Exhibit 10.2

 

General Mills Separation Pay and Benefits Program for Officers

 

Introduction

This document sets forth the Separation Pay and Benefits Program for Officers
(the “Program”) of General Mills, Inc. (the “Company”). The provisions of the
Program reflect a comprehensive review undertaken by the Company of its
severance policies and programs, and will govern terminations of employment
following the effective date (the “Effective Date”) of the Program’s adoption by
the Company’s Board of Directors (the “Board”).

The provisions of the Program are set forth in two independent component plans.
Plan A of the Program (“Plan A”) formalizes the Company’s existing severance
practices, and Plan B of the Program (“Plan B”) sets forth certain provisions
that will apply in respect of terminations of employment of certain officers
following a Change of Control (as defined herein).

The Program serves as the umbrella document governing severance policies of the
Company. However, each of Part A and Part B, as subplans of the Program,
constitute independent employee benefit plans and shall be treated for purposes
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), as
distinct plans.

The Program supersedes any severance plans, policies and/or practices currently
in effect at the Company and its Affiliates with respect to Participants (as
defined in Plan A) and Change of Control Participants (as defined in Plan B).

 

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Plan A

ARTICLE I

PURPOSE

This Plan A is intended to formalize the Company’s separation pay and benefits
policy. The purpose of this Plan A is to provide transitional pay and benefits
for a limited period of time to certain terminated employees. The Company
reserves the right to amend or terminate this Plan A by action of the Committee
(as defined below) in accordance with the amendment and termination provisions
set forth below.

ARTICLE II  

DEFINITIONS

As used in this Plan A, the following words and phrases shall have the following
respective meanings (unless the context clearly indicates otherwise):

2.1           Administrator. The Company.

2.2           Affiliate. An Affiliate of the Company shall mean any company
controlled by, controlling, or under common control with, the Company.

2.3           Annual Base Salary. With respect to a Participant, the annual base
salary in effect immediately prior to such Participant’s Date of Termination.

2.4           Average Annual Bonus. The average of the applicable Participant’s
annual bonuses paid under the Incentive Plan, for each of the last three full
fiscal years (or such lesser number of years for which such Participant was
employed by the Company) prior to the year during which occurs the Participant’s
Date of Termination.

2.5           Cause. With respect to any Participant, any definition of “Cause”
set forth in an employment, severance, or similar agreement between such
Participant and the Company (or an Affiliate thereof), or, if no such definition
exists, the occurrence of any of the following:

(a)           the Participant’s conviction of, or plea of nolo contendere with
respect to, a felony;

(b)           the improper disclosure by the Participant of proprietary
information or trade secrets of the Company and its Affiliates;

(c)           the performance by the Participant of his or her employment duties
in an unsatisfactory manner, including, without limitation, willful failure to
perform, or negligent performance of, one’s employment duties;

(d)           the falsification by the Participant of any records or documents
of the Company and its Affiliates;

 

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(e)           the dishonesty, willful misconduct, misappropriation, breach of
fiduciary duty, fraud, or embezzlement of the Participant with regard to the
Company and its Affiliates;

(f)            the violation by the Participant of any employment rules,
policies (including the Company’s Code of Conduct) or procedures of the Company
and its Affiliates;

(g)           any intentional or gross misconduct of the Participant that
injures the business or reputation of the Company and its Affiliates; or

(h)           the violation of any federal or state securities law, rule or
regulation governing the business of the Company and its Affiliates or the
constitution, by-laws, rules or regulations of any securities or commodities
exchange or self-regulatory organization governing the business of the Company
and its Affiliates or of which the Company is a member.

 

2.6

Change of Control. As defined in Part B of this Program.

 

2.7

Code. The Internal Revenue Code of 1986, as amended from time to time.

 

2.8

Committee. The Compensation Committee of the Board.

 

2.9

Company. As defined in the preamble and in Section 6.2 of this Plan A.

2.10         Comparable Job. A job offering (i) no reduction in base salary of
more than 10%, (ii) no reduction in the annual cash compensation opportunity
(i.e., base salary plus target bonus) of more than 10% (iii) no material adverse
reduction in duties and responsibilities, and (iv) no requirement of relocation
to a job location more than 50 miles from the Participant’s then-current job
location.

2.11         Date of Termination. The applicable Participant’s last day of
active employment (or last day of Leave of Absence), as designated by the
Company.

2.12         Incentive Plan. The Company’s Executive Incentive Plan, or any
predecessor or successor plan.

2.13         Interest. Interest on the applicable delayed payment equal to the
“prime rate” (as reported in the Wall Street Journal on the Date of Termination)
plus 1%, which interest shall be calculated on the basis of a 365-day year and
the actual number of days elapsed from and including the Date of Termination
through, but excluding, the date of payment.

2.14         Leave of Absence. Any absence from work authorized by the Company
or an Affiliate thereof, whether paid or unpaid, including but not limited to,
absences because of bereavement, extended care of a family member, personal
emergencies, sick time, disability (short-term or long-term), education,
vacation, sabbatical, worker’s compensation, jury duty and active military
service. The duration of the applicable Leave of Absence, including the date
when the Participant is required to return to his or her active duties, shall be
determined in the Company’s sole discretion, subject to applicable legal
requirements.

 

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2.15         Multiple. With respect to any Participant, such Participant’s
“Multiple” shall be the number so designated on Appendix A of this Plan A. A
Multiple may be either a whole number or a fractional number.

2.16         Participant. Any employee of the Company and its Affiliates at the
level of Vice President or above and any other employees of the Company and its
Affiliates designated as Participants on Appendix A of this Plan A.

2.17         Section 409A. Section 409A of the Code.

2.18         Separation Benefits. The amounts and benefits payable or required
to be provided in accordance with Section 4.3 of this Plan A.

ARTICLE III

ELIGIBILITY

3.1           Participation. A Participant shall cease to be a Participant in
this Plan A if such Participant ceases to be employed by the Company and its
Affiliates under circumstances not entitling such Participant to Separation
Benefits or if such Participant ceases to be employed by the Company and its
Affiliates at the level of Vice President or above.

3.2           No Termination of Participation Following Termination Entitling
Participant to Benefits Under Plan. Notwithstanding Section 3.1 of this Plan A,
a Participant who is entitled, as a result of a cessation of employment while a
Participant, to receive benefits under this Plan A, shall remain a Participant
in this Plan A (and shall not be subject to a reduction of such Participant’s
Multiple) until the amounts and benefits payable under this Plan A have been
paid or provided to such Participant in full.

ARTICLE IV

SEPARATION BENEFITS

4.1           Right to Separation Benefits. A Participant shall be entitled to
receive from the Company the Separation Benefits as provided in Section 4.3 of
this Plan A if (a) such Participant’s employment with the Company and its
Affiliates has been terminated for a reason specified in Section 4.2(a) of this
Plan A, (b) such Participant has not refused an offer of employment by the
Company and its Affiliates for a Comparable Job, and (c) such Participant
executes (and does not revoke), in a form that is satisfactory to the Company,
such documents as the Company may require, which shall include a separation
agreement that contains an effective general release of all known and unknown
claims against the Company in a form consistent with the Company’s past
practice, and may include provisions binding the Participant to confidentiality,
cooperation with litigation, non-disparagement, non-competition, and/or
non-solicitation agreements.

4.2           Termination of Employment.

(a)           Terminations Which Give Rise to Separation Benefits Under This
Plan A. Any termination under the following circumstances shall be deemed to be
a termination for a reason specified in Section 4.2(a) of this Plan A: any
involuntary termination of employment initiated

 

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by the Company and its Affiliates (excluding any transfer to the Company or an
Affiliate thereof) other than for Cause, Disability (as defined below) or as a
result of the Participant’s Death. A termination of employment will not be
deemed to be described by this paragraph if it occurs in connection with a
transfer by the Company and its Affiliates of assets or stock, and the
applicable Participant receives an offer of a Comparable Job with the transferee
of such assets or stock (whether before, at the time of, or immediately after
the closing of such transfer). In the case of an involuntary termination of
employment initiated by the Company and its Affiliates other than for Cause, the
applicable Participant must remain employed (or on approved Leave of Absence)
until the date of termination communicated by the Company in order for the
termination to qualify as a termination described by this paragraph. A
termination of employment will not be deemed to be described by this paragraph
if it follows a period of community assignment.

(b)           Terminations Which Do Not Give Rise to Separation Benefits Under
This Plan A. If a Participant’s employment is terminated for Cause, Disability
(within the meaning of the Company’s long-term disability plan applicable to the
Participant), as a result of the Participant’s death, or due to voluntary
termination, such termination shall not be deemed to be a termination for a
reason specified in Section 4.2(a) of this Plan A and the Participant shall not
be entitled to Separation Benefits under this Plan A.

4.3           Separation Benefits.

(a)           If a Participant’s employment is terminated under the
circumstances set forth in Section 4.1 of this Plan A entitling such Participant
to Separation Benefits, the Company shall pay or provide, as the case may be, to
such Participant the amounts and benefits set forth in items (i) through (iii)
below (the “Separation Benefits”):

 

(i)

the Company shall pay to the Participant the following amounts:

(A)  the Participant’s base salary through the Date of Termination to the extent
not theretofore paid; and

(B)  the product of (1) the actual annual bonus, if any, the Participant would
have received for the fiscal year during which the Date of Termination occurs
had such Participant remained employed through the conclusion of such year
(based on actual performance and determined by the Company in its good faith
discretion) and (2) a fraction, the numerator of which is the number of days in
such year through the Date of Termination, and the denominator of which is 365,
payable following the conclusion of such year but in no event more than
two-and-a-half months following such conclusion; and

(C)  an amount equal to the product of (1) the Multiple and (2) the sum of (x)
the Participant’s Annual Base Salary (or, if the Date of Termination follows a
Change of Control and the Participant’s base salary was higher immediately prior
to such Change of Control, such higher salary) and (y) the Average Annual Bonus,
such amounts to be

 

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paid ratably in accordance with the Company’s regular payroll practices over a
period of years equal to the applicable Multiple;

(ii)           for a number of years after the Participant’s Date of Termination
equal to the Multiple, the Company shall cause the Company’s welfare plans to
continue medical and dental benefits to the Participant and/or the Participant’s
family on the same terms applicable to similarly situated active employees, with
the Participant’s share of the premiums no greater than that applicable to such
similarly situated active employees (or, if the terms of the applicable welfare
plans do not permit such continued provision of medical and/or dental benefits,
shall pay to the Participant an amount sufficient on an after-tax basis to
permit the Participant and/or the Participant’s family to obtain such benefits
at the level required pursuant to this sentence); provided, however, that if the
Participant becomes reemployed with another employer and is eligible to receive
medical and/or dental benefits under another employer provided plan, the medical
and/or dental benefits, as applicable, described herein shall terminate; and,
provided, further, that the benefits provided hereunder shall be provided in
such a manner that such benefits (and the costs and premiums thereof) are
excluded from the Participant’s income for federal income tax purposes.
Notwithstanding the foregoing, if the Company reasonably determines that
providing continued coverage under one or more of its welfare benefit plans
contemplated herein could adversely affect the tax treatment of other
participants covered under such plans, or would otherwise have adverse legal
ramifications or adverse economic impact, the Company may, in its discretion,
provide other insurance coverage substantially similar in the aggregate to the
continued coverage otherwise required hereunder; and

(iii)      the Company shall, at its sole expense as incurred, provide the
Participant with outplacement services, the scope and provider of which shall be
selected by the Company in its sole discretion, provided that such outplacement
benefits shall end not later than the first anniversary of the Date of
Termination.

Notwithstanding the preceding provisions of this Section 4.3, in the event that
the Participant is a “specified employee” (within the meaning of Section 409A)
on the Date of Termination and the amounts to be paid within the first six
months following the Date of Termination pursuant to Section 4.3(a)(i)(C) of
this Plan A exceed the amount referenced in Treas. Regs. Section
1.409A-1(b)(9)(iii)(A) with respect to such Participant, such excess amounts
shall be paid, with Interest from the date on which payment would otherwise have
been made, on the first business day of the first calendar month that begins
after the six-month anniversary of such Participant’s “separation from service”
within the meaning of Section 409A of the Code.

 

(b)

Reductions in Certain Instances.

(i)       The Separation Benefits provided under this Plan A shall be reduced
(but not below zero) by the amount of any severance or separation pay and
benefits and/or salary-based guaranteed compensation payments provided for under
the terms of any other written employment, change in control, severance,
consulting or similar agreement (including an offer letter) to which the
applicable Participant and the Company (or an Affiliate thereof) are party or
any other severance plan, policy or arrangement in which

 

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the Participant participates, or any statutory severance scheme applicable to
the Participant, including, without limitation, the Worker Adjustment and
Retraining Notification Act of 1988 set forth at 29 U.S.C. § 2101 et seq. or any
similar state or local statute to the extent not preempted by ERISA
(collectively, “Severance Arrangements”). Nothing in this Plan A shall be
construed to provide separation pay or benefits that are duplicative of any
separation pay, which shall include the payment of salary-based guaranteed
compensation, or benefits provided to a Participant pursuant to any Severance
Arrangement. Without limiting the generality of the foregoing, if any federal,
state or local law (to the extent not preempted by ERISA), including without
limitation, worker’s compensation laws (and excluding applicable state or
federal laws regarding jury duty or active military service) or any Company
policy, benefit or practice, including, without limitation, disability benefits
or vacation pay (excluding vacation accrued but unused prior to the Date of
Termination) either provides or requires the Company to provide a Participant
with income in place of such Participant’s salary or vacation pay accruing after
the Date of Termination, then the Separation Benefits to which the Participant
would have been entitled under this Plan A shall be reduced by the amount of
such replacement pay or such post-Date of Termination vacation pay received by
the Participant. For clarity, the Company’s qualified and non-qualified
retirement plans are not considered Severance Arrangements for purposes of this
paragraph and amounts payable under this Plan A shall not be reduced pursuant to
this paragraph as a result of amounts payable under such qualified and
non-qualified retirement plans.

(ii)       The Company also reserves the right to offset any separation pay or
benefits under this Plan A by any advances, expenses, loans, claims for damages
or other monies (including any tax withholding due in respect of payments
hereunder or otherwise) the applicable Participant owes the Company or any of
its Affiliates (except for any personal or business loan for which the
Participant may have contracted with the Company or any of its Affiliates).

(iii)      In the event that any payment or benefit under this Plan A would be
non-deductible as a result of the application of Section 280G of the Code, such
payment or benefit shall be reduced to the maximum amount that may be paid or
provided without any payment or benefit to the applicable Participant being
non-deductible as a result of the application of Section 280G of the Code.

(iv)      If a Participant obtains employment within the Company or any of its
Affiliates following a termination entitling such Participant to Separation
Benefits and prior to the expiration of the number of weeks of such Separation
Benefits, any Separation Benefits will cease immediately.

(v)       Notwithstanding the provisions of any other section of this Plan A,
Separation Benefits may be discontinued if the applicable Participant is
determined by the Administrator (1) to have engaged in conduct at any time while
employed by the Company that would have provided a basis for a for-Cause
termination, (2) to have violated any of the representations or obligations
undertaken by the Participant by executing such documents as the Company may
require pursuant to Section 4.1(c) of this Plan A in order for the Participant
to be eligible for Separation Benefits under this Plan

 

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A, or (3) to have engaged in any conduct or act that was injurious, detrimental
or prejudicial to the interest of the Company. This paragraph shall have no
application following a Change of Control.               

 

4.4           Vesting of Supplemental Retirement Plan Benefit. If a Participant
is at least a Senior Vice President whose employment is terminated under the
circumstances set forth in Section 4.1 of this Plan A, then any benefit accrued
under the otherwise applicable terms of the 2005 Supplemental Retirement Plan of
General Mills, Inc. shall be fully vested as of his or her Date of Termination,
provided, however, that said Participant is at least 55 years old on his or her
Date of Termination. Solely for purposes of this Section 4.4 and for purposes of
determining if a Participant’s employment is terminated under the circumstances
set forth in Section 4.1, the definition of “Cause” at Section 2.5 shall be
applied without regard to subsection 2.5(c) thereof. This provision potentially
operates to accelerate vesting but does not impact the amount of one’s accrued
benefit, when it is paid, or the payment form, all of which are governed by the
otherwise applicable terms of the 2005 Supplemental Retirement Plan of General
Mills, Inc.

 

ARTICLE V

ADMINISTRATION

5.1           Benefits Unsecured. The separation pay and benefits and costs of
this Plan A are payable by the Company out of its general assets, with the
exception of any portion of the premiums or costs for continued benefit coverage
for which Participants will be responsible. The right of a Participant to
receive payments or benefits under this Plan A shall be only that of an
unsecured creditor against the assets of the Company and payments and benefits
under this Plan A shall be made solely from the assets of the Company. No
Participant shall have any right to any specific assets of the Company by virtue
of this Plan A.

5.2           Administrator. The general administration of this Plan A and the
responsibility for carrying out its provisions shall be vested in the
Administrator. The Company shall be the “Administrator” within the meaning of
Section 3(16) of ERISA and shall have all the responsibilities and duties
contained therein. The Administrator shall have the authority to appoint and
delegate its responsibilities under this Plan A and to designate other persons
to carry out any of its responsibilities under this Plan A. The Administrator
and/or its designee(s) shall have such discretionary powers as are necessary or
appropriate to discharge his, her or its duties, including but not limited to,
discretionary interpretation and construction of this Plan A, and the
determination of all questions of eligibility, participation and benefits and
all other related or incidental matters, provided that during the two-year
period following a Change of Control (and thereafter, to the extent the issue in
question relates to a termination of employment during such period), decisions
of the Administrator shall be subject to de novo review in the courts. The
Administrator’s (and/or its designee’s) decision will be binding on the
applicable Participant, the Participant’s spouse or other dependent or
beneficiary and all other interested parties, subject to review or correction
only to the extent that such a decision, determination or construction is shown
by clear and convincing evidence to be arbitrary and capricious, provided that
during the two-year period following a Change of Control (and thereafter, to the
extent the issue in question relates to a termination of employment during such
period), decisions of the Administrator shall be subject to de novo review in
the courts. The Administrator and/or its designee may adopt rules and
regulations of uniform applicability in his/her interpretation and
implementation of this Plan A. In order for a Participant to be eligible for
Separation Benefits, the Administrator and/or its designee shall require each
Participant to execute (and not revoke), such documents as the Administrator
and/or its designee may require pursuant to Section 4.1(c) of this Plan A and to
provide proof of any information that the Administrator finds necessary or
desirable for the proper administration of this Plan A.

5.3           Claims Procedures. Any claim for benefits under this Plan A must
be submitted in writing to the Administrator. If a claim for benefits under this
Plan A is denied in whole or in part, the claimant (or his or her authorized
representative) will be notified by the Administrator within 90 days of the date
the claim is delivered to the Administrator, unless special circumstances
require an extension of time for processing the claim, in which case the
claimant will be provided written notification, prior to the termination of the
initial 90-day period, of the

 

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special circumstances requiring an extension and the date (not to exceed a
period of an additional 90 days) by which the Administrator expects to render a
final decision. The notification will be written in understandable language and
will state (a) specific reasons for denial of the claim, (b) specific references
to any provision of this Plan A on which the denial is based, (c) a description
(if appropriate) of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary, and (d) an explanation of this Plan A’s review
procedure and the time limits applicable to such procedures, including the
claimant’s right to bring a civil action under section 502(a) of ERISA following
an adverse benefit determination on review. A claim that is not acted upon
within 90 days may be deemed by the claimant to have been denied.

5.4           Review of Claim Denials. Within 60 days after a claim has been
denied, or deemed denied, the claimant or his or her authorized representative
may make a request for a full and fair review by submitting to the Administrator
a written statement (a) requesting a review of the denial of the claim, (b)
setting forth all of the grounds upon which the request for review is based and
any facts in support thereof, and (c) setting forth any issue or comments which
the claimant deems relevant to the claim. The claimant or his or her authorized
representative, shall have, upon request and free of charge, reasonable access
to, and copies of, all documents, records and other information relevant to the
claimant’s claim for benefits and may submit comments, documents, records and
other information relating to the claim in writing. The review shall take into
account all comments, documents, records and other information submitted by the
claimant relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination. The Administrator
shall make a decision on review within 60 days after the receipt of the
claimant’s request for review, unless the Administrator determines that special
circumstances require an extension of time for processing a review is required,
in which case the claimant will be notified and a decision will be made within
120 days of receipt of the request for review. If the Administrator determines
that an extension of time is required, written notice shall be furnished to the
claimant prior to the termination of the initial 60-day period which shall
indicate the special circumstances requiring the extension and the date by which
the Administrator expects to render a final decision. The decision will be in
writing and in understandable language. The decision shall set forth (i)
specific reasons for the denial of the claim, (ii) specific references to any
plan provision on which the benefit determination is based, (iii) a statement
that the claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records, and other
information relevant to the claimant’s claim for benefits, and (iv) a statement
describing any voluntary appeal procedures offered by this Plan A and the
claimant’s right to obtain information about such procedures and a statement of
the claimant’s right to bring an action under section 502(a) of ERISA. The
decision of the Administrator on review shall be final and conclusive upon all
persons unless it is shown by clear and convincing evidence to be arbitrary and
capricious. The claimant may pursue a grievance in a federal court if he or she
is improperly denied any right or remedy to which he or she is entitled under
the Claim Review Procedure. No legal action may be brought to recover benefits
allegedly due under this Plan A unless a claimant has exhausted the Claim Review
Procedure set forth in this Plan A; and in no event may a claimant commence such
a legal action more than one year from the date of the claim denial.

 

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ARTICLE VI

MISCELLANEOUS

6.1           Amendment and Termination. This Plan A may be terminated or
amended in any respect by resolution adopted by a majority of the Committee,
provided that this Plan A may not be terminated or amended in any manner which
would adversely affect the rights or potential rights of Participants if such
action is taken in connection with, in anticipation of, during the six-month
period prior to, or during the two-year period following, a Change of Control.
No amendment or termination shall give the Company the right to recover any
amount paid to a Participant prior to the date of such action or to cause the
reduction, cessation or discontinuance of Separation Benefits to any person or
persons under this Plan A already receiving or entitled to receive separation
pay or benefits under this Plan A. No vested rights are provided under this Plan
A, subject to Section 3.2 of this Plan A and to the Change of Control-related
limitations set forth above on amendments and terminations.

6.2           Successors. This Plan A shall bind any successor of the Company,
its assets or its businesses (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent that the
Company would be obligated under this Plan A if no succession had taken place.
The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and to honor this Plan A in the
same manner and to the same extent that the Company would be required to honor
it if no such succession had taken place. The term “Company,” as used in this
Plan A, shall mean the Company as hereinbefore defined and any successor or
assignee to the business or assets which by reason hereof becomes bound by this
Plan A.

6.3           Compliance With Law. Notwithstanding anything else contained in
this Plan A, the Company shall not be required to make any payment or take any
other action prohibited by law, including, but not limited to, any regulation,
directive, or order of federal or state regulatory authorities.

6.4           Employment Status. This Plan A does not constitute a contract of
employment or impose on any Participant, the Company, or any Affiliate of the
Company any obligation to retain any Participant as an employee.

6.5           Benefits Not Assignable. Subject to Section 4.3 of this Plan A,
payments and benefits under this Plan A are not assignable or subject to
alienation since they are not vested and are solely for the support and
maintenance of the applicable Participant. Likewise, such payments and benefits
shall not be subject to attachment by creditors or through legal process against
the Company, the Administrator or any Participant.

6.6           Tax Withholding. The Company may withhold from any amounts payable
under this Plan A such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.

6.7           Construction. The invalidity or unenforceability of any provision
of this Plan A shall not affect the validity or enforceability of any other
provision of this Plan A, which shall

 

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remain in full force and effect, and any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. The captions of this Plan A are not part of the provisions
hereof and shall have no force or effect.

6.8           Governing Law. This Plan A is subject to ERISA, but is intended to
qualify as a plan which is unfunded and is maintained primarily for the purpose
of providing deferred compensation for a select group of management or highly
compensated employees. To the extent not superseded by federal law, this Plan A
shall be governed by and construed in accordance with the laws of the State of
Minnesota, without reference to principles of conflict of laws.

 

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Appendix A of Plan A

With respect to the Participants individually listed below, the applicable
Multiple shall be the Multiple set forth next to such Participant’s name. For
other Participants, the applicable Multiple shall be determined based on such
Participant’s position immediately prior to the Date of Termination, in
accordance with the following table:

Position

Multiple

Vice President

1.0

Senior Vice President

1.5

Executive Vice President and Above

2.0

 

Notwithstanding the foregoing table, the Multiples for the following
Participants shall be as set forth below:

Participant

Multiple

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Plan B

 

ARTICLE I

PURPOSE

The Board has determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued dedication of
its senior executives, notwithstanding the possibility, threat or occurrence of
a Change of Control (as defined below) of the Company. The Board believes it is
essential to diminish the inevitable distraction to its senior executives by
virtue of the personal uncertainties and risks created by a pending or
threatened Change of Control and to encourage its senior executives’ full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide its senior executives
with compensation and benefit arrangements upon a Change of Control which ensure
that the compensation and benefits expectations of its senior executives will be
satisfied and which are competitive with those of other corporations. This Plan
B is intended to serve the aforementioned purposes. The Company reserves the
right to amend or terminate this Plan B by action of the Committee (as defined
below) in accordance with the amendment and termination provisions set forth
below.

ARTICLE II

DEFINITIONS

As used in this Plan B, the following words and phrases shall have the following
respective meanings (unless the context clearly indicates otherwise):

2.1           Affiliate. An Affiliate of the Company shall mean any company
controlled by, controlling, or under common control with, the Company.

2.2           Annual Base Salary. With respect to a Change of Control
Participant, twelve times the higher of the monthly base salary paid or payable,
including any base salary which has been earned but deferred, to such Change of
Control Participant by the Company and its Affiliates in respect of the month
immediately preceding the month in which (i) the Change of Control occurs or
(ii) such Change of Control Participant’s Date of Termination occurs.

2.3           Average Annual Bonus. The average of the applicable Change of
Control Participant’s annual bonuses paid or payable under the Incentive Plan
(including amounts earned but deferred), for each of the last three full fiscal
years (or such lesser number of years for which such Change of Control
Participant was employed by the Company) prior to the Change of Control
(annualized in the event that such Change of Control Participant was not
employed by the Company for the whole of any such fiscal year and not paid a
full year’s bonus for such year). In the case of a Change of Control Participant
who has not yet received any bonuses, Average Annual Bonus shall equal such
Change of Control Participant’s target bonus, as calculated using a 1.50
corporate/unit rating and the target individual rating at the Change of Control
Participant’s level under the Incentive Plan for the fiscal year during which
occurs the Change of Control.

 

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2.4

Change of Control. Any of the following events:

(a)           The acquisition by 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 “1934 Act”)) (a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of 20% or more of 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
subsection (a), the following acquisitions shall not constitute a Change of
Control: (1) any acquisition directly from the Company; (2) any acquisition by
the Company; (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company; or (4) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this
Section 2.4; and provided, further, that if any Person’s beneficial ownership of
the Outstanding Company Voting Securities reaches or exceeds 20% as a result of
a transaction described in clause (i) or (ii) above, and such Person
subsequently acquires beneficial ownership of additional voting securities of
the Company, such subsequent acquisition shall be treated as an acquisition that
causes such Person to own 20% or more of the Outstanding Company Voting
Securities; or

(b)           Individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) 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 directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors 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 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”);
excluding however such a Business Combination pursuant to which (i) all or
substantially all of the individuals and entities who were the beneficial owners
of the Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Voting
Securities, (ii) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting

 

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from such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

(d)           Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

2.5           Change of Control Multiple. With respect to any Change of Control
Participant, such Change of Control Participant’s “Change of Control Multiple”
shall be the number so designated on Appendix A to this Plan B. A Change of
Control Multiple may be either a whole number or a fractional number.

2.6           Change of Control Participant. Any employee of the Company and its
Affiliates who is designated by the Committee as a Change of Control Participant
(all Change of Control Participants are listed on Appendix A to this Plan B).

2.7           Change of Control Separation Benefits. The amounts and benefits
payable or required to be provided in accordance with Section 4.3 of this
Plan B.

2.8           Code. The Internal Revenue Code of 1986, as amended from time to
time.

2.9           Committee. The Compensation Committee of the Board.

2.10         Company. As defined in the preamble and in Section 6.1 of this Plan
B.

2.11         Date of Termination. If a Change of Control Participant’s
employment is terminated by the Company for Cause, or by the Change of Control
Participant for Good Reason, the Date of Termination shall be the date of
receipt of the Notice of Termination (as described in Section 4.2(c) of this
Plan B) or any later date specified therein, as the case may be. If a Change of
Control Participant’s employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be the date on which the
Company notifies such Change of Control Participant of such termination. If a
Change of Control Participant’s employment is terminated by the Change of
Control Participant without Good Reason, the Date of Termination shall be the
date on which the Change of Control Participant notifies the Company of such
termination. If a Change of Control Participant’s employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of
death of such Change of Control Participant or the Disability Effective Date, as
the case may be.

2.12         Incentive Plan. The Company’s Executive Incentive Plan, or any
predecessor or successor plan.

2.13         Interest. Interest on the applicable delayed payment equal to the
“prime rate” (as reported in the Wall Street Journal on the Date of Termination
(or, if it is not reported on such date, on the next following business day on
which it is reported)) plus 1%, which interest shall be

 

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calculated on the basis of a 365-day year and the actual number of days elapsed
from and including the Date of Termination through, but excluding, the date of
payment.

2.14         Section 409A. Section 409A of the Code.

ARTICLE III

ELIGIBILITY

3.1           Participation. Any individual who is listed on Appendix A of this
Plan B shall be a Change of Control Participant in this Plan B. Appendix A of
this Plan B may be amended by the Committee by adding or removing Change of
Control Participants or by modifying Change of Control Multiples, provided that
no Change of Control Participant may be so removed nor may any Change of Control
Multiple be so reduced (a) in connection with or in anticipation of a Change of
Control or during the two-year period following a Change of Control or (b)
subject to Section 3.2(b) of this Plan B, without providing the applicable
Change of Control Participant at least one year’s notice of such removal or
reduction.

3.2           Duration of Participation. A Change of Control Participant shall
cease to be a Change of Control Participant in this Plan B if (a) such Change of
Control Participant is removed from Appendix A of this Plan B as permitted by
Section 3.1 of this Plan B or (b) such Change of Control Participant ceases to
be employed by the Company and its Affiliates under circumstances not entitling
such Change of Control Participant to Change of Control Separation Benefits.

3.3           No Termination of Participation Following Termination Entitling
Change of Control Participant to Benefits Under Plan. Notwithstanding Sections
3.1 and 3.2 of this Plan B, a Change of Control Participant who is entitled, as
a result of a cessation of employment while a Change of Control Participant, to
receive benefits under this Plan B shall remain a Change of Control Participant
in this Plan B (and shall not be subject to a reduction of such Change of
Control Participant’s Change of Control Multiple) until the amounts and benefits
payable under this Plan B have been paid or provided to such Change of Control
Participant in full.

ARTICLE IV

SEPARATION BENEFITS

4.1           Right to Change of Control Separation Benefits. A Change of
Control Participant shall be entitled to receive from the Company the Change of
Control Separation Benefits as provided in Section 4.3 of this Plan B if (a) a
Change of Control has occurred, (b) such Change of Control Participant’s
employment with the Company and its Affiliates has been terminated for any
reason specified in Section 4.2(a) of this Plan B, and (c) such termination
occurred either (i) before such Change of Control at the request of a third
party who had taken steps reasonably calculated to effect such Change of Control
or otherwise arose in connection with or anticipation of such Change of Control
or (ii) after such Change of Control and on or before the second anniversary
thereof.

4.2           Termination of Employment.

 

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(a)           Terminations Which Give Rise to Change of Control Separation
Benefits Under This Plan. Any termination under the following circumstances
shall be deemed to be a termination for a reason specified in this Section
4.2(a):

(i) any termination of employment by the Company and its Affiliates (excluding
any transfer to the Company or an Affiliate thereof) other than for Cause or
Disability; or

(ii) any termination of employment by a Change of Control Participant for Good
Reason. For purposes of this Plan B, “Good Reason” shall mean:

(A)  the assignment to the applicable Change of Control Participant of any
duties inconsistent in any material respect with such Change of Control
Participant’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities, as in effect prior to the
Change of Control (measured by reference to the most significant of those held,
exercised, and assigned during the 180-day period immediately preceding the
Change of Control), or any other action which results in a material diminution
in such position, authority, duties or responsibilities (whether or not
occurring solely as a result of the Company’s ceasing to be a publicly traded
entity), excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and that is remedied by the Company promptly after
receipt of notice thereof given by such Change of Control Participant;

(B)  a decrease in the applicable Change of Control Participant’s base salary
below the base salary in effect immediately prior to the Change of Control;

(C)  a failure, for any fiscal year, to provide the applicable Change of Control
Participant (no later than two and a half months following such fiscal year,
subject to any deferral elected by the Change of Control Participant on terms
compliant with Section 409A) with an annual bonus at least equal to the Average
Annual Bonus, other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied promptly after receipt of notice
thereof given by the Change of Control Participant;

(D)  a decrease in the aggregate long-term incentive opportunities (including
equity- and cash-based programs) below the greatest of those provided to the
applicable Change of Control Participant under the programs in which such Change
of Control Participant participated any time during the 180-day period
immediately preceding the Change of Control;

(E)  the Company’s requiring the applicable Change of Control Participant to be
based at any office or location 50 or more miles from the location where such
Change of Control Participant was employed

 

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immediately preceding the Change of Control or the Company’s requiring the
applicable Change of Control Participant to travel on Company business to a
substantially greater extent than required immediately prior to the Change of
Control; or

(F)  any failure by the Company to comply with and satisfy Section 6.1 of this
Plan B.

For purposes of this Section 4.2(a) of this Plan B, (x) a Change of Control
Participant’s ability to terminate employment for Good Reason shall be
conditioned on the Change of Control Participant providing notice of the event
or action giving rise to the right to terminate for Good Reason within 30 days
of becoming aware of such event or action and the Company’s failing to cure such
event or action, if curable, within 30 days of receipt of such notice, (y) any
good faith determination of “Good Reason” made by the Change of Control
Participant shall be conclusive, and (z) a Change of Control Participant’s
mental or physical incapacity following the occurrence of an event described
above in clauses (A) through (F) of Section 4.2(a)(ii) shall not affect such
Change of Control Participant’s ability to terminate employment for Good Reason.

(b)           Terminations Which Do Not Give Rise to Change of Control
Separation Benefits Under This Plan. If a Change of Control Participant’s
employment is terminated for Cause or Disability (as those terms are defined
below), as a result of the Change of Control Participant’s death, or due to
voluntary termination other than for Good Reason, such termination shall not be
deemed to be a termination for a reason specified in Section 4.2(a) of this Plan
B and the Change of Control Participant shall not be entitled to Change of
Control Separation Benefits under this Plan B, regardless of the occurrence of a
Change of Control; provided, however, that in the event of any such termination
during the two-year period following a Change of Control, the Change of Control
Participant (or the Change of Control Participant’s estate, as applicable) shall
be entitled to receive Accrued Obligations (except that in the event of a
termination by the Company for Cause or by the Change of Control Participant
without Good Reason, Accrued Obligations shall not for purposes of this sentence
include the amount described in Section 4.3(a)(i)(A)(2) of this Plan B),
provided that in the event that the Change of Control Participant is a
“specified employee” (within the meaning of Section 409A) on the Date of
Termination and the termination is not due to the Change of Control
Participant’s death, the portion of Accrued Obligations described in Section
4.3(a)(i)(A)(2) of this Plan B shall be paid, with Interest from the Date of
Termination, on the first business day after the date that is six months
following such Change of Control Participant’s “separation from service” within
the meaning of Section 409A of the Code. In addition, in the event of such a
termination that is due to death or Disability, the applicable Change of Control
Participant (or such Change of Control Participant’s estate and/or
beneficiaries, as applicable) shall be entitled to receive death or disability
benefits, as applicable, at least equal to the most favorable benefits provided
by the Company and its Affiliates under such plans, programs, practices and
policies relating to death or disability benefits, as applicable, as in effect
with respect to other peer executives and their beneficiaries at any time during
the 180-day period immediately preceding the Change of Control or, if more
favorable to the applicable Change of Control Participant (or such Change of
Control Participant’s estate and/or beneficiaries, as applicable), as in effect
on the date of the Change of Control Participant’s death

 

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or disability with respect to other peer executives of the Company and its
Affiliates and their beneficiaries.

(i)            A termination for “Disability” shall have occurred where the
applicable Change of Control Participant is absent from such Change of Control
Participant’s duties with the Company and its Affiliates on a full-time basis
for 180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to such Change of Control
Participant or such Change of Control Participant’s legal representative. In
such event, such Change of Control Participant’s employment with the Company and
its Affiliates shall terminate effective on the 30th day (the “Disability
Effective Date”) after receipt of the applicable Notice of Termination (as
defined in Section 4.2(c) of this Plan B) by the Change of Control Participant,
provided that, within the 30 days after such receipt, the Change of Control
Participant shall not have returned to full-time performance of the Change of
Control Participant’s duties.

(ii)           A termination for “Cause” shall have occurred where the
applicable Change of Control Participant is terminated because of:

(A)  the willful and continued failure of the Change of Control Participant to
perform substantially the Change of Control Participant’s duties with the
Company and its Affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Change of Control Participant by the
Board or the Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or the Chief Executive Officer believes
that the Change of Control Participant has not substantially performed the
Change of Control Participant’s duties, or

(B)  the Change of Control Participant’s conviction of, or plea of guilty or no
contest to, a felony, or

(C)  the Change of Control Participant’s misappropriation or theft of Company
assets, or

(D)  the willful engaging by the Change of Control Participant in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
the Company.

For purposes of this Section 4.2(b)(ii), no act or failure to act, on the part
of the Change of Control Participant, shall be considered “willful” unless it is
done, or omitted to be done, by the Change of Control Participant in bad faith
or without reasonable belief that the Change of Control Participant’s action or
omission was in the best interests of the Company. Any act, or failure to act,
based upon authority (A) given pursuant to a resolution duly adopted by the
Board, or if the Company is not the ultimate parent corporation of the Company
and its Affiliates and is not publicly traded, the board of directors of the
ultimate parent of the Company (the

 

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“Applicable Board”), (B) except with respect to an act or failure to act of the
Chief Executive Officer, upon the instructions of the Chief Executive Officer of
the Company or a senior officer of the Company who is senior to the applicable
Change of Control Participant, or (C) based upon the advice of counsel for the
Company, shall be conclusively presumed to be done, or omitted to be done, by
the Change of Control Participant in good faith and in the best interests of the
Company. The cessation of employment of the Change of Control Participant shall
not be deemed to be for Cause unless and until there shall have been delivered
to the Change of Control Participant a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the members of the Applicable
Board who are not officers or employees of the Company at a meeting of the
Applicable Board called and held for such purpose (after reasonable notice is
provided to the Change of Control Participant and the Change of Control
Participant is given an opportunity, together with counsel for the Change of
Control Participant, to be heard before the Applicable Board), finding that, in
the good faith opinion of the board, the Change of Control Participant is guilty
of the conduct described in this Section 4.2(b)(ii), and specifying the
particulars thereof in detail.

(c)           Notice of Termination. Any termination by the Company for Cause or
Disability, or by a Change of Control Participant for Good Reason, shall be
communicated by a Notice of Termination to the other party. For purposes of this
Plan B, a “Notice of Termination” means a written notice which (i) indicates the
specific termination provision in this Plan B relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Change of Control Participant’s
employment under the provision so indicated and (iii) 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 30 days after the giving of such notice
(except in the case of a termination due to Disability, in which case such date
shall be the Disability Effective Date)). The failure by the Change of Control
Participant or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason, Cause, or Disability
shall not waive any right of the Change of Control Participant or the Company,
respectively, hereunder or preclude the Change of Control Participant or the
Company, respectively, from asserting such fact or circumstance in enforcing the
Change of Control Participant’s or the Company’s rights hereunder.

4.3           Change of Control Separation Benefits.

(a)           If a Change of Control Participant’s employment is terminated
under the circumstances set forth in Section 4.1 of this Plan B entitling such
Change of Control Participant to Change of Control Separation Benefits, the
Company shall pay or provide, as the case may be, to such Change of Control
Participant the amounts and benefits set forth in items (i) through (iv) below
(the “Change of Control Separation Benefits”):

(i)            the Company shall pay to the Change of Control Participant in a
lump sum in cash within 30 days after the Date of Termination the aggregate of
the following amounts:

(A)  the sum of (1) the Change of Control Participant’s base salary through the
Date of Termination to the extent not theretofore paid, and (2) the product of
(x) the higher of (A) the Average Annual

 

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Bonus and (B) the Change of Control Participant’s annual bonus for the last
fiscal year (such higher amount being referred to as the “Higher Annual Bonus”)
and (y) a fraction, the numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the denominator of which is 365
(the amounts described in this Section 4.3(a)(i)(A), the “Accrued Obligations”);
and

(B)  the amount equal to the product of (1) the Change of Control Multiple and
(2) the sum of (x) the Change of Control Participant’s Annual Base Salary and
(y) the Higher Annual Bonus;

(ii)      for a number of years after the Change of Control Participant’s Date
of Termination equal to the Change of Control Multiple, or such longer period as
may be provided by the terms of the appropriate plan, program, practice or
policy, the Company shall cause its applicable welfare plans to continue medical
and dental benefits to the Change of Control Participant and/or the Change of
Control Participant’s family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and policies,
as in effect immediately prior to the Change of Control, or if more favorable to
the Change of Control Participant, as in effect immediately before the Date of
Termination; provided, however, that if the Change of Control Participant
becomes reemployed with another employer and is eligible to receive medical
and/or dental benefits under another employer provided plan, the medical and/or
dental benefits, as applicable, described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility;
and, provided, further, that the benefits provided hereunder shall be provided
in such a manner that such benefits (and the costs and premiums thereof) are
excluded from the Change of Control Participant’s income for federal income tax
purposes. Notwithstanding the foregoing, if the Company reasonably determines
that providing continued coverage under one or more of its welfare benefit plans
contemplated herein could adversely affect the tax treatment of other
participants covered under such plans, or would otherwise have adverse legal
ramifications or adverse economic impact, the Company may, in its discretion,
provide other insurance coverage substantially similar in the aggregate to the
continued coverage otherwise required hereunder.

(iii)      the Company shall, at its sole expense as incurred, provide the
Change of Control Participant with reasonable outplacement services, the terms,
scope and provider of which shall be selected by the Change of Control
Participant in the Change of Control Participant’s sole discretion, provided
that such outplacement benefits shall end not later than the last day of the
second calendar year that begins after the Date of Termination, and the Company
shall pay the full cost of such services up to but not exceeding the amount set
forth on Appendix A of this Plan B with respect to the applicable Change of
Control Participant; and

(iv)      to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Change of Control Participant any Other Benefits.

 

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Notwithstanding the preceding provisions of this Section 4.3, in the event that
the Change of Control Participant is a “specified employee” (within the meaning
of Section 409A) on the Date of Termination, amounts to be paid pursuant to
Sections 4.3(a)(i)(A)(2) and 4.3(a)(ii) of this Plan B shall be paid, with
Interest from the Date of Termination, on the first business day after the date
that is six months following such Change of Control Participant’s “separation
from service” within the meaning of Section 409A of the Code.

4.4           Certain Additional Payments by the Company.

(a)           Anything in this Plan B to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that that any Payment
would be subject to the Excise Tax, then the applicable Change of Control
Participant shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Change of Control
Participant of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, but excluding any income taxes and penalties imposed
pursuant to Section 409A of the Code, the Change of Control Participant retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section 4.4(a), if it
shall be determined that the Change of Control Participant is entitled to the
Gross-Up Payment, but that the Parachute Value of all Payments does not exceed
110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to the
Change of Control Participant and the amounts payable under this Plan B shall be
reduced so that the Parachute Value of all Payments, in the aggregate, equals
the Safe Harbor Amount. The reduction of the amounts payable hereunder, if
applicable, shall be made in such a manner as to maximize the Value of all
Payments actually made to the Change of Control Participant. For purposes of
reducing the Payments to the Safe Harbor Amount, only amounts payable under this
Plan B (and no other Payments) shall be reduced. If the reduction of the amount
payable under this Plan B would not result in a reduction of the Parachute Value
of all Payments to the Safe Harbor Amount, no amounts payable under the
Agreement shall be reduced pursuant to this Section 4.4(a). The Company’s
obligation to make Gross-Up Payments under this Section 4.4 shall not be
conditioned upon the Change of Control Participant’s termination of employment.

(b)           Subject to the provisions of Section 4.4(c) of this Plan B, all
determinations required to be made under this Section 4.4, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by Ernst & Young (the “Accounting Firm”). The Accounting Firm shall provide
detailed supporting calculations both to the Company and the Change of Control
Participant within 15 business days of the receipt of notice from the Change of
Control Participant that there has been a Payment, or such earlier time as is
requested by the Company. In the event that (i) the Accounting Firm is serving
as accountant or auditor for the individual, entity or group effecting the
Change of Control or (ii) the Accounting Firm is otherwise unable or unwilling
to make the determinations required to be made under this Section 4.4, the
Company shall appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any determination by the Accounting
Firm shall be binding upon the

 

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Company and the Change of Control Participant. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 4.4(c) of this Plan B and the Change of Control Participant thereafter
is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Change of Control Participant.

(c)           The Change of Control Participant shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten business days after
the Change of Control Participant is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid. The Change of Control Participant shall not pay such
claim prior to the expiration of the 30-day period following the date on which
he or she gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Company notifies the Change of Control Participant in writing prior to the
expiration of such period that it desires to contest such claim, the Change of
Control Participant shall: (i) give the Company any information reasonably
requested by the Company relating to such claim, (ii) take such action in
connection with contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by
the Company, (iii) cooperate with the Company in good faith in order to
effectively contest such claim, and (iv) permit the Company to participate in
any proceedings relating to such claim; provided, however, that the Company
shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Change of Control Participant harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses. Without limitation of the foregoing provisions of this Section
4.4(c), the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion, either pay
the tax claimed to the appropriate taxing authority on behalf of the Change of
Control Participant and direct the Change of Control Participant to sue for a
refund or contest the claim in any permissible manner, and the Change of Control
Participant will prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that, if
the Company pays such claim and directs the Change of Control Participant to sue
for a refund, the Company shall indemnify and hold the Change of Control
Participant harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties) imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Change of Control Participant with respect to
which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company’s control of the contest shall be
limited to

 

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issues with respect to which a Gross-Up Payment would be payable hereunder and
the Change of Control Participant shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

(d)           If, after the receipt by the Change of Control Participant of a
Gross-Up Payment or payment by the Company of an amount on the Change of Control
Participant’s behalf pursuant to Section 4.4(c) of this Plan B, the Change of
Control Participant becomes entitled to receive any refund with respect to the
Excise Tax to which such Gross-Up Payment relates or with respect to such claim,
the Change of Control Participant shall (subject to the Company’s complying with
the requirements of Section 4.4(c) of this Plan B, if applicable) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after payment by the
Company of an amount on the Change of Control Participant’s behalf pursuant to
Section 4.4(c), a determination is made that the Change of Control Participant
shall not be entitled to any refund with respect to such claim and the Company
does not notify the Change of Control Participant in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.

(e)           Any Gross-Up Payment, as determined pursuant to this Section 4.4,
shall be paid by the Company within five days of the receipt of the Accounting
Firm’s determination; provided, however, that (i) the Company may, in its sole
discretion, withhold and pay over to the Internal Revenue Service or any other
applicable taxing authority, for the benefit of the Change of Control
Participant, all or any portion of any Gross-Up Payment, and the Change of
Control Participant hereby consents to such withholding, and (ii) the Gross-Up
Payment shall be made by the end of the Change of Control Participant’s taxable
year next following the Change of Control Participant’s taxable year in which
the related taxes (and any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax are remitted to the
Internal Revenue Service or any other applicable taxing authority or, in the
case of amounts relating to a claim described in Section 4.4(c) of this Plan B
that does not result in the remittance of any federal, state, local and foreign
income, excise, social security and other taxes, the calendar year next
following the calendar year in which the claim is finally settled or otherwise
resolved.

(f)            Definitions. The following terms shall have the following
meanings for purposes of this Section 4.4.

(i)            “Excise Tax” shall mean the excise tax imposed by Section 4999 of
the Code, together with any interest or penalties imposed with respect to such
excise tax.

(ii)           “Parachute Value” of a Payment shall mean the present value as of
the date of the change of control for purposes of Section 280G of the Code of
the portion of such Payment that constitutes a “parachute payment” under Section
280G(b)(2), as determined by the Accounting Firm for purposes of determining
whether and to what extent the Excise Tax will apply to such Payment.

 

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(iii)          A “Payment” shall mean any payment or distribution in the nature
of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
the benefit of the applicable Change of Control Participant, whether paid or
payable pursuant to this Plan B or otherwise.

(iv)          The “Safe Harbor Amount” means 2.99 times the applicable Change of
Control Participant’s “base amount,” within the meaning of Section 280G(b)(3) of
the Code.

(v)           “Value” of a Payment shall mean the economic present value of a
Payment as of the date of the change of control for purposes of Section 280G of
the Code, as determined by the Accounting Firm using the discount rate required
by Section 280G(d)(4) of the Code.

4.5           Funding in Certain Circumstances. The Company has established a
Supplemental Benefits Trust with Norwest Bank Minnesota, N.A. as trustee to hold
assets of the Company under certain circumstances as a reserve for the discharge
of the Company’s obligations under this Plan B and certain plans of deferred
compensation of the Company. In the event of a termination entitling a Change of
Control Participant to Change of Control Separation Benefits hereunder, the
Company shall be obligated to immediately contribute such amounts to such trust
as may be necessary to fully fund all benefits that may become due to such
Change of Control Participant under this Article IV (except under Section
4.3(a)(ii) of this Plan B). All assets held in such trust shall remain subject
only to the claims of the Company’s general creditors whose claims against the
Company are not satisfied because of the Company’s bankruptcy or insolvency (as
those terms are defined in the applicable trust agreement). Change of Control
Participants do not have any preferred claim on, or beneficial ownership
interest in, any assets of the trust before the assets are paid to them and all
rights created under the trust, as under this Plan B, are unsecured contractual
claims of Change of Control Participants against the Company. In the event the
funding of the trust described in this paragraph does not occur, upon written
demand by the applicable Change of Control Participant given at any time after
the Date of Termination, the Company shall deposit in trust with an
institutional trustee designated by the Change of Control Participant in such
demand amounts which may become payable to the Change of Control Participant
pursuant to this Article IV (except under Section 4.3(a)(ii) of this Plan B)
with irrevocable instructions to pay amounts to the Change of Control
Participant when due in accordance with the terms of this Plan B. All fees,
expenses and other charges of any trustee of a trust described in this paragraph
shall be paid by the Company. The trustee of any trust described in this
paragraph shall be entitled to rely conclusively on the Change of Control
Participant’s written statement as to the fact that payments are due under this
Plan B and the amount of such payments.

4.6           Payment Obligations Absolute. Upon a Change of Control, subject to
Section 4.4(a) of this Plan B, the obligations of the Company to pay or provide
the Change of Control Separation Benefits described in Section 4.3 of this Plan
B shall be absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company and its Affiliates may have
against any Change of Control Participant. In no event shall a Change of Control
Participant be obligated to seek other employment or take any other action by
way of mitigation of the amounts

 

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payable to a Change of Control Participant under any of the provisions of this
Plan B, nor shall the amount of any payment under this Plan B be reduced by any
compensation earned by a Change of Control Participant as a result of employment
by another employer. Nothing in this Plan B shall prevent or limit a Change of
Control Participant’s continuing or future participation in any plan, program,
policy or practice provided by the Company and its Affiliates and for which the
Change of Control Participant may qualify, nor shall anything herein limit or
otherwise affect such rights as the Change of Control Participant may have under
any contract or agreement with the Company and its Affiliates. Amounts which are
vested benefits or which a Change of Control Participant is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its Affiliates at or subsequent to the Date
of Termination shall be payable in accordance with such plan, policy, practice
or program or contract or agreement except as explicitly modified by this Plan
B. Without limiting the generality of the foregoing, a Change of Control
Participant’s resignation under this Plan B with or without Good Reason, shall
in no way affect such Change of Control Participant’s ability to terminate
employment by reason of such Change of Control Participant’s “retirement” under
any compensation and benefits plans, programs or arrangements of the Company and
its Affiliates, including without limitation any retirement or pension plans or
arrangements or to be eligible to receive benefits under any compensation or
benefit plans, programs or arrangements of the Company and its Affiliates or
substitute plans adopted by the Company or its successors, and any termination
which otherwise qualifies as Good Reason shall be treated as such even if it is
also a “retirement” for purposes of any such plan. Notwithstanding the
foregoing, if a Change of Control Participant receives payments and benefits
pursuant to Section 4.3(a) of this Plan B, such Change of Control Participant
shall not be entitled to any severance pay or benefits under any severance plan,
program or policy of the Company and its Affiliates (including Plan A of this
Program), unless otherwise specifically provided therein in a specific reference
to this Plan B.

 

4.7           Vesting of Supplemental Retirement Plan Benefit. If a Change of
Control Participant’s employment is terminated under the circumstances set forth
in Section 4.1 of this Plan B, any benefit accrued under the otherwise
applicable terms of the 2005 Supplemental Retirement Plan of General Mills, Inc.
shall be fully vested and nonforfeitable as of his or her Date of Termination,
provided, however, that said Participant is at least 55 years old on his or her
Date of Termination. This provision potentially operates to accelerate vesting
but does not impact the amount of one’s accrued benefit, when it is paid, or the
payment form, all of which are governed by the otherwise applicable terms of the
2005 Supplemental Retirement Plan of General Mills, Inc.

 

ARTICLE V

CONFIDENTIALITY AND NON-COMPETITION

5.1           Confidentiality. As a condition of participation in this Plan B,
all Change of Control Participants agree to abide by the provisions of this
Section 5.1. Each Change of Control Participant will hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its Affiliates, and their
respective businesses, which shall have been obtained by the Change of Control
Participant during the Change of Control Participant’s employment by the Company
or any of its Affiliates and which shall not be or become public knowledge
(other than by acts by the Change of Control Participant or representatives of
the Change of Control Participant in violation of this paragraph). After
termination of the Change of Control Participant’s employment with the Company,
the Change of Control Participant shall not, without the 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.

5.2           Non-Competition. As a condition of participation in this Plan B,
all Change of Control Participants agree (and, at the request of the Company,
shall enter into a separate written agreement) to abide by the provisions of
this Section 5.2 in the event of a termination of employment entitling such
Change of Control Participant to Change of Control Separation

 

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Benefits. During the one-year period immediately following any termination of
employment which entitles a Change of Control Participant to Change of Control
Separation Benefits hereunder, such Change of Control Participant shall not
enter into Competition with the Company. For purposes of this Section,
“Competition” means (i) participating, directly or indirectly, as an individual
proprietor, partner, stockholder, officer, employee, director, joint venturer,
investor, lender, consultant or in any capacity whatsoever (within the United
States of America) in a business in competition with any business conducted by
the Company or any of its Affiliates, with regard to which the Change of Control
Participant worked or otherwise had non-incidental responsibilities or had
access to non-incidental confidential information, while employed by the Company
or any of its Affiliates; provided, however, that such participation shall not
include: (x) the mere ownership of not more than 1% of the total outstanding
stock of a publicly held company; (y) the performance of services for any
enterprise to the extent such services are not performed, directly or
indirectly, for, or with regard to, a business unit of the enterprise in the
aforesaid competition; or (z) any activity engaged in with the prior written
approval of the Company; or (ii) directly or indirectly, recruiting, soliciting
or inducing, of any employee or employees of the Company or any of its
Affiliates to terminate their employment with, or otherwise cease their
relationship with, the Company or any of its Affiliates or hiring or assisting
another person or entity to hire any employee of the Company or any of its
Affiliates. If any restriction set forth with regard to Competition is found by
any court of competent jurisdiction to be unenforceable because it extends for
too long a period of time or over too great a range of activities or in too
broad a geographic area, it shall be interpreted to extend over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable.

5.3           No Offset. The Company may require that a Change of Control
Participant affirm the requirements of this Article V in connection with receipt
of Change of Control Separation Benefits hereunder, provided that in no event
shall an asserted violation of the provisions of this Article V constitute a
basis for deferring or withholding any amounts otherwise payable to a Change of
Control Participant under this Plan B.

ARTICLE VI

MISCELLANEOUS

6.1           Successors. This Plan shall bind any successor of the Company, its
assets or its businesses (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent that the
Company would be obligated under this Plan B if no succession had taken place.
The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and to honor this Plan B in the
same manner and to the same extent that the Company would be required to honor
it if no such succession had taken place. The term “Company,” as used in this
Plan B, shall mean the Company as hereinbefore defined and any successor or
assignee to the business or assets which by reason hereof becomes bound by this
Plan B.

6.2           Amendment and Termination. The Plan may be terminated or amended
in any respect by resolution adopted by the Committee, provided, that this Plan
B may not, without the consent of all Change of Control Participants, be
terminated or amended in any manner which

 

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would adversely affect the rights or potential rights of Change of Control
Participants unless (i) such termination or amendment takes effect only upon the
first anniversary of its adoption (and becomes null and void in the event of a
Change of Control prior to such first anniversary) and (ii) such termination or
amendment is not adopted in connection with, in anticipation of, during the
six-month period prior to, or during the two-year period (or such longer period
as is necessary to ensure that all potential obligations under this Plan B have
been satisfied) following a Change of Control.

6.3           Legal Fees. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal fees and expenses which a Change of Control
Participant may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company, such Change of Control Participant or others of
the validity or enforceability of, or liability under, any provision of this
Plan B or any guarantee of performance thereof (including as a result of any
contest by the Change of Control Participant about the amount of any payment
pursuant to this Plan B), plus in each case Interest on any delayed payment.

6.4           Compliance With Law. Notwithstanding anything else contained
herein, the Company shall not be required to make any payment or take any other
action prohibited by law, including, but not limited to, any regulation,
directive, or order of federal or state regulatory authorities.

6.5           Notices. If notice is to be provided to the Company pursuant to
the terms of this Plan B, such notice shall be delivered to the Senior Vice
President of Human Resources, or if otherwise designated, the senior human
resources officer of the Company.

6.6           Employment Status. This Plan does not constitute a contract of
employment or impose on any Change of Control Participant, the Company, or any
Affiliate of the Company any obligation to retain any Change of Control
Participant as an employee.

6.7           Tax Withholding. The Company may withhold from any amounts payable
under this Plan B such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.

6.8           Construction. The invalidity or unenforceability of any provision
of this Plan B shall not affect the validity or enforceability of any other
provision of this Plan B, which shall remain in full force and effect, and any
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. The captions of
this Plan B are not part of the provisions hereof and shall have no force or
effect. Neither a Change of Control Participant’s nor the Company’s failure to
insist upon strict compliance with any provision of this Plan B or the failure
to assert any right a Change of Control Participant or the Company may have
hereunder, including, without limitation, the right of the Change of Control
Participant to terminate employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this Plan
B.

6.9           Governing Law. This Plan B is not subject to ERISA. This Plan B
shall be governed by and construed in accordance with the laws of the State of
Minnesota, without reference to principles of conflict of laws.

 

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Appendix A of Plan B

Change of Control Participant

Change of Control Multiple

Outplacement Maximum

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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