[FORM OF NON-STATUTORY STOCK OPTION AGREEMENT
UNDER 2000 STOCK INCENTIVE PLAN]
NON-STATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into and effective as of this _____ day of
___________, ______ (the "Date of Grant"), and is by and between LSC,
Incorporated (the "Company") and _________________ (the "Optionee").
A. The Company has adopted the LSC, Incorporated 2000 Stock Incentive
Plan (the "Plan") authorizing the Board of Directors of the Company (the
"Board"), or a committee as provided for in the Plan (the Board or such a
committee to be referred to as the "Committee"), to grant non-statutory stock
options and other Incentive Awards (as defined in the Plan) to employees and
non-employee directors, consultants and independent contractors of the Company
and its Subsidiaries (as defined in the Plan).
B. The Company desires to give the Optionee an inducement to acquire a
proprietary interest in the Company and an added incentive to advance the
interests of the Company by granting to the Optionee an option to purchase
shares of common stock of the Company pursuant to the Plan.
Accordingly, the parties agree as follows:
1. Grant of Option.
The Company hereby grants to the Optionee the right, privilege, and option
(the "Option") to purchase ___________________________________ (_______________)
shares (the "Option Shares") of the Company's common stock, $.01 par value per
share (the "Common Stock"), according to the terms and subject to the conditions
hereinafter set forth and as set forth in the Plan. The Option is not intended
to be an "incentive stock option," as that term is used in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
2. OPTION EXERCISE PRICE.
The per share price to be paid by Optionee in the event of an exercise of
the Option will be $____________.
3. DURATION OF OPTION AND TIME OF EXERCISE.
3.1 INITIAL PERIOD OF EXERCISABILITY. The Option will become exercisable
with respect to the Option Shares in _______ installments. The following table
sets forth the initial dates of exercisability of each installment and the
number of Option Shares as to which this Option will become exercisable on such
dates:
Initial Date of Number of Option Shares
Exercisability Available for Exercise
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______________ _______________
______________ _______________
______________ _______________
_____________ _______________
The foregoing rights to exercise this Option will be cumulative with
respect to the Option Shares becoming exercisable on each such date, but in
no event will this Option be exercisable after, and this Option will become
void and expire as to all unexercised Option Shares at, 5:00 p.m.
Minneapolis, Minnesota time) on ______________, 20___, (the "Time of
Termination").
3.2 TERMINATION OF EMPLOYMENT OR OTHER SERVICE.
(a) TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT. In the event
the Optionee's employment or other service with the Company and all
Subsidiaries is terminated by reason of the Optionee's death or Disability
or Retirement (as defined in the Plan), this Option shall become
immediately exercisable in full and remain exercisable after such
termination for three months in the case of Retirement and one year in the
case of death or Disability (but in no event after the Time of
Termination).
(b) TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR
RETIREMENT. In the event that the Optionee's employment or other service
with the Company and all Subsidiaries is terminated for any reason other
than death, Disability or Retirement, or the Optionee is in the employ or
service of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the
Company (unless the Optionee continues in the employ or service of the
Company or another Subsidiary), all rights of the Optionee under the Plan
and this Agreement will immediately terminate without notice of any kind,
and this Option will no longer be exercisable; provided, however, that if
such termination is due to any reason other than termination by the Company
or any Subsidiary for "cause" (as defined in the Plan), this Option, to the
extent that it is currently exercisable by the Optionee as of the time of
such termination, will remain exercisable for a period of three months
after such termination (but in no event after the Time of Termination).
3.3 CHANGE IN CONTROL.
(a) IMPACT OF CHANGE IN CONTROL. If a Change in Control (as defined
in the Plan) occurs and (i) the Company terminates the Participant's
employment or service for any reason other than death, Disability, cause
(as defined in the Plan), "poor job performance" (as defined below) within
twelve (12) months after the Change in Control or (ii) the Participant
terminates employment or service with the Company for Good Reason (as
defined below) within twelve (12) months after the Change in Control, then
all Options shall vest and be immediately exercisable in full as of the
date of such termination of employment or service by the Company or the
Participant, as the case may be, and shall remain exercisable until the
Time of Termination. In addition, if a Change in Control of the Company
occurs, the Committee, in its sole discretion and without the
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consent of the Optionee, may determine that the Optionee will receive, with
respect to some or all of the Option Shares, as of the effective date of
any such Change in Control of the Company, cash in an amount equal to the
excess of the Fair Market Value (as defined in the Plan) of such Option
Shares immediately prior to the effective date of such Change in Control of
the Company over the option exercise price per share of this Option. For
purposes of this Agreement, "Good Reason" shall mean, without the
Participant's prior written consent, (i) a material adverse change in the
Participant's authority, duties or responsibilities as in effect prior to
the Change in Control; (ii) a reduction by the Company in the Participant's
base salary, or a material adverse change in the form or timing of the
payment thereof, as in effect immediately prior to the Change in Control or
as thereafter increased; or (iii) the failure by the Company to cover the
Participant under benefit plans that, in the aggregate, provide
substantially similar benefits to Participant (and/or Participant's family
and dependents) at a substantially similar cost to Participant relative to
the benefits and total costs under the benefit plans in which Participant
(and/or Participant's family and dependents) was participating at any time
during the 90 days immediately preceding the Change in Control; (iv) the
Company's requiring the Participant to be based at any office or location
that is more than fifty (50) miles further from the office or location
thereof immediately preceding a Change in Control; provided, however, Good
Reason shall not include any of the circumstances or events described
herein unless the Participant has first provided written notice of such
circumstance or event and the Company has not corrected such circumstance
or event within thirty (30) days of receipt by the Company of such written
notice from the Participant. For purposes of this Agreement, "poor job
performance" means the failure of the Optionee to perform the duties of his
or her position, as in effect immediately prior to the Change in Control
and as reasonably determined by the Company, after the Company has given
the Optionee written notice of such failure and a reasonable opportunity to
correct such failure.
(b) LIMITATION ON CHANGE IN CONTROL PAYMENTS. Notwithstanding
anything in this Section 3.3 to the contrary, if, with respect to the
Optionee, acceleration of the vesting of this Option or the payment of cash
in exchange for all or part of the Option Shares as provided above (which
acceleration or payment could be deemed a "payment" within the meaning of
Section 280G(b)(2) of the Code), together with any other payments which the
Optionee has the right to receive from the Company or any corporation which
is a member of an "affiliated group" (as defined in Section 1504(a) of the
Code without regard to Section 1504(b) of the Code) of which the Company is
a member, would constitute a "parachute payment" (as defined in Section
280G(b)(2) of the Code), the payments to the Optionee as set forth herein
will be reduced to the largest amount as, in the sole judgment of the
Committee, will result in no portion of such payments being subject to the
excise tax imposed by Section 4999 of the Code; provided, however, that if
the Optionee is subject to a separate agreement with the Company or a
Subsidiary that expressly addresses the potential application of Sections
280G or 4999 of the Code (including, without limitation, that "payments"
under such agreement or otherwise will be reduced, that the Optionee will
have the discretion to determine which "payments" will be reduced, that
such "payments" will not be reduced or that such "payments" will be
"grossed up" for tax purposes), then this Section 3.3(b) will not apply,
and any
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"payments" to the Optionee pursuant to Section 3.3(a) of this Agreement
will be treated as "payments" arising under such separate agreement.
4. MANNER OF OPTION EXERCISE.
4.1 NOTICE. This Option may be exercised by the Optionee in whole or in
part from time to time, subject to the conditions contained in the Plan and in
this Agreement, by delivery, in person, by facsimile or electronic transmission
or through the mail, to the Company at its principal executive office in Eagan,
Minnesota (Attention: Chief Financial Officer of a written notice of exercise.
Such notice must be in a form satisfactory to the Committee, must identify the
Option, must specify the number of Option Shares with respect to which the
Option is being exercised, and must be signed by the person or persons so
exercising the Option. Such notice must be accompanied by payment in full of
the total purchase price of the Option Shares purchased. In the event that the
Option is being exercised, as provided by the Plan and Section 3.2 above, by any
person or persons other than the Optionee, the notice must be accompanied by
appropriate proof of right of such person or persons to exercise the Option. As
soon as practicable after the effective exercise of the Option, the Optionee
will be recorded on the stock transfer books of the Company as the owner of the
Option Shares purchased, and the Company will deliver to the Optionee one or
more duly issued stock certificates evidencing such ownership.
4.2 PAYMENT. At the time of exercise of this Option, the Optionee must
pay the total purchase price of the Option Shares to be purchased entirely in
cash (including a check, bank draft or money order, payable to the order of the
Company); provided, however, that the Committee, in its sole discretion, may
allow such payment to be made, in whole or in part, by tender of a promissory
note (on terms acceptable to the Committee in its sole discretion) or a Broker
Exercise Notice or Previously Acquired Shares (as such terms are defined in the
Plan), or by a combination of such methods. In the event the Optionee is
permitted to pay the total purchase price of this Option in whole or in part
with Previously Acquired Shares, the value of such shares will be equal to their
Fair Market Value on the date of exercise of this Option.
5. RIGHTS OF OPTIONEE; TRANSFERABILITY.
5.1 EMPLOYMENT OR SERVICE. Nothing in this Agreement will interfere with
or limit in any way the right of the Company or any Subsidiary to terminate the
employment or other service of the Optionee at any time, nor confer upon the
Optionee any right to continue in the employ or other service of the Company or
any Subsidiary at any particular position or rate of pay or for any particular
period of time.
5.2 RIGHTS AS A SHAREHOLDER. The Optionee will have no rights as a
shareholder unless and until all conditions to the effective exercise of this
Option (including, without limitation, the conditions set forth in Sections 4
and 6 of this Agreement) have been satisfied and the Optionee has become the
holder of record of such shares. No adjustment will be made for dividends or
distributions with respect to this Option as to which there is a record date
preceding the date the Optionee becomes the holder of record of such shares,
except as may otherwise be provided in the Plan or determined by the Committee
in its sole discretion.
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5.3 RESTRICTIONS ON TRANSFER. Except pursuant to testamentary will or the
laws of descent and distribution or as otherwise expressly permitted by the
Plan, no right or interest of the Optionee in this Option prior to exercise may
be assigned or transferred, or subjected to any lien, during the lifetime of the
Optionee, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise. The Optionee will, however, be entitled to
designate a beneficiary to receive this Option upon such Optionee's death, and,
in the event of the Optionee's death, exercise of this Option (to the extent
permitted pursuant to Section 3.2(a) of this Agreement) may be made by the
Optionee's legal representatives, heirs and legatees.
5.4 BREACH OF CONFIDENTIALITY OR NON-COMPETE AGREEMENTS. Notwithstanding
anything in this Agreement or the Plan to the contrary, in the event that the
Optionee materially breaches the terms of any confidentiality or non-compete
agreement entered into with the Company or any Subsidiary, whether such breach
occurs before or after termination of the Optionee's employment or other service
with the Company or any Subsidiary, the Committee in its sole discretion may
immediately terminate all rights of the Optionee under the Plan and this
Agreement without notice of any kind.
6. SECURITIES LAW AND OTHER RESTRICTIONS.
Notwithstanding any other provision of the Plan or this Agreement, the
Company will not be required to issue, and the Optionee may not sell, assign,
transfer or otherwise dispose of, any Option Shares, unless (a) there is in
effect with respect to the Option Shares a registration statement under the
Securities Act of 1933, as amended, and any applicable state or foreign
securities laws or an exemption from such registration, and (b) there has been
obtained any other consent, approval or permit from any other regulatory body
which the Committee, in its sole discretion, deems necessary or advisable. The
Company may condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing Option Shares, as may be deemed
necessary or advisable by the Company in order to comply with such securities
law or other restrictions.
7. WITHHOLDING TAXES.
The Company is entitled to (a) withhold and deduct from future wages of the
Optionee (or from other amounts that may be due and owing to the Optionee from
the Company), or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any federal, state or local withholding
and employment-related tax requirements attributable to the Option, including,
without limitation, the grant or exercise of this Option, or (b) require the
Optionee promptly to remit the amount of such withholding to the Company before
acting on the Optionee's notice of exercise of this Option. In the event that
the Company is unable to withhold such amounts, for whatever reason, the
Optionee agrees to pay to the Company an amount equal to the amount the Company
would otherwise be required to withhold under federal, state or local law.
8. ADJUSTMENTS.
In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or
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extraordinary dividend (including a spin-off), or any other change in the
corporate structure or shares of the Company, the Committee (or, if the Company
is not the surviving corporation in any such transaction, the board of directors
of the surviving corporation), in order to prevent dilution or enlargement of
the rights of the Optionee, will make appropriate adjustment (which
determination will be conclusive) as to the number and kind of securities or
other property (including cash) subject to, and the exercise price of, this
Option.
9. SUBJECT TO PLAN.
The Option and the Option Shares granted and issued pursuant to this
Agreement have been granted and issued under, and are subject to the terms of,
the Plan. The terms of the Plan are incorporated by reference in this Agreement
in their entirety, and the Optionee, by execution of this Agreement,
acknowledges having received a copy of the Plan. The provisions of this
Agreement will be interpreted as to be consistent with the Plan, and any
ambiguities in this Agreement will be interpreted by reference to the Plan. In
the event that any provision of this Agreement is inconsistent with the terms of
the Plan, the terms of the Plan will prevail.
10. MISCELLANEOUS.
10.1 BINDING EFFECT. This Agreement will be binding upon the heirs,
executors, administrators and successors of the parties to this Agreement.
Without limiting the preceding sentence, the term "Company" in this Agreement
refers to successors or the Company and the term "Optionee" in this Agreement
refers to the heirs, executors, administrators and successors of the Optionee.
10.2 GOVERNING LAW. This Agreement and all rights and obligations under
this Agreement will be construed in accordance with the Plan and governed by the
laws of the State of Minnesota, without regard to conflicts of laws provisions.
Any legal proceeding related to this Agreement will be brought in an appropriate
Minnesota court, and the parties to this Agreement consent to the exclusive
jurisdiction of the court for this purpose.
10.3 ENTIRE AGREEMENT. This Agreement and the Plan set forth the entire
agreement and understanding of the parties to this Agreement with respect to the
grant and exercise of this Option and the administration of the Plan and
supersede all prior agreements, arrangements, plans and understandings relating
to the grant and exercise of this Option and the administration of the Plan.
10.4 AMENDMENT AND WAIVER. Other than as provided in the Plan, this
Agreement may be amended, waived, modified or canceled only by a written
instrument executed by the parties to this Agreement or, in the case of a
waiver, by the party waiving compliance.
(BALANCE OF PAGE INTENTIONALLY BLANK)
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The parties to this Agreement have executed this Agreement effective the
day and year first above written.
LSC, INCORPORATED
By
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Its
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By execution of this Agreement, OPTIONEE
the Optionee acknowledges having
received a copy of the Plan. ------------------------------------
(Signature)
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(Name and Address)
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