EXHIBIT 10.4
2000 STOCK INCENTIVE PLAN
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
2000 STOCK INCENTIVE PLAN
I. Purpose of Plan.
The purpose of the Northern Technologies International Corporation 2000 Stock
Incentive Plan (the "Plan") is to advance the interests of Northern Technologies
International Corporation (the "Company") and its stockholders by enabling the
Company and its Subsidiaries to attract and retain persons of ability to perform
services for the Company and its Subsidiaries by providing an incentive to such
individuals through equity participation in the Company and by rewarding such
individuals who contribute to the achievement by the Company of its economic
objectives.
II. Definitions.
The following terms will have the meanings set forth below, unless the context
clearly otherwise requires:
A. "Board" means the Board of Directors of the Company.
B. "Broker Exercise Notice" means a written notice pursuant to
which a Participant, upon exercise of an Option, irrevocably
instructs a broker or dealer to sell a sufficient number of
shares or loan a sufficient amount of money to pay all or a
portion of the exercise price of the Option and/or any related
withholding tax obligations and remit such sums to the Company
and directs the Company to deliver stock certificates to be
issued upon such exercise directly to such broker or dealer.
C. "Change in Control" means an event described in Section 13.1
of the Plan.
D. "Code" means the Internal Revenue Code of 1986, as amended.
E. "Committee" means the group of individuals administering the
Plan, as provided in Section 3 of the Plan.
F. "Common Stock" means the common stock of the Company; par
value $.02 per share, or the number and kind of shares of
stock or other securities into which such Common Stock may be
changed in accordance with Section 4.3 of the Plan.
G. "Disability" means the disability of the Participant such as
would entitle the Participant to receive disability income
benefits pursuant to the long-term disability plan of the
Company or Subsidiary then covering the Participant or, if no
such plan exists or is applicable to the Participant, the
permanent and total disability of the Participant within the
meaning of Section 22(e)(3) of the Code.
H. "Eligible Recipients" means all employees (including, without
limitation, officers and directors who are also employees) of
the Company or any Subsidiary, any non-employee consultants
and independent contractors of the Company or any Subsidiary
and any joint venture partners (including without limitation,
officers, directors and partners thereof) of the Company or
any Subsidiary.
I. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
J. "Fair Market Value" means, with respect to the Common Stock,
as of any date (or, if no shares were traded or quoted on such
date, as of the next preceding date on which there was such a
trade or quote), the closing market price per share of the
Common Stock as reported on the American Stock Exchange
Composite Tape on that date.
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K. "Incentive Award" means an Option, Stock Appreciation Right,
Restricted Stock Award, Performance Unit or Stock Bonus
granted to an Eligible Recipient pursuant to the Plan.
L. "Incentive Stock Option" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Section 6
of the Plan that qualifies as an "incentive stock option"
within the meaning of Section 422 of the Code.
M. "Non-Employee Director" means any member of the Board of
Directors of the Company who is not an employee of the Company
or any Subsidiary.
N. "Non-Statutory Stock Option" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Section 6
of the Plan that does not qualify as an Incentive Stock
Option.
O. "Option" means an Incentive Stock Option or a Non-Statutory
Stock Option.
P. "Participant" means an Eligible Recipient who receives one or
more Incentive Awards under the Plan.
Q. "Performance Unit" means a right granted to an Eligible
Recipient pursuant to Section 9 of the Plan to receive a
payment from the Company, in the form of stock, cash or a
combination of both, upon the achievement of established
performance goals.
R. "Previously Acquired Shares" means shares of Common Stock that
are already owned by the Participant or, with respect to any
Incentive Award, that are to be issued upon the grant,
exercise or vesting of such Incentive Award.
S. "Restricted Stock Award" means an award of Common Stock
granted to an Eligible Recipient pursuant to Section 8 of the
Plan that is subject to the restrictions on transferability
and the risk of forfeiture imposed by the provisions of such
Section 8.
T. "Retirement" means termination of employment or service
pursuant to and in accordance with the regular (or, if
approved by the Board for purposes of the Plan, early)
retirement/pension plan or practice of the Company or
Subsidiary then covering the Participant, provided that if the
Participant is not covered by any such plan or practice, the
Participant will be deemed to be covered by the Company plan
or practice for purposes of this determination.
U. "Securities Act" means the Securities Act of 1933, as amended.
V. "Stock Appreciation Right" means a right granted to an
Eligible Recipient pursuant to Section 7 of the Plan to
receive a payment from the Company in the form of stock, cash
or a combination of both, equal to the difference between the
Fair Market Value of one or more shares of Common Stock and
the exercise price of such shares under the terms of such
Stock Appreciation Right.
W. "Stock Bonus" means an award of Common Stock granted to an
Eligible Recipient pursuant to Section 10 of the Plan.
X. "Subsidiary" means any entity that is directly or indirectly
controlled by the Company or any entity in which the Company
has a significant equity interest, as determined by the
Committee.
Y. "Tax Date" means the date any withholding tax obligation
arises under the Code for a Participant with respect to an
Incentive Award.
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III. Plan Administration.
A. The Committee. The Plan will be administered by the Board, all
of whom will be "disinterested persons" within the meaning of
Rule 16b-3 under the Exchange Act, or by a committee
consisting solely of not fewer than two members of the Board
who are such "disinterested persons." As used in this Plan,
the term "Committee" will refer to the Board or to such a
committee, if established. To the extent consistent with
corporate law, the Committee may delegate to any officers of
the Company the duties, power and authority of the Committee
under the Plan pursuant to such conditions or limitations as
the Committee may establish; provided, however, that only the
Committee may exercise such duties, power and authority with
respect to Eligible Recipients who are subject to Section 16
of the Exchange Act. Each determination, interpretation or
other action made or taken by the Committee pursuant to the
provisions of the Plan will be conclusive and binding for all
purposes and on all persons, and no member of the Committee
will be liable for any action or determination made in good
faith with respect to the Plan or any Incentive Award granted
under the Plan.
B. Authority of the Committee.
1. In accordance with and subject to the provisions of
the Plan, the Committee will have the authority to
determine all provisions of Incentive Awards as the
Committee may deem necessary or desirable and as
consistent with the terms of the Plan, including,
without limitation, the following: (i) the Eligible
Recipients to be selected as Participants; (ii) the
nature and extent of the Incentive Awards to be made
to each Participant (including the number of shares
of Common Stock to be subject to each Incentive
Award, any exercise price, the manner in which
Incentive Awards will vest or become exercisable and
whether Incentive Awards will be granted in tandem
with other Incentive Awards) and the form of written
agreement, if any, evidencing such Incentive Award;
(iii) the time or times when Incentive Awards will be
granted; (iv) the duration of each Incentive Award;
and (v) the restrictions and other conditions to
which the payment or vesting of Incentive Awards may
be subject. In addition, the Committee will have the
authority under the Plan in its sole discretion to
pay the economic value of any Incentive Award in the
form of cash, Common Stock or any combination of
both.
2. The Committee will have the authority under the Plan
to amend or modify the terms of any outstanding
Incentive Award in any manner, including, without
limitation, the authority to modify the number of
shares or other terms and conditions of an Incentive
Award, extend the term of an Incentive Award,
accelerate the exercisability or vesting or otherwise
terminate any restrictions relating to an Incentive
Award, accept the surrender of any outstanding
Incentive Award or, to the extent not previously
exercised or vested, authorize the grant of new
Incentive Awards in substitution for surrendered
Incentive Awards; provided, however that the amended
or modified terms are permitted by the Plan as then
in effect and that any Participant adversely affected
by such amended or modified terms has consented to
such amendment or modification. No amendment or
modification to an Incentive Award, however, whether
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pursuant to this Section 3.2 or any other provisions
of the Plan, will be deemed to be a regrant of such
Incentive Award for purposes of this Plan.
3. In the event of (i) any reorganization, merger,
consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split,
combination of shares, rights offering, extraordinary
dividend or divestiture (including a spin-off) or any
other change in corporate structure or shares, (ii)
any purchase, acquisition, sale or disposition of a
significant amount of assets or a significant
business, (iii) any change in accounting principles
or practices, or (iv) any other similar change, in
each case with respect to the Company or any other
entity whose performance is relevant to the grant or
vesting of an Incentive Award, the Committee (or, if
the Company is not the surviving corporation in any
such transaction, the board of directors of the
surviving corporation) may, without the consent of
any affected Participant, amend or modify the vesting
criteria of any outstanding Incentive Award that is
based in whole or in part on the financial
performance of the Company (or any Subsidiary or
division thereof) or such other entity so as
equitably to reflect such event, with the desired
result that the criteria for evaluating such
financial performance of the Company or such other
entity will be substantially the same (in the sole
discretion of the Committee or the board of directors
of the surviving corporation) following such event as
prior to such event; provided, however, that the
amended or modified terms are permitted by the Plan
as then in effect.
IV. Shares Available for Issuance.
A. Maximum Number of Shares Available. Subject to adjustment as
provided in Section 4.3 of the Plan, the maximum number of
shares of Common Stock that will be available for issuance
under the Plan will be 200,000 shares.
B. Accounting for Incentive Awards. Shares of Common Stock that
are issued under the Plan or that are subject to outstanding
Incentive Awards will be applied to reduce the maximum number
of shares of Common Stock remaining available for issuance
under the Plan. Any shares of Common Stock that are subject to
an Incentive Award that lapses, expires, is forfeited or for
any reason is terminated unexercised or unvested and any
shares of Common Stock that are subject to an Incentive Award
that is settled or paid in cash or any form other than shares
of Common Stock will automatically again become available for
issuance under the Plan. Any shares of Common Stock that
constitute the forfeited portion of a Restricted Stock Award,
however, will not become available for further issuance under
the Plan.
C. Adjustments to Shares and Incentive Awards. In the event of
any reorganization, merger, consolidation, recapitalization,
liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or
extraordinary dividend (including a spin-off) or any other
change in the corporate structure or shares of the Company,
the Committee (or, if the Company is not the surviving
corporation in any such transaction, the board of directors of
the surviving corporation) will make appropriate adjustment
(which determination will be conclusive) as to the number and
kind of securities available for issuance under the Plan and,
in order to prevent dilution or enlargement of the rights of
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Participants, the number, kind and, where applicable, exercise
price of securities subject to outstanding Incentive Awards.
V. Participation.
Participants in the Plan will be those Eligible Recipients who, in the judgment
of the Committee, have contributed, are contributing or are expected to
contribute to the achievement of economic objectives of the Company or its
Subsidiaries. Eligible Recipients may be granted from time to time one or more
Incentive Awards, singly or in combination or in tandem with other Incentive
Awards, as may be determined by the Committee in its sole discretion. Incentive
Awards will be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date will be the date of any related
agreement with the Participant.
VI. Options.
A. Grant. An Eligible Recipient may be granted one or more
Options under the Plan, and such Options will be subject to
such terms and conditions, consistent with the other
provisions of the Plan, as may be determined by the Committee
in its sole discretion. The Committee may designate whether an
Option is to be considered an Incentive Stock Option or a
Non-Statutory Stock Option.
B. Exercise Price. The per share price to be paid by a
Participant upon exercise of an Option will be determined by
the Committee in its discretion at the time of the Option
grant, provided that (a) such price will not be less than 100%
of the Fair Market Value of one share of Common Stock on the
date of grant with respect to an Incentive Stock Option (110%
of the Fair Market Value if, at the time the Incentive Stock
Option is granted, the Participant owns, directly or
indirectly, more than 10% of the total combined voting power
of all classes of stock of the Company or any parent or
subsidiary corporation of the Company), and (b) such price
will not be less than 85% of the Fair Market Value of one
share of Common Stock on the date of grant with respect to a
Non-Statutory Stock Option.
C. Exercisabilitv and Duration. An Option will become exercisable
at such times and in such installments as may be determined by
the Committee in its sole discretion at the time of grant;
provided, however, that no Option may be exercisable after 10
years from its date of grant.
D. Payment of Exercise Price. The total purchase price of the
shares to be purchased upon exercise of an Option will be paid
entirely in cash (including check, bank draft or money order);
provided, however, that the Committee, in its sole discretion
and upon terms and conditions established by the Committee,
may allow such payments to be made, in whole or in part, by
tender of a Broker Exercise Notice, Previously Acquired Shares
or by a combination of such methods.
E. Manner of Exercise. An Option may be exercised by a
Participant in whole or in part from time to time, subject to
the conditions contained in the Plan and in the agreement
evidencing such Option, by delivery in person, by facsimile or
electronic transmission or through the mail of written notice
of exercise to the Company (Attention: Chief Financial
Officer) at its principal executive office in Lino Lakes,
Minnesota and by paying in full the total exercise price for
the shares of Common Stock to be purchased in accordance with
Section 6.4 of the Plan.
F. Aggregate Limitation of Stock Subject to Incentive Stock
Options. To the extent that the aggregate Fair Market Value
(determined as of the date an Incentive Stock Option is
granted) of the shares of Common Stock with respect to which
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incentive stock options (within the meaning of Section 422 of
the Code) are exercisable for the first time by a Participant
during any calendar year (under the Plan and any other
incentive stock option plans of the Company or any subsidiary
or parent corporation of the Company (within the meaning of
the Code)) exceeds $100,000 (or such other amount as may be
prescribed by the Code from time to time), such excess Options
will be treated as Non-Statutory Stock Options. The
determination will be made by taking incentive stock options
into account in the order in which they were granted. If such
excess only applies to a portion of an incentive stock option,
the Committee, in its discretion, will designate which shares
will be treated as shares to be acquired upon exercise of an
incentive stock option.
G. Automatic Grants to Non-Employee Directors.
1. Grant of Options. At such time as, following the
effective date of the Plan, Non-Employee Directors
are first elected or appointed to the Board of
Directors, such Non-Employee Directors will be
granted automatically, on a one-time basis on the
date of their election or appointment, a
Non-Statutory Stock Option to purchase the pro-rata
portion of 2,000 shares of Common Stock, calculated
by dividing the number of months remaining in the
fiscal year at the time of election or appointment
divided by twelve. Following the effective date of
the Plan, Non-Employee Directors will be granted
automatically, on the first day of each fiscal year,
a Non-Statutory Stock Option to purchase 2,000 shares
of Common Stock. Notwithstanding the foregoing
provisions of this Section 6.7(a), a Non-Statutory
Stock Option shall not be granted under this Section
6.7(a) to the extent a Non-Employee Director is
automatically granted a similar option under the
Company's 1994 Stock Incentive Plan. All automatic
grants pursuant to this Section 6.7 are subject to
adjustment as provided in Section 4.3 of the Plan.
2. Option Exercise Price. The per share price to be paid
by the Non-Employee Director at the time an Option is
exercised will be 100% of the Fair Market Value of
one share of Common Stock on the date the Option is
granted. The total purchase price of the shares to be
purchased upon exercise will be paid entirely in cash
(including check, bank draft or money order).
3. Duration of Options. Each Option will terminate five
years after its date of grant and will become
exercisable, on a cumulative basis, with respect to
33 1/3% of the shares covered by such Option on each
anniversary of the date of its grant.
4. Effect of Termination of Directorship. In the event a
Non-Employee Director's service as a director of the
Company is terminated by reason of death, Disability
or retirement all outstanding Options then held by
the Non-Employee Director will become immediately
exercisable in full and will remain exercisable
following such termination until the expiration of
any such Option. In the event that a Non-Employee
Director's service as a director of the Company is
terminated for any reason other than death,
Disability or retirement, all outstanding Options
then held by the Non-Employee Director will remain
exercisable to the extent exercisable as of
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such termination of service for a period of three
months after such termination of service (but in no
event after the expiration of any such Option). Such
Options will not be subject to the termination
provisions of Section 11 of the Plan.
5. Manner of Option Exercise. An Option may be exercised
by a Non-Employee Director in whole or in part from
time to time, subject to the conditions contained in
the Plan and in the agreement evidencing such Option,
by giving written notice of exercise to the Company
at its principal executive office (such notice to
specify the particular Option that is being exercised
and the number of shares with respect to which the
Option is being exercised) accompanied by payment, in
cash or check payable to the Company, of the total
purchase price of the shares to be purchased under
the Option.
6. Non-Discretionary Grants. Options granted to
Non-Employee Directors pursuant to this Section 6.7
are intended to qualify as "formula awards" within
the meaning of Rule 16b-3 under the Exchange Act. As
a result, other than as provided in Section 16 of the
Plan, the Committee will not have the authority to
amend the eligibility requirements for, or modify the
terms of, such Options (including, without
limitation, the authority to modify the rights of
Non-Employee Directors in connection with termination
of service as a director or a change in control of
the Company) if such amendments or modifications
would disqualify such Options from treatment as
"formula awards."
VII. Stock Appreciation Rights.
A. Grant. An Eligible Recipient may be granted one or more Stock
Appreciation Rights under the Plan, and such Stock
Appreciation Rights shall be subject to such terms and
conditions, consistent with the other provisions of the Plan,
as will be determined by the Committee in its sole discretion.
B. Exercise Price. The exercise price of a Stock Appreciation
Right will be determined by the Committee, in its discretion,
at the date of grant but will not be less than 100% of the
Fair Market Value of one share of Common Stock on the date of
grant.
C. Exercisability and Duration. A Stock Appreciation Right will
become exercisable at such time and in such installments as
may be determined by the Committee in its sole discretion at
the time of grant; provided, however, that no Stock
Appreciation Right may be exercisable after 10 years from its
date of grant. A Stock Appreciation Right will be exercised by
giving notice in the same manner as for Options, as set forth
in Section 6.5 of the Plan.
VIII. Restricted Stock Awards.
A. Grant. An Eligible Recipient may be granted one or more
Restricted Stock Awards under the Plan, and such Restricted
Stock Awards will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion. The
Committee may impose such restrictions or conditions, not
inconsistent with the provisions of the Plan, to the vesting
of such Restricted Stock Awards as it deems appropriate,
including, without limitation, that the Participant remain in
the continuous employ or service of the Company or a
Subsidiary for a certain period or that the Participant or the
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Company (or any Subsidiary or division thereof) satisfy
certain performance goals or criteria.
B. Rights as a Stockholder; Transferability. Except as provided
in Sections 8.1, 8.3 and 14.3 of the Plan, a Participant will
have all voting, dividend, liquidation and other rights with
respect to shares of Common Stock issued to the Participant as
a Restricted Stock Award under this Section 8 upon the
Participant becoming the holder of record of such shares as if
such Participant were a holder of record of shares of
unrestricted Common Stock.
C. Dividends and Distributions. Unless the Committee determines
otherwise in its sole discretion (either in the agreement
evidencing the Restricted Stock Award at the time of grant or
at any time after the grant of the Restricted Stock Award),
any dividends or distributions (including regular quarterly
cash dividends) paid with respect to shares of Common Stock
subject to the unvested portion of a Restricted Stock Award
will be subject to the same restrictions as the shares to
which such dividends or distributions relate. In the event the
Committee determines not to pay such dividends or
distributions currently, the Committee will determine in its
sole discretion whether any interest will be paid on such
dividends or distributions. In addition, the Committee in its
sole discretion may require such dividends and distributions
to be reinvested (and in such case the Participants consent to
such reinvestment) in shares of Common Stock that will be
subject to the same restrictions as the shares to which such
dividends or distributions relate.
D. Enforcement of Restrictions. To enforce the restrictions
referred to in this Section 8, the Committee may place a
legend on the stock certificates referring to such
restrictions and may require the Participant, until the
restrictions have lapsed, to keep the stock certificates,
together with duly endorsed stock powers, in the custody of
the Company or its transfer agent or to maintain evidence of
stock ownership, together with duly endorsed stock powers, in
a certificateless book-entry stock account with the Company's
transfer agent.
IX. Performance Units.
An Eligible Recipient may be granted one or more Performance Units under the
Plan, and such Performance Units will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. The Committee may impose such restrictions or
conditions, not inconsistent with the provisions of the Plan, to the vesting of
such Performance Units as it deems appropriate, including, without limitation,
that the Participant remain in the continuous employ or service of the Company
or any Subsidiary for a certain period or that the Participant or the Company
(or any Subsidiary or division thereof) satisfy certain performance goals or
criteria. The Committee will have the sole discretion either to determine the
form in which payment of the economic value of vested Performance Units will be
made to the Participant (i.e., cash, Common Stock or any combination thereof) or
to consent to or disapprove the election by the Participant of the form of such
payment.
X. Stock Bonuses.
An Eligible Recipient may be granted one or more Stock Bonuses under the Plan,
and such Stock Bonuses will be subject to such terms and conditions, consistent
with the other provisions of the Plan, as may be determined by the Committee in
its sole discretion. The Participant will have all voting, dividend, liquidation
and other rights with respect to the shares of Common Stock issued to a
Participant as a Stock Bonus under this Section 10 upon the Participant becoming
the holder of record of such shares; provided, however, that the Committee may
impose such restrictions on the assignment or transfer of a Stock Bonus as it
deems appropriate.
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XI. Effect of Termination of Employment or Other Service.
A. Termination Due to Death, Disability or Retirement. In the
event a Participant's employment or other service with the
Company and all Subsidiaries is terminated by reason of death,
Disability or Retirement:
1. All outstanding Options and Stock Appreciation Rights
then held by the Participant will remain exercisable
to the extent exercisable as of such termination
following such termination until the expiration date
of such Option or Stock Appreciation Right;
2. All Restricted Stock Awards then held by the
Participant that have not vested will be terminated
and forfeited; and
3. All Performance Units and Stock Bonuses then held by
the Participant will vest and/or continue to vest in
the manner determined by the Committee and set forth
in the agreement evidencing such Performance Units or
Stock Bonuses.
B. Termination for Reasons Other than Death, Disability or
Retirement.
1. In the event a Participant's employment or other
service is terminated with the Company and all
Subsidiaries for any reason other than death,
Disability or Retirement, or a Participant is in the
employ or service of a Subsidiary and the Subsidiary
ceases to be a Subsidiary of the Company (unless the
Participant continues in the employ or service of the
Company or another Subsidiary), all rights of the
Participant under the Plan and any agreements
evidencing an Incentive Award will immediately
terminate without notice of any kind, and no Options
or Stock Appreciation Rights then held by the
Participant will thereafter be exercisable, all
Restricted Stock Awards then held by the Participant
that have not vested will be terminated and
forfeited, and all Performance Units and Stock
Bonuses then held by the Participant will vest and/or
continue to vest in the manner determined by the
Committee and set forth in the agreement evidencing
such Performance Units or Stock Bonuses; provided,
however, that if such termination is due to any
reason other than termination by the Company or any
Subsidiary for "cause," all outstanding Options and
Stock Appreciation Rights then held by such
Participant will remain exercisable to the extent
exercisable as of such termination for a period of
one month after such termination (but in no event
after the expiration date of any such Option or Stock
Appreciation Right).
2. For purposes of this Section 11.2, "cause" (as
determined by the Committee) will be as defined in
any employment or other agreement or policy
applicable to the Participant or, if no such
agreement or policy exists, will mean (i) dishonesty,
fraud, misrepresentation, embezzlement or deliberate
injury or attempted injury, in each case related to
the Company or any Subsidiary, (ii) any unlawful or
criminal activity of a serious nature, (iii) any
intentional and deliberate breach of a duty or duties
that, individually or in the aggregate, are material
in relation to the Participant's overall duties, or
(iv) any material breach of any employment, service,
confidentiality or noncompete agreement entered into
with the Company or any Subsidiary.
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C. Modification of Rights Upon Termination. Notwithstanding the
other provisions of this Section 11, upon a Participant's
termination of employment or other service with the Company
and all Subsidiaries, the Committee may, in its sole
discretion (which may be exercised at any time on or after the
date of grant, including following such termination), cause
Options and Stock Appreciation Rights (or any part thereof)
then held by such Participant to become or continue to become
exercisable and/or remain exercisable following such
termination of employment or service and Restricted Stock
Awards, Performance Units and Stock Bonuses then held by such
Participant to vest and/or continue to vest or become free of
transfer restrictions, as the case may be, following such
termination of employment or service, in each case in the
manner determined by the Committee; provided, however, that no
Option may remain exercisable beyond its expiration date.
D. Breach of Confidentiality or Noncompete Agreements.
Notwithstanding anything in this Plan to the contrary, in the
event that a Participant materially breaches the terms of any
confidentiality or noncompete agreement entered into with the
Company or any Subsidiary or takes any other action that the
Committee, in its sole discretion, deems to be adverse to the
interests of the Company or any Subsidiary (an "Adverse
Action"), whether such Adverse Action occurs before or after
termination of such Participant's employment or other service
with the Company or any Subsidiary, the Committee in its sole
discretion may immediately terminate all rights of the
Participant under the Plan and any agreements evidencing an
Incentive Award then held by the Participant without notice of
any kind. In addition, to the extent that a Participant takes
such Adverse Action during the period beginning 6 months prior
to, and ending 6 months following, the date of such employment
or service termination, the Committee in its sole discretion
will have the authority (by so providing in the agreement
evidencing such Incentive Award at the time of grant) to
rescind (i) any grant of an Incentive Award made to such
Participant during such period and (ii) any exercise of an
Option of the Participant that was exercised during such
period, and to require the Participant to pay to the Company,
within 10 days of receipt from the Company of notice of such
rescission, the amount of any gain realized from such
rescinded grant or exercise. Such payment will be made in cash
(including check, bank draft or money order) or, with the
Committee's consent, shares of Common Stock with a Fair Market
Value on the date of payment equal to the amount of such
payment. The Company will be entitled to withhold and deduct
from future wages of the Participant (or from other amounts
that may be due and owing to the Participant from the Company
or Subsidiary) or make other arrangements for the collection
of all amounts necessary to satisfy such payment obligation.
E. Date of Termination of Employment or Other Service. Unless the
Committee otherwise determines in its sole discretion, a
Participant's employment or other service will, for purposes
of the Plan, be deemed to have terminated on the date recorded
on the personnel or other records of the Company or the
Subsidiary for which the Participant provides employment or
other service, as determined by the Committee in its sole
discretion based upon such records.
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XII. Payment of Withholding Taxes.
A. General Rules. The Company is entitled to (a) withhold and
deduct from future wages of the Participant (or from other
amounts that may be due and owing to the Participant from the
Company or a Subsidiary), or make other arrangements for the
collection of, all legally required amounts necessary to
satisfy any and all federal, state and local withholding and
employment-related tax requirements attributable to an
Incentive Award, including, without limitation, the grant,
exercise or vesting of, or payment of dividends with respect
to, an Incentive Award or a disqualifying disposition of stock
received upon exercise of an Incentive Stock Option, or (b)
require the Participant promptly to remit the amount of such
withholding to the Company before taking any action, including
issuing any shares of Common Stock, with respect to an
Incentive Award.
B. Special Rules. The Committee may, in its sole discretion and
upon terms and conditions established by the Committee, permit
or require a Participant to satisfy, in whole or in part, any
withholding or employment-related tax obligation described in
Section 12.1 of the Plan by electing to tender Previously
Acquired Shares or a Broker Exercise Notice, or by a
combination of such methods.
XIII. Change in Control.
A. Change in Control. For purposes of this Section 13.1, a
"Change in Control" of the Company will mean (a) the sale,
lease, exchange or other transfer of substantially all of the
assets of the Company (in one transaction or in a series of
related transaction) to a person or entity that is not
controlled, directly or indirectly, by the Company, (b) a
merger or consolidation to which the Company is a party if the
stockholders of the Company immediately prior to effective
date of such merger or consolidation do not have "beneficial
ownership" (as defined in Rule 13d-3 under the Exchange Act)
immediately following the effective date of such merger or
consolidation of more than 80% of the combined voting power of
the surviving corporation's outstanding securities ordinarily
having the right to vote at elections of directors, or (c) a
change in control of the Company of a nature that would be
required to be reported pursuant to Section 13 or 15(d) of the
Exchange Act, whether or not the Company is then subject to
such reporting requirements, including, without limitation,
such time as (i) any person becomes, after the effective date
of the Plan, the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 40% or
more of the combined voting power of the Company's outstanding
securities ordinarily having the right to vote at elections of
directors, or (ii) individuals who constitute the Board on the
effective date of the Plan cease for any reason to constitute
at least a majority of the Board, provided that any person
becoming a director subsequent to the effective date of the
Plan whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a
majority of the directors comprising the Board on the
effective date of the Plan will, for purposes of this clause
(ii), be considered as though such persons were a member of
the Board on the effective date of the Plan.
B. Acceleration of Vesting. Without limiting the authority of the
Committee under Section 3.2 of the Plan, if a Change in
Control of the Company occurs, then, if approved by the
Committee in its sole discretion either in an agreement
evidencing an Incentive Award at the time of grant or at any
time after the grant of an Incentive Award, (a) all Options
and Stock Appreciation Rights will become immediately
exercisable in full and will remain exercisable for the
remainder of their terms, regardless of whether the
Participants to whom such Options or Stock Appreciation Rights
have been granted remain in the employ or service of the
Company or any Subsidiary; (b) all outstanding Restricted
Stock Awards will become immediately fully vested; and (c) all
Performance Units and Stock Bonuses then held by the
Participant will vest and/or continue to vest in the manner
determined by the Committee and set forth in the agreement
evidencing such Performance Units or Stock Bonuses.
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C. Cash Payment for Options. If a Change in Control of the
Company occurs, then the Committee, if approved by the
Committee in its sole discretion either in an agreement
evidencing an Incentive Award at the time of grant or at any
time after the grant of an Incentive Award, and without the
consent of any Participant effected thereby, may determine
that some or all Participants holding outstanding Options will
receive, with respect to and in lieu of some or all of the
shares of Common Stock subject to such Options, as of the
effective date of any such Change in Control of the Company,
cash in an amount equal to the excess of the Fair Market Value
of such shares immediately prior to the effective date of such
Change in Control of the Company over the exercise price per
share of such Options.
D. Limitation on Change in Control Payments. Notwithstanding
anything in Section 13.2 or 13.3 of the Plan to the contrary,
if, with respect to a Participant, the acceleration of the
vesting of an Incentive Award as provided in Section 13.2 or
the payment of cash in exchange for all or part of an
Incentive Award as provided in Section 13.3 (which
acceleration or payment could be deemed a "payment" within the
meaning of Section 280G(b)(2) of the Code), together with any
other payments which such Participant has the right to receive
from the Company or any corporation that is a member of an
"affiliated group" (as defined in Section 1504(a) of the Code
without regard to Section 1504(b) of the Code) of which the
Company is a member, would constitute a "parachute payment"
(as defined in Section 280G(b)(2) of the Code), then the
payments to such Participant pursuant to Section 13.2 or 13.3
will be reduced to the largest amount as will result in no
portion of such payments being subject to the excise tax
imposed by Section 4999 of the Code; provided, however, that
if such Participant is subject to a separate agreement with
the Company or a Subsidiary which specifically provides that
payments attributable to one or more forms of employee stock
incentives or to payments made in lieu of employee stock
incentives will not reduce any other payments under such
agreement, even if it would constitute an excess parachute
payment, then the limitations of this Section 13.4 will, to
that extent, not apply.
XIV. Rights of Eligible Recipients and Participants: Transferability.
A. Employment or Service. Nothing in the Plan will interfere with
or limit in any way the right of the Company or any Subsidiary
to terminate the employment or service of any Eligible
Recipient or Participant at any time, nor confer upon any
Eligible Recipient or Participant any right to continue in the
employ or service of the Company or any Subsidiary.
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B. Rights as a Stockholder. As a holder of Incentive Awards
(other than Restricted Stock Awards), a Participant will have
no rights as a stockholder unless and until such Incentive
Awards are exercised for, or paid in the form of, shares of
Common Stock and the Participant becomes the holder of record
of such shares. Except as otherwise provided in the Plan, no
adjustment will be made for dividends or distributions with
respect to such Incentive Awards as to which there is a record
date preceding the date the Participant becomes the holder of
record of such shares, except as the Committee may determine
in its discretion.
C. Restrictions on Transfer. Except pursuant to testamentary will
or the laws of descent and distribution or as otherwise
expressly permitted by the Plan, no right or interest of any
Participant in an Incentive Award prior to the exercise or
vesting of such Incentive Award will be assignable or
transferable, or subjected to any lien; during the lifetime of
the Participant, either voluntarily or involuntarily, directly
or indirectly by operation of law or otherwise. A Participant
will, however, be entitled to designate a beneficiary to
receive an Incentive Award upon such Participant's death, and
in the event of a Participant's death, payment of any amounts
due under the Plan will be made to, and exercise of any
Options (to the extent permitted pursuant to Section 9 of the
Plan) may be made by, the Participant's legal representatives,
heirs and legatees.
D. Non-Exclusivity of the Plan. Nothing contained in the Plan is
intended to modify or rescind any previously approved
compensation plans of programs of the Company or create any
limitations on the power or authority of the Board to adopt
such additional or other compensation arrangements as the
Board may deem necessary or desirable.
XV. Securities Law and Other Restrictions.
Notwithstanding any other provision of the Plan or any agreements entered into
pursuant to the Plan, the Company will not be required to issue any shares of
Common Stock under this Plan, and a Participant may not sell, assign, transfer
or otherwise dispose of shares of Common Stock issued pursuant to Incentive
Awards granted under the Plan, unless (a) there is in effect with respect to
such shares a registration statement under the Securities Act and any applicable
state securities laws or an exemption from such registration under the
Securities Act and applicable state securities laws, and (b) there has been
obtained any other consent, approval or permit from any other regulatory body
which the Committee, in its sole discretion, deems necessary or advisable. The
Company may condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing shares of Common Stock, as may be
deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.
XVI. Plan Amendment. Modification and Termination
The Board may suspend or terminate the Plan or any portion thereof at any time,
and may amend the Plan from time to time in such respects as the Board may deem
advisable in order that Incentive Awards under the Plan will conform to any
change in applicable laws or regulations or in any other respect the Board may
deem to be in the best interests of the Company; provided, however, that (a) the
Board will not have the authority to amend the eligibility requirements for
Options granted pursuant to Section 6.7 of the Plan, or to modify the number of
shares, exercise price, exercisability, duration, manner of payment or other
terms with respect to such Options, more than once every six months, other than
to comply with changes in the Code, the Employee Retirement Income Security Act
or the rules promulgated thereunder; and (b) no amendments to the Plan will be
effective without approval of the stockholders of the Company if stockholder
approval of the amendment is then required pursuant to Rule 16b-3 under the
Exchange Act, Section 422 of the Code or the rules of the National Association
of Securities Dealers, Inc. No termination, suspension or amendment of the Plan
may adversely affect any outstanding Incentive Award without the consent of the
affected Participant; provided, however, that this sentence will not impair the
right of the Committee to take whatever action it deems appropriate under
Sections 4.3 and 13 of the Plan.
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XVII. Effective Date and Duration of the Plan
The Plan is effective as of November 19, 1999, the date it was adopted by the
Board. The Plan will terminate at midnight on November 18, 2009, and may be
terminated prior to such time to by Board action, and no Incentive Award will be
granted after such termination. Incentive Awards outstanding upon termination of
the Plan may continue to be exercised, or become free of restrictions, in
accordance with their terms.
XVIII. Miscellaneous
A. Governing Law. The validity, construction, interpretation,
administration and effect of the Plan and any rules,
regulations and actions relating to the Plan will be governed
by and construed exclusively in accordance with the laws of
the State of Minnesota.
B. Successors and Assigns. The Plan will be binding upon and
inure to the benefit of the successors and permitted assigns
of the Company and the Participants.
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