Exhibit 10.8


 


ALLIANT
TECHSYSTEMS INC.


MANAGEMENT
COMPENSATION PLAN


(as
restated effective April 1, 2002)


 


Article I.  Establishment and Purpose of Plan


 


Alliant Techsystems Inc., a Delaware corporation (the “Company”),
previously established the Alliant Techsystems Inc. Management Compensation
Plan (the “Plan”) effective October 1, 1990, for the benefit of its
management employees.  The Plan has been
amended from time to time.  The Company
hereby amends and restates the Plan in its entirety as set forth herein,
effective April 1, 2002 (the “Restatement Effective Date”), subject to the
approval of the stockholder of the Company, to incorporate such amendments and
to clarify its terms.


 


The purpose of the Plan is to provide incentive compensation to
management employees in accordance with the Company’s “pay for performance”
philosophy by directly relating individual, unit and Company-wide performance
to compensation in a manner that is equitable internally and competitive with
similarly situated companies.


 


The Plan provides for annual incentive payments to management employees
based upon the achievement of pre-established performance goals.  Incentive compensation payable under the
Plan is intended to be deductible by the Company in accordance with
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”).


 


Article II.  Definitions


 


For purposes of the Plan, unless the context otherwise requires, the
following terms shall have the meaning set forth below.


 


2.1                                 “Award”
means an award of incentive compensation under the Plan to a Participant in
accordance with the terms set forth herein.


 


2.2                                 “Award
Percentage,” for an Incentive Unit for any Performance Period means the
percentage derived from dividing the dollar amount of the Incentive Unit’s Earned
Incentive Fund by the Incentive Unit’s Target Incentive Fund for such
Performance Period.  In general, an
Incentive Unit’s Award Percentage may not exceed two hundred percent (200%).  However, the Committee in its discretion may
approve an Award Percentage of up to three hundred percent (300%).


 


2.3                                 “Base
Salary” of a Participant for a Performance Period, means the Participant’s
basic annual salary, exclusive of any bonus, incentive plan payment, pension or
other Company-paid benefit and all other items of extraordinary compensation,
but shall include for purposes of this Plan: 
(a) the amount of any reduction in Base Salary to which a Participant
has agreed as part of any plan of the Company to use the amount of such
reduction to purchase benefits under a cafeteria plan under Code
Section 125, a transportation fringe benefit plan under Code
Section 132(f), or in connection with any qualified cash or deferred
arrangement under Code Section


 

















 


401(k); (b) payments made to the Participant under the Company’s salary
continuance plan for absence due to illness, injury, or approved medical leave
of absence; and (c) any Participant payments by salary reduction or its
equivalent to a Company-sponsored nonqualified deferred compensation plan.


 


2.4                                 “Board”
means the Board of Directors of the Company as constituted at the relevant
time.


 


2.5                                 “CEO”
means the Company’s Chief Executive Officer at the relevant time.


 


2.6                                 “Change
Event” means:


 


(a)                                  the acquisition after
the Restatement Effective Date by any “person” or group of persons (a
“Person”), as such terms are used in Section 13(d) and 14(d) of the
Exchange Act (other than the Company or a Subsidiary or any Company employee
benefit plan (including its trustee)) of “beneficial ownership” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company directly or indirectly representing fifteen percent (15%) or more
of the total number of shares of the Company’s then outstanding Voting
Securities (excluding the sale or issuance of such securities directly by the
Company, or where the acquisition of such securities is made by such Person
from five (5) or fewer shareholders in a transaction or transactions approved
in advance by the Board);


 


(b)                                 the public
announcement by any Person of an intention to acquire the Company through a
tender offer, exchange offer or other unsolicited proposal; or


 


(c)                                  the individuals who,
as of the Restatement Effective Date, are members of the Board (the “Incumbent
Board”), cease for any reason to constitute at least a majority of the Board;
provided, however, that if the nomination for election of any new director was
approved by a vote of a majority of the Incumbent Board, such new director
shall, for purposes of this definition, be considered a member of the Incumbent
Board.


 


2.7                                 “Change
of Control” means:


 


(a)                                  the acquisition by
any Person (other than the Company or a Subsidiary, or any Company employee
benefit plan (including its trustee)) of “beneficial ownership” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing, directly or indirectly, more than fifty percent (50%)
of the total number of shares of the Company’s then outstanding Voting
Securities;


 


(b)                                 consummation of a
reorganization, merger or consolidation of the Company, or the sale or other
disposition of all or substantially all of the Company’s assets (a “Business
Combination”), in each case, unless, following such Business Combination, the
individuals and entities who were the beneficial


 


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owners of the total number of shares of the Company’s outstanding
Voting Securities immediately prior to both: 
(i) such Business Combination; and (ii) any Change Event occurring within
twelve (12) months prior to such Business Combination, beneficially own,
directly or indirectly, more than fifty percent (50%) of the total number of
shares of the outstanding Voting Securities of the resulting corporation, or
the acquiring corporation, as the case may be, immediately following such
Business Combination (including, without limitation, the outstanding Voting
Securities of any corporation which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or
through one or more Subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination, of the total
number of shares of the Company’s outstanding Voting Securities; or


 


(c)                                  any other
circumstances (whether or not following a “Change Event”) which the Board
determines to be a Change of Control for purposes of this Plan after giving due
consideration to the nature of the circumstances then represented and the
purposes of this Plan.  Any such
determination made by the Board shall be irrevocable except by vote of a
majority of the members of the Board who voted in favor of making such
determination.


 


For purposes of this definition, a “Change of Control” shall not result
from any transaction precipitated by the Company’s insolvency, appointment of a
conservator or determination by a regulatory agency that the Company is
insolvent.


 


2.8                                 “Code”
means the Internal Revenue Code of 1986, as amended.


 


2.9                                 “Committee”
means the Personnel and Compensation Committee of the Board, as constituted at
the relevant time, which shall consist of two or more “outside directors”
within the meaning of Section 162(m) of the Code.


 


2.10                           “Company”
means Alliant Techsystems Inc., a Delaware corporation.


 


2.11                           “Corporate
Management” means the Company’s Chief Executive Officer, Chief Financial
Officer, Chief People Officer, and any other individual to whom these officers
may delegate responsibilities under the Plan from time to time.


 


2.12                           “Disability
or Disabled,” with respect to a Participant, means that the Participant
satisfies the requirements to receive disability benefits under the
Company-sponsored long-term disability plan in which the Participant
participates without regard to any waiting periods.  A Participant shall not be considered to be “Disabled” unless the
Participant furnishes proof of the Disability to the Company in such form and
manner as the Company may require.


 


2.13                           “Early
Retirement Date,” of a Participant, means the date (prior to the date on
which the Participant reaches his or her Normal Retirement Date), on which the
Participant has satisfied all of the requirements to begin receiving benefits
under the Company-sponsored qualified defined benefit plan in which he or she
participates.


 


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2.14                           “Earned
Incentive Fund,” of an Incentive Unit for a Performance Period is the
dollar amount determined by applying the Incentive Unit’s weighted average
organizational performance percentage, using the organizational weightings
described in Section 5.1(b) and the achievement levels for the
Organizational Performance Goals described in Section 5.1(c) and (d), to
the Incentive Unit’s Target Incentive Fund.


 


2.15                           “Eligible
Employee,” for any Performance Period, means an employee of the Company
who, during such period, regularly and directly makes or influences policy and
operational decisions of the Company that significantly affect the financial
results and strategic direction of the Company, as determined by the CEO
according to guidelines established by the Committee.  The designation of an employee as an Eligible Employee for any
Performance Period shall be subject to final approval by the Committee.


 


2.16                           “Exchange
Act” means the Securities Exchange Act of 1934.


 


2.17                           “Fair
Market Value,” of a share of Stock as of any date means the closing price
of the Stock as reported on the New York Stock Exchange Composite Tape for such
date, or if no such reported sale of the Stock shall have occurred on such
date, on the next preceding date on which there was such a reported sale.


 


2.18                           “Fiscal
Year” means the Company’s fiscal year, i.e., April 1 through March 31.


 


2.19                           “Incentive
Group,” with respect to an Incentive Unit, means the business group, if
any, of which the Incentive Unit is a part, as specified by the Committee from
time to time.


 


2.20                           “Incentive
Unit” means the Company, or a part thereof (e.g., limited liability
company, business group, or major corporate staff department), as specified by
the Committee from time to time.


 


2.21                           “Individual
Performance Percentage” means the percentage remaining when the
Organizational Performance Percentage is subtracted from 100%.


 


2.22                           “Normal
Retirement Date,” of a Participant, means the date on which the Participant
has reached the age of sixty-five (65).


 


2.23                           “162(m)
Employee,” for any Fiscal Year, means an employee of the Company who, as
the close of the Fiscal Year, is:  (a)
the CEO (or an individual acting in such capacity); or (b) among the four
highest compensated officers of the Company (other than the CEO).  Whether an employee is the CEO or one of the
four highest compensated officers of the Company is determined pursuant to the
executive compensation rules of the Exchange Act.


 


2.24                           “Organizational
Performance Percentage” is the percentage applied to the Earned Incentive
Fund for an Incentive Unit for a Performance Period in order to determine the
amount of the Earned Incentive Fund that will be allocated to Participants for
the achievement of Organizational Performance Goals.  The Committee, in its discretion, will determine the
Organizational Performance Percentage for an Incentive Unit for a Performance
Period prior to the beginning of the Performance Period.  Such percentage may vary from Incentive Unit
to Incentive Unit.


 


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2.25                           “Organizational
Performance Goal” has the meaning set forth in Section 5.1(b).


 


2.26                           “Outstanding
Level,” of a Performance Goal for a Performance Period, is an achievement
level above the Target Level for such goal, as specified by the Committee at
the time the Target Level is established, which generally corresponds to 200%
of a Participant’s Target Award.


 


2.27                           “Participant,”
in the Plan for any Performance Period, means an Eligible Employee who for such
Performance Period has:  (a) been
approved for participation in the Plan by the Committee; (b) satisfied the
participation requirements set forth in Article IV; and (c) commenced
participation in the Plan.


 


2.28                           “Performance
Goals,” of a Participant for a Performance Period, are the goals
established for the Participant for the Performance Period, the achievement of
which is a condition for receiving an Award under the Plan.  A Participant’s Performance Goals consist of
the Organizational Performance Goals applicable for the Incentive Unit to which
the Participant is assigned and the Individual Performance Goals established
for the Participant for his or her individual performance during the
Performance Period.


 


In the case of a Participant who is a 162(m) Employee, all Performance
Goals must be pre-established by the Committee, must be objective, and must
state, in terms of an objective formula or standard, the method for computing
the amount of compensation payable if the goal is attained.  A Performance Goal is considered
“pre-established” for purposes of this paragraph if it is established in
writing by the Committee no later than ninety (90) days after the commencement
of a Performance Period, provided that the outcome is substantially uncertain
at the time the Committee actually establishes the goal.  However, in no event will a Performance Goal
be considered to be pre-established if it is established after twenty-five
percent (25%) of a Performance Period has elapsed.  A Performance Goal is considered “objective” if a third party
having knowledge of the relevant facts could determine whether the goal is
met.  A formula or standard is
considered “objective” if a third party having knowledge of the relevant
performance results could calculate the amount to be paid to the Participant.


 


Performance goals may be based on one or more of the following factors
and may be based on attainment of a particular level of, or on a positive
change in, a factor:


 


(a)                                  revenue;


(b)                                 revenue per employee;


(c)                                  net income;


(d)                                 earnings per employee;


(e)                                  earnings per share;


(f)                                    operating income;


(g)                                 total shareholder
return;


(h)                                 earnings before income
tax;


(i)                                     return on equity


(j)                                     market share;


(k)                                  earnings before
interest and income tax;


(l)                                     before or after tax
return on net assets;


 


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(m)                               economic value added;


(n)                                 sales; and


(o)                                 cash flow


 


2.29                           “Performance
Period” means, generally, the Fiscal Year. 
However, the Committee may, its discretion, designate a shorter
period.  In no event, however, shall a
Performance Period be less than six (6) months.


 


2.30                           “Retirement,”
of a Participant, means the Participant’s termination of employment with the
Company on or after the Participant’s Early Retirement Date or Normal
Retirement Date.


 


2.31                           “Stock”
means the common stock of the Company, par value on cent ($.01).


 


2.32                           “Subsidiary”
means a corporation defined in Section 424(f) of the Code.


 


2.33                           “Target
Award,” with respect to a Performance Goal, is the dollar amount assigned
for achievement of the goal at the Target Level pursuant to
Section 5.1(c).


 


2.34                           “Target
Incentive Fund,” of an Incentive Unit for a Performance Period, is the
dollar amount determined by adding together the Target Awards of each
Participant assigned to the Incentive Unit for the Performance Period.


 


2.35                           “Target
Level,” of a Performance Goal for a Performance Period, is a level of
achievement for that goal, as specified by the Committee prior to the beginning
of the Performance Period, which generally corresponds to one hundred percent
(100%) of the Target Award.


 


2.36                           “Threshold
Level,” of a Performance Goal for a Performance Period, is a level of
achievement below the Target Level of such goal and below which no Award is
payable with respect to the Performance Goal, as specified by the Committee at
the time the Target Level is established.


 


2.37                           “Voting
Securities” means any shares of the capital stock or other securities of
the Company that are generally entitled to vote in elections for directors.


 


Article III.  Administration of the Plan


 


3.1                                 Committee’s
Authority.  The Plan shall be
administered by the Committee.  For each
Performance Period, the Committee shall have exclusive authority to:  (a) establish the general guidelines for the
Plan (including designating the Incentive Units and Incentive Groups) and the
budget for the Plan; (b) establish the guidelines to be employed by the CEO in
the selection of Eligible Employees and approve or disapprove the CEO’s
selection of each Eligible Employee; and (c) certify the extent of the
achievement of each Performance Goal for each Participant who is a 162(m)
Employee.


 


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3.2                                 Committee
Action.  A majority of the Committee
shall constitute a quorum, and the act of a majority of the members of the
Committee present at a meeting at which a quorum is present shall be the act of
the Committee.


 


3.3                                 Committee’s
Powers.  The Committee shall have
the power, in its discretion, to take such actions as may be necessary to carry
out the provisions and purposes of the Plan and shall have the authority to
control and manage the operation and administration of the Plan.  In order to effectuate the purposes of the
Plan, the Committee shall have the discretionary power and authority to
construe and interpret the Plan, to supply any omissions therein, to reconcile
and correct any errors or inconsistencies, to decide any questions in the
administration and application of the Plan, and to make equitable adjustments
for any mistakes or errors made in the administration of the Plan.  All such actions or determinations made by
the Committee, and the application of rules and regulations to a particular
case or issue by the Committee, in good faith, shall not be subject to review by
anyone, but shall be final, binding and conclusive on all persons ever
interested hereunder.


 


In construing the Plan and in exercising its power under provisions
requiring the Committee’s approval, the Committee shall attempt to ascertain
the purpose of the provisions in question and when the purpose is known or
reasonably ascertainable, the purpose shall be given effect to the extent
feasible.  The Committee shall have all
powers necessary or appropriate to accomplish its duties under the Plan
including, but not limited to, the power and duty to:


 


(a)                                  maintain complete and
accurate records of all Plan transactions, contributions, and
distributions.  The Committee shall
maintain the books of accounts, records, and other data in the manner necessary
for proper administration of the Plan;


 


(b)                                 adopt rules of
procedure and regulations necessary for the proper and efficient administration
of the Plan, provided the rules and regulations are not inconsistent with the
terms of the Plan  as set forth herein. 
All rules and decisions of the Committee shall be uniformly and
consistently applied to all Participants in similar circumstances;


 


(c)                                  enforce
the terms of the Plan and the rules and regulations it adopts;


 


(d)                                 review
claims and render decisions on claims for benefits under the Plan;


 


(e)                                  furnish the Company
or the Participants, upon request, with information that the Company or the
Participants may require for tax or other purposes;


 


(f)                                    employ agents,
attorneys, accountants or other persons (who also may be employed by or
represent the Company) for such purposes as the Committee considers necessary
or desirable in connection with its duties hereunder; and


 


(g)                                 perform any and all
other acts necessary or appropriate for the proper management and
administration of the Plan.


 


The Committee may from time to time in its discretion delegate certain
Plan administration duties to the Corporate Management, except that the
Committee may not delegate


 


7

















 


its duties regarding the establishment and
certification of the Performance Goals of Participants who are 162(m)
Employees.


 


IV.                                Eligibility to
Participate


 


Participation in the Plan is limited to Eligible Employees.  Prior to each Performance Period, the CEO
shall determine which employees are Eligible Employees for the Performance
Period.  In making such determination,
the CEO shall follow the guidelines established by the Committee for the
selection of Eligible Employees.  The
Committee has final authority to approve or disapprove the CEO’s selection of
any Eligible Employee.  An Eligible
Employee shall become a Participant only upon his or her approval by the
Committee and his or her compliance with such terms and conditions as the Committee
may from time to time establish for the implementation of the Plan.


 


V.                                    Calculation
of Awards


 


A Participant’s Award for a Performance Period is determined according
to the following multi-step process:


 


5.1                                 Prior
to the beginning of a Performance Period, the Committee (in the case of Participants
who are 162(m) Employees) and Corporate Management (in the case of all other
Participants):


 


(a)                                  Determines the
Incentive Unit to which the Participant is assigned and the Incentive Group, if
any, of which the Incentive Unit is a part for purposes of determining Awards;


 


(b)                                 Sets both
Organizational and Individual Performance Goals for the Participant.  The Organizational Performance Goals for a
Participant consist of Performance Goals for the Incentive Unit to which the
Participant is assigned, the Incentive Group, if any, of which the Incentive
Unit is a part, and the Company as a whole, and are weighted depending on the
Committee’s assessment of the importance of the performance of each such unit
in determining the Participant’s Award.


 


(c)                                  Sets a Threshold,
Target, and Outstanding Level for each Performance Goal and assigns a dollar
amount for achievement of the Performance Goal at each level.  (The dollar amount assigned for achievement
of the Performance Goal at the Target Level is termed the “Target Award.”)  In the case of a Participant who is a 162(m)
Employee, the Participant’s total Award if all of his or her Performance Goals
were met at the Outstanding Level for a Fiscal Year (i.e., the highest total
Award payable under the Plan to such Participant for a Fiscal Year) may not
exceed the lesser of $2,000,000 or three (3) times the Participant’s Base
Salary for such Fiscal Year.


 


(d)                                 Determines the
Participant’s Incentive Unit’s Target Incentive Fund for the Performance Period
by adding together the Target Awards for each Participant in the Incentive
Unit.


 


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5.2                                 Following
the close of a Performance Period, the Committee (in the case of Participants
who are 162(m) Employees), and Corporate Management (in the case of all other
Participants):


 


(a)                                  Compares the actual
performance of each of the organizational units for which Organizational
Performance Goals were established for the Participant pursuant to
Section 5.1(b) for the Performance Period, with the unit’s Performance
Goals for such period and determines the level of achievement for each such
Performance Goal.


 


(b)                                 Determines the dollar
amount of the Incentive Unit’s Earned Incentive Fund by applying the
organizational weightings described in Section 5.1(b) to the achievement
levels in 5.1(c) and multiplying the results by the Incentive Unit’s Target
Incentive Fund determined pursuant to Section 5.1(d).


 


(c)                                  Determines the
Participant’s Incentive Unit Award Percentage for the Performance Period by
dividing the dollar amount of the Incentive Unit’s Earned Incentive Fund by the
dollar amount of its Target Incentive Fund for such period.


 


(d)                                 Determines the
Participant’s Award, if any, for the Participant’s Organizational Performance
Goals by multiplying the Participant’s Organizational Performance Percentage by
the product of his or her cumulative Target Awards (i.e., the sum of his or her
Target Awards for the Performance Period) and his or her Incentive Unit’s Award
Percentage.


 


(e)                                  Determines the
Participant’s Award, if any, for the Participant’s Individual Performance Goals
by determining the level of achievement of each such goal.  In general, the amount allocated to each
Participant will be the amount pre-established (when the Performance Goals were
established) for achievement of the Participant’s Individual Performance Goals
at the Threshold, Target and Outstanding Levels.  However, at the discretion of the Committee, this amount may be
increased (except in the case of a Participant who is a 162(m) Employee) or
decreased based upon such objective or subjective criteria, as it deems
appropriate.  In any event, the
aggregate Awards for achievement of Individual Performance Goals for all
Participants in the Participant’s Incentive Unit for any Performance Period may
not exceed the Individual Performance Percentage of the Incentive Unit’s Earned
Incentive Fund for the Performance Period.


 


(f)                                    In the case of a
Participant who is a 162(m) Employee, the Committee shall certify the extent to
which the Participant has satisfied each of his or her Performance Goals.


 


VI.                                Payment
of Award


 


6.1                                 Timing
of Award Payment.  A Participant’s
Award for a Performance period shall be paid to him or her within 60 days
following the close of the Performance Period. 
A


 


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Participant may, however, elect to defer some or all of any amount
otherwise payable to him or her in cash pursuant to this Article 6 under,
and subject to the terms of, the Alliant Techsystems Inc. Management Deferred
Compensation Plan.


 


6.2                                 Form
of Payment.  Payment of an Award
shall be in the form of a lump sum in either cash or Stock or a combination
thereof, as the Committee determines in its sole discretion.  With respect to any payment in the form of
Stock, the number of shares distributed to the Participant shall be equal to
the cash that would have been distributed to the Participant (but for the
Committee’s election to pay the Award in Stock) divided by the Fair Market
Value of the Stock determined as of the day before the date the amount of the
Award is approved by the Committee.  An
aggregate of 250,000 shares of Stock is hereby made available and reserved for
delivery under the Plan pursuant to this Section 6.2, and
Section 6.3, below.  Subject to the
foregoing limit, shares of Stock held in treasury shares by the Company may be
used for or in connection with the Plan.


 


6.3                                 Election
to Purchase Stock.  The Committee
may, in its discretion, with respect to all or any part of the cash portion of
any Award (“Cash Award”) permit such Participants or group of Participants as
it may designate to elect, in lieu of receiving payment of the Cash Award in
cash, to use the Cash Award to acquire Stock on the date such Cash Award would
otherwise be payable, at a price specified by the Committee, which price shall
be no less than 85% of Fair Market Value as of the day before the date the
amount of the Award is approved by the Committee.


 


6.4                                 Change
in Employment Status During Performance Period.  In general, a Participant must be employed by the Company on the
last day of a Performance Period in order to receive an Award for such
period.  However, if the Participant’s
employment is terminated during a Performance Period due to his or her death,
Retirement, Disability or due to his or her involuntary termination by the
Company for reasons other than Cause, or if the Participant is demoted during
the Performance Period such that he or she is no longer an Eligible Employee
and therefore unable to participate in the Plan for the remainder of the
Performance Period, the Participant (or the Participant’s beneficiary in the
case of the Participant’s death) will be entitled to receive a portion of the
Award for which the Participant otherwise would have been eligible.  The portion for which the Participant (or
beneficiary) is eligible shall be equal to a fraction, the numerator of which
is the number of days the Participant was employed as an Eligible Employee
during the Performance Period, and the denominator of which is the number of
days in the Performance Period. For purposes of this Section 6.4, a
Participant’s employment shall be considered to be involuntarily terminated by
the Company if the Participant does not request or initiate such termination,
and “Cause” shall mean that:  (a) the
Participant engages in an act of dishonesty or moral turpitude (including but
not limited to conviction of a felony) or a breach of a Company policy which
has an adverse effect upon the Company; (b) a Participant fails to substantially
perform his or her duties of employment; or (c) a Participant’s divulges any
information that the Company considers to be proprietary and confidential.  Notwithstanding anything in the Plan to the
contrary, a Participant must be employed by the Company continuously for at
least one entire calendar quarter during a Performance Period in order to be
eligible for an Award for the Performance Period.


 


If a Participant transfers employment from one Incentive Unit to
another during a Performance Period, he or she will be eligible to receive an
Award based on the performance of


 


10

















 


all of the Incentive Units to which he or she was assigned during the
Performance Period, determined on a pro rata basis.  However, for Participants, other than Participants who are 162(m)
Employees, the Committee, in its discretion, may determine the Award based on
the assumption that the Participant was assigned to just one of the Incentive
Units during the Performance Period.


 


6.5                                 Beneficiary.  In the event that any amount becomes payable
under the Plan by reason of the Participant’s death, such amount shall be paid
to the same beneficiary or a beneficiaries (and in the same proportions as)
last designated by the Participant to receive benefits under the Company Basic
Life Insurance Plan upon the Participant’s death.  Such amount shall be paid to the beneficiary or beneficiaries at
the same time such amount would have been paid to the Participant had he or she
survived.  In order for such designation
to be valid for purposes of the Plan, it must be completed and filed with the
Company according to the rules established by the Company for the Company Basic
Life Insurance Plan.  If the Participant
has not completed a beneficiary designation for the Company Basic Life
Insurance Plan, or all such beneficiaries have predeceased the Participant,
then any amount that becomes payable under the Plan by reason of the
Participant’s death shall be paid to the personal representative of the Participant’s
estate.  If there is any question as to
the legal right of any person to receive a distribution under the Plan by
reason of the Participant’s death, the amount in question may, at the
discretion of the Committee, be paid to the personal representative of the
Participant’s estate, in which event the Company shall have no further
liability to anyone with respect to such amount.


 


VII.                            Change
of Control


 


Notwithstanding anything in the Plan to the contrary, in the event of a
Change of Control, each Participant shall receive payment of his or her Award,
based upon the assumption that all Performance Goals for the Performance Period
in which the Change of Control occurs were satisfied at the Target Level,
multiplied by a fraction, the numerator of which is the number of months
(calculated to the nearest whole month) of such Participant’s participation in
the Plan during the Performance Period in which the Change of Control occurs,
and the denominator of which is the number of months in the Performance Period.  Distribution of such amount shall be made in
cash in a lump sum on the fifth business day after the Change of Control
occurs.


 


VIII.                        Amendment
and Termination of the Plan


 


The Board may amend, cancel, or terminate the Plan at any time and any
such amendment, cancellation or termination may be retroactively effective,
except that no amendment, cancellation or termination shall adversely affect an
Award earned under the Plan for any Performance Period completed before
adoption of the amendment, cancellation or termination.


 


IX.                                Miscellaneous


 


9.1                                 No
Guaranty of Employment.  Neither the
adoption and maintenance of the Plan, the designation of an employee as an
Eligible Employee, the setting of Performance Goals, nor the provision of any
Award under the Plan shall be deemed to be a contract of employment between the
Company and any employee.  Nothing
contained in the Plan shall give any


 


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employee the right to be retained in the
employ of the Company or to interfere with the right of the Company to
discharge any employee at any time, nor shall it give the Company the right to
require any employee to remain in its employ or to interfere with the
employee’s right to terminate his or her employment at any time.


 


9.2                                 Release.  Any payment of an Award to or for the
benefit of a Participant or a beneficiary that is made in good faith by the
Company in accordance with the Company’s interpretation of its obligations
hereunder, shall be in full satisfaction of all claims against the Company for
payments under the Plan to the extent of such payment.


 


9.3                                 Notices.  Any notice permitted or required under the
Plan shall be in writing and shall be hand-delivered or sent, postage prepaid,
by first class mail, or by certified or registered mail with return receipt
requested, to the chairman of the Committee, if to the Committee or the
Company, or to the address last shown on the records of the Company, if to a
Participant or beneficiary.  Any such
notice shall be effective as of the date of hand-delivery or mailing.


 


9.4                                 Nonalienation.  No benefit payable at any time under the
Plan shall be subject in any manner to alienation, sale, transfer, assignment,
pledge, levy, attachment, or encumbrance of any kind by any Participant or beneficiary.


 


9.5                                 Plan
is Unfunded.  All Awards under the
Plan shall be paid from the general assets of the Company.  No Participant shall be deemed to have, by
virtue of being a Participant in the Plan, any claim on any specific assets of
the Company such that the Participant would be subject to income taxation on
any Award prior to distribution to him or her, and the rights of Participants
and beneficiaries to any payments to which they are otherwise entitled under
the Plan shall be those of an unsecured general creditor of the Company.


 


9.5.                              Tax
Liability.  The Company may withhold
from any payment of Awards or other compensation payable to a Participant or
beneficiary such amounts as the Company determines are reasonably necessary to
pay any taxes required to be withheld under applicable law.


 


9.6.                              Captions.  Article and section headings and
captions are provided for purposes of reference and convenience only and shall
not be relied upon in any way to construe, define, modify, limit, or extend the
scope of any provision of the Plan.


 


9.7.                              Invalidity
of Certain Plan Provisions.  If any
provision of the Plan is held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision of the Plan and the Plan
shall be construed and enforced as if such provision had not been included.


 


9.8.                              No
Other Agreements.  The terms and
conditions set forth herein constitute the entire understanding of the Company
and the Participants with respect to the matters addressed herein.


 


9.9.                              Incapacity.  In the event that any Participant is unable
to care for his or her affairs because of illness or accident, any payment due
may be paid to the Participant’s spouse, parent, brother, sister or other
person deemed by the Committee to have incurred expenses for the care of such
Participant, unless a duly qualified guardian or other legal representative has
been appointed.


 


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9.10.                        Applicable
Law.  The Plan and all rights under
it shall be governed by and construed according to the laws of the State of
Minnesota.


 


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