Exhibit 10.1
ev3 Inc.

THIRD AMENDED AND RESTATED
2005 INCENTIVE PLAN

(As amended on May 25, 2010)

 

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TABLE OF CONTENTS

              Page  
1. BACKGROUND AND PURPOSE
    1    
2. DEFINITIONS
    1    
3. SHARES AVAILABLE FOR ISSUANCE; GRANT LIMITS AND ADJUSTMENTS
    7    
4. EFFECTIVE DATE
    9    
5. COMMITTEE
    10    
6. ELIGIBILITY
    11    
7. OPTIONS
    11    
8. STOCK APPRECIATION RIGHTS
    13    
9. STOCK GRANTS AND STOCK UNIT GRANTS
    14    
10. PERFORMANCE AWARDS
    16    
11. ANNUAL PERFORMANCE CASH AWARDS
    17    
12. NON-EMPLOYEE DIRECTOR AWARDS
    18    
13. OTHER CASH-BASED AWARDS AND OTHER STOCK-BASED AWARDS
    19    
14. PERFORMANCE MEASURES
    20    
15. DIVIDEND EQUIVALENTS
    22    
16. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE
    22    
17. CHANGE IN CONTROL
    26    
18. PAYMENT OF WITHHOLDING TAXES
    27    
19. NON-TRANSFERABILITY
    28    
20. SECURITIES REGISTRATION
    28    
21. LIFE OF PLAN
    29    
22. AMENDMENT, MODIFICATION OR TERMINATION
    29    
23. DEFERRED COMPENSATION
    30    
24. MISCELLANEOUS
    30  

 

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1. BACKGROUND AND PURPOSE
     The purpose of this Plan is to promote the interest of the Company and its
Subsidiaries by authorizing the Committee to grant Awards to Eligible Recipients
in order to (1) attract and retain such individuals, (2) provide an additional
incentive to such individuals to work to increase the value of Stock and
(3) provide such individuals with a stake in the future of the Company which
corresponds to the stake of each of the Company’s stockholders.
2. DEFINITIONS
     2.1. Adverse Action. Adverse Action means any action or conduct by a
Participant that the Committee, in its sole discretion, determines to be
injurious, detrimental, prejudicial or adverse to the interests of the Company
or any Subsidiary, including: (a) disclosing confidential information of the
Company or any Subsidiary to any person not authorized by the Company or
Subsidiary to receive it, (b) engaging, directly or indirectly, in any
commercial activity that in the judgment of the Committee competes with the
business of the Company or any Subsidiary or (c) interfering with the
relationships of the Company or any Subsidiary and their respective employees,
independent contractors, customers, prospective customers and vendors.
     2.2. Annual Grant Limit or Annual Grant Limits. Annual Grant Limit or
Annual Grant Limits has the meaning set forth in Section 3.5 of this Plan.
     2.3. Award. Award means, individually or collectively, an Option, Stock
Appreciation Right, Stock Grant, Stock Unit Grant, Annual Performance Cash
Award, Non-Employee Director Award, Other Cash-Based Award or Other Stock-Based
Award, in each case granted to an Eligible Recipient pursuant to this Plan.
     2.4. Award Agreement. Award Agreement means either: (a) a written or
electronic agreement entered into by the Company and a Participant setting forth
the terms and provisions applicable to an Award granted under this Plan,
including any amendment or modification thereof, or (b) a written or electronic
certificate or statement issued by the Company to a Participant describing the
terms and provisions of such an Award, including any amendment or modification
thereof. The Committee may provide for the use of electronic, Internet or other
non-paper Award Agreements, and the use of electronic, Internet or other
non-paper means for the acceptance thereof and actions thereunder by a
Participant.
     2.5. Board. Board means the Board of Directors of the Company.
     2.6. Cause. Cause means with respect to any Participant (A) the Participant
has engaged in conduct that in the judgment of the Committee constitutes gross
negligence, misconduct or gross neglect in the performance of the Participant’s
duties and responsibilities, including any breach of the Company’s Code of
Business Conduct and conduct resulting or intending to result directly or
indirectly in gain or personal enrichment for the Participant at the Company’s
expense, (B) the Participant has been convicted of or has pled guilty to a
felony for fraud, embezzlement or theft, (C) the Participant has engaged in a
breach of any policy of the Company for which termination of employment or
service is a permissible consequence or the Participant has not immediately
cured any performance or other issues raised by the Participant’s supervisor,
(D) the Participant had knowledge of (and did not disclose to the Company in

 

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writing) any condition that could potentially impair the Participant’s ability
to perform the functions of his or her job or service relationship fully,
completely and successfully, or (E) the Participant has engaged in any conduct
that would constitute “cause” under the terms of his or her employment or
consulting agreement, if any.
     2.7. Change in Control. Change in Control means a change in control of the
Company occurring after the effective date of this Plan of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the 1934 Act, whether or not the Company is then subject
to such reporting requirement; provided, however, that, without limitation, a
Change in Control shall include: (i) the acquisition (other than from the
Company) after the date hereof by any person, entity or “group” within the
meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act (excluding, for this
purpose, the Company or its subsidiaries, any employee benefit plan of the
Company or its subsidiaries which acquires beneficial ownership of voting
securities of the Company, any qualified institutional investor who meets the
requirements of Rule 13d-1(b)(1) promulgated under the 1934 Act, Warburg Pincus
LLC and its affiliates, and The Vertical Group, L.P. and its affiliates) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
1934 Act) of 20% or more of either the then-outstanding shares of common stock
or the combined voting power of the Company’s then-outstanding capital stock
entitled to vote generally in the election of directors; (ii) individuals who,
as of the date hereof, constitute the Board (the “Incumbent Board”) ceasing for
any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s stockholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of the Company) shall be, for purposes of this
Plan, considered as though such person were a member of the Incumbent Board;
(iii) consummation of a reorganization, merger, or consolidation, in each case,
with respect to which persons who were the stockholders of the Company
immediately prior to such reorganization, merger, or consolidation do not,
immediately thereafter, own more than 50% of the combined voting power entitled
to vote generally in the election of directors of the reorganized, merged,
consolidated or other surviving corporation’s then-outstanding voting
securities; (iv) approval by the stockholders of the Company of a liquidation or
dissolution of the Company; or (v) the sale of all or substantially all of the
assets of the Company.
     2.8. Code. Code means the Internal Revenue Code of 1986, as amended. Any
reference to a section of the Code herein shall be deemed to include a reference
to any applicable regulations thereunder and any successor or amended section of
the Code.
     2.9. Committee. Committee means the Compensation Committee of the Board or
a subcommittee thereof, or any other committee comprised solely of directors
designated by the Board to administer this Plan who are (a) “non-employee
directors” within the meaning of Rule 16b-3 under the Exchange Act, (b)
“independent directors” as defined in the Listing Rules of the Nasdaq Stock
Market (or other applicable exchange or market on which the Stock may be traded
or quoted) and (c) “outside directors” within the meaning of Section 162(m) of
the Code. The members of the Committee shall be appointed from time to time by
and shall serve at the

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discretion of the Board. If the Committee does not exist or cannot function for
any reason, the Board may take any action under this Plan that would otherwise
be the responsibility of the Committee, except as otherwise provided in the
Plan.
     2.10. Company. Company means ev3 Inc., a Delaware corporation, and any
successor thereto as provided in Section 24.11 of this Plan.
     2.11. Consultant. Consultant means a person engaged to provide consulting
or advisory services (other than as an Employee or a Non-Employee Director) to
the Company or any Subsidiary that: (a) are not in connection with the offer and
sale of the Company’s securities in a capital raising transaction and (b) do not
directly or indirectly promote or maintain a market for the Company’s
securities.
     2.12. Covered Employee. Covered Employee means any Employee who is or may
become a “Covered Employee,” as defined in Section 162(m) of the Code, and who
is designated, either as an individual Employee or class of Employees, by the
Committee within the shorter of: (a) ninety (90) days after the beginning of any
Performance Period, or (b) twenty-five percent (25%) of any Performance Period
has elapsed, as a “Covered Employee” under this Plan for such applicable
Performance Period.
     2.13. Director. Director means any member of the Board.
     2.14. Director Fees. Director Fees means any compensation payable by the
Company in the form of cash to a Non-Employee Director for service as a
Non-Employee Director on the Board or any committee of the Board as may be
approved from time to time by the Board, excluding expense allowances,
reimbursements and insurance premiums paid to or on behalf of such Non-Employee
Directors.
     2.15. Disability. Disability means any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months and which renders a
Participant unable to engage in any substantial gainful activity. The Committee
shall determine whether a Participant has a Disability. If a Participant
disputes such determination, the issue shall be submitted to a competent
licensed physician appointed by the Board, and the physician’s determination as
to whether a Participant has a Disability shall be binding on the Company and
the Participant.
     2.16. Effective Date. Effective Date has the meaning set forth in Section 4
of this Plan
     2.17. Eligible Recipients. Eligible Recipients means all Employees, all
Non-Employee Directors and all Consultants.
     2.18. Employee. Employee means any individual performing services for the
Company or a Subsidiary and designated as an employee of the Company or a
Subsidiary on the payroll records thereof. An Employee shall not include any
individual during any period he or she is classified or treated by the Company
or Subsidiary as an independent contractor, a consultant or any employee of an
employment, consulting or temporary agency or any other entity other than the
Company or Subsidiary, without regard to whether such individual is subsequently
determined to have been, or is subsequently retroactively reclassified as a
common-law

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employee of the Company or Subsidiary during such period. An individual shall
not cease to be an Employee in the case of: (a) any leave of absence approved by
the Company, or (b) transfers between locations of the Company or between the
Company or any Subsidiaries. For purposes of ISOs, no such leave may exceed
ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave of
absence approved by the Company or a Subsidiary, as applicable, is not so
guaranteed, then three (3) months following the ninety-first (91st) day of such
leave, any ISO held by a Participant shall cease to be treated as an ISO and
shall be treated for tax purposes as a Non-ISO. Neither service as a
Non-Employee Director nor payment of a Non-Employee Director’s retainer or other
fee by the Company shall be sufficient to constitute “employment” by the
Company.
     2.19. Fair Market Value. Fair Market Value means with respect to the Stock,
as of any date: (a) the closing sale price of the Stock as of such date at the
end of the regular trading session, as reported by the Nasdaq Stock Market, the
New York Stock Exchange, the American Stock Exchange or any national securities
exchange on which the Stock is then listed (or, if no shares were traded on such
date, as of the next preceding date on which there was such a trade); (b) if the
Stock is not so listed, admitted to unlisted trading privileges or reported on
any national exchange, the closing sale price as of such date at the end of the
regular trading session, as reported by the OTC Bulletin Board or the Pink
Sheets LLC, or other comparable service (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); or (c) if the Stock is not so listed or reported, such price as the
Committee determines in good faith in the exercise of its reasonable discretion,
and consistent with the definition of “fair market value” under Section 409A of
the Code. If determined by the Committee, such determination shall be final,
conclusive and binding for all purposes and on all persons, including the
Company, the stockholders of the Company, the Participants and their respective
successors-in-interest. No member of the Committee shall be liable for any
determination regarding the fair market value of the Stock that is made in good
faith.
     2.20. Full Value Award. Full Value Award means an Award other than in the
form of an Option or Stock Appreciation Right, and which is settled by the
issuance of shares of Stock.
     2.21. Grant Date. Grant Date means the date an Award is granted to a
Participant pursuant to this Plan.
     2.22. Individual Performance Goals. Individual Performance Goals has the
meaning set forth in Section 11.4 of this Plan.
     2.23. Individual Performance Participants. Individual Performance
Participants has the meaning set forth in Section 11.4 of this Plan.
     2.24. ISO. ISO means an option granted under this Plan to purchase Stock
which is intended to satisfy the requirements of Section 422 of the Code.
     2.25. 1933 Act. 1933 Act means the Securities Act of 1933, as amended. Any
reference to a section of the 1933 Act herein shall be deemed to include a
reference to any applicable regulations thereunder and any successor or amended
section of the 1933 Act.

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     2.26. 1934 Act. 1934 Act means the Securities Exchange Act of 1934, as
amended. Any reference to a section of the 1934 Act herein shall be deemed to
include a reference to any applicable regulations thereunder and any successor
or amended section of the 1934 Act.
     2.27. Maximum Payout. Maximum Payout has the meaning set forth in
Section 11.3 of this Plan.
     2.28. Non-Employee Director. Non-Employee Director means any Director who
is not an Employee of the Company or a Subsidiary of the Company.
     2.29. Non-Employee Director Award. Non-Employee Director Award means any
Non-ISO, Stock Appreciation Right or Full Value Award granted, whether singly,
in combination, or in tandem, to an Eligible Recipient who is a Non-Employee
Director, pursuant to such applicable terms, conditions and limitations as the
Committee may establish in accordance with this Plan.
     2.30. Non-ISO. Non-ISO means an option granted under this Plan to purchase
Stock which is intended to fail to satisfy the requirements of Section 422 of
the Code.
     2.31. Option. Option means an ISO or a Non-ISO.
     2.32. Other Cash-Based Award. Other Cash-Based Award means an Award,
denominated and paid in cash, not otherwise described by the terms of this Plan,
granted pursuant to Section 13.1 of this Plan.
     2.33. Other Stock-Based Award. Other Stock-Based Award means an
equity-based or equity-related Award not otherwise described by the terms of
this Plan, granted pursuant to Section 13.2 of this Plan.
     2.34. Participant. Participant means an Eligible Recipient who receives one
or more Awards under this Plan.
     2.35. Participation Factor. Participation Factor has the meaning set forth
in Section 11.2 of this Plan.
     2.36. Performance-Based Compensation. Performance-Based Compensation means
compensation under an Award that is intended to satisfy the requirements of
Section 162(m) of the Code for certain performance-based compensation paid to
Covered Employees. Notwithstanding the foregoing, nothing in this Plan shall be
construed to mean that an Award which does not satisfy the requirements for
performance-based compensation under Section 162(m) of the Code does not
constitute performance-based compensation for other purposes, including
Section 409A of the Code.
     2.37. Performance Goals. Performance Goals mean with respect to any
applicable Award, one or more targets, goals or levels of attainment required to
be achieved in terms of the specified Performance Measures during the specified
Performance Period, as set forth in the related Award Agreement.

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     2.38. Performance Measures. Performance Measures mean: (a) with respect to
any Award intended to qualify as Performance-Based Compensation, any one or more
of the measures described in Section 14.1 of this Plan on which the Performance
Goals are based and which measures are approved by the Company’s stockholders
pursuant to this Plan in order to qualify Awards as Performance-Based
Compensation; and (b) with respect to any other Award, any performance measures
as determined by the Committee in its sole discretion and set forth in the
applicable Award Agreement for purposes of determining the applicable
Performance Goal.
     2.39. Performance Period. Performance Period means the period of time, as
determined by the Committee, during which the Performance Goals must be met in
order to determine the degree of payout or vesting with respect to an Award.
     2.40. Plan. Plan means this ev3 Inc. Third Amended and Restated 2005
Incentive Plan as effective as of the date approved by the stockholders of the
Company, and as amended from time to time thereafter.
     2.41. Predecessor Plans. Predecessor Plans means the Company’s equity-based
compensation plans in effect prior to the establishment of this Plan or
equity-based compensation plans assumed by the Company, under which Awards are
outstanding as of the Effective Date of this Plan, including the ev3 LLC Amended
and Restated 2003 Incentive Plan, as amended, FoxHollow Technologies, Inc. 2004
Equity Incentive Plan, FoxHollow Technologies, Inc. 1997 Stock Plan, Micro
Therapeutics, Inc. 1996 Stock Incentive Plan, as amended and the Micro
Therapeutics, Inc. 1993 Incentive Stock Option, Nonqualified Stock Option and
Restricted Stock Purchase Plan.
     2.42. Retirement. Retirement means, unless otherwise defined in an Award
Agreement or in a written employment, services or other agreement between the
Participant and the Company or a Subsidiary, “Retirement” as defined from time
to time for purposes of this Plan by the Committee or by the Company’s chief
human resources officer or other person performing that function or, if not so
defined, means voluntary termination of employment or service by the Participant
on or after the date the Participant reaches age fifty-five (55) with the
present intention to leave the Company’s industry or to leave the general
workforce.
     2.43. Rule 16b-3. Rule 16b-3 means the exemption under Rule 16b-3 to
Section 16(b) of the 1934 Act or any successor to such rule.
     2.44. Stock. 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 Stock may be changed in accordance with Section 3.6 of this Plan..
     2.45. Stock Appreciation Right. Stock Appreciation Right means a right
which is granted under Section 8 of this Plan to receive the appreciation in a
share of Stock.
     2.46. Stock-Based Award. Stock-Based Award means any equity-based or
equity-related Award made pursuant to this Plan, including Options, Stock
Appreciation Rights, Stock Grants, Stock Unit Grants and Other Stock-Based
Awards.

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     2.47. Stock Grant. Stock Grant means a grant under Section 9 of this Plan
which is designed to result in the issuance of the number of shares of Stock
described in such grant rather than a payment in cash based on the Fair Market
Value of such shares of Stock.
     2.48. Stock Unit Grant. Stock Unit Grant means a grant under Section 9 of
this Plan which is designed to result in the payment of cash based on the Fair
Market Value of the number of shares of Stock described in such grant rather
than the issuance of the number of shares of Stock described in such grant.
     2.49. Subsidiary. Subsidiary means a corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) of the Company.
     2.50. Ten Percent Stockholder. Ten Percent Stockholder means a person who
owns (after taking into account the attribution rules of Section 424(d) of the
Code) more than ten percent (10%) of the total combined voting power of all
classes of stock of either the Company, a Subsidiary or a “parent corporation”
(within the meaning of Section 424(e) of the Code).
3. SHARES AVAILABLE FOR ISSUANCE; GRANT LIMITS AND ADJUSTMENTS
     3.1. Shares Available for Issuance. Subject to adjustment as provided in
Section 3.6, the maximum number of shares of Stock that shall be available for
issuance under this Plan shall be the sum of:

  (a)   14,500,000;     (b)   The number of shares of Stock subject to Awards
outstanding under the Predecessor Plans as of the Effective Date but only to the
extent that such outstanding Awards are forfeited, expire or otherwise terminate
without the issuance of such shares of Stock;     (c)   The number of shares
issued or Awards granted under the Plan in connection with the settlement,
assumption or substitution of outstanding awards or obligations to grant future
awards as a condition of the Company and/or any Subsidiar(ies) acquiring,
merging or consolidating with another entity; and     (d)   The number of shares
that are unallocated and available for grant under a stock plan assumed by the
Company or any Subsidiary(ies) in connection with the merger, consolidation, or
acquisition of another entity by the Company and/or any of its Subsidiaries,
based on the applicable exchange ratio and other transaction terms, but only to
the extent that such shares may be utilized by the Company or its Subsidiaries
following the transaction pursuant to the rules and regulations of the Nasdaq
Stock Market (or other applicable market or exchange on which the Company’s
Stock may be quoted or traded), including the shares previously transferred
pursuant to this Section 3.1(d) of this Plan in connection with the Company’s
acquisition of FoxHollow Technologies, Inc.;

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provided, however, that no more than 7,500,000 shares of Stock authorized for
issuance under this Plan may be issued pursuant to Full Value Awards and no more
than 14,000,000 shares of Stock may be issued in connection with the exercise of
ISOs.
     3.2. Source of Shares. The shares of Stock described in Section 3.1 shall
be reserved to the extent that the Company deems appropriate from authorized but
unissued shares of Stock and from shares of Stock which have been reacquired by
the Company.
     3.3. Accounting for Awards. Shares of Stock that are issued under this Plan
or that are subject to outstanding Awards shall be applied to reduce the maximum
number of shares of Stock remaining available for issuance under this Plan only
to the extent they are used; provided, however, that the full number of shares
of Stock subject to a Stock Appreciation Right granted that is settled by the
issuance of shares of Stock shall be counted against the shares of Stock
available for issuance under this Plan, regardless of the number of shares
actually issued upon settlement of such Stock Appreciation Right. Furthermore,
any shares of Stock withheld to satisfy tax withholding obligations on Awards
issued under this Plan, any shares of Stock withheld to pay the exercise price
of Awards under this Plan and any shares of Stock not issued or delivered as a
result of the “net exercise” of an outstanding Option pursuant to Section 7.4
shall be counted against the shares of Stock available for issuance under this
Plan and shall not be available again for grant under this Plan. Any shares of
Stock repurchased by the Company on the open market using the proceeds from the
exercise of an Award shall not increase the number of shares of Stock available
for issuance under this Plan. Any shares of Stock related to Awards under this
Plan that terminate by expiration, forfeiture, cancellation or otherwise without
the issuance of the shares of Stock, or are settled in cash in lieu of shares of
Stock, or are exchanged with the Committee’s permission, prior to the issuance
of shares of Stock, for Awards not involving shares of Stock, shall be available
again for grant under this Plan.
     3.4. Use of Proceeds. The proceeds which the Company receives from the sale
of any shares of Stock under this Plan shall be used for general corporate
purposes and shall be added to the general funds of the Company.
     3.5. Annual Grant Limits. The following limits (each an “Annual Grant
Limit” and, collectively, “Annual Grant Limits”), as adjusted pursuant to
Section 3.6, shall apply to grants of Awards unless the Committee specifically
determines at the time of grant that an Award is not intended to qualify as
Performance-Based Compensation under this Plan:

  (a)   The maximum aggregate number of shares of Stock subject to Options and
Stock Appreciation Rights granted to any one Participant in any one calendar
year shall be 1,500,000 shares.     (b)   The maximum aggregate number of shares
of Stock subject to Stock Grants and Stock Unit Grants granted to any one
Participant in any one calendar year shall be 1,500,000 shares.     (c)   The
maximum aggregate number of shares of Stock subject to Performance Awards
granted to any one Participant in any one calendar year shall be 1,500,000
shares.

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  (d)   The maximum aggregate dollar amount granted with respect to Annual
Performance Cash Awards to any one Participant in any one calendar year shall
not exceed $5,000,000, determined as of the date of payout.     (e)   The
maximum aggregate dollar amount granted with respect to Other Cash-Based Awards
to any one Participant in any one calendar year shall not exceed $5,000,000,
determined as of the date of payout.     (f)   The maximum aggregate number of
shares of Stock granted with respect to Other Stock-Based Awards to any one
Participant in any one calendar year shall not exceed 1,500,000 shares,
determined as of the date of payout.

     3.6. Adjustments to Shares and Awards.

  (a)   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 similar 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) shall make appropriate adjustment (which determination shall be
conclusive) as to: (i) the number and kind of securities or other property
(including cash) available for issuance or payment under this Plan, including
the sub-limits set forth in Section 3.1 and the Annual Award Limits set forth in
Section 3.5, and (ii) in order to prevent dilution or enlargement of the rights
of Participants, the number and kind of securities or other property (including
cash) subject to outstanding Awards and the exercise price of outstanding
Awards. The determination of the Committee as to the foregoing adjustments, if
any, shall be final, conclusive and binding on Participants under this Plan.    
(b)   Notwithstanding anything else herein to the contrary, without affecting
the number of shares of Stock reserved or available hereunder, the sublimits in
Section 3.1 and the Annual Award Limits in Section 3.5, the Committee may
authorize the issuance or assumption of benefits under this Plan in connection
with any merger, consolidation, acquisition of property or stock or
reorganization upon such terms and conditions as it may deem appropriate,
subject to compliance with the rules under Sections 422 and 424 of the Code, as
and where applicable.

4. EFFECTIVE DATE
     The effective date of this Plan shall be the date the stockholders of the
Company (acting at a duly called meeting of such stockholders) approve the
adoption of this Plan as amended and restated (the “Effective Date”).

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5. COMMITTEE
     5.1. Plan Administration. This Plan shall be administered by the Committee.
The Committee acting in its sole discretion shall exercise such powers and take
such action as expressly called for under this Plan and, further, the Committee
shall have the power to interpret this Plan and (subject to Section 17 and
Section 22 and Rule 16b-3) to take such other action in the administration and
operation of this Plan as the Committee deems equitable under the circumstances,
which action shall be binding on the Company, on each affected Participant and
on each other person directly or indirectly affected by such action. The
Committee shall not be obligated to treat Participants or Eligible Recipients
uniformly, and determinations made under this Plan may be made by the Committee
selectively among Participants or Eligible Recipients, whether or not such
Participants and Eligible Recipients are similarly situated. Furthermore, the
Committee as a condition to making any grant under this Plan to any Eligible
Recipient shall have the right to require him or her to execute an agreement
which makes the Eligible Recipient subject to non-competition provisions and
other restrictive covenants which run in favor of the Company.
     5.2. No Repricing. Notwithstanding any other provision of this Plan other
than Section 3.6, the Committee shall not, without prior approval of the
Company’s stockholders, seek to effect any re-pricing of any previously granted,
“underwater” Option or Stock Appreciation Right by: (i) amending or modifying
the terms of the Option or Stock Appreciation Right to lower the exercise price;
(ii) canceling the underwater Option or Stock Appreciation Right in exchange for
(A) cash; (B) replacement Options or Stock Appreciation Rights having a lower
exercise price; or (C) other Awards; or (iii) repurchasing the underwater
Options or Stock Appreciation Rights and granting new Awards under this Plan.
For purposes of this Section 5.2, an Option or Stock Appreciation Right shall be
deemed to be “underwater” at any time when the Fair Market Value of the Stock is
less than the exercise price of the Option or Stock Appreciation Right.
     5.3. Participants Based Outside of the United States. In addition to the
authority of the Committee under Section 5.1 and notwithstanding any other
provision of the Plan, the Committee may, in its sole discretion, amend the
terms of the Plan or Awards with respect to Participants resident outside of the
United States or employed by a non-U.S. Subsidiary in order to comply with local
legal requirements, to otherwise protect the Company’s or Subsidiary’s
interests, or to meet objectives of the Plan, and may, where appropriate,
establish one or more sub-plans (including the adoption of any required rules
and regulations) for the purposes of qualifying for preferred tax treatment
under foreign tax laws. The Committee shall have no authority, however, to take
action pursuant to this Section 5.3: (i) to reserve shares or grant Awards in
excess of the limitations provided in this Plan; (ii) to effect any re-pricing
in violation of Section 5.2; (iii) to grant an Option or Stock Appreciation
Right having an exercise price less than 100% of the Fair Market Value of one
share of Stock on the Grant Date in violation of this Plan; or (iv) for which
stockholder approval would then be required pursuant to Section 22.2.
     5.4. Non-Employee Director Awards. Notwithstanding any other provision of
this Plan, all grants of Non-Employee Director Awards shall only be granted and
administered by a Committee comprised solely of members of the Board who are
“independent directors” within

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the meaning of the Listing Rules of the Nasdaq Stock Market (or other applicable
exchange or market on which the Stock may be traded or quoted).
6. ELIGIBILITY
     Only Employees shall be eligible for the grant of ISOs under this Plan. All
Eligible Recipients shall be eligible for the grant of Non-ISOs, Stock
Appreciation Rights, Performance Awards, Annual Performance Cash Awards, Other
Cash-Based Awards, Other Stock-Based Awards, and for Stock Grants and Stock Unit
Grants under this Plan.
7. OPTIONS
     7.1. Grant; Award Agreement. The Committee acting in its sole discretion
shall have the right to grant Options to Eligible Recipients under this Plan to
purchase shares of Stock subject to such terms and conditions, consistent with
the other provisions of this Plan, as may be determined by the Committee in its
sole discretion. Each grant of an Option to an Eligible Recipient shall be
evidenced by an Award Agreement, and each Award Agreement shall set forth
whether the Option is an ISO or a Non-ISO and shall set forth such other terms
and conditions of such grant as the Committee acting in its sole discretion
deems consistent with the terms of this Plan; provided, however, that if the
Committee grants an ISO and a Non-ISO to an Employee on the same date, the right
of the Employee to exercise the ISO shall not be conditioned on his or her
failure to exercise the Non-ISO. To the extent that any ISO (or portion thereof)
granted under this Plan ceases for any reason to qualify as an “incentive stock
option” for purposes of Section 422 of the Code, such ISO (or portion thereof)
shall continue to be outstanding for purposes of this Plan but shall thereafter
be deemed to be a Non-ISO. Options may be granted to an Eligible Recipient for
services provided to a Subsidiary only if, with respect to such Eligible
Recipient, the underlying shares of Stock constitute “service recipient stock”
within the meaning of Treas. Reg. Section 1.409A-1(b)(5)(iii).
     7.2. $100,000 Limit. No Option shall be treated as an ISO to the extent
that the aggregate Fair Market Value of the Stock subject to the Option which
would first become exercisable in any calendar year exceeds $100,000. Any such
excess shall instead automatically be treated as a Non-ISO. The Committee shall
interpret and administer the ISO limitation set forth in this Section 7.2 in
accordance with Section 422(d) of the Code, and the Committee shall treat this
Section 7.2 as in effect only for those periods for which Section 422(d) of the
Code is in effect.
     7.3. Exercise Price. The per share price to be paid by a Participant upon
exercise of an Option granted pursuant to this Section 7 shall be determined by
the Committee in its sole discretion at the time of grant; provided, however,
that such price shall not be less than one hundred percent (100%) of the Fair
Market Value of one share of Stock on the Grant Date and; provided, further,
that if the Option is an ISO granted to an Employee who is a Ten Percent
Stockholder, the per share price for each share of Stock subject to such ISO
shall be no less than 110% of the Fair Market Value of a share of Stock on the
date such ISO is granted.

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     7.4. Payment.

  (a)   The exercise price of an Option shall be payable in full upon the
exercise of such Option in cash (including check, bank draft or money order);
provided, however, that the Committee, in its sole discretion, may allow such
payments to be made, in whole or in part, by (i) by tender, or attestation as to
ownership, of Shares that are already owned by the Participant that are
acceptable to the Committee (“Previously Acquired Shares”); (ii) by a “net
exercise” of the Option (as further described in paragraph (b), below);
(iii) through cashless exercise procedure which is effected by an unrelated
broker through a sale of Stock in the open market; (iv) by a combination of such
methods; or (v) any other method approved or accepted by the Committee in its
sole discretion.     (b)   In the case of a “net exercise” of an Option, the
Company shall not require a payment of the exercise price of the Option from the
Participant but shall reduce the number of shares of Stock issued upon the
exercise by the largest number of whole shares that has a Fair Market Value that
does not exceed the aggregate exercise price for the shares exercised under this
method. Shares of Stock shall no longer be outstanding under an Option (and
shall therefore not thereafter be exercisable) following the exercise of such
Option to the extent of (i) shares used to pay the exercise price of an Option
under the “net exercise,” (ii) shares actually delivered to the Participant as a
result of such exercise and (iii) any shares withheld for purposes of tax
withholding.     (c)   Previously Acquired Shares tendered or covered by an
attestation as payment of the exercise price of an Option shall be valued at
their Fair Market Value on the exercise date.

     7.5. Exercisability and Duration. An Option shall 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 and as
set forth in the related Award Agreement, including (i) the achievement of one
or more of the Performance Goals; or that (ii) the Participant remain in the
continuous employment or service with the Company or a Subsidiary for a certain
period; provided, however, that no Option shall be exercisable after ten
(10) years from the Grant Date (five (5) years from the Grant Date in the case
of an ISO that is granted to an Employee who is a Ten Percent Stockholder on the
date the Option is granted). The Award Agreement for any Option granted pursuant
to this Section 7 that becomes exercisable solely based on the continued service
of the Participant shall provide that such Option shall become exercisable on a
pro rata basis (which may be determined on a monthly, annual or other basis and
may be tied to a specific vesting date each year, such as November 15) over a
vesting term of not less than three years after the Grant Date of the Option or
no more rapidly than ratably over a three-year period after the Grant Date of
the Option, except (a) in connection with the death, Disability or Retirement of
the Participant or a Change in Control; or (b) for any Option granted to a
Participant who within six months of the Grant Date is first appointed or
elected as an officer of the Company, hired as an Employee, elected as a
Director or retained as a

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Consultant. Notwithstanding the foregoing, if the exercise of an Option that is
exercisable in accordance with its terms is prevented by the provisions of
Section 20, the Option shall remain exercisable until thirty (30) days after the
date such exercise first would no longer be prevented by such provisions, but in
any event no later than the expiration date of such Option.
     7.6. 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 this
Plan and in the Award 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 Plymouth, Minnesota
(or to the Company’s designee as may be established from time to time by the
Company and communicated to Participants) and by paying in full the total
exercise price for the shares of Stock to be purchased in accordance with
Section 7.4 of this Plan.
8. STOCK APPRECIATION RIGHTS
     8.1. Grant; Award Agreement. The Committee acting in its sole discretion
shall have the right to grant Stock Appreciation Rights to Eligible Recipients
under this Plan subject to such terms and conditions, consistent with the other
provisions of this Plan, as may be determined by the Committee in its sole
discretion. Each Stock Appreciation Right grant shall be evidenced by an Award
Agreement or, if such Stock Appreciation Right is granted as part of an Option,
shall be evidenced by an Award Agreement for the related Option. Stock
Appreciation Rights may be granted to an Eligible Recipient for services
provided to a Subsidiary only if, with respect to such Eligible Recipient, the
underlying shares of Stock constitute “service recipient stock” within the
meaning of Treas. Reg. Section 1.409A-1(b)(5)(iii).
     8.2. Exercise Price. The exercise price of a Stock Appreciation Right shall
be determined by the Committee, in its sole discretion, at the time of grant;
provided, however, that such price shall not be less than one hundred percent
(100%) of the Fair Market Value of one share of Stock on the Grant Date.
     8.3. Exercisability and Duration. A Stock Appreciation Right shall become
exercisable at such times and in such installments as may be determined by the
Committee in its sole discretion at the time of grant; provided, however, that
no Stock Appreciation Right shall be exercisable after ten (10) years from its
Grant Date. The Award Agreement for any Stock Appreciation Right that becomes
exercisable solely based on the continued service of the Participant shall
provide that such Stock Appreciation Right shall become exercisable on a pro
rata basis (which may be determined on a monthly, annual or other basis and may
be tied to a specific vesting date each year, such as November 15) over a
vesting term of not less than three years after the Grant Date of the Stock
Appreciation Right or no more rapidly than ratably over a three-year period
after the Grant Date of the Stock Appreciation Right, except (a) in connection
with the death, Disability or Retirement of the Participant or a Change in
Control; or (b) for any Stock Appreciation Right granted to a Participant who
within six months of the Grant Date is first appointed or elected as an officer
of the Company, hired as an Employee, elected as a Director or retained as a
Consultant. Notwithstanding the foregoing, if the exercise of a Stock
Appreciation Right that is exercisable in accordance with its terms is prevented
by the provisions of Section 20, the Stock Appreciation Right shall remain
exercisable until thirty (30) days after

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the date such exercise first would no longer be prevented by such provisions,
but in any event no later than the expiration date of such Stock Appreciation
Right.
     8.4. Manner of Exercise. A Stock Appreciation Right shall be exercised by
giving notice in the same manner as for Options, as set forth in Section 7.6,
subject to any other terms and conditions consistent with the other provisions
of this Plan as may be determined by the Committee in its sole discretion.
     8.5. Settlement. Upon the exercise of a Stock Appreciation Right, a
Participant shall be entitled to receive payment from the Company in an amount
determined by multiplying:

  (a)   The excess of the Fair Market Value of a share of Stock on the date of
exercise over the per share exercise price; by     (b)   The number of shares of
Stock with respect to which the Stock Appreciation Right is exercised.

     8.6. Form of Payment. Payment, if any, with respect to a Stock Appreciation
Right settled in accordance with Section 8.5 shall be made in accordance with
the terms of the applicable Award Agreement, in cash, shares of Stock or a
combination thereof, as the Committee determines in its sole discretion.
9. STOCK GRANTS AND STOCK UNIT GRANTS
     9.1. Grant; Award Agreement. The Committee acting in its sole discretion
shall have the right to make Stock Grants and Stock Unit Grants to Eligible
Recipients, subject to such terms and conditions, consistent with the other
provisions of this Plan, as may be determined by the Committee in its sole
discretion. Each Stock Grant and each Stock Unit Grant shall be evidenced by an
Award Agreement, and each Award Agreement shall set forth the conditions, if
any, under which Stock shall be issued under the Stock Grant or cash shall be
paid under the Stock Unit Grant and the conditions under which the Participant’s
interest in any Stock which has been issued shall become non-forfeitable.
     9.2. Conditions.

  (a)   Conditions to Issuance of Stock. The Committee acting in its sole
discretion may make the issuance of Stock under a Stock Grant subject to the
satisfaction of one or more conditions which the Committee deems appropriate
under the circumstances for Participants generally or for a Participant in
particular, and the related Award Agreement shall set forth each such condition
and the deadline for satisfying each such condition. Stock subject to a Stock
Grant shall be issued in the name of a Participant only after each such
condition, if any, has been timely satisfied, and any Stock which is so issued
shall be held by the Company pending the satisfaction of the forfeiture
conditions, if any, under Section 9.2(b) for the related Stock Grant.

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  (b)   Conditions on Forfeiture of Stock or Cash Payment. The Committee acting
in its sole discretion may make any cash payment due under a Stock Unit Grant or
Stock issued in the name of a Participant under a Stock Grant non-forfeitable
subject to the satisfaction of one or more conditions, including the achievement
of one or more Performance Goals, that the Committee acting in its sole
discretion deems appropriate under the circumstances for Participants generally
or for a Participant in particular, and the related Award Agreement shall set
forth each such condition, if any, and the deadline, if any, for satisfying each
such condition. A Participant’s non-forfeitable interest in the shares of Stock
underlying a Stock Grant or the cash payable under a Stock Unit Grant shall
depend on the extent to which he or she timely satisfies each such condition. If
a share of Stock is issued under this Section 9.2(b) before a Participant’s
interest in such share of Stock is non-forfeitable, (1) such share of Stock
shall not be available for re-issuance under Section 3 until such time, if any,
as such share of Stock thereafter is forfeited as a result of a failure to
timely satisfy a forfeiture condition and (2) the Company shall have the right
to condition any such issuance on the Participant first signing an irrevocable
stock power in favor of the Company with respect to the forfeitable shares of
Stock issued to such Participant in order for the Company to effect any
forfeiture called for under the related Award Agreement.     (c)   Minimum
Period of Service. If a Stock Grant or Stock Unit Grant vests solely based on
the continued service of the Participant, the Award Agreement shall provide that
such Stock Grant or Stock Unit Grant shall vest on a pro rata basis (which may
be determined on a monthly, annual or other basis and may be tied to a specific
vesting date each year, such as November 15) over a vesting term of not less
than three years after the Grant Date of the Stock Grant or Stock Unit Grant or
no more rapidly than ratably over a three-year period after the Grant Date of
the Stock Grant or Stock Unit Grant, except (a) in connection with the death,
Disability or Retirement of the Participant or a Change in Control; or (b) for
any such Stock Grant or Stock Unit Grant granted to a Participant who within six
months of the Grant Date is first appointed or elected as an officer of the
Company, hired as an Employee, elected as a Director or retained as a
Consultant. If a Stock Grant or Stock Unit Grant vests solely on the achievement
of one or more Performance Goals, the Award Agreement shall provide that the
Performance Period for the achievement of such Performance Goals shall be at
least one year, except in connection with the death or Disability of the
Participant or a Change in Control.

     9.3. Dividends and Voting Rights.

  (a)   Regular Cash Dividends. Except as otherwise provided in Section 15 or as
otherwise set forth in an Award Agreement, if a regular dividend is paid in cash
on a share of Stock after such Stock has been issued under a Stock

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      Grant but before the first date that a Participant’s interest in such
Stock (1) is forfeited completely or (2) becomes completely non-forfeitable, the
Company shall hold such dividend subject to the same conditions under
Section 9.2(b) as the related Stock Grant.

  (b)   Stock Dividends. Except as otherwise provided in Section 15, if a
dividend is paid on a share of Stock in Stock after such Stock has been issued
under a Stock Grant but before the first date that a Participant’s interest in
such Stock (1) is forfeited completely or (2) becomes completely
non-forfeitable, the Company shall hold such dividend Stock subject to the same
conditions under Section 9.2(b) as the related Stock Grant.     (c)   Other.
Except as otherwise provided in Section 15, if a dividend (other than a dividend
described in Section 9.3(a) or Section 9.3(b)) is paid with respect to a share
of Stock after such Stock has been issued under a Stock Grant but before the
first date that a Participant’s interest in such Stock (1) is forfeited
completely or (2) becomes completely non-forfeitable, the Company shall hold
such dividend in accordance with such rules as the Committee shall adopt with
respect to each such dividend.     (d)   Voting. Except as otherwise set forth
in an Award Agreement, a Participant shall have the right to vote the Stock
issued under his or her Stock Grant during the period which comes after such
Stock has been issued under a Stock Grant but before the first date that a
Participant’s interest in such Stock (1) is forfeited completely or (2) becomes
completely non-forfeitable.

     9.4. Satisfaction of Forfeiture Conditions. A share of Stock shall cease to
be subject to a Stock Grant at such time as a Participant’s interest in such
Stock becomes non-forfeitable under this Plan, and the certificate or other
evidence of ownership representing such share shall be transferred to the
Participant as soon as practicable thereafter.
     9.5. Section 83(b) Election. If a Participant makes an election pursuant to
Section 83(b) of the Code with respect to a Stock Grant, the Participant must
file, within thirty (30) days following the Grant Date of the Stock Grant, a
copy of such election with the Company and with the Internal Revenue Service, in
accordance with the regulations under Section 83 of the Code. The Committee may
provide in the Award Agreement that the Stock Grant is conditioned upon the
Participant’s making or refraining from making an election with respect to the
award under Section 83(b) of the Code.
10. PERFORMANCE AWARDS
     10.1. Grant; Award Agreement. An Eligible Recipient may be granted one or
more Performance Awards under this Plan, and such awards shall be subject to
such terms and conditions, consistent with the other provisions of this Plan, as
may be determined by the Committee in its sole discretion, including the
achievement of one or more Performance Goals.

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Each Performance Award shall be evidenced by an Award Agreement that shall
specify the amount of cash, shares of Stock or combination of both to be
received by the Participant upon payout of the Performance Award, any
Performance Goals upon which the Performance Award is subject, any Performance
Period during which any Performance Goals must be achieved and such other
provisions as the Committee shall determine which are not inconsistent with the
terms of this Plan.
     10.2. Vesting. The Committee may impose such restrictions or conditions,
not inconsistent with the provisions of this Plan, to the vesting of such
Performance Awards as it deems appropriate, in its sole discretion, including
the achievement of one or more of the Performance Goals. If a Performance Award
vests solely on the achievement of one or more Performance Goals, the Award
Agreement shall provide that the Performance Period for the achievement of such
Performance Goals shall be at least one year, except in connection with the
death or Disability of the Participant or a Change in Control.
     10.3. Form and Timing of Performance Award Payment. Subject to the terms of
this Plan, after the applicable Performance Period has ended, the holder of
Performance Awards shall be entitled to receive payment on the value and number
of Performance Awards earned by the Participant over the Performance Period, to
be determined as a function of the extent to which the corresponding Performance
Goals have been achieved. Payment of earned Performance Awards shall be as
determined by the Committee and as evidenced in the Award Agreement. Subject to
the terms of this Plan, the Committee, in its sole discretion, may pay earned
Performance Awards in the form of cash or in shares of Stock (or in a
combination thereof) equal to the value of the earned Performance Awards at the
close of the applicable Performance Period, or as soon as practicable after the
end of the Performance Period, except to the extent that a Participant has
properly elected to defer payment that may be attributable to a Performance
Award under a Company deferred compensation plan or arrangement. The
determination of the Committee with respect to the form of payment of
Performance Awards shall be set forth in the Award Agreement pertaining to the
grant of the award. Any shares of Stock issued in payment of earned Performance
Awards may be granted subject to any restrictions deemed appropriate by the
Committee, in it sole discretion, including that the Participant remain in the
continuous employment or service with the Company or a Subsidiary for a certain
period.
11. ANNUAL PERFORMANCE CASH AWARDS
     11.1. Grant. Subject to such terms and conditions, consistent with the
other provisions of this Plan, as may be determined by the Committee in its sole
discretion, the Committee, at any time and from time to time, may grant to
Participants Awards denominated in cash in such amounts and upon such terms as
the Committee shall determine, based on the achievement of specified Performance
Goals for annual periods or other time periods as determined by the Committee
(the “Annual Performance Cash Awards”).
     11.2. Target Payout. The target amount that may be paid with respect to an
Annual Performance Cash Award (the “Target Payout”) shall be determined by the
Committee pursuant to this Section 11.2 and shall be based on a percentage of a
Participant’s actual annual base salary at the time of grant (“Participation
Factor”), within the range established by the Committee for each Participant and
subject to adjustment as provided in the second to last

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sentence of this paragraph. The Participation Factors, which are intended to
reflect a Participant’s level of responsibility, may be up to 150% for any
Participant. The Chief Executive Officer may approve modifications to the
foregoing Participation Factors for any Participant who is not a Covered
Employee, if such modification is based on level of responsibility. The
Committee may establish curves, matrices or other measurements for prorating the
amount of payments for achievement of Performance Goals at less or greater than
the Target Payout.
     11.3. Maximum Payout. The Committee also may establish a maximum potential
payout amount (the “Maximum Payout”) with respect to an Annual Performance Cash
Award of up to 300% of the Target Payout in the event Performance Goals are
exceeded by an amount established by the Committee at the time Performance Goals
are established. The Committee may establish curves, matrices or other
measurements for prorating the amount of payments for achievement of Performance
Goals at greater than the Target Payout but less than the Maximum Payout.
     11.4. Individual Performance Goals. At the time an Annual Performance Cash
Award is made, the Committee may increase the Target Payout and the Maximum
Payout (as either may be prorated in accordance with Sections 11.2 and 11.3) for
selected Participants (“Individual Performance Participants”) to reflect
individual performance goals (“Individual Performance Goals”) established at
that time by the Committee. The Committee shall have the discretion to reduce by
an amount up to 100% the amount that would otherwise be paid under the payout
formula to an Individual Performance Participant based on the Committee’s
evaluation of the individual’s achievement of the Individual Performance Goals.
     11.5. Payment. Payment of any earned Annual Performance Cash Awards shall
be made as soon as possible after the Committee has determined the extent to
which the applicable Performance Goals and Individual Performance Goals have
been achieved and not later than the last day of the short term deferral period
determined in accordance with Treas. Reg. Sec. 1.409A-1(b)(4), except to the
extent that a Participant has properly elected to defer payment that may be
attributable to an Annual Performance Cash Award under a Company deferred
compensation plan or arrangement.
12. NON-EMPLOYEE DIRECTOR AWARDS
     12.1. Automatic and Discretionary Grants to Non-Employee Directors. The
Committee at any time and from time to time may approve resolutions providing
for the automatic grant to Non-Employee Directors of Awards granted under this
Plan and may grant to Non-Employee Directors such discretionary Non-Employee
Director Awards on such terms and conditions, consistent with the other
provisions of this Plan, as may be determined by the Committee in its sole
discretion, and set forth in an applicable Award Agreement. Notwithstanding any
other provision in this Plan to the contrary, any Non-Employee Director Awards
granted under this Plan shall not be subject to the minimum vesting requirements
set forth in Sections 7.5, 8.3, 9.2(c) and 10.2.
     12.2. Shares in Lieu of Retainers and Other Director Fees. If the Committee
so permits, a Non-Employee Director may elect to receive shares of Common Stock
in lieu of Director Fees

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by giving written notice of such election to the Company in a form approved by
the Committee within a time period specified by the Committee. An election to
receive payment of Director Fees in the form of shares of Common Stock may be
revoked only by a subsequent election to receive payment of Director Fees in
cash or to defer such Director Fees pursuant to Section 12.3. The number of
shares of Common Stock to be paid to a Non-Employee Director pursuant to this
Section 12.2 shall be determined by dividing the amount of Director Fees payable
by the Fair Market Value of the Common Stock on the date such Director Fees
would have been paid in cash but for the Participant’s election to receive
payment of such Director Fees in the form of Common Stock. The amount of any
fractional share shall be paid in cash.
     12.3. Deferral of Award Payment. If the Committee so permits, a
Non-Employee Director may elect to defer the grant or payment of a Non-Employee
Director Award pursuant to such terms and conditions as the Committee may
prescribe.
     12.4. Composition of Committee. For purposes of this Section 12, all
references to “Committee” in this Section 12 shall mean a Committee that
consists solely of directors who are “independent directors” as defined in the
Listing Rules of the Nasdaq Stock Market (or other applicable exchange or market
on which the Stock may be traded or quoted).
13. OTHER CASH-BASED AWARDS AND OTHER STOCK-BASED AWARDS
     13.1. Other Cash-Based Awards. Subject to such terms and conditions,
consistent with the other provisions of this Plan, as may be determined by the
Committee in its sole discretion, the Committee, at any time and from time to
time, may grant Other Cash-Based Awards to Participants in such amounts and upon
such terms as the Committee shall determine.
     13.2. Other Stock-Based Awards. Subject to such terms and conditions,
consistent with the other provisions of this Plan, as may be determined by the
Committee in its sole discretion, the Committee may grant Other Stock-Based
Awards not otherwise described by the terms of this Plan (including the grant or
offer for sale of unrestricted shares of Stock) in such amounts and subject to
such terms and conditions as the Committee shall determine. Such Other
Stock-Based Awards may involve the transfer of actual shares of Stock to
Participants or payment in cash or otherwise of amounts based on the value of
shares of Stock, and may include Stock-Based Awards designed to comply with or
take advantage of the applicable local laws of jurisdictions other than the
United States.
     13.3. Value of Other Cash-Based Awards and Other Stock-Based Awards. Each
Other Cash-Based Award shall specify a payment amount or payment range as
determined by the Committee in its sole discretion. Each Other Stock-Based Award
shall be expressed in terms of shares of Stock or units based on shares of
Stock, as determined by the Committee in its sole discretion. The Committee may
establish Performance Goals in its sole discretion for any Other Cash-Based
Award or any Other Stock-Based Award. If the Committee exercises its discretion
to establish Performance Goals for any such Awards, the number or value of Other
Cash-Based Awards or Other Stock-Based Awards that shall be paid out to the
Participant shall depend on the extent to which the Performance Goals are met.

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     13.4. Payment of Other Cash-Based Awards and Other Stock-Based Awards.
Payment, if any, with respect to an Other Cash-Based Award or an Other
Stock-Based Award shall be made in accordance with the terms of the Award, in
cash for any Other Cash-Based Award and in cash or shares of Stock for any Other
Stock-Based Award, as the Committee determines in its sole discretion, except to
the extent that a Participant has properly elected to defer payment that may be
attributable to an Other Cash-Based Award or Other Stock-Based Award under a
Company deferred compensation plan or arrangement.
14. PERFORMANCE MEASURES
     14.1. Performance Measures. The Performance Goals upon which the payment or
vesting of an Award to a Covered Employee that is intended to qualify as
Performance-Based Compensation shall be limited to one or more specified
objective Performance Measures that are based on the following Performance
Measures: Sales and Revenue Measures: Gross Revenue, Sales Allowances, Net
Revenue, Invoiced Revenue, Collected Revenue, Revenues from New Products, Bad
Debts; Expense Measures: Direct Material Costs, Direct Labor Costs, Indirect
Labor Costs, Direct Manufacturing Costs, Indirect Manufacturing Costs, Cost of
Goods Sold, Sales, General and Administrative Expenses, Operating Expenses,
Non-cash Expenses, Tax Expense, Non-operating Expenses, Total Expenses;
Profitability and Productivity Measures: Gross Margin, Net Operating Income,
EBITDA (earnings before interest, taxes, depreciation and amortization), EBIT
(earnings before interest and taxes), Net Operating Income After Taxes (NOPAT),
Net Income, Net Cash Flow, Net Cash Flow from Operations; Asset Utilization and
Effectiveness Measures: Cash, Excess Cash, Accounts Receivable, Inventory (WIP
or Finished Goods), Inventory Days on Hand, Days Sales Outstanding, Current
Assets, Working Capital, Total Capital, Fixed Assets, Total Assets, Standard
Hours, Plant Utilization, Purchase Price Variance, Manufacturing Overhead
Variance; Debt and Equity Measures: Accounts Payable, Current Accrued
Liabilities, Total Current Liabilities, Total Debt, Debt Principal Payments, Net
Current Borrowings, Total Long-term Debt, Credit Rating, Retained Earnings,
Total Preferred Equity, Total Common Equity, Total Equity; Stockholder and
Return Measures: Earnings per Share (diluted and fully diluted), Stock Price,
Dividends, Shares Repurchased, Total Return to Stockholders, Debt Coverage
Ratios, Return on Assets, Return on Equity, Return on Invested Capital, Economic
Profit (for example, economic value added); Customer and Market Measures:
Dealer/Channel Size/Scope, Dealer/Channel Performance/Effectiveness, Order Fill
Rate, Customer Satisfaction, Customer Service/Care, Brand Awareness and
Perception, Market Share, Warranty Rates, Product Quality, Channel Inventory;
Organizational and Employee Measures: Headcount, Employee Performance, Employee
Productivity, Standard Hours, Employee Engagement/Satisfaction, Employee
Turnover, Employee Diversity.
     Any of the Performance Measures can be used in an algebraic formula (e.g.,
averaged over a period, combined into a ratio, compared to a budget or standard,
compared to previous periods or other formulaic combinations) based on the
Performance Measure to create a Performance Measure. Any Performance Measure(s)
may be used to measure the performance of the Company or Subsidiary as a whole
or any division or business unit of the Company, product or product group,
region or territory, or Subsidiary, or any combination thereof, as the Committee
may deem appropriate. Any Performance Measure(s) can be compared to the
performance of a group of comparator companies, or published or special index
that the Committee, in its sole discretion, deems appropriate, or the Company
may select any

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Performance Measure(s) above as compared to various stock market indices. The
Committee also has the authority to provide for accelerated vesting of any Award
based on the achievement of Performance Goals pursuant to any Performance
Measure(s) specified in this Section 14.1.
     14.2. Establishment of Performance Goals. Any Award to a Covered Employee
that is intended to qualify as Performance-Based Compensation shall be granted,
and Performance Goals for such an Award shall be established, by the Committee
in writing not later than ninety (90) days after the commencement of the
Performance Period to which the Performance Goals relate, or such other period
required under Section 162(m) of the Code; provided that the outcome is
substantially uncertain at the time the Committee establishes the Performance
Goal; and provided further that in no event shall a Performance Goal be
considered to be pre-established if it is established after twenty-five percent
(25%) of the Performance Period (as scheduled in good faith at the time the
Performance Goal is established) has elapsed.
     14.3. Certification of Payment. Before any payment is made in connection
with any Award to a Covered Employee that is intended to qualify as
Performance-Based Compensation, the Committee shall certify in writing, as
reflected in the minutes, that the Performance Goals established with respect to
such Award have been achieved.
     14.4. Evaluation of Performance. The Committee may provide in any such
Award Agreement including Performance Goals that any evaluation of performance
may include or exclude any of the following events that occurs during a
Performance Period: (a) items related to a change in accounting principles;
(b) items relating to financing activities; (c) expenses for restructuring or
productivity initiatives; (d) other non-operating items; (e) items related to
acquisitions; (f) items attributable to the business operations of any entity
acquired by the Company during the Performance Period; (g) items related to the
disposal of a business or segment of a business; (h) items related to
discontinued operations that do not qualify as a segment of a business under
applicable accounting standards; (i) items attributable to any stock dividend,
stock split, combination or exchange of stock occurring during the Performance
Period; (j) any other items of significant income or expense which are
determined to be appropriate adjustments; (k) items relating to unusual or
extraordinary corporate transactions, events or developments; (l) items related
to amortization of acquired intangible assets; (m) items that are outside the
scope of the Company’s core, on-going business activities; (n) items related to
acquired in-process research and development; (o) items relating to changes in
tax laws; (p) items relating to major licensing or partnership arrangements;
(q) items relating to asset impairment charges; (r) items relating to gains or
losses for litigation, arbitration and contractual settlements; (s) foreign
currency exchange rate fluctuations; (t) foreign currency exchange rate gains
and losses; or (u) items relating to any other unusual or nonrecurring events,
or changes in applicable laws, accounting principles or business conditions. To
the extent such inclusions or exclusions affect Awards to Covered Employees,
they shall be prescribed in a form that meets the requirements of Section 162(m)
of the Code for deductibility.
     14.5. Adjustment of Performance Goals, Performance Periods or other Vesting
Criteria. Subject to Section 14.6, the Committee may amend or modify the vesting
criteria (including any Performance Goals, Performance Measures or Performance
Periods) of any outstanding Awards based in whole or in part on the financial
performance of the Company (or any Subsidiary or division, business unit or
other sub-unit thereof) in recognition of unusual or nonrecurring events

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(including the events described in Sections 3.6 or 14.4 hereof) affecting the
Company or the financial statements of the Company or of changes in applicable
laws, regulations or accounting principles, whenever the Committee determines
that such adjustments are appropriate in order to prevent unintended dilution or
enlargement of the benefits or potential benefits intended to be made available
under this Plan. The determination of the Committee as to the foregoing
adjustments, if any, shall be final, conclusive and binding on Participants
under this Plan.
     14.6. Adjustment of Performance-Based Compensation. Awards that are
intended to qualify as Performance-Based Compensation may not be adjusted
upward. The Committee shall retain the discretion to adjust such Awards
downward, either on a formula or discretionary basis or any combination, as the
Committee determines.
     14.7. Committee Discretion. In the event that applicable tax or securities
laws change to permit Committee discretion to alter the governing Performance
Measures without obtaining stockholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining stockholder
approval. In addition, in the event that the Committee determines that it is
advisable to grant Awards that shall not qualify as Performance-Based
Compensation, the Committee may make such grants without satisfying the
requirements of Section 162(m) of the Code and base vesting on Performance
Measures other than those set forth in Section 14.1.
15. DIVIDEND EQUIVALENTS
Any Participant selected by the Committee may be granted dividend equivalents
based on the dividends declared on shares of Stock that are subject to any
Award, to be credited as of dividend payment dates, during the period between
the date the Award is granted and the date the Award is exercised, vests or
expires, as determined by the Committee. Such dividend equivalents shall be
converted to cash or additional shares of Stock by such formula and at such time
and subject to such limitations as may be determined by the Committee.
Notwithstanding the foregoing or any other provision of this Plan to the
contrary, the Committee shall not grant dividend equivalents based on the
dividends declared on shares of Stock that are subject to an Option or Stock
Appreciation Right and further, no dividend or dividend equivalents shall be
paid out with respect to any unvested Awards, the vesting of which is based on
the achievement of Performance Goals.
16. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE
     16.1. Termination Due to Death or Disability. Unless otherwise expressly
provided by the Committee in its sole discretion in an Award Agreement, and
subject to Sections 16.3 and 16.5, 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 and Stock Appreciation Rights held by the
Participant as of the effective date of such termination shall, to the extent
exercisable as of such termination, remain exercisable for a period of one year
after such termination (but in no event after the expiration date of any such
Option or Stock Appreciation Right) and Options and Stock

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      Appreciation Rights not exercisable as of such termination shall be
terminated and forfeited;     (b)   All outstanding Stock Grants and Stock Unit
Grants held by the Participant as of the effective date of such termination that
have not vested as of the date of such termination shall be terminated and
forfeited;     (c)   All outstanding but unpaid Performance Awards, Other
Cash-Based Awards and Other Stock-Based Awards held by the Participant as of the
effective date of such termination shall be terminated and forfeited; provided,
however, that with respect to any such Awards the vesting of which is based on
the achievement of Performance Goals, if a Participant’s employment or other
service with the Company or any Subsidiary, as the case may be, is terminated by
reason of death or Disability prior to the end of the Performance Period of such
Award, but after the conclusion of a portion of the Performance Period (but in
no event less than one year), the Committee may, in its sole discretion, cause
shares of Stock to be delivered or payment made with respect to the
Participant’s Award, but only if otherwise earned for the entire Performance
Period and only with respect to the portion of the applicable Performance Period
completed at the date of such event, with proration based on full fiscal years
only and no shares to be delivered for partial fiscal years. The Committee shall
consider the provisions of Section 16.5 and shall have the discretion to
consider any other fact or circumstance in making its decision as to whether to
deliver such shares of Stock or other payment, including whether the Participant
again becomes employed; and     (d)   If the effective date of such termination
is before the end of the Performance Period to which an Annual Performance Cash
Award relates, then any such Annual Performance Cash Award held by a Participant
shall be terminated and forfeited; if the effective date of such termination is
on or after the end of the Performance Period to which an Annual Performance
Cash Award relates, then any such Annual Performance Cash Award held by a
Participant shall be paid to the Participant in accordance with the payment
terms of such Award.

     16.2. Termination for Reasons Other than Death or Disability. Unless
otherwise expressly provided by the Committee in its sole discretion in an Award
Agreement, and subject to Sections 16.3 and 16.5 of this Plan, in the event a
Participant’s employment or other service with the Company and all Subsidiaries
is terminated for any reason other than death or Disability:

  (a)   All outstanding Options and Stock Appreciation Rights held by the
Participant as of the effective date of such termination shall, to the extent
exercisable as of such termination, remain exercisable for a period of three
months after such termination (but in no event after the expiration date of any
such Option or Stock Appreciation Right) and Options and Stock

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      Appreciation Rights not exercisable as of such termination shall be
terminated and forfeited.     (b)   All Stock Grants and Stock Unit Grants held
by the Participant as of the effective date of such termination that have not
vested as of such termination shall be terminated and forfeited;     (c)   All
outstanding unpaid Performance Awards, Other Cash-Based Awards and Other
Stock-Based Awards held by the Participant as of the effective date of such
termination shall be terminated and forfeited; and     (d)   If the effective
date of such termination is before the end of the Performance Period to which an
Annual Performance Cash Award relates, then any such Annual Performance Cash
Award held by a Participant shall be terminated and forfeited; if the effective
date of such termination is on or after the end of the Performance Period to
which an Annual Performance Cash Award relates, then any such Annual Performance
Cash Award held by a Participant shall be paid to the Participant in accordance
with the payment terms of such Award.

     16.3. Modification of Rights upon Termination. Notwithstanding the other
provisions of this Section 16, upon a Participant’s termination of employment or
other service with the Company or any Subsidiary, as the case may be, the
Committee may, in its sole discretion (which may be exercised at any time on or
after the Grant Date, including following such termination) cause Options or
Stock Appreciation Rights (or any part thereof) held by such Participant as of
the effective date of such termination to terminate, become or continue to
become exercisable or remain exercisable following such termination of
employment or service, and Stock Grants, Stock Unit Grants, Performance Awards,
Annual Performance Cash Awards, Non-Employee Director Awards, Other Cash-Based
Awards and Other Stock-Based Awards held by such Participant as of the effective
date of such termination to terminate, vest or become free of restrictions and
conditions to payment, 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 (a) no Option or Stock Appreciation Right may remain
exercisable beyond its expiration date; (b) the Committee may not take any
action not permitted pursuant to Section 14.3 or Section 22.5; (c) the Committee
taking any such action relating to Non-Employee Director Awards shall consist
solely of “independent directors” as defined in the Listing Rules of the NASDAQ
Stock Market (or other applicable exchange or market on which the Stock may be
traded or quoted); and (d) any such action by the Committee adversely affecting
any outstanding Award shall not be effective without the consent of the affected
Participant (subject to the right of the Committee to take whatever action it
deems appropriate under Section 3.6, 16.5, 17 or 22).
     16.4. Determination of Termination of Employment or Other Service. Unless
the Committee otherwise determines in its sole discretion, a Participant’s
employment or other service shall, for purposes of this 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 in its sole discretion based upon such
records. Notwithstanding the foregoing, if payment of an Award that is subject
to Section

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409A of the Code is triggered by a termination of a Participant’s employment or
other service, such termination shall also constitute a “separation from
service” within the meaning of Section 409A of the Code, and any change in
employment status that constitutes a “separation from service” under
Section 409A of the Code shall be treated as a termination of employment or
service, as the case may be.
     16.5. Additional Forfeiture Events.

  (a)   Effect of Actions Constituting Cause or Adverse Action. Notwithstanding
anything in this Plan to the contrary and in addition to the other rights of the
Committee under this Section 16.5, if a Participant is determined by the
Committee, acting in its sole discretion, to have taken any action that would
constitute Cause or an Adverse Action during or within one year after the
termination of employment or other service with the Company or a Subsidiary,
irrespective of whether such action or the Committee’s determination occurs
before or after termination of such Participant’s employment or other service
with the Company or any Subsidiary and irrespective of whether or not the
Participant was terminated as a result of such Cause or Adverse Action, (i) all
rights of the Participant under this Plan and any Award Agreements evidencing an
Award then held by the Participant shall terminate and be forfeited without
notice of any kind, and (ii) the Committee in its sole discretion shall have the
authority to rescind the exercise, vesting or issuance of, or payment in respect
of, any Awards of the Participant that were exercised, vested or issued, or as
to which such payment was made, during such period and to require the
Participant to pay to the Company, within ten (10) days of receipt from the
Company of notice of such rescission, any amount received or the amount of any
gain realized as a result of such rescinded exercise, vesting, issuance or
payment (including any dividends paid or other distributions made with respect
to any shares subject to any Award). The Company may defer the exercise of any
Option or Stock Appreciation Right for a period of up to six (6) months after
receipt of the Participant’s written notice of exercise or the issuance of share
certificates upon the vesting of any Award for a period of up to six (6) months
after the date of such vesting in order for the Committee to make any
determination as to the existence of Cause or an Adverse Action. The Company
shall be entitled to 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
amounts necessary to satisfy such payment obligations. Unless otherwise provided
by the Committee in an applicable Award Agreement, this Section 16.5(a) shall
not apply to any Participant following a Change in Control.     (b)   Forfeiture
of Awards under Sarbanes-Oxley Act. If the Company is required to prepare an
accounting restatement due to the material noncompliance of the Company, as a
result of misconduct, with any financial reporting requirement under the
securities laws, then any

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      Participant who is one of the individuals subject to automatic forfeiture
under Section 304 of the Sarbanes-Oxley Act of 2002 shall reimburse the Company
for the amount of any Award received by such individual under this Plan during
the 12-month period following the first public issuance or filing with the
Securities and Exchange Commission, as the case may be, of the financial
document embodying such financial reporting requirement.

17. CHANGE IN CONTROL
     17.1. Acceleration of Vesting. Without limiting the authority of the
Committee under Sections 3.6 and 5.1 of this Plan, if a Change in Control of the
Company occurs, then, unless otherwise provided by the Committee in its sole
discretion either in the Award Agreement evidencing an Award at the time of
grant or at any time after the grant of an Award, (a) all outstanding Options
and Stock Appreciation Rights shall become immediately exercisable in full and
shall 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 employment or service with the Company or any Subsidiary;
(b) all restrictions and vesting requirements applicable to any Award based
solely on the continued service of the Participant shall terminate; and (c) all
Awards the vesting or payment of which are based on Performance Goals shall vest
as though such Performance Goals were fully achieved at target and shall become
immediately payable; provided, however, that no Award that provides for a
deferral of compensation within the meaning of Section 409A of the Code shall be
cashed out upon the occurrence of a Change in Control unless the event or
circumstances constituting the Change in Control also constitute a “change in
the ownership” of the Company, a “change in the effective control” of the
Company or a “change in the ownership of a substantial portion of the assets” of
the Company, in each case as determined under Section 409A of the Code. The
treatment of any other Awards in the event of a Change in Control shall be as
determined by the Committee in connection with the grant thereof, as reflected
in the applicable Award Agreement.
     17.2. Alternative Treatment of Stock-Based Awards. In connection with a
Change in Control, the Committee in its sole discretion, either in an Award
Agreement at the time of grant of a Stock-Based Award or at any time after the
grant of such an Award, may determine that any or all outstanding Stock-Based
Awards granted under this Plan, whether or not exercisable or vested, as the
case may be, shall be canceled and terminated and that in connection with such
cancellation and termination the holder of such Stock-Based Award shall receive
for each share of Stock subject to such Award a cash payment (or the delivery of
shares of stock, other securities or a combination of cash, stock and securities
with a fair market value (as determined by the Committee in good faith)
equivalent to such cash payment) equal to the difference, if any, between the
consideration received by stockholders of the Company in respect of a share of
Stock in connection with such Change in Control and the purchase price per
share, if any, under the Award, multiplied by the number of shares of Stock
subject to such Award (or in which such Award is denominated); provided,
however, that if such product is zero ($0) or less or to the extent that the
Award is not then exercisable, the Award may be canceled and terminated without
payment therefor. If any portion of the consideration pursuant to a Change in
Control may be received by holders of shares of Stock on a contingent or delayed
basis, the Committee may, in its sole discretion, determine the fair market
value per share of such consideration as of the time

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of the Change in Control on the basis of the Committee’s good faith estimate of
the present value of the probable future payment of such consideration.
Notwithstanding the foregoing, any shares of Stock issued pursuant to a
Stock-Based Award that immediately prior to the effectiveness of the Change in
Control are subject to no further restrictions pursuant to this Plan or an Award
Agreement (other than pursuant to the securities laws) shall be deemed to be
outstanding shares of Stock and receive the same consideration as other
outstanding shares of Stock in connection with the Change in Control.
     17.3. Limitation on Change in Control Payments. Notwithstanding anything in
Section 17.1 or 17.2 to the contrary, if, with respect to a Participant, the
acceleration of the vesting of an Award as provided in Section 17.1 or the
payment of cash in exchange for all or part of a Stock-Based Award as provided
in Section 17.2 (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 17.1 or 17.2 shall be reduced (or acceleration of vesting
eliminated) to the largest amount as shall result in no portion of such
“payments” being subject to the excise tax imposed by Section 4999 of the Code;
provided, however, that such reduction shall be made only if the aggregate
amount of the payments after such reduction exceeds the difference between
(a) the amount of such payments absent such reduction minus (b) the aggregate
amount of the excise tax imposed under Section 4999 of the Code attributable to
any such excess parachute payments; and provided further that such payments
shall be reduced (or acceleration of vesting eliminated) in the following order:
(i) options with an exercise price above fair market value that have a positive
value for purposes of Section 280G of the Code, (ii) pro rata among Awards that
constitute deferred compensation under Section 409A of the Code, and
(iii) finally, among the Awards that are not subject to Section 409A of the
Code. Notwithstanding the foregoing sentence, if a Participant is subject to a
separate agreement with the Company or a Subsidiary that expressly addresses the
potential application of Section 280G or 4999 of the Code, then this
Section 17.3 shall not apply and any “payments” to a Participant pursuant to
Section 17.1 or 17.2 shall be treated as “payments” arising under such separate
agreement.
18. PAYMENT OF WITHHOLDING TAXES
     18.1. 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 amounts the Company reasonably
determines are required to satisfy any and all federal, foreign, state and local
withholding and employment related tax requirements attributable to an Award,
including the grant, exercise, vesting or settlement of, or payment of dividends
with respect to, an Award or a disqualifying disposition of stock received upon
exercise of an ISO, 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 Stock, with respect to an Award. When withholding for taxes is
effected under this Plan, it shall be withheld only up to the minimum required
tax

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withholding rates or such other rate that will not trigger a negative accounting
impact on the Company.
     18.2. 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 18.1 by withholding shares of Common
Stock underlying an Award, electing to tender, or by attestation as to ownership
of, other shares of Common Stock held by a Participant, 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, shares of Common
Stock withheld by the Company or tendered or covered by an attestation shall be
valued at their Fair Market Value.
19. NON-TRANSFERABILITY
     19.1. General Rule. Except as provided in Section 19.2, no Award shall be
transferable by a Participant other than by will or by the laws of descent and
distribution, and any Option or Stock Appreciation Right shall be exercisable
during a Participant’s lifetime only by the Participant. The person or persons
to whom an Award is transferred by will or by the laws of descent and
distribution or pursuant to Section 19.2, thereafter shall be treated as the
Participant.
     19.2. Transfers to Family Members. A Non-ISO may be transferred by a
Participant to a “family member” (as defined for purposes of Form S-8 under the
1933 Act) of such Participant or to a trust exclusively for the benefit of one
or more of such family members of such Participant; provided, however, that such
transfer is made as a gift without consideration, and such transfer complies
with applicable securities laws.
20. SECURITIES REGISTRATION
     As a condition to the receipt of shares of Stock under this Plan, a
Participant shall, if so requested by the Company, agree to hold such shares of
Stock for investment and not with a view of resale or distribution to the public
and, if so requested by the Company, shall deliver to the Company a written
statement satisfactory to the Company to that effect. Furthermore, if so
requested by the Company, a Participant shall make a written representation to
the Company that he or she shall not sell or offer for sale any of such Stock
unless a registration statement shall be in effect with respect to such Stock
under the 1933 Act and any applicable state securities law or he or she shall
have furnished to the Company an opinion in form and substance satisfactory to
the Company of legal counsel satisfactory to the Company that such registration
is not required. Certificates or other evidence of ownership representing the
Stock transferred upon the exercise of an Option or Stock Appreciation Right or
upon the lapse of the forfeiture conditions, if any, on any Stock Grant may at
the discretion of the Company bear a legend to the effect that such Stock has
not been registered under the 1933 Act or any applicable state securities law
and that such Stock cannot be sold or offered for sale in the absence of an
effective registration statement as to such Stock under the 1933 Act and any
applicable state securities law or an opinion in form and substance satisfactory
to the Company of legal counsel satisfactory to the Company that such
registration is not required.

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21. LIFE OF PLAN
     Subject to earlier termination as provided in Section 22 below, this Plan
shall terminate at midnight on May 14, 2017. No Award shall be granted after
termination of this Plan, but Awards outstanding upon termination of this Plan
shall remain outstanding in accordance with their applicable terms and
conditions and the terms and conditions of this Plan.
22. AMENDMENT, MODIFICATION OR TERMINATION
     22.1. Generally. Subject to other subsections of this Section 22 and
Sections 5.2 and 22.3, the Board at any time may suspend or terminate this Plan
(or any portion thereof) or terminate any outstanding Award Agreement and the
Committee, at any time and from time to time, may amend this Plan or amend or
modify the terms of an outstanding Award. The Committee’s power and authority to
amend or modify the terms of an outstanding Award includes the authority to
modify the number of shares of Stock or other terms and conditions of an Award,
extend the term of an Award, accelerate the exercisability or vesting or
otherwise terminate any restrictions relating to an Award, accept the surrender
of any outstanding Award or, to the extent not previously exercised or vested,
authorize the grant of new Awards in substitution for surrendered Awards;
provided, however, that the amended or modified terms are permitted by this Plan
as then in effect and that any Participant adversely affected by such amended or
modified terms has consented to such amendment or modification.
     22.2. Stockholder Approval. No amendments to this Plan shall be effective
without approval of the Company’s stockholders if: (a) stockholder approval of
the amendment is then required pursuant to Section 422 of the Code, the rules of
the primary stock exchange or stock market on which the Stock is then traded,
applicable U.S. state corporate laws or regulations, applicable U.S. federal
laws or regulations, and the applicable laws of any foreign country or
jurisdiction where Awards are, or shall be, granted under this Plan; or (b) such
amendment would: (i) modify Section 5.2; (ii) materially increase benefits
accruing to Participants; (iii) increase the aggregate number of shares of Stock
issued or issuable under this Plan; (iv) increase any limitation set forth in
this Plan on the number of shares of Stock which may be issued or the aggregate
value of Awards which may be made, in respect of any type of Award to any single
Participant during any specified period; (v) modify the eligibility requirements
for Participants in this Plan; (vi) reduce the minimum exercise price as set
forth in Sections 7.3 and 8.2; or (vii) to reduce the minimum vesting period or
Performance Period requirements applicable to Awards under this Plan to
Participants who are Employees.
     22.3. Awards Previously Granted. Notwithstanding any other provision of
this Plan to the contrary, no termination, suspension or amendment of this Plan
may adversely affect any outstanding Award without the consent of the affected
Participant; provided, however, that this sentence shall not impair the right of
the Committee to take whatever action it deems appropriate under Sections 3.6,
14.5, 16.5, 17 or 22.4 of this Plan.
     22.4. Amendments to Conform to Law. Notwithstanding any other provision of
this Plan to the contrary, the Committee may amend this Plan or an Award
Agreement, to take effect retroactively or otherwise, as deemed necessary or
advisable for the purpose of conforming this Plan or an Award Agreement to any
present or future law relating to plans of this or similar

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nature, and to the administrative regulations and rulings promulgated
thereunder. By accepting an Award under this Plan, a Participant agrees to any
amendment made pursuant to this Section 22.4 to any Award granted under this
Plan without further consideration or action.
     22.5. Waiver, Lapse or Acceleration of Exercisability or Vesting.
Notwithstanding any other provision of this Plan, the Committee shall not have
the authority to waive, lapse or accelerate the exercisability or vesting of any
Award held by any Participant who is an Employee, except (a) in connection with
the death, Disability or Retirement of the Participant or a Change in Control or
(b) to the extent that the number of shares of Stock covered by such waived,
lapsed or accelerated Award (together with the number of shares of Stock covered
by all other Awards, the exercisability or vesting of which previously have been
waived, lapsed or accelerated by the Committee under this Plan) do not exceed
ten percent (10%) of the total number of shares of Stock authorized for Awards
under this Plan.
     22.6. Non-Employee Director Awards. Notwithstanding any other provision of
this Plan to the contrary, no action may be taken with respect to any
outstanding Non-Employee Director Award other than by the Committee, which for
such actions shall consist solely of “independent directors” as defined in the
Listing Rules of the Nasdaq Stock Market (or other applicable exchange or market
on which the Stock may be traded or quoted).
23. DEFERRED COMPENSATION
     It is intended that all Awards issued under this Plan be in a form and
administered in a manner that shall comply with the requirements of Section 409A
of the Code, or the requirements of an exception to Section 409A of the Code,
and the Award Agreements and this Plan shall be construed and administered in a
manner that is consistent with and gives effect to such intent. The Committee is
authorized to adopt rules or regulations deemed necessary or appropriate to
qualify for an exception from or to comply with the requirements of Section 409A
of the Code. Notwithstanding anything in this Section 23 to the contrary, with
respect to any Award subject to Section 409A of the Code, no amendment to or
payment under such Award shall be made except and only to the extent permitted
under Section 409A of the Code.
24. MISCELLANEOUS
     24.1. Stockholder Rights. No Participant shall have any rights as a
stockholder of the Company as a result of the grant of an Option or a Stock
Appreciation Right pending the actual delivery of the Stock subject to such
Option or Stock Appreciation Right to such Participant. A Participant’s rights
as a stockholder in the shares of Stock which remain subject to forfeiture under
Section 9.2(b) shall be set forth in the related Award Agreement.
     24.2. No Contract of Employment. The grant of an Award to a Participant
under this Plan shall not constitute a contract of employment or a right to
continue to serve on the Board and shall not confer on a Participant any rights
upon his or her termination of employment or service in addition to those
rights, if any, expressly set forth in this Plan or the related Award Agreement.
     24.3. Construction. All references to Sections are to Sections of this Plan
unless otherwise indicated. Each term set forth in Section 2 shall, unless
otherwise stated, have the

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meaning set forth opposite such term for purposes of this Plan and, for purposes
of such definitions, the singular shall include the plural and the plural shall
include the singular. In this Plan, except where otherwise indicated by clear
contrary intention, “including” (and with correlative meaning “include”) means
including without limiting the generality of any description preceding such
term, and “or” is used in the inclusive sense of “and/or”. Wherever possible,
each provision of this Plan and any Award Agreement shall be interpreted so that
it is valid under the applicable law. If any provision of this Plan or any Award
Agreement is to any extent invalid under the applicable law, that provision
shall still be effective to the extent it remains valid. The remainder of this
Plan and the Award Agreement also shall continue to be valid, and the entire
Plan and Award Agreement shall continue to be valid in other jurisdictions. If
there is any conflict between the terms of this Plan and the terms of any Award
Agreement, the terms of this Plan shall control.
     24.4. Other Conditions. Each Award Agreement may require that a Participant
(as a condition to the exercise of an Option or a Stock Appreciation Right or
the issuance of Stock or cash subject to any other Award) enter into any
agreement or make such representations prepared by the Company, including any
agreement which restricts the transfer of Stock acquired pursuant to the
exercise of an Option or a Stock Appreciation Right or a Stock Grant or other
Award or provides for the repurchase of such Stock by the Company.
     24.5. Rule 16b-3. The Committee shall have the right to amend any Award to
withhold or otherwise restrict the transfer of any Stock or cash under this Plan
to a Participant as the Committee deems appropriate in order to satisfy any
condition or requirement under Rule 16b-3 to the extent Section 16 of the 1934
Act might be applicable to such grant or transfer.
     24.6. Coordination with Employment Agreements and Other Agreements. If the
Company enters into an employment agreement or other agreement with a
Participant which expressly provides for the acceleration in vesting of an
outstanding Award or for the extension of the deadline to exercise any rights
under an outstanding Award, any such acceleration or extension shall be deemed
effected pursuant to, and in accordance with, the terms of such outstanding
Award and this Plan even if such employment agreement or other agreement is
first effective after the date the outstanding Award was granted; provided,
however, no extension of the deadline to exercise any rights under an
outstanding Option or Stock Appreciation Right shall be permitted to the extent
such extension would cause the Option or Stock Appreciation Right to become
subject to the requirements of Section 409A of the Code.
     24.7. Fractional Shares. No fractional shares of Stock shall be issued or
delivered under this Plan or any Award. The Committee shall determine whether
cash, other Awards or other property shall be issued or paid in lieu of
fractional shares of Stock or whether such fractional shares of Stock or any
rights thereto shall be forfeited or otherwise eliminated by rounding up or
down.
     24.8. Unfunded Plan. Participants shall have no right, title or interest
whatsoever in or to any investments that the Company or its Subsidiaries may
make to aid it in meeting its obligations under this Plan. Nothing contained in
this Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary relationship between the
Company and any Participant, beneficiary, legal representative, or any other

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individual. To the extent that any individual acquires a right to receive
payments from the Company or any Subsidiary under this Plan, such right shall be
no greater than the right of an unsecured general creditor of the Company or the
Subsidiary, as the case may be. All payments to be made hereunder shall be paid
from the general funds of the Company or the Subsidiary, as the case may be, and
no special or separate fund shall be established and no segregation of assets
shall be made to assure payment of such amounts except as expressly set forth in
this Plan.
     24.9. Relationship to Other Benefits. No payment under this Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare, or benefit plan of the
Company or any Subsidiary unless provided otherwise in such plan.
     24.10. 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 this Plan and any rules, regulations and actions relating to this Plan
shall be governed by and construed exclusively in accordance with the laws of
the State of Delaware, notwithstanding the conflicts of laws principles of any
jurisdictions. Unless otherwise provided in an Award Agreement, recipients of an
Award under this Plan are deemed to submit to the exclusive jurisdiction and
venue of the federal or state courts of the State of Minnesota to resolve any
and all issues that may arise out of or relate to this Plan or any related Award
Agreement.
     24.11. Successors. All obligations of the Company under this Plan with
respect to Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation or otherwise, of all or substantially
all of the business or assets of the Company.
     24.12. Delivery and Execution of Electronic Documents. To the extent
permitted by applicable law, the Company may: (a) deliver by email or other
electronic means (including posting on a Web site maintained by the Company or
by a third party under contract with the Company) all documents relating to this
Plan or any Award hereunder (including prospectuses required by the Securities
and Exchange Commission) and all other documents that the Company is required to
deliver to its security holders (including annual reports and proxy statements),
and (b) permit Participants to use electronic, internet or other non-paper means
to execute applicable Plan documents (including Award Agreements) and take other
actions under this Plan in a manner prescribed by the Committee.

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