Document:

exv10w11

 

Exhibit 10.11

NON-STATUTORY STOCK OPTION AGREEMENT

     THIS AGREEMENT, made and entered into effective this                     day of                                 
         , by and between ROCHESTER MEDICAL CORPORATION, a Minnesota corporation (hereinafter
referred to as the “Corporation”) and , a resident of the State of                                         (hereinafter referred to as the “Optionee”).

     WHEREAS, the Corporation considers it desirable and in its best interests that the Optionee be
given an inducement to acquire a proprietary interest in the Corporation and an added incentive to
advance the interests of the Corporation, by possessing an option to purchase common shares of the
Corporation, in accordance with Rochester Medical Corporation 2001 Stock Option Plan (the “Plan”)
adopted by the Directors of the Corporation, as amended, and ratified by Shareholders of the
Corporation.

     NOW THEREFORE, in consideration of the premises and of the mutual promises and consideration
provided herein, the parties agree as follows:

     1. Definitions. Words and phrases not otherwise defined herein shall have the
meanings ascribed to them, respectively, in the Plan.

     2. Grant of Option. The Corporation grants to Optionee an Option (the “Option”) to
purchase                                                (                    ) common shares of the Corporation at a purchase price of $       
                                   per share, in the manner and subject to the conditions provided herein and in the
Plan. The Option hereby granted shall be an NQO as provided in the Plan.

     3. Time of Exercise of Option. The Option may be exercised in whole or in part at
any time, or from time to time, from the date hereof until the earliest of (i) twelve months after
the Optionee ceases to be a director for any reason, including death or (ii)                    o’clock p.m. CST on
                                         ,                     .

     No provision of this Agreement to the contrary withstanding, neither the Option nor any right
claimed thereby or hereby, therein or herein or thereunder or hereunder shall be exercisable by
anyone on or after
                         ,

     4. Method of Exercise. The Option shall be exercised by written notice to the Board
of the Corporation, or the Committee if such exists, at the Corporation’s principal place of
business. The notice shall be accompanied by payment of the option price for the shares being
purchased in cash or by cashier’s check or certified check or, in the sole discretion of the Board,
or the Committee if such exists, by such other form of payment as is permitted under the Plan. The
notice shall also be accompanied by any document reasonably required by the Corporation to be
executed by Optionee, acknowledging the applicable restrictions on the transfer of the common
shares being purchased as set forth under Section 8 of this Agreement. The Corporation shall make
prompt delivery of a certificate or certificates representing such common shares, provided that if
any law or regulation requires the Corporation to take any action with respect to the common shares
specified in such notice before the issuance thereof, then the date of delivery of such common
shares shall be extended for the period necessary to take such action. The Option must be
exercised with respect to at least 500 of the common shares, unless only a lesser number of the
common shares are then exercisable, in which case it must be exercised with respect to all of such
lesser number.

     5. Reclassification, Consolidation or Merger.

     5.1 If and to the extent that the number of issued common shares of the Corporation shall be
increased or reduced by change in par value, split up, reverse split, reclassification,
distribution of a dividend payable in stock, or the like, the number of common shares subject to
the Option and the option price per share shall be proportionately adjusted in accordance with the
Plan.

     5.2 If the Corporation is reorganized or consolidated or merged with another corporation, the
Optionee shall be entitled to receive an option (the “New Option”) covering common shares of such
reorganized, consolidated or merged company in the same proportion, at an equivalent price, and
subject to the same conditions as the Option. For purposes of the preceding sentence, the excess
of the fair market value of the common shares subject to the Option immediately after the
reorganization, consolidation or merger over the aggregate option price of such common shares shall
not be more than the excess of the aggregate fair market value of all common shares subject to the
Option immediately before such reorganization, consolidation or merger over the aggregate option
price of such common shares, and the New Option or assumption of the

 

 

Option shall not give the
Optionee additional benefits which he does not have under this Option, or deprive him of benefits
which he has under this Option.

     6. Rights Prior to Exercise of Option. This Option is non-transferable by Optionee,
except in the event of his death, and during his lifetime is exercisable only by him. No person
shall have any rights as a stockholder with respect to any common shares purchasable hereunder
until payment of the option price and delivery to him of such common shares as herein provided.

     7. Restriction on Disposition. All common shares acquired by Optionee pursuant to
this Agreement shall be subject to the restrictions on sale, encumbrance and other disposition
contained in the Company’s By-Laws, or imposed by applicable state and federal laws or regulations
regarding the registration or qualification of such acquisition of common shares, and may not be
sold or otherwise disposed of (i) within two years from the date of the granting of the Option
under which such common shares were acquired, (ii) within one year after the exercise of the
Option, and (iii) unless the Corporation has received a prior opinion of Optionee’s counsel
satisfactory in form and substance to counsel for the Corporation that such transaction will not
violate the Securities Act of 1933 or any applicable state law regulating the sale of securities.

     8. Binding Effect — Plan Governs.

     8.1 This Agreement shall inure to the benefit of and be binding upon the parties hereto and
their respective heirs, executors, administrators, successors and assigns.

     8.2 This Agreement shall be construed in accordance with and shall be governed by the terms
of the Plan as adopted by the Board and approved by the shareholders of the Corporation within the
meaning of Section 422 of the Internal Revenue Code of 1986, as the Plan may be amended from time
to time by the Board and the shareholders of the Corporation. Optionee acknowledges receipt of a
copy of the Plan prior to the execution hereof. If possible, this Agreement shall be construed
along with and in addition to any other agreement which the Corporation and Optionee may enter
into, but any provision in this Agreement which contradicts any provision of any other agreement
shall take precedence and be binding over such other provision.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	“Optionee”	 	 	 	“Corporation”
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Rochester Medical Corporation
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Anthony J. Conway, President
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	David Jonas, CFO

2<PAGE>

                                                                     Exhibit 4.1

                              G & K SERVICES, INC.
                           2006 EQUITY INCENTIVE PLAN

1.   Purpose. The purpose of G & K Services, Inc. 2006 Equity Incentive Plan
     (the "Plan") is to motivate directors, key employees and advisors to
     produce a superior return to the stockholders of G & K Services, Inc. by
     offering them an opportunity to participate in stockholder gains, by
     facilitating stock ownership and by rewarding them for achieving a high
     level of corporate financial performance. The Plan is also intended to
     facilitate recruiting and retaining talented executives for key positions
     by providing an attractive capital accumulation opportunity. The Plan was
     adopted by the Board (as defined below) on August 23, 2006, subject to the
     approval of stockholders at the annual meeting of stockholders scheduled
     for November 16, 2006.

2.   Definitions.

     2.1. The following terms, whenever used in this Plan, shall have the
          meanings set forth below:

          (a)  "Affiliate" means any corporation or limited liability company, a
               majority of the voting stock or membership interests of which is
               directly or indirectly owned by the Company, and any partnership
               or joint venture designated by the Committee in which any such
               corporation or limited liability company is a partner or joint
               venturer.

          (b)  "Award" means a grant made under this Plan in the form of
               Performance Shares, Restricted Stock, Restricted Stock Units,
               Options, Performance Units, Stock Appreciation Rights, or Stock
               Awards.

          (c)  "Award Agreement" means a written agreement or other
               communication evidencing the terms and conditions of an Award in
               the form of either an agreement to be executed by both the
               Participant and the Company (or an authorized representative of
               the Company) or a certificate, notice, term sheet or similar
               communication.

          (d)  "Beneficiary" means the person or persons determined in
               accordance with Section 13.

          (e)  "Board" means the Board of Directors of the Company.

          (f)  "Change in Control" means the occurrence of any of the following
               events:

               (i)  any "Person" within the meaning of Section 13(d)(3) or
                    14(d)(2) of the Securities Exchange Act of 1934 (the "Act")
                    (other than the Company or any company owned, directly or
                    indirectly, by the shareholders of the Company in
                    substantially the same proportions as their ownership of
                    stock of the Company) becomes the "Beneficial Owner" within
                    the meaning of Rule 13d-3 promulgated under the Act of 30%
                    or more of the combined voting

<PAGE>

                    power of the then outstanding securities of the Company
                    entitled to vote generally in the election of directors;
                    excluding, however, any circumstance in which such
                    beneficial ownership resulted from any acquisition by an
                    employee benefit plan (or related trust) sponsored or
                    maintained by the Company or by any corporation controlling,
                    controlled by, or under common control with, the Company;

               (ii) a change in the composition of the Board since August 23,
                    2006, (the "Effective Date"), such that the individuals who,
                    as of such date, constituted the Board (the "Incumbent
                    Board") cease for any reason to constitute at least a
                    majority of such Board; provided that any individual who
                    becomes a director of the Company subsequent to the
                    Effective Date whose election, or nomination for election by
                    the Company's stockholders, was approved by the vote of at
                    least a majority of the directors then comprising the
                    Incumbent Board shall be deemed a member of the Incumbent
                    Board; and provided further that any individual who was
                    initially elected as a director of the Company as a result
                    of an actual or threatened election contest, as such terms
                    are used in Rule 14a-12 of Regulation 14A promulgated under
                    the Act, or any other actual or threatened solicitation of
                    proxies or consents by or on behalf of any person or entity
                    other than the Board shall not be deemed a member of the
                    Incumbent Board;

               (iii) a reorganization, recapitalization, merger or consolidation
                    (a "Corporate Transaction") involving the Company, unless
                    securities representing 60% or more of the combined voting
                    power of the then outstanding voting securities entitled to
                    vote generally in the election of directors of the Company
                    or the corporation resulting from such Corporate Transaction
                    (or the parent of such corporation) are held subsequent to
                    such transaction by the person or persons who were the
                    beneficial holders of the outstanding voting securities
                    entitled to vote generally in the election of directors of
                    the Company immediately prior to such Corporate Transaction,
                    in substantially the same proportion as their ownership
                    immediately prior to such Corporate Transaction; or

               (iv) the sale, transfer or other disposition of all or
                    substantially all of the assets of the Company.

          (g)  "Code" means the Internal Revenue Code of 1986, as amended from
               time to time, and the rulings and regulations issued thereunder.

          (h)  "Committee" has the meaning set forth in Section 3.

          (i)  "Company" means G & K Services, Inc., a Minnesota corporation.

                                        2

<PAGE>

          (j)  "Deferred Stock Units" has the meaning set forth in Section 9.

          (k)  "Employee" means an individual who is a common law employee
               (including an officer or director who is also an employee) of the
               Company or an Affiliate.

          (l)  "Fair Market Value" means, on a given date, (i) if there should
               be a public market for the Shares on such date, the price at
               which a Share was last sold (i.e., closing market price) on the
               principal United States market for the Shares, or, if no sale of
               Shares shall have been reported on such principal United States
               market on such date, then the immediately preceding date on which
               sales of the Shares have been so reported 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.

          (m)  "Incentive Stock Option" means any Option designated as such and
               granted in accordance with the requirements of Section 422 of the
               Code.

          (n)  "Non-Qualified Stock Option" means an Option other than an
               Incentive Stock Option.

          (o)  "Option" means a right to purchase Stock awarded under Section
               10.

          (p)  "Other Stock-Based Awards" means Awards granted pursuant to
               Section 12.

          (q)  "Participant" means a person described in Section 5 designated by
               the Committee to receive an Award under the Plan.

          (r)  "Performance Cycle" means the period of time as specified by the
               Committee over which Performance Shares or Performance Units are
               to be earned.

          (s)  "Performance Shares" means an Award made pursuant to Section 6
               which entitles a Participant to receive Shares, their cash
               equivalent, or a combination thereof, based on the achievement of
               performance targets during a Performance Cycle.

          (t)  "Performance Units" means an Award made pursuant to Section 6
               which entitles a Participant to receive cash, Stock, or a
               combination thereof, based on the achievement of performance
               targets during a Performance Cycle.

          (u)  "Plan" means this 2006 Equity Incentive Plan, as amended from
               time to time.

                                        3

<PAGE>

          (v)  "Qualifying Performance Criteria" has the meaning set forth in
               Section 16.2.

          (w)  "Restricted Stock" means Stock granted under Section 7 that is
               subject to restrictions imposed pursuant to said Section.

          (x)  "Restricted Stock Unit" means a grant under Section 9 of the
               right to receive a Share subject to vesting and such other
               restrictions imposed pursuant to said Section, together with
               dividend equivalents with respect to such Share if and as so
               determined by the Committee.

          (y)  "Share" means a share of Stock.

          (z)  "Stock" means the Class A Common Stock, $.50 par value per share,
               of the Company, as such class of Stock may be redesignated or
               renamed from time to time.

          (aa) "Stock Appreciation Right" means a right awarded to a Participant
               pursuant to Section 11 that entitles the Participant to receive,
               in cash, Stock or a combination thereof, as determined by the
               Committee, an amount equal to or otherwise based on the excess of
               (a) the Fair Market Value of a Share at the time of exercise over
               (b) the exercise price of the right, as established by the
               Committee on the date the Award is granted.

          (bb) "Stock Award" means an award of Stock granted to a Participant
               pursuant to Section 8.

          (cc) "Term" means the period during which an Option or Stock
               Appreciation Right may be exercised or the period during which
               the restrictions placed on a Restricted Stock Unit or Restricted
               Stock are in effect.

     2.2. Gender and Number. Except when otherwise indicated by context,
          reference to the masculine gender shall include, when used, the
          feminine gender and any term used in the singular shall also include
          the plural.

3.   Administration.

     3.1. Administration of the Plan. The Plan shall be administered by the
          Compensation Committee of the Board or such other committee selected
          by the Board and consisting of two or more members of the Board (the
          "Committee"). Any power of the Committee may also be exercised by the
          Board, except to the extent that the grant or exercise of such
          authority would cause any Award or transaction to become subject to
          (or lose an exemption under) the short-swing profit recovery
          provisions of Section 16 of the Act, or cause an Award not to qualify
          for treatment as "performance based compensation" under Section 162(m)
          of the Code. To the extent that any permitted action taken by the
          Board conflicts with action taken by the Committee, the Board action
          shall control. The Committee may delegate any or all aspects of the
          day-to-day administration of the Plan to one

                                        4

<PAGE>

          or more officers or employees of the Company or any Affiliate, and/or
          to one or more agents.

     3.2. Powers of the Committee. Subject to the express provisions of this
          Plan, the Committee shall be authorized and empowered to take all
          actions that it determines to be necessary or appropriate in
          connection with the administration of this Plan, including, without
          limitation: (i) to prescribe, amend and rescind rules and regulations
          relating to this Plan and to define terms not otherwise defined
          herein; (ii) to determine which persons are eligible to be granted
          Awards under Section 5, to which of such persons, if any, Awards shall
          be granted hereunder and the timing of any such Awards; (iii) to grant
          Awards to Participants and determine the terms and conditions of
          Awards, including the number of Shares subject to Awards, the exercise
          or exercise price of such Shares, and the circumstances under which
          Awards become exercisable or vested or are forfeited or expire, which
          terms may but need not be conditioned upon the passage of time,
          continued employment, the satisfaction of performance criteria, the
          occurrence of certain events, or other factors; (iv) to establish and
          certify the extent of satisfaction of any performance goals or other
          conditions applicable to the grant, issuance, exercisability, vesting,
          and/or ability to retain any Award; (v) to prescribe and amend the
          terms of Award Agreements or other documents relating to Awards made
          under this Plan (which need not be identical) and the terms of or form
          of any document or notice required to be delivered to the Company by
          Participants under this Plan; (vi) to determine whether, and the
          extent to which, adjustments are required pursuant to Section 25;
          (vii) to interpret and construe this Plan, any rules and regulations
          under this Plan, and the terms and conditions of any Award granted
          hereunder, and to make exceptions to any such provisions in good faith
          and for the benefit of the Company; and (viii) to make all other
          determinations deemed necessary or advisable for the administration of
          this Plan.

     3.3. Determinations by the Committee. All decisions, determinations and
          interpretations by the Committee regarding the Plan, any rules and
          regulations under the Plan, and the terms and conditions of or
          operation of any Award granted hereunder, shall be final and binding
          on all Participants, Beneficiaries, heirs, assigns or other persons
          holding or claiming rights under the Plan or any Award. The Committee
          shall consider such factors as it deems relevant, in its sole and
          absolute discretion, to making such decisions, determinations and
          interpretations including, without limitation, the recommendations or
          advice of any officer or other employee of the Company and such
          attorneys, consultants and accountants as it may select.

4.   Shares Available Under the Plan; Limitation on Awards.

     4.1. Aggregate Limits. Subject to adjustment as provided in Section 25, the
          aggregate number of Shares issuable pursuant to all Awards under this
          Plan shall not exceed 2,000,000 Shares. Awards of Stock Appreciation
          Rights, Restricted Stock, Restricted Stock Units, Deferred Stock
          Units, and Stock cannot exceed 667,000 Shares of the 2,000,000 Shares
          authorized. Said amounts may be increased by the

                                        5

<PAGE>

          number of adjusted Company Shares available for issuance under any
          equity incentive plan assumed by the Company in connection with a
          merger or other acquisition but only if and to the extent determined
          by the Committee in its sole discretion. The Shares issued pursuant to
          Awards granted under this Plan may consist, in whole or in part, of
          authorized but unissued Stock or treasury Stock not reserved for any
          other purpose.

     4.2. Issuance of Shares. For purposes of this Section 4, the aggregate
          number of Shares available for Awards under this Plan at any time
          shall not be reduced by Shares subject to Awards that have been
          canceled, expired, or forfeited, but shall be reduced by the portion
          of Awards settled in cash or withheld in connection with the exercise
          or settlement of an Award. Net Share counting shall not be used to
          determine the number of Shares available for Awards, nor shall Shares
          tendered in connection with the exercise of an Award affect the number
          of Awards available for issuance under the Plan.

     4.3. Tax Code Limits. No Participant may be awarded in any calendar year
          Awards covering an aggregate of more than 250,000 Shares, which limits
          shall be calculated and adjusted pursuant to Section 25 only to the
          extent that such calculation or adjustment will not affect the status
          of any Award theretofore issued or that may thereafter be issued as
          "performance based compensation" under Section 162(m) of the Code. The
          maximum amount payable pursuant to that portion of a Performance Unit
          granted under this Plan in any calendar year to any Participant that
          is intended to satisfy the requirements for "performance based
          compensation" under Section 162(m) of the Code shall be a dollar
          amount not to exceed $5,000,000.

5.   Participation. Participation in the Plan shall be limited to Employees,
     prospective employees, directors or advisors of the Company or an Affiliate
     selected by the Committee. Options intending to qualify as Incentive Stock
     Options may only be granted to Employees of the Company or any subsidiary
     within the meaning of the Code. Participation is entirely at the discretion
     of the Committee, and is not automatically continued after an initial
     period of participation.

6.   Performance Shares and Performance Units. An Award of Performance Shares or
     Performance Units, under the Plan shall entitle the Participant to future
     payments or Shares or a combination thereof based upon the level of
     achievement with respect to one or more pre-established performance
     criteria (including Qualifying Performance Criteria) established for a
     Performance Cycle.

     6.1. Amount of Award. The Committee shall establish a maximum amount of a
          Participant's Award, which amount shall be denominated in Shares in
          the case of Performance Shares or in dollars in the case of
          Performance Units.

     6.2. Communication of Award. Each Award Agreement evidencing an Award of
          Performance Shares or Performance Units shall contain provisions
          regarding (i) the target and maximum amount payable to the Participant
          pursuant to the Award,

                                        6

<PAGE>

          (ii) the performance criteria and level of achievement versus the
          criteria that shall determine the amount of such payment, (iii) the
          Performance Cycle as to which performance shall be measured for
          determining the amount of any payment, (iv) the timing of any payment
          earned by virtue of performance, (v) restrictions on the alienation or
          transfer of the Award prior to actual payment, (vi) forfeiture
          provisions and (vii) such further terms and conditions, in each case
          not inconsistent with this Plan, as may be determined from time to
          time by the Committee.

     6.3. Performance Criteria. Performance criteria established by the
          Committee shall relate to corporate, group, unit or individual
          performance, and may be established in terms of earnings, growth in
          earnings, ratios of earnings to equity or assets, or such other
          measures or standards determined by the Committee; provided, however,
          that the performance criteria for any portion of an Award of
          Performance Shares or Performance Units that is intended by the
          Committee to satisfy the requirements for "performance-based
          compensation" under Code Section 162(m) shall be a measure based on
          one or more Qualifying Performance Criteria selected by the Committee
          and specified at the time the Award is granted. Multiple performance
          targets may be used and the components of multiple performance targets
          may be given the same or different weighting in determining the amount
          of an Award earned, and may relate to absolute performance or relative
          performance measured against other groups, units, individuals or
          entities.

     6.4. Discretionary Adjustments. Notwithstanding satisfaction of any
          performance goals, the amount paid under an Award of Performance
          Shares or Performance Units on account of either financial performance
          or personal performance evaluations may be reduced by the Committee on
          the basis of such further considerations as the Committee shall
          determine.

     6.5. Payment of Awards. Following the conclusion of each Performance Cycle,
          the Committee shall determine the extent to which performance criteria
          have been attained, and the satisfaction of any other terms and
          conditions with respect to an Award relating to such Performance
          Cycle. The Committee shall determine what, if any, payment is due with
          respect to an Award and whether such payment shall be made in cash,
          Stock or a combination thereof. Payment shall be made in a lump sum or
          installments, as determined by the Committee at the time the Award is
          granted, commencing as promptly as practicable following the end of
          the applicable Performance Cycle, subject to such terms and conditions
          and in such form as may be prescribed by the Committee. Payment in
          Stock may be in Restricted Stock or Restricted Stock Units, as
          determined by the Committee at the time the Award is granted.

     6.6. Termination of Employment. Unless the Committee provides otherwise:

          (a)  Due to Death or Disability. If a Participant who is an Employee
               ceases to be an Employee or if a Participant who is a director
               ceases to be a director before the end of a Performance Cycle, in
               either case by reason of death or

                                        7

<PAGE>

               permanent disability, the Performance Cycle for such Participant
               for the purpose of determining the amount of Award payable shall
               end at the end of the calendar quarter immediately preceding the
               date on which said Participant ceased to be an Employee or
               director, as the case may be. The amount of an Award payable to a
               Participant (or the Beneficiary of a deceased Participant) to
               whom the preceding sentence is applicable shall be paid at the
               end of the Performance Cycle, and shall be that fraction of the
               Award computed pursuant to the preceding sentence, the numerator
               of which is the number of calendar quarters during the
               Performance Cycle during all of which said Participant was an
               Employee or director and the denominator of which is the number
               of full calendar quarters in the Performance Cycle.

          (b)  Due to Reasons Other Than Death or Disability. Upon any other
               termination of employment as an Employee or director of a
               Participant during a Performance Cycle, participation in the Plan
               shall cease and all outstanding Awards of Performance Shares or
               Performance Units to such Participant shall be cancelled.

7.   Restricted Stock Awards. An Award of Restricted Stock under the Plan shall
     consist of Shares the grant, issuance, retention, vesting and/or
     transferability of which are subject, during specified periods of time, to
     such conditions and terms as the Committee deems appropriate. Restricted
     Stock granted pursuant to the Plan need not be identical, but each grant of
     Restricted Stock must contain and be subject to the terms and conditions
     set forth below.

     7.1. Award Agreement. Each Award of Restricted Stock shall be evidenced by
          an Award Agreement. Each Award Agreement shall contain provisions
          regarding (i) the number of Shares subject to the Award or a formula
          for determining such number, (ii) the purchase price of the Shares, if
          any, and the means of payment, (iii) such terms and conditions on the
          grant, issuance, vesting and/or forfeiture of the Restricted Stock as
          may be determined from time to time by the Committee, (iv)
          restrictions on the transferability of the Award and (v) such further
          terms and conditions, in each case not inconsistent with this Plan, as
          may be determined from time to time by the Committee. Shares issued
          under an Award of Restricted Stock may be issued in the name of the
          Participant and held by the Participant or held by the Company, in
          each case as the Committee may provide.

     7.2. Vesting and Lapse of Restrictions. The grant, issuance, retention,
          vesting and/or settlement of Shares of Restricted Stock shall occur at
          such time and in such installments as determined by the Committee or
          under criteria established by the Committee. The Committee shall have
          the right to make the timing of the grant and/or the issuance, ability
          to retain, vesting and/or settlement of Shares of Restricted Stock
          subject to continued employment, passage of time and/or such
          performance criteria as deemed appropriate by the Committee.

                                        8

<PAGE>

     7.3. Rights as a Stockholder. Unless otherwise determined by the Committee,
          a Participant shall have all voting, dividend, liquidation and other
          rights with respect to Restricted Stock held by such Participant as if
          the Participant held unrestricted Stock; provided that the unvested
          portion of any award of Restricted Stock shall be subject to any
          restrictions on transferability or risks of forfeiture imposed
          pursuant to Sections 7.1, 7.2 and 7.4. Unless the Committee otherwise
          determines or unless the terms of the applicable Award Agreement or
          grant provides otherwise, any non-cash dividends or distributions paid
          with respect to shares of unvested Restricted Stock shall be subject
          to the same restrictions and vesting schedule as the Shares to which
          such dividends or distributions relate.

     7.4. Termination of Employment. Unless the Committee provides otherwise:

          (a)  Due to Death or Disability. If a Participant who is an Employee
               ceases to be an Employee or if a Participant who is a director
               ceases to be a director prior to the lapse of restrictions on
               Shares of Restricted Stock, in either case by reason of death or
               permanent disability, all restrictions on Shares of Restricted
               Stock held for the Participant's benefit shall immediately lapse.

          (b)  Due to Reasons Other Than Death or Disability. Upon any other
               termination of employment as an Employee or director prior to the
               lapse of restrictions, participation in the Plan shall cease and
               all Shares of Restricted Stock held for the benefit of a
               Participant shall be forfeited by the Participant.

     7.5. Certificates. The Committee may require that certificates representing
          Shares of Restricted Stock be retained and held in escrow by a
          designated employee or agent of the Company or any Affiliate until any
          restrictions applicable to Shares of Restricted Stock so retained have
          been satisfied or lapsed. Each certificate issued in respect to an
          Award of Restricted Stock may, at the election of the Committee, bear
          the following legend:

          "This certificate and the shares of stock represented hereby are
          subject to the terms and conditions (including forfeiture provisions
          and restrictions against transfer) contained in the 2006 Equity
          Incentive Plan and the Restricted Stock Award. Release from such terms
          and conditions shall obtain only in accordance with the provisions of
          the Plan and the Award, a copy of each of which is on file in the
          office of the Secretary of G & K Services, Inc."

8.   Stock Awards.

     8.1. Grant. A Participant may be granted one or more Stock Awards under the
          Plan. Stock Awards shall be subject to such terms and conditions,
          consistent with the other provisions of the Plan, as may be determined
          by the Committee.

     8.2. Rights as a Stockholder. A Participant shall have all voting,
          dividend, liquidation and other rights with respect to Shares issued
          to the Participant as a Stock Award

                                        9

<PAGE>

          under this Section 8 upon the Participant becoming the holder of
          record of the Shares granted pursuant to such Stock Award; provided
          that the Committee may impose such restrictions on the assignment or
          transfer of Shares awarded pursuant to a Stock Award as it considers
          appropriate.

9.   Restricted Stock Units. Restricted Stock Units are Awards denominated in
     units under which the issuance of Shares is subject to such conditions and
     terms as the Committee deems appropriate. Restricted Stock Units granted
     pursuant to the Plan need not be identical, but each grant of Restricted
     Stock Units must contain and be subject to the terms and conditions set
     forth below. Restricted Stock Units may be granted without vesting or
     forfeiture restrictions. Such Restricted Stock Units may also be called
     "Deferred Stock Units," in the discretion of the Committee.

     9.1. Award Agreement. Each Award of Restricted Stock Units shall be
          evidenced by an Award Agreement. Each Award Agreement shall contain
          provisions regarding (i) the number of Restricted Stock Units subject
          to such Award or a formula for determining such number, (ii) the
          purchase price of the Shares subject to the Award, if any, and the
          means of payment, (iii) such terms and conditions on the grant,
          issuance, vesting and/or forfeiture of the Restricted Stock Units as
          may be determined from time to time by the Committee, (iv)
          restrictions on the transferability of the Award, and (v) such further
          terms and conditions in each case not inconsistent with this Plan as
          may be determined from time to time by the Committee.

     9.2. Vesting and Lapse of Restrictions. The grant, issuance, retention,
          vesting and/or settlement of Restricted Stock Units shall occur at
          such time and in such installments as determined by the Committee or
          under criteria established by the Committee. The Committee shall have
          the right to make the timing of the grant and/or the issuance, ability
          to retain, vesting and/or settlement of Restricted Stock Units subject
          to continued employment, passage of time and/or such performance
          criteria as deemed appropriate by the Committee.

     9.3. Rights as a Stockholder. Participants shall have no voting rights with
          respect to Shares underlying Restricted Stock Units unless and until
          such Shares are reflected as issued and outstanding shares on the
          Company's stock ledger. Shares underlying Restricted Stock Units shall
          be entitled to dividends or dividend equivalents only to the extent
          provided by the Committee. If an Award of Restricted Stock Units
          includes dividend equivalents, an amount equal to the dividends that
          would have been paid if the Restricted Stock Units had been issued and
          outstanding Shares as of the record date for the dividends shall be
          paid to the Participant in cash subject to applicable withholding
          taxes in accordance with the terms of the Award as determined by the
          Committee, consistent with Section 409A of the Code.

                                       10
<PAGE>

     9.4. Termination of Employment. Unless the Committee provides otherwise:

          (a)  Due to Death or Disability. If a Participant who is an Employee
               ceases to be an Employee or if a Participant who is a director
               ceases to be a director, in either case by reason of the
               Participant's death or permanent disability, all restrictions on
               the Restricted Stock Units of the Participant shall lapse in
               accordance with the terms of the Award as determined by the
               Committee.

          (b)  Due to Reasons Other Than Death or Disability. For Awards
               designated Restricted Stock Units by the Committee, if a
               Participant ceases employment as an Employee or director for any
               reason other than death or permanent disability, all Restricted
               Stock Units of the Participant and all rights to receive dividend
               equivalents thereon shall immediately terminate without notice of
               any kind and shall be forfeited by the Participant. The forgoing
               sentence shall not apply to an Award designated as a Deferred
               Stock Unit by the Committee unless the Committee provides to the
               contrary in the Award.

10.  Options. The Committee may grant an Option or provide for the grant of an
     Option, either from time-to-time in the discretion of the Committee or
     automatically upon the occurrence of specified events, including, without
     limitation, the achievement of performance goals (which may include
     Qualifying Performance Criteria). Except to the extent provided herein, no
     Participant (or Beneficiary of a deceased Participant) shall have any
     rights as a stockholder with respect to any Shares subject to an Option
     granted hereunder until said Shares have been issued. Options granted
     pursuant to the Plan need not be identical, but each Option must contain
     and be subject to the terms and conditions set forth below.

     10.1. Type of Option; Number of Shares. Each Option shall be evidenced by
          an Award Agreement identifying the Option represented thereby as an
          Incentive Stock Option or Non-Qualified Stock Option, as the case may
          be, and the number of Shares to which the Option applies.

     10.2. Exercise Price. The exercise price under each Option shall be
          established by the Committee and shall not be less than the Fair
          Market Value of the Shares subject to the Option on the date of grant;
          provided, however, that the exercise price per Share with respect to
          an Option that is granted in connection with a merger or other
          acquisition as a substitute or replacement award for options held by
          optionees of the acquired entity may be less than 100% of the Fair
          Market Value on the date such Option is granted.

     10.3. Exercisability. The Committee shall have the right to make the timing
          of the ability to exercise any Option subject to continued employment,
          the passage of time and/or such performance requirements as deemed
          appropriate by the Committee.

                                       11

<PAGE>

     10.4. Exercise Term. Each Option shall have a Term established by the
          Committee, provided that no Incentive Stock Option shall be
          exercisable after ten years from the date of grant.

     10.5. Payment for Shares. The exercise price of the Shares with respect to
          which an Option is exercised shall be payable at the time of exercise
          in accordance with procedures established by the Company. The exercise
          price of any Option may be paid in cash or, to the extent allowed by
          the Committee, an irrevocable commitment by a broker to pay over such
          amount from a sale of the Shares issuable under an Option, the
          delivery (either physically or by attestation) of previously-owned
          Shares, or a combination thereof.

     10.6. No Repricing. Other than in connection with a change in the Company's
          capitalization (as described in Section 25), an Option may not be
          re-priced without stockholder approval (including canceling previously
          awarded Options and re-granting them with a lower exercise price).

     10.7. No Reload Grants. Stock Options shall not be granted under the Plan
          in consideration for and shall not be conditioned upon the delivery of
          Shares to the Company in payment of the exercise price and/or tax
          withholding obligation under any other employee stock option or stock
          appreciation right.

     10.8. Incentive Stock Options. In the case of an Incentive Stock Option,
          each Option shall be subject to any terms, conditions and provisions
          as the Committee determines necessary or desirable in order to qualify
          the Option as an Incentive Stock Option. Notwithstanding anything to
          the contrary in this Section 10, in the case of an Incentive Stock
          Option (a) if the Participant owns stock possessing more than 10
          percent of the combined voting power of all classes of stock of the
          Company (a "10% Stockholder"), the exercise price of such Option must
          be at least 110 percent of the Fair Market Value of the Common Stock
          on the date of grant, and the Option must expire within a period of
          not more than five years from the date of grant, and (b) termination
          of employment will be deemed to occur when the person to whom an Award
          was granted ceases to be an employee (as determined in accordance with
          Section 3401(c) of the Code and the regulations promulgated
          thereunder) of the Company and its subsidiaries. Notwithstanding
          anything in this Section 10 to the contrary, Options designated as
          Incentive Stock Options shall not be eligible for treatment under the
          Code as Incentive Stock Options (and shall be deemed Non-Qualified
          Stock Options) to the extent that either (i) the aggregate Fair Market
          Value of Shares (determined as of the time of grant) with respect to
          which such Options are exercisable for the first time by the

                                       12

<PAGE>

          Participant during any calendar year (under all plans of the Company
          and any Affiliate) exceeds $100,000, taking Options into account in
          the order in which they were granted, and (ii) such Options otherwise
          remain exercisable but are not exercised within three months of
          termination of employment (or such other period of time provided in
          Section 422 of the Code).

     10.9. Termination of Employment.

          (a)  Due to Death or Disability. If a Participant who is an Employee
               ceases to be an Employee or if a Participant who is a director
               ceases to be a director in either case by reason of death or
               permanent disability, each outstanding Option shall become
               exercisable to the extent and for such period or periods
               determined by the Committee but not beyond the expiration date of
               said Option. If a Participant dies before exercising all
               outstanding Options, the outstanding Options shall be exercisable
               by the Participant's Beneficiary.

          (b)  Other Than Death or Disability. Unless the Committee provides
               otherwise, upon any other termination of employment as an
               Employee or director, all rights of the Participant under this
               Plan shall immediately terminate without notice of any kind.

11.  Stock Appreciation Rights.

     11.1. General. An Award of a Stock Appreciation Right shall entitle the
          Participant, subject to terms and conditions determined by the
          Committee to receive upon exercise of the right an amount equal to or
          otherwise based on the excess of (a) the Fair Market Value of a Share
          at the time of exercise over (b) the exercise price of the right, as
          established by the Committee on the date the Award is granted. Stock
          Appreciation Rights may be granted to Participants from time to time
          either in tandem with, or as a component of, an Option granted under
          Section 10, other Awards granted under the Plan or stock options
          granted under any other Company equity compensation plan ("tandem
          SARs") or without reference to other Awards or stock options
          ("freestanding SARs"). Any Stock Appreciation Right granted in tandem
          with an Option may be granted at the same time such Option is granted
          or at any time thereafter before exercise or expiration of such
          Option. The Committee may provide that the exercise of a tandem SAR
          will be in lieu of the exercise of the stock option or Award in
          connection with which the tandem SAR was granted. A tandem SAR may not
          be exercised at any time when the per Share Fair Market Value of the
          Shares to which it relates does not exceed the exercise price of the
          Option associated with the tandem SAR. The provisions of Stock
          Appreciation Rights need not be the same with respect to each grant or
          each recipient. All freestanding SARs shall be granted subject to the
          same terms and conditions applicable to Options as set forth in
          Section 10, and all tandem SARs shall have the same vesting,
          exercisability, forfeiture and termination provisions as such Award or
          stock option to which they relate. Subject to the foregoing sentence
          and the terms of the Plan, the Committee may impose such other

                                       13

<PAGE>

          conditions or restrictions on any Stock Appreciation Right as it shall
          deem appropriate.

     11.2. Exercise Price. The per Share price for exercise of Stock
          Appreciation Rights shall be determined by the Committee, but shall be
          a price that is equal to or greater than 100% of the Fair Market Value
          of the Shares subject to the Award on the date of grant; provided,
          however, that the per Share exercise price with respect to a Stock
          Appreciation Right that is granted in connection with a merger or
          other acquisition as a substitute or replacement award for stock
          appreciation rights held by awardees of the acquired entity may be
          less than 100% of the Fair Market Value on the date such Award is
          granted.

     11.3. No Repricing. Other than in connection with a change in the Company's
          capitalization (as described in Section 25), a Stock Appreciation
          Right may not be re-priced without stockholder approval (including
          canceling previously awarded Stock Appreciation Rights and re-granting
          them with a lower exercise price).

     11.4. No Reload Grants. Stock Appreciation Rights shall not be granted
          under the Plan in consideration for and shall not be conditioned upon
          the delivery of Shares to the Company in payment of the exercise price
          and/or tax withholding obligation under any other employee stock
          option or stock appreciation right.

     11.5. Termination of Employment.

          (a)  Due to Death or Disability.

               (i)  If a Participant who is an Employee ceases to be an Employee
                    or if a Participant who is a director ceases to be a
                    director, in either case by reason of death or permanent
                    disability, each outstanding freestanding SAR shall become
                    exercisable to the extent and for such period or periods
                    determined by the Committee but not beyond the expiration
                    date of said Stock Appreciation Right.

               (ii) If a Participant who is an Employee ceases to be an Employee
                    or if a Participant who is a director ceases to be a
                    director, in either case by reason of death or permanent
                    disability, each outstanding tandem SAR shall become
                    exercisable to the extent and for such period or periods
                    determined by the Committee but not beyond the expiration
                    date of said Stock Appreciation Right. If a Participant

                                       14

<PAGE>

                    dies before exercising all tandem SARs, the outstanding
                    tandem SARs shall be exercisable by the Participant's
                    Beneficiary.

          (b)  Other Than Death or Disability. Unless the Committee provides
               otherwise, upon any other termination of employment as an
               Employee or director, all rights of the Participant under this
               Plan shall immediately terminate without notice of any kind.

     11.6 Payment. Upon exercise of a Stock Appreciation Right, payment shall be
          made in the form of cash, Shares or a combination thereof as
          determined by the Committee at the time the Award is granted. However,
          notwithstanding any other provisions of this Plan, in no event may the
          payment (whether in cash or Stock) upon exercise of a Stock
          Appreciation Right exceed an amount equal to 100% of the Fair Market
          Value of the Shares subject to the Stock Appreciation Right at the
          time of grant.

12.  Other Stock-Based Awards. The Committee, in its sole discretion, may grant
     or sell Awards of Shares and Awards that are valued in whole or in part by
     reference to, or are otherwise based on the Fair Market Value of, Shares.
     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).

13.  Nontransferability of Rights. Unless the Committee provides otherwise, (i)
     no rights under any Award will be assignable or transferable and no
     Participant or Beneficiary will have any power to anticipate, alienate,
     dispose of, pledge or encumber any rights under any Award, and (ii) the
     rights and the benefits of any Award may be exercised and received during
     the lifetime of the Participant only by the Participant or by the
     Participant's legal representative. The Participant may, by completing and
     signing a written beneficiary designation form which is delivered to and
     accepted by the Company, designate a beneficiary to receive any payment
     and/or exercise any rights with respect to outstanding Awards upon the
     Participant's death. If at the time of the Participant's death there is not
     on file a fully effective beneficiary designation form, or if the
     designated beneficiary did not survive the Participant, the person or
     persons surviving at the time of the Participant's death in the first of
     the following classes of beneficiaries in which there is a survivor, shall
     have the right to receive any payment and/or exercise any rights with
     respect to outstanding Awards:

                                       15

<PAGE>

     (a)  Participant's surviving spouse;

     (b)  Equally to the Participant's children, except that if any of the
          Participant's children predecease the Participant but leave
          descendants surviving, such descendants shall take by right of
          representation the share their parent would have taken if living;

     (c)  Participant's surviving parents equally;

     (d)  Participant's surviving brothers and sisters equally; or

     (e)  The legal representative of the Participant's estate.

     If a person in the class surviving dies before receiving any payment and/or
     exercising any rights with respect to outstanding Awards (or the person's
     share of any payment and/or rights in case of more than one person in the
     class), that person's right to receive any payment and/or exercise any
     rights with respect to outstanding Awards will lapse and the determination
     of who will be entitled to receive any payment and/or exercise any rights
     with respect to outstanding Awards will be determined as if that person
     predeceased the Participant.

14.  Termination of Employment.

     14.1. Transfers of employment between the Company and an Affiliate, or
          between Affiliates, will not constitute termination of employment for
          purposes of any Award.

     14.2. Subject to compliance with applicable law, the Committee may specify
          whether any authorized leave of absence or absence for military or
          government service or for any other reasons will constitute a
          termination of employment for purposes of the Award and the Plan.

15.  Change in Control. In the event of a Change in Control after the Effective
     Date, the Committee may (subject to Section 25), but shall not be obligated
     to, (a) accelerate, vest or cause the restrictions to lapse with respect
     to, all or any portion of an Award, (b) cancel Awards for fair value (as
     determined in the sole discretion of the Committee) which, in the case of
     Options and Stock Appreciation Rights, may equal the excess, if any, of the
     value of the consideration to be paid in the Change in Control transaction
     to holders of the same number of Shares subject to such Options or Stock
     Appreciation Rights (or, if no consideration is paid in any such
     transaction, the Fair Market Value of the Shares subject to such Options or
     Stock Appreciation Rights) over the aggregate exercise price of such
     Options or Stock Appreciation Rights, and which for Performance Shares and
     Performance Units may be determined as if the Performance Cycle ended as of
     the close of the calendar quarter preceding the consummation of the
     Corporate Transition, with a pro rata portion of the Award payable based
     upon the number of completed calendar quarters in the Performance Cycle,
     (c) provide for the issuance of substitute Awards that will substantially
     preserve the otherwise applicable terms of any affected Awards previously
     granted hereunder as determined by the Committee in its sole discretion, or
     (d) provide that for a period of at least 30 days prior to the Change in

                                       16

<PAGE>

     Control, Options or Awards shall be exercisable as to all Shares subject
     thereto and that upon the occurrence of the Change in Control, such Option
     or Awards shall terminate and be of no further force and effect.

16.  Qualifying Performance-Based Compensation.

     16.1. General. The Committee may specify that all or a portion of any Award
          is intended to satisfy the requirements for "performance-based
          compensation" under Section 162(m) of the Code; provided that the
          performance criteria for any portion of an Award that is intended by
          the Committee to satisfy the requirements for "performance-based
          compensation" under Section 162(m) of the Code shall be a measure
          based on one or more Qualifying Performance Criteria selected by the
          Committee and specified at the time such Award is granted. The
          Committee shall certify the extent to which any Qualifying Performance
          Criteria has been satisfied, and the amount payable as a result
          thereof, prior to payment, settlement or vesting of any Award that is
          intended to satisfy the requirements for "performance-based
          compensation" under Section 162(m) of the Code. Notwithstanding
          satisfaction of any performance goals, the number of Shares issued or
          the amount paid under an Award may be reduced by the Committee on the
          basis of such further considerations as the Committee shall determine.

     16.2. Qualifying Performance Criteria. For purposes of this Plan, the term
          "Qualifying Performance Criteria" shall mean any one or more of the
          following performance criteria, either individually, alternatively or
          in any combination, applied to either the Company as a whole or to a
          business unit or Affiliate, either individually, alternatively or in
          any combination, and measured either annually or cumulatively over a
          period of years, on an absolute basis or relative to a pre-established
          target, to previous years' results or to a designated comparison
          group, in each case as specified and determined by the Committee: (a)
          cash flow, (b) earnings per share of the Company, (c) earnings before
          interest, taxes and amortization, (d) share price performance, (e)
          return on capital, (f) return on assets or net assets, (g) revenue,
          (h) net earnings or net income, (i) operating income or net operating
          income, (j) operating profit or net operating profit, (k) operating
          margin or profit margin, (l) return on operating revenue, (m) return
          on invested capital, (n) market segment share, (o) brand
          recognition/acceptance, (p) customer satisfaction, (q) return on
          equity or (r) total stockholder return. The Committee may
          appropriately adjust any evaluation of performance under a Qualifying
          Performance Criteria to exclude any of the following events that
          occurs during a Performance Cycle: (i) asset write-down, (ii)
          litigation or claim judgments or settlements, (iii) the effect of
          changes in or under provisions under tax laws, accounting principles
          or other such laws or provisions affecting reported results, (iv)
          accruals for reorganizations or restructuring programs, and (v) any
          extraordinary nonrecurring items as described in Accounting Principles
          Board Opinion No. 30 and/or in management's discussion and analysis of
          financial condition and results of operations appearing in the
          Company's annual report to stockholders for the applicable year. Any
          Qualifying Performance Criteria must be objectively determinable, must
          be established by the Committee while the outcome for the

                                       17

<PAGE>

          Performance Cycle is substantially uncertain and while no more than 90
          days, or if less, 25 percent of the number of days in the Performance
          Cycle have passed, and must otherwise meet the requirements of Section
          162(m) of the Code.

17.  Effective Date of the Plan. The Plan was adopted by the Board on August 23,
     2006, subject to approval of the shareholders of the Company at the next
     annual meeting. If this Plan is not approved by the shareholders in
     accordance with Minnesota Statute Section 302A.437, at the next annual
     meeting, this Plan shall be void. The Plan shall remain available for the
     grant of Awards until all shares available for grant have been awarded and
     all Awards have been settled. Notwithstanding the foregoing, the Plan may
     be terminated at such earlier time as the Board may determine. Termination
     of the Plan will not affect the rights and obligations of the Participants
     and the Company arising under Awards theretofore granted and then in
     effect.

18.  Right to Terminate Employment. Nothing in the Plan shall confer upon any
     Participant the right to continue in the employment of the Company or any
     Affiliate or affect any right which the Company or any Affiliate may have
     to terminate employment of the Participant.

19.  Compliance With Laws; Listing and Registration of Shares. All Awards
     granted under the Plan (and all issuances of Stock or other securities
     under the Plan) shall be subject to all applicable laws, rules and
     regulations, and to the requirement that if at any time the Committee shall
     determine that the listing, registration or qualification of the Shares
     covered thereby upon any securities exchange or under any state or federal
     law, or the consent or approval of any governmental regulatory body, is
     necessary or desirable as a condition of, or in connection with, the grant
     of such Award or the issue or purchase of Shares thereunder, such Award may
     not be exercised in whole or in part, or the restrictions on such Award
     shall not lapse, unless and until such listing, registration,
     qualification, consent or approval shall have been effected or obtained
     free of any conditions not acceptable to the Committee.

20.  Conditions and Restrictions Upon Securities Subject to Awards. The
     Committee may provide that the Shares issued upon exercise of an Option or
     Stock Appreciation Right or otherwise subject to or issued under an Award
     shall be subject to such further agreements, restrictions, conditions or
     limitations as the Committee in its discretion may specify prior to the
     exercise of such Option or Stock Appreciation Right or the grant, vesting
     or settlement of such Award, including without limitation, conditions on
     vesting or transferability, forfeiture or repurchase provisions and method
     of payment for the Shares issued upon exercise, vesting or settlement of
     such Award (including the actual or constructive surrender of Shares
     already owned by the Participant) or payment of taxes arising in connection
     with an Award. Without limiting the foregoing, such restrictions may
     address the timing and manner of any re-sales by the Participant or other
     subsequent transfers by the Participant of any Shares issued under an
     Award, including without limitation (a) restrictions under an insider
     trading policy or pursuant to applicable law, (b) restrictions designed to
     delay and/or coordinate the timing and manner of sales by Participant and
     holders of other Company equity compensation arrangements, and (c)
     restrictions as to the use of a specified brokerage firm for such re-sales
     or other transfers.

                                       18

<PAGE>

21.  Withholding Taxes. The Company or an Affiliate shall be entitled to: (a)
     withhold and deduct from future wages of a Participant (or from other
     amounts that may be due and owing to a Participant from the Company or an
     Affiliate), including all payments under this Plan, or make other
     arrangements for the collection of (including through the sale of Shares
     otherwise issuable pursuant to the applicable Award), all legally required
     amounts necessary to satisfy any and all federal, state, local and foreign
     withholding and employment-related tax requirements attributable to an
     Award, including, without limitation, the grant, exercise or vesting of, or
     payment of dividends with respect to, an Award or a disqualifying
     disposition of Common Stock received upon exercise of an Incentive Stock
     Option; or (b) require a Participant promptly to remit the amount of such
     withholding to the Company before taking any action with respect to an
     Award. To the extent specified by the Committee, withholding may be
     satisfied by withholding Stock to be received upon exercise or vesting of
     an Award or by delivery to the Company of previously owned Stock. In
     addition, the Company may reasonably delay the issuance or delivery of
     Shares pursuant to an Award as it determines appropriate to address tax
     withholding and other administrative matters.

22.  Deferral of Payments. The Committee may, in an Award Agreement or
     otherwise, provide for the deferred delivery of Shares upon settlement,
     vesting or other events with respect to Restricted Stock or Restricted
     Stock Units, or in payment or satisfaction of an Award of Performance
     Shares or Performance Units. Notwithstanding anything herein to the
     contrary, in no event will any deferral of the delivery of Shares or any
     other payment with respect to any Award be allowed if the Committee
     determines, in its sole discretion, that the deferral would result in the
     imposition of additional tax under Section 409A(1)(B) of the Code. Shares
     that are allocated after the Effective Date in connection with the deferral
     of an Award under the Director Deferred Compensation Plan (which includes
     dividend equivalents that are to be allocated under that plan after the
     Effective Date in connection with deferrals under the 1996 Director Stock
     Option Plan) or Shares that are allocated after the Effective Date under
     any other deferred compensation plan allowing for payment in Shares that
     refers specifically to this Plan, shall be issued under this Plan. Such
     issuances shall reduce the number of Shares available for Awards under this
     Plan.

23.  No Liability of Company. The Company and any Affiliate which is in
     existence or hereafter comes into existence shall not be liable to a
     Participant, Beneficiary or any other person as to: (a) the non-issuance or
     sale of Stock as to which the Company has been unable to obtain from any
     regulatory body having jurisdiction over the matter, the authority deemed
     by the Company's counsel to be necessary to the lawful issuance and sale of
     any Shares hereunder; (b) any tax consequence to any Participant,
     Beneficiary or other person due to the receipt, exercise or settlement of
     any Award granted hereunder; or (c) any provision of law or legal
     restriction that prohibits or restricts the transfer of Shares issued
     pursuant to any Award.

24.  Amendment, Modification and Termination of the Plan. The Board or Committee
     may at any time terminate, suspend or modify the Plan, except that the
     Board or Committee will not, without authorization of the stockholders of
     the Company, effect any change (other

                                       19

<PAGE>

     than through adjustment for changes in capitalization as provided in
     Section 25) which will:

     (a)  increase the total amount of Stock which may be awarded under the
          Plan;

     (b)  increase the individual maximum limits in Section 4.3;

     (c)  change the class of persons eligible to participate in the Plan;

     (d)  reduce the exercise price of outstanding Options or Stock Appreciation
          Rights; or

     (e)  otherwise amend the Plan in any manner requiring stockholder approval
          by law or under listing requirements of any exchange or interdealer
          quotation system on which the Shares are listed.

     No termination, suspension, or modification of the Plan will adversely
     affect any right acquired by any Participant or any Beneficiary under an
     Award granted before the date of termination, suspension, or modification,
     unless otherwise agreed to by the Participant; but, it will be conclusively
     presumed that any adjustment for changes in capitalization provided for in
     Section 25 does not adversely affect any right.

25.  Adjustment for Changes in Capitalization.

     (a)  In the event that the number of Shares shall be increased or decreased
          through a reorganization, reclassification, combination of shares,
          stock split, reverse stock split, spin-off, dividend (other than
          regular, quarterly cash dividends), or otherwise, then each Share that
          has been authorized for issuance under the Plan, whether such Share is
          then currently subject to or may become subject to an Award under the
          Plan, as well as the per share limits set forth in Section 4, shall be
          appropriately adjusted by the Committee to reflect such increase or
          decrease, unless the Company provides otherwise under the terms of
          such transaction. The terms of any outstanding Award shall also be
          adjusted by the Committee as to price, number of Shares subject to
          such Award and other terms to reflect the foregoing events.

     (b)  In the event there shall be any other change in the number or kind of
          outstanding Shares, or any stock or other securities into which such
          Shares shall have been changed, or for which it shall have been
          exchanged, whether by reason of a merger, consolidation or otherwise,
          then the Committee shall, in its sole discretion, determine the
          appropriate adjustment, if any, to be effected. In addition, in the
          event of such change described in this paragraph, the Committee may
          accelerate the time or times at which any Award may be exercised and
          may provide for cancellation of such accelerated Awards that are not
          exercised within a time prescribed by the Committee in its sole
          discretion. Notwithstanding anything to the contrary herein, any
          adjustment to Options granted pursuant to this Plan intended to
          qualify as Incentive Stock Options shall comply with the requirements,
          provisions and restrictions of the Code.

                                       20

<PAGE>

     (c)  No right to purchase fractional Shares shall result from any
          adjustment in Awards pursuant to this Section 25. In case of any such
          adjustment, the Shares subject to the Award shall be rounded down to
          the nearest whole Share. Notice of any adjustment shall be given by
          the Company to each Participant, which shall have been so adjusted and
          such adjustment (whether or not notice is given) shall be effective
          and binding for all purposes of the Plan.

26.  Transferability. Unless the Award Agreement (or an amendment thereto
     authorized by the Committee) expressly states that the Award is
     transferable, no Award granted under this Plan, nor any interest in such
     Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or
     otherwise transferred in any manner, other than by will or the laws of
     descent and distribution. The Committee may grant an Award or amend an
     outstanding Award to provide that the Award is transferable or assignable
     (a) in the case of a transfer without the payment of any consideration, to
     any "family member" as such term is defined in Section A.1(a)(5) of the
     General Instructions to Form S-8 under the Securities Act of 1933, as such
     may be amended from time to time, and (b) in any transfer described in
     clause (ii) of Section A.1(a)(5) of the General Instructions to Form S-8
     under the 1933 Act as amended from time to time, provided that following
     any such transfer or assignment the Award will remain subject to
     substantially the same terms applicable to the Award while held by the
     Participant to whom it was granted, as modified as the Committee shall
     determine appropriate, and as a condition to such transfer the transferee
     shall execute an agreement agreeing to be bound by such terms; provided
     further, that an Incentive Stock Option may be transferred or assigned only
     to the extent consistent with Section 422 of the Code. Any purported
     assignment, transfer or encumbrance that does not qualify under this
     Section 26 shall be void and unenforceable against the Company.

27.  International Participants. With respect to Participants who reside or work
     outside the United States of America and who are not (and who are not
     expected to be) "covered employees" within the meaning of Section 162(m) of
     the Code, the Committee may, in its sole discretion, amend the terms of the
     Plan or Awards with respect to such Participants in order to conform such
     terms with the requirements of local law or to obtain more favorable tax or
     other treatment for a Participant, the Company or an Affiliate.

28.  Other Benefit Plans. All Awards shall constitute a special incentive
     payment to the Participant and shall not be taken into account in computing
     the amount of salary or compensation of the Participant for the purpose of
     determining any benefits under any pension, retirement, profit-sharing,
     bonus, life insurance or other benefit plan of the Company or under any
     agreement between the Company and the Participant, unless such plan or
     agreement specifically provides otherwise.

29.  Choice of Law. The Plan shall be governed by and construed in accordance
     with the laws of the State of Minnesota without regard to conflicts of
     laws, and except as otherwise provided in the pertinent Award agreement,
     any and all disputes between a Participant and the Company or any Affiliate
     relating to an Award shall be brought only in a state or federal court of
     competent jurisdiction sitting in Minneapolis, Minnesota.

                                       21

<PAGE>

30.  Section 409A. Notwithstanding other provisions of the Plan or any Award
     agreements thereunder, no Award shall be granted, deferred, accelerated,
     extended, paid out or modified under this Plan in a manner that would
     result in the imposition of an additional tax under Section 409A of the
     Code upon a Participant. In the event that it is reasonably determined by
     the Committee that, as a result of Section 409A of the Code, payments in
     respect of any Award under the Plan may not be made at the time
     contemplated by the terms of the Plan or the relevant Award agreement, as
     the case may be, without causing the Participant holding such Award to be
     subject to taxation under Section 409A of the Code, the Company will make
     such payment on the first day that would not result in the Participant
     incurring any tax liability under Section 409A of the Code.

                                       22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]