<PAGE>
As filed with the Securities and Exchange Commission on March 31, 2000
Registration No. 333-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
ADAPTIVE BROADBAND CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-1668412
(State of Incorporation) (I.R.S. Employer Identification No.)
----------------------------
1143 Borregas Avenue
Sunnyvale, CA 94089
(Address of principal executive offices)
-----------------------------
SUPPLEMENTAL EXECUTIVE
DEFERRED COMPENSATION PLAN
(Full title of the plan)
Kenneth J. Wees
Vice President, General Counsel and Secretary
1143 Borregas Avenue
Sunnyvale, CA 94089
(408) 732-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------------
Copies to:
Kenneth L. Guernsey, Esq.
Cooley Godward llp
One Maritime Plaza, 20th Floor
San Francisco, CA 94111
(415) 693-2000
----------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
Proposed Maximum Proposed
Title of Securities Amount to be Offering Price Maximum Aggregate Amount of
to be Registered Registered Per Share (1) Offering Price (1) Registration Fee
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock interests in the Adaptive 200,000 51.41 10,282,000 2,714.45
Broadband Corporation Supplemental
Executive Deferred Compensation Plan
(par value $.10)
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee. The offering price per share and the aggregate offering
price are based upon the average of the high and low prices of the
Company's Common Stock as reported on the Nasdaq Market on March 30, 2000
for shares available for grant pursuant to the Supplemental Executive
Deferred Compensation Plan (pursuant to Rule 457(c) under the Act).
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Adaptive Broadband Corporation (the
"Company") with the Securities and Exchange Commission are incorporated by
reference into this Registration Statement:
(a) The Company's latest annual report on Form 10-K filed pursuant to Sections
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")
(b) All other reports filed pursuant to Sections 13(a) or 15(d) of the Exchange
Act since the end of the fiscal year covered by the annual reports, the
prospectus or the registration statement referred to in (a) above.
(c) The description of the Company's Common Stock which is contained in a
registration statement filed under the Exchange Act, including any
amendment or report filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing
of a post-effective amendment which indicates that all securities offered 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 of this
registration statement from the date of the filing of such reports and
documents.
DESCRIPTION OF SECURITIES
Not Applicable.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act. The Registrant's bylaws provide for indemnification of officers, directors
and employees, and the Company has entered into an indemnification agreement
with each officer and director of the Registrant (an "Indemnitee"). Under the
bylaws and such indemnification agreements, the Registrant must indemnify an
Indemnitee to the fullest extent permitted by Delaware law for losses and
expenses incurred in connection with actions in which the Indemnitee is involved
by reason of having been a director or employee of the Registrant. In certain
circumstances, the Registrant is also obligated to advance expenses an
Indemnitee may incur in connection with such actions before any resolution of
the action, and the Indemnitee may sue to enforce his or her right to
indemnification or advancement of expenses.
The Registrant also maintains an insurance policy insuring its directors
and officers against liability for certain acts and omissions while acting in
their official capacities.
As permitted by section 102 of the Delaware General Corporation Law, the
Registrant's certificate of incorporation eliminates a director's personal
liability for monetary damages to the Registrant and its stockholders arising
from a breach or alleged breach of a director's fiduciary duty, except for
liability under section 174 of the Delaware General Corporation Law or liability
for any breach of the director's duty of loyalty to the Registrant or its
stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, or for any transaction
from which the director derived an improper personal benefit. The effect of this
provision in the certificate of incorporation is to eliminate the rights of the
Registrant and its stockholders (through stockholders' derivative suits on
behalf of the Registrant) to recover monetary damages against a director for
breach of fiduciary duty as a director (including breaches resulting from
negligent or grossly negligent behavior) except in the situations described
above.
1
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number
<C> <S>
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to
this Registration Statement.
24.1 Power of Attorney.
99.1+ California Microwave, Inc. Supplemental Executive Deferred
Compensation Plan
99.2+ Adaptive Broadband Corporation Supplemental Executive Deferred
Compensation Plan.
99.3+ Rabbi Trust Agreement for Adaptive Broadband Corporation.
</TABLE>
_______________________
+ Management contract or compensatory plan or arrangement.
2
<PAGE>
UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) 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;
(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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective 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)(i) and (a)(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 issuer pursuant to
`Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference herein.
(b) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) 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.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities Act
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 Securities 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.
The Plan. Pursuant to the requirements of the Securities Act of 1933, as
amended, the California Microwave, Inc. Administrative Committee, the
administrator of the Plan, has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Sunnyvale, State of California, on March 29, 2000.
SUPPLEMENTAL EXECUTIVE DEFERRED
COMPENSATION PLAN
By:/s/ Kenneth J. Wees
--------------------------------
Kenneth J. Wees
Title: Committee Member
3
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of 1933,
as amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for 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 Sunnyvale, State of California, on
March 31, 2000.
Adaptive Broadband Corporation
By: /s/ Frederick D. Lawrence
--------------------------------
Frederick D. Lawrence
Title: Chief Executive Officer
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Frederick D. Lawrence Chairman of the Board, President, Chief March 31 2000
- --------------------------------------------------------- Executive Officer and Director (Principal
Frederick D. Lawrence Executive Officer and Director)
/s/ Donna S. Birks Executive Vice President and Chief March 31, 2000
- --------------------------------------------------------- Financial Officer (Principal Financial and
Donna S. Birks Accounting Officer)
/s/ Kenneth J. Wees Vice President, General Counsel and March 31, 2000
- --------------------------------------------------------- Secretary
Kenneth J. Wees
* Director March 31, 2000
- ---------------------------------------------------------
Leslie G. Denend
* Director March 31, 2000
- ---------------------------------------------------------
George A. Joulwan
* Director March 31, 2000
- ---------------------------------------------------------
William B. Marx, Jr.
* Director March 31, 2000
- ---------------------------------------------------------
Terry W. Ward
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
* Director March 31, 2000
- ---------------------------------------------------------
Fredrick W. Whitridge, Jr.
* By: /s/ Kenneth J. Wees
----------------------------------------------------
Kenneth J. Wees
Attorney-in-Fact
</TABLE>
5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential Page
Exhibit Number Description Numbers
<C> <S> <C>
5.1 Opinion of Cooley Godward LLP. 8
23.1 Consent of Ernst & Young LLP, Independent Auditors. 9
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to
this Registration Statement. --
24.1 Power of Attorney. 10
99.1+ California Microwave, Inc. Supplemental Executive Deferred
Compensation Plan. 11
99.2+ Adaptive Broadband Corporation Supplemental Executive Deferred
Compensation Plan. 46
99.3+ Rabbi Trust Agreement for Adaptive Broadband Corporation. 74
</TABLE>
+ Management contract or compensatory plan or arrangement.
<PAGE>
Exhibit 5.1
March 31, 2000
Adaptive Broadband Corporation
1143 Borregas Avenue
Sunnyvale, CA 94089
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Adaptive Broadband Corporation (the "Company") of a
Registration Statement on Form S-8 (the "Registration Statement") with the
Securities and Exchange Commission covering the offering of up to 200,000 shares
of the Company's Common Stock, par value $.10 per share, (the "Shares") pursuant
to its Supplemental Executive Deferred Compensation Plan (the "Plan").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, your Certificate of Incorporation and By-laws, as amended,
and such other documents, records, certificates, memoranda and other instruments
as we deem necessary as a basis for this opinion. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof, and
the due execution and delivery of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Plan, the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable (except as to shares issued pursuant to certain
deferred payment arrangements, which will be fully paid and nonassessable when
such deferred payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward LLP
By: /s/ Kenneth Guernsey
--------------------
Kenneth L. Guernsey
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Supplemental Executive Deferred Compensation Plan of our
report dated July 23, 1999, with respect to the consolidated financial
statements of Adaptive Broadband Corporation incorporated by reference in its
Annual Report (Form 10-K) for the year ended June 30, 1999 and the related
financial statement schedule included therein, filed with the Securities and
Exchange Commission.
/S/Ernst & Young LLP,
Palo Alto, California
March 27, 2000
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
Know All Persons By These Presents, that each person whose signature
appears below, being a member of the Board of Directors of Adaptive Broadband
Corporation (the "Company"), hereby constitutes and appoints Donna S. Birks and
Kenneth J. Wees, and each of them, as his true and lawful attorney-in-fact and
agent, each with full power of substitution and resubstitution, for and in her
or his name, place and stead, in any and all capacities, to sign on her or his
behalf the Company's Registration Statement on Form S-8 with respect to up to
1,200,000 shares of the Company's common stock issuable under the Company's 1992
Stock Option Plan, and any and all amendments (including post-effective
amendments) thereto, and to file the same, with all exhibits thereto, and all
other documents in connection therewith and with such Registration Statement,
with the Securities and Exchange Commission, with the full power and authority
to do and perform each and every act and thing necessary or advisable to be done
in connection therewith, as fully to all intents and purposes as she or he might
or could do in person, hereby ratifying and confirming all that said attorney-
in-fact and agent, or her or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
DATED: March 20, 2000
/s/ Frederick D. Lawrence /s/ William B. Marx, Jr.
- ------------------------- ------------------------
Frederick D. Lawrence William B. Marx, Jr.
/s/ Leslie G. Denend /s/ Terry W. Ward
- ------------------------- ------------------------
Leslie G. Denend Terry W. Ward
/s/ George A. Joulwan /s/ Frederick W. Whitridge, Jr.,
- ------------------------- --------------------------------
George A. Joulwan Frederick W. Whitridge, Jr.
<PAGE>
Exhibit 99.1
__________________________________
CALIFORNIA MICROWAVE, INC.
SUPPLEMENTAL EXECUTIVE DEFERRED COMPENSATION PLAN
__________________________________
[LOGO OF CALIFORNIA MICROWAVE]
Effective January 1, 1999
<PAGE>
CALIFORNIA MICROWAVE, INC.
SUPPLEMENTAL EXECUTIVE DEFERRED COMPENSATION PLAN
California Microwave, Inc., a Delaware corporation ("Company") has adopted
this Supplemental Executive Deferred Compensation Plan ("Plan") effective as of
January 1, 1999.
1. PURPOSE
- -- -------
The primary purpose of the Plan is to provide deferred compensation to a
select group of management and highly compensated employees through an unfunded
"top hat" arrangement exempt from the fiduciary, funding, vesting, and plan
termination insurance provisions of Title I and Title IV of the ERISA. More
specifically, the Company has adopted this Plan to provide a select group of
Employees with the opportunity to defer their compensation, to invest their
deferrals in Phantom Stock and to receive additional Phantom Stock as Matching
Contributions. The purposes of this Plan also include the deferral of payment
of fees to be earned by outside directors, i.e. members of the Board who are not
officers or common-law employees of the Company, within the meaning of Section
3121 of the Code, and the investment of such deferrals in units of Phantom
Stock.
2. DEFINITIONS AND CAPITALIZED TERMS
- -- ---------------------------------
The capitalized terms, set forth in alphabetical order defined below, are
used throughout the Plan.
(a) "Account" refers to the bookkeeping entries established and maintained by
the Company or the Committee for the purpose of recording (i) the amounts
of Compensation deferred by an Employee and Matching Contributions made by
the Company under this Plan, (ii) any interest accruals or investment
earnings with respect to those amounts, and (iii) any distributions to an
Employee or Beneficiary.
(b) "Beneficiary" refers to the person or entity selected to receive any
portion of an Employee's Account that has not been distributed from the
Plan at the time of the Employee's death. Such designation shall be on a
form provided or approved by the Plan Administrator. In the event a
married Employee designates someone other than his or her spouse as sole,
primary Beneficiary, such initial designation or subsequent change shall be
invalid unless the spouse consents in a writing which names the designated
Beneficiary. If an Employee fails to designate a Beneficiary or no
designated Beneficiary survives the Employee,
<PAGE>
the Plan Administrator may direct payment of benefits to the following
person or persons in the order given below:
The Employee's
(i) spouse,
(ii) descendants, per stirpes,
(iii) parents,
(iv) brothers and sisters, or
(v) estate of the Participant.
(c) "Board" or "Board of Directors" refers to the Board of Directors of the
Company.
(d) "Change in Control" has the meaning specified in Section 280G of the Code
and the regulations thereunder.
(e) "Code" refers to the Internal Revenue Code of 1986, as amended from time to
time.
(f) "Committee" or "Administrative Committee" refers to the officers of the
Company who act on behalf of the Company in discharging the Company's
duties as the Plan Administrator. Notwithstanding any other provision of
the Plan document, to the extent permitted by law, any member of the
Committee or any other officer or employee of the Company who exercises
discretion or authority on behalf of the Company shall not be a fiduciary
of the Plan merely by virtue of his or her exercise of such discretion or
authority. The Board shall identify the Company officers who shall serve
as members of the Committee. Absent a designation to the contrary, the
Vice President and Secretary of the Company shall act on behalf of the
Company and the Committee. Because this Plan is a "top hat" arrangement,
the Committee shall not be subject to the fiduciary duties imposed by the
provisions of Part 4 of Title I of ERISA.
(g) "Common Stock" refers to the Company's voting common stock.
(h) "Company," "Corporation" or "Employer" refers to California Microwave,
Inc., a Delaware corporation.
(i) "Compensation" refers to an Employee's gross salary, including base salary,
commissions, bonuses or awards, payable by the Company after an Employee
first becomes eligible to participate in the Plan and during the period
through which such participation continues. As a general rule, the
Compensation subject to deferral under this Plan is the Employee's base
<PAGE>
salary and bonus under the Company's Executive Incentive Program. For
outside directors, "Compensation" refers to directors fees payable by the
Company after the outside director first becomes eligible to participate in
this Plan and during the period through which such participation continues.
For the 1999 Plan Year, the Compensation an outside director may defer
under the Plan is limited to fees first payable by the Company after
December 31, 1998, for services to be rendered after that date.
(j) "Disabled" or "Disability" refers to a physical or mental condition of an
Employee which (i) occurs after an Employee first defers Compensation under
this Plan, (ii) results from an injury, disease or disorder, and (iii)
renders the Employee totally and permanently incapable of continuing in his
or her customary employment with the Company. In determining whether an
Employee is disabled, the Committee may rely upon the conclusions of any
insurance carrier that has issued a policy of disability income insurance
covering the Employee or upon the conclusions of any physician acceptable
to the Committee. An Employee automatically will satisfy the requirements
under this Plan, with respect to submission of evidence of disability,
throughout the period that he or she remains qualified for Social Security
disability benefits. Any Employee who believes that he or she is entitled
to any advantage, benefit or other consideration under the Plan as a result
of being Disabled shall apply to the Committee for such consideration and
shall provide any evidence of Disability which the Committee in its sole
discretion may request in a manner consistent with the Americans with
Disabilities Act of 1990 and other relevant laws.
(k) "Effective Date" refers to January 1, 1999, with respect to Compensation
first earned, determined or payable after that date.
(l) "Employee" refers to any employee, within the meaning of Section 3121(d) of
the Code, who is highly compensated or who is a member of management and
who is selected by the Company to participate in this Plan. Specifically,
the Plan is made available to employees whose duties and activities within
the Company have strategic import for the success of the entire Company.
These are employees who have assumed an obligation to invest and hold a
certain percentage of their Compensation in Phantom Stock or in shares of
Company common stock. Where the Plan Administrator considers appropriate
in applying the provisions of this Plan, the term Employee shall include
only persons who are Participants or Inactive Participants under Plan.
Where required by context, the term "Employee" shall
<PAGE>
include references to members of the Company's Board who are not officers
or common-law employees of the Company, within the meaning of Code Section
3121. To the extent necessary for the orderly administration of the Plan,
all definitions and other provisions of the Plan shall be construed in a
manner consistent with participation by outside directors and with their
deferral of the inclusion of fees into gross income for federal and state
income tax purposes.
(m) "ERISA" refers to the Employee Retirement Income Security Act of 1974, as
amended from time to time.
(n) "Hardship" refers to an Employee's immediate and heavy financial need
caused by an unforeseeable emergency, as described in Treasury Regulations
Section 1.457-2(h)(4) and (5). In general, but without limitation, the Plan
Administrator shall approve a Hardship withdrawal from an Employee's
Account if the reduction does not exceed the amount needed to pay for the
following unreimbursed expenses: (i) medical expenses defined in Code
Section 213(d) and incurred (or to be incurred) by the Employee, or his or
her spouse or dependents (as described in Code Section 152) as a result of
a sudden or unexpected illness or accident; (ii) loss of a participant's
property as a result of a casualty or other extraordinary, unforeseeable
circumstances attributable to forces beyond the participant's control; and
(iii) other costs recognized by the Plan Administrator to pose an immediate
and heavy financial need on the Employee as a result of an unforeseeable
emergency or other factors beyond an Employee's control.
(o) "Inactive Participant" refers to an Employee who deferred Compensation
under the Plan during a previous Plan Year but who does not defer any
Compensation payable during the current Plan Year.
(p) "Matching Contributions" refers to amounts described in Section 5.6(a)
below.
(q) "Participant" refers to an eligible Employee who elects to defer under the
Plan part or all of his or her Compensation payable during the current Plan
Year.
(r) "Phantom Stock" refers to an artificial unit of value, the amount of one
unit of which varies with the value of one share of the Company's voting
common stock. For purposes of distributions to a Participant, Inactive
Participant or Beneficiary, the Plan may settle part or all of its
obligation in cash or in stock in an amount determined with reference to
<PAGE>
the value of the Company's stock on the last business day before the date
of distribution.
(s) "Plan Administrator" refers to the Company or the Committee as the context
may require.
(t) "Plan Year" refers to the period of 12 consecutive months commencing on
first day of January of each year.
(u) "Qualified Plan" refers to the Company's tax qualified individual account
plan subject to the limits imposed by Code Sections 401(a)(4) and 415.
(v) "Service" and "Years of Service" refers to an Employee's periods of
continuous employment with the Company measured from the Employee's most
recent date of hire or rehire. Continuous employment includes vacations and
other periods of paid or unpaid absence approved by the Company.
(w) "Termination of Employment" refers to an Employee's (i) separation from
service with the Company, (ii) refusal or failure to return to work within
five working days after the date requested by the Company, (iii) failure to
return to work at the conclusion of a leave of absence. In the case of
outside directors, "Termination of Employment" or "Termination" refers to
the voluntary or involuntary cessation of all services as an outside
director without the commencement or recommencement of service as an
officer or common-law employee of the Company, within the meaning of Code
Section 3121.
(x) "Trust" refers to a rabbi trust intended to satisfy the requirements of
Revenue Procedures 92-64 and 92-65 of which a financial institution
selected by the Company serves as trustee. The term "Trustee" shall
include such financial institution and any successor Trustee under the
Trust instrument.
3. ELIGIBILITY
- -- -----------
The Company may, from time to time, in its sole discretion, designate by
name those Employees of the Company who are eligible to participate in the Plan
for one or more Plan Years and the date upon which each such Employee's
participation may commence. All designated Employees shall be notified by the
Company of their eligibility to participate. An Employee shall cease to be
eligible when the Company so notifies such Employee in the Company's sole
discretion. Additionally, an Employee shall not be eligible to participate in
the Plan during the Plan
<PAGE>
Year immediately following the Plan Year in which the Employee takes a Hardship
withdrawal from the Plan. The effective date of any such ineligibility under the
preceding two sentences shall be the first day of the Plan Year coinciding with
or next following the date on which the Board or Committee provides the Employee
with written notice of revocation of eligibility. An Employee's eligibility to
participate in the Plan does not confer upon the Employee any right to any
award, bonus or other remuneration of any kind.
The Committee administering the Plan or in the case of outside directors a
subcommittee on which no outside director participates ("Administrative
Committee" or "Committee"), in its sole discretion, may designate from time to
time those outside directors of the Company who are eligible to participate in
the Plan for one or more Plan Years and the date upon which each such director's
participation may commence. All designated outside directors shall be notified
by the Committee of their eligibility to participate. An outside director shall
cease to be eligible to defer Compensation under the Plan when he or she ceases
to be an outside director or when the Committee, in its sole discretion,
designates the outside director as no longer eligible to participate in the
Plan. An outside director's eligibility to participate in the Plan does not
confer upon the outside director any right to any fee, remuneration or right to
continued participation, election or appointment of any kind.
4. DEFERRAL OF COMPENSATION
- -- ------------------------
4.1 Election to Defer
- --- -----------------
An Employee who is eligible to participate in the Plan may elect to
defer the receipt of Compensation by completing a deferral election form
provided or approved by the Committee. Pursuant to the deferral election form,
an eligible Employee may make two separate deferral elections as follows: (1)
an election to defer any whole percentage but no more than seventy percent (70%)
of the Employee's base salary, and (2) an election to defer any whole percentage
but no more than one hundred percent (100%) of his or her annual bonus or award
under the Company's Executive Incentive Program and other bonus plans if any.
An Employee who elects to participate in the Plan must defer at least one
thousand dollars ($1,000) in Compensation for each Plan Year in which he or she
remains eligible to participate. At the time an Employee completes a deferral
election form, the Employee must designate in writing the method in which the
Compensation deferred for any Plan Year, adjusted
<PAGE>
under Section 5 below, shall be distributed from the Employee's Account.
An outside director who is eligible to participate in the Plan may
elect to defer the receipt of Compensation by completing a deferral election
form provided or approved by the Company or Committee. Pursuant to the deferral
election form, an eligible outside director may elect to defer any whole
percentage of his or her Compensation. An outside director who elects to
participate in the Plan must defer at least $1,000 in Compensation for each Plan
Year in which he or she remains eligible to participate.
4.2 Date of Deferral
- --- ----------------
An eligible Employee must submit his or her deferral election form to
the Committee no later than the last day of the deferral election period. The
last day of the deferral election period shall be (a) the last day preceding the
calendar year in which the eligible Employee will render the services for which
he or she will receive any part of the Compensation payable to the Employee
during that year; or (b) in the year in which an Employee first becomes eligible
to participate, the Employee may make his or her election within the first 30
days after the date the Employee becomes eligible to participate. At the time
of the deferral election, an eligible Employee must specify, on the Plan's
enrollment form, the event or date upon the occurrence of which distributions
are to commence under the Plan and the form in which such distributions shall be
made.
An eligible outside director must submit his or her deferral election
form to the Committee no later than the last day of the deferral election
period. The last day of the deferral election period shall be December 31st,
the last day preceding the calendar year in which the eligible director will
render the services for which he or she will receive any part of the
Compensation payable during that calendar year. At the time of the deferral
election, the outside director must specify, on the Plan's enrollment form, the
event or date upon the occurrence of which distributions are to commence under
the Plan and the form in which such distributions shall be made.
4.3 Multiple Elections
- --- ------------------
An election by an officer or common-law employee to defer Compensation
shall be effective on the date an eligible Employee delivers a completed
deferral election form to the
<PAGE>
Committee; provided, however, that, if the eligible Employee delivers another
properly completed deferral election form to the Committee prior to the close of
the deferral election period described in Section 4.2, the deferral election on
the form bearing the latest date shall control. After the last day of the
election period, the controlling election made prior to the close of the period
shall be irrevocable.
An election by an outside director to defer Compensation shall be
effective on the date an eligible outside director delivers a completed deferral
election to the Committee; provided, however, that, if the eligible outside
director delivers another properly completed deferral election form to the
Committee prior to the close of the deferral election period described in
Section 4.2, the deferral election on the form bearing the latest date shall
control. After the last day of the election period, the controlling election
made prior to the close of the period shall be irrevocable.
4.4 Annual Elections
- --- ----------------
In order to defer any portion of Compensation earned in any calendar
year, an eligible Employee or eligible outside director must submit at least one
completed deferral election form during the one-month period immediately
preceding the start of that calendar year. If an Employee or outside director
fails to make such a submission before the start of the calendar year, the
Employee or outside director will be deemed to have elected not to defer any
Compensation for that calendar year.
4.5 No Hardship Adjustments
- --- -----------------------
After an annual election has taken effect for any Plan Year, a
Participant may not increase or decrease the percentage or amount of
Compensation to be deferred during that Plan Year; except that an Employee or
outside director must cease all deferrals under the Plan if such cessation would
relieve the Employee or outside director of one or more Hardships without any
withdrawals under this Plan.
5. DEFERRED COMPENSATION ACCOUNTS
- -- ------------------------------
5.1 Maintenance of Accounts
- --- -----------------------
The Plan Administrator shall maintain one or more Accounts with
respect to any Compensation deferred by an eligible Employee or outside director
under Section 4 above.
<PAGE>
The Plan Administrator may credit the Account with the full amount of
Compensation deferred in any payroll period. If the Compensation deferred is
subject to federal or state employment taxes (e.g. taxes under the Federal
Insurance Contributions Act or Federal Unemployment Tax Act), said taxes may be
withheld and deducted from a portion of the Employee's Compensation not deferred
under this Plan. A Participant or Inactive Participant shall be fully vested at
all times in amounts deferred under Section 4 above, as adjusted for any
earnings, losses, interest accruals, administrative expenses or distributions as
described below.
5.2 Investment Elections
- --- --------------------
a. Investment Options
------------------
In accordance with rules, procedures and options which the Committee
in its sole discretion may establish from time to time, a Participant shall have
the right to direct the investment of his or her Account, except for any period
of time during which the Company limits Account earnings to interest accruals
under Section 5.4 below. Although the Company shall have the obligation to
follow the Participant's investment directions, the Company, in its sole
discretion, may satisfy its obligation from time to time in one or both of the
following ways. First, the Company may invest assets allocable to the
Participant's Accounts in the specific investments, in the specific amounts and
for the specific periods directed by the Participant; and the Company must
credit or charge the Participant's Accounts with the earnings, gains or losses
resulting from such investments. Second, the Company may invest assets
allocable to the Participant's Accounts in any manner, in any amount and for any
period of time which the Company in its sole discretion may select; but the
Company must credit or charge the Participant's Accounts with the same earnings,
gains or losses that the Participant would have incurred if the Company had
invested the assets allocable to the Participant's Accounts in the specific
investments, in the specific amounts and for the specific periods directed by
the Participant. In accordance with procedures established by the Plan
Administrator, a Participant may change his or her investment directions once
each calendar quarter. Such changes may be made in a writing delivered to the
Company or the Committee no fewer than 15 days preceding the effective date of
the change or as soon thereafter as permitted by law. Nothing in the preceding
sentence shall prohibit the Plan Administrator from implementing a Participant's
investment instructions within fewer than 15
<PAGE>
days after receipt of said instructions. If this Plan is determined to be
subject to the fiduciary provisions of Part 4 of Title I of ERISA, this Plan
shall be treated as a Plan described in Section 404(c) of ERISA and Title 29 of
the Code of Federal Regulations Section 2550.404c-1, in which Plan fiduciaries
may be relieved of liability for any losses which are the direct and necessary
result of investment instructions given by a Participant or Beneficiary.
b. Phantom Stock
-------------
The Company anticipates that, throughout the existence of the Plan,
one of the investment options available to Participants and Inactive
Participants shall be Phantom Stock, each unit of which shall be equal in value
to one share of the Company's voting common stock. All amounts invested in
Phantom Stock shall be treated as if they had been invested in shares of Company
common stock purchased from the Company at fair market value as of the first day
of the month following the date on which Compensation is withheld from the
Employee's paycheck pursuant to a deferral election under this Plan or as soon
thereafter as administratively feasible. Absent contrary investment
instructions from an Employee, an Employee's election to defer Compensation
under this Plan shall constitute consent by the Employee to the Plan
Administrator's investing such deferred Compensation into units of Phantom Stock
and to the Plan Administrator's retaining such Phantom Stock in the Employee's
Account until the earlier of (i) ultimate distribution to the Employee or to his
or her Beneficiary under the Plan or (ii) the receipt of new investment
instructions from the Employee. Despite the foregoing, the Plan Administrator
may but need not prohibit or delay the liquidation, disposition or acquisition
of any Phantom Stock units by any Employee or outside director who is subject to
short-swing trading liability under Section 16(b) of the Securities and Exchange
Act of 1934 if said liquidation, disposition or acquisition may result in the
imposition of such liability.
5.3 Investment Earnings or Losses
- --- -----------------------------
Except for any period of time during which the Company limits Account
earnings to interest accruals under Section 5.4 below, any amounts credited to
the Account of a Participant or Inactive Participant as a result of the deferral
of all or part of his or her Compensation may increase or decrease as a result
of the Company's investment of such amounts during the Plan Year, as described
in Section 5.2 above. A ratable share of Plan investment earnings or losses
under this
<PAGE>
Section 5.3 shall be credited to the Account of a Participant or Inactive
Participant, as determined in good faith by the Committee. At the sole
discretion of the Committee, for any Plan Year, the Committee may allocate to
the Participant's Account either (i) the full amount of the Participant's share
of Plan investment earnings or losses or (ii) the full amount of such share
adjusted for any federal, state or local income or employment taxes attributable
to such earnings or losses. If the full amount of such investment earnings or
losses are allocated to a Participant's Account, any federal, state or local
income or employment tax consequences attributable to such earnings or losses
under this Section 5.3 shall be borne by or inure to the benefit of the Company.
The Participant and his or her Beneficiary understand and agree that they assume
all risk in connection with any decrease in the value of the Compensation
deferred under the Plan and invested in accordance with these Sections 5.2 or
5.3.
5.4 Interest Accruals
- --- -----------------
Prior to the start of any Plan Year, the Company may inform
Participants and Inactive Participants in writing that, during the Plan Year,
the Company will not invest an Employee's deferred Compensation as described in
Sections 5.2 or 5.3 above. Rather, part or all of any amounts credited to the
Account of a Participant or Inactive Participant as a result of the deferral of
all or part of his or her Compensation and Matching Contributions shall accrue
interest compounded annually, as consideration for the use or forbearance of
money. The accrual of interest begins and the compounding of interest occurs on
the first day of each Plan Year or, if later, the date on which an eligible
Employee first defers Compensation under the Plan. The rate at which interest
accrues shall equal the prime rate, plus one percent, offered to borrowers by a
commercial bank in Sunnyvale, California on the last day of the preceding Plan
Year. The Committee shall select the commercial bank before the first day of
the Plan Year during which the accrual occurs. At the sole discretion of the
Company, for any Plan Year (i) the full amount of such accrued interest may be
allocated to a Participant's Account or (ii) adjusted for any federal, state or
local income or employment taxes attributable to such interest, prior to
allocating such interest to a Participant's Account. If the full amount of such
interest accruals are allocated to a Participant's Account, any federal, state
or local income or employment taxes attributable to interest accruals under this
Section 5.4 shall be borne by or inure to the benefit of the Company.
<PAGE>
5.5 Investment of Unpaid Balances
- --- -----------------------------
The unpaid balance of all Accounts payable under the Plan shall
continue to be credited with the investment earnings or losses described in
Sections 5.2 and 5.3 above or, at the election of the Company or Committee,
continued accruals of interest as described in Section 5.4 above.
5.6 Company Contributions
- --- ---------------------
a. Matching Contributions
----------------------
(1) Officers and Common-Law Employees
---------------------------------
Prior to the last day (or effective no later than such last day) of
any Plan Year quarter for which an eligible Employee has deferred Compensation
under this Plan, the Committee may add to his or her Accounts an amount equal to
the Company Matching Contributions. Company Matching Contributions shall be
allocated to the Participant's Account only during the first 3 years following
the Employee's effective date of eligibility. During the Plan's existence, the
Company anticipates that its only Matching Contributions shall be in units of
Phantom Stock computed in two tiers as described below:
Tier I - Company Match Formula
for Matching First Four Hundred Units of Phantom Stock
Purchased With Employee Deferrals in Any Plan Year Quarter
----------------------------------------------------------
Phantom Stock Purchased Company Matching
With Current Employee Deferrals Contribution
- ------------------------------- ------------
Each Four Units Up To One Unit
Four Hundred Units
Tier II - Company Match Formula
for Matching Additional Units of Company Stock
Purchased With Employee Deferrals in Any Plan Year Quarter
----------------------------------------------------------
Phantom Stock Purchased Company Matching
With Employee Deferrals Contribution
----------------------- ------------
Each Two Units From 401 One Unit
To 800 Units
<PAGE>
(2) Outside Directors
-------------------
This Plan does not require or permit Company Matching Contributions
with respect to the deferrals or Accounts of outside directors.
b. Other Contributions
-------------------
Apart from Compensation deferrals and Matching Contributions, the
Company, Employees and outside directors shall not make any contributions for
any Participant under this Plan.
c. Adjustments to Company Contributions
------------------------------------
Once credited to a Participant's or Inactive Participant's Accounts
under this Plan, the amounts described in Section 5.6 shall accrue the interest
or investment return described in Section 5.2, 5.3, 5.4 and 5.5 above, and shall
be paid in accord with Section 7 below.
d. Class-Year Vesting in Company Contributions
-------------------------------------------
Subject to the provisions of Section 5.6(e) below, an Employee shall
vest in each Year's Company Matching Contribution as described in Section 5.6(a)
above, at a rate determined as follows with reference to the Employee's Years of
Service after the allocation of said Matching Contribution to the Employee's
Account:
Years of Service Vested Percentage
---------------- -----------------
Fewer than 2 0%
2 or more 100%
Additionally, if an Employee liquidates (e.g. for distribution or for
a transfer to another investment option) any Phantom Stock units acquired with
Employee deferrals and if such liquidation occurs fewer than two years after the
Employee has received a Company Matching Contribution with respect to Phantom
Stock units acquired with Employee deferrals, the Employee shall forfeit the
Company Matching Contribution made with respect to such Phantom Stock units.
Additionally, except as provided in Section 5.6(e) below, an Employee shall be
100% vested if, (a) prior to his or her Termination of
<PAGE>
Employment, the Employee attains age 65, dies or becomes Disabled, or (b) a
Change in Control occurs.
e. Forfeitures for Misconduct.
---------------------------
Without regard to the number of Years of Service an Employee has
completed with the Company after receiving any allocation of Matching
Contributions and without regard to an Employee's age, Disability or death, if
an Employee separates from service with the Company as a result of the
Employee's misconduct as determined by the Committee, the Employee shall
forfeit all amounts allocated to his or her Accounts under Section 5.6(a) and
(c) above. Such forfeitures will be used to reduce the Company's obligation, if
any, to make Matching Contributions to other Participants or to defray the
expenses of administering the Plan.
5.7 Company's General Assets
- --- ------------------------
Participant understands and agrees that all Compensation deferred
under the Plan and all amounts credited to a Participant's Account under the
Plan (a) are the general assets of the Company, (b) may be used in the operation
of the Company's business or in any other manner permitted by law, and (c)
remain subject to the claims of the Company's general unsecured creditors.
Participant agrees, on behalf of Participant and his or her Beneficiary, that
(i) title to any amounts deferred under the Plan or credited to a Participant's
Account remains in the Company and (ii) neither Participant nor his or her
Beneficiary has any property interests whatsoever in said amounts, except as
general creditors of the Company.
6. EFFECT ON EMPLOYEE BENEFITS
- -- ---------------------------
Amounts deferred under this Plan or distributed pursuant to the terms
of this Plan are not taken into account in the calculation of an Employee's
benefits under any employee pension or welfare benefit program or under any
other compensation policy maintained by the Company, except to the extent
provided in such program or policy.
7. PAYMENT OF DEFERRED COMPENSATION ACCOUNTS
- -- -----------------------------------------
7.1 Income Tax Obligations
- --- ----------------------
If an Employee or outside director is assessed federal, state or local
income taxes by reason of, and computed on the basis of, his or her
undistributed deferred Compensation
<PAGE>
or undistributed interest accrued on his or her Account, the Employee or outside
director shall notify the Committee in writing of such assessment and there
shall be distributed from the Employee's or outside director's Account deferred
Compensation or accrued interest in an amount equal to such tax assessment,
together with any interest due and penalties assessed thereupon within 30 days
following such notice; provided however, that if the Committee determines that
such assessment is improper, it may request that the Employee or outside
director contest the assessment, at the expense of the Company (which expense
shall include all costs of appeal and litigation, including legal and accounting
fees, and any additional interest assessed on the deficiency from and after the
date of the Employee's or outside director's notice to the Committee); and
during the period such contest is pending, the sums otherwise distributable
pursuant to this Section 7.1 shall not be distributed.
7.2 In-Service Withdrawals
- --- ----------------------
a. Withdrawals to Meet Hardships
-----------------------------
If at any time following the first anniversary of initial
participation in the Plan, an Employee or outside director incurs a Hardship, as
described in Section 2(m) above, the Employee or outside director may, by
written notice to the Committee, request that all or any specified part of his
or her Account but not less than $1,000 per withdrawal be paid to the Employee
or outside director; and such withdrawal, if approved by the Committee, shall be
made in a lump sum within 30 days following the Committee's receipt of such
notice. The Committee shall have exclusive discretionary authority to determine
whether to make a Hardship distribution. The Committee's decision shall be
final and binding on all parties. Any Hardship withdrawals from an Account
shall reduce the amount available for subsequent distributions from the Account,
as the Committee may determine. Despite the foregoing, the Committee may but
need not deny a Hardship withdrawal requested by any Employee or outside
director who is subject to short-swing trading liability of Section 16(b) of the
Securities and Exchange Act of 1934 under circumstances in which said withdrawal
may result in the imposition of such liability.
b. Other Withdrawals.
------------------
Prior to the Termination of his or her Employment, a Participant or
Inactive Participant may not
<PAGE>
withdraw any funds from his or her Account, except as provided in Section 7.1
and in paragraph a. of this Section 7.2.
7.3 Termination of Employment
- --- -------------------------
Upon Termination of the Employment of a Participant or Inactive
Participant, the Committee shall distribute his or her Account under the Plan in
a lump sum or in no more than ten substantially equal annual installments, as
elected by the Participant or Inactive Participant at the time of the deferral
of Compensation. The payment from the Account shall occur or commence within 30
days after the first day of the calendar year immediately following the calendar
year in which the Termination of Employment occurs.
7.4 Disability
- --- ----------
Upon the Disability of a Participant or Inactive Participant prior to
Termination of Employment, the Committee shall distribute his or her Account
under the Plan, as elected by the Participant or Inactive Participant, in a lump
sum or in no more than ten substantially equal annual installments as elected by
the Participant or Inactive Participant at the time of the deferral of
Compensation. The payment from the Account shall occur or commence within 30
days after the first day of the calendar year immediately following the calendar
year in which the Disability results in the Employee's termination of
employment. Prior to the death of the Participant or Inactive Participant,
during any period in which a Participant or Inactive Participant remains
Disabled, he or she (or his or her legal representative) may request Hardship
withdrawals from any undistributed portion of his or her Account. Any such
Hardship withdrawals shall reduce the amount available for subsequent
distributions from the Account, as the Company in good faith may determine.
7.5 Death Prior to Commencement of Distributions
- --- --------------------------------------------
Upon the death of a Participant or Inactive Participant prior to the
commencement of any distribution under Sections 7.3 or 7.4 above, the Account of
such Participant or Inactive Participant shall be distributed to his or her
Beneficiary, in a lump sum or in no more than ten substantially equal annual
installments, as elected at the time of the deferral of Compensation under the
Plan. The payment from the Account shall occur or commence within [30] days
after the first day of the calendar year immediately following the calendar year
in which the death of the Participant or Inactive Participant
<PAGE>
occurs. During the period between the death of the Participant or Inactive
Participant and the commencement of distributions to the Beneficiary, the
Beneficiary may request Hardship withdrawals from any undistributed portion of
his or her Account. Any such Hardship withdrawals shall reduce the amount
available for subsequent distributions from the Plan, as the Company may
determine.
7.6 Death After Commencement of Distributions
- --- -----------------------------------------
Upon the death of a Participant or Inactive Participant after the
commencement of any distribution in accordance with Sections 7.3 or 7.4 above,
the balance remaining in the Account of such Participant or Inactive Participant
shall be distributed to his or her Beneficiary in accordance with the terms
elected by the Participant or Inactive Participant under Sections 7.3 or 7.4.
7.7 Default Distribution
- --- --------------------
The Company shall accelerate the payment of Accounts under the Plan as
a lump sum payment (i) if an Employee or outside director Terminates Employment
with the Company at a time when the value of his or her Account is less than
$25,000, (ii) at anytime after an Employee's or outside director's Termination
of Employment if the value of an Account falls below $10,000 or (iii) if an
Employee who has elected installment distributions, terminates employment with
the Company and engages in conduct which the Committee in its sole discretion
determines to be competition against the Company. Additionally, if a
Participant or Inactive Participant fails to elect a form of benefit at the time
of his or her deferral of Compensation, the Company shall distribute the Account
in a lump sum within 30 days after the Account first becomes payable, for any
reason other than Hardship under the Plan.
7.8 Withholding and Other Tax Consequences
- --- --------------------------------------
From any payments made under this Plan, the Company shall withhold any
taxes or other amounts which federal, state or local law requires the Company to
deduct, withhold and deposit. The Company's determination of the type and
amount of taxes to be withheld from any payment shall be final and binding on
all persons having or claiming to have an interest in this Plan or in any
Account under this Plan.
<PAGE>
7.9 Restrictions on Distributions and Withdrawals
- --- ---------------------------------------------
The Plan Administrator may but need not prohibit or delay the
liquidation or other disposition of any Phantom Stock units or the issuance,
acquisition or distribution on any shares of Company common stock with respect
to payments (or the withholding of tax on such payments) to any person who is
subject to short-swing trading liability under Section 16(b) of the Securities
and Exchange Act of 1934 if said liquidation, disposition, issuance, acquisition
or distribution may result in the imposition of such liability.
8. FUNDING
- -- -------
All amounts deferred under this Plan remain or become general assets
of the Company. All payments under this Plan shall come from the general assets
of the Company. The amounts credited to an Employee's or outside director's
Account are not secured by any specific assets of the Company. This Plan shall
not be construed to require the Company to fund any of the benefits provided
hereunder or to establish a trust or purchase an insurance policy or other
product for such purpose. The Company may make such arrangements as it desires
to provide for the payment of benefits. Neither an Employee, outside director,
Participant or Inactive Participant nor his or her Beneficiary or estate shall
have any rights against the Company with respect to any portion of any Account
under the Plan except as general unsecured creditors. No Employee, outside
director, Participant, Inactive Participant, Beneficiary or estate has an
interest in any Account under this Plan until the Employee, outside director,
Participant, Inactive Participant, Beneficiary or estate actually receives
payment from the Account.
9. SUSPENSION OF PAYMENTS UPON COMPANY'S INSOLVENCY
- -- ------------------------------------------------
At all times during the continuance of any trust established in
connection with this Plan ("Trust"), if the Plan Administrator determines that
the Company's financial condition is likely to result in the suspension of
benefit payments from the Trust, the Plan Administrator shall advise
Participants, Inactive Participants and Beneficiaries that payments from the
Trust shall be suspended. If the Trustee subsequently resumes such payments,
the Administrator shall advise Participants, Inactive Participants and
Beneficiaries that, if Trust assets are sufficient, the first payment following
such discontinuance shall include the aggregate amount of all payments due to
Participants, Inactive Participants and Beneficiaries under the terms of the
Plan for the period of such discontinuance, less
<PAGE>
the aggregate amount of any payments made directly by the Company during any
period of discontinuance. No insufficiency of Trust assets shall relieve the
Company of its obligation to make payments when due under the Plan.
10. NON-ALIENATION OF BENEFITS
- --- --------------------------
The interest of any Employee, outside director, Participant, Inactive
Participant or Beneficiary shall not be subject to sale, assignment, transfer,
conveyance, hypothecation, encumbrance, garnishment, attachment, anticipation,
pledge, alienation or other disposition prior to actual distribution from the
Plan; and any attempt to effect such disposition shall be void. No portion of
any Account shall, prior to receipt thereof, be subject to the debts, contracts,
liabilities, or engagements of any Employee, outside director, Participant,
Inactive Participant or Beneficiary. Nothing in the preceding sentence shall
prohibit the Company from recovering from an Employee, outside director,
Participant, Inactive Participant or Beneficiary any payments to which he or she
was not entitled under the Plan.
11. LIMITATION OF RIGHTS
- --- --------------------
Nothing in this Plan document or in any related instrument shall cause
this Plan to be treated as a contract of employment within the meaning of the
Federal Arbitration Act, 9 U.S.C. 1 et seq., or shall be construed as evidence
of any agreement or understanding, express or implied, that the Company (a) will
employ or engage any person in any particular position or level of Compensation,
(b) will offer any person initial or continued participation or awards in any
commission, bonus or other compensation program, or (c) will continue any
person's employment or engagement with the Company.
12. BEST PAYMENTS
- --- -------------
(a) If the gross amount of any payment or benefit under this Plan, either
separately or in combination with any other payment or benefit payable by
the Company or any of its affiliates or pursuant to a plan of the Company
or an affiliate, would constitute a parachute payment within the meaning of
the Code Section 280G, then the total payments and benefits accrued and
payable under this Plan shall not exceed the amount necessary to maximize
the amount receivable by the Employee after payment of all employment,
income and excise taxes imposed on the Employee with respect to such
payments or benefits.
<PAGE>
(b) The Employee may elect by written notice which items of compensation, if
any, shall be reduced so as to meet the requirements of Section 12(a)
above. If there is a dispute between the Company and the Employee
regarding (i) the extent, if any, to which any payments or benefits to the
Employee are parachute payments or excess parachute payments, under Code
Section 280G, or (ii) the base amount of such Employee's Compensation under
Code Section 280G, or (iii) the status of such Employee as a disqualified
individual, under Code Section 280G, such dispute shall be resolved in the
same manner as a claim for benefits under this Plan.
(c) Within 60 days of a Change in Control or, if later, within 30 days of the
Employee's receiving notice of termination of employment from the Company
or the Company's receiving notice of termination of employment from the
Employee, either the Employee or the Company may request (i) a
determination of the amount of any parachute payment, excess parachute
payment, or base amount of compensation, or (ii) a determination of the
reduction necessary to maximize the net receipts of the Employee as
described in Section 12(a) above. Any fees, costs or expenses incurred by
the Employee in connection with such determinations shall be paid equally
by the Employee and the Company.
13. NOTICE UNDER WARN
- --- -----------------
(a) Any amounts paid (i) to any Employee under the Worker Adjustment and
Retraining Notification Act of 1988 ("WARN") or under any other laws
regarding termination of employment, or (ii) to any third party for the
benefit of said Employee or for the benefit of his or her dependents shall
not be offset or reduced by any amounts paid or determined to be payable by
the Company to said Employee or to his or her dependents under this Plan.
(b) A Change in Control shall not be considered an "unforeseeable business
circumstance" under WARN that would relieve the Company of its obligation
to provide layoff notice to Participants or Inactive Participants under
this Plan. In determining whether there has occurred an "employment loss"
that would entitle a Participant or Inactive Participant to notice under
WARN, any voluntary or involuntary separation of the Participant or
Inactive Participant shall be treated as an employment loss entitling the
Employee to such notice.
<PAGE>
14. AMENDMENT OR TERMINATION OF PLAN
- --- --------------------------------
(a) Prior to a Change in Control, the Board of Directors may modify, suspend or
terminate the Plan in any manner that does not (i) reduce any benefits
accrued under this Plan or (ii) constitute a forfeiture of any benefits
vested under this Plan. After a Change in Control, the Plan may not be
amended or terminated in any manner that adversely affects the fixed or
contingent rights of any Participant or Inactive Participant under the
Plan, including but not limited to the right to continue to defer the
receipt of payments until the times specified in Section 7 above or the
right to accrue interest or investment earnings at the rate and in the
manner described in Section 5 above.
(b) Except where the law imposes other requirements, in modifying, suspending
or terminating the Plan, or in taking any other action with respect to the
implementation, operation, maintenance or administration of the Plan, the
Board of Directors may act by a resolution of the full Board or by a
resolution of the Compensation Committee of the Board.
(c) This Plan shall terminate immediately if an impartial arbitrator or court
of competent jurisdiction determines that this Plan is not exempt from the
fiduciary provisions of Part 4 of Title I of ERISA. The Plan shall
terminate as of the date it ceased to be exempt.
(d) Upon termination of the Plan, the Plan Administrator shall distribute all
Accounts, as determined in the sole discretion of the Plan Administrator
(i) in a lump sum to all Participants or (ii) in accordance with the method
designated by Participants at the time of their deferrals.
15. ADMINISTRATIVE PROCEDURES AND DISPUTE RESOLUTION
- --- ------------------------------------------------
15.1 Plan Administrator
- ---- ------------------
The Plan Administrator shall be the Company. The Company may
establish an Administrative Committee composed of any persons, including
officers or employees of the Company, who act on behalf of the Company in
discharging the duties of the Company in administering the Plan. No
Administrative Committee member who is a full-time officer, employee or outside
director of the Company shall receive compensation with respect to his or her
service on the Administrative Committee. Any member of the Administrative
Committee may resign by delivering his or her written resignation to the Board
of Directors of the Company or
<PAGE>
to the Compensation Committee of the Board. The full Board or the Compensation
Committee of the Board may remove any Committee member by providing him or her
with ten (10) days advance written notice of the removal.
15.2 Committee Organization and Procedures
- ---- -------------------------------------
(a) The Chief Financial Officer and Corporate Secretary of the Company may
designate a chairperson from the members of the Administrative Committee.
The Administrative Committee may appoint a secretary, who may or may not be
a member of the Administrative Committee. The secretary shall have the
primary responsibility for keeping a record of all meetings and acts of the
Administrative Committee and shall have custody of all documents, the
preservation of which shall be necessary or convenient to the efficient
functioning of the Administrative Committee. All reports required by law
may be signed by the Chairperson or another member of the Administrative
Committee, as designated by the Chairperson, on behalf of the Company.
(b) The Administrative Committee shall act by a majority of its members in
office and may adopt such rules and regulations as it deems desirable for
the conduct of its affairs. If the Company, the Plan, any Participant or
Inactive Participant is or becomes subject to any rules of the Securities
and Exchange Commission or any national or regional securities exchange,
the Company and the members of the Administrative Committee shall take any
actions which are necessary or desirable for the maintenance, modification
or operation of the Plan in accordance with those rules.
15.3 Administrative Authority
- ---- ------------------------
The Company and the Committee have discretionary authority to perform
all functions necessary or appropriate to the operation of the Plan, including
without limitation authority to (a) construe and interpret the provisions of the
Plan document and any related instrument and determine any question arising
under the Plan document or related instrument, or in connection with the
administration or operation thereof; (b) determine in its sole discretion all
facts and relevant considerations affecting the eligibility of any Employee to
be or become a Participant; (c) decide eligibility for, and the amount of,
benefits for any Participant, Inactive Participant or Beneficiary; (d) authorize
and direct all disbursements under the Plan; and (e) employ and engage such
persons, counsel and agents and to obtain such administrative, clerical,
medical,
<PAGE>
legal, audit and actuarial services as it may deem necessary in carrying out the
provisions of the Plan. The Company shall be the "administrator" as defined in
Section 3(16)(A) of ERISA for purposes of the reporting and disclosure
requirements of ERISA and the Code. The Corporate Secretary of the Company (or
in his or her absence, the Chief Financial Officer of the Company) shall be the
agent for service of process on the Plan.
15.4 Expenses
- ---- --------
All reasonable expenses that are necessary to operate and administer
the Plan shall be paid directly by the Company. All reasonable costs incurred
by a Committee member in the discharge of the Company's or his or her duties
under the Plan shall be paid or reimbursed by the Company. Such costs shall
include fees or expenses arising from the Committee's retention, with the
consent of the Company, of any attorneys, accountants, actuaries, consultants or
recordkeepers required by the Committee to discharge its duties under the Plan.
Nothing in the preceding two sentences or in any other provisions of the Plan
shall require the Company to pay or reimburse any Committee member or any other
person for any cost, liability, loss, fee or expense incurred by the Committee
member or other person in any dispute with the Company; nor may any Committee
member or other person reimburse himself, herself or itself from any Plan
contributions or from the principal or income of investment or funding vehicle
for the Plan for any such cost, liability, loss, fee or expense.
15.5 Insurance
- ---- ---------
The Company may, but need not, obtain liability insurance to protect
its directors, officers, employees or representatives against loss in the
discharge of their administrative responsibilities in the operation of the Plan.
15.6 Claims Procedure
- ---- ----------------
(a) A claim for benefits shall be considered filed only when actually received
by the Plan Administrator.
(b) Any time a claim for benefits is wholly or partially denied, the
Participant, Inactive Participant or Beneficiary (hereinafter "Claimant")
shall be given written notice of such denial within 30 days after the claim
is filed, unless special circumstances require an extension of time for
processing the claim. If there is an extension, the Claimant shall be
notified of the extension and the reason for the
<PAGE>
extension within the initial 30-day period. The extension shall expire
within 60 days after the claim is filed. Such notice will indicate the
reason for denial, the pertinent provisions of the Plan on which the denial
is based, an explanation of the claims appeal procedure set forth herein,
and a description of any additional material or information necessary to
perfect the claim and an explanation of why such material or information is
necessary.
15.7 Appeal Procedures
- ---- -----------------
(a) Any person who has had a claim for benefits denied by the Plan
Administrator, or is otherwise adversely affected by the action or inaction
of the Plan Administrator, shall have the right to request review by the
Plan Administrator. Such request must be in writing, and must be received
by the Plan Administrator within 60 days after such person receives notice
of the Plan Administrator's action. If written request for review is not
made within such 60-day period, the Claimant shall forfeit his or her right
to review. The Claimant or a duly authorized representative of the
Claimant may review all pertinent documents and submit issues and comments
in writing.
(b) The Plan Administrator shall then review the claim. The Plan Administrator
may issue a written decision reaffirming, modifying or setting aside its
former action within 30 days after receipt of the written request for
review, or 60 days if special circumstances require an extension. The
Claimant shall be notified in writing of any such extension within 30 days
following the request for review. An original or copy of the decision
shall be furnished to the Claimant. The decision shall set forth the
reasons and pertinent plan provisions or relevant laws on which the
decision rests. The decision shall be final and binding upon the Claimant
and the Plan Administrator and all other persons having or claiming to have
an interest in the Plan or in any Account established under the Plan.
15.8 Arbitration
- ---- -----------
(a) Any Participant's, Inactive Participant's or Beneficiary's claim remaining
unresolved after exhaustion of the procedures in Section 15.6 and 15.7 (and
to the extent permitted by law any dispute concerning any breach or claimed
breach of duty regarding the Plan) shall be settled solely by binding
arbitration at the Employer's principal place of business at the time of
the arbitration, in accordance with the
<PAGE>
Employment Claims Rules of the American Arbitration Association. Judgment
on any award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. Each party to any dispute regarding the Plan shall
pay the fees and costs of presenting his, her or its case in arbitration.
All other costs of arbitration, including the costs of any transcript of
the proceedings, administrative fees, and the arbitrator's fees shall be
borne equally by the parties.
(b) Except as otherwise specifically provided in this Plan, the provisions of
this Section 15.8 shall be absolutely exclusive for any and all purposes
and fully applicable to each and every dispute regarding the Plan including
any claim which, if pursued through any state or federal court or
administrative proceeding, would arise at law, in equity or pursuant to
statutory, regulatory or common law rules, regardless of whether such claim
would arise in contract, tort or under any other legal or equitable theory
or basis. The arbitrator who hears or decides any claim under the Plan
shall have jurisdiction and authority to award only Plan benefits and
prejudgment interest; and apart from such benefits and interest, the
arbitrator shall not have any authority or jurisdiction to make any award
of any kind including, without limitation, compensatory damages, punitive
damages, foreseeable or unforeseeable economic damages, damages for pain
and suffering or emotional distress, adverse tax consequences or any other
kind or form of damages. The remedy, if any, awarded by such arbitrator
shall be the sole and exclusive remedy for each and every claim which is
subject to arbitration pursuant to this Section 15.8. Any limitations on
the relief that can be awarded by the arbitrator are in no way intended (i)
to create rights or claims that can be asserted outside arbitration or (ii)
in any other way to reduce the exclusivity of arbitration as the sole
dispute resolution mechanism with respect to this Plan.
(c) The Plan and the Company will be the necessary parties to any action or
proceeding which involves the Plan. No person employed by the Company, no
Participant, Inactive Participant or Beneficiary or any other person having
or claiming to have an interest in the Plan will be entitled to any notice
or process, unless such person is a named party to the action or
proceeding. In any arbitration proceeding all relevant statutes of
limitation shall apply. Any final judgment or decision that may be entered
in any such action or proceeding will be binding and conclusive on all
persons having or claiming to have any interest in the Plan.
<PAGE>
15.9 Notices
- ---- -------
Any notice from the Company or the Committee to an Employee, outside
director, Participant, Inactive Participant or Beneficiary regarding this Plan
may be addressed to the last known residence of said person as indicated in the
records of the Company. Any notice to, or any service of process upon, the
Company or the Committee with respect to this Plan may addressed as follows:
Mr. Kenneth Wees
Corporate Secretary
California Microwave, Inc.
1143 Borregas Avenue
Sunnyvale, California 94089
15.10 Indemnification
- ----- ---------------
To the extent permitted by law, the Company shall, and hereby does,
indemnify and hold harmless any director, officer or employee of the Company who
is or may be deemed to be responsible for the operation of the Plan, from and
against any and all losses, claims, damages or liabilities (including attorneys'
fees and amounts paid, with the approval of the Board, in settlement of any
claim) arising out of or resulting from a duty, act, omission or decision with
respect to the Plan, so long as such duty, act, omission or decision does not
involve gross negligence or willful misconduct on the part of such director,
officer or employee. Any individual so indemnified shall, within ten (10) days
after receipt of notice of any action, suit or proceeding, notify the Corporate
Secretary of the Company (or in the absence of the Corporate Secretary, the
Chief Financial Officer ("CFO") of the Company) and offer in writing to the
Secretary or CFO the opportunity, at the Company's expense, to handle and defend
such action, suit or proceeding, and the Company shall have the right, but not
the obligation, to conduct the defense in any such action, suit or proceeding.
An individual's failure to give the Corporate Secretary or CFO such notice and
opportunity shall relieve the Company of any liability to said individual under
this Section 15.10. The Company may satisfy its obligations under this
provision (in whole or in part) by the purchase of insurance. Any payment by an
insurance carrier to or on behalf of such individual shall, to the extent of
such payment, discharge any obligation of the Company to the individual under
this indemnification.
<PAGE>
16. MISCELLANEOUS
- --- -------------
16.1 Alternative Acts and Times
- ---- --------------------------
If it becomes impossible or burdensome for the Company or the
Committee to perform a specific act at a specific time required by this Plan,
the Company or Committee may perform such alternative act which most nearly
carries out the intent and purpose of this Plan and may perform such required or
alternative act at a time as close as administratively feasible to the time
specified in this Plan for such performance. Nothing in the preceding sentence
shall allow the Company or Committee to accelerate or defer any payments to
Participants or Inactive Participants under this Plan, except as otherwise
expressly permitted herein.
16.2 Gender and Number
- ---- -----------------
Whenever used herein, pronouns shall include all genders, and the
singular shall include the plural, and the plural shall include the singular,
whenever the context shall plainly so requires.
16.3 Governing Law and Severability
- ---- ------------------------------
This Plan shall be construed in accordance with the laws of the State
of California (exclusive of its rules regarding conflicts of law) to the extent
that such laws are not preempted by ERISA or other federal laws. If any
provision of this Plan shall be held illegal or invalid for any reason, such
determination shall not affect the remaining provisions of this Plan which shall
be construed as if said illegal or invalid provision had never been included.
16.4 Facility of Payment
- ---- -------------------
If the Plan Administrator, in its sole discretion, determines that
any Employee, outside director, Participant, Inactive Participant or Beneficiary
by reason of infirmity, minority or other disability, is physically, mentally or
legally incapable of giving a valid receipt for any payment due him or her or is
incapable of handling his or her own affairs and if the Plan Administrator is
not aware of any legal representative appointed on his or her behalf, then the
Plan Administrator, in its sole discretion, may direct (a) payment to or for the
benefit of the Employee, outside director, Participant, Inactive Participant or
Beneficiary; (b) payment to any person or institution maintaining custody of the
Employee,
<PAGE>
outside director, Participant, Inactive Participant or Beneficiary; or (c)
payment to any other person selected by the Plan Administrator to receive,
manage and disburse such payment for the benefit of the Employee, outside
director, Participant, Inactive Participant or Beneficiary. The receipt by any
such person of any such payment shall be a complete acquittance therefor; and
any such payment, to the extent thereof, shall discharge the liability of the
Company, the Committee, and the Plan for any amounts owed to the Employee,
outside director, Participant, Inactive Participant or Beneficiary hereunder. In
the event of any controversy or uncertainty regarding who should receive or whom
the Plan Administrator should select to receive any payment under this Plan, the
Plan Administrator may seek instruction from a court of proper jurisdiction or
may place the payment (or entire Account) into such court with final
distribution to be determined by such court.
16.5 Correction of Errors
- ---- --------------------
Any crediting of Compensation or interest accruals to the Account of
any Employee, outside director, Participant, Inactive Participant or Beneficiary
under a mistake of fact or law shall be returned to the Company. If an
Employee, outside director, Participant, Inactive Participant or Beneficiary in
an application for a benefit or in response to any request by the Company or the
Plan Administrator for information, makes any erroneous statement, omits any
material fact, or fails to correct any information previously furnished
incorrectly to the Company or the Plan Administrator, or if the Plan
Administrator makes an error in determining the amount payable to an Employee,
outside director, Participant, Inactive Participant or Beneficiary, the Company
or the Plan Administrator may correct its error and adjust any payment on the
basis of correct facts. The amount of any overpayment or underpayment may be
deducted from or added to the next succeeding payments, as directed by the Plan
Administrator. The Plan Administrator and the Company reserve the right to
maintain any action, suit or proceeding to recover any amounts improperly or
incorrectly paid to any person under the Plan or in settlement of a claim or
satisfaction of a judgment involving the Plan and to obtain any other remedies
available under federal or state law.
16.6 Missing Persons
- ---- ---------------
In the event a distribution of part or all of an Account is required
to be made from the Plan to an Employee, outside director, Participant, Inactive
Participant or
<PAGE>
Beneficiary, and such person cannot be located, the relevant portion of the
Account shall escheat in accordance with the laws of the State of California. If
the affected Employee, outside director, Participant, Inactive Participant or
Beneficiary later presents himself or herself for payment by the Company, his or
her portion of the Account shall be reinstated and distributed as soon as
administratively feasible. The Company shall reinstate the amount forfeited by
reclaiming such amount from the State of California, and allocating it to the
Account of the affected Employee, outside director, Participant, Inactive
Participant or Beneficiary. Prior to forfeiting any Account, the Company shall
attempt to contact the Employee, outside director, Participant, Inactive
Participant or Beneficiary by return receipt mail (or other carrier) at his or
her last known address according to the Company's records, and, where practical,
by letter-forwarding services offered through the Internal Revenue Service, or
the Social Security Administration, or such other means as the Plan
Administrator deems appropriate.
16.7 Status of Participants
- ---- ----------------------
In accordance with Revenue Procedure 92-65 Section 3.01(d), this
Plan hereby provides:
(a) Employees, outside directors, Participants and Inactive Participants under
this Plan shall have the status of general unsecured creditors of the
Company;
(b) This Plan constitutes a mere promise by the Company to make benefit
payments in the future;
(c) Any trust to which this Plan refers (i.e. any trust created by the Company
and any assets held by the trust to assist the Company in meeting its
obligations under the Plan) shall conform to the terms of the model trust
described in Revenue Procedure 92-64; and
(d) It is the intention of the parties that the arrangements under this Plan
shall be unfunded for tax purposes and for purposes of Title I of ERISA.
16.8 Company Stock Subject to The Plan
- ---- ---------------------------------
a. Number of Shares
----------------
Without limiting the application of Section 16.8(b) below, regarding
changes in the capital structure of the Company, the maximum aggregate number of
shares of Company
<PAGE>
Common Stock which may be distributed to any Employee under this Plan is the
number sufficient to enable Employees and outside directors to satisfy the
equity holding requirements imposed by the Company.
b. Changes In Capital Structure
----------------------------
Subject to any required action by the shareholders and directors of
the Company, the number of units of Phantom Stock allocable to the Account of
any Employee and the number of Shares of Common Stock distributable from the
Account of any Participant or Inactive Participant and the per-unit value or
per-share price thereof shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of Common Stock resulting from a stock
split, reverse stock split, combination, reclassification, the payment of a
stock dividend on the Common Stock or any other increase or decrease in the
number of such Shares of Common Stock effected without receipt of consideration
by the Company. Such adjustment shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
The Committee may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the number or class of securities
covered by the Plan, as well as the value thereof or price to be paid therefor,
in the event of the Company's effecting one or more reorganizations,
recapitalizations, rights offerings, or other increases or reductions of the
number of shares of its outstanding Common Stock, or in the event of the
Company's being consolidated with or merged into any other corporation. Unless
otherwise determined by the Committee, upon the dissolution or liquidation of
the Company or upon any merger or consolidation in any Plan Year, if the Company
is not the surviving corporation, a Participant's right to receive units of
Phantom Stock or shares of Company Stock computed with reference to a
Participant's Compensation deferrals for the entire Plan Year or with reference
to the value of a Participant's or Inactive Participant's Account, shall
terminate and thereupon become null and void.
c. Necessary Actions
-----------------
The Plan shall become effective on January 1, 1999. The Plan shall
continue in effect for a term of twenty (20) years unless sooner terminated or
unless extended by the Board as described above. To the extent required by law,
as determined by the Company, the adoption of the Plan shall be
<PAGE>
subject to approval by the affirmative vote of the shareholders of the Company
in accordance with the federal laws of the United States or of the state of
California if applicable. Shares of Common Stock or units of Phantom Stock shall
not be issued with respect to any Compensation deferrals under the Plan unless
the issuance and delivery of such securities pursuant thereto shall comply with
all relevant provisions of federal, state and local securities laws. As a
condition to the issuance of securities under the Plan, the Company may require
the Participant or Inactive Participant to represent and warrant, at the time of
any allocation of the securities, that the securities are being acquired only
for investment and without any present intention to sell or distribute such
securities if, in the opinion of the Company, such a representation is required
by any of the aforementioned relevant provisions of law. During the term of this
Plan, the Company will at all times reserve and keep available the number of
securities as shall be sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain pertinent approval or exemption from any
regulatory body having jurisdiction and authority deemed by the Company to be
necessary to the lawful allocation, issuance or sale of any securities hereunder
shall relieve the Company of any liability in respect of the nonallocation,
nonissuance or nonsale of such securities as to which such requisite authority
shall not have been obtained.
16.9 Employee and Spouse Acknowledgement
- ---- -----------------------------------
By executing or completing a deferral election, enrollment,
beneficiary designation or investment instruction form for this Plan, each
Employee or outside director on behalf of himself or herself -- and, if Employee
or outside director is married, on behalf of his or her spouse -- thereby
acknowledges the following: (a) each of them has read and understood this Plan
document, (b) each of them knowingly and voluntarily agrees to be bound by the
provisions of the Plan, as amended unilaterally by the Employer from time to
time, including those Plan provisions which require the resolution of disputes
by binding out-of-court arbitration. Employees and outside directors further
acknowledges that they have had the opportunity to consult with counsel of their
own choosing with respect to all of the financial, tax and legal consequences of
participating in this Plan, including in particular the effects of participation
on any community property or other interest which the Employee's or outside
director's spouse may have in the amounts deferred under this California
Microwave, Inc. Supplemental Executive Deferred Compensation Plan.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed this document on
the date set forth adjacent to his or her signature below.
California Microwave, Inc.
Dated: December 20, 1998 By: /s/ Donna Birks
-------------------- ------------------------------
Donna Birks
Executive Vice President and Chief
Financial Officer
Dated: December 20, 1998 By: /s/ Kenneth Wees
----------------- -------------------------------
Kenneth Wees
Vice President, General Counsel and
Secretary
<PAGE>
Exhibit 99.2
[LOGO OF ADAPTIVE BROADBAND CORPORATION]
ADAPTIVE BROADBAND CORPORATION
SUPPLEMENTAL EXECUTIVE
DEFERRED COMPENSATION PLAN
Effective as of January 1, 2000
<PAGE>
ADAPTIVE BROADBAND CORPORATION
SUPPLEMENTAL EXECUTIVE DEFERRED COMPENSATION PLAN
Effective as of January 1, 2000
RECITALS
--------
This Adaptive Broadband Corporation Supplemental Executive Deferred
Compensation Plan (the "Plan") was adopted by Adaptive Broadband Corporation
(the "Employer") for certain of its executive employees and members of its Board
of Directors. The purpose of the Plan is to offer those employees and Outside
Directors an opportunity to defer the receipt of compensation in order to
provide deferred compensation benefits taxable pursuant to section 451 of the
Internal Revenue Code of 1986, as amended (the "Code"). The Plan is also
intended to allow such employees and Outside Directors to invest their deferrals
in Phantom Stock of the Company, and in the case of eligible employees, to
receive additional Phantom Stock as Matching Contribution Credits. The Plan is
intended to be a "top-hat" plan (i.e., an unfunded deferred compensation plan
maintained for a select group of management or highly-compensated employees)
under sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974 ("ERISA") and a Board of Directors deferred compensation
plan.
This Plan represents the merger of two plans, the California Microwave
Non-qualified Deferred Compensation Plan (the "Prior Plan") and the Adaptive
Broadband Corporation Supplemental Executive Deferred Compensation Plan (the
"New Plan"). The Employer hereby consolidates, amends and restates both plans
into this single plan which assumes the name of the New Plan, effective as of
January 1, 2000. However, certain provisions of the Plan take effect in March,
2000, as specifically provided herein.
The Prior Plan and the New Plan are hereby consolidated and amended to
read as follows:
ARTICLE 1
---------
DEFINITIONS
-----------
1.1 ACCOUNT means the balance credited to a Participant's or Beneficiary's
-------
Plan account on the books of the Employer, including contribution and deferral
credits and deemed income, gains and losses (as determined pursuant to Section
5.3) credited thereto during a given year. A participant shall have a separate
Account for each year in which they participate in the Plan. A Participant's
Account may include a Compensation Deferral Account, a Matching Contribution
Account, and/or a Prior Plan Account. A Participant's or Beneficiary's Account
value shall be determined as of the date of reference.
1.2 ACTIVE PARTICIPANT means any currently Eligible Individual who elects
------------------
to make Compensation Deferrals pursuant to Section 3.1 of the Plan during the
current Plan Year.
1.
<PAGE>
1.3 ADAP STOCK FUND means an account maintained on the books of the
---------------
Employer reflecting credits to Participants' Accounts in Phantom Stock.
1.4 BENEFICIARY means any person or person so designated in accordance
-----------
with the provisions of Article 8.
1.5 CHANGE OF CONTROL will occur if (a) any Person (as defined in Section
-----------------
2(a)(2) of the Securities Act of 1933, as amended) other than the Employer, is
or becomes the beneficial owner, directly or indirectly (including by holding
securities which are exercisable for or convertible into shares of capital stock
of the Employer), of 30% or more of the combined voting power of the outstanding
shares of capital stock of the Employer entitled to vote generally in the
election of directors; or (b) the Employer sells, leases or exchanges all or
substantially all of its property and assets under Section 271 of the General
Corporation Law of the State of Delaware, or (c) Continuing Directors cease to
constitute a majority of the Board, or (d) a majority of the Employer's outside
directors determine that a Change in Control has occurred.
For this purpose, the term "Continuing Directors" means the directors of
the Employer in office on January 1, 1999 and any successor to any such director
whose nomination or selection was approved by a majority of the directors in
office at the time of the director's nomination or selection and who is not an
"affiliate" or "associate" (as defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended) of any person who is the beneficial owner,
directly or indirectly (including holding securities which are exercisable for
or convertible into shares of capital stock of the Employer) of 10% or more of
the combined voting power of the outstanding shares of capital stock of the
Employer entitled to vote generally in the election of directors. Moreover, for
this purpose the term "outside directors, as used in this Section, means those
members of the Employer's Board of Directors who are not, and during the past
six months were not, an employee or officer of the Employer.
1.6 CODE means the Internal Revenue Code of 1986 and the regulations
----
thereunder, as amended from time to time.
1.7 COMMON STOCK means the Employer's voting common stock.
------------
1.8 COMPENSATION means specifically compensation that may be deferred
------------
under the Plan. For employees, "Compensation" means base salary, sales
commissions under the Employer's Sales Incentive Plan (SIP) and bonuses under
the Employer's Executive Incentive Plan (EIP), payable by the Employer to an
Eligible Individual after the individual first becomes eligible to participate
in this Plan and during the period through which such participation continues.
For Outside Directors, "Compensation" means directors' fees and committee
meeting attendance fees payable by the Employer after the Outside Director first
becomes eligible to participate in this Plan and during the period through which
such participation continues.
1.9 COMPENSATION DEFERRAL ACCOUNT is defined in Section 3.2.
-----------------------------
1.10 COMPENSATION DEFERRALS is defined in Section 3.1.
----------------------
2.
<PAGE>
1.11 DESIGNATION DATE means the first day of each calendar quarter, or
----------------
such other date or dates designated by the Employer as of which a designation of
deemed investment directions (or a change in a prior direction) by an individual
pursuant to Section 5.1 shall become effective.
1.12 DISABILITY or DISABLED refers to a physical or mental condition of a
----------------------
Participant which (i) occurs after the Participant first defers Compensation
under this Plan, (ii) results from an injury, disease or disorder, and (iii)
renders the Participant totally and permanently incapable of continuing in his
or her customary employment with the Employer, as determined by the Employer.
In determining whether a Participant is Disabled, the Employer may rely upon the
conclusions of any insurance carrier that has issued a policy of disability
income insurance covering the Participant or upon the conclusions of any
physician acceptable to the Employer. A Participant shall automatically be
considered Disabled throughout the period that he or she remains qualified for
Social Security disability benefits.
1.13 EFFECTIVE DATE of this amendment and restatement means January 1,
--------------
2000.
1.14 ELIGIBLE INDIVIDUAL means, for any Plan Year (or applicable portion
-------------------
thereof), a person employed by the Employer who is determined by the Employer to
be a member of a select group of management or highly compensated employees, or
a member of the Employer's Board of Directors who is not an officer or common-
law employee of the Employer. Employees designated as Eligible Individuals
shall be employees whose duties and activities within the Employer have
strategic import for the success of the entire Employer and who have assumed an
obligation to invest and hold a certain percentage of their Compensation in
Phantom Stock or in shares of Employer Common Stock.
By each December 31, the Employer shall notify those individuals, if
any, who will be Eligible Individuals for the next Plan Year, of their right to
participate in the Plan. If the Employer first designates an individual as an
Eligible Individual during a Plan Year, the Employer shall notify such
individual of its determination and of the date during the Plan Year on which he
or she shall first become eligible to participate.
1.15 EMPLOYER means Adaptive Broadband Corporation and its successors and
--------
assigns unless otherwise herein provided, or any other corporation or business
organization which, with the consent of Adaptive Broadband Corporation, or its
successors or assigns, assumes the Employer's obligations hereunder, or any
other corporation or business organization which agrees, with the consent of
Adaptive Broadband Corporation, to become a party to the Plan.
1.16 FINANCIAL HARDSHIP is defined in Section 6.4.
------------------
1.17 INACTIVE PARTICIPANT means a Participant who deferred Compensation
--------------------
under the Plan during a previous Plan Year but who does not defer any
Compensation payable during the current Plan Year and has an Account balance.
An Inactive Participant may no longer be an Eligible Individual, but continues
to "participate" in the Plan in that his or her Account participates in deemed
investment fund gains and loses.
1.18 MATCHING CONTRIBUTION ACCOUNT is defined in Section 3.4.
-----------------------------
3.
<PAGE>
1.19 MATCHING CONTRIBUTION CREDITS is defined in Section 3.3.
-----------------------------
1.20 OUTSIDE DIRECTOR means a member of the Employer's Board or Directors
----------------
who is not an officer or a common-law employee of the Employer.
1.21 PARTICIPANT means any Prior Plan Participant, and anyone who is or
-----------
was an Eligible Individual and who has an Account balance. A Participant may be
Active or Inactive.
1.22 PARTICIPANT ENROLLMENT AND ELECTION FORM and ELECTION CHANGE FORM
-----------------------------------------------------------------
means the form or forms on which an Eligible Individual elects to defer
Compensation hereunder and on which the Participant makes certain other
designations as required thereon.
1.23 PHANTOM STOCK means an artificial unit of value, the amount of one
-------------
unit of which varies with the value of one share of the Employer's voting Common
Stock. Effective March 11, 2000, all distributions to a Participant or
Beneficiary with respect to Phantom Stock shall be made in Common Stock of the
Employer. Prior to March 10, 2000, for purposes of distributions to a
Participant or Beneficiary, the Plan may settle part of all of its obligation in
cash or in stock in an amount determined with reference to the value of the
Employer's Common Stock on the last business day before the date of
distribution.
1.24 PLAN means this Adaptive Broadband Corporation Supplemental Executive
----
Deferred Compensation Plan, as amended from time to time.
1.25 PLAN YEAR means the twelve (12) month period ending on the December
---------
31 of each year during which the Plan is in effect.
1.26 PRIOR PLAN means the California Microwave Non-qualified Deferred
----------
Compensation Plan.
1.27 PRIOR PLAN ACCOUNTS means the account reflecting the balance credited
-------------------
to a Prior Plan Participant's account in the Prior Plan as of the close of
business on December 31, 1999, plus deemed earnings and losses thereon.
1.28 PRIOR PLAN PARTICIPANT means a Participant who had an account balance
----------------------
under the Prior Plan on the Effective Date.
1.29 TERMINATION OF EMPLOYMENT means, with respect to an employee, the
-------------------------
employee's (i) separation from service with the Employer, (ii) refusal or
failure to return to work within five (5) business days after the date requested
by the Employer, or (iii) failure to return to work at the conclusion of a leave
of absence. With respect to Outside Directors of the Employer, "Termination of
Employment" means the voluntary or involuntary cessation of all services as an
Outside Director without the commencement or recommencement of service as an
officer or common-law employee of the Company, within the meaning of Code
Section 3121.
1.30 TERMINATION UPON A CHANGE OF CONTROL means the employee's separation
------------------------------------
from service with the Employer (i) on the day of a Change of Control and (ii) as
a result of a Change of Control.
4.
<PAGE>
1.31 TRUST means the Trust described in Article 12.
-----
1.32 TRUSTEE means the trustee of the Trust described in Article 12.
-------
1.33 VALUATION DATE means the last day of each Plan Year and any other
--------------
date that the Employer, in its sole discretion, designates as a Valuation Date.
ARTICLE 2
---------
ELIGIBILITY AND PARTICIPATION
-----------------------------
2.1 REQUIREMENTS. Each Eligible Individual shall be eligible to become a
------------
Participant on the date specified by the Employer. An individual shall cease to
be an Eligible Individual upon his or her Termination of Employment or, if
earlier, at the end of the Plan Year in which the Employer determines, in its
discretion, to end his or her status as an Eligible Individual and so notifies
such individual.
Participation in the Participant Compensation Deferral feature of the
Plan is voluntary. In order to participate in the Participant Compensation
Deferral feature of the Plan, an otherwise Eligible Individual must make written
application in such manner as may be required by Section 3.1 and by the Employer
and must agree to make Compensation Deferrals as provided in Article 3.
2.2 PRIOR PLAN PARTICIPANTS. Each Prior Plan participant shall continue
-----------------------
to participate in the Plan on the Effective Date. A Prior Plan Participant
shall be entitled to make deemed investment directions and accrue earnings and
losses on the amounts credited to his or her Prior Plan Accounts as provided in
Article 5, and to receive distributions or withdrawals from his Accounts as
provided in Article 6. However, a Prior Plan Participant shall be entitled to
make Compensation Deferrals and/or receive Matching Contribution Credits after
the Effective Date only during the period he or she is named by the Employer as
an Eligible Individual under this Plan.
2.3 RE-EMPLOYMENT. If a Participant whose employment or Director status
-------------
with the Employer is terminated is subsequently re-employed or subsequently
becomes a Director, he or she shall become a Participant in accordance with the
provisions of Section 2.1.
2.4 CHANGE OF ELIGIBILITY STATUS. During any period in which a
----------------------------
Participant remains in the employ of the Employer, but is not or ceases to be an
Eligible Individual, he or she shall not be eligible to make Compensation
Deferrals hereunder.
ARTICLE 3
---------
CONTRIBUTIONS AND CREDITS
-------------------------
3.1 PARTICIPANT COMPENSATION DEFERRALS. In accordance with rules
----------------------------------
established by the Employer, an Eligible Individual may elect to defer
Compensation which is not yet payable and which would otherwise be paid to the
Participant. Amounts so deferred will be considered a Participant's
"Compensation Deferrals". An Eligible Individual who is a
5.
<PAGE>
common-law employee may make two separate deferral elections as follows: (1) an
election to defer any whole percentage (not to exceed 70%) of his or her base
salary, and (2) an election to defer any whole percentage (not to exceed 80%) of
his or her SIP commission or EIP bonus under the Employer's Sales Incentive Plan
or Executive Incentive Plan. An eligible Outside Director may elect to defer any
whole percentage of his or her compensation. However, if an Eligible Individual
elects to make Compensation Deferrals for any Plan Year, he or she must defer an
amount which, at the time of deferral, is anticipated to amount to a minimum of
$1,000 for such year.
An Eligible Individual shall not be eligible to make Compensation
Deferrals during the Plan Year immediately following the Plan Year during which
he or she takes a hardship withdrawal from the Plan under Section 6.3.
(a) Initial Deferral Elections. An Eligible Individual shall make his
--------------------------
or her deferral election on a Participant Enrollment and Election Form, and must
submit such form to the Employer no later than the last day of the deferral
election period. The last day of the deferral election period shall be
generally in mid-December and designated specifically and announced in the
annual open enrollment materials (but not later than December 31 of the year
before the election is to take effect.) Notwithstanding the foregoing, however,
in the year in which an employee first becomes eligible to participate, the
employee may make his or her election within the first thirty (30) days after
the date the employee becomes eligible to participate.
At the time of the deferral election, the Participant may specify, on
the Participant Enrollment and Election Form, the date (or dates) on which
distributions of his or her Account shall be made, and the form in which such
distributions shall be made, as specified in Articles 6 and 7.
After a deferral election has taken effect for any Plan Year, the
Participant may not increase or decrease the percentage or amount of
Compensation to be deferred during that Plan Year, except as provided in
paragraph (c) below, and except that a Participant must cease all deferrals
under the Plan if such cessation would relieve the Participant of one or more
Financial Hardships without any withdrawals under the Plan. Compensation
Deferrals shall be made through regular payroll or Director's compensation
deductions or through an election by the Participant to defer a SIP commission
or EIP bonus payment not yet payable to him or her at the time of the election.
(b) Deferral Elections for Subsequent Years. During the month of
---------------------------------------
December each year (the "Election Period"), each Eligible Individual shall be
given the opportunity to revoke or change his Compensation Deferral elections
for the upcoming Plan Year. A Compensation Deferral election made with respect
to the Participant's base salary, SIP commission or EIP bonus or with respect to
a Director's compensation shall continue in force only for the Plan Year for
which the election is first effective. In order to defer Compensation in future
years, the Participant must make a new election during the Election Period for
that year.
Compensation Deferrals shall be deducted by the Employer from the pay
of a deferring Participant and shall be credited to the Account of the deferring
Participant.
6.
<PAGE>
(c) Special Election Period in March 2000. Effective March 2, 2000,
-------------------------------------
each Active Participant will have the option to decrease (but not to increase)
his or her Compensation Deferral elections for the remainder of the year 2000 by
filing a new Compensation Deferral election form by March 10, 2000. A
Participant's election to change his or her Compensation Deferrals under this
section becomes effective on March 11, 2000, and shall apply only with respect
to Compensation payable on or after such effective date.
3.2 COMPENSATION DEFERRAL ACCOUNT. There shall be established and
-----------------------------
maintained by the Employer a separate Compensation Deferral Account in the name
of each Participant to which shall be credited or debited: (a) amounts equal to
the Participant's Compensation Deferrals; (b) amounts equal to any deemed
earnings or losses (to the extent realized, based upon deemed fair market value
of the Account's deemed assets, as determined by the Employer, in its
discretion) attributable or allocable thereto; (c) amounts equal to the
Participant's withdrawals; and (d) expenses charged to that Account.
A Participant shall at all times be 100% vested in amounts credited to
his or her Participant Compensation Deferral Accounts.
3.3 MATCHING CONTRIBUTION CREDITS. During the first three years in which
-----------------------------
an Eligible Individual (other than an Outside Director) is eligible to
participate in this Plan, the Employer may choose to make Matching Contribution
Credits to such Participant's Accounts for any calendar quarter in which the
Participant has (i) made Compensation Deferrals, and (ii) chosen to invest such
deferrals in Phantom Stock. Such Matching Contribution Credits shall be made in
units of Phantom Stock pursuant to the following formula:
First Four Hundred (400) Units of Phantom Stock: The Participant may
-----------------------------------------------
receive one (1) unit of Phantom Stock as a Matching Contribution
Credit for every four (4) units of Phantom Stock deemed "purchased"
during the Plan Year with current Compensation Deferrals, up to a
maximum of 400 hundred units purchased.
Additional Phantom Stock Purchases: If the number of Phantom Stock
----------------------------------
units deemed "purchased" with current Compensation Deferrals during
the Plan Year exceeds 400, then the Participant may receive one (1)
unit of Phantom Stock as a Matching Contribution Credit for every two
(2) such additional units (over 400) deemed "purchased" with Current
Compensation Deferrals, up to a maximum of 800 units purchased. (No
Matching Contribution Credits shall be awarded with respect to Phantom
Stock "purchases" exceeding 800 units in a Plan Year.)
For purposes of this Section, the number of units of Phantom Stock
deemed "purchased" by a Participant with current Compensation Deferrals in the
Plan Year is the number of units of Phantom Stock in which the Compensation
Deferrals made by the Participant during such year are deemed invested pursuant
to Section 5.1.
No Matching Contribution Credits shall be made with respect to Outside
Directors.
7.
<PAGE>
Special Credits in March 2000. Notwithstanding the foregoing, the
Employer shall make Matching Contribution Credits as of March 10, 2000, with
respect to deemed purchases of Phantom Stock with Compensation Deferrals made
during the period from January 1, 2000 through March 10, 2000. The amount of
Phantom Stock deemed purchased with Compensation Deferrals from March 1, 2000
through March 10, 2000 shall be determined based on the value of the Employer's
Common Stock as of the close of business on March 10, 2000. The Employer shall
make Matching Contribution Credits as of March 31, 2000 with respect to
Compensation Deferrals deemed invested in the ADAP Stock Fund for the period
from March 11, 2000 to March 31, 2000; and the amount of Phantom Stock deemed
purchased with Compensation Deferrals during such period shall be based on the
value of Employer Common Stock at the close of business March 31, 2000.
3.4 MATCHING CONTRIBUTION ACCOUNTS. There shall be established and
------------------------------
maintained a separate Matching Contribution Account in the name of each
Participant. Such Account shall be credited or debited, as applicable, with (a)
the number of Phantom Stock units credited pursuant to Section 3.3, (b)
withdrawals by the Participant, and (c) expenses charged to that Account.
A Participant's Matching Contribution Account shall be valued as of
each Valuation Date. The value of each unit of Phantom Stock in the
Participant's Matching Contribution Credit Accounts on any Valuation Date shall
equal the value, on such date, of one share of the Employer's voting Common
Stock.
3.5 CONTRIBUTIONS TO THE TRUST. An amount shall be contributed by the
--------------------------
Employer to the Trust maintained under Section 12.1 equal to the amount(s)
required to be credited to the Participant's Accounts under Sections 3.2 and 3.4
(except with regard to Phantom Stock). The Employer shall make a good faith
effort to contribute these amounts to the Trust as soon as is practicable after
such amounts are withheld from the base salary, SIP commission or EIP bonus pay
of the Participant.
ARTICLE 4
---------
VESTING AND FORFEITURES
-----------------------
4.1 VESTING IN COMPENSATION DEFERRAL ACCOUNTS. A Participant shall at all
-----------------------------------------
times be fully vested in amounts credited to his or her Compensation Deferral
Accounts.
4.2. CLASS YEAR VESTING IN MATCHING CONTRIBUTION CREDITS. A Participant
---------------------------------------------------
shall become vested in the Matching Contribution Credits that were made to his
Account in any Plan Year on the date that is two (2) years following the date on
which those particular Matching Contribution Credits were made to his Account,
provided that the Participant has been in continuous employment with the
Employer throughout such period. For this purpose, "Continuous employment"
includes vacations and other periods of paid or unpaid absence approved by the
Company.
In addition, the Participant shall be 100% vested in all Matching
Contribution Credits made to his or her Accounts (a) if the Participant reaches
age 65, dies or becomes Disabled before his or her Termination of Employment, or
(b) if a Change in Control occurs. The
8.
<PAGE>
Employer has the discretion to accelerate vesting in individual cases, if it
deems such acceleration appropriate.
4.3 FORFEITURE OF MATCHING CONTRIBUTION CREDITS. A Participant may
-------------------------------------------
forfeit all or part of his Matching Contribution Credits as provided in
paragraphs (a), (b), or (c) of this Section.
(a) Forfeiture upon liquidation of Phantom Stock. If a Participant
--------------------------------------------
liquidates any Phantom Stock units in which his Compensation Deferrals are
deemed invested (i.e., by transfer to another investment option or by receiving
a distribution or withdrawal) within two years after receiving a Matching
Contribution Credit with respect to such units, the Participant shall forfeit
the Matching Contribution Credits made with respect to such units.
Notwithstanding the foregoing, effective March 2, 2000, each
Participant who is an active employee shall be given the one-time opportunity to
transfer any portion of his or her Compensation Deferral Account allocated to
Phantom Stock to any other deemed investment option offered under the Plan
without forfeiting the Matching Contribution Credits attributable to such units.
An election to make such transfer must be filed with the Employer no later than
March 10, 2000. As provided in Section 5.1, no amounts allocated to Phantom
Stock may be transferred to other deemed investment options after March 10,
2000.
(b) Forfeiture of Non-vested Credits upon Termination of Employment.
---------------------------------------------------------------
If the Participant incurs a Termination of Employment (for reasons other than
reaching age 65, death or Disability) before the expiration of two (2) years
from the date on which the last Matching Contribution Credit was made to his or
her Account, the Participant shall forfeit any Matching Contribution Credits
which have not yet vested as of the date of such termination.
This forfeiture provision shall not apply to any Participant whose
Matching Contribution Credits vested prior to his or her Termination of
Employment in accordance with the Employer's exercise of its discretion to
accelerate vesting as provided in Section 4.2.
(c) Forfeiture for Misconduct. If a Participant incurs a Termination
-------------------------
of Employment as a result of misconduct, as determined by the Employer, the
Participant shall forfeit all amounts in his or her Matching Contribution
Accounts irrespective of their vesting.
Such forfeitures will be used to reduce the Employer's obligation, if
any, to make Matching Contribution Credits for other Participants or to defray
the expenses of administering the Plan.
ARTICLE 5
---------
ALLOCATION OF FUNDS
-------------------
5.1 DEEMED INVESTMENT DIRECTIONS OF PARTICIPANTS. Subject to such
--------------------------------------------
limitations or procedures as may from time to time be required by law, imposed
by the Employer or the Trustee or contained elsewhere in the Plan, each
Participant may communicate to the Employer a direction as to how his or her
Plan Accounts should be deemed to be invested (in any
9.
<PAGE>
whole percentage multiples) among such categories of deemed investments as may
be made available by the Employer hereunder.
Effective March 11, 2000, a Participant may choose to have future
Compensation Deferrals allocated among either (a) the ADAP Stock Fund, or (b)
one or more other deemed investment funds made available under the Plan, in such
proportions as the Participant may designate. However, once amounts are
allocated to the ADAP Stock Fund, they may not subsequently be transferred to
another deemed investment fund. The Participant may transfer existing account
balances among the various deemed investment options (other than the ADAP Stock
Fund) on a quarterly basis, as provided above. The Participant may not change
the deemed investment of amounts allocated to the ADAP Stock Fund, nor may the
Participant transfer any portion of his or her Account into the ADAP Stock fund
from any other deemed investment option.
Subject to the restrictions described above, deemed investment
directions may be given by submitting an investment designation form to the
Employer at least ten (10) business days prior to each quarterly Designation
Date. Such directions shall be effective as of the Designation Date immediately
following submission of such form. A Participant may change his or her deemed
investment directions by submitting a new investment designation form at least
ten (10) business days prior to a future Designation Date, such change to be
effective as of the Designation Date immediately following submission of the new
investment designation form. Notwithstanding the ten-business day requirement
described above, effective March 2, 2000, any Participant who is an active
employee may elect to change the manner in which his or her Plan Accounts are
deemed invested by filing a new investment designation form no later than March
10, 2000, such election to be effective as of March 11, 2000.
A Participant may separately designate deemed investments (i) for that
portion of the Participant's Account attributable to amounts that were credited
to the Participant's Account prior to the Designation Date on which such
direction shall become effective, and (ii) for that portion of the Participant's
Account attributable to amounts that will be credited to the Participant's
Account after the Designation Date on which such direction shall become
effective, and shall be subject to the following rules:
(a) All amounts credited to the Participant's Account shall be deemed
to be invested in accordance with the then effective deemed investment
direction, and as of the effective date of any new deemed investment direction,
all or a portion of the Participant's Account at that date shall be reallocated
among the designated deemed investment funds according to the percentages
specified in the new deemed investment direction unless and until a subsequent
deemed investment direction shall be filed and become effective. An election
concerning deemed investment choices shall continue indefinitely until changed
by the Participant in accordance with this Section. Notwithstanding the
foregoing, effective March 11, 2000, any portion of the Participant's Account
allocated to the ADAP Stock Fund shall remain allocated to the ADAP Stock Fund
until distribution to the Participant (or forfeiture pursuant to Section 4.3);
the Participant may not change the deemed investment of such amounts.
10.
<PAGE>
(b) If the Employer receives an initial or revised deemed investment
direction which it deems to be incomplete, unclear or improper, the
Participant's investment direction then in effect shall remain in effect (or, in
the case of a deficiency in an initial deemed investment direction, the
Participant shall be deemed to have filed no deemed investment direction) until
the next Designation Date, unless the Employer provides for, and permits the
application of, corrective action prior thereto.
(c) Beginning January 1, 2000, if the Employer possesses (or is deemed
to possess as provided in (b), above) at any time directions as to the deemed
investment of less than all of a Participant's Account, the Participant shall be
deemed to have directed that the undesignated portion of the Account be deemed
to be invested in the Fidelity Advisor Money Market Fund. Prior to January 1,
2000, if the Employer possesses (or is deemed to possess as provided in (b),
above) at any time directions as to the deemed investment of less than all of a
Participant's Account, the Participant shall be deemed to have directed that the
undesignated portion of the Account be deemed to be invested in units of Phantom
Stock.
(d) Each Participant hereunder, as a condition to his or her
participation hereunder, agrees to indemnify and hold harmless the Employer and
its agents and representatives from any losses or damages of any kind relating
to the deemed investment of the Participant's Account hereunder.
(e) Each reference in this Section to a Participant shall be deemed to
include, where applicable, a reference to a Beneficiary.
5.2 DEEMED INVESTMENTS IN PHANTOM STOCK. One of the investment options
-----------------------------------
currently available to Participants is Phantom Stock, each unit of which shall
be equal in value to one share of the Employer's voting Common Stock. Effective
March 11, 2000, deemed investments in Phantom Stock shall be made through the
ADAP Stock Fund, subject to the terms and conditions set forth herein.
Effective March 11, 2000, the ADAP Stock Fund will be available as a
deemed investment option only with respect to current Compensation Deferrals,
and amounts deemed invested in the ADAP Stock Fund may not be transferred into
any other deemed investment option. Participants may not transfer any portion of
their Account from the ADAP Stock Fund into another deemed investment option,
nor may a Participant transfer any amounts from another deemed investment option
into the ADAP Stock Fund. All distributions with respect to the portion of a
Participant's Account allocated to the ADAP Stock Fund shall be made solely in
shares of Common Stock of the Employer. For purposes of making distributions
with respect to amounts allocated to the ADAP Stock Fund, any fractional shares
credited to the Participant's Account shall be rounded up to the nearest full
share.
All amounts invested in Phantom Stock shall be treated as if they had
been invested in shares of Employer Common Stock purchased from the Employer at
fair market value as of the close of trading on the "deemed purchase date," or
as soon thereafter as administratively feasible. For periods prior to April 1,
2000, the "deemed purchase date" is the last day of the month in which
Compensation is withheld from the Eligible Individual's paycheck (or director's
compensation) pursuant to a deferral election under this Plan. Effective
11.
<PAGE>
April 1, 2000, the deemed purchase date will be the payroll distribution date
for the payroll period in which the compensation was deferred.
Despite the foregoing, the Plan Administrator may, but need not,
prohibit or delay the liquidation, disposition, or acquisition of any Phantom
Stock units by any Participant who is subject to short swing trading liability
under Section 16(b) of the Securities and Exchange Act of 1934 if said
liquidation, disposition, or acquisition may result in the imposition of such
liability.
Phantom Stock Rules Applicable Before March 11, 2000. Prior to March
11, 2000, distributions with respect to the portion of the Participant's Account
deemed invested in Phantom Stock may be made in cash or in shares of Common
Stock, as determined by the Employer. Absent contrary investment instructions
from a Participant, a Participant's election to defer Compensation under this
Plan shall constitute consent by the Participant to the Plan Administrator's
retaining such Phantom Stock in the Participant's Accounts until the earlier of
(i) ultimate distribution to the Participant or to his or her Beneficiary under
the Plan, or (ii) the receipt of new investment instructions from the
Participant.
5.3 ALLOCATION OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS. In accordance
---------------------------------------------------
with Section 5.1, each Participant shall have the right to direct the Employer
as to how amounts in his or her Plan Accounts shall be deemed to be invested,
subject to such limitations or procedures as may from time to time be required
by law, imposed by the Employer or the Trustee, or contained elsewhere in the
Plan. Allocation of deemed earnings or losses on Participants' Accounts shall
be made in accordance with such deemed investment directions, as described
below.
The Employer shall direct the Trustee to invest the account maintained
in the Trust on behalf of the Participant pursuant to the deemed investment
directions the Employer properly has received from the Participant. The value of
the Participant's Accounts shall be equal to the value of the account maintained
under the Trust on behalf of the Participant. As of each valuation date of the
Trust, the Participant's Accounts will be credited or debited to reflect the
Participant's deemed investments of the Trust.
The Participant's Plan Accounts will be credited or debited with the
increase or decrease in the realizable net asset value or credited interest, as
applicable, of the designated deemed investments, as follows. As of each
Valuation Date, an amount equal to the net increase or decrease in realizable
net asset value or credited interest, as applicable (as determined by the
Employer or the Trustee, as applicable), of each deemed investment option within
the Accounts since the preceding Valuation Date shall be allocated among all
Participants' Accounts deemed to be invested in that investment option in
accordance with the ratio which the portion of the Account of each Participant
which is deemed to be invested within that investment option, determined as
provided herein, bears to the aggregate of all amounts deemed to be invested
within that investment option.
5.4 ACCOUNTING FOR DISTRIBUTIONS. As of the date of any distribution
----------------------------
hereunder, the distribution made hereunder to the Participant or his or her
Beneficiary or Beneficiaries shall be charged to such Participant's Account.
Such amounts shall be charged on
12.
<PAGE>
a pro rata basis against the investments of the Trust in which the Participant's
Account is deemed to be invested.
5.5 SEPARATE ACCOUNTS. A separate account under the Plan shall be
-----------------
established and maintained by the Employer to reflect the annual Accounts for
each Participant with sub-accounts to show separately the applicable deemed
investments within each annual Account.
5.6 INTERIM VALUATIONS. If it is determined by the Employer that the
------------------
value of a Participant's Account as of any date on which distributions are to be
made differs materially from the value of the Participant's Account on the prior
Valuation Date upon which the distribution is to be based, the Employer, in its
discretion, shall have the right to designate any date in the interim as a
Valuation Date for the purpose of revaluing the Participant's Account so that
the Account will, prior to the distribution, reflect its share of such material
difference in value.
5.7 EXPENSES. Expenses, including Trustee fees, allocable to the
--------
administration or operation of an Account maintained under the Plan shall be
paid by the Employer unless, in the discretion of the Employer, the Employer
elects to charge such expenses against the appropriate Participant's Account or
Participants' Accounts. If an expense is charged against a Participant's
Account, at the discretion of the Employer, such expense either (i) will reduce
the contribution to the Trust under Section 3.5 next due to be made by the
Employer in respect of the Account, or (ii) will be paid from the Trust to the
Employer out of assets of the Trust corresponding to the Participant's Account
hereunder.
5.8 TAXES. Any taxes allocable to an Account (or portion thereof)
-----
maintained under the Plan which are payable prior to the distribution of the
Account (or portion thereof), as determined by the Employer, shall be paid by
the Employer unless, in the discretion of the Employer, the Employer elects to
charge such taxes against the appropriate Participant's Account or Participants'
Accounts. If a tax amount is charged against a Participant's Account, at the
discretion of the Employer, such expense either (i) will reduce the contribution
to the Trust under Section 3.5 next due to be made by the Employer in respect of
the Account, or (ii) will be paid from the Trust to the Employer out of assets
of the Trust corresponding to the Participant's Account.
ARTICLE 6
---------
ENTITLEMENT TO BENEFITS
-----------------------
6.1 FIXED PAYMENT DATES; TERMINATION OF EMPLOYMENT; CHANGE OF CONTROL. On
-----------------------------------------------------------------
his or her Participant Enrollment and Election Form, a Participant may elect to
have his or her vested Account for the Plan Year paid (a) upon termination of
employment, or (b) upon the earlier of a fixed payment date or termination of
employment. Any fixed date elected by a Participant pursuant to the foregoing
shall be a fixed date no earlier than a date in the third calendar year
following the calendar year in which the election is made. Such fixed payment
date may not be accelerated or extended, except (a) as provided below with
respect to
13.
<PAGE>
termination of employment or a Change of Control, (b) as provided below with
respect to the March 2000 special election period, or (c) as provided in Section
6.2.
Termination of Employment. Regardless of any fixed payment date selected
-------------------------
by the Participant, all of the Participant's outstanding vested Accounts shall
be paid (or will begin to be paid) upon the Participant's termination of
employment, other than a termination of employment following a Change of
Control.
Change of Control. Upon a Change of Control, the Participant's vested
-----------------
accounts will be paid (or will begin to be paid) on the later of (a) the fixed
payment date selected by the Participant within the 30-day period following the
Change of Control (as described below) or (b) the 31st day following the Change
of Control (or as soon thereafter as administratively feasible). Any payment
made on the 31st day following a Change of Control (or as soon thereafter as
administratively feasible) pursuant to this provision shall be made in a lump
sum, unless the Participant elects a different method of payment within the 30-
day period following the Change of Control.
30-Day Election Period. Upon a Change in Control, the Participant
will be given the opportunity to select a new fixed date for payment of his or
her vested Accounts to be made or to begin. The Participant's election of a new
payment date must be made within 30 days following the date of the Change of
Control. If the Participant fails to make such an election within the 30-day
period following the Change of Control, the Participant's vested accounts will
be paid on the 31st day following the Change of Control (or as soon thereafter
as administratively feasible), as provided above.
Special March 2000 Election Period. Effective March 2, 2000, Active
----------------------------------
Participants with a portion of their Compensation Deferral Accounts deemed
invested in Phantom Stock may change the date on which distribution of their
Accounts is to begin, as well as the manner of such distribution, by filing a
new Payout Election Change Form no later than March 10, 2000. (The Participant
must be an Active Employee at the time the new election form is filed.) This
special election period is provided in light of the changes to the Plan that
take effect on March 11, 2000.
6.2 IMMEDIATE DISTRIBUTION ELECTION; TEN PERCENT PENALTY. In addition to
----------------------------------------------------
a Participant's option to have payment or commencement of payment of his or her
vested account occur at one of the specific times described in Section 6.1, a
Participant may elect to have his or her vested Account (or a portion thereof)
paid or commence to be paid immediately upon his or her election. Any amount
paid pursuant to this Section shall be subject to a ten percent (10%) penalty,
with the amount of the penalty being returned to the Employer. In the event of
an immediate distribution elected under this Section, the ten percent (10%)
penalty on the entire portion of the vested account to be distributed in
installments under this Section shall be returned to the Employer on or about
the date of the first installment.
Any Participant wishing to elect an immediate distribution pursuant to
this Section must complete an Immediate Distribution Election Form. The
distribution shall occur or commence as soon as is administratively feasible
following the Employer's receipt of the Immediate Distribution Election Form.
14.
<PAGE>
6.3 DEATH BENEFITS. If a Participant dies before the commencement of
--------------
payments to the Participant hereunder, the entire value of the Participant's
Account shall be paid, in the manner as provided in Article 7, to the
Beneficiary or Beneficiaries designated in accordance with Article 8. During
the period between the death of the Participant and the commencement of
distributions to the Beneficiary, the Beneficiary may request hardship
distributions from the Participant's Account in accordance with Section 6.3, and
any such withdrawals shall reduce the amount available for subsequent
distributions from the Plan.
Upon the death of a Participant after payments hereunder have begun
but before he or she has received all payments to which he or she is entitled
under the Plan, the remaining benefit payments shall be paid to the person or
persons designated in accordance with Section 8.1 in the manner in which such
benefits were payable to the Participant.
Distributions to the Beneficiary or Beneficiaries of a deceased
Participant shall be made (or shall begin) by the January 31 of the calendar
year following the year in which the Participant's death occurred, except that
the portion of the Participant's Accounts attributable to his or her Prior Plan
Accounts shall be distributed as soon as practicable following the Participant's
death.
6.4 HARDSHIP DISTRIBUTIONS. In the event of Financial Hardship of the
----------------------
Participant, as hereinafter defined, the Participant may apply to the Employer
for the distribution of all or any part of his or her vested Account. The
Employer shall consider the circumstances of each such case, and the best
interests of the Participant and his or her family, and shall have the right, in
its sole discretion, if applicable, to allow such distribution, or, if
applicable, to direct a distribution of part of the amount requested, or to
refuse to allow any distribution. Upon a finding of financial hardship, the
Employer shall make the appropriate distribution to the Participant from amounts
held by the Employer in respect of the Participant's vested Accounts. In no
event shall the aggregate amount of the distribution exceed either the full
value of the Participant's vested Accounts or the amount determined by the
Employer to be necessary to alleviate the Participant's Financial Hardship
(which Financial Hardship may be considered to include any taxes due because of
the distribution occurring because of this Section), and which is not reasonably
available from other resources of the Participant. For purposes of this Section,
the value of the Participant's vested Accounts shall be determined as of the
date of the distribution.
"Financial Hardship" means an immediate and heavy financial need
resulting from an unforeseeable emergency as a result of (a) from medical
expenses due to a sudden and unexpected illness or accident of the Participant
or of a dependent (as defined in Code section 152(a)) of the Participant, (b)
loss of the Participant's property due to casualty, or (c) the need to prevent
eviction of a Participant from his or her principal residence or foreclosure on
the mortgage on the Participant's principal residence, or (d) other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant, each as determined to exist by the
Employer. A distribution may be made under this Section only with the consent
of the Employer.
Notwithstanding the foregoing, the Employer may but need not deny a
Financial Hardship withdrawal requested by any Participant who is subject to
short-swing trading liability
15.
<PAGE>
of Section 16(b) of the Securities and Exchange Act of 1934 under circumstances
in which said withdrawal may result in the imposition of such liability.
6.5 INCOME TAX OBLIGATIONS. If a Participant is assessed federal, state,
----------------------
or local income taxes by reason of, and computed on the basis of, his or her
undistributed deferred Compensation or undistributed interest accrued on his or
her Account, the Participant shall notify the Employer in writing of such
assessment, and there shall be distributed from the Participant's Account
deferred Compensation or accrued interest in an amount equal to such tax
assessment, together with any interest due and penalties assessed thereon within
thirty (30) days following such notice. Notwithstanding the foregoing, if the
Employer determines that such assessment is improper, it may request that the
Participant contest the assessment, at the expense of the Employer (which
expense shall include all costs of appeal and litigation, including legal and
accounting fees, and any additional interest assess on the deficiency from and
after the date of the Participant's notice to the Employer); and during the
period such contest is pending, the sums otherwise distributable pursuant to
this Section 6.5 shall not be distributed.
6.6 APPLICATION TO TRUSTEE. On the date or dates on which a Participant
----------------------
or Beneficiary is entitled to payment under ARTICLE 6, the Participant or
Beneficiary need not make application for payment to the Employer, but instead
may make application for payment directly to the Trustee who shall pay the
Participant or Beneficiary the appropriate amount directly from the Trust
without the consent of the Employer. The Trustee shall report the amount of
each such payment, and any withholding thereon, to the Employer.
ARTICLE 7
---------
DISTRIBUTION OF BENEFITS
------------------------
7.1 AMOUNT. A Participant (or his or her Beneficiary) shall become
------
entitled to receive, on or about the date(s) provided in Article 6, a
distribution in an aggregate amount equal to the Participant's vested Accounts.
Any payment due hereunder from the Trust which is not paid by the Trust for any
reason will be paid by the Employer from its general assets.
7.2 METHOD OF PAYMENT.
-----------------
(a) Cash Or In-Kind Payments. Payments under the Plan (other than
------------------------
payments with respect to amounts deemed invested in Phantom Stock) shall be made
in cash or in-kind, as elected by the Participant and as permitted by the
Employer and the Trustee in their sole and absolute discretion, subject,
however, to Section 13.4 and any other applicable restrictions on transfer that
may be applicable legally or contractually. Effective March 11, 2000, all
amounts deemed invested in Phantom Stock through the ADAP Stock Fund shall be
distributed in shares of Common Stock of the Employer. Prior to March 11, 2000,
the value of the portion of a Participant's Accounts deemed invested in Phantom
Stock may be distributed in cash or in stock in an amount equal to the value of
the Company's Common Stock on the last business day before the date of
distribution.
(b) Manner of Payment. In the case of distributions to a Participant
-----------------
or his or her Beneficiary by virtue of an entitlement pursuant to Sections 6.1,
6.2, or 6.3, an aggregate amount equal to the Participant's vested Account (or
the portion of the Account to which the
16.
<PAGE>
entitlement applies) will be paid by the Trust or the Employer, as provided
by Section 7.1, in a lump sum or in no more than ten (10) substantially equal
annual installments (adjusted for gains and losses), as selected by the
Participant. The Participant may select a method of distribution at the time of
his or her Compensation Deferral Election, provided however, that the method of
distribution selected on the Participant's most recent Compensation Deferral
Election shall govern the distribution of the Participant's entire vested
Account. (However, if distribution of a portion of the Participant's Account has
already begun pursuant to the Participant's election of a fixed date
distribution, distribution of that portion of the Participant's account shall
continue in accordance with the method of distribution, without regard to any
new election.) Notwithstanding the foregoing, in the event of a Change of
Control, a Participant may change his election of a method of distribution,
provided that such election is made prior to thirty (30) days following the
Change of Control. If a Participant fails to designate properly the manner of
payment of the Participant's benefit under the Plan, such payment will be in a
lump sum.
If the whole or any part of a payment hereunder is to be in
installments, the total to be so paid shall continue to be deemed to be invested
pursuant to Article 5 under such procedures as the Employer may establish, in
which case any deemed income, gain, loss or expense attributable thereto (as
determined by the Trustee, in its discretion) shall be reflected in the
installment payments, in such equitable manner as the Trustee shall determine.
7.3 DEFAULT DISTRIBUTION. The Employer shall accelerate the payment of
--------------------
Accounts under the Plan as a lump sum payment (i) if a Participant incurs a
Termination of Employment at a time when the value of his or her Account in the
Plan is less than $25,000, (ii) at anytime after a Participant's Termination of
Employment if the value of his or her Account falls below $10,000, or (iii) if
an Employee who has elected installment distributions incurs a Termination of
Employment and engages in conduct which the Employer in its discretion
determines to be competition against the Employer.
ARTICLE 8
---------
BENEFICIARIES; PARTICIPANT DATA
-------------------------------
8.1 DESIGNATION OF BENEFICIARIES. Each Participant from time to time may
----------------------------
designate any person or persons (who may be named contingently or successively)
to receive such benefits as may be payable under the Plan upon or after the
Participant's death, and such designation may be changed from time to time by
the Participant by filing a new designation. Each designation will revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Employer, and will be effective only when filed in writing with the Employer
during the Participant's lifetime.
In the event a married Participant designates someone other than his
or her spouse as sole, primary Beneficiary, such initial designation or
subsequent change shall be invalid unless the spouse consents in a writing which
names the designated Beneficiary.
In the absence of a valid Beneficiary designation, or if, at the time
any benefit payment is due to a Beneficiary, there is no living Beneficiary
validly named by the Participant, the Employer shall pay any such benefit
payment to the Participant's spouse, if then living, but
17.
<PAGE>
otherwise to the Participant's then living descendants, if any, per stirpes,
but, if none, to the Participant's estate. In determining the existence or
identity of anyone entitled to a benefit payment, the Employer may rely
conclusively upon information supplied by the Participant's personal
representative, executor or administrator.
If a question arises as to the existence or identity of anyone
entitled to receive a benefit payment as aforesaid, or if a dispute arises with
respect to any such payment, then, notwithstanding the foregoing, the Employer,
in its sole discretion, may distribute such payment to the Participant's estate
without liability for any tax or other consequences which might flow therefrom,
or may take such other action as the Employer deems to be appropriate.
8.2 INFORMATION TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES;
--------------------------------------------------------------
INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES. Any communication, statement
- -------------------------------------------------
or notice addressed to a Participant or to a Beneficiary at his or her last post
office address as shown on the Employer's records shall be binding on the
Participant or Beneficiary for all purposes of the Plan. The Employer shall not
be obliged to search for any Participant or Beneficiary beyond the sending of a
registered letter to such last known address. If the Employer notifies any
Participant or Beneficiary that he or she is entitled to an amount under the
Plan and the Participant or Beneficiary fails to claim such amount or make his
or her location known to the Employer within three (3) years thereafter, then,
except as otherwise required by law, if the location of one or more of the next
of kin of the Participant is known to the Employer, the Employer may direct
distribution of such amount to any one or more or all of such next of kin, and
in such proportions as the Employer determines. If the location of none of the
foregoing persons can be determined, the Employer shall have the right to direct
that the amount payable shall be deemed to be a forfeiture, except that the
dollar amount of the forfeiture, unadjusted for deemed gains or losses in the
interim, shall be paid by the Employer if a claim for the benefit subsequently
is made by the Participant or the Beneficiary to whom it was payable. If a
benefit payable to an unlocated Participant or Beneficiary is subject to escheat
pursuant to applicable state law, the Employer shall not be liable to any person
for any payment made in accordance with such law.
ARTICLE 9
---------
ADMINISTRATION
--------------
9.1 ADMINISTRATIVE AUTHORITY. Except as otherwise specifically provided
------------------------
herein, the Employer, acting through its Board of Directors or the designee
thereof, shall have the sole responsibility for and the sole control of the
operation and administration of the Plan, and shall have the power and authority
to take all action and to make all decisions and interpretations which may be
necessary or appropriate in order to administer and operate the Plan, including,
without limiting the generality of the foregoing, the power, duty and
responsibility to:
(a) Resolve and determine all disputes or questions arising under the
Plan, and to remedy any ambiguities, inconsistencies or omissions in the Plan.
18.
<PAGE>
(b) Adopt such rules of procedure and regulations as in its opinion
may be necessary for the proper and efficient administration of the Plan and as
are consistent with the Plan.
(c) Implement the Plan in accordance with its terms and the rules and
regulations adopted as above.
(d) Make determinations with respect to the eligibility of any person
as an Eligible Individual or a Participant (as provided in Section 1.12), and
make determinations concerning the crediting of Plan Accounts.
(e) Appoint any persons or firms, or otherwise act to secure
specialized advice or assistance, as it deems necessary or desirable in
connection with the administration and operation of the Plan, and the Employer
shall be entitled to rely conclusively upon, and shall be fully protected in any
action or omission taken by it in good faith reliance upon, the advice or
opinion of such firms or persons. The Employer shall have the power and
authority to delegate from time to time by written instrument all or any part of
its duties, powers or responsibilities under the Plan, both ministerial and
discretionary, as it deems appropriate, to any person or committee, and in the
same manner to revoke any such delegation of duties, powers or responsibilities.
Any action of such person or committee in the exercise of such delegated duties,
powers or responsibilities shall have the same force and effect for all purposes
hereunder as if such action had been taken by the Employer. Further, the
Employer may authorize one or more persons to execute any certificate or
document on behalf of the Employer, in which event any person notified by the
Employer of such authorization shall be entitled to accept and conclusively rely
upon any such certificate or document executed by such person as representing
action by the Employer until such notified person shall have been notified of
the revocation of such authority.
9.2 UNIFORMITY OF DISCRETIONARY ACTS. Whenever in the administration or
--------------------------------
operation of the Plan discretionary actions by the Employer are required or
permitted, such actions shall be consistently and uniformly applied to all
persons similarly situated, and no such action shall be taken which shall
discriminate in favor of any particular person or group of persons.
9.3 LITIGATION. Except as may be otherwise required by law, in any action
----------
or judicial proceeding affecting the Plan, no Participant or Beneficiary shall
be entitled to any notice or service of process, and any final judgment entered
in such action shall be binding on all persons interested in, or claiming under,
the Plan.
9.4 CLAIMS PROCEDURE. Any person claiming a benefit under the Plan (a
----------------
"Claimant") shall present the claim, in writing, to the Employer or the Trustee,
and the Employer or the Trustee shall respond in writing. If the claim is
denied, the written notice of denial shall state, in a manner calculated to be
understood by the Claimant:
(a) The specific reason or reasons for the denial, with specific
references to the Plan provisions on which the denial is based;
19.
<PAGE>
(b) A description of any additional material or information necessary
for the Claimant to perfect his or her claim and an explanation of why such
material or information is necessary; and
(c) An explanation of the Plan's claims review procedure.
The written notice denying or granting the Claimant's claim shall be
provided to the Claimant within ninety (90) days after the Employer's or
Trustee's receipt of the claim, unless special circumstances require an
extension of time for processing the claim. If such an extension is required,
written notice of the extension shall be furnished by the Employer or Trustee to
the Claimant within the initial ninety (90) day period and in no event shall
such an extension exceed a period of ninety (90) days from the end of the
initial ninety (90) day period. Any extension notice shall indicate the special
circumstances requiring the extension and the date on which the Employer or
Trustee expects to render a decision on the claim. Any claim not granted or
denied within the period noted above shall be deemed to have been denied.
Any Claimant whose claim is denied, or deemed to have been denied
under the preceding sentence (or such Claimant's authorized representative),
may, within sixty (60) days after the Claimant's receipt of notice of the
denial, or after the date of the deemed denial, request a review of the denial
by notice given, in writing, to the Employer or Trustee. Upon such a request
for review, the claim shall be reviewed by the Employer or Trustee (or its
designated representative) which may, but shall not be required to, grant the
Claimant a hearing. In connection with the review, the Claimant may have
representation, may examine pertinent documents, and may submit issues and
comments in writing.
The decision on review normally shall be made within sixty (60) days
of the Employer's receipt of the request for review. If an extension of time is
required due to special circumstances, the Claimant shall be notified, in
writing, by the Employer or Trustee, and the time limit for the decision on
review shall be extended to one hundred twenty (120) days. The decision on
review shall be in writing and shall state, in a manner calculated to be
understood by the Claimant, the specific reasons for the decision and shall
include references to the relevant Plan provisions on which the decision is
based. The written decision on review shall be given to the Claimant within the
sixty (60) day (or, if applicable, the one hundred twenty (120) day) time limit
discussed above. If the decision on review is not communicated to the Claimant
within the sixty (60) day (or, if applicable, the one hundred twenty (120) day)
period discussed above, the claim shall be deemed to have been denied upon
review. All decisions on review shall be final and binding with respect to all
concerned parties.
ARTICLE 10
----------
AMENDMENT
---------
10.1 RIGHT TO AMEND. The Employer, by written instrument executed by a
--------------
duly authorized representative of the Employer, shall have the right to amend
the Plan, at any time and with respect to any provisions hereof, and all parties
hereto or claiming any interest hereunder shall be bound by such amendment;
provided, however, that no such amendment shall
20.
<PAGE>
deprive a Participant or a Beneficiary of a right accrued hereunder prior to the
date of the amendment.
10.2 AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN.
----------------------------------------------------
Notwithstanding the provisions of Section 10.1, the Plan may be amended by the
Employer at any time, retroactively if required, if found necessary, in the
opinion of the Employer, in order to ensure that the Plan is characterized as
"top-hat" plan of deferred compensation maintained for a select group of
management or highly compensated employees as described under ERISA sections
201(2), 301(a)(3), and 401(a)(1), and to conform the Plan to the provisions and
requirements of any applicable law (including ERISA and the Code). No such
amendment shall be considered prejudicial to any interest of a Participant or a
Beneficiary hereunder.
ARTICLE 11
----------
TERMINATION
-----------
11.1 EMPLOYER'S RIGHT TO TERMINATE OR SUSPEND PLAN. The Employer reserves
---------------------------------------------
the right to terminate the Plan and/or its obligation to make further credits to
Plan Accounts. The Employer also reserves the right to suspend the operation of
the Plan for a fixed or indeterminate period of time.
11.2 AUTOMATIC TERMINATION OF PLAN. The Plan automatically shall
-----------------------------
terminate upon the dissolution of the Employer, or upon its merger into or
consolidation with any other corporation or business organization if there is a
failure by the surviving corporation or business organization to adopt
specifically and agree to continue the Plan.
11.3 SUSPENSION OF DEFERRALS. In the event of a suspension of the Plan,
-----------------------
the Employer shall continue all aspects of the Plan, other than Compensation
Deferrals and Matching Contribution Credits, during the period of the
suspension, in which event payments hereunder will continue to be made during
the period of the suspension in accordance with Articles 6 and 7.
11.4 ALLOCATION AND DISTRIBUTION. This Section shall become operative on
---------------------------
a complete termination of the Plan. The provisions of this Section also shall
become operative in the event of a partial termination of the Plan, as
determined by the Employer, but only with respect to that portion of the Plan
attributable to the Participants to whom the partial termination is applicable.
Upon the effective date of any such event, notwithstanding any other provisions
of the Plan, no persons who were not theretofore Participants shall be eligible
to become Participants, the value of the interest of all Participants and
Beneficiaries shall be determined and, after deduction of estimated expenses in
liquidating and, if applicable, paying Plan benefits, paid to them as soon as is
practicable after such termination.
11.5 SUCCESSOR TO EMPLOYER. Any corporation or other business
---------------------
organization which is a successor to the Employer by reason of a consolidation,
merger or purchase of substantially all of the assets of the Employer shall have
the right to become a party to the Plan by adopting the same by resolution of
the entity's board of directors or other appropriate governing body. If, within
ninety (90) days from the effective date of such consolidation, merger
21.
<PAGE>
or sale of assets, such new entity does not become a party hereto, as above
provided, the Plan automatically shall be terminated, and the provisions of
Section 11.4 shall become operative.
ARTICLE 12
----------
THE TRUST
---------
12.1 ESTABLISHMENT OF TRUST. The Employer has established the Trust with
----------------------
the Trustee pursuant to the terms and conditions set forth in the Trust
agreement entered into between the Employer and the Trustee. The Trust is
intended to be treated as a "grantor" trust under the Code and the establishment
of the Trust is not intended to cause the Participant to realize current income
on amounts contributed thereto, and the Trust shall be so interpreted.
ARTICLE 13
----------
MISCELLANEOUS
-------------
13.1 LIMITATIONS ON LIABILITY OF EMPLOYER. Neither the establishment of
------------------------------------
the Plan nor any modification thereof, nor the creation of any account under the
Plan, nor the payment of any benefits under the Plan shall be construed as
giving to any Participant or other person any legal or equitable right against
the Employer, or any officer or employer thereof except as provided by law or by
any Plan provision. The Employer does not in any way guarantee any
Participant's Account from loss or depreciation, whether caused by poor
investment performance of a deemed investment or the inability to realize upon
an investment due to an insolvency affecting an investment vehicle or any other
reason. In no event shall the Employer, or any successor, employee, officer,
director or stockholder of the Employer, be liable to any person on account of
any claim arising by reason of the provisions of the Plan or of any instrument
or instruments implementing its provisions, or for the failure of any
Participant, Beneficiary or other person to be entitled to any particular tax
consequences with respect to the Plan, or any credit or distribution hereunder.
13.2 CONSTRUCTION. If any provision of the Plan is held to be illegal or
------------
void, such illegality or invalidity shall not affect the remaining provisions of
the Plan, but shall be fully severable, and the Plan shall be construed and
enforced as if said illegal or invalid provision had never been inserted herein.
For all purposes of the Plan, where the context admits, the singular shall
include the plural, and the plural shall include the singular. Headings of
Articles and Sections herein are inserted only for convenience of reference and
are not to be considered in the construction of the Plan. The laws of the State
of California shall govern, control and determine all questions of law arising
with respect to the Plan and the interpretation and validity of its respective
provisions, except where those laws are preempted by the laws of the United
States. Participation under the Plan will not give any Participant the right to
be retained in the service of the Employer nor any right or claim to any benefit
under the Plan unless such right or claim has specifically accrued hereunder.
The Plan is intended to be and at all times shall be interpreted and
administered so as to qualify as an unfunded deferred compensation plan, and no
provision of the Plan shall be interpreted so as to give any individual any
right in any assets of the Employer which right is greater than the rights of a
general unsecured creditor of the Employer.
22.
<PAGE>
13.3 SPENDTHRIFT PROVISION. No amount payable to a Participant or a
---------------------
Beneficiary under the Plan will, except as otherwise specifically provided by
law, be subject in any manner to anticipation, alienation, attachment,
garnishment, sale, transfer, assignment (either at law or in equity), levy,
execution, pledge, encumbrance, charge or any other legal or equitable process,
and any attempt to do so will be void; nor will any benefit be in any manner
liable for or subject to the debts, contracts, liabilities, engagements or torts
of the person entitled thereto. Further, (i) the withholding of taxes from Plan
benefit payments, (ii) the recovery under the Plan of overpayments of benefits
previously made to a Participant or Beneficiary, (iii) if applicable, the
transfer of benefit rights from the Plan to another plan, or (iv) the direct
deposit of benefit payments to an account in a banking institution (if not
actually part of an arrangement constituting an assignment or alienation) shall
not be construed as an assignment or alienation.
In the event that any Participant's or Beneficiary's benefits
hereunder are garnished or attached by order of any court, the Employer or
Trustee may bring an action or a declaratory judgment in a court of competent
jurisdiction to determine the proper recipient of the benefits to be paid under
the Plan. During the pendency of said action, any benefits that become payable
shall be held as credits to the Participant's or Beneficiary's Account or, if
the Employer or Trustee prefers, paid into the court as they become payable, to
be distributed by the court to the recipient as the court deems proper at the
close of said action.
13.4 EMPLOYER STOCK SUBJECT TO THE PLAN.
----------------------------------
(a) Number of Shares. Prior to March 11, 2000, and without limiting
----------------
the application of paragraph (b) below (regarding changes in the capital
structure of the Employer), the maximum aggregate number of shares of Employer
Common Stock which may be distributed to any Participant under this Plan is the
number sufficient to enable the Participant to satisfy the equity holding
requirements imposed by the Employer.
(b) Changes in Capital Structure. Subject to any required action by
----------------------------
the shareholders and directors of the Employer, the number of units of Phantom
Stock allocable to the Account of any Participant and the number of shares of
Common Stock distributable from the Account of any Participant and the per-unit
value or per-share price thereof shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, combination, reclassification, the
payment of a stock dividend on the Common Stock or any other increase or
decrease in the number of such shares of Common Stock effected without receipt
of consideration by the Employer. Such adjustment shall be made by the
Employer, whose determination in that respect shall be final, binding, and
conclusive.
The Employer may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the number or class of securities
covered by the Plan, as well as the value thereof or price to be paid therefor,
in the event of the Employer's effecting one or more reorganizations,
recapitalizations, rights, offerings, or other increase or reductions of the
number of shares of its outstanding Common Stock, or in the event of the
Employer's being consolidated with or merged into any other corporation. Unless
otherwise determined by the Employer, upon the dissolution or liquidation of the
Employer or upon any merger or consolidation in any Plan Year, if the Employer
is not the surviving corporation, a Participant's right to receive units of
23.
<PAGE>
Phantom Stock or shares of Company Stock computed with reference to a
Participant's Compensation Deferrals for the entire Plan Year or with reference
to the value of a Participant's Account, shall terminate and thereupon become
null and void.
(c) Necessary Actions. To the extent required by law, as determined
-----------------
by the Employer, the adoption of the Plan shall be subject to approval by the
affirmative vote of the shareholders of the Employer in accordance with the
federal laws of the United States or of the State of California if applicable.
Shares of Common Stock or units of Phantom Stock shall not be issued with
respect to any Compensation Deferrals under the Plan unless the issuance and
delivery of such securities pursuant thereto shall comply with all relevant
provisions of federal, state, and local securities laws. As a condition to the
issuance of securities under the Plan, the Employer may require the Participant
to represent and warrant, at the time of any allocation of securities, that the
securities are being acquired only for investment and without any present
intention to sell or distribute such securities if, in the opinion of the
Employer, such a representation is required by any of the aforementioned
relevant provisions of law. During the term of this Plan, the Employer will at
all times reserve and keep available the number of securities as shall be
sufficient to satisfy the requirements of the Plan. Inability of the Company to
obtain pertinent approval or exemption from any regulatory body having
jurisdiction and authority deemed by the Employer to be necessary to the lawful
allocation, issuance, or sale of any securities hereunder shall relieve the
Employer of any liability in respect of the nonallocation, nonissuance, or
nonsale of such securities as to which such requisite authority shall not have
been obtained.
13.5 BEST PAYMENTS.
-------------
(a) If the gross amount of any payment or benefit under this Plan,
either separately or in combination with any other payment or benefit payable by
the Employer or its affiliates or pursuant to a plan of the Employer or an
affiliate, would constitute a parachute payment within the meaning of Code
Section 280G, then the total payments and benefits accrued and payable under
this Plan shall not exceed the amount necessary to maximize the amount
receivable by the Participant after payment of all employment, income, and
excise taxes imposed on the Participant with respect to such payments or
benefits.
(b) The Participant may elect by written notice which items of
compensation, if any, shall be reduced so as to meet the requirements of Section
13.5(a) above. If there is a dispute between the Employer and the Participant
regarding (i) the extent, if any, to which any payments or benefits to the
Participant are parachute payments or excess parachute payments under Code
Section 280G, or (ii) the base amount of such Participant's compensation under
Code Section 280G, or (iii) the status of such Participant as a disqualified
individual under Code Section 280G, such dispute shall be resolved in the same
manner as a claim for benefits under the Plan.
(c) Within sixty (60) days of a Change in Control, or, if later,
within thirty (30) days of the Participant's receiving notice of termination of
employment from the Employer or the Employer's receiving notice of termination
of employment from the Participant, either the Employer or the Participant may
request (i) a determination of the amount of any parachute payment, excess
parachute payment, or base amount of compensation, or (ii) a determination of
24.
<PAGE>
the reduction necessary to maximize the net receipts of the Participant as
described in Section 13.5(a) above. Any fees, costs, or expenses incurred by
the Participant in connection with such determinations shall be paid equally by
the Employer and the Participant.
13.6 PARTICIPANT AND SPOUSE ACKNOWLEDGEMENT. By executing or completing a
--------------------------------------
deferral election, enrollment, beneficiary designation, or investment direction
form for this Plan, each Participant on behalf of himself or herself -- and, if
the Participant is married, on behalf of his or her spouse -- thereby
acknowledges the following: (a) each of them has read and understood this Plan
document, and (b) each of them knowingly and voluntarily agrees to be bound by
the provisions of the Plan, as amended unilaterally by the Employer from time to
time. Participants further acknowledge that they have had the opportunity to
consult with counsel of their own choosing with respect to all of the financial,
tax, and legal consequences of participating in this Plan, including in
particular the effects of participation on any community property or other
interest which the Participant's spouse may have in the amounts deferred under
this Plan.
25.
<PAGE>
IN WITNESS WHEREOF, the Employer has caused this amended and restated Plan
to be executed and its seal to be affixed hereto, effective as of the 1st day of
January 2000.
ATTEST/WITNESS ADAPTIVE BROADBAND CORPORATION
Harriett Purviance By: /s/ Robert G. Parrish
- -------------------------------- --------------------------------
Name: Robert G. Parrish
--------------------------------
(Please Print)
Date: March 27, 2000
--------------
26.
<PAGE>
EXHIBIT 99.3
RABBI TRUST AGREEMENT
FOR
ADAPTIVE BROADBAND CORPORATION
<PAGE>
TRUST AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
TRUST AGREEMENT.................................................................................. 1
ARTICLE I ESTABLISHMENT OF TRUST................................................................. 2
1.1 INITIAL DEPOSIT.......................................................................... 2
1.2 IRREVOCABILITY........................................................................... 2
1.3 GRANTOR TRUST............................................................................ 2
1.4 TRUST ASSETS............................................................................. 2
1.5 ADDITIONAL DEPOSIT....................................................................... 2
1.6 CUSTODY OF ASSETS........................................................................ 3
ARTICLE II PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES................................. 3
2.1 PAYMENTS................................................................................. 3
2.2 BENEFIT ENTITLEMENTS..................................................................... 3
2.3 BENEFIT PAYMENTS......................................................................... 3
ARTICLE III...................................................................................... 3
TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN PARTICIPATING EMPLOYER IS
INSOLVENT........................................................................................ 3
3.1 CLAIMS OF CREDITORS...................................................................... 3
3.2 CESSATION OF BENEFIT PAYMENTS............................................................ 4
3.3 INSOLVENCY............................................................................... 4
ARTICLE IV NO REVERSION TO CONTROLLING EMPLOYER.................................................. 5
ARTICLE V INVESTMENT AUTHORITY................................................................... 5
5.1 INVESTMENT AUTHORITY..................................................................... 5
5.2 DELEGATION OF AUTHORITY TO CUSTODIAN..................................................... 5
5.3 SUBSTITUTION OF ASSETS................................................................... 5
ARTICLE VI DISPOSITION OF INCOME................................................................. 5
ARTICLE VII ACCOUNTING BY TRUSTEE................................................................ 5
ARTICLE VIII RESPONSIBILITY OF TRUSTEE........................................................... 7
8.1 STANDARD OF CARE......................................................................... 7
8.2 INDEMNIFICATION.......................................................................... 7
</TABLE>
<PAGE>
<TABLE>
<S> <C>
8.3 LEGAL COUNSEL............................................................................ 7
8.4 AGENTS................................................................................... 7
8.5 TRUSTEE POWERS........................................................................... 7
8.6 NO BUSINESS OBJECTIVE.................................................................... 7
ARTICLE IX COMPENSATION AND EXPENSES OF TRUSTEE.................................................. 8
9.1 PAYMENT OF EXPENSES...................................................................... 8
9.2 COMPENSATION............................................................................. 8
9.3 PAYMENT PROCEDURES....................................................................... 8
ARTICLE X RESIGNATION AND REMOVAL OF TRUSTEE..................................................... 9
10.1 RESIGNATION.............................................................................. 9
10.2 REMOVAL.................................................................................. 9
10.3 TRANSFER OF ASSETS....................................................................... 9
10.4 SUCCESSOR................................................................................ 9
ARTICLE XI APPOINTMENT OF SUCCESSOR.............................................................. 9
11.1 APPOINTMENT.............................................................................. 9
11.2 LIMITED LIABILITY........................................................................ 9
ARTICLE XII AMENDMENT OR TERMINATION............................................................. 9
12.1 AMENDMENT................................................................................ 10
12.2 TERMINATION WITHOUT CONSENT.............................................................. 10
12.3 TERMINATION WITH CONSENT................................................................. 10
ARTICLE XIII MISCELLANEOUS....................................................................... 10
13.1 SURVIVAL................................................................................. 10
13.2 NO ASSIGNMENT............................................................................ 10
13.3 APPLICABLE LAW........................................................................... 10
13.4 HEADINGS................................................................................. 10
13.5 COUNTERPARTS............................................................................. 10
ARTICLE XIV EFFECTIVE DATE....................................................................... 11
</TABLE>
<PAGE>
TRUST AGREEMENT
THIS TRUST AGREEMENT is made as of the 30/th/ day of March, 2000, by and
between ADAPTIVE BROADBAND CORPORATION ("Controlling Employer") and RELIANCE
TRUST COMPANY ("Trustee");
WHEREAS, certain affiliates of Controlling Employer (the Controlling
Employer and each of such affiliates collectively shall be referred to herein as
the "Participating Employers"), as listed on Exhibit A attached hereto and
incorporated herein by this reference, have adopted certain deferred
compensation plans;
WHEREAS, each of the deferred compensation plans (each of such plans
collectively shall be referred to herein as the "Plan"), as listed on Exhibit B
attached hereto and incorporated herein by this reference, is intended to
provide to certain eligible employees the opportunity to defer the receipt and
income taxation of a portion of such employees?annual compensation;
WHEREAS, the Participating Employers have incurred or expect to incur
liability under the terms of the Plan with respect to the individuals employed
by them and participating in the Plan;
WHEREAS, the Controlling Employer wishes to name Reliance Trust Company as
Trustee of the trust ("the Trust");
WHEREAS, each of the Participating Employers intends to contribute to the
Trust assets that shall be held therein, subject to the claims of each such
Participating Employer's creditors in the event of each such Participating
Employers Insolvency (as herein defined), until paid to Plan participants and
their beneficiaries in such manner and at such times as specified in the Plan;
WHEREAS, it is the intention of the parties that the Trust shall constitute
an unfunded arrangement and shall not affect the status of the Plan as an
unfunded plan maintained for the purpose of providing deferred compensation for
a select group of management or highly compensated employees, for all purposes
of Title I of the Employee Retirement Income Security Act of 1974; and
WHEREAS, it is the intention of each of the Participating Employers to make
contributions to the Trust to provide a source of funds to assist such
Participating Employers in the meeting of liabilities under the Plan.
1
<PAGE>
NOW, THEREFORE, the parties do hereby adopt the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:
ARTICLE I
ESTABLISHMENT OF TRUST
----------------------
1.1 Initial Deposit. Controlling Employer hereby deposits with Trustee in
---------------
trust certain funds (as an initial funding amount), which shall become the
principal of the Trust to be held, administered and disposed of by Trustee as
provided in this Trust Agreement.
1.2 Irrevocability. No part of the Trust principal or earnings thereon
--------------
shall be used for any purpose other than (i) providing benefits to participants
under the Plan and (ii) defraying reasonable expenses of administration in
accordance with Article IX until all such payments required by this Trust
Agreement have been made; provided, nothing in this Section 1.2 shall be deemed
to limit or otherwise prevent the termination of the Trust as provided in
Sections 12.2 or 12.3.
1.3 Grantor Trust. The Trust is intended to be a grantor trust, of which
-------------
each Participating Employer is the grantor with respect to the Plan participants
employed by such Participating Employer, within the meaning of subpart E, part
I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as
amended (the "Code"), and shall be construed accordingly.
1.4 Trust Assets. The principal of the Trust and any earnings thereon
------------
shall be held separate and apart from other funds of the Participating Employers
and shall be used exclusively for the uses and purposes of Plan participants and
general creditors as herein set forth. Plan participants and their
beneficiaries shall have no preferred claim on, or any beneficial ownership
interest in, any assets of the Trust. Any rights created under the Plan and
this Trust Agreement shall be mere unsecured contractual rights of Plan
participants and their beneficiaries against the Participating Employers. Any
assets held by the Trust will be subject to the claims of each Participating
Employer's general creditors under federal and state law in the event of
Insolvency, as defined in Section 3.3 herein, but only with respect to assets of
the Trust held for the benefit of Plan participants employed by such
Participating Employer. For purposes of this Trust Agreement, any reference to
"Plan participant" or "Plan participants" shall mean only those persons who
accrue a benefit under the Plan by reason of services performed for a
Participating Employer. In order to determine, as of any day, the assets which
shall be subject to the claims of each Participating Employers general
creditors, Trustee shall allocate Trust assets among each Participating Employer
in proportion to the total contributions made to the Trust by each Participating
Employer for or on behalf of the Plan participants with a benefit under the Plan
as of such day.
1.5 Additional Deposit. Each Participating Employer may, in its sole
------------------
discretion, at any time, or from time to time, make additional deposits of cash,
insurance policies or other property acceptable to Trustee to augment the
principal to be held, administered and disposed of by Trustee
2
<PAGE>
as provided in this Trust Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional deposits.
1.6 Custody of Assets. Notwithstanding any provision in this Agreement to
-----------------
the contrary, unless otherwise agreed to by the Trustee, all of the assets of
the Trust may be held by a custodian other than the Trustee and may be appointed
by the Trustee at the direction of the Controlling Employer. The Controlling
Employer hereby authorizes and directs the Trustee to enter into such agreements
with the custodian as may be necessary to establish an account with the
custodian.
ARTICLE II
PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES
-----------------------------------------------------
2.1 Payments. Subject to Article III, the Custodian shall make payments
--------
out of the Trust Fund to such participants, in such amounts, in such manner, and
at such times as may be specified in written directions of the Plans Controlling
Employer, as provided for in the Plan or its authorized designee.
2.2 Benefit Entitlements. The entitlement of a Plan participant or his or
--------------------
her beneficiaries to benefits under the Plan shall be determined by the
Controlling Employer or such party as it shall designate under the Plan, and any
claim for such benefits shall be considered and reviewed under the procedures
set out in the Plan.
2.3 Benefit Payments. A Participating Employer, at the discretion of
----------------
Controlling Employer, may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the terms of the
Plan. Controlling Employer shall notify Trustee of its decision to permit
payment of benefits directly prior to the time amounts are payable to
participants or their beneficiaries. In addition, if the principal of the
Trust, and any earnings thereon, are not sufficient to make payments of benefits
in accordance with the terms of the Plan, the applicable Participating Employer,
at the discretion of Controlling Employer, shall make the balance of each such
payment as it falls due.
ARTICLE III
TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST
BENEFICIARY WHEN PARTICIPATING EMPLOYER IS INSOLVENT
----------------------------------------------------
3.1 Claims of Creditors. At all times during the continuance of this
-------------------
Trust, as provided in Section 1.4 hereof, the principal and income of the Trust
held for the benefit of Plan participants of a Participating Employer shall be
subject to claims of general creditors of such Participating Employer under
federal and state law as set forth below.
3
<PAGE>
(a) The Board of Directors (or similar governing body) of each
Participating Employer shall have the duty to inform Trustee in writing of
the Participating Employer's Insolvency. If a person claiming to be a
creditor of the Participating Employer alleges in writing to Trustee that
the Participating Employer has become Insolvent, Trustee shall determine
whether the Participating Employer is Insolvent and, pending such
determination, Trustee shall discontinue payment of benefits in accordance
with Section 3.2.
(b) Unless Trustee has actual knowledge of the Participating
Employer's Insolvency, or has received notice from Controlling Employer,
such Participating Employer or a person claiming to be a creditor alleging
that the Participating Employer is Insolvent, Trustee shall have no duty to
inquire whether the Participating Employer is Insolvent. Trustee may in
all events rely on such evidence concerning the Participating Employer's
solvency as may be furnished to Trustee and that provides Trustee with a
reasonable basis for making a determination concerning the Participating
Employer's solvency.
3.2 Cessation of Benefit Payments. If at any time Trustee has determined
-----------------------------
that one of the Participating Employers has become Insolvent, the Trustee shall
discontinue payments from the Trust to or on behalf of Plan participants who are
or were employees of that Participating Employer, to the extent such employees'
benefits correspond to assets of the Trust (and earnings thereon) contributed by
such Participating Employer. Further, the Trustee shall segregate the assets of
the Trust attributable to such Participating Employer's participants (the
"Affected Assets") and continue to hold the Affected Assets in trust for the
benefit of the Participating Employers general creditors until the Trustee
receives a court order directing the disposition of such assets. Nothing in
this Trust Agreement shall in any way diminish any rights of Plan participants
or their beneficiaries to pursue their rights as general creditors of the
Participating Employer with respect to benefits due under the Plan or otherwise.
Trustee shall resume the payment of benefits to or on behalf of Plan
participants who are or were employees of such Participating Employer in
accordance with Article II of this Trust Agreement on the date (the
"Determination Date") Trustee has determined that the Participating Employer is
not Insolvent (or is no longer Insolvent). Notwithstanding anything in this
Article III to the contrary, if Trustee discontinues the payment of benefits
from the Trust and segregates the Affected Assets pursuant to this Section 3.2,
Trustee shall not thereafter make payment of benefits accrued before the
Determination Date to or on behalf of such Plan participants from any assets of
the Trust other than (i) the Affected Assets (and earnings thereon), and (ii)
new contributions made to the Trust for such Participating Employer; provided,
nothing contained herein shall prevent Trustee from making payment of benefits
accrued on or after the Determination Date to or on behalf of such Plan
participants from any assets of the Trust other than the Affected Assets (and
earnings thereon) in accordance with the terms of this Trust Agreement.
3.3 Insolvency. A Participating Employer shall be considered "Insolvent"
----------
for purposes of this Trust Agreement if the Participating Employer is (i) unable
to pay its debts as they become due, or (ii) subject to a pending proceeding as
a debtor under the United States Bankruptcy Code.
4
<PAGE>
3.4 Recommencement of Payments. Provided that there are sufficient
--------------------------
assets, if Trustee discontinues the payment of benefits from the Trust pursuant
to Section 3.2 hereof and subsequently resumes such payments, such payments
shall be made exclusively from (i) the Affected Assets then remaining in the
Trust, and (ii) new contributions made to the Trust for such Participating
Employer, and the first payment following such discontinuance shall include (to
the extent of such Affected Assets and/or new contributions) the aggregate
amount of all payments due to Plan participants or their beneficiaries under the
terms of the Plan for the period of such discontinuance (other than payments due
in the form of common stock of the Controlling Employer), less the aggregate
amount of any payments made to Plan participants or their beneficiaries by a
Participating Employer in lieu of the payments provided for hereunder during any
such period of discontinuance.
ARTICLE IV
NO REVERSION TO CONTROLLING EMPLOYER
------------------------------------
Except as provided in Article III and Sections 9.3 and 12.3 hereof,
Controlling Employer shall have no right or power to direct Trustee to return to
Controlling Employer or to divert to others any of the Trust assets before all
payment of benefits have been made to Plan participants and their beneficiaries
pursuant to the terms of the Plan.
ARTICLE V
INVESTMENT AUTHORITY
--------------------
5.1 Investment Authority. Controlling Employer shall have the exclusive
--------------------
right to direct Trustee with respect to the purchase, acquisition, investment,
disposition, transfer or surrender of any investment asset held by the Trust,
and Trustee shall have no responsibility for the investment and management of
the assets of the Trust. The Trustee shall act only upon receipt of proper
written directions from Controlling Employer or its designees and shall have no
liability to review or question any such directions. Trustee shall not be
liable for the acts or omissions of Controlling Employer or have any obligation
to invest or otherwise manage any asset of the Trust.
5.2 Delegation of Authority to Custodian. With respect to all assets held
------------------------------------
by the custodian in accordance with Section 1.6, the Trustee is authorized and
directed to delegate to the custodian the authority and responsibility for
receiving and carrying out the directions of the Controlling Employer.
5.3 Substitution of Assets. Controlling Employer shall have the right at
----------------------
any time, and from time to time in its sole discretion, to substitute assets of
equal fair market value for any asset held by the Trust. This right is
exercisable by Controlling Employer in a nonfiduciary capacity without the
approval or consent of any person in a fiduciary capacity.
5
<PAGE>
ARTICLE VI
DISPOSITION OF INCOME
---------------------
During the term of the Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
ARTICLE VII
ACCOUNTING BY TRUSTEE
---------------------
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between the
Controlling Employer and Trustee and all records necessary to carry out its
responsibilities described in Section 3.2. Within 120 days following the close
of each calendar year and within 120 days after the removal or resignation of
Trustee, Trustee shall deliver to the Controlling Employer a written account of
its administration of the Trust during such year or during the period from the
close of the last preceding year to the date of such removal or resignation,
setting forth all investments, receipts, disbursements and other transactions
effected by it, including a description of all securities and investments
purchased and sold with the cost or net proceeds of such purchases or sales
(accrued interest paid or receivable being shown separately), and showing all
cash, securities and other property held in the Trust at the end of such year or
as of the date of such removal or resignation, as the case may be.
Notwithstanding anything in this Article VII to the contrary, the Trustee shall
be entitled to rely on the records maintained by any custodian or recordkeeper
appointed by the Controlling Employer for the maintenance and provision of all
records specified in this Article VII.
6
<PAGE>
ARTICLE VIII
RESPONSIBILITY OF TRUSTEE
-------------------------
8.1 Standard of Care. Trustee shall act with the care, skill, prudence
----------------
and diligence under the circumstances then prevailing that a prudent person
acting in like capacity and familiar with such matters would use in the conduct
of an enterprise of a like character and with like aims; provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Controlling Employer which is
contemplated by, and in conformity with, the terms of the Plan or this Trust and
is given in writing by Controlling Employer. In the event of a dispute between
Controlling Employer and a participant, Trustee may apply to a court of
competent jurisdiction to resolve the dispute.
8.2 Indemnification. Controlling Employer shall indemnify Trustee
---------------
against, and hold Trustee harmless from, any and all loss, damage, penalty,
liability, cost, and expense, including without limitation, reasonable
attorneys?fees and disbursements, that may be incurred by, imposed upon, or
asserted against Trustee by reason of any claim, regulatory proceeding, or
litigation arising from any act done or omitted to be done by any individual or
person with respect to the Plan or Trust, excepting only any and all loss, etc.,
arising from Trustees negligence or bad faith or failure to perform any of its
duties hereunder, or violations by Trustee of the Code, the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or other applicable law.
Trustee shall indemnify Controlling Employer, each Participating Employer, the
Plan and Trust against and hold those parties harmless from, any and all loss,
damage, penalty, liability, cost and expense, including without limitation,
reasonable attorneys fees and disbursements, that may be incurred by, imposed
upon, or asserted against Controlling Employer, each Participating Employer, the
Plan or Trust, by reason of any claim, regulatory proceeding or litigation
arising out of Trustees negligence or bad faith or failure to perform any of its
duties hereunder, or violations by Trustee of the Code, ERISA or other
applicable law. This provision shall survive the termination of the Trust.
8.3 Legal Counsel. Trustee may consult with legal counsel (who may also
-------------
be counsel for Controlling Employer generally) with respect to any of its duties
or obligations hereunder.
8.4 Agents. Trustee may hire agents, accountants, actuaries, investment
------
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
8.5 Trustee Powers. Trustee shall have, without exclusion, all powers
--------------
conferred on Trustees by applicable law, unless expressly provided otherwise
herein.
8.6 No Business Objective. Notwithstanding any powers granted to Trustee
---------------------
pursuant to this Trust Agreement or to applicable law, Trustee shall not have
any power that could give this Trust the objective of carrying on a business and
dividing the gains therefrom, within the meaning
7
<PAGE>
of Section 301.7701-2 of the Procedure and Administrative Regulations
promulgated pursuant to the Internal Revenue Code.
ARTICLE IX
COMPENSATION AND EXPENSES OF TRUSTEE
------------------------------------
9.1 Payment of Expenses. Trustee may make payments of all reasonable
-------------------
administrative expenses, real and personal property taxes, income taxes, stock
transfer taxes and other taxes of any and all kinds levied or assessed under
existing or future laws against the Trust Fund out of the Trust Fund to such
persons, in such amounts, in such manner and at such time as may be specified in
written directions of the Controlling Employer or its authorized designee.
9.2 Compensation. Trustee shall be paid such reasonable compensation and
------------
expenses as shall from time to time be agreed upon in writing by Controlling
Employer and Trustee. Such compensation and expenses shall be withdrawn by
Trustee out of the Trust Fund, unless paid by the Participating Employers.
9.3 Payment Procedures. All reasonable and proper scheduled compensation
------------------
and expenses shall be withdrawn by Trustee out of the Trust Fund, unless paid by
the Participating Employers, and shall be paid by one or more of the
Participating Employers if the same cannot be withdrawn from the Trust Fund.
All other reasonable and proper expenses shall be withdrawn by Trustee out of
the Trust Fund after receiving Controlling Employer approval which shall not be
reasonably denied, unless paid by the Participating Employers and shall be paid
by one or more of the Participating Employers if the same cannot be withdrawn
from the Trust Fund. To the extent a Participating Employer pays any expenses
that are properly payable from the Trust Fund, Trustee shall reimburse such
Participating Employer from the Trust Fund if requested to do so by Controlling
Employer.
8
<PAGE>
ARTICLE X
RESIGNATION AND REMOVAL OF TRUSTEE
----------------------------------
10.1 Resignation. Trustee may resign at any time by written notice to
-----------
Controlling Employer, which shall be effective 90 days after receipt of such
notice unless Controlling Employer and Trustee agree otherwise.
10.2 Removal. Trustee may be removed by Controlling Employer on 90 days
-------
notice or upon shorter notice accepted by Trustee.
10.3 Transfer of Assets. Upon resignation or removal of Trustee and
------------------
appointment of a successor Trustee, all assets shall subsequently be transferred
to the successor Trustee. The transfer shall be completed within 120 days after
receipt of notice of resignation, removal or transfer, unless the Controlling
Employer extends the time limit.
10.4 Successor. If Trustee resigns or is removed, a successor shall be
---------
appointed, in accordance with Article XI hereof, by the effective date of
resignation or removal under Sections 10.1 or 10.2. If no such appointment has
been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
ARTICLE XI
APPOINTMENT OF SUCCESSOR
------------------------
11.1 Appointment. If Trustee resigns or is removed in accordance with
-----------
Section 10.1 or 10.2 hereof, Controlling Employer may appoint any third party,
such as a bank trust department or other party that may be granted corporate
trustee powers under state law, as a successor to replace Trustee upon
resignation or removal. The appointment shall be effective when accepted in
writing by the new Trustee, who shall have all of the rights and powers of the
former Trustee, including ownership rights in the Trust assets. The former
Trustee shall execute any instrument necessary or reasonably requested by the
Controlling Employer or the successor Trustee to evidence the transfer.
11.2 Limited Liability. The successor Trustee need not examine the records
-----------------
and acts of any prior Trustee and may retain or dispose of existing Trust
assets, subject to Articles VII and VIII hereof. The successor Trustee shall
not be responsible for, and Controlling Employer shall indemnify and defend the
successor Trustee from, any claim or liability resulting from any action or
inaction of any prior Trustee or from any other past event, or any condition
existing at the time it becomes successor Trustee.
9
<PAGE>
ARTICLE XII
AMENDMENT OR TERMINATION
------------------------
12.1 Amendment. This Trust Agreement may be amended by a written
---------
instrument executed by Trustee and the Board of Directors (or similar governing
body) of Controlling Employer. Notwithstanding the foregoing, no such amendment
shall conflict with the terms of the Plan or shall make the Trust revocable.
12.2 Termination Without Consent. The Trust shall not terminate until the
---------------------------
date on which Plan participants and their beneficiaries are no longer entitled
to benefits pursuant to the terms of the Plan. Upon termination of the Trust,
any assets remaining in the Trust shall be returned to Controlling Employer.
12.3 Termination With Consent. Upon written approval of participants or
------------------------
beneficiaries entitled to payment of benefits pursuant to the terms of the Plan,
Controlling Employer may terminate this Trust prior to the time all benefit
payments under the Plan have been made. All assets in the Trust at termination
shall be returned to Controlling Employer.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 Survival. Any provision of this Trust Agreement prohibited by law
--------
shall be ineffective to the extent of any such prohibition, without invalidating
the remaining provisions hereof.
13.2 No Assignment. Benefits payable to Plan participants and their
-------------
beneficiaries under this Trust Agreement may not be anticipated, assigned
(either at law or in equity), alienated, pledged, encumbered or subjected to
attachment, garnishment, levy, execution or other legal or equitable process.
13.3 Applicable Law. This Trust Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Georgia.
13.4 Headings. The headings are solely for convenience and shall not be
--------
relied upon in construing any provisions hereof.
13.5 Counterparts. This Trust Agreement may be executed in counterparts,
------------
and each counterpart shall be appended hereto.
10
<PAGE>
ARTICLE XIV
EFFECTIVE DATE
--------------
The effective date of this amendment and restatement of the Trust Agreement
shall be March 30, 2000.
IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement
as of the date first above written.
CONTROLLING EMPLOYER:
ADAPTIVE BROADBAND CORPORATION
Dated: 3/30/2000 By: Robert G. Parrish
--------- --------------------------
Title: V.P., Human Resources
-----------------------
TRUSTEE:
RELIANCE TRUST COMPANY
By: William C. Harlow
--------------------------
Title: Senior Vice President
-----------------------
11
<PAGE>
EXHIBIT A
---------
PARTICIPATING EMPLOYERS
Employer Name
-------------
Adaptive Broadband Corporation
A-1
<PAGE>
EXHIBIT B
---------
PARTICIPATING PLANS
Plan Name
---------
ADAPTIVE BROADBAND CORPORATION
SUPPLEMENTAL EXECUTIVE DEFERRED COMPENSATION PLAN
B-1
<PAGE>
March 30, 2000
William C. Harlow
Senior Vice President
Reliance Trust Company
Lenox Plaza, Suite 900
3384 Peachtree Road
Atlanta, GA 30326
Re: Adaptive Broadband Corporation
Supplemental Executive Deferred Compensation Plan
Dear Mr. Harlow:
Please accept this letter as notification that Adaptive Broadband Corporation
has appointed Reliance Trust Company as Trustee of the above referenced plan as
of the date entered as the effective date of the amended and restated trust
established for the plan.
Sincerely,
Robert G. Parrish
V. P., Human Resources
B-2
