Exhibit 10.1

 

FARGO ELECTRONICS, INC.

2003 STOCK INCENTIVE PLAN

(as amended May 21, 2006)

 

1.                                       PURPOSE OF PLAN.

 

The purpose of the Fargo Electronics, Inc. 2003 Stock Incentive Plan (the
“Plan”) is to advance the interests of Fargo Electronics, Inc. (the “Company”)
and its stockholders by enabling the Company and its Subsidiaries to attract and
retain qualified individuals through opportunities for equity participation in
the Company, and to reward those individuals who contribute to the Company’s
achievement of its economic objectives.

 

2.                                       DEFINITIONS.

 

The following terms will have the meanings set forth below, unless the context
clearly otherwise requires:

 

2.1                                 “BOARD” MEANS THE COMPANY’S BOARD OF
DIRECTORS.

 

2.2                                 “BROKER EXERCISE NOTICE” MEANS A WRITTEN
NOTICE PURSUANT TO WHICH A PARTICIPANT, UPON EXERCISE OF AN OPTION, IRREVOCABLY
INSTRUCTS A BROKER OR DEALER TO SELL A SUFFICIENT NUMBER OF SHARES OR LOAN A
SUFFICIENT AMOUNT OF MONEY TO PAY ALL OR A PORTION OF THE EXERCISE PRICE OF THE
OPTION AND/OR ANY RELATED WITHHOLDING TAX OBLIGATIONS AND REMIT SUCH SUMS TO THE
COMPANY AND DIRECTS THE COMPANY TO DELIVER STOCK CERTIFICATES TO BE ISSUED UPON
SUCH EXERCISE DIRECTLY TO SUCH BROKER OR DEALER OR THEIR NOMINEE.

 

2.3                                 “CAUSE” MEANS (I) DISHONESTY, FRAUD,
MISREPRESENTATION, EMBEZZLEMENT OR DELIBERATE INJURY OR ATTEMPTED INJURY, IN
EACH CASE RELATED TO THE COMPANY OR ANY SUBSIDIARY, (II) ANY UNLAWFUL OR
CRIMINAL ACTIVITY OF A SERIOUS NATURE, (III) ANY INTENTIONAL AND DELIBERATE
BREACH OF A DUTY OR DUTIES THAT, INDIVIDUALLY OR IN THE AGGREGATE, ARE MATERIAL
IN RELATION TO THE PARTICIPANT’S OVERALL DUTIES, OR (IV) ANY MATERIAL BREACH OF
ANY CONFIDENTIALITY OR NONCOMPETE AGREEMENT ENTERED INTO WITH THE COMPANY OR ANY
SUBSIDIARY.

 

2.4                                 “CHANGE IN CONTROL” MEANS AN EVENT DESCRIBED
IN SECTION 10.1 OF THE PLAN.

 

2.5                                 “CODE” MEANS THE INTERNAL REVENUE CODE OF
1986, AS AMENDED.

 

2.6                                 “COMMITTEE” MEANS THE GROUP OF INDIVIDUALS
ADMINISTERING THE PLAN, AS PROVIDED IN SECTION 3 OF THE PLAN.

 

2.7                                 “COMMON STOCK” MEANS THE COMMON STOCK OF THE
COMPANY, PAR VALUE $0.01 PER SHARE, OR THE NUMBER AND KIND OF SHARES OF STOCK OR
OTHER SECURITIES INTO WHICH SUCH COMMON STOCK MAY BE CHANGED IN ACCORDANCE WITH
SECTION 4.3 OF THE PLAN.

 

2.8                                 “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

 

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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.

 

2.9                                 “EFFECTIVE DATE” MEANS MAY 1, 2003 OR SUCH
LATER DATE AS THE PLAN IS INITIALLY APPROVED BY THE COMPANY’S STOCKHOLDERS.

 

2.10                           “ELIGIBLE RECIPIENTS” MEANS ALL EMPLOYEES
(INCLUDING, WITHOUT LIMITATION, OFFICERS AND DIRECTORS WHO ARE ALSO EMPLOYEES)
OF THE COMPANY OR ANY SUBSIDIARY AND ALL NON-EMPLOYEE DIRECTORS.

 

2.11                           “EXCHANGE ACT” MEANS THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.

 

2.12                           “FAIR MARKET VALUE” MEANS, WITH RESPECT TO THE
COMMON STOCK, AS OF ANY DATE:  (I) THE MEAN BETWEEN THE REPORTED HIGH AND LOW
SALE PRICES OF THE COMMON STOCK AT THE END OF THE REGULAR TRADING SESSION, IF
THE COMMON STOCK IS LISTED, ADMITTED TO UNLISTED TRADING PRIVILEGES, OR REPORTED
ON ANY NATIONAL SECURITIES EXCHANGE OR ON THE NASDAQ NATIONAL MARKET ON SUCH
DATE (OR, IF NO SHARES WERE TRADED ON SUCH DAY, AS OF THE NEXT PRECEDING DAY ON
WHICH THERE WAS SUCH A TRADE); OR (II) IF THE COMMON STOCK IS NOT SO LISTED,
ADMITTED TO UNLISTED TRADING PRIVILEGES, OR REPORTED ON ANY NATIONAL EXCHANGE OR
ON THE NASDAQ NATIONAL MARKET, THE CLOSING BID PRICE AS OF SUCH DATE AT THE END
OF THE REGULAR TRADING SESSION, AS REPORTED BY THE NASDAQ SMALLCAP MARKET, OTC
BULLETIN BOARD, THE BULLETIN BOARD EXCHANGE (BBX) OR THE NATIONAL QUOTATION
BUREAUS, INC., OR OTHER COMPARABLE SERVICE; OR (III) 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.

 

2.13                           “INCENTIVE AWARD” MEANS AN OPTION OR RESTRICTED
STOCK AWARD GRANTED TO AN ELIGIBLE RECIPIENT PURSUANT TO THE PLAN.

 

2.14                           “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.

 

2.15                           “NON-STATUTORY STOCK OPTION” MEANS A RIGHT TO
PURCHASE COMMON STOCK GRANTED TO AN ELIGIBLE RECIPIENT PURSUANT TO SECTION 6 OF
THE PLAN THAT DOES NOT QUALIFY AS AN INCENTIVE STOCK OPTION.

 

2.16                           “OPTION” MEANS AN INCENTIVE STOCK OPTION OR A
NON-STATUTORY STOCK OPTION.

 

2.17                           “PARTICIPANT” MEANS AN ELIGIBLE RECIPIENT WHO
RECEIVES ONE OR MORE INCENTIVE AWARDS UNDER THE PLAN.

 

2.18                           “PREVIOUSLY ACQUIRED SHARES” MEANS SHARES OF
COMMON STOCK THAT ARE ALREADY OWNED BY THE PARTICIPANT OR, WITH RESPECT TO ANY
INCENTIVE AWARD, THAT ARE TO BE ISSUED UPON THE GRANT, EXERCISE OR VESTING OF
SUCH INCENTIVE AWARD.

 

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2.19                           “RESTRICTED STOCK AWARD” MEANS AN AWARD OF COMMON
STOCK GRANTED TO AN ELIGIBLE RECIPIENT PURSUANT TO SECTION 7 OF THE PLAN THAT IS
SUBJECT TO THE RESTRICTIONS ON TRANSFERABILITY AND THE RISK OF FORFEITURE
IMPOSED BY THE PROVISIONS OF SUCH SECTION 7.

 

2.20                           “RETIREMENT” MEANS NORMAL OR APPROVED EARLY
TERMINATION OF EMPLOYMENT OR SERVICE PURSUANT TO AND IN ACCORDANCE WITH THE
REGULAR RETIREMENT/PENSION PLAN OR PRACTICE OF THE COMPANY OR SUBSIDIARY THEN
COVERING THE PARTICIPANT, PROVIDED THAT IF THE PARTICIPANT IS NOT COVERED BY ANY
SUCH PLAN OR PRACTICE, THE PARTICIPANT WILL BE DEEMED TO BE COVERED BY THE
COMPANY’S PLAN OR PRACTICE FOR PURPOSES OF THIS DETERMINATION.

 

2.21                           “SECURITIES ACT” MEANS THE SECURITIES ACT OF
1933, AS AMENDED.

 

2.22                           “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.

 

3.                                       PLAN ADMINISTRATION.

 

3.1                                 THE COMMITTEE. THE PLAN WILL BE ADMINISTERED
BY THE BOARD OR BY A COMMITTEE OF THE BOARD. SO LONG AS THE COMPANY HAS A
CLASS OF ITS EQUITY SECURITIES REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT,
ANY COMMITTEE ADMINISTERING THE PLAN WILL CONSIST SOLELY OF TWO OR MORE MEMBERS
OF THE BOARD WHO ARE “NON-EMPLOYEE DIRECTORS” WITHIN THE MEANING OF RULE 16B-3
UNDER THE EXCHANGE ACT. SUCH A COMMITTEE, IF ESTABLISHED, WILL ACT BY MAJORITY
APPROVAL OF THE MEMBERS (UNANIMOUS APPROVAL WITH RESPECT TO ACTION BY WRITTEN
CONSENT), AND A MAJORITY OF THE MEMBERS OF SUCH A COMMITTEE WILL CONSTITUTE A
QUORUM. AS USED IN THE PLAN, “COMMITTEE” WILL REFER TO THE BOARD OR TO SUCH A
COMMITTEE, IF ESTABLISHED. TO THE EXTENT CONSISTENT WITH APPLICABLE CORPORATE
LAW OF THE COMPANY’S JURISDICTION OF INCORPORATION, 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

 

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THE NUMBER OF SHARES OF COMMON STOCK TO BE SUBJECT TO EACH INCENTIVE AWARD, ANY
EXERCISE PRICE, THE MANNER IN WHICH INCENTIVE AWARDS WILL VEST OR BECOME
EXERCISABLE AND WHETHER INCENTIVE AWARDS WILL BE GRANTED IN TANDEM WITH OTHER
INCENTIVE AWARDS) AND THE FORM OF WRITTEN AGREEMENT, IF ANY, EVIDENCING SUCH
INCENTIVE AWARD; (III) THE TIME OR TIMES WHEN INCENTIVE AWARDS WILL BE GRANTED;
(IV) THE DURATION OF EACH INCENTIVE AWARD; AND (V) THE RESTRICTIONS AND OTHER
CONDITIONS TO WHICH THE PAYMENT OR VESTING OF INCENTIVE AWARDS MAY BE SUBJECT.
IN ADDITION, THE COMMITTEE WILL HAVE THE AUTHORITY UNDER THE PLAN IN ITS SOLE
DISCRETION TO PAY THE ECONOMIC VALUE OF ANY INCENTIVE AWARD IN THE FORM OF CASH,
COMMON STOCK OR ANY COMBINATION OF BOTH.

 

(B)                                 SUBJECT TO SECTION 3.2(D), BELOW, 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.

 

(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, DISPOSITION OR
WRITE-DOWN OF A SIGNIFICANT AMOUNT OF ASSETS OR A SIGNIFICANT BUSINESS;
(III) ANY CHANGE IN ACCOUNTING PRINCIPLES OR PRACTICES, TAX LAWS OR OTHER SUCH
LAWS OR PROVISIONS AFFECTING REPORTED RESULTS; 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 OR OTHER SUBUNIT THEREOF) OR SUCH
OTHER ENTITY SO AS EQUITABLY TO REFLECT SUCH EVENT, WITH THE DESIRED RESULT THAT
THE CRITERIA FOR EVALUATING SUCH FINANCIAL PERFORMANCE OF THE COMPANY OR SUCH
OTHER ENTITY WILL BE SUBSTANTIALLY THE SAME (IN THE SOLE DISCRETION OF THE
COMMITTEE OR THE BOARD OF DIRECTORS OF THE SURVIVING CORPORATION) FOLLOWING SUCH
EVENT AS PRIOR TO SUCH EVENT; PROVIDED, HOWEVER, THAT THE AMENDED OR MODIFIED
TERMS ARE PERMITTED BY THE PLAN AS THEN IN EFFECT.

 

(D)                                 NOTWITHSTANDING ANY OTHER PROVISION OF THIS
PLAN OTHER THAN SECTION 4.3, THE COMMITTEE MAY NOT, WITHOUT PRIOR APPROVAL OF
THE COMPANY’S STOCKHOLDERS, SEEK TO EFFECT ANY RE-PRICING OF ANY PREVIOUSLY
GRANTED, “UNDERWATER” OPTION BY: (I) AMENDING OR MODIFYING THE TERMS OF THE
OPTION TO LOWER THE EXERCISE PRICE; (II) CANCELING THE UNDERWATER OPTION AND
GRANTING EITHER REPLACEMENT OPTIONS HAVING A LOWER EXERCISE PRICE OR RESTRICTED
STOCK

 

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AWARDS;  IN EXCHANGE; OR (III) REPURCHASING THE UNDERWATER OPTIONS AND GRANTING
NEW INCENTIVE AWARDS UNDER THIS PLAN. FOR PURPOSES OF THIS SECTION 3.2(D) AND
SECTION 10.4, AN OPTION WILL BE DEEMED TO BE “UNDERWATER” AT ANY TIME WHEN THE
FAIR MARKET VALUE OF THE COMMON STOCK IS LESS THAN THE EXERCISE PRICE OF THE
OPTION.

 

4.                                       SHARES AVAILABLE FOR ISSUANCE.

 

4.1                                 MAXIMUM NUMBER OF SHARES AVAILABLE; CERTAIN
RESTRICTIONS ON AWARDS. 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 1,000,000. THE SHARES AVAILABLE FOR ISSUANCE
UNDER THE PLAN MAY, AT THE ELECTION OF THE COMMITTEE, BE EITHER TREASURY SHARES
OR SHARES AUTHORIZED BUT UNISSUED, AND, IF TREASURY SHARES ARE USED, ALL
REFERENCES IN THE PLAN TO THE ISSUANCE OF SHARES WILL, FOR CORPORATE LAW
PURPOSES, BE DEEMED TO MEAN THE TRANSFER OF SHARES FROM TREASURY.
NOTWITHSTANDING ANY OTHER PROVISIONS OF THE PLAN TO THE CONTRARY, (I) NO
PARTICIPANT IN THE PLAN MAY BE GRANTED ANY INCENTIVE AWARDS RELATING TO MORE
THAN 200,000 SHARES OF COMMON STOCK IN THE AGGREGATE DURING ANY FISCAL YEAR OF
THE COMPANY AND (II) NO MORE THAN 100,000 SHARES OF COMMON STOCK MAY BE GRANTED
AS RESTRICTED STOCK AWARDS UNDER THE PLAN; PROVIDED, HOWEVER, THAT A PARTICIPANT
WHO IS FIRST APPOINTED OR ELECTED AS AN OFFICER, HIRED AS AN EMPLOYEE BY THE
COMPANY OR WHO RECEIVES A PROMOTION THAT RESULTS IN AN INCREASE IN
RESPONSIBILITIES OR DUTIES MAY BE GRANTED, DURING THE FISCAL YEAR OF SUCH
APPOINTMENT, ELECTION, HIRING, RETENTION OR PROMOTION, INCENTIVE AWARDS RELATING
TO UP TO 400,000 SHARES OF COMMON STOCK (SUBJECT TO ADJUSTMENT AS PROVIDED IN
SECTION 4.3 OF THE PLAN).

 

4.2                                 ACCOUNTING FOR INCENTIVE AWARDS. SHARES OF
COMMON STOCK THAT ARE ISSUED UNDER THE PLAN OR THAT ARE SUBJECT TO OUTSTANDING
INCENTIVE AWARDS WILL BE APPLIED TO REDUCE THE MAXIMUM NUMBER OF SHARES OF
COMMON STOCK REMAINING AVAILABLE FOR ISSUANCE UNDER THE PLAN; PROVIDED, HOWEVER,
THAT SHARES SUBJECT TO AN INCENTIVE AWARD THAT LAPSES, EXPIRES, IS FORFEITED
(INCLUDING ISSUED SHARES FORFEITED UNDER A RESTRICTED STOCK AWARD) OR FOR ANY
REASON IS TERMINATED UNEXERCISED OR UNVESTED OR 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. TO THE EXTENT THAT THE EXERCISE PRICE OF
ANY OPTION AND/OR ASSOCIATED TAX WITHHOLDING OBLIGATIONS ARE PAID BY TENDER OR
ATTESTATION AS TO OWNERSHIP OF PREVIOUSLY ACQUIRED SHARES, OR TO THE EXTENT THAT
SUCH TAX WITHHOLDING OBLIGATIONS ARE SATISFIED BY WITHHOLDING OF SHARES
OTHERWISE ISSUABLE UPON EXERCISE OF THE OPTION, ONLY THE NUMBER OF SHARES OF
COMMON STOCK ISSUED NET OF THE NUMBER OF SHARES TENDERED, ATTESTED TO OR
WITHHELD WILL BE APPLIED TO REDUCE THE MAXIMUM NUMBER OF SHARES OF COMMON STOCK
REMAINING AVAILABLE FOR ISSUANCE UNDER THE PLAN.

 

4.3                                 ADJUSTMENTS TO SHARES AND INCENTIVE AWARDS.
IN THE EVENT OF ANY REORGANIZATION, MERGER, CONSOLIDATION, RECAPITALIZATION,
LIQUIDATION, RECLASSIFICATION, STOCK DIVIDEND, STOCK SPLIT, COMBINATION OF
SHARES, RIGHTS OFFERING, DIVESTITURE OR EXTRAORDINARY DIVIDEND (INCLUDING A
SPIN-OFF) OR ANY OTHER CHANGE IN THE CORPORATE STRUCTURE OR SHARES OF THE
COMPANY, THE COMMITTEE (OR, IF THE COMPANY IS NOT THE SURVIVING CORPORATION IN
ANY SUCH TRANSACTION, THE BOARD OF DIRECTORS OF THE SURVIVING CORPORATION) WILL
MAKE APPROPRIATE ADJUSTMENT (WHICH DETERMINATION WILL BE CONCLUSIVE) AS TO THE
NUMBER AND KIND OF SECURITIES OR OTHER PROPERTY (INCLUDING CASH) AVAILABLE FOR
ISSUANCE OR PAYMENT UNDER THE PLAN AND, IN ORDER TO PREVENT DILUTION OR
ENLARGEMENT OF THE RIGHTS OF PARTICIPANTS,

 

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THE NUMBER AND KIND OF SECURITIES OR OTHER PROPERTY (INCLUDING CASH) SUBJECT TO
OUTSTANDING INCENTIVE AWARDS AND THE EXERCISE PRICE OF OUTSTANDING OPTIONS.

 

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 in its sole discretion. Incentive
Awards will be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date will be the date of any related
agreement with the Participant.

 

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 IN ITS SOLE DISCRETION. THE COMMITTEE
MAY DESIGNATE WHETHER AN OPTION IS TO BE CONSIDERED AN INCENTIVE STOCK OPTION OR
A NON-STATUTORY STOCK OPTION. TO THE EXTENT THAT ANY INCENTIVE STOCK OPTION
GRANTED UNDER THE PLAN CEASES FOR ANY REASON TO QUALIFY AS AN “INCENTIVE STOCK
OPTION” FOR PURPOSES OF SECTION 422 OF THE CODE, SUCH INCENTIVE STOCK OPTION
WILL CONTINUE TO BE OUTSTANDING FOR PURPOSES OF THE PLAN BUT WILL THEREAFTER BE
DEEMED TO BE 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, HOWEVER,
THAT 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 ANY OPTION (110% OF THE
FAIR MARKET VALUE WITH RESPECT TO AN INCENTIVE STOCK OPTION IF, AT THE TIME SUCH
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).

 

6.3                                 EXERCISABILITY AND DURATION. AN OPTION WILL
BECOME EXERCISABLE AT SUCH TIMES AND IN SUCH INSTALLMENTS AND UPON SUCH TERMS
AND CONDITIONS AS MAY BE DETERMINED BY THE COMMITTEE IN ITS SOLE DISCRETION AT
THE TIME OF GRANT (INCLUDING WITHOUT LIMITATION THAT THE PARTICIPANT REMAIN IN
THE CONTINUOUS EMPLOY OR SERVICE OF THE COMPANY OR A SUBSIDIARY FOR A CERTAIN
PERIOD); PROVIDED, HOWEVER, THAT NO OPTION MAY BE EXERCISABLE PRIOR TO SIX
MONTHS FROM ITS DATE OF GRANT (OTHER THAN AS PROVIDED IN SECTION 8.1 OF THE
PLAN) OR AFTER 10 YEARS FROM ITS DATE OF GRANT (FIVE YEARS FROM ITS DATE OF
GRANT IN THE CASE OF AN INCENTIVE STOCK OPTION 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, IN ITS SOLE DISCRETION AND UPON TERMS AND
CONDITIONS

 

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ESTABLISHED BY THE COMMITTEE, MAY ALLOW SUCH PAYMENTS TO BE MADE, IN WHOLE OR IN
PART, BY TENDER OF A BROKER EXERCISE NOTICE, BY TENDER, OR ATTESTATION AS TO
OWNERSHIP, OF PREVIOUSLY ACQUIRED SHARES THAT HAVE BEEN HELD FOR THE PERIOD OF
TIME NECESSARY TO AVOID A CHARGE TO THE COMPANY’S EARNINGS FOR FINANCIAL
REPORTING PURPOSES AND THAT ARE OTHERWISE ACCEPTABLE TO THE COMMITTEE, OR BY A
COMBINATION OF SUCH METHODS. FOR PURPOSES OF SUCH PAYMENT, PREVIOUSLY ACQUIRED
SHARES TENDERED OR COVERED BY AN ATTESTATION WILL BE VALUED AT THEIR FAIR MARKET
VALUE ON THE EXERCISE DATE.

 

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 AT ITS PRINCIPAL EXECUTIVE OFFICE
IN EDEN PRAIRIE, MINNESOTA AND BY PAYING IN FULL THE TOTAL EXERCISE PRICE FOR
THE SHARES OF COMMON STOCK TO BE PURCHASED IN ACCORDANCE WITH SECTION 6.4 OF THE
PLAN.

 

7.                                       RESTRICTED STOCK AWARDS.

 

7.1                                 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 IN ITS SOLE
DISCRETION. THE COMMITTEE MAY IMPOSE SUCH RESTRICTIONS OR CONDITIONS, NOT
INCONSISTENT WITH THE PROVISIONS OF THE PLAN, TO THE VESTING OF SUCH RESTRICTED
STOCK AWARDS AS IT DEEMS APPROPRIATE, INCLUDING, WITHOUT LIMITATION, THAT THE
PARTICIPANT REMAIN IN THE CONTINUOUS EMPLOY OR SERVICE OF THE COMPANY OR A
SUBSIDIARY FOR A CERTAIN PERIOD; PROVIDED, HOWEVER, THAT OTHER THAN AS PROVIDED
IN SECTION 8.1 OF THE PLAN, NO RESTRICTED STOCK AWARD MAY VEST PRIOR TO SIX
MONTHS FROM ITS DATE OF GRANT.

 

7.2                                 RIGHTS AS A STOCKHOLDER; TRANSFERABILITY.
EXCEPT AS PROVIDED IN SECTIONS 7.1, 7.3, 7.4 AND 11.3 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 7 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.

 

7.3                                 DIVIDENDS AND DISTRIBUTIONS. UNLESS THE
COMMITTEE DETERMINES OTHERWISE IN ITS SOLE DISCRETION (EITHER IN THE AGREEMENT
EVIDENCING THE RESTRICTED STOCK AWARD AT THE TIME OF GRANT OR AT ANY TIME AFTER
THE GRANT OF THE RESTRICTED STOCK AWARD), ANY DIVIDENDS OR DISTRIBUTIONS (OTHER
THAN 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. THE COMMITTEE WILL DETERMINE IN ITS SOLE DISCRETION
WHETHER ANY INTEREST WILL BE PAID ON SUCH DIVIDENDS OR DISTRIBUTIONS.

 

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7.4                                 ENFORCEMENT OF RESTRICTIONS. TO ENFORCE THE
RESTRICTIONS REFERRED TO IN THIS SECTION 7, THE COMMITTEE MAY PLACE A LEGEND ON
THE STOCK CERTIFICATES REFERRING TO SUCH RESTRICTIONS AND MAY REQUIRE THE
PARTICIPANT, UNTIL THE RESTRICTIONS HAVE LAPSED, TO KEEP THE STOCK CERTIFICATES,
TOGETHER WITH DULY ENDORSED STOCK POWERS, IN THE CUSTODY OF THE COMPANY OR ITS
TRANSFER AGENT, OR TO MAINTAIN EVIDENCE OF STOCK OWNERSHIP, TOGETHER WITH DULY
ENDORSED STOCK POWERS, IN A CERTIFICATELESS BOOK-ENTRY STOCK ACCOUNT WITH THE
COMPANY’S TRANSFER AGENT.

 

8.                                       EFFECT OF TERMINATION OF EMPLOYMENT OR
OTHER SERVICE.

 

8.1                                 TERMINATION DUE TO DEATH OR DISABILITY. IN
THE EVENT A PARTICIPANT’S EMPLOYMENT OR OTHER SERVICE WITH THE COMPANY AND ALL
SUBSIDIARIES IS TERMINATED BY REASON OF DEATH OR DISABILITY:

 

(A)                                  ALL OUTSTANDING OPTIONS THEN HELD BY THE
PARTICIPANT WILL BECOME IMMEDIATELY EXERCISABLE IN FULL AND WILL REMAIN
EXERCISABLE FOR A PERIOD OF ONE (1) YEAR AFTER SUCH TERMINATION (BUT IN NO EVENT
AFTER THE EXPIRATION DATE OF ANY SUCH OPTION); AND

 

(B)                                 ALL RESTRICTED STOCK AWARDS THEN HELD BY THE
PARTICIPANT WILL BECOME FULLY VESTED.

 

8.2                                 TERMINATION DUE TO RETIREMENT. SUBJECT TO
SECTION 8.5 OF THE PLAN, IN THE EVENT A PARTICIPANT’S EMPLOYMENT OR OTHER
SERVICE WITH THE COMPANY AND ALL SUBSIDIARIES IS TERMINATED BY REASON OF
RETIREMENT:

 

(A)                                  ALL OUTSTANDING OPTIONS THEN HELD BY THE
PARTICIPANT WILL, TO THE EXTENT EXERCISABLE AS OF SUCH TERMINATION, REMAIN
EXERCISABLE IN FULL FOR A PERIOD OF THREE (3) MONTHS AFTER SUCH TERMINATION (BUT
IN NO EVENT AFTER THE EXPIRATION DATE OF ANY SUCH OPTION). OPTIONS NOT
EXERCISABLE AS OF SUCH RETIREMENT WILL BE FORFEITED AND TERMINATE; AND

 

(B)                                 ALL RESTRICTED STOCK AWARDS THEN HELD BY THE
PARTICIPANT THAT HAVE NOT VESTED AS OF SUCH TERMINATION WILL BE TERMINATED AND
FORFEITED.

 

8.3                                 TERMINATION FOR REASONS OTHER THAN DEATH,
DISABILITY OR RETIREMENT. SUBJECT TO SECTION 8.5 OF THE PLAN, IN THE EVENT A
PARTICIPANT’S EMPLOYMENT OR OTHER SERVICE IS TERMINATED WITH THE COMPANY AND ALL
SUBSIDIARIES FOR ANY REASON OTHER THAN DEATH, DISABILITY OR RETIREMENT, OR A
PARTICIPANT IS IN THE EMPLOY OF A SUBSIDIARY AND THE SUBSIDIARY CEASES TO BE A
SUBSIDIARY OF THE COMPANY (UNLESS THE PARTICIPANT CONTINUES IN THE EMPLOY OF THE
COMPANY OR ANOTHER SUBSIDIARY):

 

(A)                                  ALL OUTSTANDING OPTIONS THEN HELD BY THE
PARTICIPANT WILL, TO THE EXTENT EXERCISABLE AS OF SUCH TERMINATION, REMAIN
EXERCISABLE IN FULL FOR A PERIOD OF THREE MONTHS AFTER SUCH TERMINATION (BUT IN
NO EVENT AFTER THE EXPIRATION DATE OF ANY SUCH OPTION). OPTIONS NOT EXERCISABLE
AS OF SUCH TERMINATION WILL BE FORFEITED AND TERMINATE; AND

 

(B)                                 ALL RESTRICTED STOCK AWARDS THEN HELD BY THE
PARTICIPANT THAT HAVE NOT VESTED AS OF SUCH TERMINATION WILL BE TERMINATED AND
FORFEITED.

 

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8.4                                 MODIFICATION OF RIGHTS UPON TERMINATION.
NOTWITHSTANDING THE OTHER PROVISIONS OF THIS SECTION 8, UPON A PARTICIPANT’S
TERMINATION OF EMPLOYMENT OR OTHER SERVICE WITH THE COMPANY AND ALL
SUBSIDIARIES, THE COMMITTEE MAY, IN ITS SOLE DISCRETION (WHICH MAY BE EXERCISED
AT ANY TIME ON OR AFTER THE DATE OF GRANT, INCLUDING FOLLOWING SUCH
TERMINATION), CAUSE OPTIONS (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 THEN HELD
BY SUCH PARTICIPANT TO VEST AND/OR CONTINUE TO VEST OR BECOME FREE OF
RESTRICTIONS AND CONDITIONS TO ISSUANCE, AS THE CASE MAY BE, FOLLOWING SUCH
TERMINATION OF EMPLOYMENT OR SERVICE, IN EACH CASE IN THE MANNER DETERMINED BY
THE COMMITTEE; PROVIDED, HOWEVER, THAT NO INCENTIVE AWARD MAY REMAIN EXERCISABLE
OR CONTINUE TO VEST FOR MORE THAN TWO YEARS BEYOND THE DATE SUCH INCENTIVE AWARD
WOULD HAVE TERMINATED IF NOT FOR THE PROVISIONS OF THIS SECTION 8.4 BUT IN NO
EVENT BEYOND ITS EXPIRATION DATE.

 

8.5                                 EFFECTS OF ACTIONS CONSTITUTING CAUSE.
NOTWITHSTANDING ANYTHING IN THE PLAN TO THE CONTRARY, IN THE EVENT THAT A
PARTICIPANT IS DETERMINED BY THE COMMITTEE, ACTING IN ITS SOLE DISCRETION, TO
HAVE COMMITTED ANY ACTION WHICH WOULD CONSTITUTE CAUSE AS DEFINED IN
SECTION 2.3, IRRESPECTIVE OF WHETHER SUCH ACTION OR THE COMMITTEE’S
DETERMINATION OCCURS BEFORE OR AFTER TERMINATION OF SUCH PARTICIPANT’S
EMPLOYMENT OR SERVICE WITH THE COMPANY OR ANY SUBSIDIARY, ALL RIGHTS OF THE
PARTICIPANT UNDER THE PLAN AND ANY AGREEMENTS EVIDENCING AN INCENTIVE AWARD THEN
HELD BY THE PARTICIPANT SHALL TERMINATE AND BE FORFEITED WITHOUT NOTICE OF ANY
KIND. THE COMPANY MAY DEFER THE EXERCISE OF ANY OPTION OR THE VESTING OF ANY
RESTRICTED STOCK AWARD FOR A PERIOD OF UP TO FORTY-FIVE (45) DAYS IN ORDER FOR
THE COMMITTEE TO MAKE ANY DETERMINATION AS TO THE EXISTENCE OF CAUSE.

 

8.6                                 DETERMINATION OF TERMINATION OF EMPLOYMENT
OR OTHER SERVICE. UNLESS THE COMMITTEE OTHERWISE DETERMINES IN ITS SOLE
DISCRETION, A PARTICIPANT’S EMPLOYMENT OR OTHER SERVICE WILL, FOR PURPOSES OF
THE PLAN, BE DEEMED TO HAVE TERMINATED ON THE DATE RECORDED ON THE PERSONNEL OR
OTHER RECORDS OF THE COMPANY OR THE SUBSIDIARY FOR WHICH THE PARTICIPANT
PROVIDES EMPLOYMENT OR SERVICE, AS DETERMINED BY THE COMMITTEE IN ITS SOLE
DISCRETION BASED UPON SUCH RECORDS.

 

9.                                       PAYMENT OF WITHHOLDING TAXES.

 

9.1                                 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, FOREIGN, STATE AND
LOCAL WITHHOLDING AND EMPLOYMENT-RELATED TAX REQUIREMENTS ATTRIBUTABLE TO AN
INCENTIVE AWARD, INCLUDING, WITHOUT LIMITATION, THE GRANT, EXERCISE OR VESTING
OF, OR PAYMENT OF DIVIDENDS WITH RESPECT TO, AN INCENTIVE AWARD OR A
DISQUALIFYING DISPOSITION OF STOCK RECEIVED UPON EXERCISE OF AN INCENTIVE STOCK
OPTION, OR (B) REQUIRE THE PARTICIPANT PROMPTLY TO REMIT THE AMOUNT OF SUCH
WITHHOLDING TO THE COMPANY BEFORE TAKING ANY ACTION, INCLUDING ISSUING ANY
SHARES OF COMMON STOCK, WITH RESPECT TO AN INCENTIVE AWARD.

 

9.2                                 SPECIAL RULES. THE COMMITTEE MAY, IN ITS
SOLE DISCRETION AND UPON TERMS AND CONDITIONS ESTABLISHED BY THE COMMITTEE,
PERMIT OR REQUIRE A PARTICIPANT TO SATISFY, IN WHOLE OR IN PART, ANY WITHHOLDING
OR EMPLOYMENT-RELATED TAX OBLIGATION DESCRIBED IN SECTION 9.1 OF THE PLAN BY

 

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ELECTING TO TENDER, OR BY ATTESTATION AS TO OWNERSHIP OF, PREVIOUSLY ACQUIRED
SHARES THAT HAVE BEEN HELD FOR THE PERIOD OF TIME NECESSARY TO AVOID A CHARGE TO
THE COMPANY’S EARNINGS FOR FINANCIAL REPORTING PURPOSES AND THAT ARE OTHERWISE
ACCEPTABLE TO THE COMMITTEE, BY DELIVERY OF A BROKER EXERCISE NOTICE OR A
COMBINATION OF SUCH METHODS. FOR PURPOSES OF SATISFYING A PARTICIPANT’S
WITHHOLDING OR EMPLOYMENT-RELATED TAX OBLIGATION, PREVIOUSLY ACQUIRED SHARES
TENDERED OR COVERED BY AN ATTESTATION WILL BE VALUED AT THEIR FAIR MARKET VALUE.

 

10.                                 CHANGE IN CONTROL.

 

10.1                           A “CHANGE IN CONTROL” SHALL BE DEEMED TO HAVE
OCCURRED IF THE EVENT SET FORTH IN ANY ONE OF THE FOLLOWING PARAGRAPHS HAS
OCCURRED:

 

(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 ANY
SUCCESSOR;

 

(B)                                 THE APPROVAL BY THE STOCKHOLDERS OF THE
COMPANY OF ANY PLAN OR PROPOSAL FOR THE LIQUIDATION OR DISSOLUTION OF THE
COMPANY;

 

(C)                                  ANY SUCCESSOR, OTHER THAN A BONA FIDE
UNDERWRITER, 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) 20% OR MORE, BUT NOT 50% OR MORE, OF THE COMBINED VOTING POWER OF THE
COMPANY’S 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 CONTINUITY DIRECTORS (AS DEFINED IN SECTION 10.2
BELOW), OR (II) MORE THAN 50% OF THE COMBINED VOTING POWER OF THE COMPANY’S
OUTSTANDING SECURITIES ORDINARILY HAVING THE RIGHT TO VOTE AT ELECTIONS OF
DIRECTORS (REGARDLESS OF ANY APPROVAL BY THE CONTINUITY DIRECTORS);

 

(D)                                 A MERGER OR CONSOLIDATION TO WHICH THE
COMPANY IS A PARTY IF THE STOCKHOLDERS OF THE COMPANY IMMEDIATELY PRIOR TO
EFFECTIVE DATE OF SUCH MERGER OR CONSOLIDATION 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) 50% OR MORE, BUT NOT MORE THAN 80%, OF THE COMBINED
VOTING POWER OF THE SURVIVING CORPORATION’S 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 CONTINUITY
DIRECTORS, OR (II) LESS THAN 50% OF THE COMBINED VOTING POWER OF THE SURVIVING
CORPORATION’S THEN OUTSTANDING SECURITIES ORDINARILY HAVING THE RIGHT TO VOTE AT
ELECTIONS OF DIRECTORS (REGARDLESS OF ANY APPROVAL BY THE CONTINUITY DIRECTORS);
OR

 

(E)                                  THE CONTINUITY DIRECTORS CEASE FOR ANY
REASON TO CONSTITUTE AT LEAST A MAJORITY OF THE BOARD.

 

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10.2                           CHANGE IN CONTROL DEFINITIONS. FOR PURPOSES OF
THIS SECTION 10:

 

(A)                                  “CONTINUITY DIRECTORS” OF THE COMPANY WILL
MEAN ANY INDIVIDUALS WHO ARE MEMBERS OF THE BOARD ON THE EFFECTIVE DATE OF THE
PLAN AND ANY INDIVIDUAL WHO SUBSEQUENTLY BECOMES A MEMBER OF THE BOARD WHOSE
ELECTION, OR NOMINATION FOR ELECTION BY THE COMPANY’S STOCKHOLDERS, WAS APPROVED
BY A VOTE OF AT LEAST A MAJORITY OF THE CONTINUITY DIRECTORS (EITHER BY SPECIFIC
VOTE OR BY APPROVAL OF THE COMPANY’S PROXY STATEMENT IN WHICH SUCH INDIVIDUAL IS
NAMED AS A NOMINEE FOR DIRECTOR WITHOUT OBJECTION TO SUCH NOMINATION).

 

(B)                                 “BONA FIDE UNDERWRITER” MEANS AN ENTITY
ENGAGED IN BUSINESS AS AN UNDERWRITER OF SECURITIES THAT ACQUIRES SECURITIES OF
THE COMPANY THROUGH SUCH ENTITY’S PARTICIPATION IN GOOD FAITH IN A FIRM
COMMITMENT UNDERWRITING UNTIL THE EXPIRATION OF 40 DAYS AFTER THE DATE OF SUCH
ACQUISITION.

 

(C)                                  “SUCCESSOR” MEANS ANY INDIVIDUAL,
CORPORATION, PARTNERSHIP, GROUP, ASSOCIATION OR OTHER PERSON,” AS SUCH TERM IS
USED IN SECTION 13(D) OR SECTION 14(D) OF THE EXCHANGE ACT, OTHER THAN THE
COMPANY, ANY “AFFILIATE” (AS DEFINED BELOW) OR ANY BENEFIT PLAN(S) SPONSORED BY
THE COMPANY OR ANY AFFILIATE THAT SUCCEEDS TO, OR HAS THE PRACTICAL ABILITY TO
CONTROL (EITHER IMMEDIATELY OR SOLELY WITH THE PASSAGE OF TIME), THE COMPANY’S
BUSINESS DIRECTLY, BY MERGER, CONSOLIDATION OR OTHER FORM OF BUSINESS
COMBINATION, OR INDIRECTLY, BY PURCHASE OF THE COMPANY’S OUTSTANDING SECURITIES
ORDINARILY HAVING THE RIGHT TO VOTE AT THE ELECTION OF DIRECTORS OR ALL OR
SUBSTANTIALLY ALL OF ITS ASSETS OR OTHERWISE. FOR THIS PURPOSE, AN “AFFILIATE”
IS (I) ANY CORPORATION AT LEAST A MAJORITY OF WHOSE OUTSTANDING SECURITIES
ORDINARILY HAVING THE RIGHT TO VOTE AT ELECTIONS OF DIRECTORS IS OWNED DIRECTLY
OR INDIRECTLY BY THE COMPANY OR (II) ANY OTHER FORM OF BUSINESS ENTITY IN WHICH
THE COMPANY, BY VIRTUE OF A DIRECT OR INDIRECT OWNERSHIP INTEREST, HAS THE RIGHT
TO ELECT A MAJORITY OF THE MEMBERS OF SUCH ENTITY’S GOVERNING BODY.

 

10.3                           ACCELERATION OF VESTING. WITHOUT LIMITING THE
AUTHORITY OF THE COMMITTEE UNDER SECTIONS 3.2 AND 4.3 OF THE PLAN, IF A CHANGE
IN CONTROL OF THE COMPANY OCCURS, THEN, IF APPROVED BY THE COMMITTEE IN ITS SOLE
DISCRETION EITHER IN AN AGREEMENT EVIDENCING AN INCENTIVE AWARD AT THE TIME OF
GRANT OR AT ANY TIME AFTER THE GRANT OF AN INCENTIVE AWARD, ALL INCENTIVE AWARDS
THEN OUTSTANDING WILL BECOME IMMEDIATELY EXERCISABLE IN FULL AND WILL REMAIN
EXERCISABLE IN ACCORDANCE WITH THEIR TERMS.

 

10.4                           CASH PAYMENT. IF A CHANGE IN CONTROL OF THE
COMPANY OCCURS, THEN THE COMMITTEE, IF APPROVED BY THE COMMITTEE IN ITS SOLE
DISCRETION EITHER IN AN AGREEMENT EVIDENCING AN INCENTIVE AWARD AT THE TIME OF
GRANT OR AT ANY TIME AFTER THE GRANT OF AN INCENTIVE AWARD, AND WITHOUT THE
CONSENT OF ANY PARTICIPANT AFFECTED THEREBY, MAY DETERMINE THAT:

 

(A)                                  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; AND

 

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(B)                                 ANY OPTIONS WHICH, AS OF THE EFFECTIVE DATE
OF ANY SUCH CHANGE IN CONTROL, ARE “UNDERWATER” (AS DEFINED IN SECTION 3.2(D))
SHALL TERMINATE AS OF THE EFFECTIVE DATE OF ANY SUCH CHANGE IN CONTROL.

 

10.5                           LIMITATION ON CHANGE IN CONTROL PAYMENTS.
NOTWITHSTANDING ANYTHING IN SECTION 10.3 OR 10.4 OF THE PLAN TO THE CONTRARY,
IF, WITH RESPECT TO A PARTICIPANT, THE ACCELERATION OF THE EXERCISABILITY OF AN
OPTION AS PROVIDED IN SECTION 10.3 OR THE PAYMENT OF CASH IN EXCHANGE FOR ALL OR
PART OF AN OPTION AS PROVIDED IN SECTION 10.4 (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” THAT SUCH PARTICIPANT HAS THE RIGHT TO
RECEIVE FROM THE COMPANY OR ANY CORPORATION THAT IS A MEMBER OF AN “AFFILIATED
GROUP” (AS DEFINED IN SECTION 1504(A) OF THE CODE WITHOUT REGARD TO
SECTION 1504(B) OF THE CODE) OF WHICH THE COMPANY IS A MEMBER, WOULD CONSTITUTE
A “PARACHUTE PAYMENT” (AS DEFINED IN SECTION 280G(B)(2) OF THE CODE), THEN THE
“PAYMENTS” TO SUCH PARTICIPANT PURSUANT TO SECTION 10.3 OR 10.4 OF THE PLAN 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 A PARTICIPANT IS SUBJECT TO A SEPARATE AGREEMENT WITH THE
COMPANY OR A SUBSIDIARY WHICH SPECIFICALLY PROVIDES THAT PAYMENTS ATTRIBUTABLE
TO ONE OR MORE FORMS OF EMPLOYEE STOCK INCENTIVES OR TO PAYMENTS MADE IN LIEU OF
EMPLOYEE STOCK INCENTIVES WILL NOT REDUCE ANY OTHER PAYMENTS UNDER SUCH
AGREEMENT, EVEN IF IT WOULD CONSTITUTE AN EXCESS PARACHUTE PAYMENT, OR PROVIDES
THAT THE PARTICIPANT WILL HAVE THE DISCRETION TO DETERMINE WHICH PAYMENTS WILL
BE REDUCED IN ORDER TO AVOID AN EXCESS PARACHUTE PAYMENT, THEN THE LIMITATIONS
OF THIS SECTION 10.4 WILL, TO THAT EXTENT, NOT APPLY.

 

11.                                 RIGHTS OF ELIGIBLE RECIPIENTS AND
PARTICIPANTS; TRANSFERABILITY.

 

11.1                           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.

 

11.2                           RIGHTS AS A STOCKHOLDER. AS A HOLDER OF INCENTIVE
AWARDS (OTHER THAN RESTRICTED STOCK AWARDS), A PARTICIPANT WILL HAVE NO RIGHTS
AS A STOCKHOLDER UNLESS AND UNTIL SUCH INCENTIVE AWARDS ARE EXERCISED FOR, OR
PAID IN THE FORM OF, SHARES OF COMMON STOCK AND THE PARTICIPANT BECOMES THE
HOLDER OF RECORD OF SUCH SHARES. EXCEPT AS OTHERWISE PROVIDED IN THE PLAN, NO
ADJUSTMENT WILL BE MADE FOR DIVIDENDS OR DISTRIBUTIONS WITH RESPECT TO SUCH
INCENTIVE AWARDS AS TO WHICH THERE IS A RECORD DATE PRECEDING THE DATE THE
PARTICIPANT BECOMES THE HOLDER OF RECORD OF SUCH SHARES, EXCEPT AS THE COMMITTEE
MAY DETERMINE IN ITS DISCRETION.

 

11.3                           RESTRICTIONS ON TRANSFER.

 

(A)                                  EXCEPT PURSUANT TO TESTAMENTARY WILL OR THE
LAWS OF DESCENT AND DISTRIBUTION OR AS OTHERWISE EXPRESSLY PERMITTED BY
SUBSECTIONS (B) AND (C) BELOW, NO RIGHT OR INTEREST OF ANY PARTICIPANT IN AN
INCENTIVE AWARD PRIOR TO THE EXERCISE (IN THE CASE OF OPTIONS) OR VESTING (IN
THE CASE OF RESTRICTED STOCK AWARDS) OF SUCH INCENTIVE AWARD WILL BE ASSIGNABLE
OR

 

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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.

 

(B)                                 A PARTICIPANT WILL BE ENTITLED TO DESIGNATE
A BENEFICIARY TO RECEIVE AN INCENTIVE AWARD UPON SUCH PARTICIPANT’S DEATH, AND
IN THE EVENT OF SUCH PARTICIPANT’S DEATH, PAYMENT OF ANY AMOUNTS DUE UNDER THE
PLAN WILL BE MADE TO, AND EXERCISE OF ANY OPTIONS (TO THE EXTENT PERMITTED
PURSUANT TO SECTION 8 OF THE PLAN) MAY BE MADE BY, SUCH BENEFICIARY. IF A
DECEASED PARTICIPANT HAS FAILED TO DESIGNATE A BENEFICIARY, OR IF A BENEFICIARY
DESIGNATED BY THE PARTICIPANT FAILS TO SURVIVE THE PARTICIPANT, PAYMENT OF ANY
AMOUNTS DUE UNDER THE PLAN WILL BE MADE TO, AND EXERCISE OF ANY OPTIONS (TO THE
EXTENT PERMITTED PURSUANT TO SECTION 9 OF THE PLAN) MAY BE MADE BY, THE
PARTICIPANT’S LEGAL REPRESENTATIVES, HEIRS AND LEGATEES. IF A DECEASED
PARTICIPANT HAS DESIGNATED A BENEFICIARY AND SUCH BENEFICIARY SURVIVES THE
PARTICIPANT BUT DIES BEFORE COMPLETE PAYMENT OF ALL AMOUNTS DUE UNDER THE PLAN
OR EXERCISE OF ALL EXERCISABLE OPTIONS, THEN SUCH PAYMENTS WILL BE MADE TO, AND
THE EXERCISE OF SUCH OPTIONS MAY BE MADE BY, THE LEGAL REPRESENTATIVES, HEIRS
AND LEGATEES OF THE BENEFICIARY.

 

(C)                                  UPON A PARTICIPANT’S REQUEST, THE COMMITTEE
MAY, IN ITS SOLE DISCRETION, PERMIT A TRANSFER OF ALL OR A PORTION OF A
NON-STATUTORY STOCK OPTION, OTHER THAN FOR VALUE, TO SUCH PARTICIPANT’S CHILD,
STEPCHILD, GRANDCHILD, PARENT, STEPPARENT, GRANDPARENT, SPOUSE, FORMER SPOUSE,
SIBLING, NIECE, NEPHEW, MOTHER-IN-LAW, FATHER-IN-LAW, SON-IN-LAW,
DAUGHTER-IN-LAW, BROTHER-IN-LAW, OR SISTER-IN-LAW, ANY PERSON SHARING SUCH
PARTICIPANT’S HOUSEHOLD (OTHER THAN A TENANT OR EMPLOYEE), A TRUST IN WHICH ANY
OF THE FOREGOING HAVE MORE THAN FIFTY PERCENT OF THE BENEFICIAL INTERESTS, A
FOUNDATION IN WHICH ANY OF THE FOREGOING (OR THE PARTICIPANT) CONTROL THE
MANAGEMENT OF ASSETS, AND ANY OTHER ENTITY IN WHICH THESE PERSONS (OR THE
PARTICIPANT) OWN MORE THAN FIFTY PERCENT OF THE VOTING INTERESTS. ANY PERMITTED
TRANSFEREE WILL REMAIN SUBJECT TO ALL THE TERMS AND CONDITIONS APPLICABLE TO THE
PARTICIPANT PRIOR TO THE TRANSFER. A PERMITTED TRANSFER MAY BE CONDITIONED UPON
SUCH REQUIREMENTS AS THE COMMITTEE MAY, IN ITS SOLE DISCRETION, DETERMINE,
INCLUDING, BUT NOT LIMITED TO EXECUTION AND/OR DELIVERY OF APPROPRIATE
ACKNOWLEDGEMENTS, OPINION OF COUNSEL, OR OTHER DOCUMENTS BY THE TRANSFEREE.

 

11.4                           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.

 

12.                                 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
securities laws of a state or foreign jurisdiction or an exemption from such
registration under the Securities Act and applicable state or foreign securities
laws, and (b) there has been obtained any other consent, approval or permit from
any other U.S. or foreign regulatory body which the Committee, in its sole

 

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discretion, deems necessary or advisable. The Company may condition such
issuance, sale or transfer upon the receipt of any representations or agreements
from the parties involved, and the placement of any legends on certificates
representing shares of Common Stock, as may be deemed necessary or advisable by
the Company in order to comply with such securities law or other restrictions.

 

13.                                 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
such amendments to the Plan will be effective without approval of the Company’s
stockholders if: (i) stockholder approval of the amendment is then required
pursuant to Section 422 of the Code or the rules of any stock exchange or Nasdaq
or similar regulatory body; or (ii) such amendment seeks to modify
Section 3.2(d) hereof. No termination, suspension or amendment of the Plan
may adversely affect any outstanding Incentive Award without the consent of the
affected Participant; provided, however, that this sentence will not impair the
right of the Committee to take whatever action it deems appropriate under
Sections 3.2(c), 4.3 and 10 of the Plan.

 

14.                                 EFFECTIVE DATE AND DURATION OF THE PLAN.

 

The Plan is effective as of the Effective Date. The Plan will terminate at
midnight on April 30, 2013, and may be terminated prior to such time by Board
action. No Incentive Award will be granted after termination of the Plan.
Incentive Awards outstanding upon termination of the Plan may continue to be
exercised, or become free of restrictions, according to their terms.

 

15.                                 MISCELLANEOUS.

 

15.1                           GOVERNING LAW. EXCEPT TO THE EXTENT EXPRESSLY
PROVIDED HEREIN OR IN CONNECTION WITH OTHER MATTERS OF CORPORATE GOVERNANCE AND
AUTHORITY (ALL OF WHICH SHALL BE GOVERNED BY THE LAWS OF THE COMPANY’S
JURISDICTION OF INCORPORATION), 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.

 

15.2                           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.

 

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