Document:

exv10w1

Exhibit 10.1

SURMODICS, INC.

2009 EQUITY INCENTIVE PLAN

1. Purpose. The purpose of the SurModics, Inc. 2009 Equity Incentive Plan (the “Plan”) is
to promote the interests of the Company and its shareholders by providing key personnel of, and
advisors to, the Company and its Affiliates with an opportunity to acquire a proprietary interest
in the Company. The opportunity to acquire a proprietary interest in the Company will aid in
attracting, motivating and retaining key personnel and advisors, including Non-Employee Directors,
and will align their interests with those of the Company’s shareholders.

2. Definitions. The capitalized terms used in the Plan have the meanings set forth below.

     (a) “Affiliate” means a corporation or other entity controlled by, controlling or
under common control with the Company.

     (b) “Agreement” means any written or electronic agreement, instrument or document
evidencing the grant of an Award in a form approved by the Committee, including all amendments
thereto.

     (c) “Award” means a grant made under the Plan in the form of Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares or Other
Stock-Based Award.

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

     (e) “Cause” means the Participant’s (i) incompetence or failure or refusal to perform
satisfactorily any duties reasonably required of the Participant by the Company; (ii) violation of
any law, rule or regulation (other than traffic violations, misdemeanors or similar offenses) or
cease-and-desist order, court order, judgment, regulatory directive or agreement; (iii) commission
or omission of, or engaging in, any act or practice that constitutes a material breach of the
Participant’s fiduciary duty to the Company, involves personal dishonesty on the part of the
Participant or demonstrates a willful or continuing disregard for the best interests of the
Company; (iv) engaging in dishonorable or disruptive behavior, practices or acts which would be
reasonably expected to harm or bring disrepute to the Company, its business or any of its
customers, employees or vendors; (v) any failure of the Participant to materially conform to the
Company’s Code of Ethics and Business Conduct; or (vi) the Participant’s material breach of any
confidentiality, non-disclosure, non-solicitation, non-competition, invention assignment or similar
agreement with the Company or any Affiliate.

     (f) “Change in Control” means one of the following:

     (1) Any “person” (as defined in Sections 13(d) and 14(d) of the Exchange Act) acquires
or becomes a “beneficial owner” (as defined in Rule 13d-3 or any successor rule under the
Exchange Act), directly or indirectly, of securities of the Company representing 35% or more
of the combined voting power of the then outstanding securities entitled to vote generally
in the election of directors (“Voting Securities”), provided, however, that the following
shall not constitute a Change in Control:

     (A) any acquisition of beneficial ownership by the Company or a subsidiary of
the Company;

 

 

     (B) any acquisition or beneficial ownership by any employee benefit plan (or
related trust) sponsored or maintained by the Company or one or more of its
subsidiaries;

     (C) any acquisition or beneficial ownership by any corporation (including
without limitation an acquisition in a transaction of the nature described in part
(3) of this definition) with respect to which, immediately following such
acquisition, more than 65%, respectively, of (x) the combined voting power of the
Company’s then outstanding Voting Securities and (y) the Company’s then outstanding
Common Stock is then beneficially owned, directly or indirectly, by all or
substantially all of the persons who beneficially owned Voting Securities and Common
Stock, respectively, of the Company immediately prior to such acquisition in
substantially the same proportions as their ownership of such Voting Securities and
Common Stock, as the case may be, immediately prior to such acquisition;

     (D) any acquisition of Voting Securities or Common Stock directly from the
Company; or

     (E) any acquisition of beneficial ownership by the Participant or a group,
acting in concert, that includes the Participant;

     (2) Continuing Directors shall not constitute a majority of the members of the Board.
For purposes of this Plan, “Continuing Directors” means: (A) individuals who, on the
effective date of this Plan, are directors of the Company, (B) individuals elected as
directors of the Company subsequent to the effective date of this Plan for whose election
proxies shall have been solicited by the Board or (C) any individual elected or appointed by
the Board to fill vacancies on the Board caused by death or resignation (but not by removal)
or to fill newly-created directorships, provided that a “Continuing Director” shall not
include an individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the threatened election or removal of directors
(or other actual or threatened solicitation of proxies or consents) by or on behalf of any
person other than the Board; or

     (3) Consummation of a reorganization, merger or consolidation of the Company or a
statutory exchange of outstanding Voting Securities of the Company, unless immediately
following such reorganization, merger, consolidation or exchange, all or substantially all
of the persons who were the beneficial owners, respectively, of Voting Securities and Common
Stock immediately prior to such reorganization, merger, consolidation or exchange
beneficially own, directly or indirectly, more than 65% of, respectively, (x) the combined
voting power of the then outstanding voting securities entitled to vote generally in the
election of directors and (y) the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger, consolidation or exchange in substantially the
same proportions as their ownership, immediately prior to such reorganization, merger,
consolidation or exchange, of the Voting Securities and Common Stock, as the case may be;
provided, however, that such a transaction shall not be deemed to be a Change in Control
with respect to a Participant if a majority of the then combined voting power of the then
outstanding voting securities (or voting equity interests) of the surviving corporation or
of any corporation (or other entity) acquiring all or substantially all of the assets of the
Company shall be beneficially owned, directly or indirectly, immediately after a
reorganization, merger, consolidation, exchange or disposition of assets referred to above,
by the Participant or by a group, acting in concert, that includes the Participant.

Notwithstanding the foregoing, for purposes of Awards hereunder that are subject to the
provisions of Code Section 409A, no Change in Control shall be deemed to have occurred upon
an event described in clauses (1) through (3) above that would have the effect of changing
the

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time or form of payment of such Award unless such event would also constitute a change
in the ownership or effective control of, or a change in the ownership of a substantial
portion of the assets of, the Company for purposes of Code Section 409A.

     (g) “Code” means the Internal Revenue Code of 1986, as amended and in effect from time
to time, and the regulations promulgated thereunder.

     (h) “Committee” means two or more Non-Employee Directors designated by the Board to
administer the Plan under Section 3 hereof, each member of which shall be (i) an independent
director within the meaning of the rules and regulations of The NASDAQ Stock Market, (ii) a
non-employee director within the meaning of Exchange Act Rule 16b-3, and (iii) an “outside
director” for purposes of Code Section 162(m).

     (i) “Common Stock” means the common stock, par value $.05, of the Company.

     (j) “Company” means SurModics, Inc., a Minnesota corporation, or any successor thereto.

     (k) “Continuing Directors” has the meaning set forth in Section 2(f)(2).

     (l) “Corporate Transaction” means (i) dissolution or liquidation of the Company, (ii)
a sale of substantially all of the assets of the Company, or (iii) a merger or consolidation of the
Company with or into any other corporation, regardless of whether the Company is the surviving
corporation.

     (m) “Disability” means, unless otherwise defined in an Agreement, any medically
determinable physical or mental impairment that causes the Participant to be unable to carry out
his job responsibilities for a continuous period of more than six months, in the sole determination
of the Committee.

     (n) “Employee” means an employee (including an officer or director who is also an
employee) of the Company or an Affiliate.

     (o) “Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect
from time to time.

     (p) “Fair Market Value” of a Share means the closing sale price of a Share on the
NASDAQ Global Select Market (or such other national securities exchange as may at the time be the
principal market for the Shares) on the date of determination (or if no sale occurred on that day,
on the next preceding day on which a sale of Shares occurred). If the Shares are not then listed
and traded upon a national securities exchange but are regularly quoted on an automated quotation
system or by a recognized securities dealer, Fair Market Value of a Share shall be the closing sale
price (or the average of the high bid and low asked prices if selling prices are not reported) on
such system or by such dealer on the date of determination (or if no such prices were reported on
that day, on the last day such prices were reported). In the absence of an established market for
the Shares as described above, Fair Market Value of a Share will be what the Committee determines
in good faith and in a manner consistent with Code Section 409A to be 100% of the fair market value
of a Share on that date.

     (q) “FAS 123R” has the meaning set forth in Section 17.

     (r) “Grant Date” means the date on which the Committee approves the grant of an Award
under the Plan, or such later date as may be specified by the Committee on the date the Committee
approves the Award.

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     (s) “Incentive Stock Option” or “ISO” means any Option designated as such and
granted in accordance with the requirements of Code Section 422.

     (t) “Non-Employee Director” means a member of the Board who is not an Employee.

     (u) “Non-Statutory Stock Option” means an Option other than an Incentive Stock Option.

     (v) “Option” means a right granted under the Plan to purchase a specified number of
Shares at a specified price.

     (w) “Other Stock-Based Award” means an Award described in Section 12 of this Plan.

     (x) “Parent” means a “parent corporation,” as defined in Code Section 424(e), of the
Company.

     (y) “Participant” means a person to whom an Award is or has been made in accordance
with the Plan.

     (z) “Performance-Based Compensation” means an Award to a person who is, or is
determined by the Committee to likely become, a “covered employee” (as defined in Code Section
162(m)(3)) and that is intended to constitute “performance-based compensation” within the meaning
of Code Section 162(m)(4)(C).

     (aa) “Performance Measures” means any measures of performance established by the
Committee that must be satisfied as a condition precedent to the vesting of an Award of
Performance-Based Compensation. Performance Measures shall consist of any one, or a combination
of, the following attributes of the Company: (i) revenue; (ii) net income; (iii) shareholders
equity; (iv) earnings per share; (v) return on equity; (vi) return on assets; (vii) total
shareholder return; (viii) net operating income; (ix) cost controls; (x) cash flow; (xi) operating
cash flow; (xii) increase in revenue; (xiii) economic value added; (xiv) increase in share price or
earnings; (xv) return on investment; (xvi) return on invested capital; (xvii) department or
business unit performance goals; (xviii) client contracting goals; (xix) technological and business
development milestones and contracting goals; (xx) increase in market share; (xxi) regulatory,
clinical or commercial milestones; and (xxii) quality control, in all cases including, if selected
by the Committee, threshold, target and maximum levels. Any Performance Measure utilized may be
expressed in absolute amounts, on a per share basis, as a growth rate or change from preceding
periods, or as a comparison to the performance of specified companies or other external measures,
and may relate to one or any combination of corporate, group, unit, division, Affiliate or
individual performance.

     (bb) “Performance Period” means the period of time, as specified in an Agreement,
during which Performance Measures must be achieved.

     (cc) “Performance Shares” means the right to receive a designated number of Shares
upon the achievement of specified levels of one or more Performance Measures as provided in this
Plan and the applicable Agreement.

     (dd) “Prior Plan” means the SurModics, Inc. 2003 Equity Incentive Plan, as amended and
restated.

     (ee) “Plan” has the meaning set forth in Section 1.

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     (ff) “Restricted Stock” means Shares issued to a Participant that are subject to such
restrictions on transfer, forfeiture conditions and other restrictions or limitations as may be set
forth in this Plan and the applicable Agreement.

     (gg) “Restricted Stock Unit” means a right to receive, in cash and/or Shares as
determined by the Committee, the Fair Market Value of a Share, subject to such restrictions on
transfer, forfeiture conditions and other restrictions or limitations as may be set forth in this
Plan and the applicable Agreement.

     (hh) “Securities Act” means the Securities Act of 1933, as amended and in effect from
time to time.

     (ii) “Service” means the provision of services by a Participant to the Company or any
Affiliate in any Service Provider capacity. A Service Provider’s Service shall be deemed to have
terminated either upon an actual cessation of providing services, or upon the entity for which the
Service Provider provides services ceasing to be an Affiliate. Except as otherwise provided in any
Agreement, Service shall not be deemed terminated in the case of (i) any approved leave of absence;
(ii) transfers among the Company and any Affiliates in any Service Provider capacity; or (iii) any
change in status so long as the individual remains in the service of the Company or any Affiliate
in any Service Provider capacity.

     (jj) “Service Provider” means an Employee, a Non-Employee Director, or any consultant
or advisor who is a natural person and who provides services to the Company or any Affiliate.

     (kk) “Share” means a share of Common Stock.

     (ll) “Stock Appreciation Right” or “SAR” means the right to receive, in cash
and/or Shares as determined by the Committee, an amount equal to the appreciation in value of a
specified number of Shares between the Grant Date of the SAR and its exercise date.

     (mm) “Subsidiary” means a “subsidiary corporation,” as defined in Code Section 424(f),
of the Company.

     (nn) “Substitute Award” means an Award granted upon the assumption of, or in
substitution or exchange for, outstanding awards granted by a company or other entity acquired by
the Company or any Affiliate or with which the company or any Affiliate combines.

     (oo) “Successor” means the guardian or legal representative of an incompetent
Participant, or if the Participant is deceased, means the estate of the Participant or the person
or persons who may, by bequest or inheritance, or pursuant to the terms of an Award, acquire the
right to exercise an Option or Stock Appreciate Right or to receive cash and/or Shares issuable in
satisfaction of an Award in the event of a Participant’s death.

     (pp) “Termination Date” has the meaning set forth in Section 16(b).

     (qq) “Transferee” means any “family member” (as defined by Rule 701(c)(3) under the
Securities Act) of the Participant.

     (rr) “Voting Securities” has the meaning set forth in Section 2(f)(1).

3. Administration of the Plan.

     (a) Administration. The authority to control and manage the operations and
administration of the Plan shall be vested in the Committee in accordance with this Section 3.

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     (b) Scope of Authority. Subject to the terms of the Plan, the Committee shall have
the exclusive authority, in its discretion, to take such actions as it deems necessary or advisable
to administer the Plan, including:

     (1) determining the Service Providers to whom Awards will be granted, the timing of
each such Award, the types of Awards and the number of Shares covered by each Award, the
terms, conditions, performance criteria, restrictions and other provisions of Awards, and
the manner in which Awards are paid or settled;

     (2) cancelling or suspending an Award, accelerating the vesting or extending the
exercise period of an Award, or otherwise amending the terms and conditions of any
outstanding Award, subject to the requirements of Sections 16(c) and (d); and

     (3) establishing, amending or rescinding rules to administer the Plan, interpreting the
Plan and any Award or Agreement made under the Plan, and making all other determinations
necessary or desirable for the administration of the Plan.

Notwithstanding anything in this Plan to the contrary, the Board shall perform the duties and have
the responsibilities of the Committee with respect to Awards made to Non-Employee Directors.

     (c) Acts of the Committee; Delegation. A majority of the members of the Committee
shall constitute a quorum for any meeting of the Committee, and any act of a majority of the
members present at any meeting at which a quorum is present or any act unanimously approved in
writing by all members of the Committee shall be the act of the Committee. To the extent not
inconsistent with applicable law or stock exchange rules, the Committee may delegate all or any
portion of its authority under the Plan to determine and administer Awards to Participants who are
not subject to Section 16 of the Exchange Act to one or more persons who are either Non-Employee
Directors or executive officers of the Company.

     (d) Finality of Decisions. The Committee’s interpretation of the Plan and of any
Award or Agreement made under the Plan, and all related decisions or resolutions of the Board or
Committee, shall be final and binding on all parties with an interest therein.

     (e) Indemnification. Each person who is or has been a member of the Committee or of
the Board, and any other person to whom the Committee delegates authority under the Plan in
accordance with Section 3(c), shall be indemnified and held harmless by the Company, to the extent
permitted by law, against and from (i) any loss, cost, liability or expense that may be imposed
upon or reasonably incurred by such person in connection with or resulting from any claim, action,
suit or proceeding to which such person may be a party or in which such person may be involved by
reason of any action taken or failure to act, made in good faith, under the Plan and (ii) any and
all amounts paid by such person in settlement thereof, with the Company’s approval, or paid by such
person in satisfaction of any judgment in any such action, suit or proceeding against such person,
provided such person shall give the Company an opportunity, at the Company’s expense, to handle and
defend the same before such person undertakes to handle and defend it on such person’s own behalf.
The foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such person or persons may be entitled under the Certificate of
Incorporation or Bylaws of the Company, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them harmless.

4. Shares Available Under the Plan.

     (a) Maximum Shares Available. Subject to Sections 4(b) and 4(c), and to adjustment as
provided in Section 17, a total of 1,500,000 Shares shall be authorized for grant under the Plan.
All Shares authorized for grant under this Plan may be granted as Incentive Stock Options. In
determining the

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number of Shares to be counted against this limit in connection with any Award, the
following rules shall apply:

     (1) Each Share that is subject to an Award of Options or Stock Appreciation Rights
shall be counted against the Shares available for distribution under this Plan as one Share.

     (2) Each Share (or security that is convertibly into, or equivalent to, a Share) that
is subject to any Award other than Options or Stock Appreciation Rights shall be counted
against the Shares available for distribution under this Plan as one and one-half (1.50)
Shares.

     (3) Where the number of Shares subject to the Award is variable on the Grant Date, the
number of Shares to be counted against the limit prior to the settlement of the Award shall
be the maximum number of Shares that could be received under that particular Award.

     (4) Where two or more types of Awards are granted to a Participant in tandem with each
other, such that the exercise of one type of Award with respect to a number of Shares
cancels at least an equal number of Shares of the other, the number of Shares to be counted
against the limit prior to the settlement of the Award shall be the largest number of Shares
that would be counted against the limit under either of the Awards.

     (b) Effect of Forfeitures and Other Actions. To the extent that any Award is
forfeited or terminates without vesting, or any Option or Stock Appreciation Right terminates,
expires or lapses without being exercised, the Shares subject to such Award not delivered as a
result thereof shall again be available for Awards under the Plan. Shares tendered or withheld to
pay the exercise price of an Option or to pay any tax withholding related to any Award will count
against the limitations set forth in Section 4(a) and will not be added back to the Shares
available under the Plan. When a Stock Appreciation Right that may be settled for Shares is
exercised, the number of Shares subject to the Agreement shall be counted against the number of
Shares available for issuance under the Plan as one Share for every Share subject thereto,
regardless of the number of Shares used to settle the Stock Appreciation Right upon exercise.

     (c) Forfeitures Under Prior Plan. To the extent that any stock option or
restricted stock award is forfeited or terminates without vesting, or any stock option terminates,
expires or lapses without being exercised, under the Prior Plan, the Shares subject to such stock
option or restricted stock award not delivered as a result thereof shall be available for Awards
under the Plan. Notwithstanding the foregoing, Shares tendered or withheld to pay the exercise
price of a stock option or to pay tax withholding on an award under the Prior Plan will not be
added back to the Shares available under the Plan.

     (d) Source of Shares. Shares issued under the Plan shall be authorized and unissued
Shares. No fractional Shares may be issued under the Plan, but the Committee may, in its
discretion, pay cash in lieu of any fractional Share in settlement of an Award.

     (e) Individual Option and SAR Limit. The aggregate number of Shares subject to
Options and/or Stock Appreciation Rights granted during any calendar year to any one Participant
shall not exceed 200,000.

5. Eligibility. Participation in the Plan shall be limited to (i) Service Providers and
(ii) any individual the Company desires to induce to become a Service Provider, so long as any such
inducement grant is contingent upon such individual becoming a Service Provider. Notwithstanding
the foregoing, Incentive Stock Options may only be granted to Employees.

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6. General Terms of Awards.

     (a) Award Agreement. Except for Other Stock-Based Awards that involve only the
immediate issuance of unrestricted and fully vested Shares, each Award shall be evidenced by an
Agreement setting forth the number of Shares subject to the Award together with such other terms
and conditions applicable to the Award (and not inconsistent with the Plan) as determined by the
Committee. An Award to a Participant may be made singly or in combination with any form of Award.

     (b) Vesting and Term. Each Agreement shall set forth the period until the applicable
Award is scheduled to expire and any applicable Performance Period. The Committee may provide for
such vesting conditions as it may determine.

     (c) Transferability. Except as provided in this Section 6(c), (i) during the lifetime
of a Participant only the Participant (or that Participant’s Successor) may exercise an Option or
Stock Appreciation Right, or receive payment with respect to any other Award; and (ii) no Award may
be sold, assigned, transferred, exchanged or encumbered other than to a Successor in the event of a
Participant’s death. Any attempted transfer in violation of this Section 6(c) shall be of no
effect. The Committee may, however, provide in an Agreement or otherwise that an Award (other than
an Incentive Stock Option) may be transferred or assigned pursuant to a divorce decree or a
domestic relations order, and may be transferable, to the extent permitted by law, to a Transferee
if the Participant does not receive any consideration for the transfer. Any Award held by a
Transferee shall continue to be subject to the same terms and conditions that were applicable to
that Award immediately before the transfer thereof to the Transferee. For purposes of any
provision of the Plan relating to notice to a Participant or to acceleration or termination of an
Award upon the death or termination of employment of a Participant, the references to “Participant”
shall mean the original grantee of an Award and not any Transferee or Successor.

     (d) Termination of Service. Unless otherwise provided in an Agreement, and subject
to Section 13 of this Plan, if a Participant’s Service with the Company and all of its Affiliates
terminates, the following provisions shall apply (in all cases subject to the scheduled expiration
of an Option or Stock Appreciation Right, as applicable):

     (1) Upon termination of Service for Cause, all unexercised Options and SARs and all
unvested portions of any other outstanding Awards shall be immediately forfeited and
terminated without consideration;

     (2) Upon termination of Service for any reason other than for Cause, all unvested and
unexercisable portions of any outstanding Awards shall be immediately forfeited and
terminated without consideration;

     (3) Upon termination of Service for any reason other than Cause, death or Disability,
the currently vested and exercisable portions of Options and SARs may be exercised within
three months of the date of such termination; or

     (4) Upon termination of Service due to death or Disability, the currently vested and
exercisable portions of Options and SARs may be exercised within six months of the date of
such termination.

     (e) Rights as Shareholder. No Participant, Successor, or Transferee shall have any
rights as a shareholder with respect to any securities covered by an Award unless and until the
date the Participant, Successor, or Transferee becomes the holder of record of the Shares, if any,
to which the Award relates.

     (f) Performance-Based Awards. Any Award may be granted as Performance-Based
Compensation if the Committee establishes one or more Performance Measures upon which vesting, the

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lapse of restrictions or settlement in solely in Shares is contingent. With respect to any Award
intended to be Performance-Based Compensation, the Committee shall establish and administer
Performance Measures in the manner described in Section 19.

7. Restricted Stock Awards.

     (a) Shares subject to a Restricted Stock Award shall be subject to vesting conditions, and the
corresponding lapse or waiver of forfeiture conditions and other restrictions, based on such
factors and occurring over such period of time as the Committee may determine in its sole
discretion. The Committee may provide whether any consideration other than Services must be
received by the Company or any Affiliate as a condition precedent to the grant of a Restricted
Stock Award.

     (b) Unvested Shares subject to a Restricted Stock Award shall be evidenced by a book-entry in
the name of the Participant with the Company’s transfer agent or by one or more Common Stock
certificates issued in the name of the Participant. Any such Common Stock certificate shall be
deposited with the Company or its designee, together with an assignment separate from the
certificate, in blank, signed by the Participant, and bear an appropriate legend referring to the
restricted nature of the Restricted Stock evidenced thereby. Any book-entry shall be subject to
transfer restrictions and accompanied by a similar legend. Upon the vesting of Shares of
Restricted Stock and the corresponding lapse of the restrictions and forfeiture conditions, the
transfer restrictions and restrictive legend applicable to any book-entry evidencing such Shares
will be removed, or a certificate for the Shares bearing no restrictive legend shall be delivered
to the Participant or a Successor or a Transferee.

     (c) Except as otherwise provided in this Plan or the applicable Agreement, a Participant with
a Restricted Stock Award shall have all the other rights of a shareholder, including the right to
receive dividends and the right to vote the Shares of Restricted Stock. Except as otherwise
provided in this Plan or the applicable Agreement, any Shares or property other than regular cash
dividends distributed with respect to unvested Shares subject to a Restricted Stock Award shall be
subject to the same conditions and restrictions as the underlying Shares. Notwithstanding the
foregoing, cash dividends on Shares subject to Restricted Stock or Restricted Stock Units Awards
that have performance vesting provisions shall be subject to the same conditions and restrictions
as the related Shares.

8. Restricted Stock Unit Awards. A Restricted Stock Unit Award shall be subject to vesting
conditions, and the corresponding lapse or waiver of forfeiture conditions and other restrictions,
based on such factors and occurring over such period of time as the Committee may determine in its
discretion. The Committee may provide whether any consideration other than Services must be
received by the Company or any Affiliate as a condition precedent to the grant of a Restricted
Stock Unit Award. Following the vesting of a Restricted Stock Unit Award, payment to the
Participant shall be made in the form of cash, Shares or a combination of cash and Shares as
determined by the Committee. Such payment shall either comply with the provisions of Code Section
409A or be made within such time period after vesting as will qualify such payment for the
“short-term deferral” exemption from Code Section 409A.

9. Stock Option Awards.

     (a) Type and Exercise Price. The Agreement pursuant to which an Option is granted
shall specify whether the Option is an Incentive Stock Option or a Non-Statutory Stock Option. The
exercise price at which each Share subject to an Option may be purchased shall be determined by the
Committee and set forth in the Agreement, and shall not be less than the Fair Market Value of a Share on
the Grant Date.

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     (b) Payment of Exercise Price. The purchase price of the Shares with respect to which
an Option is exercised shall be payable in full at the time of exercise, which may include, to the
extent permitted by the Committee, payment under a broker-assisted sale and remittance program
acceptable to the Committee. The purchase price may be paid in cash or, if the Committee so
permits, by withholding Shares otherwise issuable to the Participant upon exercise of the Option or
by delivery to the Company of Shares (by actual delivery or attestation) already owned by the
Participant (in each case, such Shares having a Fair Market Value as of the date the Option is
exercised equal to the purchase price of the Shares being purchased), or a combination thereof,
unless otherwise provided in the Agreement. A Participant exercising an Option shall not be
permitted to pay any portion of the purchase price with Shares if, in the opinion of the Committee,
payment in such manner could have adverse financial accounting consequences for the Company.

     (c) Exercisability and Expiration. Each Option shall be exercisable in whole or in
part on the terms provided in the Agreement. No Option shall be exercisable more than seven years
after its Grant Date. In no event shall any Option be exercisable at any time after its scheduled
expiration. When an Option is no longer exercisable, it shall be deemed to have terminated.

     (d) No Reload Options. Options will not be granted under the Plan in consideration
for, and the grant of Options will not be conditioned on, the delivery of Shares to the Company in
payment of the exercise price and/or tax withholding obligation under any other Option.

     (e) Incentive Stock Options.

     (1) An Option will constitute an Incentive Stock Option only if the Participant
receiving the Option is an Employee, and only to the extent that (i) it is so designated in
the applicable Agreement and (ii) the aggregate Fair Market Value (determined as of the
Option Grant Date) of the Shares with respect to which Incentive Stock Options held by the
Participant first become exercisable in any calendar year (under the Plan and all other
plans of the Company and its Affiliates) does not exceed $100,000 (or such other limit as
may be required by the Code to qualify the Option as an Incentive Stock Option). To the
extent an Option granted to a Participant exceeds this limit, the Option shall be treated as
a Non-Statutory Stock Option.

     (2) No Participant may receive an Incentive Stock Option under the Plan if, immediately
after the grant of such Award, the Participant would own (after application of the rules
contained in Code Section 424(d)) Shares possessing more than 10% of the total combined
voting power of all classes of stock of the Company or an Affiliate, unless (i) the option
price for that Incentive Stock Option is at least 110% of the Fair Market Value of the
Shares subject to that Incentive Stock Option on the Grant Date and (ii) that Option will
expire no later than five years after its Grant Date.

     (3) The Agreement covering an Incentive Stock Option shall contain such other terms and
provisions that the Committee determines necessary to qualify the Option as an Incentive
Stock Option.

10. Stock Appreciation Rights.

     (a) Nature of Award. An Award of a Stock Appreciation Right shall entitle the
Participant (or a Successor or a Transferee), subject to terms and conditions determined by the
Committee, to receive upon exercise of the Stock Appreciation Right all or a portion of the excess
of (i) the Fair Market Value of a specified number of Shares as of the date of exercise of the Stock Appreciation Right
over (ii) a specified exercise price that shall not be less than 100% of the Fair Market Value of
such Shares on the Grant Date of the Stock Appreciation Right.

10

 

     (b) Exercise of SAR. Each Stock Appreciation Right may be exercisable in whole or in
part at the times, on the terms and in the manner provided in the Agreement; provided that no Stock
Appreciation Right shall be exercisable more than ten years after its Grant Date. No Stock
Appreciation Right shall be exercisable at any time after its scheduled expiration. When a Stock
Appreciation Right is no longer exercisable, it shall be deemed to have terminated. Upon exercise
of a Stock Appreciation Right, payment to the Participant (or a Successor or Transferee) shall be
made at such time or times as shall be provided in the Agreement in the form of cash, Shares or a
combination of cash and Shares as determined by the Committee. The Agreement may provide for a
limitation upon the amount or percentage of the total appreciation on which payment (whether in
cash and/or Shares) may be made in the event of the exercise of a Stock Appreciation Right.

11. Performance Shares.

     (a) Initial Award.

     (1) An Award of Performance Shares under the Plan shall entitle the Participant (or a
Successor or Transferee) to future payments of Shares based upon the achievement of
specified levels of one or more Performance Measures over the course of the relevant
Performance Period. The Agreement shall specify the nature and requisite level(s) of
achievement for each Performance Measure and the length of the Performance Period applicable
to an Award of Performance Shares, and may provide that a portion of the Shares for a
Participant’s Award will be issued for performance that exceeds the minimum target but falls
below the maximum target applicable to the Award. The Agreement shall also provide for the
timing of the issuance, which shall either comply with the provisions of Code Section 409A
or be in a lump sum occurring within the period necessary to cause it to qualify as a
“short-term deferral” within the meaning of Code Section 409A.

     (2) Following the conclusion or acceleration of each Performance Period, the Committee
shall determine (i) the extent to which Performance Measures have been attained; (ii) the
number of Performance Shares that have been earned and the value thereof; and (iii) the
extent to which any other terms and conditions with respect to an Award relating to the
Performance Period have been satisfied.

     (b) Acceleration and Adjustment. The Agreement may permit an acceleration of the
Performance Period and an adjustment of Performance Measures and issuance of Shares with respect to
some or all of the Performance Shares awarded to a Participant upon the occurrence of certain
events, which may include a Change of Control, a Corporate Transaction, a recapitalization of the
Company or an Affiliate, a change in the accounting practices of the Company, a change in the
Participant’s title or employment responsibilities, or the Participant’s death or Disability. The
Agreement also may provide for a limitation on the value of an Award of Performance Shares that a
Participant may receive.

12. Other Stock-Based Awards. The Committee may from time to time grant Common Stock and
other Awards that are valued by reference to and/or payable in whole or in part in Shares under the
Plan. The Committee, in its sole discretion, shall determine the terms and conditions of such
Awards, which shall be consistent with the terms and purposes of the Plan. The Committee may, in
its sole discretion, direct the Company to issue Shares subject to restrictive legends and/or stop
transfer instructions that are consistent with the terms and conditions of the Award to which the
Shares relate.

13. Corporate Transaction.

     (a) In the event of a proposed Corporate Transaction, the Committee may, but shall not be
obligated to:

11

 

     (1) With respect to a Corporate Transaction that involves a merger or consolidation,
make appropriate provision for the protection of the outstanding Awards by the substitution
of options, stock appreciation rights, restricted stock, restricted stock units, Performance
Shares or other stock-based awards and appropriate voting common stock of the corporation
surviving any such merger or consolidation or, if appropriate, the Parent of the Company or
such surviving corporation, in lieu of such outstanding Awards;

     (2) With respect to any Corporate Transaction, including, without limitation, a merger
or consolidation, declare, prior to the occurrence of the Corporate Transaction, and provide
written notice of such declaration to each holder of an Option or Stock Appreciation Right,
that (i) each outstanding Option and Stock Appreciation Right, whether or not then
exercisable, shall be canceled at the time of, or immediately prior to the occurrence of,
the Corporate Transaction in exchange for payment to each holder of an Option or Stock
Appreciation Right, promptly after the Corporate Transaction, of cash (or, if the Committee
so elects in lieu of solely cash, of such form(s) of consideration, including cash and/or
property, solely or in such combination as the Committee shall determine, that the holders
of Options and Stock Appreciation Rights would have received as a result of the Corporate
Transaction if such holders had exercised the Options and Stock Appreciation Rights
immediately prior to the Corporate Transaction) equal to, for each Share covered by a
canceled Option or Stock Appreciation Right, the amount, if any, by which the fair market
value (as defined in this Section 13(a)(2)) per Share exceeds the exercise price per Share
covered by such Option or Stock Appreciation Right, and (ii) at the time of the declaration,
each Option and Stock Appreciation Right shall immediately become exercisable in full and
each holder of an Option or Stock Appreciation Right shall have the right, during the period
preceding the time of cancellation of the Option or Stock Appreciation Right, to exercise
the Option or Stock Appreciation Right as to all or any part of the Shares covered thereby
in whole or in part, as the case may be. In the event of a declaration pursuant to this
Section 13(a)(2), each outstanding Option and Stock Appreciation Right, to the extent that
it shall not have been exercised prior to the Corporate Transaction, shall be canceled at
the time of, or immediately prior to, the Corporate Transaction, as provided in the
declaration. For purposes of Section 13(a) only, “fair market value” per Share means the
fair market value, as determined in good faith by the Committee, of the consideration to be
received per Share by the shareholders of the Company upon the occurrence of the Corporate
Transaction, notwithstanding anything to the contrary provided in this Agreement;

     (3) With respect to any Corporate Transaction, including, without limitation, a merger
or consolidation, declare, prior to the occurrence of the Corporate Transaction, and provide
written notice of such declaration to each holder of an Option or Stock Appreciation Right,
that (i) each outstanding Option and Stock Appreciation Right then exercisable, or that
becomes exercisable pursuant to the terms of the Agreement related to such Option or Stock
Appreciation Right prior to the occurrence of such Corporate Transaction, shall be canceled
at the time of, or immediately prior to the occurrence of, the Corporate Transaction in
exchange for payment to each holder of an Option or Stock Appreciation Right, promptly after
the Corporate Transaction, of cash (or, if the Committee so elects in lieu of solely cash,
of such form(s) of consideration, including cash and/or property, solely or in such
combination as the Committee shall determine, that the holders of Options and Stock
Appreciation Rights would have received as a result of the Corporate Transaction if such holders had exercised the Options and
Stock Appreciation Rights immediately prior to the Corporate Transaction) equal to, for each
Share covered by a canceled Option or Stock Appreciation Right, the amount, if any, by which
the fair market value per Share exceeds the exercise price per Share covered by such Option
or Stock Appreciation Right, and (ii) each outstanding Option and Stock Appreciation Right
that does not become exercisable prior to the occurrence of such Corporate Transaction,
shall be canceled at

12

 

the time of, or immediately prior to, the Corporate Transaction without payment or any other consideration. In the event of a declaration pursuant to this Section
13(a)(3), each outstanding Option and Stock Appreciation Right, to the extent that it shall
not have been exercised prior to the Corporate Transaction, shall be canceled at the time
of, or immediately prior to, the Corporate Transaction, as provided in the declaration;

     (4) With respect to any Corporate Transaction, including, without limitation, a merger
or consolidation, declare, prior to the occurrence of the Corporate Transaction, and provide
written notice of such declaration to each holder of an Option or Stock Appreciation Right,
that each outstanding Option and Stock Appreciation Right shall be canceled at the time of,
or immediately prior to the occurrence of, the Corporate Transaction without payment or any
other consideration. In the event of a declaration pursuant to this Section 13(a)(4), each
outstanding Option and Stock Appreciation Right, to the extent that it shall not have been
exercised prior to the Corporate Transaction, shall be canceled at the time of, or
immediately prior to, the Corporate Transaction, as provided in the declaration;

     (5) With respect to any Corporate Transaction, including, without limitation, a merger
or consolidation, declare, prior to the occurrence of the Corporate Transaction, and provide
written notice of such declaration to each holder of an Option or Stock Appreciation Right,
that (i) each outstanding Option and Stock Appreciation Right shall be canceled at the time
of, or immediately prior to the occurrence of, the Corporate Transaction without payment or
any other consideration, and (ii) at the time of the declaration, each Option and Stock
Appreciation Right shall immediately become exercisable in full and each holder of an Option
or Stock Appreciation Right shall have the right, during the period preceding the time of
cancellation of the Option or Stock Appreciation Right, to exercise the Option or Stock
Appreciation Right as to all or any part of the Shares covered thereby in whole or in part,
as the case may be. In the event of a declaration pursuant to this Section 13(a)(5), each
outstanding Option and Stock Appreciation Right, to the extent that it shall not have been
exercised prior to the Corporate Transaction, shall be canceled at the time of, or
immediately prior to, the Corporate Transaction, as provided in the declaration;

     (6) Provide, upon the occurrence of the Corporate Transaction, for the vesting and
corresponding waiver of forfeiture conditions and other restrictions on Restricted Stock
Awards, Restricted Stock Unit Awards or Performance Share Awards that are outstanding as of
the occurrence of the Corporate Transaction, and provide for notice thereof to the holders
of such Awards; or

     (7) Provide that, upon the occurrence of the Corporate Transaction, any portions of any
Restricted Stock Awards, Restricted Stock Unit Awards or Performance Share Awards that are
subject to vesting conditions, forfeiture conditions or other restrictions as of the
occurrence of the Corporate Transaction shall be canceled without payment or any other
consideration, and provide for notice thereof to the holders of such Awards.

     (b) Notwithstanding the foregoing, no holder of an Award shall be entitled to the payment
provided for in this Section 13 with respect to any portion of such Award as shall have expired or
been forfeited prior to the occurrence of the applicable Corporate Transaction.

14. Plan Participation and Service Provider Status. Status as a Service Provider shall not
be construed as a commitment that any Award will be made under the Plan to that Service Provider or
to eligible Service Providers generally. Nothing in the Plan or in any Agreement or related
documents shall confer upon any Service Provider or Participant any right to continuous service
with the Company or any Affiliate, nor shall it interfere with or limit in any way any right of the
Company or any Affiliate to

13

 

terminate the person’s continuous service at any time with or without
Cause or change such person’s compensation, other benefits, job responsibilities or title.

15. Tax Withholding. The Company or any Affiliate, as applicable, shall have the right to
(i) withhold from any cash payment under the Plan or any other compensation owed to a Participant
(including a Successor or a Transferee) an amount sufficient to cover any required withholding
taxes, and (ii) require a Participant or other person receiving Shares under the Plan to pay to the
Company or any Affiliate a cash amount sufficient to cover any required withholding taxes before
actual receipt of those Shares. In lieu of all or any part of a cash payment from a person
receiving Shares under the Plan, the Committee may permit the individual to cover all or any part
of the required withholdings (up to the Participant’s minimum required tax withholding rate or such
other rate that will not trigger a negative accounting impact to the Company or any Affiliate)
through a reduction in the number of Shares delivered or a delivery or tender to the Company of
Shares held by the Participant or other person, in each case valued in the same manner as used in
computing the withholding taxes under applicable laws.

16. Effective Date, Duration, Amendment and Termination of the Plan.

     (a) Effective Date. The Plan shall become effective on the date it is approved by the
requisite vote of the Company’s shareholders.

     (b) Duration of the Plan. The Plan shall remain in effect until all Shares subject to
it shall be distributed, all Awards have expired or terminated, the Plan is terminated pursuant to
Section 16(c), or the tenth anniversary of the date of shareholder approval of the Plan, whichever
occurs first (the “Termination Date”). Awards made before the Termination Date may be exercised,
vested or otherwise effectuated beyond the Termination Date unless limited in the Agreement or
otherwise.

     (c) Amendment and Termination of the Plan. Except as limited in Section 16(d) below,
the Board may at any time and from time to time terminate, suspend or amend the Plan. The Company
shall submit any amendment of the Plan to its shareholders for approval if the rules of the
principal securities exchange on which the Shares are then listed or other applicable laws or
regulations require shareholder approval of such amendment. No termination, suspension, or
amendment of the Plan or any Agreement may materially and adversely affect any right acquired by
any Participant (or Successor or Transferee) under an Award granted before the date of termination,
suspension, or amendment, unless (i) otherwise agreed to by the Participant in the Agreement or
otherwise, (ii) required as a matter of law or (iii) effectuated pursuant to Section 20(e) of this
Plan. It will be conclusively presumed that any adjustment for changes in capitalization provided
for in Sections 11(b) or 17, and any amendment to the Plan or any Agreement to avoid the imposition
of any additional tax under Code Section 409A does not adversely affect these rights.

     (d) No Option or SAR Repricing. Except as provided in Section 17, no Option or Stock
Appreciation Right granted under the Plan may be amended to decrease the exercise price thereof, or
be cancelled in conjunction with the grant of any new Option or Stock Appreciation Right with a
lower exercise price, or otherwise be subject to any action that would be treated under accounting
rules or otherwise as a “repricing” of such Option or Stock Appreciation Right, unless such action
is approved by the Company’s shareholders.

17. Adjustment for Changes in Capitalization. In the event of any equity restructuring
(within the meaning of Statement of Financial Accounting Standards No. 123 (revised 2004), or as
such standard is subsequently codified in the Financial Accounting Standards Board Accounting
Standards CodificationTM, collectively referred to herein as “FAS 123R”) that causes the per share
value of Shares to change, such as a stock dividend or stock split, the Committee shall cause there
to be made an equitable adjustment to the number and kind of Shares or other securities issued or
reserved for issuance pursuant

14

 

to the Plan and to outstanding Awards (including but not limited to the number and kind of Shares to which such Awards are subject, and the exercise or strike price of
such Awards) to the extent such other Awards would not otherwise automatically adjust in the equity
restructuring; provided, in each case, that with respect to Incentive Stock Options, no such
adjustment shall be authorized to the extent that such adjustment would cause such Incentive Stock
Options to violate Code Section 422(b) or any successor provision; provided further, that no such
adjustment shall be authorized under this Section to the extent that such adjustment would cause an
Award to be subject to adverse tax consequences under Code Section 409A. In the event of any other
change in corporate capitalization, which may include a merger, consolidation, any reorganization
(whether or not such reorganization comes within the definition of such term in Code Section 368),
or any partial or complete liquidation of the Company to the extent such events do not constitute
equity restructurings or business combinations within the meaning of FAS 123R, such equitable
adjustments described in the foregoing sentence may be made as determined to be appropriate and
equitable by the Committee to prevent dilution or enlargement of rights. In either case, any such
adjustment shall be conclusive and binding for all purposes of the Plan. Unless otherwise
determined by the Committee, the number of Shares subject to an Award shall always be a whole
number.

18. Dividend Equivalents. An Award (other than an Option or SAR) that does not involve the
issuance of Shares concurrently with the grant of the Award may, if so determined by the Committee,
provide the Participant with the right to receive dividend equivalent payments with respect to
Shares subject to the Award (both before and after the Shares are earned, vested or acquired),
which payments may be either made currently, credited to an account for the Participant, or deemed
to have been reinvested in additional Shares which shall thereafter be deemed to be part of and
subject to the underlying Award, including the same vesting and performance conditions. Dividend
equivalent amounts credited to an account for the Participant may be settled in cash or Shares or a
combination of both, as determined by the Committee, and shall be subject to the same vesting and
performance conditions as the underlying Award.

19. Performance-Based Compensation.

     (a) Designation of Awards. If the Committee determines at the time an Award is
granted to a Participant who is then an executive officer of the Company that such Participant is,
or is likely to be, a “covered employee” for purposes of Code Section 162(m) as of the end of the
tax year in which the Company would ordinarily claim a tax deduction in connection with such Award,
then the Committee may provide that this Section 19 will be applicable to such Award, which shall
be considered Performance-Based Compensation.

     (b) Performance Measures. If an Award is subject to this Section 19, then the lapsing
of restrictions thereon and the distribution of Shares or other property pursuant thereto, as
applicable, shall be subject to the achievement of one or more of the Performance Measures
specified in the definition of that term in this Plan. When establishing Performance Measures for
a Performance Period, the Committee may exclude amounts or charges relating to an event or occurrence that the Committee
determines, consistent with the requirements of Code Section 162(m), should appropriately be
excluded. The Committee may also adjust Performance Measures for a Performance Period to the
extent permitted by Code Section 162(m) to prevent the dilution or enlargement of a Participant’s
rights with respect to Performance-Based Compensation. The Committee will determine the amount of
Shares to be issued in connection with an Award subject to this Section 19 consistent with the
requirements of Code Section 162(m), and may adjust downward, but not upward, the number of Shares
determined to be otherwise issuable in connection with such an Award.

15

 

     (c) Limitations. Subject to adjustment as provided in Section 17, no Participant may
be granted Performance-Based Compensation in any calendar year with respect to more than 200,000
Shares.

20. Other Provisions.

     (a) Unfunded Plan. The Plan shall be unfunded and the Company shall not be required
to segregate any assets that may at any time be represented by Awards under the Plan. Neither the
Company, its Affiliates, the Committee, nor the Board shall be deemed to be a trustee of any
amounts to be paid under the Plan nor shall anything contained in the Plan or any action taken
pursuant to its provisions create or be construed to create a fiduciary relationship between on one
hand the Company and/or its Affiliates, and on the other hand a Participant or Successor or
Transferee. To the extent any person has or acquires a right to receive a payment in connection
with an Award under the Plan, this right shall be no greater than the right of an unsecured general
creditor of the Company.

     (b) Limits of Liability.

     (1) Any liability of the Company to any Participant or Successor or Transferee with
respect to an Award shall be based solely upon contractual obligations created by the Plan
and the Award Agreement.

     (2) Except as may be required by law, neither the Company nor any member of the Board
or of the Committee, nor any other person participating (including participation pursuant to
a delegation of authority under Section 3(c) of the Plan) in any determination of any
question under the Plan, or in the interpretation, administration or application of the
Plan, shall have any liability to any party for any action taken, or not taken, in good
faith under the Plan.

     (c) Compliance with Applicable Legal Requirements. No Shares distributable pursuant
to the Plan shall be issued and delivered unless the issuance of the Shares complies with all
applicable legal requirements, including compliance with the provisions of applicable state
securities laws, the Securities Act, the Exchange Act and the requirements of the exchanges on
which the Company’s Shares may, at the time, be listed.

     (d) Other Benefit and Compensation Programs. Payments and other benefits received by
a Participant under an Award made pursuant to the Plan shall not be deemed a part of a
Participant’s regular, recurring compensation for purposes of the termination, indemnity or
severance pay laws of any country and shall not be included in, nor have any effect on, the
determination of benefits under any other employee benefit plan, contract or similar arrangement
provided by the Company or an Affiliate unless expressly so provided by such other plan, contract
or arrangement, or unless the Committee expressly determines that an Award or portion of an Award
should be included to accurately reflect competitive compensation practices or to recognize that an
Award has been made in lieu of a portion of competitive cash compensation.

     (e) Requirements of Law.

     (1) To the extent that federal laws do not otherwise control, the Plan and all
determinations made and actions taken pursuant to the Plan shall be governed by the laws of
the State of Minnesota without regard to its conflicts-of-law principles and shall be
construed accordingly.

     (2) If any provision of the Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan
shall be construed and enforced as if the illegal or invalid provision had not been
included.

16

 

     (3) It is intended that the Plan and all Awards granted pursuant to it shall be
administered by the Committee so as to permit the Plan and Awards to comply with Exchange
Act Rule 16b-3. If any provision of the Plan or of any Award would otherwise frustrate or
conflict with the intent expressed in this Section 20(e)(3), that provision to the extent
possible shall be interpreted and deemed amended in the manner determined by the Committee
so as to avoid the conflict. To the extent of any remaining irreconcilable conflict with
this intent, the provision shall be deemed void as applied to Participants subject to
Section 16 of the Exchange Act to the extent permitted by law and in the manner deemed
advisable by the Committee.

     (4) It is intended that (i) all Awards of Options, SARs and Restricted Stock under the
Plan will not provide for the deferral of compensation within the meaning of Code Section
409A and thereby be exempt from Code Section 409A, and (ii) all other Awards under the Plan
will either not provide for the deferral of compensation within the meaning of Code Section
409A, or will comply with the requirements of Code Section 409A, and Awards shall be
structured and the Plan administered in accordance with this intent. For Awards subject to
Code Section 409A, the following provisions shall apply:

     (A) Separation from Service. If any amount shall be payable with
respect to any Award hereunder as a result of a Participant’s termination of
employment or other Service, then notwithstanding any other provision of this Plan,
a termination of employment or other Service will be deemed to have occurred only at
such time as the Participant has experienced a “separation from service,” as such
term is defined for purposes of Code Section 409A.

     (B) Timing of Payment to a Specified Employee. If any amount shall be
payable with respect to any Award hereunder as a result of a Participant’s
“separation from service” at such time as the Participant is a “specified employee,”
as such term is defined for purposes of Code Section 409A, then notwithstanding any
other provision of this Plan, no payment shall be made, except as permitted under
Code Section 409A, prior to the first day of the seventh (7th) calendar month
beginning after the Participant’s separation from service (or the date of his or her
earlier death). The Company may adopt a specified employee policy that will apply to
identify the “specified employees” for all deferred compensation plans subject to
Code Section 409A; otherwise, “specified employees” will be identified using the
default standards contained in the regulations under Code Section 409A.

17exv10w2

Exhibit 10.2

SURMODICS, INC.

1999 EMPLOYEE STOCK PURCHASE PLAN

(As Amended and Restated November 30, 2009)

ARTICLE I — ESTABLISHMENT OF PLAN

	1.01	 	Adoption by Board of Directors. By action of the Board of Directors of SurModics, Inc. (the
“Corporation”) on November 15, 1999, the Corporation adopted an employee stock purchase plan
(the “Original Plan”) pursuant to which eligible employees of the Corporation and certain of
its subsidiaries may be offered the opportunity to purchase shares of Stock of the
Corporation. The terms and conditions of this employee stock purchase plan, as amended from
time to time as provided herein, are set forth in this plan document. The shareholders of the
Corporation approved the Original Plan on January 24, 2000. The Corporation intends that the
Original Plan, and as it may be amended and modified from time, shall qualify as an “employee
stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended from
time to time, (the “Code”) and shall be construed in a manner consistent with the requirements
of Code Section 423 and the regulations thereunder.
	 
	1.02	 	Amendment of the Plan. On November 30, 2009, the Board of Directors of the Corporation
adopted an amendment and restatement of the Original Plan pursuant to which, among other
things, the number of shares reserved for issuance upon the exercise of options granted under
the Original Plan was increased. Within twelve (12) months of the Board’s adoption of the
amendment and restatement, the Plan as amended and restated shall be subject to approval by
the shareholders of the Corporation in the manner provided under Code Section 423 and the
regulations thereunder. In the event the shareholders fail to approve the amendment and
restatement of the Plan within twelve (12) months after its adoption by the Board, the
amendment and restatement of the Plan shall not become effective and shall have no force and
effect, and the Original Plan shall continue in effect in the same form as it existed prior to
its amendment and restatement. To the extent that options under the Plan had been granted
with respect to shares of Stock added to the Plan as a result of the Board’s adoption of the
amendment and restatement, if the shareholders do not approve such amendment and restatement,
the Corporation shall cancel all such outstanding options and return all related payroll
deductions to the affected Participants without interest. No shares of stock shall be issued
to any Participant with respect to any such options unless and until the shareholders approve
the Plan within such twelve-month period.

 

 

ARTICLE II — PURPOSE

	2.01	 	Purpose. The primary purpose of the Plan is to provide an opportunity for Eligible Employees
of the Corporation to become shareholders of the Corporation, thereby providing them with an
incentive to remain in the Corporation’s employ, to improve operations, to increase profits
and to contribute more significantly to the Corporation’s success.

ARTICLE III — DEFINITIONS

	3.01	 	“Administrator” means the Board of Directors or such Committee appointed by the Board of
Directors to administer the Plan. The Board or the Committee may, in its sole discretion,
authorize the officers of the Corporation to carry out the day-to-day operation of the Plan.
In its sole discretion, the Board may take such actions as may be taken by the Administrator,
in addition to those powers expressly reserved to the Board under this Plan.
	 
	3.02	 	“Board of Directors” or “Board” means the Board of Directors of SurModics, Inc.
	 
	3.03	 	“Compensation” means the Participant’s base compensation, excluding commissions, overtime and
all bonuses.
	 
	3.04	 	“Corporation” means SurModics, Inc., a Minnesota corporation.
	 
	3.05	 	“Eligible Employee” means any employee who, as determined on or immediately prior to an
Enrollment Period, is a United States full-time or part-time employee of the Corporation or
one of its Subsidiaries and is customarily employed for twenty (20) hours or more per week.
	 
	3.06	 	“Enrollment Period” means the period determined by the Administrator for purposes of
accepting elections to participate during a Phase from Eligible Employees.
	 
	3.07	 	“Fiscal Year” means the fiscal year of the Corporation, which is the twelve-month period
beginning October 1 each year and ending September 30 the following year.
	 
	3.08	 	“Participant” means an Eligible Employee who has been granted an option and is participating
during a Phase through payroll deductions, but shall exclude those employees subject to the
limitations described in Section 9.03 below.
	 
	3.09	 	“Phase” means the period beginning on the date that an option is granted under the Plan,
otherwise referred to as the commencement date of the Phase, and ending on the date that the
option is exercised, otherwise referred to as the termination date of the Phase.

- 2 -

 

	3.10	 	“Plan” means the SurModics, Inc. 1999 Employee Stock Purchase Plan, as amended and restated.
	 
	3.11	 	“Stock” means the voting common stock of the Corporation.
	 
	3.12	 	“Subsidiary” means any corporation defined as a subsidiary of the Corporation in Code Section
424(f) as of the effective date of the Plan, and such other corporations that qualify as
subsidiaries of the Corporation under Code Section 424(f) as the Board approves to participate
in this Plan from time to time.

ARTICLE IV — ADMINISTRATION

	4.01	 	Administration. Except for those matters expressly reserved to the Board pursuant to any
provisions of the Plan, the Administrator shall have full responsibility for administration of
the Plan, which responsibility shall include, but shall not be limited to, the following:

	 	(a)	 	The Administrator shall, subject to the
provisions of the Plan, establish, adopt and revise such rules and
procedures for administering the Plan, and shall make all other
determinations as it may deem necessary or advisable for the
administration of the Plan;
	 
	 	(b)	 	The Administrator shall, subject to the
provisions of the Plan, determine all terms and conditions that shall
apply to the grant and exercise of options under this Plan, including,
but not limited to, the number of shares of Stock that may be granted,
the date of grant, the exercise price and the manner of exercise of an
option. The Administrator may, in its discretion, consider the
recommendations of the management of the Corporation when determining
such terms and conditions;
	 
	 	(c)	 	The Administrator shall have the exclusive
authority to interpret the provisions of the Plan, and each such
interpretation or determination shall be conclusive and binding for all
purposes and on all persons, including, but not limited to, the
Corporation and its Subsidiaries, the shareholders of the Corporation
and its Subsidiaries, the Administrator, the directors, officers and
employees of the Corporation and its Subsidiaries, and the Participants
and the respective successors-in-interest of all of the foregoing; and
	 
	 	(d)	 	The Administrator shall keep minutes of its
meetings or other written records of its decisions regarding the Plan
and shall, upon requests, provide copies to the Board.

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ARTICLE V — PHASES OF THE PLAN

	5.01	 	Phases. The Plan shall be carried out in one or more Phases, the duration, commencement
dates and termination dates of which shall be determined by the Administrator in its sole
discretion. Unless the Administrator determines otherwise, each Phase shall be three (3)
months in duration and shall commence on March 1, June 1, September 1 and December 1 of each
calendar year during the term of the Plan, and terminate on the last day of May, August,
November and February, respectively. Unless the Administrator determines otherwise, no two
Phases shall run concurrently.
	 
	 	 	Notwithstanding anything in the Plan to the contrary, the Administrator may also, in
its sole discretion, designate a special commencement date for a special Phase with
respect to those individuals who first become Eligible Employees after the
commencement date of an existing Phase in connection with a merger, purchase or
similar transaction. Such special phase shall terminate on the termination date of
such existing Phase.
	 
	5.02	 	Limitations. The Administrator may, in its discretion, limit the number of shares available
for option grants during any Phase as it deems appropriate. Without limiting the foregoing,
in the event all of the shares of Stock reserved for the grant of options under Section 12.01
are issued pursuant to the terms hereof prior to the commencement of one or more Phases or the
number of shares of Stock remaining is so small, in the opinion of the Administrator, as to
render administration of any succeeding Phase impracticable, such Phase or Phases may be
canceled or the number of shares of Stock limited as provided herein. In addition, if, based
on the payroll deductions authorized by Participants at the beginning of a Phase, the
Administrator determines that the number of shares of Stock which would be purchased at the
end of that Phase exceeds the number of shares of Stock remaining reserved under Section 12.01
hereof for issuance under the Plan, or if the number of shares of Stock remaining available
for purchase under the Plan is less than the number of shares Participants are entitled to
purchase pursuant to option grants by the Administrator for such Phase, then the Administrator
shall make a pro rata allocation of the shares of Stock remaining available in as nearly
uniform and equitable a manner as the Administrator shall consider practicable as of the
commencement date of the Phase or, if the Administrator so elects, as of the termination date
of the Phase. In the event such allocation is made as of the commencement date of a Phase,
the payroll deductions which otherwise would have been made on behalf of Participants shall be
reduced accordingly.

ARTICLE VI — ELIGIBILITY

	6.01	 	Eligibility. Subject to the limitations described in Section 9.03, each employee who is an
Eligible Employee on or immediately prior to the commencement of a Phase shall be eligible to
participate in such Phase; provided, however, that the

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	 	 	Administrator may, in its sole discretion, establish a special eligibility date for
certain Eligible Employees who become eligible to participate in the Plan in
connection with a merger, purchase or similar transaction pursuant to Section 5.01.
If, in the discretion of the Administrator, any Phase commences on a date other than
March 1, whether an employee is an Eligible Employee shall be determined on a date
selected by the Administrator.

ARTICLE VII — PARTICIPATION

	7.01	 	Participation. Participation in the Plan is voluntary. An Eligible Employee who desires to
participate in any Phase of the Plan must complete the Plan enrollment form provided by the
Administrator and deliver such form to the Administrator or its designated representative
during the Enrollment Period established by the Administrator prior to the commencement date
of the Phase.
	 
	7.02	 	Subsequent Phases. An Eligible Employee who elects to participate in a Phase shall be deemed
to have elected to participate in each subsequent Phase unless such Participant elects to
discontinue payroll deductions during a Phase or exercises his or her right to withdraw
amounts previously withheld, as provided under Article X hereof. In such event, such
Participant must complete a change of election form or a new Plan enrollment form and file
such form with the Administrator during the Enrollment Period prior to the next Phase with
respect to which the Eligible Employee wishes to participate.

ARTICLE VIII — PAYMENT: PAYROLL DEDUCTIONS

	8.01	 	Enrollment. Each Eligible Employee electing to participate shall indicate such election on
the Plan enrollment form and designate therein a percentage of such Participant’s Compensation
to be deducted during each pay period during the Phase and credited to such Employee’s
bookkeeping account under the Plan in accordance with Section 13.01. Subject to the
Participant’s right to discontinue payroll deductions as provided in Section 10.02, the
Administrator’s authority to limit payroll deductions as provided in Section 5.02, and the
limitations contained in Section 9.03(a), such percentage shall be at least one percent (1%)
but not more than ten percent (10%) of such Participant’s Compensation to be paid during such
Phase, or such other maximum percentage as the Administrator may establish from time to time.
In order to be effective, such Plan enrollment form must be properly completed and received by
the Administrator by the due date indicated on such form, or by such other date established by
the Administrator.

	8.02	 	Payroll Deductions. Payroll deductions for a Participant shall commence with the paycheck
issued immediately after the commencement date of the Phase and shall terminate with the
paycheck issued immediately prior to the termination date of that Phase, unless the
Participant elects to discontinue payroll deductions or exercises his or her right to withdraw
all accumulated payroll deductions previously withheld during the Phase as provided in Article
X hereof. The

- 5 -

 

	 	 	authorized payroll deductions shall be made from the paychecks issued during such
Phase by deducting from the Participant’s Compensation covered by each such paycheck
that percentage specified by the Participant in the applicable Plan enrollment or
deduction change form.
	 
	 	 	Unless the Participant elected to discontinue payroll deductions or exercised his or
her right to withdraw all accumulated payroll deductions previously withheld during
the preceding Phase (in which event the Participant must complete a change of
election form or a new Plan enrollment form, as the case may be, to continue
participation for any subsequent Phase), the Corporation shall continue to withhold
from such Participant’s Compensation the same designated percentage specified by the
Participant in the most recent Plan enrollment or deduction change form previously
completed by the Participant for all subsequent Phases.
	 
	8.03	 	Change in Compensation During a Phase. In the event that the Participant’s Compensation is
increased or decreased during a Phase for any reason so that the amount actually withheld on
behalf of the Participant as of the termination date of the Phase is different from the amount
anticipated to be withheld as determined on the commencement date of the Phase, then the
extent to which the Participant may exercise his or her option shall be based on the amounts
actually withheld on his or her behalf, subject to the limitations in Article IX. In the
event of a change in the pay period of any Participant, such as from biweekly to monthly, an
appropriate adjustment shall be made to the deduction in each new pay period so as to insure
the deduction of the proper amount authorized by the Participant.
	 
	8.04	 	Decreases During a Phase. In addition to the right to discontinue or withdraw payroll
deductions during a Phase as provided in Article X, a Participant may decrease the percentage
of Compensation designated to be deducted as payroll deductions during a Phase (but not below
1%) by completing and filing such deduction change forms as the Administrator may require.
Such decrease shall be effective with the next payroll period beginning after the date that
the Administrator receives such forms and shall apply to all remaining Compensation paid
during the Phase, as well as to Compensation paid during subsequent Phases. The Participant
may exercise the right to decrease his or her payroll deductions only once during each Phase.

ARTICLE IX — OPTIONS

	9.01	 	Grant of Option. Subject to Article X, a Participant who has elected to participate in the
manner described in Article VIII and who is employed by the Corporation or a Subsidiary as of
the commencement date of a Phase shall be granted an option as of such date to purchase that
number of whole shares of Stock determined by dividing the total amount credited to the
Participant’s account as of the termination of that Phase by the option price per share set
forth in Section 9.02(a) below. The option price per share for such Stock shall be

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	 	 	determined under Section 9.02 hereof, and the number of shares exercisable shall be
determined under Section 9.03 hereof.

	9.02	 	Option Price. Subject to the limitations hereinbelow, the option price for such Stock shall
be the lower of the amounts determined under paragraphs (a) and (b) below:

(a) Eighty-five percent (85%) of the average closing price for a share of
the Corporation’s Stock as reported on The NASDAQ Global Select Market or
such other established securities exchange on which the Stock then trades
over the five (5) trading days immediately preceding the commencement date
of the Phase; or

(b) Eighty-five percent (85%) of the average closing price for a share of
the Corporation’s Stock as reported on The NASDAQ Global Select Market or
such other established securities exchange on which the Stock then trades
over the five (5) trading days immediately preceding the termination date of
the Phase.

	 	 	If the Corporation’s Stock is not listed on The NASDAQ Global Select
Market or another established securities exchange, then the option
price shall equal the lesser of (i) eighty-five percent (85%) of the
fair market value of a share of the Corporation’s Stock as of the
commencement date of the Phase; or (ii) eighty-five percent (85%) of
the fair market value of such stock as of the termination date of the
Phase. Such “fair market value” shall be determined by the Board.
	 
	9.03	 	Limitations. No employee shall be granted an option hereunder:

(a) Which permits his or her rights to purchase Stock under all employee
stock purchase plans of the Corporation and its Subsidiaries to accrue at a
rate which exceeds Twenty-Five Thousand Dollars ($25,000) of fair market
value of such Stock (determined at the time such option is granted) for each
calendar year in which such option is outstanding at any time;

(b) If such employee would own and/or hold, immediately after the grant of
the option, Stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Corporation or of any
Subsidiary. For purposes of determining stock ownership under this
paragraph, the rules of Section 424(d) of the Code and the regulations
thereunder shall apply.

(c) Which, if exercised, would cause the limits established by the
Administrator under Section 5.02 to be exceeded.

	9.04	 	Exercise of Option. Subject to a Participant’s right to withdraw in the manner provided in
Section 10.01, a Participant’s option for the purchase of shares of Stock will be exercised
automatically on the termination date of that Phase.

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	 	 	However, in no event shall a Participant be allowed to exercise an option for more
shares of Stock than can be purchased with the payroll deductions accumulated by the
Participant in his or her bookkeeping account as of the end of such Phase.
	 
	9.05	 	Delivery of Shares. As promptly as practicable after the termination of any Phase, the
Corporation’s transfer agent or other authorized representative shall deliver to each
Participant herein certificates for that number of whole shares of Stock purchased upon the
exercise of the Participant’s option. The Corporation may, in its sole discretion, arrange
with the Corporation’s transfer agent or other authorized representative to establish, at the
direction of the Participant, individual securities accounts to which will be credited that
number of whole shares of Stock that are purchased upon such exercise, such securities account
to be subject to such terms and conditions as may be imposed by the transfer agent or
authorized representative.
	 
	 	 	The shares of the Corporation’s common stock to be delivered to a Participant
pursuant to the exercise of an option under Section 9.04 of the Plan will be
registered in the name of the Participant or, if the Participant so directs by
written notice to the Administrator prior to the termination date of the Phase, in
the names of the Participant and one other person the Participant may designate as
his joint tenant with rights of survivorship, to the extent permitted by law.
	 
	 	 	Any accumulated payroll deductions remaining after the exercise of the Participant’s
option shall be returned to the Participant, without interest, on the first paycheck
issued for the payroll period which begins on or immediately after the commencement
date of next Phase; provided, however, that the Corporation may, under rules of
uniform application, retain such remaining amount in the Participant’s bookkeeping
account and apply it toward the purchase of shares of Stock in the next succeeding
Phase, unless the Participant requests a withdrawal of such amount pursuant to
Section 10.01.

ARTICLE X — WITHDRAWAL OR

DISCONTINUATION OF PAYROLL WITHHOLDINGS

	10.01	 	Withdrawal. Once during the Phase, a Participant may request a withdrawal of all
accumulated payroll deductions then credited to the Participant’s bookkeeping account by
completing a change of election form and filing such form with the Administrator. The
Participant’s request shall be effective as of the beginning of the next payroll period
immediately following the date that the Administrator receives the Participant’s properly
completed change of election form. As soon as administratively feasible after such payroll
period, all payroll deductions credited to a bookkeeping account for the Participant will be
paid to such Participant, with interest at the Federal Discount Rate as quoted in the Wall
Street Journal as of the commencement date of the Phase, compounded monthly, from the
commencement date of the Phase through the date of payment. No further payroll deductions
will be made during that Phase or any future Phase unless the

- 8 -

 

	 	 	Participant completes a new Plan enrollment form as provided in Section 8.02 above.
If the Participant requests a withdrawal, the option granted to the Participant
under that Phase of the Plan shall immediately lapse and shall not be exercisable.
Partial withdrawals of payroll deductions are not permitted.
	 
	 	 	Notwithstanding the foregoing, in order to be effective for a particular Phase, the
Participant’s request for withdrawal must be properly completed and received by the
Administrator on or before the date immediately preceding the termination date of
the Phase established by the Administrator. Requests for withdrawal that are
received after that due date shall not be effective and no withdrawal shall be made,
unless otherwise determined by the Administrator.
	 
	10.02	 	Discontinuation. At any time during the Phase, a Participant may also request that the
Administrator discontinue any further payroll deductions that would otherwise be made during
the remainder of the Phase by completing a change of election form and filing such form with
the Administrator on or before the date immediately preceding the termination date of the
Phase established by the Administrator. The Participant’s request shall be effective as of
the beginning of the next payroll period immediately following the date that the Administrator
receives the Participant’s properly completed change of election form. Upon the effective
date of the Participant’s request, the Corporation will discontinue making payroll deductions
for such Participant for that Phase, and all future Phases, unless the Participant completes
another change of election form as provided above. Amounts credited to the Participant’s
bookkeeping account prior to the effective date of the request to discontinue deductions shall
be used to purchase additional shares of Stock upon termination of the current Phase in
accordance with the terms of the Plan.

ARTICLE XI — TERMINATION OF EMPLOYMENT

	11.01	 	Termination. If, on or before the termination date of any Phase, a Participant’s employment
terminates with the Corporation for any reason, voluntarily or involuntarily, including by
reason of retirement or death, the payroll deductions credited to such Participant’s
bookkeeping account for such Phase, if any, will be returned to the Participant, without
interest, and any options granted to such Participant under the Plan shall immediately lapse
and shall not be exercisable. The return of such payroll deductions shall be made to the
Participant as soon as administratively practicable following the Participant’s termination of
employment. In the event that such termination occurs near the end of a Phase and the
Corporation is unable to discontinue payroll deductions for such Participant for his or her
final paycheck(s), such deductions shall still be made but shall be returned to the
Participant as provided herein. In no event shall the accumulated payroll deductions be used
to purchase any shares of Stock.
	 
	 	 	If the option lapses as a result of the Participant’s death, any accumulated payroll
deductions credited to the Participant’s bookkeeping account will be paid to the

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	 	 	Participant’s estate, without interest. In the event a Participant dies after
exercise of the Participant’s option but prior to delivery of the Stock to be
transferred pursuant to the exercise of the option under Section 9.04 above, any
such Stock and/or accumulated payroll deductions remaining after such exercise shall
be paid by the Corporation to the Participant’s estate.
	 
	 	 	The Corporation will not be responsible for or be required to give effect to the
disposition of any cash or Stock or the exercise of any option in accordance with
any will or other testamentary disposition made by such Participant or in accordance
with the provisions of any law concerning intestacy, or otherwise. No person shall,
prior to the death of a Participant, acquire any interest in any Stock, in any
option or in the cash credited to the Participant’s bookkeeping account during any
Phase of the Plan.
	 
	11.02	 	Subsidiaries. In the event that any Subsidiary ceases to be a Subsidiary of the
Corporation, the employees of such Subsidiary shall be considered to have terminated their
employment for purposes of Section 11.01 hereof as of the date the Subsidiary ceased to be a
Subsidiary of the Corporation.

ARTICLE XII — STOCK RESERVED FOR OPTIONS

	12.01	 	Shares Reserved. Four Hundred Thousand (400,000) shares of Stock, which may be authorized
but unissued shares of the Corporation (or the number and kind of securities to which said
400,000 shares may be adjusted in accordance with Section 14.01 hereof) are reserved for
issuance upon the exercise of options to be granted under the Plan. Shares subject to the
unexercised portion of any lapsed or expired option may again be subject to option under the
Plan.
	 
	12.02	 	Rights as Shareholder. The Participant shall have no rights as a shareholder with respect
to any shares of Stock subject to the Participant’s option until the date of the issuance of a
stock certificated evidencing such shares, or the electronic delivery of such shares to the
account of the Participant, in each case as provided in Section 9.05. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date such shares of
Stock are actually issued, except as otherwise provided in Section 14.01 hereof.

ARTICLE XIII — ACCOUNTING AND USE OF FUNDS

	13.01	 	Bookkeeping Account. Payroll deductions for Participants shall be credited to bookkeeping
accounts, established by the Corporation for each such Participant under the Plan. A
Participant may not make any cash payments into such account. Such account shall be solely
for bookkeeping purposes and shall not require the Corporation to establish any separate fund
or trust hereunder. All funds from payroll deductions received or held by the Corporation
under the Plan may be used, without limitation, for any corporate purpose by the Corporation,

- 10 -

 

	 	 	which shall not be obligated to segregate such funds from its other funds. Except
as otherwise provided in Section 10.01, Participants shall not be entitled to
interest on the amounts credited to such bookkeeping accounts.

ARTICLE XIV — ADJUSTMENT PROVISION

	14.01	 	General. Subject to any required action by the shareholders of the Corporation, in the
event of an increase or decrease in the number of outstanding shares of Stock or in the event
the Stock is changed into or exchanged for a different number or kind of shares of stock or
other securities of the Corporation or another corporation by reason of a reorganization,
merger, consolidation, divestiture (including a spin-off), liquidation, recapitalization,
reclassification, stock dividend, stock split, combination of shares, rights offering or any
other change in the corporate structure or shares of the Corporation, the Board (or, if the
Corporation is not the surviving corporation in any such transaction, the board of directors
of the surviving corporation), in its sole discretion, shall adjust the number and kind of
securities subject to and reserved under the Plan and, to prevent the dilution or enlargement
of rights of those Participants to whom options have been granted, shall adjust the number and
kind of securities subject to such outstanding options and, where applicable, the exercise
price per share for such securities.
	 
	 	 	In the event of sale by the Corporation of substantially all of its assets and the
consequent discontinuance of its business, or in the event of a merger, exchange,
consolidation, reorganization, divestiture (including a spin-off), liquidation,
reclassification or extraordinary dividend (collectively referred to as a
“transaction”), after which the Corporation is not the surviving corporation, the
Board may, in its sole discretion, at the time of adoption of the plan for such
transaction, provide for one or more of the following:

	 	(a)	 	The acceleration of the exercisability of
outstanding options granted at the commencement of the Phase then in
effect, to the extent of the accumulated payroll deductions made as of
the date of such acceleration pursuant to Article VIII hereof;
	 
	 	(b)	 	The complete termination of this Plan and a
refund of amounts credited to the Participants’ bookkeeping accounts
hereunder; or
	 
	 	(c)	 	The continuance of the Plan only with respect
to completion of the then current Phase and the exercise of options
thereunder. In the event of such continuance, Participants shall have
the right to exercise their options as to an equivalent number of
shares of stock of the corporation succeeding the Corporation by reason
of such transaction.

	 	 	In the event of a transaction where the Corporation survives, then the Plan shall
continue in effect, unless the Board takes one or more of the actions set forth

- 11 -

 

	 	 	above. The grant of an option pursuant to the Plan shall not limit in any way the
right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes in its capital or business structure or to merge,
exchange or consolidate or to dissolve, liquidate, sell or transfer all or any part
of its business or assets.

ARTICLE XV — NONTRANSFERABILITY OF OPTIONS

	15.01	 	Nontransferability. Options granted under any Phase of the Plan shall not be transferable
and shall be exercisable only by the Participant during the Participant’s lifetime.
	 
	15.02	 	Nonalienation. Neither payroll deductions granted to a Participant’s account, nor any
rights with regard to the exercise of an option or to receive Stock under any Phase of the
Plan may be assigned, transferred, pledged or otherwise disposed of in any way by the
Participant. Any such attempted assignment, transfer, pledge or other disposition shall be
null and void and without effect, except that the Corporation may, at its option, treat such
act as an election to withdraw in accordance with Section 10.01.

ARTICLE XVI — AMENDMENT AND TERMINATION

	16.01	 	General. The Plan may be terminated or suspended at any time by the Board of Directors,
provided that, except as permitted in Sections 5.02 and 14.01 hereof, no such termination or
suspension shall take effect with respect to any options then outstanding. No options may be
granted during any suspension of the Plan or after its termination. The Board may, from time
to time, amend the Plan as it may deem proper and in the best interests of the Corporation or
as may be necessary to comply with Code Section 423, as amended, and the regulations
thereunder, or other applicable laws or regulations; provided, however, no such amendment
shall, without the consent of a Participant, materially adversely affect or impair the right
of a Participant with respect to any outstanding option; and provided, further, that no such
amendment shall:

	 	(a)	 	increase the total number of shares for which
options may be granted under the Plan (except as provided in Section
14.01 herein);
	 
	 	(b)	 	change the definition of employees or the class
of employees eligible to participate in the Plan; or
	 
	 	(c)	 	materially increase the benefits accruing to
Participants under the Plan;

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	 	 	without the approval of the Corporation’s shareholders, if such approval is required
for compliance with Code Section 423, as amended, and the regulations thereunder, or
other applicable laws or regulations.

ARTICLE XVII — NOTICES

	17.01	 	General. All notices, forms, elections or other communications in connection with the Plan
or any Phase thereof shall be in such form as specified by the Corporation or the
Administrator from time to time, and shall be deemed to have been duly given when received by
the Participant or his or her personal representative or by the Corporation or its designated
representative, as the case may be.

- 13 -

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