Exhibit 10.20
PATTERSON DENTAL COMPANY
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STOCK OPTION PLAN
FOR CANADIAN EMPLOYEES
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June 13, 2000
Table of Contents
Page
1. Purpose of the Plan ................................................. 1
2. Defined Terms ....................................................... 1
3. Eligibility and Participation ....................................... 4
4. Amount and Form of Grants. .......................................... 4
5. Options ............................................................. 4
6. Payment For Option; Withdrawal From Plan ............................ 5
7. Termination, Repurchase and Acceleration of Options ................. 5
8. Exercise of Options ................................................. 6
9. No Rights as Shareholder ............................................ 7
10. Changes in Capitalization ........................................... 7
11. Termination or Suspension of Plan Participation ..................... 7
12. Certain Restrictions ................................................ 7
13. Amendment, Suspension of Termination Plan ........................... 7
14. Non-transferability of Participant's Rights ......................... 8
15. Administration And Interpretation ................................... 8
16. Expenses ............................................................ 8
17. Governing Law ....................................................... 8
18. Board Approval of Plan .............................................. 8
1. Purpose of the Plan
The name of this plan is the PATTERSON DENTAL COMPANY STOCK OPTION PLAN
FOR CANADIAN EMPLOYEES (the "Plan"). The purpose of the Plan is to enable
PATTERSON DENTAL COMPANY (the "Company") and its Canadian subsidiaries,
including Patterson Dental Canada, Inc., to attract, retain and motivate key
employees, to compensate them for their contributions to the growth and profits
of the Company and to encourage their ownership of stock in the Company.
2. Defined Terms
Unless expressly indicated otherwise, the following terms have the
meaning ascribed to them below:
2.1 "Affiliate" means, with respect to an Eligible Employee, an
entity controlling, controlled by, or under common control
with, Patterson Dental Company.
2.2 "Board of Directors" means the board of directors of the
Company.
2.3 "Business Day" means a day on which banks are open for
business in Montreal.
2.4 "Cause" means termination by Patterson Canada or an Affiliate
of a Participant's employment upon (i) the willful and
continued failure by such Participant to substantially perform
his duties with the Patterson Canada (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance
is delivered to such Participant by his or her employer, which
demand specifically identifies the manner in which his or her
employer believes that such Participant has not substantially
performed his duties, or (ii) the willful engaging by a
Participant in conduct which is demonstrably and materially
injurious to Patterson Canada, monetarily or otherwise,
including a violation of Patterson Canada's policies as set
forth in its policy and procedure manual, as the same may be
amended from time to time, or policies adopted from time to
time by Patterson Canada for employees and communicated in
writing to Participants. For purposes of this Subsection, no
act or failure to act, on a Participant's part shall be deemed
"willful" unless done, or omitted to be done, by such
Participant not in good faith and without reasonable belief
that his action or omission was in the best interest of
Patterson Canada.
2.5 "Committee" means the Compensation Committee of the Board of
Directors of the Company or such other committee of the Board
of Directors as may be designated by the Board of Directors to
administer the Plan, and if no committee is designated to
administer this Plan, then any references to the Committee
shall mean the Board of Directors of the Company.
2.6 "Company" means Patterson Dental Company, and any reference to
an action that must be taken by the Company means an action
that must be taken or authorized by the Board of Directors of
the Company or a Committee thereof.
2.7 "Conversion Rate" means the rate utilized in its business by
the Royal Bank of Canada, or such other financial institution
as may be designated by the Company, for the conversion of
funds denominated in Canadian dollars into funds denominated
in United States dollars on the date preceding the date on
which the Option is purchased or exercised, as the case may
be; and if such preceding date was not a Business Day, on the
next preceding Business Day.
2.8 "Disability" means permanent and total disability as
determined under the Company's employer sponsored long-term
disability insurance program.
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2.9 "Early Retirement" means the retirement of a Participant from
active employment with the Company or any Subsidiary on or
after a Participant's 55th birthday and prior to such
Participant's 65th birthday.
2.10 "Effective Date" of the Plan means June 13, 2000.
2.11 "Eligible Employee" means individuals residing in Canada who
are employees of Patterson Dental Canada, Ltd. or any
affiliate of Patterson Dental Company located in Canada.
2.12 "Event of Acceleration" means any of the following:
(a) The Company acquires actual knowledge that any person
(other than the Company, a Subsidiary, an acquired company or
entity, or any employee benefit plan(s) sponsored by the
Company or a Subsidiary, or an underwriter) has acquired the
beneficial ownership (determined as provided in Rule 13d-3
under the Exchange Act or any successor rule in effect on such
date), directly or indirectly, of securities of the Company
entitling such Person to 30% or more of the voting power of
the Company; or
(b) A tender offer is made to acquire securities of the
Company entitling the holders thereof to 30% or more of the
voting power of the Company; or
(c) A solicitation subject to Rule 14a-11 under the Exchange
Act (or any successor rule) relating to the election or
removal of 50% or more of the members of the Board or any
class of the Board shall be made by any Person other than the
Company or less than 51% of the members of the Board shall be
continuing directors; or
(d) The shareholders of the Company shall approve a merger,
consolidation, share exchange, division or sale or other
disposition of assets of the Company as a result of which the
shareholders of the Company immediately prior to such
transaction shall not hold, directly or indirectly,
immediately following such transaction, a majority of the
voting power of (a) in the case of a merger or consolidation,
the surviving or resulting corporation; (b) in the case of a
share exchange, the acquiring corporation; or (c) in the case
of division or a sale or other disposition of assets, each
surviving, resulting or acquiring corporation, which,
immediately following the transaction, holds more than 10% of
the consolidated assets of the Company immediately prior to
the transaction;
provided, however, that the Committee may, in its sole
discretion, determine that an event described above shall not
constitute an Event of Acceleration.
2.13 "Exchange Act" means the U.S. Securities Exchange Act of 1934,
as amended.
2.14 "Exercise Price" means the price at which a Share may be
purchased (equal to 62.5% of the Market Price) pursuant to a
Vested Option.
2.15 "Market Price" means the closing sales price (in U. S.
dollars) for a share of Patterson common stock as quoted on
any stock exchange or a national market system, including,
without limitation, the National Market of the National
Association of Securities Dealers, Inc. ("Nasdaq") on the date
preceding the date on which an Option grant is made to an
Eligible Employee (the "Determination Date") as such price is
reported in The Wall Street Journal or such other source as
the Company deems reliable; provided, however, that if no
sales were reported on such date, the closing high bid price
on that day shall be used, and if the Determination Date shall
be a weekend or holiday, the Market Price shall be the
reported closing
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sales price for the Shares as quoted on such exchange or
system on the last market trading day prior to the
Determination Date.
2.16 "Option" means an option to purchase Shares awarded to an
Eligible Employee pursuant to Section 4.
2.17 "Option Period" means the period during which an Option
granted hereunder may be exercised which commences three (3)
years after the grant of the Option and terminates five (5)
years after the grant of the Option.
2.18 "Option Purchase Price" means the purchase price of an Option
paid during the year following the grant of an Option by an
Eligible Employee. This amount paid will equal 37.5% of the
Market Price of the Shares subject to the Option.
2.19 "Participant" means an Eligible Employee who has been selected
by the Committee to receive an Option and who has elected to
purchase an Option awarded pursuant to the Plan and has signed
a Participation Agreement.
2.20 "Participation Agreement" means the Participation Agreement
attached hereto as Exhibit 1, or as such form may be from time
to time amended and prescribed by the Company.
2.21 "Patterson Canada" means Patterson Dental Canada, Inc., a
wholly-owned subsidiary of the Company, and includes any
Subsidiary of Patterson Canada.
2.22 "Pay Day" means a calendar day on which an Eligible Employee
is paid his or her salary or bonus.
2.23 "Retirement" means retirement of a Participant from active
employment with the Company or any Subsidiary on or after a
Participant's 65th birthday.
2.24 "Salary" means the gross compensation (including commissions
and/or bonuses) paid to an Eligible Employee paid by Patterson
Canada or an Affiliate.
2.25 "Salary Deduction" means the amount designated by a
Participant to be withheld by Patterson Canada or an Affiliate
from his or her Salary as of each Pay Day, and to be remitted
to the Company to be applied to purchase an Option in
accordance with the Plan.
2.26 "Shares" means common stock, $.01 (U.S.) par value per share,
of the Company.
2.27 "Subsidiary" means any company in which Patterson Canada or
other Affiliate directly or indirectly holds at least a
majority of the voting shares.
2.28 "Termination" means, specifically in reference to an Eligible
Employee, the termination of his or her employment by
Patterson Canada or another Affiliate.
2.29 "Vested Option" means an Option: (a) for which the Option
Purchase Price has been paid; (b) which has been held by a
Participant for at least three years following the date of the
Option grant (or such lesser period if an Event of
Acceleration has occurred); and (c) which has not been
terminated or repurchased by the Company pursuant to the terms
of the Plan.
All references to defined terms in the singular shall include the
plural and vice versa.
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3. Eligibility and Participation
Eligible Employees of Patterson Canada or of any Subsidiary, who are
designated and awarded an Option by the Committee, shall be eligible to
participate in the Plan. Participants shall be selected from time to time by the
Committee, in its sole discretion, from among Eligible Employees. If an Eligible
Employee who has been awarded an Option wishes to participate in the Plan, the
Employee must within 30 days affirmatively elect to participate in the Plan by
signing and returning a Participation Agreement in the form of Exhibit 1 and
authorize Salary Deductions to be paid within the year following the Option
grant. Participation in the Plan is not a condition of employment within the
meaning of any applicable legislation. A Participant is not obligated to
exercise an Option which has been purchased pursuant to the Plan.
4. Amount and Form of Grants.
4.1 Grants of Options under the Plan shall be determined by the
Committee, which may grant Options at such times and to such Eligible Employees
as the Committee in its sole discretion shall determine. Options awarded to
designated Eligible Employees shall be as set forth in a written Option grant,
which shall specify the Option Purchase Price and the approximate number of
Shares, based upon the Market Price on the Determination Date.
4.2 The number of Shares subject to the Option shall be determined on
the first anniversary of the Option grant. Upon such first anniversary, the
total amount of Salary Deductions actually made for the purpose of the Option
shall equal the Option Purchase Price. The number of Shares subject to the
Option shall be equal to the Option Purchase Price divided by the product of the
Market Price on the Determination Date and .375. Only whole Shares may be
subject to an Option. Therefore, in the event the foregoing calculation results
in a fractional share, any excess Salary Deductions shall be refunded as soon as
administratively practical.
4.3 The Option is exercisable once it becomes a Vested Option and the
Exercise Price has been paid. The Exercise Price shall be equal to 62.5% of the
Market Price of the Shares subject to the Option, as calculated in Section 4.2.
4.4 The total number of Shares which may be issued to all Participants
under the Plan shall not exceed 500,000, subject to adjustment as provided in
Section 10. Such shares may be authorized but unissued Shares. In the event an
Option is not exercised, is forfeited, or repurchased, the Shares called for by
such Option will become available for future grants.
5. Options
5.1 Upon a grant of an Option, a Participant may, for a period of
thirty (30) days following receipt of the grant, elect to sign and submit to the
Company a Participation Agreement, which authorizes Salary Deductions for one
year following the grant of the Option. The total amount of Salary Deductions
received following the first anniversary of the Option grant shall equal the
Option Purchase Price. The grant shall terminate and be void if the Eligible
Employee does not elect to participate in the Plan and does not agree within
such thirty-day period to authorize Salary Deductions to purchase the Option.
5.2 Subject to all terms and conditions of the Plan, each Option may be
exercised to purchase all or any number of Shares subject to the Option
commencing on the third anniversary of the Option grant and ending on the fifth
anniversary of the Option grant. The Company may, following an Event of
Acceleration, terminate any Option upon not less than 30 days' written notice to
a Participant.
5.3 The Option may be exercised in whole or in part at any time during
the Option Period as provided in Section 8.
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5.4 Except as otherwise provided in the Plan, if a Participant does not
exercise an Option during the Option Period, the Option shall be forfeited and
no part of the Option Purchase Price shall be refunded or payable to a
Participant. As soon as administratively practical following the first
anniversary of the grant of the Option, the Company will notify the Participant
of the number of Shares subject to the Option and of the amount of the Exercise
Price.
6. Payment For Option; Withdrawal From Plan
6.1 An Eligible Employee who is offered an Option and who wishes to
participate in the Plan must purchase the Option by Salary Deductions. A
Participant must authorize Patterson Canada or the relevant Affiliate to make
the Salary Deductions in accordance with the instructions contained in each
Participation Agreement. Subject to a Participant's instructions to terminate
Salary Deductions, Salary Deductions will be made in accordance with such
instructions on each Pay Day.
6.2 As soon as practicable following each Pay Day, Patterson Canada or
the relevant Affiliate shall remit all Participants' Salary Deductions to the
Company together with a list of such Participants and the amount of Salary
Deduction of each Participant.
6.3 A Participant may, at any time prior to the first anniversary of
the grant of an Option, elect to withdraw from the Plan and terminate Salary
Deductions, whereupon such participation and Salary Deductions shall cease
effective as of the first pay period following the date such notice was given to
the Company. Notice by a Participant to terminate Salary Deductions under the
Plan shall be given in writing by a Participant and shall be deemed given to the
Company only when received by the Company at its principal executive offices in
Mendota Heights, Minnesota (U.S.A.) or such other address as the Company may
specify in writing. Upon cessation of Salary Deductions, the aggregate amount
deducted from a Participant's compensation shall represent the Option Purchase
Price for the Option.
7. Termination, Repurchase, Forfeiture and Acceleration of Options
7.1 Prior to Third Year Anniversary
7.1.1 Upon the death, Disability, or Retirement of a
Participant prior to the third anniversary following
an Option grant, the Participant, or the personal
representative of a Participant or his or her estate,
shall be entitled to exercise the Option to the
extent of the Participant's Salary Deductions made
prior to such event, as follows:
(a) In the event of death or Disability, the Option
shall be exercisable immediately, irrespective of
whether the third anniversary of the date the Option
was granted has occurred.
(b) In the event of Retirement, the Option shall be
exercisable during the Option Period when the Option
would otherwise have become a Vested Option (the
third anniversary of the Option grant).
7.1.2 If, prior to the third anniversary of the date of
grant of an Option, a Participant is involuntarily
terminated without Cause prior to Retirement, or upon
the Early Retirement of a Participant, the Company
shall repurchase the Option, for a repurchase price
equal to the total amount of the Option Purchase
Price (in U.S. Dollars) paid to the
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Company by the Participant, together with a rate of
interest thereon determined by the Committee,
provided the Participant is not employed by a
competitor of the Company. If the Committee elects
not to repurchase such Options because of employment
of the Participant by a competitor, then the Option
shall terminate and any portion of the Option
Purchase Price previously paid shall be forfeited.
7.1.3 If, prior to the third anniversary of the date of
grant of an Option, a Participant's employment is
voluntarily terminated prior to his or her having
attained age 55, or is involuntarily terminated for
Cause, the Option shall terminate, and any portion of
the Option Purchase Price previously paid shall be
forfeited.
7.1.4 Notwithstanding any other provision contained in the
Plan, in case any Event of Acceleration occurs, a
Participant who has paid the Option Purchase Price
shall be entitled to exercise the Option (as
described in Section 8), irrespective of whether the
third anniversary of the date of grant of the Option
has occurred.
7.2 Effect of Termination of Employment on Vested Options
7.2.1 If, following the third anniversary of the grant of
an Option, employment of a Participant is
involuntarily terminated without Cause or terminates
due to Early Retirement, he or she may exercise the
Option within 30 days of such Termination of
employment. The Committee shall have the discretion
to allow the Participant to sell and assign the
Option to the Company, and the Company may repurchase
the Option, for a repurchase price equal to the total
amount of the Option Purchase Price (in U.S. Dollars)
together with interest thereon at a rate to be
determined by the Committee. If the Committee elects
not to repurchase such Option and it is not exercised
within 30 days of such Termination or Early
Retirement, the Option shall terminate, and any
portion of the Option Purchase Price previously paid
shall be forfeited.
7.2.2 If, following the third anniversary of the grant of
an Option, employment of Participant terminates as a
result of Retirement, death or Disability, a Vested
Option may be exercised by the Participant or the
personal representative of the Participant or his or
her estate. In no event, however, will any party be
entitled to exercise an Option after the expiration
of the two year Option Period.
7.2.3 If, following the third anniversary of the grant of
an Option, a Participant's employment is voluntarily
terminated prior to his or her having attained age
55, or is involuntarily terminated for Cause, the
Option shall terminate and any portion of the Option
Price previously paid shall be forfeited, unless the
Option is exercised in accordance with Section 8.
8. Exercise of Options
8.1 Subject to Section 7, a Vested Option may be exercised in whole at
any time or in part from time to time during the Option Period if at the time of
such exercise, the Participant is employed by Patterson Canada or an Affiliate,
and for a period of thirty (30) days following Termination of such Participant's
employment without Cause.
8.2 The Option may be exercised only by the Participant completing the
Notice of Exercise of Options (the "Notice"), and delivering the Notice to the
Company at its principal office. The Notice shall state the number of shares as
to which the Option is being exercised and shall be accompanied by payment in
full of the Exercise Price at the Conversion Rate for all shares designated as
exercised in the Notice. The exercise of
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the Option shall be deemed effective when the Notice is received by the Company
and accompanied by payment that complies with the terms of the Plan. The Option
may be exercised with respect to any number or all of the shares as to which it
can then be exercised and, if partially exercised, may be exercised as to the
unexercised shares any number of times during the Option Period as provided
herein. Upon exercise of an Option, the Company shall cause a certificate for
the number of Shares purchased to be issued in the name of the Participant and
delivered to the address indicated in the Notice no later than fifteen (15) days
following receipt of the Notice.
8.3 No fractional share shall be issued to a Participant upon exercise
of an Option.
9. No Rights as Shareholder
Until an Option is exercised and the Participant has become the record
holder of Shares purchasable pursuant to the Option, a Participant shall not
have any rights as a shareholder with respect to such Shares.
10. Changes in Capitalization
In the event of any change in the outstanding Shares of the Company by
reason of any share dividend, split, recapitalization, reorganization, merger,
consolidation, combination, exchange of shares or rights offering to purchase
common shares at a price substantially below fair market value, or other similar
corporate change, the aggregate number of shares subject to an Option, including
the number and kind of shares subject to such Option and the purchase price per
share thereof, shall be appropriately adjusted, consistent with such change and
in such manner as the Committee, in its sole discretion, may deem equitable to
prevent substantial dilution or enlargement of the rights granted to or
available to Participants. Adjustments made by the Committee shall be conclusive
and binding for all purposes of the Plan.
11. Termination or Suspension of Plan Participation
11.1 A Participant's participation in the Plan automatically and
immediately terminates in the event of the Participant's death, Disability,
Termination of employment, or in the event that the Participant ceases to be a
Canadian resident. Upon such termination, the right of Participant to exercise
the Option, or assign for repurchase the same to the Company, shall be governed
by Section 7. Upon termination of participation in the Plan, a Participant's
Salary Deductions shall cease as soon as administratively feasible following
such event.
11.2 When a Participant ceases to be paid by Patterson Canada or an
Affiliate while nevertheless maintaining employee status because of authorized
leave, (i.e., maternity or parental leave, layoff, or temporary disability), the
Participant's participation in the Plan shall be suspended until he or she once
again receives a Salary.
12. Certain Restrictions
The Shares are subject to resale restrictions under the applicable
securities legislation of certain of the provinces of Canada and may therefore
not be sold in such provinces. The Participant should refer to his or her legal
advisors for advice in that respect.
13. Amendment, Suspension or Termination of the Plan
The Company or the Committee may, at its discretion, amend, suspend or
terminate the Plan or participation therein, at any time, in whole or in part.
The Company shall send written notice to all Participants of any such material
amendment, suspension or termination of the Plan.
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14. Non-transferability of Participant's Rights
Neither Options nor rights of Participants thereunder may be assigned
or transferred in whole or in part either directly or indirectly or by operation
of law, except as may be permitted by the Committee from time to time; provided,
however, that a Disabled Participant, or his or her guardian, or the personal
representative of a disabled or deceased Participant, or his/her estate, may
exercise any Option which could have been exercised by a deceased or Disabled
Participant as provided in Section 7.1.1 or 7.2.2..
15. Administration And Interpretation
15.1 The Plan shall be administered by the Committee. The Committee has
full authority and discretion to interpret the provisions of the Plan and to
resolve any dispute that may arise under the Plan.
15.2 The Committee shall have the sole discretion, subject to the
provisions of the Plan, to determine the Participants eligible to participate in
the Plan.
15.3 The Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or in any Option granted hereunder in
the manner and to the extent it shall deem necessary to carry out the terms of
the Plan.
15.4 The Committee may delegate to any person, committee or group, such
responsibilities related to the administration of the Plan as it shall
determine.
15.5 Participation of an Eligible Employee in the Plan is entirely
voluntary; it may not be interpreted as a condition of employment or as
conferring any rights or privileges other than those expressly stipulated in
this document. Furthermore, Participation in the Plan does not constitute an
undertaking on the part of the Company or its Affiliates of continued employment
of a Participant, nor does it constitute a limitation of any kind whatsoever on
the right of the Company or its Affiliates to manage its affairs.
15.6 The Company does not hereby provide any guarantee with respect to
any loss that a Participant may incur as a result of a decrease in the Market
Price of the Shares or as a result of market fluctuations, irrespective of the
cause thereof.
15.7 The Company does not hereby assume any liability with respect to
the taxation consequences that may affect the Participants, and the Company
hereby recommends that Participants seek advice from their own advisors.
16. Expenses
Subject to the provisions contained in this document, the Company shall
pay all expenses related to the management of the Plan.
17. Governing Law
The Plan and all amendments thereto shall be interpreted in accordance
with the laws of the State of Minnesota and the applicable laws of the United
States.
18. Board Approval of Plan
This Plan was adopted by the Company's Board of Directors effective
June 13, 2000.
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