<PAGE> 1
================================================================================
As filed with the Securities and Exchange Commission on December 3, 1997
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-------------------------
WESTERN DIGITAL CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 95-2647125
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
-------------------------
8105 IRVINE CENTER DRIVE
IRVINE, CALIFORNIA 92618
(714) 932-5000
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
-------------------------
WESTERN DIGITAL CORPORATION
DEFERRED COMPENSATION PLAN
(Full title of plan)
-------------------------
MICHAEL A. CORNELIUS
VICE PRESIDENT LAW & ADMINISTRATION AND SECRETARY
WESTERN DIGITAL CORPORATION
8105 IRVINE CENTER DRIVE
IRVINE, CALIFORNIA 92618
(714) 932-5000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE PRICE PER OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) SHARE PRICE (2) FEE
- -------------------------------- --------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
WESTERN DIGITAL CORPORATION $40,000,000 100% $40,000,000 $11,800
DEFERRED COMPENSATION PLAN
OBLIGATIONS (3)
=============================================================================================
</TABLE>
- ----------
(1) The Western Digital Corporation Deferred Compensation Plan Obligations are
unsecured obligations of Western Digital Corporation to pay deferred
compensation in the future in accordance with the terms of the Western Digital
Corporation Deferred Compensation Plan.
(2) Estimated solely for purposes of calculating registration fees.
(3) Certain amounts granted to participants under the Company's Non-Employee
Directors Stock-For-Fees Plan and deferred pursuant to the Company's Deferred
Compensation Plan shall be distributed in the form of Company Common Stock.
400,000 shares of Common Stock were previously registered on the Company's Form
S-8 Registration Statement No. 33-60168, filed with the Securities and Exchange
Commission on March 29, 1993, with respect to the Company's Non-Employee
Directors Stock-For-Fees Plan (includes 200,000 shares of Common Stock
registered on the Form S-8 Registration Statement and 200,000 shares of Common
Stock registered on the Form S-8 Registration Statement pursuant to Rule 416 in
connection with the Company's stock dividend of one share for each share
outstanding on May 20, 1997).
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INTRODUCTION
This Registration Statement on Form S-8 is filed by Western Digital
Corporation, a Delaware corporation (the "COMPANY"), relating to $40,000,000 of
unsecured obligations of the Company to pay deferred compensation in the future
(the "OBLIGATIONS") in accordance with the terms of the Company's Deferred
Compensation Plan (the "PLAN").
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
* Information required by Part 1 of Form S-8 to be contained in the
Section 10(a) prospectus is omitted from this Registration Statement in
accordance with Rule 428 under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have been filed previously by the Company
with the Securities and Exchange Commission, are incorporated herein by
reference and made a part hereof:
(i) The Company's Annual Report on Form 10-K for the year ended June 28,
1997; and
(ii) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 27, 1997.
All reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934
subsequent to the date of this Registration Statement and prior to the filing of
a post-effective amendment hereto which indicates that all securities offered
hereunder have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of filing of such documents.
For purposes of this Registration Statement, any statement contained in
a document incorporated or deemed to be incorporated herein by reference shall
be deemed to be modified or superseded to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated herein by reference modifies or supersedes such statement in
such document. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
2
<PAGE> 3
ITEM 4. DESCRIPTION OF SECURITIES.
$40,000,000 of Obligations are being registered under this Registration
Statement to be offered to a select group of management and highly compensated
employees and directors of the Company and any of its subsidiaries that have
been selected by the Board of Directors of the Company (the "BOARD") to
participate in the Plan and have adopted the Plan as a sponsor. The Obligations
are general unsecured and unfunded obligations of the Company to pay deferred
compensation in the future in accordance with the terms of the Plan.
The amount of compensation deferred by each participant in the Plan is
determined in accordance with the Plan based upon elections by each participant.
To participate in the Plan, participants must defer a minimum of $2,000 annually
and may elect to defer, on an annual basis, up to a maximum of 100% of such
participant's base annual salary, annual bonus and director's fees ("ANNUAL
DEFERRAL AMOUNT"). Obligations will consist of an amount equal to (A) each
participant's "DEFERRAL ACCOUNT" under the Plan which includes (i) the sum of
the participant's Annual Deferral Amounts plus (ii) amounts credited to the
participant's Deferral Account based on the participant's selection from
measurement fund alternatives in accordance with and subject to the rules and
procedures established from time to time by the Board or a committee appointed
by the Board (the "COMMITTEE"), less (iii) all distributions made to the
participant or his or her beneficiary pursuant to the Plan that relate to the
participant's Deferral Account and (B) each participant's "COMPANY CONTRIBUTION
ACCOUNT" under the Plan which includes (i) the sum of any credits made by the
Board, in its sole discretion, as of the last day of the fiscal year of the Plan
to such account plus (ii) amounts credited to the participant's Company
Contribution Account based on the participant's selection from measurement fund
alternatives in accordance with and subject to the rules and procedures
established from time to time by the Board or the Committee, less (iii) all
distributions made to the participant or his or her beneficiary pursuant to the
Plan that relate to the participant's Company Contribution Account.
The following portions of a participant's Deferral Account and Company
Contribution Account shall be distributed in the form of Company Common Stock,
as a lump sum at the time distribution to the participant is to commence: (i)
that portion of a participant's Deferral Account balance attributable to his or
her deferral of directors' fees paid in the form of shares of Company Common
Stock and granted to non-employee directors pursuant to the terms of the Western
Digital Corporation Non-Employee Directors Stock-For-Fees Plan (the "DIRECTORS'
PLAN") and (ii) that portion of a participant's Company Contribution Account
balance attributable to the 15% premium award granted to non-employee directors
as an annual Company Contribution Amount each year pursuant to the Directors'
Plan, which amount shall be credited at such times as the Company shall
determine.
Participants may receive distributions from their account balances under the
following circumstances:
1. Subject to certain limitations, a participant may elect to receive a
future "SHORT-TERM PAYOUT" from the Plan with respect to the Annual Deferral
Amount. The Short-Term Payout shall be a lump sum payment in an amount that is
equal to the Annual Deferral Amount for the year for which the Short-Term Payout
was elected, plus amounts credited or debited, if any. Subject to the other
terms and conditions of the Plan, each Short-Term Payout elected shall be paid
within 60 days of the first day of the fiscal year of the Plan (the "PLAN YEAR")
that is a number of years (not less than three, as specified by the participant)
after the first day of the Plan Year in which the Annual Deferral Amount is
actually deferred.
2. If a participant experiences an extraordinary and unforeseeable
financial emergency that arises as a result of events beyond the control of the
participant and that places an immediate and heavy financial need that cannot be
relieved by certain other resources of the participant, as specified in the
Plan, the participant may petition the Board or the Committee to (a) suspend any
deferrals required to be made by the participant or (b) receive a partial or
full payout from the Plan, provided that any payout shall not exceed the lesser
of the participant's vested account balance or the amount needed to satisfy the
financial emergency. If, subject to the sole discretion of the Board or the
Committee, the petition for a suspension and/or payout is approved, suspension
shall take effect upon the date of approval and any payout shall be made within
60 days of the date of approval.
3
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3. In connection with the commencement of participation in the Plan, a
participant shall elect to receive retirement benefits in a lump sum or pursuant
to an annual installment of 5, 10, 15 or 20 years. The participant may change
his or her election to an allowable alternative payout period, provided the
change in election is submitted at least three years prior to the participant's
retirement and is accepted by the Board, or the Committee, in its sole
discretion. If a participant dies after retirement but before the retirement
benefit is paid in full, the participant's unpaid retirement benefit payments
shall continue and shall be paid to the beneficiary (a) over the remaining
period or (b) in a single lump sum if requested by the beneficiary and allowed
in the sole discretion of the Board or the Committee. If the participant dies
before he or she retires, the participant's beneficiary shall receive an amount
equal to the participant's vested account balance.
4. A participant who is determined by the Board or the Committee to be
suffering from a disability, shall be excused thereafter from making deferrals
committed pursuant to his or her election for the Plan Year during which the
participant first suffers the disability.
5. If a participant's employment with or service as a director of the
Company and/or any of its subsidiaries participating in the Plan is terminated
prior to the participant's retirement, death or disability, the participant
shall receive an amount equal to the participant's vested account balance, which
amount shall be paid in a lump sum within 60 days after the termination of
employment or service as a director.
6. A participant may elect, at any time, to withdraw all of his or her
vested account balance, subject to a 10% withdrawal penalty.
The Obligations are unassignable and non-transferable and neither a
participant nor any other person shall have any right to commute, sell, assign,
transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate, alienate or convey in advance of actual receipt, the amounts, if
any, payable under the Plan.
An irrevocable trust has been established to pay the Obligations. The
trustee of the trust shall be authorized, upon written instructions from the
Board, the Committee or an investment manager appointed by the Committee, to
invest and reinvest the assets of the trust in accordance with the trust
agreement.
The Plan is administered by the Board or the Committee, which has the
power to make, amend, interpret and enforce all appropriate rules and
regulations for the administration of the Plan and to resolve all questions
arising under the Plan.
The Company may terminate the Plan at any time and may amend the Plan
from time to time by action of the Board; provided, however, that no such
amendment shall be effective to decrease or restrict the value of a
participant's vested account balance in existence at the time the amendment is
made.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145(a) of the General Corporation Law of the State of Delaware
(the "GCL") provides that a Delaware corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no cause to believe his
or her conduct was unlawful.
4
<PAGE> 5
Section 145(b) of the GCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if he or she acted under similar standards to
those set forth above, except that no indemnification may be made in respect to
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the court in
which such action or suit was brought shall determine that despite the
adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to be indemnified for such
expenses which the court shall deem proper.
Section 145 of the GCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsection (a) and (b) or in the defense of any
claim, issue or matter therein, he or she shall be indemnified against expenses
actually and reasonably incurred by him or her in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against such officer
or director and incurred by him or her in any such capacity or arising out of
his or her status as such, whether or not the corporation would have the power
to indemnify him or her against such liabilities under Section 145.
As permitted by Section 102(b)(7) of the GCL the Company's Certificate
of Incorporation provides that a director shall not be liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director. However, such provision does not eliminate or limit the liability of a
director for acts or omissions not in good faith or for breaching his or her
duty of loyalty, engaging in intentional misconduct or knowingly violating the
law, paying a dividend or approving a stock repurchase which was illegal, or
obtaining an improper personal benefit. A provision of this type has no effect
on the availability of equitable remedies, such as injunction or rescission, for
breach of fiduciary duty.
The Company's Bylaws require that directors and officers be indemnified
to the maximum extent permitted by Delaware law.
The Company may, from time to time, enter into indemnity agreements with
each of its directors and officers requiring that the Company pay on behalf of
each director and officer party thereto any amount that he or she is or becomes
legally obligated to pay because of any claim or claims made against him or her
because of any act or omission or neglect or breach of duty including any actual
or alleged error or misstatement or misleading statement, which he or she
commits or suffers while acting in his or her capacity as a director and/or
officer of the Company and solely because of his or her being a director and/or
officer. Under the GCL, absent such an indemnity agreement, indemnification of a
director or officer is discretionary rather than mandatory (except in the case
of a proceeding in which a director or officer is successful on the merits).
Consistent with the Company's Bylaw provision on the subject, the indemnity
agreements require the Company to make prompt payment of defense and
investigation costs and expenses at the request of the director or officer in
advance of indemnification, provided that the recipient undertakes to repay the
amounts if it is ultimately determined that he or she is not entitled to
indemnification for such expense and provided further that such advance shall
not be made if it is determined that the director or officer acted in bad faith
or deliberately breached his or her duty to the Company or its stockholders and,
as a result, it is more likely than not that it will ultimately be determined
that he or she is not entitled to indemnification under the terms of the
indemnity agreement. The indemnity agreements make the advance of litigation
expenses mandatory absent a special determination to the contrary, whereas under
the GCL absent such an indemnity agreement, such advance would be discretionary.
Under the indemnity agreement, the Company would not be required to pay or
reimburse the director or officer for his or her expenses in seeking
indemnification recovery against the Company. By the terms of the indemnity
agreement, its benefits are not available if the director or officer has other
indemnification or insurance coverage for the subject claim or, with respect to
the matters giving rise to the claim, (i) received a personal benefit, (ii)
violated Section 16(b) of the Exchange Act or analogous provisions of law, or
(iii) committed certain acts of dishonesty. Absent the indemnity agreement,
5
<PAGE> 6
indemnification that might be made available to directors and officers could be
changed by amendments to the Company's Certificate of Incorporation or Bylaws.
The Company has a policy of directors' liability insurance which insures
the directors and officers against the cost of defense, settlement or payment of
a judgment under certain circumstances.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit No. Description
- ----------- -----------
4.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.4.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 29,
1997, as filed with the Securities and Exchange Commission on May
9, 1997).
4.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2.2
to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 29, 1997, as filed with the Securities and Exchange
Commission on May 9, 1997).
4.3 Western Digital Corporation Deferred Compensation Plan, as
amended and restated effective January 1, 1998.
5 Opinion of Gibson, Dunn & Crutcher LLP.
23.1 Consent of KPMG Peat Marwick LLP, independent auditors.
23.2 Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit 5
hereto).
24 Power of Attorney (contained on signature page hereto).
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
6
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(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
7
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for a filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, on
December 3, 1997.
WESTERN DIGITAL CORPORATION
By: /s/ CHARLES A. HAGGERTY
------------------------------------
Charles A. Haggerty
Chairman of the Board, President and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
CHARLES A. HAGGERTY and MICHAEL A. CORNELIUS his or her true and lawful
attorneys-in-fact and agents, each acting alone, with full powers of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as full to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming that all said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the date indicated.
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<CAPTION>
SIGNATURE TITLE DATE
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<S> <C> <C>
/s/ CHARLES A. HAGGERTY
- ----------------------- Chairman of the Board, President and December 3, 1997
Charles A. Haggerty Chief Executive Officer (Principal
Executive Officer)
/s/ DUSTON M. WILLIAMS
- ----------------------- Senior Vice President, Finance and December 3, 1997
Duston M. Williams Chief Financial Officer (Principal
Financial and Accounting Officer)
/s/ JAMES A. ABRAHAMSON
- ----------------------- Director
James A. Abrahamson December 3, 1997
/s/ PETER D. BEHRENDT
- ----------------------- Director
Peter D. Behrendt December 3, 1997
/s/ I.M. BOOTH
- ----------------------- Director
I.M. Booth December 3, 1997
/s/ IRWIN FEDERMAN
- ----------------------- Director
Irwin Federman December 3, 1997
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ ANDRE R. HORN
- ---------------------- Director
Andre R. Horn December 3, 1997
- ---------------------- Director
Anne O. Krueger __________, 1997
- ---------------------- Director
Thomas E. Pardun __________, 1997
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit 3.4.1 to
the Company's Quarterly Report on Form 10-Q for the
quarter ended March 29, 1997, as filed with the
Securities and Exchange Commission on May 9, 1997).
4.2 Bylaws of the Company (incorporated by reference to
Exhibit 3.2.2 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 29, 1997, as filed with
the Securities and Exchange Commission on May 9, 1997).
4.3 Western Digital Corporation Deferred Compensation Plan,
as amended and restated effective January 1, 1998.
5 Opinion of Gibson, Dunn & Crutcher LLP.
23.1 Consent of KPMG Peat Marwick LLP, independent auditors.
23.2 Consent of Gibson, Dunn & Crutcher LLP (contained in
Exhibit 5 hereto).
24 Power of Attorney (contained on signature page hereto).
</TABLE>
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WESTERN DIGITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
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EXHIBIT 4.3
AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1998
COPYRIGHT (C) 1997
BY COMPENSATION RESOURCE GROUP, INC.
ALL RIGHTS RESERVED
<PAGE> 2
WESTERN DIGITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
PURPOSE......................................................................1
ARTICLE 1 DEFINITIONS....................................................1
ARTICLE 2 SELECTION, ENROLLMENT, ELIGIBILITY.............................7
2.1 SELECTION BY COMMITTEE.........................................7
2.2 ENROLLMENT REQUIREMENTS........................................8
2.3 ELIGIBILITY; COMMENCEMENT OF PARTICIPATION.....................8
2.4 TERMINATION OF PARTICIPATION AND/OR DEFERRALS..................8
ARTICLE 3 DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING TAXES..........8
3.1 MINIMUM DEFERRALS..............................................8
3.2 MAXIMUM DEFERRAL...............................................9
3.3 ELECTION TO DEFER; EFFECT OF ELECTION FORM.....................9
3.4 WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS........................10
3.5 ANNUAL COMPANY CONTRIBUTION AMOUNT............................10
3.6 INVESTMENT OF TRUST ASSETS....................................10
3.7 VESTING.......................................................11
3.8 CREDITING/DEBITING OF ACCOUNT BALANCES........................11
3.9 FICA AND OTHER TAXES..........................................14
3.10 DISTRIBUTIONS.................................................14
ARTICLE 4 SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES;
WITHDRAWAL ELECTION...........................................15
4.1 SHORT-TERM PAYOUT.............................................15
4.2 OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM................15
4.3 WITHDRAWAL PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL
EMERGENCIES...................................................15
4.4 WITHDRAWAL ELECTION...........................................15
ARTICLE 5 RETIREMENT BENEFIT............................................16
5.1 RETIREMENT BENEFIT............................................16
5.2 PAYMENT OF RETIREMENT BENEFIT.................................16
5.3 DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT...............16
</TABLE>
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WESTERN DIGITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================
<TABLE>
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PAGE
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<S> <C> <C>
ARTICLE 6 PRE-RETIREMENT SURVIVOR BENEFIT...............................17
6.1 PRE-RETIREMENT SURVIVOR BENEFIT...............................17
6.2 PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT....................17
ARTICLE 7 TERMINATION BENEFIT...........................................17
7.1 TERMINATION BENEFIT...........................................17
7.2 PAYMENT OF TERMINATION BENEFIT................................17
ARTICLE 8 DISABILITY WAIVER AND BENEFIT.................................18
8.1 DISABILITY WAIVER.............................................18
8.2 CONTINUED ELIGIBILITY; DISABILITY BENEFIT.....................18
ARTICLE 9 BENEFICIARY DESIGNATION.......................................19
9.1 BENEFICIARY...................................................19
9.2 BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT..............19
9.3 ACKNOWLEDGEMENT...............................................19
9.4 NO BENEFICIARY DESIGNATION....................................19
9.5 DOUBT AS TO BENEFICIARY.......................................19
9.6 DISCHARGE OF OBLIGATIONS......................................20
ARTICLE 10 LEAVE OF ABSENCE..............................................20
10.1 PAID LEAVE OF ABSENCE.........................................20
10.2 UNPAID LEAVE OF ABSENCE.......................................20
ARTICLE 11 TERMINATION, AMENDMENT OR MODIFICATION........................20
11.1 TERMINATION...................................................20
11.2 AMENDMENT.....................................................21
11.3 PLAN AGREEMENT................................................21
11.4 EFFECT OF PAYMENT.............................................22
ARTICLE 12 ADMINISTRATION................................................22
12.1 COMMITTEE DUTIES..............................................22
12.2 AGENTS........................................................22
12.3 BINDING EFFECT OF DECISIONS...................................22
12.4 INDEMNITY OF COMMITTEE........................................22
12.5 EMPLOYER INFORMATION..........................................22
</TABLE>
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 13 OTHER BENEFITS AND AGREEMENTS.................................23
13.1 COORDINATION WITH OTHER BENEFITS..............................23
ARTICLE 14 CLAIMS PROCEDURES.............................................23
14.1 PRESENTATION OF CLAIM.........................................23
14.2 NOTIFICATION OF DECISION......................................23
14.3 REVIEW OF A DENIED CLAIM......................................24
14.4 DECISION ON REVIEW............................................24
14.5 LEGAL ACTION..................................................24
ARTICLE 15 TRUST.........................................................24
15.1 ESTABLISHMENT OF THE TRUST....................................24
15.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUST...................25
15.3 DISTRIBUTIONS FROM THE TRUST..................................25
ARTICLE 16 MISCELLANEOUS.................................................25
16.1 STATUS OF PLAN................................................25
16.2 UNSECURED GENERAL CREDITOR....................................25
16.3 EMPLOYER'S LIABILITY..........................................25
16.4 NONASSIGNABILITY..............................................25
16.5 NOT A CONTRACT OF EMPLOYMENT..................................26
16.6 FURNISHING INFORMATION........................................26
16.7 TERMS.........................................................26
16.8 CAPTIONS......................................................26
16.9 GOVERNING LAW.................................................26
16.10 NOTICE........................................................26
16.11 SUCCESSORS....................................................27
16.12 SPOUSE'S INTEREST.............................................27
16.13 VALIDITY......................................................27
16.14 INCOMPETENT...................................................27
16.15 COURT ORDER...................................................27
16.16 DISTRIBUTION IN THE EVENT OF TAXATION.........................28
16.17 INSURANCE.....................................................28
16.18 LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL..........28
</TABLE>
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WESTERN DIGITAL CORPORATION
DEFERRED COMPENSATION PLAN
Amended and Restated
Effective January 1, 1998
PURPOSE
The purpose of this Plan is to provide specified benefits to a select
group of management and highly compensated Employees and Directors who
contribute materially to the continued growth, development and future business
success of Western Digital Corporation a Delaware corporation, and its
subsidiaries, if any, that sponsor this Plan. This Plan shall be unfunded for
tax purposes and for purposes of Title I of ERISA. The Plan was originally
adopted effective May 16, 1994, previously amended and restated effective
January 9, 1997, and is hereby amended and restated in its entirety effective
January 1, 1998.
ARTICLE 1 DEFINITIONS
DEFINITIONS
For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
1.1 "Account Balance" shall mean, with respect to a Participant, a credit on
the records of the Employer equal to the sum of (i) the Deferral Account
balance and (ii) the Company Contribution Account balance. The Account
Balance, and each other specified account balance, shall be a
bookkeeping entry only and shall be utilized solely as a device for the
measurement and determination of the amounts to be paid to a
Participant, or his or her designated Beneficiary, pursuant to this
Plan.
1.2 "Annual Bonus" shall mean any compensation, in addition to Base Annual
Salary relating to services performed during any calendar year, whether
or not paid in such calendar year or included on the Federal Income Tax
Form W-2 for such calendar year, payable to a Participant as an Employee
under the Management Incentive Compensation Plan, Profit Sharing Plan
(Cash Element) or Long-Term Incentive Plan.
1.3 "Annual Company Contribution Amount" shall mean, for any one Plan Year,
the amount determined in accordance with Section 3.5.
1.4 "Annual Deferral Amount" shall mean that portion of a Participant's Base
Annual Salary, Annual Bonus and Directors Fees that a Participant elects
to have, and is deferred, in
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accordance with Article 3, for any one Plan Year. In the event of a
Participant's Retirement, Disability (if deferrals cease in accordance
with Section 8.1), death or a Termination of Employment prior to the end
of a Plan Year, such year's Annual Deferral Amount shall be the actual
amount withheld prior to such event.
1.5 "Annual Installment Method" shall be an annual installment payment over
the number of years selected by the Participant in accordance with this
Plan, calculated as follows: The vested Account Balance of the
Participant shall be calculated as of the close of business on the last
business day of the year. The annual installment shall be calculated by
multiplying this balance by a fraction, the numerator of which is one,
and the denominator of which is the remaining number of annual payments
due the Participant. By way of example, if the Participant elects a 10
year Annual Installment Method, the first payment shall be 1/10 of the
vested Account Balance, calculated as described in this definition. The
following year, the payment shall be 1/9 of the vested Account Balance,
calculated as described in this definition. Each annual installment
shall be paid on or as soon as practicable after the last business day
of the applicable year.
1.6 "Base Annual Salary" shall mean the annual cash compensation relating to
services performed during any calendar year, whether or not paid in such
calendar year or included on the Federal Income Tax Form W-2 for such
calendar year, excluding bonuses, commissions, overtime, fringe
benefits, stock options, relocation expenses, incentive payments,
non-monetary awards, directors fees and other fees, automobile and other
allowances paid to a Participant for employment services rendered
(whether or not such allowances are included in the Employee's gross
income). Base Annual Salary shall be calculated before reduction for
compensation voluntarily deferred or contributed by the Participant
pursuant to all qualified or non-qualified plans of any Employer and
shall be calculated to include amounts not otherwise included in the
Participant's gross income under Code Sections 125, 402(e)(3), 402(h),
or 403(b) pursuant to plans established by any Employer; provided,
however, that all such amounts will be included in compensation only to
the extent that, had there been no such plan, the amount would have been
payable in cash to the Employee.
1.7 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, that are entitled to
receive benefits under this Plan upon the death of a Participant.
1.8 "Beneficiary Designation Form" shall mean the form established from time
to time by the Committee that a Participant completes, signs and returns
to the Committee to designate one or more Beneficiaries.
1.9 "Board" shall mean the board of directors of the Company.
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1.10 "Change in Control" shall mean the first to occur of any of the
following events:
(a) Any person (other than an Exempt Person), alone or together with
its Affiliates and Associates, including any group of Persons
which is deemed a "person" under Section 13(d)(3) of the Exchange
Act, becomes the Beneficial Owner, directly or indirectly, of
thirty-three and one-third percent or more of (i) the
then-outstanding shares of the Company's common stock or (ii)
securities representing thirty-three and one-third percent or
more of the combined voting power of the Company's then
outstanding voting securities;
(b) A change, during any period of two consecutive years, of a
majority of the Board of the Company as constituted as of the
beginning of such period, unless the election, or nomination for
election by the Company's stockholders, of each director who was
not a director at the beginning of such period was approved by
vote of at least two-thirds of the Incumbent Directors then in
office (for purposes hereof, "Incumbent Directors" shall consist
of the directors holding office as of the effective date of this
Plan and any person becoming a director subsequent to such date
whose election, or nomination for election by the Company's
stockholders, is approved by a vote of at least a majority of the
incumbent Directors then in office);
(c) Consummation of any merger, consolidation, reorganization or
other extraordinary transactions (or series of related
transactions) involving the Company which results in the
stockholders of the Company having power to vote in the ordinary
election of directors immediately prior to such transaction (or
series of related transactions) failing to beneficially own at
least a majority of the securities of the Company having the
power to vote in the ordinary election of directors which are
outstanding after giving effect to such transaction (or series of
related transactions); or
(d) The stockholders of the Company approve a plan of complete
liquidation of the Company or the sale of substantially all of
the assets of the Company; or
(e) Substantially all of the assets of the Company are sold or
otherwise transferred to parties that are not within a
"controlled group of corporations" (as defined in Code Section
1563) in which the Company is a member.
1.11 "Claimant" shall have the meaning set forth in Section 14.1.
1.12 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
1.13 "Committee" shall mean the committee described in Article 12.
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1.14 "Company" shall mean Western Digital Corporation a Delaware corporation,
and any successor to all or substantially all of the Company's assets or
business.
1.15 "Company Common Stock" shall mean authorized and unissued shares or
treasury shares of the Company's common stock.
1.16 "Company Contribution Account" shall mean (i) the sum of the
Participant's Annual Company Contribution Amounts, plus (ii) amounts
credited in accordance with all the applicable crediting provisions of
this Plan that relate to the Participant's Company Contribution Account,
less (iii) all distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the Participant's
Company Contribution Account.
1.17 "Deduction Limitation" shall mean the following described limitation on
a benefit that may otherwise be distributable pursuant to the provisions
of this Plan. Except as otherwise provided, this limitation shall be
applied to all distributions that are "subject to the Deduction
Limitation" under this Plan. If an Employer determines in good faith
prior to a Change in Control that there is a reasonable likelihood that
any compensation paid to a Participant for a taxable year of the
Employer would not be deductible by the Employer solely by reason of the
limitation under Code Section 162(m), then to the extent deemed
necessary by the Employer to ensure that the entire amount of any
distribution to the Participant pursuant to this Plan prior to the
Change in Control is deductible, the Employer may defer all or any
portion of a distribution under this Plan. Any amounts deferred pursuant
to this limitation shall continue to be credited/debited with additional
amounts in accordance with Section 3.8 below, even if such amount is
being paid out in installments. The amounts so deferred and amounts
credited thereon shall be distributed to the Participant or his or her
Beneficiary (in the event of the Participant's death) at the earliest
possible date, as determined by the Employer in good faith, on which the
deductibility of compensation paid or payable to the Participant for the
taxable year of the Employer during which the distribution is made will
not be limited by Section 162(m), or if earlier, the effective date of a
Change in Control. Notwithstanding anything to the contrary in this
Plan, the Deduction Limitation shall not apply to any distributions made
after a Change in Control.
1.18 "Deferral Account" shall mean (i) the sum of all of a Participant's
Annual Deferral Amounts, plus (ii) amounts credited in accordance with
all the applicable crediting provisions of this Plan that relate to the
Participant's Deferral Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate
to his or her Deferral Account.
1.19 "Director" shall mean any member of the board of directors of any
Employer.
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1.20 "Directors Fees" shall mean the annual fees paid by any Employer,
including retainer fees and meetings fees, as compensation for serving
on the board of directors and, after January 8, 1997, shall include
Directors Fees (Stock Element).
1.21 "Directors Fees (Stock Element)" shall mean that portion of Directors
Fees paid in the form of shares of Company Common Stock and granted to
Non-Employee Directors on a mandatory or elective basis under the terms
of the Stock Plan after January 8, 1997.
1.22 "Disability" shall mean a period of disability during which a
Participant qualifies for permanent disability benefits under the
Participant's Employer's long-term disability plan, or, if a Participant
does not participate in such a plan, a period of disability during which
the Participant would have qualified for permanent disability benefits
under such a plan had the Participant been a participant in such a plan,
as determined in the sole discretion of the Committee. If the
Participant's Employer does not sponsor such a plan, or discontinues to
sponsor such a plan, Disability shall be determined by the Committee in
its sole discretion.
1.23 "Disability Benefit" shall mean the benefit set forth in Article 8.
1.24 "Election Form" shall mean the form established from time to time by the
Committee that a Participant completes, signs and returns to the
Committee to make an election under the Plan.
1.25 "Employee" shall mean a person who is an employee of any Employer.
1.26 "Employer(s)" shall mean the Company and/or any of its subsidiaries (now
in existence or hereafter formed or acquired) that have been selected by
the Board to participate in the Plan and have adopted the Plan as a
sponsor.
1.27 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
1.28 "First Plan Year" shall mean the period beginning May 16, 1994 and
ending December 31, 1994.
1.29 "Long-Term Incentive Plan" shall mean the Western Digital Corporation
Long-Term Incentive Plan.
1.30 "Management Incentive Plan" shall mean the Western Digital Corporation
Management Incentive Plan.
1.31 "Participant" shall mean any Employee or Director (i) who is selected to
participate in the Plan, (ii) who elects to participate in the Plan,
(iii) who signs a Plan Agreement, an
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Election Form and a Beneficiary Designation Form, (iv) whose signed Plan
Agreement, Election Form and Beneficiary Designation Form are accepted
by the Committee, (v) who commences participation in the Plan, and (vi)
whose Plan Agreement has not terminated. A spouse or former spouse of a
Participant shall not be treated as a Participant in the Plan or have an
account balance under the Plan, even if he or she has an interest in the
Participant's benefits under the Plan as a result of applicable law or
property settlements resulting from legal separation or divorce.
1.32 "Plan" shall mean the Western Digital Corporation Deferred Compensation
Plan, originally adopted effective May 16, 1994, amended and restated in
its entirety January 9, 1997, and further amended and restated in its
entirety effective January 1, 1998, which shall be evidenced by this
instrument and by each Plan Agreement, as they may be amended from time
to time.
1.33 "Plan Agreement" shall mean a written agreement, as may be amended from
time to time, which is entered into by and between an Employer and a
Participant. Each Plan Agreement executed by a Participant and the
Participant's Employer shall provide for the entire benefit to which
such Participant is entitled under the Plan; should there be more than
one Plan Agreement, the Plan Agreement bearing the latest date of
acceptance by the Employer shall supersede all previous Plan Agreements
in their entirety and shall govern such entitlement. The terms of any
Plan Agreement may be different for any Participant, and any Plan
Agreement may provide additional benefits not set forth in the Plan or
limit the benefits otherwise provided under the Plan; provided, however,
that any such additional benefits or benefit limitations must be agreed
to by both the Employer and the Participant.
1.34 "Plan Year" shall, except for the First Plan Year, mean a period
beginning on January 1 of each calendar year and continuing through
December 31 of such calendar year.
1.35 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
1.36 "Profit Sharing Plan (Cash Element)" shall mean the portion of the
Western Digital Corporation Profit Sharing Plan which, in accordance
with its terms, pays benefits in cash.
1.37 "Retirement", "Retire(s)" or "Retired" shall mean, with respect to an
Employee, severance from employment from all Employers for any reason
other than a leave of absence, death or Disability on or after the
attainment of age fifty-five (55); and shall mean with respect to a
Director who is not an Employee, severance of his or her directorships
with all Employers on or after the later of (a) the attainment of age
seventy (70), or (b) in the sole discretion of the Committee, an age
later than age seventy (70). If a Participant is both an Employee and a
Director, Retirement shall not occur until he or she Retires as both an
Employee and a Director, which Retirement shall be deemed to be a
Retirement as a Director; provided, however, that such a Participant may
elect, at least three years prior to Retirement and in
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accordance with the policies and procedures established by the
Committee, to Retire for purposes of this Plan at the time he or she
Retires as an Employee, which Retirement shall be deemed to be a
Retirement as an Employee.
1.38 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.39 "Short-Term Payout" shall mean the payout set forth in Section 4.1.
1.40 "Stock Plan" shall mean the Western Digital Corporation Non-Employee
Directors Stock-For-Fees Plan, as amended and restated effective January
9, 1997.
1.41 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.42 "Termination of Employment" shall mean the severing of employment with
all Employers, or service as a Director of all Employers, voluntarily or
involuntarily, for any reason other than Retirement, Disability, death
or an authorized leave of absence. If a Participant is both an Employee
and a Director, a Termination of Employment shall occur only upon the
termination of the last position held; provided, however, that such a
Participant may elect, at least three years before Termination of
Employment and in accordance with the policies and procedures
established by the Committee, to be treated for purposes of this Plan as
having experienced a Termination of Employment at the time he or she
ceases employment with an Employer as an Employee.
1.43 "Trust" shall mean one or more trusts established pursuant to that
certain Master Trust Agreement, dated as of May 16, 1994 between the
Company and the trustee named therein, as amended from time to time.
1.44 "Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the
Participant that would result in severe financial hardship to the
Participant resulting from (i) a sudden and unexpected illness or
accident of the Participant or a dependent of the Participant, (ii) a
loss of the Participant's property due to casualty, or (iii) such other
extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the
sole discretion of the Committee.
ARTICLE 2
SELECTION, ENROLLMENT, ELIGIBILITY
2.1 SELECTION BY COMMITTEE. Participation in the Plan shall be limited to a
select group of management and highly compensated Employees and
Directors of the Employers, as determined by the Committee in its sole
discretion. From that group, the Committee shall select, in its sole
discretion, Employees and Directors to participate in the Plan.
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2.2 ENROLLMENT REQUIREMENTS. As a condition to participation, for the First
Plan Year, each selected Employee or Director shall complete, execute
and return to the Committee any time prior to May 16, 1994, a Plan
Agreement, an Election Form and a Beneficiary Designation Form.
Individuals initially selected to participate after May 16, 1994 may
commence participation by completing, executing and returning to the
Committee a Plan Agreement, an Election Form and a Beneficiary
Designation Form, all within 30 days of selection. In addition, the
Committee shall establish from time to time such other enrollment
requirements as it determines in its sole discretion are necessary.
2.3 ELIGIBILITY; COMMENCEMENT OF PARTICIPATION. Provided an Employee or
Director selected to participate in the Plan has met all enrollment
requirements set forth in this Plan and required by the Committee,
including returning all required documents to the Committee within the
specified time period, that Employee or Director shall commence
participation in the Plan on May 16, 1994, or, in the case of those
selected for participation after that date, the May 1, or January 1
immediately following the date in which the Employee or Director
completes all enrollment requirements, provided that a Director who is
elected or appointed other than at an annual stockholders meeting may
commence participation on the date he or she joins the Board, subject to
new elections for each succeeding Plan Year pursuant to Section 3.3. If
an Employee or a Director fails to meet all such requirements within the
period required, in accordance with Section 2.2, that Employee or
Director shall not be eligible to participate in the Plan until the
first day of the Plan Year following the delivery to and acceptance by
the Committee of the required documents.
2.4 TERMINATION OF PARTICIPATION AND/OR DEFERRALS. If the Committee
determines in good faith that a Participant no longer qualifies as a
member of a select group of management or highly compensated employees,
as membership in such group is determined in accordance with Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall have the
right, in its sole discretion, to (i) terminate any deferral election
the Participant has made for the remainder of the Plan Year in which the
Participant's membership status changes, (ii) prevent the Participant
from making future deferral elections and/or (iii) immediately
distribute the Participant's then vested Account Balance as a
Termination Benefit and terminate the Participant's participation in the
Plan.
ARTICLE 3
DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING TAXES
3.1 MINIMUM DEFERRALS.
(a) BASE ANNUAL SALARY, ANNUAL BONUS AND DIRECTOR'S FEES. For each
Plan Year, a Participant may elect to defer, as his or her Annual
Deferral Amount, Base Annual
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Salary, Annual Bonus and/or Director's Fees in the following
minimum amounts for each deferral elected:
<TABLE>
<CAPTION>
<S> <C>
DEFERRAL MINIMUM AMOUNT
Base Annual Salary $2,000
Annual Bonus $2,000
Directors Fees $ 0
</TABLE>
If an election is made for less than stated minimum amounts, or
if no election is made, the amount deferred shall be zero.
(b) SHORT PLAN YEAR. Notwithstanding the foregoing, if a Participant
first becomes a Participant after the first day of a Plan Year,
or in the case of the First Plan Year of the Plan, the minimum
Base Annual Salary deferral shall be an amount equal to the
minimum set forth above, multiplied by a fraction, the numerator
of which is the number of complete months remaining in the Plan
Year and the denominator of which is 12.
3.2 MAXIMUM DEFERRAL.
(a) BASE ANNUAL SALARY, ANNUAL BONUS AND DIRECTORS FEES. For each
Plan Year, a Participant may elect to defer, as his or her Annual
Deferral Amount, Base Annual Salary, Annual Bonus and/or
Directors Fees up to the following maximum percentages for each
deferral elected:
<TABLE>
<CAPTION>
DEFERRAL MAXIMUM AMOUNT
<S> <C>
Base Annual Salary 100%
Annual Bonus 100%
Directors Fees 100%
</TABLE>
(b) Notwithstanding the foregoing, if a Participant first becomes a
Participant after the first day of a Plan Year, or in the case of
the First Plan Year, the maximum Annual Deferral Amount, with
respect to Base Annual Salary, Annual Bonus and Directors Fees
shall be limited to the amount of compensation not yet earned by
the Participant as of the date the Participant submits a Plan
Agreement and Election Form to the Committee for acceptance.
3.3 ELECTION TO DEFER; EFFECT OF ELECTION FORM.
(a) FIRST PLAN YEAR. In connection with a Participant's commencement
of participation in the Plan, the Participant shall make an
irrevocable deferral election for the Plan Year in which the
Participant commences participation in the Plan, along with such
other elections as the Committee deems necessary or desirable
under the Plan. For
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these elections to be valid, the Election Form must be completed
and signed by the Participant, timely delivered to the Committee
(in accordance with Section 2.2 above) and accepted by the
Committee.
(b) SUBSEQUENT PLAN YEARS. For each succeeding Plan Year, an
irrevocable deferral election for that Plan Year, and such other
elections as the Committee deems necessary or desirable under the
Plan, shall be made by timely delivering to the Committee, in
accordance with its rules and procedures, before the end of the
Plan Year preceding the Plan Year for which the election is made,
a new Election Form; provided that any deferral election in
respect of Directors Fees for the 1997 Plan Year may be made on
or before January 31, 1997. If no such Election Form is timely
delivered for a Plan Year, the Annual Deferral Amount shall be
zero for that Plan Year.
3.4 WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS. For each Plan Year, the Base
Annual Salary portion of the Annual Deferral Amount shall be withheld
from each regularly scheduled Base Annual Salary payroll in equal
amounts, as adjusted from time to time for increases and decreases in
Base Annual Salary. The Annual Bonus and/or Directors Fees portion of
the Annual Deferral Amount shall be withheld at the time the Annual
Bonus or Directors Fees are or otherwise would be paid to the
Participant, whether or not this occurs during the Plan Year itself.
3.5 ANNUAL COMPANY CONTRIBUTION AMOUNT. For each Plan Year, the Board, in
its sole discretion, may, but is not required to, credit any amount it
desires to any Participant's Company Contribution Account under this
Plan, which amount shall be for that Participant the Annual Company
Contribution Amount for that Plan Year. The amount so credited to a
Participant may be smaller or larger than the amount credited to any
other Participant, and the amount credited to any Participant for a Plan
Year may be zero, even though one or more other Participants receive an
Annual Company Contribution Amount for that Plan Year. The Annual
Company Contribution Amount, if any, shall be credited as of the last
day of the Plan Year. If a Participant is not employed by an Employer as
of the last day of a Plan Year other than by reason of his or her
Retirement or death while employed, the Annual Company Contribution
Amount for that Plan Year shall be zero. Notwithstanding the foregoing,
the Company shall credit to the Account Balances of Participants who are
non-employee Directors an Annual Company Contribution Amount each Plan
Year representing the 15 percent premium awarded under Section 7(b) of
the Stock Plan (the "Premium Award"), which amount shall be credited at
such times as the Company shall determine.
3.6 INVESTMENT OF TRUST ASSETS. The Trustee of the Trust shall be
authorized, upon written instructions received from the Committee or
investment manager appointed by the
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Committee, to invest and reinvest the assets of the Trust in accordance
with the applicable Trust Agreement, including the disposition of stock
and reinvestment of the proceeds in one or more investment vehicles
designated by the Committee.
3.7 VESTING.
(a) A Participant shall at all times be 100% vested in his or her
Deferral Account.
(b) Except as otherwise provided in this Section 3.7, a Participant
shall be vested in his or her Company Contribution Account in
accordance with the provisions governing employer contributions
under the Company's qualified 401(k) plan.
(c) A Participant shall at all times be 100% vested in the portion of
his or her Deferral Account attributable to the Premium Award(s).
(d) Notwithstanding anything to the contrary contained in this
Section 3.7, in the event of his or her Retirement, Disability or
a Change in Control, a Participant's Company Contribution Account
shall immediately become 100% vested (if it is not already vested
in accordance with this Section 3.7).
3.8 CREDITING/DEBITING OF ACCOUNT BALANCES. In accordance with, and subject
to, the rules and procedures that are established from time to time by
the Committee, in its sole discretion, amounts shall be credited or
debited to a Participant's Account Balance in accordance with the
following rules:
(a) ELECTION OF MEASUREMENT FUNDS. Except as otherwise provided in
Section 3.8 (d) or Section 3.8(e) below, a Participant, in
connection with his or her initial deferral election in
accordance with Section 3.3(a) above, shall elect, on the
Election Form, one or more Measurement Fund(s) (as described in
Section 3.8(c) below) to be used to determine the additional
amounts to be credited to his or her Account Balance for the
first day thereof in which the Participant commences
participation in the Plan and continuing thereafter for each
subsequent day in which the Participant participates in the Plan,
unless changed in accordance with the next sentence. Except as
otherwise provided in Section 3.8(d) or Section 3.8(e) below,
commencing with the first day that follows the Participant's
commencement of participation in the Plan and continuing
thereafter for each subsequent day in which the Participant
participates in the Plan, no later than the prior business day,
the Participant may (but is not required to) elect, by submitting
an Election Form to the Committee that is accepted by the
Committee, to add or delete one or more Measurement Fund(s) to be
used to determine the additional amounts to be credited to his or
her Account Balance, or to change the portion of his or her
Account Balance allocated to each previously or newly elected
Measurement Fund;
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provided, however, that a Participant may make no more than two
(2) such elections each Plan Year. If an election is made in
accordance with the previous sentence, it shall apply to the next
day and continue thereafter for each subsequent day in which the
Participant participates in the Plan, unless changed in
accordance with the previous sentence.
(b) PROPORTIONATE ALLOCATION. In making any election described in
Section 3.8(a) above, the Participant shall specify on the
Election Form, in increments of five percentage points (5%), the
percentage of his or her Account Balance to be allocated to a
Measurement Fund (as if the Participant was making an investment
in that Measurement Fund with that portion of his or her Account
Balance and Annual Deferral Amount).
(c) MEASUREMENT FUNDS. Except as otherwise provided in Section 3.8(d)
or Section 3.8(e) below, the Participant may elect one or more of
the following measurement funds, based on certain mutual funds
(the "Measurement Funds"), for the purpose of crediting
additional amounts to his or her Account Balance:
(1) Fidelity VIP Money Market Portfolio (described as a mutual
fund seeking a high level of current income as is
consistent with preserving capital and providing
liquidity);
(2) Fidelity VIP II Index 500 Portfolio (described as a mutual
fund which seeks to achieve investment results
corresponding to the total return of common stocks
publicly traded in the United States);
(3) Neuberger & Berman Management Inc. AMT Partners Portfolio
(described as a mutual fund which seeks long-term growth
of capital primarily through investments in common
stocks);
(4) Fred Alger Management Inc. Small Capitalization Portfolio
(described as a mutual fund which seeks long-term growth
of capital primarily through investments in small
capitalization common stocks); and
(5) Declared Rate Fund (described as a fund which is credited
with interest at a fixed rate declared as an annual rate
for each Plan Year by the Company prior to the beginning
of the Plan Year).
As necessary, the Committee may, in its sole discretion,
discontinue, substitute or add a Measurement Fund. Each such
action will take effect as of the first day of the calendar
quarter that follows by thirty (30) days the day on which the
Committee gives Participants advance written notice of such
change.
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(d) MINIMUM PERCENTAGE FOR DECLARED RATE MEASUREMENT FUND.
Notwithstanding any provision of this Plan, other than Section
3.8(e) below, that may be construed to the contrary, effective
January 1, 1998, a Participant's Account Balance as of such date
shall be allocated to the Declared Rate Measurement Fund. Except
as otherwise provided in Section 3.8(e) below, effective January
2, 1998, at all times during a Plan Year, a Participant must
allocate a minimum percentage of his or her existing Account
Balance and Annual Deferral Amount to the Declared Rate
Measurement Fund (the "Minimum Percentage"). The Minimum
Percentage for a Plan Year (i) must be fifty percent (50%) for
the 1998 Plan Year, (ii) must be determined by the Committee, in
its sole discretion, and announced prior to the beginning of any
other Plan Year, (iii) may be higher or lower than the Minimum
Percentage for any other Plan Year and (iv) may be zero for any
other Plan Year.
(e) COMPANY STOCK MEASUREMENT FUND FOR DIRECTORS' FEES (STOCK
ELEMENT). Notwithstanding any provision of this Plan that may be
construed to the contrary, the portion of a Participant's
Deferral Account balance attributable to his or her deferral of
Directors' Fees (Stock Element) and the portion of a
Participant's Company Contribution Account balance attributable
to the Premium Award(s), as that term is defined in Section 3.5
above, must be (i) deemed invested at all times prior to
distribution in the Company Stock Measurement Fund and (ii)
distributed, in the form of Company Common Stock, as a lump sum
at the time distribution to the Participant or his or her
Beneficiary(ies) is to commence. For purposes of this Section
3.8(e), the Company Stock Measurement Fund is described as a fund
which shall be credited or debited with investment results
corresponding to the total return of Company Common Stock.
(f) CREDITING OR DEBITING METHOD. The performance of each elected
Measurement Fund (either positive or negative) will be determined
by the Committee, in its reasonable discretion, based on the
performance of the Measurement Funds themselves. A Participant's
Account Balance shall be credited or debited on a daily basis
based on the performance of each Measurement Fund selected by the
Participant, as determined by the Committee in its sole
discretion, as though (i) a Participant's Account Balance were
invested in the Measurement Fund(s) selected by the Participant,
in the percentages applicable to such calendar date, at the
closing price on such date; (ii) the portion of the Annual
Deferral Amount that was actually deferred during any calendar
date were invested in the Measurement Fund(s) selected by the
Participant, in the percentages applicable to such calendar date,
no later than the close of business on the third business day
after the day on which such amounts are actually deferred from
the Participant's Base Annual Salary through reductions in his or
her payroll, at the closing price on such date; and (iii) any
distribution made to a Participant that decreases such
Participant's Account
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Balance ceased being invested in the Measurement Fund(s), in the
percentages applicable to such calendar date, no earlier than
three business days prior to the distribution, at the closing
price on such date.
(g) NO ACTUAL INVESTMENT. Notwithstanding any other provision of this
Plan that may be interpreted to the contrary, the Measurement
Funds are to be used for measurement purposes only, and a
Participant's election of any such Measurement Fund, the
allocation to his or her Account Balance thereto, the calculation
of additional amounts and the crediting or debiting of such
amounts to a Participant's Account Balance shall not be
considered or construed in any manner as an actual investment of
his or her Account Balance in any such Measurement Fund. In the
event that the Company or the Trustee (as that term is defined in
the Trust), in its own discretion, decides to invest funds in any
or all of the Measurement Funds, no Participant shall have any
rights in or to such investments themselves. Without limiting the
foregoing, a Participant's Account Balance shall at all times be
a bookkeeping entry only and shall not represent any investment
made on his or her behalf by the Company or the Trust; the
Participant shall at all times remain an unsecured creditor of
the Company.
3.9 FICA AND OTHER TAXES
(a) ANNUAL DEFERRAL AMOUNTS. For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the
Participant's Employer(s) shall withhold from that portion of the
Participant's Base Annual Salary and Bonus that is not being
deferred, in a manner determined by the Employer(s), the
Participant's share of FICA and other employment taxes on such
Annual Deferral Amount. If necessary, the Committee may reduce
the Annual Deferral Amount in order to comply with this Section
3.9.
(b) ANNUAL COMPANY CONTRIBUTION AMOUNTS. When a participant becomes
vested in a portion of his or her Company Contribution Account,
the Participant's Employer(s) shall withhold from the
Participant's Base Annual Salary and/or Bonus that is not
deferred, in a manner determined by the Employer(s), the
Participant's share of FICA and other employment taxes. If
necessary, the Committee may reduce the vested portion of the
Participant's Company Contribution Account in order to comply
with this Section 3.9.
3.10 DISTRIBUTIONS. The Participant's Employer(s), or the trustee of the
Trust, shall withhold from any payments made to a Participant under this
Plan all federal, state and local income, employment and other taxes
required to be withheld by the Employer(s), or the trustee of the Trust,
in connection with such payments, in amounts and in a manner to be
determined in the sole discretion of the Employer(s) and the trustee of
the Trust.
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ARTICLE 4
SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES; WITHDRAWAL ELECTION
4.1 SHORT-TERM PAYOUT. In connection with each election to defer an
Annual Deferral Amount, a Participant may irrevocably elect to receive a
future "Short-Term Payout" from the Plan with respect to such Annual
Deferral Amount. Subject to the Deduction Limitation, the Short-Term
Payout shall be a lump sum payment in an amount that is equal to the
Annual Deferral Amount plus amounts credited or debited in the manner
provided in Section 3.9 above on that amount, determined at the time
that the Short-Term Payout becomes payable (rather than the date of a
Termination of Employment). Subject to the Deduction Limitation and the
other terms and conditions of this Plan, each Short-Term Payout elected
shall be paid within a 60 days after the first day of any Plan Year
designated by the Participant that is at least three Plan Years after
the Plan Year in which the Annual Deferral Amount is actually deferred.
Notwithstanding the foregoing, the Participant may irrevocably elect to
defer the distribution of a Short-Term Payout to the first 60 days of
another Plan Year designated by the Participant that is at least two
Plan Years after the Plan Year in which such Short-Term Payout would
otherwise be paid, provided such election is made no later than the
first day of the Plan Year immediately proceeding the Plan Year in which
the Short-Term Payout would otherwise be paid.
4.2 OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM. Should an event occur
that triggers a benefit under Article 5, 6, 7 or 8, any Annual Deferral
Amount, plus amounts credited or debited thereon, that is subject to a
Short-Term Payout election under Section 4.1 shall not be paid in
accordance with Section 4.1 but shall be paid in accordance with the
other applicable Article.
4.3 WITHDRAWAL PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL EMERGENCIES.
If the Participant experiences an Unforeseeable Financial Emergency, the
Participant may petition the Committee to (i) suspend any deferrals
required to be made by a Participant and/or (ii) receive a partial or
full payout from the Plan. The payout shall not exceed the lesser of the
Participant's vested Account Balance, calculated as if such Participant
were receiving a Termination Benefit, or the amount reasonably needed to
satisfy the Unforeseeable Financial Emergency. If, subject to the sole
discretion of the Committee, the petition for a suspension and/or payout
is approved, suspension shall take effect upon the date of approval and
any payout shall be made within 60 days of the date of approval. The
payment of any amount under this Section 4.3 shall not be subject to the
Deduction Limitation.
4.4 WITHDRAWAL ELECTION. A Participant (or, after a Participant's death, his
or her Beneficiary) may elect, at any time, to withdraw all of his or
her vested Account Balance, calculated as if there had occurred a
Termination of Employment as of the day of the election, less a
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withdrawal penalty equal to 10% of such amount (the net amount shall be
referred to as the "Withdrawal Amount"). This election can be made at
any time, before or after Retirement, Disability, death or Termination
of Employment, and whether or not the Participant (or Beneficiary) is in
the process of being paid pursuant to an installment payment schedule.
If made before Retirement, Disability or death, a Participant's
Withdrawal Amount shall be his or her Account Balance calculated as if
there had occurred a Termination of Employment as of the day of the
election. No partial withdrawals of the Withdrawal Amount shall be
allowed. The Participant (or his or her Beneficiary) shall make this
election by giving the Committee advance written notice of the election
in a form determined from time to time by the Committee. The Participant
(or his or her Beneficiary) shall be paid the Withdrawal Amount within
60 days of his or her election. Once the Withdrawal Amount is paid, the
Participant's participation in the Plan shall terminate and the
Participant shall not be eligible to participate in the Plan in the
future. The payment of this Withdrawal Amount shall not be subject to
the Deduction Limitation.
ARTICLE 5
RETIREMENT BENEFIT
5.1 RETIREMENT BENEFIT. Subject to the Deduction Limitation, a Participant
who Retires shall receive, as a Retirement Benefit, his or her vested
Account Balance.
5.2 PAYMENT OF RETIREMENT BENEFIT. A Participant, in connection with his or
her commencement of participation in the Plan, shall elect on an
Election Form to receive the Retirement Benefit in a lump sum or
pursuant to an Annual Installment Method of 5, 10, 15 or 20 years. The
Participant may annually change his or her election to an allowable
alternative payout period by submitting a new Election Form to the
Committee, provided that any such Election Form is submitted at least 3
years prior to the Participant's Retirement and is accepted by the
Committee in its sole discretion. The Election Form most recently
accepted by the Committee shall govern the payout of the Retirement
Benefit. If a Participant does not make any election with respect to the
payment of the Retirement Benefit, then such benefit shall be payable in
a lump sum. The lump sum payment shall be made, or installment payments
shall commence, no later than 60 days after the last day of the Plan
Year in which the Participant Retires. Any payment made shall be subject
to the Deduction Limitation.
5.3 DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT. If a Participant dies
after Retirement but before the Retirement Benefit is paid in full, the
Participant's unpaid Retirement Benefit payments shall continue and
shall be paid to the Participant's Beneficiary (a) over the remaining
number of years and in the same amounts as that benefit would have been
paid to the Participant had the Participant survived, or (b) in a lump
sum, if requested by
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the Beneficiary and allowed in the sole discretion of the Committee,
that is equal to the Participant's unpaid remaining vested Account
Balance.
ARTICLE 6
PRE-RETIREMENT SURVIVOR BENEFIT
6.1 PRE-RETIREMENT SURVIVOR BENEFIT. Subject to the Deduction Limitation,
the Participant's Beneficiary shall receive a Pre-Retirement Survivor
Benefit equal to the Participant's vested Account Balance if the
Participant dies before he or she Retires, experiences a Termination of
Employment or suffers a Disability.
6.2 PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT. A Participant, in connection
with his or her commencement of participation in the Plan, shall elect
on an Election Form whether the Pre-Retirement Survivor Benefit shall be
received by his or her Beneficiary in a lump sum or pursuant to an
Annual Installment Method of 5, 10, 15 or 20 years. The Participant may
annually change this election to an allowable alternative payout period
by submitting a new Election Form to the Committee, which form must be
accepted by the Committee in its sole discretion. The Election Form most
recently accepted by the Committee prior to the Participant's death
shall govern the payout of the Participant's Pre-Retirement Survivor
Benefit. If a Participant does not make any election with respect to the
payment of the Pre-Retirement Survivor Benefit, then such benefit shall
be paid in a lump sum. Despite the foregoing, if the Participant's
vested Account Balance at the time of his or her death is less than
$25,000, payment of the Pre-Retirement Survivor Benefit may be made, in
the sole discretion of the Committee, in a lump sum or pursuant to an
Annual Installment Method of not more than 5 years. The lump sum payment
shall be made, or installment payments shall commence, no later than 60
days after the last day of the Plan Year in which the Committee is
provided with proof that is satisfactory to the Committee of the
Participant's death. Any payment made shall be subject to the Deduction
Limitation.
ARTICLE 7
TERMINATION BENEFIT
7.1 TERMINATION BENEFIT. Subject to the Deduction Limitation, the
Participant shall receive a Termination Benefit, which shall be equal to
the Participant's vested Account Balance if a Participant experiences a
Termination of Employment prior to his or her Retirement, death or
Disability.
7.2 PAYMENT OF TERMINATION BENEFIT. The Termination of Employment shall be
paid in a lump sum within 60 days of the Termination of Employment.
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ARTICLE 8
DISABILITY WAIVER AND BENEFIT
8.1 DISABILITY WAIVER.
(a) WAIVER OF DEFERRAL. A Participant who is determined by the
Committee to be suffering from a Disability shall be excused from
fulfilling that portion of the Annual Deferral Amount commitment
that would otherwise have been withheld from a Participant's Base
Annual Salary, Annual Bonus and/or Directors Fees for the Plan
Year during which the Participant first suffers a Disability.
During the period of Disability, the Participant shall not be
allowed to make any additional deferral elections, but will
continue to be considered a Participant for all other purposes of
this Plan.
(b) RETURN TO WORK. If a Participant returns to employment, or
service as a Director, with an Employer, after a Disability
ceases, the Participant may elect to defer an Annual Deferral
Amount for the Plan Year following his or her return to
employment or service and for every Plan Year thereafter while a
Participant in the Plan; provided such deferral elections are
otherwise allowed and an Election Form is delivered to and
accepted by the Committee for each such election in accordance
with Section 3.3 above.
8.2 CONTINUED ELIGIBILITY; DISABILITY BENEFIT. A Participant suffering a
Disability shall, for benefit purposes under this Plan, continue to be
considered to be employed, or in the service of an Employer as a
Director, and shall be eligible for the benefits provided for in
Articles 4, 5, 6 or 7 in accordance with the provisions of those
Articles. Notwithstanding the above, the Committee shall have the right
to, in its sole and absolute discretion and for purposes of this Plan
only, and must in the case of a Participant who is otherwise eligible to
Retire, deem the Participant to have experienced a Termination of
Employment, or in the case of a Participant who is eligible to Retire,
to have Retired, at any time (or in the case of a Participant who is
eligible to Retire, as soon as practicable) after such Participant is
determined to be suffering a Disability, in which case the Participant
shall receive a Disability Benefit equal to his or her vested Account
Balance at the time of the Committee's determination; provided, however,
that should the Participant otherwise have been eligible to Retire, he
or she shall be paid in accordance with Article 5. The Disability
Benefit shall be paid in a lump sum within 60 days of the Committee's
exercise of such right. Any payment made shall be subject to the
Deduction Limitation.
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ARTICLE 9
BENEFICIARY DESIGNATION
9.1 BENEFICIARY. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as
contingent) to receive any benefits payable under the Plan to a
beneficiary upon the death of a Participant. The Beneficiary designated
under this Plan may be the same as or different from the Beneficiary
designation under any other plan of an Employer in which the Participant
participates.
9.2 BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT. A Participant shall
designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee or its
designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the
terms of the Beneficiary Designation Form and the Committee's rules and
procedures, as in effect from time to time. If the Participant names
someone other than his or her spouse as a Beneficiary, a spousal
consent, in the form designated by the Committee, must be signed by that
Participant's spouse and returned to the Committee. Upon the acceptance
by the Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The Committee shall be
entitled to rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his or her death.
9.3 ACKNOWLEDGMENT. No designation or change in designation of a Beneficiary
shall be effective until received and acknowledged in writing by the
Committee or its designated agent.
9.4 NO BENEFICIARY DESIGNATION. If a Participant fails to designate a
Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the
Participant's designated Beneficiary shall be deemed to be his or her
surviving spouse. If the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a Beneficiary shall be
payable to the executor or personal representative of the Participant's
estate.
9.5 DOUBT AS TO BENEFICIARY. If the Committee has any doubt as to the proper
Beneficiary to receive payments pursuant to this Plan, the Committee
shall have the right, exercisable in its discretion, to cause the
Participant's Employer to withhold such payments until this matter is
resolved to the Committee's satisfaction.
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9.6 DISCHARGE OF OBLIGATIONS. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to
the Participant, and that Participant's Plan Agreement shall terminate
upon such full payment of benefits.
ARTICLE 10
LEAVE OF ABSENCE
10.1 PAID LEAVE OF ABSENCE. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of absence
from the employment of the Employer, the Participant shall continue to
be considered employed by the Employer and the Annual Deferral Amount
shall continue to be withheld during such paid leave of absence in
accordance with Section 3.3.
10.2 UNPAID LEAVE OF ABSENCE. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave of absence
from the employment of the Employer, the Participant shall continue to
be considered employed by the Employer and the Participant shall be
excused from making deferrals until the earlier of the date the leave of
absence expires or the Participant returns to a paid employment status.
Upon such expiration or return, deferrals shall resume for the remaining
portion of the Plan Year in which the expiration or return occurs, based
on the deferral election, if any, made for that Plan Year. If no
election was made for that Plan Year, no deferral shall be withheld.
ARTICLE 11
TERMINATION, AMENDMENT OR MODIFICATION
11.1 TERMINATION. Although each Employer anticipates that it will continue
the Plan for an indefinite period of time, there is no guarantee that
any Employer will continue the Plan or will not terminate the Plan at
any time in the future. Accordingly, each Employer reserves the right to
discontinue its sponsorship of the Plan and/or to terminate the Plan at
any time with respect to any or all of its participating Employees and
Directors, by action of its board of directors. Upon the termination of
the Plan with respect to any Employer, the Plan Agreements of the
affected Participants who are employed by that Employer, or in the
service of that Employer as Directors, shall terminate and their vested
Account Balances, determined as if they had experienced a Termination of
Employment on the date of Plan termination or, if Plan termination
occurs after the date upon which a Participant was eligible to Retire,
then with respect to that Participant as if he or she had Retired on the
date of Plan termination, shall be paid to the Participants as follows:
Prior to a Change in Control, if the Plan is terminated with respect to
all of its Participants, an Employer shall
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have the right, in its sole discretion, and notwithstanding any
elections made by the Participant, to pay such benefits in a lump sum or
pursuant to an Annual Installment Method of up to 15 years, with amounts
credited and debited during the installment period as provided herein.
If the Plan is terminated with respect to less than all of its
Participants, an Employer shall be required to pay such benefits in a
lump sum. After a Change in Control, the Employer shall be required to
pay such benefits in a lump sum. The termination of the Plan shall not
adversely affect any Participant or Beneficiary who has become entitled
to the payment of any benefits under the Plan as of the date of
termination; provided however, that the Employer shall have the right to
accelerate installment payments without a premium or prepayment penalty
by paying the vested Account Balance in a lump sum or pursuant to an
Annual Installment Method using fewer years (provided that the present
value of all payments that will have been received by a Participant at
any given point of time under the different payment schedule shall equal
or exceed the present value of all payments that would have been
received at that point in time under the original payment schedule).
11.2 AMENDMENT. Any Employer may, at any time, amend or modify the Plan in
whole or in part with respect to that Employer by the action of its
board of directors; provided, however, that: (i) no amendment or
modification shall be effective to decrease or restrict the value of a
Participant's vested Account Balance in existence at the time the
amendment or modification is made, calculated as if the Participant had
experienced a Termination of Employment as of the effective date of the
amendment or modification or, if the amendment or modification occurs
after the date upon which the Participant was eligible to Retire, the
Participant had Retired as of the effective date of the amendment or
modification, and (ii) no amendment or modification of this Section 11.2
of the Plan shall be effective. The amendment or modification of the
Plan shall not affect any Participant or Beneficiary who has become
entitled to the payment of benefits under the Plan as of the date of the
amendment or modification; provided, however, that the Employer shall
have the right to accelerate installment payments by paying the vested
Account Balance in a lump sum or pursuant to an Annual Installment
Method using fewer years (provided that the present value of all
payments that will have been received by a Participant at any given
point of time under the different payment schedule shall equal or exceed
the present value of all payments that would have been received at that
point in time under the original payment schedule).
11.3 PLAN AGREEMENT. Despite the provisions of Sections 11.1 and 11.2 above,
if a Participant's Plan Agreement contains benefits or limitations that
are not in this Plan document, the Employer may only amend or terminate
such provisions with the consent of the Participant.
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11.4 EFFECT OF PAYMENT. The full payment of the applicable benefit under
Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries
under this Plan and the Participant's Plan Agreement shall terminate.
ARTICLE 12
ADMINISTRATION
12.1 COMMITTEE DUTIES. This Plan shall be administered by a Committee which
shall consist of the Board, or such committee as the Board shall
appoint. Members of the Committee may be Participants under this Plan.
The Committee shall also have the discretion and authority to (i) make,
amend, interpret, and enforce all appropriate rules and regulations for
the administration of this Plan and (ii) decide or resolve any and all
questions including interpretations of this Plan, as may arise in
connection with the Plan. Any individual serving on the Committee who is
a Participant shall not vote or act on any matter relating solely to
himself or herself. When making a determination or calculation, the
Committee shall be entitled to rely on information furnished by a
Participant or the Company.
12.2 AGENTS. In the administration of this Plan, the Committee may, from time
to time, employ agents and delegate to them such administrative duties
as it sees fit (including acting through a duly appointed
representative) and may from time to time consult with counsel who may
be counsel to any Employer.
12.3 BINDING EFFECT OF DECISIONS. The decision or action of the Administrator
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules
and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.
12.4 INDEMNITY OF COMMITTEE. All Employers shall indemnify and hold harmless
the members of the Committee, any Employee to whom the duties of the
Committee may be delegated, and the Administrator against any and all
claims, losses, damages, expenses or liabilities arising from any action
or failure to act with respect to this Plan, except in the case of
willful misconduct by the Committee, any of its members, any such
Employee or the Administrator.
12.5 EMPLOYER INFORMATION. To enable the Committee and/or Administrator to
perform its functions, the Company and each Employer shall supply full
and timely information to the Committee and/or Administrator, as the
case may be, on all matters relating to the compensation of its
Participants, the date and circumstances of the Retirement, Disability,
death or Termination of Employment of its Participants, and such other
pertinent information as the Committee or Administrator may reasonably
require.
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ARTICLE 13
OTHER BENEFITS AND AGREEMENTS
13.1 COORDINATION WITH OTHER BENEFITS. The benefits provided for a
Participant and Participant's Beneficiary under the Plan are in addition
to any other benefits available to such Participant under any other plan
or program for employees of the Participant's Employer. The Plan shall
supplement and shall not supersede, modify or amend any other such plan
or program except as may otherwise be expressly provided.
ARTICLE 14
CLAIMS PROCEDURES
14.1 PRESENTATION OF CLAIM. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as
a "Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such Claimant
from the Plan. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within 60 days after
such notice was received by the Claimant. All other claims must be made
within 180 days of the date on which the event that caused the claim to
arise occurred. The claim must state with particularity the
determination desired by the Claimant.
14.2 NOTIFICATION OF DECISION. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in
writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or
in part, to the Claimant's requested determination, and such
notice must set forth in a manner calculated to be understood by
the Claimant:
(i) the specific reason(s) for the denial of the claim, or any
part of it;
(ii) specific reference(s) to pertinent provisions of the Plan
upon which such denial was based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is
necessary; and
(iv) an explanation of the claim review procedure set forth in
Section 14.3 below.
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Deferred Compensation Plan
Master Plan Document
================================================================================
14.3 REVIEW OF A DENIED CLAIM. Within 60 days after receiving a notice from
the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file
with the Committee a written request for a review of the denial of the
claim. Thereafter, but not later than 30 days after the review procedure
began, the Claimant (or the Claimant's duly authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion,
may grant.
14.4 DECISION ON REVIEW. The Committee shall render its decision on review
promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the
Committee's decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be understood by
the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which
the decision was based; and
(c) such other matters as the Committee deems relevant.
14.5 LEGAL ACTION. A Claimant's compliance with the foregoing provisions of
this Article 14 is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for benefits under
this Plan.
ARTICLE 15
TRUST
15.1 ESTABLISHMENT OF THE TRUST. The Company shall establish the Trust, and
each Employer shall at least annually transfer over to the Trust such
assets as the Employer determines, in its sole discretion, are necessary
to provide, on a present value basis, for its respective future
liabilities created with respect to the Annual Deferral Amounts and
Annual Company Contribution Amounts for such Employer's Participants for
all periods prior to the transfer, as well as any debits and credits to
the Participants' Account Balances for all periods prior to the
transfer, taking into consideration the value of the assets in the trust
at the time of the transfer.
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WESTERN DIGITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================
15.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUST. The provisions of the Plan
and the Plan Agreement shall govern the rights of a Participant to
receive distributions pursuant to the Plan. The provisions of the Trust
shall govern the rights of the Employers, Participants and the creditors
of the Employers to the assets transferred to the Trust. Each Employer
shall at all times remain liable to carry out its obligations under the
Plan.
15.3 DISTRIBUTIONS FROM THE TRUST. Each Employer's obligations under the Plan
may be satisfied with Trust assets distributed pursuant to the terms of
the Trust, and any such distribution shall reduce the Employer's
obligations under this Plan.
ARTICLE 16
MISCELLANEOUS
16.1 STATUS OF PLAN. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that "is unfunded and is
maintained by an employer primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employee" within the meaning of ERISA Sections 201(2),
301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted
to the extent possible in a manner consistent with that intent.
16.2 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of an Employer. For
purposes of the payment of benefits under this Plan, any and all of an
Employer's assets shall be, and remain, the general, unpledged
unrestricted assets of the Employer. An Employer's obligation under the
Plan shall be merely that of an unfunded and unsecured promise to pay
money in the future.
16.3 EMPLOYER'S LIABILITY. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Plan Agreement, as
entered into between the Employer and a Participant. An Employer shall
have no obligation to a Participant under the Plan except as expressly
provided in the Plan and his or her Plan Agreement.
16.4 NONASSIGNABILITY. Neither a Participant nor any other person shall have
any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate, alienate or
convey in advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are
expressly declared to be, unassignable and non-transferable. No part of
the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant
or any other person, be transferable by operation of law in the event of
a
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Deferred Compensation Plan
Master Plan Document
================================================================================
Participant's or any other person's bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or
otherwise.
16.5 NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between any
Employer and the Participant. Such employment is hereby acknowledged to
be an "at will" employment relationship that can be terminated at any
time for any reason, or no reason, with or without cause, and with or
without notice, unless expressly provided in a written employment
agreement. Nothing in this Plan shall be deemed to give a Participant
the right to be retained in the service of any Employer, either as an
Employee or a Director, or to interfere with the right of any Employer
to discipline or discharge the Participant at any time.
16.6 FURNISHING INFORMATION. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be
requested in order to facilitate the administration of the Plan and the
payments of benefits hereunder, including but not limited to taking such
physical examinations as the Committee may deem necessary.
16.7 TERMS. Whenever any words are used herein in the masculine, they shall
be construed as though they were in the feminine in all cases where they
would so apply; and whenever any words are used herein in the singular
or in the plural, they shall be construed as though they were used in
the plural or the singular, as the case may be, in all cases where they
would so apply.
16.8 CAPTIONS. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
16.9 GOVERNING LAW. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State of
California without regard to its conflicts of laws principles.
16.10 NOTICE. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address
below:
Deferred Compensation Plan Committee
-------------------------------------------
Western Digital Corporation
-------------------------------------------
8105 Irvine Center Drive
-------------------------------------------
Irvine, CA 92718
-------------------------------------------
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Deferred Compensation Plan
Master Plan Document
================================================================================
Such notice shall be deemed given as of the date of delivery or,
if delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in writing and
hand-delivered, or sent by mail, to the last known address of the
Participant.
16.11 SUCCESSORS. The provisions of this Plan shall bind and inure to the
benefit of the Participant's Employer and its successors and assigns and
the Participant and the Participant's designated Beneficiaries.
16.12 SPOUSE'S INTEREST. The interest in the benefits hereunder of a spouse of
a Participant who has predeceased the Participant shall automatically
pass to the Participant and shall not be transferable by such spouse in
any manner, including but not limited to such spouse's will, nor shall
such interest pass under the laws of intestate succession.
16.13 VALIDITY. In case any provision of this Plan shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as
if such illegal or invalid provision had never been inserted herein.
16.14 INCOMPETENT. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of that
person's property, the Committee may direct payment of such benefit to
the guardian, legal representative or person having the care and custody
of such minor, incompetent or incapable person. The Committee may
require proof of minority, incompetence, incapacity or guardianship, as
it may deem appropriate prior to distribution of the benefit. Any
payment of a benefit shall be a payment for the account of the
Participant and the Participant's Beneficiary, as the case may be, and
shall be a complete discharge of any liability under the Plan for such
payment amount.
16.15 COURT ORDER. The Committee is authorized to make any payments directed
by court order in any action in which the Plan or the Committee has been
named as a party. In addition, if a court determines that a spouse or
former spouse of a Participant has an interest in the Participant's
benefits under the Plan in connection with a property settlement or
otherwise, the Committee, in its sole discretion, shall have the right,
notwithstanding any election made by a Participant, to immediately
distribute the spouse's or former spouse's interest in the Participant's
benefits under the Plan to that spouse or former spouse.
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Deferred Compensation Plan
Master Plan Document
================================================================================
16.16 DISTRIBUTION IN THE EVENT OF TAXATION.
(a) IN GENERAL. If, for any reason, all or any portion of a
Participant's benefits under this Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the
Committee before a Change in Control, or the trustee of the Trust
after a Change in Control, for a distribution of that portion of
his or her benefit that has become taxable. Upon the grant of
such a petition, which grant shall not be unreasonably withheld
(and, after a Change in Control, shall be granted), a
Participant's Employer shall distribute to the Participant
immediately available funds in an amount equal to the taxable
portion of his or her benefit (which amount shall not exceed a
Participant's unpaid vested Account Balance under the Plan). If
the petition is granted, the tax liability distribution shall be
made within 90 days of the date when the Participant's petition
is granted. Such a distribution shall affect and reduce the
benefits to be paid under this Plan.
(b) TRUST. If the Trust terminates in accordance with Section 3.6(e)
of the Trust and benefits are distributed from the Trust to a
Participant in accordance with that Section, the Participant's
benefits under this Plan shall be reduced to the extent of such
distributions.
16.17 INSURANCE. The Employers, on their own behalf or on behalf of the
trustee of the Trust, and, in their sole discretion, may apply for and
procure insurance on the life of the Participant, in such amounts and in
such forms as the Trust may choose. The Employers or the trustee of the
Trust, as the case may be, shall be the sole owner and beneficiary of
any such insurance. The Participant shall have no interest whatsoever in
any such policy or policies, and at the request of the Employers shall
submit to medical examinations and supply such information and execute
such documents as may be required by the insurance company or companies
to whom the Employers have applied for insurance.
16.18 LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL. The Company and
each Employer is aware that upon the occurrence of a Change in Control,
the Board or the board of directors of a Participant's Employer (which
might then be composed of new members) or a shareholder of the Company
or the Participant's Employer, or of any successor corporation might
then cause or attempt to cause the Company, the Participant's Employer
or such successor to refuse to comply with its obligations under the
Plan and might cause or attempt to cause the Company or the
Participant's Employer to institute, or may institute, litigation
seeking to deny Participants the benefits intended under the Plan. In
these circumstances, the purpose of the Plan could be frustrated.
Accordingly, if, following a Change in Control, it should appear to any
Participant that the Company, the Participant's Employer or any
successor corporation has failed to comply with any of its obligations
under the Plan or any agreement thereunder or, if the Company, such
Employer or any
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WESTERN DIGITAL CORPORATION
Deferred Compensation Plan
Master Plan Document
================================================================================
other person takes any action to declare the Plan void or unenforceable
or institutes any litigation or other legal action designed to deny,
diminish or to recover from any Participant the benefits intended to be
provided, then the Company and the Participant's Employer irrevocably
authorize such Participant to retain counsel of his or her choice at the
expense of the Company and the Participant's Employer (who shall be
jointly and severally liable) to represent such Participant in
connection with the initiation or defense of any litigation or other
legal action, whether by or against the Company, the Participant's
Employer or any director, officer, shareholder or other person
affiliated with the Company, the Participant's Employer or any successor
thereto in any jurisdiction.
IN WITNESS WHEREOF, the Company has signed this Plan document as of
__________, 199_.
"Company"
Western Digital Corporation a Delaware
corporation
By: ______________________________
Title: ______________________________
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EXHIBIT 5
December 3, 1997
(714) 451-3800 C96182-00002
Western Digital Corporation
8105 Irvine Center Drive
Irvine, CA 92618
Re: Registration Statement on Form S-8 for $40,000,000
in Deferred Compensation Obligations
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by Western Digital Corporation, a Delaware
corporation (the "Company") with the Securities and Exchange Commission in
connection with the registration under the Securities Act of 1933, as amended
(the "Securities Act") of $40,000,000 in Deferred Compensation Obligations (the
"Obligations"), which will represent unsecured obligations of the Company to pay
deferred compensation in the future, pursuant to the Company's Deferred
Compensation Plan (the "Plan").
For purposes of rendering this opinion, we have made such legal and
factual examinations as we have deemed necessary under the circumstances and, as
part of such examination, we have examined, among other things, originals and
copies, certified or otherwise identified to our satisfaction, of such
documents, corporate records and other instruments as we have deemed necessary
or appropriate. For the purposes of such examination, we have assumed the
genuineness of all signatures on original documents and the conformity to
original documents of all copies submitted to us.
On the basis of and in reliance upon the foregoing, we are of the opinion that
assuming the Registration Statement shall have become effective pursuant to the
provisions of the Securities Act, the Obligations, when issued in accordance
with the provisions of the Plan, will be validly issued, fully paid and
non-assessable, and will be binding obligations of the Company, subject, as
1
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Western Digital Corporation
December 3, 1997
Page Two
to enforcement, to (i) bankruptcy, reorganization, insolvency, moratorium and
other similar laws and court decisions of general application, including without
limitation, statutory or other laws regarding fraudulent or preferential
transfers, relating to, limiting or affecting the enforcement of creditor's
rights generally, and (ii) the effect of general principles of equity upon the
specific enforceability of any of the remedies, covenants or other provisions of
the Plan and upon the availability of injunctive relief or other equitable
remedies and the application of principles of equity (regardless of whether
enforcement is considered in proceedings at law or in equity) as such principles
relate to, limit or affect the enforcement of creditors' rights generally.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act.
Very truly yours,
/s/ GIBSON, DUNN & CRUTCHER LLP
-----------------------------------
Gibson, Dunn & Crutcher LLP
DW/LRO/sp
2
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 and related prospectus pertaining to the Western Digital
Corporation Deferred Compensation Plan of our report dated July 16, 1997,
relating to the consolidated balance sheets of Western Digital Corporation as of
June 28, 1997 and June 29, 1996, and the related consolidated statements of
income, shareholders' equity and cash flows for each of the years in the
three-year period ended June 28, 1997, which report appears in the June 28, 1997
Annual Report on Form 10-K of Western Digital Corporation.
/s/ KPMG PEAT MARWICK LLP
-----------------------------------
KPMG Peat Marwick LLP
Orange County, California
December 3, 1997
