SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
[ ] Preliminary Information Statement [ ] Confidential, for Use of the
[X] Definitive Information Statement Commission Only
(as permitted by Rule 14c-5(d)(2))
WORLD WIDE STONE CORPORATION
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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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 Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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WORLD WIDE STONE CORPORATION
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INFORMATION STATEMENT
MAJORITY STOCKHOLDER ACTION AS OF DECEMBER 15, 2000
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WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
NOTICE IS HEREBY GIVEN TO ALL STOCKHOLDERS OF WORLD WIDE STONE CORPORATION
THAT A WRITTEN CONSENT OF THE MAJORITY OF OUR COMPANY'S STOCKHOLDERS WILL BE
TAKEN ON DECEMBER 15, 2000. The majority consent will cover the following
actions:
1. To elect directors to serve until the next annual meeting of
stockholders and until their successors are elected and qualified.
2. To approve our 2000 Incentive Stock Plan.
3. To ratify the appointment of Arthur Andersen LLP as our independent
auditors for the fiscal year ending December 31, 2000.
These items of business are more fully described in the information
statement accompanying this notice. Stockholders of record as of the close of
business on November 3, 2000, are entitled to receive this information
statement. Stockholders holding approximately 57.3% of our outstanding common
stock have advised us that they intend to consent in writing to each of these
matters. We therefore are not holding a stockholders' meeting or soliciting
proxies on these matters.
By Order of the Board of Directors
/s/ Michael D. Nafziger
Phoenix, Arizona Michael D. Nafziger
November 20, 2000 Secretary
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WORLD WIDE STONE CORPORATION
5236 SOUTH 40TH STREET
PHOENIX, ARIZONA 85040
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INFORMATION STATEMENT FOR STOCKHOLDERS
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VOTING AND OTHER MATTERS
GENERAL
The Board of Directors of World Wide Stone Corporation, a Nevada
corporation, is furnishing this information statement to our stockholders in
connection with certain actions to be taken by a written consent of the holders
of a majority of our outstanding common stock to be taken on December 15, 2000.
The action by written consent is being taken in accordance with Sections 78.310
and 78.320 of the Nevada Revised Statutes. The holders of approximately 57.3% of
our outstanding common stock have advised us that they intend to consent in
writing to the following matters:
* election of directors;
* approval of our 2000 Incentive Stock Plan; and
* ratification of Arthur Andersen LLP as our independent auditors for
the fiscal year ending December 31, 2000.
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
This information statement is being first mailed on or about November 20,
2000, to all stockholders of record as of November 3, 2000.
VOTING SECURITIES AND VOTING RIGHTS
Stockholders of record at the close of business on November 3, 2000 are
entitled to receive this information statement and accompanying materials. On
the record date, there were outstanding 32,803,768 shares of our common stock,
which excludes 2,000,000 treasury shares.
Each holder of common stock generally would be entitled to cast one vote
per share of common stock held on any matter submitted to the vote of our
stockholders. Under Nevada law, however, any action that may be taken at any
meeting of our stockholders may be taken by written consent of the requisite
number of stockholders required to take such action. The election of directors
requires the affirmative vote of a plurality of the shares of common stock
voting for directors, and the approval of our 2000 Incentive Stock Plan and
ratification of Arthur Andersen LLP as our independent auditors requires the
affirmative vote of a majority of the shares of common stock voting on each of
those matters. Our articles of incorporation do not allow for cumulative voting
by our stockholders.
Franklin E. Cunningham and Spencer W. Cunningham, officers and directors of
our company, own an aggregate of 18,807,695 shares of our common stock,
representing approximately 57.3% of our common stock. See "Security Ownership of
Principal Stockholders, Directors, and Officers." Messrs. Cunningham and
Cunningham have advised us that they intend to consent in writing to each of the
matters described in this information statement, which ensures approval of each
proposal. We therefore are not holding a stockholders' meeting or soliciting
proxies on these matters.
EXPENSES OF INFORMATION STATEMENT
We will pay the expenses of preparing and mailing this information
statement and other materials that accompany this statement. In addition, we may
reimburse brokerage firms and other persons representing beneficial owners of
shares for expenses incurred in forwarding this information statement and
accompanying materials to such beneficial owners. We also may pay for and use
the services of other individuals or companies to distribute
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this information statement and accompanying materials if our Board of Directors
determines that it is advisable to do so.
ANNUAL REPORT AND OTHER MATTERS
Our 1999 Annual Report to Stockholders and Form 10-QSB for the quarter
ended June 30, 2000, which were mailed to stockholders with or preceding this
information statement, contain financial and other information about our
company, but are not incorporated into this information statement and are not to
be considered a part of these materials or subject to Regulations 14A or 14C or
to the liabilities of Section 18 of the Securities Exchange Act of 1934. WE WILL
PROVIDE UPON WRITTEN REQUEST, WITHOUT CHARGE TO EACH STOCKHOLDER OF RECORD AS OF
THE RECORD DATE, A COPY OF OUR ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1999 AND FORM 10-QSB FOR THE QUARTER ENDED JUNE 30, 2000, AS
FILED WITH THE SEC. ANY EXHIBITS LISTED IN THE FORM 10-KSB OR FORM 10-QSB REPORT
ALSO WILL BE FURNISHED UPON REQUEST AT THE ACTUAL EXPENSE INCURRED BY US IN
FURNISHING SUCH EXHIBITS. ANY SUCH REQUESTS SHOULD BE DIRECTED TO OUR COMPANY'S
SECRETARY AT OUR EXECUTIVE OFFICES AT THE ADDRESS SET FORTH IN THIS INFORMATION
STATEMENT.
ELECTION OF DIRECTORS
NOMINEES
Our bylaws provide that the number of directors shall be fixed from time to
time by resolution of our Board of Directors. Directors hold office until the
next annual meeting of stockholders or until their successors have been elected
and qualified. A board of five directors is to be elected pursuant to the
written consent of stockholders holding approximately 57.3% of our outstanding
common stock. All of the nominees currently are directors of our company. In the
event that any such nominee is unable or declines to serve as a director at the
time the written consent becomes effective, the majority stockholders will
execute a written consent to elect another nominee designated by the current
Board of Directors to fill the vacancy. We do not expect that any nominee will
be unable or will decline to serve as a director.
The following table sets forth certain information regarding the nominees
for directors.
NAME AGE POSITION HELD
---- --- -------------
Franklin E. Cunningham 49 Chairman of the Board, President, and
Chief Executive Officer
Spencer W. Cunningham 51 Executive Vice President, Treasurer, and
Director
Aaron T. Macneil 30 Chief Financial Officer and Director
Michael D. Nafziger 45 Director of National Sales, Secretary,
and Director
L. Ernest Whitesel 63 Director
FRANKLIN E. CUNNINGHAM founded our company and has served as our President
and Chief Executive Officer since August 1989 and as Chairman of the Board since
November 1991. Mr. Cunningham served as our Treasurer from August 1989 to March
1998. From 1983 to 1989, Mr. Cunningham served as a consultant and agent to
various architectural stone and ceramic tile materials and equipment suppliers,
manufacturers, manufacturer representatives, distributors, architects, and
designers in the United States, Italy, Germany, Taiwan, Spain, Portugal, India,
Turkey, and Indonesia. Mr. Cunningham has been involved in various aspects of
the architectural stone and ceramic tile industry since 1973. Mr. Cunningham is
the brother of Spencer W. Cunningham.
SPENCER W. CUNNINGHAM has served as our Executive Vice President and as a
director of our company since August 1994. Mr. Cunningham served as our Chief
Financial Officer from November 1998 until September 1999. Mr. Cunningham also
served as our Vice President from August 1989 until May 1991. From January 1985
to November 1991, Mr. Cunningham operated a real estate construction company and
served as an independent business development consultant in Ohio and Arizona.
Mr. Cunningham is the brother of Franklin E. Cunningham.
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AARON T. MACNEIL has served as our Chief Financial Officer since September
1999 and as a director of our company since March 2000. Mr. Macneil was employed
as an audit manager with Arthur Andersen LLP from September 1995 to September
1999, where he was primarily engaged in auditing publicly held companies. He is
a Certified Public Accountant in the state of Arizona.
MICHAEL D. NAFZIGER has served as our Director of National Sales and as a
director of our company since August 1996, and as our Secretary since November
1998. Mr. Nafziger served as our Director of Operations from November 1995 to
August 1996. Prior to joining our company, Mr. Nafziger served as Vice President
- Marketing for Genesis Technology Group from 1981 to 1983 and as President of
Ultraset/Profinish from 1983 to 1991. Mr. Nafziger was self-employed as a
consultant from 1991 until November 1995.
L. ERNEST WHITESEL has served as a director of our company since November
1992. Mr. Whitesel has engaged in business investing activities as President of
Hallmark Enterprises, Inc. since March 1991. Mr. Whitesel served as the
principal partner in a general insurance agency from 1981 to 1990.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Our Board of Directors held three meetings during the fiscal year ended
December 31, 1999. Each of our directors attended at least 75% of the total
number of meetings of the Board of Directors held during fiscal 1999.
Our bylaws authorize the Board of Directors to appoint among its members
one or more committees consisting of one or more directors. Our Board of
Directors currently does not have any committees.
DIRECTOR COMPENSATION AND OTHER INFORMATION
Employees of our company do not receive compensation for serving as members
of our Board of Directors. Non-employee directors receive $200 for each meeting
attended in person. In addition, we reimburse directors for expenses related to
out-of-town travel to attend meetings of the Board of Directors.
EXECUTIVE COMPENSATION
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The following table sets forth certain information concerning the
compensation earned by our Chief Executive Officer for the fiscal years ended
December 31, 1997, 1998, and 1999. No other executive officer of our company
received compensation of $100,000 or more during fiscal 1999.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION ALL OTHER
----------------------- COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS($) ($)(2)
--------------------------- ---- ------------- -------- ------
Franklin E. Cunningham 1999 $ 100,000 $ 0 $ 962
Chairman of the Board, 1998 83,333 0 962
President, and Chief Executive 1997 72,000 0 962
Officer
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(1) Mr. Cunningham also received certain perquisites, the value of which did
not exceed 10% of his salary and bonus during fiscal 1999.
(2) Amounts shown represent premium payments for term life insurance.
We offer our employees, including directors who also are employees of our
company, medical, dental, and life insurance benefits.
CONSULTING AGREEMENT
During April 1999, we entered into a Separation and Consulting Agreement
with Lee M. Cunningham, a director of our company, in connection with her
resignation as an officer of our company. Under the agreement, Ms.
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Cunningham has agreed to provide consulting services and advice to us with
respect to various human resources issues that we encounter in connection with
our business. We have agreed to pay Ms. Cunningham $2,080 per month for 81
months, beginning in April 1999, in consideration of services that Ms.
Cunningham previously provided to us, for the consulting services she provides
under the agreement, and for certain releases given by Ms. Cunningham in the
agreement. We also agreed to indemnify Ms. Cunningham with respect to any losses
she may incur as a result of her personal guarantees of our indebtedness to
third parties prior to her resignation. Ms. Cunningham is not standing for
re-election as a director of our company.
We do not have any employment or consulting agreements with any of our
other directors, officers, or other employees.
2000 STOCK OPTION PLAN
On January 27, 2000, our Board of Directors adopted the 2000 Stock Option
Plan, subject to shareholder approval. See "Proposal to Approve the 2000 Stock
Option Plan."
LIMITATION OF DIRECTORS' LIABILITY; INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES, AND AGENTS
Our articles of incorporation provide that no director or officer of our
company shall be personally liable to our company or its stockholders for
monetary damages for any breach of fiduciary duty by such person as a director
or officer, except that a director or officer shall be liable, to the extent
provided by applicable law, (a) for acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law, or (b) for the payment of
dividends in violation of restrictions imposed by Nevada laws. The effect of
this provision in the articles of incorporation is to eliminate the rights of
our company and our stockholders, either directly or through stockholders'
derivative suits brought on behalf of our company, to recover monetary damages
from a director or officer for breach of the fiduciary duty of care as a
director or officer except in those instances provided under Nevada law.
Our bylaws require us to indemnify any person who incurs liability or
expense by reason of such person acting as a director or officer of our company,
to the fullest extent allowed by Nevada law, except that indemnification is not
permitted in relation to any matter in which such person is found to be liable
for negligence or misconduct. In the event that an action, suit, or proceeding
is settled, we may indemnify such person only in connection with such matters
covered by the settlement as to which we are advised by counsel that the person
to be indemnified did not commit such a breach of duty. Our bylaws define
"expenses" to include, but not to be limited to, amounts of judgments, penalties
or fines and interest thereon, costs, attorneys' fees, expert witness fees, and
amounts paid in settlement, provided that such settlement is approved by our
board of directors before we indemnify a person determined to be entitled to
such indemnification.
Section 78.751 of the Nevada General Corporation Law provides that a
corporation may indemnify its directors and officers against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by the director or officer in connection with an action,
suit or proceeding in which the director or officer has been made or is
threatened to be made a party, if the director or officer acted in good faith
and in a manner that the director or officer reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal proceeding, had no reason to believe that his or her conduct was
unlawful. Any such indemnification may be made by the corporation only as
ordered by a court or as authorized by the corporation's stockholders or board
of directors in a specific case upon a determination made in accordance with the
Nevada GCL that such indemnification is proper in the circumstances. Under the
Nevada GCL, indemnification may not be made for any claim, issue or matter as to
which the director or officer has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals, to be liable to the corporation
or for amounts paid in settlement by the corporation, unless and only to the
extent that the court in which the action or suit was brought or other court of
competent jurisdiction determines that in view of all the circumstances of the
case, the director or officer is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper. Under the Nevada GCL, to the extent
that a director or officer of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding or in defense of any
claim, issue or matter therein, the director or officer must be indemnified by
the corporation against expenses, including attorneys' fees, actually and
reasonably incurred by the director or officer in connection with the defense.
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CERTAIN TRANSACTIONS
In January 1999, Franklin E. Cunningham, our Chairman of the Board,
President, and Chief Executive Officer, acquired the building in Phoenix,
Arizona, that we lease for our corporate offices, showroom, and warehouse space.
We paid rental payments to Mr. Cunningham of approximately $59,000 during fiscal
1999. In connection with the dissolution of their marriage, in March 2000 Mr.
Cunningham transferred this building to Lee M. Cunningham, who also is a
director of our company. Because we entered into this lease with a third party
prior to Mr. Cunningham's acquisition of the building, we believe that the terms
of the lease are no less favorable to our company than we could obtain from
non-affiliated parties. Our lease for this building expires in November 2000. We
currently are negotiating an extension to this lease and we anticipate that the
extension will be on terms substantially similar to the terms and conditions of
the existing lease.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, officers, and
persons who own more than 10% of a registered class of our equity securities to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. SEC regulations require directors, officers, and greater
than 10% stockholders to furnish our company with copies of all Section 16(a)
forms that they file. Based solely upon our review of the copies of such forms
for the year ended December 31, 1999 received by us and written representations
that no other reports were required, we believe that each person who was a
director, officer, or beneficial owner of more than 10% of our common stock
complied with all Section 16(a) filing requirements during such fiscal year,
except that (i) Aaron Macneil timely filed a report on Form 5 disclosing his
beneficial ownership of our securities as of the date on which he became an
officer of our company, which was required to have been reported earlier on Form
3; (ii) Franklin L. Cunningham filed a late report on Form 5 to disclose one
transaction that should have been reported earlier on Form 4; and (iii) Lee M.
Cunningham filed a late report on Form 5 to disclose one transaction that should
have been reported earlier on Form 4.
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SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS,
AND OFFICERS
The following table sets forth certain information regarding the shares of
our common stock beneficially owned as of November 3, 2000 (a) by each of our
directors and executive officers; (b) by all of our directors and executive
officers as a group; and (c) by each person who is known by us to own
beneficially more than 5% of our common stock.
SHARES BENEFICIALLY
OWNED(2)
-----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) NUMBER PERCENT
--------------------------------------- ------ -------
DIRECTORS AND EXECUTIVE OFFICERS
Franklin E. Cunningham 14,669,695 44.7%
Spencer W. Cunningham 4,138,000 12.6%
Aaron T. Macneil 0 *
Michael D. Nafziger 0 *
Lee M. Cunningham (3) 450,000 1.4%
L. Ernest Whitesel 23,750 *
Jaime Muguiro Munos(4) 2,280,000 7.0%
Alejandro Muguiro Munos(5) 1,520,000 4.6%
All directors and executive
officers as a group (eight persons) 23,081,445 70.3%
OTHER 5% SHAREHOLDERS
Allyson Cunningham(6) 1,906,975 5.8%
Alfredo Santiesteban Escalante(7) 1,790,024 5.5%
* Less than 1% of outstanding shares of common stock.
(1) Except as otherwise indicated, each person named in the table has sole
voting and investment power with respect to all common stock beneficially
owned by him or her, subject to applicable community property law. Except
as otherwise indicated, each of these persons may be reached through our
company at 5236 South 40th Street, Phoenix, Arizona 85040.
(2) Based on 32,803,768 shares of common stock outstanding as of November 3,
2000. The numbers and percentages shown include the shares of common stock
actually owned as of November 3, 2000 and the shares of common stock that
the person or group had the right to acquire within 60 days of that date.
In calculating the percentage of ownership, all shares of common stock that
the identified person had the right to acquire within 60 days of November
3, 2000 are deemed to be held by such person for the purpose of computing
the percentage of the shares of common stock owned by such person.
(3) Ms. Cunningham is not standing for re-election as a director of our
company.
(4) Mr. Munos is an officer and director of our wholly owned subsidiary,
Marmoles Muguiro, S.A. de C.V. Mr. Munos' address is c/o Marmoles Muguiro,
S.A. de C.V., Boulevard Francisco Villa, Km 2 CD. Industrial, Durango,
Durango, Mexico.
(5) Mr. Munos is an officer and director of our wholly owned subsidiary,
Marmoles Muguiro, S.A. de C.V. Mr. Munos' address is c/o Marmoles Muguiro,
S.A. de C.V., Boulevard Francisco Villa, Km 2 CD. Industrial, Durango,
Durango, Mexico.
(6) Ms. Cunningham is the daughter of Franklin and Lee Cunningham.
(7) Mr. Escalante's address is Avenue 20 de Noviembre # 320 Ote. 3er. Piso,
Durango, Durango, Mexico.
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PROPOSAL TO APPROVE THE
2000 INCENTIVE STOCK PLAN
On March 15, 2000, our Board of Directors adopted our 2000 Incentive Stock
Plan, or 2000 Plan, subject to approval by our stockholders within 12 months
from the date of adoption. The full text of the 2000 Plan is included as
"Appendix A" to this information statement.
Our Board of Directors has for some time recognized the importance of
providing a means for our employees and others who provide valuable services to
our company to acquire a proprietary interest in our company and to link their
interest and efforts to the long-term interests of our company's stockholders.
The Board of Directors considered the likelihood that we will be required to
grant stock options or other awards in the future in order to attract, retain,
and motivate key employees, directors, and independent contractors to provide
services to our company. In doing so, our directors took into account the
competitive business environment in which we operate and the increasing
importance that employees and potential employees, directors and potential
directors, and other individuals who may provide valuable services to our
company now attribute to compensation in the form of stock option grants.
Accordingly, our Board of Directors adopted the 2000 Plan, which is
intended to attract, retain, and motivate directors, employees, and independent
contractors who provide valuable services to our company. The Board of Directors
believes that it is in the best interests of our company to adopt the 2000 Plan.
Accordingly, the holders of approximately 57.3% of our outstanding common stock
have advised us that they will consent in writing to approve the 2000 Plan.
GENERAL TERMS OF THE 2000 PLAN; SHARES AVAILABLE FOR ISSUANCE
The 2000 Plan provides for the grant of incentive and nonqualified stock
options to acquire common stock, the direct grant of common stock, the grant of
stock appreciation rights, or SARs, and grants of other stock-based awards to
key personnel, directors, consultants, independent contractors, and others who
provide valuable services to our company. We may issue up to a maximum of
30,000,000 shares of our common stock under the 2000 Plan. The maximum number of
shares of stock with respect to which options or other awards may be granted to
any individual employee, including officers, during the term of the incentive
plan may not exceed 50% of the shares of common stock covered by the incentive
plan. As of November 3, 2000, we have not granted any options or other awards
under the incentive plan.
If any award is forfeited, terminated, canceled, does not vest, or expires
without having been exercised in full, stock not issued under such award will
again be available for the purposes of the 2000 Plan. If any change is made in
the stock subject to the 2000 Plan, or subject to any award granted under the
2000 Plan (through consolidation, spin-off, recapitalization, stock dividend,
split-up, combination of shares, exchange of shares, or otherwise), the 2000
Plan provides that appropriate adjustments will be made as to the aggregate
number and type of shares available for awards, the maximum number and type of
shares that may be subject to awards to any individual, the number and type of
shares covered by each outstanding award, and the exercise price per share (but
not the total price) for outstanding stock options.
The 2000 plan will terminate on March 15, 2010, and options may be granted
at any time during the life of the 2000 plan. The 2000 Plan is not intended to
be the exclusive means by which we may issue options or warrants to acquire our
common stock or any other type of stock-based award. To the extent permitted by
applicable law, we may issue any other options, warrants, or awards other than
pursuant to the 2000 Plan without stockholder approval.
ELIGIBILITY AND ADMINISTRATION
Employees of our company, non-employee directors, proposed directors,
proposed employees, and independent contractors will be eligible to receive
options under the 2000 Plan. Options that are incentive stock options may be
granted only to employees of our company.
The Board of Directors will administer the 2000 Plan. The Board, in its
sole discretion, may delegate all or any portion of its authority and duties
under the 2000 Plan to one or more committees appointed by the Board under such
conditions and limitations as the Board may from time to time establish. The
Board and/or any committee that
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has been delegated the authority to administer the 2000 Plan is referred to as
the "Plan Administrator." The Plan Administrator will have the authority, in its
discretion, to determine all matters relating to awards, including the selection
of the individuals to be granted awards, the type of awards, the number of
shares of common stock subject to an award, vesting conditions, expiration
dates, and any and all other terms, conditions, restrictions, and limitations,
if any, of an award.
GRANT AND EXERCISE OF OPTIONS
Options granted under the 2000 Plan may be either incentive stock options,
as defined under the Internal Revenue Code, or nonqualified options. The
expiration date, maximum number of shares purchasable, vesting provisions, and
any other provisions of options granted under the 2000 Plan will be established
at the time of grant. The Plan Administrator will set the term of each option,
but incentive stock options may not be granted for terms of greater than 10
years (5 years if the option is granted to a stockholder who possesses more than
10% of the voting power of our stock). Options will vest and become exercisable
in whole or in one or more installments at such time as may be determined by the
Plan Administrator. Any unvested options will automatically vest and become
exercisable upon a "Transfer of Control" of our company, as defined in the 2000
Plan.
The exercise prices of options will be determined by the Plan
Administrator, The exercise price of all incentive stock options granted under
the 2000 Plan may not be less than 100% of the fair market value of the common
stock at the time of the grant (110% of the fair market value if an option
intended to be an incentive stock options granted to a stockholder who at the
time the option is granted owns stock possessing more than 10% of the total
combined voting power of all classes of stock of our company or of its
subsidiaries). The most recent trade of our common stock in the National
Quotation Bureau's "Pink Sheets" occurred on October 23, 2000, at a price of
$0.21 per share.
TRANSFERABILITY OF OPTIONS; TERMINATION OF EMPLOYMENT OR SERVICES TO THE COMPANY
Except as otherwise allowed by the Plan Administrator, options granted
under the 2000 Plan are nontransferable other than by will or by the laws of
descent and distribution upon the death of the holder and, during the lifetime
of the holder, are exercisable only by such holder. Incentive stock options will
not be exercisable for more than (a) up to three months after termination of the
holder's employment for reasons other than death or disability, (b) up to one
year after termination due to disability, and (c) as determined by the Plan
Administrator after termination due to death. The Plan Administrator will
determine the terms and conditions under which nonqualified options may be
exercised following the termination of the holder's relationship with our
company. If the Plan Administrator does not specify a different time period,
nonqualified options will remain exercisable for the same periods of time after
termination of the holder's relationship with our company as incentive stock
options.
DURATION AND MODIFICATION
The 2000 Plan will remain in force until March 15, 2010, unless sooner
terminated by the Board of Directors. After the 2000 Plan is terminated, no
future awards may be granted, but awards previously granted will remain
outstanding in accordance with their applicable terms and conditions. The Board
of Directors may amend, make additions to, suspend or terminate the 2000 Plan at
any time, except that that the Board of Directors may not amend the 2000 Plan
without the approval of our stockholders if such amendments would increase the
aggregate number of shares of common stock that are available for issuance under
the 2000 Plan. The Board of Directors also may not amend the 2000 Plan without
stockholder approval if such approval is required by Section 422 of the Internal
Revenue Code, which deals with incentive stock options, or Section 162(m) of the
Internal Revenue Code, which deals with performance-based executive
compensation.
Despite the foregoing, the Board of Directors, in its sole discretion, may
bifurcate the 2000 Plan so as to restrict, limit, or condition the use of any
provision of the 2000 Plan to participants who are officers, directors or
stockholders subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the 2000 Plan with respect to other participants.
FEDERAL INCOME TAX CONSEQUENCES
Certain options granted under the 2000 Plan will be intended to qualify as
incentive stock options under Section 422 of the Internal Revenue Code.
Accordingly, there will be no taxable income to an employee when an
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incentive stock option is granted to him or her or when that option is
exercised. The amount by which the fair market value of the shares at the time
of exercise exceeds the exercise price, however, generally will be treated as an
item of preference in computing the alternate minimum taxable income of the
option holder. If an option holder exercises an incentive stock option and does
not dispose of the shares within either two years after the date of the grant of
the option or one year of the date the shares were transferred to the option
holder upon exercise, any gain realized upon disposition will be taxable to the
option holder as a capital gain. If the option holder does not satisfy the
applicable holding periods, however, the difference between the exercise price
and the fair market value of the shares on the date of exercise of the option
will be taxed as ordinary income, and the balance of the gain, if any, will be
taxed as capital gain. If the option holder disposes of the shares before the
expiration of the one-year and two-year periods and the amount realized is less
than the fair market value of the shares at the date of exercise, the employee's
ordinary income is limited to the amount realized less the exercise price paid.
We will be entitled to a tax deduction only to the extent the option holder has
ordinary income upon the sale or other disposition of the shares received when
the option was exercised.
Certain other options issued under the 2000 Plan may be nonqualified
options. The income tax consequences of nonqualified options will be governed by
Section 83 of the Internal Revenue Code. Under Section 83, the excess of the
fair market value of the shares of our common stock acquired pursuant to the
exercise of any nonqualified option or the grant of other awards over the amount
paid for such stock must be included in the gross income of the holder in the
first taxable year in which the common stock acquired by the holder is not
subject to a substantial risk of forfeiture. In calculating the excess value,
fair market value will be determined on the date that the substantial risk of
forfeiture expires, unless a Section 83(b) election is made to include the
excess value in income immediately after the acquisition, in which case fair
market value will be determined on the date of the acquisition. Generally, we
will be entitled to a federal income tax deduction in the same taxable year that
the holder recognizes income. We will be required to withhold income taxes with
respect to income reportable pursuant to Section 83 by a holder. The basis of
the shares acquired by an option holder will be equal to the exercise price of
those shares plus any income recognized pursuant to Section 83. Subsequent sales
of the acquired shares will produce capital gain or loss. Such capital gain or
loss will be long term if the stock has been held for more than 12 months from
the date the substantial risk of forfeiture lapsed or, if a Section 83(b)
election is made, more than 12 months from the date the shares were acquired.
The maximum federal capital gains tax rate currently is 20% for property held
more than 12 months.
If an option holder transfers a nonqualified option as a gift in a
non-arm's length transfer, neither the option holder nor the transferee will
realize taxable income at the time of transfer. Upon the subsequent exercise of
the option by the transferee, the option holder will realize ordinary income in
an amount equal to the excess of the fair market value of the shares on the date
of exercise over the option price. Upon a subsequent disposition of the shares
by the transferee, the transferee will generally realize short-term or long-term
capital gain or loss, with the basis for computing such gain or loss equal to
the fair market value of the stock at the time of exercise. If an option holder
makes a gift of an option and surrenders all dominion and control of the option,
the gift should be complete for federal gift tax purposes at the time of
transfer and should be valued at that time or, if later, at the time the option
becomes vested. For gift and estate tax purposes, the gift on an option would
generally cause the option and the shares of common stock acquired upon exercise
to be excluded from the option holder's estate. Special rules may apply if the
option holder makes a gift of an award to a charity or to a "living trust" under
which the option holder retains the right to revoke the trust or substantially
alter its terms.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Our Board of Directors has appointed Arthur Andersen LLP, independent
public accountants, to audit our consolidated financial statements for the
fiscal year ending December 31, 2000. The holders of approximately 57.3% of our
outstanding common stock have advised us that they intend to consent in writing
to ratify such appointment.
Dated: November 20, 2000
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APPENDIX A
WORLD WIDE STONE CORPORATION
2000 INCENTIVE STOCK PLAN
ADOPTED BY THE BOARD OF DIRECTORS AS OF MARCH 15, 2000
1. PURPOSE. The purpose of this 2000 Incentive Stock Plan (the "Plan") is
to attract, retain and motivate employees, directors, and independent
contractors by providing them with the opportunity to acquire a proprietary
interest in WORLD WIDE STONE CORPORATION, a Nevada corporation (the "Company")
and to link their interest and efforts to the long-term interests of the
Company's shareholders.
2. PLAN ADMINISTRATION
2.1 IN GENERAL. The Plan shall be administered by the Company's Board
of Directors (the "Board"). Except for the power to amend the Plan as provided
in Section 11, the Board, in its sole discretion, may delegate all or any
portion of its authority and duties under the Plan to one or more committees
appointed by the Board and consisting of at least one member of the Board, under
such conditions and limitations as the Board may from time to time establish.
The Board and/or any committee that has been delegated the authority to
administer the Plan shall be referred to as the "Plan Administrator." Except as
otherwise explicitly set forth in the Plan, the Plan Administrator shall have
the authority, in its discretion, to determine all matters relating to awards
(as described in Section 5) under the Plan, including the selection of the
individuals to be granted awards, the type of awards, the number of shares of
the Company's common stock ("Common Stock") subject to an award, vesting
conditions, and any and all other terms, conditions, restrictions and
limitations, if any, of an award. All decisions made by the Plan Administrator
pursuant to the Plan and related orders and resolutions shall be final and
conclusive.
2.2 RULE 16B-3 AND CODE SECTION 162(M). Notwithstanding any provision
of this Plan to the contrary, only the Board or a committee composed of two or
more "Non-Employee Directors" may make determinations regarding grants of awards
to officers, directors, and 10% shareholders of the Company. For purposes of
this Plan, the term "Non-Employee Directors" shall have the meaning set forth in
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "1934 Act"). The Plan Administrator shall have the authority and discretion
to determine the extent to which awards will conform to the requirements of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") and
to take such action, establish such procedures, and impose such restrictions as
the Plan Administrator determines to be necessary or appropriate to conform to
such requirements.
2.3 OTHER PLANS. The Plan Administrator also shall have authority to
grant awards as an alternative to or as the form of payment for grants or rights
earned or due under other compensation plans or arrangements of the Company,
including the plan of any entity acquired by the Company.
3. ELIGIBILITY. Any employee of the Company shall be eligible to receive
any award under the Plan. Directors who are not employees, proposed directors,
proposed employees and independent contractors shall be eligible to receive
awards other than Incentive Stock Options (as defined in Section 5.2). For
purposes of this Section 3, the "Company," with respect to all awards under the
Plan, other than Incentive Stock Options, includes any entity that is directly
or indirectly controlled by the Company or any entity in which the Company has a
significant equity interest, as determined by the Plan Administrator. With
respect to Incentive Stock Options, the "Company" includes any parent or
subsidiary of the Company as defined in Section 424 of the Code.
4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER AND SOURCE. The shares offered under the Plan shall be
shares of Common Stock and may be unissued shares or shares now held or
subsequently acquired by the Company as treasury shares, as the Plan
Administrator may from time to time determine. Subject to adjustment as provided
in Section 4.3, the aggregate number of shares of Common Stock that may be
issued under the Plan, including shares that may be issued upon exercise of
Incentive Stock Options, shall not exceed 30,000,000 shares. The aggregate
number of
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shares that may be covered by awards granted to any one individual in any year
shall not exceed 50% of the total number of shares that may be issued under the
Plan.
4.2 SHARES AVAILABLE. Any shares subject to an award granted under the
Plan that is forfeited, terminated or canceled, or any shares that do not vest,
shall again be available for the granting of awards under the Plan. If a stock
appreciation right is settled in cash, the shares covered by such award shall
remain available for the granting of other awards. The payment of cash dividends
and dividend equivalents paid in cash in conjunction with outstanding awards
shall not be counted against the shares available for issuance.
4.3 ADJUSTMENT OF SHARES AVAILABLE. The aggregate number and type of
shares available for awards under the Plan, the maximum number and type of
shares that may be subject to awards to any individual under the Plan, the
number and type of shares covered by each outstanding award, and the exercise
price per share (but not the total price) for stock options, stock appreciation
rights or similar awards outstanding under the Plan shall all be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from any split-up, combination or exchange of shares,
consolidation, spin-off or recapitalization of shares or any like capital
adjustment or the payment of any stock dividend.
4.4 TRANSFER OF CONTROL. In the event of a Transfer of Control of the
Company (as defined below), the surviving, continuing, successor or purchasing
corporation or parent corporation thereof, as the case may be (the "Acquiring
Corporation") shall either assume the Company's rights and obligations under
outstanding awards or substitute for outstanding awards substantially equivalent
awards for the Acquiring Corporation's stock. In the event the Acquiring
Corporation elects not to assume or substitute for such outstanding awards in
connection with the Transfer of Control, the Board may, in its discretion,
provide that any unexercisable and/or unvested portion of the outstanding awards
shall be immediately exercisable and vested in full on or before the date of the
Transfer of Control. The exercise and/or vesting of any award that is
permissible solely by reason of this Section 4.4 shall be conditioned upon the
consummation of the Transfer of Control. Any awards that are neither (i) assumed
or substituted for by the Acquiring Corporation in connection with the Transfer
of Control nor (ii) exercised on or before the date of the Transfer of Control
shall terminate and cease to be outstanding effective as of the date of the
Transfer of Control. Unless otherwise determined by the Board, a "Transfer of
Control" shall be deemed to have occurred in the event of any of the following:
(a) the direct or indirect sale or exchange by the shareholders of the Company
of all or substantially all of the stock of the Company if the shareholders of
the Company before such sale or exchange do not retain, directly or indirectly,
at least a majority of the beneficial interest in the voting stock of the
Company after such sale or exchange; (b) a merger or consolidation if the
shareholders of the Company before such merger or consolidation do not retain,
directly or indirectly, at least a majority of the beneficial interest in the
voting stock of the Company after such merger or consolidation (regardless of
whether the Company is the surviving corporation); (c) the sale, exchange or
transfer of all or substantially all of the assets of the Company; or (d) a
liquidation or dissolution of the Company.
5. AWARDS
5.1 TYPES OF AWARDS. Awards granted under this Plan may include, but
are not limited to, Incentive Stock Options or Nonqualified Stock Options (as
defined in Section 5.2), stock appreciation rights or restricted stock awards.
Such awards may be granted either alone, in addition to, or in tandem with any
other type of award granted under the Plan.
5.2 STOCK OPTIONS. The Plan Administrator may grant stock options,
designated as "Incentive Stock Options," which comply with the provisions of
Section 422 of the Code or any successor statutory provision, or "Nonqualified
Stock Options" that do not comply with the provisions of Section 422 of the Code
or any successor statutory provision. The price for which shares may be
purchased upon exercise of a particular option shall be determined by the Plan
Administrator; provided, however, that the exercise price of an Incentive Stock
Option shall not be less than 100% of the Fair Market Value (as defined below)
of such shares on the date such option is granted (110% of the Fair Market Value
if options are intended to be Incentive Stock Options and are granted to a
shareholder who at the time the option is granted owns or is deemed to own stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or of any parent or subsidiary of the Company). For
purposes of the Plan, "Fair Market Value" as to a particular day shall be the
per-share closing price for the Common Stock as reported for the prior trading
day in THE WALL STREET JOURNAL or in such other source as the Plan Administrator
deems reliable. The Plan Administrator shall set the term of each stock option,
but no Incentive
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Stock Option shall be exercisable more than 10 years after the date such option
is granted and, to the extent the aggregate Fair Market Value (determined as of
the date the option is granted) of Common Stock with respect to which Incentive
Stock Options granted to a particular individual become exercisable for the
first time during any calendar year (under the Plan and all other stock option
plans of the Company) exceeds $100,000 (or such corresponding amount as may be
set by the Code) such options shall be treated as Nonqualified Stock Options. An
optionholder and the Plan Administrator can agree at any time to convert an
Incentive Stock Option to a Nonqualified Stock Option.
5.3 STOCK APPRECIATION RIGHTS. The Plan Administrator may grant stock
appreciation rights, either in tandem with a stock option granted under the Plan
or with respect to a number of shares for which an option is not granted. A
stock appreciation right shall entitle the holder to receive, with respect to
each share of stock as to which the right is exercised, payment in an amount
equal to the excess of the share's Fair Market Value on the date the right is
exercised over its Fair Market Value on the date the right was granted. Such
payment may be made in cash or in shares of Common Stock valued at Fair Market
Value as of the date of the surrender, or partly in cash and partly in shares of
Common Stock, as determined by the Plan Administrator in its sole discretion.
The Plan Administrator may establish a maximum appreciation value payable for
stock appreciation rights.
5.4 RESTRICTED STOCK AWARDS. The Plan Administrator may grant
restricted stock awards under the Plan in Common Stock or denominated in units
of Common Stock. The Plan Administrator, in its discretion, may make such awards
subject to conditions and restrictions, as set forth in the instrument
evidencing the award, which may be based on continuous service with the Company
or the attainment of certain performance goals related to profits, profit
growth, profit-related return ratios, cash flow or shareholder returns, where
such goals may be stated in absolute terms or relative to comparison companies
or indices or to be achieved during a period of time. The Plan Administrator may
choose, at the time of granting a restricted stock award or at any time
thereafter up to the time of payment of the award, to include as part of such
award an entitlement to receive dividends or dividend equivalents, subject to
such terms as the Plan Administrator may establish. All dividends or dividend
equivalents that are not paid currently may, in the Plan Administrator's sole
discretion, accrue interest and be paid to the participant if, when, and to the
extent such award is paid.
5.5 PAYMENT; DEFERRAL. Awards granted under the Plan may be settled
through cash payments, the delivery of Common Stock (valued at Fair Market
Value) or the granting of awards or combinations thereof as the Plan
Administrator shall determine. Any award settlement, including payment
deferrals, may be subject to such conditions, restrictions, and contingencies as
the Plan Administrator shall determine. The Plan Administrator may permit or
require the deferral of any award payment, subject to such rules and procedures
as it may establish, which may include provisions for the payment or crediting
of interest, or dividend equivalents, including converting such credits to
deferred stock unit equivalents.
5.6 INDIVIDUAL AWARD AGREEMENTS. Stock Options shall and other awards
may be evidenced by agreements between the Company and the recipient in such
form and content as the Plan Administrator from time to time approves, which
agreements shall substantially comply with and be subject to the terms of the
Plan. Such individual agreements may contain such provisions or conditions as
the Plan Administrator deems necessary or appropriate to effectuate the sense
and purpose of the Plan and may be amended from time to time in accordance with
the terms thereof.
6. AWARD EXERCISE
6.1 PRECONDITION TO STOCK ISSUANCE. No shares shall be delivered
pursuant to the exercise of any stock option or stock appreciation right, in
whole or in part, until qualified for delivery under such securities laws and
regulations as may be deemed by the Plan Administrator to be applicable thereto
and until, in the case of the exercise of an option, payment in full of the
option price thereof (in cash or stock as provided in Section 6.3) is received
by the Company. No holder of an option or stock appreciation right, or any legal
representative, legatee or distributee shall be or be deemed to be a holder of
any shares subject to such option or right unless and until such option or right
is exercised, the exercise price is paid, and such shares are issued.
6.2 NO FRACTIONAL SHARES. No stock option may at any time be exercised
with respect to a fractional share. No fractional share shall be issued with
respect to a stock appreciation right; however, a fractional stock appreciation
right may be exercised for cash.
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6.3 FORM OF PAYMENT. An optionee may exercise a stock option using as
the form of payment (a) cash or cash equivalent, (b) stock-for-stock payment (as
described below), (c) cashless exercises, (d) any combination of the above, or
(e) such other means as the Plan Administrator may approve. Any optionee who
owns Common Stock may use such shares as a form of payment to exercise stock
options granted under the Plan. The Plan Administrator, in its discretion, may
restrict or rescind this right by notice to optionees. A stock option may be
exercised in such manner only by tendering (actually or by attestation) to the
Company whole shares of Common Stock having a Fair Market Value equal to or less
than the exercise price. If an option is exercised by surrender of shares having
a Fair Market Value less than the exercise price, the optionholder must pay the
difference in cash.
7. TRANSFERABILITY. Any Incentive Stock Option granted under the Plan
shall, during the recipient's lifetime, be exercisable only by such recipient,
and shall not be assignable or transferable by such recipient other than by will
or the laws of descent and distribution. Except as specifically allowed by the
Plan Administrator, any other award under the Plan and any of the rights and
privileges conferred thereby shall not be assignable or transferable by the
recipient other than by will or the laws of descent and distribution and such
award shall be exercisable during the recipient's lifetime only by the
recipient.
8. WITHHOLDING TAXES; OTHER DEDUCTIONS. The Company shall have the right to
deduct from any settlement of an award granted under the Plan, including the
delivery or vesting of shares, (a) an amount of cash or shares of Common Stock
having a value sufficient to cover withholding as required by law for any
federal, state or local taxes, and (b) any amounts due from the recipient of
such award to the Company or to any parent or subsidiary of the Company or to
take such other action as may be necessary to satisfy any such withholding or
other obligations, including withholding from any other cash amounts due or to
become due from the Company to such recipient an amount equal to such taxes or
obligations. The Plan Administrator also may, in its discretion, permit the
holder of an award to deliver to the Company, at the time the award is exercised
or vests, one or more shares of Common Stock previously acquired by such
individual (other than pursuant to the transaction triggering the taxes) with an
aggregate Fair Market Value up to or equal to (but not in excess of) the amount
of the taxes incurred in connection with such exercise or vesting.
9. TERMINATION OF SERVICES. The terms and conditions under which an award
may be exercised following termination of a recipient's employment, directorship
or independent contractor relationship with the Company shall be determined by
the Plan Administrator; provided, however, that Incentive Stock Options shall
not be exercisable at any time after the earliest of the date that is (a) three
months after termination of employment, unless due to death or Disability (as
defined in Section 22(e)(3) of the Code); (b) as determined by the Plan
Administrator after termination of employment due to death; (c) one year after
termination of employment due to Disability; or (d) ten years after the date of
grant (five years if granted to a shareholder who at the time the option is
granted owns or is deemed to own stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any parent or
subsidiary of the Company).
10. TERM OF THE PLAN. The Plan shall become effective as of the date of
adoption by the Board and shall remain in full force and effect through the date
that is ten years thereafter, unless sooner terminated by the Board. After the
Plan is terminated, no future awards may be granted, but awards previously
granted shall remain outstanding in accordance with their applicable terms and
conditions and the Plan's terms and conditions.
11. PLAN AMENDMENT; BIFURCATION OF THE PLAN. The Board may amend, suspend
or terminate the Plan at any time; provided that no such amendment shall be made
without the approval of the Company's shareholders (a) that would increase the
number of shares available for issuance under the Plan (other than in accordance
with Section 4.3), or (b) if such approval is required (i) to comply with
Section 422 of the Code with respect to Incentive Stock Options, or (ii) for
purposes of Section 162(m) of the Code. Notwithstanding any provision of this
Plan to the contrary, the Board, in its sole discretion, may bifurcate the Plan
so as to restrict, limit or condition the use of any provision of the Plan to
participants who are officers, directors or shareholders subject to Section 16
of the 1934 Act without so restricting, limiting or conditioning the Plan with
respect to other participants
12. PLAN NOT EXCLUSIVE. This Plan is not intended to be the exclusive means
by which the Company may issue awards to acquire its Common Stock.
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13. GOVERNING LAW. The Plan shall be governed by, and all questions arising
hereunder shall be determined in accordance with, the laws of the State of
Arizona.
14. APPROVAL BY SHAREHOLDERS. This Plan shall be submitted to the
shareholders of the Company for their approval at a regular or special meeting
to be held within 12 months after the adoption of this Plan by the Board.
Shareholder approval shall be evidenced by the affirmative vote of the holders
of a majority of the shares of the Company's Common Stock present in person or
by proxy and voting at the meeting. If the shareholders decline to approve this
Plan at such meeting or if this Plan is not approved by the shareholders within
12 months after its adoption by the Board, this Plan (and all awards granted
hereunder) shall automatically terminate to the same extent and with the same
effect as though this Plan had never been adopted. If this Plan is approved by
shareholders, all awards granted under the Plan to persons who are "Affiliates"
of the Company (as defined under the Securities Act of 1933, as amended) shall
be deemed acquired on the date such approval is obtained.
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