Exhibit 10.1


 


DATALINK CORPORATION


2009 INCENTIVE COMPENSATION
PLAN


(as amended May 13, 2010)


SECTION 1.

ESTABLISHMENT, PURPOSE AND DURATION


 


1.1    Establishment.    Datalink
Corporation, a Minnesota corporation (the “Company”), hereby establishes a new
incentive compensation plan to be known as the Datalink 2009 Incentive
Compensation Plan (the “Plan”). The Plan was approved by the Board of Directors
in March 2009 and shall become effective as of May 13, 2009, subject
to the approval of the stockholders of the Company at the Annual Meeting on May 13,
2009 (the “Effective Date”). Because no additional awards may be granted after June 11,
2009, under the Company’s existing 1999 Incentive Compensation Plan, the
Company believed it was in its best interest to adopt the Plan. The Plan shall
remain in effect as provided in Section 1.3 hereof.


 


1.2    Purpose.    The
Plan is intended to attract and retain qualified employees and consultants upon
whom, in large measure, the sustained progress, growth and profitability of the
Company depend. By encouraging employees and consultants of the Company and its
subsidiaries to acquire a proprietary interest in the Company’s growth and
performance, the Company intends to motivate employees and consultants to
achieve long-term Company goals and to more closely align such persons’
interests with those of the Company’s other stockholders.


 


1.3    Duration
of the Plan.    The Plan shall commence on the
Effective Date and shall remain in effect, subject to the right of the Board to
amend or terminate the Plan at any time pursuant to Section 15 hereof,
until the earlier to occur of (a) the date all Shares subject to the Plan
shall have been purchased or acquired and the Restrictions on all Awards
granted under the Plan shall have lapsed, according to the Plan’s provisions,
and (b) ten (10) years from the Effective Date of the Plan. The
termination of the Plan shall not adversely affect any Awards outstanding on
the date of termination.


 


SECTION 2.

DEFINITIONS


 


As used in the Plan, in addition to terms elsewhere
defined in the Plan, the following terms shall have the meanings set forth
below:


 


2.1   “Annual
Incentive Award” means a performance bonus determined under Section 11.


 


2.2   “Award”
means any Option (including Non-Qualified Stock Options and Incentive Stock
Options), Stock Appreciation Right, Restricted Stock, Share, Restricted Stock
Unit, Performance Unit, Substitute Award, Dividend Equivalent, Annual Incentive
Award or other Award permitted hereunder.


 

















 


2.3   “Award
Agreement” means any written agreement, contract, or other
instrument or document evidencing any Award granted hereunder between the
Company and a Grantee.


 


2.4   “Beneficiary”
means the Person designated to receive Plan benefits, if any, following a
Grantee’s death in accordance with Section 15.


 


2.5   “Board”
means the Board of Directors of the Company.


 


2.6   “Bonus
Opportunity” means a Grantee’s threshold, target and maximum
bonus opportunity for a Year, provided that such bonus opportunity shall be
either (a) to the extent that the Grantee has entered into an employment
agreement with the Company, the threshold, target and maximum bonus levels, if
any, specified in the employment agreement for such Year based on the Grantee’s
base salary in effect on the first day of such Year, or (b) if there is no
employment agreement in effect between


 


the Company and the Grantee as of the first day of
such Year or if the employment agreement does not specify such bonus levels,
the percentage of such Grantee’s base salary in effect on the first day of such
Year (or such later date as such person is designated as a Grantee) as
determined by the Committee in its sole discretion.


 


2.7   “Change of Control” means:


 


(a)   Change in Control” means, with respect to
Awards other than Deferred Compensation Awards, the occurrence of any one or
more of the following:


 


(i)  An
acquisition of outstanding or newly issued Company securities that results in
any Person with Beneficial Ownership (as each are defined within the meaning of
Rule 13d-3 under the Exchange Act) of more than 50% (other than any Person
who, as of the date hereof, already has Beneficial Ownership of at least 20%)
of either (x) the then outstanding shares of the Company’s Common Stock
(the “Outstanding Company Common Stock”), or (y) the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); or


 


(ii)  A change in
the composition of the Board in connection with a tender or exchange offer, a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company or the acquisition of assets of
another corporation (a “Corporate Transaction”) or a direct purchase of
securities from the Company such that (i) the individuals who, as of the
date hereof, constitute the members of the Board (the “Incumbent Board”) cease
to constitute at least a majority of the Board, or (ii) a majority of the
individuals who, as of the date hereof, constitute the Incumbent Board resign
or are removed from the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination for
election


 


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by the Company’s stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents; or


 


(iii)  The
approval by the stockholders of the Company of a Corporate Transaction or, if
consummation of such Corporate Transaction is subject, at the time of such
approval by stockholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly by
consummation); excluding, however, such a Corporate Transaction pursuant to
which (i) all or substantially all of the Beneficial Owners of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Corporate Transaction will Beneficially Own, directly or
indirectly, more than 50% of the Outstanding Company Common Stock, or more than
50% of the Outstanding Company Voting Securities of the Company resulting from
such Corporate Transaction (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially all of
the Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(other than the Company, any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company or
such corporation resulting from such Corporate Transaction) will Beneficially
Own, directly or indirectly, 20% or more of, respectively, the Outstanding
Company Common Stock or Outstanding Company Voting Securities resulting from
such Corporate Transaction except to the extent that such ownership existed
with respect to the Company prior to the Corporate Transaction, and (iii) individuals
who were members of the Incumbent Board will constitute at least a majority of
the board of directors of the corporation resulting from such Corporate
Transaction; or


 


(iv)  The approval
by the stockholders of the Company of a complete liquidation or dissolution of
the Company.


 


Despite all of the
foregoing, no Change in Control is deemed to have occurred with respect to a
Grantee if a Grantee is part of a purchasing group which consummates the Change
in Control transaction. A Grantee is deemed “part of a purchasing group” for
purposes of the preceding sentence if the Grantee is an equity participant in
the purchasing company or group except for (i) passive ownership of less
than three percent (3%) of the stock of the purchasing company or (ii) ownership
of an equity participation


 


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in the purchasing company or group which is otherwise
not significant, as determined prior to the Change in Control by a majority of
the Incumbent Board.


 


(b)   “Change of Control” means, with respect to
Deferred Compensation Awards, the occurrence one or more of any of the
following:


 


(i)  A Change in the Ownership of the Company.    A
change in ownership of the Company shall occur on the date that any one Person,
or more than one Person acting as a “Group” (as defined under Code Section 409A),
acquires ownership of stock of the Company that, together with stock held by
such Person or Group, constitutes more than 50% of the total fair market value
or total voting power of the stock of the Company; provided, however, that, if
any one Person, or more than one Person acting as a Group, is considered to own
more than 50% of the total fair market value or total voting power of the stock
of the Company, the acquisition of additional stock by the same Person or
Persons is not considered to cause a change in the ownership of the Company.


 


(ii)  A Change in the Effective Control of the Company.    A
change in the effective control of the Company occurs on the date that any one
Person, or more than one Person acting as a Group, acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such Person or Persons) ownership of stock of the Company possessing 50% or more
of the total voting power of the stock of the Company; or


 


(iii)  A Change in the Ownership of a Substantial Portion of
the Company’s Assets.    A change in the
ownership of a substantial portion of the Company’s assets occurs on the date
that any one Person, or more than one Person acting as a Group, acquires (or
has acquired during the 12-month period ending on the date of the most recent
acquisition by such Person or Persons) assets from the Company that have a
total Gross Fair Market Value (as defined below) equal to or more than 50% of
the total Gross Fair Market Value of all of the assets of the Company
immediately prior to such acquisition or acquisitions; provided, however, that,
a transfer of assets by the Company is not treated as a change in the ownership
of such assets if the assets are transferred to:


 


1)    a
stockholder of the Company (immediately before the asset transfer) in exchange
for or with respect to its stock;


 


2)    an
entity, 50% or more of the total Fair Market Value or voting power of which is
owned, directly or indirectly, by the Company;


 


3)    a
Person, or more than one Person acting as a Group, that owns, directly or
indirectly, 50% or more of the total Fair Market Value or voting power of all
the outstanding stock of the Company; or


 


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4)    an
entity, at least 50% of the total Fair Market Value or voting power of which is
owned, directly or indirectly, by a Person described in the immediately
preceding clause.


 


For purposes of this
definition, Gross Fair Market Value means the value of the assets of the
Company, or the value of the assets being disposed of, determined without
regard to any liabilities associated with such assets. For all purposes of the
latter definition of Change in Control that applies to Deferred Compensation
Awards, stock ownership is determined under Code Section 409A.


 


2.8   “Code”
means the Internal Revenue Code of 1986 (and any successor thereto), as amended
from time to time, and applicable regulations and rulings thereunder.


 


2.9   “Committee”
has the meaning set forth in Section 3.1(a).


 


2.10 “Common
Stock” means common stock, par value $.001 per share, of the
Company.


 


2.11 “Company”
has the meaning set forth in Section 1.1.


 


2.12 “Covered
Employee” means a Grantee who, as of the last day of the fiscal year
in which the value of an Award is includable in income for federal income tax
purposes, is one of the group of “covered employees,” within the meaning of
Code Section 162(m), with respect to the Company.


 


2.13 “Deferred
Compensation Awards” means Awards that could be subject to liability
under Code Section 409A and do not qualify for an exemption from Code Section 409A
coverage.


 


2.14 “Dividend
Equivalent” means any right to receive payments equal to dividends
or property, if and when paid or distributed, on Shares, Restricted Stock or
Restricted Stock Units.


 


2.15 “Effective
Date” has the meaning set forth in Section 1.1.


 


2.16 “Eligible
Person” means any employee or consultant of an Employer.


 


2.17 “Employer”
means the Company or any Subsidiary.


 


2.18 “Exchange
Act” means the Securities and Exchange Act of 1934, as amended, or
any successors thereto, and the rules and regulations promulgated
thereunder, all as shall be amended from time to time.


 


2.19 “Exercise
Date” means the date the holder of an Award that is subject to
exercise delivers notice of such exercise to the Company, accompanied by such
payment, attestations, representations and warranties or other documentation as
required hereunder, under the applicable Award Agreement or as the Committee
may otherwise specify.


 


2.20 “Fair
Market Value” means, as of any applicable date, (a) the last
sale price for one Share on such date as reported on the Nasdaq Global Market
or, if the foregoing does not apply,


 


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on such other market system or stock exchange on which
the Company’s Common Stock is then listed or admitted to trading, or on the
last previous day on which a sale was reported if no sale of a Share was
reported on such date, or (b) if the foregoing subsection (a) does
not apply, the fair market value of a Share as reasonably determined in good
faith by the Board in accordance with Code Section 409A.


 


2.21 “Grant
Date” means the date on which an Award is granted, which date may be
specified in advance by the Committee.


 


2.22 “Grantee”
means an Eligible Person who has been granted an Award.


 


2.23 “Incentive
Stock Option” means an Option granted under Section 6 that is
intended to meet the requirements of Code Section 422.


 


2.24 “Including”
or “includes” means “including,
but not limited to,” or “includes, but is not limited to,” respectively.


 


2.25 “Non-Qualified
Stock Option” means an Option granted under Section 6 that is
not intended to be an Incentive Stock Option.


 


2.26 “Option”
means an Incentive Stock Option or Non-Qualified Stock Option.


 


2.27 “Option
Price” means the price at which a Share may be purchased by a
Grantee pursuant to an Option.


 


2.28 “Performance-Based
Exception” means the performance-based exception from the tax
deductibility limitations of Code Section 162(m) (including the
special provision for options and SARS thereunder).


 


2.29 “Performance
Goal” means the objective or subjective criteria determined by the
Committee, the degree of attainment of which will affect the amount of the
Award the Grantee is entitled to receive or retain, and to the extent the
Committee intends an Award (including an Annual Incentive Award) to comply with
the Performance-Based Exception, the Performance Goals shall be chosen from
among the Performance Measures set forth in Section 4.4(a).


 


2.30 “Performance
Measures” has the meaning set forth in Section 4.4(a).


 


2.31 “Performance
Period” means that period established by the Committee at the time
any Performance Unit is granted or at any time thereafter during which any
Performance Goals specified by the Committee with respect to such Award are to
be measured.


 


2.32 “Performance
Unit” any grant pursuant to Section 10 of (a) a bonus
consisting of cash or other property the amount or value of which, and/or the
entitlement to which, is conditioned upon the attainment of any Performance
Goals specified by the Committee, or (b) a unit valued by reference to a
designated amount of property other than Shares.


 


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2.33 “Person”
means any individual, sole proprietorship, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, institution, public benefit corporation, entity or
government instrumentality, division, agency, body or department.


 


2.34 “Restricted
Stock” means any Share issued as an Award under the Plan that is
subject to Restrictions.


 


2.35 “Restricted
Stock Unit” or “RSU” means the right granted as an Award under the
Plan to receive a Share, conditioned on the satisfaction of Restrictions
imposed by the Committee, which Restrictions may be time-based,
performance-based or based upon the occurrence of one or more events or conditions.


 


2.36 “Restrictions”
means any restriction on a Grantee’s free enjoyment of the Shares or other
rights underlying Awards, including (a) that the Grantee or other holder
may not sell, transfer, pledge, or assign a Share or right, and (b) such
other restrictions as the Committee may impose in the Award Agreement
(including any restriction on the right to vote such Share and the right to
receive any dividends). Restrictions may be based upon the passage of time or
the satisfaction of performance criteria or the occurrence of one or more
events or conditions, and shall lapse separately or in combination upon such
conditions and at such time or times, in installments or otherwise, as the
Committee shall specify. Awards subject to a Restriction shall be forfeited if
the Restriction does not lapse prior to such date or the occurrence of such
event or the satisfaction of such other criteria as the Committee shall
determine.


 


2.37 “Section 16
Person” means a person who is subject to potential liability under Section 16(b) of
the Exchange Act with respect to transactions involving equity securities of
the Company.


 


2.38 “Share”
means a share of the Common Stock of the Company.


 


2.39 “Stock
Appreciation Right” or “SAR”
means a right granted as an Award under the Plan to receive, as of the date
specified in the Award Agreement, an amount equal to the number of Shares with
respect to which the SAR is exercised, multiplied by the excess of (a) the
Fair Market Value of one Share on the Exercise Date over (b) the Strike
Price.


 


2.40 “Strike
Price” means the per Share price used as the baseline measure for
the value of an SAR, as specified in the applicable Award Agreement.


 


2.41 “Subsidiary”
means any Person that directly, or through one (1) or more intermediaries,
is controlled by the Company.


 


2.42 “Substitute
Award” has the meaning set forth in Section 5.9.


 


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2.43 “Term”
means the period beginning on the Grant Date of an Award and ending on the date
such Award expires, terminates or is cancelled.


 


2.44 “Termination
of Service” occurs on the first day on which an individual is for
any reason no longer providing services to an Employer in the capacity of an
employee or consultant or with respect to an individual who is an employee or
consultant to a Subsidiary, the first day on which such entity ceases to be a
Subsidiary of the Company.


 


2.45 “Year”
means a calendar year.


 


SECTION 3.

ADMINISTRATION


 


3.1    Committee.    The
Plan shall be administered by the Compensation Committee of the Board unless
otherwise determined by the Board (the “Committee”). The members of the
Committee shall be appointed by the Board from time to time and may be removed
by the Board from time to time. Subject to Section 4.4(c), the Committee may
delegate to the Chief Executive Officer of the Company any or all of the
authority of the Committee with respect to the grant of Awards to Grantees,
other than Grantees who are executive officers, or are (or are expected to be)
Covered Employees and/or are Section 16 Persons at the time any such
delegated authority is exercised.


 


3.2    Powers
of the Committee.    Subject to the express
provisions of the Plan and to applicable law, the Committee shall have full
power and authority and sole discretion as follows:


 


(a)   to
determine when, to whom (i.e., what Eligible Persons) and in what types
and amounts Awards should be granted;


 


(b)   to
grant Awards to Eligible Persons in any number, and to determine the terms and
conditions applicable to each Award (including without limitation conditions
intended to comply with Code Sections 409A and 162(m)), the number of
Shares or the amount of cash or other property to which an Award will relate,
the Term, any Option Price or Strike Price, grant price or purchase price, any
limitation or Restriction, any schedule for or performance conditions relating
to the earning of the Award or the lapse of limitations, forfeiture
restrictions, restrictive covenants, restrictions on exercisability or
transferability, any Performance Goals, including those relating to the Company
and/or a Subsidiary and/or any division thereof and/or an individual, and/or
vesting based on the passage of time, based in each case on such considerations
as the Committee shall determine);


 


(c)   to determine
the benefit (including any Bonus Opportunity) payable under any Award and to
determine whether any performance or vesting conditions, including Performance
Measures or Performance Goals, have been satisfied;


 


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(d)   to
determine whether, to what extent and under what circumstances an Award may be
settled in, or the exercise price of an Award may be paid in, cash, Shares,
securities, other Awards or other property, or on a cashless basis, or an Award
may be accelerated, vested, canceled, forfeited or surrendered, or any terms of
the Award may be waived;


 


(e)   to
determine whether, to what extent and under what circumstances cash, Shares,
other securities, other Awards, other property and other amounts payable with
respect to an Award under the Plan shall be deferred either automatically or at
the election of the holder thereof or the Committee;


 


(f)    to
interpret and administer the Plan and any instrument or agreement, including
any Award Agreement, relating to the Plan;


 


(g)   to
establish, amend, suspend or waive rules and regulations for the proper
administration of the Plan;


 


(h)   to
determine the terms and conditions of all Award Agreements applicable to
Eligible Persons (which need not be identical) and, with the consent of the
Grantee (except as provided in this Section 3.2(h) and 15.2), to
amend any such Award Agreement at any time; provided that the consent of the
Grantee shall not be required for any amendment (i) which does not
adversely affect the rights of the Grantee, or (ii) which is necessary or
advisable (as determined by the Committee) to carry out the purpose of the
Award as a result of any new applicable law or regulation or change in an
existing applicable law or regulation or interpretation thereof, or (iii) to
the extent the Award Agreement specifically permits amendment without consent;


 


(i)    to
impose such additional terms and conditions upon the grant, exercise or
retention of Awards as the Committee may, before or concurrently with the grant
thereof, deem appropriate;


 


(j)    to
correct any defect or supply any omission or reconcile any inconsistency, and
to construe and interpret the Plan, the rules and regulations, and Award
Agreement or any other instrument entered into or relating to an Award under
the Plan; and


 


(k)   to take
any other action with respect to any matters relating to the Plan and to make
all other decisions and determinations, including factual determinations, as
may be required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.


 


3.3    Decisions
Binding.    Any action of the Committee with
respect to the Plan shall be final, conclusive and binding on all Persons,
including the Company, its Subsidiaries, any Grantee, any Eligible Person, any
Person claiming any rights under the Plan from or through any Grantee, and
stockholders. If not specified in the Plan, the time at which the Committee
must or may make any determination shall be determined by the Committee, and
any such determination may thereafter be modified by the Committee. The express
grant of any specific power to the


 


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Committee, and the taking of any action by the
Committee, shall not be construed as limiting any power or authority of the
Committee.


 


SECTION 4.

SHARES SUBJECT TO THE PLAN AND ADJUSTMENTS; CODE SECTION 162(M)


 


4.1    Number
of Shares Available for Grants.


 


(a)   Subject
to adjustment as provided in Section 4.2, the aggregate number of Shares
which may be delivered under the Plan shall not exceed One Million Five Hundred
Thousand (1,500,000) Shares. If any Shares subject to an Award granted
hereunder are forfeited or such Award otherwise terminates without the delivery
of such Shares, the Shares subject to such Award, to the extent of any such
forfeiture or termination, shall again be available for grant under the Plan.
Prior to the tenth anniversary of the Effective Date, (i) any previously
issued Shares, or (ii) Shares under an Award that are withheld, (in each
case of (i) or (ii)) in full or partial payment to the Company of the
purchase or exercise price of an Award or to satisfy tax obligations relating
to an Award (other than an Incentive Stock Options or Restricted Stock) shall
again be available for granting Awards under the Plan.


 


(b)   The
Committee shall from time to time determine the appropriate methodology for
calculating the number of Shares that have been delivered pursuant to the Plan.
Shares delivered pursuant to the Plan may be, in whole or in part, authorized
and unissued Shares, or treasury Shares, including Shares repurchased by the
Company for purposes of the Plan.


 


(c)   The
maximum number of shares of Common Stock that may be issued under the Plan in this
Section 4.1 shall not be affected by (i) the payment in cash of
dividends or Dividend Equivalents in connection with outstanding Awards, or (ii) any
Shares required to satisfy Substitute Awards.


 


4.2    Adjustments
in Authorized Shares and Awards.


 


(a)   In the
event that the Committee determines that any dividend or other distribution
(whether in the form of cash, Shares, or other securities or property), stock
split or combination, forward or reverse merger, reorganization, subdivision,
consolidation or reduction of capital, recapitalization, consolidation, scheme
of arrangement, split-up, spin-off or combination involving the Company or
repurchase or exchange of Shares, issuance of warrants or other rights to
purchase Shares or other securities of the Company, or other similar corporate
transaction or event affects the Shares such that an adjustment is determined
by the Committee to be appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under the
Plan, then the Committee shall, in such manner as it may deem equitable, adjust
any or all of: (i) the number and type of Shares (or other securities or
property) with respect to which Awards may be granted, (ii) the number and type
of 


 


 


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Shares
(or other securities or property) subject to outstanding Awards, (iii) the
grant or exercise price with respect to any Award or, if deemed appropriate,
make provision for a cash payment to the holder of an outstanding Award, (iv) the
number and kind of Shares of outstanding Restricted Stock or relating to any
other outstanding Award in connection with which Shares are subject, and (v) the
number of Shares with respect to which Awards may be granted to a Grantee, and
provided further that the number of Shares subject to any Award denominated in
Shares shall always be a whole number.


 


(b)   Notwithstanding
Section 4.2(a), any adjustments made pursuant to Section 4.2(a) shall
be made in such a manner as to ensure that after such adjustment, the Awards continue
not to be deferred compensation subject to Code Section 409A (or if such
Awards are already subject to Code Section 409A, so as not to give rise to
liability under Code Section 409A).


 


4.3    Compliance
With Code Section 162(m).


 


(a)   Section 162(m) Compliance.    To
the extent the Committee determines that compliance with the Performance-Based
Exception is desirable with respect to an Award, Sections 4.3 and 4.4
shall apply unless such provision does not apply with respect to a certain
Awards (i.e., Options and SARs) as set forth in Section 162(m) (it
being understood that compliance with 162(m) is not mandated under the
Plan with respect to Awards). In the event that changes are made to Code Section 162(m) to
permit flexibility with respect to any Awards available under the Plan, the
Committee may, subject to Sections 4.3 and 4.4, make any adjustments to
such Awards as it deems appropriate.


 


(b)   Eligible Persons.    The
Committee shall designate the Eligible Persons (each of whom shall be Covered
Employees) to be granted an Award intended to comply with Performance-Based
Exception within the time period prescribed by Section 162(m) of the
Code (i.e., within the first ninety (90) days of each Year subject to
any exception stated therein); provided that for a hiring or promotion after
such period, the designation shall not be later than the elapse of 25% of the
remainder of such Year after such hiring or promotion.


 


(c)   Time Frame Required to Establish Performance Measures.    The
Committee shall set the objective-based Performance Measures (as set forth in Section 4.4
below) in writing within the time period prescribed by Section 162(m) of
the Code (i.e., within the first ninety (90) days of each Year
subject to any exception stated therein).


 


(d)   Committee Certification and Determination of Amount
of Award.    The Committee shall determine and
certify in writing (resolutions or minutes are acceptable) the degree of
attainment of Performance Measures for any Award intended to comply with
Performance-Based Exception as soon as administratively practicable after the
end of each Year but not later than sixty (60) days after the end of such
Year. The Committee reserves the discretion to reduce (but not below zero) the
amount of an individual’s Award below the maximum Award. The determination of
the Committee to reduce (or


 


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not pay) an individual’s Award for a Year shall not
affect the maximum Award payable to any other individual.


 


(e)   162(m) Award Limitations.    No
Grantee may be granted Awards for Stock Options or SARs (or any other Award
which is determined by reference to the value of Shares or appreciation in the
value of Shares) with respect to a number of Shares in any one (1) calendar
year which, when added to any other Award denominated in Shares granted to such
Grantee in the same calendar year, shall exceed One Hundred Fifty Thousand
(150,000) Shares. If an Award denominated in Shares is cancelled, the Shares
subject to the cancelled Award continue to count against the maximum number of
Shares which may be granted to a Grantee in any calendar year. All Shares
specified in this Section 4.3(e) shall be adjusted to the extent
necessary to reflect adjustments to Shares required by Section 4.2. No
Grantee may be granted a cash Award in any one (1) calendar year, the
maximum payout for which, when added to the maximum payout for all other cash
Awards granted to such Grantee in the same calendar year, shall exceed
$1,500,000. The maximum Award that may be granted to any Grantee for a
performance period greater than one year shall not exceed the foregoing annual
maximum amounts multiplied by the number of full or partial years in the
applicable performance period.


 


4.4    Performance
Based Exception Under Section 162(m).


 


(a)   Performance Measures.    Subject
to Section 4.4(d), unless and until the Committee proposes for stockholder
vote and stockholders approve a change in the general Performance Measures set
forth in this Section 4.4(a), for Awards (other than Options and SARs)
designed to qualify for the Performance-Based Exception, the objective
performance criteria shall be based upon one or more of the following (each a “Performance
Measure”):


 


(i)  Earnings
before interest, tax, depreciation or amortization (“EBITDA”) (actual and
adjusted and either in the aggregate or on a per-Share basis);


 


(ii)  Earnings
(either in the aggregate or on a per-Share basis);


 


(iii)  Net income
or loss (either in the aggregate or on a per-Share basis);


 


(iv)  Operating
profit;


 


(v)  Growth or
rate of growth in cash flow;


 


(vi)  Cash flow
provided by operations (either in the aggregate or on a per-Share basis);


 


(vii)  Free cash
flow (either in the aggregate on a per-Share basis);


 


(viii)  Gross
revenues;


 


12

















 


(ix)  Reductions
in expense levels, operating and maintenance cost management and employee
productivity;


 


(x)  Stockholder
returns and return measures (including return on assets, investments, equity,
or gross sales);


 


(xi)  Growth or
rate of growth in return measures;


 


(xii)  Share price
(including growth measures and total stockholder return or attainment by the
Shares of a specified value for a specified period of time);


 


(xiii)  Net
economic value and/or economic value added;


 


(xiv)  Aggregate
product unit and pricing targets;


 


(xv)  Strategic
business criteria, consisting of one or more objectives based on meeting
specified revenue, market share, market penetration, geographic business
expansion goals, objectively identified project milestones, production volume
levels, cost targets, and goals relating to acquisitions or divestitures;


 


(xvi)  Achievement
of business or operational goals such as market share and/or business
development;


 


(xvii)  Achievement
of diversity objectives;


 


(xviii)  Results
of customer satisfaction surveys; and/or


 


(xix)  Debt
ratings, debt leverage and debt service;


 


provided that applicable Performance Measures may be applied on a pre- or
post-tax basis; and provided further that the Committee may, on the Grant Date
of an Award intended to comply with the Performance-Based Exception, and in the
case of other Awards, at any time, provide that the formula for such Award may
include or exclude items to measure specific objectives, such as losses from
discontinued operations, extraordinary gains or losses, the cumulative effect
of accounting changes, acquisitions or divestitures, foreign exchange impacts
and any unusual, nonrecurring gain or loss.


 


(b)   Flexibility in Setting Performance Measures.    The
levels of performance required with respect to Performance Measures may be
expressed in absolute or relative levels and may be based upon a set increase,
set positive result, maintenance of the status quo, set decrease or set
negative result. Performance Measures may differ for Awards to different
Grantees. The Committee shall specify the weighting (which may be the same or
different for multiple objectives) to be given to each performance objective
for purposes of determining the final amount payable with respect to any such
Award. Any one or more of the Performance Measures may apply to the Grantee, a
department, unit, division or function within the Company or any one or more
Subsidiaries; and may apply


 


13

















 


either alone or relative to the performance of other
businesses or individuals (including industry or general market indices).


 


(c)   Adjustments.    The
Committee shall have the discretion to adjust the determinations of the degree
of attainment of the pre-established Performance Measures; provided, however,
that Awards which are designed to qualify for the Performance-Based Exception
may not (unless the Committee determines to amend the Award so that it no
longer qualified for the Performance-Based Exception) be adjusted upward (the
Committee shall retain the discretion to adjust such Awards downward). The
Committee may not, unless the Committee determines to amend the Award so that
it no longer qualifies for the Performance-Based Exception, delegate any
responsibility with respect to Awards intended to qualify for the
Performance-Based Exception. All determinations by the Committee as to the
achievement of the Performance Measure(s) shall be in writing prior to
payment of the Award.


 


(d)   Changes to Performance Measures.    In
the event that applicable laws, rules or regulations change to permit
Committee discretion to alter the governing Performance Measures without
obtaining stockholder approval of such changes, and still qualify for the
Performance-Based Exception, the Committee shall have sole discretion to make
such changes without obtaining stockholder approval.


 


SECTION 5.

ELIGIBILITY AND GENERAL CONDITIONS OF AWARDS


 


5.1    Eligibility.    The
Committee may in its discretion grant Awards to any Eligible Person, whether or
not he or she has previously received an Award.


 


5.2    Award
Agreement.    The terms and conditions of each
Award shall be set forth in an Award Agreement as the Committee may approve.


 


5.3    Consideration
for Awards.    Awards may be granted for no cash
consideration or for any cash or other consideration as determined by the
Committee or required by applicable law.


 


5.4    Awards
May Be Granted Separately or Together.    Awards
may, in the discretion of the Committee, be granted either alone or in addition
to, at the same time or at a different time, in tandem with or in substitution
for any other Award or any award granted under any plan of the Company or any
Affiliate.


 


5.5    Rights
Upon Termination of Service.


 


(a)   General.    Each Award
Agreement may set forth the extent (if any) to which a Grantee shall have the
right to exercise and/or receive payment for any Award following a Termination
of Service. Such provisions shall be determined in the sole discretion of the
Committee and need not be uniform among Awards or Grantees and may reflect
distinctions based on the reasons for termination. Except as provided in an
Award


 


14

















 


Agreement, all Awards that have not been exercised, or
that remain subject to Restrictions or which are not otherwise vested or
exercisable at the time of a Termination of Service shall be cancelled and
forfeited to the Company. Any Restricted Stock that is forfeited by the Grantee
upon Termination of Service shall be reacquired by the Company, and the Grantee
shall sign any document and take any other action required to assign such
Shares back to the Company.


 


(b)   Dividend Equivalents.    If
Dividend Equivalents have been credited with respect to any Award and such
Award (in whole or in part) is forfeited, all Dividend Equivalents issued in
connection with such forfeited Award (or portion of an Award) shall also be
forfeited to the Company, unless otherwise set forth in an Award Agreement.


 


(c)   Waiver by Committee.    Notwithstanding
the foregoing provisions of this Section 5.5, the Committee may in its
sole discretion as to all or part of any Award as to any Grantee, at the time
the Award is granted or thereafter, determine that Awards shall become
exercisable or vested upon a Termination of Service, determine that Awards
shall continue to become exercisable or vested in full or in installments after
Termination of Service, extend the period for exercise of Options or SARs
following Termination of Service (but not beyond the original Term), or provide
that any Award shall in whole or in part not be forfeited upon such Termination
of Service. Notwithstanding the preceding sentence, the Committee shall not
have the authority under this Section 5.5(c) to take any action with
respect to an Award to the extent that such action would cause an Award that is
not intended to be deferred compensation subject to Code Section 409A to
be subject thereto (or if such Awards are already subject to Code Section 409A,
so as not to give rise to liability under Code Section 409A).


 


5.6    Nontransferability
of Awards.


 


(a)   Each
Award and each right under any Award shall be exercisable only by the Grantee
during the Grantee’s lifetime, or, if permissible under applicable law, by the
Grantee’s guardian or legal representative.


 


(b)   No
Award (prior to the time, if applicable, Shares are delivered in respect of
such Award), and no right under any Award, may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Grantee other than
by will or by the laws of descent and distribution (or, in the case of
Restricted Stock, to the Company), and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Subsidiary; provided that the
designation of a Beneficiary (pursuant to Section 15) to receive benefits
in the event of the Grantee’s death shall not constitute an assignment,
alienation, pledge, attachment, sale, transfer or encumbrance for purposes of
this Section 5.6(b). A transferee, Beneficiary, guardian, legal
representative or other person claiming any rights under the Plan from or
through any Grantee shall be subject to the provisions of the Plan and any
applicable Award Agreement, except to the extent the Plan


 


15

















 


and Award Agreement otherwise provide with respect to
such persons, and to any additional restrictions or limitations deemed necessary
or appropriate by the Committee.


 


(c)   Nothing
herein shall be construed as requiring the Committee to honor the order of a
domestic relations court regarding an Award, except to the extent required
under applicable law.


 


5.7    Exercise
by Non-Grantee.    If any Award is exercised as
permitted by the Plan by any Person other than the Grantee, the exercise notice
shall be accompanied by such documentation as may reasonably be required by the
Committee, including, without limitation, evidence of authority of such Person
or Persons to exercise the Award and, if the Committee so specifies, evidence
satisfactory to the Company that any death taxes payable with respect to such
Shares have been paid or provided for.


 


5.8    Cancellation
and Rescission of Awards.    Unless the Award
Agreement specifies otherwise, the Committee may cancel, rescind, suspend,
withhold, or otherwise limit or restrict any unexercised or unsettled Award at
any time if the Grantee is not in compliance with all applicable provisions of
the Award Agreement and the Plan or is in violation of any restrictive covenant
or other agreement with an Employer.


 


5.9    Substitute
Awards.    The Committee may, in its discretion
and on such terms and conditions as the Committee considers appropriate in the
circumstances, grant Substitute Awards under the Plan. For purposes of this Section 5.9,
“Substitute Award” means an Award granted under the Plan in substitution for
stock and stock-based awards (“Acquired Entity Awards”) held by current and former
employees or consultants of another corporation or entity who become Eligible
Persons as the result of a merger, consolidation or combination of the
employing corporation or other entity (the “Acquired Entity”) with the Company
or a Subsidiary or the acquisition by the Company or a Subsidiary of property
or stock of the Acquired Entity immediately prior to such merger,
consolidation, acquisition or combination in order to preserve for the Grantee
the economic value of all or a portion of such Acquired Entity Award at such
price as the Committee determines necessary to achieve preservation of economic
value.


 


SECTION 6.

STOCK OPTIONS


 


6.1    Grant
of Options.    Subject to and consistent with
the provisions of the Plan, Options may be granted to any Eligible Person in
such number, and upon such terms, and at any time and from time to time as
shall be determined by the Committee. Notwithstanding the foregoing, an
Incentive Stock Option may only be granted to full-time or part-time employees
(which term as used herein includes, without limitation, officers who are also
employees), and an Incentive Stock Option shall not be granted to an employee
of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the
Company within the meaning of Section 424(f) of the Code or any
successor provision.


 


16

















 


6.2    Award
Agreement.    Each Option grant shall be
evidenced by an Award Agreement in such form as the Committee may approve that
shall specify the Grant Date, the Option Price, the Term (not to exceed ten (10) years
from its Grant Date unless the Committee otherwise specifies in the Award
Agreement), the number of Shares to which the Option pertains, the time or
times at which such Option shall vest and be exercisable and such other
provisions (including Restrictions) not inconsistent with the provisions of the
Plan as the Committee shall determine. The Award Agreement also shall specify
whether the Option is intended to be an Incentive Stock Option (granted at Fair
Market Value and otherwise meeting Code Section 422) or a Non-Qualified
Stock Option.


 


6.3    Exercise
and Payment.


 


(a)   Except
as may otherwise be provided by the Committee in an Award Agreement, Options
shall be exercised by the delivery of a written notice (“Notice”) to the
Company setting forth the number of Shares to be exercised, accompanied by full
payment (including any applicable tax withholding) for the Shares made by any
one or more of the following means on the Exercise Date (or such other date as
may be permitted in writing by the Secretary of the Company):


 


(i)  cash,
personal check or wire transfer;


 


(ii)  with the
approval of the Committee, Shares or Shares of Restricted Stock valued at the
Fair Market Value of a Share on the Exercise Date; or


 


(iii)  subject to
applicable law, through the sale of the Shares acquired on exercise of the
Option through a broker-dealer to whom the Grantee has submitted an irrevocable
notice of exercise and irrevocable instructions to deliver promptly to the
Company the amount of sale or loan proceeds sufficient to pay for such Shares,
together with, if requested by the Company, the amount of applicable
withholding taxes payable by Grantee by reason of such exercise.


 


(b)   At the
discretion of the Committee and subject to applicable law, the Company may loan
a Grantee all or any portion of the amount payable by the Grantee to the
Company upon exercise of the Option on such terms and conditions as the
Committee may determine.


 


(c)   At the
time a Grantee exercises an Option or to the extent provided by the Committee
in the applicable Award Agreement, in lieu of accepting payment of the Option
Price of the Option and delivering the number of Shares of Common Stock for
which the Option is being exercised, the Committee may direct that the Company
either (i) pay the Grantee a cash amount, or (ii) issue a lesser
number of Shares of Common Stock, in any such case, having a Fair Market Value
on the Exercise Date equal to the amount, if any, by which the aggregate Fair
Market Value (or such other amount as may be specified in the applicable Award
Agreement, in the case of an exercise occurring concurrent with a Change in
Control) of the Shares of Common Stock as to which the


 


17

















 


Option is being exercised exceeds the aggregate Option
Price for such Shares, based on such terms and conditions as the Committee
shall establish.


 


SECTION 7.

STOCK APPRECIATION RIGHTS


 


7.1    Grant
of SARs.    Subject to and consistent with the
provisions of the Plan, the Committee, at any time and from time to time, may
grant SARs to any Eligible Person. The Committee may impose such conditions or
restrictions on the exercise of any SAR as it shall deem appropriate. The
Committee may grant freestanding SARs, tandem SARs, or any combination thereof.


 


7.2    Award
Agreements.    Each SAR grant shall be evidenced
by an Award Agreement in such form as the Committee may approve, which shall
contain such terms and conditions not inconsistent with the provisions of the
Plan as shall be determined from time to time by the Committee. Such agreement
shall describe the SAR, specify the number of SARs to which the Award relates,
the Strike Price, the Term and any conditions or restrictions on the exercise
of any SAR, and any other provisions as the Committee shall deem advisable.


 


7.3    Exercise
and Payment.    Except as may otherwise be
provided by the Committee in an Award Agreement, SARs shall be exercised by the
delivery of a written notice to the Company, setting forth the number of Shares
with respect to which the SAR is to be exercised. No payment of an SAR shall be
made unless applicable tax withholding requirements have been satisfied in
accordance with Section 17.1 or otherwise. Any payment by the Company in
respect of an SAR may be made in cash, Shares, other property, or any
combination thereof, as the Committee, in its sole discretion, shall determine.


 


7.4    Grant
Limitations.    The Committee may at any time
impose any other limitations or Restrictions upon the exercise of SARs which it
deems necessary or desirable in order to achieve desirable tax results for the
Grantee or the Company.


 


SECTION 8.

RESTRICTED STOCK


 


8.1    Grant
of Restricted Stock.    Subject to and
consistent with the provisions of the Plan, the Committee, at any time and from
time to time, may grant Restricted Stock to any Eligible Person in such amounts
as the Committee shall determine.


 


8.2    Award
Agreement.    Each grant of Restricted Stock
shall be evidenced by an Award Agreement that shall specify the Restrictions,
the number of Shares subject to the Restricted Stock Award, and such other
provisions not inconsistent with the provisions of this Plan as the Committee
shall determine. The Committee may impose such Restrictions on any Award of
Restricted Stock as it deems appropriate, including time-based Restrictions,
Restrictions based


 


18

















 


upon the achievement of specific performance goals,
Restrictions based on the occurrence of a specified event, and/or Restrictions
under applicable securities laws.


 


8.3    Consideration
for Restricted Stock.    The Committee shall
determine the amount, if any, that a Grantee shall pay for Restricted Stock.


 


8.4    Vesting.    Shares
subject to a Restricted Stock Award shall become vested as specified in the
applicable Award Agreement (thereafter being referred to as “Unrestricted Stock”).
For purposes of calculating the number of Shares of Restricted Stock that
become Unrestricted Stock as set forth above, Share amounts shall be rounded to
the nearest whole Share amount.


 


8.5    Effect
of Forfeiture.    If Restricted Stock is
forfeited, and if the Grantee was required to pay for such Shares or acquired
such Restricted Stock upon the exercise of an Option, the Grantee shall be
deemed to have resold such Restricted Stock to the Company at a price equal to
the lesser of (a) the amount paid by the Grantee for such Restricted Stock
or the exercise price of the Option, as applicable, and (b) the Fair
Market Value of a Share on the date of such forfeiture. The Company shall pay
to the Grantee the deemed sale price as soon as is administratively practical.
Such Restricted Stock shall cease to be outstanding, and shall no longer confer
on the Grantee thereof any rights as a stockholder of the Company, from and
after the date of the event causing the forfeiture, whether or not the Grantee
accepts the Company’s tender of payment for such Restricted Stock.


 


8.6    Escrow;
Legends.    The Committee may provide that the
certificates for any Restricted Stock (a) shall be held (together with a
stock power executed in blank by the Grantee) in escrow by the Secretary of the
Company until such Restricted Stock becomes nonforfeitable or is forfeited
and/or (b) shall bear an appropriate legend restricting the transfer of
such Restricted Stock under the Plan. If any Restricted Stock becomes
nonforfeitable, the Company shall cause certificates for such Shares to be
delivered without such legend or shall cause a release of restrictions on a
book entry account maintained by the Company’s transfer agent.


 


8.7    Stockholder
Rights in Restricted Stock.    Restricted Stock,
whether held by a Grantee or in escrow or other custodial arrangement by the
Secretary of the Company, shall confer on the Grantee all rights of a
stockholder of the Company, except as otherwise provided in the Plan or Award
Agreement. At the time of a grant of Restricted Stock, the Committee may
require the payment of cash dividends thereon to be deferred and, if the
Committee so determines, reinvested in additional Shares of Restricted Stock.
Stock dividends and deferred cash dividends issued with respect to Restricted
Stock shall be subject to the same restrictions and other terms as apply to the
Shares of Restricted Stock with respect to which such dividends are issued.


 


SECTION 9.

RESTRICTED STOCK UNITS


 


9.1    Grant
of Restricted Stock Units.    Subject to and
consistent with the provisions of the Plan and Sections 409A of the Code,
the Committee, at any time and from time to time, may


 


19

















 


grant Restricted Stock Units to any Eligible Person,
in such amount and upon such terms as the Committee shall determine. A Grantee
shall have no voting rights in Restricted Stock Units.


 


9.2    Award
Agreement.    Each grant of Restricted Stock
Units shall be evidenced by an Award Agreement that shall specify the
Restrictions, the number of Shares subject to the Restricted Stock Units
granted, and such other provisions as the Committee shall determine in
accordance with the Plan and Code Section 409A. The Committee may impose
such Restrictions on Restricted Stock Units, including time-based and
performance-based Restrictions or other Restrictions.


 


9.3    Crediting
Restricted Stock Units.    The Company shall
establish an account (“RSU Account”) on its books for each Eligible Person who
receives a grant of Restricted Stock Units. Restricted Stock Units shall be
credited to the Grantee’s RSU Account as of the Grant Date of such Restricted
Stock Units. RSU Accounts shall be maintained for recordkeeping purposes only
and the Company shall not be obligated to segregate or set aside assets
representing securities or other amounts credited to RSU Accounts. The
obligation to make distributions of securities or other amounts credited to RSU
Accounts shall be an unfunded, unsecured obligation of the Company.


 


(a)   Crediting of Dividend Equivalents.    Except
as otherwise provided in an Award Agreement, whenever dividends are paid or
distributions made with respect to Shares, Dividend Equivalents shall be
credited to RSU Accounts on all Restricted Stock Units credited thereto as of
the record date for such dividend or distribution. Such Dividend Equivalents
shall be credited to the RSU Account in the form of additional Restricted Stock
Units in a number determined by dividing the aggregate value of such Dividend
Equivalents by the Fair Market Value of a Share at the payment date of such
dividend or distribution.


 


(b)   Settlement of RSU Accounts.    The
Company shall settle an RSU Account by delivering to the holder thereof (which
may be the Grantee or his or her Beneficiary, as applicable) a number of Shares
equal to the whole number of Shares underlying the Restricted Stock Units then
credited to the Grantee’s RSU Account (or a specified portion in the event of
any partial settlement); provided that any fractional Shares underlying
Restricted Stock Units remaining in the RSU Account on the settlement date
shall be distributed in cash in an amount equal to the Fair Market Value of a
Share as of the settlement date multiplied by the remaining fractional
Restricted Stock Unit. Unless otherwise provided in an Award Agreement, the
settlement date for all Restricted Stock Units credited to a Grantee’s RSU
Account shall be as soon as administratively practical following when
Restrictions applicable to an Award of Restricted Stock Units have lapsed, but
in no event shall such settlement date be later than March 15 of the
calendar year following the calendar year in which the Restrictions applicable
to an Award of Restricted Stock Units have lapsed. Unless otherwise provided in
an Award Agreement, in the event of a Grantee’s Termination of Service prior to
the lapse of such Restrictions, such Grantee’s Restricted Stock Units shall be
immediately cancelled and forfeited to the Company.


 


20
















 


SECTION 10.

PERFORMANCE UNITS


 


10.1    Grant
of Performance Units.    Subject to and
consistent with the provisions of the Plan, Performance Units may be granted to
any Eligible Person in such number and upon such terms, and at any time and
from time to time, as shall be determined by the Committee. Performance Units
shall be evidenced by an Award Agreement in such form as the Committee may
approve, which shall contain such terms and conditions not inconsistent with
the provisions of the Plan as shall be determined from time to time by the
Committee.


 


10.2    Value/Performance
Goals.    The Committee shall set Performance
Goals in its discretion which, depending on the extent to which they are met
during a Performance Period, will determine the number or value of Performance
Units that will be paid to the Grantee at the end of the Performance Period.
Each Performance Unit shall have an initial value that is established by the
Committee at the time of grant. The Performance Goals for Awards of Performance
Units shall be set by the Committee at threshold, target and maximum
performance levels with the number or value of the Performance Units payable
tied to the degree of attainment of the various performance levels during the
Performance Period. With respect to Covered Employees and to the extent the
Committee deems it appropriate to comply with Section 162(m) of the
Code, all Performance Goals shall be based on objective Performance Measures
satisfying the requirements for the Performance-Based Exception, and shall be
set by the Committee within the time period prescribed by Section 162(m) of
the Code and related regulations.


 


10.3    Earning
of Performance Units.    After the applicable
Performance Period has ended, the holder of Performance Units shall be entitled
to payment based on the level of achievement of Performance Goals set by the
Committee and as described in Section 10.2. If the Performance Unit is
intended to comply with the Performance-Based Exception, the Committee shall
certify the level of achievement of the performance goals in writing before the
Award is settled. At the discretion of the Committee, the Award Agreement may
specify that an Award of Performance Units is payable in cash, Shares,
Restricted Stock or Restricted Stock Units.


 


10.4    Dividend
Rights.    At the discretion of the Committee if
set forth in the Award Agreement, a Grantee may be entitled to receive any
dividends or Dividend Equivalents declared with respect to Shares deliverable
in connection with grants of Performance Units which have been earned, but not
yet delivered to the Grantee.


 


SECTION 11.

ANNUAL INCENTIVE AWARDS


 


11.1    Annual
Incentive Awards.    Subject to and consistent
with the provisions of the Plan, Annual Incentive Awards may be granted to any
Eligible Person in accordance with the provisions of this Section 11.


 


21

















 


11.2    Eligible
Persons.    The Committee shall designate the
individuals eligible to be granted an Annual Incentive Award for a Year. The opportunity
to be granted an Annual Incentive Award may be evidenced by an Award Agreement
or in such form as the Committee may approve (such as minutes), which shall
specify the individual’s Bonus Opportunity, the Performance Goals, and such
other terms not inconsistent with the Plan as the Committee shall determine.


 


11.3  Determination
of Amount of Annual Incentive Awards.


 


(a)   Aggregate Maximum.    The
Committee may establish guidelines as to the maximum amount of Annual Incentive
Awards payable for any Year.


 


(b)   Establishment of Performance Goals and Bonus
Opportunities.    The Committee shall establish
Performance Goals for the Year (which may be the same or different for some or
all Eligible Persons) and shall establish the threshold, target and maximum
Bonus Opportunity for each Grantee for the attainment of specified threshold,
target and maximum Performance Goals. Performance Goals and Bonus Opportunities
may be weighted for different factors and measures as the Committee shall
determine.


 


(c)   Committee Certification and Determination of Amount
of Annual Incentive Award.    The Committee
shall determine and certify in writing the degree of attainment of Performance
Goals as soon as administratively practicable after the end of each Year. The
Committee shall determine an individual’s maximum Annual Incentive Award based
on the level of attainment of the Performance Goals (as certified by the
Committee) and the individual’s Bonus Opportunity. The Committee reserves the
discretion to reduce (but not below zero) the amount of an individual’s Annual
Incentive Award below the maximum Annual Incentive Award. The determination of
the Committee to reduce (or not pay) an individual’s Annual Incentive Award for
a Year shall not affect the maximum Annual Incentive Award payable to any other
individual. No Annual Incentive Award shall be payable to an individual unless
at least the threshold Performance Goal is attained.


 


(d)   Termination of Service.    If
a Grantee has a Termination of Service during the Year, the Committee may, in
its absolute discretion and under such rules as the Committee may from
time to time prescribe, authorize the payment of an Annual Incentive Award to
such Grantee in accordance with the foregoing provisions of this Section 11
and in the absence of such determination by the Committee the Grantee shall
receive no Annual Incentive Award for such Year.


 


11.4    Time
of Payment of Annual Incentive Awards.    Annual
Incentive Awards shall be paid as soon as administratively practicable after
the Committee determines the amount of the Award payable under Section 11
but not later than two and one-half months after the end of such Year.


 


11.5    Form of
Payment of Annual Incentive Awards.    An
individual’s Annual Incentive Award for a Year shall be paid in cash, Shares,
Restricted Stock, Options or any other form of an


 


22

















 


Award or any combination thereof as provided in the
Award Agreement or in such form as the Committee may approve.


 


SECTION 12.

DIVIDEND EQUIVALENTS


 


The Committee is authorized to grant Awards of
Dividend Equivalents alone or in conjunction with other Awards, on such terms
and conditions as the Committee shall determine in accordance with Code Section 409A.
Unless otherwise provided in the Award Agreement or in the Plan, Dividend
Equivalents if authorized shall be paid immediately when accrued and, in no
event, later than March 15 of the calendar year following the calendar
year in which such Dividend Equivalents accrue. Unless otherwise provided in
the Award Agreement or in the Plan, if the Grantee incurs a Termination of
Service prior to the date such Dividend Equivalents accrue, the Grantee’s right
to such Dividend Equivalents shall be immediately forfeited.


 


SECTION 13.

OTHER SHARE-BASED AWARDS


 


Subject to the terms of the Plan, the Committee may
grant other Awards under this Plan, including without limitation, those Awards
pursuant to which Shares are acquired or may in the future be acquired. The
Committee, in its sole discretion, shall determine the terms and conditions of
such other Awards as set forth in an Award Agreement.


 


SECTION 14.

CHANGE IN CONTROL


 


14.1    Acceleration
of Vesting.    Upon the occurrence of an event
satisfying the definition of “Change in Control” with respect to a particular
Award, unless otherwise provided in an Award Agreement, such Award shall become
vested, all Restrictions shall lapse and all Performance Goals shall be deemed
to be met, as applicable, provided, that
(a) the Committee as constituted before such Change of Control event,
determines in its sole discretion, and expressly authorizes, such acceleration
and vesting of a particular Award as set forth above, and (b) no payment
of an Award shall be accelerated to the extent such payment would cause such
Award to be subject to the adverse consequences described in Code Section 409A.
The Committee may, in its discretion, include such further provisions and
limitations in any Award Agreement as it may deem desirable.


 


14.2    Special
Treatment In the Event of a Change in Control.    In
order to maintain the Grantee’s rights upon the occurrence of a “Change in
Control” (as set forth above) with respect to an Award, the Committee, as
constituted before such event, may, in its sole discretion, as to any such
Award, either at the time the Award is made hereunder or any time thereafter,
take any one or more of the following actions: (a) make such adjustment to
any such Award then outstanding as the Committee deems appropriate to reflect
such Change in Control; or (b) cause any such


 


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Award then outstanding to be assumed, or new rights
substituted therefore, by the acquiring or surviving entity after such Change
in Control. Additionally, in the event of any Change in Control with respect to
Options and SARs, the Committee, as constituted before such Change in Control,
may, in its sole discretion, (a) cancel any outstanding unexercised
Options or SARs (whether or not vested) that have a per Share Option Price or
Strike Price (as applicable) which is greater than the per Share Fair Market
Value as of the date of the Change in Control; or (b) cancel any
outstanding unexercised Options or SARs (whether or not vested) that have a per
Share Option Price or Strike Price (as applicable) which is less than or equal
to the per Share Fair Market Value as of the date of the Change in Control in
exchange for a cash payment of an amount equal to (i) the difference
between the per share Fair Market Value as of the date of the Change in Control
and the Option Price or Strike Price multiplied by (ii) the total number
of Shares underlying such Option or SAR that are vested and exercisable at the
time of the Change in Control.


 


SECTION 15.

AMENDMENTS AND TERMINATION


 


15.1    Amendment
and Termination.    Subject to Section 15.2,
the Board may at any time amend, alter, suspend, discontinue or terminate the
Plan in whole or in part without the approval of the Company’s stockholders,
provided that (a) any amendment shall be subject to the approval of the
Company’s stockholders if such approval is required by any federal or state law
or regulation or any stock exchange or automated quotation system on which the
Shares may then be listed or quoted, and (b) any Plan amendment or termination
will not accelerate the timing of any payments that constitute deferred
compensation under Code Section 409A unless such acceleration of payment
is permitted by Code Section 409A.


 


15.2    Previously
Granted Awards.    Except as otherwise
specifically provided in the Plan (including Sections 3.2(h) and this
Section 15.2) or an Award Agreement, no termination, amendment or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan without the written consent of the Grantee of
such Award.


 


SECTION 16.

BENEFICIARY DESIGNATION


 


Each Grantee under the Plan may, from time to time,
name any Beneficiary or Beneficiaries (who may be named contingently or
successfully) to whom any benefit under the Plan is to be paid in case of his
or her death before he or she receives any or all of such benefit. Each such
designation shall revoke all prior designations by the same Grantee, shall be
in a form prescribed by the Company, and will be effective only when filed by
the Grantee in writing with the Company during the Grantee’s lifetime. In the
absence of any such designation, benefits remaining unpaid at the Grantee’s
death shall be paid to the Grantee’s estate.


 


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SECTION 17.

WITHHOLDING


 


17.1    Required
Withholding.


 


(a)   The
Committee in its sole discretion may provide that when taxes are to be withheld
in connection with the exercise of an Option or an SAR or upon the lapse of
Restrictions on an Award or upon payment of any benefit or right under this
Plan (the Exercise Date, the date such Restrictions lapse or such payment of
any other benefit or right occurs hereinafter referred to as the “Tax Date”),
the Grantee may elect to make payment for the withholding of federal, state and
local taxes, including Social Security and Medicare (“FICA”) taxes, by one or a
combination of the following methods:


 


(i)  payment of an
amount in cash equal to the amount to be withheld;


 


(ii)  requesting
the Company to withhold from those Shares that would otherwise be received upon
exercise of the Option or an SAR or upon the lapse of Restrictions on an Award,
a number of Shares having a Fair Market Value on the Tax Date equal to the
amount to be withheld; or


 


(iii)  withholding
from any compensation otherwise due to the Grantee.


 


The Committee in its sole
discretion may provide that the maximum amount of tax withholding upon exercise
of an Option or an SAR to be satisfied by withholding Shares upon exercise of
such Option pursuant to clause (ii) above shall not exceed the
minimum amount of taxes, including FICA taxes, required to be withheld under
federal, state and local law. An election by Grantee under this subsection is
irrevocable. Any fractional share amount and any additional withholding not
paid by the withholding or surrender of Shares must be paid in cash. If no
timely election is made, the Grantee must deliver cash to satisfy all tax
withholding requirements.


 


(b)   Any
Grantee who makes a disqualifying disposition with respect to an Incentive
Stock Option under the Code or an election under Section 83(b) of the
Code shall remit to the Company an amount sufficient to satisfy all resulting
tax withholding requirements in the same manner as set forth in
subsection (a).


 


(c)   No Award
shall be settled, whether in cash or in Shares, unless the applicable tax
withholding requirements have been met to the satisfaction of the Committee.


 


17.2    Notification
under Section 83(b) of the Code.    If
the Grantee, in connection with the exercise of any Option, or the grant of
Restricted Stock, makes the election permitted under Section 83(b) of
the Code to include in such Grantee’s gross income in the year of transfer the
amounts specified in Section 83(b) of the Code, then such Grantee shall
notify the Company of such election within ten (10) days of filing the
notice of the election with the Internal Revenue Service, in addition to any
filing and notification required pursuant to regulations issued under


 


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Section 83(b) of the Code. The Committee
may, in connection with the grant of an Award or at any time thereafter,
prohibit a Grantee from making the election described above.


 


SECTION 18.

GENERAL PROVISIONS


 


18.1    Governing
Law.    The validity, construction, and effect
of the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of Minnesota other than its
law respecting choice of laws and applicable federal law.


 


18.2    Severability.    If
any provision of this Plan or any Award is or becomes or is deemed to be
invalid, illegal or unenforceable in any jurisdiction, or as to any Person or
Award, or would disqualify the Plan or any Award under any law deemed applicable
by the Committee, such provision shall be construed or deemed amended to
conform to applicable laws, or if it cannot be construed or deemed amended
without, in the determination of the Committee, materially altering the intent
of the Plan or the Award, it shall be stricken and the remainder of the Plan
and any such Award shall remain in full force and effect.


 


18.3    Successors.    All
obligations of the Company under the 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
and/or assets of the Company.


 


18.4    Requirements
of Law.    The granting of Awards and the
delivery of Shares under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges or markets as may be required. Notwithstanding
any provision of the Plan or any Award, Grantees shall not be entitled to
exercise, or receive benefits under, any Award, and the Company (or any
Subsidiary) shall not be obligated to deliver any Shares or deliver benefits to
a Grantee, if such exercise or delivery would constitute a violation by the
Grantee, the Company or a Subsidiary of any applicable law or regulation.


 


18.5    Securities
Law Compliance.    If the Committee deems it
necessary to comply with any applicable securities law, or the requirements of
any securities exchange or market upon which Shares may be listed, the
Committee may impose any restriction on Awards or Shares acquired pursuant to
Awards under the Plan as it may deem advisable. All evidence of Share ownership
delivered pursuant to any Award or the exercise thereof shall be subject to
such stop transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations or other requirements of the SEC, any
securities exchange or market upon which Shares are then listed, and any
applicable securities law. If so requested by the Company, the Grantee shall
make a written representation and warranty to the Company that he or she will
not sell or offer to sell any Shares unless a registration statement shall be
in effect with respect to such Shares under the Securities Act of 1933, as
amended, and any applicable state securities law or unless he or she shall have
furnished to the Company an opinion of counsel, in form and substance
satisfactory to the Company, that such registration is not required.


 


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If the Committee determines that the exercise or
nonforfeitability of, or delivery of benefits pursuant to, any Award would
violate any applicable provision of securities laws or the listing requirements
of any national securities exchange or national market system on which are
listed any of the Company’s equity securities, then the Committee may postpone
any such exercise, nonforfeitability or delivery to comply with all such provisions
at the earliest practicable date.


 


18.6    Section 409A.    To
the extent applicable and notwithstanding any other provision of this Plan,
this Plan and Awards hereunder shall be administered, operated and interpreted
in accordance with Code Section 409A and Department of Treasury
regulations and other interpretive guidance issued thereunder, including
without limitation any such regulations or other guidance that may be issued
after the date on which the Board approves the Plan; provided, however, in the
event that the Committee determines that any amounts payable hereunder may be
taxable to a Grantee under Code Section 409A and related Department of
Treasury guidance prior to the payment and/or delivery to such Grantee of such
amount, the Company may (a) adopt such amendments to the Plan and related
Award, and appropriate policies and procedures, including amendments and
policies with retroactive effect, that the Committee determines necessary or
appropriate to preserve the intended tax treatment of the benefits provided by
the Plan and Awards hereunder and/or (b) take such other actions as the
Committee determines necessary or appropriate to comply with or exempt the Plan
and/or Awards from the requirements of Code Section 409A and related
Department of Treasury guidance, including such Department of Treasury guidance
and other interpretive materials as may be issued after the date on which the
Board approves the Plan. The Company and its Subsidiaries make no guarantees to
any Person regarding the tax treatment of Awards or payments made under the
Plan, and, notwithstanding the above provisions and any agreement or
understanding to the contrary, if any Award, payments or other amounts due to a
Grantee (or his or her beneficiaries, as applicable) results in, or causes in
any manner, the application of an accelerated or additional tax, fine or
penalty under Code Section 409A or otherwise to be imposed, then the
Grantee (or his or her beneficiaries, as applicable) shall be solely liable for
the payment of, and the Company and its Subsidiaries shall have no obligation
or liability to pay or reimburse (either directly or otherwise) the Grantee (or
his or her beneficiaries, as applicable) for, any such additional taxes, fines
or penalties.


 


18.7    No
Rights as a Stockholder.    No Grantee shall
have any rights as a stockholder of the Company with respect to the Shares
(except as provided in Section 8.7 with respect to Restricted Stock) which
may be deliverable upon exercise or payment of such Award until such Shares
have been delivered to him or her.


 


18.8    Awards
Not Taken Into Account for Other Benefits.    Awards
shall be special incentive payments to the Grantee and shall not be taken into
account in computing the amount of salary or compensation of the Grantee for
purposes of determining any pension, retirement, death or other benefit under (a) any
pension, retirement, profit-sharing, bonus, insurance or other employee benefit
plan of an Employer, except as such plan shall otherwise expressly provide, or (b) any
agreement between an Employer and the Grantee, except as such agreement shall
otherwise expressly provide.


 


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18.9    Non-Exclusivity
of Plan.    Neither the adoption of the Plan by
the Board nor its submission to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board to
adopt such other compensatory arrangements for employees as it may deem
desirable.


 


18.10    No
Trust or Fund Created.    Neither the Plan nor
any Award shall create or be construed to create a trust or separate fund of
any kind or a fiduciary relationship between the Company or any Subsidiary and
a Grantee or any other Person. To the extent that any Person acquires a right
to receive payments from the Company or any Subsidiary pursuant to an Award,
such right shall be no greater than the right of any unsecured general creditor
of the Company or any Subsidiary.


 


18.11    No
Right to Continued Employment or Awards.    No employee
shall have the right to be selected to receive an Award under this Plan or,
having been so selected, to be selected to receive a future Award. The grant of
an Award shall not be construed as giving a Grantee the right to be retained in
the employ of the Company or any Subsidiary or to be retained as a director of
the Company or any Subsidiary. Further, the Company or a Subsidiary may at any
time terminate the employment of a Grantee free from any liability, or any
claim under the Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement.


 


18.12    Construction.    The
following rules of construction will apply to the Plan: (a) the word “or”
is disjunctive but not necessarily exclusive, and (b) words in the
singular include the plural, words in the plural include the singular, and
words in the neuter gender include the masculine and feminine genders and words
in the masculine or feminine gender include the other neuter genders. The
headings of sections and subsections are included solely for convenience of
reference, and if there is any conflict between such headings and the text of
this Plan, the text shall control.


 


18.13    No
Fractional Shares.    No fractional Shares shall
be issued or delivered pursuant to the Plan or any Award, and the Committee
shall determine whether cash, other securities, or other property shall be paid
or transferred in lieu of any fractional Shares, or whether such fractional
Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.


 


18.14    Plan
Document Controls.    This Plan and each Award
Agreement constitute the entire agreement with respect to the subject matter
hereof and thereof; provided that in the event of any inconsistency between
this Plan and such Award Agreement, the terms and conditions of the Plan shall
control unless otherwise expressly stated in the Award Agreement.


 


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