EXHIBIT 10.3

 

HORMEL FOODS CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(2002 Restatement)

 

 

First Effective January 1, 1976

As Amended and Restated Effective October 26, 2002

 

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HORMEL

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(2002 Restatement)

 

TABLE OF CONTENTS

 

SECTION 1.

INTRODUCTION

 

 

 

 

1.1.

Amendment and Restatement

 

1.2.

Unfunded Obligation

 

 

 

SECTION 2.

PLAN NAME

 

 

 

SECTION 3.

PARTICIPANTS

 

 

 

 

3.1.

General Rule

 

3.2.

Specific Exclusion

 

 

 

SECTION 4.

BENEFIT FOR PARTICIPANTS

 

 

 

 

4.1.

General Amount Rule

 

4.2.

Special Amount Rule

 

4.3.

Form of Benefit

 

4.4.

Forfeiture of Benefits

 

 

 

SECTION 5.

BENEFIT FOR BENEFICIARIES

 

 

 

 

5.1.

General Amount Rule

 

5.2.

Special Amount Rule

 

5.3.

Form of Benefit

 

 

 

SECTION 6.

COMMUTATION TO LUMP SUM

 

 

 

 

6.1.

General Rule

 

6.2.

Executive Committee Members

 

6.3.

Complete Payment

 

 

 

SECTION 7.

FUNDING

 

 

 

 

7.1.

Funding

 

7.2.

Hedging Investments

 

7.3.

Consensual Creditor

 

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SECTION 8.

GENERAL MATTERS

 

 

 

 

8.1.

Amendment and Termination

 

8.2.

ERISA Administrator

 

8.3.

Limited Benefits

 

8.4.

Spendthrift Provision

 

8.5.

Service of Process

 

8.6.

Plan Year

 

8.7.

§ 162(m) Deferral

 

 

 

SECTION 9.

CLAIMS PROCEDURES

 

 

 

 

9.1.

Determinations

 

9.2.

Rules and Regulations

 

9.3.

Method of Executing Instruments

 

9.4.

Claims Procedure

 

 

9.4.1.

Original Claim

 

 

9.4.2.

Claims Review Procedure

 

 

9.4.3.

General Rules

 

 

9.4.4.

Deadline to File Claim

 

 

9.4.5.

Exhaustion of Administrative Remedies

 

 

9.4.6.

Deadline to File Legal Action

 

 

9.4.7.

Knowledge of Fact by Participant Imputed to Beneficiary

 

9.5.

Information Furnished by Participants

 

 

 

SECTION 10.

RULES OF CONSTRUCTION

 

 

 

 

10.1.

Defined Terms

 

10.2.

ERISA Status

 

10.3.

IRC Status

 

10.4.

Effect on Other Plans

 

10.5.

Disqualification

 

10.6.

Rules of Document Construction

 

10.7.

References to Laws

 

10.8.

Effect on Employment

 

10.9.

Choice of Law

 

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HORMEL
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(2002 Restatement)

 

SECTION 1

 

INTRODUCTION

 

1.1.                              Amendment and Restatement.  Hormel Foods
Corporation, a Delaware corporation, (hereinafter the “Principal Sponsor”)
heretofore, effective January 1, 1976, established a nonqualified plan of
deferred compensation which is now known as the “Hormel Supplemental Executive
Retirement Plan” (the “SERP”) and reserved to itself the right to amend the SERP
from time to time.  The Principal Sponsor has heretofore amended the SERP on
various occasions.  By adoption of this amended and restated document entitled
“Hormel Supplemental Executive Retirement Plan (2002 Restatement),” the
Principal Sponsor hereby further amends and restates the SERP in its entirety as
applied to all persons who are Participants as of October 26, 2002 (and actively
employed at some time on or after that date) and all persons who become
Participants after that date.

 

1.2.                              Unfunded Obligation.  The obligation of the
Principal Sponsor to make payments under this SERP constitutes only the
unsecured (but legally enforceable) promise of the Principal Sponsor to make
such payments.  The Participant shall have no lien, prior claim or other
security interest in any property of the Principal Sponsor.  If a fund is
established by the Principal Sponsor in connection with this SERP, the property
therein shall remain the sole and exclusive property of the Principal Sponsor. 
The Principal Sponsor will pay the cost of this SERP out of its general assets.

 

SECTION 2

 

PLAN NAME

 

This employee benefit plan shall be referred to as the “Hormel Supplemental
Executive Retirement Plan” (the “SERP”).  This document, as distinguished from
the plan maintained pursuant to this document, shall be referred to as the
“Hormel Supplemental Executive Retirement Plan (2002 Restatement)”  (the “SERP
document”).

 

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SECTION 3

 

PARTICIPANTS

 

3.1.                              General Rule.  The individuals eligible to
participate in and receive benefits under this SERP (i.e., to be “Participants”
under this SERP) are those individuals who are, on or after November 1, 1988,
employees of the Principal Sponsor who are, on or after November 1, 1988,
participants in the tax qualified, defined benefit, pension plan now known as
the Hormel Foods Corporation Salaried Employees’ Pension Plan (the “Pension
Plan”) and who are, on or after January 1, 1976, actively employed by the
Principal Sponsor.  Any employee who has become a Participant in the SERP shall
continue as a Participant until all benefits due under the SERP have been paid
(or forfeited) without regard to whether he continues as a participant in the
Pension Plan or an active employee.

 

3.2.                              Specific Exclusion.  Notwithstanding anything
apparently to the contrary in this SERP or in any written communication,
summary, resolution or document or oral communication, no individual shall be a
Participant in this SERP, develop benefits under this SERP or be entitled to
receive benefits under this SERP (either for himself or his survivors) unless
such individual is a member of a select group of management or highly
compensated employees (as that expression is used in ERISA).  If a court of
competent jurisdiction, any representative of the U.S. Department of Labor or
any other governmental, regulatory or similar body makes any direct or indirect,
formal or informal, determination that an individual is not a member of a select
group of management or highly compensated employees (as that expression is used
in ERISA), such individual shall not be (and shall not have ever been) a
Participant in this SERP at any time. If any person not so defined has been
erroneously treated as a  Participant in this SERP, upon discovery of such error
such person’s erroneous participation shall immediately terminate ab initio and
upon demand such person shall be obligated to reimburse the Principal Sponsor
for all amounts erroneously paid to him or her.

 

SECTION 4

 

BENEFIT FOR PARTICIPANTS

 

4.1.                              General Amount Rule.  This SERP shall pay to
Participants the excess, if any, of the amount, if any, determined in “(a)”
below over the amount, if any, determined in “(b)” below.

 

(a)                                  There shall be determined the amount which
would have been payable to the Participant under the formula and rules of the
Pension Plan (as the Pension Plan exists on the date as of which such amount is
determined) but determined:

 

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(i)                                     without regard to the benefit
limitations under section 415 of the Code; and

 

(ii)                                  without regard to the compensation
limitation of section 401(a)(17) of the Code; and

 

(iii)                               in the case of a Participant who is both an
officer and a member of the Executive Committee on or after December 13, 1989
and who retires on an early retirement pension under the Pension Plan and after
completing thirty (30) years of participation in the Pension Plan, as if there
were no reduction in benefits for early commencement; and

 

(iv)                              in the case of a Participant who is both an
officer and a member of the Executive Committee on or after May 22, 1989, as if
the thirty-five (35) years of Benefit Service maximum did not apply; and

 

(v)                                 including, when it would otherwise have been
paid, income deferred under any nonqualified, unfunded, elective deferred
compensation plan maintained by the Principal Sponsor; and

 

(vi)                              including, once earned, each long term
incentive plan award; provided, however, that if the long term incentive plan
award is earned with respect to a period longer than one (1) year, the long term
incentive plan award will be included as if it had been earned and received
ratably over the period with respect to which it was earned; and

 

(vii)                           including, when awarded, the fair market value
of stock awarded under all restricted stock plans as compensation for pension
accrual purposes.

 

(b)                                 There shall be determined the amount
actually payable to the Participant from the Pension Plan.

 

4.2.                              Special Amount Rule.  In the case of any
Participant who either:

 

(a)                                  had annual earnings in excess of
Seventy-Five Thousand Dollars ($75,000) from the Principal Sponsor as of
December 31, 1989, and had attained age fifty-five (55) years as of October 28,
1989, or

 

(b)                                 had annual earnings in excess of One Hundred
Thousand Dollars ($100,000) from the Principal Sponsor as of December 31, 1989,
and had attained age fifty (50) years as of October 28, 1989,

 

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the amount determined under Section 4.1(a) above shall be determined under the
formula and rules of the Pension Plan as it existed on October 28, 1989
(disregarding any subsequent amendments but taking into account the
Participant’s subsequent compensation and service) but only if the resulting
amount would be greater than the amount determined under Section 4.1(a).

 

4.3.                              Form of Benefit.  Except as provided in
Section 6 below, this benefit (minus the withholding, payroll and other taxes
which must be deducted therefrom) shall be paid to the Participant directly from
the general assets of the Principal Sponsor in the same manner, at the same
time, for the same duration and in the same form as if such benefit had been
paid directly from the Pension Plan.  All elections and optional forms of
settlement in effect and all other rules governing the payment of benefits under
the Pension Plan shall, to the extent practicable, also be given effect under
this SERP.

 

4.4.                              Forfeiture of Benefits.  All unpaid benefits
payable under this SERP to or with respect to a Participant, shall be
permanently forfeited upon the determination by the Compensation Committee of
the Board of Directors of the Principal Sponsor that the Participant, either
before or after termination of employment:

 

(a)                                  engaged in a felonious or fraudulent
conduct resulting in material harm to the Principal Sponsor or an affiliate; or

 

(b)                                 made an unauthorized disclosure to a
competitor of any material confidential information, trade information, or trade
secrets of the Principal Sponsor or an affiliate; or

 

(c)                                  provided the Principal Sponsor or an
affiliate with materially false reports concerning his or her business interests
or employment; or

 

(d)                                 made materially false representations which
are relied upon by the Principal Sponsor or an affiliate in furnishing
information to shareholders, auditors, or any regulatory or governmental body;
or

 

(e)                                  maintained an undisclosed, unauthorized and
material conflict of interest in the discharge of the duties owed by the
Participant to the Principal Sponsor or an affiliate; or

 

(f)                                    engaged in reckless or grossly negligent
activity toward the Principal Sponsor or an affiliate which is admitted or
judicially proven and which results in significant harm to the Principal Sponsor
or an affiliate; or

 

(g)                                 engaged during his or her employment or
during a period of two (2) years after the termination of his or her employment
in any employment or self–employment with a competitor of the Principal Sponsor
or an affiliate within the geographical area which is then served by the
Principal Sponsor or an affiliate.

 

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Any dispute arising under or with respect to this Section shall be subject to
the claims procedure set forth in Section 9.

 

SECTION 5

 

BENEFIT FOR BENEFICIARIES

 

5.1.                              General Amount Rule.  This SERP shall pay to
the surviving spouse or other joint or contingent annuitant or beneficiary of a
Participant the excess, if any, of the amount, if any, determined in “(a)” below
over the amount, if any, determined in “(b)” below.

 

(a)                                  There shall be determined the amount which
would have been payable with respect to the Participant under the formula and
rules of the Pension Plan (as the Pension Plan exists on the date as of which
such amount is determined) but determined:

 

(i)                                     without regard to the benefit
limitations of section 415 of the Code; and

 

(ii)                                  without regard to the compensation
limitation of section 401(a)(17) of the Code; and

 

(iii)                               in the case of a Participant who is both an
officer and a member of the Executive Committee on or after December 13, 1989
and who dies after the earliest date he could have retired on an early
retirement pension under the Pension Plan (without regard to whether he has or
has not retired) and after completing at least thirty (30) years of
participation in the Pension Plan, as if there were no reduction in benefits for
early commencement; and

 

(iv)                              in the case of a Participant who is both an
officer and a member of the Executive Committee on or after May 22, 1989, as if
the thirty-five (35) years of Benefit Service maximum did not apply; and

 

(v)                                 including, when it would otherwise have been
paid, income deferred under any nonqualified, unfunded, elective deferred
compensation plan maintained by the Principal Sponsor; and

 

(vi)                              including, once earned, each long term
incentive plan award; provided, however, that if the long term incentive plan
award is

 

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earned with respect to a period longer than one (1) year, the long term
incentive plan award will be included as if it had been earned and received
ratably over the period with respect to which it was earned; and

 

(vii)                           including, when awarded, the fair market value
of stock awarded under all restricted stock plans as compensation for pension
accrual purposes.

 

(b)                                 There shall be determined the amount
actually payable with respect to the Participant from the Pension Plan.

 

5.2.                              Special Amount Rule.  In the case of any
Participant who either:

 

(a)                                  had annual earnings in excess of
Seventy-Five Thousand Dollars ($75,000) from the Principal Sponsor as of
December 31, 1989, and had attained age fifty-five (55) years as of October 28,
1989, or

 

(b)                                 had annual earnings in excess of One Hundred
Thousand Dollars ($100,000) from the Principal Sponsor as of December 31, 1989,
and had attained age fifty (50) years as of October 28, 1989,

 

the amount determined under Section 5.1(a) above shall be determined under the
formula and rules of the Pension Plan as it existed on October 28, 1989
(disregarding any subsequent amendments but taking into account the
Participant’s subsequent compensation and service) but only if the resulting
amount would be greater than the amount determined under Section 5.1(a).

 

5.3.                              Form of Benefit.  Except as provided in
Section 6 below, this benefit (minus the withholding, payroll and other taxes
which must be deducted therefrom) shall be paid to such person directly from the
general assets of the Principal Sponsor in the same manner, at the same time,
for the same duration and in the same form as if such benefit had been paid
directly from the Pension Plan.  All elections and optional forms of settlement
in effect and all other rules governing the payment of benefits under the
Pension Plan shall, to the extent practicable, also be given effect under this
SERP.

 

SECTION 6

 

COMMUTATION TO LUMP SUM

 

6.1.                              General Rule.  Notwithstanding anything
apparently to the contrary in Sections 4 or 5 above, at the election of the
Compensation Committee of the Principal Sponsor, and for the purpose of
minimizing payroll or other taxes due on benefits payable under this SERP, the

 

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Compensation Committee may (without the consent of the Participant, joint or
contingent annuitant or beneficiary) commute the value of benefits payable under
this SERP to or with respect to a Participant at the time of the retirement,
quit, discharge, death or other termination of employment of the Participant to
an actuarially equivalent benefit payable in fifteen (15) annual installments
(with no life contingencies).  The commuted benefit shall be calculated by
reference to interest and mortality factors then in effect under the Pension
Plan.  Any installments remaining unpaid at the death of the recipient shall be
paid to the estate of the recipient.  If the Compensation Committee elects to
commute the SERP benefits payable to or with respect to a Participant, the
Compensation Committee shall cause the Participant or other person to whom such
benefits are payable to be notified of that commutation and the number of annual
installments which the Compensation Committee has determined shall be paid.

 

6.2.                              Executive Committee Members.  Notwithstanding
anything apparently to the contrary in Sections 4 or 5 above, a Participant who
is both an officer and a member of the Executive Committee on or after May 22,
1989 may make an irrevocable written election that all benefits payable to, and
all benefit payable with respect to, the Participant under the SERP shall,
without any further elections, consents or notices, be commuted to and paid in
an actuarially equivalent single lump sum cash payment within the thirty (30)
days following the earliest date on which such benefits could otherwise be
payable under the SERP.  The single lump sum shall be calculated by reference to
interest and mortality factors in effect under the Pension Plan at the time of
payment.  Such election shall not be effective, however, unless it is made and
filed with the Chairperson of the Compensation Committee (or the Chairperson’s
delegee) within fifteen (15) days after the latest of:  (i) the date the
Participant first becomes a Participant under this SERP, (ii) the date the
Participant is notified in writing of his participation in this SERP, (iii) the
date the Participant is notified in writing of the opportunity to make this
election, or (iv) May 22, 1989.

 

6.3.                              Complete Payment.  The payment of a lump sum
to a Participant under the foregoing provisions of this Section 6 shall
completely extinguish all other payments that may be due under this SERP to any
other person.

 

SECTION 7

 

FUNDING

 

7.1.                              Funding.  The obligation of the Principal
Sponsor to make payments under this SERP constitutes only the unsecured (but
legally enforceable) promise of the Principal Sponsor to make such payments. 
The Participant shall have no lien, prior claim or other security interest in
any property of the Principal Sponsor.  If a fund is established by the
Principal Sponsor in connection with this SERP, the property therein shall
remain the sole and exclusive property of the Principal Sponsor.  The Principal
Sponsor will pay the cost of this SERP out of its general assets.

 

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7.2.                              Hedging Investments.  If the Principal Sponsor
elects to finance all or a portion of its costs in connection with this SERP
through the purchase of life insurance or other investments, each Participant
agrees, as a condition of participation in this SERP, to cooperate with the
Principal Sponsor in the purchase of such investment to any extent reasonably
required by the Principal Sponsor and relinquishes any claim he may have either
for himself or any beneficiary to the proceeds of any such investment or any
other rights or interests in such investment.  If a Participant fails or refuses
to cooperate, then notwithstanding any other provision of this SERP the
Principal Sponsor may immediately and irrevocably terminate and forfeit all
benefits payable to or with respect to the Participant under this SERP.

 

7.3.                              Consensual Creditor.  Neither the Principal
Sponsor’s officers nor any member of its Board of Directors in any way secures
or guarantees the payment of any benefit or amount which may become due and
payable hereunder to or with respect to the Participants.  The Participants
entitled at any time to payments hereunder shall look solely to the assets of
the Principal Sponsor for such payments as an unsecured, general creditor. 
After benefits shall have been paid to or with respect to a Participant and such
payment purports to cover in full the benefit hereunder, the Participant shall
have no further right or interest in the other assets of the Principal Sponsor
in connection with this SERP.  Neither the Principal Sponsor nor any of its
officers nor any member of its Board of Directors shall be under any liability
or responsibility for failure to effect any of the objectives or purposes of
this SERP by reason of the insolvency of the Principal Sponsor.

 

SECTION 8

 

GENERAL MATTERS

 

8.1.                              Amendment and Termination.  The Board of
Directors of the Principal Sponsor may unilaterally amend this SERP document
prospectively, retroactively or both, at any time and for any reason deemed
sufficient by it without notice to any person affected by this SERP and may
likewise terminate the benefits of this SERP both with regard to persons
expecting to receive benefits in the future and persons already receiving
benefits at the time of such action; provided, however, that such amendment or
termination shall not be effective with respect to a Participant who was both an
officer and a member of the Executive Committee on or after May 22, 1989 without
the written consent of such Participant.  The Compensation Committee may act for
the Board of Directors to amend this SERP document.

 

8.2.                              ERISA Administrator.  The Principal Sponsor
shall be the plan administrator of this SERP.

 

8.3.                              Limited Benefits.  This SERP shall not provide
any benefits with respect to any defined contribution plan.  This SERP shall not
alter, enlarge or diminish any person’s employment rights or rights or
obligations under the Pension Plan.

 

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8.4.                              Spendthrift Provision.  No Participant,
surviving spouse, joint or contingent annuitant or beneficiary shall have the
power to transmit, assign, alienate, dispose of, pledge or encumber any benefit
payable under this SERP before its actual payment to such person.  the Principal
Sponsor shall not recognize any such effort to convey any interest under this
SERP.  No benefit payable under this SERP shall be subject to attachment,
garnishment, execution following judgment or other legal process before actual
payment to such person.

 

8.5.                              Service of Process.  In the absence of any
designation to the contrary by the Principal Sponsor, the Secretary of the
Principal Sponsor is designated as the appropriate and exclusive agent for the
receipt of service of process directed to the SERP in any legal proceeding,
including arbitration, involving the SERP.

 

8.6.                              Plan Year.  The plan year for this SERP shall
be the fiscal period of fifty–two (52) or fifty–three (53) weeks ending on the
last Saturday in October of each year.

 

8.7.                              § 162(m) Deferral.  If the Principal Sponsor
determines that delaying the time the initial payments are made or commenced
would increase the probability that such payments would be fully deductible for
federal or state income tax purposes, the Principal Sponsor may unilaterally
delay the time of the making or commencement of payments for up to twelve (12)
months after the date such payments would other wise be payable.

 

SECTION 9

 

CLAIMS PROCEDURES

 

9.1.                              Determinations.  The Compensation Committee
shall make such determinations as may be required from time to time in the
administration of the SERP.  The Compensation Committee shall have the sole
discretion, authority and responsibility to interpret and construe the SERP and
the plan document and to determine all factual and legal questions under the
SERP, including but not limited to the entitlement of employees, Participants
and beneficiaries and the amounts of their respective interests.  Benefits under
the SERP will be paid only if the Compensation Committee decides in its
discretion that an employee, Participant or Beneficiary is entitled to them. 
All interested parties may act and rely upon all information reported to them
hereunder and need not inquire into the accuracy thereof, nor be charged with
any notice to the contrary.

 

9.2.                              Rules and Regulations.  Any rule not in
conflict or at variance with the provisions hereof may be adopted by the
Compensation Committee.

 

9.3.                              Method of Executing Instruments.  Information
to be supplied or written notices to be made or consents to be given by the
Principal Sponsor or an affiliate or the Compensation Committee pursuant to any
provision of this SERP may be signed in the name of the Principal

 

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Sponsor or an affiliate by any officer or by any employee who has been
authorized to make such certification or to give such notices or consents or by
any Compensation Committee member.

 

9.4.                              Claims Procedure.  Until modified by the
Compensation Committee, the claims procedure set forth in this Section shall be
the claims procedure for the resolution of disputes and disposition of claims
arising under the SERP.  An application for a distribution or benefits under
Section 4 or Section 5 shall be considered as a claim for the purposes of this
Section.

 

9.4.1.                     Original Claim.  Any employee, former employee, or
beneficiary of such employee or former employee may, if the employee, former
employee or beneficiary so desires, file with the Compensation Committee a
written claim for benefits under the SERP.  Within ninety (90) days after the
filing of such a claim, the Compensation Committee shall notify the claimant in
writing whether the claim is upheld or denied in whole or in part or shall
furnish the claimant a written notice describing specific special circumstances
requiring a specified amount of additional time (but not more than one hundred
eighty days from the date the claim was filed) to reach a decision on the
claim.  If the claim is denied in whole or in part, the Compensation Committee
shall state in writing:

 

(a)                                  the specific reasons for the denial,

 

(b)                                 the specific references to the pertinent
provisions of this SERP on which the denial is based,

 

(c)                                  a description 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 the claims review
procedure set forth in this Section.

 

9.4.2.                     Claims Review Procedure.  Within sixty (60) days
after receipt of notice that the claim has been denied in whole or in part, the
claimant may file with the Compensation Committee a written request for a review
and may, in conjunction therewith, submit written issues and comments.  Within
sixty (60) days after the filing of such a request for review, the Compensation
Committee shall notify the claimant in writing whether, upon review, the claim
was upheld or denied in whole or in part or shall furnish the claimant a written
notice describing specific special circumstances requiring a specified amount of
additional time (but not more than one hundred twenty days from the date the
request for review was filed) to reach a decision on the request for review.

 

9.4.3.                     General Rules.

 

(a)                                  No inquiry or question shall be deemed to
be a claim or a request for a review of a denied claim unless made in accordance
with the claims procedure.  The Compensation Committee may require that any
claim for

 

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benefits and any request for a review of a denied claim be filed on forms to be
furnished by the Compensation Committee upon request.

 

(b)                                 All decisions on claims and on requests for
a review of denied claims shall be made by the Compensation Committee unless
delegated.

 

(c)                                  The Compensation Committee may, in its
discretion, hold one or more hearings on a claim or a request for a review of a
denied claim.

 

(d)                                 Claimants may be represented by a lawyer or
other representative at their own expense, but the Compensation Committee
reserves the right to require the claimant to furnish written authorization.  A
claimant’s representative shall be entitled to copies of all notices given to
the claimant.

 

(e)                                  The decision of the Compensation Committee
on a claim and on a request for a review of a denied claim shall be served on
the claimant in writing.  If a decision or notice is not received by a claimant
within the time specified, the claim or request for a review of a denied claim
shall be deemed to have been denied.

 

(f)                                    Prior to filing a claim or a request for
a review of a denied claim, the claimant or the claimant’s representative shall
have a reasonable opportunity to review a copy of SERP plan document and all
other pertinent documents in the possession of the Principal Sponsor and the
Compensation Committee.

 

9.4.4.                     Deadline to File Claim.  To be considered timely
under the SERP’s claim and review procedure, a claim must be filed with the
Compensation Committee within one (1) year after the claimant knew or reasonably
should have known of the principal facts upon which the claim is based.

 

9.4.5.                     Exhaustion of Administrative Remedies.  The
exhaustion of the claim and review procedure is mandatory for resolving every
claim and dispute arising under this SERP.  As to such claims and disputes:

 

(a)                                  no claimant shall be permitted to commence
any legal action to recover Plan benefits or to enforce or clarify rights under
the SERP under section 502 or section 510 of ERISA or under any other provision
of law, whether or not statutory, until the claim and review procedure set forth
herein have been exhausted in their entirety, and

 

(b)                                 in any such legal action all explicit and
all implicit determinations by the Compensation Committee (including, but not
limited to, determinations as

 

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to whether the claim, or a request for a review of a denied claim, was timely
filed) shall be afforded the maximum deference permitted by law.

 

9.4.6.                     Deadline to File Legal Action.  No legal action to
recover SERP benefits or to enforce or clarify rights under the SERP under
section 502 or section 510 of ERISA or under any other provision of law, whether
or not statutory, may be brought by any claimant on any matter pertaining to
this SERP unless the legal action is commenced in the proper forum before the
earlier of:

 

(a)                                  thirty (30) months after the claimant knew
or reasonably should have known of the principal facts on which the claim is
based, or

 

(b)                                 six (6) months after the claimant has
exhausted the claim and review procedure.

 

9.4.7.                     Knowledge of Fact by Participant Imputed to
Beneficiary.  Knowledge of all facts that a Participant knew or reasonably
should have known shall be imputed to every claimant who is or claims to be a
beneficiary of the Participant or otherwise claims to derive an entitlement by
reference to the Participant for the purpose of applying the previously
specified periods.

 

9.5.                              Information Furnished by Participants. 
Neither the Principal Sponsor nor the Compensation Committee shall be liable or
responsible for any error in the computation of the benefit of a Participant
resulting from any misstatement of fact made by the Participant, directly or
indirectly, to the Principal Sponsor or the Compensation Committee and used by
them in determining the Participant’s benefit.  Neither the Principal Sponsor
nor the Compensation Committee shall be obligated or required to increase the
benefit of such Participant which, on discovery of the misstatement, is found to
be understated as a result of such misstatement of the Participant.  However,
the benefit of any Participant which is overstated by reason of any such
misstatement shall be reduced to the amount appropriate for the Participant in
view of the truth.  Any reduction of an benefit shall be retained in the SERP
and used to reduce the next succeeding contribution of  the Principal Sponsor to
the SERP.

 

SECTION 10

 

RULES OF CONSTRUCTION

 

10.1.                        Defined Terms.  Words and phrases used in this SERP
with initial capital letters, which are defined in the Pension Plan documents
and which are not separately defined in this SERP shall have the same meaning
ascribed to them in the Pension Plan documents unless in the context in which
they are used it would be clearly inappropriate to do so.

 

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10.2.                        ERISA Status.  This SERP is adopted with the
understanding that it is an unfunded plan maintained primarily for the purpose
of providing deferred compensation for a select group of management or highly
compensated employees as provided in section 201(2), section 301(3) and
section 401(a)(1) of ERISA.  Each provision shall be interpreted and
administered accordingly.

 

10.3.                        IRC Status.  This SERP is intended to be a
nonqualified deferred compensation arrangement.  The rules of section 401(a) et.
seq. of the Code shall not apply to this SERP.  The rules of section 3121(v) and
section 3306(r)(2) of the Code shall apply to this SERP.

 

10.4.                        Effect on Other Plans.  This SERP shall not alter,
enlarge or diminish any person’s employment rights or obligations or rights or
obligations under the Pension Plan or any other plan.  It is specifically
contemplated that the Pension Plan will, from time to time, be amended and
possibly terminated.  All such amendments and termination shall be given effect
under this SERP (it being expressly intended that except as expressly provided
in Section 4.2 and Section 5.2 this SERP shall not lock in the benefit
structures of the Pension Plan as they exist at the adoption of this SERP or
upon the commencement of participation or commencement of benefits by any
Participant).

 

10.5.                        Disqualification.  Notwithstanding any other
provision of this SERP or any election or designation made under the SERP, any
individual who feloniously and intentionally kills a Participant shall be deemed
for all purposes of this SERP and all elections and designations made under this
SERP to have died before such Participant.  A final judgment of conviction of
felonious and intentional killing is conclusive for this purpose.  In the
absence of a conviction of felonious and intentional killing, the Principal
Sponsor shall determine whether the killing was felonious and intentional for
this purpose.

 

10.6.                        Rules of Document Construction.  Whenever
appropriate, words used herein in the singular may be read in the plural, or
words used herein in the plural may be read in the singular; the masculine may
include the feminine; and the words “hereof,” “herein” or “hereunder” or other
similar compounds of the word “here” shall mean and refer to the entire SERP and
not to any particular paragraph or Section of this SERP unless the context
clearly indicates to the contrary.  The titles given to the various Sections of
this SERP are inserted for convenience of reference only and are not part of
this SERP, and they shall not be considered in determining the purpose, meaning
or intent of any provision hereof.  If, under the rules of this SERP, an
election, form or other document must be filed with or received by the Principal
Sponsor or other person, it must be actually received to be effective.  The
determination of whether or when an election, form or other document has been
received by the Principal Sponsor or other person shall be made by the Principal
Sponsor on the basis of what documents are acknowledged by the Principal Sponsor
or other person to be in its actual possession without regard to any “mailbox
rule” of similar rule of evidence.  The absence of a document in the Principal
Sponsor’s or other person’s records and files shall be conclusive and binding
proof that the document was not received.  Notwithstanding any thing apparently
to the contrary contained in this SERP document, the SERP document shall be
construed and administered to prevent the duplication of

 

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benefits provided under this SERP and any other qualified or nonqualified plan
maintained in whole or in part by the Principal Sponsor.

 

10.7.                        References to Laws.  Any reference in this SERP to
a statute or regulation shall be considered also to mean and refer to any
subsequent amendment or replacement of that statute or regulation.

 

10.8.                        Effect on Employment.  Neither the terms of this
SERP nor the benefits hereunder nor the continuance thereof shall be a term of
the employment of any employee.  The Principal Sponsor shall not be obliged to
continue the SERP.  The terms of this SERP shall not give any employee the right
to be retained in the employment of the Principal Sponsor.

 

10.9.                        Choice of Law.  This instrument has been executed
and delivered in the State of Minnesota and has been drawn in conformity to the
laws of that State and shall, except to the extent that federal law is
controlling, be construed and enforced in accordance with the laws of the State
of Minnesota.

 

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