KAMAN CORPORATION POST-2004 DEFERRED COMPENSATION PLANEmployee Benefits Plan Agreement |
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Exhibit
10.2
KAMAN CORPORATION
POST-2004
DEFERRED COMPENSATION PLAN
Section 1
Background
1.1
Establishment of the Plan . Kaman Corporation has
established this Kaman Corporation Post-2004 Deferred Compensation
Plan (the “Plan”) effective January 1,
2005. Capitalized terms used in the Plan are defined in
Section 11 below.
1.2
Coverage . The Plan applies only
to individuals who are actively employed by the Corporation on or
after January 1, 2005. Amounts accrued but not vested under the
Prior Plan as of December 31, 2004 shall be subject to the terms of
the Plan (and shall not be subject to the terms of the Prior
Plan).
1.3
Purposes . The
Corporation maintains the Plan to:
(a)
provide
a select group of management and highly compensated employees an
opportunity to defer a portion of their Base Salary and Bonus on a
tax-advantaged basis and receive a matching contribution in the
form of Additional Deferred Compensation; and
(b)
provide
Participants in the Plan who do not participate in the SERP during
a Plan Year an additional annual benefit in the form of
Supplemental Deferred Compensation.
1.4
Section
409A .
(a)
The
Plan is intended to comply, and shall be interpreted and construed
in a manner consistent, with the provisions of Section 409A. Any
provision under the Plan that would cause any benefit hereunder to
be subject to Federal income tax prior to payment shall be void as
of the Effective Date without the necessity of further action by
the Board.
(b)
There
shall be no acceleration or subsequent deferral of the time or
schedule of any payment under the Plan except as permitted under
Section 409A and the express terms of the Plan.
(c)
All
references to “Section 409A” in the Plan shall refer to
Section 409A of the Code, Notice 2006-79 (with respect to periods
before January 1, 2008) and the final regulations issued under
Section 409A (as applicable to periods after December 31,
2007).
(d)
The
provisions of the Plan shall not apply to the Prior Plan nor
constitute a material modification of the Prior Plan.
1
Section 2
Eligibility and
Enrollment
2.1
Selection by Board . Participation in the Plan
shall be limited to a select group of management or highly
compensated employees of the Corporation whose eligibility to
participate in the Plan is approved by the Board on its own
initiative, or upon the recommendation of the
Committee. The Board may terminate an employee's
eligibility to participate in the Plan at any time in its sole
discretion.
2.2
Enrollment Requirements . As a condition to participation,
an eligible employee must complete, execute and return to the
Committee no later than December 31st prior to the beginning of the
applicable Plan Year a Plan Agreement, an Election Form and a
Beneficiary Designation Form. The Committee may establish from time
to time such other enrollment requirements as it determines in its
sole discretion are necessary or appropriate for purposes of
administering the Plan. Notwithstanding the foregoing,
in the case of the first Plan Year in which an employee becomes
eligible to participate in the Plan, such Plan Agreement and
Election Form must be completed, executed and returned no later
than thirty (30) days after the first date of such eligibility and
shall only be effective for services to be performed subsequent to
the election. For this purpose, the first day of
eligibility shall be the earlier of (i) the first business day that
an employee first satisfies the criteria set forth in Section 2.1
or (ii) the date on which the employee is first eligible to
participate in any agreement, method, program or other arrangement
of the Corporation with respect to which deferrals of compensation
are treated, together with deferrals of compensation under the
Plan, as having been deferred under a single nonqualified deferred
compensation plan under Treasury Regulation Section
1.409A-1(c)(2).
2.3
Commencement of Participation . An employee shall commence
participation in the Plan upon the timely completion of all
enrollment requirements (which may, but need not be done, through
an on-line enrollment program) and the Committee’s acceptance
of all submitted documents (through such on-line enrollment program
or through such other means as the Committee determines). Eligible
employees who wish to participate in the Plan for any particular
Plan Year must satisfy the enrollment requirements prior to the
commencement of the Plan Year; provided, however, that in the first
year in which an employee first becomes eligible to participate in
the Plan, the newly eligible employee must satisfy the enrollment
requirements within thirty (30) days after the date on which he
became eligible. If an eligible employee does not meet all
enrollment requirements within the time prescribed, that employee
shall not be allowed to participate in the Plan until the first day
of the Plan Year following the completion of all enrollment
requirements.
Section 3
Deferral
Commitments/Interest Crediting
3.1
Maximum Deferral . For each Plan Year, a Participant may
elect to defer up to 50% of Base Salary and up to 100% of
Bonus.
2
3.2
Election to Defer; Effect of Election Form . In order to
make a Deferral Election for any Plan Year a Participant must
deliver a completed Election Form to the Committee prior to the
commencement of the Plan Year to which it relates. In the case of a
newly admitted Participant, the Deferral Election must be made
within the thirty (30) day period provided for in Sections 2.2 and
2.3, and shall not apply to any Base Salary or Bonus earned prior
to the commencement of his participation. A separate Election Form
is required for each Plan Year. The Election
Form must specify the percentage of the Base Salary and/or Bonus
that the Participant has elected to defer. Except as otherwise
expressly provided for herein, each Deferral Election shall be
irrevocable for the Plan Year for which it is made, and shall be
deemed to apply to any salary increases occurring during that year.
No Election Form shall be effective unless accepted by the
Committee.
3.3
Additions to Account Balances . The percentage of a
Participant's Base Salary deferred pursuant to Section 3.2 shall be
credited to the Participant's Account Balance as of the last day of
each month in which the deferred portion of the Base Salary would
have been paid if not deferred. The percentage of a Participant's
Bonus deferred pursuant to Section 3.2 shall be credited to the
Participant's Account Balance as of the last day of each month in
which the deferred portion of the Bonus would have been paid if not
deferred.
3.4
Interest Crediting . Interest shall be credited on a daily,
weekly or monthly basis, as determined by the Committee from time
to time, and shall be compounded daily, weekly or monthly, as
determined by the Committee from time to time, on all Deferral
Amounts credited to a Participant’s Account Balance. Interest
shall be credited only with respect to amounts in the Account
Balance at the time such interest is credited, and no interest
shall be credited with respect to any portion of an Account Balance
withdrawn or distributed from an Account Balance at the time such
interest is credited. The rate of interest shall be the applicable
Crediting Rate.
3.5
Payroll Taxes . The Corporation shall ratably withhold from
that portion of the Participant's Base Salary or Bonus that is not
being deferred, any Payroll Taxes imposed on the Participant with
respect to any Deferral Amount, Additional Deferred Compensation or
Supplemental Deferred Compensation. If necessary, the Committee
shall reduce the Deferral Amount in any Plan Year to pay the
Federal Insurance Contributions Act (“FICA”) tax
imposed under Section 3101, Section 3121(a), and Section 3121(v)(2)
on compensation deferred under the plan and any income tax
withholding related to such FICA amount.
3.6
Suspension of Election upon Unforeseeable Emergency . If a
Participant believes he has experienced an Unforeseeable Emergency,
the Participant may request the Committee to cancel (but not
postpone or delay) the Participant's Deferral Election for the
remainder of the Plan Year in which the Unforeseeable Emergency
occurs. The Committee shall grant the request only if
the Committee determines that the Participant has experienced an
Unforeseeable Emergency.
3.7
Suspension of Election Upon Disability . In the event of the
Disability of a Participant, the Committee shall automatically
cancel the Participant’s Deferral Election for the remainder
of the Plan Year in which the Disability occurs effective upon the
determination of Disability.
3
Section 4
Distributions Upon
Retirement
4.1
Form of Payment . The Account Balance of a Participant who
Retires shall be distributed in a lump sum or in monthly
installments over a period of 5, 10 or 15 years, as the Participant
shall have elected pursuant to Section 4.2; provided, however, that
for purposes of the plan established by Section 6A, the Participant
may elect only between receiving distributions in monthly
installments over a period of 10 years or 15 years. Any
payment required to be made under this Plan may be made by the
Company at any time within sixty (60) days of the payment date
specified herein.
4.2
Initial Payment Election . Each Participant, in connection
with his commencement of participation in the Plan, must elect the
manner in which he wishes to have his Account Balance distributed
upon Retirement. As part of this election, the Participant shall
indicate whether he wishes the lump sum payment to be made or the
installment payments to commence (i) on the first business day of
the sixth month following the date the Participant Retires, or (ii)
on the later of (A) the first business day of the sixth month
following the date the Participant Retires or (B) on the second
business day of the January next following the date the Participant
Retires. The election shall be made on the form
prescribed by the Committee. A Participant must make a separate
election with respect to the payment of supplemental deferred
compensation pursuant to Section 6A.
4.3
Subsequent Payment Election . A Participant may
change his or her election to an allowable alternative method of
payment any time or any number of times for the purpose of further
deferring or lengthening the period of distribution under this
Section 4 provided the following requirements are met:
(a)
the
election will not take effect until at least twelve months after
the date on which the election is made and will not be recognized
with respect to payments that would otherwise have commenced during
such twelve-month period; and
(b)
except
for payments made pursuant to Section 5.2 or Section 5.4, the first
payment with respect to which such election is made shall be
deferred for a period of not less than five years from the date
such payment would otherwise have been made.
For
purposes of this Section 4.3 and Treasury Regulation Section
1.409A-2(b)(3)(iii), installment payments shall be treated as
a series of separate payments. Any election made
under this Section 4.3 shall be irrevocable; provided,
however, that it may subsequently be changed by again
complying with the requirements of this Section
4.3.
4.4
Calculation of Monthly Distributions . If a Participant
elects to receive distributions in the form of monthly
installments, the distribution shall be made in the form of equal
monthly installments adjusted on an annual basis at the beginning
of each Plan Year to provide for annual amortization of the
remaining Account Balance over the remaining payment period with
interest at the Crediting Rate determined in accordance with
Section 11.12 hereof for the Plan Year. Each monthly installment
shall be one-twelfth of the annual payment.
4
Section
5
Distributions Other
than Upon Retirement
5.1
Distributions After Lapse of Years . In
connection with each Deferral Election, a Participant may also
elect to receive a distribution of that portion of his Account
Balance equal to the Deferral Amount for that Plan Year plus any
interest credited thereon after the lapse of three or more Plan
Years as specified in the Election Form. Any
distribution under Section 5.1 shall be made in a lump sum no later
than thirty (30) days after the lapse of the number of Plan Years
specified in the Election Form [(or, if earlier, at the time
provided in Section 4.2, 5.2 or 5.3 of the Plan, as applicable];
1 provided,
however, that no interest shall be credited on the Account Balance
for any period after the last day of the last Plan Year in the
lapse period. [A Participant who has made a “lapse
of years” election pursuant to this Section 5.1 may change
his election to an election to have his Account Balance distributed
upon Retirement under Section 4, in a lump sum or in installments
as permitted thereunder. As part of such election, the Participant
shall indicate whether he wishes the lump sum payment to be made or
the installment payments to commence (i) on the first business day
of the sixth month following the date the Participant Retires, or
(ii) on the later of (A) the first business day of the sixth month
following the date the Participant Retires or (B) on the second
business day of the January next following the date the Participant
Retires. Any change in payment election under this Section 5.1
shall be made on the form prescribed by the Committee not less than
twelve months prior to the date on which such payments would
otherwise have commenced and shall also comply with the subsequent
payment election rules under Section 4.3.]
5.2
Distributions Upon Disability or Death of Participant . Upon
the Disability or death of a Participant, including a Participant
who has commenced receiving distributions of his Account Balance,
the Participant’s entire Account Balance shall be distributed
to the Participant or, in the case of a deceased Participant, to
the Participant’s Beneficiary, in a lump sum. The lump sum
distribution shall be paid on the first day of the third month
following the determination of the Participant’s Disability
or death, as applicable.
5.3
Distributions
Upon Termination of Service . In the case of a
Participant who has experienced a Termination of Service not
occasioned by Retirement, Disability or death, the entire
Account Balance of the Participant shall be distributed to the
Participant on the later of (A) the first business day of the
sixth month following the date on which the Termination of
Service occurs or (B) on the second business day of the
January next following the date on which the Termination of
Service occurs. Notwithstanding the foregoing, for
purposes of the plan established by Section 6A, the Account
Balance of a Participant who has experienced a Termination of
Service not occasioned by Retirement, Disability or death,
shall be distributed in monthly installments over a period of
10 years or 15 years (as elected by the Participant)
commencing on the later of (A) the first business day of the
sixth month following the date on which the Termination of
Service occurs or (B) on the second business day of the
January next following the date on which the Termination of
Service occurs.
5
5.4
In-Service
Distributions Upon Unforeseeable Emergency
. At any time prior to the time an amount is
otherwise payable hereunder, a Participant may request a cash
distribution of all or a portion of his or her Account Balance
on account of the Participant’s Unforeseeable Emergency,
subject to the following requirements:
(a)
A
distribution may only be made under this Section 5.4 if the
Committee or its delegate determines in its sole discretion that
the Participant has incurred an Unforeseeable Emergency consistent
with the requirements of Section 409A.
(b)
The
circumstances that will constitute an Unforeseeable Emergency will
depend upon the facts of each case and be based on the information
supplied by the Participant, in writing, pursuant to procedures
prescribed by the Committee or its delegate.
(c)
Distributions
made on account of an Unforeseeable Emergency shall in all events
be limited to the extent reasonably needed to satisfy the emergency
need.
(d)
Payment
under this Section 5.4 may not be made to the extent that such
hardship is or may be relieved:
(i)
through
reimbursement or compensation by insurance or
otherwise,
(ii)
by
liquidation of the Participant’s assets, to the extent the
liquidation of such assets would not itself cause severe financial
hardship, or
(iii)
by
cessation of deferrals under the Plan.
In
addition to the foregoing, distributions under this Section
5.4 shall not be allowed for purposes of sending a child to
college or the Participant’s desire to purchase a home
or other residence.
(e)
All
distributions under this Section shall be made in cash as soon as
practicable after the Committee or its delegate has approved the
distribution and determined that the requirements of this Section
5.4 have been met.
6
Section 6
Additional Deferred
Compensation
6.1
Additional Deferred Compensation . The Corporation shall pay
Additional Deferred Compensation to each Participant in an amount
equal to 25% of the Participant's Deferral Amount for such Plan
Year, provided,
however , that the Additional Deferred Compensation payable
to a Participant for any Plan Year shall not exceed an amount equal
to 2.5% of the Participant's Base Salary and Bonus (or such lower
percentage as the Corporation shall determine) reduced by an amount
equal to the maximum matching contribution allowed for the
Participant's benefit under the Thrift Plan determined on the
assumption that the Participant makes or has made the maximum
elective contribution that he is allowed to make under Section
402(g) of the Code and the terms of the Thrift Plan as in effect at
the beginning of such Plan Year. Any Additional Deferred
Compensation shall be credited to the Account Balance of the
Participant and shall be treated as a Deferral Amount with respect
to the Plan Year to which it relates, and, as such, shall be
governed by the Deferral Election in effect for that Plan Year. The
Additional Deferred Compensation shall be calculated within ninety
(90) days after the close of the Plan Year and shall be credited to
the Participant’s Account Balance as of January 1 of the
succeeding Plan Year to each such Participant employed on said
date. Interest shall be credited on said amount thereafter in
accordance with Section 3.4.
6.2
Other Benefits . This Plan shall supplement and shall not
supersede, modify or amend any other plan or program maintained by
the Corporation except as may otherwise be expressly
provided.
Section
6A
Supplemental Deferred
Compensation
6A.1
Supplemental
Deferred Compensation . The Corporation shall pay
Supplemental Deferred Compensation to each Participant who is
not also a participant in the SERP. The amount of the
Supplemental Deferred Compensation shall be ten percent (10%)
of the amount by which the Participant’s “W-2
Earnings” (as defined in the Pension Plan) for the most
recently concluded fiscal year of the Pension Plan exceed the
“Compensation Limit” set forth in Section
401(a)(17) of the Code, as in effect for such
year. The Supplemental Deferred Compensation shall
be calculated within ninety (90) days after the close of the
Plan Year and shall be credited to the Participant’s
Account Balance as of January 1 of the succeeding Plan Year to
each such Participant employed on said date. Interest shall be
credited on said amount thereafter in accordance with Section
3.4.
6A.2
Separate
Treatment . This Section 6A establishes a separate and
distinct plan for the payment of nonqualified deferred
compensation, which Plan shall be governed by and administered
in accordance with the provisions of this Section and Sections
2.1, 3.4, 3.5, 4.1, 4.2, 4.3, 4.4. 5.2, 5.3, 8, 9, 10, 11, 12
and 13 hereof. By way of example, and not by way of
limitation: Supplemental Deferred Compensation and the
interest credited on such Compensation shall be credited to a
separate account; a Participant shall be entitled to make a
separate election as to the distribution of his Account
Balance attributable to Supplemental Deferred
Compensation. A Participant in this Supplemental
Plan will not be entitled to receive a distribution of his
Account Balance attributable to this Plan until the time
provided for in Section 4.1, 5.2 or 5.3. A
Participant who is otherwise eligible to receive Supplemental
Deferred Compensation hereunder shall be entitled to continue
to receive such compensation even though the Participant does
not elect to make deferrals in accordance with Section 3
hereof.
7
Section 7
Cash Out
of Account Balances under the Plan
Notwithstanding
any election by a Participant under the Plan to receive
distributions in monthly installments, if the entire Account
Balance of a Participant under the Plan (including any Account
Balance established under Section 6A of the Plan) is equal to
or less than $50,000 at the time of the Participant’s
Termination of Service, the entire Account Balance of such
Participant shall be distributed in a single lump sum to such
Participant on the first business day of the sixth month
following the date on which the Termination of Service
occurs.
Section 8
Beneficiary
Designation
8.1
Beneficiary . Each Participant shall have the right, at any
time, to designate a Beneficiary (both primary as well as
contingent) to receive any distributions of the Participant's
Account Balance upon the death of the Participant.
8.2
Beneficiary Designation . A Participant shall designate his
Beneficiary by completing the Beneficiary Designation Form, and
returning it to the Committee. A Participant shall have the right
to change his Beneficiary Designation by completing and otherwise
complying with the terms of the Beneficiary Designation Form and
the Committee's rules and procedures. Upon the acceptance by the
Committee of a new Beneficiary Designation Form, all prior
Beneficiary designations shall be cancelled. No designation or
change in designation of a Ben
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