Document:

EX-10.3 2006 LONG TERM INCENTIVE PLAN

Exhibit
10.3

 

 

 

 

 

 

 

 

AGCO CORPORATION

2006 LONG-TERM INCENTIVE PLAN

(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2008)

 

 

 

 

 

AGCO CORPORATION

2006 LONG-TERM INCENTIVE PLAN

(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2008)

     The AGCO Corporation 2006 Long-Term Incentive Plan has been established by AGCO Corporation to
(a) attract and retain persons eligible to participate in the Plan; (b) motivate Participants, by
means of appropriate incentives, to achieve long-range goals; (c) provide incentive compensation
opportunities that are competitive with those of other similar companies; and (d) further identify
Participants’ interests with those of the Company’s other shareholders through compensation that is
based on the Company’s common stock; and thereby promote the long-term financial interest of the
Company and the Subsidiaries, including the growth in value of the Company’s equity and enhancement
of long-term shareholder return.

ARTICLE I

GENERAL

     1.1 Participation. Subject to the terms and conditions of the Plan, the Committee shall
determine and designate, from time to time, from among the Eligible Individuals (including
transferees of Eligible Individuals to the extent the transfer is permitted by the Plan and the
applicable Award Agreement), those persons who will be granted one or more Awards under the Plan,
and thereby become Participants in the Plan. In the discretion of the Committee, a Participant may
be granted any Award permitted under the provisions of the Plan, and more than one Award may be
granted to a Participant.

     1.2 Operation, Administration, and Definitions. The operation and administration of the Plan,
including the Awards made under the Plan, shall be subject to the provisions of Section 6 (relating
to operation and administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Article II of the Plan).

ARTICLE II

DEFINED TERMS

     In addition to the other definitions contained herein, the following definitions shall apply:

     2.1 Award. The term “Award” means any award or benefit granted under the Plan, including,
without limitation, the grant of Options, SARs, Restricted Stock Awards and Performance Share
Awards.

     2.2 Award Agreement. The term “Award Agreement” is defined in Section 5.2.

     2.3 Board. The term “Board” means the Board of Directors of the Company.

     2.4 Change in Control. The term “Change in Control” shall mean a change in the ownership of
the Company, change in the effective control of the Company or change in ownership of a substantial
portion of the Company’s assets, as described in Section 409A of the Code, including each of the
following:

 

 

     (a) A change in the ownership of the Company occurs on the date that any one person, or
more than one person acting as a group, acquires ownership of stock of the Company that,
together with stock held by such person or group, possess more than fifty percent (50%) of
the total fair market value or total voting power of the stock of the Company (not including
where any one person, or more than one person acting as a group, who is considered to own
more than fifty percent (50%) of the total fair market value or total voting power of the
stock of the Company, acquires additional stock).

     (b) A change in the effective control of the Company is presumed (which presumption may
be rebutted by the Committee) to occur on the date that: any one person, or more than one
person acting as a group, acquires (or has acquired during the twelve (12)-month period
ending on the date of the most recent acquisition by such person or persons) ownership of
stock of the Company possessing thirty percent (30%) or more of the total voting power of
the stock of the Company, or a majority of the members of the Board is replaced during any
twelve (12)-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Board prior to the date of the appointment or election of
such new directors.

     (c) A change in the ownership of a substantial portion of the Company’s assets occurs
on the date that any one person, or more than one person acting as a group, acquires (or has
acquired during the twelve (12)-month period ending on the date of the most recent
acquisition by such person or persons) assets from the Company that have a total fair market
value equal to or more than forty percent (40%) of the total fair market value of all of the
assets of the Company immediately prior to such acquisition or acquisitions unless the
assets are transferred to (i) a stockholder of the Company (immediately before the asset
transfer) in exchange for or with respect to its stock, (ii) an entity, fifty percent (50%)
or more of the total value or voting power of which is owned, directly or indirectly by the
Company, (iii) a person, or more than one person acting as a group, that owns, directly or
indirectly, fifty percent (50%) or more of the total value or voting power of all of the
outstanding stock of the Company, or (iv) an entity, at least fifty percent (50%) of the
total value or voting power of which is owned, directly or indirectly, by a person, or more
than one person acting as a group, that owns directly or indirectly, fifty percent (50%) or
more of the total value or voting power of all of the outstanding stock of the Company.

     2.5 Code. The term “Code” means the Internal Revenue Code of 1986, as amended. A reference
to any provision of the Code shall include reference to any successor provision of the Code.

     2.6 Committee. The term “Committee” is defined in Section 8.1.

     2.7 Company. The term “Company” means AGCO Corporation, a Delaware corporation.

     2.8 Effective Date. The term “Effective Date” means January 1, 2006.

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     2.9 Eligible Individual. The term “Eligible Individual” means any employee of the Company or
a Subsidiary and any Board member, consultant or other person providing services to the Company or
a Subsidiary. An Award may be granted to an individual, in connection with hiring, retention or
otherwise, prior to the date the employee first performs services for the Company or the
Subsidiaries, provided that such Awards shall not become effective prior to the date the individual
first performs such services. However, only employees of the Company or any Subsidiary shall be
considered Eligible Individuals with respect to Incentive Stock Options.

     2.10 Exchange Act. The term “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

     2.11 Exercise Price. The term “Exercise Price” is defined in Section 3.1.

     2.12 Fair Market Value. The term “Fair Market Value” means, for any particular date:

     (a) for any period during which the Stock shall be listed for trading on a national
securities exchange, the closing price per share of stock on such exchange, or

     (b) for any period during which the Stock shall not be listed for trading on a national
securities exchange, but when prices for the Stock shall be reported by the National Market
System of the National Association of Securities Dealers Automated Quotation System
(“NASDAQ”), the last transaction price per share as quoted by National Market System of
NASDAQ, or

     (c) for any period during which the Stock shall not be listed for trading on a national
securities exchange or its price reported by the National Market System of NASDAQ, but when
prices for the Stock shall be reported by NASDAQ, the closing bid price as reported by the
NASDAQ, or

     (d) in the event neither Section 2.12 (a), (b) or (c) above shall be applicable, the
market price per share of Stock as determined in good faith by the Committee using a
reasonable valuation method based on the facts and circumstances on the valuation date;
provided, however, that the use of a value per share of stock previously calculated shall
not be reasonable if, as of the date of grant, such valuation fails to reflect information
available after the date of valuation that may materially affect the value of the Company or
if the valuation per share of stock was calculated on a date more than twelve (12) months
prior to the date of grant.

     If Fair Market Value is to be determined as of a day when the securities markets are not open,
the Fair Market Value on that day shall be the Fair Market Value on the preceding day when the
markets were open. The provisions of this Section 2.12 shall be interpreted in accordance with
Section 409A of the Code and the regulations issued thereunder and applicable accounting
principles.

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     2.13 Incentive Stock Option. The term “Incentive Stock Option” means an Option that is
intended to satisfy the requirements applicable to an “incentive stock option” described in section
422(b) of the Code.

     2.14 Non-Qualified Option. The term “Non-Qualified Option” means an Option that is not
intended to be an “incentive stock option” as that term is described in section 422(b) of the Code.

     2.15 Option. The term “Option” means either an Incentive Stock Option or a Non-Qualified
Option and the grant of an Option entitles the Participant to purchase shares of Stock at an
Exercise Price established by the Committee.

     2.16 Participant. The term “Participant” means those Eligible Individuals who are granted one
or more Awards under the Plan.

     2.17 Performance Measures. The term “Performance Measures” means the measurable performance
objectives, if any, established by the Committee for a Performance Period that are to be achieved
with respect to an Award granted to a Participant under the Plan. Performance Measures may be
described in terms of Company-wide objectives or in terms of objectives that are related to
performance of the division, Subsidiary, department or function within the Company or a Subsidiary
in which the Participant receiving the Award is employed or on which the Participant’s efforts have
the most influence. The achievement of the Performance Measures established by the Committee for
any Performance Period will be determined without regard to the effect on such Performance Measures
of any acquisition or disposition by the Company of a trade or business, or of substantially all of
the assets of a trade or business, during the Performance Period and without regard to any change
in accounting standards by the Financial Accounting Standards Board or any successor entity. The
Performance Measures established by the Committee for any Performance Period under the Plan will
consist of one or more of the following:

     (1) earnings per share and/or growth in earnings per share in relation to
target objectives, excluding the effect of extraordinary or nonrecurring items;

     (2) operating cash flow and/or growth in operating cash flow in relation to
target objectives;

     (3) cash available in relation to target objectives;

     (4) net income and/or growth in net income in relation to target objectives,
excluding the effect of extraordinary or nonrecurring items;

     (5) revenue and/or growth in revenue in relation to target objectives;

     (6) total shareholder return (measured as the total of the appreciation of and
dividends declared on the Stock) in relation to target objectives;

     (7) return on invested capital in relation to target objectives;

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     (8) return on shareholder equity in relation to target objectives;

     (9) return on assets in relation to target objectives; and

     (10) return on common book equity in relation to target objectives.

     If the Committee determines that, as a result of a change in the business, operations,
corporate structure or capital structure of the Company, or the manner in which the Company
conducts its business, or any other events or circumstances, the Performance Measures are no
longer suitable, the Committee may in its discretion modify such Performance Measures or the
related minimum acceptable level of achievement, in whole or in part, with respect to a
period as the Committee deems appropriate and equitable, except where such action would
result in the loss of the otherwise available exemption of the Award under Section 162(m) of
the Code, if applicable. In such case, the Committee will not make any modification of the
Performance Measures or minimum acceptable level of achievement.

     2.18 Performance Period. The term “Performance Period” means with respect to an Award, a
period of not less than one (1) year within which the Performance Measures relating to such Award are
to be measured. Notwithstanding the foregoing, up to 250,000 Performance Shares may have
Performance Periods that are less than one (1) year. The Performance Period will be established by the
Committee at the time the Award is granted.

     2.19 Performance Share. The term “Performance Share” means an Award that is a grant of a
right to receive shares of Stock that is contingent on the achievement of performance or other
objectives during a specified period.

     2.20 Plan. The Term “Plan” means the 2006 AGCO Corporation Long-Term Incentive Plan as amended
and/or restated from time to time.

     2.21 Restricted Stock. The term “Restricted Stock” means an Award that is a grant of shares
of Stock with such shares of Stock subject to a risk of forfeiture or other restrictions or
conditions that will lapse over a specified period or upon the achievement of one or more goals
relating to completion of service by the Participant, or achievement of performance or other
objectives, as determined by the Committee.

     2.22 SAR. The term “SAR” means a stock appreciation right and the grant of a SAR entitles the
Participant to receive, in cash or Stock (as determined in accordance with subsection 3.4), value
equal to (or otherwise based on) the excess of: (a) the Fair Market Value of a specified number of
shares of Stock at the time of exercise; over (b) an Exercise Price established by the Committee.

     2.23 Subsidiaries. The term “Subsidiary” means any corporation during any period in which it
is a “subsidiary corporation” (as that term is defined in Code Section 424(f)) with respect to the
Company.

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     2.24 Stock. The term “Stock” means shares of common stock of the Company, par value $.01 per
share.

     2.25 Ten Percent Shareholder. The term “Ten Percent Shareholder” means an individual
shareholder of the Company owning stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any parent or Subsidiary. For
purposes of the preceding sentence, the rules of Section 424 of the Code shall apply in determining
stock ownership.

ARTICLE III

OPTIONS AND SARS

     3.1 Exercise Price. The “Exercise Price” of each Option and SAR granted under this Article 3
shall be established by the Committee or shall be determined by a method established by the
Committee at the time the Option or SAR is granted; except that the Exercise Price shall not be
less than one-hundred percent (100%) of the Fair Market Value of a share of Stock on the date of grant (one-hundred and ten percent (110%) of the Fair
Market Value on such date in the event of an Incentive Stock Option granted to a Participant who is
a Ten Percent Shareholder).

     3.2 Exercise. An Option and a SAR shall be exercisable in accordance with such terms and
conditions and during such periods as may be established by the Committee. Notwithstanding the
foregoing, no Incentive Stock Options may be exercisable more than ten (10) years after the date of
grant (five (5) years after the date of grant in the event of Incentive Stock Options granted to a
Participant who is a Ten Percent Shareholder).

     3.3 Payment of Option Exercise Price. The payment of the Exercise Price of an Option granted
under this Article 3 shall be subject to the following:

     (a) Subject to the following provisions of this Section 3.3, the full Exercise Price
for shares of Stock purchased upon the exercise of any Option shall be paid at the time of
such exercise (except that, in the case of an exercise arrangement approved by the Committee
and described in Section 3.3(c), payment may be made as soon as practicable after the
exercise).

     (b) The Exercise Price shall be payable in cash or by tendering, by either actual
delivery of shares or by attestation, shares of Stock acceptable to the Committee, and
valued at Fair Market Value as of the day of exercise, or in any combination thereof, as
determined by the Committee.

     (c) The Committee may permit a Participant to elect to pay the Exercise Price upon the
exercise of an Option by irrevocably authorizing a third party to sell shares of Stock (or a
sufficient portion of the shares) acquired upon exercise of the Option and
remit to the Company a sufficient portion of the sale proceeds to pay the entire
Exercise Price and any minimum tax withholding resulting from such exercise.

     3.4 Settlement of Award. Shares of Stock delivered pursuant to the exercise of an Option or
SAR shall be subject to such conditions, restrictions and contingencies as the

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Committee may
establish in the applicable Award Agreement. Settlement of SARs may be made in shares of Stock
(valued at their Fair Market Value at the time of exercise), in cash, or in a combination thereof,
as determined in the discretion of the Committee. The Committee, in its discretion, may impose
such conditions, restrictions and contingencies with respect to shares of Stock acquired pursuant
to the exercise of an Option or a SAR as the Committee determines to be desirable.

     3.5 Incentive Stock Option Limits. To the extent the aggregate Fair Market Value of Stock
with respect to which Incentive Stock Options (whether granted under this Plan or any other plan of
the Company or any parent or Subsidiary of the Company) are first exercisable by any Participant
during any calendar year exceeds $100,000, such Options, to the extent of the excess, shall be
treated as Non-Qualified Options.

ARTICLE IV

PERFORMANCE SHARE AWARDS

     At the time a Performance Share Award is granted, the Committee may designate whether such
Performance Share Award being granted to the Participant is intended to be “performance-based
compensation” as that term is used in section 162(m) of the Code. Any such Performance Share
Awards designated as intended to be “performance-based compensation” shall be conditioned on the
achievement of one or more Performance Measures, over a specified Performance Period. Prior to
payment of such Performance Shares, the Committee must certify in writing that the Performance
Measures and other material terms of the Award were in fact satisfied.

     For Performance Share Awards intended to be “performance-based compensation,” the grant of the
Awards and the establishment of the Performance Measures shall be made during the period required
under Section 162(m) of the Code.

ARTICLE V

TERMS AND CONDITIONS OF ALL AWARDS

     5.1 The number of shares of Stock as to which a Award may be granted will be determined by the
Committee in its sole discretion, subject to the provisions of Section 6.2(a) as to the total
number of shares available for grants under the Plan and subject to the limits on Options and SARs
in the following sentence. On such date as required by Section 162(m) of the Code and the
regulations thereunder for compensation to be treated as qualified performance-based compensation,
the maximum number of shares of Stock with respect to which Options, SARs, Restricted Stock Awards
or Performance Shares may be granted during any calendar year period to any Participant may not
exceed five-hundred thousand (500,000). If, after grant, an Award is cancelled, the
cancelled Award shall continue to be counted against the maximum number of shares for which
options may be granted to Participant as described in this Section 5.1.

     5.2 Each Award will either be evidenced by an “Award Agreement” in such form and containing
such terms, conditions and restrictions as the Committee may determine to be appropriate, including
without limitation, Performance Goals that must be achieved as a

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condition to vesting or payment of
the Award, or be made subject to the terms of an Award program, containing such terms, conditions
and restrictions as the Committee may determine to be appropriate, including without limitation,
Performance Goals that must be achieved as a condition to vesting or payment of the Award. Each
Award Agreement or Award program is subject to the terms of the Plan and any provisions contained
in the Award Agreement or Award program that is inconsistent with the Plan are null and void.

     5.3 The date an Award is granted will be the date on which the Committee has approved the
terms and conditions of the Award and has determined the recipient of the Award and the number of
shares covered by the Award, and has taken all such other actions necessary to complete the grant
of the Award.

     5.4 The terms of an Award may provide that the Award will be forfeited and that the
Participant will be obligated to turn over to the Company the proceeds of an Award in the event
that the Participant violates any post-termination obligations that the Participant has to the
Company or any Subsidiary including, without limitation, any obligation not to compete with the
Company or any Subsidiary (regardless of whether such obligation is enforceable under applicable
law), not to solicit employees, customers or clients of the Company or any Subsidiary, to maintain
the confidentiality of information belonging to the Company or any Subsidiary, or not to disparage
the Company or any Subsidiary or any of their affiliates.

ARTICLE VI

OPERATION AND ADMINISTRATION

     6.1 Effective Date. The Plan became effective as of the Effective Date and was previously
approved by the shareholders of the Company. Awards granted under the Plan prior to approval by
the shareholders that were contingent on such approval are effective. The Plan, as amended and
restated, is effective as of January 1, 2008 and does not require further shareholder approval.
The Plan shall be unlimited in duration and, in the event of Plan termination, shall remain in
effect as long as any Awards under it are outstanding; provided, however, that, to the extent
required by the Code, no Incentive Stock Option may be granted under the Plan on or after January
1, 2016.

     6.2 Shares Subject to Plan. The shares of Stock for which Awards may be granted under the
Plan shall be subject to the following:

     (a) Subject to the following provisions of this subsection 6.2, the maximum number of
 shares of Stock that may be delivered to Participants and their beneficiaries under the Plan
shall be five million (5,000,000).

     (b) For purposes of calculating the total number of shares of Stock available under
this Plan for grants of Awards, (i) the grant of an Award of Options, Restricted Stock
Awards, SARs or a Performance Share Award shall be deemed to be equal to the maximum number
of shares of Stock which may be issued under the Award, (ii) subject

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to the provisions of
this Section 6.2 there shall again be available for Awards under this Plan all of the
following: (A) shares of Stock represented by Awards which have been cancelled, forfeited,
surrendered or terminated or which expire unexercised and (B) the excess portion of variable
Awards, such as SARs and Performance Share Awards, which become fixed at less than their
maximum limitations.

     (c) If the Exercise Price of any stock option granted under the Plan or any prior
equity incentive plan of the Company is satisfied by tendering shares of Stock to the
Company (by either actual delivery or by attestation), only the number of shares of Stock
issued net of the shares of Stock tendered shall be deemed delivered for purposes of
determining the maximum number of shares of Stock for delivery under the Plan.

     (d) Subject to Article VII, in the event of a corporate transaction involving the
Company (including, without limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares), the Committee shall adjust Awards to preserve the
benefits or potential benefits of the Awards. Action by the Committee may include: (i)
adjustment of the number and kind of shares which may be delivered under the Plan and the
applicable limits under the Plan; (ii) adjustment of the number and kind of shares subject
to outstanding Awards; (iii) adjustment of the Exercise Price of outstanding Options and
SARs; and (iv) any other adjustments that the Committee determines to be equitable;
provided, however that any adjustments to the number of shares subject to an Award and the
Exercise Price to be paid therefor, shall be proportionately adjusted to reflect such
transaction and only such transaction on a pro rata basis such that the aggregate Exercise
Price of such Awards, if any, is not less than the aggregate Exercise Price before such
transaction. The foregoing adjustment and the manner of application of the foregoing
provisions shall be determined by the Committee in its sole discretion and to the extent not
prohibited under Section 409A of the Code and the regulations thereunder. Any such
adjustment may provide for the elimination of any fractional share which might otherwise
become subject to an Award.

     6.3 General Restrictions. Delivery of shares of Stock or other amounts under the Plan shall
be subject to the following:

     (a) Notwithstanding any other provisions of the Plan, the Company shall have no
liability to deliver any shares of Stock under the Plan or make any other distribution of
benefits under the Plan unless such delivery or distribution would comply with all
applicable laws (including, without limitation, the requirements of the Securities Act
of 1933), and the applicable requirements of any securities exchange or similar entity.

     (b) To the extent that the Plan provides for issuance of stock certificates to reflect
the issuance of shares of Stock, the issuance may be effected on a non-certificated basis,
to the extent not prohibited by applicable law or the applicable rules of any stock
exchange.

     6.4 Tax Withholding. All Awards under the Plan are subject to withholding or payment of all
applicable taxes, and the Committee may condition the delivery of any shares or

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other benefits
under the Plan on satisfaction of the applicable withholding obligations. The Committee, in its
discretion, and subject to such requirements as the Committee may impose prior to the occurrence of
such withholding, may permit such withholding obligations to be satisfied through cash payment by
the Participant or through the surrender of shares of Stock to which the Participant is otherwise
entitled under the Plan.

     6.5 Section 409A of the Code. Notwithstanding anything to the contrary contained herein,
Awards granted under this Plan are not intended to be treated as deferred compensation within the
meaning of Section 409A of the Code. Towards that end, the Plan will be administered and construed
by the Committee in a manner to fulfill such intent. Notwithstanding the foregoing, none of the
Company, its Subsidiaries or the Committee shall be liable to any Participant if any Award fails to
be exempt from, or to be in compliance with, Section 409A of the Code.

     6.6 Use of Shares. Subject to the overall limitation on the number of shares of Stock that
may be delivered under the Plan, the Committee may use available shares of Stock as the form of
payment for compensation, grants or rights earned or due under any other compensation plans or
arrangements of the Company or a Subsidiary, including the plans and arrangements of the Company or
a Subsidiary assumed in business combinations.

     6.7 Dividends and Dividend Equivalents. An Award other than an Option or SAR Award may
provide the Participant with the right to receive dividend payments or dividend equivalent payments
with respect to Stock subject to the Award (both before and after the Stock subject to the Award is
earned, vested, or acquired), which payments may be either made currently or credited to an account
for the Participant, and may be settled in cash or Stock as determined by the Committee. Any such
settlements, and any such crediting of dividends or dividend equivalents or reinvestment in shares
of Stock, may be subject to such conditions, restrictions and contingencies as the Committee shall
establish, including the reinvestment of such credited amounts in Stock equivalents.

     6.8 Payments. Awards may be settled through cash payments, the delivery of shares of Stock,
or combination thereof, as the Committee shall determine provided that, in the case of Restricted
Stock Awards and Performance Share Awards, such settlement shall be made within two and a half
(2-1/2) months after the later of (i) the last day of the Participant’s taxable year during which the Award
is no longer subject to a substantial risk of forfeiture or (ii) the last day of the Company’s
taxable year during which the Award is no longer subject to a substantial risk of forfeiture. Any Award settlement, including payments thereof or delivery of Stock, may be
subject to such conditions, restrictions and contingencies as the Committee shall determine. Each
Subsidiary shall be liable for payment of cash due under the Plan with respect to any Participant
to the extent that such benefits are attributable to the services rendered for that Subsidiary by
the Participant. Any disputes relating to liability of a Subsidiary for cash payments shall be
resolved by the Committee.

     6.9 Transferability. Except as otherwise provided by the Committee, Awards under the Plan are
not transferable except as designated by the Participant by will or by the laws of descent and
distribution.

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     6.10 Form and Time of Elections. Unless otherwise specified herein, each election required or
permitted to be made by any Participant or other person entitled to benefits under the Plan, and
any permitted modification, or revocation thereof, shall be in writing filed with the Committee at
such times, in such form, and subject to such restrictions and limitations, not inconsistent with
the terms of the Plan, as the Committee shall require.

     6.11 Action by Company or Subsidiary. Any action required or permitted to be taken by the
Company or any Subsidiary shall be by resolution of its Board, or by action of one or more members
of the Board (including a committee of the Board) who are duly authorized to act for the Board, or
(except to the extent prohibited by applicable law or applicable rules of any stock exchange) by a
duly authorized officer of such company.

     6.12 Gender and Number. Where the context admits, words in any gender shall include any other
gender, words in the singular shall include the plural and the plural shall include the singular.

     6.13 Limitation of Implied Rights.

     (a) Neither a Participant nor any other person shall, by reason of participation in the
Plan, acquire any right in or title to any assets, funds or property of the Company or any
Subsidiary whatsoever, including, without limitation, any specific funds, assets, or other
property which the Company or any Subsidiary, in their sole discretion, may set aside in
anticipation of a liability under the Plan. A Participant shall have only a contractual
right to the Stock or amounts, if any, payable under the Plan, unsecured by any assets of
the Company or any Subsidiary, and nothing contained in the Plan shall constitute a
guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any
benefits to any person.

     (b) The Plan does not constitute a contract of employment or service, and selection as
a Participant will not give any participating employee or service provider the right to be
retained in the employ or service of the Company or any Subsidiary, nor any right to claim
to any benefit under the Plan, unless such right or claim has specifically accrued under the
terms of the Plan. Except as otherwise provided in the Plan, no Award under the Plan shall
confer upon the holder thereof any rights as a shareholder of the Company prior to the date on which the individual fulfills all conditions for receipt
of such rights and issuance of Stock to such individual.

     6.14 Evidence. Evidence required of anyone under the Plan may be by certificate, affidavit,
document or other information which the person acting on it considers pertinent and reliable, and
signed, made or presented by the proper party or parties.

     6.15 Governing Law. This Plan and all Awards granted hereunder shall be governed by the laws
of the State of Delaware, except to the extent federal law applies.

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ARTICLE VII

CHANGE IN CONTROL

     Subject to the provisions of Section 6.2(d) (relating to the adjustment of shares), and except
as otherwise provided in the Plan or the Award Agreement reflecting the applicable Award, upon the
occurrence of a Change in Control: (a) all outstanding Options shall become fully exercisable; (b)
all outstanding SARs shall become fully exercisable; and (c) all Restricted Stock and Performance
Shares shall become fully vested.

     Notwithstanding any provision of any Award Agreement, in the event of or in anticipation of a
Change in Control, the Committee in its discretion may (a) declare that some or all outstanding
Options, SARs and/or Restricted Stock Awards previously granted under the Plan, whether or not then
exercisable or vested, shall terminate as of a date before or on the Change in Control without any
payment to the holder thereof (other than repayment of the purchase price, if any, paid for
Restricted Stock Awards), provided that, in the case of Options and SARs, the Committee gives prior
written notice to the Participants of such termination and gives such Participants the right to
exercise the outstanding Options or SARs for at least seven (7) days before such date to the extent
then exercisable (or to the extent such Options or SARs would have been exercisable as of the
Change in Control); (b) terminate before or on the Change in Control some or all outstanding Awards
previously granted under the Plan, whether or not then exercisable, vested or earned and payable,
in consideration of payment to the holder thereof, (i) with respect to each share of Stock for
which the Option or SAR is then exercisable (or for which the Option or SAR would have been
exercisable as of the Change in Control), of the excess, if any, of the Fair Market Value on such
date of the Stock subject to such portion of the Option or SAR over the exercise or base price
(provided that outstanding Options or SARs that are not then exercisable and that would not become
exercisable on the Change in Control, and Options or SARs with respect to which the Fair Market
Value of the Stock subject to the Options or SARs does not exceed the exercise or base price, shall
be cancelled without any payment therefor), (ii) with respect to Restricted Stock Awards that are
not then nonforfeitable and transferable (but that would have become nonforfeitable and
transferable as of the Change in Control) in exchange for the payment equal to the difference
between the then Fair Market Value of the shares of Stock subject to the Restricted Stock Award
less the unpaid purchase price, if any, for such shares or (iii) with respect to Performance Shares
that are not then earned and payable (but that would have become earned and payable as of the
Change in Control) in exchange for a payment equal to the amount which would have been payable
under such Performance Share Awards; (c) terminate before or on the Change in Control some or all
outstanding Performance Share Awards previously granted under the Plan that are not then
earned and payable (and that would not have become earned and payable as of the Change in Control)
without any payment to the holder thereof or (d) take such other action as the Committee determines
to be reasonable under the circumstances to permit the Participant to realize the value of the
Award (which value for purposes of Awards that are not then exercisable, vested or payable and that
would not become exercisable, vested or payable as of the Change in Control, and Options or SARs
with respect to which the Fair Market Value of the Stock subject to the Options or SARs does not
exceed the exercise or base price, shall be deemed to be zero). The payments described in (b)
above may be made in any manner the Committee determines, including in cash, stock or other
property (whether or not part of the consideration of the Change

12

 

in Control). The Committee may
take the actions described in (a) or (b) above with respect to Awards that are not then exercisable
whether or not the Participant will receive any payment therefor. The Committee in its discretion
may take any of the actions described in this Article VII contingent on consummation of the Change
in Control and with respect to some or all outstanding Awards, whether or not then exercisable,
vested or payable or on an Award-by-Award basis, which actions need not be uniform with respect to
all outstanding Awards. However, the Awards shall not be terminated to the extent that written
provision is made for their continuance, assumption or substitution by the Company or a successor
employer or its parent or subsidiary in connection with the Change in Control.

ARTICLE VIII

COMMITTEE

     8.1 Administration. The authority to control and manage the operation and administration of
the Plan shall be vested in a committee (the “Committee”) in accordance with this Article 8. So
long as the Board has a Compensation Committee, the Compensation Committee shall constitute the
committee unless expressly determined otherwise by the Board. In the event that the Board does not
have a Compensation Committee or the Board expressly determines that the Compensation Committee
shall not be the Committee, the members of the Committee shall be selected by the Board and the
Committee shall be comprised of two or more members of the Board who are not employees, former
employees or officers of the Company or receive remuneration from the Company in any capacity other
than as a director. If the Committee does not exist, or for any other reason determined by the
Board, the members of the Board deemed to meet such independence standards by the Board may take
any action under the Plan that would otherwise be the responsibility of the Committee.

     8.2 Powers of Committee. The Committee’s administration of the Plan shall be subject to the
following:

     (a) Subject to the provisions of the Plan, the Committee will have the authority and
discretion to select from among the Eligible Individuals those persons who shall receive
Awards, to determine the time or times of receipt, to determine the types of Awards and the
number of shares covered by the Awards, to establish the terms, conditions, performance
criteria, restrictions, and other provisions of such Awards, and (subject to the
restrictions imposed by Article IX) to cancel or suspend Awards.

     (b) The Committee may, without amending the Plan, provide for different terms and
conditions for the Awards granted to Participants who are foreign nationals or employed
outside the United States in order to accommodate differences in laws, rules, regulations or
customs of such foreign jurisdictions with respect to tax, securities, currency, employee
benefit or other matters, and may make such awards pursuant to sub-plans and other
appropriate means.

     (c) The Committee will have the authority and discretion to interpret the Plan, to
establish, amend, and rescind any rules and regulations relating to the Plan, to determine
the terms and provisions of any Award Agreement made pursuant to the Plan,

13

 

and to make all
other determinations that may be necessary or advisable for the administration of the Plan.

     (d) Any interpretations of the Plan by the Committee and any decisions made by it under
the Plan are final and binding on all persons.

     (e) In controlling and managing the operation and administration of the Plan, the
Committee shall take action in a manner that conforms to the articles and by-laws of the
Company and applicable state corporate law.

     8.3 Delegation by Committee. Except to the extent prohibited by applicable law or the
applicable rules of a stock exchange, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate all or any part of
its responsibilities and powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Committee at any time.

     8.4 Information to be Furnished to Committee. The Company and Subsidiaries shall furnish the
Committee with such data and information as it determines may be required for it to discharge its
duties. The records of the Company and Subsidiaries as to an employee’s or Participant’s
employment, service, termination of employment or service, leave of absence, reemployment and
compensation shall be conclusive on all persons unless determined by the Committee to be incorrect.
Participants and other persons entitled to benefits under the Plan must furnish the Committee such
evidence, data or information as the Committee considers desirable to carry out the terms of the
Plan.

ARTICLE IX

AMENDMENT AND TERMINATION

     The Board may, at any time, amend or terminate the Plan, provided that no amendment or
termination may, in the absence of written consent to the change by the affected Participant (or,
if the Participant is not then living, the affected beneficiary), materially adversely affect the
rights of any Participant or beneficiary under any Award granted under the Plan prior to the date
such amendment is adopted by the Board; provided that adjustments pursuant to Section 6.2(d) and
amendments to allow the Plan and the Awards issued thereunder to comply with the provisions of
Section 409A of the Code and the regulations and other applicable law thereunder or to be exempt from Section 409A of the Code shall not be subject to the foregoing limitations of this
Article IX.

     Notwithstanding the foregoing, no amendment that (i) materially increases the benefits
accruing to Participants under the Plan, (ii) materially expands the definition of Eligible
Individuals or (iii) otherwise requires shareholder approval under applicable laws or exchange
rules shall be effective until such amendment has been approved by stockholders of the
Company.

14EX-10.4 MANAGEMENT INCENTIVE COMPENSATION PLAN

Exhibit
10.4

AGCO CORPORATION

AMENDED AND RESTATED

MANAGEMENT INCENTIVE PLAN

(EFFECTIVE JANUARY 1, 2008)

 

 

I. PURPOSE; EFFECTIVE DATE; PLAN YEAR

          1.1 Purpose. Consistent with AGCO’s compensation philosophy, the purpose of this
Management Incentive Plan (“Plan”) is to facilitate alignment of management with corporate
objectives and shareholder interests, in order to achieve outstanding performance and to meet
specific AGCO Corporation (“Corporation”) financial goals. It is the intention of the Corporation
to establish an incentive compensation plan where payments are competitive, tied to performance and
offer shareholder protection, and assist with the attraction and retention of key management staff.

          1.2 Effective Date. The Plan, as amended, will become effective as of January 1,
2008.

          1.3 Plan Year. The “Plan Year” shall be the twelve (12)-month period ending December 31 of
each year.

II. ADMINISTRATION OF THE PLAN 

          Subject to the provisions of the Plan, unless determined otherwise by the Corporation’s Board
of Directors, the Compensation Committee of the Board of Directors (“Committee”) shall have the
sole authority and discretion:

	 	•	 	To construe and interpret the Plan;
	 
	 	•	 	To establish, amend, change, add to, alter and/or and rescind rules, regulations and
guidelines for administration of the Plan;
	 
	 	•	 	To make all designations and determinations specified in the Plan;
	 
	 	•	 	Except as noted herein, to determine the amount of awards and payments to be made under
the Plan and the status and rights of any Participant to payments under the Plan; and
	 
	 	•	 	To decide all questions concerning the Plan and to make all other determinations and to
take all other steps necessary or advisable for the administration of the Plan.

III. PLAN FUNDING

          The Plan will be funded annually as a part of the Corporation’s annual budgeting process.

1

 

IV. ELIGIBILITY

          Participation is limited to key full-time personnel of the Corporation and its subsidiaries
who have the ability to materially impact the financial success of the Corporation and have an
acceptable performance review or rating. Management will select the participants each year with
the approval of the Senior Vice President, Human Resources. Notwithstanding the foregoing, the
Committee must approve all awards to elected officers of the Corporation. As a guideline, eligible
jobs should fall in grades fourteen (14) and above. The Plan replaces any other type of bonus or
non-qualified profit sharing program that a participant may have participated in previously.

V. AWARD OPPORTUNITY

          Target incentive awards will be a percentage of a participant’s salary for the Plan Year. The
Committee may change the target award levels from time-to-time as it deems advisable. Initial
target award levels are:

	 	•	 	CEO: 130%
	 
	 	•	 	CFO: 100%
	 
	 	•	 	GMs: 70%
	 
	 	•	 	Other SVPs: 50%
	 
	 	•	 	Other Participants: Not more than 40%

VI. PERFORMANCE CRITERIA AND GOALS

          6.1 Performance Criteria. Awards under the Plan may be based upon corporate,
regional/functional or personal goals. The Corporate portion must be a minimum of 50% of the total
target award. Generally, three (3) to seven (7) performance measures will be used to measure performance,
and will differ depending on participant’s position with the Corporation. The initial performance
measures are:

	 	 	 	 	 
	 	 	SVP/Regional General	 	 
	CEO and CFO	 	Managers	 	Other Participants
	•   Corporate:

	 	• Corporate:	 	• Corporate:
	- EPS

	 	- EPS
	 	- EPS
		 	 	 	
	- Free Cash Flow

	 	- Free Cash Flow	 	- Free Cash Flow
		 	 	 	
	- Customer Satisfaction

	 	- Customer Satisfaction	 	- Customer Satisfaction
		 	 	 	
	 

	 	• Functional/ Regional:	 	• Functional/ Regional:
	 

	 	- Varies
	 	- Varies
	 

	 	 	 	

2

 

    6.2 Performance Measures.

              Performance measures for executive officers (“Section 162(m) Officers”), who are, or
reasonably could be expected during the Plan Year to be, among those subject to the deductibility
limitations of Section 162(m) of the Internal Revenue Code (“Section 162(m)”) shall consist of one (1)
or more of the following, which may be applied on a company-wide, geographic or operating unit
basis:

	 	•	 	Earnings per share and/or growth in earnings per share in relation to target objectives;
	 
	 	•	 	Operating or free cash flow and/or growth in operating or free cash flow in relation to
target objectives;
	 
	 	•	 	Return on invested capital in relation to target objectives;
	 
	 	•	 	Revenue and/or growth in revenue in relation to target objectives;
	 
	 	•	 	Total stockholder return (measured as the total of the appreciation of and dividends
declared on the Common Stock) in relation to target objectives;
	 
	 	•	 	Net income and/or growth in net income in relation to target objectives;
	 
	 	•	 	Return on stockholders’ equity in relation to target objectives;
	 
	 	•	 	Return on assets in relation to target objectives;
	 
	 	•	 	Return on common book equity in relation to target objectives; and
	 
	 	•	 	Customer satisfaction and/or improvement in customer satisfaction.

Specific definitions initially shall be:

	 	•	 	EPS: Diluted and adjusted to exclude restructuring and certain other infrequent items.
	 
	 	•	 	Free Cash Flow: Cash flow from operations less capital expenditures. Excludes cash flow
from financing such as increases in accounts receivables securitizations.
	 
	 	•	 	Customer Satisfaction: Overall customer satisfaction index that measures after-sales
service, sales experience and product quality.
	 
	 	•	 	Functional/Regional: Must be approved by the appropriate Senior Vice President, CEO or
CFO.

                   6.3 Weighting of Measures. The weighting will differ depending on a participant’s
position with the Corporation. The initial weighting will be:

3

 

	 	 	 	 	 	 	 
	 	 	Senior Vice	 	Regional General	 	 
	CEO and CFO	 	Presidents	 	Managers	 	Other Participants
	• Corporate

	 	• Corporate
	 	• Corporate
	 	• Corporate
	Performance is

	 	Performance is 70%
	 	Performance is 50% of
	 	Performance is not less
	weighted 100%

	 	of total weight

	 	total weight

	 	than 50% of total
	- EPS: 50%

	 	- EPS: 43%
	 	- EPS: 40%
	 	weight
	 

	 	
	 		 	• Weighting of
	- Free Cash Flow:

	 	- Free Cash Flow:
	 	- Free Cash Flow: 40%
	 	Functional/ Regional
	40%

	 	 43%
	 		 	Performance — Varies
	 

	 		 	 	 	(Equal to balance of
	- Customer

	 	- Customer
	 	- Customer
	 	weight not applied to
	Satisfaction: 10%

	 	Satisfaction: 14%	 	Satisfaction: 20%
	 	Corporate measures)
	 

	 	
	 	 	 	 
	 

	 	• Functional
	 	• Regional	 	 
	 

	 	Performance is 30%
	 	Performance is 50% of	 	 
	 

	 	of total weight
	 	total weight	 	 
	 

	 	- Varies	 	- Varies	 	 
	 

	 	
	 	 	 	 

          6.4 Performance Goals. The Committee shall approve annual written objective
performance goals reflecting corporate performance not later than ninety (90) days after the
commencement of the Plan Year to which the goals relate (or such earlier or later date as is
permitted or required by Section 162(m)). Such performance goals must be uncertain of achievement
at the time that they are established and determinable by a third party with knowledge of the
relevant facts. The Committee may not exercise any discretion to increase the amount of
compensation that otherwise would be due upon attainment of any performance goal.

VII. PLAN TRIGGER; PAYMENT OF AWARDS; ADJUSTMENTS; DISCRETIONARY AWARDS

          7.1 Plan Trigger. Incentive awards will not be paid for any category of performance
measurement unless the Corporation achieves the minimally acceptable specified plan trigger, which
may be specified as a percentage of budget. Notwithstanding the foregoing, the Committee may waive
one or more triggers to the extent applicable to participants other than Section 162(m) Officers.

          7.2 Payment of Awards. If a plan trigger is achieved, achievement of performance
measures, based on year-end results and other measurements, are determined for each incentive
category or measure with a total earned performance award being the sum of these measures (i.e.,
corporate and functional/regional). Payments shall be made not later than March 15th of the year
following the Plan Year. The achievement of the Plan triggers and payouts to Section 162(m)
Officers must be approved in advance in writing by the Committee. The target incentive award is
determined by a percentage of the actual gross base salary earned by the employee

4

 

during the
relevant Plan year (exclusive of bonus or other W-2 adjustments for moving expense, perquisites or
other fringe benefits). The range of awards will vary based on performance from 0% to 150% of
target bonus levels. The initial range shall be:

	 	 	 	 	 
	Performance Level as a % of Goal	 	Payout Level as a % of Target Bonus
	Minimum: 80%
	 	 	40	%
	 
	 	 	 	 
	Target: 100%
	 	 	100	%
	 
	 	 	 	 
	Maximum: 120%
	 	 	150	%

Notwithstanding
the foregoing, in no event may a participant receive more than $3,000,000 in a Plan
year.

Other payment considerations include:

	 	•	 	If a participant is transferred into another position that is also eligible for the
Plan, the participant’s award will be pro-rated based on the number of months during a Plan
Year in each position.
	 
	 	•	 	If a participant is promoted to a higher level position during a Plan Year, the
participant’s award will be based on the number of months worked in each position and the
base pay and target award for each position.
	 
	 	•	 	If a participant is hired during a Plan Year, the participant’s award will be based on
the number of months the participant was employed during the year.
	 
	 	•	 	If a participant terminates employment prior to the end of a Plan Year due to death,
approved retirement or disability, the participant (or the participant’s designated
beneficiary) will receive a pro-rata share, based on gross base salary to the date of
termination and actual performance, when awards are paid to all other participants.
	 
	 	•	 	If a participant quits before the completion of the last day of the Plan Year, for
reasons other than death, approved retirement or disability, then the participant will
forfeit any award.
	 
	 	•	 	If a participant is terminated without cause before the completion of the last day of
the Plan Year, for reasons other than death, approved retirement or disability, then the
participant will receive a pro-rata share based on gross base salary to the date of
termination and actual performance, when awards are paid to other participants.
	 
	 	•	 	If a participant is terminated without cause or quits after the end of the Plan Year for
reasons other than death, approved retirement or disability, but before the award is paid,
the participant will receive a complete award when paid to all other recipients.

5

 

	 	•	 	If a participant terminates employment after the end of the performance period for
reasons of death, retirement or disability, but before the award is paid, the participant
will receive a complete award when paid to all other recipients.
	 
	 	•	 	If a participant is terminated for cause at any time before the award is paid, the
participant will forfeit any award.

          7.3 Adjustments. The Committee has the authority to make adjustments to the Plan’s
performance measures in the event of certain circumstances or uncontrollable events, which include,
but are not limited to:

	 	•	 	Significant one-time unexpected restructuring expenses
	 
	 	•	 	Significant unplanned costs associated with a merger or acquisition
	 
	 	•	 	Significant unplanned net income adjustments for debt refinancing
	 
	 	•	 	Significant unplanned or unexpected taxes and/or legal charges associated with changes
in legislation
	 
	 	•	 	Changes in generally accepted accounting principles (GAAP) or the impact of any
extraordinary items as determined under GAAP

          7.4 Discretionary Awards. As appropriate, the Committee may make special awards for
participants (at the time of grant in lieu of performance-based awards or at any time in addition
to any other awards). Notwithstanding the foregoing, discretionary awards are separate and
distinct awards and shall not be contingent upon the failure to pay any other performance-based
award.

          7.5 Change in Control. In the event of a change in control, the following payments
shall be made. Promptly following the date of a change in control (but in all events within thirty
(30) days thereafter), each participant will be paid a pro rata portion of his or her bonus, based
on actual performance as of such date extrapolated for a full Plan Year. Such extrapolation shall
be based upon results through the month most recently complete prior to the change in control.
The pro rata portion shall be determined using a fraction where the numerator is the number of days
from the beginning of the Plan Year until and including the date of the change in control and the
denominator is 365.

          If within two years following a change in control a participant who is identified in writing
by the Committee as being expressly subject to this paragraph is terminated without cause, the participant
will receive (i) a pro-rata share of his or her bonus, based on gross base salary to the date of
termination and actual performance as of the date of termination extrapolated for a full Plan Year
and (ii) an amount equal to the average of the awards actually earned by the participant during the
prior two completed Plan Years and the current year’s bonus extrapolated actual performance. Any
such extrapolation shall be based upon results through the month most recently complete prior to
the termination. Such payments shall be made promptly after the
termination (but in all events within thirty (30) days thereafter). The pro rata calculation
shall be made in the same manner as described in the immediately preceding paragraph, except that
the numerator shall be determined until and including the date of termination.

          To
the extent that a payment is due to a participant under any other
section of this Plan with respect to a year that includes the portion
of the year covered by this section, the Company shall be entitled to
receive a credit against such subsequent payment for payments made
pursuant to this section.

6

 

         For
the purposes of this plan, the term “change in control” shall mean change in the ownership
of the Company, change in the effective control of the Company or change in ownership of a
substantial portion of the Company’s assets, as described in Section 280G of the Code, including
each of the following: (i) a change in the ownership of the Company occurs on the date that any one
person, or more than one person acting as a group, acquires ownership of stock of the Company that,
together with stock held by such person or group, possess more than fifty percent (50%) of the
total fair market value or total voting power of the stock of the Company (unless any one person,
or more than one person acting as a group, who is considered to own more than fifty percent (50%)
of the total fair market value or total voting power of the stock of the Company, acquires
additional stock); (ii) change in the effective control of the Company is presumed (which
presumption may be rebutted by the Committee) to occur on the date that
either: any one person, or more than one person acting as a group, acquires (or has acquired during
the twelve (12)-month period ending on the date of the most recent acquisition by such person or
persons) ownership of stock of the Company possessing thirty percent (30%) or more of the total
voting power of the stock of such Company; (iii) a majority of members of the Company’s Board is
replaced during any twelve (12)-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Company’s Board prior to the date of the appointment
or election of such new directors; or (iv) a change in the ownership of a substantial portion of
the Company’s assets occurs on the date that any one person, or more than one person acting as a
group, acquires (or has acquired during the twelve (12)-month period ending on the date of the most
recent acquisition by such person or persons) assets from the Company that have a total fair market
value equal to forty percent (40%) or more of the total fair market value of all of the assets of
the Company immediately prior to such acquisition or acquisitions unless the assets are transferred
to: a stockholder of the Company (immediately before the asset transfer) in exchange for or with
respect to its stock; an entity, fifty percent (50%) or more of the total value or voting power of
which is owned, directly or indirectly by the Company; a person, or more than one person acting as
a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or
voting power of all of the outstanding stock of the Company; or an entity, at least fifty percent
(50%) of the total value or voting power is owned, directly or indirectly, by a person, or more
than one person acting as a group, that owns directly or indirectly, fifty percent (50%) or more of
the total value of voting power of all of the outstanding stock of the Company.

VIII. MISCELLANEOUS PROVISIONS

          8.1 Successors. All obligations of the Corporation under the Plan with respect to
awards granted hereunder shall be binding on any successor to the Corporation, whether the
existence of such successor is the result of a direct or indirect purchase of all or substantially
all of the business and/or assets of the Corporation, or a merger, consolidation, or otherwise.

          8.2 No Lien. This Plan does not give a Participant any interest, lien, or claim
against any specific asset of the Corporation. Participants and beneficiaries shall have only the
rights of a general unsecured creditor of the Corporation.

          8.3 Termination and Amendment. The Plan may be terminated or amended by the Committee
at any time, provided, however, that a termination or amendment shall not materially

7

 

negatively
impact awards that are outstanding as of the time of termination or amendment except as required by
law.

          8.4 Status of Awards under Section 162(m). If any provision of the Plan does not
comply or is inconsistent with the requirements of Section 162(m), such provision or agreement
shall be construed or deemed amended to the extent necessary to conform to such requirements.
Notwithstanding the above, the Committee in its sole discretion may, with respect to any award to
be granted under the Plan, determine that compliance with Section 162(m) is not desired after
consideration of the goals of the Corporation’s executive compensation philosophy and whether it is
in the best interests of the Corporation to have such awards not qualify.

          8.5 No Employment Rights. No participant has any right to be retained in the employ
of the Corporation or any subsidiary by virtue of participation in the Plan.

          8.6 Governing Law. The Plan and awards hereunder shall be governed by and construed
according to the laws of the State of Georgia.

8

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