EXHIBIT 10.21

 

GENERAL MILLS, INC.

2001 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

 

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GENERAL MILLS, INC.
2001 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

 

 

1.

PURPOSE

          The purpose of the General Mills, Inc. 2001 Compensation Plan for
Non-Employee Directors (the “Plan”) is to provide a compensation program which
will attract and retain qualified individuals not employed by General Mills,
Inc. or its subsidiaries (the “Company”) to serve on the Board of Directors of
the Company (the “Board”) and to further align the interests of non-employee
directors with those of the stockholders by providing that a portion of
compensation will be linked directly to increases in stockholder value.

 

 

2.

EFFECTIVE DATE, DURATION OF PLAN

          This Plan shall become effective as of September 24, 2001, subject to
the approval of the Plan by the stockholders. The Plan will terminate on
September 30, 2006 or such earlier date as determined by the Board or the
Compensation Committee of the Board (the “Committee”); provided that no such
termination shall affect rights earned or accrued under the Plan prior to the
date of termination.

 

 

3.

PARTICIPATION

          Each member of the Board who is not an employee of the Company at the
date compensation is earned or accrued shall be eligible to participate in the
Plan unless prohibited from participating by the terms of their employment.

 

 

4.

COMMON STOCK SUBJECT TO THE PLAN

          a) General. The common stock to be issued under this Plan is Company
common stock (“Common Stock”) ($.10 par value) to be made available from the
authorized but unissued Common Stock, shares of Common Stock held in the
treasury, or Common Stock purchased on the open market or otherwise. Subject to
the provisions of the next succeeding paragraphs, the maximum aggregate number
of shares authorized to be issued under the Plan shall be 700,000.

If any Option (defined below) is exercised by tendering Common Stock, either
actually or by attestation, to the Company as full or partial payment in
connection with the exercise of an Option under the Plan, only the number of
shares of Common Stock issued net of the Common Stock tendered shall be deemed
delivered for purposes of determining the maximum number of shares available for
grants under the Plan. Upon forfeiture or termination of Stock Units prior to
vesting, the shares of Common Stock subject thereto shall again be available for
awards under the Plan.

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          b) Adjustments for Corporate Transactions. If a corporate transaction
has occurred affecting the Common Stock such that an adjustment to outstanding
awards is required to preserve (or prevent enlargement of) the benefits or
potential benefits intended at the time of grant, then in such manner as the
Committee deems equitable, an appropriate adjustment shall be made to (i) the
number and kind of shares which may be awarded under the Plan; (ii) the number
and kind of shares subject to outstanding awards; (iii) the number of shares
credited to an account; and, if applicable, (iv) the exercise price of
outstanding Options; provided that the number of shares of Common Stock subject
to any Option denominated in Common Stock shall always be a whole number. For
this purpose a corporate transaction includes, but is not limited to, any
dividend or other distribution (whether in the form of cash, Common Stock,
securities of a subsidiary of the Company, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Common
Stock or other securities of the Company, issuance of warrants or other rights
to purchase Common Stock or other securities of the Company, or other similar
corporate transactions. Notwithstanding anything in this paragraph to the
contrary, an adjustment to an Option under this paragraph shall be made in a
manner that will not result in a new grant of an Option under Code Section 409A.

 

 

5.

ANNUAL RETAINER

          a) General. Each non-employee director shall be entitled to receive an
annual retainer as shall be determined from time to time by the Board. Each
non-employee director of the Company shall elect by written notice to the
Company on or before each annual stockholders’ meeting how he or she shall
participate in the compensation alternative provisions of the Plan. Any
combination of the alternatives — Cash, Deferred Cash and/or Common Stock — may
be elected, provided the aggregate of the alternatives elected equals one
hundred percent of the non-employee director’s compensation at the time of the
election. The election shall remain in effect for a one-year period which shall
begin the day of the annual stockholders’ meeting and terminate the day before
the succeeding annual stockholders’ meeting (hereinafter “Plan Year”). The Plan
Year shall include four plan quarters (hereinafter “Plan Quarters”). Plan
quarters shall correspond to the Company’s fiscal quarters. A director elected
to the Board at a time other than the annual stockholders’ meeting may elect, by
written notice to the Company before such director’s first attendance at a Board
meeting, to participate in the compensation alternatives for the remainder of
that Plan Year, and elections for succeeding years shall be on the same basis as
other directors. Periodically, the Company shall supply to each participant an
account statement of participation under the Plan.

          b) Cash Alternative. Each non-employee director who elects to receive
cash compensation under the Plan shall be paid all or the specified percentage
of his or her compensation for the Plan Year in cash, and such cash payment
shall be made as of the end of each Plan Quarter. If a participant dies during a
Plan Year, the balance of the amount due to the date of the participant’s death
shall be payable in full to such

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participant’s designated beneficiary, or, if none, the estate as soon as
practicable following the date of death.

          c) Deferred Cash Alternative.

 

 

 

 

 

 

(i)

Each non-employee director may elect to have all or a specified percentage of
his or her compensation for the Plan Year deferred until the participant ceases
to be a director.

 

 

 

 

 

 

(ii)

For each director who has made this deferred cash election, the Company shall
establish a deferred compensation account for the compensation due. Interest
shall be credited to each such account based on the rate earned by the fund or
funds selected by the participant from among funds or portfolios established
under the General Mills, Inc. Savings Plan or any other qualified benefit plan
maintained by the Company which the Minor Amendment Committee, or its delegate,
in its discretion, may from time to time establish.

 

 

 

 

 

 

(iii)

Distribution of the participant’s deferred compensation account shall be at the
time, and in the form of payment, elected by the participant at the time of
deferral. The distribution date may be any date that is at least one year
subsequent to the date of deferral of such compensation, but the distribution
must be made or commenced by the later of (i) the date the participant attains
age 70 and (ii) five years after the director’s retirement from the Board.

 

 

 

 

 

 

 

A participant may elect to have the deferred compensation account distributed in
a single payment or in substantially equal annual installments for a period not
to exceed ten (10) years, or in another form requested by the Participant, in
writing, and approved by the Committee.

 

 

 

 

 

 

(iv)

In the event of the termination of a participant from Board service other than
by retirement, the Committee may in its sole discretion require that
distribution of all amounts allocated to a participant’s deferred compensation
account be accelerated and distributed as of the first business day of the
calendar year next following termination.

 

 

 

 

 

 

(v)

The Company has established a Supplemental Benefits Trust with Wells Fargo Bank
Minnesota, N.A. as Trustee to hold assets of the Company under certain
circumstances as a reserve for the discharge of the Company’s obligations as to
deferred cash compensation under the Plan and certain other of deferred
compensation plans of the Company. In the event of a Change in Control as
defined in Section 11 below, the Company shall be obligated to immediately
contribute such amounts to the Trust as may be necessary to fully fund

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all cash benefits payable under the Plan. Any participant of the Plan shall have
the right to demand and secure specific performance of this provision. All
assets held in the Trust remain subject only to the claims of the Company’s
general creditors whose claims against the Company are not satisfied because of
the Company’s bankruptcy or insolvency (as those terms are defined in the Trust
Agreement). No participant has any preferred claim on, or beneficial ownership
interest in, any assets of the Trust before the assets are paid to the
participant and all rights created under the Trust, as under the Plan, are
unsecured contractual claims of the participant against the Company.

          d) GMI Common Stock Alternative. Each participant may elect to receive
all or a specified percentage of his or her compensation in shares of Common
Stock, which will be issued at the end of each Plan Quarter. The Company shall
ensure that an adequate number of shares of Common Stock are available for
distribution to those participants making this election. Only whole numbers of
shares will be issued, with any fractional share amounts paid in cash. For
purposes of computing the number of shares earned each Plan Quarter, the value
of each share shall be equal to the mean of the high and low price of shares of
Common Stock on the New York Stock Exchange on the third Business Day preceding
the last day of each Plan Quarter. For the purposes of this Plan, “Business Day”
shall mean a day on which the New York Stock Exchange is open for trading. If a
participant dies during a Plan Year, the balance of the amount due to the date
of the participant’s death shall be payable in full to the participant’s
designated beneficiary, or, if none, to the participant’s estate, in cash, as
soon as practicable following the date of death.

 

 

6.

NON-QUALIFIED STOCK OPTIONS

          a) Grant of Options. Each non-employee director on the effective date
of the Plan (or, if first elected after the effective date of the Plan, on the
date the non-employee director first attends a Board meeting) shall be awarded
an option (an “Option”) to purchase 10,000 shares of Common Stock. As of the
close of business on each successive annual stockholders’ meeting date after the
date of the original award, each non-employee director re-elected to the Board
shall be granted an additional Option to purchase 10,000 shares of Common Stock.
All Options granted under the Plan shall be non-statutory options not entitled
to special tax treatment under Section 422 of the Internal Revenue Code of 1986,
as amended.

          b) Option Exercise Price. The per share price to be paid by the
non-employee director at the time an Option is exercised shall be 100% of the
Fair Market Value of the Common Stock on the date of grant. “Fair Market Value”
shall equal the closing price for the Common Stock on the New York Stock
Exchange on the relevant date or, if the New York Stock Exchange is closed on
that date, on the last preceding date on which the Exchange was open for
trading.

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          c) Term of Option. Each Option shall expire ten (10) years from the
date of grant.

          d) Exercise and Vesting of Option. Each Option will vest on the date
of the annual stockholders’ meeting next following the date the Option is
granted. If, for any reason, a non-employee director ceases to serve on the
Board prior to the date an Option vests, such Option shall be forfeited and all
further rights of the non-employee director to or with respect to such Option
shall terminate. If a participant should die during his or her term of service
on the Board, any vested Option may be exercised by the person designated in
such participant’s last will and testament or, in the absence of such
designation, by the participant’s estate and for Options granted on or after
June 1, 2002, any unvested Options shall fully vest and become exercisable upon
death. For Options granted prior to June 1, 2002, any unvested Options shall
vest and become exercisable upon death in a proportionate amount, based on the
full months of service completed during the vesting period of the Option from
the date of grant to the date of death.

          e) Method of Exercise and Tax Obligations. A participant exercising an
Option shall give notice to the Company of such exercise and of the number of
shares elected to be purchased prior to 4:30 P.M. CST/CDT on the day of
exercise, which must be a business day at the executive offices of the Company.
The exercise price shall be paid to the Company at the time of such exercise,
subject to any applicable rule or regulation adopted by the Committee:

 

 

 

 

 

 

(i)

in cash (including check, draft, money order or wire transfer made payable to
the order of the Company);

 

 

 

 

 

 

(ii)

through the tender of shares of Common Stock owned by the participant (by either
actual delivery or attestation); or

 

 

 

 

 

 

(iii)

by a combination of (i) and (ii) above.

 

 

 

 

 

 

For determining the amount of the payment, Common Stock delivered pursuant to
(ii) or (iii) shall have a value equal to the Fair Market Value of the Common
Stock on the date of exercise. The Company may also require payment of the
amount of any federal, state or local withholding tax attributable to the
exercise of an Option or the delivery of shares of Common Stock.

          f) Non-transferability. Except as provided by rule adopted by the
Committee, an Option shall be non-assignable and non-transferable by a
non-employee director other than by will or the laws of descent and
distribution. A non-employee director shall forfeit any Option assigned or
transferred, voluntarily or involuntarily, other than as permitted under this
subsection.

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7.

DEFERRAL OF STOCK OPTION GAINS

          Under the Plan, Participants may defer receipt of the net shares of
Common Stock to be issued upon the stock-for-stock exercise of an Option issued
hereunder, as well as dividend equivalents on the net shares.

          a) Option Gain Deferral Election. A participant can elect to defer
receipt of Net Shares (defined below) of Common Stock resulting from a
stock-for-stock exercise of an exercisable Option issued to the participant by
completing and submitting to the Company an irrevocable stock option deferral
election at least six months in advance of exercising the Option (which exercise
must be done on or prior to the expiration of the Option) and, on or prior to
the exercise date, delivering personally-owned shares equal in value to the
Option exercise price on the date of the exercise. “Net Shares” means the
difference between the number of shares of Common Stock subject to the Option
exercise and the number of shares of Common Stock delivered to satisfy the
Option exercise price. A participant may not revoke an Option gain deferral
election after it is received by the Company. A participant may choose to defer
receipt of all or only a portion of the Net Shares to be received upon exercise
of an Option. If only a portion of the Net Shares is deferred, the balance will
be issued at the time of exercise.

          b) Distribution of Deferred Common Stock. At the time of a
participant’s election to defer receipt of Common Stock issuable upon an Option
exercise or upon the award of Stock Units, as provided in Section 8(a), a
participant must also select a distribution date and a form of distribution. The
distribution date may be any date that is at least one year subsequent to either
the exercise date for the related Option or the date of grant in the case of
Stock Units granted under Section 8(a) but the distribution must be made or
commenced by the later of (i) the date the participant attains age 70 and (ii)
five years after the date of the director’s retirement from the Board.

          A participant may elect to have deferred Common Stock distributed in a
single payment or in substantially equal annual installments for a period not to
exceed ten (10) years, or in another form requested by the Participant, in
writing, and approved by the Committee. In the absence of an election, Common
Stock issued in respect of Stock Units shall be distributed in ten substantially
equal annual installments beginning on January 1 of each year following the year
in which the participant ceases to be a director. Common Stock issuable under a
single Option grant or pursuant to a single grant under Section 8(a) shall have
the same distribution date and form of distribution. Notwithstanding the above,
the following provisions shall apply:

 

 

 

 

 

 

(i)

If an Option as to which a participant has made an Option gain deferral election
terminates prior to the exercise date selected by the participant, or if the
participant dies or fails to deliver personally-owned shares in payment of the
exercise price, then the deferral election shall not become effective.

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(ii)

In the event of the termination of a participant from Board service other than
by retirement, the Committee may, in its sole discretion, require that
distribution of all Stock Units allocated to a participant’s Deferred Stock Unit
Accounts (as defined in Section 7(c)(i) below) be accelerated and distributed as
of the first business day of the calendar year next following the date of
termination.

 

 

 

 

 

 

(iii)

At the time elected by the participant for distribution of Common Stock
attributable to allocations under the participant’s Deferred Stock Unit
Accounts, the Company shall cause to be issued to the Participant, within three
(3) days of the date of distribution, shares of Common Stock equal to the number
of Stock Units credited to the Deferred Stock Unit Account and cash equal to any
dividend equivalent amounts which had not been used to “purchase” additional
Stock Units as provided below. Prior to distribution and pursuant to any rules
the Committee may adopt, a Participant may authorize the Company to withhold a
portion of the shares of Common Stock to be distributed for the payment of all
federal, state, local and foreign withholding taxes required to be collected in
respect of the distribution.

          c) Deferred Stock Unit Accounts and Dividend Equivalents.

 

 

 

 

 

 

(i)

A deferred stock unit account (“Deferred Stock Unit Account”) will be
established for each Option grant covered by a participant election to defer the
receipt of Common Stock under Section 7(a) above and, for each Net Share
deferred, a Stock Unit will be credited to the Deferred Stock Unit Account as of
the date of the Option exercise. A Deferred Stock Unit Account will also be
established each time a participant receives Stock Units pursuant to Section
8(a) hereof. Participants may make an election to receive dividend equivalents
on Stock Units in cash or reinvest such amount, and any change to such election
shall become effective six months after the date of the change. If the amounts
are reinvested, on each dividend payment date for the Company’s Common Stock,
the Company will credit each Deferred Stock Unit Account with an amount equal to
the dividends paid by the Company on the number of shares of Common Stock equal
to the number of Stock Units in the Deferred Stock Unit Account. Dividend
equivalent amounts credited to each Deferred Stock Unit Account shall be used to
“purchase” additional Stock Units for the Deferred Stock Unit Account at a price
equal to the mean of the high and low price of the Common Stock on the New York
Stock Exchange on the dividend date. The Committee may, in its sole discretion,
direct either that all dividend equivalent amounts be paid currently or all such
amounts be reinvested if, for any reason, such Committee believes it is in the
best interest of the Company to do so. If the participant fails to make an
election, the dividend equivalent amounts shall be reinvested.

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Periodically, each participant will receive a statement of the number of Stock
Units in his or her Deferred Stock Unit Account(s).

 

 

 

 

 

 

(ii)

Participants who elect under the Plan to defer the receipt of Common Stock
issuable upon the exercise of Options or elect to receive Stock Units under
Section 8(a) below will have no rights as stockholders of the Company with
respect to allocations made to their Deferred Stock Unit Account(s), except the
right to receive dividend equivalent allocations under Section 7(c)(i) above.
Stock Units may not be sold, transferred, assigned, pledged or otherwise
encumbered or disposed.

 

 

 

 

8.

STOCK UNITS

          a) Awards. On the effective date of the Plan (or, if a non-employee
director is first elected after the effective date of the Plan, on the date the
non-employee director first attends a Board meeting) and at the close of
business on each successive annual stockholders’ meeting date, each non-employee
director shall be awarded the right to receive one thousand (1,000) shares of
Common Stock on a deferred basis (“Stock Units”), subject to vesting as provided
in Section 8(b). The maximum aggregate number of shares authorized to be issued
under the Plan upon vesting of Stock Unit awards shall be 80,000. Only
non-employee directors re-elected to the Board shall be entitled to a grant
under this Section 8(a) of Stock Units awarded at the close of business on an
annual meeting date after the date of the original grant to the non-employee
directors.

          b) Vesting of and Restrictions on Stock Units. A participant’s
interest in the Stock Units shall vest on the date of the annual stockholders’
meeting next following the date of the award of the Stock Units (the “Restricted
Period”). If, for any reason, a non-employee director ceases to serve on the
Board prior to the date the non-employee director’s interest in a grant of Stock
Units vests, such Stock Units shall be forfeited and all further rights of the
non-employee director to or with respect to such Stock Units shall terminate. A
participant who dies prior to the vesting of Stock Units granted on or after
June 1, 2002 shall fully vest in such Stock Units, effective as of the date of
death. A participant who dies prior to the vesting of Stock Units granted prior
to June 1, 2002 shall vest in a proportionate number of shares of Stock Units,
based on the full months of service completed during the vesting period of the
Stock Units from the date of grant to the date of death. Stock Units may not be
sold, transferred, assigned, pledged or otherwise encumbered or disposed until
such time as share certificates for Common Stock are issued to the participants.

          c) Distribution of Stock Units. Each participant receiving an award of
Stock Units under Section 8(a) above must select a date of distribution and form
of distribution as provided under Section 7(b) above. The participant may also
elect to have dividend equivalents payable on Stock Units paid currently or
reinvested in Stock Units as provided under Section 7(c)(i).

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          d) Other Terms and Conditions. The Company may require payment of the
amount of any federal, state or local withholding tax attributable to the
constructive or actual delivery of shares of Common Stock pursuant to the terms
of this Agreement.

 

 

9.

GENERAL PROVISIONS FOR DEFERRED CASH, OPTION GAINS AND STOCK UNITS

          The following provisions shall apply to the deferral of cash
compensation described in Section 5(c) hereof, the deferral of receipt of Common
Stock issued upon exercise of Options described in Section 7 hereof and the
treatment of Stock Units granted under Section 8 hereof.

          a) A participant may, at any time prior or subsequent to the
commencement of benefit payments or distribution of Common Stock in respect of
Stock Units under this Plan, elect in writing to have his or her form of
distribution under this Plan changed to an immediate single distribution which
shall be made within one (1) business day of receipt by the Company of such
request in the case of deferred cash and three (3) business days in the case of
Common Stock; provided that the cash amount or number of shares of Common Stock
subject to such single distribution shall be reduced by an amount or number of
shares of Common Stock equal to the product of (X), the rate set forth in
Statistical Release H.15(519), or any successor publication, as published by the
Board of Governors of the Federal Reserve System for one-year U.S. Treasury
notes under the heading “Treasury Constant Maturities” for the first day of the
calendar month in which the request for a single sum distribution is received by
the Company and (Y) either (i) as to a cash distribution, the total single sum
distribution otherwise payable (based on the value of the account as of the
first day of the month in which the single sum amount is paid, adjusted by a
pro-rata portion of the specified rate of return for the prior month in which
the single sum is paid, determined by multiplying the actual rate of return for
such prior month by a fraction, the numerator of which is the number of days in
the month in which the request is received prior to the date of payment, and the
denominator of which is the number of days in the month), or (ii) as to a
distribution of Common Stock in respect of Stock Units, the number of Stock
Units held on behalf of the participant multiplied by the mean of the high and
low price of shares of Common Stock on the New York Stock Exchange on the date
of the request or, if the date of the request is not a Business Day, on the
Business Day preceding the date of the request.

          b) In the event of a severe financial hardship occasioned by an
emergency, including, but not limited to, illness, disability or personal injury
sustained by the participant or a member of the participant’s immediate family,
a participant may apply to receive a distribution, including a distribution of
Common Stock in respect of Stock Units, earlier than initially elected. The
Committee may, in its sole discretion, either approve or deny the request. The
determination made by the Committee will be final and binding on all parties. If
the request is granted, the distributions will be accelerated only to the extent
reasonably necessary to alleviate the financial hardship.

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          c) If the death of a participant occurs before a full distribution of
deferred cash amounts or Common Stock in respect of Stock Units is made, a
single distribution shall be made to the beneficiary designated by the
participant to receive such amounts. This distribution shall be made as soon as
practical following notification that death has occurred. In the absence of any
such designation, the distribution shall be made to the personal representative,
executor or administrator of the participant’s estate.

          d) As to all previous and future Plan years, and subject to the last
sentence of the first paragraph of Section 7(b) hereof, a participant who is not
within twelve (12) months of the date that such deferred amount, deferred Common
Stock or the first installment thereof would be distributed under this Plan,
shall be permitted to make no more than two amendments to the initial election
to defer distributions such that his or her distribution date is either in the
same calendar year as the date of the distribution which would have been made in
the absence of such election amendment(s) or is at least one year after the date
of the distribution which would have been made in the absence of such election
amendment(s). A participant satisfying the conditions set forth in the preceding
sentence may also amend such election so that his or her form of distribution is
changed to substantially equal annual installments for a period not to exceed
ten (10) years or is changed to a single distribution.

          e) Notwithstanding any other provision of this Plan to the contrary,
the Committee, by majority approval, may, in its sole discretion, direct that
distributions be made before such distributions are otherwise due if, for any
reason (including, but not limited to, a change in the tax or revenue laws of
the United States of America, a published ruling or similar announcement issued
by the Internal Revenue Service, a regulation issued by the Secretary of the
Treasury or his or her delegate, or a decision by a court of competent
jurisdiction involving a participant or beneficiary), it believes that a
participant or beneficiary has recognized or will recognize income for federal
income tax purposes with respect to distributions that are or will be payable to
such participants under the Plan before they are paid to him. In making this
determination, the Committee shall take into account the hardship that would be
imposed on the participant or beneficiary by the payment of federal income taxes
under such circumstances.

 

 

10.

CHANGE OF CONTROL

          Options granted under the Plan will become immediately exercisable,
and Common Stock and dividend equivalents to be issued in respect of Stock Units
will be immediately distributed upon the occurrence of a “Change of Control” as
defined in Section 11.

 

 

11.

ADMINISTRATION

          The Plan shall be administered by the Committee. The Committee shall
have full power to interpret the Plan, formulate additional details and
regulations for carrying out the Plan and amend or modify the Plan as from time
to time it deems proper and in

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the best interests of the Company, including amending the Plan to increase or
decrease the size of annual Option or Stock Unit grants made to non-employee
directors, provided that after a “Change of Control” no amendment, modification
of or action to terminate the Plan may be made which would affect compensation
earned or accrued prior to such amendment, modification or termination without
the written consent of a majority of participants determined as of the day
before a “Change of Control.” Any decision or interpretation adopted by the
Committee shall be final and conclusive. A “Change of Control” means:

          a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the “1934 Act”)) (a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of
the Company where such acquisition causes such Person to own 20% or more of the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
subsection (1), the following acquisitions shall not be deemed to result in a
Change of Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any corporation pursuant to
a transaction that complies with clauses (i), (ii) and (iii) of subsection (3)
below; and provided, further, that if any Person’s beneficial ownership of the
Outstanding Company Voting Securities reaches or exceeds 20% as a result of a
transaction described in clause (i) or (ii) above, and such Person subsequently
acquires beneficial ownership of additional voting securities of the Company,
such subsequent acquisition shall be treated as an acquisition that causes such
Person to own 20% or more of the Outstanding Company Voting Securities; or

          b) Individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

          c) The approval by the shareholders of the Company of a
reorganization, merger, consolidation, sale or other disposition of all or
substantially all of the assets of the Company (“Business Combination”) or, if
consummation of such Business Combination is subject, at the time of such
approval by shareholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly by
consummation); excluding, however, such a Business Combination

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pursuant to which (i) all or substantially all of the individuals and entities
who were the beneficial owners of the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation that as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business combination of the Outstanding
Company Voting Securities, (ii) no Person (excluding any employee benefit plan
(or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

          d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

 

 

12.

GOVERNING LAW

          The validity, construction and effect of the Plan and any such actions
taken under or relating to the Plan shall be determined in accordance with the
laws of the State of Delaware and applicable Federal law.

 

 

13.

NOTICES

          Unless otherwise notified, all notices under this Plan shall be sent
in writing to the Company, attention Corporate Compensation, P.O. Box 1113,
Minneapolis, Minnesota 55440. All correspondence to the participants shall be
sent to the address which is their recorded address as listed on the election
forms.

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