Attached files
file | filename |
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EX-15 - EX-15 - PENTAIR plc | c54142exv15.htm |
EX-10.2 - EX-10.1 - PENTAIR plc | c54142exv10w2.htm |
EX-32.2 - EX-32.2 - PENTAIR plc | c54142exv32w2.htm |
EX-32.1 - EX-32.1 - PENTAIR plc | c54142exv32w1.htm |
EX-31.2 - EX-31.2 - PENTAIR plc | c54142exv31w2.htm |
EX-31.1 - EX-31.1 - PENTAIR plc | c54142exv31w1.htm |
10-Q - FORM 10-Q - PENTAIR plc | c54142e10vq.htm |
Exhibit 10.1
PENTAIR, INC.
2008 OMNIBUS STOCK INCENTIVE PLAN
2008 OMNIBUS STOCK INCENTIVE PLAN
As Amended and Restated Through July 29, 2009
1. Purpose and Effective Date.
(a) Purpose. The Pentair, Inc. 2008 Omnibus Stock Incentive Plan has several complementary
purposes: (i) to promote the growth and success of the Company by linking a significant portion of
participant compensation to the increase in value of the Companys common stock; (ii) to attract
and retain top quality, experienced executives and key employees by offering a competitive
incentive compensation program; (iii) to reward innovation and outstanding performance as important
contributing factors to the Company s growth and progress; (iv) to align the interests of
executives, key employees, directors and consultants with those of the Companys shareholders by
reinforcing the relationship between participant rewards and shareholder gains obtained through the
achievement by plan participants of short-term objectives and long-term goals; and (iv) to
encourage executives, key employees, directors and consultants to obtain and maintain an equity
interest in the Company.
(b) Effective Date. This Plan will become effective, and Awards may be granted under this
Plan: (1) with regard to Non-Employee Directors, on and after February 26, 2008, provided that any
Awards made prior to the date that the Plan is approved by the Companys shareholders shall be
contingent on such shareholder approval, and (2) with regard to all other eligible individuals, the
date that the Plan is approved by the Companys shareholders. If the Companys shareholders
approve this Plan, then the Pentair, Inc. Omnibus Stock Incentive Plan (the Prior Plan) will
terminate on the date of such shareholder approval, and no new awards will be granted under the
Prior Plan after its termination date; provided that the Prior Plan will continue to govern awards
outstanding as of the date of such plans termination and such awards shall continue in force and
effect until fully distributed or terminated pursuant to their terms.
2. Definitions. Capitalized terms used in this Plan have the following meanings:
(a) 10% Stockholder means an Eligible Employee who, as of the date an ISO is granted to such
individual, owns more than ten percent (10%) of the total combined voting power of all classes of
Stock then issued by the Company or a Subsidiary corporation.
(b) Administrator means (i) the Committee with respect to Participants who are Eligible
Employees and Consultants and (ii) the Non-Employee Directors of the Board (or a committee of
Non-Employee Directors appointed by the Board) with respect to Participants who are Directors.
(c) Affiliate and Associate shall have the respective meanings ascribed to such terms in
Rule 12b-2 under the Exchange Act. Notwithstanding the foregoing, for purposes of determining
those individuals to whom an Option or Stock Appreciation Right may be granted, the term
Affiliate means any entity that, directly or through one or more intermediaries, is controlled
by, controls, or is under common control with the Company within the meaning of Code Sections
414(b) or (c); provided that, in applying such provisions, the phrase at least 20 percent shall
be used in place of at least 80 percent each place it appears therein.
(d) Award means a grant of Options, Stock Appreciation Rights, Performance Shares,
Performance Units, Restricted Stock, Restricted Stock Units, Deferred Stock Rights, Dividend
Equivalent Units, or any other type of award permitted under the Plan.
(e) Board means the Board of Directors of the Company.
(f) Cause means, except as otherwise determined by the Administrator and set forth in an
Award agreement, such act or omission by a Participant as is determined by the Administrator to
constitute cause for termination, including but not limited to any of the following: (i) a
material violation of any Company policy, including any policy contained in the Company Code of
Business Conduct; (ii) embezzlement from, or theft of property belonging to the Company or any
Affiliate; (iii) willful failure to perform or gross negligence in the performance of or failure to
perform assigned duties; or (iv) other intentional misconduct, whether related to employment or
otherwise, which has, or has the potential to have, a material adverse effect on the business
conducted by the Company or its Affiliates.
(g) Change of Control means a change of control of the Company, as that term is defined in
the KEESA. Notwithstanding the foregoing, with respect to an Award that is considered deferred
compensation subject to Code Section 409A, the definition of Change of Control shall be amended
and interpreted in a manner that allows the definition to satisfy the requirements of a change of
control under Code Section 409A solely for purposes of determining the timing of payment of such
Award.
(h) Code means the Internal Revenue Code of 1986, as amended. Any reference to a specific
provision of the Code includes any successor provision and the regulations promulgated under such
provision.
(i) Committee means the Compensation Committee of the Board (or a successor committee with
the same or similar authority).
(j) Company means Pentair, Inc., a Minnesota corporation, or any successor thereto.
(k) Consultant means a person or entity rendering services to the Company or an Affiliate
other than as an employee of any such entity or a Director.
(l) Deferred Stock Right means the right to receive Stock or Restricted Stock at some future
time.
(m) Director means a member of the Board, and Non-Employee Director means a Director who
is not also an employee of the Company or its Subsidiaries.
(n) Disability means, except as otherwise determined by the Administrator and set forth in
an Award agreement: (i) with respect to an ISO, the meaning given in Code Section 22(e)(3), and
(ii) with respect to all other Awards, a physical or mental incapacity which qualifies an
individual to collect a benefit under a long term disability plan maintained by the Company, or
such similar mental or physical condition which the Administrator may determine to be a disability,
regardless of whether either the individual or the condition is covered by any such long term
disability plan. The Administrator shall make the determination of Disability and may request such
evidence of disability as it reasonably determines.
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(o) Dividend Equivalent Unit means the right to receive a payment, in cash or Shares, equal
to the cash dividends or other distributions paid with respect to a Share.
(p) Eligible Employee means a key managerial, administrative or professional employee of the
Company or an Affiliate whose position is evaluated at salary grade 40 or higher or who is in a
position to make a material contribution to the continued profitable growth and long term success
of the Company or an Affiliate.
(q) Exchange Act means the Securities Exchange Act of 1934, as amended. Any reference to a
specific provision of the Exchange Act includes any successor provision and the regulations and
rules promulgated under such provision.
(r) Fair Market Value means, per Share on a particular date: (i) the closing price on such
date on the New York Stock Exchange, as reported in The Wall Street Journal, or if no sales of
Stock occur on the date in question, on the last preceding date on which there was a sale on such
market; (ii) if the Shares are not listed on the New York Stock Exchange, but are traded on another
national securities exchange or in an over-the-counter market, the last sales price (or, if there
is no last sales price reported, the average of the closing bid and asked prices) for the Shares on
the particular date, or on the last preceding date on which there was a sale of Shares on that
exchange or market; or (iii) if the Shares are neither listed on a national securities exchange nor
traded in an over-the-counter market, the price determined by the Administrator.
(s) Incentive Stock Option or ISO mean an Option that meets the requirements of Code
Section 422.
(t) KEESA means the Key Executive Employment and Severance Agreement between the Company and
key executives, as approved by the Board and in effect from time to time.
(u) Option means the right to purchase Shares at a stated price for a specified period of
time.
(v) Participant means an individual selected by the Administrator to receive an Award.
(w) Performance Awards means a Performance Share and Performance Unit, and any Award of
Restricted Stock, Restricted Stock Units, or Deferred Stock Rights the payment or vesting of which
is contingent on the attainment of one or more Performance Goals.
(x) Performance Goals means any goals the Administrator establishes that relate to one or
more of the following with respect to the Company or any one or more of its Subsidiaries,
Affiliates or other business units: net income; income from continuing operations; stockholder
return; stock price appreciation; earnings per share (including diluted earnings per share); net
operating profit (including after tax); revenue growth; organic sales growth; return on equity;
return on investment; return on invested capital (including after-tax); earnings before interest,
taxes, depreciation and amortization; operating income; operating margin; market share; return on
sales; asset reduction; cost reduction; return on equity; cash flow (including free cash flow); and
new product releases. As to each Performance Goal, the relevant measurement of performance shall
be computed in accordance with generally accepted accounting principles, if applicable; provided
that, the Administrator may, at the time of
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establishing the Performance Goal(s), exclude the effects of (i) extraordinary, unusual and/or
non-recurring items of gain or loss, (ii) gains or losses on the disposition of a business, (iii)
changes in tax regulations or laws, or (iv) the effect of a merger or acquisition. Notwithstanding
the foregoing, the calculation of any Performance Goal established for purposes of an Award shall
be made without regard to changes in accounting methods used by the Company or in accounting
standards that may be required by the Financial Accounting Standards Board after a Performance Goal
relative to an Award is established and prior to the time the compensation earned by reason of the
achievement of the relevant Performance Goal is paid to the Participant. In the case of Awards
that the Administrator determines will not be considered performance-based compensation under
Code Section 162(m), the Administrator may establish other Performance Goals not listed in this
Plan. Where applicable, the Performance Goals may be expressed, without limitation, in terms of
attaining a specified level of the particular criterion or the attainment of an increase or
decrease (expressed as absolute numbers or a percentage) in the particular criterion or achievement
in relation to a peer group or other index. The Performance Goals may include a threshold level of
performance below which no payment will be made (or no vesting will occur), levels of performance
at which specified payments will be paid (or specified vesting will occur), and a maximum level of
performance above which no additional payment will be made (or at which full vesting will occur).
(y) Performance Shares means the right to receive Shares (including Restricted Stock) to the
extent Performance Goals are achieved.
(z) Performance Unit means the right to receive a payment valued in relation to a unit that
has a designated dollar value or the value of which is equal to the Fair Market Value of one or
more Shares, to the extent Performance Goals are achieved.
(aa) Person has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and
used in Sections 13(d) and 14(d) thereof.
(bb) Plan means this Pentair, Inc. 2008 Omnibus Stock Incentive Plan, as may be amended from
time to time.
(cc) Restriction Period means the length of time established relative to an Award during
which the Participant cannot sell, assign, transfer, pledge or otherwise encumber the Stock or
Stock Units subject to such Award and at the end of which the Participant obtains an unrestricted
right to such Stock or Stock Units.
(dd) Restricted Stock means a Share that is subject to a risk of forfeiture or restrictions
on transfer, or both a risk of forfeiture and restrictions on transfer.
(ee) Restricted Stock Unit means the right to receive a payment equal to the Fair Market
Value of one Share.
(ff) Retirement means, except as otherwise determined by the Administrator and set forth in
an Award agreement, (i) with respect to Participants who are Eligible Employees or Consultants,
termination of employment or service from the Company and its Affiliates (for other than Cause) on
or after attainment of age fifty-five (55) and completion of ten (10) years of service with the
Company and its Affiliates, and (ii) with respect to Director Participants, the Directors removal
(for other than Cause), or resignation or failure to be re-elected (for other than Cause) on or
after retirement as defined in the Companys retirement policy for Non-Employee Directors.
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(gg) Section 16 Participants means Participants who are subject to the provisions of Section
16 of the Exchange Act.
(hh) Share means a share of Stock.
(ii) Stock means the Common Stock of the Company, par value of $0.16- 2/3 per share.
(jj) Stock Appreciation Right or SAR means the right to receive a payment equal to the
appreciation of the Fair Market Value of a Share during a specified period of time.
(kk) Subsidiary means any corporation or limited liability company (except that is treated
as a partnership for U.S. income tax purposes) in an unbroken chain of entities beginning with the
Company if each of the entities (other than the last entity in the chain) owns stock or equity
interests possessing more than fifty percent (50%) of the total combined voting power of all
classes of stock or equity interests in one of the other entities in the chain.
3. Administration.
(a) Administration. In addition to the authority specifically granted to the Administrator in
this Plan, the Administrator has full discretionary authority to administer this Plan, including
but not limited to the authority to: (i) interpret the provisions of this Plan; (ii) prescribe,
amend and rescind rules and regulations relating to this Plan; (iii) correct any defect, supply any
omission, or reconcile any inconsistency in any Award or agreement covering an Award in the manner
and to the extent it deems desirable to carry this Plan into effect; and (iv) make all other
determinations necessary or advisable for the administration of this Plan. All Administrator
determinations shall be made in the sole discretion of the Administrator and are final and binding
on all interested parties.
Notwithstanding any provision of the Plan to the contrary, the Administrator shall have the
discretion to grant an Award with any vesting condition, any Restriction Period or any performance
period if the Award is granted to a newly hired or promoted Participant, or accelerate the vesting,
Restriction Period or performance period of an Award, in connection with a Participants death,
disability, Retirement or termination by the Company without Cause. Any action by the Committee
to accelerate or otherwise amend an Award for reasons other than Retirement, death, Disability or a
termination by the Company without Cause, or in connection with a Change of Control, shall include
application of a commercially reasonable discount to the compensation otherwise payable to reflect
the value of the accelerated payment
Notwithstanding the above statement or any other provision of the Plan, once established, the
Committee shall have no discretion to increase the amount of compensation payable under an Award
that is intended to be performance-based compensation under Code Section 162(m), although the
Committee may decrease the amount of compensation a Participant may earn under such an Award.
(b) Delegation to Other Committees or Officers. To the extent applicable law permits, the
Board may delegate to another committee of the Board or to one or more officers of the Company, or
the Committee may delegate to one or more officers of the Company, any or all of their respective
authority and responsibility as an Administrator of the Plan; provided that no such delegation is
permitted with respect to Stock-based Awards made to Section 16 Participants at the time any such
delegated authority or responsibility is exercised unless the
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delegation is to another committee of the Board consisting entirely of Non-Employee Directors.
If the Board or the Committee has made such a delegation, then all references to the Administrator
in this Plan include such other committee or one or more officers to the extent of such delegation.
(c) Indemnification. The Company will indemnify and hold harmless each member of the Board and
the Committee, and each officer or member of any other committee to whom a delegation under Section
3(b) has been made, as to any acts or omissions with respect to this Plan or any Award to the
maximum extent that the law and the Companys by-laws permit.
4. Eligibility. The Administrator may designate any of the following as a Participant from
time to time, to the extent of the Administrators authority: any Eligible Employee, any Consultant
or any Director, including a Non-Employee Director. The Administrators granting of an Award to a
Participant will not require the Administrator to grant an Award to such individual at any future
time. The Administrators granting of a particular type of Award to a Participant will not require
the Administrator to grant any other type of Award to such individual.
5. Types of Awards. Subject to the terms of this Plan, the Administrator may grant any type
of Award to any Participant it selects, but only employees of the Company or a Subsidiary may
receive grants of incentive stock options. Awards may be granted alone or in addition to, in
tandem with, or in substitution for any other Award (or any other award granted under another plan
of the Company or any Affiliate).
6. Shares Reserved under this Plan.
(a) Plan Reserve. Subject to adjustment as provided in Section 16, an aggregate of seven
million five hundred thousand (7,500,000) Shares are reserved for issuance under this Plan. The
Shares reserved for issuance may be either authorized and unissued Shares or shares reacquired at
any time and now or hereafter held as treasury stock.
(b) Incentive stock Option Award Limits. Subject to adjustment as provided in Section 16, the
Company may issue only an aggregate of five million (5,000,000) Shares upon the exercise of
incentive stock options.
(c) Replenishment of Shares Under this Plan. The aggregate number of Shares reserved under
Section 6(a) shall be depleted by the number of Shares with respect to which an Award is granted;
provided that the aggregate number of Shares reserved under Section 6(a) shall be depleted by three
(3) Shares for each Share subject to a full-value Award. For this purpose, a full-value award
includes Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units (valued in
relation to a Share), Deferred Stock Rights and any other similar Award under which the value of
the Award is measured as the full value of a Share, rather than the increase in the value of a
Share. If, however, an Award lapses, expires, terminates or is cancelled without the issuance of
Shares or the payment of other compensation under the Award, or if Shares are forfeited under an
Award, or if Shares are issued under any Award and the Company subsequently reacquires them
pursuant to rights reserved upon the issuance of the Shares, then such Shares shall be recredited
to the Plans reserve (in the same number as they depleted the reserve) and may again be used for
new Awards under this Plan. Notwithstanding the foregoing, in no event shall the following Shares
be recredited to the Plans reserve: Shares tendered in payment of the exercise price of an Option;
Shares withheld to satisfy federal, state or local tax withholding obligations; and Shares
purchased by the Company using proceeds from Option exercises.
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(d) Participant Limitations. Subject to adjustment as provided in Section 16, no Participant
may be granted Awards that could result in such Participant:
(i) receiving Options for, and/or Stock Appreciation Rights with respect to, more than
750,000 Shares during any fiscal year of the Company;
(ii) receiving Awards of Restricted Stock and/or Restricted Stock Units and/or Deferred
Stock Rights relating to more than 500,000 Shares during any fiscal year of the Company;
(iii) receiving Awards of Performance Shares, and/or Awards of Performance Units the
value of which is based on the Fair Market Value of Shares, for more than 500,000 Shares
during any fiscal year of the Company;
(iv) receiving Awards of Performance Units the value of which is not based on the Fair
Market Value of Shares, for more than $3,000,000 during any fiscal year of the Company; or
(v) receiving other Stock-based Awards pursuant to Section 11 relating to more than
100,000 Shares during any fiscal year of the Company.
In all cases, determinations under this Section 6(d) should be made in a manner that is consistent
with the exemption for performance-based compensation that Code Section 162(m) provides.
7. Options. Subject to the terms of this Plan, the Administrator will determine all terms and
conditions of each Option, including but not limited to:
(a) Whether the Option is an incentive stock option which meets the requirements of Code
Section 422, or a nonqualified stock option which does not meet the requirements of Code Section
422;
(b) The number of Shares subject to the Option;
(c) The date of grant, which may not be prior to the date of the Administrators approval of
the grant;
(d) The exercise price, which may not be less than the Fair Market Value of the Shares subject
to the Option as determined on the date of grant; provided that an incentive stock option granted
to a 10% Stockholder must have an exercise price at least equal to 110% of the Fair Market Value of
the Shares subject to the Option as determined on the date of grant;
(e) The terms and conditions of exercise; provided that, subject to the provisions of Sections
12 and 16, one-third (1/3) of each Option may not become exercisable earlier than on each of the
first three (3) anniversaries of the date of grant; and provided further that if the aggregate
Fair Market Value of the Shares subject to the Option (as determined on the date of grant of such
Option) that become exercisable during a calendar year exceed $100,000, then such Option shall be
treated as a nonqualified stock option to the extent such $100,000 limitation is exceeded.
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(f) The term; provided that each Option must terminate no later than ten (10) years after the
date of grant and each incentive stock option granted to a 10% Stockholder must terminate no later
than five (5) years after the date of grant.
In all other respects, the terms of any incentive stock option should comply with the
provisions of Code section 422 except to the extent the Administrator determines otherwise. If an
Option that is intended to be an incentive stock option fails to meet the requirements thereof, the
Option shall automatically be treated as a nonqualified stock option to the extent of such failure.
Subject to the terms and conditions of the Award, vested Options may be exercised, in whole or
in part, by giving notice of exercise to the Company in such manner as the Company may prescribe.
This notice must be accompanied by payment in full of the exercise price in cash or by use of such
other instrument as the Administrator may agree to accept.
Payment of the exercise price, applicable withholding taxes due upon exercise of the Option,
or both may be made in the form of Stock already owned by the Participant, which Stock shall be
valued at Fair Market Value on the date the Option is exercised. A Participant who elects to make
payment in Stock may not transfer fractional shares or shares of Stock with an aggregate Fair
Market Value in excess of the Option exercise price plus applicable withholding taxes. A
Participant need not present Stock certificates when making payment in Stock, so long as other
satisfactory proof of ownership of the Stock tendered is provided (e.g., attestation of ownership
of a sufficient number of shares of Stock to pay the exercise price). The Administrator shall have
the discretion to authorize or accept payment by other forms or methods or to establish a cashless
exercise program, all within such limitations as may be imposed by the Plan or any applicable law.
8. Stock Appreciation Rights. Subject to the terms of this Plan, the Administrator will
determine all terms and conditions of each SAR, including but not limited to:
(a) Whether the SAR is granted independently of an Option or relates to an Option;
(b) The number of Shares to which the SAR relates;
(c) The date of grant, which may not be prior to the date of the Administrators approval of
the grant;
(d) The grant price, provided that the grant price shall not be less than the Fair Market
Value of the Shares subject to the SAR as determined on the date of grant;
(e) The terms and conditions of exercise or maturity; provided that, subject to the provisions
of Sections 12 and 16, one-third (1/3) of each SAR may not become exercisable or mature earlier
than on each of the first three (3) anniversaries of the date of grant;
(f) The term, provided that each SAR must terminate no later than ten (10) years after the
date of grant; and
(g) Whether the SAR will be settled in cash, Shares or a combination thereof.
8
If an SAR is granted in relation to an Option, then unless otherwise determined by the
Administrator, the SAR shall be exercisable or shall mature at the same time or times, on the same
conditions and to the extent and in the proportion, that the related Option is exercisable and may
be exercised or mature for all or part of the Shares subject to the related Option. Upon exercise
of any number of SAR, the number of Shares subject to the related Option shall be reduced
accordingly and such Option may not be exercised with respect to that number of Shares. The
exercise of any number of Options that relate to an SAR shall likewise result in an equivalent
reduction in the number of Shares covered by the related SAR.
9. Performance and Stock Awards. Subject to the terms of this Plan, the Administrator will
determine all terms and conditions of each award of Restricted Stock, Restricted Stock Units,
Deferred Stock Rights, Performance Shares or Performance Units, including but not limited to:
(a) The number of Shares and/or units to which such Award relates;
(b) Whether, as a condition for the Participant to realize all or a portion of the benefit
provided under the Award, one or more Performance Goals must be achieved during such period as the
Administrator specifies;
(c) The period of restriction with respect to Restricted Stock or Restricted Stock Units and
the period of deferral for Deferred Stock Rights (which, subject to the provisions of Sections 12
and 16, in each case may not be less than three (3) years from the date of grant);
(d) The performance period for Performance Awards (which, subject to the provisions of
Sections 12 and 16, must be at least one year);
(e) With respect to Performance Units, whether to measure the value of each unit in relation
to a designated dollar value or the Fair Market Value of one or more Shares; and
(f) With respect to Restricted Stock Units and Performance Units, whether to settle such
Awards in cash, in Shares, or a combination thereof.
During the time Restricted Stock is subject to the Period of Restriction, the Participant
shall have all of the rights of a shareholder with respect to the Restricted Stock, including the
right to vote such Stock and, unless the Administrator shall otherwise provide, the right to
receive dividends paid with respect to such Stock.
Except as otherwise provided in the Plan, at such time as all restrictions applicable to an
Award of Restricted Stock, Deferred Stock Rights or Restricted Stock Units are met and the
Restriction Period expires, ownership of the Stock subject to such restrictions shall be
transferred to the Participant free of all restrictions except those that may be imposed by
applicable law; provided that if Restricted Stock Units are paid in cash, said payment shall be
made to the Participant after all applicable restrictions lapse and the Restriction Period expires.
10. Dividend Equivalent Units. Subject to the terms of this Plan, the Administrator will
determine all terms and conditions of each award of Dividend Equivalent Units, including but not
limited to whether: (a) such Award will be granted in tandem with another Award; (b) payment of the
Award be made currently or credited to an account for the Participant which provides for the
deferral of such amounts until a stated time; and (c) the Award will be settled in
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cash or Shares; provided that Dividend Equivalent Units may be granted only in connection with
a full value Award as defined in Section 6(c).
11. Other Stock-Based Awards. Subject to the terms of this Plan, the Administrator may grant
to Participants other types of Awards, which shall be denominated or payable in, valued in whole or
in part by reference to, or otherwise based on, Shares, either alone or in addition to or in
conjunction with other Awards, and payable in Stock or cash. Without limitation, such Award may
include the issuance of shares of unrestricted Stock, which may be awarded in payment of director
fees, in lieu of cash compensation, in exchange for cancellation of a compensation right, as a
bonus, or upon the attainment of Performance Goals or otherwise, or rights to acquire Stock from
the Company. The Administrator shall determine all terms and conditions of the Award, including
but not limited to, the time or times at which such Awards shall be made, and the number of Shares
to be granted pursuant to such Awards or to which such Award shall relate; provided that any Award
that provides for purchase rights shall be priced at 100% of Fair Market Value on the date of the
Award.
12. Effect of Termination on Awards. Except as otherwise provided by the Administrator in an
Award Agreement or, subject to Section 3(a), as determined by the Administrator at the time of
termination of a Participants service:
(a) Termination of Employment or Service. If a Participants service with the Company and its
Affiliates as an employee or Director ends for any reason other than (i) a termination for Cause,
(ii) Retirement, (iii) death or (iv) Disability, then:
(i) Any outstanding Options or SARs, to the extent otherwise exercisable on the date
such Participants service ends, shall be exercisable no later than ninety (90) days
following the Participants termination date or, if earlier, the expiration date of the
Option or SAR. At the conclusion of such ninety (90) day period, all such Options and SARs
then unexercised shall be forfeited.
(ii) All other Awards made to the Participant, to the extent not then earned or paid to
the Participant, shall terminate no later than the Participants last day of employment, or
service as a Director.
(b) Retirement of Corporate Officer or Director. Upon Retirement of a Participant who is then
a Board-appointed corporate officer or a Director:
(i) Any outstanding Options or SARs shall remain outstanding (and shall continue to
vest in accordance with the terms of the Award as if the Participant had continued in
employment or service) until the earlier of the expiration date of the Award and the fifth
anniversary of such Participants Retirement date; provided, however, that such extension
shall result in the conversion of an incentive stock option to a nonqualified stock option
to the extent required under the Code.
(ii) All Restricted Stock, Restricted Stock Units and Deferred Stock Rights (that are
not Performance Awards) outstanding on the Participants Retirement date shall be
immediately vested, and any other terms and conditions applicable to such Awards shall be
deemed to have lapsed or otherwise been satisfied. Payment for all such Awards shall be
made to the Participant in either unrestricted shares of Stock or cash, depending on the
payment terms applicable to such Award.
10
(iii) All Performance Awards outstanding on the Participants Retirement date shall be
paid in either unrestricted shares of Stock or cash, as the case may be, following the end
of the performance period and based on achievement of the Performance Goals established for
such Awards, as if the Participant had not retired.
(iv) Notwithstanding the provisions of Section 2(ff), effective for Awards granted on
or after July 29, 2008, the provisions of subsections 12(b)(i), (ii) and (iii) shall apply
only with respect to the termination of employment or service from the Company and its
Affiliates (for other than Cause) of a Board-appointed corporate officer, on or after
attainment of age sixty (60) and completion of ten (10) years of service with the Company
and its Affiliates.
(c) Retirement of Other Participants. Upon Retirement of a Participant not covered by Section
12(b):
(i) Any Options and SARs exercisable on such Participants Retirement date shall be
exercisable no later than ninety (90) days following such date or, if earlier, the
expiration date of the Option or SAR. At the end of such ninety (90) day period, all
Options and SARs then unexercised shall be forfeited.
(ii) All Restricted Stock, Restricted Stock Units and Deferred Stock Rights (that are
not Performance Awards) shall vest on a prorated basis, based on the portion of the
restriction or deferral period, as applicable, which the Participant has completed at the
time of Retirement and any other terms and conditions applicable to such Awards shall be
deemed to have lapsed or otherwise been satisfied.
(iii) All Performance Awards outstanding on the Participants Retirement date shall be
paid in either unrestricted shares of Stock or cash, as the case may be, following the end
of the performance period and based on achievement of the Performance Goals established for
such Awards, as if the Participant had not retired, but prorated based on the portion of the
performance period which the Participant has completed at the time of Retirement.
(d) Death of Participant. If a Participant dies during employment with the Company and its
Affiliates or while a Director:
(i) All outstanding Options and SARS shall be exercisable by the Participants estate
or the person who has acquired the right to exercise such Awards by bequest or inheritance.
The Participants estate, or any person who succeeds to the Participants benefits under the
Plan, shall have up to twelve (12) months following the date of the Participants death, or
if earlier the expiration date of the Option or SAR, to exercise any outstanding Options or
SARs to the same extent the Participant would have been entitled to exercise said Options or
SARs on the date of death. At the end of said twelve (12) month period, all Options and
SARs then unexercised shall be forfeited.
(ii) All restrictions on all outstanding Awards of Restricted Stock or Restricted Units
(that are not Performance Awards) shall be deemed to have lapsed on a prorated basis based
on the portion of the Restriction Period which the Participant has completed on the date of
death.
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(iii) All outstanding Deferred Stock Rights (that are not Performance Awards) shall be
vested on a prorated basis based on the portion of the deferral period which the Participant
has completed on the date of death.
(iv) All Performance Awards outstanding on the date of the Participants death shall be
paid in either unrestricted shares of Stock or cash, as the case may be, following the end
of the performance period and based on achievement of the Performance Goals established for
such Awards, as if the Participant had not died, but prorated based on the portion of the
performance period which the Participant has completed at the time of death.
(e) Disability of Participant. If a Participants employment with the Company and its
Affiliates or service as a Director ends due to a Disability, then:
(i) The Participant shall have up to twelve (12) months, or if earlier the expiration
date of the Option or SAR, to exercise any outstanding Options or SARs to the same extent
the Participant would have been entitled to exercise said Options or SARs as of the date the
Disability determination is effective. At the end of said twelve (12) month period all
Options or SARs then unexercised shall be forfeited.
(ii) All restrictions applicable to an outstanding Award of Restricted Stock or
Restricted Units (that are not Performance Awards) shall be deemed to have lapsed on a
prorated basis, based on the portion of the Restriction Period the Participant completed as
of the date of Disability.
(iii) All outstanding Deferred Stock Rights (that are not Performance Awards) shall be
vested on a prorated basis based on the portion of the deferral period which the Participant
completed on the date of Disability.
(iv) All Performance Awards outstanding on the date of the Participants Disability
shall be paid in either unrestricted shares of Stock or cash, as the case may be, based on
the degree to which the Participant had attained the applicable Performance Goals as of the
date of such Participants Disability.
(f) Termination for Cause. If a Participants employment with the Company and its Affiliates
or service as a Director is terminated for Cause, all Awards and grants of every type, whether or
not then vested, shall terminate no later than the Participants last day of employment. The
Committee shall have discretion to determine whether this Section 12(f) shall apply, whether the
event or conduct at issue constitutes Cause for termination and the date on which Awards to a
Participant shall terminate.
(g) Consultants and Other Stock-Based Awards. The Committee shall have the discretion to
determine, at the time an Award is made, the effect of the termination of service of a Consultant
on Awards held by such individual, and the effect on Other Stock-Based Awards of the Participants
termination of employment or service with the Company and its Affiliates.
13. Transferability.
(a) Restrictions on Transfer. Awards are not transferable other than by will or the laws of
descent and distribution, unless and to the extent the Administrator allows a Participant
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to designate in writing a beneficiary to exercise the Award or receive payment under an Award
after the Participants death or transfer an Award as provided in subsection (b).
(b) Permitted Transfers. If allowed by the Administrator, a Participant may transfer the
ownership of some or all of the vested or earned Awards granted to such Participant, other than
incentive stock options to (i) the spouse, children or grandchildren of such Participant (the
Family Members), (ii) a trust or trust established for the exclusive benefit of such Family
Members, or (iii) a partnership in which such Family Members are the only partners. Any such
transfer shall be without consideration and shall be irrevocable. No Award so transferred may be
subsequently transferred, except by will or applicable laws of descent and distribution. The
Administrator may create additional conditions and requirements applicable to the transfer of
Awards. Following the allowable transfer of a vested Option, such Option shall continue to be
subject to the same terms and conditions as were applicable to the Option immediately prior to the
transfer. For purposes of settlement of the Award, delivery of Stock upon exercise of an Option
and the Plans Change of Control provisions, however, any reference to a Participant shall be
deemed to refer to the transferee.
14. Termination and Amendment of Plan; Amendment, Modification or Cancellation of Awards.
(a) Term of Plan. Unless the Board earlier terminates this Plan pursuant to Section 14(b),
this Plan will terminate on the earlier of the date all Shares reserved for issuance have been
issued or February 26, 2018.
(b) Termination and Amendment. The Board or the Committee may amend, alter, suspend,
discontinue or terminate this Plan at any time, subject to the following limitations:
(i) the Board must approve any amendment of this Plan to the extent the Company
determines such approval is required by: (A) action of the Board, (B) applicable corporate
law, or (C) any other applicable law;
(ii) shareholders must approve any amendment of this Plan to the extent the Company
determines such approval is required by: (A) Section 16 of the Exchange Act, (B) the Code,
(C) the listing requirements of any principal securities exchange or market on which the
Shares are then traded, or (D) any other applicable law; and
(iii) shareholders must approve any of the following Plan amendments: (A) an amendment
to materially increase any number of Shares specified in Section 6(a), 6(b) or the limits
set forth in Section 6(d) (except as permitted by Section 16), (B) an amendment to expand
the group of individuals that may become Participants, or (C) an amendment that would
diminish the protections afforded by Section 14(e) or that would materially change the
minimum vesting and performance requirements of an Award as required in the Plan.
(c) Amendment, Modification or Cancellation of Awards. Except as provided in Section 14(e)
and subject to the requirements of this Plan, the Administrator may modify, amend or cancel any
Award; or waive any restrictions or conditions applicable to any Award or the exercise of the
Award, provided that any modification or amendment that materially diminishes the rights of the
Participant, or the cancellation of the Award, shall be effective only if agreed to by the
Participant or any other person(s) as may then have an interest in the Award, but the Administrator
need not obtain Participant (or other interested party) consent for the
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adjustment or cancellation of an Award pursuant to the provisions of Section 16 or the
modification of an Award to the extent deemed necessary to comply with any applicable law, the
listing requirements of any principal securities exchange or market on which the Shares are then
traded, or to preserve favorable accounting or tax treatment of any Award for the Company.
Notwithstanding the foregoing, unless determined otherwise by the Administrator, any such amendment
shall be made in a manner that will enable an Award intended to be exempt from Code Section 409A to
continue to be so exempt, or to enable an Award intended to comply with Code Section 409A to
continue to so comply.
(d) Survival of Authority and Awards. Notwithstanding the foregoing, the authority of the
Board and the Administrator under this Section 14 and to otherwise administer the Plan will extend
beyond the date of this Plans termination. In addition, termination of this Plan will not affect
the rights of Participants with respect to Awards previously granted to them, and all unexpired
Awards will continue in force and effect after termination of this Plan except as they may lapse or
be terminated by their own terms and conditions.
(e) Repricing and Backdating Prohibited. Notwithstanding anything in this Plan to the
contrary, and except for the adjustments provided in Section 16, neither the Administrator nor any
other person may decrease the exercise price for any outstanding Option or SAR after the date of
grant nor allow a Participant to surrender an outstanding Option or SAR to the Company as
consideration for the grant of a new Option or SAR with a lower exercise price. In addition, the
Administrator may not make a grant of an Option or SAR with a grant date that is effective prior to
the date the Administrator takes action to approve such Award.
(f) Foreign Participation. To assure the viability of Awards granted to Participants employed
or residing in foreign countries, the Administrator may provide for such special terms as it may
consider necessary or appropriate to accommodate differences in local law, tax policy or custom.
Moreover, the Administrator may approve such supplements to, or amendments, restatements or
alternative versions of, this Plan as it determines is necessary or appropriate for such purposes.
Any such amendment, restatement or alternative versions that the Administrator approves for
purposes of using this Plan in a foreign country will not affect the terms of this Plan for any
other country. In addition, all such supplements, amendments, restatements or alternative versions
must comply with the provisions of Section 14(b)(ii).
In addition, if an Award is held by a Participant who is employed or residing in a foreign country
and the amount payable or Shares issuable under such Award would be taxable to the Participant
under Code Section 457A in the year such Award is no longer subject to a substantial risk of
forfeiture, then the amount payable or Shares issuable under such Award shall be paid or issued to
the Participant as soon as practicable after such substantial risk of forfeiture lapses (or, for
Awards that are not considered nonqualified deferred compensation subject to Code Section 409A, no
later than the end of the short-term deferral period permitted by Code Section 457A)
notwithstanding anything in this Plan or the Award Agreement to contrary.
(g) Code Section 409A. The provisions of Code Section 409A are incorporated herein by
reference to the extent necessary for any Award that is subject to Code Section 409A to comply
therewith.
15. Taxes.
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(a) Withholding. In the event the Company or an Affiliate of the Company is required to
withhold any Federal, state or local taxes or other amounts in respect of any income recognized by
a Participant as a result of the grant, vesting, payment or settlement of an Award or disposition
of any Shares acquired under an Award, the Company may deduct (or require an Affiliate to deduct)
from any payments of any kind otherwise due the Participant cash, or with the consent of the
Committee, Shares otherwise deliverable or vesting under an Award, to satisfy such tax obligations.
Alternatively, the Company may require such Participant to pay to the Company, in cash, promptly
on demand, or make other arrangements satisfactory to the Company regarding the payment to the
Company of the aggregate amount of any such taxes and other amounts. If Shares are deliverable
upon exercise or payment of an Award, the Committee may permit a Participant to satisfy all or a
portion of the Federal, state and local withholding tax obligations arising in connection with such
Award by electing to (a) have the Company withhold Shares otherwise issuable under the Award, (b)
tender back Shares received in connection with such Award or (c) deliver other previously owned
Shares; provided that the amount to be withheld may not exceed the total minimum federal, state and
local tax withholding obligations associated with the transaction to the extent needed for the
Company to avoid an accounting charge. If an election is provided, the election must be made on or
before the date as of which the amount of tax to be withheld is determined and otherwise as the
Committee requires. In any case, the Company may defer making payment or delivery under any Award
if any such tax may be pending unless and until indemnified to its satisfaction.
(b) No Guarantee of Tax Treatment. Notwithstanding any provisions of the Plan, the Company
does not guarantee to any Participant or any other Person with an interest in an Award that (i) any
Award intended to be exempt from Code Section 409A shall be so exempt, (ii) any Award intended to
comply with Code Section 409A or Code Section 422 shall so comply, (iii) any Award shall otherwise
receive a specific tax treatment under any other applicable tax law, nor in any such case will the
Company or any Affiliate indemnify, defend or hold harmless any individual with respect to the tax
consequences of any Award.
(c) Participant Responsibilities. If a Participant shall dispose of Stock acquired through
exercise of an ISO within either (i) two (2) years after the date the Option is granted or (ii) one
(1) year after the date the Option is exercised (i.e., in a disqualifying disposition), such
Participant shall notify the Company within seven (7) days of the date of such disqualifying
disposition. In addition, if a Participant elects, under Code Section 83, to be taxed at the time
an Award of Restricted Stock (or other property subject to such Code section) is made, rather than
at the time the Award vests, such Participant shall notify the Company within seven (7) days of the
date the Restricted Stock subject to the election is awarded.
16. Adjustment Provisions; Change of Control.
(a) Adjustment of Shares. If: (i) the Company shall at any time be involved in a merger or
other transaction in which the Shares are changed or exchanged; (ii) the Company shall subdivide or
combine the Shares or the Company shall declare a dividend payable in Shares, other securities or
other property; (iii) the Company shall effect a cash dividend the amount of which, on a per Share
basis, exceeds ten percent (10%) of the Fair Market Value of a Share at the time the dividend is
declared, or the Company shall effect any other dividend or other distribution on the Shares in the
form of cash, or a repurchase of Shares, that the Board determines by resolution is special or
extraordinary in nature or that is in connection with a transaction that the Company characterizes
publicly as a recapitalization or reorganization involving the Shares; or (iv) any other event
shall occur, which, in the case of this clause (iv), in the judgment of the Board or Committee
necessitates an adjustment to prevent dilution or
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enlargement of the benefits or potential benefits intended to be made available under this
Plan, then the Administrator shall, in such manner as it may deem equitable to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under this Plan,
adjust as applicable: (A) the number and type of Shares subject to this Plan (including the number
and type of Shares described in Sections 6(a), (b) and (d)) and which may after the event be made
the subject of Awards; (B) the number and type of Shares subject to outstanding Awards; (C) the
grant, purchase, or exercise price with respect to any Award; and (D) to the extent such discretion
does not cause an Award that is intended to qualify as performance-based compensation under Code
Section 162(m) to lose its status as such, the Performance Goals of an Award. In each case, with
respect to Awards of incentive stock options, no such adjustment may be authorized to the extent
that such authority would cause this Plan to violate Code Section 422(b).
Without limitation, in the event of any reorganization, merger, consolidation, combination or
other similar corporate transaction or event, whether or not constituting a Change of Control
(other than any such transaction in which the Company is the continuing corporation and in which
the outstanding Stock is not being converted into or exchanged for different securities, cash or
other property, or any combination thereof), the Administrator may substitute, on an equitable
basis as the Administrator determines, for each Share then subject to an Award and the Shares
subject to this Plan (if the Plan will continue in effect), the number and kind of shares of
stock, other securities, cash or other property to which holders of Stock are or will be entitled
in respect of each Share pursuant to the transaction.
Notwithstanding the foregoing, in the case of a stock dividend (other than a stock dividend
declared in lieu of an ordinary cash dividend) or subdivision or combination of the Shares
(including a reverse stock split), if no action is taken by the Administrator, adjustments
contemplated by this subsection that are proportionate shall nevertheless automatically be made as
of the date of such stock dividend or subdivision or combination of the Shares.
(b) Issuance or Assumption. Notwithstanding any other provision of this Plan, and without
affecting the number of Shares otherwise reserved or available under this Plan, in connection with
any merger, consolidation, acquisition of property or stock, or reorganization, the Administrator
may authorize the issuance or assumption of awards under this Plan upon such terms and conditions
as it may deem appropriate.
(c) Change of Control. If the Participant has in effect an employment, retention, change of
control, severance or similar agreement with the Company or any Affiliate that discusses the effect
of a Change of Control on the Participants Awards, then such agreement shall control. In all
other cases, unless provided otherwise in an Award agreement, in the event of a Change of Control:
(i) Each Option or SAR that is then held by a Participant who is employed by or in the
service of the Company or an Affiliate shall become immediately and fully vested, and,
unless otherwise determined by the Board or Committee, all Options and SARs shall be
cancelled on the date of the Change of Control in exchange for a cash payment equal to the
excess of the Change of Control price of the Shares covered by the Option or SAR that is so
cancelled over the purchase or grant price of such Shares under the Award;
(ii) Restricted Stock, Restricted Stock Units and Deferred Stock Rights (that are not
Performance Awards) that are not then vested shall vest;
16
(iii) All Performance Awards that are earned but not yet paid shall be paid, and all
Performance Awards for which the performance period has not expired shall be cancelled in
exchange for a cash payment equal to the amount that would have been due under such
Award(s) if the Performance Goals (as measured at the time of the Change of Control) were to
continue to be achieved at the same rate through the end of the performance period, or if
higher, assuming the target Performance Goals had been met at the time of such Change of
Control; and
(iv) All Dividend Equivalent Units that are not vested shall vest and be paid in cash,
and all other Awards that are not vested shall vest and if an amount is payable under such
vested Award, such amount shall be paid in cash based on the value of the Award.
If the value of an Award is based on the Fair Market Value of a Share, Fair Market Value shall
be deemed to mean the per share Change of Control price. The Administrator shall determine the per
share Change of Control price paid or deemed paid in the Change of Control transaction.
Except as otherwise expressly provided in any agreement between a Participant and the Company
or an Affiliate, if the receipt of any payment by a Participant under the circumstances described
above would result in the payment by the Participant of any excise tax provided for in Section 280G
and Section 4999 of the Code, then the amount of such payment shall be reduced to the extent
required to prevent the imposition of such excise tax.
17. Miscellaneous.
(a) Other Terms and Conditions. The grant of any Award may also be subject to other
provisions (whether or not applicable to the Award granted to any other Participant) as the
Administrator determines appropriate, including, without limitation, provisions for:
(i) the payment of the purchase price of Options by delivery of cash or other Shares or
other securities of the Company (including by attestation) having a then Fair Market Value
equal to the purchase price of such Shares, or by delivery (including by fax) to the Company
or its designated agent of an executed irrevocable option exercise form together with
irrevocable instructions to a broker-dealer to sell or margin a sufficient portion of the
Shares and deliver the sale or margin loan proceeds directly to the Company to pay for the
exercise price;
(ii) restrictions on resale or other disposition of Shares; and
(iii) compliance with federal or state securities laws and stock exchange requirements.
(b) Employment and Service. The issuance of an Award shall not confer upon a Participant any
right with respect to continued employment or service with the Company or any Affiliate, or the
right to continue as a Director. Unless determined otherwise by the Administrator, for purposes of
the Plan and all Awards, the following rules shall apply:
(i) a Participant who transfers employment between the Company and its Affiliates, or
between Affiliates, will not be considered to have terminated employment;
17
(ii) a Participant who ceases to be a Non-Employee Director because he or she becomes
an employee of the Company or an Affiliate shall not be considered to have ceased service as
a Non-Employee Director with respect to any Award until such Participants termination of
employment with the Company and its Affiliates;
(iii) a Participant who ceases to be employed by the Company or an Affiliate and
immediately thereafter becomes a Non-Employee Director, a non-employee director of an
Affiliate, or a consultant to the Company or any Affiliate shall not be considered to have
terminated employment until such Participants service as a director of, or consultant to,
the Company and its Affiliates has ceased; and
(iv) a Participant employed by an Affiliate will be considered to have terminated
employment when such entity ceases to be an Affiliate.
Notwithstanding the foregoing, for purposes of an Award that is subject to Code Section 409A,
if a Participants termination of employment or service triggers the payment of compensation under
such Award, then the Participant will be deemed to have terminated employment or service upon his
or her separation from service within the meaning of Code Section 409A.
(c) No Fractional Shares. No fractional Shares or other securities may be issued or delivered
pursuant to this Plan, and the Administrator may determine whether cash, other securities or other
property will be paid or transferred in lieu of any fractional Shares or other securities, or
whether such fractional Shares or other securities or any rights to fractional Shares or other
securities will be canceled, terminated or otherwise eliminated.
(d) Unfunded Plan. This Plan is unfunded and does not create, and should not be construed to
create, a trust or separate fund with respect to this Plans benefits. This Plan does not establish
any fiduciary relationship between the Company and any Participant or other person. To the extent
any person holds any rights by virtue of an Award granted under this Plan, such rights are no
greater than the rights of the Companys general unsecured creditors.
(e) Requirements of Law and Securities Exchange. The granting of Awards and the issuance of
Shares in connection with an Award are subject to all applicable laws, rules and regulations and to
such approvals by any governmental agencies or national securities exchanges as may be required.
Notwithstanding any other provision of this Plan or any award agreement, the Company has no
liability to deliver any Shares under this Plan or make any payment unless such delivery or payment
would comply with all applicable laws and the applicable requirements of any securities exchange or
similar entity, and unless and until the Participant has taken all actions required by the Company
in connection therewith. The Company may impose such restrictions on any Shares issued under the
Plan as the Company determines necessary or desirable to comply with all applicable laws, rules and
regulations or the requirements of any national securities exchanges.
(f) Governing Law. This Plan, and all agreements under this Plan, will be construed in
accordance with and governed by the laws of the State of Minnesota, without reference to any
conflict of law principles. Any legal action or proceeding with respect to this Plan, any Award or
any award agreement, or for recognition and enforcement of any judgment in respect of this Plan,
any Award or any award agreement, may only be heard in a bench trial, and any party to such
action or proceeding shall agree to waive its right to a jury trial.
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(g) Limitations on Actions. Any legal action or proceeding with respect to this Plan, any
Award or any award agreement, must be brought within one year (365 days) after the day the
complaining party first knew or should have known of the events giving rise to the complaint.
(h) Construction. Whenever any words are used herein in the masculine, they shall be
construed as though they were used in the feminine in all cases where they would so apply; and
wherever any words are used in the singular or plural, they shall be construed as though they were
used in the plural or singular, as the case may be, in all cases where they would so apply. Title
of sections are for general information only, and this Plan is not to be construed with reference
to such titles.
(i) Severability. If any provision of this Plan or any award agreement or any Award (i) is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any
person or Award, or (ii) would disqualify this Plan, any award agreement or any Award under any law
the Administrator deems applicable, then such provision should be construed or deemed amended to
conform to applicable laws, or if it cannot be so construed or deemed amended without, in the
determination of the Administrator, materially altering the intent of this Plan, award agreement or
Award, then such provision should be stricken as to such jurisdiction, person or Award, and the
remainder of this Plan, such award agreement and such Award will remain in full force and effect.
19