EXHIBIT 10.10
WESTERN DIGITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
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AMENDED AND RESTATED
EFFECTIVE AUGUST 1, 2001
COPYRIGHT(C) 1997
BY COMPENSATION RESOURCE GROUP, INC.
ALL RIGHTS RESERVED
TABLE OF CONTENTS
PAGE
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PURPOSE ...................................................................... 1
ARTICLE 1 DEFINITIONS..................................................... 1
ARTICLE 2 SELECTION, ENROLLMENT, ELIGIBILITY.............................. 8
2.1 SELECTION BY COMMITTEE.......................................... 8
2.2 ENROLLMENT REQUIREMENTS......................................... 8
2.3 ELIGIBILITY; COMMENCEMENT OF PARTICIPATION...................... 8
2.4 TERMINATION OF PARTICIPATION AND/OR DEFERRALS................... 8
ARTICLE 3 DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING TAXES........... 9
3.1 MINIMUM DEFERRALS............................................... 9
3.2 MAXIMUM DEFERRAL................................................ 9
3.3 ELECTION TO DEFER; EFFECT OF ELECTION FORM...................... 10
3.4 WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS.......................... 10
3.5 ANNUAL COMPANY CONTRIBUTION AMOUNT.............................. 11
3.6 INVESTMENT OF TRUST ASSETS...................................... 11
3.7 VESTING......................................................... 11
3.8 CREDITING/DEBITING OF ACCOUNT BALANCES.......................... 11
3.9 FICA AND OTHER TAXES............................................ 15
3.10 DISTRIBUTIONS................................................... 15
ARTICLE 4 SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES;
WITHDRAWAL ELECTION............................................. 16
4.1 SHORT-TERM PAYOUT............................................... 16
4.2 OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM.................. 16
4.3 WITHDRAWAL PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL
EMERGENCIES..................................................... 16
4.4 WITHDRAWAL ELECTION............................................. 17
ARTICLE 5 RETIREMENT BENEFIT.............................................. 17
5.1 RETIREMENT BENEFIT.............................................. 17
5.2 PAYMENT OF RETIREMENT BENEFIT................................... 17
5.3 DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT................. 18
ARTICLE 6 PRE-RETIREMENT SURVIVOR BENEFIT................................. 18
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6.1 PRE-RETIREMENT SURVIVOR BENEFIT................................. 18
6.2 PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT...................... 18
ARTICLE 7 TERMINATION BENEFIT............................................. 19
7.1 TERMINATION BENEFIT............................................. 19
7.2 PAYMENT OF TERMINATION BENEFIT.................................. 19
ARTICLE 8 DISABILITY WAIVER AND BENEFIT................................... 19
8.1 DISABILITY WAIVER............................................... 19
8.2 CONTINUED ELIGIBILITY; DISABILITY BENEFIT....................... 19
ARTICLE 9 BENEFICIARY DESIGNATION......................................... 21
9.1 BENEFICIARY..................................................... 21
9.2 BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT................ 21
9.3 ACKNOWLEDGEMENT................................................. 21
9.4 NO BENEFICIARY DESIGNATION...................................... 21
9.5 DOUBT AS TO BENEFICIARY......................................... 21
9.6 DISCHARGE OF OBLIGATIONS........................................ 22
ARTICLE 10 LEAVE OF ABSENCE................................................ 22
10.1 PAID LEAVE OF ABSENCE........................................... 22
10.2 UNPAID LEAVE OF ABSENCE......................................... 22
ARTICLE 11 TERMINATION, AMENDMENT OR MODIFICATION.......................... 22
11.1 TERMINATION..................................................... 22
11.2 AMENDMENT....................................................... 23
11.3 PLAN AGREEMENT.................................................. 23
11.4 EFFECT OF PAYMENT............................................... 24
ARTICLE 12 ADMINISTRATION.................................................. 24
12.1 COMMITTEE DUTIES................................................ 24
12.2 AGENTS.......................................................... 24
12.3 BINDING EFFECT OF DECISIONS..................................... 24
12.4 INDEMNITY OF COMMITTEE.......................................... 24
12.5 EMPLOYER INFORMATION............................................ 24
ARTICLE 13 OTHER BENEFITS AND AGREEMENTS................................... 25
13.1 COORDINATION WITH OTHER BENEFITS................................ 25
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ARTICLE 14 CLAIMS PROCEDURES............................................... 25
14.1 PRESENTATION OF CLAIM........................................... 25
14.2 NOTIFICATION OF DECISION........................................ 25
14.3 REVIEW OF A DENIED CLAIM........................................ 26
14.4 DECISION ON REVIEW.............................................. 26
14.5 LEGAL ACTION.................................................... 26
ARTICLE 15 TRUST........................................................... 26
15.1 ESTABLISHMENT OF THE TRUST...................................... 27
15.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUST..................... 27
15.3 DISTRIBUTIONS FROM THE TRUST.................................... 27
ARTICLE 16 MISCELLANEOUS................................................... 27
16.1 STATUS OF PLAN.................................................. 27
16.2 UNSECURED GENERAL CREDITOR...................................... 27
16.3 EMPLOYER'S LIABILITY............................................ 27
16.4 NONASSIGNABILITY................................................ 28
16.5 NOT A CONTRACT OF EMPLOYMENT.................................... 28
16.6 FURNISHING INFORMATION.......................................... 28
16.7 TERMS........................................................... 28
16.8 CAPTIONS........................................................ 28
16.9 GOVERNING LAW................................................... 29
16.10 NOTICE.......................................................... 29
16.11 SUCCESSORS...................................................... 29
16.12 SPOUSE'S INTEREST............................................... 29
16.13 VALIDITY........................................................ 29
16.14 INCOMPETENT..................................................... 29
16.15 COURT ORDER..................................................... 30
16.16 DISTRIBUTION IN THE EVENT OF TAXATION........................... 31
16.17 INSURANCE....................................................... 31
16.18 LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL............ 31
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WESTERN DIGITAL CORPORATION
DEFERRED COMPENSATION PLAN
Amended and Restated
Effective August 1, 2001
PURPOSE
The purpose of this Plan is to provide specified benefits to a select
group of management and highly compensated Employees and Directors who
contribute materially to the continued growth, development and future business
success of Western Digital Corporation a Delaware 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. The Plan was originally
adopted effective May 16, 1994, previously amended and restated effective
January 9, 1997, then again effective January 1, 1998, and is hereby amended and
restated in its entirety effective August, 2001.
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 and (ii) the Company Contribution Account balance. 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 Bonus" shall mean any compensation, in addition to Base Annual
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 Participant as an Employee under
the Management Incentive Compensation Plan, Profit Sharing Plan (Cash
Element) or Long-Term Incentive Plan.
1.3 "Annual Company Contribution Amount" shall mean, for any one Plan Year,
the amount determined in accordance with Section 3.5.
1.4 "Annual Deferral Amount" shall mean that portion of a Participant's Base
Annual Salary, Annual Bonus and Directors Fees that a Participant elects
to have, and is deferred, in
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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.
1.5 "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 vested 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 vested Account
Balance, calculated as described in this definition. The following year,
the payment shall be 1/9 of the vested 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.
1.6 "Base Annual 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, 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). Base Annual
Salary shall be calculated before reduction for compensation voluntarily
deferred or contributed by the Participant pursuant to all qualified or
non-qualified plans of any 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 any 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.
1.7 "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.
1.8 "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.
1.9 "Board" shall mean the board of directors of the Company.
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1.10 "Change in Control" shall mean the first to occur of any of the following
events:
(a) Any person (other than an Exempt Person), alone or together with
its Affiliates and Associates, including any group of Persons
which is deemed a "person" under Section 13(d)(3) of the Exchange
Act, becomes the Beneficial Owner, directly or indirectly, of
thirty-three and one-third percent or more of (i) the
then-outstanding shares of the Company's common stock or (ii)
securities representing thirty-three and one-third percent or more
of the combined voting power of the Company's then outstanding
voting securities;
(b) A change, during any period of two consecutive years, of a
majority of the Board of the Company as constituted as of the
beginning of such period, unless the election, or nomination for
election by the Company's stockholders, of each director who was
not a director at the beginning of such period was approved by
vote of at least two-thirds of the Incumbent Directors then in
office (for purposes hereof, "Incumbent Directors" shall consist
of the directors holding office as of the effective date of this
Plan and any person becoming a director subsequent to such date
whose election, or nomination for election by the Company's
stockholders, is approved by a vote of at least a majority of the
incumbent Directors then in office);
(c) Consummation of any merger, consolidation, reorganization or other
extraordinary transactions (or series of related transactions)
involving the Company which results in the stockholders of the
Company having power to vote in the ordinary election of directors
immediately prior to such transaction (or series of related
transactions) failing to beneficially own at least a majority of
the securities of the Company having the power to vote in the
ordinary election of directors which are outstanding after giving
effect to such transaction (or series of related transactions); or
(d) The stockholders of the Company approve a plan of complete
liquidation of the Company or the sale of substantially all of the
assets of the Company; or
(e) Substantially all of the assets of the Company are sold or otherwise
transferred to parties that are not within a "controlled group of
corporations" (as defined in Code Section 1563) in which the Company
is a member.
1.11 "Claimant" shall have the meaning set forth in Section 14.1.
1.12 "Code" shall mean the Internal Revenue Code of 1986, as it may be amended
from time to time.
1.13 "Committee" shall mean the committee described in Article 12.
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1.14 "Company" shall mean Western Digital Corporation a Delaware corporation,
and any successor to all or substantially all of the Company's assets or
business.
1.15 "Company Common Stock" shall mean authorized and unissued shares or
treasury shares of the Company's common stock.
1.16 "Company Contribution Account" shall mean (i) the sum of the Participant's
Annual Company Contribution Amounts, plus (ii) amounts credited in
accordance with all the applicable crediting provisions of this Plan that
relate to the Participant's Company Contribution Account, less (iii) all
distributions made to the Participant or his or her Beneficiary pursuant
to this Plan that relate to the Participant's Company Contribution
Account.
1.17 "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 an 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 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.
1.18 "Deferral Account" shall mean (i) the sum of all of a Participant's Annual
Deferral Amounts, plus (ii) amounts credited in accordance with all the
applicable crediting provisions 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.
1.19 "Director" shall mean any member of the board of directors of any
Employer.
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1.20 "Directors Fees" shall mean the annual fees paid by any Employer,
including retainer fees and meetings fees, as compensation for serving on
the board of directors and, after January 8, 1997, shall include Directors
Fees (Stock Element).
1.21 "Directors Fees (Stock Element)" shall mean that portion of Directors Fees
paid in the form of shares of Company Common Stock and granted to
Non-Employee Directors on a mandatory or elective basis under the terms of
the Stock Plan after January 8, 1997.
1.22 "Disability" shall mean a period of disability during which a Participant
qualifies for permanent disability benefits under the Participant's
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 Participant's
Employer does not sponsor such a plan, or discontinues to sponsor such a
plan, Disability shall be determined by the Committee in its sole
discretion.
1.23 "Disability Benefit" shall mean the benefit set forth in Article 8.
1.24 "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.
1.25 "Employee" shall mean a person who is an employee of any Employer.
1.26 "Employer(s)" shall mean the Company and/or any 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.
1.27 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.
1.28 "First Plan Year" shall mean the period beginning May 16, 1994 and ending
December 31, 1994.
1.29 "Long-Term Incentive Plan" shall mean the Western Digital Corporation
Long-Term Incentive Plan.
1.30 "Management Incentive Plan" shall mean the Western Digital Corporation
Management Incentive Plan.
1.31 "Participant" shall mean any Employee or Director (i) who is selected to
participate in the Plan, (ii) who elects to participate in the Plan, (iii)
who signs a Plan Agreement, an
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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
property settlements resulting from legal separation or divorce.
1.32 "Plan" shall mean the Western Digital Corporation Deferred Compensation
Plan, originally adopted effective May 16, 1994, amended and restated in
its entirety January 9, 1997, and further amended and restated in its
entirety effective January 1, 1998, which shall be evidenced by this
instrument and by each Plan Agreement, as they may be 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 an Employer and a
Participant. Each Plan Agreement executed by a Participant and the
Participant's 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, except for the First Plan Year, mean a period beginning
on January 1 of each calendar year and continuing through December 31 of
such calendar year.
1.35 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
1.36 "Profit Sharing Plan (Cash Element)" shall mean the portion of the Western
Digital Corporation Profit Sharing Plan which, in accordance with its
terms, pays benefits in cash.
1.37 "Retirement", "Retire(s)" or "Retired" shall mean, with respect to an
Employee, severance from employment from all Employers for any reason
other than a leave of absence, death or Disability on or after the
attainment of age fifty-five (55); and shall mean with respect to a
Director who is not an Employee, severance of his or her directorships
with all Employers on or after the later of (a) the attainment of age
seventy (70), or (b) in the sole discretion of the Committee, an age later
than age seventy (70). If a Participant is both an Employee and a
Director, Retirement shall not occur until he or she Retires as both an
Employee and a Director, which Retirement shall be deemed to be a
Retirement as a Director; provided, however, that such a Participant may
elect, at least three years prior to Retirement and in
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accordance with the policies and procedures established by the Committee,
to Retire for purposes of this Plan at the time he or she Retires as an
Employee, which Retirement shall be deemed to be a Retirement as an
Employee. In this regard, a Participant shall be deemed to cease being
employed by an Employer if and when the Employer employing such
Participant ceases to be a majority owned subsidiary of the Company and
the Board provides that such event shall be treated as a cessation of
employment by all Employers.
1.38 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.39 "Short-Term Payout" shall mean the payout set forth in Section 4.1.
1.40 "Stock Plan" shall mean the Western Digital Corporation Non-Employee
Directors Stock-For-Fees Plan, as amended and restated effective
January 9, 1997.
1.41 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.42 "Termination of Employment" shall mean the severing of employment with all
Employers, or service as a Director of all Employers, voluntarily or
involuntarily, for any reason other than Retirement, Disability, death or
an authorized leave of absence. If a Participant is both an Employee and a
Director, a Termination of Employment shall occur only upon the
termination of the last position held; provided, however, that such a
Participant may elect, at least three years before Termination of
Employment and in accordance with the policies and procedures established
by the Committee, to be treated for purposes of this Plan as having
experienced a Termination of Employment at the time he or she ceases
employment with an Employer as an Employee. In this regard, a Participant
shall be deemed to cease being employed by an Employer if and when the
Employer employing such Participant ceases to be a majority owned
subsidiary of the Company and the Board provides that such event shall be
treated as a cessation of employment by all Employers.
1.43 "Trust" shall mean one or more trusts established pursuant to that certain
Master Trust Agreement, dated as of May 16, 1994 between the Company and
the trustee named therein, as amended from time to time.
1.44 "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.
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ARTICLE 2
SELECTION, ENROLLMENT, ELIGIBILITY
2.1 SELECTION BY COMMITTEE. Participation in the Plan shall be limited to a
select group of management and highly compensated Employees and Directors
of the Employers, as determined by the Committee in its sole discretion.
From that group, the Committee shall select, in its sole discretion,
Employees and Directors to participate in the Plan.
2.2 ENROLLMENT REQUIREMENTS. As a condition to participation, for the First
Plan Year, each selected Employee or Director shall complete, execute and
return to the Committee any time prior to May 16, 1994, a Plan Agreement,
an Election Form and a Beneficiary Designation Form. Individuals initially
selected to participate after May 16, 1994 may commence participation by
completing, executing and returning to the Committee a Plan Agreement, an
Election Form and a Beneficiary Designation Form, all within 30 days of
selection. 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 or
Director 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 or Director shall commence
participation in the Plan on May 16, 1994, or, in the case of those
selected for participation after that date, the May 1, or January 1
immediately following the date in which the Employee or Director completes
all enrollment requirements, provided that a Director who is elected or
appointed other than at an annual stockholders meeting may commence
participation on the date he or she joins the Board, subject to new
elections for each succeeding Plan Year pursuant to Section 3.3. If an
Employee or a Director fails to meet all such requirements within the
period required, in accordance with Section 2.2, that Employee or Director
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.
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 vested Account Balance as a Termination Benefit and terminate the
Participant's participation in the Plan.
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ARTICLE 3
DEFERRAL COMMITMENTS/COMPANY CONTRIBUTION/CREDITING/TAXES
3.1 MINIMUM DEFERRALS.
(a) BASE ANNUAL SALARY, ANNUAL BONUS AND DIRECTOR'S FEES. For each Plan
Year, a Participant may elect to defer, as his or her Annual
Deferral Amount, Base Annual Salary, Annual Bonus and/or Director's
Fees in the following minimum amounts for each deferral elected:
DEFERRAL MINIMUM AMOUNT
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Base Annual Salary $2,000
Annual Bonus $2,000
Directors Fees $ 0
If an election is made for less than stated minimum amounts, 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, the minimum Base
Annual 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.
3.2 MAXIMUM DEFERRAL.
(a) BASE ANNUAL SALARY, ANNUAL BONUS AND DIRECTORS FEES. For each Plan
Year, a Participant may elect to defer, as his or her Annual
Deferral Amount, Base Annual Salary, Annual Bonus and/or Directors
Fees up to the following maximum percentages for each deferral
elected:
DEFERRAL MAXIMUM AMOUNT
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Base Annual Salary 100%
Annual Bonus 100%
Directors Fees 100%
(b) 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, the maximum Annual Deferral Amount, with
respect to Base Annual Salary, Annual Bonus and Directors Fees 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.
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3.3 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 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;
provided that any deferral election in respect of Directors Fees for
the 1997 Plan Year may be made on or before January 31, 1997. If no
such Election Form is timely delivered for a Plan Year, the Annual
Deferral Amount shall be zero for that Plan Year.
3.4 WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS. For each Plan Year, the Base
Annual Salary portion of the Annual Deferral Amount shall be withheld from
each regularly scheduled Base Annual Salary payroll in equal amounts, as
adjusted from time to time for increases and decreases in Base Annual
Salary. The Annual Bonus and/or Directors Fees portion of the Annual
Deferral Amount shall be withheld at the time the Annual Bonus or
Directors Fees are or otherwise would be paid to the Participant, whether
or not this occurs during the Plan Year itself.
3.5 ANNUAL COMPANY CONTRIBUTION AMOUNT. For each Plan Year, the Board, 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. Notwithstanding the foregoing, the Company shall credit to the
Account Balances of Participants who are non-employee Directors an Annual
Company Contribution Amount each Plan Year
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representing the 15 percent premium awarded under Section 7(b) of the
Stock Plan (the "Premium Award"), which amount shall be credited at such
times as the Company shall determine.
3.6 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.
3.7 VESTING.
(a) A Participant shall at all times be 100% vested in his or her
Deferral Account.
(b) Except as otherwise provided in this Section 3.7, a Participant
shall be vested in his or her Company Contribution Account in
accordance with the provisions governing employer contributions
under the Company's qualified 401(k) plan.
(c) A Participant shall at all times be 100% vested in the portion of
his or her Deferral Account attributable to the Premium Award(s).
(d) Notwithstanding anything to the contrary contained in this Section
3.7, in the event of his or her Retirement, Disability or a Change
in Control, a Participant's Company Contribution Account shall
immediately become 100% vested (if it is not already vested in
accordance with this Section 3.7).
3.8 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:
(a) ELECTION OF MEASUREMENT FUNDS. Except as otherwise provided in
Section 3.8 (d) or Section 3.8(e) below, a Participant, in
connection with his or her initial deferral election in accordance
with Section 3.3(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 thereof in which the
Participant commences participation in the Plan and continuing
thereafter for each subsequent day in which
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the Participant participates in the Plan, unless changed in
accordance with the next sentence. Except as otherwise provided in
Section 3.8(d) or Section 3.8(e) below, commencing with the first
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, no later than the prior
business day, 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, or to change the portion of his or her Account
Balance allocated to each previously or newly elected Measurement
Fund; provided, however, that a Participant may make no more than
two (2) such elections each Plan Year. If an election is made in
accordance with the previous sentence, it shall apply to the next
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 and Annual
Deferral Amount).
(c) MEASUREMENT FUNDS. Except as otherwise provided in Section 3.8(d) or
Section 3.8(e) below, the Participant may elect one or more of the
following measurement funds, based on certain mutual funds (the
"Measurement Funds"), for the purpose of crediting additional
amounts to his or her Account Balance:
(1) Fidelity VIP Money Market Portfolio (described as a mutual
fund seeking a high level of current income as is consistent
with preserving capital and providing liquidity);
(2) Fidelity VIP II Index 500 Portfolio (described as a mutual
fund which seeks to achieve investment results corresponding
to the total return of common stocks publicly traded in the
United States);
(3) Neuberger & Berman Management Inc. AMT Partners Portfolio
(described as a mutual fund which seeks long-term growth of
capital primarily through investments in common stocks);
(4) Fred Alger Management Inc. Small Capitalization Portfolio
(described as a mutual fund which seeks long-term growth of
capital primarily through investments in small
capitalization common stocks); and
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(5) Declared Rate Fund (described as a fund which is credited with
interest at a fixed rate declared as an annual rate for each
Plan Year by the Company prior to the beginning of the Plan
Year).
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.
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(d) MINIMUM PERCENTAGE FOR DECLARED RATE MEASUREMENT FUND.
Notwithstanding any provision of this Plan, other than Section
3.8(e) below, that may be construed to the contrary, effective
January 1, 1998, a Participant's Account Balance as of such date
shall be allocated to the Declared Rate Measurement Fund. Except as
otherwise provided in Section 3.8(e) below, effective January 2,
1998, at all times during a Plan Year, a Participant must allocate a
minimum percentage of his or her existing Account Balance and Annual
Deferral Amount to the Declared Rate Measurement Fund (the "Minimum
Percentage"). The Minimum Percentage for a Plan Year (i) must be
fifty percent (50%) for the 1998 Plan Year, (ii) must be determined
by the Committee, in its sole discretion, and announced prior to the
beginning of any other Plan Year, (iii) may be higher or lower than
the Minimum Percentage for any other Plan Year and (iv) may be zero
for any other Plan Year.
(e) COMPANY STOCK MEASUREMENT FUND FOR DIRECTORS' FEES (STOCK
ELEMENT). Notwithstanding any provision of this Plan that may be
construed to the contrary, the portion of a Participant's Deferral
Account balance attributable to his or her deferral of Directors'
Fees (Stock Element) and the portion of a Participant's Company
Contribution Account balance attributable to the Premium Award(s),
as that term is defined in Section 3.5 above, must be (i) deemed
invested at all times prior to distribution in the Company Stock
Measurement Fund and (ii) distributed, in the form of Company
Common Stock, as a lump sum at the time distribution to the
Participant or his or her Beneficiary(ies) is to commence. For
purposes of this Section 3.8(e), the Company Stock Measurement
Fund is described as a fund which shall be credited or debited
with investment results corresponding to the total return of
Company Common Stock.
(f) CREDITING OR DEBITING METHOD. The performance of each elected
Measurement Fund (either positive or negative) will be determined by
the Committee, in its reasonable discretion, 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 determined by the Committee in its sole discretion,
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 calendar date, at the closing price on such date;
(ii) the portion of the Annual Deferral Amount that was actually
deferred during any calendar date were invested in the Measurement
Fund(s) selected by the Participant, in the percentages applicable
to such calendar date, no later than the close of business on the
third business day after the day on which such amounts are actually
deferred from the Participant's Base Annual Salary through
reductions in his or her payroll, at the closing price on such date;
and (iii) any distribution made to a Participant that decreases such
Participant's Account
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Balance ceased being invested in the Measurement Fund(s), in the
percentages applicable to such calendar date, no earlier than three
business days prior to the distribution, at the closing price on
such date.
(g) 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.
3.9 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 Base Annual Salary and Bonus that is not being
deferred, in a manner determined by the Employer(s), 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) ANNUAL COMPANY CONTRIBUTION AMOUNTS. When a participant becomes
vested in a portion of his or her Company Contribution Account, the
Participant's Employer(s) shall withhold from the Participant's Base
Annual Salary and/or Bonus that is not deferred, in a manner
determined by the Employer(s), the Participant's share of FICA and
other employment taxes. If necessary, the Committee may reduce the
vested portion of the Participant's Company Contribution Account in
order to comply with this Section 3.9.
3.10 DISTRIBUTIONS. The Participant's Employer(s), 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(s), or the 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(s) and the trustee of the Trust.
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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
within a 60 days after the first 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. Notwithstanding the
foregoing, the Participant may irrevocably elect to defer the distribution
of a Short-Term Payout to the first 60 days of another Plan Year
designated by the Participant that is at least two Plan Years after the
Plan Year in which such Short-Term Payout would otherwise be paid,
provided such election is made no later than the first day of the Plan
Year immediately proceeding the Plan Year in which the Short-Term Payout
would otherwise be paid.
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 vested 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
vested Account Balance, calculated as if there had occurred a Termination
of Employment as of the day of the election, less a
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withdrawal penalty equal to 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, 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 in the future. 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 vested 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, 15 or 20 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 3 years 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
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the Beneficiary and allowed in the sole discretion of the Committee, that
is equal to the Participant's unpaid remaining vested Account Balance.
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 vested 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, 15 or 20 years. The Participant may annually
change this 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 paid in a
lump sum. Despite the foregoing, if the Participant's vested 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
of not more than 5 years. 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 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.
7.2 PAYMENT OF TERMINATION BENEFIT. The Termination of Employment shall be
paid in a lump sum within 60 days of the Termination of Employment.
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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 shall be excused from fulfilling
that portion of the Annual Deferral Amount commitment that would
otherwise have been withheld from a Participant's Base Annual
Salary, Annual Bonus and/or Directors Fees 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, or service
as a Director, with an Employer, 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 3.3 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, or in the service of an Employer as a Director,
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 vested 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. Any payment
made shall be subject to the Deduction Limitation.
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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 an Employer in which the Participant participates.
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 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 executor or personal representative of 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 Participant's
Employer to withhold such payments until this matter is resolved to the
Committee's satisfaction.
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9.6 DISCHARGE OF OBLIGATIONS. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers 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 Participant's
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 3.3.
10.2 UNPAID LEAVE OF ABSENCE. If a Participant is authorized by the
Participant's 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 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 any
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 and
Directors, by action of its board of directors. Upon the termination of
the Plan with respect to any Employer, the Plan Agreements of the affected
Participants who are employed by that Employer, or in the service of that
Employer as Directors, shall terminate and their vested 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, an Employer shall
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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, an 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 vested Account
Balance in a lump 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).
11.2 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
of directors; provided, however, that: (i) no amendment or modification
shall be effective to decrease or restrict the value of a Participant's
vested 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 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 vested Account Balance in a lump 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.
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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. 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 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 any
Employer.
12.3 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.
12.4 INDEMNITY OF COMMITTEE. All Employers 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.
12.5 EMPLOYER INFORMATION. To enable the Committee and/or Administrator to
perform its functions, the Company and each 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 Termination
of Employment of its Participants, and such other pertinent information as
the Committee or Administrator may reasonably require.
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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 Participant's 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
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.
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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:
(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
each 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 and Annual
Company Contribution Amounts for such 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.
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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 Employers, Participants and the creditors of the
Employers to the assets transferred to the Trust. Each Employer shall at
all times remain liable to carry out its obligations under the Plan.
15.3 DISTRIBUTIONS FROM THE TRUST. Each 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 an Employer. For purposes of the
payment of benefits under this Plan, any and all of an Employer's assets
shall be, and remain, the general, unpledged unrestricted assets of the
Employer. An Employer's obligation under the Plan shall be merely that of
an unfunded and unsecured promise to pay money in the future.
16.3 EMPLOYER'S LIABILITY. An 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. An 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
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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 any 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 any Employer, either as an Employee or a Director, or to
interfere with the right of any 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:
Deferred Compensation Plan Committee
Western Digital Corporation
8105 Irvine Center Drive
Irvine, CA 92718
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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 Participant's 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.
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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 trustee of the 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), a Participant's 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 vested 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 Section 3.6(e) of
the Trust and benefits are distributed from the Trust to a
Participant in accordance with that Section, the Participant's
benefits under this Plan shall be reduced to the extent of such
distributions.
16.17 INSURANCE. The Employers, 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 Employers 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 Employers 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 Employers have applied for insurance.
16.18 LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL. The Company and each
Employer is aware that upon the occurrence of a Change in Control, the
Board or the board of directors of a Participant's Employer (which might
then be composed of new members) or a shareholder of the Company or the
Participant's Employer, or of any successor corporation might then cause
or attempt to cause the Company, the Participant's 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 Participant's 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
Participant's 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
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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 Participant's Employer irrevocably authorize such
Participant to retain counsel of his or her choice at the expense of the
Company and the Participant's 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 Participant's Employer or any director, officer, shareholder
or other person affiliated with the Company, the Participant's Employer or
any successor thereto in any jurisdiction.
IN WITNESS WHEREOF, the Company has signed this Plan document as of August
1, 2001.
"Company"
Western Digital Corporation a Delaware
corporation
By:
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Title:
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