MEDTRONIC, INC.


2003 LONG-TERM INCENTIVE PLAN

(As amended and restated effective January 1, 2008)


	
 

	
 


	
1. 

	
Purpose
  of the Plan





          The
purpose of the Plan is to aid the Company and its Affiliates in recruiting and
retaining employees and to motivate such employees and other plan participants
to exert their best efforts on behalf of the Company and its Affiliates by
providing incentives through the granting of Awards. The Company expects that
it will benefit from the stock ownership opportunities provided to such
participants to encourage alignment of their interest in the Company’s success
with that of other stakeholders. The Company hereby restates the Plan in its
entirety effective January 1, 2008 to comply with the provisions of Section
409A of the Internal Revenue Code.


	
 

	
 


	
2.

	
Definitions





          The
following capitalized terms used in the Plan have the respective meanings set
forth in this Section:


	
 

	
 

	
 


	
 

	
(a)

	
“Act” means the
  Securities Exchange Act of 1934, as amended, or any successor thereto.


	
 

	
 

	
 


	
 

	
(b)

	
“Affiliate” means
  any entity that is consolidated with the Company for financial reporting
  purposes or any other entity designated by the Board in which the Company or
  an Affiliate has a direct or indirect interest of at least forty percent (40%).


	
 

	
 

	
 


	
 

	
(c)

	
“Award” means an
  Option, Stock Appreciation Right, Share of Restricted Stock, Other
  Stock-Based Award or Other Cash-Based Award granted pursuant to the Plan.


	
 

	
 

	
 


	
 

	
(d)

	
“Board” means the
  Board of Directors of the Company.


	
 

	
 

	
 


	
 

	
(e)

	
“Code” means the
  Internal Revenue Code of 1986, as amended, or any successor thereto.


	
 

	
 

	
 


	
 

	
(f)

	
“Committee” means
  the Compensation Committee of the Board.


	
 

	
 

	
 


	
 

	
(g)

	
“Company” means
  Medtronic, Inc., a Minnesota corporation.


	
 

	
 

	
 


	
 

	
(h)

	
“Effective Date”
  means the date the adoption of the Plan by the Board of Directors is approved
  by the Company’s shareholders.


	
 

	
 

	
 


	
 

	
(i)

	
“Exercise Price”
  means the purchase price per Share under the terms of an option as determined
  pursuant to Section 6(a).


	
 

	
 

	
 


	
 

	
(j)

	
“Fair Market Value”
  means, on a given date, (i) if there should be a public market for the Shares
  on such date, the closing sale price of the Shares on The New York Stock
  Exchange, or, if the Shares are not listed or admitted on any national
  securities exchange, the arithmetic mean of the per Share closing bid price
  and per Share closing asked price on such date as quoted on the National
  Association of Securities Dealers Automated Quotation System (or such market
  in which such prices are regularly quoted) (the “NASDAQ”), or, if no sale of
  Shares shall have been reported on The New York Stock Exchange or quoted on
  the NASDAQ on such date, then the immediately preceding date on which sales
  of the Shares have been so reported or quoted shall be used, and (ii) if there
  should not be a public market for the Shares on such date, the Fair Market
  Value shall be the value established by the Committee in good faith.


	
 

	
 

	
 


	
 

	
(k)

	
“ISO” means an
  Option that is an incentive stock option granted pursuant to Section 6(d).


	
 

	
 

	
 


	
 

	
(l)

	
“Option” means a
  stock option granted pursuant to Section 6.


	
 

	
 

	
 


	
 

	
(m)

	
“Other Stock-Based Awards”
  means Awards granted pursuant to Section 9(a) or 10.


	
 

	
 

	
 


	
 

	
(n)

	
“Other Cash-Based Awards”
  means Awards granted pursuant to Section 9(b) or 10.


	
 

	
 

	
 


	
 

	
(o)

	
“Participant” means
  an employee of the Company or an Affiliate who is selected by the Committee
  to participate in the Plan. An Award may also be granted to any consultant,
  agent, advisor or independent contractor who renders bona fide services to
  the Company or an Affiliate that (i) are not in connection with the offer and
  sale of the Company’s securities in a capital-raising transaction and (ii) do
  not directly or indirectly promote or maintain a market for the Company’s
  securities. Except where the context otherwise requires, references in this
  Plan to “employment” and related terms shall apply to services in any such
  capacity.


	
 

	
 

	
 


	
 

	
(p)

	
“Performance-Based Awards”
   means certain Restricted Stock, Other Stock-Based Awards and Other
  Cash-Based Awards granted pursuant to Section 10.


	
 

	
 

	
 


	
 

	
(q)

	
“Plan” means the
  2003 Long-Term Incentive Plan, as amended from time to time.


	
 

	
 

	
 


	
 

	
(r)

	
“Restricted Stock”
  means any Share granted under Section 8.











	
 

	
 

	
 


	
 

	
(s)

	
“Shares” means
  shares of common stock of the Company, $.10 par value per share.


	
 

	
 

	
 


	
 

	
(t)

	
“Stock Appreciation Right”
  means a stock appreciation right granted pursuant to Section 7.


	
 

	
 

	
 


	
 

	
(u)

	
“Subsidiary” means
  a subsidiary corporation, as defined in Section 424(f) of the Code (or any
  successor section thereto), of the Company.








	
 

	
 


	
3.

	
Shares
  Subject to the Plan





          The
total number of Shares which may be issued under the Plan is 60,000,000, of
which no more than 50% may be issued in the form of Restricted Stock or Other
Stock-Based Awards payable in Shares, provided, however, that no more than 5%
of the Shares reserved under the Plan shall be granted pursuant to Restricted
Stock Awards if such Award (a) shall vest in full prior to three years from the
Award date or (b) if a condition to such vesting is based, in whole or in part,
upon performance of the Shares or any aspect of the Company’s operations and
such vesting could occur over a period of less than one year from the Award
date. The Shares may consist, in whole or in part, of unissued Shares. The
issuance of Shares upon the exercise or satisfaction of an Award shall reduce
the total number of Shares available under the Plan. Shares which are subject
to Awards that terminate, lapse or are cancelled may be granted again under the
Plan. Any Shares tendered by a Participant or retained by the Company as full
or partial payment to the Company for the purchase price of an Award or to
satisfy tax withholding obligations in connection with an Award shall be
available for Awards under the Plan. No fractional Shares will be issued in
payment for any Award, but instead the number of Shares will be rounded upward
to the next whole Share.


	
 

	
 


	
4.

	
Administration








	
 

	
 

	
 


	
 

	
(a)

	
Delegation of Authority. The Plan shall be administered by the
  Committee, which may delegate its duties and powers in whole or in part to
  (i) any subcommittee thereof consisting solely of at least two individuals
  who are intended to qualify as “non-employee directors” within the meaning of
  Rule 16b-3 under the Act (or any successor rule thereto) and, to the extent
  required by Section 162(m) of the Code (or any successor section thereto),
  “outside directors” within the meaning thereof and (ii) persons who are not
  non-employee directors for purposes of determining and administering Awards
  to those Participants who are not then subject to the reporting requirements
  of Section 16 of the Act.


	
 

	
 

	
 


	
 

	
(b)

	
Authority of Committee. The Committee shall have exclusive power
  to make Awards and to determine when and to whom Awards shall be granted, and
  the form, amount and other terms and conditions of each Award, subject to the
  provisions of this Plan. The Committee may determine whether, to what extent
  and under what circumstances Awards may be settled, paid or exercised in
  cash, Shares or other Awards or other property, or cancelled, forfeited or
  suspended. The Committee shall have the authority to interpret this Plan and
  any Award or agreement made under this Plan, to establish, amend, waive and
  rescind any rules and regulations relating to the administration of this
  Plan, to determine the terms and provisions of any agreements entered into
  hereunder (not inconsistent with this Plan), and to make all other
  determinations necessary or advisable for the administration of this Plan.
  The Committee may correct any defect, supply any omission or reconcile any
  inconsistency in this Plan or in any Award or agreement in the manner and to
  the extent it shall deem desirable. The determinations of the Committee in
  the administration of this Plan, as described herein, shall be final, binding
  and conclusive.


	
 

	
 

	
 


	
 

	
(c)

	
Rule 16b-3. It is the intent that this Plan and all Awards granted pursuant to
  it shall be administered by the Committee (or a subcommittee thereof) so as
  to permit this Plan and Awards to comply with Rule 16b-3 under the Act. If
  any provision of this Plan or any Award would otherwise frustrate or conflict
  with the intent expressed in this Section 4(c), that provision to the extent
  possible shall be interpreted and deemed amended in the manner determined by
  the Committee so as to avoid such conflict.


	
 

	
 

	
 


	
 

	
(d)

	
Indemnification. To the full extent permitted by law, each
  member and former member of the Committee and each person to whom the
  Committee delegates or has delegated authority under this Plan shall be entitled
  to indemnification by the Company against and from any loss, liability,
  judgment, damages, cost and reasonable expense incurred by such member,
  former member or other person by reason of any action taken, failure to act
  or determination made in good faith under or with respect to this Plan.


	
 

	
 

	
 


	
 

	
(e)

	
Tax Withholding. The Committee shall require payment of
  any amount it may determine to be necessary to withhold for federal, state,
  local, non-U.S. income, payroll or other taxes as a result of the exercise,
  grant or vesting of an Award. Notwithstanding anything in any Award agreement
  to the contrary, the employee may not elect to charge any tax amounts against
  his or her Award.


	
 

	
 

	
 


	
 

	
(f)

	
Dividends or Dividend Equivalents. If the Committee so determines, any Award
  granted under the Plan may be credited with dividends or dividend equivalents
  paid with respect to the underlying shares. The 











	
 

	
 

	
 


	
 

	
 

	
Committee may apply any
  restrictions to the dividends or dividend equivalents that the Committee
  deems appropriate and may determine the form of payment, including cash,
  Shares, Restricted Stock or otherwise.


	
 

	
 

	
 


	

	
(g)

	
Code Section 409A. Any Award
  agreement that is subject to Code Section 409A and provides for payment upon
  termination of employment or separation from service shall not be payable to
  a Participant that is a “specified employee” until six months following the
  date of such Participant’s “separation from service.” A “specified employee”
  and a “separation from service” shall be determined by the Company in
  accordance with the Company’s Capital Accumulation Plan and similar Code
  Section 409A arrangements.








	
 

	
 


	
5.

	
Limitations








	
 

	
 

	
 


	
 

	
(a)

	
Term of Plan. No Award may be granted under the Plan after the tenth anniversary
  of the Effective Date, but Awards granted prior to such tenth anniversary may
  extend beyond that date.


	
 

	
 

	
 


	
 

	
(b)

	
No Repricing. No Option or Stock Appreciation Right, once granted hereunder, may
  be repriced.


	
 

	
 

	
 


	
 

	
(c)

	
Maximum. No Participant may be granted Options, Stock Appreciation Rights,
  Restricted Stock, Performance-Based Awards, Other Stock-Based Awards or any
  combination thereof relating to more than 2,000,000 Shares under the Plan
  during any fiscal year.








	
 

	
 


	
6.

	
Terms and
  Conditions of Options





          Options
granted under the Plan shall be, as determined by the Committee, non-qualified
or incentive stock options for federal income tax purposes, as evidenced by the
related Award agreements, and shall be subject to the foregoing and the
following terms and conditions and to such other terms and conditions, not
inconsistent therewith, as the Committee shall determine:


	
 

	
 

	
 


	
 

	
(a)

	
Exercise Price. The Exercise Price per Share shall be
  determined by the Committee, but shall not be less than 100% of the Fair
  Market Value of the Shares on the date an Option is granted.


	
 

	
 

	
 


	
 

	
(b)

	
Exercisability. Options granted under the Plan shall be
  exercisable at such time and upon such terms and conditions as may be
  determined by the Committee, but in no event shall an Option be exercisable
  more than ten years after the date it is granted, except as provided in
  Section 16 of the Plan.


	
 

	
 

	
 


	
 

	
(c)

	
Exercise of Options. Except as otherwise provided in the Plan
  or in an Award agreement, an Option may be exercised for all, or from time to
  time any part, of the Shares for which it is then exercisable. For purposes
  of this Section 6, the exercise date of an Option shall be the date a notice
  of written or electronic exercise and full payment of the purchase price are
  received by the Company in accordance with this Section 6(c). The purchase
  price for the Shares as to which an Option is exercised shall be paid to the
  Company pursuant to one or more of the following methods, except as otherwise
  provided in an Award agreement: (i) in cash or its equivalent (e.g., by
  check); (ii) in Shares having a Fair Market Value equal to the aggregate
  Exercise Price for the Shares being purchased and satisfying such other
  requirements as may be imposed by the Committee; (iii) partly in cash and
  partly in such Shares; (iv) if there is a public market for the Shares at
  such time, through the delivery of irrevocable instructions to a broker to
  sell Shares obtained upon the exercise of the Option and to deliver promptly
  to the Company an amount out of the proceeds of such sale equal to the
  aggregate Exercise Price for the Shares being purchased; or (v) through the
  withholding of Shares having a Fair Market Value equal to the aggregate
  Exercise Price for the Shares being purchased from the number of Shares
  otherwise issuable upon the exercise of the Option (e.g., a net share
  settlement). No Participant shall have any rights of a shareholder with
  respect to Shares subject to an Option until the Participant has given
  written or electronic notice of exercise of the Option, paid in full for such
  Shares and, if applicable, has satisfied any other conditions imposed by the
  Committee pursuant to the Plan.


	
 

	
 

	
 


	
 

	
(d)

	
ISOs. The Committee may grant Options under the
  Plan that are intended to be ISOs. Such ISOs shall comply with the
  requirements of Section 422 of the Code (or any successor section
  thereto). No ISO may be granted to any Participant who, at the time of such
  grant, owns more than ten percent of the total combined voting power of all
  classes of stock of the Company or of any Subsidiary, unless (i) the Exercise
  Price for such ISO is at least 110% of the Fair Market Value of a Share on
  the date the ISO is granted and (ii) the date on which such ISO terminates is
  a date not later than the day preceding the fifth anniversary of the date on
  which the ISO is granted Any Participant who disposes of Shares acquired upon
  the exercise of an ISO either (I) within two years after the date of grant of
  such ISO or (II) within one year after the transfer of such Shares to the
  Participant, shall notify the Company of such disposition and of the amount
  realized upon such disposition. All Options granted under the Plan are 











	
 

	
 

	
 


	
 

	
 

	
intended to be
  non-qualified stock options unless the applicable Award agreement expressly
  states that the Option is an ISO. If an Option is intended to be an ISO, and
  if for any reason such Option (or portion thereof) shall not qualify as an
  ISO, then, to the extent of such nonqualification, such Option (or portion
  thereof) shall be regarded as a non-qualified stock option granted under the
  Plan; provided that such Option (or portion thereof) otherwise complies with
  the Plan’s requirements relating to non-qualified stock options. In no event
  shall any member of the Committee, the Company or any of its Affiliates (or
  their respective employees, officers or directors) have any liability to any
  Participant (or any other person or entity) due to the failure of an Option
  to qualify for any reason as an ISO.


	
 

	
 

	
 


	

	
(e)

	
Attestation. Wherever in this Plan or any agreement evidencing an Award a
  Participant is permitted to pay the Exercise Price of an Option or taxes
  relating to the exercise of an Option by delivering Shares, the Participant
  may, subject to procedures satisfactory to the Committee, satisfy such
  delivery requirement by presenting proof of beneficial ownership of such
  Shares rather than physical delivery, in which case the Company shall treat
  the Option as exercised without further payment and shall withhold such
  number of Shares from the Shares issued upon the exercise of the Option.








	
 

	
 


	
7.

	
Terms and
  Conditions of Stock Appreciation Rights








	
 

	
 

	
 


	
 

	
(a)

	
Grants. The Committee may grant (i) a Stock Appreciation Right
  independent of an Option or (ii) a Stock Appreciation Right in
  connection with an Option, or a portion thereof. The Committee may impose
  such terms and conditions upon any Stock Appreciation Right as it deems fit.
  A Stock Appreciation Right granted pursuant to clause (ii) of the
  preceding sentence (A) may be granted at the time the related Option is
  granted or at any time prior to the exercise or cancellation of the related
  Option, (B) shall cover the same number of Shares covered by an Option
  (or such lesser number of Shares as the Committee may determine) and
  (C) shall be subject to the same terms and conditions as such Option
  except for such additional limitations as are contemplated by this
  Section 7 (or such additional limitations as may be included in an Award
  agreement).


	
 

	
 

	
 


	
 

	
(b)

	
Terms. The exercise price per Share of a Stock Appreciation Right shall be
  an amount determined by the Committee but in no event shall such amount be
  less than the Fair Market Value of a Share on the date the Stock Appreciation
  Right is granted; provided, however, that, notwithstanding the foregoing, in
  the case of a Stock Appreciation Right granted in conjunction with an Option,
  or a portion thereof, the exercise price may not be less than the Exercise
  Price of the related Option. Each Stock Appreciation Right granted
  independent of an Option shall entitle a Participant upon exercise to an
  amount equal to (i) the excess of (A) the Fair Market Value on the
  exercise date of one Share over (B) the Exercise Price per Share, times
  (ii) the number of Shares covered by the Stock Appreciation Right. Each
  Stock Appreciation Right granted in conjunction with an Option, or a portion
  thereof, shall entitle a Participant to surrender to the Company the
  unexercised Option, or any portion thereof, and to receive from the Company
  in exchange therefor an amount equal to (I) the excess of (x) the
  Fair Market Value on the exercise date of one Share over (y) the
  Exercise Price per Share, times (II) the number of Shares covered by the
  Option, or portion thereof, which is surrendered. Payment shall be made in
  Shares or in cash, or partly in Shares and partly in cash (any such Shares
  valued at such Fair Market Value), all as set forth in the Award agreement.
  Stock Appreciation Rights may be exercised from time to time upon actual
  receipt by the Company of written or electronic notice of exercise stating
  the number of Shares with respect to which the Stock Appreciation Right is
  being exercised. The date a notice of exercise is received by the Company
  shall be the exercise date.








	
 

	
 


	
8.

	
Restricted
  Stock








	
 

	
 

	
 


	
 

	
(a)

	
Grant. Subject to the provisions of the Plan, the Committee shall determine
  the number of Shares of Restricted Stock to be granted to each Participant,
  the duration of the period during which, and the conditions, if any, under
  which, the Restricted Stock may be forfeited to the Company, and the other
  terms and conditions of such Awards.


	
 

	
 

	
 


	
 

	
(b)

	
Transfer Restrictions. Shares of Restricted Stock may not be
  sold, assigned, transferred, pledged or otherwise encumbered, except as
  provided in the Plan or the applicable Award agreement. Shares of Restricted
  Stock shall be registered in the name of the Participant and held by the
  Company. After the lapse of the restrictions applicable to such Shares of
  Restricted Stock, the Company shall deliver such Shares to the Participant or
  the Participant’s legal representative.


	
 

	
 

	
 


	
 

	
(c)

	
Dividends. Dividends or dividend equivalents paid on any Shares of Restricted
  Stock may be paid directly to the Participant, withheld by the Company
  subject to vesting of the Restricted Stock pursuant to the terms of the
  applicable Award agreement, or may be reinvested in additional Shares of
  Restricted 











	
 

	
 

	
 


	
 

	
 

	
Stock, as determined by
  the Committee in its sole discretion.


	
 

	
 

	
 


	
9.

	
Other
  Awards








	
 

	
 

	
 


	
 

	
(a)

	
Other Stock-Based Awards. The Committee, in its sole discretion,
  may grant Awards of Shares and Awards that are valued in whole or in part by
  reference to, or are otherwise based on, Shares or on the Fair Market Value
  thereof (“Other Stock-Based Awards”). Such Other Stock-Based Awards shall be
  in such form, and dependent on such conditions, as the Committee shall determine,
  including, without limitation, the right to receive, or vest with respect to,
  one or more Shares (or the equivalent cash value of such Shares) upon the
  completion of a specified period of service, the occurrence of an event
  and/or the attainment of performance objectives. Other Stock-Based Awards may
  be granted alone or in addition to any other Awards granted under the Plan.
  Subject to the provisions of the Plan, the Committee shall determine the
  number of Shares to be awarded to a Participant under (or otherwise related
  to) such Other Stock-Based Awards; whether such Other Stock-Based Awards
  shall be settled in cash, Shares or a combination of cash and Shares; and all
  other terms and conditions of such Awards (including, without limitation, the
  vesting provisions thereof and provisions ensuring that all Shares so awarded
  and issued shall be fully paid and non-assessable).


	
 

	
 

	
 


	
 

	
(b)

	
Other Cash-Based Awards. In addition to the Awards described
  above, and subject to the terms of the Plan, the Committee may grant such
  other incentives denominated in cash and payable in cash under the Plan as
  the Committee determines to be in the best interests of the Company and
  subject to such other terms and conditions as it deems appropriate. The
  maximum amount of Other Cash-Based Awards (including those that are
  performance-based) that may be granted during any fiscal year shall be
  $3,000,000; provided, however, that for such Awards with performance periods
  longer than one year the maximum shall be $3,000,000 for each fiscal year in
  the performance period.








	
 

	
 


	
10.

	
Performance-Based
  Awards.





          Notwithstanding
anything to the contrary herein, the Committee may grant performance-based
Awards of Restricted Stock, Other Stock-Based Awards and Other Cash-Based Awards
to Participants (“Performance-Based Awards”). Any such Awards granted to
Participants who may be “covered employees” under Section 162(m) of the Code or
any successor section thereto shall be consistent with the provisions thereof.
In such cases, a Participant’s Performance-Based Award shall be determined
based on the attainment of written performance goals approved by the Committee
for a performance period established by the Committee (I) while the outcome for
that performance period is substantially uncertain and (II) by the earlier of
(A) 90 days after the commencement of the performance period to which the
performance goal relates or (B) the number of days which is equal to 25 percent
of the relevant performance period. The performance goals, which must be
objective, shall be based upon one or more of the following criteria: (i)
consolidated earnings before or after taxes (including earnings before
interest, taxes, depreciation and amortization); (ii) net income; (iii)
operating income; (iv) earnings per share; (v) book value per share; (vi)
return on shareholders’ equity; (vii) expense management; (viii) return on
investment; (ix) improvements in capital structure; (x) profitability of an
identifiable business unit or product; (xi) maintenance or improvements of
profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or
sales; (xv) costs; (xvi) cash flow; (xvii) working capital; (xviii) return on
assets; (xix) asset turnover; (xx) inventory turnover; (xxi) economic value
added (economic profit); and (xxii) total shareholder return. The foregoing
criteria may relate to the Company, one or more of its Subsidiaries or one or
more of its divisions or units, or any combination of the foregoing, and may be
applied on an absolute basis and/or be relative to one or more peer group
companies or indices, or any combination thereof, all as the Committee shall
determine. In addition, to the degree consistent with Section 162(m) of the
Code (or any successor section thereto), the performance goals may be
calculated without regard to the negative effect of unusual or nonrecurring
items, extraordinary items, discontinued operations or cumulative effects of
accounting changes. The Committee shall determine whether, with respect to a
performance period, the applicable performance goals have been met with respect
to a given Participant who may be a covered employee and, if they have, shall
so certify and ascertain the amount of the applicable Performance-Based Award. No Performance-Based Awards
will be paid for such performance period until such certification is made by
the Committee. The amount of the Performance-Based Award actually paid to a
given Participant may be less than the amount determined by the applicable
performance goal formula, at the discretion of the Committee. The amount of the
Performance-Based Award determined by the Committee for a performance period
shall be paid to the Participant within two and one-half months following the
end of the performance period.







	
 

	
 


	
11.

	
Adjustments
  Upon Certain Events





          Notwithstanding
any other provisions in the Plan to the contrary, the following provisions
shall apply to all Awards granted under the Plan:


	
 

	
 

	
 


	
 

	
(a)

	
Generally. In the event of any change in the outstanding Shares after the
  Effective Date by reason of any Share dividend or split, reorganization,
  recapitalization, merger, consolidation, spin-off, combination or transaction
  or exchange of Shares or other corporate exchange, or any distribution to
  shareholders of Shares other than regular cash dividends or any transaction
  similar to the foregoing, the Committee in its sole discretion and without
  liability to any person may make such substitution or adjustment, if any, as
  it deems to be equitable, as to (i) the number or kind of Shares or other
  securities issued or reserved for issuance pursuant to the Plan or pursuant
  to outstanding Awards, (ii) the maximum number of Shares for which Awards
  (including limits established for Restricted Stock, Other Stock-Based Awards
  or Other Cash-Based Awards) may be granted during a fiscal year to any
  Participant, (iii) the Exercise Price or exercise price of any Stock
  Appreciation Right and/or (iv) any other affected term of such Awards.


	
 

	
 

	
 


	
 

	
(b)

	
Change in Control. Notwithstanding anything contained in this
  Plan to the contrary, unless otherwise provided in the applicable Award
  agreement at the time of grant, in the event of a Change in Control, the
  following shall occur as of the effective date of such Change in Control with
  respect to any and all Awards outstanding as of the effective date of such
  Change in Control: (i) any and all Stock Options and Stock Appreciation
  Rights granted hereunder shall vest in full and become immediately
  exercisable, and shall remain exercisable throughout their entire term; (ii)
  any restrictions imposed on Restricted Stock (including Performance-Based
  Awards in Restricted Stock) shall lapse; (iii) a pro rata payment shall be
  made of all other Performance-Based Awards equal in each case to the number
  of Shares covered by the Award multiplied by the performance-based accrual
  percentage applicable to such Award, and multiplied by a fraction the
  numerator of which is the number of months elapsed from the date of grant
  through the effective date of the Change in Control and the denominator of
  which is the number of months from the date of grant through the originally
  scheduled maturity date; and (iv) the maximum payout opportunities attainable
  under all Other Stock-Based Awards and Other Cash-Based Awards that are not
  Performance-Based Awards shall be deemed to have been fully earned for the
  entire performance period(s). Such Awards shall be paid in cash, or in the
  sole discretion of the Committee in Shares to Participants within thirty (30)
  days following the effective date of the Change in Control, with any such
  Shares valued at the Fair Market Value as of the effective date of the Change
  in Control.


	
 

	
 

	
 


	
 

	
(c)

	
Notwithstanding anything
  in Section 11(b) to the contrary, if an amount becomes payable with respect
  to an Award upon a Change in Control pursuant to Section 11(b), the amount is
  subject to Section 409A of the Code, and the Change in Control does not
  constitute a “change in the ownership or effective control” or a “change in
  the ownership of a substantial portion of the assets” of the Company within
  the meaning of Section 409A(a)(2)(A)(v) of the Code, then the amount shall
  not be paid upon the Change in Control, but shall instead be paid at the
  earliest to occur of: (i) the Participant’s “separation from service” with
  the Company (determined in accordance with Section 409A of the Code),
  provided, that if the Participant is a “specified employee” (within the
  meaning of Section 409A of the Code), the payment date shall be the date that
  is six months after the date of the Participant’s separation from service
  with the Company; (ii) the date payment otherwise would have been made in the
  absence of any provisions in this Plan to the contrary (provided such date is
  permissible under Section 409A of the Code); or (iii) the Participant’s death.


	
 

	
 

	
 


	
 

	
(d)

	
Definition of Change in Control. For purposes of this Section 11, “Change
  in Control” means: 








	
 

	
 

	
 

	
 


	

	

	
(i)

	
Any individual, entity or
  group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Act or any
  successor thereto (a “Person”) becomes the beneficial owner (within the
  meaning of Rule 13d-3 promulgated under the Act) of 30% or more of either (A)
  the then-outstanding
  Shares (the “Outstanding Company Common Stock”) or (B) the combined voting
  power of the then-outstanding
  voting securities of the Company entitled to vote generally in the election
  of directors (the “Outstanding Company Voting Securities”); provided, however,
  that, for purposes of this clause (c)(i), the following acquisitions shall
  not constitute a Change in Control: (1) any acquisition directly from the
  Company, (2) any acquisition by the Company or any of its Subsidiaries, (3)
  any acquisition by any employee benefit plan (or related trust) sponsored or
  maintained by the Company or any of its Subsidiaries, (4) any acquisition by
  an underwriter temporarily holding securities pursuant to an offering of such
  securities or (5) any acquisition











	
 

	
 

	
 

	
 


	
 

	
 

	
 

	

  pursuant to a transaction that complies with clauses (iii) (A), (B) and (C)
  below; or




	 



	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Individuals who, as of the
  date hereof, constitute the Board (the “Incumbent Directors”) cease for any
  reason to constitute at least a majority of the Board; provided, however,
  that any individual becoming a director subsequent to the date hereof whose
  election, or nomination for election by the Company’s shareholders, was
  approved by a vote of at least a majority of the Incumbent Directors then on
  the Boardshall
  be considered as though such individual was an Incumbent Director, but
  excluding, for this purpose, any such individual whose initial assumption of
  office occurs as a result of either an actual or threatened election contest
  or other actual or threatened solicitation of proxies or consents by or on
  behalf of a Person other than the Board; or


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Consummation of a
  reorganization, merger, statutory share exchange or consolidation (or similar
  corporate transaction) involving the Company or any of its subsidiaries, a
  sale or other disposition of all or substantially all of the assets of the
  Company, or the acquisition of assets or stock of another entity by the Company or any of its
  subsidiaries (each, a “Business Combination”), in each
  case, unless, immediately following such Business Combination, (A)
  substantially all of the individuals and entities who were the beneficial
  owners, respectively, of the Outstanding Company Common Stock and the
  Outstanding Company Voting Securities immediately prior to such Business
  Combination beneficially own, directly or indirectly, more than 50% of,
  respectively, the then-outstanding
  shares of common stock (or, for a
  non-corporate entity, equivalent securities) and the then-outstanding voting securities
  entitled to vote generally in the election of directors (or, for a
  non-corporate entity, equivalent governing body), as the case may be, of (1)
  the entity resulting from such Business Combination (the
  “Surviving Corporation”) or (2) if applicable, the ultimate parent entity that
  directly or indirectly has beneficial ownership of 80% or more of the voting
  securities eligible to elect directors of the Surviving Corporation (the
  “Parent Corporation”), in substantially the same proportion as their
  ownership, immediately prior to the Business Combination, of the Outstanding
  Company Common Stock and the Outstanding Company Voting Securities, as the
  case may be, (B) no person (other than any employee benefit plan (or related
  trust) sponsored or maintained by the Surviving Corporation or the Parent
  Corporation), is or becomes the beneficial owner, directly or indirectly, of
  30% or more of the outstanding shares of common stock and the total voting
  power of the outstanding voting securities eligible to elect directors of the
  Parent Corporation (or, if there is no Parent Corporation, the Surviving
  Corporation) and (C) at least a majority of the members of the board of
  directors of the Parent Corporation (or, if there is no Parent Corporation,
  the Surviving Corporation) following the consummation of the Business
  Combination were Incumbent Directors at the time of the Board’s approval of
  the execution of the initial agreement providing for such Business
  Combination; or


	
 

	
 

	
 

	
 


	
 

	
 

	
(iv)

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






	
 

	
 

	
 

	
 


	
 


	
 

	
(e)

	
Further Adjustment of Awards. Subject to the above provisions, the
  Committee shall have the discretion, exercisable at any time before a sale,
  merger, consolidation, reorganization, liquidation, dissolution or Change in
  Control transaction to take such further action as it determines to be
  necessary or advisable with respect to Awards. Such authorized action may
  include (but shall not be limited to) establishing, amending or waiving the
  type, terms, conditions or duration of, or restrictions on, Awards so as to
  provide for earlier, later, extended or additional time for exercise, lifting
  of restrictions and other modifications, and the Committee may take such
  actions with respect to all Participants, to certain categories of
  Participants or only to individual Participants. The Committee may take such
  action before or after granting Awards to which the action relates and before
  or after any public announcement with respect to such sale, merger,
  consolidation, reorganization, liquidation, dissolution or change in control
  that is the reason for such action. Notwithstanding the foregoing, the
  Committee shall not take any action to change the terms of an Award in any
  manner that would cause the Award to violate Section 409A of the Code.








	
 

	
 


	
12.

	
No Right
  to Employment or Awards





          The
granting of an Award under the Plan shall impose no obligation on the Company
or any Affiliate to continue the employment of a Participant and shall not
lessen or affect the Company’s or Affiliate’s right to terminate the employment
of such Participant. No Participant or other person shall have any claim to be
granted any Award, and there is no obligation for uniformity of treatment of
Participants, or holders or beneficiaries of Awards. 






The terms and conditions of
Awards and the Committee’s determinations and interpretations with respect
thereto need not be the same with respect to each Participant.


	
 

	
 


	
13.

	
Other
  Benefit and Compensation Programs





          Payments
and other benefits received by a Participant under an Award shall not be deemed
a 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 an
Affiliate, unless expressly so provided by such other plan, contract or
arrangement or the 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.


	
 

	
 


	
14.

	
Successors
  and Assigns





          The
Plan shall be binding on all successors and assigns of the Company and a
Participant, including without limitation, the estate of such Participant and
the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Participant’s creditors.


	
 

	
 


	
15.

	
Nontransferability
  of Awards/Beneficiaries





          No
Award or interest in an Award may be sold, assigned, pledged (as collateral for
a loan or as security for the performance of an obligation or for any other
purpose) or transferred by the Participant or made subject to attachment or
similar proceedings otherwise than by will or by the applicable laws of descent
and distribution, except to the extent a Participant designates one or more
beneficiaries on a Company-approved form who may exercise the Award or receive
payment under the Award after the Participant’s death. During a Participant’s
lifetime, an Award may be exercised only by the Participant. Notwithstanding
the foregoing and to the extent permitted by Section 422 of the Code or
any successor thereto, the Committee, in its sole discretion, may permit a
Participant to assign or transfer an Award; provided, however, that any Award
so assigned or transferred shall be subject to all the terms and conditions of
the Plan and the agreement evidencing the Award.


          A
Participant may designate a beneficiary to succeed to the Participant’s Awards
under the Plan in the event of the Participant’s death by filing a beneficiary
form with the Company and, upon the death of the Participant, such beneficiary
shall succeed to the rights of the Participant to the extent permitted by law
and the terms of this Plan and the applicable agreement. In the absence of a
validly designated beneficiary who is living at the time of the Participant’s
death, the Participant’s executor or administrator of the Participant’s estate
shall succeed to the Awards, which shall be transferable by will or pursuant to
laws of descent and distribution.


	
 

	
 


	
16.

	
Amendments
  or Termination





          The
Board may amend, alter or discontinue the Plan, but no amendment, alteration or
discontinuation shall be made, (a) without the approval of the shareholders of
the Company, if such action would (except as is provided in Section 11 of the Plan), increase the
total number of Shares reserved for the purposes of the Plan or increase the
maximum number of Shares of Restricted Stock or Other Stock-Based Awards that
may be awarded hereunder, or the maximum number of Shares for which Awards may
be granted to any Participant, (b) without the consent of a Participant, if
such action would diminish any of the rights of the Participant under any Award
theretofore granted to such Participant under the Plan or (c) to Section 5(b),
relating to repricing of Options or Stock Appreciation Rights; provided, however, that the Committee may
amend the Plan in such manner as it deems necessary to permit the granting of
Awards meeting the requirements of the Code or other applicable laws.


	
 

	
 


	
17.

	
International
  Participants





          With
respect to Participants who reside or work outside the United States of
America, the Committee may, in its sole discretion, amend the terms of the Plan
or adopt such modifications, procedures or subplans with respect to such
Participants as are necessary or desirable to ensure the viability of the
benefits of the Plan, comply with applicable foreign laws or obtain more favorable
tax or other treatment for a Participant, the Company or an Affiliate;
provided, however, that no such changes shall apply to the Awards to
Participants who may be “covered employees” under Section 162(m) of the Code or
any successor thereto unless consistent with the provisions thereof.







	
 

	
 


	
18.

	
General








	
 

	
 

	
 


	

	
(a)

	
Issuance of Shares. Notwithstanding any other provision of
  the Plan, the Company shall have no obligation to issue or deliver any Shares
  under the Plan or make any other distribution of benefits under the Plan
  unless, in the opinion of the Company’s counsel, such issuance, delivery or
  distribution would comply with all applicable laws (including, without
  limitation, the requirements of the Securities Act of 1933, as amended, or
  any successor thereto (the “Securities Act”) or the laws of any state or
  foreign jurisdiction) and the applicable requirements of any securities
  exchange or similar entity.


	
 

	
 

	
 


	
 

	
 

	
The Company shall be under
  no obligation to any Participant to register for offering or resale or to
  qualify for exemption under the Securities Act, or to register or qualify
  under the laws of any state or foreign jurisdiction, any Shares, security or
  interest in a security paid or issued under, or created by, the Plan, or to
  continue in effect any such registrations or qualifications if made.


	
 

	
 

	
 


	
 

	
 

	
The Company may issue
  Shares with such legends and subject to such restrictions on transfer and
  stop-transfer instructions as counsel for the Company deems necessary or
  desirable for compliance by the Company with federal, state and foreign
  securities laws. The Company may also require such other action or agreement
  by the Participants as may from time to time be necessary to comply with
  applicable securities laws.


	
 

	
 

	
 


	
 

	
 

	
To the extent the Plan or
  any Award agreement provides for issuance of stock certificates to reflect
  the issuance of Shares, the issuance may be effected on a noncertificated
  basis, to the extent not prohibited by applicable law or the applicable rules
  of any stock exchange.


	
 

	
 

	
 


	

	
(b)

	
No Rights as a Shareholder. Unless otherwise provided by the
  Committee or in the agreement evidencing the Award or in any other written
  agreement between a Participant and the Company or an Affiliate, no Award
  shall entitle the Participant to any cash dividend, voting or other right of
  a shareholder unless and until the date of issuance under the Plan of the
  Shares that are the subject of such Award.


	
 

	
 

	
 


	

	
(c)

	
No Trust or Fund. The Plan is intended to constitute an
  “unfunded” plan. Nothing contained herein shall require the Company to
  segregate any monies, other property, or Shares, or to create any trusts, or
  to make any special deposits for any immediate or deferred amounts payable to
  any Participant, and no Participant shall have any rights that are greater
  than those of a general unsecured creditor of the Company.


	
 

	
 

	
 


	

	
(d)

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


	
 

	
 

	
 


	
 

	
(e)

	
Choice of Law. The validity, construction, interpretation, administration and
  effect of the Plan, and rights relating to the Plan and to Awards granted
  under the Plan, shall be governed by the substantive laws, but not the choice
  of law rules, of the State of Minnesota.








	
 

	
 


	
19.

	
Effectiveness
  of the Plan





          The
Plan shall be effective as of the Effective Date.