exv10w2






EXHIBIT 10.2




SUPERVALU INC.

2007 STOCK PLAN




STOCK OPTION AGREEMENT


This agreement is made and entered into as of the grant date indicated below (the “Grant Date”), by
and between SUPERVALU INC. (the “Company”) and the individual whose name appears below
(“Optionee”).



The Company has established the 2007 Stock Plan (the “Plan”), under which key employees of the
Company and its Affiliates may be granted Options to purchase shares of the Company’s common stock.
Optionee has been selected by the Company to receive an Option subject to the provisions of this
agreement. Capitalized terms that are used in this agreement, that are not defined, shall have the
meanings ascribed to them in the Plan.



In consideration of the foregoing, the Company and Optionee hereby agree as follows:





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





	 	 	 

	Option Number:

	 	%%OPTION_NUMBER%-%
	Grant Date:

	 	%%OPTION_DATE,’Month DD, YYYY’%-%
	Number of Shares:

	 	%%TOTAL_SHARES_GRANTED,’999,999,999’%-%
	Option Price:

	 	%%OPTION_PRICE,’$999,999,999.99’%-%
	Expiration Date:

	 	%%EXPIRE_DATE_PERIOD1,’Month DD, YYYY’%-%






	 	 	 

	SUPERVALU INC.

	 	OPTIONEE:
	 
	 	 
	 
	 	 
	 

	 	 
	[_____]

	 	%%FIRST_NAME%-% %%LAST_NAME%-%
	[Title]

	 	%%ADDRESS_LINE_1%-%
	 	 	%%CITY%-% %%STATE%-% %%ZIPCODE%-% 







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SUPERVALU INC.

2007 STOCK PLAN




STOCK OPTION TERMS AND CONDITIONS

(FOR EMPLOYEES)


These Stock Option Terms and Conditions (“Terms and Conditions”) apply to the Option granted to you
under the Plan, pursuant to the Stock Option Agreement (the “Agreement”) to which this document is
attached. Capitalized terms that are used in this document, but are not defined, shall have the
meanings ascribed to them in the Plan or the attached Agreement. See Section 20 for a list of
defined terms.



1. Vesting and Exercisability. The Option shall vest twenty-five percent (25%) in four (4) equal
annual installments on each of the first four anniversaries of the Grant Date.



The vested portion of the Option may be exercised at any time, or from time to time, to purchase
Shares. If in any year the full amount of Shares that may be purchased pursuant to the vested
portion of the Option is not purchased, the remaining amount of such Shares shall be available for
purchase during the remainder of the term of the Option. The term of the Option shall be for a
period of seven (7) years from the Grant Date, terminating at the close of business on the
Expiration Date or such shorter period as is provided for herein.



2. Manner of Exercise. Except as provided in Section 7 below, you cannot exercise the Option
unless at the time of exercise you are an employee of the Company or an Affiliate. Prior to your
death, only you may exercise the Option. You may exercise the Option as follows:





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




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





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




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



4. Delivery of Shares. You shall not have any of the rights of a stockholder with respect to any
Shares subject to the Option until such Shares are purchased by you upon exercise of the Option.
Such Shares shall then be issued and delivered to you by the Company as follows:





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




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




The Company will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market
Value of such fractional Share.



5. Withholding Taxes. You are responsible for the payment of any federal, state, local or other
taxes that are required to be withheld by the Company upon exercise of the Option and you must
promptly remit such taxes to the Company. You may elect to remit these taxes by:





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




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



6. Change in Control.





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




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






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assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to these
provisions, or the levy of an execution, attachment or similar process upon the Option, shall be
void.



You may designate a beneficiary or beneficiaries to exercise your rights with respect to the Option
upon your death. In the absence of any such designation, benefits remaining unpaid at your death
shall be paid to your estate.



8. Effect of Termination of Employment. Following the termination of your employment with the
Company or an Affiliate for any of the reasons set forth below, your right to exercise the Option,
as well as that of your beneficiary or beneficiaries, shall be as follows:





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






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






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






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






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






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




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






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






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






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




9. Repurchase Rights. If you exercise the Option within six (6) months prior to or three
(3) months after the date your employment with the Company or an Affiliate is terminated for Cause,
or if you breach any of the covenants contained in Section 10 below, the Company shall have the
right and option to repurchase from you, that number of Shares which is equal to the number you
purchased upon such exercise(s) within such time periods, and you agree to sell such Shares to the
Company.



The Company may exercise its repurchase rights by depositing in the United States mail a written
notice addressed to you at the latest mailing address for you on the records of the Company (i)
within thirty (30) days following the termination of your employment for the repurchase of Shares
purchased prior to such termination, or (ii) within thirty (30) days after any exercise of the
Option for the repurchase of Shares purchased after your termination of employment. Within thirty
(30) days after the mailing of such notice, you shall deliver to the Company the number of Shares
the Company has elected to repurchase and the Company shall pay to you in cash, as the repurchase
price for such Shares upon their delivery, an amount which shall be equal to the purchase price
paid by you for the Shares. If you have disposed of the Shares, then in lieu of delivering an
equivalent number of Shares to the Company, you must pay to the Company the amount of gain realized
by you from the disposition of the Shares exclusive of any taxes due and payable or commissions or
fees arising from such disposition.






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If the Company exercises its repurchase option prior to the actual issuance and delivery to you of
any Shares pursuant to the exercise of the Option, no Shares need be issued or delivered. In lieu
thereof, the Company shall return to you the purchase price you tendered upon the exercise of the
Option to the extent that it was actually received from you by the Company.



Following the occurrence of a Change in Control, the Company shall have no right to exercise the
repurchase rights set forth in this Section 9.



10. Employee Covenants. In consideration of benefits described elsewhere in these Terms and
Conditions and the attached Agreement, and in recognition of the fact that, as a result of your
employment with the Company or any of its Affiliates, you have had or will have access to and gain
knowledge of highly confidential or proprietary information or trade secrets pertaining to the
Company or its Affiliates, as well as the customers, suppliers, joint ventures, licensors,
licensees, distributors or other persons and entities with whom the Company or any of its
Affiliates does business (“Confidential Information”), which the Company or its Affiliates have
expended time, resources and money to obtain or develop and which have significant value to the
Company and its Affiliates, you agree for the benefit of the Company and its Affiliates, and as a
material condition to your receipt of benefits described elsewhere in these Terms and Conditions
and the attached Agreement, as follows:





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




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






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






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






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




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




11. Arbitration. You and the Company agree that any controversy, claim or dispute arising out of
or relating to the attached Agreement or the breach of any of these Terms and Conditions, or
arising out of or relating to your employment relationship with the Company or any of its
Affiliates, or the termination of such relationship, shall be resolved by final and binding
arbitration under the Employment Arbitration Rules and Mediation Procedures of the American
Arbitration Association, or other neutral arbitrator and rules as mutually agreed to by you and the
Company, except for claims by the Company relating to your alleged breach of any of the employee
covenants set forth in Section 10 above. This agreement to arbitrate specifically includes, but is
not limited to, discrimination claims under Title VII of the Civil Rights Act of 1964 and under
state and local laws prohibiting employment discrimination. Nothing in this Section 11 shall
preclude the Company from pursuing a court action to obtain a temporary restraining order or a
preliminary injunction relating to the alleged breach of any of the covenants set forth in Section
10. The agreement to arbitrate shall continue in full force and effect despite the expiration or
termination of your Option or your employment relationship with the Company or any of its
Affiliates. You and the Company agree that any award rendered by the arbitrator must be in writing
and include the findings of fact and conclusions of law upon which it is based, shall be final and
binding and that judgment upon the final award may be entered in any court having jurisdiction
thereof. The arbitrator may grant any remedy or relief that the arbitrator deems just and
equitable, including any remedy or relief that would have been available to you or the Company or
any of its Affiliates had the matter been heard in court. All expenses of arbitration, including
the required travel and other expenses of the arbitrator and any witnesses, and the costs relating
to any proof produced at the direction of the arbitrator, shall be borne equally by you and the
Company unless otherwise mutually agreed or unless the arbitrator directs otherwise in the award.
The arbitrator’s compensation shall be borne equally by you and the Company unless otherwise
mutually agreed or the law provides otherwise.



12. Adjustments. In the event that any dividend or other distribution (whether in the form of
cash, Shares, other securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or
exchange of Shares or other securities of the Company, issuance of warrants or other rights to
purchase Shares or other securities of the Company or other similar corporate transaction or event
affects the Shares covered by the Option such that an adjustment is necessary in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be made available under
these Terms and Conditions and the attached Agreement, then the Committee administering the Plan
shall, in such manner as it may deem equitable, adjust any or all of the number and type of Shares
(or other securities or other property) covered by the Option and the Exercise Price of the Option.



13. Severability. In the event that any portion of these Terms and Conditions shall be held to be
invalid, the same shall not affect in any respect whatsoever the validity and enforceability of the
remainder of these Terms and Conditions.



14. No Right to Employment. Nothing in these Terms and Conditions or the attached Agreement or
the Plan shall be construed as giving you the right to be retained as an employee of the Company.
In addition, the Company may at any time dismiss you from employment, free from any liability or
any claim under these Terms and Conditions or the attached Agreement, unless otherwise expressly
provided in these Terms and Conditions or the attached Agreement.



15. Reservation of Shares. The Company shall at all times during the term of the Option reserve
and keep available such number of Shares as will be sufficient to satisfy the requirements of these
Terms and Conditions and the attached Agreement.



16. Securities Matters. The Company shall not be required to deliver any Shares until the
requirements of any federal or state securities or other laws, rules or regulations (including the
rules of any securities exchange) as may be determined by the Company to be applicable are
satisfied.







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17. Headings. Headings are given to the sections and subsections of these Terms and Conditions
and the attached Agreement solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or interpretation of these Terms
and Conditions or the attached Agreement or any provision hereof or thereof.



18. Governing Law. The internal law, and not the law of conflicts, of the State of Delaware will
govern all questions concerning the validity, construction and effect of these Terms and Conditions
and the attached Agreement.



19. Notice. For purpose of the Agreement and these Terms and Conditions, notices and all other
communications provided for in the Agreement, these Terms and Conditions or contemplated by either
shall be in writing and shall be deemed to have been duly given when personally delivered or when
mailed United States certified or registered mail, return receipt requested, postage prepaid, and
addressed, in the case of the Company, to the Company at:





	 	 	 	P.O. Box 990

Minneapolis, MN 55440

Attention: Corporate Secretary






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






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




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





	 	a)	 	Cause shall mean:






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






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




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






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






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






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






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






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




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





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