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EXHIBIT 10.1
VALUEVISION INTERNATIONAL, INC.
2001 OMNIBUS STOCK PLAN
1. PURPOSE. The purpose of the ValueVision International, Inc. 2001
Omnibus Stock Plan (the "Plan") is to motivate key personnel to produce a
superior return to the shareholders of the Company by offering such personnel an
opportunity to realize Stock appreciation, by facilitating Stock ownership and
by rewarding them for achieving a high level of corporate financial performance.
The Plan is also intended to facilitate recruiting and retaining key personnel
of outstanding ability by providing an attractive capital accumulation
opportunity. Additionally, the Plan is intended to provide Outside Directors
with an opportunity to acquire a proprietary interest in the Company, to
compensate Outside Directors for their contribution to the Company and to aid in
attracting and retaining Outside Directors.
2. DEFINITIONS.
2.1 The terms defined in this Section are used (and capitalized)
elsewhere in the Plan.
(a) "AFFILIATE" means any corporation that is a "PARENT
CORPORATION" or "SUBSIDIARY CORPORATION" of the Company, as those terms
are defined in Code Section 424(e) and (f), or any successor
provisions.
(b) "AGREEMENT" means (i) a written contract consistent with
the terms of the Plan entered into between the Company or an Affiliate
and a Participant and (ii) containing the terms and conditions of an
Award in such form and not inconsistent with this Plan as the Committee
shall approve from time to time, together with all amendments thereto,
which amendments may be unilaterally made by the Company where such
amendment is required as a matter of law.
(c) "AWARD" or "AWARDS" means a grant made under this Plan in
the form of Restricted Stock, Options, Stock Appreciation Rights,
Performance Units, Stock or any other stock-based award.
(d) "BOARD" means the Board of Directors of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended
and in effect from time to time or any successor statute.
(f) "COMMITTEE" means the two or more Non-Employee Directors
designated by the Board to administer the Plan under Plan Section 3.1
and constituted so as to permit grants thereby to comply with Exchange
Act Rule 16b-3 and Code Section 162(m).
(g) "COMPANY" means ValueVision International Inc., a
Minnesota corporation, or the successor to all or substantially all of
its businesses by merger, consolidation, purchase of assets or
otherwise.
(h) "EFFECTIVE DATE" means the date specified in Plan Section
12.1.
(i) "EMPLOYEE" means an employee (including a officer or
director who is also an employee) of the Company or an Affiliate.
(j) "EVENT" means any of the following:
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(1) The acquisition by any individual, entity or
group (within the meaning of Exchange Act Sections 13(d)(3) or
14(d)(2)) of beneficial ownership (within the meaning of
Exchange Act Rule 13d-3) of 30% or more of either (i) the
then-outstanding shares of common stock of the Company (the
"OUTSTANDING COMPANY COMMON STOCK") or (ii) the combined
voting power of the then-outstanding voting securities of the
Company entitled to vote generally in the election of the
Board (the "OUTSTANDING COMPANY VOTING SECURITIES"); provided,
however, that the following acquisitions shall not constitute
an Event:
(A) any acquisition of common stock or
voting securities of the Company directly from the
Company,
(B) any acquisition of common stock or
voting securities of the Company by the Company or
any of its wholly owned Subsidiaries,
(C) any acquisition of common stock or
voting securities of the Company by any employee
benefit plan (or related trust) sponsored or
maintained by the Company or any of its Subsidiaries,
or
(D) any acquisition by any corporation with
respect to which, immediately following such
acquisition, more than 70% of, respectively, the
then-outstanding shares of common stock of such
corporation and the combined voting power of the
then-outstanding voting securities of such
corporation entitled to vote generally in the
election of directors is then beneficially owned,
directly or indirectly, by all or substantially all
of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities immediately before such acquisition in
substantially the same proportions as was their
ownership, immediately before such acquisition, of
the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be;
(2) Individuals who, as of the Effective Date,
constitute the Board (the "INCUMBENT Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director of
the Board after the Effective Date whose election, or
nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered a
member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest
(3) Approval by the shareholders of the Company of a
reorganization, merger, consolidation or statutory exchange of
Outstanding Company Voting Securities, unless immediately
following such reorganization, merger, consolidation or
exchange, all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately before such reorganization,
merger, consolidation or exchange beneficially own, directly
or indirectly, more than 70% of, respectively, the
then-outstanding shares of common stock and the combined
voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such
reorganization, merger, consolidation or exchange in
substantially the same proportions as was their ownership,
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immediately before such reorganization, merger, consolidation
or exchange, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be; or
(4) Approval by the shareholders of the Company of
(i) a complete liquidation or dissolution of the Company or
(ii) the sale or other disposition of all or substantially all
of the assets of the Company, other than to a corporation with
respect to which, immediately following such sale or other
disposition, more than 70% of, respectively, the
then-outstanding shares of common stock of such corporation
and the combined voting power of the then-outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately before such sale or other
disposition in substantially the same proportion as was their
ownership, immediately before such sale or other disposition,
of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be.
Notwithstanding the above, an Event shall not be deemed to occur with
respect to a recipient of an Award if the acquisition of the 30% or greater
interest referred to in paragraph (1) is by a group, acting in concert, that
includes that recipient of an Award or if at least 30% of the then-outstanding
common stock or combined voting power of the then-outstanding voting securities
(or voting equity interests) of the surviving corporation or of any corporation
(or other entity) acquiring all or substantially all of the assets of the
Company shall be beneficially owned, directly or indirectly, immediately after a
reorganization, merger, consolidation, statutory share exchange or disposition
of assets referred to in paragraphs (3) or (4) by a group, acting in concert,
that includes that recipient of an Award.
(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended and in effect from time to time, or any successor statute.
(l) "EXCHANGE ACT RULE 16b-3" means Rule 16b-3 promulgated by
the Securities and Exchange Commission under the Exchange Act, as now
in force and in effect from time to time or any successor regulation.
(m) "FAIR MARKET VALUE" as of any date means, unless otherwise
expressly provided in the Plan:
(i) the closing price of a Share on the date immediately
preceding that date or, if no sale of Shares shall
have occurred on that date, on the next preceding day
on which a sale of Shares occurred
(A) on the composite tape for New York Stock
Exchange listed shares, or
(B) if the Shares are not quoted on the
composite tape for New York Stock Exchange listed
shares, on the principal United States Securities
Exchange registered under the Exchange Act on which
the Shares are listed, or
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(C) if the Shares are not listed on any such
exchange, on the National Association of Securities
Dealers, Inc. Automated Quotation National Market
System, or
(ii) if clause (i) is inapplicable, the mean between the
closing "BID" and the closing "ASKED" quotation of a
Share on the date immediately preceding that date,
or, if no closing bid or asked quotation is made on
that date, on the next preceding day on which a
closing bid and asked quotation is made, on the
National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in
use, or
(iii) if clauses (i) and (ii) are inapplicable, what the
Committee determines in good faith to be 100% of the
fair market value of a Share on that date, using such
criteria as it shall determine, in its sole
discretion, to be appropriate for valuation.
However, if the applicable securities exchange or system has
closed for the day at the time the event occurs that triggers a
determination of Fair Market Value, whether the grant of an Award, the
exercise of an Option or Stock Appreciation Right or otherwise, all
references in this paragraph to the "date immediately preceding that
date" shall be deemed to be references to "that date." In the case of
an Incentive Stock Option, if this determination of Fair Market Value
is not consistent with the then current regulations of the Secretary of
the Treasury, Fair Market Value shall be determined in accordance with
those regulations. The determination of Fair Market Value shall be
subject to adjustment as provided in Plan Section 16.
(n) "FUNDAMENTAL CHANGE" shall mean a dissolution or
liquidation of the Company, a sale of substantially all of the assets
of the Company, a merger or consolidation of the Company with or into
any other corporation, regardless of whether the Company is the
surviving corporation, or a statutory share exchange involving capital
stock of the Company.
(o) "INCENTIVE STOCK OPTION" means any Option designated as
such and granted in accordance with the requirements of Code Section
422 or any successor provision.
(p) "INSIDER" as of a particular date means any person who, as
of that date is an officer of the Company as defined under Exchange Act
Rule 16a-1(f) or its successor provision.
(q) "NON-EMPLOYEE DIRECTOR" means a member of the Board who is
considered a non-employee director within the meaning of Exchange Act
Rule 16b-3(b)(3) or its successor provision and an outside director for
purposes of Code Section 162(m).
(r) "NON-STATUTORY STOCK OPTION" means an Option other than an
Incentive Stock Option.
(s) "OPTION" means a right to purchase Stock, including both
Non-Statutory Stock Options and Incentive Stock Options.
(t) "OUTSIDE DIRECTOR" means a director who is not an
Employee.
(u) "PARTICIPANT" means a person or entity to whom an Award is
or has been made in accordance with the Plan.
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(v) "PERFORMANCE CYCLE" means the period of time as specified
in an Agreement over which Performance Units are to be earned.
(w) "PERFORMANCE UNITS" means an Award made pursuant to Plan
Section 11.
(x) "PLAN" means this ValueVision International, Inc. 2001
Omnibus Stock Plan, as may be amended and in effect from time to time.
(y) "RESTRICTED STOCK" means Stock granted under Plan Section
7 so long as such Stock remains subject to one or more restrictions.
(z) "SECTION 16" or "SECTION 16(b)" means Section 16 or
Section 16(b), respectively, of the Exchange Act or any successor
statute and the rules and regulations promulgated thereunder as in
effect and as amended from time to time.
(aa) "SHARE" means a share of Stock.
(bb) "STOCK" means the common stock, par value $.01 per
share, of the Company.
(cc) "STOCK APPRECIATION RIGHT" means a right, the value
of which is determined in relation to the
appreciation in value of Shares pursuant to an Award
granted under Plan Section 10.
(dd) "SUBSIDIARY" means a "subsidiary corporation," as
that, term is defined in Code Section 424(f), or any
successor provision.
(ee) "SUCCESSOR" with respect to a Participant means the
legal representative of an incompetent Participant,
and if the Participant is deceased the estate of the
Participant or the person or persons who may, by
bequest or inheritance, or pursuant to the terms of
an Award, acquire the right to exercise an Option or
Stock Appreciation. Right or to receive cash and/or
Shares issuable in satisfaction of an Award in the
event of the Participant's death.
(ff) "TERM" means the period during which an Option or
Stock Appreciation Right may be exercised or the
period during which the restrictions or terms and
conditions placed on Restricted Stock or any other
Award are in effect.
(gg) "TRANSFEREE" means any member of the Participant's
immediate family (i.e., his or her children,
step-children, grandchildren and spouse) or one or
more trusts for the benefit of such family members or
partnerships in which such family members are the
only partners.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
reference to the masculine gender shall include, when used, the feminine gender
and any term used in the singular shall also include the plural.
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3. ADMINISTRATION AND INDEMNIFICATION.
3.1 ADMINISTRATION.
(a) The Committee shall administer the Plan. The Committee shall
have exclusive power to (i) make Awards, (ii) determine when
and to whom Awards will be granted, the form of each Award,
the amount of each Award (except as to the amount of the
Annual Outside Director Option, as provided in Plan Section
9.3), and any other terms or conditions of each Award
consistent with the Plan, and (iii) determine whether, to what
extent and under what circumstances, Awards may be settled,
paid or exercised in cash, Shares or other Awards, or other
property or canceled, forfeited or suspended. Each Award shall
be subject to an Agreement authorized by the Committee.
Notwithstanding the foregoing, the Board shall have the sole
and exclusive power to administer the Plan with respect to
Awards granted to Outside Directors, including any grants made
under Plan Section 9.3(d).
(b) The Committee may delegate all or any portion of its authority
under the Plan to one or more persons who are not Non-Employee
Directors.
(c) To the extent within its discretion and subject to Plan
Sections 15 and 16, other than price, the Committee may amend
the terms and conditions of any outstanding Award.
(d) It is the intent that the Plan and all Awards granted pursuant
to it shall be administered by the Committee so as to permit
the Plan and Awards to comply with Exchange Act Rule 16b-3,
except in such instances as the Committee, in its discretion,
may so provide. If any provision of the Plan or of any Award
would otherwise frustrate or conflict with the intent
expressed in this Section 3.1(d), that provision to the extent
possible shall be interpreted and deemed amended in the manner
determined by the Committee so as to avoid the conflict. To
the extent of any remaining irreconcilable conflict with this
intent, the provision shall be deemed void as applicable to
Insiders to the extent permitted by law and in the manner
deemed advisable by the Committee.
(e) The Committee's interpretation of the Plan and of any Award or
Agreement made under the Plan and all related decisions or
resolutions of the Board or Committee shall be final and
binding on all parties with an interest therein. Consistent
with its terms, the Committee shall have the power to
establish, amend or waive regulations to administer the Plan.
In carrying out any of its responsibilities, the Committee
shall have discretionary authority to construe the terms of
the Plan and any Award or Agreement made under the Plan.
3.2 INDEMNIFICATION. Each person who is or shall have been a member of
the Committee, or of the Board, and any other person to whom the Committee
delegates authority under the Plan, shall be indemnified and held harmless by
the Company, to the extent permitted by law, against and from any loss, cost,
liability or expense that may be imposed upon or reasonably incurred by such
person in connection with or resulting from any claim, action, suit or
proceeding to which such person may be a party or in which such person may be
involved by reason of any action taken or failure to act, made in good faith,
under the Plan and against and from any and all amounts paid by such person in
settlement thereof, with the Company's approval, or paid by such person in
satisfaction of any judgment in any such
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action, suit or proceeding against such person, provided such person shall give
the Company an opportunity, at the Company's expense, to handle and defend the
same before such person undertakes to handle and defend it on such person's own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such person or persons may be entitled
under the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
4. SHARES AVAILABLE UNDER THE PLAN.
(a) The number of Shares available for distribution under this
Plan shall not exceed 3,000,000 (subject to adjustment
pursuant to Plan Section 16).
(b) Any Shares subject to the terms and conditions of an Award
under this Plan that are not used because the terms and
conditions of the Award are not met may again be used for an
Award under the Plan. But Shares with respect to which a Stock
Appreciation Right has been exercised whether paid in cash
and/or in Shares may not again be awarded under this Plan.
(c) Any unexercised or undistributed portion of any terminated,
expired, exchanged, or forfeited Award, or any Award settled
in cash in lieu of Shares (except as provided in Plan Section
4(b)) shall be available for further Awards.
(d) For the purposes of computing the total number of Shares
granted under the Plan, the following rules shall apply to
Awards payable in Shares where appropriate:
(i) each Option shall be deemed to be the equivalent of
the maximum number of Shares that may be issued upon
exercise of the particular Option;
(ii) an Award (other than an Option) payable in some other
security shall be deemed to be equal to the number of
Shares to which it relates;
(iii) where the number of Shares available under the Award
is variable on the date it is granted, the number of
Shares shall be deemed to be the maximum number of
Shares that could be received under that particular
Award; and
(iv) where two or more types of Awards (all of which are
payable in Shares) are granted to a Participant in
tandem with each other, such that the exercise of one
type of Award with respect to a number of Shares
cancels at least an equal number of Shares of the
other, each such joint Award shall be deemed to be
the equivalent of the maximum number of Shares
available under the largest single Award.
Additional rules for determining the number of Shares granted under the
Plan may be made by the Committee, as it deems necessary or desirable.
(e) No fractional Shares may be issued under the Plan; however,
cash shall be paid in lieu of any fractional Share in
settlement of an Award.
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(f) The maximum number of Shares that may be awarded to a
Participant in any calendar year in the form of Options is
250,000 and the maximum number of Shares that may be awarded
to a Participant in any calendar year in the form of Stock
Appreciation Rights is 250,000.
5. ELIGIBILITY. Participation in the Plan shall be limited to Employees
and to individuals or entities who are not Employees but who provide services to
the Company or an Affiliate, including services provided in the capacity of a
consultant, adviser or director. The granting of Awards is solely at the
discretion of the Committee, except that Incentive Stock Options may only be
granted to Employees and Awards to Outside Directors are subject to the limits
of Section 9.3.
6. GENERAL TERMS OF AWARDS.
6.1 AMOUNT OF AWARD. Each Agreement shall set forth the number of
Shares of Restricted Stock, Stock or Performance Units subject to the Agreement,
or the number of Shares to which the Option subject to the Agreement applies or
with respect to which payment upon the exercise of the Stock Appreciation Right
subject to the Agreement is to be determined, as the case may be, together with
such other terms and conditions applicable to the Award as determined by the
Committee acting in its sole discretion.
6.2 TERM. Each Agreement, other than those relating solely to Awards of
Shares without restrictions, shall set forth the Term of the Option, Stock
Appreciation Right, Restricted Stock or other Award or the Performance Cycle for
the Performance Units, as the case may be. Acceleration of the expiration of the
applicable Term is permitted, upon such terms and conditions as shall be set
forth in the Agreement, which may, but need not, include (without limitation)
acceleration resulting from the occurrence of an Event or in the event of the
Participant's death or retirement. Acceleration of the Performance Cycle of
Performance Units shall be subject to Plan Section 11.2.
6.3 TRANSFERABILITY. Except as provided in this Section, during the
lifetime of a Participant to whom an Award is granted, only that Participant (or
that Participant's legal representative) may exercise an Option or Stock
Appreciation Right, or receive payment with respect to Performance Units or any
other Award. No Award of Restricted Stock (before the expiration of the
restrictions), Options, Stock Appreciation Rights or Performance Units or other
Award may be sold, assigned, transferred, exchanged or otherwise encumbered
other than pursuant to a qualified domestic relations order as defined in the
Code or Title 1 of the Employee Retirement Income Security Act of 1974, as
amended ("E.R.I.S.A."), or the rules thereunder; any attempted transfer in
violation of this Section 6.3 shall be of no effect. Notwithstanding the
immediately preceding sentence, the Committee, in an Agreement or otherwise at
its discretion, may provide (i) that the Award subject to the Agreement shall be
transferable to a Successor in the event of a Participant's death, or (ii) that
the Award (other than Incentive Stock Options) may be transferable to a
Transferee. Any Award held by a Transferee shall continue to be subject to the
same terms an conditions that were applicable to that Award immediately before
the transfer thereof to the Transferee.
6.4 TERMINATION OF EMPLOYMENT. No Option or Stock Appreciation Right
may be exercised by a Participant, all Restricted Stock held by a Participant or
any other Award then subject to restrictions shall be forfeited, and no payment
with respect to Performance Units for which the applicable Performance Cycle has
not been completed shall be made, if the Participant's employment or other
relationship with the Company and its Affiliates shall be voluntarily terminated
or involuntarily terminated with or without cause before the expiration of the
Term of the Option, Stock Appreciation Right, Restricted Stock or other Award,
or the completion of the Performance Cycle, as the case may be, except as, and
to the extent, provided in the Agreement applicable to that Award. An Award
may be
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exercised by, or paid to, a Transferee or the Successor of a Participant
following the death of the Participant to the extent, and during the period of
time, if any, provided in the applicable Agreement.
6.5 RIGHTS AS SHAREHOLDER. Each Agreement shall provide that a
Participant shall have no rights as a shareholder with respect to any securities
covered by an Award if and until the date the Participant becomes the holder of
record of the Stock, if any, to which the Award relates.
7. RESTRICTED STOCK AWARDS.
(a) An Award of Restricted Stock under the Plan shall consist
of Shares subject to restrictions on transfer and conditions of
forfeiture, which restrictions and conditions shall be included in the
applicable Agreement. The Committee may provide for the lapse or waiver
of any such restriction or condition based on such factors or criteria
as the Committee, in its sole discretion, may determine.
(b) Except as otherwise provided in the applicable Agreement,
each Stock certificate issued with respect to an Award of Restricted
Stock shall either be deposited with the Company or its designee,
together with an assignment separate from the certificate, in blank,
signed by the Participant, or bear such legends with respect to the
restricted nature of the Restricted Stock evidenced thereby as shall be
provided for in the applicable Agreement.
(c) The Agreement shall describe the terms and conditions by
which the restrictions and conditions of forfeiture upon awarded
Restricted Stock shall lapse. Upon the lapse of the restrictions and
conditions, Shares free of restrictive legends, if any, relating to
such restrictions shall be issued to the Participant or a Successor or
Transferee.
(d) A Participant or a Transferee with a Restricted Stock
Award shall have all the other rights of a shareholder including, but
not limited to, the right to receive dividends and the right to vote
the Shares of Restricted Stock.
8. OTHER AWARDS. The Committee may from time to time grant Stock and
other Awards under the Plan including without limitations those Awards pursuant
to which Shares are or may in the future be acquired, Awards denominated in
Stock units, securities convertible into Stock and phantom securities. The
Committee, in its sole discretion, shall determine the terms and conditions of
such Awards provided that such Awards shall not be inconsistent with the terms
and purposes of this Plan. The Committee may, at its sole discretion, direct the
Company to issue Shares subject to restrictive legends and/or stop transfer
instructions that are consistent with the terms and conditions of the Award to
which the Shares relate.
9. STOCK OPTIONS.
9.1 TERMS OF ALL OPTIONS.
(a) An Option shall be granted pursuant to an Agreement as
either an Incentive Stock Option or a Non-Statutory Stock Option. The
purchase price of each Share subject to an Option shall be set forth in
the Agreement, but shall not be less than 100% of the Fair Market Value
of a Share as of the date the Option is granted (except as provided in
Plan Section 19).
(b) The purchase price of the Shares with respect to which an
Option is exercised shall be payable in full at the time of exercise,
provided that to the extent permitted by law, the Agreement may permit
some or all Participants to simultaneously exercise Options and sell
the
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Shares thereby acquired pursuant to a brokerage or similar relationship
and use the proceeds from the sale as payment of the purchase price of
the Shares. The purchase price may be payable in cash, by delivery or
tender of Shares that have been owned by the Participant for at least
the preceding 180 days and having a Fair Market Value as of the date
the Option is exercised equal to the purchase price of the Shares being
purchased pursuant to the Option, or a combination thereof, as
determined by the Committee, but no fractional Shares will be issued or
accepted.
(c) Each Option shall be exercisable in whole or in part on
the terms provided in the Agreement. Notwithstanding anything to the
contrary in this Plan and except as otherwise provided in an Agreement,
all Options granted to Employees shall vest and become exercisable in
full upon the occurrence of an Event or a proposed Fundamental Change.
In no event shall any Option be exercisable at any time after the
expiration of its Term. When an Option is no longer exercisable, it
shall be deemed to have lapsed or terminated.
9.2 INCENTIVE STOCK OPTIONS. In addition to the other terms and
conditions applicable to all Options:
(a) the aggregate Fair Market Value (determined as of the date
the Option is granted) of the Shares with respect to which Incentive
Stock Options held by an individual first become exercisable in any
calendar year (under this Plan and all other incentive stock option
plans of the Company and its Affiliates) shall not exceed $100,000 (or
such other limit as may be required by the Code) if this limitation is
necessary to qualify the Option as an Incentive Stock Option and to the
extent an Option or Options granted to a Participant exceed this limit
the Option or Options shall be treated as a Non-Statutory Stock Option;
(b) an Incentive Stock Option shall not be exercisable more
than 10 years after the date of grant (or such other limit as may be
required by the Code) if this limitation is necessary to qualify the
Option as an Incentive Stock Option;
(c) the Agreement covering an Incentive Stock Option shall
contain such other terms and provisions that the Committee determines
necessary to qualify this Option as an Incentive Stock Option; and
(d) notwithstanding any other provision of this Plan to the
contrary, no Participant may receive an Incentive Stock Option under
the Plan if, at the time the Award is granted, the Participant owns
(after application of the rules contained in Code Section 424(d), or
its successor provision), Shares possessing more than 10% of the total
combined voting power of all classes of stock of the Company or its
Subsidiaries, unless (i) the option price for that Incentive Stock
Option is at least 110% of the Fair Market Value of the Shares subject
to that Incentive Stock Option on the date of grant and (ii) that
Option is not exercisable after the date five years from the date that
Incentive Stock Option is granted.
9.3 TERMS AND CONDITIONS OF OUTSIDE DIRECTORS' OPTIONS
(a) Annual Outside Director Option Grants. For the Annual
Meeting of Shareholders to be held on June 21, 2001 and for each Annual
Meeting of Shareholders thereafter during the term of this Plan, each
Outside Director serving as an Outside Director of the Company
immediately following the Annual Meeting shall be granted, by virtue of
serving as an Outside Director of the Company, a Non-Statutory Stock
Option to purchase 10,000 Shares or such other amount as may be
established from time to time by the Board, but in no event to exceed
50,000 Shares (an "ANNUAL OUTSIDE DIRECTOR OPTION"). Each Annual
Outside Director
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Option shall be deemed to be granted to each Outside Director
immediately after an Annual Meeting.
(b) Vesting of Annual Outside Director Options. Subject to the
provisions of Plan Section 9.3(c), Annual Outside Director Options
shall vest and become exercisable as provided in the Agreement. Each
Option, to the extent exercisable, shall be exercisable in whole or in
part. Notwithstanding anything to the contrary in this Plan, all Annual
Outside Director Options shall vest and become exercisable in full upon
the occurrence of an Event or a proposed Fundamental Change.
(c) Termination of Annual Outside Directors' Options. Each
Outside Director Option granted pursuant to this Plan and all rights to
purchase Shares thereunder shall terminate on the earliest of:
(i) ten years after the date that the Outside Director
Option was granted or such other time period
specified in the Agreement;
(ii) the expiration of the period specified in the
Agreement after the death or permanent disability of
an Outside Director; or
(iii) ninety days after the date the Outside Director
ceases to be a director of the Company, provided,
however, that the option shall be exercisable during
this 90-day period only to the extent the option was
exercisable as of the date the person ceases to be an
Outside Director unless the cessation results from
the director's death or permanent disability.
Notwithstanding the preceding sentence, if an Outside
Director who resigns or whose term expires then
becomes a consultant or Employee of the Company
within ninety days of such resignation or term
expiration, the Outside Director Options of such
person shall continue in full force and effect.
(e) Non-exclusivity of Section 9.3. The provisions of this
Section 9.3 are not intended to be exclusive; the Committee, in its
discretion, may grant Options or other Awards to an Outside Director.
10. STOCK APPRECIATION RIGHTS. An Award of a Stock Appreciation Right
shall entitle the Participant (or a Successor or Transferee), subject to terms
and conditions determined by the Committee, to receive upon exercise of the
Stock Appreciation Right all or a portion of the excess of (i) the Fair Market
Value of a specified number of Shares as of the date of exercise of the Stock
Appreciation Right over (ii) a specified price that shall not be less than 100%
of the Fair Market Value of such Shares as of the date of grant of the Stock
Appreciation Right. A Stock Appreciation Right may be granted in connection with
part or all of, in addition to, or completely independent of an Option or any
other Award under this Plan. If issued in connection with a previously or
contemporaneously granted Option, the Committee may impose a condition that
exercise of a Stock Appreciation Right cancels a pro rata portion of the Option
with which it is connected and vice versa. Each Stock Appreciation Right may be
exercisable in whole or in part on the terms provided in the Agreement. No Stock
Appreciation Right shall be exercisable at any time after the expiration of its
Term. When a Stock Appreciation Right is no longer exercisable, it shall be
deemed to have lapsed or terminated. Upon exercise of a Stock Appreciation
Right, payment to the Participant or a Successor or Transferee shall be made at
such time or times as shall be provided in the Agreement in the form of cash,
Shares or a combination of cash and Shares as determined by the Committee. The
Agreement may provide for a limitation upon the amount or
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percentage of the total appreciation on which payment (whether in cash and/or
Shares) may be made in the event of the exercise of a Stock Appreciation Right.
11. PERFORMANCE UNITS.
11.1 INITIAL AWARD.
(a) An Award of Performance Units under the Plan shall entitle
the Participant or a Successor or Transferee to future payments of
cash, Shares or a combination of cash and Shares, as determined by the
Committee, based upon the achievement of pre-established performance
targets. These performance targets may, but need not, include (without
limitation) targets relating to one or more of the Company's or a
group's, unit's, Affiliate's or an individual's performance. The
Agreement may establish that a portion of a Participant's Award will be
paid for performance that exceeds the minimum target but falls below
the maximum target applicable to the Award. The Agreement shall also
provide for the timing of the payment.
(b) Following the conclusion or acceleration of each
Performance Cycle, the Committee shall determine the extent to which
(i) performance targets have been attained, (ii) any other terms and
conditions with respect to an Award relating to the Performance Cycle
have been satisfied and (iii) payment is due with respect to an Award
of Performance Units.
11.2 ACCELERATION AND ADJUSTMENT. The Agreement may permit an
acceleration of the Performance Cycle and an adjustment of performance targets
and payments with respect to some or all of the Performance Units awarded to a
Participant, upon the occurrence of certain events, which may, but need not
include without limitation an Event, a Fundamental Change, a recapitalization, a
change in the accounting practices of the Company, a change in the Participant's
title or employment responsibilities, the Participant's death or retirement or,
with respect to payments in Shares with respect to Performance Units, a
reclassification, stock dividend, stock split or stock combination as provided
in Plan Section 16. The Agreement also may provide for a limitation on the value
of an Award of Performance Units that a Participant may receive.
12. EFFECTIVE DATE AND DURATION OF THE PLAN.
12.1 EFFECTIVE DATE. The Plan shall become effective as of June 22,
2001, provided that the Plan is approved by the requisite vote of shareholders
at the meeting of shareholders to be held June 21, 2001 or at any adjournment
thereof.
12.2 DURATION OF THE PLAN. The Plan shall remain in effect until all
Stock subject to it shall be distributed, all Awards have expired or lapsed, the
Plan is terminated pursuant to Plan Section 15, or June 21, 2011 (the
"TERMINATION Date"); provided, however, Awards made before the Termination Date
may be exercised, vested or otherwise effectuated beyond the Termination Date
unless limited in the Agreement or otherwise. No Award of an Incentive Stock
Option shall be made more than 10 years after the Effective Date (or such other
limit as may be required by the Code) if this limitation is necessary to qualify
the Option as an Incentive Stock Option.
13. PLAN DOES NOT AFFECT EMPLOYMENT STATUS.
(a) Status as an eligible Employee shall not be construed as a
commitment that any Award will be made under the Plan to that eligible
Employee or to eligible Employees generally.
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(b) Nothing in the Plan or in any Agreement or related
documents shall confer upon any Employee or Participant any right to
continue in the employment of the Company or any Affiliate or
constitute, any contract of employment or affect any right that the
Company or any Affiliate may have to change such person's compensation,
other benefits, job responsibilities, or title, or to terminate the
employment of such person with or without cause.
14. TAX WITHHOLDING. The Company shall have the right to withhold from
any cash payment under the Plan to a Participant or other person (including a
Successor or Transferee) an amount sufficient to cover any required withholding
taxes. The Company shall have the right to require a Participant or other person
receiving Shares under the Plan to pay the Company a cash amount sufficient to
cover any required withholding taxes before actual receipt of those Shares. In
lieu of all or any part of a cash payment from a person receiving Shares under
the Plan, the Committee may permit the individual to cover all or any part of
the required withholdings, and to cover any additional withholdings up to the
amount needed to cover the individual's full FICA and federal, state and local
income taxes with respect to income arising from payment of the Award, through a
reduction of the number of Shares delivered or delivery or tender return to the
Company of Shares held by the Participant or other person, in each case valued
in the same manner as used in computing the withholding taxes under the
applicable laws.
15. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN.
(a) The Board may at any time and from time to time terminate,
suspend or modify the Plan. Except as limited in (b) below, the
Committee may at any time alter or amend any or all Agreements under
the Plan to the extent permitted by law.
(b) No termination, suspension, or modification of the Plan
will materially and adversely affect any right acquired by any
Participant or Successor or Transferee under an Award granted before
the date of termination, suspension, or modification, unless otherwise
agreed to by the Participant in the Agreement or otherwise, or required
as a matter of law; but it will be conclusively presumed that any
adjustment for changes in capitalization provided for in Plan Sections
11.2 or 16 does not adversely affect these rights.
16. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. Subject to any required
action by the Company's shareholders, appropriate adjustments, so as to prevent
enlargement of rights or inappropriate dilution -- (i) in the aggregate number
and type of Shares available for Awards under the Plan, (ii) in the limitations
on the number of Shares that may be issued to an individual Participant as an
Option or a Stock Appreciation Right in any calendar year or that may be issued
in the form of Restricted Stock or Shares without restrictions, (iii) in the
number and type of Shares and amount of cash subject to Awards then outstanding,
(iv) in the Option price as to any outstanding Options and, (v) subject to Plan
Section 11.2, in outstanding Performance Units and payments with respect to
outstanding Performance Units may be made by the Committee in its sole
discretion to give effect to adjustments made in the number or type of Shares
through a Fundamental Change (subject to Plan Section 17), recapitalization,
reclassification, stock dividend, stock split, stock combination or other
relevant change, provided that fractional Shares shall be rounded to the nearest
whole Share.
17. FUNDAMENTAL CHANGE. In the event of a proposed Fundamental Change,
the Committee may, but shall not be obligated to:
(a) if the Fundamental Change is a merger or consolidation or
statutory share exchange, make appropriate provision for the protection
of the outstanding Options and Stock Appreciation Rights by the
substitution of options, stock appreciation rights and appropriate
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voting common stock of the corporation surviving any merger or
consolidation or, if appropriate the parent corporation of the Company
or such surviving corporation; or
(b) at least 30 days before the occurrence of the Fundamental
Change, declare, and provide written notice to each holder of an Option
or Stock Appreciation Right of the declaration, that each outstanding
Option and Stock Appreciation Right, whether or not then exercisable,
shall be canceled at the time of, or immediately before the occurrence
of the Fundamental Change in exchange for payment to each holder of an
Option or Stock Appreciation Right, within days after the Fundamental
Change, of cash equal to (i) for each Share covered by the canceled
Option, the amount, if any, by which the Fair Market Value (as defined
in this Section) per Share exceeds the exercise price per Share covered
by such Option or (ii) for each Stock Appreciation Right, the price
determined pursuant to Section 10, except that Fair Market Value of the
Shares as of the date of exercise of the Stock Appreciation Right, as
used in clause (i) of Plan Section 10, shall be deemed to mean Fair
Market Value for each Share with respect to which the Stock
Appreciation Right is calculated determined in the manner hereinafter
referred to in this Section. At the time of the declaration provided
for in the immediately preceding sentence, each Stock Appreciation
Right and each Option shall immediately become exercisable in full and
each person holding an Option or a Stock Appreciation Right shall have
the right, during the period preceding the time of cancellation of the
Option or Stock Appreciation Right, to exercise the Option or the Stock
Appreciation Right in whole or in part, as the case may be. In the
event of a declaration pursuant to this Plan Section 17(b), each
outstanding Option and Stock Appreciation Right granted pursuant to the
Plan that shall not have been exercised before the Fundamental Change
shall be canceled at the time of, or immediately before, the
Fundamental Change, as provided in the declaration. Notwithstanding the
foregoing, no person holding an Option or a Stock Appreciation Right
shall be entitled to the payment provided for in this Section 17 (b) if
such Option or Stock Appreciation Right shall have expired pursuant to
the Agreement. For purposes of this Section only, "Fair Market Value"
per Share shall mean the cash plus the fair market value, as determined
in good faith by the Committee, of the non-cash consideration to be
received per Share by the shareholders of the Company upon the
occurrence of the Fundamental Change.
18. FORFEITURES. An Agreement may provide that if a Participant has
received or been entitled to payment of cash, delivery of Shares, or a
combination thereof pursuant to an Award within six months before the
Participant's termination of employment with the Company and its Affiliates, the
Committee, in its sole discretion, may require the Participant to return or
forfeit the cash and/or Shares received with respect to the Award (or its
economic value as of (i) the date of the exercise of Options or Stock
Appreciation Rights, (ii) the date of, and immediately following, the lapse of
restrictions on Restricted Stock or the receipt of Shares without restrictions,
or (iii) the date on which the right of the Participant to payment with respect
to Performance Units vests, as the case may be) in the event of certain
occurrences specified in the Agreement. The Committee's right to require
forfeiture must be exercised within 90 days after discovery of such an
occurrence but in no event later than 15 months after the Participant's
termination of employment with the Company and its Affiliates. The occurrences
may, but need not include competition with the Company or any Affiliate,
unauthorized disclosure of material proprietary information of the Company or
any Affiliate, a violation of applicable business ethics policies of the Company
or Affiliate or any other occurrence specified in the Agreement within the
period or periods of time specified in the Agreement.
19. CORPORATE MERGERS, ACQUISITIONS, ETC. The Committee may also grant
Options, Stock Appreciation Rights, Restricted Stock or other Awards under the
Plan having terms, conditions and provisions that vary from those specified in
this Plan provided that any such awards are granted in substitution for, or in
connection with the assumption of, existing options, stock appreciation rights,
restricted stock or other award granted, awarded or issued by another
corporation and assumed or
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otherwise agreed to be provided for by the Company pursuant to or by reason of a
transaction involving a corporate merger, consolidation, acquisition of property
or stock, separation, reorganization or liquidation to which the Company or a
subsidiary is a party.
20. UNFUNDED PLAN. The Plan shall be unfunded and the Company shall not
be required to segregate any assets that may at any time be represented by
Awards under the Plan. Neither the Company, its Affiliates, the Committee, nor
the Board of Directors shall be deemed to be a trustee of any amounts to be paid
under the Plan nor shall anything contained in the Plan or any action taken
pursuant to its provisions create or be construed to create a fiduciary
relationship between the Company and/or its Affiliates, and a Participant or
Successor or Transferee. To the extent any person acquires a right to receive an
Award under the Plan, this right shall be no greater than the right of an
unsecured general creditor of the Company.
21. LIMITS OF LIABILITY.
(a) Any liability of the Company to any Participant with
respect to an Award shall be based solely upon contractual obligations
created by the Plan and the Award Agreement.
(b) Except as may be required by law, neither the Company nor
any member of the Board of Directors or of the Committee, nor any other
person participating in any determination of any question under the
Plan, or in the interpretation, administration or application of the
Plan, shall have any liability to any party for any action taken, or
not taken, in good faith under the Plan.
22. COMPLIANCE WITH APPLICABLE LEGAL REQUIREMENTS. No certificate for
Shares distributable pursuant to this Plan shall be issued and delivered unless
the issuance of a certificate complies with all applicable legal requirements
including, without limitation, compliance with the provisions of applicable
state securities laws, the Securities Act of 1933, as amended and in effect from
time to time or any successor statute, the Exchange Act and the requirements of
the exchanges on which the Company's Shares may, at the time, be listed.
23. DEFERRALS AND SETTLEMENTS. The Committee may require or permit
Participants to elect to defer the issuance of Shares or the settlement of
Awards in cash under such rules and procedures as it may establish under the
Plan. It may also provide that deferred settlements include the payment or
crediting of interest on the deferral amounts.
24. OTHER BENEFIT AND COMPENSATION PROGRAMS. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan
shall not be deemed a part of a Participant's regular, recurring compensation
for purposes of the termination, indemnity or severance pay laws of any country
and shall not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan, contract or similar arrangement
provided by the Company or an Affiliate unless expressly so provided by such
other plan, contract or arrangement, or unless the Committee expressly
determines that an Award or portion of an Award should be included to accurately
reflect competitive compensation practices or to recognize that an Award has
been made in lieu of a portion of competitive cash compensation.
25. BENEFICIARY UPON PARTICIPANT'S DEATH. To the extent that the
transfer of a Participant's Award at his or her death is permitted under an
Agreement, a Participant's Award shall be transferable at death to the estate or
to the person who acquires the right to succeed to the Award by bequest or
inheritance.
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26. CHANGE-IN-CONTROL PAYMENTS.
(a) Notwithstanding the provisions of Plan Section 17 above,
if any Award, either alone or together with other payments in the
nature of compensation to a Participant that are contingent on a change
in the ownership or effective control of the Company or in the
ownership of a substantial portion of the assets of the Company or
otherwise, would result in any portion thereof being subject to an
excise tax imposed under Code Section 4999, or any successor provision,
or would not be deductible in whole or in part by the Company, an
affiliate of the Company (as defined in Code Section 1504, or any
successor provision), or other person making such payments as a result
of Code Section 280G, or any successor provision, such Award and/or
such other benefits and payments shall be reduced (but not below zero)
to the largest aggregate amount as will result in no portion thereof
being subject to such an excise tax or being not so deductible.
(b) For purposes of Plan Section 26(a), (i) no portion of
payments the receipt or enjoyment of which a Participant shall have
effectively waived in writing before the date of distribution of an
Award shall be taken into account; (ii) no portion of such Award,
benefits and other payments shall be taken into account that in the
opinion of tax counsel selected by the Company's independent auditors
and acceptable to the Participant does not constitute a "parachute
payment" within the meaning of Code Section 280G(b)(2), or any
successor provision; and (iii) the value of any non-cash benefit or any
deferred payment or benefit included in such payment shall be
determined by the Company's independent auditors in accordance with the
principles of Code Sections 280G(d)(3) and (4) or any successor
provisions;
(c) Any Award not paid as a result of this Plan Section 26 or
reduced to zero as a result of the limitations imposed hereby, shall
remain outstanding in full force and effect in accordance with the
other terms and provisions of this Plan.
27. REQUIREMENTS OF LAW.
(a) To the extent that federal laws do not otherwise control,
the Plan and all determinations made and actions taken pursuant to the
Plan shall be governed by the laws of the State of Minnesota without
regard to its conflicts-of-law principles and shall be construed
accordingly.
(b) If any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not effect
the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.