Exhibit 10.3
WASHINGTON MUTUAL, INC.
DEFERRED COMPENSATION PLAN FOR
DIRECTORS AND CERTAIN HIGHLY COMPENSATED EMPLOYEES
Initially Adopted February 17, 1987
Amended and Restated Effective April 17, 2001
The Deferred Compensation Plan for Directors and Certain Highly
Compensated Employees was initially adopted by Washington Mutual Savings Bank on
February 17, 1987, was amended and restated effective January 1, 1988 and was
subsequently amended and restated effective January 1, 1993. Sponsorship of the
Plan was transferred to Washington Mutual, Inc. in 1994 in connection with the
corporate reorganization pursuant to which Washington Mutual Savings Bank was
merged into Washington Mutual Bank and became a subsidiary of Washington Mutual,
Inc. The Plan was amended and restated in its entirety by Washington Mutual,
Inc., generally effective February 1, 1997 and was subsequently amended and
restated effective January 1, 2000. Effective April 17, 2001, the Plan is hereby
amended and restated to provide certain additional investment and deferral
provisions with respect to the Participants and to effect certain other changes:
1. DEFINITIONS.
1.1 "Account" means a separate bookkeeping account established for each
Participant on the books of the Company that employs the applicable Participant
for the purpose of recording amounts of Compensation deferred, Restricted Stock
Awards surrendered or Discretionary Company Contributions made by or on behalf
of such Participant, and income earned thereon, pursuant to the provisions of
the Plan.
1.2 "Board" means the Board of Directors of WM, Inc.
1.3 "Annual Bonus" has its usual and ordinary meaning. It is not
intended to include commissions or other similar variable compensation, and is
not intended to include bonuses for services for less than the full calendar
year.
1.4 "Code" means the Internal Revenue Code of 1986, as it may be amended
or replaced from time to time.
1.5 "Company" means WM, Inc., or any direct or indirect subsidiary of
WM, Inc. With respect to any Participant or former Participant, the term
"Company" means the Company by whom the Participant is currently employed, or
was last employed in the case of a former Participant.
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1.6 "Compensation" means salary, Annual Bonus, quarterly or semiannual
bonuses, commissions, variable compensation and other direct cash compensation
payable by a Company to an Eligible Employee for employment by the Company, and
Directors' fees payable by WM, Inc. to its Directors. The term "Compensation"
shall not include reimbursement for expenses incurred by the Eligible Employee,
or contributions to or benefits accrued under any Retirement Plan. In addition,
the term "Compensation" does not include Restricted Stock Awards.
1.7 "Compensation Committee" means the Directors' Compensation and
Stock Option Committee of the Board.
1.8 "Discretionary Company Contributions" has the meaning set forth
in Section 2.6.
1.9 "Effective Date" means April 17, 2001, for purposes of
this amendment and restatement.
1.10 "Eligible Employee" means (a) each Director of WM, Inc.,
(b) each salaried employee of either WM, Inc. or any banking
subsidiary of WM, Inc. who has the following corporate title:
Chairman, Vice Chairman, Group President, President, Senior
Executive Vice President, Executive Vice President or Senior
Vice President, and (c) each salaried employee of a nonbanking
subsidiary of WM, Inc. who has the corporate title of President,
and each salaried employee of any nonbanking subsidiary of
WM, Inc. who has the corporate title of Senior Vice President
and who is determined by the Plan Administration Committee,
in its discretion, to be eligible to participate under the Plan.
1.11 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
1.12 "Nonqualified Stock Options" means those nonqualified stock options
of the Company awarded to a Participant pursuant to the Washington Mutual
Amended and Restated 1994 Stock Option Plan.
1.13 "Participant" means any Eligible Employee who has elected to defer
Compensation under the Plan.
1.14 "Plan" means this plan for the deferral of Compensation, as it may
be amended from time to time.
1.15 "Plan Administration Committee" or "Committee" means such person or
persons appointed under the provisions of Section 6 to administer and interpret
the terms of the Plan.
1.16 "Plan Year" means the 12-consecutive-month period commencing each
January 1 and ending each December 31.
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1.17 "Pre-Existing Plan" means the Plan as in effect prior to the
Effective Date.
1.18 "Qualifying Gain" means the net shares accrued on behalf of a
Participant upon his or her exercise of Nonqualified Stock Options using the
stock-for-stock cashless payment method set forth in Section 2.4.
1.19 "Qualifying Gain Account" means a separate bookkeeping account
established for the Participant on the books of each Company that employs such
Participant for purposes of accounting for any Qualifying Gain deferred by such
Participant, and phantom dividend equivalent units earned thereon, pursuant to
the provisions of the Plan. Any Qualifying Gain that is deferred and held in
this account shall be converted to phantom stock units equal to the Qualifying
Gain. Any phantom dividend equivalent units credited to this account shall be
converted to phantom stock units in accordance with Section 4.3(c).
1.20 "Retirement Plan" means any defined benefit or defined contribution
plan qualified under Section 401(a) of the Code, and which is sponsored by one
or more Companies.
1.21 "Restricted Stock Award" means an award of stock of WM, Inc. made
to a Participant pursuant to the Washington Mutual, Inc. Restricted Stock
Plan.
1.22 "Termination Date" means the date on which an Eligible Employee
ceases to be an Eligible Employee, for any reason.
1.23 "WM, Inc." means Washington Mutual, Inc., a Washington
corporation.
2. DEFERRAL ELECTION AND DISCRETIONARY COMPANY CONTRIBUTION.
2.1 Election to Defer Compensation.
(a) Any Eligible Employee may elect at any time on or prior to 15
days preceding the first day of any calendar quarter to defer the
receipt of all or any portion of his or her Compensation for services to
be rendered in the immediately following calendar quarter or quarters
(not including any Annual Bonus). In the case of a bonus determined on
less than an annual basis (e.g., a quarterly or semiannual bonus), the
deferral election must be made on or prior to 15 days preceding the
first day of the first calendar quarter in which any services will be
rendered that relate, in whole or in part, to the bonus in question.
(b) Notwithstanding anything in this Section 2.1 to the contrary,
any amount to be deferred under the Plan shall not reduce the current
Compensation of the Participant below the total amount that is to be
withheld from the Participant's Compensation pursuant to a requirement
of law or pursuant to an elected optional payroll deduction.
(c) The parties hereto understand that the Plan does not
determine or affect any Participant's entitlement to any bonus.
Accordingly, in the event that a Participant elects to defer a
percentage of any potential bonus that is not ultimately awarded, such
election shall be null and void.
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2.2 Election to Defer Annual Bonus.
(a) Each Eligible Employee may elect to defer a certain
percentage amount, up to 100%, of any Annual Bonus that may be awarded
by the Company. Each such election must be made on or before December 31
of the calendar year preceding the Plan Year in respect to which the
Annual Bonus may be awarded. For example, for an Annual Bonus for
services rendered during the Plan Year 2001, any Annual Bonus deferral
election must be made by December 31, 2000.
(b) The parties hereto understand that the Plan does not
determine or affect any Participant's entitlement to any Annual Bonus.
Accordingly, in the event that a Participant elects to defer a
percentage of his or her potential Annual Bonus that is not ultimately
awarded, such election shall be null and void.
2.3 Election of Deferral Credit in Exchange for Restricted Stock Award.
(a) Each Eligible Employee may elect to surrender all or a
portion of any Restricted Stock Award, in whole shares, in exchange for
a credit to such Eligible Employee's Account, determined as set forth in
Section 4.2(c).
(b) An election pursuant to this Section 2.3 shall be made at
least six months before the date on which the restrictions with respect
to the subject Restricted Stock Award lapse, and otherwise shall comply
with Section 2.5.
2.4 Election of Qualifying Gain Deferral.
(a) Each Eligible Employee may elect to defer all Qualifying Gain
derived from a specific grant of Nonqualified Stock Options in exchange
for a credit to such Eligible Employee's Qualifying Gain Account, in
accordance with Section 4.2(d), if (i) an irrevocable deferral election
is completed and signed by such Eligible Employee, (ii) such deferral
election is delivered to and accepted by the Committee at least six
months before the date on which such Eligible Employee elects to
exercise Nonqualified Stock Options (the "Exercised Options"), (iii)
such Eligible Employee pays, through an attestation acceptable to the
Committee, the exercise price in shares of WM, Inc. common stock that
the Participant owns and has owned continuously for the six-month period
ending on the date of exercise (the "Mature Shares"), and (iv) such
Eligible Employee complies with all other rules the Committee may
establish from time to time. A deferral of Qualifying Gain under this
Section 2.4 shall be deemed to be (A) a tender of Mature Shares in
exchange for an equivalent number of shares pursuant to the exercise of
Nonqualified Stock Options and (B) a conversion of the Participant's
right to receive any additional shares related to the Exercised Options
into a right to receive deferred compensation pursuant to the Plan. A
deferral election under this Section 2.4 shall expire at any time
elected by a Participant therein and shall automatically be revoked upon
a Participant's termination of employment or in the event of a change in
control or at any other time determined by the Committee in its sole
discretion.
(b) The Plan governs the deferral of Qualifying Gain. The
underlying Nonqualified Stock Options are governed by the stock option
plan under which they were granted. No stock options or shares of WM,
Inc. common stock are authorized to be issued under the Plan.
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2.5 Form and Manner of Election. Any election under Sections 2.1 through
2.4 shall be made in writing and in such form and manner as may be prescribed by
the Committee. The election shall specify such items as the Committee shall
reasonably require, including but not limited to:
(a) (1) With respect to an election made pursuant to Section 2.1
or 2.2, the amount to be deferred, either as a specific dollar amount or
as a percentage of Compensation. Each election of a dollar amount shall
be not less than $300 for each calendar quarter. Each election of a
percentage amount shall be not less than 15% of Compensation for each
calendar quarter; provided, however, that an election under Section 2.2
with respect to any Annual Bonus that may be granted by the Company
shall be only in such percentage amount as determined by the
Participant;
(2) With respect to an election made pursuant to Section
2.3, which Restricted Stock Award or portion thereof, and the number of
whole shares of the Restricted Stock Award that are to be surrendered;
and
(3) With respect to a deferral election made pursuant to
Section 2.4, the identity of the Nonqualified Stock Option grant that is
subject to the election, the grant date, the exercise price, the
expiration date (if any) of the deferral election and the date of
payment commencement under Section 2.8;
(b) One of the applicable payment options designated under
Section 2.7, unless an option has previously been designated (including
any designation under the Pre-Existing Plan), in which event the
election need include such a designation only if a change from the
existing designated payment option is desired;
(c) A payment commencement date as specified under Section 2.8,
unless a payment commencement date has previously been designated
(including any designation under the Pre-Existing Plan), in which event
the election need include such a designation only if a change from the
existing designated commencement date is desired;
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(d) A designated beneficiary or beneficiaries as provided in Section 3; and
(e) A method for determining additional credits pursuant to Section 4.3.
2.6 Discretionary Company Contribution. In its sole discretion, and for
the purpose of attracting or retaining highly qualified employees, the
Compensation Committee may credit an Eligible Employee's account with a
contribution known as a Discretionary Company Contribution. Any Discretionary
Company Contribution made on behalf of an Eligible Employee pursuant to this
Section 2.6 shall be credited to the Eligible Employee's Account as of a date
determined by the Compensation Committee and may be subject to such other terms
and conditions, including provisions regarding vesting, that are set forth in an
individual agreement between the Participant and the Plan Administration
Committee setting forth such terms and conditions.
2.7 Payment Options. At the time of making an election under Sections
2.1 through 2.4, or within 30 days of being credited with a Discretionary
Company Contribution under Section 2.6, the Participant shall specify one of the
following payment options:
(a) Payment of the entire Account balance attributable to such
deferral or credit in a single lump sum payment.
(b) Payment of the Account balance attributable to such deferral
or credit in monthly installments over a period certain not to exceed 10
years, with each installment to be an amount equal to the Account
balance as of the date of payment divided by the number of installments
remaining to be paid, including the current installment; provided,
however, that no monthly installment may be less than $300.
If a Participant fails to specify a payment option described above,
option (a) shall apply. If a Participant designates different payment options at
different times, the last payment option elected shall apply (including any last
election under the Pre-Existing Plan).
All payments from a Participant's Account shall be in cash. All payments
from a Participant's Qualifying Gain Account shall be in the form of whole
shares of WM, Inc. common stock equal to the number of phantom stock units held
in such Account, rounded down to the nearest whole unit, such shares to be paid
from the Washington Mutual 1994 Stock Option Plan, as amended. For purposes of
this Section 2.7, all references to "Account" shall be deemed to include a
Participant's Qualifying Gain Account.
2.8 Commencement of Payment. At the time of making a deferral election
under Sections 2.1 through 2.4, or within 30 days of being credited with a
Discretionary Company Contribution under Section 2.6, the Participant shall
irrevocably specify the date for the commencement of payment of the Compensation
deferred pursuant to that election or contribution. If a Participant fails to
specify a payment date, payment shall be made or commenced, as the case may be,
on the first day of the month immediately following such Participant's
Termination Date. A Participant may designate different payment commencement
dates to apply to separate deferral elections or contributions. A payment date
may be a date certain, or may be a date related to an employment event such as
the date of termination of employment or retirement, or may be a date related to
any other objectively determined event acceptable to the Plan Administration
Committee. The payment commencement date may not be modified with respect to
deferrals or contributions elected at the time the payment commencement date is
designated. Subsequent deferral elections may specify a different payment
commencement date for those deferrals or contributions.
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2.9 Modification of Election.
(a) A Participant's election under Section 2.1 shall continue
from calendar quarter to calendar quarter until the election is
terminated pursuant to Section 2.10, or the election is modified;
provided that an election modification must be made at least 15 days
prior to the first day of such calendar quarter; and provided further
that if an election has been made to defer compensation that is for
services to be rendered during more than one calendar quarter (e.g., a
semiannual bonus), any modification of that election must be made at
least 15 days prior to the first day of the first calendar quarter in
which any services are to be rendered that relate, in whole or in part,
to the element of Compensation that was deferred. A Participant's
election under Section 2.2 is effective only for the Plan Year for which
the election is made. Any modification of such election must be made
prior to January 1 of the Plan Year for which the Annual Bonus may be
awarded. An election pursuant to Section 2.3 or 2.4 is irrevocable.
(b) Payment options may be modified at any time more than 30 days
prior to the Participant's payment commencement date. As provided in
Section 3, Beneficiary designations may be modified at any time. Payment
commencement dates may not be modified. Any modification of an election
pursuant to this Section 2.9 shall be ineffective unless it is made in
writing and is timely delivered to the Plan Administration Committee, in
such form as shall be reasonably required by the Committee.
2.10 Termination of Election. A Participant's deferral election under
Section 2.1 shall terminate upon the earliest of (a) the first day of the
calendar quarter immediately following the date on which the Plan Administration
Committee receives from such Participant written notice stating that his or her
election is terminated (provided that if an election has been made to defer
compensation that is for services to be rendered during more than one calendar
quarter (e.g., a semiannual bonus), any termination of that election must be
done at least 15 days prior to the first day of the first calendar quarter in
which any services are to be rendered that relate, in whole or in part, to the
element of Compensation that was deferred); (b) such Participant's Termination
Date; or (c) termination of the Plan. In the event of a voluntary termination of
an election by the Participant pursuant to clause (a) above, the Participant may
not defer additional amounts until a timely election is made to defer
Compensation that is payable in a subsequent calendar quarter, as provided in
Section 2.1.
3. BENEFICIARY DESIGNATION.
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3.1 Designation of Beneficiary. At the time of making an election under
Sections 2.1 through 2.4, or within 30 days of being credited with a
Discretionary Company Contribution under Section 2.6, a Participant shall
designate a person or persons as the Participant's beneficiary or beneficiaries
(both primary as well as secondary) to whom payment under the Plan shall be made
in the event of the Participant's death prior to complete distribution of such
Participant's Account balance under the Plan. Each beneficiary designation shall
become effective only when filed in writing with the Plan Administration
Committee during the Participant's lifetime on a form prescribed by the
Committee. Such payments shall be made to the primary beneficiary if such person
survives the Participant. If not, such payments shall be made to the secondary
beneficiary if such person survives the Participant, and if not, then payments
will be made in accordance with the provisions of Section 3.3. If a beneficiary
dies at a time such beneficiary is entitled to receive payments hereunder, the
remaining payments shall be made to such beneficiary's estate, as provided in
Section 3.4.
3.2 Filing New Designation. The filing of a new beneficiary designation
form will cancel all beneficiary designations previously filed. Any finalized
divorce, dissolution or annulment of marriage or any new marriage of a
Participant subsequent to the date of filing of a beneficiary designation form
shall revoke such designation.
3.3 Failure to Designate. If a Participant fails to designate a
beneficiary as provided above, or if a Participant's beneficiary designation is
revoked by marriage, divorce, dissolution, annulment or otherwise without
execution of a new designation; or if all designated beneficiaries predecease
the Participant or die prior to complete distribution of the Participant's
benefits hereunder; then, the Plan Administration Committee shall direct the
distribution of such benefits to the Participant's estate.
3.4 Death of Beneficiary. At the death of the beneficiary who is
entitled to receive payments hereunder, the balance (if any) then remaining in
the Participant's Account shall be paid in a lump sum to the beneficiary's
estate. Such payment shall completely discharge the Company's obligations under
the Plan.
3.5 Change of Beneficiary. Notwithstanding any other provision of the
Plan, any beneficiary designation may be changed by a Participant at any time by
the written filing of such change on a form prescribed by the Plan
Administration Committee.
4. ACCOUNTS.
4.1 Separate Accounts. The Plan Administration Committee shall establish
a separate Account for each Participant, to which it will credit each amount
required to be credited hereunder. The Account thus established shall be a
bookkeeping Account, and shall not grant to any Participant any security
interest or other prior right in any assets of the Company by reason of such
credits.
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4.2 Timing of Credit.
(a) Subject to Section 5.2(c), as of the first day of each month,
the Plan Administration Committee shall credit to each Participant's
Account that portion of such Participant's regular monthly Compensation
earned during the immediately preceding month for which a deferral
election under Section 2.1 is in effect.
(b) Subject to Section 5.2(c), with respect to each deferral
election under Section 2.1 or 2.2 that defers any bonus, commission,
variable compensation or other element of Compensation that is not
regular monthly compensation, the Plan Administration Committee shall
credit to each Participant's Account the amount of the deferral election
as of the date the bonus, commission, variable compensation or other
Compensation, if any, is awarded by the Company to the Participant.
(c) Subject to Section 5.2(c), with respect to any deferral
election made by a Participant under Section 2.3 (relating to restricted
stock), the Plan Administration Committee shall credit to the
Participant's Account the amount of the value of the surrendered
Restricted Stock Award as of the date the restrictions lapse. The value
of such Restricted Stock Award shall be the number of shares of
Restricted Stock surrendered to the Company multiplied by the closing
price of such shares of stock as of the date the restrictions on such
stock otherwise would have lapsed pursuant to the terms of the
Restricted Stock Award. For these purposes, the closing price shall be
the closing price of the common stock of WM, Inc. on the New York Stock
Exchange, or on such other national securities exchange or national
securities association on which such stock is then traded.
(d) Subject to Section 5.2(c), with respect to any deferral
election made under Section 2.4 (relating to Qualifying Gain deferral),
the Plan Administration Committee shall credit to the Participant's
Qualifying Gain Account a number of phantom stock units equal to the
value of deferred Qualifying Gain divided by the closing price of WM,
Inc. common stock on the effective date of the Qualifying Gain deferral.
For these purposes, the closing price shall be the closing price of the
common stock of WM, Inc. on the New York Stock Exchange, or on such
other national securities exchange or national securities association on
which such stock is then traded.
(e) Subject to Section 5.2(c), with respect to any Discretionary
Company Contribution made with respect to a Participant under Section
2.6, the Plan Administration Committee shall credit to the Participant
the amount of each contribution as of the date specified by the
Compensation Committee.
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4.3 Additional Credits.
(a) Each Participant's Account shall be credited with additional
amounts pursuant to the "Interest Method" set forth in Section 4.3(b)(1)
or the "Stock Fund Method" set forth in Section 4.3(b)(2). The method of
crediting shall be elected in writing by the Participant pursuant to
procedures established by the Plan Administration Committee. Such
election also may be modified from time to time effective as of the
first day of a calendar quarter pursuant to such procedures. A
Participant may elect the Interest Method with respect to a portion of
his or her Account and the Stock Fund Method with respect to the
remainder of the Account. However, no method can be elected by a
Participant unless at least 10% of the Participant's Account is
allocated to such method. Portions of an Account for which there is no
effective election shall be credited pursuant to Section 4.3(b)(1).
(b) (1) With respect to the portion of a Participant's Account
credited pursuant to the Interest Method, as of the first day of each
calendar quarter, the Plan Administration Committee shall credit to the
Participant's Account interest on the average daily balance of such
Account subject to the Interest Method during the immediately preceding
calendar quarter, using the actual number of days in such preceding
calendar quarter, at the interest rate in effect for such preceding
calendar quarter. The applicable interest rate shall be determined as
follows:
As of January 1 of each year, commencing with the Effective Date,
the Plan Administration Committee, in its sole discretion, will
establish the applicable interest rate for the then commencing
Plan Year by reference to the interest rate that the Committee
determines could be applicable as of such date to any unsecured
junior debt offering by Washington Mutual Bank or by a comparable
financial institution or public corporation. Such determination
will be made by the Committee, which shall request an estimate of
such debt offering interest rate from at least one nationally
recognized investment banking firm. The interest rate so
determined will be set forth in writing and kept with the Plan
records.
(2) With respect to the portion of a Participant's Account
credited pursuant to the Stock Fund Method, as of the first day of any
calendar quarter, the Plan Administration Committee shall credit or
debit such Account to reflect the rate of return that would have been
earned on such portion of the Participant's Account had such portion
been invested in the Company stock fund under the Washington Mutual,
Inc. Retirement Savings and Investment Plan during the previous calendar
quarter. The foregoing notwithstanding, if, as of the first day of a
calendar quarter, the value of the WM, Inc. common stock in the Company
stock fund under the Washington Mutual, Inc. Retirement Savings and
Investment Plan comprises less than 70% of the total value of such fund,
the Plan Administration Committee shall credit or debit the portion of
the Participant's Account allocated to the Stock Fund Method for the
prior calendar quarter as if such portion had been invested in whole or
partial shares of such common stock and received any dividends paid on
such common stock.
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(c) Each Participant's Qualifying Gain Account shall be credited
with phantom dividend equivalent units equal to the product of the
dividend paid on a share of WM, Inc. common stock multiplied by the
number of phantom stock units held in the Participant's Qualifying Gain
Account on the record date for the cash dividend. Phantom dividend
equivalent units credited to each Participant's Qualifying Gain Account
shall be used to "purchase" additional phantom stock units for such
Account at a price equal to the closing price of the WM, Inc. common
stock on the date such phantom dividend equivalent units are so
credited. No fractional phantom stock units shall be credited based on
this "purchase."
5. PAYMENT OF ACCOUNT BALANCE.
5.1 Payment Method. The Company shall pay the Participant's Account
balance under the Plan to such Participant in accordance with the payment option
designated by the Participant pursuant to Section 2.7. In the event of the death
of the Participant prior to payment of the entire Account balance, payment shall
be made to such Participant's beneficiary or beneficiaries designated under
Section 3 in accordance with the payment method designated by the Participant
pursuant to Section 2, or in accordance with any accelerated method (including
lump sum) as the Plan Administration Committee shall determine in its sole
discretion.
5.2 Withholding and Offset.
(a) Any payment or other distribution of benefits under the Plan
may be reduced by any amount required to be withheld by the Company
under any applicable law, rule, regulation, order or other requirement,
now or hereafter in effect, of any governmental authority.
(b) If a Participant becomes entitled to a distribution of
benefits under the Plan, and if at such time such Participant has
outstanding any debt, obligation or other liability representing an
amount owing to the Company, then the Company may offset such amount
owing it against the amount of benefits otherwise distributable. Such
determination shall be made by the Plan Administration Committee.
(c) If any tax withholding is required with respect to
Compensation deferred hereunder, a deferral credit with respect to
surrendered restricted stock or a Discretionary Company Contribution,
the Company shall withhold such amounts as are required from
Compensation paid to the Participant that is not deferred; provided that
if there is insufficient nondeferred Compensation to allow for the
required withholding, the withholding shall be taken from the deferred
Compensation and the Participant's credit under Section 4.2 shall be
reduced accordingly.
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5.3 Payment for Unforeseeable Emergency. A Participant shall not be
entitled to withdraw any portion of the balance of his or her Account except
that, in cases of an unforeseeable emergency, the Plan Administration Committee
may authorize, on a uniform and nondiscriminatory basis and taking into account
other resources reasonably available to the Participant, payment of so much of
the Participant's Account as is required to meet the need created by the
emergency. For the purposes hereof, an "unforeseeable emergency" is an
unanticipated emergency that is caused by an event beyond the control of the
Participant or the Participant's beneficiary and that would result in severe
financial hardship to the individual if early withdrawal were not permitted.
Without limiting the generality of the foregoing, an unforeseeable emergency
shall include a sudden and unexpected illness or accident of the Participant or
of a dependent (as defined in Code ss. 152(a)) of the Participant, loss of the
Participant's property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
Participant's control. The circumstances that will constitute an unforeseeable
emergency will depend on the facts of each case, as determined by the Plan
Administration Committee in its sole discretion, but, in any case, payment may
not be made to the extent that such hardship is or may be relieved:
(a) through reimbursement or compensation by insurance or otherwise;
(b) by liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship; or
(c) by cessation of deferrals under the Plan.
For the purposes hereof, examples of what are not considered to be
unforeseeable emergencies shall include the need to send a Participant's child
to college or the desire to purchase a home.
5.4 Limitation on Liability. The Company's maximum liability to make
payments hereunder is limited to the amount of the Participant's Account
(including the interest thereon pursuant to Section 4.3).
6. ADMINISTRATION OF THE PLAN.
The Compensation Committee shall from time to time appoint a committee,
which shall be designated the Plan Administration Committee, to administer the
Plan. The Compensation Committee may fix or change the number of members of the
Committee at any time at its discretion. Each member of the Plan Administration
Committee shall serve until such member resigns or becomes unable to serve due
to death or disability or until such member is removed by the Compensation
Committee. The Plan Administration Committee shall administer and interpret the
Plan and for that purpose may make, amend or revoke rules and regulations at any
time. The Committee also shall make determinations about benefits hereunder. All
decisions of the Plan Administration Committee shall be by vote of a majority of
its members eligible to vote on a particular matter, and shall be final and
binding on all parties. The Plan Administration Committee shall have absolute
discretion to carry out its responsibilities hereunder. Members of the Plan
Administration Committee shall be eligible to participate in the Plan while
serving as a member of the Committee; provided, however, that no member shall be
entitled to vote or take any other action as part of the Committee with respect
to such member's benefits or any other matter affecting such member's rights as
a Participant under the Plan.
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7. CLAIMS PROCEDURE.
7.1 Claims Procedure. Any person desiring a benefit under,
interpretation or construction of, ruling under or information regarding the
Plan shall submit a written request therefor to the Plan Administration
Committee. The Committee shall respond in writing to any such request as soon as
practicable. Any interpretation or construction of, and any ruling under, the
Plan by the Plan Administration Committee shall be final and binding on all
parties.
7.2 Denial of Claim. If a claim for benefits is denied in whole or in
part, the Plan Administration Committee shall notify the claimant of such denial
and of his or her right to a conference with an individual designated in the
notice for the purpose of explaining the denial. If the claimant does not want
such a conference, or is dissatisfied with its outcome, he or she shall be
furnished in writing, in a manner calculated to be understood by the claimant,
specific reasons for such denial, specific references to the Plan provisions on
which the denial is based, a description of any additional material necessary
for him or her to perfect his or her claim, an explanation of why such material
is necessary, and an explanation of the Plan's review procedure as described in
Section 7.3.
7.3 Review Procedure. Any person, or his or her duly authorized
representative, whose claim for benefits under the Plan has been denied in whole
or in part, may appeal from such denial to the Plan Administration Committee by
submitting to the Committee a written request for review within 75 days after
receiving notice of denial. The Plan Administration Committee shall give the
claimant an opportunity to review pertinent documents relating to the denial in
preparing his or her request for review. The request must set forth all the
grounds upon which it is based, supporting facts and documents, and any other
matters that the claimant deems pertinent, and the relief sought. The Committee
may require the claimant to submit such additional facts, documents or other
material as it deems necessary or advisable in making its review. The Plan
Administration Committee shall act upon a request for review within 60 days
after receipt thereof unless special circumstances require further time, but in
no event later than 120 days after such receipt. If the Plan Administration
Committee confirms the denial in whole or in part, the Committee shall give
written notice to the claimant setting forth, in a manner calculated to be
understood by the claimant, the specific reasons for denial and specific
reference to the Plan provisions on which the decision was based. The
determination of the Plan Administration Committee upon such review shall be
final and conclusive and shall be binding on the claimant and all persons
claimed by, through or under him or her, subject, however, to any right of
appeal under applicable law.
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8. AMENDMENT AND TERMINATION OF PLAN.
8.1 Amendment. The Compensation Committee may at any time amend the
Plan, provided that no amendment shall deny or reduce any amounts previously
credited to any Participant's Account.
8.2 Termination.
(a) The Compensation Committee may at any time terminate the
Plan, if in its judgment the continuance of the Plan, or the tax,
accounting or other effects thereof, would not be in the best interest
of the Company.
(b) Upon any termination of the Plan under this Section 8.2, the
Participant will be deemed to have withdrawn from the Plan as of the
date of such termination, the remaining deferred Compensation for the
balance of the calendar quarter shall prospectively cease to be deferred
for such calendar quarter, and the Company will pay to the Participant
the balance in the Participant's Account at such times and pursuant to
such terms and conditions as the Board in its sole discretion shall
determine.
9. MISCELLANEOUS.
9.1 Unsecured General Creditor; Unfunded Plan. A Participant and such
Participant's beneficiaries, heirs, successors and assigns shall have no legal
or equitable rights, interest or claims in any property or assets of the
Company. Such assets of the Company shall not be held under any trust for the
benefit of a Participant, or such Participant's beneficiaries, heirs, successors
or assigns, or held in any way as collateral security for the fulfillment of the
obligations of the Company under the Plan. Any and all assets of the Company
shall be, and remain, the general, unpledged, unrestricted assets of the
Company. The Company's obligation hereunder shall be merely that of an unfunded
and unsecured promise of the Company to pay money in the future. It is the
intention of the parties hereto that the Plan be unfunded for tax purposes and
for purposes of Title I of ERISA.
9.2 Plan Administrator. With respect to ERISA, the Plan Administration
Committee shall be the plan administrator and named fiduciary as to the Plan and
the corporate secretary of WM, Inc. shall be the agent for purposes of receiving
legal process.
9.3 No Right to Employment. The Plan shall not confer upon any person the
right to be retained in the employ of the Company, interfere with the right of
the Company to discharge or otherwise deal with any person without regard to the
existence of the Plan or otherwise be interpreted or construed as creating or
modifying any employment or other contract between the Company and any person.
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9.4 Alienation. No right, interest or benefit under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, security interest, encumbrance, charge, execution, attachment,
garnishment or legal process by the creditors of the Participant or the
Participant's beneficiary, and any attempt to do so shall be void.
9.5 Information. Participants and their beneficiaries under the Plan shall
provide such authorizations, elections, designations and other information as
the Plan Administration Committee shall deem necessary for the proper
administration of the Plan. All such authorizations, elections, designations and
other information shall be in form approved by the Committee. The Plan
Administration Committee shall not be obligated to determine the accuracy or
authenticity of any information provided by any Participant or beneficiary under
the Plan and any payment or other distribution of benefits based thereon shall
be binding on such person, or on anyone claiming by, through or under such
person, and shall completely discharge any liability under the Plan to the
extent of any payment made.
9.6 Headings. Headings of sections and paragraphs of the Plan are inserted
for convenience of reference only and shall not constitute a part of the Plan.
9.7 Applicable Law. The Plan shall be interpreted, construed and enforced
in accordance with the laws of the State of Washington, except insofar as state
law has been preempted by ERISA.
9.8 Validity. In the event any provision of the Plan is held invalid,
void or unenforceable, the same shall not affect, in any respect whatsoever, the
remainder of the Plan.
IN WITNESS WHEREOF, the Company has caused the Plan to be executed on this 17th
day of April, 2001, but to be effective as of the Effective Date.
WASHINGTON MUTUAL, INC.
By: /s/ Daryl D. David
Its: Executive Vice President
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