Exhibit 10.26
ARTICLE I
PURPOSE AND EFFECTIVE
DATE
The purpose of the Hughes Supply, Inc.
Nonqualified Deferred Compensation Plan (“Plan”) is to
aid Hughes Supply, Inc. and its subsidiaries in retaining and
attracting executive employees by providing them with tax deferred
savings opportunities. The Plan provides a select group of
management and 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), of Hughes Supply,
Inc. with the opportunity to elect to defer receipt of specified
portions of compensation, and to have these deferred amounts
treated as if invested in specified hypothetical investment
benchmarks. The Plan shall be effective as of March 1,
2002.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following
words and phrases shall have the meanings indicated, unless the
context clearly indicates otherwise:
Section 2.01 Administrative Committee.
“Administrative
Committee” means the committee appointed by the Compensation
Committee of the Board.
Section 2.02 Base Salary. “Base Salary” means the base rate of
cash compensation paid by the Company to or for the benefit of a
Participant for services rendered or labor performed while a
Participant, including base pay a Participant could have received
in cash in lieu of (A) deferrals pursuant to Section 4.02 and (B)
contributions made on his behalf to any qualified plan maintained
by the Company or to any cafeteria plan under Section 125 of the
Internal Revenue Code maintained by the Company.
Section 2.03 Base Salary Deferral. “Base Salary Deferral” means the
amount of a Participant’s Base Salary which the Participant
elects to have withheld on a pre-tax basis from his Base Salary and
credited to his Deferral Account pursuant to Section
4.02.
Section 2.04 Beneficiary. “Beneficiary” means the person,
persons or entity designated by the Participant to receive any
benefits payable under the Plan pursuant to Article X.
Section 2.05 Board. “Board” means the Board of Directors
of Hughes Supply, Inc.
Section 2.06 Bonus. “Bonus” means any cash bonus paid by
the Company.
Section 2.07 Change in Control. For purposes of this Plan, a “Change in
Control” shall be deemed to have occurred as of the first day
any one or more of the following conditions shall have been
satisfied:
(A) any person or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) acquires
beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of 25% or more of either (i) the then outstanding
shares of common stock of Hughes Supply, Inc. or (ii) the combined
voting power of the then outstanding voting securities of Hughes
Supply, Inc. entitled to vote generally in the election of
directors, provided that the following acquisitions shall not
constitute a Change in Control: (i) any acquisition directly from
Hughes Supply, Inc. (excluding any acquisition by virtue of the
exercise of a conversion privilege), (ii) any acquisition by Hughes
Supply, Inc.; (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by Hughes
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Supply, Inc., or any corporation controlled by
Hughes Supply, Inc., or (iv) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation, if following
such reorganization, merger or consolidation the conditions
described in clause (iii) of paragraph (c) below are
met;
(B) individuals who, as of March 1, 2002,
constitute the Board (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to March 1, 2002, whose election, or nomination for
election by Hughes Supply, Inc.’s shareholders, was approved
by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person other than the Board; or
(C) the stockholders of Hughes Supply, Inc.
approve: (i) a plan of complete liquidation of Hughes Supply, Inc.;
or (ii) an agreement for the sale or disposition of all or
substantially all of Hughes Supply, Inc.’s assets; or (iii) a
merger, consolidation, or reorganization of Hughes Supply, Inc.
with or involving any other corporation, limited liability entity
or similar person, other than a merger, consolidation, or
reorganization that would result in the voting securities of Hughes
Supply, Inc. outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least
seventy-five percent (75%) of the combined voting power of the
voting securities of Hughes Supply, Inc. (or such surviving entity)
outstanding immediately after such merger, consolidation, or
reorganization.
Section 2.08 Code. “Code” means the Internal Revenue
Code of 1986, as amended. References to any provision of the Code
or regulation (including a proposed regulation) thereunder shall
include any successor provisions or regulations.
Section 2.09 Common Stock. “Common Stock” means the common
stock of Hughes Supply, Inc.
Section 2.10 Company . “Company” means Hughes Supply,
Inc., its successors or affiliated organizations authorized by the
Board or the Compensation Committee to participate in the Plan and
any organization into which or with which Hughes Supply, Inc. may
merge or consolidate or to which all or substantially all of its
assets may be transferred.
Section 2.11 Compensation Committee. “Compensation Committee” means the
Compensation Committee of the Board.
Section 2.12 Consideration Shares. “Consideration Shares” means shares
of Common Stock owned by a Participant for six months or
longer.
Section 2.13 Deferral Account. “Deferral Account” means the account
maintained on the books of the Administrative Committee for each
Participant pursuant to Article VII.
Section 2.14 Deferral Period. “Deferral Period” is defined in
Section 4.02.
Section 2.15 Deferred Amount. “Deferred Amount” is defined in
Section 4.02.
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Section 2.16 Reserved for future use.
Section 2.17 Disability. “Disability” means eligibility for
disability benefits under the terms of the Company’s
Long-Term Disability Plan.
Section 2.18 Eligible Compensation. “Eligible Compensation” means any
Base Salary, Incentive Compensation or Bonuses otherwise payable,
or Restricted Stock Grants and/or Gain Shares recognizable as
taxable income with respect to a Plan Year that the Administrative
Committee deems eligible for deferral under the Plan.
Section 2.19 ERISA. “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.
Section 2.20 Excess 401(k) Contribution.
“Excess 401(k)
Contribution” means a deferral into the Plan by a Participant
of Savings Plan Compensation that such Participant would have been
able to defer into The Hughes Supply Inc. Cash or Deferred Profit
Sharing Plan and Trust but for limitations imposed by the
Code.
Section 2.21 Form of Payment. “Form of Payment” means payment in
one lump sum or in substantially equal annual installments of up to
15 years.
Section 2.22 Gain Share Account. “Gain Share Account” means the
account maintained on the books by the Administrative Committee for
the Participant of the number of Phantom Share Units related to
Gain Shares, adjusted for hypothetical gains, earnings, dividends,
stock splits, losses, distributions, withdrawals and other similar
activities.
Section 2.23 Gain Shares. “Gain Shares” means the shares of
Common Stock so determined under Section 5.05 as resulting from the
exercise of any Option pursuant to Article V.
Section 2.24 Hardship Withdrawal. “Hardship Withdrawal” means the
early payment of all or part of the balance in a Deferral
Account(s), Gain Share Account(s), and Restricted Stock Account(s)
in the event of an Unforeseeable Emergency.
Section 2.25 Hypothetical Investment Benchmark.
“Hypothetical Investment
Benchmark” shall mean the phantom investment benchmarks that
are used to measure the return credited to a Participant’s
Deferral Account.
Section 2.26 Incentive Compensation. “Incentive Compensation” means the
amount awarded to a Participant for a Plan Year under any incentive
plan maintained by the Company, determined to be eligible for
deferral by the Administrative Committee.
Section 2.27 Incentive Deferral. “Incentive Deferral” means the
amount of a Participant’s Incentive Compensation or Bonus
which the Participant elects to have withheld on a pre-tax basis
from his Incentive Compensation or Bonus and credited to his
Deferral Account pursuant to Section 4.02.
Section 2.28 Matching Contribution. “Matching Contribution” means the
amount of annual matching contribution that the Company may make to
the Plan pursuant to Section 9.02.
Section 2.29 Option. “Option” means a nonqualified stock
option to purchase shares of Common Stock under the Hughes Supply,
Inc. 1997 Executive Stock Option Plan.
Section 2.30 Participant. “Participant” means any individual
who is eligible or makes an election to participate in this Plan
and who elects to participate by filing a Participation Agreement
as provided in Article IV, a Stock Option Gain Deferral Agreement
as provided in Article V, or a Restricted Stock Deferral Agreement
as provided in Article VI.
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Section 2.31 Participation Agreement. “Participation Agreement” means an
agreement filed by a Participant in accordance with Article
IV.
Section 2.32 Phantom Share Units. “Phantom Share Units” means units of
deemed investment in shares of Hughes Supply, Inc. Common Stock so
determined under Sections 5.06 & 6.04.
Section 2.33 Plan Year. “Plan Year” means a twelve-month
period beginning February 1 and ending the following January
31.
Section 2.34 Restricted Stock. “Restricted Stock” means the shares
of Common Stock so determined under Article VI.
Section 2.35 Restricted Stock Account.
“Restricted Stock
Account” means the account maintained on the books by the
Administrative Committee for the Participant of the number of
Phantom Share Units related to Restricted Stock Shares, adjusted
for hypothetical gains, earnings, dividends, stock splits, losses,
distributions, withdrawals and other similar activities.
Section 2.36 Restricted Stock Deferral Agreement.
“Restricted Stock Deferral
Agreement” means an agreement filed by a Participant in
accordance with Article VI to defer receipt of Restricted Stock
upon vesting under the Hughes Supply, Inc. 1997 Executive Stock
Option Plan.
Section 2.37 Retirement. “Retirement” means retirement of a
Participant from the Company after attaining age 55.
Section 2.38 Savings Plan Compensation.
“Savings Plan
Compensation” has the same meaning as the term
“Compensation” in The Hughes Supply, Inc. Cash or
Deferred Profit Sharing Plan and Trust, disregarding limitations
imposed by Section 401(a)(17) of the Code.
Section 2.39 Stock Option Gain Deferral Agreement.
“Stock Option Gain Deferral
Agreement” means an agreement filed by a Participant in
accordance with Article V to defer receipt of Gain Shares from the
exercise of an Option.
Section 2.40 Reserved for Future Use.
Section 2.41 Reserved for Future Use.
Section 2.42 Reserved for Future Use.
Section 2.43 Reserved for Future Use.
Section 2.44 Termination of Employment.
“Termination of Employment” means the cessation of a
Participant’s services as a full-time employee of the Company
for any reason other than Retirement.
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Section 2.45 Unforeseeable Emergency. “Unforeseeable Emergency” means
severe financial hardship to the Participant resulting from a
sudden and unexpected illness or accident of the Participant or a
dependent of the Participant, loss of the Participant’s
property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond
the control of the Participant.
Section 2.46 Valuation Date. “Valuation Date” means the last day
of each calendar month or such other date as the Administrative
Committee in its sole discretion may determine.
ARTICLE III
ADMINISTRATION
Section 3.01 Compensation Committee and Administrative
Committee Duties. This
Plan shall be administered by the Compensation Committee. A
majority of the members of the Compensation Committee shall
constitute a quorum for the transaction of business. All
resolutions or other action taken by the Compensation Committee
shall be by a vote of a majority of its members present at any
meeting or, without a meeting, by an instrument in writing signed
by all its members. Members of the Compensation Committee may
participate in a meeting of such committee by means of a conference
telephone or similar communications equipment that enables all
persons participating in the meeting to hear each other, and such
participation in a meeting shall constitute presence in person at
the meeting and waiver of notice of such meeting. The Compensation
Committee shall be responsible for the administration of this Plan
and shall have all powers necessary to administer this Plan,
including discretionary authority to determine eligibility for
benefits and to decide claims under the terms of this Plan, except
to the extent that any such powers are vested in any other person
administering this Plan by the Compensation Committee. The
Compensation Committee may from time to time establish rules for
the administration of this Plan, and it shall have the exclusive
right to interpret this Plan and to decide any matters arising in
connection with the administration and operation of this Plan. All
rules, interpretations and decisions of the Compensation Committee
shall be conclusive and binding on the Company, Participants and
Beneficiaries.
The Compensation Committee has delegated to the
Administrative Committee responsibility for performing certain
administrative and ministerial functions under this Plan. The
Administrative Committee shall be responsible for determining in
the Hypothetical Investment Benchmarks, distribution of Deferred
Amounts, distribution of Gain Share Accounts, distribution of
Restricted Stock Accounts, determination of account balances,
crediting of hypothetical earnings and debiting of hypothetical
losses and of distributions, in-service withdrawals, deferral
elections and any other duties concerning the day-to-day operation
of this Plan, other than the amount of the Matching Contribution as
set forth in Section 9.02. The Compensation Committee shall have
discretion to delegate to the Administrative Committee such
additional duties as it may determine. The Administrative Committee
may designate one of its members as a chairperson and may retain
and supervise outside providers, third party administrators, record
keepers and professionals (including in-house professionals) to
perform any or all of the duties delegated to it
hereunder.
Neither the Compensation Committee nor a member
of the Board nor any member of the Administrative Committee shall
be liable for any act or action hereunder, whether of omission or
commission, by any other member or employee or by any agent to whom
duties in connection with the administration of this Plan have been
delegated or for anything done or omitted to be done in connection
with this Plan. The Compensation Committee and the Administrative
Committee shall keep records of all of their respective proceedings
and the Administrative Committee shall keep records of all payments
made to Participants or Beneficiaries and payments made for
expenses or otherwise.
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The Company shall, to the fullest extent
permitted by law, indemnify each director, officer or employee of
the Company (including the heirs, executors, administrators and
other personal representatives of such person), each member of the
Compensation Committee and Administrative Committee against
expenses (including reasonable attorneys’ fees), judgments,
fines, amounts paid in settlement, actually and reasonably incurred
by such person in connection with any threatened, pending or actual
suit, action or proceeding (whether civil, criminal, administrative
or investigative in nature or otherwise) in which such person may
be involved by reason of the fact that he or she is or was serving
this Plan in any capacity at the request of the Company, the
Compensation Committee or Administrative Committee.
Any expense incurred by the Company, the
Compensation Committee or the Administrative Committee relative to
the administration of this Plan shall be paid by the Company
and/or, prior to a Change in Control, may be deducted from the
Deferral Accounts of the Participants as determined by the
Compensation Committee.
Section 3.02 Claim Procedure. If a Participant or Beneficiary makes a written
request alleging a right to receive payments under this Plan or
alleging a right to receive an adjustment in benefits being paid
under this Plan, such actions shall be treated as a claim for
benefits. All claims for benefits under this Plan shall be sent to
the Administrative Committee. If the Administrative Committee
determines that any individual who has claimed a right to receive
benefits, or different benefits, under this Plan is not entitled to
receive all or any part of the benefits claimed, the Administrative
Committee shall inform the claimant in writing of such
determination and the reasons therefore in terms calculated to be
understood by the claimant. The notice shall be sent within 90 days
of the claim unless the Administrative Committee determines that
additional time, not exceeding 90 days, is needed and so notifies
the Participant. The notice shall make specific reference to the
pertinent Plan provisions on which the denial is based, and shall
describe any additional material or information that is necessary.
Such notice shall, in addition, inform the claimant of the
procedure that the claimant should follow to take advantage of the
review procedures set forth below in the event the claimant desires
to contest the denial of the claim. The claimant may within 90 days
thereafter submit in writing to the Administrative Committee a
notice that the claimant contests the denial of his or her claim
and desires a further review by the Compensation Committee. The
Compensation Committee shall within 60 days thereafter review the
claim and authorize the claimant to review pertinent documents and
submit issues and comments relating to the claim to the
Compensation Committee. The Compensation Committee will render a
final decision on behalf of the Company with specific reasons
therefor in writing and will transmit it to the claimant within 60
days of the written request for review, unless the Chairperson of
the Compensation Committee determines that additional time, not
exceeding 60 days, is needed, and so notifies the Participant. If
the Administrative Committee fails to respond to a claim filed in
accordance with the foregoing within 60 days or any such extended
period, the Company shall be deemed to have denied the
claim.
ARTICLE IV
PARTICIPATION
Section 4.01 Participation. Participation in the Plan shall be limited to
executives who (i) are members of a select group of management and
highly compensated employees within the meaning of ERISA sections
201(2), 301(a)(3) and 401(a)(1); (ii) meet such eligibility
criteria as the Compensation Committee shall establish from time to
time, and (iii) elect to participate in this Plan by filing a
Participation Agreement, a Stock Option Gain Deferral Agreement,
and/or a Restricted Stock Deferral Agreement with the
Administrative Committee. Except as provided in Section 4.03, a
Participation Agreement must be filed prior to the December 31st
immediately preceding the Plan Year for which it is effective;
provided, however that in the first year in which an individual
first becomes eligible to participate in the Plan, the newly
eligible Participant may make an election to defer Base Salary for
services to be performed subsequent to the election
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and for Incentive Compensation or Bonuses not
yet determined and payable within 30 days after the date the
individual becomes eligible to participate. The Administrative
Committee shall have the discretion to establish special deadlines
regarding the filing of Participation Agreements.
Section 4.02 Contents of Participation Agreement.
Subject to Article IX, each
Participation Agreement shall set forth: (i) the amount of Base
Salary, Bonuses, Incentive Compensation and Excess 401(k)
Contributions for the Plan Year or performance period to which the
Participation Agreement relates that is to be deferred under the
Plan (the “Deferred Amount”), expressed as either a
dollar amount or a percentage of the Base Salary, Bonus, and/or
Incentive Compensation for such Plan Year or performance period
and/or any Excess 401(k) Contributions that the Participant wishes
to make; (ii) the period after which payment of the Deferred Amount
is to be made or begin to be made (the “Deferral
Period”), which shall be the earlier of (A) a number of full
years, not less than three, (B) the period ending upon the
Retirement or prior Termination of Employment of the Participant,
and (iii) the Form of Payment.
Section 4.03 Modification or Revocation of Election by
Participant. A
Participa
