Document:

EXHIBIT 10.11

 

 

REHABCARE GROUP, INC.

AMENDED AND RESTATED

1996 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

 

This Agreement will certify that the Grantee designated in Section 1 below (“you”) is awarded the number of restricted shares of common stock, par value of $0.01 per share of RehabCare Group, Inc., a Delaware corporation (the “Company”), designated in Section 1 below pursuant to the Amended and Restated 1996 Long-Term Incentive Plan (“Plan”), subject to the terms, conditions, and restrictions in the Plan and those set forth below.  Your signature below constitutes your acceptance of this award and acknowledgement of your agreement to the terms, conditions and restrictions contained in this Agreement.  You must return an executed copy of this Agreement to the Corporate Human Resource Department – Attention: Gina Quigley by March 9, 2006.

 

Section 1.  Basic Terms.

 

	
            Name of Grantee:
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
            Social Security Number of Grantee:
 	
             
 	
             
 
	
            Date of Award:
 	
             
 	
             
 
	
            Number of Shares Awarded:
 	
             
 	
             
 
	
            Period of Restriction:
 	
            Three Years
 	
             
 
	
             
 	
             
 	
             
 

 

Section 2.  Entire Agreement.  This Agreement consists of the provisions set forth on this cover page and the further provisions set forth on the following pages.  The Grantee represents that he or she has read and understood such further provisions, which are binding on the parties as if set forth on this cover page.

 

IN WITNESS WHEREOF, the parties have executed this Restricted Stock Agreement in duplicate as of the Date of Award.

 

REHABCARE GROUP, INC.

 

By:                                          
                            

	
             
 	
            President and Chief Executive Officer
 

 

 

Accepted by Grantee:

 

                                          
                                  

Grantee

 

 

1

 

EXHIBIT 10.11

 

 

 

REHABCARE GROUP, INC.

AMENDED AND RESTATED

1996 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

 

TERMS, CONDITIONS AND RESTRICTIONS

 

	
            1.
 	
            AWARD OF RESTRICTED STOCK.  Subject to the terms and conditions contained in this Agreement and the Plan, the Company hereby awards to you the number of shares of restricted stock designated in the Basic Terms section of the cover page (“Restricted Stock”). The time between the Date of Award and the lapse of all forfeiture restrictions (including the Service Restrictions defined  below) shall be referred to as the “Restricted Period.”
 

 

	
            2.
 	
            SERVICE RESTRICTIONS.  Except as otherwise provided in this Agreement, you shall forfeit all of the shares of Restricted Stock awarded under this Agreement as to which the restrictions provided in Section 3 below shall not have lapsed on your termination of employment (the “Service Restrictions”).  For purposes of this Agreement, termination of your employment shall occur only when you are no longer an employee of the Company or any affiliated company.
 

 

	
            3.
 	
            LAPSE OF SERVICE RESTRICTIONS.  The Service Restrictions on your Restricted Stock shall lapse (i.e., the Restricted Stock shall vest) upon the first to occur of any of the following events:
 

 

	
             
 	
            •
 	
            the third anniversary of the Date of Award; or
 

	
             
 	
            •
 	
            a Change in Control of the Company.
 

 

Notwithstanding the preceding, in the event of your death or the termination of your employment as a result of your disability (pursuant to the terms of any employee disability benefit plan maintained by the Company) before such third anniversary of the Date of Award, the Plan Committee, in its sole discretion, may determine that the Service Restrictions shall lapse as of such date.

For purposes of this Agreement, a “Change in Control” shall mean:

	
             
 	
            (i)
 	
            The acquisition by any individual, entity or group, or a Person (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), of ownership of thirty percent (30%) or more of either (a) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (b) 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)
 	
            Individuals who, as the date hereof, constitute the board of directors ("Board") of the Company (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual 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 shall be considered as though such 
 

 

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EXHIBIT 10.11

 

 

individual were a member of the Incumbent Board, but excluding, as a member of the Incumbent Board, 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 by or on behalf of a Person other than the Board; or

 

	
             
 	
            (iii)
 	
            Approval by the stockholders of the Company of a reorganization, merger or consolidation, in each case, unless, following such reorganization, merger or consolidation, (a) more than fifty percent (50%) of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior
to such reorganization, merger or consolidation, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (b) no Person beneficially owns, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then outstanding voting securities of such corporation, entitled to vote generally in the election of directors and (c) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation; 
 

 

	
             
 	
            (iv)
 	
            Approval by the stockholders of the Company of (a) a complete liquidation or dissolution of the Company or (b) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (1) more than forty percent (40%) of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person beneficially owns, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (3) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of 
 

 

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EXHIBIT 10.11

 

 

the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company.

 

	
             
 	
            4.
 	
            LIMITATION ON TRANSFER.  Prior to the end of the Restricted Period, shares of Restricted Stock shall not be transferable under any circumstances and no transfer of your rights with respect to such shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest in you any interest or right in or with respect to such shares, but immediately upon any attempt to transfer such shares, such shares, and all of the rights related thereto, shall be forfeited and the transfer shall be of no force or effect.
 

 

	
             
 	
            5.
 	
            SHAREHOLDER RIGHTS.  Except for the restrictions and limitation on transfer described in this Agreement, you shall have, with respect to your Restricted Stock, all of the rights of a stockholder of the Company, including the right to vote the Restricted Stock and the right to receive any cash dividends.  Stock dividends issued with respect to Restricted Stock shall be treated as additional shares under this Agreement and shall be subject to the same restrictions and other terms and conditions that apply to the Restricted Stock with respect to which such dividends are issued.
 

 

	
             
 	
            6.
 	
            ISSUANCE OF CERTIFICATE.  As soon as practicable following the lapse of all forfeiture restrictions with respect to any shares of Restricted Stock, such shares shall be transferred to you in the name of a nominee in an account for you or, at your request, in the form of a certificate.  Except for dividends, if any, payable to stockholders generally, you have no right to receive any payment in cash from the Company or an Affiliate with respect to the Restricted Stock, either before or after such shares vest.
 

 

The Company may register shares of Restricted Stock with respect to which the Restricted Period shall not have lapsed in the name of a nominee or hold such shares in any custodial arrangement.

 

	
             
 	
            7.
 	
            LEGEND.  Any certificate representing the shares of Restricted Stock subject to this Agreement shall bear a legend referring to this Agreement and the fact that such shares are nontransferable and are subject to the restrictions hereunder until such restrictions have lapsed and the legend has been removed.  Such legend shall read as follows:
 

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RESTRICTION ON TRANSFER AND THE RISK OF FORFEITURE TO THE COMPANY AS PROVIDED IN A RESTRICTED STOCK AGREEMENT BETWEEN THE ISSUER AND THE REGISTERED OWNER OF THESE SECURITIES, A COPY OF WHICH IS ON FILE WITH THE ISSUER.

 

Shares of Common Stock awarded hereunder shall not be transferable by you until after an unlegended certificate has been issued to you as provided in Section 6 with respect to such shares.

 

	
             
 	
            8.
 	
            TAXES.  The Committee may withhold the delivery of certificates for shares of Restricted Stock until you make satisfactory arrangements to pay any withholding, transfer or other taxes due with respect to the transfer or vesting of such shares.  Or, you may elect that the Committee issue fewer unrestricted shares with the balance being used 
 

 

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EXHIBIT 10.11

 

 

to satisfy your tax obligations.  The Committee also shall withhold from any dividends any amount required to be withheld by any governmental entity.

 

	
             
 	
            9.
 	
            ADJUSTMENTS.  The Committee may make such adjustments in the number or kind of shares of Restricted Stock covered by this Agreement as may be required to prevent dilution or enlargement of your rights that would otherwise result from any stock split, stock dividend, reorganization, recapitalization, sale, consolidation, issuance of stock rights or warrants or any similar event.
 

 

	
             
 	
            10.
 	
            INTERPRETATION BINDING.  The interpretations and determinations of the Committee are binding and conclusive.
 

 

	
             
 	
            11.
 	
            NO RIGHT TO CONTINUE AS AN EMPLOYEE; NO RIGHT TO FURTHER AWARDS.  This Agreement does not give you any right to continue as an employee of the Company for any period of time or at any rate of compensation, nor does it interfere with the Company’s right to determine the terms of your employment.  An award of Restricted Stock is within the discretion of the Committee, and does not entitle you to any further awards of Restricted Stock.
 

 

 

5rebecca.moody@selectcomfort.com

    
      

      

    

    
      Exhibit
        10.12

      

      SELECT
        COMFORT CORPORATION

      1999
        EMPLOYEE STOCK PURCHASE PLAN

      (As
        Amended through February 2005)

      

      

      1.  Purpose.

       

      The
        purpose of this 1999 Employee Stock Purchase Plan (the “Plan”) is to advance the
        interests of Select Comfort Corporation (the "Company”) and its shareholders by
        allowing eligible employees of the Company and its Participating Subsidiaries
        to
        use payroll deductions to acquire shares of the Company’s Common Stock on
        favorable terms. The Company intends that the Plan qualify as an “employee stock
        purchase plan” under Section 423 of the Code. Accordingly, provisions of the
        Plan will be construed so as to extend and limit participation in a manner
        consistent with the requirements of Section 423 of the Code.

       

      2.  Definitions.

       

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

       

      2.2  “Change
        in Control”
means
        an event described in Section 9.1 of the Plan.

       

      2.3  “Code”
means
        the Internal Revenue Code of 1986, as amended.

       

      2.4  “Committee”
means
        the group of individuals administering the Plan, as provided in Section 3
        of the
        Plan.

       

      2.5  “Common
        Stock”
means
        the common stock, par value $0.01 per share, of the Company, or the number
        and
        kind of shares of stock or other securities into which such common stock
        may be
        changed in accordance with Section 4.3 of the Plan.

       

      2.6  “Compensation”
means
        all gross cash compensation (including wage, salary, incentive, bonus and
        overtime earnings) paid by the Company or any Participating Subsidiary to
        a
        Participant, including amounts that would have constituted compensation but
        for
        a Participant’s election to defer or reduce compensation pursuant to any
        deferred compensation, cafeteria, capital accumulation or any other similar
        plan
        of the Company; provided, however, that the Committee, in its sole discretion,
        may expand or limit the amounts that will be deemed compensation for purposes
        of
        the Plan in such manner as it deems appropriate.

       

      2.7  “Eligible
        Employee”
means
        any employee of the Company or a Participating Subsidiary (other than an
        employee whose customary employment with the Company or a Participating
        Subsidiary is for five months or less per calendar year) who, with respect
        to
        any Offering Period, is employed by the Company or a Participating Subsidiary
        prior to the Offering Commencement Date for such Offering Period.

       

      2.8  “Exchange
        Act”
means
        the Securities Exchange Act of 1934, as amended.

       

      
        
           

        

        
          A-1

          
            

          

        

        
           

        

      

       

      2.9  “Fair
        Market Value”
means,
        with respect to the Common Stock, as of any date (or, if no shares were traded
        or quoted on such date, as of the next preceding date on which there was
        such a
        trade or quote) (a) the mean between the reported high and low sale prices
        of
        the Common Stock if the Common Stock is listed, admitted to unlisted trading
        privileges or reported on any foreign or national securities exchange or
        on the
        Nasdaq National Market or an equivalent foreign market on which sale prices
        are
        reported; (b) if the Common Stock is not so listed, admitted to unlisted
        trading
        privileges or reported, the closing bid price as reported by the Nasdaq SmallCap
        Market, OTC Bulletin Board, National Quotation Bureau, Inc. or other comparable
        service; or (c) if the Common Stock is not so listed or reported, such price
        as
        the Committee determines in good faith in the exercise of its reasonable
        discretion.

       

      2.10  “Offering
        Commencement Date”
means
        the first day of an Offering Period.

       

      2.11  “Offering
        Period”
means
        any of the offerings to Participants of Options under the Plan, each continuing
        for three months, as described in Section 6 of the Plan.

       

      2.12  “Offering
        Termination Date”
means
        the last day of an Offering Period.

       

      2.13  “Option”
means
        a
        right to purchase shares of Common Stock granted to a Participant in connection
        with an Offering Period pursuant to Section 7 of the Plan

       

      2.14  “Option
        Price”
means,
        with respect to any Offering Period through the Offering Period commencing
        as of
        April 1, 2005, eighty-five percent (85%) of the Fair Market Value of one
        share
        of Common Stock on the Offering Termination Date, and with respect to any
        Offering Period commencing on or after July 1, 2005, ninety-five percent
        (95%)
        of the Fair Market Value of one share of Common Stock on the Offering
        Termination Date.

       

      2.15  “Participant”
means
        an Eligible Employee who elects to participate in the Plan pursuant to Section
        5
        of the Plan.

       

      2.16  “Participating
        Subsidiary”
means
        a
        Subsidiary that has been designated by the Committee from time to time, in
        its
        sole discretion, as a corporation whose Eligible Employees may participate
        in
        the Plan.

       

      2.17  “Securities
        Act”
means
        the Securities Act of 1933, as amended.

       

      2.18  “Subsidiary”
means
        any subsidiary corporation of the Company within the meaning of Section 424(f)
        of the Code.

       

      2.19  “Termination
        of Employment”
means
        a
        Participant’s complete termination of employment with the Company and all
        Participating Subsidiaries for any reason, including without limitation death,
        disability or retirement. In the event that a Participant is in the employ
        of a
        Participating Subsidiary and the Participating Subsidiary ceases to be a
        Participating Subsidiary of the Company for any reason, such event will be
        deemed a termination of employment unless the Participant continues in the
        employ of the Company or another Participating Subsidiary.

       

      
        
           

        

        
          A-2

          
            

          

        

        
           

        

      

       

      3.  Administration.

       

      The
        Plan
        will be administered by the Board or by a committee of the Board. So long
        as the
        Company has a class of its equity securities registered under Section 12
        of the
        Exchange Act, any committee administering the Plan will consist solely of
        two or
        more members of the Board who are “non-employee directors” within the meaning of
        Rule 16b-3 under the Exchange Act. Such a committee, if established, will
        act by
        majority approval of the members (at a meeting in person or by telephone
        conference or by written consent), and a majority of the members of such
        a
        committee will constitute a quorum. As used in the Plan, “Committee” will refer
        to the Board or to such a committee, if established. To the extent consistent
        with corporate law, the Committee may delegate to any officers of the Company
        the duties, power and authority of the Committee under the Plan pursuant
        to such
        conditions or limitations as the Committee may establish; provided, however,
        that only the Committee may exercise such duties, power and authority with
        respect to Participants who are subject to Section 16 of the Exchange Act.
        The
        Committee may exercise its duties, power and authority under the Plan in
        its
        sole discretion without the consent of any Participant or other party, unless
        the Plan specifically provides otherwise. Each determination, interpretation
        or
        other action made or taken by the Committee pursuant to the provisions of
        the
        Plan will be final, conclusive and binding for all purposes and on all persons,
        including, without limitation, the Company, the shareholders of the Company,
        the
        participants and their respective successors-in-interest. No member of the
        Committee will be liable for any action or determination made in good faith
        with
        respect to the Plan or any Option granted under the Plan.

      

      4.  Shares
        Available for Issuance; Adjustments for Certain Events.
        

       

      4.1  Maximum
        Number of Shares Available.
        Subject
        to adjustment as provided in Section 4.3 of the Plan, the maximum number of
        shares of Common Stock available for issuance under the Plan will be 1,500,000
        shares of Common Stock. If the total number of shares of Common Stock that
        would
        otherwise be issuable upon the exercise of Options granted pursuant to Section
        7
        of the Plan on any Offering Termination Date exceeds the number of shares
        then
        available for issuance under the Plan, the Committee will make a pro rata
        allocation of the shares of Common Stock remaining available for issuance
        under
        the Plan in as uniform and equitable a manner as it deems
        appropriate.

       

      4.2  Accounting
        for Options.
        Shares
        of Common Stock that are issued under the Plan or that are subject to
        outstanding Options will be applied to reduce the maximum number of shares
        of
        Common Stock remaining available for issuance under the Plan. Any shares
        of
        Common Stock that are subject to an Option that is terminated unexercised
        will
        automatically again become available for issuance under the Plan.

       

      4.3  Adjustments
        to Shares and Options.
        In the
        event of any reorganization, merger, consolidation, recapitalization,
        liquidation, reclassification, stock dividend, stock split, combination of
        shares, rights offering, divestiture or extraordinary dividend (including
        a
        spin-off) or any other change in the corporate structure or shares of the
        Company, the Committee (or, if the Company is not the surviving corporation
        in
        any such transaction, the board of directors of the surviving corporation)
        will
        make appropriate adjustment (which determination will be 

       

      
        
           

        

        
          A-3

          
            

          

        

        
           

        

      

       

      conclusive)
        as to the number and kind of securities or other property (including cash)
        available for issuance or payment under the Plan and, in order to prevent
        dilution or enlargement of the rights of Participants, the number and kind
        of
        securities or other property (including cash) subject to, and the exercise
        price
        of, outstanding Options.

       

      5.  Participation;
        Payroll Deductions.

       

      5.1  Participation.
        Participation in the Plan is voluntary and is not a condition of employment.
        Eligible Employees may elect to participate in the Plan, beginning with the
        first Offering Period to commence after such person becomes an Eligible
        Employee, by properly completing an enrollment form in the form provided
        by the
        Company and filing the enrollment form with the Company's Human Resources
        Department not later than the 15th day of the month immediately preceding
        the
        Offering Commencement Date of the first Offering Period in which the Participant
        wishes to participate (or on such later date prior to the first Offering
        Period
        after adoption of the Plan as may be reasonably necessary to enable Eligible
        Employees to participate in such first Offering Period). An Eligible Employee
        who elects to participate with respect to an Offering Period will be deemed
        to
        have elected to participate in each subsequent Offering Period, unless such
        Participant properly withdraws from participation on a timely basis. An Eligible
        Employee may withdraw from participation as to any subsequent Offering Period
        by
        properly completing a notice of withdrawal in the form provided by the Company
        and filing the notice of withdrawal with the Company's Human Resources
        Department not later than 4:30 p.m., Minneapolis, Minnesota time on the 15th
        day
        of the last month of an Offering Period. Any such notice of withdrawal will
        be
        effective for the next Offering Period commencing after the Offering Period
        in
        which such notice of withdrawal is given, all as further described in Section
        8.1 of the Plan.

       

      5.2  Limitation
        on Participation.
        Notwithstanding any provisions of the Plan to the contrary, an Eligible Employee
        may not participate in the Plan and will not be granted an Option under the
        Plan
        if, immediately after the grant of such Option, such Eligible Employee (or
        any
        other person whose stock ownership would be attributed to such Eligible Employee
        pursuant to Section 424(d) of the Code) would own stock or options possessing
        5%
        or more of the total combined voting power or value of all classes of stock
        of
        the Company or of its “parent” or “subsidiary” corporations (within the meaning
        of Section 424 of the Code).

       

      5.3  Payroll
        Deductions.

       

      (a)  By
        completing and filing an enrollment form, a Participant will elect to have
        payroll deductions made from such Participant’s total Compensation in whole
        percentages from a minimum of 1% to a maximum of 15%, (or such other minimum
        or
        maximum percentages as the Committee may from time to time
        establish).

       

      (b)  All
        payroll deductions authorized by a Participant will be credited as of each
        payday to an account established under the Plan for the Participant. Such
        account will be solely for bookkeeping purposes, no separate fund, trust
        or
        other segregation of such amounts will be established or made and the amounts
        represented by such account will be held as part of the Company's general
        assets, usable for any corporate purpose. A 

       

      
        
           

        

        
          A-4

          
            

          

        

        
           

        

      

       

      Participant
        may not make any separate cash payment or contribution to such Participant’s
        account. No interest will accrue on amounts held in such accounts under the
        Plan.

       

      (c)  No
        increases or decreases in the amount of payroll deductions for a Participant
        may
        be made during an Offering Period. A Participant may increase or decrease
        the
        amount of his or her payroll deductions under the Plan for subsequent Offering
        Periods by properly completing an amended enrollment form and filing it with
        the
        Company's Human Resources Department not later than the 15th day of the month
        immediately preceding the Offering Commencement Date of the Offering Period
        for
        which such change in payroll deductions is to be effective.

       

      (d)  A
        Participant may withdraw from participation in the Plan as provided in Section
        8.1 of the Plan.

       

      6.  Offering
        Periods.

       

      Options
        to purchase shares of Common Stock will be offered to Participants under
        the
        Plan through a continuous series of Offering Periods, each continuing for
        three
        months, and each of which will commence on January 1, April 1, July 1 and
        October 1 of each year, as the case may be, and will terminate on March 31,
        June
        30, September 30 and December 31 of such year, as the case may be.

       

      7.  Options.

       

      7.1  Grant
        of Options.
        With
        respect to any Offering Period, each Participant participating in such Offering
        Period will be granted, by operation of the Plan on the Offering Commencement
        Date for such Offering Period, an Option to purchase (at the Option Price)
        as
        many shares (including fractional shares) of Common Stock as such Participant
        will be able to purchase with the accumulated payroll deductions credited
        to
        such Participant’s account during such Offering Period plus the balance (if any)
        carried forward from the Participant’s payroll deduction account from the
        preceding Offering Period.

       

      7.2  Limitations
        on Purchase.
        Notwithstanding Section 7.1 or any other provision of the Plan to the contrary,
        the number of shares of Common Stock that may be purchased under the Plan
        will
        be limited as follows:

       

      (a)  No
        Participant may purchase more than 2,000 shares of Common Stock under the
        Plan
        in any given Offering Period.

       

      (b)  No
        Participant may be granted an Option that permits such Participant’s right to
        purchase Common Stock under the Plan and any other “employee stock purchase
        plans” (within the meaning of Section 423 of the Code) of the Company and its
        Subsidiaries to accrue (i.e., become exercisable) at a rate that exceeds
        $25,000
        of Fair Market Value of Common Stock (determined at the time such Option
        is
        granted) for each calendar year in which such Option is outstanding at any
        time.

       

      7.3  Exercise
        of Options.

       

      
        
           

        

        
          A-5

          
            

          

        

        
           

        

      

       

      (a)  Unless
        a
        Participant withdraws from the Plan as provided in Section 8.1 of the Plan,
        the
        Participant's Option for the purchase of shares of Common Stock granted with
        respect to an Offering Period will be exercised automatically at the Offering
        Termination Date of such Offering Period for the purchase of the number of
        shares (including fractional shares) of Common Stock that the accumulated
        payroll deductions in such Participant’s account as of such Offering Termination
        Date will purchase at the applicable Option Price.

       

      (b)  No
        Participant (or any person claiming through such Participant) will have any
        interest in any Common Stock subject to an Option under the Plan until such
        Option has been exercised, at which point such interest will be limited to
        the
        interest of a purchaser of the Common Stock purchased upon such exercise
        pending
        the delivery of such Common Stock.

       

      (c)  Shares
        of
        Common Stock acquired by each Participant shall be held in a general securities
        brokerage account maintained for the benefit of all Participants with a
        registered securities broker/dealer selected by the Company (the “Agent”). The
        Agent shall maintain individual subaccounts for each Participant in such
        general
        account to which shall be allocated such Participant’s shares of Common Stock.
        The Committee, in its discretion, may direct the Agent to issue and deliver
        to
        any Participant a certificate or certificates for the whole number of shares
        of
        Common Stock held in such Participant's subaccount at any time ninety (90)
        days
        or more after the Participant ceases to be an Eligible Employee, which
        certificates shall be registered in the name of the Participant or in the
        form
        directed by the Participant. No certificates for fractional shares will be
        issued. Instead, Participants will receive a cash distribution representing
        any
        fractional shares.

       

      (d)  Cash
        dividends with respect to a Participant's shares of Common Stock held in
        the
        general securities brokerage account maintained by the Agent shall automatically
        be reinvested in additional shares of Common Stock. The purchase price of
        any
        shares (“Reinvestment Shares”) purchased through the reinvestment of dividends
        shall be the Fair Market Value of a share on the date such dividend is paid.
        There shall be allocated to each Participant’s individual subaccount such
        Participant’s Reinvestment Shares purchased with the dividend funds credited to
        such Participant.

       

      (e)  Each
        Participant shall be entitled to vote all shares held for the benefit of
        such
        Participant in the general securities brokerage account maintained by the
        Agent.

       

      8.  Withdrawal
        From Plan.

       

      8.1  Voluntary
        Withdrawal.

       

      (a)  A
        Participant may, at any time on or before 4:30 p.m., Minneapolis, Minnesota
        time
        on the 15th day of the last month of an Offering Period, terminate his or
        her
        participation in the Plan and withdraw all, but not less than all, of the
        payroll deductions credited during the applicable Offering Period to such
        Participant’s account under the Plan by giving written notice of withdrawal to
        the Company’s Human Resources Department. Such notice shall be substantially in
        the form of the notice of 

       

      
        
           

        

        
          A-6

          
            

          

        

        
           

        

      

       

      withdrawal
        provided by the Company and must state that the Participant wishes to terminate
        his or her participation in the Plan and request the withdrawal of all of
        the
        Participant's payroll deductions credited during the applicable Offering
        Period
        to such Participant’s account under the Plan. Following the receipt by the
        Company of a timely notice of withdrawal, (a) all of the payroll deductions
        credited during the applicable Offering Period to such Participant's account
        under the Plan will be paid to such Participant as soon as practicable after
        receipt of the notice of withdrawal; (b) such Participant’s Option for such
        Offering Period will automatically be canceled and will no longer be
        exercisable; and (c) payroll deductions under the Plan will cease as soon
        as
        practicable after receipt of the notice of withdrawal and until such time,
        if
        any, that a valid and timely enrollment form is subsequently filed by such
        Participant.

       

      (b)  A
        Participant's voluntary withdrawal pursuant to this Section 8.1 will not
        have
        any effect upon such Participant’s eligibility to participate in a subsequent
        Offering Period (so long as such Participant completes and files a new
        enrollment form pursuant to Section 5 of the Plan) or in any similar plan
        that
        may hereafter be adopted by the Company.

       

      8.2  Termination
        of Employment.
        

       

      (a)  Upon
        the
        Termination of Employment of a Participant at any time, (a) all of the payroll
        deductions credited during the current Offering Period to such Participant's
        account under the Plan will be paid to such Participant (or, in the case
        of
        death, to the person or persons entitled thereto under Sections 10 and 11.3
        of
        the Plan) as soon as practicable after the effective date of the Termination
        of
        Employment; (b) such Participant’s Option for such Offering Period will
        automatically be canceled and will no longer be exercisable; and (c) payroll
        deductions under the Plan will cease as soon as practicable after the effective
        date of the Termination of Employment.

       

      (b)  Unless
        the Committee otherwise determines in its sole discretion, a Participant's
        employment will, for purposes of the Plan, be deemed to have terminated on
        the
        date recorded on the personnel or other records of the Company or the
        Participating Subsidiary for which the Participant provides employment, as
        determined by the Committee in its sole discretion based upon such
        records.

       

      9.  Change
        in Control.

       

      9.1  Change
        in Control.
        For
        purposes of this Section 9, a “Change in Control” of the Company will mean the
        following:

       

      (a)  the
        sale,
        lease, exchange or other transfer, directly or indirectly, of substantially
        all
        of the assets of the Company (in one transaction or in a series of related
        transactions) to any Person (as defined below); 

       

      (b)  the
        approval by the shareholders of the Company of any plan or proposal for the
        liquidation or dissolution of the Company;

       

      
        
           

        

        
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      (c)  any
        Person, other than a Bona Fide Underwriter (as defined below), becomes after
        the
        effective date of the Plan the “beneficial owner” (as defined in Rule 13d-3
        under the Exchange Act), directly or indirectly, of (i) 20% or more, but
        not
        more than 50%, of the combined voting power of the Company’s outstanding
        securities ordinarily having the right to vote at elections of directors,
        unless
        the transaction resulting in such ownership has been approved in advance
        by the
        Continuity Directors (as defined below), or (ii) more than 50% of the combined
        voting power of the Company’s outstanding securities ordinarily having the right
        to vote at elections of directors (regardless of any approval by the Continuity
        Directors);

       

      (d)  a
        merger
        or consolidation to which the Company is a party if the shareholders of the
        Company immediately prior to the effective time of such merger or consolidation
        have, solely on account of ownership of securities of the Company at such
        time,
“beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act),
        immediately following the effective time of such merger or consolidation,
        of
        securities of the surviving corporation representing (i) 50% or more, but
        not
        more than 80%, of the combined voting power of the surviving corporation’s then
        outstanding securities ordinarily having the right to vote at elections of
        directors, unless such merger or consolidation has been approved in advance
        by
        the Continuity Directors, or (ii) less than 50% of the combined voting
        power of the surviving corporation’s then outstanding securities ordinarily
        having the right to vote at elections of directors (regardless of any approval
        by the Continuity Directors); or 

       

      (e)  the
        Continuity Directors cease for any reason to constitute at least a majority
        of
        the Board.

       

      9.2  Change
        in Control Definitions.
        For
        purposes of this Section 9:

       

      (a)  “Continuity
        Director” means any individual who was a member of the Board on the effective
        date of the Plan, while he or she is a member of the Board, and any individual
        who subsequently becomes a member of the Board whose election, or nomination
        for
        election by the Company’s shareholders, was approved by a vote of at least a
        majority of the directors who are Continuity Directors (either by a specific
        vote or by approval of the proxy statement of the Company in which such
        individual is named as a nominee for director without objection to such
        nomination). For example, assuming that seven individuals comprise the entire
        Board as of the effective date of the Plan, if a majority of such individuals
        approved a proxy statement in which two different individuals were nominated
        to
        replace two of the individuals who were members of the Board as of the effective
        date of the Plan, these two newly elected directors would join the remaining
        five directors who were members of the Board as of the effective date of
        the
        Plan as Continuity Directors. Similarly, if subsequently a majority of these
        directors approved a proxy statement in which three different individuals
        were
        nominated to replace three other directors who were members of the Board
        as of
        the effective date of the Plan, these three newly elected directors would
        also
        become, along with the other four directors, Continuity Directors. Individuals
        subsequently joining the Board could become Continuity Directors under the
        principles reflected in this example.

       

      
        
           

        

        
          A-8

          
            

          

        

        
           

        

      

       

      (b)  “Bona
        Fide Underwriter” means a Person engaged in business as an underwriter of
        securities that acquires securities of the Company from the Company through
        such
        Person’s participation in good faith in a firm commitment underwriting until the
        expiration of 40 days after the date of such acquisition. 

       

      (c)  “Person”
        means any individual, corporation, partnership, group, association or other
        “person,” as such term is used in Section 13(d) or Section 14(d) of the Exchange
        Act, other than the Company, any affiliate or any benefit plan sponsored
        by the
        Company or any affiliate. For this purpose, an affiliate is (i) any corporation
        at least a majority of whose outstanding securities ordinarily having the
        right
        to vote at elections of directors is owned directly or indirectly by the
        Company
        or (ii) any other form of business entity in which the Company, by virtue
        of a
        direct or indirect ownership interest, has the right to elect a majority
        of the
        members of such entity’s governing body. 

       

      9.3  Adjustment
        of Offering Period.
        Without
        limiting the authority of the Committee under Sections 3, 4.3 and 13 of the
        Plan, if a Change in Control of the Company occurs, the Committee, in its
        sole
        discretion, may (a) accelerate the Offering Termination Date of the then
        current
        Offering Period and provide for the exercise of Options thereunder by
        Participants in accordance with Section 7.3 of the Plan, or (b) accelerate
        the
        Offering Termination Date of the then current Offering Period and provide
        that
        all payroll deductions credited to the accounts of Participants will be paid
        to
        Participants as soon as practicable after such Offering Termination Date
        and
        that all Options for such Offering Period will automatically be canceled
        and
        will no longer be exercisable.

       

      10.  Designation
        of Beneficiary.

       

      A
        Participant may file with the Company’s Human Resources Department a written
        designation of a beneficiary who is to receive shares of Common Stock and
        cash,
        if any, under the Plan in the event of such Participant's death prior to
        delivery of such shares or cash to such Participant. The Participant may
        change
        such designation of beneficiary at any time by written notice to the Company’s
        Human Resources Department. In the event of the death of a Participant in
        the
        absence of a valid designation of a beneficiary who is living at the time
        of
        such Participant's death, (a) the Company will deliver such shares of Common
        Stock and cash to the executor or administrator of the estate of the
        Participant, or (b) if to the Company’s knowledge no such executor or
        administrator has been appointed, the Company, in its sole discretion, may
        deliver such shares of Common Stock and cash to the spouse or to any one
        or more
        dependents or relatives of the Participant or, if no spouse, dependent or
        relative is known to the Company, to such other person as the Company may
        designate.

       

      11.  Rights
        of Eligible Employees and Participants; Transferability.

       

      11.1  No
        Right to Employment.
        Nothing
        in the Plan will interfere with or limit in any way the right of the Company
        or
        any Participating Subsidiary to terminate the employment of any Eligible
        Employee or Participant at any time, nor confer upon any Eligible Employee
        or
        Participant any right to continue in the employ of the Company or any
        Participating Subsidiary.

       

      
        
           

        

        
          A-9

          
            

          

        

        
           

        

      

       

      11.2  Rights
        as a Shareholder.
        As a
        holder of an Option under the Plan, a Participant will have no rights as
        a
        shareholder unless and until such Option is exercised and the Participant
        becomes the holder of record of shares of Common Stock. Except as otherwise
        provided in the Plan, no adjustment will be made for dividends or distributions
        with respect to Options as to which there is a record date preceding the
        date
        the Participant becomes the holder of record of such shares, except as the
        Committee may determine in its sole discretion.

       

      11.3  Restrictions
        on Transfer.
        Neither
        payroll deductions credited to a Participant's account nor any rights with
        regard to the exercise of an Option or to receive shares of Common Stock
        under
        the Plan may be assigned, transferred, pledged or otherwise disposed of in
        any
        way (other than by will, the laws of descent and distribution, or as provided
        in
        Section 10 of the Plan) by the Participant. Any such attempt at assignment,
        transfer, pledge or other disposition will be without effect, except that
        the
        Company may treat such act as an election to withdraw from the Plan in
        accordance with Section 8.1 of the Plan. During his or her lifetime, a
        Participant's Option to purchase shares of Common Stock under the Plan is
        exercisable only by such Participant.

       

      12.  Securities
        Law and Other Restrictions.

       

      Notwithstanding
        any other provision of the Plan or any agreements entered into pursuant to
        the
        Plan, the Company will not be required to issue any shares of Common Stock
        under
        the Plan, and a Participant may not sell, assign, transfer or otherwise dispose
        of shares of Common Stock issued pursuant to Options granted under the Plan,
        unless (a) there is in effect with respect to such shares a registration
        statement under the Securities Act and any applicable state or foreign
        securities laws or an exemption from such registration under the Securities
        Act
        and applicable state or foreign securities laws, and (b) there has been
        obtained any other consent, approval or permit from any other regulatory
        body
        that the Committee, in its sole discretion, deems necessary or advisable.
        The
        Company may condition such issuance, sale or transfer upon the receipt of
        any
        representations or agreements from the parties involved, and the placement
        of
        any legends on certificates representing shares of Common Stock, as may be
        deemed necessary or advisable by the Company in order to comply with such
        securities law or other restrictions.

       

      13.  Amendment
        or Termination.

       

      The
        Board
        may suspend or terminate the Plan or any portion thereof at any time, and
        may
        amend the Plan from time to time in such respects as the Board may deem
        advisable in order that Options under the Plan will conform to any change
        in
        applicable laws or regulations or in any other respect the Board may deem
        to be
        in the best interests of the Company; provided, however, that no amendments
        to
        the Plan will be effective without approval of the shareholders of the Company
        if shareholder approval of the amendment is then required pursuant to Section
        423 of the Code or the rules of any stock exchange or Nasdaq or similar
        regulatory body. Upon termination of the Plan, the Committee, in its sole
        discretion, may take any of the actions described in Section 9.3 of the
        Plan.

       

      14.  Effective
        Date of Plan.

       

      The
        Plan
        will be effective as of June 10, 1999, the date it was adopted by the Board.
        The
        Plan will terminate at midnight on December 31, 2020 and may be terminated
        prior
        to such time 

       

      
        
           

        

        
          A-10

          
            

          

        

        
           

        

      

       

      by
        Board
        action, and no Option will be granted after such termination. The Plan has
        been
        adopted by the Board subject to shareholder approval.

       

      15.  Miscellaneous.

       

      15.1  Governing
        Law.
        The
        validity, construction, interpretation, administration and effect of the
        Plan
        and any rules, regulations and actions relating to the Plan will be governed
        by
        and construed exclusively in accordance with the laws of the State of Minnesota,
        notwithstanding the conflicts of laws principles of any
        jurisdictions.

       

      15.2  Successors
        and Assigns.
        The
        Plan will be binding upon and inure to the benefit of the successors and
        permitted assigns of the Company and the Participants.

       

      15.3  Withholding.
        Delivery of shares of Common Stock or of cash pursuant to the Plan shall
        be
        subject to any required withholding taxes. A person entitled to receive shares
        of Common Stock may, as a condition precedent to receiving such shares, be
        required to pay the Company a cash amount equal to the amount of any required
        withholdings.

       

      
        
           

        

        
          A-11

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