Exhibit 99.2
OCEANFIRST BANK
NEW DIRECTOR DEFERRED
COMPENSATION MASTER AGREEMENT
THIS
Agreement is adopted effective as of the
1 st day of January, 2005, by
OceanFirst Bank, a federally-chartered savings bank, hereinafter
referred to as the “Plan Sponsor,” as
follows:
RECITALS
WHEREAS , the Plan Sponsor established for directors a
deferred compensation plan that was documented in the
“Director Deferred Compensation Master Agreement” (the
“Plan”) effective as of August 1, 1995, to provide
additional retirement benefits and income tax deferral
opportunities for a select group of management and/or highly
compensated employees of the Plan Sponsor and its Affiliates
(collectively, the “Company”). The Plan is intended to
be a “top hat plan,” exempt from certain requirements
of ERISA, pursuant to sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA; and
WHEREAS , the Plan Sponsor intends that the Plan shall
at all times be administered and interpreted in such a manner as to
constitute an unfunded nonqualified deferred compensation plan for
tax purposes and for purposes of Title I of ERISA. The Plan is not
intended to qualify for favorable tax treatment pursuant to
Section 401(a) of the Code or any successor section or
statute.
WHEREAS , the Plan Sponsor intends to amend and restate
the Plan, effective as of January 1, 2005, primarily to
conform the Plan to the requirements of Internal Revenue Code
Section 409A, enacted as part of the American Jobs Creation
Act of 2004.
NOW, THEREFORE
, the Plan Sponsor hereby restates
the Plan to read as follows effective as of January 1,
2005.
ARTICLE 1
Definitions
For the purpose of this Plan, unless
otherwise clearly apparent from the context, the following phrases
or terms shall have the following indicated meanings:
1.1 “Account or
Accounts” shall
mean a book account reflecting amounts credited to a
Participant’s Deferral Account as adjusted for earnings and
for distributions or withdrawals made to or by the Participant or
his Beneficiary.
1.2
“Affiliate” shall mean any business entity other than the
Plan Sponsor that is a member of a controlled group of
corporations, within the meaning of Section 414(b) of the
Code, of
which the Plan Sponsor is a member; all other
trade or business (whether or not incorporated) under common
control, within the meaning of Section 414(c) of the Code,
with the Plan Sponsor; any service organization other than the Plan
Sponsor that is a member of an Affiliated service group, within the
meaning of Section 414(m) of the Code, of which the Plan
Sponsor is a member; and any other organization that is required to
be aggregated with the Plan Sponsor under Section 414(o) of
the Code.
1.3 “Bank”
means OceanFirst Bank and any
successor thereto.
1.4
“Beneficiary” shall mean one or more persons, trusts, estates
or other entities that are entitled to receive benefits under this
Plan upon the death of the Participant.
1.5 “Benefit
Age” shall mean the
birthday on which a Participant becomes eligible to receive
benefits under the Plan. Such birthday shall be designated in the
Participant’s Joinder Agreement.
1.6 “Change of
Control” shall mean
the occurrence of either Subparagraph (a), (b), or (c), below, or
any combination of said event(s) as described within the meaning of
Treasury regulations 1.409A-3(g)(5):
(a) Change of Ownership of the Plan
Sponsor. A change of ownership of the Plan Sponsor occurs on the
date that any one person or persons acting as a Group (as that term
is defined in Subparagraph (2)) acquires ownership of the
stock of the parent holding company of the Plan Sponsor,
OceanFirst Financial Corp ., that, together with stock held
by such person or Group, constitutes more than fifty percent
(50%) of the total fair market value or total voting power of
the stock of OceanFirst Financial Corp . or of any
corporation that owns at least fifty percent (50%) of the
total fair market value and total voting power of OceanFirst
Financial Corp.
(i) However, if any person or Group
is considered to own more than fifty percent (50%) of the
total fair market value or total voting power of the stock of
OceanFirst Financial Corp. , the acquisition of additional
stock by the same person or Group of persons is not considered to
cause a Change of Control. In addition, the term Change of Control
shall apply if there is an increase in the percentage of stock
owned by any one person or persons, acting as a Group, as a result
of a transaction in which the Plan Sponsor acquires its stock in
exchange for property. The rule set forth in the immediately
preceding sentence applies only when there is a transfer of stock
of OceanFirst Financial Corp. (or issuance of stock of
OceanFirst Financial Corp. ) and the stock of OceanFirst
Financial Corp. remains outstanding after the
transaction.
(ii) Persons will not be considered
to be acting as a Group solely because they purchase or own stock
of OceanFirst Financial Corp. at the same time or as a
result of the same public offering. However, persons will be
considered to be acting as a Group if they are shareholders of
OceanFirst Financial Corp. and it enters into a merger,
consolidation, purchase or acquisition of stock or similar business
transaction with another corporation. If a person owns stock in
OceanFirst Financial Corp. and another
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corporation is involved in a
business transaction, then the shareholder of OceanFirst
Financial Corp. is deemed to be acting as a Group with other
shareholders in OceanFirst Financial Corp. prior to the
transaction.
(b) Effective Change of Control. If
OceanFirst Financial Corp. does not qualify under
Subparagraph (a), above, then it may still meet the definition of
Change of Control on the date that either:
(i) Any one person, or more than one
person, acting as a Group acquires (or has acquired during the
twelve (12) month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of
OceanFirst Financial Corp. possessing thirty-five percent
(35%) or more of the total voting power of the stock of
OceanFirst Financial Corp. ; or
(ii) A majority of the numbers of
OceanFirst Financial Corp. Board of Directors are replaced
during any twelve (12) month period by directors whose
appointment or election is not endorsed by a majority of the
members of OceanFirst Financial Corp. Board of Directors
prior to the date of the appointment or election.
(c) Change in Ownership of
OceanFirst Financial Corp’s Assets. A change in the
ownership of a substantial portion of OceanFirst Financial
Corp’s assets occurs on the date that any person, or more
than one person acting as a group, acquires or has acquired during
the twelve (12) month period ending on the date of the most
recent acquisition by such person or person’s assets from
OceanFirst Financial Corp. that have a total fair market
value equal to more than forty percent (40%) of the total
gross fair market value of all of the assets of OceanFirst
Financial Corp. immediately prior to such acquisition or
acquisitions. For this purpose, gross fair market value means the
value of the assets of OceanFirst Financial Corp. , or the
value of the assets being disposed of, determined without regard to
any liabilities associated with such assets. There will be no
Change of Control under this Subparagraph (c) when there is a
transfer to an entity that is controlled by the shareholders of
OceanFirst Financial Corp. immediately after the transfer. A
transfer of assets by OceanFirst Financial Corp. is not
treated as a change in ownership of such assets if the assets are
transferred to:
(i) A shareholder of OceanFirst
Financial Corp. (immediately before the asset transfer) in
exchange for or with respect to its stock;
(ii) An entity, fifty percent
(50%) or more of the total value or voting power of which is
owned directly or indirectly by OceanFirst Financial Corp.
;
(iii) A person, or more than one
person, acting as a Group, that owns, directly or indirectly, fifty
percent (50%) or more of the total value or voting power of
all the outstanding stock of OceanFirst Financial Corp. ;
or
(iv) An entity, at least fifty
percent (50%) of the total value or voting power of which is
owned, directly or indirectly, by a person described in
Subparagraph (c), above.
(v) A complete liquidation or
dissolution of OceanFirst Financial Corp. ; or
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(vi) The sale of other disposition
of at least seventy-five percent (75%) in net fair market
value of all or substantially all of the assets of OceanFirst
Financial Corp. to any person or persons, not in the normal
course of business.
Notwithstanding the above, no event
shall constitute a Change of Control unless it also constitutes a
“change of control event” within the meaning of
Section 409A of the Code and the regulations
thereunder.
1.7 “Code”
shall mean the Internal Revenue Code
of 1986, and the Treasury regulations or any other authoritative
guidance issued thereunder, as may be amended from time to
time.
1.8
“Claimant” shall mean a person who believes that he or she
is being denied a benefit to which he or she is entitled
hereunder.
1.9 “Declared
Rate” shall have
the meaning set forth in Section 4.3 of this Plan.
1.10 “Deferral
Account” shall
mean: (i) the sum of the Participant’s Deferral
Amount(s) that may be allocated in whole or in part by a
Participant pursuant to his or her initial deferral election to the
Deferral Account for any one Plan Year, plus (ii) amounts
credited (net of amounts debited, which may result in an aggregate
negative number), less (iii) all distributions made from the
Deferral Account. At the time of the Participant’s initial
deferral election, for any one Plan Year, the Participant shall
specify in his or her Joinder Agreement the form in which payment
shall be made to the Participant or his or her Beneficiaries.
Distributions from the Deferral Account will begin as of the date
or event specified in the Participant’s Joinder
Agreement.
1.11 “Deferral
Amount” shall mean
that portion of a Participant’s Director Fees that a
Participant elects to defer for any one Plan Year as specified in
the Participant’s Joinder Agreement.
1.12 “Deferral
Period” shall mean
the period of time designated in the Participant’s Joinder
Agreement during which the Participant shall be entitled to defer
current Director Fees. The Deferral Period shall commence on the
date designated in the Participant’s Joinder
Agreement.
1.13
“Director” shall mean any non-employee member of the Board
of Directors of the Plan Sponsor [and/or the Company]
.
1.14 “Director
Fees” shall mean
the fees, committee fees, and/or retainers paid in cash and
received from the Bank [and/or the Company] .
1.15
“Disability.” A disability shall occur if, upon a
determination by a duly licensed physician selected by the Plan
Sponsor, the Participant is 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 twelve
(12) months and the Participant is “disabled”
within the meaning of Treasury Regulation
Section 1.409A-3(i)(4).
1.16 Effective
Date” is
January 1, 2005.
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1.17 “Entry Date”
shall mean with respect to an
individual, the first day of the calendar quarter following the
date on which the individual first becomes eligible to participate
in the Plan.
1.18
“ERISA” shall
mean the Employee Retirement Income Security Act of 1974, as it may
be amended from time to time.
1.19 “Joinder
Agreement” shall
mean the document executed by the Participant and Plan
Administrator whereby the Participant agrees to participate in the
Plan.
1.20
“Participant” shall mean any Director of the Plan Sponsor
[and/or the Company] : (i) who is selected to
participate in this Plan, (ii) who elects to participate in
this Plan by signing a Joinder Agreement, and (iii) who
completes and signs certain election form(s) required by the Plan
Administrator.
1.21 “Payout
Period” means the
time frame during which benefits under this Plan are
payable.
1.22 “Permissible
Payments” shall
mean one or more of the following six (6) events upon which
payment will be made to a Participant or their Beneficiary under
the terms of the Plan: (i) the Participant’s Separation
from Service, (ii) the Participant’s death,
(iii) the Participant’s Disability, (iv) a change
in ownership or effective control of the Plan Sponsor, or in the
ownership of a substantial portion of the assets of the Plan
Sponsor, (v) upon the occurrence of an Unforeseeable
Emergency, or (vi) a time (or pursuant to a fixed schedule)
specified under the Plan or the Joinder Agreement (in accordance
with the terms of the Plan), within the meaning of Treasury
regulation 1.409A-3(i)(1).
1.23 “Plan
Administrator” shall be the Board of Directors or their
designee. A Participant in the Plan should not serve as a singular
Plan Administrator. If a Participant is part of a group of
participants designated as a committee or Plan Administrator, then
the Participant may not participate in any activity or decision
relating solely to his or her individual benefits under the Plan;
matters solely affecting the applicable Participant will be
resolved by the remaining Plan Administrator members or by the
Board.
1.24
“Plan” shall
mean this OceanFirst Bank New Director Deferred Compensation Master
Agreement evidenced by this instrument (formerly known as the
“Director Deferred Compensation Master Agreement”), as
amended from time to time.
1.25 “Plan
Year” shall mean
the twelve (12) month period beginning January 1 of each
calendar year and continuing through December 31 of such
calendar year.
1.26 “ Predecessor Plan” shall
mean the Director Deferred Compensation Master Agreement as in
effect on October 3, 2004, a copy of which is attached to this
restated Plan as Appendix 1. The Predecessor Plan governs all
amounts considered by law to be deferred before January 1,
2005, and not subject to Code Section 409A. The Predecessor
Plan set forth in Appendix 1 shall not be materially modified,
within the meaning of Code Section 409A and the guidance
thereunder, after October 3, 2004.
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1.27 “Separation from
Service” A
Participant separates from service with the Plan Sponsor if the
Participant dies, or otherwise has a “separation from
service” with the Plan Sponsor or an Affiliate, within the
meaning of Section 409A(a)(2)(A)(i) of the Code.
1.28 “Specified
Employee” shall
mean a Participant who the Plan Sponsor reasonably believes to be a
“specified employee” within the meaning of
Section 409A of the Code. Notwithstanding other provisions of
this Plan to the contrary, distributions hereunder to a Specified
Employee on account of a Separation from Service may not be made
before the date which is six (6) months after the date of
Separation from Service (or, if earlier, the date of death of the
Specified Employee). If payments to a Specified Employee are to be
made in installments, each installment payment to which a Specified
Employee is entitled upon a Separation from Service will be delayed
by six (6) months. A Participant meeting the definition of
Specified Employee on December 31 or during a 12 month period
ending December 31 will be treated as a Specified Employee for
the 12 month period commencing the following
April 1.
1.29
“Trust” shall
mean one or more trusts that may be established in accordance with
the terms of the Plan.
1.30 “Unforeseeable
Emergency” shall
mean a severe financial hardship of the Participant or Beneficiary
resulting from an illness or accident of the Participant or
Beneficiary, the Participant or Beneficiary’s spouse, or the
Participant or Beneficiary’s dependent(s) (as defined in
Section 152(a) of the Code) or loss of the Participant or
Beneficiary’s property due to casualty or other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant or Beneficiary that
constitutes an “unforeseeable emergency” within the
meaning of Section 409A of the Code and Treasury Regulation
1.409A-3(g)(3).
ARTICLE 2
Eligibility
2.1 Eligibility.
Eligibility to participate in this
Plan is limited to Directors.
2.2 Enrollment
Requirements. As a
condition to participation in this Plan, each director shall
complete, execute, and return to the Plan Administrator a Joinder
Agreement within the time specified by the Plan Administrator. In
addition, the Plan Administrator shall establish such other
enrollment requirements as it determines necessary or advisable.
All elections to defer Director Fees with respect to a Plan Year
shall be irrevocable, except as permitted under Section 3.2(c)
below (Unforeseeable Emergency).
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ARTICLE 3
Contributions and
Credits
3.1 Deferrals.
For each Plan Year, a Participant
may elect to defer Directors Fees, in an amount equal to the lesser
of (i) a fixed dollar amount or (ii) the actual amount of
fees the Participant earned during any given quarter. The amount of
Participant’s projected Deferral Amount and the Deferral
Period shall be set forth in the Participant’s Joinder
Agreement and shall continue in effect pursuant to the terms of
this Plan until the Participant amends his or her Joinder Agreement
by filing with the Plan Administrator a Notice of Adjustment of
Deferral Amount. A copy of a Notice of Adjustment of Deferral
Amount can be obtained from the Plan Administrator.
3.2 Election to Defer Director
Fees.
(a) First Year of
Eligibility. If a Director becomes a Participant in the Plan
after the beginning of a Plan Year, he or she may make an initial
deferral election within thirty (30) days after the date he or
she becomes eligible with respect to Director Fees paid for
services to be performed subsequent to the election. An election to
defer Director Fees shall be irrevocable and shall continue in
effect until the Participant submits a Notice of Adjustment of
Deferral Amount to the Plan Administrator in accordance with
Section 3.2(b) of this Plan. For a Participant’s
deferral election to be valid, the Joinder Agreement must be
completed and signed by the Participant and accepted by the Plan
Administrator.
(b) Deferral
Election Rules. For each succeeding Plan Year after the first,
in the event a Participant elects to change his or her Deferral
Amount, the Participant must submit a Notice of Adjustment of
Deferral Amount to the Plan Administrator by
December 15 th before the year in which the
Participant’s services are performed.
(c) Terminations of Deferral
Elections Following an Unforeseeable Emergency. If a
Participant receives a payment upon an Unforeseeable Emergency
under this Plan, the deferral election for that Plan Year shall
terminate upon payment to the Participant. A Participant may again
elect to defer Director Fees for any succeeding Plan Year, in
accordance with the terms of this Plan.
ARTICLE 4
Crediting
Account(s)
4.1 Crediting
Account(s). As of the
last day of each month during the Plan Year (the
“Determination Date”), the Participant’s Deferral
Account shall be increased by the amount of interest earned since
the preceding Determination Date. Interest shall be based upon the
Declared Rate (as defined in Section 4.3 hereof). Interest
shall be based upon the average daily balance of the
Participant’s Deferral Account since the last preceding
Determination Date, but after the Deferral Account has been
adjusted for any contributions or distributions to be credited or
deducted for each such day.
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4.2 Statement of Accounts.
The Plan Administrator shall submit
to each Participant, within 120 days after the close of each Plan
Year, a statement in such form as the Plan Administrator deems
desirable, setting forth the balance to the credit of such
Participant in his or her Deferral Account as of the last day of
the preceding Plan Year.
4.3 Declared Rate.
The “Declared Rate”
shall mean an annual rate equal to: (i) the rate provided to
the Bank’s qualified 401(k) plan participants investing in
the Stable Fund provided for in such qualified plan, plus
(ii) 250 basis points. Accrual of interest on deferred
Directors Fees shall not commence until the first day of the month
following the end of the quarter during which such Directors Fees
were ratably earned and deferred. The Interest Factor, for purposes
of compounding monthly interest and annuitizing and/or discounting,
shall be adjusted annually at the beginning of each calendar year
to reflect any change to the Stable Fund rate for such calendar
year. Should (i) the Bank’s qualified 401(k) plan be
terminated, (ii) such qualified 401(k) plan be amended so that
the Stable Fund rate is no longer applicable to such plan, or
(iii) the Bank designate a different qualified 401(k) plan
provider and such successor provide does not offer the Stable Fund,
the Bank’s Board of Directors shall designate both an
alternative interest rate and spread to such interest rate, if any,
which shall be used for purposes of compounding monthly interest
and annuitizing and/or discounting pursuant to this Agreement;
provided, however, that such alternative interest rate and spread
designated by the Bank’s Board of Directors shall not be less
than an annual rate equal to: (i) the ask yield for the One
Year Treasury Bill with a maturity date closest to one
(1) year, as published by The Wall Street Journal on
December 31 of the most recent calendar year, plus
(ii) 150 basis points.
ARTICLE 5
Vesting
5.1 Vesting of
Benefits. A Participant
shall at all times be 100% vested in his Deferral
Account.
ARTICLE 6
Payment of Amounts
Due
6.1 Payment Following Separation
from Service Other Than Death. Except for Separation from Service due to
death, a Participant shall be paid his or her Deferral Account
balance commencing on the date specified in his or her Joinder
Agreement following attainment of his or her Benefit Age.
Notwithstanding the above, if the date specified in the
Participant’s Joinder Agreement is the Participant’s
Separation from Service and the Participant is a Specified Employee
at the time of his or her Separation from Service, such payment
will commence six (6) months after the Participant’s
Separation from Service.
6.2 Payment Following
Disability. In the event
of a Disability, the Participant shall be paid his or her Deferral
Account balance with payment or payments being made or commencing
within thirty (30) days following the determination of a
Participant’s Disability. The Participant’s Deferral
Account shall be paid in monthly installments throughout the
Payout
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Period, unless an alternative distribution
option is elected in the Participant’s Joinder Agreement. If
the Participant dies while receiving installment payments under
this Section, his Beneficiary will be entitled to the present value
of remaining payments in a lump sum.
6.3 Payment Following
Death. In the event of
the Participant’s death, the Participant’s Beneficiary
shall be paid the Participant’s Deferral Account balance as
specified in the Participant’s Joinder Agreement. Said
payment or payments shall commence within thirty (30) days
following the date of death of the Participant. In addition, upon
the Participant’s death, the Beneficiary shall be entitled to
receive a one-time lump sum death benefit in the amount of $10,000.
This benefit shall be provided specifically for the purpose of
providing payment for funeral and/or burial expenses of the
Participant. Such benefit will be paid within 30 days of
notification of the Participant’s death. The
Participant’s Beneficiary shall not be entitled to such
benefit if the Participant is terminated for cause prior to his
death.
6.4 Payment Following Change in
Control. A Participant
shall be paid his or her Account balance following a Change in
Control with payments being made or commencing within thirty
(30) days following the Change in Control event, but only to
the extent such payment(s) complies with regulations and other
guidance issued by the United States Secretary of the Treasury or
Internal Revenue Service with respect to
Section 409A(a)(2)(A)(v) of the Code. Payments upon a Change
in Control shall be made in accordance with the Participant’s
Joinder Agreement.
6.5 Payment in the Event of an
Unforeseeable Emergency. If the Participant experiences an Unforeseeable
Emergency, the Participant may petition the Plan Administrator for
payment of an amount that shall not exceed the lesser of:
(i) the Participant’s vested Account(s), or
(ii) the amount reasonably needed to satisfy the Unforeseeable
Emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the payment. A Participant may not
receive such a payment to the extent that the Unforeseeable
Emergency is or may be relieved: (i) through reimbursement or
compensation by insurance or otherwise, or (ii) by liquidation
of the Participant’s assets, to the extent the liquidation of
such assets would not itself cause severe financial hardship. If
the Plan Administrator approves a Participant’s petition for
a payment then the Participant shall receive said payment as soon
as administratively feasible after such approval.
6.6 Subsequent Changes in the
Form of Payment. If
permitted by the Plan Sponsor, and subject to limitations below, a
Participant may elect to change his or her form of payment due to
Disability or Death by submitting a Notice of Election to Change
Form of Payment to the Plan Administrator, provided that such
change will not take effect for at least twelve (12) months
after the date on which the election is made and approved by the
Plan Administrator. A Participant may also elect to change his or
her form of payment as a result of Separation from Service and/or
in the event of a Change of Control, by submitting a Notice of
Election to Change Form of Payment to the Plan Administrator,
provided that (i) such change will not take effect until at
least twelve (12) months after the date on which the election
is made and approved by the Plan Administrator, and (ii) the
first payment with respect to which the change is made must be
deferred for a period of not less than five (5) years from the
date such payment would otherwise have been paid.
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6.7 Subsequent Changes in the Time and Form of
Payment. A Participant
may, upon written notice to the Plan Administrator, make a change
that further delays or changes the time or form of payment of a
previously elected Deferral Account, provided that the following
requirements are satisfied: (i) the change does not take
effect until at least twelve (12) months after the date on
which the change is made, (ii) the first payment with respect
to which the change is made must be deferred for at least five
(5) years from the date the payment would otherwise have been
made, and (iii) the change cannot be made less than twelve
(12) months before the date of the first scheduled
payment.
6.8 Special Transition
Rule. With respect to
deferred compensation amounts under the Plan that are subject to
Code Section 409A, payment method elections may be made or
revised by a Participant on or before December 31, 2008, with
respect to the form of payment of such amounts. Such election will
not be treated as a change in the form and timing of a payment
under Code Section 409A(a)(4) or an acceleration of a payment
under Code Section 409A(a)(3) provided the election is made
and filed with the Plan Sponsor on or before December 31,
2008. Any election made pursuant to this Section is applicable only
to amounts that are not otherwise payable in the year in which the
election is made.
6.9 Effect of Other Permissible
Payment Events. Should an
event occur that triggers a payment as a result of Disability,
death, an Unforeseeable Emergency, Separation from Service, or
following a Change of Control, any amounts subject to a Deferral
Account that have not yet been paid shall instead be paid in
accordance with the Permissible Payment event that triggers such a
distribution.
6.10 Method of
Payments.
(a) Cash. All Permissible
Payments made under the Plan shall be made in cash.
(b) Definition of Payment.
The term “payment” shall be treated as a single payment
for purposes of subsequent changes of time or form of payment,
within the meaning of Treasury regulations
1.409A-2(b)(2).
(c) Form of Payment. A
Participant, in connection with his or her commencement of
participation in the Plan, may elect the form (method) of payment
for the applicable Permissible Payment event. Upon the occurrence
of a Permissible Payment event, the Participant’s Account
shall be calculated as of the Permissible Payment event. If a
Participant has failed to select an optional form of payment (
i.e. lump sum ), his or her Account shall be paid in monthly
installments throughout the Payout Period. The amount of the
Participant’s monthly installment benefit shall be the
annuitized value (using the Declared Rate) of the
Participant’s Deferral Account, measured initially as of the
date of the Permissible Payment event and re-annuitized at the
beginning of each calendar year thereafter using the Declared Rate
in effect at such time, as adjusted pursuant to Section 4.3.
The amount of each monthly installment payment shall be determined
by dividing the value of the Participant’s Deferral Account
immediately prior to such payment by the number of payments
remaining to be paid. Any unpaid Account Balance shall continue to
be deemed to be invested pursuant to Article 5, in which case any
deemed income, gains, losses, or expenses shall be reflected in the
actual payments.
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6.11 No Accelerations. Notwithstanding anything in this Agreement to
the contrary, no change submitted on a Notice of Election to Change
Form of Payment shall be accepted by the Plan Sponsor if the change
accelerates the time over which distributions shall be made to the
Participant (except as otherwise permitted by Section 409A of
the Code), and the Plan Sponsor shall deny any change made to an
election if the Plan Sponsor determines that the change violates
the requirement under Section 409A of the Code. The Plan
Sponsor may, however, accelerate certain distributions under the
Plan to the extent permitted under Section 409A of the Code as
follows:
(a) Domestic Relations Order.
The Plan will permit direct payment of a Participant’s vested
Account Balance to an individual other than a Participant as
necessary to fulfill a domestic relations order, as defined in
Section 414(p)(1)(B) of the Code.
(b) Conflicts of Interest.
The Plan will permit such acceleration of the time or schedule of
payment under the Plan as may be necessary to comply with
applicable Federal, state, local, or foreign ethics laws or
interest law to the extent permitted by Treasury Regulation
1.409A-3(j)(4)(iii).
(c) De Minimis
and Specified Amounts. The Plan will permit the acceleration of
the time or schedule of payment to a Participant, provided that
(i) the payment accompanies the termination in the entirety of
the Participant’s interest in the Plan; (ii) the payment
is made on or before the later of: (A) December 31 of the
Calendar Year in which occurs the Participant’s Separation
from Service from the Plan Sponsor, or (B) the date is
2 1 / 2 months after the
Participant’s Separation from Service from the Plan Sponsor;
and (iii) the payment is not greater than $10,000.
6.12 Unsecured General Creditor
Status of Participant.
(a) Payment to the Participant or
any Beneficiary hereunder shall be made from assets which shall
continue, for all purposes, to be part of the general, unrestricted
assets of the Plan Sponsor and no person shall have any interest in
any such asset by virtue of any provision of this Plan. The Plan
Sponsor’s obligation hereunder shall be an unfunded and
unsecured promise to pay money in the future. To the extent that
any person acquires a right to receive payments from the Plan
Sponsor under the provisions hereof, such right shall be no greater
than the right of any unsecured general creditor of the Plan
Sponsor and no such person shall have or acquire any legal or
equitable right, interest or claim in or to any property or assets
of the Plan Sponsor.
(b) In the event that the Plan
Sponsor purchases an insurance policy or policies insuring the life
of a Participant or employee, to allow the Plan Sponsor to recover
or meet the cost of providing benefits, in whole or in part,
hereunder, no Participant or Beneficiary shall have any rights
whatsoever in said policy or the proceeds therefrom. The Plan
Sponsor or Trustee shall be the primary owner and beneficiary of
any such insurance policy or property and shall possess and may
exercise all incidents of ownership therein.
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(c) In the event that the Plan
Sponsor purchases an insurance policy or policies on the life of a
Participant as provided for above, then all of such policies shall
be subject to the claims of the creditors of the Plan
Sponsor.
(d) If the Plan Sponsor chooses to
obtain insurance on the life of a Participant in connection with
its obligations under this Plan, the Participant hereby agrees to
take such physical examinations and to truthfully and completely
supply such information as may be required by the Plan Sponsor or
the insurance company designated by the Plan Sponsor.
6.13 Facility of
Payment. If a
distribution is to be made to a minor, or to a person who is
otherwise incompetent, then the Plan Administrator may make such
distribution: (i) to the legal guardian, or if none, to a
parent of a minor payee with whom the payee maintains his or her
residence, or (ii) to the conservator or Administrator or, if
none, to the person having custody of an incompetent payee. Any
such distribution shall fully discharge the Plan Sponsor and the
Plan Administrator from further liability on account
thereof.
6.14 Distribution in the Event of
Taxation. If for any
reason, all or any portion of a Participant’s benefits under
this Plan becomes taxable to a Participant or Beneficiary prior to
actual receipt, the Participant or Beneficiary may petition the
Plan Administrator for a payment of that portion of his or her
benefit that has become taxable. Upon the grant of such petition,
which grant shall not be unreasonably withheld, the Plan
Administrator shall distribute to the Participant or Beneficiary
immediately available funds in an amount equal to the taxable
portion of his or her benefit (which amount shall not exceed a
Participant’s unpaid vested Account balance under this Plan),
but only to the extent such payment will not fail to comply with
Section 409A(a)(2) or (3) of the Code. If the petition is
granted, the tax liability distribution shall be made within ninety
(90) days of the date when the Participant or Beneficiary
petition is granted. Such a distribution shall effect and reduce
the benefits to be paid to the Participant or Beneficiary under
this Plan.
ARTICLE 7
Beneficiary
Designation
7.1 Designation of
Beneficiaries.
(a) Each Participant may designate
any person or persons (who may be named contingently or
successively) to receive any benefits payable under the Plan upon
the Participant’s death, and the designation may be changed
from time to time by the Participant by filing a new designation.
Each designation will revoke all prior designations by the same
Participant, shall be in the form prescribed by the Plan
Administrator, and shall be effective only when filed in writing
with the Plan Administrator during the Participant’s
lifetime. Beneficiary designations shall be made in the
Participant’s Joinder Agreement
(b) In the absence of a valid
Beneficiary designation, or if, at the time any benefit payment is
due to a Beneficiary, there is no living Beneficiary validly named
by the Participant, the Plan Sponsor shall pay the benefit payment
to the Participant’s spouse, if then living, and
if
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the spouse is not then living to the
Participant’s then living descendants, if any, per stripes,
and if there are no living descendants, to the Participant’s
estate. In determining the existence or identity of anyone entitled
to a benefit payment, the Plan Sponsor may rely conclusively upon
information supplied by the Participant’s personal
representative, executor or administrator.
(c) If a question arises as to the
existence or identity of anyone entitled to receive a death benefit
payment under the Plan, or if a dispute arises with respect to any
death benefit payment under the Plan, the Plan Sponsor may
distribute the payment to the Participant’s estate without
liability for any tax or other consequences, or may take any other
action which the Plan Sponsor deems to be appropriate.
7.2 Information to be Furnished
by Participants and Beneficiaries; Inability to Locate Participants
or Beneficiaries. Any
communication, statement or notice addressed to a Participant or to
a Beneficiary at his or her last post office address as shown on
the Plan Sponsor’s records shall be binding on the
Participant or Beneficiary for all purposes of this Plan. The Plan
Sponsor shall not be obligated to search for any Participant or
Beneficiary beyond the sending of a registered letter to the last
known address.
ARTICLE 8
Termination, Amendment or
Modification
8.1 Plan Termination.
The Plan Sponsor reserves the right
to terminate the Plan. The Plan Sponsor also reserves the right to
suspend the operation of the Plan for a fixed or indeterminate
period of time. The Plan automatically shall terminate upon the
dissolution of the Plan Sponsor, or upon a merger into or
consolidation with any other corporation or business organization
if there is a failure by the surviving corporation or business
organization to specifically adopt and agree to continue the Plan.
The Plan Sponsor reserves the right, by action of its Board of
Directors, to terminate the Plan and distribute to Participants
their vested Account(s), but subject to the following restrictions
imposed by Code Section 409A:
(a) Distributions will be made if
the Plan is terminated within twelve (12) months of a
corporate dissolution taxed under IRC Section 331, or with the
approval of a bankruptcy court pursuant to 11 U.S.C.
Section 503(b)(1)(A), provided that the amounts deferred under
the Plan are included in the Participant’s gross income in
the latest of:
(i) The calendar year in which the
Plan termination occurs;
(ii) The calendar year in which the
amount is no longer subject to a substantial risk of forfeiture;
or
(iii) The first calendar year in
which the payment is administratively practicable.
(b) Distributions will be made if
the Plan Sponsor terminates the Plan within the thirty
(30) days preceding or the twelve (12) months following a
Change in Control event (as defined in Treasury Regulations
1.409A-2(g)(5)). The Plan will then be treated as
terminated
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only if all substantially similar arrangements
sponsored by the Plan Sponsor are terminated so that all
participants in all similar arrangements are required to receive
all amounts of Compensation deferred under the terminated
arrangements within twelve (12) months of the date of
termination of the arrangements.
(c) The Plan Sponsor may also
terminate the Plan and make distributions provided that:
(i) All plans sponsored by the Plan
Sponsor will be aggregated with any terminated arrangements if the
same Participant participated in all of the arrangements that are
terminated;
(ii) No payments other than payments
that would be payable under the terms of the plan if the
termination had not occurred are made within twelve
(12) months of the plan termination;
(iii) All payments are made within
twenty-four (24) months of the plan termination;
and
(iv) The Plan Sponsor does not adopt
a new plan that would be aggregated with any terminated plan if the
same Participant participated in both arrangements, at any time
within five years following the date of termination of the
Plan.
8.2 Amendment of Plan.
The Plan Sponsor may, at any time,
amend or modify this Plan in whole or in part; provided, however,
that, except to the extent necessary to bring the Plan into
compliance with Section 409A(a)(2),(3), or (4) of the
Code:
(i) No amendment or modification
shall be effective to decrease the value or vested percentage of a
Participant’s Account(s), in existence at the time an
amendment or modification is made, and
(ii) No amendment or modification
shall materially and adversely affect the Participant’s
rights to be credited with additional amounts on such Account(s),
or otherwise materially and adversely affect the
Participant’s rights with respect to such Account(s). The
amendment or modification of this Plan shall have no effect on any
Participant or Beneficiary who has become entitled to the payment
of benefits under this Plan as of the date of the amendment or
modification.
ARTICLE 9
Administration
9.1 Plan Administrator
Duties. The Plan
Administrator shall be responsible for the management, operation
and administration of the Plan. The Plan Administrator shall act at
meetings by affirmative vote of a majority of its members. Any
action permitted to be taken at a meeting may be taken without a
meeting if, prior to such action, a unanimous written consent to
the action is signed by all members and such written consent is
filed with the minutes of the
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proceedings of the Plan Administrator. A member
shall not vote or act upon any matter which relates solely to
himself or herself as a Participant. The Chair or any other member
or members of the Plan Administrator designated by the Chair may
execute any certificate or other written direction on behalf of the
Plan Administrator. When making a determination or calculation, the
Plan Administrator shall be entitled to rely on information
furnished by a Participant or the Plan Sponsor. No provision of
this Plan shall be construed as imposing on the Plan Administrator
any fiduciary duty under
