<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1998
REGISTRATION NO. ____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
- --------------------------------------------------------------------------------
COMPUTER NETWORK TECHNOLOGY CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
MINNESOTA 41-1356476
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
605 NORTH HIGHWAY 169
MINNEAPOLIS, MINNESOTA 55441
(Address of Principal Executive Offices) (Zip Code)
1992 STOCK AWARD PLAN
(Full Title of the Plan)
GREGORY T. BARNUM
CHIEF FINANCIAL OFFICER
COMPUTER NETWORK TECHNOLOGY CORPORATION
605 NORTH HIGHWAY 169
MINNEAPOLIS, MINNESOTA 55441
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(612) 797-6100
(Telephone Number, Including Area Code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------- --------------- -------------------- -------------------- -----------------
PROPOSED PROPOSED
TITLE OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED (1) PRICE PER SHARE (2) OFFERING PRICE (2) REGISTRATION FEE
- -------------------- --------------- -------------------- -------------------- -----------------
<S> <C> <C> <C> <C>
Common Stock,
par value $0.01 800,000 shares $6.125 $4,900,000 $1,446
per share
==================== =============== ==================== ==================== =================
</TABLE>
(1) This Registration Statement relates to an additional 800,000 shares of
Common Stock to be offered pursuant to the 1992 Employee Stock Award Plan,
for which plan 5,400,000 shares have previously been registered pursuant to
the Registrant's Registration Statements Nos. 33-83262, 33-48944, 33-68372
and 333-31853.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(h) under the Securities Act of 1933, based on the
average of the high and low sale prices per share of the Registrant's
Common Stock as reported on the NASDAQ National Market System on July 23,
1998.
<PAGE>
PART II
INFORMATION REQUIRED BY GENERAL INSTRUCTION E TO FORM S-8
1. INCORPORATION BY REFERENCE.
The contents of the Registrant's Registration Statements No. 33-83262,
33-48944, 33-68372 and 333-31853 are incorporated in this Registration Statement
by reference.
2. EXHIBITS (REQUIRED OPINIONS AND CONSENTS).
Exhibit Description
------- -----------
5 Opinion of Faegre & Benson LLP, Corporate Counsel to the
Company.
23.1 Consent of Faegre & Benson LLP to the filing of its opinion as
an exhibit to this Registration Statement (included in Exhibit
5).
23.2 Consent of KPMG Peat Marwick LLP.
24 Power of Attorney authorizing Gregory T. Barnum to sign and
file all amendments and exhibits to this Registration
Statement and any and all applications and instruments
pertaining to the registration of the securities covered
hereby on behalf of the directors and officers of the Company
(included as part of the signature page of this Registration
Statement).
99 1992 Stock Award Plan as amended.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Minneapolis, State of Minnesota, on July 24,
1998.
COMPUTER NETWORK TECHNOLOGY CORPORATION
By: /s/ Gregory T. Barnum
------------------------------------------
Gregory T. Barnum, Chief Financial Officer
Each of the undersigned officers and directors of Computer Network
Technology Corporation hereby appoints Gregory T. Barnum as attorney and agent
for the undersigned, with full power of substitution, for and in the name, place
and stead of the undersigned, to sign and file with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, any and all amendments
(including post-effective amendments) and exhibits to this Registration
Statement and any and all applications and instruments pertaining to the
registration of the securities covered hereby, with full power and authority to
do and perform any and all acts and things whatsoever requisite and necessary or
desirable.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Thomas G. Hudson
- --------------------------
Thomas G. Hudson President and Chief Executive July 24, 1998
Officer (Principal Executive
Officer) and Director
/s/ Gregory T. Barnum
- --------------------------
Gregory T. Barnum Chief Financial Officer (Principal July 24, 1998
Financial Officer)
/s/ Jeffrey A. Bertelsen
- --------------------------
Jeffrey A. Bertelsen Corporate Controller and Treasurer July 24, 1998
(Principal Accounting Officer)
/s/ Patrick W. Gross
- --------------------------
Patrick W. Gross Director July 24, 1998
/s/ Erwin A. Kelen
- --------------------------
Erwin A. Kelen Director July 24, 1998
/s/ Lawrence Perlman
- --------------------------
Lawrence Perlman Director July 24, 1998
/s/ John A. Rollwagen
- --------------------------
John A. Rollwagen Director July 24, 1998
II-2
<PAGE>
INDEX TO EXHIBITS
Exhibit Page
- ------- ----
5 Opinion of Faegre & Benson LLP, Corporate Counsel
to the Company.....................................Electronically Filed
23.1 Consent of Faegre & Benson LLP to the filing of
its opinion as an exhibit to this Registration
Statement (included in Exhibit 5).
23.2 Consent of KPMG Peat Marwick LLP...................Electronically Filed
24 Power of Attorney authorizing Gregory T. Barnum to
sign and file all amendments and exhibits to this
Registration Statement and any and all
applications and instruments pertaining to the
registration of the securities covered hereby on
behalf of the directors and officers of the
Company (included as part of the signature page of
this Registration Statement).
99 1992 Stock Award Plan as amended...................Electronically Filed
<PAGE>
EXHIBIT 5 AND 23.1
[Letterhead of Faegre & Benson LLP]
July 24, 1998
Computer Network Technology Corporation
605 North Highway 169
Minneapolis, Minnesota 55441
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-8 under the
Securities Act of 1933, as amended (the "Registration Statement"), relating to
the offering of an additional 800,000 shares of Common Stock, par value $0.01
per share (the "Shares"), of Computer Network Technology Corporation, a
Minnesota corporation (the "Company"), under the Company's 1992 Stock Award Plan
(the Plan), we have examined such corporate records and other documents,
including the Registration Statement, and have reviewed such matters of law as
we have deemed relevant hereto, and, based upon this examination and review, it
is our opinion that all necessary corporate action on the part of the Company
has been taken to authorize the issuance and sale of the Shares and that, when
issued and sold as contemplated in the Plan and the Registration Statement, the
Shares will be legally issued, fully paid and nonassessable under the current
laws of the State of Minnesota.
We are admitted to the practice of law in the State of Minnesota and
the foregoing opinions are limited to the laws of that state and the federal
laws of the United States of America.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
FAEGRE & BENSON LLP
<PAGE>
Exhibit 23.2
[Letterhead of KPMG Peat Marwick LLP]
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Computer Network Technology Corporation:
We consent to the use of our reports incorporated herein by reference in this
Form S-8 Registration Statement.
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
July 24, 1998
<PAGE>
EXHIBIT 99
1992 STOCK AWARD PLAN
(AS AMENDED AND RESTATED THROUGH MAY 1998)
1. PURPOSE. The purpose of this 1992 Stock Award Plan (the "Plan") is to
motivate key personnel, including non-employee directors, to produce a superior
return to the shareholders of Computer Network Technology Corporation by
offering such personnel an opportunity to realize Stock appreciation, by
facilitating Stock ownership, and by rewarding them for achieving a high level
of corporate performance. This Plan is also intended to facilitate recruiting
and retaining key personnel of outstanding ability by providing an attractive
capital accumulation opportunity.
2. DEFINITIONS.
2.1 The terms defined in this section are used (and capitalized) elsewhere
in this Plan.
(a) "AFFILIATE" means any corporation that is a "parent corporation" or
"subsidiary corporation" of the Company, as those terms are defined in Section
424(e) and (f) of the Code, or any successor provision.
(b) "AGREEMENT" means a written contract entered into between the Company
or an Affiliate and a Participant containing the terms and conditions of an
Award in such form (not inconsistent with this Plan) as the Committee approves
from time to time, together with all amendments thereto, which amendments may be
unilaterally made by the Company (with the approval of the Committee) unless
such amendments are deemed by the Committee to be materially adverse to the
Participant and are not required as a matter of law.
(c) "AWARD" means a grant made under this Plan in the form of Options,
Restricted Stock, Stock, Performance Units or any other Stock-based Award.
(d) "BOARD" means the Board of Directors of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
(f) "COMMITTEE" means two or more Disinterested Persons designated by the
Board to administer this Plan under Section 3 hereof.
(g) "COMPANY" means Computer Network Technology Corporation, a Minnesota
corporation, or any successor to substantially all of its businesses.
(h) "DISINTERESTED PERSON" means a member of the Board who is considered a
disinterested person within the meaning of Exchange Act Rule l6b-3 or any
successor definition.
(i) "EFFECTIVE DATE" means the date specified in Section 10.1 hereof.
(j) "EMPLOYEE" means any employee (including an officer or director who is
also an employee) of the Company or an Affiliate. "Employee" shall also include
other individuals and entities who are not "employees" of the Company or an
Affiliate but who provide services to the Company or an Affiliate in the
capacity of an advisor, director or consultant. In addition, references herein
to "employment" and similar terms shall include the providing of services in any
such capacity.
(k) "EVENT" means any of the following:
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(i) The acquisition by an individual, entity, or group (within the
meaning of Section 13(d)(3) or l4(d)(2) of the Exchange Act) of beneficial
ownership (within the meaning of Exchange Act Rule 13d-3) of 40% or more of
either (A) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power of the
then outstanding voting securities of the Company entitled to vote
generally in the election of the Board (the "Outstanding Company Voting
Securities"); provided, however, that the following acquisitions shall not
constitute an Event:
(1) any acquisition of voting securities of the Company directly
from the Company,
(2) any acquisition of voting securities of the Company by the
Company or any of its wholly owned Subsidiaries,
(3) any acquisition of voting securities of the Company by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any of its Subsidiaries, or
(4) any acquisition by any corporation with respect to which,
immediately following such acquisition, more than 60% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such acquisition in substantially the
same proportions as was their ownership, immediately prior to such
acquisition, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be;
(ii)Individuals who, as of the Effective Date, constitute the Board
(the "INCUMBENT BOARD") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest which was (or, if
threatened, would have been) subject to Exchange Act Rule 14a-l l;
(iii) Approval by the shareholders of the Company of a reorganization,
merger, consolidation, or statutory exchange of Outstanding Company Voting
Securities, unless immediately following such reorganization, merger,
consolidation, or exchange, all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such reorganization, merger, consolidation, owned, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such reorganization, merger,
consolidation, or exchange in substantially the same proportions as was
their ownership, immediately prior to such reorganization, merger,
consolidation, or exchange, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(iv)Approval by the shareholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) the sale or other
disposition of all or substantially all of the assets of the Company, other
than to a corporation with respect to which, immediately following such
sale or other disposition, more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as was their ownership, immediately
A-2
<PAGE>
prior to such sale or other disposition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be.
(v) Notwithstanding the above, an Event shall not be deemed to occur
with respect to an employee if the acquisition of the 40% or greater
interest referred to in subsection (i) is by a group, acting in concert,
that includes that recipient or if at least 40% of the then outstanding
common stock or combined voting power of the then outstanding voting
securities (or voting equity interests) of the surviving corporation or of
any corporation (or other entity) acquiring all or substantially all of the
assets of the Company shall be beneficially owned, directly or indirectly,
immediately after a reorganization, merger, consolidation, statutory share
exchange or disposition of assets referred to in subsections (iii) or (iv)
by a group, acting in concert, that includes that Participant.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(m) "FAIR MARKET VALUE" as of any date means, unless otherwise expressly
provided in this Plan:
(i) the closing sale price of a Share on the date immediately
preceding that date or, if no sale of Shares shall have occurred on that
date, on the next preceding day on which a sale occurred of Shares on the
National Association of Securities Dealers, Inc. Automated Quotations
National Market System ("NMS"), or
(ii)if the Shares are not quoted on the NMS, what the Committee
determines in good faith to be 100% of the fair market value of a Share on
that date.
Provided, however, if the NMS has closed for the day at the time the event
occurs that triggers a determination of Fair Market Value, whether the grant of
an Award, the exercise of an Option or otherwise, all references in this Section
2.1(m) to the "date immediately preceding that date" shall be deemed to be
references to "that date." In the case of an Incentive Stock Option, if such
determination of Fair Market Value is not consistent with the then current
regulations of the Secretary of the Treasury, Fair Market Value shall be
determined in accordance with said regulations. The determination of Fair Market
Value shall be subject to adjustment as provided in Section 13 hereof.
(n) "FUNDAMENTAL CHANGE" means a dissolution or liquidation of the Company,
a sale of substantially all of the assets of the Company, a merger or
consolidation of the Company with or into any other corporation, regardless of
whether the Company is the surviving corporation, or a statutory share exchange
involving capital stock of the Company.
(o) "INCENTIVE STOCK OPTION" means any Option designated as such and
granted in accordance with the requirements of Code Section 422 or any successor
to said section.
(p) "NON-QUALIFIED STOCK OPTION" means an Option other than an Incentive
Stock Option.
(q) "OPTION" means a right to purchase Stock, including both Non-Qualified
Stock Options and Incentive Stock Options.
(r) "OUTSIDE DIRECTORS" means those directors of Company who are not
employees of the Company or any Affiliate.
(s) "PERFORMANCE CYCLE" means the period of time as specified in an
Agreement over which Performance Units are to be earned.
(t) "PERFORMANCE UNITS" means an Award made under Section 7.2 hereof
(u) "PLAN" means this 1992 Stock Award Plan, as amended from time to time.
A-3
<PAGE>
(v) "RESTRICTED STOCK" means Stock granted under Plan Section 7.3 so long
as such Stock remains subject to one or more restrictions.
(w) "RETIREMENT" of an Employee means termination of employment with the
Company or an Affiliate on or after the date the Employee attains age 55.
(x) "SHARE" means a share of Stock.
(y) "STOCK" means the common stock, $.01 par value per share (as such par
value may be adjusted from time to time), of the Company.
(z) "SUBSIDIARY" means a subsidiary corporation," as that term is defined
in Section 424(f) of the Code, or any successor provision.
(aa)"SUCCESSOR" means the legal representative of the estate of a deceased
Participant or the person or persons who may, by bequest or inheritance, or
under the terms of an Award or of forms submitted by the Participant to the
Committee under Section 17 hereof, acquire the right to exercise an Option or
receive cash or Shares issuable in satisfaction of an Award in the event of an
employee's death.
(bb)"TERM" means the period during which an Option may be exercised or the
period during which the restrictions or terms and conditions placed on
Restricted Stock are in effect.
(cc)"TRANSFEREE" means any member of the Participant's immediate family
(i.e., his or her children, step-children, grandchildren and spouse) or one or
more trusts for the benefit of such family members or partnerships in which such
family members are the only partners.
2.2 NUMBER. Except when otherwise indicated by context, any term used in
the singular shall also include the plural.
3. ADMINISTRATION.
3.1 AUTHORITY OF COMMITTEE.
(a) GENERAL. Except as provided in Section 3.1(b), the Committee shall
administer this Plan. The Committee may delegate all or any portion of its
authority under this Plan to persons who are not Disinterested Persons solely
for purposes of determining and administering Awards to Employees who are not
then subject to the reporting requirements of Section 16 of the Exchange Act.
The Committee shall have exclusive power to make Awards, to determine when and
to whom Awards will be granted, the form of each Award, the amount of each
Award, and any other terms or conditions of each Award. Each Award shall be
subject to an Agreement authorized by the Committee. The Committee's
interpretation of this Plan and of any Awards made under this Plan shall be
final and binding on all persons. The Committee shall have the power to
establish regulations to administer this Plan and to change such regulations.
(b) OPTIONS TO OUTSIDE DIRECTORS. Notwithstanding any contrary provisions
of this Plan, the granting and terms, conditions, and eligibility requirements
of Awards granted to Outside Directors shall be determined by the Board of
Directors of the Company.
3.2 INDEMNIFICATION. To the full extent permitted by law, (a) no member of
the Board or of the Committee or any person to whom the Committee delegates
authority under this Plan shall be liable for any action or determination taken
or made in good faith with respect to this Plan or any Award made under this
Plan and (b) the members of the Board and of the Committee and each person to
whom the Committee delegates authority under this Plan shall be entitled to
indemnification by the Company with regard to such actions and determinations.
A-4
<PAGE>
4. SHARES AVAILABLE UNDER THIS PLAN. The number of Shares available for
distribution under this Plan shall not exceed 6,200,000 (subject to adjustment
as provided in this Section 4 and under Section 13 hereof). Any Shares subject
to the terms and conditions of an Award under this Plan that are not used
because the terms and conditions of the Award are not met may again be used for
an Award under this Plan. In addition, if, in accordance with this Plan, an
employee uses shares of Common Stock of the Company to (i) pay a purchase or
exercise price, including an Option exercise price, or (ii) satisfy tax
withholdings, only the number of shares issued net of the shares tendered in
payment of such purchase or exercise price and tax withholdings shall be deemed
to be issued for purposes of determining the maximum number of Shares available
under the Plan. Further, the maximum number of Shares available for distribution
under this Plan shall be increased to take into account any Awards granted under
Section 18 of this Plan.
5. ELIGIBILITY. Awards may be granted under this Plan to Employees and
Outside Directors, and such Awards shall have the terms and conditions specified
in Sections 6 and 7 hereof and elsewhere in this Plan. The granting of Awards to
Employees (other than Outside Directors) is solely at the discretion of the
Committee; the granting of Awards to Outside Directors is solely at the
discretion of the Board.
6. GENERAL TERMS OF AWARDS.
6.1 AMOUNT OF AWARD. Each Agreement with an Employee shall set forth the
number of Shares to which the Option subject to such Agreement applies or the
number of Shares of Restricted Stock, Stock, Performance Units subject to such
Agreement, as the case may be.
6.2 TERM. Each Agreement, other than those relating solely to Awards of
Shares without restrictions, shall set forth the Term of the Option or
Restricted Stock or the Performance Cycle for the Performance Units, as the case
may be. An Agreement may permit an acceleration of the expiration of the
applicable Term upon such terms and conditions as shall be set forth in the
Agreement, which may, but need not, include without limitation acceleration
resulting from the occurrence of an Event or in the event of the Employee's
death or Retirement. Acceleration of the Performance Cycle of Performance Units
shall be subject to Section 7.2(b) hereof.
6.3 AGREEMENTS. Each Award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions, as determined by the
Committee, which shall apply to such Award, in addition to the terms and
conditions specified in this Plan.
6.4 TRANSFERABILITY. Except as provided in this Section 6.4, during the
lifetime of an employee to whom an Award is granted, only that Participant (or
that Participant's legal representative) may exercise an Option or receive
payment with respect to Performance Units or any other Award. No Award of
Restricted Stock (prior to the expiration of the restrictions), Options or
Performance Units or other Award may be sold, assigned, transferred, exchanged
or otherwise encumbered other than pursuant to a domestic relations order as
defined in the Code or Title 1 of the Employee Retirement Income Security Act
("ERISA") or the rules thereunder; any attempted transfer in violation of this
Section 6.4 shall be of no effect. Notwithstanding the immediately preceding
sentence, the Committee, in an Agreement or otherwise at its discretion, may
provide (i) that the Award subject to the Agreement shall be transferable to a
Successor in the event of an employee's death, or (ii) that the Award (other
than Incentive Stock Options) may be transferable to a Transferee if the
Participant receives no consideration for the transfer. Any Award held by a
Transferee shall continue to be subject to the same terms and conditions that
were applicable to such Award immediately prior to its transfer. By way of
example and not limitation, (i) an Option may be exercised by a Transferee as
and to the extent that such Option has become exercisable and has not terminated
in accordance with the provisions of the Plan and the applicable Agreement and
(ii) for purposes of any provision of this Plan relating to notice to an
optionee or to vesting or termination of an Option upon the death, disability or
termination of employment of an optionee, the references to "optionee" shall
mean the original grantee of an option and not any Transferee.
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<PAGE>
7. TERMS AND CONDITIONS OF SPECIFIC AWARDS.
7.1 STOCK OPTIONS.
(a) TERMS OF ALL OPTIONS. Each Option shall be granted as either an
Incentive Stock Option or a Non-Qualified Stock Option. Only Non-Qualified Stock
Options may be granted to Outside Directors and to Employees who are not
employees of the Company or an Affiliate but who provide services to the Company
or an Affiliate in the capacity of an advisor or consultant. The purchase price
of each Share subject to an Option shall be determined by the Committee and set
forth in the Agreement, but shall not be less than 100% of the Fair Market Value
of a Share as of the date the Option is granted. The purchase price of the
Shares with respect to which an Option is exercised shall be payable in full at
the time of exercise, provided that to the extent permitted by law, the
Agreement may permit some or all Participants simultaneously to exercise Options
and sell the Shares thereby acquired pursuant to a brokerage or similar
relationship and use the proceeds from such sale as payment of the purchase
price of such Shares. The purchase price may be payable in cash, in Stock having
a Fair Market Value as of the date the Option is exercised equal to the purchase
price of the Stock being purchased pursuant to the Option, or a combination
thereof as determined by the Committee and provided in the Agreement. Each
Option shall be exercisable in whole or in part on the terms provided in the
Agreement. In no event shall any Option be exercisable at any time after its
expiration date. When an Option is no longer exercisable, it shall be deemed to
have lapsed or terminated. The number of Shares for which any Employee may be
granted Options in any one calendar year shall not exceed 750,000. The Committee
may provide, in an Agreement or otherwise, that an employee who exercises an
Option and pays the Option price in whole or in part with Shares then owned by
the Participant will be entitled to receive another Option covering the same
number of shares tendered and with a price of no less than Fair Market Value on
the date of grant of such additional Option ("Reload Option").
(b) INCENTIVE STOCK OPTIONS. In addition to the other terms and conditions
applicable to all Options:
(i) the maximum number of shares that may be covered with respect to
incentive stock options is 6,200,000.
(ii)the aggregate Fair Market Value (determined as of the date the
Option is granted) of the Shares with respect to which Incentive Stock
Options held by an individual first become exercisable in any calendar year
(under this Plan and all other incentive stock option plans of the Company
and its Affiliates) shall not exceed $100,000 (or such other limit as may
be required by the Code) if such limitation is necessary to qualify the
Option as an Incentive Stock Option;
(iii) an Incentive Stock Option shall not be exercisable more than 10
years after the date of grant (or such other limit as may be required by
the Code) if such limitation is necessary to qualify the Option as an
Incentive Stock Option; and
(iv)the Agreement covering an Incentive Stock Option shall contain
such other terms and provisions which the Committee determines necessary to
qualify such Option as an Incentive Stock Option.
7.2 PERFORMANCE UNITS.
(a) INITIAL AWARD. An Award of Performance Units shall entitle such
Participant (or a Successor) to future payments of cash, Stock, or a combination
of cash and Stock, as determined by the Committee and provided in the Agreement,
based upon the achievement of performance targets established by the Committee.
Such performance targets may, but need not, include without limitation targets
relating to one or more of corporate, group, unit, Affiliate, or individual
performance. The Agreement may establish that a portion of a full or maximum
amount of an employee's Award will be paid for performance which exceeds the
minimum target but falls below the maximum target applicable to such Award. The
Agreement shall also provide for the timing of such payment. Following the
conclusion or acceleration of each Performance Cycle, the Committee shall
determine the extent to which (i) performance targets have been attained, (ii)
any other terms and conditions with respect to an Award relating to such
Performance Cycle have been satisfied, and (iii) payment is due with respect to
an Award of
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<PAGE>
Performance Units. The maximum payment that can be made for awards granted to
any one individual shall be $1,000,000 for any single or combined performance
goals established for a specified performance period.
(b) ACCELERATION AND ADJUSTMENT. The Agreement may permit an acceleration
of the Performance Cycle and an adjustment of performance targets and payments
with respect to some or all of the Performance Units awarded to an employee upon
such terms and conditions as shall be set forth in the Agreement, upon the
occurrence of certain events, which may, but need not include without limitation
an Event, a Fundamental Change, the Participant's death or Retirement or, with
respect to payments in Stock with respect to Performance Units, a
reclassification, stock dividend, stock split, or stock combination as provided
in Section 13 hereof.
7.3 RESTRICTED STOCK AWARDS
(a) The Committee is authorized to grant, either alone or in conjunction
with other Awards, stock and stock-based Awards. The Committee shall determine
the persons to whom such Awards are made, the timing and amount of such Awards,
and all other terms and conditions. Company Common Stock granted to recipients
may be unrestricted or may contain such restrictions, including provisions
requiring forfeiture and imposing restrictions upon stock transfer, as the
Committee may determine. Unless forfeited, the recipient of restricted Common
Stock will have all other rights of a shareholder, including without limitation,
voting and dividend rights. No more than 500,000 shares in the form of
restricted stock and stock shall be issued under the Stock Award Plan.
(b) An Award of Restricted Stock under the Plan shall consist of Shares
subject to restrictions on transfer and conditions of forfeiture, which
restrictions and conditions shall be included in the applicable Agreement. The
Committee may provide for the lapse or waiver of any such restriction or
condition based on such factors or criteria as the Committee, in its sole
discretion, may determine.
(c) Except as otherwise provided in the applicable Agreement, each Stock
certificate issued with respect to an Award of Restricted Stock shall either be
deposited with the Company or its designee, together with an assignment separate
from the certificate, in blank, signed by the Participant, or bear such legends
with respect to the restricted nature of the Restricted Stock evidenced thereby
as shall be provided for in the applicable Agreement.
(d) The Agreement shall describe the terms and conditions by which the
restrictions and conditions of forfeiture upon awarded Restricted Stock shall
lapse. Upon the lapse of the restrictions and conditions, Shares free of
restrictive legends, if any, relating to such restrictions shall be issued to
the Participant or a Successor or Transferee.
(e) An employee or a Successor or Transferee with a Restricted Stock Award
shall have all the other rights of a shareholder including, but not limited to,
the right to receive dividends and the right to vote the Shares of Restricted
Stock.
7.4 OTHER AWARDS. The Committee may from time to time grant Stock and other
Awards under the Plan including without limitations those Awards pursuant to
which Shares are or may in the future be acquired, Awards denominated in Stock
units, securities convertible into Stock and Phantom securities. The Committee,
in its sole discretion, shall determine the terms and conditions of such Awards
provided that such Awards shall not be inconsistent with the terms and purposes
of this Plan. The Committee may, at its sole discretion, direct the Company to
issue Shares subject to restrictive legends and/or stop transfer instructions
that are consistent with the terms and conditions of the Award to which the
Shares relate. Furthermore, the Committee may use stock available under this
Plan as payment for compensation, grants or rights and earned or due under any
other compensation plans or arrangements of the Company. No more than 500,000
shares in the form of restricted stock and stock shall be issued under the Stock
Award Plan.
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8. TERMS AND CONDITIONS OF OUTSIDE DIRECTOR AWARDS.
8.1 Outside Directors may, in the discretion of the Board and in accordance
with the terms of this Plan, be granted Awards under this Plan at various times,
including when an Outside Director is first elected or appointed to the Board,
when an Outside Director is re-elected to the Board or at other times as may be
deemed appropriate.
8.2 TERMS OF AWARDS. In addition to the terms set forth in Section 7.1 of
this Plan, Outside Director Awards may contain such other terms and conditions
as the Board determines.
9. EFFECTIVE DATE OF THIS PLAN.
9.1 EFFECTIVE DATE. This Plan shall become effective as of March 5, 1992,
the date of adoption of this Plan by the Board, provided that this Plan is
approved and ratified by the affirmative vote of the holders of a majority of
the outstanding Shares of Stock present or represented and entitled to vote in
person or by proxy at a meeting of the shareholders of the Company no later than
December 31, 1992.
9.2 DURATION OF THIS PLAN. This Plan shall remain in effect until all Stock
subject to it shall be distributed or all Awards have expired or lapsed,
whichever is latest to occur, or this Plan is terminated pursuant to Section 12
hereof. No Award of an Incentive Stock Option shall be made more than 10 years
after the effective date (or such other limit as may be required by the Code) if
such limitation is necessary to qualify the Option as an Incentive Stock Option.
Except with respect to Director Options, the date and time of approval by the
Committee of the granting of an Award (or such other time as the Committee shall
designate) shall be considered the date and time at which such Award is made or
granted, notwithstanding the date of any Agreement with respect to such Award.
10. RIGHT TO TERMINATE EMPLOYMENT. Nothing in this Plan or in any Agreement
shall confer upon any Employee the right to continue in the employment of the
Company or any Affiliate or affect any right which the Company or any Affiliate
may have to terminate the employment of the Employee with or without cause.
11. TAX WITHHOLDING. The Company may withhold from any cash payment under
this Plan to an employee or other person (including a Successor or a Transferee)
an amount sufficient to cover any required withholding taxes. The Company shall
have the right to require an employee or other person receiving Stock under this
Plan to pay to the Company a cash amount sufficient to cover any required
withholding taxes. In lieu of all or any part of such a cash payment from a
person receiving Stock under this Plan, the Committee may permit the individual
to elect to cover all or any part of the required withholdings, and to cover any
additional withholdings up to the amount needed to cover the individual's full
FICA and federal, state, and local income tax with respect to income arising
from payment of the Award, through a reduction of the number of Shares delivered
to such individual or a subsequent return to the Company of Shares held by the
Employee or other person, in each case valued in the same manner as used in
computing the withholding taxes under the applicable laws.
12. AMENDMENT, MODIFICATION AND TERMINATION OF THIS PLAN.
(a) The Board may at any time and from time to time terminate, suspend or
modify the Plan. Except as limited in (b) below, the Committee may at any time
alter or amend any or all Agreements under the Plan to the extent permitted by
law. However, no such action may, without further approval of the shareholders
of the Company, be effective if such approval is required in order that the Plan
conform to the requirements of Code Section 422.
(b) No termination, suspension, or modification of the Plan will materially
and adversely affect any right acquired by any Participant or Successor or
Transferee under an Award granted before the date of termination, suspension, or
modification, unless otherwise agreed to by the Participant in the Agreement or
otherwise, or required as a matter of law; but it will be conclusively presumed
that any adjustment for changes in capitalization provided for in Plan Sections
7.2 or 13 does not adversely affect these rights.
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13. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. Appropriate adjustments in
the aggregate number and type of Shares available for Awards under this Plan and
in the number and type of Shares and amount of cash subject to Awards then
outstanding, in the Option price as to any outstanding Options and, subject to
Section 7.2(b) hereof, in outstanding Performance Units and payments with
respect to outstanding Performance Units may be made by the Committee in its
sole discretion to give effect to adjustments made in the number or type of
Shares of the Company through a Fundamental Change (subject to Section 14
hereof), recapitalization, reclassification, stock dividend, stock split, stock
combination, or other relevant change, provided that fractional Shares shall be
rounded to the nearest whole share.
14. FUNDAMENTAL CHANGE. In the event of a proposed Fundamental Change: (a)
involving a merger, consolidation, or statutory share exchange, unless
appropriate provision shall be made for the protection of the outstanding
Options by the substitution of options and appropriate voting common stock of
the corporation surviving any such merger or consolidation or, if appropriate,
the parent corporation of the Company or such surviving corporation, to be
issuable upon the exercise of options in lieu of Options and capital stock of
the Company, or (b) involving the dissolution or liquidation of the Company, the
Committee shall declare, at least 20 days prior to the occurrence of the
Fundamental Change, and provide written notice to each holder of an Option of
the declaration, that each outstanding Option, whether or not then exercisable,
shall be canceled at the time of, or immediately prior to the occurrence of the
Fundamental Change in exchange for payment to each holder of an Option, within
ten days after the Fundamental Change, of cash equal to the amount, if any, for
each Share covered by the canceled Option, by which the Fair Market Value (as
defined in this Section) per Share exceeds the exercise price per Share covered
by such Option. At the time of the declaration provided for in the immediately
preceding sentence, each Option shall immediately become excercisable in full
and each person holding an Option shall have the right, during the period
preceding the time of cancellation of the Option, to exercise the Option as to
all or any part of the Shares covered thereby; provided, however, that if such
Fundamental Change does not become effective, then the declaration pursuant to
this Section 14(b) shall be rescinded, the acceleration of the exercisibility of
the Option pursuant to this Section 14(b) shall be void, and the Option shall be
exercisable in accordance with its terms. In the event of a declaration pursuant
to this Section 14, each outstanding Option that shall not have been exercised
prior to the Fundamental Change shall be canceled at the time of, or immediately
prior to, the Fundamental Change, as provided in the declaration.
Notwithstanding the foregoing, no person holding an Option shall be entitled to
the payment provided for in this Section 14 if such Option shall have expired
pursuant to an Agreement. For purposes of this Section only, "Fair Market Value"
per Share means the cash plus the fair market value, as determined in good faith
by the Committee, of the non-cash consideration to be received per Share by the
shareholders of the Company upon the occurrence of the Fundamental Change,
notwithstanding anything to the contrary provided in this Plan.
15. UNFUNDED PLAN. This Plan shall be unfunded and the Company shall not be
required to segregate any assets that may at any time be represented by Awards
under this Plan.
16. OTHER BENEFIT AND COMPENSATION PROGRAMS. Payments and other benefits
received by an employee under an Award shall not be deemed a part of an
employee's regular, recurring compensation for purposes of any termination,
indemnity, or severance pay laws and shall not be included in, nor have any
effect on, the determination of benefits under any other employee benefit plan,
contract, or similar arrangement provided by the Company or an Affiliate, unless
expressly so provided by such other plan, contract, or arrangement or the
Committee determines that an Award or portion of an Award should be included to
reflect competitive compensation practices or to recognize that an Award has
been made in lieu of a portion of competitive cash compensation.
17. BENEFICIARY UPON EMPLOYEE'S DEATH. To the extent that the transfer of
an employee's Award at death is permitted under an Agreement, (a) an employee's
Award shall be transferable to the beneficiary, if any, designated on forms
prescribed by and filed with the Committee and (b) upon the death of the
Employee, such beneficiary shall succeed to the rights of the Employee to the
extent permitted by law and this Plan. If no such designation of a beneficiary
has been made, the Participant's legal representative shall succeed to the
Awards, which shall be transferable by will or pursuant to laws of descent and
distribution to the extent permitted under an Agreement.
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18. CORPORATE MERGERS, ACQUISITIONS, ETC. The Committee may also grant
Options, Restricted Stock or other Awards under the Plan having terms,
conditions and provisions that vary from those specified in this Plan provided
that any such awards are granted in substitution for, or in connection with the
assumption of, existing options, stock appreciation rights, restricted stock or
other awards granted, awarded or issued by another corporation and assumed or
otherwise agreed to be provided for by the Company pursuant to or by reason of a
transaction involving a corporate merger, consolidation, acquisition of property
or stock, separation, reorganization or liquidation to which the Company or a
subsidiary is a party.
19. DEFERRALS AND SETTLEMENTS. The Committee may require or permit
Employees to elect to defer the issuance of Shares or the settlement of Awards
in cash under such rules and procedures as it may establish under the Plan. It
may also provide that deferred settlements include the payment or crediting of
interest on the deferral amounts.
20. GOVERNING LAW. To the extent that federal laws do not otherwise
control, this Plan and all determinations made and actions taken pursuant to
this Plan shall be governed by the laws of Minnesota and construed accordingly.
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