Document:

Exhibit 10.3 to St. Jude Medical, Inc. Form 8-K dated May 16, 2007

Exhibit 10.3

 

ST. JUDE MEDICAL, INC. 2007 STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD CERTIFICATE

This certifies that   [name]

is granted a Restricted Stock Award for **[number]* shares of Common Stock,

$.10 par value, of St. Jude Medical, Inc., a Minnesota corporation.

	
            Social Security Number:
 	
             
 	
             
 	
             
 	
             
 
	
            Address:
 	
             
 	
             
 	
             
 	
             
 
	
            Grant Date:
 	
             
 	
             
 	
            , 200
 	
             
 
	
            Expiration Date of Restricted Period:
 	
             
 	
            [____] [vesting schedule]
 

 

This Restricted Stock Award is governed by, and
subject in all respects to, the
terms and conditions of the Restricted Stock Award Agreement, a copy of which
is attached to and
made a part of this document, and the St. Jude Medical, Inc.
2007 Stock Incentive Plan, a copy of which is available upon request.
This
Award Certificate has been duly executed, by manual or facsimile signature, on
behalf of St. Jude Medical, Inc.

	
            ST. JUDE MEDICAL, INC.
 
	
            By:
 	
             
 
	
            Name:
 	
             
 
	
            Title:
 	
             
 

 

ST. JUDE MEDICAL, INC.

2007 STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

This Restricted Stock Award Agreement is between St. Jude Medical, Inc., a Minnesota corporation (the “Company”), and you, the person named in the attached Restricted Stock Award Certificate (the “Award Certificate”), who is an employee or a director of the Company. This Agreement is effective as of the date of grant set forth in the attached Award Certificate (the “Grant Date”).

The Company wishes to award to you a number of shares of the Company’s Common Stock, $.10 par value (the “Common Stock”), subject to certain restrictions as provided in this Agreement, in order to carry out the purpose of the St. Jude Medical, Inc. 2007 Stock Incentive Plan (the “Plan”).

Accordingly, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and you hereby agree as follows:

	
             
 	
            1.
 	
            Award of Restricted Stock. 
 

The Company hereby grants to you, effective as of the Grant Date, an Award of Restricted Stock for that number of shares of Common Stock set forth in the attached Award Certificate (the “Shares”), on the terms and conditions set forth in this Agreement and the Award Certificate and in accordance with the terms of the Plan. 

	
             
 	
            2.
 	
            Rights with Respect to the Shares. 
 

With respect to the Shares, you shall be entitled to exercise the rights of a shareholder of Common Stock of the Company, including the right to vote the Shares and the right to receive cash dividends thereon as provided in Section 8 of this Agreement, unless and until the Shares are forfeited pursuant to Section 5 hereof. Your rights with respect to the Shares shall remain forfeitable at all times prior to the date or dates on which such rights become vested, and the restrictions with respect to the Shares lapse, in accordance with Section 3, Section 4 or Section 5 hereof.

	
             
 	
            3.
 	
            Vesting. 
 

Subject to the terms and conditions of this Agreement, the Shares shall vest, and the restrictions with respect to the Shares shall lapse, on the date or dates and in the amount or amounts set forth in the attached Award Certificate if you remain continuously employed by the Company or if you continuously serve on the Company’s Board of Directors until the respective vesting dates.

	
             
 	
            4.
 	
            Change of Control. 
 

Notwithstanding the vesting provisions contained in Section 3 above, but subject to the other terms and conditions in this Agreement, upon the occurrence of a Change of Control (as defined below) you shall become immediately and unconditionally vested in all Shares and the restrictions with respect to all of the Shares shall lapse. For purposes of this Agreement, “Change of Control” shall mean any of the following events:

(a)           the acquisition by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company or any of its Affiliates, or any employee benefit plan of the Company and/or one or more of it Affiliates, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities in a transaction or series of transactions not approved in advance by a vote of at least three-quarters of the Continuing Directors (as defined below); or

(b)           individuals who, as of the Grant Date, constitute the Board of Directors of the Company (generally the “Directors” and as of the Grant Date the “Continuing Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a Director subsequent to the Grant Date whose nomination for election was approved in advance by a vote of at lease three-quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

(c)           the approval by the shareholders of the Company of a reorganization, merger, consolidation, liquidation or dissolution of the Company or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the Continuing Directors; or

(d)           the first purchase under any tender offer or exchange offer (other than an offer by the Company or any of its Affiliates) pursuant to which shares of Common Stock are purchased; or

(e)           at least a majority of the Continuing Directors determines in their sole discretion that there has been a change in control of the Company.

	
             
 	
            5.
 	
            Early Vesting; Forfeiture. 
 

If your employment terminates or if you resign or are removed from or otherwise cease to serve on, the Company’s Board of Directors prior to the vesting of the Shares pursuant to Section 3 or Section 4 hereof, your rights to all of the unvested Shares shall be immediately and irrevocably forfeited, including the right to vote such Shares and the right to receive cash dividends on such Shares, unless otherwise determined by the Committee administering the Plan, except that if you die, become Disabled, or in the case of an employee, terminate employment by reason of Normal Retirement or Early Retirement prior to the vesting or forfeiture of all Shares pursuant to Section 3 or Section 4 hereof, you shall become immediately and unconditionally vested in all of the Shares for which vesting has occurred as a result of such event in accordance with the terms of the Award Certificate and
your rights to all of the unvested Shares shall be immediately and irrevocably forfeited pursuant to the terms of this Agreement and the attached Award Certificate, and the restrictions with respect to all such vested Shares shall lapse, on the date of your death, that you become Disabled or you terminate employment by reason of Normal Retirement or Early Retirement. For purposes of this Section 5, “Disabled” refers to a permanent and total disability as approved by the Committee, “Normal Retirement” means the retirement of an employee on or after age 65 and “Early Retirement” means the retirement of an employee with the consent of the Committee. No transfer by will or the applicable laws of descent and distribution of any Shares which vest by reason of your death shall be effective to bind the Company unless the Committee administering the Plan shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as
the Committee may deem necessary to establish the validity of the transfer.

 

2

	
             
 	
            6.
 	
            Restriction on Transfer. 
 

Until the Shares vest pursuant to Section 3, Section 4 or Section 5 hereof, none of the Shares may be sold, assigned, transferred, pledged, attached or otherwise encumbered, and no attempt to transfer the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Shares.

	
             
 	
            7.
 	
            Issuance and Custody of Certificates. 
 

(a)           The Company shall cause the Shares to be issued in your name, either by book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company. The Shares shall be restricted from transfer and shall be subject to an appropriate stop-transfer order. If any certificate is issued, the certificate shall bear an appropriate legend referring to the restrictions applicable to the Shares.

(b)           If any certificate is issued, you shall be required to execute and deliver to the Company a stock power or stock powers relating to the Shares as a condition to the receipt of this Award of Restricted Stock.

(c)           After any Shares vest pursuant to Section 3, Section 4 or Section 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 9 hereof, the Company shall promptly cause such vested Shares (less any Shares withheld to pay taxes), free of the restrictions and/or legend described in Section 7(a) hereof, to be delivered, either by book-entry registration or in the form of a certificate or certificates, registered in your name or in the names of your legal representatives, beneficiaries or heirs, as the case may be.

	
             
 	
            8.
 	
            Distributions and Adjustments. 
 

(a)           If any Shares vest subsequent to any change in the number or character of the Common Stock of the Company (through any stock dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation split-up, spin-off, combination, repurchase or exchange of shares or otherwise), you shall then receive upon such vesting the number and type of securities or other consideration which you would have received if such Shares had vested prior to the event changing the number or character of the outstanding Common Stock.

 

3

(b)           Any additional shares of Common Stock of the Company, any other securities of the Company and any other property (except for cash dividends or other cash distributions) distributed with respect to the Shares prior to the date or dates the Shares vest shall be subject to the same restrictions, terms and conditions as the Shares to which they relate and shall be promptly deposited with the Secretary of the Company or a custodian designated by the Secretary.

(c)           Any cash dividends or other cash distributions payable with respect to the Shares shall be distributed to you at the same time cash dividends or other cash distributions are distributed to shareholders of the Company generally.

	
             
 	
            9.
 	
            Taxes. 
 

(a)           You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of the grant of the Shares, payment of dividends on the Shares, the vesting of the Shares and any other matters related to this Agreement. In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.

(b)           In accordance with the terms of the Plan, and such rules as may be adopted by the Committee administering the Plan, you may elect to satisfy any applicable tax withholding obligations arising from the receipt of, or the lapse of restrictions relating to, the Shares by (i) delivering cash (including check, draft, money order or wire transfer made payable to the order of the Company), (ii) having the Company withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Company shares of Common Stock having a Fair Market Value equal to the amount of such taxes. The Company will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share. Your election must be made on or before the
date that the amount of tax to be withheld is determined.

	
             
 	
            10.
 	
            General Provisions. 
 

(a)           Interpretations. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon your request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee administering the Plan, and such determination shall be final, conclusive and binding upon all parties in interest.

(b)           No Right to Employment or Board Service. Nothing in this Agreement or the Plan shall be construed as giving you the right to be retained as an employee of the Company or to continue to serve on the Company’s Board of Directors. In addition, the Company may at any time dismiss you from employment, free from any liability or any claim under this Agreement, unless otherwise expressly provided in this Agreement.

 

4

(c)           Securities Matters. The Company shall not be required to deliver any Shares until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

(d)           Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.

(e)           Governing Law. The internal law, and not the law of conflicts, of the State of Minnesota will govern all questions concerning the validity, construction and effect of this Agreement.

(f)            Notices. You should send all written notices regarding this Agreement or the Plan to the Company at the following address:

	
             
 	
            St. Jude Medical, Inc.
 

	
             
 	
            One Lillehei Plaza
 

	
             
 	
            St. Paul, MN 55117
 

	
             
 	
            Attn.: Stock Plan Administrator
 

(g)           Award Certificate. This Restricted Stock Award Agreement is attached to and made part of an Award Certificate and shall have no force or effect unless such Award Certificate is duly executed and delivered by the Company to you.

* * * * * * * *

 

5Exhibit 10.4 to St. Jude Medical, Inc. Form 8-K dated May 16, 2007

Exhibit 10.4

 

 

	
            ST. JUDE MEDICAL, INC.
 
 2007 EMPLOYEE STOCK PURCHASE PLAN
 

 

 

 

TABLE OF CONTENTS

	
             
 	
             
 	
            Page 
 
	 
	
            SECTION 1.
 	
            PURPOSE
 	
            1
 
	 
	
            SECTION 2.
 	
            DEFINITIONS
 	
            1
 
	 
	
            SECTION 3.
 	
            ELIGIBILITY
 	
            4
 
	 
	
            SECTION 4.
 	
            CONTRIBUTION PERIODS
 	
            5
 
	 
	
            SECTION 5.
 	
            PARTICIPATION
 	
            5
 
	 
	
            SECTION 6.
 	
            METHOD OF PAYMENT OF CONTRIBUTIONS
 	
            5
 
	 
	
            SECTION 7.
 	
            GRANT OF OPTION
 	
            6
 
	 
	
            SECTION 8.
 	
            EXERCISE OF OPTION
 	
            6
 
	 
	
            SECTION 9.
 	
            DELIVERY
 	
            7
 
	 
	
            SECTION 10.
 	
            VOLUNTARY WITHDRAWAL; TERMINATION OF  EMPLOYMENT
 	
            7
 
	 
	
            SECTION 11.
 	
            INTEREST
 	
            8
 
	 
	
            SECTION 12.
 	
            SHARES
 	
            8
 
	 
	
            SECTION 13.
 	
            ADMINISTRATION
 	
            8
 
	 
	
            SECTION 14.
 	
            DEATH OF PARTICIPANT
 	
            9
 
	 
	
            SECTION 15.
 	
            TRANSFERABILITY
 	
            9
 
	 
	
            SECTION 16.
 	
            USE OF FUNDS
 	
            9
 
	 
	
            SECTION 17.
 	
            REPORTS
 	
            9
 
	 
	
            SECTION 18.
 	
            ADJUSTMENTS UPON CHANGES IN CAPITALIZATION;  CORPORATE TRANSACTIONS
 	
            9
 

 

 

i

	
             
 	
             
 	
            Page 
 
	
             
 	
             
 	
             
 
	
            SECTION 19.
 	
            AMENDMENT OR TERMINATION
 	
            11
 
	 
	
            SECTION 20.
 	
            NOTICES
 	
            12
 
	 
	
            SECTION 21.
 	
            CONDITIONS UPON ISSUANCE OF SHARES
 	
            12
 
	 
	
            SECTION 22.
 	
            TERM OF PLAN; EFFECTIVE DATE
 	
            12
 
	 
	
            SECTION 23.
 	
            ADDITIONAL RESTRICTIONS OF RULE 16b-3
 	
            12
 
	 
	
            SECTION 24.
 	
            GOVERNING LAW
 	
            13
 
	 
	
            SECTION 25.
 	
            SEVERABILITY
 	
            13
 
	 
	
            SECTION 26.
 	
            NO RIGHTS AS AN EMPLOYEE
 	
            13
 
	 
	
            SECTION 27.
 	
            INTERNATIONAL PARTICIPANTS
 	
            13
 
	 
	
            SECTION 28.
 	
            TAXES
 	
            14
 
	 
	
            SECTION 29.
 	
            ACCEPTANCE OF TERMS
 	
            14
 

 

 

ii

ST. JUDE MEDICAL, INC.

2007 EMPLOYEE STOCK PURCHASE PLAN

The following constitute the provisions of the 2007 Employee Stock Purchase Plan of St. Jude Medical, Inc.

	
            Section 1.
 	
            Purpose.
 

The purpose of the Plan is to
enable the Company to obtain and retain the services of employees. In addition, the Plan provides a convenient, meaningful
opportunity for employees to purchase St. Jude Medical, Inc. stock, thereby increasing participating employees’ personal
interest in the Company’s success. It is the intention of the Company to have a portion of the Plan qualify as an
“Employee Stock Purchase Plan” within the meaning of Section 423 of the Code, and it is intended that such portion
of the Plan be treated as a separate plan which shall comply with Section 423 of the Code in all respects. Separately,
certain provisions of this Plan document govern the purchase of St. Jude Medical, Inc. stock other than through the portion of the
Plan governed by Section 423 of the Code, and it is intended that such purchases shall not be subject to the requirements of
Section 423 of the Code.

	
            Section 2.
 	
            Definitions.
 

(a)          “Account” means the funds accumulated with respect to a Participant as a result of deduction from such Participant’s paycheck for the purpose of purchasing Shares under the Plan. The funds allocated to a Participant’s Account shall remain the property of the Participant at all times but may be commingled with the general funds of the Company, except to the extent such commingling may be prohibited by the laws of any applicable jurisdiction.

(b)          “Board” means the Board of Directors of the Company.

(c)          “Business Day” means any day (other than a Saturday or Sunday) on which the New York Stock Exchange is permitted to be open for trading.

(d)          “Code” means the Internal Revenue Code of 1986, as amended.

(e)          “Commencement Date” means the first calendar day of each Contribution Period of the Plan.

(f)          “Common Stock” means the Common Stock, par value $.10 per share, of the Company.

 

(g)          “Committee” means the committee described in Section 13(a) of the Plan.

(h)          “Company” means St. Jude Medical, Inc., a Minnesota corporation. Effective as of the date any Subsidiary becomes a Designated Subsidiary, references herein to the “Company” shall be interpreted to include such Designated Subsidiary, as appropriate.

(i)           “Compensation” means regular straight time earnings, commissions and commission-based sales bonuses annualized at the time of enrollment prior to the Commencement Date, excluding payments, if any, for overtime, incentive compensation, incentive payments, premiums, bonuses (including bonuses paid under the Company’s Management Incentive Compensation Plan) and any other special remuneration.

(j)           “Continuous Status as an Employee” means the absence of any interruption or termination of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the case of (i) medical leave; (ii) leave allowed under the Family and Medical Leave Act; (iii) personal leave; (iv) military leave; (v) jury duty; (vi) any other leave of absence approved by the Committee, provided that such leave does not exceed the respective time period designated by Company policy, unless re-employment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; or (vii) transfers between locations of the Company or between the
Company and its Subsidiaries.

(k)          “Contribution Period” means a 1-year period; provided, however, that the Board shall have the power to change the duration and/or frequency of Contribution Periods with respect to future purchases without shareholder approval if such change is announced at least 5 Business Days prior to the scheduled beginning of the first Contribution Period to be affected; provided further, however, that no Contribution Period shall exceed 27 months.

(l)          “Contributions” means all amounts credited to the Account of a Participant pursuant to the Plan.

(m)         “Corporate Transaction” means (i) a sale of all or substantially all of the Company’s assets or (ii) a merger, consolidation or other capital reorganization of the Company with or into another corporation or any other transaction or series of related transactions in which the Company’s shareholders immediately prior thereto own less than 50% of the voting stock of the Company (or its successor or parent) immediately thereafter.

(n)          “Designated Subsidiaries” means the Subsidiaries that have been designated by the Board from time to time in its sole discretion as eligible to participate in the portion of the Plan subject to Section 423 of the Code.

2

(o)          “Employee” means any person, including an Officer or director who is also an employee, but excluding any person whose customary employment is (i) less than 20 hours per week or (ii) for not more than 5 months in any calendar year.

(p)          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(q)          “Fair Market Value” means, with respect to the Common Stock on a given date, the closing price for the Common Stock for such date, or if such date is not a Business Day, the last reported sale price for the Common Stock for the last Business Day preceding such date, as quoted on the New York Stock Exchange or another exchange; provided, however, that if the Common Stock ceases to be listed for trading on the New York Stock Exchange or another exchange, “Fair Market Value” of the Common Stock for a given date shall mean the value determined in good faith by the Board.

(r)          “New Purchase Date” shall have the meaning set forth in Section 18(b) hereof.

(s)           “Officer” means a person who has been designated by the Board as a reporting officer for purposes of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(t)           “Participant” means any Employee who is eligible and has elected to participate in the Plan accordance with Sections 3 and 5 hereof and who has not withdrawn from the Plan or whose participation in the Plan is not otherwise terminated.

(u)          “Plan” means this 2007 Employee Stock Purchase Plan, as may be amended from time to time.

(v)          “Purchase Date” means the last calendar day of each Contribution Period of the Plan.

(w)         “Purchase Price” means with respect to a Contribution Period that price as announced by the Committee prior to the first Business Day of that Contribution Period, which price may, in the discretion of the Committee, be a price which is not fixed or determinable as of the first Business Day of that Contribution Period; provided, however, that in no event shall the Purchase Price for any Contribution Period be less than the lesser of 85% of the Fair Market Value of a Share on the Commencement Date or on the Purchase Date, in each case rounded up to the next higher full cent. If the Commencement Date or the Purchase Date is not a Business Day, then the Purchase Price for any Contribution Period shall not be less than the lesser of 85% of the Fair Market Value of a Share on the Business
Day immediately preceding the Commencement Date or the Purchase Date.

3

(x)          “Share” means a share of Common Stock, as adjusted in accordance with Section 18 hereof.

(y)          “Subsidiary” means a corporation, domestic or foreign, of which not less than 50% of the total combined voting power of all classes of stock is held by the Company or any such subsidiary of the Company, whether or not such corporation now exists or is hereafter organized or acquired by the Company or another such subsidiary of the Company. “Subsidiary” also means an unincorporated business entity, such as a limited liability company or partnership, in which the Company holds directly or indirectly not less than 50% of the total combined voting power with respect to all classes of equity ownership of such entity, whether or not such unincorporated business entity now exists or is hereafter organized or acquired by the Company or another Subsidiary of the Company, but
only if such entity either (i) has duly elected under applicable treasury regulations to be an association treated as a corporation for federal income tax purposes, and such election continues in effect; or (ii) is disregarded as a separate entity for federal income tax purposes, has not made an election described in clause (i) of this sentence and, pursuant to applicable treasury regulations, its assets are considered to be owned by another Subsidiary that is a corporation or is treated as one under clause (i) of this sentence.

	
            Section 3.
 	
            Eligibility.
 

(a)          Any person who is an Employee and has completed 30 days of continuous employment service for the Company or one or more of its Designated Subsidiaries shall become eligible to participate in the Plan on the first day of the month coincident with or following completion of such period of service, subject to the requirements of Section 5(a) hereof and the limitations imposed by Section 423(b) of the Code.

(b)          Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) if, immediately after the grant, such Employee (together with any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding options to purchase stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or of any Subsidiary of the Company, or (ii) if such option would permit his or her rights to purchase stock under all employee stock purchase plans (described in Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate that exceeds $25,000 of the Fair Market Value of such
stock (determined at the time such option is granted), or that exceeds 2,000 Shares, for each calendar year in which such option is outstanding at any time.

4

	
            Section 4.
 	
            Contribution Periods.
 

The Plan shall be implemented by a
series of consecutive Contribution Periods. The first Contribution Period shall commence on August 1, 2007 and shall end on July
31, 2008. The Plan shall continue until terminated in accordance with Sections 19 and 22 hereof.

	
            Section 5.
 	
            Participation.
 

(a)          An eligible
Employee may become a Participant by following the established enrollment procedure as directed by the Committee, or other entity
designated by the Committee, prior to the Commencement Date of the applicable Contribution Period, unless an earlier or later time
for completing the enrollment procedure is set by the Committee for all eligible Employees with respect to a given Contribution
Period. The eligible Employee shall determine the amount of the Participant’s Compensation (subject to Section 6(a) hereof)
to be paid as Contributions pursuant to the Plan.

(b)          Payroll deductions shall commence on the first payroll paid on or following the Commencement Date and shall end on the last payroll paid on or prior to the Purchase Date of the Contribution Period, unless sooner terminated as provided in Section 10 hereof. A Participant who has elected to participate in a Contribution Period shall automatically participate in the next Contribution Period until such time as such Participant withdraws from the Plan or terminates employment as provided in Section 10 hereof.

	
            Section 6.
 	
            Method of Payment of Contributions.
 

(a)          A Participant shall elect to have payroll deductions made on each payroll paid during the Contribution Period in full dollar amounts not less than $5 and not more than 10% (or such other maximum percentage as the Board may establish from time to time before any Commencement Date) of such Participant’s Compensation on each payroll paid during the Contribution Period. All payroll deductions made by a Participant shall be credited to his or her Account under the Plan. A Participant may not make any additional payments into his or her Account. No assets in a Participant’s Account shall be subject to the debts, contracts, liabilities, engagements or torts of the Participant.

(b)          A Participant may discontinue his or her participation in the Plan as provided in Section 10 hereof.

(c)          Unless
otherwise provided by the Committee, a Participant may decrease the amount of his or her Contributions once during a Contribution
Period by following the established administrative procedures as directed by the Committee to authorize a decrease in the payroll
deduction amount. The decrease in amount shall be effective as soon as administratively 

5

feasible following the date of receipt by the
Company, or other entity designated by the Committee. However, any decrease in amount must be made at least 30 days prior to the
end of the Contribution Period to ensure such decrease shall be effective within the current Contribution Period.

(d)          Unless otherwise provided by the Committee, a Participant may not increase the amount of his or her Contributions during a Contribution Period. A Participant may only increase the amount of his or her Contributions with respect to a future Contribution Period by following the established administrative procedures as directed by the Committee to authorize an increase in the payroll deduction amount. The increase in amount shall be effective as of the Commencement Date of the next Contribution Period following the date of receipt by the Company, or other entity designated by the Committee.

(e)          Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a Participant’s payroll deductions may be adjusted during any Contribution Period, subject to the discretion of the Committee. Payroll deductions shall re-commence at the amount provided in such Participant’s most recently submitted enrollment materials at the beginning of the first Contribution Period that is scheduled to end in the next succeeding calendar year, unless terminated by the Participant as provided in Section 10 hereof.

	
            Section 7.
 	
            Grant of Option.
 

On the Commencement Date of each
Contribution Period, each eligible Employee participating in such Contribution Period shall be granted an option to purchase on
the Purchase Date a number of Shares determined by dividing such Employee’s Contributions accumulated prior to such Purchase
Date and retained in the Participant’s Account as of the Purchase Date by the applicable Purchase Price, subject to the
limitations set forth in Sections 3(b) and 12 hereof.

	
            Section 8.
 	
            Exercise of Option.
 

Unless a Participant ceases to be
an eligible Employee as provided in Section 3 or withdraws from the Plan as provided in Section 10 hereof, his or her option
for the purchase of Shares will be exercised automatically on each Purchase Date of each Contribution Period, and the maximum
number of Shares (which may include a fractional Share) subject to the option will be purchased at the applicable Purchase Price
with the accumulated Contributions in his or her Account. The Shares purchased upon exercise of an option hereunder shall be
deemed to be transferred to the Participant on the Purchase Date. During his or her lifetime, a Participant’s option to
purchase Shares hereunder is exercisable only by him or her.

6

	
            Section 9.
 	
            Delivery.
 

As promptly as practicable after
each Purchase Date of each Contribution Period, the number of Shares purchased by each Participant upon exercise of his or her
option shall be delivered in accordance with procedures established from time to time by the Committee, and a transfer agent for
the Common Stock may be utilized or a brokerage or nominee account may be established for this purpose. The terms of such transfer
agency or brokerage or nominee account shall be at the sole discretion of the Company, and participation in the Plan is expressly
conditioned on the acceptance of such terms.

	
            Section 10.
 	
            Voluntary Withdrawal; Termination of Employment.
 

(a)          A Participant may
withdraw from the Plan by following the established administrative procedures as directed by the Committee, or other entity
designated by the Committee. The withdrawal request will be effective as soon as administratively feasible. However, any
withdrawal request must be made at least 30 days prior to the end of a Contribution Period to ensure such withdrawal request shall
be effective within such Contribution Period. Once the withdrawal request is effective, all of the Participant’s
Contributions credited to his or her Account will be paid to him or her with interest, his or her option will be automatically
terminated, and no further Contributions for the purchase of Shares will be made absent re-enrollment. Notwithstanding the
foregoing, an Officer shall not have the right to withdraw Contributions credited to his or her account under the Plan except in
accordance with Section 10(b) hereof. Upon withdrawal from the Plan, a Participant may not re-enroll in the Plan until the next
Contribution Period. In order to re-enroll, a Participant must follow the provisions set forth under Section 5(a)
hereof.

(b)          Upon termination
of the Participant’s Continuous Status as an Employee prior to the Purchase Date of a Contribution Period for any reason,
including death or retirement, the Contributions credited to his or her Account will be returned to him or her or, in the case of
his or her death, to the person or persons entitled thereto under Section 14 hereof, in either case [with interest, and his
or her option will be automatically terminated. Whether the Participant’s Continuous Status as an Employee has been
terminated shall be determined by the Committee in its sole discretion. In the event that any Designated Subsidiary ceases to be a
Designated Subsidiary of the Company, the employees of such Designated Subsidiary shall no longer be Employees for purposes of
Section 3(a) hereof as of the date such Designated Subsidiary ceases to be a Designated Subsidiary.

(c)          A Participant’s
withdrawal from the Plan shall not have any effect upon his or her eligibility to participate in any similar plan that may
hereafter be adopted by the Company or any Subsidiary.

7

	
            Section 11.
 	
            Interest.
 

In any situation where the Plan
provides for the payment of interest on the Contributions of a Participant in the Plan, such interest rate shall be determined by
the Committee and disclosed the Participants prior to the Commencement Date.

	
            Section 12.
 	
            Shares.
 

(a)          Subject to adjustment as provided in Section 18 hereof, the maximum number of Shares which shall be issued under the Plan shall be 5,000,000 Shares. If on a given Purchase Date, the number of Shares with respect to which options are to be exercised exceeds the number of Shares available for sale under the Plan on such Purchase Date, the Committee shall make a pro rata allocation of the Shares available for purchase on such Purchase Date among all Participants, and the balances in the Accounts shall be refunded without interest to the respective Participants.

(b)          The Participant shall have no interest or voting right in Shares covered by his or her option until such option has been exercised.

	
            Section 13.
 	
            Administration.
 

(a)          The Committee. The Plan shall be administered by a committee (the “Committee”) established by the Board. The members of the Committee need not be directors of the Company and shall be appointed by and serve at the pleasure of the Board.

(b)          Powers of Committee. The Committee shall supervise and administer the Plan and shall have full power to adopt, amend and rescind any rules deemed desirable and appropriate for the administration of the Plan and not inconsistent with the Plan, to construe and interpret the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. Decisions of the Committee will be final and binding on all parties who have an interest in the Plan. The Committee may delegate ministerial duties to such of the Company’s employees, outside entities and outside professionals as the Committee so determines.

(c)          Power and Authority of the Board. Notwithstanding anything to the contrary contained herein, the Board may, at any time and from time to time, without any further action of the Committee, exercise the powers and duties of the Committee under the Plan.

8

	
            Section 14.
 	
            Death of Participant.
 

In the event of the death of a
Participant, the Company shall deliver any Shares and cash in the Participant’s Account to a beneficiary previously
designated by the Participant or, if there is no surviving beneficiary duly designated, to the executor or administrator of the
estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the
Company, in its discretion, may deliver such Shares and/or cash to the spouse or to any one or more dependents or relatives of the
Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may
designate.

	
            Section 15.
 	
            Transferability.
 

Neither Contributions credited to a
Participant’s Account nor any rights with regard to the exercise of an option or to receive Shares under the Plan may be
assigned, transferred, pledged or otherwise disposed of in any way (other than as provided in Section 14 hereof) by the
Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the
Company may treat such act as an election to withdraw funds in accordance with Section 10 hereof.

	
            Section 16.
 	
            Use of Funds.
 

All Contributions received or held
by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to
segregate such Contributions. The Plan is unfunded and shall not create nor be construed to create a trust or separate fund of any
kind or a fiduciary relationship among the Company, the Board, the Committee and the Participant. To the extent a Participant
acquires a right to receive payment from the Company pursuant to the Plan, such right shall be no greater than the right of any
unsecured general creditor of the Company.

	
            Section 17.
 	
            Reports.
 

Accounts will be maintained for
each Participant in the Plan. Account statements will be made available to participating Employees by the Company and will set
forth the amounts of Contributions, the Purchase Price per Share, the number of Shares purchased and the remaining cash balance,
if any.

	
            Section 18.
 	
            Adjustments Upon Changes in Capitalization; Corporate Transactions.
 

(a)          Adjustment. The
number of Shares set forth in Section 12 hereof, the price per Share covered by each option under the Plan that has not yet been
exercised and the maximum number of Shares that may be purchased by a Participant in a calendar year pursuant to Section 

9

3(b) hereof, shall be proportionately adjusted for
any increase or decrease in the number of outstanding Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock (including any such change in the number of Shares effected in connection with
a change in domicile of the Company). Such adjustment shall be made by the Board, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares issuable hereunder or subject to an option hereunder.

(b)          Corporate Transactions. In
the event of a dissolution or liquidation of the Company, any Contribution Period then in progress will terminate immediately
prior to the consummation of such action, unless otherwise provided by the Board in its sole discretion, and in such event, all
outstanding options shall automatically terminate and the balance in the Accounts shall be refunded with interest to the
respective Participants. In the event of a Corporate Transaction, each option outstanding under the Plan shall be assumed or an
equivalent option shall be substituted by the successor corporation or a parent or subsidiary of such successor corporation. In
the event that the successor corporation refuses to assume or substitute for outstanding options, the Contribution Period then in
progress shall be shortened and a new Purchase Date shall be set (the “New Purchase Date”), as of which date the
Contribution Period then in progress will terminate. The New Purchase Date shall be on or before the date of consummation of the
Corporate Transaction and the Board shall notify each Participant in writing, at least 10 days prior to the New Purchase Date,
that the Purchase Date for his or her option has been changed to the New Purchase Date and that his or her option will be
exercised automatically on the New Purchase Date, unless prior to such date he or she has withdrawn from the Plan as provided in
Section 10 hereof. For purposes of this Section 18, an option granted under the Plan shall be deemed to be assumed,
without limitation, if, at the time of issuance of the stock or other consideration upon a Corporate Transaction, each holder of
an option under the Plan would be entitled to receive upon exercise of the option the same number and kind of shares of stock or
the same amount of property, cash or securities as such holder would have been entitled to receive upon the occurrence of the
Corporate Transaction if the holder had been, immediately prior to the Corporate Transaction, the holder of the number of Shares
covered by the option at such time (after giving effect to any adjustments in the number of Shares covered by the option as
provided for in this Section 18); provided however that if the consideration received in the transaction is not solely common
stock of the successor corporation or its parent (as defined in Section 424(e) of the Code), the Board may, with the consent of
the successor corporation, provide for the consideration to be received upon exercise of the option to be solely common stock of
the successor corporation or its parent equal in fair market value, as determined by the Committee, to the per Share consideration
received by holders of Common Stock in the Corporate Transaction.

10

The Board may, if it so determines
in the exercise of its sole discretion, also make provision for adjusting the number of Shares set forth in Section 12 hereof, as
well as the price per Share covered by each outstanding option, in the event that the Company effects one or more reorganizations,
recapitalizations, rights offerings or other increases or reductions of its outstanding Common Stock, and in the event the Company
is consolidated with or merged into any other corporation.

	
            Section 19.
 	
            Amendment or Termination.
 

(a)          The Board may at any time and for any reason terminate or amend the Plan. Except as provided in Section 18 hereof, no such termination of the Plan may affect options previously granted, provided that the Plan or the Contribution Period may be terminated by the Board on a Purchase Date or by the Board’s setting a new Purchase Date with respect to a Contribution Period then in progress if the Board determines that termination of the Plan and/or the Contribution Period is in the best interests of the Company and the shareholders or if continuation of the Plan and/or the Contribution Period would cause the Company to incur adverse accounting charges as a result of a change after the effective date of the Plan in the generally accepted accounting principles applicable to the Plan.
Except as provided in Section 18 hereof and in this Section 19, no amendment to the Plan shall make any change in any option previously granted that adversely affects the rights of any Participant. In addition, to the extent necessary to comply with Rule 16b-3 under the Exchange Act or Section 423 of the Code (or, in either case, any successor rule or provision or any applicable law or regulation) or the requirements of any stock exchange upon which the Shares may then be listed, the Company shall obtain shareholder approval in such a manner and to such a degree as so required.

(b)          Without shareholder approval and without regard to whether any Participant rights may be considered to have been adversely affected, the Board shall be entitled to change the Contribution Periods and/or the Purchase Price as permitted under the Plan, limit the frequency and/or number of changes in the amount deducted during a Contribution Period, establish the exchange ratio applicable to amounts deducted in a currency other than U.S. dollars, permit payroll deductions in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed payroll deduction elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of
Shares for each Participant properly correspond with amounts deducted from the Participant’s Compensation, and establish such other limitations or procedures as the Board determines in its sole discretion to be advisable and consistent with the Plan.

11

	
            Section 20.
 	
            Notices.
 

All notices or other communications
by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the
form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

	
            Section 21.
 	
            Conditions Upon Issuance of Shares.
 

Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and delivery of such Shares pursuant thereto shall comply
with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, applicable state securities laws and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.

As a condition to the exercise of
an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in
the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of
law.

	
            Section 22.
 	
            Term of Plan; Effective Date.
 

The Plan shall become effective
upon approval by the Company’s shareholders. It shall continue in effect until all of the Shares set forth in Section 12
hereof are exhausted or such earlier time as the Plan is terminated pursuant to Section 19 hereof.

	
            Section 23.
 	
            Additional Restrictions of Rule 16b-3.
 

The terms and conditions of options
granted hereunder to, and the purchase of Shares by, Officers shall comply with the applicable provisions of Rule 16b-3. This
Plan shall be deemed to contain, and such options shall be deemed to contain, and the Shares issued upon exercise thereof shall be
subject to, such additional conditions and restrictions as may be required by Rule 16b-3 to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions. 

12

	
            Section 24.
 	
            Governing Law.
 

The internal law, and not the law
of conflicts, of the State of Minnesota, shall govern all questions concerning the validity, construction and effect of the Plan,
and any rules and regulations relating to the Plan.

	
            Section 25.
 	
            Severability.
 

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

	
            Section 26.
 	
            No Rights as an Employee.
 

Nothing in the Plan shall be
construed to give any person (including an Employee or Participant) the right to remain in the employ of the Company or a
Subsidiary or to affect the right of the Company or a Subsidiary to terminate the employment of any person (including the Employee
or Participant) at any time with or without cause. Nothing in this Plan shall confer on any person any legal or equitable right
against the Company or any Subsidiary, or give rise to any cause of action at law or in equity against the Company or any
Subsidiary. Neither the Shares purchased hereunder nor any other benefits conferred hereby, including the right to purchase Common
Stock at a discount, shall form any part of the wages or salary of any eligible Employee for purposes of severance pay or
termination indemnities, irrespective of the reason for termination of employment. Under no circumstances shall any person ceasing
to be an Employee be entitled to any compensation for any loss of any right or benefit under this Plan which such Employee might
otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or
unfair dismissal, breach of contract or otherwise. 

	
            Section 27.
 	
            International Participants.
 

The Committee shall have the power
and authority to allow any of the Company’s Subsidiaries other than Designated Subsidiaries to adopt and join in the portion
of this Plan that is not intended to comply with Section 423 of the Code and to allow employees of such Subsidiaries who work or
reside outside of the United States an opportunity to acquire Shares in accordance with such special terms and conditions as the
Committee may establish from time to time, which terms and conditions may modify the terms and conditions of the Plan set forth
elsewhere in this Plan. Without limiting the authority of the Committee, the special terms and 

13

conditions which may be established with respect to
any foreign country, and which need not be the same for all foreign countries, include but are not limited to the right to
participate, procedures for elections to participate, the payment of any interest with respect to amounts received from or
credited to accounts held for the benefit of participants, the purchase price of any Shares to be acquired, the length of any
Contribution Period, the maximum amount of contributions, credits or Shares which may be acquired by any participating employees,
and a participating employee’s rights in the event of his or her death, disability, withdrawal from participation in the
purchase of Shares hereunder, or termination of employment. Any purchases made pursuant to the provisions of this Section 27 shall
not be subject to the requirements of Section 423 of the Code.

	
            Section 28.
 	
            Taxes.
 

Participants are responsible for
the payment of all income taxes, employment, social insurance, welfare and other taxes under applicable law relating to any
amounts deemed under the laws of the country of their residency or of the organization of the Subsidiary employing such
Participant to constitute income arising out of the Plan, the purchase and sale of Shares pursuant to the Plan and the
distribution of Shares or cash to the Participant in accordance with this Plan. Each Participant hereby authorizes the relevant
Subsidiary to make appropriate withholding deductions from each Participant’s compensation, which shall be in addition to any
payroll deductions made pursuant to Section 6, and to pay such amounts to the appropriate tax authorities in the relevant country
or countries in order to satisfy any of the above tax liabilities of the Participant under applicable law.

	
            Section 29.
 	
            Acceptance of Terms.
 

By participating in the Plan, each
Participant shall be deemed to have accepted all the conditions of the Plan and the terms and conditions of any rules and
regulations adopted by the Committee and shall be fully bound thereby.

 

Approved by the Board on February 23, 2007, subject
to shareholder approval.

 

14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]