Exhibit 10.FF
DONALDSON COMPANY, INC.
DEFERRED STOCK OPTION GAIN PLAN
(2005 RESTATEMENT)
8
As Amended and Restated Effective as of January 1, 2005
DONALDSON COMPANY, INC.
DEFERRED STOCK OPTION GAIN PLAN
(2005 RESTATEMENT)
TABLE OF CONTENTS
PAGE
SECTION 1. HISTORY AND PURPOSE......................................1
1.1. History
1.2. Purpose
1.3. Relation to Master Stock Plans
SECTION 2. DEFINITIONS..............................................2
2.1. Account
2.2. Affiliate
2.3. Beneficiary
2.4. Board
2.5. Change of Control
2.5.1. Affiliate
2.5.2. Beneficial Owner
2.5.3. Exchange Act
2.5.4 Person
2.6. Committee
2.7. Common Stock
2.8. Company
2.9. Deferral Election
2.10. Disability, Disabled
2.11. Effective Date
2.12. Eligible Employee
2.13. Exercise Date
2.14. Participant
2.15. Plan
2.16. Plan Year
2.17. Stock Units
2.18. Termination of Employment
2.19. Vested
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SECTION 3. ELIGIBILITY AND PARTICIPATION............................6
3.1. Eligibility
3.2. Commencement of Participation
3.3. Termination of Participation
3.4. Overriding Exclusion
SECTION 4. STOCK UNITS..............................................7
4.1. Deferral Elections
4.2. Stock Units
4.3. Adjustment
4.4. Dividend Units
4.5. Vesting
SECTION 5. TIME AND MANNER OF PAYMENTS..............................9
5.1. Time of Payment
5.2. Manner of Payment
5.3. Changes in Time and Manner of Payment
5.4. Change of Control Distributions
5.5. Death Benefit
5.6. Beneficiary Designation
SECTION 6. STOCK UNIT ACCOUNTS.....................................12
6.1. Participant Accounts
6.2. Charges Against Accounts
SECTION 7. FUNDING.................................................13
7.1. Funding
7.2. Corporate Obligation
SECTION 8. ADMINISTRATION..........................................14
8.1. Authority
8.2. Liability
8.3. Procedures
8.4. Claim for Benefits
8.5. Claims Procedure
8.5.1. Original Claim
8.5.2. Claims Review Procedure
8.5.3. General Rules
8.6. Payments upon Imposition of Federal or State Taxes
8.7. Legal Fees
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8.8. Errors in Computations
SECTION 9. MISCELLANEOUS...........................................18
9.1. Not an Employment Contract
9.2. Nontransferability
9.3. Tax Withholding
9.4. Expenses
9.5. Governing Law
9.6. Amendment and Termination
9.7. Rules of Interpretation
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DONALDSON COMPANY, INC.
DEFERRED STOCK OPTION GAIN PLAN
(2005 RESTATEMENT)
SECTION 1
HISTORY AND PURPOSE
1.1. HISTORY. Since July 25, 1997, Donaldson Company, Inc. has maintained an
unfunded, nonqualified deferred compensation for a select group of highly
compensated employees, known as the "DONALDSON COMPANY, INC. DEFERRED STOCK
OPTION GAIN PLAN". The Plan, in its most current amended and restated form, is
maintained under a document effective August 1, 2003 (the "Prior Plan
Statement"). Effective as of January 1, 2005, Donaldson Company, Inc. hereby
amends and restates the Plan in the manner hereinafter set forth. Credits made
to the Plan which relate entirely to services performed on or before December
31, 2004 shall continue to be governed under the terms of the Prior Plan
Statement. Credits which relate all or in part to services performed on or after
January 1, 2005 shall be made subject to the terms of this Plan statement, the
terms of which are intended to comply with the deferred compensation provisions
in the American Jobs Creation Act of 2004.
1.2. PURPOSE. The purposes of this Plan are to allow a select group of
management and highly compensated employees of the Company to defer the receipt
of income that would otherwise be subject to income tax upon exercise of stock
options granted by the Company and to attract and retain certain executive
employees of outstanding competence.
1.3 RELATION TO MASTER STOCK PLANS. All benefits provided by this Plan are
subject to any applicable terms, conditions and restrictions required by the
Donaldson Company, Inc. 2001 Master Stock Incentive Plan.
SECTION 2
DEFINITIONS
The following words and phrases shall have the following meanings, unless a
different meaning is plainly required by the context. Any masculine terminology
used in the Plan shall also include the feminine gender and the definition of
any terms in the singular shall also include the plural.
2.1. ACCOUNT -- the deferred compensation account established under this Plan
for a Participant pursuant to Section 6.1.
2.2. AFFILIATE -- a business entity which is under "common control" with the
Company or which is a member of an "affiliated service group" that includes the
Company, as those terms are defined in section 414(b), (c) and (m) of the Code.
A business entity shall also be treated as an Affiliate if, and to the extent
that, such treatment is required by regulations under section 414(o) of the
Code. In addition to said required treatment, the Committee may, in its
discretion, designate as an Affiliate any business entity which is not such a
"common control" or "affiliated service group" business entity but which is
otherwise affiliated with the Company, subject to such limitations as the
Committee may impose.
2.3. BENEFICIARY -- any person or entity validly designated by the Participant
in accordance with Section 5 to receive the benefits, if any, payable from the
Participant's Account after the Participant's death. Designated persons or
entities shall not be considered Beneficiaries until the death of the
Participant.
2.4. BOARD -- the Board of Directors of the Company.
2.5. CHANGE OF CONTROL -- a "Change of Control" shall be deemed to have occurred
if the event set forth in any one of the following paragraphs shall have
occurred:
(a) any Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities, excluding
any Person who becomes such a Beneficial Owner in connection with a
transaction described in clause (i) of paragraph (c) below; or
(b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on
the date hereof, constitute the Board and any new director (other than
a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the
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Board or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two thirds (2/3) of the
directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was
previously so approved or recommended; or
(c) there is consummated a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other
corporation, other than (i) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any subsidiary of the
Company, at least 60% of the combined voting power of the securities
of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the
Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company or there is consummated an agreement for
the sale or disposition by the Company of all or substantially all of
the Company's assets, other than a sale or disposition by the Company
of all or substantially all of the Company's assets to an entity, at
least 60% of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially the
same proportions as their ownership of the Company immediately prior
to such sale.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions. Solely for
purposes of this Section 2.5, the following words and phrases shall have the
following meanings:
2.5.1. AFFILIATE -- an "affiliate" within the meaning of Rule 12b-2
promulgated under Section 12 of the Exchange Act.
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2.5.2. BENEFICIAL OWNER -- a "beneficial owner" within the meaning of Rule
13d-3 under the Exchange Act.
2.5.3. EXCHANGE ACT -- the Securities Exchange Act of 1934, as amended from
time to time.
2.5.4 PERSON -- a "person" within the meaning of Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
2.6. COMMITTEE -- the Human Resources Committee of the Board of Directors of the
Company.
2.7. COMMON STOCK -- the common stock of the Company.
2.8. COMPANY -- Donaldson Company, Inc. and, except in determining under Section
2.5 hereof whether or not any Change of Control has occurred, shall include any
successor by merger, purchase or otherwise.
2.9. DEFERRAL ELECTION -- an election to defer the receipt of gain on an option
to buy Common Stock made by an Eligible Employee in accordance with Section 4.1.
2.10. DISABILITY, DISABLED -- a physical or mental impairment which constitutes
total and permanent disability and during which the Eligible Employee is not
receiving any payments of an Early Retirement Pension or a Vested Benefit under
the Donaldson Company, Inc. Salaried Employees' Pension Plan (1997 Restatement)
(as amended from time to time), and the Eligible Employee either:
(a) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected
to last for a continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than
three (3) months under an accident and health plan covering employees
of the Company; or
(b) is eligible to receive and is actually receiving (after the applicable
waiting period) benefits under the federal Social Security Act as in
effect at the time of the Disability.
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Notwithstanding the foregoing, the terms Disability and Disabled shall at all
times be interpreted in a manner so as not to violate section 409A of the
Internal Revenue Code.
2.11. EFFECTIVE DATE -- July 25, 1997, the original effective date of the Plan.
The amended and restated Plan document as set forth herein is effective as of
January 1, 2005.
2.12. ELIGIBLE EMPLOYEE -- an officer of the Company who is selected by the
Committee as provided in Section 3.
2.13. EXERCISE DATE -- the date on which an Eligible Employee exercises an
option to purchase Common Stock that is subject to a Deferral Election; provided
however, that such date shall not be deemed to occur prior to the date on which
the Participant tenders mature shares of Common Stock in payment of the option
exercise price, by attestation to the ownership of shares. For the purpose of
this Plan, shares of Common Stock shall be considered mature if they have been
held by the Participant for at least six months and have not been used to pay
the exercise price for another stock option exercise during the six months prior
to their tender.
2.14. PARTICIPANT -- an Eligible Employee or a former Eligible Employee of the
Company or its Affiliates who has any amount credited to his Account in this
Plan.
2.15. PLAN -- the Donaldson Company, Inc. Deferred Stock Option Gain Plan as set
forth herein, and as the same may be amended from time to time.
2.16. PLAN YEAR -- the twelve (12) consecutive month period ending on any
December 31.
2.17. STOCK UNITS -- the units credited to a Participant's Account pursuant to
Section 4.2.
2.18. TERMINATION OF EMPLOYMENT -- the complete severance of an employee's
employment relationship with the Company and all Affiliates, if any, for any
reason other than the employee's death or Disability.
2.19. VESTED -- nonforfeitable.
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SECTION 3
ELIGIBILITY AND PARTICIPATION
3.1. ELIGIBILITY. Any officer of the Company who is affirmatively selected by
the Committee shall be an Eligible Employee and may actively participate under
the Plan until the earlier of the officer's Termination of Employment or
transfer to a non-officer position with the Company or its Affiliates. The
Committee may rescind an officer's selection as an Eligible Employee and
discontinue an officer's active participation in the Plan at any time.
3.2. COMMENCEMENT OF PARTICIPATION. An Eligible Employee shall become a
Participant in the Plan when the Eligible Employee is first credited with any
amount pursuant to Section 4.
3.3. TERMINATION OF PARTICIPATION. A person shall cease to be a Participant as
soon as all amounts credited to the Participant's Account have been paid in
full.
3.4. OVERRIDING EXCLUSION. Notwithstanding anything apparently to the contrary
in this Plan Statement or in any written communication, summary, resolution or
document or oral communication, no individual shall be a Participant in this
Plan, develop benefits under this Plan or be entitled to receive benefits under
this Plan (either for himself or herself or his or her survivors) unless such
individual is a member of a select group of management or highly compensated
employees (as that expression is used in ERISA). If a court of competent
jurisdiction, any representative of the U.S. Department of Labor or any other
governmental, regulatory or similar body makes any direct or indirect, formal or
informal, determination that an individual is not a member of a select group of
management or highly compensated employees (as that expression is used in
ERISA), such individual shall not be (and shall not have ever been) a
Participant in this Plan at any time. If any person not so defined has been
erroneously treated as a Participant in this Plan, upon discovery of such error
such person's erroneous participation shall immediately terminate AB INITIO and
upon demand such person shall be obligated to reimburse the Company for all
amounts erroneously paid to him or her.
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SECTION 4
STOCK UNITS
4.1. DEFERRAL ELECTIONS. An Eligible Employee may file with the Committee a
Deferral Election as to any option to buy Common Stock granted to such Eligible
Employee by the Company, subject to the following:
(a) Deferral Elections must be made on forms approved by the Committee,
must be made at such time as the Committee shall determine at least
prior to the December 31 of the Plan Year preceding the Plan Year in
which occurs the date on which the option to buy Common Stock which is
subject to the Deferral Election is granted, and shall conform to such
other procedural and substantive rules as the Committee shall make.
(b) Deferral Elections may only be made with respect to options whose
exercise price may be paid in shares of Common Stock, and shall
obligate the Eligible Employee making the Deferral Election to pay the
exercise price and any tax withholding required at the time of
exercise by attestation to the ownership of shares of Common Stock
that the Eligible Employee has owned for at least six months and that
have not been used to exercise another option for at least six months.
(c) Each Deferral Election shall specify the time and manner (in
accordance with Sections 5.1 and 5.2) in which distribution of the
portion of the Participant's Account attributable to that Deferral
Election shall be made.
(d) Subject to permitted changes to the time and form of payment described
in Sections 5.3, a Deferral Election shall be irrevocable once it has
been filed with the Committee.
(e) Nothing in this Plan shall be deemed to extend the period during which
stock options may be exercised, or to otherwise alter the terms of any
stock option; provided, however, that if the Participant has not
exercised any option subject to a Deferral Election as of the time of
payment specified in the Deferral Election, the option shall be deemed
exercised as of the time of payment specified in the Deferral Election
(which shall become the Exercise Date), and the Participant's Account
shall be credited with the appropriate number of Stock Units under
Section 4.2, if any, immediately prior to payment of the Participant's
Account pursuant to Section 5. In no event shall the Participant's
Exercise Date occur after the time of payment specified in the
Participant's Deferral Election.
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4.2. STOCK UNITS. As of each Exercise Date, a Participant's Account shall be
credited with the number of Stock Units equal to the difference between (a) and
(b):
(a) The number of shares of Common Stock obtained by exercise of the
option being exercised; and
(b) The number of shares of Common Stock required to pay both the exercise
price of the option being exercised and any required tax withholding.
4.3. ADJUSTMENT. In the event of any change in the outstanding shares of common
stock of the Company by reason of any stock split or stock dividend in the form
of a split, the Committee shall adjust the number of Stock Units in a
Participant's Account so that such number equals the number of Stock Units in
the Account prior to the event, multiplied by a fraction, the denominator of
which is the number of Stock Units in the Account prior to the event, and the
numerator of which is the number of shares of Common Stock the Participant would
have had after the event if the Participant had shares of Common Stock
immediately prior to the event equal in number to the number of Stock Units in
the Participant's Account immediately prior to the event. In the event of any
dividend (other than a stock dividend in the form of a split), recapitalization,
merger, consolidation, spinoff, reorganization, combination or exchange of
shares or other similar corporate change, then if the Committee, or the board of
directors of a successor corporation, shall determine, in its sole discretion,
that such change equitably requires an adjustment in the number of Stock Units
then held in the Participant's Account, such adjustment shall be made by the
Committee or said board and shall be conclusive and binding for all purposes of
the Plan.
4.4. DIVIDEND UNITS. The number of Stock Units in a Participant's Account shall
be automatically increased as of each Common Stock dividend payment date in an
amount equal to the number of shares of Common Stock that could be purchased on
such dividend payment date with the cash dividends that would be paid on a
number of shares of Common Stock equal to the number of Stock Units in the
Participant's Account on the record date for such dividend.
4.5. VESTING. The Accounts of all Participants shall be 100% Vested at all
times.
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SECTION 5
TIME AND MANNER OF PAYMENTS
5.1. TIME OF PAYMENT. Payment of a Participant's Account under the Plan will
commence as soon as administratively feasible after (but not later than December
31 of the Plan Year in which occurs, or if later, sixty (60) days following) the
earliest of the following events:
(a) the Participant's death;
(b) the Participant's Disability;
(c) the date that is twenty four (24) months following the Participant's
Termination of Employment; or
(d) a date of distribution selected by the Participant (at the time the
Participant first becomes eligible to participate, on a form
prescribed by the Committee), which may be:
(i) a fixed, specified date (E.G., January 1, 2010); or
(ii) a date that is a specified number of months after the
Participant's Termination of Employment (not to exceed twenty
four (24) months); provided, however, that where payment under
this paragraph (d)(ii) is made to any "key employee" (as defined
under section 409A of the Code) on account of Termination of
Employment, such payment shall commence no earlier than six (6)
months following a Termination of Employment (or upon the death
of the employee, if earlier) if required to comply with section
409A of the Code.
5.2. MANNER OF PAYMENT. A Participant's Account will be paid to the Participant
in either a single lump-sum payment or in annual installments over a period of
not more than twenty (20) years. The Participant must elect a manner of payment
at the time the Participant elects his or her date of distribution pursuant to
Section 5.1(d). Notwithstanding the foregoing, the following special rules shall
apply:
(a) in the case of the Participant's death or Disability, payment shall be
in a single lump sum;
(b) if the Participant's Account upon commencement of distribution under
Section 5.1 is less then Ten Thousand Dollars ($10,000), payment shall
be in a single lump sum; and
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(c) in the event no election was made by the Participant, payment shall be
in a single lump sum.
Payment to the Participant shall be made, net of withholding taxes, exclusively
in shares of Common Stock, one share for each Stock Unit distributed. For
purposes of determining any tax withholding on a payment, the value of Common
Stock will be the market price of such Common Stock as of the close of business
on the day prior to the date as of which the payment is made.
5.3. CHANGES IN TIME AND MANNER OF PAYMENT. Notwithstanding the foregoing, a
Participant who is actively employed by the Company may make a new election that
changes the time or form of payment selected pursuant to Section 5.1(d) and
Section 5.2, subject to the following limitations:
(a) Such election must be submitted to and accepted by the Committee at
least twelve (12) months prior to the date a distribution to the
Participant would otherwise have been made or commenced;
(b) The election shall have no effect until at least twelve (12) months
after the date on which the election is made;
(c) The election may change the time when payment shall commence but only
if the new date selected by the Participant for commencement shall be
a date that is at least five (5) years from the prior date of
distribution selected by the Participant;
(d) The election may reduce or extend the number of installment payments
(subject to the limitations in Section 5.2) so long as the initial
installment is delayed at least five (5) years from the date
distribution would have otherwise commenced; and
(e) If the participant changes the time and/or form of payment under this
Section 5.3, payment shall commence as soon as administratively
feasible after (but not later than December 31 of the Plan Year in
which occurs, or if later, sixty (60) days following) the earliest of
the following events:
(i) the Participant's death;
(ii) the Participant's Disability; or
(iii) the new date selected by the Participant for commencement.
5.4. CHANGE OF CONTROL DISTRIBUTIONS. Notwithstanding any other provision of
this Plan, in the event of a Change of Control, each Participant who incurs a
Termination of Employment with the Company for any reason during the two (2)
year period following such Change of Control shall
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receive within ten (10) business days after the date of termination a lump sum
payment of the entire balance contained in the Participant's Account; provided,
however, that with respect to any Participant who separated from service before
the date of a Change of Control, the balance of the Participant's Account shall
be paid at the time and in the manner as elected by the Participant under this
Section 5 hereof (and shall not be commuted to a lump sum or otherwise
accelerated by the Change of Control). Where payment under this Section 5.4 is
made to any "key employee" (as defined under section 409A of the Code) on
account of Termination of Employment, such payment shall commence no earlier
than six (6) months following a Termination of Employment (or upon the death of
the employee, if earlier) if required to comply with section 409A of the Code.
5.5. DEATH BENEFIT. In the event of a Participant's death, the Company shall pay
the amount of the Participant's Account as of the date of death (as adjusted
from time to time pursuant to Section 4.4) in a lump-sum to the Participant's
designated Beneficiary as soon as administratively feasible after the
Participant's death (but not later than December 31 of the Plan Year in which
the Participant's death occurs, or if later, sixty (60) days following such
death). In the event no election was made by the Participant, payment shall be
in a single lump-sum stock distribution (and cash for fractional shares).
5.6. BENEFICIARY DESIGNATION. A Participant shall submit to the Company upon
initial designation as an Eligible Employee in the Plan, and at such other times
as the Participant desires, on a form provided by the Committee, a written
designation of the beneficiary or beneficiaries to whom payment of the
Participant's Account under the Plan shall be made in the event of the
Participant's death. Beneficiary designations shall become effective only when
received by the Company. Beneficiary designations first received by the Company
after the Participant's death, and any designations in effect at the time a
valid subsequent designation is received by the Company, shall be invalid and
have no effect. If a Participant has not designated a Beneficiary, or if no
designated Beneficiary is living on the date of distribution, the Participant's
Account shall be distributed to those persons entitled to receive the
Participant's benefit under the Donaldson Company, Inc. Salaried Employees'
Pension Plan (1997 Restatement), as amended from time to time.
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SECTION 6
STOCK UNIT ACCOUNTS
6.1. PARTICIPANT ACCOUNTS. The Committee shall cause a bookkeeping account to be
kept in the name of each Participant which shall reflect the Stock Units
credited to a Participant.
6.2. CHARGES AGAINST ACCOUNTS. There shall be charged against each Participant's
bookkeeping account any payments made to the Participant or the Participant's
Beneficiary in accordance with Section 5.
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SECTION 7
FUNDING
7.1. FUNDING. The Company and its Affiliates shall be responsible for paying all
benefits due hereunder. For the purpose of facilitating the payment of benefits
due hereunder, the Company may (but shall not be required to) establish and
maintain a grantor trust pursuant to an Agreement between the Company and a
trustee selected by the Company; provided, however, that any such grantor trust
must be structured so that it does not result in any federal income tax
consequences to any Participant until distributions under Section 5 are actually
received. The Company may contribute to a grantor trust thereby created such
amounts as it may from time to time determine.
7.2. CORPORATE OBLIGATION. Neither the officers nor any member of the Board of
Directors of the Company or any of its Affiliates in any way secures or
guarantees the payment of any benefit or amount which may become due and payable
hereunder to or with respect to any Participant. Each Participant and other
person entitled at anytime to payments hereunder shall look solely to the assets
of the Company and its Affiliates for such payments as an unsecured, general
creditor. Nothing herein shall be construed to give a Participant, Beneficiary
or any other person or persons any right, title, interest or claim in or to any
specific asset, fund, reserve, account or property of any kind whatsoever owned
by the Company or in which it may have any right, title or interest now or in
the future. After benefits shall have been paid to or with respect to a
Participant and such payment purports to cover in full the benefit hereunder,
such former Participant or other person or persons, as the case may be, shall
have no further right or interest in the other assets of the Company and its
Affiliates in connection with this Plan.
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SECTION 8
ADMINISTRATION
8.1. AUTHORITY. The Plan shall be administered by the Committee, which shall
have full discretionary power and authority to administer and interpret the Plan
and to determine all factual and legal questions under the Plan, including but
not limited to the entitlement of Participants and Beneficiaries, and the amount
of their respective interests. Except where necessary to comply with applicable
corporate or securities law, or applicable rules of the New York Stock Exchange
(e.g., with respect to executive officers), the Committee may delegate or
redelegate to one or more persons, jointly or severally, and whether or not such
persons are members of the Committee or employees of the Company, such functions
assigned to the Committee hereunder as it may from time to time deem advisable.
Until withdrawn or redelegated by the Committee, all of the Committee's
delegable power and authority under this Section 8.1 shall be deemed delegated
to the Company's Vice President in charge of executive compensation, excluding
only the power and authority to act in such a way as would materially increase
the cost of the Plan.
8.2. LIABILITY. No member of the Committee and no director or member of the
management of the Company or its Affiliates shall be liable to any persons for
any actions taken under the Plan, or for any failure to effect any of the
objective or purposes of the Plan, by reason of insolvency or otherwise.
8.3. PROCEDURES. The Committee may from time to time adopt such rules and
procedures as it deems appropriate to assist in the administration of the Plan.
8.4. CLAIM FOR BENEFITS. No employee or other person shall have any claim or
right to payment of any amount hereunder until payment has been authorized and
directed by the Committee.
8.5. CLAIMS PROCEDURE. Until modified by the Committee, the claims procedure set
forth in this Section 8.5 shall be the claims procedure for the resolution of
disputes and disposition of claims arising under the Plan.
8.5.1. ORIGINAL CLAIM. Any employee, former employee, or Beneficiary of
such employee or former employee may, if the employee, former employee or
Beneficiary so desires, file with the Committee a written claim for benefits
under the Plan. Within ninety (90) days after the filing of such a claim, the
Committee shall notify the claimant in writing whether the claim is upheld or
denied in whole or in part or shall furnish the claimant a written notice
describing specific special circumstances requiring a specified amount of
additional time (but not more than one hundred eighty (180) days from the date
the claim was filed) to reach a decision on the claim. If the claim is denied in
whole or in part, the Committee shall state in writing:
(a) the specific reasons for the denial,
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(b) the specific references to the pertinent provisions of this Plan on
which the denial is based,
(c) a description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such
material or information is necessary, and
(d) an explanation of the claims review procedure set forth in this
Section.
8.5.2. CLAIMS REVIEW PROCEDURE. Within sixty (60) days after receipt of
notice that the claim has been denied in whole or in part, the claimant may file
with the Committee a written request for a review and may, in conjunction
therewith, submit written issues and comments. Within sixty (60) days after the
filing of such a request for review, the Committee shall notify the claimant in
writing whether, upon review, the claim was upheld or denied in whole or in part
or shall furnish the claimant a written notice describing specific special
circumstances requiring a specified amount of additional time (but not more than
one hundred twenty days (120) from the date the request for review was filed) to
reach a decision on the request for review.
8.5.3. GENERAL RULES.
(a) No inquiry or question shall be deemed to be a claim or a request for
a review of a denied claim unless made in accordance with the claims
procedure. The Committee may require that any claim for benefits and
any request for a review of a denied claim be filed on forms to be
furnished by the Committee upon request.
(b) All decisions on original claims shall be made by the Committee and
requests for a review of denied claims shall be made by the Committee.
(c) The Committee may, in its discretion, hold one or more hearings on a
claim or a request for a review of a denied claim.
(d) Claimants may be represented by a lawyer or other representative at
their own expense, but the Committee reserves the right to require the
claimant to furnish written authorization. A claimant's representative
shall be entitled to copies of all notices given to the claimant.
(e) The decision of the Committee on an original claim or on a request for
a review of a denied claim shall be served on the claimant in writing.
If a decision or notice is not received by a claimant within the time
specified, the claim or request for a review of a denied claim shall
be deemed to have been denied.
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(f) Prior to filing a claim or a request for a review of a denied claim,
the claimant or the claimant's representative shall have a reasonable
opportunity to review a copy of this Plan Statement and all other
pertinent documents in the possession of the Company and its
Affiliates.
8.6. PAYMENTS UPON IMPOSITION OF FEDERAL OR STATE TAXES. If any Participant is
determined to be subject to federal or state income tax on any amount accrued on
his or her behalf under this Plan prior to the time of payment hereunder,
federal or state taxes attributable to the amount determined to be so taxable
shall be distributed by the Plan to such Participant. An amount accrued on his
or her behalf under this Plan shall be determined to be subject to federal
income tax upon the earliest of:
(i) a final determination by the United States Internal Revenue
Service addressed to the Participant which is not appealed to the
courts;
(ii) a final determination by the United States Tax Court or any other
Federal Court affirming any such determination by the Internal
Revenue Service; or
(iii) an opinion by the Tax Counsel of the Company, addressed to the
Company that, by reason of Treasury Regulations, amendments to
the Internal Revenue Code, published Internal Revenue Service
rulings, court decisions or other substantial precedent, amounts
accrued on a Participant's behalf hereunder are subject to
federal or state income tax prior to payment.
The Company shall undertake at its sole expense to defend any tax claims
described herein which are asserted by the Internal Revenue Service or by any
state revenue authority against any Participant, including attorney fees and
costs of appeal, and shall have the sole authority to determine whether or not
to appeal any determination made by the Internal Revenue Service, by any state
revenue authority or by a lower court. The Company also agrees to reimburse any
Participant for any interest or penalties in respect of federal or state tax
claims hereunder upon receipt of documentation of same.
8.7. LEGAL FEES. If the Company does not pay the benefits required under the
terms of the Plan for reasons other than the insolvency of the Company, the
Company agrees to reimburse any Participant for all legal fees incurred in
enforcing his or her claim to benefits under the Plan.
8.8. ERRORS IN COMPUTATIONS. The Committee shall not be liable or responsible
for any error in the computation of any benefit payable to or with respect to
any Participant resulting from any misstatement of fact made by the Participant
or by or on behalf of any Beneficiary to whom such benefit shall be payable,
directly or indirectly, to the Committee, and used by the Committee in
determining the benefit. The Committee shall not be obligated or required to
increase the benefit payable to or with respect to such Participant which, on
discovery of the misstatement, is found to be understated as a result of such
misstatement of the Participant. However, the benefit of any
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Participant which is overstated by reason of any such misstatement or any other
reason shall be reduced to the amount appropriate in view of the truth (and to
recover any prior overpayment).
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SECTION 9
MISCELLANEOUS
9.1. NOT AN EMPLOYMENT CONTRACT. This Plan is not and shall not be deemed to
constitute a contract of employment between the Company and any employee or
other person, nor shall anything herein contained be deemed to give any employee
or other person any right to be retained in the Company's employ or in any way
limit or restrict the Company's right or power to discharge any employee or
other person at any time and to treat him without regard to the effect which
such treatment might have upon the employee as a Participant in the Plan.
9.2. NONTRANSFERABILITY. A Participant's rights and interest under the Plan,
including amounts payable, may not be assigned, alienated, pledged or
transferred except, in the event of a Participant's death to his Beneficiary. No
benefit payable under this Plan shall be subject to attachment, garnishment,
execution following judgment or other legal process before actual payment to the
Participant or Beneficiary.
9.3. TAX WITHHOLDING. The Company shall withhold the amount of any federal,
state or local income tax or other tax required to be withheld by the Company
under applicable law with respect to any amount payable under the Plan. Any cash
payable in lieu of fractional shares shall be applied to the payment of tax
withholding. The Participant shall not be liable for any tax withholding.
9.4. EXPENSES. All expenses of administering the Plan shall be borne by the
Company.
9.5. GOVERNING LAW. Except to the extent that federal law or Delaware General
Corporation law is controlling, the Plan shall be construed and enforced in
accordance with and governed by the laws of the State of Minnesota.
9.6. AMENDMENT AND TERMINATION. The Company reserves the power to unilaterally
amend this Plan at any time, either prospectively or retroactively or both by
action of the Committee. The Committee may likewise terminate or curtail the
benefits of this Plan both with regard to persons expecting to receive benefits
in the future and persons already receiving benefits at the time of such action;
provided, however, that the Committee may not amend or terminate the Plan with
respect to benefits that have accrued and are vested pursuant to Section 4 in
any manner that reduces the amount of such benefits or alters the effect of any
Participant election previously filed with the Company. No modification of the
terms of this Plan shall be effective unless it is in writing and signed on
behalf of the Company by a person authorized to execute such writing. No oral
representation concerning the interpretation or effect of this Plan shall be
effective to amend the Plan.
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9.7. RULES OF INTERPRETATION. The titles given to the various sections of this
Plan are inserted for convenience of reference only and are not part of this
Plan, and they shall not be considered in determining the purpose, meaning or
intent of any provision hereof. This Plan shall be construed and this Plan shall
be administered to create an unfunded plan providing deferred compensation to a
select group of management or highly compensated employees so that it is exempt
from the requirements of Parts 2, 3 and 4 of Title I of ERISA and qualifies for
a form of simplified, alternative compliance with the reporting and disclosure
requirements of Part 1 of Title I of ERISA.
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