Exhibit 10.11

 

CANTERBURY PARK HOLDING CORPORATION

 

EMPLOYEE STOCK PURCHASE PLAN

 

 

1.                   Establishment of Plan. Canterbury Park Holding Corporation
(hereinafter referred to as the “Company”) proposes to grant to certain
employees of the Company the opportunity to purchase common stock of the
Company. Such common stock shall be purchased pursuant to the plan herein set
forth which shall be known as the “Canterbury Park Holding Corporation Employee
Stock Purchase Plan” (hereinafter referred to as the “Plan”). The Company
intends that the Plan shall qualify as an “Employee Stock Purchase Plan” under
Section 423 of the Internal Revenue Code of 1954, as amended, and shall be
construed in a manner consistent with the requirements of said Section 423 and
the regulations thereunder.

 

2.                   Purpose. The Plan is intended to encourage stock ownership
by all employees of the Company and to provide them with further incentive to
continue their employment, improve operations, increase profits, and contribute
more significantly to the Company’s success.

 

3.                   Administration. The Plan shall be administered by a
committee (hereinafter referred to as the “Committee”) consisting of not less
than three directors or employees of the Company (which shall be the
Compensation Committee if any is established by the Board of Directors), as
designated by the Board of Directors of the Company (hereinafter referred to as
the “Board of Directors”). The Board of Directors shall fill all vacancies in
the Committee and may remove any member of the Committee at any time, with or
without cause. The Committee shall select its own chairman and hold its meetings
at such times and places as it may determine. All determinations of the
Committee shall be made by a majority of its members. Any decision which is made
in writing and signed by a majority of the members of the Committee shall be
effective as fully as though made by a majority vote at a meeting duly called
and held. The determinations of the Committee shall be made in accordance with
its judgment as to the best interests of the Company, its employees and its
shareholders and in accordance with the purposes of the Plan; provided, however,
that the provisions of the Plan shall at all times be construed in a manner
consistent with the requirements of Section 423 of the Internal Revenue Code, as
amended. Such determinations shall be binding upon the Company and the
participants in the Plan unless otherwise determined by the Board of Directors.
The Company shall pay all expenses of administering the Plan. No member of the
Board of Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
under it.

 

4.                   Duration and Phases of the Plan. (a) The Plan will commence
on April 15, 1995 and will terminate when all shares authorized for issuance
under Paragraph 10 of this Plan, as it may be amended from time to time, are
issued or at such earlier date as shall be determined by the Company’s Board of
Directors, except that any phase commenced prior to such termination shall, if
necessary, be allowed to continue beyond such termination until completion.
Notwithstanding the foregoing, this Plan shall be considered of no force or
effect and any options granted shall be considered null and void unless the
holders of a majority of all of the issued and outstanding shares of the common
stock of’ the Company approve the Plan within twelve (12) months before or after
the date of its adoption by the Board of Directors; and, further, any amendment
of this Plan to increase the number of shares authorized for issuance under
Paragraph 10 of this Plan shall be considered of no force or effect and any
options granted thereafter shall be considered null and void unless the holders
of a majority of all the issued and outstanding shares of the common stock of
the Company approve such amendment of the Plan within twelve (12) months after
the date Paragraph 10 is amended by the Board of Directors to increase the
number of shares authorized for issuance.

 

 

 

 

(b)                 The Plan shall be carried out in one or more phases, each
phase being for a period of one year or such other period of time as may be
determined by the Board or Committee. No phase shall run concurrently, but a
phase may commence immediately after the termination of the preceding phase. The
existence and date of commencement of a phase (the “Commencement Date”) shall be
determined by the Committee, provided that the commencement of the first phase
shall be within twelve (12) months before or after the date of approval of the
Plan by the shareholders of the Company. In the event all of the stock reserved
for grant of options hereunder is issued pursuant to the terms hereof prior to
the commencement of one or more phases scheduled by the Committee or the number
of shares remaining is so small, in the opinion of the Committee, as to render
administration of any succeeding phase impracticable, such phase or phases shall
be cancelled. Phases shall be numbered successively Phase 1, Phase 2, Phase 3,
etc.

 

(c)                 The Board of Directors may elect to accelerate the
termination date of any phase effective on the date specified by the Board of
Directors in the event of (i) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which shares would be converted into cash, securities or other property, other
than a merger of the Company in which shareholders immediately prior to the
merger have the same proportionate ownership of stock in the surviving
corporation immediately after the merger; (ii) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all of the assets of the Company; or (iii) any plan of
liquidation or dissolution of the Company.

 

5.                   Eligibility. All Employees, as defined in Paragraph 19
hereof, who are employed by the Company at least one day prior to the
Commencement Date of a phase shall be eligible to participate in such phase.

 

6.                   Participation. Participation in the Plan is voluntary. An
eligible Employee may elect to participate in any phase of the Plan, and thereby
become a “Participant” in the Plan, by completing the Plan payroll deduction
form provided by the Company and delivering it to the Company or its designated
representative prior to the Commencement Date of that phase. Payroll deductions
for a Participant shall commence on the first payday after the Commencement Date
of the phase and shall terminate on the last payday immediately prior to or
coinciding with the termination date of that phase unless sooner terminated by
the Participant as provided in Paragraph 9 hereof.

 

7.                   Payroll Deductions. (a) Upon enrollment, a Participant
shall elect to make contributions to the Plan by payroll deductions (in full
dollar amounts and in amounts calculated to be as uniform as practicable
throughout the period of the phase), in the aggregate amount not in excess of
10% of such Participant’s Base Pay for the term of the phase, as determined
according to Paragraph 19 hereof.

 

The minimum authorized payroll deduction must aggregate to not less than $10 per
month.

 

(b)                 In the event that the Participant’s compensation for any pay
period is terminated or reduced from the compensation rate for such a period as
of the Commencement Date of the phase for any reason so that the amount actually
withheld on behalf of the Participant as of the termination date of the phase is
less than the amount anticipated to be withheld over the phase year as
determined on the Commencement Date of the phase, then the extent to which the
Participant may exercise his option shall be based on the amount actually
withheld on his behalf. In the event of a change in the pay period of any
Participant, such as from bi-weekly to monthly, an appropriate adjustment shall
be made to the deduction in each new pay period so as to ensure the deduction of
the proper amount authorized by the Participant.

 

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(c)                 All payroll deductions made for Participants shall be
credited to their accounts under the Plan. The Participant may not make any
separate cash payments into such account.

 

(d)                 Except for his right to discontinue participation in the
Plan as provided in Paragraph 9, no Participant shall be entitled to increase or
decrease the amount to be deducted in a given phase after the Commencement Date.

 

8.                   Options.

 

(a)                 Grant of Option.

 

(i)                   A Participant who is employed by the Company as of the
Commencement Date of a phase shall, subject to the limitations of Paragraph 10
hereof, be granted an option as of such date to purchase that number of full
shares of Company common stock to be determined by dividing the total amount to
be credited to that Participant’s account under Paragraph 7 hereof by (1) the
option price set forth in Paragraph 8(a)(ii)(A) hereof with respect to phases
ending on or prior to October 1, 2005, or (2) ninety-five percent (95%) of the
per share fair market value of such common stock on the Termination Date of the
phase with respect to phases beginning on or after October 1, 2005; provided
that with respect to this clause (2) in no event shall a Participant be
permitted to purchase during a phase more than that number of shares which is
equal to 30% of the amount determined by dividing the total amount credited to
the Participant’s account under Paragraph 7 hereof by 95% of the fair market
value per share of such common stock on the Commencement Date of such phase and
rounding down to the nearest whole number.

 

(ii)                 Unless otherwise determined by the Board or Committee prior
to the commencement of a Phase, the option price for such shares of common stock
shall be the lower of:

 

A.             Eighty-five percent (85%) of the fair market value of such shares
of common stock on the Commencement Date of the phase for phases ending on or
prior to October 1, 2005 and ninety-five percent (95%) of the fair market of
such common stock on the termination date for phases beginning on or after
October 1, 2005; or   B. Eighty-five percent (85%) of the fair market value of
such shares of common stock on the termination date of the phase for phases
ending prior to October 1, 2005 and ninety-five (95%) of the fair market value
if such shares of common stock on the termination date for phases beginning on
or after October 1, 2005.

 

(iii)                The fair market value of shares of common stock of the
Company shall be determined by the Committee for each valuation date in a manner
acceptable under Section 423, Internal Revenue Code of 1954.

 

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(iv)               Anything herein to the contrary notwithstanding, no Employee
shall be granted an option hereunder:

 

A.             Which permits his rights to purchase stock under all employee
stock purchase plans of the Company, its subsidiaries or its parent, if any, to
accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of the
fair market value of such stock (determined at the time such option is granted)
for each calendar year in which such option is outstanding at any time;   B. If
immediately after the grant such Employee would own and/or hold outstanding
options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company, its
parent, if any, or of any subsidiary of the Company.  For purposes of
determining stock ownership under this Paragraph, the rules of Section 425(d) of
the Internal Revenue Code, as amended, shall apply; or   C. Which can be
exercised after the expiration of 27 months from the date the option is granted.

 

(b)                 Exercise of Option.

 

(i)                   Unless a Participant gives written notice to the Company
pursuant to Paragraph 8(b) (ii) or Paragraph 9 prior to the termination date of
a phase, his option for the purchase of shares will be exercised automatically
for him as of such termination date for the purchase of the number of full
shares of Company common stock which the accumulated payroll deductions in his
account at that time will purchase at the applicable option price, subject to
the limitations set forth in Paragraph 10 hereof.

 

(ii)                 A Participant may, by written notice to the Company at any
time during the thirty (30) day period immediately preceding the termination
date of a phase, elect, effective as of the termination date of that phase, to
exercise his option for a specified number of full shares less than the maximum
number which may be purchased under his option.

 

(iii)               As promptly as practicable after the termination date of any
phase, the Company will deliver to each Participant herein the common stock
purchased upon the exercise of his option, together with a cash payment equal to
the balance, if any, of his account which was not used for the purchase of
common stock with interest accrued thereon.

 

9.                   Withdrawal or Termination of Participation. (a) A
Participant may, at any time prior to the termination date of a phase, withdraw
all payroll deductions then credited to his account by giving written notice to
the Company. Promptly upon receipt of such notice of withdrawal, all payroll
deductions credited to the Participant’s account will be paid to him with
interest accrued thereon and no further payroll deductions will be made during
that phase. In such event, the option granted the Participant under that phase
of the Plan shall lapse immediately. Partial withdrawals of payroll deductions
hereunder may not be made.

 

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(b)                 In the event of the death of a Participant, the person or
persons specified in Paragraph 14 may give notice to the Company within sixty
(60) days of the death of the Participant electing to purchase the number of
full shares which the accumulated payroll deductions in the account of such
deceased Participant will purchase at the option price specified in Paragraph
8(a) (ii) and have the balance in the account distributed in cash with interest
accrued thereon. If no such notice is received by the Company within said sixty
(60) days, the accumulated payroll deductions will be distributed in full in
cash with interest accrued thereon.

 

(c)                 Upon termination of Participant’s employment for any reason
other than death of the Participant, the payroll deductions credited to his
account, plus interest, shall be returned to him.

 

10.                Stock Reserved for Options. (a) Three Hundred Fifty Thousand
(350,000) shares1 of the Company’s $.01 par value common stock are reserved for
issuance upon the exercise of options to be granted under the Plan. Shares
subject to the unexercised portion of any lapsed or expired option may again be
subject to option under the Plan.

 

(b)                 If the total number of shares of Company common stock for
which options are to be granted for a given phase as specified in Paragraph 8
exceeds the number of shares then remaining available under the Plan (after
deduction of all shares for which options have been exercised or are then
outstanding) and if the Committee does not elect to cancel such phase pursuant
to Paragraph 4, the Committee shall make a pro rata allocation of the shares
remaining available in as uniform and equitable a manner as it shall consider
practicable. In such event, the options to be granted and the payroll deductions
to be made pursuant to the Plan which would otherwise be effected may, in the
discretion of the Committee, be reduced accordingly. The Committee shall give
written notice of such reduction to each Participant affected.

 

(c)                 The Participant (or a joint tenant named pursuant to
Paragraph 10(d) hereof) shall have no rights as a shareholder with respect to
any shares subject to the Participant’s option until the date of the issuance of
a stock certificate evidencing such shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such stock certificate is actually issued, except as otherwise provided
in Paragraph 12 hereof.

 

(d)                 The shares of Company common stock to be delivered to a
Participant pursuant to the exercise of an option under the Plan will be
registered in the name of the Participant or, if the Participant so directs by
written notice to the Committee prior to the termination date of that phase of
the Plan, in the names of the Participant and one other person the Participant
may designate as his joint tenant with rights of survivorship, to the extent
permitted by law.

 

11.                Accounting and Use of Funds. Payroll deductions for each
Participant shall be credited to an account established for him under the Plan.
A Participant may not make any separate cash payments into such account. Such
account shall be solely for bookkeeping purposes and no separate fund or trust
shall be established hereunder and the Company shall not be obligated to
segregate such funds. All funds from payroll deductions received or held by the
Company under the Plan may be used, without limitation, for any corporate
purpose by the Company.

 

____________________________

1 Increased from 100,000 shares to 250,000 shares approved by shareholders June
2001. Increase from to 250,000 shares to 350,000 shares approved by Board April
2006 and by the shareholders on June 1, 2006.

 

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12.                Adjustment Provision. (a) Subject to any required action by
the shareholders of the Company, the number of shares which are authorized in
Section 10 to be issued pursuant to this Plan and the number of shares covered
by each outstanding option and the price per share thereof in each such option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of the Company common stock resulting from a subdivision or
consolidation of shares or the payment of a share dividend (but only on the
shares) or any other increase or decrease in the number of such shares effected
without receipt of consideration by the Company.

 

(b)                 In the event of a change in the shares of the Company as
presently constituted, which is limited to a change of all its authorized shares
with par value into the same number of shares with a different par value or
without par value, the shares resulting from any such change shall be deemed to
be the shares within the meaning of this Plan.

 

13.                Non-Transferability of Options. (a) Options granted under any
phase of the Plan shall not be transferable except under the laws of descent and
distribution and shall be exercisable only by the Participant during his
lifetime and after his death only by his beneficiary of the representative of
his estate as provided in Paragraph 9(b) hereof.

 

(b)                 Neither payroll deductions credited to a Participant’s
account, nor any rights with regard to the exercise of an option or to receive
common stock under any phase of the Plan may be assigned, transferred, pledged
or otherwise disposed of in any way by the Participant. Any such attempted
assignment, transfer, pledge or other disposition shall be null and void and
without effect, except that the Company may, at its option, treat such act as an
election to withdraw funds in accordance with Paragraph 9.

 

14.                Designation of Beneficiary. A Participant may file a written
designation of a beneficiary who is to receive any cash to the Participant’s
credit plus interest thereon under any phase of the Plan in the event of such
Participant’s death prior to exercise of his option pursuant to Paragraph 9(b)
hereof, or to exercise his option and become entitled to any stock and/or cash
upon such exercise in the event of the Participant’s death prior to exercise of
the option pursuant to Paragraph 9(b) hereof. The beneficiary designation may be
changed by the Participant at any time by written notice to the Company.

 

Upon the death of a Participant and upon receipt by the Company of proof deemed
adequate by it of the identity and existence at the Participant’s death of a
beneficiary validly designated under the Plan, the Company shall in the event of
the Participant’s death under the circumstances described in Paragraph 9(b)
hereof, allow such beneficiary to exercise the Participant’s option pursuant to
Paragraph 9(b) if such beneficiary is living on the termination date of the
phase and deliver to such beneficiary the appropriate stock and/or cash after
exercise of the option. In the event there is no validly designated beneficiary
under the Plan who is living at the time of the Participant’s death under the
circumstances described in Paragraph 9(b) or in the event the option lapses, the
Company shall deliver the cash credited to the account of the Participant with
interest to the executor or administrator of the estate of the Participant, or
if no such executor or administrator has been appointed to the knowledge of the
Company, it may, in its discretion, deliver such cash to the spouse or to any
one or more dependents or relatives of the Participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate. The Company will not be responsible for or be required to
give effect to the disposition of any cash or stock or the exercise of any
option in accordance with any will or other testamentary disposition made by
such Participant or in accordance with the provision of any law concerning
intestacy, or otherwise. No designated beneficiary shall, prior to the death of
a Participant by whom he has been designated, acquire any interest in any stock
or in any option or in the cash credited to the Participant under any phase of
the Plan.

 

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15.                Amendment and Termination. The Plan may be terminated at any
time by the Board of Directors provided that, except as permitted in Paragraph
4(c) with respect to an acceleration of the termination date of any phase, no
such termination will take effect with respect to any options then outstanding.
Also, the Board may, from time to time, amend the Plan as it may deem proper and
in the best interests of the Company or as may be necessary to comply with
Section 423 of the Internal Revenue Code of 1986, as amended, or other
applicable laws or regulations; provided, however, that no such amendment shall,
without prior approval of the shareholders of the Company (1) increase the total
number of shares for which options may be granted under the Plan (except as
provided in Paragraph 12 herein), (2) permit aggregate payroll deductions in
excess of ten percent (10%) of a Participant’s compensation as of the
Commencement Date of a phase, or (3) impair any outstanding option.

 

16.                Interest. In any situation where the Plan provides for the
payment of interest on a Participant’s payroll deductions, such interest shall
be determined by averaging the month-end balances in the Participant’s account
for the period of his participation and computing interest thereon at the rate
of five percent (5%) per annum.

 

17.                Notices. All notices or other communications in connection
with the Plan or any phase thereof shall be in the form specified by the
Committee and shall be deemed to have been duly given when received by the
Participant or his designated personal representative or beneficiary or by the
Company or its designated representative, as the case may be.

 

18.                Participation of Subsidiaries. The Board of Directors may, by
written resolution, authorize the employees of any of its subsidiaries to
participate hereunder. Effective as of the date of coverage of any such
subsidiary, any references herein to the “Company” shall be interpreted as
referring to such subsidiary as well as to Canterbury Park Holding Corporation.

 

In the event that any subsidiary which is covered under the Plan ceases to be a
subsidiary of Canterbury Park Holding Corporation, the employees of such
subsidiary shall be considered to have terminated their employment for purposes
of Paragraph 9 hereof as of the date such subsidiary ceases to be such a
subsidiary.

 

19.                Definitions. (a) “Subsidiary” shall include any corporation
which shall be deemed a subsidiary of the Company under Section 425(f) of the
Internal Revenue Code of 1954, as amended.

 

(b)                 “Employee” shall mean any employee, including an officer, of
the Company who as of the first day of the month immediately preceding the
Commencement Date of a phase is customarily employed by the Company for more
than fifteen (15) hours per week.

 

(c)                 “Base Pay” is the regular pay for employment for each
employee as annualized for a twelve (12) month period, exclusive of overtime,
commissions, bonuses, disability payments, shift differentials, incentives and
other similar payments, determined as of the Commencement Date of each phase.

 

Adopted by Board of Directors: April 3, 1995

 

Amended in early 2001 by Board to increase authorized shares to 250,000, with
shareholder approval of such amendment occurring in June 2001.

 

Amended August 2005 to conform to FAS 123R.

 

Amended in April 2006 by the Board to increase authorized shares to 350,000,
with shareholder approval of such amendment occurring June 1, 2006.

 

Amended in September 2011 to increase discretion assigned to the Committee and
to Company management in administration.

 

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