EXHIBIT 10.14
COMPUTER NETWORK TECHNOLOGY CORPORATION
2002 STOCK AWARD PLAN
1. Purpose. The purpose of this 2002 Stock Award Plan (the "Plan") is to
motivate key personnel, including non-employee directors, to produce a superior
return to the shareholders of Computer Network Technology Corporation 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 performance. This Plan is also intended to facilitate recruiting
and retaining key personnel of outstanding ability by providing an attractive
capital accumulation opportunity.
2. Definitions.
2.1 The terms defined in this section are used (and capitalized) elsewhere
in this Plan.
(a) "Affiliate" means (i) any corporation that is a "parent corporation" or
"subsidiary corporation" of the Company, as those terms are defined in Section
424(e) and (f) of the Code, or any successor provision, and (ii) any other
corporation or other entity determined by the Committee to constitute an
Affiliate for purposes of this Plan.
(b) "Agreement" means a written contract entered into between the Company
or an Affiliate and a Participant containing the terms and conditions of an
Award in such form (not inconsistent with this Plan) as the Committee approves
from time to time, together with all amendments thereto, which amendments may be
unilaterally made by the Company (with the approval of the Committee) unless
such amendments are deemed by the Committee to be materially adverse to the
Participant and are not required as a matter of law.
(c) "Award" means a grant made under this Plan in the form of Options,
Restricted Stock, Stock, Performance Units 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 from time to
time.
(f) "Committee" means two or more Disinterested Persons designated by the
Board to administer this Plan under Section 3 hereof.
(g) "Company" means Computer Network Technology Corporation, a Minnesota
corporation, or any successor to substantially all of its businesses.
(h) "Disinterested Person" means a member of the Board who is considered a
disinterested person within the meaning of Exchange Act Rule 16b-3 or any
successor definition.
(i) "Effective Date" means the date specified in Section 9.1 hereof.
(j) "Employee" means any employee (including an officer or director who is
also an employee) of the Company or an Affiliate. "Employee" shall also include
other individuals and entities who are not "employees" of the Company or an
Affiliate but who provide services to the Company or an Affiliate in the
capacity of an advisor, director or consultant. In addition, references herein
to "employment" and similar terms shall include the providing of services in any
such capacity.
(k) "Event" means any of the following:
(i) The acquisition by an individual, entity, or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of
beneficial ownership (within the meaning of Exchange Act Rule 13d-3) of
40% or more of either (A) the then outstanding shares of common stock
of the Company (the "Outstanding Company Common Stock") or (B) 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:
(1) any acquisition of voting securities of the Company
directly from the Company,
(2) any acquisition of voting securities of the Company by
the Company or any of its wholly owned Subsidiaries,
(3) any acquisition of 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
(4) any acquisition by any corporation with respect to
which, immediately following such acquisition, more than 60%
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 prior to such acquisition in substantially the
same proportions as was their
ownership, immediately prior to such acquisition, of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be;
(ii)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 subsequent to 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 which was (or, if threatened, would have been) subject
to Exchange Act Rule 14a-l l;
(iii) 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 prior to
such reorganization, merger, consolidation, owned, directly or
indirectly, more than 60% 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, immediately prior to such
reorganization, merger, consolidation, or exchange, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be; or
(iv)Approval by the shareholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) 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 60% 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 prior to such sale or other disposition in substantially
the same proportion as was their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.
(v) Notwithstanding the above, an Event shall not be deemed to
occur with respect to an employee if the acquisition of the 40% or
greater interest referred to in subsection (i) is by a group, acting in
concert, that includes that recipient or if at least 40% 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 subsections (iii) or (iv) by a
group, acting in concert, that includes that Participant.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(m) "Fair Market Value" as of any date means, unless otherwise expressly
provided in this Plan:
(i) the closing sale 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 occurred of Shares
on the National Association of Securities Dealers, Inc. Automated
Quotations National Market System ("NMS"), or
(ii)if the Shares are not quoted on the NMS, what the Committee
determines in good faith to be 100% of the fair market value of a Share
on that date.
Provided, however, if the NMS 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 otherwise, all references in this Section
2.1(m) 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 such
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 said regulations. The determination of Fair Market
Value shall be subject to adjustment as provided in Section 13 hereof.
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(n) "Fundamental Change" means 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
to said section.
(p) "Non-Qualified Stock Option" means an Option other than an Incentive
Stock Option.
(q) "Option" means a right to purchase Stock, including both Non-Qualified
Stock Options and Incentive Stock Options.
(r) "Outside Directors" means those directors of Company who are not
employees of the Company or any Affiliate.
(s) "Performance Cycle" means the period of time as specified in an
Agreement over which Performance Units are to be earned.
(t) "Performance Units" means an Award made under Section 7.2 hereof
(u) "Plan" means this 2002 Stock Award Plan, as amended from time to time.
(v) "Restricted Stock" means Stock granted under Plan Section 7.3 so long
as such Stock remains subject to one or more restrictions.
(w) "Retirement" of an Employee means termination of employment with the
Company or an Affiliate on or after the date the Employee attains age 55.
(x) "Share" means a share of Stock.
(y) "Stock" means the common stock, $.01 par value per share (as such par
value may be adjusted from time to time), of the Company.
(z) "Successor" means the legal representative of the estate of a deceased
Participant or the person or persons who may, by bequest or inheritance, or
under the terms of an Award or of forms submitted by the Participant to the
Committee under Section 18 hereof, acquire the right to exercise an Option or
receive cash or Shares issuable in satisfaction of an Award in the event of an
employee's death.
(aa)"Term" means the period during which an Option may be exercised or the
period during which the restrictions or terms and conditions placed on
Restricted Stock are in effect.
(bb)"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 Number. Except when otherwise indicated by context, any term used in
the singular shall also include the plural.
3. Administration.
3.1 Authority of Committee.
(a) General. Except as provided in Section 3.1(b), the Committee shall
administer this Plan. The Committee may delegate all or any portion of its
authority under this Plan to persons who are not Disinterested Persons solely
for purposes of determining and administering Awards to Employees who are not
then subject to the reporting requirements of Section 16 of the Exchange Act.
Any person to whom such authority is delegated may redelegate such authority to
the extent permitted by the Board or Committee. The Committee shall have
exclusive power to make Awards, to determine when and to whom Awards will be
granted, the form of each Award, the amount of each Award, and any other terms
or conditions of each Award. Each Award shall be subject to an Agreement
authorized by the Committee. The Committee's interpretation of this Plan and of
any Awards made under this Plan shall be final and binding on all persons. The
Committee shall have the power to establish regulations to administer this Plan
and to change such regulations.
(b) Options to Outside Directors. Notwithstanding any contrary provisions
of this Plan, the granting and terms, conditions, and eligibility
requirements of Awards granted to Outside Directors shall be determined by
the Board of Directors of the Company.
3.2 Indemnification. To the full extent permitted by law, (a) no member of
the Board or of the Committee or any person to whom the Committee delegates
authority under this Plan shall be liable for any action or determination taken
or made in good faith with respect to this Plan or any Award made under this
Plan and (b) the members of the Board and of the Committee and each person to
whom the Committee delegates authority under this Plan shall be entitled to
indemnification by the Company with regard to such actions and determinations.
4. Shares Available Under this Plan. The number of Shares available for
distribution under this Plan shall not exceed 1,000,000 (subject to adjustment
as provided in this Section 4 and under Section 13 hereof). 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 this Plan. In addition, if, in accordance with this Plan, an
employee uses shares of Common Stock of the Company to (i) pay a purchase or
exercise price, including an Option exercise price, or (ii) satisfy tax
withholdings, only the number of shares issued net of the shares tendered in
payment of such purchase or exercise price and tax withholdings shall be deemed
to be issued for purposes of determining the maximum number of Shares available
under the Plan. Further, the maximum number of Shares available for distribution
under this Plan shall be increased to take into account any Awards granted under
Section 19 of this Plan.
5. Eligibility. Awards may be granted under this Plan to Employees and
Outside Directors, and such Awards shall have the terms and conditions specified
in Sections 6 and 7 hereof and elsewhere in this Plan. The granting of Awards to
Employees (other
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than Outside Directors) is solely at the discretion of the Committee; the
granting of Awards to Outside Directors is solely at the discretion of the
Board.
6. General Terms of Awards.
6.1 Amount of Award. Each Agreement with an Employee shall set forth the
number of Shares to which the Option subject to such Agreement applies or the
number of Shares of Restricted Stock, Stock, Performance Units subject to such
Agreement, as the case may be.
6.2 Term. Each Agreement, other than those relating solely to Awards of
Shares without restrictions, shall set forth the Term of the Option or
Restricted Stock or the Performance Cycle for the Performance Units, as the case
may be. An Agreement may permit an acceleration of the expiration of the
applicable Term 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 Employee's
death or Retirement. Acceleration of the Performance Cycle of Performance Units
shall be subject to Section 7.2(b) hereof.
6.3 Agreements. Each Award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions, as determined by the
Committee, which shall apply to such Award, in addition to the terms and
conditions specified in this Plan.
6.4 Transferability. Except as provided in this Section 6.4, during the
lifetime of an employee to whom an Award is granted, only that Participant (or
that Participant's legal representative) may exercise an Option or receive
payment with respect to
Performance Units or any other Award. No Award of Restricted Stock (prior to the
expiration of the restrictions), Options or Performance Units or other Award may
be sold, assigned, transferred, exchanged or otherwise encumbered other than
pursuant to a domestic relations order as defined in the Code or Title 1 of the
Employee Retirement Income Security Act ("ERISA") or the rules thereunder; any
attempted transfer in violation of this Section 6.4 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 an
employee's death, or (ii) that the Award (other than Incentive Stock Options)
may be transferable to a Transferee if the Participant receives no consideration
for the transfer. Any Award held by a Transferee shall continue to be subject to
the same terms and conditions that were applicable to such Award immediately
prior to its transfer. By way of example and not limitation, (i) an Option may
be exercised by a Transferee as and to the extent that such Option has become
exercisable and has not terminated in accordance with the provisions of the Plan
and the applicable Agreement and (ii) for purposes of any provision of this Plan
relating to notice to an optionee or to vesting or termination of an Option upon
the death, disability or termination of employment of an optionee, the
references to "optionee" shall mean the original grantee of an option and not
any Transferee.
7. Terms and Conditions of Specific Awards.
7.1 Stock Options.
(a) Terms of All Options. Each Option shall be granted as either an
Incentive Stock Option or a Non-Qualified Stock Option. Only Non-Qualified Stock
Options may be granted to Outside Directors; to Employees who are employees of
an Affiliate within the meaning of Section 2.1(a)(ii) hereof; and to Employees
who are not employees of the Company or an Affiliate, but who provide services
to the Company or an Affiliate in the capacity of an advisor or consultant. The
purchase price of each Share subject to an Option shall be determined by the
Committee and 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. 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 simultaneously to
exercise Options and sell the Shares thereby acquired pursuant to a brokerage or
similar relationship and use the proceeds from such sale as payment of the
purchase price of such Shares. The purchase price may be payable in cash, in
Stock having a Fair Market Value as of the date the Option is exercised equal to
the purchase price of the Stock being purchased pursuant to the Option, or a
combination thereof as determined by the Committee and provided in the
Agreement. Each Option shall be exercisable in whole or in part on the terms
provided in the Agreement. In no event shall any Option be exercisable at any
time after its expiration date. When an Option is no longer exercisable, it
shall be deemed to have lapsed or terminated. The number of Shares for which any
Employee may be granted Options in any one calendar year shall not exceed
750,000. The Committee may provide, in an Agreement or otherwise, that an
employee who exercises an Option and pays the Option price in whole or in part
with Shares then owned by the Participant will be entitled to receive another
Option covering the same number of shares tendered and with a price of no less
than Fair Market Value on the date of grant of such additional Option ("Reload
Option").
(b) Incentive Stock Options. In addition to the other terms and conditions
applicable to all Options:
(i) the maximum number of shares that may be covered with respect
to incentive stock options is 1,000,000.
(ii)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 within the meaning of Section 2.1(a)(i)
hereof) shall not exceed $100,000 (or such other limit as may be
required by the Code) if such limitation is necessary to qualify the
Option as an Incentive Stock Option;
(iii) 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 such limitation is necessary to qualify the
Option as an Incentive Stock Option; and
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(iv) the Agreement covering an Incentive Stock Option shall
contain such other terms and provisions which the Committee determines
necessary to qualify such Option as an Incentive Stock Option.
7.2 Performance Units.
(a) Initial Award. An Award of Performance Units shall entitle such
Participant (or a Successor) to future payments of cash, Stock, or a combination
of cash and Stock, as determined by the Committee and provided in the Agreement,
based upon the achievement of performance targets established by the Committee.
Such performance targets may, but need not, include without limitation targets
relating to one or more of corporate, group, unit, Affiliate, or individual
performance. The Agreement may establish that a portion of a full or maximum
amount of an employee's Award will be paid for performance which exceeds the
minimum target but falls below the maximum target applicable to such Award. The
Agreement shall also provide for the timing of such payment. 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 such
Performance Cycle have been satisfied, and (iii) payment is due with respect to
an Award of Performance Units. The maximum payment that can be made for awards
granted to any one individual shall be $1,000,000 for any single or combined
performance goals established for a specified performance period.
(b) 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 an employee upon
such terms and conditions as shall be set forth in the Agreement, upon the
occurrence of certain events, which may, but need not include without limitation
an Event, a Fundamental Change, the Participant's death or Retirement or, with
respect to payments in Stock with respect to Performance Units, a
reclassification, stock dividend, stock split, or stock combination as provided
in Section 13 hereof.
7.3 Restricted Stock Awards
(a) The Committee is authorized to grant, either alone or in conjunction
with other Awards, stock and stock-based Awards. The Committee shall determine
the persons to whom such Awards are made, the timing and amount of such Awards,
and all other terms and conditions. Company Common Stock granted to recipients
may be unrestricted or may contain such restrictions, including provisions
requiring forfeiture and imposing restrictions upon stock transfer, as the
Committee may determine. Unless forfeited, the recipient of restricted Common
Stock will have all other rights of a shareholder, including without limitation,
voting and dividend rights.
(b) 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.
(c) 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.
(d) 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.
(e) An employee or a Successor or 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.
7.4 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. Furthermore, the Committee may use stock available under this
Plan as payment for compensation, grants or rights and earned or due under any
other compensation plans or arrangements of the Company.
8. Terms and Conditions of Outside Director Awards.
8.1 Outside Directors may, in the discretion of the Board and in accordance
with the terms of this Plan, be granted Awards under this Plan at various times,
including when an Outside Director is first elected or appointed to the Board,
when an Outside Director is re-elected to the Board or at other times as may be
deemed appropriate.
8.2 Terms of Awards. In addition to the terms set forth in Section 7.1 of
this Plan, Outside Director Awards may contain such other terms and conditions
as the Board determines.
9. Effective Date of this Plan.
9.1 Effective Date. This Plan shall become effective as of March 30, 2002,
the date of adoption of this Plan by the Board, provided that this Plan is
approved and ratified by the affirmative vote of the holders of a majority of
the outstanding Shares of Stock
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present or represented and entitled to vote in person or by proxy at a meeting
of the shareholders of the Company no later than March 30, 2003.
9.2 Duration of this Plan. This Plan shall remain in effect until all Stock
subject to it shall be distributed or all Awards have expired or lapsed,
whichever is latest to occur, or this Plan is terminated pursuant to Section 12
hereof. 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
such limitation is necessary to qualify the Option as an Incentive Stock Option.
Except with respect to Director Options, the date and time of approval by the
Committee of the granting of an Award (or such other time as the Committee shall
designate) shall be considered the date and time at which such Award is made or
granted, notwithstanding the date of any Agreement with respect to such Award.
10. Right to Terminate Employment. Nothing in this Plan or in any Agreement
shall confer upon any Employee the right to continue in the employment of the
Company or any Affiliate or affect any right which the Company or any Affiliate
may have to terminate the employment of the Employee with or without cause.
11. Tax Withholding. The Company may withhold from any cash payment under
this Plan to an employee or other person (including a Successor or a Transferee)
an amount sufficient to cover any required withholding taxes. The Company shall
have the right to require an employee or other person receiving Stock under this
Plan to pay to the Company a cash amount sufficient to cover any required
withholding taxes. In lieu of all or any part of such a cash payment from a
person receiving Stock under this Plan, the Committee may permit the individual
to elect or may require 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 tax
with respect to income arising from payment of the Award, through a reduction of
the number of Shares delivered to such individual or a subsequent return to the
Company of Shares held by the Employee or other person, in each case valued in
the same manner as used in computing the withholding taxes under the applicable
laws.
12. Amendment, Modification and Termination of this 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. However, no such action may, without further approval of the shareholders
of the Company, be effective if such approval is required in order that the Plan
conform to the requirements of Code Section 422.
(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
7.2 or 13 does not adversely affect these rights.
13. Adjustment for Changes in Capitalization. Appropriate adjustments in
the aggregate number and type of Shares available for Awards under this Plan and
in the number and type of Shares and amount of cash subject to Awards then
outstanding, in the Option price as to any outstanding Options and, subject to
Section 7.2(b) hereof, 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 of the Company through a Fundamental Change (subject to Section 14
hereof), recapitalization, reclassification, stock dividend, stock split,
reverse stock split, stock combination, or other relevant change, provided that
fractional Shares shall be rounded to the nearest whole share.
14. Fundamental Change. In the event of a proposed Fundamental Change: (a)
involving a merger, consolidation, or statutory share exchange, unless
appropriate provision shall be made for the protection of the outstanding
Options by the substitution of options and appropriate voting common stock of
the corporation surviving any such merger or consolidation or, if appropriate,
the parent corporation of the Company or such surviving corporation, to be
issuable upon the exercise of options in lieu of Options and capital stock of
the Company, or (b) involving the dissolution or liquidation of the Company, the
Committee shall declare, at least 20 days prior to the occurrence of the
Fundamental Change, and provide written notice to each holder of an Option of
the declaration, that each outstanding Option, whether or not then exercisable,
shall be canceled at the time of, or immediately prior to the occurrence of the
Fundamental Change in exchange for payment to each holder of an Option, within
ten days after the Fundamental Change, of cash equal to the amount, if any, for
each Share covered by the canceled Option, by which the Fair Market Value (as
defined in this Section) per Share exceeds the exercise price per Share covered
by such Option. At the time of the declaration provided for in the immediately
preceding sentence, each Option shall immediately become exercisable in full
and each person holding an Option shall have the right, during the period
preceding the time of cancellation of the Option, to exercise the Option as to
all or any part of the Shares covered thereby; provided, however, that if such
Fundamental Change does not become effective, then the declaration pursuant to
this Section 14(b) shall be rescinded, the acceleration of the exercisibility of
the Option pursuant to this Section 14(b) shall be void, and the Option shall be
exercisable in accordance with its terms. In the event of a declaration pursuant
to this Section 14, each outstanding Option that shall not have been exercised
prior to the Fundamental Change shall be canceled at the time of, or immediately
prior to, the Fundamental Change, as provided in the declaration.
Notwithstanding the foregoing, no person holding an Option shall be entitled to
the payment provided for in this Section 14 if such Option shall have expired
pursuant to an Agreement. For purposes of this Section only, "Fair Market Value"
per Share means the cash plus the fair market value, as determined in good
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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, notwithstanding anything to the contrary provided in this Plan.
15. Unfunded Plan. This 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 this Plan.
16. Other Benefit and Compensation Programs. Payments and other benefits
received by an employee under an Award shall not be deemed a part of an
employee's regular, recurring compensation for purposes of any termination,
indemnity, or severance pay laws 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 the
Committee determines that an Award or portion of an Award should be included to
reflect competitive compensation practices or to recognize that an Award has
been made in lieu of a portion of competitive cash compensation.
17. Foreign Employees. The Committee shall have the authority and
discretion to establish terms and conditions of Awards as the Committee
determines to be necessary or appropriate to conform to applicable requirements
or practices of jurisdictions outside of the United States. In addition, the
Committee may adopt, amend, and terminate such arrangements, not inconsistent
with the intent of the Plan, as it may deem necessary or desirable to make
available tax or other benefits of the laws of any foreign jurisdiction to
Employees who are subject to such laws and who receive Awards under the Plan.
18. Beneficiary Upon Employee's Death. To the extent that the transfer of
an employee's Award at death is permitted under an Agreement, (a) an employee's
Award shall be transferable to the beneficiary, if any, designated on forms
prescribed by and filed with the Committee and (b) upon the death of the
Employee, such beneficiary shall succeed to the rights of the Employee to the
extent permitted by law and this Plan. If no such designation of a beneficiary
has been made, the Participant's legal representative shall succeed to the
Awards, which shall be transferable by will or pursuant to laws of descent and
distribution to the extent permitted under an Agreement.
19. Corporate Mergers, Acquisitions, Dispositions, Etc. The Committee may
also grant Options, 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 awards granted, awarded or issued by another corporation and
assumed or 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 an Affiliate is a party. The Committee may also take such action with
respect to Options, Restricted Stock or other Awards under the Plan as it deems
appropriate, in its sole discretion, in the event of the divestiture, spin-off,
or transfer of an Affiliate or a line of business of the Company.
20. Deferrals and Settlements. The Committee may require or permit
Employees 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.
21. Governing Law. To the extent that federal laws do not otherwise
control, this Plan and all determinations made and actions taken pursuant to
this Plan shall be governed by the laws of Minnesota and construed accordingly.
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