Document:

Exhibit 10.27

Exhibit 10.27

WOODWARD GOVERNOR COMPANY

EXECUTIVE BENEFIT PLAN

(Amended and Restated November 18, 2010)

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 	 	 	 
	I PURPOSE AND EFFECTIVE DATE
	 	 	1	 
	1.1. Purpose
	 	 	1	 
	1.2. Effective Date
	 	 	1	 
	1.3. History
	 	 	1	 
	1.4. Code Section 409A
	 	 	1	 
	II DEFINITIONS
	 	 	2	 
	2.1. “Account”
	 	 	2	 
	2.2. “Administrator”
	 	 	2	 
	2.3. “Affiliate”
	 	 	2	 
	2.4. “Base Salary”
	 	 	2	 
	2.5. “Beneficiary”
	 	 	2	 
	2.6. “Board”
	 	 	3	 
	2.7. “Bonus”
	 	 	3	 
	2.8. “Change in Control”
	 	 	3	 
	2.9. “Code”
	 	 	5	 
	2.10. “Company”
	 	 	5	 
	2.11. “Deferral Contribution Amounts”
	 	 	5	 
	2.12. “Deferral Election”
	 	 	5	 
	2.13. “Disability”
	 	 	5	 
	2.14. “Distribution Election”
	 	 	5	 
	2.15. “Early Retirement Date”
	 	 	5	 
	2.16. “Election Period”
	 	 	6	 
	2.17. “Eligible Member”
	 	 	6	 
	2.18. “Exchange Act”
	 	 	6	 
	2.19. “FICA”
	 	 	6	 
	2.20. “Investment Fund or Funds”
	 	 	6	 
	2.21. “Normal Retirement Date”
	 	 	6	 
	2.22. “Participant”
	 	 	6	 
	2.23. “Plan”
	 	 	7	 
	2.24. “Plan Year”
	 	 	7	 

 

-i-

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	Page	 
	 	 	 	 
	2.25. “Prior Account Balance”
	 	 	7	 
	2.26. “Retirement”
	 	 	7	 
	2.27. “Separation from Service”
	 	 	7	 
	2.28. “Specified Employee”
	 	 	8	 
	2.29. “Supplemental Benefit Amount”
	 	 	8	 
	2.30. “Valuation Date”
	 	 	8	 
	III PARTICIPATION
	 	 	8	 
	3.1. Participation
	 	 	8	 
	3.2. ERISA Exemption
	 	 	8	 
	IV DEFERRAL CONTRIBUTION AMOUNTS
	 	 	9	 
	4.1. Permissible Deferrals under the Plan
	 	 	9	 
	4.2. Deferral Elections
	 	 	9	 
	4.3. Crediting of Deferral Elections
	 	 	11	 
	4.4. Vesting
	 	 	11	 
	4.5. Deferred Contribution Amounts Subject to FICA at Time of Deferral
	 	 	11	 
	V SUPPLEMENTAL BENEFIT AMOUNT
	 	 	11	 
	5.1. Computation of Supplemental Benefit Amount
	 	 	11	 
	5.2. Vesting
	 	 	12	 
	5.3. Crediting of Supplemental Benefit Amount
	 	 	12	 
	5.4. Distribution Elections
	 	 	12	 
	VI ACCOUNTS AND INVESTMENTS
	 	 	12	 
	6.1. Valuation of Accounts
	 	 	12	 
	6.2. Hypothetical Investment Funds
	 	 	13	 
	6.3. Crediting of Investment Return
	 	 	14	 
	6.4. Changing Investment Fund Options
	 	 	14	 
	6.5. Investment Alternatives After Death
	 	 	14	 
	VII PAYMENT OF BENEFITS
	 	 	14	 
	7.1. Distribution at Specific Future Date
	 	 	14	 
	7.2. Distribution Upon Retirement or Disability
	 	 	15	 
	7.3. Distribution On Other Termination of Employment
	 	 	16	 

 

-ii-

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	Page	 
	 	 	 	 
	7.4. Unforeseeable Emergency
	 	 	16	 
	7.5. Time and Form of Elections
	 	 	17	 
	7.6. Form of Payment and Withholding
	 	 	17	 
	7.7. Exception for Specified Employees
	 	 	17	 
	7.8. Timing of Payments
	 	 	17	 
	VIII DEATH BENEFITS
	 	 	18	 
	8.1. Death Prior to Commencement of Benefits
	 	 	18	 
	8.2. Death After Commencement of Benefits
	 	 	18	 
	IX ADMINISTRATION
	 	 	18	 
	9.1. Authority of Administrator
	 	 	18	 
	9.2. Participant’s Duty to Furnish Information
	 	 	18	 
	9.3. Interested Member of Administrator
	 	 	19	 
	9.4. Indemnification
	 	 	19	 
	9.5. Claims Procedure
	 	 	19	 
	X AMENDMENT AND TERMINATION
	 	 	20	 
	XI MISCELLANEOUS
	 	 	20	 
	11.1. No Implied Rights; Rights on Termination of Service
	 	 	20	 
	11.2. No Employment Rights
	 	 	20	 
	11.3. Nature of the Plan
	 	 	20	 
	11.4. Nontransferability
	 	 	21	 
	11.5. Successors and Assigns
	 	 	21	 
	11.6. Payment with Respect to Incapacitated Persons
	 	 	22	 
	11.7. Arbitration
	 	 	22	 
	11.8. Gender and Number
	 	 	22	 
	11.9. Headings
	 	 	22	 
	11.10. Severability
	 	 	22	 
	11.11. Effect on Other Employee Benefit Plans
	 	 	22	 
	11.12. Non-U.S
	 	 	23	 
	11.13. Applicable Law
	 	 	23	 

 

-iii-

 

WOODWARD GOVERNOR COMPANY

EXECUTIVE BENEFIT PLAN

I PURPOSE AND EFFECTIVE DATE.

	 	1.1.	 	Purpose. The Woodward Governor Company Executive Benefit Plan has been
established by Woodward Governor Company to attract and retain certain key members by:

	 	(a)	 	providing a tax-deferred capital accumulation vehicle to
supplement such members’ individual retirement contributions, thereby
encouraging savings for retirement, and

	 	(b)	 	supplementing such members’ retirement income available under
the Woodward Governor Company Retirement Savings Plan (the “RSP”), which is
otherwise limited pursuant to the rules and regulations of the Internal Revenue
Code of 1986, as amended (the “Code”).

	 	1.2.	 	Effective Date. The Plan was originally effective January 1, 2001 and
was subsequently amended and restated effective January 1, 2007. The Plan is hereby
amended and restated November 18, 2010, effective as of January 1, 2009. The Plan
shall remain in effect until terminated in accordance with Article X.

	 	1.3.	 	History. The Woodward Governor Company Amended and Restated Unfunded
Deferred Compensation Plan No. 1 (the “DC Plan No. 1”) and the Woodward Governor
Company Unfunded Deferred Compensation Plan No. 2 (the “DC Plan No. 2) were merged with
and into this Plan effective January 1, 2001. The Plan is intended to be an amendment,
restatement and continuation of such plans for periods following the merger date.

	 	1.4.	 	Code Section 409A. This Plan is intended to be a nonqualified deferred
compensation plan within the meaning of Section 409A of the Code. The provisions of
this Plan shall be interpreted, construed and administered in a manner necessary to
comply with the requirements of Code Section 409A and applicable regulations and other
guidance issued thereunder. Consistent with such rule of interpretation, this
amendment and restatement clarifies certain ambiguous Plan terms to reflect the
interpretation and administration of the Plan pursuant to such terms in compliance with
the requirements of Code Section 409A.

 

 

 

II DEFINITIONS.

When used in the Plan and initially capitalized, the following words and phrases
shall have the meanings indicated:

	 	2.1.	 	“Account” means the recordkeeping account established for each Participant in
the Plan for purposes of accounting for the amount of the Participant’s:

	 	(a)	 	Deferral Contribution Amounts deferred and credited in
accordance with Article IV each year, if any,

	 	(b)	 	Supplemental Benefit Amounts determined and credited in
accordance with Article V each year, if any, and

	 	(c)	 	account balance, if any, under the prior DC Plan No. 1 and/or
prior DC Plan No. 2 on the day immediately preceding the original effective
date of this Plan,

all adjusted periodically to reflect the hypothetical investment return on such
amounts in accordance with Article VI and distributions in accordance with Article
VII.

	 	2.2.	 	“Administrator” means the Compensation Committee of the Board or such other
individual or committee appointed and delegated by the Board to administer the Plan in
accordance with Article IX. To the extent so delegated, the term “Administrator”
hereunder shall be deemed to refer to such individual or committee. The Compensation
Committee shall take such actions it deems necessary or desirable to ensure that such
individual or committee has sufficient and appropriate authority for carrying out the
intent and purpose of the Plan.

	 	2.3.	 	“Affiliate” means any corporation, partnership, joint venture, trust,
association or other business enterprise which is a member of the same controlled group
of corporations, trades or businesses as the Company within the meaning of Code Section
414(b) or (c); provided, however, that for purposes only of the term “Affiliate” when
used in the definition of “Separation from Service” below, in applying Code Section
1563(a)(1), (2), and (3) in determining a controlled group of corporations under Code
Section 414(b), the language “at least 50 percent” shall be used instead of “at least
80 percent” each place it appears in Code Section 1563(a)(1), (2), and (3), and in
applying Treasury Reg. § 1.414(c)-2 for purposes of determining trades or businesses
(whether or not incorporated) that are under common control for purposes of Code
Section 414(c), “at least 50 percent” shall be used instead of “at least 80 percent”
each place it appears in Treasury Reg. § 1.414(c)-2.

	 	2.4.	 	“Base Salary” means a Participant’s base salary in effect for a given Plan Year
as reflected in the personnel records of the Company.

	 	2.5.	 	“Beneficiary” means the person or entity designated by the Participant to
receive the Participant’s Plan benefits in the event of the Participant’s death. If
the Participant does not designate a Beneficiary, or if the Participant’s designated
Beneficiary predeceases the Participant, the Participant’s estate shall be the
Beneficiary under the Plan.

 

2

 

	 	2.6.	 	“Board” means the Board of Directors of the Company.

	 	2.7.	 	“Bonus” means for a given Plan Year any incentive compensation awarded and
payable to a Participant in the Plan Year for performance over one or more fiscal-year
performance periods under the Woodward Governor Company Management Incentive Plan, the
Woodward Governor Company Long Term Incentive Plan, and/or any other bonus or incentive
compensation plan designated by the Administrator from time to time for inclusion
within this definition for deferral purposes.

	 	2.8.	 	“Change in Control” shall be deemed to have occurred if:

	 	(a)	 	any “person” (as defined in Section 13(d) and 14(d) of the
Exchange Act) (excluding for this purpose the Company or any subsidiary of the
Company, or any employee benefit plan of the Company or any subsidiary of the
Company, or any person or entity organized, appointed or established by the
Company for or pursuant to the terms of such plan which acquires beneficial
ownership of voting securities of the Company) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly
of securities of the Company representing fifteen percent (15%) or more of the
combined voting power of the Company’s then outstanding securities; provided,
however, that no Change in Control shall be deemed to have occurred:

	 	(i)	 	as the result of an acquisition of securities
of the Company by the Company which, by reducing the number of voting
securities outstanding, increases the direct or indirect beneficial
ownership interest of any person to fifteen percent (15%) or more of
the combined voting power of the Company’s then outstanding securities,
but any subsequent increase in the direct or indirect beneficial
ownership interest of such a person in the Company shall be deemed a
Change in Control; or

	 	(ii)	 	as a result of the acquisition directly from
the Company of securities of the Company representing less than fifty
percent (50%) of the voting power of the Company; or

	 	(iii)	 	if the Board determines in good faith that a
person who has become the beneficial owner directly or indirectly of
securities of the Company representing fifteen percent (15%) or more of
the combined voting power of the Company’s then outstanding securities
has inadvertently reached that level of ownership interest, and if such
person divests as promptly as practicable a sufficient amount of securities of the Company so that the person no
longer has a direct or indirect beneficial ownership interest in
fifteen percent (15%) or more of the combined voting power of the
Company’s then outstanding securities; or

 

3

 

	 	(b)	 	during any period of two (2) consecutive years (not including
any period prior to the original effective date (as set forth in Section 1.2
above) of the Plan), individuals who at the beginning of such two-year period
constitute the Board and any new director or directors (except for any director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in paragraph (a) above or paragraph (c) below)
whose election by the Board or nomination for election by the Company’s
shareholders was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so approved, cease
for any reason to constitute at least a majority of the Board (such individuals
and any such new directors being referred to as the “Incumbent Board”); or

	 	(c)	 	approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company; or

	 	(d)	 	consummation of:

	 	(i)	 	an agreement for the sale or disposition of the
Company or all or substantially all of the Company’s assets,

	 	(ii)	 	a plan of merger or consolidation of the
Company with any other corporation, or

	 	(iii)	 	a similar transaction or series of
transactions involving the Company (any transaction described in
subparagraphs (i) and (ii) of this paragraph (d) being referred to as a
“Business Combination”), in each case unless after such a Business
Combination:

	 	(a)	 	the shareholders of the Company
immediately prior to the Business Combination continue to own,
directly or indirectly, more than fifty-one percent (51%) of the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
new (or continued) entity (including, but not by way of
limitation, an entity which as a result of such transaction owns
the Company or all or substantially all of the Company’s former
assets either directly or through one or more subsidiaries)
immediately after such Business Combination, in substantially the same proportion as their
ownership in the Company immediately prior to such Business
Combination, and

 

4

 

	 	(b)	 	at least a majority of the
members of the board of directors of the entity resulting from
such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.

	 	2.9.	 	“Code” means the Internal Revenue Code of 1986, as amended.

	 	2.10.	 	“Company” means Woodward Governor Company and any successor thereto.

	 	2.11.	 	“Deferral Contribution Amounts” means the amounts of Base Salary and Bonus
deferred by a Participant, if any, and credited to his or her Account in accordance
with Article IV but such amounts specifically and expressly do not include any Prior
Account Balance of such Participant.

	 	2.12.	 	“Deferral Election” means the election made in writing (or any other format
approved by the Administrator) by an Eligible Member to defer such Eligible Member’s
Base Salary and/or Bonus otherwise payable for any given Plan Year in accordance with
Article IV.

	 	2.13.	 	“Disability” means that the Participant is, by reason of any medically
determinable physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than 12 months, receiving
disability benefits under the Company’s long-term disability plan for a period of not
less than three months. If a Participant does not participate in such a long term
disability plan, then Disability shall mean that the Participant is unable to engage in
any substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, as determined in the sole
discretion of the Administrator.

	 	2.14.	 	“Distribution Election” means the election made by a Participant in writing
(or any other format approved by the Administrator) for a Plan Year regarding the
timing and form of payment of his or her Deferral Contribution Amounts under Article IV
or Supplemental Benefit Amounts under Article V with respect to such Plan Year or,
where applicable, made under prior DC Plan No. 1 or prior DC Plan No. 2 in respect of
the timing and form of payment of his or her Prior Account Balance.

	 	2.15.	 	“Early Retirement Date” means the date on which any Participant incurs a
Separation from Service on or after he has attained age 55 but before he has attained
age 65.

 

5

 

	 	2.16.	 	“Election Period” means the period(s) specified by the Administrator during
which a Deferral Election may be made with respect to a Participant’s Base Salary
and/or Bonus otherwise payable for a Plan Year, or a Distribution Election may be made
with respect to payment of Deferred Compensation Amounts or Supplemental Benefit
Amounts credited for such Plan Year.

	 	2.17.	 	“Eligible Member” means a member of the Company or an Affiliate who has been
selected by the Administrator to participate in the Plan in accordance with Article
III.

	 	2.18.	 	“Exchange Act” means the Securities and Exchange Act of 1934.

	 	2.19.	 	“FICA” means the employment tax imposed on a member’s income under the Federal
Insurance Contributions Act (Chapter 21 of the Code) which is comprised of Old-Age,
Survivors and Disability Insurance and Hospital Insurance.

	 	2.20.	 	“Investment Fund or Funds” means the investment funds designated by the
Administrator as the basis for determining the hypothetical investment return to be
credited in accordance with Article VI to Participants’ Accounts. As of the effective
date of this amendment and restatement of the Plan, the Investment Funds shall mirror
the investment funds available under the RSP, including the investment in Woodward
Governor Company Common Stock under the Company Stock Component under the RSP. The
Administrator, in its sole discretion, may change the Investment Funds at such times as
it deems appropriate. Any Investment Fund alternatives that are different than those
offered under the RSP shall be described in an Appendix to the Plan.

	 	2.21.	 	“Normal Retirement Date” means the date on which any Plan Participant incurs a
Separation from Service on or after he has attained age 65.

2.22. “Participant” means an Eligible Member who has:

	 	(a)	 	been notified by the Administrator of his eligibility to
participate in the Plan, and

	 	(b)	 	either:

	 	(i)	 	completed and submitted a Deferral Election in
accordance with Section 4.2, or

	 	(ii)	 	had credited to his Account, by the Company,
Supplemental Benefit Amounts in accordance with Article V, or

	 	(iii)	 	had an account balance under the prior DC Plan
No. 1 and/or the prior DC Plan No. 2 on the day immediately preceding
the original effective date of this Plan.

 

6

 

	 	2.23.	 	“Plan” means the Woodward Governor Company Executive Benefit Plan, as amended
from time to time.

	 	2.24.	 	“Plan Year” means the 12 consecutive month period beginning each January 1.

	 	2.25.	 	“Prior Account Balance” means an Eligible Member’s account balance(s), if any,
under the prior DC Plan No. 1 and/or prior DC Plan No. 2 which were transferred to this
Plan by the Company and credited to his Account pursuant to Section 3.1.

	 	2.26.	 	“Retirement” means Separation from Service by a Participant on his Early
Retirement Date or Normal Retirement Date.

	 	2.27.	 	“Separation from Service” means, in respect of a Participant, any termination
of employment with the Company and all its Affiliates due to Retirement, death, or
other reason; provided, however, that, no Separation from Service for reasons other
than death shall be deemed to occur for purposes of the Plan while the Participant is
on military leave, sick leave, or other bona fide leave of absence that does not exceed
six months or, if longer, the period during which the Participant’s right to
reemployment with the Company or its Affiliates is provided either under applicable
statute or by contract; and provided further that, if the period of leave exceeds six
months and the Participant does not retain a right to reemployment under an applicable
statute or by contract, a Separation from Service will be deemed to have occurred on
the first day following such six-month period. Whether or when a Separation from
Service has occurred for purposes of the Plan shall be determined based on the meaning
of “separation from service” under Code Section 409A and the regulations promulgated
thereunder and, accordingly, shall be based on whether the facts and circumstances
indicate that the Company and its Affiliates and the Participant reasonably anticipate
that no further services will be performed after a certain date or that the level of
bona fide services the Participant will perform after such date (whether as an employee
or as an independent contractor) will permanently decrease to no more than 20% of the
average level of bona fide services performed (whether as an employee or independent
contractor) over the immediately preceding 36-month period (or the full period of
services to the Company and its Affiliates if the Participant has been providing
services to the Company and its Affiliates less than 36 months). A Participant shall
be presumed for this purpose to have a Separation from Service where the level of bona
fide services decreases to a level equal to 20% or less of such average level of
services.

 

7

 

	 	2.28.	 	“Specified Employee” means a Participant who is a key employee (as defined in
Code Section 416(i) without regard to Code Section 416(i)(5)) of the Company or an
Affiliate. For purposes of this definition, a Participant is a key employee if the
Participant meets the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii)
(applied in accordance with the regulations thereunder and disregarding Code Section
416(i)(5)) at any time during the 12-month period ending on any December 31st. If a Participant is a key employee as of any December
31st, that Participant is treated as a Specified Employee for the
12-month period beginning on the April 1st following the relevant
December 31st. Notwithstanding the foregoing, a Participant who
otherwise would be a Specified Employee under the preceding sentence shall not be a
Specified Employee for purposes of the Plan unless, as of the date of the
Participant’s Separation from Service, stock of such Company or an Affiliate thereof
is publicly traded on an established securities market or otherwise.

	 	2.29.	 	“Supplemental Benefit Amount” means the amount computed on behalf of the
Participant, if any, and credited to his or her Account in accordance with Article V.

	 	2.30.	 	“Valuation Date” means a date on which the Investment Funds are valued and the
Participant’s Account is adjusted for any resulting gains or losses. The Valuation
Date shall be each day the New York Stock Exchange is open for business, or such other
date(s) occurring at least once every calendar year as the Administrator shall
determine; provided, however, that for purposes of Articles VII and VIII and Section
11.4 only, Valuation Date shall mean the 15th day of each calendar month or,
if it is not a day the New York Stock Exchange is open for business, the next
succeeding day the New York Stock Exchange is open for business.

III PARTICIPATION.

	 	3.1.	 	Participation. The Administrator shall select those members eligible
to participate in the Plan. In selecting Eligible Members, the Administrator shall take
into consideration such factors as it deems relevant in connection with accomplishing
the purposes of the Plan. An Eligible Member shall become a Participant in the Plan
when (A) he is notified in writing by the Administrator (or in any other format
approved by the Administrator) that he is eligible to participate in the Plan, and (B)
he has either (1) completed and submitted a Deferral Election to the Administrator in
accordance with Article IV, or (2) had credited to his Account, by the Company,
Supplemental Benefit Amounts in accordance with Article V, or (3) had credited to his
Account, by the Company, his account balance, if any, under the prior DC Plan No. 1
and/or the prior DC Plan No. 2 on the day immediately preceding the original effective
date of this Plan.

	 	3.2.	 	ERISA Exemption. It is the intent of the Company that the Plan be
exempt from Parts 2, 3 and 4 of Subtitle B of Title I of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), as an unfunded plan that is maintained by
the Company primarily for the purpose of providing deferred compensation for a select
group of management of highly compensated employees (the “ERISA Exemption”).
Notwithstanding anything to the contrary in Section 3.1 or in any other provision of
the Plan, the Administrator may in its sole discretion exclude any one or more members from eligibility to participate or
from participation in the Plan, may exclude any Participant from continued
participation in the Plan, and may take any further action it considers necessary or
appropriate if the Administrator reasonably determines in good faith that such
exclusion or further action is necessary in order for the Plan to qualify for, or to
continue to qualify for, the ERISA Exemption.

 

8

 

IV DEFERRAL CONTRIBUTION AMOUNTS.

	 	4.1.	 	Permissible Deferrals under the Plan. An Eligible Member may elect to
defer:

	 	(a)	 	Deferral of Base Salary: up to 50% of his or her Base
Salary for a Plan Year, in increments of 1%, provided, however, that any
election to defer over 30% of Base Salary must be approved in advance of such
election by the Administrator; and

	 	(b)	 	Deferral of Bonus: up to 100% of his or her Bonus for
a Plan Year, in increments of 5%,

by filing a Deferral Election in accordance with Section 4.2 below.

	 	4.2.	 	Deferral Elections. A Participant’s Deferral Election shall be in
writing (or in any other form approved by the Administrator), and shall be filed with
the Administrator at such time and in such manner as the Administrator shall provide,
subject to the following:

	 	(a)	 	A Deferral Election pertaining to Base Salary shall be made
during the Election Period established by the Administrator which shall end no
later than December 31 preceding the first day of the Plan Year in which the
services in respect of which such Base Salary would otherwise be payable are
performed. A Deferral Election pertaining to a Bonus for a Plan Year shall be
made during the Election Period established by the Administrator which shall
end no later than the last day of the Company’s fiscal year next preceding the
fiscal year which contains the first day of the performance period (which shall
consist of one or more consecutive fiscal years of the Company) to which such
Bonus relates and after the end of which such Bonus, absent the Deferral
Election, would be paid. Notwithstanding the foregoing, with respect to any
portion of a Bonus which constitutes “performance-based compensation,” as
defined under Code Section 409A, such Deferral Election shall be made within
the Election Period prescribed by the Administrator which shall end no later
than the date that is six months before the end of the applicable fiscal year
performance period(s) with respect to which the Bonus is payable but in no
event after the Bonus amount has become readily ascertainable; provided,
however, that any such Deferral Election may only be made during an Election
Period established under this sentence if the Participant has performed services continuously from the later of the beginning of such
performance period(s) or the date the performance criteria is established
through the date the Deferral Election is made.

 

9

 

	 	(b)	 	At the discretion of the Administrator, a Deferral Election may
be made by

	 	(i)	 	newly-hired Eligible Members for the Plan Year
in which they commence employment, or

	 	(ii)	 	a member who otherwise becomes an Eligible
Member after the beginning of a Plan Year for the Plan Year in which he
or she first becomes an Eligible Member (as determined consistent with
Code Section 409A and the regulations thereunder).

Notwithstanding the preceding sentence or Section 4.2(a), such Deferral
Elections must be made within thirty (30) days of the member’s date of hire
or the date the member becomes an Eligible Member, whichever applies.
However, such Deferral Elections shall be prospective and shall apply only
to Base Salary that would otherwise be paid to the Eligible Member with
respect to services performed after the Deferral Election is made and only
to a portion of a Bonus for the applicable performance period(s) that shall
not exceed the total Bonus amount prorated for the number of days remaining
in the relevant performance period(s) after the Deferral Election is made
relative to the total number of days in the performance period(s).

	 	(c)	 	Deferral Elections shall be expressed as a percentage of Base
Salary and Bonus within the limits provided under the Plan.

	 	(d)	 	Once made, Deferral Elections for Base Salary and Bonus shall
remain in effect only for the Plan Year for which each such election is made.

Notwithstanding any provision herein to the contrary, Deferral Elections
with respect to a given Plan Year shall be irrevocable on the date filed
with the Administrator, except if the Administrator, in its sole discretion,
determines that the Participant has suffered an unforeseeable emergency as
provided in Section 7.4 or, before the end of the Election Period in which
the Deferral Election was made, revokes the election because a bona fide
administrative mistake was made. If a Deferral Election is cancelled in
accordance with Section 7.4, the Participant may not make a new Deferral
Election until the Election Period established by the Administrator in
accordance with Section 4.2(a) for making deferrals for the Plan Year
commencing at least 12 months after the unforeseeable emergency.

 

10

 

	 	(e)	 	At the time a Deferral Election is made with respect to Base
Salary or Bonus for a Plan Year, the Participant shall also make a Distribution
Election with respect to such Plan Year deferrals in accordance with Article
VII.

	 	4.3.	 	Crediting of Deferral Elections. The amount of Base Salary and Bonus
that a Participant elects to defer under the Plan shall be credited by the Company to
the Participant’s Account as Deferral Contribution Amounts as of the date such Base
Salary or such Bonus would have been paid to the Participant absent the Deferral
Election.

	 	4.4.	 	Vesting. A Participant’s Deferral Contribution Amounts for each Plan
Year shall be fully vested at the time credited to such Participant’s Account.

	 	4.5.	 	Deferred Contribution Amounts Subject to FICA at Time of Deferral. A
Participant’s Deferred Contribution Amounts are subject to FICA at the time the amounts
are contributed to the Plan for deferral. The gross amount of the Participant’s Base
Salary deferral and Bonus deferral will be contributed to the Participant’s Account and
the corresponding FICA tax due will be deducted from that portion of the Participant’s
Base Salary or Bonus not deferred, as the case may be. Notwithstanding the foregoing,
if a Participant has elected to defer a percentage of his or her Bonus such that
contribution of the gross amount of the Bonus deferred would leave insufficient funds
to remit the applicable FICA tax to the government, then the applicable Bonus amount
contributed to the Participant’s Account shall be made net of the smallest amount of
FICA tax needed to satisfy such liability which cannot be covered from the portion of
Bonus not deferred.

V SUPPLEMENTAL BENEFIT AMOUNT.

	 	5.1.	 	Computation of Supplemental Benefit Amount. An Eligible Member
designated by the Administrator for participation under the Plan shall be entitled to a
Supplemental Benefit Amount for each Plan Year that he is an Eligible Member equal to:

	 	(a)	 	the excess, if any, of the amount of contributions the
Participant otherwise would have been entitled to have credited to a separate
account for his benefit as Company Matching Contributions, Grandfathered
Contributions and Company Stock Component Contributions under the RSP for a
given year if such contribution amounts were calculated without regard to the
following:

	 	(i)	 	Code Section 415,

	 	(ii)	 	Code Section 401(a)(17),

	 	(iii)	 	Code Section 401(k)(3),

	 	(iv)	 	Code Section 401(m)(2),

	 	(v)	 	Code Section 402(g), and

	 	(vi)	 	any Deferral Election made by the Participant
for such given year under Article IV of this Plan, over

 

11

 

	 	(b)	 	the actual amount of such contributions which the Participant
is entitled to have credited to a separate account for his benefit for such
given year under the RSP.

Notwithstanding the foregoing, if after the beginning of a Plan Year, a
Participant changes his or her deferral/contribution elections under the RSP
in a manner that would affect the amount of Supplemental Benefit Amount
credits based on Company Matching Contributions under the RSP for such Plan
Year, the Supplemental Benefit Amount credits to be credited for such Plan
Year shall be appropriately reduced or increased, as the case may be,
provided that the aggregate Supplemental Benefit Amount for such Plan Year
based on Company Matching Contributions under the RSP does not exceed 100%
of the matching contributions that would have been provided under the RSP
for such Plan Year absent any plan-based restrictions that reflect limits on
qualified plan contributions under the Code.

	 	5.2.	 	Vesting. A Participant’s Supplemental Benefit Amounts calculated by
the Company for each Plan Year shall be fully vested at the time credited to such
Participant’s Account.

	 	5.3.	 	Crediting of Supplemental Benefit Amount. The Supplemental Benefit
Amounts computed in Section 5.1 above for each Plan Year shall be credited by the
Company to the Participant’s Account as soon as reasonably practicable.

	 	5.4.	 	Distribution Elections. During the Election Period pertaining to the
deferral of Base Salary for each Plan Year, a Participant shall also make a
Distribution Election in accordance with Article VII with respect to the distribution
of any Supplemental Benefit Amount to be credited to his or her Account for such Plan
Year.

VI ACCOUNTS AND INVESTMENTS.

	 	6.1.	 	Valuation of Accounts. The Administrator shall establish an Account
for each Participant who:

	 	(a)	 	has filed a Deferral Election to defer Base Salary and/or
Bonus; or

	 	(b)	 	has been credited with a Supplemental Benefit Amount; or

 

12

 

	 	(c)	 	has a Prior Account Balance on the effective date of this Plan.

Such Account shall be credited with a Participant’s Deferral Contribution Amounts
and Supplemental Benefit Amounts as set forth in Sections 4.3 and 5.3, respectively,
and with the Participant’s Prior Account Balance, if any. As of each Valuation
Date, the Participant’s Account shall be adjusted upward or downward to reflect:

	 	(d)	 	the investment return to be credited as of such Valuation Date
pursuant to Section 6.3 below; and

	 
	 	(e)	 	the amount of distributions, if any, to be debited as of that
Valuation Date under Article VII.

Each Participant will receive a statement of his or her Account balance at least
annually.

	 	6.2.	 	Hypothetical Investment Funds. Each Participant generally may direct
the manner in which his or her Account shall be deemed invested in and among the
Investment Funds; provided, however, that each investment election made by a
Participant shall, notwithstanding anything to the contrary in the Plan, be strictly
subject to the consent of the Administrator which, in its sole discretion, may elect to
honor the Participant’s request or have the Account deemed invested in another manner.
Such deemed investment election shall be made in accordance with such procedures as the
Administrator shall establish and any such election shall be made in whole percentages.
The investment authority shall remain at all times with the Administrator. The
selection of Investment Funds by a Participant shall be for the sole purpose of
determining the rate of return to be credited to his or her Account and shall not be
treated or interpreted in any manner whatsoever as a requirement or direction to
actually invest assets in any Investment Fund or any other investment media.

	 
	 	 	 	A Participant may make an investment election for the Investment Fund based on
Woodward Governor Company Common Stock (“Company Common Stock”) only if such
election is approved in advance by the Board. Notwithstanding any provision of the
Plan to the contrary, if a Participant is granted permission to elect such
Investment Fund, the Participant may only revoke such Investment Fund election with
the prior approval of the Board. Any such revocation shall only be effective with
respect to future deferrals and credits. Any portion of the Participant’s Account
deemed invested in Company Common Stock shall continue to be deemed to be invested
in Company Common Stock and may not be transferred to any other hypothetical
Investment Fund. The applicable value of Company Common Stock as of any Valuation
Date shall be equal to the closing price of such common stock on NASDAQ quoted by
the Wall Street Journal for the applicable Valuation Date.

 

13

 

	 	6.3.	 	Crediting of Investment Return. Each Participant’s Account shall be
credited on each Valuation Date with his or her allocable share of investment gains or
losses of each Investment Fund in which his or her Account is hypothetically invested.
The Administrator shall adopt a protocol for allocating the deemed investment gains and
losses similar to that used in the RSP. Notwithstanding any provision herein to the
contrary, if a Participant elects to invest in the hypothetical Investment Fund for
Woodward Governor Company Common Stock, such Participant’s Account shall also be
credited with any deemed dividends paid during the period beginning with the
immediately preceding Valuation Date and ending with the current Valuation Date.

	 
	 	6.4.	 	Changing Investment Fund Options. Subject to the provisions of this
Article VI, a Participant may, on a daily basis, make a new election with respect to
the hypothetical Investments Funds in which his or her Account shall be deemed invested
in the future. Any such election shall be made in the form specified by the
Administrator.

	 
	 	6.5.	 	Investment Alternatives After Death. For periods after the Valuation
Date coincident with or next following a Participant’s death and pursuant to procedures
established by the Administrator, the Participant’s Account balance pertaining to
Deferral Contribution Amounts, Supplemental Benefit Amounts, if any, and/or Prior
Account Balance, if any, shall be reallocated and reinvested among the Investment Funds
in accordance with the Beneficiary’s hypothetical investment direction.

VII PAYMENT OF BENEFITS.

	 	7.1.	 	Distribution at Specific Future Date. During the Election Period(s)
specified by the Administrator for making a Deferral Election for a Plan Year, an
Eligible Member may elect one or more future Valuation Dates (which must be one or more
specific dates) as of which all or a portion of his or her Deferral Contribution
Amounts to be deferred and any Supplemental Benefit Amounts to be credited for such
Plan Year, and earnings thereon, shall be distributed. Participants who participated
prior to January 1, 2001 in prior DC Plan No. 1 or prior DC Plan No. 2 also had the
opportunity to make such an election(s) under such plans with respect to all or a
portion of their Prior Account Balances and earnings thereon, which elections shall
continue in effect under this Section 7.1 of the Plan. Any distribution as of a
specific future date made to an Eligible Member pursuant to any such elections shall be
paid in a single lump-sum payment or substantially equal annual, quarterly or monthly
installments for a specified period up to but not exceeding 10 years, as provided in
such election. Any such specific future date shall be a Valuation Date in a specific
future year which is at least five Plan Years after the Plan Year for which the
Deferral Contribution Amounts or Supplemental Benefit Amounts are credited to such
Participant’s Account; provided, however, that only one distribution date per Plan Year
may be elected under this Section 7.1. If the Participant

 

14

 

	 	 	 	elects a distribution to be made or commenced at one or more specific future dates and incurs a Separation
from Service or a Disability prior to any such date, such election shall be without
further effect and distribution shall commence pursuant to Section 7.2, 7.3 or 8.1,
as applicable. The amount of each installment payment to be made under any
installment payment election shall be equal to the quotient obtained by dividing the
balance in the portion of the Eligible Member’s Account subject to the election as
of the Valuation Date as of which the installment payment is to be made by the
number of installment payments remaining to be made at the time of such calculation.
A Distribution Election under this Section 7.1 may be changed to a Valuation Date
(which must be a specific date) in a future Plan Year or changed to a different form
of payment if the following requirements are satisfied: (i) the new Distribution
Election must be made at least 12 months in advance of the originally scheduled
distribution or distribution commencement date and may not take effect for at least
12 months after the date the new Distribution Election is made; (ii) the new
Distribution Election must require a revised distribution or distribution
commencement date of at least five Plan Years from the date such payment would
otherwise have been made or commenced; and (iii) the new Distribution Election shall
not accelerate the schedule of any payment, except as permitted under the
regulations under Code Section 409A. Notwithstanding the foregoing, any amounts
distributable under this Section 7.1 shall be paid or commenced, as the case may be,
on or as soon as practicable following the Valuation Date elected and must be made
or commenced within the same taxable year of the elected Valuation Date or, if later
and provided the Participant is not permitted, directly or indirectly, to designate
the taxable year of payment, the 15th day of the third calendar month following the
elected Valuation Date.

	 
	 	7.2.	 	Distribution Upon Retirement or Disability. Subject to Sections 7.7
and 7.8 and the provisions of this Section 7.2, if a Participant incurs a Separation
from Service by reason of Retirement or incurs a Disability, distribution of the
Participant’s Account (excluding any portion thereof then being paid in installments
pursuant to Section 7.1) shall be made or commenced on the Valuation Date of the
calendar month beginning next following the date such Participant incurs the Separation
from Service or Disability or as soon thereafter as is practicable. Distribution under
this Section 7.2 shall be made:

	 	(a)	 	in a lump sum; or

	 
	 	(b)	 	in substantially equal annual, quarterly or monthly
installments for a specified period up to but not exceeding 10 years,

 

15

 

as elected by the Participant on his or her Distribution Election(s). The amount of
each installment payment to be made under any installment payment election shall be
equal to the quotient obtained by dividing the balance in the portion of the
Participant’s Account subject to the election as of the Valuation Date as of which
the installment payment is to be made by the number of installment payments
remaining to be made at the time of such calculation. A Distribution
Election under this Section 7.2 may be changed to another time and/or form of
payment if the following requirements are satisfied: (i) the new Distribution
Election must be made at least 12 months in advance of the originally scheduled
distribution or distribution commencement date and may not take effect for at least
12 months after the date the new Distribution Election is made; (ii) the new
Distribution Election must require a revised distribution or distribution
commencement date of at least five Plan Years from the date such payment would
otherwise have been made or commenced; and (iii) the new Distribution Election shall
not accelerate the schedule of any payment, except as permitted under the
regulations under Code Section 409A. A Participant cannot alter or change his
Distribution Election once he has begun to receive payments under this Section 7.2
of the Plan. If the Participant does not have in effect a valid Distribution
Election with respect to all or any portion of his or her Account on file with the
Administrator at the time of Retirement or Disability, the Participant’s Account or
applicable portion thereof not covered by a valid Distribution Election shall be
paid in a single sum under paragraph (a) above. Notwithstanding any provision in the
Plan to the contrary, distributions made under this Section 7.2 must be made or
commenced within 90 days following the Participant’s Separation from Service or
Disability, as the case may be, and the Participant shall not have any right to
designate the year of payment.

	 	7.3.	 	Distribution On Other Termination of Employment. Subject to Sections
7.7 and 7.8 and the provisions of this Section 7.3, if a Participant incurs a
Separation from Service for any reason other than Retirement or death and the
Participant has not incurred a Disability prior thereto, the Participant’s Account
(excluding any portion thereof then being paid in installments under Section 7.1) shall
be paid in a lump sum payment as of the Valuation Date of the calendar month beginning
next following such Separation from Service or as soon thereafter as is practicable.
Notwithstanding any provision in the Plan to the contrary, distributions made under
this Section 7.3 must be made within 90 days following the Participant’s Separation
from Service and the Participant shall not have any right to designate the year of
payment.

	 	7.4.	 	Unforeseeable Emergency. Prior to the distribution date otherwise
scheduled under the Plan as of which payment is to be made or commenced, upon showing
an unforeseeable emergency, a Participant may request that the Administrator accelerate
payment of all or a portion of his or her Deferral Contribution Amounts, Supplemental
Benefit Amounts, Prior Account Balance, and earnings thereon, in an amount not
exceeding the amount necessary to meet the unforeseeable emergency, plus amounts
necessary to pay taxes reasonably anticipated as a result of the distribution, after
taking into account the extent to which such unforeseeable emergency is or may be
relieved through reimbursement or compensation by insurance or otherwise or by
liquidation of the Participant’s assets (to the extent the liquidation of such assets
would not itself cause severe financial hardship). For purposes of the Plan, an
unforeseeable emergency means a severe financial

 

16

 

	 	 	 	hardship to the Participant resulting from an
illness or accident of the Participant, the Participant’s spouse, or a dependent of
the Participant (as specified in Code Section 409A), loss of the Participant’s
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant.
The determination of an unforeseeable emergency shall be made by the Administrator
in its sole discretion, based on such information as the Administrator shall deem to
be necessary and relevant and the requirements of Section 409A of the Code, and such
decision shall be final and binding on all parties. If the Administrator authorizes
a withdrawal due to an unforeseeable emergency pursuant to this Section 7.4, the
Participant shall not be eligible to file a new Deferral Election until the Election
Period established by the Administrator in accordance with Section 4.2(a) for the
Plan Year commencing at least 12 months after such withdrawal, and the Participant’s
Deferral Election(s) for the Plan Year in which the withdrawal is made shall be
cancelled. Notwithstanding any provision in the Plan to the contrary, distributions
made under this Section 7.4 must be made as of a Valuation Date within 90 days
following the Administrator’s determination of an unforeseeable emergency and the
Participant shall not have any right to designate the year of payment.

	 
	 	7.5.	 	Time and Form of Elections. Subject to the provisions of Section
4.2(e) and 5.4, all Distribution Elections under this Article VII shall be made at the
time and in the form established by the Administrator and shall be subject to such
other rules and limitations that the Administrator, in its sole discretion, may
establish to the extent permissible under and consistent with Code Section 409A.

	 
	 	7.6.	 	Form of Payment and Withholding. All payments under the Plan shall be
made in cash and are subject to the withholding of all applicable federal, state and
local and foreign governmental taxes; provided, however, any payment under the Plan
that is attributable to the portion of a Participant’s Account deemed invested in
Company Common Stock shall be made in whole shares of Company Common Stock, with
fractional shares paid in cash.

	 
	 	7.7.	 	Exception for Specified Employees. Notwithstanding any provision to
the contrary in this Article VII of the Plan, if a Participant is a Specified Employee
at the time when his or her Separation from Service occurs for any reason other than
death, such Participant’s distribution or distribution commencement date in accordance
with Section 7.2 or Section 7.3 on account of such Separation from Service shall be
adjusted to instead occur on the date that is six (6) months following the relevant
distribution or distribution commencement date.

	 
	 	7.8.	 	Timing of Payments. Notwithstanding any provision of the Plan to the
contrary, until paid, any amount distributable from a Participant’s Account shall
continue to be adjusted under Article VI to reflect investment returns of the
investments in which the Account is deemed invested, and the amount distributable shall
be valued as of the Valuation Date coincident with or next preceding the date
payment is made. In addition, if calculation of the amount of a payment is not
administratively practicable due to events beyond the control of the Participant or
his or her Beneficiary, a payment will be treated as made on the specified date for
purposes of Code Section 409A if the payment is made during the first calendar year
in which the calculation of the amount of the payment is administratively
practicable.

 

17

 

VIII DEATH BENEFITS.

	 	8.1.	 	Death Prior to Commencement of Benefits. If a Participant dies prior
to commencement of payment of his or her Account under Section 7.2 or 7.3, the
Participant’s Beneficiary shall receive a survivor benefit in an amount equal to the
Participant’s Account balance (including the amount of any unpaid installments that had
commenced pursuant to Section 7.1) to be paid in a single lump sum as soon as
practicable following the Participant’s death. Distributions made under this Section
8.1 must be made on a Valuation Date within 90 days following the Participant’s death,
and the Beneficiary shall not have any right to designate the year of payment.

	 
	 	8.2.	 	Death After Commencement of Benefits. If a Participant incurs a
Separation from Service or incurs a Disability prior to a Separation from Service, has
commenced payments in installments, and dies prior to the time his or her Account
balance has been fully distributed, the Participant’s Beneficiary shall receive the
remaining portion of the Participant’s Account at the regularly-scheduled date of
payment for any remaining installment payments of the Participant’s Account.

IX ADMINISTRATION.

	 	9.1.	 	Authority of Administrator. The Administrator shall have full power
and authority to carry out the terms of the Plan, including, subject to the provisions
of Section 1.4, the discretionary authority to construe and interpret the Plan, make
factual findings, decide all questions of eligibility and determine the amount, manner
and time of payment of any benefits hereunder. The Administrator may establish such
rules and regulations as it may consider necessary or desirable for the effective and
efficient administration of the Plan. The Administrator’s interpretation, construction
and administration of the Plan, including any adjustment of the amount or recipient of
the payments to be made, shall be binding and conclusive on all persons for all
purposes. Neither the Company, including its officers, members or directors, nor the
Administrator or the Board or any member thereof, shall be liable to any person for any
action taken or omitted in connection with the interpretation, construction and
administration of the Plan.

	 
	 	9.2.	 	Participant’s Duty to Furnish Information. Each Participant shall
furnish to the Administrator such information as it may from time to time request for
the purpose of the proper administration of this Plan.

 

18

 

	 	9.3.	 	Interested Member of Administrator. If a member of the Administrator
is also a Participant in the Plan, he or she may not decide or determine any matter or
question concerning his or her benefits unless such decision or determination could be
made by him or her under the Plan if he or she were not a member of the Administrator.

	 
	 	9.4.	 	Indemnification. No person (including any present or former member of
the Administrator, and any present or former officer or member of the Company or any
Affiliate) shall be personally liable for any act done or omitted to be done in good
faith in the administration of the Plan. Each present or former officer or member of
the Company or any Affiliate to whom the Administrator has delegated any portion of its
responsibilities under the Plan and each present or former member of the Administrator
shall be indemnified and saved harmless by the Company (to the extent not indemnified
or saved harmless under any liability insurance or other indemnification arrangement
with respect to the Plan) from and against any an all claims of liability to which they
are subjected by reason of any act done or omitted to be done in good faith in
connection with the administration of the Plan, including all expenses reasonably
incurred in their defense if the Company fails to provide such defense. No member of
the Administrator shall be liable for any act or omission of any other member of the
Administrator, nor for any act or omission upon his own part, excepting his own willful
misconduct or gross neglect.

	 
	 	9.5.	 	Claims Procedure. If a Participant or Beneficiary (“Claimant”) is
denied all or a portion of an expected benefit under this Plan for any reason, he or
she may file a claim with the Administrator. The Administrator shall notify the
Claimant within 90 days of allowance or denial of the claim, unless the Claimant
receives written or electronic notice from the Administrator prior to the end of the
90-day period stating that special circumstances require an extension (of up to 90
additional days) of the time for decision. The notice of the decision shall be in
writing and sent by mail to Claimant’s last known address (or sent electronically), and
if a denial of the claim, shall contain the following information: (a) the specific
reasons for the denial; (b) specific reference to pertinent provisions of the Plan on
which the denial is based; (c) if applicable, a description of any additional
information or material necessary to perfect the claim, an explanation of why such
information or material is necessary, and an explanation of the claims review
procedure; and (d) a statement of the Claimant’s right to bring an action under Section
502(a) of ERISA following a final adverse benefit determination. A Claimant is
entitled to request a review of any denial of his or her claim by the Board. The
request for review must be submitted within 60 days of mailing of notice of the denial.
The Claimant or his or her representatives shall be entitled to review all pertinent
documents, and to submit issues and comments orally and in writing. The Board shall
render a review decision in writing or electronically within 60 days after receipt of a
request for a review, provided that, in special circumstances the Board may extend the
time for decision by not more than 60
days upon notice to the Claimant. The Claimant shall receive written or electronic
notice of the Board’s review decision, together with specific reasons for the
decision and reference to the pertinent provisions of the Plan, as well as a
statement of the Claimant’s right to bring an action under Section 502(a) of ERISA.

 

19

 

X AMENDMENT AND TERMINATION.

The Board may amend or terminate the Plan at any time. Upon termination of the Plan,
Participant Account balances shall remain in the Plan until the Participant becomes eligible
for benefit payments as provided in Article VII or VIII, as applicable. Notwithstanding the
foregoing, the Administrator, in its discretion, may elect to distribute Participants’
Account balances following termination of the Plan, in which case the entire vested Account
balances of all Participants shall be distributed, notwithstanding any installment payment
elections made by Participants, to the extent acceleration of the time and form of payment
is permitted under Code Section 409A and the regulations and guidance issued thereunder.

XI MISCELLANEOUS.

	 	11.1.	 	No Implied Rights; Rights on Termination of Service. Neither the
establishment of the Plan nor any amendment thereof shall be construed as giving any
Participant, Beneficiary or any other person, individually or as a member of a group,
any legal or equitable right unless such right shall be specifically provided for in
the Plan or conferred by specific action of the Board or the Administrator in
accordance with the terms and provisions of the Plan. Except as expressly provided in
this Plan, neither the Company nor any of its Affiliates shall be required or be liable
to make any payment under the Plan.

	 
	 	11.2.	 	No Employment Rights. Nothing herein shall constitute a contract of
employment or of continuing service or in any manner obligate the Company or any
Affiliate to continue the services of any Participant, or obligate any Participant to
continue in the service of the Company or Affiliates, or as a limitation of the right
of the Company or Affiliates to discharge any of their members, with or without cause.

	 
	 	11.3.	 	Nature of the Plan.

	 	(a)	 	Unfunded Plan. Nothing herein contained shall require
or be deemed to require the Company to segregate, earmark or otherwise set
aside any funds or other assets to provide for any payments made hereunder.
Benefits hereunder shall be paid from assets which shall continue, for all
purposes, to be part of the general, unrestricted assets of the Company and its
Affiliates. The obligations of the Company hereunder shall be an unfunded and
unsecured promise to pay money in the future. However, the Company may
establish one or more trusts to assist in meeting its
obligations under the Plan, the assets of which shall be subject to the
claims of the Company’s general creditors. No current or former
Participant, Beneficiary or other person, individually or as a member of a
group, shall have any right, title or interest in any account, fund, grantor
trust, or any asset that may be acquired by the Company in respect of its
obligations under the Plan (other than as a general creditor of the Company
with an unsecured claim against its general assets).

 

20

 

	 	(b)	 	Exception for Change in Control. Notwithstanding the
provisions of paragraph (a) of this Section 11.3, the Company shall create a
rabbi trust to hold funds to be used in payment of the obligations of the
Company under the Plan, which trust shall not be funded except as provided in
the following sentence. In the event of a Change in Control (or prior thereto
in the sole discretion of the Company), the Company shall fund such trust in an
amount equal to not less than the total value of the Participants’ Accounts
under the Plan as of the Valuation Date immediately preceding the Change in
Control, provided that: (i) any funds contained therein shall remain subject to
the claims of the Company’s general creditors; and (ii) such action will not
result in the imposition of additional tax under Section 409A(b)(5) of the
Code. In addition, upon a Change in Control, the trust by its terms shall
become irrevocable.

	 	11.4.	 	Nontransferability. Prior to payment thereof, no benefit under the
Plan shall be assignable or subject to any manner of alienation, sale, transfer, claims
of creditors, pledge, attachment or encumbrances of any kind, except pursuant to a
domestic relations order awarding benefits to an “alternate payee” (within the meaning
of Code Section 414(p)(8)) that the Administrator determines satisfies the criteria set
forth in paragraphs (1), (2) and (3) of Code Section 414(p) (a “DRO”). Notwithstanding
any provision of the Plan to the contrary, to the extent required by the DRO the Plan
benefits awarded to an alternate payee under a DRO may be paid in a single lump sum to
the alternate payee on the Valuation Date as soon as administratively practicable
following the date the Administrator determines the order is a DRO, and such amounts,
as adjusted for earnings, gains and losses, will be deducted from the Participant’s
Account as of such Valuation Date.

	 
	 	11.5.	 	Successors and Assigns. The rights, privileges, benefits and
obligations under the Plan are intended to be, and shall be treated as legal
obligations of and binding upon the Company, its successors and assigns, including
successors by merger, consolidation, reorganization or otherwise.

 

21

 

	 	11.6.	 	Payment with Respect to Incapacitated Persons. Any amounts payable
hereunder to any person who is a minor or under a legal disability, as determined under
applicable state law, or who is unable to manage properly his or her financial affairs
may be paid (a) to the legal representative of such person, (b) to anyone acting as the
person’s agent under a durable power of attorney, (c) to an
adult relative or friend of the person or (d) to anyone with whom the person is
residing. Any payment of a benefit made in accordance with the provisions of this
section shall be a complete discharge of any liability for the making of such
payment under the Plan. The Administrator’s reliance on the written power of
attorney or other instrument of agency governing a relationship between the person
entitled to benefit the person to whom the Administrator directs payment of the
benefit shall be fully protected at least to the same extent as though the
Administrator had dealt directly with the person entitled to the benefit as a fully
competent person. In the absence of actual knowledge to the contrary, the
Administrator may assume that the instrument of agency was validly executed, that
the person was competent at the time of execution and that at the time of reliance,
the agency had not been terminated or amended.

	 
	 	11.7.	 	Arbitration. Any controversy or claim arising out of or relating to
this Plan, or breach hereof, shall be settled by arbitration in the City of Chicago in
accordance with the laws of the State of Illinois with an arbitrator appointed by the
Company; provided, however, that with respect to any claim subject to Section 9.5, the
individual must have exhausted the claims and review procedure set forth in such
Section 9.5 before submitting the claim to arbitration under this Section 11.7. The
arbitration shall be conducted in accordance with the rules of the American Arbitration
Association, except with respect to the selection of an arbitrator. The arbitrator’s
determination shall be final and binding upon all parties and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction thereof.

	 
	 	11.8.	 	Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender shall include the feminine and neuter genders, the plural
shall include the singular, and the singular shall include the plural.

	 
	 	11.9.	 	Headings. The headings of the various Articles and Sections in the
Plan are solely for convenience and shall not be relied upon in construing any
provisions hereof. Any reference to a Section shall refer to a Section of the Plan
unless specified otherwise.

	 
	 	11.10.	 	Severability. Whenever possible, each provision of the Plan shall be
interpreted in such manner as to be effective and valid under applicable law, but it
any provision of the Plan is held to be invalid, illegal or unenforceable in any
respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision or any other
jurisdiction, and the Plan shall be reformed, construed and enforced in such
jurisdiction so as to best give effect to the intent of the Company under the Plan.

	 
	 	11.11.	 	Effect on Other Employee Benefit Plans. Any benefit paid or payable under
this Plan shall not be included in a Participant’s compensation for purposes of
computing benefits under any employee benefit plan maintained or contributed by
the Company or any Affiliate except as may otherwise be required under the specific
terms of such employee benefit plan.

 

22

 

	 	11.12.	 	Non-U.S. Participants. With respect to any Affiliate which employs
Participants who reside outside the United States, and notwithstanding anything herein
to the contrary, the Administrator may, in its sole discretion, amend the terms of the
Plan in order to conform such terms with the requirements of local law or to meet the
objectives of the Plan, and may, where appropriate, establish one or more sub-plans to
reflect such amended provisions.

	 
	 	11.13.	 	Applicable Law. This Plan is established under and will be construed
according to the laws of the State of Illinois, to the extent not preempted by the laws
of the United States.

*     *     *

IN
WITNESS WHEREOF, the undersigned has caused this Plan to be executed this 18th
day of November, 2010.

	 	 	 	 	 
	 	WOODWARD GOVERNOR COMPANY

 	 
	 	By:  	/s/ Thomas A. Gendron
 	 
	 	 	Thomas A. Gendron 	 
	 	 	Chief Executive Officer and President 	 

 

23Exhibit 10.28

Exhibit 10.28

	 	 	 
	Date:

	 	November 17, 2010
	 
	 	 
	To:

	 	Dennis Benning
	 
	 	 
	From:

	 	Tom Gendron
	 

	 	Chairman of the Board and Chief Executive Officer
	 
	 	 
	Subject:

	 	Confirmation of Assignment Extension

Dear Dennis,

This memo modifies and clarifies our mutual agreement relative to your assignment as President,
Airframe Systems (formerly Group Vice President, Airframe Systems and President, Woodward MPC).
All terms and conditions outlined in your October 1, 2008 Confirmation of Promotion memo still
apply with the following modifications and clarifications:

	 	•	 	As a result of the acquisition of HR Textron (now Woodward HRT), your position includes
the oversight of all Airframe Systems (Woodward MPC and HRT). During the course of your
assignment, it is acknowledged that you are required to maintain two offices — one based in
the Skokie, Illinois facility, and the other in the Santa Clarita, California facility. It
is also expected that you will return to the Fort Collins, Colorado facility occasionally
as needed.

	 	•	 	The last bullet of the October 1, 2008 memo, which related to duration and expected
assignments with the Company, is hereby deleted in its entirety and replaced with the
following:

You will continue as President, Airframe Systems, until such time as a successor has
been duly appointed by the Company.

	 	•	 	You will continue to be eligible for salary reviews in accordance with the Company’s
annual salary planning cycle.

	 	•	 	The Company will provide the following to you for your time spent in both Skokie and
Santa Clarita locations:

	 	•	 	The use of a car and reimbursement for the cost of gas associated with business use
of the vehicle.

	 	•	 	Accommodations (either hotel or rented apartment or some combination) for the
duration of the assignment. You will be responsible for all other day-to-day living
expenses during the assignment, e.g. meals, laundry expenses, and other miscellaneous
expenses.

	 	•	 	The Company will reimburse travel expenses associated with you and your spouse when
traveling to/from Illinois, California, or Colorado locations.

	 	•	 	It is understood that there will be a period of time needed to transition and wrap up
your temporary residences in both Illinois and California. Therefore, the Company will pay
for travel expenses (i.e. air travel, rental car, and hotel if needed) for you and your
spouse for a period of 30 days following the end of your assignment.

	 	•	 	At the successful completion of your assignment, you will be eligible to receive a
performance bonus in the amount of $250,000, less applicable withholdings. Successful
completion means that your successor is assessed, named and effectively transitioned into
the President, Airframe Systems President position.

Please contact me should you have any questions. Otherwise, to indicate your agreement with the
terms outlined in this letter, please sign below and return the original of this memo to my
attention.

	 	 	 	 	 
	Sincerely,

 	 	 
	/s/ Tom Gendron
 	 	 
	Tom Gendron 	 	 
	Chairman of the Board, Chief Executive Officer and President 	 	 

	 	 	 	 	 
	Accepted by,
	 	 	 	 
	 
	 	 	 	 
	/s/ Dennis Benning

	 	November 17, 2010	 	 
	 	 	 
	Dennis Benning

	 	Date

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}]]