Attached files
file | filename |
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10-K - FORM 10-K - SMITH INTERNATIONAL INC | h69022e10vk.htm |
EX-10.9 - EX-10.9 - SMITH INTERNATIONAL INC | h69022exv10w9.htm |
EX-32.1 - EX-32.1 - SMITH INTERNATIONAL INC | h69022exv32w1.htm |
EX-23.1 - EX-23.1 - SMITH INTERNATIONAL INC | h69022exv23w1.htm |
EX-21.1 - EX-21.1 - SMITH INTERNATIONAL INC | h69022exv21w1.htm |
EX-10.3 - EX-10.3 - SMITH INTERNATIONAL INC | h69022exv10w3.htm |
EX-31.1 - EX-31.1 - SMITH INTERNATIONAL INC | h69022exv31w1.htm |
EX-31.2 - EX-31.2 - SMITH INTERNATIONAL INC | h69022exv31w2.htm |
EX-10.2 - EX-10.2 - SMITH INTERNATIONAL INC | h69022exv10w2.htm |
EX-10.13 - EX-10.13 - SMITH INTERNATIONAL INC | h69022exv10w13.htm |
EXCEL - IDEA: XBRL DOCUMENT - SMITH INTERNATIONAL INC | Financial_Report.xls |
EXHIBIT 10.17
SMITH INTERNATIONAL, INC.
POST-2004 SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN
RETIREMENT PLAN
(As Amended and Restated Effective as of January 1, 2008)
TABLE OF CONTENTS
Page | ||||
ARTICLE
ONE ESTABLISHMENT, PURPOSE AND STATUS OF THE PLAN |
1 | |||
1.1 Background |
1 | |||
1.2 Purpose of Plan |
1 | |||
1.3 Status of Plan |
1 | |||
ARTICLE
TWO DEFINITIONS |
1 | |||
2.1 Account |
1 | |||
2.2 Active Participant |
1 | |||
2.3 Administrative Committee |
1 | |||
2.4 Advance Distribution Election |
1 | |||
2.5 Affiliated Entity |
1 | |||
2.6 Beneficiary |
2 | |||
2.7 Board |
2 | |||
2.8 Bonus |
2 | |||
2.9 Change of Control |
2 | |||
2.10 Code |
2 | |||
2.11 Company |
2 | |||
2.12 Compensation |
2 | |||
2.13 Compensation Committee |
2 | |||
2.14 Deferral Agreement |
2 | |||
2.15 Deferred Compensation Ledger |
2 | |||
2.16 Determination Date |
3 | |||
2.17 Elective Deferral Contribution |
3 | |||
2.18 Employee |
3 | |||
2.19 Employment |
3 | |||
2.20 Employer |
3 | |||
2.21 ERISA |
3 | |||
2.22 Executive Staff Participant |
3 | |||
2.23 Financial Emergency |
3 | |||
2.24 Funds |
3 | |||
2.25 401(k) Plan |
3 | |||
2.26 Insolvent |
4 | |||
2.27 Interest Equivalents |
4 | |||
2.28 Investment Experience |
4 | |||
2.29 Participant |
4 | |||
2.30 Plan |
4 | |||
2.31 Plan Year |
4 | |||
2.32 Separation from Service |
4 | |||
2.33 Specified Employee |
4 | |||
2.34 Subsidiary |
4 | |||
2.35 Total and Permanent Disability |
5 | |||
2.36 Trust |
5 | |||
2.37 Trust Agreement |
5 | |||
2.38 Trustee |
5 | |||
2.39 Valuation Date |
5 | |||
ARTICLE
THREE ADMINISTRATION |
5 | |||
3.1 Composition of Administrative Committee |
5 | |||
3.2 Administration of Plan |
5 | |||
3.3 Action by Committee |
5 | |||
3.4 Delegation |
6 | |||
3.5 Reliance Upon Information |
6 | |||
3.6 Responsibility and Indemnity |
6 |
Page | ||||
ARTICLE
FOUR PARTICIPATION |
7 | |||
4.1 Eligibility of Employees |
7 | |||
4.2 Notification of Eligible Employees |
7 | |||
4.3 Compensation and Bonus Deferral Agreement |
7 | |||
4.4 Leave of Absence |
8 | |||
4.5 Employer Contributions |
8 | |||
4.6 Vesting |
11 | |||
4.7 Election of Manner of Payment |
11 | |||
ARTICLE
FIVE DEFERRAL OF COMPENSATION AND ALLOCATION OF INTEREST EQUIVALENTS |
12 | |||
5.1 Deferral of Compensation and/or Bonus |
12 | |||
5.2 Allocation of Investment Experience to Accounts |
12 | |||
5.3 Investment of Accounts |
12 | |||
5.4 Interest Equivalents |
12 | |||
5.5 Participants Rights Under the Trust |
13 | |||
5.6 Determination of Account |
13 | |||
ARTICLE
SIX DISTRIBUTIONS |
13 | |||
6.1 Amount of Deferred Compensation Subject to Distribution |
13 | |||
6.2 Forms of Distribution Following Determination Date Except for Death |
13 | |||
6.3 Form of Death Distribution |
14 | |||
6.4 Timing of Distributions |
14 | |||
6.5 Advance Distribution Election Required |
15 | |||
6.6 Withdrawal due to Financial Emergency |
15 | |||
6.7 Trust and Payor of Deferred Compensation |
15 | |||
6.8 Reimbursement of Participant |
16 | |||
6.9 Facility of Payments |
16 | |||
6.10 Beneficiary Designations |
17 | |||
6.11 Withholding of Taxes |
17 | |||
6.12 Distribution due to Qualified Domestic Relations Order |
17 | |||
ARTICLE SEVENRIGHTS OF PARTICIPANTS |
17 | |||
7.1 Annual Statement to Participants |
17 | |||
7.2 Limitation of Rights |
18 | |||
7.3 Nonalienation of Benefits |
18 | |||
7.4 Claims Procedures |
19 | |||
ARTICLE
EIGHT MISCELLANEOUS |
21 | |||
8.1 Amendment or Termination of the Plan |
21 | |||
8.2 Powers of the Company |
21 | |||
8.3 Adoption of Plan by Affiliated Entity |
22 | |||
8.4 Waiver |
22 | |||
8.5 Notice |
22 | |||
8.6 Severability |
22 | |||
8.7 Gender, Tense and Headings |
22 | |||
8.8 Governing Law |
22 |
SMITH INTERNATIONAL, INC.
POST-2004 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
POST-2004 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(As Amended and Restated Effective as of January 1, 2008)
ARTICLE ONE
ESTABLISHMENT, PURPOSE AND STATUS OF THE PLAN
1.1 Background. Smith International, Inc. (the Company) originally established the
Smith International, Inc. Post-2004 Supplemental Executive Retirement Plan (the Plan),
effective as of December 31, 2004. The Company hereby amends and restates the Plan under the form
of this Plan document, as effective as of January 1, 2008, for the primary purpose of incorporating
changes required under Section 409A of the Internal Revenue Code of 1986, as amended (the Code).
1.2 Purpose of Plan. The Plan is maintained for the purpose of advancing the
interests of the Company and its stockholders by enhancing the Companys ability to attract and
retain highly qualified executives. The Company anticipates that accomplishment of those
objectives will be facilitated by providing Participants with a mechanism through which they may
provide for their retirement (or other deferred compensation needs) by electing to defer all or a
portion of their Compensation and/or Bonuses.
1.3 Status of Plan. The Plan is intended as an unfunded plan to be maintained
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 the
Employee Retirement Income Security Act of 1974, as amended (ERISA), and as such it is intended
that the Plan be exempt from the participation and vesting, funding, and fiduciary responsibility
requirements of Title I of ERISA. The Plan is also intended to qualify for simplified reporting
under U.S. Department of Labor Regulation Section 2530.104-23, which provides for an alternative
method of compliance for plans described in such regulation. The Plan is not intended to satisfy
the qualification requirements of Section 401 of the Internal Revenue Code of 1986, as amended (the
Code). The Plan is intended to comply with the requirements of Code Section 409A for deferred
compensation plans and is to be construed in accordance with Code Section 409A and the authority
issued thereunder.
ARTICLE TWO
DEFINITIONS
In addition to the terms defined in the text hereof, each term below shall have the meaning
assigned thereto for all purposes of the Plan unless the context reasonably requires a broader,
narrower or different meaning.
2.1 Account. Account means, with respect to each Participant, the Account
reflecting his interest under the Plan under the Deferred Compensation Ledger, as established and
maintained pursuant to Article Five hereof. The Administrative Committee may establish
subaccounts for Participants under their Accounts as it may deem appropriate from time to time.
2.2 Active Participant. Active Participant means a Participant who is currently
eligible to authorize a Deferral Agreement and to receive an allocation of Employer contributions
to his Account.
2.3 Administrative Committee. Administrative Committee means the committee
described in Article Three of the Plan.
2.4 Advance Distribution Election. Advance Distribution Election means a separate
written agreement entered into by and between the Employer and a Participant which specifies the
Participants election as to the method that the deferred amount is to be paid, such as lump sum or
installment payments.
2.5 Affiliated Entity. Affiliated Entity means an entity which is affiliated by
common ownership or control with the Company as determined and designated by the Compensation
Committee, CEO or the Administrative Committee in its discretion.
1
2.6 Beneficiary. Beneficiary means the beneficiary or beneficiaries designated by
the Participant to receive any amounts distributable under the Plan upon his death.
2.7 Board. Board means the Board of Directors of the Company.
2.8 Bonus. Bonus means any amount payable to the Participant during a Plan Year as
an award granted under the Smith International, Inc. Executive Officer Annual Incentive Plan (or
any successor thereto) or under any other bonus or cash incentive program maintained by the Company
or an Adopting Employer.
2.9 Change of Control. Change of Control means the occurrence of any of the
following:
(a) | any person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) being or becoming the beneficial owner as defined in Rule 13d-3 of the Exchange Act) directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the then outstanding securities of such Employer; | ||
(b) | the first purchase of the Companys common stock pursuant to a tender or exchange offer (other than a tender or exchange offer made by the Company); | ||
(c) | the approval by the Companys stockholders of a merger or consolidation, a sale or disposition of all or substantially all of the Companys assets or a plan of liquidation or dissolution of the Company; or | ||
(d) | during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company ceasing for any reason to constitute at least a majority thereof, unless the election or nomination for the election by the Companys stockholders of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. |
Notwithstanding the above provisions of this Section 2.9, Change of Control shall have
the meaning set forth in Code Section 409A(a)(2)(A)(v) and any regulations issued thereunder, which
are incorporated herein by this reference, but only to the extent inconsistent with the above
provisions as determined by the Compensation Committee.
2.10 Code. Code means the Internal Revenue Code of 1986, as amended, and the
regulations and other authority issued thereunder by the appropriate governmental authority.
References herein to any Section of the Code shall include references to any successor Section or
provision of the Code.
2.11 Company. Company means Smith International, Inc. or any successor in interest
thereto.
2.12 Compensation. Compensation means the salary, perquisite payments, and other
cash remuneration that is payable by the Employer to the Employee during a Plan Year for
compensatory services rendered, excluding any Bonuses, severance payments, and reimbursements of
business and other expenses.
2.13 Compensation Committee. Compensation Committee means the Compensation and
Benefits Committee of the Board.
2.14 Deferral Agreement. Deferral Agreement means a separate written agreement
entered into by and between the Employer and an Active Participant prior to the commencement of a
Plan Year, which agreement describes the terms and conditions of such Active Participants deferred
compensation arrangement hereunder for the Plan Year. The Deferral Agreement shall be executed and
dated by the Active Participant and shall specify the amount of Compensation and/or Bonus related
to services to be performed during the Plan Year, by percentage or dollar amount, to be deferred.
2.15 Deferred Compensation Ledger. Deferred Compensation Ledger means the
appropriate accounting records maintained by the Administrative Committee which set forth the name
of each Participant and his Account transactions reflecting (a) the amount of Compensation and
Bonus deferred pursuant to Article Four, (b) the amount of Employer contributions made on
behalf of the Participant pursuant to Article Four, (c) the amount of Investment Experience
credited or charged to the Participants Account pursuant to Article Five, and (d) the
amount of any distributions or withdrawals pursuant to
Article Six. The Deferred Compensation Ledger shall be utilized solely as a device for the measurement and determination of
the contingent amounts to be paid to Participants under the Plan. The Deferred
2
Compensation Ledger
shall not constitute or be treated as an escrow, trust fund, or any other type of funded account of
whatever kind for Code or ERISA purposes and, moreover, contingent amounts credited thereto shall
not be considered plan assets for ERISA purposes. In addition, no economic benefit or
constructive receipt of income shall be provided to any Participant for purposes of the Code unless
and until cash payments under the Plan are actually made to the Participant. The Deferred
Compensation Ledger merely provides a record of the bookkeeping entries relating to the contingent
benefits that the Employer intends to provide to Participants and thus reflects a mere unsecured
promise to pay such amounts in the future.
2.16 Determination Date. Determination Date means, with respect to a Participant,
the date of his Separation from Service due to his death, Disability or other Separation from
Service.
2.17 Elective Deferral Contribution. Elective Deferral Contribution means any
amount of a Participants Compensation and/or Bonus which he elects to defer hereunder and to have
such deferred amount credited to his Account.
2.18 Employee. Employee means a member of a select group of management or highly
compensated employees of the Employer, as determined by the Compensation Committee for each Plan
Year.
2.19 Employment. Employment means employment as an Employee. In this regard,
neither the transfer of a Participant from employment by the Company to employment by an Affiliated
Entity nor the transfer of a Participant from employment by an Affiliated Entity to employment by
the Company shall be deemed to be a Separation from Service by the Participant. Moreover, a
Participant shall not be deemed to have incurred a Separation from Service because of his approved
temporary absence from active employment on account of illness or authorized vacation, or during
another approved and temporary leave of absence granted by the Employer.
2.20 Employer. Employer means the Company and each Affiliated Entity which has
adopted the Plan with the consent of the Compensation Committee or the Administrative Committee.
2.21 ERISA. ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and other authority issued thereunder by the appropriate governmental
authority. References herein to any section of ERISA shall include references to any successor
section or provision of ERISA.
2.22 Executive Staff Participant. Executive Staff Participant means a Participant
who is designated by the Compensation Committee, in its discretion, as an Executive Staff
Participant. An Executive Staff Participant will generally be a senior officer of the Employer who
is a member of the Employers Executive Staff; provided, however, only Participants so designated
by the Compensation Committee shall be deemed Executive Staff Participants for purposes of this
Plan. Executive Staff Participants shall be designated by name in resolutions adopted by the
Compensation Committee from time to time, and any Participant may be added or deleted from the list
of Executive Staff Participants by the Compensation Committee in its absolute discretion at any
time. Executive Staff Participants are eligible to receive additional Employer contributions in
accordance with Section 4.5.
2.23 Financial Emergency. Financial Emergency means an unforeseeable emergency and
severe financial hardship to the Participant resulting from an illness or accident of the
Participant, the Participants spouse, or of a dependent (as defined in Code Section 152(a)) of the
Participant, loss of the Participants property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of the Participant.
Withdrawals of amounts from the Participants Account due to a Financial Emergency, pursuant
to Section 6.6, shall only be permitted to the extent reasonably necessary to satisfy the
emergency need plus amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which such hardship is or may be relieved
through reimbursement or compensation by insurance or otherwise or by liquidation of the
Participants assets (to the extent the liquidation of such assets would not itself cause severe
financial hardship). The Administrative Committee, in
its discretion, shall determine whether a Financial Emergency has occurred and the amount
needed to satisfy the emergency need, and each such determination shall be made in accordance with
the requirements of Code Section 409A. The Participant must provide the Administrative Committee
with the information that it requests to make these determinations.
2.24 Funds. Funds means the investment funds designated from time to time for the
deemed investment of Accounts pursuant to Article Five.
2.25 401(k) Plan. 401(k) Plan means the Smith International, Inc. 401(k) Retirement
Plan, as it may be amended from time to time, or any successor defined contribution plan maintained
by the Company which is intended to qualify under Sections 401(a) and 401(k) of the Code.
3
2.26 Insolvent. Insolvent means either (a) the Employer is unable to pay its debts
as they become due, or (b) the Employer is subject to a pending proceeding as a debtor under the
United States Bankruptcy Code.
2.27 Interest Equivalents. Interest Equivalents means the hypothetical amounts
credited as interest to the Participants Account, as a component of Investment Experience,
pursuant to Section 5.4.
2.28 Investment Experience. Investment Experience means the hypothetical amounts
credited (as income, gains or appreciation on any hypothetical investments in Funds or other
investments permitted by the Trustee) or charged (as losses or depreciation on any such
hypothetical investments) to the balances in the Participants Account pursuant to Article
Five, including, without limitation, Interest Equivalents.
2.29 Participant. Participant means an Employee who has been selected by the
Compensation Committee to participate in the Plan. An Employee or former Employee (or a
Beneficiary thereof in the event of death) who still has an Account balance shall be deemed a
Participant hereunder regardless of whether he is an Active Participant.
2.30 Plan. Plan means the Smith International, Inc. Post-2004 Supplemental
Executive Retirement Plan as set forth herein, and as it may be amended from time to time. This
Plan is a separate and distinct plan from the Smith International, Inc. Supplemental Executive
Retirement Plan which was frozen by the Compensation Committee effective as of December 31, 2004.
2.31 Plan Year. Plan Year means the calendar year commencing on January 1 and
ending on December 31.
2.32 Separation from Service. Separation from Service means the Participants
separation from service with the Employer within the meaning of Code Section 409A.
2.33 Specified Employee. Specified Employee means any Participant who is a key
employee (as defined in Code Section 416(i) without regard to Code Section 416(i)(5)) of the
Company (or an entity which is considered to be a single employer with the Company under Code
Section 414(b) or 414(c)), as determined under Code Section 409A at any time during the twelve (12)
month period ending on December 31, but only if the Company has any stock that is publicly traded
on an established securities market (or otherwise as prescribed by Code Section 409A), and shall
include the following:
(a) | an officer of the Company or Affiliated Entity having compensation (as defined in Code Section 415(c)(3)) for the applicable Plan Year greater than $130,000, as adjusted under Code Section 416(i)(1); | ||
(b) | any person owning (or considered as owning within the meaning of Code Section 318) more than five percent (5%) of the outstanding stock of the Company or Affiliated Entity or stock possessing more than five percent (5%) of the total combined voting power of such stock, or if the Company or Affiliated Employer is not a corporation, any person owning more than five percent (5%) of the capital or profits interest of the Company or Affiliated Entity; or | ||
(c) | a person who would be described in clause (b) above if one percent (1%) were substituted for five percent (5%) each place it appears in such clause (b), and whose aggregate annual compensation (as defined in Code Section 415(c)(3)) from the Company and any Affiliated Entity is more than $150,000. |
For purposes of determining ownership under this Section 2.33, the aggregation rules
of Code Sections 414(b), (c) and (m) shall not apply. For purposes of clause (a) above, no more
than fifty (50) Employees (or, if lesser, the greater of three (3) or ten percent (10%) of the
Employees) shall be treated as officers.
Notwithstanding the foregoing, a Participant who is a Specified Employee, as determined under
this Section 2.33, will be deemed to be a Specified Employee solely for the period of April
1 to March 31 following such December 31, except as otherwise may be required by Code Section 409A.
2.34 Subsidiary. Subsidiary means any subsidiary of the Company as defined under
Code Section 424(f).
4
2.35 Total and Permanent Disability. Total and Permanent Disability means the
Participant is (a) unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (b) is, by reason of any
medically determinable physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an accident and health plan
covering Employees of the Employer. Any determination of Total and Permanent Disability shall be
made in accordance with the requirements of Code Section 409A.
2.36 Trust. Trust means a grantor trust, as described in Code Sections 671-677, of
the type commonly referred to as a rabbi trust which has been created under the Trust Agreement
and pursuant to which the Employer may place assets to informally fund contingent benefits
payable under the Plan.
2.37 Trust Agreement. Trust Agreement means the Smith International, Inc. Post-2004
Supplemental Executive Retirement Plan Trust Agreement, as it may be amended from time to time,
which embodies the terms and conditions of the Trust.
2.38 Trustee. Trustee means the duly appointed and acting trustee of the Trust, and
any successor thereto.
2.39 Valuation Date. Valuation Date means the last day of each calendar quarter and
any other interim date, as determined by the Administrative Committee, for the valuation of
Participants Accounts.
ARTICLE THREE
ADMINISTRATION
3.1 Composition of Administrative Committee. The Administrative Committee shall be
comprised of such officers of the Employer as chosen by the Compensation Committee to constitute
the Administrative Committee. Each member of the Administrative Committee shall serve at the
pleasure of the Compensation Committee and the Compensation Committee may remove or replace a
member of the Administrative Committee pursuant to procedures established by the Compensation
Committee.
A member of the Administrative Committee may also be a Participant. A member of the
Administrative Committee who is also a Participant shall not vote or otherwise act on any matter
relating solely to himself.
The members of the Administrative Committee shall not receive any special compensation for
serving in their capacities as members of the Administrative Committee but shall be reimbursed by
the Company for any reasonable expenses incurred in connection therewith. No bond or other
security need be required of the Administrative Committee or any member thereof.
3.2 Administration of Plan. The Administrative Committee shall operate, administer,
interpret, construe and construct the Plan, including correcting any defect, supplying any omission
or reconciling any inconsistency. The Administrative Committee shall have all powers necessary or
appropriate to implement and
administer the terms and provisions of the Plan, including the power to make findings of fact.
The determination of the Administrative Committee as to the proper interpretation, construction,
or application of any term or provision of the Plan shall be final, binding, and conclusive with
respect to all interested persons.
In addition, the Trustee may take investment directions from the Administrative Committee, in
which case the Administrative Committee shall implement the provisions of Section 5.3
regarding investment of Account balances. The Administrative Committee shall have the authority to
select any Fund or other prudent investment vehicles that are available for hypothetical investment
by Participants of their Account balances in assets held by the Trust. Furthermore, the
Administrative Committee shall direct the Trustee in matters relating to the distribution to
Participants of amounts credited to their Accounts in accordance with the terms of the Plan.
3.3 Action by Committee. A majority of the members of the Administrative Committee
shall constitute a quorum for the transaction of business, and the vote of a majority of those
members present at any meeting at which a quorum is present shall decide any question brought
before the meeting and shall be the act of the Administrative Committee. In addition, the
Administrative Committee may take any other action otherwise proper under the Plan by an
affirmative vote, taken without a meeting, of a majority of its members.
5
3.4 Delegation. The Administrative Committee may, in its discretion, delegate one or
more of its duties to its designated agents or to employees of an Employer, but may not delegate
its authority to make the determinations specified in the first paragraph of Section 3.2.
3.5 Reliance Upon Information. No member of the Administrative Committee shall be
liable for any decision, action, omission, or mistake in judgment, provided that he acted in good
faith in connection with the administration of the Plan. Without limiting the generality of the
foregoing, any decision or action taken by the Administrative Committee in reasonable reliance upon
any information supplied to it by the Board, the Compensation Committee, any employee of an
Employer, the Employers legal counsel, or the Employers independent accountants shall be deemed
to have been taken in good faith.
The Administrative Committee may consult with legal counsel, who may be counsel for the
Employer or other counsel, with respect to its obligations or duties hereunder, or with respect to
any action, proceeding or question at law, and shall not be liable with respect to any action
taken, or omitted, in good faith pursuant to the advice of such counsel.
3.6 Responsibility and Indemnity. To the full extent permitted by law, Smith
International, Inc. and each other adopting Employer (collectively, the Employer) jointly and
severally shall defend, indemnify and hold harmless each past, present and future member of the
Administrative Committee and each other employee who acts in the capacity of an agent, delegate or
representative of the Administrative Committee under the Plan (hereafter, all such indemnified
persons shall be jointly and severally referred to as Plan Administration Employee) against, and
each Plan Administration Employee shall be entitled without further act on his part to indemnity
from the Employer for, any and all losses, claims, damages, judgments, settlements, liabilities,
expenses and costs (and all actions in respect thereof and any legal or other costs and expenses in
giving testimony or furnishing documents in response to a subpoena or otherwise), including the
cost of investigating, preparing or defending any pending, threatened or anticipated action, claim,
suit or other proceeding, whether or not in connection with litigation in which the Plan
Administration Employee is a party (collectively, the Losses), as and when incurred, directly or
indirectly, relating to, based upon, arising out of, or resulting from his being or having been a
Plan Administration Employee; provided, however, that such indemnity shall not include any Losses
incurred by such Plan Administration Employee (i) with respect to any matters as to which he is
finally adjudged in any such action, suit or proceeding to have been guilty of gross negligence,
bad faith or intentional misconduct in the performance of his duties as a Plan Administration
Employee, or (ii) with respect to any matter to the extent that a settlement thereof is effected in
an amount in excess of the amount approved by the Company (which approval shall not be unreasonably
withheld). The foregoing right of indemnification shall be in addition to any liability that the
Employer may otherwise have to the Plan Administration Employee.
The Employers obligation hereunder to indemnify the Plan Administration Employee shall exist
without regard to the cause or causes of the matters for which indemnity is owed and expressly
includes (but is not limited to) the Losses, directly or indirectly, relating to, based upon,
arising out of, or resulting from any one or more of the following:
(a) | the sole negligence or fault of any Plan Administration Employee or combination of Plan Administration Employees; | ||
(b) | the sole negligence or fault of the Employer; | ||
(c) | the sole negligence or fault of third parties; | ||
(d) | the concurrent negligence of fault or any combination of the Plan Administration Employee and/or the Employer and/or any third party; and | ||
(e) | Any other conceivable or possible combination of fault or negligence, it being the specific intent of the Employer to provide the maximum possible indemnification protection hereunder, but excluding any such Losses that are found by a court of competent jurisdiction to have resulted from the gross negligence, bad faith or intentional misconduct of the Plan Administration Employee. |
The Plan Administration Employee shall have the right to retain counsel of its own choice to
represent it provided that such counsel is acceptable to the Employer, which acceptance shall not
be unreasonably withheld. The Employer shall pay the fees and expenses of such counsel, and such
counsel shall to the full extent consistent with its professional responsibilities cooperate with
the Employer and any counsel designated by it. The Employer shall be liable for any
6
settlement of
any claim against the Plan Administration Employee made with the written consent of the Employer
which consent shall not be unreasonably withheld.
The foregoing right of indemnification shall inure to the benefit of the successors and
assigns, and the heirs, executors, administrators and personal representatives of each Plan
Administration Employee, and shall be in addition to all other rights to which the Plan
Administration Employee may be entitled as a matter of law, contract, or otherwise.
ARTICLE FOUR
PARTICIPATION
4.1 Eligibility of Employees. The Compensation Committee shall have the sole and
exclusive authority and discretion to designate Employees who are eligible to participate in the
Plan as Active Participants. Only Employees who are members of a select group of management or
highly compensated Employees for purposes of ERISA shall be eligible for selection by the
Compensation Committee.
The Compensation Committee shall also have the authority and discretion to deem any Employee
as no longer an Active Participant effective as of the first day of the next Plan Year; provided,
however, such action shall not be effective before the date that the Participant receives written
notice of same. Any Participant whose Employment is terminated, for whatever reason, shall not be
an Active Participant effective as of his Separation from Service date. A person who is no longer
an Active Participant shall still be considered a Participant for other purposes hereunder until he
has received a total distribution of his Account balance.
4.2 Notification of Eligible Employees. Within thirty (30) days prior to the
beginning of each Plan Year, the Administrative Committee, as directed by the Compensation
Committee, shall notify in writing each of the Employees who are eligible to elect to defer
Compensation under the Plan. The Compensation Committee shall also have the right to designate
Employees as Active Participants at any time during a Plan Year. Each Employee who has been
designated as an Active Participant by the Compensation Committee in any Plan Year shall remain
eligible to defer Compensation and/or Bonuses hereunder unless and until the Compensation Committee
determines that he is no longer eligible to authorize such deferrals and notifies Employee of same.
An Employee (or in the event of his death, his Beneficiary) shall be a Participant hereunder as
long as he has any balance credited to his Account, regardless of whether he is eligible to
authorize Compensation and/or Bonus deferrals hereunder as an Active Participant. Only Employees
who are designated as Active Participants for a Plan Year may authorize deferrals or have Employer
contributions made on their behalf.
4.3 Compensation and Bonus Deferral Agreement. After an Employee has been notified by
the Administrative Committee that he is eligible to participate in the Plan for the relevant Plan
Year as an Active Participant, he must, in order to defer Compensation and/or Bonus with respect to
services to be performed during such Plan Year, notify the Administrative Committee of his deferral
election by completing and executing a Deferral Agreement prior to the end of the Plan Year which
precedes the Plan Year to which such Deferral Agreement relates. The Employee may elect to defer
up to one hundred percent (100%) of his Compensation and/or Bonus for a Plan Year or the portion
thereof that he is an Active Participant. Any Deferral Agreement that is not completed and signed
by the Employee, and received and accepted by the Administrative Committee (or its delegate), on or
prior to the
last day of the Plan Year immediately preceding the Plan Year for which the Employee is
notified that he may make a deferral election, shall be treated as the Employees election not to
defer Compensation or Bonus for that Plan Year.
If, after the commencement of a Plan Year, an Employee is designated by the Compensation
Committee as an Active Participant for the first time under this Plan or any other plan maintained
by the Employer that is an account balance plan within the meaning of, and subject to, Code
Section 409A, the newly eligible Active Participant, in order to defer Compensation hereunder, must
complete and execute a Deferral Agreement and return it to the Administrative Committee (or its
delegate) within thirty (30) days of the effective date on which the Employee first became an
Active Participant. Such Deferral Agreement shall only apply to defer Compensation and/or Bonus
for services to be performed for the remainder of the Plan Year by the Active Participant, provided
that such services are to be performed subsequent to receipt and approval of his Deferral Agreement
by the Administrative Committee.
The amount of Compensation elected to be deferred pursuant to a Deferral Agreement shall be
withheld on a pro rata basis from the Active Participants regular payments of Compensation for
each pay period during the Plan Year or portion thereof during which such Deferral Agreement is in
effect, unless otherwise designated by the Active Participant in his Deferral Agreement. In the
event that a Trust is maintained, Compensation deferrals shall promptly be delivered to the Trustee
by the Employer.
7
Regardless of any services performed during a year on behalf of the Company, no Participant
will accrue any right to receive any Bonus until it is actually awarded to him. An Active
Participants election to defer all or any portion of his Bonus that may be awarded with respect to
any Plan Year must be made prior to the first day of the Plan Year in which services will be
performed for which such Bonus amount is to be paid.
The dollar amount or percentage of a Bonus elected to be deferred under this Section
4.3 shall be deferred in one lump sum and shall be deemed to have been deferred on the date the
deferred portion of the Bonus would otherwise have been paid to the Active Participant in the
absence of his deferral election. Any Bonus deferral election made hereunder shall be void and
ineffective to the extent that no Bonus is awarded to the Active Participant with respect to
services performed during the Plan Year.
To the extent required under payroll tax law or regulation, the deferred amount of any
Compensation or Bonus elected hereunder may be reduced by the Administrative Committee in order to
provide taxable, non-deferred wages sufficient to cover required withholding taxes.
4.4 Leave of Absence. If an Active Participant is authorized by his Employer for any
reason to take a paid leave of absence from Employment, the Participant shall continue to be
considered in Employment and his Elective Deferral Contributions shall continue to be withheld
during such paid leave of absence. If an Active Participant is authorized by his Employer for any
reason to take an unpaid leave of absence from Employment, the Participant shall continue to be
considered in Employment and the Participant shall be excused from making Elective Deferral
Contributions from his Compensation until the Participant returns to a paid Employment status.
Upon his return from the unpaid leave, Elective Deferral Contributions shall resume for the
remaining portion of the Plan Year in which the expiration or return occurs, based on the
Participants Deferral Agreement, if any, as in effect for that Plan Year, i.e., the same
percentage or dollar amount that was being withheld prior to the unpaid leave of absence shall
resume after return to active service, but no make-up contributions shall be made for the unpaid
leave period. A leave of absence shall not affect any previously elected Bonus deferral.
4.5 Employer Contributions.
(1) Age-Weighted Contributions. Subject to the following provisions of this
subsection that apply to Executive Staff Participants, effective as of the last day of each
3-month quarter during a Plan Year, an Age-Weighted Contribution shall be allocated and
credited by the Administrative Committee to the Account of each Active Participant who has
entered into a Deferral Agreement covering that quarter. The Age-Weighted Contribution
shall be based on the Active Participants Age-Weighted Contribution Percentage (AWCP) as
determined based on the schedule set forth below:
Age as of Anniversary of | ||||
Participants Date of Birth | AWCP | |||
Under Age 40 |
2.00 | % | ||
40-44 |
2.50 | % | ||
45-49 |
3.00 | % | ||
50-54 |
4.00 | % | ||
55-59 |
5.00 | % | ||
60 or older |
6.00 | % |
An Active Participants AWCP shall change as of the first payroll period beginning in
the month following the month in which the anniversary of the Active Participants date of
birth occurs. To compute an Active Participants Age-Weighted Contribution for a Plan Year,
his AWCP shall be multiplied by the Active Participants (i) Total 401(k) Compensation for
the Plan Year (defined below) minus his (ii) Net 401(k) Compensation for the Plan Year
(defined below).
Total 401(k) Compensation means the total of all cash amounts payable by the Employer
to or for the benefit of an Active Participant for services rendered or labor performed
while an Active Participant during the Plan Year (including overtime pay, Bonuses, perq
pay, plus incentive or other supplemental pay and amounts that he could have received in
cash (i) in lieu of an Elective Deferral Contribution to this Plan or a 401(k) salary
deferral contribution made under the 401(k) Plan and (ii) had he not entered into a salary
reduction agreement pursuant to a cafeteria plan under Section 125 of the Code), minus (i)
severance pay, (ii) any amount attributable to the grant,
8
vesting or payout of any
equity-based incentive award to the Active Participant, and (iii) the proceeds from the
Active Participants exercise of any stock options. The Total 401(k) Compensation of any
Active Participant taken into account for purposes of the Plan shall be prorated for (i) a
Plan Year of less than twelve months (other than the first Plan Year) or (ii) in the case of
an Active Participant who is either an Active Participant for less than the entire Plan Year
or receives Compensation for less than the entire Plan Year. Total 401(k) Compensation
shall not be reduced or otherwise affected by any limits that apply under the 401(k) Plan.
Net 401(k) Compensation means the total of all cash amounts payable by the Employer
to or for the benefit of an Active Participant for services rendered or labor performed
while an Active Participant during a Plan Year (including overtime pay, Bonuses, perq pay,
plus incentive or other supplemental pay and amounts which he could have received in cash
(i) in lieu of a 401(k) salary deferral contribution made under the 401(k) Plan and (ii) had
he not entered into a salary reduction agreement pursuant to a cafeteria plan under Section
125 of the Code), minus (i) severance pay, (ii) any amount attributable to the grant,
vesting or payout of any equity-based incentive award to the Active Participant, (iii) the
proceeds from the Active Participants exercise of any stock options, and (iv) the Active
Participants Elective Deferral Contributions to this Plan or to another deferred
compensation program other than 401(k) salary deferral contributions made under the 401(k)
Plan. The Net 401(k) Compensation of any Active Participant taken into account for
purposes of the Plan shall be limited to $210,000 for the Plan Year with such amount to be
(i) adjusted automatically to reflect any cost-of-living increases authorized by Section
401(a)(17) of the Code and (ii) prorated for (a) a Plan Year of less than twelve months or
(b) in the case of an Active Participant who is either an Active Participant for less than
the entire Plan Year or receives Compensation for less than the entire Plan Year.
Notwithstanding the preceding provisions of this subsection, the Employers
Age-Weighted Contribution (AWC) with respect to each Executive Staff Participant shall be
determined by the Administrative Committee or its delegate for each 3-month quarter during
each Plan Year in accordance with the provisions of this paragraph. The Age-Weighted
Contribution Percentage (AWCP) shall be six percent (6%) for each Executive Staff
Participant. The AWC of each Executive Staff Participant shall be computed in accordance
with the following formula: (6% x A) - B = AWC. For purposes of this formula, A equals the
Executive Staff Participants Total 401(k) Compensation, and B equals the dollar amount of
the age-weighted, profit sharing contribution, if any, for the applicable 3-month quarter
that has been or will be contributed by the Employer on behalf of the Executive Staff
Participant under the terms of the 401(k) Plan. Effective as of the last day of each
3-month quarter during a Plan Year, the AWC for each Executive Staff Participant shall be
allocated and credited by the Administrative Committee to his account under the Deferred
Compensation Ledger.
(2) Make-up Matching Contributions. The provisions of this subsection
4.5(2) shall apply only to those Active Participants who (i) have authorized elective
deferral contributions under the 401(k) Plan during the Plan Year and (ii) have entered into
a Deferral Agreement hereunder for the Plan Year. To the extent that an Active Participant
authorized elective deferral contributions under the 401(k) Plan during a Plan Year but his
account thereunder is precluded from receiving an allocation of any matching contributions
under the 401(k) Plan that it otherwise would have been eligible to receive, as the result
of non-discrimination limits imposed by the average deferral percentage (ADP) test or the
actual contribution percentage (ACP) test under the Code, then such
Active Participant shall be eligible to receive a Make-up Matching Contribution under
this Plan for that Plan Year. The Make-up Matching Contribution shall be equal to the
difference between (i) the total matching contributions that the Active Participants
account under the 401(k) Plan would have been allocated for the Plan Year without regard to
the ADP and ACP tests, and (ii) the amount of matching contributions actually allocated to
his account under the 401(k) Plan for the Plan Year. The Make-up Matching Contributions
shall be allocated and credited by the Administrative Committee to the affected Active
Participants Account, effective as of the last day of the Plan Year. Notwithstanding the
preceding provisions of this subsection, no Make-up Matching Contribution shall be credited
by the Administrative Committee on behalf of any Active Participant who is not in Employment
on the last day of such Plan Year for any reason.
(3) Matching Contributions.
(a) Non-Executive Staff Participants. The provisions of this
subsection 4.5 (3)(a) shall apply only to those Active Participants who (a)
have entered into a Deferral Agreement for the Plan Year and (b) are not Executive
Staff Participants. The Matching Contribution (MC) of such an eligible Participant
for a Plan Year shall be computed as follows:
MC
= The lesser of: [.015A + (.985A x B)] or [(6% x C) - (D + E)]
9
For purposes of this formula:
A equals the aggregate dollar amount of elective deferral contributions that
the Active Participant made to this Plan for the Plan Year, pursuant to his
Deferral Agreement, that were credited to his Account;
B equals the matching contribution percentage designated under section 3.03(b)
(or its successor) of the 401(k) Plan for the Plan Year;
C equals the Active Participants Total 401(k) Compensation (as defined in
Section 4.5(1)) minus any (i) Bonus paid during the Plan Year and (ii)
retention or similar payments paid during the Plan Year;
D equals the maximum dollar amount of matching contributions that could be
credited to the Active Participants account under the 401(k) Plan for the
Plan Year (regardless of the actual amount of matching contributions credited
to the Active Participants 401(k) Plan account); and
E equals the Make-up Matching Contributions, if any, that were credited to the
Active Participants Account for the Plan Year pursuant to subsection
4.5(2) above.
For example, assume that for a Plan Year (i) the Active Participants Account was
credited with elective deferral contributions of $8,000 under this Plan; (ii) the
matching contribution percentage under section 3.03(b) (or its successor) of the
401(k) Plan for such Plan Year was 100% (but not exceeding 1.50% of the compensation
deferred under the 401(k) Plan); (iii) the Active Participants Total 401(k)
Compensation (excluding his Bonus, if any) was $125,000; (iv) his account could have
been credited with a maximum dollar amount of $1,875 in matching contributions under
the 401(k) Plan (1.50% of Total 401(k) Compensation (or such other percentage
designated under section 3.03(b) of the 401(k) Plan or any successor provision); and
(v) his Account under this Plan was credited with a $1,000 Make-up Matching
Contribution.
MC = The lesser of: [(.015 x $8,000) + ($7880 x 100%)] or [(6% x
125,000) - ($1,875 + $1,000)]
MC
= The lesser of: $8,000 or $4,625 (i.e., $7,500 - $2,875)
MC = $4,625
The MC shall be computed, allocated and credited to the Active Participants
Account effective as of the last day of the Plan Year. Notwithstanding the preceding
provisions of this subsection, no Matching Contribution shall be credited for a Plan
Year on behalf of any Active Participant who is not in Employment on the last day of
such Plan Year for any reason.
(b) Executive Staff Participants. The Companys Matching Contribution
(MC) with respect to each Executive Staff Participant shall be determined in
accordance with the provisions of this subsection 4.6(3)(b) which shall apply
regardless of whether or not (i) the Executive Staff Participant is also a member of
the 401(k) Plan or has entered into a Deferral Agreement under this Plan, or (ii) any
matching contributions were credited to his 401(k) Plan account during the Plan Year.
The MC of an Executive Staff Participant for a Plan Year shall be computed as
follows:
X = The lesser of: (A + B) or (6% x C).
MC
= X - (D + E).
For purposes of this formula: A equals the aggregate dollar amount of elective
deferral contributions that the Executive Staff Participant made to this Plan for the
Plan Year, pursuant to his Deferral Agreement, that were credited to his Account; B
equals the maximum dollar amount of elective deferral contributions that could be
credited to the Executive Staff Participants Account under the 401(k) Plan for the
Plan Year under Code Section 402(g) (regardless of the Executive Staff Participants
actual elective deferral contributions under the
401(k) Plan); C equals the Executive Staff Participants Total 401(k) Compensation (as defined in Section 4.5(1)) for the Plan Year; D equals the maximum matching contributions that could
401(k) Plan); C equals the Executive Staff Participants Total 401(k) Compensation (as defined in Section 4.5(1)) for the Plan Year; D equals the maximum matching contributions that could
10
be credited
to the Executive Staff Participants account under the 401(k) Plan for the Plan Year
(regardless of the actual amount of the Executive Staff Participants matching
contributions credit to his 401(k) Plan account); and E equals the Make-up Matching
Contributions, if any, that were credited to the Executive Staff Participants
Account for the Plan Year pursuant to subsection 4.5(2) above. For example,
assume that for a Plan Year, an Executive Staff Participant (i) earned Total 401(k)
Compensation of $300,000; (ii) authorized and was credited with elective deferral
contributions under this Plan of $11,000; (iii) could have deferred a maximum of
$15,500 to the 401(k) Plan for the Plan Year under Code Section 402(g); (iv) could
have received a maximum matching contribution under the 401(k) Plan of $4,500 for the
Plan year (the lesser of $15,500 or 1.50% of compensation as limited under Code
Section 401(a)(17) for the Plan Year); and (v) his Account under this Plan was not
credited with any Make-up Matching Contributions for the Plan Year.
X = the lesser of: ($15,500 + $11,000) or (6% x
$300,000)
X = $18,000
MC
= $18,000 - ($4,500 + 0)
MC = $13,500.
The MC shall be computed, allocated and credited by the Administrative Committee
to the Executive Staff Participants Account effective as of the last day of the Plan
Year. Notwithstanding the previous provisions of this subsection, no MC shall be
credited by the Administrative Committee for a Plan Year on behalf of any Executive
Staff Participant who is not in Employment on the last day of such Plan Year for any
reason.
The Compensation Committee may, in its discretion, determine that the matching
contribution percentage for purposes of the preceding provisions of this
subsection 4.5(3)(b) shall not be 100% as described above (i.e., a
dollar-for-dollar match but not in excess of 6% of the Executive Staff Participants
Total 401(k) Compensation); for example, the Compensation Committee may determine
that the matching contribution percentage under the 401(k) Plan for the Plan Year
shall also apply under this subsection 4.5(3)(b) for Executive Staff
Participants. In such event, the formula at subsection 4.5(3)(a) which
incorporates a 100% match of the first 1.50% of elective deferral contributions shall
apply for the Plan Year for Executive Staff Participants. Any such determination
made by the Compensation Committee shall be recorded in a duly adopted resolution and
communicated in writing to the Executive Staff Participants prior to the beginning of
each applicable Plan Year.
(4) Discretionary Profit Sharing Contributions. The Compensation Committee
may, in its discretion, determine the amount, if any, of the Employers profit sharing
contribution for a Plan Year and how such amount is to be allocated and credited between and
among the Participants Accounts. A Participant shall not be entitled to share in the
allocation of any such Employer profit sharing contribution for a Plan Year if he is not in
Employment on the last day of the Plan Year for any reason. The Compensation Committee shall
have no obligation to authorize any such profit sharing contributions hereunder for any Plan
Year.
4.6 Vesting. All contributions made by Participants and the Employer hereunder shall
be fully vested and nonforfeitable at all times. All Investment Experience credited on all
contributions shall also be fully vested and nonforfeitable at all times.
4.7 Election of Manner of Payment. At the time that a Participant makes a deferral
election under Section 4.3, the Participant shall also elect (on an Advance Distribution
Election form) the manner in which his distribution shall be paid following his Determination Date
after Separation from Service from among the following options:
(a) | Lump sum payment; or | ||
(b) | If the distributable portion of the Account balance is at least $25,000 on the Determination Date, annual installments to be paid during a period specified by the Participant of not less than two (2) nor more than twenty (20) years. If the distributable amount is less than $25,000, it shall automatically be paid in a lump sum distribution without regard to any installment option that may have been elected by the Participant. Should a Participant elect annual installments under this |
11
Section 4.7, each installment payment shall be treated as a separate payment under Code Section 409A. |
ARTICLE FIVE
DEFERRAL OF COMPENSATION AND ALLOCATION
OF INTEREST EQUIVALENTS
OF INTEREST EQUIVALENTS
5.1 Deferral of Compensation and/or Bonus. If an Active Participant has elected to
defer Compensation and/or a Bonus hereunder for a Plan Year, the deferred amounts shall not be paid
when they otherwise would have been paid in the absence of such election. A bookkeeping entry to
reflect the deferred amounts shall be credited by the Administrative Committee to the Active
Participants Account under the Deferred Compensation Ledger. With respect to Compensation and
Bonuses deferred hereunder for a Plan Year, each such deferred amount shall be credited to the
Active Participants Account under the Deferred Compensation Ledger as of the date it otherwise
would have been paid to the Active Participant and shall reflect a mere unsecured promise by the
Employer to pay such amount in the future.
5.2 Allocation of Investment Experience to Accounts. As of each Valuation Date, the
Administrative Committee or its delegate shall determine the Investment Experience for the
applicable accounting period and, as soon as practicable after such period, shall post and credit
the amount of Investment Experience to each Participants Account effective as of the end of such
period. Each Account for which there was a positive balance at any time during the applicable
valuation period shall be entitled to an allocation and crediting of Investment Experience for that
valuation period regardless of whether the Participant is still an Active Participant.
5.3 Investment of Accounts. The Administrative Committee shall permit each
Participant to request that the amounts credited to his Account under the Deferred Compensation
Ledger be invested in any one or a combination of Funds (or other investment vehicles) which have
been designated by the Administrative Committee as available for hypothetical investment under the
Plan. However, except as provided in the next sentence, the Trustee shall make the final
investment decision, which may or may not correspond to the Participants request. In the event
that a Participant is serving as Trustee, the Administrative Committee, and not the Trustee, shall
make the final decision with respect to the hypothetical investment of such Participants Account.
Subject to Section 5.4 for Interest Equivalents, the Investment Experience posted and
credited to each Participants Account shall be based upon the Investment Experience of the actual
investments made by the Trustee in which the Participants Account balance is hypothetically
invested. Notwithstanding any contrary provision of the Plan or Trust Agreement, no direct
investment in securities issued by the Company or its Affiliated Entities shall be permitted under
the Plan or Trust.
Except as otherwise provided below, each Participant shall advise the Administrative
Committee, or any agent appointed by such Committee, of his request with respect to the
hypothetical investment of the amounts credited to his Account. Each Participants investment
request shall be in a form and manner, and in the minimum increments, as prescribed
by the Administrative Committee. Each Participant may, on any business day on which the
applicable financial markets are open, communicate directly with any appointed mutual fund company,
financial consultant, or other appropriate agent or delegate of the Administrative Committee to
request a change in the combination of Funds (or other investment vehicle) in which his Account is
hypothetically invested. The Administrative Committee may direct the Trustee concerning the Funds
in which the Participants Account shall be hypothetically invested in the absence of an investment
request from such Participant, or in the event that any such request is not followed by the
Administrative Committee or Trustee for whatever reason.
In addition, notwithstanding any contrary provision of the Plan or Trust Agreement, neither
the Administrative Committee nor Trustee shall be bound to follow the investment request of any
Participant. Subject to Section 5.4, the Investment Experience posted to each
Participants Account shall be based solely on the Investment Experience of the actual Funds or
other investments authorized by the Administrative Committee or Trustee, as applicable, in which
the Participants Account balance was hypothetically invested. Investment Experience shall be
allocated to the Participants Account as directed by the Administrative Committee.
5.4 Interest Equivalents. To the extent that all or any portion of a Participants
Account is deemed to have been hypothetically invested in a Fund that is a money market mutual
fund, the Participants Account will be credited with the Interest Equivalent described below in
this Section 5.4 instead of the actual investment return generated by the deemed investment
in the money market mutual fund. In addition, if a Trust is maintained, all deferrals of
Compensation and Bonus authorized by Participants shall be credited with Interest Equivalents by
the Employer from the date otherwise payable by the Employer to the Participants until the date
that such amounts are paid to the Trustee for investment in Funds or other
12
investment vehicles.
Compensation and Bonuses being deferred during a calendar quarter shall be considered to be
invested on the mid-point day of the calendar quarter during which such amounts would otherwise
have been payable to the Participant and shall be credited with Interest Equivalents accordingly
for that calendar quarter. Interest Equivalents shall be computed by the Administrative Committee
pursuant to non-discriminatory procedures maintained by the Administrative Committee from time to
time, and such amounts shall be posted and credited to each affected Participants Account by the
Administrative Committee.
Crediting of Interest Equivalents hereunder shall be made only to the Accounts of those
affected Participants who are current Employees. Therefore, for example, if a Participant has
terminated Employment but has not yet received a distribution of the entire amount credited to his
Account by the end of the month in which he is terminated, the Investment Experience that is deemed
to be credited to such Participants Account (to the extent of the portion of the Account that is
hypothetically invested in the money market mutual fund) after the last day of such month shall
only be the actual investment return realized by the deemed investment in the money market mutual
fund, and not the greater Interest Equivalent.
All amounts credited to a Participants Account, to the extent such amounts are either (i)
deemed to have been invested in a Fund that is a money market mutual fund or (ii) withheld by the
Employer from a Participants Compensation or Bonus but not yet paid to the Trustee for investment
in any Fund (or other investment vehicle), shall be credited quarterly with Interest Equivalents.
The rate of Interest Equivalents shall be equal to 120% of the long-term, applicable federal rate
(AFR) for quarterly compounding for the last month of the calendar quarter immediately preceding
the calendar quarter in which the Interest Equivalents are to be credited. For example, for
purposes of crediting Interest Equivalents for the 3-month quarter ending December 31 of a given
Plan Year, 120% of the AFR rate for September of that Plan Year will be used.
Allocations of Interest Equivalents shall be computed and credited by the Administrative
Committee based on the balances credited to the Participants Account as of the last day of each
calendar quarter during a Plan Year, i.e., March 31, June 30, September 30 and December 31. In the
event of a distribution following a Determination Date, the applicable portion of the Participants
Account balance deemed to be invested in a Fund that is a money market fund shall be credited with
Interest Equivalents based on such applicable portion as of the last day of the month which
includes the Determination Date.
Interest Equivalents credited to the Participants Account shall be compounded quarterly and
shall increase the contingent benefits receivable by the Participant in the future.
5.5 Participants Rights Under the Trust. The assets of the Trust shall be held for
the benefit of the Participants in accordance with the terms of the Plan and the Trust Agreement.
In accordance with applicable provisions of the Trust Agreement, the assets of the Trust shall
remain subject to the claims of the general creditors of the Employer, and the rights of the
Participants to the amounts in the Trust shall be limited as provided in the Plan and Trust
Agreement in the event that the Employer becomes Insolvent.
5.6 Determination of Account. The aggregate amount credited to a Participants
Account under the Deferred Compensation Ledger shall consist of (i) the aggregate amount of
deferred Compensation and/or Bonuses and Employer Contributions made pursuant to Article
Four, plus (or minus) (ii) the aggregate amount of Investment Experience credited or charged to
such Account pursuant to Article Five, minus (iii) the aggregate amount of any
distributions or withdrawals made from such Account pursuant to Article Six.
ARTICLE SIX
DISTRIBUTIONS
6.1 Amount of Deferred Compensation Subject to Distribution. As of the Participants
Determination Date, the aggregate amount credited to his Account maintained under the Deferred
Compensation Ledger shall become distributable in accordance with the provisions of Section
6.2.
6.2 Forms of Distribution Following Determination Date Except for Death. Upon the
occurrence of a Determination Date (except due to the Participants death) and prior to a Change of
Control, the Participants Account balance shall become distributable in the form of payment
prescribed in Section 4.7. All distributions shall be paid in cash.
If there is no form of distribution election elected by the Participant pursuant to
Section 4.7, the form of distribution following a Determination Date shall automatically be
a lump sum payment. A Participant cannot elect to retain his
13
distributable Account balance in the
Plan following his Determination Date except for any remaining unpaid installments during the
installment period.
Notwithstanding any provision hereof to the contrary, with respect to any Determination Date
resulting from a Separation from Service within the 12-month period following a Change of Control,
all distributions under the Plan shall automatically be paid in lump sum payments, no installment
payments may be elected and no prior installment election shall be honored. Following a Change of
Control, a lump sum payment shall be made to each Participant who incurs a Separation from Service
within 12 months after the Change of Control date. In such event, the lump sum distribution shall
be paid within thirty (30) days after the Participants Separation from Service date.
Notwithstanding any previous installment payment election that may have been made by the
Participant, the aggregate of any remaining installment payments due to a Participant who had
incurred a Separation from Service at any time prior to the Change of Control shall be paid to such
Participant in a lump sum within 30 days after the Change of Control date.
6.3 Form of Death Distribution. If the Determination Date results from the death of
the Participant, his designated Beneficiary (pursuant to Section 6.10) shall automatically
receive a lump sum cash distribution of the Participants Account balance within sixty (60) days
following the date of Participants death and, therefore, installment payments, or continued
installment payments, shall not be available as a distribution option following the Participants
death, even if previously elected by the Participant or Beneficiary. If the Participant dies while
receiving installment payments before receiving all of such installment payments, his designated
Beneficiary (pursuant to Section 6.10) shall automatically receive a lump sum cash
distribution of the Participants remaining Account balance within sixty (60) days following the
date that the Administrative Committee is notified of the Participants death.
Notwithstanding the preceding paragraph of this Section 6.3, if (a) the Participants
Account balance at the time of his death is at least one million dollars ($1,000,000) and (b) the
Participant had an installment distribution election in effect at the time of his death, then the
Participants installment election shall be honored and his designated Beneficiary shall receive
installment payments over the installment period, or remaining installment period, that had been
elected by the Participant prior to his death; provided, however, if the elected installment period
or remaining installment period, as applicable, is longer than five (5) years from the date of
Participants death, the installment payments shall be made over an installment period that ends on
the last day of the year that is five years from the end of the year in which the Participants
death occurred. In this event, the installment payment period shall be automatically shortened
pursuant to this provision and the maximum installment period shall thus not exceed the 5-year
period specified in the immediately preceding sentence. All installment payments shall be made in
substantially equal annual payments over the installment period, and each installment payment shall
be treated as a separate payment under Code Section 409A.
6.4 Timing of Distributions.
(a) | Lump Sum Distribution. Lump sum distributions shall be made as soon as administratively feasible following the end of the calendar quarter in which the Participants Determination Date occurs, but in no event later than thirty (30) days following such date. | ||
Notwithstanding the above, any distribution payable to a Specified Employee due to the Specified Employees Separation from Service (for any reason except due to his death) shall not be made before the earlier of the date which is six (6) months after the date of his Separation from Service. | |||
(b) | Installment Payments. Annual installment payments shall commence as soon as administratively feasible following the end of the calendar quarter in which the Participants Determination Date occurs, but in no event later than thirty (30) days following such date. Thereafter, the remaining installment payments shall be made as of the annual anniversary of the first installment date. Each installment payment shall be treated as a separate payment under Code Section 409A. | ||
Notwithstanding the above, any distribution payable to a Specified Employee due to the Specified Employees Separation from Service (for any reason except due to his death) shall not commence earlier than the date which is six (6) months after the date of his Separation from Service. | |||
(c) | Changes in Time and Form of Distribution. If a Participant has not commenced receiving payments under this Section 6.4, the Participant may petition the Administrative Committee in writing to request that the form of distribution be changed from a lump sum distribution to an |
14
installment payment option; provided, however, any such election to delay his distribution or change the form of payment: |
(1) | will not be effective until at least 12 months after the date on which the election is made; | ||
(2) | must be made at least 12 months before the distribution is otherwise payable; and | ||
(3) | in the case of an election related to a payment other than a payment made due to the Participants death, Total and Permanent Disability, or Financial Emergency, the first payment with respect to which such election is made is deferred for a period of not less than five (5) years from the date such payment would otherwise have been made. |
6.5 Advance Distribution Election Required. The Participants election as to the form
of his distribution hereunder with respect to any Plan Year must be made prior to the first day of
the Plan Year in which the services will be performed for which the Compensation or Bonus relates.
If the Participant or Beneficiary, as applicable, validly elects annual installment payments, then
Investment Experience shall continue to be credited by the Administrative Committee to
undistributed amounts allocated to the Participants Account. Pending receipt of any distribution
from the Plan, the Participant or Beneficiary shall remain subject to Section 7.2 and other
applicable provisions of the Plan.
6.6 Withdrawal due to Financial Emergency. A Participant who believes he has suffered
a Financial Emergency may in writing request a distribution of the portion of his Account balance
needed to satisfy the emergency need. The Administrative Committee will review the Participants
request to determine whether, in its discretion, a Financial Emergency has occurred and, if so, the
amount reasonably needed to satisfy the emergency need.
If the Administrative Committee, in its discretion, determines that a Participant has suffered
a Financial Emergency, the Administrative Committee may direct payment to the Participant of only
that portion, if any, of his Account balance which is attributable to his Compensation and Bonus
deferral contributions and is necessary to satisfy the emergency need.
A Participant requesting a withdrawal for Financial Emergency must petition the Administrative
Committee in writing and provide such information as the Administrative Committee may request to
support the withdrawal request. The Administrative Committee, in its discretion, shall determine
whether a Financial Emergency under the Plan has occurred and the minimum amount needed to satisfy
the emergency need, plus amounts necessary to pay taxes reasonably anticipated as a result of the
distribution, after taking into account the extent to which such hardship is or may be relieved
through
reimbursement or compensation by insurance or otherwise or by liquidation of the Participants
assets (to the extent the liquidation of such assets would not itself cause severe financial
hardship).
Only one withdrawal for a Financial Emergency may be made by Participant in any 24-month
period. If, subject to the sole discretion of the Administrative Committee, the petition for
payout is approved, the payout shall be made within 60 days of the date of approval. A request for
a withdrawal under this Section 6.6 must be accompanied by (a) a letter signed by the
Participant describing all the circumstances and the resources he has available to meet the need
and a certification that the resources listed in the definition of Financial Emergency and all
others are unavailable/insufficient/non-existent to meet the need, (b) copies of the appropriate
official documentation (e.g., bills, eviction or foreclosure notices or documents showing that such
are impending), and (c) statement of monthly household income and expenses (with explanations for
unusual items).
If the withdrawal is approved in its discretion, the Administrative Committee shall authorize
a distribution to the Participant in the amount reasonably necessary to satisfy the Financial
Emergency. No Interest Equivalents shall be credited to the Participants Account during a
calendar quarter with respect to the amount distributed to satisfy the Financial Emergency.
6.7 Trust and Payor of Deferred Compensation. Benefits payable under the Plan with
respect to a Participants Account shall be the obligation of, and payable by, the Company;
provided, however, the Company may, in its complete discretion, obtain reimbursement from any
adopting Employer which employed the Participant. Adoption and maintenance of the Plan by the
Employer shall not, for that reason, create a joint venture or partnership relationship between or
among such entities for purposes of payment of benefits under the Plan or for any other purpose.
In order to meet its contingent obligations under the Plan, the Employer shall not set aside
any assets or otherwise create any type of fund in which any Participant, or any person claiming
under such Participant, has an interest other than that of an unsecured general creditor of the
Employer or which would provide any Participant, or any person claiming under such
15
Participant,
with a legally enforceable right to priority over any general creditor of the Employer in the event
that the Employer becomes Insolvent.
The Employer intends for the Plan to recognize the value to the Employer of the past and
present services of Participants and to encourage and assure their continued service with the
Employer by making more adequate provision for their future retirement security. The maintenance
of the Plan is, in part, made necessary by certain benefit limitations which are imposed on the
401(k) Plan by the Code. The Plan is intended to constitute an unfunded, unsecured plan of
deferred compensation for a select group of management or highly compensated employees of the
Employer. Plan benefits herein provided are to be paid out of the Employers general assets.
Nevertheless, subject to the terms hereof and of the Trust Agreement, the Employer may transfer
money or other property to the Trustee and the Trustee shall pay Plan benefits to Participants and
their beneficiaries out of the Trust fund. To the extent the Employer transfers assets to the
Trustee, the Administrative Committee may, but need not, establish procedures for the Trustee to
invest the Trust assets in Funds or otherwise in accordance with each Participants designated
deemed investments pursuant to Article Five, but only with respect to the portion of the
Trust assets equal to such Participants Account balance.
The Compensation Committee or Board may establish the Trust and direct the Company to enter
into the Trust Agreement. In such event, the Company shall remain the owner of all assets in the
Trust Fund and the assets shall be subject to the claims of the Employers creditors if the
Employer ever becomes Insolvent. The Chief Executive Officer of the Company and the Board shall
each have the duty to inform the Trustee in writing if the Employer becomes Insolvent. Such notice
given under the preceding sentence by any party shall satisfy all of the parties duty to give
notice. When so informed, the Trustee shall suspend payments to the Participants and hold the
assets for the benefit of the Employers general creditors. If the Trustee receives a written
allegation that the Employer is Insolvent, the Trustee shall suspend payments to the Participants
and hold the Trust fund for the benefit of the Employers general creditors, and shall determine
within the period specified in the Trust Agreement whether the Employer is Insolvent. If the
Trustee determines that the Employer is not Insolvent, the Trustee shall resume payments to the
Participants. No Participant or Beneficiary shall have any preferred claim to, or any beneficial
ownership interest in, any assets of the Trust Fund.
During any period in which a Trust is in existence, benefits payable under the Plan shall be
payable by the Trustee in accordance with the terms, provisions, conditions and limitations of the
Plan and Trust Agreement. To the extent that any distribution described in the immediately
preceding sentence does not fully satisfy the obligation for any benefit due under the Plan, the
Employer shall remain fully liable and obligated for full payment of any unpaid benefit due and
payable under the Plan.
6.8 Reimbursement of Participant. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal fees and other expenses which the Participant (or any
Beneficiary thereof) may reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Employer, the Participant or others concerning the validity or enforceability of,
or liability under, any provision of this Plan or any guarantee of performance thereof (including,
without limitation, as a result of any contest by the Participant about the amount of any benefits
due pursuant to the Plan), plus in each case interest on any delayed payment at the applicable
interest rate specified in Section 5.4 for Interest Equivalents. To the extent that the
Employer is found under a final decree of a court of competent jurisdiction to have engaged in an
intentional breach of contract without good cause, bad faith or fraudulent conduct hereunder in
delaying or failing to make any payment due under this Plan, then the amount found due to any
Participant shall be fully paid to the Participant within thirty (30) days of such determination.
The Company authorizes Participant to engage counsel of his choice to represent him in any such
dispute. This Section 6.8 shall not be construed to limit or foreclose any court or
arbitrator from imposing any other awards or remedies. Notwithstanding the above, no reimbursement
shall be made for legal fees and other expenses incurred after the last day of the second taxable
year of the Participant following the taxable year in which the Participant incurs a Separation
from Service, and reimbursement will not be made later than the last day of the third taxable year
of the Participant following the taxable year of the Participants Separation from Service.
6.9 Facility of Payments. If the Administrative Committee determines that any person
entitled to payments under the Plan is physically or mentally incompetent to receive or properly
receipt for such payments, the Company shall make such payments or, if applicable, the
Administrative Committee shall direct the Trustee to make the payments, to the legal guardian or
other personal representative of such person for the use and benefit of such person. If the
Administrative Committee for any reason is unable to determine with reasonable certainty the proper
person to pay pursuant to the immediately preceding sentence, the Company shall pay or, if
applicable, the Administrative Committee shall direct the Trustee to pay, any amounts due hereunder
into a court of competent jurisdiction in an interpleader proceeding for purposes of being directed
by such court as to the proper disposition of such amounts. Any such payments so made by the
Company or the Trustee, to the extent of the amounts thereof, shall be a full and complete
discharge of any liability or obligation of the Plan, Trust, Employer, Administrative Committee,
Compensation Committee, Board and other interested parties, therefor.
16
6.10 Beneficiary Designations. Each Employee, upon becoming a Participant, shall file
with the Administrative Committee (or its delegate) a designation of one or more Beneficiaries to
whom benefits otherwise payable to the Participant shall be made in the event of his death prior to
the complete distribution of his Account balance. A Beneficiary designation shall be on the form
prescribed by the Administrative Committee and shall be effective when received and accepted by the
Administrative Committee. A Participant may, from time to time, revoke or change his Beneficiary
designation by filing a new designation form with the Administrative Committee. The last valid
designation received by the Administrative Committee shall be controlling; provided, however, that
no Beneficiary designation, or change or revocation thereof, shall be effective unless received
prior to the Participants death, and shall not be effective as of a date prior to its receipt by
the Administrative Committee
If no valid and effective Beneficiary designation exists at the time of the Participants
death, or if no designated Beneficiary survives the Participant, or if such designation conflicts
with applicable law, the payment of the Participants Account balance shall be made to the
Participants surviving lawful spouse, if any. If there is no surviving spouse, then payment of
the Account balance shall be made to the executor or administrator of the Participants estate, or
if there is no administration on Participants estate, in accordance with the laws of descent and
distribution as determined by the Company. If the Administrative Committee is in doubt as to the
right of any person to receive such amount, it may direct that the amount be paid into any court of
competent jurisdiction in an interpleader action, and such payment shall be a full and complete
discharge of any liability or obligation under the Plan or Trust Agreement to the full extent of
such payment.
6.11 Withholding of Taxes. The Administrative Committee shall direct the Employer
or, if appropriate, the Trustee, to withhold from the amount of benefits payable under the Plan all
federal, state and local taxes required to be withheld under any applicable law or governmental
regulation or ruling.
For each payroll period in which an Elective Deferral Contribution is being withheld, the
Employer shall ratably withhold from that portion of the Active Participants Compensation or Bonus
that is not being deferred, the Active Participants share of FICA, FUTA other applicable
employment taxes that are required to be withheld with respect to such Elective Deferral
Contributions.
With respect to Employer contributions pursuant to Section 4.5, the Employer shall
withhold the Active Participants required share of FICA, FUTA or and other applicable employment
taxes from the Active Participants
Compensation or Bonus that is not being deferred. Such taxes shall be withheld at the same
time that the Employer contributions are credited to the Deferred Compensation Ledger.
6.12 Distribution due to Qualified Domestic Relations Order. A distribution may be
allowed for a qualified domestic relations order (QDRO) as described in Code Section 414(p).
The Administrative Committee shall establish procedures to determine whether domestic relations
orders submitted to the Administrative Committee or its delegate under Section 3.4, are
QDROs and to administer distributions under any valid QDROs. If the Administrative Committee or
its delegate, in its discretion, determines a domestic relations order to be a QDRO, the
Administrative Committee or its delegate may direct payment only from the portion, if any, of the
Account balance which is attributable to Participants Compensation and Bonus deferral
contributions and is necessary to satisfy the QDRO.
ARTICLE SEVEN
RIGHTS OF PARTICIPANTS
7.1 Annual Statement to Participants. As soon as practicable after the end of each
Plan Year, or at such other time as the Administrative Committee determines to be appropriate, the
Administrative Committee shall cause to be prepared and delivered to each Participant a written
statement showing the following information and such other information that the Administrative
Committee decides is appropriate:
(a) | The beginning balances in the Participants Account under the Deferred Compensation Ledger as of the first day of the Plan Year; | ||
(b) | The amount of Compensation and Bonuses deferred for the Plan Year and credited to the Participants Account for the Plan Year; |
17
(c) | The amount of Employer contributions for the Plan Year that were credited to the Participants Account for the Plan Year; | ||
(d) | The adjustments to the Participants Account to reflect the crediting of Investment Experience and any distributions or withdrawals made during the Plan Year; and | ||
(e) | the ending balances in the Participants Account as of the last day of the Plan Year. |
7.2 Limitation of Rights. Nothing in this Plan shall be construed to:
(a) | Give any individual who is employed by an Employer any right to be a Participant unless and until such person is selected by the Compensation Committee. | ||
(b) | Give any Participant any rights, other than as an unsecured general creditor of the Employer, with respect to the Compensation, Bonuses, Employer contributions and Investment Experience credited to his Account under the Deferred Compensation Ledger until such amounts are actually distributed to him; | ||
(c) | Limit in any way the right of the Employer to terminate a Participants Employment with the Employer; | ||
(d) | Give a Participant or any other person any interest in any fund or in any specific asset of the Employer; | ||
(e) | Give a Participant or any other person any interests or rights other than those of an unsecured general creditor of the Employer; | ||
(f) | Be evidence of any agreement or understanding, express or implied, that the Employer will employ a Participant in any particular position, at any particular rate of remuneration, or for any particular time period; or | ||
(g) | Create a fiduciary relationship between the Participant and the Employer, Compensation Committee, and/or Administrative Committee. |
7.3 Nonalienation of Benefits. No right or benefit under this Plan shall be subject
to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber, or charge the same will be void and without
effect. No right or benefit hereunder shall in any manner be liable for or subject to any debts,
contracts, liabilities or torts of the person entitled to such benefits. If any Participant or
Beneficiary hereunder shall become bankrupt or attempt to anticipate, alienate, assign, sell,
pledge, encumber, or charge any right or benefit hereunder, or if any creditor shall attempt to
subject the same to a writ of garnishment, attachment, execution, sequestration, or any other form
of process or involuntary lien or seizure, then such right or benefit shall be held by the Company
for the sole benefit of the Participant or Beneficiary, his spouse, children, or other dependents,
or any of them, in such manner as the Administrative Committee shall deem proper, free and clear of
the claims of any party.
The withholding of taxes from benefit payments hereunder; the recovery under the Plan of
overpayments of benefits previously made to a Participant; the transfer of benefit rights from the
Plan to another plan; the direct deposit of benefit payments to an account in a banking institution
(if not actually part of an arrangement constituting an assignment or alienation); or an in-service
distribution under Section 6.6, shall not be construed as an assignment or alienation for
purposes of the first paragraph of this Section.
The first paragraph of this Section shall not preclude (a) the Participant from designating a
Beneficiary to receive any benefit payable hereunder upon his death, or (b) the executors,
administrators, or other legal representatives of the Participant or his estate from assigning any
rights hereunder to the person or persons entitled thereto.
In the event that any Participants or Beneficiarys benefits hereunder are garnished or
attached by order of any court, the Company or Trustee may bring an action or a declaratory
judgment in a court of competent jurisdiction to determine the proper recipient of the benefits to
be paid under the Plan. During the pendency of said action, any benefits that become payable shall
be held as credits to the Participants Account or, if the Company prefers, paid into the court as
they become payable, to be distributed by the court to the recipient as the court deems proper at
the close of said action.
18
7.4 Claims Procedures.
(a) | Filing a Claim. A Participant or his authorized representative may file a claim for benefits under the Plan (hereafter, referred to as a Claimant). Any claim must be in writing and submitted to the Administrative Committee at such address as may be specified from time to time. Claimants will be notified in writing of approved claims, which will be processed as claimed. A claim is considered approved only if its approval is communicated in writing to the Claimant. | ||
(b) | Denial of Claim. In the case of the denial of a claim respecting benefits paid or payable with respect to a Claimant, a written notice will be furnished to the Claimant within 90 days of the date on which the claim is received by the Administrative Committee. If special circumstances (such as for a hearing) require a longer period, the Claimant will be notified in writing, prior to the expiration of the 90-day period, of the reasons for an extension of time; provided, however, that no extension will be permitted beyond 90 days after expiration of the initial 90-day period. | ||
(c) | Reasons for Denial. A denial or partial denial of a claim will be dated and signed by the Administrative Committee and will clearly set forth: |
(1) | the specific reason or reasons for the denial; | ||
(2) | specific reference to pertinent Plan provisions on which the denial is based; | ||
(3) | a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and | ||
(4) | an explanation of the procedure for review of the denied or partially denied claim set forth below, including the Claimants right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review. |
(d) | Review of Denial. Upon denial of a claim, in whole or in part, a Claimant or his duly authorized representative will have the right to submit a written request to the Administrative Committee for a full and fair review of the denied claim by filing a written notice of appeal with the Administrative Committee within 60 days of the receipt by the Claimant of written notice of denial of the claim. A Claimant or the Claimants authorized representative will have, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimants claim for benefits and may submit issues and comments in writing. The review will take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. | ||
If the Claimant fails to file a request for review within 60 days of the denial notification, the claim will be deemed abandoned and the Claimant precluded from reasserting it. If the Claimant does file a request for review, his request must include a description of the issues and evidence he deems relevant. Failure to raise issues or present evidence on review will preclude those issues or evidence from being presented in any subsequent proceeding or judicial review of the claim. | |||
(e) | Decision Upon Review. The Administrative Committee will provide a prompt written decision on review. If the claim is denied on review, the decision shall set forth: |
(1) | the specific reason or reasons for the adverse determination; | ||
(2) | specific reference to pertinent Plan provisions on which the adverse determination is based; | ||
(3) | a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimants claim for benefits; and |
19
(4) | a statement describing any voluntary appeal procedures offered by the Plan and the Claimants right to obtain the information about such procedures, as well as a statement of the Claimants right to bring an action under ERISA Section 502(a). |
A decision will be rendered no more than 60 days after the Administrative Committees receipt of the request for review, except that such period may be extended for an additional 60 days if the Administrative Committee determines that special circumstances (such as for a hearing) require such extension. If an extension of time is required, written notice of the extension will be furnished to the Claimant before the end of the initial 60-day period. | |||
To the extent of its responsibility to review the denial of benefit claims, the Administrative Committee will have full authority to interpret and apply in its discretion the provisions of the Plan. The decision of the Administrative Committee will be final and binding upon any and all Claimants, including, but not limited to, Participants, and any other individuals making a claim through them. | |||
(f) | Other Procedures. Notwithstanding the foregoing, the Administrative Committee, in its discretion, may adopt different procedures for different claims without being bound by past actions. Any procedures adopted, however, shall be designed to afford a Claimant a full and fair review of his claim and shall comply with applicable regulations under ERISA. | ||
(g) | Finality of Determinations; Exhaustion of Remedies. To the extent permitted by law, decisions reached under the claims procedures set forth in this Section shall be final and binding on all parties. No legal action for benefits under the Plan shall be brought unless and until the Claimant has exhausted his remedies under this Section. In any such legal action, the Claimant may only present evidence and theories which the Claimant presented during the claims procedure. Any claims which the Claimant does not in good faith pursue through the review stage of the procedure shall be treated as having been irrevocably waived. Judicial review of a Claimants denied claim shall be limited to a determination of whether the denial was an abuse of discretion based on the evidence and theories the Claimant presented during the claims procedure. Any suit or legal action initiated by a Claimant under the Plan must be brought by the Claimant no later than one year following a final decision on the claim for benefits by the Administrative Committee. The one-year limitation on suits for benefits will apply in any forum where a Claimant initiates such suit or legal action. | ||
(h) | Effect of Committee Action. The Plan shall be interpreted by the Administrative Committee in accordance with the terms of the Plan and their intended meanings. However, the Administrative Committee shall have the discretion to make any findings of fact needed in the administration of the Plan, and shall have the discretion to interpret or construe ambiguous, unclear or implied (but omitted) terms in any fashion that the Administrative Committee deems to be appropriate in its sole judgment. The validity of any such finding of fact, interpretation, construction or decision shall not be given de novo review if challenged in court, by arbitration or in any other forum, and shall be upheld unless clearly arbitrary or capricious. To the extent the Administrative Committee has been granted discretionary authority under the Plan, the Administrative Committees prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter. If, due to errors in drafting, any Plan provision does not accurately reflect its intended meaning, as demonstrated by consistent interpretations or other evidence of intent, or as determined by the Administrative Committee in it sole and exclusive judgment, the provision shall be considered ambiguous and shall be interpreted by the Administrative Committee in a fashion consistent with its intent, as determined by the Administrative Committee in its sole discretion. The Administrative Committee, without the need for approval by the Board, may amend the Plan retroactively to cure any such ambiguity. This Section 7.4 may not be invoked by any person to require the Plan to be interpreted in a manner which is inconsistent with its interpretation by the Administrative Committee. All actions taken and all determinations made in good faith by the Administrative Committee shall be final and binding upon all persons claiming any interest in or under the Plan. |
20
ARTICLE EIGHT
MISCELLANEOUS
8.1 Amendment or Termination of the Plan. The Compensation Committee or the
Administrative Committee may amend or terminate the Plan at any time effective as of the date
specified by said Committee, including amendments with a retroactive effective date; provided,
however, the provisions of Section 8.2 may not be amended without the consent of at least
two-thirds (2/3) of all affected Participants and no amendment may be made which affects the rights
or duties of the Compensation Committee hereunder without its consent. In addition, unless the
particular Participant (or his Beneficiary in the event of death) consents in writing, no such
amendment or termination shall adversely affect any rights of such Participant or Beneficiary to
any amounts which are required to be allocated and credited hereunder to his Account at such time.
Notwithstanding the immediately preceding paragraph, the Plan may be amended by the
Compensation Committee or the Administrative Committee at any time prior to a Change of Control if
required to ensure that the Plan is characterized as a top-hat plan of deferred compensation
maintained for a select group of management or highly compensated employees as described under
ERISA Sections 201(2), 301(a)(3), and 401(a)(1), or to conform the Plan to the requirements of
ERISA, for top-hat plans or supplemental executive retirement plans or the requirements of the
Code for deferred compensation plans including Code Section 409A. No such amendment for this
exclusive purpose shall be considered prejudicial to the interest of a Participant or a Beneficiary
hereunder.
Following a Change of Control, any amendment or termination of the Plan (which is proposed by
the Compensation Committee or Administrative Committee pursuant to the immediately preceding
paragraph) shall require the written consent of a majority of the then Participants. For purposes
of this Plan, when the consent of a majority of the Participants is required, the determination of
majority consent shall be based upon receiving the consent of any combination of Participants whose
sum of Account balances under the Plan as of the time of determination is greater than fifty
percent (50%) of the sum of all Account balances for all Participants at such time, rather than
upon receiving the consent of a majority of the number of Participants. For purposes of this
determination, Beneficiaries of deceased Participants shall be considered Participants.
If the consent of a majority of the Participants is required for the amendment or termination
of the Plan, then the Administrative Committee shall be responsible for securing such Participant
consents in a timely and confidential fashion and, unless ordered by a court of competent
jurisdiction, shall not reveal to the Company, the Board, Compensation
Committee or any other interested party any information concerning such consents, except
whether the required majority has been achieved. The decision whether or not to consent is the
responsibility of the Participant in the exercise of his judgment, and notice of such consent or
failure to consent shall be administered in a confidential manner to protect the identity of the
Participant. Any consent of a Participant required under this Section 8.1 shall be deemed
given if no written objection from such Participant is received by the person soliciting such
consents on behalf of the Participants within fifteen (15) days after a written notice requesting
such consent and indicating such 15-day response period has been sent postpaid by United States
registered or certified mail with return receipt requested, and such return receipt has been
returned indicating receipt of such notice by the Participant.
In the event of termination of the Plan, there shall be no Active Participants, and the
Account balance of each Participant shall not be distributable except in accordance with
Article Six. In accordance with Code Section 409A, termination of the Plan shall not, by
itself, create a distribution event for Participants.
8.2 Powers of the Company. The existence of outstanding and unpaid benefits under the
Plan shall not affect in any way the right or power of the Employer to make or authorize any
adjustments, recapitalization, reorganization or other changes in the Employers capital structure
or in its business, or any merger or consolidation of the Employer, or any issue of bonds,
debentures, common or preferred stock, or the dissolution or liquidation of the Employer, or any
sale or transfer of all or any part of their assets or business, or any other act or corporate
proceeding, whether of a similar character or otherwise.
Should the Employer (or any successor thereto) elect to dissolve, enter into a sale of its
assets, or enter into any reorganization incident to which it is not the surviving entity, unless
the surviving or successor entity shall formally agree to assume and continue the Plan, and Trust
if applicable, the Plan shall terminate with respect to the Employer (or any successor thereto) on
the earlier of the date of closing or the effective date of such transaction. In such event, there
shall be no Active Participants of that Employer, and the Account balance of each affected
Participant shall not be distributable except in accordance with Article Six.
21
Should any successor to the Company assume and continue the Plan, and Trust if applicable,
incident to a transaction described in the immediately preceding paragraph, the affected
Participants Account balances shall not be distributable except in accordance with Article
Six.
8.3 Adoption of Plan by Affiliated Entity. Any Affiliated Entity may adopt the Plan
with the consent of the Compensation Committee or the Administrative Committee, effective as of the
date specified by the respective Committee. Any Affiliated Entity which has adopted the Plan shall
not be responsible for the administration of the Plan, and its Employees who are eligible to
participate herein shall be selected as provided herein.
8.4 Waiver. No term or condition of this Plan shall be deemed to have been waived,
nor shall there be an estoppel against the enforcement of any provision of this Plan, except by
written instrument of the party charged with such waiver or estoppel. No such written waiver shall
be deemed a continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not constitute a waiver of such
term or condition for the future or as to any act other than that specifically waived. Any waiver
by either party hereto of a breach of any provision of the Plan by the other party shall not
operate or be construed as a waiver by such party of any subsequent breach thereof.
8.5 Notice. Except as provided in Section 8.1, any notice required or
permitted to be given under this Plan shall be sufficient if in writing and delivered via
telecopier, messenger, or overnight courier with appropriate proof of receipt, or sent by U.S.
registered or certified or registered mail, return receipt requested, to the appropriate person or
entity at the address last furnished by such person or entity. Such notice shall be deemed given
as of the date of delivery to the recipient or, if delivery is made by mail, as of the date shown
on the receipt for registration or certification.
8.6 Severability. In the event that any provision of the Plan is declared invalid and
not binding on the parties hereto in a final decree or order issued by a court of competent
jurisdiction, such declaration shall not affect the validity of the other provisions of the Plan to
which such declaration of invalidity does not relate and such other provisions shall remain in full
force and effect.
8.7 Gender, Tense and Headings. Whenever the context requires, words of the masculine
gender used herein shall include the feminine and neuter, and words used in the singular shall
include
the plural. The words hereof, hereunder, herein, and similar compounds of the word
here shall refer to the entire Plan and not to any particular term or provision of the Plan.
Headings of Articles and Sections, as used herein, are inserted solely for convenience and
reference and shall not affect the meaning, interpretation or scope of the Plan.
8.8 Governing Law. The Plan shall be subject to and governed by the laws of the State
of Texas (other than such laws relating to choice of laws), except to the extent preempted by
ERISA, the Code or other controlling federal law.
[Signature page follows.]
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IN WITNESS WHEREOF, this Plan is approved and executed by a duly authorized officer of the
Company, on this 22nd day of October 2009, to be effective as of January 1,
2008.
ATTEST: | SMITH INTERNATIONAL, INC. | |||||
By:
|
/s/ PAMELA L KUNKEMOELLER | By: | /s/ MALCOLM W. ANDERSON | |||
Name:
|
Pamela L. Kunkemoeller | Name: | Malcolm W. Anderson | |||
Title:
|
Asst. General Counsel Corporate | Title: | SVP Human Resources | |||
& Asst. Secretary |
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