exv10w4






 




    Exhibit 10.4



 




    Standard
    Microsystems Corporation

    Plan for Deferred Compensation in Common Stock

    for Outside Directors



 


		
	
    1.  
	
    Purpose




 



    The purpose of this Plan is to provide for deferred payment of
    certain portions of the compensation of Eligible Directors of
    Standard Microsystems Corporation, at their election, in
    accordance with the provisions hereof and to increase the
    proprietary interest of the Eligible Directors in the
    Corporation by tying the value of such deferred compensation to
    the performance of the Corporation’s Common Stock.



 


		
	
    2.  
	
    Definitions




 



    As used herein, the following terms shall have the meanings set
    forth below:



 



    “Account” shall mean the Account established
    for a Participant pursuant to Section 4.



 



    “Basic Retainer” shall mean, for each fiscal
    year of service, the sum of the quarterly cash fees paid in
    advance to an Eligible Director for service on the Board of
    Directors and any committee thereof on which the Eligible
    Director serves, excluding any per-meeting fee or expense
    reimbursement.



 



    “Beneficiary” shall mean the person or persons
    designated by a Participant in accordance with Section 6 to
    receive any amount, or any shares of Common Stock, payable under
    this Plan by reason of the Participant’s death or
    incompetence.



 



    “Board of Directors” shall mean the Board of
    Directors of the Corporation.



 



    “Change in Control” shall mean a change in
    ownership or effective control of the Corporation, determined in
    accordance with Section 409A of the Code.



 



    “Code” shall mean the U.S. Internal
    Revenue Code of 1986, as amended.



 



    “Committee” shall mean the persons appointed by
    the Board of Directors to administer this Plan in accordance
    with Section 8.



 



    “Common Stock” shall mean the shares of Common
    Stock of the Corporation.



 



    “Corporation” shall mean Standard Microsystems
    Corporation.



 



    “Director” shall mean a member of the Board of
    Directors.



 



    “Eligible Director” shall mean any individual
    who is a member of the Board of Directors and who is not an
    employee of the Corporation or any of its subsidiaries.



 



    “Market Value” shall mean, with respect to one
    share of Common Stock on any date (or if the Common Stock shall
    not have traded on that day, then the next succeeding business
    day on which the Common Stock shall have traded), the closing
    sale price of a share of Common Stock in the principal market in
    which the Common Stock trades (or if such price is not reported,
    the mean of the closing bid and asked prices).



 



    “Participant” shall mean any Eligible Director
    who has made an election, or is deemed to have made an election,
    under Section 3 to defer any portion of his or her Basic
    Retainer.



 



    “Phantom Share Unit” or “PSU”
    shall mean a unit of measurement equivalent to one share of
    Common Stock, with none of the attendant rights of a holder of
    such share, including, without limitation, the right to vote
    such share or the right to receive dividends thereon, except to
    the extent otherwise specifically provided herein.



 



    “Plan” shall mean this Plan for Deferred
    Compensation in Common Stock for Outside Directors, as amended
    from time to time.



 


		
	
    3.  
	
    Deferral
    Elections




 



    (a) Each Director who is an Eligible Director on the
    effective date of this Plan, may, within 30 days of such
    effective date, and each Eligible Director who shall be first
    elected as an Eligible Director after the effective date of this
    Plan, shall within 30 days following such election, elect
    to have payment of some part or all of
    his/her
    Basic













 






    Retainers which would otherwise be payable subsequent to the
    Eligible Director’s deferral election, deferred and to have
    payment of such portion made under the terms of this Plan. Any
    such deferral election shall be made in accordance with the
    following:



 



    (i) A deferral election shall be made in writing, on a form
    provided by the Committee for such purpose.



 



    (ii) In the election form, the Eligible Director,
    (x) if he or she was an Eligible Director on the date of
    adoption of this Plan, shall specify that 0%, 50%, or 100% of
    such Eligible Director’s Basic Retainer shall be deferred,
    or (y) if he or she was first elected as an Eligible
    Director after the date of adoption of this Plan shall specify
    that 50% or 100% of such Eligible Director’s Basic Retainer
    shall be deferred.



 



    (b) Each Eligible Director’s deferral election made
    pursuant to Section 3(a) shall remain in effect throughout
    any period in which such Eligible Director shall be an Eligible
    Director; provided that, not later than December 1 of any year
    an Eligible Director may make a new deferral election, in
    accordance with (a)(ii) above, for Basic Retainers payable in
    subsequent fiscal years and provided further that if no such new
    election is made, then the existing election shall be
    irrevocable with respect to the Basic Retainer payable in the
    following fiscal year.



 



    (c) If an Eligible Director shall fail or omit to file an
    election form within the period specified in Section 3(a),
    he/she shall
    thereby be deemed to have elected that 50% of
    his/her
    Basic Retainer shall be deferred.



 







 


		
	
    4.  
	
    Accounts




 



    For each Participant, there shall be established on the books
    and records of the Corporation, for bookkeeping purposes only, a
    separate Account to reflect the Participant’s interest
    under this Plan. The Account so established shall be maintained
    in accordance with the following:



 



    (a) On the fifteenth day of the second month of each fiscal
    quarter of service as an Eligible Director, a Participant’s
    Account shall be credited with a number of PSUs (including any
    fractional PSU rounded to one decimal place) that shall equal
    the product obtained by multiplying (i) the percentage
    elected pursuant to
    Section.
    3 by (ii) the quotient obtained by dividing
    (x) one-quarter of such participant’s Basic Retainer
    (prorated, however, for actual period of service during such
    fiscal quarter subsequent to the Participants election to defer
    hereunder), by (y) the Market Value on the fifteenth day of
    the second month of such fiscal quarter.



 



    (b) A Participant’s interest in his or her Account
    shall be fully vested and nonforfeitable at all times.



 



    (c) As of each date on which the Corporation pays a
    dividend on its Common Stock, each Participant’s Account
    shall be credited with additional PSUs, the number of which
    shall be determined by (i) multiplying the number of PSUs
    in the Participant’s Account on the record date for such
    dividend by the per-share amount of the dividend so paid, and
    (ii) dividing the amount determined pursuant to
    clause (i) by the Market Value of one share of Common Stock
    on the dividend payment date.



 



    (d) In the event of any change in the Common Stock
    occurring by reason of any stock dividend, recapitalization,
    reorganization, merger, consolidation,
    split-up,
    combination or exchange of shares, or any rights offering to
    purchase such shares at a price substantially below fair market
    value, or any similar change affecting the Common Stock, the
    number and kind of shares represented by PSUs shall be
    appropriately adjusted to reflect such change in such manner as
    the Committee, in its sole discretion, may deem appropriate. The
    Committee shall give notice to each Participant of any
    adjustment made pursuant to this Section 4(d), and such
    adjustment shall be effective and binding for all purposes of
    this Plan.



 


		
	
    5.  
	
    Payment
    of Account Balances




 



    Payment with respect to a Participant’s Account shall be
    made in accordance with the following:



 



    (a) A Participant’s Account shall become payable upon
    the Participants ceasing to be a member of the Board of
    Directors for any reason. Such payment shall be made to the
    Participant or the Participant’s Beneficiary, as the case
    may be. The Corporation shall make payment by issuing in the
    name of such Participant or Beneficiary a number of whole shares
    of Common Stock equal to the number of PSUs in the Account as of
    the date of such termination of service.




    

    2








 






    (b) Payment shall be made within 10 days after the
    earlier of (i) the expiration of the 30 day period
    referred to in Section 5(a) or (ii) the
    Participant’s or Beneficiary’s notifying the
    Corporation that he or she elects not to have payment of the
    Account made to another person.



 



    (c) Notwithstanding any other provision in this
    Section 5 to the contrary, the entire balance of each
    Participant’s Account shall become immediately due and
    payable in shares of Common Stock upon the occurrence of a
    Change in Control, as hereinafter defined. Payment with respect
    to such balance shall be in a number of whole shares of Common
    Stock determined as provided in Section 5(a), substituting
    the occurrence of such Change in Control for the date of
    termination of a Participant’s service as a Director.
    Payment shall be made as soon as practicable, and in any event
    within 10 days, after the occurrence of such Change in
    Control.



 



    (d) There shall be deducted from the amount of any payment
    otherwise required to be made under this Plan all federal, state
    and local taxes required by law to be withheld with respect to
    such payment.



 


		
	
    6.  
	
    Designation
    and Change of Beneficiary




 



    Each Participant shall file with the Committee a written
    designation of one or more persons as the Beneficiary who shall
    be entitled to receive any amount, including shares of Common
    Stock, payable under this Plan by reason of the
    Participant’s death or incompetency. A Participant may,
    from time to time, revoke or change his or her Beneficiary
    designation, without the consent of any previously designated
    Beneficiary, by filing a new written designation with the
    Committee. The last such designation received by the Committee
    shall be controlling; provided, however, that no designation, or
    change or revocation thereof, shall be effective unless
    delivered to the Committee prior to the Participant’s death
    or incompetency, and in no event shall it be effective as of a
    date prior to such delivery. If at the date of a
    Participant’s death or incompetency, there is no
    designation of a Beneficiary in effect for the Participant
    pursuant to the provisions of this Section 6, or if no
    Beneficiary designated by the Participant in accordance with the
    provisions hereof survives to receive any amount payable under
    this Plan by reason of the Beneficiary’s death or
    incompetency, the Participant’s estate shall be treated as
    the Participant’s Beneficiary for purposes of this Plan.



 


		
	
    7.  
	
    Rights of
    Participants




 



    A Participant’s rights and interests under this Plan shall
    be subject to the following provisions:



 



    (a) A Participant shall have the status of a general
    unsecured creditor of the Corporation with respect to his or her
    right to receive any payment under this Plan. This Plan shall
    constitute a mere promise by the Corporation to make payments in
    the future of the benefits provided for herein. It is intended
    that the arrangements reflected in this Plan be treated as
    unfunded for tax purposes.



 



    (b) The Corporation may, but shall not be required to,
    establish a trust to assist it in funding any of its payment
    obligations under this Plan. If any such trust is established,
    all of the assets of the trust shall, at all times prior to
    payment to Participants, remain subject to the claims of the
    Corporation’s creditors; and no Participant or Beneficiary
    shall have any preferred claim on, or any beneficial ownership
    interest in, any assets of the trust. Any trust so established
    shall also contain such other terms and provisions as will
    permit the trust to be treated as a “grantor trust”,
    of which the Corporation is the grantor, within the meaning of
    subpart E, part I, subchapter J, chapter 1, subtitle A
    of the Code (or any successor provisions). If any such trust is
    established, the Corporation shall be relieved of its obligation
    hereunder to pay any amounts or shares of Common Stock to any
    Participant or Beneficiary, to the extent that such amounts or
    shares are paid to the Participant or Beneficiary from such
    trust.



 



    (c) A Participant’s right to payments under this Plan
    shall not be subject in any manner to anticipation, alienation,
    sale, transfer, assignment, pledge, encumbrance, attachment, or
    garnishment by creditors of the Participant or his or her
    Beneficiary.



 


		
	
    8.  
	
    Administration




 



    (a) This Plan shall be administered by or under the
    direction of the Compensation Committee of the Board of
    Directors (the “Committee”)



 



    (b) All decisions, actions or interpretations of the
    Committee under this Plan shall be final, conclusive and binding
    upon all parties.




    

    3








 






    (c) No member of the Committee shall be personally liable
    by reason of any contract or other instrument executed by such
    member or on his or her behalf in his or her capacity as a
    member of the Committee nor for any mistake of judgment made in
    good faith, and the Corporation shall indemnify and hold
    harmless each member of the Committee, and each employee,
    officer, or director of the Corporation or any of its
    subsidiaries to whom any duty or power relating to the
    administration or interpretation of this Plan may be delegated,
    against any cost or expense (including counsel fees) or
    liability (including any sum paid in settlement of a claim with
    the approval of the Board of Directors) arising out of any act
    or omission to act in connection with this Plan unless arising
    out of such person’s own fraud or bad faith.



 



    (d) Any instrument may be delivered to the Committee by
    certified mail, return receipt requested, addressed to the
    Committee at the principal executive office of the Corporation.
    Delivery shall be deemed complete on the third business day
    after such mailing in New York, New York or Hauppauge, New York.
    A copy of any instrument so delivered shall similarly and
    simultaneously be mailed to the Secretary of the Corporation.



 



    (e) There are reserved for issuance pursuant to this Plan,
    100,000 shares of Common Stock.



 


		
	
    9.  
	
    Amendment
    or Termination




 



    (a) The Board of Directors may, with prospective or
    retroactive effect, amend, suspend or terminate this Plan or any
    portion thereof at any time; provided, however, that no
    amendment of this Plan shall deprive any Participant of any
    right to receive payment due him or her under the terms of this
    Plan as in effect prior to such amendment without his or her
    written consent.



 



    (b) Any amendment that the Board of Directors would be
    permitted to make pursuant to the preceding paragraph may also
    be made by the Committee where appropriate to facilitate the
    administration of this Plan or to comply with applicable law or
    any applicable rules and regulations of governing authorities,
    provided that the cost of this Plan to the Corporation is not
    materially increased by such amendment.



 


		
	
    10.  
	
    Successor
    Corporation




 



    The obligations of the Corporation under this Plan shall be
    binding upon any successor corporation or organization resulting
    from the merger, consolidation, or other reorganization of the
    Corporation, or upon any successor corporation or organization
    succeeding to substantially all of the assets and business of
    the Corporation. The Corporation agrees that it will make
    appropriate provision for the preservation of Participants’
    rights under this Plan in any agreement or plan which it may
    enter into or adopt to effect any such merger, consolidation,
    reorganization or transfer of assets.



 


		
	
    11.  
	
    Effective
    Date




 



    This Plan was adopted March 4, 1997 and shall become
    effective immediately following the 1997 annual meeting of the
    stockholders of the Corporation.



 


		
	
    12.  
	
    Governing
    Law




 



    The provisions of this Plan shall be governed by and construed
    in accordance with the laws of the State of New York.




    

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