EXHIBIT 10.12.2
WESTERN DIGITAL CORPORATION
AMENDED AND RESTATED
CHANGE OF CONTROL SEVERANCE PLAN
1. Purpose of Plan. The Executives have made and are expected to
make major contributions to the profitability, growth and financial strength of
the Company and its affiliates. In addition, the Company considers the continued
availability of the Executives' services, managerial skills and business
experience to be in the best interest of the Company and its stockholders and
desires to assure the continued services of the Executives on behalf of the
Company and/or its affiliates without the distraction of the Executives
occasioned by the possibility of an abrupt change in control of the Company.
2. Definitions. Whenever the following terms are used in this
Plan, they shall have the meaning specified below unlessthe context clearly
indicates to the contrary:
2.01 "Board" shall mean the Board of Directors of the
Company.
2.02 "Cause" shall mean the occurrence or existence of
any of the following with respect to the Executive, as determined by a majority
of the disinterested directors of the Board or the Committee:
(a) the Executives' conviction by, or entry of a plea of
guilty or nolo contendere in, a court of competent and final jurisdiction for
any crime involving moral turpitude or any felony punishable by imprisonment in
the jurisdiction involved;
(b) whether prior or subsequent to the date hereof, the
Executives' willful engaging in dishonest or fraudulent actions or omissions
which results directly or indirectly in any demonstrable material financial or
economic harm to the Company or any of its subsidiaries or affiliates;
(c) the Executives' failure or refusal to perform his or
her duties as reasonably required by the Employer, provided that Executive shall
have first received written notice from the Employer stating with specificity
the nature of such failure or refusal and affording the Executive at least five
(5) days to correct the act or omission complained of;
(d) gross negligence, insubordination, material
violation by the Executive of any duty of loyalty to the Company or any
subsidiary or affiliate of the Company, or any other material misconduct on the
part of the Executive, provided that the Executive shall have first received
written notice from the Company stating with specificity the nature of such
action or violation and affording the Executive at least five (5) days to
correct such action or violation;
(e) the repeated non-prescription use of any controlled
substance, or the repeated use of alcohol or any other non-controlled substance
which in the Board's reasonable determination renders the Executive unfit to
serve in his or her capacity as an officer or employee of the Company or any of
its subsidiaries or affiliates;
(f) sexual harassment by the Executive that has been
reasonably substantiated and investigated;
(g) involvement in activities representing conflicts of
interest with the Company or any of its subsidiaries or affiliates;
(h) improper disclosure of confidential information;
(i) conduct endangering, or likely to endanger, the
health or safety of another employee;
(j) falsifying or misrepresenting information on the
records of the Company or any of its subsidiaries or affiliates; or
(k) the Executive's physical destruction or theft of
substantial property or assets of the Company or any of its subsidiaries or
affiliates.
2.03 "Change in Control" shall mean an occurrence of any
of the following events, unless the Board shall provide otherwise:
(a) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), 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 (other than the Company or any subsidiary
thereof or any employee benefit plan of the Company or any subsidiary thereof,
or any underwriter in connection with a firm commitment public offering of the
Company's capital stock), becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 of the Exchange Act, except that a person shall also be
deemed the beneficial owner of all securities which such person may have a right
to acquire, whether or not such right is presently exercisable) 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 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 transaction (or series of related
transactions) involving the Company which results
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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 (or any successor or other person which issues securities in such
transaction or transactions) 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 all or substantially all of
the assets of the Company.
2.04 "Code" shall mean the Internal Revenue Code of 1986,
as amended.
2.05 "Committee" shall mean the Compensation Committee of
the Board.
2.06 "Company" shall mean Western Digital Corporation, a
Delaware corporation, and, as permitted by Section 12.03(b), its successors and
assigns.
2.07 "Date of Termination" following a Change in Control
shall mean the dates, as the case may be, for the following events: (a) if the
Executive's employment is terminated by death, the date of death, (b) if the
Executive's employment is terminated due to a Permanent Disability, thirty (30)
days after the Notice of Termination is given (provided that the Executive shall
not have returned to the performance of his or her duties on a full-time basis
during such period), (c) if the Executive's employment is terminated pursuant to
a termination for Cause, the date specified in the Notice of Termination, and
(d) if the Executive's employment is terminated for any other reason, fifteen
(15) days after delivery of the Notice of Termination unless otherwise agreed by
the Executive and the Company.
2.08 "Disability" shall mean that the Executive is
unable, by reason of injury, illness or other physical or mental impairment, to
perform each and every task of the position for which the Executive is employed,
which inability is certified by a licensed physician reasonably selected by the
Employer.
2.09 "Effective Date" shall mean March 29, 2001.
2.10 "Employer" shall mean the Company or its subsidiary
employing Executive, provided however, that nothing contained herein shall
prohibit the Company or another of its subsidiaries fulfilling any obligation of
the employing entity to the Executive and for such purposes will be deemed the
act of the Employer.
2.11 "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
2.12 "Executive" shall mean any Tier 1 Executive or Tier
2 Executive.
2.13 "Good Reason" shall mean any of the following
without the Executive's express written consent:
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(a) (i) the assignment to the Executive of any
duties materially and adversely inconsistent with the Executive's positions,
duties, responsibilities and status with the Employer immediately prior to a
Change in Control or with significantly less authority than immediately prior to
the Change in Control;
(ii) a significant adverse alteration in the
nature of the Executive's reporting responsibilities, titles, or offices with
the Employer from those in effect immediately prior to a Change in Control, or
(iii) any removal of the Executive from, or any
failure to reelect the Executive to, any such positions, except in connection
with a termination of the employment of the Executive for Cause, Permanent
Disability, or as a result of the Executive's death or by the Executive other
than for Good Reason;
(b) a reduction by the Employer in the Executive's base
salary in effect immediately prior to a Change in Control;
(c) failure by the Employer to continue in effect any
compensation plan, bonus or incentive plan, stock purchase plan, stock option
plan, life insurance plan, health plan, disability plan or other benefit plan or
arrangement in which the Executive is participating at the time of a Change in
Control unless the Employer substitutes a plan or arrangement which, when viewed
in the totality of the benefits provided, does not adversely impact the
Executive in a material respect, or the taking of any action by the Employer
which would adversely affect, in a material respect, Executive's participation
in or materially reduce Executive's benefits under any of such plans;
(d) any material breach by the Company or the Employer
of any provision of this Plan;
(e) following a Change in Control, the Executive is
excluded (without substitution of a substantially equivalent plan) from
participation in any incentive, compensation, stock option, health, dental,
insurance, pension or other benefit plan generally made available to persons at
Executive's level of responsibility in the Company or the Employer;
(f) the requirement by the Employer that the Executive's
principal place of employment be relocated more than fifty (50) miles from his
or her place of employment prior to a Change in Control, or that the Executive
must travel on the Employer's business to an extent materially greater than the
Executive's customary business travel obligations prior to a Change in Control;
or
(g) the Company's failure to obtain a satisfactory
agreement from any successor to assume and agree to perform the Company's
obligations under this Plan, as contemplated in Section 12.03(b) hereof.
2.14 "Notice of Termination" shall mean a written notice
which shall indicate the specific termination provision in this Plan relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
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2.15 "Permanent Disability" shall mean if, as a result of
the Executive's Disability, the Executive shall have been absent from his or her
duties with the Employer on a full-time basis for six (6) months of any
consecutive eight (8) month period.
2.16 "Termination of Employment" shall mean the time when
the employee-employer relationship between the Executive and the Employer is
terminated for any reason, voluntarily or involuntarily, with or without Cause,
including, without limitation, a termination by reason of resignation, discharge
(with or without Cause), Permanent Disability, death or retirement, but
excluding terminations where there is a simultaneous re-employment of the
Executive by the Company or a subsidiary of the Company.
2.17 "Tier 1 Executive" shall mean an officer of the
Company who is elected or appointed by the Board of Directors and is subject to
Section 16 of the Exchange Act.
2.18 "Tier 2 Executive" shall mean an employee who is
appointed as an officer of the Company by the President of the Company pursuant
to the Company's Bylaws and such other employee of the Company or any of its
subsidiaries who is designated as a Tier 2 Executive by the Board or the
Committee.
3. Term. This Plan shall be effective until the fifth anniversary
of the Effective Date and may be extended by the Board until no later than the
tenth anniversary of the Effective Date.
4. Compensation Upon A Change In Control.
4.01 Salary. Commencing on the date a Change in Control
shall occur, the Employer shall pay a salary to the Executive at an annual rate
at least equal to the annual salary payable to the Executive immediately prior
to such date. The salary, as it may be changed from time to time by mutual
agreement between the Executive and the Employer, shall be paid in equal
installments on each regular payroll payment date after the date of this Plan
and shall be subject to regular withholding for federal, state and local taxes
in accordance with law.
4.02 Other Benefits.
(a) Commencing on the date a Change in Control shall
occur, the Executive shall be entitled to participate in and to receive benefits
under those employee benefit plans or arrangements (including, without
limitation, any pension or welfare plan, life, health, hospitalization and other
forms of insurance and all other "fringe" benefits or perquisites) made
available to executives of the Company or the Employer, or any successor
thereto. The Executive's level of participation in, or entitlements under, any
such employee benefit plan or arrangement of any successor to the Company shall
be calculated as if the Executive had been an employee of such successor to the
Company from the date of the Executive's employment by the Employer.
(b) Commencing on the date a Change in Control shall
occur, the Executive shall be entitled to reimbursement, in accordance with the
usual practices of the Employer, for all reasonable travel and other business
expenses incurred by the Executive in the performance of his or her duties on
behalf of the Employer.
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5. Termination of Employment of Executive.
5.01 Payment of Severance Benefits Upon Change of
Control. In the event of a Change in Control of the Company, Executive shall be
entitled to the severance benefits set forth in Section 6, but only if during
the term of this Plan:
(a) the Executive's employment by the Employer is
terminated by the Employer without Cause within one (1) year after the date of
the Change in Control;
(b) the Executive terminates his or her employment with
the Employer for Good Reason within one (1) year after the date of the Change in
Control and complies with the procedures set forth in Section 5.02;
(c) the Executive's employment by the Employer is
terminated by the Employer prior to the Change in Control and such termination
arose in connection with or in anticipation of the Change in Control (for
purposes of this Plan, meaning that at the time of such termination the Company
had entered into an agreement, the consummation of which would result in a
Change in Control, or any person had publicly announced its intent to take or
consider actions that would constitute a Change in Control, and in each case
such Change in Control is consummated, or the Board adopts a resolution to the
effect that a potential Change in Control for purposes of this Plan has
occurred); or
(d) the Executive terminates his or her employment with
the Employer for Good Reason prior to the Change in Control, the event
constituting Good Reason arose in connection with or in anticipation of the
Change in Control and the Executive complies with the procedures set forth in
Section 5.02.
5.02 Good Reason.
(a) Notwithstanding anything contained in any employment
agreement between the Executive and the Employer to the contrary, during the
term of this Plan the Executive may terminate his or her employment with the
Employer for Good Reason as set forth in Section 5.01(b) or (d) and be entitled
to the benefits set forth in Section 6, provided that the Executive gives
written notice to the Company and the Employer of his or her election to
terminate his or her employment for such reason within 180 days after the time
he or she becomes aware of the existence of facts or circumstances constituting
Good Reason or, if later, within ten (10) days of the time the claim is resolved
pursuant to Section 5.02(b).
(b) If the Executive believes that he or she is entitled
to terminate his or her employment with the Employer for Good Reason, he or she
may apply in writing to the Company for confirmation of such entitlement prior
to the Executive's actual separation from employment, by following the claims
procedure set forth in Section 9. The submission of such a request by the
Executive shall not constitute "Cause" for the Company to terminate the
Executive's employment and the Executive shall continue to receive all
compensation and benefits he or she was receiving at the time of such submission
throughout the resolution of the matter pursuant to the procedures set forth in
Section 9. If the Executive's request for a termination of employment for Good
Reason is denied under both the request and appeal procedures set forth in
Sections 9.02 and 9.03, then the parties shall use their best efforts to
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resolve the claim within ninety (90) days after the claim is submitted to
binding arbitration pursuant to Section 9.04.
5.03 Permanent Disability. In the event of a Permanent
Disability of the Executive, the Executive shall be entitled to no further
benefits under this Plan, provided that the Employer shall have provided the
Executive a Notice of Termination and the Executive shall not have returned to
the full-time performance of the Executive's duties within thirty (30) days of
such Notice of Termination.
5.04 Cause. The Employer may terminate the employment of
the Executive for Cause. The Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Executive a Notice of Termination and a certified copy of a resolution of the
Board adopted by the affirmative vote of not less than a majority of the entire
membership of the Board (other than the Executive if he or she is a member of
the Board at such time) at a meeting called and held for that purpose and at
which the Executive was given an opportunity to be heard, finding that the
Executive was guilty of conduct constituting Cause based on reasonable evidence,
specifying the particulars thereof in detail. For purposes of this Section 5.04,
no act or failure to act on the Executive's part shall be considered "willful"
unless done or omitted to be done by him or her not in good faith and without
reasonable belief that his or her action or omission was in the best interest of
the Company and the Employer.
5.05 Notice of Termination. Any termination of the
Executive's employment by the Employer or by the Executive (other than
termination based on the Executive's death) following a Change in Control shall
be communicated by the terminating party in a Notice of Termination to the other
party hereto.
6. Compensation and Benefits Upon Termination of Employment.
6.01 Severance Benefits. If the Executive shall be
terminated from employment with the Employer or shall terminate his or her
employment with the Employer as described in Section 5.01, then the Executive
shall be entitled to receive the following:
(a) In lieu of any further payments to the Executive
except as expressly contemplated hereunder, the Employer shall pay as severance
pay to the Executive an amount equal to two times (in the case of a Tier 1
Executive) or one times (in the case of a Tier 2 Executive) the Executive's
annual base compensation plus target bonus as in effect immediately prior to the
Change in Control or as in effect on the date of the Notice of Termination,
whichever is higher. Such cash payment shall be payable in a single sum, within
ten (10) business days following the Executive's Date of Termination.
(b) Any non-vested stock options granted to the
Executive by the Company shall become 100% vested and may be exercised by the
Executive for the longer of (i) ninety (90) days after the Date of Termination
or (ii) the period specified in the plan or agreement governing such options.
(c) For a period of twenty-four months (in the case of a
Tier 1 Executive) or twelve months (in the case of a Tier 2 Executive) following
the Executive's Date of Termination (the "payment period"), the Executive shall
be entitled to the continuation of the same or
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equivalent life, health, hospitalization, dental and disability insurance
coverage and other employee insurance or welfare benefits (including equivalent
coverage for his or her spouse and dependent children) and car allowances as he
or she was receiving immediately prior to the Change in Control. In the event
that Executive is ineligible under the terms of such insurance to continue to be
so covered, the Employer shall provide Executive with a lump sum payment equal
to the cost of obtaining such coverage for the payment period. If the Executive,
prior to a Change in Control, was receiving any cash-in-lieu payments designed
to enable the Executive to obtain insurance coverage of his or her choosing, the
Employer shall, in addition to any other benefits to be provided under this
Section 6.01(d), provide Executive with a lump-sum payment equal to the amount
of such in-lieu payments that the Executive would have been entitled to receive
over the payment period. The benefits to be provided under this Section 6.01(d)
shall be reduced to the extent of the receipt of substantially equivalent
coverage by the Executive from any successor employer.
(d) All awards under the Company's Executive Retention
Plan adopted in July, 1998 or any similar plan shall accelerate and be payable
fifteen (15) days after the Date of Termination.
(e) If any payments received by a Tier 1 Executive
pursuant to this Plan will be subject to the excise tax imposed by Section 4999
of the Code, or any successor or similar provision of the Code or any comparable
provision of state law (the "Excise Tax"), the Employer shall pay to the Tier 1
Executive additional compensation such that the net amount received by the Tier
1 Executive after deduction of any Excise Tax (and taking into account any
federal, state and local income taxes payable by the Tier 1 Executive as a
result of the receipt of such gross-up compensation), shall be equal to the
total payments he or she would have received had no such Excise Tax (or any
interest or penalties thereon arising primarily from the acts or omissions of
the Employer) been paid or incurred. The Employer shall pay such additional
compensation at the time when the Employer withholds such Excise Tax from any
payments to the Tier 1 Executive. The calculation of the tax gross-up payment
shall be approved by the Company's independent certified public accounting firm
and the Tier 1 Executive's designated financial advisor.
(f) In the event that the amount of payments or other
benefits payable to a Tier 2 Executive under this Plan, together with any
payments or benefits payable under any other plan, program, arrangement or
agreement maintained by the Employer or one of its affiliates, would constitute
an 'excess parachute payment' (within the meaning of Section 280G of the Code),
the payments under this Plan shall be reduced (by the minimum possible amounts)
until no amount payable to the Tier 2 Executive under this Plan constitutes an
'excess parachute payment' (within the meaning of Section 280G of the Code);
provided, however, that no such reduction shall be made if the net after-tax
payment (after taking into account Federal, state, local or other income and
excise taxes) to which the Tier 2 Executive would otherwise be entitled without
such reduction would be greater than the net after-tax payment (after taking
into account Federal, state, local or other income and excise taxes) to the Tier
2 Executive resulting from the receipt of such payments with such reduction. If,
as a result of subsequent events or conditions (including a subsequent payment
or absence of a subsequent payment under this Plan or other plans, programs,
arrangements or agreements maintained by the Employer or one of its affiliates),
it is determined that payments hereunder have been reduced by more than the
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minimum amount required under this Section 6.01(f), then an additional payment
shall be promptly made to the Tier 2 Executive in an amount equal to the excess
reduction. All determinations required to be made under this Section 6.01(f),
including whether a payment would result in an 'excess parachute payment' and
the assumptions to be utilized in arriving at such determination, shall be made
and approved by the Company's independent certified public accounting firm and
the Tier 2 Executive's designated financial advisor.
6.02 Accrued Benefits. Upon termination of the employment
of Executive for any reason, any accumulated but unused vacation shall be paid
through the Date of Termination. Upon termination of the employment of Executive
as set forth in Section 5.01, any accrued but unpaid bonus shall be paid through
the Date of Termination. Unless otherwise specifically provided in this Plan,
any payments or benefits payable to the Executive hereunder, including without
limitation any bonus, in respect of any calendar year during which the Executive
is employed by the Employer for less than the entire such year shall be prorated
in accordance with the number of days in such calendar year during which he or
she is so employed.
7. No Mitigation. The Executive shall not be required to mitigate
the amount of any payments provided for by this Plan by seeking employment or
otherwise, nor shall the amount of any cash payments or benefits provided under
this Plan be reduced by any compensation or benefits earned by the Executive
after his or her Date of Termination (except as provided in the last sentence of
Section 6.01(d) above). Notwithstanding the foregoing, if the Executive is
entitled, by operation of any applicable law, to unemployment compensation
benefits or benefits under the Worker Adjustment and Retraining Act of 1988
(known as the "WARN" Act) in connection with the termination of his or her
employment in addition to amounts required to be paid to him or her under this
Plan, then to the extent permitted by applicable statutory law governing
severance payments or notice of termination of employment, the Company shall be
entitled to offset the amounts payable hereunder by the amounts of any such
statutorily mandated payments.
8. Limitation on Rights.
8.01 No Employment Contract. This Plan shall not be
deemed to create a contract of employment between the Employer and the Executive
and shall create no right in the Executive to continue in the Employer's
employment for any specific period of time, or to create any other rights in the
Executive or obligations on the part of the Company or its subsidiaries, except
as set forth herein. Except as set forth herein, this Plan shall not restrict
the right of the Employer to terminate the employment of Executive, or restrict
the right of the Executive to terminate his or her employment.
8.02 No Other Exclusions. This Plan shall not be
construed to exclude the Executive from participation in any other compensation
or benefit programs in which he or she is specifically eligible to participate
either prior to or following the Effective Date of this Plan, or any such
programs that generally are available to other executive personnel of the
Company, nor shall it affect the kind and amount of other compensation to which
the Executive is entitled.
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9. Administrator and Claims Procedure.
9.01 Administrator. Except as set forth herein, the
administrator (the "Administrator") for purposes of this Plan shall be the
Company. The Company shall have the right to designate one or more of the
Company's or the Employer's employees as the Administrator at any time. The
Company shall give the Executive written notice of any change in the
Administrator, or in the address or telephone number of the same.
9.02 Claims Procedure. The Executive, or other person
claiming through the Executive, must file a written claim for benefits with the
Administrator as a prerequisite to the payment of benefits under this Plan. The
Administrator shall make all determinations as to the right of any person to
receive benefits under Sections 9.02 and 9.03. The decision by the Administrator
of a claim for benefits by the Executive, his or her heirs or personal
representative (the "claimant") shall be stated in writing by the Administrator
and delivered or mailed to the claimant within thirty (30) days after receipt of
the claim, unless special circumstances require an extension of time for
processing the claim. If such an extension is required, written notice of the
extension shall be furnished to the claimant prior to the termination of the
initial thirty-day period. In no event shall such extension exceed a period of
thirty (30) days from the end of the initial period. Any notice of denial shall
set forth the specific reasons for the denial, specific reference to pertinent
provisions of this Plan upon which the denial is based, a description of any
additional material or information necessary for the claimant to perfect his or
her claim, with an explanation of why such material or information is necessary,
and a description of claim review procedures, written to the best of the
Administrator's ability in a manner that may be understood without legal or
actuarial counsel.
9.03 Appeals. A claimant whose claim for benefits has
been wholly or partially denied by the Administrator may request, within sixty
(60) days following the date of such denial, in a writing addressed to the
Administrator, a review of such denial. The claimant shall be entitled to submit
written comments, documents, records and other information he or she shall
consider relevant to a determination of his or her claim, and he or she may
include a request for a hearing in person before the Administrator. Prior to
submitting his or her request, the claimant shall be entitled to review such
documents, records, and other information as the Administrator shall reasonably
agree are pertinent to his or her claim. The claimant may, at all stages of the
review, be represented by counsel, legal or otherwise, of his or her choice,
provided that the fees and expenses of such counsel shall be borne by the
claimant, unless the claimant is successful, in which case, such costs shall be
borne by the Company. The review of the claim shall take into account all
information submitted by claimant relating to the claim, without regard to
whether such information was submitted in the initial benefit determination. All
requests for review shall be promptly resolved. The Administrator's decision
with respect to any such review shall be set forth in writing and shall be
mailed to the claimant not later than sixty (60) days following receipt by the
Administrator of the claimant's request unless special circumstances, such as
the need to hold a hearing, require an extension of time for processing, in
which case the Administrator's decision shall be so mailed not later than one
hundred and twenty (120) days after receipt of the claimant's request. The time
and place of any hearing shall be as mutually agreed by the parties. If the
claimant is dissatisfied with the Administrator's decision on review, the
claimant may then either, at his or her option, invoke the arbitration
procedures described in Section 9.04 or pursue a remedy in a judicial forum. No
legal action may be commenced prior to the completion of the claims and appeals
procedures described in the foregoing provisions of Section 9.02 and 9.03.
Notwithstanding the foregoing, no legal action may be commenced after
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ninety (90) days after the date upon which the Administrator's written decision
on appeal was sent to claimant.
9.04 Arbitration. A claimant who has followed the
procedures in Sections 9.02 and 9.03, but who has not obtained full relief on
his or her claim for benefits, may, within sixty (60) days following his or her
receipt of the Administrator's written decision on review pursuant to Section
9.03, apply in writing to the Administrator for expedited and binding
arbitration of his or her claim before an arbitrator in Orange County,
California in accordance with the commercial arbitration rules of the American
Arbitration Association, as then in effect, or pursuant to such other form of
alternative dispute resolution as the parties may agree (collectively, the
"arbitration"). Subject to Section 10, the Company or the Employer shall pay
filing fees and other costs required to initiate the arbitration. The
arbitrator's sole authority shall be to interpret and apply the provisions of
this Plan; and except as set forth herein he or she shall not change, add to, or
subtract from, any of its provisions. The arbitrator shall have the power to
compel attendance of witnesses at the hearing. Any court having jurisdiction may
enter a judgment based upon such arbitration. The arbitrator shall be appointed
by mutual agreement of the Company and the claimant; provided that if the
Company and the claimant cannot agree, the arbitrator shall be appointed
pursuant to the applicable commercial arbitration rules. The arbitrator shall be
a professional person with a reputation in the community for expertise in
employee benefit matters and who is unrelated to the claimant, the Company or
its subsidiaries or any employees of the Company or its subsidiaries. All
decisions of the arbitrator shall be final and binding on the claimant and the
Company.
10. Legal Fees and Expenses. If any dispute arises between the
parties with respect to the interpretation or performance of this Plan, the
prevailing party in any arbitration or proceeding shall be entitled to recover
from the other party its attorneys fees, arbitration or court costs and other
expenses incurred in connection with any such proceeding. Amounts, if any, paid
to the Executive under this Section 10 shall be in addition to all other amounts
due to the Executive pursuant to this Plan.
11. ERISA. This Plan is an unfunded compensation arrangement for
a member of a select group of the Company's management or that of its
subsidiaries and any exemptions under the Employee Retirement Income Security
Act of 1974, as amended, as applicable to such an arrangement shall be
applicable to this Plan.
12. Miscellaneous.
12.01 Administration. This Plan may be administered by the
Board or the Committee. When this Plan refers to any action by the Board, the
Committee may take such action with the same effect as if it had been taken by
the Board.
12.02 Amendments. This Plan may be changed, amended or
modified by resolution of the Board or the Committee.
12.03 Assignment and Binding Effect.
(a) Neither this Plan nor the rights or obligations
hereunder shall be assignable by the Executive or the Company except that this
Plan shall be assignable to, binding
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upon and inure to the benefit of any successor of the Company, and any successor
shall be deemed substituted for the Company upon the terms and subject to the
conditions hereof'.
(b) The Company will require any successor (whether by
purchase of assets, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to expressly assume and agree
to perform all of the obligations of the Company under this Plan (including the
obligation to cause any subsequent successor to also assume the obligations of
this Plan) unless such assumption occurs by operation of law. Nothing in this
Section 12.03 is intended, however, to require that a person or group referred
to in Section 2.03(a) as being the beneficial owner of shares of stock of the
Company must assume the obligations under this Plan as a result of such stock
ownership.
12.04 No Waiver. No waiver of any term, provision or
condition of this Plan, whether by conduct or otherwise, in any one or more
instances shall be deemed or be construed as a further or continuing waiver of
any such term, provision or condition or as a waiver of any other term,
provision or condition of this Plan.
12.05 Rules of Construction.
(a) This Plan has been executed in, and shall be
governed by and construed in accordance with the laws of, the State of
California. Captions contained in this Plan are for convenience of reference
only and shall not be considered or referred to in resolving questions of
interpretation with respect to this Plan.
(b) If any provision of this Plan is held to be illegal,
invalid or unenforceable under any present or future law, and if the rights or
obligations of any party hereto under this Plan will not be materially and
adversely affected thereby, (i) such provision will be fully severable, (ii)
this Plan will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Plan will remain in full force and effect and will not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision,
there will be added automatically as a part of this Plan a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
12.06 Notices. Any notice required or permitted by this
Plan shall be in writing, delivered by hand, or sent by registered or certified
mail, return receipt requested, or by recognized courier service (regularly
providing proof of delivery), addressed to the Board and the Company and where
applicable, the Administrator, at the Company's then principal office, or to the
Executive at the address set forth in the records of the Employer, as the case
may be, or to such other address or addresses the Company or the Executive may
from time to time specify in writing. Notices shall be deemed given when
received.
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