EXHIBIT 10.12
GENERAL MILLS, INC.
DEFERRED COMPENSATION PLAN
As Amended Through December 1, 1999
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GENERAL MILLS, INC.
DEFERRED COMPENSATION PLAN
1. PURPOSE OF PLAN
General Mills, Inc. (the "Company") hereby establishes a Deferred
Compensation Plan (the "Plan") for a select group of its key management
employees of the Company and its affiliates as a means of sheltering a
portion of income from current taxation while accumulating resources
for future investments or retirement. Under the Plan, Participants may
defer both cash incentive compensation and delivery and receipt of
common stock issued under the Company's stock option plans. As to
deferred cash, Participants shall earn a "rate of return" on the
deferred amounts which track the investment return achieved under the
Voluntary Investment Plan of General Mills, Inc. (the "VIP") and/or
rates equivalent to investment results of other funds or portfolios as
may be made available from time to time pursuant to the provisions of
the Plan. As to stock options, Participants may defer receipt of the
net shares of General Mills, Inc. common stock ("Common Stock")
resulting from a Participant's stock-for-stock option exercise and
dividend equivalents on the net shares. Under current tax law, amounts
properly deferred and the "rate of return" or earnings credited to such
amounts are not taxable (except for FICA taxation, as required) as
income until they are distributed to the Participants. Under current
tax law, distributions from this Plan will be taxed as ordinary income
in the year in which they are received.
2. ELIGIBILITY
An individual is a Participant in the Plan if such individual (i) is a
Participant in the Executive Incentive Plan, (ii) has been selected by
management to participate in "Compensation Plus," or (iii) has an
individual agreement, approved by the Minor Amendment Committee, which
provides for participation in this Plan and has elected to defer
compensation or receipt of Common Stock pursuant to the provisions of
any of these programs or the agreement. Former employees of the Company
who have retired from the Company may also participate if they would
have been eligible to participate at the time they retired from the
Company.
3. PLAN ADMINISTRATION
(i) Minor Amendment Committee. Except as provided below, this Plan
shall be administered by the Minor Amendment Committee (the
"Minor Amendment Committee"). The Minor Amendment Committee
shall act by affirmative vote of a majority of its members at
a meeting or in writing without a meeting. The Minor Amendment
Committee shall appoint a secretary who may be but need not be
one of its own members. The secretary shall keep complete
records of the administration of the Plan. The Minor Amendment
Committee may authorize each and any one of its members to
perform routine acts and to sign documents on its behalf. To
the extent necessary to maintain any exemption under Rule
16b-3 or any successor rule ("Rule 16b-3") under the
Securities Exchange Act of 1934 as to certain officers of the
Company, certain portions of this Plan shall be administered
by the Compensation Committee.
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(ii) Plan Administration. The Minor Amendment Committee may appoint
such persons or establish such subcommittees, employ such
attorneys, agents, accountants or investment advisors
necessary or desirable to advise or assist it in the
performance of its duties hereunder, and the Minor Amendment
Committee may rely upon their respective written opinions or
certifications.
Administration of the Plan shall consist of interpreting and
carrying out the provisions of the Plan. The Minor Amendment
Committee shall determine the eligibility of employees to
participate in the Plan, their rights while Participants in
the Plan and the nature and amount of benefits to be received
therefrom. The Minor Amendment Committee shall decide any
disputes which may arise under the Plan. The Minor Amendment
Committee may provide rules and regulations for the
administration of the Plan consistent with its terms and
provisions. Any construction or interpretation of the Plan and
any determination of fact in administering the Plan made in
good faith by the Minor Amendment Committee shall be final and
conclusive for all Plan purposes.
(iii) Claims Procedure.
(a) The Minor Amendment Committee shall prescribe a form
for the presentation of claims under the terms of the
Plan.
(b) Upon presentation to the Minor Amendment Committee of
a claim on the prescribed form, the Minor Amendment
Committee shall make a determination of the validity
thereof. If the determination is adverse to the
claimant, the Minor Amendment Committee shall furnish
to the claimant within a reasonable period of time
after the receipt of the claim a written notice
setting forth the following:
(1) The specific reason or reasons for the
denial;
(2) Specific reference to pertinent provisions
of the Plan on which the denial is based;
(3) 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
(4) An explanation of the Plan's claim review
procedure.
(c) In the event of a denial of a claim, the claimant may
appeal such denial to the Minor Amendment Committee
for a full and fair review of the adverse
determination. The claimant's request for review must
be in writing and be made to the Minor Amendment
Committee within 60 days after receipt by the
claimant of the written notification required under
subsection (b) above. The claimant or his or her duly
authorized representative may submit issues and
comments in writing which shall be given full
consideration by the Minor Amendment Committee in its
review.
(d) The Minor Amendment Committee may, in its sole
discretion, conduct a hearing. A request for a
hearing will be given full
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consideration. At such hearing, the claimant shall be
entitled to appear and present evidence and be
represented by counsel.
(e) A decision on a request for review shall be made by
the Minor Amendment Committee not later than 60 days
after receipt of the request; provided, however, in
the event of a hearing or other special
circumstances, such decision shall be made not later
than 120 days after receipt of such request.
(f) The Minor Amendment Committee's decision on review
shall state in writing the specific reasons and
references to the Plan provisions on which it is
based. Such decision shall be immediately provided to
the claimant. In the event the claimant disagrees
with the findings of the Minor Amendment Committee,
the matter shall be referred to arbitration in
accordance with Section 14 hereof.
(g) The Minor Amendment Committee may allocate its
responsibilities among its several members, except
that all matters involving the hearing of and
decision on claims and the review of the
determination of benefits shall be made by the full
Minor Amendment Committee. No member of the Minor
Amendment Committee shall participate in any matter
relating solely to himself.
4. DEFERRAL AND PAYMENT OF COMPENSATION
(i) Cash Deferral Election. A Participant can elect to defer cash
incentive compensation by completing and submitting to the
Company a cash deferral election form by December 31 of each
year. Such election shall apply to the Participant's cash
incentive compensation, if any, to be paid in the next
calendar year. A Participant's cash deferral election may
apply to:
(a) 100% of the cash incentive compensation,
(b) any amount in excess of a specified dollar amount,
(c) any amount up to a specified dollar amount, or
(d) a specified percentage (in whole numbers) of the cash
incentive compensation.
(ii) Stock Option Gain Deferral Election. A Participant can elect
to defer receipt of Net Shares (defined below) of Common Stock
resulting from a stock-for-stock exercise of an exercisable
stock option issued to the Participant by completing and
submitting to the Company an irrevocable stock option deferral
election at least six months in advance of exercising the
stock option (which exercise must be done on or prior to the
expiration of the stock option) and, on or prior to the
exercise date, delivering personally-owned shares equal in
value to the option exercise price on the date of the
exercise. At the time of the deferral election, the
Participant can also choose to use some of the shares subject
to the stock option to satisfy any FICA, Medicare or any other
taxes due upon the stock option exercise. "Net Shares" means
the difference between the number of shares of Common Stock
subject to the stock option exercise and the number of
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shares of Common Stock delivered to satisfy the stock option
exercise price less any shares used to satisfy FICA, Medicare
or any other taxes due upon the stock option exercise. A
Participant may not revoke a stock option gain deferral
election after it is received by the Company. A Participant
may choose to defer receipt of all or only a portion of the
Net Shares to be received upon exercise of a stock option. If
only a portion of the Net Shares is deferred, the balance will
be issued at the time of exercise.
(iii) Distribution of Deferred Cash and Common Stock. At the time of
a Participant's deferral election, a Participant must also
select a distribution date and a form of distribution. The
distribution date may be any date that is at least one year
subsequent to either the date the compensation would otherwise
be payable or the exercise date for the related stock option,
as the case may be. The deferral election must provide that
distribution shall be made or commenced as of the date the
Participant attains age 70.
A Participant may elect to have deferred cash amounts paid or
Common Stock distributed, as the case may be, in a single
payment or in substantially equal annual installments for a
period not to exceed ten (10) years, or up to fifteen (15)
years for elections made until December 31, 1985, or in
another form requested by the Participant, in writing, and
approved by the Minor Amendment Committee. Common Stock
issuable under a single stock option grant shall have the same
distribution date and form of distribution. Notwithstanding
the above, the following provisions shall apply:
(a) If the employment of a Participant terminates for any
reason other than retirement prior to the date of
receipt of any incentive compensation award, then any
cash deferral election made with respect to such
incentive compensation award shall not become
effective.
(b) If a stock option, as to which a Participant has made
a stock option gain deferral election, terminates
prior to the exercise date selected by the
Participant, or if the Participant dies or fails to
deliver personally-owned shares in payment of the
exercise price, then the deferral election shall not
become effective.
(c) In the event of the termination of a Participant
other than by retirement, the Minor Amendment
Committee may, with sole and complete discretion, if
it determines that such distribution is in the best
interest of the Company, require that distribution of
all cash and Stock Units (as defined in Section 8(i)
below) allocated to a Participant's Deferred Cash
Accounts or Deferred Stock Unit Accounts (as defined
in Section 8(i) below) be accelerated and distributed
as of the first business day of the calendar year
next following the date of termination.
(d) As to all previous and future Plan years, a
Participant who (A) has elected a distribution date
and distribution in either a single distribution or
substantially equal installments and (B) is not
within twelve (12) months of the date that such
deferred amount, deferred
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Common Stock or the first installment thereof would
be distributed under this Plan, shall be permitted to
make no more than two amendments to the initial
election to defer distributions such that his or her
distribution date is either in the same calendar year
as the date of the distribution which would have been
made in the absence of such election amendment(s) or
is at least one year after the date of the
distribution which would have been made in the
absence of such election amendment(s). A Participant
satisfying the conditions set forth in the preceding
sentence may also amend such election so that his or
her form of distribution is changed to substantially
equal annual installments for a period not to exceed
ten (10) years or is changed to a single
distribution.
(e) A Participant may, at any time prior or subsequent to
the commencement of cash benefit payments under this
Plan, elect in writing to have his or her form of
payment of any or all amounts due under this Plan
changed to an immediate lump-sum distribution which
shall be paid within one (1) business day of receipt
by the Company of such request; provided that the
amount of any such lump-sum distribution shall be
reduced by an amount equal to the product of (X) the
total lump-sum distribution otherwise payable (based
on the value of the account as of the first day of
the month in which the lump-sum amount is paid,
adjusted by a pro-rata portion of the rate of return
for the prior month in which the lump-sum is paid,
determined by multiplying the actual rate of return
for such prior month by a fraction, the numerator of
which is the number of days in the month in which the
request is received prior to the date of payment, and
the denominator of which is the number of days in the
month), and (Y) the rate set forth in Statistical
Release H.15(519), or any successor publication, as
published by the Board of Governors of the Federal
Reserve System for one-year U.S. Treasury notes under
the heading "Treasury Constant Maturities" for the
first day of the calendar month in which the request
for a lump-sum distribution is received by the
Company.
(f) A Participant may, at any time prior or subsequent to
the commencement of distribution of Common Stock
under this Plan, elect to have his or her form of
distribution of any or all distributions of Common
stock to be made under this Plan changed to an
immediate single distribution which shall be made
within three (3) days of receipt by the Company of
such request; provided, that the number of shares of
Common Stock to be distributed in the single
distribution shall be reduced by the number of shares
equal in value to the product of (X) the number of
Stock Units allocated to the Participant's Deferred
Stock Unit Account, (Y) the mean of the high and low
price of the shares of Common Stock on the New York
Stock Exchange on the date of the request, and (Z)
the rate set forth in Statistical Release H.15(519),
or any successor publication as published by the
Board of Governors of the Federal Reserve System for
one-year U.S. Treasury notes under the heading
"Treasury Constant Maturities" for the first day of
the calendar month in which the request for a single
Common Stock distribution is received by the Company.
Only whole numbers of shares will be issued, with any
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fractional share amounts and dividend equivalents not
used to "purchase" additional Stock Units paid in
cash.
(g) At the time elected by the Participant for
distribution of Common Stock attributable to
allocations under the Participant's Deferred Stock
Unit Accounts, the Company shall issue to the
Participant, within three (3) days of the date of
distribution, shares of Common Stock equal to the
number of Stock Units credited to the Deferred Stock
Unit Account and cash equal to any dividend
equivalent amounts which had not been used to
"purchase" additional Stock Units as provided below.
Prior to distribution and pursuant to any rules the
Committee may adopt, a Participant may authorize the
Company to withhold a portion of the shares of Common
Stock to be distributed for the payment of all
federal, state, local and foreign withholding taxes
required to be collected in respect of the
distribution.
(iv) Rabbi 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 as to
deferred cash incentive compensation under the Plan and
certain other plans of deferred compensation of the Company.
In the event of a "Change in Control" (as defined in Section
12 below), the Company shall be obligated to immediately
contribute such amounts to the Trust as may be necessary to
fully fund all cash benefits payable under the Plan. Any
Participant in the Plan shall have the right to demand and
secure specific performance of this provision. 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 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 Plan, are unsecured
contractual claims of the Participant against the Company.
(v) Common Stock Distribution. In the event of a Change of
Control, shares of Common Stock and cash attributable to Stock
Units and dividend equivalents credited to each Participant's
Deferred Stock Unit Account shall be immediately distributed
to the Participant.
5. DEFERRED CASH ACCOUNTS AND INVESTMENT RETURNS ON AMOUNTS IN DEFERRED
ACCOUNTS
A deferred cash incentive compensation account ("Deferred Cash
Account") will be established on behalf of each Participant electing to
defer cash incentive compensation under Section 4(i) above, and the
amount of deferred cash incentive compensation will be credited to each
Participant's Deferred Cash Account as of the first of the month
coincident with or next following the month in which a deferral becomes
effective. Each Participant's Deferred Cash Account will be credited
monthly with a "rate of return" on the total deferred cash amount
accruing as of the first of the month coincident with or next following
the date deferred incentive compensation is credited to the
Participant's Deferred Cash Account. Such "rate of return" shall be
based upon the actual investment
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performance of funds in the VIP, or at such other rates as may be made
available to Participants from time to time pursuant to the provisions
of the Plan. A Participant may elect to have the "rate of return"
credited to his or her Deferred Cash Account at any of the following
rates:
(a) the rate of return as from time to time earned by the
Fixed Income Fund of the VIP;
(b) the rate of return as from time to time earned by the
Equity Fund of the VIP; or
(c) any other rates of return of other funds or
portfolios established under a qualified benefit plan
maintained by the Company which the Minor Amendment
Committee may establish as an available rate of
return under this Plan.
Participants may elect to have any combination of the above "rates of
return" accrue on amounts in their Deferred Cash Account, from 1% to
100%, provided that the sum of the percentages attributable to such
rates equals 100%. A Participant may change the "rate(s) of return" to
be credited to his or her Deferred Cash Account, except as to a Unit
Performance Fund, as of the first day of any month by notifying the
Company, in writing, of such election by the last business day of the
preceding month.
Each Participant's Deferred Cash Account will be credited monthly with
the "rate(s) of return" elected by the Participant until the amount in
each Participant's Deferred Cash Account is distributed to the
Participant on the distribution date(s) elected by the Participant.
Each Participant shall receive a periodic statement of the balance of
his or her Deferred Cash Account.
6. COMPANY CONTRIBUTIONS TO DEFERRED CASH ACCOUNTS
As of the first of the month coincident with or next following the
month in which a deferral is made hereunder, each Participant's
Deferred Cash Account will be credited with hypothetical interest in an
amount equal to 2 1/2% of the Participant's deferred cash incentive
compensation, or such amount as will otherwise equal the value of the
"Base Allocation" (as that term is defined in the VIP) which would have
been allocated to the Participant if the Participant had contributed
such deferred cash incentive compensation amount to the VIP. In
addition, as soon as practicable following the end of each fiscal year,
each Participant's Deferred Cash Account may be credited with
hypothetical interest in an amount not to exceed 2 1/2% of the
Participant's deferred cash incentive compensation, or such amount as
will otherwise equal the value of the "Variable Allocation" (as that
term is defined in the VIP) which would have been allocated to the
Participant if the Participant had contributed such deferred cash
incentive compensation amount to the VIP. Company contributions under
this Section 6 shall not be made as to deferrals which were included in
a Participant's earnable compensation under the General Mills
International Retirement Plan.
7. SHORT-TERM DEFERRALS
Notwithstanding the foregoing provisions of the Plan, the Company may
also permit Participants to elect to defer all or part of cash
incentive compensation, if any, to a date certain selected by the
Company within the taxable year it would
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otherwise be paid, upon written notice to the Company received by
December 31 of the preceding calendar year. Interest shall be credited
on such deferred cash amount at a rate selected by the Company and
communicated to the Participants at the same time the availability of
any such short-term deferral opportunity is communicated to
Participants.
8. DEFERRED STOCK UNIT ACCOUNTS AND DIVIDEND EQUIVALENTS
(i) A deferred stock unit account ("Deferred Stock Unit Account")
will be established for each stock option grant covered by a
Participant election to defer the receipt of Common Stock
under Section 4(ii) above and, for each Net Share deferred, a
Stock Unit ("Stock Unit") will be credited to the Deferred
Stock Unit Account as of the date of the stock option
exercise. Participants may make elections, which shall become
effective six months after they are made, either to receive
dividend equivalent cash amounts on Stock Units currently or
to have the amounts reinvested. If the amounts are reinvested,
on each dividend payment date for the Company's Common Stock,
the Company will credit each Deferred Stock Unit Account with
an amount equal to the dividends paid by the Company on the
number of shares of Common Stock equal to the number of Stock
Units in the Deferred Stock Unit Account. Dividend equivalent
amounts credited to each Deferred Stock Unit Account shall be
used to "purchase" additional Stock Units for the Deferred
Stock Unit Account at a price equal to the mean of the high
and low price of the Common Stock on the New York Stock
Exchange on the dividend date. No fractional Stock Units will
be credited. The Minor Amendment Committee may, in its sole
discretion, direct either that all dividend equivalent amounts
be paid currently or all such amounts be reinvested if, for
any reason, such Committee believes it is in the best interest
of the Company to do so. If the Participant fails to make an
election, the dividend equivalent amounts shall be reinvested.
Each Participant will receive a periodic statement of the
number of Stock Units in his or her Deferred Stock Unit
Account(s).
(ii) The Plan governs the deferral of receipt of Common Stock
issuable upon the exercise of stock options of the Company.
The stock options are governed by the stock option plan under
which they are granted. No stock options or shares of Common
Stock are authorized to be issued under the Plan. Participants
who elect under the Plan to defer the receipt of Common Stock
issuable upon the exercise of stock options will have no
rights as stockholders of the Company with respect to
allocations made to their Deferred Stock Unit Account(s),
except the right to receive dividend equivalent allocations
under Section 8(i) above.
(iii) In the event that the Compensation Committee determines that
any dividend or other distribution (whether in the form of
cash, Common Stock, securities of a subsidiary of the Company,
other securities or other property), recapitalization, stock
split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or
exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock
or other securities of the Company, or other similar corporate
transaction or event affects the Common Stock such that an
adjustment to the Participants' allocations to their Deferred
Stock Unit Account(s) is appropriate to prevent reduction or
enlargement of the benefits or potential benefits intended to
be made
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available under the Plan, then the Compensation Committee may,
in its sole discretion and in such manner as it may deem
equitable, adjust the Stock Units allocated to Participants'
Deferred Stock Unit Account(s).
9. FINANCIAL HARDSHIP PAYMENTS
In the event of a severe financial hardship occasioned by an emergency,
including, but not limited to, illness, disability or personal injury
sustained by the Participant or a member of the Participant's immediate
family, a Participant may apply to receive a distribution, including a
distribution of Common Stock related to allocations of Stock Units
under Deferred Stock Unit Account(s), earlier than initially elected.
Subject to Section 3(i), the Minor Amendment Committee may, in its sole
discretion, either approve or deny the request. The determination made
by the Minor Amendment Committee will be final and binding on all
parties. If the request is granted, the distributions will be
accelerated only to the extent reasonably necessary to alleviate the
financial hardship.
10. DEATH OF A PARTICIPANT
If the death of a Participant occurs before a full distribution of the
Participant's Deferred Cash Account(s) or Deferred Stock Unit
Account(s) is made, a single distribution shall be made to the
beneficiary designated by the Participant to receive such amounts. This
distribution shall be made as soon as practical following notification
that death has occurred. In the absence of any such designation, the
distribution shall be made to the personal representative, executor or
administrator of the Participant's estate.
11. IMPACT ON OTHER BENEFIT PLANS
The Company may maintain life, disability, retirement and/or savings
plans under which benefits earned or payable are related to earnings of
a Participant.
Life and disability plan benefits will generally be based upon the
earnings that a Participant would have earned in a given calendar year
in the absence of any deferral hereunder.
Retirement benefits under a qualified pension plan maintained by the
Company or an affiliate will be based upon earnings actually paid to a
Participant during any given Plan year. If a person terminates
employment with a right to a vested benefit under a qualified plan
maintained by the Company or an affiliate, and if the actual income for
pension purposes was reduced because of a cash deferral under this
Plan, the Company will provide a supplemental pension equal to the
difference between the actual benefit payable from the pension plan and
the benefit that such Participant would have been received had income
not been deferred. If such a supplemental benefit is due, such benefit
would be subject to all of the provisions and in accordance with the
terms and conditions of the Supplemental Retirement Plan of General
Mills, Inc. This supplemental retirement benefit will not apply to
Participants who terminate before becoming vested under the qualified
pension plan.
12. NON-ASSIGNABILITY OF INTERESTS
The interests herein and the right to receive distributions under this
Plan may not be anticipated, alienated, sold, transferred, assigned,
pledged, encumbered, or
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subjected to any charge or legal process, and if any attempt is made to
do so, or a Participant becomes bankrupt, the interests of the
Participant under the Plan may be terminated by the Minor Amendment
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
Participant or make any other disposition of such interests that it
deems appropriate. Notwithstanding the foregoing, in the event a
Participant has received an overpayment from the Supplemental
Retirement Plan of General Mills, Inc. and has failed to repay such
amounts upon written demand of the Company, the Company shall be
authorized and empowered, at the discretion of the Company, to deduct
such amount from the Participant's Deferred Cash Account(s).
13. AMENDMENTS TO PLAN
The Company, or if specifically delegated, its delegate, reserves the
right to suspend, amend or otherwise modify or terminate this Plan at
any time, without notice. However, this Plan may not be suspended,
amended, otherwise modified, or terminated after a Change in Control
without the written consent of a majority of Participants determined as
of the day before such Change in Control occurs. A "Change of Control"
means:
(a) The acquisition by any 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 any 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) Individuals who, as of the date hereof, 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 the date hereof
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
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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
(c) 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 power
of the then outstanding 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 of 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 of 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) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding any other provision of this Plan to the contrary and
except as provided in Section 3(i), the Minor Amendment Committee may,
in its sole discretion, direct that distributions be made before such
distributions are otherwise due to be made 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), such Committee believes that Participants or their
beneficiaries have recognized or will recognize income for federal
income tax purposes with respect to
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distributions that are or will be distributed to such Participants
under the Plan before such distributions are scheduled to be paid. In
making this determination, the Minor Amendment Committee shall take
into account the hardship that would be imposed on Participants or
their beneficiaries by the payment of federal income taxes under such
circumstances.
14. ARBITRATION
(i) 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.
(ii) 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.
(iii) 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.
(iv) Arbitration under this Section shall be conducted by a single
arbitrator selected jointly by the Company and the Participant
or Beneficiary, as applicable (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 within 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.
(v) 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.
(vi) 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.
(vii) 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.
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15. EFFECTIVE DATE AND PLAN YEAR
This Plan became effective as of May 1, 1984. It shall operate on a
calendar year basis thereafter. The Plan has been amended and restated
effective as of January 1, 1986; and amended as of February 9, 1987;
July 1, 1987; June 21, 1990; April 29, 1991; May 1, 1991; November 15,
1991; December 15, 1992, December 1, 1994, January 1, 1995, June 3,
1996, November 7, 1996, March 31, 1998 and December 1, 1999.
