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EXHIBIT 4.1
WOODWARD GOVERNOR COMPANY
EXECUTIVE BENEFIT PLAN
EFFECTIVE JANUARY 1, 2004
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I. PURPOSE AND EFFECTIVE DATE............................................................1
1.1. Purpose............................................................................1
1.2. Effective Date.....................................................................1
1.3. History............................................................................1
II. DEFINITIONS...........................................................................1
2.1. "Account"..........................................................................1
2.2. "Administrator"....................................................................2
2.3. "Affiliate"........................................................................2
2.4. "Base Salary"......................................................................2
2.5. "Beneficiary"......................................................................2
2.6. "Board"............................................................................2
2.7. "Bonus"............................................................................2
2.8. "Change in Control"................................................................3
2.9. "Code".............................................................................4
2.10. "Company"..........................................................................4
2.11. "Deferral Contribution Amounts"....................................................5
2.12. "Deferral Election"................................................................5
2.13. "Disability".......................................................................5
2.14. "Distribution Election"............................................................5
2.15. "Early Retirement Date"............................................................5
2.16. "Election Period"..................................................................5
2.17. "Eligible Member"..................................................................5
2.18. "Exchange Act".....................................................................5
2.19. "FICA".............................................................................5
2.20. "Investment Fund or Funds".........................................................5
2.21. "Normal Retirement Date"...........................................................6
2.22. "Participant"......................................................................6
2.23. "Plan".............................................................................6
2.24. "Plan Year"........................................................................6
2.25. "Prior Account Balance"............................................................6
2.26. "Retirement".......................................................................6
2.27. "Supplemental Benefit Amount"......................................................6
2.28. "Valuation Date"...................................................................6
III. PARTICIPATION.........................................................................7
3.1. Participation......................................................................7
3.2. ERISA Exemption....................................................................7
IV. DEFERRAL CONTRIBUTION AMOUNTS.........................................................7
4.1. Permissible Deferrals under the Plan...............................................7
(a) Deferral of Base Salary............................................................7
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(b) Deferral of Bonus..................................................................7
4.2. Deferral Elections.................................................................8
4.3. Crediting of Deferral Elections....................................................9
4.4. Vesting............................................................................9
4.5. Deferred Contribution Amounts Subject to FICA at Time of Deferral..................9
V. SUPPLEMENTAL BENEFIT AMOUNT...........................................................9
5.1. Computation of Supplemental Benefit Amount.........................................9
5.2. Vesting...........................................................................10
5.3. Crediting of Supplemental Benefit Amount..........................................10
VI. ACCOUNTS AND INVESTMENTS.............................................................10
6.1. Valuation of Accounts.............................................................10
6.2. Hypothetical Investment Funds.....................................................11
6.3. Crediting of Investment Return....................................................11
6.4. Changing Investment Fund Options..................................................12
6.5. Investment Alternatives After Death...............................................12
VII. PAYMENT OF BENEFITS..................................................................12
7.1. Distribution at Specific Future Date..............................................12
7.2. Distribution Upon Retirement or Disability........................................12
7.3. Distribution On Other Termination of Employment...................................13
7.4. Unscheduled Withdrawal............................................................13
7.5. Unforeseeable Emergency...........................................................14
7.6. Time and Form of Elections........................................................14
7.7. Form of Payment and Withholding...................................................14
VII. DEATH BENEFITS.......................................................................14
8.1. Death Prior to Commencement of Benefits...........................................14
8.2. Death After Commencement of Benefits..............................................14
8.3. Administrator Discretion Regarding Form...........................................14
IX. ADMINISTRATION.......................................................................15
9.1. Authority of Administrator........................................................15
9.2. Participant's Duty to Furnish Information.........................................15
9.3. Interested Member of Administrator................................................15
9.4. Indemnification...................................................................15
9.5. Claims Procedure..................................................................15
X. AMENDMENT AND TERMINATION............................................................16
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XI. MISCELLANEOUS........................................................................16
11.1. No Implied Rights; Rights on Termination of Service...............................16
11.2. No Employment Rights..............................................................16
11.3. Nature of the Plan................................................................17
(a) Unfunded Plan.....................................................................17
(b) Exception for Change in Control...................................................17
11.4. Nontransferability................................................................17
11.5. Successors and Assigns............................................................18
11.6. Payment with Respect to Incapacitated Persons.....................................18
11.7. Arbitration.......................................................................18
11.8. Gender and Number.................................................................18
11.9. Headings..........................................................................18
11.10. Severability......................................................................18
11.11. Effect on Other Employee Benefit Plans............................................19
11.12. Non-U.S. Participants.............................................................19
11.13. Applicable Law....................................................................19
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WOODWARD GOVERNOR COMPANY
EXECUTIVE BENEFIT PLAN
I. PURPOSE AND EFFECTIVE DATE.
1.1. PURPOSE. The Woodward Governor Company Executive Benefit Plan
has been established by Woodward Governor Company to attract and
retain certain key members by:
(a) providing a tax-deferred capital accumulation vehicle to
supplement such members' individual retirement
contributions, thereby encouraging savings for
retirement, and
(b) supplementing such members' retirement income available
under the Woodward Governor Company Retirement Savings
Plan (the "RSP"), which is otherwise limited pursuant to
the rules and regulations of the Internal Revenue Code
of 1986, as amended.
1.2. EFFECTIVE DATE. The Plan was originally effective January 1,
2001. This amendment and restatement of the Plan is effective
January 1, 2004. The Plan shall remain in effect until
terminated in accordance with Article X.
1.3. HISTORY. The Woodward Governor Company Amended and Restated
Unfunded Deferred Compensation Plan No.1 (the "DC Plan No. 1")
and the Woodward Governor Company Unfunded Deferred Compensation
Plan No. 2 (the "DC Plan No. 2) were merged with and into this
Plan effective January 1, 2001. The Plan is intended to be an
amendment, restatement and continuation of such plans for
periods following the merger date.
II. DEFINITIONS.
When used in the Plan and initially capitalized, the following words and
phrases shall have the meanings indicated:
2.1. "ACCOUNT" means the recordkeeping account established for each
Participant in the Plan for purposes of accounting for the
amount of the Participant's:
(a) Deferral Contribution Amounts deferred and credited in
accordance with Article IV each year, if any,
(b) Supplemental Benefit Amounts determined and credited in
accordance with Article V each year, if any, and
(c) account balance, if any, under the prior DC Plan No. 1
and/or prior DC Plan No. 2 on the day immediately
preceding the original effective date of this Plan,
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all adjusted periodically to reflect the hypothetical investment
return on such amounts in accordance with Article VI and
distributions in accordance with Article VII.
2.2. "ADMINISTRATOR" means the Compensation Committee or such other
individual or committee appointed and delegated by the Board to
administer the Plan in accordance with Article IX. To the extent
so delegated, the term "Administrator" hereunder shall be deemed
to refer to such individual or committee. The Compensation
Committee shall take such actions it deems necessary or
desirable to ensure that such individual or committee has
sufficient and appropriate authority for carrying out the intent
and purpose of the Plan.
2.3. "AFFILIATE" means:
(a) any corporation, partnership, joint venture, trust,
association or other business enterprise which is a
member of the same controlled group of corporations,
trades or businesses as the Company within the meaning
of Code Section 414, and
(b) any other entity that is designated as an Affiliate by
the Board.
2.4. "BASE SALARY" means a Participant's base salary in effect for a
given year as reflected in the personnel records of the Company.
2.5. "BENEFICIARY" means the person or entity designated by the
Participant to receive the Participant's Plan benefits in the
event of the Participant's death. If the Participant does not
designate a Beneficiary, or if the Participant's designated
Beneficiary predeceases the Participant, the Participant's
estate shall be the Beneficiary under the Plan.
2.6. "BOARD" means the Board of Directors of the Company.
2.7. "BONUS" means any incentive compensation awarded to a
Participant for a given year under the Woodward Governor Company
Annual Incentive Compensation Plan, the Woodward Governor
Company Long-Term Incentive Compensation Plan, the Woodward
Governor Company Retention Incentive Agreement for FST
Executives, and/or any other bonus or incentive compensation
plan designated by the Administrator from time to time for
inclusion within this definition for deferral purposes.
2.8. "CHANGE IN CONTROL" shall be deemed to have occurred if:
(a) any "person" (as defined in Section 13(d) and 14(d) of
the Exchange Act) (excluding for this purpose the
Company or any subsidiary of the Company, or any
employee benefit plan of the Company or any subsidiary
of the Company, or any person or entity organized,
appointed or established by the Company for or pursuant
to the terms of such plan which acquires beneficial
ownership of voting securities of the Company)
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is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) directly or indirectly of
securities of the Company representing fifteen percent
(15%) or more of the combined voting power of the
Company's then outstanding securities; provided,
however, that no Change in Control shall be deemed to
have occurred:
(i) as the result of an acquisition of securities of
the Company by the Company which, by reducing
the number of voting securities outstanding,
increases the direct or indirect beneficial
ownership interest of any person to fifteen
percent (15%) or more of the combined voting
power of the Company's then outstanding
securities, but any subsequent increase in the
direct or indirect beneficial ownership interest
of such a person in the Company shall be deemed
a Change in Control; or
(ii) as a result of the acquisition directly from the
Company of securities of the Company
representing less than fifty percent (50%) of
the voting power of the Company; or
(iii) if the Board determines in good faith that a
person who has become the beneficial owner
directly or indirectly of securities of the
Company representing fifteen percent (15%) or
more of the combined voting power of the
Company's then outstanding securities has
inadvertently reached that level of ownership
interest, and if such person divests as promptly
as practicable a sufficient amount of securities
of the Company so that the person no longer has
a direct or indirect beneficial ownership
interest in fifteen percent (15%) or more of the
combined voting power of the Company's then
outstanding securities; or
(b) during any period of two (2) consecutive years (not
including any period prior to the original effective
date (as set forth in Section 1.2 above) of the Plan),
individuals who at the beginning of such two-year period
constitute the Board and any new director or directors
(except for any director designated by a person who has
entered into an agreement with the Company to effect a
transaction described in paragraph (a) above or
paragraph (c) below) whose election by the Board or
nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds of the
directors then still in office who either were directors
at the beginning of the period or whose election or
nomination for election was previously so approved,
cease for any reason to constitute at least a majority
of the Board (such individuals and any such new
directors being referred to as the "Incumbent Board");
or
(c) approval by the shareholders of the company of a
complete liquidation or dissolution of the Company; or
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(d) consummation of:
(i) an agreement for the sale or disposition of the
Company or all or substantially all of the
Company's assets,
(ii) a plan of merger or consolidation of the Company
with any other corporation, or
(iii) a similar transaction or series of transactions
involving the Company (any transaction described
in subparagraphs (i) and (ii) of this paragraph
(d) being referred to as a "Business
Combination"), in each case unless after such a
Business Combination:
(a) the shareholders of the Company
immediately prior to the Business
Combination continue to own, directly or
indirectly, more than fifty-one percent
(51%) of the combined voting power of
the then outstanding voting securities
entitled to vote generally in the
election of directors of the new (or
continued) entity (including, but not by
way of limitation, an entity which as a
result of such transaction owns the
Company or all or substantially all of
the Company's former assets either
directly or through one or more
subsidiaries) immediately after such
Business Combination, in substantially
the same proportion as their ownership
in the Company immediately prior to such
Business Combination, and
(b) at least a majority of the members of
the board of directors of the entity
resulting from such Business Combination
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 Business
Combination.
2.9. "CODE" means the Internal Revenue Code of 1986, as amended.
2.10. "COMPANY" means Woodward Governor Company and any successor
thereto.
2.11. "DEFERRAL CONTRIBUTION AMOUNTS" means the amounts of Base Salary
and Bonus deferred by a Participant, if any, and credited to his
or her Account in accordance with Article IV but such amounts
specifically and expressly do not include any Prior Account
Balance of such Participant.
2.12. "DEFERRAL ELECTION" means the written election made by an
Eligible Member to defer such Eligible Member's Base Salary
and/or Bonus for any given year in accordance with Article IV.
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2.13. "DISABILITY" means Disability as defined in the Woodward
Governor Company Long-Term Disability Plan.
2.14. "DISTRIBUTION ELECTION" means the written election made by a
Participant for a Plan Year regarding the timing and form of
payment of his or her Deferral Contribution Amounts under
Article IV or Supplemental Benefit Amounts under Article V with
respect to such Plan Year.
2.15. "EARLY RETIREMENT DATE" means the date on which any Plan
Participant retires from active employment with the Company or
any Affiliate on or after he has attained age 55 but before he
has attained age 65.
2.16. "ELECTION PERIOD" means the period specified by the
Administrator during which a Deferral Election may be made with
respect to a Participant's Base Salary and/or Bonus payable for
a Plan Year, or a Distribution Election may be made with respect
to payment of Deferred Compensation Amounts or Supplemental
Benefit Amounts credited for such Plan Year.
2.17. "ELIGIBLE MEMBER" means a member of the Company or an Affiliate
who has been selected by the Administrator to participate in the
Plan in accordance with Article III.
2.18. "EXCHANGE ACT" means the Securities and Exchange Act of 1934.
2.19. "FICA" means the employment tax imposed on a member's income
under the Federal Insurance Contributions Act (Chapter 21 of the
Code) which is comprised of Old-Age, Survivors and Disability
Insurance and Hospital Insurance
2.20. "INVESTMENT FUND OR FUNDS" means the investment funds designated
by the Administrator as the basis for determining the
hypothetical investment return to be credited in accordance with
Article VI to Participants' Accounts. As of the effective date,
the Investment Funds shall mirror the investment funds available
under the RSP. The Administrator, in its sole discretion, may
change the Investment Funds at such times as it deems
appropriate. Any Investment Fund alternatives that are different
that those offered under the RSP shall be described in an
Appendix to the Plan.
2.21. "NORMAL RETIREMENT DATE" means the date on which any Plan
Participant retires from active employment with the Company or
any Affiliate on or after he has attained age 65.
2.22. "PARTICIPANT" means an Eligible Member who has:
(a) been notified by the Administrator of his eligibility to
participate in the Plan, and
(b) either:
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(i) completed and submitted a Deferral Election in
accordance with Section 4.2, or
(ii) had credited to his Account, by the Company,
Supplemental Benefit Amounts in accordance with
Article V, or
(iii) had an account balance under the prior DC Plan
No. 1 and/or the prior DC Plan No. 2 on the day
immediately preceding the effective date of this
Plan.
2.23. "PLAN" means the Woodward Governor Company Executive Benefits
Plan, as amended from time to time.
2.24. "PLAN YEAR" means the 12 consecutive month period beginning each
January 1.
2.25. "PRIOR ACCOUNT BALANCE" means an Eligible Member's account
balance(s), if any, under the prior DC Plan No. 1 and/or prior
DC Plan No. 2 which were transferred to this Plan by the Company
and credited to his Account pursuant to Section 3.1.
2.26. "RETIREMENT" means termination of employment by a Participant by
reason of retiring from active employment with the Company or
any Affiliate on his Early Retirement Date or Normal Retirement
Date.
2.27. "SUPPLEMENTAL BENEFIT AMOUNT" means the amount computed on
behalf of the Participant, if any, and credited to his or her
Account in accordance with Article V.
2.28. "VALUATION DATE" means a date on which the Investment Funds are
valued and the Participant's Account is adjusted for any
resulting gains or losses. The Administrator shall determine the
Valuation Date and such date shall be at least once every
calendar year.
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III. PARTICIPATION.
3.1. PARTICIPATION. The Administrator shall select those members
eligible to participate in the Plan. In selecting Eligible
Members, the Administrator shall take into consideration such
factors as it deems relevant in connection with accomplishing
the purposes of the Plan. An Eligible Member shall become a
Participant in the Plan when (A) he is notified in writing by
the Administrator that he is eligible to participate in the
Plan, and (B) he has either (1) completed and submitted a
Deferral Election to the Administrator in accordance with
Article IV, or (2) had credited to his Account, by the Company,
Supplemental Benefit Amounts in accordance with Article V, or
(3) had credited to his Account, by the Company, his account
balance, if any, under the prior DC Plan No. 1 and/or the prior
DC Plan No. 2 on the day immediately preceding the original
effective date of this Plan.
3.2. ERISA EXEMPTION. It is the intent of the Company that the Plan
be exempt from Parts 2, 3 and 4 of Subtitle B of Title I of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), as an unfunded plan that is maintained by the Company
primarily for the purpose of providing deferred compensation for
a select group of management of highly compensated employees
(the "ERISA Exemption"). Notwithstanding anything to the
contrary in Section 3.1 or in any other provision of the Plan,
the Administrator may in its sole discretion exclude any one or
more members from eligibility to participate or from
participation in the Plan, may exclude any Participant from
continued participation in the Plan, and may take any further
action (including the immediate payment of the Participant's
entire interest under the Plan in a lump-sum) it considers
necessary or appropriate if the Administrator reasonably
determines in good faith that such exclusion or further action
is necessary in order for the Plan to qualify for, or to
continue to qualify for, the ERISA Exemption.
IV. DEFERRAL CONTRIBUTION AMOUNTS.
4.1. PERMISSIBLE DEFERRALS UNDER THE PLAN. An Eligible Member may
elect to defer:
(a) DEFERRAL OF BASE SALARY: up to 50% of his or her Base
Salary for a Plan Year, in increments of 1%, provided,
however, that any election to defer over 30% of Base
Salary must be approved in advance by the Administrator,
and
(b) DEFERRAL OF BONUS: up to 100% of his or her Bonus for a
Plan Year, in increments of 25%,
by filing a Deferral Election in accordance with Section 4.2
below.
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4.2. DEFERRAL ELECTIONS. A Participant's Deferral Election shall be
in writing, and shall be filed with the Administrator at such
time and in such manner as the Administrator shall provide,
subject to the following:
(a) A Deferral Election pertaining to Base Salary and/or
Bonus shall be made during the Election Period
established by the Administrator which shall end no
later than December 31 preceding the first day of the
Plan Year in which such Base Salary and/or Bonus would
otherwise be payable.
(b) At the discretion of the Administrator, a Deferral
Election may be made by
(i) newly-hired Eligible Members for the Plan Year
in which they commence employment,
(ii) a member who becomes an Eligible Member after
the beginning of a Plan Year for the Plan Year
in which they become an Eligible Member.
Notwithstanding the preceding sentence, such Deferral
Elections must be made within thirty (30) days of their
date of hire or the date the member becomes an Eligible
Member, whichever applies. However, such Deferral
Elections shall be prospective and shall apply only to
Base Salary and/or Bonus that would otherwise be paid to
the Eligible Member after the Deferral Election is made.
(c) Deferral Elections shall be expressed as a percentage of
Base Salary or Bonus, within the limits provided under
the Plan.
Once made, a Deferral Election for:
(A) Base Salary shall remain in effect for all
subsequent Plan Years unless changed or revoked
by the Participant in accordance with rules
established by the Administrator, and
(B) Bonus shall remain in effect only for the Plan
Year for which such Bonus Deferral Election was
made.
Any such modification or revocation with respect to Base Salary
shall be effective for the Plan Year following the Plan Year in
which it is made. Notwithstanding anything to the contrary, any
revocation for Base Salary and/or Bonus shall become effective
as soon as practicable in the event it is made because of the
Participant's Disability or if the Administrator, in its sole
discretion, determines that the Participant has suffered a
severe financial hardship or a bona fide administrative mistake
was made. If a Deferral Election is revoked in accordance with
any of the foregoing, the Participant may not make a new
Deferral Election until the Election Period established by the
Administrator for making deferrals for the next Plan Year.
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(d) At the time a Deferral Election is made with respect to
Base Salary or Bonus for a Plan Year, the Participant
may also make a Distribution Election with respect to
such Plan Year deferrals in accordance with Section 7.1.
4.3. CREDITING OF DEFERRAL ELECTIONS. The amount of Base Salary and
Bonus that a Participant elects to defer under the Plan shall be
credited by the Company to the Participant's Account as Deferral
Contribution Amounts as of the date such Base Salary or such
Bonus would have been paid to the Participant absent the
Deferral Election.
4.4. VESTING. A Participant's Deferral Contribution Amounts for each
Plan Year shall be fully vested at the time credited to such
Participant's Account.
4.5. DEFERRED CONTRIBUTION AMOUNTS SUBJECT TO FICA AT TIME OF
DEFERRAL. A Participant's Deferred Contribution Amounts are
subject to FICA at the time the amounts are contributed to the
Plan for deferral. The gross amount of the Participant's Base
Salary deferral and Bonus deferral will be contributed to the
Participant's Account and the corresponding FICA tax due will be
deducted from that portion of the Participant's Base Salary or
Bonus not deferred, as the case may be. Notwithstanding the
foregoing, if a Participant has elected to defer a percentage of
his or her Bonus such that contribution of the gross amount of
the Bonus deferred would leave insufficient funds to remit the
applicable FICA tax to the government, then the applicable Bonus
amount contributed to the Participant's Account shall be made
net of the smallest amount of FICA tax needed to satisfy such
liability which cannot be covered from the portion of Bonus not
deferred.
V. SUPPLEMENTAL BENEFIT AMOUNT.
5.1. COMPUTATION OF SUPPLEMENTAL BENEFIT AMOUNT. An Eligible Member
designated by the Administrator for participation under the Plan
shall be entitled to a Supplemental Benefit Amount for each Plan
Year that he is an Eligible Member equal to:
(a) the excess, if any, of the benefit the Participant
otherwise would have been entitled to have credited to a
separate account for his benefit under the RSP for a
given year if such benefit was calculated without regard
to the following:
(A) Code Section 415,
(B) Code Section 401(a)(17),
(C) Code Section 401(k)(3),
(D) Code Section 401(m)(2),
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(E) Code Section 402(g), and
(F) any Deferral Election made by the Participant
for such given year under Article IV of this
Plan, OVER
(b) the accrued benefit which the Participant is entitled to
have credited to a separate account for his benefit for
such given year under the RSP.
5.2. VESTING. A Participant's Supplemental Benefit Amounts calculated
by the Company for each Plan Year shall be fully vested at the
time credited to such Participant's Account.
5.3. CREDITING OF SUPPLEMENTAL BENEFIT AMOUNT. The Supplemental
Benefit Amounts computed in Section 5.1 above for each Plan Year
shall be credited by the Company to the Participant's Account as
soon as reasonably practicable.
5.4. DISTRIBUTION ELECTIONS. During the Election Period for each Plan
Year, a Participant may also make a Distribution Election with
respect to the distribution under Section 7.1 of any
Supplemental Benefit Amount to be credited to his or her Account
for such Plan Year.
VI. ACCOUNTS AND INVESTMENTS.
6.1. VALUATION OF ACCOUNTS. The Administrator shall establish an
Account for each Participant who:
(a) has filed a Deferral Election to defer Base Salary
and/or Bonus, or
(b) has been credited with a Supplemental Benefit Amount, or
(c) has a Prior Account Balance on the effective date of
this Plan.
Such Account shall be credited with a Participant's Deferral
Contribution Amounts and Supplemental Benefit Amounts as set
forth in Sections 4.3 and 5.3, respectively, and with the
Participant's Prior Account Balance, if any. As of each
Valuation Date, the Participant's Account shall be adjusted
upward or downward to reflect:
(i) the investment return to be credited as of such
Valuation Date pursuant to Section 6.3 below,
(ii) the amount of distributions, if any, to be debited as of
that Valuation Date under Article VII, and
(iii) the amount of forfeitures, if any, to be debited under
Section 7.4(a).
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6.2. HYPOTHETICAL INVESTMENT FUNDS. Each Participant generally may
direct the manner in which his or her Account shall be deemed
invested in and among the Investment Funds; provided, however,
that each investment election made by a Participant shall,
notwithstanding anything to the contrary in the Plan, be
strictly subject to the consent of the Administrator which, in
its sole discretion, may elect to honor the Participant's
request or have the Account deemed invested in another manner.
Such deemed investment election shall be made in accordance with
such procedures as the Administrator shall establish and any
such election shall be made in whole percentages. The investment
authority shall remain at all times with the Administrator. The
selection of Investment Funds by a Participant shall be for the
sole purpose of determining the rate of return to be credited to
his or her Account and shall not be treated or interpreted in
any manner whatsoever as a requirement or direction to actually
invest assets in any Investment Fund or any other investment
media.
A Participant may make an investment election for the Investment
Fund based on Woodward Governor Company Common Stock only if
such election is approved in advance by the Board.
Notwithstanding any provision of the Plan to the contrary, if a
Participant is granted permission to elect such Investment Fund,
the Participant may only revoke such Investment Fund election
with the prior approval of the Board. Any such revocation shall
only be effective with respect to future deferrals and credits.
Any portion of the Participant's Account deemed invested in the
Company's Common Stock shall continue to be deemed to be
invested in Common Stock and may not be transferred to any other
hypothetical Investment Fund. The applicable value of the common
stock as of any Valuation Date shall be equal to the closing
price of such common stock on NASDAQ quoted by the WALL STREET
JOURNAL for the applicable Valuation Date.
6.3. CREDITING OF INVESTMENT RETURN. Each Participant's Account shall
be credited on each Valuation Date with his or her allocable
share of investment gains or losses of each Investment Fund in
which his or her Account is hypothetically invested. The
Administrator shall adopt a protocol for allocating the deemed
investment gains and losses similar to that used in the RSP.
Notwithstanding anything to the contrary, if a Participant
elects to invest in the hypothetical Investment Fund for
Woodward Governor Company Common Stock, such Participant's
Account shall also be credited with any deemed dividends paid
during the period beginning with the immediately preceding
Valuation Date and ending with the current Valuation Date.
6.4. CHANGING INVESTMENT FUND OPTIONS. Subject to the provisions of
this Article VI, a Participant may, on a daily basis, make a new
election with respect to the hypothetical Investments Funds in
which his or her Account shall be deemed invested in the future.
Any such election shall be made in the form specified by the
Administrator.
6.5. INVESTMENT ALTERNATIVES AFTER DEATH. For periods after the
Valuation Date coincident with or following a Participant's
death and pursuant to procedures
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established by the Administrator, the Participant's Account
balance pertaining to Deferral Contribution Amounts,
Supplemental Benefit Amounts, if any, and/or Prior Account
Balance, if any, shall be reallocated and reinvested among the
Investment Funds in accordance with the Beneficiary's
hypothetical investment direction.
VII. PAYMENT OF BENEFITS.
7.1. DISTRIBUTION AT SPECIFIC FUTURE DATE. During the Election Period
specified by the Administrator for a Plan Year, an Eligible
Member may elect one or more future Valuation Dates as of which
all or a portion of his or her Deferral Contribution Amounts and
any Supplemental Benefit Amounts for such Plan Year, and
earnings thereon, shall be distributed. Any distribution as of a
specific future date made to an Eligible Member pursuant to such
election shall be paid in a single lump-sum payment. Any such
future date shall be a Valuation Date in a specific future year
which is at least five Plan Years after the Plan Year for which
the initial Deferral Contribution Amounts or Supplemental
Benefit Amounts are credited to such Participant's Account;
provided, however, that only one distribution date per Plan Year
may be elected under this Section 7.1; provided, further that,
if the Participant elects a distribution at one or more specific
future dates and has a termination of employment prior to any
such date, distribution shall commence pursuant to Sections 7.2,
7.3, 8.1 or 8.2, as applicable. A distribution election under
this Section 7.1 may be revoked or extended to a Valuation Date
in a future Plan Year by filing a one-time revocation or
extension election with the Administrator at least 12 months
prior to the first day of the Plan Year in which such
distribution was scheduled to take place. Notwithstanding the
foregoing, any amounts distributable under this Section 7.1
shall be paid as soon as practicable following such relevant
Valuation Date.
7.2. DISTRIBUTION UPON RETIREMENT OR DISABILITY. If a Participant
terminates employment with the Company and/or Affiliates by
reason of Retirement or Disability, distribution of the
Participant's Account shall be made by or commence on the
Valuation Date coincident with or next following such
Participant's termination of employment. Distribution under this
Section 7.2 shall be made:
(a) in a lump sum, or
(b) in substantially equal annual, quarterly or monthly
installments for a period up to but not exceeding 10
years
as elected by the Participant on his or her Distribution
Election. A Participant may revoke or change his or her
Distribution Election under this Section 7.2 by filing a new
Distribution Election with the Administrator; provided, however,
that any Distribution Election that has not been on file with
the Administrator at least 12 months prior to the first day of
the Plan Year in which the Participant's termination of
employment occurs shall be void and disregarded. A Participant
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cannot alter or change his Distribution Election once he has
begun to receive payments under the Plan. Notwithstanding the
foregoing, a Participant (or his legal representative) whose
termination of employment occurs by reason of Disability may
request that the Administrator distribute the Participant's
Account in another payment form following such termination of
employment for Disability or defer distribution of the
Participant's Account until such Participant is no longer
eligible for coverage under the Woodward Governor Company
Long-Term Disability Plan, in which case the Administrator, in
its sole discretion, shall determine whether to make payment in
another form or defer such distributions after taking into
consideration all factors which it deems relevant. If the
Participant does not have a valid Distribution Election on file
with the Administrator at the time of Retirement or Disability,
the Participant's Account shall be paid in a single sum under
paragraph (a) above.
7.3. DISTRIBUTION ON OTHER TERMINATION OF EMPLOYMENT. If a
Participant's employment with the Company or Affiliates
terminates for any reason other than Retirement, Disability or
death, the Participant's Account shall be paid in a lump sum
payment as of the Valuation Date coincident with or next
following such termination of employment.
7.4. UNSCHEDULED WITHDRAWAL. A Participant may request a withdrawal
of all or a portion of his or her Deferral Contribution Amounts,
Supplemental Benefit Amounts, and earnings thereon, by filing a
Distribution Election with the Administrator specifying the
amount to be withdrawn. Payment of such amount, adjusted by the
amount forfeited as set forth in paragraph (a) below, shall be
made as of the first Valuation Date administratively practicable
after such request is received, and shall be subject to the
following:
(a) An amount equal to 10% of the withdrawal requested shall
be debited to the Participant's Account and permanently
forfeited.
(b) Any Deferral Election in effect at the time of such
withdrawal shall be void for periods after such
withdrawal.
(c) The Participant shall not be eligible to file a new
Deferral Election until the election period for the Plan
Year commencing at least 12 months after such
withdrawal.
7.5. UNFORESEEABLE EMERGENCY. Prior to the date otherwise scheduled
for payment under the Plan, upon showing an unforeseeable
emergency, a Participant may request that the Administrator
accelerate payment of all or a portion of his or her Deferral
Contribution Amounts, Supplemental Benefit Amounts, and earnings
thereon, in an amount not exceeding the amount necessary to meet
the unforeseeable emergency. For purposes of the Plan, an
unforeseeable emergency means an unanticipated emergency that is
caused by an event beyond the control of the Participant and
that would result in severe financial or medical hardship to the
Participant if early withdrawal were not permitted. Severe
financial or
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medical hardship shall be deemed to exist in the event of the
Participant's long and serious illness, impending bankruptcy or
other similar extraordinary circumstances. The determination of
an unforeseeable emergency shall be made by the Administrator in
its sole discretion, based on such information as the
Administrator shall deem to be necessary and relevant and such
decision shall be final and binding on all parties.
7.6. TIME AND FORM OF ELECTIONS. All Distribution Elections under
this Article VII shall be made at the time and in the form
established by the Administrator and shall be subject to such
other rules and limitations that the Administrator, in its sole
discretion, may establish.
7.7. FORM OF PAYMENT AND WITHHOLDING. All payments under the Plan
shall be made in cash and are subject to the withholding of all
applicable federal, state and local and foreign governmental
taxes; provided, however, any payment under the Plan that is
attributable to the portion of a Participant's Account deemed
invested in Company common stock shall be made in whole shares
of Company common stock, with fractional shares paid in cash.
VIII. DEATH BENEFITS.
8.1. DEATH PRIOR TO COMMENCEMENT OF BENEFITS. If a Participant dies
prior to commencement of payment of his or her Account, the
Participant's Beneficiary shall receive a survivor benefit in an
amount equal to the Participant's Account balance to be paid in
a single lump sum as soon as practicable following the
Participant's death.
8.2. DEATH AFTER COMMENCEMENT OF BENEFITS. If a Participant
terminates employment due to Retirement or Disability, and dies
prior to the time his or her Account balance has been fully
distributed, the Participant's Beneficiary shall receive the
remaining portion of the Participant's Account at the
regularly-scheduled date of payment for any remaining
installment payments of the Participant's Account.
8.3. ADMINISTRATOR DISCRETION REGARDING FORM. Notwithstanding the
foregoing provisions of this Article VIII, a Beneficiary may
request that the Administrator approve an alternate form of
payment of survivor benefits under this Article VIII which
request may be granted in the sole discretion of the
Administrator.
IX. ADMINISTRATION.
9.1. AUTHORITY OF ADMINISTRATOR. The Administrator shall have full
power and authority to carry out the terms of the Plan. The
Administrator may establish such rules and regulations as it may
consider necessary or desirable for the effective and efficient
administration of the Plan. The Administrator's interpretation,
construction and administration of the Plan, including any
adjustment of the amount or recipient of the payments to be
made, shall be binding and conclusive
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on all persons for all purposes. Neither the Company, including
its officers, members or directors, nor the Administrator or the
Board or any member thereof, shall be liable to any person for
any action taken or omitted in connection with the
interpretation, construction and administration of the Plan.
9.2. PARTICIPANT'S DUTY TO FURNISH INFORMATION. Each Participant
shall furnish to the Administrator such information as it may
from time to time request for the purpose of the proper
administration of this Plan.
9.3. INTERESTED MEMBER OF ADMINISTRATOR. If a member of the
Administrator is also a Participant in the Plan, he or she may
not decide or determine any matter or question concerning his or
her benefits unless such decision or determination could be made
by him or her under the Plan if he or she were not a member of
the Administrator.
9.4. INDEMNIFICATION. No person (including any present or former
member of the Administrator, and any present or former officer
or member of the Company or any Affiliate) shall be personally
liable for any act done or omitted to be done in good faith in
the administration of the Plan. Each present or former officer
or member of the Company or any Affiliate to whom the
Administrator has delegated any portion of its responsibilities
under the Plan and each present or former member of the
Administrator shall be indemnified and saved harmless by the
Company (to the extent not indemnified or saved harmless under
any liability insurance or other indemnification arrangement
with respect to the Plan) from and against any an all claims of
liability to which they are subjected by reason of any act done
or omitted to be done in good faith in connection with the
administration of the Plan, including all expenses reasonably
incurred in their defense if the Company fails to provide such
defense. No member of the Administrator shall be liable for any
act or omission of any other member of the Administrator, nor
for any act or omission upon his own part, excepting his own
willful misconduct or gross neglect.
9.5. CLAIMS PROCEDURE. If a Participant or Beneficiary ("Claimant")
is denied all or a portion of an expected benefit under this
Plan for any reason, he or she may file a claim with the
Administrator. The Administrator shall notify the Claimant
within 90 days of allowance or denial of the claim, unless the
Claimant receives written notice from the Administrator prior to
the end of the 90-day period stating that special circumstances
require an extension (of up to 90 additional days) of the time
for decision. The notice of the decision shall be in writing,
sent by mail to Claimant's last known address, and if a denial
of the claim, shall contain the following information: (a) the
specific reasons for the denial; (b) specific reference to
pertinent provisions of the Plan on which the denial is based;
and (c) if applicable, a description of any additional
information or material necessary to perfect the claim, an
explanation of why such information or material is necessary,
and an explanation of the claims review procedure. A Claimant is
entitled to request a review of any denial of his or her claim
by the Board. The request for review must be submitted within 60
days of mailing of notice of the
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denial. Absent a request for review within the 60-day period,
the claim shall be deemed to be conclusively denied. The
Claimant or his or her representatives shall be entitled to
review all pertinent documents, and to submit issues and
comments orally and in writing. The Board shall render a review
decision in writing within 60 days after receipt of a request
for a review, provided that, in special circumstances the Board
may extend the time for decision by not more than 60 days upon
written notice to the Claimant. The Claimant shall receive
written notice of the Board's review decision, together with
specific reasons for the decision and reference to the pertinent
provisions of the Plan.
X. AMENDMENT AND TERMINATION.
The Board may amend or terminate the Plan at any time; provided,
however, that no such amendment or termination shall have a material
adverse effect on any Participant's rights under the Plan accrued as of
the date of such amendment or termination without such Participant's
written consent. Upon termination of the Plan, the Board may cause a
lump-sum payment of all benefits for all Participants at substantially
the same time.
XI. MISCELLANEOUS.
11.1. NO IMPLIED RIGHTS; RIGHTS ON TERMINATION OF SERVICE. Neither the
establishment of the Plan nor any amendment thereof shall be
construed as giving any Participant, Beneficiary or any other
person, individually or as a member of a group, any legal or
equitable right unless such right shall be specifically provided
for in the Plan or conferred by specific action of the Board or
the Administrator in accordance with the terms and provisions of
the Plan. Except as expressly provided in this Plan, neither the
Company nor any of its Affiliates shall be required or be liable
to make any payment under the Plan.
11.2. NO EMPLOYMENT RIGHTS. Nothing herein shall constitute a contract
of employment or of continuing service or in any manner obligate
the Company or any Affiliate to continue the services of any
Participant, or obligate any Participant to continue in the
service of the Company or Affiliates, or as a limitation of the
right of the Company or Affiliates to discharge any of their
members, with or without cause.
11.3. NATURE OF THE PLAN.
(a) UNFUNDED PLAN. Nothing herein contained shall require or
be deemed to require the Company to segregate, earmark
or otherwise set aside any funds or other assets to
provide for any payments made hereunder. Benefits
hereunder shall be paid from assets which shall
continue, for all purposes, to be part of the general,
unrestricted assets of the Company and its Affiliates.
The obligations of the Company hereunder shall be an
unfunded and unsecured promise to pay money in the
future. However, the Company may establish one or more
trusts to assist in meeting its obligations under the
Plan, the assets of which shall be subject to the
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claims of the Company's general creditors. No current or
former Participant, Beneficiary or other person,
individually or as a member of a group, shall have any
right, title or interest in any account, fund, grantor
trust, or any asset that may be acquired by the Company
in respect of its obligations under the Plan (other than
as a general creditor of the Company with an unsecured
claim against its general assets).
(b) EXCEPTION FOR CHANGE IN CONTROL. Notwithstanding the
provisions of paragraph (a) of this Section 11.3, the
Company shall create a rabbi trust to hold funds to be
used in payment of the obligations of the Company under
the Plan, which trust shall not be funded except as
provided in the following sentence. In the event of a
Change in Control (or prior thereto in the sole
discretion of the Company), the Company shall fund such
trust in an amount equal to not less than the total
value of the Participants' Accounts under the Plan as of
the Valuation Date immediately preceding the Change in
Control, provided that any funds contained therein shall
remain subject to the claims of the Company's general
creditors. In addition, upon a Change in Control, the
trust by its terms shall become irrevocable.
11.4. NONTRANSFERABILITY. Prior to payment thereof, no benefit under
the Plan shall be assignable or subject to any manner of
alienation, sale, transfer, claims of creditors, pledge,
attachment or encumbrances of any kind, except pursuant to a
domestic relations order awarding benefits to an "alternate
payee" (within the meaning of Code Section 414(p)(8)) that the
Administrator determines satisfies the criteria set forth in
paragraphs (1), (2) and (3) of Code Section 414(p) (a "DRO").
Notwithstanding any provision of the Plan to the contrary, the
Plan benefits awarded to an alternate payee under a DRO shall be
paid in a single lump sum to the alternate payee on the
Valuation Date as soon as administratively practicable following
the date the Administrator determines the order is a DRO, and
such amounts, as adjusted for earnings, gains and losses, will
be deducted from the Participant's Account as of such Valuation
Date.
11.5. SUCCESSORS AND ASSIGNS. The rights, privileges, benefits and
obligations under the Plan are intended to be, and shall be
treated as legal obligations of and binding upon the Company,
its successors and assigns, including successors by merger,
consolidation, reorganization or otherwise.
11.6. PAYMENT WITH RESPECT TO INCAPACITATED PERSONS. Any amounts
payable hereunder to any person who is a minor or under a legal
disability, as determined under applicable state law, or who is
unable to manage properly his or her financial affairs may be
paid (a) to the legal representative of such person, (b) to
anyone acting as the person's agent under a durable power of
attorney, (c) to an adult relative or friend of the person or
(d) to anyone with whom the person is residing. Any payment of a
benefit made in accordance with the provisions of this section
shall be a complete discharge of any liability for the making of
such payment under the Plan. The Administrator's reliance on the
written power of
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attorney or other instrument of agency governing a relationship
between the person entitled to benefit the person to whom the
Administrator directs payment of the benefit shall be fully
protected at least to the same extent as though the
Administrator had dealt directly with the person entitled to the
benefit as a fully competent person. In the absence of actual
knowledge to the contrary, the Administrator may assume that the
instrument of agency was validly executed, that the person was
competent at the time of execution and that at the time of
reliance, the agency had not been terminated or amended.
11.7. ARBITRATION. Any controversy or claim arising out of or relating
to this Plan, or breach hereof, shall be settled by arbitration
in the City of Chicago in accordance with the laws of the State
of Illinois with an arbitrator appointed by the Company. The
arbitration shall be conducted in accordance with the rules of
the American Arbitration Association, except with respect to the
selection of an arbitrator. The arbitrator's determination shall
be final and binding upon all parties and judgment upon the
award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.
11.8. GENDER AND NUMBER. Except when otherwise indicated by the
context, words in the masculine gender shall include the
feminine and neuter genders, the plural shall include the
singular, and the singular shall include the plural.
11.9. HEADINGS. The headings of the various Articles and Sections in
the Plan are solely for convenience and shall not be relied upon
in construing any provisions hereof. Any reference to a Section
shall refer to a Section of the Plan unless specified otherwise.
11.10. SEVERABILITY. Whenever possible, each provision of the Plan
shall be interpreted in such manner as to be effective and valid
under applicable law, but it any provision of the Plan is held
to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other
provision or any other jurisdiction, and the Plan shall be
reformed, construed and enforced in such jurisdiction so as to
best give effect to the intent of the Company under the Plan.
11.11. EFFECT ON OTHER EMPLOYEE BENEFIT PLANS. Any benefit paid or
payable under this Plan shall not be included in a Participant's
compensation for purposes of computing benefits under any
employee benefit plan maintained or contributed by the Company
or any Affiliate except as may otherwise be required under the
specific terms of such employee benefit plan.
11.12. NON-U.S. PARTICIPANTS. With respect to any Affiliate which
employs Participants who reside outside the United States, and
notwithstanding anything herein to the contrary, the
Administrator may, in its sole discretion, amend the terms of
the Plan in order to conform such terms with the requirements of
local law or to meet the objectives of the Plan, and may, where
appropriate, establish one or more sub-plans to reflect such
amended provisions.
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11.13. APPLICABLE LAW. This Plan is established under and will be
construed according to the laws of the State of Illinois, to the
extent not preempted by the laws of the United States.