the exercise of a Stock Appreciation
Right, the Participant to whom it is granted has the right to receive the
excess, if any, of:
(1) The Fair Market Value of a share of Stock on the date of
exercise; over
(2) The grant price of the Stock Appreciation Right as
determined by the Committee, which shall not be less than the Fair
Market Value of a share of Stock on the date of grant in the case of
any SAR related to any Incentive Stock Option.
(b) OTHER TERMS. All awards of Stock Appreciation Rights shall be
evidenced by an Award Agreement. The terms, methods of exercise, methods of
settlement, form of consideration payable in settlement, and any other terms and
conditions of any Stock Appreciation Right shall be determined by the Committee
at the time of the grant of the Award and shall be reflected in the Award
Agreement.
ARTICLE 9
PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE SHARES. The Committee is authorized to grant
Performance Shares to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Shares granted to each Participant. All
Awards of Performance Shares shall be evidenced by an Award Agreement.
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9.2 RIGHT TO PAYMENT. A grant of Performance Shares gives the Participant
rights, valued as determined by the Committee, and payable to, or exercisable
by, the Participant to whom the Performance Shares are granted, in whole or in
part, as the Committee shall establish at grant or thereafter. Subject to the
terms of the Plan, the Committee shall set performance goals and other terms or
conditions to payment of the Performance Shares in its discretion which,
depending on the extent to which they are met, will determine the number and
value of Performance Shares that will be paid to the Participant.
9.3 OTHER TERMS. Performance Shares may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.
ARTICLE 10
RESTRICTED STOCK AWARDS
10.1 GRANT OF RESTRICTED STOCK. The Committee is authorized to make Awards
of Restricted Stock to Participants in such amounts and subject to such terms
and conditions as determined by the Committee. All Awards of Restricted Stock
shall be evidenced by a Restricted Stock Award Agreement.
10.2 ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, or otherwise, as the Committee
determines at the time of the grant of the Award or thereafter.
10.3 FORFEITURE. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period, Restricted Stock that is at that time
subject to restrictions shall be forfeited, provided, however, that the
Committee may provide in any Restricted Stock Award Agreement that restrictions
or forfeiture conditions relating to Restricted Stock will be waived in whole or
in part in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part restrictions or
forfeiture conditions relating to Restricted Stock.
10.4 CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.
ARTICLE 11
PERFORMANCE-BASED AWARDS
11.1 PURPOSE. The purpose of this Article 11 is to provide the Committee
the ability to qualify the Performance Share Awards under Article 9 and the
Restricted Stock Awards under Article 10 as "performance-based compensation"
under Section 162(m) of the Code. If the Committee, in its discretion, decides
to grant a Performance-Based Award to a Covered Employee, the provisions of this
Article 11 shall control over any contrary provision contained in Articles 9 or
10.
11.2 APPLICABILITY. This Article 11 shall apply only to those Covered
Employees selected by the Committee to receive Performance-Based Awards. The
Committee may, in its discretion, grant Restricted Stock Awards or Performance
Share Awards to Covered Employees that do not satisfy the requirements of this
Article 11. The designation of a Covered Employee as a Participant for a
Performance Period shall not in any manner entitle the Participant to receive an
Award for the period. Moreover, designation of a Covered Employee as a
Participant for a particular Performance Period shall not require designation of
such Covered Employee as a Participant in any subsequent Performance Period and
designation of one Covered Employee as a Participant shall not require
designation of any other Covered Employees as a Participant in such period or in
any other period.
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11.3 DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE AWARDS. With
regard to a particular Performance Period, the Committee shall have full
discretion to select the length of such Performance Period, the type of
Performance-Based Awards to be issued, the kind and/or level of the Performance
Goal, and whether the Performance Goal is to apply to the Company, a Subsidiary
or any division or business unit thereof.
11.4 PAYMENT OF PERFORMANCE AWARDS. Unless otherwise provided in the
relevant Award Agreement, a Participant must be employed by the Company or a
Subsidiary on the last day of the Performance Period to be eligible for a
Performance Award for such Performance Period. Furthermore, a Participant shall
be eligible to receive payment under a Performance-Based Award for a Performance
Period only if the Performance Goals for such period are achieved. In
determining the actual size of an individual Performance-Based Award, the
Committee may reduce or eliminate the amount of the Performance-Based Award
earned for the Performance Period, if in its sole and absolute discretion, such
reduction or elimination is appropriate.
11.5 MAXIMUM AWARD PAYABLE. The maximum Performance-Based Award payable to
any one Participant under the Plan for a Performance Period is 500,000 shares of
Stock, or in the event the Performance-Based Award is paid in cash, such maximum
Performance-Based Award shall be determined by multiplying 500,000 by the Fair
Market Value of one share of Stock as of the date of grant of the
Performance-Based Award.
ARTICLE 12
PROVISIONS APPLICABLE TO AWARDS
12.1 STAND-ALONE AND TANDEM AWARDS. Awards granted under the Plan may, in
the discretion of the Committee, be granted either alone, in addition to, or in
tandem with, any other Award granted under the Plan. Awards granted in addition
to or in tandem with other Awards may be granted either at the same time as or
at a different time from the grant of such other Awards.
12.2 EXCHANGE PROVISIONS. The Committee may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Stock, or another
Award, based on the terms and conditions the Committee determines and
communicates to the Participant at the time the offer is made.
12.3 TERM OF AWARD. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant.
12.4 FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Company or a Subsidiary on the grant or exercise of an Award may be made in such
forms as the Committee determines at or after the time of grant, including
without limitation, cash, promissory note, Stock, other Awards, or other
property, or any combination, and may be made in a single payment or transfer,
in installments, or on a deferred basis, in each case determined in accordance
with rules adopted by, and at the discretion of, the Committee.
12.5 LIMITS ON TRANSFER. No right or interest of a Participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no Award
shall be assignable or transferable by a Participant other than by will or the
laws of descent and distribution.
12.6 BENEFICIARIES. Notwithstanding Section 12.5, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If the Participant is married, a
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designation of a person other than the Participant's spouse as his beneficiary
with respect to more than 50 % of the Participant's interest in the Award shall
not be effective without the written consent of the Participant's spouse. If no
beneficiary has been designated or survives the Participant, payment shall be
made to the person entitled thereto under the Participant's will or the laws of
descent and distribution. Subject to the foregoing, a beneficiary designation
may be changed or revoked by a Participant at any time provided the change or
revocation is filed with the Committee.
12.7 STOCK CERTIFICATES. Notwithstanding anything herein to the contrary,
the Company shall not be required to issue or deliver any certificates
evidencing shares of Stock pursuant to the exercise of any Awards, unless and
until the Board has determined, with advice of counsel, that the issuance and
delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the requirements of
any exchange on which the shares of Stock are listed or traded. All Stock
certificates delivered under the Plan are subject to any stop-transfer orders
and other restrictions as the Committee deems necessary or advisable to comply
with Federal, state, or foreign jurisdiction, securities or other laws, rules
and regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded. The Committee
may place legends on any Stock certificate to reference restrictions applicable
to the Stock. In addition to the terms and conditions provided herein, the Board
may require that a Participant make such reasonable covenants, agreements, and
representations as the Board, in its discretion, deems advisable in order to
comply with any such laws, regulations, or requirements.
12.8 ACCELERATION UPON A CHANGE OF CONTROL. If a Change of Control occurs,
all outstanding Options, Stock Appreciation Rights, and other Awards shall
become fully exercisable and all restrictions on outstanding Awards shall lapse.
To the extent that this provision causes Incentive Stock Options to exceed the
dollar limitation set forth in Section 7.2(d), the excess Options shall be
deemed to be Non-Qualified Stock Options. Upon, or in anticipation of, such an
event, the Committee may cause every Award outstanding hereunder to terminate at
a specific time in the future and shall give each Participant the right to
exercise Awards during a period of time as the Committee, in its sole and
absolute discretion, shall determine.
ARTICLE 13
CHANGES IN CAPITAL STRUCTURE
13.1 GENERAL.
(a) SHARES AVAILABLE FOR GRANT. In the event of any change in the
number of shares of Stock outstanding by reason of any stock dividend or split,
recapitalization, merger, consolidation, combination, or exchange of shares or
similar corporate change, the maximum aggregate number of shares of Stock with
respect to which the Committee may grant Awards shall be appropriately adjusted
by the Committee. In the event of any change in the number of shares of Stock
outstanding by reason of any other event or transaction, the Committee may, but
need not, make such adjustments in the number and class of shares of Stock with
respect to which Awards may be granted as the Committee may deem appropriate.
(b) OUTSTANDING AWARDS - INCREASE OR DECREASE IN ISSUED SHARES
WITHOUT CONSIDERATION. Subject to any required action by the shareholders of the
Company, in the event of any increase or decrease in the number of issued shares
of Stock resulting from a subdivision or consolidation of shares of Stock or the
payment of a stock dividend (but only on the shares of Stock), or any other
increase or decrease in the number of such shares effected without receipt or
payment of consideration by the Company, the Committee shall proportionally
adjust the number of shares of Stock subject to each outstanding Award and the
exercise price per share of Stock of each such Award.
(c) OUTSTANDING AWARDS - CERTAIN MERGERS. Subject to any required
action by the shareholders of the Company, in the event that the Company shall
be the surviving corporation in any merger or consolidation (except a merger or
consolidation as a result of which the holders of shares of Stock receive
securities of another corporation), each Award outstanding on the date of such
merger or consolidation shall pertain to and
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apply to the securities which a holder of the number of shares of Stock subject
to such Award would have received in such merger or consolidation.
(d) OUTSTANDING AWARDS - CERTAIN OTHER TRANSACTIONS. In the event of
(i) a dissolution or liquidation of the Company, (ii) a sale of all or
substantially all of the Company's assets, (iii) a merger or consolidation
involving the Company in which the Company is not the surviving corporation or
(iv) a merger or consolidation involving the Company in which the Company is the
surviving corporation but the holders of shares of Stock receive securities of
another corporation and/or other property, including cash, the Committee shall,
in its absolute discretion, have the power to:
(1) cancel, effective immediately prior to the occurrence of
such event, each Award outstanding immediately prior to such event
(whether or not then exercisable), and, in full consideration of
such cancellation, pay to the Participant to whom such Award was
granted an amount in cash, for each share of Stock subject to such
Award, respectively, equal to the excess of (A) the value, as
determined by the Committee in its absolute discretion, of the
property (including cash) received by the holder of a share of Stock
as a result of such event over (B) the exercise of such Award; or
(2) provide for the exchange of each Award outstanding
immediately prior to such event (whether or not then exercisable)
for an option, a stock appreciation right, restricted stock award,
performance share award or performance-based award with respect to,
as appropriate, some or all of the property for which such Award is
exchanged and, incident thereto, make an equitable adjustment as
determined by the Committee in its absolute discretion in the
exercise price or value of the option, stock appreciate right,
restricted stock award, performance share award or performance-based
award or the number of shares or amount of property subject to the
option, stock appreciation right, restricted stock award,
performance share award or performance-based award or, if
appropriate, provide for a cash payment to the Participant to whom
such Award was granted in partial consideration for the exchange of
the Award.
(e) OUTSTANDING AWARDS - OTHER CHANGES. In the event of any other
change in the capitalization of the Company or corporate change other than those
specifically referred to in Article 13, the Committee may, in its absolute
discretion, make such adjustments in the number and class of shares subject to
Awards outstanding on the date on which such change occurs and in the per share
exercise price of each Award as the Committee may consider appropriate to
prevent dilution or enlargement of rights.
(f) NO OTHER RIGHTS. Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Stock subject to an Award or the exercise
price of any Award.
ARTICLE 14
AMENDMENT, MODIFICATION, AND TERMINATION
14.1 AMENDMENT, MODIFICATION, AND TERMINATION. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that to the extent necessary and desirable
to comply with any applicable law, regulation, or stock exchange rule, the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.
14.2 AWARDS PREVIOUSLY GRANTED. Except as otherwise provided in the Plan,
including without limitation, the provisions of Article 13, no termination,
amendment, or modification of the Plan shall
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adversely affect in any material way any Award previously granted under the
Plan, without the written consent of the Participant.
ARTICLE 15
GENERAL PROVISIONS
15.1 NO RIGHTS TO AWARDS. No Participant , employee, or other person shall
have any claim to be granted any Award under the Plan, and neither the Company
nor the Committee is obligated to treat Participants, employees, and other
persons uniformly.
15.2 NO STOCKHOLDERS RIGHTS. No Award gives the Participant any of the
rights of a stockholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.
15.3 WITHHOLDING. The Company or any Subsidiary shall have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy Federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of this Plan. With the
Committee's consent, a Participant may elect to have the Company withhold from
those Stock that would otherwise be received upon the exercise of any Option, a
number of shares having a Fair Market Value equal to the minimum statutory
amount necessary to satisfy the Company's applicable federal, state, local and
foreign income and employment tax withholding obligations.
15.4 NO RIGHT TO EMPLOYMENT OR SERVICES. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment or services at any
time, nor confer upon any Participant any right to continue in the employ of the
Company or any Subsidiary.
15.5 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an "unfunded"
plan for incentive compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater than those of a
general creditor of the Company or any Subsidiary.
15.6 INDEMNIFICATION. To the extent allowable under applicable law, each
member of the Committee or of the Board shall be indemnified and held harmless
by the Company from any loss, cost, liability, or expense that may be imposed
upon or reasonably incurred by such member in connection with or resulting from
any claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action or failure to act under
the Plan and against and from any and all amounts paid by him or her in
satisfaction of judgment in such action, suit, or proceeding against him or her
provided he or she gives the Company an opportunity, at its own expense, to
handle and defend the same before he or she undertakes to handle and defend it
on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or Bylaws, as a matter of
law, or otherwise, or any power that the Company may have to indemnify them or
hold them harmless.
15.7 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or other benefit plan of the
Company or any Subsidiary.
15.8 EXPENSES. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.
15.9 TITLES AND HEADINGS. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
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15.10 FRACTIONAL SHARES. No fractional shares of stock shall be issued and
the Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up or down as appropriate.
15.11 SECURITIES LAW COMPLIANCE. With respect to any person who is, on the
relevant date, obligated to file reports under Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be void to the extent permitted by law and voidable as deemed advisable by
the Committee.
15.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register under the
Securities Act of 1933, as amended, any of the shares of Stock paid under the
Plan. If the shares paid under the Plan may in certain circumstances be exempt
from registration under the Securities Act of 1933, as amended, the Company may
restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
15.13 GOVERNING LAW. The Plan and all Award Agreements shall be construed
in accordance with and governed by the laws of the State of Arizona.
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