Exhibit 10.9

PENTAIR LTD.

2008 OMNIBUS STOCK INCENTIVE PLAN

As Amended and Restated Through September 28, 2012

1. Purpose and Effective Date.

(a) Purpose. The Pentair Ltd. 2008 Omnibus Stock Incentive Plan has several
complementary purposes: (i) to promote the growth and success of the Company by
linking a significant portion of participant compensation to the increase in
value of the Company’s common stock; (ii) to attract and retain top quality,
experienced executives and key employees by offering a competitive incentive
compensation program; (iii) to reward innovation and outstanding performance as
important contributing factors to the Company’s growth and progress; (iv) to
align the interests of executives, key employees, directors and consultants with
those of the Company’s shareholders by reinforcing the relationship between
participant rewards and shareholder gains obtained through the achievement by
plan participants of short-term objectives and long-term goals; and (iv) to
encourage executives, key employees, directors and consultants to obtain and
maintain an equity interest in the Company.

(b) Effective Date. This Plan became effective, and Awards were granted under
this Plan: (1) with regard to Non-Employee Directors, on and after February 26,
2008, provided that any Awards made prior to the date that the Plan is approved
by the Company’s shareholders shall be contingent on such shareholder approval,
and (2) with regard to all other eligible individuals, the date that the Plan is
approved by the Company’s shareholders. If the Company’s shareholders approve
this Plan, then the Pentair, Inc. Omnibus Stock Incentive Plan (the “Prior
Plan”) will terminate on the date of such shareholder approval, and no new
awards will be granted under the Prior Plan after its termination date; provided
that the Prior Plan will continue to govern awards outstanding as of the date of
such plan’s termination and such awards shall continue in force and effect until
fully distributed or terminated pursuant to their terms. The Plan terminated on
September 28, 2012.

2. Definitions. Capitalized terms used in this Plan have the following meanings:

(a) “10% Stockholder” means an Eligible Employee who, as of the date an ISO is
granted to such individual, owns more than ten percent (10%) of the total
combined voting power of all classes of Stock then issued by the Company or a
Subsidiary corporation.

(b) “Administrator” means (i) the Committee with respect to Participants who are
Eligible Employees and Consultants and (ii) the Non-Employee Directors of the
Board (or a committee of Non-Employee Directors appointed by the Board) with
respect to Participants who are Directors.

(c) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 under the Exchange Act. Notwithstanding the foregoing,
for purposes of determining those individuals to whom an Option or Stock
Appreciation Right may be granted, the term “Affiliate” means any entity that,
directly or through one or more intermediaries, is controlled by, controls, or
is under common control with the Company within the meaning of Code Sections
414(b) or (c); provided that, in applying such provisions, the phrase “at least
20 percent” shall be used in place of “at least 80 percent” each place it
appears therein.

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(d) “Award” means a grant of Options, Stock Appreciation Rights, Performance
Shares, Performance Units, Restricted Stock, Restricted Stock Units, Deferred
Stock Rights, Dividend Equivalent Units, or any other type of award permitted
under the Plan.

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

(f) “Cause” means, except as otherwise determined by the Administrator and set
forth in an Award agreement, such act or omission by a Participant as is
determined by the Administrator to constitute cause for termination, including
but not limited to any of the following: (i) a material violation of any Company
policy, including any policy contained in the Company Code of Business Conduct;
(ii) embezzlement from, or theft of property belonging to the Company or any
Affiliate; (iii) willful failure to perform or gross negligence in the
performance of or failure to perform assigned duties; or (iv) other intentional
misconduct, whether related to employment or otherwise, which has, or has the
potential to have, a material adverse effect on the business conducted by the
Company or its Affiliates.

(g) “Change of Control” means a change of control of the Company, as that term
is defined in the KEESA. Notwithstanding the foregoing, with respect to an Award
that is considered deferred compensation subject to Code Section 409A, the
definition of “Change of Control” shall be amended and interpreted in a manner
that allows the definition to satisfy the requirements of a change of control
under Code Section 409A solely for purposes of determining the timing of payment
of such Award.

(h) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to
a specific provision of the Code includes any successor provision and the
regulations promulgated under such provision.

(i) “Committee” means the Compensation Committee of the Board (or a successor
committee with the same or similar authority).

(j) “Company” means (i) prior to September 28, 2012, Pentair, Inc., a Minnesota
corporation, or any successor thereto or (ii) on and after September 28, 2012,
Pentair Ltd., a Swiss company, or any successor thereto.

(k) “Consultant” means a person or entity rendering services to the Company or
an Affiliate other than as an employee of any such entity or a Director.

(l) “Deferred Stock Right” means the right to receive Stock or Restricted Stock
at some future time.

(m) “Director” means a member of the Board, and “Non-Employee Director” means a
Director who is not also an employee of the Company or its Subsidiaries.

(n) “Disability” means, except as otherwise determined by the Administrator and
set forth in an Award agreement: (i) with respect to an ISO, the meaning given
in Code Section 22(e)(3), and (ii) with respect to all other Awards, a physical
or mental incapacity which qualifies an individual to collect a benefit under a
long term disability plan maintained by the Company, or such similar mental or
physical condition which the Administrator may determine to be a disability,
regardless of whether either the individual or the condition is covered by any
such long term disability plan. The Administrator shall make the determination
of Disability and may request such evidence of disability as it reasonably
determines.

 

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(o) “Dividend Equivalent Unit” means the right to receive a payment, in cash or
Shares, equal to the cash dividends or other distributions paid with respect to
a Share.

(p) “Eligible Employee” means a key managerial, administrative or professional
employee of the Company or an Affiliate whose position is evaluated at salary
grade 40 or higher or who is in a position to make a material contribution to
the continued profitable growth and long term success of the Company or an
Affiliate.

(q) “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any
reference to a specific provision of the Exchange Act includes any successor
provision and the regulations and rules promulgated under such provision.

(r) “Fair Market Value” means, per Share on a particular date: (i) the closing
price on such date on the New York Stock Exchange, as reported in The Wall
Street Journal, or if no sales of Stock occur on the date in question, on the
last preceding date on which there was a sale on such market; (ii) if the Shares
are not listed on the New York Stock Exchange, but are traded on another
national securities exchange or in an over-the-counter market, the last sales
price (or, if there is no last sales price reported, the average of the closing
bid and asked prices) for the Shares on the particular date, or on the last
preceding date on which there was a sale of Shares on that exchange or market;
or (iii) if the Shares are neither listed on a national securities exchange nor
traded in an over-the-counter market, the price determined by the Administrator.

(s) “Incentive Stock Option” or “ISO” mean an Option that meets the requirements
of Code Section 422.

(t) “KEESA” means the Key Executive Employment and Severance Agreement between
the Company and key executives, as approved by the Board and in effect from time
to time.

(u) “Option” means the right to purchase Shares at a stated price for a
specified period of time.

(v) “Participant” means an individual selected by the Administrator to receive
an Award.

(w) “Performance Awards” means a Performance Share and Performance Unit, and any
Award of Restricted Stock, Restricted Stock Units, or Deferred Stock Rights the
payment or vesting of which is contingent on the attainment of one or more
Performance Goals.

(x) “Performance Goals” means any goals the Administrator establishes that
relate to one or more of the following with respect to the Company or any one or
more of its Subsidiaries, Affiliates or other business units: net income; income
from continuing operations; stockholder return; stock price appreciation;
earnings per share (including diluted earnings per share); net operating profit
(including after tax); revenue growth; organic sales growth; return on equity;
return on investment; return on invested capital (including after-tax); earnings
before interest, taxes, depreciation and amortization; operating income;
operating margin; market share; return on sales; asset reduction; cost
reduction; return on equity; cash flow (including free cash flow); and new
product releases. As to each Performance Goal, the relevant measurement of
performance shall be computed in accordance with generally accepted accounting
principles, if applicable; provided that, the Administrator may, at the time of

 

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establishing the Performance Goal(s), exclude the effects of (i) extraordinary,
unusual and/or non-recurring items of gain or loss, (ii) gains or losses on the
disposition of a business, (iii) changes in tax regulations or laws, or (iv) the
effect of a merger or acquisition. Notwithstanding the foregoing, the
calculation of any Performance Goal established for purposes of an Award shall
be made without regard to changes in accounting methods used by the Company or
in accounting standards that may be required by the Financial Accounting
Standards Board after a Performance Goal relative to an Award is established and
prior to the time the compensation earned by reason of the achievement of the
relevant Performance Goal is paid to the Participant. In the case of Awards that
the Administrator determines will not be considered “performance-based
compensation” under Code Section 162(m), the Administrator may establish other
Performance Goals not listed in this Plan. Where applicable, the Performance
Goals may be expressed, without limitation, in terms of attaining a specified
level of the particular criterion or the attainment of an increase or decrease
(expressed as absolute numbers or a percentage) in the particular criterion or
achievement in relation to a peer group or other index. The Performance Goals
may include a threshold level of performance below which no payment will be made
(or no vesting will occur), levels of performance at which specified payments
will be paid (or specified vesting will occur), and a maximum level of
performance above which no additional payment will be made (or at which full
vesting will occur).

(y) “Performance Shares” means the right to receive Shares (including Restricted
Stock) to the extent Performance Goals are achieved.

(z) “Performance Unit” means the right to receive a payment valued in relation
to a unit that has a designated dollar value or the value of which is equal to
the Fair Market Value of one or more Shares, to the extent Performance Goals are
achieved.

(aa) “Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof.

(bb) “Plan” means this Pentair Ltd. 2008 Omnibus Stock Incentive Plan, as may be
amended from time to time.

(cc) “Restriction Period” means the length of time established relative to an
Award during which the Participant cannot sell, assign, transfer, pledge or
otherwise encumber the Stock or Stock Units subject to such Award and at the end
of which the Participant obtains an unrestricted right to such Stock or Stock
Units.

(dd) “Restricted Stock” means a Share that is subject to a risk of forfeiture or
restrictions on transfer, or both a risk of forfeiture and restrictions on
transfer.

(ee) “Restricted Stock Unit” means the right to receive a payment equal to the
Fair Market Value of one Share.

(ff) “Retirement” means, except as otherwise determined by the Administrator and
set forth in an Award agreement, (i) with respect to Participants who are
Eligible Employees or Consultants, termination of employment or service from the
Company and its Affiliates (for other than Cause) on or after attainment of age
fifty-five (55) and completion of ten (10) years of service with the Company and
its Affiliates, and (ii) with respect to Director Participants, the Director’s
removal (for other than Cause), or resignation or failure to be re-elected (for
other than Cause) on or after “retirement” as defined in the Company’s
retirement policy for Non-Employee Directors.

 

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(gg) “Section 16 Participants” means Participants who are subject to the
provisions of Section 16 of the Exchange Act.

(hh) “Share” means a share of Stock.

(ii) “Stock” means (i) prior to September 28, 2012, the Common Stock of the
Company, par value of $0.16- 2/3 per share, or (ii) on and after September 28,
2012, the registered shares of the Company, nominal value CHF 0.50 per share,
subject to any capital changes.

(jj) “Stock Appreciation Right” or “SAR” means the right to receive a payment
equal to the appreciation of the Fair Market Value of a Share during a specified
period of time.

(kk) “Subsidiary” means any corporation or limited liability company (except
that is treated as a partnership for U.S. income tax purposes) in an unbroken
chain of entities beginning with the Company if each of the entities (other than
the last entity in the chain) owns stock or equity interests possessing more
than fifty percent (50%) of the total combined voting power of all classes of
stock or equity interests in one of the other entities in the chain.

3. Administration.

(a) Administration. In addition to the authority specifically granted to the
Administrator in this Plan, the Administrator has full discretionary authority
to administer this Plan, including but not limited to the authority to:
(i) interpret the provisions of this Plan; (ii) prescribe, amend and rescind
rules and regulations relating to this Plan; (iii) correct any defect, supply
any omission, or reconcile any inconsistency in any Award or agreement covering
an Award in the manner and to the extent it deems desirable to carry this Plan
into effect; and (iv) make all other determinations necessary or advisable for
the administration of this Plan. All Administrator determinations shall be made
in the sole discretion of the Administrator and are final and binding on all
interested parties.

Notwithstanding any provision of the Plan to the contrary, the Administrator
shall have the discretion to grant an Award with any vesting condition, any
Restriction Period or any performance period if the Award is granted to a newly
hired or promoted Participant, or accelerate the vesting, Restriction Period or
performance period of an Award, in connection with a Participant’s death,
disability, Retirement or termination by the Company without Cause. Any action
by the Committee to accelerate or otherwise amend an Award for reasons other
than Retirement, death, Disability or a termination by the Company without
Cause, or in connection with a Change of Control, shall include application of a
commercially reasonable discount to the compensation otherwise payable to
reflect the value of the accelerated payment

Notwithstanding the above statement or any other provision of the Plan, once
established, the Committee shall have no discretion to increase the amount of
compensation payable under an Award that is intended to be performance-based
compensation under Code Section 162(m), although the Committee may decrease the
amount of compensation a Participant may earn under such an Award.

(b) Delegation to Other Committees or Officers. To the extent applicable law
permits, the Board may delegate to another committee of the Board or to one or
more officers of the Company, or the Committee may delegate to one or more
officers of the Company, any or all of their respective authority and
responsibility as an Administrator of the Plan; provided that

 

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no such delegation is permitted with respect to Stock-based Awards made to
Section 16 Participants at the time any such delegated authority or
responsibility is exercised unless the delegation is to another committee of the
Board consisting entirely of Non-Employee Directors. If the Board or the
Committee has made such a delegation, then all references to the Administrator
in this Plan include such other committee or one or more officers to the extent
of such delegation.

(c) Indemnification. The Company will indemnify and hold harmless each member of
the Board and the Committee, and each officer or member of any other committee
to whom a delegation under Section 3(b) has been made, as to any acts or
omissions with respect to this Plan or any Award to the maximum extent that the
law and the Company’s by-laws permit.

4. Eligibility. The Administrator may designate any of the following as a
Participant from time to time, to the extent of the Administrator’s authority:
any Eligible Employee, any Consultant or any Director, including a Non-Employee
Director. The Administrator’s granting of an Award to a Participant will not
require the Administrator to grant an Award to such individual at any future
time. The Administrator’s granting of a particular type of Award to a
Participant will not require the Administrator to grant any other type of Award
to such individual.

5. Types of Awards. Subject to the terms of this Plan, the Administrator may
grant any type of Award to any Participant it selects, but only employees of the
Company or a Subsidiary may receive grants of incentive stock options. Awards
may be granted alone or in addition to, in tandem with, or in substitution for
any other Award (or any other award granted under another plan of the Company or
any Affiliate).

6. Shares Reserved under this Plan.

(a) Plan Reserve. Subject to adjustment as provided in Section 16, an aggregate
of seven million five hundred thousand (7,500,000) Shares are reserved for
issuance under this Plan. The Shares reserved for issuance may be either
authorized and unissued Shares or shares reacquired at any time and now or
hereafter held as treasury stock.

(b) Incentive stock Option Award Limits. Subject to adjustment as provided in
Section 16, the Company may issue only an aggregate of five million
(5,000,000) Shares upon the exercise of incentive stock options.

(c) Replenishment of Shares Under this Plan. The aggregate number of Shares
reserved under Section 6(a) shall be depleted by the number of Shares with
respect to which an Award is granted; provided that the aggregate number of
Shares reserved under Section 6(a) shall be depleted by three (3) Shares for
each Share subject to a full-value Award. For this purpose, a full-value award
includes Restricted Stock, Restricted Stock Units, Performance Shares,
Performance Units (valued in relation to a Share), Deferred Stock Rights and any
other similar Award under which the value of the Award is measured as the full
value of a Share, rather than the increase in the value of a Share. If, however,
an Award lapses, expires, terminates or is cancelled without the issuance of
Shares or the payment of other compensation under the Award, or if Shares are
forfeited under an Award, or if Shares are issued under any Award and the
Company subsequently reacquires them pursuant to rights reserved upon the
issuance of the Shares, then such Shares shall be recredited to the Plan’s
reserve (in the same number as they depleted the reserve) and may again be used
for new Awards under this Plan. Notwithstanding the foregoing, in no event shall
the following Shares be recredited to the Plan’s reserve: Shares tendered in
payment of the exercise price of an Option; Shares withheld to satisfy federal,
state or local tax withholding obligations; and Shares purchased by the Company
using proceeds from Option exercises.

 

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(d) Participant Limitations. Subject to adjustment as provided in Section 16, no
Participant may be granted Awards that could result in such Participant:

(i) receiving Options for, and/or Stock Appreciation Rights with respect to,
more than 750,000 Shares during any fiscal year of the Company;

(ii) receiving Awards of Restricted Stock and/or Restricted Stock Units and/or
Deferred Stock Rights relating to more than 500,000 Shares during any fiscal
year of the Company;

(iii) receiving Awards of Performance Shares, and/or Awards of Performance Units
the value of which is based on the Fair Market Value of Shares, for more than
500,000 Shares during any fiscal year of the Company;

(iv) receiving Awards of Performance Units the value of which is not based on
the Fair Market Value of Shares, for more than $3,000,000 during any fiscal year
of the Company; or

(v) receiving other Stock-based Awards pursuant to Section 11 relating to more
than 100,000 Shares during any fiscal year of the Company.

In all cases, determinations under this Section 6(d) should be made in a manner
that is consistent with the exemption for performance-based compensation that
Code Section 162(m) provides.

7. Options. Subject to the terms of this Plan, the Administrator will determine
all terms and conditions of each Option, including but not limited to:

(a) Whether the Option is an “incentive stock option” which meets the
requirements of Code Section 422, or a “nonqualified stock option” which does
not meet the requirements of Code Section 422;

(b) The number of Shares subject to the Option;

(c) The date of grant, which may not be prior to the date of the Administrator’s
approval of the grant;

(d) The exercise price, which may not be less than the Fair Market Value of the
Shares subject to the Option as determined on the date of grant; provided that
an incentive stock option granted to a 10% Stockholder must have an exercise
price at least equal to 110% of the Fair Market Value of the Shares subject to
the Option as determined on the date of grant;

(e) The terms and conditions of exercise; provided that, subject to the
provisions of Sections 12 and 16, one-third (1/3) of each Option may not become
exercisable earlier than on each of the first three (3) anniversaries of the
date of grant; and provided further that if the aggregate Fair Market Value of
the Shares subject to the Option (as determined on the date of grant of such
Option) that become exercisable during a calendar year exceed $100,000, then
such Option shall be treated as a nonqualified stock option to the extent such
$100,000 limitation is exceeded.

 

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(f) The term; provided that each Option must terminate no later than ten
(10) years after the date of grant and each incentive stock option granted to a
10% Stockholder must terminate no later than five (5) years after the date of
grant.

In all other respects, the terms of any incentive stock option should comply
with the provisions of Code section 422 except to the extent the Administrator
determines otherwise. If an Option that is intended to be an incentive stock
option fails to meet the requirements thereof, the Option shall automatically be
treated as a nonqualified stock option to the extent of such failure.

Subject to the terms and conditions of the Award, vested Options may be
exercised, in whole or in part, by giving notice of exercise to the Company in
such manner as the Company may prescribe. This notice must be accompanied by
payment in full of the exercise price in cash or by use of such other instrument
as the Administrator may agree to accept.

Payment of the exercise price, applicable withholding taxes due upon exercise of
the Option, or both may be made in the form of Stock already owned by the
Participant, which Stock shall be valued at Fair Market Value on the date the
Option is exercised. A Participant who elects to make payment in Stock may not
transfer fractional shares or shares of Stock with an aggregate Fair Market
Value in excess of the Option exercise price plus applicable withholding taxes.
A Participant need not present Stock certificates when making payment in Stock,
so long as other satisfactory proof of ownership of the Stock tendered is
provided (e.g., attestation of ownership of a sufficient number of shares of
Stock to pay the exercise price). The Administrator shall have the discretion to
authorize or accept payment by other forms or methods or to establish a cashless
exercise program, all within such limitations as may be imposed by the Plan or
any applicable law.

8. Stock Appreciation Rights. Subject to the terms of this Plan, the
Administrator will determine all terms and conditions of each SAR, including but
not limited to:

(a) Whether the SAR is granted independently of an Option or relates to an
Option;

(b) The number of Shares to which the SAR relates;

(c) The date of grant, which may not be prior to the date of the Administrator’s
approval of the grant;

(d) The grant price, provided that the grant price shall not be less than the
Fair Market Value of the Shares subject to the SAR as determined on the date of
grant;

(e) The terms and conditions of exercise or maturity; provided that, subject to
the provisions of Sections 12 and 16, one-third (1/3) of each SAR may not become
exercisable or mature earlier than on each of the first three (3) anniversaries
of the date of grant;

(f) The term, provided that each SAR must terminate no later than ten (10) years
after the date of grant; and

(g) Whether the SAR will be settled in cash, Shares or a combination thereof.

 

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If an SAR is granted in relation to an Option, then unless otherwise determined
by the Administrator, the SAR shall be exercisable or shall mature at the same
time or times, on the same conditions and to the extent and in the proportion,
that the related Option is exercisable and may be exercised or mature for all or
part of the Shares subject to the related Option. Upon exercise of any number of
SAR, the number of Shares subject to the related Option shall be reduced
accordingly and such Option may not be exercised with respect to that number of
Shares. The exercise of any number of Options that relate to an SAR shall
likewise result in an equivalent reduction in the number of Shares covered by
the related SAR.

9. Performance and Stock Awards. Subject to the terms of this Plan, the
Administrator will determine all terms and conditions of each award of
Restricted Stock, Restricted Stock Units, Deferred Stock Rights, Performance
Shares or Performance Units, including but not limited to:

(a) The number of Shares and/or units to which such Award relates;

(b) Whether, as a condition for the Participant to realize all or a portion of
the benefit provided under the Award, one or more Performance Goals must be
achieved during such period as the Administrator specifies;

(c) The period of restriction with respect to Restricted Stock or Restricted
Stock Units and the period of deferral for Deferred Stock Rights (which, subject
to the provisions of Sections 12 and 16, in each case may not be less than three
(3) years from the date of grant);

(d) The performance period for Performance Awards (which, subject to the
provisions of Sections 12 and 16, must be at least one year);

(e) With respect to Performance Units, whether to measure the value of each unit
in relation to a designated dollar value or the Fair Market Value of one or more
Shares; and

(f) With respect to Restricted Stock Units and Performance Units, whether to
settle such Awards in cash, in Shares, or a combination thereof.

During the time Restricted Stock is subject to the Period of Restriction, the
Participant shall have all of the rights of a shareholder with respect to the
Restricted Stock, including the right to vote such Stock and, unless the
Administrator shall otherwise provide, the right to receive dividends paid with
respect to such Stock.

Except as otherwise provided in the Plan, at such time as all restrictions
applicable to an Award of Restricted Stock, Deferred Stock Rights or Restricted
Stock Units are met and the Restriction Period expires, ownership of the Stock
subject to such restrictions shall be transferred to the Participant free of all
restrictions except those that may be imposed by applicable law; provided that
if Restricted Stock Units are paid in cash, said payment shall be made to the
Participant after all applicable restrictions lapse and the Restriction Period
expires.

10. Dividend Equivalent Units. Subject to the terms of this Plan, the
Administrator will determine all terms and conditions of each award of Dividend
Equivalent Units, including but not limited to whether: (a) such Award will be
granted in tandem with another Award; (b) payment of the Award be made currently
or credited to an account for the Participant which

 

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provides for the deferral of such amounts until a stated time; and (c) the Award
will be settled in cash or Shares; provided that Dividend Equivalent Units may
be granted only in connection with a “full value” Award as defined in
Section 6(c).

11. Other Stock-Based Awards. Subject to the terms of this Plan, the
Administrator may grant to Participants other types of Awards, which shall be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, Shares, either alone or in addition to or in conjunction
with other Awards, and payable in Stock or cash. Without limitation, such Award
may include the issuance of shares of unrestricted Stock, which may be awarded
in payment of director fees, in lieu of cash compensation, in exchange for
cancellation of a compensation right, as a bonus, or upon the attainment of
Performance Goals or otherwise, or rights to acquire Stock from the Company. The
Administrator shall determine all terms and conditions of the Award, including
but not limited to, the time or times at which such Awards shall be made, and
the number of Shares to be granted pursuant to such Awards or to which such
Award shall relate; provided that any Award that provides for purchase rights
shall be priced at 100% of Fair Market Value on the date of the Award.

12. Effect of Termination on Awards. Except as otherwise provided by the
Administrator in an Award Agreement or, subject to Section 3(a), as determined
by the Administrator at the time of termination of a Participant’s service:

(a) Termination of Employment or Service. If a Participant’s service with the
Company and its Affiliates as an employee or Director ends for any reason other
than (i) a termination for Cause, (ii) Retirement, (iii) death or
(iv) Disability, then:

(i) Any outstanding Options or SARs, to the extent otherwise exercisable on the
date such Participant’s service ends, shall be exercisable no later than ninety
(90) days following the Participant’s termination date or, if earlier, the
expiration date of the Option or SAR. At the conclusion of such ninety (90) day
period, all such Options and SARs then unexercised shall be forfeited.

(ii) All other Awards made to the Participant, to the extent not then earned or
paid to the Participant, shall terminate no later than the Participant’s last
day of employment, or service as a Director.

(b) Retirement of Corporate Officer or Director. Upon Retirement of a
Participant who is then a Board-appointed corporate officer or a Director:

(i) Any outstanding Options or SARs shall remain outstanding (and shall continue
to vest in accordance with the terms of the Award as if the Participant had
continued in employment or service) until the earlier of the expiration date of
the Award and the fifth anniversary of such Participant’s Retirement date;
provided, however, that such extension shall result in the conversion of an
incentive stock option to a nonqualified stock option to the extent required
under the Code.

(ii) All Restricted Stock, Restricted Stock Units and Deferred Stock Rights
(that are not Performance Awards) outstanding on the Participant’s Retirement
date shall be immediately vested, and any other terms and conditions applicable
to such Awards shall be deemed to have lapsed or otherwise been satisfied.
Payment for all such Awards shall be made to the Participant in either
unrestricted shares of Stock or cash, depending on the payment terms applicable
to such Award.

 

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(iii) All Performance Awards outstanding on the Participant’s Retirement date
shall be paid in either unrestricted shares of Stock or cash, as the case may
be, following the end of the performance period and based on achievement of the
Performance Goals established for such Awards, as if the Participant had not
retired.

(iv) Notwithstanding the provisions of Section 2(ff), effective for Awards
granted on or after July 29, 2008, the provisions of subsections 12(b)(i),
(ii) and (iii) shall apply only with respect to the termination of employment or
service from the Company and its Affiliates (for other than Cause) of a
Board-appointed corporate officer, on or after attainment of age sixty (60) and
completion of ten (10) years of service with the Company and its Affiliates.

(c) Retirement of Other Participants. Upon (A) Retirement of a Participant who
is then a Board-appointed corporate officer prior to the attainment of age sixty
(60) (with respect to Awards granted on or after July 29, 2008), or
(B) Retirement of a Participant who is not then a Board-appointed corporate
officer or a Director::

(i) Any Options and SARs exercisable on such Participant’s Retirement date shall
be exercisable no later than ninety (90) days following such date or, if
earlier, the expiration date of the Option or SAR. At the end of such ninety
(90) day period, all Options and SARs then unexercised shall be forfeited.

(ii) All Restricted Stock, Restricted Stock Units and Deferred Stock Rights
(that are not Performance Awards) shall vest on a prorated basis, based on the
portion of the restriction or deferral period, as applicable, which the
Participant has completed at the time of Retirement and any other terms and
conditions applicable to such Awards shall be deemed to have lapsed or otherwise
been satisfied.

(iii) All Performance Awards outstanding on the Participant’s Retirement date
shall be paid in either unrestricted shares of Stock or cash, as the case may
be, following the end of the performance period and based on achievement of the
Performance Goals established for such Awards, as if the Participant had not
retired, but prorated based on the portion of the performance period which the
Participant has completed at the time of Retirement.

(d) Death or Disability. If a Participant’s service with the Company and its
Affiliates ends due to death or Disability:

(i) All Options and SARs shall vest immediately and shall be exercisable until
the earlier of twelve (12) months following the date the Participant’s service
ends and the expiration date of the Option or SAR. Upon such earlier date, all
Options and SARs then unexercised shall be forfeited.

(ii) All Restricted Stock, Restricted Stock Units and Deferred Stock Rights
(that are not Performance Awards or for which any Performance Goals have been
satisfied) shall be immediately vested, and any other terms and conditions
applicable to such Awards shall be deemed to have lapsed or otherwise been
satisfied.

(iii) All Performance Awards shall be paid in either unrestricted shares of
Stock or cash, as the case may be, following the end of the performance period
and based on achievement of the Performance Goals established for such Awards,
as if the Participant had not terminated service.

 

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(e) Termination for Cause. If a Participant’s employment with the Company and
its Affiliates or service as a Director is terminated for Cause, all Awards and
grants of every type, whether or not then vested, shall terminate no later than
the Participant’s last day of employment. The Committee shall have discretion to
determine whether this Section 12(f) shall apply, whether the event or conduct
at issue constitutes Cause for termination and the date on which Awards to a
Participant shall terminate.

(f) Consultants and Other Stock-Based Awards. The Committee shall have the
discretion to determine, at the time an Award is made, the effect of the
termination of service of a Consultant on Awards held by such individual, and
the effect on Other Stock-Based Awards of the Participant’s termination of
employment or service with the Company and its Affiliates.

13. Transferability.

(a) Restrictions on Transfer. Awards are not transferable other than by will or
the laws of descent and distribution, unless and to the extent the Administrator
allows a Participant to designate in writing a beneficiary to exercise the Award
or receive payment under an Award after the Participant’s death or transfer an
Award as provided in subsection (b).

(b) Permitted Transfers. If allowed by the Administrator, a Participant may
transfer the ownership of some or all of the vested or earned Awards granted to
such Participant, other than incentive stock options to (i) the spouse, children
or grandchildren of such Participant (the “Family Members”), (ii) a trust or
trust established for the exclusive benefit of such Family Members, or (iii) a
partnership in which such Family Members are the only partners. Notwithstanding
the foregoing, vested or earned Awards may be transferred without the
Administrator’s pre-approval if the transfer is made incident to a divorce as
required pursuant to the terms of a “domestic relations order” as defined in
Section 414(p) of the Code; provided that no such transfer will be allowed with
respect to ISOs if such transferability is not permitted by Code Section 422.
Any such transfer shall be without consideration and shall be irrevocable. No
Award so transferred may be subsequently transferred, except by will or
applicable laws of descent and distribution. The Administrator may create
additional conditions and requirements applicable to the transfer of Awards.
Following the allowable transfer of a vested Option, such Option shall continue
to be subject to the same terms and conditions as were applicable to the Option
immediately prior to the transfer. For purposes of settlement of the Award,
delivery of Stock upon exercise of an Option and the Plan’s Change of Control
provisions, however, any reference to a Participant shall be deemed to refer to
the transferee.

14. Termination and Amendment of Plan; Amendment, Modification or Cancellation
of Awards.

(a) Term of Plan. The Plan terminated on September 28, 2012.

(b) Termination and Amendment. The Board or the Committee may amend, alter,
suspend, discontinue or terminate this Plan at any time, subject to the
following limitations:

(i) the Board must approve any amendment of this Plan to the extent the Company
determines such approval is required by: (A) action of the Board, (B) applicable
corporate law, or (C) any other applicable law;

 

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(ii) shareholders must approve any amendment of this Plan to the extent the
Company determines such approval is required by: (A) Section 16 of the Exchange
Act, (B) the Code, (C) the listing requirements of any principal securities
exchange or market on which the Shares are then traded, or (D) any other
applicable law; and

(iii) shareholders must approve any of the following Plan amendments: (A) an
amendment to materially increase any number of Shares specified in Section 6(a),
6(b) or the limits set forth in Section 6(d) (except as permitted by
Section 16), (B) an amendment to expand the group of individuals that may become
Participants, or (C) an amendment that would diminish the protections afforded
by Section 14(e) or that would materially change the minimum vesting and
performance requirements of an Award as required in the Plan.

(c) Amendment, Modification or Cancellation of Awards. Except as provided in
Section 14(e) and subject to the requirements of this Plan, the Administrator
may modify, amend or cancel any Award; or waive any restrictions or conditions
applicable to any Award or the exercise of the Award, provided that any
modification or amendment that materially diminishes the rights of the
Participant, or the cancellation of the Award, shall be effective only if agreed
to by the Participant or any other person(s) as may then have an interest in the
Award, but the Administrator need not obtain Participant (or other interested
party) consent for the adjustment or cancellation of an Award pursuant to the
provisions of Section 16 or the modification of an Award to the extent deemed
necessary to comply with any applicable law, the listing requirements of any
principal securities exchange or market on which the Shares are then traded, or
to preserve favorable accounting or tax treatment of any Award for the Company.
Notwithstanding the foregoing, unless determined otherwise by the Administrator,
any such amendment shall be made in a manner that will enable an Award intended
to be exempt from Code Section 409A to continue to be so exempt, or to enable an
Award intended to comply with Code Section 409A to continue to so comply.

(d) Survival of Authority and Awards. Notwithstanding the foregoing, the
authority of the Board and the Administrator under this Section 14 and to
otherwise administer the Plan will extend beyond the date of this Plan’s
termination. In addition, termination of this Plan will not affect the rights of
Participants with respect to Awards previously granted to them, and all
unexpired Awards will continue in force and effect after termination of this
Plan except as they may lapse or be terminated by their own terms and
conditions.

(e) Repricing and Backdating Prohibited. Notwithstanding anything in this Plan
to the contrary, and except for the adjustments provided in Section 16, neither
the Administrator nor any other person may decrease the exercise price for any
outstanding Option or SAR after the date of grant nor allow a Participant to
surrender an outstanding Option or SAR to the Company as consideration for the
grant of a new Option or SAR with a lower exercise price. In addition, the
Administrator may not make a grant of an Option or SAR with a grant date that is
effective prior to the date the Administrator takes action to approve such
Award.

(f) Foreign Participation. To assure the viability of Awards granted to
Participants employed or residing in foreign countries, the Administrator may
provide for such special terms as it may consider necessary or appropriate to
accommodate differences in local law, tax policy or custom. Moreover, the
Administrator may approve such supplements to, or amendments, restatements or
alternative versions of, this Plan as it determines is necessary or appropriate
for such purposes. Any such amendment, restatement or alternative versions that
the Administrator approves for purposes of using this Plan in a foreign country
will not affect the terms of this Plan for any other country. In addition, all
such supplements, amendments, restatements or alternative versions must comply
with the provisions of Section 14(b)(ii).

 

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In addition, if an Award is held by a Participant who is employed or residing in
a foreign country and the amount payable or Shares issuable under such Award
would be taxable to the Participant under Code Section 457A in the year such
Award is no longer subject to a substantial risk of forfeiture, then the amount
payable or Shares issuable under such Award shall be paid or issued to the
Participant as soon as practicable after such substantial risk of forfeiture
lapses (or, for Awards that are not considered nonqualified deferred
compensation subject to Code Section 409A, no later than the end of the
short-term deferral period permitted by Code Section 457A) notwithstanding
anything in this Plan or the Award Agreement to contrary.

(g) Code Section 409A. The provisions of Code Section 409A are incorporated
herein by reference to the extent necessary for any Award that is subject to
Code Section 409A to comply therewith.

15. Taxes.

(a) Withholding. In the event the Company or an Affiliate of the Company is
required to withhold any Federal, state or local taxes or other amounts in
respect of any income recognized by a Participant as a result of the grant,
vesting, payment or settlement of an Award or disposition of any Shares acquired
under an Award, the Company may deduct (or require an Affiliate to deduct) from
any payments of any kind otherwise due the Participant cash, or with the consent
of the Committee, Shares otherwise deliverable or vesting under an Award, to
satisfy such tax obligations. Alternatively, the Company may require such
Participant to pay to the Company, in cash, promptly on demand, or make other
arrangements satisfactory to the Company regarding the payment to the Company of
the aggregate amount of any such taxes and other amounts. If Shares are
deliverable upon exercise or payment of an Award, the Committee may permit a
Participant to satisfy all or a portion of the Federal, state and local
withholding tax obligations arising in connection with such Award by electing to
(a) have the Company withhold Shares otherwise issuable under the Award,
(b) tender back Shares received in connection with such Award or (c) deliver
other previously owned Shares; provided that the amount to be withheld may not
exceed the total minimum federal, state and local tax withholding obligations
associated with the transaction to the extent needed for the Company to avoid an
accounting charge. If an election is provided, the election must be made on or
before the date as of which the amount of tax to be withheld is determined and
otherwise as the Committee requires. In any case, the Company may defer making
payment or delivery under any Award if any such tax may be pending unless and
until indemnified to its satisfaction.

(b) No Guarantee of Tax Treatment. Notwithstanding any provisions of the Plan,
the Company does not guarantee to any Participant or any other Person with an
interest in an Award that (i) any Award intended to be exempt from Code
Section 409A shall be so exempt, (ii) any Award intended to comply with Code
Section 409A or Code Section 422 shall so comply, (iii) any Award shall
otherwise receive a specific tax treatment under any other applicable tax law,
nor in any such case will the Company or any Affiliate indemnify, defend or hold
harmless any individual with respect to the tax consequences of any Award.

(c) Participant Responsibilities. If a Participant shall dispose of Stock
acquired through exercise of an ISO within either (i) two (2) years after the
date the Option is granted or (ii) one (1) year after the date the Option is
exercised (i.e., in a disqualifying disposition), such

 

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Participant shall notify the Company within seven (7) days of the date of such
disqualifying disposition. In addition, if a Participant elects, under Code
Section 83, to be taxed at the time an Award of Restricted Stock (or other
property subject to such Code section) is made, rather than at the time the
Award vests, such Participant shall notify the Company within seven (7) days of
the date the Restricted Stock subject to the election is awarded.

16. Adjustment Provisions; Change of Control.

(a) Adjustment of Shares. If: (i) the Company shall at any time be involved in a
merger or other transaction in which the Shares are changed or exchanged;
(ii) the Company shall subdivide or combine the Shares or the Company shall
declare a dividend payable in Shares, other securities or other property;
(iii) the Company shall effect a cash dividend the amount of which, on a per
Share basis, exceeds ten percent (10%) of the Fair Market Value of a Share at
the time the dividend is declared, or the Company shall effect any other
dividend or other distribution on the Shares in the form of cash, or a
repurchase of Shares, that the Board determines by resolution is special or
extraordinary in nature or that is in connection with a transaction that the
Company characterizes publicly as a recapitalization or reorganization involving
the Shares; or (iv) any other event shall occur, which, in the case of this
clause (iv), in the judgment of the Board or Committee necessitates an
adjustment to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under this Plan, then the Administrator
shall, in such manner as it may deem equitable to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under this Plan, adjust as applicable: (A) the number and type of Shares subject
to this Plan (including the number and type of Shares described in Sections
6(a), (b) and (d)) and which may after the event be made the subject of Awards;
(B) the number and type of Shares subject to outstanding Awards; (C) the grant,
purchase, or exercise price with respect to any Award; and (D) to the extent
such discretion does not cause an Award that is intended to qualify as
performance-based compensation under Code Section 162(m) to lose its status as
such, the Performance Goals of an Award. In each case, with respect to Awards of
incentive stock options, no such adjustment may be authorized to the extent that
such authority would cause this Plan to violate Code Section 422(b).

Without limitation, in the event of any reorganization, merger, consolidation,
combination or other similar corporate transaction or event, whether or not
constituting a Change of Control (other than any such transaction in which the
Company is the continuing corporation and in which the outstanding Stock is not
being converted into or exchanged for different securities, cash or other
property, or any combination thereof), the Administrator may substitute, on an
equitable basis as the Administrator determines, for each Share then subject to
an Award and the Shares subject to this Plan (if the Plan will continue in
effect), the number and kind of shares of stock, other securities, cash or other
property to which holders of Stock are or will be entitled in respect of each
Share pursuant to the transaction.

Notwithstanding the foregoing, in the case of a stock dividend (other than a
stock dividend declared in lieu of an ordinary cash dividend) or subdivision or
combination of the Shares (including a reverse stock split), if no action is
taken by the Administrator, adjustments contemplated by this subsection that are
proportionate shall nevertheless automatically be made as of the date of such
stock dividend or subdivision or combination of the Shares.

(b) Issuance or Assumption. Notwithstanding any other provision of this Plan,
and without affecting the number of Shares otherwise reserved or available under
this Plan, in connection with any merger, consolidation, acquisition of property
or stock, or reorganization, the Administrator may authorize the issuance or
assumption of awards under this Plan upon such terms and conditions as it may
deem appropriate.

 

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(c) Change of Control. If the Participant has in effect an employment,
retention, change of control, severance or similar agreement with the Company or
any Affiliate that discusses the effect of a Change of Control on the
Participant’s Awards, then such agreement shall control. In all other cases,
unless provided otherwise in an Award agreement, in the event of a Change of
Control:

(i) Each Option or SAR that is then held by a Participant who is employed by or
in the service of the Company or an Affiliate shall become immediately and fully
vested, and, unless otherwise determined by the Board or Committee, all Options
and SARs shall be cancelled on the date of the Change of Control in exchange for
a cash payment equal to the excess of the Change of Control price of the Shares
covered by the Option or SAR that is so cancelled over the purchase or grant
price of such Shares under the Award;

(ii) Restricted Stock, Restricted Stock Units and Deferred Stock Rights (that
are not Performance Awards) that are not then vested shall vest;

(iii) All Performance Awards that are earned but not yet paid shall be paid, and
all Performance Awards for which the performance period has not expired shall be
cancelled in exchange for a cash payment equal to the amount that would have
been due under such Award(s) if the Performance Goals (as measured at the time
of the Change of Control) were to continue to be achieved at the same rate
through the end of the performance period, or if higher, assuming the target
Performance Goals had been met at the time of such Change of Control; and

(iv) All Dividend Equivalent Units that are not vested shall vest and be paid in
cash, and all other Awards that are not vested shall vest and if an amount is
payable under such vested Award, such amount shall be paid in cash based on the
value of the Award.

If the value of an Award is based on the Fair Market Value of a Share, Fair
Market Value shall be deemed to mean the per share Change of Control price. The
Administrator shall determine the per share Change of Control price paid or
deemed paid in the Change of Control transaction.

Except as otherwise expressly provided in any agreement between a Participant
and the Company or an Affiliate, if the receipt of any payment by a Participant
under the circumstances described above would result in the payment by the
Participant of any excise tax provided for in Section 280G and Section 4999 of
the Code, then the amount of such payment shall be reduced to the extent
required to prevent the imposition of such excise tax.

 

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17. Miscellaneous.

(a) Other Terms and Conditions. The grant of any Award may also be subject to
other provisions (whether or not applicable to the Award granted to any other
Participant) as the Administrator determines appropriate, including, without
limitation, provisions for:

(i) the payment of the purchase price of Options by delivery of cash or other
Shares or other securities of the Company (including by attestation) having a
then Fair Market Value equal to the purchase price of such Shares, or by
delivery (including by fax) to the Company or its designated agent of an
executed irrevocable option exercise form together with irrevocable instructions
to a broker-dealer to sell or margin a sufficient portion of the Shares and
deliver the sale or margin loan proceeds directly to the Company to pay for the
exercise price;

(ii) restrictions on resale or other disposition of Shares; and

(iii) compliance with federal or state securities laws and stock exchange
requirements.

(b) Employment and Service. The issuance of an Award shall not confer upon a
Participant any right with respect to continued employment or service with the
Company or any Affiliate, or the right to continue as a Director. Unless
determined otherwise by the Administrator, for purposes of the Plan and all
Awards, the following rules shall apply:

(i) a Participant who transfers employment between the Company and its
Affiliates, or between Affiliates, will not be considered to have terminated
employment;

(ii) a Participant who ceases to be a Non-Employee Director because he or she
becomes an employee of the Company or an Affiliate shall not be considered to
have ceased service as a Non-Employee Director with respect to any Award until
such Participant’s termination of employment with the Company and its
Affiliates;

(iii) a Participant who ceases to be employed by the Company or an Affiliate and
immediately thereafter becomes a Non-Employee Director, a non-employee director
of an Affiliate, or a consultant to the Company or any Affiliate shall not be
considered to have terminated employment until such Participant’s service as a
director of, or consultant to, the Company and its Affiliates has ceased; and

(iv) a Participant employed by an Affiliate will be considered to have
terminated employment when such entity ceases to be an Affiliate.

Notwithstanding the foregoing, for purposes of an Award that is subject to Code
Section 409A, if a Participant’s termination of employment or service triggers
the payment of compensation under such Award, then the Participant will be
deemed to have terminated employment or service upon his or her “separation from
service” within the meaning of Code Section 409A.

(c) No Fractional Shares. No fractional Shares or other securities may be issued
or delivered pursuant to this Plan, and the Administrator may determine whether
cash, other securities or other property will be paid or transferred in lieu of
any fractional Shares or other securities, or whether such fractional Shares or
other securities or any rights to fractional Shares or other securities will be
canceled, terminated or otherwise eliminated.

 

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(d) Unfunded Plan. This Plan is unfunded and does not create, and should not be
construed to create, a trust or separate fund with respect to this Plan’s
benefits. This Plan does not establish any fiduciary relationship between the
Company and any Participant or other person. To the extent any person holds any
rights by virtue of an Award granted under this Plan, such rights are no greater
than the rights of the Company’s general unsecured creditors.

(e) Requirements of Law and Securities Exchange. The granting of Awards and the
issuance of Shares in connection with an Award are subject to all applicable
laws, rules and regulations and to such approvals by any governmental agencies
or national securities exchanges as may be required. Notwithstanding any other
provision of this Plan or any award agreement, the Company has no liability to
deliver any Shares under this Plan or make any payment unless such delivery or
payment would comply with all applicable laws and the applicable requirements of
any securities exchange or similar entity, and unless and until the Participant
has taken all actions required by the Company in connection therewith. The
Company may impose such restrictions on any Shares issued under the Plan as the
Company determines necessary or desirable to comply with all applicable laws,
rules and regulations or the requirements of any national securities exchanges.

(f) Governing Law. This Plan, and all agreements under this Plan, will be
construed in accordance with and governed by the laws of the State of Minnesota,
without reference to any conflict of law principles. Any legal action or
proceeding with respect to this Plan, any Award or any award agreement, or for
recognition and enforcement of any judgment in respect of this Plan, any Award
or any award agreement, may only be heard in a “bench” trial, and any party to
such action or proceeding shall agree to waive its right to a jury trial.

(g) Limitations on Actions. Any legal action or proceeding with respect to this
Plan, any Award or any award agreement, must be brought within one year (365
days) after the day the complaining party first knew or should have known of the
events giving rise to the complaint.

(h) Construction. Whenever any words are used herein in the masculine, they
shall be construed as though they were used in the feminine in all cases where
they would so apply; and wherever any words are used in the singular or plural,
they shall be construed as though they were used in the plural or singular, as
the case may be, in all cases where they would so apply. Title of sections are
for general information only, and this Plan is not to be construed with
reference to such titles.

(i) Severability. If any provision of this Plan or any award agreement or any
Award (i) is or becomes or is deemed to be invalid, illegal or unenforceable in
any jurisdiction, or as to any person or Award, or (ii) would disqualify this
Plan, any award agreement or any Award under any law the Administrator deems
applicable, then such provision should be construed or deemed amended to conform
to applicable laws, or if it cannot be so construed or deemed amended without,
in the determination of the Administrator, materially altering the intent of
this Plan, award agreement or Award, then such provision should be stricken as
to such jurisdiction, person or Award, and the remainder of this Plan, such
award agreement and such Award will remain in full force and effect.

 

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