Executive Deferred Compensation Plan - PeopleSoft Inc.
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PEOPLESOFT, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
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Adopted Effective March 1, 1994
Amended and Restated Effective January 1, 2002
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TABLE OF CONTENTS
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1. PURPOSE................................................................ 1
2. DEFINITIONS AND CAPITALIZED TERMS...................................... 1
3. ELIGIBILITY............................................................ 6
4. DEFERRAL OF COMPENSATION............................................... 7
4.1 Election to Defer................................................ 7
4.2 Date of Deferral................................................. 7
4.3 Multiple Elections............................................... 7
4.4 Annual Elections................................................. 8
4.5 No Hardship Adjustments.......................................... 8
5. DEFERRED COMPENSATION ACCOUNTS......................................... 8
5.1 Maintenance of Accounts.......................................... 8
5.2 Investment Elections............................................. 8
5.3 Investment Earnings or Losses.................................... 9
5.4 Interest Accruals................................................ 9
5.5 Investment of Unpaid Balances.................................... 10
5.6 Company Contributions............................................ 10
5.7 Company's General Assets......................................... 11
6. EFFECT ON EMPLOYEE BENEFITS............................................ 12
7. PAYMENT OF DEFERRED COMPENSATION AND DEATH BENEFITS.................... 12
7.1 Income Tax Obligations........................................... 12
7.2 In-Service Withdrawals........................................... 12
7.3 Termination of Employment........................................ 14
7.4 Disability....................................................... 14
7.5 Death Prior to Commencement of Distributions..................... 15
7.6 Death After Commencement of Distributions........................ 15
7.7 Default Distribution............................................. 15
7.8 Withholding and Other Tax Consequences........................... 16
8. FUNDING................................................................ 16
9. SUSPENSION OF PAYMENTS UPON COMPANY'S INSOLVENCY....................... 16
10. NON-ALIENATION OF BENEFITS............................................. 16
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TABLE OF CONTENTS
(CONTINUED)
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11. LIMITATION OF RIGHTS................................................... 17
12. BEST PAYMENTS.......................................................... 17
13. NOTICE UNDER WARN...................................................... 17
14. AMENDMENT OR TERMINATION OF PLAN....................................... 18
15. ADMINISTRATIVE PROCEDURES AND DISPUTE RESOLUTION....................... 18
15.1 Plan Administrator............................................... 18
15.2 Committee Organization and Procedures............................ 19
15.3 Administrative Authority......................................... 19
15.4 Expenses......................................................... 19
15.5 Insurance........................................................ 20
15.6 Claims Procedure................................................. 20
15.7 Arbitration...................................................... 22
15.8 Notices.......................................................... 23
15.9 Indemnification.................................................. 23
16. MISCELLANEOUS.......................................................... 23
16.1 Alternative Acts and Times....................................... 23
16.2 Masculine and Feminine, Singular and Plural...................... 24
16.3 Governing Law and Severability................................... 24
16.4 Facility of Payment.............................................. 24
16.5 Correction of Errors............................................. 24
16.6 Missing Persons.................................................. 25
16.7 Status of Participants........................................... 25
16.8 Executive 401(k) Plan............................................ 25
16.9 Employee and Spouse Acknowledgement.............................. 26
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PEOPLESOFT, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
The Board of Directors of PeopleSoft, Inc., a Delaware corporation
("Company") has amended and restated its Executive Deferred Compensation Plan
("Plan") effective January 1, 2002.
1. PURPOSE
The primary purpose of the Plan is to provide deferred compensation
to a select group of management and highly compensated employees through an
unfunded "top hat" arrangement exempt from the fiduciary, funding, vesting, and
plan termination insurance provisions of Title I and Title IV of the Employee
Retirement Income Security Act ("ERISA"). More specifically, the Company has
adopted this Plan to provide Employees with the opportunity to defer
Compensation and to receive the Matching Contributions they are unable to defer
or receive under the Company's tax qualified cash or deferred compensation plan
("Qualified Plan"), because of the limits on deferrals imposed by Sections
401(k) and 402(g) of the Internal Revenue Code ("Code") and because of the
Company's exclusion of certain highly compensated employees from the Matching
Contribution feature of the Qualified Plan under Section 401(m) of the Code.
2. DEFINITIONS AND CAPITALIZED TERMS
The capitalized terms, set forth in alphabetical order defined
below, are used throughout the Plan.
(a) "Account" refers to the bookkeeping entries established
and maintained by the Company or the Committee for the purpose of recording (i)
Compensation deferred by an Employee under this Plan, (ii) Matching
Contributions allocated to the Employee, (iii) investment earnings or losses
credited to or charged against the Employee, (iv) administrative expenses
charged to the Employee, and (v) distributions to an Employee or Beneficiary.
Where the Plan Administrator considers appropriate in applying the provisions of
this Plan, the term Account shall include any death benefit available with
respect to a Participant or Inactive Participant who dies prior to the
commencement of distributions to him or her under Section 7.5 of the Plan.
Effective January 1, 1997, the term Account shall include, as appropriate, an
Employee's account under the PeopleSoft, Inc. Executive 401(k) Plan.
(b) "Beneficiary" refers to the person or entity selected to
receive the greater of the following: (i) the death benefit correctly specified
in the last individual statement provided by the Plan to the Employee
immediately before his or her death or (ii) any portion of an Employee's Account
that has not been distributed from the Plan at the time of the Employee's death.
Such designation shall be on a form provided or approved by the Plan
Administrator. In the event a married Employee designates someone other than his
or her spouse as sole, primary Beneficiary, such initial designation or
subsequent change shall be invalid unless the spouse consents in a writing which
names the designated Beneficiary. If an Employee fails to designate a
Beneficiary or no designated Beneficiary survives the Employee, the Plan
Administrator may
1.
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direct payment of benefits to the following person or persons in the order given
below: the Employee's
(i) spouse, descendants, per stirpes, parents,
(ii) brothers and sisters, or
(iii) estate of the Participant.
(c) Board" or "Board of Directors" refers to the Board of
Directors of the Company.
(d) "Change in Control" has the meaning specified in Section
280G of the Code.'
(e) "Code" refers to the Internal Revenue Code of 1986, as
amended from time to time, and any valid regulations thereunder.
(f) "Committee" or "Administrative Committee" refers to the
officers of the Company who act on behalf of the Company in discharging the
Company's duties as the Plan Administrator. Notwithstanding any other provision
of the Plan document, any member of the Committee or any other officer or
employee of the Company who exercises discretion or authority on behalf of the
Company shall not be a fiduciary of the Plan merely by virtue of his or her
exercise of such discretion or authority. The Board shall identify the Company
officers who shall serve as members of the Committee. Absent a designation to
the contrary, the Vice President, Human Resources, shall act on behalf of the
Company and the Committee. Because this Plan is a "top hat" arrangement, the
Committee shall not be subject to the duties imposed by the provisions of Part 4
of Title I of ERISA.
(g) "Company," "Corporation" or "Employer" refers to
PeopleSoft, Inc., a Delaware corporation. To the extent provided in an adoption
agreement for this Plan, the terms "Company," "Corporation" or "Employer" also
shall refer to PeopleSoft USA, Inc., a California corporation.
(h) "Compensation" refers to an Employee's gross salary,
including any commissions, bonuses or awards, payable by the Company after an
Employee first becomes eligible to participate in the Plan and during the period
through which such participation continues. In determining Employee deferrals
and Employer Matching Contributions under this Plan, the Plan Administrator
shall take account of items included in the definition of Compensation under the
Employer's Qualified Plan with the following adjustments:
(i) Compensation shall increase to reflect amounts
deferred by an Employee under this Plan; and
(ii) Compensation shall not be limited to amounts
permitted under Qualified Plans pursuant to Code Section 401(a)(17)
($200,000 for 2002).
Compensation does not include distributions from this Plan.
2.
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(i) "Contingent Worker" describes any person during the
period in which the person renders services to, for or on behalf of the Company
under one or more of the following categories or classifications:
(1) Independent Contractor. An "independent
contractor" is an individual (a) whose services are engaged by the Company
under a written or oral contract, between the individual and the Company,
to perform specialized tasks, for or on behalf of the Company, which
require substantial skill and independent judgement and (b) whose
compensation is not subject to the withholding of employment or income
taxes by the Company under Sections 3121 or 3401 of the Code (other than
back-up withholding under Code Section 3406) but is subject to reporting
by the Company, under Code Section 6041, on IRS Form 1099-MISC or other
form for the reporting of nonemployee compensation.
(2) Leased Worker. A "leased worker" is an individual
hired by an employee leasing company and made available to the Company by
the leasing company, under a written or oral contract between the Company
and the leasing company, in an arrangement in which the compensation paid
to the individual is subject to the withholding of employment or income
taxes by the leasing company under Sections 3121 or 3401 of the Code. The
term "leased worker" includes but is not limited to persons who provide
services to the Company in a joint employment relationship with the
leasing company. Similarly, the term "leased worker" includes but is not
limited to a leased employee within the meaning of Section 414(n) of the
Code.
(3) Technical Contractor. A "technical contractor" is
an individual who is a skilled technical worker, such as an engineer or
computer specialist and who is hired by a technical services firm and made
available to the Company by the technical services firm, in an arrangement
in which the compensation paid to the individual is subject to the
withholding of employment or income taxes by the technical services firm
under Sections 3121 or 3401 of the Code or is subject to reporting by the
technical services firm, under Code Section 6041, on IRS Form 1099-MISC or
other form for the reporting of nonemployee compensation. The term
"technical contractor" includes but is not limited to independent
contractors and leased workers. The term "technical services firm"
includes but is not limited to a leasing company, as described above, or a
firm distinct from the Company under a master vendor program or
outsourcing arrangement, as described below.
(4) Master Vendor Worker. A "master vendor worker" is
an individual who renders services to the Company under a master vendor
program. A master vendor program is an arrangement in which a personnel
agency or other human resources firm supplies the Company with some or all
of the individuals who, at any time or from time to time, constitute the
Company's temporary work force, either directly or through other temporary
help services, with or without consolidated billing or invoicing. The
compensation paid to the master vendor worker is subject to the
withholding of employment or income taxes by the personnel agency or human
resources firm under Sections 3121 or 3401 of the Code or is subject to
reporting by the personnel agency or human resources firm, under Code
Section 6041, on IRS Form 1099-MISC or other form
3.
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for the reporting of nonemployee compensation. The term "master vendor
worker" includes but is not limited to independent contractors, leased
workers and technical contractors.
(5) Outsourcing Organization Worker. An "outsourcing
organization worker" is an individual who renders services to the Company
under an outsourcing or managed services arrangement. An outsourcing or
managed services arrangement exists when a firm, distinct from the Company
and with specialized expertise, contracts with the Company not only to
provide personnel but also to assume responsibility for functions not at
the core of the Company's business. Non-core functions include but are not
limited to mail room, reception, food service, landscaping, and building
security or maintenance. The compensation paid to an outsourcing
organization worker is subject to the withholding of employment or income
taxes by the outsourcing organization or managed services firm under
Sections 3121 or 3401 of the Code or is subject to reporting by the
outsourcing organization or managed services firm, under Code Section
6041, on IRS Form 1099-MISC or other form for the reporting of nonemployee
compensation. The term "outsourcing organization worker" includes but is
not limited to independent contractors, leased workers, technical
contractors and master vendor workers.
Consistent with the terms of the Plan and relevant laws, the
Administrative Committee shall have discretionary authority to determine
which persons who provide services to, for or on behalf of a Company are
Contingent Workers excluded from the category of Employees eligible to
participate in this Plan.
(j) "Disabled" or "Disability" refers to a physical or
mental condition of an Employee which (i) occurs after an Employee first defers
Compensation under this Plan, (ii) results from an injury, disease or disorder,
(iii) renders the Employee totally and permanently incapable of continuing in
his or her customary employment with the Company, and (iv) causes the Employee
to be eligible to receive disability benefits under the Social Security
Administration or under any long-term disability plan or policy provided by the
Company. An Employee automatically will satisfy the requirements under this
Plan, with respect to submission of evidence of disability, throughout the
period that he or she remains qualified for Social Security disability benefits.
Any Employee who believes that he or she is entitled to any advantage, benefit
or other consideration under the Plan as a result of being Disabled shall apply
to the Committee for such consideration and shall provide any evidence of
Disability which the Committee in its discretion may request in a manner
consistent with the Americans with Disabilities Act of 1990 and other relevant
laws.
(k) "Effective Date" refers to March 1, 1994, with respect
to the initial adoption of this Plan and to January 1, 1997, with respect to the
amendment and restatement of this Plan as well as with respect to Compensation
first earned, determined or payable after that date.
(l) "Employee" "Employee" refers to any employee who is
highly compensated or who is a member of management selected by the Board to
participate in this Plan. In determining whether an employee is described in the
preceding sentence, an employee shall be considered to be highly compensated if
the employee's annual Compensation equals at
4.
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least $150,000 or such greater amount permitted to be considered under Section
401(a)(17) of the Code ($200,000 in 2002). The term "Employee" does not include
any individual who is not on the United States ("U.S.") payroll of the Company.
An individual is not on the U.S. payroll of the Company during any period in
which the Company does not actually deduct, withhold and deposit employment or
income taxes from such individual's compensation under Sections 3121 or 3401 of
the Code. The term "Employee" does not include any Contingent Worker. Where the
Plan Administrative Committee considers appropriate in applying the provisions
of this Plan, the term Employee shall include only persons who are Participants
or Inactive Participants under the Plan.
(m) "ERISA" refers to the Employee Retirement Income
Security Act of 1974, as amended from time to time.
(n) "Hardship" refers to an Employee's immediate and heavy
financial need caused by an unforeseeable emergency, as described in Treasury
Regulations Section 1.457-2(h)(4) and (5). In general, but without limitation,
the Plan Administrator shall approve a Hardship withdrawal from an Employee's
Account if the reduction does not exceed the amount needed to pay for the
following unreimbursed expenses: (i) medical expenses defined in Code Section
213(d) and incurred (or to be incurred) during the calendar year by the
Employee, or his or her spouse or dependents (as described in Code Section 152)
as a result of a sudden or unexpected illness or accident; (ii) loss of a
participant's property as a result of a casualty or other extraordinary,
unforeseeable circumstances attributable to forces beyond the participant's
control; and (iii) other costs recognized by the Plan Administrator to pose an
immediate and heavy financial need on the Employee as a result of an
unforeseeable emergency or other factors beyond an Employee's control.
(o) "Inactive Participant" refers to an Employee who
deferred Compensation under the Plan during a previous Plan Year but who does
not defer any Compensation payable during the current Plan Year.
(p) "Matching Contributions" refers to amounts described in
Section 5.6(a) below.
(q) "Participant" refers to an eligible Employee who elects
to defer under the Plan part or all of his or her Compensation payable during
the current Plan Year.
(r) "Plan" refers to the PeopleSoft, Inc. Executive Deferred
Compensation Plan, as initially adopted effective March 1, 1994, and as amended
from time to time thereafter. Deferrals by any Employee shall be governed by the
terms of the Plan at the time the Employee elects to make such deferrals.
Distributions to any Participant, Inactive Participant or Beneficiary under this
Plan shall be governed by the terms of the Plan at the time such distributions
commence. Effective January 1, 1997, the term Plan shall include, as
appropriate, the PeopleSoft, Inc. Executive 401(k) Plan.
(s) "Plan Administrator" refers to the Company.
(t) "Plan Year" refers to the calendar year.
5.
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(u) "Qualified Plan" refers to the Company's tax qualified
individual account cash or deferred compensation plan subject to the limits
imposed by Code Sections 401(a)(4), 401(k), 401(m), 402(g) and 415.
(v) "Service" and "Years of Service" have the meanings
specified in Code Section 411(a)(4) and (5)(A) and the regulations thereunder.
As a general rule, the terms "Service" and "Year of Service" shall be applied
under this Plan in the same manner as applied under the Company's Qualified
Plan. As an exception to the general rule, the Committee may adjust the
computation of Service under this Plan to avoid statutory or regulatory
restrictions that apply to the computation of Service under the Company's
Qualified Plan. In determining the extent and continuation of an Employee's
Service, the Plan Administrator ordinarily shall treat employment with any
affiliate of the Employer, within the meaning of Code Section 414(b) and (c), as
employment with the Employer for the following purposes:
(i) For determining the amount of Employer Matching
Contributions an Employee may receive under this Plan;
(ii) For determining an Employee's vested interest in
his or her Employer Matching Contribution Account under this Plan and
under the Employer's Executive 401(k) Plan; and
(iii) Effective January 1, 1999, for preventing the
characterization of a transfer among Employer affiliates as a Termination
of Employment entitling an Employee or Alternate Payee to distributions
from this Plan or from the Employer's Executive 401(k) Plan.
(w) "Termination of Employment" refers to an Employee's (i)
separation from service with the Company, (ii) refusal or failure to return to
work within five working days after the date requested by the Company, (iii)
failure to return to work at the conclusion of a leave of absence.
(x) "Trust" refers to a rabbi trust within the meaning of
Revenue Procedures 92-64 and 92-65 of which a financial institution selected by
the Company serves as trustee. The term "Trustee" shall include such financial
institution and any successor Trustee under the Trust instrument.
3. ELIGIBILITY
The Board may, from time to time, designate by name those Employees
of the Company who are eligible to participate in the Plan for one or more Plan
Years and the date upon which each such Employee's participation may commence.
All designated Employees shall be notified by the Board or the Committee of
their eligibility to participate. An Employee shall cease to be eligible when
the Employee ceases to be highly compensated as described in Section 2(l) above.
Additionally, an Employee shall not be eligible to participate in the Plan
during the Plan Year immediately following the Plan Year in which the Employee
takes a Hardship withdrawal from the Plan. The effective date of any such
ineligibility under the preceding two sentences shall be the first day of the
Plan Year coinciding with or next following the date on which the Board or
Committee provides the Employee with notice of such
6.
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revocation. An Employee's eligibility to participate in the Plan does not confer
upon the Employee any right to any award, bonus or other remuneration of any
kind.
4. DEFERRAL OF COMPENSATION
4.1 Election to Defer
An Employee who is eligible to participate in the Plan may
elect to defer the receipt of Compensation by completing a deferral election
form provided or approved by the Committee. Pursuant to the deferral election
form, an eligible Employee may elect to defer any whole percentage or fixed
dollar amount of his or her Compensation. An Employee who elects to participate
in the Plan must defer at least ten thousand dollars ($10,000) in Compensation
for each Plan Year in which he or she remains eligible to participate. At the
time an Employee completes a deferral election form, the Employee must designate
in writing the method in which the Compensation deferred for any Plan Year,
adjusted under Section 5 below, shall be distributed from the Employee's
Account. For any Plan Year prior to January 1, 2000, an Employee's designation
of a method of distribution shall apply only to Compensation deferred that year,
adjusted under Section 5 below. After December 31, 1999, an Employee's
designation of a method of distribution shall apply to an Employee's entire
Account under this Plan, including amounts deferred before or after the
designation, as adjusted under Section 5 below. Following the initial
designation for the first Plan Year beginning after December 31, 1999, if an
Employee delivers another properly completed designation to the Committee, the
Employee's entire Account under this Plan shall be paid in accordance with the
designation bearing the latest date prior to the commencement of distributions.
4.2 Date of Deferral
An eligible Employee must submit his or her deferral election
form to the Committee no later than the last day of the deferral election
period. The last day of the deferral election period shall be (a) the last day
preceding the calendar year in which the eligible Employee will render the
services for which he or she will receive any part of the Compensation payable
to the Employee during that year or (b) in the first year in which the Company
implements the Plan or in which an Employee first becomes eligible to
participate, the Employee may make his or her election within the first 30 days
after the later of (i) the date the Plan becomes effective or (ii) the date the
Employee becomes eligible to participate.
4.3 Multiple Elections
An election to defer Compensation shall be effective on the
date an eligible Employee delivers a completed deferral election form to the
Committee; provided, however, that, if the eligible Employee delivers another
properly completed deferral election form to the Committee prior to the close of
the deferral election period described in Section 4.2, the deferral election on
the form bearing the latest date shall control. After the last day of the
election period, the controlling election made prior to the close of the period
shall be irrevocable.
7.
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4.4 Annual Elections
In order to defer any portion of Compensation earned in any
calendar year-after 1994, an eligible Employee must submit at least one
completed deferral election form during the 30-day period immediately preceding
the start of that calendar year. If an Employee fails to make such a submission,
the Employee will be deemed to have elected to continue deferring the same fixed
dollar amount or percentage of Compensation that the Employee deferred in the
preceding calendar year.
4.5 No Hardship Adjustments
After an annual election has taken effect for any Plan Year, a
Participant may not increase or decrease the percentage or amount of
Compensation to be deferred during that Plan Year; except that an Employee must
cease all deferrals under the Plan if such cessation would relieve the Employee
of one or more Hardships without any withdrawals under this Plan.
5. DEFERRED COMPENSATION ACCOUNTS
5.1 Maintenance of Accounts
The Plan Administrator shall maintain one or more with respect
to any Compensation deferred by an eligible under Section 4 above. The Plan
Administrator shall credit the Account with the full amount of Compensation
deferred in any payroll period. If the Compensation deferred is subject to
federal or state employment taxes (e.g. taxes under the Federal Insurance
Contributions Act or Federal Unemployment Tax Act), said taxes shall be withheld
and deducted from a portion of the Employee's Compensation not deferred under
this Plan. A Participant or Inactive Participant shall be fully vested at all
times in amounts deferred under Section 4 above, as adjusted for any earnings,
losses, interest accruals, administrative expenses or distributions as described
below.
5.2 Investment Elections
In accordance with rules, procedures and options established
by the Committee, a Participant shall have the right to direct the investment of
his or her Account, except for any period of time during which the Company
limits Account earnings to interest accruals under Section 5.4 below. Although
the Company shall have the obligation to follow the Participant's investment
directions, the Company, in its sole discretion, may satisfy its obligation from
time to time in one or both of the following ways. First, the Company may invest
assets allocable to the Participant's Accounts in the specific investments, in
the specific amounts and for the specific periods directed by the Participant;
and the Company must credit or charge the Participant's Accounts with the
earnings, gains or losses resulting from such investments. Second, the Company
may invest assets allocable to the Participant's Accounts in any manner, in any
amount and for any period of time which the Company in its sole discretion may
select; but the Company must credit or charge the Participant's Accounts with
the same earnings, gains or losses that the Participant would have incurred if
the Company had invested the assets allocable to the Participant's Accounts in
the specific investments, in the specific amounts and for the specific periods
directed by the Participant. In accordance with procedures established by the
Plan Administrator, a Participant may change his or her investment directions
effective as of the
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first day of any calendar quarter. Such changes may be made in a writing
delivered to the Company or the Committee no fewer than fifteen (15) days
preceding the effective date of the change. If the Employee fails to provide any
investment directions at a time when the Employee has an interest in the
Company's Qualified Plan, the Company or the Committee may follow the then
current investment directions for the Employee's interest in the Company's
Qualified Plan. If this Plan is determined to be subject to the fiduciary
provisions of Part 4 of Title I of ERISA, this Plan shall be treated as a Plan
described in Section 404(c) of ERISA and Title 29 of the Code of Federal
Regulations Section 2550.404c-1, in which Plan fiduciaries may be relieved of
liability for any losses which are the direct and necessary result of investment
instructions given by a Participant or Beneficiary.
5.3 Investment Earnings or Losses
Except for any period of time during which the Company limits
Account earnings to interest accruals under Section 5.4 below, any amounts
credited to the Account of a Participant or Inactive Participant as a result of
the deferral of all or part of his or her Compensation may increase or decrease
as a result of the Company's investment of such amounts during the Plan Year, as
described in Section 5.2 above. A ratable share of Plan investment earnings or
losses under this Section 5.3 shall be credited to the Account of a Participant
or Inactive Participant, as determined in good faith by the Committee. At the
sole discretion of the Committee, for any Plan Year, the Committee may allocate
to the Participant's Account either (i) the full amount of the Participant's
share of Plan investment earnings or losses or (ii) the full amount of such
share adjusted for any federal, state or local income or employment tax
consequences attributable to such earnings or losses. If the full amount of such
investment earnings or losses are allocated to a Participant's Account, any
federal, state or local income or employment tax consequences attributable to
such earnings or losses under this Section 5.3 shall be borne by or inure to the
benefit of the Company. The Participant and his or her Beneficiary understand
and agree that they assume all risk in connection with any decrease in the value
of the Compensation deferred under the Plan and invested in accordance with
these Sections 5.2 and 5.3.
5.4 Interest Accruals
During each Plan Year in which the Company does not invest an
Employee's deferred Compensation as described in Sections 5.2 and 5.3 above, any
amounts credited to the Account of a Participant or Inactive Participant as a
result of the deferral of all or part of his or her Compensation shall accrue
interest compounded annually, as consideration for the use or forbearance of
money. The accrual of interest begins and the compounding of interest occurs on
January 1 of each Plan Year or, if later, the date on which an eligible Employee
first defers Compensation under the Plan. The rate at which interest accrues
shall equal the prime rate, plus one percent, offered to borrowers by a
commercial bank in Pleasanton, California on December 31st of the Plan Year
during which the accrual occurs. The Committee shall select the commercial bank
before December 1 of the Plan Year during which the accrual occurs. At the sole
discretion of the Company, for any Plan Year (i) the full amount of such accrued
interest may be allocated to a Participant's Account or (ii) adjusted for any
federal, state or local income or employment tax consequences attributable to
such interest, prior to allocating such interest to a Participant's Account. the
full amount of such interest accruals are allocated to a Participant's
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Account, any federal, state or local income or employment tax consequences
attributable to interest accruals under this Section 5.4 shall be borne by or
inure to the benefit of the Company.
5.5 Investment of Unpaid Balances
The unpaid balance of all Accounts payable under the Plan
shall continue to be credited with the investment earnings or losses described
in Sections 5.2 and 5.3 above or continued accruals of interest as described in
Section 5.4 above.
5.6 Company Contributions
a. Matching Contributions
At the end of any Plan Year for which an eligible
Employee has deferred Compensation under this Plan, the Committee shall add to
his or her Accounts an amount equal to the Company matching contributions,
within the meaning of Code Section 401(m) and the Company's Qualified Plan,
which the Employee would have received (i) if the Employee had contributed, to
the Company's Qualified Plan, the amounts deferred under this Plan and (ii) if
the limitations described in Section 1 above did not apply to the Company's
Qualified Plan ("Matching Contributions"). For Plan Years beginning before
January 1, 2000, the Company shall make Matching Contributions only with respect
to an Employee's Compensation deferrals in any year under this Plan that do not
exceed the amount an individual is permitted to defer under Code Section 402(g)
($9,500 for 1997 and $10,000 for 1998 and 1999). For Plan Years beginning after
December 31, 1999, the Company shall make Matching Contributions only with
respect to an Employee's Compensation deferrals in any year under this Plan that
do not exceed $10,000. Despite any other provisions of this Plan, any Matching
Contributions allocated to an Employee's account for any year under the
Company's Qualified Plan shall reduce dollar-for-dollar any Matching
Contributions allocable to said Employee's Account for that same year under this
Plan. The Company's Matching Contributions shall be weighted, in the same manner
as under the Company's Qualified Plan, for the Years of Service an Employee
completes with the Company prior to Termination of Employment, so that for every
dollar an Employee defers in any Plan Year, the Company will make the Matching
Contribution described below:
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Employee's Company's
Years of Service Matching Contribution
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During year 1 $0.00
During years 2, 3 and 4 $0.25
During years 5, 6 and 7 $0.50
During years 8, 9 and 10 $0.75
During years 11 and beyond $1.00
</TABLE>
b. Discretionary Contributions
Apart from Compensation deferrals and Matching
Contributions, the Company may but need not make additional contributions for
any Employee under this Plan.
10.
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These discretionary contributions shall be subject to the same vesting,
distribution and other provisions that apply to Matching Contributions under
this Plan.
c. Adjustments to Company Contributions
Once credited to an Employee's Accounts under this Plan,
the amounts described in Section 5.6 shall accrue the interest or investment
return described in Section 5.2, 5.3, 5.4 and 5.5 above, and shall be paid in
accord with Section 7 below.
d. Vesting in Company Contributions
Subject to the provisions of Section 5.6(e) below, an
Employee shall vest in amounts allocated to his or her Account as described in
Section 5.6 above, at the same rate the Employee would have vested in Matching
Contributions under the Company's Qualified Plan, which rate shall be determined
with reference to the Employee's Years of Service with the Company as follows:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Fewer than 2 0%
2 but fewer than 3 25%
3 but fewer than 4 50%
4 but fewer than 5 75%
5 or more 100%
</TABLE>
Additionally, except as provided in Section 5.6(e) below, an Employee shall be
1000 vested if, prior to his or her Termination of Employment, the Employee
attains age 65, dies or becomes Disabled.
e. Forfeitures for Misconduct
Without regard to the number of Years of Service an
Employee has completed with the Company and without regard to an Employee's age,
Disability or death, if an Employee separates from service with the Company as a
result of the Employee's gross misconduct, within the meaning of Part 6 of Title
I of ERISA, regarding group health continuation coverage, or if the Employee
engages in unlawful business competition with the Company, the Employee shall
forfeit all amounts allocated to his or her Accounts under Section 5.6(a) and
(c) above. Such forfeitures will be used to reduce the Company's obligation, if
any, to make Matching Contributions to other Participants or to defray the
expenses of administering the Plan.
5.7 Company's General Assets
Employee understands and agrees that all Compensation deferred
under the Plan and all amounts credited to a Participant's Account under the
Plan (a) are the general assets of the Company, (b) may be used in the operation
of the Company's business or in any other manner permitted by law, and (c)
remain subject to the claims of the Company's general
11.
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unsecured creditors. Participant agrees, on behalf of Participant and his or her
Beneficiary, that (i) title to any amounts deferred under the Plan or credited
to a Participant's Account remains in the Company and (ii) neither Participant
nor his or her Beneficiary has any property interests whatsoever in said
amounts, except as general creditors of the Company.
6. EFFECT ON EMPLOYEE BENEFITS
Amounts deferred under this Plan or distributed pursuant to the
terms of this Plan are not taken into account in the calculation of an
Employee's benefits under any employee pension or welfare benefit program or
under any other compensation practice maintained by the Company, except to the
extent provided in such program or practice.
7. PAYMENT OF DEFERRED COMPENSATION AND DEATH BENEFITS
7.1 Income Tax Obligations
If an Employee is assessed federal, state or local income
taxes by reason of, and computed on the basis of, his or her undistributed
deferred Compensation, Matching Contributions or other additions to his or her
Account, the Employee shall notify the Committee in writing of such assessment
and there shall be distributed from the Employee's Account deferred Compensation
or other amounts equal to such tax assessment, together with any interest due
and penalties assessed thereupon within thirty (30) days following such notice;
provided however, that if the Committee determines that such assessment is
improper, it may request that the Employee contest the assessment, at the
expense of the Company (which expense shall include all costs of appeal and
litigation, including legal and accounting fees, and any additional interest
assessed on the deficiency from and after the date of the Employee's notice to
the Committee); and during the period such contest is pending, the sums
otherwise distributable pursuant to this Section 7.1 shall not be distributed.
7.2 In-Service Withdrawals
a. Withdrawals to Meet Hardships
If at any time following the first anniversary of
initial participation in the Plan, an Employee incurs a Hardship, as described
in Section 2(n) above, the Employee may, by written notice to the Committee,
request that all or any specified part of his or her Account, but not less than
$1,000 per withdrawal, be paid to the Employee; and such distribution, if
approved by the Company, shall be made in a lump sum within thirty (30) days
following the Company's receipt of such notice. The Company shall have exclusive
authority to determine whether to make a Hardship distribution from an
Employee's Account but shall not unreasonably deny a request for such a
distribution. The Company's decision shall be final and binding on all parties.
Any Hardship withdrawals from an Account shall reduce the amount available for
subsequent distributions from the Account, as the Company in good faith may
determine.
12.
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b. Other Withdrawals
Prior to the termination of his or her employment, a
Participant or Inactive Participant may not withdraw any funds from his or her
Account under this Plan or under the Executive 401(k) Plan, (collectively
"Plans") (i) except as provided in paragraph a. of this Section 7.2, and (ii)
except as provided in a Qualified Domestic Relations Order with respect to an
Employee who has attained at least age 50 at the time the withdrawal or
distribution is to commence.
c. Definitions
1. For purposes of the Plans referenced in Section
7.2(b) above, the term "Qualified Domestic Relations Order" or "QDRO" means a
Domestic Relations Order:
a. Which creates or recognizes the existence of an
Alternate Payee's right to, or assigns to an Alternate
Payee the right to, receive all or a portion of the
benefits payable with respect to a Participant or
Inactive Participant under the Plans; and
b. Which specifies
(1) The name and last known mailing address of
(a) the Participant or Inactive Participant
and
(b) Alternate Payee(s) covered by the Order;
(2) The amount or percentage of the Participant's
or Inactive Participant's benefits to be paid
by the Plans to each such Alternate Payee, or
the manner in which such amount or percentage
is to be determined;
(3) The number of payments or period to which
such order applies;
(4) The Plans as the retirement programs to which
such order applies;
c. Which does not require
(1) The Plans to provide any type or form of
benefit, or any option, not otherwise
provided under the Plans;
13.
<PAGE>
(2) The Plans to provide increased benefits
(determined on the basis of actuarial value);
or
(3) The payment of benefits to an Alternate Payee
which are required to be paid to another
Alternate Payee under an Order previously
determined to be a Qualified Domestic
Relations Order under the Plans;
d. Which satisfies the requirements of Section
514(b)(7) of ERISA; and
e. Which complies with criteria specified in the QDRO
procedures established from time to time by the Company
or by the Plan Administrative Committee.
2. For purposes of the Plans referenced in Section
7.2(b) above, the term "Domestic Relations Order" includes any judgment, decree
or order, including approval of a property settlement agreement that:
a. Is made pursuant to a state domestic relations law
including a community property law;
b. Relates to the provision of child support, alimony
payments or marital property rights to a spouse, former
spouse, child or other dependent.
3. For purposes of the Plans referenced in Section
7.2(b) above, the term "Alternate Payee" includes any spouse, former spouse,
child or other dependent of a Participant or Inactive Participant who is
recognized by a domestic relations order as having a right to receive all, or a
portion of, the benefits payable with respect to a Participant or Inactive
Participant under the Plans.
7.3 Termination of Employment
Upon Termination of the Employment of a Participant or
Inactive Participant, the Committee shall distribute his or her Account under
the Plan, as elected by the Participant or Inactive Participant, in a lump sum
or in five or more (but not more than 15) substantially equal annual
installments. The payment from the Account shall occur or commence within 30
days after the first day of the calendar year immediately following the calendar
year in which the Termination of Employment occurs.
7.4 Disability
Upon the Disability of a Participant or Inactive Participant
prior to Termination of Employment, the Committee shall distribute his or her
Account under the Plan, as elected by the Participant or Inactive Participant,
in a lump sum or in five or more (but not
14.
<PAGE>
more than 15) substantially equal annual installments. The payment from the
Account shall occur or commence within 30 days after the first day of the
calendar year immediately following the calendar year in which the Disability
results in the Employee's Termination of Employment. Prior to the death of the
Participant or Inactive Participant, during any period in which a Participant or
Inactive Participant remains Disabled, he or she (or his or her legal
representative) may request Hardship withdrawals from any undistributed portion
of his or her Account. Any such Hardship withdrawals shall reduce the amount
available for subsequent distributions from the Account, as the Company in good
faith may determine.
7.5 Death Prior to Commencement of Distributions
Upon the death of a Participant or Inactive Participant prior
to the commencement of any distribution under Sections 7.3 or 7.4 above, his or
her Beneficiary shall receive the greater of the following: (i) the death
benefit correctly specified in the last individual statement provided by the
Plan to the Employee immediately before his or her death or (ii) any portion of
an Employee's Account that has not been distributed from the Plan at the time of
the Employee's death --which amount shall be distributed to the Beneficiary, in
a lump sum or in five or more (but not more than 15) substantially equal annual
installments, as elected at the time of the deferral of Compensation under the
Plan. The payment of such amount shall occur or commence within 30 days after
the first day of the calendar year immediately following the calendar year in
which the death of the Participant or Inactive Participant occurs. During the
period between the death of the Participant or Inactive Participant and the
commencement of distributions to the Beneficiary, the Beneficiary may request
Hardship withdrawals from the undistributed portion of his or her death benefit
or Account. Any such Hardship withdrawals shall reduce the amount available for
subsequent distributions from the Plan, as the Company in good faith may
determine.
7.6 Death After Commencement of Distributions
Upon the death of a Participant or Inactive Participant after
the commencement of any distribution in accordance with Sections 7.3 or 7.4
above, the balance remaining in the Account of such Participant or Inactive
Participant shall be distributed to his or her Beneficiary in accordance with
the terms elected by the Participant or Inactive Participant under Sections 7.3
or 7.4.
7.7 Default Distribution
The Company shall accelerate the payment of Accounts under the
Plan as a lump sum payment (i) if an Employee terminates employment with the
Company at a time when the value of his or her Account is less than $25,000,
(ii)at anytime after an Employee's termination of employment if the value of an
Account falls below $10,000 or (iii) if an Employee who has elected installment
distributions--terminates employment with the Company and works for a competitor
of the Company. Additionally, if a Participant or Inactive Participant fails to
elect a form of benefit at the time of his or her deferral of Compensation, the
Company shall distribute the Account in a lump sum within 30 days after the
Account first becomes payable under the Plan.
15.
<PAGE>
7.8 Withholding and Other Tax Consequences
From any payments made under this Plan, the Company shall
withhold any taxes or other amounts which federal, state or local law requires
the Company to deduct, withhold and deposit. The Company's determination of the
type and amount of taxes to be withheld from any payment shall be final and
binding on all persons having or claiming to have an interest in this Plan or in
any Account under this Plan.
8. FUNDING
All amounts deferred under this Plan remain or become general assets
of the Company. All payments under this Plan shall come from the general assets
of the Company. The amounts credited to an Employee's Account are not secured by
any specific assets of the Company. This Plan shall not be construed to require
the Company to fund any of the benefits provided hereunder or to establish a
trust or purchase an insurance policy or other product for such purpose. The
Company may make such arrangements as it desires to provide for the payment of
benefits. Neither an Employee, Participant or Inactive Participant nor his or
her Beneficiary or estate shall have any rights against the Company with respect
to any portion of any Account under the Plan except as general unsecured
creditors. No Employee, Participant, Inactive Participant, Beneficiary or estate
has an interest in any Account under this Plan until the Employee, Participant,
Inactive Participant, Beneficiary or estate actually receives payment from the
Account.
9. SUSPENSION OF PAYMENTS UPON COMPANY'S INSOLVENCY
At all times during the continuance of any trust established in
connection with this Plan ("Trust"), if the Plan Administrator determines that
the Company's financial condition is likely to result in the suspension of
benefit payments from the Trust, the Plan Administrator shall advise
Participants, Inactive Participants and Beneficiaries that payments from the
Trust shall be suspended during the Company's insolvency. If the Trustee
subsequently resumes such payments, the Administrator shall advise Participants,
Inactive Participants and Beneficiaries that, if Trust assets are sufficient,
the first payment following such discontinuance shall include the aggregate
amount of all payments due to Participants, Inactive Participants and
Beneficiaries under the terms of the Plan for the period of such discontinuance,
less the aggregate amount of any payments made directly by the Company during
any period of discontinuance. No insufficiency of Trust assets shall relieve the
Company of its obligation to make payments when due under the Plan.
10. NON-ALIENATION OF BENEFITS
The interest of any Employee, Participant, Inactive Participant or
Beneficiary shall not be subject to sale, assignment, transfer, conveyance,
hypothecation, encumbrance, garnishment, attachment, anticipation, pledge,
alienation or other disposition prior to actual distribution from the Plan; and
any attempt to effect such disposition shall be void. No portion of any Account
shall, prior to receipt thereof, be subject to the debts, contracts,
liabilities, or engagements of any Employee, Participant, Inactive Participant
or Beneficiary. Nothing in the preceding sentence shall prohibit the Company
from recovering from an Employee, Participant,
16.
<PAGE>
Inactive Participant or Beneficiary any payments to which he or she was not
entitled under the Plan.
11. LIMITATION OF RIGHTS
Nothing in this Plan document or in any related instrument shall
cause this Plan to be treated as a contract of employment within the meaning of
the Federal Arbitration Act, 9 U.S.C. 1 et seq., or shall be construed as
evidence of any agreement or understanding, express or implied, that the Company
(a) will employ any person in any particular position or level of Compensation,
(b) will offer any person initial or continued participation or awards in any
commission, bonus or other compensation program, or (c) will continue any
person's employment with the Company.
12. BEST PAYMENTS
(a) If the gross amount of any payment or benefit under this
Plan, either separately or in combination with any other payment or benefit
payable by the Company or any of its affiliates or pursuant to a plan of the
Company or an affiliate, would constitute a parachute payment within the meaning
of the Code Section 280G, then the total payments and benefits accrued and
payable under this Plan shall not exceed the amount necessary to maximize the
amount receivable by the Employee after payment of all employment, income and
excise taxes imposed on the Employee with respect to such payments or benefits.
(b) The Employee may elect by written notice which items of
compensation, if any, shall be reduced so as to meet the requirements of Section
12(a) above. If there is a dispute between the Company and the Employee
regarding (i) the extent, if any, to which any payments or benefits to the
Employee are parachute payments or excess parachute payments, under Code Section
280G, or (ii) the base amount of such Employee's Compensation under Code Section
280G, or (iii) the status of such Employee as a disqualified individual, under
Code Section 280G, such dispute shall be resolved in the same manner as a claim
for benefits under this Plan.
(c) Within 60 days of a Change in Control or, if later,
within 30 days of the Employee's receiving notice of termination of employment
from the Company or the Company's receiving notice of termination of employment
from the Employee, either the Employee or the Company may request (i) a
determination of the amount of any parachute payment, excess parachute payment,
or base amount of compensation, or (ii) a determination of the reduction
necessary to maximize the net receipts of the Employee as described in Section
12(a) above. Any fees, costs or expenses incurred by the Employee in connection
with such determinations shall be paid equally by the Employee and the Company.
13. NOTICE UNDER WARN
(a) Any amounts paid (i) to any Employee under the Worker
Adjustment and Retraining Notification Act of 1988 ("WARN") or under any
other-laws regarding termination of employment, or (ii) to any third party for
the benefit of said Employee or for the benefit of his or her dependents shall
not be offset or reduced by any amounts paid or
17.
<PAGE>
determined to be payable by the Company to said Employee or to his or her
dependents under this Plan.
(b) A Change in Control shall not be considered an
"unforeseeable business circumstance" under WARN that would relieve the Company
of its obligation to provide layoff notice to Participants or Inactive
Participants under this Plan. In determining whether there has occurred an
"employment loss" that would entitle a Participant or Inactive Participant to
notice under WARN, any voluntary or involuntary separation of the Participant or
Inactive Participant shall be treated as an employment loss entitling the
Employee to such notice.
14. AMENDMENT OR TERMINATION OF PLAN
(a) Prior to a Change in Control, the Board of Directors may
modify, suspend or terminate the Plan in any manner that does not (i) reduce any
benefits accrued under this Plan or (ii) constitute a forfeiture of any benefits
vested under this Plan. Except as provided in paragraph 14(c) below, after a
Change in Control, the Plan may not be amended or terminated in any manner that
adversely affects the fixed or contingent rights of any Participant or Inactive
Participant under the Plan, including but not limited to the right to continue
to defer the receipt of payments until the times specified in Section 7 above or
the right to accrue interest or investment earnings at the rate and in the
manner described in Section 5 above.
(b) In modifying, suspending or terminating the Plan, or in
taking any other action with respect to the implementation, operation,
maintenance or administration of the Plan, the Board of Directors may act by a
resolution of the full Board or by a resolution of a Compensation Committee of
the Board.
(c) This Plan shall terminate immediately if an impartial
arbitrator or court of competent jurisdiction determines that this Plan is not
exempt from the fiduciary provisions of Part 4 of Title I of ERISA. The Plan
shall terminate as of the date it ceased to be exempt.
(d) Upon termination of the Plan, the Plan Administrator
shall distribute all Accounts, as determined by the Plan Administrator (i) in a
lump sum to all Participants or (ii) in accordance with the method designated by
Participants at the time of their deferrals.
15. ADMINISTRATIVE PROCEDURES AND DISPUTE RESOLUTION
15.1 Plan Administrator
(a) The Plan Administrator shall be the Company. The Company
may establish an Administrative Committee composed of any persons, including
officers or employees of the Company, who act on behalf of the Company in
discharging the duties of the Company in administering the Plan. No
Administrative Committee member who is a full-time officer or employee of the
Company shall receive compensation with respect to his or her service on the
Administrative Committee. Any member of the Administrative Committee may resign
by delivering his or her written resignation to the Board of Directors of the
Company or to the Compensation Committee of the Board. The full Board or the
Compensation Committee of the
18.
<PAGE>
Board may remove any Committee member by providing him or her with written
notice of the removal.
15.2 Committee Organization and Procedures
(a) The Chief Financial Officer of the Company ("CFO") or
the Senior Vice President of the Company to whom the Vice President, Human
Resources, reports ("SVPHR") may designate a chairperson from the members of the
Administrative Committee. The Administrative Committee may appoint a secretary,
who may or may not be a member of the Administrative Committee. The secretary
shall have the primary responsibility for keeping a record of all meetings and
acts of the Administrative Committee and shall have custody of all documents,
the preservation of which shall be necessary or convenient to the efficient
functioning of the Administrative Committee. All reports required by law may be
signed by the Chairperson or another member of the Administrative Committee, as
designated by the Chairperson, on behalf of the Company.
(b) The Administrative Committee shall act by a majority of
its members in office and may adopt such rules and regulations as it deems
desirable for the conduct of its affairs. If the Company, the Plan, any
Participant or Inactive Participant is or becomes subject to any rules of the
Securities and Exchange Commission or any national or regional securities
exchange, the Company and the members of the Administrative Committee shall take
any actions which are necessary or desirable for the maintenance, modification
or operation of the Plan in accordance with those rules.
15.3 Administrative Authority
The Company and the Committee have discretionary authority to
perform all functions necessary or appropriate to the operation of the Plan,
including without limitation authority to (a) construe and interpret the
provisions of the Plan document and any related instrument and determine any
question arising under the Plan document or related instrument, or in connection
with the administration or operation thereof; (b) determine in its sole
discretion all facts and relevant considerations affecting the eligibility of
any Employee to be or become a Participant; (c) decide eligibility for, and the
amount of, benefits for any Participant, Inactive Participant or Beneficiary;
(d) authorize and direct all disbursements under the Plan; and (e) employ and
engage such persons, counsel and agents and to obtain such administrative,
clerical, medical, legal, audit and actuarial services as it may deem necessary
in carrying out the provisions of the Plan. The Company shall be the
"administrator" as defined in Section 3(16)(A) of ERISA for purposes of the
reporting and disclosure requirements of ERISA and the Code. The SVPHR, or in
his or her absence, the Vice President, Human Resources, of the Company shall be
the agent for service of process on the Plan.
15.4 Expenses
All reasonable expenses which are necessary to operate and
administer the Plan shall be paid directly by the Company. All reasonable costs
incurred by a Committee member in the discharge of the Company's or his or her
duties under the Plan shall be paid or reimbursed by the Company. Such costs
shall include fees or expenses arising from the
19.
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Committee's retention, with the consent of the Company, of any attorneys,
accountants, actuaries, consultants or recordkeepers required by the Committee
to discharge its duties under the Plan. Nothing in the preceding two sentences
or in any other provisions of the Plan shall require the Company to pay or
reimburse any Committee member or any other person for any cost, liability,
loss, fee or expense incurred by the Committee member or other person in any
dispute with the Company; nor may any Committee member or other person reimburse
himself, herself or itself from any Plan contributions or from the principal or
income of investment or funding vehicle for the Plan for any such cost,
liability, loss, fee or expense.
15.5 Insurance
The Company may, but need not, obtain liability insurance to
protect its directors, officers, employees or representatives against liability
in the operation of the Plan.
15.6 Claims Procedure
(a) Application for Benefits. Any application for benefits,
inquiries about the Plan or inquiries about present or future rights under the
Plan must be submitted to the Plan Administrator in writing by an applicant (or
his or her authorized representative).
(b) Denial of Claims. In the event that any application for
benefits is denied in whole or in part, the Plan Administrator must provide the
applicant with written or electronic notice of the denial of the application,
and of the applicant's right to review the denial. Any electronic notice will
comply with the regulations of the U.S. Department of Labor. The written notice
of denial will be set forth in a manner designed to be understood by the
employee and will include the following:
(i) the specific reason or reasons for the denial;
(ii) references to the specific Plan provisions upon
which the denial is based;
(iii) a description of any additional information or
material that the Plan Administrator needs to
complete the review and an explanation of why such
information or material is necessary; and
(iv) an explanation of the Plan's review procedures and
the time limits applicable to such procedures,
including a statement of the applicant's right to
proceed to arbitration pursuant to Section 15.7
following a denial on review of the claim, as
described in Section 15.6(d) below.
This written notice will be given to the applicant
within ninety (90) days after the Plan Administrator receives the application,
unless special circumstances require an extension of time, in which case, the
Plan Administrator has up to an additional ninety (90) days for processing the
application. If an extension of time for processing is required, written notice
of the extension will be furnished to the applicant before the end of the
initial ninety (90)
20.
<PAGE>
day period. This notice of extension will describe the special circumstances
necessitating the additional time and the date by which the Plan Administrator
is to render its decision on the application.
(c) Request for a Review. Any person (or that person's
authorized representative) for whom an application for benefits is denied, in
whole or in part, may appeal the denial by submitting a request for a review to
the Plan Administrator within sixty (60) days after the application is denied. A
request for a review shall be in writing and shall be addressed to the Company.
A request for review must set forth all of the grounds
on which it is based, all facts in support of the request and any other matters
that the applicant feels are pertinent. The applicant (or his or her
representative) shall have the opportunity to submit (or the Plan Administrator
may require the applicant to submit) written comments, documents, records, and
other information relating to his or her claim. The applicant (or his or her
representative) shall be provided, upon request and free of charge, reasonable
access to, and copies of, all documents, records and other information relevant
to his or her claim. The review shall take into account all comments, documents,
records and other information submitted by the applicant (or his or her
representative) relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.
(d) Decision on Review. The Plan Administrator will act on
each request for review within sixty (60) days after receipt of the request,
unless special circumstances require an extension of time (not to exceed an
additional thirty (60) days), for processing the request for a review. If an
extension for review is required, written notice of the extension will be
furnished to the applicant within the initial sixty (60) day period. This notice
of extension will describe the special circumstances necessitating the
additional time and the date by which the Plan Administrator is to render its
decision on the review. The Plan Administrator will give prompt, written or
electronic notice of its decision to the applicant. Any electronic notice will
comply with the regulations of the U.S. Department of Labor. In the event that
the Plan Administrator confirms the denial of the application for benefits in
whole or in part, the notice will set forth, in a manner calculated to be
understood by the applicant, the following:
(i) the specific reason or reasons for the denial;
(ii) references to the specific Plan provisions upon
which the denial is based;
(iii) a statement that the applicant is entitled to
receive, upon request and free of charge,
reasonable access to, and copies of, all
documents, records and other information relevant
to his or her claim; and
(iv) a statement of the applicant's right to proceed to
arbitration pursuant to Section 15.7.
(e) Rules and Procedures. The Plan Administrator will
establish rules and procedures, consistent with the Plan and with ERISA, as
necessary and appropriate in
21.
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carrying out its responsibilities in reviewing benefit claims. The Plan
Administrator may require an applicant who wishes to submit additional
information in connection with an appeal from the denial of benefits to do so at
the applicant's own expense.
(f) Exhaustion of Remedies. No legal action for benefits
under the Plan may be brought until the claimant (i) has submitted a written
application for benefits in accordance with the procedures described by Section
15.6(a) above, (ii) has been notified by the Plan Administrator that the
application is denied, (iii) has filed a written request for a review of the
application in accordance with the appeal procedure described in Section 15.6(c)
above, and (iv) has been notified in writing that the Plan Administrator has
denied the appeal. Notwithstanding the foregoing, if the Plan Administrator does
not respond to a Participant's claim or appeal within the relevant time limits
specified in this Section 15.6, the Participant may proceed to arbitration
pursuant to Section 15.7.
15.7 Arbitration
(a) Any Participant's, Inactive Participant's or
Beneficiary's claim remaining unresolved after exhaustion of the procedures in
Section 15.6 (and to the extent permitted by law any dispute concerning any
breach or claimed breach of duty regarding the Plan) shall be settled solely by
binding arbitration at the Employer's principal place of business at the time of
the arbitration, in accordance with the Employment Claims Rules of the American
Arbitration Association. Judgment on any award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. Each party to any dispute
regarding the Plan shall pay the fees and costs of presenting his, her or its
case in arbitration. All other costs of arbitration, including the costs of any
transcript of the proceedings, administrative fees, and the arbitrator's fees
shall be borne by the Employer.
(b) Except as otherwise specifically provided in this Plan,
the provisions of this Section 15.7 shall be absolutely exclusive for any and
all purposes and fully applicable to each and every dispute regarding the Plan
including any claim which, if pursued through any state or federal court or
administrative proceeding, would arise at law, in equity or pursuant to
statutory, regulatory or common law rules, regardless of whether such claim
would arise in contract, tort or under any other legal or equitable theory or
basis. The arbitrator who hears or decides any claim under the Plan shall have
jurisdiction and authority to award only Plan benefits and prejudgment interest;
and apart from such benefits and interest, the arbitrator shall not have any
authority or jurisdiction to make any award of any kind including, without
limitation, compensatory damages, punitive damages, foreseeable or unforeseeable
economic damages, damages for pain and suffering or emotional distress, adverse
tax consequences or any other kind or form of damages. The remedy, if any,
awarded by such arbitrator shall be the sole and exclusive remedy for each and
every claim which is subject to arbitration pursuant to this Section 15.7. Any
limitations on the relief that can be awarded by the arbitrator are in no way
intended (i) to create rights or claims that can be asserted outside arbitration
or (ii) in any other way to reduce the exclusivity of arbitration as the sole
dispute resolution mechanism with respect to this Plan.
(c) The Plan and the Company will be the necessary parties
to any action or proceeding involving the Plan. No person employed by the
Company, no Participant, Inactive
22.
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Participant or Beneficiary or any other person having or claiming to have an
interest in the Plan will be entitled to any notice or process, unless such
person is a named party to the action or proceeding. In any arbitration
proceeding all relevant statutes of limitation shall apply. Any final judgment
or decision that may be entered in any such action or proceeding will be binding
and conclusive on all persons having or claiming to have any interest in the
Plan.
15.8 Notices
Any notice from the Company or the Committee to an Employee,
Participant, Inactive Participant or Beneficiary regarding this Plan may be
addressed to the last known residence of said person as indicated in the records
of the Company. Any notice to, or any service of process upon, the Company or
the Committee with respect to this Plan may addressed as follows:
Vice President, Human Resources
PeopleSoft, Inc.
4305 Hacienda Drive
P.O. Box 9085
Pleasanton, California 94566
15.9 Indemnification
To the extent permitted by law, the Company shall, and hereby
does, indemnify and hold harmless any director, officer or employee of the
Company who is or may be deemed to be responsible for the operation of the Plan,
from and against any and all losses, claims, damages or liabilities (including
attorneys' fees and amounts paid, with the approval of the Board, in settlement
of any claim) arising out of or resulting from a duty, act, omission or decision
with respect to the Plan, so long as such duty, act, omission or decision does
not involve gross negligence or willful misconduct on the part of such director,
officer or employee. Any individual so indemnified shall, within 10 days after
receipt of notice of any action, suit or proceeding, notify the SVPHR of the
Company (or in the absence of a SVPHR, the CFO of the Company) and offer in
writing to the SVPHR (or CFO) the opportunity, at the Company's expense, to
handle and defend such action, suit or proceeding; and the Company shall have
the right, but not the obligation, to conduct the defense in any such action,
suit or proceeding. An individual's failure to give the SVPHR (or CFO) such
notice and opportunity shall relieve the Company of any liability to said
individual under this Section 15.9. The Company may satisfy its obligations
under this provision (in whole or in part) by the purchase of insurance. Any
payment by an insurance carrier to or on behalf of such individual shall, to the
extent of such payment, discharge any obligation of the Company to the
individual under this indemnification.
16. MISCELLANEOUS
16.1 Alternative Acts and Times
If it becomes impossible or burdensome for the Company or the
Committee to perform a specific act at a specific time required by this Plan,
the Company or Committee may perform such alternative act which most nearly
carries out the intent and purpose of this Plan and may perform such required or
alternative act at a time as close as
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administratively feasible to the time specified in this Plan for such
performance. Nothing in the preceding sentence shall allow the Company or
Committee to accelerate or defer any payments to Participants or Inactive
Participants under this Plan, except as otherwise expressly permitted herein.
16.2 Masculine and Feminine, Singular and Plural
Whenever used herein, pronouns shall include all both genders,
and the singular shall include the plural, and the plural shall include the
singular, whenever the context shall plainly so require.
16.3 Governing Law and Severability
This Plan shall be construed in accordance with the laws of
the State of California (exclusive of its rules regarding conflicts of law) to
the extent that such laws are not preempted by ERISA or other federal laws. If
any provision of this Plan shall be held illegal or invalid for any reason, such
determination shall not affect the remaining provisions of this Plan, which
shall be construed as if said illegal or invalid provision had never been
included.
16.4 Facility of Payment
If the Plan Administrator, in its sole discretion, determines
that any Employee, Participant, Inactive Participant or Beneficiary by reason of
infirmity, minority or other disability, is physically, mentally or legally
incapable of giving a valid receipt for any payment due him or her or is
incapable of handling his or her own affairs and if the Plan Administrator is
not aware of any legal representative appointed on his or her behalf, then the
Plan Administrator, in its sole discretion, may direct (a) payment to or for the
benefit of the Employee, Participant, Inactive Participant or Beneficiary; (b)
payment to any person or institution maintaining custody of the Employee,
Participant, Inactive Participant or Beneficiary; or (c) payment to any other
person selected by the Plan Administrator to receive, manage and disburse such
payment for the benefit of the Employee, Participant, Inactive Participant or
Beneficiary. The receipt by any such person of any such payment shall be a
complete acquittance therefor; and any such payment, to the extent thereof,
shall discharge the liability of the Company, the Committee, and the Plan for
any amounts owed to the Employee, Participant, Inactive Participant or
Beneficiary hereunder. In the event of any controversy or uncertainty regarding
who should receive or whom the Plan Administrator should select to receive any
payment under this Plan, the Plan Administrator may seek instruction from a
court of proper jurisdiction or may place the payment (or entire Account) into
such court with final distribution to be determined by such court.
16.5 Correction of Errors
Any crediting of Compensation, Matching Contributions or other
amounts to the Account of any Employee, Participant, Inactive Participant or
Beneficiary under a mistake of fact or law shall be returned to the Company. If
an Employee, Participant, Inactive Participant or Beneficiary in an application
for a benefit or in response to any request by the Company or the Plan
Administrator for information, makes any erroneous statement, omits any material
fact, or fails to correct any information previously furnished incorrectly to
the Company or the Plan
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Administrator, or if the Plan Administrator makes an error in determining the
amount payable to an Employee, Participant, Inactive Participant or Beneficiary,
the Company or the Plan Administrator may correct its error and adjust any
payment on the basis of correct facts. The amount of any overpayment or
underpayment may be deducted from or added to the next succeeding payments, as
directed by the Plan Administrator. The Plan Administrator and the Company
reserve the right to maintain any action, suit or proceeding to recover any
amounts improperly or incorrectly paid to any person under the Plan or in
settlement of a claim or satisfaction of a judgment involving the Plan.
16.6 Missing Persons
In the event a distribution of part or all of an Account is
required to be made from the Plan to an Employee, Participant, Inactive
Participant or Beneficiary, and such person cannot be located, the relevant
portion of the Account shall escheat in accordance with the laws of the State of
California. If the affected Employee, Participant, Inactive Participant or
Beneficiary later contacts the Company, his or her portion of the Account shall
be reinstated and distributed as soon as administratively feasible. The Company
shall reinstate the amount forfeited by reclaiming such amount from the State of
California, and allocating it to the Account of the affected Employee,
Participant, Inactive Participant or Beneficiary. Prior to forfeiting any
Account, the Company shall attempt to contact the Employee, Participant,
Inactive Participant or Beneficiary by return receipt mail (or other carrier) at
his or her last known address according to the Company's records, and, where
practical, by letter-forwarding services offered through the Internal Revenue
Service, or the Social Security Administration, or such other means as the Plan
Administrator deems appropriate.
16.7 Status of Participants
In accordance with Revenue Procedure 92-65 Section 3.01(d),
this Plan hereby provides:
a. Employees, Participants, Inactive Participants and
Beneficiaries under this Plan shall have the status of general unsecured
creditors of the Company;
b. This Plan constitutes a mere promise by the Company to
make benefit payments in the future;
c. Any trust to which this Plan refers (i.e. any trust
created by the Company and any assets held by the trust to assist the Company in
meeting its obligations under the Plan) shall conform to the terms of the model
trust described in Revenue Procedure 92-64; and
d. It is the intention of the parties that the arrangements
under this Plan shall be unfunded for tax purposes and for purposes of Title I
of ERISA.
16.8 Executive 401(k) Plan
Prior to January 1, 1997, the Company allowed a select group
of management and highly compensated employees to defer Compensation and receive
Matching
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Contributions under the PeopleSoft, Inc. Executive 401(k) Plan (the "Executive
401(k) Plan"). On May 31, 1995, the U.S. Internal Revenue Service issued Private
Letter Ruling 31308394 under Code Sections 83, 402, 451, 671 and 677 in favor of
the Executive 401(k) Plan. Effective January 1, 1997, the Company took the
following actions with respect to the Executive 401(k) Plan:
a. The Company discontinued all Compensation deferrals and
Matching and other contributions under the Executive 401(k) Plan;
b. For Employees who had Accounts in the Executive 401(k)
Plan as of December 31, 1996, the Company decided to maintain, invest and
distribute those Accounts in accordance with the terms of the Executive 401(k)
Plan as of that date or as amended by the Company in its sole discretion from
time to time thereafter;
c. The Executive 401(k) Plan document was amended and
restated in the form of this Executive Deferred Compensation Plan document, and
effective January 1, 1997, the Executive Deferred Compensation Plan document is
intended to govern amounts credited under both the Executive Deferred
Compensation Plan and the Executive 401(k) Plan;
d. The Company made Matching Contributions available under
this amended and restated Executive Deferred Compensation Plan to Participants
whose annual Compensation is at least the amount specified in Code Section
401(a)(17) ($200,000 in 2002); and
e. Except as otherwise provided in this document or in
other written documents adopted by the Company, all Accounts under the Executive
Deferred Compensation Plan that were not distributed on or before December 31,
1996, became subject to the terms of this Executive Deferred Compensation Plan
as amended and restated effective January 1, 1997, and as modified by the
Company in its sole discretion from time to time thereafter.
The complete discontinuance of contributions, as described in
Section 16.8.a. above, may be referred to as "freezing" the Executive 401(k)
Plan. Although the Company has discontinued all such contributions, the Company,
in its sole discretion, at any time and from time to time, may modify the
provisions of the frozen Executive 401(k) Plan through a written amendment to
this Plan document. An Employee's Account in the frozen Executive 401(k) Plan
shall remain a separate and distinct part of any Account the Employee may have
or may acquire in the Executive Deferred Compensation Plan. An Employee may
continue to change investment directions with respect to his or her
undistributed Executive 401(k) Accounts on a quarterly basis among the
investment options made available from time to time under the Executive 401(k)
Plan.
16.9 Employee and Spouse Acknowledgement
By executing this Plan document or related enrollment or
election form, the undersigned Employee and, if Employee is married, Employee's
spouse hereby acknowledge that each of them has read and understood this Plan
document. Employee and his or her spouse also acknowledge that they knowingly
and voluntarily agree to be bound by the provisions of the Plan, as amended from
time to time, including those Plan provisions which require the resolution
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of disputes by binding out-of-court arbitration. Employee and his or her spouse
further acknowledge that they have had the opportunity to consult with counsel
of their own choosing with respect to all of the financial, tax and legal
consequences of participating in this Plan, including in particular the effects
of participation on any community property or other interest which the
Employee's spouse may have in the Compensation deferred under this amended and
restated Executive Deferred Compensation Plan.
IN WITNESS WHEREOF, the undersigned has executed this document on
the date set forth adjacent to his or her signature below.
PEOPLESOFT, INC.
A Delaware Corporation
Dated: By
-------------------------------- ------------------------------------
Anne S. Jordan
General Counsel and
Senior Vice President
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EMPLOYEE
Dated:
-------------------------------- --------------------------------------
Employee's Signature
--------------------------------------
Employee's Printed Name
EMPLOYEE'S SPOUSE
Dated:
-------------------------------- --------------------------------------
Spouse's Signature
--------------------------------------
Spouse's Printed Name
28.