<PAGE>
EXHIBIT 4.4
ROCKETCHIPS, INC.
2000 EQUITY INCENTIVE PLAN
SECTION 1
DEFINED TERMS
In addition to the other definitions contained herein, the following
definitions shall apply:
1.1 Award. The term "Award" shall mean any award or benefit granted in
accordance with the terms of the Plan. Awards under the Plan may be in the form
of (i) Stock Options; (ii) Restricted Stock; and/or (iii) Tax Offset Payments.
The terms and conditions of the Award shall be set forth in an "Award
Agreement."
1.2 Board. The term "Board" shall mean the Board of Directors of the
Company.
1.3 Change in Control. The term "Change in Control" shall mean:
(a) the acquisition by any person or group deemed a person under
Sections 3(a)(9) and 13(d)(3) of the Exchange Act (other than the
Company and its subsidiaries as determined immediately prior to
that date) of beneficial ownership, directly or indirectly (with
beneficial ownership determined as provided in Rule 13d-3, or any
successor rule, under the Exchange Act), of a majority of the
total combined voting power of all classes of Stock of the
Company having the right under ordinary circumstances to vote at
an election of the Board, if such person or group deemed a person
prior to such acquisition was not a beneficial owner of at least
five percent (5%) of such total combined voting power of the
Company;
(b) the date of approval by the stockholders of the Company of an
agreement providing for the merger or consolidation of the
Company with another corporation or other entity where (x)
stockholders of the Company immediately prior to such merger or
consolidation would not beneficially own following such merger or
consolidation shares entitling such stockholders to a majority of
all votes (without consolidation of the rights of any class of
stock to elect directors by a separate class vote) to which all
stockholders of the surviving corporation would be entitled in
the election of directors, or (y) where the members of the Board,
immediately prior to such merger or consolidation, would not,
immediately after such merger or consolidation, constitute a
majority of the board of directors of the surviving corporation;
or
(c) the sale of all or substantially all of the assets of the
Company.
1.4 Code. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include reference to any
successor provision of the Code.
1
<PAGE>
1.5 Committee. The term "Committee" shall mean a committee described in
Section 10.
1.6 Company. The term "Company" shall mean RocketChips, Inc.
1.7 Covered Shares. The term "Covered Shares" shall mean the number of
shares of Stock that an Eligible Individual may purchase pursuant to an Option.
1.8 Director. The term "Director" shall mean a member of the Company's
Board.
1.9 Eligible Individual. The term "Eligible Individual" shall mean (a) any
common law employee, prospective employee, or officer of the Company, (b)
members of the Company's Board, and (c) consultants and advisors to the Company
and any Related Company. All Eligible Individuals must be natural persons who
provide bona fide services to the Company or a Related Company. In addition, the
services provided to the Company or Related Company must not be in connection
with an offer or sale of securities in a capital raising transaction and must
not directly or indirectly promote or maintain a market for the Company's Stock.
An Award may be granted to an Eligible Individual prior to the date the Eligible
Individual performs services for the Company or Related Company, provided that
such Award shall not become vested until a date which is on or after the date
the Eligible Individual first performs such services.
1.10 Exchange Act. The term "Exchange Act" shall mean the Securities Act of
1934, as amended.
1.11 Exercise Price. The term "Exercise Price" shall mean the exercise
price of each Option granted under Section 4 established by the Committee and
determined by any reasonable method established by the Committee at the time the
Option is granted. Options granted pursuant to Section 4 of the Plan shall not
have an Exercise Price of less than 100% of the Fair Market Value of the
Company's Stock on the date the Option is granted.
1.12 Fair Market Value. The term "Fair Market Value" of a share of Stock on
a given date shall mean the closing price of the share of Stock as reported on
the Nasdaq Stock Market on such date, if the share of Stock is then quoted on
the Nasdaq Stock Market or, if the market is closed on that date, the closing
price of the share of Stock on the previous trading day. If the Stock is not
listed on the Nasdaq Stock Market, Fair Market Value shall be determined in good
faith by the Board or Committee.
1.13 Incentive Stock Option. The term "Incentive Stock Option" or "ISO"
shall mean an Option that is intended to satisfy the requirements of Section
422(b) of the Code.
1.14 Non-Employee Director. The term "Non-Employee Director" shall mean a
"non-employee director" as defined in Rule 16b-3(b)(3)(i) of the Exchange Act.
1.15 Non-Qualified Stock Option. The term "Non-Qualified Stock Option" or
"NSO" shall mean an Option that is not intended to satisfy the requirements
applicable to an "incentive
2
<PAGE>
stock option" described in Section 422(b) of the Code. NSO grants may be awarded
to any Eligible Individual.
1.16 Option. The term "Option" or "Stock Option" shall mean an ISO or NSO
granted pursuant to the Plan. The grant of an Option entitles the Eligible
Individual to purchase shares of Stock at an Exercise Price established by the
Committee.
1.17 Performance Award. The term "Performance Award" shall mean an award or
grant of shares based upon the achievement of performance objectives, as
contemplated by Section 5.
1.18 Plan. The term "Plan" shall mean this 2000 Equity Incentive Plan.
1.19 Related Company. The term "Related Company" shall mean any corporation
other than the Company and any partnership, joint venture or other entity in
which the Company owns, directly or indirectly, at least a 20% beneficial
ownership interest. A Related Company includes a subsidiary of the Company and
an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns 50% or
more of the voting stock in one of the other corporations in such chain.
1.20 Stock. The term "stock" shall mean shares of common stock, $.01 par
value, of the Company.
1.21 Stock Option Agreement. The term "Stock Option Agreement" or "Agreement"
shall mean any written agreement evidencing the terms and conditions of an ISO
or NSO granted under the Plan. The Agreement shall be subject to the terms and
conditions of the Plan.
SECTION 2
PURPOSE
The RocketChips, Inc. 2000 Stock Equity Incentive Plan has been established
by RocketChips, Inc. to (i) attract and retain individuals eligible to
participate in the Plan; (ii) motivate Eligible Individuals, by means of
appropriate incentives, to achieve long-range goals; (iii) provide incentive
compensation opportunities that are competitive with those of other similar
companies; and (iv) further identify Eligible Individuals' interests with those
of the Company's other shareholders through compensation that is based on the
Company's common stock; and thereby promote the long-term financial interest of
the Company and any Related Company, including the growth in value of the
Company's equity and enhancement of long-term shareholder return.
SECTION 3
PARTICIPATION
Subject to the terms and conditions of the Plan, the Committee may
determine and designate, from time to time, Eligible Individuals who will be
granted one or more Awards under
3
<PAGE>
the Plan at the Exercise Price. In its sole discretion and without shareholder
approval, the Committee may grant to an Eligible Individual any Award or Awards
permitted under the provisions of the Plan. Awards may be granted as
alternatives to or replacement of Awards outstanding under the Plan, or any
other plan or arrangement of the Company or Related Company (including a plan or
arrangement of a business or entity, all or a portion of which is acquired by
the Company or a Related Company). Only employees are eligible to be granted
Incentive Stock Options.
SECTION 4
STOCK OPTIONS
4.1 General. The grant of an Option entitles the Eligible Individual to
purchase shares of Stock at an Exercise Price established by the Committee. Any
Option awarded to Eligible Individuals under this Section 4 may be either NSOs
or ISOs, as determined in the discretion of the Committee. To the extent that
any Stock Option does not qualify as an ISO, it shall constitute an NSO.
4.2 Option Awards. Subject to the following provisions, Options awarded
under the Plan shall be in such form and shall have such terms as the Committee
may determine and specify in a Stock Option Agreement entered into between the
Eligible Individual and the Company.
(a) Exercise of an Option. An Option shall be exercisable in
accordance with such terms and conditions and during such periods
as may be established by the Committee. In no event shall any
fraction of a share of Stock be issued upon the exercise of an
Option. An Option must be exercised for at least 100 shares of
Stock, or such lesser number of shares of Stock if the remaining
portion of an Option is for fewer than 100 shares of Stock.
(b) Exercise Price. The Exercise Price of an Option granted under
this Section 4 shall be established by the Committee or shall be
determined by a method established by the Committee at the time
the Option is granted, except that the Exercise Price shall not
be less than 100% of the Fair Market Value of the Company's Stock
on the date of grant.
(c) Payment of Option Exercise Price. The payment of the Exercise
Price of an Option granted under this Section 4 shall be subject
to the following:
(1) Subject to the following provisions of this Subsection
4.2(c), the full Exercise Price for shares of Stock
purchased upon the exercise of any Option shall be paid at
the time of such exercise or such other time as approved by
the Committee.
(2) Payment of the Exercise Price shall be made in such manner
as the Committee may provide in the Award, which may include
cash (including cash equivalents), tendering of shares of
Stock
4
<PAGE>
acceptable to the Committee and either already owned by the
Eligible Individual or subject to Awards hereunder (so-
called "cashless" or "immaculate" exercise methods), and any
other manner permitted by law and approved by the Committee,
or any combination of the foregoing. If the Company
determines that a Stock Option may be exercised using shares
of Restricted Stock, then unless the Committee provides
otherwise, the shares received upon the exercise of a Stock
Option which are paid for using Restricted Stock shall be
restricted in accordance with the original terms of the
Restricted Stock Award. In the case of any deferred payment
arrangement, interest shall be compounded at least annually
and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any
applicable provisions of the Code, of any amounts other than
amounts stated to be interest under the deferred payment
arrangement.
(3) An Eligible Individual may elect to pay the Exercise Price
upon the exercise of an Option by irrevocably authorizing a
third party to sell shares of Stock (or a sufficient portion
of the shares) acquired upon exercise of the Option and
remit to the Company a sufficient portion of the sale
proceeds to pay the entire Exercise Price and any tax
withholding resulting from such exercise.
(d) Settlement of Option. Shares of Stock delivered pursuant to the
exercise of an Option shall be subject to such conditions,
restrictions and contingencies as the Committee, in its
discretion, may establish in addition to such conditions,
restrictions, and contingencies set forth in the Agreement.
(e) Reload Options. The Committee may grant "reload" options,
pursuant to the terms and conditions established by the Committee
and any applicable requirements of Rule 16b-3 of the Exchange Act
("Rule 16b-3") or any other applicable law. The Eligible
Individual would be granted a new Option when the payment of the
Exercise Price of a previously granted Option is made by the
delivery of shares of the Company's Stock owned by the Eligible
Individual pursuant to Section 4.2(c)(2) hereof and/or when
shares of the Company's Stock are tendered or forfeited as
payment of the amount to be withheld under applicable income tax
laws in connection with the exercise of an Option. The new Option
would be an Option to purchase the number of shares not exceeding
the sum of (i) the number of shares of the Company's Stock
provided as consideration upon the exercise of the previously
granted Option to which such "reload" option relates and (ii) the
number of shares of the Company's Stock tendered or forfeited as
payment of the amount to be withheld under applicable income tax
laws in connection with the exercise of the Option to which such
"reload" option relates. "Reload" options may be granted
5
<PAGE>
with respect to Options granted under this Plan. Such "reload"
options shall have a per share exercise price equal to the Fair
Market Value as of the date of grant of the new Option.
(f) Vesting. Eligible Individuals shall vest in all Options in
accordance with the terms and conditions of the Agreement entered
into by and between the Eligible Individual and the Company. The
total number of shares of Stock subject to an Option may, but
need not, vest and therefore become exercisable in periodic
installments that may, but need not, be equal.
(g) Option Term. The term of each Option shall be fixed by the
Committee. In the event that the Plan is terminated pursuant to
terms and conditions of Section 11, the Plan shall remain in
effect as long as any Awards under it are outstanding.
(h) Termination of Employment. Following the termination of Eligible
Individual's employment with the Company or a Related Company,
the Option shall be exercisable to the extent determined by the
Committee and specified in the Award Agreement. The Committee may
provide different post-termination exercise provisions with
respect to termination of employment for different reasons.
(i) Incentive Stock Options. ISO grants may only be awarded to
employees of the Company, a "parent corporation," or a
"subsidiary corporation" as those terms are defined in Sections
424(e) and 424(f) of the Code. In order for an employee to be
eligible to receive an ISO grant, the employee must be employed
by the Company, parent corporation, or subsidiary corporation
during the period beginning on the date the Option is granted and
ending on the day three months prior to the date such Option is
exercised. Notwithstanding the provisions of Section 4.2, no ISO
shall (i) have an Exercise Price which is less than 100% of the
Fair Market Value of the Stock on the date of the ISO Award, (ii)
be exercisable more than ten (10) years after the ISO is awarded,
or (iii) be awarded more than ten (10) years after the Effective
Date of this Plan. No ISO awarded to an employee who owns more
than 10% of the total combined voting power of all classes of
Stock of the Company, its "parent corporation" or any "subsidiary
corporation" shall (i) have an Exercise Price of less than 110%
of the Fair Market Value of the Stock on the date of the ISO
Award or (ii) be exercisable more than five (5) years after the
date of the ISO Award. Notwithstanding Section 8.7, no ISO shall
be transferable other than by will and the laws of descent and
distribution. To the extent that the aggregate fair market value
(determined at the time of grant) of shares of Stock with respect
to ISOs are exercisable for the first time by the employee during
any calendar year, in combination with shares first exercisable
under all other plans of the Company and any Related Company,
exceeds $100,000, such Options shall be treated as NSOs.
6
<PAGE>
(j) Early Exercise. The Option may, but need not, include a provision
whereby the Eligible Individual may elect at any time prior to
his or her termination of employment with the Company to exercise
the Option as to any part or all of the shares of Stock subject
to the Option prior to the full vesting of the Option. Any
unvested shares of Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other
restrictions the Committee determines to be appropriate.
SECTION 5
PERFORMANCE AWARDS
The Committee shall have the right to designate Awards as "Performance
Awards." The grant or vesting of a Performance Award shall be subject to the
achievement of performance objectives established by the Committee based on one
or more of the following criteria, in each case applied to the Company on a
consolidated basis or to a business unit, as specified by the Committee in an
Award Agreement, and which the Committee may use as an absolute measure, as a
measure of improvement relative to prior performance, or as a measure of
comparable performance relative to a peer group of companies: sales, operating
profits, operating profits before interest expenses and taxes, net earnings,
earnings per share, return on equity, return on assets, return on invested
capital, total shareholder return, cash flow, debt to equity ratio, market
share, stock price, economic value added, and market value added. The terms and
conditions of a Performance Award shall be set forth in an Award Agreement
entered into between the Company and the Eligible Individual.
SECTION 6
RESTRICTED STOCK
Subject to the following provisions, the Committee may grant Awards of
Restricted Stock to an Eligible Individual in such form and on such terms and
conditions as the Committee may determine and specify in a Restricted Stock
Award Agreement entered into between the Company and the Eligible Individual:
(a) The Restricted Stock Award shall specify the number of shares of
Restricted Stock to be awarded, the price, if any, to be paid by
the Eligible Individual and the date or dates on which, or the
conditions upon the satisfaction of which, the Restricted Stock
will vest. The grant and/or the vesting of Restricted Stock may
be conditioned upon the completion of a specified period of
service with the Company or a Related Company, upon the
attainment of specified performance objectives or upon such other
criteria as the Committee may determine.
(b) Stock certificates representing the Restricted Stock awarded to
an Eligible Individual shall be registered in the Eligible
Individual's name, but the Committee may direct that such
certificates be held by the Company or its designee on behalf of
the Eligible Individual. Except as may be permitted
7
<PAGE>
by the Committee, no share of Restricted Stock may be sold,
transferred, assigned, pledged or otherwise encumbered by an
Eligible Individual until such share has vested in accordance
with the terms of the Restricted Stock Award. At the time the
Restricted Stock vests, a certificate for such vested shares
shall be delivered to the Eligible Individual (or his or her
designated beneficiary in the event of death), free from the
restrictions imposed thereon except that any restrictions under
federal or state securities laws shall continue to apply.
(c) The Committee may provide that the Eligible Individual shall have
the right to vote or receive dividends on Restricted Stock.
Unless the Committee provides otherwise, Stock received as a
dividend on, or in connection with a stock split of, Restricted
Stock shall be subject to the same restrictions as the Restricted
Stock.
(d) Except as may be provided by the Committee, in the event of an
Eligible Individual's termination of employment or relationship
with the Company prior to all of his or her Restricted Stock
becoming vested, or in the event any conditions to the vesting of
Restricted Stock have not been satisfied prior to any deadline
for the satisfaction of such conditions as set forth in the
Restricted Stock Award, the shares of Restricted Stock which have
not vested shall be forfeited, and the Committee may provide that
(i) any purchase price paid by the Eligible Individual be
returned to the Eligible Individual or (ii) a cash payment equal
to the Restricted Stock's fair market value on the date of
forfeiture, if lower, be paid to the Eligible Individual.
(e) The Committee may waive, in whole or in part, any or all of the
conditions to receipt of, or restrictions with respect to, any or
all of the Eligible Individual's Restricted Stock.
SECTION 7
TAX OFFSET PAYMENTS
The Committee may provide for a Tax Offset Payment to be made by the
Company to an Eligible Individual with respect to one or more Awards granted
under the Plan. The Tax Offset Payment shall be in an amount specified by the
Committee, which shall not exceed the amount necessary to pay the federal,
state, local and other taxes payable with respect to the applicable Award,
assuming that the Eligible Individual is taxed at the maximum tax rate
applicable to such income. The Tax Offset Payment shall be paid solely in cash.
No Eligible Individual shall be granted a Tax Offset Payment in any fiscal year
with respect to more than the number of shares of Stock covered by Awards
granted to such Eligible Individual in such fiscal year. The terms and
conditions of a Tax Offset Payment Award shall be set forth in an Award
Agreement entered into between the Company and the Eligible Individual.
8
<PAGE>
SECTION 8
OPERATION AND ADMINISTRATION
8.1 General. The operation and administration of this Plan, including any
Awards granted under this Plan, shall be subject to the provisions of Section 8.
8.2 Effective Date. Subject to the approval of the shareholders of the
Company, the Plan shall be effective as of June 15, 2000 (the "Effective Date")
provided, however, that to the extent that Awards are granted under the Plan
prior to its approval by the shareholders of the Company, the Awards shall be
subject to the approval of the Plan by the shareholders of the Company. The
term of the Plan shall be limited in duration to ten (10) years from the earlier
of (a) the Effective Date or (b) the date the Plan is approved by the Company's
shareholders.
8.3 Shares Subject to Plan. The shares of Stock for which Awards may be
granted under this Plan shall be subject to the following:
(a) Subject to the following provisions of this Section 8.3, the
maximum aggregate number of shares of Stock that may be issued
and sold under the Plan shall be 1,000,000 shares. The number of
shares of Stock so reserved for issuance shall be subject to
adjustment pursuant to Sections 8.3 (b) and 8.3(d). The shares of
Stock may be authorized, but unissued, or reacquired Stock.
(b) On January 1st of each year, commencing with year 2001, the
aggregate number of shares of Stock that may be awarded under the
Plan shall automatically increase by the lesser of (a) 400,000
shares of Stock, (b) 3.5% of the outstanding shares of Stock or
Stock Equivalents on such date, or (c) a lesser amount determined
by the Board. For purposes of this subsection 8.3(b), the term
"Stock Equivalents" shall include the number of shares of common
stock which would be issuable upon conversion of then outstanding
preferred stock or convertible notes, debentures or other
financial instruments (other than "cashless" or net exercise
rights in derivative securities).
(c) To the extent an Award terminates without having been exercised,
or shares awarded are forfeited, such shares shall again be
available issue under the Plan. Shares of Stock surrendered in
payment of the Exercise Price and shares of Stock which are
withheld in order to satisfy federal, state or local tax
liability, shall not count against the maximum aggregate number
of shares authorized to be issued pursuant to this Plan, and
shall again be available for issuance pursuant to the terms of
the Plan.
(d) In the event of any merger, reorganization, consolidation, sale
of substantially all assets, recapitalization, stock dividend,
stock split, combination or reverse stock split, spin-off, split-
up, split-off, distribution of assets or other change in
corporate structure affecting the Stock, a
9
<PAGE>
substitution or adjustment, as may be determined to be
appropriate by the Committee or the Board in its sole discretion,
shall be made in the aggregate number of shares reserved for
issuance under the Plan and the number, kind and price of shares
subject to outstanding Options shall be appropriately adjusted by
the Board, whose determination shall be conclusive. However, no
such adjustment shall exceed the aggregate value of any
outstanding Award prior to such substitution or adjustment. The
Board or Committee may make such other adjustments as it deems
appropriate.
(e) No Eligible Individual shall be granted Options, Restricted
Stock, or any combination thereof with respect to more than
500,000 shares of Stock in any fiscal year (subject to adjustment
as provided in Section 8.3(d).
8.4 Securities Laws Restrictions. Issuance of shares of Stock or other
amounts under the Plan shall be subject to the following:
(a) If at any time the Committee determines that the issuance of
Stock under the Plan is or may be unlawful under the laws of any
applicable jurisdiction, the right to exercise any Stock Option
or receive any Restricted Stock shall be suspended until the
Committee determines that such issuance is lawful. The Company
shall have no obligation to effect any registration of
qualification of the Stock under federal or state laws.
(b) Any person exercising a Stock Option or receiving Restricted
Stock shall make such representations (including representations
to the effect that such person will not dispose of the Stock so
acquired in violation of federal and state securities laws) and
furnish such information as may, in the opinion of counsel for
the Company, be appropriate to permit the Company to issue the
Stock in compliance with applicable federal and state securities
laws. The Committee may refuse to permit the exercise of a Stock
Option or issuance of Restricted Stock until such representations
and information have been provided.
(c) The Company may place an appropriate legend evidencing any
transfer restrictions on all shares of Stock issued under the
Plan and may issue stop transfer instructions in respect thereof.
(d) To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of shares of Stock, the
issuance may be effected on a non-certificated basis, to the
extent not prohibited by applicable law or the applicable rules
of any stock exchange.
8.5 Tax Withholding. Each Eligible Individual shall, no later than the
date as of which the value of an Award first becomes includible in such person's
gross income for applicable tax purposes, pay, pursuant to such arrangements as
the Company may establish from
10
<PAGE>
time to time, any federal, state, local or other taxes of any kind required by
law to be withheld with respect to the Award. The obligations of the Company
under the Plan shall be conditional on such payment, and the Company (and, where
applicable, any Related Company), shall, to the extent permitted by law, have
the right to deduct any such taxes from any payment of any kind otherwise due to
the Eligible Individual.
8.6 Payments. Awards may be settled in any of the methods described in
Section 4.2(c). Any Award settlement, including payment deferrals, may be
subject to such conditions, restrictions and contingencies as the Committee
shall determine. The Committee may permit or require the deferral of any Award
payment, subject to such rules and procedures as it may establish, which may
include provisions for the payment or crediting of interest, or dividend
equivalents, including converting such credits into deferred Stock equivalents.
Each Related Company shall be liable for payment of cash due under the Plan with
respect to any Eligible Individual to the extent that such benefits are
attributable to the services rendered for that Related Company by the Eligible
Individual. Any disputes relating to liability of a Related Company for cash
payments shall be resolved by the Committee.
8.7 Transferability. Except as otherwise provided by the Committee, Awards
under the Plan may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by beneficiary designation, will or by the
laws of descent and distribution. If the Committee makes an Award transferable,
the Award Agreement shall set forth such additional terms and conditions
regarding transferability as the Committee deems appropriate.
8.8 Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Eligible Individual or other
person entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
8.9 Agreement With Company. Any Award under the Plan shall be subject to
such terms and conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and conditions of any Award
shall be reflected in an Award Agreement. A copy of the Award Agreement shall be
provided to the Eligible Individual, and the Committee may, but need not
require, the Eligible Individual to sign the Award Agreement.
8.10 Limitation of Implied Rights.
(a) Neither an Eligible Individual nor any other person shall, by
reason of participation in the Plan, acquire any right in or
title to any assets, funds or property of the Company or any
Related Company whatsoever, including, without limitation, any
specific funds, assets, or other property which the Company or
any Related Company, in its sole discretion, may set aside in
anticipation of a liability under the Plan. An Eligible
Individual shall have only a contractual right to the Stock or
amounts, if any, payable under the Plan, unsecured by any assets
of the Company or any Related Company, and nothing contained in
the Plan shall constitute a guarantee
11
<PAGE>
that the assets of the Company or any Related Company shall be
sufficient to pay any benefits to any Eligible Individual.
(b) This Plan does not constitute a contract of employment, and
selection as a Eligible Individual will not give the Eligible
Individual the right to be retained in the employ of the Company
or any Related Company, nor any right or claim to any future
grants or to any benefit under the Plan, unless such right or
claim has specifically accrued under the terms of the Plan.
Except as otherwise provided in the Plan, no Award under the
Plan shall confer upon an Eligible Individual any rights of a
shareholder of the Company prior to the date on which the
Eligible Individual fulfills all conditions for receipt of such
rights.
8.11 Termination for Cause. If the employment of an Eligible Individual is
terminated by the Company or a Related Company for "cause," then the Committee
shall have the right to cancel any Options granted to the Eligible Individual
under the Plan. The term "cause" shall mean (1) the Eligible Individual's
violation of any provision of any non-competition agreement or confidentiality
agreement with the Company; (2) an illegal or negligent action by the Eligible
Individual that materially and adversely affects the Company; (3) the Eligible
Individual's failure or refusal to perform his/her duties (except when prevented
by reason of illness or disability); or (4) conviction of the Eligible
Individual of a felony involving moral turpitude.
8.12 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
SECTION 9
CHANGE IN CONTROL
In the event of a Change in Control, if specifically documented in either a
special form of Award Agreement at the time of grant or amendment to an existing
Award Agreement, in each case on an individual-by-individual basis:
(a) all or a portion (as determined by the Committee) of outstanding
Stock Options awarded to such individual under the Plan shall
become fully exercisable and vested; and
(b) the restrictions applicable to all or a portion (as determined
by the Committee) of any outstanding Restricted Stock awards
under the Plan held by an Eligible Individual shall lapse and
such shares shall be deemed fully vested.
Notwithstanding the foregoing, no acceleration of vesting or termination of
restrictions on Restricted Stock shall occur if (a) all Awards are assumed by a
surviving corporation or its parent or (b) the surviving corporation or its
parent substitutes Awards with substantially the same terms for such Awards.
The Committee shall have the right to cancel Awards in the event
12
<PAGE>
of a Change in Control, provided that in exchange for such cancellation, the
Eligible Individual shall receive a cash payment equal to the Change in Control
consideration less the exercise price of the Awards.
SECTION 10
COMMITTEE
10.1 Administration. The Plan shall be administered by the Compensation
Committee of the Board or such other committee of Directors as the Board shall
designate, which shall consist of not less than two Non-Employee Directors. If
the Board does not appoint a Compensation Committee or other committee to
administer this Plan, the Plan shall be administered by the Board. The members
of the Committee shall be Non-Employee Directors and shall serve at the pleasure
of the Board. To the extent that the Board determines it to be desirable to
qualify Awards granted hereunder as "performance-based compensation" within the
meaning of Section 162(m) of the Code, the Plan shall be administered by a
Committee of two or more "outside directors" within the meaning of Section
162(m) of the Code. To the extent that the Board determines it to be desirable
to qualify Awards as exempt under Rule 16b-3, the Award transactions
contemplated hereunder shall be structured to satisfy the requirements for
exemption under Rule 16b-3. All determinations made by the Committee pursuant
to the provisions of the Plan shall be final and binding on all persons,
including the Company and Eligible Individuals. The Board may administer the
Plan or exercise any or all of the administration duties of the Committee at any
time when a Committee meeting the requirements of this Section has not been
appointed, and the Board may exempt Awards pursuant to Rule 16b-3(d)(1) of the
Exchange Act.
10.2 Powers of Committee. The Committee shall have the following authority
with respect to Awards under the Plan: to grant Awards; to adopt, alter and
repeal such administrative rules, guidelines and practices governing the Plan as
it shall deem advisable; to interpret the terms and provisions of the Plan and
any Award granted under the Plan; and to otherwise supervise the administration
of the Plan. In particular, and without limiting its authority and powers, the
Committee shall have the authority:
(a) to determine whether and to what extent any Award or combination
of Awards will be granted hereunder;
(b) to select the Eligible Individuals to whom Awards will be
granted;
(c) to determine the number of shares of Stock to be covered by each
Award granted hereunder subject to the limitations contained
herein;
(d) to determine the terms and conditions of any Award granted
hereunder, including, but not limited to, any vesting or other
restrictions based on such performance objectives and such other
factors as the Committee may establish, and to determine whether
the performance objectives and other terms and conditions of the
Award are satisfied;
13
<PAGE>
(e) to determine the treatment of Awards upon the Eligible
Individual's retirement, disability, death, termination for
cause or other termination of employment or service;
(f) to determine that amounts equal to the amount of any dividends
declared with respect to the number of shares covered by an
Award (i) will be paid to the Eligible Individual currently or
(ii) will be deferred and deemed to be reinvested or (iii) will
otherwise be credited to the Eligible Individual or that the
Eligible Individual has no rights with respect to such
dividends;
(g) to amend the terms of any Award, prospectively or retroactively;
provided, however, that no amendment shall impair the rights of
the Eligible Individual without his or her written consent; and
(h) to substitute new Stock Options for previously granted Stock
Options, or for options granted under other plans or agreements,
in each case including previously granted options having higher
option prices.
Determinations by the Committee under the Plan relating to the form,
amount, and terms and conditions of Awards need not be uniform, and may be made
selectively among Eligible Individuals who receive Awards under the Plan,
whether or not such Eligible Individuals are similarly situated. The Committee
shall have the power to accelerate the time at which an Award may first be
exercised or the time during which an Award or any part thereof will vest in
accordance with the Plan, notwithstanding any provisions in an Award Agreement
stating the time at which the Award may first be exercised or the time during
which the Award will vest.
10.3 Delegation by Committee. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee may
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Committee at any time.
10.4 Information to be Furnished to Committee. The Company and any Related
Company shall furnish the Committee with such data and information as it
determines may be required for it to discharge its duties. The records of the
Company and any Related Company as to an Eligible Individual's employment,
termination of employment, leave of absence, reemployment and compensation shall
be conclusive on all persons unless determined to be incorrect. Eligible
Individuals and other persons entitled to benefits under the Plan must furnish
the Committee such evidence, data or information as the Committee considers
desirable to carry out the terms of the Plan.
10.5 Non-Liability of Board and Committee. No member of the Board or the
Committee, nor any officer or employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action, determination
or interpretation taken or made with respect to the Plan, and all members of the
Board or the Committee and all officers or employees of the Company acting on
their behalf shall, to the extent permitted by law, be fully
14
<PAGE>
indemnified and protected by the Company with respect to any such action,
determination or interpretation.
SECTION 11
AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, provided that no
amendment or termination may, in the absence of written consent to the change by
the affected Eligible Individual (or, if the Eligible Individual is not then
living, the affected beneficiary), adversely affect the rights of any Eligible
Individual or beneficiary under any Award granted under the Plan prior to the
date such amendment is adopted by the Board; provided that adjustments made
pursuant to Subsection 8.3(d) shall not be subject to the foregoing limitations
of this Section 11. An amendment shall be subject to approval by the Company's
shareholders only to the extent required by applicable laws, regulations or
rules of a stock exchange or similar entity.
SECTION 12
INVESTMENT PURPOSES
Unless a registration statement under the Securities Act of 1933, as
amended (the "Act") is in effect with respect to Stock to be purchased upon
exercise of Options to be granted under the Plan, the Company shall require that
the Eligible Individual agree with and represent to the Company in writing that
he or she is acquiring such shares of Stock for the purpose of investment and
with no present intention to transfer, sell or otherwise dispose of such shares
of Stock other than by transfers which may occur by will or by the laws of
descent and distribution, and no shares of Stock may be transferred unless, in
the opinion of counsel to the Company, such transfer would be in compliance with
applicable securities laws. In addition, unless a registration statement under
the Act is in effect with respect to the Stock to be purchased under the Plan,
each certificate representing any shares of Stock issued to the Eligible
Individual hereunder shall have endorsed thereon a legend in substantially the
following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") AND WITHOUT REGISTRATION UNDER ANY APPLICABLE STATE
SECURITIES LAWS, IN RELIANCE UPON EXEMPTION(S) CONTAINED THEREIN.
NO TRANSFER OF THESE SHARES OR ANY INTEREST THEREIN MAY BE MADE
EXCEPT PURSUANT TO EFFECTIVE REGISTRATION UNDER SAID LAWS UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT
THAT SUCH TRANSFER OR DISPOSITION DOES NOT REQUIRE REGISTRATION
UNDER SAID LAWS AND, FOR ANY SALES UNDER RULE 144 OF THE ACT,
SUCH EVIDENCE AS IT SHALL REQUEST FOR COMPLIANCE WITH THAT RULE,
OR APPLICABLE STATE SECURITIES LAWS.
15
<PAGE>
SECTION 13
GENERAL PROVISIONS
13.1 Award Agreements. No Eligible Individual will have rights under an
Award granted to such Eligible Individual unless and until an Award Agreement
has been duly executed on behalf of the Company and the Eligible Individual.
13.2 No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Related Company from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
13.3 Headings. The headings of the sections and subsections of this Plan
are intended for the convenience of the parties only and shall in no way be held
to explain, modify, construe, limit, amplify or aid in the interpretation of the
provisions hereof.
13.4 Beneficiaries. An Eligible Individual may, from time to time, name
any beneficiary or beneficiaries (who may be named contingently or successively)
to whom any benefit under the Plan may be paid or transferred in case of death.
Each designation will revoke all prior designations, shall be in a form
prescribed by the Committee, and will be effective only when filed by the
Eligible Individual in writing with the Committee during his or her lifetime. In
the absence of any such designation, benefits outstanding at the Eligible
Individual's death shall be paid or transferred to his or her estate. There
shall be no third party beneficiaries of or to this Plan. Any beneficiary of the
Eligible Individual shall have only a claim to such benefits as may be
determined to be payable hereunder, if any, and shall not, under any
circumstances other than the right to claim such benefits, be deemed a third
party beneficiary of or to this Plan.
13.5 Repurchase Option. The terms of any repurchase option shall be
specified in the Award Agreement.
13.6 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Minnesota,
except to the extent preempted by federal law, without regard to the principles
of comity or the conflicts of law provisions of any jurisdiction.
16
