Attached files
file | filename |
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10-K - FORM 10-K - IKONICS CORP | c63305e10vk.htm |
EX-23 - EX-23 - IKONICS CORP | c63305exv23.htm |
EX-32 - EX-32 - IKONICS CORP | c63305exv32.htm |
EX-24 - EX-24 - IKONICS CORP | c63305exv24.htm |
EX-31.2 - EX-31.2 - IKONICS CORP | c63305exv31w2.htm |
EX-31.1 - EX-31.1 - IKONICS CORP | c63305exv31w1.htm |
EXHIBIT 10.1
IKONICS CORPORATION
1995 STOCK INCENTIVE PLAN
(AS AMENDED AS OF NOVEMBER 18, 2010)
1995 STOCK INCENTIVE PLAN
(AS AMENDED AS OF NOVEMBER 18, 2010)
1. | Purpose of Plan. |
The purpose of the IKONICS Corporation 1995 Stock Incentive Plan (the Plan) is to advance
the interests of the IKONICS Corporation (the Company) and its stockholders by enabling the
company and its subsidiaries to attract and retain persons of ability to perform services for the
Company and its subsidiaries by providing an incentive to such individuals through equity
participation in the Company and by rewarding such individuals who contribute to the achievement by
the Company of its economic objectives.
2. | Definitions. |
The following terms will have the meaning set forth below, unless the context clearly
otherwise requires:
2.1 Board means the Board of Directors of the Company.
2.2 Broker Exercise Notice means a written notice pursuant to which a Participant,
upon exercise of an Option, irrevocably instructs a broker or dealer to sell a sufficient
number of shares or loan a sufficient amount of money to pay all or a portion of the
exercise price of the Option and/or any related withholding tax obligations and remit such
sums to the Company and directs the Company or deliver stock certificates to be issued upon
such exercise directly to such broker or dealer.
2.3 Change in Control means an event described in Section 13.1 of the Plan.
2.4 Code means the Internal Revenue Code of 1986, as amended.
2.5 Committee means the group of individuals administering the Plan, as provided in
Section 3 of the Plan.
2.6 Common Stock means the common stock of the Companys $.10 par value, or the number
and kind of shares of stock or other securities into which such Common Stock may be changed
in accordance with Section 4.3 of the Plan.
2.7 Disability means the disability of the Participant such as would entitle the
Participant to receive disability income benefits pursuant to the long-term disability plan
of the Company or Subsidiary then covering the Participant or, if no such plan exists or is
applicable to the Participant, the permanent and total disability of the Participant within
the meaning of Section 22(e)(3) of the Code.
2.8 Eligible Recipients means all directors (including non-employee directors),
officers and employees of the Company or any Subsidiary.
2.9 Exchange Act means the Securities Exchange Act of 1934, as amended.
2.10 Fair Market Value means, with respect to the Common Stock, as of any date (or, if
no shares were traded or quoted on such date, as of the next preceding date on which there
was such a trade or quote):
a. If the Common Stock is listed (or admitted to unlisted trading privileges) on
an exchange or reported on the NASDAQ National Market System or bid and asked prices
are reported on the NASDAQ system or a comparable reporting service, the closing
sale price or the mean of the closing bid and asked prices, as the case may be.
b. If the Common Stock is not so listed or reported, such price as the Committee
determines in good faith in the exercise of its reasonable discretion.
2.11 Incentive Award means an Option, Stock Appreciation Right, Restricted Stock
Award, Performance Unit or Stock Bonus granted to an Eligible Recipient pursuant to the
Plan.
2.12 Incentive Stock Option means a right to purchase Common Stock granted to an
Eligible Recipient pursuant to Section 6 of the Plan that qualifies as an incentive stock
option within the meaning of Section 422 of the Code.
2.13 Non-Statutory Stock Option means a right to purchase Common Stock granted to an
Eligible Recipient pursuant to Section 6 of the Plan that does not qualify as a Incentive
Stock Option.
2.14 Option means an Incentive Stock Option or a Non-Statutory Stock Option.
2.15 Participant means an Eligible Recipient who receives one or more Incentive Awards
under the Plan.
2.16 Performance Unit means a right granted to an Eligible Recipient pursuant to
Section 9 of the Plan to receive a payment from the Company, in the form of stock, cash or a
combination of both, upon the achievement of established performance goals.
2.17 Previously Acquired Shares means shares of Common Stock that are already owned by
the Participant or, with respect to any Incentive Award, that are to be issued upon the
grant, exercise or vesting of such Incentive Award.
2.18 Restricted Stock Award means an award of Common Stock granted to an Eligible
Recipient pursuant to Section 8 of the Plan that is subject to the restrictions on
transferability and the risk of forfeiture imposed by the provisions of such Section 8.
2.19 Retirement means normal or approved early termination of employment or service
pursuant to and in accordance with the regular retirement/pension plan or practice of the
Company or Subsidiary then covering the Participant, provided that if the Participant is not
covered by any such plan or practice, the Participant will be deemed to be covered by the
Companys plan or practice for purposes of this determination.
2.20 Securities Act means the Securities Act of 1933, as amended.
2.21 Stock Appreciation Right means a right granted to an Eligible Recipient pursuant
to Section 7 of the Plan to receive a payment from the Company, in the form of stock, cash
or a combination of both, equal to the difference between the Fair Market Value of one or
more shares of Common Stock and the exercise price of such shares under the terms of such
Stock Appreciation Right.
2.22 Stock Bonus means an award of Common Stock granted to an Eligible Recipient
pursuant to Section 10 of the Plan.
2.23 Subsidiary means any entity that is directly or indirectly controlled by the
Company or any entity in which the Company has a significant equity interest, as determined
by the Committee.
2.24 Tax Date means the date any withholding tax obligation arises under the Code for
a Participant with respect to an Incentive Award.
3. | Plan Administration. |
3.1 The Committee. The Plan will be administered by the Board or by a committee
of the Board consisting of not less than two persons; provided, however, that from and after
the date on which the Company first registers a class of its equity securities under Section
12 of the Exchange Act, the Plan will be administered by the Board, all of whom will be
disinterested persons within the meaning of Rule 16b-3 under the Exchange Act, or by a
committee consisting solely of not fewer than two members of the Board who are such
disinterested persons. As used in this Plan, the term Committee will refer to the Board
or to such a committee, if established. To the extent consistent with corporate law, the
Committee may delegate to any officers of the Company the duties, power and authority of the
Committee under the Plan pursuant to such conditions or limitations as the Committee may
establish; provided, however, that only the Committee may exercise such duties, power and
authority with respect to Eligible Recipients who are subject to Section 16 of the Exchange
Act. The Committee may exercise its duties, power and authority under the Plan in its sole
and absolute discretion without the consent of any Participant or other party, unless the
Plan specifically provides otherwise. Each determination, interpretation or other action
made or taken by the Committee pursuant to the provisions of the Plan will be conclusive and
binding for all purposes and on all persons, and no member of the Committee will be liable
for any action or determination made in good faith with respect to the Plan or any Incentive
Award granted under the Plan.
3.2 Authority of the Committee.
a. In accordance with and subject to the provisions of the Plan, the Committee
will have the authority to determine all provisions of Incentive Awards as the
Committee may deem necessary or desirable and as consistent with the terms of the
Plan, including, without limitation, the following: (i) the Eligible Recipients to
be selected as Participants; (ii) the nature and extent of the Incentive Awards to
be made to each Participant (including the number of shares of Common Stock to be
subject to each Incentive Award, any exercise price, the manner in which Incentive
Awards will vest or become exercisable and whether Incentive Awards will be granted
in tandem with other Incentive Awards) and the form of written agreement, if any,
evidencing such Incentive Award; (iii) the time or times when Incentive Awards will
be granted; (iv) the duration of each Incentive Award; and (v) the restrictions and
other conditions to which the payment or vesting of Incentive Awards may be subject.
In addition, the Committee will have the authority under the Plan to pay the
economic value of any Incentive Award in the form of cash, Common Stock or any
combination of both.
b. The Committee will have the authority under the Plan to amend or modify the
terms of any outstanding Incentive Award in any manner, including, without
limitation, the authority to modify the number of shares or other terms and
conditions of an Incentive Award, extend the term of an Incentive Award, accelerate
the exercisability or vesting or otherwise terminate any restrictions relating to an
Incentive Award, accept the surrender of any outstanding Incentive Award or, to the
extent not previously exercised or vested, authorize the grant of new Incentive
Awards in substitution for surrendered Incentive Awards; provided, however that the
amended or modified terms are permitted by the Plan as then in effect and that any
Participant adversely affected by such amended or modified terms has consented to
such amendment or modification. No amendment or modification to an Incentive Award,
however, whether pursuant to this Section 3.2 or any other provisions of the Plan,
will be deemed to be a regrant of such Incentive Award for purposes of this Plan.
c. In the event of (i) any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, extraordinary dividend or divestiture
(including a spin-off) or any other change in corporate structure or shares, (ii)
any purchase, acquisition, sale or disposition of a significant amount of assets or
a significant business; (iii) any change in accounting principles or practices, or
(iv) any other similar change, in each case with respect to the Company or any other
entity whose performance is relevant to the grant or vesting of an Incentive Award,
the Committee (or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) may, without the
consent of any affected Participant, amend or modify the vesting criteria of any
outstanding Incentive Award that is based in whole or in part on the financial
performance of the Company (or any Subsidiary or division thereof) or such other
entity so as equitably to reflect such event, with the desired result that the
criteria for evaluating such financial performance of the Company or such other
entity will be substantially the same (in the discretion of the Committee or the
board of directors of the surviving corporation) following such event as prior to
such event; provided, however, that the amended or modified terms are permitted by
the Plan as then in effect.
4. | Shares Available for Issuance. |
4.1 Maximum Number of Shares. Subject to adjustment as provided in Section 4.3
of the Plan, the maximum number of shares of Common Stock that will be available for
issuance under the Plan will be 442,750 shares. The shares available for issuance under the
Plan shall be shares authorized but unissued, under the Companys Articles of Incorporation.
4.2 Accounting for Incentive Awards. Shares of Common Stock that are issued
under the Plan or that are subject to outstanding Incentive Awards will be applied to reduce
the maximum number of shares of Common Stock remaining available for issuance under the
Plan. Any shares of Common Stock that are subject to an Incentive Award that lapses,
expires, is forfeited or for any reason is terminated unexercised or unvested and any shares
of Common Stock that are subject to an Incentive Award that is settled or paid in cash or
any form other than shares of Common Stock will automatically again become available for
issuance under the Plan. Any shares of Common Stock that constitute the forfeited portion of
a Restricted Stock Award, however, will not become available for further issuance under the
Plan.
4.3 Adjustments to Shares of Incentive Awards. In the event of any
reorganization, merger, consolidation, recapitalization, liquidation, reclassification,
stock dividend, stock split, combination of shares, rights offering, divestiture or
extraordinary dividend (including a
spin-off) or any other change in the corporate structure or shares of the Company, the
Committee (or, if the Company is not the surviving corporation in any such transaction, the
board of directors of the surviving corporation) will make appropriate adjustment (which
determination will be conclusive) as to the number and kind of securities available for
issuance under the Plan and, in order to prevent dilution or enlargement of the rights of
Participants, the number, kind and, where applicable, exercise price of securities subject
to outstanding Incentive Awards.
5. | Participation. |
Participants in the Plan will be those Eligible Recipients who, in the judgment of the
Committee, have contributed, are contributing or are expected to contribute to the achievement of
economic objectives of the Company or its subsidiaries. Eligible Recipients may be granted from
time to time one or more Incentive Awards, singly or in combination or in tandem with other
Incentive Awards, as may be determined by the Committee. Incentive Awards will be deemed to be
granted as of the date specified in the grant resolution of the Committee, which date will be the
date of any related agreements with the Participant.
6. | Options. |
6.1 Grant. An Eligible Recipient may be granted one or more Options under the
Plan, and such Options will be subject to such terms and conditions, consistent with the
other provisions of the Plan, as may be determined by the Committee. The Committee may
designate whether an Option is to be considered an Incentive Stock Option or a Non-Statutory
Stock Option.
6.2 Exercise Price. The per share price to be paid by a Participant upon
exercise of an Option will be determined by the Committee in its discretion at the time of
the Option grant, provided that (a) such price will not be less than 100% of the Fair Market
Value of one share of Common Stock on the date of grant with respect to an Incentive Stock
Option (110% of the Fair Market Value if, at the time the Incentive Stock Option is granted,
the Participant owns, directly or indirectly, more than 10% of the total combined voting
power of all classes of stock of the Company or any parent or subsidiary corporation of the
Company), and (b) such price will not be less than 85% of the Fair Market Value of one share
of Common Stock on the date of grant with respect to a Non-Statutory Stock Option.
6.3 Exercisability and Duration. An Option will become exercisable at such times
and in such installments as may be determined by the Committee at the time of grant;
provided, however, that no Incentive Stock Option may be exercisable after 10 years from its
date of grant (five years from its date of grant if, at the time the Incentive Stock Option
is granted, the Participant owns, directly or indirectly, more than 10% of the total
combined voting power of all classes of stock of the Company or any parent or subsidiary
corporation of the Company).
6.4 Payment of Exercise Price. The total purchase price of the shares to be
purchased upon exercise of an Option will be paid entirely in cash (including check, bank
draft or money order); provided, however, that the Committee may allow such payments to be
made, in whole or in part and upon such terms and conditions as may be established by the
Committee, by tender of a Broker Exercise Notice, Previously Acquired Shares, a promissory
note or by a combination of such methods.
6.5 Manner of Exercise. An Option may be exercised by a Participant in whole or
in part from time to time, subject to the conditions contained in the Plan and in the
agreement
evidencing such Option, by delivery in person, by facsimile or electronic transmission or
through the mail of written notice of exercise to the Company (Attention: Chief Financial
Officer) at its principal executive office in Duluth, Minnesota and by paying in full the
total exercise price for the shares of Common Stock to be purchased in accordance with
Section 6.4 of the Plan.
6.6 Aggregate Limitation of Stock Subject to Incentive Stock Options. To the
extent that the aggregate Fair Market Value (determined as of the date an Incentive Stock
Option is granted) of the shares of Common Stock with respect to which incentive stock
options (within the meaning of Section 422 of the Code) are exercisable for the first time
by a Participant during any calendar year (under the Plan and any other incentive stock
option plans of the Company or any subsidiary or parent corporation of the Company (within
the meaning of the Code)) exceeds $100,000 (or such other amount as may be prescribed by the
Code from time to time), such excess Options will be treated as Non-Statutory Stock Options.
The determination will be made by taking incentive stock options into account in the order
in which they were granted. If such excess only applies to a portion of an incentive stock
option, the Committee will designate which shares will be treated as shares to be acquired
upon exercise of an incentive stock option.
7. | Stock Appreciation Rights. |
7.1 Grant. An Eligible Recipient may be granted one or more Stock Appreciation
Rights under the Plan, and such Stock Appreciation Rights shall be subject to such terms and
conditions, consistent with the other provisions of the Plan, as will be determined by the
Committee.
7.2 Exercise Price. The exercise price of a Stock Appreciation Right will be
determined by the Committee at the date of grant but will not be less than 85% of the Fair
Market Value of one share of Common Stock on the date of grant.
7.3 Exercisability and Duration. A Stock Appreciation Right will become
exercisable at such time and in such installments as may be determined by the Committee at
the time of grant; provided, however, that no Stock Appreciation Right may be exercisable
prior to six months or after 10 years from its date of grant. A Stock Appreciation Right
will be exercised by giving notice in the same manner as for Options, as set forth in
Section 6.5 of the Plan.
8. | Restricted Stock Awards. |
8.1 Grant. An Eligible Recipient may be granted one or more Restricted Stock
Awards under the Plan, and such Restricted Stock Awards will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be determined by the
Committee. The Committee may impose such restrictions or conditions, not inconsistent with
the provisions of the Plan, to the vesting of such Restricted Stock Awards as it deems
appropriate, including, without limitation, that the Participant remain in the continuous
employ or service of the Company or a subsidiary for a certain period or that the
Participant or the Company (or any subsidiary or division thereof) satisfy certain
performance goals or criteria.
8.2 Rights as a Stockholder; Transferability. Except as provided in Sections
8.1, 8.3 and 14.3 of the Plan, a Participant will have all voting, dividend, liquidation and
other rights with respect to shares of Common Stock issued to the Participant as a
Restricted Stock Award under this Section 8 upon the Participant becoming the holder of
record of such shares as if such Participant were a holder of record of shares of
unrestricted Common Stock.
8.3 Dividends and Distributions. Unless the Committee determines otherwise
(either in the agreement evidencing the Restricted Stock Award at the time of grant or at
any time after the grant of the Restricted Stock Award), any dividends or distributions
(including regular quarterly cash dividends) paid with respect to shares of Common Stock
subject to the unvested portion of a Restricted Stock Award will be subject to the same
restrictions as the shares to which such dividends or distributions relate. In the event the
Committee determines not to pay such dividends or distributions currently, the Committee
will determine whether any interest will be paid on such dividends or distributions. In
addition, the Committee may require such dividends and distributions to be reinvested (and
in such case the Participants consent to such reinvestment) in shares of Common Stock that
will be subject to the same restrictions as the shares to which such dividends or
distributions relate.
8.4 Enforcement of Restrictions. To enforce the restrictions referred to in this
Section 8, the Committee may place a legend on the stock certificates referring to such
restrictions and may require the Participant, until the restrictions have lapsed, to keep
the stock certificates, together with duly endorsed stock powers, in the custody of the
Company or its transfer agent or to maintain evidence of stock ownership, together with duly
endorsed stock powers, in a certificateless book-entry stock account with the Companys
transfer agent.
9. | Performance Units. |
An Eligible Recipient may be granted one or more Performance Units under the Plan, and such
Performance Units will be subject to such terms and conditions, consistent with the other
provisions of the Plan, as may be determined by the Committee. The Committee may impose such
restrictions or conditions, not inconsistent with the provisions of the Plan, to the vesting of
such Performance Units as it deems appropriate, including, without limitation, that the Participant
remain in the continuous employ or service of the Company or any subsidiary for a certain period or
that the Participant or the Company (or any Subsidiary or division thereof) satisfy certain
performance goals or criteria. The Committee will have the discretion either to determine the form
in which payment of the economic value of vested Performance Units will be made to the Participant
(i.e., cash, Common Stock or any combination thereof) or to consent to or disapprove the election
by the Participant of the form of such payment.
10. | Stock Bonuses. |
An Eligible Recipient may be granted one or more Stock Bonuses under the Plan, and such Stock
Bonuses will be subject to such terms and conditions, consistent with the other provisions of the
Plan, as may be determined by the Committee. The Participant will have all voting, dividend,
liquidation and other rights with respect to the shares of Common Stock issued to a Participant as
a Stock Bonus under this Section 10 upon the Participant becoming the holder of record of such
shares; provided, however, that the Committee may impose such restrictions on the assignment or
transfer of a Stock Bonus as it deems appropriate.
11. | Effect of Termination of Employment or Other Service. |
11.1 Termination Due to Death, Disability or Retirement. In the event a
Participants employment or other service with the Company and all subsidiaries is
terminated by reason of death, Disability or Retirement:
a. All outstanding Options and Stock Appreciation Rights then held by the
Participant will remain exercisable to the extent exercisable as of such termination
for a period of 30 days after such termination (but in no event after the expiration
date of any such Option or Stock Appreciation Right);
b. All outstanding Restricted Stock Awards then held by the Participant that
have not vested will be terminated and forfeited; and
c. All outstanding Performance Units and Stock Bonuses then held by the
Participant will vest and/or continue to vest in the manner determined by the
Committee and set forth in the agreement evidencing such Performance Units or Stock
Bonuses.
11.2 Termination for Reasons Other than Death, Disability or Retirement.
a. In the event a Participants employment or other service is termination with
the Company and all subsidiaries for any reason other than death, Disability or
Retirement, or a Participant is in the employ or service of a subsidiary and the
subsidiary ceases to be a subsidiary of the Company (unless the Participant
continues in the employ or service of the Company or another subsidiary), all rights
of the Participant under the Plan and any agreements evidencing an Incentive Award
will immediately terminate without notice of any kind, and no Options or Stock
Appreciation Rights then held by the Participant will thereafter be exercisable, all
Restricted Stock Awards then held by the Participant that have not vested will be
terminated and forfeited, and all Performance Units and Stock Bonuses then held by
the Participant will vest and/or continue to vest in the manner determined by the
Committee and set forth in the agreement evidencing such Performance Units or Stock
Bonuses; provided, however, that if such termination is due to any reason other than
termination by the Company or any subsidiary for cause, all outstanding Options
and Stock Appreciation Rights then held by such Participant will remain exercisable
to the extent exercisable as of such termination for a period of 30 days after such
termination (but in no event after the expiration date of any such Option or Stock
Appreciation Right).
b. For purposes of this Section 11.2, cause (as determined by the Committee)
will be a defined in any employment or other agreement or policy applicable to the
Participant or, if no such agreement or policy exists, will mean (i) dishonesty,
fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, in
each case related to the Company or any subsidiary, (ii) any unlawful or criminal
activity of a serious nature, (iii) any intentional and deliberate breach of a duty
or duties that, individually or in the aggregate, are material in relation to the
Participants overall duties, or (iv) any material breach of any employment,
service, confidentiality or non-compete agreement entered into with the Company or
any subsidiary.
11.3 Modification of Rights Upon Termination. Notwithstanding the other
provisions of this Section 11, upon a Participants termination of employment or other
service with the Company and all subsidiaries, the Committee may in its discretion (which
may be exercised at any time on or after the date of grant, including following such
termination) cause Options and Stock Appreciation Rights (or any part thereof) then held by
such Participant to become or continue to become exercisable and/or remain exercisable
following such termination of employment or service and Restricted Stock Awards, Performance
Units and Stock Bonuses then held by such Participant to vest and/or continue to vest or
become free of transfer restrictions, as the case may be, following such termination of
employment or service, in each casein the manner determined by the Committee; provided,
however, that no Option or Stock Appreciation Right may remain exercisable beyond its
expiration date.
11.4 Breach of Confidentiality or Non-Compete Agreements. Notwithstanding
anything in this Plan to the contrary, in the event that a Participant materially breaches
the terms of any confidentiality or non-compete agreement entered into with the Company or
any subsidiary, whether such breach occurs before or after termination of such Participants
employment or other service with the Company or any subsidiary, the Committee may
immediately terminate all rights of the Participant under the Plan and any agreements
evidencing an Incentive Award then held by the Participant without notice of any kind.
11.5 Date of Termination of Employment or Other Service. Unless the Committee
otherwise determines, a Participants employment or other service will, for purposes of the
Plan, be deemed to have terminated on the date recorded on the personnel or other records of
the Company or the subsidiary for which the Participant provides employment or other
service, as determined by the Committee based upon such records.
12. | Payment of Withholding Taxes. |
12.1 General Rules. The Company is entitled to (a) withhold and deduct from
future wages of the Participant (or from other amounts that may be due and owing to the
Participant from the Company or a subsidiary), or make other arrangements for the collection
of, all legally required amounts necessary to satisfy any and all federal, state and local
withholding and employment-related tax requirements attributable to an Incentive Award,
including, without limitation, the grant, exercise or vesting of, or payment of dividends
with respect to, an Incentive Stock Option, or (b) require the Participant promptly to remit
the amount of such withholding to the Company before taking any action, including issuing
any shares of Common Stock, with respect to an Incentive Award.
12.2 Special Rules. The Committee may, upon terms and conditions established by
the Committee, permit or require a Participant to satisfy, in whole or in part, any
withholding or employment-related tax obligation described in Section 12.1 of the Plan by
electing to tender Previously Acquired Shares, a Broker Exercise Notice or a promissory note
(on terms acceptable to the Committee in its sole discretion), or by a combination of such
methods.
13. | Change in Control. |
13.1 Change in Control. For purposes of this Section 13.1, a Change in Control
of the Company will mean the following:
a. the sale, lease, exchange or other transfer, directly or indirectly, of
substantially all of the assets of the Company (in one transaction or in a series of
related transactions) to a person or entity that is not controlled by the Company;
b. the approval by the stockholders of the Company of any plan or proposal for
the liquidation or dissolution of the Company;
c. a merger or consolidation to which the Company is a party if the stockholders
of the Company immediately prior to the effective date of such merger or
consolidation have beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act), immediately following the effective date of such merger or
consolidation, of securities of the surviving corporation representing (i) more than
50%, but not more than 80% of the combined voting power of the surviving
corporations then outstanding securities ordinarily having the right to vote at
elections of directors, unless such merger or consolidation has been approved in
advance by the Incumbent Directors (as defined in Section 13.2 below), or (ii) 50%
or
less of the combined voting power of the surviving corporations then outstanding
securities ordinarily having the right to vote at elections of directors (regardless
of any approval by the Incumbent Directors);
d. any person becomes after the effective date of the Plan the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
(i) 40% or more, but not 50% or more, of the combined voting power of the Companys
outstanding securities ordinarily having the right to vote at elections of
directors, unless the transaction resulting in such ownership has been approved in
advance by the Incumbent Directors, or (ii) 50% or more of the combined voting power
of the Companys outstanding securities ordinarily having the right to vote at
elections of directors (regardless of any approval by the Incumbent Directors);
e. the Incumbent Directors cease for any reason to constitute at least a
majority of the Board; or
f. a change in control of the Company of a nature that would be required to be
reported pursuant to Section 13 or 15(d) of the Exchange Act, whether or not the
company is then subject to such reporting requirements.
13.2 Incumbent Directors. For purposes of this Section 13, Incumbent Directors
of the Company means any individuals who are members of the Board on the effective date of
the Plan and any individual who subsequently becomes a member of the Board whose election,
or nomination for election by the Companys stockholders, was approved by a vote of at least
a majority of the Incumbent Directors (either by specific vote or by approval of the
Companys proxy statement in which such individual is named as a nominee for director
without objection to such nomination).
13.3. Acceleration of Vesting. Without limiting the authority of the Committee
under Section 3.2 of the Plan, if a Change in Control of the Company occurs, then unless the
Committee otherwise determines and sets forth in the agreement evidencing an Incentive Award
at the time of grant of such Incentive Award, (a) all outstanding Options and Stock
Appreciation Rights will become immediately exercisable in full and will remain exercisable
for the remainder of their terms, regardless of whether the Participant to whom such Options
or Stock Appreciation Rights have been granted remains in the employ or service of the
Company or any Subsidiary; (b) all outstanding Restricted Stock Awards will become
immediately fully vested and non-forfeitable; and (c) all outstanding Performance Units and
Stock Bonuses then held by the Participant will vest and/or continue to vest in the manner
determined by the Committee and set forth in the agreement evidencing such Performance
Unites or Stock Bonuses.
13.4 Cash Payment for Options. If a Change of Control of the Company occurs,
then the Committee, if approved by the Committee either in an agreement evidencing an
Incentive Award at the time of grant or at any time after the grant of an Incentive Award,
may determine that some or all Participants holding outstanding Options will receive, with
respect to some or all of the shares of Common Stock subject to such Options, as of the
effective date of any such Change in Control of the Company, cash in an amount equal to the
excess of the Fair Market Value of such shares immediately prior to the effective date of
such Change in Control of the Company over the exercise price per share of such Options.
13.5 Limitation on Change in Control Payments. Notwithstanding anything in
Section 13.3 or 13.4 of the Plan to the contrary, if, with respect to a Participant, the
acceleration
of the vesting of an Incentive Award as provided in Section 13.3 or the payment of cash in
exchange for all or part of an Incentive Award as provided in Section 13.4 (which
acceleration or payment could be deemed a payment within the meaning of Section 280G(b)(2)
of the Code), together with any other payments which such Participant has the right to
receive from the Company or any corporation that is a member of an affiliate group (as
defined in Section 1504(a) of the Code without regarding to Section 1504(b) of the Code) of
which the Company is a member, would constitute a parachute payment (as defined in Section
280G(b)(2) of the Code), then the payments to such Participant pursuant to Section 13.3 or
13.4 will be reduced to the largest amount as will result in no portion of such payments
being subject to the excise tax imposed by Section 4999 of the Code; provided, however, that
if such Participant is subject to a separate agreement with the Company or a subsidiary that
specifically provides that payments attributable to one or more forms to employee stock
incentives or to payments made in lieu of employee stock incentives will not reduce any
other payments under such agreement, event if it would constitute an excess parachute
payment, or provides that the Participant will have the discretion to determine which
payment will be reduced in order to avoid an excess parachute payment, then the limitations
of this Section 13.5 will, to that extent, not apply.
14. | Rights of Eligible Recipients and Participants; Transferability. |
14.1 Employment or Service. Nothing in the Plan will interfere with or limit in
any way the right of the Company or any Subsidiary to terminate the employment or service of
any Eligible Recipient or Participant at any time, nor confer upon any Eligible Recipient or
Participant any right to continue in the employ or service of the Company or any Subsidiary.
14.2 Rights as a Stockholder. As a holder of Incentive Awards (other than
Restricted Stock Awards and Stock Bonuses), a Participant will have no rights as a
stockholder unless and until such Incentive Awards are exercised for, or paid in the form
of, shares of Common Stock and the Participant becomes the holder of record of such shares.
Except as otherwise provided in the Plan, no adjustment will be made for dividends or
distributions with respect to such Incentive Awards as to which there is a record date
preceding the date the Participant becomes the holder of record of such shares, except as
the Committee may determine.
14.3 Restrictions on Transfer. Except pursuant to testamentary will or the laws
of descent and distribution or as otherwise expressly permitted by the Plan, no right or
interest of any Participant in an Incentive Award prior to the exercise or vesting of such
Incentive Award will be assignable or transferable, or subjected to any lien, during the
lifetime of the Participant, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise. A Participant will, however, be entitled to designate a
beneficiary to receive an Incentive Award upon such Participants death, and in the event of
a Participants death, payment of any amounts due under the Plan will be made to, and
exercise of any Options (to the extent permitted pursuant to Section 11 of the Plan) may be
made by, the Participants legal representatives, heirs and legatees.
14.4 Non-Exclusivity of the Plan. Nothing contained in the Plan is intended to
modify or rescind any previously approved compensation plans or programs of the Company or
create any limitations on the power or authority of the Board to adopt such additional or
other compensation arrangements as the Board may deem necessary or desirable.
15. | Securities Law and Other Restrictions. |
Notwithstanding any other provision of the Plan or any agreements entered into pursuant to the
Plan, the Company will not be required to issue any shares of Common Stock under this Plan, and a
Participant may not sell, assign, transfer or otherwise dispose of shares of Common Stock issued
pursuant to Incentive Awards granted under the Plan, unless (a) there is in effect with respect to
such shares a registration statement under the Securities Act and any applicable state securities
laws or an exemption from such registration under the Securities Act and applicable state
securities laws, and (b) there has been obtained any other consent, approval or permit from any
other regulatory body which the Committee deems necessary or advisable. The Company may condition
such issuance, sale or transfer upon the receipt of any representations or agreements from the
parties involved, and the placement of any legends on certificates representing shares of Common
Stock, as may be deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.
16. | Plan Amendment, Modification and Termination. |
The Board may suspend or terminate the Plan or any portion thereof at any time, and may amend
the Plan from time to time in such respects as the Board may deem advisable in order that Incentive
Awards under the Plan will conform to any change in applicable laws or regulations or in any other
respect the Board may deem to be in the best interests of the Company; provided, however, that no
amendments to the Plan will be effective without approval of the stockholders of the Company if
stockholder approval of the amendment is then required pursuant to Rule 16b-3 under the Exchange
Act, Section 422 of the Code or the rules of the NASD or any stock exchange. No termination,
suspension or amendment of the Plan may adversely affect any outstanding Incentive Award without
the consent of the affected Participant; provided, however, that this sentence will not impair the
right of the Committee to take whatever action is deems appropriate under Sections 3.2(c), 4.3 and
13 of the Plan.
17. | Effective Date and Duration of the Plan |
The Plan is effective as of February 19, 2009, the date it was adopted by the Board in its
current form. The Plan will terminate at midnight on February 18, 2019, and may be terminated prior
to such time by Board action, and no Incentive Award will be granted after such termination.
Incentive Awards outstanding upon termination of the Plan may continue to be exercised, or become
free of restrictions, in accordance with their terms.
18. | Miscellaneous |
18.1 Governing Law. The validity, construction, interpretation, administration
and effect of the Plan and any rules, regulations and actions relating to the Plan will be
governed by and construed exclusively in accordance with the laws of the State of Minnesota,
notwithstanding the conflicts of laws principles of any jurisdictions.
18.2 Successors and Assigns. The Plan will be binding upon and inure to the
benefit of the successors and permitted assigns of the Company and the Participants.