EXHIBIT 10.c
MTS SYSTEMS CORPORATION
1987 STOCK OPTION PLAN
1. Purpose. The purpose of the MTS Systems Corporation 1987 Stock
Option Plan is to provide a continuing, long-term incentive to selected eligible
officers and key employees of MTS Systems Corporation (the "Corporation") and of
any subsidiary corporation of the Corporation ("Subsidiary"), as herein defined;
and to non-employee directors of the Corporation, to provide a means of
rewarding outstanding performance; and enable the Corporation to maintain a
competitive position to attract and retain key personnel necessary for continued
growth and profitability.
2. Definitions. The following words and phrases as used herein shall
have the meanings set forth below:
2.1 "Board" shall mean the Board of Directors of the Corporation as it
may be comprised from time to time.
2.2 "Change in Control" shall mean the time at which any entity, person
or group (other than the Corporation, any subsidiary of the Corporation or any
savings, pension or other benefit plan for the benefit of any employees of the
Corporation or its subsidiaries) which prior to such time beneficially owned
less than twenty percent (20%) of the then outstanding Common Stock acquires
such additional shares of Common Stock in one or more transactions, or a series
of transactions, such that following such transaction or transactions such
entity, person or group beneficially owns, directly or indirectly, twenty
percent (20%), or more, of the outstanding Common Stock.
2.3 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.4 "Committee" shall mean the Committee referred to in Section 4.1 of
the Plan. If at any time no Committee shall be in office, then the functions of
the Committee specified in the Plan shall be exercised by the Board, unless the
Plan specifically states otherwise.
2.5 "Common Stock" shall mean the common Stock, par value $.25 per
share, of the Corporation.
2.6 "Corporation" shall mean MTS Systems Corporation, a Minnesota
corporation.
2.7 "Fair Market Value" of any security on any given date shall be
determined by the Committee as follows: (a) if the security is listed for
trading on one or more national securities exchanges (including the Nasdaq
National Market System), the reported last sales price on the principal such
exchange on the date in question, or if such security shall not have been traded
on such principal exchange on such date, the reported last sales price on such
principal exchange on the first day prior thereto on which such security was so
traded; or (b) if the security is not listed for trading on a national
securities exchange (including the Nasdaq National Market System) but is traded
in the over-the-counter market, the mean of the highest and lowest bid prices
for such security on the date in question, or if there are no such bid prices
for such prices for such security on such date, the mean of the highest and
lowest bid prices on the first day prior thereto on which such prices existed;
or (c) if neither (a) nor (b) is applicable, by any means deemed fair and
reasonable by the Committee, which determination shall be final and binding on
all parties.
2.8 "ISO" shall mean any Option granted pursuant to this Plan and
intended to qualify as an "incentive stock option" within the meaning of Section
422 of the Code.
2.9 "Non-Employee Director" shall mean a "Non-Employee Director" within
the meaning of Rule 16b-3(b)(3) under the Securities Exchange Act of 1934.
2.10 "NQO" shall mean any Option granted pursuant to this Plan which is
not an ISO.
2.11 "Option" shall mean any stock Option granted pursuant to this
Plan, whether an ISO or a NQO.
2.12 "Optionee" shall mean any person who is the holder of an Option
granted pursuant to this Plan.
2.13 "Outside Director" means a director who: (a) is not a current
employee of the Company or any member of an affiliated group which include the
Company; (b) is not a former employee of the Company who receives compensation
for prior services (other than benefits under a tax-qualified retirement plan)
during the taxable year; (c) has not been an officer of the Company; (d) does
not receive remuneration from the Company, either directly or indirectly, in any
capacity other than as a director, except as otherwise permitted under Code
Section 162(m) and regulations thereunder. For this purpose, remuneration
includes any payment in exchange for goods or services. This definition shall be
further governed by the provisions of Code Section 162(m) and regulations
promulgated thereunder.
2.14 "Plan" shall mean this 1987 Stock Option Plan of the Corporation.
2.15 "Subsidiary" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the Corporation
if each of the corporations (other than the last corporation in the unbroken
chain) owns stock possession 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain.
3. Shares Available Under Plan. The number of shares which may be
issued pursuant to Options granted under this Plan shall not exceed 600,000
shares (post two-for-one stock split effective April 1, 1996) of the Common
Stock of the Corporation; provided, however, that shares which become available
as a result of cancelled, unexercised, lapsed or terminated Options granted
under this Plan shall be available for issuance pursuant to Options subsequently
granted under this Plan. In the event of any stock dividend or stock split with
respect to the Common Stock of the Corporation, such adjustment shall be made in
the aggregate number of shares reserved for issuance under the Plan as may be
determined to be appropriate by the Board. The shares issued upon exercise of
Options granted under this Plan may be authorized and unissued shares or shares
previously acquired or to be acquired by the Corporation.
4. Administration.
4.1 The Plan will be administered by a Committee appointed by the Board
of Directors of the Company consisting of at least two Directors, all of whom
shall be Outside Directors and Non-Employee Directors, who shall serve at the
pleasure of the Board.
4.2 The Committee will have plenary authority, subject to provisions of
the Plan, to determine when and to whom Options will be granted, the term of
each Option, the number of shares covered by it, the participation by the
optionee in other plans, and any other terms or conditions of each Option. The
Committee shall determine with respect to each grant of an Option whether a
participant shall receive an ISO or an NQO. The number of shares the term and
the other terms and conditions of a particular kind of Option need not be the
same, even as to Options granted at the same time. The Committee's
recommendations regarding Option grants and terms and conditions thereof will be
conclusive. No ISO shall be granted under the Plan after November 26, 1996.
4.3 The Committee will have the sole responsibility for construing and
interpreting the Plan, for establishing and amending any rules and regulations
as it deems necessary or desirable for the proper administration of the Plan,
and for resolving all questions arising under the Plan. Any decision or action
taken by the Committee arising out of or about the construction, administration,
interpretation and effect of the plan and of its rules and regulations will, to
the extent permitted by law, be within its absolute discretion, except as
otherwise specifically provided herein, and will be conclusive and binding on
all Optionees, all successors, and any other person, whether that person is
claiming under or through any Optionee or otherwise.
4.4 The Committee will designate one of its members as chairman. It
will hold its meeting at the times and places as it may determine. A majority of
its members will constitute a quorum, and all determinations of the Committee
will be made by a majority of its members. Any determination reduced to writing
and signed by all members will be fully as effective as if it had been made by a
majority vote at a meeting duly called and held. The Committee may appoint a
secretary, who need not be a member of the Committee, and may make such rules
and regulations for the conduct of its business as it may deem advisable.
4.5 No member of the Committee will be liable, in the absence of bad
faith, for any act or omission with respect to his service on the Committee.
Service on the Committee will constitute service as a member of the Board, so
that the members of the Committee will be entitled to indemnification and
reimbursement as Board members pursuant to its Bylaws.
4.6 The Committee will regularly inform the Board as to its actions
with respect to all Options granted under the Plan and the terms and conditions
and any such Options in a manner, at any times, and in any form as the Board may
reasonably request.
4.7 Any other provision of the Plan to the contrary notwithstanding,
the Committee is authorized to take such action as it, in its discretion, may
deem necessary or advisable and fair and equitable to Optionees in the event of:
a Change in Control of the Corporation; a tender, exchange or similar offer for
all or any part of the Common Stock made by any entity, person or group (other
than the Corporation, any Subsidiary of the Corporation or its Subsidiaries); a
merger of the Corporation into, a consolidation of the Corporation with, or an
acquisition of the Corporation by another corporation; or a sale or transfer of
all or substantially all of the Corporation's assets. Such action, in the
Committee's discretion, may include (but shall not be deemed limited to),
establishing, amending or waiving the forms, terms, conditions or duration of
Options so as to provide for earlier, later, extended or additional terms for
exercise of the whole, or any installment, thereof; alternate forms of payment,
or other modifications. The Committee may take any such actions pursuant to this
Section 4.7 by adopting rules or regulations of general applicability to all
Optionees, or to certain categories of Optionees, by amending or waiving terms
and conditions in stock option agreements, or by taking action with respect to
individual Optionees. The Committee may take any such actions before or after
the public announcement of any such Change in Control, tender offer, exchange
offer, merger, consolidation, acquisition or sale or transfer of assets.
5. Participants.
5.1 Participation in this Plan shall be limited to key personnel of the
Corporation or of a Subsidiary, who are employees of the Corporation or of a
Subsidiary. Officers will be employees for this purpose, whether or not they are
also members of the Board.
5.2 Subject to other provisions of this Plan, Options may be granted to
the same participants on more than one occasion.
5.3 The Committee's determination under the Plan including, without
limitation, determination of the persons to receive Options, the form, amount
and type of such Options, and the terms and provisions of Options need not be
uniform and may be made selectively among otherwise eligible participants
whether or not the participants are similarly situated.
6. Terms and Conditions.
6.1 Each Option granted under the Plan shall be evidenced by a written
agreement, which shall be subject to the provisions of this Plan and to such
other terms and conditions as the Corporation may deem appropriate.
6.2 Each Option agreement shall specify the period for which the Option
thereunder is granted (which in no event shall exceed ten years from the date of
the grant for options granted pursuant to Section 6.3(a) and 6.3(c) hereof and
five years from the date of grant for Options granted pursuant to 6.3(b) hereof)
and shall provide that the Option shall expire at the end of such period;
provided, however, the term of each Option shall be subject to the power of the
Committee, among other things, to accelerate or otherwise adjust the terms for
exercise of Options pursuant to Section 4.7 hereof in the event of the
occurrence of any of the events set forth therein.
6.3 The exercise price per share shall be determined by the Committee
at the time any Option is granted and shall be determined as follows:
(a) For employees who do not own Stock possessing more than ten
percent (10%) of the total combined voting power of all classes of Stock of the
Corporation or of any Subsidiary, the ISO exercise price per share shall not be
less than one hundred percent (100%) of Fair Market Value of the Common Stock of
the Corporation on the date the option is granted, as determined by the
Committee.
(b) For employees who own Stock possessing more than ten percent
(10%) of the total combined voting power of all classes of Stock of the
Corporation or of any Subsidiary, the ISO exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value of the Common
Stock of the Corporation on the date the Option is granted, as determined by the
Committee.
(c) The NQO exercise price per share shall not be less than one
hundred percent (100%) of the Fair Market Value of the Common Stock of the
Corporation on the date the Option is granted, as determined by the Committee.
6.4 The aggregate Fair Market Value (determined as of the time the
Option is granted) of the Common Stock with respect to which an ISO granted
under this Plan or any other plan of the Corporation or its Subsidiaries is
exercisable for the first time by an Optionee during any calendar year shall not
exceed $100,000.
6.5 An Option shall be exercised at such time or times, and with
respect to such number of shares, as may be determined by the Corporation at the
time of the grant. The Option agreement may require, if so determined by the
Corporation, that no part of the Option may be exercised until the Optionee
shall have remained in the employ of the Corporation or of a Subsidiary for such
period after the date of the Option as the Corporation may specify.
6.6 The Corporation may prescribe the form of legend which shall be
affixed to the Stock certificate representing shares to be issued and the shares
shall be subject to the provisions of any repurchase agreement or other
agreement restricting the sale or transfer thereof. Such agreements or
restrictions shall be noted on the certificate representing the shares to be
issued.
7. Exercise of Option.
7.1 Each exercise of an Option granted hereunder, whether in whole or
in part, shall be by written notice thereof, delivered to the Secretary of the
Corporation (or such other person as he may designate). The notice shall state
the number of shares with respect to which the Options are being exercised and
shall be accompanied by payment in full for the number of shares so designated.
Shares shall be registered in the name of the Optionee unless the Optionee
otherwise directs in his or her notice of election.
7.2 Payment shall be made to the Corporation either (i) in cash,
including certified check, bank draft or money order, (ii) at the discretion of
the Corporation, by delivering Corporation Common Stock already owned by the
participant or a combination of Common Stock and cash, or (iii) at the
discretion of the Corporation by delivering a promissory note, containing such
terms and conditions acceptable to the Corporation, for all or a portion of the
purchase price of the share so purchased. With respect to (ii), the Fair Market
Value of Stock so delivered shall be determined as of the date immediately
preceding the date of exercise.
7.3 Upon notification of the amount due and prior to, or concurrently
with, the delivery to the Optionee of a certificate representing any shares
purchased pursuant to the exercise of an Option, the Optionee shall promptly pay
to the Corporation any amount necessary to satisfy applicable federal, state or
local tax requirements.
8. Adjustments of Option Stock. In case the shares issuable upon
exercise of any Option granted under the Plan at any time outstanding shall be
subdivided into a greater or combined into a lesser number of shares (whether
with or without par value), the number of shares purchasable upon exercise of
such Option immediately prior thereto shall be adjusted so that the Optionee
shall be entitled to receive a number of shares which he or she would have owned
or have been entitled to receive after the happening of such event had such
Option been exercised immediately prior to the happening of such subdivision or
combination or any record date with respect thereto. An adjustment made pursuant
to this paragraph shall become effective immediately after the effective date of
such subdivision or combination retroactive to the record date, if any, for such
subdivision or combination. The option price (as such amount may have
theretofore been adjusted pursuant to the provisions hereof) shall be adjusted
by multiplying the option price immediately prior to the adjustment of the
number of shares purchasable upon the exercise of the Option immediately prior
to such adjustment, and of which the denominator shall be the number of shares
so purchasable immediately thereafter. Substituted shares of Stock shall be
deemed shares under Section 2 of the Plan.
9. Assignments. Any Option granted under this Plan shall be exercisable
only by the Optionee to whom granted during his or her lifetime and shall not be
assignable or transferable otherwise than by will or by the laws of descent and
distribution.
10. Severance; Death; Disability. An Option shall terminate, and no
rights thereunder may be exercised, if the person to whom it is granted ceases
to be employed by the Corporation or by a Subsidiary except that:
10.1 If the employment of the Optionee is terminated by any reason
other than his or her death or disability, the Optionee may at any time within
not more than three months after termination of his or her employment, exercise
his or her Option rights but only to the extent they were exercisable by the
Optionee on the date of termination of his or her employment; provided, however,
that if the employment is terminated by deliberate, willful or gross misconduct
as determined by the Committee, all rights under the Option shall terminate and
expire upon such termination.
10.2 If the Optionee dies while in the employ of the Corporation or a
Subsidiary, or within not more than three months after termination of his or her
employment, the Optionee's rights under the Option may be exercised at any time
within three months following such death by his or her personal representative
or by the person or person to whom such rights under the Option shall pass by
will by the laws of descent and distribution.
10.3 If the employment of the Optionee is terminated because of
permanent disability, the Optionee, or his or her legal representative may at
any time within not more than one (1) year after termination of his or her
employment, exercise his or her Option rights but only to the extent they were
exercisable by the Optionee on the date of termination of his or her employment.
10.4 Notwithstanding anything contained in Sections 10.1, 10.2 and 10.3
to the contrary, no Option rights shall be exercisable by anyone after the
expiration of the term of the Option.
10.5 Transfers of employment between the Corporation and a Subsidiary,
or between Subsidiaries, will not constitute termination of employment for
purposes of any Option granted under this Plan. The Committee may specify in the
terms and conditions of an Option whether any authorized leave of absence or
absence for military or government service or for any other reasons will
constitute a termination of employment for purposes of the Option and the Plan.
11. Rights of Participants. Neither the participant nor the personal
representatives, heirs, or legatees of such participant shall be or have any of
the rights or privileges of a shareholder of the Corporation in respect of any
of the shares issuable upon the exercise of an Option granted under this Plan
unless and until certificates representing such shares shall have been issued
and delivered to the participant or to such personal representatives, heirs or
legatees.
12. Securities Registration. If any law or regulation of the Securities
and Exchange Commission or of any other body having jurisdiction shall require
the Corporation or the participant to take any action in connection with the
exercise of an Option, then notwithstanding any contrary provision of an Option
agreement or this Plan, the date for exercise of such Option and the delivery of
the shares purchased thereunder shall be deferred until the completion of the
necessary action. In the event that the Corporation shall deem it necessary, the
Corporation may condition the grant or exercise of an Option granted under this
Plan upon the receipt of a satisfactory certificate that the Optionee is
acquiring the Option or the shares obtained by exercise of the Option for
investment purposes and not with the view or intent to resell or otherwise
distribute such Option or shares. In such event, the Stock certificate
evidencing such shares shall bear a legend referring to applicable laws
restricting transfer of such shares. In the event that the Corporation shall
deem it necessary to register under the Securities Act of 1933, as amended, or
any other applicable statute, any Options or any shares with respect to which an
Option shall have been granted or exercised, then the participant shall
cooperate with the Corporation and take such action as is necessary to permit
registration or qualification of such Options or shares.
13. Duration and Amendment.
13.1 There is no express limitation upon the duration of the Plan,
except for the requirement of the Code that all ISOs must be granted within ten
years from the date the Plan is adopted by the Board.
13.2 The Board may terminate or may amend the Plan at any time,
provided, however that the Board may not, without approval of the stockholders
of the Corporation, (i) increase the maximum number of shares as to which
Options may be granted under the Plan, (ii) permit the granting of Options at
less than 100% of Fair Market Value at time of grant, (iii) change the class of
employees eligible to receive Options under the Plan, or (iv) grant Options to
Non-Employee Directors.
14. Approval of Shareholders. This Plan is subject to approval of the
Corporation's shareholders, and if it is not so approved on or before one year
after the date of adoption of this Plan by the Board, the Plan shall not come
into effect, and any Options granted pursuant to this Plan shall be deemed
cancelled.
15. Conditions of Employment. The granting of an Option to a
participant under this Plan shall impose no obligation on the Corporation to
continue the employment of any participant and shall not lessen or affect the
right of the Corporation to terminate the employment of the participant.
16. Other Options. Nothing in the Plan will be construed to limit the
authority of the Corporation to exercise its corporate rights and powers,
including, by way of illustration and not by way of limitation, the right to
grant options for proper corporate purposes otherwise than under the Plan to any
employee or any other person, firm, corporation, association, or other entity,
or to grant options to, or assume options of, any person for the acquisition by
purchase, lease, merger, consolidation, or otherwise, of all or any part of the
business and assets of any person, firm, corporation, association, or other
entity.
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Adopted by the Board of Directors on November 26, 1986.
Adopted by the Corporation's Shareholders on January 27, 1987.
Amendment adopted by the Board of Directors November 23, 1987.
Amendment adopted by the Corporation's Shareholders on January 25, 1988.
Amendment adopted by the Board of Directors on January 25, 1988.
Amendment adopted by the Board of Directors on April 19, 1988.
Amended by the Board of Directors on November 22, 1996.