EXHIBIT 10.2
SUPERVALU INC.
2007 STOCK PLAN
STOCK OPTION AGREEMENT
This agreement is made and entered into as of the grant date indicated below
(the “Grant Date”), by and between SUPERVALU INC. (the “Company”) and the
individual whose name appears below (“Optionee”).
The Company has established the 2007 Stock Plan (the “Plan”), under which key
employees of the Company and its Affiliates may be granted Options to purchase
shares of the Company’s common stock. Optionee has been selected by the Company
to receive an Option subject to the provisions of this agreement. Capitalized
terms that are used in this agreement, that are not defined, shall have the
meanings ascribed to them in the Plan.
In consideration of the foregoing, the Company and Optionee hereby agree as
follows:

1.   Option Grant. The Company hereby grants to Optionee, subject to Optionee’s
acceptance hereof, the right and option to purchase the number of Shares
indicated below at the exercise price per Share indicated below (the “Exercise
Price”), effective as of the Grant Date. The Option has been designated as a
Non-Qualified Stock Option (“NQ”) for tax purposes, the consequences of which
are set forth in the prospectus that describes the Plan.   2.   Acceptance of
Option and Stock Option Terms and Conditions. The Option is subject to and
governed by the Stock Option Terms and Conditions (“Terms and Conditions”)
attached hereto, which is incorporated in the terms and provisions of the Plan.
To accept the Option, this agreement must be delivered and accepted through an
electronic medium in accordance with procedures established by the Company or
Optionee must sign and return a copy of this agreement to the Company within
sixty (60) days after the Grant Date. By so doing, Optionee acknowledges receipt
of the accompanying Terms and Conditions and the Plan, and represents that
Optionee has read and understands the same and agrees to be bound by the
accompanying Terms and Conditions and the terms and provisions of the Plan. In
the event that any provision of this agreement or the accompanying Terms and
Conditions is inconsistent with the terms and provisions of the Plan, the terms
and provisions of the Plan shall govern. Any question of administration or
interpretation arising under this agreement or the accompanying Terms and
Conditions shall be determined by the Committee administering the Plan, and such
determination shall be final, conclusive and binding upon all parties in
interest.   3.   Vesting, Exercise Rights and Expiration. Except as otherwise
provided in the accompanying Terms and Conditions: (i) twenty-five percent (25%)
of the Option shall vest in four (4) equal annual installments on each of the
first four anniversaries of the Grant Date, (ii) the vested portion of the
Option may be exercised in whole or part, and (iii) the Option will expire on
the expiration date indicated below (the “Expiration Date”).

     
Option Number:
  %%OPTION_NUMBER%-%
Grant Date:
  %%OPTION_DATE,’Month DD, YYYY’%-%
Number of Shares:
  %%TOTAL_SHARES_GRANTED,’999,999,999’%-%
Option Price:
  %%OPTION_PRICE,’$999,999,999.99’%-%
Expiration Date:
  %%EXPIRE_DATE_PERIOD1,’Month DD, YYYY’%-%

     
SUPERVALU INC.
  OPTIONEE:
 
   
 
   
 
   
[_____]
  %%FIRST_NAME%-% %%LAST_NAME%-%
[Title]
  %%ADDRESS_LINE_1%-%     %%CITY%-% %%STATE%-% %%ZIPCODE%-%

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SUPERVALU INC.
2007 STOCK PLAN
STOCK OPTION TERMS AND CONDITIONS
(FOR EMPLOYEES)
These Stock Option Terms and Conditions (“Terms and Conditions”) apply to the
Option granted to you under the Plan, pursuant to the Stock Option Agreement
(the “Agreement”) to which this document is attached. Capitalized terms that are
used in this document, but are not defined, shall have the meanings ascribed to
them in the Plan or the attached Agreement. See Section 20 for a list of defined
terms.
1. Vesting and Exercisability. The Option shall vest twenty-five percent (25%)
in four (4) equal annual installments on each of the first four anniversaries of
the Grant Date.
The vested portion of the Option may be exercised at any time, or from time to
time, to purchase Shares. If in any year the full amount of Shares that may be
purchased pursuant to the vested portion of the Option is not purchased, the
remaining amount of such Shares shall be available for purchase during the
remainder of the term of the Option. The term of the Option shall be for a
period of seven (7) years from the Grant Date, terminating at the close of
business on the Expiration Date or such shorter period as is provided for
herein.
2. Manner of Exercise. Except as provided in Section 7 below, you cannot
exercise the Option unless at the time of exercise you are an employee of the
Company or an Affiliate. Prior to your death, only you may exercise the Option.
You may exercise the Option as follows:

  a)   By delivering a “Notice of Exercise of Stock Option” to the Company at
its principal office, attention: Corporate Secretary, stating the number of
Shares being purchased and accompanied by payment of the full purchase price for
such Shares (determined by multiplying the Exercise Price by the number of
Shares to be purchased). Note: In the event the Option is exercised by any
person other than you pursuant to any of the provisions of Section 7 below, the
Notice must be accompanied by appropriate proof of such person’s right to
exercise the Option; or     b)   By entering an order to exercise the Option
using E*TRADE’s website.

3. Method of Payment. The full purchase price for the Shares to be purchased
upon exercise of the Option must be paid as follows:

  a)   By delivering directly to the Company, cash or its equivalent payable to
the Company;     b)   By delivering indirectly to the Company, cash or its
equivalent payable to the Company through E*TRADE’s website;     c)   By
delivering directly to the Company Shares having a Fair Market Value as of the
exercise date equal to the purchase price (commonly known as a “Stock Swap”); or
    d)   By delivering directly to the Company the full purchase price in a
combination of cash and Shares.

You shall represent and warrant in writing that you are the owner of the Shares
so delivered, free and clear of all liens, encumbrances, security interests and
restrictions. To the extent that you possess Shares in certificated form, you
shall duly endorse in blank all certificates delivered to the Company.
4. Delivery of Shares. You shall not have any of the rights of a stockholder
with respect to any Shares subject to the Option until such Shares are purchased
by you upon exercise of the Option. Such Shares shall then be issued and
delivered to you by the Company as follows:

  a)   In the form of a stock certificate registered in your name or your name
and the name of another adult person (twenty-one (21) years of age or older) as
joint tenants, and mailed to your address; or

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  b)   In “book entry” form, that is, registered with the Company’s stock
transfer agent, in your name or your name and the name of another adult person
(twenty-one (21) years of age or older) as joint tenants, and sent by electronic
delivery to your brokerage account.

The Company will not deliver any fractional Share but will pay, in lieu thereof,
the Fair Market Value of such fractional Share.
5. Withholding Taxes. You are responsible for the payment of any federal, state,
local or other taxes that are required to be withheld by the Company upon
exercise of the Option and you must promptly remit such taxes to the Company.
You may elect to remit these taxes by:

  a)   Delivering directly to the Company, cash or its equivalent payable to the
Company;     b)   Delivering indirectly to the Company, cash or its equivalent
payable to the Company through E*TRADE’s website;     c)   Having the Company
withhold a portion of the Shares to be issued upon exercise of the Option having
a Fair Market Value as of the exercise date equal to the amount of federal and
state income tax required to be withheld upon such exercise (commonly referred
to as a “Tax Swap” or “Stock for Tax”); or     d)   Delivering directly to the
Company, Shares, other than the Shares issuable upon exercise of the Option,
having a Fair Market Value as of the exercise date equal to such taxes.

You shall represent and warrant in writing that you are the owner of the Shares
so delivered, free and clear of all liens, encumbrances, security interests and
restrictions. To the extent that you possess Shares in certificated form, you
shall duly endorse in blank all certificates delivered to the Company.
6. Change in Control.

  a)   If, within two (2) years after a Change in Control you experience an
involuntary termination of employment initiated by the Company for reasons other
than Cause, or a termination of employment for Good Reason, the unvested portion
of the Option shall immediately vest and the Option shall become immediately
exercisable in full and remain exercisable for one (1) year beginning on the
date of your termination of employment. If the Option is replaced pursuant to
subsection (d) below, the protections and rights granted under this subsection
(a) shall transfer and apply to such replacement option.     b)   If, in the
event of a Change in Control, and to the extent the Option is not assumed by a
successor corporation (or affiliate thereto) or other successor entity or
person, or replaced with an award or grant that, solely in the discretionary
judgment of the Committee preserves the existing value of the Option at the time
of the Change in Control, then the unvested portion of the Option shall
immediately vest and the Option shall become immediately exercisable in full
upon the Change in Control.     c)   In the discretion of the Committee and
notwithstanding subsection (b) above or any other provision, the Option (whether
or not exercisable) may be cancelled at the time of the Change in Control in
exchange for cash, property or a combination thereof that is determined by the
Committee to be at least equal to the excess (if any) of the value of the
consideration that would be received in such Change in Control by the holders of
Common Stock, over the Exercise Price for the Option. For purposes of
clarification, by operation of this provision Options that would not yield a
gain at the time of the Change in Control under the aforementioned equation are
subject to cancellation without consideration. Furthermore, the Committee is
under no obligation to treat Options and/or holders of Options uniformly and has
the discretionary authority to treat Options and/or holders of Options
disparately.     d)   If in the event of a Change in Control and to the extent
that this Option is assumed by any successor corporation, affiliate thereof,
person or other entity, or is replaced with awards that, solely in the
discretionary judgment of the Committee preserve the existing value of this
Option at the time of the Change in Control and provide for vesting and
settlement terms that are at least as favorable to you as the vesting and payout
terms applicable to this Option, then the assumed Option or such substitute
therefor shall remain outstanding and be governed by its respective terms.

7. Transferability. The Option shall not be transferable other than by will or
the laws of descent and distribution. More particularly, the Option may not be
assigned, transferred, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or
similar process. Any attempted

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assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to these provisions, or the levy of an execution, attachment or similar
process upon the Option, shall be void.
You may designate a beneficiary or beneficiaries to exercise your rights with
respect to the Option upon your death. In the absence of any such designation,
benefits remaining unpaid at your death shall be paid to your estate.
8. Effect of Termination of Employment. Following the termination of your
employment with the Company or an Affiliate for any of the reasons set forth
below, your right to exercise the Option, as well as that of your beneficiary or
beneficiaries, shall be as follows:

  a)   Voluntary or Involuntary. If your employment is terminated voluntarily or
involuntarily for any reason other than retirement, death or permanent
disability, you may exercise the Option prior to its Expiration Date, at any
time within a period of up to one (1) year after such termination of employment,
to the full extent of the number of Shares you were entitled to purchase under
that portion of the Option which was vested as of the date of termination of
your employment.     b)   Retirement. You shall be deemed to have retired,
solely for purposes of these Terms and Conditions and the attached Agreement, in
the event that your employment terminates for any reason other than death or
disability and you are at least fifty-five (55) years of age.

  (i)   If you retire and you have completed ten (10) or more years of service
with the Company or an Affiliate, the unvested portion of the Option shall
immediately vest in full. Thereafter, you may exercise the Option at any time
prior to its Expiration Date, to the full extent of the Shares covered by the
Option that were not previously purchased.     (ii)   If you retire and you have
completed less than ten (10) years of service with the Company or an Affiliate,
you may exercise the Option prior to its Expiration Date, at any time within a
period of up to one (1) year after the date of your retirement, to the full
extent of the number of Shares you were entitled to purchase under that portion
of the Option which was vested as of the date of your retirement.

  c)   Death Prior to Age 55. If your death occurs before you attain the age of
fifty-five (55), while you are employed by the Company or an Affiliate, or
within three (3) months after the termination of your employment, the unvested
portion of the Option shall immediately vest in full. Thereafter, the Option may
be exercised prior to its Expiration Date, by your beneficiary(ies), or a
legatee(s) under your last will, or your personal representative(s) or the
distributee(s) of your estate, to the full extent of the Shares covered by the
Option that were not previously purchased:

  (i)   At any time within a period of up to one (1) year after your death if
such occurs while you are employed, or     (ii)   At any time within a period of
up to one (1) year following the termination of your employment if your death
occurs within three (3) months of your termination of employment.

  d)   Death After Age 55. If your death occurs after you attain the age of
fifty-five (55), while you are employed by the Company or an Affiliate, or
within three (3) months after the termination of your employment, the unvested
portion of the Option shall immediately vest in full. Thereafter, the Option may
be exercised prior to its Expiration Date, by your beneficiary(ies), or a
legatee(s) under your last will, or your personal representative(s) or the
distributee(s) of your estate, to the full extent of the Shares covered by the
Option that were not previously purchased:

  (i)   At any time, if you have completed ten (10) or more years of service
with the Company or an Affiliate; or

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  (ii)   If you have completed less than ten (10) years of service with the
Company or an Affiliate, then at any time within a period of up to one (1) year
after the date of your death if such occurs while you are employed, or within a
period of up to one (1) year after the date of termination of your employment if
your death occurs within three (3) months of your termination of employment.

  e)   Disability Prior to Age 55. If your employment terminates before you
attain the age of fifty-five (55), as a result of a permanent disability, the
unvested portion of the Option shall immediately vest in full. Thereafter, the
Option may be exercised prior to its Expiration Date, by you or by your personal
representative(s), at any time within a period of up to one (1) year after your
employment terminates due to such permanent disability, to the full extent of
the Shares covered by the Option that were not previously purchased.         You
shall be considered permanently disabled if you suffer from a medically
determinable physical or mental impairment that renders you incapable of
performing any substantial gainful employment, and is evidenced by a
certification to such effect by a doctor of medicine approved by the Company. In
lieu of such certification, the Company shall accept, as proof of permanent
disability, your eligibility for long-term disability payments under the
applicable Long-Term Disability Plan of the Company.     f)   Disability After
Age 55. If your employment terminates as a result of a permanent disability
after you attain the age of fifty-five (55), the unvested portion of the Option
shall immediately vest in full. Thereafter, the Option may be exercised prior to
its Expiration Date, by you or by your personal representative(s), to the full
extent of the Shares covered by the Option that were not previously purchased:

  (i)   At any time, if you have completed ten (10) or more years of service
with the Company or an Affiliate; or     (ii)   If you have completed less than
ten (10) years of service with the Company or an Affiliate, then at any time
within a period of one (1) year after your employment terminates due to such
permanent disability.

      You shall be considered permanently disabled if you suffer from a
medically determinable physical or mental impairment that renders you incapable
of performing any substantial gainful employment, and is evidenced by a
certification to such effect by a doctor of medicine approved by the Company. In
lieu of such certification, the Company shall accept, as proof of permanent
disability, your eligibility for long-term disability payments under the
applicable Long-Term Disability Plan of the Company.     g)   Change in
Duties/Leave of Absence. The Option shall not be affected by any change of your
duties or position or by a temporary leave of absence approved by the Company,
so long as you continue to be an employee of the Company or of an Affiliate.

9. Repurchase Rights. If you exercise the Option within six (6) months prior to
or three (3) months after the date your employment with the Company or an
Affiliate is terminated for Cause, or if you breach any of the covenants
contained in Section 10 below, the Company shall have the right and option to
repurchase from you, that number of Shares which is equal to the number you
purchased upon such exercise(s) within such time periods, and you agree to sell
such Shares to the Company.
The Company may exercise its repurchase rights by depositing in the United
States mail a written notice addressed to you at the latest mailing address for
you on the records of the Company (i) within thirty (30) days following the
termination of your employment for the repurchase of Shares purchased prior to
such termination, or (ii) within thirty (30) days after any exercise of the
Option for the repurchase of Shares purchased after your termination of
employment. Within thirty (30) days after the mailing of such notice, you shall
deliver to the Company the number of Shares the Company has elected to
repurchase and the Company shall pay to you in cash, as the repurchase price for
such Shares upon their delivery, an amount which shall be equal to the purchase
price paid by you for the Shares. If you have disposed of the Shares, then in
lieu of delivering an equivalent number of Shares to the Company, you must pay
to the Company the amount of gain realized by you from the disposition of the
Shares exclusive of any taxes due and payable or commissions or fees arising
from such disposition.

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If the Company exercises its repurchase option prior to the actual issuance and
delivery to you of any Shares pursuant to the exercise of the Option, no Shares
need be issued or delivered. In lieu thereof, the Company shall return to you
the purchase price you tendered upon the exercise of the Option to the extent
that it was actually received from you by the Company.
Following the occurrence of a Change in Control, the Company shall have no right
to exercise the repurchase rights set forth in this Section 9.
10. Employee Covenants. In consideration of benefits described elsewhere in
these Terms and Conditions and the attached Agreement, and in recognition of the
fact that, as a result of your employment with the Company or any of its
Affiliates, you have had or will have access to and gain knowledge of highly
confidential or proprietary information or trade secrets pertaining to the
Company or its Affiliates, as well as the customers, suppliers, joint ventures,
licensors, licensees, distributors or other persons and entities with whom the
Company or any of its Affiliates does business (“Confidential Information”),
which the Company or its Affiliates have expended time, resources and money to
obtain or develop and which have significant value to the Company and its
Affiliates, you agree for the benefit of the Company and its Affiliates, and as
a material condition to your receipt of benefits described elsewhere in these
Terms and Conditions and the attached Agreement, as follows:

  a)   Non-Disclosure of Confidential Information. You acknowledge that you will
receive access or have received access to Confidential Information about the
Company or its Affiliates, that this information was obtained or developed by
the Company or its Affiliates at great expense and is zealously guarded by the
Company and its Affiliates from unauthorized disclosure, and that your
possession of this special knowledge is due solely to your employment with the
Company or one (1) or more of its Affiliates. In recognition of the foregoing,
you will not at any time during employment or following termination of
employment for any reason, disclose, use or otherwise make available to any
third party, any Confidential Information relating to the Company’s or any
Affiliate’s business, products, services, customers, vendors, or suppliers;
trade secrets, data, specifications, developments, inventions and research
activity; marketing and sales strategies, information and techniques; long and
short term plans; existing and prospective client, vendor, supplier and employee
lists, contacts and information; financial, personnel and information system
information and applications; and any other information concerning the business
of the Company or its Affiliates which is not disclosed to the general public or
known in the industry, except for disclosure necessary in the course of your
duties or with the express written consent of the Company. All Confidential
Information, including all copies, notes regarding and replications of such
Confidential Information will remain the sole property of the Company or its
Affiliate, as applicable, and must be returned to the Company or such Affiliate
immediately upon termination of your employment.     b)   Return of Property.
Upon termination of employment with the Company or any of its Affiliates, or at
any other time at the request of the Company, you shall deliver to a designated
Company representative all records, documents, hardware, software and all other
property of the Company or its Affiliates and all copies of such property in
your possession. You acknowledge and agree that all such materials are the sole
property of the Company or its Affiliates and that you will certify in writing
to the Company at the time of delivery, whether upon termination or otherwise,
that you have complied with this obligation.     c)   Non-Solicitation of
Existing or Prospective Customers, Vendors and Suppliers. You specifically
acknowledge that the Confidential Information described in Section 10(a)
includes confidential data pertaining to existing and prospective customers,
vendors and suppliers of the Company or its Affiliates; that such data is a
valuable and unique asset of the business of the Company or its Affiliates; and
that the success or failure of the their businesses depends upon the the ability
to establish and maintain close and continuing personal contacts and working
relationships with such existing and prospective customers, vendors and
suppliers and to develop proposals which are specific to such existing and
prospective customers, vendors and suppliers. Therefore, during your employment
with the Company or any of its Affiliates and for the twelve (12) months
following termination of employment for any reason, you agree that you will not,
except on behalf of the Company or its Affiliates, or with the Company’s express
written consent, solicit, approach, contact or attempt to solicit, approach or
contact, either directly or indirectly, on

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      your own behalf or on behalf of any other person or entity, any existing
or prospective customers, vendors or suppliers of the Company or its Affiliates
with whom you had contact or about whom you gained Confidential Information
during your employment with the Company or its Affiliates for the purpose of
obtaining business or engaging in any commercial relationship that would be
competitive with the “Business of the Company” (as defined below in
Section 10(e)(i)) or cause such customer, supplier or vendor to materially
change or terminate its business or commercial relationship with the Company or
its Affiliates.

  d)   Non-Solicitation of Employees. You specifically acknowledge that the
Confidential Information described in Section 10(a) also includes confidential
data pertaining to employees and agents of the Company or its Affiliates, and
you further agree that during your employment with the Company or its Affiliates
and for the twelve (12) months following termination of employment for any
reason, you will not, directly or indirectly, on your own behalf or on behalf of
any other person or entity, solicit, contact, approach, encourage, induce or
attempt to solicit, contact, approach, encourage or induce any of the employees
or agents of the Company or its Affiliates to terminate their employment or
agency with the Company or any of its Affiliates.     e)   Non-Competition. You
covenant and agree that during your employment with the Company or any of its
Affiliates and for the twelve (12) months following termination of employment
for any reason, you will not, in any geographic market in which you worked on
behalf of the Company or any of its Affiliates, or for which you had any sales,
marketing, operational, logistical or other management or oversight
responsibility, engage in or carry on, directly or indirectly, as an owner,
employee, agent, associate, consultant, partner or in any other capacity, a
business competitive with the Business of the Company. This Section 10(e) shall
not apply in the event of a Change in Control as described in Section 6 above.

  i)   The “Business of the Company” shall mean any business or activity
involved in grocery or general merchandise retailing and supply chain logistics,
including but not limited to grocery distribution, business-to-business portal,
retail support services and third-party logistics, of the type provided by the
Company or its Affiliates, or presented in concept to you by the Company or its
Affiliates at any time during your employment with the Company or any of its
Affiliates.     ii)   To “engage in or carry on” shall mean to have ownership in
such business (excluding ownership of up to one percent (1%) of the outstanding
shares of a publicly-traded company) or to consult, work in, direct or have
responsibility for any area of such business, including but not limited to
operations, logistics, sales, marketing, finance, recruiting, sourcing,
purchasing, information technology or customer service.

  f)   No Disparaging Statements. You agree that you will not make any
disparaging statements about the Company, its Affiliates, directors, officers,
agents, employees, products, pricing policies or services.     g)   Remedies for
Breach of These Covenants. Any breach of the covenants in this Section 10 likely
will cause irreparable harm to the Company or its Affiliates for which money
damages could not reasonably or adequately compensate the Company or its
Affiliates. Accordingly, the Company or any of its Affiliates shall be entitled
to all forms of injunctive relief (whether temporary, emergency, preliminary,
prospective or permanent) to enforce such covenants, in addition to damages and
other available remedies, and you consent to the issuance of such an injunction
without the necessity of the Company or any such Affiliate posting a bond or, if
a court requires a bond to be posted, with a bond of no greater than $500 in
principal amount. In the event that injunctive relief or damages are awarded to
Company or any of its Affiliates for any breach by you of this Section 10, you
further agree that the Company or such Affiliate shall be entitled to recover
its costs and attorneys’ fees necessary to obtain such recovery. In addition,
you agree that upon your breach of any covenant in this Section 10, the Option,
and any other unexercised options issued under the Plan or any other stock
option plans of the Company will immediately terminate and the Company shall
have the right to exercise any and all of the rights described above including
the provisions articulated in Section 9.     h)   Enforceability of These
Covenants. It is further agreed and understood by you and the Company that if
any part, term or provision of these Terms and Conditions should be held to be
unenforceable, invalid or illegal

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      under any applicable law or rule, the offending term or provision shall be
applied to the fullest extent enforceable, valid or lawful under such law or
rule, or, if that is not possible, the offending term or provision shall be
struck and the remaining provisions of these Terms and Conditions shall not be
affected or impaired in any way.

11. Arbitration. You and the Company agree that any controversy, claim or
dispute arising out of or relating to the attached Agreement or the breach of
any of these Terms and Conditions, or arising out of or relating to your
employment relationship with the Company or any of its Affiliates, or the
termination of such relationship, shall be resolved by final and binding
arbitration under the Employment Arbitration Rules and Mediation Procedures of
the American Arbitration Association, or other neutral arbitrator and rules as
mutually agreed to by you and the Company, except for claims by the Company
relating to your alleged breach of any of the employee covenants set forth in
Section 10 above. This agreement to arbitrate specifically includes, but is not
limited to, discrimination claims under Title VII of the Civil Rights Act of
1964 and under state and local laws prohibiting employment discrimination.
Nothing in this Section 11 shall preclude the Company from pursuing a court
action to obtain a temporary restraining order or a preliminary injunction
relating to the alleged breach of any of the covenants set forth in Section 10.
The agreement to arbitrate shall continue in full force and effect despite the
expiration or termination of your Option or your employment relationship with
the Company or any of its Affiliates. You and the Company agree that any award
rendered by the arbitrator must be in writing and include the findings of fact
and conclusions of law upon which it is based, shall be final and binding and
that judgment upon the final award may be entered in any court having
jurisdiction thereof. The arbitrator may grant any remedy or relief that the
arbitrator deems just and equitable, including any remedy or relief that would
have been available to you or the Company or any of its Affiliates had the
matter been heard in court. All expenses of arbitration, including the required
travel and other expenses of the arbitrator and any witnesses, and the costs
relating to any proof produced at the direction of the arbitrator, shall be
borne equally by you and the Company unless otherwise mutually agreed or unless
the arbitrator directs otherwise in the award. The arbitrator’s compensation
shall be borne equally by you and the Company unless otherwise mutually agreed
or the law provides otherwise.
12. Adjustments. In the event that any dividend or other distribution (whether
in the form of cash, Shares, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Shares
or other securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company or other similar corporate
transaction or event affects the Shares covered by the Option such that an
adjustment is necessary in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under these Terms
and Conditions and the attached Agreement, then the Committee administering the
Plan shall, in such manner as it may deem equitable, adjust any or all of the
number and type of Shares (or other securities or other property) covered by the
Option and the Exercise Price of the Option.
13. Severability. In the event that any portion of these Terms and Conditions
shall be held to be invalid, the same shall not affect in any respect whatsoever
the validity and enforceability of the remainder of these Terms and Conditions.
14. No Right to Employment. Nothing in these Terms and Conditions or the
attached Agreement or the Plan shall be construed as giving you the right to be
retained as an employee of the Company. In addition, the Company may at any time
dismiss you from employment, free from any liability or any claim under these
Terms and Conditions or the attached Agreement, unless otherwise expressly
provided in these Terms and Conditions or the attached Agreement.
15. Reservation of Shares. The Company shall at all times during the term of the
Option reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of these Terms and Conditions and the attached
Agreement.
16. Securities Matters. The Company shall not be required to deliver any Shares
until the requirements of any federal or state securities or other laws, rules
or regulations (including the rules of any securities exchange) as may be
determined by the Company to be applicable are satisfied.

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17. Headings. Headings are given to the sections and subsections of these Terms
and Conditions and the attached Agreement solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material or relevant to
the construction or interpretation of these Terms and Conditions or the attached
Agreement or any provision hereof or thereof.
18. Governing Law. The internal law, and not the law of conflicts, of the State
of Delaware will govern all questions concerning the validity, construction and
effect of these Terms and Conditions and the attached Agreement.
19. Notice. For purpose of the Agreement and these Terms and Conditions, notices
and all other communications provided for in the Agreement, these Terms and
Conditions or contemplated by either shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed United States
certified or registered mail, return receipt requested, postage prepaid, and
addressed, in the case of the Company, to the Company at:

      P.O. Box 990
Minneapolis, MN 55440
Attention: Corporate Secretary

    and in the case of you, to you at the most current address shown on your
employment records. Either party may designate a different address by giving
notice of change of address in the manner provided above, except that notices of
change of address shall be effective only upon receipt.

  a)   Notice of Termination by Company. Any purported termination of employment
of you by the Company (whether for Cause or without Cause) shall be communicated
by a Notice of Termination to you. No purported termination of employment of you
by the Company shall be effective without a Notice of Termination having been
given.     b)   Good Reason Notice by You. Any purported termination of
employment by you for Good Reason shall be communicated by a Notice of
Termination to the Company. Your termination of employment will not be for Good
Reason unless (i) you give the Company written notice of the event or
circumstance which you claim is the basis for Good Reason within six (6) months
of such event or circumstance first occurring, and (ii) the Company is given
thirty (30) days from its receipt of such notice within which to cure or resolve
the event or circumstance so noticed. If the circumstance is cured or resolved
within said thirty (30) days, your termination of employment will not be for
Good Reason.

20. Definitions. The following terms, and terms derived from the following
terms, shall have the following meanings when used in these Terms and Conditions
or the attached Agreement with initial capital letters unless, in the context,
it would be unreasonable to do so.

  a)   Cause shall mean:

  i)   your continued failure to perform your duties with the Company (other
than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to you
by the Board or an officer of the Company which specifically identifies the
manner in which the Board or the officer believes that you have not
substantially performed your duties;     ii)   the conviction of, or plea of
guilty or nolo contendere to, a felony or the willful engaging by you in conduct
which is materially and demonstrably injurious to the Company;     iii)   your
commission of a material act or material acts of personal dishonesty intended to
result in your substantial personal enrichment at the expense of the Company; or
    iv)   your material violation of Company policies relating to Code of
Business Conduct, Equal Employment Opportunities and Harassment or Workplace
Violence;

      provided, however, that in no event shall Cause exist by virtue of any
action taken by you (A) in compliance with express written directions of the
Board, the Company’s Chief Executive Officer or the officer to whom you report,
or (B) in reliance upon the express written consent of the Company’s counsel.

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      In each case above, for a termination of employment to be for Cause, you
must be provided with a Notice of Termination (as described in Section 19(a))
within six (6) months after the Company has actual knowledge of the act or
omission constituting Cause. Whether a termination of employment is for Cause as
provided above will be determined by the Company in its sole discretion based on
all the facts and circumstances.

  b)   Change in Control shall be deemed to have occurred upon any of the
following events:

  i)   the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of either (A) the then outstanding shares of common stock of the
Company, or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors; provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change in Control: (A) any
acquisition directly from the Company, or (B) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company;     ii)   the consummation of any merger
or other business combination of the Company, sale or lease of all or
substantially all of the Company’s assets or combination of the foregoing
transactions (the “Transactions”) other than a Transaction immediately following
which the stockholders of the Company and any trustee or fiduciary of any
Company employee benefit plan immediately prior to the Transaction own at least
sixty percent (60%) of the voting power, directly or indirectly, of (A) the
surviving corporation in any such merger or other business combination; (B) the
purchaser or lessee of the Company’s assets, or (C) both the surviving
corporation and the purchaser or lessee in the event of any combination of
Transactions;     iii)   within any 24-month period, the persons who were
directors immediately before the beginning of such period (the “Incumbent
Directors”) shall cease (for any reason other than death) to constitute at least
a majority of the Board or the board of directors of a successor to the Company.
For this purpose, any director who was not a director at the beginning of such
period shall be deemed to be an Incumbent Director if such director was elected
to the Board by, or on the recommendation of or with the approval of, at least
three-fourths of the directors who then qualified as Incumbent Directors (so
long as such director was not nominated by a person who has expressed an intent
to effect a Change in Control or engage in a proxy or other control contest); or
    iv)   such other event or transaction as the Board shall determine
constitutes a Change in Control.

  c)   CIC Date shall mean the date on which a Change in Control occurs.     d)
  Good Reason shall mean any one (1) or more of the following events occurring
during the two-year period following the CIC Date:

  i)   your annual base salary is reduced below the higher of (A) the amount in
effect on the CIC Date, or (B) the highest amount in effect at any time
thereafter;     ii)   your Target Bonus is reduced below the Target Bonus as it
existed before the CIC Date;     iii)   your duties and responsibilities or the
program of incentive compensation (including without limitation long term
incentive plans and equity incentive programs), vacation, fringe benefits,
perquisites, retirement and general insurance benefits offered to your are
materially and adversely diminished in comparison to the duties and
responsibilities or the program of such benefits enjoyed by you on the CIC Date;
or     iv)   you are required to be based at a location more than forty-five
(45) miles from the location where you were based and performed services on the
CIC Date or your business travel obligations are significantly increased over
those in effect immediately prior to the CIC Date;

      provided, however, that any diminution of duties or responsibilities that
occurs solely as a result of the fact that the Company ceases to be a public
company shall not, in and of itself, constitute Good Reason.

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  e)   Notice of Termination shall mean a written notice which shall indicate
the specific provision in these Terms and Conditions relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for your termination of employment under the provisions so indicated.    
f)   Target Bonus shall mean the target amount of bonus established under the
annual bonus plan for you for the year in which the termination of employment
occurs. When the context requires, it shall also mean the target amount of bonus
established for any earlier or later year.

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