Exhibit 10.2.2
INCORPORATED TERMS
DATED AS OF _________________
TO
RESTRICTED STOCK AND
RESTRICTED STOCK UNIT AGREEMENT
The following are the "Incorporated Terms" referred to in the
instrument entitled "Restricted Stock and Restricted Stock Unit Agreement" which
refers to these Incorporated Terms and which has been signed by the Company and
the Employee (the "Base Instrument"). The Incorporated Terms and the Base
Instrument constitute a single agreement and that agreement consists of the Base
Instrument and the Incorporated Terms. The Incorporated Terms dovetail with the
Base Instrument; because the last paragraph of the Base Instrument is Paragraph
1, the Incorporated Terms begin with Paragraph 2.
2. Restrictions. (a) (i) Except as otherwise provided herein, the
Base Restricted Stock, the Matching Restricted Stock and the Time Vested
Restricted Stock may not be sold, transferred or otherwise alienated or
hypothecated until, in the case of the Base Restricted Stock, the date set forth
after "Base Restricted Stock Release Date" on the signature page; in the case of
the Matching Restricted Stock, the date set forth after "Matching Restricted
Stock Release Date" on the signature page; and in the case of the Time Vested
Restricted Stock, until the Release Date determined as follows. For each date
set forth after "Time Vested Restricted Stock Release Date" on the signature
page, divide the number of shares set forth after "Shares of Time Vested
Restricted Stock" by the sum of one and the difference between the latest year
set forth after "Time Vested Restricted Stock Release Date" on the signature
page and the earliest year set forth thereafter. The resulting quotient, rounded
down to the nearest whole share, is the number of shares of Restricted Stock
that shall be released from such restrictions on each date set forth after "Time
Vested Restricted Stock Release Date" and such date shall be the Release Date
for such shares (and only for such shares), except that if after "Goal" on the
signature page "Applicable" appears, then such date shall be a Release Date only
if the condition set forth after "Goal" applicable to such Release Date is
satisfied. As used in "Goal," "▇▇▇" means the quotient of dividing Net Income by
Average Equity. "Net Income" means the Company's net income, determined in
accordance with generally accepted accounting principles ("GAAP") adjusted to
exclude the after-tax effect of the items excluded in clauses (i) and (ii) of
the definition of EPS in Section 2(c) of this Agreement. "Average Equity" means
the average of the Company's shareholders' equity determined in accordance with
GAAP computed by using shareholders' equity at each month-end in the year for
which Net Income is being determined.
(ii) The term "Release Date" shall be applied separately to
the Base Restricted Stock, the Matching Restricted Stock and the Time Vested
Restricted Stock as if the term "Release Date" were the term "Base Restricted
Stock Release Date," the term "Matching Restricted Stock Release Date," or the
term "Time Vested Restricted Stock Release Date," as the case may be, and such
application shall correspond to the application of the term "Restricted Stock"
as set forth in Paragraph 1(a) of the Base Instrument.
(b) The Release Date for RSUs shall be the same as the Release Date
for the Time Vested Restricted Stock. Except as otherwise provided herein, RSUs
may not be sold, transferred or otherwise alienated or hypothecated regardless
of the occurrence of the Release Date.
(c) Except as otherwise provided herein, the Performance Restricted
Stock may not be sold, transferred or otherwise alienated or hypothecated until
the Release Date determined as follows. For each date set forth after
"Performance Restricted Stock Release Date" on the signature page, multiply the
number of shares set forth after "Shares of Performance Restricted Stock" on the
signature page by the quotient of dividing the EPS for the fiscal year of the
Company ended on the December 31 immediately preceding such date by the amount
set forth after "Target" on the signature page. The resulting product, rounded
down to the nearest whole share, is the number of shares of Restricted Stock
that shall be released from such restrictions on the corresponding date set
forth after "Performance Restricted Stock Release Date" and such date shall be
the Release Date for such shares (and only for such shares). "EPS" means the
Company's diluted earnings per share, determined in accordance with GAAP and
adjusted to exclude the after-tax effect of (i) realized gains and losses, and
(ii) extraordinary items, except that there shall not be excluded such gains,
losses and items attributable to joint ventures. If by any date set forth after
"Performance Restricted Stock Release Date" the Company has not publicly
announced its diluted earnings per share, such date shall be two business days
after such earnings are publicly announced.
3. Escrow. Shares of Restricted Stock shall be issued (in
certificate or electronic form, at the discretion of the Company) as soon as
practicable in the name of the Employee but shall be held in an escrow
arrangement by the transfer agent for the Stock, as escrow agent. Unless
forfeited as provided herein, Restricted Stock shall cease to be held in escrow
and certificates for such Stock shall be delivered to the Employee, or in the
case of his death, to his Beneficiary (as hereinafter defined) on the Release
Date or upon any other termination of the restrictions imposed by Paragraph 2
hereof.
4. Transfer After Release Date; Securities Law Restrictions. Except
as otherwise provided herein, Restricted Stock shall become free of the
restrictions of Paragraph 2 and be freely transferable by the Employee on the
Release Date. Notwithstanding the foregoing or anything to the contrary herein,
the Employee agrees and acknowledges with respect to any Restricted Stock and
any Stock delivered in settlement of RSUs that has not been registered under the
Securities Act of 1933, as amended (the "Act") (i) he will not sell or otherwise
dispose of such Stock except pursuant to an effective registration statement
under the Act and any applicable state securities laws, or in a transaction
which, in the opinion of counsel for the Company, is exempt from such
registration, and (ii) a legend will be placed on the certificates or other
evidence for the Restricted Stock (or in the case of RSUs, any such Stock
delivered in settlement) to such effect.
5. Termination of Employment Due to Death. If the Employee's
employment with the Company or any of its subsidiaries is terminated because of
death prior to the Release Date, (i) the restrictions of Paragraph 2 applicable
to the Restricted Stock shall terminate on the date of death and such Restricted
Stock shall be free of such restrictions and, except as otherwise
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provided in Paragraph 4 hereof, freely transferable, and (ii) a Release Date
shall be deemed to have occurred for all RSUs.
6. Forfeiture of Restricted Stock. (a) If the Employee's employment
with the Company and all of its subsidiaries is ------------------------------
terminated prior to the Release Date for any reason (including without
limitation, disability or termination by the Company and all subsidiaries
thereof, with or without cause) other than death, all Restricted Stock and all
RSUs shall be forfeited to the Company on the date of such termination unless
otherwise provided in subparagraph (b) below, or unless the Management
Development, Nominating and Governance Committee of the Company's Board of
Directors (the "Management Development Committee") or other Committee of such
Board administering the Plan (the Management Development Committee or such other
Committee is herein referred to as the "Committee") determines, on such terms
and conditions, if any, as the Committee may impose, that all or a portion of
the Restricted Stock and/or Stock deliverable on settlement of RSUs shall be
released to the Employee and the restrictions of Paragraph 2 applicable thereto
shall terminate. Absence of the Employee on leave approved by a duly elected
officer of the Company, other than the Employee, shall not be considered a
termination of employment during the period of such leave.
The Release Date for the Time Vested Restricted Stock (and any Time
Vested Restricted Stock awarded as RSUs) and the Performance Restricted Stock
may occur on multiple dates, each of which is a Release Date for the number of
shares determined as provided in Paragraphs 2(a) and (c). Hence, any forfeiture
of Time Vested Restricted Stock, Time Vested Restricted Stock awarded as RSUs or
Performance Restricted Stock applies only to the shares for which a Release Date
had not yet occurred on the date of forfeiture. The preceding sentence has been
included in this Agreement for the purpose of avoiding any doubt that the result
described in the preceding sentence would occur; therefore, such result will
occur under prior agreements awarding Performance Restricted Stock to the
Employee even though a comparable provision is not included in such agreements.
(b) If the Employee's employment with the Company and all of its
subsidiaries terminates by reason of retirement after reaching age 62 and after
having been employed by the Company or any subsidiary thereof for an aggregate
period of at least seven years, such retirement shall not result in forfeiture
of the Performance Restricted Stock or of any RSUs (this provision does not
apply to the Base or Matching Restricted Stock nor does it apply to Time Vested
Restricted Stock not awarded as RSUs) if no later than the date on which
employment terminates, the Employee enters into an agreement with the Company
(which agreement shall be drafted by and acceptable to the Company) under which
the Employee agrees not to compete with the Company and its subsidiaries during
a period ending one year after the latest of the dates set forth after (i) "Time
Vested Restricted Stock Release Date" on the signature page, and (ii)
"Performance Restricted Stock Release Date" on the signature page, and the
Employee complies with such agreement. If the Employee enters into such a
non-competition agreement and thereafter breaches the terms thereof, the
Restricted Stock and RSUs shall be forfeited and the Employee shall return to
the Company any Stock that was awarded under this Agreement and that was
delivered to the Employee after the date on which such non-competition agreement
was entered into. If the conditions in the second preceding sentence are
satisfied and the Employee complies with the terms of such agreement, upon the
Employee's death, the
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provisions of Paragraph 5 shall apply as if the Employee's employment with the
Company and its subsidiaries terminated because of such death.
(c) Any shares of (i) Performance Restricted Stock for which a
Release Date has not occurred by the latest date set forth after "Performance
Restricted Stock Release Date" on the signature page (such date being subject to
extension as contemplated in the last sentence of Paragraph 2(c)) and (ii) Time
Vested Restricted Stock for which a Release Date does not occur because the
condition set forth after "Goal" on the signature page is not satisfied, shall
be forfeited to the Company, unless in the case of (i) and (ii) the Committee
determines otherwise as contemplated in subparagraph (a) above.
(d) If Restricted Stock is forfeited, the Employee hereby appoints
the Company, acting through any Vice President or more senior officer, as the
Employee's attorney-in-fact to transfer such forfeited Restricted Stock to the
Company.
7. Beneficiary. (a) The person whose name appears on the signature
page hereof after the caption "Beneficiary" or any successor designated by the
Employee in accordance herewith (the person who is the Employee's Beneficiary at
the time of his death herein referred to as the "Beneficiary") shall be entitled
to receive the Restricted Stock to be released to the Beneficiary under
Paragraphs 3 and 5 as a result of the death of the Employee and the Stock to be
delivered in settlement of RSUs. The Employee may from time to time revoke or
change his Beneficiary without the consent of any prior Beneficiary by filing a
new designation with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Employee's death, and in no event shall any designation
be effective as of a date prior to such receipt.
(b) If no such Beneficiary designation is in effect at the time of
an Employee's death, or if no designated Beneficiary survives the Employee or if
such designation conflicts with law, upon the death of the Employee, the
Employee's estate shall be entitled to receive the Restricted Stock and the
Stock to be delivered in settlement of RSUs. If the Committee is in doubt as to
the right of any person to receive such Restricted Stock or Stock to be
delivered in settlement of RSUs, the Company may retain the same and any
distributions thereon, without liability for any interest thereon, until the
Committee determines the person entitled thereto, or the Company may deliver
such all of such property and any distributions thereon to any court of
appropriate jurisdiction and such delivery shall be a complete discharge of the
liability of the Company therefor.
8. Restricted Stock Legend. In addition to any legends placed on
certificates for Restricted Stock, each certificate or other evidence for shares
of Restricted Stock shall bear the following legend:
"The sale or other transfer of these shares of stock, whether
voluntary, or by operation of law, is subject to certain
restrictions set forth in the MGIC Investment Corporation 2002 Stock
Incentive Plan and a Restricted Stock Agreement between MGIC
Investment Corporation and the registered owner
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hereof. A copy of such Plan and such Agreement may be obtained from
the Secretary of MGIC Investment Corporation."
When the restrictions imposed by Paragraph 2 hereof terminate, the Employee
shall be entitled to have the foregoing legend removed from such Stock.
9. Voting Rights; Dividends and Other Distributions; Rights of RSUs.
(a) While the Restricted Stock is subject to restrictions under Paragraph 2 and
prior to any forfeiture thereof, the Employee may exercise full voting rights
for the Restricted Stock.
(b) While the Restricted Stock is subject to the restrictions under
Paragraph 2 and prior to any forfeiture thereof, the Employee shall be entitled
to receive all dividends and other distributions paid with respect to the
Restricted Stock. If any such dividends or distributions are paid in Stock, such
shares shall be subject to the same restrictions as the shares of Restricted
Stock with respect to which they were paid, including the requirement that
Restricted Stock be held in escrow pursuant to Paragraph 3 hereof.
(c) Subject to the provisions of this Agreement, the Employee shall
have, with respect to the Restricted Stock, all other rights of holders of
Stock.
(d) RSUs represent only the right to receive as Stock, on the terms
provided herein, the number of shares indicated after "Shares of Time Vested
Restricted Stock" on the signature page. Except to the extent forfeited as
provided herein, on the Restricted Stock Units Settlement Date set forth on the
signature page or determined as provided thereon, RSUs shall be settled by the
issuance of shares of Stock and certificates for such Stock shall be delivered
to the Employee, or in the case of his death, to his Beneficiary. The Employee
with respect to RSUs shall have no rights as a holder of Stock, including the
right to vote or to receive dividends, until certificates for such Stock are
actually delivered in settlement of the RSUs. Notwithstanding the preceding
sentence, on each date on which the Company pays a dividend in cash on the
Stock, the Company shall make a payment in cash on the RSUs that are outstanding
on the record date for such dividend equal to the dividend that would have been
paid on the number of shares indicated after "Shares of Time Vested Restricted
Stock" on the signature page had such shares been outstanding.
10. Tax Withholding. (a) It shall be a condition of the obligation
of the Company to release from escrow Restricted Stock to the Employee or the
Beneficiary or to deliver Stock in settlement of RSUs, and the Employee agrees,
that the Employee shall pay to the Company upon its demand, such amount as may
be requested by the Company for the purpose of satisfying its liability to
withhold federal, state, or local income or other taxes incurred by reason of
the award of the Restricted Stock or RSUs, as a result of the termination of the
restrictions on Restricted Stock hereunder or the delivery of Stock in
settlement of RSUs.
(b) If the Employee does not make an election under Section 83(b) of
the Internal Revenue Code of 1986, as amended, with respect to the Restricted
Stock awarded hereunder, and does not satisfy the withholding obligations prior
to the Tax Date (as defined below) by paying sufficient cash to the Company or
transferring ownership of a sufficient
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number of other shares of Stock to the Company as provided in Paragraph 10(c),
then the withholding tax requirements arising from the termination of
restrictions on the Restricted Stock or the settlement of RSUs in Stock shall be
satisfied through a withholding by the Company of shares of Stock that would
otherwise be delivered to the Employee. In such event, the Company shall
withhold that number of shares of Restricted Stock otherwise deliverable to the
Employee from escrow hereunder or that number of shares of Stock that would
otherwise be delivered in settlement of RSUs, in each case, having a Fair Market
Value (as such term is defined in the Plan) on the day prior to the Tax Date
equal to the amount required to be withheld as a result of the termination of
the restrictions on such Restricted Stock or as a result of the settlement of
RSUs in Stock. As used herein, "Tax Date" means the date on which the Employee
must include in his gross income for federal income tax purposes the fair market
value of the Restricted Stock, or Stock delivered in settlement of the RSUs,
over the purchase price therefor.
(c) If the Employee desires to use cash or other shares of Stock to
satisfy the withholding obligations set forth above, the Employee must: (i) make
an election to do so in writing on a form provided by the Company, (ii) deliver
such election form to the Company by the deadline specified by the Company, and
(iii) deliver to the company the required cash or other shares of Stock having a
Fair Market Value on the Tax Date (as defined above) equal to the amount
required to be withheld.
11. Adjustments in Event of Change in Stock or Fiscal Year. In the
event of any change in the outstanding shares of Stock ("capital adjustment")
for any reason, including but not limited to, any stock splits, stock dividend,
recapitalization, merger, consolidation, reorganization, combination or exchange
of shares or other similar event which, in the judgment of the Committee, could
distort the implementation of the award of Restricted Stock or the award of RSUs
or the realization of the objectives of such award, the Committee may make such
adjustments in the shares of Restricted Stock subject to this Agreement or in
the shares deliverable on settlement of RSUs, or in the terms, conditions or
restrictions of this Agreement, including the Target and the Goal set forth on
the signature page, as the Committee deems equitable. In addition, if the
Company changes its fiscal year from a year ending December 31, the Committee
may make such adjustments in the Performance Restricted Stock Release Date and
the Target as the Committee deems equitable.
12. Change in Control. If a "Change in Control of the Company" (as
defined in the Annex attached hereto) occurs, notwithstanding anything herein,
the restrictions of Paragraph 2 applicable to the Restricted Stock shall
terminate on the date of the Change in Control of the Company and a Release Date
shall be deemed to have occurred for all RSUs. The Employee agrees that such
Annex may be amended by the Company on one or more occasions without the consent
or approval of the Employee if in the determination of the Committee such
amendment is necessary or appropriate to conform the provisions of such Annex to
the IRS Notice (as defined in such Annex), any regulations issued by the IRS
under Section 409A of the Internal Revenue Code of 1986 (which was added by the
American Jobs Creation Act of 2004) or any position published by the IRS with
respect to such Section. The right of the Company to make such an amendment does
not depend on whether the Restricted Stock or RSUs are subject to such Section
but will enable the Company to have uniform provisions governing a change of
control among all agreements having such change of control provisions, including
those under
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which compensation is subject to such Section. Any such amendment will become
effective upon notice to the Employee. The Company will seek to give the
Employee notice of an amendment with reasonable promptness after the Committee
has approved the amendment.
13. Powers of Company Not Affected; No Right to Continued
Employment.
(a) The existence of the Restricted Stock or RSUs shall not affect
in any way the right or power of the Company or its stockholders to make or
authorize any combination, subdivision or reclassification of the Stock or any
reorganization, merger, consolidation, business combination, exchange of shares,
or other change in the Company's capital structure or its business, or any issue
of bonds, debentures or stock having rights or preferences equal, superior or
affecting the Restricted Stock or any Stock to be issued in settlement of RSUs
or, in both cases, the rights thereof, or dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise. The determination of the Committee as to any such adjustment shall be
conclusive and binding for all purposes of this Agreement.
(b) Nothing herein contained shall confer upon the Employee any
right to continue in the employment of the Company or any subsidiary or
interfere with or limit in any way the right of the Company or any subsidiary to
terminate the Employee's employment at any time, subject, however, to the
provisions of any agreement of employment between the Company or any subsidiary
and the Employee. The Employee acknowledges that a termination of his or her
employment could occur at a time before which the restrictions referred to in
Paragraph 2 above have lapsed, resulting in the forfeiture of the Restricted
Stock and RSUs by the Employee, unless otherwise provided herein. In such event,
the Employee will not be able to realize the value of the Restricted Stock or of
the Stock that underlies the RSUs nor will the Employee be entitled to any
compensation on account of such value.
14. Interpretation by Committee. The Employee agrees that any
dispute or disagreement which may arise in connection with this Agreement shall
be resolved by the Committee, in its sole discretion, and that any
interpretation by the Committee of the terms of this Agreement or the Plan and
any determination made by the Committee under this Agreement or the Plan may be
made in the sole discretion of the Committee and shall be final, binding, and
conclusive. Any such determination need not be uniform and may be made
differently among Employees awarded Restricted Stock and RSUs.
15. Miscellaneous. (a) This Agreement shall be governed and
construed in accordance with the laws of the State of Wisconsin applicable to
contracts made and to be performed therein between residents thereof.
(b) The waiver by the Company of any provision of this Agreement
shall not operate or be construed to be a subsequent waiver of the same
provision or waiver of any other provision hereof.
(c) The Restricted Stock and RSUs shall be deemed to have been
awarded pursuant to the Plan and is subject to the terms and conditions thereof.
In the event of any
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conflict between the terms hereof and the provisions of the Plan, the terms and
conditions of the Plan shall prevail. Any and all terms used herein, unless
specifically defined herein shall have the meaning ascribed to them in the Plan.
A copy of the Plan is available on request of the Employee made in writing or by
e-mail to the Company's Secretary.
(d) Any notice, filing or delivery hereunder or with respect to
Restricted Stock or RSUs shall be given to the Employee at either his usual work
location or his home address as indicated in the records of the Company, and
shall be given to the Committee or the Company at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Avenue,
Milwaukee 53202, Attention: Secretary. All such notices shall be given by first
class mail, postage pre-paid, or by personal delivery.
(e) This Agreement shall be binding upon and inure to the benefit of
the Company and its successors and assigns and shall be binding upon and inure
to the benefit of the Employee, the Beneficiary and the personal
representative(s) and heirs of the Employee, except that the Employee may not
transfer any interest in any Restricted Stock prior to the release of the
restrictions imposed by Paragraph 2 nor may the Employee transfer any interest
in any RSUs.
(f) As a condition to the grant of the Restricted Stock and RSUs,
the Employee must execute an agreement not to compete in the form provided to
the Employee by the Company.
The end of Paragraph 15 is the end of the Incorporated Terms. The
remainder of the Agreement is contained in the Base Instrument.
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ANNEX
DEFINITION OF "CHANGE IN CONTROL OF THE COMPANY" AND RELATED TERMS
1 Change in Control of the Company. A "Change in Control of the Company"
shall be deemed to have occurred if an event set forth in any one of the
following paragraphs shall have occurred:
(i) any Person (other than (A) the Company or any of its
subsidiaries, (B) a trustee or other fiduciary holding securities
under any employee benefit plan of the Company or any of its
subsidiaries, (C) an underwriter temporarily holding securities
pursuant to an offering of such securities or (D) a corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock in
the Company ("Excluded Persons")) is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates
after July 22, 1999, pursuant to express authorization by the Board
of Directors of the Company (the "Board") that refers to this
exception) representing more than 50% of the total fair market value
of the stock of the Company or representing 50% or more of the total
voting power of the stock of the Company; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors of the Company then
serving: (A) individuals who, on July 22, 1999, constituted the
Board and (B) any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company,
as such terms are used in Rule 14a-11 of Regulation 14A under the
Act) whose appointment or election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at
least a majority of the directors then still in office who either
were directors on July 22, 1999, or whose initial appointment,
election or nomination for election as a director which occurred
after July 22, 1999 was approved by such vote of the directors then
still in office at the time of such initial appointment, election or
nomination who were themselves either directors on July 22, 1999 or
initially appointed, elected or nominated by such majority vote as
described above ad infinitum (collectively the "Continuing
Directors"); provided, however, that individuals who are appointed
to the Board pursuant to or in accordance with the terms of an
agreement relating to a merger, consolidation, or share exchange
involving the Company (or any direct or indirect subsidiary of the
Company) shall not be Continuing Directors for purposes of this
Agreement until after such individuals are first nominated for
election by a vote of at least a majority of the then Continuing
Directors and are thereafter elected as directors by the
Annex - Page 1 of 4
shareholders of the Company at a meeting of shareholders held
following consummation of such merger, consolidation, or share
exchange; and, provided further, that in the event the failure of
any such persons appointed to the Board to be Continuing Directors
results in a Change in Control of the Company, the subsequent
qualification of such persons as Continuing Directors shall not
alter the fact that a Change in Control of the Company occurred; or
(iii) a merger, consolidation or share exchange of the Company
with any other corporation is consummated or voting securities of
the Company are issued in connection with a merger, consolidation or
share exchange of the Company (or any direct or indirect subsidiary
of the Company) pursuant to applicable stock exchange requirements,
other than (A) a merger, consolidation or share exchange which would
result in the voting securities of the Company entitled to vote
generally in the election of directors outstanding immediately prior
to such merger, consolidation or share exchange continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent
thereof) at least 50% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent
thereof entitled to vote generally in the election of directors of
such entity or parent outstanding immediately after such merger,
consolidation or share exchange, or (B) a merger, consolidation or
share exchange effected to implement a recapitalization of the
Company (or similar transaction) in which no Person (other than an
Excluded Person) is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates after July 22, 1999,
pursuant to express authorization by the Board that refers to this
exception) representing at least 50% of the combined voting power of
the Company's then outstanding voting securities entitled to vote
generally in the election of directors; or
(iv) the sale or disposition by the Company of all or
substantially all of the Company's assets (in one transaction or a
series of related transactions within any period of 24 consecutive
months), other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity of which at
least 75% of the combined voting power of the voting securities
entitled to vote generally in the election of directors (or such
lower percentage as is determined under the IRS Notice) immediately
after such sale are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to
such sale. It is understood that in no event shall a sale or
disposition of assets be considered to be a sale of substantially
all of the assets unless the assets sold or disposed of have a total
gross fair market value of at least 40% of the total gross fair
market value of all of the Company's assets immediately prior to
such sale or disposition.
Annex - Page 2 of 4
2 Related Definitions. For purposes of this Annex, the following terms,
when capitalized, shall have the following meanings:
(i) Act. The term "Act" means the Securities Exchange Act of
1934, as amended.
(ii) Affiliate and Associate. The terms "Affiliate" and
"Associate" shall have the respective meanings ascribed to such
terms in Rule l2b-2 of the General Rules and Regulations under the
Act.
(iii) Beneficial Owner. A Person shall be deemed to be the
"Beneficial Owner" of any securities:
(a) which such Person or any of such Person's Affiliates
or Associates has the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, (A) securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase, or (B)
securities issuable upon exercise of Rights issued pursuant to
the terms of the Company's Rights Agreement, dated as of July
22, 1999, between the Company and ▇▇▇▇▇ Fargo Bank Minnesota,
National Association (as successor Rights Agent), as amended
from time to time (or any successor to such Rights Agreement),
at any time before the issuance of such securities;
(b) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule l3d-3 of the General Rules and Regulations
under the Act), including pursuant to any agreement,
arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to
beneficially own, any security under this Subsection 1 (c) as
a result of an agreement, arrangement or understanding to vote
such security if the agreement, arrangement or understanding:
(A) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Act and (B) is not
also then reportable on a Schedule l3D under the Act (or any
comparable or successor report); or
(c) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
of such Person's Affiliates or
Annex - Page 3 of 4
Associates has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting (except pursuant to
a revocable proxy as described in Subsection 1(c) (ii) above)
or disposing of any voting securities of the Company.
(iv) IRS Notice. The term "IRS Notice" shall mean the IRS
Notice 2005-1, which was issued with respect to the American Jobs
Creation Act of 2004.
(v) Person. The term "Person" shall mean any individual, firm,
partnership, corporation or other entity, including any successor
(by merger or otherwise) of such entity, or a group of any of the
foregoing acting in concert.
(vi) Stock. The term "stock" shall have the meaning
contemplated by the IRS Notice.
Annex - Page 4 of 4