Document:

Dear Kerry: 

        We
have received your notice of retirement dated September 25, 2009. 

        We acknowledge
that in choosing the date of your retirement, in addition to your own personal planning,
you have taken into consideration the company’s long-standing succession plans, the
Board’s wishes regarding the pacing of those plans, and the coordination of
implementation with the Company’s strategic goals. This has resulted in some personal
financial sacrifice. 

        In
recognition of the above, the Board has determined to pay you, in addition to any benefits
accruing by reason of voluntary retirement under the Agreement dated January 1, 2009 (the
“Officer’s Agreement”), a retirement bonus award in the amount of
$1,270,000. This sum will be paid (net of all necessary withholding) on October 9, 2009. 

        In
partial consideration for the foregoing award, you agree to provide, as and when
requested, continued support and cooperation in the management transition necessitated by
your retirement. We agree that such support and cooperation in a general way will
constitute “consultation” under Section 3.1 of the Officer’s Agreement, and
that the above described retirement bonus award is an agreeable “fee” for such
services; but we agree further that if specific services requested by the Company should
in the future require substantial time or effort on your part, the general terms of
Section 3.1 regarding “such reasonable terms as to notice, time, place, fee and
duration of consultation” shall govern. 

        We
mutually confirm all the other terms of the Officer’s Agreement concerning the terms
and conditions of your retirement. 

        If
this letter is consistent with your understanding of the agreement we have reached on this
subject, please confirm by your signature below. 

        On
behalf of the stockholders, employees and all other constituents of Ladish, we thank you
for your many years of loyal service and wish you happiness in your retirement. 

	 	Sincerely,
	 	
LADISH CO., INC.

By: /s/ Wayne E. Larsen                                     

        AGREED this 25th day of September, 2009.

	 	/s/ K. L. Woody                                                    
	 	Kerry L. WoodyExhibit 10-E to Donaldson Company, Inc. Form 10-K for fiscal year ended July 31, 2009

Exhibit 10-D

 

DONALDSON COMPANY, INC.

ESOP RESTORATION PLAN

(2003 Restatement) 

 

As Amended and Restated Effective as of August 1, 2003

 

 

DONALDSON COMPANY, INC.

ESOP RESTORATION PLAN

(2003 Restatement) 

 

TABLE OF CONTENTS

 

Page     

 

	
SECTION 1. 
 	
ESTABLISHMENT AND PURPOSE
 	
1
 
	
 
 	
 
 	
 
 	
 
 
	
 
 	
1.1.
 	
Establishment
 	
 
 
	
 
 	
1.2.
 	
Purpose
 	
 
 
	
 
 	
 
 	
 
 	
 
 
	
SECTION 2.
 	
DEFINITIONS
 	
1
 
	
 
 	
 
 	
 
 	
 
 
	
 
 	
2.1.
 	
Account
 	
 
 
	
 
 	
2.2.
 	
Affiliate
 	
 
 
	
 
 	
2.3.
 	
Beneficiary
 	
 
 
	
 
 	
2.4.
 	
Board
 	
 
 
	
 
 	
2.5.
 	
Change of Control
 	
 
 
	
 
 	
 
 	
2.5.1.
 	
Affiliate
 	
 
 
	
 
 	
 
 	
2.5.2.
 	
Beneficial Owner
 	
 
 
	
 
 	
 
 	
2.5.3.
 	
Exchange Act
 	
 
 
	
 
 	
 
 	
2.5.4.
 	
Person
 	
 
 
	
 
 	
2.6.
 	
Code
 	
 
 
	
 
 	
2.7.
 	
Committee
 	
 
 
	
 
 	
2.8.
 	
Company
 	
 
 
	
 
 	
2.9.
 	
Disability, Disabled
 	
 
 
	
 
 	
2.10. 
 	
Effective Date
 	
 
 
	
 
 	
2.11. 
 	
Eligible Employee
 	
 
 
	
 
 	
2.12. 
 	
ERISA
 	
 
 
	
 
 	
2.13. 
 	
ESOP
 	
 
 
	
 
 	
2.14. 
 	
Participant
 	
 
 
	
 
 	
2.15. 
 	
Plan
 	
 
 
	
 
 	
2.16. 
 	
Stock Units
 	
 
 
	
 
 	
2.17. 
 	
Termination of Employment
 	
 
 
	
 
 	
2.18. 
 	
Vested
 	
 
 
	
 
 	
 
 	
 
 	
 
 
	
SECTION 3.
 	
PARTICIPATION
 	
4
 
	
 
 	
 
 	
 
 	
 
 
	
 
 	
3.1.
 	
Participation
 	
 
 
	
 
 	
3.2.
 	
Termination of Participation
 	
 
 
	
 
 	
3.3.
 	
Overriding Exclusion
 	
 
 
	
 
 	
 
 	
 
 	
 
 

 

 

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SECTION 4.
 	
STOCK UNITS
 	
5
 
	
 
 	
 
 	
 
 	
 
 
	
 
 	
4.1.
 	
Stock Units
 	
 
 
	
 
 	
4.2.
 	
Adjustment
 	
 
 
	
 
 	
4.3.
 	
Dividend Units
 	
 
 
	
 
 	
4.4.
 	
Vesting
 	
 
 
	
 
 	
 
 	
 
 	
 
 
	
SECTION 5.
 	
TIME AND MANNER OF PAYMENTS
 	
6
 
	
 
 	
 
 	
 
 	
 
 
	
 
 	
5.1.
 	
Time of Payment
 	
 
 
	
 
 	
5.2.
 	
Manner of Payment
 	
 
 
	
 
 	
5.3.
 	
Changes in Time and Manner of Payment
 	
 
 
	
 
 	
5.4.
 	
Change in Control Distributions
 	
 
 
	
 
 	
5.5.
 	
Acceleration of Payments
 	
 
 
	
 
 	
 
 	
5.5.1. 
 	
When Available
 	
 
 
	
 
 	
 
 	
5.5.2. 
 	
Forfeiture
 	
 
 
	
 
 	
5.6.
 	
Death Benefit
 	
 
 
	
 
 	
5.7.
 	
Beneficiary Designation
 	
 
 
	
 
 	
 
 	
 
 	
 
 
	
SECTION 6.
 	
STOCK UNIT ACCOUNT
 	
8
 
	
 
 	
 
 	
 
 	
 
 
	
 
 	
6.1.
 	
Participant Accounts
 	
 
 
	
 
 	
6.2.
 	
Charges Against Accounts
 	
 
 
	
 
 	
 
 	
 
 	
 
 
	
SECTION 7.
 	
FUNDING
 	
8
 
	
 
 	
 
 	
 
 	
 
 
	
 
 	
7.1.
 	
Funding
 	
 
 
	
 
 	
7.2.
 	
Corporate Obligation
 	
 
 
	
 
 	
 
 	
 
 	
 
 
	
SECTION 8.
 	
FORFEITURE OF BENEFITS
 	
8
 
	
 
 	
 
 	
 
 	
 
 
	
SECTION 9.
 	
ADMINISTRATION
 	
9
 
	
 
 	
 
 	
 
 	
 
 
	
 
 	
9.1.
 	
Authority
 	
 
 
	
 
 	
9.2.
 	
Liability
 	
 
 
	
 
 	
9.3.
 	
Procedures
 	
 
 
	
 
 	
9.4.
 	
Claim for Benefits
 	
 
 
	
 
 	
9.5.
 	
Claims Procedure
 	
 
 
	
 
 	
 
 	
9.5.1. 
 	
Original Claim
 	
 
 
	
 
 	
 
 	
9.5.2. 
 	
Claims Review Procedure
 	
 
 
	
 
 	
 
 	
9.5.3. 
 	
General Rules
 	
 
 
	
 
 	
9.6.
 	
Payments upon Imposition of Federal or State Taxes
 	
 
 
	
 
 	
9.7.
 	
Legal Fees
 	
 
 
	
 
 	
9.8.
 	
Errors in Computations
 	
 
 
	
 
 	
 
 	
 
 	
 
 

 

 

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SECTION 10.
 	
MISCELLANEOUS
 	
12
 
	
 
 	
 
 	
 
 	
 
 
	
 
 	
10.1. 
 	
Not an Employment Contract
 	
 
 
	
 
 	
10.2. 
 	
Nontransferability
 	
 
 
	
 
 	
10.3. 
 	
Tax Withholding
 	
 
 
	
 
 	
10.4. 
 	
Expenses
 	
 
 
	
 
 	
10.5. 
 	
Governing Law
 	
 
 
	
 
 	
10.6. 
 	
Amendment and Termination
 	
 
 
	
 
 	
10.7. 
 	
Rules of Interpretation
 	
 
 
	
 
 	
 
 	
 
 	
 
 
	
APPENDIX A
 	
ESOP RESTORATION PLAN PARTICIPANTS
 	
A-1
 

 

 

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DONALDSON COMPANY, INC.

ESOP RESTORATION PLAN

(2003 Restatement)

 

SECTION 1

 

ESTABLISHMENT AND PURPOSE

 

1.1.      Establishment. Effective as of August 1, 1990, Donaldson Company, Inc. established a nonqualified, unfunded supplemental deferred compensation plan for a select group of highly compensated employees known as the “DONALDSON COMPANY, INC. ESOP RESTORATION PLAN.” Effective as of August 1, 2003, the Plan document is amended and restated to be as set forth herein.

 

1.2.      Purpose. The purposes of this Plan are to enable the Company to supplement the benefits for a select group of management or highly compensated employees under the Donaldson Company, Inc. Employee Stock Ownership Plan which will be reduced because of the compensation limitation under section 401(a)(17) of the Code; to provide a means whereby certain amounts payable by the Company to a select group of management or highly compensated employees may be deferred to some future period; and to attract and retain certain executive employees of outstanding competence.

 

SECTION 2

 

DEFINITIONS

 

The following words and phrases shall have the following meanings, unless a different meaning is plainly required by the context. Any masculine terminology used in the Plan shall also include the feminine gender and the definition of any terms in the singular shall also include the plural.

 

2.1.      Account— the bookkeeping account established under this Plan for a Participant pursuant to Section 6.1.

 

2.2.      Affiliate — a business entity which is under “common control” with the Company or which is a member of an “affiliated service group” that includes the Company, as those terms are defined in section 414(b), (c) and (m) of the Code. A business entity shall also be treated as an Affiliate if, and to the extent that, such treatment is required by regulations under section 414(o) of the Code. In addition to said required treatment, the Committee may, in its discretion, designate as an Affiliate any business entity which is not such a “common control” or “affiliated service group” business entity but which is otherwise affiliated with the Company, subject to such limitations as the Committee may impose.

 

2.3.      Beneficiary — any person or entity validly designated by the Participant in accordance with Section 5 to receive the benefits, if any, payable from the Participant’s Account after the Participant’s death. Designated persons or entities shall not be considered Beneficiaries until the death of the Participant.

 

 

2.4.      Board — the Board of Directors of the Company.

 

2.5.      Change Of Control— a “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

 

	
 
 	
(a)
 	
any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (c) below; or
 

 

	
 
 	
(b)
 	
the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or
election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or
 

 

	
 
 	
(c)
 	
there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any
parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 60% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; or
 

 

	
 
 	
(d)
 	
the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are
owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.
 

 

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Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions. Solely for purposes of this Section 2.5, the following words and phrases shall have the following meanings:

 

2.5.1.   Affiliate — an “affiliate” within the meaning of Rule 12b-2 promulgated under Section 12 of the Exchange Act.

 

2.5.2.   Beneficial Owner — a “beneficial owner” within the meaning of Rule 13d-3 under the Exchange Act.

 

2.5.3.   Exchange Act — the Securities Exchange Act of 1934, as amended from time to time.

 

2.5.4.   Person — a “person” within the meaning of Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

2.6.      Code — the Internal Revenue Code of 1986, including applicable regulations for the specified section of the Code. Any reference in this Plan Statement to a section of the Code, including the applicable regulation, shall be considered also to mean and refer to any subsequent amendment or replacement of that section or regulation.

 

2.7.      Committee — the Human Resources Committee of the Board of Directors of the Company.

 

2.8.      Company — Donaldson Company, Inc. and, except in determining under Section 2.5 hereof whether or not any Change in Control has occurred, shall include any successor by merger, purchase or otherwise.

 

2.9.      Disability, Disabled — a physical or mental impairment which constitutes total and permanent disability and during which the Eligible Employee is not receiving any payments of an Early Retirement Pension or a Vested Benefit under the Pension Plan, and the Eligible Employee either:

 

-3-

 

	
 
 	
(a)
 	
is eligible to receive long-term disability benefits under the Company’s separate long-term disability insurance plan (which program shall be administered on a uniform and nondiscriminatory basis); if such separate long-term disability coverage is elected by the Eligible Employee, or
 

 

	
 
 	
(b)
 	
is eligible to receive and is actually receiving (after the applicable waiting period) benefits under the federal Social Security Act as in effect at the time of the Disability.
 

 

2.10.    Effective Date — August 1, 1990, the original effective date of the Plan. The amended Plan document as set forth herein is effective as of August 1, 2003.

 

2.11.    Eligible Employee — an executive employee of the Company or its Affiliates.

 

2.12.    Erisa — the Employee Retirement Income Security Act of 1974, including applicable regulations for the specified section of ERISA. Any reference in this Plan to a section of ERISA, including the applicable regulation, shall be considered also to mean and refer to any subsequent amendment or replacement of that section or regulation.

 

2.13.    Esop — the tax-qualified, stock bonus plan known as the “Donaldson Company, Inc. Employee Stock Ownership Plan (1987 Restatement),” as amended from time to time.

 

2.14.    Participant — an Eligible Employee or a former Eligible Employee of the Company or its Affiliates who has any amount credited to his or her Account in this Plan.

 

2.15.    Plan — the Donaldson Company, Inc. ESOP Restoration Plan as set forth herein, and as the same may be amended from time to time.

 

2.16.    Stock units — the units (previously referred to as “Performance Units”) credited to a Participant’s Account as provided in Section 4.1.

 

2.17.    Termination of Employment — the complete severance of an employee’s employment relationship with the Company and all Affiliates, if any, for any reason other than the employee’s death or Disability.

 

	
2.18.
 	
Vested — nonforfeitable.
 

 

SECTION 3

 

PARTICIPATION

 

3.1.      Participation. Participation in the Plan on and after August 1, 2003 shall be limited to the persons listed on Appendix A.

 

3.2.      Termination of participation. A person shall cease to be a Participant as soon as all amounts credited to the Participant’s Account have been paid in full.

 

-4-

 

 

3.3.      Overriding exclusion. Notwithstanding anything apparently to the contrary in this Plan or in any written communication, summary, resolution or document or oral communication, no individual shall be a Participant in this Plan, develop benefits under this Plan or be entitled to receive benefits under this Plan (either for the employee or his or her 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 Plan at any time. If any person not so defined has been erroneously treated as a Participant in this Plan, 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 Company for all amounts erroneously paid to him or her.

 

SECTION 4

 

STOCK UNITS

 

4.1.      Stock units. The number of Stock Units credited to a Participant’s Account shall equal the number credited as of that date under the terms of this Plan then in effect, subject to any:

 

	
 
 	
(a)
 	
adjustment pursuant to Section 4.2;
 

 

	
 
 	
(b)
 	
increase pursuant to Section 4.3; or
 

 

	
 
 	
(c)
 	
reduction due to payments made, as provided in Section 6.2.
 

 

4.2.      Adjustment. In the event of any change in the outstanding shares of common stock of the Company by reason of any stock split or stock dividend in the form of a split, the Committee shall adjust the number of Stock Units in a Participant’s Account so that such number equals the number of Stock Units in the Account prior to the event, multiplied by a fraction, the denominator of which is the number of Stock Units in the Account prior to the event, and the numerator of which is the number of shares of Common Stock the Participant would have had after the event if the Participant had shares of Common Stock immediately prior to the event equal in number to the number of Stock Units in the Participant’s Account immediately prior to the event. In the event of any dividend (other than a stock dividend in the form of a
split), recapitalization, merger, consolidation, spinoff, reorganization, combination or exchange of shares or other similar corporate change, then if the Committee, or the board of directors of a successor corporation, shall determine, in its sole discretion, that such change equitably requires an adjustment in the number of Stock Units then held in the Participant’s Account, such adjustment shall be made by the Committee or said board and shall be conclusive and binding for all purposes of the Plan.

 

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4.3.      Dividend Units. The number of Stock Units in a Participant’s Account shall be automatically increased as of each Common Stock dividend payment date in an amount equal to the number of shares of Common Stock that could be purchased on such dividend payment date with the cash dividends that would be paid on a number of shares of Common Stock equal to the number of Stock Units in the Participant’s Account on the record date for such dividend.

 

4.4.      Vesting. Subject to the forfeiture provisions of Section 8, the Accounts of all Participants shall be 100% Vested at all times.

 

SECTION 5

 

TIME AND MANNER OF PAYMENTS

 

5.1.      Time of payment. Payment of a Participant’s Account under the Plan will commence as soon as administratively feasible (but no more than twenty (20) days) following the occurrence of the earliest of the following events:

 

	
 
 	
(a)
 	
death,
 

 

	
 
 	
(b)
 	
Disability, or
 

 

	
 
 	
(c)
 	
the date of distribution selected by the Participant in writing at a time and on a form prescribed by the Committee.
 

 

Payment of a Participant’s Account may not begin prior to the Participant’s Termination of Employment.

 

5.2.      Manner of Payment. A Participant’s Account will be paid to the Participant in either a single lump-sum payment or in annual installments of not more than twenty (20) years. The Participant must elect a manner of payment at the time the Participant elects his or her date of distribution pursuant to Section 5.1(c). In the event no election was made by the Participant, payment shall be in a single lump-sum. Payment to the Participant shall be made, net of withholding taxes, exclusively in shares of Common Stock, one share for each Stock Unit distributed. For purposes of determining any tax withholding on a payment, the value of Common Stock will be the market price of such Common Stock as of the close of business on the day prior to the date as of which the payment is made.

 

5.3.      Changes in Time and Manner of Payment. Notwithstanding the foregoing, a Participant may make a new election concerning selection of the time and form of payment authorized pursuant to this Section 5 (the “New Election”) in accordance with the following terms and conditions, unless waived or modified by the Committee:

 

	
 
 	
(a)
 	
A New Election shall only be permitted once and must be made and become effective as hereinafter provided, if at all, prior to the Participant’s Termination of Employment, death or Disability, whichever happens first;
 

 

-6-

 

	
 
 	
(b)
 	
A New Election shall become effective twelve months after it is received by the Company; and
 

 

	
 
 	
(c)
 	
If any of the events set forth in Section 5.1 of the Plan occur prior to the effective date of a New Election with respect to previously credited deferrals, then payments shall be paid hereunder to or with respect to the Participant according to the elections in effect at the time of the event.
 

 

5.4.      Change in Control Distributions. Notwithstanding any other provision of this Section 5, a Participant or Beneficiary will receive a distribution of his or her entire Account if a Change in Control occurs. Distribution of the entire Account shall be made on the date of the Change in Control. Such distribution shall be made in a single lump-sum cash payment.

 

5.5.      Acceleration of Payments.

 

5.5.1.   When Available. A Participant or Beneficiary whose Termination of Employment has occurred may receive an accelerated payment of his or her entire Account (after reduction for the forfeiture described in Section 5.5.2). To receive such an accelerated payment, the Participant or Beneficiary must file a written payment application with the Committee. Payment of the accelerated payment (after reduction for the forfeiture described in Section 5.5.2) shall be made as soon as administratively feasible (but no more than twenty (20) days) following the approval of a completed application by the Committee. Such accelerated payment shall be made in a lump-sum stock distribution. The amount of the accelerated payment shall be equal to the value of the Account as of such distribution date (after reduction for the forfeiture described below).

 

5.5.2.   Forfeiture. Upon the approval of an accelerated payment, there shall be irrevocably forfeited from the Account of the Participant or Beneficiary an amount equal to ten percent (10%) of the Account.

 

5.6.      Death Benefit. In the event of a Participant’s death, the Company shall pay the amount of the Participant’s Account as of the date of death (as adjusted from time to time pursuant to Section 6.2) in a lump-sum or in installments, as previously elected by the Participant, to the Participant’s designated Beneficiary as soon as administratively feasible. In the event no election was made by the Participant, payment shall be in a single lump-sum stock distribution (and cash for fractional shares).

 

5.7.       Beneficiary Designation. A Participant shall submit to the Company upon initial designation as an Eligible Employee in the Plan, and at such other times as the Participant desires, on a form provided by the Committee, a written designation of the beneficiary or beneficiaries to whom payment of the Participant’s Account under the Plan shall be made in the event of the Participant’s death. Beneficiary designations shall become effective only when received by the Company. Beneficiary designations first received by the Company after the Participant’s death, and any designations in effect at the time a valid subsequent designation is received by the Company, shall be invalid and have no effect. If a Participant has not designated a Beneficiary, or if no designated Beneficiary is living on the date of
distribution, the Participant’s Account shall be distributed to those persons entitled to receive the Participant’s benefit under the Donaldson Company, Inc. Salaried Employees’ Pension Plan (1997 Restatement), as amended from time to time.

 

-7-

 

SECTION 6

 

STOCK UNIT ACCOUNT

 

6.1.      Participant Accounts. The Committee shall cause a bookkeeping account to be kept in the name of each Participant which shall reflect the Stock Units credited to a Participant.

 

6.2.      Charges Against Accounts. There shall be charged against each Participant’s bookkeeping account any payments made to the Participant or the Participant’s Beneficiary in accordance with Section 5.

 

SECTION 7

 

FUNDING

 

7.1.      Funding. The Company and its Affiliates shall be responsible for paying all benefits due hereunder. For the purpose of facilitating the payment of benefits due hereunder, the Company may (but shall not be required to) establish and maintain a grantor trust pursuant to an Agreement between the Company and a trustee selected by the Company; provided, however, that any such grantor trust must be structured so that it does not result in any federal income tax consequences to any Participant until distributions under Section 5 are actually received. The Company may contribute to a grantor trust thereby created such amounts as it may from time to time determine.

 

7.2.      Corporate Obligation. Neither the officers nor any member of the Board of Directors of the Company or any of its Affiliates 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 any Participant. Each Participant and other person entitled at anytime to payments hereunder shall look solely to the assets of the Company and its Affiliates for such payments as an unsecured, general creditor. Nothing herein shall be construed to give a Participant, Beneficiary or any other person or persons any right, title, interest or claim in or to any specific asset, fund, reserve, account or property of any kind whatsoever owned by the Company or in which it may have any right, title or interest now or in the future. After benefits shall have been paid to or with
respect to a Participant and such payment purports to cover in full the benefit hereunder, such former Participant or other person or persons, as the case may be, shall have no further right or interest in the other assets of the Company and its Affiliates in connection with this Plan.

 

SECTION 8

 

FORFEITURE OF BENEFITS

 

All unpaid benefits under this Plan shall be permanently forfeited if the Participant is discharged from employment with the Company for cause, or if the Committee determines that the Participant:

 

-8-

 

	
 
 	
(a)
 	
engaged in competition with the Company during, or within two years following, his termination of employment with the Company; or
 

 

	
 
 	
(b)
 	
performed acts of willful malfeasance or gross negligence in a matter of material importance to the Company.
 

 

SECTION 9

 

ADMINISTRATION

 

9.1.      Authority. The Plan shall be administered by the Committee, which shall have full discretionary power and authority to administer and interpret the Plan and to determine all factual and legal questions under the Plan, including but not limited to the entitlement of Participants and Beneficiaries, and the amount of their respective interests.

 

9.2.      Liability. No member of the Committee and no director or member of the management of the Company or its Affiliates shall be liable to any persons for any actions taken under the Plan, or for any failure to effect any of the objective or purposes of the Plan, by reason of insolvency or otherwise.

 

9.3.      Procedures. The Committee may from time to time adopt such rules and procedures as it deems appropriate to assist in the administration of the Plan.

 

9.4.      Claim for benefits. No employee or other person shall have any claim or right to payment of any amount hereunder until payment has been authorized and directed by the Committee.

 

9.5.      Claims Procedure. Until modified by the Committee, the claims procedure set forth in this Section 9.5 shall be the claims procedure for the resolution of disputes and disposition of claims arising under the Plan.

 

9.5.1.   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 Committee a written claim for benefits under the Plan. Within ninety (90) days after the filing of such a claim, the 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 (180) 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 Committee shall state in writing:

 

	
 
 	
(a)
 	
the specific reasons for the denial,
 

 

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

 

-9-

 

	
 
 	
(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.
 

 

9.5.2.   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 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 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 (120) from the date the request for review was filed) to reach a decision on the request for review.

 

	
 
 	
9.5.3.
 	
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 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 Committee upon request.
 

 

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

 

	
 
 	
(c)
 	
The 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 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 Committee on an original claim or 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 this Plan Statement and all other pertinent documents in the possession of the Company and its Affiliates.
 

 

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9.6.      Payments Upon Imposition of Federal or State Taxes. If any Participant is determined to be subject to federal or state income tax on any amount accrued on his or her behalf under this Plan prior to the time of payment hereunder, federal or state taxes attributable to the amount determined to be so taxable shall be distributed by the Plan to such Participant. An amount accrued on his or her behalf under this Plan shall be determined to be subject to federal income tax upon the earliest of:

 

	
 
 	
(i)
 	
a final determination by the United States Internal Revenue Service addressed to the Participant which is not appealed to the courts;
 

 

	
 
 	
(ii)
 	
a final determination by the United States Tax Court or any other Federal Court affirming any such determination by the Internal Revenue Service; or
 

 

	
 
 	
(iii)
 	
an opinion by the Tax Counsel of the Company, addressed to the Company that, by reason of Treasury Regulations, amendments to the Internal Revenue Code, published Internal Revenue Service rulings, court decisions or other substantial precedent, amounts accrued on a Participant’s behalf hereunder are subject to federal or state income tax prior to payment.
 

 

The Company shall undertake at its sole expense to defend any tax claims described herein which are asserted by the Internal Revenue Service or by any state revenue authority against any Participant, including attorney fees and costs of appeal, and shall have the sole authority to determine whether or not to appeal any determination made by the Internal Revenue Service, by any state revenue authority or by a lower court. The Company also agrees to reimburse any Participant for any interest or penalties in respect of federal or state tax claims hereunder upon receipt of documentation of same.

 

9.7.      Legal Fees. If the Company does not pay the benefits required under the terms of the Plan for reasons other than the insolvency of the Company, the Company agrees to reimburse any Participant for all legal fees incurred in enforcing his or her claim to benefits under the Plan.

 

9.8.      Errors in Computations. The Committee shall not be liable or responsible for any error in the computation of any benefit payable to or with respect to any Participant resulting from any misstatement of fact made by the Participant or by or on behalf of any Beneficiary to whom such benefit shall be payable, directly or indirectly, to the Committee, and used by the Committee in determining the benefit. The Committee shall not be obligated or required to increase the benefit payable to or with respect to 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 or any other reason shall be reduced to the amount appropriate in view of the truth (and to
recover any prior overpayment).

 

 

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SECTION 10

 

MISCELLANEOUS

 

10.1.    Not an Employment Contract. This Plan is not and shall not be deemed to constitute a contract of employment between the Company and any employee or other person, nor shall anything herein contained be deemed to give any employee or other person any right to be retained in the Company’s employ or in any way limit or restrict the Company’s right or power to discharge any employee or other person at any time and to treat him without regard to the effect which such treatment might have upon the employee as a Participant in the Plan.

 

10.2.    Nontransferability. A Participant’s rights and interest under the Plan, including amounts payable, may not be assigned, alienated, pledged or transferred except, in the event of a Participant’s death to his Beneficiary. No benefit payable under this Plan shall be subject to attachment, garnishment, execution following judgment or other legal process before actual payment to the Participant or Beneficiary.

 

10.3.    Tax Withholding. The Company shall withhold the amount of any federal, state or local income tax or other tax required to be withheld by the Company under applicable law with respect to any amount payable under the Plan. Any cash payable in lieu of fractional shares shall be applied to the payment of tax withholding. The Participant shall not be liable for any tax withholding.

 

10.4.    Expenses. All expenses of administering the Plan shall be borne by the Company.

 

10.5.    Governing Law. Except to the extent that federal law is controlling, the Plan shall be construed and enforced in accordance with and governed by the laws of the State of Minnesota.

 

10.6.    Amendment and Termination. The Company reserves the power to unilaterally amend this Plan at any time, either prospectively or retroactively or both by action of the Committee (with the written concurrence of the Chief Executive Officer of the Company). The Committee may likewise terminate or curtail the benefits of this Plan 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 the Committee may not amend or terminate the Plan with respect to benefits that have accrued and are Vested pursuant to Section 4 in any manner that reduces the amount of such benefits or alters the effect of any participant election previously filed with the Company. No modification of the terms of this Plan shall be effective unless it is in writing
and signed on behalf of the Company by a person authorized to execute such writing. No oral representation concerning the interpretation or effect of this Plan shall be effective to amend the Plan.

 

10.7.    Rules of Interpretation. The titles given to the various sections of this Plan are inserted for convenience of reference only and are not part of this Plan, and they shall not be considered in determining the purpose, meaning or intent of any provision hereof. This Plan shall be construed and this Plan shall be administered to create an unfunded plan providing deferred compensation to a select group of management or highly compensated employees so that it is exempt from the requirements of Parts 2, 3 and 4 of Title I of ERISA and qualifies for a form of simplified, alternative compliance with the reporting and disclosure requirements of Part 1 of Title I of ERISA.

 

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