As filed with the Securities and Exchange Commission on May 7, 2002
Registration No. 333-__________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
Form S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Exact name of issuer as specified in its charter:
HEWLETT-PACKARD COMPANY
State or other jurisdiction of I.R.S. Employer
incorporation or organization: Identification No.:
Delaware 94-1081436
Address of principal executive offices:
3000 Hanover Street, Palo Alto, California 94304
Full title of the plans:
COMPAQ COMPUTER CORPORATION 401(k) INVESTMENT PLAN
COMPAQ COMPUTER CORPORATION DEFERRED COMPENSATION
AND SUPPLEMENTAL SAVINGS PLAN
Name and address of agent for service:
ANN O. BASKINS
Senior Vice President, General Counsel and Secretary
3000 Hanover Street, Palo Alto, California 94304
Telephone Number, including area code, of agent for service: (650) 857-1501
CALCULATION OF REGISTRATION FEE
======================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered Share Price Registration Fee
------------------------------- ------------------- --------------------- ---------------------- ---------------------
Common Stock, $.01 par 9,500,000 shares(3) $16.66(4) $158,270,000(4) $14,560.84(4)
value, (2) to be issued under
the Compaq Computer Corporation
401(k) Investment Plan(1)
------------------------------- ------------------- --------------------- ---------------------- ---------------------
Common Stock, (2) $.01 par 65,000 shares(3) $16.66(4) $1,082,900(4) $99.63(4)
value, to be issued under the
Compaq Computer Corporation
Deferred Compensation and
Supplemental Savings Plan
------------------------------- ------------------- --------------------- ---------------------- ---------------------
Deferred Compensation $25,000,000 100% $25,000,000 $2,300
Obligations to be issued
under the Compaq Computer
Corporation Deferred
Compensation and Supplemental
Savings Plan(5)
------------------------------- ------------------- --------------------- ---------------------- ---------------------
======================================================================================================================
Total $0.00(6)
----------
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as
amended (the "Securities Act"), this registration statement also covers an
indeterminate amount of interests to be offered or sold pursuant to the Compaq
Computer Corporation 401(k) Investment Plan (the "401(k) Plan").
(2) Each share of common stock includes a right to purchase one one-thousandth
of a share of Series A Participating Preferred Stock.
(3) Plus such indeterminable number of additional shares as may be issued under
the 401(k) Plan and the Compaq Computer Corporation Deferred Compensation and
Supplemental Savings Plans (the "Deferred Compensation Plan") (collectively, the
"Plans")by reason of a stock split, stock dividend or similar capital adjustment
that results in an increase in the number of the Registrant's outstanding shares
of Common Stock.
(4) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(h) under the Securities Act on the basis of $16.66 per
share, the average of the high and low prices of the Registrant's Common Stock
on May 1, 2002, as reported on the New York Stock Exchange.
(5) The obligations under the Deferred Compensation Plan are unsecured
obligations of Compaq Computer Corporation ("Compaq") to pay deferred
compensation in the future in accordance with the terms of the Deferred
Compensation Plan.
(6) The total filing fee for common stock registered herein of $16,960.47 is
offset pursuant to Rule 457(p) of the Securities Act by filing fees totaling
$16,960.47 previously paid with respect to unsold shares registered pursuant to
Registration Statements on Form S-8 filed by Compaq on May 17, 2001 ($85,465)
for the Compaq Computer Corporation 2001 Stock Option Plan (Commission File No.
333-61176).
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, which were filed by Hewlett-Packard Company
("HP") and the 401(k) Plan with the Securities and Exchange Commission (the
"Commission"), and any future filings made by HP and the 401(k) Plan with the
Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") prior to the filing of
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 in the registration statement and to be part
thereof form the date of filing of such documents:
* Annual report on Form 10-K for the fiscal year ended October
31, 2001, filed with the Commission on January 29, 2002 as
amended on Form 10-K/A filed with the Commission on January 30,
2002;
* Quarterly report on Form 10-Q for the quarter ended January 31,
2002, filed with the Commission on March 12, 2002;
* Current report on Form 8-K, dated November 5, 2001, filed with
the Commission on November 6, 2001;
* Current report on Form 8-K, dated November 14, 2001, filed with
the Commission on November 14, 2001;
* Current report on Form 8-K, dated November 15, 2001, filed with
the Commission on November 16, 2001;
* Current report on Form 8-K, dated November 29, 2001, filed with
the Commission on November 30, 2001 (modified by Current report
on Form 8-K, dated February 14, 2002, filed with the Commission
on February 14, 2002);
* Current report on Form 8-K, dated December 7, 2001, filed with
the Commission on December 7, 2001;
* Current report on Form 8-K, dated February 13, 2002, filed with
the Commission on February 14, 2002;
* Current report on Form 8-K, dated February 14, 2002, filed with
the Commission on February 14, 2002;
* Current report on Form 8-K, dated February 27, 2002, filed with
the Commission on February 27, 2002;
* Current report on Form 8-K, dated March 14, 2002, filed with the
Commission on March 15, 2002;
* Current report on Form 8-K, dated March 28, 2002, filed with the
Commission on March 29, 2002;
* Current report on Form 8-K, dated April 1, 2002, filed with the
Commission on April 3, 2002;
* Current report on Form 8-K, dated April 12, 2002, filed with the
Commission on April 15, 2002;
* Current report on Form 8-K, dated April 17, 2002, filed with the
Commission on April 18, 2002;
* Current report on Form 8-K, dated May 1, 2002, filed with the
Commission on May 2, 2002;
* Current report on Form 8-K, dated May 3, 2002, filed with the
Commission on May 7, 2002;
* The description of HP's common stock contained in our
registration statement on Form 8-A, filed with the Commission on
or about November 6, 1957 and any amendment or report filed with
the Commission for the purposes of updating such description;
* The description of HP's preferred share purchase rights contained
in our registration statement on Form 8-A, filed with the
Commission on September 4, 2001 and any amendment or
report filed with the Commission for the purpose of updating such
description; and
* Compaq's Annual report on Form 11-K for the 401(k) Plan for the
fiscal year ended December 31, 2000, filed with the Commission on
June 28, 2001.
II-1
Item 4. Description of Securities.
The securities being registered pursuant to the Deferred Compensation
Plan represent obligations (the "Obligations") of the Registrant to pay deferred
compensation in the future in accordance with the terms of the Plan, which is
filed as Exhibit 4.2 to this Registration Statement.
The Obligations are general unsecured obligations of the Registrant to
pay deferred compensation in the future according to the Deferred Compensation
Plan from a trust established by the Registrant and then from the general assets
of the Registrant, and rank equally with other unsecured and unsubordinated
indebtedness of the Registrant.
The amount of compensation to be deferred by each participant is
determined in accordance with the Plan based on elections by the participant.
eligible employees may defer up to 50% of base salary, and up to 100% of bonus
awards and profits sharing, if eligible. Each participant's account also may be
credited with a matching contribution each plan year. Amounts credited to a
participant's account are credited with deemed investment returns equal to the
experience of selected investment funds offered under the Deferred Compensation
Plan and elected by the participant. The Obligations are generally payable upon
a date or dates selected by the participant in accordance with the terms of the
Deferred Compensation Plan, subject to exceptions for in-service withdrawals and
certain terminations of employment. The Obligations generally are payable in the
form of a lump-sum distribution or in installments, at the election of the
participant made in accordance with the terms of the Deferred Compensation Plan.
Participants or beneficiaries generally may not sell, transfer,
anticipate, assign, hypothecate or otherwise dispose of any right or interest in
the Deferred Compensation Plan. A participant may designate one or more
beneficiaries to receive any portion of Obligations payable in the event of
death. The Registrant reserves the right to amend or terminate the Deferred
Compensation Plan at any time and for any reason.
At the discretion of the Registrant, the Obligations that are deemed to
be invested in common stock of the Registrant may be paid in common stock of the
Registrant. Funds in an amount equal to employee deferrals, matching
contributions and earnings have been deposited in a grantor trust. The funds
held in the trust are to be used to satisfy obligations of the Registrant under
the Deferred Compensation Plan. Although the funds are available to creditors of
the Registrant, they are not available for general corporate purposes.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware
authorizes a court to award or a corporation's board of directors to grant
indemnification to directors and officers in terms that are sufficiently broad
to permit indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act.
Our certificate of incorporation contains a provision eliminating the
personal liability of our directors to HP or its shareowners for breach of
fiduciary duty as a director to the fullest extent permitted by applicable law.
Our bylaws provide for the mandatory indemnification of our directors
and officers to the fullest extent permitted by Delaware law. Our bylaws also
provide:
(i) that we may expand the scope of the indemnification by
individual contracts with our directors and officers, and
(ii) that we shall not be required to indemnify any director or
officer unless the indemnification is required by law, if the proceeding in
which indemnification is sought was brought by a director or officer, it was
authorized in advance by our board of directors, the indemnification is provided
by us, in our sole discretion pursuant to powers vested in us under the Delaware
law, or the indemnification is required by individual contract.
In addition, our bylaws give us the power to indemnify our employees
and agents to the fullest extent permitted by Delaware law.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
4.1 Compaq Computer Corporation 401(k) Investment Plan.
4.2 Compaq Computer Corporation Deferred Compensation and Supplemental
Savings Plan.
II-2
5.1 Undertaking re: Status of Favorable Determination Letter Covering the
Compaq Computer Corporation 401(k) Investment Plan.
5.2 Opinion of legality.
23.1 Consent of Counsel. Contained with the opinion filed as Exhibit 5.2
hereto and incorporated herein by reference.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
23.3 Consent of Ernst & Young LLP, Independent Auditors.
23.4 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.5 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
24 Power of attorney. Contained in the signature pages (pages II-4 to
II-5) of this Form S-8 Registration Statement and incorporated herein
by reference.
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
i. To include any prospectus required by section 10(a)(3)
of the Securities Act;
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; and 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 the undertakings set forth in clauses (i) and (ii) above
shall not apply if the information required to be included in a post-effective
amendment by these clauses is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act, that are
incorporated by reference in this registration statement.
2. 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 therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, 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 therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act 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 Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
SIGNATURES
THE REGISTRANT
Pursuant to the requirements of the Securities Act, 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 Palo Alto, state of California, on this 7th day of
May, 2002.
HEWLETT-PACKARD COMPANY
/s/ Charles N. Charnas
------------------------
Charles N. Charnas
Assistant Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the persons whose signatures
appear below constitute and appoint Ann O. Baskins and Charles N. Charnas, and
each of them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities to sign the Form S-8 Registration Statement
pertaining to shares of common stock of HP and an indeterminate number of plan
interests issuable under the 401(k) Plan and shares of common stock of HP
issuable under the Compensation Plan and deferred compensation Obligations
payable, and any or all amendments (including post-effective amendments) to
said Form S-8 Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
their substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, on May 7, 2002 this
Registration Statement and any Amendments to Registration Statements have been
signed below by the following persons in the capacities and on the dates
indicated.
Signature Title
--------- -----
/s/ Carleton S. Fiorina Chairman and Chief Executive Officer
----------------------- (Principal Executive Officer)
Carleton S. Fiorina
/s/ Robert P. Wayman Executive Vice President,
----------------------- Finance and Administration and
Robert P. Wayman Chief Financial Officer
(Principal Financial Officer)
/s/ Jon E. Flaxman Vice President and Controller
----------------------- (Principal Accounting Officer)
Jon E. Flaxman
----------------------- Director
Lawrence T. Babbio, Jr.
/s/ Michael D. Capellas
----------------------- Director
Michael D. Capellas
II-4
/s/ Philip M. Condit
----------------------- Director
Philip M. Condit
/s/ Patricia C. Dunn
----------------------- Director
Patricia C. Dunn
/s/ Sam Ginn
----------------------- Director
Sam Ginn
/s/ Richard A. Hackborn
----------------------- Director
Richard A. Hackborn
/s/ Dr. George A. Keyworth, II
------------------------------ Director
Dr. George A. Keyworth, II
----------------------- Director
Robert E. Knowling Jr.
/s/ Sanford M. Litvack
----------------------- Director
Sanford M. Litvack
/s/ Thomas J. Perkins
---------------------- Director
Thomas J. Perkins
/s/ Lucille S. Salhany
---------------------- Director
Lucille S. Salhany
II-5
THE PLAN
Pursuant to the requirements of the Securities Act, the Registrant,
as the administrator of the 401(k) Plan, has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Palo Alto, State of California on the 7th day of
May, 2002.
COMPAQ COMPUTER CORPORATION
401(k) INVESTMENT PLAN
Signature Title
--------- -----
/s/ Caroline Atherton Member of the Retirement Plan
--------------------- Administrative Committee
Caroline Atherton
/s/ Linda S. Auwers Member of the Retirement Plan
-------------------- Administrative Committee
Linda S. Auwers
/s/ Ben Wells Member of the Retirement Plan
-------------------- Administrative Committee
Ben Wells
II-6
EXHIBIT INDEX
Exhibit No.
4.1 Compaq Computer Corporation 401(k) Investment Plan.
4.2 Compaq Computer Corporation Deferred Compensation and Supplemental
Savings Plan.
5.1 Undertaking re: Status of Favorable Determination Letter Covering the
Compaq Computer Corporation 401(k) Investment Plan.
5.2 Opinion of legality.
23.1 Consent of Counsel. Contained with the opinion filed as Exhibit 5.2
hereto and incorporated herein by reference.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
23.3 Consent of Ernst & Young LLP Independent Auditors.
23.4 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.5 Consent of PricewaterhouseCoopers LLP Independent Accountants.
24 Power of attorney. Contained in the signature pages (pages II-4 to II-5)
of this Form S-8 Registration Statement and incorporated herein by
reference.
EXHIBIT 4.1
COMPAQ COMPUTER CORPORATION 401(K) INVESTMENT PLAN
WITNESSETH:
WHEREAS, Compaq Computer Corporation, hereinafter referred to as
"Compaq" has heretofore adopted effective as of April 1, 1985, the Compaq
Computer Corporation Savings Plus Plan, which name was changed, effective as of
January 1, 1986, to the Compaq Computer Corporation Investment Plan, hereinafter
referred to as the "Prior Plan," for the benefit of its employees; and
WHEREAS, the Prior Plan was amended and restated, effective July 1,
1988, was amended and restated effective January 1, 1989, was amended and
restated effective January 1, 1994, and was amended and restated effective
January 1, 1999, including changing the name of the Prior Plan to the Compaq
Computer Corporation 401(k) Investment Plan, hereinafter referred to as the
"Plan;" and
WHEREAS, the Company desires to amend the Plan to comply with GUST; and
WHEREAS, the Company desires to amend the Plan to reflect certain
provisions of the EGTRRA. Any such amendments are intended as good faith
compliance with the requirements of EGTRRA and are to be construed in accordance
with EGTRRA and guidance issued thereunder and shall supersede the provisions of
the Plan to the extent those provisions are inconsistent with the provisions of
these amendments.
NOW THEREFORE, the Plan is hereby restated in its entirety as follows
with no interruption in time, effective as of January 1, 2001, except as
otherwise indicated herein and except with respect to EGTRRA amendments which
shall be effective January 1, 2002:
ARTICLE I - Definitions and Construction
----------------------------------------
1.1. DEFINITIONS. Where the following words and phrases appear in
the Plan, they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary.
(1) ACCOUNT(S). A Member's Cash or Deferred Account, Employer
Contribution Account, and/or Rollover Contribution Account, including the
amounts credited thereto.
(2) ACT. The Employee Retirement Income Security Act of 1974, as
amended.
(3) BENEFICIARY. The individual entitled to receive payment of the
benefit of a deceased Member in accordance with Section 9.2.
(4) BENEFIT COMMENCEMENT DATE. With respect to each Member or
Beneficiary, the date such Member or Beneficiary's benefit is paid to him from
the Trust Fund in accordance with Section 10.1.
(5) CASH OR DEFERRED ACCOUNT. An individual account for each Member,
which is credited with the Cash or Deferred Contributions made by the Employer
on such Member's behalf and the Employer Safe Harbor Contributions, if any, made
on such Member's behalf pursuant to Section 3.3 to satisfy the restrictions set
forth in Section 3.1 (e) and which is credited with (or debited for) such
account's allocation of net income (or net loss) and changes in value of the
Trust Fund.
(6) CASH OR DEFERRED CONTRIBUTIONS. Contributions made to the Plan by
the Employer on a Member's behalf in accordance with the Member's elections to
defer Compensation under the Plan's qualified cash or deferred arrangement as
described in Section 3.1.
(7) CHANGE IN CONTROL. A "Change in Control" shall be deemed to
have occurred if:
(i) any "person" as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") (other
than Compaq, any trustee or other fiduciary holding securities under any Compaq
Compaq employee benefit plan, or any entity owned, directly or indirectly, by
stockholders in substantially the same proportions as their ownership of Compaq
voting securities), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act, or any successor rule or regulation thereto as in
effect from time to time), directly or indirectly, of Compaq securities
representing 30% or more of the combined voting power of Compaq's then
outstanding securities;
(ii) during any period of two consecutive years (not
including any period prior to the adoption of the Plan), individuals who at the
beginning of such period constitute the Board of Directors, and any new director
(other than a director designated by a person who has entered into an agreement
with Compaq to effect a transaction described in clause (i), (iii), or (iv) of
this paragraph) whose election by the Board of Directors or nomination for
election by Compaq's stockholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the beginning
of the two-year period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
of the Board of Directors;
(iii) there is consummated a merger or consolidation of
Compaq with any other corporation, other than a merger or consolidation that
results in Compaq voting securities outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of voting securities of Compaq or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that a merger
or consolidation effected to implement a recapitalization of Compaq (or similar
transaction) in which no person acquires more than 30% of the combined voting
power of Compaq's then outstanding securities shall not constitute a Change in
Control; or (iv) Compaq stockholders approve a plan of complete liquidation of
Compaq or an agreement for the sale or disposition by Compaq of all or
substantially all of Compaq's assets. If any of the events enumerated in clauses
(i) through (iv) occur, the Board shall determine the effective date of the
Change in Control resulting therefrom, for purposes of the Plan.
(8) CODE. The Internal Revenue Code of 1986, as amended.
(9) COMMITTEE. The Retirement Plan Administrative Committee as
described in Article XIII.
(10) COMPAQ. Compaq Computer Corporation, and any successor thereto.
(11) COMPAQ STOCK. The common stock of Compaq Computer Corporation and
any other stock into which such common stock may hereafter be changed whether
directly as a result of a single change or indirectly as a result of more than
one change.
(12) COMPENSATION. Except as specifically provided for in Appendix B
or elsewhere in the Plan, the total of all wages, salaries, fees for
professional service and other amounts received in cash or in kind by a Member
for services actually rendered or labor performed for the Employer while a
Member to the extent such amounts are includable in gross income, subject to the
following adjustments and limitations.
(a) The following shall be excluded:
(i) Overtime pay, profit sharing payments, bonuses, shift
differential, and incentive or other supplemental pay; provided, however, that
neither "overtime pay" nor "shift differential" shall include any compensation
attributable to hours worked in any workweek in excess of forty paid to an
Employee whose regularly scheduled work weeks vary in a cycle, but (a) only to
the extent that such compensation is attributable to hours that are regularly
scheduled in such a workweek for such Employee and (b) in the case of an
Employee whose regularly scheduled hours in a cycle exceed forty multiplied by
the number of weeks in such cycle, only to the extent that the exclusion of such
compensation from "overtime pay" or "shift differential" will not cause such
Employee's Compensation, when calculated without compensation attributable to
hours worked in a workweek over the regularly scheduled number of hours but not
in excess of forty, to be an amount greater than if such Employee worked a
regularly scheduled forty hours in each workweek in such cycle;
(ii) Reimbursements and other expense allowances;
(iii) Cash and noncash fringe benefits;
(iv) Moving expenses;
(v) Employer contributions to or payments from this or
any other deferred compensation program, whether such program is qualified under
section 401(a) of the Code or nonqualified;
(vi) Welfare benefits;
(vii) Amounts realized from the receipt or exercise of a
stock option that is not an incentive stock option within the meaning of section
422 of the Code;
(viii) Amounts realized at the time property described in
section 83 of the Code is freely transferable or no longer subject to a
substantial risk of forfeiture;
(ix) Amounts realized as a result of an election described
in section 83(b) of the Code;
(x) Any amount realized as a result of a disqualifying
disposition within the meaning of section 421(a) of the Code; and
(xi) Any other amounts that receive special tax benefits
under the Code but are not hereinafter included.
(b) Elective contributions made on a Member's behalf by the
Employer that are not includable in income under section 125, section 132(f),
section 402(e)(3), section 402(h), or section 403(b) of the Code shall be
included;
(c) The Compensation of any Member taken into account for
purposes of the Plan shall be limited to $170,000 for any Plan Year with such
limitation to be:
(i) Adjusted automatically to reflect any amendments to
section 401(a)(17) of the Code (including, without limitation, the amendment
made by EGTRRA) and any cost-of-living increases authorized by section
401(a)(17) of the Code; and (ii) Prorated for a Plan Year of less than twelve
months and to the extent otherwise required by applicable law.
(13) CONTROLLED ENTITY. Each corporation that is a member of a
controlled group of corporations, within the meaning of section 1563(a)
(determined without regard to sections 1563(a)(4) and 1563(e)(3)(C)) of the
Code, of which the Employer is a member, each trade or business (whether or not
incorporated) with which the Employer is under common control, and each member
of an affiliated service group, within the meaning of section 414(m) of the
Code, of which the Employer is a member.
(14) DIRECT ROLLOVER. A payment by the Plan to an Eligible Retirement
Plan designated by a Distributee pursuant to Section 10.5.
(15) DIRECTORS. The Board of Directors of Compaq.
(16) DISTRIBUTEE. Each (A) Member entitled to an Eligible Rollover
Distribution, (B) Member's surviving spouse with respect to the interest of such
surviving spouse in an Eligible Rollover Distribution, and (C) former spouse of
a Member who is an alternate payee under a qualified domestic relations order,
as defined in section 414(p) of the Code, with regard to the interest of such
former spouse in an Eligible Rollover Distribution.
(17) EARLY RETIREMENT DATE. The date prior to a Member's Normal
Retirement Date upon which such Member terminates service after attaining age
fifty-five.
(18) EGTRRA. The Economic Growth and Tax Relief Reconciliation Act and
any rulings, guidance, and regulations promulgated thereunder.
(19) ELIGIBLE EMPLOYEE. Each Employee other than (A) an Employee whose
terms and conditions of employment are governed by a collective bargaining
agreement, unless such agreement provides for his coverage under the Plan,
(B) except for any employee who resides in Puerto Rico, a nonresident alien who
receives no earned income from the Employer that constitutes income from sources
within the United States, and (C) an employee of a Controlled Entity that is not
a participating employer pursuant to Article XVIII hereunder. Notwithstanding
any provision of the Plan to the contrary, no individual who is designated,
compensated, or otherwise classified or treated by the Employer as an
independent contractor, contingent worker, consultant, temporary employee,
"leased employee" (or other similar category) whether or not such a person is a
Leased Employee, or student shall be eligible to become a Member in the Plan. It
is expressly intended that such individuals are excluded from Plan participation
for any period of time during which they are so designated even if that
designation, classification, or treatment is later changed for any reason
(including, without limitation, a determination by a court or administrative
agency that such individuals are common law employees). (20) Eligible Retirement
Plan. (A) With respect to a Distributee other than a surviving spouse, an
individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified plan
described in section 401(a) of the Code, which under its provisions and
applicable law may accept such Distributee's Eligible Rollover Distribution, and
(B) with respect to a Distributee who is a surviving spouse, an individual
retirement account described in section 408(a) of the Code or an individual
retirement annuity described in section 408(b) of the Code. With respect to
distributions made after December 31, 2001, an Eligible Retirement Plan shall
also mean an annuity contract described in section 403(b) of the Code and an
eligible plan under section 457(b) of the Code which is maintained by a state,
political subdivision of a state, or any agency or instrumentality of a state or
political subdivision of a state and which agrees to separately account for
amounts transferred into such plan from the Plan. The definition of Eligible
Retirement Plan shall also apply in the case of a distribution to a surviving
spouse, or to a spouse or former spouse who is the alternate payee under a
qualified domestic relation order, as defined in section 414(p) of the Code.
(21) ELIGIBLE ROLLOVER DISTRIBUTION. With respect to a Distributee, any
distribution of all or any portion of the Accounts of a Member other than (A) a
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated Beneficiary or for a specified
period of ten years or more, (B) a distribution to the extent such distribution
is required under section 401(a)(9) of the Code, (C) the portion of a
distribution that is not includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities), (D) a loan treated as a distribution under section 72(p) of the
Code and not excepted by section 72(p)(2), (E) a loan in default that is a
deemed distribution, (F) any corrective distribution provided in Sections 3.7
and 4.6(b), and (G) any other distribution so designated by the Internal Revenue
Service in revenue rulings, notices, and other guidance of general
applicability. A distribution pursuant to Section 11.1(d) from the Cash or
Deferred Account of a Member who has not attained age 59 1/2 shall not
constitute an Eligible Rollover Distribution. With respect to distributions made
after December 31, 2001, any amount that is distributed on account of hardship
shall not be an Eligible Rollover Distribution and the Distributee may not elect
to have any portion of such a distribution paid directly to an Eligible
Retirement Plan.
(22) EMPLOYEE. Each (A) individual employed by the Employer and (B)
individual employed by a Controlled Entity.
(23) EMPLOYER. Compaq and each entity that has been designated to
participate in the Plan pursuant to the provisions of Article XVIII.
(24) EMPLOYER CONTRIBUTION ACCOUNT. An individual account for each
Member, which is credited with the sum of (A) the Employer Matching
Contributions made on such Member's behalf, and (B) the Employer Safe Harbor
Contributions, if any, made on such Member's behalf pursuant to Section 3.3 to
satisfy the restrictions set forth in Section 3.4 and which is credited with
(or debited for) such account's allocation of net income (or net loss) and
changes in value of the Trust Fund.
(25) EMPLOYER CONTRIBUTIONS. The total of Employer Matching
Contributions and Employer Safe Harbor Contributions.
(26) EMPLOYER MATCHING CONTRIBUTIONS. Contributions made to the Plan
by the Employer pursuant to Section 3.2.
(27) EMPLOYER SAFE HARBOR CONTRIBUTIONS. Contributions made to the
Plan by the Employer pursuant to Section 3.3.
(28) EMPLOYMENT COMMENCEMENT DATE. The date on which an Employee first
performs an Hour of Service.
(29) HIGHLY COMPENSATED EMPLOYEE. Each Employee who performs services
during the Plan Year for which the determination of who is highly compensated is
being made (the "Determination Year") and who:
(a) Is a five-percent owner of the Employer (within the meaning
of section 416(i)(1)(A)(iii) of the Code) at any time during the Determination
Year or the twelve-month period immediately preceding the Determination Year
(the "Look-Back Year"); or
(b) Receives compensation (within the meaning of section
414(q)(4) of the Code; "compensation" for purposes of this Paragraph shall mean
the amount paid during the preceding Plan Year by the Employer to the Employee
for services rendered (regardless of whether the individual was a Member at the
time) as reportable to the Federal Government for the purposes of withholding
federal income taxes increased by any amount to which section 125, section
132(f), section 402(h)(1)(B), or section 403(b) apply) in excess of $85,000
(with such amount to be adjusted automatically to reflect any cost-of-living
adjustments authorized by section 414(q)(1) of the Code) during the Look-Back
Year and is a member of the top 20% of Employees for the Look-Back Year (other
than Employees described in section 414(q)(5) of the Code) ranked on the basis
of compensation received during the year.
For purposes of the preceding sentence, (i) all employers aggregated
with the Employer under section 414(b), (c), (m), or (o) of the Code shall be
treated as a single employer and (ii) a former Employee who had a separation
year (generally, the Determination Year such Employee separates from service)
prior to the Determination Year and who was an active Highly Compensated
Employee for either such separation year or any Determination Year ending on or
after such Employee's fifty-fifth birthday shall be deemed to be a Highly
Compensated Employee. To the extent that the provisions of this Paragraph are
inconsistent or conflict with the definition of a "highly compensated employee"
set forth in section 414(q) of the Code and the Treasury regulations thereunder,
the relevant terms and provisions of section 414(q) of the Code and the Treasury
regulations thereunder shall govern and control.
(30) HOUR OF SERVICE.
(a) Each hour for which an Employee is directly or indirectly
paid, or entitled to payment by an Employer or a Controlled Entity, for the
performance of duties. These hours shall be credited to the Employee for the
Plan Year or Years in which the duties are performed;
(b) Each hour for which an Employee is directly or indirectly
paid, or entitled to payment, by an Employer or other Controlled Entity on
account of a period of time during which no duties are performed (irrespective
of whether the employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty, military duty or
leave of absence. Hours under this paragraph shall be calculated and credited
pursuant to Section 2530.200b-2 of the Department of Labor Regulations which are
incorporated herein by this reference; and
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer or other Controlled
Entity. The same Hours of Service shall not be credited both under paragraph (a)
or paragraph (b), as the case may be, and under this paragraph (c). These hours
shall be credited to the Employee for the Plan Year or Years to which the award
or agreement pertains rather than the Plan Year in which the award, agreement or
payment is made.
(1) INVESTMENT FUND. Investment funds made available from time to
time for the investment of Plan assets as described in Article V.
(2) LEASED EMPLOYEE. Each person who is not an employee of the
Employer or a Controlled Entity but who performs services for the Employer or a
Controlled Entity pursuant to an agreement (oral or written) between the
Employer or a Controlled Entity and any leasing organization, provided that such
person has performed such services for the Employer or a Controlled Entity or
for related persons (within the meaning of section 144(a)(3) of the Code) on a
substantially full-time basis for a period of at least one year and such
services are performed under primary direction or control by the Employer or a
Controlled Entity.
(3) LEAVE OF ABSENCE. A period during which an Employee is granted a
temporary absence from active employment (with or without pay) by his Employer
for a specified period of time under terms whereby such absence does not
constitute a termination of such Employee's employment and, at the end of which,
such Employee returns to active employment with such Employer.
(4) MEMBER. Each Employee who (A) has met the eligibility
requirements for participation in the Plan and elected to participate in the
Plan pursuant to Article II or (B) has made a Rollover Contribution in
accordance with Section 3.8(b), but only to the extent provided in Section
3.8(b). For purposes of Article V only, the Beneficiary of a deceased Member and
any alternate payee under a qualified domestic relations order (as defined in
Section 19.2) shall have the rights of a Member.
(5) NORMAL RETIREMENT DATE. The date a Member attains the age of
sixty-five.
(6) PARTICIPATION SERVICE. The measure of service used in determining
an Employee's eligibility to participate in the Plan as determined pursuant to
Section 2.2.
(7) PERIOD OF SERVICE. Each period of an Employee's Service
commencing on his Employment Commencement Date or a Reemployment Commencement
Date, if applicable, and ending on a Severance from Service Date.
Notwithstanding the foregoing, a period during which an Employee is absent from
Service by reason of the individual's pregnancy, the birth of a child of the
individual, the placement of a child with the individual in connection with the
adoption of such child by the individual, or for the purposes of caring for such
child for the period immediately following such birth or placement shall not
constitute a Period of Service between the first and second anniversary of the
first date of such absence. A Period of Service shall also include any period
required to be credited as a Period of Service by federal law other than the Act
or the Code, but only under the conditions and to the extent so required by such
federal law.
(8) PERIOD OF SEVERANCE. Each period of time commencing on an
Employee's Severance from Service Date and ending on a Reemployment Commencement
Date.
(9) PLAN. The Compaq Computer Corporation 401(k) Investment Plan, as
amended from time to time.
(10) PLAN YEAR. The twelve-consecutive month period commencing
January 1 of each year.
(11) REEMPLOYMENT COMMENCEMENT DATE. The first date upon which an
Employee performs an Hour of Service following a Severance from Service Date.
(12) ROLLOVER CONTRIBUTION ACCOUNT. An individual account for an
Eligible Employee, which is credited with the Rollover Contributions of such
Employee and which is credited with (or debited for) such Account's allocation
of net income (or net loss) and changes in value of the Trust Fund.
(13) ROLLOVER CONTRIBUTIONS. Contributions made by an Eligible
Employee pursuant to Section 3.8.
(14) SERVICE. The period of an Employee's employment with the Employer
or a Controlled Entity. In no event shall Service include any period of
employment with a corporation or other entity prior to the date it became a
Controlled Entity or after it ceases to be a Controlled Entity except to the
extent required by law or as otherwise provided in the Plan or to the extent
determined by the Committee. The Committee, in its discretion, may credit
individuals with Service for employment with any other entity, but only if and
when such individual becomes an Eligible Employee and only if such crediting of
Service (A) has a legitimate business reason, (B) does not by design or
operation discriminate significantly in favor of Highly Compensated Employees,
and (C) is applied to all similarly-situated Eligible Employees.
(15) SEVERANCE FROM SERVICE DATE. The earlier of (A) the first date on
which an Employee terminates his Service following his Employment Commencement
Date or a Reemployment Commencement Date, if applicable, or (B) the first
anniversary of the first date of a period in which an Employee remains absent
from Service (with or without pay) with the Employer for any reason other than
resignation, retirement, discharge, or death, such as vacation, holiday, Leave
of Absence, disability, or lay-off that is not classified by the Employer as a
termination of Service. Notwithstanding the foregoing, the Severance from
Service Date of an individual who is absent from Service by reason of the
individual's pregnancy, the birth of a child of the individual, the placement of
a child with the individual in connection with the adoption of such child by the
individual, or for purposes of caring for such child for the period immediately
following such birth or placement shall be the second anniversary of the first
date of such absence.
(16) TRUST. The Compaq Computer Corporation Investment Trust
established under the Trust Agreement(s) to hold and invest contributions made
under the Plan and income thereon, and from which the Plan benefits are
distributed.
(17) TRUST AGREEMENT. The agreement(s) entered into between Compaq and
the Trustee establishing the Trust, as such agreement(s) may be amended from
time to time.
(18) TRUST FUND. The funds and properties held pursuant to the
provisions of the Trust Agreement for the use and benefit of the Members,
together with all income, profits, and increments thereto.
(19) TRUSTEE. The trustee or trustees qualified and acting under the
Trust Agreement at any time.
(20) VALUATION DATES. Each day that the New York Stock Exchange is
open for business.
(21) VESTED INTEREST. The percentage of a Member's Accounts which,
pursuant to the Plan, is nonforfeitable.
(22) VESTING SERVICE. The measure of service used in determining a
Member's Vested Interest as determined pursuant to Section 8.4.
1.2. NUMBER AND GENDER. Wherever appropriate herein, words used in the
singular shall be considered to include the plural and words used in the plural
shall be considered to include the singular. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender.
1.3. HEADINGS. The headings of Articles and Sections herein are
included solely for convenience, and if there is any conflict between such
headings and the text of the Plan, the text shall control.
1.4. CONSTRUCTION. It is intended that the Plan be qualified within
the meaning of section 401(a) of the Code and that the Trust be tax exempt under
section 501(a) of the Code, and all provisions herein shall be construed in
accordance with such intent.
1.5. EFFECTIVE DATE. The Plan, as amended and restated herein, is
effective as of the Effective Date which shall be January 1, 2001, as to this
restatement of the Plan, except (A) as otherwise indicated in specific
provisions of the Plan and (B) that provisions of the Plan required to have an
earlier effective date by applicable statute and/or regulation shall be
effective as of the required effective date in such statute and/or regulation
and shall apply, as of such effective date, to any plan merged into this Plan.
ARTICLE II - PARTICIPATION
--------------------------
2.1. ELIGIBILITY. Each Eligible Employee shall be eligible to become a
Member coincident with such Eligible Employee's Employment Commencement Date.
Notwithstanding the foregoing:
(a) An Eligible Employee who was a Member in the Plan on the
day prior to the Effective Date shall remain a Member in this restatement
thereof as of the Effective Date;
(b) An Employee who has not become a Member in the Plan because
he was not an Eligible Employee shall be eligible to become a Member in the Plan
upon becoming an Eligible Employee;
(c) A Member who ceases to be an Eligible Employee but remains
an Employee shall continue to be a Member but, on and after the date he ceases
to be an Eligible Employee, he shall no longer be entitled to defer Compensation
hereunder or share in allocations of Employer Contributions unless and until he
shall again become an Eligible Employee.
2.2. PARTICIPATION SERVICE.
(a) Subject to the remaining Paragraphs of this Section, an
individual shall be credited with Participation Service in an amount equal to
his aggregate Periods of Service whether or not such Periods of Service are
completed consecutively.
(b) Paragraph (a) above notwithstanding, if an individual
terminates his Service (at a time other than during a Leave of Absence) and
subsequently resumes his Service, if his Reemployment Commencement Date is
within twelve months of his Severance from Service Date, such Period of
Severance shall be treated as a Period of Service for purposes of Paragraph (a)
above. (c) Paragraph (a) above notwithstanding, if an individual terminates his
Service during a Leave of Absence and subsequently resumes his Service, if his
Reemployment Commencement Date is within twelve months of the beginning of such
Leave of Absence, such Period of Severance shall be treated as a Period of
Service for purposes of Paragraph (a) above.
(d) In the case of an individual who terminates employment at
a time when he does not have any Vested Interest in his Employer Contribution
Account but who then incurs a Period of Severance which equals or exceeds the
greater of (1) five years or (2) his Period of Service prior to such Period of
Severance, such individual's Period of Service completed before such Period of
Severance shall be disregarded in determining his Participation Service.
2.3. ELECTION TO BECOME A MEMBER. Membership in the Plan is voluntary.
Any Eligible Employee may become a Member upon the date on which he first
becomes eligible pursuant to Section 2.1 by executing and filing with the
Committee, within the time limits prescribed by the Committee, the forms
prescribed by the Committee. Any Eligible Employee who does not become a Member
upon the date on which he first becomes eligible pursuant to Section 2.1 may
become a Member on any subsequent date by executing and filing with the
Committee the forms prescribed by the Committee within the time limits
prescribed by the Committee.
ARTICLE III - CONTRIBUTIONS
---------------------------
3.1. CASH OR DEFERRED CONTRIBUTIONS.
(a) A Member may elect to defer any integral percentage up to
19% (or such other percentage prescribed from time to time by the Committee) of
his Compensation for a Plan Year by having the Employer contribute the amount so
deferred to the Plan. A Member's election to defer an amount of his Compensation
pursuant to this Section shall be made by authorizing his Employer, in the
manner prescribed by the Committee, to reduce his Compensation in the elected
amount and the Employer, in consideration thereof, agrees to contribute an equal
amount to the Plan. The Compensation elected to be deferred by a Member pursuant
to this Section shall become a part of the Employer's Cash or Deferred
Contributions and shall be allocated in accordance with Section 4.2(a).
Compensation for a Plan Year not so deferred by such election shall be received
by such Member in cash.
(b) A Member's deferral election shall remain in force and in
effect for all periods following the effective date of such election (which
shall be as soon as administratively practicable after the election is made)
until modified or terminated or until such Member terminates his employment or
ceases to be an Eligible Employee. A Member who has elected to defer a portion
of his Compensation may change his deferral election percentage (within the
percentage limits set forth in Paragraph (a) above), effective as soon as
administratively practicable by communicating such new deferral election
percentage to his Employer in the manner and within the time period prescribed
by the Committee.
(c) A Member may cancel his deferral election effective as soon
as administratively practicable by communicating such cancellation to his
Employer in the manner and within the time period prescribed by the Committee. A
Member who so cancels his deferral election may resume Compensation deferrals,
effective as soon as administratively practicable by communicating his new
deferral election to his Employer in the manner and within the time period
prescribed by the Committee.
(d) In restriction of the Members' elections provided in
Paragraphs (a), (b), and (c) above, the Cash or Deferred Contributions and the
elective deferrals (within the meaning of section 402(g)(3) of the Code) under
all other plans, contracts, and arrangements of the Employer on behalf of any
Member for any calendar year shall not exceed the dollar limit provided for in
Section 402(g) of the Code.
(e) In further restriction of the Members' elections provided in
Paragraphs (a), (b), and (c) above, it is specifically provided that one of the
"actual deferral percentage" tests set forth in section 401(k)(3) of the Code
and the Treasury regulations thereunder must be met in each Plan Year. Such
testing shall utilize the current year testing method as such term is defined in
Internal Revenue Service Notice 98-1. The Committee may elect, in accordance
with applicable Treasury regulations, to treat Employer Matching Contributions
to the Plan as Cash or Deferred Contributions for the purposes of meeting these
requirements. If multiple use of the alternative limitation (within the meaning
of section 401(m)(9) of the Code and Treasury regulation Section 1.401 (m)-2(b))
occurs during a Plan Year, such multiple use shall be corrected in accordance
with the provisions of Treasury regulation Section 1.401 (m)-2(c); provided,
however, that if such multiple use is not eliminated by making Employer Safe
Harbor Contributions, then the "actual contribution percentages" of all Highly
Compensated Employees participating in the Plan shall be reduced, and the excess
contributions distributed, in accordance with the provisions of Section 3.7(c)
and applicable Treasury regulations, so that there is no such multiple use.
(f) If the Committee determines that a reduction of
Compensation deferral elections made pursuant to Paragraphs (a), (b) and (c)
above is necessary to insure that the restrictions set forth in Paragraph (d)
or (e) above are met for any Plan Year, the Committee may reduce the elections
of affected Members on a temporary and prospective basis in such manner as the
Committee shall determine.
(g) As soon as administratively practicable following the end
of each payroll period, but no later than the time required by applicable law,
the Employer shall contribute to the Trust, as Cash or Deferred Contributions
with respect to each Member, an amount equal to the amount of Compensation
elected to be deferred, pursuant to Paragraphs (a) and (b) above (as adjusted
pursuant to Paragraph (f) above), by such Member during such payroll period.
Such contributions, as well as the contributions made pursuant to Sections
3.2(a) and 3.3 shall be made without regard to current or accumulated profits of
the Employer. Notwithstanding the foregoing, the Plan is intended to qualify as
a profit sharing plan for purposes of sections 401(a), 402, 412, and 417 of the
Code.
3.2. EMPLOYER MATCHING CONTRIBUTIONS.
(a) For each payroll period, the Employer shall contribute to
the Trust, except as provided for in Appendix B, an amount that equals 100% of
the Cash or Deferred Contributions that were made pursuant to Section 3.1 on
behalf of each of the Members during such payroll period and that were not in
excess of 6% of each such Member's Compensation for such payroll period.
(b) In addition to the Employer Matching Contributions made
pursuant to the preceding sentence, for each Plan Year the Employer shall
contribute to the Trust, except as provided for in Appendix B, as Employer
Matching Contributions, an amount equal to the difference, if any, between (1)
100% of the total Cash or Deferred Contributions that were made pursuant to
Section 3.1 on behalf of each of the Eligible Members during such Plan Year and
that were not in excess of 6% of each such Eligible Member's total Compensation
for such Plan Year and (2) the Employer Matching Contributions made pursuant to
the preceding sentence for each such Eligible Member for such Plan Year. For
purposes of this Paragraph and Section 4.2(e), the term "Eligible Member" shall
mean each Member who was an Eligible Employee on the last day of the applicable
Plan Year.
(c) For each Plan Year, the Employer may contribute to the
Trust, out of its current or accumulated earnings and profits, as an additional
Employer Matching Contribution, in an amount as determined in its discretion on
behalf of each of the Members who made Cash or Deferred Contributions during
such Plan Year.
(d) Employer Matching Contributions may be made in cash or
Compaq Stock, as determined by and in the discretion of the Employer.
3.3. EMPLOYER SAFE HARBOR CONTRIBUTIONS. In addition to the Employer
Matching Contributions made pursuant to Section 3.2, the Employer, in its
discretion, may contribute for each Plan Year a "safe harbor contribution" for
such Plan Year the amounts necessary to cause the Plan to satisfy the
restrictions set forth in Section 3.1(e) (with respect to certain restrictions
on Cash or Deferred Contributions) and Section 3.4 (with respect to certain
restrictions on Employer Matching Contributions). Amounts contributed in order
to satisfy the restrictions set forth in Section 3.1(e) shall be considered
"qualified matching contributions" (within the meaning of Treasury regulation
Section 1.401 (k)-1(g)(13)) for purposes of such Section, and amounts
contributed in order to satisfy the restrictions set forth in Section 3.4 shall
be considered Employer Matching Contributions for purposes of such Section. Any
amounts contributed pursuant to this Section shall be allocated in accordance
with Sections 4.2(e) and (f).
3.4. RESTRICTIONS ON EMPLOYER MATCHING CONTRIBUTIONS. In restriction
of the Employer Matching Contributions hereunder, it is specifically provided
that one of the "actual contribution percentage" tests set forth in section
401(m) of the Code and the Treasury regulations thereunder must be met in each
Plan Year. Such testing shall utilize the current year testing method as such
term is defined in Internal Revenue Service Notice 98-1. The Committee may
elect, in accordance with applicable Treasury regulations, to treat Cash or
Deferred Contributions to the Plan as Employer Matching Contributions for
purposes of meeting this requirement.
3.5. PAYMENTS TO TRUSTEE. Contributions under the Plan shall be paid
by the Employer directly to the Trustee as soon as practicable after such
contributions are made.
3.6. RETURN OF CONTRIBUTIONS. Anything to the contrary herein
notwithstanding, the Employer's contributions to the Plan are contingent upon
the deductibility of such contributions under section 404 of the Code. To the
extent that a deduction for contributions is disallowed, such contributions
shall, upon the written demand of the Employer, be returned to the Employer by
the Trustee within one year after the date of disallowance, reduced by any net
losses of the Trust Fund attributable thereto but not increased by any net
earnings of the Trust Fund attributable thereto, which net earnings shall be
treated as a forfeiture in accordance with Section 4.3. Moreover, if Employer
contributions are made under a mistake of fact, such contributions shall, upon
the written demand of the Employer, be returned to the Employer by the Trustee
within one year after the payment thereof, reduced by any net losses of the
Trust Fund attributable thereto but not increased by any net earnings of the
Trust Fund attributable thereto, which net earnings shall be treated as a
forfeiture in accordance with Section 4.3.
3.7. DISPOSITION OF EXCESS DEFERRALS AND EXCESS CONTRIBUTIONs.
(a) Anything to the contrary herein notwithstanding, any Cash
or Deferred Contributions to the Plan for a calendar year on behalf of a Member
in excess of the limitations set forth in Section 3.1 (d) and any "excess
deferrals" from other plans allocated to the Plan by such Member no later than
March 1 of the next following calendar year within the meaning of, and pursuant
to the provisions of, section 402(g)(2) of the Code, shall be distributed to
such Member not later than April 15 of the next following calendar year.
(b) Anything to the contrary herein notwithstanding, if, for
any Plan Year, the aggregate Cash or Deferred Contributions made by the Employer
on behalf of Highly Compensated Employees exceeds the maximum amount of Cash or
Deferred Contributions permitted on behalf of such Highly Compensated Employees
pursuant to Section 3.1(e), an excess amount shall be determined by reducing
Cash or Deferred Contributions made on behalf of Highly Compensated Employees in
order of their highest actual deferral percentages in accordance with section
401(k)(8)(B)(ii) of the Code and the Treasury regulations thereunder. Once
determined, such excess shall be distributed to Highly Compensated Employees in
order of the highest dollar amounts contributed on behalf of such Highly
Compensated Employees in accordance with section 401(k)(8)(C) of the Code and
the Treasury regulations thereunder before the end of the next following Plan
Year.
(c) Anything to the contrary herein notwithstanding, if, for
any Plan Year, the aggregate Employer Matching Contributions allocated to the
Employer Contribution Accounts of Highly Compensated Employees exceeds the
maximum amount of such Employer Matching Contributions permitted on behalf of
such Highly Compensated Employees pursuant to Section 3.4, an excess amount
shall be determined by reducing the Employer Matching Contributions made on
behalf of Highly Compensated Employees in order of their highest contribution
percentages in accordance with section 401(m)(6)(B)(ii) of the Code and Treasury
regulations thereunder. Once determined, such excess shall be distributed to
Highly Compensated Employees in order of the highest dollar amounts contributed
on behalf of such Highly Compensated Employees in accordance with section
401(m)(6)(C) of the Code and the Treasury regulations thereunder (or, if such
excess contributions are forfeitable, they shall be forfeited) before the end of
the next following Plan Year. Employer Matching Contributions shall be forfeited
pursuant to this Paragraph only if distribution of all vested Employer Matching
Contributions is insufficient to meet the requirements of this Paragraph. If
vested Employer Matching Contributions are distributed to a Member and nonvested
Employer Matching Contributions remain credited to such Member's Accounts, such
nonvested Employer Matching Contributions shall vest at the same rate as if such
distribution had not been made.
(d) In coordinating the disposition of excess deferrals and
excess contributions pursuant to this Section, such excess deferrals and excess
contributions shall be disposed of in the following order:
(i) First, Cash or Deferred Contributions that constitute
excess deferrals described in Paragraph (a) above that are not considered in
determining the amount of Employer Matching Contributions pursuant to Section
3.2 shall be distributed;
(ii) Second, excess Cash or Deferred Contributions that
constitute excess deferrals described in Paragraph (a) above that are considered
in determining the amount of Employer Matching Contributions pursuant to Section
3.2 shall be distributed, and the Employer Matching Contributions with respect
to such Cash or Deferred Contributions shall be forfeited;
(iii) Third, excess Cash or Deferred Contributions
described in Paragraph (b) above that are not considered in determining the
amount of Employer Matching Contributions pursuant to Section 3.2 shall be
distributed;
(iv) Fourth, excess Cash or Deferred Contributions
described in Paragraph (b) above that are considered in determining the amount
of Employer Matching Contributions pursuant to Section 3.2 shall be distributed,
and the Employer Matching Contributions with respect to such Cash or Deferred
Contributions shall be forfeited; (v) Fifth, excess Employer Contributions
described in Paragraph (c) above shall be distributed (or, if forfeitable,
forfeited).
(e) Any distribution or forfeiture of excess deferrals or
excess contributions pursuant to the provisions of this Section shall be
adjusted for income or loss allocated thereto in accordance with the provisions
of Section 4.4 through the Valuation Date next preceding the date of the
distribution or forfeiture. Any forfeiture pursuant to the provisions of this
Section shall be considered to have occurred on the date which is 2 1/2 months
after the end of the Plan Year.
3.8. ROLLOVER CONTRIBUTIONS.
(a) Rollover Contributions may be made to the Plan by any
Eligible Employee of amounts received by such Eligible Employee from individual
retirement accounts or annuities or from an employees' trust described in
section 401(a) of the Code, which is exempt from tax under section 501(a) of the
Code, but only if any such Rollover Contribution is made pursuant to and in
accordance with applicable provisions of the Code and Treasury regulations
promulgated thereunder. A Rollover Contribution of amounts that are "eligible
rollover distributions" within the meaning of section 402(f)(2)(A) of the Code
may be made to the Plan irrespective of whether such eligible rollover
distribution was paid to the Eligible Employee or paid to the Plan as a "direct"
Rollover Contribution. A direct Rollover Contribution to the Plan may be
effectuated only by wire transfer directed to the Trustee or by issuance of a
check made payable to the Trustee, which is negotiable only by the Trustee and
which identifies the Eligible Employee for whose benefit the Rollover
Contribution is being made. Any Eligible Employee desiring to effect a Rollover
Contribution to the Plan must execute and file with the Committee the form
prescribed by the Committee for such purpose. The Committee may require as a
condition to accepting any Rollover Contribution that such Eligible Employee
furnish any evidence that the Committee in its discretion deems satisfactory to
establish that the proposed Rollover Contribution is in fact eligible for
rollover to the Plan and is made pursuant to and in accordance with applicable
provisions of the Code and Treasury regulations. Ineligible rollover amounts
shall be returned to the Eligible Employee within a reasonable time after a
determination is made that such amounts are ineligible. All Rollover
Contributions to the Plan must be made in cash. A Rollover Contribution shall be
credited to the Rollover Contribution Account of the Eligible Employee for whose
benefit such Rollover Contribution is being made as soon as administratively
practicable following the date on which such Rollover Contribution is made.
Notwithstanding anything to the contrary, eligible rollover distributions may
not include after-tax contributions unless otherwise permitted by the Committee.
(b) An Eligible Employee who has made a Rollover Contribution
in accordance with this Section, but who has not otherwise become a Member in
the Plan in accordance with Article II, shall become a Member coincident with
such Rollover Contribution; provided, however, that such Member shall not have a
right to defer Compensation or have Employer Contributions made on his behalf
until he has otherwise satisfied the requirements imposed by Article II.
3.9. REPEAL OF MULTIPLE USE TEST. The multiple use test described in
Treasury Regulation section 1.401(m)-2 and Section 3.1 of the Plan shall not
apply for Plan Years beginning after December 31, 2001.
ARTICLE IV - ALLOCATIONS AND LIMITATIONS
----------------------------------------
4.1. SUSPENSE ACCOUNT. All contributions, forfeitures, and the net
income (or net loss) of the Trust Fund shall be held in suspense until allocated
or applied to the Accounts of the Members as provided herein.
4.2. ALLOCATION OF CONTRIBUTIONS.
(a) Cash or Deferred Contributions made by the Employer on a
Member's behalf for each payroll period pursuant to Section 3.1 shall be
allocated to such Member's Cash or Deferred Account as soon as administratively
practicable after contributions are received by the Trustee.
(b) The Employer Matching Contributions for each payroll period
pursuant to Section 3.2(a) shall be allocated as soon as administratively
practicable after contributions are received by the Trustee to the Employer
Contribution Accounts of the Members for whom such contributions were made.
(c) The Employer Matching Contributions for each payroll period
pursuant to Section 3.2(b) shall be allocated as soon as administratively
practicable after contributions are received by the Trustee to the Employer
Contributions Account of the Members for when such contributions were made.
(d) The Employer Matching Contributions, if any, for each Plan
Year pursuant to Section 3.2(c) shall be allocated to the Employer Contribution
Accounts of the Members. The allocation to each such eligible Member's Employer
Contribution Account shall be that portion of such Employer Matching
Contributions which is in the same proportion that the Employer Matching
Contributions allocated to such Eligible Member's Employer Contribution Account
for such Plan Year bears to the total of all Employer Matching Contributions
allocated pursuant to Paragraph (b) above to all such eligible Members' Employer
Contributions Accounts for such Plan Year.
(e) The Employer Safe Harbor Contribution, if any, made
pursuant to Section 3.3 for a Plan Year in order to satisfy the restrictions set
forth in Section 3.1(e) shall be allocated to the Cash or Deferred Accounts of
Members who (1) received an allocation of Cash or Deferred Contributions for
such Plan Year and (2) were not Highly Compensated Employees for such Plan Year
(each such Member individually referred to as an "Eligible Member" for purposes
of this Paragraph) as follows:
(i) First, to the Cash or Deferred Account of the
Eligible Member who received the least amount of Compensation for such Plan Year
until the limitation set forth in Section 4.6 has been reached as to such
Eligible Member;
(ii) Next to the Cash or Deferred Account of the Eligible
Member who received the next smallest amount of Compensation for such Plan Year
until the limitation set forth in Section 4.6 has been reached as to such
Eligible Member;
(iii) Next continuing in such manner until the Employer
Safe Harbor Contribution for such Plan Year has been completely allocated or the
limitation set forth in Section 4.6 has been reached as to all Eligible Members.
The remaining portion, if any, of such Employer Safe Harbor Contribution
for such Plan Year shall be allocated among the Cash or Deferred Accounts of all
Members who were Eligible Employees during such Plan Year, with the allocation
to each such Member's Cash or Deferred Account being the portion of such
remaining Employer Safe Harbor Contribution which is in the same proportion that
such Member's Compensation for such Plan Year bears to the total of all such
Members' Compensation for such Plan Year, subject to the limitations set forth
in Section 4.6 with respect to each such Member.
(f) The Employer Safe Harbor Contribution, if any, made
pursuant to Section 3.3 for a Plan Year in order to satisfy the restrictions set
forth in Section 3.4 shall be allocated to the Employer Contribution Accounts of
Members who (1) received an allocation of Employer Matching Contributions for
such Plan Year and (2) were not Highly Compensated Employees for such Plan Year
(each such Member individually referred to as an "Eligible Member" for purposes
of this Paragraph) as follows:
(i) First, to the Employer Contribution Account of the
Eligible Member who received the least amount of Compensation for such Plan Year
until the limitation set forth in Section 4.4 has been reached as to such
Eligible Member;
(ii) Next to the Employer Contribution Account of the
Eligible Member who received the next smallest amount of Compensation for such
Plan Year until the limitation set forth in Section 4.6 has been reached as to
such Eligible Member;
(iii) Next in such manner until the Employer Safe Harbor
Contribution for such Plan Year has been completely allocated or the limitation
set forth in Section 4.6 has been reached as to all Eligible Members.
The remaining portion, if any, of such Employer Safe Harbor
Contribution for such Plan Year shall be allocated among the Employer
Contribution Accounts of all Members who were Eligible Employees during such
Plan Year, with the allocation to each such Member's Employer Contribution
Account being the portion of such remaining Employer Safe Harbor Contribution
which is in the same proportion that such Member's Compensation for such Plan
Year bears to the total of all such Members' Compensation for such Plan Year,
subject to the limitations set forth in Section 4.6 with respect to each such
Member.
(g) If an Employer Safe Harbor Contribution is made in order to
satisfy the restrictions set forth in both Section 3.1 (e) and Section 3.4 for
the same Plan Year, the Employer Safe Harbor Contribution made in order to
satisfy the restrictions set forth in Section 3.1 (e) shall be allocated
pursuant to Paragraph (e) above prior to allocating the Employer Safe Harbor
Contribution made in order to satisfy the restrictions set forth in Section 3.4
(pursuant to Paragraph (f) above). In determining the application of the
limitations set forth in Section 4.6 to the allocations of Employer Safe Harbor
Contributions, all Annual Additions (as such term is defined in Section 4.6) to
a Member's Accounts other than Employer Safe Harbor Contributions shall be
considered allocated prior to Employer Safe Harbor Contributions.
(h) All contributions to the Plan shall be considered allocated
to Members' Accounts no later than the last day of the Plan Year for which they
were made, as determined pursuant to Article 3, except that, for purposes of
Section 4.4, contributions shall be considered allocated to Members' Accounts
when received by the Trustee
4.3. APPLICATION OF FORFEITURES. Any amounts that are forfeited under
any provision hereof during a Plan Year shall be applied to reduce Employer
Matching Contributions or Employer Safe Harbor Contributions, if any, next
coming due and/or to pay expenses incident to the administration of the Plan and
Trust. Prior to such application, forfeited amounts shall be invested in the
Investment Fund or Funds designated from time to time by the Committee.
4.4. VALUATION OF ACCOUNTS. All amounts contributed to the Trust Fund
shall be invested as soon as administratively practicable following their
receipt by the Trustee, and the balance of each Account shall reflect the result
of daily pricing of the assets in which such Account is invested from the time
of receipt by the Trustee until the time of distribution.
4.5. ALLOCATIONS ATTRIBUTABLE TO COMPAQ STOCK. Plan provisions to the
contrary notwithstanding, the provisions of this Section shall be applicable
with respect to allocations and accounting for Compaq Stock held by the Plan.
All amounts that are allocated to a Member's Accounts under the Plan and are to
be invested in Compaq Stock shall be used to purchase shares of Compaq Stock as
soon as practicable after such allocation at such times, in such quantities, and
from such sources as determined by the Trustee. Shares of Compaq Stock so
purchased for a Member's Accounts shall be earmarked for the benefit of such
Member. Any cash dividends received by the Trustee with respect to Compaq Stock
earmarked for Members' Accounts shall be invested in additional shares of Compaq
Stock, which shall be earmarked for the benefit of such Member. Any such
additional Compaq Stock, plus any other Compaq Stock received as a result of a
stock split or stock dividend, shall be allocated pro rata to the Members'
Accounts in proportion to the respective balances of Compaq Stock credited to
such Accounts as of the appropriate record date and, following an allocation of
such shares to a Member's Accounts, such shares shall be earmarked for the
benefit of such Member.
4.6. LIMITATIONS AND CORRECTIONS.
(a) For purposes of this Section, the following terms and
phrases shall have these respective meanings:
(i) "Annual Additions" of a Member for any Limitation
Year shall mean the total of (A) the Employer Contributions, Cash or Deferred
Contributions, and forfeitures, if any, allocated to such Member's Accounts for
such year, (B) Member's contributions, if any, (excluding any Rollover
Contributions) for such year, and (C) amounts referred to in sections 415(1)(1)
and 419A(d)(2) of the Code.
(ii) "415 Compensation" shall mean the total of all
amounts paid by the Employer to or for the benefit of a Member for services
rendered or labor performed for the Employer which are required to be reported
on the Member's federal income tax withholding statement or statements (Form
W-2 or its subsequent equivalent), subject to the following adjustments and
limitations:
(A) The following shall be included:
(1) Elective deferrals (as defined in
section 402(g)(3) of the Code) from compensation to be paid by the Employer to
the Member;
(2) Any amount which is contributed or
deferred by the Employer at the election of the Member and which is not
includable in the gross income of the Member by reason of section 125, or
section 457 of the Code; and
(3) Any amounts that are not includable in
the gross income of a Member under a salary reduction agreement by reason of the
application of section 132(f) of the Code.
(B) The 415 Compensation of any Member taken into
account for purposes of the Plan shall be limited to $170,000 for any Plan Year
with such limitation to be:
(1) Adjusted automatically to reflect any
amendments to section 401(a)(17) of the Code and any cost-of-living increases
authorized by section 401(a)(17) of the Code (including, without limitation,
amendments made by EGTRRA); and
(2) Prorated for a Plan Year of less than
twelve months and to the extent otherwise required by applicable law.
(iii) "Limitation Year" shall mean the Plan Year.
(iv) Except to the extent permitted under Section 3.1(h)
and section 414(v) of the Code, "Maximum Annual Additions" of a Member for any
Limitation Year shall mean the lesser of (A) $30,000 ($40,000 for limitation
years beginning on or after January 1, 2002, with such amount to be adjusted
automatically to reflect any cost-of-living adjustment authorized by section
415(d) of the Code) or (B) 25% (100% for limitation years beginning on or after
January 1, 2002) of such Member's 415 Compensation during such Limitation Year,
except that the limitation in this Clause (B) shall not apply to any
contribution for medical benefits (within the meaning of section 419A(f)(2) of
the Code) after separation from service with the Employer or a Controlled Entity
that is otherwise treated as an Annual Addition or to any amount otherwise
treated as an Annual Addition under section 415(1)(1) of the Code.
(b) Contrary Plan provisions notwithstanding, in no event shall
the Annual Additions credited to a Member's Accounts for any Limitation Year
exceed the Maximum Annual Additions for such Member for such year. If as a
result of a reasonable error in estimating a Member's compensation, a reasonable
error in determining the amount of elective deferrals (within the meaning of
section 402(g)(3) of the Code) that may be made with respect to any individual
under the limits of section 415 of the Code, or because of other limited facts
and circumstances, the Annual Additions that would be credited to a Member's
Accounts for a Limitation Year would nonetheless exceed the Maximum Annual
Additions for such Member for such year, the excess Annual Additions which, but
for this Section, would have been allocated to such Member's Accounts shall be
disposed of as follows:
(i) First, any such excess Annual Additions in the form
of Cash or Deferred Contributions on behalf of such Member that would not have
been considered in determining the amount of Employer Contributions allocated to
such Member's Accounts pursuant to Section 4.2 shall be distributed to such
Member, adjusted for income or loss allocated thereto;
(ii) Next, any such excess Annual Additions in the form of
Cash or Deferred Contributions on behalf of such Member that would have been
considered in determining the amount of Employer Contributions allocated to such
Member's Accounts pursuant to Section 4.2 shall be distributed to such Member,
adjusted for income or loss allocated thereto, and the Employer Contributions
that would have been allocated to such Member's Accounts based upon such
distributed Cash or Deferred Contributions shall, to the extent such amounts
would have otherwise been allocated to such Member's Accounts, be allocated to a
suspense account and shall be held there until used to reduce future Employer
Matching Contributions or Employer Safe Harbor Contributions, if any, in the
same manner as a forfeiture;
(c) If a suspense account is in existence at any time during a
Limitation Year pursuant to this section, it will participate in allocations of
the net income (or net loss) of the Trust Fund
(d) For purposes of determining whether the Annual Additions
under this Plan exceed the limitations herein provided, all defined contribution
plans of the Employer are to be treated as one defined contribution plan. In
addition, all defined contribution plans of Controlled Entities shall be
aggregated for this purpose. For purposes of this Section only, a "Controlled
Entity" (other than an affiliated service group member within the meaning of
section 414(m) of the Code) shall be determined by application of a more than
50% control standard in lieu of an 80% control standard. If the Annual Additions
credited to a Member's Accounts for any Limitation Year under this Plan plus the
additions credited on his behalf under other defined contribution plans required
to be aggregated pursuant to this Paragraph would exceed the Maximum Annual
Additions for such Member for such Limitation Year, the Annual Additions under
this Plan and the additions under such other plans shall be reduced on a pro
rata basis and allocated, reallocated, or returned in accordance with applicable
plan provisions regarding Annual Additions in excess of Maximum Annual
Additions.
(e) In the case of a Member who also participated in a defined
benefit plan of the Employer or a Controlled Entity (as defined in Paragraph (d)
above), the Employer shall reduce the Annual Additions credited to the Accounts
of such Member under this Plan pursuant to the provisions of Paragraph (b) to
the extent necessary to prevent the limitation set forth in section 415(e) of
the Code from being exceeded. Notwithstanding the foregoing, the provisions of
this Paragraph shall apply only if such defined benefit plan does not provide
for a reduction of benefits thereunder to ensure that the limitation set forth
in section 415(e) of the Code is not exceeded. Further, this Paragraph shall not
apply for Limitation Years beginning after December 31, 1999.
(f) If the Committee determines that a reduction of
Compensation deferral elections pursuant to Section 3.1 is necessary to insure
that the limitations set forth in this Section are met for any Plan Year, the
Committee may reduce the elections of affected Members on a temporary and
prospective basis in such manner as the Committee shall determine.
4.7. EQUITABLE ALLOCATIONS. If the Committee determines in making any
allocation to any Account under the provisions of the Plan that the strict
application of the provisions of this Article will not produce an equitable and
nondiscriminatory allocation among the Accounts of the Members, it may modify
any procedure specified in the Plan for the purpose of achieving an equitable
and nondiscriminatory allocation in accordance with the general concepts of the
Plan; provided, however, that any such modification shall not reduce a Member's
Vested Interest in his Accounts and shall be consistent with the provisions of
section 401(a)(4) of the Code. If the Committee in good faith determines that
certain expenses of administration paid by the Trustee during the Plan Year
under consideration are not general, ordinary, and usual and equitably should
not be borne by all Members, but should be borne only by one or more Members,
for whom or because of whom such specific expenses were incurred, the Committee
shall make suitable adjustments by debiting the particular Account or Accounts
of such one or more Members; provided, however, that any such adjustment shall
be nondiscriminatory and consistent with the provisions of section 401(a) of the
Code.
ARTICLE V - INVESTMENT FUNDS
----------------------------
5.1. INVESTMENT OF ACCOUNTS.
(a) Each Member shall designate, in accordance with the
procedures established from time to time by the Committee, the manner in which
the amounts allocated to each of his Accounts shall be invested from among the
Investment Funds made available from time to time by the Committee. A Member may
designate one of such Investment Funds for all the amounts allocated to his
Accounts or he may split the investment of the amounts allocated to his Accounts
among such Investment Funds in such increments as the Committee may prescribe.
If a Member fails to make a designation, then his Accounts shall be invested in
the Investment Fund or Funds designated by the Committee from time to time in a
uniform and nondiscriminatory manner.
(b) A Member may change his investment designation for future
contributions to be allocated to his Accounts. Any such change shall be made in
accordance with the procedures established by the Committee, and the frequency
of such changes may be limited by the Committee.
(c) A Member may elect to convert his investment designation
with respect to the amounts already allocated to his Accounts. Any such
conversion shall be made in accordance with the procedures established by the
Committee, and the frequency of such conversions may be limited by the
Committee.
5.2. RESTRICTION ON ACQUISITION OF COMPAQ STOCK. Notwithstanding any
other provision hereof, it is specifically provided that the Trustee shall not
purchase Compaq Stock or other Compaq securities during any period in which such
purchase is, in the opinion of counsel for Compaq or the Committee, restricted
by any law or regulation applicable thereto. During such period, amounts that
would otherwise be invested in Compaq Stock or other Compaq securities pursuant
to an investment designation shall be invested in such other assets as the
Committee may in its discretion determine, or the Trustee may hold such amounts
uninvested for a reasonable period pending the purchase of such stock or
securities.
5.3. PASS-THROUGH VOTING OF COMPAQ STOCK. To the extent permitted by
section 404(a) of the Act, at each annual meeting and special meeting of the
shareholders of Compaq, a Member may direct the voting of the number of whole
shares of Compaq Stock attributable to his Accounts as of the Valuation Date
coinciding with or, if none, next preceding the record date for such meeting.
The Committee shall forward or cause to be forwarded to each such Member copies
of pertinent proxy solicitation material provided by Compaq together with a
request for such Member's confidential instructions as to the manner in which
such shares are to be voted. The Committee shall direct the Trustee to vote such
shares in accordance with such instructions and, to the extent permitted by
section 404(a) of the Act, shall also direct the Trustee as to the manner in
which to vote any shares of Compaq Stock at any such meeting for which the
Committee has not received, or is not subject to receiving, such voting
instructions.
5.4. STOCK RIGHTS, STOCK SPLITS, AND STOCK DIVIDENDS. No Member shall
have any right to request, direct, or demand that the Committee or the Trustee
exercise in his behalf rights or privileges to acquire, convert, or exchange
Compaq Stock or other securities. The Trustee shall exercise or sell any such
rights or privileges as directed by the Committee. Compaq Stock received by the
Trustee by reason of a stock split, stock dividend, or recapitalization shall be
appropriately allocated to the Accounts of each affected Member.
ARTICLE VI - RETIREMENT BENEFITS
--------------------------------
6.1. RETIREMENT BENEFITS. A Member who terminates his employment on or
after his Normal Retirement Date shall be entitled to a retirement benefit,
payable at the time and in the form provided in Article X, equal to the value of
his Accounts on his Benefit Commencement Date. Any contribution allocable to a
Member's Accounts after his Benefit Commencement Date shall be distributed, if
his benefit was paid in a lump sum, or used to increase his payments, if his
benefit is being paid on a periodic basis, as soon as administratively
practicable after the date that such contribution is paid to the Trust Fund.
ARTICLE VII - DISABILITY BENEFITS
---------------------------------
7.1. DISABILITY BENEFITS. In the event a Member's employment is
terminated, and such Member is totally and permanently disabled, as determined
pursuant to Section 7.2, such Member shall be entitled to a disability benefit,
payable at the time and in the form provided in Article X, equal to the value of
his Accounts on his Benefit Commencement Date. Any contribution allocable to a
Member's Accounts after his Benefit Commencement Date shall be distributed, if
his benefit was paid in a lump sum, or used to increase his payments, if his
benefit is being paid on a periodic basis, as soon as administratively
practicable after the date that such contribution is paid to the Trust Fund.
7.2. TOTAL AND PERMANENT DISABILITY DETERMINED. A Member shall be
considered totally and permanently disabled if such Member is determined by the
Committee to be totally and permanently disabled within the meaning of the
Compaq Computer Corporation Long-Term Disability Program and is so certified by
the Committee.
ARTICLE VIII - AMOUNT OF BENEFITS AND DETERMINATION OF VESTED INTEREST
----------------------------------------------------------------------
8.1. NO BENEFITS UNLESS HEREIN SET FORTH. Except as set forth in this
Article, upon termination of employment of a Member prior to his Normal
Retirement Date for any reason other than total and permanent disability (as
defined in Section 7.2) or death, such Member shall acquire no right to any
benefit from the Plan or the Trust Fund.
8.2. AMOUNT OF BENEFIT. Each Member whose employment is terminated
prior to his Normal Retirement Date for any reason other than total and
permanent disability (as defined in Section 7.2) or death shall be entitled to a
termination benefit, payable at the time and in the form provided in Article X,
equal to his Vested Interest in the value of his Accounts on his Benefit
Commencement Date. A Member's Vested Interest in any contribution allocable to
his Accounts after his Benefit Commencement Date shall be distributed, if his
benefit was paid in a lump sum, or used to increase his payments, if his benefit
is being paid on a periodic basis, as soon as administratively practicable after
the date that such contribution is paid to the Trust Fund.
8.3. DETERMINATION OF VESTED INTEREST.
(a) A Member shall have a 100% Vested Interest in his Cash or
Deferred Account and Rollover Contribution Account at all times.
(b) Prior to January 1, 1999, a Member's Vested Interest in his
Employer Contribution Account shall be determined as follows:
(i) Except as provided in Paragraph (ii) below and
Paragraphs (e), (f), and (g) of this Section, a Member's Vested Interest in his
Employer Contribution Account shall be determined by such Member's years of
Vesting Service in accordance with the following schedule:
YEARS OF VESTING SERVICE VESTED INTEREST
Less than 5 years 0%
5 years or more 100%
(ii) Prior to a Member's completion of five years of
Vesting Service, such Member's Vested Interest in his Employer Contribution
Account shall be determined separately for each Plan Year's Employer
Contributions allocated to such Account in accordance with the following
schedule:
YEARS OF VESTING SERVICE VESTED INTEREST
Less than 1 year 0%
1 year 33-1/3%
2 years 66-2/3%
3 years or more 100%
For purposes of this Paragraph 8.3 (b)(ii) only, (1) each Member's Employment
Commencement Date or Reemployment Commencement Date, as applicable, shall be
deemed to be January 1 of the Plan Year in which an Employer Contribution is
made and (2) each Member shall be credited with a year of Vesting Service for
each Plan Year in which such Member is an Eligible Employee on the last day of
the Plan Year and shall be credited with no Vesting Service for any Plan Year in
which such Member is not an Eligible Employee on the last day of the Plan Year;
provided, however, that the provisions of this Paragraph shall apply only to the
extent that application of such provisions produces a greater Vested Interest of
a Member with respect to such Member's allocation of Employer Contributions for
a Plan Year than produced under the terms of the Plan without regard to this
Paragraph.
(c) From and after January 1, 1999, except as provided for in
Appendix B, if a Member has completed at least three years of Vesting Service as
of December 31, 1998, a Member's Vested Interest in his Employer Contribution
Account shall be determined in accordance with Section 8.3(b) above.
(d) From and after January 1, 1999, except as provided for in
Appendix B, if a Member has completed less than three years of Vesting Service
as of December 31, 1998, his Vested Interest in his Employer Contribution
Account shall be determined as follows:
(i) Such Member's Vested Interest in amounts contributed
as of December 31, 1998 (including earnings and losses thereto) to his Employer
Contribution Account shall be determined in accordance with the provisions set
forth in 8.3(b) above.
(ii) Such Member's Vested Interest in amounts contributed
from and after January 1, 1999 (including earnings and losses thereto) to his
Employer Contribution Account shall be determined by such Member's years of
Vesting Service in accordance with the following schedule:
YEARS OF VESTING SERVICE VESTED INTEREST
Less than 1 year 0%
1 year 20%
2 years 40%
3 years 60%
4 years 80%
5 years or more 100%
(e) Paragraphs (a), (b), (c), and (d) above notwithstanding,
with respect to any Member who was a participant in the Plan on the day prior to
the Effective Date, in no event shall such Member's Vested Interest in his
Employer Contribution Account after the Effective Date be less than such Vested
Interest would have been had the Plan provisions prior to such date been in
effect.
(f) Paragraphs (a), (b), (c), and (d) above notwithstanding, a
Member shall have a 100% Vested Interest in his Employer Contribution Account
upon (1) attainment of his Early Retirement Date or Normal Retirement Date, (2)
termination of employment due to the determination of the total and permanent
disability of such Member as provided in Section 7.2, (3) termination of
employment due to the death of such Member, and (4) an event described in and as
provided in Section 17.2.
(g) Effective as of June 11, 1998, Paragraphs (a), (b), (c),
and (d) above notwithstanding, if a Member shall cease to be employed by reason
of a reduction in force, as hereinafter described, such Member shall then have a
100% Vested Interest in his Employer Contribution Account. The employment of a
Member shall be considered as having been terminated because of a "reduction of
force" if such Member's employment with Compaq or a Controlled Entity was or is
terminated on or after June 11,1998 and before December 31, 2002, and such
termination was or is solely and directly the result of a work force reduction
or reorganization or re-engineering of the workforce and for reasons other than
"cause." For purposes of this Section 8.3, "cause" shall mean a termination of a
Member's employment with Compaq by reason of such Member's (i) conviction of
felony, (ii) conviction of a misdemeanor involving moral turpitude, (iii)
engagement in conduct that is injurious (monetarily or otherwise) to Compaq or
any Controlled Entity (including, without limitation, misuse of Compaq's or
Controlled Entity's funds or other property), (iv) engagement in business
activities that are in conflict with the business interests of Compaq, (v)
insubordination, (vi) engagement in conduct that is in violation of Compaq's
safety rules or standards or which otherwise may cause or causes injury to
another employee or any other person, (vii) breach of an agreement with Compaq,
(viii) substandard performance of duties, (ix) engagement in conduct that is in
violation of Compaq's Code of Conduct or other corporate policies, or (x)
engagement in conduct that violates any other policy, rule, or standard of
Compaq.
(h) Notwithstanding the foregoing, all Members, and former
Members who have terminated their Service, and who have an Account(s) in the
Plan on the date that a Change in Control occurs due to the consummation of the
transaction contemplated by the Agreement and Plan of Reorganization dated
September 4, 2001, by and among Hewlett-Packard Company, Heloise Merger
Corporation and Compaq Computer Corporation shall be fully vested in their
Account(s).
8.4. VESTING SERVICE.
(a) For the period preceding the Effective Date, subject to the
provisions of Paragraphs (c) and (d) below, an Employee shall be credited with
Vesting Service in an amount equal to all service credited to him for vesting
purposes under the Plan as it existed on the day prior to the Effective Date.
(b) On and after the Effective Date, subject to the remaining
Paragraphs of this Section, an Employee shall be credited with Vesting Service
in an amount equal to his aggregate Periods of Service whether or not such
Periods of Service are completed consecutively.
(c) Paragraph (b) above notwithstanding, if an Employee
terminates his Service (at a time other than during a Leave of Absence) and
subsequently resumes his Service, if his Reemployment Commencement Date is
within twelve months of his Severance from Service Date, such Period of
Severance shall be treated as a Period of Service for purposes of Paragraph (b)
above.
(d) Paragraph (b) above notwithstanding, if an Employee
terminates his Service during a Leave of Absence and subsequently resumes his
Service, if his Reemployment Commencement Date is within twelve months of the
beginning of such Leave of Absence, such Period of Severance shall be treated as
a Period of Service for purposes of Paragraph (b) above.
(e) In the case of a Member who incurs a Period of Severance of
five consecutive years, such Member's years of Vesting Service completed after
such Period of Severance shall be disregarded in determining such Member's
Vested Interest in any Plan benefits derived from Employer Contributions on his
behalf prior to such Period of Severance.
(f) In the case of an individual who terminates employment at a
time when he does not have any Vested Interest in his Employer Contribution
Account and who then incurs a Period of Severance that equals or exceeds five
years, such individual's Period of Service completed before such Period of
Severance shall be disregarded in determining his years of Vesting Service.
8.5. FORFEITURES.
(a) With respect to a Member who terminates employment with the
Employer with a Vested Interest in his Employer Contribution Account that is
less than 100% and either is not entitled to a distribution from the Plan or
receives a distribution from the Plan of the balance of his Vested Interest in
his Accounts in the form of a lump sum distribution by the close of the second
Plan Year following the Plan Year in which his employment is terminated, the
forfeitable amount credited to the terminated Member's Employer Contribution
Account as of the Valuation Date next preceding his Benefit Commencement Date
shall become a forfeiture as of his Benefit Commencement Date (or as of his date
of termination of employment if no amount is payable from the Trust Fund on
behalf of such Member with such Member being considered to have received a
distribution of zero dollars on his date of termination of employment).
(b) In the event that an amount credited to a terminated
Member's Employer Contribution Account becomes a forfeiture pursuant to
Paragraph (a) above, the terminated Member shall, upon subsequent reemployment
with the Employer prior to incurring a Period of Severance of five consecutive
years, have the forfeited amount restored to such Member's Employer Contribution
Account, unadjusted by any subsequent gains or losses of the Trust Fund;
provided, however, that such restoration shall be made only if such Member
repays in cash an amount equal to the amount so distributed to him pursuant to
Paragraph (a) above within five years from the date the Member is reemployed;
and provided, further, that such Member's repayment of amounts distributed to
him from his Cash or Deferred Account shall be limited to the portion thereof
that was attributable to contributions with respect to which the Employer made
Employer Matching Contributions. A reemployed Member who was not entitled to a
distribution from the Plan on his date of termination of employment shall be
considered to have repaid a distribution of zero dollars on the date of his
reemployment. Any such restoration shall be made as of the Valuation Date
coincident with or next succeeding the date of repayment. Notwithstanding
anything to the contrary in the Plan, forfeited amounts to be restored by the
Employer pursuant to this Paragraph shall be charged against and deducted from
forfeitures for the Plan Year in which such amounts are restored that would
otherwise be available to reduce Employer Matching Contributions and Employer
Safe Harbor Contributions. If such forfeitures otherwise available are not
sufficient to provide such restoration, the portion of such restoration not
provided by forfeitures shall be charged against and deducted from Employer
Matching Contributions otherwise available for allocation to other Members in
accordance with Sections 4.2(c) and 4.2(d), and any additional amount needed to
restore such forfeited amounts shall be provided by an additional Employer
Contribution (which shall be made without regard to current or accumulated
earnings and profits).
(c) With respect to a Member whose Vested Interest in his
Employer Contribution Account is less than 100% and who makes a withdrawal from
or receives a termination distribution from his Employer Contribution Account
other than a lump sum distribution by the close of the second Plan Year
following the Plan Year in which his employment is terminated, any amount
remaining in his Employer Contribution Account shall continue to be maintained
as a separate account. At any relevant time, such Member's nonforfeitable
portion of his separate account shall be determined in accordance with the
following formula:
X =P(AB+(RxD))-(RxD)
For purposes of applying the formula: X is the nonforfeitable portion of such
separate account at the relevant time; P is the Member's Vested Interest in his
Employer Contribution Account at the relevant time; AB is the balance of such
separate account at the relevant time; R is the ratio of the balance of such
separate account at the relevant time to the balance of such separate account
after the withdrawal or distribution; and D is the amount of the withdrawal or
distribution. For all other purposes of the Plan, a Member's separate account
shall be treated as an Employer Contribution Account. Upon his incurring a
Period of Severance of five consecutive years, the forfeitable portion of a
terminated Member's separate account and Employer Contribution Account shall be
forfeited as of the end of the Plan Year during which the terminated Member
completes such Period of Severance.
(d) With respect to a Member who terminates employment with the
Employer with a Vested Interest in his Employer Contribution Account greater
than 0% but less than 100% and who is not otherwise subject to the forfeiture
provisions of Paragraph (a) or Paragraph (c) above, the forfeitable portion of
his Employer Contribution Account shall be forfeited as of the end of the Plan
Year during which the terminated Member completes a Period of Severance of five
consecutive years, or, if earlier, the end of the Plan Year during which the
death of such terminated Member occurs if such Member was not reemployed by
Employer between the date of his termination of employment and the date of his
death.
(e) Any forfeitures occurring pursuant to Paragraphs (a), (c),
or (d) above shall be held in a suspense account and shall be applied to reduce
Employer Matching Contributions or Employer Safe Harbor Contributions, if any,
next coming due and/or to pay expenses incident to the administration of the
Plan and Trust. For all Valuation Dates prior to such application, forfeited
amounts held in the suspense account shall receive allocations of net income (or
net loss) pursuant to Section 4.4.
(f) Distributions of benefits described in this Section shall
be subject to the time of payment requirements of Section 10.1.
ARTICLE IX - DEATH BENEFITS
---------------------------
9.1. DEATH BENEFITS. Upon the death of a Member while an Employee,
the Member's designated Beneficiary shall be entitled to a death benefit,
payable at the time and in the form provided in Article X, equal to the value of
the Member's Accounts on his Benefit Commencement Date. Any contribution
allocable to a Member's Accounts after his Benefit Commencement Date shall be
distributed, if the death benefit was paid in a lump sum, or used to increase
payments, if the death benefit is being paid on a periodic basis, as soon as
administratively practicable after the date that such contribution is paid to
the Trust Fund.
9.2. DESIGNATION OF BENEFICIARIES.
(a) Each Member shall have the right to designate the Beneficiary
or beneficiaries to receive payment of his benefit in the event of his death.
Each such designation shall be made by executing the Beneficiary designation
form prescribed by the Committee and filing such form with the Committee. Any
such designation may be changed at any time by such Member by executing and
filing of a new designation in accordance with this Section. Notwithstanding the
foregoing, if a Member who is married on the date of his death has designated an
individual or entity other than his surviving spouse as his Beneficiary, such
designation shall not be effective unless (1) such surviving spouse has
consented thereto in writing and such consent (A) acknowledges the effect of
such specific designation, (B) either consents to the specific designated
Beneficiary (which designation may not subsequently be changed by the Member
without spousal consent) or expressly permits such designation by the Member
without the requirement of further consent by such spouse, and (C) is witnessed
by a Plan representative (other than the Member) or a notary public or (2) the
consent of such spouse cannot be obtained because such spouse cannot be located
or because of other circumstances described by applicable Treasury regulations.
Any such consent by such surviving spouse shall be irrevocable.
(b) If no Beneficiary designation is on file with the Committee
at the time of the death of the Member or if such designation is not effective
for any reason as determined by the Committee, the designated Beneficiary or
beneficiaries to receive such death benefit shall be as follows:
(i) If a Member leaves a surviving spouse, his designated
Beneficiary shall be such surviving spouse; and
(ii) If a Member leaves no surviving spouse, his
designated Beneficiary shall be (A) such Member's executor or administrator or
(B) his heirs at law if there is no administration of such Member's estate.
(c) Notwithstanding the preceding provisions of this Section
and to the extent not prohibited by state or federal law, if a Member is
divorced from his spouse and at the time of his death is not remarried to the
person from whom he was divorced, any designation of such divorced spouse as his
Beneficiary under the Plan filed prior to the divorce shall be null and void
unless the contrary is expressly stated in writing filed with the Committee by
the Member. The interest of such divorced spouse failing hereunder shall vest in
the persons specified in Paragraph (b) above as if such divorced spouse did not
survive the Member.
ARTICLE X - TIME AND FORM OF PAYMENT OF BENEFITS
------------------------------------------------
10.1. TIME OF PAYMENT
(a) Subject to the provisions of the remaining Paragraphs of
this Section, a Member's Benefit Commencement Date shall be the date that is as
soon as administratively practicable after the date the Member or his
Beneficiary becomes entitled to a benefit pursuant to Article VI, VII, VIII, or
IX unless the Member has been reemployed by the Employer or a Controlled Entity
before such potential Benefit Commencement Date.
(b) Unless (1) the Member has attained age sixty-five or died,
(2) the Member consents to a distribution pursuant to Paragraph (a) within the
ninety-day period ending on the date payment of his benefit hereunder is to
commence pursuant to Paragraph (a), or (3) the Member's Vested Interest in his
Accounts is not in excess of $5,000 (or such other limit as provided for in
Section 411(a)(11) of the Code), the Member's Benefit Commencement Date shall be
deferred to the date which is as soon as administratively practicable after the
earlier of the date the Member attains age sixty-five or the Member's date of
death, or such earlier date as the Member may elect by written notice to the
Committee prior to such Valuation Date; provided, however, that a Member who has
attained age sixty-five and is entitled to a benefit pursuant to Article VIII
shall be deemed to have elected to defer his Benefit Commencement Date until the
earlier of (A) an actual request for distribution of the entire balance in his
Accounts or (B) such time as specified in Section 10.1 (d) below. No less than
thirty days (unless such thirty-day period is waived by an affirmative election
in accordance with applicable Treasury regulations) and no more than ninety days
before his Benefit Commencement Date, the Committee shall inform the Member of
his right to defer his Benefit Commencement Date and shall describe the Member's
Direct Rollover election rights pursuant to Section 10.5 below.
(c) A Member's Benefit Commencement Date shall in no event be
later than the sixtieth day following the close of the Plan Year during which
such Member attains, or would have attained, his Normal Retirement Date or, if
later, terminates his employment with the Employer and all Controlled Entities;
provided, however, that a Member who has attained age sixty-five and is entitled
to a benefit pursuant to Article VIII shall be deemed to have elected to defer
his Benefit Commencement Date until the earlier of (1) an actual request for
distribution of the entire balance in his Accounts or (2) such time as specified
in Section 10.1 (d) below.
(d) A Member's Benefit Commencement Date shall be in compliance
with the provisions of section 401(a)(9) of the Code and applicable Treasury
regulations thereunder and shall in no event be later than:
(i) April 1 of the calendar year following the later of
(A) the calendar year in which such Member attains the age of seventy and
one-half or (B) the calendar year in which such Member terminates his employment
with the Employer and all Controlled Entities (provided, however, that clause
(B) of this sentence shall not apply in the case of a Member who is a
"five-percent owner" (as defined in section 416 of the Code) with respect to the
Plan Year ending in the calendar year in which such Member attains the age of
seventy and one-half); and
(ii) In the case of a benefit payable pursuant to Article
IX, (A) if payable to other than the Member's spouse, the last day of the
one-year period following the death of such Member, or (B) if payable to the
Member's spouse, after the date upon which such Member would have attained the
age of seventy and one-half, unless such surviving spouse dies before payments
commence, in which case the Benefit Commencement Date may not be deferred beyond
the last day of the one-year period following the death of such surviving
spouse.
The provisions of this Section notwithstanding, a Member may not elect to defer
the receipt of his benefit hereunder to the extent that such deferral creates a
death benefit that is more than incidental within the meaning of section
401(a)(9)(G) of the Code and applicable Treasury regulations thereunder.
(e) Subject to the provisions of Paragraph (d), a Member's
Benefit Commencement Date shall not occur unless the Article VI, VII, VIII, or
IX event entitling the Member (or his Beneficiary) to a benefit constitutes a
distributable event described in section 401(k)(2)(B) of the Code and shall not
occur while the Member is employed by the Employer or any Controlled Entity
(irrespective of whether the Member has become entitled to a distribution of his
benefit pursuant to Article VI, VII, VIII, or IX).
(f) Benefits shall be paid (or transferred pursuant to Section
10.5) in cash except that a Member (or his designated Beneficiary or legal
representative in the case of a deceased Member) may elect to have the portion
of his Accounts invested in Company Stock paid (or transferred pursuant to
Section 10.5) in full shares of Compaq Stock to the extent of such Member's pro
rata portion of the shares of Compaq Stock held in the Compaq Stock Fund, with
any balance (including fractional shares of Compaq Stock) to be paid or
transferred in cash.
(g) With respect to distributions under the Plan made on or
after January 1, 2002, the Plan will apply the minimum distribution requirements
of Section 401(a)(9) of the Code in accordance with the regulations thereunder
that were proposed on January 17, 2001 (the 2001 Proposed Regulations),
notwithstanding any provision of the Plan to the contrary. This paragraph shall
continue in effect until the last calendar year beginning before the effective
date of the final regulations under Section 401(a)(9) of the Code or such other
date as may be published by the Internal Revenue Service.
(h) On or after January 1, 2002, whenever the phrase
"terminates his employment" is used herein, it shall be interpreted to include a
"severance from employment."
10.2. ALTERNATIVE FORMS OF BENEFIT FOR MEMBERS.
(a) For purposes of Article VI, VII, or VIII, and subject to
Appendix B, the benefit of any Member shall be paid in one of the following
alternative forms to be selected by the Member or, in the absence of such
selection, in the form of a lump sum payment; provided, however, that the period
and method of payment of any such form shall be in compliance with theprovisions
of section 401(a)(9) of the Code and applicable Treasury regulations
thereunder:
(i) A lump sum.
(ii) Periodic installment payments for any term certain to
such Member or, in the event of such Member's death before the end of such term
certain, to his designated Beneficiary as provided in Section 9.2. Upon the
death of a Beneficiary who is receiving installment payments under this
Paragraph, the remaining balance in the Member's Accounts shall be paid as soon
as administratively practicable, in one lump sum cash payment, to the
Beneficiary's executor or administrator or to his heirs at law if there is no
administration of such Beneficiary's estate.
(b) If a Member, who terminated his employment under
circumstances such that he was entitled to a benefit pursuant to Article VI,
VII, or VIII, dies prior to the time that any funds from his Accounts have been
paid, or irrevocably committed to be paid, to provide a benefit pursuant to this
Section, the amount of the benefit to which he was entitled shall be paid
pursuant to Section 10.3 just as if such Member had died while employed by the
Employer.
10.3. ALTERNATIVE FORMS OF DEATH BENEFIT. For purposes of Article IX,
the death benefit for a deceased Member shall be paid to his Beneficiary
designated in accordance with the provisions of Section 9.2 in one of the
following alternative forms to be selected by the Member (or the Member's
designated Beneficiary if authorized by the Member) or, in the absence of such
selection, by the Committee; provided, however, that the period and method of
payment of any such form shall be in compliance with the provisions of section
401(a)(9) of the Code and applicable Treasury regulations thereunder:
(a) A lump sum.
(b) Periodic installment payments for any term certain;
provided, however, the term certain shall not exceed the life expectancy of the
Beneficiary. Upon the death of a beneficiary who is receiving installment
payments under this Paragraph, the remaining balance in the Member's Accounts
shall be paid as soon as administratively practicable, in one lump sum cash
payment, to the Beneficiary's executor or administrator or to his heirs at law
if there is no administration of such Beneficiary's estate.
10.4. CASH-OUT OF BENEFIT. If a Member terminates his employment and
the amount in his Accounts is not in excess of $5,000 (or such other limit as
provided for in Section 411(a)(11) of the Code), such Member's benefit shall be
paid in one lump sum payment in lieu of any other form of benefit herein
provided. Any such payment shall be made at the time specified in Section
10.1(a) without regard to the consent restrictions of Section 10.1(b). The
provisions of this Section shall not be applicable to a Member following his
Benefit Commencement Date.
10.5. DIRECT ROLLOVER ELECTION. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a Distributee's election under
this Section, a Distributee may elect, at the time and in the manner prescribed
by the Committee, to have all or any portion of an Eligible Rollover
Distribution (other than any portion attributable to the offset of an
outstanding loan balance of such Member pursuant to the Plan's loan procedure)
paid directly to an Eligible Retirement Plan specified by the Distributee in a
Direct Rollover. Prior to any Direct Rollover pursuant to this Section, the
Committee may require the Distributee to furnish the Committee with a statement
from the plan, account, or annuity to which the benefit is to be transferred
verifying that such plan, account, or annuity is, or is intended to be, an
Eligible Retirement Plan.
10.6. BENEFITS FROM ACCOUNT BALANCES. With respect to any benefit
payable in any form pursuant to the Plan, such benefit shall be provided from
the Account balance(s) to which the particular Member or Beneficiary is
entitled.
10.7. COMMERCIAL ANNUITIES. At the direction of the Committee, the
Trustee may pay any form of benefit provided hereunder other than a lump sum
payment or a Direct Rollover pursuant to Section 10.5 by the purchase of a
commercial annuity contract and the distribution of such contract to the Member
or Beneficiary. Thereupon, the Plan shall have no further liability with respect
to the amount .used to purchase the annuity contract and such Member or
Beneficiary shall look solely to the company issuing such contract for such
annuity payments. All certificates for commercial annuity benefits shall be
nontransferable, except for surrender to the issuing company, and no benefit
thereunder may be sold, assigned, discounted, or pledged (other than as
collateral for a loan from the company issuing same). Notwithstanding the
foregoing, the terms of any such commercial annuity contract shall conform with
the time of payment, form of payment, and consent provisions of Sections 10.1,
10.2, and 10.3.
10.8. UNCLAIMED BENEFITS. In the case of a benefit payable on behalf
of a Member, if the Committee is unable to locate the Member or Beneficiary to
whom such benefit is payable, upon the Committee's determination thereof, such
benefit shall be forfeited, held in a suspense account, and applied to reduce
Employer Matching Contributions or Employer Safe Harbor Contributions, if any,
next coming due. For all Valuation Dates prior to such application, forfeited
amounts held in the suspense account shall participate in allocations of the net
income (or net loss) of the Trust Fund. Notwithstanding the foregoing, if
subsequent to any such forfeiture the Member or Beneficiary to whom such benefit
is payable makes a valid claim for such benefit, such forfeited benefit shall be
restored to the Plan in the manner provided in Section 8.5(b).
10.9. CLAIMS PROCEDURE.
(a) All claims for benefits under this Plan shall be filed in
writing in accordance with such procedures as the Committee may establish. The
Committee shall provide to the claimant a written notice of its determination
with regard to the claim within 90 days after the Plan's receipt of the claim
(or, in the case of special circumstances, within 180 days after the Plan's
receipt of the claim). In any case where a claim is denied in whole or in part,
the notice shall set forth the specific reasons for the denial, specific
references to pertinent plan provisions on which the denial was based, a
description of any additional material or information necessary for the claimant
to perfect the claim (and an explanation why that material or information is
necessary), and appropriate steps to be taken if the claimant wishes to appeal
the denial.
(b) A claimant whose claim for benefits has been denied in
whole or in part may request review of the denial by filing, in accordance with
such procedures as the Committee may establish, a written appeal which sets
forth the evidence, information, and arguments which support the claimant's
position. Any such appeal must be filed within 60 days of the claimant's receipt
of written notification of the denial of the claim. In connection with such an
appeal, a claimant may review pertinent documents under such procedures as the
Committee may establish; if the claimant fails to file an appeal within such
60-day period, he shall have no further right to appeal. The Committee shall
make its decision with respect to an appeal within 60 days after the Plan's
receipt of the appeal (or, in the case of special circumstances, within 120 days
after the Plan's receipt of the appeal). The Committee shall provide the
claimant with a written notice of its decision which shall include specific
reasons for the decision and specific references to pertinent Plan provisions on
which the decision is based.
(c) In no event may a claim for benefits be filed by a claimant
more than 120 days after the applicable "Notice Date," as defined below.
(i) In any case where benefits are paid to the claimant
as a lump sum, the Notice Date shall be the date of payment of the lump sum.
(ii) In any case where benefits are paid to the claimant
in the form of an annuity, the Notice Date shall be the date of payment of the
first installment of the annuity.
(iii) In any case where the Plan (prior to the filing of a
claim for benefits) determines that an individual is not entitled to benefits
(for example (without limitation) where an individual terminates employment and
the Plan determines that he has not vested) and the Plan provides written notice
to such person of its determination, the Notice Date shall be the date of the
individual's receipt of such notice.
(d) In no event may any legal proceeding regarding entitlement
to benefits or any aspect of benefits under the Plan be commenced later than the
earliest of (i) two (2) years after the applicable Notice Date; or (ii) one (1)
year after the date a claimant receives a decision from the Committee regarding
his appeal, or (iii) the date otherwise prescribed by applicable law.
ARTICLE XI - IN-SERVICE WITHDRAWALS
-----------------------------------
11.1. IN-SERVICE WITHDRAWALS.
(a) A Member who has attained age fifty-nine and one-half may
withdraw from his Rollover Contribution Account any or all amounts held in such
Account.
(b) A Member who has attained age fifty-nine and one-half and
has withdrawn all amounts in his Rollover Contribution Account may withdraw from
his Employer Contribution Account an amount not exceeding such Member's Vested
Interest in the then value of such Account.
(c) A Member who has attained age fifty-nine and one-half and
has made all available withdrawals pursuant to Paragraphs (a) and (b) above may
withdraw from his Cash or Deferred Account an amount not exceeding the then
value of such Account.
(d) A Member who has a financial hardship, as determined by the
Committee, and who (1) has made all available withdrawals pursuant to the
Paragraphs above and obtained all other distributions available under this Plan,
(2) has made all available withdrawals and obtained all other distributions
pursuant to the provisions of any other plans of the Employer and any Controlled
Entities of which he is a member, and (3) has obtained all available loans
pursuant to Article XII and pursuant to the provisions of any other plans of the
Employer and any Controlled Entities of which he is a member may withdraw from
his Employer Contribution Account, his Rollover Contribution Account, and his
Cash or Deferred Account amounts not to exceed the lesser of (A) such Member's
Vested Interest in such Accounts or (B) the amount determined by the Committee
as being available for withdrawal pursuant to this Paragraph. Such withdrawal
shall come, first, from the Member's Cash or Deferred Contribution Sub Account
transferred from the Tandem Computers Incorporated 401 (k) Investment Plan (the
"Tandem Plan") or the Microcom, Inc. Employees' 401 (k) Plan (the "Microcom
Plan"), if any, second from his Cash or Deferred Account, third from his Vested
Interest in his Employer Contribution Account, and, finally, from his Rollover
Contribution Account. For purposes of this Paragraph, financial hardship shall
mean the immediate and heavy financial needs of the Member. A withdrawal based
upon financial hardship pursuant to this Paragraph shall not exceed the amount
required to meet the immediate financial need created by the hardship and not
reasonably available from other resources of the Member. The amount required to
meet the immediate financial need may include any amounts necessary to pay any
federal, state, or local income taxes or penalties reasonably anticipated to
result from the distribution. The determination of the existence of a Member's
financial hardship and the amount required to be distributed to meet the need
created by the hardship shall be made by the Committee. The decision of the
Committee shall be final and binding, provided that all Members similarly
situated shall be treated in a uniform and nondiscriminatory manner. A
withdrawal shall be deemed to be made on account of an immediate and heavy
financial need of a Member if the withdrawal is for:
(i) Expenses for medical care described in section 213(d)
of the Code previously incurred by the Member, the Member's spouse, or any
dependents of the Member (as defined in section 152 of the Code) or necessary
for those persons to obtain medical care described in section 213(d) of the Code
and not reimbursed or reimbursable by insurance;
(ii) Costs directly related to the purchase of a principal
residence of the Member (excluding mortgage payments);
(iii) Payment of tuition and related educational fees, and
room and board expenses, for the next twelve months of post-secondary education
for the Member or the Member's spouse, children, or dependents (as defined in
section 152 of the Code);
(iv) Payments necessary to prevent the eviction of the
Member from his principal residence or foreclosure on the mortgage of the
Member's principal residence; or
(v) Such other financial needs determined by the
Committee consistent with those other circumstances that the Commissioner of
Internal Revenue may deem to be immediate and heavy financial needs through the
publication of revenue rulings, notices, and other documents of general
applicability.
The above notwithstanding, (1) withdrawals under this Paragraph from a Member's
Cash or Deferred Account shall be limited to (a) the sum of the Member's Cash or
Deferred Contributions transferred from the Tandem Plan or the Microcom Plan to
the Plan, plus income allocable thereto and credited to the Member's Cash or
Deferred Account as of the Valuation Date coincident with or next preceding
December 31,1988, less any previous withdrawals of such amounts, and (b) for all
other Members, the Member's Cash or Deferred Contributions to the Plan from and
after January 1,1999, less any previous withdrawals of such amounts and (2)
Employer Contributions after December 31, 1988, utilized to satisfy the
restrictions set forth in Section 3.1(e), and income allocable thereto, shall
not be subject to withdrawal. A Member who makes a withdrawal under this
Paragraph may not make elective contributions under the Plan, the Compaq
Computer Corporation Deferred Compensation and Supplemental Savings Plan, the
Compaq Computer Corporation Employee Stock Purchase Plan, or any other plan
maintained by the Employer or any Controlled Entity for a period of twelve
months following the date of such withdrawal (on or after January 1, 2002, six
months following the later of the date of withdrawal or January 1, 2002).
Further, for years beginning before January 1, 2002, such Member may not make
elective contributions under the Plan, the Compaq Computer Corporation Deferred
Compensation and Supplemental Savings Plan, the Compaq Computer Corporation
Employee Stock Purchase Plan, or any other plan maintained by the Employer or
any Controlled Entity for such Member's taxable year immediately following the
taxable year of the withdrawal in excess of the applicable limit set forth in
Section 3.1(d) for such next taxable year less the amount of such Member's
elective contributions for the taxable year of the withdrawal.
(e) A Member whose account was merged into the Plan from the
Digital Equipment Savings and Investment Plan may withdraw all or part of his
Account as provided for in Appendix B.
11.2. RESTRICTION ON IN-SERVICE WITHDRAWALS.
(a) All withdrawals pursuant to this Article shall be made in
accordance with the procedures established by the Committee.
(b) Notwithstanding the provisions of this Article, no
withdrawal shall be made from an Account to the extent such Account has been
pledged to secure a loan from the Plan under Article XII. Furthermore,
notwithstanding the provisions of this Article, no withdrawal shall be made from
an Account prior to the earliest time permitted by applicable law.
(c) If a Member's Account from which a withdrawal is made is
invested in more than one Investment Fund, the Member shall designate which
Investment Fund, or combination of Investment Funds, from which the withdrawal
shall be made. In the absence of such designation, the withdrawal shall be made
pro rata from each Investment Fund in which such Account is invested.
(d) Any withdrawal hereunder that constitutes an Eligible
Rollover Distribution shall be subject to the Direct Rollover election described
in Section 10.5.
(e) This Article shall not be applicable to a Member following
termination of employment and the amounts in such Member's Accounts shall be
distributable only in accordance with the provisions of Article X.
ARTICLE XII - LOANS
-------------------
12.1. Eligibility for Loan. Upon application by (1) any Member who is
an Employee or (2) any Member (A) who is a party-in-interest, as that term is
defined in section 3(14) of the Act, as to the Plan, (B) who is no longer
employed by the Employer, who is a Beneficiary of a deceased Member or who is an
alternate payee under a qualified domestic relations order, as defined in
section 414(p)(8) of the Code, and (C) who retains an Account balance under the
Plan (an individual who is eligible to apply for a loan under this Article being
hereinafter referred to as a "Member" for purposes of this Article), the
Committee may in its discretion direct the Trustee to make a loan or loans to
such Member. Such loans shall be made pursuant to the provisions of the
Committee's written loan procedure, which procedure is hereby incorporated by
reference as a part of the Plan.
12.2. MAXIMUM LOAN.
(a) A loan to a Member may not exceed 50% of the then value of
such Member's Vested Interest in his Accounts.
(b) Paragraph (a) above to the contrary notwithstanding, no
loan shall be made from the Plan to the extent that such loan would cause the
total of all loans made to a Member from all qualified plans of the Employer or
a Controlled Entity ("Outstanding Loans") to exceed the lesser of
(i) $50,000 (reduced by the excess, if any, of (A) the
highest outstanding balance of Outstanding Loans during the one-year period
ending on the day beforethe date on which the loan is to be made, over (B) the
outstanding balance of Outstanding Loans on the date on which the loan is made);
or
(ii) One-half the present value of the Member's
nonforfeitable accrued benefit under all qualified plans of the Employer or a
Controlled Entity.
ARTICLE XIII - ADMINISTRATION OF THE PLAN
-----------------------------------------
13.1. APPOINTMENT OF COMMITTEE. The general administration of the Plan
shall be vested in the Committee which shall be appointed by the Senior Vice
President of Human Resources of Compaq (or such other comparable officer) (the
"Senior Vice President of Human Resources") and shall consist of one or more
persons. Any individual, whether or not an Employee, is eligible to become a
member of the Committee. For purposes of the Act, the Committee shall be the
Plan "administrator" and shall be the "named fiduciary" with respect to the
general administration of the Plan (except as to the investment of the assets of
the Trust Fund).
13.2. TERM, VACANCIES, RESIGNATION, AND REMOVAL. Each member of the
Committee shall serve until he resigns, dies, or is removed by the Senior Vice
President of Human Resources. At any time during his term of office, a member of
the Committee may resign by giving written notice to the Senior Vice President
of Human Resources and the Committee, such resignation to become effective upon
the appointment of a substitute member or, if earlier, the lapse of thirty days
after such notice is given as herein provided. At any time during his term of
office, and for any reason, a member of the Committee may be removed by the
Senior Vice President of Human Resources with or without cause, and the Senior
Vice President of Human Resources may in his discretion fill any vacancy that
may result therefrom. Any member of the Committee who is an Employee shall
automatically cease to be a member of the Committee as of the date he ceases to
be employed by the Employer or a Controlled Entity.
13.3. OFFICERS, RECORDS, AND PROCEDURES. The Committee may select
officers and may appoint a secretary who need not be a member of the Committee.
The Committee shall keep appropriate records of its proceedings and the
administration of the Plan and shall make available for examination during
business hours to any Member or Beneficiary such records as pertain to that
individual's interest in the Plan. The Committee shall designate the person or
persons who shall be authorized to sign for the Committee and, upon such
designation, the signature of such person or persons shall bind the Committee.
13.4. MEETINGS. The Committee shall hold meetings upon such notice and
at such time and place as it may from time to time determine. Notice to a member
shall not be required if waived in writing by that member. One-third of the
members of the Committee duly appointed shall constitute a quorum for the
transaction of business. All resolutions or other actions taken by the Committee
at any meeting where a quorum is present shall be by vote of a majority of those
present at such meeting and entitled to vote. Resolutions may be adopted or
other action taken without a meeting upon written consent signed by all of the
members of the Committee. Meetings may be held in person, by electronic or
telephonic conference call (or a combination thereof).
13.5. SELF-INTEREST OF MEMBERS. No member of the Committee shall have
any right to vote or decide upon any matter relating solely to himself under the
Plan or to vote in any case in which his individual right to claim any benefit
under the Plan is particularly involved. In any case in which a Committee member
is so disqualified to act and the remaining members cannot agree, the Senior
Vice President of Human Resources shall appoint a temporary substitute member to
exercise all the powers of the disqualified member concerning the matter in
which he is disqualified.
13.6. COMPENSATION AND BONDING. The members of the Committee shall not
receive compensation with respect to their services for the Committee. To the
extent required by the Act or other applicable law, or required by Compaq,
members of the Committee shall furnish bond or security for the performance of
their duties hereunder.
13.7. COMMITTEE POWERS AND DUTIES. The Committee shall supervise the
administration and enforcement of the Plan according to the terms and provisions
hereof and, in addition to any powers and duties otherwise specified in the Plan
or the Trust Agreement, and any implied powers and duties which may be necessary
or desirable to accomplish these purposes, the Committee shall have the
following powers and duties, including, but not by way of limitation, the right,
power, authority, and duty:
(a) To make rules, regulations, and bylaws for the
administration of the Plan that are not inconsistent with the terms and
provisions hereof, provided such rules, regulations, and bylaws are evidenced in
writing and copies thereof are delivered to the Trustee and to Compaq, and to
enforce the terms of the Plan and the rules and regulations promulgated
thereunder by the Committee;
(b) To interpret and construe in its discretion all terms,
provisions, conditions, and limitations of the Plan, and all other Plan-related
documents (i.e., election forms) and, in all cases, the construction necessary
for the Plan to qualify under the applicable provisions of the Code shall
control;
(c) To correct any defect or to supply any omission or to
reconcile any inconsistency or ambiguity that may appear in the Plan in such
manner and to such extent as it shall deem expedient in its discretion to
effectuate the purposes of the Plan;
(d) To employ and compensate such accountants, attorneys,
investment advisors, and other agents, employees, and independent contractors as
the Committee may deem necessary or advisable for the proper and efficient
administration of the Plan and where it deems it appropriate, to delegate to
such individuals or firms duties it has with respect to the Plan;
(e) To determine in its discretion all questions relating to
eligibility;
(f) To make a determination in its discretion as to the right
of any person to a benefit under the Plan and to compute the amount of benefits
which shall be payable to any Member in accordance with the provisions of the
Plan and to prescribe procedures, including, but not limited to, a "qualified
domestic relations order" procedure (within the meaning of section
206(d)(3)(G)(ii) of the Act and section 414(p)(6)(B) of the Code), to be
followed by distributees in obtaining benefits hereunder;
(g) To prepare, file, and distribute, in such manner as the
Committee determines to be appropriate, such information and material as is
required by the reporting and disclosure requirements of the Act;
(h) To furnish the Employer any information necessary for the
preparation of such Employer's tax return or other information that the
Committee determines in its discretion is necessary for a legitimate purpose;
(i) To require and obtain from the Employer and the Members any
information or data that the Committee determines is necessary for the proper
administration of the Plan;
(j) To instruct the Trustee as to the loans to Members pursuant
to the provisions of Article XII;
(k) To develop and oversee an investment policy and to instruct
the Trustee as to the management, investment, and reinvestment of the Trust Fund
as provided in the Trust Agreement;
(l) To appoint and remove investment managers pursuant to
Section 15.5;
(m) To receive and review reports from the Trustee and from
investment managers as to the financial condition of the Trust Fund, including
its receipts and disbursements;
(n) To review periodically the Plan's short-term and long-term
investment needs and goals and to communicate such needs and goals to the
Trustee and any investment manager as frequently as the Committee, in its
discretion, deems necessary for the proper administration of the Plan and Trust;
(o) To establish or designate Investment Funds as investment
options as provided in Article V;
(p) To direct the Trustee as to the exercise of rights or
privileges to acquire, convert, or exchange Compaq Stock pursuant to Section
5.3;
(q) To establish a reasonable administrative claims appeal
process;
(r) To delegate duties regarding the claims appeal process to
another member of the Committee;
(s) To appoint or employ persons or firms to assist in its
decision-making process; and
(t) To take such actions as the Committee determines to be
appropriate to maintain the tax qualified status of the Plan and the Plan's
compliance with the Act, including self-correction under the Employee Plans
Compliance Resolution System or such other similar program as may exist from
time to time.
13.8. INFORMATION. The Employer shall supply full and timely
information to the Committee, including, but not limited to, information
relating to each Member's Compensation, age, retirement, death, or other cause
of termination of employment and such other pertinent facts as the Committee may
require. The Employer shall advise the Trustee of such of the foregoing facts as
are deemed necessary for the Trustee to carry out the Trustee's duties under the
Plan. When making a determination in connection with the Plan, the Committee
shall be entitled to rely upon the aforesaid information furnished by the
Employer. The Committee shall be entitled to rely conclusively upon all tables,
valuations, certificates, opinions, and reports which are furnished by any
actuary, accountant, counsel, or other person who is employed or engaged for
such purposes.
13.9. INDEMNIFICATION. Compaq shall indemnify and hold harmless each
member of the Committee and each Employee who is a delegate of the Committee
against any and all expenses and liabilities arising out of his administrative
functions or fiduciary responsibilities, including any expenses and liabilities
that are caused by or result from an act or omission constituting the negligence
of such individual in the performance of such functions or responsibilities, but
excluding expenses and liabilities that are caused by or result from such
individual's own gross negligence or willful misconduct. Expenses against which
such individual shall be indemnified hereunder shall include, without
limitation, the amounts of any settlement or judgment, costs, counsel fees, and
related charges reasonably incurred in connection with a claim asserted or a
proceeding brought or settlement thereof. Compaq may purchase and maintain
liability insurance (which insurance shall not permit recourse against the
insured parties) with scope of coverage and limits of liability sufficient to
protect the members of the Committee and other fiduciaries who are, were, or may
be Employees of Compaq or a Controlled Entity from monetary liability for any
breach of their fiduciary responsibilities not resulting from their own gross
negligence or will misconduct.
ARTICLE XIV - TRUSTEE AND ADMINISTRATION OF TRUST FUND
------------------------------------------------------
14.1. APPOINTMENT, RESIGNATION, REMOVAL, AND REPLACEMENT OF TRUSTEE.
The Trustee shall be appointed, removed, and replaced by and in the sole
discretion of the Senior Vice-President of Human Resources. The Trustee shall be
the "named fiduciary" with respect to investment of the Trust Fund's assets.
14.2. TRUST AGREEMENT. The administration of the assets of the Plan and
the duties, obligations, and responsibilities of the Trustee shall be governed
by the Trust Agreement entered into between Compaq and Trustee. The Trust
Agreement may be amended from time to time as Compaq deems advisable in order to
effectuate the purposes of the Plan. The Trust Agreement is incorporated herein
by reference and thereby made a part of the Plan.
14.3. PAYMENT OF EXPENSES. All expenses incident to the administration
of the Plan and Trust, including but not limited to, legal, accounting, Trustee
fees, direct expenses of Compaq and the Committee in the administration of the
Plan, and the cost of furnishing any bond or security required of the Committee
shall be paid by the Trustee from the Trust Fund, and, until paid, shall
constitute a claim against the Trust Fund which is paramount to the claims of
Members and beneficiaries; provided, however, that (a) the obligation of the
Trustee to pay such expenses from the Trust Fund shall cease to exist to the
extent such expenses are paid by the Employer and (b) in the event the Trustee's
compensation is to be paid, pursuant to this Section, from the Trust Fund, any
individual serving as Trustee who already receives full-time pay from an
Employer or an association of Employers whose employees are Members in the Plan,
or from an employee organization whose members are Members in the Plan, shall
not receive any additional compensation for serving as Trustee. This Section
shall be deemed to be a part of any contract to provide for expenses of Plan and
Trust administration, whether or not the signatory to such contract is, as a
matter of convenience, the Employer.
14.4. TRUST FUND PROPERTY. All income, profits, recoveries,
contributions, forfeitures, and any and all moneys, securities, and properties
of any kind at any time received or held by the Trustee hereunder shall be held
for investment purposes as a commingled Trust Fund. The Committee shall maintain
Accounts in the name of each Member, but the maintenance of an Account
designated as the Account of a Member shall not mean that such Member shall have
a greater or lesser interest than that due him by operation of the Plan and
shall not be considered as segregating any funds or property from any other
funds or property contained in the commingled fund. No Member shall have any
title to any specific asset in the Trust Fund.
14.5. DISTRIBUTIONS FROM MEMBERS' ACCOUNTS. Distributions from a
Member's Accounts shall be made by the Trustee only if, when, and in the amount
and manner directed in writing by the Committee. Any distribution made to a
Member or for his benefit shall be debited to such Member's Account or Accounts.
All distributions hereunder shall be made in cash except as otherwise
specifically provided herein.
14.6. PAYMENTS SOLELY FROM TRUST FUND. All benefits payable under the
Plan shall be paid or provided for solely from the Trust Fund, and neither the
Employer nor the Trustee assumes any liability or responsibility for the
adequacy thereof. The Committee or the Trustee may require execution and
delivery of such instruments as are deemed necessary to assure proper payment
of any benefits.
14.7. NO BENEFITS TO THE EMPLOYER. No part of the corpus or income of
the Trust Fund shall be used for any purpose other than the exclusive purpose of
providing benefits for the Members and their beneficiaries and of defraying
reasonable expenses of administering the Plan and Trust. Anything to the
contrary herein notwithstanding, the Plan shall not be construed to vest any
rights in the Employer other than those specifically given hereunder.
ARTICLE XV - Fiduciary Provisions
---------------------------------
15.1. ARTICLE CONTROLS. This Article shall control over any contrary,
inconsistent or ambiguous provisions contained in the Plan.
15.2. GENERAL ALLOCATION OF FIDUCIARY DUTIES. Each fiduciary with
respect to the Plan shall have only those specific powers, duties,
responsibilities and obligations as are specifically given him under the Plan.
The Senior Vice President of Human Resources shall have the sole authority to
appoint and remove the Trustee and members of the Committee. Except as otherwise
specifically provided herein, the Committee shall have the sole responsibility
for the administration of the Plan, which responsibility is specifically
described herein. Except as otherwise specifically provided herein and in the
Trust Agreement, the Trustee shall have the sole responsibility for the
administration, investment, and management of the assets held under the Plan.
However, if the Committee, as a co-fiduciary, shall exercise its power given
hereunder at any time, and from time to time, by written notice to the Trustee,
to direct the Trustee in the management, investment, and reinvestment of the
Trust Fund, then in such event the Trustee shall be subject to all proper
directions of the Committee that are made in accordance with the terms of the
Plan and the Act. It is intended under the Plan that each fiduciary shall be
responsible for the proper exercise of his own powers, duties, responsibilities,
and obligations hereunder and shall not be responsible for any act or failure to
act of another fiduciary except to the extent provided by law or as specifically
provided herein.
15.3. FIDUCIARY DUTY. Each fiduciary under the Plan, including, but
not limited to, the Committee and the Trustee as "named fiduciaries," shall
discharge his duties and responsibilities with respect to the Plan:
(a) Solely in the interest of the Members, for the exclusive
purpose of providing benefits to Members and their beneficiaries and of
defraying reasonable expenses of administering the Plan and Trust;
(b) With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of alike
character and with like aims;
(c) By diversifying the investments of the Plan so as to
minimize the risk of large losses, unless under the circumstances it is prudent
not to do so; and
(d) In accordance with the documents and instruments governing
the Plan insofar as such documents and instruments are consistent with
applicable law.
No fiduciary shall cause the Plan or Trust Fund to enter into a "prohibited
transaction" as provided in section 4975 of the Code or section 406 of the Act.
15.4. DELEGATION OF FIDUCIARY DUTIES. The Committee may appoint
subcommittees, individuals, or any other agents as it deems advisable and may
delegate to any of such appointees any or all of the powers and duties of the
Committee. Such appointment and delegation must specify in writing the powers or
duties being delegated, and must be accepted in writing by the delegatee. Upon
such appointment, delegation and acceptance, the delegating Committee members
shall have no liability for the acts or omissions of any such delegatee, as long
as the delegating Committee members do not violate any fiduciary responsibility
in making or continuing such delegation.
15.5. INVESTMENT MANAGER. The Committee may, in its sole discretion,
appoint an "investment manager," with power to manage, acquire or dispose of any
asset of the Plan and to direct the Trustee in this regard, so long as:
(a) The investment manager is (1) registered as an investment
adviser under the Investment Advisers Act of 1940, (2) not registered as an
investment adviser under such act by reason of paragraph (1) of section 203A(a)
of such act, is registered as an investment adviser under the laws of the state
(referred to in such paragraph (1)) in which it maintains its principal office
and place of business, and, at the time it last filed the registration form most
recently filed by it with such state in order to maintain its registration under
the laws of such state, also filed a copy of such form with the Secretary of
Labor, (3) a bank, as defined in the Investment Advisers Act of 1940, or (4) an
insurance company qualified to do business under the laws of more than one
state; and
(b) Such investment manager acknowledges in writing that he is
a fiduciary with respect to the Plan. Upon such appointment, the Committee shall
not be liable for the acts of the investment manager, as long as the Committee
members do not violate any fiduciary responsibility in making or continuing such
appointment. The Trustee shall follow the directions of such investment manager
and shall not be liable for the acts or omissions of such investment manager.
The investment manager may be removed by the Committee at any time and within
the Committee's sole discretion.
15.6. DISCRETIONARY ACTION. Each Plan fiduciary having authority under
the Plan to make factual findings, to determine eligibility for benefits, and/or
to interpret the terms of the Plan and other Plan-related documents shall have
discretionary authority to make such findings, determinations, or
interpretations within the discretion of the fiduciary, and all such findings,
determinations, and interpretations by the fiduciary shall be conclusive and
binding on all parties, including, without limitation, the Employer, the Plan,
and the Members, unless a court of competent jurisdiction finds such finding,
determination, or interpretation to be arbitrary and capricious and/or an abuse
of discretion. For purposes of this paragraph, arbitrary and capricious shall
mean "having no foundation."
ARTICLE XVI - AMENDMENTS
------------------------
16.1. RIGHT TO AMEND. Subject to Section 16.2 and any other limitations
contained in the Act or the Code, the Board of Directors or the Committee may
from time to time amend, in whole or in part, any or all of the provisions of
the Plan on behalf of Compaq and all Employers, including any amendment
necessary to acquire and maintain a qualified status for the Plan under the
Code, whether or not retroactive; provided, however, that any amendment to
terminate the Plan or to alter the amount of any Employer Contribution to the
Plan may be made only by the Board of Directors. All amendments to the Plan
shall be in writing and shall be executed by a member of the Committee.
16.2. LIMITATION ON AMENDMENTS. No amendment of the Plan shall be made
that would vest in the Employer, directly or indirectly, any interest in or
control of the Trust Fund. No amendment shall be made that would vary the Plan's
exclusive purpose of providing benefits to Members and their beneficiaries and
of defraying reasonable expenses of administering the Plan or that would permit
the diversion of any part of the Trust Fund from that exclusive purpose. No
amendment shall be made that would reduce any then nonforfeitable interest of a
Member in his accrued benefit (within the meaning of section 411(d)(6) of the
Code). No amendment shall increase the duties or responsibilities of the Trustee
unless the Trustee consents thereto in writing.
ARTICLE XVII - DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION, PARTIAL
TERMINATION, AND MERGER OR CONSOLIDATION
----------------------------------------
17.1. RIGHT TO DISCONTINUE CONTRIBUTIONS, TERMINATE, OR PARTIALLY
TERMINATE. The Employer has established the Plan with the bona fide intention
and expectation that from year to year it will be able to, and will deem it
advisable to, make its contributions as herein provided. However, the Directors
realize that circumstances not now foreseen, or circumstances beyond its
control, may make it either impossible or inadvisable for the Employer to
continue to make its contributions to the Plan. Therefore, the Directors shall
have the right and the power to discontinue contributions to the Plan, terminate
the Plan, or partially terminate the Plan at any time hereafter. Each member of
the Committee and the Trustee shall be notified of such discontinuance,
termination, or partial termination.
17.2. PROCEDURE IN THE EVENT OF DISCONTINUANCE OF CONTRIBUTIONS
TERMINATION OR PARTIAL TERMINATION.
(a) If the Plan is amended so as to permanently discontinue
Employer Contributions, or if Employer Contributions are in fact permanently
discontinued, the Vested Interest of each affected Member shall be 100%,
effective as of the date of discontinuance. In case of such discontinuance, the
Committee shall remain in existence and all other provisions of the Plan that
are necessary, in the opinion of the Committee, for equitable operation of the
Plan shall remain in force.
(b) If the Plan is terminated or partially terminated, the
Vested Interest of each affected Member shall be 100%, effective as of the
termination date or partial termination date, as applicable. Unless the Plan is
otherwise amended prior to dissolution of Compaq, the Plan shall terminate as of
the date of dissolution of Compaq.
(c) Upon discontinuance of contributions, termination, or
partial termination, any previously unallocated contributions, forfeitures, and
net income (or net loss) shall be allocated among the Accounts of the Members on
such date of discontinuance, termination, or partial termination according to
the provisions of Article IV. Thereafter, the net income (or net loss) shall
continue to be allocated to the Accounts of the Members until the balances of
the Accounts are distributed.
(d) In the case of a termination or partial termination of the
Plan, and in the absence of a Plan amendment to the contrary, the Trustee shall
pay the balance of the Accounts of a Member for whom the Plan is so terminated,
or who is affected by such partial termination, to such Member, subject to the
time of payment, form of payment, and consent provisions of Article 10.
17.3. MERGER, CONSOLIDATION, OR TRANSFER. This Plan and Trust Fund may
not merge or consolidate with, or transfer its assets or liabilities to, any
other plan, unless immediately thereafter each Member would, in the event such
other plan terminated, be entitled to a benefit which is equal to or greater
than the benefit to which he would have been entitled if the Plan were
terminated immediately before the merger, consolidation, or transfer.
ARTICLE XVIII - PARTICIPATING EMPLOYERS
---------------------------------------
18.1. DESIGNATION OF OTHER EMPLOYERS.
(a) The Committee may designate any entity or organization
eligible by law to participate in the Plan and the Trust as an Employer by
written instrument delivered to the Secretary of Compaq, to the Trustee, and to
the designated Employer. Such written instrument shall specify the effective
date of such designated participation, may incorporate specific provisions
relating to the operation of the Plan that apply to the designated Employer only
and shall become, as to such designated Employer and its Employees, a part of
the Plan.
(b) Each designated Employer shall be conclusively presumed to
have consented to its designation and to have agreed to be bound by the terms of
the Plan and Trust Agreement and any and all amendments thereto upon its
submission of information to the Committee required by the terms of or with
respect to the Plan or upon making a contribution to the Trust Fund pursuant to
the terms of the Plan; provided, however, that the terms of the Plan may be
modified so as to increase the obligations of an Employer only with the consent
of such Employer, which consent shall be conclusively presumed to have been
given by such Employer upon its submission of any information to the Committee
required by the terms of or with respect to the Plan or upon making a
contribution to the Trust Fund pursuant to the terms of the Plan following
notice of such modification.
(c) The provisions of the Plan shall apply separately and
equally to each Employer and its Employees in the same manner as is expressly
provided Compaq and its Employees, except that the power to appoint or otherwise
affect the Committee or the Trustee and the power to amend or terminate the Plan
shall be exercised by the Senior Vice President of Human Resources alone and in
the case of Employers which are Controlled Entities, Employer Discretionary
Contributions to be allocated pursuant to Section 4.2(f) and forfeitures to be
allocated pursuant to Section 4.3 shall be allocated on an aggregate basis among
the Members employed by all Employers; provided, however, that each Employer
shall contribute to the Trust Fund its share of total Employer Discretionary
Contribution for a Plan Year based on the Members in its employ during such Plan
Year.
(d) Transfer of employment among Employers shall not be
considered a termination of employment hereunder, and Service with one Employer
shall be considered as Service with all others, subject, however, to the
provisions of Section 1.1(44).
(e) Any Employer may, by appropriate action of its board of
directors or noncorporate counterpart, terminate its participation in the Plan;
provided, however, that any such action must be communicated in writing to the
Secretary of Compaq, to the Trustee, and to the Committee. Moreover, the
directors may, in their discretion, terminate an Employer's Plan participation
at any time by written instrument delivered to the Secretary of Compaq, to the
Trustee, and to the Employer.
18.2. Single Plan. For purposes of the Code and the Act, the Plan as
adopted by the Employers shall constitute a single plan rather than a separate
plan of each Employer. All assets in the Trust Fund shall be available to pay
benefits to all Members and their beneficiaries.
ARTICLE XIX - MISCELLANEOUS PROVISIONS
--------------------------------------
19.1. NO CONTRACT OF EMPLOYMENT. The adoption and maintenance of the
Plan shall not be deemed to be either a contract between the Employer and any
person or to be consideration for the employment of any person. Nothing herein
contained shall be deemed to give any person the right to be retained in the
employ of the Employer or to restrict the right of the Employer to discharge any
person at any time nor shall the Plan be deemed to give the Employer the right
to require any person to remain in the employ of the Employer or to restrict any
person's right to terminate his employment at any time.
19.2. ALIENATION OF INTEREST FORBIDDEN. Except as otherwise provided
with respect to "qualified domestic relations orders" and certain judgments and
settlements pursuant to section 206(d) of the Act and sections 401(a)(13) and
414(p) of the Code and except as otherwise provided under other applicable law,
no right or interest of any kind in any benefit shall be transferable or
assignable by any Member or any Beneficiary or be subject to anticipation,
adjustment, alienation, encumbrance, garnishment, attachment, execution, or levy
of any kind. Plan provisions to the contrary notwithstanding, the Committee
shall comply with the terms and provisions of any "qualified domestic relations
order," including an order that requires distributions to an alternate payee
prior to a Member's "earliest retirement age" as such term is defined in section
206(d)(3)(E)(ii) of the Act and section 414(p)(4)(B) of the Code, and shall
establish appropriate procedures to effect the same.
19.3. UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT
REQUIREMENTS. Notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with section 414(u) of the Code.
19.4. SEVERABILITY. If any provision of this Plan shall be held illegal
or invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof. In such case, each provision shall be fully
severable and the Plan shall be construed and enforced as if said illegal or
invalid provision had never been included herein.
19.5. JURISDICTION. The situs of the Plan hereby created is Texas. All
provisions of the Plan shall be construed in accordance with the laws of Texas
except to the extent preempted by federal law.
19.6. PAYMENTS TO MINORS AND INCOMPETENTS. If a Member or Beneficiary
entitled to receive a benefit under the Plan is a minor or is determined by the
Committee in its discretion to be incompetent or is adjudged by a court of
competent jurisdiction to be legally incapable of giving valid receipt and
discharge for a benefit provided under the Plan, the Committee may pay such
benefit to the duly appointed guardian or conservator of such Member or
Beneficiary for the account of such Member or Beneficiary. If no guardian or
conservator has been appointed for such Member or Beneficiary, the Committee may
pay such benefit to any third party who is determined by the Committee, in its
sole discretion, to be authorized to receive such benefit for the account of
such Member or Beneficiary. Such payment shall operate as a full discharge of
all liabilities and obligations of the Committee, the Trustee, the Employer, and
any fiduciary of the Plan with respect to such benefit.
19.7. PLAN CHANGES DURING PERIODS OF TRANSITION. Anything to the
contrary herein notwithstanding, the Committee may in its discretion provide
that, during and for the duration of any period of transition as a result of a
change of Trustees and as necessary to ensure an orderly transition, (1) no
withdrawals, loans, execution of, change to, or revocation of a Compensation
reduction agreement, change of investment designation of future contributions or
transfer of amounts in Accounts from one Investment Fund to another Investment
Fund, or other Plan activity shall be permitted, or (2) any such Plan activity
shall be limited or restricted; provided that any such temporary cessation,
limitation, or restriction of Plan activity shall be in compliance with all
applicable law.
19.8. MEMBER'S AND BENEFICIARY'S ADDRESSES. It shall be the affirmative
duty of each Member to inform the Committee of, and to keep on file with the
Committee, his current mailing address and the current mailing address of his
designated Beneficiary. If a Member fails to keep the Committee informed of his
current mailing address and the current mailing address of his designated
Beneficiary, neither the Committee, the Trustee, the Employer, nor any fiduciary
under the Plan shall be responsible for any late or lost payment of a benefit or
for failure of any notice to be provided timely under the terms of the Plan.
19.9. INCORRECT INFORMATION, FRAUD, CONCEALMENT, OR ERROR. Any contrary
provisions of the Plan notwithstanding, if, because of a human or systems error,
or because of incorrect information provided by or correct information failed to
be provided by, fraud, misrepresentation, or concealment of any relevant fact
(as determined by the Committee) by any person the Plan enrolls any individual,
pays benefits under the Plan, incurs a liability or makes any overpayment or
erroneous payment, the Plan shall be entitled to recover from such person the
benefit paid or the liability incurred, together with all expenses incidental to
or necessary for such recovery.
19.10. Acquisition and Holding of Compaq Stock. The Plan is specifically
authorized to acquire and hold up to 100% of its assets in Compaq Stock so long
as Compaq Stock is a "qualifying employer security," as such term is defined in
Section 407(d)(5) of the Act.
19.11. Special Provisions for Certain Leased Employees. A "leased
employee" shall receive credit for Hours of Service and years of Vesting Service
for the entire period during which he is a leased employee of the Employer or a
Controlled Entity as if he were a Employee, except for any period during which:
(a) such leased employee is covered by a money purchase pension plan maintained
by the leasing organization which provides for (i) a non-integrated employer
contribution rate of at least ten percent (10%) of compensation, (ii) full and
immediate vesting, and (iii) immediate participation (except for employees who
perform substantially all their services for the leasing organization and any
other employee whose compensation for the leasing organization in each Plan Year
during the four (4) plan year period ending with the Plan Year is less than
$1,000); and (b) leased employees do not constitute more than twenty percent
(20%) of the nonhighly compensated work force (within the meaning of Section
414(n)(5)(C)(ii) of the Code) of the Employer or a Controlled Entity.
Notwithstanding the foregoing, a leased employee shall not be considered an
Employee eligible to participate in the Plan as long as he remains a leased
employee. For purposes of this Section 19.11, the term "leased employee" means
any person (a) who is not an Employee and (b) who pursuant to an agreement
between the Employer or a Controlled Entity and any other person (a "leasing
organization") performs services for the Employer or a Controlled Entity (the
"recipient") on a substantially full-time basis for a period of at least one (1)
year and such services are performed under the primary direction or control of
the recipient.
ARTICLE XX - TOP-HEAVY STATUS
-----------------------------
20.1. ARTICLE CONTROLS. Any Plan provisions to the contrary
notwithstanding, the provisions of this Article shall control to the extent
required to cause the Plan to comply with the requirements imposed under section
416 of the Code.
20.2. DEFINITIONS. For purposes of this Article, the following terms
and phrases shall have these respective meanings:
(a) Account Balance: As of any Valuation Date, the aggregate
amount credited to an individual's account or accounts under a qualified defined
contribution plan maintained by the Employer or a Controlled Entity (excluding
employee contributions that were deductible within the meaning of section 219 of
the Code and rollover or transfer contributions made after December 31, 1983, by
or on behalf of such individual to such plan from another qualified plan
sponsored by an entity other than the Employer or a Controlled Entity),
increased by (1) the aggregate distributions made to such individual from such
plan during a five-year period ending on the Determination Date and (2) the
amount of any contributions due as of the Determination Date immediately
following such Valuation Date.
Effective January 1, 2002, the amount of Account Balances of a Member
as of the Determination Date shall be increased by the distributions made with
respect to the Member under the Plan and any plan in the Aggregation Group
during the one-year period ending on the Determination Date. The preceding
sentence shall also apply to distributions under a terminated plan which, had it
not been terminated, would have been in the Aggregation Group. In the case of a
distribution made for a reason other than a separation from service, death, or
disability, this provision shall be applied by substituting "five-year period"
for "one-year period."
(b) Accrued Benefit: As of any Valuation Date, the present
value (computed on the basis of the Assumptions) of the cumulative accrued
benefit (excluding the portion thereof that is attributable to employee
contributions that were deductible pursuant to section 219 of the Code, to
rollover or transfer contributions made after December 31, 1983, by or on behalf
of such individual to such plan from another qualified plan sponsored by an
entity other than the Employer or a Controlled Entity, to proportional subsidies
or to ancillary benefits) of an individual under a qualified defined benefit
plan maintained by the Employer or a Controlled Entity increased by (1) the
aggregate distributions made to such individual from such plan during a
five-year period ending on the Determination Date and (2) the estimated benefit
accrued by such individual between such Valuation Date and the Determination
Date immediately following such Valuation Date. Solely for the purpose of
determining top-heavy status, the Accrued Benefit of an individual shall be
determined under (1) the method, if any, that uniformly applies for accrual
purposes under all qualified defined benefit plans maintained by the Employer
and the Controlled Entities or (2) if there is no such method, as if such
benefit accrued not more rapidly than under the slowest accrual rate permitted
under section 411(b)(1)(C) of the Code.
Effective January 1, 2002, the amount of Account Balances of a Member
as of the Determination Date shall be increased by the distributions made with
respect to the Member under the Plan and any plan in the Aggregation Group
during the one-year period ending on the Determination Date. The preceding
sentence shall also apply to distributions under a terminated plan which, had it
not been terminated, would have been in the Aggregation Group. In the case of a
distribution made for a reason other than a separation from service, death, or
disability, this provision shall be applied by substituting "five-year period"
for "one-year period."
(c) Aggregation Group: The group of qualified plans maintained
by the Employer and each Controlled Entity consisting of (1) each plan in which
a Key Employee participates and each other plan that enables a plan in which a
Key Employee participates to meet the requirements of section 401(a)(4) or 410
of the Code or (2) each plan in which a Key Employee participates, each other
plan that enables a plan in which a Key Employee participates to meet the
requirements of section 401(a)(4) or 410 of the Code and any other plan that the
Employer elects to include as a part of such group; provided, however, that the
Employer may elect to include a plan in such group only if the group will
continue to meet the requirements of sections 401(a)(4) and 410 of the Code with
such plan being taken into account.
(d) Assumptions: The interest rate and mortality assumptions
specified for top-heavy status determination purposes in any defined benefit
plan included in the Aggregation Group that includes the Plan.
(e) Determination Date: For the first Plan Year of any plan,
the last day of such Plan Year and for each subsequent Plan Year of such plan,
the last day of the preceding Plan Year.
(f) Key Employee: A "key employee" as defined in section 416(i)
of the Code and the Treasury regulations thereunder.
(g) Plan Year: With respect to any plan, the annual accounting
period used by such plan for annual reporting purposes.
(h) Remuneration: 415 Compensation as defined in Section
4.6(a)(2).
(i) Valuation Date: With respect to any Plan Year of any
defined contribution plan, the most recent date within the twelve-month period
ending on a Determination Date as of which the trust fund established under such
plan was valued and the net income (or loss) thereof allocated to Members'
accounts. With respect to any Plan Year of any defined benefit plan, the most
recent date within a twelve-month period ending on a Determination Date as of
which the plan assets were valued for purposes of computing plan costs for
purposes of the requirements imposed under section 412 of the Code.
20.3. TOP-HEAVY STATUS. The Plan shall be deemed to be top-heavy for a
Plan Year if, as of the Determination Date for such Plan Year, (1) the sum of
Account Balances of Members who are Key Employees exceeds 60% of the sum of
Account Balances of all Members unless an Aggregation Group including the Plan
is not top-heavy or (2) an Aggregation Group including the Plan is top-heavy. An
Aggregation Group shall be deemed to be top-heavy as of a Determination Date if
the sum (computed in accordance with section 416(g)(2)(B) of the Code and the
Treasury regulations promulgated thereunder) of (1) the Account Balances of Key
Employees under all defined contribution plans included in the Aggregation Group
and (2) the Accrued Benefits of Key Employees under all defined benefit plans
included in the Aggregation Group exceeds 60% of the sum of the Account Balances
and the Accrued Benefits of all individuals under such plans. Notwithstanding
the foregoing, the Account Balances and Accrued Benefits of individuals who are
not Key Employees in any Plan Year but who were Key Employees in any prior Plan
Year shall not be considered in determining the top-heavy status of the Plan for
such Plan Year. Further, notwithstanding the foregoing, the Account Balances and
Accrued Benefits of individuals who have not performed services for the Employer
or any Controlled Entity at any time during the five-year period ending on the
applicable Determination Date shall not be considered. The accrued benefits and
accounts of any individual who has not performed services for the Employer
during the one-year period ending on the Determination Date shall not be taken
into account.
20.4. TOP-HEAVY VESTING SCHEDULE. If the Plan is determined to be
top-heavy for a Plan Year, the Vested Interest in the Employer Contribution
Account of each Member who is credited with an Hour of Service during such Plan
Year shall be determined in accordance with the following schedule:
YEARS OF VESTING SERVICE VESTED INTEREST
Less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 years or more 100%
20.5. TOP-HEAVY CONTRIBUTIONS.
(a) If the Plan is determined to be top-heavy for a Plan Year,
the Employer shall contribute to the Plan for such Plan Year on behalf of each
Member who is not a Key Employee and who has not terminated his employment as of
the last day of such Plan Year an amount equal to:
(i) The lesser of (A) 3% of such Member's Remuneration
for such Plan Year or (B) a percent of such Member's Remuneration for such Plan
Year equal to the greatest percent determined by dividing for each Key Employee
the amounts allocated to such Key Employee's Cash or Deferred Account and
Employer Contribution Account for such Plan Year by such Key Employee's
Remuneration; reduced by
(ii) The amount of Employer Discretionary Contributions
and forfeitures allocated to such Member's Accounts for such Plan Year.
(b) The minimum contribution required to be made for a Plan
Year pursuant to this Section for a Member employed on the last day of such Plan
Year shall be made regardless of whether such Member is otherwise ineligible to
receive an allocation of the Employer's contributions for such Plan Year.
Notwithstanding the foregoing, if the Plan is deemed to be top-heavy for a Plan
Year, the Employer's contribution for such Plan Year pursuant to this Paragraph
shall be increased by substituting "4%" in lieu of "3%" in Clause (1) hereof to
the extent that the Directors determine to so increase such contribution to
comply with the provisions of section 416(h)(2) of the Code.
(c) Notwithstanding the foregoing, no contribution shall be
made pursuant to this Section for a Plan Year with respect to a Member who is a
Member in another defined contribution plan sponsored by the Employer or a
Controlled Entity if such Member receives under such other defined contribution
plan (for the plan year of such plan ending with or within the Plan Year of the
Plan) a contribution which is equal to or greater than the minimum contribution
required by section 416(c)(2) of the Code. (d) Notwithstanding the foregoing, no
contribution shall be made pursuant to this Section for a Plan Year with respect
to a Member who is a Member in a defined benefit plan sponsored by the Employer
or a Controlled Entity if such Member accrues under such defined benefit plan
(for the plan year of such plan ending with or within the Plan Year of this
Plan) a benefit that is at least equal to the benefit described in section
416(c)(1) of the Code. If the preceding sentence is not applicable, the
requirements of this Section shall be met by providing a minimum benefit under
such defined benefit plan which, when considered with the benefit provided under
the Plan as an offset, is at least equal to the benefit described in section
416(c)(1) of the Code.
(e) Notwithstanding the foregoing, effective for limitation
years that begin on or after January 1, 2002, Employer Matching Contributions
shall be taken into account for purposes of satisfying the minimum contribution
requirements of section 416(c)(2) of the Code and the Plan. The preceding
sentence shall apply with respect to Employer Matching Contributions under the
Plan or, if the Plan provides that the minimum contribution requirement shall be
met in another plan, such other plan. Employer Matching Contributions that are
used to satisfy the minimum contribution requirements shall be treated as
matching contributions for purposes of the actual contribution percentage test
and other requirements of section 401(m) of the Code.
20.6. TERMINATION OF TOP-HEAVY STATUS. If the Plan has been deemed to
be top-heavy for one or more Plan Years and thereafter ceases to be top-heavy,
the provisions of this Article shall cease to apply to the Plan effective as of
the Determination Date on which it is determined no longer to be top-heavy.
Notwithstanding the foregoing, the Vested Interest of each Member as of such
Determination Date shall not be reduced and, with respect to each Member who has
three or more years of Vesting Service on such Determination Date, the Vested
Interest of each such Member shall continue to be determined in accordance with
the schedule set forth in Section 20.4.
20.7. EFFECT OF ARTICLE. Notwithstanding anything contained herein to
the contrary, the provisions of this Article shall automatically become
inoperative and of no effect to the extent not required by the Code or the Act.
APPENDIX A
SPECIAL LIMITATIONS UNDER THE PUERTO RICO INTERNAL REVENUE CODE OF 1994
1. In addition to the limitations otherwise provided in the Plan, the
limitations provided in this Appendix A, which are intended to comply with the
Puerto Rico Internal Revenue Code of 1994, as amended, including applicable
regulatory authority thereunder (the "Puerto Rico Code"), shall apply to Members
who are permanent residents of Puerto Rico employed by the Employer.
2. In restriction of the Members' Cash or Deferred Contribution elections
provided in Section 3.1, the Cash or Deferred Contributions on behalf of any
Member for any calendar year shall not exceed the lesser of: (i) the dollar
limitation provided in section 1165(e)(7) of the Puerto Rico Code (which is
$8,000 as of the Effective Date) or (ii) 10% of the Member's Compensation for
that year, reduced by the amount a Member contributes for the calendar year to a
Puerto Rico Individual Retirement Account (IRA). The provisions of Sections
3.7(a) and 3.1(f) shall apply to the Cash or Deferred Contributions by a Member
in excess of the foregoing limitation.
3. In further restriction of the Members' Cash or Deferred Contribution
elections provided in Section 3.1, it is specifically provided that one of the
"actual deferral percentage" tests set forth in section 1165(e)(3) of the Puerto
Rico Code must be met in each Plan Year. The provisions of Sections 3.7(b) and
3.1(f) shall apply to the Cash or Deferred Contribution elections of Members who
are "highly compensated employees," within the meaning of section
1165(e)(3)(E)(iii) of the Puerto Rico Code, respecting the foregoing limitation.
4. Notwithstanding anything to the contrary in Section 11.1(d) of the Plan, any
Member to which this Appendix A applies, will continue to be subject to the
12-month suspension rule on and after January 1, 2002, and the offset to the
amount permitted under 402(g) of the Code in the calendar year following the
year in which the hardship withdrawal was made as previously in effect under the
Code prior to January 1, 2002.
APPENDIX B
SPECIAL PROVISIONS WITH RESPECT TO THE MERGER OF
THE DIGITAL EQUIPMENT CORPORATION SAVINGS AND INVESTMENT PLAN
Notwithstanding anything to the contrary contained herein, the following
following shall apply with respect to those Members who were participants of the
Digital Equipment Corporation Savings and Investment Plan:
1. DEFINITIONS. Capitalized terms in this Appendix B shall have the
same meaning as in the Plan unless a different meaning is set forth below or
unless their context clearly indicates to the contrary.
(a) DIGITAL. Digital Equipment Corporation.
(b) DIGITAL MEMBER. Each employee of Digital who had an
account balance under the Digital Plan as of the Effective Date and who became a
Member of the Plan as of such date.
(c) DIGITAL PLAN. The Digital Equipment Corporation Savings and
Investment Plan, which was merged into and survived by the Plan as of the
Effective Date.
(d) EFFECTIVE DATE. December 31, 1999.
2. Notwithstanding any provision of the Plan to the contrary, each
Digital Member who is 100% vested in his Company Contribution Account under the
Digital Plan as of the Effective Date shall have a 100% vested and
nonforfeitable interest to contributions allocated to his Employer Contribution
Account under the Plan (and earnings thereon) on and after the Effective Date.
3. Notwithstanding Section 3.2 of the Plan, a Digital Member who was
not an Enhanced Match Participant under the terms of the Digital Plan shall
receive Employer Matching Contributions under the Plan in accordance with the
following:
(a) For each payroll period, the Employer shall contribute to
the Trust an amount that equals the lesser of (i) 33-1/3% of the Cash or
Deferred Contributions that were made pursuant to Section 3.1 of the Plan on
behalf of such Member during such payroll period or (ii) 2% of such Member's
Compensation from the Employer for such payroll period.
(b) Further, for each Plan Year, the Employer shall contribute
to the Trust, as Employer Matching Contributions, on behalf of each Digital
Member who is an Employee on the last day of such Plan Year (or whose death or
termination of employment with the Employer and all Controlled Entities on or
after the date upon which such Member both attains age 55 and completes 10 years
of Vesting Service occurs prior to such day) an amount which, when added to the
Employer Matching Contributions made pursuant to the preceding sentence for such
Plan Year, equals the lesser of (i) 33-1/3% of such Member's Cash or Deferred
Contributions for the Plan Year or (ii) 2% of such Member's Compensation from
the Employer for the Plan Year.
(c) For each Plan Year, the Employer may contribute to the
Trust, out of its current or accumulated earnings and profits, as an additional
Employer Matching Contribution, in an amount as determined in its discretion on
behalf of each of the Members who made Cash or Deferred Contributions during
such Plan Year.
(d) Employer Matching Contributions may be made in cash or
Compaq Stock, as determined by and in the discretion of the Employer.
(e) For purposes of Article III of the Plan, the defined term
"Compensation" shall have the same meaning as is assigned to such term under the
Digital Plan.
4. From and after the Effective Date, each Digital Member's Accounts
under the Plan shall be governed by the provisions of Section 8.7 of the Digital
Plan with respect to withdrawals and distributions of Compaq Stock.
5. From and after the Effective Date, in addition to making
withdrawals from the Plan in accordance with Article XI of the Plan, each
Digital Member shall also be eligible to make withdrawals pursuant to Section
6.3 of the Digital Plan.
6. From and after the Effective Date, in addition to the timing and
forms of benefit payment available under Article X of the Plan, each Digital
Member who so qualifies under the Digital Plan shall be eligible to receive
partial lump sum payments in accordance with the provisions of Section 8.1(b)
thereof.
APPENDIX C
SPECIAL PROVISIONS WITH RESPECT TO THE MERGER OF THE
TANDEM COMPUTERS INCORPORATED 401(K) INVESTMENT PLAN
Notwithstanding anything to the contrary contained herein, the
following shall apply with respect to those Members who were participants of the
Tandem Computers Incorporated 401(k) Investment Plan:
1. The Tandem Computers Incorporated 401(k) Investment Plan (the
"Tandem Plan") is hereby merged with and into the Plan effective as of 11:59
p.m. on December 31, 1998 (the "Plan Merger Date"), and all provisions of the
Plan shall replace and supersede all provisions of the Tandem Plan. Each
participant who has an account balance under the Tandem Plan as of the Plan
Merger Date shall become a Member of the Plan ("Tandem Member") as of such date.
2. The assets of the Tandem Plan shall become assets of the Plan and
held as part of the trust established under the Plan as of the Plan Merger Date,
and such assets shall be transferred by the trustee of the Tandem Plan to the
Trustee of the Plan as soon as administratively feasible after the Plan Merger
Date (the "Asset Transfer Date"), adjusted for any earnings or losses from the
Plan Merger Date through the Asset Transfer Date. All assets shall be
transferred in cash, except that loans from the Tandem Plan to Tandem Members
that are outstanding as of the Asset Transfer Date ("Plan Loans") shall be
transferred in kind. The transferred assets (Other than Plan Loans) shall be
invested in accordance with the investment elections of the Tandem Members as in
effect on the Plan Merger Date, until changed in accordance with the investment
election provisions of the Plan.
3. For purposes of eligibility and vesting under the Plan, each
Tandem Member shall be credited with service equal to the service credited to
such participant pursuant to the terms of the Tandem Plan as of the Plan Merger
Date.
4. The amounts held in each Tandem Member's accounts under the Tandem
Plan shall be credited to such Member's Accounts under the Plan as follows:
(a) Amounts credited to a Tandem Member's Deferred Account under
the Tandem Plan shall be credited to such Member's Cash or Deferred Account
under the Plan.
(b) Amounts credited to a Tandem Member's Rollover Account under
the Tandem Plan shall be credited to such Member's Rollover Contribution Account
under the Plan.
(c) Amounts credited to a Tandem Member's Company Account shall
be 100% vested and shall be credited to such Member's Employer Contribution
Account under the Plan.
5. The beneficiary designation of a Tandem Member in effect under the
Tandem Plan on the Plan Merger Date shall remain in effect under the Plan unless
and until changed by such Member in accordance with the terms of the Plan.
6. Allocations of contributions, forfeitures, and earnings for all
periods prior to January 1, 1999 shall be made separately under the Tandem Plan
and the Plan based upon the terms and provisions of the respective plans.
7. Immediately after the Plan Merger Date, each Tandem Member shall,
in the event that the Plan is terminated, be entitled to a benefit which is
equal to or greater than the benefit to which such Member would have been
entitled under the Tandem Plan immediately prior to such date if the Tandem Plan
had then been terminated. The provisions of the preceding sentence shall be
construed under the applicable federal regulations pursuant to section 208 of
the Employee Retirement Income Security Act of 1974, as amended, and section
414(l) of the Internal Revenue Code of 1986, as amended (the "Code").
8. With respect to Tandem Members, the Plan shall preserve all
optional forms of benefit and rights under the Tandem Plan required to be
preserved pursuant to section 411(d)(6) of the Code and any Treasury regulations
issued thereunder.
9. Each capitalized term used in this instrument shall have the
meaning ascribed to such term under the Plan or the Tandem Plan, as applicable,
unless otherwise defined herein.
10. Any provision of the Plan or the Tandem Plan which is inconsistent
with any provision of this instrument shall be considered to be and hereby is
amended by this instrument
APPENDIX D
SPECIAL PROVISIONS WITH RESPECT TO THE MERGER OF THE
MICROCOM, INC. EMPLOYEES' 401(K) PLAN
Notwithstanding anything to the contrary contained herein, the following
shall apply with respect to those Members who were participants of the Microcom,
Inc. Employees' 401(k) Plan:
1. The Microcom, Inc. Employees' 401(k) Plan (the "Microcom Plan") is
hereby merged with and into the Plan effective as of 11:59 p.m. on December 31,
1998 (the "Plan Merger Date"), and all provisions of the Plan shall replace and
supersede all provisions of the Microcom Plan. Each participant who has an
account balance under the Microcom Plan as of the Plan Merger Date shall become
a Member of the Plan ("Microcom Member") as of such date.
2. The assets of the Microcom Plan shall become assets of the Plan and
held as part of the trust established under the Plan as of the Plan Merger Date,
and such assets shall be transferred by the trustee of the Microcom Plan to the
Trustee of the Plan as soon as administratively feasible after the Plan Merger
Date (the "Asset Transfer Date"), adjusted for any earnings or losses from the
Plan Merger Date through the Asset Transfer Date. All assets shall be
transferred in cash, except that loans from the Microcom Plan to Microcom
Members that are outstanding as of the Asset Transfer Date ("Plan Loans") shall
be transferred in kind. The transferred assets (other than Plan Loans) shall be
invested in accordance with the investment elections of the Microcom Members as
in effect on the Plan Merger Date, until changed in accordance with the
investment election provisions of the Plan.
3. For purposes of eligibility and vesting under the Plan, each Microcom
Member shall be credited with service equal to the service credited to such
participant pursuant to the terms of the Microcom Plan as of the Plan Merger
Date.
4. The amounts held in each Microcom Member's account under the Microcom
Plan shall be credited to such Member's Accounts under the Plan as follows:
(a) Amounts credited to a Microcom Member's Account under the
Microcom Plan which are attributable to elective deferrals (including earnings
thereon) shall be credited to such Member's Cash or Deferred Account under the
Plan.
(b) Amounts credited to a Microcom Member's Account under the
Microcom Plan which are attributable to rollover contributions (including
earnings thereon) shall be credited to such Member's Rollover Contribution
Account under the Plan.
(c) Amounts credited to a Microcom Member's Account under the
Microcom Plan which are attributable to employer basic matching contributions
shall be credited to such Member's Employer Contribution Account under the Plan.
5. The beneficiary designation of a Microcom Member in effect under the
Microcom Plan on the Plan Merger Date shall remain in effect under the Plan
unless and until changed by such Member in accordance with the terms of the
Plan.
6. Allocations of contributions, forfeitures, and earnings for all
periods prior to January 1, 1999 shall be made separately under the Microcom
Plan and the Plan based upon the terms and provisions of the respective plans.
7. Immediately after the Plan Merger Date, each Microcom Member shall,
in the event that the Plan is terminated, be entitled to a benefit which is
equal to or greater than the benefit to which such Member would have been
entitled under the Microcom Plan immediately prior to such date if the Microcom
Plan had then been terminated. The provisions of the preceding sentence shall be
construed under the applicable federal regulations pursuant to section 208 of
the Employee Retirement Income Security Act of 1974, as amended, and section
414(l) of the Internal Revenue Code of 1986, as amended (the "Code").
8. With respect to Microcom Members, the Plan shall preserve all
optional forms of benefit and rights under the Microcom Plan required to be
preserved pursuant to section 411(d)(6) of the Code and any Treasury regulations
issued thereunder.
9. Each capitalized term used in this instrument shall have the meaning
ascribed to such term under the Plan or the Microcom Plan, as applicable, unless
otherwise defined herein.
10. Any provision of the Plan or the Microcom Plan which is inconsistent
with any provision of this instrument shall be considered to be and hereby is
amended by this instrument.
EXHIBIT 4.2
COMPAQ COMPUTER CORPORATION
DEFERRED COMPENSATION AND SUPPLEMENTAL SAVINGS PLAN
ARTICLE I. ESTABLISHMENT AND PURPOSE
------------------------------------
1.1. ESTABLISHMENT. Effective as of January 1, 1985, COMPAQ COMPUTER
CORPORATION (the "Company") established a deferred compensation plan for
eligible officers The plan, which was revised in November 1987, was known as the
"Compaq Computer Corporation Deferred Compensation Plan." Effective as of April
1, 1985, the Company also established the "Compaq Computer Corporation Excess
and Supplemental Savings Plan" in order to provide additional benefits to
certain of its officers. As of July 23, 1992, the Company combined the
aforementioned plans, amending and restating them as the COMPAQ COMPUTER
CORPORATION DEFERRED COMPENSATION AND SUPPLEMENTAL SAVINGS PLAN (the "Plan").
The Company thereafter enhanced and preserved the benefits offered by providing
that Plan assets be held and invested by the Trustee (to be appointed by the
Company), pursuant to the terms of the Compaq Computer Corporation Deferred
Compensation and Supplemental Savings Trust dated December 17, 1993 (the
"Trust"). The Trustee invests the Plan assets with the goal of achieving the
hypothetical investment returns credited to Plan Participants. Payments to the
Participants are made first from the Trust and second by the Company to the
extent that the Trust assets are not sufficient. The effective date of that
amendment and restatement was December 17, 1993. Effective January 1, 1995, the
Plan is being restated to further enhance the Plan and to improve its
administration. The rights of any Participants in the Plan and the rights of any
individual who is an "Eligible Employee" (as defined herein) on or after such
effective date shall be governed by the Plan as so amended and restated.
1.2. PURPOSE. The objective and purpose of the Plan is to attract
competent officers and key executives by offering flexible compensation
opportunities to officers and key executives of the Company, and to provide them
an opportunity to build an estate or supplement income for use after retirement.
The Plan is also intended to compensate the Participant for amounts that cannot
be credited to the Participant's accounts under the Investment Plan (as
hereinafter defined) by reason of the provisions of Sections 401(a)(17), 401(k),
402(g), and 415 of the Code and the corresponding provisions of the Investment
Plan or by reason of the Participant's election to participate hereunder.
1.3. APPLICATION OF PLAN. The Plan shall be applicable only with
respect to the eligible corporate officers and key executives of the Company.
This Plan is intended to be an unfunded plan maintained by the Company primarily
to provide deferred compensation for a select group of management and highly
compensated employees. As such the Plan shall be exempt from the participation,
vesting and funding requirements of Parts 2 and 3 of Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and shall be
subject to the limited reporting and disclosure requirements (under Part 1 of
Title I of ERISA) applicable to such plans.
ARTICLE II. DEFINITIONS AND CONSTRUCTION
----------------------------------------
2.1. DEFINITIONS. Whenever used in the Plan, the following terms shall
have the meaning set forth below unless otherwise expressly provided:
(a) "ACCOUNTS" means the recordkeeping accounts which are
maintained under the name of a Participant to account for any Salary Deferral
Amounts, Bonus Deferral Amounts, Supplemental Amounts, and Credited Income
thereon, which may be credited from time to time.
(i) SALARY DEFERRAL ACCOUNT-a separate subaccount maintained
to account for a Participant's Salary Deferral amount plus Credited Income
thereon.
(ii) BONUS DEFERRAL ACCOUNT-a separate subaccount maintained to
account for a Participant's Bonus Deferral Amount plus Credited Income thereon.
(iii) SUPPLEMENTAL ACCOUNT-a separate subaccount maintained to
account for a Participant's Supplemental Amount plus Credited Income thereon.
(b) "AFFILIATE" means an entity which is a member of a controlled
group of corporations (as defined in Section 414(b) of the Code) which includes
the Company.
(c) "ANNUAL ADDITION" means an "annual addition" within the
meaning of Section 415(c)(2) of the Code and as further defined in the
Investment Plan.
(d) "BENEFICIARY" means the person, persons or trust designated by
a Participant as provided in Section 11.1, or designated as a beneficiary under
the terms of Section 11.1.
(e) "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
(f) "BONUS" means any management incentive or other bonus award
that an Eligible Employee may become eligible to receive.
(g) "BONUS DEFERRAL AMOUNT" means that portion of an Eligible
Employee's Bonus which he has elected to defer, as provide in Section 5.3.
(h) "CHANGE OF CONTROL" shall be deemed to have occurred if: (i)
any "person" as such term is used in Sections 13(d) and 14(d) of the Exchange
Act (other than the Company, any trustee or other fiduciary holding securities
under any employee benefit plan of the Company, or any company owned, directly
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; (ii) during
any period of two consecutive years individuals who at the beginning of such
period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction describe in clause (i), (iii), or (iv) of this Section
2.1(h)) whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the two-year
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the Board of
Directors; (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no person acquires more than 30% of the combined voting power of the
Company's then outstanding securities shall not constitute a Change in Control
of the Company; or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
(i) "CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
(j) "COMMITTEE" means the committee of persons appointed by the
Board of Directors of the Company, as provided in Section 8.1. The Committee
shall serve as plan administrator within the meaning of ERISA.
(k) "COMPANY" means COMPAQ COMPUTER CORPORATION.
(l) "CREDITED INCOME" means the assumed earnings credited to
Participant's Account, as provided in Section 7.2.
(m) "DEFERRAL AMOUNTS" means Salary Deferral Amounts and/or Bonus
Deferral Amounts, as more fully described in Article V.
(n) "DEFERRAL PAYMENT DATE" means the payment date, as specified
by a Participant on his Salary Deferral Amount or Bonus Deferral Amount election
form, on which he elects to have his applicable amount paid or commence being
paid.
(o) "ELIGIBLE EMPLOYEE" means a key employee of the Company or an
Affiliate who has a grade 110 or above (or its equivalent) and who is a United
States resident paid on a United State payroll.
(p) "INVESTMENT OPTIONS" means the optional forms of determining
Credited Income with respect to Participants' Accounts, which the Committee, in
its discretion, may elect to establish pursuant to Section 7.2.
(q) "INVESTMENT PLAN" means the Compaq Computer Corporation
Investment Plan, as it may be amended from time to time.
(r) "PARTICIPANT" means an Eligible Employee who has elected,
under the terms and conditions of the Plan, to defer payment of all or a portion
of his bonus or salary, and/or who is credited with a Supplemental Savings
Amount. A Participant who is not currently an Eligible Employee but whose
Account under this Plan is credited with a balance shall be referred to as an
"Inactive Participant." The term "Participant" shall include Eligible Employees,
former Eligible Employees, and employees other than Eligible Employees, so long
as any such individual has a balance credited to his Account.
(s) "PLAN" means the COMPAQ COMPUTER CORPORATION DEFERRED
COMPENSATION AND SUPPLEMENTAL SAVINGS PLAN as set forth herein, and as it may be
amended from time to time.
(t) "PLAN YEAR" means the 12-month period beginning each January 1
and ending December 31 of such year.
(u) "PLAN YEAR QUARTER" means the three (3) month periods in each
Plan Year ending on March 31, June 30, September 30, and December 31,
respectively.
(v) "SALARY DEFERRAL AMOUNT" means that portion of an Eligible
Employee's Base Salary that he has elected to defer, as provided in Section 5.2.
(w) "SUPPLEMENTAL AMOUNT" means the amount creditable to the
Supplemental Account of a Participant pursuant to Section 4.2.
2.2. GENDER AND NUMBER; SEVERABILITY. Except when otherwise indicated
by the context, any masculine terminology when used in the Plan shall also
include the feminine gender, and the definition of any term in the singular
shall also include the plural. In the event any provision of the Plan shall be
held invalid or illegal for any reason, any illegality or invalidity shall not
affect the remaining parts of the Plan, but the Plan shall be construed and
enforced as if the illegal or invalid provision had never been inserted, and the
Company shall have the privilege and opportunity to correct and remedy such
questions of illegality or invalidity by amendment as provided in the Plan.
ARTICLE III. PARTICIPATION
--------------------------
3.1. ELIGIBILITY. The Committee shall provide each Eligible Employee
with notice of his status as an Eligible Employee, so as to permit such Eligible
Employee the opportunity to make the elections provided for under Article V.
Such notice may be given at such time and in such manner as the Committee may
determine from time to time, and the Committee shall advise the Eligible
Employee of the time and manner for filing his election for which he qualifies.
Each Eligible Employee shall be eligible to participate in all features of the
Plan for which he qualifies. In addition, all Eligible Employees who are subject
to the contribution criteria set forth in Section 4.2 shall be eligible to
receive credit for a Supplemental Amount for Plan Years in which they are
subject to such criteria.
3.2. PARTICIPATION.
(a) IN GENERAL. An Eligible Employee shall become a Participant in
this Plan as of the first day of the calendar year immediately following the
calendar year during which: (i) the Committee receives his deferral election
pursuant to Article V or (ii) the Committee credits the Participant with a
Supplemental Amount. Individuals becoming Eligible Employees on or after the
first day of any Plan Year may not become Participants and may not make deferral
elections except with respect to amounts otherwise payable in the succeeding
calendar year.
(b) CESSATION OF STATUS AS ELIGIBLE EMPLOYEE. If an Eligible
Employee with a Salary Deferral Amount and/or Bonus Deferral Amount election in
effect for a particular Plan Year ceases to be an Eligible Employee during such
Plan Year, his election with respect to a Salary Deferral Amount shall terminate
effective as of the close of the payroll period during which he ceases to be an
Eligible Employee. Such Employee's election with respect to his Bonus Deferral
Amount shall terminate as of the first day on which he no longer qualifies as an
Eligible Employee. The provisions in the preceding two sentences relate only to
the discontinuance of the Deferral Amount elections for the remainder of the
Plan Year in which the Employee terminates employment or otherwise ceases to be
an Eligible Employee. Amounts credited to such person's Accounts under any such
election prior to its discontinuance shall be payable pursuant to the terms of
such election.
ARTICLE IV. SUPPLEMENTAL BENEFITS
---------------------------------
4.1. SUPPLEMENTAL AMOUNT. Each Eligible Employee and Participant shall
be credited with a Supplemental Amount as provided in Section 4.2.
4.2. DETERMINATION OF SUPPLEMENTAL AMOUNT. Each Eligible Employee shall
be credited with a Supplemental Amount under the Plan for the applicable Plan
Year equal to the Eligible Employee's Salary Deferral Amounts, but in no event
in an amount greater than six percent (6%) of such Eligible Employee's
Considered Compensation as defined in the Investment Plan (calculated without
regard to Code Section 401(a)(17)) less an amount equal to such Eligible
Employee's actual or accrued Employer Matching Contribution as defined in the
Investment Plan; provided, however, that no Supplemental Amount shall be
credited to any employee of the Company or an Affiliate with respect to whom the
Company or an Affiliate funds or has promised to pay (whether by individual
contract or pursuant to or part of a plan or program that provides) deferred
compensation or pension benefits to such person other than pursuant to the
Investment Plan or this Plan.
ARTICLE V. DEFERRAL AMOUNTS; DEFERRAL ELECTIONS
-----------------------------------------------
5.1. TYPES OF DEFERRAL AMOUNTS. There are two types of Deferral Amounts
that may be applicable to a Participant under the Plan: Salary Deferral Amounts
as described in Section 5.2, and Bonus Deferral Amounts as described in Section
5.3.
5.2. SALARY DEFERRAL ELECTION.
(a) SALARY DEFERRAL AMOUNT. An Eligible Employee may elect to defer
all or any portion of 50% of his Base Salary (as hereinafter defined) which he
may be entitled to receive from the Company less any such Base Salary
contributed to the Investment Plan for the Plan Year. For purposes of this
Section 5.2, Base Salary is a Participant"s regular gross salary that is subject
to Social Security Tax pursuant to Code Section 3100 et. seq. Notwithstanding
anything contained herein to the contrary, if a deferral hereunder would
otherwise result in the Participant's Base Salary not equaling or exceeding the
Social Security Contribution and Benefit Base as defined in Section 230 of the
Social Security Act, then only the regular gross salary exceeding the Social
Security Contribution and Benefit Base as defined in Section 230 of the Social
Security Act shall be deferred pursuant to this Section. The amount to be so
deferred shall be specified in such manner as shall be determined by the
Committee.
(b) ELECTION OF SALARY DEFERRAL AMOUNT. To make an election of a
Salary Deferral Amount for any calendar year, the Eligible Employee must file a
deferral election form with the Committee in accord with such rules as are set
by the Committee, but in no event later than the last business day of the
calendar year preceding the Plan Year for which the election is made. Each such
election shall be made with respect to a specific calendar year and all payroll
periods applicable to the Eligible Employee which begin within such calendar
year. An election filed for a calendar year shall be applicable only for such
calendar year.
(c) TREATMENT OF NEW ELIGIBLE EMPLOYEES. If an individual first
becomes an Eligible Employee on or after the first day of a calendar year, such
Eligible Employee may not make a Salary Deferral Amount election for the
remaining payroll periods of such calendar year.
5.3. BONUS DEFERRAL ELECTION.
(a) BONUS DEFERRAL AMOUNT. An Eligible Employee may elect to defer
all or any portion of any Bonus he may be awarded by the Company. The amount to
be so deferred shall be specified in such manner as shall be determined by the
Committee. However, in no event may an Eligible Employee elect to defer any
portion of any Bonus unless the aggregate payments by the Company to him after
such deferral during the calendar year will equal or exceed the Social Security
Contribution and Benefit Base as defined in Section 230 of the Social Security
Act.
(b) ELECTION OF BONUS DEFERRAL AMOUNT. To make an election of a
Bonus Deferral Amount, the Eligible Employee must file a deferral election form
with the Committee. Each such election shall be made with respect to a calendar
year and with respect to some or all Bonus awards (which may be in varying
percentages) made by the Company within such calendar year. To make an effective
Bonus Deferral Amount election for a calendar year, the Eligible Employee must
file the appropriate deferral election form with the Committee in accord with
such rules as are set by the Committee, but in no event later than the last
business day of the calendar year preceding the Plan Year for which the election
is made.
(c) TREATMENT OF NEW ELIGIBLE EMPLOYEE. If an individual first
becomes an Eligible Employee on or after the first day of a calendar year, such
Eligible Employee may not make a Bonus Deferral Amount election for such
calendar year.
5.4. DEFERRAL ELECTIONS. All Salary Deferral Amount and Bonus Deferral
Amount elections, as provided under Sections 5.2 and 5.3 respectively, shall be
made on such deferral election forms as are prescribed by the Committee. Each
election form shall specify the nature of the Deferral Amount, the form of
payment which is to be applicable with respect to such designated Deferral
Amount, as provided in Article VI, the Beneficiary or Beneficiaries to receive
any death benefit applicable to the subject amount, as provided in Sections 6.5
and 11.1 and the Deferral Payment Date on which payment is to commence with
respect to such Deferral Amount. Such Deferral Payment Date must be at least
three (3) years after the date of the filing of the election form but in all
events shall commence no later than the January 1, April 1, July 1 or October 1
following the fifth anniversary of the employee's termination of employment with
the Company or related entities. Except as otherwise provided in this Article V,
all such Salary Deferral Amount and Bonus Deferral Amount elections shall become
irrevocable for the subject calendar year once the calendar year has commenced.
An Eligible Employee may change or revoke his Salary Deferral Election under
Section 5.2 and may change or revoke his Bonus Deferral election under Section
5.3 pursuant to such rules as are set by the Committee but in no event may any
such election be amended or revoked after the last business day of the calendar
year preceding the Plan Year for which the election is made. Only Eligible
Employees may file deferral election forms as provided for in this Section 5.4
and Sections 5.2 and 5.3, and Inactive Participants are not eligible to file
such forms.
ARTICLE VI. PAYMENT OF BENEFITS
-------------------------------
6.1. TIME OF PAYMENT OF DEFERRAL AMOUNTS. On each deferral election
form filed by a Participant, such Participant shall specify the Deferral Payment
Date on which benefit payments under the Plan are to be made or commence with
respect to the Deferral Amount covered by such deferral election. In making such
designation, the Participant may designate any January 1, April 1, July 1, or
October 1 date of a specified year after the Plan Year as a Deferral Payment
Date. Additionally, on such form the Participant may elect that in all events
payments shall commence no later than on the first day of the calendar quarter
next following the date on which the Eligible Employee terminates employment
with the Company and Affiliates. Where an Eligible Employee has made a
designation to receive an amount in annual installments, as permitted under
Section 6.2, his "Deferral Payment Date" shall be the date on which the first
installment payment is to be paid and on the anniversary thereof in each
subsequent years. If for any reason the Eligible Employee fails to make an
effective Deferral Payment Date designation, his Deferral Payment Date for the
amount that is the subject of the deferral election shall be the first day of
the calendar quarter next following the date on which the Eligible Employee
terminates employment with the Company and related entities. Except as otherwise
provided in this Article VI, all benefit payments under the Plan with respect to
Deferral Amounts and Bonus Deferral Amounts shall be made to the Participant on
the Deferral Payment Dates as specified in his applicable deferral election
forms, as provided in the next preceding sentence (if applicable). Payments with
respect to Supplemental Amounts shall be made on the same dates and in the same
manner as the Salary Deferral Amounts for the same subject calendar year.
6.2. FORMS OF PAYMENT OF DEFERRAL AMOUNTS.
(a) IN GENERAL. On each deferral election form filed by a
Participant, such Participant shall specify the form of payment for the amounts
attributable to the Deferral Amount covered by such deferral election. In making
such designation, the Participant may designate payment in the form of a single
lump sum payment or payment in the form of annual installment payments payable
for not less than two (2) but no more than fifteen (15) years. Annual
installment payments will be paid once a year beginning on the date specified on
the applicable deferral election form, as provided in Section 6.1. If for any
reason the Participant fails to make an effective designation under this Section
6.2, payment of the amount that is the subject of the deferral election shall be
made in the form of a single lump sum payment on the date as specified in
Section 6.1. Except as otherwise provided in this Article VI, all benefit
payments under the Plan with respect to a Participant's Salary Deferral Amounts
or Bonus Deferral Amounts shall be made to the Participant in the payment forms
as specified on his applicable deferral election forms.
(b) PAYMENT OF DEFERRAL AMOUNTS FOLLOWING TERMINATION OF
EMPLOYMENT. Upon a Participant's termination of employment prior to attainment
of age 55, the Deferral Amounts shall be paid to such Participant as previously
designated; provided, however, that all lump sum or installment payments
scheduled for payment after the fifth anniversary of the Participant's
termination of employment shall be paid on the first day of the first calendar
quarter next following such fifth anniversary.
6.3. DISTRIBUTION OF ACCOUNTS FOR NEED. Notwithstanding the provisions
of Sections 6.1 and 6.2, a Participant shall receive a distribution of his
Accounts under the Plan in the event of a financial hardship that is due to an
unanticipated emergency beyond the control of the Participant or the
Participant's dependents or family. The Committee shall determine such financial
hardship in its sole and complete discretion, and any such distribution shall be
limited to the amount necessary to meet the emergency.
6.4. DEATH BENEFITS. If a Participant shall die with a balance credited
to his Accounts, such balance shall be paid to his applicable designated
Beneficiary or Beneficiaries as provided herein. With respect to all amounts
that have not been paid as of the Participant's death, the then-current balance
of each such amount payable to a designated Beneficiary shall be paid to the
designated Beneficiary under the form of payment as elected for such
Beneficiary, as provided for in Section 11.1. In the absence of a designated
form of payment to a Beneficiary, the Beneficiary shall be paid in ten (10)
annual installments, with the first of such annual installment payments being
paid to the designated Beneficiary on the first day of the first calendar
quarter next following the death of the Participant, and subsequent installment
payments being paid on the anniversaries of such date thereafter. Each
Beneficiary of a deceased Participant who is receiving the death benefit
payments provided for in this Section 6.4 shall have the amounts to be paid to
the Beneficiary credited to a subaccount in the name of the Beneficiary under
the deceased Participant's Account, and such subaccount shall be adjusted from
time to time as provided in Section 7.2, including, without limitation,
adjustments for the crediting of Credited Income thereto. The crediting of such
subaccount shall be for bookkeeping purposes and shall not represent a transfer
or segregation of assets for the benefit of such Beneficiary, but the
Beneficiary may select such Investment Options pursuant to Section 7.2 as if the
Beneficiary were a Participant.
6.5. CONSOLIDATION OF PAYMENTS. In any case where a Participant is
receiving more than one benefit payment under Section 6.2 and 6.3 during a Plan
Year, the Committee may, in its sole discretion, elect at any time during such
Plan Year to consolidate such payments into a lesser number of payments payable
on such Plan Year Quarter date as the Committee determines.
6.6. WITHHOLDING OF TAXES. The Company shall have the right to deduct
from all payments made under the Plan any federal, state or local taxes required
by law to be withheld with respect to such payments. The Company shall reduce
Bonus Deferral Amounts to make payments of any Social Security taxes owed by a
Participant attributable to such Bonus Deferral Amounts, provided the
Participant has not elected prior to the Plan Year with respect to which such
taxes are payable to make payment of such amounts, whether directly or through
payroll withholding.
6.7. MINIMUM DISTRIBUTIONS. If a Participant's employment with the
Company has terminated, and if such Participant has elected (or is entitled) to
receive distributions from the Plan in an amount (or which is reasonably
expected to be an amount) of less than $10,000 annually, the Committee in its
sole and exclusive discretion may pay to such Participant, in lieu of such
annual amount, the total vested balance in such Participant's Account
immediately upon termination. In the alternative, the Committee in its
discretion may increase such Participant's annual payments to $10,000 and reduce
the total number of payments to be paid in proportion to such increased payment,
but may not otherwise accelerate the time of the payments.
6.8. METHOD OF CALCULATION OF PAYMENTS. For purposes of computing the
amount of any distribution to a Participant or a Beneficiary, the balance in
such Participant's or Beneficiary's Account (as of the date preceding the
payment date) shall be multiplied by a fraction, the numerator of which equals
one and the denominator of which equals the number of years that such
Participant or Beneficiary has elected to defer payments under this Article less
the number of payments such Participant or Beneficiary has previously received
pursuant to this Section.
ARTICLE VII. ACCOUNTS; CREDITED INCOME
--------------------------------------
7.1. PARTICIPANT ACCOUNTS. The Committee shall maintain, or cause to be
maintained, bookkeeping Accounts for each Participant for the purpose of
accounting for the Participant's beneficial interest under the Plan. The
establishment and maintenance of separate Accounts for each Participant shall
not be construed as giving any person an interest in assets of the Company or a
right to payment other than as provided hereunder. Benefits hereunder shall
constitute an unsecured general obligation of the Company, but the Company has
created reserves held in Trust in accordance with the terms thereof.
7.2. INVESTMENT OPTIONS; CREDITING OF INCOME. The Committee shall
credit Accounts with Credited Income at the rate of return generated by one (1)
or more of the Investment Options established by the Committee and selected by
the Participants. The Committee shall establish separate funds for bookkeeping
purposes to measure a hypothetical rate of return over a period designated by
the Committee. The Committee may, but need not, provide for such options as are
substantially similar (if not identical) to those provided under the Investment
Plan. Such Investment Options and the relevant funds shall be established for
bookkeeping purposes only and shall not require the establishment of actual
corresponding funds by the Committee or the Company. Any establishment, addition
or deletion of Investment Options shall be in the sole and absolute discretion
of the Committee. The Committee shall promulgate uniform procedures applicable
to all Participants for allocating and transferring amounts credited to
individual Accounts based on the performances of the various Investment Options,
and may, in its sole discretion, establish uniform procedures for Participant
direction and election amongst such funds, including the designation of an
Investment Option for Participants in the absence of a Participant election. In
the absence of an election by a Participant of an Investment Option, the
Participant will be deemed to have elected an Investment Option that is or is
substantially equivalent to a short-term money market fund.
7.3. NATURE OF ACCOUNT ENTRIES. The establishment and maintenance of
Participants' Accounts shall be merely bookkeeping entries and shall not be
construed as giving any person an interest in any specific assets of the Company
or of any subsidiary of the Company or Trust or a right to payment or other than
as provided hereunder. Benefits hereunder shall constitute an unsecured general
obligation of the Company, but the Company has provided for amounts to be held
in trust on the Company's behalf under the Trust.
7.4. VESTING. A Participant shall have a fully vested and nonforfeitable
beneficial interest in the balance standing to the credit of his Salary
Deferral, Bonus Deferral and Supplemental Accounts as of any relevant date,
subject to the conditions and limitations on the payment of amounts credited to
such Accounts as provided in the Plan.
7.5. ACCOUNT STATEMENTS. The Committee shall provide each Participant
with a statement of the status of his Accounts under the Plan. The Committee
shall provide such statement annually and at such other times as the Committee
may determine from time to time, and such statement shall be in the format as
presented by the Committee.
ARTICLE VIII. ADMINISTRATION OF THE PLAN
----------------------------------------
8.1. ADMINISTRATION. The Plan shall be administered by a committee of
persons appointed by the Board of Directors of the Company; provided, however
that such Committee may consist solely of one person. A majority of the members
of the Committee shall constitute a quorum and the acts of a majority of the
members present, or acts approved in writing by a majority of the members
without a meeting, shall be the acts of the Committee. The Committee shall have
that authority which is expressly stated in the Plan as vested in the Committee
and authority to make rules to administer and interpret the Plan, to decide
questions arising under the Plan, and to take such other action as may be
appropriate to carry out the purposes of the Plan.
8.2. RULES; CLAIMS FOR BENEFITS. The Committee shall adopt and
establish such rules and regulations with respect to the administration of the
Plan as it deems necessary and appropriate. In the event that a Participant, a
Beneficiary or the Company claims any right hereunder, he may submit such
information as he deems necessary or appropriate. The Committee and the claimant
shall in good faith attempt to resolve the claim in an expeditious and informal
manner. If the Committee and the claimant fail to resolve the claim, a written
notice of such failure shall be furnished to the claimant within ninety (90)
days after the claim is filed with the Committee. Such notice shall refer, if
appropriate, to pertinent provisions of the Plan or the Trust, shall set forth
in writing the reasons for denial of the claim and where appropriate shall
explain how the claimant can perfect the claim. If the claim is denied, in whole
or in part, the claimant shall also be notified in writing that a review
procedure is available. Thereafter, within ninety (90) days after receiving the
written notice of the Committee's failure to resolve the claim, the claimant may
request in writing, and shall be entitled to one, de novo review meeting with a
person or persons appointed by the Company to review the Committee's decisions
or findings (the "Reviewer"). The Reviewer shall be independent of the Committee
and the Company and not reportable to any member of the Committee. In addition,
the Reviewer shall not have received any payment from the Company in the three
years prior to his appointment as Reviewer except for those payments to him for
services as a Reviewer. The claimant may present reasons why the claim should be
allowed. The claimant shall be entitled to be represented by counsel at this
review meeting. The claimant may also submit a written statement of his claim
and the reason for requesting a review of the claim. Such statement may be
submitted in addition to, or in lieu of, the review meeting. The Reviewer shall
develop and retain a new administrative record of all relevant information. If
the claimant does not request a review meeting within ninety (90) days after
receiving written notice of the Committee's failure to resolve the claim, the
claimant shall be deemed to have accepted the Committee's written disposition,
unless the claimant shall have been physically or mentally incapacitated so as
to be unable to request review within such period. A decision on review of the
claim by the Reviewer shall be made within sixty (60) days after review, and a
written copy of such decision shall be delivered to the claimant and the
Committee. If special circumstances require an extension of the ordinary period,
the Reviewer shall so notify the claimant. In any event, if a claim is not
determined within one hundred twenty (120) days after submission for review, it
shall be deemed to be granted. The Reviewer shall have the right to request and
receive from a claimant such additional information, documents or other evidence
as the Reviewer may reasonably require. To the extent required by law,
completion of the claims procedures described in this Article VIII shall be a
mandatory precondition that must be complied with prior to the commencement of a
legal or equitable action by a person claiming rights under the Plan or the
Trust. The Committee and the claimant may by mutual agreement waive the
procedures as a mandatory condition to such action. In no event shall the claims
procedure set forth in this Article VIII be applied to circumvent or have the
effect of modifying either the manner of payment or the time of commencement of
payment under the terms of the Plan.
8.3. FINALITY OF DETERMINATIONS. Except as provided by law, all
determinations of the Reviewer to any matter arising under the Plan, including
questions of construction and interpretation, shall be binding and conclusive
upon all interested parties.
8.4. INDEMNIFICATION. To the extent permitted by law and the Company's
bylaws, the members of the Committee, the Reviewer, and the Trustee, its agents,
and the officers, directors, and employees of the Company shall be indemnified
and held harmless by the Company against and from any and all loss, cost,
liability, or expense that may be imposed upon or may be reasonably incurred by
them in connection with or resulting from any claim, action, suit, or proceeding
to which they may be a party or in which they may be involved by reason of any
action taken or failure to act under the Plan and against and from any and all
amounts paid by them in settlement (with the Company's written approval) or paid
by them in satisfaction of a judgment in any such action, suit or proceeding.
ARTICLE IX. FUNDING
-------------------
9.1. FUNDING. It is intended that the Company is under a contractual
obligation to make the payments when due under the Plan or as the Committee or
the Reviewer may direct. All amounts paid under the Plan shall be paid in cash
first, from Trust assets and then from the general assets of the Company.
Benefits hereunder and Credited Income shall also be reflected on the accounting
records of the Company, as provided for under the Plan. No Participant shall
have any right, title or interest whatsoever in or to any investment reserves,
trusts, accounts, or funds that the Company may purchase, establish or
accumulate to aid in providing the benefit payments described in the Plan except
as provided for under the Trust. Participants and Beneficiaries shall not
acquire any interest under the Plan greater than that of unsecured general
creditors of the Company. Shortly after the end of each Plan Year the Committee
will calculate the total Account Balances of all Participants. If such aggregate
balance exceeds the total net assets of the Trust, the Company shall contribute
such excess to the Trust. If the Trust's net assets exceed the aggregate balance
of the Participants' Accounts, the Committee will credit such excess against any
liabilities or other obligations of the Company to the Trust. In that event
funds of the Trust are returned to the Company or paid for the benefit of its
general creditors, all payment obligations under this Plan shall be due
immediately and the Company hereby acknowledges that the obligations hereunder
accrued not by reason of the events described in this sentence but by reason of
payments that otherwise would have been paid previously, but for this Plan.
ARTICLE X. AMENDMENT; TERMINATION; MERGER
-----------------------------------------
10.1. AMENDMENT AND TERMINATION. The Committee may amend, modify, or
terminate the Plan at any time but in no event shall any such amendment,
modification, or termination result in a reduction in any Participant's Account
or postpone the time of payment thereunder as of the time of such amendment,
modification, or termination unless the Committee and any Participant,
Beneficiary or employee who suffers such a reduction or postponement by reason
of such proposed amendment, modification or termination, consents in writing to
such amendment, modification or termination, and such consent is filed with the
Committee in the calendar year preceding the effective date of the proposed
amendment, modification or termination. Notwithstanding the foregoing sentence,
the right to terminate the Plan, amend the definition of Eligible Employee, or
amend Section 4.2 of the Plan shall be the exclusive right of the Board of
Directors. In the event of a termination of the Plan, no further deferral
elections may be made under the Plan and amounts which are then payable, or
which become payable under the terms of the Plan, shall be paid as scheduled in
accordance with the provisions of the Plan.
10.2. CHANGE OF CONTROL. In the event of a Change of Control of the
Company, all benefits hereunder shall become immediately due and payable if the
Participant voluntarily or involuntarily terminates employment on or before the
second anniversary of such change in control and each Participant shall have the
right to receive his benefits hereunder in a single lump sum payment.
10.3. AUTOMATIC PAYMENT. Notwithstanding anything contained herein to
the contrary, if it has been finally determined that funds held pursuant to this
Plan and the relevant Trust or Credited Income are includable in the taxable
income of a Participant or his Beneficiary, such funds shall be immediately
distributed to such Participant or Beneficiary. For purposes of this Section, a
final determination shall occur when a decision is determined by the highest
court which could otherwise render a decision (or the Participant and the
Internal Revenue Service have reached a final agreement) in this regard.
ARTICLE XI. GENERAL PROVISIONS
------------------------------
11.1. BENEFICIARY DESIGNATION. A Participant shall designate a
Beneficiary or Beneficiaries who, upon his death, are to receive payments that
otherwise would have been paid to him under the Plan. All Beneficiary
designations shall be in writing and on a form prescribed by the Committee for
such purpose, and any such designation shall only be effective if and when
delivered to the Committee during the lifetime of the Participant. On the
Beneficiary designation form, the Participant may also designate the form of
payment to the designated Beneficiary. Any such designated form of payment must
be a form as permitted under the Plan. A Participant may from time to time
during his lifetime change a designated Beneficiary or Beneficiaries (or change
a designated form of payment to a Beneficiary) by filing a new Beneficiary
designation form with the Committee. In the event a designated Beneficiary of a
Participant predeceases the Participant, the designation of such Beneficiary
shall be void. If a designated Beneficiary dies after the Participant, but
before all death benefit payments relating to such Beneficiary have been paid,
the remainder of such death benefit payments shall be continued to such
Beneficiary's estate, unless the Participant had designated on the applicable
Beneficiary designation form a method of payment to a contingent Beneficiary. In
the event a Participant shall fail to designate a Beneficiary or Beneficiaries
with respect to any death benefit payments, or if for any reason such
designation shall be ineffective, in whole or in part, any payment that
otherwise would have been paid to such Participant shall be paid to his estate,
and in such event, his estate shall be his Beneficiary with respect to such
payments.
11.2. EFFECT ON OTHER PLANS. Deferred Amounts shall not be considered
as part of a Participant's compensation for the purpose of any savings or
pension plan maintained by the Company, but such amounts shall be taken into
account under all other employee benefit plans maintained by the Company in the
year in which such amounts would have been payable in the absence of a deferral
election; provided, however, that such amounts shall not be taken into account
to the extent the inclusion thereof would jeopardize the tax-qualified status of
the plan to which they relate.
11.3. NONTRANSFERABILITY. No right or interest of any Participant in
the Plan shall be assignable or transferable in whole or in part, either
voluntarily or by operation of law or otherwise, or be subject to payment of
debts of any Participant by execution, levy, garnishment, attachment, pledge,
bankruptcy, or in any other manner. Subject to Section 11.6 and notwithstanding
the foregoing, upon receipt of a copy of a decree from a court of competent
jurisdiction which finally declares a Participant's spouse as having property
rights to a portion of the amounts credited to such Participant's Accounts, the
Committee shall segregate such portion from the Participant's Accounts and hold
that portion for the benefit of the spouse. For purposes of crediting Credited
Income on and determining the timing of the distribution of such segregated
amounts, such segregated amounts shall be treated as if they had remained part
of the Participant's Account but subject to such Investment Option elections as
are made by the spouse. In receiving payment of such amount, and in designating
Beneficiaries, the Spouse shall be treated as if he or she was a Participant;
provided that the spouse shall not be entitled to begin receiving payments
hereunder before the earliest date that the Participant could have recovered
payments under this Plan.
11.4. PLAN NOT AN EMPLOYMENT CONTRACT. The Plan is not an employment
contract. It does not give to any person the right to be continued in
employment, and all Eligible Employees and employees remain subject to change of
salary, transfer, change of job, discipline, layoff, discharge, or any other
change of employment status.
11.5. APPLICABLE LAW. The Plan shall be governed and construed in
accordance with the laws of the State of Texas, except to the extent such laws
are preempted by any applicable Federal law.
11.6. QUALIFIED DOMESTIC RELATIONS ORDERS. Upon receipt of any court
order relating to the benefit payable to a Participant hereunder, the Committee
shall (a) notify the Participant and the "alternate payee(s)" of such order and
the Plan's procedures for determining the qualified status of such order; and
(b) segregate in a separate account in the Plan the amount payable pursuant to
such order. Within 18 months of receipt of such order, the Committee shall
determine whether the order is a "qualified domestic relations order" (as
defined in Section 414(p)(7) of the Code determined as if the Plan were a
qualified plan), pursuant to written administrative procedures identical to
those adopted by the Investment Plan in accordance with Section 414(p)(6) and
(7) of the Code. If such order is a qualified domestic relations order
determined as if the Plan were a qualified plan, the Committee shall pay the
segregated amount to that alternate payee(s) entitled thereto.
COMPAQ COMPUTER CORPORATION
DEFERRED COMPENSATION AND SUPPLEMENTAL SAVINGS PLAN
FIRST AMENDMENT
Compaq Computer Corporation (the "Company") established the Compaq
Computer Corporation Deferred Compensation and Supplemental Savings Plan,
effective January 1, 1985, and as amended and restated effective January 1, 1995
(the "Plan"), and delegated the authority to amend the Plan under Section 10.1
to the Plan Administrative Committee (the "Committee") appointed under Section
8.1 of the Plan. Effective as of January 2, 1998, the Committee does hereby
amend the Plan to read as follows:
1. The following definition shall be inserted after Section 2.1(j) of
the Plan as Section 2.1(k), and the remaining definitions shall be renumbered
accordingly:
"(k) 'Common Stock' means common stock of the Company, par value $.01
per share."
2. The second sentence of Section 9.1 of the Plan is amended in its
entirety to read as follows:
"All amounts paid under the Plan shall be paid in cash, first from
Trust assets and then from the general assets of the Company;
provided, however, that the Committee may determine, in its
discretion, to pay in whole shares of Common Stock the portion of
an Account that is deemed to be invested in Common Stock for
purposes of Section 7.2."
EXHIBIT 5.1
Compaq Computer Corporation has received a favorable determination
letter from the Internal Revenue Service ( the "IRS") concerning the
qualification of the Compaq Computer Corporation 401(k) Investment Plan under
Section 401(a) and related provisions of the Internal Revenue Code of 1986, as
amended. HP will submit any future material amendments to the Compaq Computer
Corporation 401(k) Investment Plan to the IRS with a request for a favorable
determination that the Compaq Computer Corporation 401(k) Investment Plan as
amended, continues to so qualify.
EXHIBIT 5.2
May 6, 2002
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, California 94304
Re: An aggregate of 9,565,000 Shares of Common Stock of Hewlett-Packard Company
offered pursuant to the Compaq Computer Corporation 401(k) Investment Plan
and the Compaq Computer Corporation Deferred Compensation Savings and
Supplemental Savings Plan and obligations pursuant to the Deferred
Compensation Savings and Supplemental Savings Plan
Dear Sir or Madam:
I have examined the proceedings taken and the instruments executed in
connection with the organization and present capitalization of Hewlett-Packard
Company (the "Company") and the reservation for issuance and authorization of
the sale and issuance from time to time of not in excess of an aggregate of
9,565,000 shares of the Company's common stock (the "Shares") pursuant to the
terms of the Compaq Computer Corporation 401(k) Investment Plan and the Compaq
Computer Corporation Deferred Compensation and Supplemental Savings Plan (the
"Deferred Compensation Plan") (collectively, the "Plans") and the
offer and sale of $25,000,000 of deferred compensation obligations (the
"Obligations") pursuant to the Deferred Compensation and Supplemental Savings
Plan. The Shares and the Obligations are the subject of a Registration Statement
on Form S-8 under the Securities Act of 1933, as amended, which is being filed
with the Securities and Exchange Commission and to which this opinion is to be
attached as an exhibit.
Upon the basis of such examination, I am of the following opinion:
When issued pursuant to the Plans, the Shares will be duly and validly
issued and fully paid and nonassessable. The Obligations to be issued pursuant
to the Deferred Compensation Plan are binding obligations, and, when issues in
accordance with the provisions of the Deferred Compensation Plan, will be
legally issued, fully paid and nonassessable.
You are further advised that I consent to the use of this opinion as an
exhibit to the above-mentioned Registration Statement on Form S-8.
Very truly yours,
/s/ Charles N. Charnas
-------------------------
Charles N. Charnas
Assistant Secretary
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS, ERNST & YOUNG LLP
We consent to the incorporation by reference in this Registration Statement on
Form S-8 of Hewlett-Packard Company pertaining to the Compaq Computer
Corporation 401(K) Investment Plan and the Compaq Computer Corporation Deferred
Compensation and Supplemental Savings Plan of our report dated November 13,
2001, except for Note 19, as to which the date is December 6, 2001, with respect
to the consolidated financial statements and schedule of Hewlett-Packard Company
in its Annual Report on Form 10-K/A for the year ended October 31, 2001, filed
with the Securities and Exchange Commission.
San Jose, California
May 6, 2002
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) of Hewlett-Packard Company pertaining to the Compaq Computer Corporation
401(K) Investment Plan and the Compaq Computer Corporation Deferred Compensation
and Supplemental Savings Plan (the Registration Statement) of our reports dated
January 16, 2002, with respect to the consolidated financial statements and
schedule of Compaq Computer Corporation included in Hewlett-Packard Company's
Current Report on Form 8-K dated February 14, 2002, filed with the Securities
and Exchange Commission. We also consent to the incorporation by reference in
the Registration Statement of our report dated May 4, 2001, with respect to the
financial statements and schedule of Compaq Computer Corporation 401(K)
Investment Plan included in the Plan's Annual Report (Form 11-K) for the year
ended December 31, 2000, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Houston, Texas
May 6, 2002
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Hewlett-Packard Company of our report dated November
23, 1999 relating to the financial statements and financial statement schedule,
which appears in the Hewlett-Packard Company's Annual Report on Form 10-K/A for
the year ended October 31, 2001.
PricewaterhouseCoopers LLP
San Jose, California
May 6, 2002
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Hewlett-Packard Company of our report dated January 25,
2000 relating to the consolidated financial statements of Compaq Computer
Corporation for the year ended December 31, 1999, which appears in the Current
Report on Form 8-K of Hewlett-Packard Company dated February 14, 2002. We also
consent to the incorporation by reference of our report dated January 25, 2000
relating to the financial statement schedule of Compaq Computer Corporation for
the year ended December 31, 1999, which appears in the Current Report on Form
8-K of Hewlett-Packard Company dated February 14, 2002.
PricewaterhouseCoopers LLP
Houston, Texas
May 6, 2002