EXHIBIT 4.3
Damark International, Inc.
1991 Stock Option Plan, as amended
(including form of Incentive Stock Option Agreement,
Non-Qualified Stock Option Agreement and Exercise Letter)
DAMARK INTERNATIONAL, INC.
1991 STOCK OPTION PLAN
(AS AMENDED)
______________________________
PART I
PURPOSES; DEFINITIONS; SHAREHOLDER APPROVAL;
RESERVATION OF SHARES; AND PARTICIPATION IN PLAN
ARTICLE I
Purposes
1.1 PURPOSES OF PLAN. The purpose of this Damark International, Inc. 1991
Stock Option Plan, as amended, (the "Plan") is to provide incentives to
employees of the Company and/or any Subsidiary who contribute, and are expected
to contribute, to the success of the Company and any Subsidiary, to provide a
means of rewarding outstanding performance, and to enhance the interest of such
employees in the Company's continued success and progress by providing them a
proprietary interest in the Company. Further, this Plan is designed to enhance
the Company's ability to maintain a competitive position in attracting and
retaining qualified personnel necessary for the continued success and progress
of the Company.
ARTICLE II
Definitions
2.1 Certain terms used herein shall have the meaning below stated, subject
to the provisions of Section 7.1.
"Board" or "Board of Directors" means the Board of Directors of the
Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee appointed by the Board to administer this
Plan pursuant to Article VII or, if no Committee is appointed by the Board,
means the Board.
"Common Stock" means, subject to the provisions of Section 9.3, the
presently authorized Class A Common Stock of the Company,
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par value $.01 per share.
"Company" means Damark International, Inc., a Minnesota corporation.
"Disability" means (subject to Section 6.2) a physical or mental impairment
of sufficient severity such that an Employee is permanently unable to continue
his employment with the Company as determined by the Committee.
"Employee" means an employee (including an officer) of the Company or of
any Subsidiary of the Company.
"Fair Market Value" means the fair market value of the Company's Common
Stock as determined by the Committee on the basis of available prices for such
Common Stock or in such manner as may be authorized by applicable regulations
under the Code.
"Incentive Stock Option" means an option to purchase Common Stock, granted
by the Company to an Employee pursuant to Section 5.1, which is intended to meet
the requirements of Section 422A of the Code and which is designated at the time
of the award of an Incentive Stock Option.
"Non-Statutory Option" means an option to purchase Common Stock, granted by
the Company to an Optionee pursuant to Section 5.1, which is not an Incentive
Stock Option.
"Option" means an Incentive Stock Option or a Non-Statutory Option.
"Optionee" means the holder of an Option granted under the Plan.
"Plan" means the Damark International, Inc. 1991 Stock Option Plan, as set
forth herein and as from time to time amended.
"Subsidiary" means a subsidiary or parent corporation, as defined in
Section 425(e) and (f) of the Code, with respect to the Company.
"1933 Act" means the Securities Act of 1933, as amended.
ARTICLE III
Shareholder Approval; Reservations of Shares
3.1 SHAREHOLDER APPROVAL. This Plan as amended by the Board of Directors
on January 26, 1994 shall be subject to approval by the affirmative vote of the
holders of a majority of the Company's Common Stock at a meeting of
shareholders, which approval must be
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obtained no later than January 25, 1995.
3.2 SHARES RESERVED UNDER PLAN. Subject to adjustment under the
provisions of Section 9.3 hereof, the maximum number of shares of Common Stock
which may be issued and sold under this Plan is 900,000 shares. Such shares may
be either authorized and unissued shares or shares issued and thereafter
acquired by the Company. Shares issued pursuant to this Plan shall be subject
to all applicable provisions of the Articles of Incorporation and Bylaws of the
Company in existence at the time of issuance of such shares and at all times
thereafter. If Options granted under this Plan shall terminate or cease to be
exercisable by reason of expiration, surrender for cancellation or otherwise
without having been wholly exercised, new Options may be granted under this Plan
covering the number of shares to which such termination or cessation relates.
At no time may the sum of the maximum number of shares issuable under
outstanding Options granted under this Plan and the number of shares previously
issued under Options granted under this Plan exceed the maximum number of shares
that may be issued and sold under this Plan, as above stated.
ARTICLE IV
Participation in Plan
4.1 ELIGIBILITY TO RECEIVE OPTIONS. Options under this Plan may be
granted only to Employees who are employed by the Company or a Subsidiary on the
date the Option is granted and who the Committee believes are in a position to
make an important contribution to the success of the Company, all as determined
by the Committee, provided that no Employee shall be eligible for Options under
this Plan if such person has been a member of the Board of Directors of the
Company or a Subsidiary within one year of the grant.
4.2 PARTICIPATION NOT GUARANTEE OF EMPLOYMENT. Nothing in this Plan or in
the instrument evidencing the grant of an Option shall in any manner be
construed to limit in any way the right of the Company or a Subsidiary to
terminate an Employee's employment at any time without regard to the effect of
such termination on any rights such Employee would otherwise have under this
Plan, or give any right to such an Employee to remain employed by the Company or
a Subsidiary in any particular position or at any particular rate of
compensation.
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PART II
OPTIONS;
TERMINATION OF EMPLOYMENT AND DEATH
ARTICLE V
Options
5.1 GRANTS OF OPTIONS.
(a) GRANT. The Committee may grant Incentive Stock Options and/or
Non-Statutory Options to Employees, subject to the limitations provided in
Section 5.1(f) and Section 7.1. All Options under this Plan shall be granted
within ten years of March 20, 1991, the date on which this Plan was adopted by
the Board of Directors subject to approval of the Plan by shareholders.
(b) OPTION PRICE. The purchase price per share of Common Stock under
each Incentive Stock Option and Non-Statutory Option shall be determined by the
Committee but shall be not less than 100% of the Fair Market Value per share of
such Common Stock on the date the Option is granted for Incentive Stock Options
and 85% of the Fair Market Value per share of such Common Stock on the date the
Option is granted for Non-Statutory Options. The purchase price per share may
be subject to adjustment in accordance with the provisions of Section 9.3
hereof.
(c) OPTIONS AGREEMENTS. Options shall be evidenced by option
agreements in such form and containing such terms and conditions as the
Committee shall approve, which terms and conditions need not be the same for all
Options.
(d) OPTIONS NONTRANSFERABLE. An Option granted under this Plan shall
by its terms be nontransferable by the Optionee other than by will or the laws
of descent and distribution, and, during the lifetime of the Optionee, shall be
exercisable only by such Optionee. No transfer of an Option by an Optionee by
will or by the laws of descent and distribution shall be effective to bind the
Company unless the Company shall have been furnished with written notice thereof
and a copy of the will and/or such other evidence as the Committee may determine
necessary to establish the validity of the transfer.
(e) SUBSTITUTION AND CANCELLATION. The Committee, in its sole
discretion, may grant to an Optionee who has been granted an Option under this
Plan, in exchange for the surrender and cancellation of such Option, a new
Option having a purchase price lower (or higher) than the purchase price
provided in the Option so surrendered and cancelled and containing such other
terms as the Committee may deem appropriate, subject to Section 5.1(b) and such
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other limitations or restrictions with respect to an Incentive Stock Option as
may be imposed by the Code.
(f) ANNUAL PER-EMPLOYEE LIMITATION. The number of shares of Common
Stock subject to all Options granted to any Employee during any calendar year
shall not exceed 150,000 shares.
5.2 EXERCISE.
(a) TERM OF OPTIONS; VESTING; AND EXERCISE. The term of each Option
granted under this Plan shall not exceed ten (10) years from the date of grant.
An Option granted under this Plan shall become vested and exercisable at such
rate and on such conditions as the Committee shall determine at the time such
Option is granted.
(b) EXERCISE; PAYMENT ON EXERCISE. Options shall be exercised by
delivering to the Company an exercise notice in the form prescribed by the
Committee. No shares of Common Stock shall be issued on the exercise of an
Option unless paid for in full at the time of purchase as provided in the next
sentence and until the provisions of 9.4 shall have been satisfied. Payment for
shares of Common Stock purchased upon the exercise of an Option shall be made
(i) in cash, or (ii) the following alternative forms of payment: (A) in whole
or in part in shares of Common Stock held by the Optionee for at least six
months and valued at the then Fair Market Value thereof, or (B) by delivery to
the Company of irrevocable instructions to the Optionee's broker, which
instructions and broker shall be satisfactory to the Company, to promptly
deliver to the Company the total purchase price for the shares of the Option
being exercised from the sale proceeds for such shares or the loan proceeds for
such shares or any other securities which the Optionee may have in his account
with such broker, and the Company will deliver such shares directly to such
broker in accordance with such procedures as the Committee may establish, which
alternative forms of payment may be permitted by the Committee at the time the
Option is granted or at any time thereafter during the term of the Option.
Stock certificates for the shares of Common Stock so paid for will be issued and
delivered to the person entitled thereto only at the Company's office in
Minneapolis, Minnesota. No Optionee shall have any rights as a shareholder with
respect to any share of Common Stock covered by an Option unless and until such
Optionee shall have become the holder of record of such share and, except as
otherwise permitted in Section 9.3 hereof, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property or distributions or other rights) in respect of such share for which
the record date is prior to the date on which such Optionee shall have become
the holder of record thereof.
(c) DISSOLUTION, LIQUIDATION, ETC. If at any time after
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an Option has become exercisable and prior to its exercise and expiration, a
voluntary dissolution, liquidation (other than a liquidation into another
corporation which agrees to continue this Plan) or winding up of the affairs
of the Company shall be proposed, the Company shall cause notice in writing to
be mailed to each person holding an Option under this Plan, which notice shall
be mailed not less than twenty days prior to the closing of the transfer books
of the Company or the record date for determination of the holders of Common
Stock of the Company entitled to participate in such dissolution, liquidation
or winding up, as the case may be, to the end that during such notice period
the holder of any Option, to the extent that the same is then exercisable by
such holder, subject to the terms of Article V hereof, may purchase Common
Stock in accordance with the terms of the Option and be entitled, in respect
of the number of shares so purchased, to all the rights of the other holders
of Common Stock of the Company with respect to such proposed dissolution,
liquidation or winding up of the affairs of the Company. Each Option at the
time outstanding and all rights thereunder shall terminate at the close of
business on the twentieth day after mailing of such notice to the holder of
such Option or on the record date for determination of holders of Common Stock
entitled to participate in such dissolution, liquidation or winding up,
whichever date is later.
(d) EXERCISE OF OPTIONS. In the event that an Optionee exercises
Options, such Optionee shall comply with all requirements set forth in the
option agreement for such Options in connection with the purchase of shares of
Common Stock under this Plan.
5.3 INCENTIVE STOCK OPTIONS.
(a) ANNUAL LIMITATION. In no event shall any Optionee be granted an
Incentive Stock Option under this Plan or any other plan of the Company or any
Subsidiary if such option would, during the calendar year in which the option
first becomes exercisable when combined with other Incentive Stock Options which
first become exercisable in such calendar year, entitle such Optionee, to
purchase shares of Common Stock or shares of any Subsidiary having an aggregate
fair market value (determined as of the time such option or options were
granted) in excess of $100,000. In the event an option granted hereunder is
designated an Incentive Stock Option and exceeds the limitations set forth in
this Section 5.4(a), whether at the time of grant or thereafter, such option
shall be an Incentive Stock Option only to the extent permitted hereby and the
balance thereof shall be a Non-Statutory Option for the purposes of this Plan.
(b) INCENTIVE STOCK OPTIONS GRANTED TO TEN PERCENT SHAREHOLDERS. No
Incentive Stock Option shall be granted to any Employee who owns, directly or
indirectly pursuant to Section 425(d) of the Code, stock possessing more than
ten percent (10%) of
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the total combined voting power of all classes of stock of the Company or any
Subsidiary, unless at the time such Incentive Stock Option is granted, the
price of the Incentive Stock Option is at least 110% of the Fair Market Value
of the Common Stock subject to the Incentive Stock Option and such Incentive
Stock Option, by its terms, is not exercisable after the expiration of five
(5) years from the date such Incentive Stock Option is granted.
(c) NOTICE. Each Optionee shall give prompt notice to the Company of
any disposition of shares acquired upon exercise of an Incentive Stock Option if
such disposition occurs within either two years after the date of grant or one
year after the date of transfer of such shares to the Optionee upon the exercise
of such Incentive Stock Option.
(d) CONSENT. To the extent appropriate to avoid a "modification" or
other event described in Section 425(h) of the Code, a Optionee's rights under
an Incentive Stock Option (including the rights to pay the exercise price in
Common Stock) shall be set forth in the option agreement for such Option entered
into at the date of grant, so as to preclude any requirement that further
Committee consent be given after the date of grant.
ARTICLE VI
Termination of Employment
6.1 TERMINATION OF EMPLOYMENT. Unless earlier terminated in accordance
with its terms, an Option shall terminate 90 days after any termination of the
Optionee's employment with the Company or any Subsidiary for any reason other
than as a result of the death or disability of the Optionee or, in the case of
death or disability of any Optionee, 120 days after the death or the termination
of the Optionee's employment due to disability.
6.2 EMPLOYMENT. For all purposes of this Plan, and any Option granted
hereunder, "employment" shall be defined in accordance with the provisions of
Section 1.421-7(h) of the Income Tax Regulations (or any successor regulations).
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PART III
ADMINISTRATION, AMENDMENT AND TERMINATION
OF PLAN; MISCELLANEOUS
ARTICLE VII
Administration of Plan
7.1 THE COMMITTEE. This Plan shall be administered by a Committee of
the Board of Directors of two or more persons, each of whom shall be a member
of the Board and shall be a "disinterested person" within the meaning of Rule
16b-3(c)(i) of the Securities and Exchange Commission as in effect on January
26, 1994, and shall be appointed by, and serve at the pleasure of, the Board.
No person shall serve as a member of the Committee if such person is eligible,
or had been eligible at any time within one year prior to appointment as a
member, for selection as a person to whom stock may be allocated or to whom
Options may be granted under this Plan or any other plan of the Company or any
of its affiliates entitling the participants therein to acquire stock or stock
options of the issuer or any of its affiliates. A majority of the Committee
shall constitute a quorum thereof and the actions of a majority of the
Committee at a meeting at which a quorum is present, or actions unanimously
approved in writing by all members of the Committee, shall be the actions of
the Committee. Vacancies occurring on the Committee shall be filled by the
Board. The Committee shall have full and final authority to interpret this
Plan and the agreements evidencing Options granted hereunder (which agreements
need not be identical), to prescribe, amend and rescind rules and regulations,
if any, relating to this Plan and to make all determinations necessary or
advisable for the administration of this Plan. The Committee's determination
in all matters referred to herein shall be conclusive and binding for all
purposes and upon all persons including, but without limitation, the Company,
the shareholders of the Company, the Committee and each of the members
thereof, and the Employees and the Optionees, and their respective personal
representatives, heirs and assigns.
7.2 LIABILITY OF COMMITTEE. No member of the Committee shall be liable
for anything done or omitted to be done by such member or by any other member of
the Committee in connection with this Plan, except for the willful misconduct or
gross negligence of such member. The Committee shall have power to engage
outside consultants, auditors or other professional help to assist in the
fulfillment of the Committee's duties under this Plan at the Company's expense.
7.3 DETERMINATIONS OF THE COMMITTEE. In making its determinations
concerning the Employees, who shall receive Options as well as the number of
shares to be covered thereby and time or
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times at which they shall be granted, the Committee shall take into account
the nature of the services rendered by the respective Employees and their
past, present, and potential contribution to the Company's success and such
other factors as the Committee may deem relevant. The Committee shall also
determine the form of option agreements to be issued under this Plan and the
terms and conditions to be included therein, provided such terms and
conditions are not inconsistent with the terms of this Plan. In its
discretion or in accordance with a direction from the Board, the Committee may
waive any provisions of any option agreement, provided such waiver is not
inconsistent with the terms of this Plan as then in effect.
ARTICLE VIII
Amendment and Termination of Plan
8.1 AMENDMENT OF PLAN.
(a) GENERALLY. The Plan may be amended at any time and from time to
time by the Board of Directors of the Company but no amendment which (i)
increases the aggregate number of shares of Common Stock which may be issued and
sold under this Plan other than adjustments pursuant to Section 9.3, (ii)
decreases the minimum option price provided in this Plan, (iii) extends the
period during which Options may be granted under this Plan, or (vi) changes the
class of Employees eligible to receive Options, shall be effective unless and
until the same is approved by the affirmative vote, in person or by proxy, of
the holders of a majority of the shares of Class A and Class B Common Stock of
the Company and Series A and Series B Preferred Stock of the Company present and
entitled to vote at a meeting held to take such action at which a quorum is
present. No termination or amendment of this Plan, without the consent of the
holder of any Option then existing, may terminate such holder's Option or
materially and adversely affect such holder's rights thereunder.
(b) AMENDMENTS RELATING TO INCENTIVE STOCK OPTIONS. To the extent
applicable, this Plan is intended to permit the issuance of Incentive Stock
Options in accordance with the provisions of Section 422A of the Code. The Plan
may be modified or amended at any time, both prospectively and retroactively,
and in such manner as to affect Incentive Stock Options previously granted
(after taking into account Section 425(h) of the Code, relating to
"modifications," etc.), if such amendment or modification is necessary for this
Plan and the Incentive Stock Options granted hereunder to qualify under said
provisions of the Code.
8.2 TERMINATION. The Board of Directors of the Company may at any time
terminate this Plan as of any date specified in a resolution adopted by the
Board. If not earlier terminated, this
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Plan shall terminate on the tenth anniversary of the effective date of the
Plan. No Options may be granted after this Plan has terminated. After this
Plan shall terminate, the function of the Committee will be limited to
supervising the administration of Options previously granted.
ARTICLE IX
Miscellaneous Provisions
9.1 RESTRICTIONS UPON GRANT OF OPTIONS. The registration or qualification
under any Federal or state law of any shares of Common Stock to be granted
pursuant to this Plan (whether to permit the grant of Options or the resale or
other disposition of any such shares of Common Stock by or on behalf of the
Optionees receiving such shares) may be necessary or desirable and, in any such
event, delivery of the certificates for such shares of Common Stock shall, if
the Board of Directors, in its sole discretion, shall determine, not be made
until such listing, registration or qualification shall have been completed.
9.2 RESTRICTIONS UPON RESALE OF UNREGISTERED STOCK. If the shares of
Common Stock that have been transferred to a Optionee pursuant to the terms of
this Plan are not registered under the 1933 Act, pursuant to an effective
registration statement, such Optionee, if the Committee shall deem it advisable,
may be required to represent and agree in writing (i) that any shares of Common
Stock acquired by such Optionee pursuant to this Plan will not be sold except
pursuant to an effective registration statement under the 1933 Act, or pursuant
to an exemption from registration under the 1933 Act and (ii) that such Optionee
is acquiring such shares of Common Stock for such Optionee's own account and not
with a view to the distribution thereof.
9.3 ADJUSTMENTS. In the event of any change (through recapitalization,
merger, consolidation, stock dividend, split-up, or amount of the Company's
capital stock (or any other transaction described in Section 425(a) of the Code)
after any Option is granted hereunder and prior to the exercise thereof, the
Option, to the extent that it has not been exercised, shall entitle the holder
to such number and kind of securities as such holder would have been entitled to
had such holder actually owned the stock subject to the Option at the time of
the occurrence of such change. If any such event should occur, the number of
shares subject to Options which are authorized to be issued hereunder, but which
have not been issued, shall be similarly adjusted. If any other event shall
occur, prior to the exercise of an Option granted to an Optionee hereunder,
which shall increase or decrease the amount of capital stock outstanding and
which the Committee, in its sole discretion, shall determine equitably requires
an adjustment in the number of shares which the holder should be permitted to
acquire, such
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adjustment as the Committee shall determine may be made, and when so made
shall be effective and binding for all purposes of this Plan.
9.4 WITHHOLDING OF TAXES. Each Optionee who exercises an Option to
purchase Common Stock shall, prior to the issuance of any shares, pay to the
Company, or make arrangements (including withholding of shares of Common Stock
purchased upon exercise of the Option at the Fair Market Value thereof)
satisfactory to the Committee regarding payment of, any taxes of any kind
required by law to be withheld with respect to the transfer to such Optionee of
such shares of Common Stock and/or amounts upon exercise of such Option.
9.5 USE OF PROCEEDS. The proceeds from the sale of Common Stock pursuant
to Options granted under this Plan shall constitute general funds of the Company
and may be used for such corporate purposes as the Company may determine.
9.6 OTHER GRANTS. Options may be granted under this Plan from time to
time in substitution for stock options held by employees of other corporations
who are or are about to become employees of the Company or a Subsidiary as the
result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary, or the acquisition by the Company or a Subsidiary of
the assets of the employing corporation, or the acquisition by the Company or a
Subsidiary of stock of the employing corporation as the result of which it
becomes a Subsidiary of the Company. The terms and conditions of the substituted
Options so granted may vary from the terms and conditions set forth in Part II
to such extent as the Committee may deem appropriate to conform, in whole or in
part, to the provisions of the substituted stock incentives.
9.7 OTHER BENEFITS. Nothing contained herein shall prevent the Company
from establishing other incentive plans in which Employees under the Plan may
also participate. No award under this Plan shall be considered as compensation
in calculating any insurance, pension or other benefit for which the recipient
is eligible unless any such insurance, pension or other benefit is granted under
a plan which expressly provides that compensation under this Plan (and
specifying the type of such compensation) shall be considered as compensation
under such plan.
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