GANDER MOUNTAIN COMPANY
2004 OMNIBUS STOCK PLAN
As approved by the shareholders on
Purpose. The purpose of the Amended
and Restated Gander Mountain Company 2004 Omnibus Stock Plan (the “Plan”)
is to promote the interests of the Company and its shareholders by providing
key personnel of the Company and its Affiliates with an opportunity to acquire
a proprietary interest in the Company and reward them for achieving a high
level of performance and thereby develop a stronger incentive to put forth
maximum effort for the continued success and growth of the Company and its
Affiliates. In addition, the opportunity to acquire a proprietary
interest in the Company will aid in attracting and retaining key personnel of
outstanding ability. The Plan is also intended to provide Outside
Directors with an opportunity to acquire a proprietary interest in the Company,
to compensate Outside Directors, consultants and advisors for their
contribution to the Company and to aid in attracting and retaining Outside
Directors and qualified consultants and advisors.
The capitalized terms
used elsewhere in the Plan have the meanings set forth below.
means any corporation that is a “parent corporation” or “subsidiary
corporation” of the Company, as those terms are defined in Code Sections
424(e) and (f), or any successor provisions.
means a written contract (i) consistent with the terms of the Plan entered
into between the Company or an Affiliate and a Participant and
(ii) containing the terms and conditions of an Award in such form and not
inconsistent with the Plan as the Committee shall approve from time to time,
together with all amendments thereto, which amendments may be unilaterally made
by the Company (with the approval of the Committee) unless such amendments are
deemed by the Committee to be materially adverse to the Participant and not
required as a matter of law.
“Award” or “Awards”
means a grant made under the Plan in the form of Restricted Stock, Options,
Stock Appreciation Rights, Performance Units, Stock or any other
the Board of Directors of the Company.
the Internal Revenue Code of 1986, as amended and in effect from time to time
or any successor statute.
means two or more Non-Employee Directors designated by the Board to administer
the Plan under Section 3.1 of the Plan and constituted so as to permit
grants thereby to comply with Exchange Act Rule 16b-3 and Code
Gander Mountain Company, a Minnesota
corporation, or any successor to all or substantially all of its businesses by
merger, consolidation, purchase of assets or otherwise.
means the date specified in Section 12.1 of the Plan.
means an employee (including an officer or director who is also an employee) of
the Company or an Affiliate.
means the Securities Exchange Act of 1934, as amended and in effect from time
to time or any successor statute.
Rule 16b-3” means Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, as now in force and in effect from
time to time or any successor regulation.
“Fair Market Value”
as of any date means, unless otherwise expressly provided in the Plan:
the closing sale price of a Share on the
date of grant, or, if no sale of Shares shall have occurred on that date, on
the next preceding day on which a sale of Shares occurred
on the composite tape
for New York Stock Exchange listed shares, or
if the Shares are not
quoted on the composite tape for New York Stock Exchange listed shares, on the
principal United States Securities Exchange registered under the Exchange Act
on which the Shares are listed, or
if the Shares are not
listed on any such exchange, on the National Association of Securities
Dealers, Inc. Automated Quotations National Market System or any system
then in use, or
if clause (i) is inapplicable, the
mean between the closing “bid” and the closing “asked” quotation of a Share on
the date immediately preceding that date, or, if no closing bid or asked
quotation is made on that date, on the next preceding day on which a closing
bid and asked quotation is made, on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use, or
if clauses (i) and (ii) are
inapplicable, what the Committee determines in good faith to be 100% of the
fair market value of a Share on that date, using such criteria as it shall
determine, in its sole discretion, to be appropriate for valuation.
if the applicable securities exchange or system has closed for the day at the
time the event occurs that triggers a determination of Fair Market Value,
whether the grant of an Award, the exercise of an Option or Stock Appreciation
Right or otherwise, all references in this paragraph to the “date immediately
preceding that date” shall be deemed to be references to “that date.” In
the case of an Incentive Stock Option, if this determination of Fair Market
Value is not consistent with the then current regulations of the Secretary of
the Treasury, Fair Market Value shall be determined in accordance with those
regulations. The determination of Fair Market Value shall be subject to
adjustment as provided in Section 16 of the Plan.
means a dissolution or liquidation of the Company, a sale of substantially all
of the assets of the Company, a merger or consolidation of the Company with or
into any other corporation, regardless of whether the Company is the surviving
corporation, or a statutory share exchange involving capital stock of the
Option” means any Option designated as such and granted in accordance with
the requirements of Code Section 422 or any successor provision.
“Insider” as of
a particular date means any person who, as of that date is an officer of the
Company as defined under Exchange Act Rule 16a-1(f) or its successor
Director” means a member of the Board who is considered a non-employee
director within the meaning of Exchange Act Rule 16b-3(b)(3) or its
successor provision and an outside director for purposes of Code Section 162(m).
Stock Option” means an Option other than an Incentive Stock Option.
a right to purchase Stock, including both Non-Statutory Stock Options and
Incentive Stock Options.
means a director who is not an Employee.
means a person or entity to whom an Award is or has been made in accordance
with the Plan.
means the period of time as specified in an Agreement over which Performance
Units are to be earned.
means an Award made pursuant to Section 11 of the Plan.
this Amended and Restated Gander Mountain Company 2004 Omnibus Stock Plan, as
may be amended and in effect from time to time.
means Stock granted under Section 7 of the Plan so long as such Stock
remains subject to one or more restrictions.
or “Section 16(b)” means Section 16 or Section 16(b),
respectively, of the Exchange Act or any successor statute and the
rules and regulations promulgated thereunder as in effect and as amended
from time to time.
“Share” means a
share of Stock.
the Series B Nonvoting Common Stock, par value $.01 per share, of the
Right” means a right, the value of which is determined in relation to the
appreciation in value of Shares pursuant to an Award granted under
Section 10 of the Plan.
means a “subsidiary corporation,” as that term is defined in Code
Section 424(f) or any successor provision.
with respect to a Participant means the legal representative of an incompetent
Participant, and if the Participant is deceased the estate of the Participant
or the person or persons who may, by bequest or inheritance, or pursuant to the
terms of an Award, acquire the right to exercise an Option or Stock
Appreciation Right or to receive cash and/or Shares issuable in satisfaction of
an Award in the event of the Participant’s death.
the period during which an Option or Stock Appreciation Right may be exercised
or the period during which the restrictions or terms and conditions placed on
Restricted Stock or any other Award are in effect.
means any member of the Participant’s immediate family (i.e., his or her
children, step-children, grandchildren and spouse) or one or more trusts for
the benefit of such family members or partnerships in which such family members
are the only partners.
Gender and Number. Except when otherwise indicated by the
context, reference to the masculine gender shall include, when used, the
feminine gender and any term used in the singular shall also include the
The Committee shall
administer the Plan. The Committee shall have exclusive power to
(i) make Awards, (ii) determine when and to whom Awards will be
granted, the form of each Award, the amount of each Award, and any other terms
or conditions of each Award consistent with the Plan, and (iii) determine
whether, to what extent and under what circumstances, Awards may be settled,
paid or exercised in cash, Shares or other Awards, or other property or
canceled, forfeited or suspended. Each Award shall be subject to an
Agreement authorized by the Committee. A majority of the members of the
Committee shall constitute a quorum for any meeting of the Committee, and acts
of a majority of the members present at any meeting at which a quorum is
present or the acts unanimously approved in writing by all members of the
Committee shall be the acts of the Committee. Notwithstanding the
foregoing, the Board shall have the sole and exclusive power to administer the
Plan with respect to Awards granted to Outside Directors and, except to the
extent that the grant or exercise of such authority would cause any Award or
transaction to become subject to (or lose an exemption under) the short-swing
profit recovery provisions of Section 16 of the Exchange Act, the Board
may, at any time and from time
time, without any further action of the Committee, exercise the powers and
duties of the Committee under the Plan. To the extent that any permitted
action taken by the Board conflicts with action taken by the Committee, the
Board action will control.
Solely for purposes of
determining and administering Awards to Participants who are not Insiders, the
Committee may delegate all or any portion of its authority under the Plan to
one or more persons who are not Non-Employee Directors.
To the extent within
its discretion and subject to Sections 15 and 16 of the Plan, other than price,
the Committee may amend the terms and conditions of any outstanding Award.
It is the intent that
the Plan and all Awards granted pursuant to it shall be administered by the
Committee so as to permit the Plan and Awards to comply with Exchange Act
Rule 16b-3, except in such instances as the Committee, in its discretion,
may so provide. If any provision of the Plan or of any Award would
otherwise frustrate or conflict with the intent expressed in this
Section 3.1(d), that provision to the extent possible shall be interpreted
and deemed amended in the manner determined by the Committee so as to avoid the
conflict. To the extent of any remaining irreconcilable conflict with
this intent, the provision shall be deemed void as applicable to Insiders to
the extent permitted by law and in the manner deemed advisable by the Committee.
interpretation of the Plan and of any Award or Agreement made under the Plan
and all related decisions or resolutions of the Board or Committee shall be
final and binding on all parties with an interest therein. Consistent
with its terms, the Committee shall have the power to establish, amend or waive
regulations to administer the Plan. In carrying out any of its
responsibilities, the Committee shall have discretionary authority to construe
the terms of the Plan and any Award or Agreement made under the Plan.
Indemnification. Each person who is or shall have been a member
of the Committee, or of the Board, and any other person to whom the Committee
delegates authority under the Plan, shall be indemnified and held harmless by
the Company, to the extent permitted by law, against and from any loss, cost,
liability or expense that may be imposed upon or reasonably incurred by such
person in connection with or resulting from any claim, action, suit or
proceeding to which such person may be a party or in which such person may be
involved by reason of any action taken or failure to act, made in good faith,
under the Plan and against and from any and all amounts paid by such person in
settlement thereof, with the Company’s approval, or paid by such person in
satisfaction of any judgment in any such action, suit or proceeding against
such person, provided such person shall give the Company an opportunity, at the
Company’s expense, to handle and defend the same before such person undertakes
to handle and defend it on such person’s own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of
indemnification to which such person or persons may be entitled under the
Company’s Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
Under the Plan.
The number of Shares
available for distribution under the Plan shall not exceed 4,000,000 (subject
to adjustment pursuant to Section 16 of the Plan).
Any Shares subject to
the terms and conditions of an Award under the Plan that are not used because
the terms and conditions of the Award are not met may again be used for an
Award under the Plan; provided however, that Shares with respect to which a
Stock Appreciation Right has been exercised whether paid in cash and/or in
Shares may not again be awarded under the Plan.
Any unexercised or
undistributed portion of any terminated, expired, exchanged, or forfeited
Award, or any Award settled in cash in lieu of Shares (except as provided in
Section 4(b) of the Plan) shall be available for further Awards.
For the purposes of
computing the total number of Shares granted under the Plan, the following
rules shall apply to Awards payable in Shares where appropriate:
each Option shall be
deemed to be the equivalent of the maximum number of Shares that may be issued
upon exercise of the particular Option;
an Award (other than
an Option) payable in some other security shall be deemed to be equal to the
number of Shares to which it relates;
where the number of
Shares available under the Award is variable on the date it is granted, the
number of Shares shall be deemed to be the maximum number of Shares that could
be received under that particular Award; and
where two or more
types of Awards (all of which are payable in Shares) are granted to a
Participant in tandem with each other, such that the exercise of one type of
Award with respect to a number of Shares cancels at least an equal number of
Shares of the other, each such joint Award shall be deemed to be the equivalent
of the maximum number of Shares available under the largest single Award.
rules for determining the number of Shares granted under the Plan may be
made by the Committee as it deems necessary or desirable.
No fractional Shares
may be issued under the Plan; however, cash shall be paid in lieu of any
fractional Share in settlement of an Award.
The maximum number of
Shares that may be awarded to a Participant in any calendar year in the form of
Options is 2,000,000 and the maximum number of Shares that may be awarded to a
Participant in any calendar year in the form of Stock Appreciation Rights is
Eligibility. Participation in the Plan shall be limited to
Employees and to individuals or entities who are not Employees but who provide
services to the Company or an Affiliate, including services provided in
the capacity of a consultant, advisor or director. The granting of Awards
is solely at the discretion of the Committee, except that Incentive Stock
Options may only be granted to Employees. References herein to
“employed,” “employment” or similar terms (except “Employee”) shall include the
providing of services in any capacity or as a director or director emeritus.
Neither the transfer of employment of a Participant between any of the Company
or its Affiliates, nor a leave of absence granted to such Participant and
approved by the Committee, shall be deemed a termination of employment for
purposes of the Plan.
General Terms of
Amount of Award. Each Agreement shall set forth the number of
Shares of Restricted Stock, Stock or Performance Units subject to the
Agreement, or the number of Shares to which the Option subject to the Agreement
applies or with respect to which payment upon the exercise of the Stock
Appreciation Right subject to the Agreement is to be determined, as the case
may be, together with such other terms and conditions applicable to the Award
as determined by the Committee acting in its sole discretion.
Term. Each Agreement, other than those relating
solely to Awards of Shares without restrictions, shall set forth the Term of
the Option, Stock Appreciation Right, Restricted Stock or other Award or the
Performance Cycle for the Performance Units, as the case may be.
Acceleration of the expiration of the applicable Term is permitted, upon such
terms and conditions as shall be set forth in the Agreement, which may, but
need not, include, without limitation, acceleration in the event of the Participant’s
death or retirement. Acceleration of the Performance Cycle of the
Performance Units will be subject to Section 11.2 of the Plan.
Transferability. Except as provided in this Section, during the
lifetime of a Participant to whom an Award is granted, only that Participant
(or that Participant’s legal representative) may exercise an Option or Stock
Appreciation Right, or receive payment with respect to Performance Units or any
other Award. No Award of Restricted Stock (before the expiration of the
restrictions), Options, Stock Appreciation Rights, Performance Units or other
Award may be sold, assigned, transferred, exchanged or otherwise encumbered
other than to a Successor in the event of a Participant’s death or pursuant to
a qualified domestic relations order as defined in the Code or Title 1 of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
or the rules thereunder; any attempted transfer in violation of
this Section 6.3
shall be of no effect. Notwithstanding the immediately preceding
sentence, the Committee, in an Agreement or otherwise at its discretion, may
provide that the Award (other than Incentive Stock Options) may be transferable
to a Transferee if the Participant does not receive any consideration for the
transfer. Any Award held by a Transferee shall continue to be subject to
the same terms and conditions that were applicable to that Award immediately
before the transfer thereof to the Transferee. For purposes of any
provision of the Plan relating to notice to a Participant or to acceleration or
termination of an Award upon the death, disability or termination of employment
of a Participant, the references to “Participant” shall mean the original
grantee of an Award and not any Transferee.
Termination of Employment. Except as otherwise determined by the
Committee or provided by the Committee in an Agreement, in case of a
Participant’s termination of employment, the following provisions shall apply:
Options and Stock Appreciation Rights.
If a Participant’s employment or other
relationship with the Company and its Affiliates terminates because of the
Participant’s death, then any Option or Stock Appreciation Right that has not
expired or been terminated shall remain exercisable for one year after
Participant’s death, but, unless otherwise provided in the Agreement, only to
the extent that such Option or Stock Appreciation Right was exercisable
immediately prior to Participant’s death.
If a Participant’s employment or other
relationship with the Company and its Affiliates terminates because the
Participant is disabled (within the meaning of Section 22(e)(3) of
the Code), then any Option or Stock Appreciation Right that has not expired or
been terminated shall remain exercisable for one year after Participant’s
termination of employment resulting from Participant’s disability, but, unless
otherwise provided in the Agreement, only to the extent that such Option or
Stock Appreciation Right was exercisable immediately prior to such
Participant’s termination of employment resulting from Participant’s
If a Participant’s employment terminates
for any reason other than death or disability, then any Option or Stock
Appreciation Right that has not expired or been terminated shall remain
exercisable for three months after termination of the Participant’s employment
or Participant’s cessation of service as an Outside Director or director
emeritus, whichever occurs later, but, unless otherwise provided in the Agreement,
only to the extent that such Option or Stock Appreciation Right was exercisable
immediately prior to such Participant’s termination of employment or ceasing to
be an Outside Director or director emeritus.
Notwithstanding Sections 6.4(a)(i),
(ii) and (iii) of the Plan, in no event shall an Option or a Stock
Appreciation Right be exercisable after the expiration of the Term of such
Award. Any Option or Stock Appreciation Right that is not exercised
within the periods set forth in Sections 6.4 (i), (ii) and
(iii) of the Plan, except as otherwise provided by the Committee in the
Agreement, shall terminate as of the end of the periods described in such
Performance Units. If a Participant’s employment or other
relationship with the Company and its Affiliates terminates during a
Performance Cycle because of death or disability, or under other circumstances
provided by the Committee in its discretion in the Agreement or otherwise, the
Participant, unless the Committee shall otherwise provide in the Agreement,
shall be entitled to a payment with respect to the Performance Units at the end
of the Performance Cycle based upon the extent to which achievement of
performance targets was satisfied at the end of such period (as determined at
the end of the Performance Cycle) and prorated for the portion of the
Performance Cycle during which the Participant was employed by the Company or
its Affiliates. Except as provided in this Section 6.4(b) or in
the Agreement, if a Participant’s employment or other relationship with the
Company and its Affiliates terminates during a Performance Cycle, then such
Participant shall not be entitled to any payment with respect to that Performance
Restricted Stock Awards. Unless otherwise provided in the Agreement, in
case of a Participant’s death or disability, the Participant shall be entitled
to receive a number of Shares of Restricted Stock under outstanding Awards that
has been prorated for the portion of the Term of the Awards during which the
Participant was employed by the Company and its Affiliates, and, with respect
to such Shares, all restrictions shall lapse. Any Shares of Restricted
Stock as to which restrictions do not lapse under the preceding sentence shall
terminate at the date of the Participant’s termination of employment and such
Shares of Restricted Stock shall be forfeited to the Company.
Rights as Shareholder. Each Agreement shall provide that a
Participant shall have no rights as a shareholder with respect to any
securities covered by an Award unless and until the date the Participant
becomes the holder of record of the Stock, if any, to which the Award relates.
An Award of Restricted
Stock under the Plan shall consist of Shares subject to restrictions on
transfer and conditions of forfeiture, which restrictions and conditions shall
be included in the applicable Agreement. The Committee may provide for
the lapse or waiver of any such restriction or condition based on such factors
or criteria as the Committee, in its sole discretion, may determine.
Except as otherwise
provided in the applicable Agreement, each Stock certificate issued with
respect to an Award of Restricted Stock shall either be deposited with the
Company or its designee, together with an assignment separate from the
certificate, in blank, signed by the Participant, or bear such legends with
respect to the restricted nature of the Restricted Stock evidenced thereby as
shall be provided for in the applicable Agreement.
The Agreement shall
describe the terms and conditions by which the restrictions and conditions of
forfeiture upon awarded Restricted Stock shall lapse. Upon the lapse of
the restrictions and conditions, Shares free of restrictive legends, if any,
relating to such restrictions shall be issued to the Participant or a Successor
A Participant or a
Transferee with a Restricted Stock Award shall have all the other rights of a
shareholder including, but not limited to, the right to receive dividends and
the right to vote the Shares of Restricted Stock.
No more than 2,000,000
of the total number of Shares available for Awards under the Plan shall be issued
during the term of the Plan as Restricted Stock. This limitation shall be
calculated pursuant to the applicable provisions of Sections 4 and 16 of the
Other Awards. The Committee may from time
to time grant Stock and other Awards under the Plan including, without
limitation, those Awards pursuant to which Shares are or may in the future be
acquired, Awards denominated in Stock units, securities convertible into Stock
and phantom securities. The Committee, in its sole discretion, shall
determine the terms and conditions of such Awards provided that such Awards
shall not be inconsistent with the terms and purposes of the Plan. The
Committee may, at its sole discretion, direct the Company to issue Shares
subject to restrictive legends and/or stop transfer instructions that are
consistent with the terms and conditions of the Award to which the Shares
relate. No more than 500,000 of the total number of Shares available for
Awards under the Plan shall be issued during the term of the Plan in the form
of Stock without restrictions.
Terms of All Options.
An Option shall be
granted pursuant to an Agreement as either an Incentive Stock Option or a
Non-Statutory Stock Option. The purchase price of each Share subject to
an Option shall be determined by the Committee and set forth in the Agreement,
but shall not be less than 100% of the Fair Market Value of a Share as of the
date the Option is granted (except as provided in Sections 9.2 and 19 of the
Plan or as otherwise determined by the Committee in its discretion).
The purchase price of
the Shares with respect to which an Option is exercised shall be payable in
full at the time of exercise, provided that to the extent permitted by law, the
Agreement may permit some or all Participants to simultaneously exercise
Options and sell the
thereby acquired pursuant to a brokerage or similar relationship and use the
proceeds from the sale as payment of the purchase price of the Shares.
The purchase price may be payable in cash, by delivery or tender of Shares
having a Fair Market Value as of the date the Option is exercised equal to the
purchase price of the Shares being purchased pursuant to the Option, or a
combination thereof, as determined by the Committee, but no fractional Shares
will be issued or accepted. Provided, however, that a Participant
exercising a stock option shall not be permitted to pay any portion of the
purchase price with Shares if, in the opinion of the Committee, payment in such
manner could have adverse financial accounting consequences for the Company.
The Committee may
provide, in an Agreement or otherwise, that a Participant who exercises an
Option and pays the Option price in whole or in part with Shares then owned by
the Participant will be entitled to receive another Option covering the same
number of shares tendered and with a price of no less than Fair Market Value on
the date of grant of such additional Option (“Reload Option”).
Unless otherwise provided in the Agreement, a Participant, in order to be
entitled to a Reload Option, must pay with Shares that have been owned by the
Participant for at least the preceding 180 days.
Each Option shall be
exercisable in whole or in part on the terms provided in the Agreement.
In no event shall any Option be exercisable at any time after the expiration of
its Term. When an Option is no longer exercisable, it shall be deemed to
have lapsed or terminated.
Incentive Stock Options. In addition to the other terms and conditions
applicable to all Options:
the purchase price of
each Share subject to an Incentive Stock Option shall not be less than 100% of
the Fair Market Value of a Share as of the date the Incentive Stock Option is
granted if this limitation is necessary to qualify the Option as an Incentive
Stock Option (except as provided in Section 19 of the Plan);
the aggregate Fair
Market Value (determined as of the date the Option is granted) of the Shares
with respect to which Incentive Stock Options held by an individual first
become exercisable in any calendar year (under the Plan and all other incentive
stock option plans of the Company and its Affiliates) shall not exceed $100,000
(or such other limit as may be required by the Code) if this limitation is
necessary to qualify the Option as an Incentive Stock Option and to the extent
any Option granted to a Participant exceeds this limit the Option shall be
treated as a Non-Statutory Stock Option;
an Incentive Stock
Option shall not be exercisable more than 10 years after the date of grant (or
such other limit as may be required by the Code) if this limitation is
necessary to qualify the Option as an Incentive Stock Option;
the Agreement covering
an Incentive Stock Option shall contain such other terms and provisions that
the Committee determines necessary to qualify this Option as an Incentive Stock
other provision of the Plan to the contrary, no Participant may receive an
Incentive Stock Option under the Plan if, at the time the Award is granted, the
Participant owns (after application of the rules contained in Code
Section 424(d), or its successor provision), Shares possessing more than
10% of the total combined voting power of all classes of stock of the Company
or its Subsidiaries, unless (i) the option price for that Incentive Stock
Option is at least 110% of the Fair Market Value of the Shares subject to that
Incentive Stock Option on the date of grant and (ii) that Option is not
exercisable after the date five years from the date that Incentive Stock Option
Award of a Stock Appreciation Right shall entitle the Participant (or a
Successor or Transferee), subject to terms and conditions determined by the
Committee, to receive upon exercise of the Stock Appreciation Right all or a
portion of the excess of (i) the Fair Market Value of a specified number
of Shares as of the date of exercise of the Stock Appreciation Right over
(ii) a specified price that shall not be less than 100% of the Fair Market
Value of such Shares as of the date of grant of the Stock Appreciation
Right. A Stock Appreciation Right may be granted in connection with part
or all of, in addition to, or completely
independent of an Option or any other Award under the
Plan. If issued in connection with a previously or contemporaneously
granted Option, the Committee may impose a condition that exercise of a Stock
Appreciation Right cancels a pro rata portion of the Option with which it is
connected and vice versa. Each Stock Appreciation Right may be
exercisable in whole or in part on the terms provided in the Agreement.
No Stock Appreciation Right shall be exercisable at any time after the
expiration of its Term. When a Stock Appreciation Right is no longer
exercisable, it shall be deemed to have lapsed or terminated. Upon
exercise of a Stock Appreciation Right, payment to the Participant or a
Successor or Transferee shall be made at such time or times as shall be
provided in the Agreement in the form of cash, Shares or a combination of cash
and Shares as determined by the Committee. The Agreement may provide for
a limitation upon the amount or percentage of the total appreciation on which
payment (whether in cash and/or Shares) may be made in the event of the
exercise of a Stock Appreciation Right.
An Award of
Performance Units under the Plan shall entitle the Participant or a Successor
or Transferee to future payments of cash, Shares or a combination of cash and
Shares, as determined by the Committee, based upon the achievement of
pre-established performance targets. These performance targets may, but
need not, include, without limitation, targets relating to one or more of the
Company’s or a group’s, unit’s, Affiliate’s or an individual’s
performance. The Agreement may establish that a portion of a
Participant’s Award will be paid for performance that exceeds the minimum
target but falls below the maximum target applicable to the Award. The
Agreement shall also provide for the timing of the payment.
conclusion or acceleration of each Performance Cycle, the Committee shall
determine the extent to which (i) performance targets have been attained,
(ii) any other terms and conditions with respect to an Award relating to
the Performance Cycle have been satisfied and (iii) payment is due with
respect to an Award of Performance Units.
Acceleration and Adjustment. The Agreement may permit an acceleration of
the Performance Cycle and an adjustment of performance targets and payments
with respect to some or all of the Performance Units awarded to a Participant,
upon the occurrence of certain events, which may, but need not include, without
limitation, a Fundamental Change, a recapitalization, a change in the
accounting practices of the Company, a change in the Participant’s title or
employment responsibilities, the Participant’s death or retirement or, with
respect to payments in Shares with respect to Performance Units, a
reclassification, stock dividend, stock split or stock combination as provided
in Plan Section 16. The Agreement also may provide for a limitation
on the value of an Award of Performance Units that a Participant may receive.
Effective Date and Duration of the
Effective Date. Upon its adoption by the Board, the Plan shall
be submitted for approval by the shareholders of the Company and shall be
effective as of the date of such approval.
Duration of the Plan. The Plan shall remain in effect until all
Stock subject to it shall be distributed, all Awards have expired or lapsed,
the Plan is terminated pursuant to Section 15 of the Plan or the tenth
anniversary of the Effective Date (the “Termination Date”); provided,
however, that Awards made before the Termination Date may be exercised, vested
or otherwise effectuated beyond the Termination Date unless limited in the
Agreement or otherwise. No Award of an Incentive Stock Option shall be
made more than 10 years after the Effective Date (or such other limit as may be
required by the Code) if this limitation is necessary to qualify the Option as
an Incentive Stock Option. The date and time of approval by the Committee
of the granting of an Award shall be considered the date and time at which the
Award is made or granted.
Plan Does Not
Affect Employment Status.
Status as an eligible
Employee shall not be construed as a commitment that any Award will be made
under the Plan to that eligible Employee or to eligible Employees generally.
Nothing in the Plan or
in any Agreement or related documents shall confer upon any Employee or
Participant any right to continue in the employment of the Company or any
Affiliate or constitute any contract of employment or affect any right that the
Company or any
may have to change such person’s compensation, other benefits, job
responsibilities, or title, or to terminate the employment of such person with
or without cause.
Tax Withholding. The Company shall have the
right to withhold from any cash payment under the Plan to a Participant or
other person (including a Successor or a Transferee) an amount sufficient to
cover any required withholding taxes. The Company shall have the right to
require a Participant or other person receiving Shares under the Plan to pay
the Company a cash amount sufficient to cover any required withholding taxes
before actual receipt of those Shares. In lieu of all or any part of a
cash payment from a person receiving Shares under the Plan, the Committee may
permit the individual to cover all or any part of the required withholdings
through a reduction of the number of Shares delivered or delivery or tender
return to the Company of Shares held by the Participant or other person, in
each case valued in the same manner as used in computing the withholding taxes
under the applicable laws.
Modification and Termination of the Plan.
The Board may at any
time and from time to time terminate, suspend or modify the Plan. Except
as limited in (b) below, the Committee may at any time alter or amend any
or all Agreements under the Plan to the extent permitted by law.
suspension, or modification of the Plan will materially and adversely affect
any right acquired by any Participant or Successor or Transferee under an Award
granted before the date of termination, suspension, or modification, unless
otherwise agreed to by the Participant in the Agreement or otherwise, or
required as a matter of law; but it will be conclusively presumed that any
adjustment for changes in capitalization provided for in Section 16 of the
Plan does not adversely affect these rights.
Changes in Capitalization. Subject to any required action by the Company’s shareholders,
appropriate adjustments, so as to prevent enlargement of rights or
inappropriate dilution — (i) in the aggregate number and type of Shares
available for Awards under the Plan, (ii) in the limitations on the number
of Shares that may be issued to an individual Participant as an Option or a
Stock Appreciation Right in any calendar year or that may be issued in the form
of Restricted Stock or Shares without restrictions, (iii) in the number
and type of Shares and amount of cash subject to Awards then outstanding, and
(iv) in the Option price as to any outstanding Options may be made by the
Committee in its sole discretion to give effect to adjustments made in the number
or type of Shares through a Fundamental Change (subject to Section 17 of
the Plan), recapitalization, reclassification, stock dividend, stock split,
stock combination or other relevant change, provided that fractional Shares
shall be rounded to the nearest whole Share.
Fundamental Change. In the event of a proposed
Fundamental Change, the Committee may, but shall not be obligated to:
if the Fundamental
Change is a merger or consolidation or statutory share exchange, make
appropriate provision for the protection of the outstanding Options and Stock
Appreciation Rights by the substitution of options, stock appreciation rights
and appropriate voting common stock of the corporation surviving any merger or
consolidation or, if appropriate, the parent corporation of the Company or such
surviving corporation; or
at least ten days
before the occurrence of the Fundamental Change, declare, and provide written
notice to each holder of an Option or Stock Appreciation Right of the
declaration, that each outstanding Option and Stock Appreciation Right, whether
or not then exercisable, shall be canceled at the time of, or immediately
before the occurrence of the Fundamental Change in exchange for payment to each
holder of an Option or Stock Appreciation Right, within ten days after the
Fundamental Change, of cash equal to (i) for each Share covered by the
canceled Option, the amount, if any, by which the Fair Market Value (as defined
in this Section) per Share exceeds the exercise price per Share covered by such
Option or (ii) for each Stock Appreciation Right, the price determined
pursuant to Section 10, except that Fair Market Value of the Shares as of
the date of exercise of the Stock Appreciation Right, as used in clause
(i) of Section 10 of the Plan, shall be deemed to mean Fair Market
Value for each Share with respect to which the Stock Appreciation Right is
calculated determined in the manner hereinafter referred to in this
Section. At the time of the declaration provided for in the immediately
preceding sentence, each Stock Appreciation Right and each Option shall
immediately become exercisable in full and each person holding an Option
or a Stock
Appreciation Right shall have the right, during the period preceding the time
of cancellation of the Option or Stock Appreciation Right, to exercise the
Option as to all or any part of the Shares covered thereby or the Stock
Appreciation Right in whole or in part, as the case may be. In the event
of a declaration pursuant to this Section 17(b), each outstanding Option
and Stock Appreciation Right granted pursuant to the Plan that shall not have
been exercised before the Fundamental Change shall be canceled at the time of,
or immediately before, the Fundamental Change, as provided in the
declaration. Notwithstanding the foregoing, no person holding an Option
or a Stock Appreciation Right shall be entitled to the payment provided for in
this Section 17(b) if such Option or Stock Appreciation Right shall
have terminated, expired or been cancelled. For purposes of this
Section only, “Fair Market Value” per Share means the cash plus the fair
market value, as determined in good faith by the Committee, of the non-cash
consideration to be received per Share by the shareholders of the Company upon
the occurrence of the Fundamental Change.
Forfeitures. An Agreement may provide
that if a Participant has received or been entitled to payment of cash,
delivery of Shares, or a combination thereof pursuant to an Award within six
months before the Participant’s termination of employment with the Company and
its Affiliates, the Committee, in its sole discretion, may require the Participant
to return or forfeit the cash and/or Shares received with respect to the Award
(or its economic value as of (i) the date of the exercise of Options or
Stock Appreciation Rights, (ii) the date of, and immediately following,
the lapse of restrictions on Restricted Stock or the receipt of Shares without
restrictions or (iii) the date on which the right of the Participant to
payment with respect to Performance Units vests, as the case may be) in the
event of certain occurrences specified in the Agreement. The Committee’s
right to require forfeiture must be exercised within 90 days after discovery of
such an occurrence but in no event later than 15 months after the Participant’s
termination of employment with the Company and its Affiliates. The
occurrences may, but need not, include competition with the Company or any
Affiliate, unauthorized disclosure of material proprietary information of the
Company or any Affiliate, a violation of applicable business ethics policies of
the Company or Affiliate or any other occurrence specified in the Agreement
within the period or periods of time specified in the Agreement.
The Committee may also grant Options, Stock Appreciation Rights, Restricted
Stock or other Awards under the Plan in substitution for, or in connection with
the assumption of, existing options, stock appreciation rights, restricted
stock or other award granted, awarded or issued by another corporation and
assumed or otherwise agreed to be provided for by the Company pursuant to or by
reason of a transaction involving a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation to
which the Company or a Subsidiary is a party. The terms and conditions of
the substitute Awards may vary from the terms and conditions set forth in the
Plan to the extent as the Board at the time of the grant may deem appropriate
to conform, in whole or in part, to the provisions of the awards in substitution
for which they are granted.
Unfunded Plan. The Plan shall be unfunded
and the Company shall not be required to segregate any assets that may at any
time be represented by Awards under the Plan. Neither the Company, its
Affiliates, the Committee, nor the Board of Directors shall be deemed to be a
trustee of any amounts to be paid under the Plan nor shall anything contained
in the Plan or any action taken pursuant to its provisions create or be
construed to create a fiduciary relationship between the Company and/or its
Affiliates, and a Participant or Successor or Transferee. To the
extent any person acquires a right to receive an Award under the Plan, this
right shall be no greater than the right of an unsecured general creditor of
Limits of Liability.
Any liability of the Company to any
Participant with respect to an Award shall be based solely upon contractual
obligations created by the Plan and the Award Agreement.
Except as may be required by law, neither
the Company nor any member of the Board of Directors or of the Committee, nor
any other person participating in any determination of any question under the
Plan, or in the interpretation, administration or application of the Plan,
shall have any liability to any party for any action taken, or not taken, in
good faith under the Plan.
Applicable Legal Requirements. No certificate for Shares distributable pursuant to
the Plan shall be issued and delivered unless the issuance of the certificate
complies with all applicable legal requirements including, without limitation,
compliance with the provisions of applicable state securities laws, the
Securities Act of 1933, as amended and in effect from time
to time or any successor statute, the Exchange Act and the requirements of the
exchanges on which the Company’s Shares may, at the time, be listed.
The Committee may require or permit Participants to elect to defer the issuance
of Shares or the settlement of Awards in cash under such rules and
procedures as it may establish under the Plan. It may also provide that
deferred settlements include the payment or crediting of interest on the
Other Benefit and
Payments and other benefits received by a Participant under an Award made
pursuant to the Plan shall not be deemed a part of a Participant’s regular,
recurring compensation for purposes of the termination, indemnity or severance
pay laws of any country and shall not be included in, nor have any effect on,
the determination of benefits under any other employee benefit plan, contract
or similar arrangement provided by the Company or an Affiliate unless expressly
so provided by such other plan, contract or arrangement, or unless the
Committee expressly determines that an Award or portion of an Award should be
included to accurately reflect competitive compensation practices or to
recognize that an Award has been made in lieu of a portion of competitive cash
To the extent that the transfer of a Participant’s Award at his or her death is
permitted under an Agreement, a Participant’s Award shall be transferable at
death to the estate or to the person who acquires the right to succeed to the
Award by bequest or inheritance.
Requirements of Law.
To the extent that federal laws do not
otherwise control, the Plan and all determinations made and actions taken
pursuant to the Plan shall be governed by the laws of the State of Minnesota without regard
to its conflicts-of-law principles and shall be construed accordingly.
If any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
effect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.