Exhibit 10.2

Parkway Properties Inc.

Deferred Compensation Plan

 

            Parkway Properties Inc., a Maryland corporation, and its affiliates and subsidiaries (the “Employer”), pursuant to Section 8 of the Parkway Properties, Inc. Deferred Compensation Plan (the “Prior Plan”), hereby amends and restates the Prior Plan for the benefit of a select group of management or highly compensated employees.  This Plan amendment and restatement is effective January 1, 2005 and adopted by the Employer on November 8, 2007, and shall represent the restatement and continuation of the Employer’s Prior Plan with the administration of such Prior Plan performed in compliance with Internal Revenue Code Section 409A and the regulations promulgated thereto.  This Plan is an unfunded arrangement and is intended to be exempt from the participation, vesting, funding, and fiduciary requirements set forth in Title I of the Employee Retirement Income Security Act of 1974, as amended.  It is intended to comply with Internal Revenue Code Section 409A. 

 

Article 1 - Definitions

 

1.1       Account.  

The bookkeeping account established for each Participant as provided in Section 5.1 hereof. 

 

1.2       Administrator.

            The Compensation Committee appointed by the Board of Directors. The Plan Administrator shall serve as the agent for the Employer with respect to the Trust.

 

1.3       Board.

The Board of Directors of the Employer.

 

1.4       Bonus.

Compensation which is designated as such by the Employer and which relates to services performed during an incentive period by an Eligible Service Provider in addition to his or her Salary, including any pretax elective deferrals from said Bonus to any Employer sponsored plan that includes amounts deferred under a Deferral Election or any elective deferral as defined in Code Section 402(g)(3) or any amount contributed or deferred at the election of the Eligible Service Provider in accordance with Code Section 125 or 132(f)(4).

 

1.5       Change-in-Control.

Provided that such definition shall be interpreted in a manner that is consistent with Code Section 409A and regulations thereunder, a “Change-in-Control” of the Employer (which, for purpose of this Section 1.5 shall mean Parkway Properties Inc. but not any of its affiliates or subsidiaries ) shall mean the first to occur of any of the following:

 

 

 

 

 

 

 

 

(a)        the date that any one person or persons acting as a group acquires ownership of Employer stock constituting more than fifty percent (50%) of the total fair market value or total voting power of the Employer;

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(b)        the date that any one person or persons acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of the stock of the Employer possessing thirty percent (30%) or more of the total voting power of the stock of the Employer;

 

c)         the date that any one person or persons acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Employer that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Employer immediately prior to such acquisition; or

 

d)         the date that a majority of members of the Employer’s Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or elections.

 

1.6       Code.

The Internal Revenue Code of 1986, as amended.

 

1.7       Compensation.

The Participant’s earned income, including Salary, Bonus, Performance-based Compensation, directors fees related to Board membership and Employer restricted stock units and other remuneration from the Employer as may be included by the Administrator. 

 

1.8       Deferrals.

The portion of Compensation that a Participant elects to defer in accordance with Section 3.1 hereof.  The Employer may, from time to time in their sole and absolute discretion, limit the Compensation for deferral under this Plan.

 

1.9       Deferral Election.

The separate agreement, submitted to the Administrator, by which an Eligible Service Provider agrees to participate in the Plan and make Deferrals thereto.

 

1.10     Disability.

 

A Participant shall be considered disabled if: (i) the Participant is 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; (ii) the Participant 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 3 months under an accident and health plan covering employees of the Participant’s Employer; or (iii) determined to be totally disabled by the Social Security Administration.

 

1.11     Effective Date.

            January 1, 2008.

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1.12     Eligible Service Provider.

An Employee shall be considered an Eligible Service Provider if such Employee is a member of a select group of management or highly compensated employees or is an active member of the Board and is designated as an Eligible Service Provider by the Administrator. The designation of an Employee as an Eligible Service Provider in any year shall not confer upon such Employee any right to be designated as an Eligible Service Provider in any future Plan Year.

 

1.13     Employee or Service Provider.

For purposes of this Plan, Employee or Service Provider shall mean any person employed by the Employer or any person who is a member of the Board.

 

1.14     Employer.

Parkway Properties Inc. and its subsidiaries and affiliates.

 

1.15     Employer Discretionary Contribution.

A discretionary contribution made by the Employer that is credited to one or more Participant’s Accounts in accordance with the terms of Section 3.6 hereof.

 

1.16     ERISA.

The Employee Retirement Income Security Act of 1974, as amended.

 

1.17     Investment Fund.

Each investment(s) which serves as a means to measure value, increases or decreases with respect to a Participant’s Accounts.

 

1.18     Matching Contribution.

A discretionary contribution made by the Employer that is credited to one or more Participant’s Accounts in accordance with the terms of Section 3.5 hereof.

 

1.19     Participant.

An Eligible Service Provider who is a Participant as provided in Article 2.

 

1.20     Performance-based Compensation.

Performance-based compensation shall mean compensation that (i) meets the definition of Code Section 409A(a)(4)(B)(iii) and related guidance and regulations, (ii) is designated as such by the Employer and relates to services performed during a performance period of at least twelve months by an Eligible Service Provider, including any pretax elective deferrals from said Performance-based Compensation to any Employer sponsored plan that includes amounts deferred under a Deferral Election or any elective deferral as defined in Code Section 402(g)(3) or any amount contributed or deferred at the election of the Eligible Service Provider in accordance with Code Section 125 or 132(f)(4).

 

1.21     Plan Year.

Each Plan Year shall be measured from January 1 through December 31.

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1.22     Retirement.

Retirement shall mean either (i) a Participant has reached age sixty-five (65) and has a Separation from Service, or (ii) a Participant has reached age fifty-five (55) and has five (5) Years of Service and has a Separation from Service. 

 

1.23     Salary.

An Eligible Service Provider’s base salary earned during a Plan Year, including any pretax elective deferrals from said Salary to any Employer sponsored plan that includes amounts deferred under a Deferral Election or any elective deferral as defined in Code Section 402(g)(3) or any amount contributed or deferred at the election of the Eligible Service Provider in accordance with Code Section 125 or 132(f)(4).

 

1.24     Separation from Service.

As provided by regulations promulgated under Code Section 409A, a Participant shall incur a Separation from Service with the Service Recipient due to death, Retirement or other termination of employment or service with the Service Recipient unless the employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not to exceed six months, or if longer, so long as the individual retains a right to reemployment with the Service Recipient under an applicable statute or by contract. 

 

1.25     Service Recipient.

As provided by regulations promulgated under Code Section 409A, Service Recipient shall mean the Employer or person for whom the services are performed and with respect to whom the legally binding right to compensation arises, and all persons with whom such person would be considered a single employer under Code Section 414(b) (employees of controlled group of corporations), and all persons with whom such person would be considered a single employer under Code Section 414(c) (employees of partnerships, proprietorships, etc., under common control).

 

1.26     Specified Employee.

 

Specified Employee shall mean a participant who is considered a key employee on the Identification Date, as defined in Code Section 416(i) without regard to section 416(i)(5) and such other requirements imposed under Code Section 409A(a)(2)(B)(i) and regulations thereunder for the period beginning April 1 of the year subsequent to the Identification Date and ending March 31 of the following year.  The Identification Date for this Plan is December 31 of each year.  Notwithstanding anything to the contrary, a Participant is not a Specified Employee unless any stock of the Service Recipient is publicly traded on an established securities market or otherwise. 

 

1.27     Trust.

The agreement between the Employer and the Trustee under which the assets of the Plan are held, administered and managed, which shall conform to the terms of Rev. Proc. 92-64.

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1.28     Trustee.

Regions Morgan Keegan Trust, or such other successor that shall become trustee pursuant to the terms of the Plan.

 

1.29     Years of Service.

A Participant’s “Years of Service” shall be measured by employment during a twelve (12) month period commencing with the Participant’s date of hire or date of Board appointment, as applicable which ever is earlier, and anniversaries thereof.  

 

Article 2 - Participation

 

2.1       Commencement of Participation.

Each Eligible Service Provider shall become a Participant at the earlier of the date on which his or her Deferral Election first becomes effective or the date on which an Employer Discretionary Contribution is first credited to his or her Account.

 

2.2       Loss of Eligible Service Provider Status.

A Participant who is no longer an Eligible Service Provider shall not be permitted to submit a Deferral Election and all Deferrals for such Participant shall cease as of the end of the Plan Year in which such Participant is determined to no longer be an Eligible Service Provider.  Amounts credited to the Account of a Participant who is no longer an Eligible Service Provider shall continue to be held pursuant to the terms of the Plan and shall be distributed as provided in Article 6.

 

Article 3 - Contributions

 

3.1       Deferral Elections - General.

A Participant’s Deferral Election for a Plan Year is irrevocable for that applicable Plan Year; provided, however that a cessation of Deferrals shall be allowed if required by the terms of the Employer’s qualified 401(k) plan in order for the Participant to obtain a hardship withdrawal from the 401(k) plan, or if required under Section 6.10 (Unforeseeable Emergency) of this Plan.  Such amounts deferred under the Plan shall not be made available to such Participant, except as provided in Article 6, and shall reduce such Participant’s Compensation from the Employer in accordance with the provisions of the applicable Deferral Election; provided, however, that all such amounts shall be subject to the rights of the general creditors of the Employer as provided in Article 8.  The Deferral Election, in addition to the requirements set forth below, must designate: (i) the amount of Compensation to be deferred, (ii) the time of the distribution, and (iii) the form of the distribution.

 

 

3.2       Time of Election.

A Deferral Election shall be void if it is not made in a timely manner as follows:

 

(a)        A Deferral Election with respect to any Compensation must be submitted to the Administrator before the beginning of the calendar year during which the amount to be deferred will be earned.  As of December 31 of each calendar year, said Deferral Election is irrevocable.

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(b)        Notwithstanding the foregoing and in the discretion of the Employer, in a year in which an Employee or director on the Board is first eligible to participate, and provided that such Employee or director on the Board is not eligible to participate in any other similar account balance arrangement subject to Code Section 409A, such Deferral Election shall be submitted within thirty (30) days after the date on which an Employee or director on the Board is first eligible to participate, and such Deferral Election shall apply to Compensation to be earned during the remainder of the calendar year after such election is made . 

 

(c)        Notwithstanding the foregoing and in the discretion of the Employer, a Deferral Election with respect to any Performance-based Compensation may be submitted by the Eligible Service Provider or Participant provided that such Deferral Election is submitted at least six (6) months prior to the end of the performance period on which the Performance-based Compensation is based.

 

3.3       Distribution Elections.

At the time a Participant makes a Deferral Election, he or she must also elect the time and form of the distribution by establishing one or more In-Service Account(s) or Retirement Account(s) as provided in Sections 5.1 and 6.1.  If the Participant fails to properly designate the time and form of a distribution, the Participant’s Account shall be designated as a Retirement Account and shall be paid in a lump sum.

 

3.4       Additional Requirements.

The Deferral Election, subject to the limitations set forth in Sections 3.1 and 3.2 hereof, shall comply with the following additional requirements, or as otherwise required by the Administrator in its sole discretion:

 

(a)        Deferrals may be made in whole percentages or stated dollar amounts with such limitations as determined by the Administrator.

 

(b)       The maximum amount that may be deferred each Plan Year is twenty-five percent (25%) of the Participant’s Salary and one-hundred percent (100%) of the Participant’s Bonus or Performance-based Compensation, net of applicable taxes. The maximum amount of director fees that may be deferred each Plan Year is one hundred percent (100%).  Contingent Bonus elections shall be allowed in any Plan Year designated as a Bonus deferral Plan Year by the Employer.  The deferral of restricted stock units shall only be allowed as such units are provided by the Employer and are designated as units available for deferral.

 

 

3.5       Matching Contribution.

The Employer may also credit to the Account of each Participant who makes Deferrals a Matching Contribution in an amount equal to a percentage of the Deferrals contributed by the Participant, with such percentage determined annually by the Employer, in its sole discretion.

 

Such Matching Contribution shall be credited to such sub-account(s) as may be elected by the Participant for his or her Base Salary Deferrals, or if no Base Salary Deferrals, then for Bonus or Performance-based Compensation Deferrals in accordance with Section 5.1 and procedures established by the Plan Administrator.  

 

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3.6       Employer Discretionary Contributions.

The Employer reserves the right to make discretionary contributions to some or all Participants’ Accounts in such amount and in such manner as may be determined by the Employer.  Such Employer Discretionary Contribution, at the option of the Employer shall be credited to such sub-account(s) as may be elected by the Participant in accordance with Sections 3.1 and 5.1 and procedures established by the Administrator, or if no such election is made by the Participant, then to such sub-account(s) as may be elected by the Participant for his or her Base Salary Deferrals, or if no Base Salary Deferrals, then for Bonus or Performance-based Compensation Deferrals or if no Base Salary or Bonus Deferrals, then to the Participant’s Retirement sub-account with the shortest payment period maintained within the Participant’s Account in accordance with Section 5.1.  

 

3.7       Crediting of Contributions.

 

(a)        Base Salary Deferrals shall be credited to a Participant’s Account, and if applicable transferred to the Trust, as soon as administratively feasible following the close of each payroll period.  Bonus or Performance-based Compensation Deferrals and director fees associated with Board membership shall be credited to a Participant’s Account, and if applicable transferred to the Trust, quarterly or annually, as applicable.

 

(b)        Matching Contributions shall be credited to a Participant’s Account, and if applicable transferred to the Trust, as soon as administratively feasible following the close of each payroll period.

 

(c)        Employer Discretionary Contributions shall be credited to a Participant’s Account, and if applicable transferred to the Trust, at such time as the Employer shall determine. 

 

Article 4 - Vesting

 

4.1       Vesting of Deferrals.

A Participant shall be one-hundred percent (100%) vested in his or her Account attributable to Deferrals and any earning or losses on the investment of such Deferrals.

 

4.2       Vesting of Matching Contributions.

Except as otherwise provided herein, a Participant shall have a vested right to the portion of his or her Account attributable to Matching Contributions and any earnings or losses on the investment of such Matching Contributions according to such vesting schedule as the Employer shall determine at the time a Matching Contribution is made.  

 

4.3       Vesting of Employer Discretionary Contributions.

A Participant shall have a vested right to the portion of his or her Account attributable to Employer Discretionary Contribution(s) and any earnings or losses on the investment of such Employer Discretionary Contribution(s) according to such vesting schedule as the Employer shall determine at the time an Employer Discretionary Contribution is made. 

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4.4       Vesting in Event of Retirement, Disability, Death or Change-in-Control.

 

(a)        A Participant who incurs a Separation from Service due to Retirement shall be fully vested in the amounts credited to his or her Account as of the date of Retirement.

 

(b)        A Participant who incurs a Separation from Service due to Disability shall be fully vested in the amounts credited to his or her Account as of the date of Disability.

 

(c)        Upon a Participant’s death, the Participant shall be fully vested in the amounts credited to his or her Account as of the date of death.

 

(d)       Upon a Change-in-Control, all Participants shall be fully vested in the amounts credited to their Accounts as of the date of the Change-in-Control.

 

4.5       Amounts Not Vested.

Any amounts credited to a Participant’s Account that are not vested at the time of his or her Separation from Service shall be forfeited.

 

4.6       Forfeitures.

Any forfeitures from a Participant’s Account shall be returned to the Employer.

 

Article 5 - Accounts

 

5.1       Accounts.

The Administrator shall establish and maintain a bookkeeping account in the name of each Participant.  The Administrator shall also establish sub-accounts as provided in subsection (a) and (b), below, as elected by the Participant pursuant to Article 3.  A Participant may have a maximum of ten (10) sub-accounts at any time.

 

 

 

 

 

 

(a)        A Participant may establish one or more Retirement Account(s) (“Retirement sub-accounts”) by designating as such on the Participant’s Deferral Election.  Each Participant’s Retirement sub-account shall be credited with Deferrals (as specified in the Participant’s Deferral Election), any Matching Contributions allocable thereto, any Employer Discretionary Contributions, and the Participant’s allocable share of any earnings or losses on the foregoing.  Each Participant’s Retirement sub-account shall be reduced by any distributions made plus any federal and state tax withholding, and any social security withholding tax as may be required by law. 

 

(b)        A Participant may elect to establish one or more In-Service Accounts (“In-Service sub-accounts”) by designating as such in the Participant’s Deferral Election the year in which payment shall be made.  Each Participant’s In-Service sub-account shall be credited with Deferrals (as specified in the Participant’s Deferral Election), any Matching Contributions allocable thereto, any Employer Discretionary Contributions, and the Participant’s allocable sha