Document:

EXHIBIT 10.1

HORMEL

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(2005 Restatement)

First Effective January 1, 1976

As Amended and Restated Effective January 1, 2005

 

HORMEL

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(2005 Restatement)

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
   

  	
  INTRODUCTION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.1.

  	
  Amendment and Restatement

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  1.1.1.

  	
  Grandfathered Accrued Benefit

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  1.1.2.

  	
  Non-Grandfathered Accrued Benefit

  	
   

  	
   

  
	
   

  	
   

  	
  1.2.

  	
  Unfunded Obligation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  PLAN NAME

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  PARTICIPANTS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1.

  	
  General Rule

  	
   

  	
   

  
	
   

  	
   

  	
  3.2.

  	
  Specific Exclusion

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  BENEFIT FOR PARTICIPANTS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.1.

  	
  General Amount Rule

  	
   

  	
   

  
	
   

  	
   

  	
  4.2.

  	
  Special Amount Rule

  	
   

  	
   

  
	
   

  	
   

  	
  4.3.

  	
  Time and Form of Payment

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  4.3.1.

  	
  Time of Payment

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  4.3.2.

  	
  Form of Payment

  	
   

  	
   

  
	
   

  	
   

  	
  4.4.

  	
  Forfeiture of Benefits

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  BENEFIT FOR BENEFICIARIES

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.1.

  	
  Death Before Benefit Commencement

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  5.1.1

  	
  General Amount Rule

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  5.1.2.

  	
  Special Amount Rule

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  5.1.3.

  	
  Time and Form of Payment

  	
   

  	
   

  
	
   

  	
   

  	
  5.2.

  	
  Death After Benefit Commencement

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  COMMUTATION TO LUMP SUM

  	
   

  	
  8

  

 

 i
 

 

 

	
  SECTION 7.

  	
   

  	
  FUNDING

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.1.

  	
  Funding

  	
   

  	
   

  
	
   

  	
   

  	
  7.2.

  	
  Hedging Investments

  	
   

  	
   

  
	
   

  	
   

  	
  7.3.

  	
  Consensual Creditor

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  GENERAL MATTERS

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  	
   

  	
   

  

 

 ii

HORMEL

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(2005 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 (2005
Restatement),” the Principal Sponsor hereby further amends and restates the
SERP in its entirety.  The provisions of
this restatement, which are amended to comply with section 409A of the Internal
Revenue Code (added by the American Jobs Creation Act of 2004), shall apply
to:  (i) the portion of each Participant’s
accrued benefit under Section 4 of this SERP which constitutes the
Non-Grandfathered Accrued Benefit, and (ii) the benefit for a surviving spouse
or beneficiary of a deceased Participant provided under Section 5 of this
SERP.  The Participant’s Grandfathered
Accrued Benefit shall continue to be governed under the terms of the 2002
Restatement, as amended by a First Amendment. 
For this purpose, the terms Grandfathered Accrued Benefit and
Non-Grandfathered Accrued Benefit shall have the following meanings:

1.1.1.                                                         Grandfathered Accrued Benefit.  The present value, as of December 31, 2004,
of the amount of benefit to which the Participant would have been entitled
under this SERP if the Participant voluntarily terminated services on December
31, 2004, and received a payment of the benefits with the maximum value available
from this SERP on the earliest possible date allowed under this SERP.  The Grandfathered Accrued Benefit may
increase to equal the present value of the benefit the Participant actually
becomes entitled to, determined under the terms of the SERP as in effect on
October 3, 2004, without regard to any further services rendered by the
Participant after December 31, 2004, or any other events affecting the amount
of or entitlement to benefits (other than Participant election with respect to
the time or form of an available benefit).

1.1.2.                                                         Non-Grandfathered Accrued Benefit.  The portion of the Employee’s accrued benefit
other than the Grandfathered Accrued Benefit.

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 (2005 Restatement)”  (the “SERP document”).

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.

 2
 

 

(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:

(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
each long term incentive plan award earned prior to October 29, 2006; 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; and

(viii)                        recognizing
as Eligibility Service, Benefit Service or as Vesting Service or both periods that
are required to be recognized for purposes of this SERP pursuant to a separate
written agreement between the Principal Sponsor and the Participant and by
including in Compensation and in Average Monthly Compensation amounts that are
required to be included pursuant to a separate written agreement between the
Principal Sponsor and the Participant (and in either such case, the separate
written agreement shall be signed on behalf of the Principal Sponsor by a
member of the Board of Directors who is not a Participant in this SERP).

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

 3
 

 

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,

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.                                          Time and Form of Payment. 
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.

4.3.1.                                                         Time of Payment. 
Payment shall commence upon any one of the following events (the “Benefit
Commencement Date”) as selected by the Participant within thirty (30) days of
commencement of participation in the Plan (or, in accordance with transition
rules under section 409A of the Internal Revenue Code, in the case of an
individual who was a Participant before January 1, 2007, on or prior to
December 31, 2006):

(a)                                                                      the
later of the first of the calendar month following attainment of age sixty (60)
or the first of the month following separation from service (as that term is
defined under Section 409A of the Internal Revenue Code);

(b)                                                                     the
later of the first of the calendar month following attainment of age sixty-two
(62) or the first of the month following separation from service; or

(c)                                                                      the
first of the calendar month following separation from service.

Notwithstanding the foregoing, with respect to any
distribution made on account of separation from service to a Participant who is
a key employee (as defined under section 409A of the Internal Revenue Code and
regulations thereunder), such Participant’s Benefit Distribution Date shall be
the earlier of:  the date that is six (6)
months after the Participant’s separation from service, or the date of the
Participant’s death.  Payment shall be
deemed paid as of the Benefit Distribution Date if it is made no later than the
last day of the calendar year in which occurs the Benefit Distribution Date, or
if later, the 15th day of the third calendar month following the Benefit
Distribution Date.

4.3.2.                                                         Form of Payment.  In the absence of an affirmative written
election to the contrary, payment shall be made in the applicable presumptive
form of a life annuity (either the Single Life Annuity form or the Qualified
Joint and Survivor Life Annuity form), as if such benefit had been paid
directly from the Pension Plan pursuant to Section 4.2 of such Plan regarding
presumptive forms.  Notwithstanding the
foregoing:

 4
 

 

(a)                                                                      Optional Forms of Annuity.  Before any payment has commenced, a
Participant may elect to change the form of payment from one type of life
annuity to another to the extent permitted under the Pension Plan, and further
provided that the annuities are actuarially equivalent applying reasonable
actuarial assumptions as permitted under section 409A of the Internal Revenue
Code.

(b)                                                                     Lump Sum (Gary Ray and Michael McCoy).   Notwithstanding the foregoing, the benefits
payable to or with respect to Gary Ray and Michael McCoy under this SERP shall
be paid in an actuarially equivalent single lump sum cash payment.  The payment of a lump sum to a Participant
shall completely extinguish all other payments that may be due under this SERP
to any other person.

(c)                                                                      Small Amounts.  If the actuarially equivalent present value
of the Participant’s benefits at separation from service is not more than Five
Thousand Dollars ($5,000), that present value shall be paid in a single lump
sum.  The payment of a lump sum to a
Participant shall completely extinguish all other payments that may be due
under this SERP to any other person.

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

 5
 

 

(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.

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.                                          Death
Before Benefit Commencement.

5.1.1.                                                         General Amount Rule.  This SERP shall pay to the surviving spouse
or other 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

 6
 

 

(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; and

(viii)                        recognizing
as Eligibility Service, Benefit Service or as Vesting Service or both periods
that are required to be recognized for purposes of this SERP pursuant to a
separate written agreement between the Principal Sponsor and the Participant
and by including in Compensation and in Average Monthly Compensation amounts
that are required to be included pursuant to a separate written agreement
between the Principal Sponsor and the Participant (and in either such case, the
separate written agreement shall be signed on behalf of the Principal Sponsor
by a member of the Board of Directors who is not a Participant in this SERP).

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

5.1.2.                                                         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 5.1.1(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 5.1.1(a).

5.1.3.                                                         Time and Form of Payment.  Payment shall commence upon the first of the
calendar month following the Participant’s death.  Payment shall be made to the surviving spouse
(or such other designated beneficiary, if applicable) in the Survivor Annuity
form as provided under Section 4.2 of the Pension Plan, as if the Participant
separated from service on the date of death for reasons other than death,
elected to commence receipt of the Participant’s benefit in the Survivor
Annuity form (upon the first of the calendar month following separation) and
then immediately died.

 7
 

 

5.2.                                          Death
After Benefit Commencement.  The only
death benefits which shall be payable under this SERP upon the death of a
Participant after the Participant’s separation from service and after payment
of benefits under this SERP has commenced to the Participant shall be the
unpaid installments of annuity, if any, which are to be continued under the
form of pension which the Participant has elected under the provisions of
Section 4 hereof or which are provided automatically in the absence of the
Participant’s affirmative election.

SECTION 6

COMMUTATION TO LUMP SUM

Notwithstanding the foregoing, to the extent
permissible under Section 409A of the Internal Revenue Code and related
Treasury regulations and guidance, if there is a termination of the SERP with
respect to all Participants, the Principal Sponsor shall have the right, in its
sole discretion, and notwithstanding any elections made by the Participant, to
immediately pay all benefits in a lump sum following such termination of the
SERP.  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.

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.

 8
 

 

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.

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.

 9
 

 

8.7.                                          § 162(m) Deferral. 
Payment will be delayed if the Principal Sponsor reasonably anticipates
that the Principal Sponsor’s deduction with respect to such payment otherwise
would be limited or eliminated by application of section 162(m) of the Internal
Revenue Code; provided that payment shall be made at the earliest date at which
the Principal Sponsor reasonably anticipates that the deduction of the payment
of the amount will not be limited or eliminated by application of section
162(m) of the Internal Revenue Code.

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 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,

 10
 

 

(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 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.

 11

 

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 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.

 12
 

 

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.

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

 13
 

 

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 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.

 14EXHIBIT
10.2

HORMEL
FOODS CORPORATION

NONEMPLOYEE
DIRECTOR DEFERRED STOCK PLAN

(Plan
Adopted October 4, 1999; Amended and Restated September 18, 2006)

1.                                       Introduction.

1.1.                                          Plan
History.  The Hormel Foods
Corporation Nonemployee Director Deferred Stock Plan (the “Plan”) was first
adopted October 4, 1999 and first restated November 24, 2003 (collectively, the
“Prior Plan Documents”).  Deferred
compensation credited under the Plan which relates entirely to services
performed on or before December 31, 2004 shall continue to be governed by the
terms of the Prior Plan Documents. 
Deferred compensation credited under the Plan which relates all or in
part to services performed on or after January 1, 2005 shall be governed by the
terms of this Plan restatement, the terms of which are intended to comply with
the deferred compensation provisions in the American Jobs Creation Act of 2004.

1.2.                                          Purpose.  The purpose of the Plan is to provide an
opportunity for nonemployee members of the Board of Directors (the “Board”) of
Hormel Foods Corporation (the “Company”) to increase their ownership of the
Common Stock, par value $.0586 per share, of the Company (“Common Stock”), and
thereby align their interest in the long-term success of the Company with that
of the other stockholders of the Company. 
This will be accomplished by allowing each participating director to
elect voluntarily to defer all or a portion of his or her retainer and meeting
fees into the right to receive shares of Common Stock at a later date pursuant
to elections made by such director under this Plan.

2.                                       Eligibility.  Individuals who are members of the Board of
the Company (“Directors”) and who are not also officers or other employees of
the Company or its subsidiaries are eligible to participate in this Plan (“Eligible
Directors”).

3.                                       Administration.  This Plan will be administered by the
Compensation Committee of the Board (the “Committee”), which is composed solely
of two or more Nonemployee Directors (as defined in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).  All questions of interpretation of this Plan
will be determined by the Committee, and each determination, interpretation or
other action that the Committee makes or takes pursuant to the provisions of
this Plan will be conclusive and binding for all purposes and on all
persons.  The Committee will not be
liable for any action or determination made in good faith with respect to this
Plan.

4.                                       Election
to Defer Receipt of Retainer and Fees.

4.1.                                          Election
to Defer Cash Compensation.  Each
Eligible Director who decides to participate in this Plan (a “Participating
Director”) may irrevocably elect to defer receipt of cash equal to 25%, 50%,
75% or 100% of the annual cash retainer (“Retainer”) payable to that Director
for services to be rendered as a Director in the “Plan Year” (as defined below)
following such election and 25%, 50%, 75% or 100% of the meeting fees payable
for attendance at Board meetings or meetings of

 

Committees of the
Board (“Meeting Fees”) otherwise payable to such Director for services
performed after the effective date of the Deferral Election (as defined in
Section 4.2).  As of the date of adoption
of this amended and restated Plan, Eligible Directors are customarily paid the
Retainer one-half on February 1 and one-half on August 1 of each year, and
Meeting Fees are paid on the day of the meeting.  As used herein, “Plan Year” means the
12-month period which runs from January 1 through December 31.  The amounts to be deferred will be in the
form of Common Stock units credited to an account for the Participating
Director (a “Deferred Stock Account”). 
No shares of Common Stock will be issued to a Participating Director
until he or she receives a payment under the Plan pursuant to Section 6.

4.2.                                          Manner
of Making Deferral Election.  A
Participating Director may elect to defer payment of Retainer and Meeting Fees
pursuant to this Plan by filing, no later than December 31 of each year (or by
such earlier date as the Committee shall determine), an irrevocable election
with the Committee on a form provided for that purpose (“Deferral Election”).  The Deferral Election shall be effective with
respect to the Retainer and Meeting Fees otherwise payable for services
performed during the following Plan Year unless the Participating Director
shall revoke or change the election in accordance with the procedure set forth
in Section 4.6.  The Deferral Election
form shall specify an amount to be deferred expressed as a percentage of the
Participating Director’s Retainer and Meeting Fees.

4.3.                                          Credits
to Deferred Stock Account for Deferrals. 
On the last business day of each calendar quarter of the Plan Year (the “Credit
Date”), a Participating Director shall receive a credit to his or her Deferred
Stock Account.  The amount credited shall
be in the form of stock units in a number equal to the number of shares of
Common Stock (rounded to the nearest one-hundredth of a share) determined by
dividing (i) the product of an amount equal to the Retainer and Meeting Fees
specified for deferral that would otherwise have been paid to the Participating
Director for the applicable calendar quarter multiplied by 105% by (ii) the
Fair Market Value of one share of Common Stock on the Credit Date.

4.4.                                          Dividend
Credit.  Each time a dividend is paid
on the Common Stock, the Participating Director shall receive a credit of stock
units to his or her Deferred Stock Account equal to either the number of shares
(if a stock dividend is paid) or that number of shares of Common Stock (rounded
to the nearest one-hundredth of a share) having a Fair Market Value on the
dividend payment date (if a cash dividend is paid) equal to the amount of the
dividend that would have been payable on the number of shares of Common Stock
equal to the number of stock units credited to the Participating Director’s
Deferred Stock Account on the dividend record date.

4.5.                                          Fair
Market Value.  For purposes of
converting dollar amounts into shares of Common Stock, the Fair Market Value of
each share of Common Stock shall be equal to the closing price of one share of
the Company’s Common Stock on the New York Stock Exchange-Composite
Transactions (or such other principal stock exchange on which the Common Stock
may then be listed) on the last business day of the applicable calendar quarter
of the Plan Year for credits under Section 4 or the applicable payment date
pursuant to Section 6.

4.6.                                          Change
in Election.  Prior to the first day
of the Plan Year for which a Deferral Election is to become effective, each Participating
Director may irrevocably elect in writing to change

 2
 

 

a Deferral
Election, either to change the percentage of such Director’s Retainer and
Meeting Fees to be deferred or to discontinue making deferrals and currently
receive the entire Retainer and Meeting Fees in cash (an “Amended Election”).  Once a Deferral Election becomes effective as
of the first day of a Plan Year, such election shall be irrevocable, and an
Amended Election may only be made with respect to Retainer and Meeting Fees
paid for services performed on or after the first day of the Plan Year
commencing after the date of receipt of such Amended Election by the Company.

4.7.                                          Termination
of Service as a Director.  If a
Participating Director leaves the Board before the conclusion of any Plan Year
calendar quarter, he or she will be paid the quarterly installment of the
Retainer and Meeting Fees entirely in cash, notwithstanding that a Deferral
Election or Amended Election is on file with the Committee.  The date of termination of a Participating
Director’s service as a Director of the Company will be deemed to be the date
of termination recorded on the personnel or other records of the Company or the
Board.

5.                                       Shares
Available for Issuance.

5.1.                                          Maximum
Number of Shares Available.  Subject
to adjustment pursuant to Section 5.2, the maximum number of shares of Common
Stock that shall be available for issuance under this Plan shall be
300,000.  Shares issuable under this Plan
may be either authorized but unissued shares, shares held in the treasury of
the Company or shares acquired on the open market or otherwise.

5.2.                                          Adjustments
to Shares.  In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend, an appropriate adjustment will
be made in the number and/or kind of securities available for issuance under
this Plan to prevent either the dilution or the enlargement of the rights of
the Eligible Directors and Participating Directors.

6.                                       Deferral
Payment.

6.1.                                          Deferral
Payment Election.  At the time of
making the Deferral Election, each Participating Director shall also complete a
deferral payment election specifying one of the payment options described in
Sections 6.2 and 6.3, and the year following separation from service (as that
term is defined under Section 409A of the Internal Revenue Code) in which
amounts credited to the Participating Director’s Deferred Stock Account shall
be paid in a lump sum pursuant to Section 6.2, or in which installment payments
shall commence pursuant to Section 6.3. 
The deferral payment election shall be irrevocable as to all amounts
credited to the Participating Director’s Deferred Stock Account.  The Participating Director may change the
deferral payment election by means of a subsequent deferral payment election in
writing that will take effect for deferrals credited for Plan Years after the
date the Company receives such subsequent deferral payment election.

6.2.                                          Payment
of Deferred Stock Accounts in a Lump Sum. 
Unless a Participating Director elects to receive payment of his or her
Deferred Stock Account in installments as described in Section 6.3, credits to
a Participating Director’s Deferred Stock Account shall be payable in full on
February 15 of the year following the Participating Director’s separation from
service (or the first business day thereafter) or such other later date as
elected by the Participating Director pursuant to

 3
 

 

Section 6.1.  All payments shall be made in shares of
Common Stock, with one share of Common Stock issued for each stock unit
credited to the Participating Director’s Deferred Stock Account, plus cash in
lieu of any fractional share.

6.3.                                          Payment
of Deferred Stock Accounts in Installments. 
A Participating Director may elect to have his or her Deferred Stock
Account paid in annual installments commencing the year following termination
of service as a Director or commencing in a later year as elected by the
Participating Director pursuant to Section 6.1. 
All payments shall be made in shares of Common Stock, with one share of
Common Stock issued for each stock unit credited to the Participating Directors
Deferred Stock Account, plus cash in lieu of any fractional share.  All installment payments shall be made
annually on February 15 of each year (or the first business day
thereafter).  The amount of each
installment payment shall be computed as the number of shares credited to the
Participating Director’s Deferred Stock Account on the relevant installment
payment date, multiplied by a fraction, the numerator of which is one and the
denominator of which is the total number of installments elected (not to exceed
five) minus the number of installments previously paid.  Amounts paid prior to the final installment
payment shall be rounded to the nearest whole number of shares; the final
installment payment shall be for the whole number of stock units then credited
to the Participating Director’s Deferred Stock Account, together with cash in
lieu of any fractional share.

6.4.                                          Change
in Control.  Notwithstanding the
foregoing, in the event of a Participating Director’s separation from service
within six months following a Change of Control (as defined in Section 11),
credits to a Participating Director’s Deferred Stock Account shall be paid in a
lump sum (notwithstanding any prior election to the contrary) to the
Participating Director or the Participating Director’s beneficiary or estate,
as the case may be, in whole shares of Common Stock (together with cash in lieu
of a fractional share).

6.5.                                          Key
Employees.  Notwithstanding the
foregoing, if a Participating Director is a “key employee” (as that term is
defined under Section 409A), the Director’s Deferred Stock Account following
separation from service shall be payable no earlier than six months after such
separation from service.

7.                                       Limitation
on Rights of Eligible and Participating Directors.

7.1.                                          Service
as a Director.  Nothing in this Plan
will interfere with or limit in any way the right of the Company’s Board or its
stockholders to remove an Eligible Director or Participating Director from the
Board.  Neither this Plan nor any action
taken pursuant to it will constitute or be evidence of any agreement or
understanding, express or implied, that the Company’s Board or its stockholders
have retained or will retain an Eligible Director or Participating Director for
any period of time or at any particular rate of compensation.

7.2.                                          Nonexclusivity
of the Plan.  Nothing contained in
this Plan is intended to effect, modify or rescind any of the Company’s
existing compensation plans or programs or to create any limitations on the
Board’s power or authority to modify or adopt compensation arrangements as the
Board may from time to time deem necessary or desirable.

 4
 

 

8.                                       Plan
Amendment, Modification and Termination. 
The Board may suspend or terminate this Plan at any time.  The Board may amend this Plan from time to
time in such respects as the Board may deem advisable in order that this Plan
will conform to any change in applicable laws or regulations or in any other
respect that the Board may deem to be in the Company’s best interests.  If there is a termination of the Plan with
respect to all Participants, the Board shall have the right, in its sole
discretion, and notwithstanding any elections made by the Participant, to amend
the Plan to immediately pay all benefits in a lump sum following such Plan
termination, to the extent permissible under Section 409A of the Internal
Revenue Code.

9.                                       Effective
Date and Duration of the Plan.  This
Plan shall become effective as of the date the Board approves this Plan and
will continue until the earlier to occur of (i) the termination of the Plan by
Board or (ii) the tenth anniversary of the date of approval of this Plan by the
Board.

10.                                 Participants
Are General Creditors of the Company. 
The Participating Directors and beneficiaries thereof shall be general,
unsecured creditors of the Company with respect to any payments to be made
pursuant to this Plan and shall not have any preferred interest by way of
trust, escrow, lien or otherwise in any specific assets of the Company.  Although the Company expects to set aside
monies or other assets to meet its obligations hereunder (there being no
obligation to do so), the same shall, nevertheless, be regarded as a part of
the general assets of the Company subject to the claims of its general
creditors, and neither any Participating Director nor any beneficiary thereof
shall have a legal, beneficial or security interest therein.

11.                                 Change
of Control.  “Change of Control”
means any one of the following events:

(a)                                  The
acquisition by any person, entity or “group”, within the meaning of Section
13(d)(3) or 14(d)(2) the Exchange Act, other than The Hormel Foundation, the Company
or any of its wholly owned subsidiaries, or any employee benefit plan of the
Company and/or any of its wholly owned subsidiaries, of beneficial ownership
(within the meaning of Rule 13d 3 promulgated under the Exchange Act) of 20% or
more of either the then outstanding shares of Common Stock or the combined
voting power of the Company’s then outstanding voting securities in a
transaction or series of transactions not approved in advance by a vote of at
least three quarters of the Continuing Directors (as defined below); or

(b)                                 Individuals
who, as of the effective date of the Plan, constitute the Board of Directors of
the Company (the “Continuing Directors”) cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a director
subsequent to the effective date of the Plan whose election, or nomination for
election by the Company’s stockholders, was approved in advance by a vote of at
least three quarters of the Continuing Directors (other than a nomination of an
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 the
directors of the Company or other actual or threatened solicitation of proxies
or consents by or on behalf of a person, entity or “group” within the meaning
of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, other than the
Board) shall be, for purposes of this Plan, considered as a Continuing
Director; or

 5
 

 

(c)                                  Approval
by the stockholders of the Company of a reorganization, merger, consolidation,
liquidation or dissolution of the Company or of the sale (in one transaction or
a series of related transactions) of all or substantially all of the assets of
the Company other than a reorganization, merger, consolidation, liquidation,
dissolution or sale approved in advance by three quarters of the Continuing
Directors; or

(d)                                 The
first purchase under any tender offer or exchange offer (other than an offer by
the Company or any of its wholly owned subsidiaries) pursuant to which shares
of Common Stock are purchased.

12.                                 Miscellaneous.

12.1.                        Securities
Law and Other Restrictions. 
Notwithstanding any other provision of this Plan or any Deferral
Election or Amended Election delivered pursuant to this Plan, the Company will
not be required to issue any shares of Common Stock under this Plan and a
Participating Director may not sell, assign, transfer or otherwise dispose of
shares of Common Stock issued pursuant to this Plan, unless (a) there is in
effect with respect to such shares a registration statement under the
Securities Act of 1933, as amended (the “Securities Act”) and any applicable
state securities laws or an exemption from such registration under the
Securities Act and applicable state securities laws and (b) there has been
obtained any other consent, approval or permit from any other regulatory body
that the Committee, in its sole discretion, deems necessary or advisable.  The Company may condition such issuance, sale
or transfer upon the receipt of any representations or agreements from the
parties involved, and the placement of any legends on certificates representing
shares of Common Stock, as may be deemed necessary or advisable by the Company,
in order to comply with such securities law or other restriction.

12.2.                        Governing
Law.  The validity, construction,
interpretation, administration and effect of this Plan and any rules,
regulations and actions relating to this Plan will be governed by and construed
exclusively in accordance with the internal laws (without regard to conflict of
laws principles) of the State of Delaware.

 6

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