Document:

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

Exhibit 10.1  

FIRST AMENDMENT

MTS
SYSTEMS CORPORATION

2006
STOCK INCENTIVE PLAN

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

RECITALS

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

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

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

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

SECTION 16

COMPLIANCE WITH CODE SECTION 409A

	
 

	
 

	
16.1

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

	
 

	
 

	
16.2

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

-1-

	
 

	
 

	
16.3

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

	
 

	
 

	
16.4

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

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

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
MTS SYSTEMS CORPORATION

	
 

	
 

	
 

	
 

	
 

	
Date:

	
 

	
 

	
By: 

	
 

	
 

	 

	
 

	
 

	 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Its:

	
 

	
 

	
 

	
 

	
 

	 

-2-Exhibit 10.2 to MTS Systems Corporation Form 8-K dated October 27, 2008

Exhibit 10.2  

FIRST AMENDMENT

MTS
SYSTEMS CORPORATION

EXECUTIVE
VARIABLE COMPENSATION PLAN

          THIS
INSTRUMENT, amending the Executive Variable Compensation Plan (the “Plan”), is
made and entered into by MTS Systems Corporation (“MTS”), and shall be
effective as of December 31, 2008.

RECITALS

          WHEREAS,
on November 24, 2004, the Board of Directors, established the MTS Systems
Corporation Executive Variable Compensation Plan, to provide incentive
compensation to certain executives, which Plan was subsequently approved by
shareholders; and

          WHEREAS,
Section 8.2 of the Plan authorizes the Compensation Committee of the Board of
Directors (formerly the Human Resources Committee) to amend the Plan from time;

          NOW,
THEREFORE, Section 7.1 of the Plan is hereby amended in its entirety to read as
follows: 

	
 

	
 

	
“7.1

	
Payouts. Payouts of Bonus Awards will be made in
 cash or other readily-available funds within 90 days of the end of the
 Performance Period, provided that, with respect to Performance-Based Awards,
 no payment shall be made until the Committee certifies to the achievement of
 the Performance Goals as provided in Section 6.6. Payouts are intended to be
 exempt from the requirements applicable to nonqualified deferred compensation
 plans pursuant to Code §409A and regulations promulgated thereunder. To this
 end, any payment required under this Plan shall be made no later than 21⁄2
 months following the last day of Corporation’s or the Participant’s taxable
 year in which the Performance Period ends. This Plan shall be administered
 and interpreted in a manner that is consistent with and gives effect to such
 intention.”

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

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

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
MTS SYSTEMS CORPORATION

	
 

	
 

	
 

	
 

	
Date:

	
 

	
 

	
By: 

	
 

	
 

	 

	
 

	
 

	 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Its:

	
 

	
 

	
 

	
 

	
 

	 

-1-Exhibit 10.3 to MTS Systems Corporation Form 8-K dated October 27, 2008

Exhibit 10.3  

	
 

	
 

	
 

	

	
 

	
MTS Systems Corporation

	
 

	
Executive Deferred Compensation Plan

December 31, 2008

Restated

Table of Contents

	
 

	
 

	
 

	
 

	
 

	
Section

	
 

	
 

	
 

	
Page

	
 

	
 

	
 

	
 

	
 

	
Section 1.

	
 

	
Purpose of the Plan

	
 

	
3

	
 

	
 

	
 

	
 

	
 

	
Section 2.

	
 

	
Definitions

	
 

	
3

	
 

	
 

	
 

	
 

	
 

	
Section 3.

	
 

	
Eligibility and Participation in the Plan

	
 

	
5

	
 

	
 

	
 

	
 

	
 

	
Section 4.

	
 

	
Deferred Compensation and Company Contributions

	
 

	
6

	
 

	
 

	
 

	
 

	
 

	
Section 5.

	
 

	
Plan Accounts

	
 

	
7

	
 

	
 

	
 

	
 

	
 

	
Section 6.

	
 

	
Distribution from Accounts

	
 

	
8

	
 

	
 

	
 

	
 

	
 

	
Section 7.

	
 

	
Form of Distribution

	
 

	
11

	
 

	
 

	
 

	
 

	
 

	
Section 8.

	
 

	
Funding and Rights to Benefits

	
 

	
12

	
 

	
 

	
 

	
 

	
 

	
Section 9.

	
 

	
Administration and Claims

	
 

	
12

	
 

	
 

	
 

	
 

	
 

	
Section 10.

	
 

	
Amendment and Termination

	
 

	
13

	
 

	
 

	
 

	
 

	
 

	
Section 11.

	
 

	
General Provisions

	
 

	
14

2

MTS SYSTEMS CORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN (2005)

(Restated December 31, 2008)

          THIS
INSTRUMENT, amending and restating the MTS Systems Corporation Executive
Deferred Compensation Plan (2005), is adopted by MTS Systems Corporation, a
corporation organized under the laws of the state of Minnesota (the “Company”),
and shall be effective as of December 31, 2008.

RECITALS

          WHEREAS,
the Company established, effective January 1, 2005, the MTS Systems Corporation
Executive Deferred Compensation Plan (2005) (the “Plan”), an unfunded and
nonqualified supplemental executive retirement plan, to provide additional
retirement income to select members of management and other highly compensated
employees of the Company in addition to any benefits such employees may obtain
under the Company’s qualified 401(k) plan;

          WHEREAS,
the Plan was established as a separate plan from the nonqualified supplemental
executive retirement plan established by the Company effective as of December
19, 1994 entitled the “MTS Systems Corporation Executive Compensation Deferral
Plan” (the “1994 Plan”);

          WHEREAS,
the Plan is intended to comply with the requirement of Code §409A, and the
Company desires to amend and restate the Plan to comply with the final
regulations promulgated under Code §409A;

          NOW,
THEREFORE, the MTS Systems Corporation Executive Deferred Compensation Plan
(2005) is amended and restated in its entirety effective December 31, 2008 to
read as follows:

          1.          Purpose of the Plan. The purpose of this Plan is to provide
Participants with the ability to supplement the retirement benefits provided by
the Qualified Plan of the Company in part by voluntarily deferring some of
their annual compensation as set forth herein.

          2.          Definitions.

          2.1        Account.
“Account” is an appropriate bookkeeping account of record maintained by the
Company for the sole purpose of measuring and determining the amounts, if any,
to be paid to a Participant pursuant to this Plan and shall consist of Deferred
Compensation, if any, Company Contributions, if any, and equivalent interest
credited thereon. Each Participant shall have a single Account except that, at
the election of the Company, separate subaccounts for Deferred Compensation and
Company Contributions may be established.

          2.2        Affiliate.
“Affiliate” is an entity that would be considered with the Company a single
employer under Code §414(b) and (c) and §1563(a), except that 50% shall be
substituted for the 80% each place it appears in Code §414(b) and (c) and
§1563(a).

          2.3        Aggregated
Plans. “Aggregated Plans” includes this Plan and any other like-type plan
of the Company or any Affiliate in which a given Participant participates and
as to which Treas. Reg. §1.409A-1(c)(2) requires the aggregation of all such
nonqualified deferred compensation in applying Code §409A, but shall not
include the 1994 Plan. Notwithstanding the foregoing: (a) the plan for a
Participant is treated as a separate plan from the plan for any other
Participant, even though such plans may be incorporated into a single written
document such as this Plan and covering all Participants; (b) with respect to
each Participant, Deferred Compensation, Company Contributions shall represent 

3

separate
plans; and (c) two otherwise Aggregated Plans in which the Participant
participates as an employee in one plan and as a director or independent
contractor in the other are two separate plans.

          2.4        Code.
“Code” is the Internal Revenue Code of 1986, as amended.

          2.5        Committee.
“Committee” is the Human Resources Committee of the Board of Directors of the
Company, or such other committee designated by the Board of Directors to
administer this Plan.

          2.6        Company.
“Company” is MTS Systems Corporation, a corporation organized under the laws of
the state of Minnesota, and any Affiliates. 

          2.7        Company
Contributions. “Company Contributions” are amounts, if any, credited by the
Company to the Account of a Participant under Section 4.2 and that are not
subject to the election under Section 4.1.

          2.8        Compensation.
“Compensation” is any compensation paid to a Participant by the Company in any
Plan Year, as would be reported on Form W-2, including any form of variable
compensation and any amounts of compensation which would have been paid to the
Participant in such year except that such Participant elected to defer such
amounts under this Plan, any tax-qualified or non-tax qualified plan of
deferred compensation maintained by the Company, but shall exclude any
compensation recognized as a result of the exercise of a stock option and any
taxable distribution from the Qualified Plan or any other non-tax qualified
plan of deferred compensation maintained by the Company. For a non-employee
member of the Board of Directors of the Company, “Compensation” is the
director’s fees paid by the Company other than in the common stock of the
Company.

          2.9        Deferred
Compensation. “Deferred Compensation” is the Participant’s Compensation
which the Participant has elected to have treated as Deferred Compensation
under Section 4.1 of this Plan, in addition to the Company Contributions, if
any, to the Plan. 

          2.10      Measuring
Investments. “Measuring Investments” is a hypothetical investment used for
the purpose of measuring income, gains and losses to the Accounts of
Participants (as if the Accounts had in fact been so invested); provided that
such amounts reflect actual predetermined investments or notional amounts in
accordance with Treas. Reg. §31.3121(v)(2)-1(d)(2). 

          2.11      Participant.
“Participant” is any management or highly compensated employee or
classification of such employees of the Company, selected from time to time to
participate in this Plan as provided in Section 3.1 and any non-employee member
of the Board of Directors of the Company. 

          2.12      Performance-Based
Compensation. “Performance-Based Compensation” is that portion of the
Participant’s Compensation, if any, where the amount of, or entitlement to, is
contingent on the satisfaction of preestablished organizational or individual
performance criteria relating to a performance period of at least 12
consecutive months, provided that the performance criteria are established not
later than 90 days after commencement of the performance period and the outcome
is substantially uncertain at the time. The Company will determine the status
of Compensation as Performance-Based Compensation in accordance with Treas.
Reg. §1.409A-1(e).

          2.13      Plan.
“Plan” is the MTS Systems Corporation Executive Deferred Compensation Plan
(2005), as restated effective December 31, 2008.

          2.14      Plan
Administrator. “Plan Administrator” shall mean the Committee, or other
person or committee designated by the Committee in accordance with Section 7.2.

          2.15      Plan
Year. “Plan Year” shall mean the calendar year, ending each December 31.

4

          2.16      Qualified
Plan. “Qualified Plan” is the MTS Retirement Savings Plan, effective as of
October 1, 1966, as amended from time to time.

          2.17      Separation
from Service. “Separation from Service” shall mean the Participant’s
termination of employment with the Company and its Affiliates whether on
account of death, retirement, disability or otherwise. The Company will
determine whether a Participant has incurred a Separation from Service based on
the facts and circumstances and as described in Treas. Reg. §1.409A-1(h)(1)(ii).
A Participant incurs a Separation from Service if the Company and the
Participant reasonably anticipate, based on the facts and circumstances, the
Participant will not perform any additional services after a certain date or
that the level of bona fide services (whether performed 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 over the immediately preceding
36-month period (or, if less, the period the employee has rendered service to
the Company) (“Average Prior Service”). A Participant is presumed to have
incurred a Separation from Service if the Participant’s service level decreases
to 20% or less than the Average Prior Service and is presumed to not have
incurred a Separation from Service if the Participant’s service level continues
at a rate which is 50% or more of the Average Prior Service. No presumption
applies where the Participant’s service level is more than 20% and less than
50% of the Average Prior Service. A Participant does not incur a Separation
from Service if the Participant is on military leave, sick leave, or other bona
fide leave of absence if such leave does not exceed a period of 6 months, or if
longer, the period for which a statute or contract provides the Participant
with the right to reemployment with the Company. If a Participant’s leave
exceeds 6 months but the Participant is not entitled to reemployment under a
statute or contract, the Participant incurs a Separation from Service on the
next day following the expiration of 6 months, (12 months where a leave of
absence is due to a condition that may constitute a disability unless the
Company or the Participant terminate the leave sooner). In accordance with and
subject to Treas. Reg. §1.409A-1(h)(4), if the Company sells its assets to an
unrelated party purchaser where the Participants otherwise would incur a
Separation from Service and where such Participants will provide services to
the purchaser after the sale closing, the Company and the purchaser retain
discretion no later than the asset sale closing date to specify in writing
whether the Participants will incur a Separation from Service; provided however
that all affected Participants shall be treated uniformly.

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

          2.19      Valuation
Date. “Valuation Date” is any date designated by the Committee on which the
fair market value of the Accounts of Participants is determined. For purposes
of determining the time of payment of any distribution from this Plan,
Valuation Date shall mean the last day of each calendar month during the Plan
Year.

          3.          Eligibility
and Participation in the Plan.

          3.1        Employee
Eligibility. The Committee, in its
sole discretion, will select the employees or classification of employees of
the Company who shall be eligible to become Participants in the Plan, provided
that each such employee would be a member of a select group of management or
highly compensated employees, as determined under the Employee Retirement
Income Security Act of 1974,

5

as amended,
and regulations thereunder. Any change in the employee status as a member of a
classification eligible for the Plan (other than upon Separation from Service)
shall be effective as of the first day of the next Plan Year. An employee who
becomes eligible or who is selected to participate in the Plan during the Plan
Year shall become a Participant on the first day of the next month following
such selection and shall make an election in accordance with Section 4.1. 

          3.2      Director
Eligibility. A non-employee member of the Board of Directors of the Company
shall be eligible to participate in this Plan upon the director’s initial
election as a member of the Board. A director who becomes eligible shall become
a Participant on the first day of the next month following such election and
shall make an election in accordance with Section 4.1. 

          3.3      Termination
of Eligibility and Participation. Each designated employee or
classification of employees shall be eligible to contribute to this Plan and to
receive any Company Contributions until such time as the Committee revokes such
designation; provided, however, that the employee shall continue to be a
Participant in this Plan to receive benefits until the Participant’s Account is
fully paid. A non-employee director shall eligible to contribute to this Plan
and to receive any Company Contributions until such time as the director incurs
a Separation from Service; provided, however, that the director shall continue
to be a Participant in this Plan and to receive the Participant’s Account until
such time as the Participant’s Account is fully paid. 

          4.        Deferred
Compensation and Company Contributions. 

          4.1      Deferred
Compensation Election. Each Participant may elect to defer and contribute
any or all of the Participant’s Compensation for the Plan Year. 

	
 

	
 

	
 

	
 

	
 

	
 

	
           a.        Each
 election (or deemed election) to defer an amount to the Participant’s Account
 as Deferred Compensation under this Section shall: 

	
 

	
 

	
 

	
 

	
 

	
            i)          be
 made upon forms furnished by the Company or by evidencing such election using
 an electronic or telephonic medium available to such individual and
 acceptable to the Company, at such time as the Company shall determine and
 shall conform to such other procedural and substantive rules as the Company
 shall establish; 

	
 

	
 

	
 

	
 

	
 

	
            ii)          except
 as provided in Section 6.2, be irrevocable after the first day of the Plan
 Year for which the deferral election is made; and 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
            iii)          except
 as provided in subsection 4.1(b) and (c), be received by the Company prior to
 the first day of the Plan Year for which the deferral election is made. 

	
 

	
 

	
 

	
 

	
 

	
 

	
           b.        With
 respect to an eligible employee or director who first becomes a Participant
 during the Plan Year, the Participant’s election to defer Compensation for
 that Plan Year must be received by the Company no later than 30 days after
 the date of the Participant’s initial eligibility, and, if so received, the
 deferral election shall be effective as of the first day of the month
 following such receipt, shall be irrevocable for the remainder of the Plan
 Year and shall only apply to Compensation earned following the effective date
 of the election. With respect to an election to defer a bonus earned over a
 specified period that does not constitute Performance-Based Compensation,
 only that portion of the bonus will be deferred based on a fraction, the
 numerator of which is the number of days remaining in the service period and
 the denominator of which is the total number of days in the service period. 

	
 

	
 

	
 

	
 

	
 

	
 

	
           c.         With
 respect to Performance-Based Compensation, the Participant’s election to
 defer may be made no later than 6 months before the last day of the
 performance period to which the payment of Performance-Based Compensation
 relates. 

6

	
 

	
 

	
 

	
 

	
           d.         The
 Participant may elect to defer a dollar amount or percentage of Compensation,
 which shall be applicable to all or any portion (such as base salary,
 variable compensation or commission) of the Participant’s Compensation earned
 during the Plan Year, as determined by the Committee; provided that the
 designation of the types of Compensation eligible for deferral shall be
 determined prior to the first day of the Plan Year and shall be irrevocable
 during such Plan Year. 

	
 

	
 

	
 

	
 

	
           e.          The
 Participant shall also elect in writing on the form on which the deferral
 election is made, the form of payment as provided in Section 7.1, which
 election shall be irrevocable, except as provided in Sections 7.2. 

	
 

	
 

	
 

	
 

	
           f.          A
 new election may be made for each subsequent Plan Year in accordance with the
 provisions of subsection 4.1(a); provided however, that in the absence of a
 timely election, the Participant’s written deferral election for the
 preceding Plan Year shall apply to the succeeding Plan Year. 

          4.2      Company
Contribution. In addition to Deferred Compensation, the Company may, but
shall not be obligated to, contribute to the Plan on behalf of one or more
Participants. The amount of any Company Contribution may be based on all or any
portion (salary, bonus or commissions) of a Participant’s Compensation, and may
take into account contributions that the Company has made under the provisions
of its Qualified Plan and/or as Deferred Compensation. Company Contributions
shall not be subject to the election provided under Section 4.1, and need not
be uniform for all Participants. The Company may, prior to the date the
Participant has a legally binding right to such Company Contribution, designate
the time and form of payment of such Company Contributions (including any
income, gains or losses thereon) and in the absence of such designation, the
time and form of payment in effect for the Participant’s Deferred Compensation
for that Plan Year shall apply (or if no such election is in effect, in a lump
sum in accordance with Section 6). 

          4.3      Vesting.
Each Participant shall have a fully vested and nonforfeitable interest in his
or her amounts of Deferred Compensation contributed to the Plan under Section
4.1. Company Contributions under Section 4.2 may be subject to a vesting
schedule or other conditions, including but not limited to non-competition, as
determined by the Committee, in its sole discretion, provided such restrictions
are established at the time such contributions are first credited to the
Participant’s Account. 

          5.        Plan
Accounts. 

          5.1      Establishment
of Accounts. On the date that an amount of Deferred Compensation under
Section 4.1 would otherwise be paid to the Participant, that amount shall be
credited to an Account on behalf of the Participant on the books of the
Company. As of the last day of the Plan Year, or such earlier date as the
Committee determines, the amount of any Company Contribution under Section 4.2
shall be credited to the Participant’s Account. No Participant shall derive any
rights or benefits in or to any assets of the Company solely from the
establishment or maintenance of such Accounts on the books of the Company. The
Account shall not constitute or be treated as an escrow or trust fund of any
kind. 

          5.2       Designation
of Measuring Investments. In the discretion of the Company and in
accordance with procedures to be established by the Company, each Participant
shall elect, as part of the initial enrollment process, and from time to time
thereafter, one or more Measuring Investments that shall be used to determine
the value of such Participant’s Account. If permitted by the Company, a
Participant’s change in Measuring Investments shall designate: 

	
 

	
 

	
 

	
            a.          one
 or more Measuring Investments for the current Account balance, and 

	
 

	
 

	
 

	
            b.          one
 or more Measuring Investments for amounts that are credited to the Account in
 the future. 

7

An effective
change in Measuring Investments shall be effective as of the day after the
Valuation Date coincident with or immediately following the date the election
change is filed. A Participant’s change in Measuring Investments shall not be
effective unless such election change complies with the procedures established
by the Company. The Company may, in its sole discretion, add, discontinue or
substitute a Measuring Investment. In the event the Company does not permit
Participant election of Measuring Investments, each Participant’s Account shall
be credited with interest at a rate of return based on a fixed income
investment of 1-10 years maturity as determined in good faith by the Committee
from time to time. 

          5.3          Adjustments
of Accounts. As of each Valuation Date, the value of each Account shall be
adjusted for credits, distributions and withholding subtractions under Section
11.3 during the valuation period and the value of each Account shall be
adjusted for income, gains and losses during the valuation period as if the
Account had in fact been invested in the Measuring Investments selected by the
Participant during such period. The Committee shall establish additional rules
for the adjustment of Participants’ Accounts as it deems necessary and
appropriate. All such determinations shall be final and binding on all
Participants. The Company shall provide to the Participant at least annually a
written statement setting for current value of each Account and any changes to
the Account. 

          6.            Distributions
from Accounts. 

          6.1          Separation
from Service. 

	
 

	
 

	
 

	
 

	
               a.          With
 respect to a Participant who is not a Specified Employee, unless earlier
 distributed as provided herein or except as permitted by Section 6.7,
 distribution of the Participant Account shall commence on the Valuation Date
 coincident with or immediately following the Participant’s Separation from
 Service with the Company and shall be made as soon as practicable (but no
 later than the 90th day) after such Valuation Date in the form elected by the
 Participant in accordance with Section 4.1 or, if applicable, as designated
 by the Employer in accordance with Section 4.2. 

	
 

	
 

	
 

	
 

	
               b.          With
 respect to a Participant who is a Specified Employee, unless earlier
 distributed as provided herein or except as permitted by Section 6.7,
 distribution of the Participant Account shall commence on the Valuation Date
 coincident with or immediately following the 181st day after the
 date of the Participant’s Separation from Service with the Company and shall
 be made as soon as practicable (but no later than the 90th day)
 after such Valuation Date in the form elected by the Participant in
 accordance with Section 4.1 or, if applicable, as designated by the Employer
 in accordance with Section 4.2. 

	
 

	
 

	
 

	
 

	
6.2

	
     Unforeseeable
 Emergency. 

	
 

	
 

	
 

	
 

	
               a.          If the Committee determines that the Participant has incurred an
 Unforeseeable Emergency, the Participant shall receive a distribution from
 the Participant’s Account as of the Valuation Date coincident with or
 immediately preceding the date of the approval of the Unforeseeable Emergency
 by the Committee, and shall be made in a single lump sum as soon as
 practicable (but no later than the 30th day) after such approval. To receive
 such a distribution, the Participant must file a written distribution request
 with the Committee, specifying the basis for the Unforeseeable Emergency and
 the amount requested, and shall furnish such supporting documentation of the
 request as the Committee may require. The amount of the payment based on
 Unforeseeable Emergency shall not exceed the amount that is reasonably
 necessary to satisfy the emergency, and shall include the amounts necessary
 to pay any federal, state or local income taxes reasonably anticipated to
 result from the payment, or the value of the Participant’s Account, whichever
 is less. A distribution for an Unforeseeable Emergency shall not be made
 after the death of the Participant or after the occurrence of any
 distribution event. 

8

	
 

	
 

	
 

	
 

	
 

	
 

	
          b.          “Unforeseeable
 Emergency” means:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
              i)          a
 severe financial hardship to the Participant resulting from a sudden and
 unexpected illness or accident of the Participant, the Participant’s spouse,
 a beneficiary or the Participant’s dependent (as defined in Code §152(a) but
 without regard to Code §152(b)(1), (b)(2) and (d)(1)(B)); 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
              ii)         loss
 of the Participant’s property due to casualty; or 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
              iii)        other
 similar extraordinary and unforeseeable circumstances arising as a result of
 the events beyond the control of the Participant. 

	
 

	
 

	
 

	
 

	
 

	
 

	
          c.           Whether
 a Participant is faced with an Unforeseeable Emergency that may permit a
 distribution to be made under Section 6.2 is to be determined based on the
 relevant facts and circumstances of each case and Treas. Reg.
 §1.409A-3(i)(3), but, in any case, a distribution on account of an
 Unforeseeable Emergency may not be made to the extent that such emergency is
 or may be relieved: 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
    i)          through
 reimbursement or compensation from insurance or otherwise; 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
              ii)         by
 liquidation of the Participant’s assets to the extent the liquidation of such
 assets would not itself cause severe financial hardship; or 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
    iii)        by
 cessation of deferrals under the Plan. 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Company
 must take into account any additional compensation available upon the
 cessation of deferrals under the Plan, but may disregard amounts available as
 a hardship distribution or a loan from the Qualified Plan or as an
 unforeseeable emergency distribution under another nonqualified plan
 sponsored by the Company.

	
 

	
 

	
 

	
 

	
 

	
 

	
          d.           A
 Participant may cancel an existing and otherwise irrevocable election for
 that Plan Year at any time following the Participant’s receipt of a
 distribution for an Unforeseeable Emergency or of a distribution from the
 Company’s Qualified Plan based on a hardship within the meaning of Treas.
 Reg. §1.401(k)-1(d)(3). 

	
 

	
 

	
 

	
 

	
 

	
 

	
          e.           Neither
 a Participant’s request nor failure to request a distribution upon an
 Unforeseeable Emergency or the Company’s acceptance or rejection of such a
 request shall be deemed a change in payment election under this Plan. 

	
 

	
 

	
 

	
 

	
 

	
 

	
6.3     Disability.
 

	
 

	
 

	
 

	
 

	
 

	
 

	
          a.           If
 the Participant has incurred a Disability, payment of the Participant’s
 Account shall be made to the Participant’s beneficiary as of the Valuation
 Date coincident with or immediately following the Participant’s Separation
 from Service as a result of the Disability and shall be made in a single lump
 sum payment as soon as practicable (but no later than the 90th day) after
 such Valuation Date. 

	
 

	
 

	
 

	
 

	
 

	
 

	
          b.          “Disability”
 is any medically determined physical or mental impairment that is expected to
 result in death or continue for at least 12 months and that renders the
 Participant unable to engage in any substantial gainful activity or for which
 the Participant receives at least three months of benefits under a
 Company-sponsored disability plan. 

9

	
 

	
 

	
 

	
 

	
6.4      Death.
 

	
 

	
 

	
 

	
 

	
           a.          If
 the Participant dies, whether prior to the commencement of payment or after
 payments have begun, payment of the Participant’s Account (or any portion
 that remains unpaid) shall be made to the Participant’s beneficiary in a
 single lump sum payment as of the Valuation Date coincident with or
 immediately following the Participant’s death and shall be made as soon as
 practicable (but no later than the 90th day) after such Valuation Date. 

	
 

	
 

	
 

	
 

	
           b.          Each
 Participant shall file with the Company, on form prescribed by the Company, a
 written designation of the person or persons to receive the Participant’s
 Account under this Plan. This right shall include the right to name and
 change primary and contingent beneficiaries, but any designation of
 beneficiaries shall be effective only when filed by the Participant in
 writing with the Company during the Participant’s lifetime. Prior to the
 death of the Participant, no spouse or surviving spouse of a Participant and
 no person designated to be a beneficiary shall have any rights or interest in
 the benefits credited under this Plan including, but not limited to, the
 right to be the sole beneficiary or to consent to the designation of beneficiaries
 (or the changing of designated beneficiaries) by the Participant. In the
 absence of such written designation or if the beneficiaries so named
 predeceased the Participant, the Participant’s beneficiary shall be the same
 person(s) designated as such under the terms of the Qualified Plan. 

	
 

	
 

	
 

	
 

	
6.5

	
Change in
 Control. 

	
 

	
 

	
 

	
 

	
          a.          In
 the event of a Change in Control of the Company, distribution of the
 Participant’s Account shall be made as of the Valuation Date coincident with
 or next following the Change in Control and shall be made in a lump sum
 payment as soon as practicable (but no later than the 90th day) after such
 Valuation Date. 

	
 

	
 

	
 

	
 

	
          b.          “Change
 in Control” is a change in control as defined in the Company’s 2006 Stock
 Incentive Plan, as amended from time to time. 

	
 

	
 

	
 

	
           6.6     Permissible
 Acceleration. Notwithstanding anything in this Article 6, the Committee,
 in its sole discretion and without any Participant discretion or election,
 operationally may elect to accelerate the time or schedule of payment from
 the Plan in any or all of the circumstances described in Treas. Reg.
 §§1.409A-3(j)(4)(ii) through (xiv); provided that the Committee must treat
 all similarly situated Participants on a reasonably equivalent basis. Such
 circumstances include, but are not limited to: 

	
 

	
 

	
 

	
 

	
          a.          the
 mandatory lump-sum payment of the remaining balance in the Participant’s
 Accounts in the Plan and all Aggregated Plans, provided the payment amount does
 not exceed the applicable dollar amount under Code §402(g)(1)(B); 

	
 

	
 

	
 

	
 

	
          b.          any
 required withholding of income or employment taxes with respect to any
 amounts in a Participant’s Account (whether or not distributable at the time)
 shall be distributed from the Participant’s Account at the time such
 withholding is required to be paid, and shall be applied to pay such required
 withholding; and 

	
 

	
 

	
 

	
 

	
          c.          any
 payment pursuant to Section 8.5. 

	
 

	
 

	
 

	
 

	
6.7

	
Subsequent
 Election to Defer. 

	
 

	
 

	
 

	
 

	
          a.          A
 Participant may elect to further defer distribution of the Participant’s
 Account payable upon a Separation of Service if: 

10

	
 

	
 

	
 

	
 

	
 

	
 

	
          i)          the
 election to further defer is made at least twelve months prior to the date of
 the Participant’s Separation from Service; and 

	
 

	
 

	
 

	
 

	
 

	
 

	
          ii)          such
 Participant has not previously elected pursuant to this Section to defer
 distribution of the Participant’s Account. 

	
 

	
 

	
 

	
 

	
 

	
No spouse,
 former spouse, designated beneficiary or other person shall have any right to
 participate in the Participant’s decision to further defer distribution of
 all or a portion of the Participant’s Account.

	
 

	
 

	
 

	
 

	
 

	
          b.       The
 Participant must elect that, except in the event of death, Disability or
 Unforeseeable Emergency, the Participant’s Account will distributed on
 either: 

	
 

	
 

	
 

	
 

	
 

	
 

	
           i)         the
 fifth anniversary of the date of the Participant’s Separation from Service;
 or 

	
 

	
 

	
 

	
 

	
 

	
 

	
           ii)        the
 first day of the month following the date the Participant attains age 60,
 provided such date is later than the fifth anniversary of Participant’s
 Separation from Service. 

	
 

	
 

	
 

	
 

	
 

	
           c.       An
 election to change the form of payment under Section 7.2 shall be considered
 a subsequent election to defer and shall comply with the provisions of this
 Section. 

	
 

	
 

	
 

	
 

	
 

	
7.        Form of Distribution. 

	
 

	
 

	
 

	
 

	
          7.1       Form.
 Upon a Participant’s Separation from Service, unless distributed earlier in
 accordance with the Plan, distribution of the Participant’s Account shall be
 made in one or more of the following forms designated by the Participant
 provided the election is made at the same time and subject to the conditions
 set forth in Section 4.1: 

	
 

	
 

	
 

	
 

	
 

	
 

	
 a.         a
 single lump sum; or 

	
 

	
 

	
 

	
 

	
 

	
           b.         a
 series of monthly installments over 60 months, provided, however, that
 installments shall be made quarterly if the aggregate amount of monthly
 payments per quarter would be less than $5,000. 

If the
Participant shall have failed to make a timely designation of the form of
distribution or as otherwise provided in Section 6.6(a), the distribution shall
be made in a single lump sum. 

          7.2      Election
to Change Form. An election to change the form of payment under Section 7.1
with respect to amounts previously credited to the Participant’s Accounts shall
be considered a subsequent election to defer and shall comply with the
provisions of Section 6.7. For purposes of Section 6.7 and the requirements of
Treas. Reg. §1.409A-2(b), a series of monthly installments shall be treated as
a single payment. 

          7.3      Incompetency.
Every person receiving or claiming benefits under this Plan shall be
conclusively presumed to be mentally competent until the date on which the Plan
Administrator receives a written notice in a form and manner acceptable to the
Plan Administrator that such person is incompetent and that a guardian,
conservator or other person legally vested with the care of his estate has been
appointed. In such event, the Plan Administrator may direct payments of
benefits to such guardian, conservator or other person legally vested with the
care of his estate and any such payments so made shall be a complete discharge
of the Company and the Plan Administrator to the extent so made. 

11

          8.          Funding
and Rights to Benefits. 

          8.1        Unsecured
Creditors. The rights of Participants and the beneficiaries to benefits
from this Plan are solely as unsecured creditors of the Company. Benefits
payable under this Plan shall be payable from the general assets of the
Company, and there shall be no fund or other assets securing the payment of
such benefits. In its discretion, the Company may purchase or set aside assets
to provide for the payment of benefits hereunder but such assets shall in all
cases remain assets of the Company. No Participant or former Participant shall
have any legal or equitable right or interest in any Account or in any funds
set aside by the Company or in any assets in which the Company may invest, from
time to time, to fund this Plan. 

          8.2         Insurance.
The Company may, but is not required to, obtain insurance in connection with
its obligations under this Plan. The Company shall be the owner and beneficiary
of the proceeds of such insurance contract. The Participant, as a condition of
participation under this Plan, shall cooperate with the Company and shall
execute any documents reasonably requested by the Company to obtain any such
insurance. 

          8.3         Trust.
The Company may establish a grantor trust or other similar arrangement to fund
this Plan, provided that no such arrangement shall be established which results
in the Participant having any rights other than those of a general unsecured
creditor of the Company. 

          8.4         Assignment
and Levy. The Plan is for the benefit and protection of Participants and
their beneficiaries and the rights, privileges and except as provided in
Section 8.5 benefits herein conferred shall not, to the extent permitted by
law, be subject to alienation, assignment, pledge, levy, attachment,
garnishment or other legal process or in any manner anticipated, encumbered,
committed, withdrawn or surrendered, and neither shall the same be subject or
liable in any way for debts, contracts, or agreements or other claims of
creditors of such Participants or their beneficiaries whether such claims are
now contracted or which may hereafter be contracted or incurred. 

          8.5         Domestic
Relations Orders. The Plan Administrator may permit the assignment of the
interest of a Participant in the Plan to a Participant’s former spouse as part
of a judgment decree or order, including approval of a property settlement
agreement, that relates to provision of alimony payments, or marital property
rights to a former spouse, made pursuant to state domestic relations law
(including a state community property law) and that creates a former spouse’s
right to all or a portion of the Participant’s Account under the Plan. Such
payments shall not impair the rights of any former spouse under any such order
previously accepted by the Plan with respect to the Participant’s Account.
Payment of benefits may be made in a single lump sum as of a date specified in
the order. To the extent feasible, the rules and procedures for the
determination of an order under this Plan shall be consistent with the
procedures for a qualified domestic relations order under the Qualified Plan. 

          9.           Administration
and Claims. 

          9.1         Administration.
The Plan shall be administered by
the Committee; provided, however, that the Committee may delegate any and all
of its powers and authority to a person or committee appointed by the Company,
subject to its review, and in that case, all references in the Plan to the
Committee shall instead mean such person or other committee. The Committee
shall have full power to construe, interpret and administer this Plan,
including to make any determination required under this Plan and to make such
rules and regulations as it deems advisable for the operation of this Plan. A
majority of the Committee shall constitute a quorum. Actions of the Committee
shall be by a majority of persons constituting a quorum and eligible to vote on
an issue. Meetings may be held in person or by telephone. Action by the
Committee may be taken in writing without a meeting provided all disinterested
members of the Committee execute such action. To the extent it is feasible to
do so, determinations, rules and regulations of the Committee under this Plan
shall be consistent with similar determinations, rules and regulations of the
Qualified Plan. All determinations of the Committee shall be final and binding
on all parties, subject only to the review of the Board of Directors of the
Company. 

12

          9.2         Named
Fiduciary and Plan Administrator. The Company is designated as the Named
Fiduciary and the Plan Administrator of the Plan. The Chief Financial Officer
of the Company is authorized to perform general administrative functions under
the Plan on behalf of the Plan Administrator. Personnel acting within the scope
of their employment on behalf of the Company in the performance its duties on
behalf of the Named Fiduciary and the Plan Administrator under this Plan shall
not become or be deemed to be fiduciaries in their individual capacity. 

          9.3         Claims
Procedure and Review. A Participant or beneficiary (the “claimant”) may
make a claim for Plan benefits within the time and in the manner described
herein. Such claim shall be made within 60 days after the claim arises by
filing a written request with the President of the Company, on behalf of the
Plan Administrator. The claim shall be determined by the Plan Administrator
within a reasonable time after the receipt of the written claim. Notice of the
Plan Administrator’s decision shall be communicated to the claimant in writing.
If the claim is denied, the notice shall include the specific reasons for the
denial (including reference to pertinent Plan provisions), a description of any
additional material or information necessary for the Plan Administrator to
reconsider the claim, the reasons for any of such additional material or
information, and an explanation of the review procedure. 

          9.4         Appeal.
The claimant or his or her duly authorized representative may, within 90 days
after receiving such written notice, request the Committee to review the Plan
Administrator’s decision. The Committee shall afford the claimant a hearing and
the opportunity to review all pertinent documents and submit issues and
comments orally and in writing and shall render a review decision in writing
within 60 days after receipt of request for review. The review proceeding shall
be conducted in accordance with the rules and regulations adopted from time to
time by the Committee, which, to the extent feasible, shall be consistent with
the rules and regulations for the Qualified Plans. 

          9.5         Indemnification.
The Company shall indemnify and hold harmless each member of the Committee and
any other employee or officer acting on behalf of the Company against any and
all claims, loss, damages, expenses (including reasonable attorneys’ fees), and
liability (including any amounts paid in settlement) as a result of the
administration of the Plan or the exercise of discretion or from any other
action or failure to act hereunder, except when the same is judicially
determined to be due to gross negligence or willful misconduct of such person.
Notwithstanding the foregoing, the Company does not assure or guarantee the tax
consequences of benefits provided hereunder or other matters beyond its
control. 

          10.         Amendment
and Termination. 

          10.1       Amendments.

	
 

	
 

	
 

	
 

	
              a.          The
 Company reserves the right to amend or modify, in whole or in part, any or
 all of the provisions of this Plan at any time by a written instrument
 approved by the Committee; provided, however, that, except as provided in
 subsection (b), no amendment or modification shall be made which will deprive
 any Participant or any Participant’s beneficiary of any vested benefits to
 which he or she is entitled under the Plan. 

	
 

	
 

	
 

	
 

	
              b.          Notwithstanding
 the foregoing, the Company reserves the right to amend or modify, in whole or
 in part, any or all of the provisions of this Plan at any time by written
 instrument approved by the Committee to the extent the Committee determines
 in its sole discretion, to comply with the Code §409A, and regulations and
 other guidance promulgated thereunder, provided that such amendment will not
 result in taxation to any Participant under Code §409A. As a condition to
 receiving benefits under this Plan, each Participant is deemed to consent to
 any such amendment or modification, without further action, including any
 reduction in any benefits otherwise considered accrued and vested prior to
 the effective date of such amendment or modification. 

	
 

	
 

	
 

	
          10.2        Termination.
 Continuation of the Plan is not assumed as a contractual obligation of the
 Company and the right is reserved by the Company, by written instrument
 approved by the Committee, to

13

at any time
reduce, suspend or discontinue the Plan, provided no such reduction, suspension
or discontinuance shall deprive any Participant or beneficiary of any benefits
that become vested under the Plan. The Company, by written instrument approved
by the Committee, may terminate the Plan and distribute all of the Accounts of
the Plan under the following circumstances: 

	
 

	
 

	
 

	
 

	
 

	
          a.          within
 12 months following a dissolution taxable under Code §331 or with approval of
 a bankruptcy court under 11 U.S.C. §503(b)(1)(A), provided that the Plan
 Accounts are paid to the Participants and are included in the Participants’
 gross income in the latest of (or, if earlier, the taxable year in which the
 amount is actually or constructively received): 

	
 

	
 

	
 

	
 

	
 

	
 

	
            i)          the
 calendar year in which the plan termination and liquidation occurs; or 

	
 

	
 

	
 

	
 

	
 

	
 

	
            ii)         the
 first calendar year in which the payment is administratively practicable. 

	
 

	
 

	
 

	
 

	
 

	
          b.         by
 irrevocable action taken within the 30 days preceding or the 12 months
 following a Change in Control, provided the Company distributes all Plan
 Accounts (and must distribute the accounts under any Aggregated Plans which
 plan the Company also must terminate and liquidate as to each Participant who
 has experienced the Change in Control) within 12 months following the date of
 Company’s irrevocable action to terminate and liquidate the Plan and
 Aggregated Plans. Where the Change in Control results from an asset purchase
 transaction, the entity that is primarily liable after the transaction to pay
 the Participants’ Accounts shall exercise the discretion to terminate the
 Plan and distribute the Accounts. 

	
 

	
 

	
 

	
 

	
 

	
 

	
c.         for
 any other reason in the Company’s discretion provided that: 

	
 

	
 

	
 

	
 

	
 

	
 

	
            i)          the
 termination and liquidation does not occur proximate to a downturn in the
 Company’s financial health; 

	
 

	
 

	
 

	
 

	
 

	
 

	
            ii)         the
 Company also terminates all Aggregated Plans in which any Participant also is
 a participant; 

	
 

	
 

	
 

	
 

	
 

	
 

	
            iii)        the
 Plan makes no payments in the 12 months following the date of the Company’s
 irrevocable action to terminate and liquidate the Plan other than payments
 the Plan would have made irrespective of Plan termination; 

	
 

	
 

	
 

	
 

	
 

	
 

	
            iv)        the
 Plan makes all payments within 24 months following the date of the Company’s
 irrevocable action to terminate and liquidate the Plan; and 

	
 

	
 

	
 

	
 

	
 

	
 

	
            v)         the
 Company within 3 years following the date of the Company’s irrevocable action
 to terminate and liquidate the Plan does not adopt a new plan covering any
 Participant that would be an Aggregated Plan. 

          11.      General
Provisions. 

          11.1     Participant’s
Rights. The establishment of this Plan shall not create any legal or
equitable right against the Company unless such right is specifically provided
for in this Plan. Furthermore, nothing in this Plan shall be construed as
giving a Participant the right to be retained in the employment of the Company,
and a Participant shall remain subject to discharge at any time to the same
extent as if this Plan had not been adopted. 

          11.2     Notices.
Notices required by this Plan to be given to the Company or a Participant shall
be in writing and shall be considered to have been duly given or served if
personally delivered, or sent by first class, certified or registered mail. 

14

          11.3     Tax
Withholding. The Company shall, at the time required for such payment,
deduct from the Participant’s Account and remit to the Company or the proper
governmental authorities an amount sufficient to satisfy federal, state, and
local tax withholding requirements with respect to amounts credited to the
Participant’s Account or distributed to the Participant, as the case may be. 

          11.4     Effect
on Other Plans. This Plan shall supplement and not supersede, modify or
amend any other plan or program sponsored by the Company, including but not
limited to, the Qualified Plan and the 1994 Plan. 

          11.5     Release.
Any payment to or for the benefit of any Participant or designated
beneficiaries in accordance with the provisions hereof shall, to the extent
thereof, be in full satisfaction of all claims hereunder against the Company. 

          11.6     Severability.
The invalidity or partial invalidity of any portion of this Plan shall not
invalidate the remainder thereof, and said remainder shall remain in full force
and effect. 

          11.7     Successors.
All obligations of the Company under the Plan shall be binding upon and inure
to the benefit of any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business and/or
assets of the Company. 

          11.8     Governing
Law. The laws of the State of Minnesota shall govern construction and
administration of this Plan, except to the extent preempted by federal law. 

***

          IN
WITNESS WHEREOF, MTS Systems Corporation has caused its duly authorized officer
to execute this Plan on its behalf, who has been duly authorized by its
Compensation Committee as of the effective date stated above. 

	
 

	
 

	
 

	
 

	
MTS SYSTEMS
 CORPORATION

	
 

	
 

	
 

	
 

	
By: 

	
 

	
 

	
 

	 

	
 

	
 

	
 

	
 

	
Its:

	
 

	
 

	
 

	 

15

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