Document:

exv4w2

 

Exhibit 4.2

RANGE RESOURCES CORPORATION

2004 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	 	Page

	1.
	 	Purpose	 	1
	2.
	 	Definitions	 	1
	3.
	 	Administration	 	5
	 
	 	(a)   Authority of the Committee	 	5
	 
	 	(b)   Manner of Exercise of Committee Authority	 	5
	 
	 	(c)   Limitation of Liability	 	6
	4.
	 	Stock Subject to Plan	 	6
	 
	 	(a)   Overall Number of Shares Available for Delivery	 	6
	 
	 	(b)   Application of Limitation to Grants of Options	 	6
	 
	 	(c)   Availability of Shares Not Delivered under Options	 	6
	 
	 	(d)   Stock Offered	 	7
	5.
	 	Eligibility	 	7
	6.
	 	Specific Terms of Options	 	7
	 
	 	(a)   General	 	7
	 
	 	(b)   Options	 	7
	7.
	 	Certain Provisions Applicable to Options	 	7
	 
	 	(a)   Stand-Alone, Additional, Tandem, and Substitute Options	 	7
	 
	 	(b)   Term of Options	 	8
	 
	 	(c)   Form and Timing of Payment under Options; Deferrals	 	8
	 
	 	(d)   Exemptions from Section 16(b) Liability	 	8
	8.
	 	Recapitalization or Reorganization	 	8
	 
	 	(a)   Existence of Plans and Options	 	8
	 
	 	(b)   Subdivision or Consolidation of Shares	 	9
	 
	 	(c)   Corporate Restructuring	 	9
	 
	 	(d)   Change in Control Price	 	10
	 
	 	(e)   Additional Issuances	 	10
	9.
	 	General Provisions	 	11
	 
	 	(a)   Transferability.	 	11
	 
	 	(b)   Changes to this Plan and Options	 	12
	 
	 	(c)   Limitation on Rights Conferred under Plan	 	12
	 
	 	(d)   Unfunded Status of Options	 	12
	 
	 	(e)   Nonexclusivity of this Plan	 	12
	 
	 	(f)   Fractional Shares	 	13
	 
	 	(g)   Severability	 	13

(i )

 

	 	 	 	 	 
	 	 	 	 	Page

	 
	 	(h)   Governing Law	 	13
	 
	 	(i)   Conditions to Delivery of Stock	 	13
	 
	 	(j)   Plan Effective Date; Term	 	14

(ii )

 

RANGE RESOURCES CORPORATION

2004 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

     1. Purpose. The purpose of the Range Resources Corporation 2004 Non-Employee
Director Stock Option Plan (the “Plan”) is to provide a means through which
Range Resources Corporation, a Delaware corporation (the “Company”), may
attract and retain the services of experienced and knowledgeable independent
individuals as members of the Board of Directors of the Company (the “Board”)
and to provide a means whereby those persons upon whom the responsibilities of
the successful administration and management of the Company rest, and whose
present and potential contributions to the welfare of the Company are of
importance, can acquire and maintain Stock ownership, thereby strengthening
their concern for the welfare of the Company and their desire to remain in its
service. A further purpose of this Plan is to provide such directors with
additional incentive and reward opportunities designed to enhance the
profitable growth of the Company. Accordingly, this Plan provides for the
granting of Options to such directors.

     2. Definitions. For purposes of this Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof:

        (a) “Beneficiary” means one or more persons, trusts or other entities
which have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under this Plan upon such Participant’s death or to which Options or
other rights are transferred if and to the extent permitted under Section 9(a)
hereof. If, upon a Participant’s death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the persons,
trusts or other entities entitled by will or the laws of descent and
distribution to receive such benefits.

        (b) “Beneficial Owner” shall have the meaning ascribed to such term in
Rule 13d-3 under the Exchange Act and any successor to such Rule.

        (c) “Business Day” means any day, other than a Saturday, a Sunday, or a
legal holiday, on which commercial banks are open for business in Texas.

        (d) “Change in Control” means the occurrence of any of the following
events:

      (i) The agreement to acquire or a tender offer for beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) by any Person of 50% or more of either (x) the then
outstanding shares of Stock (the “Outstanding Stock”) or (y) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
paragraph (i), the following acquisitions shall not constitute a Change
in Control: (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company or (D) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (A), (B) and (C) of paragraph (iii) below; or

 

 

      (ii) Individuals who constitute the Incumbent Board (as defined
below) cease for any reason to constitute at least a majority of the
Board; for these purposes, the “Incumbent Board” shall be defined as the
individuals who, as of the Effective Date, constitute the Board and any
other individual who becomes a director of the Company after that date
and whose election or appointment by the Board or nomination for election
by the Company’s stockholders was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Incumbent Board; or

      (iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Company or an acquisition of assets of another corporation (a
“Business Combination”), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities
who were the Beneficial Owners, respectively, of the Outstanding Stock
and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction
owns the Company, or all or substantially all of the Company’s assets
either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (B) no Person (excluding
any employee benefit plan (or related trust) of the Company or the
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership of the Company existed prior to the Business Combination and
(C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or
of the action of the Board, providing for such Business Combination; or

      (iv) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

     (e) “Change in Control Price” means the amount calculated in accordance
with Section 8 of this Plan.

     (f) “Code” means the Internal Revenue Code of 1986, as amended from time
to time, including regulations thereunder and successor provisions and
regulations thereto.

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     (g) “Committee” means a committee of one or more directors designated by
the Board to administer this Plan; provided, however, that following such time
as the Company has any class of equity security registered pursuant to Section
12 of the Exchange Act, the Committee shall consist solely of two or more
directors, each of whom shall be a “non-employee director” within the meaning
of Rule 16b-3.

     (h) “Dividend Equivalent” means a right to receive cash, Stock, or other
property equal in value to dividends paid with respect to a specified number of
shares of Stock.

     (i) “Effective Date” means December 31, 2004.

     (j) “Eligible Person” means all non-employee members of the Board.

     (k) “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, including rules thereunder and successor provisions and
rules thereto.

     (l) “Exercise Price” means the exercise price per share of Stock
determined pursuant to Section 6(b)(i).

     (m) “Fair Market Value” means, for a particular day:

      (i) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges on any national or regional securities
exchange at the date of determining the Fair Market Value, then the mean
of the high and low sales prices, on the last Business Day before the
date in question or, if no such sale takes place on that Business Day,
the average of the closing bid and asked prices, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to unlisted trading privileges
on that securities exchange; or

      (ii) If shares of Stock of the same class are not listed or admitted
to unlisted trading privileges as provided in Subsection 2(m)(i) and
sales prices for shares of Stock of the same class in the
over-the-counter market are reported by the National Association of
Securities Dealers, Inc. Automated Quotations, Inc. (“NASDAQ”) National
Market System (or such other system then in use) at the date of
determining the Fair Market Value, then the mean of the high and low
sales prices so reported on the last Business Day before the date in
question or, if no such sale takes place on that Business Day, the
average of the high bid and low asked prices so reported; or

      (iii) If shares of Stock of the same class are not listed or
admitted to unlisted trading privileges as provided in Subsection 2(m)(i)
and sales prices for shares of Stock of the same class are not reported
by the NASDAQ National Market System (or a similar system then in use) as
provided in Subsection 2(m)(ii), and if bid and asked prices
for shares of Stock of the same class in the over-the-counter market
are reported by NASDAQ (or, if not so reported, by the National Quotation
Bureau Incorporated) at the date of determining the Fair Market Value,
then the average of the high bid and low asked prices on the last
Business Day before the date in question; or

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      (iv) If shares of Stock of the same class are not listed or admitted
to unlisted trading privileges as provided in Subsection 2(m)(i) and
sales prices or bid and asked prices therefor are not reported by NASDAQ
(or the National Quotation Bureau Incorporated) as provided in Subsection
2(m)(ii) or Subsection 2(m)(iii) at the date of determining the Fair
Market Value, then the value determined in good faith by the Committee,
which determination shall be conclusive for all purposes; or

      (v) If shares of Stock of the same class are listed or admitted to
unlisted trading privileges as provided in Subsection 2(m)(i) or sales
prices or bid and asked prices therefor are reported by NASDAQ (or the
National Quotation Bureau Incorporated) as provided in Subsection
2(m)(ii) or Subsection 2(m)(iii) at the date of determining the Fair
Market Value, but the volume of trading is so low that the Board
determines in good faith that such prices are not indicative of the fair
value of the Stock, then the value determined in good faith by the
Committee, which determination shall be conclusive for all purposes
notwithstanding the provisions of Subsections 2(m)(i), (ii), or (iii).

        (n) “Immediate Family Members” has the meaning set forth in Subsection
9(a)(i).

        (o) “Option” means a right, granted to a Participant under Section 6
hereof, to purchase Stock at a specified price during specified time periods.

        (p) “Participant” means a person who has been granted an Option under this
Plan which remains outstanding, including a person who is no longer an Eligible
Person.

        (q) “Permitted Transferees” has the meaning set forth in Subsection
9(a)(i).

        (r) “Person” means any person or entity of any nature whatsoever,
specifically including an individual, a firm, a company, a corporation, a
partnership, a trust or other entity; a Person, together with that Person’s
“Affiliates” and “Associates” (as those terms are defined in Rule 12b-2 under
the Exchange Act), and any Persons acting as a partnership, limited
partnership, joint venture, association, syndicate or other group (whether or
not formally organized), or otherwise acting jointly or in concert or in a
coordinated or consciously parallel manner (whether or not pursuant to any
express agreement), for the purpose of acquiring, holding, voting or disposing
of securities of the Company with such Person, shall be deemed a single
“Person.”

        (s) “Qualified Member” means a member of the Committee who is a
“non-employee director” within the meaning of Rule 16b-3(b)(3).

        (t) “Rule 16b-3” means Rule 16b-3, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act, as from time to time
in effect and applicable to this Plan and Participants.

        (u) “Securities Act” means the Securities Act of 1933 and the rules and
regulations promulgated thereunder, or any successor law, as it may be amended
from time to time.

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        (v) “Stock” means the Company’s common stock, par value $                     per share,
and such other securities as may be substituted (or resubstituted) for Stock
pursuant to Section 8.

        (w) “Subsidiary” means with respect to the Company, (i) any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by the Company,
(ii) any partnership whose general partner is, or is owned, directly or
indirectly, by, the Company, or (iii) any limited liability company whose
managing member is, or is owned, directly or indirectly, by, the Company.

     3. Administration.

        (a) Authority of the Committee. This Plan shall be administered by the
Committee except to the extent the Board elects to administer this Plan, in
which case references herein to the “Committee” shall be deemed to include
references to the “Board.” Subject to the express provisions of the Plan and
Rule 16b-3, the Committee shall have the authority, in its sole and absolute
discretion, to (i) adopt, amend, and rescind administrative and interpretive
rules and regulations relating to the Plan; (ii) determine the Eligible Persons
to whom, and the time or times at which, Options shall be granted; (iii)
determine the number of shares of Stock that shall be the subject of each
Option; (iv) determine the terms and provisions of each Option agreement (which
need not be identical), including provisions defining or otherwise relating to
(A) the term and the period or periods and extent of exercisability of the
Options, (B) the extent to which the transferability of Options and/or shares
of Stock issued or transferred pursuant to any Option is restricted, (C) the
effect of termination of employment of a Participant on an Option, and (D) the
effect of approved leaves of absence (consistent with any applicable
regulations of the Internal Revenue Service); (v) accelerate the time of
exercisability of any Option that has been granted; (vi) construe the
respective Option agreements and the Plan; (vii) make determinations of the
Fair Market Value of the Stock pursuant to the Plan; (viii) delegate its duties
under the Plan to such agents as it may appoint from time to time, provided
that the Committee may not delegate its duties with respect to making Options
to, or otherwise with respect to Options granted to, Eligible Persons who are
subject to Section 16(b) of the Exchange Act; (ix) subject to ratification by
the Board, terminate, modify, or amend the Plan; and (x) make all other
determinations, perform all other acts, and exercise all other powers and
authority necessary or advisable for administering the Plan, including the
delegation of those ministerial acts and responsibilities as the Committee
deems appropriate. Subject to Rule 16b-3, the Committee may correct any
defect, supply any omission, or reconcile any inconsistency in the Plan, in any
Option, or in any Option agreement in the
manner and to the extent it deems necessary or desirable to carry the Plan into
effect, and the Committee shall be the sole and final judge of that necessity
or desirability. The determinations of the Committee on the matters referred
to in this Section 3(a) shall be final and conclusive.

        (b) Manner of Exercise of Committee Authority. At any time that a member of
the Committee is not a Qualified Member, any action of the Committee relating
to an Option granted or to be granted to a Participant who is then subject to
Section 16 of the Exchange Act in respect of the Company, may be taken either
(i) by a subcommittee, designated by the Committee, composed solely of two or
more Qualified Members, or (ii) by the Committee but with each such member who
is not a Qualified Member abstaining or recusing himself or herself from such
action; provided, however, that, upon such abstention or recusal, the Committee

5

 

remains composed solely of two or more Qualified Members. Such action,
authorized by such a subcommittee or by the Committee upon the abstention or
recusal of such non-Qualified Member(s), shall be the action of the Committee
for purposes of this Plan. Any action of the Committee shall be final,
conclusive and binding on all persons, including the Company, its Subsidiaries,
stockholders, Participants, Beneficiaries, and transferees under Section 9(a)
hereof or other persons claiming rights from or through a Participant. The
express grant of any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or managers
of the Company or any Subsidiary, or committees thereof, the authority, subject
to such terms as the Committee shall determine, to perform such functions,
including administrative functions, as the Committee may determine, to the
extent that such delegation will not result in the loss of an exemption under
Rule 16b-3(d)(1) for Options granted to Participants subject to Section 16 of
the Exchange Act in respect of the Company. The Committee may appoint agents
to assist it in administering this Plan.

        (c) Limitation of Liability. The Committee and each member thereof shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any officer or employee of the Company or a
Subsidiary, the Company’s legal counsel, independent auditors, consultants or
any other agents assisting in the administration of this Plan. Members of the
Committee and any officer or employee of the Company or a Subsidiary acting at
the direction or on behalf of the Committee shall not be personally liable for
any action or determination taken or made in good faith with respect to this
Plan, and shall, to the fullest extent permitted by law, be indemnified and
held harmless by the Company with respect to any such action or determination.

     4. Stock Subject to Plan.

        (a) Overall Number of Shares Available for Delivery. Subject to adjustment in
a manner consistent with any adjustment made pursuant to Section 8, the total
number of shares of Stock reserved and available for delivery in connection
with Options under this Plan shall not exceed 300,000 shares.

        (b) Application of Limitation to Grants of Options. No Option may be granted
if the number of shares of Stock to be delivered in connection with such Option
exceeds the number of shares of Stock remaining available under this Plan minus
the number of shares of Stock issuable in settlement of or relating to
then-outstanding Options. The Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for
example, in the case of tandem or substitute awards) and make adjustments if
the number of shares of Stock actually delivered differs from the number of
shares previously counted in connection with an Option.

        (c) Availability of Shares Not Delivered under Options. Shares of Stock
subject to an Option under this Plan that expire or are canceled, forfeited,
settled in cash or otherwise terminated without a delivery of shares to the
Participant, including (i) the number of shares withheld in payment of any
exercise or purchase price of an Option or taxes relating to Options, and (ii)
the number of shares surrendered in payment of any exercise or purchase price
of an Option or taxes relating to any Option, will again be available for
Options under this Plan.

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        (d) Stock Offered. The shares to be delivered under the Plan shall be made
available from (i) authorized but unissued shares of Stock, (ii) Stock held in
the treasury of the Company, or (iii) previously issued shares of Stock
reacquired by the Company, including shares purchased on the open market, in
each situation as the Board or the Committee may determine from time to time at
its sole option.

     5. Eligibility. Options may be granted under this Plan only to Eligible
Persons.

     6. Specific Terms of Options.

        (a) General. Options may be granted on the terms and conditions set forth in
this Section 6. In addition, the Committee may impose on any Option or the
exercise thereof, at the date of grant or thereafter (subject to Section 6(b)
and Section 9(b)), such additional terms and conditions, not inconsistent with
the provisions of this Plan, as the Committee shall determine, including terms
requiring forfeiture of Options in the event of termination of a Participant’s
service on the Board and terms permitting a Participant to make elections
relating to his or her Option. The Committee shall retain full power and
discretion to accelerate, waive or modify, at any time, any term or condition
of an Option that is not mandatory under this Plan.

        (b) Options. The Committee is authorized to grant Options to Participants on the
following terms and conditions:

      (i) Exercise Price. Each Option agreement shall state the exercise price
per share of Stock (the “Exercise Price”) which shall not be less than
100% of the Fair Market Value of the Stock on the date of grant of the
Option.

      (ii) Time and Method of Exercise. The Committee shall determine the time
or times at which or the circumstances under which an Option may be
exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the methods by
which such Exercise Price may be paid or deemed to be paid, the form of
such payment, including, without limitation, cash, Stock or awards
granted under other plans of the Company or any Subsidiary, or other
property (including notes or other contractual obligations of
Participants to make payment on a deferred basis), and the methods by or
forms in which Stock will be delivered or deemed to be delivered to
Participants. Notwithstanding the foregoing, unless provided otherwise
in an Option agreement, any Participant that is terminated following the
vesting of any Option and/or the lapse of a risk of forfeiture associated
with any Option shall continue to hold such Option, until the expiration
or exercise of the Option, to the extent such Option is vested and/or no
longer subject to a risk of forfeiture at the time of the Participant’s
termination.

     7. Certain Provisions Applicable to Options.

        (a) Stand-Alone, Additional, Tandem, and Substitute Options. Options granted
under this Plan may, in the discretion of the Committee, be granted either
alone or in addition to, in tandem with, or in substitution or exchange for,
any other Option or any award granted under another plan of the Company, any
Subsidiary, or any business entity to be acquired by the Company or a
Subsidiary, or any other right of a Participant to receive payment

7

 

from the
Company or any Subsidiary. Such additional, tandem and substitute or exchange
Options may be granted at any time. If an Option is granted in substitution or
exchange for another Option, the Committee shall require the surrender of such
other Option in consideration for the grant of the new Option.

        (b) Term of Options. The term of each Option shall be for such period as may
be determined by the Committee; provided that in no event shall the term of any
Option exceed a period of ten years.

        (c) Form and Timing of Payment under Options; Deferrals. Subject to the terms of this Plan and any applicable Option agreement,
payments to be made by the Company upon the exercise of an Option may be made
in such forms as the Committee shall determine, including, without limitation,
cash, Stock or other property, and may be made in a single payment or transfer,
in installments, or on a deferred basis. The exercise of any Option may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the discretion of the Committee or upon occurrence of one or more specified
events. Installment or deferred payments may be required by the Committee
(subject to Section 9(b) of this Plan, including the consent provisions thereof
in the case of any deferral of an outstanding Option not provided for in the
original Option agreement) or permitted at the election of the Participant on
terms and conditions established by the Committee. Payments may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents or other amounts in respect of installment or deferred
payments denominated in Stock. Any deferral shall only be allowed as is
provided in a separate deferred compensation plan adopted by the Company. This
Plan shall not constitute an “employee benefit plan” for purposes of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended.

        (d) Exemptions from Section 16(b) Liability. It is the intent of the Company
that the grant of any Options to or other transaction by a Participant who is
subject to Section 16 of the Exchange Act shall be exempt from Section 16 of
the Exchange Act pursuant to an applicable exemption (except for transactions
acknowledged in writing to be non-exempt by such Participant). Accordingly, if
any provision of this Plan or any Option agreement does not comply with the
requirements of Rule 16b-3 as then applicable to any such transaction, such
provision shall be construed or deemed amended to the extent necessary to
conform to the applicable requirements of Rule 16b-3 so that such Participant
shall avoid liability under Section 16(b) of the Exchange Act.

     8. Recapitalization or Reorganization.

        (a) Existence of Plans and Options. The existence of this Plan and the Options
granted hereunder shall not affect in any way the right or power of the Board
or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any
issue of debt or equity securities ahead of or affecting Stock or the rights
thereof, the dissolution or liquidation of the Company or any sale, lease,
exchange or other disposition of all or any part of its assets or business or
any other corporate act or proceeding.

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        (b) Subdivision or Consolidation of Shares. The terms of an Option and the
number of shares of Stock authorized pursuant to Section 4 for issuance under
the Plan shall be subject to adjustment from time to time, in accordance with
the following provisions:

      (i) If at any time, or from time to time, the Company shall
subdivide as a whole (by reclassification, by a Stock split, by the
issuance of a distribution on Stock payable in Stock, or otherwise) the
number of shares of Stock then outstanding into a greater number of
shares of Stock, then (A) the maximum number of shares of Stock available
for the Plan as provided in Section 4 shall be increased proportionately,
and the kind of shares or other securities available for the Plan shall
be appropriately adjusted, (B) the number of shares of Stock (or other
kind of shares or securities) that may be acquired under any Option shall
be increased proportionately, and (C) the exercise price for each share
of Stock (or other kind of shares or securities) subject to then
outstanding Options shall be reduced proportionately, without changing
the aggregate purchase price or value as to which outstanding Options
remain exercisable or subject to restrictions.

      (ii) If at any time, or from time to time, the Company shall
consolidate as a whole (by reclassification, reverse Stock split, or
otherwise) the number of shares of Stock then outstanding into a lesser
number of shares of Stock, (A) the maximum number of shares of Stock
available for the Plan as provided in Section 4 shall be decreased
proportionately, and the kind of shares or other securities available for
the Plan shall be appropriately adjusted, (B) the number of shares of
Stock (or other kind of shares or securities) that may be acquired under
any Option shall be decreased proportionately, and (C) the exercise price
for each share of Stock (or other kind of shares or securities) subject
to then outstanding Options shall be increased proportionately, without
changing the aggregate purchase price or value as to which outstanding
Options remain exercisable or subject to restrictions.

      (iii) Whenever the number of shares of Stock subject to outstanding
Options and the price for each share of Stock subject to outstanding
Options are required to be adjusted as provided in this Section 8(b), the
Committee shall promptly prepare and deliver to Participants a notice
setting forth, in reasonable detail, the event requiring adjustment, the
amount of the adjustment, the method by which such adjustment was
calculated, and the change in price and the number of shares of Stock,
other securities, cash, or property purchasable subject to each Option
after giving effect to the adjustments. The Committee shall promptly
give each Participant such a notice.

      (iv) Adjustments under Subsections 8(b)(i) and (ii) shall be made by
the Committee, and its determination as to what adjustments shall be made
and the extent thereof shall be final, binding, and conclusive.

        (c) Corporate Restructuring. If the Company recapitalizes, reclassifies its
capital stock, or otherwise changes its capital structure (a
“recapitalization”), the number and class of shares of Stock covered by an
Option theretofore granted shall be adjusted so that such Option shall
thereafter cover the number and class of shares of stock and securities to
which the holder would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to the recapitalization, the holder had
been the holder of record of the number of shares of

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Stock then covered by such
Option. Upon a Change in Control the Committee, acting in its sole discretion
without the consent or approval of any holder, shall effect one or more of the
following alternatives, which may vary among
individual holders and which may vary among Options held by any individual
holder: (i) accelerate the time at which Options then outstanding may be
exercised so that such Options may be exercised in full for a limited period of
time on or before a specified date (before or after such Change in Control)
fixed by the Committee, after which specified date all unexercised Options and
all rights of holders thereunder shall terminate; (ii) require the mandatory
surrender to the Company by selected holders of some or all of the outstanding
Options held by such holders (irrespective of whether such Options are then
exercisable under the provisions of the Plan) as of a date, before or after
such Change in Control, specified by the Committee, in which event the
Committee shall thereupon cancel such Options and pay to each holder an amount
of cash per share equal to the excess, if any, of the amount calculated in
Section 8(d) (the “Change in Control Price”) of the shares subject to such
Option over the exercise price(s) under such Options for such shares; (iii)
make such adjustments to Options then outstanding as the Committee deems
appropriate to reflect such Change in Control (provided, however, that the
Committee may determine in its sole discretion that no adjustment is necessary
to Options then outstanding); or (iv) provide that the number and class of
shares of Stock covered by an Option theretofore granted shall be adjusted so
that such Option shall thereafter cover the number and class of shares of stock
or other securities or property (including, without limitation, cash) to which
the holder would have been entitled pursuant to the terms of the agreement of
merger, consolidation or sale of assets and dissolution if, immediately prior
to such merger, consolidation or sale of assets and dissolution, the holder had
been the holder of record of the number of shares of Stock then covered by such
Option.

        (d) Change in Control Price. The “Change in Control Price” shall equal the
amount determined in clause (i), (ii) or (iii), whichever is applicable, as
follows: (i) the per share price offered to holders of the same class of Stock
of the Company in any such merger, consolidation, sale of assets or dissolution
transaction, (ii) the price per share offered to holders of the same class of
Stock of the Company in any tender offer or exchange offer whereby a Change in
Control takes place, or (iii) if such Change in Control occurs other than
pursuant to a tender or exchange offer, the fair market value per share of the
shares into which such Options being surrendered are exercisable, as determined
by the Committee as of the date determined by the Committee to be the date of
cancellation and surrender of such Options. In the event that the
consideration offered to stockholders of the Company in any transaction
described in this Section 8(d) or Section 8(c) above consists of anything other
than cash, the Committee shall determine the fair cash equivalent of the
portion of the consideration offered which is other than cash.

        (e) Additional Issuances. Except as expressly provided in this Plan, the
issuance by the Company of shares of stock of any class or securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, and in any case whether or
not for fair value, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of shares of Stock subject to Options
theretofore granted or the purchase price per share, if applicable.

10

 

     9. General Provisions.

        (a) Transferability.

      (i) Permitted Transferees. The Committee may, in its discretion, permit
a Participant to transfer all or any portion of an Option, or authorize
all or a portion of any Option to be granted to an Eligible Person to be
on terms which permit transfer by such Participant, to (A) the spouse,
children or grandchildren of the Participant or other relative approved
by the Committee (“Immediate Family Members”), (B) a trust or trusts for
the exclusive benefit of such Immediate Family Members, or (C) a
partnership or limited liability company in which such Immediate Family
Members are the only partners or members as applicable (collectively,
“Permitted Transferees”); provided that (X) there may be no consideration
for any such transfer and (Y) subsequent transfers of Options transferred
as provided above shall be prohibited except subsequent transfers back to
the original holder of the Option and transfers to other Permitted
Transferees of the original holder. Option agreements with respect to
which such transferability is authorized at the time of grant must be
approved by the Committee and must expressly provide for transferability
in a manner consistent with this Subsection 9(a).

      (ii) Qualified Domestic Relations Orders. Options may be transferred
pursuant to qualified domestic relations orders entered or approved by a
court of competent jurisdiction upon delivery to the Company of written
notice of such transfer and a certified copy of such order.

      (iii) Other Transfers. Except as expressly permitted by Subsections
9(a)(i) and 9(a)(ii), Options shall not be transferable other than by
will or the laws of descent and distribution.

      (iv) Effect of Transfer. Following the transfer of any Option as
contemplated by Subsections 9(a)(i), 9(a)(ii) and 9(a)(iii), (A) such
Option shall continue to be subject to the same terms and conditions as
were applicable immediately prior to transfer, provided that the term
“Participant” shall be deemed to refer to the Permitted Transferee, the
recipient under a qualified domestic relations order, or the estate or
heirs of a deceased Participant, as applicable, to the extent appropriate
to enable the Participant to exercise the transferred Option in
accordance with the terms of this Plan and applicable law, and (B) the
provisions of the Option relating to exercisability hereof shall continue
to be applied with respect to the original Participant and, following the
occurrence of any such events described therein, the Options shall be
exercisable by the Permitted Transferee, the recipient under a qualified
domestic relations order, or the estate or heirs of a deceased
Participant, as applicable, only to the extent and for the periods that
would have been applicable in the absence of the transfer.

      (v) Procedures and Restrictions. Any Participant desiring to transfer an
Option as permitted under Subsections 9(a)(i) or 9(a)(ii) shall make
application therefor in the manner and time specified by the Committee
and shall comply with such other requirements as the Committee may
require to assure compliance with all

11

 

applicable securities laws. The
Committee shall not give permission for such a transfer if (i) it would
give rise to short-swing liability under Section 16(b) of the Exchange
Act or (ii) it may not be made in compliance with all applicable federal,
state and foreign securities laws.

      (vi) Registration. To the extent the issuance to any Permitted
Transferee of any shares of Stock issuable pursuant to Options
transferred as permitted in this Section 9(b) is not registered under the
Securities Act pursuant to the effective registration statement of the
Company generally covering the shares to be issued pursuant to this Plan,
the Company shall not have any obligation to register the issuance of any
such shares of Stock to any such transferee.

        (b) Changes to this Plan and Options. The Board may amend, alter, suspend,
discontinue or terminate this Plan or the Committee’s authority to grant
Options under this Plan without the consent of stockholders or Participants,
except that any amendment or alteration to this Plan shall be subject to the
approval of the Company’s stockholders not later than the annual meeting next
following such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Stock may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other such
changes to this Plan to stockholders for approval; provided that, without the
consent of an affected Participant, no such Board action may materially and
adversely affect the rights of such Participant under any previously granted
and outstanding Option. The Committee may waive any conditions or rights
under, or amend, alter, suspend, discontinue or terminate any Option
theretofore granted and any Option agreement relating thereto, except as
otherwise provided in this Plan; provided that, without the consent of an
affected Participant, no such Committee action may materially and adversely
affect the rights of such Participant under such Option.

        (c) Limitation on Rights Conferred under Plan. Neither this Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or to
continue as a member of the Board, (ii) interfering in any way with the right
of the Company to remove any Eligible Person from the Board, (iii) giving an
Eligible Person or Participant any claim to be granted any Option under this
Plan or to be treated uniformly with other Participants, or (iv) conferring on
a Participant any of the rights of a stockholder of the Company unless and
until the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Option.

        (d) Unfunded Status of Options. This Plan is intended to constitute an
“unfunded” plan for certain incentive awards.

        (e) Nonexclusivity of this Plan. Neither the adoption of this Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable. Nothing contained in this Plan shall be construed to prevent the
Company from taking any corporate action which is deemed by the Company to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on this Plan or any Option made under this Plan. No employee,
Beneficiary or

12

 

other person shall have any claim against the Company or any
Subsidiary as a result of any such action.

        (f) Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to this Plan or any Option. The Committee shall determine
whether cash, other Options or other property shall be issued or paid in lieu
of such fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.

        (g) Severability. If any provision of this Plan is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions hereof, but such provision shall be fully severable and
the Plan shall be construed and enforced as if the illegal or invalid provision
had never been included herein. If any of the terms or provisions of this Plan
or any Option agreement conflict with the requirements of Rule 16b-3 (as those
terms or provisions are applied to Eligible Persons who are subject to Section
16(b) of the Exchange Act), then those conflicting terms or provisions shall be
deemed inoperative to the extent they so conflict with the requirements of Rule
16b-3 (unless the Board or the Committee, as appropriate, has expressly
determined that the Plan or such Option should not comply with Rule 16b-3).

        (h) Governing Law. All questions arising with respect to the provisions of the
Plan and the Options, unless otherwise specified in an Option agreement, shall
be determined by application of the laws of the State of Delaware, without
giving effect to any conflict of law provisions thereof, except to the extent
Delaware law is preempted by federal law. The obligation of the Company to
sell and deliver Stock hereunder is subject to applicable federal and state
laws and to the approval of any governmental authority required in connection
with the authorization, issuance, sale, or delivery of such Stock.

        (i) Conditions to Delivery of Stock. Nothing herein or in any Option granted hereunder or any Option agreement
shall require the Company to issue any shares with respect to any Option if
that issuance would, in the opinion of counsel for the Company, constitute a
violation of the Securities Act or any similar or superseding statute or
statutes, any other applicable state or federal statute or regulation, or any
rules of any applicable securities exchange or securities association, as then
in effect. At the time of any exercise of an Option the Company may, as a
condition precedent to the exercise of such Option, require from the
Participant (or in the event of his death, his legal representatives, heirs,
legatees, or distributees) such written representations, if any, concerning the
holder’s intentions with regard to the retention or disposition of the shares
of Stock being acquired pursuant to the Option and such written covenants and
agreements, if any, as to the manner of disposal of such shares as, in the
opinion of counsel to the Company, may be necessary to ensure that any
disposition by that holder (or in the event of the holder’s death, his legal
representatives, heirs, legatees, or distributees) will not involve a violation
of the Securities Act or any similar or superseding statute or statutes, any
other applicable state or federal statute or regulation, or any rule of any
applicable securities exchange or securities association, as then in effect.
No Option shall be exercisable unless and until the holder thereof shall have
paid cash or property to, or performed services for, the Company that the
Committee believes is equal to or greater in value than the par value of the
Stock subject to such Option.

13

 

        (j) Plan Effective Date; Term. This Plan has been adopted by the Board of the
Company effective as of December 31, 2004.

14exv10w1

 

Exhibit 10.1

SECOND AMENDMENT

TO

EMPLOYMENT AGREEMENT

(WALLER)

     THIS SECOND AMENDMENT (this “Amendment”) is made as of April 19, 2004, to
the Employment Agreement dated May 25, 1996 by and between WILSONS THE LEATHER
EXPERTS INC., a Minnesota corporation (the “Company”), and JOEL WALLER, a
resident of Minnesota (the “Executive”), as amended by that First Amendment to
Employment Agreement dated as of April 3, 2000 (the “Agreement”).

     WHEREAS, the Company wishes to continue to secure the Executive’s services
as Chairman and Chief Executive Officer of the Company under the terms of the
Agreement as modified by this Amendment;

     WHEREAS, the Executive wishes to continue to provide such services to the
Company; and

     WHEREAS, the Executive and the Company desire to modify certain terms of
Section 6(c) in the Agreement.

     NOW THEREFORE, in consideration of the premises and of the mutual
covenants and undertakings stated herein, the Executive and the Company hereby
agree to amend the Agreement as follows:

     A.     The introduction to Section 6(c) and Section 6(c)(i) of the Agreement
are hereby amended in their entirety to read as follows:

     “(c)   If the Executive’s employment hereunder ends prior to the end of the
Employment Period by reason of resignation by the Executive for Good Reason or
termination by the Company without Cause, then:

	 	(i)	 	the Company shall continue to pay, or cause one
or more of its Subsidiaries to continue to pay, to the
Executive, in accordance with, and at the times provided in,
Section 3(a) hereof, the Executive’s Base Salary for a period
of 24 months after the Termination Date even if such 24-month
period does not end at or prior to the end of the Employment
Period”;

     B.     Section 6(c)(iv) of the Agreement is hereby amended in its entirety to
read as follows:

	 	“(iv)	 	the Executive and his dependents shall continue,
for a period of 24 months after the Termination Date, even if
such 24-month period does not end at or prior to the end of
the Employment Period, to be entitled to all medical,

 

 

	 	 	 	dental, life insurance and disability benefits of the type
that they received immediately prior to the Termination Date
(or, in the event their participation in a plan pursuant to
which any such benefits are provided is barred by the terms
of such plan, benefits which are no less favorable to them
than the benefits under such plan), except to the extent
essentially equivalent and no less favorable benefits are
provided to them by a subsequent employer; and”

     C.     All references in the Agreement and this Amendment to “this Agreement,”
the “Agreement,” “hereunder,” “herein,” or “hereof” shall be deemed to be
references to the Agreement, as amended by this Amendment and as hereafter
amended by any other amendment adopted in accordance with Section 22 of the
Agreement.

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date and year first above written.

	 	 	 	 	 
	 
	 	WILSONS THE LEATHER
EXPERTS INC.
	 
	 	 	 	 
	/s/ Joel N. Waller

	 	By:
	 	/s/ Michael Cowhig
	
 

	 	 	 	
 
	Name: Joel N. Waller

	 	Name:
	 	Michael Cowhig
	

	 	 	 	
 
	 
	 	 	 	 
	

	 	Title:
	 	Chair, Compensation Committee
	

	 	 	 	
 

2

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