BECTON, DICKINSON AND COMPANY
DEFERRED COMPENSATION PLAN
(Formerly the Becton, Dickinson and Company Salary and Bonus Deferral Plan)
Amended and Restated as of March 22, 2004
BECTON, DICKINSON AND COMPANY
DEFERRED COMPENSATION PLAN
Amended and Restated as of March 22, 2004
TABLE OF CONTENTS
ARTICLE I Definitions.................................................................................2
Section 1.1 "Accounts".............................................................................2
Section 1.2 "Annual Open Enrollment Period"........................................................2
Section 1.3 "Base Salary"..........................................................................2
Section 1.4 "Board of Directors"...................................................................2
Section 1.5 "Bonus"................................................................................2
Section 1.6 "Change in Control"....................................................................2
Section 1.7 "Code".................................................................................4
Section 1.8 "Committee"............................................................................4
Section 1.9 "Common Stock".........................................................................4
Section 1.10 "Company"..............................................................................4
Section 1.11 "Company Discretionary Credits"........................................................4
Section 1.12 "Company Discretionary Credit Account".................................................4
Section 1.13 "Company Matching Credits".............................................................4
Section 1.14 "Company Matching Credit Account"......................................................4
Section 1.15 "Deferral Election"....................................................................4
Section 1.16 "Deferred Bonus".......................................................................4
Section 1.17 "Deferred Bonus Account"...............................................................4
Section 1.18 "Deferred Bonus Election"..............................................................4
Section 1.19 "Deferred Equity-Based Compensation"...................................................5
Section 1.20 "Deferred Equity-Based Compensation Account"...........................................5
Section 1.21 "Deferred Equity-Based Compensation Election"..........................................5
Section 1.22 "Deferred Salary"......................................................................5
Section 1.23 "Deferred Salary Account"..............................................................5
Section 1.24 "Deferred Salary Election".............................................................5
Section 1.25 "Deferred SERP Distribution"...........................................................5
Section 1.26 "Deferred SERP Distribution Account"...................................................5
Section 1.27 "Deferred SERP Distribution Election"..................................................5
Section 1.28 "Deferred Stock Account"...............................................................5
Section 1.29 "Deferred Stock Election"..............................................................5
Section 1.30 "Disabled".............................................................................5
Section 1.31 "Dividend Reinvestment Return".........................................................5
Section 1.32 "Equity-Based Compensation"............................................................6
Section 1.33 "Equity-Based Compensation Plan".......................................................6
Section 1.34 "ERISA"................................................................................6
Section 1.35 "Fiscal Year"..........................................................................6
Section 1.36 "Investment Election"..................................................................6
Section 1.37 "Investment Options"...................................................................6
Section 1.38 "NYSE".................................................................................6
Section 1.39 "Other Stock-Based Awards".............................................................6
Section 1.40 "Participant"..........................................................................6
Section 1.41 "Performance Units"....................................................................6
Section 1.42 "Plan".................................................................................6
Section 1.43 "Plan Year" means the calendar year....................................................6
Section 1.44 "Restricted Stock Units"...............................................................6
Section 1.45 "SERP".................................................................................6
Section 1.46 "Stock Award Plan".....................................................................7
Section 1.47 "Stock Trust"..........................................................................7
ARTICLE II Eligibility and Participation...............................................................8
Section 2.1 Eligibility............................................................................8
Section 2.2 Participation..........................................................................8
ARTICLE III Deferral Elections and Deferral Periods....................................................11
Section 3.1 Deferred Salary Election..............................................................11
Section 3.2 Deferred Bonus Election...............................................................11
Section 3.3 Deferred Equity-Based Compensation Election...........................................12
Section 3.4 Deferred SERP Distribution Election...................................................12
Section 3.5 Company Matching Credits..............................................................13
Section 3.6 Company Discretionary Credits.........................................................13
Section 3.7 Deferral Period.......................................................................13
Section 3.8 Modification of Deferral Period.......................................................14
ARTICLE IV Participants' Accounts.....................................................................15
Section 4.1 Crediting of Employee Deferrals and Company Matching and Discretionary Credits........15
Section 4.2 Investment Election...................................................................15
Section 4.3 Hypothetical Earnings.................................................................15
Section 4.4 Vesting...............................................................................18
Section 4.5 Account Statements....................................................................18
ARTICLE V Distributions and Withdrawals..............................................................19
Section 5.1 Timing of Distribution................................................................19
Section 5.2 Form of Distribution..................................................................22
ARTICLE VI General Provisions.........................................................................25
Section 6.1 Unsecured Promise to Pay..............................................................25
Section 6.2 Plan Unfunded.........................................................................25
Section 6.3 Designation of Beneficiary............................................................25
Section 6.4 Expenses..............................................................................26
Section 6.5 Voting Common Stock...................................................................26
Section 6.6 Non-Assignability.....................................................................26
Section 6.7 Mandatory Deferral....................................................................26
Section 6.8 Employment/Participation Rights.......................................................26
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Section 6.9 Severability..........................................................................27
Section 6.10 No Individual Liability...............................................................27
Section 6.11 Tax Withholding.......................................................................27
Section 6.12 Applicable Law........................................................................28
Section 6.13 Incompetency..........................................................................28
Section 6.14 Notice of Address.....................................................................28
ARTICLE VII Administration.............................................................................29
Section 7.1 Committee.............................................................................29
Section 7.2 Claims Procedure......................................................................29
ARTICLE VIII Amendment, Termination and Effective Date..................................................30
Section 8.1 Amendment of the Plan.................................................................30
Section 8.2 Termination of the Plan...............................................................30
Section 8.3 No Impairment of Benefits.............................................................30
Section 8.4 Effective Date........................................................................30
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BECTON, DICKINSON AND COMPANY
DEFERRED COMPENSATION PLAN
Amended and Restated as of March 22, 2004
FOREWORD
Effective as of August 1, 1994 (the "Effective Date"), Becton, Dickinson and
Company (the "Company") adopted the Becton, Dickinson and Company Salary and
Bonus Deferral Plan (the "Plan") for the benefit of certain of its employees.
The Plan is intended to be an unfunded plan of deferred compensation primarily
for the benefit of a select group of management and highly compensated
employees. To the extent that the Plan permits the voluntary deferral of
bonuses, the Plan is intended to amend and replace the Bonus Deferral Option of
the Becton, Dickinson and Company Executive Bonus Plan.
The purpose of the Plan is to permit those employees of the Company who are part
of a select group of management or highly compensated employees to defer,
pursuant to the provisions of the Plan, a portion of the salaries, bonuses and
other remuneration (including certain equity-based compensation) otherwise
payable to them.
Effective as of August 15, 1996, the Board of Directors of the Company amended
the Plan to permit Participants to have their deferred salaries or deferred
bonuses considered to be invested in Common Stock of the Company, to permit
those Participants to vote a number of shares of Common Stock equal to the
number considered to be held for their benefit under the Plan, and for certain
other purposes.
Effective as of November 1, 2001, the Plan is amended and restated to rename the
Plan as the Becton, Dickinson and Company Deferred Compensation Plan, and to
modify the deferral opportunities and the distribution and withdrawal options
under the Plan, and to make certain other modifications deemed desirable.
Effective as of March 22, 2004, the Plan is amended and restated to permit
participants to defer certain equity-based compensation awarded under the
Becton, Dickinson and Company Stock Award Plan (the "Stock Award Plan") and the
Becton, Dickinson and Company 2004 Employee and Director Equity-Based
Compensation Plan (the "Equity-Based Compensation Plan") and to clarify the
Committee's discretion to require Deferral Elections to be made earlier than
September 30 of a Plan Year with respect to amounts to be paid in a year or
years following the Plan Year. The Plan is also amended to allow reallocations
from a Participant's Deferred Stock Account to other Investment Options.
ARTICLE I
Definitions
Section 1.1 "Accounts" means the bookkeeping accounts established under
the Plan, if any, on behalf of a Participant and includes earnings credited
thereon or losses charged thereto.
Section 1.2 "Annual Open Enrollment Period" means the annual period
designated by the Committee, which ends not later than the December 31 of a Plan
Year, during which a Participant may make or change elections to defer annual
Base Salary, Bonuses, Equity-Based Compensation, and SERP distributions.
Notwithstanding the foregoing, the Annual Open Enrollment Period for 2001 shall
be the period designated by the Committee which ends not later than November 9,
2001.
Section 1.3 "Base Salary" means the base salary or wages otherwise
taken into account under the Becton, Dickinson and Company Savings Incentive
Plan, determined in accordance with the provisions of such plan, but without
regard to the limitation on compensation otherwise required under Code section
401(a)(17), and without regard to any deferrals of the foregoing of compensation
under this or any other plan of deferred compensation maintained by the Company.
Section 1.4 "Board of Directors" means the Board of Directors of the
Company.
Section 1.5 "Bonus" means the annual bonus payable under the Company's
Performance Incentive Plan, or any successor thereto.
Section 1.6 "Change in Control" of the Company means any of the
following events:
(1) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 25% or more of either (A) the
then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (B) the combined voting power of
the then-outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that, for purposes of this Section
1.6, the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any affiliated company, (iv) any acquisition by any corporation
pursuant to a transaction that complies with Sections 1.6(3)(A),
1.6(3)(B) and 1.6(3)(C), or (v) any acquisition that the Board
determines, in good faith, was inadvertent, if the acquiring Person
divests as promptly as practicable a sufficient amount of the
Outstanding Company Common Stock and/or the Outstanding
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Company Voting Securities, as applicable, to reverse such acquisition
of 25% or more thereof.
(2) Individuals who, as of April 24, 2000, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to April 24, 2000 whose election, or
nomination for election as a director by the Company's shareholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board.
(3) Consummation of a reorganization, merger, consolidation or
sale or other disposition of all or substantially all of the assets of
the Company (a "Business Combination"), in each case, unless, following
such Business Combination, (A) all or substantially all of the
individuals and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation that, as a result of such transaction, owns the Company or
all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions
as their ownership immediately prior to such Business Combination of
the Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any
corporation resulting from such Business Combination or any employee
benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly
or indirectly, 25% or more of, respectively, the then-outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then-outstanding voting
securities of such corporation, except to the extent that such
ownership existed prior to the Business Combination, and (C) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement or of the
action of the Board providing for such Business Combination; or
(4) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
3
Section 1.7 "Code" means the Internal Revenue Code of 1986, as amended,
or any successor statute.
Section 1.8 "Committee" means the committee that is responsible for
administering the Plan. The Committee shall consist of three or more employees
of the Company as determined by, and appointed by, the Board of Directors. The
Committee may delegate pursuant to a written authorization (including, by way of
illustration, through a contract, memorandum, or other written delegation
document) any or all of its responsibilities involving ongoing day-to-day
administration or ministerial acts, as set forth in this Plan to one or more
individuals or service-providers. In any case where this Plan refers to the
Committee, such reference is deemed to be a reference to any delegate of the
Committee appointed for such purpose.
Section 1.9 "Common Stock" means the common stock ($1.00 par value) of
the Company, including any shares into which it may be split, subdivided or
combined.
Section 1.10 "Company" means Becton, Dickinson and Company and any
successor to such corporation by merger, purchase or otherwise.
Section 1.11 "Company Discretionary Credits" means the amounts credited
to a Participant's Company Discretionary Credit Account, if any, pursuant to
Section 3.6.
Section 1.12 "Company Discretionary Credit Account" means the
bookkeeping account established under Section 3.6, if any, on behalf of a
Participant and includes any earnings credited thereon or losses charged thereto
pursuant to Article IV.
Section 1.13 "Company Matching Credits" means the amounts credited to a
Participant's Company Matching Credit Account, if any, pursuant to Section 3.5.
Section 1.14 "Company Matching Credit Account" means the bookkeeping
account established under Section 3.5, if any, on behalf of a Participant and
includes any earnings credited thereon or losses charged thereto pursuant to
Article IV.
Section 1.15 "Deferral Election" means the Participant's election to
participate in this Plan and defer amounts eligible for deferral in accordance
with the Plan terms. Except as the context otherwise requires, references herein
to Deferral Elections include any subsequent modifications of a prior Deferral
Election.
Section 1.16 "Deferred Bonus" means the amount of a Participant's Bonus
that such Participant has elected to defer until a later year pursuant to an
election under Section 3.2.
Section 1.17 "Deferred Bonus Account" means the bookkeeping account
established under Section 3.2 on behalf of a Participant, and includes any
earnings credited thereon or losses charged thereto pursuant to Article IV.
Section 1.18 "Deferred Bonus Election" means the election by a
Participant under Section 3.2 to defer a portion of the Participant's Bonus
until a later year.
4
Section 1.19 "Deferred Equity-Based Compensation" means the amount of a
Participant's Equity-Based Compensation that such Participant has elected to
defer until a later year pursuant to an election under Section 3.3.
Section 1.20 "Deferred Equity-Based Compensation Account" means the
bookkeeping account established under Section 3.3 on behalf of a Participant,
and includes any earnings credited thereon or losses charged thereto pursuant to
Section 4.3(b).
Section 1.21 "Deferred Equity-Based Compensation Election" means the
election by a Participant under Section 3.3 to defer a portion of the
Participant's Equity-Based Compensation.
Section 1.22 "Deferred Salary" means the amount of a Participant's Base
Salary that such Participant has elected to defer until a later year pursuant to
an election under Section 3.1.
Section 1.23 "Deferred Salary Account" means the bookkeeping account
established under Section 3.1 on behalf of a Participant, and includes any
earnings credited thereon or losses charged thereto pursuant to Article IV.
Section 1.24 "Deferred Salary Election" means the election by a
Participant under Section 3.1 to defer until a later year a portion of his or
her Base Salary.
Section 1.25 "Deferred SERP Distribution" means the amount of a
Participant's SERP distribution that such Participant has elected to defer under
this Plan pursuant to an election under Section 3.4.
Section 1.26 "Deferred SERP Distribution Account" means the bookkeeping
account established under Section 3.4 on behalf of a Participant, and includes
any earnings credited thereon or losses charged thereto pursuant to Article IV.
Section 1.27 "Deferred SERP Distribution Election" means the election
by a Participant under Section 3.4 to defer all or a portion of the
Participant's SERP distribution.
Section 1.28 "Deferred Stock Account" means the bookkeeping account
established under Section 4.3(b) on behalf of a Participant and includes, in
addition to amounts stated in that Section, any Dividend Reinvestment Return
credited thereon.
Section 1.29 "Deferred Stock Election" means the election by a
Participant under Section 4.3(b) to have applicable deferred amounts credited in
the form of Common Stock to the Participant's Deferred Stock Account.
Section 1.30 "Disabled" means that a Participant is totally and
permanently disabled as defined in the Company's Long-Term Disability Plan.
Section 1.31 "Dividend Reinvestment Return" means the amounts which are
credited to each Participant's Deferred Stock Account pursuant to Section 4.3(b)
to reflect dividends declared by the Company on its Common Stock.
5
Section 1.32 "Equity-Based Compensation" means (i) November 24, 2003,
awards granted under the Stock Award Plan and (ii) Restricted Stock Units,
Performance Units, and Other Stock-Based Awards granted under Sections 7, 8, and
9 of the Equity-Based Compensation Plan, and does not include any such awards
that qualify as vested stock, restricted stock, stock option awards, or stock
appreciation rights.
Section 1.33 "Equity-Based Compensation Plan" means the Becton,
Dickinson and Company 2004 Employee and Director Equity-Based Compensation Plan.
Section 1.34 "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, or any successor statute.
Section 1.35 "Fiscal Year" means the fiscal year of the Company, which
currently is the twelve month period commencing on the first day of October and
ending on the last day of September of the following calendar year.
Section 1.36 "Investment Election" means the Participant's election to
have deferred amounts credited with hypothetical earnings credits (or losses)
that track the investment performance of the Investment Options and/or Company
Common Stock in accordance with Article IV.
Section 1.37 "Investment Options" means those hypothetical targeted
investment options designated by the Committee as measurements of the rate of
return to be credited to (or charged against) amounts deferred to Participants'
Accounts.
Section 1.38 "NYSE" means The New York Stock Exchange.
Section 1.39 "Other Stock-Based Awards" means awards granted under
Section 9 of the Equity-Based Compensation Plan.
Section 1.40 "Participant" means a common law employee of the Company
who meets the eligibility requirements for a deferral under this Plan as set
forth in Article II and who is eligible to elect to defer amounts under this
Plan in accordance with Article III.
Section 1.41 "Performance Units" means awards granted under Section 8
of the Equity-Based Compensation Plan.
Section 1.42 "Plan" means the Becton, Dickinson and Company Deferred
Compensation Plan (previously the Becton, Dickinson and Company Salary and Bonus
Deferral Plan) as from time to time in effect.
Section 1.43 "Plan Year" means the calendar year.
Section 1.44 "Restricted Stock Units" means Restricted Stock Units
granted under Section 7 of the Equity-Based Compensation Plan.
Section 1.45 "SERP" means the Becton, Dickinson and Company Retirement
Benefit Restoration Plan, as from time to time in effect.
6
Section 1.46 "Stock Award Plan" means the Becton, Dickinson and Company
Stock Award Plan as the same may be amended from time to time.
Section 1.47 "Stock Trust" means the Becton, Dickinson and Company
Deferred Salary and Bonus Trust established as of August 15, 1996 between the
Company and Wachovia Bank of North Carolina, N.A., as amended from time to time
thereafter.
7
ARTICLE II
Eligibility and Participation
Section 2.1 Eligibility
(a) An individual shall be eligible to become a
Participant in this Plan if the individual meets the
following requirements:
(i) the individual is a common law employee of a
unit of the Company (or of one of its
subsidiaries) to which the Plan has been
adopted pursuant to a decision by, or with
the approval of, the Board of Directors;
(ii) the individual is not a nonresident alien of
the United States receiving no United States
source income within the meaning of sections
861(a)(3) or 911(d)(2) of the Code; and
(iii) the employee has annualized Base Salary of
$100,000 or more for the calendar year in
which the Deferral Election is required to
be made.
(b) The Committee shall have the ability to adjust,
prospectively for any Plan Year, the dollar
limitation in Section 2.1(a)(iii).
(c) The Committee may also:
(i) designate as ineligible particular
individuals, groups of individuals or
employees of business units who otherwise
would be eligible under Section 2.1(a); or
(ii) designate as eligible particular
individuals, groups of individuals or
employees of business units who otherwise
would be ineligible under Section 2.1(a).
(d) An employee who, at any time, ceases to meet the
foregoing eligibility requirements, as determined in
the sole discretion of the Committee, shall
thereafter cease to be a Participant eligible to
continue making deferrals under the Plan, and any
deferral elections then in effect shall cease to be
effective. In such case, the individual may remain a
Participant in the Plan with respect to amounts
already deferred prior to the date such individual
ceased to be an active Participant.
Section 2.2 Participation
(a) Deferral Election. As soon as practicable after the
Committee determines that an employee is eligible to
become a Participant, the Committee shall
8
provide the Participant with the appropriate election
forms with which a Participant may make a Deferral
Election. In the case of an employee who first
becomes eligible during a Plan Year, such Deferral
Election may be made within the first thirty (30)
days of eligibility with respect to any Salary to be
earned thereafter for the remainder of the Plan Year.
In the case of a newly-hired participant, such
Deferral Election within the first thirty (30) days
of eligibility may also be made with respect to any
Equity-Based Compensation awarded or granted at the
time of hire and to be earned thereafter. In the case
of Bonus awards granted in 2004 and 2005 and
Equity-Based Compensation awards granted in 2003 and
2004, the Deferred Bonus and Deferred Equity-Based
Compensation Elections shall be made by September 30,
2004, or such earlier time determined by the
Committee. In the event that such Deferred Bonus and
Deferred Equity-Based Compensation Elections are
required by the Committee to be made earlier than
September 30, 2004, in order that the Deferral
Elections will be grandfathered under certain
proposed legislation, but the legislation, as
enacted, does not grandfather the Deferral Elections,
the early Deferral Elections shall be void. If the
Participant does not return the completed forms to
the Committee at such time as required by the
Committee, the Participant will not be allowed to
participate in the Plan until the next Annual Open
Enrollment Period. All Deferral Elections hereunder
(including any modifications of prior Deferral
Elections otherwise permitted under the Plan) may be
made in accordance with written, electronic or
telephonic procedures prescribed by the Committee.
(b) Contents of Deferral Election. A Participant's
Deferral Election must be made in the manner
designated by the Committee and must be accompanied
by:
(i) an election to defer Base Salary, Bonus,
and/or Company Matching Credits and, with
respect to deferrals made on or after
January 1, 2002, and through December 31,
2003, a single deferral period election and
distribution option election with respect to
all such amounts deferred for any Plan Year
(all such amounts deferred with respect to
any Plan Year shall be treated as a single
category of deferral for purposes of
determining deferral periods and
distribution options), and, with respect to
amounts deferred after December 31, 2003, a
single deferral period election and
distribution option election with respect to
Base Salary and Company Matching Credit
(Base Salary and Company Matching Credit
deferrals with respect to any Plan Year
shall be treated as a single category of
deferral for purposes of determining
deferral periods and distribution options)
and separate deferral period and
distribution option elections with respect
to Bonus;
9
(ii) an election to defer Equity-Based
Compensation and a deferral period election
with respect to Equity-Based Compensation,
as determined by the Committee;
(iii) an election to defer SERP distributions and
any Company Discretionary Credits and a
separate deferral period election with
respect to each such separate category of
deferral;
(iv) an Investment Election (except with respect
to an Equity-Based Compensation Election,
which shall automatically be credited to a
Deferred Stock Account for investment return
purposes);
(v) a designation of a beneficiary or
beneficiaries to receive any deferred
amounts owed upon the Participant's death;
(vi) subject to section 2.2(b)(i), a designation
as to the form of distribution for each
separate year's deferral and each separate
category of deferral; provided, however,
that if no specific election is made with
respect to any deferred amount, the
Participant will be deemed to have elected
to receive such amounts in the form of a
lump sum distribution (in cash and, solely
to the extent distributable amounts are
credited to the Participant's Deferred Stock
Account at the time of the distribution,
shares of Common Stock);
(vii) an application for a policy of life
insurance under which the Participant is the
insured and the Company is the sole owner of
and beneficiary under such policy; and
(viii) such additional information as the Committee
deems necessary or appropriate.
10
ARTICLE III
Deferral Elections and Deferral Periods
Section 3.1 Deferred Salary Election
(a) Each Participant who has elected to defer the maximum
pre-tax elective deferral that is permitted for a
calendar year under the Becton, Dickinson and Company
Savings Incentive Plan and under Code section 402(g)
may make a Deferred Salary Election with respect to
Base Salary otherwise to be paid in such calendar
year, provided that a valid Deferred Salary Election
is made by the date specified in Section 3.1(b). A
Participant may elect to defer from 1% to 75% of the
Participant's Base Salary (in increments of 1%);
provided, however, that the Participant must elect a
Deferred Salary amount of at least $5,000.
Notwithstanding the foregoing, any Deferred Salary
Election must be made in a manner that will ensure
that the Participant is paid a sufficient amount of
Base Salary that will allow adequate amounts
available for (i) any pre-tax elective deferrals
under the Becton, Dickinson and Company Savings
Incentive Plan, and (ii) any amounts to be deferred
by the Participant in order to participate in any
other benefit programs maintained by the Company.
(b) Except with respect to Deferred Salary Elections made
by Participants who first become eligible to
participate during a Plan Year (which elections must
be made as specified in Section 2.2(a)), a Deferred
Salary Election with respect to Base Salary for a
particular calendar year must be made on or before
the December 31 (November 9, 2001 with respect to
salary earned during the 2002 year) preceding the
commencement of such calendar year or at such earlier
time as determined by the Committee. Once a Deferred
Salary Election is made, it shall be irrevocable for
the applicable calendar year and apply only to Base
Salary otherwise to be paid during the applicable
calendar year. Such Deferred Salary shall be credited
to the Participant's Deferred Salary Account as of
the first business day after the last day of each
payroll period.
Section 3.2 Deferred Bonus Election
(a) Each Participant may elect to make a Deferred Bonus
Election with respect to a Bonus otherwise to be paid
in the calendar year immediately following (or, in
the discretion of the Committee, in a later year
following) the year of the Participant's Deferred
Bonus Election. A Participant may elect to defer from
1% to 100% of the Participant's Bonus (in increments
of 1%); provided, however, that the Participant's
Deferred Bonus Election must result in a deferral of
at least $5,000.
11
(b) A Deferred Bonus Election with respect to any Bonus
to be paid in a particular calendar year must be made
on or before the September 30 preceding the
commencement of such calendar year (November 9, 2001
with respect to Bonus amounts to be paid in 2002) or
at such earlier time as determined by the Committee.
Once made, a Deferred Bonus Election cannot be
changed or revoked except as provided herein. Such
Deferred Bonus shall be credited to the Participant's
Deferred Bonus Account as of the first business day
in January of the year that the Bonus otherwise would
have been paid to the Participant in the absence of
any deferral hereunder.
Section 3.3 Deferred Equity-Based Compensation Election
(a) To the extent permitted by law on a tax deferred
basis, each Participant may elect to make a Deferred
Equity-Based Compensation Election with respect to
Equity-Based Compensation otherwise to be paid in the
calendar year immediately following (or, in the
discretion of the Committee, in a later year
following) the year of the Participant's Deferred
Equity-Based Compensation Election. A Participant may
elect to defer from 1% to 100% of the Participant's
Equity-Based Compensation, and may make separate
elections with respect to each of the Participant's
Restricted Stock Units, Performance Units, Other
Stock-Based Awards, and November 24, 2003, awards
under the Stock Award Plan, provided, however, that
the Participant's total Equity-Based Compensation
Election must result in a deferral of at 100 units of
Equity-Based Compensation.
(b) A Deferred Equity-Based Compensation Election with
respect to any Equity-Based Compensation to be paid
in a particular calendar year must be made on or
before September 30 preceding the commencement of
such calendar year or at such earlier time as
determined by the Committee. Once made, a Deferred
Equity-Based Compensation Election cannot be changed
or revoked except as provided herein. Such Deferred
Equity-Based Compensation shall be credited to the
Participant's Deferred Equity-Based Compensation
Account as soon as practicable after the Equity-Based
Compensation otherwise would vest and be paid, and
will be credited for investment tracking purposes to
the Participant's Deferred Stock Account under
Section 4.3(b).
Section 3.4 Deferred SERP Distribution Election
(a) Each Participant who is otherwise a participant in
the SERP may elect to make a Deferred SERP
Distribution Election, at the time specified in
subsection (b) below, with respect to a SERP
distribution that is otherwise to be paid to the
Participant. A Participant may elect to defer from 1%
to 100% of the Participant's applicable SERP
distribution (in increments of 1%); provided,
however, that the total of the Participant's Deferred
SERP Distribution Election must result in a deferral
of at least $5,000.
12
(b) A Deferred SERP Distribution Election with respect to
any SERP distribution payable during a particular
calendar year must be made at least one year before
the date that the SERP distribution is otherwise
payable to the Participant. Once made, a Deferred
SERP Distribution Election cannot be changed or
revoked except as provided herein. Such Deferred SERP
Distribution shall be credited to the Participant's
Deferred SERP Distribution Account as soon as
practicable after such amount would otherwise have
been payable to the Participant. If the Participant
otherwise becomes entitled to a SERP distribution
after having made such an election and before the end
of such one-year period, such election shall be
ineffective and the applicable SERP distribution
shall not be deferred hereunder.
Section 3.5 Company Matching Credits
If a Participant has made a Deferred Salary Election
in accordance with Section 3.1 and, as a result of
such Deferred Salary Election, the Participant is
entitled to a lower matching contribution amount
under the SIP, then the Participant shall be eligible
to have Company Matching Credits credited to the
Participant's Company Matching Credit Account. The
amount of such Company Matching Credits shall equal
the amount of the matching contribution to which the
Participant would have been entitled under the SIP
had the Participant not made any Deferred Salary
Election for the Plan Year under this Plan (taking
into account all applicable Code limitations that
limit the amount of matching contributions under the
SIP) less an amount equal to the actual matching
contribution to which the Participant is entitled
under the SIP for the Plan Year. Such amounts shall
be credited to the Participant's Company Matching
Credit Account as soon as practicable after the end
of the Plan Year and shall be subject to the vesting
schedule described in Article IV.
Section 3.6 Company Discretionary Credits
The Company may, in its sole discretion, provide for
additional credits to all or some Participants'
Accounts at any time. Such amounts shall be credited
to the Participant's Company Discretionary Credit
Account and shall be subject to the vesting schedule
established by the Company at the time such amounts
are credited.
Section 3.7 Deferral Period
With respect to amounts deferred in accordance with
Sections 3.1 through 3.6, in accordance with section
2.2(b), each Participant must elect the deferral
period for each separate category of deferral.
Subject to the additional deferral provisions of
Section 3.8 and the acceleration provisions of
Article V, a Participant's deferral period may be for
a specified number of years or until a specified
date, subject to any
13
limitations that the Committee in its discretion may
choose to apply, provided that, in all events, a
deferral period must be for at least two (2) years
from the first day of the Plan Year in which the
deferred amounts would otherwise be payable (or, in
the case of amounts described in Section 3.5 or
Section 3.6, credited to the Participant's Account).
However, notwithstanding the deferral period
otherwise specified, payments shall be paid or begin
to be paid under the Plan in accordance with the
mandatory distribution provisions in Article V.
Section 3.8 Modification of Deferral Period
(a) With respect to any previously deferred amount
credited to a Participant's Accounts, a Participant
may request that the Committee approve an additional
deferral period of at least two (2) years from the
date the previously deferred amounts were otherwise
payable. Any such request must be made by written
notice to the Committee at least twelve (12) months
before the expiration of the deferral period for any
previously deferred amount with respect to which an
additional deferral election is requested. A separate
additional deferral election is required to be made
for each separate category of previously deferred
amount that is treated as subject to a single
deferral period election under section 2.2(b) above.
Each such additional deferral election request shall
include a newly designated manner of payment election
in accordance with the provision of Section 5.2
below. No more than two such extensions may be
elected by a Participant with respect to any specific
deferred amount.
(b) With respect to any previously deferred amount
credited to a Participant's Accounts, a Participant
may request that the Committee approve an accelerated
deferral date with respect to amounts that are not
otherwise payable for at least three (3) years from
the date of such request, provided that the resulting
accelerated deferral date may not be any earlier than
two (2) years from the date of such Participant
election. A separate deferral modification election
is required to be made for each separate category of
previously deferred amount that is treated as subject
to a single deferral period election under section
2.2(b) above. Each such modified deferral period
request shall include a newly designated manner of
payment election in accordance with the provisions of
Section 5.2 below. No more than two such
modifications may be elected by a Participant with
respect to any specific deferred amount.
14
ARTICLE IV
Participants' Accounts
Section 4.1 Crediting of Employee Deferrals and Company Matching
and Discretionary Credits
Deferrals to this Plan that are made under Article
III shall be credited to the Participant's Accounts
in accordance with such rules established by the
Committee from time to time. Each Participant's
Accounts shall be administered in a way to permit
separate Deferral Elections, deferral periods, and
Investment Elections with respect to various Plan
Year deferrals and compensation types as the
Committee determines, in its sole discretion, are
necessary or appropriate.
Section 4.2 Investment Election
Effective January 1, 2002, all balances reflected
through December 31, 2001 credited to the Accounts of
Participants who are not actively employed on January
1, 2002 shall continue to be credited with earnings
(or charged with losses) to reflect the income (or
loss) that would have been earned had the deferred
amounts been invested in the Investment Options then
in effect with respect to such Participants. With
respect to amounts credited to all other
Participants' Accounts under the Plan, Participants'
Investment Elections with respect to deferred amounts
hereunder shall be made pursuant to the written,
telephonic or electronic methods prescribed by the
Committee and subject to such rules on Investment
Elections and Investment Options as established by
the Committee from time to time. Upon receipt by the
Committee, and in accordance with rules established
by the Committee, an Investment Election shall be
effective as soon as practicable after receipt and
processing of the election by the Committee.
Investment Elections will continue in effect until
changed by the Participant. An eligible Participant
(including a Participant who terminates employment on
or after January 1, 2002) may change a prior
Investment Election (or default Investment Election)
with respect to deferred amounts on a monthly basis,
by notifying the Committee, at such time and in such
manner as approved by the Committee. Any such changed
Investment Election may result in amending Investment
Elections for prior deferrals or for future deferrals
or both.
Section 4.3 Hypothetical Earnings
(a) General. Subject to Section 4.2, additional
hypothetical bookkeeping amounts shall be credited to
(or deducted from) a Participant's Accounts to
reflect the earnings (or losses) that would have been
experienced had
15
the deferred amounts been invested in the Investment
Options selected by the Participant as targeted rates
of return, net of all fees and expenses otherwise
associated with the Investment Options. The Committee
may add or delete Investment Options, on a
prospective basis, by notifying all Participants
whose Accounts are hypothetically invested in such
Options, in advance, and soliciting elections to
transfer deferred amounts so that they track
investments in other Investment Options then
available.
(b) Company Stock Investment Option. Instead of having
deferred amounts credited with hypothetical earnings
(or losses) in accordance with Section 4.3(a), and
subject to Section 4.2, a Participant may elect to
have all or part of the Participant's deferred
amounts (in whole percentage increments) credited in
the form of Common Stock to a Deferred Stock Account.
Such an election may be made as a part of the
Participant's Deferral Election and thereafter on the
same basis as Participants are permitted to make
other Investment Elections and using the same or
similar procedures as participants use to make other
Investment Elections under Section 4.2. In addition,
any amounts credited to a Participant's Accounts
other than the Participant's Deferred Stock Account
may be transferred for hypothetical investment
tracking purposes to the Participant's Deferred Stock
Account, and any amounts credited to a Participant's
Deferred Stock Account may be transferred for
hypothetical investment tracking purposes to a
Participant's Accounts other than the Participant's
Deferred Stock Account. All distributions of amounts
credited to a Participant's Deferred Stock Account
may only be distributed in whole shares of Common
Stock (with cash for fractional shares).
A Participant's Deferred Stock Account will be
credited:
(i) as of the first business day after the last
day of each bi-weekly payroll period, with
the number of shares of Common Stock (in
whole shares and fractional shares, as
determined by the Committee) determined by
dividing the Participant's deferred amounts
attributable to Deferred Salary for such
bi-weekly payroll period subject to the
Deferred Stock Election by the price for
shares of Common Stock, determined by the
Committee, as of the day such deferred
amounts are credited to the Participant's
Account; and
(ii) annually, as of the first business day in
January of each calendar year, with the
number of shares of Common Stock (in whole
shares and fractional shares, as determined
by the Committee) determined by dividing the
portion of the Participant's Deferred Bonus
and Company Matching Credits subject to the
Deferred Stock Election by the price for
shares of Common Stock, determined by the
Committee, as of the day such deferred
amounts are credited to the Participant's
Accounts; and
16
(iii) at such other times as the Committee
determines with respect to all other
deferred amounts under the Plan, with the
number of shares of Common Stock (in whole
shares and fractional shares, as determined
by the Committee) determined by dividing the
portion of the Participant's deferred
amounts to be credited in the Deferred Stock
Account by the price for shares of Common
Stock, determined by the Committee, as of
the day such deferred amounts are credited
to the Participant's Account, or, in the
case of deferred amounts measured in stock
units, by crediting the account with the
same number of shares of Common Stock.
If the Company enters into transactions involving
stock splits, stock dividends, reverse splits or any
other recapitalization transactions, the number of
shares of Common Stock credited to a Participant's
Deferred Stock Account will be adjusted (in whole
shares and fractional shares, as determined by the
Committee) so that the Participant's Deferred Stock
Account reflects the same equity percentage interest
in the Company after the recapitalization as was the
case before such transaction.
If at least a majority of the Company's stock is sold
or exchanged by its shareholders pursuant to an
integrated plan for cash or property (including stock
of another corporation) or if substantially all of
the assets of the Company are disposed of and, as a
consequence thereof, cash or property is distributed
to the Company's shareholders, each Participant's
Deferred Stock Account will, to the extent not
already so credited under this Section 4.3(b), be (i)
credited with the amount of cash or property
receivable by a Company shareholder directly holding
the same number of shares of Common Stock as is
credited to such Participant's Deferred Stock Account
and (ii) debited by that number of shares of Common
Stock surrendered by such equivalent Company
shareholder.
Each time the Company declares a dividend on its
Common Stock, each Participant's Deferred Stock
Account will be credited with a Dividend Reinvestment
Return equal to that number of shares of Common Stock
(in whole shares and fractional shares, as determined
by the Committee) determined by dividing (i) the
amount that would have been paid (or the fair market
value thereof, if the dividend is not paid in cash)
to the Participant on the total number of shares of
Common Stock credited to the Participant's Deferred
Stock Account had that number of shares of Common
Stock been held by such Participant by (ii) the price
for shares of Common Stock, determined by the
Committee, as of the dividend payment date.
17
(c) Limitations on Allocations and Reallocations to and
From Deferred Stock Account.
Pursuant to the Policy Statement on Insider Trading
and Compliance, as the same may be amended (the
"Policy"), there are time periods (each, a "blackout
period") during which time Participants may not
effect transactions, directly or indirectly, in
Company equity securities. Under the Policy, the
Company's Corporate Secretary may also impose
additional blackout periods with respect to some or
all Participants. Participants whose ability to
effect transactions is prohibited during such
blackout periods also will be prohibited during such
periods from making any Investment Election or
Deferred Stock Election that increases or decreases
the amount credited to the participant's Deferred
Stock Account. The Committee, at the direction of the
Company's Corporate Secretary, shall adopt and
implement procedures to ensure that the provisions of
this Paragraph are carried out.
Section 4.4 Vesting
At all times a Participant shall be fully vested in
his Deferred Salary, Deferred Bonus, Deferred
Equity-Based Compensation, and Deferred SERP
Distribution Accounts hereunder (including any
earnings or losses and Dividend Reinvestment Return
thereon). A Participant shall become vested in any
Company Matching Credits in the same manner and to
the same extent as the Participant is vested in
matching contributions otherwise credited to the
Participant under the Becton, Dickinson and Company
Savings Incentive Plan. A Participant shall become
vested in any Company Discretionary Credits pursuant
to the vesting schedule established by the Company at
the time such Credits, if any, are made. Except as
otherwise provided in Section 5.1(b) (death) or
Section 5.1(c) (disability), if a Participant
terminates employment at any time prior to becoming
fully vested in amounts credited to the Participant's
Accounts hereunder, the nonvested amounts credited to
the Participant's Accounts shall be immediately
forfeited and the Participant shall have no right or
interest in such nonvested deferred amounts.
Section 4.5 Account Statements
Within 60 days following the end of each Plan Year
(or at such more frequent times determined by the
Committee), the Committee shall furnish each
Participant with a statement of Account which shall
set forth the balances of the individual's Accounts
as of the end of such Plan Year (or as of such time
determined by the Committee), inclusive of tracked
earnings (or losses) and any Dividend Reinvestment
Return. In addition, the Committee shall maintain
records reflecting each year's deferrals separately
by type of compensation.
18
ARTICLE V
Distributions and Withdrawals
Section 5.1 Timing of Distribution
(a) Time of Distribution - Distributions Other than
Death, Disability, or Scheduled Distributions. Except
as otherwise provided herein in the case of a
Participant who retires and subject to Section
5.1(d), a Participant's vested Accounts shall be paid
or commence to be paid, in the form of distribution
elected in a particular Deferral Election (subject to
Section 5.2), at such date as determined in the sole
discretion of the Committee following the earlier of:
(i) the Participant's termination of employment, or
(ii) the date otherwise specified in the
Participant's Deferral Election. In the case of a
Participant who retires from employment hereunder (as
defined below), and subject to Section 5.1(d), a
Participant's vested Accounts shall be paid or
commence to be paid, in the form of distribution
elected in a particular Deferral Election (subject to
Section 5.2), at such date as determined in the sole
discretion of the Committee following the later of:
(i) the Participant's retirement from active
employment (or, in the case of certain Equity-Based
Compensation that vests one year after retirement,
one year after retirement), or (ii) the date
otherwise specified in the Participant's Deferral
Election; provided however that, in all events
distributions to such a retired Participant must be
made (or commence to be paid) as of the earlier of
the Participant's attainment of age 70 or death. For
purposes of this Section 5.1(a), a Participant has
"retired" from active employment if:
(i) the Participant terminates from active
employment after having attained age 65 with
five years of service with the Company or an
affiliate;
(ii) the Participant terminates from active
employment after having attained age 55 with
ten years of service with the Company or an
affiliate; or
(iii) the Committee, in its sole discretion,
otherwise determines that the Participant
has retired for this purpose.
(b) Timing of Distributions - Participant's Death. If a
Participant dies before the full distribution of the
Participant's Accounts under this Article V, any
deferred amounts that are not vested and have not
previously been forfeited shall become 100% vested.
Unless the Participant had commenced receiving
installment payments, as soon as practicable after
the Participant's death, all remaining amounts
credited to the Participant's Accounts shall be paid
in a single lump sum payment to the Participant's
19
named beneficiary (or beneficiaries). In the absence
of any beneficiary designation, payment shall be made
to the personal representative, executor or
administrator of the Participant's estate.
Beneficiary designations may be changed by a
Participant at any time without the consent of the
Participant's spouse or any prior beneficiary. If the
Participant dies after having commenced to receive
installment payments, the Participant's beneficiary
may accelerate the payment of any remaining
installment payments as follows:
(i) The beneficiary may request (within a
reasonable time after the Participant's
death, as specified by the Committee) that
all remaining installment payments that are
otherwise to be paid to the beneficiary at
least twelve (12) months after the date of
the request be accelerated and paid in a
single lump sum payment as of a date
specified by the Committee that is at least
twelve (12) months after the date of the
request; or
(ii) The beneficiary may request (within a
reasonable time after the Participant's
death, as specified by the Committee) that
all remaining installment payments that are
otherwise to be paid to the beneficiary be
accelerated and paid in the form of an
immediate lump sum payment, subject to the
requirement that ten percent (10%) of the
remaining amounts be permanently forfeited.
(c) Timing of Distributions - Participant's Disability.
Notwithstanding anything in the Plan to the contrary,
if a Participant becomes Disabled, the Participant
will be treated as having terminated employment and
any deferred amounts that are not vested and have not
previously been forfeited shall become 100% vested.
Notwithstanding anything in a Participant's Deferral
Election to the contrary with respect to payment
commencement, as soon as practicable after the
Participant becomes Disabled, all remaining amounts
credited to the Participant's Accounts shall be paid
or commence to be paid to the Participant in the form
of distribution elected by the Participant in the
Participant's Deferral Election. In addition, as soon
as practicable after the Participant becomes
Disabled, the Participant may request that the
Committee change any installment distribution
election so that amounts subject to the election are
accelerated and paid in the form of a single lump sum
distribution. Such distribution shall be made only if
the Committee, taking into account the type of
factors taken into account in the event of a hardship
under Section 5.1(f), in its sole discretion,
approves such request.
(d) Scheduled Distribution. As a part of the
Participant's Deferral Election, a Participant may
elect to receive a lump sum distribution or annual
installments (over 2, 3, 4 or 5 years, as elected by
the Participant) equal to all or any part of the
vested balance of the Participant's Accounts to be
paid (or commence to be paid) at a scheduled
distribution date, subject to
20
the timing requirements in Section 5.1(a). For these
purposes, the amount of each installment payment
shall be determined by multiplying the value of the
Participant's remaining vested Accounts subject to
the scheduled distribution election by a fraction,
the numerator of which is one (1) and the denominator
of which is the number of calendar years remaining in
the installment period. These scheduled distributions
are generally available only for distributions that
are scheduled to commence to be paid while a
Participant is employed by the Company. If a
Participant terminates employment before commencing
receipt of scheduled distributions, the timing
requirements of Section 5.1(a) shall apply (which
requirements provide for payment upon termination of
employment, unless the Participant has attained
retirement age, in which case a later distribution
date may apply). If a Participant terminates
employment while receiving scheduled installment
payments, such installment payments shall continue to
be paid in the same form of distribution, subject to
the Participant's right to accelerate the remaining
payments in accordance with Section 5.1(e) or Section
5.1(f). Notwithstanding the foregoing, if a
Participant's employment is terminated for cause, as
determined by the Company, full payment of all
remaining amounts in such Participant's Account shall
be paid in the form of a single lump sum payment as
soon as practicable after such termination.
(e) Early Distribution. Notwithstanding any other
provision of the Plan, a Participant or beneficiary
may, at any time prior to or subsequent to
commencement of payments, request in writing to the
Committee to have any or all vested amounts in his or
her Accounts paid in an immediate lump sum
distribution, provided that an amount equal to ten
percent (10%) of the requested distribution shall be
permanently forfeited from the Participant's Accounts
prior to such distribution. Any such lump sum
distribution shall be paid as soon as practicable
after the Committee's receipt of the Participant's
(or beneficiary's) request. The minimum permitted
early distribution under this Section 5.1(e) shall be
$3,000.
(f) Hardship Distribution. At any time prior to the time
an amount is otherwise payable hereunder, an active
Participant may request a distribution of all or a
portion of any vested amounts credited to the
Participant's Accounts on account of the
Participant's financial hardship, subject to the
following requirements:
(i) Such distribution shall be made, in the sole
discretion of the Committee, if the
Participant has incurred an unforeseeable
emergency.
(ii) For purposes of this Plan, an "unforeseeable
emergency" shall mean an unanticipated
emergency that is caused by an event beyond
the control of the Participant and that
would result in severe financial hardship to
the Participant resulting from a sudden
21
and unexpected illness or accident of the
Participant or of a Participant's dependent
(as defined in Code section 152(a)), loss of
the Participant's property due to casualty,
or other similar extraordinary and
unforeseeable circumstances arising as a
result of events beyond the Participant's
control. The circumstances that will
constitute an unforeseeable emergency will
depend upon the facts of each case and be
based on the information supplied by the
Participant, in writing, pursuant to the
procedure prescribed by the Committee. In
addition to the foregoing, distributions
under this subsection shall not be allowed
for purposes of sending a child to college
or the Participant's desire to purchase a
home or other residence. In all events,
distributions made on account of an
unforeseeable emergency are limited to the
extent reasonably needed to satisfy the
emergency need.
(iii) Notwithstanding the foregoing, payment under
this subsection may not be made to the
extent that such hardship is or may be
relieved:
(A) through reimbursement or compensation by
insurance or otherwise,
(B) by liquidation of the Participant's
assets, to the extent the liquidation of
such assets would not itself cause severe
financial hardship, or
(C) by cessation of deferrals under the
Plan.
(iv) All distributions under this subsection
shall be made in cash as soon as practicable
after the Committee has approved the
distribution and that the requirements of
this subsection have been met.
(v) The minimum permitted hardship withdrawal
shall be $3,000.
Section 5.2 Form of Distribution
(a) General. Except as otherwise provided in this Article
V, all amounts payable from a Participant's Accounts
shall be paid in one of the forms of distribution
described in Subsections (b) and (c) below, as
elected by the Participant in a Deferral Election or
as modified by the Participant in accordance with
Subsection (d) below. Any Participant who fails to
elect a form of distribution with respect to any
deferral amount (or any compensation type) shall be
deemed to have elected to receive such amounts in the
form of a lump sum distribution in cash and, to the
extent distributable amounts are credited to the
Participant's Deferred Stock Account, in shares of
Common Stock (with any fractional share interest
therein paid in cash to the extent of the then fair
market value thereof).
22
(b) Lump Sum Distribution. A Participant may elect, in
accordance with such procedures established by the
Committee, to have any vested deferral amounts
credited to his Accounts paid in the form of a single
lump sum distribution at the time otherwise required
or permitted under the Plan.
(c) Annual Installment Distributions. A Participant may
elect, in accordance with such procedures established
by the Committee, to have any vested deferral amounts
credited to his Accounts paid at the time otherwise
required or permitted in the form of annual
installments over a 5, 10 or 15-year period
commencing at the time otherwise required or
permitted under the Plan and paid annually thereafter
for the remainder of the installment period (subject
to Section 5.1(b)). For these purposes, the amount of
each installment payment shall be determined by
multiplying the value of the Participant's remaining
vested Accounts by a fraction, the numerator of which
is one (1) and the denominator of which is the number
of calendar years remaining in the installment
period. Notwithstanding the foregoing, if a
Participant's employment is terminated for cause, as
determined by the Company, full payment of all
remaining amounts in such Participant's Account shall
be paid in the form of a single lump sum payment as
soon as practicable after such termination.
(d) Change in Form
(i) Notwithstanding the foregoing, in accordance
with the written, telephonic or electronic
procedures prescribed by the Committee, a
Participant may elect to change the form
applicable to a particular category of
deferral at any time, provided that such
election must be made at least twelve (12)
consecutive months before the date on which
such distribution otherwise would have been
made or commenced. Any such change that is
not in effect for at least the applicable
twelve (12) month period shall be
disregarded and the last valid election
shall be substituted in its place. In the
absence of such a valid election,
distribution shall be made in the form of a
single lump sum distribution in cash and, to
the extent distributable amounts are
credited to the Participant's Deferred Stock
Account, in shares of Common Stock (with any
fractional share interest therein paid in
cash to the extent of the then fair market
value thereof).
(ii) In addition, with respect to a Participant
who has commenced receiving installment
payments, such Participant may elect,
pursuant to the written, telephonic or
electronic method prescribed by the
Committee (or its delegate), to have all
remaining installment payments that are
otherwise to be paid to the Participant at
least twelve (12) months after the date of
the election be accelerated and paid in a
single lump sum payment as of a date
23
specified by the Committee that is at least
twelve (12) months after the date of the
election.
24
ARTICLE VI
General Provisions
Section 6.1 Unsecured Promise to Pay
The Company shall make no provision for the funding
of any amounts payable hereunder that (i) would cause
the Plan to be a funded plan for purposes of section
404(a)(5) of the Code, or Title I of ERISA, or (ii)
would cause the Plan to be other than an "unfunded
and unsecured promise to pay money or other property
in the future" under Treasury Regulations 'SS'
1.83-3(e); and, except to the extent specified in the
Stock Trust following a "change of control" (as
defined in the Stock Trust) of the Company, the
Company shall have no obligation to make any
arrangement for the accumulation of funds to pay any
amounts under this Plan. Subject to the restrictions
of the preceding sentence and in Section 4.3, the
Company, in its sole discretion, may establish one or
more grantor trusts described in Treasury Regulations
'SS' 1.677(a)-1(d) to accumulate funds and/or shares
of Common Stock to pay amounts under this Plan,
provided that the assets of such trust(s) shall be
required to be used to satisfy the claims of the
Company's general creditors in the event of the
Company's bankruptcy or insolvency.
Section 6.2 Plan Unfunded
In the event that the Company (or one of its
subsidiaries) shall decide to establish an advance
accrual reserve on its books against the future
expense of payments hereunder, such reserve shall not
under any circumstances be deemed to be an asset of
this Plan but, at all times, shall remain a part of
the general assets of the Company (or such
subsidiary), subject to claims of the Company's (or
such subsidiary's) creditors. A person entitled to
any amount under this Plan shall be a general
unsecured creditor of the Company (or the
Participant's employer subsidiary) with respect to
such amount. Furthermore, a person entitled to a
payment or distribution with respect to any amounts
credited to Participant Accounts shall have a claim
upon the Company (or the Participant's employer
subsidiary) only to the extent of the vested
balance(s) credited to such Accounts.
Section 6.3 Designation of Beneficiary
The Participant's beneficiary under this Plan with
respect to amounts credited to the Participant's
Accounts hereunder shall be the person designated to
receive benefits on account of the Participant's
death on a form provided by the Committee.
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Section 6.4 Expenses
All commissions, fees and expenses that may be
incurred in operating the Plan and any related
trust(s) established in accordance with the Plan
(including the Stock Trust) will be paid by the
Company.
Section 6.5 Voting Common Stock
Each Participant who has a Deferred Stock Account
shall be entitled to provide directions to the
Committee to cause the Committee to similarly direct
the Trustee of the Stock Trust to vote, on any matter
presented for a vote to the shareholders of the
Company, that number of shares of Common Stock held
by the Stock Trust equivalent to the number of shares
of Common Stock credited to the Participant's
Deferred Stock Account. The Committee shall arrange
for distribution to all such Participants in a timely
manner all communications directed generally to the
shareholders of the Company as to which their votes
are solicited. If the Stock Trust ever holds fewer
shares of Common Stock than there are shares
allocated to Deferred Stock Accounts under the Plan
as to which timely and proper directions have been
received from the applicable Plan participants, the
Committee will direct the Trustee to vote all shares
held in the Stock Trust in the same proportion as the
total shares covered by timely and proper directions
that have been directed to be voted.
Section 6.6 Non-Assignability
Participants, their legal representatives and their
beneficiaries shall have no right to anticipate,
alienate, sell, assign, transfer, pledge or encumber
their interests in the Plan, nor shall such interests
be subject to attachment, garnishment, levy or
execution by or on behalf of creditors of the
Participants or of their beneficiaries.
Section 6.7 Mandatory Deferral
Notwithstanding any other provision of this Plan, the
Compensation and Benefits Committee of the Company's
Board of Directors may require an employee to defer:
(i) the portion of any Base Salary, Bonus amount,
Equity-Based Compensation, or SERP distribution, or
(ii) the portion of any payment from any Account
hereunder, in any case where the Company anticipates
that such portion otherwise would be nondeductible
pursuant to section 162(m) of the Code.
Section 6.8 Employment/Participation Rights
(a) Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any
Participant's employment at any time, nor confer upon
any Participant any right to continue in the employ
of the Company.
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(b) Nothing in the Plan shall be construed to be evidence
of any agreement or understanding, express or
implied, that the Company will continue to employ a
Participant in any particular position or at any
particular rate of remuneration.
(c) No employee shall have a right to be selected as a
Participant, or, having been so selected, to be
continued as a Participant.
(d) Nothing in this Plan shall affect the right of a
recipient to participate in and receive benefits
under and in accordance with any pension,
profit-sharing, deferred compensation or other
benefit plan or program of the Company.
Section 6.9 Severability
If any particular provision of the Plan shall be
found to be illegal or unenforceable for any reason,
the illegality or lack of enforceability of such
provision shall not affect the remaining provisions
of the Plan, and the Plan shall be construed and
enforced as if the illegal or unenforceable provision
had not been included.
Section 6.10 No Individual Liability
It is declared to be the express purpose and
intention of the Plan that no liability whatsoever
shall attach to or be incurred by the shareholders,
officers, or directors of the Company (or any
affiliate) or any representative appointed hereunder
by the Company (or any affiliate), under or by reason
of any of the terms or conditions of the Plan.
Section 6.11 Tax and Other Withholding
The Company shall have the right to deduct from any
payment made under the Plan any amount required by
federal, state, local, or foreign law to be withheld
with respect to such payment. The Company shall also
have the right to withhold from other current salary
or wages any amount required by federal, state,
local, or foreign law to be withheld with respect to
compensation deferred under the Plan at any time
prior to payment of such deferred compensation, or if
such other current salary or wages are insufficient
to satisfy such withholding requirement, to require
the Participant to pay the Company such amount
required to be withheld to the extent such
requirement cannot be satisfied through withholding
on other current salary or wages. Additionally,
should deferrals under this Plan cause there to be
insufficient current salary or wages for purposes of
withholding taxes or other amounts required by
federal, state, local, or foreign law to be withheld
from current salary or wages, the Company shall
require the Participant to pay the Company such
amount required to be withheld to the extent such
requirement cannot be satisfied through withholding
on other
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current salary or wages. Amounts deferred under the
Plan will be taken into account for purposes of any
withholding obligation under the Federal Insurance
Contributions Act and Federal Unemployment Tax Act at
the later of the Plan Year during which the services
are performed or the Plan Year during which the
rights to the amounts are no longer subject to a
substantial risk of forfeiture, as required by
section 3121(v) and 3306(r) of the Code and the
regulations promulgated thereunder.
Section 6.12 Applicable Law
This Plan shall be governed by and construed in
accordance with the laws of the State of New Jersey
except to the extent governed by applicable federal
law.
Section 6.13 Incompetency
Any person receiving or claiming benefits under the
Plan shall be conclusively presumed to be mentally
competent and of age until the Committee receives
written notice, in a form and manner acceptable to
it, that such person is incompetent or a minor, and
that a guardian, conservator, or other person legally
vested with the care of his estate has been
appointed. If the Committee finds that any person to
whom a benefit is payable under the Plan is unable to
properly care for his or her affairs, or is a minor,
then any payment due (unless a prior claim therefor
shall have been made by a duly appointed legal
representative) may be paid to the spouse, a child, a
parent, or a brother or sister, or to any person
deemed by the Committee to have incurred expense for
the care of such person otherwise entitled to
payment. If a guardian or conservator of the estate
of any person receiving or claiming benefits under
the Plan shall be appointed by a court of competent
jurisdiction, payments shall be made to such guardian
or conservator provided that proper proof of
appointment is furnished in a form and manner
suitable to the Committee. Any payment made under the
provisions of this Section shall be a complete
discharge of liability therefor under the Plan.
Section 6.14 Notice of Address
Any payment made to a Participant or a designated
beneficiary at the last known post office address of
the distributee on file with the Committee, shall
constitute a complete acquittance and discharge of
any obligations of the Company under this Plan,
unless the Committee shall have received prior
written notice of any change in the condition or
status of the distributee. Neither the Committee, the
Company nor any director, officer, or employee of the
Company shall have any duty or obligation to search
for or ascertain the whereabouts of a Participant or
a designated beneficiary.
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ARTICLE VII
Administration
Section 7.1 Committee
Prior to a Change in Control, the Plan shall be
administered by the Committee. The Committee shall
have the exclusive right to interpret the Plan
(including questions of construction and
interpretation) and the decisions, actions and
records of the Committee shall be conclusive and
binding upon the Company and all persons having or
claiming to have any right or interest in or under
the Plan. The Committee may delegate to such
officers, employees or departments of the Company, or
to service-providers or other persons, such
authority, duties, and responsibilities of the
Committee as it, in its sole discretion, considers
necessary or appropriate for the proper and efficient
operation of the Plan, including, without limitation,
(i) interpretation of the Plan, (ii) approval and
payment of claims, and (iii) establishment of
procedures for administration of the Plan.
Notwithstanding the foregoing, after a Change in
Control, the trustee of any grantor trust established
for the purpose of accumulating funds to satisfy the
obligations incurred by the Company under this Plan
shall administer the Plan and shall have the same
privileges and rights as given to the Committee prior
to a Change in Control.
Section 7.2 Claims Procedure
Any person dissatisfied with the Committee's
determination of a claim for benefits (or claim for
eligibility for participation) hereunder must file a
written request for reconsideration with the
Committee. This request must include a written
explanation setting forth the specific reasons for
such reconsideration. The Committee shall review its
determination promptly and render a written decision
with respect to the claim, setting forth the specific
reasons for such denial written in a manner
calculated to be understood by the claimant. Such
claimant shall be given a reasonable time within
which to comment, in writing, to the Committee with
respect to such explanation. The Committee shall
review its determination promptly and render a
written decision with respect to the claim. Such
decision of the Committee shall be conclusive,
binding, and final upon all claimants under this
Plan.
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ARTICLE VIII
Amendment, Termination and Effective Date
Section 8.1 Amendment of the Plan
Subject to Section 8.3, the Plan may be wholly or
partially amended or otherwise modified at any time
by written action of the Board of Directors.
Section 8.2 Termination of the Plan
Subject to the provisions of Section 8.3, the Plan
may be terminated at any time by written action of
the Board of Directors.
Section 8.3 No Impairment of Benefits
Notwithstanding the provisions of Sections 8.1 and
8.2, no amendment to or termination of the Plan shall
reduce the amount credited to any Participant's
Accounts hereunder.
Section 8.4 Effective Date
The Plan, as previously amended and restated, was
effective as of August 15, 1996. The Plan as set
forth herein is amended and restated effective as of
March 22, 2004, with the exception of the amendment
to Section 4.2 allowing participants to allocate and
reallocate deferrals out of a Deferred Stock Account,
which amendment shall be effective beginning as of
the first day of the quarter after the Plan
amendments are approved.
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