Exhibit 10(GG)
LTX Corporation
Deferred Compensation Plan
Master Plan Document
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Effective December 1, 2001
LTX 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.............................................. 7
2.1 Selection by Committee.......................................................... 7
2.2 Enrollment Requirements......................................................... 7
2.3 Eligibility; Commencement of Participation...................................... 7
2.4 Termination of Participation and/or Deferrals................................... 7
ARTICLE 3 Deferral Commitments/Company Contribution/401(k) Restoration Matching
Contribution/Vesting/Crediting/Taxes............................................ 8
3.1 Annual Deferral Amounts......................................................... 8
3.2 Minimum Deferrals............................................................... 8
3.3 Maximum Deferral................................................................ 9
3.4 Election to Defer; Effect of Election Form...................................... 9
3.5 Withholding of Annual Deferral Amounts.......................................... 9
3.6 Annual Company Contribution Amount.............................................. 10
3.7 Annual 401(k) Restoration Matching Amount....................................... 10
3.8 Investment of Trust Assets...................................................... 10
3.9 Vesting......................................................................... 10
3.10 Crediting/Debiting of Account Balances.......................................... 11
3.11 FICA and Other Taxes............................................................ 13
ARTICLE 4 Short-Term Payout; Unforeseeable Financial Emergencies; Withdrawal Election..... 13
4.1 Short-Term Payout............................................................... 13
4.2 Other Benefits Take Precedence Over Short-Term.................................. 14
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies........... 14
4.4 Withdrawal Election............................................................. 14
ARTICLE 5 Retirement Benefit.............................................................. 14
5.1 Retirement Benefit.............................................................. 14
5.2 Payment of Retirement Benefit................................................... 14
5.3 Death Prior to Completion of Retirement Benefit................................. 15
ARTICLE 6 Pre-Retirement Survivor Benefit................................................. 15
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
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6.1 Pre-Retirement Survivor Benefit............................................ 15
6.2 Payment of Pre-Retirement Survivor Benefit................................. 15
ARTICLE 7 Termination Benefit........................................................ 15
7.1 Termination Benefit........................................................ 15
7.2 Payment of Termination Benefit............................................. 15
ARTICLE 8 Disability Benefit......................................................... 16
8.1 Disability................................................................. 16
8.2 Continued Eligibility; Disability Benefit.................................. 16
ARTICLE 9 Beneficiary Designation.................................................... 17
9.1 Beneficiary................................................................ 17
9.2 Beneficiary Designation; Change; Spousal Consent........................... 17
9.3 Acknowledgement............................................................ 17
9.4 No Beneficiary Designation................................................. 17
9.5 Doubt as to Beneficiary.................................................... 17
9.6 Discharge of Obligations................................................... 17
ARTICLE 10 Leave of Absence........................................................... 17
10.1 Paid Leave of Absence...................................................... 17
10.2 Unpaid Leave of Absence.................................................... 18
ARTICLE 11 Termination, Amendment or Modification..................................... 18
11.1 Termination................................................................ 18
11.2 Amendment.................................................................. 19
11.3 Plan Agreement............................................................. 19
11.4 Effect of Payment.......................................................... 19
ARTICLE 12 Administration............................................................. 19
12.1 Committee Duties........................................................... 19
12.2 Administration Upon Change In Control...................................... 19
12.3 Agents..................................................................... 20
12.4 Binding Effect of Decisions................................................ 20
12.5 Indemnity of Committee..................................................... 20
12.6 Employer Information....................................................... 20
ARTICLE 13 Other Benefits and Agreements.............................................. 21
13.1 Coordination with Other Benefits........................................... 21
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
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ARTICLE 14 Claims Procedures................................................. 21
14.1 Presentation of Claim............................................. 21
14.2 Notification of Decision.......................................... 21
14.3 Review of a Denied Claim.......................................... 21
14.4 Decision on Review................................................ 22
14.5 Legal Action...................................................... 22
ARTICLE 15 Trust............................................................. 22
15.1 Establishment of the Trust........................................ 22
15.2 Interrelationship of the Plan and the Trust....................... 22
15.3 Distributions From the Trust...................................... 22
ARTICLE 16 Miscellaneous..................................................... 23
16.1 Status of Plan.................................................... 23
16.2 Unsecured General Creditor........................................ 23
16.3 Employer's Liability.............................................. 23
16.4 Nonassignability.................................................. 23
16.5 Not a Contract of Employment...................................... 23
16.6 Furnishing Information............................................ 23
16.7 Terms............................................................. 24
16.8 Captions.......................................................... 24
16.9 Governing Law..................................................... 24
16.10 Notice............................................................ 24
16.11 Successors........................................................ 24
16.12 Spouse's Interest................................................. 24
16.13 Validity.......................................................... 24
16.14 Incompetent....................................................... 24
16.15 Court Order....................................................... 25
16.16 Distribution in the Event of Taxation............................. 25
16.17 Insurance......................................................... 25
16.18 Legal Fees To Enforce Rights After Change in Control.............. 25
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
================================================================================
LTX CORPORATION
DEFERRED COMPENSATION PLAN
Effective December 1, 2001
Purpose
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The purpose of this Plan is to provide specified benefits to a select
group of management or highly compensated Employees and Directors who contribute
materially to the continued growth, development and future business success of
LTX Corporation, a Massachusetts corporation, and its subsidiaries, if any, that
sponsor this Plan. This Plan shall be unfunded for tax purposes and for purposes
of Title I of ERISA.
ARTICLE 1
Definitions
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For the purposes of this Plan, unless otherwise clearly apparent from
the context, the following phrases or terms shall have the following indicated
meanings:
1.1 "Account Balance" shall mean, with respect to a Participant, a credit
on the records of the Employer equal to the sum of (i) the Deferral
Account balance, (ii) the Company Contribution Account balance, and
(iii) the 401(k) Restoration Matching 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 Company Contribution Amount" shall mean, for any one Plan
Year, the amount determined in accordance with Section 3.6.
1.3 "Annual Deferral Amount" shall mean that portion of a Participant's
Base Annual Salary, Bonus, Commissions and Director Fees that a
Participant defers 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.
1.4 "Annual 401(k) Restoration Matching Amount" for any one Plan Year
shall be the amount determined in accordance with Section 3.7.
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 date
on which a benefit payment hereunder is triggered due to the
Participant's Retirement. 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 ten
(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,
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
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calculated as described in this definition. The first annual
installment payment shall be paid no later than ninety (90) days after
the date on which the first benefit payment hereunder is triggered due
to the Participant's Retirement. Remaining annual installments shall be
paid no later than sixty (60) days after each January 1 following the
Participant's Retirement.
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, director fees and other fees, and automobile and
other allowances paid to a Participant for employment services rendered
(whether or not such allowances are included in the Employee's gross
income). Base Annual Salary shall be calculated before reduction for
compensation voluntarily deferred or contributed by the Participant
pursuant to all qualified or non-qualified plans of any Employer and
shall be calculated to include amounts not otherwise included in the
Participant's gross income under Code Sections 125, 402(e)(3), 402(h),
or 403(b) pursuant to plans established by any Employer; provided,
however, that all such amounts will be included in compensation only to
the extent that had there been no such plan, the amount would have been
payable in cash to the Employee.
1.7 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, that are entitled to
receive benefits under this Plan upon the death of a Participant.
1.8 "Beneficiary Designation Form" shall mean the form established from
time to time by the Committee that a Participant completes, signs and
returns to the Committee to designate one or more Beneficiaries.
1.9 "Board" shall mean the board of directors of the Company.
1.10 "Bonus" shall mean any compensation, in addition to Base Annual Salary
payable during the Plan Year to a Participant as an Employee under any
Employer's bonus and cash incentive plans, excluding stock options.
1.11 "Change in Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (a) the then
outstanding shares of Stock (the "Outstanding Company Common
Stock") or (b) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
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the Company or (iv) any acquisition pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (a)
of this Section 1.11; or
(b) Individuals who, as of June 8, 1999, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to June 8, 1999 whose election, or
nomination for election by the Company's stockholders, was approved
by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of
the Company or the acquisition of assets of another entity (a
"Corporate Transaction"), in each case, unless, following such
Corporate Transaction, (i) all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Corporate Transaction beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from
such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company
or all or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same
proportions as their immediately prior to such Corporate
Transaction of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person
(excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Corporate
Transaction) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Corporate Transaction or the
combined voting power of the then outstanding voting of such
corporation except to the extent that such ownership existed prior
to the Corporate Transaction and (iii) at least a majority of the
members of the board of directors of the corporation resulting from
such Corporate Transaction were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Corporate Transaction; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
1.12 "Claimant" shall have the meaning set forth in Section 14.1.
1.13 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
================================================================================
1.14 "Commissions" shall mean the cash commissions payable during the Plan
Year to a Participant as an Employee.
1.15 "Committee" shall mean the committee described in Article 12.
1.16 "Company" shall mean LTX Corporation, a Massachusetts corporation, and
any successor to all or substantially all of the Company's assets or
business.
1.17 "Company Contribution Account" shall mean (i) the sum of the
Participant's Annual Company Contribution Amounts, plus (ii) amounts
credited or debited in accordance with all the applicable crediting and
debiting 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.
1.18 "Deduction Limitation" shall mean the following described limitation on
a benefit that may otherwise be distributable pursuant to the
provisions of this Plan. Except as otherwise provided, this limitation
shall be applied to all distributions that are "subject to the
Deduction Limitation" under this Plan. If 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 3.10 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.
1.19 "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 and debiting provisions of this Plan that
relate to the Participant's Deferral Account, less (iii) all
distributions made to the Participant or his or her Beneficiary
pursuant to this Plan that relate to his or her Deferral Account.
1.20 "Director" shall mean any member of the board of directors of any
Employer.
1.21 "Director 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.
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
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
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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 December 1, 2001 and
ending December 31, 2001.
1.29 "401(k) plan" shall be that certain LTX Growth and Investment Program
dated October 1, 1995 adopted by the Company and as amended from time
to time.
1.30 "401(k) Restoration Matching Account" shall mean (i) the sum of all of
a Participant's Annual 401(k) Restoration Matching Amounts, plus (ii)
amounts credited in accordance with all the applicable crediting
provisions of this Plan that relate to the Participant's 401(k)
Restoration Matching Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate
to the Participant's 401(k) Restoration Matching Account.
1.31 "Participant" shall mean any Employee or Director (i) who is selected
to participate in the Plan, (ii) who elects to participate in the Plan,
(iii) who signs a Plan Agreement, an Election Form and a Beneficiary
Designation Form, (iv) whose signed Plan Agreement, Election Form and
Beneficiary Designation Form are accepted by the Committee, (v) who
commences participation in the Plan, and (vi) whose Plan Agreement has
not terminated. A spouse or former spouse of a Participant shall not be
treated as a Participant in the Plan or have an account balance under
the Plan, even if he or she has an interest in the Participant's
benefits under the Plan as a result of applicable law or property
settlements resulting from legal separation or divorce.
1.32 "Plan" shall mean the Company's Deferred Compensation Plan, which shall
be evidenced by this instrument and by each Plan Agreement, as they may
be amended from time to time.
1.33 "Plan Agreement" shall mean a written agreement, as may be amended from
time to time, which is entered into by and between an Employer and a
Participant. Each Plan Agreement executed by a Participant and the
Participant's Employer shall provide for the entire benefit to which
such Participant is entitled under the Plan; should there be more than
one Plan Agreement, the Plan Agreement bearing the latest date of
acceptance by the Employer shall supersede all previous Plan Agreements
in their entirety and shall govern such entitlement. The terms of any
Plan Agreement may be different for any Participant, and any Plan
Agreement may provide additional
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
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benefits not set forth in the Plan or limit the benefits otherwise
provided under the Plan; provided, however, that any such additional
benefits or benefit limitations must be agreed to by both the Employer
and the Participant.
1.34 "Plan Year" shall, except for the First Plan Year, mean a period
beginning on January 1 of each calendar year and continuing through
December 31 of such calendar year.
1.35 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
1.36 "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
earlier of the attainment of (a) age sixty-five (65) or (b) age
fifty-five (55) with ten (10) Years of Service; 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 (y) the
attainment of age seventy (70), or (z) 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.
1.37 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.38 "Short-Term Payout" shall mean the payout set forth in Section 4.1.
1.39 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.40 "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.
1.41 "Trust" shall mean one or more trusts established pursuant to that
certain Master Trust Agreement, dated as of ________, 2001 between the
Company and the trustee named therein, as amended from time to time.
1.42 "Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the
Participant that would result in severe financial hardship to the
Participant resulting from (i) a sudden and unexpected illness or
accident of the Participant or a dependent of the Participant, (ii) a
loss of the Participant's property due to casualty, or (iii) such other
extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the
sole discretion of the Committee.
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
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1.43 "Years of Service" shall mean the total number of full years in which a
Participant has been employed by one or more Employers. For purposes of
this definition, a year of employment shall be a 365 day period (or 366
day period in the case of a leap year) that, for the first year of
employment, commences on the Employee's date of hiring and that, for
any subsequent year, commences on an anniversary of that hiring date.
The Committee shall make a determination as to whether any partial year
of employment shall be counted as a Year of Service.
ARTICLE 2
Selection, Enrollment, Eligibility
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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, each selected
-----------------------
Employee or Director shall complete, execute and return to the
Committee a Plan Agreement, an Election Form and a Beneficiary
Designation Form, all within thirty (30) days after he or she is
selected to participate in the Plan. In addition, the Committee shall
establish from time to time such other enrollment requirements as it
determines in its sole discretion are necessary.
2.3 Eligibility; Commencement of Participation. Provided an Employee 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 the first day of the month following the
month in which the Employee or Director completes all enrollment
requirements. If an Employee or a Director fails to meet all such
requirements within the period required, in accordance with Section
2.2, that Employee or Director shall not be eligible to participate in
the Plan until the first day of the Plan Year following the delivery
to and acceptance by the Committee of the required documents.
2.4 Termination of Participation and/or Deferrals. If the Committee
---------------------------------------------
determines in good faith that a Participant no longer qualifies as a
member of a select group of management or highly compensated employees,
as membership in such group is determined in accordance with Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the
right, in its sole discretion, to (i) terminate any deferral election
the Participant has made for the remainder of the Plan Year in which
the Participant's membership status changes, (ii) prevent the
Participant from making future deferral elections and/or (iii)
immediately distribute the Participant's then vested Account Balance as
a Termination Benefit and terminate the Participant's participation in
the Plan.
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
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ARTICLE 3
Deferral Commitments/Company Contribution/ 401(k) Restoration Matching
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Contribution/Vesting/Crediting/Taxes
------------------------------------
3.1 Annual Deferral Amounts. A Participant may elect to defer, as his or
-----------------------
her Annual Deferral Amount, either a percentage or a fixed dollar
amount of his or her Base Annual Salary, Bonus, Commissions and/or
Director Fees. If a Participant designates a fixed dollar amount to be
withheld from the payment of Base Annual Salary, Bonus, Commissions
and/or Director Fees and such fixed dollar amount exceeds the amount
actually payable to the Participant, the entire amount of such Base
Annual Salary, Bonus, Commissions and/or Director Fees payment, as
applicable, shall be withheld.
3.2 Minimum Deferrals.
-----------------
(a) Base Annual Salary, Bonus, Commissions, and Director Fees.
---------------------------------------------------------
For each Plan Year, a Participant may elect to defer, as his
or her Annual Deferral Amount, Base Annual Salary, Bonus,
Commissions and/or Director Fees in the following minimum
amounts for each deferral elected:
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Deferral Minimum Percentage
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Base Annual Salary 5%
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Bonus 5%
---------------------------------------------------
Commissions 5%
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Director Fees 5%
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If an election is made for less than the stated minimum
amounts, or if no election is made, the amount deferred shall
be zero.
(b) Short Plan Year. Notwithstanding the foregoing, if a
---------------
Participant first becomes a Participant after the first day of
a Plan Year, or in the case of the first Plan Year of the Plan
itself, the minimum Base Annual Salary, Bonus, Commissions
and/or Director Fees 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.
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
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3.3 Maximum Deferral.
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(a) Base Annual Salary, Bonus, Commissions and Director Fees. For
--------------------------------------------------------
each Plan Year, a Participant may elect to defer, as his or
her Annual Deferral Amount, Base Annual Salary, Bonus,
Commissions and/or Director Fees up to the following maximum
percentages for each deferral elected:
---------------------------------------------------
Deferral Maximum Amount
---------------------------------------------------
Base Annual Salary 75%
---------------------------------------------------
Bonus 100%
---------------------------------------------------
Commissions 100%
---------------------------------------------------
Director Fees 100%
---------------------------------------------------
(b) Short Plan Year. Notwithstanding the foregoing, if a
---------------
Participant first becomes a Participant after the first day of
a Plan Year, or in the case of the first Plan Year of the Plan
itself, the maximum Annual Deferral Amount with respect to
Base Annual Salary, Bonus, Commissions and Director 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.
3.4 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. If no such Election
Form is timely delivered for a Plan Year, the Annual Deferral
Amount shall be zero for that Plan Year.
3.5 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 Bonus, Commissions and/or Director Fees portion
of the Annual Deferral Amount shall be withheld at the time the Bonus,
Commissions or Director Fees are or otherwise would be paid to the
Participant, whether or not this occurs during the Plan Year itself.
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
================================================================================
3.6 Annual Company Contribution Amount.
----------------------------------
(a) For each Plan Year, an Employer may be required to credit
amounts to a Participant's Company Contribution Account in
accordance with employment or other agreements entered into
between the Participant and the Employer. Such amounts shall
be credited on the date or dates prescribed by such
agreements.
(b) For each Plan Year, an Employer, in its sole discretion,
may, but is not required to, credit any amount it desires to
any Participant's Company Contribution Account under this
Plan, which amount shall be for that Participant the Annual
Company Contribution Amount for that Plan Year. The amount
so credited to a Participant may be smaller or larger than
the amount credited to any other Participant, and the amount
credited to any Participant for a Plan Year may be zero,
even though one or more other Participants receive an Annual
Company Contribution Amount for that Plan Year. The Annual
Company Contribution Amount, if any, shall be credited as of
the last day of the Plan Year. If a Participant is not
employed by an Employer as of the last day of a Plan Year
other than by reason of his or her Retirement or death while
employed, the Annual Company Contribution Amount for that
Plan Year shall be zero.
3.7 Annual 401(k) Restoration Matching Amount. For each Plan Year during
-----------------------------------------
which a Participant participates in the Company's 401(k) Plan and a
Company matching contribution is made to such 401(k) Plan, an Employer
shall credit a Participant's Annual 401(k) Restoration Matching Account
under this Plan with an amount equal to the difference between (i) the
amount the Employer contributed to the 401(k) Plan on behalf of such
Participant during the Plan Year, and (ii) the amount that would have
been contributed by the Employer to the 401(k) Plan on behalf of such
Participant during such Plan Year (a) had the Participant not
voluntarily deferred or contributed amounts to any non-qualified plans
maintained by the Employer and (b) without regard to any limitations
imposed by the Code. The amount so credited to a Participant under this
Plan shall be for that Participant the Annual 401(k) Restoration
Matching Amount for that Plan Year. A Participant's Annual 401(k)
Restoration Matching Amount 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 401(k) Restoration Matching Amount for
that Plan Year. If a Participant is not employed by the Employer as of
the last day of a Plan Year other than by reason of his or her
Retirement, Disability or death, the Annual 401(k) Restoration Matching
Amount for such Plan Year shall be zero. In the event of Retirement,
Disability, or death, a Participant shall be credited with the Annual
401(k) Restoration Matching Amount for the Plan Year in which he or she
Retires, becomes disabled or dies.
3.8 Investment of Trust Assets. The Trustee of the Trust shall be
--------------------------
authorized, upon written instructions received from the Committee or
investment manager appointed by the Committee, to invest and reinvest
the assets of the Trust in accordance with the applicable Trust
Agreement, including the disposition of stock and reinvestment of the
proceeds in one or more investment vehicles designated by the
Committee.
3.9 Vesting.
-------
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
================================================================================
(a) A Participant shall at all times be 100% vested in his or her
Deferral Account.
(b) A Participant shall be vested in his or her Company Contribution
Account in accordance with the vesting schedule(s) set forth in
his or her Plan Agreement, employment agreement or any other
agreement entered into between the Participant and his or her
Employer.
(c) A Participant shall be vested in his or her 401(k) Restoration
Matching Account only to the extent that the Participant would
be vested in such amounts under the provisions of the 401(k)
Plan.
(d) Notwithstanding anything to the contrary contained in this
Section 3.9, in the event of Retirement, death or a Change in
Control, a Participant's Company Contribution Account and 401(k)
Restoration Matching Account shall immediately become 100%
vested (if it is not already vested in accordance with the above
vesting schedules).
(e) Notwithstanding subsection 3.9(d) above, the vesting schedule
for a Participant's Company Contribution Account and/or 401(k)
Restoration Matching Account shall not be accelerated to the
extent that the Committee determines that such acceleration
would cause the deduction limitations of Section 280G of the
Code to become effective. In the event that all of a
Participant's Company Contribution Account and/or 401(k)
Restoration Matching Account is not vested pursuant to such a
determination, the Participant may request independent
verification of the Committee's calculations with respect to the
application of Section 280G. In such case, the Committee must
provide to the Participant within 15 business days of such a
request an opinion from a nationally recognized accounting firm
selected by the Participant (the "Accounting Firm"). The opinion
shall state the Accounting Firm's opinion that any limitation in
the vested percentage hereunder is necessary to avoid the limits
of Section 280G and contain supporting calculations. The cost of
such opinion shall be paid for by the Company.
3.10 Crediting/Debiting of Account Balances. In accordance with, and
--------------------------------------
subject to, the rules and procedures that are established from time
to time by the Committee, in its sole discretion, amounts shall be
credited or debited to a Participant's Account Balance in accordance
with the following rules:
(a) Election of Measurement Funds. A Participant, in connection with
-----------------------------
his or her initial deferral election in accordance with Section
3.4(a) above, shall elect, on the Election Form, one or more
Measurement Fund(s) (as described in Section 3.10(c) below) to
be used to determine the amounts to be credited or debited to
his or her Account Balance. 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
amounts to be credited or debited 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. If an
election is made in accordance with the previous sentence, it
shall apply as of the first business day deemed reasonably
practicable by the Committee, in its sole discretion, and shall
continue
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
================================================================================
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 3.10(a) above, the Participant shall specify on the
Election Form, in increments of one percent (1%), the percentage of
his or her Account Balance to be allocated to a Measurement Fund
(as if the Participant was making an investment in that Measurement
Fund with that portion of his or her Account Balance).
(c) Measurement Funds. The Participant may elect one or more of the
-----------------
measurement funds (the "Measurement Funds"), based on certain
mutual funds, for the purpose of crediting or debiting additional
amounts to his or her Account Balance. At the beginning of each
Plan Year, the Committee shall provide the Participant with a list
of Measurement Funds available. As necessary, the Committee may, in
its sole discretion, discontinue, substitute or add a Measurement
Fund. Each such action will take effect as of the first day of the
calendar quarter that follows by thirty (30) days the day on which
the Committee gives Participants advance written notice of such
change.
(d) Crediting or Debiting Method. The performance of each elected
----------------------------
Measurement Fund (either positive or negative) will be 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, such performance being determined by the Committee in
-----------------------------------------------------
its sole discretion.
-------------------
(e) No Actual Investment. Notwithstanding any other provision of this
--------------------
Plan that may be interpreted to the contrary, the Measurement Funds
are to be used for measurement purposes only, and a Participant's
election of any such Measurement Fund, the allocation to his or her
Account Balance thereto, the calculation of additional amounts and
the crediting or debiting of such amounts to a Participant's
Account Balance shall not be considered or construed in any manner
---------
as an actual investment of his or her Account Balance in any such
Measurement Fund. In the event that the Company or the Trustee (as
that term is defined in the Trust), in its own discretion, decides
to invest funds in any or all of the Measurement Funds, no
Participant shall have any rights in or to such investments
themselves. Without limiting the foregoing, a Participant's Account
Balance shall at all times be a bookkeeping entry only and shall
not represent any investment made on his or her behalf by the
Company or the Trust; the Participant shall at all times remain an
unsecured creditor of the Company.
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
================================================================================
3.11 FICA and Other Taxes.
--------------------
(a) Annual Deferral Amounts. For each Plan Year in which an Annual
-----------------------
Deferral Amount is being withheld from a Participant, the
Participant's Employer(s) shall withhold from that portion of the
Participant's Base Annual Salary, Bonus and Commissions 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 3.11.
(b) 401(k) Restoration Matching Account and Company Contribution
------------------------------------------------------------
Account. When a participant becomes vested in a portion of his or
-------
her 401(k) Restoration Matching Account or 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 401(k) Restoration Matching Account or Company
Contribution Amount, as applicable, in order to comply with this
Section 3.11.
(c) 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.
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 all or a
portion of 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 portion of the Annual Deferral Amount the
Participant elected to have distributed as a Short-Term Payout plus
amounts credited or debited in the manner provided in Section 3.10
above on that amount, determined at the time that the Short-Term Payout
becomes payable. Subject to the Deduction Limitation and the other
terms and conditions of this Plan, each Short-Term Payout elected shall
be paid out during a sixty (60) day period commencing immediately after
the first day of any Plan Year designated by the Participant. The Plan
Year designated by the Participant must be at least three (3) Plan
Years after the Plan Year in which the Annual Deferral Amount is
actually deferred. By way of example, if a three (3) year Short-Term
Payout is elected for Annual Deferral Amounts that are deferred in the
Plan Year commencing January 1, 2002, the three (3) year Short-Term
Payout would become payable during a sixty (60) day period commencing
January 1, 2006.
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
================================================================================
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 sixty (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 "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. No partial withdrawals of the Account Balance 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 sixty (60) days of his or her election. Once the
Withdrawal Amount is paid, the Participant's participation in the Plan
shall be suspended for the remainder of the Plan Year in which the
withdrawal is elected and for one (1) full Plan Year thereafter. 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 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 to and accepted by
the Committee in its sole discretion at least 12 months prior to the
Participant's Retirement. 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
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
================================================================================
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 ninety (90) days after the date
on which the Participant Retires. Remaining annual installments shall
be paid no later than sixty (60) days after each January 1 following
the Participant's Retirement. 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 Beneficiary shall receive a lump sum payment that is
equal to the Participant's unpaid remaining vested Account Balance no
later than ninety (90) days after 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 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 becomes entitled to benefits under
this Plan as a result of Retirement, Termination of Employment or
Disability.
6.2 Payment of Pre-Retirement Survivor Benefit. The Pre-Retirement Survivor
------------------------------------------
Benefit shall be paid to the Participant's Beneficiary in a lump sum
payment no later than ninety (90) days after 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 before he or she becomes
entitled to benefits under this Plan as a result of Retirement, death
or Disability.
7.2 Payment of Termination Benefit. The Participant shall receive his or
------------------------------
her Termination Benefit in a lump sum payment no later than ninety (90)
days after the date on which the Participant experiences a Termination
of Employment. Any payment made shall be subject to the Deduction
Limitation.
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
================================================================================
ARTICLE 8
Disability Benefit
------------------
8.1 Disability.
----------
(a) Continued Deferral. If a Participant is determined by the Committee
------------------
to be both (i) suffering from a Disability and (ii) receiving 100
percent of his or her Base Annual Salary and/or Director Fees
during the period of Disability, then the Participant's Annual
Deferral Amount shall continue to be withheld during such period of
Disability in accordance with Section 3.4.
(b) Waiver of Deferral. If a Participant is determined by the Committee
------------------
to be both (i) suffering from a Disability and, (ii) receiving less
than 100 percent of his or her Base Annual Salary and/or Director
Fees during the period of Disability, then such Participant shall
be excused from fulfilling his or her Annual Deferral Amount
commitment that would otherwise have been withheld 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.
(c) Deferral Following Disability. If a Participant (i) returns to
-----------------------------
employment, or service as a Director, with an Employer after a
Disability ceases, and (ii) payment of 100 percent of his or her
Base Annual Salary and/or Director Fees recommences, the
Participant may elect to defer an Annual Deferral Amount for the
Plan Year in which both (i) and (ii) occur 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 3.4 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 Committee, in its sole discretion, may
cause the Disability Benefit to be paid either in a lump sum payment or
pursuant to an Annual Installment Method of 5, 10, 15 or 20 years. The
lump sum payment shall be made, or installment payments shall commence,
within sixty (60) days after the last day of the Plan Year in which the
Committee determines that the Participant has suffered a Disability. Any
payment made shall be subject to the Deduction Limitation.
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
================================================================================
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.
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
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
================================================================================
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 3.4.
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 (i) as if they had experienced a Termination
of Employment on the date of Plan termination; or (ii) 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. Such benefits shall be paid to
the Participants as follows: (i) 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 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; or
(ii) prior to a Change in Control, 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; or (iii) after a Change in Control, if
the Plan is terminated with respect to some or all of its Participants,
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).
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LTX Corporation
Deferred Compensation Plan
Master Plan Document
================================================================================
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 or Section 12.2 of
the Plan shall be effective. The amendment or modification of the Plan
shall not affect any Participant or Beneficiary who has become entitled
to the payment of benefits under the Plan as of the date of the amendment
or modification; provided, however, that the Employer shall have the
right to accelerate installment payments by paying the 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.
11.4 Effect of Payment. The full payment of the applicable benefit under
-----------------
Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries
under this Plan and the Participant's Plan Agreement shall terminate.
ARTICLE 12
Administration
--------------
12.1 Committee Duties. Except as otherwise provided in this Article 12, this
----------------
Plan shall be administered by a Committee which shall consist of the
Board, or such committee as the Board shall appoint. Members of the
Committee may be Participants under this Plan and are listed at Appendix
A. The Committee shall also have the discretion and authority to (i)
make, amend, interpret, and enforce all appropriate rules and regulations
for the administration of this Plan and (ii) decide or resolve any and
all questions including interpretations of this Plan, as may arise in
connection with the Plan. Any individual serving on the Committee who is
a Participant shall not vote or act on any matter relating solely to
himself or herself. When making a determination or calculation, the
Committee shall be entitled to rely on information furnished by a
Participant or the Company.
12.2 Administration Upon Change In Control. For purposes of this Plan, the
-------------------------------------
Company shall be the "Administrator" at all times prior to the occurrence
of a Change in Control. Upon and after the occurrence of a Change in
Control, the "Administrator" shall be an independent third party selected
by the Trustee and approved by the individual who, immediately prior to
such event, was the Company's Chief Executive Officer or, if not so
identified, the Company's highest
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ranking officer (the "Ex-CEO"). The Administrator shall have the
discretionary power to determine all questions arising in connection with
the administration of the Plan and the interpretation of the Plan and
Trust including, but not limited to benefit entitlement determinations;
provided, however, upon and after the occurrence of a Change in Control,
the Administrator shall have no power to direct the investment of Plan or
Trust assets or select any investment manager or custodial firm for the
Plan or Trust. Upon and after the occurrence of a Change in Control, the
Company must: (1) pay all reasonable administrative expenses and fees of
the Administrator; (2) indemnify the Administrator against any costs,
expenses and liabilities including, without limitation, attorney's fees
and expenses arising in connection with the performance of the
Administrator hereunder, except with respect to matters resulting from
the gross negligence or willful misconduct of the Administrator or its
employees or agents; and (3) supply full and timely information to the
Administrator on all matters relating to the Plan, the Trust, the
Participants and their Beneficiaries, the Account Balances of the
Participants, the date and circumstances of the Retirement, Disability,
death or Termination of Employment of the Participants, and such other
pertinent information as the Administrator may reasonably require. Upon
and after a Change in Control, the Administrator may be terminated (and a
replacement appointed) by the Trustee only with the approval of the
Ex-CEO. Upon and after a Change in Control, the Administrator may not be
terminated by the Company.
12.3 Agents. In the administration of this Plan, the Committee may, from time
------
to time, employ agents and delegate to them such administrative duties as
it sees fit (including acting through a duly appointed representative)
and may from time to time consult with counsel who may be counsel to any
Employer.
12.4 Binding Effect of Decisions. The decision or action of the Administrator
---------------------------
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules
and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.
12.5 Indemnity of Committee. 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.
12.6 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 sixty (60) days
after such notice was received by the Claimant. All other claims must be
made within 180 days of the date on which the event that caused the claim
to arise occurred. The claim must state with particularity the
determination desired by the Claimant.
14.2 Notification of Decision. The Committee shall consider a Claimant's claim
------------------------
within a reasonable time, and shall notify the Claimant in writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or
in part, to the Claimant's requested determination, and such
notice must set forth in a manner calculated to be understood by
the Claimant:
(i) the specific reason(s) for the denial of the claim, or any
part of it;
(ii) specific reference(s) to pertinent provisions of the Plan
upon which such denial was based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is
necessary; and
(iv) an explanation of the claim review procedure set forth in
Section 14.3 below.
14.3 Review of a Denied Claim. Within sixty (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 thirty (30) days after the review
procedure began, the Claimant (or the Claimant's duly authorized
representative):
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(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 sixty (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. In order to provide assets from which to
--------------------------
fulfill the obligations of the Participants and their beneficiaries under
the Plan, the Company may establish a Trust by a trust agreement with a
third party, the trustee, to which each Employer may, in its discretion,
contribute cash or other property, including securities issued by the
Company, to provide for the benefit payments under the Plan.
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.
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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
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.
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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
Massachusetts 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:
LTX Corporation
Attention: Chief Financial Officer
University Avenue
Westwood, Massachusetts 02090
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
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the case may be, and shall be a complete discharge of any liability under
the Plan for such payment amount.
16.15 Court Order. The Committee is authorized to make any payments directed by
-----------
court order in any action in which the Plan or the Committee has been
named as a party. In addition, if a court determines that a spouse or
former spouse of a Participant has an interest in the Participant's
benefits under the Plan in connection with a property settlement or
otherwise, the Committee, in its sole discretion, shall have the right,
notwithstanding any election made by a Participant, to immediately
distribute the spouse's or former spouse's interest in the Participant's
benefits under the Plan to that spouse or former spouse.
16.16 Distribution in the Event of Taxation.
-------------------------------------
(a) In General. If, for any reason, all or any portion of a
----------
Participant's benefits under this Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the
Committee before a Change in Control, or the 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 its terms and
-----
benefits are distributed from the Trust to a Participant in
accordance therewith, the Participant's benefits under this Plan
shall be reduced to the extent of such distributions.
16.17 Insurance. The 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
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frustrated. Accordingly, if, following a Change in Control, it should
appear to any Participant, in his or her sole discretion, 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 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
Participant may 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 __________,
2001.
"Company"
LTX Corporation, a Massachusetts corporation
By: __________________________________
Title: _______________________________
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APPENDIX A
Chief Executive Officer
Chief Financial Officer
Vice President of Human Resources
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