Document:

exv10w27

 

Exhibit 10.27

COLLEGIATE FUNDING SERVICES, INC.

2002 STOCK INCENTIVE PLAN

(Formerly known as the CFSL Holdings, Inc. 2002 Stock Incentive Plan)

Amended and Restated June 21, 2004

NOTICE OF RESTRICTED STOCK AWARD

	 	 	 	 	 
	

	 	Grantee’s Name and Address:
	 	«First_Name» «MI» «Last_Name»
	

	 	 	 	«Street_Address»
	

	 	 	 	«City», «State» «ZIP»

     You have been granted shares of restricted Common Stock, subject to the terms and conditions
of this Notice of Restricted Stock Award (the “Notice”), the Collegiate Funding Services, Inc. 2002
Stock Incentive Plan (formerly known as the CFSL Holdings Corp. 2002 Stock Incentive Plan), as
amended from time to time (the “Plan”) and the Restricted Stock Award Agreement (the “Restricted
Stock Agreement”) attached hereto, as follows. Unless otherwise defined herein, the terms defined
in the Plan shall have the same defined meanings in this Notice.

	 	 	 	 	 
	

	 	Award Number:
	 	«Number»
	 
	

	 	Date of Award:	 	 
	 
	

	 	Total Number of Shares Subject	 	 
	

	 	to the Award (the “Restricted Shares”):
	 	«Restricted_Shares»
	 
	

	 	Expiration Date:
	 	N/A
	 
	

	 	Vesting Schedule:	 	 

     Subject to the Grantee’s Continuous Service and other limitations set forth in this Notice,
the Plan, the Restricted Stock Agreement and any then-effective written agreement between the
Grantee and the Company, the Restricted Shares shall vest and become nonforfeitable with respect to
twenty-five percent (25%) of the Shares initially granted hereunder on each of the first, second,
third and fourth anniversaries of the Date of Award.

     During any authorized leave of absence, the vesting of the Restricted Shares as provided in
this schedule shall be suspended after the leave of absence exceeds a period of ninety (90) days.
Vesting of the Restricted Shares shall resume upon the Grantee’s termination of the leave of
absence and return to service to the Company or a Related Entity. The Vesting Schedule of the
Restricted Shares shall be extended by the length of the suspension.

     In the event of the Grantee’s change in status from Employee to Consultant or from an Employee
whose customary employment is 20 hours or more per week to an Employee whose customary employment
is fewer than 20 hours per week, vesting of the Restricted Shares shall continue only to the extent
determined by the Committee as of the time of such change in status.

 

 

     In the event of termination of the Grantee’s Continuous Service for any reason other than
Disability or death, the Restricted Shares shall, to the extent not then vested, be forfeited by
the Grantee without consideration, except as otherwise determined by the Committee.

     In the event of a Change in Control or the Grantee’s termination of Continuous Service due to
the Grantee’s death or Disability, the Restricted Shares shall, to the extent not then vested and
not previously forfeited, immediately become fully vested.

     IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the
Restricted Shares are to be governed by the terms and conditions of this Notice, the Plan and the
Restricted Stock Agreement.

	 	 	 	 	 
	 	 	COLLEGIATE FUNDING SERVICES, INC.

a Delaware corporation
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	 	 	Name: J. Barry Morrow
	

	 	 	 	Title: Chief Executive Officer

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE RESTRICTED SHARES SHALL VEST, IF AT ALL, ONLY DURING
THE PERIOD OF THE GRANTEE’S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED
THE RESTRICTED SHARES OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES
THAT NOTHING IN THIS NOTICE, THE RESTRICTED STOCK AGREEMENT OR THE PLAN SHALL CONFER UPON THE
GRANTEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEE’S CONTINUOUS SERVICE,
NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE’S RIGHT OR THE RIGHT OF THE GRANTEE’S EMPLOYER
TO TERMINATE GRANTEE’S CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT
NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT
WITH THE COMPANY TO THE CONTRARY, GRANTEE’S STATUS IS AT WILL.

The Grantee acknowledges receipt of a copy of the Plan and the Restricted Stock Agreement, and
represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the
Restricted Shares subject to all of the terms and provisions hereof and thereof. The Grantee has
reviewed this Notice, the Plan and the Restricted Stock Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Notice, and fully understands
all provisions of this Notice, the Plan and the Restricted Stock Agreement. The Grantee hereby
agrees that all disputes arising out of or relating to this Notice, the Plan and the Restricted
Stock Agreement shall be resolved in accordance with Section 16 of the Restricted Stock Agreement.
The Grantee further agrees to notify the Company upon any change in the residence address indicated
in this Notice.

	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	Signed:	 	 
	

	 	 
	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	Grantee:

2

 

Award Number: __«Number»______

COLLEGIATE FUNDING SERVICES, INC.

2002 STOCK INCENTIVE PLAN

(Formerly known as the CFSL Holdings, Inc. 2002 Stock Incentive Plan)

Amended and Restated: June 21, 2004

RESTRICTED STOCK AWARD AGREEMENT

     1. Grant of Restricted Shares. The Company hereby grants to the Grantee (the
“Grantee”) named in the Notice of Restricted Stock Award (the “Notice”), a Restricted Stock Award
consisting of the Total Number of Shares of Common Stock (hereinafter called the “Restricted
Shares”) set forth in the Notice, subject to the terms and provisions of the Notice, this
Restricted Stock Award Agreement (the “Restricted Stock Agreement”) and the Collegiate Funding
Services, Inc. 2002 Stock Incentive Plan (formerly known as the CFSL Holdings Corp. 2002 Stock
Incentive Plan), as amended from time to time (the “Plan”), which are incorporated herein by
reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Restricted Stock Agreement.

     2. Grantee’s Representations. The Grantee understands that, at any time prior to the
Registration Date, neither the Restricted Shares will not have been registered under the Securities
Act of 1933, as amended or any United States securities laws. In the event the Restricted Shares
have not been registered under the Securities Act of 1933, as amended, at the time the Restricted
Shares vest, the Grantee shall, if requested by the Company, deliver to the Company his or her
Investment Representation Statement in the form attached hereto as Exhibit B.

     3. Vesting. Subject to the Grantee’s Continuous Service with the Company, the
Restricted Shares shall vest and become nonforfeitable with respect to 25% of the Restricted Shares
initially granted hereunder on each of the first, second, third and fourth anniversaries of the
Date of Award. Notwithstanding the foregoing, in the event the above vesting schedule results in
the vesting of any fractional shares, such fractional shares shall not be deemed vested hereunder
but shall vest and become nonforfeitable when such fractional shares aggregate whole shares.

     4. Termination or Change of Continuous Service. If the Grantee’s Continuous Service
is terminated for any reason (any such date being referred to herein as the “Termination Date”)
other than death or Disability, the Restricted Shares shall, to the extent not then vested, be
forfeited by the Grantee without consideration. In the event of the Grantee’s change in status
from Employee, Director or Consultant to any other status of Employee, Director or Consultant, the
Restricted Shares shall remain in effect and, except to the extent otherwise determined by the
Committee, continue to vest.

 

 

     (a) Disability of Grantee. In the event the Grantee’s Continuous Service terminates
as a result of his or her Disability, the Restricted Shares shall become fully vested and
nonforfeitable as of the Termination Date.

     (b) Death of Grantee. In the event of the termination of the Grantee’s Continuous
Service as a result of his or her death or in the event of the Grantee’s death during the six (6)
month period following the Grantee’s termination of Continuous Service as a result of his or her
Disability, the unvested Restricted Shares shall become fully vested and nonforfeitable.

     5. Change in Control. Notwithstanding any other provisions of this Restricted Stock
Agreement or the Notice to the contrary, in the event of a Change in Control, the Restricted Shares
shall, to the extent not then vested and not previously forfeited, immediately become fully vested.

     6. Transferability of Restricted Shares. The Restricted Shares may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent or distribution, and, during the lifetime of the Grantee, by gift and/or
pursuant to a domestic relations order to members of the Grantee’s Immediate Family to the extent
and in the manner determined by the Committee, and/or by transfer to a guardian of the Grantee if
necessary in the event of the Disability of the Grantee. The terms of the Restricted Shares shall
be binding upon the executors, administrators, heirs, successors and transferees of the Grantee.

     7. Lock-Up Agreement.

          (a) Agreement. The Grantee, if requested by the Company and the lead underwriter of
any public offering of the Common Stock or other securities of the Company (the “Lead
Underwriter”), hereby irrevocably agrees not to sell, contract to sell, grant any option to
purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise
transfer or dispose of any interest in any Common Stock or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire Common Stock (except
Common Stock included in such public offering or acquired on the public market after such offering)
during the 180-day period following the effective date of a registration statement of the Company
filed under the Securities Act of 1933, as amended, or such shorter period of time as the Lead
Underwriter shall specify. The Grantee further agrees to sign such documents as may be requested
by the Lead Underwriter to effect the foregoing and agrees that the Company may impose
stop-transfer instructions with respect to such Common Stock subject to the lock-up period until
the end of such period. The Company and the Grantee acknowledge that each Lead Underwriter of a
public offering of the Company’s stock, during the period of such offering and for the 180-day
period thereafter, is an intended beneficiary of this Section 7.

          (b) No Amendment Without Consent of Underwriter. During the period from
identification as a Lead Underwriter in connection with any public offering of the Company’s Common
Stock until the earlier of (i) the expiration of the lock-up period specified in Section 7(a) in
connection with such offering or (ii) the abandonment of such offering by the Company and the Lead
Underwriter, the provisions of this Section 7 may not be amended or waived except with the consent
of the Lead Underwriter.

 

 

     8. Certificates. Certificates evidencing the Restricted Shares shall be issued by the
Company and shall be registered in the Grantee’s name on the stock transfer books of the Company
promptly after the date hereof, but shall remain in the physical custody of the Company or its
designee at all times prior to the vesting of such Restricted Shares pursuant to Section 3. As a
condition to the receipt of this Restricted Stock Award, the Grantee shall deliver to the Company a
stock power, duly endorsed in blank, relating to the Restricted Shares. No certificates shall be
issued for fractional shares.

     9. Rights as a Stockholder. The Grantee shall be the record owner of the Restricted
Shares until or unless such Restricted Shares are forfeited pursuant to Section 4 hereof, and as
record owner shall be entitled to all rights of a common stockholder of the Company, including,
without limitation, voting rights with respect to the Restricted Shares and the Participant shall
receive, when paid, any dividends on all of the Restricted Shares granted hereunder as to which the
Grantee is the record holder on the applicable record date. As soon as practicable following the
vesting of any Restricted Shares pursuant to Section 3, certificates for the Restricted Shares
which shall have vested shall be delivered to the Grantee or to the Grantee’s legal guardian or
representative along with the stock powers relating thereto.

     10. Legend on Certificates. The certificates representing the vested Restricted
Shares delivered to the Grantee as contemplated by Section 9 above shall be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the Securities and Exchange Commission, any stock
exchange upon which such shares are listed, and any applicable Federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

     11. No Right to Continued Employment. The granting of the Restricted Shares evidenced
by this Restricted Stock Agreement shall impose no obligation on the Company or any Related Entity
to continue the employment of the Grantee and shall not lessen or affect the Company’s or the
Related Entity’s right to terminate the employment of the Grantee.

     12. Withholding. The Grantee may be required to pay to the Company or any Related
Entity, and the Company shall have the right and is hereby authorized to withhold, any applicable
withholding taxes in respect of the Restricted Shares, their grant or vesting or any payment or
transfer with respect to the Restricted Shares and to take such action as may be necessary in the
opinion of the Committee to satisfy all obligations for the payment of such withholding taxes.

     13. Securities Laws. Upon the vesting of any Restricted Shares, the Grantee will make
or enter into such written representations, warranties and agreements as the Committee may
reasonably request in order to comply with applicable securities laws or with this Restricted Stock
Agreement.

     14. Entire Agreement: Governing Law. The Notice, the Plan and this Restricted Stock
Agreement constitute the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the Company and the
Grantee with respect to the subject matter hereof, and may not be modified adversely to the

 

 

Grantee’s interest except by means of a writing signed by the Company and the Grantee.
Nothing in the Notice, the Plan and this Restricted Stock Agreement (except as expressly provided
therein) is intended to confer any rights or remedies on any persons other than the parties. The
Notice, the Plan and this Restricted Stock Agreement are to be construed in accordance with and
governed by the internal laws of the State of New York without giving effect to any choice of law
rule that would cause the application of the laws of any jurisdiction other than the internal laws
of the State of New York to the rights and duties of the parties. Should any provision of the
Notice, the Plan or this Restricted Stock Agreement be determined by a court of law to be illegal
or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the
other provisions shall nevertheless remain effective and shall remain enforceable.

     15. Headings. The captions used in the Notice and this Restricted Stock Agreement are
inserted for convenience and shall not be deemed a part of the Restricted Stock for construction or
interpretation.

     16. Dispute Resolution. The provisions of this Section 16 shall be the exclusive
means of resolving disputes arising out of or relating to the Notice, the Plan and this Option
Agreement. The Company, the Grantee and the Grantee’s assignees (the “parties”) shall attempt in
good faith to resolve any disputes arising out of or relating to the Notice, the Plan and this
Restricted Stock Agreement by negotiation between individuals who have authority to settle the
controversy. Negotiations shall be commenced by either party by notice of a written statement of
the party’s position and the name and title of the individual who will represent the party. Within
thirty (30) days of the written notification, the parties shall meet at a mutually acceptable time
and place, and thereafter as often as they reasonably deem necessary, to resolve the dispute. If
the dispute has not been resolved by negotiation, the parties agree that any suit, action or
proceeding arising out of or relating to the Notice, the Plan or this Restricted Stock Agreement
shall be brought in the United States District Court for the Southern District of New York (or
should such court lack jurisdiction to hear such action, suit or proceeding, in a New York state
court in the County of New York) and that the parties shall submit to the jurisdiction of such
court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the
party may have to the laying of venue for any such suit, action or proceeding brought in such
court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY
SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 16 shall for any
reason be held invalid or unenforceable, it is the specific intent of the parties that such
provisions shall be modified to the minimum extent necessary to make it or its application valid
and enforceable.

     17. Notices. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or upon deposit in the United States mail
by certified mail (if the parties are within the United States) or upon deposit for delivery by an
internationally recognized express mail courier service (for international delivery of notice),
with postage and fees prepaid, addressed to the other party at its address as shown beneath its
signature in the Notice, or to such other address as such party may designate in writing from time
to time to the other party.

 

 

     18. Confidentiality. The Company shall provide to Grantee, during the period for
which Grantee has one or more Awards outstanding, copies of financial statements of the Company at
least annually. Grantee understands and agrees that such financial statements are confidential and
shall not be disclosed by Grantee, to any entity or person, for any reason, at any time, without
the prior written consent of the Company, unless required by law. If disclosure of such financial
statements is required by law, whether through subpoena, request for production, deposition, or
otherwise, Grantee promptly shall provide written notice to Company, including copies of the
subpoena, request for production, deposition or otherwise, within five (5) business days of their
receipt by Grantee and prior to any disclosure so as to provide Company an opportunity to move to
quash or otherwise to oppose the disclosure. Notwithstanding the foregoing, Grantee may disclose
the terms of such financial statements to his or her spouse or domestic partner, and for legitimate
business reasons, to legal, financial and tax advisors.exv10w1

 

Exhibit 10.1

WILSONS THE LEATHER EXPERTS INC.

AMENDED AND RESTATED 2000 LONG TERM INCENTIVE PLAN

     1. Purpose. The purpose of this Amended and Restated 2000 Long Term Incentive Plan is
to motivate key personnel to produce a superior return to the shareholders of the Company and its
Affiliates by offering such individuals an opportunity to realize Stock appreciation, by
facilitating Stock ownership, and by rewarding them for achieving a high level of corporate
performance. This Plan is also intended to facilitate recruiting and retaining key personnel of
outstanding ability.

     2. Definitions. The capitalized terms used in this Plan have the meanings set forth
below.

     (a) “Affiliate” means any corporation that is a “parent corporation” or “subsidiary
corporation” of the Company, as those terms are defined in Sections 424(e) and (f) of the
Code, or any successor provision, and, for purposes other than the grant of Incentive Stock
Options, any joint venture in which the Company or any such “parent corporation” or
“subsidiary corporation” owns an equity interest.

     (b) “Agreement” means a written contract entered into between the Company or an
Affiliate and a Participant containing the terms and conditions of an Award in such form
(not inconsistent with this Plan) as the Committee approves from time to time, together with
all amendments thereof, 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 are not required as a matter of law.

     (c) “Associate” means any full-time or part-time employee (including an officer or
director who is also an employee) of the Company or an Affiliate. Except with respect to
grants of Incentive Stock Options, “Associate” shall also include any member of the Board or
other individual who is not an “employee” of the Company or an Affiliate but who provides
services to the Company or an Affiliate as a consultant or adviser. References in this Plan
to “employment” and related terms (except for references to “employee” in this definition of
“Associate” or in Section 7(a)(1)) shall include the providing of services in any such
capacity.

     (d) “Award” means a grant made under this Plan in the form of Options, Stock
Appreciation Rights, Restricted Stock, Performance Shares or any Other Stock-Based Award,
whether singly, in combination or in tandem.

     (e) “Board” means the Board of Directors of the Company.

     (f) “Cause” means, unless otherwise provided by the Committee in an applicable
Agreement, (i) “Cause” as defined in any employment agreement with the Company to which the
Participant is a party, or (ii) if there is no such employment agreement or if it does not
define Cause: (A) conviction of the Participant for committing a felony under federal law
or the law of the state in which such action occurred, (B) unlawful conduct or gross
misconduct that is willful and deliberate on the Participant’s part and that, in either
event, is materially injurious to the business or reputation of the Company, or (C) an act
or acts of dishonesty undertaken by the Participant and intended to result in material
personal gains or enrichment of the Participant or others at the expense of the Company.
The Committee shall, unless otherwise provided in an applicable Agreement with the
Participant, have the sole discretion to determine whether “Cause” exists, and its
determination shall be final.

 

 

     (g) “Change in Control” means:

     (i) a majority of the directors of the Company shall be persons other than
persons

	 	(A)  	for whose election proxies shall
have been solicited by Board or
	 
	 	(B)  	who are then serving as directors
appointed by the Board to fill vacancies on the Board caused by
death or resignation (but not by removal) or to fill
newly-created directorships,

     (ii) more than 33-1/3% (with respect to Awards granted prior to the effective
date of this Amended and Restated 2000 Long Term Incentive Plan provided in Section
12(a) hereof) or a majority (with respect to Awards granted on or after the
effective date of this Amended and Restated 2000 Long Term Incentive Plan provided
in Section 12(a) hereof) of (1) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (“Outstanding Company Voting Securities”) or (2) the then outstanding
Shares of Stock (“Outstanding Company Common Stock”) is directly or indirectly
acquired or beneficially owned (as defined in Rule 13d-3 under the Exchange Act, or
any successor rule thereto) by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act), provided, however, that the
following acquisitions and beneficial ownership shall not constitute Changes in
Control pursuant to this paragraph 2(g)(ii):

	 	(A)  	any acquisition or beneficial
ownership by the Company or a Subsidiary, or
	 
	 	(B)  	any acquisition or beneficial
ownership by any employee benefit plan (or related trust)
sponsored or maintained by the Company or one or more of its
Subsidiaries, or
	 
	 	(C)  	any acquisition or beneficial
ownership by a Parent or its wholly-owned Subsidiaries, as long
as they shall remain wholly-owned Subsidiaries, of 100% of the
Outstanding Company Voting Securities as a result of a merger or
statutory share exchange which complies with Section
2(g)(iii)(A)(2) or the exception in Section 2(g)(iii)(B) hereof
in all respects,

     (iii) the shareholders of the Company approve a definitive agreement or plan to

	 	(A)  	merge or consolidate the Company
with or into another corporation (other than (1) a merger or
consolidation with a Subsidiary or (2) a merger in which

	 	(a)  	the Company is
the surviving corporation,
	 
	 	(b)  	no Outstanding
Company Voting Securities or Outstanding Company Common
Stock (other than fractional shares) held by
shareholders of the Company immediately prior to the
merger is converted into cash,

2

 

	 	   	securities, or other property (except (i) voting
stock of a Parent owning directly, or indirectly
through wholly-owned Subsidiaries, both beneficially
and of record 100% of the Outstanding Company Voting
Securities immediately after the Merger or (ii) cash
upon the exercise by holders of Outstanding Company
Voting Securities or Outstanding Company Common Stock
of statutory dissenters’ rights),
	 
	 	(c)  	the persons who
were the beneficial owners, respectively, of the
Outstanding Company Voting Securities and Outstanding
Company Common Stock immediately prior to such merger
beneficially own, directly or indirectly, immediately
after the merger, at least 66-2/3% (with respect to
Awards granted prior to the effective date of this
Amended and Restated 2000 Long Term Incentive Plan
provided in Section 12(a) hereof) or a majority (with
respect to Awards granted on or after the effective date
of this Amended and Restated 2000 Long Term Incentive
Plan provided in Section 12(a) hereof) of, respectively,
the then outstanding common stock and the voting power
of the then outstanding voting securities of the
surviving corporation or its Parent entitled to vote
generally in the election of directors, and
	 
	 	(d)  	if voting
securities of the Parent are exchanged for Outstanding
Company Voting Securities in the merger, all holders of
any class or series of Outstanding Company Voting
Securities immediately prior to the merger have the
right to receive substantially the same per share
consideration in exchange for their Outstanding Company
Voting Securities as all other holders of such class or
series),

	 	(B)  	exchange, pursuant to a statutory
share exchange, Outstanding Company Voting Securities of any one
or more classes or series held by shareholders of the Company
immediately prior to the exchange for cash, securities or other
property, except for (a) voting stock of a Parent owning
directly, or indirectly through wholly-owned Subsidiaries, both
beneficially and of record 100% of the Outstanding Company
Voting Securities immediately after the statutory share exchange
if (i) the persons who were the beneficial owners, respectively,
of the Outstanding Company Voting Securities and Outstanding
Company Common Stock immediately prior to such statutory share
exchange own, directly or indirectly, immediately after the
statutory share exchange at least 66-2/3% (with respect to
Awards granted prior to the effective date of this Amended and
Restated 2000 Long Term Incentive Plan provided in Section 12(a)
hereof) or a majority (with respect to Awards granted on or
after the effective

3

 

	 	   	date of this Amended and Restated 2000 Long Term Incentive
Plan provided in Section 12(a) hereof) of, respectively, the
then outstanding common stock and the voting power of the
then outstanding voting securities of such Parent entitled to
vote generally in the election of directors, and (ii) all
holders of any class or series of Outstanding Company Voting
Securities immediately prior to the statutory share exchange
have the right to receive substantially the same per share
consideration in exchange for their Outstanding Company
Voting Securities as all other holders of such class or
series or (b) cash with respect to fractional shares of
Outstanding Company Voting Securities or payable as a result
of the exercise by holders of Outstanding Company Voting
Securities of statutory dissenters’ rights,
	 
	 	(C)  	sell or otherwise dispose of all
or substantially all of the assets of the Company (in one
transaction or a series of transactions), or
	 
	 	(D)  	liquidate or dissolve the
Company.

Notwithstanding anything to the contrary stated in this Section 2(g), with respect to Awards
granted on or after the effective date of this Amended and Restated 2000 Long Term Incentive Plan
provided in Section 12(a) hereof, a Change in Control shall not be deemed to have occurred in
connection with a merger or consolidation, statutory share exchange or disposition following
shareholder approval of all or substantially all of the assets of the Company of the nature
described in Section 2(g)(iii)(A), (B) or (C) hereof until immediately prior to the consummation of
such merger, consolidation, statutory share exchange or disposition of all or substantially all of
the assets of the Company rather than occurring at the time of approval by the shareholders of the
Company of a definitive agreement or plan to merge or consolidate the Company, effect such a
statutory share exchange or dispose of all or substantially all of the assets of the Company.

     (h) “Code” means the Internal Revenue Code of 1986, as amended and in effect from time
to time, or any successor statute.

     (i) “Committee” means two or more Non-Employee Directors designated by the Board to
administer this Plan under Section 3 hereof and constituted so as to permit this Plan to
comply with Exchange Act Rule 16b-3; provided that if no Committee is designated by the
Board, the Board shall constitute the Committee.

     (j) “Company” means Wilsons The Leather Experts Inc., a Minnesota corporation, or any
successor to all or substantially all of its businesses by merger, consolidation, purchase
of assets or otherwise.

     (k) “Disability” means any physical or mental incapacitation whereby a Participant is
unable for a period of twelve consecutive months or for an aggregate of twelve months in any
twenty-four consecutive month period to perform his or her duties for the Company or any
Affiliate. “Disabled,” with respect to any Participant, shall mean that such Participant has
incurred a Disability.

     (l) “Exchange Act” means the Securities Exchange Act of 1934, as amended; “Exchange Act
Rule 16b-3” means Rule 16b-3 promulgated by the Securities and Exchange

4

 

Commission under the Exchange Act as in effect with respect to the Company or any successor
regulation.

     (m) “Fair Market Value” as of any date means, unless otherwise expressly provided in
this Plan:

     (i) (A) the closing sale price of a Share on the composite tape for New York
Stock Exchange (“NYSE”) listed shares, or if Shares are not quoted on the composite
tape for NYSE listed shares, on the Nasdaq National Market or any similar system
then in use or, (B) if clause (i)(A) is not applicable, the mean between the closing
“bid” and the closing “asked” quotation of a Share on the Nasdaq SmallCap Market or
any similar system then in use, or (C) if the Shares are not quoted on the NYSE
composite tape or on the Nasdaq National Market or the Nasdaq SmallCap Market or any
similar system then in use, the closing sale price of a Share on the principal
United States securities exchange registered under the Exchange Act on which the
Shares are listed, in any case on the date immediately preceding that date, or, if
no sale of Shares shall have occurred on that date, on the next preceding day on
which a sale of Shares occurred, or

     (ii) if clause (i) is not applicable, what the Committee determines in good
faith to be 100% of the fair market value of a Share on that date.

     However, 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, 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 such 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 said regulations. The
determination of Fair Market Value shall be subject to adjustment as provided in Section
12(f) hereof.

     (n) “Fundamental Change” 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 Company.

     (o) “Incentive Stock Option” means any Option designated as such and granted in
accordance with the requirements of Section 422 of the Code or any successor to such
section.

     (p) “Non-Employee Director” means a member of the Board who is considered a
non-employee director within the meaning of Exchange Act Rule 16b-3.

     (q) “Non-Qualified Stock Option” means an Option other than an Incentive Stock Option.

     (r) “Other Stock-Based Award” means an Award of Stock or an Award based on Stock other
than Options, Stock Appreciation Rights, Restricted Stock or Performance Shares.

     (s) “Option” means a right to purchase Stock (or, if the Committee so provides in an
applicable Agreement, Restricted Stock), including both Non-Qualified Stock Options and
Incentive Stock Options.

5

 

     (t) “Parent” means a “parent corporation,” as that term is defined in Section 424(e) of
the Code, or any successor provision.

     (u) “Participant” means an Associate to whom an Award is made.

     (v) “Performance Period” means the period of time as specified in an Agreement over
which Performance Shares are to be earned.

     (w) “Performance Shares” means a contingent award of a specified number of Performance
Shares, with each Performance Share equivalent to one or more Shares or a fractional Share
or a Unit expressed in terms of one or more Shares or a fractional Share, as specified in
the applicable Agreement, a variable percentage of which may vest depending upon the extent
of achievement of specified performance objectives during the applicable Performance Period.

     (x) “Plan” means this Amended and Restated 2000 Long Term Incentive Plan, as amended
and in effect from time to time, provided that the references in Section 12(a) hereof to the
original Plan shall mean the Plan effective as of March 23, 2000, prior to the subsequent
amendments.

     (y) “Restricted Stock” means Stock granted under Section 10 hereof so long as such
Stock remains subject to one or more restrictions.

     (z) “Share” means a share of Stock.

     (aa) “Stock” means the Company’s common stock, $0.01 par value per share (as such par
value may be adjusted from time to time).

     (bb) “Stock Appreciation Right” means a right, the value of which is determined
relative to appreciation in value of Shares pursuant to an Award granted under Section 8
hereof.

     (cc) “Subsidiary” means a “subsidiary corporation,” as that term is defined in Section
424(f) of the Code, or any successor provision.

     (dd) “Successor” with respect to a Participant means the legal representative of an
incompetent Participant and, if the Participant is deceased, the legal representative of the
estate of the Participant or the person or persons who may, by bequest or inheritance, or
under the terms of an Award or of forms submitted by the Participant to the Committee under
Section 12(i) hereof, acquire the right to exercise an Option or Stock Appreciation Right or
receive cash and/or Shares issuable in satisfaction of an Award in the event of a
Participant’s death.

     (ee) “Term” means the period during which an Option or Stock Appreciation Right may be
exercised or the period during which the restrictions placed on Restricted Stock or any
other Award are in effect.

     (ff) “Unit” means a bookkeeping entry that may be used by the Company to record and
account for the grant of Stock, Stock Appreciation Rights and Performance Shares expressed
in terms of Units of Stock until such time as the Award is paid, cancelled, forfeited or
terminated.

     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
plural.

6

 

     3. Administration.

     (a) Authority of Committee. The Committee shall administer this Plan. The
Committee shall have exclusive power, subject to the limitations contained in this Plan, to
make Awards and to determine when and to whom Awards will be granted, and the form, amount
and other terms and conditions of each Award, subject to the provisions of this Plan. The
Committee, subject to the limitations contained in this Plan, may 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. The Committee shall
have the authority to interpret this Plan and any Award or Agreement made under this Plan,
to establish, amend, waive and rescind any rules and regulations relating to the
administration of this Plan, to determine the terms and provisions of any Agreements entered
into hereunder (not inconsistent with this Plan), and to make all other determinations
necessary or advisable for the administration of this Plan. The Committee may correct any
defect, supply any omission or reconcile any inconsistency in this Plan or in any Award in
the manner and to the extent it shall deem desirable. The determinations of the Committee in
the administration of this Plan, as described herein, shall be final, binding and
conclusive. A majority of the members of the Committee shall constitute a quorum for any
meeting of the Committee.

     (b) Delegation of Authority. The Committee may delegate all or any part of its
authority under this Plan to officers of the Company or other persons who are not
Non-Employee Directors for purposes of determining and administering Awards solely to
Associates who are not then subject to the reporting requirements of Section 16 of the
Exchange Act. Any officer to whom the Committee delegates such authority may, in turn,
delegate such authority to such other officer of the Company as the officer delegating such
authority may determine.

     (c) Rule 16b-3 Compliance. It is intended that this Plan and all Awards granted
pursuant to it shall be administered by the Committee so as to permit this Plan and Awards
to comply with Exchange Act Rule 16b-3. If any provision of this Plan or of any Award would
otherwise frustrate or conflict with the intent expressed in this Section 3(c), that
provision to the extent possible shall be interpreted and deemed amended in the manner
determined by the Committee so as to avoid such conflict. To the extent of any remaining
irreconcilable conflict with such intent, the provision shall be deemed void as applicable
to Participants who are then subject to the reporting requirements of Section 16 of the
Exchange Act to the extent permitted by law and in the manner deemed advisable by the
Committee.

     (d) Indemnification. To the full extent permitted by law, (a) each member and
former member of the Committee and each person to whom the Committee delegates or has
delegated authority under this Plan shall be entitled to indemnification by the Company
against and from any loss, liability, judgment, damage, cost and reasonable expense incurred
by such member, former member or other person by reason of any action taken, failure to act
or determination made in good faith under or with respect to this Plan, and (b) no member or
former member of the Committee or any person to whom the Committee delegates or has
delegated authority under this Plan shall be liable for any act or determination made in
good faith under or with respect to this Plan.

     4. Shares Available; Maximum Payouts.

     (a) Shares Available. The number of Shares available for distribution under
this Plan is 4,200,000 (subject to adjustment under Section 12(f) hereof). Notwithstanding
anything to the

7

 

contrary provided in this Plan, any Shares subject to an Award granted on or after the
effective date of this Amended and Restated 2000 Long Term Incentive Plan provided in
Section 12(a) hereof, except Options, Stock Appreciation Rights and Awards of Stock without
restrictions, shall be counted against the total number of shares available for distribution
under this Plan, as set forth in the first sentence of this Section 4(a) (subject to any
adjustment under Section 12(f) hereof), as two Shares for every one Share granted.

     (b) Shares Again Available. Any Shares subject to an Award under this Plan
which are not used because the Award expires without all Shares subject to such Award having
been issued or because the terms and conditions of the Award are not met may again be used
for an Award under this Plan. Any Shares that are the subject of Awards which are
subsequently forfeited to the Company pursuant to the restrictions applicable to such Award
may again be used for an Award under this Plan. If a Participant exercises a Stock
Appreciation Right, any Shares covered by the Stock Appreciation Right in excess of the
number of Shares issued (or, in the case of a settlement in cash or any other form of
property, in excess of the number of Shares equal in value to the amount of such settlement,
based on the Fair Market Value of such Shares on the date of such exercise) may again be
used for an Award under this Plan. If, in accordance with the Plan, a Participant uses
Shares to (i) pay a purchase or exercise price, including an Option exercise price, or (ii)
satisfy tax withholdings, such Shares may again be used for an Award under this Plan. The
maximum number of shares available for distribution under this Plan for issuance of
Incentive Stock Options is 4,200,000.

     (c) No Fractional Shares. No fractional Shares may be issued under this Plan;
fractional Shares will be rounded to the nearest whole Share, for which purpose a one-half
Share shall be rounded to up the next highest whole Share.

     (d) Maximum Payouts. No more than 600,000 Shares subject to this Plan (subject
to adjustment under Section 12(f) hereof) may be granted in the aggregate pursuant to
Restricted Stock (if vesting is based on a period of time without regard to the attainment
of specified performance conditions) and Other Stock-Based Awards.

     5. Eligibility. Awards may be granted under this Plan to any Associate at the
discretion of the Committee.

     6. General Terms of Awards.

     (a) Awards. Awards under this Plan may consist of Options (either Incentive
Stock Options or Non-Qualified Stock Options), Stock Appreciation Rights, Performance
Shares, Restricted Stock and Other Stock-Based Awards. Awards of Restricted Stock may, in
the discretion of the Committee, provide the Participant with dividends or dividend
equivalents and voting rights prior to vesting (whether vesting is based on a period of
time, the attainment of specified performance conditions or otherwise).

     (b) Amount of Awards. Each Agreement shall set forth the number of Shares of
Restricted Stock, Stock or Performance Shares subject to such Agreement, or the number of
Shares to which the Option applies or with respect to which payment upon the exercise of the
Stock Appreciation Right is to be determined, as the case may be, together with such other
terms and conditions applicable to the Award (not inconsistent with this Plan) as determined
by the Committee in its sole discretion.

8

 

     (c) Term. Each Agreement, other than those relating solely to Awards of Stock
without restrictions, shall set forth the Term of the Award and any applicable Performance
Period for Performance Shares, as the case may be, but in no event shall the Term of an
Award or the Performance Period be longer than five years after the date of grant. An
Agreement with a Participant may permit acceleration of vesting requirements and of the
expiration of the applicable Term upon such terms and conditions as shall be set forth in
the Agreement, which may, but, unless otherwise specifically provided in this Plan, need
not, include, without limitation, acceleration resulting from the occurrence of a Change in
Control, a Fundamental Change, or the Participant’s death or Disability. Acceleration of the
Performance Period of Performance Shares shall be subject to Section 9(b) hereof.

     (d) Agreements. Each Award under this Plan shall be evidenced by an Agreement
setting forth the terms and conditions, as determined by the Committee, that shall apply to
such Award, in addition to the terms and conditions specified in this Plan.

     (e) Transferability. During the lifetime of a Participant to whom an Award is
granted, only such Participant (or such Participant’s legal representative or, if so
provided in the applicable Agreement in the case of a Non-Qualified Stock Option, a
permitted transferee as hereafter described) may exercise an Option or Stock Appreciation
Right or receive payment with respect to Performance Shares or any other Award. No Award of
Restricted Stock (prior to the expiration of the restrictions), Options, Stock Appreciation
Rights, Performance Shares or other Award (other than an award of Stock without
restrictions) may be sold, assigned, transferred, exchanged, or otherwise encumbered, and
any attempt to do so shall be of no effect. Notwithstanding the immediately preceding
sentence, (i) an Agreement may provide that an Award shall be transferable to a Successor in
the event of a Participant’s death and (ii) an Agreement may provide that a Non-Qualified
Stock Option shall be transferable to any member of a Participant’s “immediate family” (as
such term is defined in Rule 16a-1(e) promulgated under the Exchange Act, or any successor
rule or regulation) or to one or more trusts whose beneficiaries are members of such
Participant’s “immediate family” or partnerships in which such family members are the only
partners, and (iii) an Agreement may provide that a Non-Qualified Option shall be
transferable pursuant to a qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act, or the rules thereunder; provided,
however, that the Participant receives no consideration for the transfer. Any Non-Qualified
Stock Option held by a permitted transferee shall continue to be subject to the same terms
and conditions that were applicable to such Non-Qualified Stock Option immediately prior to
its transfer and may be exercised by such permitted transferee as and to the extent that
such Non-Qualified Stock Option has become exercisable and has not terminated in accordance
with the provisions of this Plan and the applicable Agreement. For purposes of any provision
of this Plan relating to notice to a Participant or to vesting or termination of a
Non-Qualified Stock Option upon the termination of employment of a Participant, the
references to “Participant” shall mean the original grantee of the Non-Qualified Stock
Option and not any permitted transferee.

9

 

     (f) Termination of Employment. Except as otherwise determined by the Committee
or provided by the Committee in an applicable Agreement (which may, without limitation, in
the sole discretion of the Committee, provide for an extension of the exercisability of
Options and Stock Appreciation Rights beyond the periods set forth in paragraphs 1(i)
through (v) below, subject in all events to paragraph 1(v) below), in case of a
Participant’s termination of employment, the following provisions shall apply:

     (1) Options and Stock Appreciation Rights.

	 	(i)  	Death. If a Participant’s
employment terminates because of his or her death, then any
Option or Stock Appreciation Right that has not expired or been
terminated shall become exercisable in full, and may be
exercised by the Participant’s Successor at any time, or from
time to time, within one year after the date of the
Participant’s death.
	 
	 	(ii)  	Disability. If a
Participant’s employment terminates because of Disability, then
any Option or Stock Appreciation Right that has not expired or
been terminated shall become exercisable in full, and the
Participant or the Participant’s Successor may exercise such
Option or Stock Appreciation Right at any time, or from time to
time, within one year after the date of the Participant’s
Disability.
	 
	 	(iii)  	Cause. If a
Participant’s employment is terminated by the Company for Cause,
then any Option or Stock Appreciation Right granted on or after
the effective date of this Amended and Restated 2000 Long Term
Incentive Plan provided in Section 12(a) hereof that has not
expired or been terminated shall terminate immediately upon
termination of the Participant’s employment.
	 
	 	(iv)  	Reasons other than Death,
Disability or Cause. If a Participant’s employment
terminates for any reason other than death, Disability or, with
respect to any Option or Stock Appreciation Rights granted on or
after the effective date of this Amended and Restated 2000 Long
Term Incentive Plan provided in Section 12(a) hereof, Cause,
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, but
only to the extent that such Option or Stock Appreciation Right
was exercisable immediately prior to such Participant’s
termination of employment.
	 
	 	(v)  	Expiration of Term.
Notwithstanding the foregoing paragraphs (i)-(iv), in no event
shall an Option or a Stock Appreciation Right be exercisable
after expiration of the Term of such Award. Any Option or Stock
Appreciation Right that is not exercised within the periods set
forth in the foregoing paragraphs (i)-(iv), except as otherwise
provided by the Company in the applicable

10

 

	 	   	Agreement, shall terminate as of the end of the periods
described in such paragraphs.

     (2) Performance Shares. If a Participant’s employment with the
Company or any of its Affiliates terminates during a Performance Period
because of death or Disability, or under other circumstances provided by the
Committee in its discretion in the applicable Agreement or otherwise, the
Participant, unless the Committee shall otherwise provide in the applicable
Agreement, shall be entitled to a payment of Performance Shares at the end
of the Performance Period 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 Period) and prorated for the portion of the
Performance Period during which the Participant was employed by the Company
or any Affiliate. Except as provided in this Section 6(f)(2) or in the
applicable Agreement, if a Participant’s employment with the Company or any
of its Affiliates terminates during a Performance Period, then such
Participant shall not be entitled to any payment with respect to that
Performance Period.

     (3) Restricted Stock. Unless otherwise provided in the
applicable 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 pro rated for the portion of
the Term of the Awards during which the Participant was employed by the
Company or any Affiliate, 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.

     (g) Rights As Shareholder. A Participant shall have no rights as a shareholder
with respect to any securities covered by an Award until the date the Participant becomes
the holder of record.

     7. Stock Options.

     (a) Terms of All Options.

     (1) Grants. Each Option shall be granted pursuant to an Agreement as
either an Incentive Stock Option or a Non-Qualified Stock Option. Only Non-Qualified
Stock Options may be granted to Associates who are not employees of the Company or
an Affiliate.

     (2) Purchase Price. The purchase price of each Share subject to an
Option shall be determined by the Committee and set forth in the applicable
Agreement, but shall not be less than 100% of the Fair Market Value of a Share as of
the date the Option is granted. 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, Participants may simultaneously
exercise Options and sell the Shares thereby acquired pursuant to a brokerage or
similar relationship and use the proceeds from such sale to pay the purchase price
of such Shares. The purchase price may be paid in cash or, if the Committee so
permits, through a reduction of the number of Shares delivered to the Participant
upon exercise of the Option or delivery or tender to the Company of Shares

11

 

held by such Participant (in each case, such 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, unless otherwise
provided in the Agreement.

     (3) Exercisability. Each Option shall be exercisable in whole or in
part on the terms provided in the Agreement, provided that if a Change in Control
shall occur, then any Option that has not expired or been terminated shall become
exercisable in full. In no event shall any Option be exercisable at any time after
its Term. When an Option is no longer exercisable, it shall be deemed to have lapsed
or terminated.

     (4) Maximum Annual Options Per Participant. No Participant may receive
any combination of Options and Stock Appreciation Rights relating to more than
800,000 Shares in the aggregate pursuant to Awards in any fiscal year of the Company
under this Plan (subject to adjustment under Section 12(f) hereof).

     (b) Incentive Stock Options. In addition to the other terms and conditions
applicable to all Options:

     (i) 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 this 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 such
limitation is necessary to qualify the Option as an Incentive Stock Option, and to
the extent an Option or Options granted to a Participant exceed such limit, such
Option or Options shall be treated as a Non-Qualified Stock Option;

     (ii) an Incentive Stock Option shall not be exercisable and the Term of the
Award shall not be more than five years after the date of grant (or such other limit
as may be required by the Code) if such limitation is necessary to qualify the
Option as an Incentive Stock Option;

     (iii) the Agreement covering an Incentive Stock Option shall contain such other
terms and provisions which the Committee determines necessary to qualify such Option
as an Incentive Stock Option; and

     (iv) notwithstanding any other provision of this Plan to the contrary, no
Participant may receive an Incentive Stock Option under this Plan if, at the time
the Award is granted, the Participant owns (after application of the rules contained
in Section 424(d) of the Code, or its successor provision) Shares possessing more
than ten percent of the total combined voting power of all classes of stock of the
Company or its subsidiaries, unless (A) the option price for such Incentive Stock
Option is at least 110% of the Fair Market Value of the Shares subject to such
Incentive Stock Option on the date of grant and (B) such Option is not exercisable
after the date five years from the date such Incentive Stock Option is granted.

     (c) Repricing; Shareholder Approval. Except as provided in Section 12(f)
hereof, neither the Board nor the Committee shall cause the Company to reduce the exercise
price of any outstanding Option Award, whether through amendment, exchange of Options, or
other means, without the prior approval of the shareholders of the Company.

12

 

     8. Stock Appreciation Rights. An Award of a Stock Appreciation Right shall entitle the
Participant, 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 which 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 a previously or contemporaneously granted Option, or independent of any Option. If
issued in connection with an Option, the Committee may impose a condition that exercise of a Stock
Appreciation Right cancels the Option with which it is connected and exercise of the connected
Option cancels the Stock Appreciation Right. Each Stock Appreciation Right may be exercisable in
whole or in part on the terms provided in the applicable Agreement, provided that if a Change in
Control shall occur, then any Stock Appreciation Right that has not expired or been terminated
shall become exercisable in full. No Stock Appreciation Right shall be exercisable at any time
after its Term. When a Stock Appreciation Right is no longer exercisable, it shall be deemed to
have lapsed or terminated. Except as otherwise provided in the applicable Agreement, upon exercise
of a Stock Appreciation Right, payment to the Participant (or to his or her Successor) shall be
made in the form of cash, Stock or a combination of cash and Stock as promptly as practicable after
such exercise, provided that with respect to any Stock Appreciation Right that may be paid in cash,
the Agreement shall specify such additional terms as may be necessary to satisfy the requirements
of Section 409A of the Code. The Agreement may provide for a limitation upon the amount or
percentage of the total appreciation on which payment (whether in cash and/or Stock) may be made in
the event of the exercise of a Stock Appreciation Right. As specified in Section 7(a) hereof, no
Participant may receive any combination of Options and Stock Appreciation Rights relating to more
than 800,000 Shares in the aggregate pursuant to Awards in any fiscal year of the Company under
this Plan (subject to adjustment under Section 12(f) hereof).

     9. Performance Shares.

     (a) Initial Award. An Award of Performance Shares shall entitle a Participant
(or a Successor) to future payments based upon the achievement of performance targets
established in writing by the Committee. Payment shall be made in Stock, or a combination of
cash and Stock, as determined by the Committee. With respect to those Participants who are
“covered employees” within the meaning of Section 162(m) of the Code and the regulations
thereunder, such performance targets shall consist of one or any combination of two or more
of earnings or earnings per share before income tax (profit before taxes), net earnings or
net earnings per share (profit after tax), inventory, total, or net operating asset
turnover, operating income, total shareholder return, return on equity, return on net
assets, pre-tax and pre-interest expense return on average invested capital, which may be
expressed on a current value basis, or sales growth, and any such targets may relate to one
or any combination of two or more of corporate, group, unit, division, Affiliate or
individual performance and may be measured in absolute terms or relative to a designated
peer group or index of comparable companies. The Agreement may establish that a portion of
the maximum amount of a Participant’s Award will be paid for performance which exceeds the
minimum target but falls below the maximum target applicable to such Award. The Agreement
shall also provide for the timing of such payment. Following the conclusion or acceleration
of each Performance Period, 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 such Performance Period have been satisfied, and (iii) payment is due
with respect to a Performance Share Award. No Participant may receive Performance Shares
relating to more than 200,000 Shares (or cash equivalents), or receive more than 200,000
Shares (or cash equivalents) pursuant to Awards of Performance Shares in any fiscal year of
the Company under this Plan (subject to adjustment under Section 12(f) hereof).

13

 

     (b) Acceleration and Adjustment. The applicable Agreement may permit an
acceleration of the Performance Period and an adjustment of performance targets and payments
with respect to some or all of the Performance Shares awarded to a Participant, upon such
terms and conditions as shall be set forth in the Agreement, upon the occurrence of certain
events, which may, but, unless otherwise specifically provided in this Plan, need not,
include, without limitation, a Change in Control, a Fundamental Change, the Participant’s
death or Disability, a change in accounting practices of the Company or its Affiliates, or,
with respect to payments in Stock for Performance Share Awards, a reclassification, stock
dividend, stock split or stock combination as provided in Section 12(f) hereof.

     (c) Valuation. To the extent that payment of a Performance Share is made in
cash, a Performance Share earned after conclusion of a Performance Period shall have a value
equal to the Fair Market Value of a Share on the last day of such Performance Period.

     10. Restricted Stock. Subject to Section 4(d) hereof, Restricted Stock may be granted
in the form of Shares registered in the name of the Participant but held by the Company until the
restrictions on the Restricted Stock Award lapse, subject to forfeiture as provided in the
applicable Agreement. Any employment conditions, performance conditions, restrictions on
transferability and the Term of the Award shall be established by the Committee in its discretion
and included in the applicable Agreement. The Committee may provide in the applicable Agreement 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, which may, but need not, include without
limitation a Change in Control, a Fundamental Change or the Participant’s death or Disability. If a
restriction placed on a Restricted Stock Award lapses with the passage of time, such Restricted
Stock Award shall provide that no more than one-third of the Shares subject to that Restricted
Stock Award may vest in any year (except that a Restricted Stock Award which vests with the passage
of time may provide for accelerated vesting in whole or in part as a result of the attainment of an
annual performance target), provided that nothing stated herein shall limit the Committee’s right
to provide for acceleration of the Term and the lapse of the restriction on the Restricted Stock
Award in the event of any one or more of a Change of Control, a Fundamental Change or the
Participant’s death or Disability or the termination of employment by the Company or a Subsidiary
without cause. The Committee, in the applicable Agreement, may, in its sole discretion, award all
or any of the rights of a shareholder with respect to the Shares of Restricted Stock during the
period that they remain subject to restrictions, including, without limitation, the right to vote
the Shares and receive dividends. With respect to those Participants who are “covered employees”
within the meaning of Section 162(m) of the Code and the regulations thereunder, any performance
conditions to the lapse of restrictions on restricted stock shall be based on performance targets
that consist of one or any combination of two or more of earnings or earnings per share before
income tax (profit before taxes), net earnings or net earnings per share (profit after tax),
inventory, total, or net operating asset turnover, operating income, total shareholder return,
return on equity, return on net assets, pre-tax and pre-interest expense return on average invested
capital, which may be expressed on a current value basis, or sales growth, and any such targets may
relate to one or any combination of two or more of corporate, group, unit, division, Affiliate or
individual performance and may be measured in absolute terms or relative to a designated peer group
or index of comparable companies. No participant may receive more than 200,000 Shares of Restricted
Stock subject to performance conditions or be entitled to have restrictions lapse with respect to
more than 200,000 Shares of Restricted Stock subject to performance conditions in any fiscal year
of the Company under this Plan (subject to adjustment under Section 12(f) hereof).

     11. Other Stock-Based Awards. Subject to Section 4(d) hereof, the Committee may from
time to time grant Awards of Stock, and other Awards under this Plan (collectively herein defined
as “Other Stock-Based Awards”), including without limitation those Awards pursuant to which Shares
may

14

 

be acquired in the future, such as Awards denominated in Stock, Stock Units, securities convertible
into Stock and phantom securities. The Committee, in its sole discretion, shall determine, and
provide in the applicable Agreement for, the terms and conditions of such Awards, provided that
such Awards shall not be inconsistent with the terms and purposes of this Plan. The Committee may,
in its sole discretion, direct the Company to issue Shares subject to restrictive legends and/or
stop transfer instructions which are consistent with the terms and conditions of the Award to which
such Shares relate.

     12. General Provisions.

     (a) Effective Date of this Plan. The original Plan became effective as of March
23, 2000, and was approved and ratified by the affirmative vote of the holders of a majority
of the outstanding Shares of Stock present or represented and entitled to vote in person or
by proxy at a meeting of the shareholders of the Company held on May 18, 2000. The original
Plan was amended by amendments dated August 24, 2000, March 21, 2002, June 11, 2003 and
September 18, 2003. This Amended and Restated 2000 Long Term Incentive Plan shall become
effective as of February 21, 2005, provided that this Amended and Restated 2000 Long Term
Incentive Plan is approved and ratified by the affirmative vote of the holders of a majority
of the outstanding Shares of Stock present or represented and entitled to vote in person or
by proxy at a meeting of the shareholders of the Company held no later than June 30, 2005.
If this Amended and Restated 2000 Long Term Incentive Plan is not so approved, any Award
granted subject to such approval, including without limitation any Award that would not have
been permitted under the original Plan as amended prior to the effective date of this
Amended and Restated 2000 Long Term Incentive Plan, shall be canceled and be null and void.
In no event shall any Award of Restricted Stock or Performance Shares granted under this
Amended and Restated 2000 Long Term Incentive Plan vest, and in no event may any Award of
Options or Stock Appreciation Rights be exercised, prior to approval and ratification of
this 2000 Long Term Incentive Plan by the shareholders as set forth above to the extent that
such Award would not have been permitted under the original Plan as amended prior to the
effective date of this Amended and Restated 2000 Long Term Incentive Plan.

     (b) Duration of this Plan; Date of Grant. This Plan shall remain in effect
until all Stock subject to it shall be distributed or all Awards have expired or lapsed,
whichever is latest to occur, or this Plan is terminated pursuant to Section 12(e) hereof.
No Award shall be made more than ten years after the effective date of this Amended and
Restated 2000 Long Term Incentive Plan provided in Section 12(a) hereof. The date and time
of approval by the Committee of the granting of an Award shall be considered the date and
time at which such Award is made or granted, notwithstanding the date of any Agreement with
respect to such Award; provided, however, that the Committee may grant Awards other than
Incentive Stock Options to Associates or to persons who are about to become Associates, to
be effective and deemed to be granted on the occurrence of certain specified contingencies,
provided that if the Award is granted to a non-Associate who is about to become an
Associate, such specified contingencies shall include, without limitation, that such person
becomes an Associate.

     (c) Right to Terminate Employment. Nothing in this Plan or in any Agreement
shall confer upon any Participant who is an employee of the Company the right to continue in
the employment of the Company or any Affiliate or affect any right which the Company or any
Affiliate may have to terminate or modify the employment of the Participant with or without
cause.

     (d) Tax Withholding. The Company may withhold from any payment of cash or Stock
to a Participant or other person under this Plan an amount sufficient to cover any required

15

 

withholding taxes, including the Participant’s social security and Medicare taxes (FICA) and
federal, state and local income tax with respect to income arising from payment of the
Award. The Company shall have the right to require the payment of any such taxes before
issuing any Stock pursuant to the Award. In lieu of all or any part of a cash payment from a
person receiving Stock under this Plan, the Committee may, in the applicable Agreement or
otherwise, permit a person to cover all or any part of the required withholdings, and to
cover any additional withholdings up to the amount needed to cover the person’s full FICA
and federal, state and local income tax with respect to income arising from payment of the
Award, through a reduction of the number of Shares delivered to such person or a delivery or
tender to the Company of Shares held by such person, in each case valued in the same manner
as used in computing the withholding taxes under applicable laws.

     (e) Amendment, Modification and Termination of this Plan. Except as provided in
this Section 12(e), the Board may at any time amend, modify, terminate or suspend this Plan.
Except as provided in this Section 12(e), the Committee may at any time alter or amend any
or all Agreements under this Plan to the extent permitted by law, in which event, as
provided in Section 2(b) hereof, the term “Agreement” shall mean the Agreement as so
amended. Amendments are subject to approval of the shareholders of the Company only if such
approval is necessary to maintain this Plan in compliance with the requirements of Exchange
Act Rule 16b-3, Section 422 of the Code, their successor provisions, or any other applicable
law or regulation. No termination, suspension or modification of this Plan may materially
and adversely affect any right acquired by any Participant (or a Participant’s legal
representative) or any Successor or permitted transferee under an Award granted before the
date of termination, suspension or modification, unless otherwise provided in an Agreement
or otherwise or required as a matter of law. It is conclusively presumed that any adjustment
for changes in capitalization provided for in Section 9(b) or 12(f) hereof does not
adversely affect any right of a Participant or other person under an Award.

     (f) Adjustment for Changes in Capitalization. Appropriate adjustments in the
aggregate number and type of securities available for Awards under this Plan, in the
limitations on the number and type of securities that may be issued to an individual
Participant, in the number and type of securities and amount of cash subject to Awards then
outstanding, in the Option exercise price as to any outstanding Options and, subject to
Section 9(b) hereof, in outstanding Performance Shares and payments with respect to
outstanding Performance Shares 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 12(g) hereof), recapitalization, reclassification, stock dividend, stock
split, stock combination, spin-off or other relevant change, provided that fractional Shares
shall be rounded to the nearest whole Share, for which purpose a one-half Share shall be
rounded to the next highest whole Share.

     (g) Fundamental Change. In the event of a proposed Fundamental Change, the
Committee may, but shall not be obligated to:

     (i) with respect to a Fundamental Change that involves a merger, 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 such merger or consolidation or, if appropriate, the Parent of the
Company or such surviving corporation, in lieu of Options, Stock Appreciation Rights
and capital stock of the Company, or

16

 

     (ii) with respect to any Fundamental Change, including, without limitation, a
merger, consolidation or statutory share exchange,

declare, at least twenty days prior to the occurrence of the Fundamental Change, 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 prior to the occurrence of, the Fundamental
Change in exchange for payment to each holder of an Option or Stock Appreciation Right,
within 20 days after the Fundamental Change, of cash (or with respect to an Option, if the
Committee so elects in lieu of solely cash, of such form(s) of consideration, including cash
and/or property, singly or in such combination as the Committee shall determine, that such
holder of an Option would have received as a result of the Fundamental Change if such holder
had exercised such holder’s Option immediately prior to the Fundamental Change) 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 12(g)) 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 8 hereof, 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 8, 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 12(g).
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 12(g), each outstanding Option and Stock Appreciation Right that
shall not have been exercised prior to the Fundamental Change shall be canceled at the time
of, or immediately prior to, the Fundamental Change, as provided in the declaration.
Notwithstanding the foregoing, no person holding an Option or Stock Appreciation Right shall
be entitled to the payment provided for in this Section 12(g) if such Option or Stock
Appreciation Right shall have terminated, expired or been cancelled. For purposes of this
Section 12(g) 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,
notwithstanding anything to the contrary provided in this Plan.

     (h) Other Benefit and Compensation Programs. Payments and other benefits
received by a Participant under an Award shall not be deemed a part of a Participant’s
regular, recurring compensation for purposes of any termination, indemnity or severance pay
laws 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 the Committee determines that an Award or portion of an Award should be
included to reflect competitive compensation practices or to recognize that an Award has
been made in lieu of a portion of competitive cash compensation.

     (i) Beneficiary Upon Participant’s Death. To the extent that the transfer of a
Participant’s Award at death is permitted by this Plan or under an Agreement, (i) a
Participant’s Award shall be transferable to the beneficiary, if any, designated on forms
prescribed by and filed with the Committee and (ii) upon the death of the Participant, such
beneficiary shall succeed to the rights of the Participant to the extent permitted by law
and this Plan. If no such designation of

17

 

a beneficiary has been made, the Participant’s legal representative shall succeed to the
Awards, which shall be transferable by will or pursuant to laws of descent and distribution
to the extent permitted by this Plan or under an Agreement.

     (j) Unfunded Plan. This 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 this
Plan. None of the Company, its Affiliates, the Committee, or the Board shall be deemed to be
a trustee of any amounts to be paid under this Plan nor shall anything contained in this
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. To the extent any person acquires a right to receive an Award under this Plan,
such right shall be no greater than the right of an unsecured general creditor of the
Company.

     (k) Limits of Liability.

     (i) Any liability of the Company to any Participant with respect to an Award
shall be based solely upon contractual obligations created by this Plan and the
Agreement.

     (ii) Except as may be required by law, neither the Company nor any member or
former member of the Board or of the Committee, nor any other person participating
(including participation pursuant to a delegation of authority under Section 3(b)
hereof) in any determination of any question under this Plan, or in the
interpretation, administration or application of this Plan, shall have any liability
to any party for any action taken, or not taken, in good faith under this Plan.

     (l) Compliance with Applicable Legal Requirements. No certificate for Shares
distributable pursuant to this Plan shall be issued and delivered unless the issuance of
such 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, if any, on which the Company’s
Shares may, at the time, be listed.

     (m) Deferrals and Settlements. 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 this Plan. It may also provide that deferred
settlements include the payment or crediting of interest on the deferral amounts.

     13. Substitute Awards. Awards may be granted under this Plan from time to time in
substitution for Awards held by employees of other corporations who are about to become Associates,
or whose employer is about to become a Subsidiary of the Company, as the result of a merger or
consolidation of the Company or a Subsidiary of the Company with another corporation, the
acquisition by the Company or a Subsidiary of the Company of all or substantially all the assets of
another corporation or the acquisition by the Company or a Subsidiary of the Company of at least
50% of the issued and outstanding stock of another corporation. The terms and conditions of the
substitute Awards so granted may vary from the terms and conditions set forth in this Plan to such
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.

18

 

     14. Governing Law. To the extent that federal laws do not otherwise control, this Plan
and all determinations made and actions taken pursuant to this Plan shall be governed by the laws
of Minnesota and construed accordingly.

     15. Severability. In the event any provision of this Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this
Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not
been included.

     16. Prior Plans. Notwithstanding the adoption of this Amended and Restated 2000 Long
Term Incentive Plan by the Board and approval of this Amended and Restated 2000 Long Term Incentive
Plan by the Company’s shareholders as provided by Section 12(a) hereof, the Company’s 1996 Stock
Option Plan and 1998 Stock Option Plan, as the same may have been amended from time to time (the
“Prior Plans”), shall remain in effect. All grants and awards heretofore made under the Prior Plans
shall be governed by the terms of the Prior Plans.

19

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