AS AMENDED (THE "CODE").
ALL PLAN BENEFITS ARE PAID OUT OF THE GENERAL
ASSETS OF THE COMPANY (AS DEFINED IN ARTICLE II).
1.03.
LEGAL STATUS.
THE PLAN CONSISTS OF TWO SEPARATE
PLANS:
(A) AN UNFUNDED DEFERRED COMPENSATION PLAN FOR A SELECT GROUP OF MANAGEMENT OR
HIGHLY COMPENSATED EMPLOYEES (WITHIN THE MEANING OF SECTIONS 201(2), 301(A)(3),
401(A)(1), 4021(B)(6) OF EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA")), EXCEPT TO THE EXTENT THAT THE PLAN PROVIDES BENEFITS AS
DESCRIBED IN SUBSECTION (B), BELOW; AND
(B) AN "EXCESS BENEFIT PLAN" (WITHIN THE MEANING OF SECTION 3(36) OF ERISA), TO
THE EXTENT THE PLAN PROVIDES BENEFITS THAT SECTION 415 OF THE CODE PREVENTS THE
IBM 401(K) PLUS PLAN FROM PROVIDING.
1.04.
SECTION 409A.
(A) GRANDFATHERED AMOUNTS UNDER SECTION 409A.
BENEFITS EARNED AND VESTED UNDER
THE EDCP BEFORE JANUARY 1, 2005, AS ADJUSTED FOR EARNINGS, GAINS, OR LOSSES ON
THOSE BENEFITS ("GRANDFATHERED AMOUNTS") ARE TREATED AS GRANDFATHERED FOR
PURPOSES OF SECTION 409A OF THE CODE.
GRANDFATHERED AMOUNTS ARE SUBJECT TO THE
TERMS OF THE EDCP IN EFFECT ON OCTOBER 3, 2004, EXCEPT AS PROVIDED HEREIN OR IN
APPENDIX A.
FOR RECORDKEEPING PURPOSES, THE COMPANY WILL ACCOUNT SEPARATELY FOR
GRANDFATHERED AMOUNTS.
(B) NON-GRANDFATHERED AMOUNTS.
WITH RESPECT TO BENEFITS UNDER THE PLAN
(INCLUDING BENEFITS EARNED BEFORE THE EFFECTIVE DATE) OTHER THAN GRANDFATHERED
AMOUNTS ("NON-GRANDFATHERED AMOUNTS"), THE PLAN IS INTENDED, AND SHALL BE
CONSTRUED, TO COMPLY WITH THE REQUIREMENTS OF SECTION 409A OF THE CODE.
NON-GRANDFATHERED AMOUNTS EARNED BEFORE THE EFFECTIVE DATE WERE SUBJECT, BEFORE
THE EFFECTIVE DATE, TO THE TERMS OF THE EDCP, AS AMENDED, INCLUDING, FOR
EXAMPLE, THE REQUIREMENT THAT ANY PAYMENT TO A 409A KEY EMPLOYEE (AS DEFINED IN
ARTICLE II) THAT WOULD OTHERWISE BE PAID IN THE FIRST SIX MONTHS AFTER A
SEPARATION FROM SERVICE WAS INSTEAD PAID IN THE SEVENTH MONTH.
NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS SECTION 1.04, IN NO EVENT SHALL THE COMPANY,
ITS OFFICERS, DIRECTORS, EMPLOYEES, PARENTS, SUBSIDIARIES, OR AFFILIATES BE
LIABLE FOR ANY ADDITIONAL TAX, INTEREST, OR PENALTY INCURRED BY A PARTICIPANT OR
BENEFICIARY AS A RESULT OF THE PLAN'S FAILURE TO SATISFY THE REQUIREMENTS OF
SECTION 409A OF THE CODE, OR AS A RESULT OF THE PLAN'S FAILURE TO SATISFY ANY
OTHER APPLICABLE REQUIREMENTS FOR THE DEFERRAL OF TAX.
2
ARTICLE II. DEFINITIONS
The following words and phrases as used herein have the following meanings
unless a different meaning is required by the context:
"401(k) Plan" means the IBM 401(k) Plus Plan as in effect from time to time,
including, with respect to periods before the Effective Date, the IBM Savings
Plan and any other predecessor to the IBM 401(k) Plus Plan, as applicable.
"409A Key Employee" has the meaning described in the IBM Section 409A Umbrella
Document, which is Appendix B.
"409A Separation from Service" has the meaning described in the IBM Section 409A
Umbrella Document attached to this Plan as Appendix B.
"Account" means a record-keeping account maintained for a Participant under the
Plan.
A Participant's Accounts under the Plan include,