DIVERSIFIED INVESTMENT ADVISORS, INC. NONQUALIFIED DEFERRED COMPENSATION PLAN DOCUMENT

 

 

TABLE OF CONTENTS

 

Article 1.		Introduction	2
Article 2.		Definitions	3
Article 3.		Eligibility and Participation	10
Article 4.		Elections and Contributions	12
Article 5.		Distribution of Account Balances	19
Article 6.		Plan Investments	27
Article 7.		Beneficiary	28
Article 8.		Vesting and Forfeitures	29
Article 9.		Administration	30
Article 10.		Miscellaneous	34

 

 

 

ARTICLE 1. — INTRODUCTION

 

Whereas, the Employer wishes to establish a nonqualified employee retirement plan (the “Plan”) solely to provide deferred compensation for a select group of management or highly compensated employees within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, effective January 1, 2005, and

 

Whereas, the Plan is intended to comply with section 409A of the Internal Revenue Code, as amended (the “Code”) and regulations thereunder, and

 

[ If this is an amendment, restatement, and continuation of an existing plan, the following shall apply :

 

Whereas, the following provisions constitute an amendment, restatement, and continuation of the Prior Plan, and

 

Whereas, amounts that were Earned and Vested under the Prior Plan as of December 31, 2004, including earnings thereon, shall be considered Grandfathered Amounts, and thereby, exempt from the requirements under Code section 409A, and amounts that are earned or vested under this Plan after December 31, 2004, including earnings thereon, shall be subject to the requirements under Code section 409A.]

 

Whereas, the Employer has determined that pursuant to the laws of the Employer’s state, it may establish such a Plan, and

 

Whereas, the Employer wishes to provide that the Plan to be established under this Agreement shall have the name specified in Section 3 of the Adoption Agreement, and

 

Whereas, the Employer wishes to provide under the Plan that the Employer shall pay the entire cost of vested accrued benefits from its general assets and/or assets set aside in a grantor trust by the Employer to meet its obligations under the Plan, and

 

Whereas, the Employer intends that the assets of the Plan and, if applicable, the Trust shall at all times be subject to the claims of the general creditors of the Employer,

 

Now therefore, the Employer does hereby establish the Plan as follows, and does hereby agree that the Plan shall be structured, held and disposed of as follows:

 

 

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ARTICLE 2. — DEFINITIONS

 

2.1                                  “401(k) Deferrals” means for purposes of the Adoption Agreement, an election to defer Compensation under the 401(k) Plan.

 

2.2                                  “401(k) Plan” means the qualified cash or deferred arrangement of the Employer.

 

2.3                                  “Adoption Agreement” means the Adoption Agreement executed by the Employer and submitted to Diversified Investment Advisors, Inc.  The Adoption Agreement shall be considered to be a part of this Plan.

 

2.4           “Age” means age at the most recent birthday.

 

2.5                                  “Annual Sub-Account” means a bookkeeping account under a Calendar Year Plan established and maintained by the Employer to which (1) Salary Reduction Contributions, (2) Matching Contributions, (3) Nonelective Employer Contributions, and (4) Performance-Based Compensation for a Plan Year shall be credited to each respective Annual Sub-Account.

 

2.6                                  “Beneficiary” shall have the meaning set forth in Section 7.1.

 

2.7           “Board” means the Employer’s Board of Directors.

 

2.8                                  “Calendar Year Plan” means a Plan under which the Employer establishes and maintains a Participant’s Account on behalf of each Eligible Employee’s Annual Sub-Accounts which include, if applicable, but are not limited to a (1) Salary Reduction Contribution Account, (2) Performance-Based Compensation Contribution Account, (3) Matching Contribution Account, and (4) Nonelective Employer Contribution Account to which (1) Salary Reduction Contributions, (2) Performance-Based Compensation Contributions, (3) Matching Contributions, and (4) Nonelective Employer Contributions shall be credited to each respective Annual Sub-Account.

 

2.9                                  “Claimant” means a Participant (or in the case of the Participant’s death, the Participant’s Beneficiary or Beneficiaries) who makes a written application to the Plan Administrator for benefits that he or she believes are due under the Plan.

 

2.10         “Code” means the Internal Revenue Code of 1986, as amended.

 

2.11                            “Compensation” means amounts so elected by the Employer (or if applicable, Company) in the Adoption Agreement that are payable to an Eligible Employee (of if applicable, Eligible Director or Independent Contractor) for services rendered to the Employer (or if applicable, Company), including but not limited to wages, salary, bonuses, overtime,

 

 

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commissions, and other remuneration that is reportable to the Federal government, or which would be reportable if it were not deferred under this Plan.  Compensation shall be based on amounts paid during that portion of the Plan Year in which the Eligible Employee (or if applicable, Eligible Director or Independent Contractor) is a Participant in the Plan.  Compensation must be earned in the Plan Year in which any amount of such Compensation is credited to a Participant’s Account.

 

2.12                            “Company” means the entity designated as the Employer in Section 1 of the Adoption Agreement.  For purposes of this Plan, references to Employer shall mean Company, unless the context clearly indicates otherwise.

 

2.13                            “Deferral Agreement” means an election by an Eligible Employee to (1) make a Salary Reduction Contribution and/or (2) specify a time of distribution for Salary Reduction Contributions or Employer Contributions made on his or her behalf, as so elected by the Employer in the Adoption Agreement.  A Deferral Agreement to make a Salary Reduction Contribution must be made prior to the end of the Election Period preceding the close of the Taxable Year preceding the Taxable Year in which Compensation subject to the Salary Reduction Contribution is earned.  A Deferral Agreement must specify the time and the form of distribution as permitted by the election of the Employer in the Adoption Agreement.  Changes to a Deferral Agreement may be made, but only before the Deferral Agreement becomes irrevocable, which is generally the last day of a Participant’s Taxable Year.  The Participant must also list his or her designated Beneficiary or Beneficiaries as described in Article 7.

 

2.14                            “Deferred Compensation” means the amount of Compensation that the Participant elects to defer under the Deferral Agreement and that the Participant and the Employer mutually agree shall be deferred in accordance with the Plan, if any, and the amount of any Employer Contributions, if any, made on behalf of the Participant.

 

2.15                            “Disability” or “Disabled” means:

 

(a)                                   A Participant (1) 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 twelve (12) months, or (2) 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 twelve (12)  months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Participant’s Employer.

 

(b)                                  As specified in the Adoption Agreement, a Participant shall be deemed Disabled:

 

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(1)                                   If determined to be totally disabled by the Social Security Administration;

 

(2)                                   In accordance with a disability insurance program sponsored by the Employer, provided the definition of Disability set forth in such insurance program satisfies the requirements of Section 2.15(a); or

 

(3)                                   In the Plan Administrator’s sole discretion, provided that the Participant is disabled under Section 2.15(a).

 

(c)                                   In the event the determination of Disability is made under Section 2.15(b)(2) or Section 2.15(b)(3), the Plan Administrator shall have the exclusive right of determining, with the assistance of a competent physician, whether a Participant is Disabled.  A certificate to that effect executed by the Plan Administrator and supported by the affidavit of an examining physician, shall be sufficient evidence of such fact and may be so accepted by the Plan Administrator without further inquiry, provided that all Participants under similar circumstances shall be treated alike.

 

2.16                            “Earned and Vested” means amounts deferred under the Prior Plan, if any, to which a Participant had a nonforfeitable right to receive as of December 31, 2004.  Such amounts are considered Grandfathered Amounts.  The term Earned and Vested is only applicable to a plan that is an amendment, restatement, and continuation of a Prior Plan, as indicated in Section 4 of the Adoption Agreement.

 

2.17                            “Effective Date” means the effective date specified in Section 5(a) of the Adoption Agreement for new plans, or Section 5(b) of the Adoption Agreement for a plan that is an amendment, restatement, and continuation of a Prior Plan.

 

2.18                            “Election Period” means the enrollment window(s) designated by the Employer in which a Participant may be permitted to enter into a Deferral Agreement, make a distribution election(s) upon Separation from Service and/or a Specified Time, and make any changes to such election(s).

 

2.19                            “Eligible Director” means the director of the Company who has been chosen by the Board each year, in its sole discretion, to be eligible to participate in the Plan.  For purposes of this Plan, references to Eligible Employee shall mean Eligible Director, unless the context clearly indicates otherwise.

 

2.20                            “Eligible Employee” means an individual who is part of a select group of management or highly compensated individuals who performs services for the Employer as an employee and who has been chosen by the Employer each year, in its sole discretion, to be eligible to participate in the Plan.  If Eligible Directors and/or Eligible Independent Contractors participate in this Plan in accordance with the Employer’s election in the Adoption

 

 

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Agreement, the term “Eligible Employee” shall also mean such Eligible Directors and/or Eligible Independent Contractors and the term “employment” shall include service as a director or independent contractor unless the context clearly indicates otherwise.

 

2.21                            “Eligible Independent Contractor” means the Independent Contractor of the Company who has been chosen by the Company each year, in its sole discretion, to be eligible to participate in the Plan.  For purposes of this Plan, references to Eligible Employee shall mean Eligible Independent Contractor, unless the context clearly indicates otherwise.

 

2.22                            “Employer” means the employer named in Section 1 of the Adoption Agreement and any succeeding or continuing corporation.  For purposes of Article 10.2, Employer shall also include all persons with whom the Employer would be considered a single employer under Code sections 414(b) or (c).  If Eligible Directors and/or Eligible Independent Contractors participate in this Plan in accordance with the Employer’s election in the Adoption Agreement, the term “Employer” shall also mean Company unless the context clearly indicates otherwise.

 

2.23                            “Employer Contributions” means Matching Contributions and/or Nonelective Employer Contributions made by the Employer on behalf of a Participant, as so elected by the Employer in the Adoption Agreement.

 

2.24         “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

2.25                            “Evergreen Plan” means a Plan under which the Employer establishes and maintains a Participant’s Account, which may have sub-accounts depending on the Employer’s election, on behalf of each Eligible Employee including, if applicable, but are not limited to a (1) Salary Reduction Contribution Account, (2) Performance-Based Compensation Contribution Account (3) Matching Contribution Account, and (4) Nonelective Employer Contribution Account to which (1) Salary Reduction Contributions, (2) Performance-Based Compensation Contributions, (3) Matching Contributions, and (4) Nonelective Employer Contributions shall be credited.

 

2.26                            “Grandfathered Amounts” means amounts, if any, that were deferred under the Prior Plan and Earned and Vested as of December 31, 2004.  Grandfathered Amounts are not subject to the requirements under Code section 409A.  The term Grandfathered Amounts is only applicable to a plan that is an amendment, restatement, and continuation of a Prior Plan, as indicated in Section 4 of the Adoption Agreement.

 

2.27                            “Key Employee” means an Eligible Employee treated as a “specified employee” as of his Separation from Service under Code section 409A(a)(2)(B)(i), i.e., a key employee (as defined in Code section 416(i) without regard to paragraph (5) thereof) of the Company or its affiliates if the Company is a Publicly Traded Company.  Key Employees shall be determined in accordance with Code section 409A using an identification date set forth in

 

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the Adoption Agreement.  A listing of Key Employees as of an identification date shall be effective for the 12-month period beginning on the effective date set forth on the Adoption Agreement.

 

2.28                            “Legally Binding Right” means a nonforfeitable right that cannot be reduced or eliminated within the meaning of Code section 409A and regulations thereunder.

 

2.29                            “Matching Contribution” means an amount contributed by the Employer on behalf of a Participant that elects to make a Salary Reduction Contribution under the Plan.

 

2.30                            “Matching Contribution Account” means a bookkeeping account established by the Employer for each Participant to which Matching Contributions shall be credited.

 

2.31                            “Nonelective Employer Contribution” means an amount contributed by the Employer on behalf of a Participant.

 

2.32                            “Nonelective Employer Contribution Account” means a bookkeeping account established by the Employer for each Participant to which Nonelective Employer Contributions shall be credited.

 

2.33                            “Participant” means any Eligible Employee (or if applicable, Eligible Director or Independent Contractor) selected by the Employer who has elected to participate in the Plan by entering into a Deferral Agreement.

 

2.34                            “Participant’s Account” means a bookkeeping account established and maintained by the Employer to which (1) Salary Reduction Contributions, (2) Matching Contributions, (3) Nonelective Employer Contributions, and (4) Performance-Based Compensation shall be credited.  A Participant’s Account includes the Participant’s Annual Sub-Account, if applicable.

 

2.35                            “Performance-Based Compensation” means Compensation a participant will be entitled to upon satisfying organizational or individual performance goals for a performance period that is at least 12 consecutive months. For performance-based compensation elections, a participant is permitted to make deferral elections after the beginning of the taxable year the participant will perform the services, provided that:

 

·                   The participant makes the deferral election on or before the date that is six months prior to the end of the related performance period;

 

·                   The participant performs services continuously from the later of: (i) the beginning of the performance period or (ii) the date the Company establishes the performance criteria, through the date the participant makes the deferral election; and

 

 

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·                   The amount of performance-based compensation that will be earned is not readily ascertainable (e.g., the performance goals are not certain to be achieved at the time the participant makes the deferral election).

 

Whether or not Compensation is considered Performance-Based Compensation shall be determined under procedures established by the Plan Administrator and in accordance with Code section 409A and regulations thereunder).

 

2.36                            “Performance-Based Compensation Contribution Account” means a bookkeeping account established by the Employer for each Participant electing to defer all or a portion of his or her Performance-Based Compensation.

 

2.37                            “Performance-Based Compensation Deferral Election” means an election to defer all or a portion of Performance-Based Compensation earned during a service period.

 

2.38         “Plan” means this plan, as named in the Adoption Agreement.

 

2.39                            “Plan Administrator” means the Employer or other person(s) or entity(ies) appointed by the Employer in accordance with Article IX.

 

2.40                            “Plan Year” means a twelve (12) consecutive month period beginning and ending on the dates specified in the Adoption Agreement.

 

2.41                            “Prior Plan” means a predecessor nonqualified deferred compensation plan, if any, that was in existence as of October 3, 2004 and is named in the Adoption Agreement.  The Prior Plan is or is not intended to be subject to Code section 409A depending on the election made by the Employer in the Adoption Agreement.  The term Prior Plan is only applicable to a plan that is an amendment, restatement, and continuation of a plan in existence as of October 3, 2004, as indicated in the Adoption Agreement.

 

2.42                            “Publicly Traded Company” means an entity any stock of which is publicly traded on an established securities market or otherwise.

 

2.43                            “Retirement Age” means the age specified in the Adoption Agreement.

 

2.44                            “Salary Reduction Contribution” means an amount of Compensation a Participant elects to defer under his or her Deferral Agreement which shall be deducted from the Participant’s Compensation without reduction for any taxes or withholding (except to the extent required by law or under Code section 409A and regulations thereunder.)

 

2.45                            “Salary Reduction Contribution Account” means a bookkeeping account established by the Employer for each Participant electing to make a Salary Reduction Contribution under the Plan.

 

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2.46                            “Separation from Service” means a “separation from” within the meaning of Code section 409A and regulations thereunder.

 

2.47                            “Specified Time” means the time a Participant’s account may be distributed prior to a Separation from Service.  A Participant’s distribution as of a Specified Time shall be null and void upon a Participant’s Separation from Service.

 

2.48                            “Taxable Year” means the Participant’s taxable year.

 

2.49                            “Trust” means the Trust Agreement between the Employer and the Trustees that meets the requirements of a “grantor” trust under Revenue Procedures 92-64 and 92-65 and otherwise meets the requirements under Code section 409A and regulations thereunder.

 

2.50                            “Trustees” means the Trustees named in the Trust and their duly appointed and acting successor Trustee(s) which shall be appointed by the corporation and may consist of one or more persons.

 

2.51                            “Unforeseeable Emergency” means a severe financial hardship to a Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Code section 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.  Whether or not a Participant has an Unforeseeable Emergency shall be determined by the Plan Administrator in accordance with Code section 409A and applicable regulations thereunder.

 

 

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3.4            Change in Employment Status.  During any period in which a Participant remains in the employ or service of the Employer, but ceases to be an Eligible Employee, he or she shall cease to be a Participant in the Plan.

 

 

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ARTICLE 4. — ELECTIONS AND CONTRIBUTIONS

 

4.1            Election to Make Salary Reduction Contributions.

 

(a)           Deferral Agreement.

 

(1)           An Eligible Employee may make an irrevocable Deferral Agreement to make a Salary Reduction Contribution in one (1) percent increments, not to exceed the percentage of Compensation specified in the Adoption Agreement, by the end of the Election Period preceding the Taxable Year in which such Compensation subject to the Salary Reduction Contribution is earned.

 

(2)                                   Unless otherwise specified in the Adoption Agreement, the Deferral Agreement must specify:

 

(i)            The time of distribution; and

 

(ii)           The form of distribution.

 

(3)           A Deferral Agreement shall be made in accordance with procedures established by the Plan Administrator and in accordance with Code section 409A and regulations thereunder.

 

(b)           Timing of Initial Deferral Agreement.  If this Plan is a new Plan, and the Eligible Employee is not a participant in another account balance plan of the Employer within the meaning of Code section 409A and regulations thereunder, the Eligible Employee who is eligible to participate in this Plan as of the Plan’s Effective Date may make an initial Deferral Agreement to make a Salary Reduction Contribution within thirty (30) days after the Plan’s Effective Date.  Each other Eligible Employee, Re-Employed Employee or Re-Employed Previously Eligible Employee who is not a participant in another account balance elective plan of the Employer within the meaning of Code section 409A and regulations thereunder may make an initial Deferral Agreement to make a Salary Reduction Contribution within thirty (30) days after the date the Eligible Employee first becomes eligible to participate in the Plan.  Any such Deferral Agreement must apply only to compensation paid for services performed after the election.  In all other cases, the initial Deferral Agreement to make a Salary Reduction Contribution must be made no later than the last day of the Election Period preceding the Taxable Year in which Compensation subject to the Salary Reduction Contribution is earned.

 

(c)           Frequency of Making a Deferral Agreement after Initial Election.

 

 

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(1)           If the Employer so elects in the Adoption Agreement, a Participant may elect to make a Salary Reduction Contribution on his or her Deferral Agreement each Plan Year (annual deferral election).

 

(2)           If the Employer so elects in the Adoption Agreement, a Participant’s Deferral Agreement shall remain in effect such that the Participant will automatically be deemed to have made a Deferral Agreement each Plan Year so long as the Deferral Agreement becomes irrevocable no later than the last day of the Election Period preceding the Taxable Year in which Compensation subject to the Salary Reduction Contribution is earned (carry-forward deferral election).

 

(i)            The Participant may modify or terminate his or her automatic Deferral Agreement by notifying the Plan Administrator at any time, but any such modification or termination must be made no later than the last day of the Election Period preceding the Taxable Year in which Compensation subject to the Deferral Agreement would have otherwise been earned.

 

(ii)           The modification or termination of a Participant’s automatic Deferral Agreement shall be made in accordance with procedures established by the Plan Administrator and in accordance with Code section 409A and regulations thereunder.

 

(d)           Failure to Make Timely Election.  If an Eligible Employee fails to enter into a timely Deferral Agreement, the Eligible Employee shall be deemed to have elected to make no Salary Reduction Contributions for the applicable Plan Year.

 

(e)           Crediting of Salary Reduction Contributions.  Salary Reduction Contributions made by a Participant under this Section 4.1 shall be credited to the Participant’s Account as soon as practicable after the Compensation subject to the Salary Reduction Contribution would have otherwise been paid to the Participant.  All Salary Reduction Contributions shall be held as an asset of the Employer.

 

(f)            Any Deferral Agreement to make Salary Reduction Contributions under this Section 4.1 shall be at all times subject to the rules set forth under Section 4.4.

 

4.2            Employer Contributions.

 

(a)           Matching Contributions.  If the Employer so elects in the Adoption Agreement, the Employer may make a Matching Contribution as specified in the Adoption Agreement.

 

 

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(b)           Nonelective Employer Contributions.  If the Employer so elects in the Adoption Agreement, the Employer may make Nonelective Employer Contributions under this Plan.  The amount of such Nonelective Employer Contributions shall be equal to the amount specified in the Adoption Agreement.

 

(c)           Election of Time and Form of Distribution for Employer Contributions.

 

(1)           If the Employer so elects in the Adoption Agreement, a Participant may elect on his or her Deferral Agreement to defer Employer Contributions by specifying:

 

(i)            The time of distribution; and

 

(ii)           The form of distribution.

 

(2)           The time and form of distribution must be specified no later than the time the Participant obtains a Legally Binding Right to such Employer Contributions.  After such time, modification to the time or form of distribution may only be made in accordance with Section 4.4.

 

(3)           A Deferral Agreement shall be made in accordance with procedures established by the Plan Administrator and in accordance with Code section 409A and regulations thereunder.

 

(4)           The Participant may modify or terminate the time and/or form of distribution specified under this Section 4.2(c) by notifying the Plan Administrator prior to the Participant obtaining a Legally Binding Right to the Employer Contributions subject to the modification and/or termination. After such time, modification to the time or form of distribution may only be made in accordance with Section 4.4.

 

(5)           The modification or termination of the time and/or form of distribution specified under this Section 4.2(c) shall be made in accordance with procedures established by the Plan Administrator and in accordance with Code section 409A and regulations thereunder.

 

(d)           Failure to Make Timely Election.  If an Eligible Employee fails to set the time and form of distribution prior to the time the Participant obtains a Legally Binding Right to Employer Contributions made on his or her behalf, any election to defer such Employer Contributions after such time shall be subject to the rules set forth under Section 4.4.  Such election to defer Employer Contributions after the date the Participant obtains a Legally Binding Right to such Employer Contributions

 

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shall be made in accordance with procedure