EXHIBIT 10 (ww)
2005 CHURCHILL DOWNS
INCORPORATED
DEFERRED COMPENSATION PLAN
(As Amended as of December 1,
2008)
2005 CHURCHILL DOWNS INCORPORATED
DEFERRED COMPENSATION PLAN
(As Amended as of December 1,
2008)
Table of Contents
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SECTION 1.
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ESTABLISHMENT
AND PURPOSE OF PLAN
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3
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SECTION 2.
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DEFINITIONS
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3
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SECTION 3.
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PARTICIPATION,
CONTRIBUTIONS AND DEFERRALS
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7
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SECTION 4.
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VESTING AND
ADMINISTRATION OF ACCOUNTS
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9
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SECTION 5.
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DISPOSITION OF
PARTICIPANT ACCOUNTS
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11
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SECTION 6.
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COMMITTEE
ADMINISTRATION
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16
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SECTION 7.
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ADOPTION AND
WITHDRAWAL
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16
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SECTION 8.
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CLAIM AND
REVIEW PROCEDURES
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17
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SECTION 9.
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MISCELLANEOUS
PROVISIONS
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18
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2005 CHURCHILL DOWNS INCORPORATED
DEFERRED COMPENSATION PLAN
(As Amended as of December 1,
2008)
SECTION 1.
ESTABLISHMENT AND PURPOSE OF PLAN
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1.1
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Establishment and Restatement of Plan
. The Board established the 2005
Churchill Downs Incorporated Deferred Compensation Plan effective
January 1, 2005.
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1.2
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Purpose of
Plan . The purpose of the
Plan is to provide eligible executives and directors of the Company
and its affiliated companies an opportunity to defer to a future
date the receipt of base and bonus compensation for services as
well as director’s fees.
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1.3
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Section 409A . The 2005 Churchill Downs Incorporated Deferred
Compensation Plan (the “2005 Plan”) is intended to be a
new deferred compensation plan compliant with the requirements of
Section 409A (as defined below), which became effective for
deferrals of compensation after December 31, 2004. The Plan
also amends the Churchill Downs Incorporated Deferred Compensation
Plan (as amended and restated effective January 1, 2001),
which was in existence on December 31, 2004 (the “Prior
Plan”) by freezing the Prior Plan. All deferrals of
compensation otherwise earned and vested on or prior to
December 31, 2004 (including bonus compensation with respect
2004 service), are deferred under, and remain subject to, the
provisions of the Prior Plan as it existed on October 3, 2004
(attached hereto as Exhibit A). It is intended that no deferrals
will be made under the Prior Plan after December 31, 2004,
except that an election made on or before December 31, 2004
with respect to salary earned for services performed during
calendar year 2005 shall be a deferral under the Prior Plan but,
unlike the grandfathered deferrals and earnings thereon under the
Prior Plan, such deferral and any earnings thereon shall be subject
to the requirements of Section 409A. For purposes of
administrative convenience and efficiency and compliance with
Section 409A, such deferral of 2005 salary and the earnings
thereon may be transferred to the 2005 Plan provided such transfer
conforms to, and does not cause the remaining deferrals under the
Prior Plan and earnings thereon to become subject to, the
requirements of Section 409A. Subject to the foregoing, all
deferrals of compensation with respect to service performed after
December 31, 2004, shall be governed by the terms of the 2005
Deferred Compensation Plan. Deferrals under the Prior Plan shall
include all amounts transferred from any other plan of deferred
compensation to the Prior Plan on or before October 3, 2004.
The Company shall maintain separate bookkeeping accounts of
grandfathered deferrals, including all earnings thereon, and
amounts deferred under the 2005 Plan.
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SECTION 2.
DEFINITIONS
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2.1
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“
Account ” means the Participant’s In-Service
Account, Distribution Account and Transferred Account which are
bookkeeping accounts established on the Company’s records
showing the amount of the Participant’s accrued:
(1) Employer contributions; (2) Compensation and
Director’s Fees deferred pursuant to the Participant’s
election; (3) in the case of a Transferred Account, deferred
compensation transferred to the Plan pursuant to Section 3.9;
and (4) any notional earnings and losses accrued
thereon.
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3
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2.2
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“
Board ” means the Company’s Board of
Directors.
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2.3
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“
Compensation ” means the regular base salary and
annual bonus or incentive compensation payable by the Employer to
the Participant for services performed for the Employer.
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2.4
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“
Cause ,” in connection with the termination of the
Participant’s employment with the Employer, means that, in
the judgment of the Company’s President, based upon any
information or evidence reasonably persuasive to the President, the
Participant: [i] willfully engaged in activities or conducted
himself or herself in a manner seriously detrimental to the
interests of the Employer, Company or its affiliates; or [ii]
failed to execute the duties reasonably assigned to him or her in a
reasonably timely, effective, or competent manner; provided,
however, that the termination of the Participant’s employment
because of Disability shall not be deemed to be for Cause and the
determination of Cause in the event of the President’s
employment termination shall be determined by the Board.
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2.5
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“
Change of Control ” means a “change in the
ownership,” “change in the effective control,” or
“change in the ownership of a substantial portion of the
assets,” (as determined under Section 409A) of the
Employer. To constitute a Change of Control with respect to a
Participant, the event must relate to [a] the corporation for whom
the Participant is performing services, [b] the corporation that is
liable for the payment of the amounts deferred under this Plan, [c]
a corporation that is the majority shareholder of a corporation
identified in [a] or [b], or [d] any corporation in a chain of
corporations in which each corporation is a majority shareholder of
another corporation in the chain, ending in a corporation
identified in [a] or [b]. For purposes of this definition, the
attribution rules of Code §318(a) apply to determine stock
ownership. Stock underlying a vested option is considered owned by
the holder of the option, except where the option is exercisable
for stock that is not vested.
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(a) Change in the Ownership of a
Corporation. A change in the ownership of a corporation occurs on
the date that any one person, or more than one person acting as a
group (as defined in paragraph (b)), acquires ownership of stock of
the corporation that, together with stock held by such person or
group, constitutes more than 50 percent of the total fair market
value or total voting power of the stock of such
corporation.
(b) Persons Acting as a Group.
Persons will be considered to be acting as a group if they are
owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of stock, or similar business transaction
with the corporation. If a person, including an entity, owns stock
in both corporations that enter into a merger, consolidation,
purchase or acquisition of stock, or similar transaction, such
shareholder is considered to be acting as a group with other
shareholders in a corporation prior to the transaction giving rise
to the change and not with respect to the ownership interest in the
other corporation.
(c) Change in the Effective Control
of the Corporation. Notwithstanding that a corporation has not
undergone a change in ownership, a change in the effective control
of a corporation occurs on the date that either —
(1) Any one person, or more than one
person acting as a group (as determined under paragraph (b)),
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 stock of the corporation possessing 35 percent or more
of the total voting power of the stock of such corporation;
or
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(2) a majority of members of the
corporation’s board of directors is replaced during any
12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the corporation’s
board of directors prior to the date of the appointment or
election, provided that for purposes of this paragraph (2) the
term corporation refers solely to the relevant corporation
identified in the first paragraph of this Section for which no
other corporation is a majority shareholder for purposes of that
paragraph (for example, if Corporation A is a publicly held
corporation with no majority shareholder, and Corporation A is the
majority shareholder of Corporation B, which is the majority
shareholder of Corporation C, the term corporation for purposes of
this paragraph (2) would refer solely to Corporation
A).
In the absence of an event described
in paragraph (1) or (2), a change in the effective control of
a corporation will not have occurred.
(d) Multiple Change in Control
Events. A change in effective control also may occur in any
transaction in which either of the two corporations involved in the
transaction has a Change in Control.
(e) Acquisition of Additional
Control. If any one person, or more than one person acting as a
group, is considered to effectively control a corporation, the
acquisition of additional control of the corporation by the same
person or persons is not considered to cause a change in the
effective control of the corporation (or to cause a change in the
ownership of the corporation).
(f) Change in the Ownership of a
Substantial Portion of a Corporation’s Assets. A change in
the ownership of a substantial portion of a corporation’s
assets occurs on the date that any one person, or more than one
person acting as a group (as determined in paragraph (b)), 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 corporation that have a total gross fair market value equal to
or more than 40 percent of the total gross fair market value of all
of the assets of the corporation immediately prior to such
acquisition or acquisitions. For this purpose, gross fair market
value means the value of the assets of the corporation, or the
value of the assets being disposed of, determined without regard to
any liabilities associated with such assets.
(g) Transfers to a Related Person.
There is no Change in Control when there is a transfer to an entity
that is controlled by the shareholders of the transferring
corporation immediately after the transfer, as provided in this
paragraph (g). A transfer of assets by a corporation is not treated
as a change in the ownership of such assets if the assets are
transferred to —
(1) A shareholder of the corporation
(immediately before the asset transfer) in exchange for or with
respect to its stock;
(2) An entity, 50 percent or more of
the total value or voting power of which is owned, directly or
indirectly, by the corporation;
(3) A person, or more than one
person acting as a group, that owns, directly or indirectly, 50
percent or more of the total value or voting power of all the
outstanding stock of the corporation; or
(4) An entity, at least 50 percent
of the total value or voting power of which is owned, directly or
indirectly, by a person described in paragraph (3).
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For purposes of this paragraph
(g) and except as otherwise provided, a person’s status
is determined immediately after the transfer of the assets. For
example, a transfer to a corporation in which the transferor
corporation has no ownership interest before the transaction, but
which is a majority-owned subsidiary of the transferor corporation
after the transaction is not treated as a change in the ownership
of the assets of the transferor corporation.
Notwithstanding the foregoing, the
determination of the occurrence of a Change of Control shall be
made by the Committee in accordance with the requirements of
Section 409A.
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2.6
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“
Code ” means the Internal Revenue Code of 1986, as
amended, and the guidance and regulations promulgated
thereunder.
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2.7
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“
Committee ” means the Compensation Committee of the
Board.
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2.8
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“
Common Stock ” means the common stock, no par value,
of the Company.
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2.9
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“
Company ” means Churchill Downs Incorporated, a
Kentucky corporation or its successor.
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2.10
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“
Director ” means a member of an Employer’s board
of directors.
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2.11
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“
Director Fees ” means the retainer, meeting and other
fees payable by the Employer to a member of an Employer’s
board of directors for service performed as a board
member.
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2.12
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“
Disability ” or “ Disabled ” means
the Participant [i] is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to last for a continuous period of
not less than 12 months, or [ii] is, by reason of any medically
determinable physical or mental impairment which 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
Employer.
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2.13
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“
Distribution Account ” means the Account established
for the Participant for distribution to the Participant on or after
Separation From Service at the Participant’s election in
accordance with Section 5.
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2.14
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“
Employee ” means an individual who is an employee of
an Employer and who is part of a select group of management or
highly compensated employees of the Employer within the meaning of
Labor Reg. §2520.104-23.
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2.15
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“
Employer ” means the Company and any subsidiary or
affiliated company that adopts the Plan as to its eligible
Employees and Directors pursuant to Section 7.
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2.16
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“
Employer Discretionary Contributions ” means the
contributions made by the Employer to a Participant’s Account
on a discretionary basis under Section 3.8.
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2.17
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“
Employer Matching Contributions ” means the matching
contributions made by the Employer to a Participant’s Account
under Section 3.7.
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2.18
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“
In-Service Account ” means the Account established for
the Participant for distribution to the Participant before the
Participant’s separation from service with the Employer at
the Participant’s election in accordance with
Section 5.
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6
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2.19
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“
IRS ” means the Internal Revenue Service, Department
of the Treasury of the United States.
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2.20
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“
Participant ” means an Employee or Director who is or
has been designated by the Committee as being eligible to
participate in the Plan and who has an amount credited to an
Account for his or her benefit under the Plan.
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2.21
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“
Performance Based Compensation ” means compensation
where [i] the payment of the compensation or the amount of the
compensation is contingent on the satisfaction of organizational or
individual performance criteria, and [ii] the performance criteria
are not substantially certain to be met at the time of a deferral
election is permitted, including compensation based upon subjective
performance criteria where [a] any subjective performance criteria
relates to the performance of the Participant, a group which
includes the Participant, or a business unit for which the
Participant provides services (which may include the entire
Employer), and [b] the determination that any subjective
performance criteria have been met is not made by the Participant
or a family member of the Participant (as defined in Code
§267(c)(4) applied as if the family of an individual includes
the spouse of any member of the family).
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2.22
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“
Plan ” means the 2005 Churchill Downs Deferred
Compensation Plan as described herein, and as amended from time to
time.
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2.23
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“
Profit Sharing Plan ” means the Churchill Downs
Incorporated Profit Sharing Plan.
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2.24
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“
Secretary ” means the Secretary of the Treasury of the
United States.
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2.25
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Section 409A ” means Section 409A of the
Code.
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2.26
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Separation From Service ” shall have the meaning
ascribed to such phrase under Section 409A.
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2.27
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“
Stock Account ” means the notional investment account
established for a Director in accordance with
Section 4.11.
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2.28
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“
Stock Election ” means the election referred to in
Section 4.11.
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2.29
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“
Transferred Account ” means the Account established
for the Participant, and reflecting deferred compensation
transferred to the Plan pursuant to Section 3.9, for
distribution to the Participant on or after Separation From Service
at the Participant’s election in accordance with
Section 5 or as otherwise specified by the Committee pursuant
to Section 3.9.
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2.30
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“
Unforeseeable Emergency ” means a severe financial
hardship to the Participant resulting from an illness or accident
of the Participant, the Participant’s spouse, or a dependent
(as defined in Code §152(a)) 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.
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SECTION 3.
PARTICIPATION, CONTRIBUTIONS AND
DEFERRALS
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3.1
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Eligibility
. The Plan is intended to
constitute, and shall be administered to qualify as, a “top
hat” plan exempt from certain requirements of the Employee
Retirement Income Security Act of 1974, as amended, pursuant to
Labor Reg. §2520.104-23 and shall be maintained strictly for a
select
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7
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group of management or highly
compensated employees as contemplated by said regulation. Subject
to the requirements of said regulation, the Committee may designate
any of an Employer’s management or highly compensated
Employees or an Employer’s Directors as being eligible to
participate in the Plan. The Committee shall communicate
designation of eligibility to the Employee or Director in writing
as soon as administratively practicable.
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3.2
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Commencement
of Participation . An
Employee or Director who is designated as eligible to participate
in the Plan in accordance with Section 3.1 shall commence
participation on the next January 1 following the date the
Employee or Director files his or her deferral election with the
Committee, or its designated agent, in accordance with
Section 3.4.
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3.3
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Revocation
of Right to Participate in Plan . The Committee may revoke the right of any
Participant to participate in the Plan, which revocation shall be
effective with respect to Compensation and Director’s Fees
earned and payable after the date of such revocation. The
revocation shall not alter or diminish the rights of the
Participant with respect to amounts credited to the
Participant’s Account before the revocation.
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3.4
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Participant
Deferral Elections . An
Employee or Director who has been designated as eligible to
participate in the Plan may elect, in writing on forms approved by
the Committee, to defer the receipt of all or a portion (in one
percent (1%) increments) of his or her Compensation and
Director’s Fees earned and payable after the effective date
of such election and have such amount credited to the
Participant’s Account pursuant to the terms of the Plan. The
deferral election shall continue from year to year until revoked or
modified by the Participant. Deferral elections, and
revocation or modifications thereto, must be made during the period
of time established by the Committee before the beginning of the
applicable calendar year and shall be effective on the
January 1 following receipt by the Company of the completed
election form. Deferral elections with respect to bonus or
incentive compensation payable with respect to services performed
in a calendar year must be made before the end of the preceding
calendar year; provided, that in the case of Performance Based
Compensation, the deferral election may be made not later than 6
months before the end of the applicable performance
period.
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3.5
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No Deferrals
During Long Term Disability . A Participant may not make deferrals under
this Plan during any period that the Participant is receiving
benefits under a long term disability plan of an
Employer.
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3.6
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Revocation/Modification of Deferral
Elections . Deferral
elections may be revoked or modified by the Participant by
notifying the Company in writing of such revocation or modification
on forms available from the Company. Any revocation or modification
of a deferral election shall be effective on the January 1
following receipt by the Company of a completed
revocation/modification form. Deferral elections shall be
automatically revoked on the effective date of Plan termination and
on the date the Participant becomes ineligible to participate in
the Plan. Except as provided under Section 5.1 of the Plan, no
modification of a deferral election shall alter the time and form
of distribution of any prior deferral.
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3.7
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Employer
Matching Contributions .
The Account of a Participant who is an Employee shall be credited
with an Employer Matching Contribution on base compensation
deferrals made to this Plan equal to the Employer Matching
Contribution the Participant would have received under the Profit
Sharing Plan (whether or not the Participant participates in the
Profit Sharing Plan) but for the dollar limits applicable under the
Profit Sharing Plan less any Employer Matching Contribution
allocated to the Participant’s account under the Profit
Sharing Plan. No matching contributions shall be made on
Transferred Accounts.
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3.8
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Employer
Discretionary Contributions . The Employer, in its sole discretion, may make
additional Employer Discretionary Contributions to the Account of
any one or more Participants who are Employees. Unless expressly so
provided by the Committee, Employer Discretionary Contributions
shall not be made to Transferred Accounts. The amount of Employer
Discretionary Contributions credited to a Participant’s
Account pursuant to this Section 3.8, if any, shall be
determined by the Employer in its sole discretion.
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3.9
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Transfer
Contributions . A
Participant may request a transfer to the Plan of contributions
deferred under another deferred compensation plan of an Employer
which qualifies as an unfunded “top hat” arrangement
under Title I of ERISA as well as for income tax purposes. The
Committee, in its sole discretion, may elect whether or not to
accept transfers from other deferred compensation plans. Unless
otherwise specified by the Committee, deferred accounts transferred
to this Plan shall be subject to the terms and conditions of this
Plan, including but not limited to the time and method of
distribution and the Participant shall make a distribution election
in accordance with Section 5 to the extent such election
complies with Section 409A. The Committee shall accept
transfers from other deferred compensation plans only to the extent
that such transfer, and any applicable timing and method of
distribution, complies with the requirements of Section 409A
and will not cause the transferred amounts, or amounts deferred
under this Plan, to be subject to the additional tax imposed under
Section 409A on deferrals which fail to meet the requirements
of such Section 409A. No matching contributions shall be made
on deferred compensation transferred to the Plan pursuant to this
Section 3.9.
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SECTION 4.
VESTING AND ADMINISTRATION OF
ACCOUNTS
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4.1
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Credits/Debts to Account . Compensation and Director’s Fees
deferred under the Plan pursuant to the Participant’s
election in accordance with Section 3.4 shall be credited to
the Participant’s Account as soon as administratively
practicable after the date the deferrals would otherwise have been
paid to the Participant in accordance with the Employer’s
normal payroll practices in the case of employees, and when the
Director’s Fees would otherwise have been paid to the
applicable Director. Matching contributions under Section 3.7
shall be credited to the Participant’s Account at the time
matching contributions are allocated to participant accounts under
the Profit Sharing Plan. Employer discretionary contributions made
by the Employer pursuant to Section 3.8 shall be credited to
the Participant’s Account at the time specified by the
Employer.
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4.2
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Establishment of Rabbi Trust
. The Company may establish an
irrevocable grantor trust to provide a source of funds to assist
the Employer in satisfying its liability to Participants and their
beneficiaries under this Plan. If such rabbi trust is established,
the Employer may make contributions to the trust, with respect to
deferrals, in such manner and at such times as the Committee
determines. The Employer may make contributions to the trust in
such other manner and at such other times as the Committee deems
appropriate in its sole discretion. Each Employer shall be the sole
owner of the assets of the trust as to its participating Employees
and Directors, and the assets of the trust shall be subject to the
claims of the general creditors of the Employer. The sole interest
of Participant and the Participant’s beneficiaries to the
assets of the trust shall be as a general cr
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