Service Corporation
International
Executive Deferred Compensation Plan
Amended and Restated Effective
May 12, 2009
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Page
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1
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ARTICLE 2 Selection, Enrollment,
Eligibility
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8
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2.1 Selection by Committee
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8
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2.2 Enrollment and Eligibility Requirements;
Commencement of Participation
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8
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ARTICLE 3 Deferral Commitments/Company
Contribution Amounts/Company Restoration Matching Amounts
/Vesting/Crediting/Taxes
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9
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3.1 Annual Deferral Amount
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9
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3.2 Timing of Deferral Elections; Effect of
Election Form
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9
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3.3 Withholding and Crediting of Annual
Deferral Amounts
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11
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3.4 Company Contribution
Amount
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11
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3.5 Company Restoration Matching
Amount
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11
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12
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3.7 Crediting/Debiting of Account
Balances
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13
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14
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ARTICLE 4 Scheduled Distributions;
Unforeseeable Emergencies
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15
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4.1 Scheduled Distributions
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15
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4.2 Postponing Scheduled
Distributions
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15
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4.3 Other Benefits Take Precedence Over
Scheduled Distributions
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15
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4.4 Unforeseeable Emergencies
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ARTICLE 5 Change In Control
Benefit
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5.1 Change in Control Benefit
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5.2 Payment of Change in Control
Benefit
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ARTICLE 6 Retirement
Benefit
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16
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6.2 Payment of Retirement
Benefit
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ARTICLE 7 Termination
Benefit
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18
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6.2 Payment of Retirement
Benefit
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ARTICLE 8 Disability
Benefit
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8.2 Payment of Disability
Benefit
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-i-
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Page
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9.2 Payment of Death Benefit
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20
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ARTICLE 10 Beneficiary
Designation
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10.2 Beneficiary Designation; Change; Spousal
Consent
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20
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20
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10.4 No Beneficiary
Designation
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20
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10.5 Doubt as to Beneficiary
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20
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10.6 Discharge of Obligations
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20
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ARTICLE 11 Leave of Absence
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20
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11.1 Paid Leave of Absence
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20
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11.2 Unpaid Leave of Absence
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ARTICLE 12 Termination of Plan, Amendment
or Modification
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ARTICLE 13 Administration
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13.2 Administration Upon Change In
Control
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22
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13.4 Binding Effect of
Decisions
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13.5 Indemnity of Committee
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13.6 Employer Information
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ARTICLE 14 Other Benefits and
Agreements
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23
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14.1 Coordination with Other
Benefits
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ARTICLE 15 Claims
Procedures
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15.1 Presentation of Claim
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15.2 Notification of Decision
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15.3 Review of a Denied Claim
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24
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24
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24
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16.1 Establishment of the
Trust
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24
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16.2 Interrelationship of the Plan and the
Trust
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25
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-ii-
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Page
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16.3 Distributions From the
Trust
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25
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25
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17.2 Unsecured General
Creditor
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17.3 Employer’s
Liability
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17.5 Not a Contract of
Employment
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17.6 Furnishing Information
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17.15 Domestic Relations
Orders
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27
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17.16 Distribution in the Event of Income
Inclusion Under Code Section 409A
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27
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17.17 Deduction Limitation on Benefit
Payments
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27
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-iii-
SERVICE CORPORATION
INTERNATIONAL
Executive Deferred Compensation Plan
Amended and Restated May 12, 2009
The Plan was
originally adopted effective as of January 1, 2005. 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 Service Corporation International, a
Texas 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.
The Plan was
previously amended and restated in its entirety to comply with all
applicable laws, including Code Section 409A and related
Treasury guidance and Regulations, and shall be operated and
interpreted in accordance with this intention. The Plan is now
again amended and restated in its entirety to revise its vesting
provisions. The provisions of this Plan, as amended and restated,
shall apply to any Participant with at least one hour of service on
or after May 12, 2009.
For the purposes
of this Plan, unless otherwise clearly apparent from the context,
the following phrases or terms shall have the following indicated
meanings:
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1.1
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“ Account Balance
” shall mean, with respect to a Participant, an entry on the
records of the Employer equal to the sum of the Participant’s
Annual Accounts. The 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 a Participant, or
his or her designated Beneficiary, pursuant to this
Plan.
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If
a Participant is both an Employee and a Director and participates
in the Plan in each capacity, then separate Account Balances (and
separate Annual Accounts, if applicable) shall be established for
such Participant as a device for the measurement and determination
of the (i) amounts deferred under the Plan that are
attributable to the Participant’s status as an Employee, and
(ii) amounts deferred under the Plan that are attributable to
the Participant’s status as a Director.
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1.2
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“ Annual Account
” shall mean, with respect to a Participant, an entry on the
records of the Employer equal to (i) the sum of the
Participant’s Annual Deferral Amount, Company Contribution
Amount and Company Restoration Matching Amount for any one Plan
Year, plus (ii) amounts credited or debited to such amounts
pursuant to this Plan, less (iii) all distributions made to
the Participant or his or her Beneficiary pursuant to this Plan
that relate to the Annual Account for such Plan Year. The Annual
Account 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 a Participant, or his or her designated
Beneficiary, pursuant to this Plan.
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1.3
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“ Annual Deferral
Amount ” shall mean that portion of a Participant’s
Base Salary, Bonus, Director Fees and LTIP Amounts that a
Participant defers in accordance with Article 3 for
any
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1
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one
Plan Year, without regard to whether such amounts are withheld and
credited during such Plan Year.
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1.4
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“ Annual Installment
Method ” shall mean the method used to determine the
amount of each payment due to a Participant who has elected to
receive a benefit over a period of years in accordance with the
applicable provisions of the Plan. The amount of each annual
payment due to the Participant shall be calculated by multiplying
the balance of the Participant’s benefit by a fraction, the
numerator of which is one and the denominator of which is the
remaining number of annual payments due to the Participant. The
amount of the first annual payment shall be calculated as of the
close of business on or around the Participant’s Benefit
Distribution Date, and the amount of each subsequent annual payment
shall be calculated on or around each anniversary of such Benefit
Distribution Date. For purposes of this Plan, the right to receive
a benefit payment in annual installments shall be treated as the
entitlement to a single payment.
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1.5
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“ Base Salary ”
shall mean the annual cash compensation relating to services
performed during any calendar year, excluding distributions from
nonqualified deferred compensation plans, bonuses, commissions,
overtime, fringe benefits, stock options, relocation expenses,
incentive payments, non-monetary awards, director fees and other
fees, and automobile and other allowances paid to a Participant for
employment services rendered (whether or not such allowances are
included in the Employee’s gross income). 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.
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1.6
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“ Beneficiary ”
shall mean one or more persons, trusts, estates or other entities,
designated in accordance with Article 10, that are entitled to
receive benefits under this Plan upon the death of a
Participant.
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1.7
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“ Beneficiary Designation
Form ” shall mean the form established from time to time
by the Committee that a Participant completes, signs and returns to
the Committee to designate one or more Beneficiaries.
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1.8
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“ Benefit Distribution
Date ” shall mean the date upon which all or an
objectively determinable portion of a Participant’s vested
benefits will become eligible for distribution. Except as otherwise
provided in the Plan, a Participant’s Benefit Distribution
Date shall be determined based on the earliest to occur of an event
or scheduled date set forth in Articles 4 through 9, as
applicable.
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1.9
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“ Board ” shall
mean the board of directors of the Company.
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1.10
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“ Bonus ” shall
mean any compensation, in addition to Base Salary, and LTIP
Amounts, earned by a Participant under any Employer’s annual
bonus and cash incentive plans.
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1.11
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“ 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
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2
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provided in Subsection (b)(ii), 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).
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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:
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(a)
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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 Subsection (b), 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.
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(b)
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A
“change in the effective control” of the applicable
corporation shall occur on either of the following
dates:
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(i)
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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
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(ii)
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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 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.
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(c)
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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
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3
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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).
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1.12
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“ Code ” shall
mean the Internal Revenue Code of 1986, as it may be amended from
time to time.
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1.13
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“ Committee ”
shall mean the committee described in Article 13.
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1.14
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“ Company ” shall
mean Service Corporation International, a Texas corporation, and
any successor to all or substantially all of the Company’s
assets or business.
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1.15
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“ Company Contribution
Amount ” shall mean, for any one Plan Year, the amount
determined in accordance with Section 3.4.
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1.16
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“ Company Restoration
Matching Amount ” shall mean, for any one Plan Year, the
amount determined in accordance with Section 3.5.
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1.17
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“ Death Benefit ”
shall have the meaning provided in Section 9.1.
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1.18
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“ Director ”
shall mean any member of the board of directors of any
Employer.
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1.19
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“ Director Fees ”
shall mean the annual fees earned by a Director from any Employer,
including retainer fees and meetings fees, as compensation for
serving on the board of directors.
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1.20
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“ Disability ” or
“ Disabled ” shall mean that a Participant is
either (i) 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 (ii) 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.
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1.21
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“ Disability Benefit
” shall have the meaning provided in
Section 8.1.
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1.22
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“ Election Form ”
shall mean the form, which may be in electronic format, established
from time to time by the Committee that a Participant completes,
signs and returns to the Committee to make an election under the
Plan.
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1.23
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“ Employee ”
shall mean a person who is an employee of an Employer.
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1.24
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“ Employer(s) ”
shall be defined as follows:
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4
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(a)
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Except as otherwise provided in
Subsection (b), the term “Employer” shall mean 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 the Plan and have adopted the Plan as a
sponsor.
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(b)
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For
the purpose of determining whether a Participant has experienced a
Separation from Service, the term “Employer” shall
mean:
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(i)
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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)
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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. In order to identify the
group of entities described in the preceding sentence, the
Committee shall use an ownership threshold of at least 50% as a
substitute for the 80% minimum ownership threshold that appears in,
and otherwise must be used when applying, the applicable provisions
of (A) Code Section 1563 for determining a controlled
group of corporations under Code Section 414(b), and
(B) Treas. Reg. §1.414(c)-2 for determining the trades or
businesses that are under common control under Code
Section 414(c).
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1.25
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“ ERISA ” shall
mean the Employee Retirement Income Security Act of 1974, as it may
be amended from time to time.
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1.26
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“ 401(k) Plan ”
shall mean the SCI Retirement Savings Plan, as it may be amended
from time to time, or any successor thereto.
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1.27
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“ LTIP Amounts ”
shall mean any portion of the compensation attributable to a Plan
Year that is earned by a Participant under the Company’s
Performance Unit Plan or any other “performance-based
compensation plan within the meaning of Code Section 409A and
so designated by the Committee.
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1.28
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“ Participant ”
shall mean any Employee or Director (i) who is selected to
participate in the Plan, (ii) whose executed Plan Agreement,
Election Form and Beneficiary Designation Form are accepted by the
Committee, and (iii) whose Plan Agreement has not
terminated.
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1.29
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“ Performance-Based
Compensation ” shall mean compensation the entitlement to
or amount of which is contingent on the satisfaction of
pre-established organizational or individual performance criteria
relating to a performance period of at least 12 consecutive months,
as determined by the Committee in accordance with Treas. Reg.
§1.409A-1(e).
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1.30
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“ Plan ” shall
mean the Service Corporation International Executive Deferred
Compensation Plan, which shall be evidenced by this instrument, as
it may be amended from time to time, and by any other documents
that together with this instrument define a Participant’s
rights to amounts credited to his or her Account
Balance.
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5
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1.31
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“ Plan Agreement
” shall mean a written agreement in the form prescribed by or
acceptable to the Committee that evidences a Participant’s
agreement to the terms of the Plan and which may establish
additional terms or conditions of Plan participation for a
Participant. Unless otherwise determined by the Committee, the most
recent Plan Agreement accepted with respect to a Participant shall
supersede any prior Plan Agreements for such Participant. Plan
Agreements may vary among Participants and may provide additional
benefits not set forth in the Plan or limit the benefits otherwise
provided under the Plan.
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1.32
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“ Plan Year ”
shall mean a period beginning on January 1 of each calendar year
and continuing through December 31 of such calendar
year.
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1.33
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“ Retirement ,”
“ Retire(s) ” or “ Retired ”
shall mean with respect to a Participant who is an Employee, a
Separation from Service on or after the attainment of age 60 with
five Years of Service, and shall mean with respect to a Participant
who is a Director, a Separation from Service. If a Participant is
both an Employee and a Director and participates in the Plan in
each capacity, (i) 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 (ii) the
determination of whether the Participant 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.
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1.34
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“ 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:
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(a)
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For
a Participant who provides services to an Employer as an Employee,
except as otherwise provided in Subsection (c) below, 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).
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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 six 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
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6
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other bona fide leave of absence
exceeds six 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 six 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.
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(b)
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For
a Participant who provides services to an Employer as a Director, a
Separation from Service shall occur on the date the Participant
ceases to serve on the Board of Directors of the Employer and each
of its subsidiaries and affiliates.
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(c)
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For
a Participant who provides services to an Employer as both an
Employee and a Director , a Separation from Service
generally shall not occur until the Participant has ceased
providing services for such Employer as both as an Employee and as
a Director, as determined in accordance with the provisions set
forth in Subsections (a) and (b) above, respectively.
Notwithstanding the foregoing provisions in this Subsection (c), if
a Participant provides services for an Employer as both an Employee
and as a Director, to the extent permitted by Treas. Reg.
§1.409A-1(h)(5) the services provided by such Participant as a
Director shall not be taken into account in determining whether the
Participant has experienced a Separation from Service as an
Employee, and the services provided by such Participant as an
Employee shall not be taken into account in determining whether the
Participant has experienced a Separation from Service as a
Director.
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1.35
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“ Specified Employee
” shall mean any Participant who is determined to be a
“key employee” (as defined under Code Section 416(i)
without regard to paragraph (5) thereof) for the applicable
period, as determined annually by the Committee in accordance with
Treas. Reg. §1.409A-1(i). In determining whether a Participant
is a Specified Employee, the following provisions shall
apply:
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(a)
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The
Committee’s identification of the individuals who fall within
the definition of “key employee” under Code Section
416(i) (without regard to paragraph (5) thereof) shall be based
upon the 12-month period ending on each December 31
st
(referred to below as
the “identification date”). In applying the applicable
provisions of Code Section 416(i) to identify such individuals,
“compensation” shall be determined in accordance with
Treas. Reg. §1.415(c)-2(a) without regard to (i) any safe
harbor provided in Treas. Reg. §1.415(c)-2(d), (ii) any
of the special timing rules provided in Treas. Reg.
§1.415(c)-2(e), and (iii) any of the special rules
provided in Treas. Reg. §1.415(c)-2(g); and
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(b)
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Each Participant who is among the
individuals identified as a “key employee” in
accordance with Subsection (a) shall be treated as a Specified
Employee for purposes of this Plan if such Participant experiences
a Separation from Service during the 12-month period that begins on
the April 1 st following the applicable
identification date.
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1.36
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“ Termination Benefit
” shall have the meaning provided in
Section 7.1.
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1.37
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“ Trust ” shall
mean one or more trusts established by the Company in accordance
with Article 16.
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1.38
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“ Unforeseeable
Emergency ” shall mean a severe financial hardship of the
Participant resulting from (i) 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), (ii) a loss
of the Participant’s property due to casualty, or
(iii) 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.
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1.39
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“ Years of Service
” shall mean the total number of full years in which a
Participant has been employed by one or more Employers. For
purposes of this definition, a year of employment shall be a
365 day period (or 366 day period in the case of a leap
year) that, for the first year of employment, commences on the
Employee’s date of hiring and that, for any subsequent year,
commences on an anniversary of that hiring date. A partial year of
employment shall not be treated as a Year of Service.
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ARTICLE 2
Selection, Enrollment, Eligibility
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2.1
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Selection by
Committee . Participation in the Plan shall be
limited to Directors and, as determined by the Committee in its
sole discretion, a select group of management or highly compensated
Employees. From that group, the Committee shall select, in its sole
discretion, those individuals who may actually participate in this
Plan.
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2.2
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Enrollment and Eligibility
Requirements; Commencement of Participation
.
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(a)
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As
a condition to participation, each Director or selected Employee
shall complete, execute and return to the Committee a Plan
Agreement, an Election Form and a Beneficiary Designation Form by
the deadline(s) established by the Committee in accordance with the
applicable provisions of this Plan. In addition, the Committee
shall establish from time to time such other enrollment
requirements as it determines, in its sole discretion, are
necessary.
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(b)
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Each Director or selected Employee
who is eligible to participate in the Plan shall commence
participation in the Plan on the date that the Committee determines
that the Director or Employee 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.
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(c)
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If
a Director or an Employee fails to meet all requirements
established by the Committee within the period required, that
Director or Employee shall not be eligible to participate in the
Plan during such Plan Year.
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8
ARTICLE 3
Deferral Commitments/Company Contribution
Amounts/
Company Restoration Matching Amounts/
Vesting/Crediting/Taxes
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3.1
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Annual Deferral
Amount .
For each Plan Year, a Participant may elect to defer, as his or her
Annual Deferral Amount, Base Salary, Bonus, LTIP Amounts and/or
Director Fees up to the following maximum percentages for each
deferral elected:
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Deferral
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Maximum Percentage
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80
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%
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90
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%
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90
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%
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100
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%
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Notwithstanding the foregoing, if a
Participant first becomes a Participant after the first day of a
Plan Year, then to the extent required by Section 3.2 and Code
Section 409A and related Treasury Regulations, the maximum
amount of the Participant’s Base Salary, Bonus, LTIP Amounts
or Director Fees that may be deferred by the Participant for the
Plan Year shall be determined by applying the percentages set forth
above to the portion of such compensation attributable to services
performed after the date that the Participant’s deferral
election is made.
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3.2
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Timing of Deferral Elections; Effect
of Election Form .
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(a)
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General Timing Rule for Deferral
Elections . Except as otherwise provided in
this Section 3.2, in order for a Participant to make a valid
election to defer Base Salary, Bonus, Director Fees and/or LTIP
Amounts, the Participant must submit an Election Form on or before
the deadline established by the Committee, which in no event shall
be later than the December 31 st preceding the Plan Year in which
such compensation will be earned.
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Any
deferral election made in accordance with this Section 3.2(a)
shall be irrevocable; provided, however, that if the Committee
permits or requires Participants to make a deferral election by the
deadline described above for an amount that qualifies as
Performance-Based Compensation, the Committee may permit a
Participant to subsequently change his or her deferral election for
such compensation by submitting a new Election Form in accordance
with Section 3.2(d) below.
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(b)
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Timing of Deferral Elections for
Newly Eligible Plan Participants . A Director or selected Employee
who first becomes eligible to participate in the Plan on or after
the beginning of 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.
§1.409A-1(c)(2), may be permitted to make an election to defer
the portion of Base Salary, Bonus, Director Fees and/or LTIP
Amounts attributable to services to be performed after such
election, provided that the Participant submits an Election Form on
or before the deadline established by the Committee, which in no
event shall be later than 30 days after the Participant first
becomes eligible to participate in the Plan.
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If
a deferral election made in accordance with this
Section 3.2(b) 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.
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Any
deferral election made in accordance with this Section 3.2(b)
shall become irrevocable no later than the 30
th
day after the date the
Director or selected Employee becomes eligible to participate in
the Plan.
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(c)
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Timing of Deferral Elections for
Fiscal Year Compensation . In the event that the fiscal year
of an Employer is different than the taxable year of a Participant,
the Committee may determine that a deferral election may be made
for “fiscal year compensation” (as defined below), by
submitting an Election Form on or before the deadline established
by the Committee, which in no event shall be later than the last
day of the Employer’s fiscal year immediately preceding the
fiscal year in which the services related to such compensation will
begin to be performed. For purposes of this Section, the term
“fiscal year compensation” shall only include Bonus and
LTIP Amounts relating to a service period coextensive with one or
more consecutive fiscal years of the Employer, of which no amount
is paid or payable during the Employer’s fiscal year(s) that
constitute the service period.
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A
deferral election made in accordance with this Section 3.2(c)
shall be irrevocable; provided, however, that if the Committee
permits or requires Participants to make a deferral election by the
deadline described in this Section 3.2(c) for an amount that
qualifies as Performance-Based Compensation, the Committee may
permit a Participant to subsequently change his or her deferral
election for such compensation by submitting a new Election Form in
accordance with Section 3.2(d) below.
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(d)
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Timing of Deferral Elections for
Performance-Based Compensation . Subject to the limitations
described below, the Committee may determine that an irrevocable
deferral election for an amount that qualifies as Performance-Based
Compensation may be made by submitting an Election Form on or
before the deadline established by the Committee, which in no event
shall be later than 6 months before the end of the performance
period.
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In
order for a Participant to be eligible to make a deferral election
for Performance-Based Compensation in accordance with the deadline
established pursuant to this Section 3.2(d), the Participant
must have performed services continuously from the later of
(i) the beginning of the performance period for such
compensation, or (ii) the date upon which the performance
criteria for such compensation are established, through the date
upon which the Participant makes the deferral election for such
compensation. In no event shall a deferral election submitted under
this Section 3.2(d) be permitted to apply to any amount of
Performance-Based Compensation that has become readily
ascertainable.
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(e)
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Timing Rule for Deferral of
Compensation Subject to Risk of Forfeiture
.
With respect to
compensation (i) to which a Participant has a legally binding
right to payment in a subsequent year, and (ii) that is
subject to a forfeiture condition requiring the Participant’s
continued services for a period of at least 12 months from the
date the Participant obtains the legally binding right, the
Committee may determine that an
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irrevocable deferral election for
such compensation may be made by timely delivering an Election Form
to the Committee in accordance with its rules and procedures, no
later than the 30 th day after the Participant obtains
the legally binding right to the compensation, provided that the
election is made at least 12 months in advance of the earliest
date at which the forfeiture condition could l
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