FIRST BANK SYSTEM, INC.
1991 STOCK INCENTIVE PLAN
(Including Amendments Effective April 21, 1993,
Amendments Effective April 28, 1994 and Amendments
Effective April 26, 1995)
SECTION 1. PURPOSE; EFFECT ON PRIOR PLANS.
(a) Purpose. The purpose of the First Bank System, Inc. 1991
Stock Incentive Plan (the "Plan") is to aid in attracting and retaining
management personnel and members of the Board of Directors who are not also
employees ("Non-Employee Directors") of First Bank System, Inc. (the "Company")
capable of assuring the future success of the Company, to offer such personnel
and Non-Employee Directors incentives to put forth maximum efforts for the
success of the Company's business and to afford such personnel and Non-Employee
Directors an opportunity to acquire a proprietary interest in the Company.
(b) Effect on Prior Plans. From and after the effective date
of the Plan, no stock options or restricted stock awards shall be granted under
the Company's 1987 Stock Option Plan and Special Performance and Retention Plan.
All outstanding stock options and restricted stock awards previously granted
under the 1987 Stock Option Plan and Special Performance and Retention Plan
shall remain outstanding in accordance with the terms thereof.
SECTION 2. DEFINITIONS.
As used in the Plan, the following terms shall have the
meanings set forth below:
(a) "Affiliate" shall mean (i) any entity that, directly or
indirectly through one or more intermediaries, is controlled by the Company and
(ii) any entity in which the Company has a significant equity interest, as
determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent
or other Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement,
contract or other instrument or document evidencing any Award granted under the
Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any regulations promulgated thereunder.
(e) "Committee" shall mean a committee of the Board of
Directors of the Company designated by such Board to administer the Plan and
composed of not less than three directors, each of whom is a "disinterested
person" within the meaning of Rule 16b-3. Each member of the Committee shall be
an "outside director" within the meaning of Section 162(m) of the Code.
(f) "Dividend Equivalent" shall mean any right granted under
Section 6(e) of the Plan.
(g) "Eligible Person" shall mean any employee, officer,
consultant or independent contractor providing services to the Company or any
Affiliate who the Committee determines to be an Eligible Person. Eligible Person
shall not include any Non-Employee Director, who shall receive Awards only
pursuant to Section 6(h) of the Plan.
(h) "Fair Market Value" shall mean, with respect to any
property (including, without limitation, any Shares or other securities), the
fair market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee or, in the case of
grants pursuant to Section 6(h), the Board of Directors. Notwithstanding the
foregoing, for purposes of the Plan, the Fair Market Value of Shares on a given
date shall be the closing price of the Shares as reported on the New York Stock
Exchange on such date, if the Shares are then quoted on the New York Stock
Exchange.
(i) "Incentive Stock Option" shall mean an option granted
under Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code or any successor provision.
(j) "Non-Qualified Stock Option" shall mean an option granted
under Section 6(a) of the Plan, or Section 6(h) of the Plan in the case of
grants to Non-Employee Directors, that is not intended to be an Incentive Stock
Option.
(k) "Option" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option.
(l) "Other Stock-Based Award" shall mean any right granted
under Section 6(f) of the Plan.
(m) "Participant" shall mean an Eligible Person designated to
be granted an Award under the Plan.
(n) "Performance Award" shall mean any right granted under
Section 6(d) of the Plan.
(o) "Person" shall mean any individual, corporation,
partnership, association or trust.
(p) "Restricted Stock" shall mean any Share granted under
Section 6(c) of the Plan.
(q) "Restricted Stock Unit" shall mean any unit granted under
Section 6(c) of the Plan evidencing the right to receive a Share (or a cash
payment equal to the Fair Market Value of a Share) at some future date.
(r) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934.
(s) "Shares" shall mean shares of Common Stock, $1.25 par
value, of the Company or such other securities or property as may become subject
to Awards pursuant to an adjustment made under Section 4(c) of the Plan.
(t) "Stock Appreciation Right" shall mean any right granted
under Section 6(b) of the Plan.
SECTION 3. ADMINISTRATION.
(a) Power and Authority of the Committee. The Plan shall be
administered by the Committee; provided, however, that Section 6(h) of the Plan
shall not be administered by the Committee but rather by the Board of Directors
subject to the provisions and restrictions of such Section 6(h). Subject to the
terms of the Plan and applicable law, and except with respect to Section 6(h) of
the Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to each
Participant under the Plan; (iii) determine the number of Shares to be covered
by (or with respect to which payments, rights or other matters are to be
calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v) amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of Options or
the lapse of restrictions relating to Restricted Stock or Restricted Stock
Units; (vi) determine whether, to what extent and under what circumstances
Awards may be exercised in cash, Shares, other securities, other Awards or other
property, or canceled, forfeited or suspended; (vii) determine whether, to what
extent and under what circumstances cash, Shares, other securities, other
Awards, other property and other amounts payable with respect to an Award under
the Plan shall be deferred either automatically or at the election of the holder
thereof or the Committee; (viii) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the Plan; (ix)
establish, amend, suspend or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (x) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon any
Participant, any holder or beneficiary of any Award and any employee of the
Company or any Affiliate.
(b) Meetings of the Committee. The Committee shall select one
of its members as its chairman and shall hold its meetings at such times and
places as the Committee may determine. A majority of the Committee's members
shall constitute a quorum. All determinations of the Committee shall be made by
not less than a majority of its members. Any decision or determination reduced
to writing and signed by all of the members of the Committee shall be fully
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may appoint a secretary and may make such rules and
regulations for the conduct of its business as it shall deem advisable.
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) Shares Available. Subject to adjustment as provided in
Section 4(c), the number of Shares available for granting Awards under the Plan
shall be 5,000,000. If any Shares covered by an Award or to which an Award
relates are not purchased or are forfeited, or if an Award otherwise terminates
without delivery of any Shares, then the number of Shares counted against the
aggregate number of Shares available under the Plan with respect to such Award,
to the extent of any such forfeiture or termination, shall again be available
for granting Awards under the Plan. In addition, any Shares that are used by a
Participant as full or partial payment to the Company of the purchase price
relating to an Award, or in connection with satisfaction of tax obligations
relating to an Award in accordance with the provisions of Section 8(a) of the
Plan, shall again be available for granting Awards to Eligible Persons who are
not officers or directors of the Company for purposes of Section 16 of the
Securities Exchange Act of 1934, as amended.
(b) Accounting for Awards. For purposes of this Section 4, if
an Award entitles the holder thereof to receive or purchase Shares, the number
of Shares covered by such Award or to which such Award relates shall be counted
on the date of grant of such Award against the aggregate number of Shares
available for granting Awards under the Plan.
(c) Adjustments. In the event that the Committee (or, in the
case of grants under Section 6(h) of the Plan, the Board of Directors) shall
determine that any dividend or other distribution (whether in the form of cash,
Shares, other securities or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee (or,
in the case of grants under Section 6(h) of the Plan, the Board of Directors) to
be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee (or, in the case of grants under Section 6(h) of the Plan, the Board
of Directors) shall, in such manner as it may deem equitable, adjust any or all
of (i) the number and type of Shares (or other securities or other property)
which thereafter may be made the subject of Awards, (ii) the number and type of
Shares (or other securities or other property) subject to outstanding Awards and
(iii) the purchase or exercise price with respect to any Award; provided,
however, that the number of Shares covered by any Award or to which such Award
relates shall always be a whole number.
(d) Incentive Stock Options. Notwithstanding the foregoing,
the number of Shares available for granting Incentive Stock Options under the
Plan shall not exceed 3,000,000, subject to adjustment as provided in the Plan
and Section 422 or 424 of the Code or any successor provisions.
(e) Award Limitations Under the Plan. No Eligible Person may
be granted any Award or Awards, the value of which Awards are based solely on an
increase in the value of the Shares after the date of grant of such Awards, for
more than 500,000 Shares, in the aggregate, in any three calendar year period
beginning with the period commencing January 1, 1994 and ending December 31,
1996; provided, however, that such limitation shall apply only to Shares
available for granting Awards under the Plan pursuant to amendments to the Plan
submitted for stockholder approval at the Company's 1994 annual meeting of
stockholders and amendments adopted thereafter. The foregoing limitation
specifically includes the grant of any "performance-based" Awards within the
meaning of ss.162(m) of the Code.
SECTION 5. ELIGIBILITY.
Any Eligible Person, including any Eligible Person who is an
officer or director of the Company or any Affiliate, shall be eligible to be
designated a Participant; provided, however, that an Incentive Stock Option may
only be granted to full or part-time employees (which term as used herein
includes, without limitation, officers and directors who are also employees) and
an Incentive Stock Option shall not be granted to an employee of an Affiliate
unless such Affiliate is also a "subsidiary corporation" of the Company within
the meaning of Section 424(f) of the Code or any successor provision.
Non-Employee Directors shall receive Awards of Non-Qualified Stock Options as
provided in Section 6(h) of the Plan.
SECTION 6. AWARDS.
(a) Options. The Committee is hereby authorized to grant
Options to Participants with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable
under an Option shall be determined by the Committee; provided,
however, that such purchase price shall not be less than 100% of the
Fair Market Value of a Share on the date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by
the Committee.
(iii) Time and Method of Exercise. The Committee shall
determine the time or times at which an Option may be exercised in
whole or in part and the method or methods by which, and the form or
forms (including, without limitation, cash, Shares, other securities,
other Awards or other property, or any combination thereof, having a
Fair Market Value on the exercise date equal to the relevant exercise
price) in which, payment of the exercise price with respect thereto may
be made or deemed to have been made.
(iv) Reload Options. The Committee may grant "reload"
options, separately or together with another Option, pursuant to which,
subject to the terms and conditions established by the Committee and
any applicable requirements of Rule 16b-3 or any other applicable law,
the Participant would be granted a new Option when the payment of the
exercise price of a previously granted option is made by the delivery
of shares of the Company's Common Stock owned by the Participant
pursuant to Section 6(a)(iii) hereof or the relevant provisions of
another plan of the Company, and/or when shares of the Company's Common
Stock are tendered or forfeited as payment of the amount to be withheld
under applicable income tax laws in connection with the exercise of an
option, which new Option would be an option to purchase the number of
Shares not exceeding the sum of (A) the number of shares of the
Company's Common Stock provided as consideration upon the exercise of
the previously granted option to which such "reload" option relates and
(B) the number of shares of the Company's Common Stock tendered or
forfeited as payment of the amount to be withheld under applicable
income tax laws in connection with the exercise of the option to which
such "reload" option relates. "Reload" options may be granted with
respect to options previously granted under this Plan, the First Bank
System 1987 Stock Option Plan or any other stock option plan of the
Company, and may be granted in connection with any Option granted under
this Plan at the time of such grant. Such "reload" options shall have a
per share exercise price equal to the Fair Market Value as of the date
of grant of the new Option.
(b) Stock Appreciation Rights. The Committee is hereby
authorized to grant Stock Appreciation Rights to Participants subject to the
terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right
granted under the Plan shall confer on the holder thereof a right to receive
upon exercise thereof the excess of (i) the Fair Market Value of one Share on
the date of exercise (or, if the Committee shall so determine, at any time
during a specified period before or after the date of exercise) over (ii) the
grant price of the Stock Appreciation Right as specified by the Committee, which
price shall not be less than 100% of the Fair Market Value of one Share on the
date of grant of the Stock Appreciation Right. Subject to the terms of the Plan
and any applicable Award Agreement, the grant price, term, methods of exercise,
dates of exercise, methods of settlement and any other terms and conditions of
any Stock Appreciation Right shall be as determined by the Committee. The
Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units. The Committee
is hereby authorized to grant Awards of Restricted Stock and Restricted Stock
Units to Participants with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the Plan
as the Committee shall determine:
(i) Restrictions. Shares of Restricted Stock and Restricted
Stock Units shall be subject to such restrictions as the Committee may
impose (including, without limitation, any limitation on the right to
vote a Share of Restricted Stock or the right to receive any dividend
or other right or property with respect thereto), which restrictions
may lapse separately or in combination at such time or times, in such
installments or otherwise as the Committee may deem appropriate.
(ii) Stock Certificates. Any Restricted Stock granted under
the Plan shall be evidenced by issuance of a stock certificate or
certificates, which certificate or certificates shall be held by the
Company. Such certificate or certificates shall be registered in the
name of the Participant and shall bear an appropriate legend referring
to the terms, conditions and restrictions applicable to such Restricted
Stock. In the case of Restricted Stock Units, no Shares shall be
issued at the time such Awards are granted.
(iii) Forfeiture; Delivery of Shares. Except as otherwise
determined by the Committee, upon termination of employment (as
determined under criteria established by the Committee) during the
applicable restriction period, all Shares of Restricted Stock and all
Restricted Stock Units at such time subject to restriction shall be
forfeited and reacquired by the Company; provided, however, that the
Committee may, when it finds that a waiver would be in the best
interest of the Company, waive in whole or in part any or all remaining
restrictions with respect to Shares of Restricted Stock or Restricted
Stock Units. Shares representing Restricted Stock that is no longer
subject to restrictions shall be delivered to the holder thereof
promptly after the applicable restrictions lapse or are waived. Upon
the lapse or waiver of restrictions and the restricted period relating
to Restricted Stock Units evidencing the right to receive Shares, such
Shares shall be issued and delivered to the holders of the Restricted
Stock Units.
(d) Performance Awards. The Committee is hereby authorized to
grant Performance Awards to Participants subject to the terms of the Plan and
any applicable Award Agreement. A Performance Award granted under the Plan (i)
may be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards or other property and (ii)
shall confer on the holder thereof the right to receive payments, in whole or in
part, upon the achievement of such performance goals during such performance
periods as the Committee shall establish. Subject to the terms of the Plan and
any applicable Award Agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award granted and the amount of any payment or transfer to be made
pursuant to any Performance Award shall be determined by the Committee.
(e) Dividend Equivalents. The Committee is hereby authorized
to grant to Participants Dividend Equivalents under which such Participants
shall be entitled to receive payments (in cash, Shares, other securities, other
Awards or other property as determined in the discretion of the Committee)
equivalent to the amount of cash dividends paid by the Company to holders of
Shares with respect to a number of Shares determined by the Committee. Subject
to the terms of the Plan and any applicable Award Agreement, such Dividend
Equivalents may have such terms and conditions as the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is hereby
authorized to grant to Participants such other Awards that are denominated or
payable in, valued in whole or in part by reference to, or otherwise based on or
related to, Shares (including, without limitation, securities convertible into
Shares), as are deemed by the Committee to be consistent with the purpose of the
Plan; provided, however, that such grants must comply with Rule 16b-3 and
applicable law. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the terms and conditions of such
Awards. Shares or other securities delivered pursuant to a purchase right
granted under this Section 6(f) shall be purchased for such consideration, which
may be paid by such method or methods and in such form or forms (including
without limitation, cash, Shares, other securities, other Awards or other
property or any combination thereof), as the Committee shall determine, the
value of which consideration, as established by the Committee, shall not be less
than 100% of the Fair Market Value of such Shares or other securities as of the
date such purchase right is granted.
(g) General. Except as otherwise specified with respect to
Awards to Non-Employee Directors pursuant to Section 6(h) of the Plan:
(i) No Cash Consideration for Awards. Awards shall be granted
for no cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards
may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with or in substitution for any other Award or
any award granted under any plan of the Company or any Affiliate other
than the Plan. Awards granted in addition to or in tandem with other
Awards or in addition to or in tandem with awards granted under any
such other plan of the Company or any Affiliate may be granted either
at the same time as or at a different time from the grant of such other
Awards or awards.
(iii) Forms of Payment under Awards. Subject to the terms of
the Plan and of any applicable Award Agreement, payments or transfers
to be made by the Company or an Affiliate upon the grant, exercise or
payment of an Award may be made in such form or forms as the Committee
shall determine (including, without limitation, cash, Shares, other
securities, other Awards or other property or any combination thereof),
and may be made in a single payment or transfer, in installments or on
a deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents with respect to installment or
deferred payments.
(iv) Limits on Transfer of Awards. No Award and no right
under any such Award shall be transferable by a Participant otherwise
than by will or by the laws of descent and distribution; provided,
however, that, if so determined by the Committee, a Participant may, in
the manner established by the Committee, designate a beneficiary or
beneficiaries to exercise the rights of the Participant and receive any
property distributable with respect to any Award upon the death of the
Participant. Each Award or right under any Award shall be exercisable
during the Participant's lifetime only by the Participant or, if
permissible under applicable law, by the Participant's guardian or
legal representative. No Award or right under any such Award may be
pledged, alienated, attached or otherwise encumbered, and any purported
pledge, alienation, attachment or encumbrance thereof shall be void and
unenforceable against the Company or any Affiliate.
(v) Term of Awards. The term of each Award shall be for such
period as may be determined by the Committee.
(vi) Restrictions; Securities Exchange Listing. All
certificates for Shares or other securities delivered under the Plan
pursuant to any Award or the exercise thereof shall be subject to such
stop transfer orders and other restrictions as the Committee (or, in
the case of grants under Section 6(h) of the Plan, the Board of
Directors) may deem advisable under the Plan or the rules, regulations
and other requirements of the Securities and Exchange Commission and
any applicable federal or state securities laws, and the Committee (or,
in the case of grants under Section 6(h) of the Plan, the Board of
Directors) may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. If the
Shares or other securities are traded on a securities exchange, the
Company shall not be required to deliver any Shares or other securities
covered by an Award unless and until such Shares or other securities
have been admitted for trading on such securities exchange.
(h) Non-Qualified Stock Options to Non-Employee Directors. The
Board of Directors shall issue Non-Qualified Stock Options to Non-Employee
Directors in accordance with this Section 6(h).
Each Non-Employee Director serving on the Company's Board of
Directors immediately following the 1993 Annual Meeting of Stockholders of the
Company shall be granted, as of the date of such meeting, a Non-Qualified Stock
Option to purchase 2,500 Shares (subject to adjustment pursuant to Section 4(c)
of the Plan). Each Non-Employee Director first elected or appointed to the
Company's Board of Directors after the 1993 Annual Meeting of Stockholders and
during the term of the Plan shall be granted, as of the date of such Director's
first election or appointment to the Board of Directors, a Non-Qualified Stock
Option to purchase 2,500 Shares (subject to adjustment pursuant to Section 4(c)
of the Plan). After the initial grant to each Non-Employee Director as set forth
above in this Section 6(h), each such Director shall be granted during the term
of the Plan, as of the date of each Annual Meeting of Stockholders of the
Company, if such Director's term of office continues after such date, a
Non-Qualified Stock Option to purchase 1,000 Shares (subject to adjustment
pursuant to Section 4(c) of the Plan); provided that such number of shares shall
be increased from 1,000 Shares to 1,500 Shares (subject to adjustment pursuant
to Section 4(c) of the Plan) for any such grants occurring on or after the date
of the Company's 1995 Annual Meeting of Stockholders.
Each Non-Qualified Stock Option granted to a Non-Employee
Director pursuant to this Section 6(h) shall be exercisable in full as of the
date of grant, shall have an exercise price equal to the Fair Market Value of a
Share on the date of grant and shall expire on the tenth anniversary of the date
of grant, except as provided below. This Section 6(h) shall not be amended more
than once every six months other than to comport with changes in the Code, the
Employee Retirement Income Security Act or the rules and regulations thereunder.
Subject to the last sentence of this paragraph, and except as
hereinafter provided, each Option granted pursuant to this Section 6(h) on or
after the date of the Company's 1995 Annual Meeting of Stockholders shall
include, and all outstanding Options on the date of the Company's 1995 Annual
Meeting of Stockholders granted pursuant to this Section 6(h) shall be deemed
amended to include, a provision entitling the optionee to a further
Non-Qualified Stock Option (a "Non-Employee Director Reload Option") in the
event the optionee exercises such an Option, in whole or in part, by
surrendering other Shares in accordance with this Section 6(h) and the terms of
the Option. Any such Non-Employee Director Reload Option (i) shall be for a
number of Shares equal to the number of Shares surrendered as part or all of the
exercise price of the Option to which it relates; (ii) shall have an expiration
date which is the same as the expiration date of the Option to which it relates;
(iii) shall have an exercise price equal to the Fair Market Value of a Share on
the date of exercise of the Option to which it relates; and (iv) shall be
exercisable in full as of the date of grant. A Non-Employee Director Reload
Option may be reloaded under the same terms, provided that the original Option
to which such series of Non-Employee Director Reload Options relates may be
reloaded a maximum of three times. Non-Employee Director Reload Options shall
only be granted to a Director during such Director's term as a Non-Employee
Director. Any such Non-Employee Director Reload Option shall be subject to
availability of sufficient shares for grant under the Plan. Shares surrendered
as part or all of the exercise price of the Option to which it relates that have
been owned by the optionee less than six months will not be counted for purposes
of determining the number of Shares that may be purchased pursuant to a
Non-Employee Director Reload Option. The provisions of this paragraph shall not
become effective and shall be void unless and until receipt by the Company of an
interpretive letter from the Securities and Exchange Commission or an opinion of
counsel reasonably acceptable to the Company to the effect that the grant of
such reload options will not cause any such Non-Employee Director to lose his or
her status as a "disinterested person" under Rule 16b-3 of the Securities
Exchange Act of 1934, as amended.
All grants of Non-Qualified Stock Options pursuant to this
Section 6(h) shall be automatic and non-discretionary and shall be made strictly
in accordance with the foregoing terms and the following additional provisions:
(i) Non-Qualified Stock Options granted to a Non-Employee
Director hereunder shall terminate and may no longer be exercised if
such Director ceases to be a Non-Employee Director of the Company,
except that:
(A) If such Director's term shall be terminated for any
reason other than gross and willful misconduct, death,
disability, or retirement, such Director may at any time within a
period of three months after such termination, but not after the
termination date of the Option, exercise the Option.
(B) If such Director's term shall be terminated by reason of
gross and willful misconduct during the course of the term,
including but not limited to, wrongful appropriation of funds of
the Company or the commission of a gross misdemeanor or felony,
the Option shall be terminated as of the date of the misconduct.
(C) If such Director's term shall be terminated by reason of
disability or retirement, such Director may exercise the Option
in accordance with the terms thereof as though such termination
had never occurred. If such Director shall die following any such
termination, the Option may be exercised in accordance with its
terms by the personal representatives or administrators of such
Director or by any person or persons to whom the Option has been
transferred by will or the applicable laws of descent and
distribution.
(D) If such Director shall die while a Director of the
Company or within three months after termination of such
Director's term for any reason other than disability or
retirement or gross and willful misconduct, the Option may be
exercised in accordance with its terms by the personal
representatives or administrators of such Director or by any
person or persons to whom the Option has been transferred by will
or the applicable laws of descent and distribution.
(ii) Non-Qualified Stock Options granted to Non-Employee
Directors may be exercised in whole or in part from time to time by
serving written notice of exercise on the Company at its principal
executive offices, to the attention of the Company's Secretary. The
notice shall state the number of shares as to which the Option is being
exercised and be accompanied by payment of the purchase price. A
Non-Employee Director may, at such Director's election, pay the
purchase price by check payable to the Company, by promissory note, or
in shares of the Company's Common Stock, or in any combination thereof
having a Fair Market Value on the exercise date equal to the applicable
exercise price. If payment or partial payment is made by promissory
note, such note shall (A) be secured by the Shares to be delivered upon
exercise of such Option (other than those withheld in payment of taxes
as set forth below), (B) be limited in principal amount to the maximum
amount permitted under applicable laws, rules and regulations, (C) be
for a term of six years and (D) bear interest at the applicable federal
rate (as determined in accordance with Section 1274(d) of the Code),
compounded semi-annually.
(iii) In order to comply with all applicable federal or state
income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable federal or state
payroll, withholding, income or other taxes, which are the sole and
absolute responsibility of a Non-Employee Director, are withheld or
collected from such Director. At any time when a Non-Employee Director
is required to pay the Company an amount required to be withheld under
applicable income tax laws in connection with an Option granted
pursuant to this Section 6(h), such Director may (A) elect to have the
Company withhold a portion of the Shares otherwise to be delivered upon
exercise of such Option with a Fair Market Value equal to the amount of
such taxes (an "Election") or (B) deliver to the Company Shares other
than Shares issuable upon exercise of such Option with a Fair Market
Value equal to the amount of such taxes. An Election, if any, must be
made on or before the date that the amount of tax to be withheld is
determined. The Board of Directors may disapprove of any Election, may
suspend or terminate the right to make Elections, may limit the amount
of any Election, and may make rules concerning the required information
to be included in any Election. Non-Employee Directors may only make an
Election in compliance with the Rules established by the Company to
comply with Section 16(b) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
SECTION 7. AMENDMENT AND TERMINATION; ADJUSTMENTS.
Except to the extent prohibited by applicable law and unless
otherwise expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the
Company may amend, alter, suspend, discontinue or terminate the Plan; provided,
however, that, notwithstanding any other provision of the Plan or any Award
Agreement, without the approval of the stockholders of the Company, no such
amendment, alteration, suspension, discontinuation or termination shall be made
that, absent such approval:
(i) would cause Rule 16b-3 to become unavailable with
respect to the Plan;
(ii) would violate the rules or regulations of the New York
Stock Exchange, any other securities exchange or the National
Association of Securities Dealers, Inc. that are applicable to the
Company; or
(iii) would cause the Company to be unable, under the Code,
to grant Incentive Stock Options under the Plan.
(b) Amendments to Awards. Except with respect to Awards
granted pursuant to Section 6(h) of the Plan, the Committee may waive
any conditions of or rights of the Company under any outstanding Award,
prospectively or retroactively. The Committee may not amend, alter,
suspend, discontinue or terminate any outstanding Award, prospectively
or retroactively, without the consent of the Participant or holder or
beneficiary thereof, except as otherwise herein provided.
(c) Correction of Defects, Omissions and Inconsistencies. The
Committee (or, in the case of grants under Section 6(h) of the Plan,
the Board of Directors) may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the manner and
to the extent it shall deem desirable to carry the Plan into effect.
SECTION 8. INCOME TAX WITHHOLDING; TAX BONUSES.
(a) Withholding. In order to comply with all applicable
federal or state income tax laws or regulations, the Company may take such
action as it deems appropriate to ensure that all applicable federal or state
payroll, withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all federal and state
taxes to be withheld or collected upon exercise or receipt of (or the lapse of
restrictions relating to) an Award, the Committee, in its discretion and subject
to such additional terms and conditions as it may adopt, may permit the
Participant to satisfy such tax obligation by (i) electing to have the Company
withhold a portion of the Shares otherwise to be delivered upon exercise or
receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes or (ii) delivering to the Company
Shares other than Shares issuable upon exercise or receipt of (or the lapse of
restrictions relating to) such Award with a Fair Market Value equal to the
amount of such taxes. The election, if any, must be made on or before the date
that the amount of tax to be withheld is determined.
(b) Tax Bonuses. The Committee, in its discretion, shall have
the authority, at the time of grant of any Award under this Plan or at any time
thereafter, to approve cash bonuses to designated Participants to be paid upon
their exercise or receipt of (or the lapse of restrictions relating to) Awards
in order to provide funds to pay all or a portion of federal and state taxes due
as a result of such exercise or receipt (or the lapse of such restrictions). The
Committee shall have full authority in its discretion to determine the amount of
any such tax bonus.
SECTION 9. GENERAL PROVISIONS.
(a) No Rights to Awards. Except as otherwise provided in
Section 6(h) of the Plan, no Eligible Person, Participant or other Person shall
have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to different Participants.
(b) Delegation. The Committee may delegate to one or more
officers of the Company or any Affiliate or a committee of such officers the
authority, subject to such terms and limitations as the Committee shall
determine, to grant Awards to Eligible Persons who are not officers or directors
of the Company for purposes of Section 16 of the Securities Exchange Act of
1934, as amended.
(c) Award Agreements. No Participant will have rights under an
Award granted to such Participant unless and until an Award Agreement shall have
been duly executed on behalf of the Company.
(d) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(e) No Right to Employment, Etc. The grant of an Award shall
not be construed as giving a Participant the right to be retained in the employ,
or as giving a Non-Employee Director the right to continue as a Director, of the
Company or any Affiliate. In addition, the Company or an Affiliate may at any
time dismiss a Participant from employment, or terminate the term of a
Non-Employee Director, free from any liability or any claim under the Plan,
unless otherwise expressly provided in the Plan or in any Award Agreement.
(f) Governing Law. The validity, construction and effect of
the Plan and any rules and regulations relating to the Plan shall be determined
in accordance with the laws of the State of Minnesota.
(g) Severability. If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or would disqualify the Plan or any Award under any law deemed
applicable by the Committee (or, in the case of grants under Section 6(h) of the
Plan, the Board of Directors), such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or deemed
amended without, in the determination of the Committee (or, in the case of
grants under Section 6(h) of the Plan, the Board of Directors), materially
altering the purpose or intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction or Award, and the remainder of the Plan or any
such Award shall remain in full force and effect.
(h) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(i) No Franctional Shares. No fractional Shares shall be
issued or delivered pursuant to the Plan or any Award, and the Committee (or, in
the case of grants under Section 6(h) of the Plan, the Board of Directors) shall
determine whether cash shall be paid in lieu of any fractional Shares or whether
such fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
(j) Headings. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.
SECTION 10. EFFECTIVE DATE OF THE PLAN.
The Plan shall be effective as of the date of its approval by
the stockholders of the Company.
SECTION 11. TERM OF THE PLAN.
Awards shall only be granted under the Plan during a 10-year
period beginning on the effective date of the Plan. However, unless otherwise
expressly provided in the Plan or in an applicable Award Agreement, any Award
theretofore granted may extend beyond the end of such 10-year period, and the
authority of the Committee provided for hereunder with respect to the Plan and
any Awards, and the authority of the Board of Directors of the Company to amend
the Plan, shall extend beyond the end of such period.