Exhibit 10.1
EDWARDS LIFESCIENCES CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
(Effective January 1, 2005)
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EDWARDS LIFESCIENCES CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
(Effective January 1, 2005)
ARTICLE I
PURPOSE
This Edwards Lifesciences Corporation Deferred Compensation Plan (the “Plan”) is designed to (1) offer selected employees of Edwards Lifesciences Corporation and its affiliates certain benefits that cannot be provided under the Edwards Lifesciences Corporation tax-qualified plans and (2) provide additional opportunities for selected employees to defer compensation. This Plan shall be effective for (i) Compensation earned after December 31, 2004 and deferred pursuant to the provisions of this Plan and (ii) any Compensation deferred prior to January 1, 2005 under the Edwards Lifesciences Corporation Executive Option Plan but not vested on or before such date.
This Plan is intended to comply with the provisions of the American Jobs Creation Act of 2004 applicable to deferred compensation and shall be administered and operated in conformity with those provisions and applicable Treasury Regulations.
This Plan is intended to be a plan that is unfunded and maintained by Edwards Lifesciences Corporation primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
ARTICLE II
DEFINITIONS
2.1 Account means the account maintained under the Plan for each Participant which is credited with amounts under Article III of the Plan and adjusted periodically for investment performance under Article IV of the Plan and distributions or withdrawals in accordance with Article V. To the extent it considers necessary or appropriate, the Compensation Committee or its delegate may further divide each such Account into a series of separate subaccounts so that each category of deferred Compensation or other contribution may be credited to its own separate subcategories within that particular Account.
2.2 Administrative Committee means the Administrative Committee as defined in the 401(k) Plan.
2.3 Base Pay means the Participant’s Base Pay as defined in the 401(k) Plan.
2.4 Beneficiary means the Participant’s Beneficiary (as defined in Article VI) designated to receive the Participant’s Accounts, if any, from the Plan, upon the death of the Participant.
2.5 Bonus means any bonus which is approved by the Compensation Committee and listed on Attachment A to this Plan. Attachment A may be updated from time to time to accurately reflect the approved bonuses for purpose of this definition.
2.6 Bonus Deferral means the amount of the Participant’s Bonus which the Participant elected to defer and contribute to the Plan which, but for such election, would have otherwise been paid to him/her.
2.7 Code means the Internal Revenue Code of 1986, as amended.
2.8 Company means Edwards Lifesciences Corporation.
2.9 Compensation means Compensation as defined in the 401(k) Plan without regard to Section 401(a)(17) of the Code, except that the Bonuses deferred under the Plan are included in Compensation in the Plan Year in which such amounts would be paid if they were not deferred and not in the Plan Year in which such amounts are actually paid.
2.10 Compensation Committee means the Compensation and Governance Committee of the Board of Directors of the Company. The Compensation Committee shall have full discretionary authority to administer and interpret the Plan, to determine eligibility for Plan benefits, to select employees for Plan participation, to determine the benefit entitlement of each Participant and Beneficiary hereunder and to correct errors. The Compensation Committee may delegate one or more of its duties and responsibilities hereunder to the Administrative Committee, and unless the Compensation Committee expressly provides to the contrary, any such delegation will carry with it the Compensation Committee’s full discretionary authority with respect to the delegated duties and responsibilities. In no event, however, shall the Compensation Committee delegate its authority to select the Eligible Employees who are to participate in the Plan or its authority to amend or terminate the Plan pursuant to the provisions of Article VII. Decisions of the Compensation Committee or the Administrative Committee will be final and binding on all persons.
2.11 Eligible Employee means any individual who is employed as a corporate officer of the Company and who is a U.S. employee or a U.S. expatriate. In addition, “Eligible Employee” means any other key employee of the Company or an affiliate who is designated as an Eligible Employee by the Chief Executive Officer of the Company.
2.12 Excess Matching Contribution means the difference between the Matching Contributions allocated to a Participant’s 401(k) Plan Account during the Plan Year and the amount that would have been allocated if the limitations of Sections 415, 401(k), 402(g) and 401(m) of the Code, as well as the limitations of Section 401(a)(17) of the Code, were disregarded.
2.13 401(k) Plan means the Edwards Lifesciences Corporation 401(k) Savings and Investment Plan.
2.14 Matching Contribution means the Matching Contribution pursuant to the 401(k) Plan.
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2.15 Participant means any Eligible Employee who has an Account balance in the Plan.
2.16 Pay Deferral Contribution means the amount of the Participant’s Compensation which the Participant elected to defer into the Plan which, but for such election, would have otherwise been paid to him/her.
2.17 Plan Year means the calendar year.
2.18 Plan Year Account means for each Plan Year, that portion of an Eligible Employee’s Account that is attributable to (i) Compensation that would have been paid in such Plan Year had payment not been deferred under this Plan and (ii) earnings credited thereto pursuant to Article IV.
2.19 Separation from Service means separation from service with the Company and all affiliates within the meaning of Code Section 409A and the regulations thereunder.
2.20 Vesting has the same meaning as Vesting in the 401(k) Plan.
ARTICLE III
PAY DEFERRALS, BONUS DEFERRALS AND MATCHING CONTRIBUTIONS
3.1 Supplementary Pay Deferrals.
(a) Elections. In order to be eligible to make supplementary Pay Deferral Contributions for a Plan Year, an Eligible Employee must file an appropriate deferral election for that Plan Year. Such election must be made before the start of the Plan Year in which the Compensation subject to that election is to be earned in accordance with the rules and procedures established by the Compensation Committee. However, if an individual first becomes an Eligible Employee during a Plan Year, that individual may elect, within thirty (30) days after he or she is first notified that he or she is eligible to participate in the Plan, to make supplemental Pay Deferral Contributions with respect to Compensation earned for services performed after the election is made. The election will remain in effect for the Plan Year for which it is made or, if the Compensation Committee so permits, all subsequent Plan Years during which the individual remains an Eligible Employee.
(b) No Changes. A Participant’s Pay Deferral election, once filed, may not be revoked, modified or changed, except to the extent permitted under Code Section 409A and the regulations thereunder.
(c) Late Election. If an Eligible Employee does not make a timely election for a Plan Year, no Pay Deferrals will be made under the Plan on behalf of that Eligible Employee with regard to that election for that Plan Year.
3.2 Amounts. A Participant may make a separate election to defer under the Plan each of the following amounts of Compensation:
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(a) A portion of his or her Compensation in excess of the annual contribution limit under Sections 401(k) and 402(g) of the Code (as contributed to the 401(k) Plan).
(b) Any whole percentage of his or her Base Pay (with a minimum of five percent (5%)) in addition to the Base Pay being deferred pursuant to the Participant’s Pay Deferral election.
(c) Any whole percentage of his or her Bonus. However, in no event may the Bonus deferred under the Plan, when added to any Bonus contributed to the 401(k) Plan as Pay Deferral, exceed one hundred percent (100%) of such Bonus.
3.3 Supplemental Matching Contribution. An Eligible Employee will be eligible to receive a supplemental matching contribution for a Plan Year equal to the Eligible Employee’s Excess Matching Contribution for that Plan Year.
ARTICLE IV
CREDITING OF ACCOUNTS AND EARNINGS
(a) Pay Deferral Contributions. A Participant’s Pay Deferral Contributions, if any, will be credited to his or her Account as of the date that the salary deferrals to which those deferral contributions relate would otherwise have been credited to the 401(k) Plan.
(b) Base Pay and Bonus Deferral. A Participant’s Base Pay and Bonus Deferrals, if any, will be credited to his or her Account as of the date that the Base Pay and Bonus Deferrals would otherwise have been paid.
(c) Excess Matching Contributions. A Participant’s Excess Matching Contributions, if any, will be credited to his or her Account as of the date that the Matching Contribution to which the Excess Matching Contribution relate would otherwise have been credited to the 401(k) Plan.
4.2 Earnings. Amounts credited to a Participant’s Accounts under the Plan shall be credited with earnings and losses, at periodic intervals determined by the Compensation Committee, at a rate equal to the actual rate of return for such period of the investment fund or funds or index or indices or vehicle or vehicles selected by that Participant from a range of investment vehicles authorized by the Compensation Committee. The rate of return on investment vehicles shall be tracked solely for the purpose of computing the amount of benefits payable from the Participant’s Accounts under the Plan. The Company shall not be obligated to make any actual investment. The available investment funds, subject to change periodically by the Compensation Committee or delegate thereof, shall be identified in Attachment B hereto.
4.3 Account Statements. Account Statements will be generated effective as of the last day of each calendar quarter and mailed to each Participant as soon as administratively feasible. Account Statements will reflect all Account activity during the reporting quarter, including Account contributions, distributions and earnings credits.
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4.4 Vesting. Subject to Section 8.1, a Participant shall be 100% Vested in his or her Account in the Plan at all times.
ARTICLE V
DISTRIBUTIONS
(a) Annual Election. Each Participant must elect, with respect to each Plan Year, the manner in which his or her Plan Year Account will be distributed. Such election must be made at the same time the Participant files his or her deferral election for one or more items of Compensation to be earned in the Plan Year.
(b) Timing. A Participant may elect to have the vested portion of his or her Plan Year Accounts distributed as soon as administratively practicable following one of the following distribution events: (i) the date of the Participant’s Separation from Service, (ii) the date of the Participant’s death, (iii) the date specified by the Participant in his or her election or (iv) the earliest of any (i), (ii) or (iii) above elected by the Participant. Under option (iii), above, the date specified must be at least 12 months from the date the initial deferral election for that Account is filed.
(c) Form. The vested portion of the Plan Year Accounts will be distributed, based on the Participant’s election under (a) above, in one of the following forms: (i) a lump sum or (ii) a series of annual installments, not in excess of fifteen (15). The amount of each installment will be the remaining balance of the Participant’s vested Accounts divided by the number of installments remaining (including the installment to be made).
(d) Subsequent Election. A Participant may change the distribution election in effect for a Plan Year Account by submitting that change to the Compensation Committee or its delegate in writing. However, the subsequent election shall have no force or effect and shall not become effective until the expiration of the 12-month period measured from the filing date of such election. In addition, such election shall be valid only if (A) such election defers any distribution for at least 5 years after the date that distribution would have otherwise been made or commenced in the absence of such subsequent election and, in the case of a scheduled distribution to be made pursuant to option (iii) of Section 5.1(b), (B) such election is made at least twelve (12) months before the date of the first of the scheduled payments. In no event may any change to the distribution election in effect for the Plan Year Account result in any acceleration of the distribution of that Account.
(e) Default. If, upon a Participant’s Separation from Service, the Compensation Committee does not have a proper distribution election on file for that Participant, the vested portion of each of his or her Plan Year Account will be distributed to the Participant in one lump sum as soon as administratively practicable following the Participant’s Separation from Service.
(f) Deferred Commencement of Distribution. Notwithstanding any provision to the contrary in this Article V or any other article of this Plan, no distribution in connection with the Separation from Service by a Participant who is at the time a “key employee” within the meaning of that term under Code Section 416(i) shall be made or
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otherwise commence prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of such Separation from Service or (ii) the date of the Participant’s death.
(g) Small Benefit Cashout. Notwithstanding Section 5.1(f) above, a Participant whose Accounts under the Plan total less than $50,000 as of the last day of the Plan Year in which he or she incurs a Separation from Service will receive lump sum payment of his or her Accounts as soon as administratively practicable following the Participant’s Separation from Service.
5.2 Effect of Payment. Payment to the person or trust reasonably and in good faith determined by the Compensation Committee to be the Participant’s Beneficiary will completely discharge any obligations the Company may have under the Plan. If a Plan benefit is payable to a minor or a person declared to be incompetent or to a person the Compensation Committee in good faith believes to be incompetent or incapable of handling the disposition of property, the Compensation Committee may direct payment of such Plan benefit to the guardian, legal representative or person having the care and custody of such minor and such decision by the Compensation Committee is binding on all parties. The Compensation Committee may initiate reasonable action to ensure that benefits are properly paid to an appropriate guardian.
The Compensation Committee may require proof of incompetence, minority, incapacity or guardianship as it may deem appropriate prior to distribution of the Plan benefit. Such distribution will completely discharge the Compensation Committee from all liability with respect to such benefit.
5.3 Taxation of Plan Benefits. It is intended that each Participant will be taxed on amounts credited to him or her under the Plan at the time such amounts are received, and the provisions of the Plan will be interpreted consistent with that intention.
5.4 Withholding and Payroll Taxes. Edwards will withhold from payments made hereunder any taxes required to be withheld for the payment of taxes to the Federal, or any state or local government.
5.5 Distribution Due to Unforeseeable Emergency. If a Participant (a) incurs a severe financial hardship as a result of (i) a sudden and unexpected illness or accident involving the Participant or his or her spouse or any dependent (as determined pursuant to Section 152(a) of the Code), (ii) a casualty loss involving the Participant’s property or (iii) other similar extraordinary and unforeseeable event beyond the Participant’s control and (b) does not have any other resources available, whether through reimbursement or compensation (by insurance or otherwise) or liquidation of existing assets (to the extent such liquidation would not itself result in financial hardship), to satisfy such financial emergency, then the Participant may apply to the Compensation Committee for an immediate distribution from the vested portion of his or her Account in an amount necessary to satisfy such financial hardship and the tax liability attributable to such distribution. The Compensation Committee shall have complete discretion to accept or reject the request and shall in no event authorize a distribution in an amount in excess of that reasonably required to meet such financial hardship and the tax liability attributable to that distribution. In addition, such Participant shall be precluded from enrolling in the Plan for the entire Plan Year beginning January 1 after the request is approved.
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ARTICLE VI
BENEFICIARY DESIGNATION
6.1 Beneficiary Designation. Each Participant has the right to designate one or more persons or trusts as the Participant’s Beneficiary, primary as well as secondary, to whom benefits under this Plan will be paid in the event of the Participant’s death prior to complete distribution to the Participant of the benefits due under the Plan. Each Beneficiary designation will be in a written form prescribed by the Compensation Committee and will be effective only when filed with the Compensation Committee during the Participant’s lifetime.
6.2 Amendments to Beneficiary Designation. Any Beneficiary designation may be changed by a Participant without the consent of any Beneficiary by the filing of a new Beneficiary designation with the Compensation Committee. Filing a Beneficiary designation as to any benefits available under the Plan revokes all prior Beneficiary designations effective as of the date such Beneficiary designation is received by the Compensation Committee. If a Participant’s Accounts are community property, any Beneficiary designation will be valid or effective only as permitted under applicable law.
6.3 No Beneficiary Designation. In the absence of an effective Beneficiary designation, or if all Beneficiaries predecease the Participant, the Participant’s estate will be the Beneficiary. If a Beneficiary dies after the Participant and before payment of benefits under this Plan has been completed, and no secondary Beneficiary has been designated to receive such Beneficiary’s share, the remaining benefits will be payable to the Beneficiary’s estate.
ARTICLE VII
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Compensation Committee may amend the Plan at any time, except that no amendment will decrease or restrict the Accounts of Participants and Beneficiaries at the time of the amendment. Notwithstanding the foregoing, if the Compensation Committee determines that additional restrictions or limitations must be placed on the investment vehicles utilized for measuring the return on the amounts credited to Participant Accounts, the right of Participants to make investment elections with respect to their Accounts, their ability to make or change distribution elections, their ability to defer distributions, the commencement date for the distribution of their benefits and the method of such distribution or their rights or status as creditors under the Plan in order to avoid current income taxation of amounts deferred under the Plan, the Compensation Committee may, in its sole discretion, amend the Plan to impose such restrictions or limitations, cease deferrals under the Plan and/or defer distribution dates under the Plan.
7.2 Right to Terminate. The Compensation Committee may at any time terminate the Plan.
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ARTICLE VIII
MISCELLANEOUS
8.1 Unfunded Plan. This Plan is intended to be an unfunded retirement plan maintained primarily to provide retirement benefits for a select group of management or highly compensated employees. All credited amounts are unfunded, general obligations of the Company. The Plan constitutes a mere promise by the Company to make payments in the future in accordance with the terms of the Plan. Participants and Beneficiaries have the status of general unsecured creditors of the Company. Plan benefits will be paid from the general assets of the Company and nothing in the Plan will be construed to give any Participant or any other person rights to any specific assets of the Company.
8.2 Nonassignability. Neither a Participant nor any other person will have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be nonassignable and nontransferable. No part of the amounts payable will, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency. Nothing contained herein will preclude the Company from offsetting any amount owed to it by a Participant against payments to such Participant or his or her Beneficiary.
8.3 Claims Procedure. If a claim for benefits by a Participant or his or her beneficiary or beneficiaries (the “applicant”) is denied, the Compensation Committee will furnish the applicant within 90 days after receipt of such claim (or within 180 days after receipt if the Compensation Committee notifies the applicant prior to the end of the 90 day period that special circumstances require an extension of time), a written notice which specifies the reason for the denial, refers to the pertinent provisions of the Plan on which the denial is based, describes any additional material or information necessary for properly completing the claim and explains why such material or information is necessary, and explains the claim review procedures of this Section 8.3. If, within 60 days after receipt of such notice, the applicant so requests in writing, the Compensation Committee will review its earlier decision. The Compensation Committee’s decision on review will be in writing, and will include specific reasons for the decision, written in a manner calculated to be understood by the claimant, and will include specific references to the pertinent provisions of the Plan on which the decision is based. It will be delivered to the claimant within 60 days after the request for review is received, unless extraordinary circumstances require a longer period, but in no event more than 120 days after the request for review is received.
8.4 Indemnification. The Company and its Affiliates will indemnify and hold harmless the Board of Directors, the members of the Compensation Committee and the Administrative Committee, and employees of the Company and the affiliates who may be deemed fiduciaries of the Plan, from and against any and all liabilities, claims, costs and expenses, including attorneys’ fees, arising out of an alleged breach in the performance of their fiduciary duties under the Plan, other than such liabilities, claims, costs and expenses as may result from the gross negligence or willful misconduct of such persons. The Company and its
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affiliates shall have the right, but not the obligation, to conduct the defense of such persons in any proceeding to which this Section 8.4 applies
8.5 Not a Contract of Employment. The terms and conditions of this Plan will not be deemed to constitute a contract of employment between a Participant and the Company or any affiliates, and neither the Participant nor the Participant’s Beneficiary will have any rights against the Company or any affiliate except as may otherwise be specifically provided herein. Moreover, nothing in this Plan is deemed to give a Participant the right to be retained in the service of his or her employer or to interfere with the right of such employer to discipline or discharge him or her at any time.
8.6 Protective Provisions. A Participant will cooperate with the Company by furnishing any and all information requested by the Company, in order to facilitate the payment of benefits hereunder.
8.7 Governing Law. The provisions of this Plan will be construed and interpreted according to the laws of the State of California, to the extent not preempted by ERISA.
8.8 Severability. In the event any provision of the Plan is held invalid or illegal for any reason, any illegality or invalidity will not affect the remaining parts of the Plan, but the Plan will be construed and enforced as if the illegal or invalid provision had never been inserted, and Edwards will have the privilege and opportunity to correct and remedy such questions of illegality or invalidity by amendment as provided in the Plan, including, but not by way of limitation, the opportunity to construe and enforce the Plan as if such illegal and invalid provision had never been inserted herein.
8.9 Successors. The provisions of this Plan will bind and inure to the benefit of the Company, the Participants and Beneficiaries, and their respective successors, heirs and assigns. The term successors as used herein will include any corporate or other business entity which, whether by merger, consolidation, purchase or otherwise acquires all or substantially all of the business and assets of Edwards, and successors of any such corporation or other business entity.
8.10 Effect on Benefit Plans. Amounts paid under this Plan, will not by operation of this Plan be considered to be compensation for the purposes of any benefit plan maintained by the Company or any affiliate. The treatment of such amounts under other employee benefit plans will be determined pursuant to the provisions of such plans.
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The Company has caused this instrument to be executed by its authorized officer, as of December , 2004.
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Available Investment Funds
January 1, 2005
Large Cap Growth | |
HACAX | Harbor Capital Appreciation |
WCATX | Credit Suisse Capital Appreciation Fund |
PRGFX | T Rowe Price Growth Stock |
SINGX | SSgA International Opportunities Fund |
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Large Cap Blend | |
PAPIX | PIMCO Capital Appreciation Fund |
SLASX | Selected American Shares |
VFINX | Vanguard 500 Index Fund |
SVSPX | SSgA S&P 500 Equity Index Fund |
SSGWX | SSgA Core Opportunities |
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Large Cap Value | |
CFIMX | Clipper Fund |
VWNFX | Vanguard Windsor II |
FEQTX | Fidelity Equity Income II Fund |
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Mid Cap Growth | |
TVFQX | Firsthand Technology Value Fund |
SSMGX | Sit Small Cap Growth Fund |
FMCSX | Fidelity Midcap Stock Fund |
BRAGX | Bridgeway Aggressive Growth Fund |
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Mid Cap Blend | |
LLPFX | Longleaf Partners |
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Mid Cap Value | |
DMCVX | Dreyfus Midcap Value Fund |
TAVFX | Third Avenue Value Fund |
TBGVX | Tweedy, Browne Global Value Fund |
WVALX | Weitz Value Fund |
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Small Cap Growth | |
FUSMX | Freemont US Micro Cap Fund |
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Small Cap Blend | |
RYPRX | Royce Premier Fund |
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Small Cap Value | |
TASCX | Third Avenue Small Cap |
TSCVX | Tocqueville Small Cap Value Fund |
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High Quality Intermediate-Term Bond | |
PNBIX | BlackRock Intermediate Bond Fund |
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Medium Quality Short-Term Bond | |
FSGVX | Federated US Gov’t: 1-3 Years Inst’l. |
VFISX | Vanguard Short-Term Treasury |
* Please note that the funds listed above are subject to availability from the fund sponsors. Fund availability is subject to change without advance notice.