LAND O'LAKES, INC.
COOPERATIVE VALUE INCENTIVE PLAN
Land O'Lakes, Inc. (the "Company"), a Minnesota cooperative association, hereby
amends and restates the Land O'Lakes, Inc. Cooperative Value Incentive Plan (the
"Plan") in order to provide deferred compensation to certain key employees of
the Company effective January 1, 2005. The Company has determined that it is in
its interest to provide certain key employees with financial incentives to
reward the employees for their performance and to encourage long-term commitment
to employment with the Company. These financial incentive awards shall be
determined under the terms of this Plan.
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. When used in this document with initial
capital letters, the following terms have the meanings indicated unless a
different meaning is plainly required by the context:
"Board of Directors" or "Board" means the Board of Directors of the
Company.
"Change in Control Event" means a change in ownership or change in
effective control of a corporation or a change in control of a substantial
portion of a corporation's assets as defined in proposed regulations under
Section 409A of the Code or subsequent Treasury Department guidance.
"Change in Control Event with respect to the Participant" means a
Change in Control Event that is considered to relate to a Participant because it
relates to (a) the corporation for which the Participant is performing services
at the time of the event, (b) the corporation that is liable for payments to the
Participant under the Plan (or all such corporations if there are more than
one), or (c) a corporation that is a majority shareholder of a corporation
identified in (a) or (b), or any corporation in a chain of corporations in which
each corporation is a majority shareholder of another corporation in the chain,
ending in a corporation identified in (a) or (b). For purposes of this
definition, the corporation referred to in (a) must be the Company or a Related
Employer and the corporation referred to in (b) must be the Company. For
purposes of this definition, a majority shareholder is a shareholder owning more
than 50% of the total fair market value and total voting power of such
corporation.
"Disability" means a medically determinable physical or mental
condition which is expected to result in death or to last for a continuous
period of not less than 12 months and which renders a Participant unable to
engage in any substantial gainful activity or is, by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than 3
months under an accident and health plan covering employees of the Company. The
existence or nonexistence of such Disability shall be established by the
certificate of a medical doctor selected by or satisfactory to the Company.
"Early Retirement" means a voluntary Termination of Service by a
Participant on or after the date that will enable the Participant to be eligible
to receive an early retirement benefit under the Land O'Lakes, Inc. Employee
Retirement Plan (or would enable such a benefit if the Participant participated
in that plan).
"Executive Committee" means the Executive Committee of the Board, to
which the Board has delegated authority for administration of the Plan.
"Normal Retirement" means a voluntary Termination of Service by a
Participant on or after the date that will enable the Participant to be eligible
to receive a normal retirement benefit under the Land O'Lakes, Inc. Employee
Retirement Plan (or would enable such a benefit if the Participant participated
in that plan).
"Participant" means any employee or individual described in Section
2.1.
"Participant's Beneficiary" has the meaning set forth in Section 6.3.
"Plan" means the Land O'Lakes, Inc. Cooperative Value Incentive Plan,
as set forth herein, including any amendments hereto, which is maintained by the
Company primarily for the purpose of providing financial incentives for certain
key employees.
"Plan Year" means the calendar year.
"Related Employer" means each entity that is treated as part of a
single employer with the Company under Section 414 of the Code.
"Retirement" means a voluntary Termination of Service by a Participant
on or after the date that will enable the Participant to be eligible to receive
an Early Retirement or Normal Retirement benefit under the Land O'Lakes, Inc.
Employee Retirement Plan (or would enable such a benefit if the Participant
participated in that plan).
"Termination of Service" means that an employee has terminated
employment with the Company and each Related Employer.
"Unforeseeable Emergency" means a severe financial hardship to a
Participant resulting from illness or accident of the Participant, the
Participant's spouse, or a dependent (as defined in Section 152(a) of the
Internal Revenue Code) of the Participant, loss of the Participant's property
due to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant. The Company
will determine whether such a severe financial hardship has taken place and may
require that the Participant provide sufficient evidence to support such a
determination.
"Value Appreciation Right" means an award granted by the Company to a
Participant under this Plan as described in Article 3.
"Value of the VAR Unit" means the value of a VAR Unit determined under
Section 3.4.
"VAR Unit" or "Value Appreciation Right Unit" means a performance unit
used to describe and value the Value Appreciation Right benefits granted to
Participants under the Plan.
ARTICLE 2
PARTICIPATION
Section 2.1 Eligibility. The employees of the Company who are eligible
to become Participants in the Plan are the Chief Executive Officer of the
Company, officers of the Company who have attained the level of a Vice President
or above, and any other employees of the Company who are designated by the Chief
Executive Officer as eligible to become Participants in the Plan.
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ARTICLE 3
NATURE OF VALUE APPRECIATION RIGHT AWARDS
Section 3.1 Description of Value Appreciation Right Awards.
(a) Annual Value Appreciation Right Awards will be made in the
form of VAR Units all as further provided in this Plan. In general, a
Participant will be granted a specified number of VAR Units with
respect to a particular Plan Year. The Executive Committee shall be
responsible for determining the amount of the annual Value Appreciation
Right Award for the Chief Executive Officer. The Chief Executive
Officer shall be responsible for determining the level and annual Value
Appreciation Right Award for all other Participants (including those
new employees of the Company who become Participants during a Plan
Year). In general, the number of VAR Units granted to a Participant
each year as a Value Appreciation Right Award shall be within the
following guidelines:
Level of Participant Value Appreciation Right Award
-------------------- ------------------------------
Chief Executive Officer Amount determined by Executive
Committee
Level 1 Officer Up to 5,250 VAR Units
Level 2 Officer Up to 2,250 VAR Units
Level 3 Officer Up to 1,000 VAR Units
Level 4 Non-Officer Up to 1,000 VAR Units
(b) Notwithstanding the foregoing, the Chief Executive Officer
may grant Value Appreciation Right Awards in excess of the amount set
forth above. The Chief Executive Officer shall report annually to the
Executive Committee with regard to the participating Participants and
the Value Appreciation Right Awards made to each Participant under this
Plan. The total of all Value Appreciation Right Awards granted to
Participants for a given Plan Year shall not exceed 200,000 VAR Units.
(c) Any options that had been granted under the Plan as of
December 31, 2004 or under the Land O'Lakes, Inc. California
Cooperative Value Incentive Plan shall be converted to VAR Units under
this Plan, effective as of January 1, 2005. The conversion shall be
made by crediting each individual who was a participant under either
plan on December 31, 2004 with a number of VAR Units equal to the
number of units that were available to be acquired by the Participant
pursuant to the grant of such options.
Section 3.2 Vesting of Value Appreciation Right Awards. VAR Units
granted under Section 3.1 shall vest over four (4) years with the first 25% of
the VAR Units to be vested on December 31 of the Plan Year in which the Value
Appreciation Right Award is made, and the remaining 75% of the VAR Units vesting
in 25% increments on December 31 of the three (3) succeeding years. A VAR Unit
credited under Section 3.1(c) shall vest as if it had been granted in the year
that an option was granted with respect to which the credit was made.
Notwithstanding the foregoing, in the event a Participant's employment status
with the Company changes, the special vesting rules set forth in Article 5 shall
apply.
Section 3.3 Participant Accounts. At the time a grant of VAR Units is
first made to a Participant, the Company shall establish an "account" under the
Plan in the name of the Participant to reflect the number of VAR Units held for
such Participant.
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Section 3.4 Valuation of VAR Units.
(a) The value of a VAR Unit granted under the Plan, referred
to in the Plan as the Value of the VAR Unit, shall be the difference
between a "current price" with respect to that VAR Unit and a "grant
price" with respect to that VAR Unit, but shall not be less than zero.
The "grant price" with respect to a VAR Unit shall be the current price
with respect to that VAR Unit as of December 31 of the year immediately
preceding the year for which the Value Appreciation Right Award is
granted. The "current price" with respect to a VAR Unit shall be
determined on that date and on the December 31 of each subsequent year
before the year in which distribution is completed with respect to that
VAR Unit or the VAR Unit expires. The initial Value of the VAR Unit at
time of grant shall be zero because the current price and grant price
with respect to the VAR Unit are the same at the time of grant. An
annual valuation of VAR Units shall be made as of December 31 of each
year and shall be used to establish the Value of the VAR Unit with
respect to which a distribution will be made in the following year, as
further provided in Articles 4 and 5.
(b) The "current price" with respect to a VAR Unit shall be
determined in accordance with the following formula:
Enterprise Value: 8 x 5-Year Average EBIT
(Earnings Before Interest and Taxes)
Less: 5-Year Average Long-Term
Debt and Capital Securities
Plus: 5-Year Average Cash to Members
(Patronage Plus Equity Redemption)
Equals: Total Equity Value
Divided By: 10-Million
Equals: Current Price per VAR Unit
(c) Each option to acquire units that existed under the Plan
prior to this restatement and options under the Land O'Lakes, Inc.
California Cooperative Value Incentive Plan have been converted to VAR
Units under the Plan as provided in Section 3.1(c). The Value of the
VAR Unit credited to a Participant on account of such an option shall
be determined under this section as if the VAR Unit had been granted in
the year that such option was granted to the Participant.
(d) After 4 years have passed from the date that a VAR Unit
has been granted to a Participant, including the year of the grant, the
Participant may elect pursuant to a process established by the Company
to have the VAR Unit valued in a different manner permitted by this
subsection. Such an election will only be effective for calendar years
that follow the year during which the election is made. If such an
election is made, the Value of the VAR Unit will be determined on
December 31 of the calendar year preceding the year in which that
election is effective, using the method provided in the prior
provisions of this section. Subsequent to that date, the Value of the
VAR Unit will be determined by increasing the Value of the VAR Unit
determined on that December 31
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by a specified interest rate. That rate shall be set by the Company at
the beginning of each calendar year for purposes of determining the
Value of the VAR Unit on the next December 31. If no rate is specified
at the beginning of a calendar year, the Company may set the rate at a
later time or choose to apply the rate used for the prior calendar
year.
(e) Except for VAR Units described in Section 3.4(c),
beginning in the calendar year following the tenth year after grant of
a VAR Unit, including the year of the grant, the Value of the VAR Unit
will be determined by increasing the Value of the VAR Unit determined
on December 31 of that tenth year by a specified interest rate. That
rate shall be the same for a calendar year as the rate specified in
Section 3.4(d) for that year. Notwithstanding those requirements, if a
Participant's Termination of Service occurs on account of the
Participant's Disability or Retirement, then the valuation method
described in the provisions before this Subsection (e) shall not be
used later than through the second calendar year following the calendar
year in which that Termination of Service occurs and thereafter shall
be determined by increasing the Value of the VAR Unit determined on
December 31 of that second calendar year by the specified interest rate
described earlier in this Subsection (e).
(f) Notwithstanding Subsection (e) above, in the case of VAR
Units described in Section 3.4(c), the valuation method described in
the provisions before Subsection (e) above shall apply through at least
the December 31 immediately preceding the calendar year in which the
Participant incurs a Termination of Service. Further, notwithstanding
Subsection (e) above, in the case of VAR Units described in Section
3.4(c), if that Termination of Service occurs on account of the
Participant's Disability or Retirement, then such valuation method
shall be used through the second calendar year following the calendar
year in which that Termination of Service occurs and thereafter shall
be determined by increasing the Value of the VAR Unit determined on
December 31 of that second calendar year by the specified interest rate
described in Subsection (e). Also, notwithstanding Subsection (e)
above, in the case of VAR Units described in Section 3.4(c), if that
Termination of Service occurs on account of the Participant's death,
then the valuation method described in the provisions before Subsection
(e) above shall be used through the end of the calendar year preceding
the date of that death.
ARTICLE 4
DISTRIBUTIONS
Section 4.1 Distribution Requirements.
(a) The value of any VAR Unit may not be distributed until
that VAR Unit is vested as provided in Section 3.2.
(b) Except as otherwise provided in Section 4.3, distributions
shall be made in February of a calendar year. Distribution of the value
of any VAR Unit acquired by a Participant shall be made during a
specific February elected by the Participant or otherwise specified
under Section 4.3, or at any other time specified in Section 4.3. If
distribution is to be made during a specific February, but
administrative matters prevent distribution during that February, then
that distribution will be made as soon as administratively feasible
after that February.
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(c) Payment to or on behalf of a Participant with regard to a
VAR Unit shall be made in a single sum.
(d) Elections under this article shall be made on forms and
pursuant to rules established by the Company.
(e) Upon full payment to the Participant of the Value of the
VAR Unit, the Participant shall have no further interest in the VAR
Unit for which the Participant has received that payment, and the
Participant shall have no further right to any increase in the value of
that VAR Unit.
(f) The Company shall have the right to deduct any federal or
state taxes required by law to be withheld from all distributions made
pursuant to the Plan.
Section 4.2 Time of Distribution Election.
(a) A Participant's election regarding the time of
distribution with respect to a VAR Unit shall be made before the
calendar year that the VAR Unit is granted. However, in the first year
that a Participant becomes eligible to participate in the Plan, such
election may be made within 30 days after the date the Participant
becomes eligible to participate in the Plan and before grants are made
to the Participant under this Plan.
(b) Notwithstanding Subsection (a), during calendar year 2006,
a Participant may make an election regarding the time of distribution
with respect to VAR Units granted during 2005 and 2006, which must be
after 2006. This right shall also apply to VAR Units credited during
2005 under Section 3.1(c) to replace options that had been granted
under the Plan or another plan prior to 2005. Such election must be
made prior to a Participant's Termination of Service in 2006.
Section 4.3 Distribution Timing Options.
(a) A Participant may elect to have distribution with respect
to a VAR Unit that is scheduled to vest in a particular calendar year
made on or about a specified date in a February for which such
distribution is permitted under the Plan. A Participant may not elect a
date later than a date in February of the first calendar year following
the Participant's earliest possible Normal Retirement date. If a
Participant makes this election, that distribution will be made on or
about that date to the Participant, unless the Participant dies prior
to that date or incurs a Termination of Service prior to that date and
prior to the Participant's earliest possible Retirement date. In the
event of such a death or Termination of Service, distribution will be
made within or as soon as administratively feasible after 90 days
following the earlier of such death or Termination of Service. A
separate such election may be made that will apply in the event of the
Participant's Disability. The same rules apply to that election, except
that the elected time of distribution will not be accelerated in the
event of the Participant's Termination of Service on account of or
subsequent to the Participant's incurring a Disability.
(b) Alternatively, a Participant may elect (including by not
electing a specified date under Subsection (a) above) to have
distribution with respect to a VAR Unit that is scheduled to vest in a
particular calendar year be made subsequent to the earliest to occur of
the following: (1) the Participant's Termination of Service after
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reaching the Participant's earliest possible Retirement date, (2) the
Participant's Disability, (3) the Participant's Termination of Service
(other than on account of incurring a Disability) before the
Participant's earliest possible Retirement date or (4) the
Participant's death. In the case of the Participant's Disability or
Termination of Service after reaching the Participant's earliest
possible Retirement date, distribution will be made during the February
following the event for which distribution is made. In the case of the
Participant's death or Termination of Service (other than on account of
incurring a Disability) before the Participant's earliest possible
Retirement date, distribution will be made within or as soon as
administratively possible after 90 days following the event for which
distribution is made.
(c) If a Participant doesn't make an election under Subsection
(a) or Subsection (b) with respect to a VAR Unit granted to the
Participant, then distribution of the value of such VAR Unit will be
made as if the Participant made an election under Subsection (b).
(d) A Participant may make a second election to have
distribution with respect to a VAR Unit granted to the Participant made
on a specified date in a February at least five years after the
Participant's Termination of Service, or the specified date for
commencement of distribution with respect to that VAR Unit if the
Participant has previously elected such a specified date under this
section. Such election shall not be effective in the event of the
Participant's death or of the Participant's Termination of Service
prior to Retirement. The election must be made at least one year prior
to that Termination of Service, or specified date, for it to be
effective. A Participant may also make a second election regarding the
time of distribution on account of Disability. The election must be
made at least one year prior to such event for it to be effective. If
such an election is effective, a five-year delay is not required but
the elected time of distribution must be otherwise consistent with this
Article IV. If a Participant makes a second election under this
Subsection (d), the Participant may not elect a payment later than a
date in February of the first calendar year following the Participant's
earliest possible Normal Retirement date.
(e) Except if a Participant dies or incurs a Termination of
Service prior to Retirement, no distribution will be made under the
Plan in 2006.
Section 4.4 Distribution Form and Date of Determination of Value.
(a) Distribution to a Participant under the Plan with respect
to a VAR Unit shall be made in a lump sum payment of cash equal to the
then Value of the VAR Unit.
(b) Generally, the Value of the VAR Unit that will be
distributed will be its Value on the December 31 prior to the date of
distribution. However, in the case of a Participant's Termination of
Service prior to Retirement or the Participant's death, the Value of
the VAR Unit that will be distributed will be its Value on the December
31 prior to the date of that event.
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ARTICLE 5
CHANGE IN EMPLOYMENT STATUS
Section 5.1 Termination of Employment. In the event a Participant's
Termination of Service occurs for any reason, except death, Disability, or
Retirement, the Participant shall cease to be a Participant in the Plan as of
the date of that Termination of Service, except as otherwise provided in this
Section. Upon such Termination of Service:
(a) Any unvested VAR Units held in the name of the Participant
shall be forfeited as of the date of the Termination of Service.
(b) The value of any vested VAR Units held in the name of the
Participant shall be distributed in accordance with the procedure set
forth in Article IV.
Section 5.2 Retirement. In the event a Participant's Termination of
Service occurs as a result of the Participant's Retirement, the Participant
shall cease to be a Participant in the Plan as of the date of Retirement, except
as otherwise provided in this Section. Upon such Termination of Service:
(a) Any Value Appreciation Right Award made with respect to
the year of Retirement shall be prorated to the Retirement date.
(b) In the event that a Participant's Termination of Service
results from Normal Retirement or Early Retirement, any unvested VAR
Units will vest.
(c) The valuation of the VAR Units and distribution to the
Participant shall occur as set forth in Sections 3.4 and Article IV,
respectively.
Section 5.3 Disability. In the event that a Participant's employment
status with the Company has changed as a result of Participant's Disability, the
Participant shall cease to be a Participant in the Plan as of the date of such
status change, except as otherwise provided in this Section. Upon such status
change:
(a) Any Value Appreciation Right Award made with respect to
the year of the status change shall be prorated.
(b) In the event that a Participant's Termination of Service
results from a Disability, any unvested VAR Units will vest.
(c) The valuation of the VAR Units and distribution to the
Participant shall occur as set forth in Sections 3.4 and Article IV,
respectively.
(d) If a Participant returns to employment by a Participating
Employer or a Related Employer after incurring a Disability, any
distributions on account of that Disability will cease.
Section 5.4 Death. Upon Participant's death:
(a) Any unvested VAR Units held in the name of the deceased
Participant shall be forfeited as of the date of death.
(b) Any VAR Units held in name of the deceased Participant
must be distributed on behalf of the Participant as provided in Article
IV and the valuation of the
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VAR Units shall occur as set forth in Section 3.4. Distribution will be
made to the Participant's Beneficiary.
ARTICLE 6
NON-TRANSFERABILITY
Section 6.1 Anti-alienation of VAR Units. VAR Units granted to a
Participant and any rights and privileges pertaining thereto may not be
anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or
subjected to any charge or legal process; and no interest or right to receive a
benefit may be taken, either voluntarily or involuntarily, for the satisfaction
of the debts of, or other obligations or claims against, such person or entity,
including claims for alimony, support, separate maintenance and claims in
bankruptcy proceedings.
Section 6.2 Incompetent Participants. If any Participant has been
declared incompetent and a conservator or other person legally charged with the
care of such Participant or of his or her estate has been appointed, any
distribution under the Plan to which the Participant is entitled shall be paid
to such conservator or other person legally charged with the care of the
Participant or his or her estate. Except as provided above, when the Company has
determined that a Participant is unable to manage his or her affairs, the
Company may provide for such distribution or any part thereof to be made to any
other person or institution then contributing toward or providing for the care
and maintenance of such Participant. Any such distribution shall be a payment
for the account of such Participant and a complete discharge of any liability of
the Company and the Plan therefor.
Section 6.3 Designated Beneficiary. In the event of a Participant's
death prior to the distribution of any amounts payable under the Plan, the
payment of any amounts on behalf of the Participant under the Plan shall be made
to the Participant's Beneficiary designated on a form provided to the
Participant by the Company (the "Participant's Beneficiary"). If no such
beneficiary has been designated, payments shall be made to the duly appointed
and qualified executor or other personal representative of the Participant to be
distributed in accordance with the Participant's will or applicable intestacy
law; or in the event that there shall be no such representative duly appointed
and qualified within six (6) months after the date of death of such deceased
Participant, then to such persons as, at the date of the Participant's death,
would be entitled to share in the distribution of such deceased Participant's
personal estate under the provisions of the applicable statute then in force
governing the descent of intestate property, in the proportions specified in
such statute.
ARTICLE 7
ADMINISTRATION OF THE PLAN
Section 7.1 Administrator. The administrator and named fiduciary of the
Plan shall be the Company.
Section 7.2 Authority of Administrator. The Company shall have
authority, duty and power to interpret and construe the provisions of the Plan
as it deems appropriate, to temporarily suspend the Plan, to adopt, establish
and revise rules, procedures and regulations relating to the Plan, to determine
the conditions subject to which the value of any Value Appreciation Right Awards
that may be made or payable, and to make any other determinations which it
believes necessary or advisable for the administration of the Plan. The Company
shall have the duty and responsibility of maintaining records, making the
requisite calculations and dispersing payments hereunder. The Company's
determinations, interpretations, regulations and calculations shall be final and
binding on all persons and parties concerned. The Chief Executive Officer of the
Company shall be the agent of the Plan for the service of legal process in
accordance with Section 502 of the Employee Retirement Income Security Act of
1974, as amended.
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Section 7.3 Operation of Plan. The Company shall be responsible for the
general operation and administration of the Plan and for carrying out the
provisions thereof. The Company shall be responsible for the expenses incurred
in the administration of the Plan. The Company shall also be responsible for
determining eligibility for payments and the amounts payable pursuant to the
Plan. The Company shall be entitled to rely conclusively upon all tables,
valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by the
Company with respect to the Plan. The procedures for filing claims for payments
under the Plan are described below.
Section 7.4 Claims Procedures.
(a) It is the intent of the Company to make distributions
under the Plan without the Participant having to complete or submit any
claims forms other than notices contemplated by the Plan. However, a
Participant who believes he or she is entitled to a payment under the
Plan may submit a claim for such payment in writing to the Company. Any
claim must be made by the Participant or his or her beneficiary in
writing and state the claimant's name and the nature of the payment to
be made under the Plan on a form acceptable to the Company. If for any
reason a claim under this Plan is denied by the Company, the Claims
Manager shall deliver to the claimant a written explanation setting
forth the specific reasons for the denial, specific references to the
pertinent provisions under the Plan on which the denial is based, 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 information on the procedures to be
followed by the claimant in obtaining a review of his or her claim, all
written in a manner reasonably understandable to the claimant. For this
purpose: (i) the claimant's claim shall be deemed to be filed when
presented orally or in writing to the Claims Manager and (ii) the
Claims Manager's explanation shall be in writing delivered to the
claimant within 90 days of the date the claim is filed.
(b) The claimant shall have 60 days following his or her
receipt of the denial of the claim to file with the Claims Manager a
written request for review of the denial. For such review, the claimant
or the claimant's representative may review pertinent documents and
submit written issues and comments.
(c) The Claims Manager shall decide the issue on review and
furnish the claimant with a copy within 60 days of receipt of the
claimant's request for review of the claimant's claim. The decision on
review shall be in writing and shall include specific reasons for the
decision, written in a manner reasonably understandable to the
claimant, as well as specific references to the pertinent provisions in
the Plan on which the decision is based. If a copy of the decision is
not so furnished to the claimant within such 60 days, the claim shall
be deemed denied on review. In no event may a claimant commence legal
action for benefits the claimant believes are due the claimant until
the claimant has exhausted all of the remedies and procedures afforded
the claimant by this Section 7.4.
(d) For claims procedures purposes, the "Claims Manager" shall
be the Company.
Section 7.5 Participant's Address. Each Participant shall keep the
Company informed of his or her current address and the current address of his or
her beneficiary. The Company shall not be obligated to search for any person. If
the location of a Participant is not made known to the Company within three (3)
years after the date on which payment of the Participant's benefits payable
under this Plan may be made, payment may be made as though the Participant
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had died at the end of the three-year period. If, within one (1) additional year
after such three-year period has elapsed, or, within three (3) years after the
actual death of a Participant, the Company is unable to locate any designated
beneficiary of the Participant, then the Company shall have no further
obligation to pay any benefit hereunder to such Participant or designated
beneficiary and such benefits shall be irrevocably forfeited.
Section 7.6 Liability. Notwithstanding any of the provisions of the
Plan to the contrary, neither the Company nor any individual acting as an
employee or agent of the Company shall be liable to any Participant or any other
person for any claim, loss, liability or expense incurred in connection with the
Plan, unless attributable to fraud or willful misconduct on the part of the
Company or any such employee or agent of the Company.
ARTICLE 8
MISCELLANEOUS PROVISIONS
Section 8.1 No Employment Rights. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee any right to be retained in
the employ of the Company.
Section 8.2 Unfunded and Unsecured. The Plan shall at all times be
considered entirely unfunded both for tax purposes and for purposes of Title I
of the Employee Retirement Income Security Act of 1974, as amended, and no
provision shall at any time be made with respect to segregating assets of the
Company for payment of any amounts hereunder. Any funds with respect to payment
to be made hereunder shall continue for all purposes to be part of the general
assets of the Company and available to the general creditors of the Company in
the event of the Company's bankruptcy (when the Company is involved in a pending
proceeding under the Federal Bankruptcy Code) or insolvency (when the Company is
unable to pay its debts as they mature). No Participant or any other person
shall have any interests in any particular assets of the Company by reason of
the right to receive a benefit under the Plan and to the extent the Participant
or any other person acquires a right to receive benefits under this Plan, such
right shall be no greater than the right of any general unsecured creditor of
the Company. The Plan constitutes a mere promise by the Company to make payments
to the Participants in the future. Nothing contained in the Plan shall
constitute a guaranty by the Company or any other person or entity that any
funds in any trust or the assets of the Company will be sufficient to pay any
benefit hereunder. Furthermore, no Participant shall have any right to a benefit
under the Plan except in accordance with the terms of the Plan.
Section 8.3 Plan Provisions. Except when otherwise required by the
context, any singular terminology shall include the plural.
Section 8.4 Severability. If a provision of the Plan shall be held to
be illegal or invalid, the illegality or invalidity shall not affect the
remaining parts of the Plan and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.
Section 8.5 Applicable Law. To the extent not preempted by the laws of
the United States, the laws of the State of Minnesota shall apply with respect
to this Plan.
Section 8.6 Successor to Company. In the event there is a successor or
assignee to or of the Company, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all (at least 85% of the
assets or the common stock) of the Company, the Company, in its sole discretion,
may either cash out or require such successor or assignee to assume and agree to
perform the Company's obligations under the Plan, in the same manner and
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to the same extent that the Company would be required to perform if no such
succession or assignment had occurred or terminate the Plan pursuant to the
provisions of Article 10. If a successor or assignee assumes the Plan pursuant
to this Section 8.6, the term "Company," as used in the Plan, shall mean the
Company as hereinbefore defined and any successor or assignee to the Company
which by reason hereof becomes bound by the terms and provisions of the Plan.
Section 8.7 Authority of CEO. Except in cases where the
responsibilities are reserved to the Board or Executive Committee under this
Plan, the Chief Executive Officer of the Company (or his designee) may act on
behalf of the Company under this Plan.
ARTICLE 9
AMENDMENT
The Company reserves the power to alter, amend or wholly revise or terminate the
Plan at any time and from time to time by the action of the Board and the
interest of each Participant is subject to the powers so reserved. An amendment
shall be authorized by the Board or Executive Committee and shall be stated in
an instrument in writing signed in the name of the Company by a person or
persons authorized by the Board. After the instrument has been so executed, the
Plan shall be effectively amended in the manner therein set forth, and all
Participants shall be bound thereby. No amendment to the Plan may alter, impair,
or reduce the methodology for valuation of Value Appreciation Rights (VAR Units)
of Participants that have been awarded under the Plan prior to the effective
date of such amendment without the written consent of the affected Participants.
However, if the Company determines that an event has occurred that substantially
changes the relationship between the value measured under Section 3.4 and the
value of the Company, such as a major merger, the Company may modify such
methodology as it determines to be appropriate in order to limit such a change.
Such modification may include a modification of the number of VAR Units held
under the Plan on behalf of each Participant. However, the modification shall
not reduce the total value of the VAR Units held in the name of a Participant
below such value prior to such event.
ARTICLE 10
TERMINATION OF PLAN
Section 10.1 Power to Terminate and Consequences of Termination of the
Plan. The Company may at any time terminate the Plan by action of the Board. No
further Value Appreciation Right Awards will be granted after the date of
termination of the Plan. The termination of the Plan shall not reduce alter,
impair, or reduce the methodology for valuation of Value Appreciation Rights
(VAR Units) of Participants that have been awarded prior to the effective date
of such termination, without the written consent of the affected Participant.
Upon such termination, all unvested VAR Units shall immediately vest.
Thereafter, the Company shall distribute the value of all VAR Units held in the
name of Participants and the Participants shall have no further rights or
benefits under the Plan after that distribution is complete. The valuation of
VAR Units so distributed and the distribution to the Participants shall occur as
set forth in Sections 3.4 and Article IV, respectively.
Section 10.2 Options to Accelerate Distribution.
(a) The Company may elect to make lump sum distributions of
the value of all VAR Units held in the names of Participants if it
elects to terminate the Plan and make those distributions within twelve
(12) months of a Change in Control Event that is a Change in Control
Event with respect to the Participant for each Participant.
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(b) The Company may elect to make lump sum distributions of
the value of all VAR Units held in the names of Participants if it
elects to terminate the Plan and make those distributions subsequent to
12 months after and within 24 months of that termination provided that:
(1) All arrangements sponsored by a Participating Employer or
Related Employer that would be aggregated with this Plan under
Section 1.409A-1(c) of Proposed Treasury Regulations (or
successor regulations), if Participants participated in those
arrangements, are terminated; and
(2) The Company does not adopt a new arrangement that would
have been aggregated with the Plan under those regulations
(had the Plan continued), if Participants participated under
that arrangement and the Plan, at any time within five years
following the date of termination of the Plan.
Notwithstanding the prior provisions of this Subsection (b), if those
elections are made under this Subsection (b), payments to Participants
that would have been made before such 12 month period shall be made as
if those elections had not been made.
In Witness Whereof, this restatement is effective as of _________________, 2005.
LAND O'LAKES
BY: ________________________
TITLE: ______________________
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