Document:

1994 STOCK AWARD PLAN

(Amended and Restated as of January 1, 2008)

          1. Purpose. The purpose of this 1994 Stock
Award Plan (the “Plan’) is to motivate key personnel to produce a superior return to the shareholders of Medtronic, Inc.
(the “Company”) and its Affiliates by offering such individuals an opportunity to realize Stock appreciation, by
facilitating Stock ownership, and by rewarding them for achieving a high level of corporate performance. This Plan is also
intended to facilitate recruiting and retaining key personnel of outstanding ability. The Plan is amended and restated January 1,
2008 to comply with Section 409A of the Internal Revenue Code.

          2. Definitions. The capitalized terms used in
this Plan have the meanings set forth below.

	
 

	
 

	
 

	
 

	
          (a)
 “Affiliate” means any corporation that is a “parent corporation” or
 “subsidiary corporation” of the Company, as those terms are defined in
 Sections 424(e) and (t) of the Code, or any successor provision, and, for
 purposes other than the grant of Incentive Stock Options, any joint venture
 in which the Company or any such “parent corporation” or “subsidiary
 corporation” owns an equity interest.

	
 

	
 

	
 

	
          (b)
 “Agreement” means the agreement, whether in written or electronic form, between
 the Company or an Affiliate and a Participant containing the terms and
 conditions of an Award (not inconsistent with this Plan), together with all
 amendments to such agreement, which amendments may be unilaterally made by
 the Company unless such amendments are deemed by the Committee to be
 materially adverse to the Participant or are not required as a matter of law.
 The Agreement and any amendments thereto shall be deemed accepted and agreed
 upon by the Participant upon receipt, without the necessity of obtaining the
 Participant’s signature.

	
 

	
 

	
 

	
          (c)
 “Award” means a grant made under this Plan in the form of Options, Stock
 Appreciation Rights, Restricted Stock, Performance Shares or any Other
 Stock-Based Award.

	
 

	
 

	
 

	
          (d)
 “Board” means the Board of Directors of the Company.

	
 

	
 

	
 

	
          (e)
 “Change in Control” means:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

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

Notwithstanding
the foregoing provisions of this definition, a Change in Control shall not be
deemed to occur with respect to a Participant if the acquisition of the 30% or
greater interest referred to in clause (i) is by a group, acting in concert,
that includes the Participant or if at least 40% of the then outstanding common
stock or combined voting power of the then outstanding voting securities (or
voting equity interests) of the Surviving Corporation or, if applicable, the
Parent Corporation shall be beneficially owned, directly or indirectly,
immediately after a Business Combination by a group, acting in concert, that
includes that Participant.

	
 

	
 

	
 

	
          (f)
 “Code” means the Internal Revenue Code of 1986, as amended and in effect from
 time to time, or any successor statute.

	
 

	
 

	
 

	
          (g)
 “Committee” means the persons designated by the Board to administer this Plan
 under Section 3 hereof. The Committee shall consist of not less than three
 members of the Board and, except as otherwise determined by the Board, such
 persons shall be “non-employee directors” under Exchange Act Rule 16b-3 and
 “outside directors” under Section 162(m) of the Code.

	
 

	
 

	
 

	
          (h)
 “Company” means Medtronic, Inc., a Minnesota corporation, or any successor to
 all or substantially all of its businesses by merger, consolidation, purchase
 of assets or otherwise.

	
 

	
 

	
 

	
          (i)
 “Disability” means the disability of a Participant such that the Participant
 is considered disabled under any retirement plan of the Company which is
 qualified under Section 401 of the Code, or, in the case of a Participant
 employed by a non-U.S. Affiliate or in a non-U.S. location, under any
 retirement plan or long-term disability plan of the Company or such Affiliate
 applicable to such Participant, or as otherwise determined by the Committee.

	
 

	
 

	
 

	
 

	
          (j)
 “Employee” means any full-time or part-time regular employee (including
 officers) of the Company or an Affiliate. For purposes of this Plan, a
 regular employee is an employee who is on the regular payroll of the Company
 or an Affiliate and who is identified in the personnel records of the Company
 or an Affiliate as being an employee. Except with respect to grants of
 Incentive Stock Options, “Employee” shall also include other individuals who
 are not regular employees of the Company or an Affiliate but who provide
 services to the Company or an Affiliate in the capacity of an independent
 contractor and to whom the Company specifically chooses to grant an Award and
 therefore treat as a Participant. References in this Plan to “employment” and
 related terms shall include the providing of services in any such capacity.

	
 

	
 

	
 

	
 

	
          (k)
 “Exchange Act” means the Securities Exchange Act of 1934, as amended;
 “Exchange Act Rule 16b-3” means Rule l6b-3 promulgated by the Securities and
 Exchange Commission under the Exchange Act as in effect with respect to the
 Company or any successor regulation.

	
 

	
 

	
 

	
          (l)
 “Fair Market Value” as of any date means, unless otherwise expressly provided
 in this Plan:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
          (i)
 the closing sale price of a Share (A) on the composite tape for New York
 Stock Exchange (“NYSE”) listed shares, or (B) if the Shares are not quoted on
 the NYSE composite tape, on the principal United States securities exchange
 registered under the Exchange Act on which the Shares are listed, or (C) if
 the Shares are not listed on any such exchange, on the National Association
 of Securities Dealers, Inc. Automated Quotation System National Market
 System, on that date, or, if no sale of Shares shall have occurred on that
 date, on the next preceding day on which a sale of Shares occurred, or

	
 

	
 

	
 

	
 

	
 

	
          (ii)
 if clause (i) is not applicable, what the Committee determines in good faith
 to be 100% of the fair market value of a Share on that date. In the case of
 an Incentive Stock Option, if such determination of Fair Market Value is not
 consistent with the then current regulations of the Secretary of the
 Treasury, Fair Market Value shall be determined in accordance with said
 regulations. The determination of Fair Market Value shall be subject to
 adjustment as provided in Section 14(f) hereof.

	
 

	
 

	
 

	
 

	
          (m)
 “Fundamental Change” means a dissolution or liquidation of the Company, a
 sale of substantially all of the assets of the Company, a merger or
 consolidation of the Company with or into any other corporation, regardless
 of whether the Company is the surviving corporation, or a statutory share
 exchange involving capital stock of the Company.

	
 

	
 

	
 

	
          (n)
 “Incentive Stock Option” means any Option designated as such and granted in
 accordance with the requirements of Section 422 of the Code or any successor
 to such section.

	
 

	
 

	
 

	
          (o)
 “Non-Employee Director” means a member of the Board who is not an employee of
 the Company or any Affiliate.

	
 

	
 

	
 

	
          (p)
 “Non-Qualified Stock Option” means an Option other than an Incentive Stock
 Option.

	
 

	
 

	
 

	
          (q)
 “Other Stock-Based Award” means an Award of Stock or an Award based on Stock
 other than Options, Stock Appreciation Rights, Restricted Stock or
 Performance Shares.

	
 

	
 

	
 

	
          (r)
 “Option” means a right to purchase Stock, including both Non-Qualified Stock
 Options and Incentive Stock Options.

	
 

	
 

	
 

	
          (s)
 “Participant” means an Employee to whom an Award is made.

	
 

	
 

	
 

	
          (t)
 “Performance Period” means the period of time as specified in an Agreement
 over which Performance Shares are to be earned.

	
 

	
 

	
 

	
          (u)
 “Performance Shares” means a contingent award of a specified number of
 Performance Shares, with each Performance Share equivalent to one Share, a
 variable percentage of which may vest depending upon the extent of
 achievement of specified performance objectives during the applicable
 Performance Period.

	
 

	
 

	
 

	
          (v)
 “Plan” means this 1994 Stock Award Plan, as amended and in effect from time
 to time.

	
 

	
 

	
 

	
          (w)
 “Restricted Stock” means Stock granted under Section 10 hereof so long as
 such Stock remains subject to one or more restrictions.

	
 

	
 

	
 

	
          (x)
 “Retirement” means retirement of an Employee as defined under any retirement
 plan of the Company which is qualified under Section 401 of the Code (which
 currently provides for retirement on or after age 55, provided the Employee
 has been employed by the Company and/or one or more Affiliates for at least
 ten years, or retirement on or after age 62), or under any retirement plan of
 the Company or any Affiliate applicable to the Employee due to employment by
 a non-U.S. Affiliate or employment in a non-U.S. location, or as otherwise
 determined by the Committee.

	
 

	
 

	
 

	
          (y)
 “Share” means a share of Stock.

	
 

	
 

	
 

	
          (z)
 “Stock” means the common stock, $. 10 par value per share (as such par value
 may be adjusted from time to time), of the Company.

	
 

	
 

	
 

	
          (aa)
 “Stock Appreciation Right” means a right, the value of which is determined
 relative to appreciation in value of Shares pursuant to an Award granted
 under Section 8 hereof.

	
 

	
 

	
 

	
          (bb)
 “Subsidiary” means a “subsidiary corporation,” as that term is defined in
 Section 424(f) of the Code, or any successor provision.

	
 

	
 

	
 

	
          (cc)
 “Successor” with respect to a Participant means the legal representative of
 an incompetent Participant or, if the Participant is deceased, the legal
 representative of the estate of the Participant or the person or persons who
 may, by bequest or inheritance, or valid beneficiary designation under
 Section 14(i) hereof, acquire the right to exercise an Option or Stock
 Appreciation Right or receive cash and/or Shares issuable in satisfaction of
 an Award in the event of a Participant’s death.

	
 

	
 

	
 

	
          (dd)
 “Term” means the period during which an Option or Stock Appreciation Right is
 outstanding or the period during which the restrictions placed on Restricted
 Stock or any other Award are in effect.

	
 

	
 

	
          Except
 when otherwise indicated by the 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. 

	
 

	
 

	
 

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

	
 

	
 

	
 

	
          (b) Delegation of Authority. The
 Committee may delegate all or any part of its authority under this Plan to
 (i) one or more subcommittees which may consist solely of “non-employee
 directors” under Exchange Act Rule 16b-3 and “outside directors” under
 Section 162(m) of the Code and (ii) persons who are not non-employee
 directors for purposes of determining and administering Awards solely to
 Employees who are not then subject to the reporting requirements of Section
 16 of the Exchange Act.

	
 

	
 

	
 

	
          (c) Rule 16b-3. It is the intent that
 this Plan and all Awards granted pursuant to it shall be administered by the
 Committee (or a subcommittee thereof) so as to permit this Plan and Awards to
 comply with Exchange Act Rule I 6b-3. If any provision of this Plan or of any
 Award would otherwise frustrate or conflict with the intent expressed in this
 Section 3(c), that provision to the extent possible shall be interpreted and
 deemed amended in the manner determined by the Committee so as to avoid such
 conflict.

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

	
 

	
 

	
4. Shares Available; Maximum Payouts.

	
 

	
 

	
 

	
          (a) Shares Available. The number of
 additional Shares available for distribution under this Plan as of April 30,
 2000 is 58,000,000 (which brings the total number of shares authorized for
 distribution under this Plan since inception to 102,800,000, as adjusted to
 date pursuant to Section 14(f)). All shares are subject to adjustment under
 Section 14(f) hereof.

	
 

	
 

	
 

	
          (b) Shares Again Available. Any Shares
 subject to the terms and conditions of an Award under this Plan which are not
 used because the terms and conditions of the Award are not met may again be
 used for an Award under this Plan.

	
 

	
 

	
 

	
          (c)
Unexercised Awards. Any unexercised or undistributed portion of any
terminated, expired, exchanged, or forfeited Award or any Award settled in
cash in lieu of Shares shall be available for further Awards. 

	
 

	
 

	
 

	
          (d) No Fractional Shares. No fractional
 Shares may be issued under this Plan. Fractional Shares will be rounded to
 the nearest whole Share.

	
 

	
 

	
 

	
          (e) Maximum Payouts. No more than 35% of
 all Shares subject to this Plan may be granted in the aggregate pursuant to
 Restricted Stock, Performance Share and Other Stock-Based Awards. No
 Participant may be granted Options, Stock Appreciation Rights, Performance
 Shares or any combination thereof relating to more than 2,000,000 Shares over
 a one-year period under this Plan. 

	
 

	
 

	
 

	
5. Eligibility. Awards may be granted under
 this Plan to any Employee at the discretion of the Committee.

	
 

	
 

	
 

	
6. General Terms
 of Awards.

	
 

	
 

	
 

	
          (a) Awards. Awards under this Plan may
 consist of Options (either Incentive Stock Options or Non-Qualified Stock
 Options), Stock Appreciation Rights, Performance Shares, Restricted Stock and

	
 

	
 

	
 

	
 Other
 Stock-Based Awards. Awards of Restricted Stock may, in the discretion of the
 Committee, provide the Participant with dividends or dividend equivalents and
 voting rights prior to vesting (whether vesting is based on a period of time
 during which employment must continue or on attainment of specified
 performance conditions).

	
 

	
 

	
 

	
          (b) Amount of Awards. Each Agreement
 shall set forth the number of Shares of Restricted Stock, Stock or
 Performance Shares subject to such Agreement, or the number of Shares to
 which the Option applies or with respect to which payment upon the exercise
 of the Stock Appreciation Right is to be determined, as the case may be, as
 determined by the Committee in its sole discretion.

	
 

	
 

	
 

	
          (c) Term. Each Agreement, other than
 those relating solely to Awards of Stock without restrictions, shall set
 forth the Term of the Award and any applicable Performance Period for
 Performance Shares, as the case may be, but in no event shall the Term of an
 Award (other than Awards granted in lieu of cash compensation) or the
 Performance Period be longer than ten years after the date of grant. In
 addition to the accelerated vesting provided pursuant to Sections 7(c), 8(b),
 9(b), 10(b) and 11(b) hereof in the event of a Change in Control, an
 Agreement with a Participant may permit acceleration of vesting and of the
 expiration of the applicable Term upon such terms and conditions as shall be
 set forth in the Agreement, which may, but need not, include, without
 limitation, acceleration resulting from the occurrence of a Fundamental
 Change, or the Participant’s death, Disability or Retirement. Acceleration of
 the Performance Period of Performance Shares shall be subject to Sections
 9(b) and 9(c) hereof.

	
 

	
 

	
 

	
          (d) Agreements. Each Award under this
 Plan shall be evidenced by an Agreement setting forth the terms and
 conditions, as determined by the Committee, which shall apply to such Award
 in addition to the terms and conditions specified in this Plan. All
 provisions of the Plan, which by their terms apply to an Award, shall apply
 regardless of whether such terms are expressly set forth in the Award
 Agreement, except to the extent that the Agreement for that Award expressly
 provides otherwise.

	
 

	
 

	
 

	
          (e) Transferability. During the lifetime
 of a Participant to whom an Award is granted, only such Participant (or such
 Participants legal representative or, if so provided in the applicable
 Agreement in the case of a Non-Qualified Stock Option, a permitted transferee
 as hereafter described) may exercise an Option or Stock Appreciation Right or
 receive payment with respect to Performance Shares or any other Award. No
 Award of Restricted Stock (prior to the expiration of the restrictions),
 Options, Stock Appreciation Rights, Performance Shares or other Award (other
 than an award of Stock without restrictions) may be sold, assigned,
 transferred, exchanged, or otherwise encumbered, and any attempt to do so
 shall be of no effect. Notwithstanding the immediately preceding sentence,
 (i) an Award shall be transferable to a Successor in the event of a
 Participant’s legal incompetency or death and (ii) an Agreement may provide
 that a Non-Qualified Stock Option shall be transferable to any member of a
 Participant’s ‘immediate family” (as such term is defined in Rule 16a-1(e)
 promulgated under the Exchange Act, or any successor rule or regulation) or
 to one or more trusts whose beneficiaries are members of such Participant’s
 “immediate family” or partnerships in which such family members are the only
 partners; provided, however, that (1) the Participant receives no consideration
 for the transfer and (2) such transferred Non-Qualified Stock Option shall
 continue to be subject to the same terms and conditions as were applicable to
 such Non-Qualified Stock Option immediately prior to its transfer.

	
 

	
 

	
 

	
          (f) Termination of Employment. Except as
 otherwise determined by the Committee or provided by the Committee in an
 applicable Agreement, in case of termination of employment, the following
 provisions shall apply:

	
 

	
 

	
 

	
                    (1)
Options and Stock Appreciation Rights.

	
 

	
 

	
 

	
 

	
 

	
          (i) Death. If a Participant who has been
 granted an Option or Stock Appreciation Rights shall die before such Option
 or Stock Appreciation Rights have expired, the Option or Stock Appreciation
 Rights shall become exercisable in full, and may be exercised by the
 Participant’s Successor at any time, or from time to lime, within three years
 after the date of the Participant’s death, in the case of an Option or Stock 

	
 

	
 

	
 

	
 

	
 

	
Appreciation
 Right granted before April 30, 2000 and within five years after the date of
 the Participant’s death in the case of an Option or Stock Appreciation Right
 granted on or after April 30, 2000.

	
 

	
 

	
 

	
 

	
 

	
          (ii) Disability or Retirement. If a
 Participant’s employment terminates because of Disability or Retirement, the
 Option or Stock Appreciation Rights shall become exercisable in full, and the
 Participant may exercise his or her Options or Stock Appreciation Rights at
 any time, or from time to time, within three years after the date of such
 termination, in the case of an Option or Stock Appreciation Right granted
 before April 30, 2000, and within five years after the date of such
 termination in the case of an Option or Stock Appreciation Right granted on
 or after April 30, 2000.

	
 

	
 

	
 

	
 

	
 

	
          (iii) Reasons other than Death, Disability or
 Retirement. If a Participant’s employment terminates for any
 reason other than death, Disability or Retirement, the unvested or
 unexercised portion of any Award held by such Participant shall terminate (a)
 on the date of termination of employment for Awards granted before April 30,
 2000, and (b) at the close of business on the date 30 days after the date of
 termination of employment for Awards granted on or after April 30, 2000,
 provided, however, that no further vesting shall occur after the date of
 termination of employment.

	
 

	
 

	
 

	
 

	
 

	
          (iv) Expiration of Term. Notwithstanding
 the foregoing paragraphs (i)-(iii), in no event shall an Option or a Stock
 Appreciation Right be exercisable after expiration of the Term of such Award.

	
 

	
 

	
 

	
 

	
          (2) Performance Shares. If a
 Participant’s employment with the Company or any of its Affiliates terminates
 during a Performance Period because of death, Disability or Retirement, or
 under other circumstances provided by the Committee in its discretion in the
 applicable Agreement, the Participant shall be entitled to a payment of
 Performance Shares at the end of the Performance Period based upon the extent
 to which achievement of performance targets was satisfied at the end of such
 period (as determined at the end of the Performance Period) and prorated for
 the portion of the Performance Period during which the Participant was
 employed by the Company or any Affiliate. Except as provided in this Section
 6(f)(2), in the applicable Agreement, or in Section 9(b) or 9(c) hereof, if a
 Participant’s employment terminates with the Company or any of its Affiliates
 during a Performance Period, then such Participant shall not be entitled to
 any payment with respect to that Performance Period.

	
 

	
 

	
 

	
          (3) Restricted Stock. In case of a
 Participant’s death, Disability or Retirement, the Participant shall be
 entitled to receive that number of shares of Restricted Stock under
 outstanding Awards that has been pro rated for the portion of the Term of the
 Awards during which the Participant was employed by the Company or any
 Affiliate, and with respect to such Shares all restrictions shall lapse. Upon
 termination of employment for any reason other than death, Disability or
 Retirement, any shares of Restricted Stock whose restrictions have not lapsed
 (including pursuant to Section 10(b) hereof) will automatically be forfeited
 in full and cancelled by the Company upon such termination of employment.

	
 

	
 

	
 

	
          (g) Rights as Shareholder. A Participant
 shall have no rights as a shareholder with respect to any securities covered
 by an Award until the date the Participant becomes the holder of record.

	
 

	
 

	
 

	
7. Stock Options.

	
 

	
 

	
 

	
          (a) Terms and Exercisability of All Options.
 Each Option shall be granted pursuant to an Agreement as either an Incentive
 Stock Option or a Non-Qualified Stock Option. Only Non-Qualified Stock
 Options may be granted to Employees who are not regular employees of the
 Company or an Affiliate. The purchase price of each Share subject to an
 Option shall be determined by the Committee and set forth in the Agreement,
 but shall not be less than 100% of the Fair Market Value of a Share on the
 date the Option is granted. The Agreement shall specify a vesting schedule under
 which the Option becomes 

	
 

	
 

	
 

	
 

	
available to
 exercise, subject to any acceleration that may be provided in the Agreement
 or in this Plan. Only the vested portion of an Option may be exercised. When
 exercising an Option, the purchase price of the Shares shall be paid in full
 at the time of exercise, provided that, to the extent permitted by law,
 Participants may simultaneously exercise Options and sell the Shares thereby
 acquired pursuant to a brokerage or similar relationship and use the proceeds
 from such sale to pay the purchase price of such Shares. The purchase price
 may be paid in cash, or by delivery of cash proceeds of such a simultaneous
 exercise and sale or by delivery to the Company, physically or by
 attestation, of Shares already owned by such Participant, provided that any
 such Shares not acquired on the open market shall have been owned for at
 least 6 months (with such Shares having a total fair market value as of the
 date the Option is exercised equal to the total exercise cost of the Shares
 being purchased pursuant to the Option), or a combination thereof unless
 otherwise provided in the Agreement. Each Option shall be exercisable in
 whole or in part on the terms provided in the Agreement. In no event shall
 any Option be exercisable at any time after its Term. When an Option is no
 longer exercisable, it shall be deemed to have lapsed or terminated.

	
 

	
 

	
 

	
 

	
(b)
 Incentive Stock Options. In addition to the other terms and conditions
 applicable to all Options:

	
 

	
 

	
 

	
 

	
 

	
          (i)
 the aggregate Fair Market Value (determined as of the date the Option is
 granted) of the Shares with respect to which Incentive Stock Options held by
 an individual first become exercisable in any calendar year (under this Plan
 and all other incentive stock option plans of the Company and its Affiliates)
 shall not exceed $100,000 (or such other limit as may be required by the
 Code), if such limitation is necessary to qualify the Option as an Incentive
 Stock Option, and to the extent an Option or Options granted to a Participant
 exceed such limit, such Option or Options shall be treated as a Non-Qualified
 Stock Option;

	
 

	
 

	
 

	
 

	
 

	
          (ii)
 an Incentive Stock Option shall not be exercisable and the Term of the Award
 shall not be more than ten years after the date of grant (or such other limit
 as may be required by the Code) if such limitation is necessary to qualify
 the Option as an Incentive Stock Option;

	
 

	
 

	
 

	
 

	
 

	
          (iii)
 the Agreement covering an Incentive Stock Option shall contain such other
 terms and provisions which the Committee determines necessary to qualify such
 Option as an Incentive Stock Option; and 

	
 

	
 

	
 

	
 

	
 

	
          (iv)
 notwithstanding any other provision of this Plan to the contrary, no
 Participant may receive an Incentive Stock Option under this Plan if, at the
 time the Award is granted, the Participant owns (after application of the
 rules contained in Section 424(d) of the Code, or its successor provision)
 Shares possessing more than ten percent of the total combined voting power of
 all classes of stock of the Company or its subsidiaries, unless (A) the
 option price for such Incentive Stock Option is at least 110% of the Fair
 Market Value of the Shares subject to such Incentive Stock Option on the date
 of grant and (B) such Option is not exercisable after the date five years
 from the date such Incentive Stock Option is granted.

	
 

	
 

	
 

	
 

	
          (c) Change in Control. For all Options
 granted prior to October 25, 2001, and for all Options granted after such
 date except in the latter case where otherwise expressly provided in the
 Agreement relating to an Option, upon the occurrence of a Change in Control,
 each then-outstanding Option, whether or not previously exercisable, shall
 vest and be exercisable in full.

	
 

	
 

	
 

	
8. Stock Appreciation Rights.

	
 

	
 

	
 

	
          (a) In 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 Stock
 Appreciation Right all or a portion of the excess of (i) the Fair Market
 Value of a specified number of Shares on the date of exercise of the Stock
 Appreciation Right over (ii) a specified price which shall not be less than
 100% of the Fair Market Value of such Shares on the date of grant of the
 Stock Appreciation Right. A Stock Appreciation Right may be granted in
 connection with a previously or contemporaneously granted Option, or
 independent of any Option. If issued in connection with an Option, the
 Committee may impose a condition that exercise of a Stock Appreciation Right
 cancels the Option with which it is connected and 

	
 

	
 

	
 

	
 

	
exercise of
 the connected Option cancels the Stock Appreciation Right. Each Stock
 Appreciation Right may be exercisable in whole or in part on the terms
 provided in the Agreement. No Stock Appreciation Right shall be exercisable
 at any time after its Term. When a Stock Appreciation Right is no longer
 exercisable, it shall be deemed to have lapsed or terminated. Except as
 otherwise provided in the applicable Agreement, upon exercise of a Stock Appreciation
 Right, payment to the Participant (or to his or her Successor) shall be made
 in the form of cash, Stock or a combination of cash and Stock as promptly as
 practicable after such exercise. The Agreement may provide for a limitation
 upon the amount or percentage of the total appreciation on which payment
 (whether in cash and/or Stock) may be made in the event of the exercise of a
 Stock Appreciation Right.

	
 

	
 

	
 

	
          (b) Change in Control. For all Stock
 Appreciation Rights granted prior to October 25, 2001, and for all Stock
 Appreciation Rights granted after such date except in the latter case where
 otherwise expressly provided in the Agreement relating to a Stock
 Appreciation Right, upon the occurrence of a Change in Control, each
 then-outstanding Stock Appreciation Right, whether or not previously
 exercisable, shall vest and be exercisable in full.

	
 

	
 

	
 

	
9. Performance Shares.

	
 

	
 

	
 

	
          (a) Initial Award. An Award of
 Performance Shares shall entitle a Participant (or a Successor) to future
 payments based upon the achievement of performance targets established in
 writing by the Committee. Payment shall be made in Stock, or a combination of
 cash and Stock, as determined by the Committee, provided that at least 25% of
 the value of the vested Performance Shares shall be distributed in the form
 of Stock. With respect to those Participants who are “covered employees”
 within the meaning of Section 162(m) of the Code and the regulations
 thereunder, such performance targets shall consist of one or any combination
 of two or more of revenue, revenue per employee, earnings before income tax
 (profit before taxes), earnings before interest and income tax, net earnings
 (profits after tax), earnings per employee, tangible, controllable or total
 asset turnover, earnings per share, operating income, total shareholder
 return, market share, return on equity, before- or after-tax return on net
 assets, distribution expense, inventory turnover, or economic value added
 (economic profit), and any such targets may relate to one or any combination
 of two or more of corporate, group, unit, division, Affiliate or individual
 performance. The Agreement may establish that a portion of the maximum amount
 of a Participants Award will be paid for performance, which exceeds the minimum
 target but falls below the maximum target applicable to such Award. The
 Agreement shall also provide for the timing of such payment. The Committee
 shall determine the extent to which (i) performance targets have been
 attained, (ii) any other terms and conditions with respect to an Award
 relating to such Performance Period have been satisfied, and (iii) payment is
 due with respect to a Performance Share Award.

	
 

	
 

	
 

	
          (b) Change in Control. For all
 Performance Share Awards granted prior to October 25, 2001, and for all
 Performance Share Awards granted after such date except in the latter ease
 where otherwise expressly provided in the Agreement relating to a Performance
 Share Award, upon the occurrence of a Change in Control, a Participant who
 has been awarded Performance Shares (but has not yet received payment of such
 shares) shall be entitled to a pro rata payment of such Performance Shares.
 The pro rata payment shall be made to the Participant as of the date of the
 Change in Control, in shares or cash (at the election of the Company) equal
 to the number of Shares covered by the Performance Shares multiplied by the
 performance-based accrual percentage pertaining to such Performance Shares as
 of the Change in Control, multiplied by a fraction the numerator of which is
 the number of months elapsed from the date the Performance Shares were
 granted through the date of the Change in Control and the denominator of
 which is the number of months from the date the Performance Shares were
 granted through the Performance Shares’ scheduled maturity date.

	
 

	
 

	
 

	
          (c) Acceleration and Adjustment for Other Reasons.
 In addition to the acceleration upon a Change in Control provided pursuant to
 Section 9(b) hereof and subject to the requirements of Section 409A of the
 Code, the Agreement may permit an acceleration of the Performance Period and
 an adjustment of performance targets and payments with respect to some or all
 of the Performance Shares awarded to a Participant, upon such terms and
 conditions as shall be set forth in the Agreement, upon the occurrence of
 certain events, which may, but need not, include without limitation a
 Fundamental Change, the 

	
 

	
 

	
 

	
 

	
Participant’s
 death, Disability or Retirement, a change in accounting practices of the
 Company or its Affiliates, or, with respect to payments in Stock for
 Performance Share Awards, a reclassification, stock dividend, stock split or
 stock combination as provided in Section 14(t) hereof.

	
 

	
 

	
 

	
          (d) Valuation. Each Performance Share
 earned after conclusion of a Performance Period shall have a value equal to
 the average of the Fair Market Values of a Share for the 20 consecutive
 business days ending on and including the last day of such Performance
 Period.

	
 

	
 

          10. Restricted Stock.

	
 

	
 

	
 

	
 

	
 

	
 

	
          (a) In General. Restricted Stock may be
 granted in the form of Shares registered in the name of the Participant but
 held by the Company until the end of the Term of the Award. Any employment
 conditions, performance conditions and the Term of the Award shall be
 established by the Committee in its discretion and included in the applicable
 Agreement. The Committee may provide in the applicable Agreement for the
 lapse or waiver of any such restriction or condition based on such factors or
 criteria as the Committee, in its sole discretion, may determine. No Award of
 Restricted Stock may vest earlier than one year from the date of grant,
 except as provided in the applicable Agreement or in Section 10(b) hereof.

	
 

	
 

	
 

	
          (b) Change in Control. For all Restricted
 Stock Awards granted prior to October 25, 2001, and for all Restricted Stock
 Awards granted after such date except in the latter case where otherwise
 expressly provided in the Agreement relating to a Restricted Stock Award,
 upon the occurrence of a Change in Control, all restrictions with respect to
 shares of Restricted Stock shall lapse.

          11. Other Stock-Based Awards.

	
 

	
 

	
 

	
 

	
 

	
 

	
          (a) In General. The Committee may from
 time to time grant Awards of Stock, and other Awards under this Plan
 (collectively herein defined as “Other Stock-Based Awards”), including,
 without limitation, those Awards pursuant to which Shares may be acquired in
 the future, such as Awards denominated in Stock units, securities convertible
 into Stock and phantom securities. The Committee, in its sole discretion,
 shall determine the terms and conditions of such Awards provided that such
 Awards shall not be inconsistent with the terms and purposes of this Plan.
 The Committee may, in its sole discretion, direct the Company to issue Shares
 subject to restrictive legends and/or stop transfer instructions which are
 consistent with the terms and conditions of the Award to which such Shares
 relate.

	
 

	
 

	
 

	
          (b) Change in Control. Unless otherwise
 specifically provided in the Agreement related to the grant of an Other
 Stock-Based Award, upon a Change in Control any such Award shall vest and/or
 pay out in full, as applicable, as if the Award had continued to maturity
 with all applicable conditions and targets satisfied.

	
 

	
 

	
 

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

	
 

	
 

	
          12. Prior Automatic Grants to Non-Employee
 Directors. The provisions of Section 12 of the Plan as in effect
 prior to April 30, 2000 shall be applicable to automatic grants of
 Non-Qualified Stock Options (and related Limited Rights) made prior to March
 5, 1998 to Non-Employee Directors.

	
 

	
 

	
 

	
          13. Prior Elective Grants to Non-Employee
Directors.
 The provisions of Section 13 of the Plan as in effect prior to April 30, 2000
 shall be applicable to grants of Restricted Stock made prior to March 5, 1998
 to Non-Employee Directors pursuant to their elections to receive such grants
 in lieu of all or a portion of their annual fees for their services as
 Non-Employee Directors.

	
 

	
 

	
14. General Provisions.

	
 

	
 

	
 

	
          (a) Effective Date of this Plan. This
 Plan shall become effective as of April 29, 1994, provided that this Plan is
 approved and ratified by the affirmative vote of the holders of a majority of
 the outstanding Shares of Stock present or represented and entitled to vote
 in person or by proxy at a meeting of the shareholders of the Company no
 later than August 31, 1994. This Plan, as amended and restated, is effective
 as of April 30, 2000.

	
 

	
 

	
 

	
          (b) Duration of this Plan. This Plan
 shall remain in effect until all Stock subject to it shall be distributed or
 all Awards have expired or lapsed, whichever is latest to occur, or this Plan
 is terminated pursuant to Section 14(e) hereof. No Award of an Incentive
 Stock Option shall be made more than ten years after the effective date
 provided in the second sentence of Section 14(a) hereof (or such other limit
 as may be required by the Code) if such limitation is necessary to qualify
 the Option as an Incentive Stock Option. The date and time of approval by the
 Committee of the granting of an Award shall be considered the date and time
 at which such Award is made or granted, notwithstanding the date of any
 Agreement with respect to such Award; provided, however, that the Committee
 may grant Awards other than Incentive Stock Options to be effective and
 deemed to be granted on the occurrence of certain specified contingencies.

	
 

	
 

	
 

	
          (c) Right to Terminate Employment. Nothing
 in this Plan or in any Agreement shall confer upon any Participant who is an
 Employee 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 or modify the employment of the Participant with or without cause.

	
 

	
 

	
 

	
          (d) Tax Withholding. The Company shall
 withhold from any payment of cash or Stock to a Participant or other person
 under this Plan an amount sufficient to cover any required withholding taxes,
 including the Participants social security and Medicare taxes (FICA) and
 federal, state and local income tax with respect to income arising from
 payment of the Award. The Company shall have the right to require the payment
 of any such taxes before issuing any Stock pursuant to the Award.

	
 

	
 

	
 

	
          (e) Amendment, Modification and Termination of this
 Plan. Except as provided in this Section 14(e), the Board may at
 any time amend, modify, terminate or suspend this Plan. Except as provided in
 this Section 14(e), the Committee may at any time alter or amend any or all
 Agreements under this Plan to the extent permitted by law. Plan amendments
 are subject to approval of the shareholders of the Company only if such
 approval is necessary to maintain this Plan in compliance with the
 requirements of Exchange Act Rule 16b-3, Section 422 of the Code, their
 successor provisions, or any other applicable law or regulation. No
 termination, suspension or modification of this Plan may materially and
 adversely affect any right acquired by any Participant (or a Participant’s
 legal representative) or any Successor under an Award granted before the date
 of termination, suspension or modification, unless otherwise agreed by the
 Participant in the Agreement or otherwise or required as a matter of law. It
 is conclusively presumed that any adjustment for changes in capitalization
 provided for in Section 9(c) or 14(f) hereof does not adversely affect any
 right of a Participant under an Award.

	
 

	
 

	
 

	
          (f) Adjustment for Changes in Capitalization.
 In the event of any change in corporate capitalization (including, but not
 limited to, a change in the number of Shares outstanding), arising from a
 stock split, Fundamental Change, Change in Control, or other corporate
 transaction, including, without limitation, any merger, consolidation,
 separation, spin-off, distribution of stock or property of the Company, share
 exchange, reorganization (whether or not such reorganization comes within the
 definition of such term in Section 368 of the Code) or any partial or
 complete liquidation of the Company, the Committee or Board may make such
 substitution or adjustments in the aggregate number and type of Shares
 reserved for issuance under the Plan, and the maximum limitation upon Awards
 to be granted to any 

	
 

	
 

	
 

	
 

	
Participant,
 in the number, type and option price of shares subject to outstanding Stock
 Options and Stock Appreciation Rights, in outstanding Performance Shares and
 payments with respect to outstanding Performance Shares in the number and
 type of Shares subject to other outstanding Awards granted under the Plan
 and/or such other equitable substitution or adjustments as it may determine
 to be appropriate in its sole discretion; provided however, that the number
 of Shares subject to any Award shall always be a whole number. Such adjusted
 option price shall also be used to determine the amount payable by the
 Company upon the exercise of any Stock Appreciation Right connected with any
 Stock Option.

	
 

	
 

	
 

	
          (g) Fundamental Change. In the event of a
 proposed Fundamental Change: (a) involving a merger, consolidation or
 statutory share exchange, unless appropriate provision shall be made (which
 the Committee may, but shall not be obligated to, make) for the protection of
 the outstanding Options and Stock Appreciation Rights by the substitution of
 options, stock appreciation rights and appropriate voting common stock of the
 corporation surviving any such merger or consolidation or, if appropriate,
 the parent corporation of the Company or such surviving corporation, to be
 issuable upon the exercise of options or used to calculate payments upon the
 exercise of stock appreciation rights in lieu of Options, Stock Appreciation
 Rights and capital stock of the Company, or (b) involving the dissolution or
 liquidation of the Company, the Committee may, but shall not be obligated to,
 declare, at least twenty days prior to the occurrence of the Fundamental
 Change, and provide written notice to each holder of an Option or Stock
 Appreciation Right of the declaration, that each outstanding Option and Stock
 Appreciation Right, whether or not then exercisable, shall be cancelled at
 the time of, or immediately prior to the occurrence of, the Fundamental
 Change in exchange for payment to each holder of an Option or Stock
 Appreciation Right, within 20 days after the Fundamental Change, of cash
 equal to (i) for each Share covered by the cancelled Option, the amount, if
 any, by which the Fair Market Value (as defined in this Section 14(g)) per
 Share exceeds the exercise price per Share covered by such Option or (ii) for
 each Stock Appreciation Right, the price determined pursuant to Section 8
 hereof, except that Fair Market Value of the Shares as of the date of
 exercise of the Stock Appreciation Right, as used in clause (i) of Section 8,
 shall be deemed to mean Fair Market Value for each Share with respect to
 which the Stock Appreciation Right is calculated determined in the manner
 hereinafter referred to in this Section 14(g). At the time of the declaration
 provided for in the immediately preceding sentence, each Stock Appreciation
 Right and each Option shall immediately become exercisable in full and each
 person holding an Option or a Stock Appreciation Right shall have the right,
 during the period preceding the time of cancellation of the Option or Stock
 Appreciation Right, to exercise the Option as to all or any part of the
 Shares covered thereby or the Stock Appreciation Right in whole or in part,
 as the case may be. In the event of a declaration pursuant to this Section
 14(g), each outstanding Option and Stock Appreciation Right that shall not
 have been exercised prior to the Fundamental Change shall be cancelled at the
 time of, or immediately prior to, the Fundamental Change, as provided in the
 declaration. Notwithstanding the foregoing, no person holding an Option or
 Stock Appreciation Right shall be entitled to the payment provided for in
 this Section 14(g) if such Option or Stock Appreciation Right shall have
 expired or terminated. For purposes of this Section 14(g) only, ‘Fair Market
 Value’ per Share means the cash plus the fair market value, as determined in
 good faith by the Committee, of the non-cash consideration to be received per
 Share by the shareholders of the Company upon the occurrence of the
 Fundamental Change, notwithstanding anything to the contrary provided in this
 Plan. .

	
 

	
 

	
 

	
          (h) Other Benefit and Compensation Programs.
Payments
 and other benefits received by a Participant under an Award shall not be deemed
 a part of a Participants regular, recurring compensation for purposes of any
 termination, indemnity or severance pay laws and shall not be included in,
 nor have any effect on, the determination of benefits under any other
 employee benefit plan, contract or similar arrangement provided by the
 Company or an Affiliate, unless expressly so provided by such other plan,
 contract or arrangement or the Committee determines that an Award or portion
 of an Award should be included to reflect competitive compensation practices
 or to recognize that an Award has been made in lieu of a portion of
 competitive cash compensation.

	
 

	
 

	
 

	
          (i) Beneficiary Upon Participant’s Death.
 A Participant may designate a beneficiary to succeed to the Participant’s
 Awards under the Plan in the event of the Participant’s death by filing a
 beneficiary form with the Company and, upon the death of the Participant,
 such beneficiary shall succeed to the rights of the Participant to the extent
 permitted by law and the terms of this Plan and the applicable Agreement. In
 the 

	
 

	
 

	
 

	
 

	
absence of a
 validly designated beneficiary who is living at the time of the Participant’s
 death, the Participant’s executor or administrator of the Participant’s
 estate shall succeed to the Awards, which shall be transferable by will or
 pursuant to laws of descent and distribution.

	
 

	
 

	
 

	
          (j) Forfeitures. In the event an Employee
 has received or been entitled to payment of cash, delivery of Stock or a
 combination thereof pursuant to an Award within the period beginning six
 months prior to the Employee’s termination of employment with the Company and
 its Affiliates and ending when the Award terminates or is cancelled, the
 Company, in its sole discretion, may require the Employee to return or
 forfeit the cash and/or Stock received with respect to the Award (or its
 economic value as of (i) the date of the exercise of Options or Stock
 Appreciation Rights, (ii) the date of, and immediately following, the lapse
 of restrictions on Restricted Stock or the receipt of Stock without
 restrictions, or (iii) the date on which the right of the Employee to payment
 with respect to Performance Shares vests, as the case may be) in the event of
 any of the following occurrences: performing services for or on behalf of a competitor
 of, or otherwise competing with, the Company or any Affiliate, unauthorized
 disclosure of material proprietary information of the Company or any
 Affiliate, a violation of applicable business ethics policies or business
 policies of the Company or any Affiliate, or any other occurrence specified
 in the related Agreement. The Company’s right to require forfeiture must be
 exercised not later than 90 days after discovery of such an occurrence but in
 no event later than 15 months after the Employee’s termination of employment
 with the Company and its Affiliates. Such right shall be deemed to be
 exercised upon the Company’s mailing written notice to the Employee of such
 exercise, at the Employee’s most recent home address as shown on the
 personnel records of the Company. In addition to requiring forfeiture as
 described herein, the Company may exercise its rights under this Section
 14(j) by preventing or terminating the exercise of any Awards or the
 acquisition of Shares or cash thereunder. In the event an Employee fails or
 refuses to forfeit the cash and/or Shares demanded by the Company (adjusted
 for any intervening stock splits), the Employee shall be liable to the
 Company for damages equal to the number of Shares demanded times the highest
 closing price per share of the Stock during the period between the applicable
 date specified in (i) through (iii) above and the date of any judgment or
 award to the Company, together with all costs and attorneys’ fees incurred by
 the Company to enforce this provision.

	
 

	
 

	
 

	
          (k) Unfunded Plan. This Plan shall be
 unfunded and the Company shall not be required to segregate any assets that
 may at any time be represented by Awards under this Plan. Neither the
 Company, its Affiliates, the Committee, nor the Board shall be deemed to be a
 trustee of any amounts to be paid under this Plan nor shall anything
 contained in this Plan or any action taken pursuant to its provisions create
 or be construed to create a fiduciary relationship between the Company and/or
 its Affiliates, and a Participant or Successor. To the extent any person
 acquires a right to receive an Award under this Plan, such right shall be no
 greater than the right of an unsecured general creditor of the Company.

	
 

	
 

	
 

	
 

	
          (l)
 Limits of Liability.

	
 

	
 

	
 

	
 

	
          (i)
 Any liability of the Company to any Participant with respect to an Award
 shall be based solely upon contractual obligations created by this Plan and
 the Agreement.

	
 

	
 

	
 

	
 

	
 

	
          (ii)
 Except as may be required by law, neither the Company nor any member or
 former member of the Board or of the Committee, nor any other person
 participating (including participation pursuant to a delegation of authority
 under Section 3(b) hereof) in any determination of any question under this
 Plan, or in the interpretation, administration or application of this Plan,
 shall have any liability to any party for any action taken, or not taken, in
 good faith under this Plan.

	
 

	
 

	
 

	
 

	
          (m) Compliance
 with Applicable Legal
 Requirements. No certificate for Shares distributable pursuant to
 this Plan shall be issued and delivered unless the issuance of such
 certificate complies with all applicable legal requirements including,
 without limitation, compliance with the provisions of applicable state
 securities laws, the Securities Act of 1933, as amended and in effect from
 time to time, or any successor statute, the Exchange Act and the requirements
 of the exchanges on which the Company’s Shares may, at the time, be listed.

	
 

	
 

	
 

	
 

	
          15. Governing Law. To the extent that
 federal laws do not otherwise control, this Plan and all determinations made
 and actions taken pursuant to this Plan shall be governed by the laws of
 Minnesota, without giving effect to conflicts of law provisions, and
 construed accordingly.

	
 

	
 

	
 

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

	
 

	
 

	
 

	
          17. Termination of Prior Plans. Effective
 upon the approval of this Plan by the Company’s shareholders as provided by
 Section 14(a) hereof, no further grants of options, performance shares or restricted
 stock or any other awards shall be made under the Company’s 1979 Restricted
 Stock and Performance Share Award Plan, 1979 Nonqualified Stock Option Plan,
 1989 Phantom Stock Award Plan or 1991 Restricted Stock Plan for Non-Employee
 Directors (the “Prior Plans”). Thereafter, all grants and awards made under
 the Prior Plans prior to such approval by the shareholders shall continue in
 accordance with the terms of the Prior Plans.MEDTRONIC, INC.

MEDTRONIC INCENTIVE PLAN
(As amended and restated effective January 1, 2008)

SECTION 1.

BACKGROUND, PURPOSE AND DURATION

          1.1.
Effective Date. The Company previously established the
Medtronic Incentive Plan effective as of April 26, 2003 (the “Effective
Date”). The Company hereby restates the Plan
in its entirety, effective January 1, 2008 to comply with the provisions of
Section 409A of the Internal Revenue Code.

          1.2.
Purpose of the Plan. The Plan is designed to motivate employees
to achieve the Company’s primary annual objectives as reflected in the
Company’s annual operating plan by providing the opportunity for incentive
compensation in addition to annual salaries.

          The
Plan is intended to amend, incorporate and restate prior incentive compensation
plans established by the Company, including the Management Incentive Plan and
the Employee Incentive Plan. The terms of the Plan, as set forth herein, shall
apply to awards granted under the Plan on and after the Effective Date. Awards
granted under the Company’s incentive compensation plans in effect prior to the
Effective Date shall be governed by the terms of such plans.

SECTION 2.

DEFINITIONS

          The
following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:

          2.1.
“Actual Award” means as to any
Performance Period, the actual award of incentive compensation (if any) payable
to a Participant for the Performance Period. Each Actual Award is determined by
the Payout Formula for the Performance Period, subject to the Committee’s
authority under Section 4.6 to increase, reduce or eliminate the award
determined by the Payout Formula.

          2.2.
“Affiliate” means any corporation
that is a “parent corporation” or “subsidiary corporation” of the Company, as
those terms are defined in Sections 424(e) and (f) of the Code, or any
successor provision, and any joint venture in which the Company or any such
“parent corporation” or “subsidiary corporation” owns a controlling equity
interest.

          2.3.
“Board” means the Board of
Directors of the Company.

          2.4.
“Code” means the Internal Revenue
Code of 1986, as amended.

          2.5.
“Committee” means the Compensation
Committee of the Board or its delegate as set forth in Section 3.4 hereof.

          2.6.
“Company” means Medtronic, Inc., a
Minnesota corporation.

          2.7.
“Disability” means the disability
of a Participant such that the Participant is considered disabled under any
retirement plan of the Company which is qualified under Section 401 of the
Code, or, in the case of a Participant employed by a non-U.S. Affiliate or in a
non-U.S. location, under any retirement plan or long-term disability plan of
the Company or such Affiliate applicable to such Participant, or as otherwise
determined by the Committee.

          2.8.
“Employee” means any employee of
the Company or of an Affiliate, whether such employee is so employed at the
time the Plan is adopted or becomes so employed subsequent to the adoption of
the Plan.

          2.9.
“Fiscal Year” means the fiscal
year of the Company.

          2.10.
“Participant” means as to any
Performance Period, an Employee who has been selected by the Committee for
participation in the Plan for that Performance Period.

          2.11.
“Payout Formula” means as to any
Performance Period, the formula or payout matrix established by the Committee
pursuant to Section 4.4 in order to determine the Actual Awards (if any)
to be paid to Participants. The formula or matrix may differ from Participant
to Participant.

          2.12.
“Performance Period” means
generally, the Fiscal Year. However, the Committee may, at its discretion,
designate a shorter period.

          2.13.
“Plan” means the
Medtronic, Inc. Medtronic Incentive Plan, as set forth herein and as
hereafter amended from time to time.

          2.14.
“Retirement” means retirement of
an Employee as defined under any retirement plan of the Company which is
qualified under Section 401 of the Code (which currently provides for
retirement on or after age 55, provided the Employee has been employed by the
Company and/or one or more Affiliates for at least ten years, or retirement on
or after age 62), or under any retirement plan of the Company or any Affiliate
applicable to the Employee due to employment by a non-U.S. Affiliate or
employment in a non-U.S. location, or as otherwise determined by the Committee.

          2.15.
“Salary” of a Participant for a
Performance Period, means the Participant’s eligible earnings during such
period, determined in accordance with the Company’s normal payroll practices:

	
 

	
 

	
 

	
a.
  including:

	
 

	
 

	
 

	
          i.
  base salary;

	
 

	
 

	
 

	
          ii.
  any other individual performance-based forms of compensation such as lump sum
  merit, development or promotional payments;

	
 

	
 

	
 

	
          iii.
  the amount of any reduction in 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);

	
 

	
 

	
 

	
          iv.
  any Participant payments by salary reduction or its equivalent to a Company-sponsored
  nonqualified deferred compensation plan; and

	
 

	
 

	
 

	
          v.
  if applicable, overtime, sick pay, and shift differentials; but

	
 

	
 

	
 

	
          b.
  excluding: (i) any discretionary bonuses (such as hiring bonuses);
  (ii) workers compensation payments; (iii) short-term disability
  benefit payments from a third party; (iv) long-term disability benefit
  payments; (v) other payments made by a third party; (vi) service
  awards; (vii) tuition reimbursements; (viii) relocation allowances;
  (ix) severance payments; (x) any one-time payment, or other payment
  not directly related to base salary (such as referral bonuses, incentive
  payments for a current Performance Period or prior Performance Period and
  other similar payments); (xi) payments of deferred compensation, whether
  qualified or nonqualified; (xii) 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 (xiii) expatriate allowances.

          2.16.
“Target Award” means the target
award payable under the Plan to a Participant for the Performance Period,
expressed as a percentage of his or her Salary or a specific dollar amount, as
determined by the Committee in accordance with Section 4.2 hereof.

          2.17.
“Termination of Employment” means
a cessation of the employee-employer relationship between an Employee and the
Company or an Affiliate for any reason, including, but not limited to, a
termination by resignation, discharge, death, Disability, Retirement, or the
cessation of Affiliate status, whether through sale, decrease in equity
ownership or otherwise, but excluding any such termination where there is a
simultaneous reemployment by the Company or an Affiliate.

SECTION 3.

ADMINISTRATION

          3.1.
Committee is the
Administrator. The
Plan shall be administered by the Compensation Committee of the Board (the
“Committee”). The Committee shall consist of not less than two (2) members
of the Board. The members of the Committee shall be appointed from time to time
by the Board.

          3.2.
Committee Authority. It shall be the duty of the Committee to
administer the Plan in accordance with the Plan’s provisions. The Committee
shall have all powers and discretion necessary or appropriate to administer the
Plan and to control its operation, including, but not limited to, the power to
(a) determine which Employees shall be Participants, (b) prescribe
the terms and conditions of awards, (c) interpret the Plan and the awards,
(d) adopt such procedures and subplans as are necessary or appropriate to
permit participation in the Plan by Employees who are foreign nationals or
employed outside of the United States, (e) adopt rules for the
administration, interpretation and application of the Plan as are consistent
therewith, and (f) interpret, amend or revoke any such rules.

          3.3.
Decisions Binding. All determinations and decisions made by
the Committee, the Board, and any delegate of the Committee pursuant to the
provisions of the Plan shall be final, conclusive, and binding on all persons,
and shall be given the maximum deference permitted by law.

          3.4.
Chief Executive Officer
Oversight and Delegation.
The Committee may delegate all or any part of its authority to other Board
members or Medtronic employees. Unless the Committee determines otherwise, the
Committee shall be treated as having delegated its authority to the Company’s
Chief Executive Officer (“CEO”) to the fullest extent permitted hereunder. The
CEO may make such determinations and take such actions within the scope of such
delegation as the CEO deems necessary. In his or her sole discretion, the CEO
may delegate all or part of the CEO’s authority and powers under the Plan to
one or more directors, officers, or other employees of the Company on such
terms and conditions as he or she may provide.

          3.5
Indemnification. To the full extent permitted by law,
each member and former member of the Committee and each person to whom the
Committee or the CEO delegates or has delegated authority under this Plan shall
be entitled to indemnification by the Company against and from any loss,
liability, judgment, damages, cost and reasonable expense incurred by such
member, former member or other person by reason of any action taken, failure to
act or determination made in good faith under or with respect to this Plan.

SECTION 4.

SELECTION OF PARTICIPANTS AND DETERMINATION
OF AWARDS

          4.1.
Selection of
Participants. The
Committee, in its sole discretion, shall select the Employees who shall be
Participants for any Performance Period based upon the recommendation of
appropriate management. In addition, the Committee, in its sole discretion,
shall determine whether Employees who are hired after the commencement of a
Performance Period shall participate in the Plan for that Performance Period.
Participation in the Plan is in the sole discretion of the Committee, and on a
Performance Period by 

Performance
Period basis. Accordingly, an Employee who is a Participant for a given
Performance Period in no way is guaranteed or assured of being selected for
participation in any subsequent Performance Period.

          4.2.
Determination of Target
Awards. The
Committee, in its sole discretion, shall establish a Target Award for each
Participant, which shall be set forth in writing. The amount of each
Participant’s Target Award shall be determined by the Committee in its sole
discretion, based upon the Participant’s level of responsibility within the
Company or such other objective criteria as the Committee may determine is
appropriate.

          4.3.
Determination of
Performance Objectives.
The Committee, in its sole discretion, shall establish the Performance
Objectives for the Performance Period. Such Performance Objectives shall be set
forth in writing. “Performance Objectives” means the Corporate Financial
Performance, Sector Financial Performance, and/or Unit/Individual Performance
Category goal(s) (or combined goal(s)) determined by the Committee (in its sole
discretion) to be applicable to the Participants for a Target Award for a
Performance Period. As determined by the Committee, the Performance Objectives
for any Target Award applicable to the Participants may provide for a targeted
level or levels of achievement in the Performance Categories using one or more
financial or other measures. The Performance Objectives may differ from award
to award.

          Minimum
threshold(s) may be set by the Committee for any or all of the Performance
Categories (as defined in Section 4.4) for a Participant, below which no Actual
Awards may be payable to the Participant for that Category.

          A
Participant may be assigned multiple Performance Objectives in the same
Performance Category. In such cases the Performance Objectives shall be given a
percentage weight that is dependent on the assessment of the importance of the
Performance Objective and the sum of the percentage weights in a Performance
Category shall equal 100%.

          4.4.
Determination of Payout
Formula or Formulas.
The Committee, in its sole discretion, shall establish a Payout Formula or
Formulas for purposes of determining the Actual Award (if any) payable to each
Participant. Each Payout Formula shall (a) be in writing, (b) be
based on a combination of Performance Categories (as defined below) designated
for the Participant, (c) be based on a comparison of actual performance to
the Performance Objectives, (d) provide for the payment of a Participant’s
Target Award if the Performance Objectives for the Performance Period are
achieved, and (e) provide for an Actual Award greater than or less than
the Participant’s Target Award, depending upon the extent to which actual
performance exceeds or falls below the Performance Objectives.

          Each
Participant’s entitlement to an Actual Award will be based on one or more of
the percentage-weighted combination(s) of the performance of the Company as a
whole (“Corporate Financial Performance”), the Participant’s sector (“Sector
Financial Performance”), and/or the Participant’s Unit (e.g., business unit,
division, work group, department, country, geography, etc.) and/or individual
performance (“Unit/Individual Performance”) (each defined as a “Performance
Category”). The Committee shall designate for each Participant in the Plan a
combination of Performance Categories based upon the level of impact and
responsibility the Participant’s job has on corporate, sector and/or business
unit specific financial results and/or individual performance. The
Participant’s Payout Formula shall include one or a combination of the
foregoing Performance Categories. For instance, the Payout Formula for
Participant A may contain only the Corporate Financial Performance
Category, in which case the Participant’s Payout Formula would be based solely
on attainment of Performance Objectives in the Corporate Financial Performance
Category. Likewise, the Payout Formula for Participant B may contain both
the Corporate Financial Performance Category and Sector Financial Performance
Category, and the Participant’s Payout Formula would be based on attainment of
Performance Objectives in both the Corporate Financial Performance Category and
the Sector Financial Performance Category.

          4.5.
Date for Determinations.
The Committee shall make all determinations under Section 4.1 through 4.4 on or
before the 90th day of each Performance Period, but in no event after 25% of
the applicable Performance Period has elapsed.

          4.6.
Determination of Actual
Awards. After the
end of each Performance Period, the Committee shall certify in writing the
extent to which the Performance Objectives applicable to each Participant for
the Performance Period were achieved or exceeded. The Actual Award for each
Participant shall be determined by applying the Payout Formula to the level of
actual performance that has been certified by the Committee. Notwithstanding
any contrary provision of the Plan, the Committee, in its sole discretion, may
(a) eliminate or reduce the Actual Award payable to any Participant below
that which otherwise would be payable under the Payout Formula,
(b) increase the Actual Award payable to any Participant above that which
otherwise would be payable under the Payout Formula, and (c) as further
set forth in Section 5.4 below, determine whether or not a Participant will
receive an Actual Award in the event the Participant incurs a Termination of
Employment prior to the date the Actual Award is to be paid pursuant to Section
5.2 below.

SECTION 5.

PAYMENT OF AWARDS

          5.1.
Right to Receive Payment. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any amounts under the Plan, and rights to the
payment hereunder shall be no greater than the rights of the Company’s unsecured
creditors. All expenses involved in administering the Plan shall be borne by
the Company.

          5.2.
Timing of Payment. A Participant’s Actual Award for a
Performance Period shall be paid to him or her within two and one-half months
following the close of the Fiscal Year. A Participant may, however, elect to
defer or exchange some or all of his or her Actual Award under other Company
plans in effect at that time.

          5.3.
Form of Payment. Except as set forth in Section 5.2,
payment of an Actual Award shall be in cash in the form of a lump sum.

	
 

	
 

	
 

	
5.4. Termination of Employment During
  Performance Period.

	
 

	
 

	
 

	
          a.
  If the Participant’s employment is terminated during a Performance Period due
  to the Participant’s death, Disability, or Retirement, the Participant (or
  the Participant’s beneficiary in the case of the Participant’s death) will be
  entitled to receive a pro rata portion of the Actual Award for which the
  Participant otherwise would have been eligible, determined at the end of the
  applicable Performance Period based upon the portion of the Performance
  Period the Participant was employed by the Company or Affiliate.

	
 

	
 

	
 

	
          b.
  Following a Termination of Employment during a Performance Period, or after
  completion of a Performance Period but prior to the time an Actual Award is
  paid, for any reason other than death, Disability or Retirement, a
  Participant’s eligibility to receive an Actual Award for such Performance
  Period shall be determined solely at the discretion of the Committee. No such
  Actual Award may exceed a pro rata portion of the Actual Award for which the
  Participant otherwise would have been eligible, determined at the end of the
  applicable Performance Period based upon the portion of the Performance
  Period the Participant was employed by the Company or Affiliate.

	
 

	
 

	
 

	
          c.
  Notwithstanding anything in this Section 5.4 to the contrary, a Participant
  shall not be entitled to any Actual Award for a Performance Period if the
  Participant’s employment is terminated by the Company or Affiliate during the
  Performance Period or during the period between the end of the Performance
  Period and the date on which the Actual Award is otherwise payable to the
  Participant for the following reasons: (a) failure to comply with any
  material policies and procedures of the Company or Affiliate;
  (b) conduct reflecting dishonesty or disloyalty to the Company or 

	
 

	
 

	
 

	
Affiliate,
  or which may have a negative impact on the reputation of the Company or
  Affiliate; (c) allegation of commission of a felony, theft or fraud, or
  violations of law involving moral turpitude; or (d) failure to perform
  the material duties of his or her employment. If a Participant’s employment
  is terminated for any of the foregoing reasons, the time at which the Participant
  ceases to be an employee for purposes of this Section 5.4 shall mean the time
  at which such Participant is instructed or notified to cease performing his
  or her job responsibilities for the Company or any Affiliate, whether or not
  for other reasons, such as payroll, benefits or compliance with legal
  procedures or requirements, he or she may still have other attributes of an
  employee.

          5.5.
Beneficiary. The Committee or its delegate shall
create a procedure whereby a Participant may file, on a form to be provided by
the Company, a written election designating one or more beneficiaries with
respect to the amount, if any, payable in the event of the Participant’s death.
The Participant may amend such beneficiary designation in writing at any time
prior to the Participant’s death without the consent of any previously
designated beneficiary. Such designation or amended designation, as the case
may be, shall not be effective unless and until received by the authorized
representatives of the Company prior to the Participant’s death. In the absence
of any such designation, the amount payable, if any, shall be delivered to the
legal representative of such Participant’s estate.

SECTION 6.

CHANGE IN CONTROL

          6.1.
Calculation of Awards. Notwithstanding any other provisions of
the Plan (including, without limitation, minimum thresholds provided under
Section 4.3 and the provisions of Section 5.4, none of which shall apply), if a
Change in Control (as defined below) occurs during a Performance Period, each
Participant shall be entitled to an Actual Award under the Plan for the full
Performance Period (typically 12 months), calculated in accordance with
Section 4.6, but with payment accelerated to the time of the Change in Control.
A Participant’s Actual Award for such Performance Period shall be the greater
of (a) the Target Award for which the Participant would have been eligible
had the Participant’s Salary, determined as of the day immediately prior to the
Change in Control, remained the same throughout the Performance Period; or
(b) if the Change in Control occurs after the first quarter of a Fiscal
Year, the Actual Award that the Participant would have received if (i) no
Change in Control had occurred during such Fiscal Year, (ii) the Participant’s
Salary, determined as of the day immediately prior to the Change in Control,
remained the same throughout the Performance Period, and (iii) the
achievement of the Participant’s Performance Objectives for the Performance
Period had equaled the performance most recently projected by the Company for
such Performance Period prior to the Change in Control, adjusted to exclude:
(A) all non-recurring or special charges incurred by the Company during
the Performance Period; (B) all legal, accounting, investment banking and
other costs and expenses incurred or projected by the Company in connection
with, or in opposition to, the events resulting in the Change in Control; and
(C) the projected effect of the Change in Control upon the achievement of
Participant’s Performance Objectives.

          6.2.
  Definition. For purposes of this Section 6, a
  “Change in Control” means: 

	
 

	
 

	
 

	
 

	
 

	
          a.
  Any individual, entity or group (within the meaning of Section 13(d)(3) or
  14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
  Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule
  13d-3 promulgated under the Exchange Act) of 30% or more of either (i) the
  then-outstanding shares of common stock of the Company (the “Outstanding Company
  Common Stock”) or (ii) the combined voting power of the then-outstanding
  voting securities of the Company entitled to vote generally in the election
  of directors (the “Outstanding Company Voting Securities”); provided, however,
  that, for purposes of this clause (a), the following acquisitions shall not
  constitute a Change in Control: (1) any acquisition directly from the
  Company, (2) any acquisition by the Company or any of its subsidiaries, (3)
  any acquisition by any employee benefit plan (or related trust) sponsored or
  maintained by the Company or any of its subsidiaries, (4) any acquisition by
  an underwriter temporarily holding securities pursuant to an offering of such
  securities or (5) any acquisition pursuant to a transaction that complies
  with clauses (i), (ii) and (iii) of clause (c) below; or

	
 

	
 

	
 

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

	
 

	
 

	
 

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

	
 

	
 

	
 

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

                    6.3.
Payment of Awards. Actual Awards
shall be paid under this Section 6 within two and one-half months following the
date of the first Change in Control to occur during the Performance Period.
Notwithstanding the preceding sentence, a Participant may, however, elect to
defer or exchange some or all of his or her Actual Awards under other Company
plans in effect at that time. 

SECTION 7.

GENERAL PROVISIONS

          7.1.
Tax Withholding. The Company or an Affiliate shall have
the right to deduct from any payment made under the Plan any federal, state,
local or non-U.S. income, payroll or other taxes required by law to be withheld
with respect to such payment.

          7.2.
No Effect on Employment. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee or other person any right
to continue to be employed by or perform services for the Company or any
Affiliate of the Company, and the right to terminate the employment of or
performance of services by any Participant at any time and for any reason is
specifically reserved to the Company and its Affiliates.

          7.3.
Participation. No Employee shall have the right to be
selected to receive an award under this Plan, or, having been so selected, to
be selected to receive a future award.

          7.4.
Release. Any payment of an Actual Award to or for
the benefit of a Participant or 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.

          7.5.
Notices. Any notice provided by the Company under
the Plan may be posted to a Company-designated website.

          7.6.
Benefits Not
Transferable.
Except as may be approved by the Committee, a Participant’s rights and interest
under the Plan may not be assigned or transferred, hypothecated or encumbered,
in whole or in part, either directly or by operation of law or otherwise
(except in the event of a Participant’s death) including, but not by way of
limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in
any other manner; provided, however, that, subject to applicable law, any
amounts payable to any Participant hereunder are subject to reduction to
satisfy any liabilities owed to the Company or any of its Affiliates by the
Participant.

          7.7.
Successors. All obligations of the Company and any
Affiliate under the Plan, with respect to awards granted hereunder, shall be
binding on any successor to the Company and/or such Affiliate, whether the
existence of such successor is the result of a direct or indirect purchase,
merger or consolidation of all or substantially all of the business or assets
of the Company or such Affiliate, or otherwise.

          7.8.
Actions and Decision
Regarding the Business or Operations of the Company. Notwithstanding anything in the Plan to
the contrary, none of the Company, its officers, directors, employees or agents
shall have any liability to any Participant (or his or her beneficiaries or
heirs) under the Plan or otherwise on account of any action taken, or not
taken, in good faith by any of the foregoing persons with respect to the
business or operations of the Company or any Affiliates.

SECTION 8.

AMENDMENT, TERMINATION AND DURATION

          8.1.
Plan Amendment or
Suspension. The
Plan may be amended or suspended in whole or in part at any time and from time
to time by the Committee.

          8.2.
Plan Termination. This Plan shall terminate upon the
adoption of a resolution of the Committee terminating the Plan.

          8.3.
Duration of the Plan. The Plan shall commence on the date
specified herein, and subject to Sections 8.1 and 8.2 (regarding the Board’s
right to amend or terminate the Plan, respectively), shall remain in effect
thereafter.

SECTION 9.

LEGAL CONSTRUCTION

          9.1.
Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.

          9.2.
Severability. In the event any provision of the Plan
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision had not been
included.

          9.3.
Requirements of Law. The granting and payment of awards under
the Plan shall be subject to all applicable laws, rules and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required.

          9.4.
Governing Law. The validity, construction,
interpretation, administration and effect of the Plan, and rights relating to
the Plan and to awards granted under the Plan, shall be governed by the
substantive laws, but not the choice of law rules, of the State of Minnesota.

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