Nonqualified Deferred Compensation Plan – Hasbro Inc.
HASBRO, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
Effective October 1, 1997
TABLE OF CONTENTS
Page
Purpose
ARTICLE 1 - Definitions
ARTICLE 2 - Selection, Enrollment, Eligibility
2.1 Selection by Committee
2.2 Enrollment Requirements
2.3 Eligibility; Commencement of Participation
2.4 Termination of Participation and/or Deferrals
ARTICLE 3 - Deferral Commitments/Company Matching/Crediting/Taxes
3.1 Minimum Deferrals
3.2 Maximum Deferral
3.3 Election to Defer; Effect of Election Form
3.4 Withholding of Annual Deferral Amounts
3.5 Annual Company Matching Amount
3.6 Investment of Trust Assets
3.7 Vesting
3.8 Crediting/Debiting of Account Balances
3.9 FICA and Other Taxes
3.10 Distributions
3.11 Employer Deferral
ARTICLE 4 - Short-Term Payout; Unforeseeable Financial
Emergencies; Withdrawal Election
ARTICLE 5 - Retirement Benefit
ARTICLE 6 - Pre-Retirement Survivor Benefit
ARTICLE 7 - Termination Benefit
ARTICLE 8 - Disability Waiver and Benefit
8.1 Disability Waiver
8.2 Continued Eligibility; Disability Benefit
ARTICLE 9 - Beneficiary Designation
9.1 Beneficiary
9.2 Beneficiary Designation; Change
9.3 Acknowledgment
9.4 No Beneficiary Designation
9.5 Doubt as to Beneficiary
9.6 Discharge of Obligations
ARTICLE 10 - Leave of Absence
ARTICLE 11 - Termination, Amendment or Modification
11.1 Termination
11.2 Amendment
11.3 Plan Agreement
11.4 Effect of Payment
ARTICLE 12 - Administration
12.1 Committee Duties
12.2 Agents
12.3 Binding Effect of Decisions
12.4 Indemnity of Committee
12.5 Employer Information
ARTICLE 13 - Other Benefits and Agreements
13.1 Coordination with Other Benefits
ARTICLE 14 - Claims Procedures
14.1 Presentation of Claim
14.2 Notification of Decision
14.3 Review of a Denied Claim
14.4 Decision on Review
14.5 Legal Action
ARTICLE 15 - Trust
15.1 Establishment of the Trust
15.2 Interrelationship of the Plan and the Trust
15.3 Distributions From the Trust
ARTICLE 16 - Miscellaneous
16.1 Status of Plan
16.2 Unsecured General Creditor
16.3 Employer's Liability
16.4 Nonassignability
16.5 Not a Contract of Employment
16.6 Furnishing Information
16.7 Terms
16.8 Captions
16.9 Governing Law
16.10 Notice
16.11 Successors
16.12 Validity
16.13 Incompetent
16.14 Distribution in the Event of Taxation
16.15 Insurance
16.16 Legal Fees To Enforce Rights After Change in Control
HASBRO, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
Effective October 1, 1997
Purpose
The purpose of this Plan is to provide specified benefits to a select group
of management and highly compensated Employees who contribute materially to
the continued growth, development and future business success of Hasbro,
Inc., a Rhode Island corporation, and its subsidiaries, if any, that
sponsor this Plan. This Plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA.
ARTICLE 1
Definitions
For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
1.1 'Account Balance' shall mean, with respect to a Participant, a
credit on the records of the Employer equal to the sum of (i) the Deferral
Account balance and (ii) the Company Matching Account balance. The Account
Balance, and each other specified account balance, shall be a bookkeeping
entry only and shall be utilized solely as a device for the measurement and
determination of the amounts to be paid to a Participant, or his or her
designated Beneficiary, pursuant to this Plan.
1.2 'Annual Bonus' shall mean any compensation, in addition to Base
Annual Salary relating to services performed during any calendar year,
whether or not paid in such calendar year or included on the Federal Income
Tax Form W-2 for such calendar year, payable to a Participant as an
Employee under any Employer's annual bonus and cash incentive plans,
excluding stock options, holiday bonuses, retention bonuses, or any other
discretionary or special bonus or awards.
1.3 'Annual Company Matching Amount' for any one Plan Year shall be the
amount determined in accordance with Section 3.5.
1.4 'Annual Deferral Amount' shall mean that portion of a Participant's
Base Annual Salary and Annual Bonus that a Participant elects to have, and
is deferred, in accordance with Article 3, for any one Plan Year. In the
event of a Participant's Retirement, Disability (if deferrals cease in
accordance with Section 8.1), death or a Termination of Employment prior to
the end of a Plan Year, such year's Annual Deferral Amount shall be the
actual amount withheld prior to such event.
1.5 'Base Annual Salary' shall mean the annual cash compensation
relating to services performed during any calendar year, whether or not
paid in such calendar year or included on the Federal Income Tax Form W-2
for such calendar year, excluding bonuses of every type, commissions,
overtime, fringe benefits, stock options, relocation expenses, incentive
payments, non- monetary awards, directors fees and other fees, automobile
and other allowances paid to a Participant for employment services rendered
(whether or not such allowances are included in the Employee's gross
income). Base Annual Salary shall be calculated before reduction for
compensation voluntarily deferred or contributed by the Participant
pursuant to all qualified or non-qualified plans of any Employer and shall
be calculated to include amounts not otherwise included in the
Participant's gross income under Code Sections 125, 402(e)(3), 402(h), or
403(b) pursuant to plans established by any Employer; provided, however,
that all such amounts will be included in compensation only to the extent
that, had there been no such plan, the amount would have been payable in
cash to the Employee.
1.6 'Annual Installment Method' shall be an annual installment payment
over the number of years selected by the Participant in accordance with
this Plan, calculated as follows: The Account Balance of the Participant
shall be calculated as of the close of business three business days prior
to the last business day of the year. The annual installment shall be
calculated by multiplying this balance by a fraction, the numerator of
which is one, and the denominator of which is the remaining number of
annual payments due the Participant. By way of example, if the Participant
elects a 10 year Annual Installment Method, the first payment shall be 1/10
of the Account Balance, calculated as described in this definition. The
following year, the payment shall be 1/9 of the Account Balance, calculated
as described in this definition. Each annual installment shall be paid on
or as soon as practicable after the last business day of the applicable
year.
1.7 'Beneficiary' shall mean one or more persons, trusts, estates or
other entities, designated in accordance with Article 9, that are entitled
to receive benefits under this Plan upon the death of a Participant.
1.8 'Beneficiary Designation Form' shall mean the form established from
time to time by the Committee that a Participant completes, signs and
returns to the Committee to designate one or more Beneficiaries.
1.9 'Board' shall mean the board of directors of the Company.
1.10 'Change in Control' shall mean the first to occur of any of the
following events:
(a) 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 (the '1934 Act') of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the 1934 Act) of 20% or more of either (i) the then
outstanding shares of Common Stock of Hasbro, Inc. ('Hasbro') (the
'Outstanding Common Stock') or (ii) the combined voting power of the then
outstanding voting securities of Hasbro entitled to vote generally in the
election of directors (the 'Outstanding voting Securities'); provided,
however, that the following acquisitions shall not constitute a Change in
Control: (i) any acquisition directly from Hasbro or any of its
subsidiaries, (ii) any acquisition by Hasbro or any of its subsidiaries,
(iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Hasbro or any of its subsidiaries, (iv) any
acquisition by Alan or Sylvia Hassenfeld, members of their respective
immediate families, or heirs of Alan or Sylvia Hassenfeld or of any member
of their respective immediate families, the Sylvia Hassenfeld Trust, the
Merrill Hassenfeld Trust, the Alan Hassenfeld Trust, the Hassenfeld
Foundation, any trust or foundation established by or for the primary
benefit of any of the foregoing or controlled by one or more of any of the
foregoing, or any affiliates or associates (as such terms are defined in
Rule 12b-2 promulgated under the 1934 Act) of any of the foregoing or (v)
any acquisition by any corporation with respect to which, following such
acquisition, more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Common
Stock and the Outstanding Voting Securities immediately prior to such
acquisition in substantially the same proportions as their ownership,
immediately prior to such acquisition, of the Outstanding Common Stock and
Outstanding Voting Securities, as the case may be; or
(b) Individuals who, as the effective date of the Plan 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 the effective date of the Plan whose
election, or nomination for election 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 either
an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents; or
(c) Approval by the shareholders of Hasbro of a reorganization,
merger or consolidation, in each case, with respect to which all or
substantially all of the individuals and entities who were the beneficial
owners, respectively of the Outstanding Common Stock and Outstanding Voting
Securities immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than 60% of,
respectively, 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 reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately prior to
such reorganization, merger or consolidation, of the outstanding Common
Stock and Outstanding Voting Securities, as the case may be; or
(d) Approval by the shareholders of Hasbro of (i) a complete
liquidation or dissolution of Hasbro or (ii) the sale or other disposition
of all or substantially all of the assets of Hasbro, other than to a
corporation, with respect to which following such sale or other
disposition, more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Common
Stock and Outstanding Voting Securities immediately prior to such sale or
other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Common Stock and Outstanding Voting Securities, as the case may be.
1.11 'Claimant' shall have the meaning set forth in Section 14.1.
1.12 'Code' shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
1.13 'Committee' shall mean the committee described in Article 12.
1.14 'Company' shall mean Hasbro, Inc., a Rhode Island corporation, and
any successor to all or substantially all of the Company's assets or
business.
1.15 'Company Matching Account' shall mean (i) the sum of all of a
Participant's Annual Company Matching Amounts, plus (ii) amounts credited
in accordance with all the applicable crediting provisions of this Plan
that relate to the Participant's Company Matching Account, less (iii) all
distributions made to the Participant or his or her Beneficiary pursuant to
this Plan that relate to the Participant's Company Matching Account.
1.16 'Deduction Limitation' shall mean the following described limitation
on a benefit that may otherwise be distributable pursuant to the provisions
of this Plan. Except as otherwise provided, this limitation shall be
applied to all distributions that are 'subject to the Deduction Limitation'
under this Plan. If an Employer determines in good faith prior to a Change
in Control that there is a reasonable likelihood that any compensation paid
to a Participant for a taxable year of the Employer would not be deductible
by the Employer solely by reason of the limitation under Code Section
162(m), then to the extent deemed necessary by the Employer to ensure that
the entire amount of any distribution to the Participant pursuant to this
Plan prior to the Change in Control is deductible, the Employer may defer
all or any portion of a distribution under this Plan. Any amounts deferred
pursuant to this limitation shall continue to be credited/debited with
additional amounts in accordance with Section 3.8 below. The amounts so
deferred and amounts credited thereon shall be distributed to the
Participant or his or her Beneficiary (in the event of the Participant's
death) at the earliest possible date, as determined by the Employer in good
faith, on which the deductibility of compensation paid or payable to the
Participant for the taxable year of the Employer during which the
distribution is made will not be limited by Section 162(m), or if earlier,
the effective date of a Change in Control. Notwithstanding anything to the
contrary in this Plan, the Deduction Limitation shall not apply to any
distributions made after a Change in Control.
1.17 'Deferral Account' shall mean (i) the sum of all of a Participant's
Annual Deferral Amounts, plus (ii) amounts credited in accordance with all
the applicable crediting provisions of this Plan that relate to the
Participant's Deferral Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate to
his or her Deferral Account.
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