Exhibit 10.1

 

EVINE Live Inc.

Executives’ Severance Benefit Plan

 

Section 1. History, Plan Name and Effective Date.   Effective July 25, 2016, the
Board of Directors of EVINE Live Inc. established the EVINE Live Inc.
Executives’ Severance Benefit Plan. The following provisions constitute the
Plan, effective as of July 25, 2016.

 

Section 2. Purpose. This Plan is established to provide inducement to the
Executives, as determined to be eligible to participate in the Plan under
herein. Such inducement is necessary for the Company to continue to:
(i) attract, recruit, and retain such Executives and assure their continuing
dedication to their duties notwithstanding the threat or occurrence of a Change
in Control (as defined in Section 3(d) below) or as a result of a Termination
for reasons other than Cause (as defined below in Section 3(c) below); and
(ii) enable the Executives, should the Company receive unsolicited proposals
from third parties with respect to its future, to assess and advise the Board
what action on those proposals would be in the best interests of the Company,
its shareholders and customers, and to take such action regarding those
proposals as the Board might determine appropriate, without being influenced by
the uncertainties of their own financial situation; and (iii) demonstrate to the
Executives of the Company that the Company is concerned with the welfare of the
Executives and intends to assure that loyal Executives are treated fairly; and
(iv) ensure that the Executives are provided with compensation and benefits upon
a Change in Control which are appropriate and understood by both the Executive
and the Company.

 

The Plan is intended to comply with section 409A of the Code, and official
guidance issued thereunder. Notwithstanding any other provision of this Plan,
this Plan shall be interpreted, operated, and administered in a manner
consistent with these intentions.

 

Section 3. Definitions. Capitalized terms not otherwise defined in this Section
3 shall have the meanings ascribed to them in this Plan. Without limiting the
foregoing, in this Plan, the following definitions will apply.

 

(a) “Affiliate” means any corporation that is a Subsidiary or Parent of the
Company.

 

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

 

(c) “Cause” means what the term is expressly defined to mean in a then-effective
written agreement between an Executive and the Company or any Affiliate or, in
the absence of any such then-effective agreement or definition, means (i) a
material act of fraud which results in or is intended to result in an
Executive’s personal enrichment at the expense of Company, including without
limitation, theft or embezzlement from Company; (ii) public conduct by an
Executive that is materially detrimental to the reputation of Company;
(iii) material violation by an Executive of any written Company policy,
regulation or practice; (iv) the willful or grossly negligent failure to
adequately perform the duties of an Executive’s position to the material
detriment of the Company; (v) commission of conduct constituting a felony;
(vi) a material breach by an Executive of any of the terms and conditions of an
agreement with the Company or any Affiliate; or (vii) the Executive continues to
materially fail to perform the duties associated with Executive’s employment
after being notified of such failure and given a reasonable opportunity to cure
such failure.

 

 

 

 

(d) “Change in Control” means one of the following:

 

(1) The acquisition by any individual, entity or Group of beneficial ownership
(within the meaning of Exchange Act Rule 13d-3) of 30% or more of either (i) the
then outstanding shares of Company Stock, or (ii) the combined voting power of
the then outstanding Company Voting Securities. Notwithstanding the foregoing
sentence, the following acquisitions will not constitute a Change in Control:

 

(A) any acquisition of Stock or Company Voting Securities directly from the
Company;

 

(B) any acquisition of Stock or Company Voting Securities by the Company or any
of its wholly-owned Subsidiaries;

 

(C) any acquisition of Stock or Company Voting Securities by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any of
its Subsidiaries; or

 

(D) any acquisition of beneficial ownership by any entity with respect to which,
immediately following such acquisition, more than 70% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
outstanding Voting Securities of such entity (or its Parent) is beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who beneficially owned, respectively, the outstanding Stock and
outstanding Company Voting Securities immediately before such acquisition in
substantially the same proportions as their ownership of the outstanding Stock
and outstanding Company Voting Securities, as the case may be, immediately
before such acquisition.

 

(2) Individuals who are Continuing Directors cease for any reason to constitute
a majority of the members of the Board.

 

(3) The consummation of a Corporate Transaction unless, immediately following
such Corporate Transaction, all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the outstanding Stock
and outstanding Company Voting Securities immediately prior to such Corporate
Transaction beneficially own, directly or indirectly, more than 70% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding Voting Securities, as the case may be, of
the of the surviving or acquiring entity (or its Parent) resulting from such
Corporate Transaction in substantially the same proportions as their ownership,
immediately before such Corporate Transaction, of the outstanding Stock and
outstanding Company Voting Securities, as the case may be.

 

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Notwithstanding the foregoing:

 

(i)               a Change in Control shall not be deemed to occur with respect
to an Executive if the acquisition of the 30% or greater interest referred to in
Section 3(d)(1) is by a Group that includes the Participant, or if at least 30%
of the then outstanding common stock or combined voting power of the then
outstanding Voting Securities of the surviving or acquiring entity referred to
in Section 3(d)(3) shall be beneficially owned, directly or indirectly,
immediately after the Corporate Transaction by a Group that includes the
Executive; and

 

(ii)              to the extent that any Award constitutes a deferral of
compensation subject to Code Section 409A, and if that Award provides for a
change in the time or form of payment upon a Change in Control, then no Change
in Control shall be deemed to have occurred upon an event described in Section
3(d) unless the event would also constitute a change in ownership or effective
control of, or a change in the ownership of a substantial portion of the assets
of, the Company under Code Section 409A.

 

(e) “Code” means the Internal Revenue Code of 1986, as amended and in effect
from time to time, and the regulations promulgated thereunder.

 

(f) “Committee” means the Human Resources and Compensation Committee of the
Company’s Board.

 

(g) “Company” means EVINE Live Inc., a Minnesota corporation, or any successor
thereto.

 

(h) “Continuing Director” means an individual (1) who is, as of the effective
date of the Plan, a director of the Company, or (2) who is elected as a director
of the Company subsequent to the effective date of the Plan and whose initial
election, or nomination for initial election by the Company’s shareholders, was
approved by at least a majority of the then Continuing Directors, but excluding,
for purposes of this clause (2), any such individual whose initial assumption of
office occurs as a result of an actual proxy contest.

 

(i) “Corporate Transaction” means a reorganization, merger or consolidation of
the Company, a statutory exchange of outstanding Company Voting Securities, or a
sale or disposition (in one or a series of transactions) of all or substantially
all of the assets of the Company.

 

(j) “Executive” means those individuals eligible to participate in the Plan, who
are expressly limited to those persons in Section 3(j)(1), Section 3(j)(2) or
Section 4(b). At all times, the Chief Executive Officer of the Company (the
“CEO”), if such CEO has a separate and independent agreement with the Company
that includes severance, shall not be considered an Executive for purposes of
this Plan:

 

(1)               The then current Section 16 Officers of the Company; and

 

(2)              Any additional employees designated by name to participate in
the Plan by the Committee, or recommended by the CEO and approved by the
Committee (“Designated Employees”).

 

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A current list of the members of Officers, and a list of the individuals
described in this Section 3(j), shall be maintained by the Benefits
Administrator, and kept on file with the Corporate Secretary.

 

(k) “Exchange Act” means the Securities Exchange Act of 1934, as amended and in
effect from time to time.

 

(l) “Good Reason” means, without the Executive’s written consent:

 

(1) an adverse and material change in the Executive’s status, positions or
responsibilities as compared to the Executive’s status, position or
responsibilities as in effect prior to such change. Notwithstanding the
foregoing, neither an increase in the scope or number of an Executive’s
responsibilities, nor a change in the Executive’s reporting relationships (e.g.
a change with respect to the person or position to whom the Executive reports or
the individual(s) or position(s) who report to the Executive) shall be
considered an adverse and material change in the Executive’s status or position;

 

(2) a material reduction in the amount of either the Executive’s annual base
salary or target annual incentive program (“Annual Bonus”) opportunity as in
effect on the date she or he became a participant in the Plan, or as the same
may be increased from time to time during the term of the Executive’s
participation in this Plan. Notwithstanding the foregoing, an across-the-board
compensation or benefit plan or Annual Bonus reduction applicable on a similar
basis to all other Executives of the Company shall not be considered a material
reduction in the Executive’s annual base salary or Annual Bonus;

 

(3) the failure to provide or continue in effect materially similar compensation
and benefits, in accordance with the plans, practices, policies and programs of
the Company and its Affiliates in effect for the Executive at any time during
the 120-day period immediately preceding a Change in Control or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its Affiliates; provided,
however, that broad-based changes to the benefit plans of the Company and its
Affiliates, affecting a significant portion of the employees of the Company and
its Affiliates, shall not be deemed “Good Reason” under this Section 3(l)(3);

 

(4) the failure of any successor or assign of the Company to assume and
expressly agree to perform the obligations under this Plan;

 

(5) any purported termination of the Executive’s employment which is not
effected pursuant to a Notice of Termination and a resolution satisfying the
requirements of Section 6(e) below; and for purposes of this Plan, no such
purported termination shall be effective; or

 

(6) any request by the Company that the Executive participate in an unlawful
act.

 

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(m) “Group” means two or more persons acting as a partnership, limited
partnership, syndicate or other group for the purpose of acquiring, holding or
disposing of securities of an entity.

 

(n) “Notice of Termination” means a written notice which (1) indicates the
specific termination provision relied upon, (2) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated and (3) if the date of termination is other than the date of receipt
of such notice, specifies the termination date (which date shall be not more
than thirty (30) days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder, or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

(o) “Parent” means a “parent corporation,” as defined in Code Section 424(e).

 

(p) “Plan” means this EVINE Live Inc. Executive Severance Benefit Plan, as
effective June21, 2016 and in effect from time to time.

 

(q) “Share” means a share of Stock.

 

(r) “Stock” means the common stock of the Company.

 

(s) “Subsidiary” means a “subsidiary corporation,” as defined in Code Section
424(f), of the Company.

 

(t) “Tier” means a benefit level. Tier I executive is defined as Chief Executive
Officer and Executive Vice President (EVP), and Tier II executive is defined as
Senior Vice President (SVP).

 

(u) “Voting Securities” of an entity means the outstanding securities entitled
to vote generally in the election of directors (or comparable equity interests)
of such entity.

 

Section 4. Termination of Participation.   Except as provided in Section 4(b)
below, upon termination of participation in the Plan, the Executive shall
thereafter lose entitlement to any benefits under the Plan and all rights
hereunder shall be forfeited.

 

(a) Termination of Participation. Subject to Section 4(b) below, the following
events, if occurring before a Change in Control, will result in the termination
of an Executive’s participation in the Plan: (i) the date the Executive
separates from service with the Company and its Affiliates, (ii) the date the
Executive ceases to be an Officer without being added as a “Designated Employee”
under Section 3(j)(2) above, or (iii) the date that an Executive, whose
participation in the Plan was approved by the Committee, has his or her
participation terminated by the Committee.

 

(b) Deemed Participation.   Notwithstanding the foregoing, an Executive whose
participation in the Plan was terminated shall nevertheless be deemed to have
been a participant in the Plan on the date of a Change in Control and shall be
eligible to receive benefits as provided under this Plan if both of the
following requirements are met:

 

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(1) The Executive’s termination of participation results from: (A) involuntarily
termination from service with the Company, other than for Cause; (B) removal as
an Officer; or (C) removal by the Committee; and

 

(2) The Executive’s termination of participation occurs within the 6-month
period immediately preceding the occurrence of a Change in Control.

 

Section 5. Cash Severance Benefits.

 

(a) Payments as a Result of a Change in Control.   In the event Executive’s
employment terminates as a result of a Change in Control, the amount of the cash
severance benefit paid under this Plan shall be, with the exception of the CEO
if such CEO has a separate agreement with the Company that includes severance,
in the case of a Tier I Executive (1) an amount equal to one and one half (1 ½)
times the Executive’s highest annual rate of base salary during the 12-month
period immediately preceding the date that the Executive Separates from Service
(the “Base Salary”), and (2) one and one-half (1 1/2 ) times the target annual
incentive bonus determined from such Base Salary. In the case of a Tier II
Executive (1) an amount equal to one and one quarter (1 ¼) times the Executive’s
highest annual rate of Base Salary during the 12-month period immediately
preceding the date that the Executive Separates from Service, and (2) one and
one-quarter (1 ¼) times the target annual incentive bonus determined from such
Base Salary.

 

(b) Cash Severance Payment for Reasons Other Than a Change in Control. In the
event Executive’s employment terminates for reasons other than a Change in
Control and either (i) at the initiation of the Company for reasons other than
Cause, or (ii) at the initiation of the Executive for Good Reason, the amount of
the cash severance benefit paid under this Plan shall be , with the exception of
the CEO if such CEO has a separate agreement with the Company that includes
severance, in the case of a Tier I Executive (1) an amount equal to one and one
quarter (1 ¼) times the Executive’s highest Base Salary. In the case of a Tier
II Executive (1) an amount equal to one (1) times the Executive’s highest annual
rate of Base Salary during the 12-month period immediately preceding the date
that the Executive Separates from Service.

 

Section 6. Payment of Severance Benefits.

 

(a) Payments Following a Change in Control.   If within a one-year period
commencing on the date of a Change in Control (the “Benefit Period”), (i) the
Company terminates the employment of an Executive for any reason other than
Cause, death, or the Executive’s becoming Disabled, or (ii) the Executive
terminates his employment for Good Reason, the Executive shall be entitled to
benefits under the Plan. An Executive who is deemed to be a participant in the
Plan on the date of the Change in Control pursuant to Section 4(b) shall also be
entitled to benefits under Section 5(a) and 7(a) of the Plan if the Executive’s
employment is terminated by the Company during the Benefit Period or the
immediately preceding six (6) months. For purposes of this Plan, “Disabled”
means that the Executive has been determined to be disabled as defined in the
EVINE Live Inc. 2011Omnibus Incentive Plan.

 

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If an Executive is entitled to benefits under Section 5(a) of the Plan, the
Executive’s cash severance payment described in Section 5(a) shall be paid in a
lump sum within 30 calendar days of the later of the date that the Executive
Separates from Service (within the meaning of Code section 409A) or the date of
the Change in Control. Notwithstanding the foregoing, if the amount is payable
upon an Executive’s Separation from Service and the Executive is a Key Employee
as of his or her Separation from Service, the lump sum payment will be made on
the date that is six (6) months after the Separation from Service (or, if
earlier, the date of death of the Key Employee). For this purpose, “Key
Employee” means an Executive treated as a “specified employee” under Code
section 409A(a)(2)(B)(i), i.e., a key employee (as defined in Code section
416(i) without regard to paragraph (5) thereof). Key Employees shall be
determined in accordance with Code section 409A using December 31st as the
identification date. A listing of Key Employees as of an identification date
shall be effective for the 12-month period beginning on the April 1st following
the identification date.

 

(b) Payments for Reasons Other Than a Change in Control. If the Executive’s
employment terminates for reasons other than a Change in Control and either
(i) at the initiation of the Company for any reason other than Cause, death, or
the Executive’s becoming Disabled, or (ii) at the initiation of the Executive
for Good Reason, the Executive shall be entitled to benefits under Section 5(b)
and Section 7 of the Plan. For purposes of this Plan, “Disabled” means that the
Executive has been determined to be disabled as defined in the EVINE Live Inc.
2011 Omnibus Incentive Plan.

 

If an Executive is entitled to benefits under Section 5(b) , the Executive’s
cash severance payment described in Section 5(b) shall be paid in a lump sum
within 30 calendar days of the later of the date that the Executive Separates
from Service (within the meaning of Code section 409A) or the date of the Change
in Control. Notwithstanding the foregoing, if the amount is payable upon an
Executive’s Separation from Service and the Executive is a Key Employee as of
his or her Separation from Service, the lump sum payment will be made on the
date that is six (6) months after the Separation from Service (or, if earlier,
the date of death of the Key Employee). For this purpose, “Key Employee” means
an Executive treated as a “specified employee” under Code section
409A(a)(2)(B)(i), i.e., a key employee (as defined in Code section 416(i)
without regard to paragraph (5) thereof). Key Employees shall be determined in
accordance with Code section 409A using December 31st as the identification
date.

 

(c) Termination. Notwithstanding anything herein to the contrary, nothing herein
is meant to imply that the Company cannot terminate an Executive’s employment
for Cause, or that an Executive cannot terminate his/her employment for Good
Reason, at any time, including during a Benefit Period.

 

(d) Notice of Termination.   Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the
other party given by hand delivery, registered or certified mail, return receipt
requested, postage prepaid, to the last known home address of the Executive or
to the address of the principal office of the Company, copy to the General
Counsel.

 

(e) Future Covenants.   As a condition to the receipt of any payments or
benefits under this Plan, the Executive must sign a release of claims in favor
of the Company, all applicable consideration periods, revocation periods, and
rescission periods provided by law shall have expired. Additionally, the
Executive must use his or her best efforts and utmost diligence to guard and
protect such confidential information and trade secrets acquired during his or
her tenure with the Company and its Affiliates. Furthermore, the Executive
agrees that, for a period of eighteen (18) months following his or her
termination date, that the Executive will not directly or indirectly hire,
manage, solicit or recruit any financial planners, agents, salespeople,
financial advisors or employees of the Company or its Affiliates; provided,
however, nothing “solicit” shall not include general newspaper or similar
advertisements for employment opportunities with the Executive or with any
subsequent employer of Executive. Finally, the Executive agrees not to disparage
the Company or its Affiliates, or any of its employees or directors.

 

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Section 7. Benefit Enhancements & Coordination with Other Plans.

 

(a) Upon or Following a Change in Control. In the event benefits are payable
under this Plan to an Executive in accordance with Section 5(a) or 6(a) above,
provided the Executive elects continuation of coverage pursuant to COBRA or
similar state laws and also timely returns to the Company the documents and
payments required for such election, the Company shall reimburse the Executive a
portion of the premium amount equal to the amount paid by other similarly
situated Executives who have not been terminated and receive similar group
health, dental and life insurance benefits to the extent such benefits were in
effect for Executive and his or her dependents. In the case of a Tier I
Executive, the Company shall provide such reimbursement for that election for a
period of eighteen (18) months after the Executive’s employment terminates
subject to the Executive’s timely payment of his or her share of the applicable
premiums. In the case of a Tier II Executive, the Company shall provide such
reimbursement for that election for a period of fifteen (15) months after the
Executive’s employment terminates subject to the Executive’s timey payment of
his or her share of the applicable premiums.

 

(b) For Reasons Other Than a Change in Control. In the event benefits are
payable under this Plan to an Executive in accordance with Section 5(b) above,
provided the Executive elects continuation of coverage pursuant to COBRA or
similar state laws and also timely returns to the Company the documents and
payments required for such election, the Company shall reimburse the Executive a
portion of the premium amount equal to the amount paid by other similarly
situated Executives who have not been terminated and receive similar group
health, dental and life insurance benefits to the extent such benefits were in
effect for Executive and his or her dependents. In the case of a Tier I
Executive, the Company shall provide such reimbursement for that election for a
period of fifteen (15) months after the Executive’s employment terminates
subject to the Executive’s timely payment of his or her share of the applicable
premiums. In the case of a Tier II Executive, the Company shall provide such
reimbursement for that election for a period of twelve (12) months after the
Executive’s employment terminates subject to the Executive’s timely payment of
his or her share of the applicable premiums.

 

(c) No Executive receiving any benefit under this Plan shall be entitled to
receive any severance payment under any other severance plan, severance program,
severance arrangement or employment agreement sponsored by or entered into by
the Company, except to the extent the plan, program, agreement or arrangement
specifically provides otherwise.

 

(d) Except as otherwise provided in this Section 7, the Executive’s rights under
any other benefit plan maintained by the Company (or successor) shall be
governed by the terms of that plan as in effect on the day immediately preceding
the Change in Control.

 

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Section 8. Limitation on Parachute Payments.

 

(a) Notwithstanding any provision to the contrary set forth in this Plan, if any
of the payments or benefits provided or to be provided by the Company to
Executive or for Executive’s benefit pursuant to the terms of the Plan
constitute parachute payments (“Parachute Payments”) within the meaning of
Section 280G of the Code and would, but for this Section 8 be subject to the
excise tax imposed under Section 4999 of the code (or any successor provision
thereto) or any similar tax imposed by state or local law or any interest or
penalties with respect to such taxes (collectively, the “Excise Tax”), then the
Covered Payments shall be payable either (i) in full or (ii) reduced to the
minimum extent necessary to ensure that no portion of the Covered Payments is
subject to the Excise Tax, whichever of the foregoing (i) or (ii) results in the
Executive’s receipt on an after-tax basis of the greatest amount of benefits
after taking into account the applicable federal, state, local and foreign
income, employment and excise taxes (including the Excise Tax).

 

(b) The Covered Payments shall be reduced in a manner that maximizes Executive’s
economic position. In applying this principle, the reduction shall be made in a
manner consistent with the requirements of Section 409A of the Code, and where
two economically equivalent amounts are subject to reduction by payable at
different times, such amounts shall be reduced on a pro rata basis but not below
zero.

 

(c) Any determination required under this Section 8(c) shall be made in writing
in good faith by an accounting firm selected by the Company (the “Accountants”),
which shall provide detailed supporting calculations to the Company and the
Executive as required by the Company or the Executive. The Company and the
Executive shall provide the Accountants with such information and documents as
the Accountants may reasonably request in order to make a determination under
this Section 8(c). The Company shall be responsible for all fees and expenses of
the Accountants.

 

(d) It is possible that after the determinations and selections made pursuant to
this Section 8 the Executive will receive Covered Payments that are in the
aggregate more than the amount provided under this Section 8 (“Overpayment”) or
less than the amount provided under this Section 8 (“Underpayment”).

 

(i)In the event that: (A) the Accountants determine, based upon the assertion of
a deficiency by the Internal Revenue Service against either the Company or
Executive which the Accountants believe has a high probability of success, that
an Overpayment has been made or (B) it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding that has been
finally and conclusively resolved that an Overpayment has been made, then
Executive shall pay any such Overpayment to the Company.

 

(ii)In the event that: (A) the Accountants, based upon controlling precedent or
substantial authority, determine that an Underpayment has occurred or (B) a
court of competent jurisdiction determines that an Underpayment has occurred,
any such Underpayment will be paid promptly by the Company to or for the benefit
of the Executive.

 

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(e) Any payment made to or on behalf of an Executive under this Section 8 shall
be made in compliance with Code section 409A and by the end of the year
following the year that the related taxes are remitted to the applicable taxing
authority.

 

Section 9. Confidential Information.   Each Executive who receives a severance
benefit under this Plan agrees to retain in confidence any secret or
confidential information known to him or her relating to the Company, its
Affiliates and their respective businesses, which shall have been obtained by
the Executive during his or her employment by the Company or any of its
Affiliates and shall not be or become public knowledge (other than by acts of
the Executive or a representative of the Executive in violation of this Plan).
After termination of the Executive’s employment with the Company or any of its
Affiliates, the Executive shall not, without prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall a violation or an asserted
violation of the provisions of this Section 9 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this Plan.

 

Section 10. Binding Plan.   The obligations under this Plan shall be binding
upon and inure to the benefit of an Executive, his or her beneficiary or estate,
the Company and any successor to the Company.

 

Section 11. Amendment, Suspension or Termination of Plan.   This Plan may be
amended at any time and from time to time by and on behalf of the Company by the
Board, but no amendment shall operate to give the Executive, either directly or
indirectly, any interest whatsoever in any funds or assets of the Company,
except the right upon fulfillment of all terms and conditions hereof, as such
terms and conditions may be amended, to receive the payments herein provided. No
amendment, suspension or termination of this Plan shall operate in any way to
reduce, diminish, or adversely affect any of the benefits provided to any
Executive if such amendment, suspension or termination (i) arose by action of
the Company in connection with or anticipation of a Change in Control,
(ii) occurs coincident with a Change in Control, or (iii) occurs within one year
after a Change in Control has occurred. Any such amendment, suspension, or
termination that occurs within the six (6) month period before a Change in
Control is presumed to have been in anticipation of such Change in Control.

 

Section 12. Plan Administrator.   The Plan shall be administered by the Benefits
Administrator. The Benefits Administrator shall be the Company’s current or
acting head of Human Resources, unless and until the Board delegates this
authority elsewhere. The Benefits Administrator shall have full authority to
interpret the Plan, resolve issues pertaining to Plan eligibility, determine
benefits payable under the Plan, and take whatever actions are, in the sole
discretion of the Benefits Administrator, necessary to or desirable for such
administration, including, but not limited to: (a) establishing administrative
rules consistent with the provisions of the Plan, (b) delegating the
responsibilities of the Benefits Administrator to other persons, and
(c) retaining the services of lawyers, accountants, or other third parties to
assist with the administration of the Plan.

 

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Section 13. Claim Procedure.

 

(a) If an Executive’s claim for benefits is denied, the Benefits Administrator
will furnish written notice of denial to the Executive making the claim (the
"Claimant") within sixty (60) days of the date the claim is received, unless
special circumstances require an extension of time for processing the claim. 
This extension will not exceed sixty (60) days, and the Claimant must receive
written notice stating the grounds for the extension and the length of the
extension within the initial sixty (60) day review period.  If the Benefits
Administrator does not provide written notice, the Claimant may deem the claim
denied and seek review according to the appeals procedures set forth below.

 

(b) Denial Notice.   The notice of denial to the Claimant shall state:

 

(i)the specific reasons for the denial;    

(ii)specific references to pertinent provisions of the Plan upon which the
denial was based;    

(iii)a description of any additional material or information needed for the
Claimant to perfect his or her claim and an explanation of why the material or
information is needed; and    

(iv)a statement that the Claimant may request a review upon written application
to the Benefits Administrator, review pertinent Plan documents, and submit
issues and comments in writing, and that any appeal that the Claimant wishes to
make of the adverse determination must be in writing to the Benefits
Administrator within ninety (90) days after the Claimant receives notice of
denial of benefits.

 

The notice of denial of benefits shall notify the Claimant of his or her right
to appeal the denial through binding arbitration with the American Arbitration
Association (“AAA”) and subject to AAA’s rules and procedures, and such
arbitration shall be conducted by a single arbitrator as mutually agreed to by
the Company and Executive and, if no such mutual agreement can be reached,
before an arbitrator assigned by the AAA. The notice may state that failure to
appeal the action to the Benefits Administrator in writing within the ninety
(90) day period will render the determination final, binding and conclusive.
Notice of the arbitrator’s decision shall be given within sixty (60) days after
close of the arbitration, unless additional time is required due to special
circumstances.  In no event shall the Arbitrator render a decision on an appeal
later than one hundred twenty (120) days after the close of arbitration.

 

Section 14. No Waiver.   Neither the failure nor the delay on the part of the
Executive in exercising any right, power or privilege hereunder shall operate as
a waiver of such right, nor shall any single or partial exercise of any such
right, power or privilege preclude any further exercise thereof or the exercise
of any other right, power or privilege hereunder. No remedy conferred hereunder
is intended to be exclusive of any other remedy and each shall be cumulative and
shall be in addition to every other remedy now or hereafter existing at law or
in equity.

 

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Section 15. Rules of Construction. The headings in this Plan are for purposes of
reference only and shall not limit or otherwise affect any of the terms hereof.

 

Section 16. Governing Law.  To the extent not preempted by ERISA, the terms of
the Plan shall be governed by, and construed and enforced in accordance with,
the laws of the State of Minnesota, including all matters of construction,
validity and performance.

 

Section 17. Employment at Will.  Nothing contained herein shall confer upon any
Executive the right to be retained in the service of the Company nor limit the
right of the Company to discharge or otherwise deal with any Executive with
regard to the existence of the Plan.

 

Section 18. Unfunded.  The Plan shall at all times be entirely unfunded and no
provision shall at any time be made with respect to segregating assets of the
Company or an Affiliate for payment of any Severance Payment hereunder.  No
Executive or any other person shall have any interest in any particular assets
of the Company or an Affiliate by reason of the right to receive benefits under
this Plan and any such Participant or any other person shall have only the
rights of a general unsecured creditor of the Company or an Affiliate with
respect to any rights under the Plan.

 

***

 

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