Document:

exv4w13

 

EXHIBIT 4.13

June 27, 2006

Wireless Ronin Technologies, Inc.

14700 Martin Drive

Eden Prairie, MN 55344

Attn: Jeffrey C. Mack, Chief Executive Officer

Dear Jeff:

     Reference is made to the Promissory Note of Wireless Ronin Technologies, Inc. (the “Company”)
issued to me dated December 27, 2005 in the principal amount of $300,000 (the “Note”). The Note
bears interest at the rate of 10% per annum and matures on June 27, 2006.

     You have advised me that the Company requires additional funding for its operations and to
meet its obligations, and have requested that I agree to defer payment of my Note and accept, in
lieu thereof, the Company’s bridge units (“Units”), each Unit consisting of a 12% convertible
promissory note in the original amount of $50,000 each and a five-year warrant to purchase 10,000
shares of the Company’s common stock. You have advised me that the Company completed a $2.775
million bridge unit offering in March 2006 and proposes to issue up to an additional $2.6 million
of Units pursuant to the terms of a private placement memorandum (“Memorandum”). A description of
the Company and the Units has been set forth in a preliminary private placement Memorandum which I
have received and reviewed.

     Based on the above, and in consideration of your payment to me of 34,000 shares of the
Company’s common stock, I agree to extend the maturity date of the payment of the Note, including
interest thereon which shall continue to accrue at the rate of 10% per annum. Further, there will
be no increase in interest on the Note pending the closing on the Units. The provisions for
payment of additional shares of stock or warrants for failure to pay off the Note will not be
applicable, unless the Company fails to complete a closing on the Units on or before July 31, 2006.
When the Company commences its bridge offering as described in the Memorandum, I agree, at the
initial closing, to exchange my Note for Units. The amount of the Note shall be equal to the
principal amount of the Company’s indebtedness to me, including interest. I will receive a
proportionate share of warrants for any partial Unit issued to me.

     My agreement herein shall be subject to the Company having completed an initial closing on its
additional bridge note offering on or before July 31, 2006. If such closing does not occur by such
date, the Note will revert to its original terms.

	 	 	 	 	 
	 

	 	Very truly yours,	 	 
	 
	 	 	 	 
	 

	 	/s/ Barry Butzow	 	 
	 

	 	 

Barry Butzowexv4w14

 

EXHIBIT 4.14

June 27, 2006

Wireless Ronin Technologies, Inc.

14700 Martin Drive

Eden Prairie, MN 55344

Attn: Jeffrey C. Mack, Chief Executive Officer

Dear Jeff:

     Reference is made to the Promissory Note of Wireless Ronin Technologies, Inc. (the “Company”)
issued to me dated December 27, 2005 in the principal amount of $300,000 (the “Note”). The Note
bears interest at the rate of 10% per annum and matures on June 27, 2006.

     You have advised me that the Company requires additional funding for its operations and to
meet its obligations, and have requested that I agree to defer payment of my Note and accept, in
lieu thereof, the Company’s bridge units (“Units”), each Unit consisting of a 12% convertible
promissory note in the original amount of $50,000 each and a five-year warrant to purchase 10,000
shares of the Company’s common stock. You have advised me that the Company completed a $2.775
million bridge unit offering in March 2006 and proposes to issue up to an additional $2.6 million
of Units pursuant to the terms of a private placement memorandum (“Memorandum”). A description of
the Company and the Units has been set forth in a preliminary private placement Memorandum which I
have received and reviewed.

     Based on the above, and in consideration of your payment to me of 34,000 shares of the
Company’s common stock, I agree to extend the maturity date of the payment of the Note, including
interest thereon which shall continue to accrue at the rate of 10% per annum. Further, there will
be no increase in interest on the Note pending the closing on the Units. The provisions for
payment of additional shares of stock or warrants for failure to pay off the Note will not be
applicable, unless the Company fails to complete a closing on the Units on or before July 31, 2006.
When the Company commences its bridge offering as described in the Memorandum, I agree, at the
initial closing, to exchange my Note for Units. The amount of the Note shall be equal to the
principal amount of the Company’s indebtedness to me, including interest. I will receive a
proportionate share of warrants for any partial Unit issued to me.

     My agreement herein shall be subject to the Company having completed an initial closing on its
additional bridge note offering on or before July 31, 2006. If such closing does not occur by such
date, the Note will revert to its original terms.

	 	 	 	 	 
	 

	 	Very truly yours,	 	 
	 
	 	 	 	 
	 

	 	/s/ Jack Norqual	 	 
	 

	 	 

Jack Norqualexv10w1

 

EXHIBIT 10.1

2006 EQUITY INCENTIVE PLAN

WIRELESS RONIN TECHNOLOGIES, INC.

2006 EQUITY INCENTIVE PLAN

	1.	 	Purpose of the Plan

     The purpose of the Wireless Ronin Technologies, Inc. 2006 Equity Incentive Plan is to permit
the Board of Directors to develop and implement a variety of stock-based programs based on the
changing needs of the Company. The Board of Directors and senior management of Wireless Ronin
Technologies, Inc. believe it is in the best interest of its shareholders for officers, employees
and certain other persons to own stock in the Company and that such ownership will enhance the
Company’s ability to attract highly qualified personnel, strengthen its retention capabilities,
enhance the long-term performance of the Company to vest in Participants a proprietary interest in
the success of the Company and to provide certain “performance-based compensation” within the
meaning of Section l62(m)(4)(C) of the Code.

	2.	 	Definitions

     As used in the Plan, the following definitions apply to the terms indicated below:

	 	(a)	 	“Affiliate” shall mean an entity (whether or not incorporated), controlling,
controlled by or under common control with the Company.
	 
	 	(b)	 	“Award” shall mean an Option, SAR, Restricted Stock or Restricted Stock Units,
Stock Bonus, Cash Bonus, Performance Awards, Warrant, Dividend Equivalent or other
equity-based award granted pursuant to the terms of the Plan.
	 
	 	(c)	 	“Award Agreement” shall mean an agreement, in such form and including such
terms as the Committee in its sole discretion shall determine, evidencing an Award.
	 
	 	(d)	 	“Beneficiary” shall mean upon the employee’s death, the employee’s successors,
heirs, executors and administrators, as the case may be.
	 
	 	(e)	 	“Board of Directors” or “Board” shall mean the Board of Directors of Wireless
Ronin Technologies, Inc.
	 
	 	(f)	 	“Cash Bonus” shall mean an award of a bonus payable in cash pursuant to Section
11 hereof.
	 
	 	(g)	 	“Cause” shall mean: (i) the Participant’s conviction of any crime (whether or
not involving the Company) constituting a felony in the jurisdiction involved; (ii)
conduct of the Participant related to the Participant’s employment for which either
criminal or civil penalties against the Participant or the Company may be sought; (iii)
a violation of law, rule, or regulation, act of embezzlement, fraud,

 

 

	 	 	 	dishonesty, breach of fiduciary duty resulting in loss, damage or injury to the
Company; (iv) material violation of the Company’s policies, including, but not
limited to those relating to sexual harassment, the disclosure or misuse of
confidential information, or those set forth in Company manuals or statements of
policy; (v) serious neglect or misconduct in the performance of the Participant’s
duties for the Company or willful or repeated failure or refusal to perform such
duties.
	 
	 	(h)	 	“Change in Control” shall mean the occurrence of any one of the following
events:

	 	(1)	 	An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of either (1) the then outstanding shares of
common stock of the Company (the “Outstanding Company Common Stock”) or (2) 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”); excluding, however, the following: (i) any
acquisition directly from the Company, other than an acquisition by virtue of
the exercise of a conversion privilege unless the security being so converted
was itself acquired directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any entity controlled by the Company,
or (iv) any acquisition pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (3) of this Section 2(h); or
	 
	 	(2)	 	A change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board (such Board
shall be hereinafter referred to as the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board; provided, however, for purposes
of this Section 2(h), that any individual who becomes a member of the Board
subsequent to the Effective Date, whose election, or nomination for election by
the Company’s shareholders, was approved by a vote of at least a majority of
those individuals who were members of the Board and who were also members of
the Incumbent Board (or became such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board; but,
provided, further, that any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board shall
not be so considered as a member of the Incumbent Board; or
	 
	 	(3)	 	Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company

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	 	 	 	(“Corporate Transaction”); excluding, however, such a Corporate Transaction
pursuant to which (i) all or substantially all of the individuals and
entities who are the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Voting Securities immediately prior to
such Corporate Transaction will beneficially own, directly or indirectly,
more than 50% of, respectively, the outstanding shares of common stock, and
the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly
or through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Corporation Transaction, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (other than the Company, any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Corporate Transaction) will beneficially own, directly
or indirectly, 50% or more of, respectively, the outstanding shares of
common stock of the corporation resulting from such Corporate Transaction or
the combined voting power of the outstanding voting securities of such
corporation entitled to vote generally in the election of directors except
to the extent that such ownership existed prior to the Corporate
Transaction, and (iii) individuals who were members of the Incumbent Board
will constitute at least a majority of the members of the board of directors
of the corporation resulting from such Corporate Transaction; or
	 
	 	(4)	 	The approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

	 	(i)	 	“Code” shall mean the Internal Revenue Code of 1986, as amended.
	 
	 	(j)	 	“Committee” shall mean the Compensation Committee of the Board of Directors;
provided, however, that the Committee shall at all times consist of two or more
persons, all of whom are “non-employee directors” within the meaning of Rule 16b-3
under the Exchange Act and “outside directors” within the meaning of Section 162(m) of
the Code. Each member of the Committee shall be an “independent director” as
determined in the Nasdaq Marketplace Rules or the rules or regulations of any exchange
on which Company Stock is traded, or any other applicable law or regulation.
	 
	 	(k)	 	“Company” shall mean Wireless Ronin Technologies, Inc. or any successor
thereto. References to the Company also shall include the Company’s Affiliates unless
the context clearly indicates otherwise.
	 
	 	(l)	 	“Company Stock” or “Stock” shall mean the common stock of the Company.

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	 	(m)	 	“Disability” shall mean the existence of a physical or mental condition that
qualifies for a benefit under the long-term disability plan sponsored by the Company
which applies to the Participant. The existence of a Disability shall be determined by
the Committee.
	 
	 	(n)	 	“Dividend Equivalents” means any right granted under Section 13.
	 
	 	(o)	 	“Eligible Person” shall mean any employee, officer, non-employee director or an
individual consultant or independent contractor providing services to the Company whom
the Committee determines to be an Eligible Person.
	 
	 	(p)	 	“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from
time to time.
	 
	 	(q)	 	“Fair Market Value” shall mean, with respect to a share of Company Stock on an
applicable date:

	 	(1)	 	If the principal market for the Company Stock (the “Market”) is
a national securities exchange or the NASDAQ Stock Market, the closing sale
price or, if no reported sales take place on the applicable date, the average
of the high bid and low asked price of Company Stock as reported for such
Market on such date or, if no such quotation is made on such date, on the next
preceding day on which there were quotations, provided that such quotations
shall have been made within the ten (10) business or trading days preceding the
applicable date; or
	 
	 	(2)	 	In the event that paragraph (1) above does not apply, the Fair
Market Value of a share of Company Stock on any day shall be determined in good
faith by the Committee in a manner consistently applied.

	 	(r)	 	“Immediate Family Members” shall mean a Participant’s spouse, child(ren) and
grandchild(ren).
	 
	 	(s)	 	“Incentive Stock Option” shall mean an Option that is an “incentive stock
option” within the meaning of Section 422 of the Code and that is identified as an
Incentive Stock Option in the agreement by which it is evidenced.
	 
	 	(t)	 	“Non-Qualified Stock Option” shall mean an Option that is not an Incentive
Stock Option within the meaning of Section 422 of the Code.
	 
	 	(u)	 	“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option
that is granted by the Committee pursuant to Section 6 hereof.
	 
	 	(v)	 	“Participant” shall mean an Eligible Person who receives or is designated to be
granted one or more Awards under the Plan.
	 
	 	(w)	 	“Performance Award” shall mean a right granted to an Eligible Person pursuant
to Section 12 of the Plan to receive a payment from the Company, in the form of

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	 	 	 	stock, cash or a combination of both, upon the achievement of established
employment, service, performance or other goals (each a “Performance Measure”). A
Performance Award shall be evidenced by an agreement, the “Performance Award
Agreement,” executed by the Participant and the Committee.
	 
	 	(x)	 	“Performance Measures” shall mean any one or more of the following performance
measures or criteria, either individually, alternatively or in any combination, applied
to either the Company as a whole or to a business unit or Subsidiary, either
individually, alternatively or in any combination, and measured either annually or
cumulatively over a period of years, on an absolute basis or relative to a
pre-established target, to previous years’ results or to a designated comparison group,
in each case as specified by the Committee in the Award within the time period
prescribed by Section 162(m) of the Code and related regulations: (i) revenue; (ii)
cash flow; (iii) earnings per share; (iv) income before taxes, or earnings before
interest, taxes, depreciation and amortization; (v) return on
equity; (vi) total
shareholder return; (vii) share price performance;
(viii) return on capital; (ix)
return on assets or net assets; (x) income or net income; (xi) operating income or net
operating income; (xii) operating profit or net operating profit; (xiii) operating
margin or profit margin; (xiv) return on operating revenue; (xv) return on invested
capital; (xvi) market segment share; (xvii) product release
schedules; (xviii) new
product innovation; (xix) product cost reduction through
advanced technology; (xx)
brand recognition/acceptance; (xxi) product ship or sales
targets; (xxii) customer
segmentation or satisfaction; (xxiii) customer account profitability; or (xxiv)
economic value added (or equivalent metric).
	 
	 	(y)	 	“Person” shall mean a “person,” as such term is used in Sections 13(d) and
14(d) of the Exchange Act.
	 
	 	(z)	 	“Plan” shall mean this Wireless Ronin Technologies, Inc. 2006 Incentive Plan,
as it may be amended from time to time.
	 
	 	(aa)	 	“Restricted Stock” shall mean an award of Company Stock, the grant, issuance,
retention and/or vesting of which is subject to such restrictions, conditions and terms
as are provided in an Award Agreement.
	 
	 	(bb)	 	“Restricted Stock Award” shall mean an award of Stock granted to an Eligible
Person pursuant to Section 9 of the Plan that is subject to the restrictions on
transferability and the risk of forfeiture imposed by the provisions of such Section 9.
	 
	 	(cc)	 	“Restricted Stock Unit” shall mean any award of the right to receive
Restricted Stock or a cash payment equal to the fair market value of such Company Stock
upon the occurrence of some future event, such as the termination of employment, under
the terms set forth in an Award Agreement.

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	 	(dd)	 	“SAR” or “Stock Appreciation Right” shall mean the right to receive in whole or
in part in cash or whole shares of common stock, the Fair Market Value of a share of
Company Stock, which right is granted pursuant to Section 7 hereof and subject to the
terms and conditions contained therein.
	 
	 	(ee)	 	“Securities Act” shall mean the Securities Act of 1933, as amended from time to
time.
	 
	 	(ff)	 	“Stock Bonus” shall mean a grant of a bonus payable in shares of Company Stock
pursuant to Section 10 hereof.
	 
	 	(gg)	 	“Subsidiary” shall mean a company (whether a Company, partnership, joint
venture or other form of entity) in which the Company, or a company in which the
Company owns a majority of the shares of capital stock directly or indirectly, owns an
equity interest of fifty percent (50%) or more, and shall have the same meaning as the
term “Subsidiary Company” as defined in Section 424(f) of the Code.
	 
	 	(hh)	 	“Vesting Date” shall mean the date established by the Committee on which a
Participant has the ability to acquire all or a portion of a grant of a Stock Option or
other Award, or the date upon which the restriction on a Restricted Stock or Restricted
Stock Units grant shall lapse.
	 
	 	(ii)	 	“Warrant” shall mean any right granted under Section 8 of the Plan.

	3.	 	Stock Subject to the Plan

	 	(a)	 	Plan Limit.

     Subject to adjustment as provided in Section 15 hereof, the Committee may grant Awards
hereunder with respect to shares of Company Stock that in the aggregate do not exceed 1,000,000
shares. The grant of an Award shall not reduce the number of shares of Company Stock with respect
to which Awards may be granted pursuant to the Plan, except to the extent shares of common stock
are issuable pursuant thereto. Shares subject to Awards granted under the Plan shall count against
the foregoing limits at the time they are granted but shall again become available for grant under
the Plan as follows:

	 	(1)	 	To the extent that any Options, together with any related
rights granted under the Plan, terminate, expire or are cancelled without
having exercised the shares covered by such Options, such shares shall again be
available for grant under the Plan;
	 
	 	(2)	 	To the extent that any Warrants, together with any related
rights granted under the Plan, terminate, expire or are cancelled without
having exercised the shares covered by such Warrants, such shares shall again
be available for grant under the Plan;

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	 	(i)	 	To the extent any shares of Restricted Stock or
Restricted Stock Units or any shares of Company Stock granted as a
Stock Bonus are forfeited or cancelled for any reason, such shares
shall again be available for grant under the Plan; or
	 
	 	(ii)	 	To the extent any shares are issued upon the
exercise of an Award by the surrender or tender of Previously Acquired
Shares, surrendered or tendered shares shall be available for grant
under the Plan.

     Shares of Company Stock issued under the Plan may be either newly issued shares or treasury
shares, at the discretion of the Committee.

     The
 maximum number of shares of Company Stock that may be issued in the form of Restricted
Stock, Stock Bonuses or Restricted Stock Units, is an aggregate of one million (1,000,000) shares.

	 	(b)	 	Individual Limit.

     Subject to adjustment as provided in Section 15 hereof, the Committee shall not in any
calendar year grant Awards hereunder to any individual Participant with respect to more than
300,000 shares of Company Stock, which limit shall include any shares represented by an Award that
has been cancelled. Such Awards may be made up entirely of any one type of Award or any
combination of types of Awards available under the Plan, in the Committee’s sole discretion.

	4.	 	Administration of the Plan

	 	(a)	 	The Plan shall be administered by the Committee. Subject to the express
provisions and limitations set forth in the Plan, the Committee shall be authorized and
empowered to do all things necessary or desirable, in its sole discretion, in
connection with the administration of the Plan, including, without limitation, the
following:

	 	(1)	 	to prescribe, amend and rescind rules and regulations relating
to the Plan and to define terms not otherwise defined herein;
	 
	 	(2)	 	to determine which persons are Participants, to which of such
Participants, if any, Awards shall be granted hereunder and the timing of any
such Awards;
	 
	 	(3)	 	to grant Awards to Participants and determine the terms and
conditions thereof, including the number of shares subject to Awards and the
exercise or purchase price of such shares and the circumstances under which
Awards become exercisable or vested or are forfeited or expire, which terms may
but need not be conditioned upon the passage of time, continued employment, the
satisfaction of performance criteria, the occurrence of certain events, or
other factors;

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	 	(4)	 	to establish or verify the extent of satisfaction of any
Performance Measures or other conditions applicable to the grant, issuance,
exercisability, vesting and/or ability to retain any Award;
	 
	 	(5)	 	to prescribe and amend the terms of agreements or other
documents evidencing Awards made under the Plan (which need not be identical);
	 
	 	(6)	 	to determine whether, and the extent to which, adjustments are
required pursuant to Section 15;
	 
	 	(7)	 	to interpret and construe the Plan, any rules and regulations
under the Plan and the terms and conditions of any Award granted hereunder, and
to make exceptions to any such provisions in good faith and for the benefit of
the Company;
	 
	 	(8)	 	without amending the Plan, to grant Awards to Eligible Persons
who are foreign nationals performing services for the Company outside of the
United States, if any on such terms and conditions different from those
specified in the Plan as may in the judgment of the Committee be necessary to
foster and promote achievement of the purposes of the Plan and, in furtherance
of such purposes, the Committee may adopt, ratify or make such modifications,
amendments, procedures, subplans and the like as may be necessary or advisable
to comply with provisions of laws in other countries or jurisdictions in which
the Company or its subsidiaries operates or has employees; and
	 
	 	(9)	 	to make all other determinations deemed necessary or advisable
for the administration of the Plan.

The Company intends that the most substantial number of Awards granted under the Plan to Eligible
Persons whom the Committee believes will be “covered employees” under Section 162(m)(3) of the Code
will constitute “qualified performance-based compensation” within the meaning of Section 162(m) of
the Code.

	 	(b)	 	The Committee’s determinations under the Plan may, but need not, be uniform and
may be made on a Participant-by-Participant basis (whether or not two or more
Participants are similarly situated).
	 
	 	(c)	 	All decisions, determinations and interpretations by the Committee regarding
the Plan shall be final and binding on all Participants. The Committee shall consider
such factors as it deems relevant to making such decisions, determinations and
interpretations including, without limitation, the recommendations or advice of any
director, officer or employee of the Company and such attorneys, consultants and
accountants as it may select.
	 
	 	(d)	 	The Committee may, without amendment to the Plan, (i) accelerate the date on
which any Option, SAR, Performance Award, Warrant or Stock Bonus granted under the Plan
becomes exercisable, or otherwise adjust any of the terms of an

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	 	 	 	Award (except that no such adjustment shall, without the consent of a Participant,
reduce the Participant’s rights under any previously granted and outstanding Award
unless the Committee determines that such adjustment is necessary or appropriate to
prevent such Award from constituting “applicable employee remuneration” within the
meaning of Section 162(m) of the Code), (ii) subject to Section 9(a), waive any
condition of an Award, or otherwise adjust any of the terms of such Award; provided,
however, that (A) other than in connection with a change in the Company’s
capitalization as described in Section 15, the exercise price of any Option, SAR or
other form of Award may not be reduced without approval of the Company’s
shareholders; and (B) the amount payable to a covered employee with respect to a
qualified performance-based Award may not be adjusted upwards and the Committee may
not waive or alter Performance Measures associated with an Award in a manner that
would violate Section 162(m) of the Code; or (iii) as to any Award not intended to
constitute “performance-based compensation” under Section 162(m) of the Code, at any
time prior to the end of a performance period, the Committee may revise the
Performance Measures and the computation of payment if unforeseen events occur which
have a substantial effect on the performance of the Company, any subsidiary,
division, Affiliate or joint venture of the Company and which, in the judgment of
the Committee, make the application of the Performance Measures unfair to the
Company or a Participant unless a revision is made. Notwithstanding the forgoing
provisions of this Section 4(d), neither the Committee nor the Board may, except for
adjustments pursuant to Section 15, or as a result of a Change in Control,
materially amend a Restricted Stock or Restricted Stock Unit Award, including an
acceleration or waiver of a restriction thereof.
	 
	 	(e)	 	The Committee may determine whether an authorized leave of absence, change in
status, or absence in military or government service, shall constitute termination of
employment, subject to applicable law.
	 
	 	(f)	 	No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company shall indemnify and hold harmless
each member of the Committee and each other director or employee of the Company to whom
any duty or power relating to the administration or interpretation of the Plan has been
delegated against any cost or expense (including counsel fees) or liability (including
any sum paid in settlement of a claim with the approval of the Committee) arising out
of any action, omission or determination relating to the Plan, unless, in either case,
such action, omission or determination was taken or made by such member, director or
employee in bad faith and without reasonable belief that it was in the best interests
of the Company.

	5.	 	Eligible Persons

     The persons who shall be eligible to receive Awards pursuant to the Plan shall be those
Eligible Persons defined in Section 2(o) who are designated by the Committee.

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	6.	 	Options

     The Committee may grant Options pursuant to the Plan. Each Option shall be evidenced by an
Award Agreement in such form and including such terms as the Committee shall from time to time
approve. Except as otherwise provided in the Plan, Options shall comply with and be subject to the
following terms and conditions:

	 	(a)	 	Identification of Options.

     Each Option granted under the Plan shall be clearly identified in the applicable Award
Agreement as either an Incentive Stock Option or as a Non-Qualified Stock Option. In the absence
of such identification, an Option shall be deemed to be a Non-Qualified Stock Option.

	 	(b)	 	Exercise Price.

     The exercise price-per-share of any Option granted under the Plan shall be such price as the
Committee shall determine which shall not be less than 100% of the Fair Market Value of a share of
Company Stock on the date on which such Option is granted, except as permitted in connection with
the issuance of Options in a transaction to which Section 424(a) of the Code applies.

	 	(c)	 	Term and Exercise of Options.

	 	(1)	 	Except as provided in the Plan or in an Award Agreement, each
Option shall remain exercisable until the expiration of ten (10) years from the
date such Option was granted; provided, however, that each Stock Option shall
be subject to earlier termination, expiration or cancellation as otherwise
provided in the Plan.
	 
	 	(2)	 	Each Option shall be exercisable in whole or in part; provided,
however, that no partial exercise of an Option shall be for an aggregate
exercise price of less than $1,000 unless such partial exercise represents the
entire unexercised portion of the Option or the entire portion of the Option
that is then exercisable. The partial exercise of an Option shall not cause
the expiration, termination or cancellation of the remaining portion thereof.
Upon the partial exercise of an Option, the Award Agreement evidencing such
Option shall be returned to the Participant exercising such Option together
with the delivery of the certificates described in Section 6(c)(4) hereof.
	 
	 	(3)	 	An Option shall be exercised by delivering notice to the
Company’s principal office, to the attention of its Secretary, no less than
five business days in advance of the effective date of the proposed exercise,
and by paying the Company the full purchase price of the shares to be acquired
upon exercise of the Option in the manner provided in Section 14(j). Such
notice shall be accompanied by the Award Agreement or Agreements evidencing the
Option shall specify the number of shares of Company Stock with respect to
which the Option is being exercised and the effective

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	 	 	 	date of the proposed exercise and shall be signed by the Participant. The
Participant may withdraw such notice at any time prior to the close of
business on the business day immediately preceding the effective date of the
proposed exercise, in which case such Award Agreement or Agreements shall be
returned to him.
	 
	 	(4)	 	Certificates for shares of Company Stock purchased upon the
exercise of an Option shall be issued in the name of the Participant or his or
her Beneficiary (or permitted transferee), as the case may be, and delivered to
the Participant or his or her Beneficiary (or permitted transferee), as the
case may be, as soon as practicable following the effective date on which the
Option is exercised.
	 
	 	(5)	 	The Committee may at its sole discretion on a case by case
basis, in any applicable agreement evidencing an Option (other than, to the
extent inconsistent with the requirements of Section 422 of the Code, an
Incentive Stock Option), permit a Participant to transfer all or some of the
Options to (A) the Participant’s Immediate Family Members, or (B) a trust or
trusts for the exclusive benefit of such Immediate Family Members. Following
any such transfer, any transferred Options shall continue to be subject to the
same terms and conditions as were applicable immediately prior to the transfer.

	 	(d)	 	Limitations on Grant of Incentive Stock Options.

	 	(1)	 	To the extent that the aggregate Fair Market Value (determined
as of the time the option is granted) of any stock with respect to which
Incentive Stock Options granted under the Plan and all other plans of the
Company (and any plans of any “Subsidiary Company” or
“Parent Company” of the
Company within the meaning of Section 424 of the Code) are first exercisable by
any employee during any calendar year shall exceed the maximum limit, if any,
imposed from time to time under Section 422 of the Code, such Options in excess
of such limit shall be treated as Non-Qualified Stock Options. In such an
event, the determination of which Options shall remain Incentive Stock Options
and which shall be treated as Non-Qualified Stock Options shall be based on the
order in which such Options were granted. All other terms and provisions of
such Options that are deemed to be Non-Qualified Stock Options shall remain
unchanged.
	 
	 	(2)	 	No Incentive Stock Option may be granted to an individual if,
at the time of the proposed grant, such individual owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any of its “Subsidiary Companies” (within the meaning
of Section 424 of the Code), unless (A) the exercise price of such Incentive
Stock Option is at least one hundred ten percent (110%) of the Fair Market
Value of a share of Company Stock at the time such Incentive Stock Option is
granted and (B) such Incentive Stock Option is not

11

 

	 	 	 	exercisable after the expiration of five years from the date such Incentive
Stock Option is granted.

	7.	 	Stock Appreciation Rights (SARs)

     The Committee may grant SARs pursuant to the Plan, which SARs shall be evidenced by Award
Agreements in such form as the Committee shall from time to time approve. SARs shall comply with
and be subject to the following terms and conditions:

	 	(a)	 	Exercise Price.

     The exercise price of any SAR granted under the Plan shall be determined by the Committee at
the time of the grant of such SAR, which shall not be less than 100% of the Fair Market Value of a
share of Company Stock on the date on which such SAR is granted.

	 	(b)	 	Benefit Upon Exercise.

	 	(1)	 	The exercise of a SAR with respect to any number of shares of
Company Stock shall entitle a Participant to a payment, for each such share,
equal to the excess of (A) the Fair Market Value of a share of Company Stock on
the exercise date over (B) the exercise price of the SAR. Payment may be made
in whole or in part in cash, whole shares of the Company’s common stock, or a
combination of cash and stock.
	 
	 	(2)	 	All payments under this Section 7(b) shall be made as soon as
practicable, but in no event later than five business days, after the effective
date of the exercise of the SAR.

	 	(c)	 	Term and Exercise of SARs.

	 	(1)	 	Each SAR shall be exercisable on such date or dates, during
such period and for such number of shares of Company Stock as shall be
determined by the Committee and set forth in the agreement evidencing such SAR;
provided, however, that no SAR shall be exercisable after the expiration of ten
(10) years from the date such SAR was granted; and, provided, further, that each SAR
shall be subject to earlier termination, expiration or cancellation as provided
in the Plan.
	 
	 	(2)	 	Each SAR, may be exercised in whole or in part; provided,
however, that no partial exercise of a SAR shall be for an aggregate exercise
price of less than $1,000. The partial exercise of a SAR shall not cause the
expiration, termination or cancellation of the remaining portion thereof. Upon
the partial exercise of a SAR, the Award Agreement evidencing such SAR, marked
with such notations as the Committee may deem appropriate to evidence such
partial exercise, shall be returned to the Participant exercising such SAR,
together with the payment described in Section 7(b)(1) or 7(b)(2) hereof.

12

 

	 	(3)	 	A SAR shall be exercised by delivering notice to the Company’s
principal office, to the attention of its Secretary, no less than five business
days in advance of the effective date of the proposed exercise. Such notice
shall be accompanied by the applicable Award Agreement evidencing the SAR,
shall specify the number of shares of Company Stock with respect to which the
SAR is being exercised and the effective date of the proposed exercise, and
shall be signed by the Participant. The Participant may withdraw such notice
at any time prior to the close of business on the business day immediately
preceding the effective date of the proposed exercise, in which case the Award
Agreement evidencing the SAR shall be returned to him.
	 
	 	(4)	 	Except as otherwise provided in an applicable Award Agreement,
during the lifetime of a Participant, each SAR granted to a Participant shall
be exercisable only by the Participant and no SAR shall be assignable or
transferable otherwise than by will or by the laws of descent and distribution.
The Committee may, in any applicable Award Agreement evidencing a SAR, permit
a Participant to transfer all or some of the SAR to (A) the Participant’s
Immediate Family Members, or (B) a trust or trusts for the exclusive benefit of
such Immediate Family Members. Following any such transfer, any transferred
SARs shall continue to be subject to the same terms and conditions as were
applicable immediately prior to the transfer.

	8.	 	Warrants

     The Committee may grant Warrants pursuant to the Plan. Each Warrant shall be evidenced by an
Award Agreement in such form and including such terms as the Committee shall from time to time
approve. Except as otherwise provided in the Plan, Warrants shall comply with and be subject to
the following terms and conditions:

	 	(a)	 	Identification of Warrants.

     Each Warrant granted under the Plan shall be identified as such in the applicable Award
Agreement.

	 	(b)	 	Exercise Price.

     The exercise price-per-share of any Warrant granted under the Plan shall be such price as the
Committee shall determine which shall not be less than 100% of the Fair Market Value of a share of
Company Stock on the date on which such Warrant is granted, except as permitted in connection with
the issuance of Warrants in a transaction to which Section 424(a) of the Code applies.

	 	(c)	 	Term and Exercise of Warrants.

	 	(1)	 	Except as provided in the Plan or in an Award Agreement, each
Warrant shall remain exercisable until the expiration of ten (10) years from
the date

13

 

	 	 	 	such Warrant was granted; provided, however, that each Warrant shall be
subject to earlier termination, expiration or cancellation as otherwise
provided in the Plan.
	 
	 	(2)	 	Each Warrant shall be exercisable in whole or in part;
provided, however, that no partial exercise of a Warrant shall be for an
aggregate exercise price of less than $1,000 unless such partial exercise
represents the entire unexercised portion of the Warrant or the entire portion
of the Warrant that is then exercisable. The partial exercise of a Warrant
shall not cause the expiration, termination or cancellation of the remaining
portion thereof. Upon the partial exercise of a Warrant, the Award Agreement
evidencing such Warrant shall be returned to the Participant exercising such
Warrant together with the delivery of the certificates described in Section
6(c)(4) hereof.
	 
	 	(3)	 	A Warrant shall be exercised by delivering notice to the
Company’s principal office, to the attention of its Secretary, no less than
five business days in advance of the effective date of the proposed exercise,
and by paying the Company the full purchase price of the shares to be acquired
upon exercise of the Warrant in the manner provided in Section 14(j). Such
notice shall be accompanied by the Award Agreement or Agreements evidencing the
Warrant and shall specify the number of shares of Company Stock with respect to
which the Warrant is being exercised and the effective date of the proposed
exercise and shall be signed by the Participant. The Participant may withdraw
such notice at any time prior to the close of business on the business day
immediately preceding the effective date of the proposed exercise, in which
case such Award Agreement or Agreements shall be returned to him.
	 
	 	(4)	 	Certificates for shares of Company Stock purchased upon the
exercise of a Warrant shall be issued in the name of the Participant or his or
her Beneficiary (or permitted transferee), as the case may be, and delivered to
the Participant or his or her Beneficiary (or permitted transferee), as the
case may be, as soon as practicable following the effective date on which the
Warrant is exercised.
	 
	 	(5)	 	The Committee may at its sole discretion on a case-by-case
basis, in any applicable agreement evidencing a Warrant, permit a Participant
to transfer all or some of the Warrants to (A) the Participant’s Immediate
Family Members, or (B) a trust or trusts for the exclusive benefit of such
Immediate Family Members. Following any such transfer, any transferred
Warrants shall continue to be subject to the same terms and conditions as were
applicable immediately prior to the transfer.

14

 

	9.	 	Restricted Stock or Restricted Stock Units

     The Committee may grant shares of Restricted Stock or Restricted Stock Units pursuant to the
Plan, and may provide that a portion of a Participant’s compensation may be granted in the form of
Restricted Stock or Restricted Stock Units. Each grant of shares of Restricted Stock or Restricted
Stock Units shall be evidenced by an Award Agreement in such form and containing such terms and
conditions and subject to such agreements or understandings as the Committee shall from time to
time approve. Each grant of shares of Restricted Stock or Restricted Stock Units shall comply with
and be subject to the following terms and conditions:

	 	(a)	 	Issue Date and Vesting Date; Minimum Restriction Period.

     At the time of the grant of Restricted Stock or Restricted Stock Units, the Committee shall
establish the date of issuance and vesting with respect to such shares or Awards. In the case of
Restricted Stock Units, no shares of Company Stock shall be issued when the Award is granted, but
rather upon the lapse of restrictions and the restricted period, at which time, shares of Company
Stock or other cash or property shall be issued to the Participant holding the Restricted Stock
Units. The restriction period for an Award of Restricted Stock and Restricted Stock Units shall
not be less than three (3) years, except that a restriction period of at least one (1) year is
permitted if the Award is performance based.

	 	(b)	 	Conditions to Vesting.

     At the time of the grant of Restricted Stock or Restricted Stock Units, the Committee may
impose such restrictions and conditions, not inconsistent with the provisions hereof, to the vesting
of such shares or units, as it, in its absolute discretion, deems appropriate. By way of example
and not by way of limitation, the Committee may require, as a condition to the vesting of any class
or classes of Restricted Stock or Restricted Stock Units, that the Participant or the Company
achieve such Performance Measures including, but not limited to the period of active service as the
Committee may specify at the time of the grant.

	 	(c)	 	Restrictions on Transfer Prior to Vesting.

     Prior to the vesting of Restricted Stock or Restricted Stock Units, no transfer of a
Participant’s rights with respect to such shares or units, whether voluntary or involuntary, by
operation of law or otherwise, shall vest the transferee with any interest or right in or with
respect to such shares or units, but immediately upon any attempt to transfer such rights, such
shares or units, and all of the rights related thereto, shall be forfeited by the Participant and
the transfer shall be of no force or effect.

	 	(d)	 	Certificates.

     Restricted Stock issued prior to the Vesting Date may be certificated or uncertificated, as
determined by the Committee.

	 	(1)	 	Except as otherwise provided in this Section 9 hereof,
reasonably promptly after the date identified in the Award Agreement for
issuance of certificated shares of Restricted Stock, the Company shall cause to
be

15

 

	 	 	 	issued a stock certificate, registered in the name of the Participant to
whom such shares were granted, evidencing such shares; provided, that the
Company shall not cause to be issued such a stock certificate unless it has
received a stock power duly endorsed in blank with respect to such shares.
Each such stock certificate shall bear the following legend:

	 	 	 	The transferability of this certificate and the shares of stock represented hereby are subject to the
restrictions, terms and conditions (including
forfeiture provisions and restrictions against
transfer) contained in the Wireless Ronin
Technologies, Inc. 2006 Equity Incentive Plan and an
Award Agreement entered into between the registered
owner of such shares and Wireless Ronin Technologies,
Inc. A copy of the Plan and Award Agreement is on
file in the office of the Secretary of Wireless Ronin
Technologies, Inc., 14700 Martin Drive, Eden Prairie,
MN 55344.

	 	 	 	Such legend shall not be removed from the certificate evidencing
such shares until such shares vest pursuant to the terms of the
Award Agreement.

	 	(2)	 	Each certificate issued pursuant to Section 9(d)(1) hereof,
together with the stock powers relating to the shares of Restricted Stock
evidenced by such certificate, shall be deposited by the Company with a
custodian designated by the Company (which custodian may be the Company). The
Company shall cause such custodian to issue to the Participant a receipt
evidencing the certificates held by it which are registered in the name of the
Participant.

	 	(e)	 	Consequences Upon Vesting.

     Upon the vesting of a share of Restricted Stock pursuant to the terms hereof, the restrictions
of Section 9(c) hereof shall cease to apply to such share. Reasonably promptly after a share of
Restricted Stock vests pursuant to the terms hereof, the Company shall cause to be issued and
delivered to the Participant to whom such shares (whether certificated or uncertificated) were
granted, a certificate evidencing such share, free of the legend set forth in Section 9(d)(1)
hereof, together with any other property of the Participant held by the custodian pursuant to
Section 9(d) hereof.

	 	(f)	 	Failure to Vest.

     Except as may be provided by the Committee, in the event of a Participant’s termination of
employment or relationship with the Company prior to all of his Restricted Stock becoming vested,
or in the event any conditions to the vesting of Restricted Stock have not been satisfied prior to
the deadline for the satisfaction of such conditions as set forth in the Award, the shares

16

 

of Restricted Stock which have not vested shall be forfeited, and the Committee may provide
that (i) any purchase price paid by the Participant be returned to the Participant or (ii) a cash
payment equal to the Restricted Stock’s Fair Market Value on the date of forfeiture, if lower be
paid to the Participant.

	 	(g)	 	Voting Rights and Dividends.

     The Participant shall have the right to vote all shares of Restricted Stock during the period
the restriction is enforced. Whenever such voting rights are to be exercised, the Company shall
provide the Participant with the same notices and other materials as are provided to other holders
of the Stock, and the Participant shall be provided adequate opportunity to review the notices and
material and vote the Restricted Stock allocated to him or her. Any dividends authorized by the
Company to be paid to the Participant during the period the restriction is enforced, will be
subject to the same restrictions as the underlying shares upon which the dividend is declared.

	10.	 	Stock Bonuses

      The Committee may grant Stock Bonuses in such amounts as it shall determine from time to time,
subject to the limit set forth in Section 3 hereof. A Stock Bonus shall be in lieu of all or a
portion of a Participant’s salary or bonus and shall be paid at such time (including a future date
selected by the Committee at the time of grant) and subject to such conditions as the Committee
shall determine at the time of the grant of such Stock Bonus. By way of example and not by way of
limitation, the Committee may require, as a condition to the payment of a Stock Bonus, that the
Participant or the Company achieve such Performance Measures as the Committee may specify at the
time of the grant. Certificates for shares of Company Stock granted as a Stock Bonus shall be
issued in the name of the Participant to whom such grant was made and delivered to such Participant
as soon as practicable after the date on which such Stock Bonus is required to be paid. Prior to
the date on which a Stock Bonus awarded hereunder is required to be paid, such Award shall
constitute an unfunded, unsecured promise by the Company to distribute Company Stock in the future.

	11.	 	Cash Bonuses

      The Committee may, in its absolute discretion, in connection with any grant of Restricted
Stock, Restricted Stock Units, Stock Bonus, Warrants or Non-Qualified Stock Options or at any time
thereafter, grant a Cash Bonus, payable promptly after the date on which the Participant is
required to recognize income for federal income tax purposes in connection with such grant of
Restricted Stock, Restricted Stock Units, Non-Qualified Stock Options, Warrants or Stock Bonuses,
in such amounts as the Committee shall determine from time to time; provided, however, that in no
event shall the amount of a Cash Bonus exceed the Fair Market Value of the related shares of
Restricted Stock or Restricted Stock Units or Stock Bonus on such date on the limits set forth in
Section 3(b). A Cash Bonus shall be subject to such conditions as the Committee shall determine at
the time of the grant of such Cash Bonus. Notwithstanding anything contained herein to the
contrary, a Cash Bonus is intended to be qualified performance-based compensation under Section
162(m) and the rules and regulations thereunder, and no

17

 

payment shall be made under any such Cash Bonus until the Committee certifies in writing that
the Performance Measures for the performance period have in fact been achieved.

	12.	 	Performance Awards

      The Committee may grant Performance Awards which may be earned based upon achievement of
Performance Measures. With respect to each such award, the Committee shall establish a performance
period over which achievement of Performance Measures shall be determined and performance measures
to be met or exceeded. Such standards shall be established at the time of such award and set forth
in the Award Agreement.

	 	(a)	 	Performance Awards.

     Each Performance Award shall have a maximum value established by the Committee at the time of
such award.

	 	(b)	 	Performance Measures.

     Performance Awards shall be awarded to an Eligible Person contingent upon future performance
of the Company and/or the Company’s subsidiary, division or department in which such person is
employed over the performance period. The Committee shall establish the Performance Measures
applicable to such performance.

	 	(c)	 	Award Criteria.

     In determining the value of Performance Awards, the Committee shall take into account an
eligible person’s responsibility level, performance, potential, cash compensation level,
unexercised Options, other incentive awards and such other considerations as it deems appropriate.
Notwithstanding the preceding sentence, to the extent necessary for a Performance Award payable in
cash to be qualified performance-based compensation under Section 162(m) of the Code and the rules
and regulations thereunder, the maximum amount that may be paid under all such Performance Awards
to any one person during any calendar year shall be $1,500,000.

	 	(d)	 	Payment.

     Following the end of each performance period, the Participant holding each Performance Award
shall be entitled to receive payment of an amount, not exceeding the maximum value of the
Performance Award, based on the achievement of the Performance Measures for such performance
period, as determined by the Committee. Payment of Performance Awards may be made wholly in cash,
wholly in shares of common stock or a combination thereof, all at the discretion of the Committee.
Payment shall be made in a lump sum or in installments, and shall be subject to such vesting and
other terms and conditions as may be prescribed by the Committee for such purpose in the Award
Agreement. Notwithstanding anything contained herein to the contrary, in the case of a Performance
Award intended to be qualified performance-based compensation under Section 162(m) and the rules
and regulations thereunder, no payment shall be made under any such Performance Award until the
Committee certifies in writing that the Performance Measures for the performance period have in
fact been achieved.

18

 

	 	(e)	 	Other Terms and Conditions.

     When a Performance Award is payable in installments in common stock, if determined by the
Committee, one or more stock certificates or book-entry credits registered in the name of the
Participant representing shares of common stock which would have been issuable to the Participant
if such payment had been made in full on the day following the end of the applicable performance
period may be registered in the name of such Participant, and during the period until such
installment becomes due such Participant shall have the right to receive dividends (or the cash
equivalent thereof) and shall also have the right to vote such common stock and all other
shareholder rights (in each case unless otherwise provided in the agreement evidencing the
Performance Award), with the exception that (i) the Participant shall not be entitled to delivery
of any stock certificate until the installment payable in shares becomes due, (ii) the Company
shall retain custody of any stock certificates until such time and (iii) the Participant may not
sell, transfer, pledge, exchange, hypothecate or dispose of such common stock until such time. A
distribution with respect to shares of common stock payable in installments which has not become
due, other than a distribution in cash, shall be subject to the same restrictions as the shares of
common stock with respect to which such distribution was made, unless otherwise determined by the
Committee.

	 	(f)	 	Performance Award Agreements.

     Each Performance Award shall be evidenced by an agreement in such form and containing such
provisions not inconsistent with the provisions of the Plan as the Committee from time to time
shall approve.

	13.	 	Dividend Equivalents and Other Equity-Based Awards

      The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under
which the Participant shall be entitled to receive payments (in cash, shares, other securities,
other Awards or other property as determined in the discretion of the Committee) equivalent to the
amount of cash dividends paid by the Company to holders of shares with respect to a number of
shares determined by the Committee. Subject to the terms of the Plan, such Dividend Equivalents
may have such terms and conditions as the Committee shall determine. The Committee may grant other
types of equity-based Awards in such amounts and subject to such terms and conditions, as the
Committee shall in its sole discretion may determine, subject to the provisions of the Plan. Stock
Awards may entail the transfer of actual shares of Company Stock to Participants, or payment in
cash or otherwise of amounts based on the value of shares of Company Stock.

	14.	 	Other Provisions Applicable to Awards.

	 	(a)	 	Change in Control.

	 	(1)	 	Acceleration of vesting.

      Notwithstanding any other provision of the Plan to the contrary, unless
otherwise provided by the Committee in any Award Agreement, in the event of a Change
in Control:

19

 

	 	(i)	 	Any Options, Stock Appreciation Rights and
Warrants outstanding as of the date of such Change in Control, and
which are not then exercisable and vested, shall become fully
exercisable and vested.
	 
	 	(ii)	 	The restrictions and deferral limitations
applicable to any Restricted Stock or Restricted Stock Units shall
lapse, and such Restricted Stock or Restricted Stock Units shall
become free of all restrictions and become fully vested.
	 
	 	(iii)	 	All Performance Awards shall be considered to
be earned and payable in full, and any deferral or other restriction
shall lapse and such Performance Awards shall be settled in cash or shares, as determined by the Committee, as promptly as is practicable.
	 
	 	(iv)	 	All restrictions on other Awards shall lapse
and such Awards shall become free of all restrictions and become fully
vested.

	 	(2)	 	Cash Payment for Options.

      If a Change in Control of the Company occurs, then the Committee, if approved
by the Committee in its sole discretion either in an Award Agreement issued at the
time of the grant or at any time after the grant of an Award, and without the
consent of any Participant affected thereby, may determine that:

	 	(i)	 	some or all Participants holding outstanding
Awards will receive, with respect to some or all of the shares of
Company Stock subject to such Awards, as of the effective date of any
such Change in Control of the Company, cash in an amount equal to the
excess of the Fair Market Value of such shares immediately prior to the
effective date of such Change in Control of the Company over the
exercise price per share of such Awards; and
	 
	 	(ii)	 	with respect to any granted and outstanding
Award, the Fair Market Value of the shares of Company Stock underlying
such Award is less than or equal to the exercise price per share of
such Award as of the effective date of the applicable Change in Control
and the Award, therefore, shall terminate as of the effective date of
the applicable Change in Control.

     If the Committee makes a determination as set forth in subparagraph (i) of this subsection
(2), then as of the effective date of any such Change in Control of the Company such Awards will
terminate as to such shares and the Participants formerly holding such Awards will only have the
right to receive such cash payment(s). If the Committee makes a determination as set forth in
subparagraph (ii) of this subsection (2), then as of the effective date of any such Change in
Control of the Company such Awards will terminate, become void and expire as to all unexercised
shares of Common Stock subject to such Awards on such date, and the Participants formerly holding
such Awards will have no further rights with respect to such Awards.

20

 

	 	(3)	 	Limitation on Change in Control Payments.

      Any limitations on payments made due to a Change in Control shall be set forth
in the Award Agreement.

	 	(b)	 	Suspension or Cancellation for Cause.

      If the Committee reasonably believes that a Participant has committed an act of misconduct
which the Committee determines may constitute Cause, it may suspend the Participant’s right to
exercise any rights under an Award pending a determination by the Committee. If the employment of
a Participant is terminated by the Company for Cause, then the Committee shall have the right to
cancel any Awards granted to the Participant, whether or not vested, under the Plan. Any rights
the Company may have hereunder in respect of the events giving rise to Cause shall be in addition
to the rights the Company may have under any other agreement with a Participant or at law or in
equity. Any determination of whether a Participant’s employment is (or is deemed to have been)
terminated for Cause shall be made by the Committee in its sole discretion, which determination
shall be final and binding on all parties. If, subsequent to a Participant’s termination of
employment (whether voluntary or involuntary) without Cause, it is discovered that the
Participant’s employment could have been terminated for Cause, such Participant’s employment shall
be deemed to have been terminated for Cause. A Participant’s termination of employment for Cause
shall be effective as of the date of the occurrence of the event giving rise to Cause, regardless
of when the determination of Cause is made.

	 	(c)	 	Right of Recapture.

      If at any time within one year after the date on which a Participant exercises rights under an
Award, or if income is realized by a Participant in connection with any other stock-based award
(each of which events shall be a “realization event”), if the Committee determines in its
discretion that the Company has been materially harmed by the Participant, whether such harm (i)
results in the Participant’s termination or deemed termination of employment for Cause or (ii)
results from any activity of the Participant determined by the Committee to be in competition with
any activity of the Company, or otherwise prejudicial, contrary or harmful to the interests of the
Company (including, but not limited to, accepting employment with or serving as a consultant,
adviser or in any other capacity to an entity that is in competition with or acting against the
interest of the Company), then any gain realized by the Participant from the realization event
shall be paid by the Participant to the Company upon notice from the Company. Such gain shall be
determined as of the date of the realization event, without regard to any subsequent change in the
Fair Market Value of a share of Company Stock. The Company shall have the right to offset such
gain against any amounts otherwise owed to the Participant by the Company (whether as wages,
vacation pay, or pursuant to any benefit plan or other compensatory arrangement).

	 	(d)	 	Forfeiture for Financial Reporting Misconduct.

     If the Company is required to prepare an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial reporting

21

 

requirement under the securities laws, if the Participant knowingly or grossly negligently
engaged in the misconduct, or if one of the individuals subject to automatic forfeiture under
Section 304 of the Sarbanes – Oxley Act of 2002, the Participant shall reimburse the Company the
amount of any payment in settlement of an Award, and the income realized by a Participant in
connection with any other stock based award, earned or accrued during the twelve (12) month period
following the first public issuance or filing with the Securities and Exchange Commission (which
ever just occurred) of the financial document embodying such financial reporting requirement.

	 	(e)	 	Consideration of Awards.

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

	 	(f)	 	Awards May Be Granted Separately or Together.

      Awards may, in the discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award granted under any plan of the
Company other than the Plan. Awards granted in addition to or in tandem with other Awards or in
addition to or in tandem with awards granted under any such other plan of the Company may be
granted either at the same time as or at a different time from the grant of such other Awards or
awards.

	 	(g)	 	No Limit on Other Compensation Arrangements.

      Nothing contained in the Plan shall prevent the Company from adopting or continuing in effect
other or additional compensation arrangements, and such arrangements may be either generally
applicable or applicable only in specific cases.

	 	(h)	 	No Right to Employment, etc.

      The grant of an Award shall not be construed as giving a Participant the right to be retained
in the employ of the Company. In addition, the Company may at any time dismiss a Participant from
employment, free from any liability or any claim under the Plan, unless otherwise provided in the
Plan or in any Award Agreement.

	 	(i)	 	No Fractional Shares.

      No fractional shares shall be issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash shall be paid in lieu of a fractional share, or whether
fractional rights shall be cancelled or otherwise eliminated.

	 	(j)	 	Forms of Payment Under Awards.

      Subject to the terms of the Plan, payments or transfers to be made by the Company upon the
grant, exercise or settlement of an Award may be made in such form or forms as the Committee shall
determine (including, without limitation, cash, shares, other securities, other

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Awards or other property or any combination thereof), and may be made in a single payment or
transfer, in installments, in each case in accordance with rules of the Committee.

      Except as provided herein, the purchase price of each share of Stock purchased by an Eligible
Person or transferee upon the exercise of any Option or other Award requiring payment shall be
paid: (i) in United States Dollars in cash or by check, bank draft or money order payable to the
order of the Company; (ii) at the discretion of the Committee, through the delivery of shares of
Stock, having initially or as a result of successive exchanges of shares, an aggregate fair market
value (as determined in the manner provided under this Plan) equal to the aggregate purchase price
for the Stock as to which the Option is being exercised; (iii) at the discretion of the Committee,
by a combination of both (i) and (ii) above; or (iv) by such other method as may be permitted in
the written stock option agreement between the Company and the Optionee.

	 	(k)	 	Limits on Transfer of Awards.

      Subject to Sections 6(c), 7(c) and 8(c), no Award and no right under any such Award shall be
transferable by a Participant otherwise than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act or the rules promulgated thereunder; provided, however, that, if so
determined by the Committee, a Participant may designate a beneficiary or beneficiaries to
exercise the rights of the Participant and receive any property distributable with respect to any
Award upon the death of the Participant. Except as otherwise provided in Sections 6(c), 7(c) or
8(c), or any applicable Award Agreement or amendment thereto, each Award or right under any Award
shall be exercisable during the Participant’s lifetime only by the Participant or, if permissible
under applicable law, by the Participant’s guardian or legal representative. Any Award which is
transferred pursuant to a qualified domestic relations order or as otherwise permitted by the Plan
and the applicable Award Agreement shall remain subject to the terms and conditions set forth in
the Award Agreement and the Plan. Except as otherwise provided in any applicable Award Agreement
or amendment thereto, no Award or right under any such Award may be pledged, alienated, attached or
otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall
be void and unenforceable against the Company.

	 	(l)	 	Term of Awards.

      The term of each Award shall be for such periods as may be determined by the Committee at the
time of grant but in no event shall any Award have a term of more than 10 years.

	15.	 	Adjustment Upon Changes in Company Stock

	 	(a)	 	Adjustments.

      In the event that any dividend or other distribution (whether in the form of cash, shares,
other securities or other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of
shares or other securities of the Company or other similar corporate transaction or event affecting
shares of the Company would be reasonably likely to result in the diminution or enlargement of any
of the

23

 

benefits or potential benefits intended to be made available under the Plan or under an Award
(including, without limitation, the benefits or potential benefits of provisions relating to the
term, vesting or exercisability of any Option, Warrant or the availability of any Stock
Appreciation Rights, if any, contained in any Award, and any Change in Control or similar
provisions of any Award), the Committee shall, in such manner as it shall deem equitable or
appropriate in order to prevent such diminution or enlargement of any such benefits or potential
benefits, adjust any or all of (i) the number and type of shares (or other securities or other
property) which thereafter may be made the subject of Awards under the Plan, (ii) the number and
type of shares (or other securities or other property) subject to outstanding Awards and (iii) the
purchase or exercise price with respect to any Award.

	 	(b)	 	Outstanding Restricted Stock.

      Unless the Committee in its absolute discretion otherwise determines, any securities or other
property (including dividends paid in cash) received by a Participant with respect to a share of
Restricted Stock, which has passed its issuance date but has not vested as of the date of such
event, as a result of any dividend, stock split, reverse stock split, recapitalization, merger,
consolidation, combination, exchange of shares or otherwise, not involving a Change in Control,
shall not vest until such share of Restricted Stock vests in accordance with a Participant’s Award
Agreement, and shall be promptly deposited with the custodian designated pursuant to Paragraph
9(d)(2) hereof.

	16.	 	Rights as a Shareholder

      No person shall have any rights as a shareholder with respect to any shares of Company Stock
covered by or relating to any Option Warrant or Restricted Stock Unit granted pursuant to the Plan
until the date that the Participant becomes the registered owner of such shares. Except as
otherwise expressly provided in Section 15 hereof, no adjustment to any Option Warrant or
Restricted Stock Unit shall be made for dividends or other rights for which the record date occurs
prior to the date such stock certificate is issued.

	17.	 	No Special Employment Rights; No Right to Award

	 	(a)	 	Nothing contained in the Plan or any Award shall confer upon any Participant
any right with respect to the continuation of his or her employment by the Company or
interfere in any way with the right of the Company, subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such employment
or to increase or decrease the compensation of the Participant from the rate in
existence at the time of the grant of an Award.
	 
	 	(b)	 	No person shall have any claim or right to receive an Award hereunder. The
Committee’s granting of an Award to a Participant at any time shall neither require the
Committee to grant an Award to such Participant or any other Participant or other
person at any time nor preclude the Committee from making subsequent grants to such
Participant or any other Participant or other person.

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	18.	 	Securities Matters

	 	(a)	 	The Company shall be under no obligation to effect the registration pursuant to
the Securities Act of any interests in the Plan or any shares of Company Stock to be
issued hereunder or to effect similar compliance under any state laws. Notwithstanding
anything herein to the contrary, the Company shall not be obligated to cause to be
issued or delivered any certificates evidencing shares of Company Stock pursuant to the
Plan unless and until the Company is advised by its counsel that the issuance and
delivery of such certificates is in compliance with all applicable laws, regulations of
governmental authority and the requirements of any securities exchange or market on
which shares of Company Stock are traded. The Committee may require, as a condition of
the issuance and delivery of certificates evidencing shares of Company Stock pursuant
to the terms hereof, that the recipient of such shares make such covenants, agreements
and representations, and that such certificates bear such legends, as the Committee, in
its sole discretion, deems necessary or desirable.
	 
	 	(b)	 	The exercise of any Option granted hereunder shall be effective only at such
time as counsel to the Company shall have determined that the
issuance and delivery of shares of Company Stock pursuant to such exercise is in compliance with all applicable
laws, regulations of governmental authority and the requirements of any securities
exchange or market on which shares of Company Stock are traded.

	19.	 	Compliance with Rule 16b-3

      It is intended that the Plan be applied and administered in compliance with Rule l6b-3. If
any provision of the Plan would be in violation of Rule 16b-3 if applied as written, such provision
shall not have effect as written and shall be given effect so as to comply with Rule l6b-3, as
determined be the Committee. The Committee is authorized to amend the Plan and to make any such
modifications to Award Agreements to comply with Rule l6b-3, as it may be amended from time to
time, and to make any other such amendments or modifications deemed necessary or appropriate to
better accomplish the purposes of the Plan in light of any amendments made to Rule 16b-3.

	20.	 	Tax Matters

	 	(a)	 	Withholding. To the extent required by applicable federal, state,
local or foreign law, the Committee may and/or a Participant shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax obligations
that arise with respect to any issuance, exercise or vesting of an Award, or any
disposition of shares of Company Stock. The Company shall not be
required to issue shares or to recognize the disposition of such shares until such obligations are
satisfied. To the extent permitted or required by the Committee, these obligations may
or shall be satisfied by having the Company withhold a portion of the shares of stock
that otherwise would be issued to a Participant under such Award or by tendering a
Participant’s Previously Acquired Shares.

25

 

	 	(b)	 	Required Consent to and Notification of Code Section 83(b) Election.
No election under Section 83(b) of the Code (to include in gross income in the year of
transfer the amounts specified in Code Section 83(b)) or under a similar provision of
the laws of a jurisdiction outside the United States may be made unless expressly
permitted by the terms of the Award Agreement or by action of the Committee in writing
prior to the making of such election. In any case in which a Participant is permitted
to make such an election in connection with an Award, the Participant shall notify the
Company of such election within ten (10) days of filing notice of the election with the
Internal Revenue Service or other governmental authority, in addition to any filing and
notification required pursuant to regulations issued under Code Section 83(b) or other
applicable provision.
	 
	 	(c)	 	Requirement of Notification Upon Disqualifying Disposition Under Code
Section 421(b). If any Participant shall make any disposition of shares of stock
delivered pursuant to the exercise of an ISO under the circumstances described in Code
Section 421(b) (i.e., a disqualifying disposition), such Participant shall notify the
Company of such disposition within ten (10) days thereof.

	21.	 	Amendments

      Except to the extent prohibited by applicable law and unless otherwise expressly provided in
the Plan:

	 	(a)	 	Amendments to the Plan.

      The Board of Directors of the Company may amend, alter, suspend, discontinue or terminate the
Plan at any time and from time to time; provided, however, that, notwithstanding any other
provision of the Plan or any Award Agreement, without the approval of the shareholders of the
Company, no such amendment, alteration, suspension, discontinuation or termination shall be made
that, absent such approval, would (i) increase the number of shares that may be issued under the
Plan; (ii) permit granting of Options at less than the market price of Company Stock; (iii) permit
the repricing of outstanding Options; (iv) amend the maximum shares set forth that may be granted
as Options, Stock Appreciation Rights, Warrants, Restricted Stock or Restricted Stock Units or
Stock Bonus to any Participant; (v) extend the term of the Plan; (vi) change the class of persons
eligible to participate in the Plan; or (vii) otherwise implement any amendment required to be
approved by shareholders under the rules of any applicable stock exchange or NASDAQ Marketplace
Rules.

	 	(b)	 	Correction of Defects, Omissions and Inconsistencies.

      The Committee may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable to carry the Plan
into effect.

	22.	 	No Obligation to Exercise

      The grant to a Participant of an Option, Warrant, SAR, Performance Award or other equity-based
Awards shall impose no obligation upon such Participant to exercise such Award.

26

 

	23.	 	Transfers Upon Death

      No transfer by will or the laws of descent and distribution of any Stock Award, or the right
to exercise any Stock Award, shall be effective to bind the Company unless the Committee shall have
been furnished with (a) written notice thereof and with a copy of the will and/or such evidence as
the Committee may deem necessary to establish the validity of the transfer and (b) an agreement by
the transferee to comply with all the terms and conditions of the Stock Award that are or would
have been applicable to the Participant and to be bound by the acknowledgments made by the
Participant in connection with the grant of the Stock Award.

	24.	 	Expenses and Receipts

      The expenses related to administering the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Stock Award will be used for general corporate
purposes.

	25.	 	Limitations Imposed By Section 162(m)

      Notwithstanding any other provision hereunder, prior to a Change in Control, if and to the
extent that the Committee determines the Company’s federal tax deduction in respect of a Stock
Award may be limited as a result of Section 162(m) of the Code, the Committee may take the
following actions:

	 	(a)	 	With respect to Options, SARs, Warrants or Restricted Stock Units, the
Committee may delay the payment in respect to such Options, SARs, Warrants or
Restricted Stock Units until a date that is within 30 days after the earlier to occur
of (i) the date that compensation paid to the Participant no longer is subject to the
deduction limitation under Section 162(m) of the Code and (ii) the occurrence of a
Change in Control. In the event that a Participant exercises an Option, Warrants or
SAR at a time when the Participant is a “covered employee,” and the Committee
determines to delay the payment in respect of such any Stock Award, the Committee shall
credit cash or, in the case of an amount payable in Company Stock, the Fair Market
Value of the Company Stock, payable to the Participant to a book-entry account
established in the Participant’s name in the financial records of the Company. The
Participant shall have no rights in respect of such account and the amount credited
thereto shall not be transferable by the Participant other than by will or laws of
descent and distribution. The Committee may credit additional amounts to such account
as it may determine in its sole discretion. Any account created hereunder shall
represent only an unfunded unsecured promise by the Company to pay the amount credited
thereto to the Participant in the future.
	 
	 	(b)	 	With respect to Restricted Stock or Restricted Stock Units and Stock Bonuses,
the Committee may require the Participant to surrender to the Committee any
certificates with respect to Restricted Stock and Stock Bonuses in order to cancel the
Awards of such Restricted Stock or Restricted Stock Units and Stock Bonuses (and any
related Cash Bonuses). In exchange for such cancellation, the Committee shall credit
to a book-entry account established in the Participant’s

27

 

	 	 	 	name in the financial records of the Company a cash amount equal to the Fair Market
Value of the shares of Company Stock subject to such awards. The amount credited to
such account shall be paid to the Participant within 30 days after the earlier to
occur of (i) the date that compensation paid to the Participant no longer is subject
to the deduction limitation under Section 162(m) of the Code and (ii) the occurrence
of a Change in Control. The Participant shall have no rights in respect of such
account and the amount credited thereto shall not be transferable by the Participant
other than by will or laws of descent and distribution. The Committee may credit
additional amounts to such account as it may determine in its sole discretion. Any
account created hereunder shall represent only an unfunded unsecured promise by the
Company to pay the amount credited thereto to the Participant in the future.

	26.	 	Compliance with Section 409A of the Code

      Notwithstanding anything herein to the contrary, any Award that is deferred compensation
within the meaning of Code Section 409A shall be automatically modified and limited to the extent
that the Committee determines necessary to avoid the imposition of the additional tax under Code
Section 409A(9)(1)(B) on a Participant holding such Award.

	27.	 	Failure to Comply

      In addition to the remedies of the Company elsewhere provided for herein, a failure by a
Participant (or beneficiary or permitted transferee) to comply with any of the terms and conditions
of the Plan or Agreement, unless such failure is remedied by such Participant (or a beneficiary or
permitted transferee) within ten (10) days after having been notified of such failure by the Committee,
shall be grounds for the cancellation and forfeiture of such Award, in whole or in part, as the
Committee, in its absolute discretion, may determine. No Participant will have rights under an
Award granted to such Participant unless and until an Award Agreement shall have been duly executed
on behalf of the Company.

	28.	 	Effective Date of Plan

      This Plan was adopted by the Board of Directors on March 30, 2006, subject to approval by the
shareholders of the Company, such approval to occur no later than March 29, 2007. The Plan shall
be effective upon such approval (the “Effective Date”).

	29.	 	Term of the Plan

      The
Plan and the right to grant Awards under the Plan will terminate on
the tenth (10th) anniversary
of the effective date unless terminated earlier.

	30.	 	Severability of Provisions

      If any provision of the Plan is held to be invalid or unenforceable, the other provisions of
the Plan shall not be affected but shall be applied as if the invalid or unenforceable provision
had not been included in the Plan.

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	31.	 	Applicable Law

      Except to the extent preempted by any applicable law, the Plan will be construed and
administered in accordance with the laws of the State of Minnesota, without reference to the
principles of conflicts of law.

	32.	 	No Trust or Fund Created

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

29

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