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EXHIBIT 10.1
NVE CORPORATION
2000 STOCK OPTION PLAN
1. ESTABLISHMENT AND PURPOSE.
1.1 ESTABLISHMENT. NVE Corporation, a Minnesota Corporation, is
establishing this 2000 Stock Option Plan (the "PLAN") for
employees and others providing services to the Company. The
Plan permits the granting of both Nonstatutory Options and
Incentive Stock Options.
1.2 PURPOSE. The purposes of the Plan are to enhance shareholder
investment by attracting, retaining and motivating employees
and consultants of the Company and to encourage stock
ownership by such employees and consultants by providing them
with a means to acquire a proprietary interest in the
Company's success.
2. DEFINITIONS. Unless the context clearly requires otherwise, when
capitalized, the following terms have the meanings set forth below.
2.1 "AFFILIATE" means a corporation that, for purposes of Section
422 of the Code, is a Parent Corporation or Subsidiary
Corporation of the Company, direct or indirect.
2.2 "BOARD" means the Board of Directors of the Company.
2.3 "CODE" means the Internal Revenue Code of 1986, as amended.
2.4 "COMMITTEE" means the committee, as specified in Section 6,
appointed by the Board to administer the Plan, or the Board if
no Committee is appointed. If the Board delegates powers to a
Committee, and if the Company is or becomes subject to Section
16 of the Exchange Act, then, if necessary to comply with
Section 16, the Committee will consist initially of no less
than 2 members of the Board, each member being a "non-employee
director," within the meaning of the applicable rules of the
Exchange Act.
2.5 "COMPANY" means NVE Corporation, a Minnesota corporation.
2.6 "CONSULTANT" means any person or entity, including an officer
or director of the Company who provides consulting, director
or advisory services (other than as an Employee) to the
Company.
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2.7 "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means the
absence of any interruption or termination of employment in
the case of an Employee, or provision of services in the case
of a Consultant. Continuous Status as an Employee or
Consultant will not be deemed to be interrupted in the case of
sick leave, military leave or any other absence approved by
the Board; provided, however, that such leave is for a period
of not more than 90 days or reemployment upon the expiration
of such leave is guaranteed by contract or statute.
2.8 "DATE OF EXERCISE" means the date the Company receives notice
by an Optionee of the exercise of an Option under Section 10.1
of the Plan. The notice indicates the number of shares of
Stock that Optionee intends to exercise an Option.
2.9 "EMPLOYEE" means any person, including an officer or director
of the Company, who is employed by the Company.
2.10 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
2.11 "EXERCISE PRICE" means the amount for which one share of Stock
may be purchased upon exercise of an Option, as specified in
the applicable Option Agreement.
2.12 "FAIR MARKET VALUE" means (a) if the Stock is listed or
admitted to trade on a national securities exchange, the
closing price of the Stock, as published in the Midwest
Edition of The Wall Street Journal, of the principal national
securities exchange on which the Stock is so listed or
admitted to trade, on such date, or, if there is no trading of
the Stock on such date, then the closing price of the Stock on
the next preceding date on which there was trading in such
shares; (b) if the Stock is not listed or admitted to trade on
a national securities exchange, the last price for the Stock
on such date, as furnished by the National Association of
Securities Dealers, Inc. ("NASD") through the NASDAQ National
Market Reporting System or a similar organization if the NASD
is no longer reporting such information; (c) if the Stock is
not listed or admitted to trade on a national securities
exchange and is not reported on the National Market Reporting
System, the mean between the bid and asked price for the Stock
on such date, as furnished by the NASD; or (d) if the Stock is
not listed or admitted to trade on a national securities
exchange, is not reported on the National Market Reporting
System and if bid and asked prices for the Stock are not
furnished by the NASD or a similar organization, the values
established by any means deemed fair and reasonable by
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the Committee for purposes of the Plan. In the event that the
Fair Market Value of the Stock is established by the Committee
for purposes of the Plan, the Committee's determination is
final and binding on all parties.
2.13 "INCENTIVE STOCK OPTION" means an Option granted under the
Plan which is designated as an Incentive Stock Option and is
intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Code.
2.14 "NONSTATUTORY OPTION" means an Option granted under the Plan
that is not intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code. Except as
otherwise specified, Nonstatutory Options may be granted at
the times and subject to the restrictions as the Board
determines without conforming to the statutory rules of
Section 422 of the Code applicable to incentive stock options.
An Option granted pursuant to this Plan as an Incentive Stock
Option which does not qualify as an Incentive Stock Option
within the meaning of Section 422 of the Code at time of
grant, or ceases to qualify as an Incentive Stock Option
within the meaning of Section 422 of the Code, and is not
otherwise terminated pursuant to the Plan or the Stock Option
Agreement, will be a Nonstatutory Option for purposes of the
Plan.
2.15 "OPTION" means the right, granted under the Plan, to purchase
Stock of the Company at the Exercise Price for a specified
period of time. For purposes of the Plan, an Option may be
either an Incentive Stock Option or a Nonstatutory Option.
2.16 "OPTIONEE" means a person to whom an Option has been granted
under the Plan.
2.17 "PARENT CORPORATION" has the meaning set forth in Section
424(e) of the Code with the Company being treated as the
employer corporation for purposes of this definition.
2.18 "SUBSIDIARY CORPORATION" has the meaning set forth in Section
424(f) of the Code with the Company being treated as the
employer corporation for purposes of this definition.
2.19 "SIGNIFICANT STOCKHOLDER" means an individual who, within the
meaning of Section 422(b)(6) of the Code, owns Stock
possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any
Parent Corporation or Subsidiary Corporation of the Company.
In determining whether an individual is a Significant
Stockholder, an individual shall be
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treated as owning Stock owned by certain relatives of the
individual and certain Stock owned by corporations in which
the individual is a shareholder, partnerships in which the
individual is a partner and estates or trusts of which the
individual is a beneficiary, all as provided in Section 424(d)
of the Code.
2.20 "STOCK" means the common stock of the Company.
3. GENDER AND NUMBER. Except when otherwise indicated by the context, any
masculine terminology when used in the Plan also includes the feminine
gender, and the definition of any term in the singular also includes
the plural.
4. SEVERABILITY. Wherever possible, each provision of the Plan is to be
interpreted to be effective and valid under applicable law. If,
however, any provision of the Plan is prohibited by or invalid under
applicable law, that provision is ineffective only to the extent of the
prohibition or invalidity, without invalidating the remainder of the
provision or the remaining provisions of the Plan.
5. ELIGIBILITY AND PARTICIPATION.
5.1 ELIGIBILITY. All Employees are eligible to participate in the
Plan and receive Incentive Stock Options and/or Nonstatutory
Options. All Consultants are eligible to participate in the
Plan and receive Nonstatutory Options.
5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan,
the Committee may, from time to time, select from all
Employees and Consultants those to whom it wishes to grant
Options. The Committee determines the nature of and number of
shares of Stock subject to each Option.
6. ADMINISTRATION.
6.1 THE COMMITTEE. Except as provided herein, the Committee
administers the Plan. The Board may authorize one or more
officers or directors of the Company to assist in the
administration of the Plan, acting as a secondary committee
within guidelines established from time to time by the Board.
Within the limitations of this Section 6.1, any reference in
the Plan to the Committee includes the secondary committee.
6.2 AUTHORITY OF THE COMMITTEE. The Committee has full power
except as limited by law or by the Articles of Incorporation
or Bylaws of the Company, and subject to this Plan, to
determine the size and types of Options; to determine the
terms and conditions of the Options in a manner consistent
with the Plan; to construe and interpret the Plan and any
agreement or instrument entered into under the Plan; to
establish, amend,
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or waive rules and regulations for the Plan's administration;
and (subject to the provisions of Section 13) to amend the
terms and conditions of any outstanding Option to the extent
that the terms and conditions are within the discretion of the
Committee as provided in the Plan. Further, the Committee may
take any other action necessary or advisable for the
administration of the Plan. As permitted by law, the Committee
may delegate its authorities to the secondary Committee.
6.3 DECISIONS BINDING. All determinations and decisions made by
the Committee under the Plan and all related orders or
resolutions of the Board of Directors are final, conclusive
and binding on all persons, including the Company, its
shareholders, Employees, Consultants, Optionees and
successors.
7. STOCK SUBJECT TO THE PLAN.
7.1 NUMBER. The total number of shares of Stock made available for
grant and reserved for issuance under the Plan is 3,620,500
shares. The aggregate number of shares of Stock available
under the Plan is subject to adjustment as provided in Section
14.1.
7.2 LAPSED OPTIONS. If an Option expires or terminates for any
reason without having been exercised in full, the unpurchased
shares of Stock become available for other Options under the
Plan, unless the Plan has terminated.
8. DURATION OF THE PLAN. Subject to shareholder approval, the Plan is in
effect for ten (10) years from the date of its adoption by the Board.
Any Options outstanding at the end of this period remain in effect in
accordance with their terms. The Plan terminates before the end of this
period if all Stock subject to the Plan has been purchased by exercise
of Options granted under the Plan.
9. TERMS OF STOCK OPTIONS.
9.1 GRANT OF OPTIONS.
(a) COMMITTEE DISCRETION. Subject to Section 7.1, Options
may be granted to Employees or Consultants at any
time and from time to time as determined by the
Committee, except that Consultants may only receive
Nonstatutory Options. The Committee has complete
discretion in determining the recipient of Options
among the Employees or Consultants, the number of
shares of Stock subject to an Option and the number
of Options granted to each Optionee. In making these
determinations, the Committee may take into account
the nature of services rendered by Employees or
Consultants, their present and potential
contributions to the
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Company, and any other factors as the Committee in
its discretion deems relevant. The Committee also
determines whether an Option is to be an Incentive
Stock Option or a Nonstatutory Option.
(b) $100,000 LIMIT. The Committee may not grant an
Optionee Incentive Stock Options exercisable for the
first time during any calendar year in excess of
$100,000. This limit applies to all plans of the
Company under which Incentive Stock Options may be
granted, including plans of any Parent Corporations
and any Subsidiary Corporations of the Company. The
Fair Market Value used for this calculation is the
Fair Market Value determined at the date of the
grant. This paragraph does not prevent the grant of
Options in excess of the maximums established this
paragraph, however, such excess will be treated as a
Nonstatutory Option.
(c) 1,500,000 SHARE LIMIT. No Optionee may be granted
Options in any fiscal year to purchase an aggregate
number of shares of Stock in excess of 1,500,000
shares per Optionee, subject to adjustment under
Section 14.1.
(d) AUTHORITY TO AMEND. The Committee has the express
authority to issue amended Options for shares of
Stock subject to an Option previously granted. An
amended Option amends the terms of an Option
previously granted and supersedes the previous
Option.
(e) STOCKHOLDER APPROVAL. No Options granted under the
Plan are exercisable before the approval of the Plan
by the shareholders of the Company in accordance with
the Bylaws of the Company.
9.2 NO TANDEM OPTIONS. Where an Option granted under the Plan is
intended to be an Incentive Stock Option, the Option may not
contain terms under which the exercise of the Option would
affect the Optionee's right to exercise another Option, or
vice versa, so that the Option intended to be an Incentive
Stock Option would be deemed a tandem stock option within the
meaning of the regulations under Section 422 of the Code.
9.3 OPTION AGREEMENT.
(a) USE OF OPTION AGREEMENT. As determined by the
Committee on the date of grant, each Option is
evidenced by an Option agreement (the "OPTION
AGREEMENT") that includes the nontransferability
provisions of Section 12.2 and specifies: whether the
Option is an Incentive Stock Option or a Nonstatutory
Option; the Exercise Price; the duration of the
Option; the number of shares of Stock to which the
Option applies; any vesting or serial exercise
restrictions
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that the Committee may impose; and any other terms or
conditions that the Committee may impose. An Option
Agreement may provide that a new Option will be
granted automatically to the Optionee when the
Optionee exercises a prior Option and pays the
Exercise Price using Stock under Section 9.7. The
Committee may require an Optionee to sign the Option
Agreement.
(b) RESTRICTIONS ON STOCK. At the discretion of the
Committee, the Company may reserve to itself and/or
its assignees in the Option Agreement (a) a right of
first refusal to purchase all Stock that an Optionee,
or Permitted Transferee (as hereinafter defined), may
propose to transfer to a third party, and/or (b) a
right to repurchase a portion of or all Stock held by
an Optionee following such Optionee's termination at
any time within 90 days after the later to occur of
the Optionee's Termination Date and the date the
Optionee purchases Stock under the Plan, for cash
and/or cancellation of purchase money indebtedness,
at the Optionee's Exercise Price.
(c) INCORPORATION BY REFERENCE. All Option Agreements
incorporate the provisions of the Plan by reference,
with different provisions to apply depending upon
whether the Option Agreement applies to an Incentive
Stock Option or to a Nonstatutory Option.
9.4 EXERCISE PRICE. No Incentive Stock Option granted under the
Plan may have an Exercise Price that is less than the Fair
Market Value of the Stock on the date the Option is granted.
Incentive Stock Options granted to Significant Stockholders
must have an Exercise Price of not less than 110% of the Fair
Market Value of the Stock on the date of grant. The Exercise
Price for Nonstatutory Options may be less than the Fair
Market Value of Stock on the date the Option is granted and
are not subject to the restrictions applicable to Incentive
Stock Options.
9.5 TERM OF OPTIONS. Each Option expires at the time determined by
the Committee when the Option is granted, but no Option may be
exercised after the 10th anniversary date of its grant. By its
terms, an Incentive Stock Option granted to a Significant
Stockholder may not be exercised after the 5th anniversary
date of its grant.
9.6 EXERCISE OF OPTIONS. Options granted under the Plan are
exercisable at the times and subject to the restrictions and
conditions as the Committee in each instance approves, which
need not be the same for all Optionees.
9.7 PAYMENT. Payment for all shares of Stock must be made at the
time that an Option, or any part thereof, is exercised, and no
shares may be issued until full payment has been made. Payment
may be made in cash, cash equivalents or other form acceptable
to the Committee, including without
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limitation, in Stock having a Fair Market Value at the time of
the exercise equal to the Exercise Price, provided that the
Optionee has held such Stock for more than six months and such
Stock has been paid for within the meaning of Rule 144 of the
Securities Act of 1933, as amended, or the Optionee obtained
such Stock in the public market. In the case of an Incentive
Stock Option, the form of payment cannot prevent the Option
from qualifying for treatment as an "incentive stock option"
within the meaning of the Code. In addition, the Company may
establish a cashless exercise program in accordance with
Federal Reserve Board Regulation T.
10. WRITTEN NOTICE, ISSUANCE OF STOCK CERTIFICATES, STOCKHOLDER PRIVILEGES
10.1 WRITTEN NOTICE. An Optionee wishing to exercise an Option
gives written notice to the Chief Executive Officer of the
Company, in the form and manner prescribed by the Committee.
10.2 ISSUANCE OF STOCK CERTIFICATES. As soon as practicable after
the receipt of written notice and payment, the Company
delivers to the Optionee, or to a nominee of the Optionee, a
certificate or certificates for the shares of Stock. The
certificate may bear a legend restricting transfer if required
under Section 15.
10.3 RIGHTS OF A STOCKHOLDER. An Optionee or any other person
entitled to exercise an Option under the Plan does not have
dividend rights, voting rights or other rights or privileges
of a shareholder with respect to any Stock covered by an
Option until the date of issuance of a stock certificate for
the Stock. No adjustment is made for cash dividends or other
rights for which the record date is before the issuance date,
except as expressly provided in the Plan.
10.4 ESCROW. To enforce any restrictions on an Optionee's Stock,
the Committee may require the Optionee to deposit all
certificates representing Stock, together with stock powers or
other instruments of transfer approved by the Committee,
appropriately endorsed in blank, with the Company or an agent
designated by the Company to hold in escrow until such
restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be
placed on the certificates.
11. TERMINATION OF EMPLOYMENT.
11.1 DEATH.
(a) Unless otherwise determined by the Committee, if an
Optionee's employment in the case of an Employee, or
provision of services in the case of a Consultant,
terminates by reason of death, and prior to
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his or her death the Employee or Consultant had been
in Continuous Status as an Employee or Consultant
since the date of grant of the Option, the Option may
be exercised at any time before the expiration date
of the Option or within six months after the date of
the death, whichever period is shorter, by the person
or persons entitled to do so under the Optionee's
will.
(b) If an Optionee's employment in the case of an
Employee, or provision of service in the case of a
Consultant, terminates by reason of death within 30
days after such Employee or Consultant terminates his
or her Continuous Status as an Employee or
Consultant, the Option may be exercised at any time
before the expiration date of the Option or within
six months after the date of the death, whichever
period is shorter, by the person or persons entitled
to do so under the Optionee's will.
(c) If the Optionee fails to make a testamentary
disposition of an Option or dies intestate, the
Optionee's legal representative may exercise the
Option. Options are exercisable only to the extent
that they were exercisable as of the date of death.
11.2 TERMINATION OTHER THAN FOR CAUSE OR DUE TO DEATH.
(a) TERMINATION. In the event of an Optionee's
termination of Continuous Status as an Employee or
Consultant, except when an Employee becomes a
Consultant, other than by reason of death or for
cause (as defined in Section 11.3), the Optionee may
exercise the portion of his Option that was
exercisable by the Optionee at the date of the
termination (the "TERMINATION DATE") at any time
within 30 days after the Termination Date. In any
event, the Option cannot be exercised after the
expiration of the term of the Option. Options
terminate if not exercised within the applicable
period.
(b) DISABILITY. If the termination of Continuous Status
as an Employee or Consultant occurs due to a
disability, as defined in the Code, the Optionee may
exercise the portion of any Option that was
exercisable by such Optionee on Optionee's
Termination Date within six months after such
Termination Date. In any event, the Option cannot
be exercised after the expiration of the term of
the Option. Options terminate if not exercised within
the applicable period.
11.3 TERMINATION FOR CAUSE.
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(a) TERMINATION OF OPTIONS. If the Company terminates the
employment, in the case of an Employee, or the
provision of services, in the case of a Consultant,
for cause (as defined below), any Option or Options
held by the Optionee under the Plan, to the extent
not exercised before the termination, terminate
immediately.
(b) DEFINITION OF "CAUSE." The term "cause" means:
(i) Optionee's conviction of a felony which
would materially damage the reputation of
the Company; or
(ii) material misappropriation by Optionee of the
Company's property or other material acts of
dishonesty by Optionee against the Company;
or
(iii) Optionee's gross negligence or willful
misconduct in the performance of Optionee's
duties that has a material adverse effect on
the Company.
12. RIGHTS OF OPTIONEES.
12.1 SERVICE. Nothing in the Plan interferes with or limits in any
way the right of Company to terminate any Employee's
employment, or any Consultant's services, at any time, nor
confers upon any Employee any right to continue in the employ
of the Company, or upon any Consultant any right to continue
to provide services to the Company.
12.2 RESTRICTIONS ON TRANSFER.
(a) NONTRANSFERABLE. Except as otherwise provided by this
Section 12.2, all Options granted under the Plan are
nontransferable by the Optionee, other than by will
or the laws of descent and distribution, and are
exercisable during the Optionee's lifetime only by
the Optionee.
(b) COMMITTEE DISCRETION. The Committee may, in its sole
discretion and with the consent of the Optionee:
(i) grant Nonstatutory Options which are
transferable within the restrictions of this
Section 12.2;
(ii) amend a then-existing Nonstatutory Option to
allow for transferability of an Option
within the restrictions of this Section
12.2; or
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(iii) amend a then-existing Incentive Stock Option
(whereby an Option will become a
Nonstatutory Option) to allow for
transferability of an Option within the
restrictions of this Section 12.2
(collectively, the "TRANSFERABLE OPTIONS").
(c) LIMITED TRANSFERABILITY. Subject to the conditions in
subsection (d) below, the Committee may, in its sole
discretion, authorize all or a portion of the
Transferable Options to be on terms that permit
transfer of an Option by the initial Optionee of the
Option (the "INITIAL OPTIONEE") to:
(i) the spouse, children, step-children,
grandchildren, step-grandchildren, siblings
or parents of the Initial Optionee
("IMMEDIATE FAMILY MEMBERS");
(ii) a trust or trusts for the exclusive benefit
of the Immediate Family Members;
(iii) a partnership or other entity in which the
Immediate Family Members are the only
partners or equity owners; or
(iv) a former spouse of the Initial Optionee
under a qualified domestic relations order
(collectively, a "PERMITTED TRANSFEREE").
(d) CONDITIONS OF TRANSFER. A transfer under Section
12.2(c) is subject to the following conditions:
(i) there may be no consideration for the
transfer;
(ii) the Option Agreement under which the Options
are granted, or any amendment thereto, is
approved by the Committee, and expressly
provides for transferability in a manner
consistent with this Section 12.2;
(iii) any Option or portion transferred by an
Initial Optionee to a Permitted Transferee
may be exercised by the Permitted Transferee
only to the same extent as the Initial
Optionee would have been entitled to
exercise it, and remains subject to all of
the terms and conditions that would have
applied to the Option under the provisions
of the Plan and Option Agreement, if the
Initial Optionee had not transferred the
Option or portion to the Permitted
Transferred;
(iv) subsequent transfers of transferred Options
(including sale, assignment, pledge or other
transfer) are prohibited except by will or
the laws of descent and distribution;
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(v) the Initial Optionee remains subject to
applicable withholding taxes upon exercise
of options transferred to a Permitted
Transferee;
(vi) the Company has no obligation to notify the
Permitted Transferee of the expiration or
early termination of any Option;
(vii) the Committee may, in its sole discretion,
require as a condition to the transfer of an
Option, that the Permitted Transferee
execute an agreement under which the
Permitted Transferee would become a party to
the applicable Option Agreement and agree
that in the event the Company merges into or
consolidates with another entity, the
Company sells all or a substantial part of
its assets, or the Company's Stock is
subject to a tender or exchange offer, the
Permitted Transferee will consent to the
transfer or assumption of the Option, or
accept a new option in substitution, if the
Company requests the Permitted Transferee to
do so; and
(viii) the transfer is not effective unless and
until the Initial Optionee has furnished the
Committee written notice of the transfer,
copies of all requested documents evidencing
the transfer, and any other agreements as
may be required by the Committee.
13. AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN.
13.1 AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN. The
Board may at any time terminate, and from time to time may
amend or modify, the Plan, except that without stockholder
approval, the Board may not:
(a) increase the total amount of Stock that may be
purchased through Options granted under the Plan,
except as provided in Section 14.1;
(b) change the class of Employees or Consultants eligible
to receive Options; or
(c) change the provisions of Section 9.1 above to allow
an Optionee to be granted Options in any fiscal year
to purchase an aggregate number of shares of Stock in
excess of 1,500,000 shares per Optionee, subject to
adjustment under Section 14.1.
13.2 OPTIONS PREVIOUSLY GRANTED. No amendment, modification or
termination of the Plan shall in any manner adversely affect
any
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outstanding Option under the Plan without the consent of the
Optionee holding the Option.
14. CHANGES IN CAPITALIZATION, DISSOLUTION, LIQUIDATION, REORGANIZATION
14.1 ADJUSTMENTS. In the event of a subdivision of the outstanding
Stock, a declaration of a dividend payable in Stock, a
declaration of a dividend payable in a form other than Stock
in an amount that has a material effect on the value of the
Stock, a combination or consolidation of the outstanding Stock
(by reclassification or otherwise) into a lesser number of
shares of Stock, a recapitalization, a spin-off or a similar
occurrence, the Committee may adjust as appropriate, in its
sole discretion, one or more of:
(a) the number of shares of Stock available for future
grants under Section 7;
(b) the number of shares of Stock covered by each
outstanding Option; or
(c) the Exercise Price under each outstanding Option.
14.2 OPTIONEE RIGHTS. Except as provided in this Section 14, an
Optionee shall have no rights by reason of any issue by the
Company of any class of capital stock or securities
convertible into capital stock of any class, any subdivision
or consolidation of shares of capital stock of any class, the
payment of any capital stock dividend or any other increase or
decrease in the number of shares of capital stock of any
class.
14.3 DISSOLUTION OR LIQUIDATION. To the extent not previously
exercised, Options terminate immediately before the
dissolution or liquidation of the Company.
14.4 MERGER, EXCHANGE OR REORGANIZATION. In the event that the
Company is a party to a merger, exchange or reorganization,
outstanding Options are subject to the agreement of merger,
exchange or reorganization. The agreement must provide for:
(a) the continuation of the outstanding Options by the
Company, if the Company is a surviving corporation;
(b) the assumption of the outstanding Options by the
surviving corporation or its parent or subsidiary;
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(c) the substitution by the surviving corporation or its
parent or subsidiary of its own options for the
outstanding Options;
(d) full exercisability or vesting and accelerated
expiration of the outstanding Options; or
(e) settlement of the full value of the outstanding
Options in cash or cash equivalents followed by
cancellation of the Options.
14.5 ASSET SALE. In no event are any Option exercisable during the
period immediately following the announcement of the sale and
until all revenue resulting from a sale of assets has been
distributed to the shareholders. In the event of the sale of
all or substantially all of the Company's assets, at the
discretion of the Company, the Options will:
(a) remain outstanding;
(b) be substituted for the options of the acquiring
corporation or its parent or subsidiary;
(c) become fully vested immediately prior to the sale and
cancelled upon closing of the sale; or
(d) be cancelled in exchange for payment of full value of
the outstanding Options with cash or cash
equivalents.
15. SECURITIES REGISTRATION. In the event that the Company deems it
necessary or desirable to register under the Securities Act of 1933, as
amended, or any other applicable statute, any Options or any Stock with
respect to which an Option may be or has been granted or exercised, or
to qualify any such Options or Stock under the Securities Act of 1933,
as amended, or any other statute, then the Optionee must cooperate with
the Company and take such action as is necessary to permit registration
or qualification of the Options or Stock.
Unless the Company has determined that the following representation is
unnecessary, each person exercising an Option under the Plan may be
required by the Company, as a condition to the issuance of the shares
pursuant to exercise of the Option, to make a representation in
writing: (a) that he or she is acquiring such shares for his or her own
account for investment and not with a view to, or for sale in
connection with, the distribution of any part; and (b) that before any
transfer in connection with the resale of the shares, he or she will
obtain the written opinion of counsel for the Company, or other counsel
acceptable to the Company, that the shares may be transferred. The
Company may also require that the certificates representing the shares
contain legends reflecting the foregoing. The Company will only require
the foregoing investment representation from an Optionee,
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inscription of a legend on the Optionee's share certificate and
placement of a stop order with the Company's transfer agent if a
registration statement is not in effect with respect to the shares
issued under the Plan at the time the Optionee exercises the Option.
16. TAX WITHHOLDING.
16.1 TAX WITHHOLDING. Company has the power and the right to deduct
or withhold, or require an Optionee to remit to the Company,
an amount sufficient to satisfy federal, state, and local
taxes (including the Optionee's FICA obligation) required by
law to be withheld with respect to any grant, exercise or
payment made under or as a result of the Plan. The Company is
not required to issue any Stock under the Plan until these
obligations are satisfied.
16.2 SHARE WITHHOLDING. With respect to withholding required upon
the exercise of Options, or upon any other taxable event
hereunder, Optionees may elect, subject to the approval of the
Committee and compliance with applicable laws and regulation,
to satisfy the minimum withholding requirement, in whole or in
part, by having the Company withhold shares having a Fair
Market Value, on the date the tax is to be determined, equal
to the minimum withholding requirement.
17. INDEMNIFICATION. To the extent permitted by law, each person
who is or will have been a member of the Committee or of the
Board is indemnified by the Company against and from any loss,
cost, liability or expense that may be imposed upon or
reasonably incurred by him in connection with or resulting
from any claim, action, suit or proceeding to which he may be
a party or in which he may be involved by reason of any action
taken or failure to act under the Plan and against and from
any and all amounts paid by him in settlement, with the
Company's approval, or paid by him in satisfaction of judgment
in any action, suit, or proceeding against him, if he gives
the Company an opportunity, at its own expense, to handle and
defend before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification is not
exclusive of any other rights of indemnification to which
these persons may be entitled under the Company's Articles of
Incorporation or Bylaws, as a matter of law, or otherwise, or
any power that the Company may have to indemnify them.
18. REQUIREMENTS OF LAW
18.1 REQUIREMENTS OF LAW. The granting of Options and the issuance
of shares of Stock upon the exercise of an Option is subject
to all applicable laws, rules and regulations, and to
approvals by any governmental agencies or national securities
exchanges, as may be required.
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18.2 GOVERNING LAW. To the extent not preempted by federal law, the
Plan, and all agreements under the Plan, are governed by the
laws of the State of Minnesota.
18.3 COMPLIANCE WITH THE EXCHANGE ACT AND THE CODE. The Plan is
intended to comply in all respects with applicable law and
regulations including (a) with respect to those Optionees who
are officers or directors for purposes of Section 16 of the
Exchange Act, Rule 16b-3 of the Securities and Exchange
Commission, if applicable, and (b) with respect to Incentive
Stock Options, Code Section 422. If any provision of the Plan
is susceptible to more than one interpretation, the
interpretation should be given as is consistent with all
applicable law (including Rule 16b-3 and Code Section 422).
Notwithstanding anything herein to the contrary, with respect
to Optionees who are officers and directors of the Company for
purposes of Section 16 of the Exchange Act, no grant of an
Option will permit unrestricted ownership of Stock by the
Optionee for at least six months from the date of the grant of
such Option, unless the Board determines that the grant of
such Option otherwise satisfies the then current Rule 16b-3
requirements.
19. EFFECTIVE DATE OF PLAN. Subject to Stockholder Approval of the Plan,
the Plan shall be effective as of November 20, 2000, the date of its
adoption by the Board.
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