NORDSON CORP
EX-10.3 2005 DIRECTORS DEFERRED COMPENSATION
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<TYPE>EX-10.3
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<FILENAME>l12457aexv10w3.txt
<DESCRIPTION>EX-10.3 2005 DIRECTORS DEFERRED COMPENSATION
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                                                                    EXHIBIT 10.3

Committee Rules

                   VII. 2005 DIRECTORS' DEFERRED COMPENSATION

                  The provisions of the Plan and these Rules apply to Directors'
Compensation deferred after December 31, 2004. Directors' Compensation deferred
before January 1, 2005, remains subject to the provisions of the Plan and the
Rules as in effect on October 3, 2004.

1.    DEFINITIONS. The following definitions apply to Directors' deferred
      compensation:

      (a)   "Directors' Compensation" means all or a portion of the fees
            (including quarterly retainer fees, meeting fees, and such special
            or other fees as may be authorized by the Board of Directors, but
            excluding Director Options) paid to the Directors by reason of their
            serving on the Board and, if applicable, on Committees of the Board.

2.    DIRECTORS' COMPENSATION. Each Director will have the option to defer his
      or her Directors' Compensation and have it either (i) credited to an
      account maintained for him or her by Nordson as cash or (ii) allocated to
      an account maintained for him or her by Nordson as Stock Equivalent Units.

3.    ELECTIONS TO DEFER DIRECTORS' COMPENSATION.

      (a)   Time of Election. Any person who is appointed to fill a vacancy on
            the Board, or is newly elected as a Director, may elect within
            thirty days after the commencement of his or her term as a Director
            to defer the receipt of all or a specified portion of his or her
            Directors' Compensation earned for services performed for the
            balance of the year in which the election is made and for succeeding
            years.

      (b)   Duration of an Election. An election to defer Directors'
            Compensation will be irrevocable and will continue from year to year
            until a Director terminates the election by written request or until
            the end of the year preceding the initial distribution to the
            Director under the schedule set forth in Section 5(a), whichever
            first occurs, but, in the event of a termination, the amount
            theretofore deferred will not be paid to the Director until the
            dates specified in the schedule set forth in Section 5(a). Any
            termination of an election by written request shall be effective as
            of the first day of the year following the year in which the written
            request is made.

      (c)   Election to Defer Less than All Directors' Compensation. In the
            event that any Director elects to defer less than all of the
            Directors' Compensation payable to him or her for any period,
            Nordson will first pay the non-deferred portion of the Directors'
            Compensation to the Director in cash and will only commence to defer
            his or her Directors' Compensation, whether as cash or as Stock
            Equivalent Units,

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Committee Rules

      at such time as the entire non-deferred portion has been paid to the
      Director in cash.

4.    ELECTION OF CASH OR STOCK EQUIVALENT UNITS.

      (a)   Designation as Cash or Stock Equivalent Units. At the time that each
            Director makes an election to defer the receipt of all or a
            specified portion of his or her Directors' Compensation, the
            Director will designate whether the amount of the Directors'
            Compensation he or she elects to defer will be credited to his or
            her account as cash or allocated as Stock Equivalent Units.

      (b)   Change of Designation from Cash to Stock Equivalent Units. Each
            Director who previously designated cash may at any time elect to
            have his or her designation changed from cash to Stock Equivalent
            Units (but not from Stock Equivalent Units to cash) and all or a
            portion of the cash credited to his or her account converted to
            Stock Equivalent Units; provided that no such election may be made
            relating to all or a portion of the cash credited to his or her
            account within six months of (i) an election to receive an early
            distribution under Section 5(b) hereof (if such distribution is
            funded by the conversion of Stock Equivalent Units), (ii) an
            election to make an intra-plan transfer under Nordson's Employees'
            Savings Trust Plan ("NEST") of funds held in a Nordson Common Share
            Fund account into any other Fund under the NEST, or (iii) an
            election to receive a cash distribution from the NEST, including a
            loan or hardship withdrawal, which is funded in whole or in part by
            the liquidation of Common Shares in the participant's Nordson Common
            Share Fund account. Upon making such an election, all or the
            designated portion of the cash credited to a Director's account will
            be converted into Stock Equivalent Units based on the Fair Market
            Value of the Common Shares at the date of conversion. "Fair Market
            Value" for purposes of this Section 4(b) means the average of the
            high and low price quoted for Common Shares as reported in the
            NASDAQ National Market System on the date of conversion.

      (c)   Cash Credits. Nordson will maintain an account for each Director who
            elects to defer Directors' Compensation as cash and will credit his
            or her account (i) on the last day of each month with the amount of
            Directors' Compensation he or she elects to defer which otherwise
            would have been paid to him or her during the month and (ii) on the
            last day of each quarter with interest on the balance in this
            account at a rate equal to the rate of interest of Ten Year Treasury
            Securities as reported in the Federal Reserve Bank Constant Maturity
            Series H-15 Report for the last business day of the quarter, paid on
            the average daily balance in the account during the quarter. A
            Director whose account is credited with cash shall receive all
            distributions in cash.

      (d)   Stock Equivalent Units. Nordson will maintain an account for each
            Director who elects to defer Directors' Compensation as Stock
            Equivalent Units. After a Director makes such an election, Nordson
            will credit his or her account (i) on the

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Committee Rules

            last day of each month with a number of Stock Equivalent Units equal
            to the quotient of the amount of Directors' Compensation he or she
            elects to defer which otherwise would have been paid to him or her
            during the month divided by the Fair Market Value of the Common
            Shares on that day and (ii) on dividend payment dates with an
            additional number of Stock Equivalent Units equal to the product of
            the number of Stock Equivalent Units credited to this account
            immediately prior to the dividend payment date multiplied by a
            fraction, the numerator of which is the amount of the dividend per
            Common Share and the denominator of which is the Fair Market Value
            of the Common Shares on the dividend payment date. A Director whose
            account is credited with Stock Equivalent Units shall receive all
            distributions in Common Shares. "Fair Market Value" for purposes of
            this Section 4(d) means the average of the high and low price quoted
            for Common Shares as reported in the NASDAQ National Market System
            on the day the Directors account is credited.

      (e)   Subject to Claims of General Creditors. All Directors' Compensation
            deferred and amounts credited to accounts as cash or Stock
            Equivalent Units under the terms of this Section 4 will remain part
            of the assets of Nordson and will be subject to the claims of its
            general creditors.

5. DISTRIBUTION.

      (a)   Normal Distribution. The account maintained for each Director who
            elects to defer Directors' Compensation will be distributed in 16
            quarterly installments (the amount of each to equal the balance in
            his or her account at the particular time divided by the number of
            remaining installments) beginning with the first day of the month
            immediately succeeding the month in which that Director ceases to be
            a Director. The undistributed balance of any account will bear
            interest at the rate specified in Section 4(c)(ii), or be credited
            with additional Stock Equivalent Units upon the payment of dividends
            as provided in Section 4(d), until the account has been completely
            distributed.

      (b)   Early Distribution in Event of Financial Emergency. Notwithstanding
            the provisions of Section 5(a), a Director may, with the consent of
            the Committee, withdraw all or a portion of his or her accounts in
            the event of a financial emergency that is beyond the Director's
            control, would cause the Director great hardship if early withdrawal
            were not permitted, and qualifies as an "unforeseeable emergency"
            within the meaning of Code Section 409A(a)(2)(B)(ii); provided that,
            no election to receive such an early withdrawal will be permitted if
            it would be funded, in whole or in part, by the conversion of Stock
            Equivalent Units into cash and such election occurs within six
            months of an election to have all or any portion of the Director's
            cash account converted into Stock Equivalent Units or an election to
            make an intra-plan transfer under the NEST of funds from any Fund
            into the participant's Nordson Common Share Fund account. Any such
            early withdrawal shall be in the form of a cash distribution, with
            any Stock Equivalent Units converted into cash on the basis set

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Committee Rules

            forth in Section 5(b), and will be limited to the amount necessary
            to meet the emergency.

6.    DEATH OF A DIRECTOR. A Director may elect whether, in the event of his or
      her death prior to the expiration of the period during which his or her
      account balance is distributable, the account balance will be distributed
      to his or her estate (or designated beneficiary) in a single distribution
      or in the installments contemplated by Section 5(a). Such election will be
      made at the time of the election contemplated by Section 3; if no such
      election is made, the account balance will be distributed in a single
      distribution.

7.    NON-COMPETITION. In the event a Director ceases to be a Director and
      becomes a proprietor, officer, partner, or employee of, or otherwise
      becomes affiliated with, any business that is in competition with the
      Company, his or her account balance will be distributed immediately to him
      or her in a single cash distribution. Any Stock Equivalent Units allocated
      to the Director's account will be converted into an amount of cash equal
      to the product of the number of Stock Equivalent Units allocated to his or
      her account multiplied by the Fair Market Value of the Common Shares on
      the date of the distribution. "Fair Market Value" for purposes of this
      Section 7 means the average of the high and low price quoted for Common
      Shares as reported in the NASDAQ National Market System on the date of
      distribution.

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