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ECOLAB INC.
1997 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED AS OF AUGUST 18, 2000)
1. PURPOSE OF PLAN.
The purpose of the Ecolab Inc. 1997 Stock Incentive Plan (the "Plan")
is to advance the interests of Ecolab Inc. (the "Company") and its stockholders
by enabling the Company and its Subsidiaries to attract and retain persons of
ability to perform services for the Company and its Subsidiaries by providing an
incentive to such individuals through equity participation in the Company and by
rewarding such individuals who contribute to the achievement by the Company of
its economic objectives.
2. DEFINITIONS.
The following terms will have the meanings set forth below, unless the
context clearly otherwise requires:
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "BROKER EXERCISE NOTICE" means a written notice pursuant to which a
Participant, upon exercise of an Option, irrevocably instructs a broker or
dealer to sell a sufficient number of shares or loan a sufficient amount of
money to pay all or a portion of the exercise price of the Option and/or any
related withholding tax obligations and remit such sums to the Company and
directs the Company to deliver stock certificates to be issued upon such
exercise directly to such broker or dealer or their nominee.
2.3 "CAUSE" means (i) dishonesty, fraud, misrepresentation,
embezzlement or deliberate injury or attempted injury, in each case related to
the Company or any Subsidiary, (ii) any unlawful or criminal activity of a
serious nature, (iii) any intentional and deliberate breach of a duty or duties
that, individually or in the aggregate, are material in relation to the
Participant's overall duties, or (iv) any material breach of any employment,
service, confidentiality or noncompete agreement entered into with the Company
or any Subsidiary.
2.4 "CHANGE IN CONTROL" means an event described in Section 11.1 of the
Plan.
2.5 "CODE" means the Internal Revenue Code of 1986, as amended.
2.6 "COMMITTEE" means the group of individuals administering the Plan,
as provided in Section 3 of the Plan.
2.7 "COMMON STOCK" means the common stock of the Company, par value
$1.00 per share, or the number and kind of shares of stock or other securities
into which such Common Stock may
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be changed in accordance with Section 4.3 of the Plan.
2.8 "DISABILITY" means the disability of the Participant such as would
entitle the Participant to receive disability income benefits pursuant to the
long-term disability plan of the Company or Subsidiary then covering the
Participant or, if no such plan exists or is applicable to the Participant, the
permanent and total disability of the Participant within the meaning of Section
22(e)(3) of the Code.
2.9 "ELIGIBLE RECIPIENTS" means all employees (including, without
limitation, officers and directors who are also employees) of the Company or any
Subsidiary and any non-employee consultants and advisors of the Company or any
Subsidiary.
2.10 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
2.11 "FAIR MARKET VALUE" means, with respect to the Common Stock, as of
any date (or, if no shares were traded or quoted on such date, as of the next
preceding date on which there was such a trade or quote) the mean between the
reported high and low sale prices of the Common Stock as quoted in the WALL
STREET JOURNAL reports of the New York Stock Exchange - Composite Transactions.
2.12 "INCENTIVE AWARD" means an Option, Restricted Stock Award or
Performance Stock Award granted to an Eligible Recipient pursuant to the Plan.
2.13 "INCENTIVE STOCK OPTION" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that
qualifies as an "incentive stock option" within the meaning of Section 422 of
the Code.
2.14 "NON-STATUTORY STOCK OPTION" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that
does not qualify as an Incentive Stock Option.
2.15 "OPTION" means an Incentive Stock Option or a Non-Statutory Stock
Option.
2.16 "PARTICIPANT" means an Eligible Recipient who receives one or more
Incentive Awards under the Plan.
2.17 "PERFORMANCE STOCK AWARD" means an award of Common Stock granted
to an Eligible Recipient pursuant to Section 8 of the Plan.
2.18 "PREVIOUSLY ACQUIRED SHARES" means shares of Common Stock that are
already owned by the Participant or, with respect to any Incentive Award, that
are to be issued upon the grant, exercise or vesting of such Incentive Award.
2.19 "RESTRICTED STOCK AWARD" means an award of Common Stock granted to
an Eligible Recipient pursuant to Section 7 of the Plan that is subject to the
restrictions on transferability and
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the risk of forfeiture imposed by the provisions of such Section 7.
2.20 "Reload Option" means an Option granted under Section 6.6 with
respect to the exercise of an earlier granted option by using Previously
Acquired Shares to pay the exercise price and withholding obligation.
2.21 "RETIREMENT" means termination of employment at an age and length
of service such that the Participant would be eligible to an immediate
commencement of benefit payments under the Company's defined benefit pension
plan available generally to its employees, whether or not such individual
actually elects to commence such payments (provided that, if the Participant is
not covered by the Company's defined benefit pension plan, attainment of the
necessary age and length of service for immediate benefit commencement shall,
for purposes of the Plan, be determined as to the Participant as if such
Participant had been covered by such plan and had been credited with continuous
(vesting) service pursuant to such plan rules (a) for the period of service such
Participant was in the employ of the Company and any Subsidiary, and (b) with
respect to a Participant who was in the employ of a corporation or other
organization whose business was acquired by the Company or any Subsidiary, if
(and only to the extent) specifically provided by the Committee, for the period
of service such Participant was in the employ of such corporation or other
organization prior to such acquisition).
2.22 "SECURITIES ACT" means the Securities Act of 1933, as amended.
2.23 "SUBSIDIARY" means 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 Committee.
2.24 "TAX DATE" means the date any withholding tax obligation arises
under the Code for a Participant with respect to an Incentive Award.
3. PLAN ADMINISTRATION.
3.1 THE COMMITTEE. The Plan will be administered by the Board or by a
committee of the Board. So long as the Company has a class of its equity
securities registered under Section 12 of the Exchange Act, any committee
administering the Plan will consist solely of two or more members of the Board
who are "non-employee directors" within the meaning of Rule 16b-3 under the
Exchange Act and, if the Board so determines in its sole discretion, who are
"outside directors" within the meaning of Section 162(m) of the Code. Such a
committee, if established, will act by majority approval of the members
(unanimous approval with respect to action by written consent), and a majority
of the members of such a committee will constitute a quorum. As used in the
Plan, "Committee" will refer to the Board or to such a committee, if
established. To the extent consistent with corporate law, the Committee may
delegate to any officers of the Company the duties, power and authority of the
Committee under the Plan pursuant to such conditions or limitations as the
Committee may establish; provided, however, that only the Committee may exercise
such duties, power and authority with respect to Eligible Recipients who are
subject to Section 16 of the Exchange Act. The Committee may exercise its
duties, power and authority under the Plan in its
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sole and absolute discretion without the consent of any Participant or other
party, unless the Plan specifically provides otherwise. Each determination,
interpretation or other action made or taken by the Committee pursuant to the
provisions of the Plan will be conclusive and binding for all purposes and on
all persons, and no member of the Committee will be liable for any action or
determination made in good faith with respect to the Plan or any Incentive Award
granted under the Plan.
3.2 AUTHORITY OF THE COMMITTEE.
(a) In accordance with and subject to the provisions of the
Plan, the Committee will have the authority to determine all provisions
of Incentive Awards as the Committee may deem necessary or desirable
and as consistent with the terms of the Plan, including, without
limitation, the following: (i) the Eligible Recipients to be selected
as Participants; (ii) the nature and extent of the Incentive Awards to
be made to each Participant (including the number of shares of Common
Stock to be subject to each Incentive Award, any exercise price, the
manner in which Incentive Awards will vest or become exercisable and
whether Incentive Awards will be granted in tandem with other Incentive
Awards) and the form of written agreement, if any, evidencing such
Incentive Award; (iii) the time or times when Incentive Awards will be
granted; (iv) the duration of each Incentive Award; and (v) the
restrictions and other conditions to which the payment or vesting of
Incentive Awards may be subject. In addition, the Committee will have
the authority under the Plan in its sole discretion to pay the economic
value of any Incentive Award in the form of cash, Common Stock or any
combination of both.
(b) The Committee will have the authority under the Plan to
amend or modify the terms of any outstanding Incentive Award in any
manner, including, without limitation, the authority to modify the
number of shares or other terms and conditions of an Incentive Award,
extend the term of an Incentive Award, accelerate the exercisability or
vesting or otherwise terminate any restrictions relating to an
Incentive Award, accept the surrender of any outstanding Incentive
Award or, to the extent not previously exercised or vested, authorize
the grant of new Incentive Awards in substitution for surrendered
Incentive Awards; provided, however that the amended or modified terms
are permitted by the Plan as then in effect, that no amendment or
modification of an outstanding Incentive Award (other than as may be
required pursuant to Section 4.3 of the Plan) may decrease the per
share exercise price of an Option below the Fair Market Value of the
Common Stock on the date of grant, and that any Participant adversely
affected by such amended or modified terms has consented to such
amendment or modification.
(c) In the event of (i) any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering,
extraordinary dividend or divestiture (including a spin-off) or any
other change in corporate structure or shares, (ii) any purchase,
acquisition, sale or disposition of a significant amount of assets or a
significant business, (iii) any change in accounting
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principles or practices, or (iv) any other similar change, in each case
with respect to the Company or any other entity whose performance is
relevant to the grant or vesting of an Incentive Award, the Committee
(or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) may,
without the consent of any affected Participant, amend or modify the
vesting criteria of any outstanding Incentive Award that is based in
whole or in part on the financial performance of the Company (or any
Subsidiary or division or other subunit thereof) or such other entity
so as equitably to reflect such event, with the desired result that the
criteria for evaluating such financial performance of the Company or
such other entity will be substantially the same (in the sole
discretion of the Committee or the board of directors of the surviving
corporation) following such event as prior to such event; provided,
however, that the amended or modified terms are permitted by the Plan
as then in effect.
4. SHARES AVAILABLE FOR ISSUANCE.
4.1 MAXIMUM NUMBER OF SHARES AVAILABLE. Subject to adjustment as
provided in Section 4.3 of the Plan, the maximum number of shares of Common
Stock that will be available for issuance under the Plan will be 12,000,000
shares of Common Stock. Notwithstanding any other provisions of the Plan to the
contrary, no Participant in the Plan may be granted any Options or any other
Incentive Awards with a value based solely on an increase in the value of the
Common Stock after the date of grant, relating to more than 2,500,000 shares of
Common Stock in the aggregate during any 48- month period (subject to adjustment
as provided in Section 4.3 of the Plan). The shares available for issuance under
the Plan may, at the election of the Committee, be either treasury shares or
shares authorized but unissued, and, if treasury shares are used, all references
in the Plan to the issuance of shares will, for corporate law purposes, be
deemed to mean the transfer of shares from treasury.
4.2 ACCOUNTING FOR INCENTIVE AWARDS. Shares of Common Stock that are
issued under the Plan or that are subject to outstanding Incentive Awards will
be applied to reduce the maximum number of shares of Common Stock remaining
available for issuance under the Plan. Any shares of Common Stock that are
subject to an Incentive Award that lapses, expires, is forfeited or for any
reason is terminated unexercised or unvested and any shares of Common Stock that
are subject to an Incentive Award that is settled or paid in cash or any form
other than shares of Common Stock will automatically again become available for
issuance under the Plan. To the extent that the exercise price of any Option
and/or associated tax withholding obligations are paid by tender or attestation
as to ownership of Previously Acquired Shares, or to the extent that such tax
withholding obligations are satisfied by withholding of shares otherwise
issuable upon exercise of the Option, only the number of shares of Common Stock
issued net of the number of shares tendered, attested to or withheld will be
applied to reduce the maximum number of shares of Common Stock remaining
available for issuance under the Plan; provided, however, that such net counting
will not apply in determining the number of shares available for issuance
pursuant to Incentive Stock Options granted hereunder, unless permitted by
Section 422 of the Code and the rules and regulations thereunder. Any shares of
Common Stock that constitute the forfeited portion of a Restricted Stock Award,
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however, will not become available for further issuance under the Plan.
4.3 ADJUSTMENTS TO SHARES AND INCENTIVE AWARDS. In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other change in the corporate structure or shares of the Company, the Committee
(or, if the Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation) will make appropriate
adjustment (which determination will be conclusive) as to the number and kind of
securities or other property (including cash) available for issuance or payment
under the Plan and, in order to prevent dilution or enlargement of the rights of
Participants, (a) the number and kind of securities or other property (including
cash) subject to outstanding Incentive Awards, and (b) the exercise price of
outstanding Options.
5. PARTICIPATION.
Participants in the Plan will be those Eligible Recipients who, in the
judgment of the Committee, have contributed, are contributing or are expected to
contribute to the achievement of economic objectives of the Company or its
Subsidiaries. Eligible Recipients may be granted from time to time one or more
Incentive Awards, singly or in combination or in tandem with other Incentive
Awards, as may be determined by the Committee in its sole discretion. Incentive
Awards will be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date will be the date of any related
agreement with the Participant.
6. OPTIONS.
6.1 GRANT. An Eligible Recipient may be granted one or more Options
under the Plan, and such Options will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. The Committee may designate whether an Option
is to be considered an Incentive Stock Option or a Non-Statutory Stock Option.
To the extent that any Incentive Stock Option granted under the Plan ceases for
any reason to qualify as an "incentive stock option" for purposes of Section 422
of the Code, such Incentive Stock Option will continue to be outstanding for
purposes of the Plan but will thereafter be deemed to be a Non-Statutory Stock
Option.
6.2 EXERCISE PRICE. The per share price to be paid by a Participant
upon exercise of an Option will be determined by the Committee in its discretion
at the time of the Option grant, provided that such price will not be less than
100% of the Fair Market Value of one share of Common Stock on the date of grant.
6.3 EXERCISABILITY AND DURATION. An Option will become exercisable at
such times and in such installments and upon such terms and conditions as may be
determined by the Committee in its sole discretion at the time of grant
(including without limitation that (i) the Participant remain in the continuous
employ or service of the Company or a Subsidiary for a certain period, (ii) the
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Participant comply with certain requirements, (iii) the Participant, the Company
or any division or subunit thereof, satisfy certain performance goals or
criteria or (iv) the Common Stock satisfy certain performance goals or
criteria); provided, however, that no Option may be exercisable prior to six
months (other than as provided in Section 9.1 of the Plan) or after 10 years
from its date of grant.
6.4 PAYMENT OF EXERCISE PRICE. The total purchase price of the shares
to be purchased upon exercise of an Option will be paid entirely in cash
(including check, bank draft or money order); provided, however, that the
Committee, in its sole discretion and upon terms and conditions established by
the Committee, may allow such payments to be made, in whole or in part, by
tender of a Broker Exercise Notice, by tender, or attestation as to ownership,
of Previously Acquired Shares that have been held for the period of time
necessary to avoid a charge to the Company's earnings for financial reporting
purposes and that are otherwise acceptable to the Committee, or by a combination
of such methods. For purposes of such payment, Previously Acquired Shares
tendered or covered by an attestation will be valued at their Fair Market Value
on the exercise date.
6.5 MANNER OF EXERCISE. An Option may be exercised by a Participant in
whole or in part from time to time, subject to the conditions contained in the
Plan and in the agreement evidencing such Option, by delivery in person, by
facsimile or electronic transmission or through the mail of written notice of
exercise to the Company at its principal executive office in St. Paul, Minnesota
and by paying in full the total exercise price for the shares of Common Stock to
be purchased in accordance with Section 6.4 of the Plan.
6.6 RELOAD OPTIONS. In connection with the grant of an Option
hereunder, the Committee may provide for the automatic grant of a Reload Option
when the original underlying Option is exercised in whole or in part during the
term of the Participant's employment with the Company or any subsidiary and some
or all of the exercise price is satisfied by tender or attestation of ownership
of Previously Acquired Shares. Such Reload Option will be granted effective as
of the date of exercise of the underlying Option, will provide the Participant
the right to purchase the number of shares of Common Stock tendered or attested
to in exercising the underlying Option and the number of shares tendered,
attested to or withheld to satisfy tax obligations associated with that portion
of the underlying Option exercised by such tender or attestation, will have an
exercise price equal to the Fair Market Value on the date of grant, and will
vest and become exercisable and will be subject to such other terms and
conditions as the Committee may determine.
7. RESTRICTED STOCK AWARDS.
7.1 GRANT. An Eligible Recipient may be granted one or more Restricted
Stock Awards under the Plan, and such Restricted Stock Awards will be subject to
such terms and conditions, consistent with the other provisions of the Plan, as
may be determined by the Committee in its sole discretion. The Committee may
impose such restrictions or conditions, not inconsistent with the provisions of
the Plan, to the vesting of such Restricted Stock Awards as it deems
appropriate, including, without limitation, that (i) the Participant remain in
the continuous employ or service of the Company or a Subsidiary for a certain
period; (ii) the Participant comply with certain
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requirements; (iii) the Participant or the Company (or any Subsidiary or
division or other subunit thereof) satisfy certain performance goals or
criteria; or (iv) the Common Stock satisfy certain performance goals or
criteria, provided, however, that other than as provided in Section 9.1 of the
Plan, no Restricted Stock Award may vest prior to six months from its date of
grant.
7.2 RIGHTS AS A STOCKHOLDER; TRANSFERABILITY. Except as provided in
Sections 7.1, 7.3, 7.4 and 12.3 of the Plan, a Participant will have all voting,
dividend, liquidation and other rights with respect to shares of Common Stock
issued to the Participant as a Restricted Stock Award under this Section 7 upon
the Participant becoming the holder of record of such shares as if such
Participant were a holder of record of shares of unrestricted Common Stock.
7.3 DIVIDENDS AND DISTRIBUTIONS. Unless the Committee determines
otherwise in its sole discretion (either in the agreement evidencing the
Restricted Stock Award at the time of grant or at any time after the grant of
the Restricted Stock Award), any dividends or distributions (other than regular
quarterly cash dividends) paid with respect to shares of Common Stock subject to
the unvested portion of a Restricted Stock Award will be subject to the same
restrictions as the shares to which such dividends or distributions relate. The
Committee will determine in its sole discretion whether any interest will be
paid on such dividends or distributions. The Committee, in an agreement
evidencing a Restricted Stock Award, may require that, unless the Participant
elects otherwise, regular quarterly cash dividends paid with respect to shares
of Common Stock subject to a portion of the Restricted Stock Award that has not
vested will be reinvested (and in such case Participants hereby consent to such
reinvestment) in shares of Common Stock pursuant and in accordance with the
Company's regular dividend reinvestment plan.
7.4 ENFORCEMENT OF RESTRICTIONS. To enforce the restrictions referred
to in this Section 7, the Committee may place a legend on the stock certificates
referring to such restrictions and may require the Participant, until the
restrictions have lapsed, to keep the stock certificates, together with duly
endorsed stock powers, in the custody of the Company or its transfer agent, or
to maintain evidence of stock ownership, together with duly endorsed stock
powers, in a certificateless book-entry stock account with the Company's
transfer agent.
8. PERFORMANCE STOCK AWARDS.
An Eligible Recipient may be granted one or more Performance Stock
Awards under the Plan, and such Performance Stock Awards will be subject to such
terms and conditions, if any, consistent with the other provisions of the Plan,
as may be determined by the Committee in its sole discretion. The Participant
will have all voting, dividend, liquidation and other rights with respect to the
shares of Common Stock issued to a Participant as a Performance Stock Award
under this Section 8 upon the Participant becoming the holder of record of such
shares; provided, however, that the Committee may impose such restrictions on
the assignment or transfer of a Performance Stock Award as it deems appropriate,
and may enforce such restrictions by any or all of the methods set forth in
Section 7.4 of the Plan.
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9. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE.
9.1 TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABILITY. In the event
a Participant's employment with the Company and all Subsidiaries is terminated
by reason of death or Disability:
(a) All outstanding Options then held by the Participant will
become immediately exercisable in full and will remain exercisable for
a period of five years after such termination (but in no event after
the expiration date of any such Option);
(b) All Restricted Stock Awards then held by the Participant
will become fully vested; and
(c) Any assignment or transfer restrictions with respect to
Performance Stock Awards will lapse.
9.2 TERMINATION OF EMPLOYMENT DUE TO RETIREMENT. Subject to Section 9.6
of the Plan, in the event a Participant's employment with the Company and all
Subsidiaries is terminated by reason of Retirement:
(a) All outstanding Options then held by the Participant will,
to the extent exercisable as of such termination, remain exercisable in
full for a period of five years after such termination (but in no event
after the expiration date of any such Option). Options not exercisable
as of such Retirement will be forfeited and terminate.
(b) All Restricted Stock Awards then held by the Participant
that have not vested as of such termination will be terminated and
forfeited; and
(c) Any assignment or transfer restrictions with respect to
Performance Stock Awards that have not lapsed will continue in effect
in accordance with their terms unless otherwise provided in the
agreement evidencing such Performance Stock Awards.
9.3 TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN DEATH, DISABILITY
OR RETIREMENT. Subject to Section 9.6 of the Plan, in the event a Participant's
employment is terminated with the Company and all Subsidiaries for any reason
other than death, Disability or Retirement, or a Participant is in the employ of
a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company (unless
the Participant continues in the employ of the Company or another Subsidiary):
(a) All outstanding Options then held by the Participant will,
to the extent exercisable as of such termination, remain exercisable in
full for a period of three months after such termination (but in no
event after the expiration date of any such Option). Options not
exercisable as of such termination will be forfeited and terminate.
(b) All Restricted Stock Awards then held by the Participant
that have not vested as
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of such termination will be terminated and forfeited; and
(c) Any assignment or transfer restrictions with respect to
Performance Stock Awards that have not lapsed will continue in effect
in accordance with their terms unless otherwise provided in the
agreement evidencing such Performance Stock Awards.
9.4 TERMINATION OF SERVICE AS A NON-EMPLOYEE CONSULTANT OR ADVISOR. In
the event a Participant's service as a non-employee consultant or advisor is
terminated with the Company and all Subsidiaries for any reason, or a
Participant is in the service of a Subsidiary and the Subsidiary ceases to be a
Subsidiary of the Company (unless the Participant continues in the service of
the Company or another Subsidiary), all rights of the Participant under the Plan
and any agreements evidencing an Incentive Award will immediately terminate
without notice of any kind, and (i) no Options then held by the Participant will
thereafter be exercisable, (ii) all Restricted Stock Awards then held by the
Participant that have not vested will be terminated and forfeited, and (iii) any
assignment or transfer restrictions with respect to Performance Stock Awards
that have not lapsed will continue in effect in accordance with their terms
unless otherwise provided in the agreement evidencing such Performance Stock
Awards; provided, however, that if such termination is due to any reason other
than termination by the Company or any Subsidiary for Cause (as defined in
Section 2.3 of the Plan), all outstanding Options then held by such Participant
will remain exercisable to the extent exercisable as of such termination for a
period of three months after such termination (but in no event after the
expiration date of any such Option).
9.5 MODIFICATION OF RIGHTS UPON TERMINATION. Notwithstanding the other
provisions of this Section 9, upon a Participant's termination of employment or
other service with the Company and all Subsidiaries, the Committee may, in its
sole discretion (which may be exercised at any time on or after the date of
grant, including following such termination), cause Options (or any part
thereof) then held by such Participant to become or continue to become
exercisable and/or remain exercisable following such termination of employment
or other service, and Restricted Stock Awards and Performance Stock Awards then
held by such Participant to vest and/or continue to vest or become free of
transfer restrictions, as the case may be, following such termination of
employment or other service, in each case in the manner determined by the
Committee; provided, however, that (a) no Incentive Award will become
exercisable or vest prior to six months from its date of grant (unless such
exercisability or vesting is by reason of death or Disability), and (b) no
Incentive Award may remain exercisable or continue to vest for more than two
years beyond the date such Incentive Award would have terminated if not for the
provisions of this Section 9.5 but in no event beyond its expiration date.
9.6 EFFECTS OF ACTIONS CONSTITUTING CAUSE. Notwithstanding anything in
the Plan to the contrary, in the event that a Participant is determined by the
Committee, acting in its sole discretion, to have committed any action which
would constitute Cause as defined in Section 2.3, irrespective of whether such
action or the Committee's determination occurs before or after termination of
such Participant's employment or other service with the Company or any
Subsidiary, all rights of the Participant under the Plan and any agreements
evidencing an Incentive Award then held by the
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Participant shall terminate and be forfeited without notice of any kind.
9.7 DETERMINATION OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE.
(a) The change in a Participant's status from that of an
employee of the Company or any Subsidiary to that of a non-employee
consultant or advisor of the Company or any Subsidiary will, for
purposes of the Plan, be deemed to result in a termination of such
Participant's employment with the Company and its Subsidiaries, unless
the Committee otherwise determines in its sole discretion.
(b) The change in a Participant's status from that of a
non-employee consultant or advisor of the Company or any Subsidiary to
that of an employee of the Company or any Subsidiary will not, for
purposes of the Plan, be deemed to result in a termination of such
Participant's service as a non-employee consultant or advisor with the
Company and its Subsidiaries, and such Participant will thereafter be
deemed to be an employee of the Company or its Subsidiaries until such
Participant's employment is terminated, in which event such Participant
will be governed by the provisions of this Plan relating to termination
of employment.
(c) Unless the Committee otherwise determines in its sole
discretion, a Participant's employment or other service will, for
purposes of the Plan, be deemed to have terminated on the date recorded
on the personnel or other records of the Company or the Subsidiary for
which the Participant provides employment, as determined by the
Committee in its sole discretion based upon such records.
10. PAYMENT OF WITHHOLDING TAXES.
10.1 GENERAL RULES. The Company is entitled to (a) withhold and deduct
from future wages of the Participant (or from other amounts that may be due and
owing to the Participant from the Company or a Subsidiary), or make other
arrangements for the collection of, all legally required amounts necessary to
satisfy any and all federal, state and local withholding and employment-related
tax requirements attributable to an Incentive Award, including, without
limitation, the grant, exercise or vesting of, or payment of dividends with
respect to, an Incentive Award or a disqualifying disposition of stock received
upon exercise of an Incentive Stock Option, or (b) require the Participant
promptly to remit the amount of such withholding to the Company before taking
any action, including issuing any shares of Common Stock, with respect to an
Incentive Award.
10.2 SPECIAL RULES. The Committee may, in its sole discretion and upon
terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or
employment-related tax obligation described in Section 10.1 of the Plan by
electing to tender, or by attestation as to ownership of, Previously Acquired
Shares that have been held for the period of time necessary to avoid a charge to
the Company's earnings for financial reporting purposes and that are otherwise
acceptable to the Committee, by delivery of a Broker
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Exercise Notice or a combination of such methods. For purposes of satisfying a
Participant's withholding or employment-related tax obligation, Previously
Acquired Shares tendered or covered by an attestation will be valued at their
Fair Market Value.
11. CHANGE IN CONTROL.
11.1 A "Change in Control" shall be deemed to have occurred if the
event set forth in any one of the following paragraphs shall have occurred:
(a) any "person" as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under any employee benefit plan of the
Company, or any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), is or becomes, including
pursuant to a tender or exchange offer for shares of Common Stock
pursuant to which purchases are made, the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities, other than
in a transaction arranged or approved by the Board prior to its
occurrence; provided, however, that if any such person will become the
beneficial owner, directly or indirectly, of securities of the Company
representing 34% or more of the combined voting power of the Company's
then outstanding securities, a Change in Control will be deemed to
occur whether or not any or all of such beneficial ownership is
obtained in a transaction arranged or approved by the Board prior to
its occurrence, and other than in a transaction in which such person
will have executed a written agreement with the Company (and approved
by the Board) on or prior to the date on which such person becomes the
beneficial owner of 25% or more of the combined voting power of the
Company's then outstanding securities, which agreement imposes one or
more limitations on the amount of such person's beneficial ownership of
shares of Common Stock, if, and so long as, such agreement (or any
amendment thereto approved by the Board provided that no such amendment
will cure any prior breach of such agreement or any amendment thereto)
continues to be binding on such person and such person is in compliance
(as determined by the Board in its sole discretion) with the terms of
such agreement (including such amendment); provided, however, that if
any such person will become the beneficial owner, directly or
indirectly, of securities of the Company representing 50% or more of
the combined voting power of the Company's then outstanding securities,
a Change in Control will be deemed to occur whether or not such
beneficial ownership was held in compliance with such a binding
agreement, and provided further that the provisions of this
subparagraph (a) shall not be applicable to a transaction in which a
corporation becomes the owner of all the Company's outstanding
securities in a transaction which complies with the provisions of
subparagraph (c) of this Section 11.1 (e.g., a reverse triangular
merger); or
(b) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on August 18, 2000, constitute the Board
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and any new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on August 18,
2000, or whose appointment, election or nomination for election was
previously so approved or recommended; or
(c) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) more than 50% of the
combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after
such merger or consolidation, and in which no "person" (as defined
under subparagraph (a) above) acquires 50% or more of the combined
voting power of the securities of the Company or such surviving entity
or parent thereof outstanding immediately after such merger or
consolidation; or
(d) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, more than 50% of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such sale.
11.2 ACCELERATION OF VESTING. Without limiting the authority of the
Committee under Sections 3.2 and 4.3 of the Plan, if a Change in Control of the
Company occurs, then, if approved by the Committee in its sole discretion either
in an agreement evidencing an Incentive Award at the time of grant or at any
time after the grant of an Incentive Award, (a) all Options that have been
outstanding for at least six months will become immediately exercisable in full
and will remain exercisable in accordance with their terms; (b) all outstanding
Restricted Stock Awards that have been outstanding for at least six months will
become immediately fully vested and non-forfeitable; and (c) any transfer
restrictions with respect to Performance Stock Awards will lapse.
11.3 CASH PAYMENT FOR OPTIONS. If a Change in Control of the Company
occurs, then the Committee, if approved by the Committee in its sole discretion
either in an agreement evidencing an Incentive Award at the time of grant or at
any time after the grant of an Incentive Award, and without the consent of any
Participant affected thereby, may determine that some or all Participants
holding outstanding Options will receive, with respect to some or all of the
shares of Common Stock subject to such Options, as of the effective date of any
such Change in Control of the Company, cash
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in an amount equal to the excess of the Fair Market Value of such shares
immediately prior to the effective date of such Change in Control of the Company
over the exercise price per share of such Options.
11.4 LIMITATION ON CHANGE IN CONTROL PAYMENTS. Notwithstanding anything
in Section 11.2 or 11.3 of the Plan to the contrary, if, with respect to a
Participant, any of the payments to be made in connection with Section 11.2 or
11.3 of the Plan, together with any other payments or benefits which a
Participant has the right to receive from the Company or any corporation which
is a member of an "affiliated group" (as defined in section 1504(a) of the Code
without regard to section 1504(b) of the Code) of which the Company is a member,
constitute an "excess parachute payment" (as defined in section 280G(b) of the
Code), the payments to be made in connection with Section 11.2 or 11.3 of the
Plan shall be reduced to the extent necessary to prevent any portion of such
payments or benefits from becoming subject to the excise tax imposed under
section 4999 of the Code; provided, however, that if a Participant is subject to
a separate agreement with the Company or a Subsidiary that expressly addresses
the potential application of Sections 280G or 4999 of the Code (including,
without limitation, that "payments" under such agreement or otherwise will be
reduced, that such payments will not be reduced or that the Participant will
have the discretion to determine which "payments" will be reduced), then this
Section 11.4 will not apply, and any "payments" to a Participant pursuant to
Section 11.2 or 11.3 of the Plan will be treated as "payments" arising under
such separate agreement.
12. RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS; TRANSFERABILITY.
12.1 EMPLOYMENT OR OTHER SERVICE. Nothing in the Plan will interfere
with or limit in any way the right of the Company or any Subsidiary to terminate
the employment or Other Service of any Eligible Recipient or Participant at any
time, nor confer upon any Eligible Recipient or Participant any right to
continue in the employ or Other Service of the Company or any Subsidiary.
12.2 RIGHTS AS A STOCKHOLDER. As a holder of Incentive Awards (other
than Restricted Stock Awards and Performance Stock Awards), a Participant will
have no rights as a stockholder unless and until such Incentive Awards are
exercised for, or paid in the form of, shares of Common Stock and the
Participant becomes the holder of record of such shares. Except as otherwise
provided in the Plan, no adjustment will be made for dividends or distributions
with respect to such Incentive Awards as to which there is a record date
preceding the date the Participant becomes the holder of record of such shares,
except as the Committee may determine in its discretion.
12.3 RESTRICTIONS ON TRANSFER.
(a) Except pursuant to testamentary will or the laws of
descent and distribution or as otherwise expressly permitted by
subsections (b) and (c) below, no right or interest of any Participant
in an Incentive Award prior to the exercise or vesting of such
Incentive Award will be assignable or transferable, or subjected to any
lien, during the lifetime of the Participant, either voluntarily or
involuntarily, directly or indirectly, by operation of law or
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otherwise.
(b) A Participant will be entitled to designate a beneficiary
to receive an Incentive Award upon such Participant's death, and in the
event of a Participant's death, payment of any amounts due under the
Plan will be made to, and exercise of any Options (to the extent
permitted pursuant to Section 9 of the Plan) may be made by, the
Participant's legal representatives, heirs and legatees.
(c) Upon a Participant's request, the Committee may, in its
sole discretion, permit a transfer of all or a portion of a
Non-Statutory Stock Option, other than for value, to such Participant's
child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, any
person sharing such Participant's household (other than a tenant or
employee), a trust in which any of the foregoing have more than fifty
percent of the beneficial interests, a foundation in which any of the
foregoing (or the Participant) control the management of assets, and
any other entity in which these persons (or the Participant) own more
than fifty percent of the voting interests. Any permitted transferee
will remain subject to all the terms and conditions applicable to the
Participant prior to the transfer except that a transferee will have no
rights to receive a grant of Reload Options under Section 6.6 of the
Plan. A permitted transfer may be conditioned upon such requirements as
the Committee may, in its sole discretion, determine, including, but
not limited to execution and/or delivery of appropriate
acknowledgements, opinion of counsel, or other documents by the
transferee.
12.4 NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is
intended to modify or rescind any previously approved compensation plans or
programs of the Company or create any limitations on the power or authority of
the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.
13. SECURITIES LAW AND OTHER RESTRICTIONS.
Notwithstanding any other provision of the Plan or any agreements
entered into pursuant to the Plan, the Company will not be required to issue any
shares of Common Stock under this Plan, and a Participant may not sell, assign,
transfer or otherwise dispose of shares of Common Stock issued pursuant to
Incentive Awards granted under the Plan, unless (a) there is in effect with
respect to such shares a registration statement under the Securities Act and any
applicable securities laws of a state or foreign jurisdiction or an exemption
from such registration under the Securities Act and applicable state or foreign
securities laws, and (b) there has been obtained any other consent, approval or
permit from any other regulatory body which the Committee, in its sole
discretion, deems necessary or advisable. The Company may condition such
issuance, sale or transfer upon the receipt of any representations or agreements
from the parties involved, and the placement of any legends on certificates
representing shares of Common Stock, as may be deemed necessary or advisable by
the Company in order to comply with such securities law or other restrictions.
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14. PLAN AMENDMENT, MODIFICATION AND TERMINATION.
The Board may suspend or terminate the Plan or any portion thereof at
any time, and may amend the Plan from time to time in such respects as the Board
may deem advisable in order that Incentive Awards under the Plan will conform to
any change in applicable laws or regulations or in any other respect the Board
may deem to be in the best interests of the Company; provided, however, that no
amendments to the Plan will be effective without approval of the stockholders of
the Company if stockholder approval of the amendment is then required pursuant
to Section 422 of the Code or the rules of the New York Stock Exchange. No
termination, suspension or amendment of the Plan may adversely affect any
outstanding Incentive Award without the consent of the affected Participant;
provided, however, that this sentence will not impair the right of the Committee
to take whatever action it deems appropriate under Sections 3.2, 4.3 and 11 of
the Plan.
15. EFFECTIVE DATE AND DURATION OF THE PLAN.
The Plan is effective, as amended and restated, as of August 18, 2000,
and shall apply to Incentive Awards granted on or after such effective date. The
Plan will terminate at midnight on June 30, 2005, and may be terminated prior to
such time by Board action, and no Incentive Award will be granted after such
termination. Incentive Awards outstanding upon termination of the Plan may
continue to be exercised, or become free of restrictions, in accordance with
their terms.
16. MISCELLANEOUS.
16.1 GOVERNING LAW. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in accordance
with the laws of the State of Minnesota, notwithstanding the conflicts of laws
principles of any jurisdictions.
16.2 SUCCESSORS AND ASSIGNS. The Plan will be binding upon and inure to
the benefit of the successors and permitted assigns of the Company and the
Participants.
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