INTERNATIONAL RECTIFIER CORPORATION DEFERRED COMPENSATION PLAN

 

 

TABLE OF CONTENTS

 

		Page
1.1	“Account Balance”	1
1.2	“Annual Deferral Amount”	1
1.3	“Annual Installment Method”	1
1.4	“Base Salary”	2
1.5	“Beneficiary”	2
1.6	“Beneficiary Designation Form”	2
1.7	“Board”	2
1.8	“Bonus”	2
1.9	“Change in Control”	3
1.10	“Change in Control Termination”	4
1.11	“Change in Control Termination Benefit”	4
1.12	“Claimant”	4
1.13	“Code”	4
1.14	“Committee”	4
1.15	“Company”	4
1.16	“Company Contribution Account”	4
1.17	“Company Contribution Amount”	4
1.18	“Death Benefit”	4
1.19	“Deferral Account”	5
1.20	“Director”	5
1.21	“Director Fees”	5
1.22	“Disability” or “Disabled”	5
1.23	“Disability Benefit”	5
1.24	“Election Form”	5
1.26	“Employer(s)”	5
1.27	“ERISA”	6
1.28	“First Plan Year”	6
1.29	“Participant”	6
1.30	“Plan”	6
1.31	“Plan Agreement”	6

 

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TABLE OF CONTENTS

(continued)

 

		Page
1.32	“Plan Year”	6
1.33	“Retirement,” “Retire(s)” or “Retired”	6
1.34	“Retirement Benefit”	7
1.35	“Scheduled Distribution”	7
1.36	“Separation from Service”	7
1.38	“Specified Employee”	8
1.39	“Subsidiary”	8
1.40	“Termination Benefit”	9
1.41	“Trust”	9
1.42	“Unforeseeable Emergency”	9
1.43	“Years of Service”	9

 

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INTERNATIONAL RECTIFIER CORPORATION
DEFERRED COMPENSATION PLAN
Amended and Restated
Effective January 1, 2009

 

Purpose

 

The purpose of this Plan is to provide specified benefits to Directors and a select group of management or highly compensated Employees who contribute materially to the continued growth, development and future business success of International Rectifier Corporation, a Delaware corporation, and its subsidiaries, if any, that sponsor this Plan.  This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.

 

This Plan is intended to comply with all applicable law, including Code Section 409A and related Treasury guidance and Regulations, and shall be operated and interpreted in accordance with this intention.

 

ARTICLE I

DEFINITIONS

 

For the purposes of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:

 

1.1           “Account Balance” shall mean, with respect to a Participant, an entry on the records of the Employer equal to the sum of (i) the Participant’s Deferral Account balance and (ii) the Participant’s Company Contribution Account balance.  The Committee may establish such other subaccounts as are advisable in the administration of this Plan.  The Account Balance, and each other specified account balance, shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to the Participant, or his or her Beneficiary, pursuant to this Plan.

 

If a Participant is both an Employee and a Director and participates in the Plan in each capacity, then separate Account Balances (and separate subaccounts, if applicable) shall be established for such Participant as a device for the measurement and determination of the (a) amounts deferred under the Plan that are attributable to the Participant’s status as an Employee, and (b) amounts deferred under the Plan that are attributable to the Participant’s status as a Director.

 

1.2           “Annual Deferral Amount” as to a Participant shall mean that portion of the Participant’s Base Salary, Bonus and Director Fees that the Participant defers in accordance with Article 3 for any one Plan Year, without regard to whether such amounts are withheld and credited during such Plan Year.  In the event of a Participant’s Retirement, Disability, death or Separation from Service prior to the end of a Plan Year, the Participant’s Annual Deferral Amount for that Plan Year shall be the actual amount withheld prior to such event.

 

1.3           “Annual Installment Method” shall be an annual installment payment over the number of years selected by the Participant in accordance with this Plan, calculated as

 

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follows:  (i) for the first annual installment, the Participant’s vested Account Balance shall be calculated as of the close of business on or around the last business day that occurs prior to the commencement of the Participant’s Plan benefits, and (ii) for remaining annual installments, the Participant’s remaining vested Account Balance (which shall continue to be adjusted pursuant to Section 3.8 over the period that installment payments are made) shall be calculated as of the close of business on or around the business day that occurs on or about the next anniversary of the first annual installment payment to the Participant or on or around the first day of each Plan Year following the Plan Year in which the Participant Retires or experiences a Change in Control Termination, whichever payment timing is selected by the Committee in its sole discretion in the circumstances.  Each annual installment shall be calculated by multiplying the applicable balance by a fraction, the numerator of which is one and the denominator of which is the remaining number of annual payments due the Participant.  By way of example, if the Participant elects a ten (10) year Annual Installment Method for the Retirement Benefit, the first payment shall be 1/10 of the vested Account Balance, calculated as described in this definition.  The following year, the payment shall be 1/9 of the vested Account Balance, calculated as described in this definition.

 

1.4           “Base Salary” with respect to a Participant shall mean the Participant’s annual cash compensation relating to services performed for an Employer during the applicable Plan Year, excluding distributions from nonqualified deferred compensation plans, bonuses (including, without limitation, Bonuses), commissions, overtime, fringe benefits, stock options, stock appreciation rights, restricted stock, stock units, performance shares, performance units, other incentive payments (whether or not related to stock), non-monetary awards, relocation expenses, director fees (including, without limitation, Director Fees) and other fees, severance pay, and automobile and other allowances paid to a Participant.  Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or nonqualified plans of any Employer and shall be calculated to include amounts not otherwise included in the Participant’s gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by any Employer; provided, however, that all such amounts will be included in compensation only to the extent that, had there been no such plan, the amount would have been payable in cash to the Employee and otherwise would have been included in the Participant’s Base Salary for the relevant year.

 

1.5           “Beneficiary” as to a Participant shall mean one or more persons, trusts, estates or other entities that are entitled, in accordance with Article 10, to receive the Participant’s benefits under this Plan upon the death of the Participant.

 

1.6           “Beneficiary Designation Form” shall mean the form established from time to time by the Committee that a Participant must complete, sign and return to the Committee in order to designate one or more Beneficiaries in accordance with Article 10.

 

1.7           “Board” shall mean the board of directors of the Company.

 

1.8           “Bonus” with respect to a Participant shall mean any cash compensation, in addition to Base Salary, earned by the Participant for services rendered for an Employer during the applicable Plan Year, payable to the Participant under any Employer’s annual, semi-annual or quarterly bonus plans and/or short or long-term incentive plans.

 

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1.9                                  “Change in Control” shall mean the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of a corporation, as determined in accordance with this Section.

 

In order for an event described below to constitute a Change in Control with respect to a Participant, except as otherwise provided in part (b)(ii) of this Section, the applicable event must relate to the corporation for which the Participant is providing services, the corporation that is liable for payment of the Participant’s Account Balance (or all corporations liable for payment if more than one), as identified by the Committee in accordance with Treas. Reg. §1.409A-3(i)(5)(ii)(A)(2), or such other corporation identified by the Committee in accordance with Treas. Reg. §1.409A-3(i)(5)(ii)(A)(3).

 

In determining whether an event shall be considered a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of a corporation, the following provisions shall apply:

 

(a)                                   A “change in the ownership” of the applicable corporation shall occur on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of such corporation that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of such corporation, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(v).  If a person or group is considered either to own more than 50% of the total fair market value or total voting power of the stock of such corporation, or to have effective control of such corporation within the meaning of part (b) of this Section, and such person or group acquires additional stock of such corporation, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the ownership” of such corporation.

 

(b)                                  A “change in the effective control” of the applicable corporation shall occur on either of the following dates:

 

(i)            The date on which any one person, or more than one person 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 stock of such corporation possessing 30% or more of the total voting power of the stock of such corporation, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vi).  If a person or group is considered to possess 30% or more of the total voting power of the stock of a corporation, and such person or group acquires additional stock of such corporation, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the effective control” of such corporation; or

 

(ii)           The date on which a majority of the members of the applicable 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 such corporation’s board of directors before the date of the appointment or election, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vi).  In determining whether the event described in the preceding sentence has occurred, the applicable corporation to

 

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which the event must relate shall only include a corporation identified in accordance with Treas. Reg. §1.409A-3(i)(5)(ii) for which no other corporation is a majority shareholder.

 

(c)           A “change in the ownership of a substantial portion of the assets” of the applicable corporation shall occur on the date on which any one person, or more than one person 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 corporation that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the corporation immediately before such acquisition or acquisitions, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii).  A transfer of assets shall not be treated as a “change in the ownership of a substantial portion of the assets” when such transfer is made to an entity that is controlled by the shareholders of the transferor corporation, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii)(B).

 

1.10         “Change in Control Termination” shall mean the Participant’s Separation from Service with the Company and all other Employers for any reason, other than a termination due to the Participant’s death or Disability, that occurs upon or during the two (2) year period following the occurrence of a Change in Control.  If a Participant is both an Employee and a Director, a Change in Control Termination shall not occur unless and until the Participant is no longer an Employee and is no longer a Director.

 

1.11         “Change in Control Termination Benefit” shall mean the benefit set forth in Article 5.

 

1.12         “Claimant” shall have the meaning set forth in Section 15.1.

 

1.13         “Code” shall mean the United States Internal Revenue Code of 1986, as it may be amended from time to time.

 

1.14         “Committee” shall mean the committee described in Article 13.

 

1.15         “Company” shall mean International Rectifier Corporation, a Delaware corporation, and any successor to all or substantially all of the Company’s assets or business.

 

1.16         “Company Contribution Account” as to a Participant shall mean (i) the sum of the Participant’s Company Contribution Amounts, plus (ii) amounts credited (net of amounts debited, which may result in an aggregate negative number) to the Participant’s Company Contribution Account in accordance with this Plan, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant’s Company Contribution Account.

 

1.17         “Company Contribution Amount” as to a Participant shall mean, for any one Plan Year, the amount determined in accordance with Section 3.4 with respect to that Participant.

 

1.18         “Death Benefit” shall mean the benefit set forth in Article 9.

 

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1.19                            “Deferral Account” as to a Participant shall mean (i) the sum of all of the Participant’s Annual Deferral Amounts, plus (ii) amounts credited (net of amounts debited, which may result in an aggregate negative number) to the Participant’s Deferral Account in accordance with this Plan, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to his or her Deferral Account.

 

1.20                            “Director” shall mean any member of the Board.

 

1.21                            “Director Fees” with respect to a Director shall mean the annual cash fees paid to the Director from the Company, including cash retainer fees and cash meetings fees, as compensation for serving on the Board for the applicable Plan Year.

 

1.22                            “Disability” or “Disabled” shall mean that a Participant is either (a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) by reason of any medically determinable physical or mental impairment that 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.  For purposes of this Plan, a Participant shall be deemed Disabled if determined to be totally disabled by the Social Security Administration.  A Participant shall also be deemed Disabled if determined to be disabled in accordance with the applicable disability insurance program of such Participant’s employer, provided that the definition of “disability” applied under such disability insurance program complies with the requirements of this Section.

 

1.23                            “Disability Benefit” shall mean the benefit set forth in Article 8.

 

1.24                            “Election Form” shall mean the form, which may be in electronic format, established from time to time by the Committee that a Participant must complete, sign and return to the Committee in order to make an election under this Plan.

 

1.25                            “Employee” shall mean a person who is an employee of any Employer.

 

1.26                            “Employer(s)” shall mean

 

(a)                                   Except as otherwise provided in part (b) of this Section, the Company and/or any of its Subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Board to participate in this Plan and have adopted this Plan as a sponsor (or, as the context may require, the Company or other Employer that actually employs the Participant in question).

 

(b)                                  For the purpose of determining whether a Participant has experienced a Separation from Service, the term “Employer” shall mean:

 

(i)            The entity for which the Participant performs services and with respect to which the legally binding right to compensation deferred or contributed under this Plan arises; and

 

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(ii)           All other entities with which the entity described above would be aggregated and treated as a single employer under Code Section 414(b) (controlled group of corporations) and Code Section 414(c) (a group of trades or businesses, whether or not incorporated, under common control), as applicable.

 

1.27                            “ERISA” shall mean the United States Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

 

1.28                            “First Plan Year” shall mean the period beginning July 5, 2004 and ending December 31, 2004.

 

1.29                            “Participant” shall mean any Employee or Director (i) in the case of an Employee, who is selected to participate in this Plan, (ii) who elects to participate in this Plan, and (iii) who signs, completes and submits to the Company an executed Plan Agreement, Election Form and Beneficiary Designation Form, which are accepted by the Committee.  (The term “Participant” includes, to the extent required by the context, any current or former Employee or Director with a remaining Account Balance under this Plan, regardless of whether he or she is eligible to defer additional compensation under this Plan.)

 

1.30                            “Plan” shall mean the International Rectifier Corporation Deferred Compensation Plan, which shall be evidenced by this instrument and by each Plan Agreement, as they may be amended from time to time.

 

1.31                            “Plan Agreement” shall mean a written agreement, as it may be amended from time to time, which is entered into by and between an Employer and a Participant.  Each Plan Agreement executed by a Participant and the Participant’s Employer shall provide for the entire benefit to which such Participant is entitled under this Plan; should there be more than one Plan Agreement, the Plan Agreement bearing the latest date of acceptance by the Employer shall supersede all previous Plan Agreements in their entirety and shall govern such entitlement.  The terms of any Plan Agreement may be different for any Participant, and any Plan Agreement may provide additional benefits not set forth in this Plan or limit the benefits otherwise provided under this Plan; provided, however, that any such additional benefits or benefit limitations must be agreed to by both the Employer and the Participant.

 

1.32                            “Plan Year” shall, except for the First Plan Year, mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.

 

1.33                            “Retirement,” “Retire(s)” or “Retired” shall mean, with respect to an Employee, a Separation from Service for any reason other than the Participant’s death or Disability, or a Change in Control Termination, that occurs on or after the date on which the sum of the Employee’s age and full Years of Service equals at least sixty (60); and shall mean with respect to a Director, a Separation from Service.  If a Participant is both an Employee and a Director and participates in the Plan in each capacity, (a) the determination of whether the Participant qualifies for Retirement as an Employee shall be made when the Participant experiences a Separation from Service as an Employee and such determination shall only apply to the applicable Account Balance established in accordance with Section 1.1 for amounts deferred under the Plan as an Employee, and (b) the determination of whether the Participant

 

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qualifies for Retirement as a Director shall be made at the time the Participant experiences a Separation from Service as a Director and such determination shall only apply to the applicable Account Balance established in accordance with Section 1.1 for amounts deferred under the Plan as a Director.

 

1.34         “Retirement Benefit” shall mean the benefit set forth in Article 6.

 

1.35         “Scheduled Distribution” shall mean the distribution set forth in Section 4.1.

 

1.36         “Separation from Service” shall mean a termination of services provided by a Participant to his or her Employer, whether voluntarily or involuntarily, other than by reason of death or Disability, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(h).  In determining whether a Participant has experienced a Separation from Service, the following provisions shall apply:

 

(a)           For a Participant who provides services to an Employer as an Employee, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur when such Participant has experienced a termination of employment with such Employer.  A Participant shall be considered to have experienced a termination of employment when the facts and circumstances indicate that the Participant and his or her Employer reasonably anticipate that either (i) no further services will be performed for the Employer after a certain date, or (ii) that the level of bona fide services the Participant will perform for the Employer after such date (whether as an Employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by such Participant (whether as an Employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Employer if the Participant has been providing services to the Employer less than 36 months).

 

If a Participant is on military leave, sick leave, or other bona fide leave of absence, the employment relationship between the Participant and the Employer shall be treated as continuing intact, provided that the period of such leave does not exceed 6 months, or if longer, so long as the Participant retains a right to reemployment with the Employer under an applicable statute or by contract.  If the period of a military leave, sick leave, or other bona fide leave of absence exceeds 6 months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship shall be considered to be terminated for purposes of this Plan as of the first day immediately following the end of such 6-month period.  In applying the provisions of this paragraph, a leave of absence shall be considered a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer.

 

(b)           For a Participant who provides services to an Employer as an independent contractor, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur upon the expiration of the contract (or in the case of more than one contract, all contracts) under which services are performed for such Employer, provided that the expiration of such contract(s) is determined by the Committee to constitute a good-faith and complete termination of the contractual relationship between the Participant and such Employer.

 

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1.40         “Termination Benefit” shall mean the benefit set forth in Article 7.

 

1.41         “Trust” shall mean one or more trusts established by the Company in accordance with Article 16.

 

1.42         “Unforeseeable Emergency” shall mean a severe financial hardship of the Participant resulting from (a) an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary or the Participant’s dependent (as defined in Code Section 152 without regard to paragraphs (b)(1), (b)(2) and (d)(1)(b) thereof), (b) a loss of the Participant’s property due to casualty, or (c) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined by the Committee based on the relevant facts and circumstances.

 

1.43         “Years of Service” shall mean the total number of whole years in which a Participant has been employed by one or more Employers.  A Participant’s whole years of employment for this purpose shall be determined by dividing (i) the total number of calendar days that the Participant was employed by one or more Employers (with employment by multiple Employers on any single calendar day counted only as one day of employment), by (ii) 365; with any fractional year of service rounded down to the next whole number.  If a Participant incurs a severance from employment and is later re-employed, all days of employment (including pre- and post-break in employment service) with one or more Employers will be aggregated for this purpose.

 

ARTICLE II

SELECTION, ENROLLMENT, ELIGIBILITY

 

2.1           Selection by Committee .   Participation in this Plan shall be limited to Directors and, as determined by the Committee in its sole discretion, a select group of management and highly compensated Employees.  From that group of eligible Employees, the Committee shall select, in its sole discretion, those Employees who may actually participate in this Plan.  Unless otherwise provided by the Board, each Director may participate in this Plan.

 

2.2           Enrollment and Eligibility Requirements; Commencement of Participation .

 

(a)           As a condition to participation, each Director or selected Employee who is eligible to participate in this Plan shall complete, execute and return to the Committee a Plan Agreement, an Election Form and a Beneficiary Designation Form.  In addition, the Committee shall establish from time to time such other enrollment requirements as it determines are advisable in its sole discretion.  Except as provided in the next sentence, with respect to any Plan Year after the First Plan Year each Director or selected Employee must complete these requirements before the first day of that Plan Year in order to participate in this Plan for that Plan Year; provided that the Committee may, in its sole discretion, establish other deadlines with respect to Election Forms to defer one or more Bonuses payable to any Participant or class of Participants.  A person who first becomes a Director or is otherwise first selected as an Employee eligible to participate in this Plan during a Plan Year, as determined in accordance with Treas. Reg. §1.409A-2(a)(7)(ii) and the “plan aggregation” rules provided in Treas. Reg.

 

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§1.409A-1(c)(2), must complete these requirements within thirty (30) days after he or she first becomes a Director or is first selected to participate in this Plan, as applicable, in order to participate in this Plan for that Plan Year, and, in such event, such person’s participation in this Plan shall not commence earlier than the date determined by the Committee pursuant to Section 2.2(b) and such person shall not be permitted to defer under this Plan any portion of his or her Base Salary, Bonus and/or Director Fees that are paid with respect to services performed prior to his or her participation commencement date.  If a deferral election made in accordance with this Section 2.2(a) relates to compensation earned based upon a specified performance period, the amount eligible for deferral shall be equal to (i) the total amount of compensation for the performance period, multiplied by (ii) a fraction, the numerator of which is the number of days remaining in the service period after the Participant’s deferral election is made, and the denominator of which is the total number of days in the performance period.

 

(b)           Each Employee or Director who is eligible to participate in this Plan shall commence participation in this Plan on the date that the Committee determines, in its sole discretion, that the Employee or Director has met all enrollment requirements set forth in this Plan and required by the Committee, including returning all required documents to the Committee within the specified time period.  The Committee shall process such Participant’s deferral election as soon as administratively practicable after such deferral election is submitted to and accepted by the Committee.  After completing the participation requirements described in this Section 2.2, a Participant shall not, unless otherwise expressly required by the Committee, be required to again complete the enrollment process described in this Section 2.2 in order to participate in this Plan in any subsequent Plan Year; provided that the Committee may require Participants to complete new deferral elections each year and may require a Participant who ceases to make deferrals to this Plan for any period of time to re-enroll pursuant to this Section 2.2.

 

(c)           If an Employee or a Director fails to meet all requirements contained in this Section 2.1 within the period required, that Employee or Director shall not be eligible to participate in this Plan during such Plan Year.

 

2.3           Termination of a Participant’s Eligibility .   If the Committee determines in its sole discretion that an Employee Participant no longer qualifies as a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, or that the inclusion of Directors in this Plan could violate any applicable law or jeopardize the status of this Plan as a plan intended to be “unfunded” and “maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1), the Committee shall have the right, in its sole discretion, to prevent the Participant from making future deferral elections for future Plan Years.  In the event that a Participant is no longer eligible to defer compensation under this Plan, the Participant’s Account Balance shall nevertheless continue to be adjusted pursuant to Section 3.8 until the Participant’s Plan benefits are paid in accordance with the terms of this Plan and, to the maximum extent permitted by law, the Participant shall continue to have the ability to make Measurement Fund elections pursuant to Section 3.8 until such payment occurs.

 

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ARTICLE III

DEFERRAL COMMITMENTS, COMPANY CONTRIBUTION AMOUNTS, VESTING, CREDITING, TAXES

 

3.1           Minimum Deferrals .

 

(a)           Annual Deferral Amount .  For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Salary, Bonus and/or Director Fees, as applicable, that at the time of the election is expected to result in the following minimum amounts for each deferral elected:

 

Deferral		Minimum Amount
Base Salary and/or Bonus		$5,000 in the aggregate
Director Fees		$0

 

If the Committee determines, in its sole discretion, prior to the beginning of a Plan Year that a Participant has made an election that reasonably will result in a deferral for less than the stated minimum amounts, or if no election is made, the amount deferred shall be zero.

 

(b)           Short Plan Year .   Notwithstanding the foregoing, if a Participant first becomes a Participant after the first day of a Plan Year, the minimum Annual Deferral Amount shall be an amount equal to the minimum set forth above, multiplied by a fraction, the numerator of which is the number of complete months remaining in the Plan Year and the denominator of which is 12.

 

3.2           Maximum Deferral .

 

(a)           Annual Deferral Amount .  Subject to Sections 3.2(b) and (c), for each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Salary, Bonus and/or Director Fees up to the following maximum percentages for each deferral elected:

 

Deferral		Maximum Percentage
Base Salary		75%
Bonus		90%
Director Fees		90%

 

(b)           Short Plan Year .   If a Participant first becomes a Participant after the first day of a Plan Year, the maximum Annual Deferral Amount shall be limited to the amount of compensation not yet earned by the Participant as of the date the Participant submits a Plan Agreement and Election Form to the Committee for acceptance.

 

(c)           Other Maximum Limit .  In no event shall the maximum amount of Base Salary that a Participant may defer to this Plan in any one year exceed (i) the Participant’s total Base Salary, less (ii) the sum of the maximum amount that the Participant could elect to defer to the plan described in Section 401(k) of the Code maintained by the Company or the Participant’s Employer in which the Participant is eligible to participate (if any) for that year plus the amount(s) that the Participant may elect to contribute to any qualified welfare benefit plan of the Company or another Employer for that year for medical, healthcare, insurance, or similar

 

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benefits coverage.  The minimum deferral limits of Section 3.1 shall not apply with respect to a Participant for a Plan Year if the amount determined pursuant to the preceding sentence is less than the applicable minimum amount determined in accordance with Section 3.1.

 

3.3           Election to Defer; Effect of Election Form .

 

(a)           First Plan Year .  In connection with a Participant’s commencement of participation in this Plan, the Participant shall make an irrevocable deferral election for the Plan Year in which the Participant commences participation in this Plan, along with such other elections as the Committee deems necessary or desirable under this Plan.  For these elections to be valid, the Election Form must be completed and signed by the Participant, timely delivered to the Committee (in accordance with Section 2.2) and accepted by the Committee.

 

(b)           Subsequent Plan Years .   For each succeeding Plan Year, an irrevocable deferral election for that Plan Year, and such other elections as the Committee deems necessary or desirable under this Plan, shall be made by timely delivering a new Election Form to the Committee, in accordance with its rules and procedures, before the end of the Plan Year preceding the Plan Year for which the election is made.  If no such Election Form is timely delivered for a Plan Year, the Annual Deferral Amount shall be zero for that Plan Year.

 

(c)           Cancellation of Deferral Elections .  Notwithstanding anything else contained herein to the contrary, if a Participant receives a hardship distribution under any plan described in Section 401(k) of the Code maintained by the Company or the Participant’s Employer or any of their respective affiliates, the Participant may not make any deferrals to this Plan for the remainder of the Plan Year.

 

3.4           Withholding and Crediting of Annual Deferral Amounts .   For each Plan Year, the Base Salary portion of the Participant’s Annual Deferral Amount for that Plan Year shall be withheld from each regularly scheduled Base Salary payroll payment for the Participant in equal amounts, as adjusted from time to time for increases and decreases in the Participant’s Base Salary.  The Bonus and/or Director Fees portion of the Participant’s Annual Deferral Amount for that Plan Year shall be withheld at the time the Participant’s Bonus and/or Director Fees are or otherwise would be paid to the Participant with respect to service in that Plan Year, whether or not this occurs during the Plan Year itself.  Annual Deferral Amounts shall be credited to a Participant’s Deferral Account at the time such amounts would otherwise have been paid to the Participant.  The Committee may, with respect to the First Plan Year and any one or more Plan Years thereafter, establish and announce prior to that Plan Year such other rules regarding the Base Salary, Bonus and/or Director Fees to be covered by deferral elections made with respect to that Plan Year as the Committee may determine to be advisable in its sole discretion.

 

3.5           Company Contribution Amount .

 

(a)           For each Plan Year, an Employer may be required to credit amounts to a Participant’s Company Contribution Account in accordance with employment or other agreements entered into between the Participant and the Employer.  Such amounts shall be credited on the date or dates prescribed by such agreements.

 

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(b)           For each Plan Year, an Employer, in its sole discretion, may, but is not required to, credit any amount it desires to any Participant’s Company Contribution Account under this Plan.  The Company Contribution Amount described in this Section 3.4(a), if any, shall be credited on a date or dates to be determined by the Employer making the contribution and, in the absence of such a determination, the date or dates determined by the Committee in its sole discretion.

 

(c)           Any amount credited to a Participant’s Company Contribution Account pursuant to Sections 3.5(a) and/or (b) with respect to a Plan Year shall be the Participant’s Company Contribution Amount for that Plan Year.  The amount so credited to a Participant may be smaller or larger than the amount credited to any other Participant, and the amount credited to any Participant for a Plan Year may be zero, even though one or more other Participants receive a Company Contribution Amount for that Plan Year.

 

3.6           Crediting of Amounts after Benefit Distribution .   Notwithstanding any provision in this Plan to the contrary, should the complete distribution of a Participant’s vested Account Balance occur prior to the date on which any portion of (i) the Annual Deferral Amount that a Participant has elected to defer in accordance with Section 3.3, or (ii) the Company Contribution Amount, would otherwise be credited to the Participant’s Account Balance, such amounts shall not be credited to the Participant’s Account Balance, but shall promptly be paid to the Participant in a manner determined by the Committee in its reasonable discretion.

 

3.7           Vesting .

 

(a)           A Par