Document:

Exhibit 10.1

 

NASH-FINCH COMPANY

2000 STOCK INCENTIVE PLAN

(as amended effective February 19, 2002)

 

 

 

1.                                       Purpose of Plan.

 

                The

purpose of the Nash-Finch Company 2000 Stock Incentive Plan (the “Plan”) is to

support the maximization of long-term value creation for Nash-Finch Company

(the “Company”) and its stockholders by enabling the Company and its

Subsidiaries to attract and retain persons of ability to perform services for

the Company and its Subsidiaries by providing an incentive to such individuals through

equity participation in the Company and by rewarding such individuals who

contribute to the achievement by the Company of its economic objectives.

 

2.                                       Definitions.

 

                The

following terms will have the meanings set forth below, unless the context

clearly otherwise requires:

 

                2.1           “Board”

means the Board of Directors of the Company.

 

                2.2           “Broker

Exercise Notice” means a written notice pursuant to which a

Participant, upon exercise of an Option, irrevocably instructs a broker or

dealer to sell a sufficient number of shares or loan a sufficient amount of

money to pay all or a portion of the exercise price of the Option and/or any

related withholding tax obligations and remit such sums to the Company and

directs the Company to deliver stock certificates to be issued upon such

exercise directly to such broker or dealer.

 

                2.3           “Change

in Control” means an event described in Section 13.1 of the

Plan.

 

                2.4           “Code”

means the Internal Revenue Code of 1986, as amended.

 

                2.5           “Committee”

means the group of individuals administering the Plan, as provided in

Section 3 of the Plan.

 

                2.6           “Common

Stock” means the common stock of the Company, $1.66 2/3

par value, or the number and kind of shares of stock or other securities into

which such common stock may be changed in accordance with Section 4.3 of

the Plan.

 

                2.7           “Disability”

means the disability of the Participant such as would entitle the Participant

to receive disability income benefits pursuant to the long-term disability plan

of the Company or Subsidiary then covering the Participant or, if no such plan

exists or is applicable to the Participant, the permanent and total disability

of the Participant within the meaning of Section 22(e)(3) of the Code.

 

 

 

                2.8           “Eligible

Recipients” means all employees of the Company or any Subsidiary and

any non-employee directors, consultants and independent contractors of the

Company or any Subsidiary.

 

                2.9           “Exchange

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

 

                2.10         “Fair

Market Value” means, with respect to the Common Stock, as of any

date (or, if no shares were traded or quoted on such date, as of the next

preceding date on which there was such a trade or quote) (a) the mean

between the reported high and low sale prices of the Common Stock during the

regular trading session if the Common Stock is listed, admitted to unlisted

trading privileges or reported on any foreign or national securities exchange

or on the Nasdaq National Market or an equivalent foreign market on which sale

prices are reported; (b) if the Common Stock is not so listed, admitted to

unlisted trading privileges or reported, the closing bid price as reported by

the Nasdaq SmallCap Market, OTC Bulletin Board or the National Quotation

Bureau, Inc. or other comparable service; or (c) if the Common Stock

is not so listed or reported, such price as the Committee determines in good

faith in the exercise of its reasonable discretion.

 

                2.11         “Incentive

Award” means an Option, Stock Appreciation Right, Restricted Stock

Award, Performance Unit or Stock Bonus granted to an Eligible Recipient

pursuant to the Plan.

 

                2.12         “Incentive

Stock Option” means a right to purchase Common Stock granted to an

Eligible Recipient pursuant to Section 6 of the Plan that qualifies as an

“incentive stock option” within the meaning of Section 422 of the Code.

 

                2.13         “Non-Statutory

Stock Option” means a right to purchase Common Stock granted to an

Eligible Recipient pursuant to Section 6 of the Plan that does not qualify

as an Incentive Stock Option.

 

                2.14         “Option”

means an Incentive Stock Option or a Non-Statutory Stock Option.

 

                2.15         “Participant”

means an Eligible Recipient who receives one or more Incentive Awards under the

Plan.

 

                2.16         “Performance

Criteria” means the performance criteria that may be used by the

Committee in granting Performance Units or Restricted Stock Awards contingent

upon achievement of performance goals, consisting of specified levels of, or

relating to, customer satisfaction as measured by a Company sponsored customer

survey; employee engagement or employee relations as measured by a Company

sponsored survey; employee safety; employee diversity; financial performance as

measured by net sales, operating income, income before income taxes, net

income, net income per share (basic or diluted), profitability as measured by

return ratios (including return on assets, return on equity, return on

investment and return on sales), cash flows, market share, cost reduction

goals, 

 

 

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margins (including one or more of gross, operating and

net income margins), stock price, total return to stockholders, economic value

added, working capital and productivity improvements; retail store performance

as determined by independent assessment; and operational performance as measured

by on-time delivery, fill rate, selector accuracy, cost per case, sales per

square foot, sales per labor hour and other, similar, objective productivity

measures. The Committee may select one criterion or multiple criteria for

measuring performance, and the measurement may be based upon Company,

Subsidiary or business unit performance, either absolute or by relative

comparison to other companies or any other external measure of the selected

criteria.

 

                2.17         “Performance

Unit” means a right granted to an Eligible Recipient pursuant to

Section 9 of the Plan to receive a payment from the Company, in the form

of stock, cash or a combination of both, upon the achievement of Performance

Criteria or other established employment, service, performance or other goals

during a specified period.

 

                2.18         “Previously

Acquired Shares” means shares of Common Stock that are already owned

by the Participant or, with respect to any Incentive Award, that are to be

issued upon the grant, exercise or vesting of such Incentive Award.

 

                2.19         “Restricted

Stock Award” means an award of Common Stock granted to an Eligible

Recipient pursuant to Section 8 of the Plan that is subject to the

restrictions on transferability and the risk of forfeiture imposed by the

provisions of such Section 8.

 

                2.20         “Retirement”

means termination of employment or service pursuant to and in accordance with

the regular (or, if approved by the Board for purposes of the Plan, early)

retirement/pension plan or practice of the Company or Subsidiary then covering

the Participant, provided that if the Participant is not covered by any such

plan or practice, the Participant will be deemed to be covered by the Company’s

plan or practice for purposes of this determination.

 

                2.21         “Securities

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

 

                2.22         “Stock

Appreciation Right” means a right granted to an Eligible Recipient

pursuant to Section 7 of the Plan to receive a payment from the Company,

in the form of stock, cash or a combination of both, equal to the difference

between the Fair Market Value of one or more shares of Common Stock and the

exercise price of such shares under the terms of such Stock Appreciation Right.

 

                2.23         “Stock

Bonus” means an award of Common Stock granted to an Eligible

Recipient pursuant to Section 10 of the Plan.

 

                2.24         “Subsidiary”

means any entity that is directly or indirectly controlled by the Company or

any entity in which the Company has a significant equity interest, as

determined by the Committee.

 

 

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                2.25         “Tax

Date” means the date any withholding tax obligation arises under the

Code or other applicable tax statute for a Participant with respect to an

Incentive Award.

 

3.                                       Plan Administration.

 

                3.1           The

Committee. The Plan will be administered by the Board or by a

committee of the Board. So long as the Company has a class of its equity

securities registered under Section 12 of the Exchange Act, any committee

administering the Plan will consist solely of two or more members of the Board

who are “non-employee directors” within the meaning of Rule 16b-3 under

the Exchange Act and, if the Board so determines in its sole discretion, who

are “outside directors” within the meaning of Section 162(m) of the Code.

Such a committee, if established, will act by majority approval of the members

(but may also take action with the written consent of all of the members of

such committee), and a majority of the members of such a committee will

constitute a quorum. As used in the Plan, “Committee” will refer to the Board

or to such a committee, if established. To the extent consistent with

applicable corporate law of the Company’s jurisdiction of incorporation, the

Committee may delegate to any officers of the Company the duties, power and

authority of the Committee under the Plan pursuant to such conditions or

limitations as the Committee may establish; provided, however, that only the

Committee may exercise such duties, power and authority with respect to

Eligible Recipients who are subject to Section 16 of the Exchange Act. The

Committee may exercise its duties, power and authority under the Plan in its

sole and absolute discretion without the consent of any Participant or other

party, unless the Plan specifically provides otherwise. Each determination, interpretation

or other action made or taken by the Committee pursuant to the provisions of

the Plan will be final, conclusive and binding for all purposes and on all

persons, including, without limitation, the Company, the stockholders of the

Company, the participants and their respective successors-in-interest. No

member of the Committee will be liable for any action or determination made in

good faith with respect to the Plan or any Incentive Award granted under the

Plan.

 

                3.2           Authority

of the Committee.

 

                (a)           In accordance with and subject to the

provisions of the Plan, the Committee will have the authority to determine all

provisions of Incentive Awards as the Committee may deem necessary or desirable

and as consistent with the terms of the Plan, including, without limitation,

the following: (i) the Eligible Recipients to be selected as Participants;

(ii) the nature and extent of the Incentive Awards to be made to each

Participant (including the number of shares of Common Stock to be subject to

each Incentive Award, any exercise price, the manner in which Incentive Awards

will vest or become exercisable and whether Incentive Awards will be granted in

tandem with other Incentive Awards) and the form of written agreement, if any,

evidencing such Incentive Award; (iii) the time or times when Incentive

Awards will be granted; (iv) the duration of each Incentive Award; and

(v) the restrictions and other conditions to which the payment or vesting

of Incentive Awards may be subject. In addition, the Committee will have the 

 

 

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authority under the Plan in its sole discretion to

pay the economic value of any Incentive Award in the form of cash, Common Stock

or any combination of both.

 

                (b)           The Committee will have the authority

under the Plan to amend or modify the terms of any outstanding Incentive Award

in any manner, including, without limitation, the authority to modify the

number of shares or other terms and conditions of an Incentive Award, extend

the term of an Incentive Award or accelerate the exercisability or vesting or

otherwise terminate any restrictions relating to an Incentive Award; provided,

however that the amended or modified terms are permitted by the Plan as then in

effect and that any Participant adversely affected by such amended or modified

terms has consented to such amendment or modification. No amendment or

modification to an Incentive Award, however, whether pursuant to this

Section 3.2 or any other provisions of the Plan, will be deemed to be a

re-grant of such Incentive Award for purposes of this Plan.

 

                (c)           In the event of (i) any

reorganization, merger, consolidation, recapitalization, liquidation,

reclassification, stock dividend, stock split, combination of shares, rights

offering, extraordinary dividend or divestiture (including a spin-off) or any

other change in corporate structure or shares; (ii) any purchase,

acquisition, sale, disposition or write-down of a significant amount of assets

or a significant business; (iii) any change in accounting principles or

practices, tax laws or other such laws or provisions affecting reported

results; (iv) any uninsured catastrophic losses or extraordinary

non-recurring items as described in Accounting Principles Board Opinion

No. 30 or in management’s discussion and analysis of financial performance

appearing in the Company’s annual report to stockholders for the applicable

year; or (v) any other similar change, in each case with respect to the

Company or any other entity whose performance is relevant to the grant or

vesting of an Incentive Award, the Committee (or, if the Company is not the

surviving corporation in any such transaction, the board of directors of the

surviving corporation) may, without the consent of any affected Participant,

amend or modify the vesting criteria (including Performance Criteria) of any

outstanding Incentive Award that is based in whole or in part on the financial

performance of the Company (or any Subsidiary or division thereof) or such

other entity so as equitably to reflect such event, with the desired result

that the criteria for evaluating such financial performance of the Company or

such other entity will be substantially the same (in the sole discretion of the

Committee or the board of directors of the surviving corporation) following

such event as prior to such event; provided, however, that the amended or

modified terms are permitted by the Plan as then in effect.

 

                (d)           Notwithstanding any other provision

of this Plan other than Section 4.3, the Committee may not, without prior

approval of the Company’s stockholders, seek to effect any re-pricing of any

previously granted, “underwater” Option by: (i) amending or modifying the

terms of the Option to lower the exercise price; (ii) canceling the

underwater Option and granting either (A) replacement Options having a

lower exercise price; (B) Restricted Stock Awards; or 

 

 

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(C) Performance Units in exchange; or

(iii) repurchasing the underwater Options and granting new Incentive

Awards under this Plan. For purposes of this Section 3.2(d), an Option

will be deemed to be “underwater” at any time when the Fair Market Value of the

Common Stock is less than the exercise price of the Option.

 

4.                                       Shares Available for Issuance.

 

                4.1           Maximum

Number of Shares Available. Subject to adjustment as provided in

Section 4.3 of the Plan, the maximum number of shares of Common Stock that

will be available for issuance under the Plan will be 1,100,000 shares of

Common Stock, plus any shares of Common Stock which, as of the date the Plan is

approved by the stockholders of the Company, are reserved for issuance under

the Company’s 1994 Stock Incentive Plan, as amended, and which are not

thereafter issued or which have been issued but are subsequently forfeited and

which would otherwise have been available for further issuance under such plan.

Notwithstanding any other provisions of the Plan to the contrary, (i) no

Participant in the Plan may be granted any Options or Stock Appreciation Rights,

or any other Incentive Awards with a value based solely on an increase in the

value of the Common Stock after the date of grant, relating to more than

120,000 shares of Common Stock in the aggregate in any fiscal year of the

Company; provided, however, that a Participant who is first appointed or

elected as an officer, hired as an employee or retained as a consultant by the

Company or who receives a promotion that results in an increase in

responsibilities or duties may be granted, during the fiscal year of such

appointment, election, hiring, retention or promotion, Options relating to up

to 200,000 shares of Common Stock; and (ii) no more than an aggregate of

220,000 shares of Common Stock may be granted pursuant to Restricted Stock

Awards, Performance Units or Stock Bonuses under the Plan, other than in

exchange for full value at the time of grant or as an incentive to the

Participant to accept payment of other compensation in the form of shares of

Common Stock, with all of the foregoing limitations subject to adjustment as

provided in Section 4.3 of the Plan.

 

                4.2           Accounting

for Incentive Awards. Shares of Common Stock that are issued under

the Plan or that are subject to outstanding Incentive Awards will be applied to

reduce the maximum number of shares of Common Stock remaining available for

issuance under the Plan. Any shares of Common Stock that are subject to an

Incentive Award that lapses, expires, is forfeited or for any reason is

terminated unexercised or unvested and any shares of Common Stock that are

subject to an Incentive Award that is settled or paid in cash or any form other

than shares of Common Stock will automatically again become available for

issuance under the Plan.

 

                4.3           Adjustments

to Shares and Incentive Awards. In the event of any reorganization,

merger, consolidation, recapitalization, liquidation, reclassification, stock

dividend, stock split, combination of shares, rights offering, divestiture or

extraordinary dividend (including a spin-off) or any other change in the

corporate structure or shares of the Company, the Committee (or, if the Company

is not the surviving corporation in any such transaction, the board of

directors of the surviving corporation) will make appropriate 

 

 

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adjustment (which determination will be conclusive) as to

the number and kind of securities or other property (including cash) available

for issuance or payment under the Plan and, in order to prevent dilution or

enlargement of the rights of Participants, (a) the number and kind of

securities or other property (including cash) subject to outstanding Options,

and (b) the exercise price of outstanding Options.

 

5.                                       Participation.

 

                Participants

in the Plan will be those Eligible Recipients who, in the judgment of the

Committee, have contributed, are contributing or are expected to contribute to

the creation of value for the Company and its stockholders. Eligible Recipients

may be granted from time to time one or more Incentive Awards, singly or in

combination or in tandem with other Incentive Awards, as may be determined by

the Committee in its sole discretion. Incentive Awards will be deemed to be

granted as of the date specified in the grant resolution of the Committee,

which date will be the date of any related agreement with the Participant.

 

6.                                       Options.

 

                6.1           Grant.

An Eligible Recipient may be granted one or more Options under the Plan, and

such Options will be subject to such terms and conditions, consistent with the

other provisions of the Plan, as may be determined by the Committee in its sole

discretion. The Committee may designate whether an Option is to be considered

an Incentive Stock Option or a Non-Statutory Stock Option. To the extent that

any Incentive Stock Option granted under the Plan ceases for any reason to

qualify as an “incentive stock option” for purposes of Section 422 of the

Code, such Incentive Stock Option will continue to be outstanding for purposes

of the Plan but will thereafter be deemed to be a Non-Statutory Stock Option.

 

                6.2           Exercise

Price. The per share price to be paid by a Participant upon exercise

of an Option will be determined by the Committee in its discretion at the time

of the Option grant; provided, however, that such price will not be less than

100% of the Fair Market Value of one share of Common Stock on the date of grant

or, with respect to an Incentive Stock Option, 110% of the Fair Market Value

if, at the time the Incentive Stock Option is granted, the Participant owns,

directly or indirectly, more than 10% of the total combined voting power of all

classes of stock of the Company or any parent or subsidiary corporation of the

Company).

 

                6.3           Exercisability

and Duration. An Option will become exercisable at such times and in

such installments as may be determined by the Committee in its sole discretion

at the time of grant; provided, however, that no Option may be exercisable

prior to six months from its date of grant (other than in connection with a

Participant’s death or Disability) and no Option may be exercisable after

10 years from its date of grant (or, in the case of an Incentive Stock

Option, five years from its date of grant if, at the time the Incentive Stock

Option is granted, the Participant owns, directly or indirectly, more than 10%

of the total combined voting power of all classes of stock of the Company or

any parent or subsidiary corporation of the Company).

 

 

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                6.4           Payment

of Exercise Price. The total purchase price of the shares to be

purchased upon exercise of an Option will be paid entirely in cash (including

check, bank draft or money order); provided, however, that the Committee, in

its sole discretion and upon terms and conditions established by the Committee,

may allow such payments to be made, in whole or in part, by tender of a Broker

Exercise Notice, Previously Acquired Shares (including through delivery of a

written attestation of ownership of such Previously Acquired Shares if

permitted, and on terms acceptable, to the Committee in its sole discretion), a

promissory note (on terms acceptable to the Committee in its sole discretion)

or by a combination of such methods.

 

                6.5           Manner

of Exercise. An Option may be exercised by a Participant in whole or

in part from time to time, subject to the conditions contained in the Plan and

in the agreement evidencing such Option, by delivery in person, by facsimile or

electronic transmission or through the mail of written notice of exercise to

the Company (Attention: Secretary) at its principal executive office in

Minneapolis, Minnesota and by paying in full the total exercise price for the

shares of Common Stock to be purchased in accordance with Section 6.4 of

the Plan.

 

                6.6           Aggregate

Limitation of Stock Subject to Incentive Stock Options. To the

extent that the aggregate Fair Market Value (determined as of the date an

Incentive Stock Option is granted) of the shares of Common Stock with respect

to which incentive stock options (within the meaning of Section 422 of the

Code) are exercisable for the first time by a Participant during any calendar

year (under the Plan and any other incentive stock option plans of the Company

or any subsidiary or parent corporation of the Company (within the meaning of

the Code)) exceeds $100,000 (or such other amount as may be prescribed by the

Code from time to time), such excess Options will be treated as Non-Statutory

Stock Options. The determination will be made by taking incentive stock options

into account in the order in which they were granted. If such excess only applies

to a portion of an Incentive Stock Option, the Committee, in its discretion,

will designate which shares will be treated as shares to be acquired upon

exercise of an Incentive Stock Option.

 

7.                                       Stock Appreciation Rights.

 

                7.1           Grant.

An Eligible Recipient may be granted one or more Stock Appreciation Rights

under the Plan, and such Stock Appreciation Rights will be subject to such

terms and conditions, consistent with the other provisions of the Plan, as may

be determined by the Committee in its sole discretion. The Committee will have

the sole discretion to determine the form in which payment of the economic

value of Stock Appreciation Rights will be made to a Participant (i.e., cash,

Common Stock or any combination thereof) or to consent to or disapprove the

election by a Participant of the form of such payment.

 

 

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                7.2           Exercise

Price. The exercise price of a Stock Appreciation Right will be

determined by the Committee, in its discretion, at the date of grant but may

not be less than 100% of the Fair Market Value of one share of Common Stock on

the date of grant.

 

                7.3           Exercisability

and Duration. A Stock Appreciation Right will become exercisable at

such time and in such installments as may be determined by the Committee in its

sole discretion at the time of grant; provided, however, that no Stock

Appreciation Right may be exercisable prior to six months from its date of

grant (other than in connection with a Participant’s death or Disability) or

after 10 years from its date of grant. A Stock Appreciation Right will be

exercised by giving notice in the same manner as for Options, as set forth in

Section 6.5 of the Plan.

 

8.                                       Restricted Stock Awards.

 

                8.1           Grant.

An Eligible Recipient may be granted one or more Restricted Stock Awards under

the Plan, and such Restricted Stock Awards will be subject to such terms and

conditions, consistent with the other provisions of the Plan, as may be

determined by the Committee in its sole discretion. The Committee may impose

such restrictions or conditions, not inconsistent with the provisions of the

Plan, to the vesting of such Restricted Stock Awards as it deems appropriate,

including, without limitation, (i) the achievement of one or more of the

Performance Criteria; and/or that (ii) the Participant remain in the

continuous employ or service of the Company or a Subsidiary for a certain

period; provided, however, that no Restricted Stock Award may vest prior to six

months from its date of grant other than in connection with a Participant’s

death or Disability.

 

                8.2           Rights

as a Stockholder; Transferability. Except as provided in Sections

8.1, 8.3 and 14.3 of the Plan, a Participant will have all voting, dividend,

liquidation and other rights with respect to shares of Common Stock issued to

the Participant as a Restricted Stock Award under this Section 8 upon the

Participant becoming the holder of record of such shares as if such Participant

were a holder of record of shares of unrestricted Common Stock.

 

                8.3           Dividends

and Distributions. Unless the Committee determines otherwise in its

sole discretion (either in the agreement evidencing the Restricted Stock Award

at the time of grant or at any time after the grant of the Restricted Stock

Award), any dividends or distributions (including regular quarterly cash

dividends) paid with respect to shares of Common Stock subject to the unvested

portion of a Restricted Stock Award will be subject to the same restrictions as

the shares to which such dividends or distributions relate. In the event the

Committee determines not to pay dividends or distributions currently, the

Committee will determine in its sole discretion whether any interest will be

paid on such dividends or distributions. In addition, the Committee in its sole

discretion may require such dividends and distributions to be reinvested (and

in such case the Participant consents to such reinvestment) in shares of Common

Stock that will be subject to the same restrictions as the shares to which such

dividends or distributions relate.

 

 

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                8.4           Enforcement

of Restrictions. To enforce the restrictions referred to in this

Section 8, the Committee may place a legend on the stock certificates

referring to such restrictions and may require the Participant, until the

restrictions have lapsed, to keep the stock certificates, together with duly

endorsed stock powers, in the custody of the Company or its transfer agent or

to maintain evidence of stock ownership, together with duly endorsed stock

powers, in a certificateless book-entry stock account with the Company’s

transfer agent.

 

9.                                       Performance Units.

 

                An

Eligible Recipient may be granted one or more Performance Units under the Plan,

and such Performance Units will be subject to such terms and conditions,

consistent with the other provisions of the Plan, as may be determined by the

Committee in its sole discretion. The Committee may impose such restrictions or

conditions, not inconsistent with the provisions of the Plan, to the vesting of

such Performance Units as it deems appropriate, including, without limitation,

(i) the achievement of one or more of the Performance Criteria; and/or

that (ii) that the Participant remain in the continuous employ or service

of the Company or any Subsidiary for a certain period. The Committee will have

the sole discretion to determine the form in which payment of the economic

value of Performance Units will be made to a Participant (i.e., cash, Common

Stock, Restricted Stock Awards or any combination thereof) or to consent to or

disapprove the election by a Participant of the form of such payment.

 

10.                                 Stock Bonuses.

 

                An

Eligible Recipient may be granted one or more Stock Bonuses under the Plan, and

such Stock Bonuses will be subject to such terms and conditions, consistent

with the other provisions of the Plan, as may be determined by the Committee,

including, without limitation, (i) the achievement of one or more of the

Performance Criteria; and/or that (ii) that the Participant remain in the

continuous employ or service of the Company or any Subsidiary for a certain

period. The Participant will have all voting, dividend, liquidation and other

rights with respect to the shares of Common Stock issued to a Participant as a

Stock Bonus under this Section 10 upon the Participant becoming the holder

of record of such shares; provided, however, that the Committee may impose such

restrictions on the assignment or transfer of a Stock Bonus as it deems

appropriate.

 

11.                                 Effect of Termination of Employment or Other Service.

 

                11.1         Termination

Due to Death, Disability or Retirement. Unless otherwise provided by

the Committee in its sole discretion in the agreement evidencing an Incentive

Award:

 

                (a)           In the event a Participant’s

employment or other service with the Company and all Subsidiaries is terminated

by reason of death or Disability:

 

 

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                (i)            All outstanding Options and Stock

Appreciation Rights then held by the Participant will become immediately

exercisable in full and remain exercisable, for a period of three years after

such termination (but in no event after the expiration date of any such Option

or Stock Appreciation Right);

 

                (ii)           All Restricted Stock Awards then held

by the Participant will become fully vested; and

 

                (iii)          All Performance Units and Stock

Bonuses then held by the Participant will vest and/or continue to vest in the

manner determined by the Committee and set forth in the agreement evidencing

such Performance Units or Stock Bonuses.

 

                (b)           In the event a Participant’s

employment or other service with the Company and all Subsidiaries is terminated

by reason of Retirement:

 

                (i)            All outstanding Options and Stock

Appreciation Rights then held by the Participant will remain exercisable, to

the extent exercisable as of the date of such termination, for a period of

three years after such termination (but in no event after the expiration date

of any such Option or Stock Appreciation Right);

 

                (ii)           All Restricted Stock Awards then held

by the Participant that have not vested as of such termination will be

terminated and forfeited; and

 

                (iii)          All Performance Units and Stock

Bonuses then held by the Participant will vest and/or continue to vest in the

manner determined by the Committee and set forth in the agreement evidencing

such Performance Units or Stock Bonuses.

 

11.2                           Termination for Reasons Other than Death, Disability

or Retirement.

 

                (a)           Unless otherwise provided by the

Committee in its sole discretion in the agreement evidencing an Incentive

Award, in the event a Participant’s employment or other service is terminated

with the Company and all Subsidiaries for any reason other than death,

Disability or Retirement, or a Participant is in the employ or service of a

Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company (unless

the Participant continues in the employ or service of the Company or another

Subsidiary), all rights of the Participant under the Plan and any agreements

evidencing an Incentive Award will immediately terminate without notice of any

kind, and no Options or Stock Appreciation Rights then held by the Participant

will thereafter be exercisable, all Restricted Stock Awards then held by the

Participant that have not vested will be terminated and forfeited, and all

Performance Units and Stock Bonuses then held by the Participant will vest

and/or continue to vest in the manner determined by the Committee and set forth

in the 

 

 

11

 

agreement evidencing such Performance Units or

Stock Bonuses; provided, however, that if such termination is due to any reason

other than voluntary termination by the Participant or termination by the

Company or any Subsidiary for “cause,” all outstanding Options and Stock

Appreciation Rights then held by such Participant will remain exercisable, to

the extent exercisable as of such termination, for a period of three months

after such termination (but in no event after the expiration date of any such

Option or Stock Appreciation Right).

 

                (b)           For purposes of this

Section 11.2, “cause” (as determined by the Committee) will be as defined

in any employment or other agreement or policy applicable to the Participant

or, if no such agreement or policy exists, will mean (i) dishonesty,

fraud, misrepresentation, embezzlement or deliberate injury or attempted

injury, in each case related to the Company or any Subsidiary, (ii) any

unlawful or criminal activity of a serious nature, (iii) any intentional

and deliberate breach of a duty or duties that, individually or in the

aggregate, are material in relation to the Participant’s overall duties, or

(iv) any material breach of any employment, service, confidentiality or

non-compete agreement entered into with the Company or any Subsidiary.

 

                11.3         Modification

of Rights Upon Termination. Notwithstanding the other provisions of

this Section 11, upon a Participant’s termination of employment or other

service with the Company and all Subsidiaries, the Committee may, in its sole

discretion (which may be exercised at any time on or after the date of grant,

including following such termination), cause Options and Stock Appreciation

Rights (or any part thereof) then held by such Participant to become or

continue to become exercisable and/or remain exercisable following such termination

of employment or service and Restricted Stock Awards, Performance Units and

Stock Bonuses then held by such Participant to vest and/or continue to vest or

become free of transfer restrictions, as the case may be, following such

termination of employment or service, in each case in the manner determined by

the Committee; provided, however, that no Option or Restricted Stock Award may

become exercisable or vest prior to six months from its date of grant (other

than in connection with a Participant’s death or Disability) or remain

exercisable or continue to vest beyond its expiration date.

 

                11.4         Exercise

of Incentive Stock Options Following Termination. Any Incentive

Stock Option that remains unexercised more than one year following termination

of employment by reason of Disability or more than three months following

termination for any reason other than death or Disability will thereafter be

deemed to be a Non-Statutory Stock Option.

 

                11.5         Date of

Termination of Employment or Other Service. Unless the Committee

otherwise determines in its sole discretion, a Participant’s employment or

other service will, for purposes of the Plan, be deemed to have terminated on

the date recorded on the personnel or other records of the Company or the

Subsidiary for which the Participant provides employment or other service, as

determined by the Committee in its sole discretion based upon such records.

 

 

12

 

12.                                 Payment of Withholding Taxes.

 

                12.1         General

Rules. The Company is entitled to (a) withhold and deduct from

future wages of the Participant (or from other amounts that may be due and

owing to the Participant from the Company or a Subsidiary), or make other

arrangements for the collection of, all legally required amounts necessary to

satisfy any and all foreign, federal, state and local withholding and

employment–related tax requirements attributable to an Incentive Award,

including, without limitation, the grant, exercise or vesting of, or payment of

dividends with respect to, an Incentive Award or a disqualifying disposition of

stock received upon exercise of an Incentive Stock Option, or (b) require

the Participant promptly to remit the amount of such withholding to the Company

before taking any action, including issuing any shares of Common Stock, with

respect to an Incentive Award.

 

                12.2         Special

Rules. The Committee may, in its sole discretion and upon terms and

conditions established by the Committee, permit or require a Participant to

satisfy, in whole or in part, any withholding or employment–related tax

obligation described in Section 12.1 of the Plan by electing to tender

Previously Acquired Shares, a Broker Exercise Notice or a promissory note (on

terms acceptable to the Committee in its sole discretion), or by a combination

of such methods.

 

13.                                 Change in Control.

 

                13.1         Change in Control. For purposes of this

Section 13, a “Change in Control” of the Company will mean the following:

 

                (a)           the sale, lease, exchange or other

transfer, directly or indirectly, of substantially all of the assets of the

Company (in one transaction or in a series of related transactions) to any

Person (as defined below);

 

                (b)           consummation of any stockholder

approved plan for the liquidation or dissolution of the Company;

 

                (c)           any Person, other than a Bona Fide

Underwriter (as defined below), becoming after the effective date of the Plan

the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),

directly or indirectly, of (i) 20% or more, but not more than 50%, of the

combined voting power of the Company’s outstanding securities ordinarily having

the right to vote at elections of directors, unless the transaction resulting

in such ownership has been approved in advance by the Continuity Directors (as

defined below), or (ii) more than 50% of the combined voting power of the

Company’s outstanding securities ordinarily having the right to vote at

elections of directors (regardless of any approval by the Continuity

Directors);

 

                (d)           a merger or consolidation to which

the Company is a party if the stockholders of the Company immediately prior to

effective time of such merger or 

 

 

13

 

consolidation have, solely on account of ownership

of securities of the Company at such time, “beneficial ownership” (as defined

in Rule 13d-3 under the Exchange Act), immediately following the effective

time of such merger or consolidation, of securities of the surviving

corporation representing (i) 50% or more, but not more than 80%, of the

combined voting power of the surviving corporation’s then outstanding

securities ordinarily having the right to vote at elections of directors,

unless such merger or consolidation has been approved in advance by the

Continuity Directors, or (ii) less than 50% of the combined voting power

of the surviving corporation’s then outstanding securities ordinarily having

the right to vote at elections of directors (regardless of any approval by the

Continuity Directors); or

 

                (e)           the Continuity Directors cease for

any reason to constitute at least a majority of the Board.

 

                13.2         Change

in Control Definitions. For purposes of this Section 13:

 

                (a)           “Continuity Director” means any

individual who was a member of the Board on the effective date of the Plan,

while he or she is a member of the Board, and any individual who subsequently

becomes a member of the Board whose election or nomination for election by the

Company’s stockholders was approved by a vote of at least a majority of the

directors who are Continuity Directors (either by a specific vote or by

approval of the proxy statement of the Company in which such individual is

named as a nominee for director without objection to such nomination). For

example, assuming that nine individuals comprise the entire Board as of the

effective date of the Plan, if a majority of such individuals approved a proxy

statement in which two different individuals were nominated to replace two of

the individuals who were members of the Board as of the effective date of the

Plan, these two newly elected directors would join the remaining seven

directors who were members of the Board as of the effective date of the Plan as

Continuity Directors. Similarly, if subsequently a majority of these directors

approved a proxy statement in which three different individuals were nominated

to replace three other directors who were members of the Board as of the

effective date of the Plan, these three newly elected directors would also

become, along with the other six directors, Continuity Directors. Individuals

subsequently joining the Board could become Continuity Directors under the

principles reflected in this example.

 

                (b)           “Bona Fide Underwriter” means a

Person engaged in business as an underwriter of securities that acquires

securities of the Company from the Company through such Person’s participation

in good faith in a firm commitment underwriting until the expiration of

40 days after the date of such acquisition.

 

                (c)           “Person” means any individual,

corporation, partnership, group, association or other “person,” as such term is

used in Section 13(d) or Section 14(d) of the Exchange Act, other

than the Company, any affiliate or any benefit plan 

 

 

14

 

sponsored by the Company or any affiliate. For

this purpose, an affiliate is (i) any corporation at least a majority of

whose outstanding securities ordinarily having the right to vote at elections

of directors is owned directly or indirectly by the Company or (ii) any

other form of business entity in which the Company, by virtue of a direct or

indirect ownership interest, has the right to elect a majority of the members

of such entity’s governing body.

 

                13.3         Acceleration

of Vesting. Without limiting the authority of the Committee under

Sections 3.2 and 4.3 of the Plan, if a Change in Control of the Company occurs,

then, unless otherwise provided by the Committee in its sole discretion either

in the agreement evidencing an Incentive Award at the time of grant or at any

time after the grant of an Incentive Award, (a) all Options and Stock

Appreciation Rights that have been outstanding for at least six months will

become immediately exercisable in full and will remain exercisable for the

remainder of their terms, regardless of whether the Participant to whom such

Options or Stock Appreciation Rights have been granted remains in the employ or

service of the Company or any Subsidiary; (b) all Restricted Stock Awards

that have been outstanding for at least six months will become immediately

fully vested and non-forfeitable; and (c) all outstanding Performance

Units and Stock Bonuses then held by the Participant will vest and/or continue

to vest in the manner determined by the Committee and set forth in the

agreement evidencing such Stock Bonuses.

 

                13.4         Cash

Payment for Options. If a Change in Control of the Company occurs,

then the Committee, if approved by the Committee in its sole discretion either

in an agreement evidencing an Incentive Award at the time of grant or at any

time after the grant of an Incentive Award, and without the consent of any

Participant effected thereby, may determine that some or all Participants

holding outstanding Options will receive, with respect to some or all of the

shares of Common Stock subject to such Options, as of the effective date of any

such Change in Control of the Company, cash in an amount equal to the excess of

the Fair Market Value of such shares immediately prior to the effective date of

such Change in Control of the Company over the exercise price per share of such

Options.

 

                13.5         Limitation

on Change in Control Payments. Notwithstanding anything in

Section 13.3 or 13.4 of the Plan to the contrary, if, with respect to a

Participant, the acceleration of the vesting of an Incentive Award as provided

in Section 13.3 or the payment of cash in exchange for all or part of an

Incentive Award as provided in Section 13.4 (which acceleration or payment

could be deemed a “payment” within the meaning of Section 280G(b)(2) of

the Code), together with any other “payments” that such Participant has the

right to receive from the Company or any corporation that is a member of an

“affiliated group” (as defined in Section 1504(a) of the Code without

regard to Section 1504(b) of the Code) of which the Company is a member,

would constitute a “parachute payment” (as defined in Section 280G(b)(2)

of the Code), then the “payments” to such Participant pursuant to

Section 13.3 or 13.4 of the Plan will be reduced to the largest amount as

will result in no portion of such “payments” being subject to the excise tax

imposed by Section 4999 of the Code; provided, however, that if a

Participant is subject to a separate agreement with the Company or a Subsidiary

that expressly addresses the 

 

 

15

 

potential application of Sections 280G or 4999 of the

Code (including, without limitation, that “payments” under such agreement or

otherwise will be reduced, that the Participant will have the discretion to

determine which “payments” will be reduced, that such “payments” will not be

reduced or that such “payments” will be “grossed up” for tax purposes), then

this Section 13.5 will not apply, and any “payments” to a Participant

pursuant to Section 13.3 or 13.4 of the Plan will be treated as “payments”

arising under such separate agreement.

 

14.                                 Rights of Eligible Recipients and Participants;

Transferability.

 

                14.1         Employment

or Service. Nothing in the Plan will interfere with or limit in any

way the right of the Company or any Subsidiary to terminate the employment or

service of any Eligible Recipient or Participant at any time, nor confer upon

any Eligible Recipient or Participant any right to continue in the employ or

service of the Company or any Subsidiary.

 

                14.2         Rights

as a Stockholder. As a holder of Incentive Awards (other than

Restricted Stock Awards and Stock Bonuses), a Participant will have no rights

as a stockholder unless and until such Incentive Awards are exercised for, or

paid in the form of, shares of Common Stock and the Participant becomes the

holder of record of such shares. Except as otherwise provided in the Plan, no

adjustment will be made for dividends or distributions with respect to such

Incentive Awards as to which there is a record date preceding the date the

Participant becomes the holder of record of such shares, except as the

Committee may determine in its discretion.

 

                14.3         Restrictions

on Transfer. Except pursuant to testamentary will or the laws of

descent and distribution or as otherwise expressly permitted by the Plan,

unless approved by the Committee in its sole discretion, no right or interest

of any Participant in an Incentive Award prior to the exercise or vesting of

such Incentive Award will be assignable or transferable, or subjected to any

lien, during the lifetime of the Participant, either voluntarily or

involuntarily, directly or indirectly, by operation of law or otherwise. A

Participant will, however, be entitled to designate a beneficiary to receive an

Incentive Award upon such Participant’s death, and in the event of a Participant’s

death, payment of any amounts due under the Plan will be made to, and exercise

of any Options (to the extent permitted pursuant to Section 11 of the

Plan) may be made by, the Participant’s legal representatives, heirs and

legatees.

 

                14.4         Breach

of Confidentiality or Non-Compete Agreements. Notwithstanding

anything in the Plan to the contrary, in the event that a Participant

materially breaches the terms of any confidentiality or non-compete agreement

entered into with the Company or any Subsidiary, whether such breach occurs

before or after termination of such Participant’s employment or other service

with the Company or any Subsidiary, the Committee in its sole discretion may

immediately terminate all rights of the Participant under the Plan and any agreements

evidencing an Incentive Award then held by the Participant without notice of

any kind.

 

 

16

 

                14.5         Non-Exclusivity

of the Plan. Nothing contained in the Plan is intended to modify or

rescind any previously approved compensation plans or programs of the Company

or create any limitations on the power or authority of the Board to adopt such

additional or other compensation arrangements as the Board may deem necessary

or desirable.

 

15.                                 Securities Law and Other Restrictions.

 

                Notwithstanding

any other provision of the Plan or any agreements entered into pursuant to the

Plan, the Company will not be required to issue any shares of Common Stock

under this Plan, and a Participant may not sell, assign, transfer or otherwise

dispose of shares of Common Stock issued pursuant to Incentive Awards granted

under the Plan, unless (a) there is in effect with respect to such shares

a registration statement under the Securities Act and any applicable state or foreign

securities laws or an exemption from such registration under the Securities Act

and applicable state or foreign securities laws, and (b) there has been

obtained any other consent, approval or permit from any other regulatory body

which the Committee, in its sole discretion, deems necessary or advisable. The

Company may condition such issuance, sale or transfer upon the receipt of any

representations or agreements from the parties involved, and the placement of

any legends on certificates representing shares of Common Stock, as may be

deemed necessary or advisable by the Company in order to comply with such

securities law or other restrictions.

 

16.                                 Performance–Based Compensation Provisions.

 

                The

Committee, when it is comprised solely of two or more outside directors meeting

the requirements of Section 162(m) of the Code (“Section 162(m)”), in

its sole discretion, may designate whether any Incentive Awards are intended to

be “performance–based compensation” within the meaning of

Section 162(m). Any Incentive Awards so designated will, to the extent

required by Section 162(m), be conditioned upon the achievement of one or

more Performance Criteria, and such Performance Criteria will be established by

the Committee within the time period prescribed by, and will otherwise comply

with the requirements of, Section 162(m) giving due regard to the

disparate treatment under Section 162(m) of Options and Stock Appreciation

Rights (where compensation is determined based solely on an increase in the

value of the underlying stock after the date of grant or award), as compared to

other forms of compensation, including Restricted Stock Awards, Performance

Units and Stock Bonuses. The Committee shall also certify in writing that such

Performance Criteria have been met prior to payment of compensation to the

extent required by Section 162(m).

 

17.                                 Plan Amendment, Modification and Termination.

 

                The

Board may suspend or terminate the Plan or any portion thereof at any time, and

may amend the Plan from time to time in such respects as the Board may deem

advisable in order that Incentive Awards under the Plan will conform to any

change in applicable laws or regulations or in any other respect the Board may

deem to be in the best interests of the Company; provided, however, that no amendments

to the Plan will be 

 

 

17

 

effective without approval of the stockholders of the

Company if stockholder approval of the amendment is then required pursuant to

Section 422 of the Code or the rules of the Nasdaq Stock Market or any

other stock exchange, if applicable at such time. No termination, suspension or

amendment of the Plan may adversely affect any outstanding Incentive Award

without the consent of the affected Participant; provided, however, that this

sentence will not impair the right of the Committee to take whatever action it

deems appropriate under Sections 3.2, 4.3 and 13 of the Plan.

 

18.                                 Effective Date and Duration of the Plan.

 

                The

Plan is effective as of February 22, 2000, the date it was adopted by the

Board. The Plan will terminate at midnight on February 22, 2010, and may

be terminated prior to such time to by Board action, and no Incentive Award

will be granted after such termination. Incentive Awards outstanding upon termination

of the Plan may continue to be exercised, or become free of restrictions, in

accordance with their terms.

 

19.                                 Miscellaneous.

 

                19.1         Governing

Law. Except to the extent expressly provided herein or in connection

with other matters of corporate governance and authority (all of which shall be

governed by the laws of the Company’s jurisdiction of incorporation), the

validity, construction, interpretation, administration and effect of the Plan

and any rules, regulations and actions relating to the Plan will be governed by

and construed exclusively in accordance with the laws of the State of

Minnesota, notwithstanding the conflicts of laws principles of any

jurisdictions.

 

                19.2         Successors

and Assigns. The Plan will be binding upon and inure to the benefit

of the successors and permitted assigns of the Company and the Participants.

 

 

18Exhibit 10

Exhibit 10.2

 

NASH FINCH COMPANY

1995 DIRECTOR STOCK OPTION PLAN

 

 

 

(As

amended on February 22, 2000 and February 19, 2002)

 

1.                                       Purpose of Plan.

 

                The

purpose of the Nash Finch Company 1995 Director Stock Option Plan (the “Plan”)

is to advance the interests of Nash Finch Company (the “Company”) and its

stockholders by enabling the Company to attract and retain the services of

experienced and knowledgeable directors and to increase the proprietary

interests of such directors in the Company’s long-term success and progress and

their identification with the interests of the Company’s stockholders.

 

2.                                       Definitions.

 

                The

following terms will have the meanings set forth below, unless the context

clearly otherwise requires:

 

                2.1           “Board”

means the Board of Directors of the Company.

 

                2.2           “Code”

means the Internal Revenue Code of 1986, as amended.

 

                2.3           “Committee”

means the group of individuals administering the Plan, as provided in

Section 3 of the Plan.

 

                2.4           “Common

Stock” means the common stock of the Company, par value $1.66 2/3

per share, or the number and kind of shares of stock or other securities into

which such Common Stock may be changed in accordance with Section 4.3 of

the Plan.

 

                2.5           “Disability”

means the disability of an Eligible Director such as would entitle the Eligible

Director to receive disability income benefits pursuant to the long-term

disability plan of the Company then covering the Eligible Director or, if no

such plan exists or is applicable to the Eligible Director, the permanent and

total disability of the Eligible Director within the meaning of

Section 22(e)(3) of the Code.

 

                2.6           “Eligible

Directors” means all directors of the Company who are not, as of the

date of grant of an Option, full-time employees of the Company or any

subsidiary of the Company.

 

                2.7           “Exchange

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

 

                2.8           “Fair

Market Value” means, with respect to the Common Stock, as of any

date (or, if no shares were traded or quoted on such date, as of the next

preceding date on which there was such a trade or quote), the mean between the

reported high and low sale prices of the Common Stock during the regular

trading session as reported on the Nasdaq National Market or any stock exchange

on which the Common Stock is listed.

 

                2.9           “Option”

means a right to purchase 5,000 shares of Common Stock (subject to adjustment

as provided in Section 4.3 of the Plan) granted to an Eligible Director

pursuant to Section 5 of the Plan. 

An Option does not qualify as an “incentive stock option” within the

meaning of Section 422 of the Code.

 

                2.10         “Retirement”

means the retirement of an Eligible Director pursuant to and in accordance with

the normal retirement/pension plan or practice of the Company then covering the

Eligible Director.

 

 

 

                2.11         “Securities

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

 

3.                                       Plan Administration.

 

                The

Plan will be administered by a committee (the “Committee”) consisting solely of

two or more members of the Board.  All

questions of interpretation of the Plan will be determined by the Committee,

each determination, interpretation or other action made or taken by the

Committee pursuant to the provisions of the Plan will be conclusive and binding

for all purposes and on all persons, and no member of the Committee will be

liable for any action or determination made in good faith with respect to the

Plan or any Option granted under the Plan. 

The Committee, however, will have no power to determine the eligibility

for participation in the Plan, the number of shares of Common Stock to be

subject to Options, or the timing, pricing or other terms and conditions of the

Options.

 

4.                                       Shares Available for Issuance.

 

                4.1           Maximum

Number of Shares Available. 

Subject to adjustment as provided in Section 4.3 of the Plan, the maximum

number of shares of Common Stock that will be available for issuance under the

Plan will be 250,000 shares.  The shares

available for issuance under the Plan may, at the election of the Committee, be

either treasury shares or shares authorized but unissued, and, if treasury

shares are used, all references in the Plan to the issuance of shares will, for

corporate law purposes, be deemed to mean the transfer of shares from treasury.

 

                4.2           Accounting

for Options.  Shares of

Common Stock that are issued under the Plan or that are subject to outstanding

Options will be applied to reduce the maximum number of shares of Common Stock

remaining available for issuance under the Plan.  Any shares of Common Stock that are subject to an Option that

lapses, expires, or for any reason is terminated unexercised will automatically

again become available for issuance under the Plan.

 

                4.3           Adjustments

to Shares and Options.  In

the event of any reorganization, merger, consolidation, recapitalization,

liquidation, reclassification, stock dividend, stock split, combination of

shares, rights offering, divestiture or extraordinary dividend (including a

spin-off) or any other change in the corporate structure or shares of the

Company, the Committee (or, if the Company is not the surviving corporation in

any such transaction, the board of directors of the surviving corporation) will

make appropriate adjustment (which determination will be conclusive) as to the

number and kind of securities available for issuance under the Plan and, in

order to prevent dilution or enlargement of the rights of Eligible Directors,

the number, kind and, where applicable, exercise price of securities subject to

outstanding Options.

 

5.                                       Options.

 

                5.1           Grant.  On an annual basis, each director of the Company

who qualifies as an Eligible Director immediately following each annual meeting

of stockholders of the Company will be granted an Option.

 

                5.2           Exercise

Price.  The per share price

to be paid by an Eligible Director upon exercise of an Option will be 100% of

the Fair Market Value of one share of Common Stock on the date of grant.  The total purchase price of the shares to be

purchased upon exercise of an Option will be paid entirely in cash (including

check, bank draft or money order).

 

                5.3           Exercisability

and Duration.  Each Option

will become exercisable in full six months following its date of grant and,

subject to earlier termination in accordance with Section 5.6 of the Plan,

will expire and will no longer be exercisable five years from its date of

grant.

 

                5.4           Manner

of Exercise.  An Option may

be exercised by an Eligible Director in whole or in part from time to time,

subject to the conditions contained in the Plan and in the agreement evidencing

such Option, by 

 

 

2

 

delivery in person, by facsimile or electronic

transmission or through the mail of written notice of exercise to the Company

(Attention: Corporate Secretary) at its principal executive office in Edina,

Minnesota and by paying in full the total exercise price for the shares of

Common Stock to be purchased in accordance with Section 5.2 of the Plan.

 

                5.5           Rights

as a Stockholder.  As a

holder of Options, an Eligible Director will have no rights as a stockholder

unless and until such Options are exercised for shares of Common Stock and the

Eligible Director becomes the holder of record of such shares.  Except as otherwise provided in the Plan, no

adjustment will be made for dividends or distributions with respect to Options

as to which there is a record date preceding the date the Eligible Director

becomes the holder of record of such shares.

 

                5.6           Effect

of Termination of Service as Director.

 

                (a)           Termination

Due to Death or Disability. 

In the event an Eligible Director’s service as a director of the Company

is terminated by reason of death or Disability, all outstanding Options then

held by the Eligible Director will become immediately exercisable in full and

will remain exercisable for one year following such termination (but in no event

after the expiration date of any such Option).

 

                (b)           Termination

Due to Retirement.  In the

event an Eligible Director’s services as a director of the Company is

terminated by reason of Retirement, all outstanding options then held by the

Eligible Director will become immediately exercisable in full and (i) if

granted prior to February 22, 2000, will remain exercisable for one year

following such termination (but in no event after the expiration date of any

such Option), and (ii) if granted after February 22, 2000, will

continue to be exercisable in accordance with their terms.

 

                (c)           Termination

for Reasons Other than Death, Disability or Retirement.

 

                (i)            In the event an Eligible Director’s

service as a director of the Company is terminated for any reason other than

death, Disability or Retirement, all rights of the Eligible Director under the

Plan and any agreements evidencing an Option will immediately terminate without

notice of any kind and no Options then held by the Eligible Director will

thereafter be exercisable; provided, however, that if such termination is due

to any reason other than termination for “cause,” all outstanding Options then

held by the Eligible Director will remain exercisable to the extent exercisable

as of such termination for a period of three months after such termination (but

in no event after the expiration date of any such Option).

 

                (ii)           For purposes of this

Section 5.6, “cause” will be as defined in any agreement or policy

applicable to the Eligible Director or, if no such agreement or policy exists,

will mean (i) dishonesty, fraud, misrepresentation, embezzlement or

material and deliberate injury or attempted injury, in each case related to the

Company or any subsidiary, (ii) any unlawful or criminal activity of a

serious nature, (iii) any willful breach of duty, habitual neglect of duty

or unreasonable job performance, or (iv) any material breach of any

service, confidentiality or noncompete agreement entered into with the Company.

 

6.                                       Date of Termination of Service as a Director.

 

                An

Eligible Director’s service as a director of the Company will, for purposes of

the Plan, be deemed to have terminated on the date recorded on the personnel or

other records of the Company, as determined by the Committee based upon such

records.

 

 

3

 

7.                                       Rights of Eligible Directors; Transferability of

Interests.

 

                7.1           Service

as a Director.  Nothing in

the Plan will interfere with or limit in any way the right of the shareholders

to remove an Eligible Director at any time, and neither the Plan, nor the

granting of an Option nor any other action taken pursuant to the Plan, will

constitute or be evidence of any agreement or understanding, express or

implied, that an Eligible Director will be retained for any period of time or

at any particular rate of compensation.

 

                7.2           Restrictions

on Transfer of Interests. 

Except pursuant to testamentary will or the laws of descent and

distribution or as otherwise expressly permitted by the Plan, no right or interest

of any Eligible Director in an Option prior to the exercise of Options will be

assignable or transferable, or subjected to any lien, during the lifetime of

the Eligible Director, either voluntarily or involuntarily, directly or

indirectly, by operation of law or otherwise. 

In the event of an Eligible Director’s death, exercise of any Options

(to the extent permitted pursuant to Section 5 of the Plan) may be made by

the Eligible Director’s legal representatives, heirs and legatees.

 

                7.3           Non-Exclusivity

of the Plan.  Nothing

contained in the Plan is intended to modify or rescind any previously approved

compensation plans or programs of the Company or create any limitations on the

power or authority of the Board to adopt such additional or other compensation

arrangements as the Board may deem necessary or desirable.

 

8.                                       Securities Law and Other Restrictions.

 

                Notwithstanding

any other provision of the Plan or any agreements entered into pursuant to the

Plan, the Company will not be required to issue any shares of Common Stock

under this Plan, and an Eligible Director may not sell, assign, transfer or

otherwise dispose of shares of Common Stock issued pursuant to Options granted

under the Plan, unless (a) there is in effect with respect to such shares

a registration statement under the Securities Act and any applicable state

securities laws or an exemption from such registration under the Securities Act

and applicable state securities laws, and (b) there has been obtained any

other consent, approval or permit from any other regulatory body which the

Committee, in its sole discretion, deems necessary or advisable.  The Company may condition such issuance,

sale or transfer upon the receipt of any representations or agreements from the

parties involved, and the placement of any legends on certificates representing

shares of Common Stock, as may be deemed necessary or advisable by the Company

in order to comply with such securities law or other restrictions.

 

9.                                       Plan Amendment, Modification and Termination

 

                The

Board may suspend or terminate the Plan or any portion thereof at any time, and

may amend the Plan from time to time in such respects as the Board may deem

advisable in order that Options under the Plan will conform to any change in

applicable laws or regulations or in any other respect the Board may deem to be

in the best interests of the Company; provided, however, that no amendments to

the Plan will be effective without approval of the stockholders of the Company

if stockholder approval of the amendment is then required pursuant to the rules

of the Nasdaq Stock Market or any other stock exchange, if applicable at such

time.  No termination, suspension or

amendment of the Plan may adversely affect any outstanding Option without the

consent of the affected Eligible Director; provided, however, that this

sentence will not impair the right of the Committee to take whatever action it

deems appropriate under Section 4.3 of the Plan.

 

10.                                 Effective Date and Duration of the Plan

 

                The

Plan is effective as of March 24, 1995, the date it was adopted by the

Board.  The Plan will terminate at

midnight on March 1, 2005, and may be terminated prior thereto by Board

action, and no Option will be granted after such termination.  Options outstanding upon termination of the

Plan may continue to be exercised, or become free of restrictions, in

accordance with their terms.

 

 

4

 

11.                                 Miscellaneous

 

                11.1         Governing

Law.  Except in connection

with matters of corporate governance and authority (all of which shall be

governed by the laws of the Company’s jurisdiction of incorporation), the

validity, construction, interpretation, administration and effect of the Plan

and any rules, regulations and actions relating to the Plan will be governed by

and construed exclusively in accordance with the laws of the State of

Minnesota, notwithstanding the conflicts of laws principles of any

jurisdictions.

 

                11.2         Successors

and Assigns.  The Plan will

be binding upon and inure to the benefit of the successors and permitted

assigns of the Company and the Eligible Directors.

 

 

5

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