THE SPORTSMAN'S GUIDE, INC.
2004 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to promote the interests of the Company and its
shareholders by (i) attracting and retaining individuals eligible to participate
in the Plan; (ii) motivating such individuals by providing incentive
compensation; and (iii) aligning the interests of such individuals with the
interests of the Company's shareholders.
SECTION 2. DEFINITIONS
The following terms, as used in the Plan, shall have the meaning specified
below. Other capitalized terms shall have the meaning specified in the Plan.
a. "AWARD" means an award granted pursuant to Section 4.
b. "AWARD AGREEMENT" means a document described in Section 6 setting
forth the terms and conditions applicable to the Award granted to
c. "BOARD OF DIRECTORS" means the Board of Directors of the Company, as
it may be comprised from time to time.
d. "CHANGE OF CONTROL" means Change of Control as defined in Section
e. "CODE" means the Internal Revenue Code of 1986, and any successor
statute, as it or they may be amended from time to time.
f. "COMMITTEE" means the Compensation Committee of the Board of
Directors or such other committee as may be designated by the Board
g. "COMPANY" means The Sportsman's Guide, Inc., and any successor
h. "COVERED EMPLOYEE" means a covered employee within the meaning of
Code section 162(m)(3).
i. "DIVIDEND EQUIVALENT" means an amount equal to the amount of cash
dividends payable with respect to a Share after the date an Award is
j. "EMPLOYEE" means an employee of the Company or a Subsidiary. The
term includes consultants of the Company or a Subsidiary, but
excludes members of the Board of Directors who are not also
employees of the Company or a Subsidiary. The term also includes any
person who, in connection with the hiring of such person, has been
granted an Award prior to the date such person first performs
services for the Company or a Subsidiary, provided that no Award
granted to such a person shall become vested prior to the date that
such person first performs such services.
k. "EXCHANGE ACT" means the Securities Exchange Act of 1934, and any
successor statute, as it may be amended from time to time.
l. "FAIR MARKET VALUE" means (i) the average of the highest and lowest
sale prices of the Shares as reported on the Nasdaq reporting system
on the relevant date (or if the Shares are not then so traded, the
average of the highest and lowest sale prices of the Shares on the
stock exchange or over-the-counter market on which the Shares are
principally trading on such date), or if no sale of the Shares is
reported for such date, the next preceding day for which there is a
reported sale or (ii) if there is no public market for the Shares on
such date, fair market value as determined by the Committee.
m. "INCENTIVE STOCK OPTION" means an Option (or option granted pursuant
to any other plan of the Company or a Subsidiary) intended to comply
with Code section 422.
n. "INSIDER" means any person who is subject to Section 16 of the
Exchange Act, and any successor statutory provision, as it may be
amended from time to time.
o. "NON-QUALIFIED STOCK OPTION" means an Option not intended to comply
with Code section 422.
p. "OPTION" means an option granted pursuant to Section 4(a).
q. "PARTICIPANT" means any Employee who has been granted an Award.
r. "PERFORMANCE GOAL" means the level of performance, whether absolute
or relative to a peer group or index, established by the Committee
as the performance goal with respect to a Performance Measure.
Performance Goals may vary from Performance Period to Performance
Period and from Participant to Participant and may be established on
a stand-alone basis, in tandem or in the alternative.
s. "PERFORMANCE FORMULA" means, for a Performance Period, one or more
objective formulas or standards established by the Committee for
purposes of determining whether or the extent to which an Award has
been earned based on the level of performance attained with respect
to one or more Performance Goals. Performance Formulas may vary from
Performance Period to Performance Period and from Participant to
Participant and may be established on a stand-alone basis, in tandem
or in the alternative.
t. "PERFORMANCE MEASURE" means one or more of the following selected by
the Committee to measure Company and/or Subsidiary performance for a
Performance Period: basic or diluted earnings per share; revenue;
operating income; net income (either before or after taxes); net
income before interest and taxes; net income before interest, taxes,
depreciation and amortization; return on capital; return on equity;
net cash provided by operations; stock price and total shareholder
return. Each such measure shall be determined in accordance with
generally accepted accounting principles as consistently applied by
the Company and, if so determined by the Committee and to the extent
permitted under Code section 162(m), adjusted to omit the effects of
extraordinary items, gain or loss on the disposal of a business
segment, unusual or infrequently occurring events and transactions
and cumulative effects of changes in accounting principles.
Performance Measures may vary from Performance Period to Performance
Period and from Participant to Participant and may be established on
a stand-alone basis, in tandem or in the alternative.
u. "PERFORMANCE PERIOD" means one or more periods of time (of not less
than one fiscal year of the Company), as the Committee may
designate, over which the attainment of one or more Performance
Goals will be measured for the purpose of determining a
Participant's rights in respect of an Award.
v. "SHARES" means shares of Common Stock of the Company or any security
of the Company issued in substitution, exchange or lieu thereof.
w. "SUBSIDIARY" means (i) any corporation or other entity in which the
Company, directly or indirectly, controls 50% or more of the total
combined voting power of such corporation or other entity and (ii)
any other corporation or other entity in which the Company has a
significant equity interest, in either case as determined by the
x. "TEN-PERCENT SHAREHOLDER" means any person who owns, directly or
indirectly, on the relevant date, securities having 10% or more of
the combined voting power of all classes of the Company's securities
or of its parent or subsidiaries. For purposes of applying the
foregoing 10% limitation, the rules of Code section 424(d) shall
SECTION 3. ELIGIBILITY
The Committee may grant one or more Awards to any Employee designated by
it to receive an Award.
SECTION 4. AWARDS
The Committee may grant any one or more of the following types of Awards,
either singly, in tandem or in combination with other types of Awards:
a. OPTIONS. An Option is an option to purchase a specific number of
Shares exercisable at such time or times and subject to such terms
and conditions as the Committee may determine subject to the Plan,
provided that the term of an Option shall not exceed ten years.
(i) The exercise price of an Option shall not be less than 100% of
the Fair Market Value of the Shares on the date such Option is
(ii) The exercise price of an Option shall be paid in cash or check
(subject to collection); provided that, at the discretion of
the Committee, the exercise price may also be paid by the
tender, by either actual delivery or attestation, of Shares
acceptable to the Committee and valued at their Fair Market
Value on the date of exercise; through a combination of Shares
and cash; or through such other means as the Committee may
determine. Without limiting the foregoing, to the extent
permitted by applicable law:
A. The Committee may, on such terms and conditions as it
may determine, permit a Participant to elect to pay the
exercise price by authorizing a third party, pursuant to
a brokerage or similar arrangement, approved in advance
by the Committee, to simultaneously sell all (or a
sufficient portion) of the Shares acquired upon exercise
of such Option and to remit to the Company a sufficient
portion of the proceeds from such sale to pay the entire
exercise price of such Option and any required tax
withholding resulting therefrom.
(iii) No fractional Shares will be issued or accepted. The Committee
may impose such other conditions, restrictions and
contingencies with respect to Shares delivered pursuant to the
exercise of an Option as it deems desirable.
(iv) Incentive Stock Options shall be subject to the following
A. The aggregate Fair Market Value (determined on the date
that the Option is granted) of the Shares subject to
Incentive Stock Options which are exercisable by one
person for the first time during a particular calendar
year shall not exceed $100,000.
B. No Incentive Stock Option may be granted under this Plan
on or after the tenth anniversary of the earlier of:
(1) the date this Plan is adopted, or
(2) the date this Plan is approved by shareholders.
C. No Incentive Stock Option may be exercisable more than:
(1) in the case of an Employee who is not a
Ten-percent Shareholder on the date that the
Option is granted, ten years after the date the
Option is granted, and
(2) in the case of an Employee who is a Ten-percent
Shareholder on the date the Option is granted,
five years after the date the Option is granted.
D. In the case of an Employee who is a Ten-percent
Shareholder on the date that the Option is granted, the
exercise price of any Incentive Stock Option shall not
be less than 110% of the Fair Market Value of the Shares
subject to the Option on such date.
E. No Incentive Stock Option may be granted to a person who
is not an employee of the Company or a Subsidiary on the
date that the Option is granted.
b. RESTRICTED STOCK. Restricted Stock is Shares that are issued to a
Participant subject to restrictions on transfer and such other
restrictions on incidents of ownership as the Committee may
determine, including but not limited to the achievement of specific
goals with respect to Company, Subsidiary or individual performance
over a specified period of time. Subject to such restrictions, the
Participant as owner of such Restricted Stock shall have the rights
of the holder thereof, except that the Committee may provide at the
time of the Award that any dividends or other distributions paid
with respect to such Restricted Stock while subject to such
restrictions shall be accumulated or reinvested in Shares and held
subject to the same restrictions as the Restricted Stock and such
other terms and conditions as the Committee shall determine. A
certificate for the Restricted Stock, which certificate shall be
registered in the name of the Participant, shall bear an appropriate
restrictive legend and shall be subject to appropriate stop-transfer
orders; provided, however, that the certificates representing
Restricted Stock shall be held in custody by the Company until the
restrictions relating thereto otherwise lapse, and the Participant
shall deliver to the Company a stock power endorsed in blank
relating to the Restricted Stock.
c. STOCK EQUIVALENT UNITS. A Stock Equivalent Unit is an Award based on
the Fair Market Value of one Share. All or part of any Stock
Equivalent Units Award may be subject to conditions and restrictions
established by the Committee, including but not limited to the
achievement of specific goals with respect to Company, Subsidiary or
individual performance over a specified period of time. Dividend
Equivalents may be granted with respect to all or part of a Stock
Equivalent Unit Award. Alternatively, the Committee may also provide
for automatic awards of additional Stock Equivalent Units on each
date that cash dividends are paid on the Shares in an amount equal
to (i) the product of the dividend per Share times the total number
of Stock Equivalent Units held by the Participant as of the record
date for such cash
dividend divided by (ii) the Fair Market Value of a Share on the
dividend payment date. Stock Equivalent Units may be settled in
Shares or cash or both.
d. PERFORMANCE UNITS. A Performance Unit is an Award denominated in
cash, the amount of which may be based on the achievement of
specific goals with respect to Company, Subsidiary or individual
performance over a specified period of time. The maximum amount of
such compensation that may be paid to any one Participant with
respect to any one Performance Period shall be $1,000,000.
Performance Units may be settled in Shares or cash or both.
e. PERFORMANCE COMPENSATION AWARDS.
(i) The Committee may, at the time of grant of an Award (other
than an Option), designate such Award as a Performance
Compensation Award in order that such Award constitute
qualified performance-based compensation under Code section
162(m). With respect to each such Performance Compensation
Award, the Committee shall (on or before the 90th day of the
applicable Performance Period), establish, in writing, a
Performance Period, Performance Measure(s), Performance
Goal(s) and Performance Formula(s). Once established for a
Performance Period, such items shall not be amended or
otherwise modified to the extent such amendment or
modification would cause the compensation payable pursuant to
the Award to fail to constitute qualified performance-based
compensation under Code section 162(m).
(ii) A Participant shall be eligible to receive payment in respect
of a Performance Compensation Award only to the extent that
the Performance Goal(s) for such Award are achieved and the
Performance Formula as applied against such Performance
Goals(s) determines that all or some portion of such
Participant's Award has been earned for the Performance
Period. As soon as practicable after the close of each
Performance Period, the Committee shall review and certify in
writing whether, and to what extent, the Performance Goals(s)
for the Performance Period have been achieved and, if so,
determine and certify in writing the amount of the Performance
Compensation Award earned by the Participant for such
Performance Period based upon such Participant's Performance
Formula. The Committee shall then determine the actual amount
of the Performance Compensation Award to be paid to the
Participant and, in so doing, may use negative discretion to
decrease, but not increase, the amount of the Award otherwise
payable to the Participant based upon such performance. The
maximum Performance Compensation Award for any one Participant
for any one Performance Period shall be determined in
accordance with Sections 4(d) and 5(b), as applicable.
f. DEFERRALS. The Committee may require or permit Participants to defer
the issuance or vesting of Shares or the settlement of Awards under
such rules and procedures as it may be established under the Plan.
The Committee may also provide that deferred settlements include the
payment of, or crediting of interest on, the deferral amounts or the
payment or crediting of Dividend Equivalents on deferred settlements
denominated in Shares.
SECTION 5. SHARES AVAILABLE UNDER PLAN
a. Subject to the adjustment provisions of Section 9, the number of
Shares with respect to which Awards may be granted (or, in the cases
of Awards that may be settled in cash or Shares, settled) under the
Plan shall not exceed 600,000 Shares; provided that Shares with
respect to the unexercised or undistributed portion of any
terminated or forfeited Award and Shares tendered or withheld to pay
the exercise price of an Option and/or any required tax withholding
with respect to an Award shall be available for further Awards.
Additional rules for determining the number of Shares granted under
the Plan may be adopted by the Committee, as it deems necessary and
b. Subject to the adjustment provisions of Section 9, the maximum
number of Shares with respect to which Awards may be granted to any
single Participant in the form of Options, Restricted Stock or Stock
Equivalent Units shall not exceed the total number of Shares
available under this Plan.
c. The Shares that may be issued pursuant to an Award under the Plan
may be authorized but unissued Shares, or Shares may be acquired,
subsequently or in anticipation of the transaction, in the open
market to satisfy the requirements of the Plan.
SECTION 6. AWARD AGREEMENTS
Each Award under the Plan shall be evidenced by an Award Agreement. Each
Award Agreement shall set forth the terms and conditions applicable to the
Award, as determined by the Committee subject to the Plan, including but not
limited to provisions describing the treatment of an Award in the event of the
termination of a Participant's status as an Employee.
SECTION 7. AMENDMENT AND TERMINATION
The Board of Directors may at any time amend, suspend or terminate the
Plan, in whole or in part, and the Committee may, subject to the Plan, at any
time alter or amend any or all Award Agreements to the extent permitted by
applicable law; provided that no such action shall impair the rights of any
holder of an Award without the holder's consent. Notwithstanding the foregoing,
neither the Board of Directors nor the Committee shall (except pursuant to
Section 9) amend the Plan or any Award Agreement without the approval of the
shareholders of the Company to (i) increase the number of Shares available for
Awards as set forth in Section 5 or (ii) decrease the exercise price of any
SECTION 8. ADMINISTRATION
a. The Plan and all Awards shall be administered by the Committee. In
the absence of the Committee, or to the extent determined by the
Board of Directors, any action that could be taken by the Committee
may be taken by the Board of Directors, provided that any such
action may be taken with respect to Covered Employees only by those
members of the Board of Directors who are considered "outside
directors" within the meaning of Treasury Reg.
Section 1.162-27(e)(3). A majority of the members of the Committee
shall constitute a quorum. The vote of a majority of a quorum shall
constitute action by the Committee.
b. The Committee shall have full and complete authority, in its sole
and absolute discretion, (i) to exercise all of the powers granted
to it under the Plan, (ii) to construe, interpret and implement the
Plan and any related document, (iii) to prescribe, amend and rescind
rules relating to the Plan, (iv) to make all determinations
necessary or advisable in administering the Plan and (v) to correct
any defect, supply any omission and reconcile any inconsistency in
the Plan. The actions and determinations of the Committee on all
matters relating to the Plan and any Awards will be final and
conclusive. The Committee's determinations under the Plan need not
be uniform and may be made by it selectively among Participants who
receive, or who are eligible to receive, Awards under the Plan,
whether or not such persons are similarly situated.
c. The Committee and others to whom the Committee has allocated or
delegated authority or duties shall keep a record of all their
proceedings and actions and shall maintain all such books of
account, records and other data as shall be necessary for the proper
administration of the Plan.
d. The Company shall pay all reasonable expenses of administering the
Plan, including, but not limited to, the payment of professional
e. It is the intent of the Company that this Plan and Awards hereunder
satisfy, and be interpreted in a manner that satisfy, (i) in the
case of Participants who are or may be Insiders, the applicable
requirements of Rule 16b-3 of the Exchange Act, so that such persons
will be entitled to the benefits of Rule 16b-3, or other exemptive
rules under Section 16, and will not be subjected to avoidable
liability thereunder and (ii) in the case of Performance
Compensation Awards, the applicable requirements of Code section
162(m). If any provision of this Plan or of any Award Agreement
would otherwise frustrate or conflict with the intent expressed in
this Section 8(e), that provision, to the extent possible, shall be
interpreted and deemed amended so as to avoid such conflict. To the
extent of any remaining irreconcilable conflict with such intent,
such provision shall be deemed void as applicable to Insiders and/or
Covered Employees, as applicable.
f. The Committee may appoint such accountants, counsel and other
experts as it deems necessary or desirable in connection with the
administration of the Plan.
g. Except to the extent prohibited by applicable law or otherwise, the
Committee may from time to time allocate to one or more of its
members and delegate to one or more Employees all or any portion of
its authority and duties, provided that the Committee may not
allocate or delegate any discretionary authority with respect to
substantive decisions or functions regarding the Plan or Awards to
the extent inconsistent with the intent expressed in Section 8(e).
SECTION 9. ADJUSTMENT PROVISIONS
a. In the event of any change in the outstanding Shares by reason of a
stock dividend or stock split, the number of Shares then remaining
subject to this Plan, and the maximum number of Shares that may be
issued to any single Participant pursuant to this Plan, including
those that are then covered by outstanding Awards, shall (i) in the
event of an increase in the number of outstanding Shares, be
proportionately increased and the exercise price for each Share then
covered by an outstanding Award shall be proportionately reduced,
and (ii) in the event of a reduction in the number of outstanding
Shares, be proportionately reduced and the exercise price for each
Share then covered by an outstanding Award shall be proportionately
b. In the event of any change in the outstanding Shares by reason of a
recapitalization, merger or consolidation (whether or not the
Company is the surviving corporation), reorganization, combination
or exchange of shares or other similar corporate changes or an
extraordinary dividend in cash or property, but not including the
repurchase or issuance of Shares by the Company unrelated to any
such corporate change or extraordinary dividend, the number and kind
of shares subject to this Plan, the maximum number of shares that
may be issued to any single Participant, the number and kind of
shares subject to outstanding Awards and the exercise price thereof
shall be adjusted by the Committee as it deems appropriate to
prevent dilution or enlargement of the rights and benefits intended
to be conveyed by an Award.
c. The Committee shall make any further adjustments as it deems
necessary to help ensure equitable treatment of any holder of an
Award as the result of any transaction affecting the securities
subject to the Plan not described in Section 9(a) or (b), or as is
required or authorized under the terms of any applicable Award
Agreement, provided the Committee shall not be permitted under this
Section 9(c) to increase the number of Shares available for Awards
in total or to each Participant as set forth in Section 5.
d. The existence of the Plan and the Awards granted hereunder shall not
affect or restrict in any way the right or power of the Board of
Directors or the shareholders of the Company to make or authorize
recapitalization, reorganization or other capital structure of its
business, any merger or consolidation of the Company, any issue of
bonds, debentures, preferred or prior preference shares ahead of or
affecting the Shares or the rights thereof, the dissolution or
liquidation of the Company or any sale or transfer of all or any
part of its assets or business, or any other corporate act or
SECTION 10. CHANGE OF CONTROL
a. In the event of a Change of Control, in addition to any action
required or authorized by the terms of an Award Agreement, the
Committee may, in its sole discretion, take any of the following
actions as a result, or in anticipation, of any such event to assure
fair and equitable treatment of Participants:
(i) accelerate time periods for purposes of vesting in, or
realizing gain from, any outstanding Award made pursuant to
(ii) offer to purchase any outstanding Award made pursuant to this
Plan from the holder for its equivalent cash value, as
determined by the Committee, as of the date of the Change of
(iii) make adjustments or modifications to outstanding Awards as the
Committee deems appropriate to maintain and protect the rights
and interests of Participants following such Change of
b. A "Change of Control" means a change in control of the Company of a
nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act, provided that, without limitation, such a Change of
Control shall include and be deemed to occur upon the following
(i) Any person (as such term is defined in Sections 13(d) and
14(d)(2) of the Exchange Act) other than the Company, its
Subsidiaries or any employee benefit plan of the Company or
its Subsidiaries, becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 50% or more of the
combined voting power of the then outstanding securities of
(ii) The Incumbent Directors cease to constitute a majority of the
Board of Directors. "Incumbent Directors" means the members of
the Board of Directors at the effective date of the Plan and
persons elected or nominated for election as their successors
or pursuant to increases in the size of the Board by a vote of
at least two-thirds of the Incumbent Directors and successors
or additional members so elected or nominated.
(iii) The shareholders of the Company approve a merger, combination,
consolidation, recapitalization or other reorganization of the
with one or more other entities that are not wholly-owned
Subsidiaries and, as a result of the transaction, less than
50% of the outstanding voting securities of the surviving or
resulting corporation shall immediately after the event be
beneficially owned in the aggregate by shareholders of the
Company, determined as of the record date for determination of
holders entitled to vote on the action or the day immediately
prior to the event in the absence of a vote.
(iv) The Shareholders of the Company approve a plan of liquidation
and dissolution or sale or transfer of all or substantially
all of the Company's assets to an entity that is not a
SECTION 11. MISCELLANEOUS
a. NONASSIGNABILITY. Except as otherwise provided in this Plan or by
the Committee, no Award or benefit or right related thereto shall be
assignable or transferable except by will or by the laws of descent
b. OTHER PAYMENTS OR AWARDS. Nothing contained in the Plan shall be
deemed in any way to limit or restrict the Company or a Subsidiary
from making any award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter in
c. PAYMENTS TO OTHER PERSONS. To the extent permitted by law, none of
the benefits payable under or relating to the Plan shall be subject
to the claims or legal process of the creditors of a Participant or
of his or her beneficiary, spouse, prior spouse, or other persons or
entity. Any payment legally required to be made to any person other
than the person to whom any amount is made available under the Plan
shall be a complete discharge of the liability with respect thereto.
d. UNFUNDED PLAN. The Plan shall be unfunded. No provision of the Plan
or any Award Agreement shall require the Company or a Subsidiary,
for the purpose of satisfying any obligations under the Plan, to
purchase assets or place any assets in a trust or other entity to
which contributions are made or otherwise to segregate any assets,
nor shall the Company or a Subsidiary maintain separate bank
accounts, books, records or other evidence of the existence of a
segregated or separately maintained or administered fund for such
purposes. Participants shall have no rights under the Plan other
than as unsecured general creditors of the Company or a Subsidiary,
except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have
the same rights as other employees under generally applicable law.
e. LIMITS OF LIABILITY. Any liability of the Company or a Subsidiary to
any Participant with respect to an Award shall be based solely upon
contractual obligations created by the Plan and the Award Agreement.
Neither the Company or its Subsidiaries, nor any member of the Board
of Directors or of the
Committee, nor any other person participating in any determination
of any question under the Plan, or in the interpretation,
administration or application of the Plan, shall have any liability
to any party for any action taken, or not taken, in good faith under
f. RIGHTS OF PARTICIPANTS. Status as an eligible Employee shall not be
construed as a commitment that any Award shall be made under this
Plan to such eligible Employee or to eligible Employees generally.
Nothing contained in this Plan or in any Award Agreement shall
confer upon any Employee or Participant any right to continue in the
employ or other service of the Company or a Subsidiary or constitute
any contract or limit in any way the right of the Company or a
Subsidiary to change such person's compensation or other benefits or
to terminate the employment or other service of such person with or
without cause. Except as provided otherwise in an Award Agreement,
an Employee's (i) transfer from the Company to a Subsidiary or
affiliate of the Company, whether or not incorporated, or vice
versa, or from one Subsidiary to another; (ii) change in status to
or from employee or consultant; or (iii) leave of absence, duly
authorized in writing by the Company or a Subsidiary, shall not be
deemed a termination of such Employee's employment or other service.
g. RIGHTS AS A SHAREHOLDER. A Participant shall have no rights as a
shareholder with respect to any Shares covered by an Award until the
date the Participant becomes the holder of record of such Shares.
Except as provided in Section 9, no adjustment shall be made for
dividends or other rights, unless the Award Agreement specifically
requires such adjustment.
h. WITHHOLDING. Applicable taxes, to the extent required by law, shall
be withheld in respect of all Awards. A Participant may satisfy the
withholding obligation by paying the amount of any taxes in cash,
check (subject to collection) or Shares, or with the approval of the
Committee, Shares may be deducted from the payment to satisfy the
obligation in full or in part. The amount of the withholding and the
number of Shares to be paid or deducted in satisfaction of the
withholding requirement shall be determined by the Committee with
reference to the Fair Market Value of the Shares when the
withholding is required to be made.
i. SECTION HEADINGS. The section headings contained herein are for the
purpose of convenience only, and in the event of any conflict, the
text of the Plan, rather than the section headings, shall control.
j. CONSTRUCTION. In interpreting the Plan, the masculine gender shall
include the feminine, the neuter gender shall include the masculine
or feminine, and the singular shall include the plural unless the
context clearly indicates otherwise.
k. INVALIDITY. If any term or provision contained herein or in any
Award Agreement shall to any extent be invalid or unenforceable,
such term or provision will be
reformed so that it is valid, and such invalidity or
unenforceability shall not affect any other provision or part hereof
l. APPLICABLE LAW. The Plan, the Award Agreements and all actions taken
hereunder or thereunder shall be governed by, and construed in
accordance with, the laws of the State of Minnesota
to the conflict of law principles thereof.
m. COMPLIANCE WITH LAWS. Notwithstanding anything contained herein or
in any Award Agreement to the contrary, the Company shall not be
required to sell or issue Shares hereunder or thereunder if the
issuance would constitute a violation by the Participant or the
Company of any provisions of any law or regulation of any
governmental authority or any national securities exchange; and as a
condition of any sale or issuance, the Company may require such
agreements or undertakings, if any, as the Company may deem
necessary or advisable to assure compliance with any such law or
n. EFFECTIVE DATE AND TERM. The Plan was adopted by the Board of
Directors effective as of March 10, 2004, subject to approval by the
Company's shareholders. The Committee may grant Awards prior to
shareholder approval, provided, however, that Awards granted prior
to such shareholder approval are automatically cancelled if
shareholder approval is not obtained at or prior to the period
ending 12 months after the date the Plan is effective and provided
further that no Award may be exercisable prior to the date
shareholder approval is obtained. The Plan shall remain in effect
until all Awards under the Plan have been exercised or terminated
under the terms of the Plan and applicable Award Agreements,
provided that Incentive Stock Options under the Plan may only be
granted within ten years from the effective date of the Plan.