Exhibit 10.1
UNOCAL
DEFERRED COMPENSATION PLAN OF 2005
Effective January 1, 2005
UNOCAL
DEFERRED COMPENSATION PLAN OF 2005
TABLE OF CONTENTS
Page
ARTICLE I
TITLE AND DEFINITIONS
1.1 Title................................................................1
1.2 Definitions..........................................................1
ARTICLE II
PARTICIPATION
2.1 Participation........................................................8
ARTICLE III
ELECTIONS
3.1 Elections to Defer Compensation......................................9
3.2 Investment Elections................................................12
3.3 Distribution Elections..............................................14
ARTICLE IV
ACCOUNTS
4.1 Deferral Account....................................................15
4.2 Company Contribution Account........................................17
ARTICLE V
VESTING
5.1 Deferral Account....................................................18
5.2 Company Contribution Account........................................18
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ARTICLE VI
DISTRIBUTIONS
6.1 Distribution of Deferred Compensation and Discretionary
Company Contributions...............................................18
6.2 Unforseeable Emergency..............................................20
6.3 Inability to Locate Participant.....................................21
6.4 Effect of a Change of Control on Distributions
of Participant Accounts.............................................21
6.5 Prohibition on Acceleration of Payments.............................21
ARTICLE VII
ADMINISTRATION
7.1 Administrative Committee Action.....................................21
7.2 Powers and Duties of the Committee..................................22
7.3 Construction and Interpretation.....................................23
7.4 Information.........................................................23
7.5 Compensation, Expenses and Indemnity................................23
7.6 Quarterly Statements................................................24
7.7 Claims Procedure....................................................24
ARTICLE VIII
MISCELLANEOUS
8.1 Unsecured General Creditor..........................................26
8.2 Trust Fund..........................................................26
8.3 Restriction Against Assignment......................................27
8.4 Withholding.........................................................27
8.5 Amendment, Modification, Suspension or Termination..................27
8.6 Governing Law.......................................................28
8.7 Receipt or Release..................................................28
8.8 Payments on Behalf of Persons Under Incapacity......................28
8.9 Headings, etc. Not Part of Agreement................................28
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UNOCAL
DEFERRED COMPENSATION PLAN OF 2005
(Effective January 1, 2005)
Unocal Corporation hereby establishes the Unocal Deferred Compensation
Plan of 2005 (the "Plan"), effective January 1, 2005, to provide a select group
of management and highly compensated employees (as defined in Section 201(2) of
ERISA) with a capital accumulation opportunity by deferring compensation on a
pre-tax basis. This Plan is intended to comply with Section 409A of the Internal
Revenue Code of 1986, as amended, in order to avoid compensation deferred under
the Plan from being included in the gross income of participants under such
Section. Amounts for which elections to defer were made under the Unocal
Deferred Compensation Plan of 2002 and which were not treated as deferred before
January 1, 2005, within the meaning of Section 885 of the American Jobs Creation
Act of 2004 shall be subject to the terms of this Plan.
ARTICLE I
TITLE AND DEFINITIONS
1.1 Title.
This Plan shall be known as the Unocal Deferred Compensation Plan of
2005.
1.2 Definitions.
Whenever the following words and phrases are used in this Plan, with
the first letter capitalized, they shall have the meanings specified below.
1.2.1 "Accounts" shall mean a Participant's Deferral Account
and, if applicable, Company Contribution Account.
1.2.2 "Administrative Committee" or "Committee" shall mean the
Management Development and Compensation Committee of the Board of
Directors, such other committee to which the Management Development and
Compensation Committee has delegated its administrative authority under
the Plan or such other committee appointed by the Board of Directors to
administer the Plan. If the Management Development and Compensation
Committee shall cease to exist and the Board of Directors has not
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appointed another committee to administer the Plan, then the Board of
Directors shall serve as the Committee.
1.2.3 "Affiliate" shall mean (a) any corporation that is a
member of a controlled group of corporations (within the meaning of
Code Section 1563(a), determined without regard to Code Sections
1563(a)(4) and (e)(3)(C), and with the phrase "more than 50%"
substituted for the phrase "at least 80%" each place it appears in Code
Section 1563(a)), of which Unocal Corporation is a component member, or
(b) any entity (whether or not incorporated) that is under common
control with Unocal Corporation (as defined in Code Section 414(c) and
the Treasury Regulations thereunder, and with the phrase "more than
50%" substituted for the phrase "at least 80%" each place it appears in
the Treasury Regulations under Code Section 414(c)).
1.2.4 "Beneficiary" or "Beneficiaries" shall mean the person
or persons, including a trustee, personal representative or other
fiduciary, last designated in writing by a Participant in accordance
with procedures established by the Committee to receive the benefits
specified hereunder in the event of the Participant's death. No
beneficiary designation shall become effective until it is filed with
the Committee, and no beneficiary designation of a person other than
the Participant's spouse shall be effective unless such designation is
consented to by the Participant's spouse on a form provided by and in
accordance with procedures established by the Committee. If there is no
Beneficiary designation in effect, or if there is no surviving
designated Beneficiary, then the Participant's surviving spouse shall
be the Beneficiary. If there is no surviving spouse to receive any
benefits payable in accordance with the preceding sentence, the duly
appointed and currently acting personal representative of the
Participant's estate (which shall include either the Participant's
probate estate or living trust) shall be the Beneficiary. In any case
where there is no such personal representative of the Participant's
estate duly appointed and acting in that capacity within 90 days after
the Participant's death (or such extended period as the Committee
determines is reasonably necessary to allow such personal
representative to be appointed, but not to exceed 180 days after the
Participant's death), then Beneficiary shall mean the person or persons
who can verify by affidavit or court order to the satisfaction of the
Committee that they are legally entitled to receive the
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benefits specified hereunder. In the event any amount is payable under
the Plan to a minor, payment shall not be made to the minor, but
instead shall be paid (a) to that person's living parent(s) to act as
custodian, (b) if that person's parents are then divorced, and one
parent is the sole custodial parent, to such custodial parent, or (c)
if no parent of that person is then living, to a custodian selected by
the Committee to hold the funds for the minor under the Uniform
Transfers or Gifts to Minors Act in effect in the jurisdiction in
which the minor resides. If no parent is living and the Committee
decides not to select another custodian to hold the funds for the
minor, then payment shall be made to the duly appointed and currently
acting guardian of the estate for the minor or, if no guardian of the
estate for the minor is duly appointed and currently acting within 60
days after the date the amount becomes payable, payment shall be
deposited with the court having jurisdiction over the estate of the
minor.
1.2.5 "Board of Directors" or "Board" shall mean the board of directors
of the Company.
1.2.6 "Bonus" shall mean any annual cash bonus (not including a cash
bonus payment in lieu of fulfilling a Participant's election to receive a bonus
in the form of restricted stock) payable to a Participant under the Company's
ICP or under the TIP.
1.2.7 "Change of Control" shall be either a "Change of Control - Plan"
or a "Change of Control - Section 409A" as may be provided herein. "Change of
Control - Plan" shall mean any of the following:
(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 "Exchange Act") (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) 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
paragraph (a), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Company, (ii)
any acquisition by the Company, (iii) any acquisition by an employee
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benefit plan (or related trust) sponsored or maintained by the Company
or any entity controlled by the Company or (iv) any acquisition by any
entity pursuant to a transaction which complies with clauses (i), (ii)
and (iii) of paragraph (c) below; or
(b) Individuals who, as of February 10, 2004, 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 February 10, 2004, 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 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) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
the Company or the acquisition of assets of another entity (a
"Business Combination"), in each case, unless, following such Business
Combination:
(i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or
indirectly, more than 50% 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 entity resulting
from such Business Combination (including, without
limitation, an entity which 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 (a "Resulting Entity")) in
substantially the same proportions as their ownership,
immediately prior to such
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Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the
case may be,
(ii) no Person (excluding any Resulting Entity or any
employee benefit plan (or related trust) of the Company
or such Resulting Entity) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the Resulting
Entity or the combined voting power of the then
outstanding voting securities of such entity, 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 Resulting Entity 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.
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
"Change of Control - Section 409A" shall mean a change in ownership or
effective control of the Company, or in the ownership of a substantial portion
of the assets of the Company, all within the meaning of Section 409A(a)(2) of
the Code.
1.2.8 "Code" shall mean the Internal Revenue Code of 1986, as amended.
References to a specific statutory section shall include reference to a
successor statutory section to the referenced section.
1.2.9 "Company" shall mean Unocal Corporation or its successor.
1.2.10 "Company Contribution Account" shall mean the bookkeeping
account maintained by the Administrative Committee for each Participant that is
credited with an amount equal to the Company Discretionary Contribution Amount,
if any, and interest on such amounts pursuant to Section 4.2.
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1.2.11 "Company Discretionary Contribution Amount" shall mean such
amount, if any, determined by the Administrative Committee, in its sole
discretion, with respect to any Participant.
1.2.12 "Compensation" shall mean the Salary and/or Bonus that the
Participant is entitled to for services rendered to the Employer and which is
paid under the Employer's U.S. payroll or the Unocal Offshore Services, Limited
payroll (or their successors payrolls) and with respect to which the Participant
would otherwise receive taxable gross income for U.S. federal income tax
purposes.
1.2.13 "Deferral Account" shall mean the bookkeeping account maintained
by the Administrative Committee for each Participant that is credited with
amounts equal to (a) the portion of the Participant's Salary that he or she
defers, (b) the portion of the Participant's Bonus that he or she defers, and
(c) interest or earnings or losses pursuant to Section 4.1.
1.2.14 "Effective Date" shall mean January 1, 2005.
1.2.15 "Eligible Employee" shall mean an Employee with job
classification of T06 or M04 or above who is selected by the Administrative
Committee to be eligible for participation in the Plan and who is notified of
his or her eligibility by the Administrative Committee; provided, however, that
the Administrative Committee may in its sole discretion change requirements for
eligibility under the Plan at any time and from time to time.
1.2.16 "Employee" shall mean an employee of the Union Oil Company of
California, Unocal Corporation or Unocal Offshore Services, Limited.
1.2.17 "Employer" shall mean Union Oil Company of California, Unocal
Corporation or Unocal Offshore Services, Limited.
1.2.18 "ERISA" shall mean the Employee Retirement Income Securities Act
of 1974, as amended.
1.2.19 "ICP" shall mean the Unocal Incentive Compensation Plan, as it
may be amended from time to time.
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1.2.20 "Initial Election Period" for an Eligible Employee shall mean
the latest of (a) the thirty-day period following the Eligible Employee's date
of hire or (b) the thirty-day period following the date on which an individual
is notified by the Administrative Committee that he or she is an Eligible
Employee.
1.2.21 "Interest Rate Option" shall mean a fictional unitized fund in
which each unit is deemed to increase in value each day of the Plan Year at a
rate that, when annualized, is equal to the Interest Rate for the Plan Year.
1.2.22 "Interest Rate" shall mean, for each Plan Year, the rate that is
equal to the average of the yields on actively traded 10-year U.S. Treasury
notes, adjusted to constant maturities, for the month of September preceding
such Plan Year (as reported in the Federal Reserve Statistical Release posted on
the Federal Reserve Board's website) plus 300 basis points.
1.2.23 "Investment Option" or "Investment Options" shall mean one or
more of the Interest Rate Option and the Variable Investment Options.
1.2.24 "Key Employee" shall mean an Employee who is a "specified
employee" as defined in Section 409A(a)(2)(B)(i) of the Code.
1.2.25 "Participant" shall mean any Eligible Employee who elects to
defer Compensation in accordance with Section 3.1 or who is credited with a
Company Discretionary Contribution Amount.
1.2.26 "Plan" shall mean the Unocal Deferred Compensation Plan of 2005
set forth herein, now in effect, or as amended from time to time.
1.2.27 "Plan Year" shall mean the 12 consecutive month period beginning
on January 1 and ending the following December 31.
1.2.28 "Plan Year Subaccounts" shall mean subaccounts of a
Participant's Deferral Account established to separately account for
Compensation deferred (and interest or earnings or losses thereon) for each Plan
Year in which a Participant participates in the Plan.
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1.2.29 "Salary" shall mean the Participant's base salary, excluding
bonuses, commissions, incentives and all other remuneration for services
rendered to the Employer and prior to a reduction for any salary contributions
to a plan established pursuant to Section 125 of the Code or qualified pursuant
to Section 401(k) of the Code.
1.2.30 "Separation from Service" shall mean a termination of employment
from Company and all Affiliates provided that a Separation from Service for
purposes of the Plan shall not be deemed to occur prior to an event that
constitutes a separation from service within the meaning of Section 409A(a)(2)
of the Code.
1.2.31 "Subsidiary" shall mean any corporation of which a majority of
the outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.
1.2.32 "TIP" shall mean the Unocal Midstream and Trade Trader Incentive
Plan, as it may be amended from time to time.
1.2.33 "Unforeseeable Emergency" shall mean a severe financial hardship
to the Participant resulting from an illness or accident of the Participant or
the Participant's spouse or dependent, the loss of the Participant's property
due to casualty, or similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the Participant's control.
1.2.34 "Variable Investment Option(s)" shall mean separate fictional
unitized funds in which units are deemed to increase or decrease in value daily
in accordance with the daily increases or decreases in one of the following
indices: (1) Lehman Treasury Bellwether - 3 month, (2) Lehman Brothers Aggregate
Bond Index and (3) Standard & Poor's 500 Total Return.
ARTICLE II
PARTICIPATION
2.1 Participation.
(a) Generally. An Eligible Employee shall become a Participant in the
Plan by electing to defer Compensation in accordance with Section 3.1.
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(b) Duration of Participation. Any deferral election of a Participant
who ceases to be an Eligible Employee shall terminate effective as the next
pay period beginning after the date such cessation occurs and shall not
apply to any Bonus that becomes payable subsequent to such date; provided
that a deferral election in effect for a Plan Year or for a Bonus earned
for a Plan Year during which the Participant was an Eligible Employee for
at least some part of the Plan Year shall not terminate if such termination
would violate the requirements of Section 409A of the Code.
ARTICLE III
ELECTIONS
3.1 Elections to Defer Compensation.
(a) Initial Election Period. Each Eligible Employee may elect to defer
Compensation by filing with the Committee an election that conforms to the
requirements of this Section 3.1, on a form provided and in a manner
specified by the Committee, no later than the last day of his or her
Initial Election Period.
(b) General Rule. Subject to the minimum deferral provisions of
Section 3.1(c) below, the amount of Compensation that an Eligible Employee
may elect to defer is as follows:
(i) Any percentage or dollar amount of Salary up to 50%; and/or
(ii) Any percentage or dollar amount of Bonus up to 90%;
provided, however, that no election shall be effective to reduce the
Compensation paid to an Eligible Employee for a calendar year to an amount
that is less than the sum of: (i) the amount that the Company is required
to withhold from such Eligible Employee's Compensation for such calendar
year for purposes of federal, state and local (if any) income tax and
employment tax (including Federal Insurance Contributions Act (FICA) tax
withholding); (ii) the amount that the Company is required to withhold from
such Eligible Employee's Compensation for such calendar year for
contributions to any employee benefit plan (other than this Plan); and
(iii) the amount, if any, that the Company is required to withhold from
such Eligible Employee's Compensation for such
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calendar year for purposes of any other legally required deductions
including, but not limited to, deductions for support orders or
garnishments. Bonus deferral elections shall be subject to the last
sentence of Section 3.3(c).
(c) Minimum Deferrals. For each Plan Year during which an Eligible
Employee is a Participant, the minimum amount that may be elected under
Section 3.1(b) is $5,000. This $5,000 minimum deferral for any Plan Year
may be met by a combination of deferrals of Salary and/or Bonus, determined
on the basis of the Participant's target Bonus to be paid for such Plan
Year. If the sum of (i) the amount of Salary that the Participant has
elected to defer for a Plan Year and (ii) the amount of the Bonus to be
earned for such Plan Year that the Participant has elected to defer
(assuming for this purpose that the Bonus earned in such Plan Year and
payable in such plan year or the following Plan Year is equal to the
Participant's target Bonus for the prior Plan Year) is less than $5,000,
then the Participant's deferral elections for the Salary and the Bonus
payable for such Plan Year shall not be effective.
(d) Effect of Initial Election. An election to defer Compensation
during an Initial Election Period shall first be effective with respect to
(i) Salary earned for services performed during the first pay period
beginning after the Initial Election Period, and (ii) to the maximum extent
permitted by Section 409A of the Code, the Bonus paid with respect to
services performed in the Plan Year for which the election is made, without
regard to whether such Bonus is paid in the Plan Year earned or the
following Plan Year.
(e) Elections other than Elections during the Initial Election Period.
Subject to the requirements of Section 2.1, any Eligible Employee who fails
to elect to defer Compensation during his or her Initial Election Period
may subsequently become a Participant, by filing an election, on a form
provided and in a manner specified by the Committee, to defer Compensation
as described in paragraph (b) above. An election to defer Compensation for
a Plan Year must be filed on or before December 15 of the preceding Plan
Year (or such later date as the Committee designates, but in all events no
later than December 31 of the preceding Plan Year), and will first be
effective for Salary earned for services performed during pay periods
beginning on or after January 1 of the
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Plan Year following the Plan Year in which the election is made and Bonus
paid with respect to services performed during the Plan Year following the
Plan Year in which the election is made. Elections to defer Bonuses earned
for 2004 and payable in 2005, shall, however be subject to the
Participant's Bonus election in effect on January 1, 2005.
(f) Duration of Deferral Elections. A Participant desiring to defer
Compensation may make a deferral election with respect to Compensation for
each Plan Year after the Participant's initial Plan Year of eligibility by
filing a new election no later than December 15 of the preceding Plan Year
(or such later date as the Committee designates, but in all events no later
than December 31 of the preceding Plan Year), subject to the limitations
set forth in this Section 3.1, which election shall be effective for Salary
for services performed for the first pay period beginning on or after
January 1 of the next following Plan Year and Bonus paid with respect to
services performed during the Plan Year following the Plan Year in which
the election is made.
(g) Special Bonus Election Period. Notwithstanding the preceding
provisions of this Section 3.1, the Administrative Committee may permit an
Eligible Employee's deferral election with respect to a Bonus which is
performance-based compensation based on services performed over a period of
at least 12 months to be made not later than 6 months before the end of
such performance period. The right to make an election under this special
election period (including the right to revoke a previously made election)
and the rules applicable to such elections shall be determined by the
Administrative Committee.
(h) Other Special Election Periods. The Administrative Committee may
provide such additional election periods as it deems appropriate for the
administration of the Plan and which comply with Section 409A of the Code
and applicable guidance. Such additional election periods may include
election periods with respect to deferral of Salary and/or Bonus or
distribution elections with respect to amounts credited to a Participant's
Deferral Account or Company Contribution Account.
(i) Irrevocable Elections. Except as provided in Section 3.1(f) or
(g), any deferral election under this Section 3.1 shall be irrevocable for
a Plan Year.
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3.2 Investment Elections.
(a) The maximum amount of the Compensation deferred under this Plan
that may be deemed to be invested in the Variable Investment Options shall
be limited as described in this Section 3.2. For each Plan Year, the
Administrative Committee shall establish the maximum dollar amount of the
Compensation that Participants will defer during that Plan Year that may,
in the aggregate, be deemed to be invested in the Variable Investment
Options (the "Variable Investment Limit"). The Variable Investment Limit
for a Plan Year shall be applied on a dollar for dollar basis as
Compensation that Participants have elected to defer is credited to
Participants' Deferral Accounts during the Plan Year as follows: As of each
date that any deferred Compensation is credited to any Participant's
Deferral Account, the Administrative Committee shall determine the
aggregate amount of the deferred Compensation to be credited on that date
that the Participants have designated to be deemed to be invested in any
Variable Investment Option (the "Variable Investment Amount") and shall
reduce the Variable Investment Limit by the amount of the Variable
Investment Amount. If, as of the date any deferred Compensation is
credited, the Variable Investment Amount exceeds the remaining Variable
Investment Limit, then the portion of each Participant's deferred
Compensation to be credited on that date that such Participant has
designated to be invested in a Variable Investment Option shall be
multiplied by a fraction, the numerator of which is the remaining Variable
Investment Limit and the denominator of which is the Variable Investment
Amount for that crediting date. The resulting portion of each Participant's
deferred Compensation shall be deemed to be invested in the Variable
Investment Option designated in such Participant's election and the
remainder of the Participant's deferred Compensation to be credited on that
crediting date and each subsequent crediting date for such Plan Year shall
be deemed to be invested in the Interest Rate Option.
(b) At the time of making an initial deferral election described in
Section 3.1, the Participant shall elect one or more Investment Options for
the deemed investment of his or her deferred Compensation. Such election
shall be made on a form provided and in a manner specified by the Committee
and shall apply solely for purposes of determining the amount of interest
and/or earnings or losses to be credited or debited to his or her Plan Year
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Subaccounts that the Administrative Committee establishes pursuant to
Article IV. In making the election pursuant to this Section 3.2, the
Participant must specify, in whole percentages, the percentage of his or
her corresponding Plan Year Subaccounts that he or she wishes to be deemed
to be invested in one or more Investment Options. Any Participant who fails
to make an investment election under this Section 3.2 shall be deemed to
have elected the Interest Rate Option.
(c) A Participant's initial election under this Section 3.2 shall
remain in effect until changed. A Participant may make a new election with
respect to Compensation deferred for any subsequent Plan Year by filing a
new election on or before December 15 of the preceding Plan Year (or such
later date as the Committee designates, but in all events no later than
December 31 of the preceding Plan Year). Any election filed subsequent to
the initial election under this Section 3.2 shall remain in effect until a
new election is filed.
(d) The portion of the Plan Year Subaccount that is originally deemed
to be invested in the Interest Rate Option shall continue to be deemed to
be invested in the Interest Rate Option until distributed. The deemed
investment of the portion of any Plan Year Subaccount that is originally
deemed to be invested in a Variable Investment Option may be changed to any
other Variable Investment Option at the election of the Participant, but
may not be changed to the Interest Rate Option. The election to change the
deemed investment of all or a portion of a Plan Year Subaccount may be made
as of the end of any business day by filing an election on a form provided
by and in a manner specified by the Committee.
(e) The Company reserves the right to change the Investment Options,
and to increase or decrease the number of Investment Options for purposes
of this Plan, including, without limitation, the designation of different
indices, mutual funds or investment portfolios.
(f) Notwithstanding the Participant's ability to designate the
Investment Options in which the Plan Year Subaccounts of his or her
Deferred Account shall be deemed to be invested, the Company shall have no
obligation to invest any funds in
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accordance with any Participant's election. A Participant's Accounts shall
merely be bookkeeping entries on the Company's books, and no Participant
shall obtain any interest in any of the Investment Options.
3.3 Distribution Elections.
(a) In-Service Distributions. At the time of making an election to
defer Compensation pursuant to Section 3.1 and, if applicable and permitted
under the terms of such Company Contribution, at the time of a Company
Contribution, a Participant may elect (in the manner specified by the
Committee) to receive a single sum in-service distribution of the amount
deferred pursuant to such election, together with interest or earnings or
losses credited with respect to such amount pursuant to Article IV, in any
April that occurs after the fifth anniversary of the last day of the Plan
Year in which the amount deferred was earned. If a Participant fails to
make a distribution election under this Section 3.3(a) for a Plan Year, the
Compensation deferred for that Plan Year shall be distributed as set forth
in Section 6.1(b).
(b) Elections for Alternative Form of Distribution Upon Separation
from Service. Section 6.1(b) provides that the normal form of benefit
distribution upon a Separation from Service is a single sum. At the time of
making his or her election to defer Compensation pursuant to Section 3.1,
or, if applicable, at the time of making a distribution election for a
Company Contribution as provided by the Administrative Committee under
Section 3.1(h), a Participant may elect (in the manner specified by the
Committee) an alternative form of benefit for distribution of the
Compensation deferred under the Plan in the event that his or her
Separation from Service is for any reason other than his or her death.
(c) Elections for Distribution upon a Change of Control. At the time
of making an election to defer Compensation pursuant to Section 3.1, or, if
applicable, at the time of making a distribution election for a Company
Contribution as provided by the Administrative Committee under Section
3.1(h), a Participant may elect (in the manner specified by the Committee)
that, if a Change of Control - Plan which also qualifies as a Change of
Control - Section 409A occurs, then, notwithstanding any distribution
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election previously made under Sections 3.3(a) and/or 3.3(b), all vested
amounts credited to the Participant's Accounts as of the date of the Change
of Control shall be paid in a single sum within five business days
following such Change of Control. Furthermore, if (i) a Participant elected
to defer the Participant's Bonus earned for services preformed during a
Plan Year, (ii) elected that payment of such deferred Bonus amount be made
in a single sum upon occurrence of a Change in Control, and (iii) a Change
in Control - Section 409A occurs during the Plan Year during which the
Bonus is earned (or at any time before the Bonus would otherwise be payable
under the ICP or TIP, as applicable), then such Bonus shall not be deferred
and credited to the Participant's Account under the Plan and it shall be
paid to the Participant under the terms of the ICP or TIP without regard to
the Participant's deferral election, unless deferral of such Bonus and
payment pursuant to the Plan is required to comply with Section 409A of the
Code.
(d) Distributions to Key Employees. Distributions to Key Employees due
to Separation from Service, other than distributions due to death, shall
not commence until at least six months after Separation from Service.
Participants Accounts shall continue to be adjusted by the Interest Rate
Option and/or Variable Investment Options, as applicable, until
distributed. If this provision is applied to a Participant's Accounts, upon
lapse of such six month period, the amounts which would have been paid
during such period, as adjusted by the Interest Rate Option and/or Variable
Investment Options, shall be paid in a single sum.
(e) Special Distribution Election. The Administrative Committee may as
it deems appropriate permit a Participant to make a new distribution
election with respect to amounts deferred prior to the election provided
that the Participant makes the election prior to December 31, 2005, and the
election otherwise complies with Q&A 19 of Notice 2005-1 or subsequent
guidance under Section 409A of the Code.
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ARTICLE IV
ACCOUNTS
4.1 Deferral Account.
The Administrative Committee shall establish and maintain a Deferral
Account for each Participant under the Plan. The Deferral Account shall be
divided into Plan Year Subaccounts to the extent necessary to separately account
for deferred Compensation subject to in-service distribution elections pursuant
to Section 3.3(a). A Participant's Plan Year Subaccounts shall be divided into
separate subaccounts ("investment subaccounts"), each of which corresponds to an
Investment Option elected by the Participant pursuant to Section 3.2. A
Participant's Plan Year Subaccount for a Plan Year shall be credited as follows:
(a) The Administrative Committee shall credit the investment
subaccounts of the Plan Year Subaccount of the Participant's Deferral
Account with an amount equal to Salary deferred by the Participant during
each pay period that begins in the Plan Year for which the Plan Year
Subaccount is established on or before the fifth business day after the end
of the pay period, in accordance with the Participant's elections under
Section 3.2; that is, the portion of the Participant's deferred Salary that
the Participant has elected to be deemed to be invested in the Interest
Rate Option shall be credited to the investment subaccount corresponding to
the Interest Rate Option, the portion of the Participant's deferred Salary
that the Participant has elected to be deemed to be invested in a certain
Variable Investment Option shall be credited to the investment subaccount
corresponding to that Variable Investment Option to the extent that the
Variable Investment Option Limit is not exceeded, and any remaining portion
of deferred Salary shall be credited to the investment subaccount
corresponding to the Interest Rate Option;
(b) The Administrative Committee shall credit the investment
subaccounts of the Plan Year Subaccount of the Participant's Deferral
Account with an amount equal to the portion of the Bonus deferred by the
Participant for the Plan Year for which the Plan Year Subaccount is
established on or before the fifth business day after the Bonus or partial
Bonus would have been paid, in accordance with the Participant's elections
under Section 3.2; that is, the portion of the Participant's deferred Bonus
that the Participant has
16
elected to be deemed to be invested in the Interest Rate Option shall be
credited to the investment subaccount corresponding to the Interest Rate
Option, the portion of the Participant's deferred Bonus that the
Participant has elected to be deemed to be invested in a certain Variable
Investment Option shall be credited to the investment subaccount
corresponding to that Variable Investment Option to the extent that the
Variable Investment Option Limit is not exceeded, and any remaining portion
of the deferred Bonus shall be credited to the Interest Rate Option.
The amount credited to each investment subaccount of a Participant shall be
deemed to purchase fictional units of the Investment Option corresponding to the
investment subaccount at the value of such fictional units on the day of
crediting. As of any date, the amount credited to each investment subaccount of
a Participant's Plan Year Subaccount shall be equal to the number of units of
the Investment Option in which such investment subaccount is deemed to be
invested multiplied by the value of a fictional unit of such Investment Option
as of such date.
4.2 Company Contribution Account.
The Administrative Committee shall establish and maintain a Company
Contribution Account for each Participant under the Plan for whom it determines
that a Company Discretionary Contribution Amount is to be credited. The Company
Contribution Account shall be divided into vesting subaccounts if necessary to
separately account for different vesting schedules for different Company
Discretionary Contribution Amounts. A Participant's Company Contribution Account
shall be deemed to be invested in the Interest Rate Option. A Participant's
Company Contribution Account shall be credited as follows: As of the date that
the Administrative Committee, in its sole discretion decides to credit a
Participant with a Company Discretionary Contribution amount, the Administrative
Committee shall credit a Participant's Company Contribution Account with an
amount equal to the Company Discretionary Contribution Amount for such
Participant, and the amount so credited shall be deemed to purchase fictional
units of the Interest Rate Option at the value of such fictional units as of the
date of crediting. As of any date, the amount credited to a Participant's
Company Contribution Account shall be equal to the number of units of the
Interest Rate Option in which the Company
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Contributions Account is deemed to be invested multiplied by the value of a
fictional unit of the Interest Rate Option as of such date.
ARTICLE V
VESTING
5.1 Deferral Account.
A Participant's interest in the Participant's Deferral Account shall be
100% vested at all times.
5.2 Company Contribution Account.
A Participant's interest in any Company Discretionary Contribution
Amount credited to his or her Company Contribution Account shall vest according
to the vesting schedule that the Administrative Committee shall determine at the
time that such Company Discretionary Contribution Amount is credited.
ARTICLE VI
DISTRIBUTIONS
6.1 Distribution of Deferred Compensation and Company Discretionary
Contributions.
(a) Scheduled In-Service Distribution.
(i) The amounts credited to each of the Participant's Plan Year
Subaccounts that are subject to an in-service distribution
election made by the Participant pursuant to Section 3.3(a) above
shall be distributed in April of the year elected by the
Participant, provided that the Participant has not had a
Separation from Service on or prior to April 1 of the month
during which the distribution is scheduled to be made.
(ii) If the Participant has a Separation from Service for any reason
prior to April 1 of the month during which a in-service
distribution for a Plan Year Subaccount is scheduled to commence
pursuant to subsection (i)
18
above, the Participant's in-service distribution election for
such Plan Year Subaccount shall no longer be effective and all of
the amounts credited to such Plan Year Subaccount shall be
distributed as set forth in the following subsections of this
Section 6.1 in accordance with any applicable election by the
Participant. Distributions to key employees are subject to
Section 3.3(d) above.
(b) Alternative Form of Distribution.
(i) Distribution upon Separation from Service. In the event of a
Participant's Separation from Service, the amounts credited to
his or her Plan Year Subaccounts of his or her Deferral Account
that have not previously been paid out pursuant to the Plan and
the vested amounts credited to his or her Company Contribution
Account shall be distributed in a single sum payment as soon as
practicable following his or her Separation from Service.
Notwithstanding the foregoing, unless the Participant has elected
an in-service distribution for amounts credited to his or her
Plan Year Subaccounts, a Participant may elect to receive such
distribution in substantially equal annual installments over two
to fifteen years beginning either (A) as soon as practicable
following the Participant's Separation from Service or (B) April
of the first or second year following the year during which the
Participant's Separation from Service occurs, but not later than
the year in which the Participant attains age 65, provided that
his or her election is filed with the Committee at the time of
making his or her election to defer the Compensation credited to
such sub-account under Section 3.1 (as described in Section
3.3(b)) or at the time the Participant makes a payment election
in accordance with Section 3.1(h) for a Company Contribution.
(ii) Distribution upon Death. In the event that a Participant has a
Separation from Service as a result of his or her death, all
vested amounts in the Participant's Deferral Account and Company
Contribution Account
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(including both vested and unvested amounts) will be paid to the
Participant's Beneficiary in a single sum as soon as
administratively practicable following such termination. If a
Participant dies after termination of employment but while
receiving installment payments under this Plan, any remaining
installments shall be paid to the Participant's Beneficiary in a
single sum as soon as administratively practicable following the
Participant's death.
(c) The Participant's Plan Year Subaccounts shall continue to be credited
with earnings pursuant to Sections 4.1 and 4.2 of the Plan until all
amounts credited to his or her Plan Year Subaccounts under the Plan and
all vested amounts credited to his or her Company Contributions Account
have been distributed.
6.2 Unforeseeable Emergency.
Upon written request of a Participant, the Committee may, in its sole
discretion, make a single sum payment to a Participant and/or accelerate the
payment of installment payments due to the Participant in the case of a hardship
resulting from an Unforeseeable Emergency. However, no payment shall be made
under this Section 6.2 to the extent that a hardship is or may be relieved (a)
through reimbursement or compensation by insurance or otherwise, or (b) by
liquidation of the Participant's assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship. The written request by
the Participant shall include documentation of such Unforeseeable Emergency and
proof that the Unforeseeable Emergency may not be relieved by any of the means
listed in the preceding sentence. The amount of any payment and/or accelerated
amount under this Section 6.2 shall not exceed the lesser of (a) the amount
required to meet the immediate financial need created by such Unforeseeable
Emergency (including the amount necessary to pay any federal, state and local
income taxes or penalties reasonably anticipated to result from the
distribution) or (b) the entire vested amounts credited to the Participant's
Accounts. The amount of any such payments shall be deducted from the amounts
credited to the Participant's Accounts in such order and in such proportions as
the Committee may determine in its sole discretion. The remaining amounts
credited to a
20
Participant's Accounts shall be distributed in accordance with the Participant's
elections with respect to such Accounts.
6.3 Inability to Locate Participant.
In the event that the Committee is unable to locate a Participant or
Beneficiary within two years following the Participant's termination of
employment with the Company, the Employer and all Affiliates or, if later, the
first date that installment payments to such person are due to commence, the
amounts allocated to the Participant's Accounts shall be forfeited. If, after
such forfeiture, the Participant or Beneficiary later claims such benefits, such
amounts shall be reinstated without interest or earnings and the portions of
such Accounts that were vested at the time the Participant's employment
terminated shall be paid in accordance with Section 6.1(b) and any applicable
election of the Participant.
6.4 Effect of a Change of Control on Distributions of Participant Accounts.
Unless the Participant has elected otherwise pursuant to Section
3.3(c), the occurrence of a Change of Control - Plan shall not accelerate the
distribution of amounts credited to Participants' Accounts.
6.5 Prohibition on Acceleration of Payments.
No acceleration of the time or schedule of payments under the plan
shall occur - except as permitted under Section 409A(a)(3) of the Code.
ARTICLE VII
ADMINISTRATION
7.1 Administrative Committee Action.
The Committee shall act at meetings by affirmative vote of a majority
of the members of the Committee. Any action permitted to be taken at a meeting
may be taken without a meeting if, prior to such action, a written consent to
the action is signed by all members of the Committee and such written consent is
filed with the minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter which relates solely to himself
21
or herself as a Participant. The Chairman or any other member or members of the
Committee designated by the Chairman may execute any certificate or other
written direction on behalf of the Committee.
7.2 Powers and Duties of the Committee.
(a) The Committee, on behalf of the Participants and their
Beneficiaries, shall enforce the Plan in accordance with its terms, shall
be charged with the general administration of the Plan, and shall have all
powers necessary to accomplish its purposes, including, but not limited to,
the following:
(i) To select the funds or portfolios to be the Variable
Investment Options and to establish the Variable Investment
Limit for each Plan Year as set forth in Section 3.2 hereof;
(ii) To determine the amount of any Company Discretionary
Contribution Amounts and the applicable vesting schedule for
each Company Discretionary Contribution Amount;
(iii) To construe and interpret the terms and provisions of this
Plan;
(iv) To compute and certify to the amount and kind of benefits
payable to Participants and their Beneficiaries;
(v) To maintain all records that may be necessary for the
administration of the Plan;
(vi) To provide for the disclosure of all information and the
filing or provision of all reports and statements to
Participants, Beneficiaries or governmental agencies as
shall be required by law;
(vii) To make and publish such rules for the regulation of the
Plan and procedures for the administration of the Plan as
are not inconsistent with the terms hereof; and
22
(viii) To appoint a plan administrator or any other agent, and to
delegate to them such powers and duties in connection with
the administration of the Plan as the Committee may from
time to time prescribe.
7.3 Construction and Interpretation.
The Committee shall have full discretion to construe and interpret the
terms and provisions of this Plan, which interpretation or construction shall be
final and binding on all parties, including but not limited to the Company and
any Participant or Beneficiary. The Committee shall administer such terms and
provisions in a uniform and nondiscriminatory manner and in full accordance with
any and all laws applicable to the Plan.
7.4 Information.
To enable the Committee to perform its functions, the Company shall
supply full and timely information to the Committee on all matters relating to
the Compensation of all Participants, their death or other cause of termination,
and such other pertinent facts as the Committee may require.
7.5 Compensation, Expenses and Indemnity.
(a) The members of the Committee shall serve without compensation for
their services hereunder.
(b) The Committee is authorized at the expense of the Company to
employ such legal counsel as it may deem advisable to assist in the
performance of its duties hereunder. Expenses and fees in connection with
the administration of the Plan shall be paid by the Company.
(c) To the extent permitted by applicable state law, the Company shall
indemnify and save harmless the Committee and each member thereof, the
Board of Directors and each member thereof, and delegates of the Committee
who are employees of the Company against any and all expenses, liabilities
and claims, including legal fees to defend against such liabilities and
claims arising out of their discharge in good faith of
23
responsibilities under or incident to the Plan, other than expenses and
liabilities arising out of willful misconduct. This indemnity shall not
preclude such further indemnities as may be available under insurance
purchased by the Company or provided by the Company under any bylaw,
agreement or otherwise, as such indemnities are permitted under state law.
7.6 Quarterly Statements.
Under procedures established by the Committee, a Participant shall
receive a statement with respect to such Participant's Accounts as of the last
day of each calendar quarter.
7.7 Claims Procedure.
(a) Claim. A person who believes that he or she is being denied a
benefit to which he or she is entitled under this Plan (hereinafter
referred to as "Claimant") may file a written request for such benefit with
the Committee, setting forth his or her claim. The request must be
addressed to the Committee at the Company's principal place of business.
(b) Claim Decision. Upon receipt of a claim, the Committee shall
advise the Claimant that a reply will be forthcoming within 90 days and
shall, in fact, deliver such reply within such period. The Committee may,
however, extend the reply period for an additional 90 days for special
circumstances and, in such case, shall provide to the Claimant prior to
termination of the initial 90-day period, a written notice of the
extension, the special circumstances requiring the extension and the date
by which the Committee expects to render a decision. If the claim is denied
in whole or in part, the Committee shall inform the Claimant in writing,
using language calculated to be understood by the Claimant, setting forth:
(i) the specified reason or reasons for such denial; (ii) the specific
reference to pertinent provisions of this Plan on which such denial is
based; (iii) a description of any additional material or information
necessary for the Claimant to perfect his or her claim and an explanation
why such material or such information is necessary; (iv) a description of
the Plan's review procedures if the Claimant wishes to submit the claim for
review and the time limits for requesting a review, including a statement
24
of the Claimant's rights to bring a civil action under Section 502(a) if
ERISA following an adverse benefit determination on review.
(c) Request for Review. Within 60 days after the receipt by the
Claimant of the written opinion described above, the Claimant may request
in writing that the Committee review the determination. Such request must
be addressed to the Committee, at the Company's principal place of
business. The Claimant or his or her duly authorized representative may,
but need not, submit written comments, documents, records and other
information relating to the claim for consideration by the Committee. The
Claimant shall be provided, upon request and free of charge, reasonable
access to, and copies of, all documents, records, and other information
relevant to the Claimant's benefit claim. If the Claimant does not request
a review within such 60 day period, he or she shall be barred and estopped
from challenging the original determination.
(d) Review of Decision. Within 60 days after the Committee's receipt
of a request for review, after considering all comments and materials
presented by the Claimant relating to the claim, and without regard to
whether such information was submitted or considered in the initial benefit
determination, the Committee will inform the Claimant in writing, in a
manner calculated to be understood by the Claimant, of its decision. If
special circumstances require that the 60 day time period be extended, the
Committee will provide a written notification to the Claimant of the
extension, the special circumstances requiring a extension and the date by
which the Committee expects to render the determination on review, and the
Committee shall render the decision as soon as possible, but no later than
120 days after receipt of the request for review. If the claim or review is
denied in whole or in part, the Committee shall inform the Claimant in
writing, in language calculated to be understood by the Claimant, setting
forth: (i) the specific reason or reasons for such denial, (ii) references
to pertinent provisions of the Plan on which the denial is based, (iii) a
statement of the Claimant's entitlement to receive, upon request and free
of charge, reasonable access to, and copies of all documents, records and
other information relevant to the Claimant's benefit claim, and (iv) a
statement of the Claimant's right to bring an action under Section 502(a)
of ERISA.
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ARTICLE VIII
MISCELLANEOUS
8.1 Unsecured General Creditor.
Participants and their Beneficiaries, heirs, successors, and assigns
shall have no legal or equitable rights, claims, or interest in any specific
property or assets of the Company. No assets of the Company shall be held under
any trust (other than a grantor trust as provided in Section 8.2 of the Plan),
or held in any way as collateral security for the fulfilling of the obligations
of the Company under this Plan. Any and all of the Company's assets shall be,
and remain, the general unpledged, unrestricted assets of the Company. The
Company's obligation under the Plan shall be merely that of an unfunded and
unsecured promise of the Company to pay money in the future, and the rights of
the Participants and Beneficiaries shall be no greater than those of unsecured
general creditors. It is the intention of the Company that this Plan and the
grantor trust established pursuant to Section 8.2 of the Plan be unfunded for
purposes of the Code and for purposes of Title I of ERISA.
8.2 Trust Fund.
(a) The Company shall be responsible for the payment of all benefits
provided under the Plan. Nevertheless, the Company shall utilize a grantor trust
subject to Code Section 671, with such trustee as the Board or Committee may
approve, for the purpose of facilitating the payment of such benefits following
a Change of Control and, at the discretion of the Board or Committee, for
facilitating the payment of such benefits at any time prior to a Change in
Control. Such trust or trusts shall be irrevocable, but the assets thereof shall
be subject to the claims of the Company's creditors. To the extent any benefits
provided under the Plan are actually paid from any such trust, the Company shall
have no further obligation with respect thereto, but to the extent not so paid,
such benefits shall remain the obligation of, and shall be paid by, the Company.
(b) The trust agreement for the trust described in Section 8.2(a) shall
require the Company to fund the trust with an amount at least equal to 120% of
the aggregate amounts then credited to the Participants' Deferral Accounts and
Company Contribution Accounts within five business days following a Change in
Control. For this purpose, such trust agreement shall define "Change in Control"
as a Change in Control - Plan as such term is defined in this Plan document,
26
except that the words "Consummation of" in clause (c) of such definition shall
be changed to "Approval by the stockholders of the Company of." Notwithstanding
the preceding sentence, no such funding shall be required if such funding would
be treated as a transfer of property under Section 409A(b)(2) of the Code.
8.3 Restriction Against Assignment.
The Company shall pay all amounts payable hereunder only to the person
or persons designated by the Plan and not to any other person or corporation. No
part of a Participant's Accounts shall be liable for the debts, contracts, or
engagements of any Participant, his or her Beneficiary, or successors in
interest, nor shall a Participant's Accounts be subject to execution by levy,
attachment, or garnishment or by any other legal or equitable proceeding, nor
shall any such person have any right to alienate, anticipate, sell, transfer,
commute, pledge, encumber, or assign any benefits or payments hereunder in any
manner whatsoever. If any Participant, Beneficiary or successor in interest is
adjudicated bankrupt or purports to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge any distribution or payment from the Plan,
voluntarily or involuntarily, the Committee, in its discretion, may cancel such
distribution or payment (or any part thereof) to or for the benefit of such
Participant, Beneficiary or successor in interest in such manner as the
Committee shall direct.
8.4 Withholding.
There shall be deducted from each payment made under the Plan or any
other compensation payable to the Participant (or Beneficiary) all taxes which
are required to be withheld by the Company in respect to such payment or this
Plan. The Company shall have the right to reduce any payment (or other
compensation) by the amount of cash sufficient to provide the amount of said
taxes.
8.5 Amendment, Modification, Suspension or Termination.
The Company may amend, modify, suspend or terminate the Plan in whole
or in part, except that no amendment, modification, suspension or termination
shall have any retroactive effect to reduce any amounts allocated to a
Participant's Accounts. In the event that this Plan is
27
terminated, the distribution of the amounts credited to a Participant's Accounts
shall not be accelerated but shall be paid at such time and in such manner as
determined under the terms of the Plan immediately prior to termination as if
the Plan had not been terminated.
8.6 Governing Law.
This Plan shall be construed, governed and administered in accordance
with applicable federal law, including Section 409A of the Code, and, to the
extent not preempted by or in conflict with federal law, the laws of the State
of California.
8.7 Receipt or Release.
Any payment to a Participant or the Participant's Beneficiary in
accordance with the provisions of the Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Committee, and the Company. The
Committee may require such Participant or Beneficiary, as a condition precedent
to such payment, to execute a receipt and release to such effect.
8.8 Payments on Behalf of Persons Under Incapacity.
In the event that any amount becomes payable under the Plan to a person
who, in the sole judgment of the Committee, is considered by reason of physical
or mental condition to be unable to give a valid receipt therefor the Committee
may direct that such payment be made to any person found by the Committee, in
its sole judgment, to have assumed the care of such person. Any payment made
pursuant to such determination shall constitute a full release and discharge of
the Committee and the Company.
8.9 Headings, etc. Not Part of Agreement.
Headings and subheadings in this Plan are inserted for convenience of
reference only and are not to be considered in the construction of the
provisions hereof.
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