UNITEDHEALTH GROUP INC
EX-10(A) 2002 STOCK INCENTIVE PLAN
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<TYPE>EX-10.(A)
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<FILENAME>c74996exv10wxay.txt
<DESCRIPTION>EX-10(A) 2002 STOCK INCENTIVE PLAN
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                                                                   EXHIBIT 10(a)

                         UNITEDHEALTH GROUP INCORPORATED
                            2002 STOCK INCENTIVE PLAN
                       (Amended and Restated May 15, 2002)

SECTION 1.        PURPOSE; ADOPTION; EFFECT ON PRIOR PLANS.

         (a)      Purpose. The purpose of the UnitedHealth Group Incorporated
2002 Stock Incentive Plan (the "Plan") is to aid in attracting and retaining
employees, management personnel and other personnel and members of the Board of
Directors who are not also employees ("Non-Employee Directors") of UnitedHealth
Group Incorporated (the "Company") capable of assuring the future success of the
Company, to offer such personnel and Non-Employee Directors incentives to put
forth maximum efforts for the success of the Company's business and to afford
such personnel and Non-Employee Directors an opportunity to acquire a
proprietary interest in the Company.

         (b)      Adoption. The Company hereby adopts the Plan, subject to
approval by the shareholders of the Company. As so established and approved, the
Plan shall be known as the "2002 Stock Incentive Plan."

         (c)      Effect on Prior Plans. On the effective date of the Plan
determined in accordance with Section 10 of the Plan (the "Effective Date"), for
purposes of administration and share accounting pursuant to Sections 3 and 4 of
the Plan, the following plans of the Company, each as previously amended
(collectively, the "Prior Plans"), shall be considered to be incorporated in the
Plan: (i) United HealthCare Corporation 1991 Stock and Incentive Plan; (ii)
United HealthCare Corporation 1998 Broad-Based Stock Incentive Plan; and (iii)
UnitedHealth Group Incorporated Nonemployee Director Stock Option Plan. All
outstanding options, restricted stock and other awards issued under the Prior
Plans shall remain subject to the terms and conditions of the plans under which
they were issued, but shares of stock relating to outstanding options,
restricted stock or other awards issued under the Prior Plans are considered
shares of stock subject to the Plan under Section 4 of the Plan. From and after
the Effective Date of the Plan, no further awards shall be made under the Prior
Plans.

SECTION 2.        DEFINITIONS.

         As used in the Plan, the following terms shall have the meanings set
forth below:

                  (a)      "Affiliate" shall mean (i) any entity that, directly
         or indirectly through one or more intermediaries, is controlled by the
         Company and (ii) any entity in which the Company has a significant
         equity interest, as determined by the Committee.

                  (b)      "Award" shall mean any Option, Stock Appreciation
         Right, Restricted Stock, Restricted Stock Unit, Performance Award or
         Other Stock-Based Award granted under the Plan.

                  (c)      "Award Agreement" shall mean any written certificate,
         agreement, contract or other instrument or document evidencing any
         Award granted under the Plan.

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                  (d)      "Change in Control" shall have the meaning ascribed
         to such term in any Award Agreement.

                  (e)      "Code" shall mean the Internal Revenue Code of 1986,
         as amended from time to time, and any regulations promulgated
         thereunder.

                  (f)      "Committee" shall mean a committee of the Board of
         Directors of the Company designated by such Board to administer the
         Plan and composed of not less than two directors. To the extent
         required by Section 162(m) of the Code, the Committee shall be composed
         solely of two or more "outside directors" within the meaning of Section
         162(m) of the Code.

                  (g)      "Eligible Person" shall mean any employee, officer,
         director (including any Non-Employee Director), consultant (including,
         without limitation, any Affiliate) or independent contractor providing
         services to the Company or any Affiliate who the Committee determines
         to be an Eligible Person.

                  (h)      "Fair Market Value" shall mean, with respect to any
         property (including, without limitation, any Shares or other
         securities), the fair market value of such property determined by such
         methods or procedures as shall be established from time to time by the
         Committee. Notwithstanding the foregoing, for purposes of the Plan, the
         Fair Market Value of Shares on a given date shall be, if the Shares are
         then traded on the New York Stock Exchange, the closing price of the
         Shares as reported on the New York Stock Exchange on such date or, if
         the New York Stock Exchange is not open for trading on that date, on
         the most recent preceding date when the New York Stock Exchange was
         open for trading.

                  (i)      "Incentive Stock Option" shall mean an option granted
         under Section 6(a) of the Plan that is intended to meet the
         requirements of Section 422 of the Code or any successor provision.

                  (j)      "Non-Qualified Stock Option" shall mean an option
         granted under Section 6(a) of the Plan that is not an Incentive Stock
         Option.

                  (k)      "Option" shall mean an Incentive Stock Option or a
         Non-Qualified Stock Option.

                  (l)      "Other Stock-Based Award" shall mean any right
         granted under Section 6(e) of the Plan.

                  (m)      "Participant" shall mean an Eligible Person
         designated to be granted an Award under the Plan.

                  (n)      "Performance Award" shall mean any right granted
         under Section 6(d) of the Plan.

                  (o)      "Person" shall mean any individual, corporation,
         limited liability company, partnership, association or trust.

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                  (p)      "Qualifying Termination" shall mean a termination of
         employment under circumstances that, in the judgment of the Committee,
         warrant acceleration of the exercisability of Options or the lapse of
         restrictions relating to Restricted Stock or Restricted Stock Units.

                  (q)      "Restricted Stock" shall mean any Share granted under
         Section 6(c) of the Plan.

                  (r)      "Restricted Stock Unit" shall mean any unit granted
         under Section 6(c) of the Plan evidencing the right to receive a Share
         (or a cash payment equal to the Fair Market Value of a Share) at some
         future date.

                  (s)      "Rule 16b-3" shall mean Rule 16b-3 promulgated by the
         Securities and Exchange Commission under the Securities Exchange Act of
         1934.

                  (t)      "Shares" shall mean shares of Common Stock, $.01 par
         value, of the Company or such other securities or property as may
         become subject to Awards pursuant to an adjustment made under Section
         7(c) of the Plan.

                  (u)      "Stock Appreciation Right" shall mean any right
         granted under Section 6(b) of the Plan.

SECTION 3.        ADMINISTRATION.

         (a)      Power and Authority of the Committee. The Plan shall be
administered by the Committee. Subject to the terms of the Plan and applicable
law, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to each
Participant under the Plan; (iii) determine the number of Shares to be covered
by (or with respect to which payments, rights or other matters are to be
calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v) amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of Options or
the lapse of restrictions relating to Restricted Stock or Restricted Stock
Units; provided, however, that any such acceleration of exercisability or lapse
of restrictions shall be limited to accelerations relating to a Change in
Control, a Qualifying Termination, death or disability; (vi) determine whether,
to what extent and under what circumstances Awards may be exercised in cash,
Shares, other securities, other Awards or other property, or canceled, forfeited
or suspended; (vii) determine whether, to what extent and under what
circumstances cash, Shares, other securities, other Awards, other property and
other amounts payable with respect to an Award under the Plan shall be deferred
either automatically or at the election of the holder thereof or the Committee;
(viii) interpret and administer the Plan and any instrument or agreement
relating to, or Award made under, the Plan; (ix) establish, amend, suspend or
waive such rules and regulations and appoint such agents as it shall deem
appropriate for the proper administration of the Plan; and (x) make any other
determination and take any other action that the Committee deems necessary or
desirable for the administration of the Plan. Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive and binding upon any Participant, any holder or beneficiary of
any Award and any employee of the Company or any Affiliate.

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         (b)      Delegation. The Committee may delegate to one or more officers
of the Company or any Affiliate, or a committee of such officers, the authority,
subject to such terms and limitations as the Committee shall determine, to grant
Awards to Eligible Persons who are not officers or directors of the Company for
purposes of Section 16 of the Securities Exchange Act of 1934, as amended. The
Committee shall not delegate its powers and duties under the Plan in any manner
that would cause the Plan not to comply with the requirements of Section 162(m)
of the Code.

SECTION 4.        SHARES AVAILABLE FOR AWARDS.

         (a)      Shares Available. Subject to adjustment as provided in
Sections 4(b), 4(c) and 7(c), the total number of Shares available for granting
Awards under the Plan shall be 74,766,734 (41,573,050 of which were previously
authorized and subject to outstanding Awards under the Prior Plans, and
33,193,684 of which were previously authorized and available for grant under the
Prior Plans); provided, however, that the total number of Shares authorized
under the Plan shall be deemed to be reduced automatically, as of the Effective
Date of the Plan, by that number of Shares that were subject to outstanding
awards under the Prior Plans, as of April 1, 2002, that are no longer subject to
outstanding awards as of the Effective Date of the Plan. Not more than 7,000,000
of such Shares, subject to adjustment as provided in Section 7(c) of the Plan,
will be available for granting any types of Awards other than Awards of Options
or Stock Appreciation Rights; provided, however, that any Shares covered by an
Award that is not an Option or Stock Appreciation Rights that are forfeited
shall again be available for purposes of the foregoing limitation. If any Shares
covered by an Award or to which an Award relates are not purchased or are
forfeited, or if an Award otherwise terminates without delivery of any Shares,
then the number of Shares counted against the aggregate number of Shares
available under the Plan with respect to such Award, to the extent of any such
forfeiture or termination, shall again be available for granting Awards under
the Plan. In addition, if any Shares are used by a Participant as full or
partial payment to the Company of the purchase price relating to an Award,
whether by actual delivery or attestation, or in connection with satisfaction of
tax obligations relating to an Award, whether by actual delivery, attestation or
having shares withheld from the Award, only the number of Shares issued net of
the Shares tendered or withheld shall be deemed delivered for purposes of
determining the maximum number of Shares available for granting of Awards under
the Plan. For purposes of the previous two sentences, the term "Award" shall
explicitly include any awards outstanding under the Prior Plans as of the
Effective Date of the Plan.

         (b)      Adjustment of Shares Available in Event of Certain
Acquisitions. If the Company issues Shares as consideration for a business
acquisition by it or any of its subsidiaries, the number of shares available for
granting Awards under the Plan as set forth in the first sentence of Section
4(a) shall be increased by a number of Shares determined pursuant to the
following formula:

                         Increase = 74,766,734 x (a/b),

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         where:   a = the number of Shares issued as consideration for such
                      business acquisition, and

                  b = the number of Shares outstanding immediately before such
                      business acquisition.

Notwithstanding the foregoing, the adjustment provided for in this Section 4(b)
shall not be made unless the Company determines, at or before the time such
business acquisition is consummated, that options or other stock-based awards
will not continue to be granted, following such business acquisition, under any
plan of the acquired business which is assumed by the Company by contract or by
operation of law.

         (c)      Accounting for Awards. For purposes of this Section 4, if an
Award entitles the holder thereof to receive or purchase Shares, the number of
Shares covered by such Award or to which such Award relates shall be counted on
the date of grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan. Such Shares may again become available for
granting Awards under the Plan pursuant to the provisions of Section 4(a) of the
Plan, subject to the limitations set forth in Section 4(e) of the Plan.

         (d)      Incentive Stock Options. Notwithstanding the foregoing, the
number of Shares available for granting Incentive Stock Options under the Plan
shall not exceed 33,000,000, subject to adjustment as provided in Section 7(c)
of the Plan and Sections 422 or 424 of the Code or any successor provisions.

         (e)      Award Limitations Under the Plan. No Eligible Person may be
granted any Award or Awards, the value of which Awards are based solely on an
increase in the value of the Shares after the date of grant of such Awards, for
more than 5,000,000 Shares (subject to adjustment as provided in Section 7(c) of
the Plan), in the aggregate, in any calendar year beginning with the year
commencing January 1, 2002. The foregoing limitation specifically includes the
grant of any "qualified performance-based" Awards within the meaning of Section
162(m) of the Code.

SECTION 5.        ELIGIBILITY.

         Any Eligible Person, including any Eligible Person who is an officer or
director of the Company or any Affiliate, shall be eligible to be designated a
Participant; provided, however, that an Incentive Stock Option may be granted
only to full-time or part-time employees (which term as used herein includes,
without limitation, officers and directors who are also employees), and an
Incentive Stock Option shall not be granted to an employee of an Affiliate
unless the Affiliate is also a "subsidiary corporation" of the Company within
the meaning of Section 424(f) of the Code or any successor provision.

SECTION 6.        AWARDS.

         (a)      Options. The Committee is hereby authorized to grant Options
to Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:

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                  (i)      Exercise Price. The purchase price per Share
         purchasable under an Option shall be determined by the Committee;
         provided, however, that such purchase price shall not be less than 100%
         of the Fair Market Value of a Share on the date of grant of such
         Option.

                  (ii)     Option Term. The term of each Option shall be fixed
         by the Committee at the time of grant but in no event shall any Option
         have a term of more than 10 years.

                  (iii)    Time and Method of Exercise. The Committee shall
         determine the time or times at which an Option may be exercised in
         whole or in part and the method or methods by which, and the form or
         forms (including, without limitation, cash, loans, Shares previously
         owned by the Participant, other securities, other Awards or other
         property, or any combination thereof, having a Fair Market Value on the
         exercise date equal to the relevant exercise price) in which, payment
         of the exercise price with respect thereto may be made or deemed to
         have been made. Any Shares previously owned by a Participant referred
         to in the preceding sentence must have been owned by the Participant
         for no less than six months prior to the date of exercise of the Option
         if such Shares were acquired upon the exercise of another Option or
         upon the vesting of Restricted Stock or Restricted Stock Units.

                  (iv)     Reload Options. The Committee may grant "reload"
         Options, separately or together with another Option, pursuant to which,
         subject to the terms and conditions established by the Committee and
         any applicable requirements of Rule 16b-3 or any other applicable law
         or regulation, the Participant would be granted a new Option when the
         payment of the exercise price of a previously granted Option is made by
         the delivery or attestation of shares of the Company's Common Stock
         owned by the Participant pursuant to Section 6(a)(iii) hereof or the
         relevant provisions of another plan of the Company, and/or when shares
         of the Company's Common Stock are tendered, attested or forfeited as
         payment of the amount to be withheld under applicable tax laws in
         connection with the exercise of an option, which new Option would be an
         option to purchase the number of Shares not exceeding the sum of (A)
         the number of shares of the Company's Common Stock provided as
         consideration upon the exercise of the previously granted Option to
         which such "reload" Option relates and (B) the number of shares of the
         Company's Common Stock tendered, attested or forfeited as payment of
         the amount to be withheld under applicable tax laws in connection with
         the exercise of the Option to which such "reload" Option relates.
         "Reload" Options may be granted with respect to Options granted under
         this Plan or any other stock option plan of the Company or any of its
         Affiliates (which shall explicitly include plans assumed by the Company
         in connection with mergers, combinations and similar transactions).
         Such "reload" Options shall have a term that shall not extend beyond
         the term of the previously granted Option to which the "reload" Option
         relates and shall have a per share exercise price equal to the Fair
         Market Value as of the date of grant of the new Option. Any such
         "reload" Options shall be subject to the availability of sufficient
         shares for grant under the Plan.

                  (v)      Elective Deferral. The Committee may from time to
         time establish procedures pursuant to which a Participant may elect to
         defer, until a time or times later than the exercise of an Option,
         receipt of all or a portion of the Shares subject to such

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         Option, all on such terms and conditions as the Committee shall
         determine. If any such deferrals are permitted, then a Participant who
         elects such deferral shall not have any rights as a shareholder with
         respect to such deferred Shares unless and until Shares actually are
         delivered to the Participant with respect thereto, except to the extent
         otherwise determined by the Committee.

         (b)      Stock Appreciation Rights. The Committee is hereby authorized
to grant Stock Appreciation Rights to Participants subject to the terms of the
Plan and any applicable Award Agreement. A Stock Appreciation Right granted
under the Plan shall confer on the holder thereof a right to receive upon
exercise thereof the excess of (i) the Fair Market Value of one Share on the
date of exercise (or, if the Committee shall so determine, at any time during a
specified period before or after the date of exercise) over (ii) the grant price
of the Stock Appreciation Right as specified by the Committee, which price shall
not be less than 100% of the Fair Market Value of one Share on the date of grant
of the Stock Appreciation Right. Subject to the terms of the Plan and any
applicable Award Agreement, the grant price, term, methods of exercise, dates of
exercise, methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee. The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it may deem appropriate.

         (c)      Restricted Stock and Restricted Stock Units. The Committee is
hereby authorized to grant Awards of Restricted Stock and Restricted Stock Units
to Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:

                  (i)      Restrictions. Shares of Restricted Stock and
         Restricted Stock Units shall be subject to such restrictions as the
         Committee may impose (including, without limitation, any limitation on
         the right to vote a Share of Restricted Stock or the right to receive
         any dividend or other right or property with respect thereto), which
         restrictions may lapse separately or in combination at such time or
         times, in such installments or otherwise as the Committee may deem
         appropriate. Except as otherwise provided herein, Awards of Restricted
         Stock and Restricted Stock Units shall contain restrictions that lapse
         no sooner than three years following the date of grant or, in the case
         of Awards with performance-based vesting provisions, no sooner than one
         year following the date of grant; provided, however, that restrictions
         may lapse sooner than such dates as to portions of such Awards so long
         as restrictions as to the total number of Shares covered by such Awards
         do not lapse sooner than such dates; and provided, further, that such
         limitations shall not apply to Awards granted to new employees as part
         of initial terms of employment or Awards granted to new or existing
         employees in connection with the acquisition of businesses or assets by
         the Company.

                  (ii)     Forfeiture; Delivery of Shares. Except as otherwise
         determined by the Committee, upon termination of employment (as
         determined under criteria established by the Committee) during the
         applicable restriction period, all Shares of Restricted Stock and all
         Restricted Stock Units at such time subject to restriction shall be
         forfeited and reacquired by the Company; provided, however, that the
         Committee may, when it finds that a waiver would be in the best
         interest of the Company, including, without limitation,

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         in connection with Changes in Control, Qualifying Terminations, death
         or disability, waive in whole or in part any or all remaining
         restrictions with respect to Shares of Restricted Stock or Restricted
         Stock Units. In the case of Restricted Stock, Shares shall be issued at
         the time such Awards are granted and may be certificated or
         uncertificated. Shares representing Restricted Stock that is no longer
         subject to restrictions shall be delivered to the holder thereof
         promptly after the applicable restrictions lapse or are waived. In the
         case of Restricted Stock Units, no Shares shall be issued at the time
         such Awards are granted. Upon the lapse or waiver of restrictions and
         the restricted period relating to Restricted Stock Units evidencing the
         right to receive Shares, such Shares shall be issued and delivered to
         the holders of the Restricted Stock Units. The Committee may from time
         to time establish procedures pursuant to which a Participant may elect
         to defer, until a time or times later than the end of the restricted
         period relating to Restricted Stock Units, receipt of all or a portion
         of the Shares subject to such Restricted Stock Units, all on such terms
         and conditions as the Committee shall determine.

         (d)      Performance Awards. The Committee is hereby authorized to
grant Performance Awards to Eligible Persons subject to the terms of the Plan
and any applicable Award Agreement. A Performance Award granted under the Plan
(i) may be denominated or payable in cash, Shares (including, without
limitation, Restricted Stock or Restricted Stock Units), other securities,
other Awards or other property and (ii) shall confer on the holder thereof the
right to receive payments, in whole or in part, upon the achievement of such
performance goals during such performance periods as the Committee shall
establish. Subject to the terms of the Plan and any applicable Award Agreement,
the performance goals to be achieved during any performance period, the length
of any performance period, the amount of any Performance Award granted, the
amount of any payment or transfer to be made pursuant to any Performance Award
and any other terms and conditions of any Performance Award shall be determined
by the Committee. Notwithstanding the immediately preceding sentence, the
length of a performance period shall not be less than one (1) year.

         (e)      Other Stock-Based Awards. The Committee is hereby authorized
to grant to Participants such other Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related
to, Shares (including, without limitation, securities convertible into Shares),
as are deemed by the Committee to be consistent with the purpose of the Plan;
provided, however, that such grants must comply with applicable law. Subject to
the terms of the Plan and any applicable Award Agreement, the Committee shall
determine the terms and conditions of such Awards; provided, however, that any
Awards granted pursuant to this Section either (i) shall be granted at no less
than 100% of the Fair Market Value on the date of grant, or (ii) shall not
exceed 5% of the aggregate number of Shares available for grant under the Plan.
Shares or other securities delivered pursuant to a purchase right granted under
this Section 6(e) shall be purchased for such consideration, which may be paid
by such method or methods and in such form or forms (including without
limitation, cash, loans, Shares, other securities, other Awards or other
property or any combination thereof), as the Committee shall determine, the
value of which consideration, as established by the Committee, shall not be
less than 100% of the Fair Market Value of such Shares or other securities as
of the date such purchase right is granted.

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         (f)      General.

                  (i)      Consideration for Awards. Awards may be granted for
         no cash consideration or for any cash or other consideration as may be
         determined by the Committee or required by applicable law.

                  (ii)     Awards May Be Granted Separately or Together. Awards
         may, in the discretion of the Committee, be granted either alone or in
         addition to, in tandem with or in substitution for any other Award or
         any award granted under any plan of the Company or any Affiliate other
         than the Plan. Awards granted in addition to or in tandem with other
         Awards or in addition to or in tandem with awards granted under any
         such other plan of the Company or any Affiliate may be granted either
         at the same time as or at a different time from the grant of such other
         Awards or awards.

                  (iii)    Forms of Payment Under Awards. Subject to the terms
         of the Plan and of any applicable Award Agreement, payments or
         transfers to be made by the Company or an Affiliate upon the grant,
         exercise or payment of an Award may be made in such form or forms as
         the Committee shall determine (including, without limitation, cash,
         Shares, other securities, other Awards or other property or any
         combination thereof), and may be made in a single payment or transfer,
         in installments or on a deferred basis, in each case in accordance with
         rules and procedures established by the Committee. Such rules and
         procedures may include, without limitation, provisions for the payment
         or crediting of reasonable interest on installment or deferred
         payments.

                  (iv)     Limits on Transfer of Awards. No Award and no right
         under any such Award shall be transferable by a Participant otherwise
         than by will or by the laws of descent and distribution or pursuant to
         a qualified domestic relations order as defined by the Code or Title I
         of the Employee Retirement Income Security Act or the rules promulgated
         thereunder; provided, however, that, if so determined by the Committee,
         a Participant may, in the manner established by the Committee,
         designate a beneficiary or beneficiaries to exercise the rights of the
         Participant and receive any property distributable with respect to any
         Award upon the death of the Participant; and provided, further, that
         except in the case of an Incentive Stock Option, Awards may be
         transferable as specifically provided in any applicable Award Agreement
         or amendment thereto pursuant to terms determined by the Committee.
         Except as otherwise provided in any applicable Award Agreement or
         amendment thereto (other than an Award Agreement relating to an
         Incentive Stock Option), pursuant to terms determined by the Committee,
         each Award or right under any Award shall be exercisable during the
         Participant's lifetime only by the Participant or, if permissible under
         applicable law, by the Participant's guardian or legal representative.
         Any Award which is transferred pursuant to a qualified domestic
         relations order or as otherwise permitted by the Plan and the
         applicable Award Agreement shall remain subject to the terms and
         conditions set forth in the Award Agreement and the Plan. Except as
         otherwise provided in any applicable Award Agreement or amendment
         thereto (other than an Award Agreement relating to an Incentive Stock
         Option), no Award or right under any such Award may be pledged,
         alienated, attached or otherwise encumbered, and any purported pledge,
         alienation,

                                      -9-

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         attachment or encumbrance thereof shall be void and unenforceable
         against the Company or any Affiliate.

                  (v)      Term of Awards. The term of each Award shall be for
         such period as may be determined by the Committee at the time of grant
         but in no event shall any Award have a term of more than 10 years.

                  (vi)     Restrictions; Securities Exchange Listing. All
         certificates for Shares or other securities delivered under the Plan
         pursuant to any Award or the exercise thereof shall be subject to such
         stop transfer orders and other restrictions as the Committee may deem
         advisable under the Plan or the rules, regulations and other
         requirements of the Securities and Exchange Commission and any
         applicable federal or state securities laws, and the Committee may
         cause a legend or legends to be placed on any such certificates to make
         appropriate reference to such restrictions. If the Shares or other
         securities are traded on a securities exchange, the Company shall not
         be required to deliver any Shares or other securities covered by an
         Award unless and until such Shares or other securities have been
         admitted for trading on such securities exchange.

SECTION 7.        AMENDMENT AND TERMINATION; ADJUSTMENTS.

         Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:

                  (a)      Amendments to the Plan. The Board of Directors of the
         Company may amend, alter, suspend, discontinue or terminate the Plan at
         any time and from time to time; provided, however, that,
         notwithstanding any other provision of the Plan or any Award Agreement,
         without the approval of the shareholders of the Company, no such
         amendment, alteration, suspension, discontinuation or termination shall
         be made that, absent such approval, would violate any rules or
         regulations of the New York Stock Exchange, any other securities
         exchange or the National Association of Securities Dealers, Inc. that
         are applicable to the Company. Furthermore, shareholder approval shall
         be required for any amendments to the Plan which would (i) materially
         increase the benefits accruing to Participants; (ii) materially
         increase the number of securities which may be issued under the Plan;
         or (iii) materially modify the requirements for participation under the
         Plan.

                  (b)      Amendments to Awards. Except as otherwise explicitly
         provided herein, the Committee may waive any conditions of or rights of
         the Company under any outstanding Award, prospectively or
         retroactively. The Committee may not amend, alter, suspend, discontinue
         or terminate any outstanding Award, prospectively or retroactively,
         without the consent of the Participant or holder or beneficiary
         thereof, except as otherwise herein provided. Except as provided in
         Section 7(c) hereof, no Option may be amended to reduce its initial
         exercise price, and no Option shall be canceled and replaced with an
         Option or Options having a lower exercise price, without the approval
         of the shareholders of the Company.

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                  (c)      Adjustments. In the event that any dividend or other
         distribution (whether in the form of cash, Shares, other securities or
         other property), recapitalization, stock split, reverse stock split,
         reorganization, merger, consolidation, split-up, spin-off, combination,
         repurchase or exchange of Shares or other securities of the Company or
         other similar corporate transaction or event affecting the Shares would
         be reasonably likely to result in the diminution or enlargement of any
         of the benefits or potential benefits intended to be made available
         under the Plan or under an Award (including, without limitation, the
         benefits or potential benefits of provisions relating to the term,
         vesting or exercisability of any Option, the availability of any tandem
         Stock Appreciation Rights or "reload" Option rights, if any, contained
         in any Option Award, and any Change in Control or similar provisions of
         any Award), the Committee shall, in such manner as it shall deem
         equitable or appropriate in order to prevent such diminution or
         enlargement of any such benefits or potential benefits, adjust any or
         all of (i) the number and type of Shares (or other securities or other
         property) which thereafter may be made the subject of Awards, (ii) the
         number and type of Shares (or other securities or other property)
         subject to outstanding Awards and (iii) the purchase or exercise price
         with respect to any Award; provided, however, that the number of Shares
         covered by any Award or to which such Award relates shall always be a
         whole number.

                  (d)      Correction of Defects, Omissions and Inconsistencies.
         The Committee may correct any defect, supply any omission or reconcile
         any inconsistency in the Plan or any Award in the manner and to the
         extent it shall deem desirable to carry the Plan into effect.

SECTION 8.        INCOME TAX WITHHOLDING.

In order to comply with all applicable federal, state or local income tax laws
or regulations, the Company may take such action as it deems appropriate to
ensure that all applicable federal, state or local payroll, withholding, income
or other taxes, which are the sole and absolute responsibility of a Participant,
are withheld or collected from such Participant. In order to assist a
Participant in paying all federal and state taxes to be withheld or collected
upon exercise or receipt of (or the lapse of restrictions relating to) an Award,
the Committee, in its discretion and subject to such additional terms and
conditions as it may adopt, may permit the Participant to satisfy such tax
obligation by (i) electing to have the Company withhold a portion of the Shares
otherwise to be delivered upon exercise or receipt of (or the lapse of
restrictions relating to) such Award with a Fair Market Value equal to the
amount of such taxes (but only to the extent of the minimum amount required to
be withheld under applicable laws or regulations) or (ii) delivering to the
Company Shares other than Shares issuable upon exercise or receipt of (or the
lapse of restrictions relating to) such Award with a Fair Market Value equal to
the amount of such taxes (but only to the extent of the minimum amount required
to be withheld under applicable laws or regulations). The election, if any, must
be made on or before the date that the amount of tax to be withheld is
determined. In addition, the Committee, in its discretion and subject to such
additional terms and conditions as it may adopt, may permit a Participant to
satisfy any additional tax that the Participant elects to have the Company
withhold by delivering or attesting to Shares previously owned by the
Participant with a Fair Market Value equal to the amount of such additional tax,
which Shares, if acquired pursuant to another Award, shall have been owned by
the Participant for no less than six months.

                                      -11-

<PAGE>

SECTION 9.        GENERAL PROVISIONS.

         (a)      No Rights to Awards. No Eligible Person, Participant or other
Person shall have any claim to be granted any Award under the Plan, and there is
no obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to different Participants.

         (b)      Award Agreements. No Participant will have rights under an
Award granted to such Participant unless and until an Award Agreement shall have
been duly executed on behalf of the Company.

         (c)      No Limit on Other Compensation Arrangements. Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.

         (d)      No Right to Employment, etc. The grant of an Award shall not
be construed as giving a Participant the right to be retained in the employ, or
as giving a Non-Employee Director the right to continue as a director, of the
Company or any Affiliate. In addition, the Company or an Affiliate may at any
time dismiss a Participant from employment, or terminate the term of a
Non-Employee Director, free from any liability or any claim under the Plan,
unless otherwise expressly provided in the Plan or in any Award Agreement.

         (e)      Governing Law. The validity, construction and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Minnesota.

         (f)      Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.

         (g)      No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.

         (h)      No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.

                                      -12-

<PAGE>

         (i)      Headings. Headings are given to the Sections and subsections
of the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.

         (j)      Section 16 Compliance. The Plan is intended to comply in all
respects with Rule 16b-3 or any successor provision, as in effect from time to
time, and in all events the Plan shall be construed in accordance with the
requirements of Rule 16b-3. If any Plan provision does not comply with Rule
16b-3 as hereafter amended or interpreted, the provision shall be deemed
inoperative. The Board of Directors, in its absolute discretion, may bifurcate
the Plan so as to restrict, limit or condition the use of any provision of the
Plan with respect to persons who are officers or directors subject to Section 16
of the Securities Exchange Act of 1934, as amended, without so restricting,
limiting or conditioning the Plan with respect to other Participants.

SECTION 10.       EFFECTIVE DATE OF THE PLAN.

         The Plan shall be effective as of the date of approval by the
shareholders of the Company in accordance with applicable law.

SECTION 11.       TERM OF THE PLAN.

         New Awards shall be granted under the Plan only during a 10-year period
beginning on the Effective Date of the Plan. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award theretofore
granted may extend beyond the end of such 10-year period, and the authority of
the Committee provided for hereunder with respect to the Plan and any Awards,
and the authority of the Board of Directors of the Company to amend the Plan,
shall extend beyond the end of such period.

                                      -13-

</TEXT>
</DOCUMENT>
