POPULAR, INC. PUERTO
RICO
NONQUALIFIED DEFERRED
COMPENSATION PLAN
THIS DOCUMENT CONSTITUTES PART OF
A
PROSPECTUS COVERING SECURITIES THAT HAVE BEEN
REGISTERED UNDER THE SECURITEIS ACT OF 1933, AS AMENDED.
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Popular, Inc.
(“Popular”) hereby establishes the Popular, Inc. Puerto
Rico Nonqualified Deferred Compensation Plan (the
“Plan”), as set forth herein, effective as of
August 1, 2008. The purpose of the Plan is to allow certain
employees of Popular and its affiliates to defer receipt of a
portion of their compensation in excess of the amounts allowed to
be deferred under the Popular, Inc. Puerto Rico Savings and
Investment Plan and to provide for payment of discretionary
deferred compensation to certain employees of Popular and its
affiliates, or a death benefit for their beneficiaries.
The Plan is an
unfunded plan of deferred compensation for a select group of
management or highly compensated employees of Popular and its
affiliates intended to be exempt from the provisions of Parts 2, 3
and 4 Title I, Subtitle B of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”). The Plan is
not intended to be a tax qualified retirement plan under
Section 1165 of the Puerto Rico Internal Revenue Code of 1994,
as amended.
As used herein,
the following words and phrases shall have the meaning indicated
unless otherwise defined or required by the context:
“Account”
shall mean a bookkeeping reserve account established in the books
of Popular reflecting the total amounts credited to a Participant
under the Plan.
“Active
Participant” shall mean, with respect to any Plan Year, a
Participant who is not an Inactive Participant.
“Administrator”
shall mean the Popular, Inc. Puerto Rico Benefits Committee or such
other person(s) designated as such by the Board.
“Beneficiary”
shall mean the Participant’s successors, as determined in
accordance with the applicable laws related to legal conjugal
partnership and descent and distribution of the Commonwealth of
Puerto Rico or any other applicable jurisdiction.
“Board”
shall mean the Board of Directors of Popular.
“Cause”
shall mean any of the following:
(i) the
willful dereliction by the Participant of his duties to Popular and
its affiliates,
(ii) any
dishonest, fraudulent or criminal act on the part of the
Participant that either occurs in connection with his performance
of services to Popular or its affiliates or
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adversely
affects the reputation of Popular and its affiliates or
(iii) the
willful failure of the Participant to comply with the lawful
directives of the Board, the Board of Directors of his Employer or
of any other employee of Popular or its affiliates who has
supervisory authority with respect to the Participant.
“Change of
Control” shall be deemed to have occurred if:
(i) any
“person”, including a “group” (as
determined in accordance with Section 13(d)(3) of the
Securities Exchange Act of 1934), becomes the owner after the
Effective Date, directly or indirectly by purchase, merger,
exchange offer, tender offer, or other business combination of
voting securities of Popular representing fifty percent (50%) or
more of the then outstanding voting securities of Popular;
or
(ii) Popular
transfers substantially all of its assets to another person which
is not a wholly owned subsidiary or parent of Popular.
“CIC”
shall mean the Popular, Inc. Corporate Investment Committee or such
other person(s) designated by the Board to oversee the investments
of the Trust.
“Code”
shall mean the Puerto Rico Internal Revenue Code of 1994, as
amended from time to time.
“Compensation”
shall mean the annual base salary, cash incentives or commissions,
cash bonuses, Christmas bonus, and profit sharing amounts earned by
a Participant from the Employer. It shall not include Employer
contributions or credits under this or any other tax qualified or
nonqualified plan and payments under long-term incentive
plans.
“Deed of
Trust” shall mean the deed pursuant to which Popular declared
or constituted the Trust, pursuant to Article VII.
“Deferral
Amount” shall mean the Participant Deferral Amount and the
Employer Deferral Amount.
“Disability”
shall mean a physical or mental condition resulting from bodily
injury, disease or mental disorder which renders the Participant
incapable of continuing employment with the Employer and qualifies
the Participant for long-term disability income benefits under the
Employer’s long-term disability plan, as determined by the
insurer or administrator of that long-term disability plan. If a
Participant is not covered by the Employer’s long-term
disability plan, the Administrator will determine if the
Participant’s condition renders him incapable of continuing
employment with the Employer.
“Effective
Date” of the Plan shall mean August 1, 2008.
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“Election
Dates” shall mean the date or dates during a Plan Year
selected by the Administrator during which a Participant may elect
to defer Compensation.
“Eligible
Employee” shall mean the Employee who meets the eligibility
requirements of Section 2.01 of the Plan.
“Employer”
shall mean Popular and any of its affiliates in Puerto Rico that
has adopted the Plan.
“Employer
Deferral Amount” shall mean the total amount elected by an
Employer to be credited to the Account of a Participant under
Section 3.02.
“Financial
Hardship” shall mean an event constituting a “financial
hardship” under the terms of the Popular, Inc. Puerto Rico
Savings and Investment Plan, as determined by the
Administrator.
“Inactive
Participant” shall mean a Participant who has a balance
remaining in his Account and who either has incurred in a
termination of employment, or has suspended or ceased deferrals
under the Plan.
“Investment
Adjustment” shall mean an amount equal to the net increase or
decrease in the fair market value of an Account during a Plan Year
or other period selected by the Administrator in accordance with
the earnings crediting options selected by the Participant from
time to time, exclusive of the effect of any Deferral Amount
credited for such year or other period. Increases and decreases
shall include such items as realized or unrealized investment gains
or losses, investment income and, at the discretion of the
Administrator, may include expenses of administering the Trust and
the Plan and income taxes paid by Popular on investment earnings of
the Trust. The rate of return, positive or negative, to be credited
under each earnings crediting option is based upon the actual
performance of the investment funds or securities designated by the
CIC from time to time, including shares of stock of Popular,
computed from the date on which the Trustee makes the investment.
Provided that the Trustee may invest the assets of the Trust in
short-term obligations before investing the assets in investment
funds or securities designated by the Participants.
“Participant”
shall mean an Eligible Employee who has become a Participant as
provided under Article II.
“Participant
Deferral Amount” shall mean the total amount of Compensation
elected by a Participant to be deferred under
Section 3.01.
‘’Plan”
shall mean the Popular, Inc. Puerto Rico Nonqualified Deferred
Compensation Plan, as contained herein and as amended from time to
time.
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“Plan
Year” shall mean the twelve month period beginning on January
1 and ending on December 31.
“Popular”
shall mean Popular, Inc., its successors and assignees.
“Termination
of Employment” shall mean the date on which a Participant
ceases his employment with the Employer for any reason. However,
Termination of Employment shall not include the transfer of
employment between Employers.
“Trust”
shall mean the trust declared or constituted in connection with
this Plan and all of the assets that are held by the Trustee
thereunder.
“Trustee”
shall mean Banco Popular de Puerto Rico or the party or parties
designated as such under the Deed of Trust.
“Valuation
Date” shall mean the date or dates during a Plan Year
selected by the Administrator. The last day of the Plan Year shall
be the Annual Valuation Date.
ARTICLE II. ELIGIBILITY AND
PARTICIPATION
Section 2.01 Eligibility.
Any employee of
the Employer shall be eligible to participate in the Plan if
(i) his annual base salary from the Employer is at least
$100,000 or (ii) his sales commissions earned from the
Employer during each of the last three years are at least $85,000.
The aforementioned annual base salary and commission amounts shall
be revised every three years by the Administrator. Notwithstanding
the above, any employee of the Employer who is a member of the
Corporate Leadership Circle of Popular shall not be eligible to
participate in the plan until such future date decided by the
Board.
The
Administrator shall notify each Eligible Employee of his
eligibility to participate in the Plan.
Section 2.02 Participation.
An Eligible
Employee shall become a Participant by electing to defer
Compensation under the Plan. An Eligible Employee who has not
otherwise become a Participant shall become a Participant as of the
date determined by the Employer for purposes of receiving a credit
of an Employer Deferral Amount under Section 3.02.
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ARTICLE III. DEFERRAL
AMOUNTS
Section 3.01 Participant Deferral Amounts.
An Eligible
Employee may elect to defer Compensation as provided in this
Section.
(a) A
Participant may choose during the Election Dates to defer up to 80%
of his Compensation.
(b) A
deferral election hereunder shall be irrevocable, except as
provided in (c) below, and shall be effective with respect to
Compensation not yet earned by the Participant; provided, however,
that if a Participant is declared to be ineligible by the
Administrator, any deferral election then in effect with respect to
such Participant shall be revoked automatically effective with
respect to Compensation earned after the Participant is declared
ineligible.
(c) At
any time during the Plan Year, a Participant may revoke his
deferral election. A Participant who revokes a deferral election
may elect to defer Compensation for any future calendar
year.
(d) A
deferral election hereunder shall be in effect until it is modified
or revoked by the Participant.
(e) The
Participant Deferral Amount shall be credited to the
Participant’s Account as of the date on which the
Compensation subject to the deferral otherwise would have been
paid.
Section 3.02 Employer Deferral Amounts.
Popular’s
Executive Vice President for People and Communications in
conjunction with another Senior Executive Vice President or
Executive Vice President of Popular, may elect to credit to the
Account of an Eligible Employee an Employer Deferral Amount, as
determined in their discretion.
The Administrator
shall establish and maintain an Account in the name of each
Participant, to which the Administrator shall credit and debit
Deferral Amo
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