ASSOCIATED ESTATES REALTY
CORPORATION
DIRECTORS’ DEFERRED
COMPENSATION PLAN
(January 1, 2005
Restatement)
Associated Estates
Realty Corporation (the “Company”) maintains in effect
a Directors’ Deferred Compensation Plan (the
“Plan”) to assist it in attracting and retaining
persons of competence and stature to serve as Independent Directors
by giving those directors the option of deferring receipt of the
fees payable and awards granted to them by the Company for their
services as directors and creating an opportunity for appreciation
of fees and awards deferred based on appreciation of the
Company’s Common Shares. The Plan was established
effective October 1, 1996, and amended in September
2003. It is now desired to further amend and restate the
provisions of the Plan effective January 1, 2005, to reflect the
requirements of the American Jobs Creation Act of 2004 and Section
409A of the Internal Revenue Code (the
“Code”).
Therefore, the
Company hereby adopts amended and restated provisions of the
Plan effective as described below, as hereinafter set
forth:
1.
Effect of
Restatement . The Plan originally became effective
for all director’s fees and awards payable with respect to
periods commencing with the Company’s fiscal quarter that
began October 1, 1996. The January 1, 2005 Restatement of the
Plan is effective with respect only to amounts deferred under the
Plan on and after January 1, 2005, and no modification relating to
amounts earned and vested under the Plan as of December 31, 2004,
based on provisions in effect on October 3, 2004, shall be made
hereby. The foregoing notwithstanding, for the period prior
to January 1, 2009, the Plan shall operate based on IRS Notice
2005-1, additional notices published by the Treasury Department and
the Internal Revenue Service providing transition guidance, and a
good faith, reasonable interpretation of Section 409A of the
Code.
2.
Participation . Each director of the Company who
(a) is duly elected to the Company’s Board of Directors and
(b) receives fees and awards for services as a director (an
“Eligible Director”), may elect to defer receipt of
fees or awards otherwise payable to that director, as provided for
in the Plan; provided, however, that no director who is a common
law employee of the Company or an affiliate shall be an Eligible
Director. Each Eligible Director who elects to defer fees or
awards will be a Participant in the Plan.
3.
Administration . The Company’s Board of
Directors appoints the individuals holding the positions of Chief
Executive Officer, Chief Financial Officer, and Vice President of
Human Resources, officers of the Company who are not eligible to
become Participants, to act as the Administrators of the Plan (the
“Administrators”). The Administrators will serve
at the pleasure of the Board of Directors and will administer,
construe and interpret the Plan. The Administrators will not
be liable for any act done or determination made in good
faith. The Board of Directors has the power to designate
additional or replacement Administrators at its
discretion.
4.
Deferrals .
(a)
Deferral
Election . Prior to January 1 of each year, any
Eligible Director may file with the Administrators of the Plan an
election in writing to participate in the Plan and to defer all or
a portion of the fees or awards, or both, otherwise payable to that
director for that year or for that year and succeeding years (a
“Deferral Election”). In the first year a
director becomes eligible to participate in this Plan, such
director may file an initial Deferral Election with the
Administrators within 30 days after the date he becomes eligible to
participate in the Plan, with respect to awards to be granted or
fees paid for services to be performed after the date of the
election. When a Deferral Election is filed, an amount equal to all
or a portion (as designated in the Deferral Election) of the fees
or awards otherwise payable to a Participant for the year (or
portion thereof) or for that year and for succeeding years (as
designated in the Deferral Election) will be credited to a deferral
account maintained on behalf of that Participant (a “Deferral
Account”). A Deferral Election must also state the
Distribution Commencement Date (defined in paragraph 5) and method
of distribution (lump sum or four equal annual installments),
provided that if no form of payment is specified, the distribution
shall be made in a lump sum. If a Deferral Election has been
filed to participate in the Plan for succeeding years and a
Participant wishes to discontinue deferral, an election in writing
to terminate participation in the Plan for any succeeding year must
be filed with the Administrators prior to January 1 of that
year.
2
(b)
Accounting
. The Deferral Accounts will be maintained by the Company and
will list and reflect each Participant’s credits and
valuations. The Company will provide each Participant an
annual statement of the balance in that Participant’s
Deferral Account. The Company will credit to each
Participant’s Deferral Account an amount equivalent to the
fees or award that would have been paid to the Participant if the
Participant had not elected to participate in the Plan. The
credit will be made on the date on which the fee or award would
have been paid absent a Deferral Election. No funds will be
segregated into the Deferral Account of Participants; the Deferral
Accounts represent a general unsecured obligation of the
Company. Any amount credited to the Deferral Account based on
an award which is subject to a vesting schedule shall be subject to
the same vesting schedule under the Plan as the award would have
been.
(c)
Valuation
. Until the first distribution to a Participant, amounts
credited to a Deferral Account of that Participant will be
increased or decreased as measured by the market value of the
Company’s Common Shares plus the value of dividends or other
distribut
