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HASBRO, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
Effective October 1, 1997
TABLE OF CONTENTS
Page
Purpose
ARTICLE 1 - Definitions
ARTICLE 2 - Selection, Enrollment, Eligibility
2.1 Selection by Committee
2.2 Enrollment Requirements
2.3 Eligibility; Commencement of Participation
2.4 Termination of Participation and/or Deferrals
ARTICLE 3 - Deferral Commitments/Company Matching/Crediting/Taxes
3.1 Minimum Deferrals
3.2 Maximum Deferral
3.3 Election to Defer; Effect of Election Form
3.4 Withholding of Annual Deferral Amounts
3.5 Annual Company Matching Amount
3.6 Investment of Trust Assets
3.7 Vesting
3.8 Crediting/Debiting of Account Balances
3.9 FICA and Other Taxes
3.10 Distributions
3.11 Employer Deferral
ARTICLE 4 - Short-Term Payout; Unforeseeable Financial
Emergencies; Withdrawal Election
ARTICLE 5 - Retirement Benefit
ARTICLE 6 - Pre-Retirement Survivor Benefit
ARTICLE 7 - Termination Benefit
ARTICLE 8 - Disability Waiver and Benefit
8.1 Disability Waiver
8.2 Continued Eligibility; Disability Benefit
ARTICLE 9 - Beneficiary Designation
9.1 Beneficiary
9.2 Beneficiary Designation; Change
9.3 Acknowledgment
9.4 No Beneficiary Designation
9.5 Doubt as to Beneficiary
9.6 Discharge of Obligations
ARTICLE 10 - Leave of Absence
ARTICLE 11 - Termination, Amendment or Modification
11.1 Termination
11.2 Amendment
11.3 Plan Agreement
11.4 Effect of Payment
ARTICLE 12 - Administration
12.1 Committee Duties
12.2 Agents
12.3 Binding Effect of Decisions
12.4 Indemnity of Committee
12.5 Employer Information
ARTICLE 13 - Other Benefits and Agreements
13.1 Coordination with Other Benefits
ARTICLE 14 - Claims Procedures
14.1 Presentation of Claim
14.2 Notification of Decision
14.3 Review of a Denied Claim
14.4 Decision on Review
14.5 Legal Action
ARTICLE 15 - Trust
15.1 Establishment of the Trust
15.2 Interrelationship of the Plan and the Trust
15.3 Distributions From the Trust
ARTICLE 16 - Miscellaneous
16.1 Status of Plan
16.2 Unsecured General Creditor
16.3 Employer's Liability
16.4 Nonassignability
16.5 Not a Contract of Employment
16.6 Furnishing Information
16.7 Terms
16.8 Captions
16.9 Governing Law
16.10 Notice
16.11 Successors
16.12 Validity
16.13 Incompetent
16.14 Distribution in the Event of Taxation
16.15 Insurance
16.16 Legal Fees To Enforce Rights After Change in Control
HASBRO, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
Effective October 1, 1997
Purpose
The purpose of this Plan is to provide specified benefits to a select group
of management and highly compensated Employees who contribute materially to
the continued growth, development and future business success of Hasbro,
Inc., a Rhode Island corporation, and its subsidiaries, if any, that
sponsor this Plan. This Plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA.
ARTICLE 1
Definitions
For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
1.1 "Account Balance" shall mean, with respect to a Participant, a
credit on the records of the Employer equal to the sum of (i) the Deferral
Account balance and (ii) the Company Matching Account balance. The Account
Balance, and each other specified account balance, shall be a bookkeeping
entry only and shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to a Participant, or his or her
designated Beneficiary, pursuant to this Plan.
1.2 "Annual Bonus" shall mean any compensation, in addition to Base
Annual Salary relating to services performed during any calendar year,
whether or not paid in such calendar year or included on the Federal Income
Tax Form W-2 for such calendar year, payable to a Participant as an
Employee under any Employer's annual bonus and cash incentive plans,
excluding stock options, holiday bonuses, retention bonuses, or any other
discretionary or special bonus or awards.
1.3 "Annual Company Matching Amount" for any one Plan Year shall be the
amount determined in accordance with Section 3.5.
1.4 "Annual Deferral Amount" shall mean that portion of a Participant's
Base Annual Salary and Annual Bonus that a Participant elects to have, and
is deferred, in accordance with Article 3, for any one Plan Year. In the
event of a Participant's Retirement, Disability (if deferrals cease in
accordance with Section 8.1), death or a Termination of Employment prior to
the end of a Plan Year, such year's Annual Deferral Amount shall be the
actual amount withheld prior to such event.
1.5 "Base Annual Salary" shall mean the annual cash compensation
relating to services performed during any calendar year, whether or not
paid in such calendar year or included on the Federal Income Tax Form W-2
for such calendar year, excluding bonuses of every type, commissions,
overtime, fringe benefits, stock options, relocation expenses, incentive
payments, non- monetary awards, directors fees and other fees, automobile
and other allowances paid to a Participant for employment services rendered
(whether or not such allowances are included in the Employee's gross
income). Base Annual Salary shall be calculated before reduction for
compensation voluntarily deferred or contributed by the Participant
pursuant to all qualified or non-qualified plans of any Employer and shall
be calculated to include amounts not otherwise included in the
Participant's gross income under Code Sections 125, 402(e)(3), 402(h), or
403(b) pursuant to plans established by any Employer; provided, however,
that all such amounts will be included in compensation only to the extent
that, had there been no such plan, the amount would have been payable in
cash to the Employee.
1.6 "Annual Installment Method" shall be an annual installment payment
over the number of years selected by the Participant in accordance with
this Plan, calculated as follows: The Account Balance of the Participant
shall be calculated as of the close of business three business days prior
to the last business day of the year. The annual installment shall be
calculated by multiplying this balance by a fraction, the numerator of
which is one, and the denominator of which is the remaining number of
annual payments due the Participant. By way of example, if the Participant
elects a 10 year Annual Installment Method, the first payment shall be 1/10
of the Account Balance, calculated as described in this definition. The
following year, the payment shall be 1/9 of the Account Balance, calculated
as described in this definition. Each annual installment shall be paid on
or as soon as practicable after the last business day of the applicable
year.
1.7 "Beneficiary" shall mean one or more persons, trusts, estates or
other entities, designated in accordance with Article 9, that are entitled
to receive benefits under this Plan upon the death of a Participant.
1.8 "Beneficiary Designation Form" shall mean the form established from
time to time by the Committee that a Participant completes, signs and
returns to the Committee to designate one or more Beneficiaries.
1.9 "Board" shall mean the board of directors of the Company.
1.10 "Change in Control" shall mean the first to occur of any of the
following events:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934 (the "1934 Act") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the 1934 Act) of 20% or more of either (i) the then
outstanding shares of Common Stock of Hasbro, Inc. ("Hasbro") (the
"Outstanding Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of Hasbro entitled to vote generally in the
election of directors (the "Outstanding voting Securities"); provided,
however, that the following acquisitions shall not constitute a Change in
Control: (i) any acquisition directly from Hasbro or any of its
subsidiaries, (ii) any acquisition by Hasbro or any of its subsidiaries,
(iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Hasbro or any of its subsidiaries, (iv) any
acquisition by Alan or Sylvia Hassenfeld, members of their respective
immediate families, or heirs of Alan or Sylvia Hassenfeld or of any member
of their respective immediate families, the Sylvia Hassenfeld Trust, the
Merrill Hassenfeld Trust, the Alan Hassenfeld Trust, the Hassenfeld
Foundation, any trust or foundation established by or for the primary
benefit of any of the foregoing or controlled by one or more of any of the
foregoing, or any affiliates or associates (as such terms are defined in
Rule 12b-2 promulgated under the 1934 Act) of any of the foregoing or (v)
any acquisition by any corporation with respect to which, following such
acquisition, more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Common
Stock and the Outstanding Voting Securities immediately prior to such
acquisition in substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Outstanding Common Stock and
Outstanding Voting Securities, as the case may be; or
(b) Individuals who, as the effective date of the Plan constitute
the Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the effective date of the Plan whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of Hasbro of a reorganization,
merger or consolidation, in each case, with respect to which all or
substantially all of the individuals and entities who were the beneficial
owners, respectively of the Outstanding Common Stock and Outstanding Voting
Securities immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately prior to
such reorganization, merger or consolidation, of the outstanding Common
Stock and Outstanding Voting Securities, as the case may be; or
(d) Approval by the shareholders of Hasbro of (i) a complete
liquidation or dissolution of Hasbro or (ii) the sale or other disposition
of all or substantially all of the assets of Hasbro, other than to a
corporation, with respect to which following such sale or other
disposition, more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Common
Stock and Outstanding Voting Securities immediately prior to such sale or
other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Common Stock and Outstanding Voting Securities, as the case may be.
1.11 "Claimant" shall have the meaning set forth in Section 14.1.
1.12 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
1.13 "Committee" shall mean the committee described in Article 12.
1.14 "Company" shall mean Hasbro, Inc., a Rhode Island corporation, and
any successor to all or substantially all of the Company's assets or
business.
1.15 "Company Matching Account" shall mean (i) the sum of all of a
Participant's Annual Company Matching Amounts, plus (ii) amounts credited
in accordance with all the applicable crediting provisions of this Plan
that relate to the Participant's Company Matching Account, less (iii) all
distributions made to the Participant or his or her Beneficiary pursuant to
this Plan that relate to the Participant's Company Matching Account.
1.16 "Deduction Limitation" shall mean the following described limitation
on a benefit that may otherwise be distributable pursuant to the provisions
of this Plan. Except as otherwise provided, this limitation shall be
applied to all distributions that are "subject to the Deduction Limitation"
under this Plan. If an Employer determines in good faith prior to a Change
in Control that there is a reasonable likelihood that any compensation paid
to a Participant for a taxable year of the Employer would not be deductible
by the Employer solely by reason of the limitation under Code Section
162(m), then to the extent deemed necessary by the Employer to ensure that
the entire amount of any distribution to the Participant pursuant to this
Plan prior to the Change in Control is deductible, the Employer may defer
all or any portion of a distribution under this Plan. Any amounts deferred
pursuant to this limitation shall continue to be credited/debited with
additional amounts in accordance with Section 3.8 below. The amounts so
deferred and amounts credited thereon shall be distributed to the
Participant or his or her Beneficiary (in the event of the Participant's
death) at the earliest possible date, as determined by the Employer in good
faith, on which the deductibility of compensation paid or payable to the
Participant for the taxable year of the Employer during which the
distribution is made will not be limited by Section 162(m), or if earlier,
the effective date of a Change in Control. Notwithstanding anything to the
contrary in this Plan, the Deduction Limitation shall not apply to any
distributions made after a Change in Control.
1.17 "Deferral Account" shall mean (i) the sum of all of a Participant's
Annual Deferral Amounts, plus (ii) amounts credited in accordance with all
the applicable crediting provisions of this Plan that relate to the
Participant's Deferral Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate to
his or her Deferral Account.
1.18 "Disability" shall mean a period of disability during which a
Participant qualifies for disability benefits under the Participant's
Employer's long-term disability plan, or, if a Participant does not
participate in such a plan, a period of disability during which the
Participant would have qualified for permanent disability benefits under
such a plan had the Participant been a participant in such a plan, as
determined in the sole discretion of the Committee. If the Participant's
Employer does not sponsor such a plan, or discontinues to sponsor such a
plan, Disability shall be determined by the Committee in its sole
discretion.
1.19 "Disability Benefit" shall mean the benefit set forth in Article 8.
1.20 "Election Form" shall mean the form established from time to time by
the Committee that a Participant completes, signs and returns to the
Committee to make an election under the Plan.
1.21 "Employee" shall mean a person who is an employee of any Employer.
1.22 "Employer(s)" shall mean the Company and/or any of its subsidiaries
(now in existence or hereafter formed or acquired) that have been selected
by the Board or any authorized committee thereof to participate in the Plan
and have adopted the Plan as a sponsor.
1.23 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
1.24 "First Plan Year" shall mean the period beginning October 1, 1997
and ending December 31, 1997.
1.25 "401(k) Plan" shall mean that certain Hasbro, Inc. Retirement
Savings Plan adopted by the Company.
1.26 "Maximum 401(k) Amount" with respect to a Participant, shall be the
maximum amount of elective contributions that can be made by such
Participant, consistent with Code Section 402(g) and the limitations of
Code Section 401(k)(3), for a given plan year under the 401(k) Plan.
1.27 "Participant" shall mean any Employee (i) who is selected to
participate in the Plan, (ii) who elects to participate in the Plan,
(iii) who signs a Plan Agreement, an Election Form and a Beneficiary
Designation Form, (iv) whose signed Plan Agreement, Election Form and
Beneficiary Designation Form are accepted by the Committee, (v) who
commences participation in the Plan, and (vi) whose Plan Agreement has not
terminated. A spouse or former spouse of a Participant shall not be
treated as a Participant in the Plan or have an account balance under the
Plan, even if he or she has an interest in the Participant's benefits under
the Plan as a result of applicable law or property settlements resulting
from legal separation or divorce.
1.28 "Plan" shall mean the Company's Nonqualified Deferred Compensation
Plan, which shall be evidenced by this instrument and by each Plan
Agreement, as they may be amended from time to time.
1.29 "Plan Agreement" shall mean a written agreement, as may be amended
from time to time, which is entered into by and between an Employer and a
Participant. Each Plan Agreement executed by a Participant and the
Participant's Employer shall provide for the entire benefit to which such
Participant is entitled under the Plan; should there be more than one Plan
Agreement, the Plan Agreement bearing the latest date of acceptance by the
Employer shall supersede all previous Plan Agreements in their entirety and
shall govern such entitlement. The terms of any Plan Agreement may be
different for any Participant, and any Plan Agreement may provide
additional benefits not set forth in the Plan or limit the benefits
otherwise provided under the Plan; provided, however, that any such
additional benefits or benefit limitations must be agreed to by both the
Employer and the Participant.
1.30 "Plan Year" shall, except for the First Plan Year, mean a period
beginning on January 1 of each calendar year and continuing through
December 31 of such calendar year.
1.31 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth
in Article 6 for purposes of this Plan only.
1.32 "Retirement", "Retire(s)" or "Retired" shall mean, with respect to
an Employee, severance from employment from all Employers for any reason
other than a leave of absence, death or Disability on or after the earlier
of the attainment of (a) age sixty-five (65) or (b) age fifty-five (55)
with ten (10) Years of Service. The definition in this Section 1.32 shall
not have any effect on any other plan maintained by the Employer.
1.33 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.34 "Short-Term Payout" shall mean the payout set forth in Section 4.1.
1.35 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.36 "Termination of Employment" shall mean the severing of employment
with all Employers, voluntarily or involuntarily, for any reason other than
Retirement, Disability, death or an authorized leave of absence.
1.37 "Trust" shall mean one or more trusts established pursuant to one or
more trust agreements between the Company and the trustee named therein, as
amended from time to time.
1.38 "Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the Participant
that would result in severe financial hardship to the Participant resulting
from (i) a sudden and unexpected illness or accident of the Participant or
a dependent of the Participant, (ii) a loss of the Participant's property
due to casualty, or (iii) such other extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant, all as determined in the sole discretion of the Committee.
1.39 "Years of Plan Participation" shall mean the total number of full
Plan Years a Participant has been a Participant in the Plan prior to his or
her Termination of Employment (determined without regard to whether
deferral elections have been made by the Participant for any Plan Year).
Any partial year shall not be counted. Notwithstanding the previous
sentence, a Participant's first Plan Year of participation shall be treated
as a full Plan Year for purposes of this definition, even if it is only a
partial Plan Year of participation.
1.40 "Years of Service" shall mean the total number of full years in
which a Participant has been employed by one or more Employers. For
purposes of this definition, a year of employment shall be a 365 day period
(or 366 day period in the case of a leap year) that, for the first year of
employment, commences on the Employee's date of hiring and that, for any
subsequent year, commences on an anniversary of that hiring date. Any
partial year of employment shall not be counted.
ARTICLE 2
Selection, Enrollment, Eligibility
2.1 Selection by Committee. Participation in the Plan shall be limited
to a select group of management and highly compensated Employees of the
Employers, as determined by the Committee in its sole discretion. From
that group, the Committee shall select, in its sole discretion, Employees
to participate in the Plan.
2.2 Enrollment Requirements. As a condition to participation, each
selected Employee shall complete, execute and return to the Committee a
Plan Agreement, an Election Form and a Beneficiary Designation Form, all
within 30 days after he or she is selected to participate in the Plan. In
addition, the Committee shall establish from time to time such other
enrollment requirements as it determines in its sole discretion are
necessary.
2.3 Eligibility; Commencement of Participation. Provided an Employee
selected to participate in the Plan has met all enrollment requirements set
forth in this Plan and required by the Committee, including returning all
required documents to the Committee within the specified time period, that
Employee shall commence participation in the Plan on the first day of the
month following the month in which the Employee completes all enrollment
requirements. If an Employee fails to meet all such requirements within
the period required, in accordance with Section 2.2, that Employee shall
not be eligible to participate in the Plan until the first day of the Plan
Year following the delivery to and acceptance by the Committee of the
required documents.
2.4 Termination of Participation and/or Deferrals. If the Committee
determines in good faith that a Participant no longer qualifies as a member
of a select group of management or highly compensated employees, as
membership in such group is determined in accordance with Sections 201(2),
301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the right, in
its sole discretion, to (i) terminate any deferral election the Participant
has made for the remainder of the Plan Year in which the Participant's
membership status changes, (ii) prevent the Participant from making future
deferral elections and/or (iii) immediately distribute the Participant's
then Account Balance as a Termination Benefit and terminate the
Participant's participation in the Plan.
ARTICLE 3
Deferral Commitments/Company Matching/Crediting/Taxes
3.1 Minimum Deferrals.
(a) Base Annual Salary and Annual Bonus. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral Amount, part
or all of the Participant's Base Annual Salary, and/or Annual Bonus in the
following minimum amounts for each deferral elected:
Deferral Minimum Amount
Base Annual Salary $2,000
Annual Bonus $2,000
If an election is made for less than stated minimum amounts, or if no
election is made, the amount deferred shall be zero.
3.2 Maximum Deferral
(a) Base Annual Salary and Annual Bonus. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral Amount, part
or all of the Participant's Base Annual Salary, and/or Annual Bonus up to
the following maximum percentages for each deferral elected:
Deferral Maximum Amount
Base Annual Salary 100%
Annual Bonus 100%
Notwithstanding the foregoing, if a Participant first becomes a Participant
after the first day of a Plan Year, or in the case of the first Plan Year
of the Plan itself, the maximum Annual Deferral Amount, with respect to
Base Annual Salary and/or Annual Bonus shall be limited to the amount of
compensation not yet earned by the Participant as of the date the
Participant submits a Plan Agreement and Election Form to the Committee for
acceptance.
An election to defer Base Annual Salary and/or Annual Bonus may be
expressed as an election to defer (i) a specific percentage, (ii) a
specific dollar amount or (iii) the excess over a specified dollar amount.
3.3 Election to Defer; Effect of Election Form.
(a) First Plan Year. If a Participant's commencement of
participation in the Plan is coincident with the Participant's commencement
of employment, the Participant shall, within 30 days after commencement of
participation, make an irrevocable deferral election for the Plan Year in
which the Participant commences participation in the Plan, along with such
other elections as the Committee deems necessary or desirable under the
Plan. For these elections to be valid, the Election Form must be completed
and signed by the Participant, timely delivered to the Committee (in
accordance with Section 2.2 above) and accepted by the Committee. If a
Participant's commencement of participation begins after commencement of
employment, the Participant may not make a deferral election until the Plan
Year beginning after commencement of employment.
(b) Subsequent Plan Years. For each succeeding Plan Year, an
irrevocable deferral election for that Plan Year, and such other elections
as the Committee deems necessary or desirable under the Plan, shall be made
by timely delivering to the Committee, in accordance with its rules and
procedures, before the end of the Plan Year preceding the Plan Year for
which the election is made, a new Election Form. If no such Election Form
is timely delivered for a Plan Year, the Annual Deferral Amount shall be
zero for that Plan Year.
3.4 Withholding of Annual Deferral Amounts. For each Plan Year, the
Base Annual Salary portion of the Annual Deferral Amount shall be withheld
from each regularly scheduled Base Annual Salary payroll in equal amounts,
as adjusted from time to time for increases and decreases in Base Annual
Salary. The Annual Bonus portion of the Annual Deferral Amount shall be
withheld at the time the Annual Bonus is or otherwise would be paid to the
Participant, whether or not this occurs during the Plan Year itself. No
withholding shall be permitted within twelve months after the Participant
has received a hardship distribution from the 401(k) Plan.
3.5 Annual Company Matching Amount. For each Plan Year, an Employer, in
its sole discretion, may, but is not required to, credit an Annual Company
Matching Amount to the Company Matching Contribution Account of any
Participant who makes a contribution to the 401(k) Plan of the Maximum
401(k) Amount. A Participant's Annual Company Matching Amount for any Plan
Year shall be equal to the matching contributions that would have been made
to the 401(k) Plan on his behalf for the plan year of the 401(k) Plan that
corresponds to the Plan Year if the Participant had made no deferral and
had made a contribution to the 401(k) Plan of the Maximum 401(k) Amount for
such plan year, reduced by the amount of any matching contributions that
were actually made to the 401(k) Plan on his or her behalf for such plan
year. If a Participant is not employed by an Employer as of the last day
of a Plan Year other than by reason of his or her Retirement or death, the
Annual Company Matching Amount for such Plan Year shall be zero. In the
event of Retirement or death, a Participant shall be credited with the
Annual Company Matching Amount for the Plan Year in which he or she Retires
or dies.
3.6 Investment of Trust Assets. The Trustee of the Trust shall be
authorized, upon written instructions received from the Committee or
investment manager appointed by the Committee, to invest and reinvest the
assets of the Trust in accordance with the applicable Trust Agreement,
including the disposition of stock and reinvestment of the proceeds in one
or more investment vehicles designated by the Committee.
3.7 Vesting.
(a) A Participant shall at all times be 100% vested in his or her
Deferral Account.
(b) A Participant's Company Matching Account shall vest on the
January 1 next following the Participant's completion of a Year of Service.
(c) otwithstanding anything to the contrary contained in this
Section 3.7, in the event of a Change in Control, a Participant's Company
Matching Account shall immediately become 100% vested (if it is not already
vested in accordance with the above vesting schedule).
3.8 Crediting/Debiting of Account Balances. In accordance with, and
subject to, the rules and procedures that are established from time to time
by the Committee, in its sole discretion, amounts shall be credited or
debited to a Participant's Account Balance in accordance with the following
rules:
(a) Election of Measurement Funds. A Participant, in connection
with his or her initial deferral election in accordance with Section 3.2(a)
above, shall elect, on the Election Form, one or more Measurement Fund(s)
(as described in Section 3.10(c) below) to be used to determine the
additional amounts to be credited to his or her Account Balance for the
first calendar quarter or portion thereof in which the Participant
commences participation in the Plan and continuing thereafter for each
subsequent calendar quarter in which the Participant participates in the
Plan, unless changed in accordance with the next sentence. Commencing with
the first calendar quarter that follows the Participant's commencement of
participation in the Plan and continuing thereafter for each subsequent
calendar quarter in which the Participant participates in the Plan, no
later than the next to last business day of the calendar quarter, the
Participant may (but is not required to) elect, by submitting an Election
Form to the Committee that is accepted by the Committee, to add or delete
one or more Measurement Fund(s) to be used to determine the additional
amounts to be credited to his or her Account Balance, or to change the
portion of his or her Account Balance allocated to each previously or newly
elected Measurement Fund. If an election is made in accordance with the
previous sentence, it shall apply to the next calendar quarter and continue
thereafter for each subsequent calendar quarter in which the Participant
participates in the Plan, unless changed in accordance with the previous
sentence.
(b) Proportionate Allocation. In making any election described in
Section 3.8(a) above, the Participant shall specify on the Election Form,
in increments of one percentage point (1%), the percentage of his or her
Account Balance to be allocated to a Measurement Fund (as if the
Participant was making an investment in that Measurement Fund with that
portion of his or her Account Balance).
(c) Measurement Funds. The Participant may elect one or more of
the following measurement funds set forth on Schedule A.
As necessary, the Committee may, in its sole discretion, discontinue,
substitute or add a Measurement Fund. Each such action will take effect as
of the first day of the calendar quarter that follows by thirty (30) days
the day on which the Committee gives Participants advance written notice of
such change.
(d) Crediting or Debiting Method. Subject to charges for
administrative expenses as provided in Section 3.8(f), the performance of
each elected Measurement Fund (either positive or negative) will be
determined by the Committee, in its sole discretion, based on the
performance of the Measurement Funds themselves. A Participant's Account
Balance shall be credited or debited on a daily basis based on the
performance of each Measurement Fund selected by the Participant, as
determined by the Committee in its sole discretion, as though (i) a
Participant's Account Balance were invested in the Measurement Fund(s)
selected by the Participant, in the percentages applicable to such calendar
quarter, as of the close of business on the first business day of such
calendar quarter, at the closing price on such date; (ii) the portion of
the Annual Deferral Amount that was actually deferred during any calendar
quarter were invested in the Measurement Fund(s) selected by the
Participant, in the percentages applicable to such calendar quarter, no
later than the close of business on the third business day after the day on
which such amounts are actually deferred from the Participant's Base Annual
Salary through reductions in his or her payroll, at the closing price on
such date; and (iii) any distribution made to a Participant that decreases
such Participant's Account Balance ceased being invested in the Measurement
Fund(s), in the percentages applicable to such calendar quarter, no earlier
than three business days prior to the distribution, at the closing price on
such date. The Participant's Annual Company Matching Amount shall be
credited to his or her Company Matching Account for purposes of this
Section 3.8(d) as of the close of business on the first business day in
March of the Plan Year following the Plan Year to which it relates.
(e) No Actual Investment. Notwithstanding any other provision of
this Plan that may be interpreted to the contrary, the Measurement Funds
are to be used for measurement purposes only, and a Participant's election
of any such Measurement Fund, the allocation to his or her Account Balance
thereto, the calculation of additional amounts and the crediting or
debiting of such amounts to a Participant's Account Balance shall not be
considered or construed in any manner as an actual investment of his or her
Account Balance in any such Measurement Fund. In the event that the
Company or the Trustee (as that term is defined in the Trust), in its own
discretion, decides to invest funds in any or all of the Measurement Funds,
no Participant shall have any rights in or to such investments themselves.
Without limiting the foregoing, a Participant's Account Balance shall at
all times be a bookkeeping entry only and shall not represent any
investment made on his or her behalf by the Company or the Trust; the
Participant shall at all times remain an unsecured creditor of the Company.
(f) Expenses. The Account Balance of each Participant shall be
debited by the amount of the reasonable administrative expenses of the Plan
in the same proportion that the Participant's Account Balance bears to the
total Account Balances of all Participants.
3.9 FICA and Other Taxes.
(a) Annual Deferral Amounts. For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the Participant's
Employer(s) shall withhold from that portion of the Participant's Base
Annual Salary and Bonus that is not being deferred, in a manner determined
by the Employer(s), the Participant's share of FICA and other employment
taxes on such Annual Deferral Amount. If necessary, the Committee may
reduce the Annual Deferral Amount in order to comply with this Section 3.9.
(b) Company Matching Amounts. When a participant becomes vested in
a portion of his or her Company Matching Account, the Participant's
Employer(s) shall withhold from the Participant's Base Annual Salary and/or
Bonus that is not deferred, in a manner determined by the Employer(s), the
Participant's share of FICA and other employment taxes. If necessary, the
Committee may reduce the vested portion of the Participant's Company
Matching Account in order to comply with this Section 3.9.
3.10 Distributions. The Participant's Employer(s), or the trustee of the
Trust, shall withhold from any payments made to a Participant under this
Plan all federal, state and local income, employment and other taxes
required to be withheld by the Employer(s), or the trustee of the Trust, in
connection with such payments, in amounts and in a manner to be determined
in the sole discretion of the Employer(s) and the trustee of the Trust.
3.11 Employer Deferral. If an Employer determines in good faith prior to
a Change in Control that there is a reasonable likelihood that any
compensation paid to a Participant for a taxable year would not be
deductible by the Employer solely by reason of the limitation under Code
Section 162(m), then to the extent deemed necessary by the Employer to
ensure that all of the compensation payable to the Participant prior to the
Change in Control is deductible, the Employer may reduce the Participant's
Base Annual Salary and/or Annual Bonus and treat the amount of such
reduction as an amount deferred by the Participant. The amount so deferred
and amounts credited thereon shall be distributed to the Participant (or
his or her Beneficiary in the event of the Participant's death) at the
earliest possible date, as determined by the Employer in good faith, on
which the deductibility of compensation paid or payable to the Participant
for the taxable year of the Employer during which the distribution is made
will not be limited by Section 162(m), or if earlier, the effective date of
a Change in Control. No deferrals may be made under this Section 3.11
after the effective date of a Change in Control. For purposes of this
Section 3.11 only, the term "Participant" shall mean any Employee who has
been selected to participate in the Plan.
ARTICLE 4
Short-Term Payout; Unforeseeable Financial Emergencies;
Withdrawal Election
4.1 Short-Term Payout. In connection with each election to defer an
Annual Deferral Amount, a Participant may irrevocably elect to receive a
future "Short-Term Payout" from the Plan with respect to such Annual
Deferral Amount. Subject to the Deduction Limitation, the Short-Term
Payout shall be a lump sum payment in an amount that is equal to the Annual
Deferral Amount plus amounts credited or debited in the manner provided in
Section 3.8 above on that amount, determined at the time that the
Short-Term Payout becomes payable (rather than the date of a Termination of
Employment). Subject to the Deduction Limitation and the other terms and
conditions of this Plan, each Short-Term Payout elected shall be paid out
during a period beginning 1 day and ending 60 days after the last day of
any Plan Year designated by the Participant that is at least three Plan
Years after the Plan Year in which the Annual Deferral Amount is actually
deferred. By way of example, if a three year Short-Term Payout is elected
for Annual Deferral Amounts that are deferred in the Plan Year commencing
January 1, 1998, the three year Short-Term Payout would become payable
during a 60 day period commencing January 1, 2002.
4.2 Other Benefits Take Precedence Over Short-Term. Should an event
occur that triggers a benefit under Article 5, 6, 7 or 8, any Annual
Deferral Amount, plus amounts credited or debited thereon, that is subject
to a Short-Term Payout election under Section 4.1 shall not be paid in
accordance with Section 4.1 but shall be paid in accordance with the other
applicable Article.
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial
Emergencies. If the Participant experiences an Unforeseeable Financial
Emergency, the Participant may petition the Committee to (i) suspend any
deferrals required to be made by a Participant and/or (ii) receive a
partial or full payout from the Plan. The payout shall not exceed the
lesser of the Participant's Account Balance, calculated as if such
Participant were receiving a Termination Benefit, or the amount reasonably
needed to satisfy the Unforeseeable Financial Emergency as determined by
the Committee. If, subject to the sole discretion of the Committee, the
petition for a suspension and/or payout is approved, suspension shall take
effect upon the date of approval and any payout shall be made within
60 days of the date of approval. The payment of any amount under this
Section 4.3 shall not be subject to the Deduction Limitation or any
withdrawal penalty.
4.4 Withdrawal Election. A Participant (or, after a Participant's
death, his or her Beneficiary) may elect, at any time, to withdraw all of
his or her Account Balance, calculated as if there had occurred a
Termination of Employment as of the day of the election, less a withdrawal
penalty equal to 10% of such amount (the net amount shall be referred to as
the "Withdrawal Amount"). This election can be made at any time, before or
after Retirement, Disability, death or Termination of Employment, and
whether or not the Participant (or Beneficiary) is in the process of being
paid pursuant to an installment payment schedule. If made before
Retirement, Disability or death, a Participant's Withdrawal Amount shall be
his or her Account Balance calculated as if there had occurred a
Termination of Employment as of the day of the election. No partial
withdrawals of the Withdrawal Amount shall be allowed. The Participant (or
his or her Beneficiary) shall make this election by giving the Committee
advance written notice of the election in a form determined from time to
time by the Committee. The Participant (or his or her Beneficiary) shall
be paid the Withdrawal Amount within 60 days of his or her election. Once
the Withdrawal Amount is paid, the Participant's participation in the Plan
shall terminate and the Participant shall not be eligible to participate in
the Plan until the next enrollment period which is at least 12 months after
the date of withdrawal. The payment of this Withdrawal Amount shall not be
subject to the Deduction Limitation.
ARTICLE 5
Retirement Benefit
5.1 Retirement Benefit. Subject to the Deduction Limitation, a
Participant who Retires shall receive, as a Retirement Benefit, his or her
Account Balance.
5.2 Payment of Retirement Benefit. A Participant, in connection with
his or her commencement of participation in the Plan, shall elect on an
Election Form to receive the Retirement Benefit in a lump sum or pursuant
to an Annual Installment Method of 5, 10 or 15 years. The Participant may
annually change his or her election to an allowable alternative payout
period by submitting a new Election Form to the Committee, provided that
any such Election Form is submitted at least one year prior to the
Participant's Retirement and is accepted by the Committee in its sole
discretion. The Election Form most recently accepted by the Committee
shall govern the payout of the Retirement Benefit. If a Participant does
not make any election with respect to the payment of the Retirement
Benefit, then such benefit shall be payable in a lump sum. The lump sum
payment shall be made, or installment payments shall commence, no later
than 60 days after the date the Participant Retires. Any payment made
shall be subject to the Deduction Limitation.
5.3 Death Prior to Completion of Retirement Benefit. If a Participant
dies after Retirement but before the Retirement Benefit is paid in full,
the Participant's unpaid Retirement Benefit payments shall continue and
shall be paid to the Participant's Beneficiary (a) over the remaining
number of months and in the same amounts as that benefit would have been
paid to the Participant had the Participant survived, or (b) in a lump sum,
if requested by the Beneficiary and allowed in the sole discretion of the
Committee, that is equal to the Participant's unpaid remaining Account
Balance.
ARTICLE 6
Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit. Subject to the Deduction
Limitation, the Participant's Beneficiary shall receive a Pre-Retirement
Survivor Benefit equal to the Participant's Account Balance if the
Participant dies before he or she Retires, experiences a Termination of
Employment or suffers a Disability.
6.2 Payment of Pre-Retirement Survivor Benefit. A Participant, in
connection with his or her commencement of participation in the Plan, shall
elect on an Election Form whether the Pre-Retirement Survivor Benefit shall
be received by his or her Beneficiary in a lump sum or pursuant to an
Annual Installment Method of 5, 10 or 15 years. The Participant may
annually change this election to an allowable alternative payout period by
submitting a new Election Form to the Committee, which form must be
accepted by the Committee in its sole discretion. The Election Form most
recently accepted by the Committee prior to the Participant's death shall
govern the payout of the Participant's Pre-Retirement Survivor Benefit. If
a Participant does not make any election with respect to the payment of the
Pre-Retirement Survivor Benefit, then such benefit shall be paid in a lump
sum. Despite the foregoing, if the Participant's Account Balance at the
time of his or her death is less than $25,000, payment of the Pre-
Retirement Survivor Benefit may be made, in the sole discretion of the
Committee, in a lump sum or pursuant to an Annual Installment Method of not
more than 5 years. The lump sum payment shall be made, or installment
payments shall commence, no later than 60 days after the date the Committee
is provided with proof that is satisfactory to the Committee of the
Participant's death. Any payment made shall be subject to the Deduction
Limitation.
ARTICLE 7
Termination Benefit
7.1 Termination Benefit. Subject to the Deduction Limitation, the
Participant shall receive a Termination Benefit, which shall be equal to
the Participant's vested Account Balance if a Participant experiences a
Termination of Employment prior to his or her Retirement, death or
Disability.
7.2 Payment of Termination Benefit. If the Participant's vested Account
Balance at the time of his or her Termination of Employment is less than
$25,000, payment of his or her Termination Benefit shall be paid in a lump
sum. If his or her vested Account Balance at such time is equal to or
greater than that amount, the Committee, in its sole discretion, may cause
the Termination Benefit to be paid in a lump sum or in substantially equal
annual installment payments over a period of time that does not exceed five
years in duration. The lump sum payment shall be made, or installment
payments shall commence, no later than 60 days after the date of the
Participant's Termination of Employment. Any payment made shall be subject
to the Deduction Limitation.
ARTICLE 8
Disability Waiver and Benefit
8.1 Disability Waiver.
(a) Waiver of Deferral. A Participant who is determined by the
Committee to be suffering from a Disability shall be excused from
fulfilling that portion of the Annual Deferral Amount commitment that would
otherwise have been withheld from a Participant's Base Annual Salary and
Annual Bonus for the Plan Year during which the Participant first suffers a
Disability. During the period of Disability, the Participant shall not be
allowed to make any additional deferral elections, but will continue to be
considered a Participant for all other purposes of this Plan.
(b) Return to Work. If a Participant returns to employment with an
Employer after a Disability ceases, the Participant may elect to defer an
Annual Deferral Amount for the Plan Year following his or her return to
employment or service and for every Plan Year thereafter while a
Participant in the Plan; provided such deferral elections are otherwise
allowed and an Election Form is delivered to and accepted by the Committee
for each such election in accordance with Section 3.3 above.
8.2 Continued Eligibility; Disability Benefit. A Participant suffering
a Disability shall, for benefit purposes under this Plan, continue to be
considered to be employed and shall be eligible for the benefits provided
for in Articles 4, 5, 6 or 7 in accordance with the provisions of those
Articles. Notwithstanding the above, the Committee shall have the right
to, in its sole and absolute discretion and for purposes of this Plan only,
and must in the case of a Participant who is otherwise eligible to Retire,
deem the Participant to have experienced a Termination of Employment, or in
the case of a Participant who is eligible to Retire, to have Retired, at
any time (or in the case of a Participant who is eligible to Retire, as
soon as practicable) after such Participant is determined to be suffering a
Disability, in which case the Participant shall receive a Disability
Benefit equal to his or her Account Balance at the time of the Committee's
determination; provided, however, that should the Participant otherwise
have been eligible to Retire, he or she shall be paid in accordance with
Article 5. The Disability Benefit shall be paid in a lump sum within 60
days of the Committee's exercise of such right. Any payment made shall be
subject to the Deduction Limitation.
ARTICLE 9
Beneficiary Designation
9.1 Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as contingent)
to receive any benefits payable under the Plan to a beneficiary upon the
death of a Participant. The Beneficiary designated under this Plan may be
the same as or different from the Beneficiary designation under any other
plan of an Employer in which the Participant participates.
9.2 Beneficiary Designation; Change. A Participant shall designate his
or her Beneficiary by completing and signing the Beneficiary Designation
Form, and returning it to the Committee or its designated agent. A
Participant shall have the right to change a Beneficiary by completing,
signing and otherwise complying with the terms of the Beneficiary
Designation Form and the Committee's rules and procedures, as in effect
from time to time. Upon the acceptance by the Committee of a new
Beneficiary Designation Form, all Beneficiary designations previously filed
shall be canceled. The Committee shall be entitled to rely on the last
Beneficiary Designation Form filed by the Participant and accepted by the
Committee prior to his or her death.
9.3 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received in writing and acknowledged
in writing by the Committee or its designated agent.
9.4 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the Participant's
designated Beneficiary shall be deemed to be his or her surviving spouse.
If the Participant has no surviving spouse, the benefits remaining under
the Plan to be paid to a Beneficiary shall be payable to the then living
issue of the Participant per stirpes and, if there is no such issue, to the
executor or personal representative of the Participant's estate.
9.5 Doubt as to Beneficiary. If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the Committee
shall have the right, exercisable in its discretion, to cause the
Participant's Employer to withhold such payments until this matter is
resolved to the Committee's satisfaction.
9.6 Discharge of Obligations. The payment of benefits under the Plan to
a Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to the
Participant, and that Participant's Plan Agreement shall terminate upon
such full payment of benefits.
ARTICLE 10
Leave of Absence
10.1 Paid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of absence from
the employment of the Employer, the Participant shall continue to be
considered employed by the Employer and the Annual Deferral Amount shall
continue to be withheld during such paid leave of absence in accordance
with Section 3.4.
10.2 Unpaid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave of absence
from the employment of the Employer, the Participant shall continue to be
considered employed by the Employer and the Participant shall be excused
from making deferrals until the earlier of the date the leave of absence
expires or the Participant returns to a paid employment status. Upon such
expiration or return, deferrals shall resume for the remaining portion of
the Plan Year in which the expiration or return occurs, based on the
deferral election, if any, made for that Plan Year. If no election was
made for that Plan Year, no deferral shall be withheld.
ARTICLE 11
Termination, Amendment or Modification
11.1 Termination. Although each Employer anticipates that it will
continue the Plan for an indefinite period of time, there is no guarantee
that any Employer will continue the Plan or will not terminate the Plan at
any time in the future. Accordingly, each Employer reserves the right to
discontinue its sponsorship of the Plan and/or to terminate the Plan at any
time with respect to any or all of its participating Employees, by action
of its board of directors or any duly authorized committee thereof. Upon
the termination of the Plan with respect to any Employer, the Plan
Agreements of the affected Participants who are employed by that Employer
shall terminate and their Account Balances, determined as if they had
experienced a Termination of Employment on the date of Plan termination or,
if Plan termination occurs after the date upon which a Participant was
eligible to Retire, then with respect to that Participant as if he or she
had Retired on the date of Plan termination, shall be paid to the
Participants as follows: Prior to a Change in Control, if the Plan is
terminated with respect to all of its Participants, an Employer shall have
the right, in its sole discretion, and notwithstanding any elections made
by the Participant, to pay such benefits in a lump sum or pursuant to an
Annual Installment Method of up to 15 years, with amounts credited and
debited during the installment period as provided herein. If the Plan is
terminated with respect to less than all of its Participants, an Employer
shall be required to pay such benefits in a lump sum. After a Change in
Control, the Employer shall be required to pay such benefits in a lump sum.
The termination of the Plan shall not adversely affect any Participant or
Beneficiary who has become entitled to the payment of any benefits under
the Plan as of the date of termination; provided however, that the Employer
shall have the right to accelerate installment payments without a premium
or prepayment penalty by paying the Account Balance in a lump sum or
pursuant to an Annual Installment Method using fewer years (provided that
the present value of all payments that will have been received by a
Participant at any given point of time under the different payment schedule
shall equal or exceed the present value of all payments that would have
been received at that point in time under the original payment schedule).
11.2 Amendment. Any Employer may, at any time, amend or modify the Plan
in whole or in part with respect to that Employer by the action of its
board of directors or any duly authorized committee thereof; provided,
however, that no amendment or modification shall be effective to decrease
or restrict the value of a Participant's Account Balance in existence at
the time the amendment or modification is made, calculated as if the
Participant had experienced a Termination of Employment as of the effective
date of the amendment or modification or, if the amendment or modification
occurs after the date upon which the Participant was eligible to Retire,
the Participant had Retired as of the effective date of the amendment or
modification. The amendment or modification of the Plan shall not affect
any Participant or Beneficiary who has become entitled to the payment of
benefits under the Plan as of the date of the amendment or modification;
provided, however, that the Employer shall have the right to accelerate
installment payments by paying the Account Balance in a lump sum or
pursuant to an Annual Installment Method using fewer years (provided that
the present value of all payments that will have been received by a
Participant at any given point of time under the different payment schedule
shall equal or exceed the present value of all payments that would have
been received at that point in time under the original payment schedule).
11.3 Plan Agreement. Despite the provisions of Sections 11.1 and 11.2
above, if a Participant's Plan Agreement contains benefits or limitations
that are not in this Plan document, the Employer may only amend or
terminate such provisions with the consent of the Participant.
11.4 Effect of Payment. The full payment of the applicable benefit under
Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries under
this Plan and the Participant's Plan Agreement shall terminate.
ARTICLE 12
Administration
12.1 Committee Duties. This Plan shall be administered by a Committee
which shall consist of the Board, or such committee as the Board shall
appoint. Members of the Committee may be Participants under this Plan. The
Committee shall also have the complete discretion and authority to
(i) make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of this Plan and (ii) decide or resolve
any and all questions including interpretations of this Plan, as may arise
in connection with the Plan. Any individual serving on the Committee who
is a Participant shall not vote or act on any matter relating solely to
himself or herself. When making a determination or calculation, the
Committee shall be entitled to rely on information furnished by a
Participant or the Company.
12.2 Agents. In the administration of this Plan, the Committee may, from
time to time, employ agents and delegate to them such administrative duties
as it sees fit (including acting through a duly appointed representative)
and may from time to time consult with counsel who may be counsel to any
Employer.
12.3 Binding Effect of Decisions. The decision or action of the
Committee with respect to any question arising out of or in connection with
the administration, interpretation and application of the Plan and the
rules and regulations promulgated hereunder shall be final and conclusive
and binding upon all persons having any interest in the Plan.
12.4 Indemnity of Committee. All Employers shall indemnify and hold
harmless the members of the Committee, and any Employee to whom the duties
of the Committee may be delegated, against any and all claims, losses,
damages, expenses or liabilities arising from any action or failure to act
with respect to this Plan, except in the case of willful misconduct by the
Committee or any of its members or any such Employee.
12.5 Employer Information. To enable the Committee to perform its
functions, each Employer shall supply full and timely information to the
Committee on all matters relating to the compensation of its Participants,
the date and circumstances of the Retirement, Disability, death or
Termination of Employment of its Participants, and such other pertinent
information as the Committee may reasonably require.
12.6 Multiple Committees. The Board may divide the duties of the
Committee among more than one Committee. If more than one Committee is
established, the Board shall designate the scope of authority of each such
Committee. Each such Committee shall have all the powers and privileges
set forth above subject only to any limitations on the scope of its
authority imposed by the Board.
ARTICLE 13
Other Benefits and Agreements
13.1 Coordination with Other Benefits. The benefits provided for a
Participant and Participant's Beneficiary under the Plan are in addition to
any other benefits available to such Participant under any other plan or
program for employees of the Participant's Employer. The Plan shall
supplement and shall not supersede, modify or amend any other such plan or
program except as may otherwise be expressly provided.
ARTICLE 14
Claims Procedures
14.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as a
"Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such Claimant
from the Plan. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within 60 days after such
notice was received by the Claimant. All other claims must be made within
180 days of the date on which the event that caused the claim to arise
occurred. The claim must state with particularity the determination
desired by the Claimant.
14.2 Notification of Decision. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole
or in part, to the Claimant's requested determination, and such notice must
set forth in a manner calculated to be understood by the Claimant:
1. the specific reason(s) for the denial of the claim, or any
part of it;
2. specific reference(s) to pertinent provisions of the Plan
upon which such denial was based;
3. a description of any additional material or information
necessary for the Claimant to perfect the claim, and an explanation of why
such material or information is necessary; and
4. an explanation of the claim review procedure set forth in
Section 14.3 below.
14.3 Review of a Denied Claim. Within 60 days after receiving a notice
from the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file with
the Committee a written request for a review of the denial of the claim.
Thereafter, but not later than 30 days after the review procedure began,
the Claimant (or the Claimant's duly authorized representative):
A. may review pertinent documents;
B. may submit written comments or other documents; and/or
C. may request a hearing, which the Committee, in its sole
discretion, may grant.
14.4 Decision on Review. The Committee shall render its decision on
review promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other special
circumstances require additional time, in which case the Committee's
decision must be rendered within 120 days after such date. Such decision
must be written in a manner calculated to be understood by the Claimant,
and it must contain:
A. specific reasons for the decision;
B. specific reference(s) to the pertinent Plan provisions upon
which the decision was based; and
C. such other matters as the Committee deems relevant.
14.5 Legal Action. A Claimant's compliance with the foregoing provisions
of this Article 14 is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for benefits under this
Plan.
ARTICLE 15
Trust
15.1 Establishment of the Trust. The Company shall establish the Trust,
and each Employer shall at least annually transfer over to the Trust such
assets as the Employer determines, in its sole discretion, are necessary to
provide, on a present value basis, for its respective future liabilities
created with respect to the Annual Deferral Amounts and Company Matching
Amounts for such Employer's Participants for all periods prior to the
transfer, as well as any debits and credits to the Participants' Account
Balances for all periods prior to the transfer, taking into consideration
the value of the assets in the trust at the time of the transfer.
15.2 Interrelationship of the Plan and the Trust. The provisions of the
Plan and the Plan Agreement shall govern the rights of a Participant to
receive distributions pursuant to the Plan. The provisions of the Trust
shall govern the rights of the Employers, Participants and the creditors of
the Employers to the assets transferred to the Trust. Each Employer shall
at all times remain liable to carry out its obligations under the Plan.
15.3 Distributions From the Trust. Each Employer's obligations under the
Plan may be satisfied with Trust assets distributed pursuant to the terms
of the Trust, and any such distribution shall reduce the Employer's
obligations under this Plan.
ARTICLE 16
Miscellaneous
16.1 Status of Plan. The Plan is intended to be a plan that is not
qualified within the meaning of Code Section 401(a) and that "is unfunded
and is maintained by an employer primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employee" within the meaning of ERISA Sections 201(2),
301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted to
the extent possible in a manner consistent with that intent.
16.2 Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of an Employer. For purposes
of the payment of benefits under this Plan, any and all of an Employer's
assets shall be, and remain, the general, unpledged unrestricted assets of
the Employer. An Employer's obligation under the Plan shall be merely that
of an unfunded and unsecured promise to pay money in the future.
16.3 Employer's Liability. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Plan Agreement, as
entered into between the Employer and a Participant. An Employer shall
have no obligation to a Participant under the Plan except as expressly
provided in the Plan and his or her Plan Agreement.
16.4 Nonassignability. Neither a Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate, alienate or convey
in advance of actual receipt, the amounts, if any, payable hereunder, or
any part thereof, which are, and all rights to which are expressly declared
to be, unassignable and non-transferable. No part of the amounts payable
shall, prior to actual payment, be subject to seizure, attachment,
garnishment or sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by a Participant or any other person,
be transferable by operation of law in the event of a Participant's or any
other person's bankruptcy or insolvency or be transferable to a spouse as a
result of a property settlement or otherwise.
16.5 Not a Contract of Employment. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between any
Employer and the Participant. Such employment is hereby acknowledged to be
an "at will" employment relationship that can be terminated at any time for
any reason, or no reason, with or without cause, and with or without
notice, unless otherwise expressly provided in a written employment
agreement. Nothing in this Plan shall be deemed to give a Participant the
right to be retained in the service of any Employer or to interfere with
the right of any Employer to discipline or discharge the Participant at any
time.
16.6 Furnishing Information. A Participant or his or her Beneficiary
will cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be requested
in order to facilitate the administration of the Plan and the payments of
benefits hereunder, including but not limited to taking such physical
examinations as the Committee may deem necessary.
16.7 Terms. Whenever any words are used herein in the masculine, they
shall be construed as though they were in the feminine in all cases where
they would so apply; and whenever any words are used herein in the singular
or in the plural, they shall be construed as though they were used in the
plural or the singular, as the case may be, in all cases where they would
so apply.
16.8 Captions. The captions of the articles, sections and paragraphs of
this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
16.9 Governing Law. Subject to ERISA, the provisions of this Plan shall
be construed and interpreted according to the internal laws of the State of
Rhode Island without regard to its conflicts of laws principles.
16.10 Notice. Any notice or filing required or permitted to be given to
the Committee under this Plan shall be sufficient if in writing and hand-
delivered, or sent by registered or certified mail, to the address below:
Deferred Compensation Committee
c/o Benefits Dept., A-951
Hasbro, Inc.
1027 Newport Avenue
P.O. Box 1059
Pawtucket, RI 02862-1059
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered, or
sent by mail, to the last known address of the Participant.
16.11 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Participant's Employer and its successors and assigns and
the Participant and the Participant's designated Beneficiaries.
16.12 Validity. In case any provision of this Plan shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if
such illegal or invalid provision had never been inserted herein.
16.13 Incompetent. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of that
person's property, the Committee may direct payment of such benefit to the
guardian, legal representative or person having the care and custody of
such minor, incompetent or incapable person. The Committee may require
proof of minority, incompetence, incapacity or guardianship, as it may deem
appropriate prior to distribution of the benefit. Any payment of a benefit
shall be a payment for the account of the Participant and the Participant's
Beneficiary, as the case may be, and shall be a complete discharge of any
liability under the Plan for such payment amount.
16.14 Distribution in the Event of Taxation.
(a) In General. If, for any reason, all or any portion of a
Participant's benefits under this Plan becomes taxable to the Participant
prior to receipt, a Participant may petition the Committee before a Change
in Control, or the trustee of the Trust after a Change in Control, for a
distribution of that portion of his or her benefit that has become taxable.
Upon the grant of such a petition, which grant shall not be unreasonably
withheld (and, after a Change in Control, shall be granted), a
Participant's Employer shall distribute to the Participant immediately
available funds in an amount equal to the taxable portion of his or her
benefit (which amount shall not exceed a Participant's unpaid Account
Balance under the Plan). If the petition is granted, the tax liability
distribution shall be made within 90 days of the date when the
Participant's petition is granted. Such a distribution shall affect and
reduce the benefits to be paid under this Plan.
(b) Trust. If the Trust terminates in accordance with Section
3.6(e) of the Trust and benefits are distributed from the Trust to a
Participant in accordance with that Section, the Participant's benefits
under this Plan shall be reduced to the extent of such distributions.
16.15 Insurance. The Employers, on their own behalf or on behalf of the
trustee of the Trust, and, in their sole discretion, may apply for and
procure insurance on the life of the Participant, in such amounts and in
such forms as the Trust may choose. The Employers or the trustee of the
Trust, as the case may be, shall be the sole owner and beneficiary of any
such insurance. The Participant shall have no interest whatsoever in any
such policy or policies, and at the request of the Employers shall submit
to medical examinations and supply such information and execute such
documents as may be required by the insurance company or companies to whom
the Employers have applied for insurance.
16.16 Legal Fees To Enforce Rights After Change in Control. The Company
and each Employer is aware that upon the occurrence of a Change in Control,
the Board or the board of directors of a Participant's Employer (which
might then be composed of new members) or a shareholder of the Company or
the Participant's Employer, or of any successor corporation might then
cause or attempt to cause the Company, the Participant's Employer or such
successor to refuse to comply with its obligations under the Plan and might
cause or attempt to cause the Company or the Participant's Employer to
institute, or may institute, litigation seeking to deny Participants the
benefits intended under the Plan. In these circumstances, the purpose of
the Plan could be frustrated. Accordingly, if, following a Change in
Control, it should appear to any Participant that the Company, the
Participant's Employer or any successor corporation has failed to comply
with any of its obligations under the Plan or any agreement thereunder or,
if the Company, such Employer or any other person takes any action to
declare the Plan void or unenforceable or institutes any litigation or
other legal action designed to deny, diminish or to recover from any
Participant the benefits intended to be provided, then the Company and the
Participant's Employer irrevocably authorize such Participant to retain
counsel of his or her choice at the expense of the Company and the
Participant's Employer (who shall be jointly and severally liable) to
represent such Participant in connection with the initiation or defense of
any litigation or other legal action, whether by or against the Company,
the Participant's Employer or any director, officer, shareholder or other
person affiliated with the Company, the Participant's Employer or any
successor thereto in any jurisdiction. The Company may recover any legal
fees paid if a court of competent jurisdiction finds that the retention of
counsel by the Participant was frivolous. If the Participant prevails to
any extent, the retention of counsel shall be conclusively determined not
to be frivolous.
IN WITNESS WHEREOF, the Company has signed this Plan document as of this
14th day of November, 1997.
"Company"
Hasbro, Inc., a Rhode Island corporation
By: /s/ Alfred J. Verrecchia
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Title: Executive Vice President and President, Global Operations
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