Exhibit 10(P)


 


TARGET CORPORATION


LONG-TERM INCENTIVE PLAN


(As amended on November 9, 2005)


 


ARTICLE I


ESTABLISHMENT OF THE PLAN


 


1.1           PLAN NAME. As of the Effective Date the name of
this plan, formerly known as the Target Corporation Long-Term Incentive Plan of
1999, shall be the “Target Corporation Long-Term Incentive Plan” (hereinafter
called the “Plan”).


 


1.2           EFFECTIVE DATE. This amended and restated plan
document (the “2004 Restatement”) shall become effective on May 19, 2004 (the “Effective
Date”), subject to its approval by the holders of a majority of the voting
power of the shares deemed present and entitled to vote at the Company’s Annual
Meeting of Shareholders to be held on that date and any necessary approval from
any department, board or agency of the United States or states having
jurisdiction. Awards made on or after the Effective Date shall be subject to
the terms and conditions of this 2004 Restatement and not to the terms and
conditions of any prior version of the plan document. Awards made prior to the
Effective Date shall be subject to the terms and conditions of the plan
document in effect on the Award’s Date of Grant.


 


1.3           PURPOSE. The purpose of the Plan is to advance
the performance and long-term growth of the Company by offering long-term
incentives to directors and employees of the Company and its Subsidiaries and
such other Participants who the Plan Committee determines will contribute to
such performance and growth inuring to the benefit of the shareholders of the
Company. This Plan is also intended to facilitate recruiting and retaining
personnel of outstanding ability.


 


ARTICLE
II


DEFINITIONS


 


2.1           AWARD. An “Award” is a
grant of Stock Options, Stock Appreciation Rights, Dividend Equivalents,
Performance Awards, Restricted Stock or Restricted Stock Units under the Plan.


 


2.2           BOARD. The “Board” is
the Board of Directors of the Company.


 


2.3           CASH PROCEEDS. “Cash
Proceeds” means the cash actually received by the Company for the purchase
price payable upon exercise of a Stock Option plus the maximum tax benefit that
could be realized by the Company as a result of the exercise of such Stock
Options, which tax benefit shall be determined by multiplying (a) the amount
that is deductible as a result of any such Stock Option exercise (currently
equal to the amount upon which the Participant’s tax withholding obligation is
calculated), times (b)


 

















 


the maximum federal corporate
income tax rate for the year of exercise. To the extent a Participant pays the
exercise price and/or withholding taxes with shares, Cash Proceeds shall not be
calculated with respect to the amounts so paid.


 


2.4           CHANGE IN CONTROL. A “Change
in Control” shall be deemed to have occurred if:


 


(a)           a majority of the directors of the Company
shall be persons other than persons


 


(i)            for whose election proxies shall have been
solicited by the Board or


 


(ii)           who are then serving as directors appointed
by the Board to fill vacancies on the Board caused by death or resignation (but
not by removal) or to fill newly-created directorships,


 


(b)           30% or more of the outstanding Voting Stock
(as defined in Article IV of the Restated Articles of Incorporation, as
amended, of the Company) of the Company is acquired or beneficially owned (as
defined in Article IV of the Restated Articles of Incorporation, as amended, of
the Company) by any person (as defined in Article IV of the Restated Articles
of Incorporation, as amended, of the Company), or


 


(c)           the shareholders of the Company approve a
definitive agreement or plan to:


 


(i)            merge
or consolidate the Company with or into another corporation (other than (1) a
merger or consolidation with a Subsidiary of the Company or (2) a merger in
which the Company is the surviving corporation and either (A) no outstanding
Voting Stock of the Company (other than fractional shares) held by shareholders
immediately prior to the merger is converted into cash (except cash upon the
exercise by holders of Voting Stock of the Company of statutory dissenters’
rights), securities, or other property or (B) all holders of outstanding Voting
Stock of the Company (other than fractional shares) immediately prior to the
merger (except those that exercise statutory dissenters’ rights) have
substantially the same proportionate ownership of the Voting Stock of the
Company or its parent corporation immediately after the merger),


 


(ii)           exchange,
pursuant to a statutory exchange of shares of Voting Stock of the Company held
by shareholders of the Company immediately prior to the exchange, shares of one
or more classes or series of Voting Stock of the Company for shares of another
corporation or other securities, cash or other property,


 


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(iii)          sell
or otherwise dispose of all or substantially all of the assets of the Company
(in one transaction or a series of transactions) or


 


(iv)          liquidate
or dissolve the Company.


 


2.5           CODE. The “Code” is the
Internal Revenue Code of 1986, as amended, and rules and regulations
thereunder, as now in force or as hereafter amended.


 


2.6           COMPANY. The “Company”
is Target Corporation, a Minnesota corporation, and any successor thereof.


 


2.7           COMMON STOCK. “Common
Stock” is the common stock, $.0833 par value per share (as such par value may
be adjusted from time to time) of the Company.


 


2.8           DATE OF GRANT. The “Date
of Grant” of an Award is the date designated in the resolution by the Plan
Committee as the date of an Award, which shall not be earlier than the date of
the resolution and action thereon by the Plan Committee. In the absence of a
designated date or a fixed method of computing such date being specifically set
forth in the Plan Committee’s resolution, then the Date of Grant shall be the
date of the Plan Committee’s resolution or action. In no event shall the Date
of Grant of any Award that is authorized by the Plan Committee on or after the
Effective Date be earlier than the Effective Date.


 


2.9           DIVIDEND EQUIVALENT. A “Dividend
Equivalent” is a right to receive an amount equal to the regular cash dividend
paid on one share of Common Stock. Dividend Equivalents may only be granted in
connection with the grant of an Award that is based on but does not consist of
shares of Common Stock (whether or not restricted). The number of Dividend
Equivalents so granted shall not exceed the number of related stock-based
rights. (For example, the number of Dividend Equivalents granted in connection
with a grant of Stock Appreciation Rights may equal the number of such Stock
Appreciation Rights, even though the number of shares actually paid upon
exercise of those Stock Appreciation Rights necessarily will be less than the
number of Stock Appreciation Rights and Dividend Equivalents granted.)  Dividend Equivalents shall be subject to such
terms and conditions as may be established by the Plan Committee, but they shall
expire no later than the date on which their related stock-based rights are
either exercised, expire or are forfeited (whichever occurs first). The amounts
payable due to a grant of Dividend Equivalents may be paid in cash, either
currently or deferred, or converted into shares of Common Stock, as determined
by the Plan Committee.


 


2.10         EXCHANGE ACT. The “Exchange Act” is the Securities Exchange Act of
1934, as amended, and rules and regulations thereunder, as now in force or as
hereafter amended.


 


2.11         FAIR MARKET VALUE. “Fair
Market Value” of a share of Common Stock on any date is the Volume Weighted
Average Price for such stock as reported for


 


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such stock by Bloomberg L.P. on
such date, or in the absence of such report the Volume Weighted Average Price
for such stock as reported for such stock by the New York Stock Exchange on
such date or, if no sale has been recorded by Bloomberg L.P. or the New York
Stock Exchange on such date, then on the last preceding date on which any such
sale shall have been made in the order of primacy indicated above.


 


2.12         INCENTIVE STOCK OPTIONS. An
“Incentive Stock Option” is a Stock Option that is intended to qualify as an “incentive
stock option” under Section 422 of the Code.


 


2.13         NON-QUALIFIED OPTIONS. A “Non-Qualified
Option” is a Stock Option that is not intended to qualify as an “incentive
stock option” under Section 422 of the Code.


 


2.14         PARTICIPANT. A “Participant”
is a person who has been designated as such by the Plan Committee and granted
an Award under this Plan pursuant to Article III hereof.


 


2.15         PERFORMANCE GOALS. “Performance
Goals” are the performance conditions, if any, established pursuant to Section
4.1 hereof by the Plan Committee in connection with an Award.


 


2.16         PERFORMANCE PERIOD. The “Performance
Period” with respect to a Performance Award is a period of not less than one
calendar year or one fiscal year of the Company, beginning not earlier than the
year in which such Performance Award is granted, which may be referred to
herein and by the Plan Committee by use of the calendar or fiscal year in which
a particular Performance Period commences.


 


2.17         PERFORMANCE AWARD. A “Performance
Award” is a right to either a number of shares of Common Stock (“Performance
Shares”) or a cash amount (“Performance Units”) determined (in either case) in
accordance with Article IV of this Plan based on the extent to which the
applicable Performance Goals are achieved. A Performance Share shall be of no
value to a Participant unless and until earned in accordance with Article IV
hereof.


 


2.18         PLAN COMMITTEE. The “Plan
Committee” is the committee described in Section 8.1 hereof.


 


2.19         PLAN YEAR. The “Plan Year”
shall be a fiscal year of the Company falling within the term of this Plan.


 


2.20         RESTRICTED STOCK. “Restricted
Stock” is Common Stock granted subject to terms and conditions, including a
risk of forfeiture, established by the Plan Committee pursuant to Article VI of
this Plan.


 


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2.21         RESTRICTED STOCK UNIT. A “Restricted
Stock Unit” is a right to receive one share of Common Stock at a future date
that has been granted subject to terms and conditions, including a risk of
forfeiture, established by the Plan Committee pursuant to Article VI of this
Plan.


 


2.22         STOCK APPRECIATION RIGHT.
A “Stock Appreciation Right” is a right to receive, upon exercise of that
right, an amount, which may be paid in cash, shares of Common Stock or a
combination thereof in the discretion of the Plan Committee, equal to the
difference between the Fair Market Value of one share of Common Stock as of the
date of exercise and the exercise price for that right as determined by the
Plan Committee on or before the Date of Grant. Stock Appreciation Rights may be
granted in tandem with Stock Options or other Awards or may be freestanding.


 


2.23         STOCK OPTION. A “Stock
Option” is a right to purchase from the Company at any time not more than ten
years following the Date of Grant, one share of Common Stock for an exercise
price not less than the Fair Market Value of a share of Common Stock on the
Date of Grant, subject to such terms and conditions established pursuant to
Article V hereof. Stock Options may be either Non-Qualified Options or
Incentive Stock Options.


 


2.24         SUBSIDIARY CORPORATION. The
terms “Subsidiary” or “Subsidiary Corporation” mean any corporation (other than
the Company) in an unbroken chain of corporations beginning with the Company,
in which each of the corporations other than the last corporation in the
unbroken chain owns stock possessing fifty percent or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain as determined at the point in time when reference is made to such
“Subsidiary” or “Subsidiary Corporation” in this Plan.


 


ARTICLE III


GRANTING OF AWARDS TO PARTICIPANTS


 


3.1           ELIGIBLE PARTICIPANTS. Awards may be granted by the Plan Committee to
any employee of the Company or a Subsidiary Corporation, including any employee
who is also a director of the Company or a Subsidiary Corporation. Awards other
than grants of Incentive Stock Options may also be granted to (a) a director of
the Company who is not an employee of the Company or a Subsidiary Corporation
and (b) any individual or entity, other than an employee, who provides services
to the Company or a Subsidiary Corporation in the capacity of an advisor or
consultant. References in this Plan to “employment” and similar terms (except “employee”)
shall include the providing of services in the capacity of a director, advisor
or consultant. A person who has been engaged by the Company for employment
shall be eligible for Awards other than Incentive Stock Options, provided such
person actually reports for and commences such employment within 90 days after
the Date of Grant. Incentive Stock Options may be granted only to individuals
who are employees on the Date of Grant.


 


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3.2           DESIGNATION OF
PARTICIPANTS. At any time and from time to time during the Plan Year, the Plan
Committee may designate the employees of the Company and its Subsidiaries and
other Participants eligible for Awards.


 


3.3           ALLOCATION OF AWARDS. Contemporaneously
with the designation of a Participant pursuant to Section 3.2 hereof, the Plan
Committee shall determine the size, type and Date of Grant for each Award,
taking into consideration such factors as it deems relevant, which may include
the following:


 


(a)           the
total number of shares of Common Stock available for Awards under the Plan;


 


(b)           the
work assignment or the position of the Participant and its sensitivity and/or
impact in relationship to the profitability and growth of the Company and its
Subsidiaries; and


 


(c)           the Participant’s performance in reference to
such factors.


 


The Plan Committee may grant a Participant only one
type of Award or it may grant any combination of Awards in whatever
relationship one to the other, if any, as the Plan Committee in its discretion
so determines.


 


3.4           NOTIFICATION TO
PARTICIPANTS AND DELIVERY OF DOCUMENTS. As soon as practicable after such
determinations have been made, each Participant shall be notified of (a)
his/her designation as a Participant, (b) the Date of Grant, (c) the number and
type of Awards granted to the Participant, (d) in the case of Performance
Awards, the Performance Period and Performance Goals, and (e) in the case of
Restricted Stock or Restricted Stock Units, the Restriction Period. The
Participant shall thereafter be supplied with written evidence of any such
Awards.


 


ARTICLE
IV


PERFORMANCE AWARDS


 


4.1           ESTABLISHMENT OF
PERFORMANCE GOALS. Performance Goals applicable to a Performance Award shall be
established by the Plan Committee in its absolute discretion on or before the
Date of Grant and not more than a reasonable period of time after the beginning
of the relevant Performance Period. Such Performance Goals may include or be
based upon any of the following criteria: pretax operating contribution;
economic value added; consolidated profits of the Company expressed as a
percent; earnings per share; return on capital; return on investment; return on
shareholders’ equity; revenue; working capital; pre-tax segment profit; sales
volume; return on sales; comparable store sales; earnings before interest and
taxes; earnings before interest, taxes, depreciation and amortization; return
on assets; cash flow; gross margin rate; expense rate; market price; and total
shareholder return. Performance Goals may be absolute in their terms or be
measured against or in relationship to other companies comparably, similarly or
otherwise situated. The Plan Committee, in its sole discretion, may modify


 


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the Performance Goals if it
determines that circumstances have changed and modification is required to
reflect the original intent of the Performance Goals; provided, however, that
no such change or modification may be made to the extent it increases the
amount of compensation payable to any Participant who is a “covered employee”
within the meaning of Code Section 162(m). The Plan Committee may in its
discretion classify Participants into as many groups as it determines, and as
to any Participant relate his/her Performance Goals partially, or entirely, to
the measured performance, either absolutely or relatively, of an identified
Subsidiary, operating company or test strategy or new venture of the Company.


 


4.2           LEVELS OF PERFORMANCE
REQUIRED TO EARN PERFORMANCE AWARDS. At or about the same time that Performance
Goals are established for a specific period, the Plan Committee shall in its
absolute discretion establish the percentage of the Performance Awards granted
for such Performance Period which shall be earned by the Participant for
various levels of performance measured in relation to achievement of
Performance Goals for such Performance Period.


 


4.3           OTHER RESTRICTIONS. The
Plan Committee shall determine the terms and conditions applicable to any
Performance Award, which may include restrictions on the delivery of Common
Stock payable in connection with the Performance Award and restrictions that
could result in the future forfeiture of all or part of any Common Stock
earned. The Plan Committee may provide that shares of Common Stock issued in
connection with a Performance Award be held in escrow and/or legended.


 


4.4           NOTIFICATION TO PARTICIPANTS. Promptly after the Plan Committee has
established or modified the Performance Goals with respect to a Performance
Award, the Participant shall be provided with written notice of the Performance
Goals so established or modified.


 


4.5           MEASUREMENT OF
PERFORMANCE AGAINST PERFORMANCE GOALS. The Plan Committee shall, as soon as
practicable after the close of a Performance Period, determine:


 


(a)           the
extent to which the Performance Goals for such Performance Period have been
achieved; and


 


(b)           the
percentage of the Performance Awards earned as a result.


 


These determinations shall be absolute and final as to the facts and
conclusions therein made and be binding on all parties. Promptly after the Plan
Committee has made the foregoing determination, each Participant who has earned
Performance Awards shall be notified, in writing thereof. For all purposes of
this Plan, notice shall be deemed to have been given the date action is taken
by the Plan Committee making the determination. Participants may not sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of all or any
portion of their Performance Awards during the Performance Period, except


 


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that Performance Awards may be
transferable by assignment by a Participant to the extent provided in the
applicable Performance Award agreement.


 


4.6           TREATMENT OF
PERFORMANCE AWARDS EARNED. Upon the Plan Committee’s determination that a
percentage of any Performance Awards have been earned for a Performance Period,
Participants to whom such earned Performance Awards have been granted and who
have been (or were) in the employ of the Company or a Subsidiary thereof
continuously from the Date of Grant, subject to the exceptions set forth at
Section 4.9 and Section 4.10 hereof, shall be entitled, subject to the other
conditions of this Plan, to payment in accordance with the terms and conditions
of their Performance Awards. Such terms and conditions may permit or require
that any applicable tax withholding be deducted from the amount payable. Performance
Awards shall under no circumstances become earned or have any value whatsoever
for any Participant who is not in the employ of the Company or its Subsidiaries
continuously during the entire Performance Period for which such Performance
Award was granted, except as provided at Section 4.9 or Section 4.10 hereof.


 


4.7           DISTRIBUTION. Distributions
payable pursuant to Section 4.6 above shall be made as soon as practicable
after the Plan Committee determines the Performance Awards have been earned
unless the provisions of Section 4.8 hereof are applicable to a Participant.


 


4.8           DEFERRAL OF RECEIPT OF
PERFORMANCE AWARD DISTRIBUTIONS. With the consent of the Plan Committee, a
Participant who has been granted a Performance Award may by compliance with the
then applicable procedures under the Plan irrevocably elect in writing to defer
receipt of all or any part of any distribution associated with that Performance
Award. The terms and conditions of any such deferral, including but not limited
to, the period of time for, and form of, election; the manner and method of
payout; the plan and form in which the deferred amount shall be held; the
interest equivalent or other payment that shall accrue pending its payout; and
the use and form of Dividend Equivalents in respect of stock-based units
resulting from such deferral, shall be as determined by the Plan Committee. The
Plan Committee may, at any time and from time to time, but prospectively only
except as hereinafter provided, amend, modify, change, suspend or cancel any
and all of the rights, procedures, mechanics and timing parameters relating to
such deferrals. In addition, the Plan Committee may, in its sole discretion,
accelerate the payout of such deferrals (and any earnings thereon), or any
portion thereof, either in a lump sum or in a series of payments, but under the
following conditions only:


 


(a)           the
Federal tax statutes, regulations or interpretations are amended, modified, or
otherwise changed or affected in such a manner as to adversely alter or modify
the tax effect of such deferrals; or


 


(b)           the
Participant suffers or incurs an event that would qualify for a “withdrawal” of
contributions that have not been accumulated for two years without adverse
consequences on the tax status of a qualified profit-


 


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sharing or stock bonus plan under the Federal
tax laws applicable from time to time to such types of plans.


 


4.9           NON-DISQUALIFYING
TERMINATION OF EMPLOYMENT. Except for Section 4.10 hereof, the only exceptions
to the requirement of continuous employment during a Performance Period for
Performance Award distribution are termination of a Participant’s employment by
reason of death (in which event the Performance Award may be transferable by
will or the laws of descent and distribution only to such Participant’s
beneficiary designated to receive the Performance Award or to the Participant’s
applicable legal representatives, heirs or legatees), total and permanent
disability, with the consent of the Plan Committee, normal or late retirement
or early retirement, with the consent of the Plan Committee, or transfer of an
executive in a spin-off, with the consent of the Plan Committee, occurring
during the Performance Period applicable to the subject Performance Award. In
such instance a distribution of the Performance Award shall be made, as of the
end of the Performance Period, and 100% of the total Performance Award that
would have been earned during the Performance Period shall be earned and paid
out; provided, however, in a spin-off situation the Plan Committee may set
additional conditions, such as, without limiting the generality of the
foregoing, continuous employment with the spin-off entity. If a Participant’s
termination of employment does not meet the criteria set forth above, but the
Participant had at least 15 years of employment with the Company or a
Subsidiary or any combination thereof, the Plan Committee may allow distribution
of up to 100% of the total Performance Award for the Performance Period(s) in
which the termination of employment occurred, subject to any conditions that
the Plan Committee shall determine.


 


4.10         CHANGE IN CONTROL. In the
event of a Change in Control, a pro rata portion of all outstanding Performance
Awards under the Plan shall be payable ten days after the Change in Control. The
amount payable shall be determined by assuming that 100% of each Performance
Award was earned, and by multiplying the earned amount by a fraction, the
numerator of which shall be the number of months that have elapsed in the
applicable Performance Period prior to the Change in Control and the
denominator of which shall be the total number of months in the Performance Period.


 


ARTICLE V


STOCK OPTIONS AND


STOCK APPRECIATION RIGHTS


 


5.1           NON-QUALIFIED OPTION. Non-Qualified Options granted under the Plan are
Stock Options that are not intended to be Incentive Stock Options under the
provisions of Section 422 of the Code. Non-Qualified Options shall be evidenced
by written agreements in such form and not inconsistent with the Plan as the
Plan Committee shall in its sole discretion approve from time to time, which
agreements shall specify the number of shares to which they pertain and the
purchase price of such shares.


 


5.2           INCENTIVE STOCK OPTION.
Incentive Stock Options granted under the Plan are Stock Options that are
intended to be “incentive stock options” under Section


 


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422 of the Code, and the Plan
shall be administered, except with respect to the right to exercise options
after termination of employment, to qualify Incentive Stock Options issued
hereunder as incentive stock options under Section 422 of the Code. An Incentive
Stock Option shall not be granted to an employee who owns, or is deemed under
Section 424(d) of the Code to own, stock of the Company (or of any parent or
Subsidiary of the Company) possessing more than 10% of the total combined
voting power of all classes of stock therein. The aggregate Fair Market Value
(determined as of the time the option is granted) of the stock with respect to
which Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year (under all incentive stock option plans of
the Company or any parent or Subsidiary of the Company) shall not exceed
$100,000. Incentive Stock Options shall be evidenced by written agreements in
such form and not inconsistent with the Plan as the Plan Committee shall in its
sole discretion approve from time to time, which agreements shall specify the
number of shares to which they pertain and the purchase price of such shares.


 


 5.3          OPTION TERMS. Stock Options granted under
this Plan shall be subject to the following terms and conditions:


 


(a)           Option Period. Each Stock Option shall expire and all
rights to purchase shares thereunder shall cease not more than ten years after
its Date of Grant or on such date prior thereto as may be fixed by the Plan
Committee, or on such other date as is provided by this Plan in the event of
termination of employment, death or reorganization. No Stock Option shall
permit the purchase of any shares thereunder during the first year after its
Date of Grant, except as provided in Section 5.5 hereof or as otherwise
determined by the Plan Committee.


 


(b)           Exercise Price. The purchase price per share payable upon
exercise of a Stock Option shall not be less than the Fair Market Value of a
share of Common Stock on the Date of Grant of the Stock Option.


 


(c)           Transferability and Termination of Options. During the lifetime of an individual to
whom a Stock Option is granted, the Stock Option may be exercised only by such
individual and only while such individual is an employee of the Company or a
Subsidiary and only if the Participant has been continuously so employed by any
one or combination thereof since the Date of Grant of the Stock Option,
provided, however, that if the employment of such Participant by the Company or
a Subsidiary Corporation terminates, the Stock Option may additionally be
exercised as follows, or in any other manner provided by the Plan Committee,
but in no event later than ten years after the Date of Grant of the Stock
Option, except as set forth in (ii) and (v) below:


 


(i)            If a Participant’s termination of employment
occurs by reason of normal or late retirement under any retirement plan of the
Company or its Subsidiaries, such Participant’s Stock Options may


 


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be exercised within five years after the date of such termination of
employment. If a Participant’s termination of employment occurs by reason of
early retirement under any retirement plan of the Company or its Subsidiaries,
or by reason of the transfer of a Participant in a spin-off, or by reason of
total and permanent disability, as determined by the Plan Committee, without
retirement, then such Participant’s Stock Options shall be exercisable for a
period of up to five years after the date of such termination of employment if the
Plan Committee consents to such an extension. During the extension period, the
right to exercise Stock Options, if any, accruing in installments, shall
continue unless the Plan Committee provides otherwise; provided, however, that
if the Stock Options are Incentive Stock Options all installments shall be
immediately exercisable; and provided further, that the Plan Committee may set
additional conditions, such as, without limiting the generality of the
foregoing, an agreement to not provide services to a competitor of the Company
and its Subsidiaries and/or continuous employment with a spin-off entity.


 


(ii)           If
a Participant’s termination of employment occurs by reason of death, then such
Participant’s outstanding Stock Options shall all become immediately
exercisable and may be exercised within five years after the date of death or
the life of the option, whichever is less, but in the case of Non-Qualified
Options in no event less than one year after the date of death, unless the Plan
Committee provides otherwise.


 


(iii)          If
a Participant’s termination of employment occurs for any reason other than as
specified in Section 5.3(c)(i) or (ii) hereof, the Participant has been
employed by the Company or a Subsidiary or any combination for more than 15
years, and if the Plan Committee so approves, then such Participant’s Stock
Options may be exercised within a period of up to five years after the date of
termination of employment. During the extension period, the right to exercise
options, if any, accruing in installments shall continue unless the Plan
Committee provides otherwise; provided, however, the Plan Committee may set
additional conditions.


 


(iv)          If
a Participant’s termination of employment occurs for any reason other than as
specified in Section 5.3(c)(i) or (ii) hereof, the Plan Committee has not
approved an extension and Participant’s termination of employment is not
occasioned by the commission of a dishonest or other illegal act, then, but
only with respect to installments that have as of the date of termination
already accrued, such Participant’s Stock Options may be exercised within


 


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ninety days after the date of such termination of employment except in
the case of Participants who would at the time be subject to the provisions of
Section 16(b) of the Exchange Act, in which instance the period of exercise
shall be two hundred ten days after termination. Those Participants terminated
because of the commission of a dishonest or other illegal act shall have no
additional period after termination of employment in which to exercise their
options.


 


(v)           Rights
accruing to a Participant under Sections 5.3(c)(i), 5.3(c)(iii) and 5.3(c)(iv)
may, upon the death of a Participant subsequent to his/her termination of
employment, be exercised by his/her duly designated beneficiary or otherwise by
his/her applicable legal representatives, heirs or legatees to the extent
vested in and unexercised or perfected by the Participant at the date of
his/her death. In the case of Non-Qualified Options, the period for such
exercise shall not expire less than one year after the date of the Participant’s
death.


 


(vi)          Absence
on a leave of absence approved by the Plan Committee shall not be deemed a
termination or interruption of continuous employment for the purposes of the
Plan.


 


No Stock Option shall be assignable or transferable by the individual
to whom it is granted, except that it may be transferable (X) by assignment by
the Participant to the extent provided in the applicable option agreement, or
(Y) by will or the laws of descent and distribution in accordance with the
provisions of this Plan. An option transferred after the death of the
Participant to whom it is granted may only be exercised by such individual’s
beneficiary designated to exercise the option or otherwise by his/her
applicable legal representatives, heirs or legatees, and only within the
specific time period set forth above and only to the extent vested in and
unexercised by the Participant at the date of his/her death, except as provided
in Section 5.3(c)(ii).


 


In no event, whether by the Participant directly or by his/her proper
assignee or beneficiary or other representative, shall any option be
exercisable at any time after its expiration date as stated in the option
agreement, except as provided in Section 5.3(c)(ii) and (v). When an option is
no longer exercisable it shall be deemed for all purposes and without further
act to have lapsed and terminated. The Plan Committee may, in its sole
discretion, determine solely for the purposes of the Plan that a Participant is
permanently and totally disabled, and the acts and decisions of the Plan
Committee made in good faith in relation to any such


 


12

















 


determination shall be conclusive upon all persons and interests
affected thereby.


 


(d)           Exercise of Options. An individual entitled to exercise Stock
Options may, subject to their terms and conditions and the terms and conditions
of the Plan, exercise them in whole or in part by delivery of written notice of
exercise to the Company at its principal office, specifying the number of whole
shares of Common Stock with respect to which the Stock Options are being
exercised. Before shares may be issued, payment must be made in full, in legal
United States tender, in the amount of the purchase price of the shares to be
purchased at the time and any amounts for withholding as provided in Section
10.8 hereof; provided, however, in lieu of paying for the exercise price in
cash as described above, the individual may pay (subject to such conditions and
procedures as the Plan Committee may establish) all or part of such exercise
price by tendering (either actually or by attestation) owned and unencumbered
shares of Common Stock acceptable to the Plan Committee and having a Fair
Market Value on the date of exercise of the Stock Options equal to or less than
the exercise price of the Stock Options exercised, with cash, as set forth
above, for the remainder, if any, of the purchase price; provided, further,
that the Plan Committee may permit a Participant to elect to pay the exercise
price by authorizing a third party to sell shares of Common Stock (or a
sufficient portion of the shares) acquired upon exercise of the Stock Options
and remit to the Company a sufficient portion of the sale proceeds to pay the
entire exercise price and any tax withholding resulting from such exercise. Subject
to rules established by the Plan Committee, the withholdings required by
Section 10.8 hereof may be satisfied by the Company withholding shares of
Common Stock issued on exercise that have a Fair Market Value on the date of
exercise of the Stock Options equal to or less than the withholding required by
Section 10.8 hereof.


 


(e)           Repricing
Prohibited. Subject to Sections 5.5, 7.3 and 10.7, outstanding Stock
Options granted under this Plan shall not be repriced.


 


5.4           STOCK APPRECIATION
RIGHTS. Stock Appreciation Rights may be granted to Participants either alone (“freestanding”)
or in tandem with other Awards, including Performance Awards, Stock Options and
Restricted Stock. Stock Appreciation Rights granted in tandem with Incentive
Stock Options must be granted at the same time as the Incentive Stock Options
are granted. Stock Appreciation Rights granted in tandem with any other Award
may be granted at any time prior to the earlier of the exercise or expiration
of such Award. Stock Appreciation Rights granted in tandem with Stock Options
shall terminate and no longer be exercisable upon the termination or exercise
of the related Stock Options. The Plan Committee shall establish the terms and
conditions applicable to any Stock Appreciation Rights, which terms and
conditions need not be uniform but may not be inconsistent with the terms of
the Plan. Freestanding Stock Appreciation Rights shall generally be subject to
terms and conditions substantially


 


13

















 


similar to those described in
Section 5.3 for Stock Options, including the requirements of 5.3(a), (b) and
(e) regarding the maximum period, minimum price and prohibition on repricing.


 


5.5           CHANGE IN CONTROL. In
the event of a Change in Control:


 


(a)           If the Company is the
surviving entity and any adjustments necessary to preserve the value of the
Participant’s outstanding Stock Options and Stock Appreciation Rights have been
made, or the Company’s successor at the time of the Change in Control
irrevocably assumes the Company’s obligations under this Plan or replaces the
Participant’s outstanding Stock Options and Stock Appreciation Rights with
stock options and stock appreciation rights of equal or greater value and
having terms and conditions no less favorable to the Participant than those
applicable to the Participant’s Stock Options and Stock Appreciation Rights
immediately prior to the Change in Control, then such Awards or their
replacement awards shall become immediately exercisable in full only if within
two years after the Change in Control the Participant’s employment:


 


(i)            is terminated without “Cause”, which for
purposes of this Section 5.5 shall mean (x) willful and continued failure to
substantially perform the Participant’s duties (other than failure resulting
from incapacity due to physical or mental illness) after receipt of a written
demand for such performance specifically identifying such failure, or (y) the
willful engaging by the Participant in illegal conduct or gross misconduct that
is materially and demonstrably injurious to the Company or its successor;


 


(ii)           terminates with “Good Reason”, which for purposes of this Section 5.5
shall mean any material diminution of the Participant’s position, authority,
duties or responsibilities (including the assignment of duties materially
inconsistent with the Participant’s position or a material increase in the time
Participant is required by the Company or its successor to travel), any
reduction in salary or in the Participant’s aggregate bonus and incentive
opportunities, any material reduction in the aggregate value of the Participant’s
employee benefits (including retirement, welfare and fringe benefits), or
relocation to a principal work site that is more than 40 miles from the
Participant’s principal work site immediately prior to the Change in Control;


 


(iii)          terminates under circumstances that entitle the Participant to income
continuation benefits under any plan of the Company, a Subsidiary, or an entity
that is a successor to the Company or a Subsidiary as a result of the Change in
Control, or that would have entitled the Participant to such benefits if the
Participant participated in such plan (for this purpose only, any such plan
terminated in connection with the Change in Control shall be taken into
account); or


 


14

















 


(iv)          terminates under circumstances that entitle the Participant to income
continuation benefits under any employment agreement between the Participant
and the Company, a Subsidiary, or any successor thereof.


 


(b)           If
5.5(a) does not apply, then without any action by the Plan Committee or the Board,
each outstanding Stock Option and Stock Appreciation Right granted under the
Plan that has not been previously exercised or otherwise lapsed and terminated
shall become immediately exercisable in full; provided, however, that the Plan
Committee, in its sole discretion, and without the consent of any Participant
affected thereby, may determine that a cash payment shall be made promptly
following the Change in Control in lieu of all or any portion of the
outstanding Stock Options and Stock Appreciation Rights granted under this Plan.
The amount payable with respect to each share of Common Stock subject to an
affected Stock Option and each affected Stock Appreciation Right shall equal
the excess of the Fair Market Value of a share of Common Stock immediately
prior to such Change in Control over the exercise price of such Stock Option or
Stock Appreciation Right. After such a determination by the Plan Committee,
each Stock Option and Stock Appreciation Right, with respect to which a cash
payment is to be made shall terminate, and the Participant shall have no
further rights thereunder except the right to receive such cash payment.


 


ARTICLE VI


RESTRICTED STOCK AND RESTRICTED STOCK UNITS


 


6.1           RESTRICTION PERIOD. At
the time an Award of Restricted Stock or Restricted Stock Units is made, the
Plan Committee shall establish the terms and conditions applicable to such
Award, including the period of time (the “Restriction Period”) during which
certain restrictions established by the Plan Committee shall apply to the Award.
The Restriction Period shall be not less than three years, provided, however,
that for Awards to non-employee directors of the Company, the terms of the
Award may allow for the ratable release of the restrictions over a minimum
period of three years. Each such Award, and designated portions of the same
Award, may have a different Restriction Period, at the discretion of the Plan
Committee. Except as permitted or pursuant to Sections 6.4, 6.5 or 10.7 hereof,
the Restriction Period applicable to a particular Award shall not be changed.


 


6.2           RESTRICTED STOCK TERMS
AND CONDITIONS. Restricted Stock shall be represented by a stock certificate
registered in the name of the Participant granted such Restricted Stock. Such
Participant shall have the right to enjoy all shareholder rights during the
Restriction Period except that:


 


(a)           The
Participant shall not be entitled to delivery of the stock certificate until
the Restriction Period shall have expired.


 


15

















 


(b)           The Company may either issue shares subject
to such restrictive legends and/or stop-transfer instructions as it deems
appropriate or provide for retention of custody of the Common Stock during the
Restriction Period.


 


(c)           The
Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of the Common Stock during the Restriction Period, except that it may
be transferable by assignment by the Participant to the extent provided in the
applicable Restricted Stock Award agreement.


 


(d)           A
breach of the terms and conditions established by the Plan Committee with
respect to the Restricted Stock shall cause a forfeiture of the Restricted
Stock, and any dividends withheld thereon.


 


(e)           Dividends
payable in cash or in shares of stock or otherwise may be either currently paid
or withheld by the Company for the Participant’s account. At the discretion of
the Plan Committee, interest may be paid on the amount of cash dividends
withheld, including cash dividends on stock dividends, at a rate and subject to
such terms as determined by the Plan Committee.


 


Provided, however, and the provisions of Section 6.4 to the contrary
notwithstanding, in lieu of the foregoing, the Plan Committee may provide that
no shares of Common Stock be issued until the Restriction Period is over and
further provide that the shares of Common Stock issued after the Restriction
Period has been completed, be issued in escrow and/or be legended and that the
Common Stock be subject to restrictions including the forfeiture of all or a
part of the shares.


 


6.3           PAYMENT FOR RESTRICTED
STOCK. A Participant shall not be required to make any payment for Restricted
Stock unless the Plan Committee so requires.


 


6.4           FORFEITURE PROVISIONS. Subject
to Section 6.5, in the event a Participant terminates employment during a
Restriction Period for the Participant’s Restricted Stock or Restricted Stock
Units, such Awards will be forfeited; provided, however, that the Plan
Committee may provide for proration or full payout in the event of (a) a termination
of employment because of normal or late retirement, (b) with the consent of the
Plan Committee, early retirement or spin-off, (c) death, (d) total and
permanent disability, as determined by the Plan Committee, (e) with the consent
of the Plan Committee, termination of employment after 15 years of employment
with the Company or a Subsidiary or any combination thereof, or (f) in the case
of a non-employee director, a departure from the Board following the completion
of the director’s term of office, all subject to any other conditions the Plan
Committee may determine.


 


16

















 


6.5           CHANGE IN CONTROL. In
the event of a Change in Control, restrictions on a fraction of each
Participant’s outstanding Restricted Stock and Restricted Stock Units granted
under the Plan will lapse, and any shares not previously distributed shall be
distributed within ten days after the Change in Control. The numerator of such
fraction with respect to an Award shall be the number of months that have
elapsed in the applicable Restriction Period prior to the Change in Control and
the denominator shall be the number of months in such Restriction Period.


 


ARTICLE
VII


SHARES OF STOCK SUBJECT TO THE PLAN; MAXIMUM
AWARDS


 


7.1           SHARES AVAILABLE. Subject
to the other provisions of this Article VII, the total number of shares
available for grant as Awards pursuant to the Plan shall not exceed in the
aggregate 81,000,000 shares of Common Stock. (This limit includes the
44,000,000 shares that were originally made available under this Plan.)  Solely for the purpose of applying the
limitation in the preceding sentence and subject to the replenishment and
adjustment provisions of Sections 7.2 and 7.3 below:


 


(a)           each Award granted
under this Plan prior to the Effective Date shall reduce the number of shares
available for grant by one share for every one share granted;


 


(b)           each Stock Option or
Stock Appreciation Right granted under this Plan on or after the Effective Date
shall reduce the number of shares available for grant by one share for every
one share granted;


 


(c)           each Award granted under this Plan on or after the Effective Date that
may result in the issuance of Common Stock, other than a Stock Option, Stock
Appreciation Right, or Dividend Equivalent, shall reduce the number of shares
available for grant by two shares for every one share granted;


 


(d)           each Dividend Equivalent that the Corporation has determined may result
in the issuance of Common Stock shall reduce the number of shares available for
grant by two shares for every share that would be issuable if the accumulated
value of the Dividend Equivalent were converted into Common Stock at Fair
Market Value, but such reduction shall only occur if the corresponding
dividends payable to shareholders were paid in cash; and


 


(e)           if Awards are granted in tandem, so that only one of the Awards may
actually be exercised, only the Award that results in the greater reduction in
the number of shares available for grant shall result in a reduction of the
shares so available, and the other Award shall be disregarded.


 


Shares available for grant under the Plan may
be authorized and unissued shares, treasury shares held by the Company or
shares purchased or held by the Company or a Subsidiary for purposes of the Plan,
or any combination thereof. Shares issued upon assumption or


 


17

















 


conversion of outstanding
stock-based awards granted by an acquired company shall be disregarded in
applying the limitation set forth in this Section 7.1.


 


7.2           SHARES AGAIN AVAILABLE.
In the event all or any portion of an Award is forfeited or cancelled, expires,
is settled for cash, or otherwise does not result in the issuance of all or a
portion of the shares subject to the Award in connection with the exercise or
settlement of such Award, the number of shares not issued that were deducted
for such Award pursuant to Section 7.1 above shall be restored and may again be
used for Awards under the Plan. If a Participant uses shares of Common Stock to
pay a purchase or exercise price or tax withholding, either by having the
Company withhold shares or tendering shares (either actually or by
attestation), an equal number of such shares shall be restored and may again be
used for Awards under the Plan. In addition, shares may be reacquired on the
open market by the Company using the Cash Proceeds received by the Company from
the exercise on or after the Effective Date of Stock Options granted under the
Plan to restore an equal number of shares that may again be used for Awards
under the Plan; provided, however, that the number of shares so restored does
not exceed the number that could be purchased at Fair Market Value with the
Cash Proceeds on the date of exercise of the Stock Option giving rise to such
Cash Proceeds.


 


If one of the events described in the first sentence of the preceding
paragraph occurs with respect to an award that was granted under a Prior Plan
(as defined in Section 10.11) but remains outstanding on the Effective Date,
the total number of shares available for grant under this Plan shall be
increased by one share for each share subject to that award that is not issued.


 


Notwithstanding anything in this Section 7.2 to the contrary and solely
for purposes of determining whether shares are available for the issuance of
Incentive Stock Options, the maximum aggregate number of shares that may be
granted under this Plan shall be determined without regard to any shares
restored pursuant to this Section 7.2 that, if taken into account, would cause
the Plan to fail the requirement under Code Section 422 that the Plan designate
the maximum aggregate number of shares that may be issued.


 


7.3           RELEVANT CHANGE
ADJUSTMENTS. Appropriate adjustments in the number of shares available for
grant and in any outstanding Awards, including adjustments in the size of the
Award and in the exercise price per share of Stock Options and Stock
Appreciation Rights, as authorized herein may be made by the Plan Committee, in
its discretion (except as provided in Section 10.7 hereof), to give effect to
adjustments made in the number of shares of Common Stock through a merger,
consolidation, recapitalization, reclassification, combination, spin-off,
common stock dividend, stock split or other relevant change.


 


7.4           MAXIMUM PER PARTICIPANT
AWARD. During any consecutive thirty-six month period, no Participant may
receive Awards that, in the aggregate, could result in that Participant
receiving, earning or acquiring, subject to the adjustments described in
Section 7.3:


 


18

















 


(a)           Stock
Options and Stock Appreciation Rights for, in the aggregate, more than
4,000,000 shares of Common Stock;


(b)           Performance
Shares, Restricted Stock and Restricted Stock Units for, in the aggregate, more
than 700,000 shares of Common Stock;


(c)           A
number of Dividend Equivalents greater than the number of shares of Common
Stock the Participant could receive, earn or acquire in connection with the
related stock-based Awards granted to the Participant; and


(d)           Performance
Units with a value exceeding $15,000,000.


 


In addition, during any consecutive thirty-six month period, no
Participant who is a non-employee director may receive Awards that, in the
aggregate, could result in that Participant receiving, earning or acquiring,
subject to the adjustments described in Section 7.3, more than 75,000 shares of
Common Stock. For purposes of applying the limits described in this Section
7.4, if Awards subject to the same limit are granted in tandem, so that only
one of the Awards may actually be exercised, only one of the Awards shall be
counted.


 


ARTICLE
VIII


ADMINISTRATION


 


8.1           PLAN COMMITTEE. The Plan will be administered by a committee of two or
more members of the Compensation Committee of the Board who are appointed from
time to time by the Board and who are outside, independent Board members who,
in the judgment of the Board, are qualified to administer the Plan as
contemplated by (a) Rule 16b-3 of the Securities and Exchange Act of 1934 (or
any successor rule), (b) Section 162(m) of the Code, as amended, and the
regulations thereunder (or any successor Section and regulations), and (c) any
rules and regulations of a stock exchange on which Common Stock is traded. Any
member of the committee administering the Plan who does not satisfy or ceases
to satisfy the qualifications set out in the preceding sentence may recuse
himself or herself from any vote or other action taken by such committee. The
Board may, at any time and in its complete discretion, remove any member of
such committee and may fill any vacancy on such committee.


 


8.2           POWERS. The Plan
Committee shall have and exercise all of the powers and responsibilities
granted expressly or by implication to it by the provisions of the Plan. Subject
to and as limited by such provisions, the Plan Committee may from time to time
enact, amend and rescind such rules, regulations and procedures with respect to
the administration of the Plan as it deems appropriate or convenient.


 


8.3           INTERPRETATION. All
questions arising under the Plan, any Award agreement, or any rule, regulation
or procedure adopted by the Plan Committee shall be determined by the Plan
Committee, and its determination thereof shall be conclusive and binding upon
all parties.


 


19

















 


8.4           COMMITTEE PROCEDURE. Any
action required or permitted to be taken by the Plan Committee under the Plan
shall require the affirmative vote of a majority of a quorum of the members of
the Plan Committee. A majority of all members of the Plan Committee shall
constitute a “quorum” for Plan Committee business. The Plan Committee may act
by written determination instead of by affirmative vote at a meeting, provided
that any written determination shall be signed by all members of the Plan
Committee, and any such written determination shall be as fully effective as a
majority vote of a quorum at a meeting.


 


8.5           DELEGATION. The Plan
Committee may delegate all or any part of its authority under the Plan to a
subcommittee of directors and/or officers of the Company for purposes of
determining and administering Awards granted to persons who are not then
subject to the reporting requirements of Section 16 of the Exchange Act.


 


ARTICLE
IX


REDUCTION IN AWARDS


 


9.1           WHEN
APPLICABLE. Anything in this Plan to the contrary notwithstanding, the
provisions of this Article IX shall apply to a Participant if an independent
auditor selected by the Plan Committee (the “Auditor”) determines that each of
(a) and (b) below are applicable.


 


(a)           Payments or distributions hereunder,
determined without application of this Article IX, either alone or together
with other payments in the nature of compensation to the Participant which are
contingent on a change in the ownership or effective control of the Company, or
in the ownership of a substantial portion of the assets of the Company, or
otherwise (but after any elimination or reduction of such payments under the
terms of the Company’s Income Continuance Policy Statement or SMG Income
Continuance Policy Statement), would result in any portion of the payments
hereunder being subject to an excise tax on excess parachute payments imposed
under Section 4999 of the Code.


 


(b)           The
excise tax imposed on the Participant under Section 4999 of the Code on excess
parachute payments, from whatever source, would result in a lesser net
aggregate present value of payments and distributions to the Participant (after
subtraction of the excise tax) than if payments and distributions to the
Participant were reduced to the maximum amount that could be made without
incurring the excise tax.


 


9.2           REDUCED AMOUNT. Under this Article IX the payments and distributions
under this Plan shall be reduced (but not below zero) so that the present value
of such payments and distributions shall equal the Reduced Amount. The “Reduced
Amount” (which may be zero) shall be an amount expressed in present value which


 


20

















 


maximizes the aggregate present
value of payments and distributions under this Plan which can be made without
causing any such payment to be subject to the excise tax under Section 4999 of
the Code. The determinations and reductions under this Section 9.2 shall be
made after eliminations or reductions, if any, have been made under the Company’s
Income Continuance Policy Statement or SMG Income Continuance Policy Statement.


 


9.3           PROCEDURE. If the
Auditor determines that this Article IX is applicable to a Participant, it
shall so advise the Plan Committee in writing. The Plan Committee shall then promptly
give the Participant notice to that effect together with a copy of the detailed
calculation supporting such determination which shall include a statement of
the Reduced Amount. The Participant may then elect, in his/her sole discretion,
which and how much of the Awards otherwise awarded under this Plan shall be
eliminated or reduced (as long as after such election the aggregate present
value of the remaining Awards under this Plan equals the Reduced Amount), and
shall advise the Plan Committee in writing of his/her election within ten days
of his/her receipt of notice. If no such election is made by the Participant
within such ten-day period, the Plan Committee may elect which and how much of
the Awards shall be eliminated or reduced (as long as after such election their
aggregate present value equals the Reduced Amount) and shall notify the
Participant promptly of such election. For purposes of this Article IX, present
value shall be determined in accordance with Section 280G of the Code. All the foregoing
determinations made by the Auditor under this Article IX shall be made as
promptly as practicable after it is determined that excess parachute payments
(as defined in Section 280G of the Code) will be made to the Participant if an
elimination or reduction is not made. As promptly as practicable following the
election hereunder, the Company shall provide to or for the benefit of the
Participant such amounts and shares as are then due to the Participant under
this Plan and shall promptly provide to or for the benefit of the Participant
in the future such amounts and shares as become due to the Participant under
this Plan.


 


9.4           CORRECTIONS. As a
result of the uncertainty in the application of Section 280G of the Code at the
time of the initial determination by the Auditor hereunder, it is possible that
payments or distributions under this Plan will have been made which should not
have been made (“Overpayment”) or that additional payments or distributions
which will have not been made could have been made (“Underpayment”), in each
case, consistent with the calculation of the Reduced Amount hereunder. In the
event that the Auditor, based upon the assertion of a deficiency by the
Internal Revenue Service against the Company or the Participant which the Auditor
believes has a high probability of success, determines that an Overpayment has
been made, any such Overpayment shall be treated for all purposes as a loan to
the Participant which the Participant shall repay together with interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the Code;
provided, however, that no amount shall be payable by the Participant if and to
the extent such payment would not reduce the amount which is subject to the
excise tax under Section 4999 of the Code. In the event that the Auditor, based
upon controlling precedent, determines that an Underpayment has occurred, any
such Underpayment shall


 


21

















 


be promptly paid to or for the
benefit of the Participant together with interest at the applicable Federal
rate provided for in Section 7872(f)(2)(A) of the Code.


 


9.5           NON-CASH BENEFITS. In
making its determination under this Article IX, the value of any non-cash
benefit shall be determined by the Auditor in accordance with the principles of
Section 280G(d)(3) of the Code.


 


9.6           DETERMINATIONS BINDING.
All determinations made by the Auditor under this Article IX shall be binding
upon the Company, the Plan Committee and the Participant.


 


ARTICLE X


GENERAL
PROVISIONS


 


10.1         AMENDMENT OR TERMINATION
OF PLAN. The Board may at any time amend, suspend, discontinue or terminate the
Plan (including the making of any necessary enabling, conforming and procedural
amendments to the Plan to authorize and implement the granting of Incentive
Stock Options or other income tax preferred stock options which may be
authorized by federal law subsequent to the effective date of this Plan);
provided, however, that no amendment by the Board shall, without further
approval of the shareholders of the Company, increase the total number of
shares of Common Stock which may be made subject to the Plan, except as
provided at Section 7.3 hereof, or make any other change for which shareholder
approval is required by law or under the applicable rules of the New York Stock
Exchange. No action taken pursuant to this Section 10.1 of the Plan shall,
without the consent of the Participant, alter or impair any Awards which have
been previously granted to a Participant except pursuant to Section 10.5 of the
Plan.


 


10.2         NON-ALIENATION OF RIGHTS
AND BENEFITS. Except as expressly provided herein, no right or benefit under
the Plan shall be subject to anticipation, alienation, sale, assignment,
pledge, encumbrance or charge and any attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge the same shall be void. No right or benefit
hereunder shall in any manner be liable for or subject to the debts, contracts,
liabilities or torts of the person entitled to such right or benefit. If any
Participant or beneficiary hereunder should become bankrupt or attempt to
anticipate, alienate, sell, assign, pledge, encumber or charge any right or
benefit hereunder (other than as expressly provided herein), then such right or
benefit shall, in the sole discretion of the Plan Committee, cease and in such
event the Company may hold or apply the same or any or no part thereof for the
benefit of the Participant or beneficiary, his/her spouse, children or other
dependents or any of them in any such manner and in such proportion as the Plan
Committee in its sole discretion may deem proper.


 


10.3         NO RIGHTS AS SHAREHOLDER.
The granting of Awards under the Plan shall not entitle a Participant or any
other person succeeding to his/her rights, to any dividend, voting or other
right as a shareholder of the Company unless and until the


 


22

















 


issuance of a stock certificate
to the Participant or such other person pursuant to the provisions of the Plan
and then only subsequent to the date of issuance thereof.


 


10.4         LIMITATION OF LIABILITY
OR OBLIGATION OF THE COMPANY. As illustrative only of the limitations of
liability or obligation of the Company and not intended to be exhaustive
thereof, nothing in the Plan shall be construed:


 


(a)           to give any employee of the Company any right
to be granted any Award other than at the sole discretion of the Plan
Committee;


 


(b)           to
give any Participant any rights whatsoever with respect to shares of Common
Stock except as specifically provided in the Plan;


 


(c)           to
limit in any way the right of the Company or any Subsidiary to terminate,
change or modify, with or without cause, the employment of any Participant at
any time; or


 


(d)           to
be evidence of any agreement or understanding, express or implied, that the Company
or any Subsidiary will employ any Participant in any particular position at any
particular rate of compensation or for any particular period of time.


 


Payments and other benefits received by a Participant under an Award
shall not be deemed part of a Participant’s regular, recurring compensation for
purposes of any termination, indemnity or severance pay laws and shall not be
included in, nor have any effect on, the determination of benefits under any
other employee benefit plan, contract or similar arrangement provided by the
Company or any Subsidiary, unless expressly so provided by such other plan,
contract or arrangement or the Plan Committee determines that an Award or
portion of an Award should be included to reflect competitive compensation practices
or to recognize that an Award has been made in lieu of a portion of competitive
cash compensation.


 


10.5         GOVERNMENT REGULATIONS. Notwithstanding
any other provisions of the Plan seemingly to the contrary, the obligation of
the Company with respect to Awards granted under the Plan shall at all times be
subject to any and all applicable laws, rules and regulations and such
approvals by any government agencies as may be required or deemed by the Board
or Plan Committee as reasonably necessary or appropriate for the protection of
the Company.


 


In connection with any sale, issuance or transfer hereunder, the
Participant acquiring the shares shall, if requested by the Company, give
assurances satisfactory to counsel of the Company that the shares are being acquired
for investment and not with a view to resale or distribution thereof and
assurances in respect of such other matters as the Company may deem desirable
to assure compliance with all applicable legal requirements.


 


23

















 


10.6         NON-EXCLUSIVITY OF THE
PLAN. Neither the adoption of the Plan by the Board nor the submission of the
Plan to shareholders of the Company for approval shall be construed as creating
any limitations on the power or authority of the Board to adopt such other or
additional incentive or other compensation arrangements of whatever nature as
the Board may deem necessary or desirable or preclude or limit the continuation
of any other plan, practice or arrangement for the payment of compensation or
fringe benefits to employees generally, or to any class or group of employees,
which the Company or any Subsidiary now has lawfully put into effect,
including, without limitation, any retirement, pension, savings, profit sharing
or stock purchase plan, insurance, death and disability benefits, and executive
short term incentive plans.


 


10.7         REORGANIZATION. In case
the Company is merged or consolidated with another corporation, or in case the
property or stock of the Company is acquired by another corporation, or in case
of a separation, reorganization or liquidation of the Company (for purposes
hereof any such occurrence being referred to as an “Event”), the Plan Committee
or a comparable committee of any corporation assuming the obligations of the
Company hereunder, shall either:


 


(a)           make appropriate provision for the protection of any outstanding
stock-based Awards granted thereunder by the substitution on an equitable basis
of appropriate stock, stock units, stock options or stock appreciation rights
of the Company, or of the merged, consolidated or otherwise reorganized
corporation which will be issuable in respect to the Awards. Stock to be issued
pursuant to such substitute awards shall be limited so that the excess of the
aggregate fair market value of the shares subject to such substitute awards
immediately after such substitution over the purchase price thereof (if any) is
not more than the excess of the aggregate fair market value of the shares
subject to such substitute awards immediately before such substitution over the
purchase price thereof (if any); or


 


(b)           upon
written notice to the Participant, declare that all Performance Awards granted
to the Participant are deemed earned, that the Restriction Period of all
Restricted Stock and Restricted Stock Units has been eliminated and that all
outstanding Stock Options and Stock Appreciation Rights shall accelerate and
become exercisable in full but that all outstanding Stock Options and Stock
Appreciation Rights, whether or not exercisable prior to such acceleration,
must be exercised within the period of time set forth in such notice or they
will terminate. In connection with any declaration pursuant to this Section
10.7(b), the Plan Committee may, but shall not be obligated to, cause a cash
payment to be made to each Participant who holds a Stock Option or Stock
Appreciation Right that is terminated in an amount equal to the product
obtained by multiplying (x) the amount (if any) by which the Event Proceeds Per
Share (as hereinafter defined) exceeds the exercise price per share covered by
such Stock Option times (y) the number of shares of Common Stock covered by
such Stock Option or Stock Appreciation Right. For purposes of this Section
10.7(b), “Event


 


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Proceeds Per Share” shall mean the cash plus the fair market value, as
determined in good faith by the Plan Committee, of the non-cash consideration
to be received per share by the shareholders of the Company upon the occurrence
of the Event.


 


10.8         WITHHOLDING TAXES, ETC. All distributions under the Plan shall be
subject to any required withholding taxes and other withholdings and, in case
of distributions in Common Stock, the Participant or other recipient may, as a
condition precedent to the delivery of Common Stock, be required to pay to
his/her participating employer the excess, if any, of the amount of required
withholding over the withholdings, if any, from any distributions in cash under
the Plan. All or a portion of such payment may, in the discretion of the Plan
Committee and upon the election of the Participant, be made (a) by withholding
from shares that would otherwise be delivered to the Participant a number of
shares sufficient to satisfy the remaining required tax withholding or (b) by
tendering (either actually or by attestation) owned and unencumbered shares of
Common Stock acceptable to the Plan Committee and having a Fair Market Value on
the date of tender equal to or less than the remaining required tax withholding.
No distribution under the Plan shall be made in fractional shares of Common
Stock, but the proportional market value thereof shall be paid in cash.


 


10.9         GENERAL RESTRICTION. Each
Award shall be subject to the requirement that, if at any time the Board shall
determine, in its discretion, that the listing, registration or qualification
of the shares subject to such option and/or right upon any securities exchange
or under any state or federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in connection
with the granting of such Award or the issue or purchase of shares respectively
thereunder, such Award may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board.


 


10.10       USE OF PROCEEDS. The
proceeds derived by the Company from the sale of the stock pursuant to Awards
granted under the Plan shall constitute general funds of the Company.


 


10.11       PRIOR PLANS. Notwithstanding
the adoption of this 2004 Restatement of the Plan by the Board and approval of
this 2004 Restatement by the Company’s shareholders, the Company’s Executive
Long Term Incentive Plan of 1981 and the Director Stock Option Plan of 1995, as
the same have been amended from time to time (the “Prior Plans”), shall remain
in effect, and all grants and awards heretofore made under the Prior Plans
shall be governed by the terms of the Prior Plans. The Plan Committee shall
not, however, make any additional grants pursuant to the Prior Plans, nor shall
it grant any additional Awards on or after the Effective Date that are subject
to the terms and conditions of the Plan in effect prior to the Effective Date.


 


10.12       DURATION OF PLAN. This Plan
shall remain in effect until the earliest of the following events occurs: (a)
distribution of all shares of Common Stock subject to


 


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the Plan, (b) termination of
this Plan pursuant to Section 10.1 hereof, or (c) the tenth anniversary of the
Effective Date.


 


10.13       SEVERABILITY. In the event
any provision of this Plan shall be held to be illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of
this Plan, and this Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.


 


10.14       GOVERNING LAW. To the
extent that federal laws do not otherwise control, this Plan and all
determinations made and actions taken pursuant to this Plan shall be governed
by the laws of Minnesota and construed accordingly.


 


10.15       HEADINGS. The headings of
the Articles and their subparts in this Plan are for convenience of reading
only and are not meant to be of substantive significance and shall not add to
or detract from the meaning of such Article or subpart to which it refers.


 


10.16       STOCK CERTIFICATES. Notwithstanding
anything in the Plan to the contrary, to the extent the Plan provides for the
issuance of stock certificates to reflect the issuance of shares of Common
Stock or Restricted Stock, the issuance may be effected on a non-certificated
basis, to the extent not prohibited by applicable law or the applicable rules
of any stock exchange on which the Common Stock is traded.


 


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