Exhibit
10.4
NOVELL, INC.
STOCK-BASED
DEFERRED
COMPENSATION PLAN
( As Amended and Restated,
effective January 1, 2009 )
NOVELL, INC.
STOCK-BASED
DEFERRED
COMPENSATION PLAN
ARTICLE 1
INTRODUCTION
1.1 Establishment of
Plan . The Company (as
defined below) originally established the Plan (as defined below)
as of the Original Effective Date (as defined below), and
previously amended and restated the Plan, effective as of
April 4, 2003. The Plan is now amended and restated, effective
as of the Effective Date (as defined below), to implement changes
required pursuant to and consistent with section 409A of the Code
(as defined below) and to make certain ordinary-course design
changes for the effective administration of the Plan. This Plan
document covers any Participant (as defined below) who was entitled
to receive a benefit from the Plan as of December 31, 2008,
but did not receive full payment of such benefit under the Plan as
of such date, as well as any individual who first becomes a
Participant in the Plan on or after the Effective Date. Payments
commencing on or after the Effective Date shall be governed by the
Plan as amended and restated herein. Payments commencing prior
to the Effective Date are governed by the terms of the Plan as they
existed prior to this amendment and restatement and are either
grandfathered from the requirements of section 409A of the Code or
payable pursuant to a fixed schedule as required by and in
compliance with section 409A of the Code. Between
January 1, 2005 and December 31, 2008, the Plan has been
operated in accordance with the transition relief established by
the Treasury Department and Internal Revenue Service pursuant to
section 409A of the Code. This amendment and restatement is adopted
in conformity with final regulations under section 409A of the Code
issued by the Treasury Department on April 10, 2007 and
effective January 1, 2009.
1.2 Purpose of Plan
. The Company established the Plan
in connection with the adoption of the SOP (as defined below). The
Plan is intended to provide a vehicle for select employees who
participate in the SOP to achieve, and maintain, their SOR (as
defined below) under the SOP by offering them the opportunity to
defer the receipt of their Base Salary (as defined below) and Bonus
(as defined below) in exchange for the right to receive shares of
Common Stock (as defined below) at a future date. The Plan provides
Participants (as defined below) with this opportunity on a
tax-deferred basis and provides Participants with a
“deemed” ownership interest in the Company. The Company
intends to maintain the Plan primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees, within the meaning of sections 201(2),
301(a)(3) and 401(a)(1) of ERISA (as defined below). The Plan is a
non-qualified deferred compensation plan that is not subject to the
qualification requirements of section 401(a) of the Code (as
defined below). The Plan is intended to be maintained and operated
in accordance with the requirements of section 409A of Code with
respect to amounts subject to such requirements. The Plan will be
interpreted in a manner consistent with these
intentions.
ARTICLE 2
DEFINITIONS
Definitions are contained in this
Article and throughout other Sections of the Plan. The location of
a definition is for convenience only and should not be given any
significance. A word or term defined in this Article (or in any
other Article) will have the same meaning throughout the Plan
unless the context clearly requires a different meaning.
2.1 Amended Deferred Compensation
Agreement means an
amended Deferred Compensation Agreement executed by a Participant
that satisfies the requirements of Section 6.6 and that
changes the form of a distribution of amounts credited to the
Participant’s Post-409A Account and/or Pre-409A Account, as
applicable.
2.2 Base Salary means, for each Eligible
Employee, his or her annual rate of base salary for the Plan Year,
before taking into account amounts deferred under this Plan and any
reduction in taxable income by salary reduction under the Novell,
Inc. Deferred Compensation Plan, the Novell, Inc. 401(k) Retirement
and Savings Plan (or any other qualified plan of the Company), and
any section 125 of the Code plan of the Company.
2.3 Beneficiary means the individual(s) or
entity designated by a Participant, or by the Plan, to receive any
benefit payable upon the death of a Participant or Beneficiary. A
Beneficiary designation must be completed by the Participant and
delivered to the Committee on such form and by such method as
specified by the Committee for that purpose or may be completed
electronically and submitted by the Participant in conformance with
procedures established by the Committee. In the absence of a valid
or effective Beneficiary designation, the Beneficiary designated by
the Participant in the beneficiary designation form, if any, which
has been submitted by such Participant in connection with his or
her participation in the Novell, Inc. Deferred Compensation Plan
shall govern. In the absence of a valid or effective beneficiary
designation form for the Novell, Inc. Deferred Compensation Plan,
the beneficiary shall be (in the following order): the
Participant’s surviving spouse, or if there is no surviving
spouse, the Participant’s children, by representation, and if
there are no surviving children or issue thereof, the
Participant’s estate.
2.4 Board means the Board of Directors of the
Company.
2.5 Bonus means the annual cash bonus
compensation earned for a Plan Year by an Eligible Employee in
accordance with the applicable annual bonus program sponsored by
the Company, but excluding any payments made under the
Company’s long-term cash bonus award program or that could be
deemed to include equity based pay, and computed before taking into
account amounts deferred under this Plan and any reduction in
taxable income by salary reduction under the Novell, Inc. Deferred
Compensation Plan, the Novell, Inc. 401(k) Retirement and Savings
Plan (or any other qualified plan of the Company), and any section
125 of the Code plan of the Company. For this purpose, an Eligible
Employee’s Bonus for a particular Plan Year shall be the
Bonus that is earned by such Eligible Employee pursuant to the
performance period that commences during the Plan Year.
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2.6 Change in Control
means the occurrence 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
“Exchange Act”)) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the combined voting power of the
then outstanding Voting Stock of the Company; provided, however,
that for purposes of this Section 2.6(a), the following
acquisitions will not constitute a Change in Control: (i) any
issuance of Voting Stock of the Company directly from the Company
that is approved by the Incumbent Board (as defined in
Section 2.6(b), below), (ii) any acquisition by the
Company of Voting Stock of the Company, (iii) any acquisition
of Voting Stock of the Company by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
subsidiary, or (iv) any acquisition of Voting Stock of the
Company by any Person pursuant to a Business Combination that
complies with clauses (i), (ii) and (iii) of
Section 2.6(c), below; and provided, further, that a Change in
Control will not occur if any Person becomes the beneficial owner
of 25% or more of the combined voting power of the Voting Stock of
the Company solely as a result of an issuance of Voting Stock
described in clause (i) of this Section 2.6(a) or an
acquisition of Voting Stock described in clause (ii) of this
Section 2.6(a) unless and until such Person thereafter
acquires beneficial ownership of Voting Stock of the Company that
causes the aggregate percent of the combined voting power of the
Voting Stock of the Company then owned beneficially by such Person
to exceed the percent of the combined voting power of Voting Stock
of the Company owned beneficially by such Person immediately after
such issuance or acquisition described in clause (i) or
(ii) of this Section 2.6(a);
(b) individuals who, as of the date
hereof, constitute the Board (the “Incumbent Board,” as
modified by this Section 2.6(b)), cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least
two-thirds of the directors then comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as a nominee for
director, without objection to such nomination) will be deemed to
have then been 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 (within the meaning of Rule 14a-11 of the Exchange Act)
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;
(c) consummation of a
reorganization, merger or consolidation, a sale or other
disposition of all or substantially all of the assets of the
Company, or other transaction (each, a “Business
Combination”), unless, in each case, immediately following
such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners of Voting
Stock of the Company immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the
combined voting power of the then outstanding shares of Voting
Stock of the entity resulting from such Business Combination
(including, without limitation, an entity which 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
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subsidiaries), (ii) no Person
(other than the Company; such entity resulting from such Business
Combination; any employee benefit plan (or related trust) sponsored
or maintained by the Company, any subsidiary or such entity
resulting from such Business Combination; or any Person who
immediately prior to such Business Combination beneficially owned
directly or indirectly 25% or more of the combined voting power of
the voting stock of the Company and whose ownership of such Voting
Stock did not result in a Change in Control under
Section 2.6(a)) beneficially owns, directly or indirectly, 25%
or more of the combined voting power of the then outstanding shares
of Voting Stock of the entity resulting from such Business
Combination, and (iii) at least a majority of the members of
the Board of Directors of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of the Board
providing for such Business Combination; or
(d) approval by the stockholders of
the Company of a complete liquidation or dissolution of the
Company, except pursuant to a Business Combination that complies
with clauses (i), (ii) and (iii) of
Section 2.6(c).
2.7 Code means the Internal Revenue Code of
1986, as amended from time to time and the regulations promulgated
thereunder.
2.8 Committee means the Compensation
Committee of the Board. For purposes of administration of the Plan,
the Committee may delegate its administrative powers to another
committee or to an individual, and all references to the Committee
in the Plan shall mean the Committee’s delegate. The
Committee will serve as the “plan administrator” to
manage and control the operation and administration of the Plan,
within the meaning of section 3(16)(A) of ERISA.
2.9 Common Stock means the common stock of
the Company, par value $0.10 per share.
2.10 Company means Novell, Inc., a corporation
organized under the laws of the state of Delaware, or any successor
of Novell, Inc.
2.11 Deferral Account means a bookkeeping
account established for and maintained on behalf of a Participant
to which Units are credited. A Participant’s Deferral Account
shall consist of two separate subaccounts, the Pre-409A Account and
the Post-409A Account.
2.12 Deferred Compensation Agreement means an
agreement entered into by a Participant and the Company to reduce
the Participant’s Base Salary and/or Bonus as described in
Section 3.4 for a Plan Year and defer such amounts to the
Plan, in accordance with Article 3.
2.13 Disability means “disability”
(or similar term) as defined in the Company’s long-term
disability program and which results in payments to the Participant
under such program.
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2.14 Effective Date means January 1,
2009, the effective date of this amendment and restatement of the
Plan. The Original Effective Date means April 1, 2003,
the initial effective date of the Plan.
2.15 Eligible Employee means any participant
in the SOP who is being paid from the U.S. payroll of the Company.
Eligible Employee shall also mean any participant in the SOP who is
not being paid from the U.S. payroll of the Company, but is
designated by the Committee to participate in the Plan. Except as
otherwise provided in Section 3.1 (concerning an individual
who ceases to be an Eligible Employee), an individual’s
status as an Eligible Employee for a Plan Year shall be determined
at such time prior to the beginning of such Plan Year as determined
by the Committee, in its sole discretion. Notwithstanding the
foregoing, the Committee may determine in writing that an otherwise
Eligible Employee shall not be eligible to participate in this
Plan.
2.16 Enrollment Period means the period prior
to the first day of the Plan Year during which Eligible Employees
may elect to participate in the Plan for such Plan Year and
Participants may change (or eliminate) the percentage of Base
Salary and/or Bonus deferred to the Plan for such Plan Year. The
Committee will determine, in its sole discretion, the Enrollment
Period for a particular Plan Year, provided, that in no event will
the last day of any Enrollment Period be later than the
December 31 that immediately precedes the Plan Year for which
the Enrollment Period applies.
2.17 ERISA means the Employee Retirement
Income Security Act of 1974, as amended from time to time and the
regulations promulgated thereunder.
2.18 Hardship means:
(a) With respect to amounts credited
to a Participant’s Pre-409A Account, an unforeseeable and
unanticipated emergency which is an event beyond the control of the
Participant that is related to the death of one of the
Participant’s eligible dependents or to a medical condition
of the Participant or one of the Participant’s eligible
dependents, and which would result in severe financial hardship to
the Participant if a distribution or revocation of a deferral
election were not permitted. Hardship conditions will be evaluated
by the Committee, and the Committee will have sole discretion to
determine whether a Hardship condition exists and the
Committee’s determination will be final.
(b) With respect to amounts credited
to a Participant’s Post-409A Account, an unforeseeable
emergency that results from a severe financial hardship to the
Participant, resulting from an illness or accident of the
Participant, the Participant’s spouse, the
Participant’s Beneficiary, or the Participant’s
dependent (as defined in section 152, without regard to section
152(b)(1), (b)(2) and (d)(1)(B)); loss of the Participant’s
property due to casualty; or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond
the control of the Participant and consistent with the requirements
of Treas. Reg. §1.409A-3(i)(3).
2.19 Insolvent means the Company is
(i) unable to pay its debts as they become due or
(ii) subject to a pending proceeding as a debtor under the
United States Bankruptcy Code.
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2.20 Matching Contribution means an amount
credited to the Participant’s Deferral Account under
Section 4.1.
2.21 Participant means an Eligible Employee
who is eligible to participate in the Plan as provided in
Section 3.1 and who has made an election to defer Base Salary
and/or Bonus pursuant to the Plan.
2.22 Plan means the Novell, Inc. Stock-Based
Deferred Compensation Plan, as set forth in this document, as
amended from time to time.
2.23 Plan Year means the 12-month period
beginning on each January 1 and ending on the following
December 31.
2.24 Post-409A Account
means the subaccount maintained for
a Participant that is credited with amounts which were not earned
and vested for purposes of section 409A of the Code as of
December 31, 2004 (and any earnings attributable
thereto).
2.25 Pre-409A Account means the subaccount
maintained for a Participant that is credited with amounts which
were earned and vested for purposes of section 409A of the Code as
of December 31, 2004 (and any earnings attributable
thereto).
2.26 Separation Date means the date on which
the Participant’s Separation From Service has
occurred.
2.27 Separation From Service means with
respect to the amounts credited to the (a) Participant’s
Pre-409A Account, the Participant’s separation from
employment with the Company and (b) Participant’s
Post-409A Account, the Participant’s “separation from
service” with the Company within the meaning of section 409A
of the Code. For purposes of the Plan, a Participant shall not be
deemed to have incurred a Separation From Service with respect to
(i) the Participant’s Pre-409A Account, merely because
of a transfer between the Company and any affiliate of the Company
and (ii) the Participant’s Post-409A Account, merely
because of a transfer between the Company and any affiliate of the
Company that is required to be aggregated with the Company under
section 409A of the Code.
2.28 SOP means the Novell, Inc. Stock
Ownership Program, as amended from time to time.
2.29 SOR means a Participant’s Stock
Ownership Requirement under the SOP.
2.30 Specified Employee means any Participant
who, at any time during the twelve month period ending on the
identification date as determined by the Committee (or its
delegate), is a specified employee under section 409A of the Code,
as determined by the Committee (or its delegate). The determination
of “specified employees,” including the number and
identity of persons considered “specified employees”
and identification date, shall be made by the Committee (or its
delegate) in accordance with the provisions of sections 416(i) and
409A of the Code.
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2.31 Unit means a bookkeeping designation
under each Participant’s Deferral Account that is convertible
into a share of Common Stock when a distribution event occurs under
Article 6 of the Plan. On the date of credit, each Unit will be
equal to one share of Common Stock.
2.32 Voting Stock means securities entitled to
vote generally in the election of directors.
ARTICLE 3
PARTICIPATION
3.1 Eligibility . An Eligible Employee of the
Company shall participate in the Plan only to the extent and for
the period that the Eligible Employee is a participant in the SOP
and is a member of a select group of management or highly
compensated employees as such group is described under sections
201(2), 301(a)(3) and 401(a)(1) of ERISA. An individual who is an
Eligible Employee immediately prior to the first day of the Plan
Year, but who ceases to be an Eligible Employee during the Plan
Year for any reason shall continue to participate in the Plan with
respect to any Deferred Compensation Agreement in effect for such
Plan Year for the remainder of the Plan Year, and shall not be
permitted to enter into any new Deferred Compensation Agreement
with the Company for any future Plan Year unless and until the
individual again becomes an Eligible Employee. Any individual who
first qualifies as an Eligible Employee during a particular Plan
Year shall not be eligible to participate in the Plan until the
following Plan Year.
3.2 Participation . An Eligible Employee who
desires to participate in the Plan for a Plan Year must make an
irrevocable election to defer the receipt of Base Salary and/or
Bonus earned by the Eligible Employee for a Plan Year under a
Deferred Compensation Agreement described in Section 3.4
below. The Eligible Employee must make such election in accordance
with Section 3.3 below during the Enrollment Period. The
Company shall withhold amounts deferred by the Participant in
accordance with this election. The Participant’s deferred
amounts shall be credited to the Deferral Account as provided in
Article 5 and distributed in accordance with Article 6. An election
to defer receipt of Base Salary and/or Bonus with respect to a Plan
Year shall continue in effect for the entire Plan Year, except as
provided in Section 3.5 below. By electing to participate in
the Plan, the Eligible Employee acknowledges that all decisions and
determinations of the Committee shall be final and binding on the
Eligible Employee, his or her Beneficiaries and any other person
having or claiming an interest under the Plan.
3.3 Election Procedure
. An election to defer Base Salary
and/or Bonus under a Deferred Compensation Agreement shall be made
through an electronic or other medium acceptable to the Committee.
The election must be properly completed and delivered to the
Company in the form permitted by the Committee for this purpose no
later than the last day of the Enrollment Period, which shall occur
prior to the first day of the Plan Year for which Base Salary
and/or Bonus shall be earned.
3.4 Deferred Compensation Agreement . During
the Enrollment Period, a Participant shall designate in the
Deferred Compensation Agreement the percentage of Base Salary
and/or Bonus to be deferred into the Participant’s Post-2004
Account. A Deferred
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Compensation Agreement shall become irrevocable
as of the last day of the Enrollment Period for Base Salary and/or
Bonus to be deferred in the following Plan Year and shall remain in
effect for the entire Plan Year and for each Plan Year thereafter,
unless amended as perm
