Exhibit 4.1
HEIDRICK & STRUGGLES INTERNATIONAL, INC.
DEFERRED COMPENSATION PLAN
1. Purpose. The purpose of this Deferred Compensation Plan is to
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provide a select group of management and other highly compensated employees of
the Company a means to defer receipt of specified portions of compensation and
to have such deferred amounts treated as if invested in specified investments in
order to enhance the competitiveness of the Company's compensation programs and,
therefore, its ability to attract and retain qualified key personnel necessary
for the continued success and progress of the Company.
2. Definitions. The following terms used in the Plan shall have the
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meanings set forth below:
(a) "Administrator" shall mean the person or persons to whom the
Committee has delegated the authority to take action under the Plan, except as
may be otherwise required under Section 9.
(b) "Annual Bonus Shares" shall mean the shares awarded to a
Participant pursuant to the Heidrick & Struggle's Annual Management Incentive
Plan ("MIP").
(c) "Annual Installments" shall mean, with respect to a Cash-Based
Deferral, a payment option offered to the Participant where Heidrick & Struggles
shall pay the Participant annually, for a period not to exceed ten (10) years,
the amounts owed him or her from the Deferral Account relating to such
Cash-Based Deferral. Heidrick & Struggles shall pay the first installment to a
Participant as soon as is reasonably practicable following the Payment
Commencement Date. Subsequent installments shall be paid as soon as is
reasonably practicable following each anniversary of the Payment Commencement
Date.
(d) "Beneficiary" shall mean any person (which may include trusts and
is not limited to one person) who has been designated by the Participant in his
or her most recent written beneficiary designation filed with the Company to
receive the benefits specified under the Plan in the event of the Participant's
death. If no Beneficiary has been designated who survives the Participant's
death, then Beneficiary means any person(s) entitled by will or, in the absence
thereof, the laws of descent and distribution to receive such benefits.
(e) "Cash-Based Deferral" shall mean a deferral of Deferrable Cash
Compensation, except to the extent that a Participant directs that the reference
investment for such Cash-Based Deferral is Stock.
(f) "Cause" shall mean, when used in connection with the termination
of a Participant's employment by the Company, (i) the willful and continued
failure by the Participant substantially to perform his or her duties and
obligations to the Company (other than any such failure resulting from any
physical or mental condition, whether or not such condition constitutes a
Disability) which failure continues after Heidrick & Struggles has given notice
thereof to the Participant which notice specifies the aspects in which the
Participant has failed to perform his or her duties or obligations to the
Company and sets forth specific corrective action required of the
Participant or (ii) the willful engaging by the Participant in misconduct which
is materially injurious to the Company, monetarily or otherwise. For purposes of
this definition, no act, or failure to act, on a Participant's part shall be
considered "willful" unless done, or omitted to be done, by the Participant in
bad faith and without reasonable belief that his or her action or omission was
in the best interests of Heidrick & Struggles.
(g) "Change in Control" shall have the meaning given to such term in
the Heidrick & Struggles International, Inc. 2001 Change in Control Severance
Plan.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended.
References to any provision of the Code or regulation (including a proposed
regulation) thereunder shall include any successor provisions or regulations.
(i) "Committee" shall mean the Compensation Committee of the Board of
Directors of Heidrick & Struggles or any other directors of Heidrick & Struggles
designated as the Committee by the Board of Directors of Heidrick & Struggles.
Except as may be otherwise required under Section 9 or by applicable law, any
function of the Committee may be delegated to the Administrator.
(j) "Company" shall mean Heidrick & Struggles and Heidrick & Struggles
Inc., including any and all subsidiaries, or any successor or successors
thereto, individually or collectively, as the context requires.
(k) "Deferrable Cash Compensation" shall mean cash compensation that,
absent a deferral, would be paid by the Company to a Participant in the form of
annual cash bonus awards, annual base salary to the extent permitted by the
Committee, and any other cash compensation or award as designated by the
Committee from time to time.
(l) "Deferrable Compensation" shall mean both Deferrable Stock-Based
Compensation and Deferrable Cash Compensation.
(m) "Deferrable Stock-Based Compensation" shall mean compensation
that, absent a deferral, would be paid by the Company to a Participant in the
form of Stock, including the following; Performance Shares awarded pursuant to
Heidrick & Struggle's Long Term Incentive Plan ("LTIP"), Annual Bonus Shares
that are subject to Mandatory Deferral, restricted stock units, gains upon the
exercise of stock options awarded pursuant to the LTIP to the extent permitted
by the Committee, and/or any other Stock-based compensation as designated by the
Committee from time to time.
(n) "Deferral Account" shall mean an account established and
maintained by the Committee for a specific deferral by a Participant, as
described in Section 6.
(o) "Deferral Election Form" shall mean a form prescribed by the
Committee and filed by the Participant with the Committee setting forth his or
her deferral request.
(p) "Disability" shall mean (i) a physical or mental condition
entitling the Company to terminate the Participant's employment pursuant to an
employment agreement between the
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Participant and the Company or (ii) in the absence of such a provision for
disability termination or in the absence of an employment agreement, a physical
or mental incapacity of a Participant which entitles the Participant to benefits
under the long-term disability plan applicable to the Participant and maintained
by the Company.
(q) "Fair Market Value" shall mean (i) if the Stock is then listed or
admitted to trading upon an established stock exchange or exchanges, the closing
price on such date of determination of a share of Stock as reported on the
principal securities exchange on which shares of Stock are then listed or
admitted to trading, (ii) if the Stock is not then listed or admitted to trading
upon an established stock exchange, the average of the closing bid and ask
prices on such date of determination as reported on the National Association of
Securities Dealers Automated Quotation System, or (iii) if not so reported, the
average of the closing bid and ask prices on such date of determination as
furnished by any member of the National Association of Securities Dealers, Inc.
selected by the Committee.
(r) "Heidrick & Struggles" shall mean Heidrick & Struggles
International Inc., organized under the laws of the state of Delaware, or any
successor or successors thereto.
(s) "Mandatory Deferral" shall mean the deferral of the delivery of
Annual Bonus Shares pursuant to Section 5(d) of the Plan.
(t) "Participant" shall mean any employee of the Company who is
eligible to participate in the Plan and who elects to participate pursuant to
the terms of the Plan.
(u) "Payment Commencement Date" shall mean:
(i) with respect to a Deferral Account other than for a Mandatory
Deferral, the earlier to occur of the date elected by the Participant in his or
her Deferral Election Form for such Deferral Account or the first business day
of the calendar quarter commencing after the Participant's employment with the
Company terminates.
(ii) with respect to a Mandatory Deferral, the second anniversary
of the date the amounts subject to the Mandatory Deferral were deferred, unless
the Participant elects to defer further such amounts or a portion thereof, in
which case the Payment Commencement Date for such redeferral shall be determined
pursuant to subsection (i) above.
(v) "Performance Share" shall mean performance shares granted or to be
granted to a Participant pursuant to the Heidrick & Struggles International,
Inc. GlobalShare Program.
(w) "Plan" shall mean the plan set forth in this instrument, and known
as the Heidrick & Struggles International, Inc. Deferred Compensation Plan.
(x) "Retirement" shall mean the termination of a Participant's
employment with the Company, other than for Cause or by death (i) on or after
the Participant's attaining age 65 or (ii) on or after Participant's attaining
age 55, but prior to attaining age 65, only if such termination is
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approved in advance by the Committee and the Committee, with discretion, elects
to treat the termination as a Retirement.
(y) "Rule of Sixty Five" shall mean that, where the Participant's
employment with the Company has been terminated other than for Cause or death,
(i) the sum of such Participant's age and years of employment with the Company
as of the date of termination equals sixty-five (65) years and (ii) the
Participant has a minimum of five (5) years of service with the Company.
(z) "Stock" shall mean Heidrick & Struggles common stock or such
other securities or properties (including cash) into which such common stock may
be changed pursuant to Sections 6(f) and 6(g) herein.
(aa) "Stock-Based Deferral" shall mean (i) the deferral of
Deferrable Stock-Based Compensation, (ii) a Mandatory Deferral of Stock and
(iii) a Cash-Based Deferral from and after the time the Participant directs that
such deferral's reference investment be Stock.
(bb) "Trust" shall mean any trust or trusts established or
designated by the Committee to hold Stock or other assets in connection with the
Plan; provided, however, that the assets of such trusts shall remain subject to
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the claims of the general creditors of Heidrick & Struggles and the subsidiary
of Heidrick & Struggles by which the Participant is employed in the event of an
insolvency of Heidrick & Struggles. Heidrick & Struggles shall be considered
insolvent for purposes of the Plan and any Trust if (i) Heidrick & Struggles is
unable to pay its debts as they become due, or (ii) Heidrick & Struggles is
subject to a pending proceeding as a debtor under the United States Bankruptcy
Code.
(cc) "Trustee" shall mean the trustee of a Trust.
(dd) "Trust Agreement" shall mean the agreement entered into
between Heidrick & Struggles and the Trustee to carry out the purposes of the
Plan, as amended or restated from time to time.
3. Administration.
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(a) Authority. Both the Committee and the Administrator (subject
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to the ability of the Committee to restrict the Administrator) shall administer
the Plan in accordance with its terms, and shall have all powers necessary to
accomplish such purpose, including the power and authority to construe and
interpret the Plan, to define the terms used herein, to prescribe, amend and
rescind rules and regulations, agreements, forms, and notices relating to the
administration of the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan, including without limit which
employees of the Company shall be eligible to defer Deferrable Compensation
pursuant to the Plan, as well as the types of compensation or awards that
constitute Deferrable Compensation. Any actions of the Committee or the
Administrator with respect to the Plan shall be conclusive and binding upon all
persons interested in the Plan, except that any action of the Administrator will
not be binding on the Committee. The Committee and Administrator may each
appoint agents and delegate thereto powers and duties under the Plan, except as
otherwise limited by the Plan.
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(b) Administrator. The Administrator shall be appointed by, shall
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remain in office at the will of, and may be removed, with or without cause, by
the Committee. The Administrator may resign at any time. The Administrator shall
not be entitled to act on or decide any matter relating solely to himself or
herself or any of his or her rights or benefits under the Plan. The
Administrator shall not receive any special compensation for serving in his or
her capacity as Administrator but shall be reimbursed for any reasonable
expenses incurred in connection therewith. No bond or other security need be
required of the Administrator in any jurisdiction.
(c) Limitation of Liability. Each member of the Committee and the
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Administrator shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any officer or other employee of
the Company, the Company's independent certified public accountants, or any
executive compensation consultant, legal counsel, or other professional retained
by the Company to assist in the administration of the Plan. To the maximum
extent permitted by law, no member of the Committee or the Administrator, nor
any person to whom ministerial duties have been delegated, shall be liable to
any person for any action taken or omitted in good faith in connection with the
interpretation and administration of the Plan.
(d) Indemnification. To the maximum extent permitted by law, members
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of the Committee and the Administrator shall be fully indemnified and protected
by Heidrick & Struggles with respect to any action taken or omitted in good
faith in connection with the interpretation or administration of the Plan.
4. Eligibility to Participate.
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(a) Eligibility. The persons who shall be eligible to defer Deferrable
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Compensation pursuant to the Plan shall be the employees of the Company who may
from time to time be designated by the Committee. Such employees at all times
shall constitute a select group of management or other highly compensated
employees within the meaning of Section 401 of the Employee Retirement Income
Security Act of 1974, as amended. Participation in the Plan shall not be
mandatory, except as provided in Section 5(d) herein.
(b) Notification. The Committee shall use its best efforts to notify
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each person of his or her eligibility to participate in the Plan not later than
15 days (or such lesser period as may be practicable in the circumstances) prior
to any deadline for filing an election form.
5. Deferrals. To the extent authorized by the Committee, a
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Participant may elect to defer Deferrable Compensation for at least one (1) year
(or such other minimum time period as may be designated by the Committee) after
the date of deferral election except where the Plan provides for earlier
settlement of such Participant's Deferral Account. The date specified in the
deferral election shall be the first business day of a calendar quarter.
Notwithstanding any provision in the Plan to the contrary, a Participant may
elect to defer gains upon the exercise of stock options according to rules and
regulations provided by the Committee. In addition to any terms and conditions
of deferral set forth under the LTIP, MIP, or any other plan, program or other
arrangement from which receipt of Deferrable Compensation is deferred, the
Committee may impose limitations on the amounts permitted to be deferred and
other terms and conditions of deferrals under the Plan, including minimum and/or
maximum periods of deferral. Any such limitations, and other terms and
conditions of deferral, shall be set forth in the rules relating to the
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Plan or Deferral Election Forms, other forms, or instructions published by the
Committee and/or the Administrator.
(a) Amount. Subject to the terms of the Plan, a Participant may
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voluntarily elect to defer up to one hundred percent (100%) of each type of his
or her Deferrable Compensation in ten percent (10%) increments.
(b) Elections. Once a properly completed Deferral Election Form is
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received by the Committee, the elections of the Participant shall be
irrevocable; provided, however, that the Committee may, in its discretion,
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permit a Participant to elect a further deferral of amounts credited to a
Deferral Account by filing a later Deferral Election Form; provided, further,
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that any election to further defer amounts credited to a Deferral Account must
be made at least one (1) year prior to the date such amounts would otherwise be
payable.
(c) Date of Election. A Participant may elect to defer any portion of
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Deferrable Compensation by filing a Deferral Election Form with the Committee by
(i) in the case of annual cash bonus awards, March 31 of the calendar year in
which such annual cash bonus award was earned by the Participant, (ii) in the
case of annual base salary, December 31 of the calendar year immediately
preceding the calendar year in which the annual base salary is to be earned, and
(iii) in the case of Stock-Based Deferrals, other than Stock-Based Deferrals
described in Section 2(aa)(iii), at least six (6) months prior to the date on
which the Deferrable Stock-Based Compensation would otherwise be earned and
delivered. Notwithstanding the foregoing, Participants in their first year of
eligibility shall be given thirty (30) days from the initial date of
eligibility, and by February 15, 2002 with respect to any cash bonus award to be
paid in the year 2002, to complete and submit a Deferral Election Form.
(d) Mandatory Deferrals. Notwithstanding any provision of the Plan to
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the contrary, the Committee shall have the right to defer the payment by
Heidrick & Struggles of all or part of the Annual Bonus Shares awarded to a
Participant until the second anniversary of the date such Annual Bonus Shares
would, absent the Mandatory Deferral, otherwise be delivered pursuant to the
MIP. Pursuant to Section 5 of the Plan, a Participant may elect to further defer
receipt of Annual Bonus Shares at the conclusion of the Mandatory Deferral
period.
6. Deferral Accounts.
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(a) Establishment; Crediting of Amounts Deferred. The Committee shall
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establish one or more Deferral Accounts for each Participant. Heidrick &
Struggles shall maintain such Deferral Accounts solely as a bookkeeping entry to
evidence unfunded obligations of Heidrick & Struggles. The Committee shall
credit the amount of deferred Deferrable Compensation to each Participant's
Deferral Account on the date on which such amounts would have been paid or
delivered to the Participant absent the deferral, unless otherwise determined by
the Committee. With respect to Stock-Based Deferrals, the Committee shall credit
to a Participant's Deferral Account the number of shares of Stock that, absent
the deferral, would have otherwise been delivered as Stock based compensation
(including, for this purpose, any fractional shares of Stock that would have
otherwise been paid in cash), except that, in the case of a Stock-Based Deferral
described in Section 2(aa)(iii), the Committee shall credit to a Participant's
Deferral Account the number of shares of Stock equal in value to the quotient
obtained by dividing (i) the amount of the
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Deferral Account with respect to which the Participant directs that Stock be the
reference investment, by (ii) the Fair Market Value of a share of Stock on the
date as of which Stock becomes the reference investment for such Deferral
Account.
(b) Reference Investments. Subject to the provisions of Sections 6(c)
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and 9, amounts credited to a Deferral Account shall be deemed to be invested, at
the Participant's direction, in one or more reference investments as may be
specified from time to time by the Committee. If the Committee permits a
Participant to direct that the reference investment for his or her Deferral
Account be Stock, the Participant shall not thereafter be permitted to change
the reference investment to the extent he or she has directed Stock as the
reference investment. The amounts of income and appreciation and depreciation in
value of such Deferral Account shall be credited and debited to, or otherwise
reflected in, such Deferral Account from time to time, by the Committee, on the
basis that such amounts were invested in the reference investment. The Committee
may change or discontinue any reference investment available under the Plan in
its discretion; provided, however, that each affected Participant shall be given
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the opportunity, without limiting or otherwise impairing any other right of such
Participant regarding changes in investment directions, to redirect the
allocation of his or her Deferral Account deemed invested in the discontinued
investment among the other reference investments, including any replacement
investments. With respect to any Deferral Account established in connection with
a Stock-Based Deferral, the reference investment shall be Stock.
(c) Allocation and Reallocation of Reference Investments. A
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Participant may allocate amounts credited to his or her Deferral Account (other
than Stock-Based Deferrals) to one or more of the reference investments
authorized under the Plan. Subject to the rules established by the Committee, if
more than one reference investment is provided, a Participant may reallocate
amounts credited to his or her Deferral Account as of the first day of the
calendar month next following the filing of Participant's election to one or
more of such reference investments, by filing with the Committee a notice, in
such form as may be specified by the Committee, not later than the 15th of the
preceding month. The Committee may, in its discretion, restrict allocation into
or reallocation by specified Participants into or out of specified investments
or specify minimum or maximum amounts that may be allocated or reallocated by
Participants.
(d) Trusts. The Committee may, in its discretion, establish one or
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more Trusts (including sub-accounts under such Trust(s)), and deposit therein
amounts of cash, Stock, or other property not exceeding the amount of Heidrick &
Struggles' obligations with respect to a Participant's Deferral Account
established under this Section 6. Other provisions of this Section 6
notwithstanding, the timing of allocations and reallocations of assets in such a
Deferral Account, and the reference investments available with respect to such
Deferral Account, may be varied to reflect the timing of actual investments of
the assets of such Trust(s) and the actual investments available to such
Trust(s).
(e) Restrictions on Participant Direction. The provisions of Sections
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6(b), 6(c), and 8 notwithstanding, the Committee may restrict or prohibit
reallocations of amounts deemed invested in specified investments, and subject
such amounts to vesting requirements in order to reflect restrictions contained
in the LTIP, MIP, or any plan, program, employment agreement or other
arrangement that gave rise to Deferrable Compensation deferred under the Plan
and resulting
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in such deemed investment, to comply with any applicable law or regulation, or
for such other purpose as the Committee may determine is not inconsistent with
the Plan.
(f) Dividend Equivalents. The Committee shall credit dividend
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equivalents as shares of Stock to a Participant's Deferral Account as follows:
(i) Cash and Non-Stock Dividends. If Heidrick & Struggles declares
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and pays a dividend on Stock in the form of cash or property other than shares
of Stock, then the Committee shall credit to a Participant's Deferral Account,
as of the payment date for such dividend, with respect to each share of Stock
credited therein, a number of additional shares of Stock equal to the quotient
obtained by dividing (A) the amount of cash plus the fair market value of any
property other than shares actually paid as a dividend on each share at such
payment date, by (B) the Fair Market Value of a share of Stock at such payment
date.
(ii) Stock Dividends and Splits. If Heidrick & Struggles declares and
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pays a dividend on Stock in the form of additional shares of Stock, or there
occurs a forward split of Stock, then the Committee shall credit to a
Participant's Deferral Account, as of the payment date for such dividend or
forward Stock split, with respect to each share of Stock credited therein, a
number of additional shares of Stock equal to the number of additional shares
actually paid as a dividend or issued in such split in respect of a share of
Stock.
(g) Adjustments. The Committee shall have the right, but not the
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obligation, within its sole discretion, to make such adjustments, if any, as it
deems appropriate, to the number and kind of shares of Stock or to provide for
another reference investment upon the occurrence of any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or any other event or
condition that affects the Stock.
7. Forfeitures.
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(a) Forfeiture of Mandatory Deferrals. A Participant shall forfeit
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all Annual Bonus Shares deferred pursuant to a Mandatory Deferral if such
Participant's employment by the Company is terminated prior to the conclusion of
the Mandatory Deferral period for any reason other than death, Disability or
Retirement. Forfeited Annual Bonus Shares shall be returned to Heidrick &
Struggles.
(b) Forfeitures Under Other Plans and Arrangements. To the extent
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that Deferrable Stock-Based Compensation is deferred under the Plan and is
forfeited pursuant to the terms of the LTIP, MIP, or any plan, program,
employment agreement or other arrangement under which such Deferrable
Stock-Based Compensation was awarded, such forfeiture restrictions shall
continue to apply and the Participant shall not be entitled to the value of such
Deferrable Stock-Based Compensation and other property related thereto
(including without limitation, dividends and distributions thereon) or other
award or amount, or proceeds thereof. Any shares of Stock, other property or
other award or amount (and proceeds thereof) forfeited shall be returned to
Heidrick & Struggles.
8. Settlement of Deferral Accounts.
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(a) Cash-Based Deferrals. Heidrick & Struggles shall settle a
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Deferral Account relating to a Cash-Based Deferral by payment of cash to the
Participant in the following manner:
(i) With respect to a Deferral Account with a Payment Commencement
Date prior to the termination of the Participant's employment with the Company,
as soon as is reasonably practicable following the Payment Commencement Date, in
a lump sum or Annual Installments, as the Participant elected in his or her
Deferral Election Form relating to such Deferral Account. If such Participant's
employment with the Company subsequently terminates prior to such Participant's
satisfying the Rule of Sixty Five, Heidrick & Struggles shall pay the entire
balance in all of the Participant's Deferral Accounts, in a lump sum, to the
Participant as soon as is reasonably practicable following the first business
day of the calendar quarter commencing after the date of such termination.
(ii) With respect to a Deferral Account with a Payment Commencement
Date based on the Participant's termination of employment with the Company, in a
lump sum, as soon as is reasonably practicable after the Payment Commencement
Date, unless such termination occurs on or after such Participant's satisfying
the Rule of Sixty Five, in which case Heidrick & Struggles shall make all
payments in accordance with the direction of such Participant in his or her
Deferral Election Form relating to such Deferral Account.
(b) Stock-Based Deferrals. Heidrick & Struggles shall settle all
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Stock-Based Deferrals, as soon as is reasonably practicable after the Payment
Commencement Date, by lump-sum payment to the Participant of the shares of Stock
then credited to the Participant's Deferral Account relating to such Stock-Based
Deferral. Heidrick & Struggles shall pay any fractional shares to the
Participant in cash. The cash value of any such fractional shares shall be equal
to the product of (i) the fraction of shares, and (ii) the Fair Market Value of
a share of Stock upon the date Heidrick & Struggles pays the Stock-Based
Deferral to the Participant.
(c) Change in Control; Termination of the Plan. Notwithstanding the
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foregoing, Heidrick & Struggles shall settle all Deferral Accounts by payment of
cash or Stock, as applicable, to the Participant, or in the case of such
Participant's death to his or her Beneficiary, in a lump sum, as soon as is
reasonably practicable following (i) a Change in Control, unless the Participant
elects at least thirty (30) days before such Change in Control to reaffirm his
or her deferral election, (ii) a termination of the Plan pursuant to Section 13,
or (iii) the Participant's death.
9. Provisions Relating to Section 162(m) of the Code. It is the
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intent of Heidrick & Struggles that in the event that any amounts are deferred
hereunder by a person who is, with respect to the year of payout, deemed by the
Committee to be a "covered employee" within the meaning of Code Section 162(m)
and regulations thereunder, which compensation constitutes "qualified
performance-based compensation" within the meaning of Code Section 162(m) and
regulations thereunder or otherwise qualifies for an exemption from Code Section
162(m), shall not, as a result of deferral hereunder, become compensation with
respect to which the Company in fact would not be entitled to a tax deduction
under Code Section 162(m). Accordingly, unless otherwise determined by the
Committee, if any compensation would become so disqualified under Code Section
162(m) as a result of deferral hereunder, the Committee may
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modify the terms of such deferral (including by means of accelerated or deferred
payouts) in order to ensure that the compensation would not, at the time of
payout, be so disqualified. Similarly, the Committee may modify the terms of any
deferral (including by means of accelerated or deferred payouts) relating to
compensation that does not constitute "qualified performance-based compensation"
within the meaning of Code Section 162(m) or otherwise does not qualify for an
exemption from Code Section 162(m) in order to permit the deductibility of such
compensation under Code Section 162(m).
10. Effects on Other Benefits. Any amounts deferred or payable under
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the Plan shall not be taken into account in determining any other benefits under
any other Company plan unless, and to the extent, such plan expressly includes
such amounts.
11. Statements. The Committee shall furnish statements to each
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Participant reflecting the amount credited to a Participant's Deferral Accounts
and transactions therein not less frequently than once each calendar year.
12. Sources of Stock: Limitation on Amount of Stock-Based Deferrals.
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If shares of Stock are deposited under the Plan in a Trust pursuant to Section 6
in connection with a Stock-Based Deferral, the shares so deposited shall be
deemed to have originated, and shall be counted against the number of shares
reserved, under the LTIP, MIP, or any other plan, program, employment agreement
or other arrangement under which the shares were initially awarded.
Shares of Stock actually delivered in settlement of Deferral Accounts
shall be originally issued shares or treasury shares, in the discretion of the
Committee.
13. Amendment/Termination. Heidrick & Struggles may, with prospective
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or retroactive effect, amend, alter, suspend, discontinue, or terminate the Plan
at any time without the consent of Participants, stockholders, or any other
person; provided, however, that, without the consent of a Participant, no such
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action shall materially and adversely affect the rights of such Participant with
respect to any rights to payment of amounts credited to such Participant's
Deferral Account. Notwithstanding the foregoing, Heidrick & Struggles may, in
its sole discretion, terminate the Plan (in whole or in part) with respect to
one or more Participants and distribute to such affected Participants the
amounts credited to their Deferral Accounts in a lump sum as soon as reasonably
practicable following such termination.
14. General Provisions.
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(a) Limits on Transfer of Awards. Other than by will or the laws of
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descent and distribution, no right, title or interest of any kind in the Plan
shall be transferable or assignable by a Participant or his or her Beneficiary
or be subject to alienation, anticipation, encumbrance, garnishment, attachment,
levy, execution or other legal or equitable process, nor subject to the debts,
contracts, liabilities or engagements, or torts of any Participant or his or her
Beneficiary. Any attempt to alienate, sell, transfer, assign, pledge, garnish,
attach or take any other action subject to legal or equitable process or
encumber or dispose of any interest in the Plan shall be void.
(b) Receipt and Release. Cash payments or delivery of shares of Stock
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to any Participant or Beneficiary in accordance with the provisions of the Plan
shall, to the extent thereof, be in full satisfaction of all claims for the
compensation deferred hereunder and relating to the Deferral Account to which
the payments and/or delivery relate against Heidrick & Struggles, the
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Committee, or the Administrator, and Heidrick & Struggles may require such
Participant or Beneficiary, as a condition to such payments, to execute a
receipt and release to such effect. In the case of any payment under the Plan of
less than all amounts then credited to an account in the form of Stock, the
amounts paid shall be deemed to relate to the Stock credited to the account at
the earliest time.
(c) Unfunded Status of Awards; Creation of Trusts. The Plan shall be
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unfunded and maintained by Heidrick & Struggles for the purpose of providing
deferred compensation for a select group of management or other highly
compensated employees and shall not be an employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974, as amended.
Payments to a Participant under the Plan shall be made from the general assets
of Heidrick & Struggles and to the extent that any person acquires the right to
receive payment of benefits from Heidrick & Struggles under the Plan, such right
shall be no greater than the rights of any unsecured general creditor of
Heidrick & Struggles; provided, however, that the Committee may authorize the
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creation of Trusts, including but not limited to the Trusts referred to in
Section 6 hereof, or make other arrangements to meet Heidrick & Struggles'
obligations under the Plan, which such Trusts or other arrangements shall be
consistent with the "unfunded" status of the Plan unless the Committee otherwise
determines with the consent of each affected Participant.
(d) Other Participant Rights. No Participant shall have any of the
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rights or privileges of a stockholder of Heidrick & Struggles under the Plan,
including as a result of the crediting of shares of Stock to a Deferral Account,
or the creation of any Trust and deposit of such Stock therein. No provision of
the Plan or transaction hereunder shall confer upon any Participant any right to
be employed by the Company, or to interfere in any way with the right of the
Company to increase or decrease the amount of any compensation payable to such
Participant. Subject to the limitations set forth in Section 14(a) hereof, the
Plan shall inure to the benefit of, and be binding upon, the parties hereto and
their successors and assigns.
(e) Tax Withholding. Heidrick & Struggles shall have the right to
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deduct from amounts otherwise payable in settlement of a Deferral Account any
sums that federal, state, local or foreign tax law requires to be withheld with
respect to such payment. With respect to any taxes or withholding that may be
due prior to settlement of the Deferral Account, Heidrick & Struggles shall have
the right to withdraw, in cash or in Stock, from and reduce the Deferral Account
by, the amount of such taxes or withholdings. In such case, Heidrick & Struggles
shall arrange to provide for the payment of such taxes or withholding to the
appropriate taxing authorities.
(f) Governing Law. The validity, construction, and effect of the Plan
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and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Illinois, without giving effect to
principles of conflicts of laws, and applicable provisions of federal law.
(g) Limitation. A Participant and his or her Beneficiary shall assume
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all risk in connection with any decrease in value of the Deferral Account and
neither Heidrick & Struggles, the Committee nor the Administrator shall be
liable or responsible therefor.
(h) Construction. The captions and numbers preceding the sections of
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the Plan are included solely as a matter of convenience of reference and are not
to be taken as limiting or
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extending the meaning of any of the terms and provisions of the Plan. Whenever
appropriate, words used in the singular shall include the plural or the plural
may be read as the singular.
(i) Severability. In the event that any provision of the Plan shall be
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declared illegal or invalid for any reason, said illegality or invalidity shall
not affect the remaining provisions of the Plan but shall be fully severable,
and the Plan shall be construed and enforced as if said illegal or invalid
provision had never been inserted herein.
(j) Status; No Special Employment Rights. The establishment and
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maintenance of, or allocations and credits to, the Deferral Account of any
Participant shall not vest in any Participant any right, title or interest in
and to any plan or Company assets or benefits except at the time or times and
upon the terms and conditions and to the extent expressly set forth in the Plan
and in accordance with the terms of the Trust. Furthermore, nothing contained in
the Plan shall confer upon any Participant any right with respect to the
continuation of such Participant's employment by the Company or interfere in any
way with the right of the Company at any time to terminate such employment or to
increase or decrease the base salary or other compensation of the Participant.
(k) Anti-Hedging Certification. With respect to Mandatory Deferrals,
--------------------------
prior to any distributions of Stock to a Participant, the Committee will require
such Participant, unless the Committee agrees in writing to the contrary, to
certify in a form acceptable to the Committee that from the date of the
Mandatory Deferral to the end of the Mandatory Deferral the Participant has not,
directly or indirectly, held any equity or derivative security position with
respect to Stock, such as a short sale, a long put option or a short call
option, that increases in value as the value of Stock decreases. If the
Participant does not make such certification or makes a false certification, the
Participant shall forfeit the right to payment of any Mandatory Deferral made
pursuant to the Plan.
15. Effective Date. The Plan shall be effective as of December 12,
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2001.
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