Exhibit 10 (e)
Executive Benefit Plan
WOODWARD GOVERNOR COMPANY
EXECUTIVE BENEFIT PLAN
EFFECTIVE JANUARY 1, 2001
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TABLE OF CONTENTS
PAGE
I. PURPOSE AND EFFECTIVE DATE..........................................1
1.1. Purpose........................................................1
1.2. Effective Date.................................................1
1.3. Continuation and Combination of Two Prior Plan.................1
II. DEFINITIONS.........................................................1
2.1. "Account"......................................................1
2.2. "Administrator"................................................2
2.3. "Affiliate"....................................................2
2.4. "Base Salary"..................................................2
2.5. "Beneficiary"..................................................2
2.6. "Board"........................................................2
2.7. "Bonus"........................................................2
2.8. "Change in Control"............................................3
2.9. "Code".........................................................4
2.10. "Company"......................................................5
2.11. "Deferral Contribution Amounts"................................5
2.12. "Deferral Election"............................................5
2.13. "Disability"...................................................5
2.14. "Distribution Election"........................................5
2.15. "Early Retirement Date"........................................5
2.16. "Election Period"..............................................5
2.17. "Eligible Member"..............................................5
2.18. "Exchange Act".................................................5
2.19. "FICA".........................................................5
2.20. "Investment Fund or Funds".....................................5
2.21. "Normal Retirement Date".......................................5
2.22. "Participant"..................................................6
2.23. "Plan".........................................................6
2.24. "Plan Year"....................................................6
2.25. "Prior Account Balance"........................................6
2.26. "Retirement"...................................................6
2.27. "Supplemental Benefit Amounts".................................6
2.28. "Supplemental MISOP Amount"....................................6
2.29. "Supplemental RIP Amount"......................................7
2.30. "Valuation Date"...............................................7
III. PARTICIPATION.......................................................7
3.1. Participation..................................................7
3.2. ERISA Exemption................................................7
IV. DEFERRAL CONTRIBUTION AMOUNTS.......................................7
4.1. Permissible Deferrals under the Plan...........................7
4.2. Deferral Elections.............................................8
4.3. Crediting of Deferral Elections................................9
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TABLE OF CONTENTS
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4.4. Vesting........................................................9
4.5. Deferred Contribution Amounts Subject to FICA at Time of
Deferral. ...................................................9
V. SUPPLEMENTAL BENEFIT AMOUNTS........................................9
5.1. Computation of Supplemental Benefit Amounts....................9
5.2. Vesting.......................................................10
5.3. Crediting of Supplemental Benefit Amounts.....................10
VI. ACCOUNTS AND INVESTMENTS...........................................11
6.1. Valuation of Accounts.........................................11
6.2. Hypothetical Investment Funds.................................11
6.3. Crediting of Investment Return................................11
6.4. Changing Investment Fund Options..............................12
6.5. Investment Alternatives After Death...........................12
VII. PAYMENT OF BENEFITS................................................12
7.1. Distribution at Specific Future Date..........................12
7.2. Distribution Upon Retirement or Disability....................12
7.3. Distribution On Other Termination of Employment...............13
7.4. Unscheduled Withdrawal........................................13
7.5. Unforeseeable Emergency.......................................14
7.6. Time and Form of Elections....................................14
7.7. Form of Payment and Withholding...............................14
VIII. DEATH BENEFITS.....................................................14
8.1. Death Prior to Commencement of Benefits.......................14
8.2. Death After Commencement of Benefits..........................14
8.3. Administrator Discretion Regarding Form.......................15
IX. ADMINISTRATION.....................................................15
9.1. Authority of Administrator....................................15
9.2. Participant's Duty to Furnish Information.....................15
9.3. Interested Member of Administrator............................15
9.4. Indemnification...............................................15
9.5. Claims Procedure..............................................15
X. AMENDMENT AND TERMINATION..........................................16
XI. MISCELLANEOUS......................................................16
11.1. No Implied Rights; Rights on Termination of Service...........16
11.2. No Employment Rights..........................................16
11.3. Nature of the Plan............................................17
11.4. Nontransferability............................................17
11.5. Successors and Assigns........................................18
11.6. Payment with Respect to Incapacitated Persons.................18
11.7. Arbitration...................................................18
11.8. Gender and Number.............................................18
11.9. Headings......................................................18
11.10. Severability..................................................19
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TABLE OF CONTENTS
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11.11. Effect on Other Employee Benefit Plans........................19
11.12. Non-U.S. Participants.........................................19
11.13. Applicable Law................................................19
Exhibit A...................................................................20
INVESTMENT FUNDS UNDER THE WOODWARD GOVERNOR COMPANY
EXECUTIVE BENEFIT PLAN......................................20
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WOODWARD GOVERNOR COMPANY
EXECUTIVE BENEFIT PLAN
I. PURPOSE AND EFFECTIVE DATE.
1.1. PURPOSE. The Woodward Governor Company Executive Benefit Plan has
been established by Woodward Governor Company to attract and retain
certain key members by:
(a) providing a tax-deferred capital accumulation vehicle to
supplement such members' individual retirement contributions,
thereby encouraging savings for retirement, and
(b) supplementing such members' retirement income, available under
the Woodward Governor Company Retirement Income Plan (the
"RIP") and the Woodward Governor Company Member Investment and
Stock Ownership Plan (the "MISOP"), which is otherwise limited
pursuant to the rules and regulations of the Internal Revenue
Code of 1986, as amended.
1.2. EFFECTIVE DATE. The Plan shall be effective January 1, 2001 and
shall remain in effect until terminated in accordance with
Article X.
1.3. CONTINUATION AND COMBINATION OF TWO PRIOR PLAN. The Plan is intended
to be:
(a) an amendment, restatement and continuation of the Woodward
Governor Company Amended and Restated Unfunded Deferred
Compensation Plan No.1 (the "DC Plan No. 1"),
(b) an amendment, restatement and continuation of the Woodward
Governor Company Unfunded Deferred Compensation Plan No. 2
(the "DC Plan No. 2), and
(c) the merger and combination of the DC Plan No. 1 and the DC
Plan No. 2 into this single plan for ease in the Company's
administration.
II. DEFINITIONS.
When used in the Plan and initially capitalized, the following words and
phrases shall have the meanings indicated:
2.1. "ACCOUNT" means the recordkeeping account established for each
Participant in the Plan for purposes of accounting for the amount of
the Participant's:
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(a) Deferral Contribution Amounts deferred and credited in
accordance with Article IV each year, if any,
(b) Supplemental Benefit Amounts determined and credited in
accordance with Article V each year, if any, and
(c) account balance, if any, under the prior DC Plan No. 1 and/or
prior DC Plan No. 2 on the day immediately preceding the
effective date of this Plan,
all adjusted periodically to reflect the hypothetical investment
return on such amounts in accordance with Article VI.
2.2. "ADMINISTRATOR" means the Compensation Committee or such other
individual or committee appointed and delegated by the Board to
administer the Plan in accordance with Article IX. To the extent so
delegated, the term "Administrator" hereunder shall be deemed to
refer to such individual or committee. The Compensation Committee
shall take such actions it deems necessary or desirable to ensure
that such individual or committee has sufficient and appropriate
authority for carrying out the intent and purpose of the Plan.
2.3. "AFFILIATE" means:
(a) any corporation, partnership, joint venture, trust,
association or other business enterprise which is a member of
the same controlled group of corporations, trades or
businesses as the Company within the meaning of Code Section
414, and
(b) any other entity that is designated as an Affiliate by the
Board.
2.4. "BASE SALARY" means a Participant's base salary in effect for a
given year as reflected in the personnel records of the Company.
2.5. "BENEFICIARY" means the person or entity designated by the
Participant to receive the Participant's Plan benefits in the event
of the Participant's death. If the Participant does not designate a
Beneficiary, or if the Participant's designated Beneficiary
predeceases the Participant, the Participant's estate shall be the
Beneficiary under the Plan.
2.6. "BOARD" means the Board of Directors of the Company.
2.7. "BONUS" means any incentive compensation awarded to a Participant
for a given year under the Woodward Governor Company Annual
Incentive Compensation Plan and/or the Woodward Governor Company
Long-Term Incentive Compensation Plan.
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2.8. "CHANGE IN CONTROL" shall be deemed to have occurred if:
(a) any "person" (as defined in Section 13(d) and 14(d) of the
Exchange Act) (excluding for this purpose the Company or any
subsidiary of the Company, or any employee benefit plan of the
Company or any subsidiary of the Company, or any person or
entity organized, appointed or established by the Company for
or pursuant to the terms of such plan which acquires
beneficial ownership of voting securities of the Company) is
or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) directly or indirectly of securities
of the Company representing fifteen percent (15%) or more of
the combined voting power of the Company's then outstanding
securities; provided, however, that no Change in Control shall
be deemed to have occurred:
(i) as the result of an acquisition of securities of the
Company by the Company which, by reducing the number of
voting securities outstanding, increases the direct or
indirect beneficial ownership interest of any person to
fifteen percent (15%) or more of the combined voting
power of the Company's then outstanding securities, but
any subsequent increase in the direct or indirect
beneficial ownership interest of such a person in the
Company shall be deemed a Change in Control; or
(ii) as a result of the acquisition directly from the Company
of securities of the Company representing less than
fifty percent (50%) of the voting power of the Company;
or
(iii) if the Board determines in good faith that a person who
has become the beneficial owner directly or indirectly
of securities of the Company representing fifteen
percent (15%) or more of the combined voting power of
the Company's then outstanding securities has
inadvertently reached that level of ownership interest,
and if such person divests as promptly as practicable a
sufficient amount of securities of the Company so that
the person no longer has a direct or indirect beneficial
ownership interest in fifteen percent (15%) or more of
the combined voting power of the Company's then
outstanding securities; or
(b) during any period of two (2) consecutive years (not including
any period prior to the effective date (as set forth in
Section 1.2 above) of the Plan), individuals who at the
beginning of such two-year period constitute the Board and any
new director or directors (except for any director designated
by a person who has entered into an agreement with the Company
to effect a transaction described in subparagraph (a) above or
subparagraph (c) below) whose election by the Board or
nomination for election by the
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Company's shareholders was approved by a vote or at least
two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute at least a
majority of the Board (such individuals and any such new
directors being referred to as the "Incumbent Board"); or
(c) approval by the shareholders of the company of a complete
liquidation or dissolution of the Company; or
(d) consummation of:
(i) an agreement for the sale or disposition of the Company
or all or substantially all of the Company's assets,
(ii) a plan of merger or consolidation of the Company with
any other corporation, or
(iii) a similar transaction or series of transactions
involving the Company (any transaction described in
subparagraphs (i) and (ii) or this paragraph (d) being
referred to as a "Business Combination"), in each case
unless after such a Business Combination:
(a) the shareholders of the Company immediately prior
to the Business Combination continue to own,
directly or indirectly, more than fifty-one
percent (51%) of the combined voting power of the
then outstanding voting securities entitled to
vote generally in the election of directors of the
new (or continued) entity (including, but not by
way of limitation, an entity which as a result of
such transaction owns the Company or all or
substantially all of the Company's former assets
either directly or through one or more
subsidiaries) immediately after such Business
Combination, in substantially the same proportion
as their ownership in the Company immediately
prior to such Business Combination, and
(b) at least a majority of the members of the board of
directors of the entity resulting from such
Business Combination were members of the Incumbent
Board at the time of the execution of the initial
agreement, or of the action of the Board,
providing for such Business Combination.
2.9. "CODE" means the Internal Revenue Code of 1986, as amended.
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2.10. "COMPANY" means Woodward Governor Company and any successor thereto.
2.11. "DEFERRAL CONTRIBUTION AMOUNTS" means the amounts of Base Salary and
Bonus deferred by a Participant, if any, and credited to his or her
Account in accordance with Article IV but such amounts specifically
and expressly do not include any Prior Account Balance of such
Participant.
2.12. "DEFERRAL ELECTION" means the written election made by an Eligible
Member to defer such Eligible Member's Base Salary and/or Bonus for
any given year in accordance with Article IV.
2.13. "DISABILITY" means Disability as defined in the Woodward Governor
Company Long-Term Disability Plan.
2.14. "DISTRIBUTION ELECTION" means the written election made by a
Participant regarding the form of payment distribution of his or her
Account in accordance with Article VII.
2.15. "EARLY RETIREMENT DATE" means the date on which any Plan Participant
retires from active employment with the Company or any Affiliate on
or after he has attained age 55 but before he has attained age 65.
2.16. "ELECTION PERIOD" means the period specified by the Administrator
during which a Deferral Election may be made with respect to a
Participant's Base Salary and/or Bonus payable for a Plan Year.
2.17. "ELIGIBLE MEMBER" means a member of the Company or an Affiliate who
has been selected by the Administrator to participate in the Plan in
accordance with Article III.
2.18. "EXCHANGE ACT" means the Securities and Exchange Act of 1934.
2.19. "FICA" means the employment tax imposed on a member's income under
the Federal Insurance Contributions Act (Chapter 21 of the Code)
which is comprised of Old-Age, Survivors and Disability Insurance
and Hospital Insurance.
2.20. "INVESTMENT FUND OR FUNDS" means the investment funds designated by
the Administrator as the basis for determining the hypothetical
investment return to be credited in accordance with Article VI to
Participants' Accounts. Initially, the Investment Funds shall mirror
the available investment funds under the MISOP, as set forth on the
attached Exhibit A. Thereafter, the Administrator may change the
Investment Funds at such times as it deems appropriate.
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2.21. "NORMAL RETIREMENT DATE" means the date on which any Plan
Participant retires from active employment with the Company or any
Affiliate on or after he has attained age 65.
2.22. "PARTICIPANT" means an Eligible Member who has:
(a) been notified by the Administrator of his eligibility to
participate in the Plan, and
(b) either:
(i) completed and submitted a Deferral Election in
accordance with Section 4.2, or
(ii) had credited to his Account, by the Company,
Supplemental Benefit Amounts in accordance with Article
V, or
(iii) had an account balance under the prior DC Plan No. 1
and/or the prior DC Plan No. 2 on the day immediately
preceding the effective date of this Plan.
2.23. "PLAN" means the Woodward Governor Company Executive Benefits Plan,
as amended from time to time.
2.24. "PLAN YEAR" means the 12 consecutive month period beginning each
January 1.
2.25. "PRIOR ACCOUNT BALANCE" means an Eligible Member's account
balance(s), if any, under the prior DC Plan No. 1 and/or prior DC
Plan No. 2 which were transferred to this Plan by the Company and
credited to his Account pursuant to Section 3.1(B)(3).
2.26. "RETIREMENT" means termination of employment by a Participant by
reason of retiring from active employment with the Company or any
Affiliate on his Early Retirement Date or Normal Retirement Date.
2.27. "SUPPLEMENTAL BENEFIT AMOUNTS" means the amounts computed on behalf
of the Participant, if any, and credited to his or her Account in
accordance with Article V which represents the sum of the
Participant's Supplemental MISOP Amounts and Supplemental RIP
Amounts.
2.28. "SUPPLEMENTAL MISOP AMOUNT" means that portion of the Supplemental
Benefit Amounts computed under Section 5.1(b) of the Plan
specifically pertaining to the MISOP and credited to the
Participant's Account in accordance with Article V.
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2.29. "SUPPLEMENTAL RIP AMOUNT" means that portion of the Supplemental
Benefit Amounts computed under Section 5.1(a) of the Plan
specifically pertaining to the RIP and credited to the Participant's
Account in accordance with Article V.
2.30. "VALUATION DATE" means a date on which the Investment Funds are
valued and the Participant's Account is adjusted for any resulting
gains or losses. The Administrator shall determine the Valuation
Date and such date shall be at least once every calendar year.
III. PARTICIPATION.
3.1. PARTICIPATION. The Administrator shall select those members eligible
to participate in the Plan. In selecting Eligible Members, the
Administrator shall take into consideration such factors as it deems
relevant in connection with accomplishing the purposes of the Plan.
An Eligible Member shall become a Participant in the Plan when (A)
he is notified in writing by the Administrator that he is eligible
to participate in the Plan, and (B) he has either (1) completed and
submitted a Deferral Election to the Administrator in accordance
with Article IV, or (2) had credited to his Account, by the Company,
Supplemental Benefit Amounts in accordance with Article V, or (3)
had credited to his Account, by the Company, his account balance, if
any, under the prior DC Plan No. 1 and/or the prior DC Plan No. 2 on
the day immediately preceding the effective date of this Plan.
3.2. ERISA EXEMPTION. It is the intent of the Company that the Plan be
exempt from Parts 2, 3 and 4 of Subtitle B of Title I of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), as an unfunded plan that is maintained by the Company
primarily for the purpose of providing deferred compensation for a
select group of management of highly compensated employees (the
"ERISA Exemption"). Notwithstanding anything to the contrary in
Section 3.1 or in any other provision of the Plan, the Administrator
may in its sole discretion exclude any one or more members from
eligibility to participate or from participation in the Plan, may
exclude any Participant from continued participation in the Plan,
and may take any further action (including the immediate payment of
the Participant's entire interest under the Plan in a lump-sum) it
considers necessary or appropriate if the Administrator reasonably
determines in good faith that such exclusion or further action is
necessary in order for the Plan to qualify for, or to continue to
qualify for, the ERISA Exemption.
IV. DEFERRAL CONTRIBUTION AMOUNTS.
4.1. PERMISSIBLE DEFERRALS UNDER THE PLAN. An Eligible Member may elect
to defer:
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(a) DEFERRAL OF BASE SALARY: up to 50% of his or her Base Salary
for a Plan Year, in increments of 1%, provided, however, that
any election to defer over 30% of Base Salary must be approved
in advance by the Administrator, and
(b) DEFERRAL OF BONUS: up to 100% of his or her Bonus for a Plan
Year, in increments of 25%, by filing a Deferral Election in
accordance with Section 4.2 below.
4.2. DEFERRAL ELECTIONS. A Participant's Deferral Election shall be in
writing, and shall be filed with the Administrator at such time and
in such manner as the Administrator shall provide, subject to the
following:
(a) A Deferral Election pertaining to Base Salary and/or Bonus
shall be made during the election period established by the
Administrator which shall end no later than December 31
preceding the first day of the Plan Year in which such Base
Salary and/or Bonus would otherwise be payable.
(b) At the discretion of the Administrator, a Deferral Election
may be made by
(i) newly-hired Eligible Members for the Plan Year in which
they commence employment,
(ii) a member who becomes an Eligible Member after the
beginning of a Plan Year for the Plan Year in which they
become an Eligible Member.
Notwithstanding the preceding sentence, such Deferral
Elections must be made within thirty (30) days of their date
of hire or the date the member becomes an Eligible Member,
whichever applies. However, such Deferral Elections shall be
prospective and shall apply only to Base Salary and/or Bonus
that would otherwise be paid to the Eligible Member after the
Deferral Election is made.
(c) Deferral Elections shall be expressed as a percentage of Base
Salary or Bonus, within the limits provided under the Plan.
Once made, a Deferral Election for:
(A) Base Salary shall remain in effect for all subsequent Plan
Years unless changed or revoked by the Participant in
accordance with rules established by the Administrator, and
(B) Bonus shall remain in effect only for the Plan Year for which
such Bonus Deferral Election was made.
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Any such modification or revocation with respect to Base
Salary shall be effective for the Plan Year following the Plan
Year in which it is made. Notwithstanding anything to the
contrary, any revocation for Base Salary and/or Bonus shall
become effective as soon as practicable in the event it is
made because of the Participant's Disability or if the
Administrator, in its sole discretion, determines that the
Participant has suffered a severe financial hardship or a bona
fide administrative mistake was made. If a Deferral Election
is revoked in accordance with any of the foregoing, the
Participant may not make a new Deferral Election until the
election period established by the Administrator for making
deferrals for the next Plan Year.
4.3. CREDITING OF DEFERRAL ELECTIONS. The amount of Base Salary and Bonus
that a Participant elects to defer under the Plan shall be credited
by the Company to the Participant's Account as Deferral Contribution
Amounts as of the date such Base Salary or such Bonus would have
been paid to the Participant absent the Deferral Election.
4.4. VESTING. A Participant's Deferral Contribution Amounts for each Plan
Year shall be fully vested at the time credited to such
Participant's Account.
4.5. DEFERRED CONTRIBUTION AMOUNTS SUBJECT TO FICA AT TIME OF DEFERRAL. A
Participant's Deferred Contribution Amounts are subject to FICA at
the time the amounts are contributed to the Plan for deferral. The
gross amount of the Participant's Base Salary deferral and Bonus
deferral will be contributed to the Participant's Account and the
corresponding FICA tax due will be deducted from that portion of the
Participant's Base Salary or Bonus not deferred, as the case may be.
Notwithstanding the foregoing, if a Participant has elected to defer
a percentage of his or her Bonus such that contribution of the gross
amount of the Bonus deferred would leave insufficient funds to remit
the applicable FICA tax to the government, then the applicable Bonus
amount contributed to the Participant's Account shall be made net of
the smallest amount of FICA tax needed to satisfy such liability
which cannot be covered from the portion of Bonus not deferred.
V. SUPPLEMENTAL BENEFIT AMOUNTS.
5.1. COMPUTATION OF SUPPLEMENTAL BENEFIT AMOUNTS. An Eligible Member
designated by the Administrator for participation under the Plan
shall be entitled to a Supplemental Benefit Amount for each Plan
Year that he is an Eligible Member which is equal to the sum of:
(a) SUPPLEMENTAL BENEFIT RELATING TO THE RIP: the excess, if any,
of:
(i) the benefit the Participant otherwise would have been
entitled to have credited to a separate account for his
benefit under the RIP for
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a given year if such benefit was calculated without
regard to the following:
(A) Code Section 415,
(B) Code Section 401(a)(17), and
(C) any Deferral Election made by the Participant for
such given year under Article IV of this Plan,
OVER
(ii) the accrued benefit which the Participant is entitled to
have credited to a separate account for his benefit for
such given year under the RIP, PLUS
(b) SUPPLEMENTAL BENEFIT RELATING TO THE MISOP: the excess, if
any, of:
(i) the benefit the Participant otherwise would have been
entitled to have credited to a separate account for his
benefit under the MISOP for a given year if such benefit
was calculated without regard to the following:
(A) Code Section 415,
(B) Code Section 401(a)(17),
(C) Code Section 401(k)(3),
(D) Code Section 401(m)(2), and
(E) Code Section 402(g), OVER
(ii) the actual benefit which the Participant is entitled to
have credited to a separate account for his benefit for
such given year under the MISOP.
5.2. VESTING. A Participant's Supplemental Benefit Amounts calculated by
the Company for each Plan Year shall be fully vested at the time
credited to such Participant's Account.
5.3. CREDITING OF SUPPLEMENTAL BENEFIT AMOUNTS. The Supplemental Benefit
Amounts computed in Section 5.1 above for each Plan Year shall be
credited by the Company to the Participant's Account as soon as
reasonably practicable.
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VI. ACCOUNTS AND INVESTMENTS.
6.1. VALUATION OF ACCOUNTS. The Administrator shall establish an Account
for each Participant who:
(a) has filed a Deferral Election to defer Base Salary and/or
Bonus, or
(b) has been credited with a Supplemental Benefit Amount, or
(c) has a Prior Account Balance on the effective date of this
Plan.
Such Account shall be credited with a Participant's Deferral
Contribution Amounts and Supplemental Benefit Amounts as set forth
in Sections 4.3 and 5.3, respectively, and with the Participant's
Prior Account Balance, if any. As of each Valuation Date, the
Participant's Account shall be adjusted upward or downward to
reflect:
(i) the investment return to be credited as of such Valuation Date
pursuant to Section 6.3 below,
(ii) the amount of distributions, if any, to be debited as of that
Valuation Date under Article VII, and
(iii) the amount of forfeitures, if any, to be debited under Section
7.4(a).
6.2. HYPOTHETICAL INVESTMENT FUNDS. Each Participant generally may direct
the manner in which his or her Deferral Contribution Amounts,
Supplemental MISOP Amounts, if any, and/or Prior Account Balance, if
any, shall be deemed invested in and among the Investment Funds;
provided, however, that each investment election made by a
Participant shall, notwithstanding anything to the contrary in the
Plan, be strictly subject to the consent of the Administrator which,
in its sole discretion, may elect to honor the Participant's request
or have the Account deemed invested in another manner. Such deemed
investment election shall be made in accordance with such procedures
as the Administrator shall establish and any such election shall be
made in whole percentages. The investment authority shall remain at
all times with the Administrator. The selection of Investment Funds
by a Participant shall be for the sole purpose of determining the
rate of return to be credited to his or her Account and shall not be
treated or interpreted in any manner whatsoever as a requirement or
direction to actually invest assets in any Investment Fund or any
other investment media.
6.3. CREDITING OF INVESTMENT RETURN. Each Participant's Account shall be
credited on each Valuation Date with his or her allocable share of
investment gains or losses of each Investment Fund in which his or
her Deferral Contribution Amounts, Supplemental MISOP Amounts, if
any, and/or Prior Account Balance, if any, are hypothetically
invested. The Administrator shall adopt a protocol for allocating
the deemed investment gains and losses similar to that used in the
MISOP. Notwithstanding anything to the contrary, if a Participant
elects to invest
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in the hypothetical Investment Fund for Woodward Governor Company
Common Stock, such Participant's Account shall also be credited with
any deemed dividends paid during the period beginning with the
immediately preceding Valuation Date and ending with the current
Valuation Date.
6.4. CHANGING INVESTMENT FUND OPTIONS. Subject to any exceptions set
forth on Exhibit A, a Participant may, on a daily basis, make a new
election with respect to the hypothetical Investments Funds in which
his or her Deferral Contribution Amounts, Supplemental MISOP
Amounts, if any, and/or Prior Account Balance, if any, shall be
deemed invested in the future. Any such election shall be made in
the form specified by the Administrator.
6.5. INVESTMENT ALTERNATIVES AFTER DEATH. For periods after the Valuation
Date coincident with or following a Participant's death and pursuant
to procedures established by the Administrator, the Participant's
Account balance pertaining to Deferral Contribution Amounts,
Supplemental MISOP Amounts, if any, and/or Prior Account Balance, if
any, shall be reallocated and reinvested among the Investment Funds
in accordance with the Beneficiary's hypothetical investment
direction.
VII. PAYMENT OF BENEFITS.
7.1. DISTRIBUTION AT SPECIFIC FUTURE DATE. At the time an Eligible Member
is notified by the Administrator of his or her eligibility to
participate in the Plan, the Eligible Member may elect one or more
future Valuation Dates as of which all or a portion of his or her
Deferral Contribution Amounts and earnings thereon shall be
determined for payment. Any distribution as of a specific future
date made to an Eligible Member pursuant to his election shall be
paid in a single lump-sum payment. Any such future date shall be a
Valuation Date in a specific future year which is at least five Plan
Years after the Plan Year for which the initial Deferral
Contribution Amounts were credited to such Participant's Account;
provided, however, that only one distribution per Plan Year may be
elected under this Section 7.1; provided, further that, if the
Participant elects a distribution at one or more specific future
dates and has a termination of employment prior to any such date,
distribution shall commence pursuant to Sections 7.2, 7.3, 8.1 or
8.2, as applicable. A distribution election under this Section 7.1
may be revoked or extended to a Valuation Date in a future Plan Year
by filing a one-time revocation or extension election with the
Administrator at least 12 months prior to the first day of the Plan
Year in which such distribution was scheduled to take place.
Notwithstanding the foregoing, any amounts distributable under this
Section 7.1 shall be paid as soon as practicable following such
relevant Valuation Date.
7.2. DISTRIBUTION UPON RETIREMENT OR DISABILITY. If a Participant
terminates employment with the Company and/or Affiliates by reason
of Retirement or
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Disability, distribution of the Participant's Account shall be made
by or commence on the Valuation Date coincident with or next
following such Participant's termination of employment. Distribution
under this Section 7.2 shall be made:
(a) in a lump sum, or
(b) in substantially equal annual, quarterly or monthly
installments for a period up to but not exceeding 10 years
as elected by the Participant on his or her Distribution Election. A
Participant may revoke or change his or her Distribution Election
under this Section 7.2 by filing a new Distribution Election with
the Administrator; provided, however, that any Distribution Election
that has not been on file with the Administrator at least 12 months
prior to the first day of the Plan Year in which the Participant's
termination of employment occurs shall be void and disregarded. A
Participant cannot alter or change his Distribution Election once he
has begun to receive payments under the Plan. Notwithstanding the
foregoing, a Participant (or his legal representative) whose
termination of employment occurs by reason of Disability may request
that the Administrator distribute the Participant's Account in
another payment form following such termination of employment for
Disability or defer distribution of the Participant's Account until
such Participant is no longer eligible for coverage under the
Woodward Governor Company Long-Term Disability Plan, in which case
the Administrator, in its sole discretion, shall determine whether
to make payment in another form or defer such distributions after
taking into consideration all factors which it deems relevant. If
the Participant does not have a valid Distribution Election on file
with the Administrator at the time of Retirement or Disability, the
Participant's Account shall be paid in a single sum under paragraph
(a) above.
7.3. DISTRIBUTION ON OTHER TERMINATION OF EMPLOYMENT. If a Participant's
employment with the Company or Affiliates terminates for any reason
other than Retirement, Disability or death, the Participant's
Account shall be paid in a lump sum payment as of the Valuation Date
coincident with or next following such termination of employment.
7.4. UNSCHEDULED WITHDRAWAL. A Participant may request a withdrawal of
all or a portion of his or her Deferral Contribution Amounts and
earnings thereon by filing a Distribution Election with the
Administrator specifying the amount of the Deferral Contribution
Amounts to be withdrawn. Payment of such amount, adjusted by the
amount forfeited as set forth in Subsection (a) below, shall be made
as of the first Valuation Date administratively practicable after
such request is received, and shall be subject to the following:
(a) An amount equal to 10% of the withdrawal requested shall be
debited to the Participant's Account and permanently
forfeited.
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(b) Any Deferral Election in effect at the time of such withdrawal
shall be void for periods after such withdrawal.
(c) The Participant shall not be eligible to file a new Deferral
Election until the election period for the Plan Year
commencing at least 12 months after such withdrawal.
7.5. UNFORESEEABLE EMERGENCY. Prior to the date otherwise scheduled for
payment under the Plan, upon showing an unforeseeable emergency, a
Participant may request that the Administrator accelerate payment of
all or a portion of his or her Deferral Contribution Amounts and
earnings thereon in an amount not exceeding the amount necessary to
meet the unforeseeable emergency. For purposes of the Plan, an
unforeseeable emergency means an unanticipated emergency that is
caused by an event beyond the control of the Participant and that
would result in severe financial or medical hardship to the
Participant if early withdrawal were not permitted. Severe financial
or medical hardship shall be deemed to exist in the event of the
Participant's long and serious illness, impending bankruptcy or
other similar extraordinary circumstances. The determination of an
unforeseeable emergency shall be made by the Administrator in its
sole discretion, based on such information as the Administrator
shall deem to be necessary and relevant and such decision shall be
final and binding on all parties.
7.6. TIME AND FORM OF ELECTIONS. All Distribution Elections under this
Article VII shall be made at the time and in the form established by
the Administrator and shall be subject to such other rules and
limitations that the Administrator, in its sole discretion, may
establish.
7.7. FORM OF PAYMENT AND WITHHOLDING. All payments under the Plan shall
be made in cash and are subject to the withholding of all applicable
federal, state and local and foreign governmental taxes.
VIII. DEATH BENEFITS.
8.1. DEATH PRIOR TO COMMENCEMENT OF BENEFITS. If a Participant dies prior
to commencement of payment of his or her Account, the Participant's
Beneficiary shall receive a survivor benefit in an amount equal to
the Participant's Account balance to be paid in a single lump sum as
soon as practicable following the Participant's death.
8.2. DEATH AFTER COMMENCEMENT OF BENEFITS. If a Participant terminates
employment due to Retirement or Disability, and dies prior to the
time his or her Account balance has been fully distributed, the
Participant's Beneficiary shall receive the remaining portion of the
Participant's Account at the regularly-scheduled date of payment for
any remaining installment payments of the Participant's Account.
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8.3. ADMINISTRATOR DISCRETION REGARDING FORM. Notwithstanding the
foregoing provisions of this Article VIII, a Beneficiary may request
that the Administrator approve an alternate form of payment of
survivor benefits under this Article VIII which request may be
granted in the sole discretion of the Administrator.
IX. ADMINISTRATION.
9.1. AUTHORITY OF ADMINISTRATOR. The Administrator shall have full power
and authority to carry out the terms of the Plan. The Administrator
may establish such rules and regulations as it may consider
necessary or desirable for the effective and efficient
administration of the Plan. The Administrator's interpretation,
construction and administration of the Plan, including any
adjustment of the amount or recipient of the payments to be made,
shall be binding and conclusive on all persons for all purposes.
Neither the Company, including its officers, members or directors,
nor the Administrator or the Board or any member thereof, shall be
liable to any person for any action taken or omitted in connection
with the interpretation, construction and administration of the
Plan.
9.2. PARTICIPANT'S DUTY TO FURNISH INFORMATION. Each Participant shall
furnish to the Administrator such information as it may from time to
time request for the purpose of the proper administration of this
Plan.
9.3. INTERESTED MEMBER OF ADMINISTRATOR. If a member of the Administrator
is also a Participant in the Plan, he or she may not decide or
determine any matter or question concerning his or her benefits
unless such decision or determination could be made by him or her
under the Plan if he or she were not a member of the Administrator.
9.4. INDEMNIFICATION. No person (including any present or former member
of the Administrator, and any present or former officer or member of
the Company or any Affiliate) shall be personally liable for any act
done or omitted to be done in good faith in the administration of
the Plan. Each present or former officer or member of the Company or
any Affiliate to whom the Administrator has delegated any portion of
its responsibilities under the Plan and each present or former
member of the Administrator shall be indemnified and saved harmless
by the Company (to the extent not indemnified or saved harmless
under any liability insurance or other indemnification arrangement
with respect to the Plan) from and against any an all claims of
liability to which they are subjected by reason of any act done or
omitted to be done in good faith in connection with the
administration of the Plan, including all expenses reasonably
incurred in their defense if the Company fails to provide such
defense. No member of the Administrator shall be liable for any act
or omission of any other member of the Administrator, nor for any
act or omission upon his own part, excepting his own willful
misconduct or gross neglect.
9.5. CLAIMS PROCEDURE. If a Participant or Beneficiary ("Claimant") is
denied all or a portion of an expected benefit under this Plan for
any reason, he or she may file a claim with the Administrator. The
Administrator shall notify the Claimant within 90 days of allowance
or denial of the claim, unless the Claimant receives written
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notice from the Administrator prior to the end of the 90-day period
stating that special circumstances require an extension (of up to 90
additional days) of the time for decision. The notice of the
decision shall be in writing, sent by mail to Claimant's last known
address, and if a denial of the claim, shall contain the following
information: (a) the specific reasons for the denial; (b) specific
reference to pertinent provisions of the Plan on which the denial is
based; and (c) if applicable, a description of any additional
information or material necessary to perfect the claim, an
explanation of why such information or material is necessary, and an
explanation of the claims review procedure. A Claimant is entitled
to request a review of any denial of his or her claim by the Board.
The request for review must be submitted within 60 days of mailing
of notice of the denial. Absent a request for review within the
60-day period, the claim shall be deemed to be conclusively denied.
The Claimant or his or her representatives shall be entitled to
review all pertinent documents, and to submit issues and comments
orally and in writing. The Board shall render a review decision in
writing within 60 days after receipt of a request for a review,
provided that, in special circumstances the Board may extend the
time for decision by not more than 60 days upon written notice to
the Claimant. The Claimant shall receive written notice of the
Board's review decision, together with specific reasons for the
decision and reference to the pertinent provisions of the Plan.
X. AMENDMENT AND TERMINATION.
The Board may amend or terminate the Plan at any time; provided, however,
that no such amendment or termination shall have a material adverse effect
on any Participant's rights under the Plan accrued as of the date of such
amendment or termination without such Participant's written consent. Upon
termination of the Plan, the Board may cause a lump-sum payment of all
benefits for all Participants at substantially the same time.
XI. MISCELLANEOUS.
11.1. NO IMPLIED RIGHTS; RIGHTS ON TERMINATION OF SERVICE. Neither the
establishment of the Plan nor any amendment thereof shall be
construed as giving any Participant, Beneficiary or any other
person, individually or as a member of a group, any legal or
equitable right unless such right shall be specifically provided for
in the Plan or conferred by specific action of the Board or the
Administrator in accordance with the terms and provisions of the
Plan. Except as expressly provided in this Plan, neither the Company
nor any of its Affiliates shall be required or be liable to make any
payment under the Plan.
11.2. NO EMPLOYMENT RIGHTS. Nothing herein shall constitute a contract of
employment or of continuing service or in any manner obligate the
Company or any Affiliate to continue the services of any
Participant, or obligate any Participant to continue in the service
of the Company or Affiliates, or as a
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limitation of the right of the Company or Affiliates to discharge
any of their members, with or without cause.
11.3. NATURE OF THE PLAN.
(a) UNFUNDED PLAN. Nothing herein contained shall require or be
deemed to require the Company to segregate, earmark or
otherwise set aside any funds or other assets to provide for
any payments made hereunder. Benefits hereunder shall be paid
from assets which shall continue, for all purposes, to be part
of the general, unrestricted assets of the Company and its
Affiliates. The obligations of the Company hereunder shall be
an unfunded and unsecured promise to pay money in the future.
However, the Company may establish one or more trusts to
assist in meeting its obligations under the Plan, the assets
of which shall be subject to the claims of the Company's
general creditors. No current or former Participant,
Beneficiary or other person, individually or as a member of a
group, shall have any right, title or interest in any account,
fund, grantor trust, or any asset that may be acquired by the
Company in respect of its obligations under the Plan (other
than as a general creditor of the Company with an unsecured
claim against its general assets).
(b) EXCEPTION FOR CHANGE IN CONTROL. Notwithstanding the
provisions of paragraph (a) of this Section 11.3, the Company
shall create a rabbi trust to hold funds to be used in payment
of the obligations of the Company under the Plan, which trust
shall not be funded except as provided in the following
sentence. In the event of a Change in Control (or prior
thereto in the sole discretion of the Company), the Company
shall fund such trust in an amount equal to not less than the
total value of the Participants' Accounts under the Plan as of
the Valuation Date immediately preceding the Change in
Control, provided that any funds contained therein shall
remain subject to the claims of the Company's general
creditors. In addition, upon a Change in Control, the trust by
its terms shall become irrevocable.
11.4. NONTRANSFERABILITY. Prior to payment thereof, no benefit under the
Plan shall be assignable or subject to any manner of alienation,
sale, transfer, claims of creditors, pledge, attachment or
encumbrances of any kind, except pursuant to a domestic relations
order awarding benefits to an "alternate payee" (within the meaning
of Code Section 414(p)(8)) that the Administrator determines
satisfies the criteria set forth in paragraphs (1), (2) and (3) of
Code Section 414(p) (a "DRO"). Notwithstanding any provision of the
Plan to the contrary, the Plan benefits awarded to an alternate
payee under a DRO shall be paid in a single lump sum to the
alternate payee on the Valuation Date as soon as administratively
practicable following the date the Administrator determines the
order is a DRO,
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and such amounts, as adjusted for earnings, gains and losses, will
be deducted from the Participant's Account as of such Valuation
Date.
11.5. SUCCESSORS AND ASSIGNS. The rights, privileges, benefits and
obligations under the Plan are intended to be, and shall be treated
as legal obligations of and binding upon the Company, its successors
and assigns, including successors by merger, consolidation,
reorganization or otherwise.
11.6. PAYMENT WITH RESPECT TO INCAPACITATED PERSONS. Any amounts payable
hereunder to any person who is a minor or under a legal disability,
as determined under applicable state law, or who is unable to manage
properly his or her financial affairs may be paid (a) to the legal
representative of such person, (b) to anyone acting as the person's
agent under a durable power of attorney, (c) to an adult relative or
friend of the person or (d) to anyone with whom the person is
residing. Any payment of a benefit made in accordance with the
provisions of this section shall be a complete discharge of any
liability for the making of such payment under the Plan. The
Administrator's reliance on the written power of attorney or other
instrument of agency governing a relationship between the person
entitled to benefit the person to whom the Administrator directs
payment of the benefit shall be fully protected at least to the same
extent as though the Administrator had dealt directly with the
person entitled to the benefit as a fully competent person. In the
absence of actual knowledge to the contrary, the Administrator may
assume that the instrument of agency was validly executed, that the
person was competent at the time of execution and that at the time
of reliance, the agency had not been terminated or amended.
11.7. ARBITRATION. Any controversy or claim arising out of or relating to
this Plan, or breach hereof, shall be settled by arbitration in the
City of Chicago in accordance with the laws of the State of Illinois
with an arbitrator appointed by the Company. The arbitration shall
be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of an
arbitrator. The arbitrator's determination shall be final and
binding upon all parties and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
11.8. GENDER AND NUMBER. Except when otherwise indicated by the context,
words in the masculine gender shall include the feminine and neuter
genders, the plural shall include the singular, and the singular
shall include the plural.
11.9. HEADINGS. The headings of the various Articles and Sections in the
Plan are solely for convenience and shall not be relied upon in
construing any provisions hereof. Any reference to a Section shall
refer to a Section of the Plan unless specified otherwise.
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11.10. SEVERABILITY. Whenever possible, each provision of the Plan shall
be interpreted in such manner as to be effective and valid under
applicable law, but it any provision of the Plan is held to be
invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other
provision or any other jurisdiction, and the Plan shall be
reformed, construed and enforced in such jurisdiction so as to
best give effect to the intent of the Company under the Plan.
11.11. EFFECT ON OTHER EMPLOYEE BENEFIT PLANS. Any benefit paid or
payable under this Plan shall not be included in a Participant's
compensation for purposes of computing benefits under any employee
benefit plan maintained or contributed by the Company or any
Affiliate except as may otherwise be required under the specific
terms of such employee benefit plan.
11.12. NON-U.S. PARTICIPANTS. With respect to any Affiliate which employs
Participants who reside outside the United States, and
notwithstanding anything herein to the contrary, the Administrator
may, in its sole discretion, amend the terms of the Plan in order
to conform such terms with the requirements of local law or to
meet the objectives of the Plan, and may, where appropriate,
establish one or more sub-plans to reflect such amended
provisions.
11.13. APPLICABLE LAW. This Plan is established under and will be
construed according to the laws of the State of Illinois, to the
extent not preempted by the laws of the United States.
* * *
IN WITNESS WHEREOF, the undersigned has caused this Plan to be executed
this ______ day of _________________, 2000.
WOODWARD GOVERNOR COMPANY
By:
--------------------------------------
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EXHIBIT A
INVESTMENT FUNDS
UNDER
THE WOODWARD GOVERNOR COMPANY EXECUTIVE BENEFIT PLAN
The Investment Funds designated by the Administrator, in its sole
discretion and from time to time, as the basis for determining the hypothetical
investment return to be credited to Participants' Accounts in accordance with
Article 6 of the Woodward Governor Company Executive Benefit Plan (the "Plan"),
if applicable, are currently as follows:
1. Vanguard Treasury Money Market Fund,
2. Vanguard Short-Term Corporate Fund,
3. Vanguard Total Bond Market Index Fund,
4. Vanguard Wellington Fund,
5. Vanguard 500 Index Fund,
6. Vanguard Windsor II Fund,
7. Vanguard U.S. Growth Fund,
8. Vanguard International Growth Fund,
9. Vanguard Explorer Fund, and
10. Woodward Governor Company Common Stock but only if the Participant's
investment election for this Investment Fund is approved in advance
for such Participant by the Board of Directors of Woodward Governor
Company (the "Board"). Notwithstanding anything to the contrary in
this Exhibit A or the Plan, if a Participant is granted permission to
elect this Investment Fund, such Participant may only revoke such
Investment Fund election with the prior approval of the Board. The
applicable value of the common stock as of any Valuation Date shall be
equal to the closing price of such common stock on NASDAQ quoted by
the WALL STREET JOURNAL for the applicable Valuation Date. The
Participant's Account shall also be credited with deemed dividends, if
any, on such common stock.
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