EXHIBIT 10.9

 

GENERAL MILLS, INC.

1996 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

 

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GENERAL MILLS, INC.
1996 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

PART I

GENERAL PROVISIONS

 

 

A.

PURPOSE

          The purpose of the General Mills, Inc. 1996 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.

 

 

B.

EFFECTIVE DATE, DURATION OF PLAN AND TRANSITION RIGHTS

          This Plan shall become effective as of September 30, 1996, subject to
the approval of the Plan by the stockholders. The Plan will terminate on
September 30, 2001 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.

          This Plan supersedes and replaces the General Mills, Inc. Compensation
Plan for Non-Employee Directors, effective as of January 1, 1979 (the “1979
Plan”), the General Mills, Inc. Retirement Plan for Non-Employee Directors,
effective as of April 28, 1986 (the “1986 Plan”) and the General Mills Stock
Plan for Non-Employee Directors, effective as of September 17, 1990 (the “1990
Plan”). Participant rights accrued as of September 30, 1996 under the 1979 Plan
and the 1990 Plan shall remain in effect but no new rights or benefits shall
accrue pursuant to such plans. The 1986 Plan was terminated in February 1996.
Participants who have accrued rights under the 1986 Plan shall receive a one
time grant of Stock Units (“Stock Units”) representing the right to receive
shares of General Mills, Inc. Common Stock ($.10 per value) (“Common Stock”)
equal to the value as of September 30, 1996 of the participant’s accrued benefit
under the 1986 Plan. The value of each Stock Unit shall be deemed equal to the
mean of the high and low price of shares of Common Stock on the New York
Exchange on September 30, 1996. Common Stock issued in respect of Stock Units
granted in lieu of accrued benefits under the 1986 Plan shall be distributed
commencing on the director’s retirement from the Board, on the date or dates
elected by the director at least one year prior to the date of his or her
retirement from the Board. In the absence of such an election, such Common Stock
shall be issued in ten substantially equal annual installments on the January 1
of each year following the year in which the participant ceases to be a
director. Each participant awarded Stock Units shall receive, upon distribution,
one share of Common Stock for each Stock Unit awarded, and the Company shall
issue to and register in the name of each such participant a certificate for
that number of shares of Common Stock. Participants receiving Stock Units

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pursuant to this Part I, Section B shall have the same rights, protections and
limitations as those provided participants receiving Stock Units pursuant to
Part III, Section B.3. and Section C.1. hereof.

 

 

C.

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.

 

 

D.

COMMON STOCK SUBJECT TO THE PLAN

          Common Stock to be issued under this Plan may 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 paragraph, the maximum aggregate number of
shares authorized to be issued under the Plan shall be 250,000.

          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.

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PART II

ANNUAL RETAINER AND MEETING FEES

 

 

A.

COMPENSATION STRUCTURE

 

 

 

 

1.

Each non-employee director shall be entitled to receive an annual retainer and
meeting fees as shall be determined from time to time by the Board.

 

 

 

 

2.

Each non-employee director of the Company may elect by written notice to the
Company on or before each annual stockholders’ meeting to 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.

 

 

 

 

3.

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”).

 

 

 

 

4.

The Plan Year shall include four plan quarters (hereinafter “Plan Quarters”).
Plan Quarters shall correspond to the Company’s fiscal quarters.

 

 

 

 

5.

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 term
begins, 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.

 

 

 

 

6.

Periodically, the Company shall supply to each participant an account statement
of participation under the Plan.

 

 

B.

CASH ALTERNATIVE

 

 

 

 

1.

Each non-employee director who elects to participate under the cash compensation
provision of 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.

 

 

 

 

2.

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

 

 

 

C.

DEFERRED CASH ALTERNATIVE

 

 

 

1.

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.

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2.

For each director who has made this deferred cash election, the Company shall
establish a deferred compensation account and shall credit such account at the
end of each plan quarter for the compensation due. Interest shall be credited to
each such account monthly based on the following rates as specified by the
Committee from time to time:

 

 

 

 

 

 

a.

the rate of return as from time to time earned by the Fixed Income Fund of the
Voluntary Investment Plan of General Mills, Inc. (VIP); or

 

 

 

 

 

 

b.

the rate of return as from time to time earned by the Equity Fund of the VIP; or

 

 

 

 

 

 

c.

any other rates of return of other funds or portfolios established under a
qualified benefit plan maintained by the Company which the Minor Amendment
Committee, or its delegate, in its discretion, may from time to time establish.

 

 

 

 

3.

Distribution of the participant’s deferred compensation account shall be as
follows:

 

 

 

 

a.

at the time, and in the form of payment, elected by the participant at the time
of deferral; or

 

 

 

 

b.

in the absence of an election at the time of deferral, 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; provided, however, that for
compensation earned in Plan Years commencing after December 9, 1996,
distributions 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.

 

 

 

 

4.

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.

 

 

 

 

5.

The Company has established a Supplemental Benefits Trust with Norwest 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 plans of deferred
compensation of the Company. In the event of a Change in Control as defined in
Part IV hereinbelow, the Company shall be obligated to immediately contribute
such amounts to the Trust as may be necessary to fully fund 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

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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

 

 

 

 

1.

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.

 

 

 

 

2.

The Company shall ensure that an adequate number of shares of Common Stock are
available for distribution to those participants making this election.

 

 

 

 

3.

Only whole numbers of shares will be issued, with any fractional share amounts
paid in cash.

 

 

 

 

4.

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.

 

 

 

 

5.

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.

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PART III

STOCK COMPENSATION

 

 

A.

NON-QUALIFIED STOCK OPTIONS

 

 

 

 

1.

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 is first elected) shall be awarded an option (an “Option”)
to purchase 2,500 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 2,500 shares of Common Stock (or, beginning
September 27, 1999, an Option to purchase 5,000 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.

 

 

 

 

2.

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.

 

 

 

 

3.

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

 

 

 

 

4.

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 while employed by the Company, 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 any
unvested Options shall vest and become exercisable 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.

 

 

 

 

5.

Method of Exercise and Tax Obligations. Each notice of exercise shall be
accompanied by the full purchase price of the shares being purchased. Such
payment may be made in cash, check, shares of Common Stock valued using the Fair
Market Value as of the exercise date or a combination thereof. 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.

 

 

 

 

6.

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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B.

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.

 

 

 

 

1.

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.

 

 

 

 

2.

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
election to receive Stock Units as provided in Part III, Section C.1. 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 Part III, Section C.1. but the distribution must be
made or commenced by the later of (i) the date the participant attains age 70
and (ii) five year 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 Part III, Section C.1. shall have the
same distribution date and form of distribution. Notwithstanding the above, the
following provisions shall apply:

 

 

 

 

a.

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

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shares in payment of the exercise price, then the deferral election shall not
become effective.

 

 

 

 

b.

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 Part III, Section B.3.a. below) be accelerated and
distributed as of the first business day of the calendar year next following the
date of termination.

 

 

 

 

c.

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.

 

 

 

 

3.

Deferred Stock Unit Accounts and Dividend Equivalents.

 

 

 

 

a.

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 Part III, Section B.1. 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 elects to receive Stock Units pursuant to
Part III, Section C.1. 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. No fractional
Stock Units will be credited. The Committee may, in its sole discretion, direct
either that all dividend equivalent amounts be paid currently or all such
amounts

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

 

 

 

 

b.

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 Part
III, Section C.1. 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 Part III, Section B.3.a.
above. Stock Units may not be sold, transferred, assigned, pledged or otherwise
encumbered or disposed.

 

 

C.

RESTRICTED STOCK AND STOCK UNITS

 

 

 

 

1.

Awards. Until September 27, 1999, 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 is first elected) and at the close of
business on each successive annual stockholders’ meeting date, each non-employee
director may elect to receive either (i) an award of five hundred (500) shares
of Restricted Stock subject to vesting and restricted as described in subsection
2 hereof (the “Restricted Stock”) or (ii) an award of five hundred (500) Stock
Units, subject to vesting as provided in subsection 2. Only non-employee
directors re-elected to the Board shall be entitled to a grant under this
Section III. C.1. of Restricted Stock or Stock Units awarded at the close of
business on an annual meeting date after the date of the original grant to the
non-employee director. Beginning September 27, 1999, only Stock Units and not
Restricted Stock will be awarded under the Plan.

 

 

 

 

2.

Vesting of and Restrictions on Restricted Stock and Stock Units. A participant’s
interest in the Restricted Stock and Stock Units shall vest on the date of the
annual stockholders’ meeting next following the date of the award of the
Restricted Stock or 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 Restricted Stock or Stock Units
vests, such Restricted Stock and Stock Units shall be forfeited and all further
rights of the non-employee director to or with respect to such Restricted Stock
or Stock Units shall terminate. A participant who dies prior to the vesting of
Restricted Stock or Stock Units shall vest in a proportionate number of shares
of Restricted Stock or Stock Units, based on the full months of service
completed during the vesting period of the Restricted Stock or Stock Units from
the date of grant to the date of death. Restricted Stock may not be sold,
transferred, assigned, pledged or otherwise encumbered or disposed until the
Restricted Period

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has expired and 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.

 

 

 

 

3.

Distribution of Stock Units.

 

 

 

 

a.

Each participant electing the award of Stock Units under Part III, Section C.1.
above must select a date of distribution and form of distribution as provided
under Part III, Section B.2. The participant may also elect to have dividend
equivalents payable on Stock Units paid currently or reinvested in Stock Units
as provided under Part III, Section B.3.

 

 

 

 

4.

Other Terms and Conditions. Any shares of Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee deems appropriate,
including, without limitation, book-entry registration or issuance of stock
certificates, and may be held in escrow. Each participant granted Restricted
Stock shall have all rights as a stockholder with respect to such shares,
including the right to vote the shares and receive dividends and other
distributions. 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.

 

 

D.

GENERAL PROVISIONS FOR DEFERRED CASH, OPTION GAINS AND RSU’s

          The following provisions shall apply to the deferral of cash
compensation described in Part II, Section C hereof, the deferral of receipt of
Common Stock issued upon exercise of Options described in Part III, Section B
hereof and the treatment of Stock Units granted under Part III, Section C
hereof.

 

 

 

 

1.

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 for 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

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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.

 

 

 

 

2.

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.

 

 

 

 

3.

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.

 

 

 

 

4.

As to all previous and future Plan years, and subject to the last sentence of
the first paragraph of Part III, Section B.2. hereof, a participant who (a) has
elected a distribution date and distribution in either a single distribution or
substantially equal installments and (b) 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.

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5.

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.

 

 

E.

CHANGE OF CONTROL

          Stock Options granted under the Plan will become immediately
exercisable, restrictions on the Restricted Stock will lapse 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 Part IV hereinbelow.

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PART IV

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 the best interests of the Company, provided that
after a “Change in 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 in Control.”
Any decision or interpretation adopted by the Committee shall be final and
conclusive. A “Change of Control” means:

 

 

 

 

1.

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

 

 

 

 

2.

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

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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

 

 

 

 

3.

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 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

 

 

 

 

4.

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

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PART V

ADDITIONAL PROVISIONS

 

 

A.

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.

 

 

B.

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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