Exhibit 10.5
WESTCORP
EXECUTIVE DEFERRAL PLAN V
(EDP V)
EFFECTIVE SEPTEMBER 1, 2000
TABLE OF CONTENTS
PAGE
PURPOSE 1
ARTICLE 1 DEFINITIONS....................................................................................1
ARTICLE 2 SELECTION, ENROLLMENT, ELIGIBILITY.............................................................7
2.1 SELECTION BY COMMITTEE.........................................................................7
2.2 ENROLLMENT REQUIREMENTS........................................................................7
2.3 ELIGIBILITY; COMMENCEMENT OF PARTICIPATION.....................................................7
2.4 TERMINATION OF PARTICIPATION AND/OR DEFERRALS..................................................8
ARTICLE 3 DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING TAXES..........................................8
3.1 MINIMUM AND MAXIMUM DEFERRALS..................................................................8
3.2 ELECTION TO DEFER; EFFECT OF ELECTION FORM.....................................................8
3.3 WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS.........................................................9
3.4 ANNUAL COMPANY CONTRIBUTION AMOUNT.............................................................9
3.5 ANNUAL PERFORMANCE BASED MATCHING AMOUNT......................................................9
3.6 ANNUAL SALARY SAVINGS PLAN RESTORATION MATCHING AMOUNT........................................9
3.7 ROLLOVER AMOUNT...............................................................................10
3.8 INVESTMENT OF TRUST ASSETS...................................................................10
3.9 VESTING.......................................................................................10
3.10 CREDITING/DEBITING OF ACCOUNT BALANCES........................................................11
3.11 FICA AND OTHER TAXES..........................................................................13
ARTICLE 4 SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES; WITHDRAWAL ELECTION...................14
4.1 SHORT-TERM PAYOUT.............................................................................14
4.2 OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM................................................14
4.3 WITHDRAWAL PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL EMERGENCIES.........................14
4.4 WITHDRAWAL ELECTION...........................................................................14
ARTICLE 5 RETIREMENT BENEFIT............................................................................15
5.1 RETIREMENT BENEFIT............................................................................15
5.2 PAYMENT OF RETIREMENT BENEFIT.................................................................15
5.3 DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT...............................................15
ARTICLE 6 PRE-RETIREMENT SURVIVOR BENEFIT...............................................................16
6.1 PRE-RETIREMENT SURVIVOR BENEFIT...............................................................16
6.2 PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT....................................................16
ARTICLE 7 TERMINATION BENEFIT...........................................................................16
7.1 TERMINATION BENEFIT...........................................................................16
7.2 PAYMENT OF TERMINATION BENEFIT................................................................16
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ARTICLE 8 DISABILITY WAIVER AND BENEFIT.................................................................17
8.1 DISABILITY WAIVER.............................................................................17
8.2 CONTINUED ELIGIBILITY; DISABILITY BENEFIT.....................................................17
ARTICLE 9 BENEFICIARY DESIGNATION.......................................................................17
9.1 BENEFICIARY...................................................................................17
9.2 BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT..............................................18
9.3 ACKNOWLEDGEMENT...............................................................................18
9.4 NO BENEFICIARY DESIGNATION....................................................................18
9.5 DOUBT AS TO BENEFICIARY.......................................................................18
9.6 DISCHARGE OF OBLIGATIONS......................................................................18
ARTICLE 10 LEAVE OF ABSENCE..............................................................................18
10.1 PAID LEAVE OF ABSENCE.........................................................................18
10.2 UNPAID LEAVE OF ABSENCE.......................................................................18
ARTICLE 11 TERMINATION, AMENDMENT OR MODIFICATION........................................................19
11.1 TERMINATION...................................................................................19
11.2 AMENDMENT.....................................................................................19
11.3 PLAN AGREEMENT................................................................................20
11.4 EFFECT OF PAYMENT.............................................................................20
ARTICLE 12 ADMINISTRATION................................................................................20
12.1 COMMITTEE DUTIES..............................................................................20
12.2 ADMINISTRATION UPON CHANGE IN CONTROL.........................................................20
12.3 AGENTS........................................................................................21
12.4 BINDING EFFECT OF DECISIONS...................................................................21
12.5 INDEMNITY OF COMMITTEE........................................................................21
12.6 EMPLOYER INFORMATION..........................................................................21
ARTICLE 13 OTHER BENEFITS AND AGREEMENTS.................................................................21
13.1 COORDINATION WITH OTHER BENEFITS..............................................................21
ARTICLE 14 CLAIMS PROCEDURES.............................................................................21
14.1 PRESENTATION OF CLAIM.........................................................................21
14.2 NOTIFICATION OF DECISION......................................................................22
14.3 REVIEW OF A DENIED CLAIM......................................................................22
14.4 DECISION ON REVIEW............................................................................22
14.5 LEGAL ACTION..................................................................................23
ARTICLE 15 TRUST.........................................................................................23
15.1 ESTABLISHMENT OF THE TRUST....................................................................23
15.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUST...................................................23
15.3 DISTRIBUTIONS FROM THE TRUST..................................................................23
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PAGE
ARTICLE 16 MISCELLANEOUS.................................................................................23
16.1 STATUS OF PLAN................................................................................23
16.2 UNSECURED GENERAL CREDITOR....................................................................23
16.3 EMPLOYER'S LIABILITY..........................................................................24
16.4 NONASSIGNABILITY..............................................................................24
16.5 NOT A CONTRACT OF EMPLOYMENT..................................................................24
16.6 FURNISHING INFORMATION........................................................................24
16.7 TERMS.........................................................................................24
16.8 CAPTIONS......................................................................................24
16.9 GOVERNING LAW.................................................................................24
16.10 NOTICE........................................................................................24
16.11 SUCCESSORS....................................................................................25
16.12 SPOUSE'S INTEREST.............................................................................25
16.13 VALIDITY......................................................................................25
16.14 INCOMPETENT...................................................................................25
16.15 COURT ORDER...................................................................................25
16.16 DISTRIBUTION IN THE EVENT OF TAXATION.........................................................25
16.17 INSURANCE.....................................................................................26
16.18 LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL..........................................26
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WESTCORP
EXECUTIVE DEFERRAL PLAN V
(EDP V)
Effective September 1, 2000
PURPOSE
The purpose of this Plan is to provide specified benefits to a select
group of management or highly compensated Employees who contribute materially to
the continued growth, development and future business success of WESTCORP, a
California corporation, and its subsidiaries, if any, that sponsor this Plan.
This Plan shall be unfunded for tax purposes and for purposes of Title I of
ERISA.
ARTICLE 1
DEFINITIONS
For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
1.1 "Account Balance" shall mean, with respect to a Participant, a credit
on the records of the Employer equal to the sum of (i) the Deferral
Account balance, (ii) the vested Performance Based Matching Account
balance, (iii) the vested Company Contribution Account Balance, (iv)
the vested Salary Savings Plan Restoration Matching Account balance and
(v) the Rollover Account. The Account Balance, and each other specified
account balance, shall be a bookkeeping entry only and shall be
utilized solely as a device for the measurement and determination of
the amounts to be paid to a Participant, or his or her designated
Beneficiary, pursuant to this Plan.
1.2 "Annual Base Salary" shall mean the annual cash compensation relating
to services performed during any calendar year, whether or not paid in
such calendar year or included on the Federal Income Tax Form W-2 for
such calendar year, excluding bonuses, commissions, overtime, fringe
benefits, stock options, relocation expenses, long-term incentive
payments, non-monetary awards, directors fees and other fees,
automobile and other allowances paid to a Participant for employment
services rendered (whether or not such allowances are included in the
Employee's gross income). Annual Base Salary shall be calculated before
reduction for compensation voluntarily deferred or contributed by the
Participant pursuant to all qualified or non-qualified plans of the
Employer and shall be calculated to include amounts not otherwise
included in the Participant's gross income under Code Sections 125,
402(e)(3), 402(h), or 403(b) pursuant to plans established by the
Employer; provided, however, that all such amounts will be included in
compensation only to the extent that, had there been no such plan, the
amount would have been payable in cash to the Employee.
1.3 "Bonus" shall mean any compensation, in addition to Annual Base Salary
relating to services performed during any calendar year, whether or not
paid in such calendar year or included on the Federal Income Tax Form
W-2 for such calendar year, payable to a
1
Participant as an Employee as commissions or under any Employer's
annual bonus and cash incentive plans, excluding stock options and
restricted stock.
1.4 "Annual Company Contribution Amount" shall mean, for any one Plan Year,
the amount determined in accordance with Section 3.4
1.5 "Annual Deferral Amount" shall mean that portion of a Participant's
Annual Base Salary, Bonus and Annual Long Term Incentive that a
Participant elects to have deferred, and is deferred, in accordance
with Article 3, for any one Plan Year. In the event of a Participant's
Retirement, Disability (if deferrals cease in accordance with Section
8.1), death or a Termination of Employment prior to the end of a Plan
Year, such year's Annual Deferral Amount shall be the actual amount
withheld prior to such event.
1.6 "Annual Long Term Incentive" shall mean, for any one Plan Year, the
amount payable to a Participant as an Employee under the Employer's
"2000 Long Term Cash Incentive Plan," as amended from time to time.
1.7 "Annual Salary Savings Plan Restoration Matching Amount" for any one
Plan Year shall be the amount determined in accordance with Section 3.6
1.8 "Annual Installment Method" shall be an annual installment payment over
the number of years selected by the Participant in accordance with this
Plan, calculated as follows: The Account Balance of the Participant
shall be calculated as of the close of business on the last business
day of the year. The annual installment shall be calculated by
multiplying this balance by a fraction, the numerator of which is one,
and the denominator of which is the remaining number of annual payments
due the Participant. By way of example, if the Participant elects a
10-year Annual Installment Method, the first payment shall be 1/10 of
the Account Balance, calculated as described in this definition. The
following year, the payment shall be 1/9 of the Account Balance,
calculated as described in this definition. Each annual installment
shall be paid on or as soon as practicable after the last business day
of the applicable year.
1.9 "Annual Performance Based Matching Amount" shall mean, for any one Plan
Year, the amount determined in accordance with Section 3.5.
1.10 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, that are entitled to
receive benefits under this Plan upon the death of a Participant.
1.11 "Beneficiary Designation Form" shall mean the form established from
time to time by the Committee that a Participant completes, signs and
returns to the Committee to designate one or more Beneficiaries.
1.12 "Board" shall mean the board of directors of the Company.
1.13 "Change in Control" shall mean the first to occur of any of the
following events:
(a) The shareholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company;;
(b) The shareholders of the Company approve the sale or transfer
of all or substantially all of the assets of the Company to
parties that are not within a
2
"controlled group of corporations" (as defined in Code Section
1563) in which the company is a member;
(c) The shareholders of the Company approve any merger or
consolidation of the Company other than a consolidation or
merger of the Company in which the holders of the common stock
of the Company immediately prior to the consolidation or
merger hold more than 50% of the common stock of the surviving
corporation immediately after the consolidation or merger;
(d) The shareholders of the Company approve a reverse merger in
which the Company is the surviving corporation but the shares
of common stock outstanding immediately preceding the merger
are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, and in
which beneficial ownership of securities of the Company
representing at least fifty percent (50%) of the combined
voting power entitled to vote in the election of directors has
changed;
(e) The shareholders of the Company approve an acquisition by any
person, entity or group within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") or any comparable successor provisions (excluding any
employee benefit plan, or related trust, sponsored or
maintained by the Company or subsidiary of the Company or
other entity controlled by the Company) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rule) of securities
of the Company representing at least fifty percent (50%) of
the combined voting power entitled to vote in the election of
directors;
(f) The individuals who, as of the date of the adoption of this
provision, are members of the Company's Board (the "Incumbent
Board"), cease for any reason to constitute at least fifty
percent (50%) of the Board. (If the election, or nomination
for election by the Company's stockholders, of any new
director is approved by a vote of at least fifty percent (50%)
of the Incumbent Board, such new director shall be considered
as a member of the Incumbent Board); or
(g) The individual or entity which constitutes the largest
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor
rule) of securities of the Company, as of the date of the
adoption of this provision, sells, disposes or otherwise
transfers all or a portion of said beneficial ownership so
that it represents less than twenty-five percent (25%) of the
total securities of the Company.
1.14 "Claimant" shall have the meaning set forth in Section 14.1.
1.15 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
1.16 "Committee" shall mean the committee described in Article 12.
1.17 "Company" shall mean WESTCORP, a California corporation, and any
successor to all or substantially all of the Company's assets or
business.
3
1.18 "Deduction Limitation" shall mean the following described limitation on
a benefit that may otherwise be distributable pursuant to the
provisions of this Plan. Except as otherwise provided, this limitation
shall be applied to all distributions that are "subject to the
Deduction Limitation" under this Plan. If the Employer determines in
good faith prior to a Change in Control that there is a reasonable
likelihood that any compensation paid to a Participant for a taxable
year of the Employer would not be deductible by the Employer solely by
reason of the limitation under Code Section 162(m), then to the extent
deemed necessary by the Employer to ensure that the entire amount of
any distribution to the Participant pursuant to this Plan prior to the
Change in Control is deductible, the Employer may defer all or any
portion of a distribution under this Plan. Any amounts deferred
pursuant to this limitation shall continue to be credited/debited with
additional amounts in accordance with Section 3.8 below, even if such
amount is being paid out in installments. The amounts so deferred and
amounts credited/debited thereon shall be distributed to the
Participant or his or her Beneficiary (in the event of the
Participant's death) at the earliest possible date, as determined by
the Employer in good faith, on which the deductibility of compensation
paid or payable to the Participant for the taxable year of the Employer
during which the distribution is made will not be limited by Section
162(m), or if earlier, the effective date of a Change in Control.
Notwithstanding anything to the contrary in this Plan, the Deduction
Limitation shall not apply to any distributions made after a Change in
Control.
1.19 "Deferral Account" shall mean (i) the sum of all of a Participant's
Annual Deferral Amounts, plus (ii) amounts credited/debited in
accordance with Section 3.8 of this Plan that relate to the
Participant's Deferral Account, less (iii) all distributions made to
the Participant or his or her Beneficiary pursuant to this Plan that
relate to his or her Deferral Account.
1.20 "Disability" shall mean a period of disability during which a
Participant qualifies for permanent disability benefits under the
Employer's long-term disability plan, or, if a Participant does not
participate in such a plan, a period of disability during which the
Participant would have qualified for permanent disability benefits
under such a plan had the Participant been a participant in such a
plan, as determined in the sole discretion of the Committee. If the
Employer does not sponsor such a plan, or discontinues sponsorship of
such a plan, Disability shall be determined by the Committee in its
sole discretion.
1.21 "Disability Benefit" shall mean the benefit set forth in Article 8.
1.22 "EDP I" shall mean the Westcorp Executive Deferral Plan I, adopted
August 1, 1985, and as amended from time to time.
1.23 "EDP II" shall mean the Westcorp Executive Deferral Plan II, adopted
September 1, 1988, and as amended from time to time.
1.24 "EDP III" shall mean the Westcorp Executive Deferral Plan III adopted
May 1, 1992, and as amended from time to time.
1.25 "EDP IV" shall mean the Westcorp Executive Deferral Plan IV adopted
September 1, 1995, and as amended from time to time.
4
1.26 "Election Form" shall mean the form established from time to time by
the Committee that a Participant completes, signs and returns to the
Committee to make an election under the Plan.
1.27 "Employee" shall mean a person who is an employee of any Employer.
1.28 "Employer" shall mean the Company and/or each of its subsidiaries (now
in existence or hereafter formed or acquired) that have been selected
by the Board to participate in the Plan and have adopted the Plan as a
sponsor.
1.29 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
1.30 "Participant" shall mean any Employee (i) who is selected to
participate in the Plan, (ii) who elects to participate in the Plan,
(iii) who signs a Plan Agreement, an Election Form and a Beneficiary
Designation Form, (iv) whose signed Plan Agreement, Election Form and
Beneficiary Designation Form are accepted by the Committee, (v) who
commences participation in the Plan, and (vi) whose Plan Agreement has
not terminated. A spouse or former spouse of a Participant shall not be
treated as a Participant in the Plan or have an account balance under
the Plan, even if he or she has an interest in the Participant's
benefits under the Plan as a result of applicable law or as a result of
property settlements resulting from legal separation or divorce.
1.31 "Performance Based Matching Account" shall mean (i) the sum of the
Participant's Annual Performance Based Matching Amounts, plus (ii)
amounts credited/debited in accordance with Section 3.8 of this Plan
that relate to the Participant's Performance Based Matching Account,
less (iii) all distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the Participant's
Performance Based Matching Account.
1.32 "Plan" shall mean the WESTCORP Executive Deferral Plan V, effective
September 1, 2000, which shall be evidenced by this instrument and by
each Plan Agreement, as they may be further amended from time to time.
1.33 "Plan Agreement" shall mean a written agreement, as may be amended from
time to time, which is entered into by and between any Employer and a
Participant. Each Plan Agreement executed by a Participant and the
Employer shall provide for the entire benefit to which such Participant
is entitled under the Plan; should there be more than one Plan
Agreement, the Plan Agreement bearing the latest date of acceptance by
the Employer shall supersede all previous Plan Agreements in their
entirety and shall govern such entitlement. The terms of any Plan
Agreement may be different for any Participant, and any Plan Agreement
may provide additional benefits not set forth in the Plan or limit the
benefits otherwise provided under the Plan; provided, however, that any
such additional benefits or benefit limitations must be agreed to by
both the Employer and the Participant.
1.34 "Plan Year" shall, for the first Plan Year, begin on September 1, 2000,
and end on December 31, 2000. For each Plan Year thereafter, the Plan
Year shall mean a period beginning on January 1 of each calendar year
and continuing through December 31 of such calendar year.
5
1.35 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
1.36 Retirement", "Retire(s)" or "Retired" shall mean, with respect to an
Employee, severance of employment with all Employers for any reason
other than a leave of absence, death or Disability at such time as the
sum of the Employee's age and Years of Service equals sixty-five (65)
or more, although the Employee must be at least fifty-five (55) years
of age to qualify for Retirement under this definition.
1.37 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.38 "Rollover Account" shall mean (i) the sum of the Participant's Rollover
Amount, plus (ii) amounts credited/debited in accordance with all the
applicable crediting/debiting provisions of this Plan that relate to
the Participant's Rollover Account, less (iii) all distributions made
to the Participant or his or her Beneficiary pursuant to this Plan that
relate to the Participant's Rollover Account.
1.39 "Rollover Amount" shall mean the amount determined in connection with
Section 3.7.
1.40 "Salary Savings Plan" shall be the WESTCORP Salary Savings Plan adopted
by the Company, as it may be amended from time to time.
1.41 "Salary Savings Plan Restoration Matching Account" shall mean (i) the
sum of all of a Participant's Annual Salary Savings Plan Restoration
Matching Amounts, plus (ii) amounts credited/debited in accordance with
Section 3.8 of this Plan that relate to the Participant's Salary
Savings Plan Restoration Matching Account, less (iii) all distributions
made to the Participant or his or her Beneficiary pursuant to this Plan
that relate to the Participant's Salary Savings Plan Restoration
Matching Account.
1.42 "Short-Term Payout" shall mean the payout set forth in Section 4.1.
1.43 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.44 "Termination of Employment" shall mean the severing of employment with
all Employers, voluntarily or involuntarily, for any reason other than
Retirement, Disability, death or an authorized leave of absence.
1.45 "Trust" shall mean one or more trusts established pursuant to that
certain trust agreement, dated as of September 1, 2000, between the
Company and the trustee named therein, as amended from time to time.
1.46 "Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the
Participant that would result in severe financial hardship to the
Participant resulting from (i) a sudden and unexpected illness or
accident of the Participant or a dependent of the Participant, (ii) a
loss of the Participant's property due to casualty, or (iii) such other
extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the
sole discretion of the Committee.
1.47 "Years of Plan Participation" shall mean the sum of (i) the total
number of full Plan Years a Participant has been a Participant in the
Plan prior to his or her Termination of Employment (determined without
regard to whether deferrals have been made by the Participant for any
Plan Year), plus (ii) the total number of full Plan Years a Participant
was a participant in that certain EDP III (determined without regard to
whether deferrals
6
were made by the Participant for such year under EDP III) prior to the
Effective Date of this Plan, plus (iii) the total number of full Plan
Years a Participant was a participant in that certain EDP IV determined
without regard to whether deferrals were made by the Participant for
such year under EDP IV) prior to the Effective Date of this Plan.
Except as provided in the next three sentences, any partial year shall
not be counted. If a Participant was a participant in EDP III as of May
1, 2000, the partial EDP III plan year from May 1, 2000 to the
Effective date of this Plan plus the first Plan Year (September 1, 2000
through December 31, 2000) shall be added together and collectively
counted as one full Plan Year for purposes of this definition. If a
Participant was a participant in EDP IV as of January 1, 2000, the
partial EDP IV plan year from January 1, 2000 to the Effective Date of
this Plan plus the first Plan Year (September 1, 2000 through December
31, 2000) shall be added together and collectively counted as one full
Plan Year for purposes of this definition. Notwithstanding the above, a
Participant's first Plan Year of participation shall be treated as a
full Plan Year for purposes of this definition, even if it is only a
partial Plan Year of participation.
1.48 "Years of Service" shall mean the total number of full years in which a
Participant has been employed by one or more Employers. For purposes of
this definition, a year of employment shall be a 365 day period (or 366
day period in the case of a leap year) that, for the first year of
employment, commences on the Employee's date of hiring and that, for
any subsequent year, commences on an anniversary of that hiring date.
Any partial year of employment shall not be counted.
ARTICLE 2
SELECTION, ENROLLMENT, AND ELIGIBILITY
2.1 SELECTION BY COMMITTEE. Participation in the Plan shall be limited to a
select group of management or highly compensated Employees of the
Employer, as determined by the Committee in its sole discretion. From
that group, the Committee shall select, in its sole discretion, the
Employees to participate in the Plan.
2.2 ENROLLMENT REQUIREMENTS. As a condition to participation, each selected
Employee shall complete, execute and return to the Committee a Plan
Agreement, an Election Form and a Beneficiary Designation Form, all
within the number of days specified by the Committee after he or she is
selected to participate in the Plan. In addition, the Committee shall
establish from time to time such other enrollment requirements as it
determines in its sole discretion are necessary.
2.3 ELIGIBILITY; COMMENCEMENT OF PARTICIPATION. Provided an Employee
selected to participate in the Plan has met all enrollment requirements
set forth in this Plan and required by the Committee, including
returning all required documents to the Committee within the specified
time period, that Employee shall commence participation in the Plan on
the first day of the month following the month in which the Employee
completes all enrollment requirements. If an Employee fails to meet all
such requirements within the period required, in accordance with
Section 2.2, that Employee shall not be eligible to participate in the
Plan until the first day of the Plan Year following the delivery to and
acceptance by the Committee of the required documents.
7
2.4 TERMINATION OF PARTICIPATION AND/OR DEFERRALS. If the Committee
determines in good faith that a Participant no longer qualifies as a
member of a select group of management or highly compensated employees,
as membership in such group is determined in accordance with Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the
right, in its sole discretion, to (i) terminate any deferral election
the Participant has made for the remainder of the Plan Year in which
the Participant's membership status changes, (ii) prevent the
Participant from making future deferral elections and/or (iii)
immediately distribute the Participant's then Account Balance as a
Termination Benefit and terminate the Participant's participation in
the Plan.
ARTICLE 3
DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING/TAXES
3.1 MINIMUM AND MAXIMUM DEFERRALS.
(a) ANNUAL BASE SALARY, BONUS AND ANNUAL LONG TERM INCENTIVE. For
each Plan Year, a Participant may elect to defer, as his or
her Annual Deferral Amount, Annual Base Salary, Bonus and/or
Annual Long Term Incentive in the following minimum and
maximum whole percentages for each deferral elected:
DEFERRAL MINIMUM AMOUNT MAXIMUM AMOUNT
Annual Base Salary $2000 50%
Bonus $2000 100%
Long Term Incentive $2000 100%
If an election is made for less than the stated minimum amount
or percentage, or if no election is made, the amount deferred
shall be zero.
(b) SHORT PLAN YEAR. Notwithstanding the foregoing, if a
Participant first becomes a Participant after the first day of
a Plan Year, or in the case of the first Plan Year of the Plan
itself, the minimum Annual Base Salary deferral shall be an
amount equal to the minimum set forth above, multiplied by a
fraction, the numerator of which is the number of complete
months remaining in the Plan Year and the denominator of which
is 12. Notwithstanding the foregoing, if a Participant first
becomes a Participant after the first day of a Plan Year, or
in the case of the first Plan Year of the Plan itself, the
maximum Annual Deferral Amount, with respect to Annual Base
Salary, Bonus/Long Term Incentive shall be limited to the
amount of compensation not yet earned by the Participant as of
the date the Participant submits a Plan Agreement and Election
Form to the Committee for acceptance.
3.2 ELECTION TO DEFER; EFFECT OF ELECTION FORM.
(a) FIRST PLAN YEAR. In connection with a Participant's
commencement of participation in the Plan, the Participant
shall make an irrevocable deferral election for the Plan Year
in which the Participant commences participation in the Plan,
along with such other elections as the Committee deems
necessary or desirable under the Plan. For these elections to
be valid, the Election Form must
8
be completed and signed by the Participant, timely delivered
to the Committee (in accordance with Section 2.2 above) and
accepted by the Committee.
(b) SUBSEQUENT PLAN YEARS. For each succeeding Plan Year, an
irrevocable deferral election for that Plan Year, and such
other elections as the Committee deems necessary or desirable
under the Plan, shall be made by timely delivering to the
Committee, in accordance with its rules and procedures, before
the end of the Plan Year preceding the Plan Year for which the
election is made, a new Election Form. If no such Election
Form is timely delivered for a Plan Year, the Annual Deferral
Amount shall be zero for that Plan Year.
3.3 WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS. For each Plan Year, the Annual
Base Salary portion of the Annual Deferral Amount shall be withheld
from each regularly scheduled Annual Base Salary payroll in equal
amounts, as adjusted from time to time for increases and decreases in
Annual Base Salary. The Bonus and Annual Long Term Incentive portion of
the Annual Deferral Amount shall be withheld at the time the Bonus and
Annual Long Term Incentive is or otherwise would be paid to the
Participant.
3.4 ANNUAL COMPANY CONTRIBUTION AMOUNT. . For each Plan Year, an Employer,
in its sole discretion, may, but is not required to, credit any amount
it desires to any Participant's Company Contribution Account under this
Plan, which amount shall be for that Participant the Annual Company
Contribution Amount for that Plan Year. The amount so credited to a
Participant may be smaller or larger than the amount credited to any
other Participant, and the amount credited to any Participant for a
Plan Year may be zero, even though one or more other Participants
receive an Annual Company Contribution Amount for that Plan Year. The
Annual Company Contribution Amount, if any, shall be credited as of the
last day of the Plan Year. If a Participant is not employed by an
Employer as of the last day of a Plan Year other than by reason of his
or her Retirement or death while employed, the Annual Company
Contribution Amount for that Plan Year shall be zero.
3.5 ANNUAL PERFORMANCE BASED MATCHING AMOUNT. A Participant's Annual
Performance Based Matching Amount for any Plan Year shall be equal to
the Participant's Annual Deferral Amount for such Plan Year, multiplied
by a fixed percentage determined by the Committee, in its sole and
absolute discretion. The fixed percentage for any Participant may be
smaller or larger than the fixed percentage for any other Participant,
and the fixed percentage for a Plan Year may be zero, even though one
or more other Participants receive an Annual Performance Based Matching
Amount for that Plan Year. Notwithstanding the above, if a Participant
is not employed by an Employer as of the last day of a Plan Year, other
than by reason of his or her Retirement or death, the Annual
Performance Based Matching Amount for such Plan Year shall be zero. In
the event of Retirement or death, a Participant shall be credited with
the Annual Performance Based Matching Amount for the Plan Year in which
he or she Retires or dies.
3.6 ANNUAL SALARY SAVINGS PLAN RESTORATION MATCHING AMOUNT. A Participant's
Annual Salary Savings Plan Restoration Matching Amount for any Plan
Year shall be equal to the match the Participant would have received
under the Salary Savings Plan during the corresponding plan year of the
Salary Savings Plan, but for (I) his or her participation in this Plan,
and (ii) the limitations imposed under Code Sections 401(a)(17),
401(k)(3),
9
402(g)_ and 415, less the match actually received under the Salary
Savings Plan. . If a Participant is not employed by the Employer, as of
the last day of a Plan Year other than by reason of his or her
Retirement or death, the Annual Salary Savings Plan Restoration
Matching Amount for such Plan Year shall be zero. In the event of
Retirement or death, a Participant shall be credited with the Annual
Salary Savings Plan Restoration Matching Amount for the Plan Year in
which he or she Retires or dies.
3.7 ROLLOVER AMOUNT. .If a Participant is a participant in EDP I, EDP II,
EDP III or EDP IV on September 1, 2000, and has an account balance in
one or more of these plans on September 1, 2000, the Participant shall
transfer that/those account balance(s), as determined as of the
transfer date, and that amount shall be transferred on such date to and
added to the Participant's Account Balance under this Plan, and shall
thereafter be governed by the terms and conditions of this Plan, and
shall be referred to as the "Rollover Amount."
3.8 INVESTMENT OF TRUST ASSETS. The Trustee of the Trust shall be
authorized, upon written instructions received from the Committee or
investment manager appointed by the Committee, to invest and reinvest
the assets of the Trust in accordance with the applicable Trust
Agreement, including the disposition of stock and reinvestment of the
proceeds in one or more investment vehicles designated by the
Committee.
3.9 VESTING.
(a) A Participant shall at all times be 100% vested in his or her
Deferral Account.
(b) A Participant shall be vested in his or her Performance Based
Matching Account and Salary Savings Plan Restoration Matching
Account in accordance with the following schedule:
10
YEARS OF SERVICE ON DATE VESTED PERCENTAGE OF
OF TERMINATION OF EMPLOYMENT ANNUAL PERFORMANCE BASED MATCHING ACCOUNT
AND SALARY SAVINGS PLAN RESTORATION MATCHING
ACCOUNT
Less than 1 year 0%
1 year or more, but less than 2 20%
2 years or more, but less than 3 40%
3 years or more, but less than 4 60%
4 years or more, but less than 5 80%
5 years or more 100%
(c) A Participant shall be vested in his or her Company
Contribution Account in accordance with the vesting schedules
established by the Committee, in its sole and absolute
discretion, for each Annual Company Contribution Amount (and
amounts credited or debited thereon) at the time each such
Annual Company Contribution Amount is first credited to the
Participant's Account Balance under the Plan.
(d) Notwithstanding anything to the contrary contained in this
Section 3.9, in the event of Retirement, death or a Change in
Control, a Participant's Performance Based Matching Account
and Salary Savings Plan Restoration Matching Account shall
immediately become 100% vested (if it is not already vested in
accordance with the above vesting schedules).
(e) Notwithstanding subsection (c), the vesting schedule for a
Participant's Performance Based Matching Account and Salary
Savings Plan Restoration Matching Account shall not be
accelerated to the extent that the Committee determines that
such acceleration would cause the deduction limitations of
Section 280G of the Code to become effective. In the event
that all of a Participant's Performance Based Matching Account
and/or Salary Savings Plan Restoration Matching Account is not
vested pursuant to such a determination, the Participant may
request independent verification of the Committee's
calculations with respect to the application of Section 280G.
In such case, the Committee must provide to the Participant
within 15 business days of such a request an opinion from a
nationally recognized accounting firm selected by the Company
(the "Accounting Firm"). The opinion shall state the
Accounting Firm's opinion that any limitation in the vested
percentage hereunder is necessary to avoid the limits of
Section 280G and contain supporting calculations. The cost of
such opinion shall be paid for by the Company.
3.10 CREDITING/DEBITING OF ACCOUNT BALANCES. In accordance with, and subject
to, the rules and procedures that are established from time to time by
the Committee, in its sole discretion, amounts shall be credited or
debited to a Participant's Account Balance in accordance with the
following rules:
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(a) ELECTION OF MEASUREMENT FUNDS. A Participant, in connection
with his or her initial deferral election in accordance with
Section 3.2(a) above, shall elect, on the Election Form, one
or more Measurement Fund(s) (as described in Section 3.8(c)
below) to be used to determine the additional amounts to be
credited to his or her Account Balance for the first day in
which the Participant commences participation in the Plan and
continuing thereafter for each subsequent day in which the
Participant participates in the Plan, unless changed in
accordance with the next sentence. Commencing with the first
business day that follows the Participant's commencement of
participation in the Plan and continuing thereafter for each
subsequent day in which the Participant participates in the
Plan, the Participant may (but is not required to) elect, by
submitting an Election Form to the Committee that is accepted
by the Committee, to add or delete one or more Measurement
Fund(s) to be used to determine the additional amounts to be
credited to his or her Account Balance, and to change the
portion of his or her Account Balance allocated to each
previously elected Measurement Fund. If an election is made in
accordance with the previous sentence, it shall apply to the
next business day and continue thereafter for each subsequent
day in which the Participant participates in the Plan, unless
changed in accordance with the previous sentence.
(b) PROPORTIONATE ALLOCATION. In making any election described in
Section 3.8(a) above, the Participant shall specify on the
Election Form, in increments of five percentage points (5%),
the percentage of his or her Account Balance to be allocated
to a Measurement Fund (as if the Participant was making an
investment in that Measurement Fund with that portion of his
or her Account Balance).
(c) MEASUREMENT FUNDS. The Participant may elect one or more of
the Measurement Funds selected and announced by the Committee
in its sole discretion from time to time, based on certain
mutual funds and crediting rates (the "Measurement Funds"),
for the purpose of crediting additional amounts to his or her
Account Balance. As necessary, the Committee may, in its sole
discretion, discontinue, substitute or add a Measurement Fund.
Each such action will take effect as of the first day of the
calendar quarter that follows by thirty (30) days the day on
which the Committee gives Participants advance written notice
of such change.
(d) CREDITING OR DEBITING METHOD. The performance of each elected
Measurement Fund (either positive or negative) will be based
on the performance of the Measurement Funds themselves. A
Participant's Account Balance shall be credited or debited on
a daily basis based on the performance of each Measurement
Fund selected by the Participant as though (i) a Participant's
Account Balance were invested in the Measurement Fund(s)
selected by the Participant, in the percentages applicable to
such business day at the closing price on such date; (ii) the
portion of the Annual Deferral Amount that was actually
deferred during any day were invested in the Measurement
Fund(s) selected by the Participant no later than the close of
business on the first business day after the day on which such
amounts are actually deferred from the Participant's Annual
Base Salary through reductions in his or her payroll, at the
closing price
12
on such date; and (iii) any distribution made to a Participant
that decreases such Participant's Account Balance ceased being
invested in the Measurement Fund(s), in the percentages
applicable to such day, no earlier than one business day prior
to the distribution, at the closing price on such date. The
Participant's Annual Salary Savings Plan Restoration Matching
Amount and/or Annual Performance Based Matching Amount shall
be credited to his or her Salary Savings Plan Restoration
Matching Account and/or Performance Based Matching Account, as
the case may be, for purposes of this Section 3.8(d) as of the
close of business on the last business day of the Plan Year to
which it relates.
(e) NO ACTUAL INVESTMENT. Notwithstanding any other provision of
this Plan that may be interpreted to the contrary, the
Measurement Funds are to be used for measurement purposes
only, and a Participant's election of any such Measurement
Fund, the allocation to his or her Account Balance thereto,
the calculation of additional amounts and the crediting or
debiting of such amounts to a Participant's Account Balance
shall not be considered or construed in any manner as an
actual investment of his or her Account Balance in any such
Measurement Fund. In the event that the Company or the Trustee
(as that term is defined in the Trust), in its own discretion,
decides to invest funds in any or all of the Measurement
Funds, no Participant shall have any rights in or to such
investments themselves. Without limiting the foregoing, a
Participant's Account Balance shall at all times be a
bookkeeping entry only and shall not represent any investment
made on his or her behalf by the Company or the Trust; the
Participant shall at all times remain an unsecured creditor of
the Company.
3.11 FICA AND OTHER TAXES.
(a) ANNUAL DEFERRAL AMOUNTS. For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the
Participant's Employer(s) shall withhold from that portion of
the Participant's Annual Base Salary, Bonus and Annual Long
Term Incentive that is not being deferred, in a manner
determined by the Employer, the Participant's share of FICA
and other employment taxes on such Annual Deferral Amount. If
necessary, the Committee may reduce the Annual Deferral Amount
in order to comply with this Section 3.9.
(b) SALARY SAVINGS PLAN RESTORATION MATCHING AMOUNTS AND
PERFORMANCE BASED MATCHING AMOUNTS. When a participant becomes
vested in a portion of his or her Salary Savings Plan
Restoration Matching Account and/or Performance Based Matching
Account, the Employer shall withhold from the Participant's
Annual Base Salary, Bonus and/or Annual Long Term Incentive
that is not deferred, in a manner determined by the Employer,
the Participant's share of FICA and other employment taxes or
such amount. If necessary, the Committee may reduce the vested
portion of the Participant's Salary Savings Plan Restoration
Matching Account and/or Performance Based Matching Accounts as
the case may be, in order to comply with this Section 3.9.
(c) DISTRIBUTIONS. The Employer, or the trustee of the Trust,
shall withhold from any payments made to a Participant under
this Plan all federal, state and local income, employment and
other taxes required to be withheld by the Employer, or the
13
trustee of the Trust, in connection with such payments, in
amounts and in a manner to be determined in the sole
discretion of the Employer and the trustee of the Trust.
ARTICLE 4
SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES;
WITHDRAWAL ELECTION
4.1 SHORT-TERM PAYOUT. In connection with each election to defer an Annual
Deferral Amount, a Participant may irrevocably elect to receive a
future "Short-Term Payout" from the Plan with respect to such Annual
Deferral Amount. Subject to the Deduction Limitation, the Short-Term
Payout shall be a lump sum payment in an amount that is equal to the
Annual Deferral Amount plus amounts credited or debited in the manner
provided in Section 3.9 above on that amount, determined at the time
that the Short-Term Payout becomes payable (rather than the date of a
Termination of Employment). Subject to the Deduction Limitation and the
other terms and conditions of this Plan, each Short-Term Payout elected
shall be paid out during a 60 day period commencing immediately after
the last day of any Plan Year designated by the Participant that is at
least three Plan Years after the Plan Year in which the Annual Deferral
Amount is actually deferred. By way of example, if a three year
Short-Term Payout is elected for Annual Deferral Amounts that are
deferred in the Plan Year commencing January 1, 2001, the three year
Short-Term Payout would become payable during a 60 day period
commencing January 1, 2005.
4.2 OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM. Should an event occur
that triggers a benefit under Article 5, 6, 7 or 8, any Annual Deferral
Amount, plus amounts credited or debited thereon, that is subject to a
Short-Term Payout election under Section 4.1 shall not be paid in
accordance with Section 4.1 but shall be paid in accordance with the
other applicable Article.
4.3 WITHDRAWAL PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL EMERGENCIES.
If the Participant experiences an Unforeseeable Financial Emergency,
the Participant may petition the Committee to (i) suspend any deferrals
required to be made by a Participant and/or (ii) receive a partial or
full payout from the Plan. The payout shall not exceed the lesser of
the Participant's Account Balance, calculated as if such Participant
were receiving a Termination Benefit, or the amount reasonably needed
to satisfy the Unforeseeable Financial Emergency. If, subject to the
sole discretion of the Committee, the petition for a suspension and/or
payout is approved, suspension shall take effect upon the date of
approval and any payout shall be made within 60 days of the date of
approval. The payment of any amount under this Section 4.3 shall not be
subject to the Deduction Limitation.
4.4 WITHDRAWAL ELECTION. A Participant (or, after a Participant's death,
his or her Beneficiary) may elect, at any time, to withdraw all of his
or her Account Balance, calculated as if there had occurred a
Termination of Employment as of the day of the election, less a
withdrawal penalty equal to ten percent (10%) of such amount (the net
amount shall be referred to as the "Withdrawal Amount"). This election
can be made at any time, before or after Retirement, Disability, death
or Termination of Employment,
14
and whether or not the Participant (or Beneficiary) is in the process
of being paid pursuant to an installment payment schedule. If made
before Retirement, Disability or death, a Participant's Withdrawal
Amount shall be his or her Account Balance calculated as if there had
occurred a Termination of Employment as of the day of the election. No
partial withdrawals of the Withdrawal Amount shall be allowed. The
Participant (or his or her Beneficiary) shall make this election by
giving the Committee advance written notice of the election in a form
determined from time to time by the Committee. The Participant (or his
or her Beneficiary) shall be paid the Withdrawal Amount within 60 days
of his or her election. Once the Withdrawal Amount is paid, the
Participant's participation in the Plan shall terminate and the
Participant shall not be eligible to participate in the Plan for the
remainder of the Plan Year in which the Withdrawal Amount is paid and
the following full Plan Year. The payment of this Withdrawal Amount
shall not be subject to the Deduction Limitation.
ARTICLE 5
RETIREMENT BENEFIT
5.1 RETIREMENT BENEFIT. Subject to the Deduction Limitation, a Participant
who Retires shall receive, as a Retirement Benefit, his or her Account
Balance.
5.2 PAYMENT OF RETIREMENT BENEFIT. A Participant, in connection with his or
her commencement of participation in the Plan, shall elect on an
Election Form to receive the Retirement Benefit in a lump sum or
pursuant to an Annual Installment Method of 5, 10 or 15 years. The
Participant may annually change his or her election to an allowable
alternative payout period by submitting a new Election Form to the
Committee, provided that any such Election Form is submitted at least 1
year prior to the Participant's Retirement and is accepted by the
Committee in its sole discretion. The Election Form most recently
accepted by the Committee shall govern the payout of the Retirement
Benefit. If a Participant does not make any election with respect to
the payment of the Retirement Benefit, then such benefit shall be
payable in a lump sum. The lump sum payment shall be made, or
installment payments shall commence, no later than 60 days after the
last day of the Plan Year in which the Participant Retires. Any payment
made shall be subject to the Deduction Limitation.
5.3 DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT. If a Participant dies
after Retirement but before the Retirement Benefit is paid in full, the
Participant's unpaid Retirement Benefit payments shall continue and
shall be paid to the Participant's Beneficiary (a) over the remaining
number of years and in the same amounts as that benefit would have been
paid to the Participant had the Participant survived, or (b) in a lump
sum, if requested by the Beneficiary and allowed in the sole discretion
of the Committee, that is equal to the Participant's unpaid remaining
Account Balance.
15
ARTICLE 6
PRE-RETIREMENT SURVIVOR BENEFIT
6.1 PRE-RETIREMENT SURVIVOR BENEFIT. Subject to the Deduction Limitation,
the Participant's Beneficiary shall receive a Pre-Retirement Survivor
Benefit equal to the Participant's Account Balance if the Participant
dies before he or she Retires, experiences a Termination of Employment
or suffers a Disability.
6.2 PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT. A Participant, in
connection with his or her commencement of participation in the Plan,
shall elect on an Election Form whether the Pre-Retirement Survivor
Benefit shall be received by his or her Beneficiary in a lump sum or
pursuant to an Annual Installment Method of 5, 10 or 15 years. The
Participant may annually change his or her election to an allowable
alternative payout period by submitting a new Election Form to the
Committee, which form must be accepted by the Committee in its sole
discretion. The Election Form most recently accepted by the Committee
prior to the Participant's death shall govern the payout of the
Participant's Pre-Retirement Survivor Benefit. If a Participant does
not make any election with respect to the payment of the Pre-Retirement
Survivor Benefit, then such benefit shall be payable in a lump sum.
Despite the foregoing, if the Participant's Account Balance at the time
of his or her death is less than $25,000, payment of the Pre-Retirement
Survivor Benefit may be made, in the sole discretion of the Committee,
in a lump sum or pursuant to an Annual Installment Method that does not
exceed 5 years in duration. The lump sum payment shall be made, or
installment payments shall commence, no later than 60 days after the
date the Committee is provided with proof that is satisfactory to the
Committee of the Participant's death. Any payment made shall be subject
to the Deduction Limitation.
ARTICLE 7
TERMINATION BENEFIT
7.1 TERMINATION BENEFIT. Subject to the Deduction Limitation, the
Participant shall receive a Termination Benefit, which shall be equal
to the Participant's vested Account Balance if a Participant
experiences a Termination of Employment prior to his or her Retirement,
death or Disability. Notwithstanding anything to the contrary in this
section or any other section of this Plan, if a Participant experiences
a Termination within twenty-four (24) months following a Change in
Control, he or she shall be deemed to have Retired and shall receive a
Retirement Benefit pursuant to Article 5.
7.2 PAYMENT OF TERMINATION BENEFIT. If the Participant's vested Account
Balance at the time of his or her Termination of Employment is less
than $25,000, payment of his or her Termination Benefit shall be paid
in a lump sum. If his or her vested Account Balance at such time is
equal to or greater than that amount, the Committee, in its sole
discretion, may cause the Termination Benefit to be paid in a lump sum
or pursuant to an Annual Installment Method of not more than 5 years.
The lump sum payment shall be made, or installment payments shall
commence, no later than 60 days following the Participant's Termination
of Employment. Any payment made shall be subject to the Deduction
Limitation.
16
ARTICLE 8
DISABILITY WAIVER AND BENEFIT
8.1 DISABILITY WAIVER.
(a) WAIVER OF DEFERRAL. A Participant who is determined by the
Committee to be suffering from a Disability and is receiving
less than 100% of current Annual Base Salary shall be excused
from fulfilling that portion of the Annual Deferral Amount
commitment that would otherwise have been withheld from a
Participant's Annual Base Salary and/or Bonus/Long Term
Incentive for the Plan Year during which the Participant first
suffers a Disability. During the period of Disability, the
Participant shall not be allowed to make any additional
deferral elections, but will continue to be considered a
Participant for all other purposes of this Plan.
(b) RETURN TO WORK. If a Participant returns to employment after a
Disability ceases, the Participant may elect to defer an
Annual Deferral Amount for the Plan Year following his or her
return to employment or service and for every Plan Year
thereafter while a Participant in the Plan; provided such
deferral elections are otherwise allowed and an Election Form
is delivered to and accepted by the Committee for each such
election in accordance with Section 3.2 above.
8.2 CONTINUED ELIGIBILITY; DISABILITY BENEFIT. A Participant suffering a
Disability shall, for benefit purposes under this Plan, continue to be
considered to be employed and shall be eligible for the benefits
provided for in Articles 4, 5, 6 or 7 in accordance with the provisions
of those Articles. Notwithstanding the above, the Committee shall have
the right to, in its sole and absolute discretion and for purposes of
this Plan only, and must in the case of a Participant who is otherwise
eligible to Retire, deem the Participant to have experienced a
Termination of Employment, or in the case of a Participant who is
eligible to Retire, to have Retired, at any time (or in the case of a
Participant who is eligible to Retire, as soon as practicable) after
such Participant is determined to be suffering a Disability, in which
case the Participant shall receive a Disability Benefit equal to his or
her Account Balance at the time of the Committee's determination;
provided, however, that should the Participant otherwise have been
eligible to Retire, he or she shall be paid in accordance with Article
5. The Disability Benefit shall be paid in a lump sum within 60 days of
the Committee's exercise of such right; provided however, that should
the Participant otherwise have been eligible to Retire, he or she shall
be paid in accordance with Article 5. Any payment made shall be subject
to the Deduction Limitation.
ARTICLE 9
BENEFICIARY DESIGNATION
9.1 BENEFICIARY. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as
contingent) to receive any benefits payable under the Plan to a
beneficiary upon the death of a Participant. The Beneficiary designated
under this Plan may be the same as or different from the Beneficiary
designation under any other plan of the Employer in which the
Participant participates.
17
9.2 BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT. A Participant shall
designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee or its
designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the
terms of the Beneficiary Designation Form and the Committee's rules and
procedures, as in effect from time to time. If the Participant names
someone other than his or her spouse as a primary Beneficiary, a
spousal consent, in the form designated by the Committee, must be
signed by that Participant's spouse and returned to the Committee. Upon
the acceptance by the Committee of a new Beneficiary Designation Form,
all Beneficiary designations previously filed shall be canceled. The
Committee shall be entitled to rely on the last Beneficiary Designation
Form filed by the Participant and accepted by the Committee prior to
his or her death.
9.3 ACKNOWLEDGMENT. No designation or change in designation of a
Beneficiary shall be effective until received and acknowledged in
writing by the Committee or its designated agent.
9.4 NO BENEFICIARY DESIGNATION. If a Participant fails to designate a
Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the
Participant's designated Beneficiary shall be deemed to be his or her
surviving spouse. If the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a Beneficiary shall be
payable to the Participant's estate.
9.5 DOUBT AS TO BENEFICIARY. If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the
Committee shall have the right, exercisable in its discretion, to cause
the Employer to withhold such payments until this matter is resolved to
the Committee's satisfaction.
9.6 DISCHARGE OF OBLIGATIONS. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge the Employer and the
Committee from all further obligations under this Plan with respect to
the Participant, and that Participant's Plan Agreement shall terminate
upon such full payment of benefits.
ARTICLE 10
LEAVE OF ABSENCE
10.1 PAID LEAVE OF ABSENCE. If a Participant is authorized by the Employer
for any reason to take a paid leave of absence from the employment of
the Employer, the Participant shall continue to be considered employed
by the Employer and the Annual Deferral Amount shall continue to be
withheld during such paid leave of absence in accordance with Section
3.2.
10.2 UNPAID LEAVE OF ABSENCE. If a Participant is authorized by the Employer
for any reason to take an unpaid leave of absence from the employment
of the Employer, the Participant shall continue to be considered
employed by the Employer and the Participant shall be excused from
making deferrals until the earlier of the date the leave of absence
expires or the Participant returns to a paid employment status. Upon
such expiration or return, deferrals shall resume for the remaining
portion of the Plan Year in which the expiration
18
or return occurs, based on the deferral election, if any, made for that
Plan Year. If no election was made for that Plan Year, no deferral
shall be withheld.
ARTICLE 11
TERMINATION, AMENDMENT OR MODIFICATION
11.1 TERMINATION. Although each Employer anticipates that it will continue
the Plan for an indefinite period of time, there is no guarantee that
each Employer will continue the Plan or will not terminate the Plan at
any time in the future. Accordingly, each Employer reserves the right
to discontinue its sponsorship of the Plan and/or to terminate the Plan
at any time with respect to any or all of its participating Employees
by action of its Board. Upon the termination of the Plan with respect
to the Employer, the Plan Agreements of the affected Participants who
are employed by the Employer shall terminate and their Account
Balances, determined as if they had experienced a Termination of
Employment on the date of Plan termination or, if Plan termination
occurs after the date upon which a Participant was eligible to Retire,
then with respect to that Participant as if he or she had Retired on
the date of Plan termination, shall be paid to the Participants as
follows: Prior to a Change in Control, if the Plan is terminated with
respect to all of its Participants, the Employer shall have the right,
in its sole discretion, and notwithstanding any elections made by the
Participant, to pay such benefits in a lump sum or pursuant to an
Annual Installment Method of up to 15 years, with amounts credited and
debited during the installment period as provided herein. If the Plan
is terminated with respect to less than all of its Participants, the
Employer shall be required to pay such benefits in a lump sum. After a
Change in Control, the Employer shall be required to pay such benefits
in a lump sum. The termination of the Plan shall not adversely affect
any Participant or Beneficiary who has become entitled to the payment
of any benefits under the Plan as of the date of termination; provided
however, that the Employer shall have the right to accelerate
installment payments without a premium or prepayment penalty by paying
the Account Balance in a lump sum or pursuant to an Annual Installment
Method using fewer years than elected (provided that the present value
of all payments that will have been received by a Participant at any
given point of time under the different payment schedule shall equal or
exceed the present value of all payments that would have been received
at that point in time under the original payment schedule).
11.2 AMENDMENT. Any Employer may, at any time, amend or modify the Plan in
whole or in part with respect to that Employer by the action of its
Board; provided, however, that: (i) no amendment or modification shall
be effective to decrease or restrict the value of a Participant's
Account Balance in existence at the time the amendment or modification
is made, calculated as if the Participant had experienced a Termination
of Employment as of the effective date of the amendment or modification
or, if the amendment or modification occurs after the date upon which
the Participant was eligible to Retire, the Participant had Retired as
of the effective date of the amendment or modification, and (ii) no
amendment or modification of this Section 11.2 or Section 12.2 of the
Plan shall be effective. The amendment or modification of the Plan
shall not affect any Participant or Beneficiary who has become entitled
to the payment of benefits under the Plan as of the date of the
amendment or modification; provided, however, that the Employer shall
have the right to accelerate installment payments by paying the Account
Balance in a lump
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sum or pursuant to an Annual Installment Method using fewer years
(provided that the present value of all payments that will have been
received by a Participant at any given point of time under the
different payment schedule shall equal or exceed the present value of
all payments that would have been received at that point in time under
the original payment schedule).
11.3 PLAN AGREEMENT. Despite the provisions of Sections 11.1 and 11.2 above,
if a Participant's Plan Agreement contains benefits or limitations that
are not in this Plan document, the Employer may only amend or terminate
such provisions with the consent of the Participant.
11.4 EFFECT OF PAYMENT. The full payment of the applicable benefit under
Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries
under this Plan and the Participant's Plan Agreement shall terminate.
ARTICLE 12
ADMINISTRATION
12.1 COMMITTEE DUTIES. Except as otherwise provided in this Article 12, this
Plan shall be administered by a Committee which shall consist of the
Board, or such committee as the Board shall appoint. Members of the
Committee may be Participants under this Plan. The Committee shall also
have the discretion and authority to (i) make, amend, interpret, and
enforce all appropriate rules and regulations for the administration of
this Plan and (ii) decide or resolve any and all questions including
interpretations of this Plan, as may arise in connection with the Plan.
Any individual serving on the Committee who is a Participant shall not
vote or act on any matter relating solely to himself or herself. When
making a determination or calculation, the Committee shall be entitled
to rely on information furnished by a Participant or the Company.
12.2 ADMINISTRATION UPON CHANGE IN CONTROL. For purposes of this Plan, the
Company shall be the "Administrator" at all times prior to the
occurrence of a Change in Control. Upon and after the occurrence of a
Change in Control, the "Administrator" shall be an independent third
party selected by the Trustee and approved by the individual who,
immediately prior to such event, was the Company's Chief Executive
Officer or, if not so identified, the Company's highest ranking officer
(the "Ex-CEO"). The Administrator shall have the discretionary power to
determine all questions arising in connection with the administration
of the Plan and the interpretation of the Plan and Trust including, but
not limited to benefit entitlement determinations; provided, however,
upon and after the occurrence of a Change in Control, the Administrator
shall have no power to direct the investment of Plan or Trust assets or
select any investment manager or custodial firm for the Plan or Trust.
Upon and after the occurrence of a Change in Control, the Company must:
(1) pay all reasonable administrative expenses and fees of the
Administrator; (2) indemnify the Administrator against any costs,
expenses and liabilities including, without limitation, attorney's fees
and expenses arising in connection with the performance of the
Administrator hereunder, except with respect to matters resulting from
the gross negligence or willful misconduct of the Administrator or its
employees or agents; and (3) supply full and timely information to the
Administrator on all matters relating to the Plan,
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the Trust, the Participants and their Beneficiaries, the Account
Balances of the Participants, the date of circumstances of the
Retirement, Disability, death or Termination of Employment of the
Participants, and such other pertinent information as the Administrator
may reasonably require. Upon and after a Change in Control, the
Administrator may be terminated (and a replacement appointed) by the
Trustee only with the approval of the Ex-CEO. Upon and after a Change
in Control, the Administrator may not be terminated by the Company.
12.3 AGENTS. In the administration of this Plan, the Committee may, from
time to time, employ agents and delegate to them such administrative
duties as it sees fit (including acting through a duly appointed
representative) and may from time to time consult with counsel who may
be counsel to the Employer.
12.4 BINDING EFFECT OF DECISIONS. The decision or action of the
Administrator with respect to any question arising out of or in
connection with the administration, interpretation and application of
the Plan and the rules and regulations promulgated hereunder shall be
final and conclusive and binding upon all persons having any interest
in the Plan.
12.5 INDEMNITY OF COMMITTEE. The Employer shall indemnify and hold harmless
the members of the Committee, any Employee to whom the duties of the
Committee may be delegated, and the Administrator against any and all
claims, losses, damages, expenses or liabilities arising from any
action or failure to act with respect to this Plan, except in the case
of willful misconduct by the Committee, any of its members, any such
Employee or the Administrator.
12.6 EMPLOYER INFORMATION. To enable the Committee and/or Administrator to
perform its functions, the Company and the Employer shall supply full
and timely information to the Committee and/or Administrator, as the
case may be, on all matters relating to the compensation of its
Participants, the date and circumstances of the Retirement, Disability,
death or circumstances of the Retirement, Disability, death or
Termination of Employment of its Participants, and such other pertinent
information as the Committee or Administrator may reasonably require.
ARTICLE 13
OTHER BENEFITS AND AGREEMENTS
13.1 COORDINATION WITH OTHER BENEFITS. The benefits provided for a
Participant and Participant's Beneficiary under the Plan are in
addition to any other benefits available to such Participant under any
other plan or program for employees of the Employer. The Plan shall
supplement and shall not supersede, modify or amend any other such plan
or program except as may otherwise be expressly provided.
ARTICLE 14
CLAIMS PROCEDURES
14.1 PRESENTATION OF CLAIM. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as
a "Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such
Claimant from the Plan. If such a claim relates to the contents of a
notice
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received by the Claimant, the claim must be made within 60 days after
such notice was received by the Claimant. All other claims must be made
within 180 days of the date on which the event that caused the claim to
arise occurred. The claim must state with particularity the
determination desired by the Claimant.
14.2 NOTIFICATION OF DECISION. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in
writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole
or in part, to the Claimant's requested determination, and
such notice must set forth in a manner calculated to be
understood by the Claimant:
(i) the specific reason(s) for the denial of the claim,
or any part of it;
(ii) specific reference(s) to pertinent provisions of the
Plan upon which such denial was based;
(iii) a description of any additional material or
information necessary for the Claimant to perfect the
claim, and an explanation of why such material or
information is necessary; and
(iv) an explanation of the claim review procedure set
forth in Section 14.3 below.
14.3 REVIEW OF A DENIED CLAIM. Within 60 days after receiving a notice from
the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file
with the Committee a written request for a review of the denial of the
claim. Thereafter, but not later than 30 days after the review
procedure began, the Claimant (or the Claimant's duly authorized
representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole
discretion, may grant.
14.4 DECISION ON REVIEW. The Committee shall render its decision on review
promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the
Committee's decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be understood
by the Claimant, and it must contain:
22
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon
which the decision was based; and
(c) such other matters as the Committee deems relevant.
14.5 LEGAL ACTION. A Claimant's compliance with the foregoing provisions of
this Article 14 is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for benefits under
this Plan.
ARTICLE 15
TRUST
15.1 ESTABLISHMENT OF THE TRUST. The Company shall establish the Trust, and
the Employer shall at least annually transfer over to the Trust such
assets as the Employer determines, in its sole discretion, are
necessary to provide, on a present value basis, for its respective
future liabilities created with respect to the Annual Deferral Amounts,
Annual Performance Based Matching Amounts, and 401(k) Restoration
Matching Amounts for Employer's Participants for all periods prior to
the transfer, as well as any debits and credits to the Participants'
Account Balances for all periods prior to the transfer, taking into
consideration the value of the assets in the trust at the time of the
transfer.
15.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUST. The provisions of the Plan
and the Plan Agreement shall govern the rights of a Participant to
receive distributions pursuant to the Plan. The provisions of the Trust
shall govern the rights of the Employer, Participants and the creditors
of the Employer to the assets transferred to the Trust. The Employer
shall at all times remain liable to carry out its obligations under the
Plan.
15.3 DISTRIBUTIONS FROM THE TRUST. The Employer's obligations under the Plan
may be satisfied with Trust assets distributed pursuant to the terms of
the Trust, and any such distribution shall reduce the Employer's
obligations under this Plan.
ARTICLE 16
MISCELLANEOUS
16.1 STATUS OF PLAN. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that "is unfunded and is
maintained by an employer primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employee" within the meaning of ERISA Sections 201(2),
301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted
to the extent possible in a manner consistent with that intent.
16.2 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of the Employer. For
purposes of the payment of benefits under this Plan, any and all of the
Employer's assets shall be, and remain, the general, unpledged
unrestricted assets of the Employer. The Employer's obligation under
the Plan shall be merely that of an unfunded and unsecured promise to
pay money in the future.
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16.3 EMPLOYER'S LIABILITY. The Employer's liability for the payment of
benefits shall be defined only by the Plan and the Plan Agreement, as
entered into between the Employer and a Participant. The Employer shall
have no obligation to a Participant under the Plan except as expressly
provided in the Plan and his or her Plan Agreement.
16.4 NONASSIGNABILITY. Neither a Participant nor any other person shall have
any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate, alienate 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, unassignable and non-transferable. No part of
the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, be transferable by operation of law in
the event of a Participant's or any other person's bankruptcy or
insolvency or be transferable to a spouse as a result of a property
settlement or otherwise.
16.5 NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between the
Employer and the Participant. Such employment is hereby acknowledged to
be an "at will" employment relationship that can be terminated at any
time for any reason, or no reason, with or without cause, and with or
without notice, unless expressly provided in a written employment
agreement. Nothing in this Plan shall be deemed to give a Participant
the right to be retained in the service of the Employer, either as an
Employee or a Director, or to interfere with the right of the Employer
to discipline or discharge the Participant at any time.
16.6 FURNISHING INFORMATION. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be
requested in order to facilitate the administration of the Plan and the
payments of benefits hereunder, including but not limited to taking
such physical examinations as the Committee may deem necessary.
16.7 TERMS. Whenever any words are used herein in the masculine, they shall
be construed as though they were in the feminine in all cases where
they would so apply; and whenever any words are used herein in the
singular or in the plural, they shall be construed as though they were
used in the plural or the singular, as the case may be, in all cases
where they would so apply.
16.8 CAPTIONS. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
16.9 GOVERNING LAW. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State
of California without regard to its conflicts of laws principles.
16.10 NOTICE. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address
below:
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WESTCORP
Attention: Administrative Committee
23 Pasteur Road
Irvine, CA 92715
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered,
or sent by mail, to the last known address of the Participant.
16.11 SUCCESSORS. The provisions of this Plan shall bind and inure to the
benefit of the Employer and its successors and assigns and the
Participant and the Participant's designated Beneficiaries.
16.12 SPOUSE'S INTEREST. The interest in the benefits hereunder of a spouse
of a Participant who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable by
such spouse in any manner, including but not limited to such spouse's
will, nor shall such interest pass under the laws of intestate
succession.
16.13 VALIDITY. In case any provision of this Plan shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect
the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal or invalid provision had never been
inserted herein.
16.14 INCOMPETENT. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of
that person's property, the Committee may direct payment of such
benefit to the guardian, legal representative or person having the care
and custody of such minor, incompetent or incapable person. The
Committee may require proof of minority, incompetence, incapacity or
guardianship, as it may deem appropriate prior to distribution of the
benefit. Any payment of a benefit shall be a payment for the account of
the Participant and the Participant's Beneficiary, as the case may be,
and shall be a complete discharge of any liability under the Plan for
such payment amount.
16.15 COURT ORDER. The Committee is authorized to make any payments directed
by court order in any action in which the Plan or the Committee has
been named as a party. In addition, if a court determines that a spouse
or former spouse of a Participant has an interest in the Participant's
benefits under the Plan in connection with a property settlement or
otherwise, the Committee, in its sole discretion, shall have the right,
notwithstanding any election made by a Participant, to immediately
distribute the spouse's or former spouse's interest in the
Participant's benefits under the Plan to that spouse or former spouse.
16.16 DISTRIBUTION IN THE EVENT OF TAXATION.
(a) IN GENERAL. If, for any reason, all or any portion of a
Participant's benefits under this Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the
Committee before a Change in Control, or the Administrator of
the
25
Trust after a Change in Control, for a distribution of that
portion of his or her benefit that has become taxable. Upon
the grant of such a petition, which grant shall not be
unreasonably withheld (and, after a Change in Control, shall
be granted), the Employer shall distribute to the Participant
immediately available funds in an amount equal to the taxable
portion of his or her benefit (which amount shall not exceed a
Participant's unpaid Account Balance under the Plan). If the
petition is granted, the tax liability distribution shall be
made within 90 days of the date when the Participant's
petition is granted. Such a distribution shall affect and
reduce the benefits to be paid under this Plan.
(b) TRUST. If the Trust terminates in accordance with its terms
and benefits are distributed from the Trust to a Participant
in accordance therewith, the Participant's benefits under this
Plan shall be reduced to the extent of such distributions.
16.17 INSURANCE. The Employer, on their own behalf or on behalf of the
trustee of the Trust, and, in their sole discretion, may apply for and
procure insurance on the life of the Participant, in such amounts and
in such forms as the Trust may choose. The Employer or the trustee of
the Trust, as the case may be, shall be the sole owner and beneficiary
of any such insurance. The Participant shall have no interest
whatsoever in any such policy or policies, and at the request of the
Employer shall submit to medical examinations and supply such
information and execute such documents as may be required by the
insurance company or companies to whom the Employer has applied for
insurance.
16.18 LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL. The Company and
the Employer is aware that upon the occurrence of a Change in Control,
the Board or the board of directors of the Employer (which might then
be composed of new members) or a shareholder of the Company or the
Employer, or of any successor corporation might then cause or attempt
to cause the Company, the Employer or such successor to refuse to
comply with its obligations under the Plan and might cause or attempt
to cause the Company or the Employer to institute, or may institute,
litigation seeking to deny Participants the benefits intended under the
Plan. In these circumstances, the purpose of the Plan could be
frustrated. Accordingly, if, following a Change in Control, it should
appear to any Participant that the Company, the Employer or any
successor corporation has failed to comply with any of its obligations
under the Plan or any agreement thereunder or, if the Company, such
Employer or any other person takes any action to declare the Plan void
or unenforceable or institutes any litigation or other legal action
designed to deny, diminish or to recover from any Participant the
benefits intended to be provided, then the Company and the Employer
irrevocably authorize such Participant to retain counsel of his or her
choice at the expense of the Company and the Employer (who shall be
jointly and severally liable) to represent such Participant in
connection with the initiation or defense of any litigation or other
legal action, whether by or against the Company, the Employer or any
director, officer, shareholder or other person affiliated with the
Company, the Employer or any successor thereto in any jurisdiction.
26
IN WITNESS WHEREOF, the Company has signed this Plan document as of __________,
2000.
"Company"
WESTCORP, a California corporation
By: __________________________________
Title: _______________________________
27