Exhibit 10.1 to MTS Systems Corporation Form 8-K dated October 27, 2008







Exhibit 10.1  




FIRST AMENDMENT


MTS
SYSTEMS CORPORATION


2006
STOCK INCENTIVE PLAN


          THIS
INSTRUMENT, amending the 2006 Stock Incentive Plan (the “Plan”), is made and
entered into by MTS Systems Corporation (“MTS”), and shall be effective
December 31, 2008.


RECITALS


          WHEREAS,
the Board of Directors, at a meeting held on November 29, 2005, authorized the
establishment of the Plan, which was subsequently approved by shareholders at a
meeting held on January 31, 2006; and


          WHEREAS,
Section 12.1 of the Plan authorizes the Compensation Committee of the Board of
Directors (formerly the Human Resources Committee) to amend the Plan from time
to time, subject to shareholder approval if certain conditions provided in
Section 12.1 are met; and


          WHEREAS,
the Committee has determined that the changes proposed in this First Amendment
do not require shareholder approval as provided in Section 12.1; 


          NOW,
THEREFORE, the Plan is hereby amended to add a new Article 16 at the end
thereof to read as follows: 


SECTION 16

COMPLIANCE WITH CODE SECTION 409A


	
 

	
 


	
16.1

	
DEFERRED COMPENSATION
 means any Stock Incentive under this Plan that provides for the “deferral of
 compensation” as defined in Treas. Reg. Section 1.409A-1(b) and that would be
 subject to the taxes specified in Code Section 409A(a)(1) if and to the
 extent the Stock Incentive Agreement does not meet or is not administered and
 interpreted in compliance with the requirements of Code Section 409A(a)(2),
 (3) and (4) and the regulations promulgated thereunder. Deferred Compensation
 shall not include any amount that is otherwise exempt from the requirements
 of Code Section 409A and the regulations promulgated thereunder.


	
 

	
 


	
16.2

	
SPECIFIED EMPLOYEE means, if any stock of the
 Company, the Parent or any Subsidiary is publicly traded on an established
 securities market or otherwise on the Participant’s Separation from Service,
 a Participant who is a key employee as described in Code Section
 416(i)(1)(A), disregarding paragraph (5) thereof. For purposes of determining
 key employees under Code Section 416(i)(1)(A), the definition of compensation
 shall be the same as defined in the Company’s Retirement Savings Plan, but
 excluding any compensation of a Participant whose location is not effectively
 connected with the conduct of a trade or business within the United States.
 If a Participant is a key employee at any time during the 12 months ending on
 each September 30, the Participant is a Specified Employee for the 12 month
 period commencing on the next January 1. Any such identification of a
 Specified Employee under this Plan shall apply to all nonqualified deferred
 compensation plans in which the Specified Employee participates. In the case
 of certain corporate transactions (a merger, acquisition or spin-off), or in
 the case of nonresident alien employees, the Company will determine Specified
 Employees in accordance with Treas. Reg. §1.409A-1(i). 





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16.3

	
LIMITATION
 ON PAYMENT OR EXERCISE. With respect to any Stock Incentive that constitutes
 Deferred Compensation, such Stock Incentive shall provide for payment or
 exercise only upon: (a) a fixed date or schedule that complies with the
 requirements of Treas. Reg. §1.409A-3; (b) on a date based upon the
 Participant’s “separation from service,” or “disability,” or “unforeseeable
 emergency” as those terms are defined under Code Section 409A and the
 regulations promulgated thereunder; (c) the Participant’s death; or (d) a
 Change in Control as defined in Section 11.1. Any election permitted under
 any Stock Incentive that constitutes Deferred Compensation shall comply with
 the requirements of Treas. Reg. Section 1.409A-2 and shall be irrevocable as
 of the date of grant of the Stock Incentive. In addition, with respect to any
 Stock Incentive that constitutes Deferred Compensation, except to the extent
 acceleration or deferral is permitted by or complies with the requirements of
 Code Section 409A and the regulations and other guidance promulgated
 thereunder, neither the Committee nor a Participant may accelerate or defer the
 time or schedule of any payment or exercise of, or the amount scheduled to be
 reported as income as a result. 


	
 

	
 


	
16.4

	
DELAY IN
 PAYMENT OR EXERCISE FOR SPECIFIED EMPLOYEES. Notwithstanding anything in the
 Plan, unless the Stock Incentive Agreement specifically provides otherwise,
 no Stock Incentive that constitutes Deferred Compensation shall be paid to or
 exercised by a Specified Employee earlier than 181 days following the
 Participant’s “separation from service” as defined for purposes of Code Section
 409A (or if earlier, upon the Specified Employee’s death), except as
 permitted under Code Section 409A and the regulations and other guidance
 promulgated thereunder. The Committee may specify in the Stock Incentive
 Agreement that the amount of the Deferred Compensation delayed pursuant to
 this Section 16.4 shall accumulate interest or earnings during the period of
 such delay.





Except as
amended herein, the Plan shall remain in full force and effect.


          IN
WITNESS WHEREOF, MTS has caused this First Amendment to be executed on its
behalf by its officer, who has been duly authorized by its Compensation
Committee.



	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
MTS SYSTEMS CORPORATION


	
 

	
 

	
 

	
 

	
 


	
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