HD » Topics » SECTION 2 PAYMENTS TO THE EXECUTIVE OR HIS BENEFICIARIES

This excerpt taken from the HD 10-K filed Mar 29, 2007.

SECTION 2
PAYMENTS TO THE EXECUTIVE OR HIS BENEFICIARIES

        (a)   PAYMENT SCHEDULE. The Company, pursuant to its obligations under the Separation Agreement, has developed a Payment Schedule attached hereto as Schedule A, (the "PAYMENT SCHEDULE") which sets forth the amounts, dates and form of payment payable to the Executive (or his beneficiaries) under the Separation Agreement. Prior to the date of payment thereof, the Company shall instruct the Trustee as to the amount of the payment under Section 2(a)(iv) of the Separation Agreement (the "DEFERRED COMPENSATION AMOUNT") and the Trustee shall make payment of such amount in accordance with the Payment Schedule. Except as provided at Section 2(c)(2) hereof and subject to the Refund provisions of Section 1(d) hereof, the Trustee shall make such payments to the Executive (or his beneficiaries) in accordance with Schedule A, without further direction from the Company or any other person. The Company shall have the sole responsibility for all tax withholding filings and reports, and the Company shall direct the Trustee and the Trustee shall prepare such filings and reports as directed by the Company. The Trustee shall withhold such amounts from distributions with respect to applicable federal, state and local tax law pursuant to a written schedule of withholding amounts that the Company shall provide to the Trustee. The Trustee shall deduct and withhold such amounts and transmit such amounts to the appropriate taxing authorities as directed by the Company. All amounts payable to the Executive shall be payable to his beneficiaries if he shall die before payment is made. The Executive's beneficiary is set forth on Schedule B hereto. The Executive may change his beneficiaries at any time, and from time to time, by delivering a written designation of beneficiaries in the form set forth in Schedule B, which designation upon receipt by the Trustee shall replace and supersede any previous designation of beneficiaries by the Executive hereunder. In the case of the Executive's death, the Company shall certify in writing to the Trustee that the Executive has died

2



and that all remaining payments to be made under the Payment Schedule are to be made to the Executive's beneficiaries set forth on Schedule B.

        (b)   BENEFIT ENTITLEMENTS. The Executive and his beneficiaries shall be entitled to the benefits when payable hereunder without delay or recourse, except as set forth in Section 2(c)(2), Section 3 and Section 8 of this Agreement.

        (c)   BENEFIT PAYMENTS.

            (1)   The Company, in its discretion, may make payment of benefits directly to the Executive (or his beneficiaries) as benefits become due under the terms of the Separation Agreement (together with income thereon as provided under the Payment Schedule) ("DIRECT PAYMENTS"). Prior to the time that amounts are payable to the Executive (or his beneficiaries), the Company shall notify the Trustee of its decision to pay benefits directly. In addition, if the principal of the Trust, and any income thereon, is not sufficient to make payments of benefits in accordance with the terms of the Separation Agreement, the Company, at its discretion, shall make the balance of each such payment as it falls due. Trustee shall notify the Company where principal and income are not sufficient to make a payment then due under the Payment Schedule.

            (2)   The foregoing provisions of this Section 2 to the contrary notwithstanding, the Trustee shall not make a payment (or payments) of the unpaid portion of the amount set forth on the Payment Schedule that is scheduled for payment after July 3, 2007 (and all income thereon) ("UNPAID CONTRACTUAL PAYMENTS") in the event that, prior to the date on which an installment of the Unpaid Contractual Payments is scheduled to be issued for payment to the Executive, the Trustee has received a written certification from the Company that the Executive is not in compliance with the provisions of Section 3 (confidentiality, non-competition and non-solicitation covenants) and Section 4 (non-disparagement covenant) of the Separation Agreement ("NONCOMPLIANCE CERTIFICATION"). In such event, the Trustee shall hold the Unpaid Contractual Payments amounts as principal under the Trust, together with income accrued thereafter on such principal until such time as such payment is (or payments are) payable to the Executive or forfeited by the Executive as set forth in this Section 2(c)(2). The Trustee shall have no duty to notify or otherwise inform the Executive that the Company has submitted a certification that the Executive is not in compliance with the provisions of Section 3 (confidentiality, non-competition and non-solicitation covenants) and Section 4 (non-disparagement covenant) of the Separation Agreement. If the Trustee does not receive a written notice of objection to the Company Noncompliance Certif1ication from the Executive within twenty (20) business days after receiving such Noncompliance Certification from the Company ("OBJECTION NOTICE"), then the Unpaid Contractual Payments shall be paid promptly to the Company from the Trust. If the Trustee receives an Objection Notice from the Executive within twenty (20) business days after receiving such Noncompliance Certification from the Company, then the Trustee shall continue to hold the Unpaid Contractual Payments until the Trustee receives the first to occur of ("FINAL CERTIFICATION"): (i) a joint written direction by the Company and the Executive or (ii) a certification from the Company containing a copy of the final binding nonappealable decision of the arbitrator pursuant to Section 14(a) of the Separation Agreement, in either such case directing the Trustee to pay to the Executive or to pay to the Company, as the case may be, all or a portion of the Unpaid Contractual Payments. Any portion of the Unpaid Contractual Payments not so directed for payment to the Company or to the Executive shall be held by the Trustee and, subject to any subsequent Certifications and Notices in accordance with this Section 2(c)(2), thereafter paid to the Executive in accordance with the Payment Schedule. Notwithstanding the foregoing, the Trustee may conclusively rely on any certifications given to the Trustee by the Company pursuant to this Section 2(c)(2) and shall have no duty to determine whether any direction or order received by the Company is in compliance with the terms of the Separation Agreement or

3



    whether any decision submitted to the Trustee by the Company is a final nonappealable decision of an arbitrator as set forth in the Separation Agreement.


SECTION 3
TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY
WHEN THE COMPANY IS INSOLVENT

        (a)   CLAIMS OF CREDITORS. At all times during the continuance of this Trust, as provided in Section 1(d) hereof, the principal and income of the Trust held for the benefit of the Executive (and his beneficiaries) shall be subject to claims of general creditors of the Company under federal and state law, as set forth below.

            (1)   The Board of Directors and the Chief Executive Officer (the "CEO") of the Company shall have the duty to inform the Trustee in writing of the Company's Insolvency. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, the Trustee shall determine whether the Company is Insolvent and, pending such determination, the Trustee shall discontinue payment of benefits in accordance with Section 3(b).

            (2)   Unless the Trustee has actual knowledge of the Company's Insolvency, or has received notice from the Company or a person claiming to be a creditor alleging that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. The Trustee may in all events rely on such evidence concerning the Company's solvency as may be furnished to Trustee and that provides the Trustee with a reasonable basis for making a determination concerning the Company's solvency. In no event shall "actual knowledge" be deemed to include knowledge of the Company's credit status held by banking officers or banking employees of The Northern Trust Company which has not been communicated to the administrative staff assigned to the Trust. The Trustee may appoint an independent accounting, consulting or law firm to make any determination of solvency required by the Trustee under this Section 3. In such event, the Trustee may conclusively rely upon the determination by such firm and shall be responsible only for the prudent selection of such firm.

        (b)   CESSATION OF BENEFIT PAYMENTS. If at any time the Board of Directors or the CEO of the Company notifies the Trustee or the Trustee has determined that the Company has become Insolvent, the Trustee shall discontinue payments from the Trust to or on behalf of the Executive (or his beneficiaries). Further, the Trustee shall continue to hold the assets of the Trust in trust for the benefit of the Company's general creditors until the Trustee receives a court order directing the disposition of such assets. Nothing in this Trust Agreement shall in any way diminish any rights of the Executive or his beneficiaries to pursue their rights as general creditors of the Company with respect to benefits due under the Separation Agreement or otherwise. The Trustee shall resume the payment of benefits to the Executive or his beneficiaries in accordance with Section 2 of this Trust Agreement only after the Trustee has determined that the Company is not Insolvent (or is no longer Insolvent) or pursuant to an order from the U.S. Bankruptcy Court or other court of competent jurisdiction.

        (c)   INSOLVENCY. The Company shall be considered "INSOLVENT" for purposes of this Trust Agreement if 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.

        (d)   RECOMMENCEMENT OF PAYMENTS. Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments to the Executive (or his beneficiaries), the first payment following such discontinuance, to the extent not inconsistent with an order from the U.S. Bankruptcy Court or other court of competent jurisdiction, shall include the aggregate amount of all payments due to the Executive or his beneficiaries under the Payment Schedule for the period of such discontinuance, less

4



the aggregate amount of any payments made to the Executive or his beneficiaries directly by the Company in lieu of the payments provided for hereunder during any such period of discontinuance, all in accordance with the Payment Schedule which, if necessary, shall be modified jointly by the Company and the Executive as necessary to comply with the provisions of this paragraph (d).

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki