EXHIBIT 10.6
SUPPLEMENTAL RETIREMENT PLAN
OF GENERAL MILLS, INC.
Working Copy
As Amended Effective January, 1991,
November, 1991, December, 1992,
May, 1994, and June, 1996
SUPPLEMENTAL RETIREMENT PLAN
OF GENERAL MILLS, INC.
Effective as of January 1, 1991, General Mills, Inc. hereby amends and restates
the Supplemental Retirement Plan of General Mills, Inc. for the exclusive
benefit of its employees, pursuant to authorization of the Board of Directors of
General Mills, Inc. Additional amendments have been made since the date of the
last restatement.
ARTICLE I
INTRODUCTION
Section 1.1 Name of Plan. The name of the Plan is the "Supplemental
Retirement Plan of General Mills, Inc." It is also referred to as
the "Supplemental Plan" or the "Plan."
Section 1.2 Effective Date. The effective date of the Plan is January
1, 1976. This Plan, except as may otherwise be specifically provided herein,
shall not apply to Participants who separated from active service prior to
January 1, 1991.
ARTICLE II
DEFINITIONS
Section 2.1 Base Plan shall mean a defined benefit pension plan
sponsored by the Company, which is qualified under the provisions of Code
Section 401. With respect to any Participant in this Plan where, as of June 1,
1991, the sum of such individual's age and length of Company service equals or
exceeds 65, Base Plan shall mean the provisions of such plan as were in effect
on December 31, 1988, and benefits under this Plan shall be determined as if
such provisions had continued in effect until the date of the Participant's
termination or retirement from the Company. With respect to any Participant in
this Plan where, as of June 1, 1991, the sum of such individual's age and
Company service is less than 65, Base Plan shall mean the provisions of such
Plan as are in effect on the date of such Participant's termination or
retirement from the Company.
Section 2.2 Board shall mean the Board of Directors of General Mills,
Inc.
Section 2.3 Change in Control occurs:
(a) upon the acquisition by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"))(a "Person")
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of voting securities of the
Company where such acquisition causes such Person to own 20%
or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not be deemed
to result in a Change of Control: (i) any acquisition directly
from the Company, (ii) any acquisition by the Company, (iii)
any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction that complies with
clauses (i), (ii) and (iii) of subsection (c) below; and
provided, further, that if any Person's beneficial ownership
of the Outstanding Company Voting Securities reaches or
exceeds 20% as a result of a transaction described in clause
(i) or (ii) above, and such Person subsequently acquires
beneficial ownership of additional voting securities of the
Company, such subsequent acquisition shall be treated as an
acquisition that causes such Person to own 20% or more of the
Outstanding Company Voting Securities; or
(b) if individuals who, as of a given date, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to such date whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board; or
-2-
(c) upon the approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company ("Business Combination") or, if consummation of such
Business Combination is subject, at the time of such approval
by shareholders, to the consent of any government or
governmental agency, the obtaining of such consent (either
explicitly or implicitly by consummation); excluding, however,
such a Business Combination pursuant to which (i) all or
substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively,
the then outstanding shares of common stock and the combined
voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation,
a corporation that as a result of such transaction owns the
Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the
Outstanding Company Voting Securities, (ii) no person
(excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common
stock or the corporation resulting from such Business
Combination or the combined voting power of the then
outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business
Combination and (iii) at least a majority of the members of
the board of directors or the corporation resulting from such
Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
(d) Upon approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
Section 2.4 Code shall mean the Internal Revenue Code of 1986, as it
may be amended from time to time.
Section 2.5 Company shall mean General Mills, Inc. and any of its
subsidiaries or affiliated business entities as shall be authorized to
participate in the Plan by the Board, or its delegate.
Section 2.6 Compensation Committee shall mean the Compensation
Committee of the Board.
Section 2.7 Deferred Cash Award shall mean the cash amount deferred by
an individual under any formal plan of deferred compensation sponsored by the
Company. A Deferred Cash Award shall not include:
(a) any base salary which was deferred during calendar year 1986;
(b) any interest or investment increment applied to the amount of
the cash award which is deferred; or
-3-
(c) any cash amount deferred by any person under any individual
contract or arrangement with the Company or any of its
subsidiaries or affiliated business entities.
Section 2.8 ERISA shall mean the Employee Retirement Income Security
Act of 1974, as it may be amended from time to time.
Section 2.9 Minor Amendment Committee shall mean the Minor Amendment
Committee appointed by the Compensation Committee.
Section 2.10 "Maximum Benefit" shall mean the maximum annual benefit
payable in dollars permitted to be either accrued or paid to a participant of
any Base Plan, as determined under all applicable provisions of the Code and
ERISA, specifically taking into account the limitations of Code Sections
401(a)17 and 415, and any applicable regulations thereunder. It is specifically
intended that the Maximum Benefit, as defined herein, shall take into account
changes in the dollar limits under Code Sections 401(a)17 and 415, and benefits
payable from this Plan and the Base Plan shall be adjusted accordingly. In
addition, if a Base Plan limits the accrued benefits of any Participant by
restricting the application of future changes in such dollar limits with respect
to such Participant, benefits payable under this Plan shall nevertheless be
determined on the full amount that would have been permissible absent such
restrictions under the Base Plan.
Section 2.11 Participant shall mean an individual who is a participant
in the Company's Executive Incentive Plan or who is eligible to defer
compensation under a formal deferred compensation program maintained by the
Company, and who is:
(a) an active participant in one or more Base Plans on and after
January 1, 1976 and whose accrued benefits, determined on the
basis of the provisions of such Base Plans without regard to
the Maximum Benefit, would exceed the Maximum Benefit;
(b) An individual with a Deferred Cash Award, which, if included
as compensation under any Base Plans in which such individual
is a participant, would result in a greater accrued benefit
under the provisions of such Base Plans;
(c) An active participant of the General Mills, Inc. Executive
Incentive Plan who is entitled to a vested Pension under a
Base Plan and who is involuntarily terminated prior to
attainment of age 55, if the sum of such individual's age and
length of company service at the date of termination equals or
exceeds 75; or
(d) An individual who participates in the Retirement Income Plan
of General Mills, Inc., where the sum of such individual's age
and length of Company service as of June 1, 1991 equals or
exceeds 65, and who would have been entitled to a greater
benefit under the provisions of the RIP at the time of his or
her retirement from the Company had he or she not been
considered a "highly compensated employee" for any period on
or after January 1, 1989.
An eligible individual shall remain a Participant under this
Supplemental Plan until all amounts payable on his or her behalf from this Plan
have been paid.
Section 2.12 Defined Terms. Capitalized terms which are not defined
herein shall have the meaning ascribed to them in the relevant Base Plan.
-4-
ARTICLE III
BENEFITS
Section 3.1 Effect of Retirement. Upon the Normal, Early, Late or
Disability Retirement of a Participant, as provided under a Base Plan, such
Participant shall be entitled to a benefit equal to the amount determined in
accordance with the provisions of the Base Plan without regard to the
limitations of the Maximum Benefit, including as compensation for purposes of
such calculation any Deferred Cash Award (as if actually paid at the time of the
award), reduced by the lesser of the Participant's actual accrued benefit under
such Base Plan or the Maximum Benefit.
In the event a Participant has accrued benefits under more than one
Base Plan, the provisions of the Base Plan from which the Participant retires as
an Active Participant shall be used to determine the total benefits payable
without regard to the Maximum Benefit.
If the Participant received a partial prepayment as described in
Section 3.10, benefits payable under this Section shall be adjusted as provided
in Section 3.11.
Section 3.2 Spouse's Pension. Upon the death of a Participant whose
surviving spouse is eligible for a Spouse's Pension under a Base Plan, such
surviving spouse shall be entitled to a benefit under this Supplemental Plan,
determined in accordance with the provisions of the Base Plan without regard to
the limitations of the Maximum Benefit, and including as compensation for
purposes of such calculation any Deferred Cash Award (as if actually paid at the
time of the award), reduced by the lesser of the actual Spouse's Pension payable
under such Base Plan or the Maximum Benefit.
In the event a Participant had accrued benefits under more than one
Base Plan, the provisions of the Base Plan under which the Participant was
accruing benefits as an Active Participant shall be used to determine the total
benefits payable without regard to the Maximum Benefit.
If the Participant received a partial prepayment as described in
Section 3.10, benefits payable under this Section shall be adjusted as provided
in Section 3.11.
Section 3.3 Effect of Termination Prior to Retirement Eligibility. If a
Participant terminates employment with the Company and is entitled to a Vested
Deferred Pension under a Base Plan, such Participant shall be entitled to a
benefit equal to the amount determined in accordance with the provisions of the
Base Plan without regard to the limitations of the Maximum Benefit, including as
compensation for purposes of such calculation any Deferred Cash Award (as if
actually paid at the time of the award), reduced by the lesser of the
Participant's actual accrued benefit under such Base Plan or the Maximum
Benefit.
In the event a Participant has participated in more than one Base Plan,
the provisions of the Base Plan under which the Participant was accruing
benefits as an Active Participant at the time of such separation from service
shall be used to determined the total amount of benefit payable without regard
to the Maximum Benefit.
If the Participant received a partial prepayment as described in
Section 3.10, benefits payable under this Section shall be adjusted as provided
in Section 3.11.
-5-
Section 3.4 Benefits Prior to Separation from Service. Prior to a
Participant's separation from service due to Retirement, termination or death,
benefits shall accrue under this Supplemental Plan, based on the Participant's
actual accrued benefit under a Base Plan or Plans, the Maximum Benefit and
Deferred Cash Awards, if any. A Participant's benefit under this Supplemental
Plan may increase or decrease, before or after Retirement or termination, as a
result of changes in the formula under any Base Plan, the Maximum Benefit, or
changes in the earnings used to calculate benefits under a Base Plan formula.
Any benefit accrued under this Supplemental Plan as a result of a
Participant's Deferred Cash Award shall be payable only if, and to the extent
that on the date of his or her termination of employment, both of the following
conditions are satisfied:
(a) The Participant has a vested accrued benefit under the
applicable Base Plan; and
(b) A Deferred Cash Award was made during a year which is used in
the calculation of Final Average Earnings under this
Supplemental Plan on the date of termination.
If the Participant received a partial prepayment as described in
Section 3.10, benefits payable under this Section shall be adjusted as provided
in Section 3.11.
Section 3.5 Effect of Involuntary Termination of EIP Participants Prior
to Retirement Eligibility. In the event of the involuntary termination of an
active Participant of the General Mills, Inc. Executive Incentive Plan, where
the sum of such Participant's age and years of service with the Company equals
or exceeds 75 at the date of termination, and who is entitled to a Vested
Deferred Pension under a Base Plan, the provisions of this Section shall apply.
Subject to the aggregate limits of Section 4.4, such Participant shall be
entitled to receive benefits determined under this Section, in addition to any
benefit provided under Section 3.3. Such additional benefits shall be in the
form of a retirement supplement, calculated as the difference between an Early
Retirement Pension under the provisions of such Base Plan and a Vested Deferred
Pension under such Base Plan.
If the Participant received a partial prepayment as described in
Section 3.10, benefits payable under this Section shall be adjusted as provided
in Section 3.11.
Section 3.6 Effect of Termination of the Retirement Income Plan of
General Mills, Inc. In the event of the termination of the Retirement Income
Plan of General Mills, Inc. (RIP) within five years after a Change in Control
each Participant of the RIP whose benefits would then exceed the Maximum Benefit
as a result of the changes required under Section 12.4 of the RIP shall be
entitled to receive such excess benefits under the Supplemental Plan.
Section 3.7 Form of Payment. Any benefit amount payable under the
Supplemental Plan to a married Participant shall be adjusted and paid in the
form of a joint and 100% to survivor annuity. Any benefit amount payable under
the Supplemental Plan to an unmarried Participant shall be paid in the form of a
single life annuity. Notwithstanding the above, a married Participant may
request, subject to the approval of the Minor Amendment Committee, to have such
benefit amounts adjusted and paid as a joint and 50% to survivor annuity or as a
single life annuity. Further, any Participant may request, subject to the
approval of the Minor Amendment Committee, that any benefit amount be paid in a
single sum payment in cash, effective as of the first day monthly benefits would
otherwise begin. Any request for an alternate form of benefit that is granted
may be made at any time before benefits would otherwise begin. The Minor
Amendment Committee may approve or reject any such request in its sole
discretion. Any joint and survivor annuity shall be the actuarial equivalent of
a single life annuity based on the
-6-
following factors, determined using the ages of the Participant and spouse on
the effective date of the payment:
(a) For benefits commencing after January 1, 1989. The formula for
the joint and 100% to survivor factor is:
.868 + .005 (65 - X) + .005 (Y - X), where X is equal
to the Participant's age and Y is equal to the age of
the spouse.
The formula for the joint and 50% to survivor factor is:
.928 + .003 (65 - X) + .003 (Y - X), where X is equal
to the Participant's age and Y is equal to the age of
the spouse.
(b) For benefits commencing on or before January 1, 1989. The
formula for the joint and 100% to survivor factor is:
.815 + .007 (63 - X) + .007 (Y - X), where X is equal
to the Participant's age and Y is equal to the age of
the spouse.
The formula for the joint and 50% to survivor factor is:
.898 + .004 (63 - X) + .004 (Y - X), where X is equal
to the Participant's age and Y is equal to the age of
the spouse.
For the purpose of calculating any lump sum payment, the interest rate used
shall be the immediate annuity interest rate determined by the Pension Benefit
Guaranty Corporation as in effect on the first day of the year in which a
distribution is to be made.
Section 3.8 Time of Payment. The payment of benefits determined under
the provisions of the Supplemental Plan shall commence on the first day of the
month coincident with or next following the date upon which a Participant (or
surviving spouse) first becomes eligible to commence receiving benefits under
the Base Plan or Plans, regardless of the time benefits actually commence under
the Base Plan. Notwithstanding any other provisions of the Supplemental Plan to
the contrary, the Minor Amendment Committee may, in its sole discretion, direct
that payments be made before such payments are otherwise due, if, for any reason
(including but not limited to, a change in the tax or revenue laws of the United
States of America, a published ruling or similar announcement issued by the
Internal Revenue Service, a regulation issued by the Secretary of the Treasury
or his delegate, or a decision by a court of competent jurisdiction involving a
Participant or Beneficiary), it believes that a Participant or Beneficiary has
recognized or will recognize income for federal income tax purposes with respect
to amounts that are or will be payable under the Supplemental Plan before they
are to be paid. In making this determination, the Minor Amendment Committee
shall take into account the hardship that would be imposed on the Participant or
Beneficiary by the payment of federal income taxes under such circumstances.
Section 3.9 Effect of Changes in the Maximum Benefit. In the event the
dollar amount of the Maximum Benefit increases as a result of federal
legislation, the benefits of any Participant payable under the Supplemental
Plan, whether or not in pay status, shall be recalculated to take into account
the higher Maximum Benefit payable from the applicable Base Plan. If payments
have already commenced under the provisions of the applicable Base Plan and the
Supplemental Plan, benefit amounts under both Plans shall be adjusted to reflect
the higher Maximum Benefit, by increasing the amount paid under the Base Plan
and decreasing the amount paid under the Supplemental Plan, as soon as
administratively possible after such a change. Notwithstanding the above, if a
Base Plan is terminated, no adjustments shall be made to benefits payable under
the
-7-
Supplemental Plan with respect to changes in the Maximum Benefit after the
date of termination of the Base Plan.
Section 3.10 Partial Prepayment. Notwithstanding any other provisions
of this Supplemental Plan, partial prepayment of benefits due under this
Supplemental Plan may be made from time to time, pursuant to amendments to this
Section. Prepayments so authorized are described as follows:
(a) (1) The first prepayment was authorized to be made in January,
1988 to those active Participants who, on December 31, 1987,
had earned vested accrued benefits under one or more Base
Plans equal to the Maximum Benefit then in effect, payable at
December 31, 1987, or age 55, if later.
(2) The second prepayment was authorized to be made on or after
October, 1988 and before December 31, 1988, to those active
Participants who had earned vested accrued benefits under one
or more Base Plans, when projected to December 31, 1988, equal
to the Maximum Benefit then if effect, payable at December 31,
1988, or age 55, if later.
(3) The third prepayment was authorized to be made in December,
1989, to those active Participants who, if the Base Plans had
continued in effect through December 31, 1989 as in effect on
December 31, 1988, would have earned vested accrued benefits
under such Base Plans equal to the Maximum Benefit then in
effect, payable at January 1, 1990, or at age 55 if later.
(4) The fourth prepayment was authorized to be made in October,
1990, to those active Participants who, if the Base Plans had
continued in effect through December 31, 1990, as in effect on
December 31, 1988, would have earned vested accrued benefits
under such Base Plans equal to the Maximum Benefit then if
effect, payable at January 1, 1991, or at age 55 if later.
(5) The fifth prepayment was authorized to be made in December,
1991, to those active Participants who had earned vested
accrued benefits under one or more Base Plans, when projected
to December 31, 1991, equal to the Maximum Benefit then in
effect, payable at December 31, 1991, or age 55, if later, but
only to the extent that, when estimated benefits payable at
each Participant's normal retirement age were projected, the
Participant's additional benefits payable from this Plan at
such normal retirement date were equal to or greater than
zero.
(6) The sixth prepayment was authorized to be made in December,
1992, to those active Participants who had earned vested
accrued benefits under one or more Base Plans, when projected
to December 31, 1992, equal to the Maximum Benefit then in
effect, payable at December 31, 1992, but only to the extent
that, when estimated benefits payable at each Participant's
normal retirement age (or announced early retirement age, if
earlier) were projected, the Participant's additional benefits
payable from this Plan at such retirement date were equal to
or greater than zero.
(b) For such Participants identified in (a) above, who were eligible for a
Normal or Early Retirement under the applicable Base Plans as of the
stated dates, a monthly benefit payable under this Supplemental Plan is
calculated as if (i) retirement actually occurred on the stated date,
and (ii) the benefits payable under the applicable Base Plans were paid
under the normal form of payment provided in such Base Plans. The
resulting benefit payable under the provisions of this Supplemental
Plan shall be calculated as if payable in the form of an annuity for
the life of such Participant.
-8-
(c) For such Participants who are participating in the Company's Executive
Incentive Plan but are not eligible for a Normal or Early Retirement
under the applicable Base Plans as of the stated date, a monthly
benefit payable under this Supplemental Plan is calculated under the
provisions of Section 3.5 as if (i) such a Participant's involuntary
termination occurred as of the stated date, and (ii) the benefit
payable under the applicable Base Plans is paid under the normal form
of payment provided in such Base Plans. The resulting benefit payable
under the provisions of this Supplemental Plan shall be calculated as
if payable in the form of an annuity payable for the life of such
Participant.
(d) The present value of the monthly benefits payable under this
Supplemental Plan as calculated above shall be based on the immediate
annuity interest rates determined by the Pension Benefit Guaranty
Corporation as in effect on the January 1 of the year of any such
authorized prepayment.
(e) In the event the Compensation Committee, or its delegate, believes that
payment of the entire present value of any amounts calculated pursuant
to this Section may result in an overpayment of amounts that would have
been payable under this Supplemental Plan upon the actual retirement or
separation from service of any of such Participants, without regard to
the provisions of this Section, the Compensation Committee, or its
delegate, shall reduce the amount of the single sum payment as the
Compensation Committee, or its delegate, in its sole discretion, deems
appropriate.
Section 3.11 Adjustment for Prepayment. With respect to any Participant
who received a prepayment of benefits under Section 3.10 above, the benefits due
upon Retirement, separation or death under Sections 3.1, 3.2, 3.3, 3.4 or 3.5,
or a subsequent prepayment of benefits due under Section 3.10, shall be adjusted
to reflect the prepayment of benefits in the following manner:
(a) The monthly benefit payable under the applicable section shall
be calculated first without regard to prepayment, under a life
only form of payment.
(b) The offset for each prepayment shall be calculated based on a
lump sum future value of the amount of the prepayment. Such
amount will be calculated using the time period from the
stated date as of which the prepayment was calculated to the
date of the Participant's retirement, separation, subsequent
payment date, or death, and an annual interest rate equal to
66.2% of the immediate annuity interest rate used to calculate
the lump sum value of such prepayment, on the after-tax value
of the prepayment. The after-tax value of the prepayment shall
be based on an effective annual tax rate of 33.8%. This same
rate shall be used to compute a before-tax value for offset
purposes. The resulting lump sum future value is to be
converted to a life annuity figure using the 1983 Group
Annuity Mortality table for males.
(c) The result in (b) above shall be subtracted from (a) above
after both figures have been adjusted for the appropriate form
of benefit selected by the Participant (or spouse, in the
event of the Participant's death). The result shall be the
additional benefit remaining, if any, to be paid from this
Supplemental Plan. In the event of multiple prepayments for
such a Participant, the offset for each prepayment shall be
calculated separately and applied to the benefit in (a) above
in the order in which paid. In the event the amount (or
amounts in the event of multiple payments) determined in (b)
above is equal to the amount determined in (a) above, no
additional benefits shall be payable under this Supplemental
Plan. If the amount (or amounts in the event of multiple
payments) determined in (b) above is greater than the amount
determined in (a) above, the Company shall be entitled to
recover the amount of any excess prepayments from the
Participant and may withhold and retain
-9-
sums which would otherwise be payable to the Participant under
any other nonqualified plan of the Company in satisfaction of
the excess prepayment.
Section 3.12 Participants Formerly on Leave to General Mills
Restaurants, Inc. Participants in this Plan (i) who were active participants in
the Retirement Income Plan of General Mills, Inc. ("RIP") on "leave of absence
status" to General Mills Restaurants, Inc. and (ii) whose leaves were canceled
effective as of May 31, 1991, may be entitled to additional benefits under this
Plan as described below. In addition to any benefits that such a Participant may
be entitled to under the provisions of this Article III, this Plan shall also
pay the difference, if any, between the total benefits the Participant is
entitled to from the Base Plan in which he or she is participating at the time
of termination and this Plan, and the total benefits the Participant would have
been entitled to from the RIP and this Plan, had the Participant continued to
participate in the RIP until the date of the Participant's termination of
employment or Retirement.
Section 3.13 Presidents of General Mills Restaurants, Inc. Participants
in this Plan who were employed as Presidents of a General Mills Restaurants,
Inc. division as of May 31, 1994, were not eligible for any benefit accrual
under the terms of the Base Plan in which they participated for the period from
January 1, 1989 through May 31, 1994. Benefits shall accrued under the terms of
this Plan equal to the entire benefit which would have accrued to such
individuals under the applicable Base Plan for this period. The form and timing
of such payments shall be subject to all provisions of this Plan.
-10-
ARTICLE IV
PLAN ADMINISTRATION
Section 4.1 Compensation Committee. The Supplemental Plan shall be
administered by the Compensation Committee, and the Compensation Committee shall
have full authority to interpret the Supplemental Plan. Such interpretations of
the Compensation Committee shall be final and binding on all parties, including
the Participants, their beneficiaries, surviving spouses and the Company.
Section 4.2 Delegated Duties. The Compensation Committee shall have the
authority to delegate the duties and responsibilities of administering the
Supplemental Plan, maintaining records, issuing such rules and regulations as it
deems appropriate, and making the payments hereunder to such employees or agents
of the Company as it deems proper.
Section 4.3 Amendment and Termination. The Board, or if specifically
delegated, its delegate, may amend, modify or terminate the Supplemental Plan at
any time, provided, however, that no such amendment, modification or termination
shall adversely affect any accrued benefit under the Supplemental Plan to which
a Participant, or the Participant's Beneficiary, is entitled under Article III
prior to the date of such amendment or termination, and in which such
Participant, or the Participant's Beneficiary, would have been vested if such
benefit had been provided under the applicable Base Plan, unless the
Participant, or the Participant's Beneficiary, becomes entitled to an amount
equal to the cash value of such benefit under another plan, program or practice
adopted by the Company. Notwithstanding the above, no amendment, modification,
or termination which would affect benefits accrued under this Supplemental Plan
prior to such amendment, modification or termination may occur after a Change in
Control without the written consent of a majority of the Participants determined
as of the day before such Change in Control. Each year the Compensation
Committee shall notify, in writing, those individuals who have any accrued
benefits under the Supplemental Plan.
Section 4.4 Payments. The Company will pay all benefits arising under
this Supplemental Plan and all costs, charges and expenses relating thereto. The
benefits payable under this Supplemental Plan to each Participant shall not be
greater that what would have been paid in the aggregate under the Base Plan (i)
in the absence of federal limitations on benefit amounts, (ii) if amounts
deferred had been paid to the Participant when earned, and (iii) with respect to
Section 3.5, the Participant had actually been eligible for Early Retirement
under the Base Plan.
Section 4.5 Arbitration.
(a) Any controversy or claim arising out of or relating to this
Plan, or any alleged breach of the terms or conditions
contained herein, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the
American Arbitration Association (the "AAA") as such rules may
be modified herein.
(b) An award rendered in connection with an arbitration pursuant
to this Section shall be final and binding and, judgment upon
such an award may be entered and enforced in any court of
competent jurisdiction.
(c) The forum for arbitration under this Plan shall be
Minneapolis, Minnesota and the governing law for such
arbitration shall be laws of the State of Minnesota.
-11-
(d) Arbitration under this Section shall be conducted by a single
arbitrator selected jointly by the Company and the Participant
(the "Complainant"). If within thirty (30) days after a demand
for arbitration is made, the Company and the Complainant are
unable to agree on a single arbitrator, three arbitrators
shall be appointed. Each party shall select one arbitrator and
those two arbitrators shall then select a third neutral
arbitrator which thirty (30) days after their appointment. In
connection with the selection of the third arbitrator,
consideration shall be given to familiarity with executive
compensation plans and experience in dispute resolution
between parties, as a judge or otherwise. If the arbitrators
selected by the parties cannot agree on the third arbitrator,
they shall discuss the qualifications of such third arbitrator
with the AAA prior to selection of such arbitrator, which
selection shall be in accordance with the Commercial
Arbitration Rules of the AAA.
(e) If an arbitrator cannot continue to serve, a successor to an
arbitrator selected by a party shall be also selected by the
same party, and a successor to a neutral arbitrator shall be
selected as specified in subsection (d) of this Section. A
full rehearing will be held only if the neutral arbitrator is
unable to continue to serve or if the remaining arbitrators
unanimously agree that such a rehearing is appropriate.
(f) The arbitrator or arbitrators shall be guided, but not bound,
by the Federal Rules of Evidence and by the procedural rules,
including discovery provisions, of the Federal Rules of Civil
Procedure. Any discovery shall be limited to information
directly relevant to the controversy or claim in arbitration.
(g) The parties shall each be responsible for their own costs and
expenses, except for the fees and expenses of the arbitrators,
which shall be shared equally by the Company and the
Complainant.
Section 4.6 Non-Assignability of Benefits. Neither any benefit payable
hereunder nor the right to receive any future benefit payable under the
Supplemental Plan may be anticipated, alienated, sold, transferred, assigned,
pledged, encumbered, or subjected to any charge or legal process, and if any
attempt is made to do so, or a person eligible for any benefits becomes
bankrupt, the interest under the Supplemental Plan of the person affected may be
terminated by the Compensation Committee which, in its sole discretion, may
cause the same to be held or applied for the benefit of one or more of the
dependents of such person or make any other disposition of such benefits that it
deems appropriate.
Section 4.7 Applicable Law. All questions pertaining to the
construction, validity and effect of the Supplemental Plan shall be determined
in accordance with the laws of the United States and the laws of the State
applicable to the Base Plan covering the Participant.
Section 4.8 Supplemental Benefits Trust. The Company has established a
Supplemental Benefits Trust with Norwest Bank Minneapolis, N.A. as Trustee to
hold assets of the Company under certain circumstances as a reserve for the
discharge of the Company's obligations under the Supplemental Plan and certain
other plans of deferred compensation of the Company. In the event of a Change in
Control as defined in Section 2.3 hereof, the Company shall be obligated to
immediately contribute such amounts to the Trust as may be necessary to fully
fund all benefits payable under the Supplemental Plan. Any Participant of the
Supplemental Plan shall have the right to demand and secure specific performance
of this provision. The Company may fund the Trust in the event of the occurrence
of a Potential Change in Control as determined by the Finance Committee of the
Board. All assets held in the Trust remain subject only to the claims of the
Company's general creditors whose claims against the Company are not satisfied
because of the
-12-
Company's bankruptcy or insolvency (as those terms are defined in the Trust
Agreement). No Participant has any preferred claim on, or beneficial ownership
interest in, any assets of the Trust before the assets are paid to the
Participant and all rights created under the Trust, as under the Supplemental
Plan, are unsecured contractual claims of the Participant against the Company.
-13-