Deferred
Compensation Plan
For Non-Employee Directors
Amended and Restated
Effective as of January 1, 2005
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Page
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Article I.
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Definitions
and Construction
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1
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Definitions
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1
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Number and
Gender
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6
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Headings
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6
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Article II.
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Contributions
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7
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General
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7
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Deferral(s)
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7
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Deferral
Election
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7
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Crediting of
Deferral(s)
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7
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Article III.
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Allocations
to Member Accounts
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7
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Individual
Accounts
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7
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Investment of
Accounts
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8
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Allocation of
Net Income or Loss and Changes in Value
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8
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Article IV.
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Hypothetical
Investment of Accounts
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8
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Investment of
Accounts
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8
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Designation of
Investment Funds
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9
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Article V.
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Vested
Interest
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9
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Vesting of
Compensation Deferrals Account
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9
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Article VI.
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Unforeseeable Financial Emergency
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9
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Rules Governing Grandfathered
Benefits
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9
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Rules Governing 409A Benefits
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10
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Article VII.
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Benefit
Distributions
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10
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General
Rules
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10
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Rules Governing Form and Timing of Payment
of Grandfathered Benefits
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11
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Rules Governing Form and Timing of Payment
of 409A Benefits
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12
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Payments
Pursuant to a Qualified Domestic Relations Order
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13
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Payer of
Benefits
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14
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Unclaimed
Benefits
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14
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Article VIII.
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Transition
Rules
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14
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Deferral
Elections for Plan Years 2005 and 2006
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14
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Distribution
Elections
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15
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Table of
Contents
(continued)
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Page
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Article IX.
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Administration of Plan
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15
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Appointment of
Committee
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15
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Term,
Vacancies, Resignation, and Removal
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15
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Self-Interest
of Committee Members
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15
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Committee
Powers and Duties
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15
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Claims
Review
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17
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Company to
Supply Information
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18
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Indemnity
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18
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Article X.
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Purpose and
Unfunded Nature of the Plan
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18
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Purpose of
Plan
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18
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Unfunded Nature
of Plan
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18
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Funding of
Obligation
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19
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Article XI.
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Miscellaneous
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20
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Limitation of
Rights
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20
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Alienation of
Interest Forbidden
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20
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Minor or
Legally Incompetent Distributee
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20
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Withholding
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20
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Amendment and
Termination
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21
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Severability
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22
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Governing
Laws
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22
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DELL INC.
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
Dell Inc., a
corporation organized and existing under the laws of the State of
Delaware (the “Company”), hereby restates the Dell
Computer Corporation Deferred Compensation Plan For Non-Employee
Directors, to be retitled as the Dell Inc. Deferred Compensation
Plan For Non-Employee Directors (the “Plan”), for the
benefit of its non-employee directors, in recognition of their
services rendered to the Company; such restatement to be effective
as of January 1, 2005, except as otherwise provided
herein;
WHEREAS, it is
intended that the Plan be “unfunded” for purposes of
the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”) and not be construed to provide income to any
Member or Beneficiary under the Internal Revenue Code of 1986, as
amended (the “Code”) prior to actual receipt of
benefits hereunder;
WHEREAS, the
Plan’s terms for the period between May 20, 1994 and
December 31, 2004 have been documented under the terms of the
prior plan documents, summary plan descriptions, administrative
forms, administrative rules, summaries and other documentation as
have been previously used by the Company and the Committee to
administer the Plan, which terms are expressly intended to continue
to apply to all Grandfathered Benefits (defined below);
and
WHEREAS, the
Company desires to amend and restate the Plan, effective
January 1, 2005, except as otherwise provided herein, to
revise the Plan’s terms to satisfy the applicable
requirements of Code Section 409A with regard to amounts that
are not classified as Grandfathered Benefits and intends that the
Plan be interpreted and administered in accordance with Code
Section 409A and any guidance issued thereunder;
and
NOW THEREFORE, the
Plan is hereby restated in its entirety as follows with no
interruption in time, effective as of January 1, 2005, except
as otherwise indicated herein:
ARTICLE I.
Definitions and
Construction
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1.1
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Definitions
. Where the following
words and phrases appear in the Plan, they shall have the
respective meanings set forth below, unless their context clearly
indicates to the contrary.
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-1-
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(a)
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Account : A Member’s Deferral(s)
Account, as adjusted to reflect income, gains, losses and other
credits or charges attributable thereto. The amounts credited to
the account shall be segregated and separately accounted for as
follows:
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(1)
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Grandfathered Benefits
. The portion of a
Member’s Account, which holds amounts credited to such
account for Plan Years beginning prior to January 1,
2005.
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(2)
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409A Benefits
. The portion of a
Member’s Account, which holds amounts credited to such
account for Plan Years beginning on and after January 1, 2005.
At the direction of the Committee, the Plan shall establish a
subaccount for each Plan Year beginning on and after
January 1, 2005, which shall hold the total of amounts
credited to a Member’s Account for the applicable Plan
Year.
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(b)
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Annual Compensation
: The annual retainer
payable by the Company to a member following the Company’s
annual shareholder meeting (typically July or August) of each
year.
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(c)
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Beneficiary
: The person or trust
that a Member, in his most recent designation filed with the
Committee, shall have designated to receive his benefit under the
Plan in the event of his death; provided that, if the Member has
failed to make a designation or if no person designated shall be
alive or if no trust shall have been established by the Member, and
no successor Beneficiary shall have been designated and be alive,
any death benefit payable hereunder on behalf of such Member shall
be paid to the legal representative of such deceased Member’s
estate. Changes in designations of Beneficiaries may be made upon
notice to the Committee in any form as the Committee may prescribe
and the Committee shall immediately notify the Trustee, in writing,
of any designation or change in designation.
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(d)
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Board of Directors
: The Board of Directors
of the Company
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(e)
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Change of Control
:
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(1)
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With Respect to Grandfathered
Benefits :
With respect to Grandfathered Benefits, a Change of Control occurs
upon the earliest to occur of any of the following:
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(A)
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The
acquisition by any person of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934 (“Exchange Act”)) of 20% or more
of either (i) the then outstanding shares of stock, or
(ii) the combined voting power of the then outstanding voting
securities of the Company; provided, however, that for purposes of
this Paragraph (A), 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
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-2-
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(or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, (iv) any acquisition by
Mr. Michael S. Dell, his “affiliates” (as defined in
Rule 12b-2 promulgated under the Exchange Act) or
“associates” (as defined in Rule 12b-2 promulgated
under the Exchange Act), his heirs, or any trust or foundation to
which he has transferred or may transfer stock (collectively,
“Michael Dell”), or (v) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(i), (ii), and (ii) of Paragraph (C) of this
Section 1.1(c); or
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(B)
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Individuals who constitute the
Incumbent Board (as later defined) cease for any reason to
constitute at least a majority of the Directors; or
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(C)
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Approval by the stockholders of the
Company of a reorganization, merger, or consolidation, or sale or
other disposition of all or substantially all of the assets of the
Company, or the acquisition of assets of another corporation (a
“Business Combination”), unless following such Business
Combination (i) all or substantially all of the persons who
were the beneficial owners, respectively, of the outstanding stock
and outstanding voting securities of the Company immediately prior
to such Business Combination 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 Business Combination (including, without
limitation, a corporation 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 subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Business Combination of the outstanding stock and
outstanding voting securities of the Corporation, as the case may
be, (ii) no person (excluding any employee benefit plan (or
related trust) of the Company, such corporation resulting from such
Business Combination, and Michael Dell) beneficially owns, directly
or indirectly, 20% 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 (iii) 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 of Directors, providing for such Business Combination;
or
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-3-
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(D)
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Approval by the stockholders of the
Company of a complete liquidation or dissolution of the
Company.
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For
purposes of this Subsection (1), “Incumbent Board”
shall mean the individuals who, as of the Effective Date,
constitute the Board of Directors; provided, however, that any
individual becoming a Director, subsequent to such date whose
election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the
Board of 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
Directors.
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(2)
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With Respect to 409A
Benefits: With respect to 409A Benefits, the
occurrence of any event or transaction constituting a “change
in ownership or effective control” within the meaning of
Treasury Regulations or other Internal Revenue Service guidance
promulgated pursuant to Code Section 409A(a)(2)(A)(v). The
occurrence of a Change of Control will be determined and certified
by the Committee strictly in accordance with the foregoing
sentence; the Committee may not exercise discretion in applying the
requirements of relevant Internal Revenue Service guidance in the
determination of the occurrence of a Change of Control. For
purposes of this provision, the following acquisitions of stock by
the Company 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 corporation controlled by the Company, (iv) any
acquisition by Mr. Michael S. Dell.
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(f)
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Code : The Internal Revenue Code of 1986,
as amended from time to time.
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(g)
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Committee
: The Compensation
Committee of the Board of Directors, which may act through its
delegate.
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(h)
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Company
:
Dell Inc., a
corporation organized and existing under the laws of the State of
Delaware, or its successor or successors.
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(i)
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Deferral(s)
: A contribution by a
Member pursuant to Section 2.2 of this Plan.
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(j)
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Effective Date
: January 1, 2005,
except as otherwise provided herein. The Plan was originally
effective with respect to the Company on May 20,
1994.
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(k)
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ERISA : Public Law No. 93-406, the
Employee Retirement Income Security Act of 1974, as amended from
time to time.
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-4-
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(l)
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Investment Fund(s)
: The investment fund(s)
designated by the Committee from time to time for the hypothetical
investment of a Member’s Accounts pursuant to
Article V.
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(m)
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Member : Any non-employee director of the
Corporation who has become a Member in the Plan, for as long as his
benefit under the Plan has not been fully distributed pursuant to
the provisions of the Plan.
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(n)
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Normal Retirement
Date :
The date on which the Member attains age sixty-five (65) years
old.
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(o)
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Plan : The Dell Inc. Deferred
Compensation Plan for Non-Employee Directors, as amended from time
to time.
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(p)
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Plan Year
: The twelve
(12)-consecutive month period commencing January 1 of each
year.
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(q)
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Retirement
: Termination of a
Member’s service as a non-employee director with the Company
on or after his Normal Retirement Date.
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(r)
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Retirement Date
: The first day of the
month subsequent to a Member’s Normal Retirement Age on which
he actually terminates service as a non-employee Director with the
Company.
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(s)
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Trust Fund
: All assets of
whatsoever kind or nature held from time to time by the Trustee
pursuant to the Trust Agreement and forming a part of this Plan,
without distinction as to income and principal and without regard
to source, i.e. Member contributions or earnings. The Trust Fund
shall constitute an unfunded arrangement and shall not affect the
status of the Plan as an unfunded plan for tax purposes and for
purposes of Title I of the Employee Retirement Income Security Act
of 1974, as amended.
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(t)
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Trust Agreement
: That certain trust
agreement established pursuant to the Plan between the Company and
the Trustee or any trust agreement that forms a part of this Plan,
hereafter established, the provisions of which are incorporated
herein by reference.
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(u)
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Trustee : The corporation, individual or
individuals appointed by the Board of Directors to administer the
Trust Fund in accordance with the terms of the Trust
Agreement.
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(v)
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Unforeseeable Financial
Emergency :
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(1)
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With Respect to Grandfathered
Benefits: With respect to Grandfathered
Benefits, an Unforeseeable Financial Emergency is an unexpected
need of the Member for cash as a result of a “severe
financial hardship”, which includes (i) Medical expenses
described in Code Section 213(d) incurred by the Member, the
Member’s spouse, or any dependents of the Member
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-5-
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(as
defined in Code Section 152), or necessary to obtain such
medical care, (ii) purchase of a principal residence for the
Member, but excluding mortgage payments, (iii) Payment of
tuition, related educational fees, and room and board expenses for
the next twelve (12) months of post-secondary education for
the Member, the Member’s spouse, the Member’s children,
or the Member’s dependents; or (iv) the need to prevent
the (A) eviction of the Member from his principal residence,
or (B) foreclosure on the mortgage of the Member’s
principal residence.
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A
withdrawal may be treated as necessary to satisfy a “severe
financial hardship” if the Member represents to the Committee
that the need cannot be relieved through (i) reimbursement or
compensation by insurance or otherwise, (ii) reasonable
liquidation of the Member’s assets, to the extent such
liquidation would not itself cause an immediate and heavy financial
need; (iii) cessation of contributions under this Plan; or
(iv) other distributions or nontaxable (at the time of the
loan) loans from plans maintained by the Company or by any other
employer, or by borrowing from commercial sources on reasonable
commercial terms.
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(2)
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With Respect to 409A
Benefits: With respect to 409A Benefits, an
Unforeseeable Financial Emergency is a severe financial hardship to
the Member resulting from any of the following:
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(A)
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An
illness or accident of the Member or the illness or accident of the
Member’s spouse or dependent (as defined in Code
Section 152(a)) without regard to Code Section 152(b)(1),
(b)(2), and (d)(1)(B);
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(B)
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Loss of the Member’s property
due to casualty; or
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(C)
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Other similar extraordinary and
unforeseeable circumstance arising as a result of events beyond the
Member’s control.
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Any
determination of Unforeseeable Financial Emergency under this
Subsection (2) shall be made in accordance with the
requirements of Code Section 409A and any guidance issued
thereunder.
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(w)
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Valuation Dates
: Each day of the Plan
Year the NASDAQ is open for business.
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1.2
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Number and Gender
. Wherever appropriate
herein, words used in the singular shall be considered to include
the plural, and words used in the plural shall be considered to
include the singular. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender.
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1.3
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Headings . The headings of Articles and
Sections herein are included solely for convenience, and if there
is any conflict between such headings and the text of the Plan, the
text shall control.
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-6-
ARTICLE II.
Contributions
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2.1
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General . Participation in the Plan shall be
made available to all non-employee directors of the
Company.
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2.2
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Deferral(s)
. For any Plan Year,
each Member may elect to defer a portion of his Annual Compensation
in accordance with this Article II. Any such Deferral(s) shall
be in whole percentages of the Member’s Annual Compensation,
as specified in the Member’s participation agreement.
Contributions of amounts deferred shall be made by the Company
directly to the Trust. Annual Compensation not deferred by a Member
pursuant to this Section shall, for purposes of this Plan, be paid
to the Member in such form as is otherwise provided by the
Company.
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2.3
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Deferral Election
. A Member’s
election to defer Annual Compensation for any Plan Year under the
Plan must be made by execution of a participation agreement prior
to the first day of the Plan Year. A Member may not change his or
her deferral election during the Plan Year. Any change in a
Member’s deferral election shall be effective for the next
Plan Year.
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2.4
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Crediting of
Deferral(s) . Deferrals made by a Member shall
be credited to such Member’s Account as soon as
administratively feasible following the date such amounts would
have been paid to the Member. All payments from an Account shall be
charged against the Account as soon as administratively
feasible.
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ARTICLE III.
Allocations to Member
Accounts
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3.1
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Individual Accounts
. The Committee shall
create and maintain adequate records to disclose the interest
hereunder of each Member and Beneficiary. Such records shall be in
the form of an individual Account (including applicable
subaccounts) reflecting all credits and debits made to such Account
in the manner herein described. This individual Account shall be
constituted as follows:
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(a)
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Deferrals shall be credited to the
Member’s Account.
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(b)
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The
Account shall be segregated into subaccounts for Grandfathered
Benefits and 409A Benefits and accounted for separately.
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(c)
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The
subaccount attributable to Grandfathered Benefits shall be credited
with the Member’s Account balance as of December 31,
2004.
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(d)
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The
subaccount attributable to 409A Benefits shall be credited with all
subsequent amounts credited to the Member’s Account for Plan
Years beginning on and after January 1, 2005.
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(e)
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For
the subaccount holding 409A Benefits, the Committee shall establish
a separate subaccount for each Plan Year beginning on and after
January 1, 2005, to
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which shall be credited the total of
the Member’s Deferrals for the applicable Plan
Year.
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3.2
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Investment of
Accounts . The Committee shall credit
allocable earnings and losses to each Member’s Account
according to the hypothetical investments made by a Member pursuant
to the terms of Article IV.
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3.3
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Allocation of Net Income or Loss and
Changes in Value .
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(a)
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As
of each Valuation Date, the Committee shall determine the fair
market value and the net income (or net loss) of each Investment
Fund for the period elapsed since the next preceding Valuation
Date. The net income (or net loss) of each Investment Fund since
the next preceding Valuation Date shall be ascertained by the
Committee in such manner as it deems appropriate, which may include
expenses, if any, of administering the Investment Fund, the Trust
Fund, and the Plan.
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(b)
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For
purposes of crediting allocable net income (or net loss), each
Member’s Account shall be divided into subaccounts to reflect
the hypothetical investment of such Member’s Account in a
particular Investment Fund or Investment Funds pursuant to
Article IV. As of each Valuation Date, the net income (or net
loss) of each Investment Fund, separately and respectively, shall
be allocated among the corresponding subaccounts of the Members who
had such corresponding subaccounts invested in such Investment Fund
since the next preceding Valuation Date, and each such
corresponding subaccount shall be credited with (or debited for)
that portion of such net income (or net loss) that the value of
each such corresponding subaccount on such next preceding Valuation
Date was of the value of all such corresponding subaccounts on such
date; provided, however, that the value of such subaccounts as of
the next preceding Valuation Date shall be reduced by the amount of
any distributions made therefrom since the next preceding Valuation
Date.
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(c)
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So
long as there is a balance credited to any Account, such Account
shall continue to share in earnings (or loss) allocations pursuant
to this Section.
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(d)
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All
payments from an Account shall be charged against the Account as
soon as administratively feasible.
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ARTICLE IV.
Hypothetical Investment
of Accounts
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4.1
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Investment of
Accounts . The Committee shall from time to
time select, add, and/or delete Investment Funds for purposes of
the hypothetical investment of a Member’s Account. For
purposes of crediting allocable earnings and losses and valuation
of each Member’s Account, each Member’s Account shall
be deemed to be invested in the Investment Funds. Each Member shall
direct the hypothetical investment of all or any portion of their
Account in accordance with Section 4.2.
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4.2
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Designation of Investment
Funds .
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(a)
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Each Member, upon becoming a Member
of the Plan, shall designate, in accordance with the procedures
established from time to time by the Committee, the manner in which
the amounts credited to his Account shall be deemed to be invested
from among the Investment Funds. Such Member must designate, in
such minimum percentages as may be prescribed by the Committee,
that portion of his Account which the Member deems invested in the
Investment Fund. The designation will continue until changed by the
timely submission of a new designation, which change will be
effective as soon as administratively feasible. The Committee shall
forward the investment designation to the Trustee, who shall invest
each member’s Account in accordance with such designation. If
a Member fails to make a proper designation, then his Account shall
be deemed to be invested in the Investment Fund or Investment Funds
designated by the Committee, in its sole and absolute discretion
from time to time pursuant to the provisions of the
Trust.
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(b)
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A
Member may change his hypothetical investment designation as of any
Valuation Date for future amounts to be credited to the portion of
his Account by the timely submission of a new designation. Any such
change shall be made in accordance with the procedures established
by the Committee, and will be effective as soon as administratively
feasible.
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(c)
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In
no event may a Member designate the investment of his Account in
stock or other securities of the Company.
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ARTICLE V.
Vested
Interest
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5.1
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Vesting of Compensation Deferrals
Account . A Member shall have a 100% vested
interest in his Account at all times.
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ARTICLE VI.
Unforeseeable Financial
Emergency
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6.1
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Rules Governing Grandfathered
B
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