As filed with the Securities and Exchange Commission on August 1, 1996
Registration No. 333-______
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
VISTA INFORMATION SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA
(State or other jurisdiction
of incorporation or organization)
41-1293754
(I.R.S. Employer
Identification No.)
5060 SHOREHAM PLACE, #300
SAN DIEGO, CA
(Address of Principal Executive Offices)
92122
(Zip Code)
1993 STOCK OPTION PLAN
AND
1995 STOCK INCENTIVE PLAN
(Full title of the plans)
E. STEVEN HAMILTON
VISTA INFORMATION SOLUTIONS, INC.
5060 SHOREHAM PLACE, #300
SAN DIEGO, CA 92122
(Name and address of agent for service)
(619) 450-6100
(Telephone number, including
area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
IMMEDIATELY UPON THE FILING OF THIS REGISTRATION STATEMENT
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per share 4,435,563 shares $1.09 $4,834,763.67 $1,670.00
================================================================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416 under the Securities Act of 1933, as
amended, this Registration Statement includes an indeterminate number of
additional shares as may be issuable as a result of anti-dilution
provisions described herein.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee and calculated as follows: (i) with respect to options to
purchase shares previously granted under the Plans, on the basis of the
weighted average exercise price of such option grants and (ii) with respect
to options and incentive awards granted and to be granted under the Plans,
on the basis of the average between the bid and asked prices of the
Registrant's Common Stock on July 30, 1996 on the Nasdaq Small-Cap Market.
PART II
INFORMATION REQUIRED
IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
(the "Commission") by VISTA Information Solutions, Inc. (the "Company") are
incorporated by reference in this Registration Statement: (1) the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, as amended on
April 29, 1996 and June 28, 1996; (2) the Company's Quarterly Report on Form
10-QSB for the period ended March 31, 1996; (3) all other reports filed by the
Company pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), since December 31, 1995; and (4) the
description of the Company's Common Stock contained in its Registration
Statement on Form 10, including any amendments or reports filed for the purpose
of updating such description.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all shares of Common Stock offered pursuant to this
Registration Statement have been sold or that deregisters all shares of Common
Stock then remaining unsold, shall be deemed to be incorporated by reference in
this Registration Statement and to be a part hereof from the date of filing of
such documents.
The balance sheets of VISTA Information Solutions, Inc. as of December 31,
1995 and 1994 and the statements of operations, changes in stockholders' equity
(deficit) and cash flows for the twelve month period ended December 31, 1995 and
1994, the six month period ended December 31, 1993 and the twelve month period
ended June 30, 1993, are all incorporated herein in reliance on the report of
McGladrey & Pullen, LLP, independent auditors. The separate balance sheet of
VISTA Environmental Information, Inc. as of December 31, 1994 and the statements
of operations, changes in stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1994, are all incorporated herein
in reliance on the report of Deloitte & Touche LLP, independent accountants. All
of such financial statements are included herein and incorporated by reference
in reliance on the reports of such firms given upon their authority as experts
in accounting and auditing. To the extent that McGladrey & Pullen, LLP audits
and reports on the financial statements of VISTA Information Solutions, Inc.
issued at future dates, and consents to the use of their reports thereon, such
financial statements also will be incorporated by reference in the Registration
Statement in reliance upon their reports and said authority.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable -- the Company's Common Stock has been registered under
Section 12 of the Exchange Act as described in Item 3 of this Part II.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 6 of the Company's Restated Articles of Incorporation limits the
liability of its directors to the fullest extent permitted by the Minnesota
Business Corporation Act (the "MBCA"). Specifically, directors of the Company
will not be personally liable for monetary damages for breach of fiduciary duty
as directors, except liability for (i) any breach of the duty of loyalty to the
Company or its shareholders, (ii) acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (iii) dividends or
other distributions of corporate assets that are in contravention of certain
statutory or contractual restrictions, (iv) violations of certain Minnesota
securities laws, or (v) any transaction from which the director derives an
improper personal benefit. Liability under federal securities law is not limited
by the Restated Articles.
Section 6.1 of the Company's Restated Bylaws provide that directors,
officers, committee members and other persons and agents, past or present, of
the Company, shall be indemnified by the Company to the fullest extent permitted
by the MBCA.
The MBCA requires that the Company indemnify any director, officer or
employee made or threatened to be made a party to a proceeding, by reason of the
former or present official capacity of the person, against judgments, penalties,
fines, settlements and reasonable expenses incurred in connection with the
proceeding if certain statutory standards are met. "Proceeding" means a
threatened, pending or completed civil, criminal, administrative, arbitration or
investigative proceeding, including a derivative action in the name of the
Company. Reference is made to the detailed terms of the Minnesota
indemnification statute (Minn. Stat. ss. 302A.521) for a complete statement of
such indemnification rights. The Company's Restated Articles of Incorporation
also require the Company to provide indemnification to the fullest extent of the
Minnesota indemnification statute.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company is aware that in the opinion
of the Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. The Company has obtained
Directors and Officers insurance covering $2,000,000 for each loss with a
self-insured retention of $75,000 for each wrongful act and $5,000 per assured
subject to a maximum of $10,000 for all insureds.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
No securities are to be reoffered or resold pursuant to this Registration
Statement.
ITEM 8. EXHIBITS.
4.1* Restated Articles of Incorporation, as amended to date.
4.2** Restated By-Laws of the Company, as amended to date.
4.3*** Warrant Agreement.
4.4^ Certificate of Designation of the Rights and Preferences of the
Company's Series B Convertible Preferred Stock.
4.5^^ Certificate of Designation of the Rights and Preferences of the
Company's Series C Convertible Preferred Stock.
4.6^^ Certificate of Designation of the Rights and Preferences of the
Company's Series D Convertible Preferred Stock.
5.1+ Opinion and Consent of Oppenheimer Wolff & Donnelly.
23.1+ Consent of McGladrey & Pullen, LLP.
23.2+ Consent of Deloitte & Touche, LLP.
23.3+ Consent of Oppenheimer Wolff & Donnelly (See Exhibit 5.1).
24.1 Power of Attorney (See Signature Page).
99.1+ 1993 Stock Option Plan.
99.2+ 1995 Stock Incentive Plan.
* Incorporated by reference to the exhibits to the Company's Registration
Statement on Form SB-2, as amended on Form S-3, filed October 29, 1995.
** Incorporated by reference to the exhibits to the Company's Form 10-KSB
for the fiscal year ending June 30, 1993 (File No. 0-20312).
*** Incorporated by reference to the exhibits to the Company's Registration
Statement on Form 10 (File No. 0-20312).
^ Incorporated by reference to the exhibits to the Company's Form 10-QSB
for the quarter ended September 30, 1993 (File No. 0-20312).
^^ Incorporated by reference to the exhibits to the Company's Form 8-K
filed March 7, 1995 (File No. 0-20312).
+ Filed electronically.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on July 22, 1996.
VISTA INFORMATION SOLUTIONS, INC.
By: /s/ Thomas R. Gay
Thomas R. Gay
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas R. Gay and E. Steven Hamilton and
each or any one of them, his true and lawful attorneys-in-fact and agents, each
acting alone, with full powers of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, each acting alone, full power and authority
to do and perform each and every act and thing requisite or necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on July 22, 1996
in the capacities indicated.
Signature Title
/s/ Thomas R. Gay President, Chief Executive Officer
Thomas R. Gay (principal executive officer) and Direcotr
/s/ E. Steven Hamilton Chief Financial Officer (principal financial
E. Steven Hamilton officer)
/s/ Brian Conn Controller (principal accounting officer)
Brian Conn
/s/ Martin F. Kahn Chairman of the Board
Martin F. Kahn
/s/ James E. Hovis Director
James E. Hovis
/s/ Robert J. Moeller Director
Robert J. Moeller
/s/ Jay D. Seid Director
Jay D. Seid
/s/ Patrick A. Rivelli Director
Patrick A. Rivelli
INDEX TO EXHIBITS
Exhibit
Number Description Location
- ------ ------------ --------
4.1 Restated Articles of Incorporation, as amended to date..............(1)
4.2 Restated By-Laws of the Company, as amended to date.................(2)
4.3 Warrant Agreement...................................................(3)
4.4 Certificate of Designation of the Rights and Preferences of
the Company's Series B Convertible Preferred Stock..................(4)
4.5 Certificate of Designation of the Rights and Preferences of
the Company's Series C Convertible Preferred Stock..................(5)
4.6 Certificate of Designation of the Rights and Preferences of
the Company's Series D Convertible Preferred Stock..................(5)
5.1 Opinion and Consent of Oppenheimer Wolff & Donnelly.................(6)
23.1 Consent of McGladrey & Pullen, LLP..................................(6)
23.2 Consent of Deloitte & Touche, LLP...................................(6)
23.3 Consent of Oppenheimer Wolff & Donnelly (See Exhibit 5.1)...........(6)
24.1 Power of Attorney (See Signature Page)..............................(6)
99.1 1993 Stock Option Plan..............................................(6)
99.2 1995 Stock Incentive Plan...........................................(6)
(1) Incorporated by reference to the exhibits to the Company's Registration
Statement on Form SB-2, as amended on Form S-3, filed October 29, 1995.
(2) Incorporated by reference to the exhibits to the Company's Form 10-KSB
for the fiscal year ending June 30, 1993 (File No. 0-20312).
(3) Incorporated by reference to the exhibits to the Company's Registration
Statement on Form 10 (File No. 0-20312).
(4) Incorporated by reference to the exhibits to the Company's Form 10-QSB
for the quarter ended September 30, 1993 (File No. 0-20312).
(5) Incorporated by reference to the exhibits to the Company's Form 8-K
filed March 7, 1995 (File No. 0-20312).
(6) Filed electronically herewith.
August 1, 1996 Exhibit 5.1
VISTA Information Solutions, Inc.
5060 Shoreham Place, Suite 300
San Diego, CA 92122
Re: Registration Statement on Form S-8
1993 Stock Option Plan
1995 Stock Incentive Plan
Ladies and Gentlemen:
We have acted as counsel to VISTA Information Solutions, Inc., a Minnesota
corporation (the "Company"), in connection with the registration by the Company
of 4,435,563 shares of its Common Stock, $.01 par value (the "Shares"), pursuant
to the Company's Registration Statement on Form S-8 for the Company's 1993 Stock
Option Plan and 1995 Stock Incentive Plan (collectively, the "Option Plans"), to
be filed with the Securities and Exchange Commission on August 1, 1996 (the
"Registration Statement").
In acting as counsel for the Company and arriving at the opinions expressed
below, we have examined and relied upon originals or copies, certified or
otherwise identified to our satisfaction, of such records of the Company,
agreements and other instruments, certificates of officers and representatives
of the Company, certificates of public officials and other documents as we have
deemed necessary or appropriate as a basis for the opinions expressed herein.
In connection with our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents tendered to us as originals, the
legal capacity of natural persons and the conformity to original documents of
all documents submitted to us as certified or photostatic copies.
Based on the foregoing, and subject to the qualifications and limitations set
forth herein, it is our opinion that:
1. The Company has the corporate authority to issue the Shares in the
manner and under the terms set forth in the Registration Statement.
2. The Shares have been duly authorized and, when issued, delivered and
paid for in accordance with the Option Plans referred to in the
Registration Statement, will be validly issued, fully paid and
nonassessable.
We express no opinion with respect to laws other than the laws of the State of
Minnesota and the federal laws of the United States of America, and we assume no
responsibility as to the applicability thereto, or the effect thereon, of the
laws of any other jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to its use as part of the Registration Statement.
We are furnishing this opinion to the Company solely for its benefit in
connection with the Registration Statement as described above. It is not to be
used, circulated, quoted or otherwise referred to for any other purpose.
Very truly yours,
OPPENHEIMER WOLFF & DONNELLY
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
VISTA Information Solutions, Inc.
San Diego, California
We hereby consent to the use in this Registration Statement on Form S-8 of our
report, dated March 6, 1996, except for Note 2, the last paragraph of Note 5 and
the second and third paragraphs of Note 15, as to which the date is April 30,
1996, relating to the consolidated financial statements of VISTA Information
Solutions, Inc., and to the reference to our Firm under the caption "Experts" in
the Prospectus.
MCGLADREY & PULLEN, LLP
Bloomington, Minnesota
August 1, 1996
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Vista Information
Solutions, Inc. on Form S-8 of our report dated March 17, 1995, which expresses
an unqualified opinion on the financial statements and includes an explanatory
paragraph relating to substantial doubt about Vista Environmental Information,
Inc.'s ability to continue as a going concern, appearing in the Prospectus,
which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
San Diego, California
August 1, 1996
VISTA ENVIRONMENTAL INFORMATION, INC.
1993 STOCK OPTION PLAN
I. PURPOSES OF THE PLAN
(a) This 1993 Stock Option Plan (the "Plan") is intended to promote the
interests of Vista Environmental Information, Inc., a Delaware corporation (the
"Company") by providing a method whereby (i) key employees (including officers
and directors) of the Company (or its parent or subsidiary corporations)
responsible for the management, growth and financial success of the Company (or
its parent or subsidiary corporations), (ii) the non-employee members of the
Company's Board of Directors and/or advisory board of the Company (or its parent
or subsidiary corporations) and (iii) consultants, independent contractors and
other entities who provide valuable services to or have a business relationship
with the Company (or its parent or subsidiary corporations) may be offered
incentives and rewards which will encourage them to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Company and
continue to render services to and/or to further such relationship with the
Company (or its parent or subsidiary corporations).
(b) For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the Company:
(i) Any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company shall be considered to be
a parent corporation of the Company, provided each such corporation in
the unbroken chain (other than the Company) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
(ii) Each corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company shall be considered to
be a subsidiary of the Company, provided each such corporation (other
than the last corporation) in the unbroken chain owns, at the time of
the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
II. ADMINISTRATION OF THE PLAN
(a) At all times prior to the time that a class of equity securities of
the Company is registered under Section 12 of the Securities Exchange Act of
1934, as amended (the "1934 Act" or "Exchange Act"), the Plan shall be
administered by the Board of Directors (the "Board") of the Company. The Board,
however, may at any time appoint a committee ("Committee") of three (3) or more
members of the Board and delegate to such Committee one or more of the
administrative powers allocated to the Board under the provisions of the Plan,
including (without limitation) the power to grant options under the Plan and
administer the option surrender and option acceleration provisions of the Plan.
Members of the Committee shall serve for such period of time as the Board may
determine and shall be subject to removal by the Board at any time. The Board
may also at any time terminate the functions of the Committee and reassume all
powers and authority previously delegated to the Committee.
(b) At or prior to the time the Company has a class of equity
securities registered under Section 12 of the Exchange Act, the Board shall
appoint the Committee (if it has not already been appointed) of three (3) or
more members of the Board and delegate to such Committee all of the
administrative functions allocated to the Board under the provisions of the
Plan. The Committee shall consist of no fewer than three (3) members of the
Board, each of whom shall be a "disinterested person" within the meaning of Rule
16b-3 (or any successor rule or regulation) promulgated under the Exchange Act.
A majority of the members of the Committee shall constitute a quorum, and the
act of a majority of the members of the Committee shall be the act of the
Committee. Any member of the Committee may be removed at any time either with or
without cause by resolution adopted by the Board, and any vacancy on the
Committee may at any time be filled by resolution adopted by the Board. Any or
all of the powers and functions of the Committee may at any time and from time
to time be exercised by the Board or an executive committee thereof, provided,
however, that, with respect to the participation in the Plan of employees who
are members of the Board or of the executive committee (as the case may be),
such powers and functions of the Committee may be exercised by the Board or the
executive committee only if, at the time of such exercise, a majority of the
members of the entire Board and a majority of the directors acting in the
particular matter, or all of the members of the executive committee, as the case
may be, are "disinterested persons" within the meaning of Rule 16b-3 (or any
successor rule or regulation) promulgated under the Exchange Act.
(c) The Plan Administrator (either the Board or the Committee, to the
extent the Committee is at the time responsible for the administration of the
Plan) shall have full power and authority (subject to the provisions of the
Plan) to establish such rules and regulations as it may deem appropriate for the
proper administration of the Plan and to make such determinations under, and
issue such interpretations of, the Plan and any outstanding option as it may
deem necessary or advisable. Decisions of the Plan Administrator shall be final
and binding on all parties who have an interest in the Plan or any outstanding
option.
III. ELIGIBILITY FOR OPTION GRANTS
(a) The persons eligible to receive option grants under the Plan are as
follows:
(i) key employees (including officers and directors) of the
Company (or its parent or subsidiary corporations) who render services
which contribute to the success and growth of the Company (or its
parent or subsidiary corporations) or which may reasonably be
anticipated to contribute to the future success and growth of the
Company (or its parent or subsidiary corporations);
(ii) the non-employee members of the Board or the non-employee
members of any advisory board of the Company (or its parent or
subsidiary corporations); and
(iii) those consultants, independent contractors or other
entities who provide valuable services to, or have a business
relationship with, the Company (or its parent or subsidiary
corporations).
(b) The Plan Administrator shall have full authority to determine which
eligible individuals are to receive option grants under the Plan, the number of
shares to be covered by each such grant, whether the granted option is to be an
incentive stock option ("Incentive Option") which satisfies the requirements of
Section 422 of the Internal Revenue Code or a non-statutory option not intended
to meet such requirements, the time or times at which each such option is to
become exercisable, and the maximum term for which the option is to be
outstanding.
IV. STOCK SUBJECT TO THE PLAN
(a) The stock issuable under the Plan shall be shares of the Company's
authorized but unissued or reacquired Class B Non-Voting Common Stock (the
"Common Stock"). The aggregate number of shares which may be issued under the
Plan shall not exceed 2,400,000 shares. The total number of shares issuable
under the Plan shall be subject to (i) adjustment from time to time in
accordance with Section IV(c) of the Plan, (ii) reduction, on a share-for-share
basis, by the number of shares issued (including options therefor) from time to
time under the Company's 1991 Stock Option Plan, and (iii) reduction, on a
share-for-share basis, by the number of shares issued (or options therefor)
previously under the Environmental Audit, Inc. ("EAI") Stock Option Plan and
exchanged for options to purchase the Company's Common Stock in connection with
the merger of EAI into the Company.
(b) Should an option be terminated for any reason without being
exercised or surrendered in whole or in part (including options cancelled in
accordance with the cancellation- regrant provisions of Section VIII of the
Plan), the shares subject to the portion of the option not so exercised or
surrendered shall be available for subsequent option grants under the Plan.
Shares subject to any option or portion thereof surrendered in accordance with
Section IX of the Plan shall not be available for subsequent option grants under
the Plan.
(c) In the event any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, combination of shares,
exchange of shares or other similar transaction affecting the outstanding Common
Stock as a class without receipt of consideration, then appropriate adjustments
will be made to (i) the aggregate number of shares issuable under the Plan and
(ii) the number of shares and price per share of the Common Stock subject to
each outstanding option in order to prevent the dilution or enlargement of
benefits thereunder.
V. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action of
the Plan Administrator and may, at the Plan Administrator's discretion, be
either Incentive Options (as more fully described in Section VI of the Plan) or
non-statutory options. Individuals who are not employees of the Company or its
parent or subsidiary corporations may only be granted non-statutory options.
Each granted option shall be evidenced by one or more instruments in the form
approved by the Plan Administrator; provided, however, that each such instrument
shall comply with and incorporate the terms and conditions specified herein.
Each instrument evidencing an Incentive Option shall, in addition, be subject to
the applicable provisions of Section VI.
1. Option Price.
A. The option price per share shall be fixed by the Plan
Administrator, subject to the provisions of Section V.1.B. below.
B. The option price per share of an Incentive Option shall be
equal to the Fair Market Value of one share of Common Stock as of the
date of the grant. If any individual to whom an Incentive Option is to
be granted pursuant to the provisions of the Plan is on the date of
grant the owner of stock (as determined under Section 424(d) of the
Internal Revenue Code) possessing 10% or more of the total combined
voting power of all classes of stock of the Company or any one of its
parent or subsidiary corporations (such person to be herein referred to
as a 10% Stockholder), then the option price per share of the Common
Stock subject to an Incentive Option shall not be less than one hundred
and ten percent (110%) of the Fair Market Value of one share of Common
Stock on the date of grant.
C. The option price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section X and the
instrument evidencing the grant, be payable in one of the alternative
forms specified below:
(i) full payment in cash or cash equivalents; or
(ii) full payment in shares of Common Stock of the
Company having a Fair Market Value on the Exercise Date (as
such term is defined below) in an amount equal to the Option
Price; or
(iii) full payment in a combination of shares of
Common Stock of the Company valued at Fair Market Value on the
Exercise Date and cash or cash equivalents, equal in the
aggregate to the Option Price; or
(iv) any other form which the Plan Administrator may,
in its discretion, approve in the instrument evidencing the
grant of the option.
For purposes of this subparagraph C, the Exercise Date shall
be the first date on which the Company shall have received both written
notice of the exercise of the option and payment of the option price
for the purchased shares.
D. The Fair Market Value of a share of Common Stock on any
relevant date under subparagraph A, B or C above (and for all other
valuation purposes under the Plan) shall be determined in accordance
with the following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded in the
over-the-counter market, the Fair Market Value shall be the
mean between the highest bid and lowest asked prices (or, if
such information is available, the closing selling price) of
one share of Common Stock on the date in question in the
over-the-counter market, as such prices are reported by the
National Association of Securities Dealers through its NASDAQ
system or any successor system. If there are no reported bid
and asked prices (or closing selling price) for the Common
Stock on the date in question, then the mean between the
highest bid price and lowest asked price (or the closing
selling price) on the last preceding date for which such
quotations exist shall be determinative of Fair Market Value.
(ii) If the Common Stock is at the time listed or
admitted to trading on any stock exchange, then the fair
market value shall be the closing selling price of one share
of Common Stock on the date in question on the stock exchange
determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in
the composite tape of transactions on such exchange. If there
is no reported sale of Common Stock on such exchange on the
date in question, then the Fair Market Value shall be the
closing selling price on the exchange on the last preceding
date for which such quotation exists.
(iii) If the Common Stock at the time is neither
listed nor admitted to trading on any stock exchange nor
traded in the over-the-counter market, then the Fair Market
Value shall be determined by the Plan Administrator after
taking into account such factors as the Plan Administrator
shall deem appropriate, including one or more independent
professional appraisals.
2. Term and Exercise of Options. Each option granted under the Plan
shall be exercisable at such time or times, during such period, and for such
number of shares as shall be determined by the Plan Administrator and set forth
in the instrument evidencing such option; provided, however, that no such option
shall have a term in excess of ten (10) years from the grant date and provided
further, however, that no such option granted to a 10% Stockholder shall have a
term in excess of five (5) years from the grant date. During the lifetime of the
optionee, the option shall be exercisable only by the optionee and shall not be
assignable or transferable by the optionee otherwise than by will or by the laws
of descent and distribution.
3. Effect of Termination of Employment.
A. Should an optionee cease to be a Service Provider (as
determined under subparagraph V.3.E below) of the Company for any
reason (including death or permanent disability as defined in Section
105(d)(4) of the Internal Revenue Code) while the holder of one or more
outstanding options granted to such optionee under the Plan, then such
option or options shall not (except to the extent otherwise provided
pursuant to Section XI below) remain exercisable for more than a twelve
(12) month period (or such shorter period determined by the Plan
Administrator and specified in the instrument evidencing the grant)
following the date of such cessation of Service Provider status;
provided, however, that under no circumstances shall such options be
exercisable after the specified expiration date of the option term.
Notwithstanding the foregoing, such shorter period as determined by the
Plan Administrator shall in no event be less than: (i) six (6) months
in the event that employment termination is due to the death or
disability of optionee and (ii) thirty (30) days in the event that
cessation of Service Provider status is due to any other reason, except
that the foregoing provisions shall not apply with respect to cessation
of Service Provider status due to an event described in subparagraph
V.3.C below. Each such option shall, during such twelve (12) month or
shorter period, be exercisable only to the extent of the number of
shares (if any) for which the option is exercisable on the date of such
cessation of Service Provider status. Upon the expiration of such
twelve (12) month or shorter period or (if earlier) upon the expiration
of the option term, the option shall terminate and cease to be
exercisable.
B. Any option granted to an optionee under the Plan and
exercisable in whole or in part on the date of the optionee's death may
be subsequently exercised, but only to the extent of the number of
shares (if any) for which the option is exercisable on the date of the
optionee's death, by the personal representative of the optionee's
estate or by the person or persons to whom the option is transferred
pursuant to the optionee's will or in accordance with the laws of
descent and distribution, provided and only if such exercise occurs
prior to the earlier of (i) the first anniversary of the date of the
optionee's death or (ii) the specified expiration date of the option
term. Upon the occurrence of the earlier event, the option shall
terminate and cease to be exercisable.
C. If (i) the optionee's status as a Service Provider is
terminated for willful misconduct, theft, fraud, embezzlement or any
unauthorized disclosure or use of confidential information or trade
secrets or (ii) the optionee makes or attempts to make any unauthorized
use or disclosure of confidential information or trade secrets of the
Company or its parent or subsidiary corporations, then in any such
event all outstanding options granted the optionee under the Plan shall
terminate and cease to be exercisable immediately upon such termination
of Service Provider status or such unauthorized use or disclosure of
confidential information or trade secrets or attempt thereof.
D. Notwithstanding subparagraphs A and B above, the Plan
Administrator shall have complete discretion, exercisable either at the
time the option is granted or at the time the optionee ceases Service
Provider status, to establish as a provision applicable to the exercise
of one or more options granted under the Plan that during the limited
period of exercisability following the cessation of Service Provider
status as provided in Section V.3.A above, the option may be exercised
not only with respect to the number of shares for which it is
exercisable at the time of the optionee's cessation of Service Provider
status but also with respect to one or more subsequent installments (or
portions thereof) of purchasable shares for which the option would
otherwise have become exercisable had such cessation of Service
Provider status not occurred.
E. For purposes of the foregoing provisions of this Section
V.3 (and all other provisions of the Plan), the optionee shall be
deemed to be a Service Provider to the Company for so long as the
optionee renders services on a periodic basis to the Company or one or
more of its parent or subsidiary corporations in the capacity of an
Employee, a non-employee member of the Board of Directors or an
independent consultant or adviser. The optionee shall be considered to
be an Employee for so long as the optionee remains in the employ of the
Company or one or more of its parent or subsidiary corporations.
4. Stockholder Rights. An optionee shall have none of the rights of a
stockholder with respect to any shares covered by the option until such
individual shall have duly exercised the option and paid the option price.
5. Transfer Restrictions. The Plan Administrator shall have the
authority to establish as a term and condition of one or more options granted
under the Plan that the Company shall have a right of first refusal with respect
to any proposed sale or other disposition by the optionee (or any successor in
interest by reason of purchase, gift or other mode of transfer) and repurchase
right upon marital dissolution of any shares of Common Stock issued upon the
exercise of such options. Any such right of first refusal and repurchase right
upon marital dissolution shall be exercisable by the Company (or its assignees)
in accordance with the terms and conditions set forth in the instrument
evidencing such right.
VI. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals who are Employees of the Company. Options which are specifically
designated as "non-statutory" options when issued under the Plan shall not be
subject to the terms and conditions specified below.
(a) Option Price. The option price per share of the Common Stock
subject to an Incentive Option shall in no event be less than one hundred
percent (100%) of the fair market value of a share of Common Stock on the date
of grant.
(b) Dollar Limitation. The aggregate fair market value (determined as
of the respective date or dates of grant) of the Common Stock for which one or
more options granted to any Employee under this Plan (or any other option plan
of the Company or its parent or subsidiary corporations) may for the first time
become exercisable as Incentive Options during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two or more such options which become exercisable for the first
time in the same calendar year, the foregoing limitation on the exercisability
thereof as Incentive Options shall be applied on the basis of the order in which
such options are granted. However, any options which fail to qualify as
Incentive Options due to the foregoing limitation shall be treated as
non-statutory options subject to the terms of the Plan and the instrument
evidencing their grant.
Except as modified by the preceding provisions of this Section VI, all
the provisions of the Plan shall be applicable to the Incentive Options granted
hereunder.
VII. CORPORATE TRANSACTIONS/CHANGE IN CONTROL
(a) In the event of any of the following transactions (a "Corporate
Transaction"):
(i) a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the State of the Company's incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets or stock of the Company, or
(iii) any other corporate merger, reorganization or business
combination in which fifty percent (50%) or more of the Company's
outstanding voting stock is transferred to different holders in a
single transaction or a series of related transactions,
then the exercisability of each option outstanding under the Plan shall be
automatically accelerated so that each such option shall, immediately prior to
the specified effective date for the Corporate Transaction, become fully
exercisable five days prior to the Corporate Transaction with respect to the
total number of shares of Common Stock purchasable under such option and may be
exercised for all or any portion of such shares. However, an outstanding option
under the Plan shall not be so accelerated if and to the extent that (i) such
option is, in connection with the Corporate Transaction, either to be assumed by
the successor corporation or parent thereof or be replaced with a comparable
option to purchase shares of the capital stock of the successor corporation or
parent thereof, or (ii) such option is to be replaced by a comparable cash
incentive program of the successor corporation based on the value of the option
at the time of the Corporate Transaction, or (iii) the acceleration of such
option is subject to other applicable limitations imposed by the Plan
Administrator at the time of grant. The determination of comparability under
clause (i) or (ii) above shall be made by the Plan Administrator and its
determination should be final, binding and conclusive.
(b) With respect to any Change in Control (as defined below), the Plan
Administrator shall have full power and authority, exercisable either in advance
of any actually-anticipated Change in Control or at the time of an actual Change
in Control, to provide for the acceleration of each option outstanding under the
Plan which is not then fully exercisable so that each such option shall become
fully exercisable as of the Change in Control for the total number of shares at
the time subject to such option and may be exercised for all or any portion of
such shares as fully-vested shares of Common Stock. The Plan Administrator shall
also have full power and authority to condition such option acceleration, and
the termination of any of the Company's repurchase rights with respect to any
unvested shares purchased or purchasable under such option, upon the subsequent
termination of the optionee's employment within a designated period following
the Change in Control.
A "Change in Control" shall be deemed to occur should twenty-five
percent (25%) or more of the Company's outstanding voting stock be acquired, at
a time when one or more classes of the Company's equity securities are
registered under Section 12(g) of the Securities Exchange Act of 1934 (as
amended), pursuant to a tender or exchange offer which (i) is made by a person
or group of related persons other than the Company or a person that directly or
indirectly controls, is controlled by or is under common control with the
Company and (ii) the Board does not recommend the Company's stockholders to
accept.
(c) Upon the consummation of the Corporate Transaction, all outstanding
options under the Plan shall, to the extent not previously exercised or assumed
by the successor corporation or its parent company, terminate and be without
further force or effect. Upon the effectiveness of a Change in Control, all
outstanding options accelerated pursuant to Section VII(b) above shall remain
fully exercisable until the expiration or sooner termination of the option term
specified in the instrument evidencing the option. In connection with any such
Corporate Transaction, the exercisability as an incentive stock option under the
Federal tax laws of any accelerated options under the Plan shall remain subject
to the applicable dollar limitation of Section VI(b).
(d) If the Company is the surviving entity in any Corporate Transaction
or the outstanding options are to be assumed in connection with such Corporate
Transaction, then each option which remains outstanding under the Plan
immediately after such Corporate Transaction shall be appropriately adjusted to
apply and pertain to the number and class of any other securities and/or the
cash or other property which would be issuable, in consummation of such
Corporate Transaction, to an actual holder of the same number of shares of
Common Stock as are subject to such option immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the option price
payable per share, provided the aggregate option price payable for such option
shall remain the same. Appropriate adjustments shall also be made to the class
and number of securities available for issuance under the Plan following the
consummation of such Corporate Transaction.
(e) The grant of options under this Plan shall in no way affect the
right of the Company to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
VIII. CANCELLATION AND NEW GRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per share not less
than one hundred percent (100%) of the fair market value in the case of an
Incentive Option or, in the case of an Incentive Option granted to a 10%
Stockholder, not less than one hundred and ten percent (110%) of the fair market
value of a share of Common Stock on the new grant date.
IX. SURRENDER OF OPTIONS FOR CASH OR STOCK
(a) Provided and only if the Plan Administrator determines in its
discretion to implement stock appreciation right provisions of this Section IX,
one or more optionees may be granted the right, exercisable upon such terms and
conditions as the Plan Administrator may establish at the time of the option
grant or at any time thereafter, to surrender all or part of an unexercised
option under the Plan in exchange for a distribution from the Company equal in
amount to the difference between (i) the fair market value (at date of
surrender) of the number of shares in which the optionee is at the time vested
under the surrendered option or portion thereof and (ii) the aggregate option
price payable for such vested shares.
(b) No surrender of an option shall be effective hereunder unless it is
approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the optionee shall accordingly become entitled under this
Section IX may be made in shares of Common Stock valued at fair market value at
date of surrender, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.
(c) If the surrender of an option is rejected by the Plan
Administrator, then the optionee shall retain whatever rights the optionee had
under the surrendered option (or surrendered portion thereof) on the date of
surrender and may exercise such rights at any time prior to the later of (i)
five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised at any time after ten (10) years (or five (5) years in the case of
a 10% Stockholder) after the date of the option grant.
(d) Notwithstanding the foregoing provisions of this Section IX, should
a Change in Control (defined above) occur, then each officer or director who is
at the time of the effectiveness of the Change in Control subject to the
short-swing profit restrictions of the federal securities laws shall have the
right (exercisable for a period not to exceed thirty (30) days following the
effectiveness of the Change in Control) to surrender any or all options held by
such individual under this Plan, to the extent such options are at the time
exercisable for vested shares, and receive in exchange therefor an appreciation
distribution calculated in accordance with Section IX(a). The approval of the
Board shall not be required for such surrender, and the distribution to which
such individual shall become entitled upon such surrender shall be made entirely
in cash.
(e) The following special provisions shall be applicable to any
Incentive Option which is surrendered pursuant to the provisions of this Section
IX:
(i) The right to surrender the Incentive Option may only be
transferred or assigned in connection with a transfer or assignment of
the Incentive Option in compliance with the limitations hereof.
(ii) The Incentive Option may only be surrendered when there
is a positive spread between the fair market value of the shares
subject to the surrendered option and the aggregate option price
payable for such shares.
(iii) The Incentive Option may not be surrendered at any time
after the expiration or sooner termination of the option term.
X. BONUS, LOANS OR GUARANTEE OF LOANS
The Plan Administrator may assist any optionee (including any officer
or director) in the exercise of one or more options granted to such optionee
under the Plan by (a) authorizing the extension of a loan to such optionee from
the Company and/or the payment of a bonus by Company to optionee holding other
than an Incentive Option in an amount calculated to assist optionee in paying
optionee's federal and state tax obligation upon exercise of one or more
options, (b) permitting the optionee to pay the option price for the purchased
Common Stock in installments over a period of years or (c) authorizing a
guarantee by the Company of a third party loan to the optionee. The terms of any
loan, installment method of payment or guarantee (including the interest rate
and terms of repayment) will be established by the Plan Administrator in its
sole discretion. Loans, installment payments and guarantees may be granted
without security or collateral (other than to optionees who are consultants or
independent contractors of or who have a business relationship with the Company
or its parent or subsidiary corporations, in which event the loan must be
adequately secured by collateral other than the purchased shares), but the
maximum credit available to the optionee shall not exceed any limit imposed by
applicable law.
XI. EXTENSION OF EXERCISE PERIOD
The Board shall have full power and authority, exercisable in its sole
discretion to extend, either at any time while the option is granted or at the
time while the option remains outstanding, the period of time for which the
option is to remain exercisable following the optionee's termination of Employee
status from the period set forth in the option, agreement to such greater period
of time as the Plan Administrator shall deem appropriate; provided, however,
that in no event shall such option be exercisable after the specified expiration
date of the option term.
XII. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever; provided, however,
that no such amendment or modification shall, without the consent of the
holders, materially and adversely affect rights and obligations with respect to
options at the time outstanding under the Plan; and provided, further, that the
Board shall not, without the approval of the stockholders of the Company (i)
increase the maximum number of shares issuable under the Plan, except for
permissible adjustments under Section IV(c), (ii) materially modify the
eligibility requirements for the grant of options under the Plan or (iii)
otherwise materially increase the benefits accruing to participants under the
Plan.
XIII. EFFECTIVE DATE AND TERM OF PLAN
(a) The Plan shall be come effective when adopted by the Board, but no
option granted under the Plan shall become exercisable unless and until the Plan
shall have been approved by the stockholders of the Company. If such stockholder
approval is not obtained within twelve (12) months after the date of the Board's
adoption of the Plan, then all options previously granted under the Plan shall
terminate and no further options shall be granted. Subject to such limitation,
the Plan Administrator may grant options under the Plan at any time after the
effective date and before the date fixed herein for termination of the Plan.
(b) Unless sooner terminated in accordance with Section VII, the Plan
shall terminate upon the earlier of (i) the expiration of the ten (10) year
period measured from the date of the Board's adoption of the Plan or (ii) the
date on which all shares available for issuance under the Plan shall have been
issued or cancelled pursuant to the exercise or surrender of options granted
hereunder. If the date of termination is determined under clause (i) above, then
options outstanding on such date shall thereafter continue to have force and
effect in accordance with the provisions of the instruments evidencing such
options.
(c) Options may be granted under this Plan to purchase shares of Common
Stock in excess of the number of shares then available for issuance under the
Plan, provided (i) an amendment to increase the maximum number of shares
issuable under the Plan is adopted by the Board prior to the initial grant of
any such option and within one year thereafter such amendment is approved by the
stockholders of the Company and (ii) each option granted is not to become
exercisable, in whole or in part, at any time prior to the obtaining of such
stockholder approval.
XIV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares
pursuant to options granted under the Plan shall be used for general corporate
purposes.
XV. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option hereunder,
and the issuance of stock upon the exercise or surrender of any such option
shall be subject to the procurement by the Company of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it and the stock issued pursuant to it.
DATAMAP, INC.
1995 STOCK INCENTIVE PLAN
1. Purpose of Plan.
The purpose of the DataMap, Inc. 1995 Stock Incentive Plan (the "Plan")
is to advance the interests of DataMap, Inc. (the "Company") and its
shareholders by enabling the Company and its Subsidiaries to attract and retain
persons of ability to perform services for the Company and its Subsidiaries by
providing an incentive to such individuals through equity participation in the
Company and by rewarding such individuals who contribute to the achievement by
the Company of its economic objectives.
2. Definitions.
The following terms will have the meanings set forth below, unless the
context clearly otherwise requires:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Broker Exercise Notice" means a written notice pursuant to which a
Participant, upon exercise of an Option, irrevocably instructs a broker or
dealer to sell a sufficient number of shares or loan a sufficient amount of
money to pay all or a portion of the exercise price of the Option and/or any
related withholding tax obligations and remit such sums to the Company and
directs the Company to deliver stock certificates to be issued upon such
exercise directly to such broker or dealer.
2.3 "Change in Control" means an event described in Section 13.1 of the
Plan
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Committee" means the group of individuals administering the Plan,
as provided in Section 3 of the Plan.
2.6 "Common Stock" means the common stock of the Company, $0.01 par
value, 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.
2.7 "Disability" means the disability of the Participant such as would
entitle the Participant to receive disability income benefits pursuant to the
long-term disability plan of the Company or Subsidiary then covering the
Participant or, if no such plan exists or is applicable to the Participant, the
permanent and total disability of the Participant within the meaning of Section
22(e)(3) of the Code.
2.8 "Eligible Recipients" means all employees (including, without
limitation, officers and directors who are also employees) of the Company or any
Subsidiary and any non-employee consultants and independent contractors of the
Company or any Subsidiary.
2.9 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.10 "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):
(a) If the Common Stock is listed (or admitted to unlisted
trading privileges) on an exchange or reported on the NASDAQ National
Market System or bid and asked prices are reported on the NASDAQ system
or a comparable reporting service, the closing sale price or the mean
of the closing bid and asked prices, as the case may be.
(b) If the Common Stock is not so listed or reported, such
price as the Committee determines in good faith in the exercise of its
reasonable discretion.
2.11 "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.
2.12 "Incentive Stock Option" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that
qualifies as an "incentive stock option" within the meaning of Section 422 of
the Code.
2.13 "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.
2.14 "Non-Statutory Stock Option" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that
does not qualify as an Incentive Stock Option.
2.15 "Option" means an Incentive Stock Option or a Non-Statutory Stock
Option.
2.16 "Participant" means an Eligible Recipient who receives one or more
Incentive Awards under the Plan.
2.17 "Performance 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.
2.18 "Previously Acquired Shares" means shares of Common Stock that are
already owned by the Participant or, with respect to any Incentive Award, that
are to be issued upon the grant, exercise or vesting of such Incentive Award.
2.19 "Restricted Stock Award" means an award of Common Stock granted to
an Eligible Recipient pursuant to Section 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.
2.20 "Retirement" means normal or approved early termination of
employment or service pursuant to and in accordance with the regular
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's
plan or practice for purposes of this determination.
2.21 "Securities Act" means the Securities Act of 1933, as amended.
2.22 "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.
2.23 "Stock Bonus" means an award of Common Stock granted to an
Eligible Recipient pursuant to Section 10 of the Plan.
2.24 "Subsidiary" means any entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a significant
equity interest, as determined by the Committee.
2.25 "Tax Date" means the date any withholding tax obligation arises
under the Code for a Participant with respect to an Incentive Award.
3. Plan Administration.
3.1 The Committee. So long as the Company has a class of its equity
securities registered under Section 12 of the Exchange Act, the Plan will be
administered by a committee (the "Committee") consisting solely of not less than
two members of the Board who are "disinterested persons" within the meaning of
Rule 16b-3 under the Exchange Act. 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.
3.2 Authority of the Committee.
(a) In accordance with and subject to the provisions of the
Plan, the Committee will have the authority to determine all provisions
of Incentive Awards as the Committee may deem necessary or desirable
and as consistent with the terms of the Plan, including, without
limitation, the following: (i) the Eligible Recipients to be selected
as Participants; (ii) the nature and extent of the Incentive Awards to
be made to each Participant (including the number of shares of Common
Stock to be subject to each Incentive Award, any exercise price, the
manner in which Incentive Awards will vest or become exercisable and
whether Incentive Awards will be granted in tandem with other Incentive
Awards) and the form of written agreement, if any, evidencing such
Incentive Award; (iii) the time or times when Incentive Awards will be
granted; (iv) the duration of each Incentive Award; and (v) the
restrictions and other conditions to which the payment or vesting of
Incentive Awards may be subject. In addition, the Committee will have
the authority under the Plan to pay the economic value of any Incentive
Award in the form of cash, Common Stock or any combination of both.
(b) The Committee will have the authority under the Plan to
amend or modify the terms of any outstanding Incentive Award in any
manner, including, without limitation, the authority to modify the
number of shares or other terms and conditions of an Incentive Award,
extend the term of an Incentive Award, accelerate the exercisability or
vesting or otherwise terminate any restrictions relating to an
Incentive Award, accept the surrender of any outstanding Incentive
Award or, to the extent not previously exercised or vested, authorize
the grant of new Incentive Awards in substitution for surrendered
Incentive Awards; provided, however that the amended or modified terms
are permitted by the Plan as then in effect 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 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.
(c) In the event of (i) any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering,
extraordinary dividend or divestiture (including a spin-off) or any
other change in corporate structure or shares, (ii) any purchase,
acquisition, sale or disposition of a significant amount of assets or a
significant business, (iii) any change in accounting 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 discretion of the Committee or the board
of directors of the surviving corporation) following such event as
prior to such event; provided, however, that the amended or modified
terms are permitted by the Plan as then in effect.
4. Shares Available for Issuance.
4.1 Maximum Number of Shares. 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 3,000,000 shares.
Notwithstanding any other provision of the Plan to the contrary, no Participant
in the Plan may be granted, during the term of the Plan, any Options or Stock
Appreciation Rights, or any other Incentive Awards with a value based solely on
an increase in the value of the Common Stock after the date of grant, relating
to more than an aggregate of 1,000,000 shares of Common Stock (subject to
adjustment as provided in Section 4.3 of the Plan).
4.2 Accounting for Incentive Awards. Shares of Common Stock that are
issued under the Plan or that are subject to outstanding Incentive Awards will
be applied to reduce the maximum number of shares of Common Stock remaining
available for issuance under the Plan. Any shares of Common Stock that are
subject to an Incentive Award that lapses, expires, is forfeited or for any
reason is terminated unexercised or unvested and any shares of Common Stock that
are subject to an Incentive Award that is settled or paid in cash or any form
other than shares of Common Stock
will automatically again become available for issuance under the Plan. 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.
4.3 Adjustments to Shares and Incentive Awards. In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other change in the corporate structure or shares of the Company, the Committee
(or, if the Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation) will make appropriate
adjustment (which determination will be conclusive) as to the number and kind of
securities available for issuance under the Plan and, in order to prevent
dilution or enlargement of the rights of Participants, the number, kind and,
where applicable, exercise price of securities subject to outstanding Incentive
Awards.
5. Participation.
Participants in the Plan will be those Eligible Recipients who, in the
judgment of the Committee, have contributed, are contributing or are expected to
contribute to the achievement of economic objectives of the Company or its
Subsidiaries. Eligible Recipients may be granted from time to time one or more
Incentive Awards, singly or in combination or in tandem with other Incentive
Awards, as may be determined by the Committee. Incentive Awards will be deemed
to be granted as of the date specified in the grant resolution of the Committee,
which date will be the date of any related agreement with the Participant.
6. Options.
6.1 Grant. An Eligible Recipient may be granted one or more Options
under the Plan, and such Options will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee. The Committee may designate whether an Option is to be considered an
Incentive Stock Option or a Non-Statutory Stock Option.
6.2 Exercise Price. The per share price to be paid by a Participant
upon exercise of an Option will be determined by the Committee in its discretion
at the time of the Option grant, provided that (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.
6.3 Exercisability and Duration. An Option will become exercisable at
such times and in such installments as may be determined by the Committee at the
time of grant; provided, however, that no Incentive Stock Option may be
exercisable after 10 years from its date of grant (five years from its date of
grant 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).
6.4 Payment of Exercise Price. The total purchase price of the shares
to be purchased upon exercise of an Option will be paid entirely in cash
(including check, bank draft or money order); provided, however, that the
Committee may allow such payments to be made, in whole or in part and upon such
terms and conditions as may be established by the Committee, by tender of a
Broker Exercise Notice, Previously Acquired Shares, a promissory note or by a
combination of such methods.
6.5 Manner of Exercise. An Option may be exercised by a Participant in
whole or in part from time to time, subject to the conditions contained in the
Plan and in the agreement evidencing such Option, by delivery in person, by
facsimile or electronic transmission or through the mail of written notice of
exercise to the Company (Attention: Chief Financial Officer) at its principal
executive office in Eden Prairie, Minnesota and by paying in full the total
exercise price for the shares of Common Stock to be purchased in accordance with
Section 6.4 of the Plan.
6.6 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 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 will designate which
shares will be treated as shares to be acquired upon exercise of an incentive
stock option.
6.7 Automatic Grants to Non-Employee Directors.
(a) Grant of Options. Each Non-Employee Director serving on
the Board of Directors shall automatically be granted a Non-Statutory
Stock Option to purchase 10,000 shares of the Common Stock of the
Company (subject to adjustment upon changes in capitalization of the
Company as provided in Section 9 below and provided that no such
automatic grant shall occur if there are insufficient shares of Common
Stock available under the Plan or if the date of automatic grant would
occur after the termination date of the Plan) on January 1 of each year
this Plan is in effect, or if January 1 falls on a Saturday, Sunday or
a holiday, then on the business day next following January 1. If a
Non-Employee Director is elected or appointed to serve as a director
following such January 1 date, such Non-Employee Director shall
automatically be granted an option to purchase (i) 5,000 shares of the
Common Stock of the Company (subject to the same adjustments as set
forth in the first sentence of this paragraph) if such Non-Employee
Director is elected or appointed after June 30 in any year in which the
Plan is in effect, or (ii) 10,000 shares of the Common Stock of the
Company (subject to the same adjustments as set forth in the first
sentence of this paragraph) if such Non-Employee Director is elected or
appointed prior to July 1 in any year in which the Plan is in effect.
(b) 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 in accordance with Section 6.4 of
the Plan.
(c) Duration of Options. Each Option will terminate five years
after its date of grant and will become exercisable six months after
the date of grant.
(d) 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 or Disability, all outstanding Options
then held by the Non-Employee Director will become immediately
exercisable in full and will remain exercisable for a period of one
year after such termination (but in no event after 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 or Disability, all outstanding Options then held by the Non-
Employee Director will remain exercisable to the extent exercisable as
of 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.
(e) 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 of the
total purchase price of the shares to be purchased under the Option (in
accordance with Section 6.4 of the Plan).
(f) 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."
7. Stock Appreciation Rights.
7.1 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.
7.2 Exercise Price. The exercise price of a Stock Appreciation Right
will be determined by the Committee at the date of grant but will not be less
than 85% of the Fair Market Value of one share of Common Stock on the date of
grant.
7.3 Exercisability and Duration. A Stock Appreciation Right will become
exercisable at such time and in such installments as may be determined by the
Committee at the time of grant; provided, however, that no Stock Appreciation
Right may be exercisable prior to six months or 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.
8. Restricted Stock Awards.
8.1 Grant. An Eligible Recipient may be granted one or more Restricted
Stock Awards under the Plan, and such Restricted Stock Awards will be subject to
such terms and conditions, consistent with the other provisions of the Plan, as
may be determined by the Committee. 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
Company (or any Subsidiary or division thereof) satisfy certain performance
goals or criteria.
8.2 Rights as a Shareholder; 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.
8.3 Dividends and Distributions. Unless the Committee determines
otherwise (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 whether any interest will be paid on such dividends or
distributions. In addition, the Committee 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.
8.4 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.
9. 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. 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 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.
10. 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. 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.
11. Effect of Termination of Employment or Other Service.
11.1 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:
(a) All outstanding Options and Stock Appreciation Rights then
held by the Participant will remain exercisable to the extent
exercisable as of such termination for a period of one year after such
termination (but in no event after the expiration date of any such
Option or Stock Appreciation Right);
(b) All outstanding Restricted Stock Awards then held by the
Participant that have not vested will be terminated and forfeited; and
(c) All outstanding 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.
11.2 Termination for Reasons Other than Death, Disability or
Retirement.
(a) 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 ninety (90) days after such termination (but in no event
after the expiration date of any such Option or Stock Appreciation
Right).
(b) 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 non-compete agreement entered
into with the Company or any Subsidiary.
11.3 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
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 or Stock Appreciation Right may remain
exercisable beyond its expiration date.
11.4 Breach of Confidentiality or Non-Compete Agreements.
Notwithstanding anything in this Plan to the contrary, in the event that a
Participant materially breaches the terms of any confidentiality or non-compete
agreement entered into with the Company or any Subsidiary, whether such breach
occurs before or after termination of such Participant's employment or other
service with the Company or any Subsidiary, the Committee 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.
11.5 Date of Termination of Employment or Other Service. Unless the
Committee otherwise determines, 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 based upon such records.
12. Payment of Withholding Taxes.
12.1 General Rules. The Company is entitled to (a) withhold and deduct
from future wages of the Participant (or from other amounts that may be due and
owing to the Participant from the Company or a Subsidiary), or make other
arrangements for the collection of, all legally required amounts necessary to
satisfy any and all federal, state and local withholding and employment-related
tax requirements attributable to an Incentive Award, including, without
limitation, the grant, exercise or vesting of, or payment of dividends with
respect to, an Incentive Award or a disqualifying disposition of stock received
upon exercise of an Incentive Stock Option, or (b) require the Participant
promptly to remit the amount of such withholding to the Company before taking
any action, including issuing any shares of Common Stock, with respect to an
Incentive Award.
12.2 Special Rules. The Committee may, 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, a
Broker Exercise Notice or a promissory note (on terms acceptable to the
Committee in its sole discretion), or by a combination of such methods.
13. Change in Control.
13.1 Change in Control. For purposes of this Section 13.1, a "Change in
Control" of the Company will mean the following:
(a) the sale, lease, exchange or other transfer, directly or
indirectly, of substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to a person or
entity that is not controlled by the Company;
(b) the approval by the shareholders of the Company of any
plan or proposal for the liquidation or dissolution of the Company;
(c) a merger or consolidation to which the Company is a party
if the shareholders of the Company immediately prior to the effective
date of such merger or consolidation have "beneficial ownership" (as
defined in Rule 13d-3 under the Exchange Act), immediately following
the effective date of such merger or consolidation, of securities of
the surviving corporation representing 50% or less of the combined
voting power of the surviving corporation's then outstanding securities
ordinarily having the right to vote at elections of directors;
(d) the Incumbent Directors cease for any reason to constitute
at least a majority of the Board; or
(e) 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.
13.2 Incumbent Directors. For purposes of this Section 13, "Incumbent
Directors" of the Company means any individuals who are members of the Board on
the effective date of the Plan and any individual who subsequently becomes a
member of the Board whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the Incumbent
Directors (either by specific vote or by approval of the Company's proxy
statement in which such individual is named as a nominee for director without
objection to such nomination).
13.3 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, unless the Committee otherwise determines and sets forth in the
agreement evidencing an Incentive Award at the time of grant of such Incentive
Award, (a) all outstanding 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 Participant to whom such Options or Stock
Appreciation Rights have been granted remains in the employ or service of the
Company or any Subsidiary; (b) all outstanding Restricted Stock Awards will
become immediately fully vested and non-forfeitable; and (c) all outstanding
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.
13.4 Cash Payment for Options. If a Change in Control of the Company
occurs, then the Committee, if approved by the Committee either in an agreement
evidencing an Incentive Award at the time of grant or at any time after the
grant of an Incentive Award, may determine that some or all Participants holding
outstanding Options will receive, with respect to some or all of the shares of
Common Stock subject to such Options, as of the effective date of any such
Change in Control of the Company, cash 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.
13.5 Limitation on Change in Control Payments. Notwithstanding anything
in Section 13.3 or 13.4 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 13.3 or the payment of cash in exchange for all or part of an
Incentive Award as provided in Section 13.4 (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 13.3 or 13.4 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
that 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, or provides that the Participant
will have the discretion to determine which payments will be reduced in order to
avoid an excess parachute payment, then the limitations of this Section 13.5
will, to that extent, not apply.
14. Rights of Eligible Recipients and Participants; Transferability.
14.1 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.
14.2 Rights as a Shareholder. As a holder of Incentive Awards (other
than Restricted Stock Awards and Stock Bonuses), a Participant will have no
rights as a shareholder 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.
14.3 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 11
of the Plan) may be made by, the Participant's legal representatives, heirs and
legatees.
14.4 Non-Exclusivity of the Plan. Nothing contained in the Plan is
intended to modify or rescind any previously approved compensation plans or
programs of the Company or create any limitations on the power or authority of
the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.
15. 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 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.
16. 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 shareholders of the Company if shareholder
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 NASD or any stock
exchange. No termination, suspension or amendment of the Plan may adversely
affect any outstanding Incentive Award without the consent of the affected
Participant; provided, however, that this sentence will not impair the right of
the Committee to take whatever action it deems appropriate under Sections
3.2(c), 4.3 and 13 of the Plan.
17. Effective Date and Duration of the Plan
The Plan is effective as of March 15, 1995, the date it was adopted by
the Board. The Plan will terminate at midnight on March 15, 2005, and may be
terminated prior to such time by Board action, and no Incentive Award will be
granted after such termination. Incentive Awards outstanding upon termination of
the Plan may continue to be exercised, or become free of restrictions, in
accordance with their terms.
18. Miscellaneous
18.1 Governing Law. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in accordance
with the laws of the State of Minnesota, notwithstanding the conflicts of laws
principles of any jurisdictions.
18.2 Successors and Assigns. The Plan will be binding upon and inure to
the benefit of the successors and permitted assigns of the Company and the
Participants.
