EXHIBIT (10)P


 


TARGET CORPORATION


LONG-TERM INCENTIVE PLAN


(As amended and restated on January 10, 2007)


 


ARTICLE I


ESTABLISHMENT OF THE PLAN


 


1.1          PLAN NAME. This plan is known as the “Target
Corporation Long-Term Incentive Plan” (hereinafter called the “Plan”).


 


1.2          EFFECTIVE DATE. This amended and restated
plan document (the “2007 Restatement”) shall become effective on January 10,
2007 (the “Effective Date”). Awards made on or after the Effective Date shall
be subject to the terms and conditions of this 2007 Restatement as amended from
time to time and not to the terms and conditions of any prior version of the
plan document. To the extent that a Participant’s rights under any Awards made
prior to the Effective Date are adversely affected by this 2007 Restatement, as
amended from time to time, such Awards shall be subject to the terms and
conditions of the plan document in effect on the Award’s Date of Grant. Any
future amendments to the Plan shall be subject to Section 10.1 hereof.


 


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,


 


(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


 


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(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 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 


 


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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.


 


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.


 


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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.


 


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.


 


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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 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 


 


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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 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 


 


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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-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


 


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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 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 


 


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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 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 


 


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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 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 


 


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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 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



 


12

















 


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 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.


 


13

















 


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 (collectively, an “Equitable
Assumption or Replacement”), 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; or


 


(iii)          terminates under circumstances that entitle
the Participant to accelerated exercisability under any individual employment
agreement between the Participant and the Company, a Subsidiary, or any
successor thereof.


 


(b)           If there is no Equitable Assumption or
Replacement, 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 


 


14

















 


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.


 


(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 


 


15

















 


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.


 


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 


 


16

















 


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 May 19, 2004 (the date the Plan was last
approved by shareholders) 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 May
19, 2004 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 May 19, 2004 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 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 


 


17

















 


Company from the exercise on or after May 19, 2004 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 was outstanding on May 19, 2004, 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. In the event of any equity restructuring (within the
meaning of Financial Accounting Standards No. 123 (revised 2004)) other than:
(1) any distribution of securities or other property by the Company to
shareholders in a spin-off or split-up that does not qualify as a tax-free
spin-off or split-up under Section 355 of the Code (or any successor provision
of the Code); or (2) any cash dividend (including extraordinary cash dividends),
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, shall
be made by the Plan Committee to give effect to such equity restructuring to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan. No such adjustment shall be required to
reflect the events described in clauses (1) and (2) above, or any other change
in capitalization that does not constitute an equity restructuring, however
such adjustment may be made if the Plan Committee affirmatively determines, in
its discretion, that such an adjustment is appropriate.


 


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:


 


(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;


 


18

















 


(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.


 


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 


 


19

















 


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 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 


 


20

















 


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 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.


 


21

















 


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, adversely affect 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 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.


 


22

















 


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.


 


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 


 


23

















 


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 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 


 


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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 2007 Restatement of the Plan by the
Board, 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 the
Plan, (b) termination of this Plan pursuant to Section 10.1 hereof, or (c) the
tenth anniversary of the Effective Date.


 


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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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