EXHIBIT 10.10
WESTERN DIGITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
AMENDED AND RESTATED
EFFECTIVE JULY 1, 2002
COPYRIGHT (C) 1997
BY COMPENSATION RESOURCE GROUP, INC.
ALL RIGHTS RESERVED
WESTERN DIGITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
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............................................................ 10
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........................................................................... 16
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............................................... 17
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Master Plan Document
ARTICLE 6 PRE-RETIREMENT SURVIVOR BENEFIT............................................................... 18
6.1 PRE-RETIREMENT SURVIVOR BENEFIT............................................................... 18
6.2 PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT.................................................... 18
ARTICLE 7 TERMINATION BENEFIT........................................................................... 18
7.1 TERMINATION BENEFIT........................................................................... 18
7.2 PAYMENT OF TERMINATION BENEFIT................................................................ 18
ARTICLE 8 DISABILITY WAIVER AND BENEFIT................................................................. 18
8.1 DISABILITY WAIVER............................................................................. 19
8.2 CONTINUED ELIGIBILITY; DISABILITY BENEFIT..................................................... 19
ARTICLE 9 BENEFICIARY DESIGNATION....................................................................... 20
9.1 BENEFICIARY................................................................................... 20
9.2 BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT.............................................. 20
9.3 ACKNOWLEDGEMENT............................................................................... 20
9.4 NO BENEFICIARY DESIGNATION.................................................................... 20
9.5 DOUBT AS TO BENEFICIARY....................................................................... 20
9.6 DISCHARGE OF OBLIGATIONS...................................................................... 21
ARTICLE 10 LEAVE OF ABSENCE.............................................................................. 21
10.1 PAID LEAVE OF ABSENCE......................................................................... 21
10.2 UNPAID LEAVE OF ABSENCE....................................................................... 21
ARTICLE 11 TERMINATION, AMENDMENT OR MODIFICATION........................................................ 21
11.1 TERMINATION................................................................................... 21
11.2 AMENDMENT..................................................................................... 22
11.3 PLAN AGREEMENT................................................................................ 22
11.4 EFFECT OF PAYMENT............................................................................. 23
ARTICLE 12 ADMINISTRATION................................................................................ 23
12.1 COMMITTEE DUTIES.............................................................................. 23
12.2 AGENTS........................................................................................ 23
12.3 BINDING EFFECT OF DECISIONS................................................................... 23
12.4 INDEMNITY OF COMMITTEE........................................................................ 23
12.5 EMPLOYER INFORMATION.......................................................................... 23
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Master Plan Document
ARTICLE 13 OTHER BENEFITS AND AGREEMENTS................................................................. 24
13.1 COORDINATION WITH OTHER BENEFITS.............................................................. 24
ARTICLE 14 CLAIMS PROCEDURES............................................................................. 24
14.1 PRESENTATION OF CLAIM......................................................................... 24
14.2 NOTIFICATION OF DECISION...................................................................... 24
14.3 REVIEW OF A DENIED CLAIM...................................................................... 25
14.4 DECISION ON REVIEW............................................................................ 25
14.5 LEGAL ACTION.................................................................................. 25
ARTICLE 15 TRUST......................................................................................... 25
15.1 ESTABLISHMENT OF THE TRUST.................................................................... 25
15.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUST................................................... 26
15.3 DISTRIBUTIONS FROM THE TRUST.................................................................. 26
ARTICLE 16 MISCELLANEOUS................................................................................. 26
16.1 STATUS OF PLAN................................................................................ 26
16.2 UNSECURED GENERAL CREDITOR.................................................................... 26
16.3 EMPLOYER'S LIABILITY.......................................................................... 26
16.4 NONASSIGNABILITY.............................................................................. 26
16.5 NOT A CONTRACT OF EMPLOYMENT.................................................................. 27
16.6 FURNISHING INFORMATION........................................................................ 27
16.7 TERMS......................................................................................... 27
16.8 CAPTIONS...................................................................................... 27
16.9 GOVERNING LAW................................................................................. 27
16.10 NOTICE.................................................................................... 27
16.11 SUCCESSORS................................................................................ 28
16.12 SPOUSE'S INTEREST......................................................................... 28
16.13 VALIDITY.................................................................................. 28
16.14 INCOMPETENT............................................................................... 28
16.15 COURT ORDER............................................................................... 28
16.16 DISTRIBUTION IN THE EVENT OF TAXATION..................................................... 29
16.17 INSURANCE................................................................................. 29
16.18 LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL...................................... 29
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WESTERN DIGITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
WESTERN DIGITAL CORPORATION
DEFERRED COMPENSATION PLAN
Amended and Restated
Effective July 1, 2002
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 each
of January 9, 1997, January 1, 1998, and August 1, 2001, and is hereby amended
and restated again effective July 1, 2002.
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 any incentive or bonus plan including without limitation
the Management Incentive Compensation Plan, Profit Sharing Plan (Cash
Element), Long-Term Incentive Plan, Variable Incentive Plan, Incentive
Compensation Plan or the Western Digital Corporation Executive
Retention Plan. Notwithstanding the foregoing, Annual Bonus shall also
include amounts otherwise payable during a calendar year under a
Long-Term Retention Agreement.
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WESTERN DIGITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
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 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.
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Deferred Compensation Plan
Master Plan Document
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.
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.
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Deferred Compensation Plan
Master Plan Document
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.
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
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Deferred Compensation Plan
Master Plan Document
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.
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.
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Master Plan Document
1.30 "Long-Term Retention Agreement " shall mean the one or more long-term
retention agreements entered into between an Employee and the Company
in or about December, 2002.
1.31 "Management Incentive Plan" shall mean the Western Digital Corporation
Management Incentive Plan.
1.32 "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 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.
1.33 "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.
1.34 "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.
1.35 "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.
1.36 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
1.37 "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.
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Master Plan Document
1.38 "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 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.
1.39 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.40 "Short-Term Payout" shall mean the payout set forth in Section 4.1.
1.41 "Stock Plan" shall mean the Western Digital Corporation Non-Employee
Directors Stock-For-Fees Plan, as amended and restated effective
January 9, 1997.
1.42 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.43 "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.
1.44 "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.
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1.45 "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.
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
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Master Plan Document
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.
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.
The Committee may, in the case of an Annual Bonus, prescribe
that the portion, if any, attributable to amounts otherwise
payable under a Long-Term Retention Agreement be subject to a
separate deferral election.
(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:
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Master Plan Document
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.
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
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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 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, except that, subject to Section 3.7(d),
below, amounts attributable to any Long-Term Retention
Agreement shall be subject to forfeiture in accordance with
the terms of such agreement.
(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 Deferral Account and
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
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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 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);
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(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
(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
withdrawal penalty equal to 10% of such amount (the net amount shall be
referred to as the
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"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 the Beneficiary and allowed in the sole discretion
of the Committee, that is equal to the Participant's unpaid remaining
vested Account Balance.
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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.
ARTICLE 8
DISABILITY WAIVER AND BENEFIT
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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 have the right, in its sole discretion, and notwithstanding any
elections made by the
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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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Master Plan Document
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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Master Plan Document
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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Master Plan Document
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
July 1, 2002.
"Company"
Western Digital Corporation a Delaware
corporation
By: /s/ Raymond M. Bukaty
--------------------------------
Title: Vice President, General Counsel
and Secretary
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