EXHIBIT 10.1

 

SUPERVALU INC.
2012 STOCK PLAN

 

RESTRICTED STOCK UNIT AWARD AGREEMENT

 

Cash-Settled

 

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 (“Recipient”).

 

The Company has established the 2012 Stock Plan (the “Plan”), under which key
employees of the Company may be granted Awards of Restricted Stock Units. 
Recipient has been selected by the Company to receive an Award of Restricted
Stock Units 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 Recipient hereby agree as
follows:

 

1.  Grant.  The Company hereby grants to Recipient, subject to Recipient’s
acceptance hereof, an Award of the number of Restricted Stock Units indicated
below, effective as of the Grant Date.  Each Restricted Stock Unit represents
the right to receive an amount of cash equivalent to the Fair Market Value, as
of the vesting date of the Restricted Stock Unit, of one Share of the Company’s
Common Stock, $0.01 par value (the “Common Stock”).

 

2.  Acceptance of Award of Restricted Stock Units and Restricted Stock Unit
Award Terms and Conditions.  The Award of Restricted Stock Units is subject to
and governed by the Restricted Stock Unit Award Terms and Conditions (“Terms and
Conditions”) attached hereto, which is incorporated herein and made a part
hereof, and the terms and provisions of the Plan.  To accept the Award of
Restricted Stock Units, this agreement must be delivered and accepted through an
electronic medium in accordance with procedures established by the Company, or
Recipient must sign and return a copy of this agreement to the Company within
sixty (60) days after the Grant Date.  By so doing, Recipient acknowledges
receipt of the accompanying Terms and Conditions and the Plan, and represents
that Recipient 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.  Except as otherwise provided in the accompanying Terms and
Conditions, this Restricted Stock Unit Award shall vest according to the
schedule below.

 

Award Number:

 

Share_NUMBER-

Grant Date:

 

Restricted Stock Unit _DATE

Vesting Schedule:

 

100% on the first anniversary of the Grant Date

 

SUPERVALU INC.

 

RECIPIENT:

 

 

 

By:

 

 

 

 

Michele A. Murphy

 

FIRST_NAME-MIDDLE_NAME- LAST_NAME-

 

Executive Vice President

 

EMPLOYEE_IDENTIFIER-

 

Human Resources & Corporate Communications

 

 

 

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SUPERVALU INC.
2012 STOCK PLAN

 

RESTRICTED STOCK UNIT AWARD TERMS AND CONDITIONS

(Cash-Settled)

 

(FOR EMPLOYEES)

 

These Restricted Stock Unit Award Terms and Conditions (“Terms and Conditions”)
apply to the Award of Restricted Stock Units granted under the 2012 Stock Plan
(the “Plan”) pursuant to the Restricted Stock Unit Award 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 18 for a list of defined
terms.

 

1.              Vesting and Rights.  Except as otherwise provided below in these
Terms and Conditions, you shall vest in the Restricted Stock Units on the date
or dates and in the amount or amounts set forth in the attached Agreement if you
remain continuously employed by the Company or any of its Affiliates until the
respective vesting dates.  The Restricted Stock Units granted pursuant to the
attached Agreement do not and shall not give you any of the rights and
privileges of a holder of Common Stock.  Your rights with respect to the
Restricted Stock Units shall remain forfeitable at all times prior to the date
or dates on which such Units become vested and the restrictions with respect to
the Restricted Stock Units lapse in accordance with the Agreement, this
Section 1 and Sections 4 and 6 of these Terms and Conditions.

 

2.              Settlement of Vested Units.  No Shares of Common Stock shall be
issued to you under the Agreement; rather the Restricted Stock Units granted to
you under the Agreement shall be settled in the form of cash.  No cash shall be
distributed to you in settlement of the Restricted Stock Units prior to the date
on which the Restricted Stock Units vest in accordance with the terms and
conditions of the attached Agreement and these Terms and Conditions. 
Furthermore, and except as otherwise provided in Sections 4(e) and 4(f), any
cash to be paid to you in settlement of the Restricted Stock Units shall be paid
promptly after, but in no event later than sixty (60) calendar days after, the
Restricted Stock Units vest.  After the Restricted Stock Units vest, the Company
shall cause a dollar amount equal to the Fair Market Value of one share of
Common Stock (determined as of the vesting date) multiplied by the number of
Restricted Stock Units that vest, less any cash withheld to pay taxes, to be
paid to you in a lump sum.

 

3.              Taxes

 

a)             You acknowledge that you will consult with your personal tax
advisor regarding the income tax consequences of the grant of the Restricted
Stock Units, the vesting of the Restricted Stock Units and the receipt of cash
in settlement of the Restricted Stock Units and any other matters related to the
Terms and Conditions and the attached Agreement.  In order to comply with all
applicable federal or state income, social security, payroll, withholding or
other tax laws or regulations, the Company may take such action, and may require
you to take such action, as it deems appropriate to ensure that all applicable
federal or state income, social security, payroll, withholding or other taxes,
which are your sole and absolute responsibility, are withheld or collected from
you.

 

b)             You acknowledge that you are responsible for the payment of any
federal, state, local or other taxes that are required to be withheld by the
Company upon vesting or settlement of the Restricted Stock Units, and authorize
the Company to withhold from any cash payment pursuant to this Agreement or from
other compensation owed to you an amount or amounts sufficient to pay such
taxes.  In order to satisfy any applicable federal, state, local or other taxes
that are required to be withheld in connection with the settlement of Restricted
Stock Units, the Company shall withhold a portion of the cash otherwise to be
paid upon settlement of the Restricted Stock Units equal to the amount of
federal and state income tax required to be withheld upon such vesting.

 

4.              Change of Control

 

a)             If, within two (2) years after a Change of 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 Restricted Stock Units shall immediately

 

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vest.  If the Restricted Stock Units are replaced pursuant to subsection
(d) below, the protections and rights granted under this subsection (a) shall
transfer and apply to such replacement grant.

 

b)             If, in the event of a Change of Control, and to the extent the
Restricted Stock Units are 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 Restricted Stock Units at the time of the Change of
Control, then the unvested portion of the Restricted Stock Units shall
immediately vest.

 

c)              In the discretion of the Committee and notwithstanding
subsections (a) or (b) above, the Committee may fully vest the Restricted Stock
Units at the time of a Change of Control and deliver in exchange therefor cash,
property or a combination thereof that is determined by the Committee to be at
least equal to the value of the consideration that would be received in such
Change of Control by the holders of Common Stock. The Committee is under no
obligation to treat Recipients of Restricted Stock Units uniformly and has the
discretionary authority to treat Recipients disparately.

 

d)             In the event of a Change of Control and to the extent that the
Restricted Stock Units are assumed by any successor corporation, affiliate
thereof, person or other entity, or are replaced with awards that, solely in the
discretionary judgment of the Committee, preserve the existing value of the
Restricted Stock Units at the time of the Change of Control and provide for
vesting terms that are at least as favorable to you as the vesting terms
applicable to the Restricted Stock Units, then the assumed Restricted Stock
Units or such substitute therefore shall remain outstanding and be governed by
its respective terms.

 

e)              Notwithstanding anything in this Section 4 to the contrary, if
your right to receive payment of the Restricted Stock Units constitutes a
“deferral of compensation” subject to Code Section 409A, and if the application
of the other provisions of this Section 4 would cause a violation of such Code
section, then the unvested portion of your Restricted Stock Units shall
immediately vest at the time of the Change of Control and payment in settlement
of such Restricted Stock Units shall occur after such vesting no later than
sixty (60) calendar days after the earliest of: (i) such vesting date if the
Change of Control also constitutes a “change in the ownership,” a “change in the
effective control” or a “change in the ownership of a substantial portion of the
assets” of the Company within the meaning of Code Section 409A, (ii) your
“separation from service” with the Company within the meaning of Code
Section 409A, or (iii) the applicable vesting date or dates set forth in the
attached Agreement.

 

f)               If the Restricted Stock Units become payable as a result of
clause (ii) of subsection 6(e) and if you are a “specified employee” within the
meaning of Code Section 409A (as determined in accordance with the Company’s
policy for identifying specified employees) on the date of your separation from
service, then the payment in settlement of the Restricted Stock Units shall be
made to you no later than sixty (60) calendar days after the first business day
that is six months after the date of your separation from service (or if your
death occurs during such six month period, within sixty (60) calendar days after
your death).

 

5.              Transferability.  The Restricted Stock Units shall not be
transferable.  More particularly, the Restricted Stock Units 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 assignment, transfer, pledge, hypothecation or
other disposition of the Restricted Stock Units contrary to these provisions, or
the levy of an execution, attachment or similar process upon the Restricted
Stock Units, shall be void.

 

6.              Effect of Termination of Employment.  If you cease to be an
employee of the Company and its Affiliates prior to the vesting of the
Restricted Stock Units pursuant to Section 1 and the Agreement for any reason,
other than pursuant to Section 4 or the following terms of this Section 6, then
your rights to all of the unvested Restricted Stock Units shall be immediately
and irrevocably forfeited.

 

a)             Retirement.  If you retire, the unvested portion of the
Restricted Stock Units shall continue to vest at the same time they would have
vested pursuant to Section 1 and the Agreement had you remained employed.  You
shall be deemed to have retired, solely for purposes of these Terms

 

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and Conditions and the attached Agreement in the event that your employment
terminates for any reason other than death or disability, and at the time of
your termination you are at least sixty (60) years of age and you have completed
at least fifteen (15) years of service with the Company or an Affiliate.

 

b)             Death.  If your death occurs while you are employed by the
Company or an Affiliate, or after your retirement, as described in Section 6(a),
the unvested portion of the Restricted Stock Units shall immediately vest in
full.

 

c)              Disability.  If your employment terminates as a result of a
permanent disability, the unvested portion of the Restricted Stock Units shall
immediately vest in full.  You shall be considered permanently disabled for
these purposes 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.  Notwithstanding anything in this Section 6(c) to the contrary, if your
right to receive payment of the Restricted Stock Units constitutes a “deferral
of compensation” subject to Code Section 409A, your Restricted Stock Units shall
immediately vest in full upon your disability.  Solely for purposes of the
preceding sentence, “disability” shall have the meaning set forth in Treasury
Regulation 1.409A-3(i)(4).

 

d)             Change in Duties/Leave of Absence.  The Restricted Stock Units
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.  The foregoing provisions shall not
apply, however, if your right to receive payment of the Restricted Stock Units
constitutes a “deferral of compensation” subject to Code Section 409A and your
change in duties or position or temporary leave of absence would be considered a
“separation from service” within the meaning of Code Section 409A.  In such
circumstances, you will be deemed to have ceased employment with the Company and
its Affiliates and the other provisions of these Terms and Conditions and the
provisions of the Agreement shall control.

 

e)              Cause Terminations.  Notwithstanding anything in the Agreement
or the Terms and Conditions to the contrary, all Restricted Stock Units shall be
terminated and forfeited immediately upon your termination of employment for
Cause.

 

f)               Other Exceptions.  The Committee may determine to accelerate
the vesting of the Restricted Stock Units if you cease to be an employee of the
Company and its Affiliates prior to the vesting of the Restricted Stock Units
pursuant to the Agreement and Sections 1, 4 or 6 hereof for any reason;
provided, however, that if your right to receive payment of the Restricted Stock
Units constitutes a “deferral of compensation” subject to Code Section 409A, no
such acceleration will be permitted if the result of such acceleration would
cause a violation of Code Section 409A, and in such case the other provisions of
these Terms and Conditions and the provisions of the Agreement shall control.

 

7.              Recovery Rights.  If your employment with the Company or an
Affiliate is terminated for Cause, or if you breach any of the covenants
contained in Section 8 below, the Company shall have the right to recover any
cash paid to you in connection with any settlement of Restricted Stock Units
that occurred within six (6) months prior to the date on which your employment
with the Company and its Affiliates ended, or at any time thereafter.  The
Company may exercise its rights to recover the cash 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 within thirty (30) days following the
termination of your employment for the recovery of cash attributable to
Restricted Stock Units that settled prior to any termination for Cause, and
within thirty (30) days after the Company’s discovery of any breach of the
covenants contained in Section 8.  Within thirty (30) days after the mailing of
such notice, you shall deliver to the Company the dollar amount specified by the
Company in the notice.

 

8.              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

 

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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 8(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 their businesses depends upon
their 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 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 8(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 8(a) also includes
confidential data pertaining to employees and agents of

 

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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.

 

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 8 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 the Company or any of its Affiliates
for any breach by you of this Section 8, 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 8, the Restricted Stock Units issued under the
Plan or any other restricted stock unit 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 7.

 

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
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.

 

9.              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

 

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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 8 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 9 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 8.  The agreement to arbitrate shall continue in full force and effect
despite the expiration or termination of your Award 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.

 

10.       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 Restricted Stock Units
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 Restricted Stock Units.

 

11.       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.

 

12.       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.

 

13.       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.

 

14.       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.

 

15.       Notices.  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

 

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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 or successor.  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 ninety
(90) days 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.

 

16.  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.

 

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 15(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.  For purposes hereof, the term “Company” shall
include an Affiliate.

 

b)             Change of 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 more than fifty percent (50%) 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

 

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election of directors; provided, however, that for purposes of this subsection
(i), the following acquisitions shall not constitute a Change of 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; or

 

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 of Control or engage in a proxy or other control contest).

 

c)              Change of Control Date shall mean the date on which a Change of
Control occurs.

 

d)             Good Reason shall mean any one (1) or more of the following
events occurring during the two-year period following the Change of Control
Date:

 

i)                 your annual base salary is materially reduced below the
amount in effect on the Change of Control Date;

 

ii)              your Target Bonus is materially reduced below the Target Bonus
as it existed on the Change of Control Date;

 

iii)           your duties and responsibilities are materially and adversely
diminished in comparison to the duties and responsibilities that you had on the
Change of Control Date other than in a general reduction of the number or scope
of personnel for which you are responsible for supervising which reduction
occurs in connection with a restructuring or recapitalization of the Company or
the division of the Company in which you work;

 

iv)          the program of long term incentive compensation is materially and
adversely diminished in comparison to the program of long term incentive
compensation as it existed for you on the Change of Control Date (for purposes
of this clause (iv), a reduction of fifteen percent (15%) or more of the target
dollar amount of your long term incentive compensation as it existed for you on
the Change of Control Date based on your most recent award of long term
incentive compensation prior to the Change of Control Date shall be considered
to be material and adverse); or

 

v)             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
Change of Control 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 or
that the size of the Company has been reduced as a result of the Change of
Control 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.

 

Original Approval:

 

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