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8-K - FORM 8-K - ATS MEDICAL INC | c58290e8vk.htm |
EXHIBIT 10.1
ATS MEDICAL, INC.
2010 STOCK INCENTIVE PLAN
2010 STOCK INCENTIVE PLAN
Section 1. Purpose.
The purpose of the Plan is to promote the interests of the Company and its shareholders by
aiding the Company in attracting and retaining employees, officers, consultants, advisors and
non-employee Directors capable of assuring the future success of the Company, to offer such persons
incentives to put forth maximum efforts for the success of the Companys business and to compensate
such persons through various stock-based arrangements and provide them with opportunities for stock
ownership in the Company, thereby aligning the interests of such persons with the Companys
shareholders.
Section 2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth below:
(a) Affiliate shall mean (i) any entity that, directly or indirectly through one or more
intermediaries, is controlled by the Company and (ii) any entity in which the Company has a
significant equity interest, in each case as determined by the Committee.
(b) Award shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit, Dividend Equivalent, Performance Award, Stock Award or Other Stock-Based Award granted
under the Plan.
(c) Award Agreement shall mean any written agreement, contract or other instrument or
document evidencing an Award granted under the Plan. An Award Agreement may be in an electronic
medium and need not that be signed by a representative of the Company or the Participant. Each
Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other
terms and conditions (not inconsistent with the Plan) determined by the Committee.
(d) Board shall mean the Board of Directors of the Company.
(e) Change in Control shall have the meaning ascribed to such term in any Award Agreement;
provided, however, that no Award Agreement shall contain a definition of Change in Control that has
the effect of accelerating the exercisability of any Award or the lapse of restrictions relating to
any Award upon only the announcement or shareholder approval of (rather than consummation of) any
reorganization, merger or consolidation of, or sale or other disposition of all or substantially
all of the assets of, the Company.
(f) Code shall mean the Internal Revenue Code of 1986, as amended from time to time, and any
regulations promulgated thereunder.
(g) Committee shall mean the Personnel and Compensation Committee of the Board or any
successor committee of the Board designated by the Board to administer the Plan. The Committee
shall be comprised of not less than such number of Directors as shall be required
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to permit Awards
granted under the Plan to qualify under Rule 16b-3, and each member of the Committee shall be a
Non-Employee Director within the meaning of Rule 16b-3 and an outside director within the
meaning of Section 162(m). The Company expects to have the Plan administered in accordance with
the requirements for the award of qualified performance-based compensation within the meaning of
Section 162(m)of the Code.
(h) Company shall mean ATS Medical, Inc., a Minnesota corporation, or any successor
corporation.
(i) Director shall mean a member of the Board.
(j) Dividend Equivalent shall mean any right granted under Section 6(d) of the Plan.
(k) Eligible Person shall mean any employee, officer, consultant, advisor or non-employee
Director providing services to the Company or any Affiliate whom the Committee determines to be an
Eligible Person, provided that, in the case of consultants and advisors, such services are not in
connection with the offer or sale of securities in a capital-raising transaction and do not
directly or indirectly promote or maintain a market for the Companys securities. An Eligible
Person must be a natural person.
(l) Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
(m) Fair Market Value shall mean, with respect to any property (including, without
limitation, any Shares or other securities), the fair market value of such property determined by
such methods or procedures as shall be established from time to time by the Committee.
Notwithstanding the foregoing, unless otherwise determined by the Committee, the Fair Market Value
of Shares on a given date for purposes of the Plan shall be the closing sale price of the Shares on
the NASDAQ Global Market as reported on such date or, if such market is not open for trading on
such date, on the most recent preceding date when such market was open for trading.
(n) Incentive Stock Option shall mean an option granted under Section 6(a) of the Plan that
is intended to meet the requirements of Section 422 of the Code or any successor provision.
(o) Non-Qualified Stock Option shall mean an option granted under Section 6(a) of the Plan
that is not intended to be an Incentive Stock Option.
(p) Option shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
(q) Other Stock-Based Award shall mean any right granted under Section 6(g) of the Plan.
(r) Participant shall mean an Eligible Person designated to be granted an Award under the
Plan.
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(s) Performance Award shall mean any right granted under Section 6(e) of the Plan.
(t) Performance Goal shall mean one or more of the following performance goals, either
individually, alternatively or in any combination, applied on a corporate, subsidiary, division,
business unit, line of business or geographic region basis: sales, revenue, costs, expenses,
earnings (including one or more of net profit after tax, gross profit, operating profit, earnings
before interest and taxes, earnings before interest, taxes, depreciation and amortization and net
earnings), earnings per share, earnings per share from continuing operations, operating income,
pre-tax income, net income, margins (including one or more of direct gross, gross, operating
income, net income and pretax net income margins), returns (including one or more of return on
actual or proforma assets, net assets, equity, investment, investment capital, capital and net
capital employed), shareholder return (including total shareholder return relative to an index or
peer group), stock price, economic value added, cash generation, cash flow, unit volume, working
capital, market share, environmental health and safety goals, cost reductions and development and
implementation of strategic plans, completion of key projects, management succession plans,
diversity initiatives or SMART goals. A Performance Goal may be an absolute measure or a defined
change (amount or percentage) in a measure. A Performance Goal may reflect absolute entity or
business unit performance or performance relative to the performance of a peer group of companies
or other external measure. To the extent consistent with Section 162(m), the Committee may provide
that, in determining whether the Performance Goal has been achieved, the effect of certain events
may be excluded. These events include, but are not limited to, any of the following: asset
write-downs, litigation or related judgments or settlements, changes in tax law, accounting
principles or other such laws or provisions affecting reported results, severance, contract
termination and other costs related to exiting certain business activities, and gains or losses
from the disposition of businesses or assets or from the early extinguishment of debt.
(u) Person shall mean any individual or entity, including a corporation, partnership,
limited liability company, association, joint venture or trust.
(v) Plan shall mean this ATS Medical, Inc. 2010 Stock Incentive Plan, as amended from time
to time.
(w) Qualified Performance Award means a Performance Award that (i) is made to as officer of
the Company who may be a covered person under Section 162(m), and (ii) is intended to be
qualified performance-based compensation within the meaning of Section 162(m).
(x) Restricted Stock shall mean any Share granted under Section 6(c) of the Plan.
(y) Restricted Stock Unit shall mean any unit granted under Section 6(c) of the Plan
evidencing the right to receive a Share (or a cash payment equal to the Fair Market Value of a
Share) at some future date.
(z) Rule 16b-3 shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Exchange Act or any successor rule or regulation.
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(aa) Section 162(m) shall mean Section 162(m) of the Code and the applicable Treasury
Regulations promulgated thereunder.
(bb) Shares shall mean shares of Common Stock, par value of $0.01 per share, of the Company
or such other securities or property as may become subject to Awards pursuant to an adjustment made
under Section 4(c) of the Plan.
(cc) Specified Employee shall mean a specified employee as such term is defined in Section
409A(a)(2)(B) of the Code.
(dd) Stock Appreciation Right shall mean any right granted under Section 6(b) of the Plan.
(ee) Stock Award shall mean any Share granted under Section 6(f) of the Plan.
(ff) 2000 Plan shall mean the ATS Medical, Inc. 2000 Stock Incentive Plan, as amended from
time to time.
Section 3. Administration.
(a) Power and Authority of the Committee. The Plan shall be administered by the
Committee. Subject to the express provisions of the Plan and to applicable law, the Committee
shall have full power and authority to: (i) designate Participants; (ii) determine the type or
types of Awards to be granted to each Participant under the Plan; (iii) determine the number of
Shares to be covered by (or the method by which payments or other rights are to be calculated in
connection with) each Award; (iv) determine the terms and conditions of any Award or Award
Agreement; (v) amend the terms and conditions of any Award or Award Agreement; (vi) accelerate the
exercisability of any Award or the lapse of restrictions relating to any Award; (vii) determine
whether, to what extent and under what circumstances Awards may be exercised in cash, Shares, other
securities, other Awards or other property, or cancelled, forfeited or suspended; (viii) determine
whether, to what extent and under what circumstances cash, Shares, other securities, other Awards,
other property and other amounts payable with respect to an Award under the Plan shall be deferred
either automatically or at the election of the holder of the Award or the Committee; (ix) interpret
and administer the Plan and any instrument or agreement, including any Award Agreement, relating to
the Plan; (x) establish, amend, suspend or waive such rules and regulations and appoint such agents
as it shall deem appropriate for the proper administration of the Plan; and (xi) make any other
determination and take any other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the Plan or any Award
or Award Agreement shall be within the sole discretion of the Committee, may be made at any time
and shall be final, conclusive and binding upon any Participant, any holder or beneficiary of any
Award or Award Agreement, and any employee of the Company or any Affiliate.
(b) Delegation. The Committee may delegate its powers and duties under the Plan to
one or more Directors (including a Director who is also an officer of the Company) or a committee
of Directors and may authorize one or more officers of the Company to grant Awards under the Plan,
subject to such terms, conditions and limitations as the Committee may establish
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in its sole discretion; provided, however, that the Committee shall not delegate its powers and duties under
the Plan (i) with regard to officers or directors of the Company or any Affiliate who are subject
to Section 16 of the Exchange Act or (ii) in such a manner as would cause the Plan not to comply
with the requirements of Section 162(m).
(c) Power and Authority of the Board of Directors. Notwithstanding anything to the
contrary contained herein, the Board may, at any time and from time to time, without any further
action of the Committee, exercise the powers and duties of the Committee under the Plan, unless the
exercise of such powers and duties by the Board would cause the Plan not to comply with the
requirements of Section 162(m).
Section 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in Section 4(c) of the Plan,
the aggregate number of Shares that may be issued under all Awards under the Plan shall be
5,000,000. If any Shares covered by an Award or to which an Award relates are not purchased or are
forfeited or are reacquired by the Company (including shares of Restricted Stock, whether or not
dividends have been paid on such shares), or if an Award otherwise terminates or is cancelled
without delivery of any Shares, then the number of Shares counted pursuant to Section 4(b) of the
Plan against the aggregate number of Shares available under the Plan with respect to such Award, to
the extent of any such forfeiture, reacquisition by the Company, termination or cancellation, shall
again be available for granting Awards under the Plan. Shares that are withheld in full or partial
payment to the Company of the purchase or exercise price relating to an Award or in connection with
the satisfaction of tax obligations relating to an Award shall not be available for granting Awards
under the Plan.
(b) Accounting for Awards. For purposes of this Section 4, if an Award entitles the
holder thereof to receive or purchase Shares, the number of Shares covered by such Award or to
which such Award relates shall be counted on the date of grant of such Award against the aggregate
number of Shares available for Awards under the Plan. For Stock Appreciation Rights settled in
Shares upon exercise, the aggregate number of Shares with respect to which the Stock Appreciation
Right is exercised, rather than the number of Shares actually issued upon exercise, shall be
counted against the number of Shares available for Awards under the Plan. Awards that do not
entitle the holder thereof to receive or purchase Shares and Awards that are settled in cash shall
not be counted against the aggregate number of Shares available for Awards under the Plan.
(c) Adjustments. In the event that any dividend or other distribution (whether in the
form of cash, Shares, other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or
exchange of Shares or other securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is necessary in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and
type of Shares (or other securities or other property) that thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or other securities or other property)
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subject to
outstanding Awards, (iii) the purchase or exercise price with respect to any Awards and (iv) the
limitations contained in Section 4(d) of the Plan.
(d) Section 162(m) Limitations for Qualified Performance Awards. In accordance with
Section 162(m), there are limits on the Qualified Performance Awards that may be granted to an
Eligible Person under the Plan in any taxable year. Qualified Performance Awards denominated in
Shares are subject to the limit set forth in subsection (i) below, and Qualified Performance Awards
denominated in cash are subject to the limit set forth in subsection (ii) below. In no case is a
Qualified Performance Award subject to both of the limits set forth in subsections (i) and (ii)
below.
(i) Limitation for Qualified Performance Awards Denominated in Shares. No Eligible
Person may be granted any Qualified Performance Award or Qualified Performance Awards denominated
in Shares for more than 3,000,000 Shares (subject to adjustment as provided for in Section 4(c) of
the Plan) in the aggregate in any taxable year.
(ii) Limitation for Qualified Performance Awards Denominated in Cash. No Eligible
Person may be granted any Qualified Performance Award or Qualified Performance Awards denominated
in cash with a value in excess of $10,000,000 (whether payable in cash, Shares or other property)
in the aggregate in any taxable year.
Section 5. Eligibility.
Any Eligible Person shall be eligible to be designated a Participant. In determining which
Eligible Persons shall receive an Award and the terms of any Award, the Committee may take into
account the nature of the services rendered by the respective Eligible Persons, their present and
potential contributions to the success of the Company or such other factors as the Committee, in
its discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive Stock Option may
only be granted to full-time or part-time employees (which term as used herein includes, without
limitation, officers and Directors who are also employees), and an Incentive Stock Option shall not
be granted to an employee of an Affiliate unless such Affiliate
is also a subsidiary corporation of the Company within the meaning of Section 424(f) of the
Code or any successor provision.
Section 6. Awards.
(a) Options. The Committee is hereby authorized to grant Options to Eligible Persons
with the following terms and conditions and with such additional terms and conditions not
inconsistent with the provisions of the Plan as the Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable under an Option shall be
determined by the Committee and shall not be less than 100% of the Fair Market Value of a Share on
the date of grant of such Option; provided, however, that the Committee may designate a per share
exercise price below Fair Market Value on the date of grant (A) to the extent necessary or
appropriate, as determined by the Committee, to satisfy applicable legal or regulatory requirements
of a foreign jurisdiction or (B) if the Option is granted in substitution for a stock option
previously granted by an entity that is acquired by or merged with the Company or an Affiliate.
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(ii) Option Term. The term of each Option shall be fixed by the Committee but shall
not be longer than 10 years from the date of grant.
(iii) Time and Method of Exercise. The Committee shall determine the time or times at
which an Option may be exercised in whole or in part and the method or methods by which, and the
form or forms (including, without limitation, cash, Shares, other securities, other Awards or other
property, or any combination thereof, having a Fair Market Value on the exercise date equal to the
applicable exercise price) in which, payment of the exercise price with respect thereto may be made
or deemed to have been made.
(b) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock
Appreciation Rights to Eligible Persons subject to the terms of the Plan and any applicable Award
Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder thereof a
right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Share on the
date of exercise (or, if the Committee shall so determine, at any time during a specified period
before or after the date of exercise) over (ii) the grant price of the Stock Appreciation Right as
specified by the Committee, which price shall not be less than 100% of the Fair Market Value of one
Share on the date of grant of the Stock Appreciation Right; provided, however, that the Committee
may designate a per share grant price below Fair Market Value on the date of grant (A) to the
extent necessary or appropriate, as determined by the Committee, to satisfy applicable legal or
regulatory requirements of a foreign jurisdiction or (B) if the Stock Appreciation Right is granted
in substitution for a stock appreciation right previously granted by an entity that is acquired by
or merged with the Company or an Affiliate. Subject to the terms of the Plan and any applicable
Award Agreement, the grant price, methods of exercise, dates of exercise, methods of settlement and
any other terms and conditions of any Stock Appreciation Right shall be as determined by the
Committee. The term of any Stock Appreciation Right will be fixed by the Committee but shall not
be longer than 10 years from the date of grant. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units. The Committee is hereby authorized
to grant Awards of Restricted Stock and Restricted Stock Units to Eligible Persons with the
following terms and conditions and with such additional terms and conditions not inconsistent with
the provisions of the Plan as the Committee shall determine:
(i) Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be
subject to such restrictions as the Committee may impose (including, without limitation, any
limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or
other right or property with respect thereto), which restrictions may lapse separately or in
combination at such time or times, in such installments or otherwise, as the Committee may deem
appropriate.
(ii) Issuance and Delivery of Shares. Any Restricted Stock granted under the Plan
shall be issued at the time such Awards are granted and may be evidenced in such manner as the
Committee may deem appropriate, including book-entry registration or issuance of a stock
certificate or certificates, which certificate or certificates shall be held by the Company. Such
certificate or certificates shall be registered in the name of the Participant and shall bear an
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appropriate legend referring to the restrictions applicable to such Restricted Stock. Shares
representing Restricted Stock that is no longer subject to restrictions shall be delivered to the
Participant promptly after the applicable restrictions lapse or are waived. In the case of
Restricted Stock Units, no Shares shall be issued at the time such Awards are granted. Upon the
lapse or waiver of restrictions and the restricted period relating to Restricted Stock Units
evidencing the right to receive Shares, such Shares shall be issued and delivered to the holder of
the Restricted Stock Units.
(iii) Forfeiture. Except as otherwise determined by the Committee, upon a
Participants termination of employment or resignation or removal as a Director (in either case, as
determined under criteria established by the Committee) during the applicable restriction period,
all Shares of Restricted Stock and all Restricted Stock Units held by the Participant at such time
shall be forfeited and reacquired by the Company; provided, however, that the Committee may, when
it finds that a waiver would be in the best interest of the Company, waive in whole or in part
any or all remaining restrictions with respect to Shares of Restricted Stock or Restricted Stock
Units.
(d) Dividend Equivalents. The Committee is hereby authorized to grant Dividend
Equivalents to Eligible Persons under which the Participant shall be entitled to receive payments
(in cash, Shares, other securities, other Awards or other property as determined in the discretion
of the Committee) equivalent to the amount of cash dividends paid by the Company to holders of
Shares with respect to a number of Shares determined by the Committee. Subject to the terms of the
Plan and any applicable Award Agreement, such Dividend Equivalents may have such terms and
conditions as the Committee shall determine.
(e) Performance Awards. The Committee is hereby authorized to grant Performance
Awards to Eligible Persons subject to the terms of the Plan and any applicable Award Agreement. A
Performance Award granted under the Plan (i) may be denominated or payable in cash, Shares
(including, without limitation, Restricted Stock and Restricted Stock Units), other securities,
other Awards or other property, and (ii) shall confer on the holder thereof the right to receive
payments, in whole or in part, upon the achievement of one or more objective Performance Goals
during such performance periods as the Committee shall establish. Subject to the terms of the
Plan, the Performance Goals to be achieved during any performance period, the length of any
performance period, the amount of any Performance Award granted, the amount of any payment to be
made pursuant to any Performance Award and any other terms and conditions of any Performance Award
shall be determined by the Committee. Qualified Performance Awards shall be conditioned, to the
extent required by 162(m), solely on the achievement of one or more objective Performance Goals
established by the Committee within the time prescribed by Section 162(m), and Qualified
Performance Awards shall otherwise comply with the requirements of Section 162(m).
(f) Stock Awards. The Committee is hereby authorized to grant to Eligible Persons
Shares without restrictions thereon, as deemed by the Committee to be consistent with the purpose
of the Plan. Subject to the terms of the Plan and any applicable Award Agreement, such Stock
Awards may have such terms and conditions as the Committee shall determine.
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(g) Other Stock-Based Awards. The Committee is hereby authorized to grant to Eligible
Persons such other Awards that are denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares), as are deemed by the Committee to be consistent with the
purpose of the Plan. The Committee shall determine the terms and conditions of such Awards,
subject to the terms of the Plan and the Award Agreement. Shares, or other securities delivered
pursuant to a purchase right granted under this Section 6(g), shall be purchased for consideration
having a value equal to at least 100% of the Fair Market Value of such Shares or other securities
on the date the purchase right is
granted. The consideration paid by the Participant may be paid by such method or methods and
in such form or forms (including, without limitation, cash, Shares, other securities, other Awards
or other property, or any combination thereof), as the Committee shall determine.
(h) General.
(i) Consideration for Awards. Awards may be granted for no cash consideration or for
any cash or other consideration as may be determined by the Committee or required by applicable
law.
(ii) Awards May Be Granted Separately or Together. Awards may, in the discretion of
the Committee, be granted either alone or in addition to, in tandem with or in substitution for any
other Award or any award granted under any other plan of the Company or any Affiliate. Awards
granted in addition to or in tandem with other Awards or in addition to or in tandem with awards
granted under any other plan of the Company or any Affiliate may be granted either at the same time
as or at a different time from the grant of such other Awards or awards.
(iii) Forms of Payment under Awards. Subject to the terms of the Plan and of any
applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon
the grant, exercise or payment of an Award may be made in such form or forms as the Committee shall
determine (including, without limitation, cash, Shares, other securities, other Awards or other
property, or any combination thereof), and may be made in a single payment or transfer, in
installments or on a deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on installment or deferred payments
or the grant or crediting of Dividend Equivalents with respect to installment or deferred payments.
(iv) Term of Awards. The term of each Award shall be for a period not longer than 10
years from the date of grant.
(v) Limits on Transfer of Awards. Except as otherwise provided in this Section
6(h)(v), no Award (other than a Stock Award) and no right under any such Award shall be
transferable by a Participant other than by will or by the laws of descent and distribution. The
Committee may establish procedures as it deems appropriate for a Participant to designate a Person
or Persons, as beneficiary or beneficiaries, to exercise the rights of the Participant and receive
any property distributable with respect to any Award in the event of the Participants
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death. The
Committee, in its discretion and subject to such additional terms and conditions as it determines,
may permit a Participant to
transfer a Non-Qualified Stock Option to any family member (as such term is defined in the
General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the
Securities Act of 1933, as amended) at any time that such Participant holds such Option, provided
that such transfers may not be for value (i.e., the transferor may not receive any consideration
therefor) and the family member may not make any subsequent transfers other than by will or by the
laws of descent and distribution. Each Award under the Plan or right under any such Award shall be
exercisable during the Participants lifetime only by the Participant (except as provided herein or
in an Award Agreement or amendment thereto relating to a Non-Qualified Stock Option) or, if
permissible under applicable law, by the Participants guardian or legal representative. No Award
(other than a Stock Award) or right under any such Award may be pledged, alienated, attached or
otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall
be void and unenforceable against the Company or any Affiliate.
(vi) Restrictions; Securities Exchange Listing. All Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such
restrictions as the Committee may deem advisable under the Plan, applicable federal or state
securities laws and regulatory requirements, and the Committee may cause appropriate entries to be
made or legends to be placed on the certificates for such Shares or other securities to reflect
such restrictions. If the Shares or other securities are traded on a securities exchange, the
Company shall not be required to deliver any Shares or other securities covered by an Award unless
and until such Shares or other securities have been admitted for trading on such securities
exchange.
(vii) Prohibition on Option and Stock Appreciation Right Repricing. Except as
provided in Section 4(c) hereof, no Option may be amended to reduce its initial exercise price, and
no Option shall be cancelled and replaced with an Option or Options having a lower exercise price.
In addition, except as provided in Section 4(c) hereof, no Stock Appreciation Right may be amended
to reduce its grant price, and no Stock Appreciation Right shall be cancelled and replaced with a
Stock Appreciation Right having a lower grant price.
(viii) Section 409A Provisions. Notwithstanding anything in the Plan or any Award
Agreement to the contrary, to the extent that any amount or benefit that constitutes deferred
compensation to a Participant under Section 409A of the Code and applicable guidance thereunder is
otherwise payable or distributable to a Participant under the Plan or any Award Agreement solely by
reason of the occurrence of a Change in Control or due to the Participants disability or
separation from service (as such term is defined under Section 409A), such amount or benefit will
not be payable or distributable to the Participant by reason of such circumstance, unless the
Committee determines in good faith that (i) the circumstances giving rise to such Change in
Control, disability or separation from service meet the definition of a change in ownership or
control, disability or separation from service, as the case may be, in Section 409A(a)(2)(A) of the
Code and applicable proposed or final regulations, or (ii) the payment or distribution of such
amount or benefit would be exempt from the application of Section 409A by reason of the short-term
deferral exemption or otherwise. Any payment or distribution that otherwise would be made to
a Participant who is a Specified Employee (as determined by the Committee in good faith) on account
of separation from service may not be
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made before the date which is six months after the date of
the Specified Employees separation from service (or, if earlier, upon the Specified Employees
death), unless the payment or distribution is exempt from the application of Section 409A by reason
of the short-term deferral exemption or otherwise.
Section 7. Amendment and Termination; Corrections.
(a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue or
terminate the Plan at any time; provided, however, that, notwithstanding any other provision of the
Plan or any Award Agreement, prior approval of the shareholders of the Company shall be required
for any amendment to the Plan that:
(i) requires shareholder approval under the rules or regulations of the Securities and
Exchange Commission, the NASDAQ Global Market or any securities exchange that are applicable to the
Company;
(ii) increases the number of shares authorized under the Plan as specified in Section 4(a) of
the Plan;
(iii) increases the number of shares or value subject to the limitations contained in Section
4(d) of the Plan;
(iv) permits repricing of Options or Stock Appreciation Rights which is prohibited by Section
6(h)(vii) of the Plan;
(v) permits the award of Options or Stock Appreciation Rights at a price less than 100% of the
Fair Market Value of a Share on the date of grant of such Option or Stock Appreciation Right,
contrary to the provisions of Sections 6(a)(i) and 6(b)(ii) of the Plan; and
(vi) would cause Section 162(m) of the Code to become unavailable with respect to the Plan.
(b) Amendments to Awards. Subject to the provisions of the Plan, the Committee may
waive any conditions of or rights of the Company under any outstanding Award, prospectively or
retroactively. Except as otherwise provided in the Plan, the Committee may amend, alter, suspend,
discontinue or terminate any outstanding Award, prospectively or retroactively, but no such action
may adversely affect the rights of the holder of such Award without the consent of the Participant
or holder or beneficiary thereof.
(c) Correction of Defects, Omissions and Inconsistencies. The Committee may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or in any Award or Award Agreement in the manner and to the extent it shall deem desirable
to implement or maintain the effectiveness of the Plan.
Section 8. Income Tax Withholding.
In order to comply with all applicable federal, state, local or foreign income tax laws or
regulations, the Company may take such action as it deems appropriate to ensure that all
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applicable
federal, state, local or foreign payroll, withholding, income or other taxes, which are the sole
and absolute responsibility of a Participant, are withheld or collected from such Participant. In
order to assist a Participant in paying all or a portion of the applicable taxes to be withheld or
collected upon exercise or receipt of (or the lapse of restrictions relating to) an Award, the
Committee, in its discretion and subject to such additional terms and conditions as it may adopt,
may permit the Participant to satisfy such tax obligation by (a) electing to have the Company
withhold a portion of the Shares otherwise to be delivered upon exercise or receipt of (or the
lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such
taxes or (b) delivering to the Company Shares other than Shares issuable upon exercise or receipt
of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the
amount of such taxes. The election, if any, must be made on or before the date that the amount of
tax to be withheld is determined.
Section 9. General Provisions.
(a) No Rights to Awards. No Eligible Person, Participant or other Person shall have
any claim to be granted any Award under the Plan, and there is no obligation for uniformity of
treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan.
The terms and conditions of Awards need not be the same with respect to any Participant or with
respect to different Participants.
(b) Award Agreements. No Participant shall have rights under an Award granted to such
Participant unless and until an Award Agreement is issued to, and accepted by, the Participant.
(c) No Rights of Shareholders. Except with respect to Restricted Stock and Stock
Awards, neither a Participant nor the Participants legal representative shall be, or have any of
the rights and privileges of, a shareholder of the Company with respect to any Shares issuable upon
the exercise or payment of any Award, in whole or in part, unless and until the Shares have been
issued.
(d) No Limit on Other Compensation Plans or Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation plans or arrangements, and such plans or
arrangements may be either generally applicable or applicable only in specific cases.
(e) No Right to Employment or Directorship. The grant of an Award shall not be
construed as giving a Participant the right to be retained as an employee of the Company or any
Affiliate, or a Director to be retained as a Director, nor will it affect in any way the right of
the Company or an Affiliate to terminate a Participants employment at any time, with or without
cause. In addition, the Company or an Affiliate may at any time dismiss a Participant from
employment free from any liability or any claim under the Plan or any Award, unless otherwise
expressly provided in the Plan or in any Award Agreement.
(f) Governing Law. The internal law, and not the law of conflicts, of the State of
Minnesota, shall govern all questions concerning the validity, construction and effect of the Plan
or any Award, and any rules and regulations relating to the Plan or any Award.
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(g) Severability. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision shall 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 Committee, materially altering the purpose or intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the
remainder of the Plan or any such Award shall remain in full force and effect.
(h) No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary relationship between the
Company or any Affiliate and a Participant or any other Person. To the extent that any Person
acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such
right shall be no greater than the right of any unsecured general creditor of the Company or any
Affiliate.
(i) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant
to the Plan or any Award, and the Committee shall determine whether cash shall be paid in lieu of
any fractional Share or whether such fractional Share or any rights thereto shall be cancelled,
terminated or otherwise eliminated.
(j) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof.
Section 10. Effective Date of the Plan; Effect on 2000 Plan.
The Plan was adopted by the Board on March 31, 2010. The Plan shall be subject to approval by
the shareholders of the Company at the annual meeting of shareholders of the Company to be held on
May 12, 2010, and the Plan shall be effective as of the date of such shareholder approval. On and
after the date of shareholder approval of the Plan, no awards (other than the automatic Restricted
Stock Unit grants to non-employee Directors set forth in Section 7 of the 2000 Plan to be made to
non-employee Directors upon their election to the Board at the annual meeting of shareholders to be
held on May 12, 2010) shall be granted under the 2000 Plan, but all outstanding awards previously
granted under the 2000 Plan shall remain outstanding in accordance with the terms thereof. All
grants to non-employee Directors after the date of shareholder approval of the Plan shall be made
solely under the Plan.
Section 11. Term of the Plan.
The Plan shall terminate at midnight on March 31, 2020, unless terminated before then by the
Board; provided, however, that no Qualified Performance Award may be granted under the Plan after
the fifth year following the year in which the shareholders of the Company approved the Performance
Goals, unless and until the Performance Goals are reapproved by the shareholders. Awards may be
granted under the Plan until the earlier to occur of the date of termination of the Plan or the
date on which all Shares available for Awards under the Plan have been purchased or acquired. As
long as any Awards are outstanding under the Plan, the terms of the Plan shall govern such Awards.
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