Deferred Compensation Plan - AOL Time Warner Inc.
AOL TIME WARNER INC.
DEFERRED COMPENSATION PLAN
(Amended and Restated as of August 1, 2001)
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.1 Establishment of Plan. Time Warner Inc. established this plan
effective as of November 18, 1998, to be known as the Time Warner Inc. Deferred
Compensation Plan. Effective January 11, 2001 AOL Time Warner Inc. (the
"Company") became the plan sponsor and the plan was renamed the AOL Time Warner
Inc. Deferred Compensation Plan (the "Plan"). The Plan has been amended and
restated effective as of August 1, 2001.
1.2 Purpose of Plan. The Plan is intended to be an unfunded,
non-qualified deferred compensation plan maintained to provide deferred
compensation for a select group of management or highly compensated employees
under Section 201(2) of the Employee Retirement Income Security Act of 1974, by
providing Eligible Employees a means of irrevocably deferring to a future Year
the receipt of certain compensation from Employing Companies in excess of the
Compensation Limit. The Plan also applies to certain account balances
attributable to compensation previously irrevocably deferred under (i) the Time
Warner Deferred Compensation (pre-1999) Plan (the "Pre-1999 Plan"), (ii) the
Time Warner Excess Profit Sharing Plan (the "Excess Profit Sharing Plan"), (iii)
the Warner Bros. Supplemental Executive Retirement Plan (the "Warner Bros.
SERP") and (iv) the employment agreements of certain senior officers and key
personnel of the Company and its Affiliates, subject to the terms and conditions
for making such transfers specified in the Pre-1999 Plan, the Excess Profit
Sharing Plan, the Warner Bros. SERP and each of the employment agreements.
1.3 Applicability of Plan. The provisions of the Plan are applicable
only to Employees of Employing Companies employed on or after the effective date
of this restatement of the Plan.
ARTICLE II
DEFINITIONS
2.1 Definitions. Whenever used in the Plan, the following terms shall
have the respective meanings set forth below unless otherwise expressly
provided, and when the defined meaning is intended, the term is capitalized.
2.2 Administrative Committee: The Administrative Committee as provided
for herein.
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2.3 Adverse Tax Effect: Any reduction in the benefits available to, or
any adverse impact on, the Company from the use of Corporate Owned Life
Insurance ("COLI") as an investment vehicle to fund the obligations of the
Company under the Plan.
2.4 Affiliate: An Employing Company and any entity affiliated with the
Employing Company within the meaning of Code Section 414(b), with respect to
controlled groups of corporations, Section 414(c) with respect to trades or
businesses under common control with the Employing Company, and Section 414(m)
with respect to affiliated service groups, and any other entity required to be
aggregated with an Employing Company pursuant to regulations under Section
414(o) of the Code.
Except as described below, the term "Affiliate" shall generally mean an
entity in which the Employing Company has an ownership interest directly or
indirectly of at least eighty percent (80%).
(a) The Benefits Officer may designate any entity which is
related to the Company by less than eighty percent (80%) as an Affiliate.
(b) If an Employing Company adopts the Plan only for the
benefit of certain of its divisions, locations or operations, all other
divisions, locations or operations of said Employing Company shall be treated as
Affiliates.
(c) TWE, each division of TWE, any entity affiliated with TWE
within the meaning of Sections 414(b), 414(c) and 414(m) of the Code, and any
other entity required to be aggregated with TWE pursuant to regulations under
Section 414(o) of the Code shall be treated as Affiliates.
(d) TWE-A/N, each division of TWE-A/N, any entity affiliated
with TWE-A/N within the meaning of Sections 414(b), 414(c) and 414(m) of the
Code, and any other entity required to be aggregated with TWE-A/N pursuant to
regulations under Section 414(o) of the Code shall be treated as Affiliates.
2.5 Beneficiary: The person or persons designated from time to time by
a Participant or Inactive Participant, by notice to the Benefits Officer, to
receive any benefits payable under the Plan after his or her death, which
designation has not been revoked by notice to the Benefits Officer at the date
of the Participant's or Inactive Participant's death. Such notice shall be in a
form as required by the Benefits Officer or acceptable to such officer which is
properly completed and delivered to the Benefits Officer or such officer's
designee. Notice to the Benefits Officer shall be deemed to have been given when
it is actually received by or on behalf of such officer. The beneficiary
designation, if any, in effect for the Plan will override and supercede any
Excess Profit Sharing Plan designation. If there is none on file for the Plan,
the Excess Profit Sharing Plan designation will continue to apply to any
transferred balance from the Excess Profit Sharing Plan until a Plan designation
is made. Any such new designation will apply to all balances in the Plan.
2.6 Benefits Officer: The Benefits Officer as provided for herein.
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2.7 Board: The Board of Directors of the Company or a committee thereof
authorized to act in the name of the Board.
2.8 Code: The Internal Revenue Code of 1986, as amended.
2.9 Company: AOL Time Warner Inc.
2.10 Compensation Limit: The compensation limit of Section 401(a)(17)
of the Code, as adjusted under Section 401(a)(17)(B) of the Code for increases
in the cost of living.
2.11 Deferred Compensation Account: The separate account established
under Article V of the Plan for each Participant and Inactive Participant
representing amounts deferred by a Participant pursuant to Article III.
2.12 Disability: Permanent and total disability as determined by the
Social Security Administration or any disability for which a Participant is
receiving monthly benefits under the provisions of the AOL Time Warner Inc. Long
Term Disability Plan or, in the case of an employee covered by a long term
disability plan of an Affiliate, under the provisions of such plan, whichever
shall occur first.
2.13 Eligible Employee: An individual who meets the eligibility
requirements of Section 3.1.
2.14 Employee: An individual employed by an Employing Company.
2.15 Employing Company: The Company and each Affiliate which has been
authorized by the Benefits Officer to participate in the Plan and has adopted
the Plan.
2.16 ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
2.17 Inactive Participant: A Participant whose employment has
terminated with the Company and any Affiliate and whose Deferred Compensation
Account has not been fully distributed.
2.18 Investment Committee: The Investment Committee as provided for
herein.
2.19 Investment Direction: A Participant's or Inactive Participant's
direction to the recordkeeper of the Plan, in the form and manner prescribed by
the Benefits Officer, in accordance with directions made by telephone, through
the intranet of the applicable Employing Company or through the Internet,
directing which Investment Funds will be credited with his or her deferrals and
transfers of all or part of the deferred amounts and any earnings thereon from
other Investment Funds, the Pre-1999 Plan, the Excess Profit Sharing Plan, the
Warner Bros. SERP and certain employment agreements, as provided for herein.
2.20 Investment Funds: The hypothetical investment funds, as determined
from time to time by the Board or the Investment Committee.
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2.21 Participant: Each Employee who participates in the Plan in
accordance with the terms and conditions of the Plan.
2.22 Plan: The AOL Time Warner Inc. Deferred Compensation Plan as set
forth herein and as it may be amended from time to time.
2.23 Retirement: The term used to indicate that a Participant, as of
the date his or her employment terminates with the Company and any Affiliate, is
eligible for retirement under the then current qualified defined benefit plan of
the Company or the Affiliate from which he or she is terminating employment. If
such company does not have a qualified defined benefit plan, eligibility for
retirement shall be determined by the applicable provision in the qualified
defined contribution plan of such company for which the Participant is eligible,
and, if more than one, the plan which would result in the earliest distribution
under this Plan.
2.24 Tax Event: The first to occur of any of the following events (as
determined by the Committee):
(a) any amendments to, clarification of, or change in the laws
of the United States or taxing authority thereof that has an Adverse Tax Effect,
(b) any judicial decision, administrative pronouncement,
published or private ruling, technical advice memorandum, regulatory procedure,
notice or announcement ("Administrative Action") that has an Adverse Tax Effect,
(c) any amendment to, clarification of, or change in the
position or the interpretation of any Administrative Action that has an Adverse
Tax Effect, or
(d) the receipt by the Company or any of its Affiliates or
subsidiaries of a Notice of Proposed Adjustment (or notice similar thereto) from
the Internal Revenue Service proposing an adjustment which would result in an
Adverse Tax Effect.
2.25 TWE: Time Warner Entertainment Company, L.P.
2.26 TWE-A/N: Time Warner Entertainment-Advance/Newhouse Partnership.
2.27 Valuation Date: With respect to the Investment Funds, each
business day when the New York Stock Exchange is open.
2.28 Year: A calendar year.
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ARTICLE III
PARTICIPANT DEFERRALS
3.1 Eligibility. The Employees who shall be eligible to make deferral
elections under the Plan are those salaried officers and other key employees of
an Employing Company who at the time of a deferral election pursuant to Section
3.3 below:
(i) are on a regular periodic U.S. payroll of the
Employing Company; and
(ii) have a current base salary plus bonus in excess of
the Compensation Limit or are otherwise designated
as eligible by the Benefits Officer. For purposes
of this subsection 3.1(ii), "bonus" means any
annual bonus (paid or deferred) pursuant to a
regular program (but excluding long-term cash
incentive plan payments other than those specified
in Section 3.5 and commission, spot and similar
bonuses) for the Year preceding the current Year,
except that, in the case of a deferral election to
be made by a newly hired Employee (which election
shall be made available at the sole discretion of
the Employing Company), with respect to a bonus to
be earned in (A) the current Year, "bonus" means
the target or otherwise estimated bonus for that
portion of the current Year after the date of his
or her hire, and (B) the Year following hire,
"bonus" means the target or otherwise estimated
bonus for the current Year.
The Benefits Officer may, from time to time, modify the above
eligibility requirements and make such additional or other requirements for
eligibility as such officer may determine.
3.2 Compensation Eligible for Deferral. (a) An Eligible Employee may
elect to defer receipt of all or a specified portion of any bonus, but only to
the extent the receipt thereof would cause the Eligible Employee's compensation
to exceed the Compensation Limit. Each such deferral may be expressed as a
percentage, in 10% increments only, but in no event shall any election result in
a deferral of less than $5,000. The Eligible Employee may elect to have the
designated percentage apply only to that portion of the bonus in excess of a
certain dollar amount that he or she specifies when making the election. In lieu
of designating a percentage, the Eligible Employee may elect to have a specific
dollar amount of the bonus deferred. For purposes of this Section 3.2, "bonus"
means any annual bonus payable pursuant to a regular program and signing bonuses
(but excluding long-term cash incentive plan payments other than those specified
in Section 3.5 and commission, spot and similar bonuses) and which would
otherwise be payable in cash to an Eligible Employee for services as an
Employee. Notwithstanding anything to the contrary herein, for purposes of this
Section 3.2, "bonus" shall also mean the special one-time merger completion
bonus payable in connection with the successful completion of the merger of
America Online, Inc. and Time Warner Inc.
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(b) An Eligible Employee whose compensation is payable under
an employment agreement with an Employing Company which provides for deferred
compensation may elect to defer such deferred compensation under the Plan,
subject to the terms of such agreement. Any such deferral so elected shall be
made in the same manner as provided for in subsection (a). Notwithstanding the
foregoing, any compensation previously deferred under an employment agreement
shall be subject to deferral under the Plan only as provided for in Section
3.6(b). An Eligible Employee's employment agreement with the Company or another
Employing Company may also provide for a mandatory deferral of certain
compensation under the Plan.
(c) An Employing Company may designate a special bonus to be
paid to an Eligible Employee under an agreement with such employee as eligible
for deferral, subject to the terms of such agreement. Any such deferral so
elected shall be made in the same manner as provided for in subsection (a).
(d) Whenever any compensation eligible for deferral under the
Plan is also eligible for deferral, in whole or part, under any other deferred
compensation plan (such as an excess 401(k) plan), the amount of such
compensation eligible for deferral under the Plan shall be net of any amount
elected for deferral under the other plan.
3.3 Deferral Elections. An Eligible Employee with the consent of the
Benefits Officer may annually make an irrevocable election to defer under the
Plan certain compensation described in Section 3.2 and participate herein by
timely delivering a properly executed election to the Benefits Officer or such
officer's designee on a form prescribed by the Benefits Officer. The election
form shall specify with respect to the compensation to be deferred under the
Plan for the Year, pursuant to the provisions of Section 3.2 and Article V:
(i) the percentage of the bonus or compensation
specified in Section 3.2(b) to be deferred, the
certain dollar amount of such bonus or
compensation in excess of which the deferral has
been elected, if applicable or, the specific
dollar amount to be deferred; and
(ii) the time for the commencement of payment of the
deferred compensation, which must be either on
account of retirement or at an in-service Year to
be specified by the Eligible Employee.
Compensation which is to be deferred to an
in-service payment date must be deferred for no
fewer than three Years following the Year in which
it was earned.
3.4 Effective Date of Election. (a) An election to defer compensation
under the Plan must be received by or on behalf of the Benefits Officer prior to
July 1 of the Year preceding that in which it would be payable, at which time it
shall become irrevocable.
(b) Notwithstanding the date specified in subsection (a)
above, the Benefits Officer may prescribe an earlier or later date by which time
an Eligible Employee must elect to defer such compensation.
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(c) Under no circumstances may an Eligible Employee at any
time defer compensation to which he or she has attained a legally enforceable
right to receive currently.
3.5 Certain Incentive Plans. Notwithstanding anything to the contrary
herein, the term "bonus" wherever used in this Article III shall include (i) any
amounts payable to Eligible Employees of (a) Time Inc. and its subsidiaries and
affiliates, who participate in a Phantom Equity Plan ("PEP"), provided, however,
that any such elections shall be made irrevocably during the third Year of a
four Year PEP cycle or (b) Entertainment Weekly Inc., who participate in the
Entertainment Weekly Stock Performance Plan, (ii) any amounts payable to
Eligible Employees participating in the Time Warner Cable Long Term Cash Plan.
Any such elections pursuant to this Section shall be made prior to July 1 of the
final Year of the respective plan, at which time they shall become irrevocable.
3.6 Transfers. (a) Transfers to the Plan have previously been made of
the entire account balances of certain participants in the Pre-1999 Plan and the
Excess Profit Sharing Plan, as provided by the terms and conditions of such
plans and the Plan as in effect at the time of such transfers.
(b) Each Eligible Employee, whose compensation is payable
under an employment agreement with an Employing Company which provides for
deferred compensation, may elect to have transferred to and deferred under his
or her Deferred Compensation Account in the Plan the balance, in whole or in
part, of the compensation previously deferred under such agreement, subject to
the terms thereof. Such an election can be made at any time, but only once in
the Eligible Employee's lifetime.
(c) Transfers to the Plan shall be accepted from the Warner
Bros. SERP on or after September 1, 2001 of the account balances of certain of
the participants in the Warner Bros. SERP as provided by the terms and
conditions of the Warner Bros. SERP.
ARTICLE IV
DEFERRED COMPENSATION ACCOUNT
4.1 Deferred Compensation Account. (a) A Deferred Compensation Account
shall be established for each Participant who makes a deferral election pursuant
to Article III. A Participant's or Inactive Participant's Deferred Compensation
Account shall consist of the Compensation deferred by a Participant in any Year
under the Plan, increased or decreased by any gains or losses thereon.
(b) The Company shall maintain the Deferred Compensation
Accounts of all Participants and Inactive Participants.
(c) All payments made under the Plan shall be made directly by
the Company from its general assets subject to the claims of any creditors and
no deferred compensation under the Plan shall be segregated or earmarked or held
in trust The Plan is an unfunded and unsecured
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contractual obligation of the Company. Participants, Inactive Participants and
Beneficiaries shall be unsecured creditors of the Company with respect to all
obligations owed to them under the Plan. Participants, Inactive Participants and
Beneficiaries shall not have any interest in any fund or specific asset of the
Company by reason of any amount credited to a Deferred Compensation Account, nor
shall any such person have any right to receive any distribution under the Plan
except as explicitly stated herein. The Company shall not designate any funds or
assets to specifically provide for the distribution of the value of a Deferred
Compensation Account or issue any notes or security for the payment thereof. Any
asset or reserve that the Company may purchase or establish shall not serve as
security to Participants, Inactive Participants and Beneficiaries for the
performance of the Company under the Plan.
4.2 Hypothetical Investment. (a) For crediting rate purposes, amounts
credited to a Participant's or Inactive Participant's Deferred Compensation
Account shall be deemed to be invested according to his or her Investment
Direction in one or more of all of the similarly named funds (both core funds
and mutual funds in the mutual funds option) offered under the AOL Time Warner
Defined Contribution Plans Master Trust. For any period, the deemed return on
each of these Investment Funds shall be the same as the return for such period
on each similarly named fund offered under such master trust.
(b) Notwithstanding anything to the contrary herein, the
Company, by action of the Investment Committee or the Board, may add to,
decrease or change the Investment Funds offered under the Plan, at any time
and for any reason. Participants, Inactive Participants and Beneficiaries
shall not have the right to continue any particular deferral option.
(c) The Company shall be under no obligation to invest amounts
corresponding to any deferral options chosen by Participants or Inactive
Participants. Any such allocation to any Deferred Compensation Account shall
be made solely for the purpose of determining the value of such account under
the Plan.
4.3 Investment Direction. Deferrals shall be credited to the Investment
Funds in accordance with a Participant's or Inactive Participant's Investment
Direction. A Participant or Inactive Participant shall direct that his or her
deferrals be applied, in multiples of one percent, to deemed investments in any
or all of the Investment Funds.
4.4 Changes in Investment Direction. A Participant or Inactive
Participant may make one Investment Direction in each calendar quarter,
separately with respect to either or both new deferrals or previous deferrals
and any earnings thereon.
4.5 Manner of Hypothetical Investment. (a) For purposes of the
hypothetical investment under Section 4.2, deferred compensation shall be
considered to be invested on the date the recordkeeper of the Plan records the
deferral amount.
(b) As of each Valuation Date, the recordkeeper of the Plan
shall determine the value of each Participant's, Inactive Participant's or
Beneficiary's Deferred Compensation Account.
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(c) For purposes of distribution pursuant to Article V, the
balance of each Deferred Compensation Account shall be valued as of the
Valuation Date immediately preceding the date that the Committee commences the
processing of the distribution of the balance of such account, or the particular
installment thereof.
4.6 Participant Assumes Risk of Loss. Each Participant, Inactive
Participant and Beneficiary assumes the risk in connection with any decrease in
value of his or her Deferred Compensation Account deemed invested in the
Investment Funds.
4.7 Statement of Account. As soon as reasonably practicable after the
end of each calendar quarter, a statement shall be sent to each Participant and
Inactive Participant with respect to the value of his or her Deferred
Compensation Account as of the end of such quarter.
4.8 Investment of Account Balances Transferred from the Warner Bros.
SERP. The account balances to be transferred from the Warner Bros. SERP to the
Plan as provided in Section 3.6 (c) shall be deemed invested at the time of
transfer in the fund using the investment crediting rate based on the Capital
Preservation Fund of the AOL Time Warner Defined Contribution Plans Master
Trust. Participants in the Plan who have such account balances transferred to
the Plan shall be permitted to make two changes in Investment Direction (for
their entire Plan account balances) in the calendar quarter of the transfer
instead of one.
ARTICLE V
PAYMENT OF DEFERRED COMPENSATION ACCOUNT
5.1 Payment on Account of Termination of Employment for Reasons other
than Death or Disability. (a) In the event of termination of the Participant's
employment with the Company and any Affiliate for reasons other than death or
Disability, the Participant's Deferred Compensation Account shall be distributed
to him or her in ten annual installment payments.
(b) Notwithstanding subsection (a) above, a Participant may,
at any time, but no later than September 30 of the Year in which he or she
terminates employment with the Company and any Affiliate, request that his or
her Deferred Compensation Account be distributed to him or her in a lump sum, if
the value of the Participant's Deferred Compensation Account is $50,000 or more
(determined as of December 31 of the Year in which he or she terminates
employment with the Company and any Affiliate), or in two, five or seven annual
installment payments, and the Benefits Officer may, in such officer's sole and
absolute discretion, make a lump sum payout or payouts in such installments.
(c) Notwithstanding any other provision of this Section 5.1,
if the value of the Participant's Deferred Compensation Account is less than
$50,000 (determined as of December 31 of the Year in which he or she terminates
employment with the Company and any Affiliate), payment shall be made in a lump
sum.
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(d) The first installment, or lump sum, as the case may be,
shall be distributed as soon as practicable on or after April 1 of the Year
following the Year in which the Participant terminates employment. Subsequent
annual installment payments shall be distributed as soon as practicable on or
after each following April 1.
(e) All requests by a Participant under this Section 5.1 shall
be made only by delivering a written notice to the Benefits Officer in a manner
prescribed by such officer.
(f) This Section 5.1 shall apply to distributions which
commence on and after November 1, 2000.
5.2 Special In-Service Payment. Notwithstanding the payment provisions
in subsections (a) through (d) of Section 5.1 above, a Participant may request,
by delivering a written notice to the Benefits Officer in a manner prescribed by
such officer, one special in-service payment in a lump sum of all or any portion
of the Participant's Deferred Compensation Account (but not less than $5,000),
to be distributed as soon as practicable after the expiration of 36 months
following the month in which he or she has made the request, and the Benefits
Officer may, in such officer's sole and absolute discretion, make such payment.
(i) The value of any such special in-service payment
shall not include amounts payable under existing
in-service payment elections.
(ii) In the event of the termination of the
Participant's employment with the Company and any
Affiliate for any reason prior to the payment of
any such special in-service payment, it shall be
paid in the same manner and at the same time or
times as any other payments of the Participant's
Deferred Compensation Account due under this
Article. In the event of death, payment shall be
made as provided for in Section 5.5.
(iii) In requesting a special in-service payment, a
Participant must specify that such payment is to
be applicable to the amount or amounts which were
deferred in a specific Year or Years. All or a
percentage of the deferral for such Year or Years
may be requested.
5.3 Payment on Account of Disability. (a) In the event a Participant
meets the definition of Disability, the value of the Participant's Deferred
Compensation Account shall be distributed to him or her in five annual
installment payments.
(b) Notwithstanding subsection (a) above, if the value of the
Participant's Deferred Compensation Account is less than $50,000 as of the
Valuation Date immediately prior to the date the definition of Disability is
met, payment shall be made in a lump sum.
(c) The first installment, or lump sum, as the case may be,
shall be distributed as soon as practicable on or after April 1 of the Year
following the date the Participant has met
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the definition of Disability. Subsequent annual installment payments shall be
distributed as soon as practicable on or after each following April 1.
(d) If a Participant or Inactive Participant no longer meets
the definition of Disability and returns to work with the Company or an
Affiliate, no further payments shall be made on account of the prior Disability,
and distribution of his or her remaining Deferred Compensation Account shall be
made as otherwise provided in this Article V.
5.4 In-Service Payments. (a) An in-service payment elected by a
Participant pursuant to Section 3.3(ii) shall be distributed in a lump sum as
soon as practicable on or after April 1 in the Year specified by the
Participant.
(b) Notwithstanding subsection (a) above, a Participant may
request, by delivering written notice to the Benefits Officer on a form
prescribed by such officer prior to July 1 of the Year preceding that in which
the in-service payment is to be made, that the Benefits Officer, in such
officer's sole and absolute discretion, defer such payment until such later Year
as the Participant requests. Any such additional deferral (i) must be for full
Years, and for no fewer than 36 months from the beginning of the month in which
the in-service deferral would have been paid but for the additional deferral,
(ii) must be for the current value of the whole amount originally deferred,
(iii) can only be made five times with respect to any in-service payment, and
(iv) shall be distributed in a lump sum as soon as practicable on or after April
1 in the Year specified by the Participant. In lieu of specifying the Year in
which the payment is to be made, the Participant may specify that payment of the
deferral shall be made on account of Retirement, in which case it shall be
distributed in accordance with the provisions of Section 5.1, as soon as
practicable on or after April 1 of the Year following the date of termination
from the Company and any Affiliate.
Notwithstanding the prior sentences of this subsection (b),
distribution of any in-service payment (whether or not there has been a prior
redeferral) may be deferred pursuant to an employment contract or separation
agreement which provides that payment of the deferral shall be made on account
of retirement, in which case it shall be distributed in accordance with the
provisions of section 5.1.
(c) In the event of the termination of a Participant's
employment for any reason prior to the time any in-service payment under this
Section 5.4 would have been made, distribution of such payment shall be made
according to the manner of payment specified in Section 5.1, 5.2, 5.3 or 5.5,
based on the Participant's actual reason for termination of employment;
provided, however, that the unpaid balance of any in-service payment shall be
paid in full at the time such in-service payment would have been made but for
such termination of employment.
(d) The Benefits Officer may, in such officer's sole and
absolute discretion, defer any in-service payment previously elected by any
officer of the Company or TWE who at the time of the designated in-service
payment date is at or above the level of a senior vice president. In the event
of any such deferral by the Benefits Officer, payment shall be made
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under this Article V as if a deferral election had been made for payment on
account of Retirement.
5.5 Payment to Beneficiary or Estate in the Event of Death.
Notwithstanding the provisions for payment described in Sections 5.1 through 5.4
above, in the event of the death of a Participant or Inactive Participant before
the distribution of his or her Deferred Compensation Account has commenced, or
before such account has been fully distributed, the value of such account shall
be determined as of the Valuation Date coincident with or immediately prior to
the date that the Benefits Officer commences the processing of the distribution,
after both a written notice of his or her death and a death certificate have
been received by the Benefits Officer. Such account shall be distributed in a
lump sum as soon as practicable to the Participant's or Inactive Participant's
Beneficiary (or, if no person has been designated or if no person so designated
survives the Participant or Inactive Participant, to such Participant's or
Inactive Participant's estate or if such Beneficiary survives the Participant or
Inactive Participant, but dies prior to payment, to such Beneficiary's estate).
In case any Participant or Inactive Participant and his or her Beneficiary die
in or as a result of a common accident or disaster and under such circumstances
as to make it impossible to determine which of them was the last to die, the
Participant or Inactive Participant shall be deemed to have survived his or her
Beneficiary. Distributions hereunder shall be subject to such administrative and
procedural requirements and forms as the Benefits Officer in such officer's
discretion may require.
5.6 Severe Unforeseeable Financial Emergency Payments. Notwithstanding
any other provisions of the Plan, a Participant or Inactive Participant may make
an application to the Benefits Officer that he or she has a severe unforeseeable
financial emergency of such a substantial nature and beyond the individual's
control that a payment of compensation previously deferred under the Plan or
rescission of a deferral election is warranted. After consideration of the
application, and a determination that such an emergency exists, the Benefits
Officer may, in such officer's sole and absolute discretion, (i) direct that all
or a portion of the balance of such individual's Deferred Compensation Account
be paid to him or her in such manner and at such time as the Benefits Officer
shall specify, or (ii) may rescind, in whole or in part, a deferral election
with respect to a bonus deferred but not yet payable, but only to the extent
reasonably required to satisfy the emergency need.
5.7 Incapacity. The Benefits Officer may direct that any amounts
distributable under the Plan to a person under a legal disability be made to
(and be withheld until the appointment of) a representative qualified pursuant
to law to receive such payment on such person's behalf.
5.8 Method of Paying Installments. Installment payments as provided for
in this Article V shall be paid as follows: (i) in the case of installments paid
over two Years: 1/2 of the value of the Deferred Compensation Account subject to
installment payments shall be paid in the first installment and all of the
remaining value shall be paid in the second and final installment, (ii) in the
case of installments paid over five Years: 1/5 of the value of the Deferred
Compensation Account subject to installment payments shall be paid in the first
installment; 1/4 of the remaining value shall be paid in the second installment;
1/3 of the remaining value shall be paid in the third installment; 1/2 of the
remaining value shall be paid in the fourth installment; and all of the
remaining value in the account shall be paid in the fifth and final installment,
(iii)
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in the case of installments paid over seven Years: 1/7 of the value of the
Deferred Compensation Account subject to installment payments shall be paid in
the first installment; 1/6 of the remaining value shall be paid in the second
installment; 1/5 of the remaining value shall be paid in the third installment;
1/4 of the remaining value shall be paid in the fourth installment; 1/3 of the
remaining value shall be paid in the fifth installment; 1/2 of the remaining
value shall be paid in the sixth installment; and all of the remaining value in
the account shall be paid in the seventh and final installment, (iv) in the case
of installments paid over ten Years: 1/10 of the value of the Deferred
Compensation Account subject to installment payments shall be paid in the first
installment; 1/9 of the remaining value shall be paid in the second installment;
1/8 of the remaining value shall be paid in the third installment; 1/7 of the
remaining value shall be paid in the fourth installment; 1/6 of the remaining
value shall be paid in the fifth installment; 1/5 of the remaining value shall
be paid in the sixth installment; 1/4 of the remaining value shall be paid in
the seventh installment; 1/3 of the remaining value shall be paid in the eighth
installment; 1/2 of the remaining value shall be paid in the ninth installment
and all of the remaining value in the account shall be paid in the tenth and
final installment.
5.9 Payments Only in Cash. All payments under the Plan shall be made
only in cash.
5.10 Occurrence of a Tax Event. If a Tax Event shall occur and the
Investment Committee thereafter determines to change the Investment Funds
offered as crediting rates under the Plan for amounts that have been deferred
and elected to be deferred under the Plan prior to the effective date of such
change, then each Participant and Inactive Participant shall have a one-time
right to elect to (a) maintain his or her Deferred Compensation Account under
the Plan in the Investment Funds then offered as crediting rates under the Plan
or (b) receive a lump sum distribution of all (but not less than all) of his or
her Deferred Compensation Account under the Plan and all amounts elected to be
deferred under the Plan but not yet credited to the Plan.
5.11 Rehire of Inactive Participant. If an Inactive Participant returns
to work with the Company or an Affiliate, no further payments shall be made on
account of the prior termination of employment, and distribution of his or her
remaining Deferred Compensation Account shall be made as otherwise provided in
this Article V.
5.12 Transfers from the Pre-1999 Plan, the Excess Profit Sharing Plan
and the Warner Bros. SERP. All balances transferred from the Pre-1999 Plan, the
Excess Profit Sharing Plan, the Warner Bros. SERP and the employment agreement
specified in Section 3.6(b) shall be subject to the provisions of this Article V
as part of a Participant's or Inactive Participant's Deferred Compensation
Account. A participant whose Warner Bros. SERP account balance has been
transferred to the Plan may not elect an in-service payment date with respect to
such account balance prior to April 1, 2004.
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ARTICLE VI
ADMINISTRATION
6.1 The Administrative Committee; Appointment. The Plan shall be
administered by a Administrative Committee, consisting of not less than three
members to be appointed from time to time by the Board. The members of the
Administrative Committee shall serve at the pleasure of, and may be removed by
the Board at any time. Any member of the Administrative Committee may resign at
any time by giving notice to the Board or to the President of the Company. Any
such resignation shall take effect at the date of receipt of such notice or at
any later date specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. No
member of the Administrative Committee shall receive any compensation for his or
her services as such. Participants and Inactive Participants may be members of
the Administrative Committee but may not participate in any decision affecting
their own account in any case where the Administrative Committee may take
discretionary action under Article V.
6.2 Quorum and Actions of Administrative Committee. A majority of the
members of the Administrative Committee at the time in office shall constitute a
quorum for the transaction of business. All resolutions or other action taken by
the Administrative Committee shall be by vote of a majority of its members
present at any meeting or, without a meeting, by instrument in writing signed by
all its members. Members of the Administrative Committee may participate in a
meeting of such Administrative Committee by means of a conference telephone or
similar communications equipment that enables all persons participating in the
meeting to hear each other, and such participation in a meeting shall constitute
presence in person at the meeting.
6.3 Plan Administrator. The Administrative Committee shall be the
administrator of the Plan and shall have all powers necessary to administer the
Plan, including discretionary authority to determine eligibility for benefits
and to decide claims under the terms of the Plan, except to the extent that any
such powers are vested in any other fiduciary by the Plan or by the
Administrative Committee. The Administrative Committee may from time to time
establish rules for the administration of the Plan, and it shall have the
exclusive right to interpret the Plan to decide any matters arising in
connection with the administration and operation of the Plan. All its rules,
interpretations and decisions shall be conclusive and binding on the Employing
Companies and on Eligible Employees, Participants, Inactive Participants and
Beneficiaries.
The Administrative Committee may delegate any of its powers or duties
to others as it shall determine and may retain counsel, agents and such clerical
and accounting services as it may require in carrying out the provisions of the
Plan.
6.4 Reliance on Information. The Administrative Committee and the
Investment Committee (as described below) may rely conclusively upon all tables,
valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel, recordkeeper or other person who is employed or
engaged for any purpose in connection with the administration of the Plan.
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Neither the Administrative Committee or Investment Committee nor any
member of the Board or the board of directors (or governing body) of an
Affiliate and no employee of the Company or any Affiliate shall be liable for
any act or action hereunder, whether of omission or commission, by any other
member or employee or by any agent to whom duties in connection with the
administration of the Plan have been delegated or for anything done or omitted
to be done in connection with the Plan.
6.5 Committee Records. The Administrative Committee shall keep a record
of all its proceedings and of all payments directed by it to be made to
Participants, Inactive Participants or Beneficiaries or payments made by it for
expenses or otherwise.
6.6 The Benefits Officer; Appointment. The Benefits Officer shall be
appointed by the Chief Executive Officer of the Company and may be removed by
the Chief Executive Officer. The Benefits Officer may not serve concurrently on
the Administrative Committee or the Investment Committee. The Benefits Officer
may resign at any time by giving notice to the Chief Executive Officer of the
Company. Any such resignation shall take effect at the date of receipt of such
notice or at any later date specified therein; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective. A Participant may be appointed as the Benefits Officer. The Benefits
Officer shall not receive compensation for his or her services as such.
6.7 Delegation of Duties. The Benefits Officer may delegate any of his
powers or duties to others as he or she shall determine, and may authorize
others to execute or deliver any instrument or to make any payment in his or
her behalf. The Benefits Officer may employ such counsel, agents and clerical,
medical, accounting and actuarial services as he or she may require in
carrying out his or her functions.
6.8 Benefits Officer; Settlor and Ministerial Functions. The Benefits
Officer shall have the duty to execute settlor and ministerial functions on
behalf of the Company, including, without limitation, amending and modifying the
terms of the Plan and performing ministerial functions with respect to the Plan,
except to the extent specifically limited by resolution of the Board or by the
terms herein. The Benefits Officer shall have solely ministerial and settlor
functions, and shall have no fiduciary authority, obligations or status with
respect to the Plan, such as, without limitation, authority or discretion to
interpret or administer the Plan, set investment policy with respect to the
Plan, or resolve factual disputes arising in connection with the interpretation,
administration and operation of the Plan, and all such fiduciary authority,
obligations and status shall be retained by the Administrative Committee and
Investment Committee as set forth herein, and the Benefits Officer will present
any issues related to such authority, obligations or status to the
Administrative Committee for its resolution.
6.9 Investment Committee; Appointment. An Investment Committee,
consisting of three or more persons, shall be appointed from time to time by the
Board. The members of the Investment Committee shall serve at the pleasure of,
and may be removed by the Board at any time. Any member of the Investment
Committee may resign at any time by giving notice to the Board or to the
President of the Company. Any such resignation shall take effect at the date of
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receipt of such notice or at any later date specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. Participants may be members of the Investment
Committee. Unless otherwise directed by the Board, and except as may be required
under ERISA, no bond or other security shall be required of any members of the
Investment Committee as such. No member of the Investment Committee shall
receive compensation for his services as such.
6.10 Quorum and Actions of Investment Committee. A majority of the
members of the Investment Committee at the time in office shall constitute a
quorum for the transaction of business. All resolutions or other action taken
by the Investment Committee shall be by vote of a majority of its members
present at any meeting or, without a meeting, by instrument in writing signed
by all its members. Members of the Investment Committee may participate in a
meeting of such Investment Committee by means of a conference telephone or
similar communications equipment that enables all persons participating in the
meeting to hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
6.11 Investment Committee Chairman; Delegation by Investment Committee.
The members of the Investment Committee shall elect one of their number as
chairman and may elect a secretary who may, but need not, be one of their
number. The Investment Committee may delegate any of its powers or duties
among its members or to others as it shall determine. It may authorize one or
more of its members to execute or deliver any instrument or to make any
payment in its behalf. It may employ such counsel, agents and clerical,
accounting, actuarial and recordkeeping services as it may require in carrying
out the provisions of the Plan.
6.12 Investment Policy. The Board shall have the authority to establish
the overall investment policy for the Plan and may delegate such
responsibility to the Investment Committee. The Investment Committee shall
take all prudent action necessary or desirable for the purpose of carrying out
the foregoing.
6.13 Indemnification. The Company shall, to the fullest extent
permitted by law, indemnify each director, officer or employee of the Company
or any Affiliate (including the heirs, executors, administrators and other
personal representatives of such person) and each member of the Administrative
Committee, Investment Committee and Benefits Officer against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement,
actually and reasonably incurred by such person in connection with any
threatened, pending or actual suit, action or proceeding (whether civil,
criminal, administrative or investigative in nature or otherwise) in which
such person may be involved by reason of the fact that he or she is or was
serving any employee benefit plans of the Company or any Affiliate in any
capacity at the request of such company.
6.14 Expenses of Administration. Any expense incurred by the Company,
the Administrative Committee, the Investment Committee or the Benefits Officer
relative to the administration of the Plan shall be paid by the Employing
Companies in such proportions as the Company may direct.
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ARTICLE VII
CLAIMS PROCEDURE
7.1 Participant or Beneficiary Request for Claim. Any request for a
benefit payable under the Plan shall be made in writing by a Participant or
Beneficiary (or an authorized representative of any of them), as the case may
be, and shall be delivered to any member of the Administrative Committee. Such
written request shall be deemed filed upon receipt thereof by the Administrative
Committee. Such request shall be made within one year after the claimant first
knew or should have known that he had a claim for benefits under the Plan.
7.2 Insufficiency of Information. In the event a request for benefits
contains insufficient information, the Administrative Committee shall, within a
reasonable period after receipt of such request, send a written notification to
the claimant setting forth a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why such material is necessary. The claimant's request shall be deemed filed
with the Administrative Committee on the date the Administrative Committee
receives in writing such additional information.
7.3 Request Notification. The Administrative Committee shall make a
determination with respect to a request for benefits within ninety (90) days
after such request is filed (or within such extended period prescribed below).
The Administrative Committee shall notify the claimant whether his claim has
been granted or whether it has been denied in whole or in part. Such
notification shall be in writing and shall be delivered, by mail or otherwise,
to the claimant within the time period described above. If the claim is denied
in whole or in part, the written notification shall set forth, in a manner
calculated to be understood by the claimant:
(i) The specific reason or reasons for the denial;
(ii) Specific reference to pertinent provisions of the
Plan on which the denial is based; and
(iii) An explanation of the Plan's claim review
procedure.
Failure by the Administrative Committee to give notification
pursuant to this Section within the time prescribed shall be deemed a denial
of the request for the purpose of proceeding to the review stage.
7.4 Extensions. If special circumstances require an extension of time
for processing the claim, the Administrative Committee shall furnish the
claimant with written notice of such extension. Such notice shall be furnished
prior to the termination of the initial ninety (90)-day period and shall set
forth the special circumstances requiring the extension and the date by which
the Administrative Committee expects to render its decision. In no event shall
such extension exceed a period of ninety (90) days from the end of such initial
ninety (90)-day period.
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7.5 Claim Review. A claimant whose request for benefits has been denied
in whole or in part, or his duly authorized representative, may, within sixty
(60) days after written notification of such denial, file with a reviewer
appointed for such purpose by the Administrative Committee (or, if none has been
appointed, with the Administrative Committee itself, with a copy to the
Administrative Committee, a written request for a review of his claim. Such
written request shall be deemed filed upon receipt of same by the reviewer.
7.6 Time Limitation on Review. A claimant who timely files a request
for review of his claim for benefits, or his duly authorized representative, may
review pertinent documents (upon reasonable notice to the reviewer) and may
submit the issues and his comments to the reviewer in writing. The reviewer
shall, within sixty (60) days after receipt of the written request for review
(or within such extended period prescribed below), communicate its decision in
writing to the claimant and/or his duly authorized representative setting forth,
in a manner calculated to be understood by the claimant, the specific reasons
for its decision and the pertinent provisions of the Plan on which the decision
is based. If the decision is not communicated within the time prescribed, the
claim shall be deemed denied on review.
7.7 Special Circumstances. If special circumstances require an
extension of time beyond the sixty (60)-day period described above for the
reviewer to render his decision, the reviewer shall furnish the claimant with
written notice of the extension required. Such notice shall be furnished prior
to the termination of the initial sixty (60)-day period and shall set forth the
special circumstances requiring the extension period. In no event shall such
extension exceed a period of sixty (60) days from the end of such initial sixty
(60)-day period.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 Amendments. The Company (by action of the Board) or the Benefits
Officer (for the Company and the other Employing Companies) may at any time
amend the Plan.
8.2 Termination or Suspension. The continuance of the Plan and the
ability of an Eligible Employee to make a deferral for any Year are not assumed
as contractual obligations of the Company or any other Employing Company. The
Company reserves the right (for itself and the other Employing Companies) by
action of the Board or the Benefits Officer, to terminate or suspend the Plan,
or to terminate or suspend the Plan with respect to itself or an Employing
Company. Any Employing Company may terminate or suspend the Plan with respect to
itself by executing and delivering to the Company or the Benefits Officer such
documents as the Company or Benefits Officer shall deem necessary or desirable.
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8.3 Participants' Rights to Payment. No termination of the Plan or
amendment thereto shall deprive a Participant, Inactive Participant or
Beneficiary of the right to payment of deferred compensation credited as of the
date of termination or amendment, in accordance with the terms of the Plan as of
the date of such termination or amendment; provided, however, that in the event
of termination of the Plan, or termination of the Plan with respect to the
Company or one or more other Employing Companies, the Benefits Officer may, in
such officer's sole and absolute discretion, accelerate the payment of all such
credited deferred compensation on a uniform basis for all Participants and
Inactive Participants or, in the case of termination of the Plan with respect to
one or more other Employing Companies, for all Participants and Inactive
Participants of such other Employing Companies only.
ARTICLE IX
PARTICIPATING COMPANIES
9.1 Adoption by Other Entities. Upon the approval of the Company or the
Benefits Officer, the Plan may be adopted by any Affiliate by executing and
delivering to the Company or the Benefits Officer such documents as the Company
or Benefits Officer shall deem necessary or desirable. The provisions of the
Plan shall be fully applicable to such entity except as may otherwise be agreed
to by such adopting company and the Company or Benefits Officer.
ARTICLE X
GENERAL PROVISIONS
10.1 Participants' Rights Unsecured. The right of any Participant or
Inactive Participant to receive future payments under the provisions of the Plan
shall be an unsecured claim against the general assets of the Employing Company
employing the Participant at the time that his or her compensation is deferred.
The Company, and any other Employing Company or former Employing Company shall
not guarantee or be liable for payment of benefits to the employees of any other
Employing Company or former Employing Company under the Plan.
10.2 Non-Assignability. The right of any person to receive any benefit
payable under the Plan shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, lien or charge, and
any such benefit shall not, except to such extent as may be required by law, in
any manner be liable for or subject to the debts, contracts, liabilities,
engagements or torts of the person who shall be entitled to such benefits, nor
shall it be subject to attachment or legal process for or against such person.
10.3 Affiliate Ceasing to be Such. (a) In the event that a corporation
or other entity ceases at any time to meet the definition of an Affiliate, such
entity shall cease as of such time to be an Employing Company, if it had been
such, and those of its Employees who would have been Eligible Employees under
the Plan shall cease to be such.
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(b) Payments to Participants employed by any entity which
ceases to be an Affiliate shall be made pursuant to Article V unless prior to
the end of the Year in which such entity ceases to be an Affiliate, it adopts a
non-qualified deferred compensation plan and agrees to the transfer of the
Deferred Compensation Accounts of all such Participants to its plan and to
assume all obligations accrued under the Plan as of the date of such transfer
with respect to such accounts and subsequent distributions thereof.
10.4 No Rights Against the Company. The establishment of the Plan, any
amendment or other modification thereof, or any payments hereunder, shall not be
construed as giving to any Employee, Eligible Employee, Participant or Inactive
Participant any legal or equitable rights against the Company or any other
Employing Company or former Employing Company, its shareholders, directors,
officers or other employees, except as may be contemplated by or under the Plan
including, without limitation, the right of any Participant or Inactive
Participant to be paid as provided under the Plan. Participation in the Plan
does not give rise to any actual or implied contract of employment. A
Participant may be terminated at any time for any reason in accordance with the
procedures of the Employing Company.
10.5 Withholding. Each Employing Company, former Employing Company, or
paying agent shall withhold any federal, state and local income or employment
tax (including F.I.C.A. obligations for both social security and medicare) which
by any present or future law it is, or may be, required to withhold with respect
to any deferral of compensation pursuant to the Plan, any Employing Company
Allocation, any income deemed accrued or any distribution under the Plan, with
respect to any of its former or present Employees. The Benefits Officer shall
provide or direct the provision of information necessary or appropriate to
enable each such company to so withhold.
10.6 No Guarantee of Tax Consequences. The Administrative Committee,
the Benefits Officer, the Company and any Employing Company or former Employing
Company do not make any commitment or guarantee that any amounts deferred for
the benefit of a Participant or Inactive Participant will be excludible from the
gross income of the Participant or Inactive Participant in the Year of deferral
or distribution for federal, state or local income or employment tax purposes,
or that any other federal, state or local tax treatment will apply to or be
available to any Participant or Inactive Participant. It shall be the obligation
of each Eligible Employee, Participant or Inactive Participant to determine
whether any deferral under the Plan is excludible from his or her gross income
for federal, state and local income or employment tax purposes, and to take
appropriate action if he or she has reason to believe that any such deferral is
not so excludible.
10.7 Severability. If a provision of the Plan shall be held illegal or
invalid, the illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included in the Plan.
10.8 Governing Law. The provisions of the Plan shall be governed by and
construed in accordance with the laws of the State of New York (other than its
rules of conflicts of laws to the extent that the application of the laws of
another jurisdiction would be required thereby), to the extent not preempted by
the laws of the United States.
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