Nonqualified Deferred Compensation Plan - KB Home
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Nonqualified Deferred Compensation Plan
Master Plan Document
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NONQUALIFIED DEFERRED COMPENSATION PLAN
EFFECTIVE MARCH 1, 2001
COPYRIGHT (C) 2000
BY COMPENSATION RESOURCE GROUP
ALL RIGHTS RESERVED
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TABLE OF CONTENTS
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Purpose ..............................................................................1
ARTICLE 1 Definitions...................................................................1
ARTICLE 2 Selection, Enrollment, Eligibility............................................8
2.1 Selection by Committee.........................................................8
2.2 Enrollment Requirements........................................................8
2.3 Eligibility; Commencement of Participation.....................................8
2.4 Termination of Participation and/or Deferrals..................................8
ARTICLE 3 Deferral Commitments/Company Matching/Crediting/Taxes.........................9
3.1 Minimum Deferrals..............................................................9
3.2 Maximum Deferrals.............................................................10
3.3 Election to Defer; Effect of Election Form....................................10
3.4 Withholding of Annual Deferral Amounts........................................12
3.5 Annual Company Contribution Amount............................................12
3.6 Annual Company Matching Amount................................................12
3.7 Stock Option Amount...........................................................12
3.8 Restricted Stock Amount.......................................................13
3.9 Rollover Amount...............................................................13
3.10 Investment of Trust Assets....................................................13
3.11 Sources of Stock..............................................................13
3.12 Vesting.......................................................................13
3.13 Crediting/Debiting of Account Balances........................................14
3.14 FICA and Other Taxes..........................................................16
3.15 Distribution..................................................................17
ARTICLE 4 Short-Term Payout; Unforeseeable Financial Emergencies; Withdrawal Election..17
4.1 Short-Term Payout.............................................................17
4.2 Other Benefits Take Precedence Over Short-Term................................17
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies.........18
4.4 Withdrawal Election...........................................................18
ARTICLE 5 Retirement Benefit...........................................................18
5.1 Retirement Benefit............................................................18
5.2 Payment of Retirement Benefit.................................................18
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5.3 Death Prior to Completion of Retirement Benefit...............................19
ARTICLE 6 Pre-Retirement Survivor Benefit..............................................19
6.1 Pre-Retirement Survivor Benefit...............................................19
6.2 Payment of Pre-Retirement Survivor Benefit....................................19
ARTICLE 7 Termination Benefit..........................................................20
7.1 Termination Benefit...........................................................20
7.2 Payment of Termination Benefit................................................20
ARTICLE 8 Disability Waiver and Benefit................................................20
8.1 Disability Waiver.............................................................20
8.2 Continued Eligibility; Disability Benefit.....................................21
ARTICLE 9 Beneficiary Designation......................................................21
9.1 Beneficiary...................................................................21
9.2 Beneficiary Designation; Change; Spousal Consent..............................21
9.3 Acknowledgement...............................................................21
9.4 No Beneficiary Designation....................................................21
9.5 Doubt as to Beneficiary.......................................................22
9.6 Discharge of Obligations......................................................22
ARTICLE 10 Leave of Absence.............................................................22
10.1 Paid Leave of Absence.........................................................22
10.2 Unpaid Leave of Absence.......................................................22
ARTICLE 11 Termination, Amendment or Modification.......................................22
11.1 Termination...................................................................22
11.2 Amendment.....................................................................23
11.3 Plan Agreement................................................................23
11.4 Effect of Payment.............................................................23
ARTICLE 12 Administration...............................................................23
12.1 Committee Duties..............................................................23
12.2 Administration Upon Change In Control.........................................24
12.3 Agents........................................................................24
12.4 Binding Effect of Decisions...................................................24
12.5 Indemnity of Committee........................................................25
12.6 Employer Information..........................................................25
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ARTICLE 13 Other Benefits and Agreements................................................25
13.1 Coordination with Other Benefits..............................................25
ARTICLE 14 Claims Procedures............................................................25
14.1 Presentation of Claim.........................................................25
14.2 Notification of Decision......................................................25
14.3 Review of a Denied Claim......................................................26
14.4 Decision on Review............................................................26
14.5 Legal Action..................................................................26
ARTICLE 15 Trust........................................................................26
15.1 Establishment of the Trust....................................................26
15.2 Interrelationship of the Plan and the Trust...................................27
15.3 Distributions From the Trust..................................................27
15.4 Stock Transferred to the Trust................................................27
ARTICLE 16 Miscellaneous................................................................27
16.1 Status of Plan................................................................27
16.2 Unsecured General Creditor....................................................27
16.3 Employer's Liability..........................................................27
16.4 Nonassignability..............................................................28
16.5 Not a Contract of Employment..................................................28
16.6 Furnishing Information........................................................28
16.7 Terms.........................................................................28
16.8 Captions......................................................................28
16.9 Governing Law.................................................................28
16.10 Notice........................................................................28
16.11 Successors....................................................................29
16.12 Spouse's Interest.............................................................29
16.13 Validity......................................................................29
16.14 Incompetent...................................................................29
16.15 Court Order...................................................................29
16.16 Distribution in the Event of Taxation.........................................30
16.17 Insurance.....................................................................30
16.18 Legal Fees To Enforce Rights After Change in Control..........................30
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KB HOME
NONQUALIFIED DEFERRED COMPENSATION PLAN
Effective March 1, 2001
PURPOSE
The purpose of this Plan is to provide specified benefits to a select
group of management and highly compensated Employees who contribute materially
to the continued growth, development and future business success of KB Home, 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.
ARTICLE 1
DEFINITIONS
For 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, a credit on
the records of the Employer equal to the sum of (i) the Deferral Account
balance, (ii) the vested Company Contribution Account balance, (iii) the
vested Company Matching Account balance, (iv) the Stock Option Account
balance, (v) the Restricted Stock Account balance and (vi) the Rollover
Account balance. 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 a Participant, or his or her designated Beneficiary, pursuant to
this Plan.
1.2 "Annual Base Salary" shall mean the annual cash compensation relating to
services performed during any calendar year, whether or not paid in such
calendar year or included on the Federal Income Tax Form W-2 for such
calendar year, excluding bonuses, commissions, overtime, fringe
benefits, stock options, relocation expenses, incentive payments,
non-monetary awards, directors fees and other fees, 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). As provided in Section 3.3 notwithstanding anything in this
Plan to the contrary, a Participant's deferrals under this Plan in each
year shall not commence with respect to any portion of his/her Annual
Base Salary unless and until that Participant has deferred into the
401(k) Plan the maximum amount authorized by Section 402(g).
1.3 "Annual Bonus" shall mean any compensation, in addition to Annual Base
Salary relating to services performed during any calendar year, whether
or not paid in such calendar year or included on the Federal Income Tax
Form W-2 for such calendar year, payable to a Participant as an Employee
under any Employer's annual bonus or cash incentive plans, excluding
stock options, restricted stock based upon the performance of services
during such calendar year, and commissions.
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1.4 "Annual Company Contribution Amount" shall mean, for any one Plan Year,
the amount determined in accordance with Section 3.5.
1.5 "Annual Company Matching Amount" shall mean, for any one Plan Year, the
amount determined in accordance with Section 3.6.
1.6 "Annual Deferral Amount" shall mean that portion of a Participant's
Annual Base Salary or Annual Bonus, as applicable, that a Participant
elects to have, and is deferred, in accordance with Article 3, for any
one Plan Year. In the event of a Participant's Retirement, Disability
(if deferrals cease in accordance with Section 8.1), death or a
Termination of Employment prior to the end of a Plan Year, such year's
Annual Deferral Amount shall be the actual amount withheld prior to such
event.
1.7 "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 follows: The Account Balance of the Participant
shall be calculated as of the most recent Valuation Date. The annual
installment shall be calculated by multiplying this 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 10-year Annual Installment Method,
the first payment shall be 1/10 of the Account Balance as of the most
recent Valuation Date. The following year, the payment shall be 1/9 of
the Account Balance as of the most recent Valuation Date. Each annual
installment shall be paid on or as soon as practicable after the amount
is calculated.
1.8 "Annual Restricted Stock Amount" shall mean, with respect to a
Participant for any one Plan Year, the value of unvested restricted
stock under any Company stock incentive plan, deferred in accordance
with Section 3.8 of this Plan.
1.9 "Annual Stock Option Amount" shall mean, with respect to a Participant
for any one Plan Year, the amount of Qualifying Gains deferred on
Eligible Stock Option exercise in accordance with Section 3.7 of this
Plan, calculated using the closing price of Stock as of the end of the
business day closest to the date of such Eligible Stock Option exercise.
1.10 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, or entitled under
Article 9 in the absence of a designation, that are entitled to receive
benefits under this Plan upon the death of a Participant.
1.11 "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.
1.12 "Board" shall mean the board of directors of the Company.
1.13 "Change in Control" shall mean the first to occur of either of the
following events:
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(a) individuals who, as of the effective date of this Plan,
constitute the Board of Directors of the Company (as of the date
hereof the "Incumbent Board") cease for any reason to constitute
at least a majority of the directors constituting the Board of
Directors, provided that any person becoming a director
subsequent to the effective date of this Plan whose election, or
nomination for election by the Company's shareholders, was
approved by a vote of at least three-quarters (3/4) of the then
directors who are members of the Incumbent Board (other than an
election or nomination of an individual whose initial assumption
of office is (i) in connection with the acquisition by a third
person, including a "group" as such term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Act"), of beneficial ownership, directly or indirectly, of 20%
or more of the combined voting securities ordinarily having the
right to vote for the election of directors of the Company
(unless such acquisition of beneficial ownership was approved by
a majority of the Board of Directors who are members of the
Incumbent Board), or (ii) in connection with an actual or
threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Act) shall be, for
purposes of this Plan, considered as though such person were a
member of the Incumbent Board; or
(b) the Board of Directors (a majority of which shall consist of
directors who are members of the Incumbent Board) has determined
that a Change in Control shall have occurred.
1.14 "Claimant" shall have the meaning set forth in Section 14.1.
1.15 "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
1.16 "Committee" shall mean the committee described in Article 12.
1.17 "Company" shall mean KB Home, a Delaware corporation, and any successor
to all or substantially all of the Company's assets or business.
1.18 "Company Contribution Account" shall mean (i) the sum of the
Participant's Annual Company Contribution Amounts, plus (ii) amounts
credited (net of amounts debited) in accordance with all the applicable
crediting provisions of this Plan that relate to the Participant's
Company Contribution Account, 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.
1.19 "Company Matching Account" shall mean (i) the sum of all of a
Participant's Annual Company Matching Amounts, plus (ii) amounts
credited (net of amounts debited) in accordance with all the applicable
provisions of this Plan that relate to the Participant's Company
Matching Account, less (iii) all distributions made to the Participant
or his or her Beneficiary pursuant to this Plan that relate to the
Participant's Company Matching Account.
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1.20 "Deduction Limitation" shall mean the following described limitation on
a benefit that may otherwise be distributable pursuant to the provisions
of this Plan. Except as otherwise provided, this limitation shall be
applied to all distributions that are "subject to the Deduction
Limitation" under this Plan. If an Employer determines in good faith
prior to a Change in Control that there is a reasonable likelihood that
any compensation paid to a Participant for a taxable year of the
Employer would not be deductible by the Employer solely by reason of the
limitation under Code Section 162(m), then to the extent deemed
necessary by the Employer to ensure that the entire amount of any
distribution to the Participant pursuant to this Plan prior to the
Change in Control is deductible, the Employer may defer all or any
portion of a distribution under this Plan. Any amounts deferred pursuant
to this limitation shall continue to be credited and debited with
additional amounts in accordance with Section 3.13 below, even if such
amount is being paid out in installments. The amounts so deferred and
amounts credited (net of amounts debited) thereon shall be distributed
to the Participant or his or her Beneficiary (in the event of the
Participant's death) at the earliest possible date, as determined by the
Employer in good faith, on which the deductibility of compensation paid
or payable to the Participant for the taxable year of the Employer
during which the distribution is made will not be limited by Section
162(m), or if earlier, the effective date of a Change in Control.
Notwithstanding anything to the contrary in this Plan, the Deduction
Limitation shall not apply to any distributions made after a Change in
Control.
1.21 "Deferral Account" shall mean (i) the sum of all of a Participant's
Annual Deferral Amounts, plus (ii) amounts credited (net of amounts
debited) in accordance with all the applicable provisions of this Plan
that relate to the Participant's Deferral Account, 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.
1.22 "Disability" shall mean a period of disability during which a
Participant qualifies for permanent disability benefits under the KB
Home Long-term Disability Plan, or, if a Participant does not
participate in such plan, a period of disability during which the
Participant would have qualified for permanent disability benefits under
such plan had the Participant been a participant in such plan, as
determined in the sole discretion of the Committee. If the Participant's
Employer does not sponsor such plan, or discontinues to sponsor such
plan, Disability shall be determined by the Committee in its sole
discretion.
1.23 "Disability Benefit" shall mean the benefit set forth in Article 8.
1.24 "Election Form" shall mean the form 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.
1.25 "Eligible Stock Option" shall mean one or more non-qualified stock
option(s) selected by the Committee in its sole discretion and
exercisable under a plan or arrangement of any Employer permitting a
Participant under this Plan to defer gain with respect to such option.
1.26 "Employee" shall mean a person who is an employee of any Employer.
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1.27 "Employer" shall mean the Company 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.
1.28 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
1.29 "First Plan Year" shall mean the period beginning March 1, 2001 and
ending December 31, 2001.
1.30 "401(k) Plan" shall be that certain Kaufman and Broad Home Corporation,
Inc. 401(k) Savings Plan adopted by the Company, as it may be amended
from time to time.
1.31 "Participant" shall mean any Employee (i) who is selected by the Board
(or a committee to which the Board has delegated such authority) from
among the highly compensated and management employees of the Employer to
participate in the Plan, (ii) who elects to participate in the Plan,
(iii) who signs a Plan Agreement, an Election Form and a Beneficiary
Designation Form, (iv) whose signed Plan Agreement, Election Form and
Beneficiary Designation Form are accepted by the Committee, (v) who
commences participation in the Plan, and (vi) whose Plan Agreement has
not terminated. A spouse or former spouse of a Participant shall not be
treated as a Participant in the Plan or have an account balance under
the Plan, even if he or she has an interest in the Participant's
benefits under the Plan as a result of applicable law or property
settlements resulting from legal separation or divorce.
1.32 "Plan" shall mean the KB HOME NONQUALIFIED DEFERRED COMPENSATION PLAN,
effective March 1, 2001 which shall be evidenced by this instrument and
by each Plan Agreement, as they may be amended from time to time.
1.33 "Plan Agreement" shall mean a written agreement, as 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 the 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 the Plan or
limit the benefits otherwise provided under the Plan; provided, however,
that any such additional benefits or benefit limitations must be agreed
to by both the Employer and the Participant.
1.34 "Plan Year" shall, for the first Plan Year, begin on March 1, 2001, and
end on December 31, 2001. For each Plan Year thereafter, the Plan Year
shall mean a period beginning on January 1 of each calendar year and
continuing through December 31 of such calendar year.
1.35 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
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1.36 "Qualifying Gain" shall mean the value accrued upon exercise of an
Eligible Stock Option (i) using a Stock-for-Stock payment method and
(ii) having an aggregate fair market value in excess of the total Stock
purchase price necessary to exercise the option. In other words, the
Qualifying Gain upon exercise of an Eligible Stock Option equals the
total market value of the shares (or share equivalent units) as to which
the option is exercised minus the total exercise price for such shares
under the option. For example, assume a Participant elects to defer the
Qualifying Gain accrued upon exercise of an Eligible Stock Option to
purchase 1000 shares of Stock at an exercise price of $20 per share,
when Stock has a current fair market value of $25 per share. Using the
Stock-for-Stock payment method, the Participant would deliver 800 shares
of Stock (worth $20,000) to exercise the Eligible Stock Option and
receive, in return, 800 shares of Stock plus a Qualifying Gain (in this
case, in the form of an unfunded and unsecured promise to pay money or
property in the future) equal to $5,000 (i.e., the current value of the
remaining 200 shares of Stock).
1.37 "Restricted Stock" shall mean unvested shares of restricted stock
awarded to the Participant under any Company stock incentive plan.
1.38 "Restricted Stock Account" shall mean (i) the sum of the Participant's
Annual Restricted Stock Amounts, plus (ii) amounts credited (net of
amounts debited) in accordance with all the applicable provisions of
this Plan that relate to the Participant's Restricted Stock Account,
less (iii) all distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the Participant's
Restricted Stock Account.
1.39 "Restricted Stock Amount" shall mean, for any grant of Restricted Stock,
the amount of such Restricted Stock deferred in accordance with Section
3.8 of this Plan, calculated using the closing price of Stock as of the
end of the business day closest to the date such Restricted Stock would
otherwise vest, but for the election to defer.
1.40 "Retirement", "Retire(s)" or "Retired" shall mean, with respect to an
Employee, severance from employment from all Employers for any reason
other than a leave of absence, death or Disability at such time as the
sum of the Employee's age and Years of Service equals at least
sixty-five (65) or more, provided that the Employee is then at least
fifty-five (55) years of age.
1.41 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.42 "Rollover Account" shall mean (i) the sum of the Participant's Rollover
Amount, plus (ii) amounts credited (net of amounts debited) in
accordance with all the applicable provisions of this Plan that relate
to the Participant's Rollover Account, less (iii) all distributions made
to the Participant or his or her Beneficiary pursuant to this Plan that
relate to the Participant's Rollover Account.
1.43 "Rollover Amount" shall mean the amount determined in accordance with
Section 3.9.
1.44 "Short-Term Payout" shall mean the payout set forth in Section 4.1.
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1.45 "Stock" shall mean KB Home common stock, $1.00 par value, or any other
equity securities of the Company designated by the Committee.
1.46 "Stock Option Account" shall mean the sum of (i) the Participant's
Annual Stock Option Amounts, plus (ii) amounts credited (net of amounts
debited) in accordance with all the applicable provisions of this Plan
that relate to the Participant's Stock Option Account, less (iii) all
distributions made to the Participant or his or her Beneficiary pursuant
to this Plan that relate to the Participant's Stock Option Account.
1.47 "Stock Option Amount" shall mean, for any Eligible Stock Option, the
amount of Qualifying Gains deferred in accordance with Section 3.7 of
this Plan, calculated using the closing price of Stock as of the end of
the business day closest to the date of exercise of such Eligible Stock
Option.
1.48 "Supplemental Deferral Plan" shall mean the Kaufman and Broad Home
Corporation, Inc. Supplemental Deferral plan heretofore adopted by the
Company
1.49 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.50 "Termination of Employment" shall mean the severing of employment with
an Employer, voluntarily or involuntarily, for any reason other than
Retirement, Disability, death or an authorized leave of absence.
Termination of Employment shall not be deemed to occur, however, upon
the transfer of a Participant from the employ of the Company or another
Employer to the employ of any subsidiary or affiliate, regardless of
whether that subsidiary or affiliate is an Employer under the Plan. For
purposes of this Plan, "affiliate" means (1) any entity 50% or more of
the voting interest in which is owned, directly or indirectly, by an
entity which owns, directly or indirectly, 50% or more of the voting
interest in the Company and (2) any entity which owns, directly or
indirectly, 50% or more of the voting interest in the Company.
1.51 "Trust" shall mean one or more trusts established pursuant to that
certain Master Trust Agreement, dated as of March 1, 2000 between the
Company and the trustee named therein, as amended from time to time.
1.52 "Unforeseeable Financial Emergency" shall mean an unanticipated
emergency that is caused by an event beyond the control of the
Participant that would result in severe financial hardship to the
Participant resulting from (i) a sudden and unexpected illness or
accident of the Participant or a dependent of the Participant, (ii) a
loss of the Participant's property due to casualty, or (iii) another
extraordinary and unforeseeable circumstance arising as a result of
events beyond the control of the Participant, all as determined in the
sole discretion of the Committee.
1.53 "Valuation Date" shall mean the last day of each Plan Year or any other
date as of which the Committee, in its sole discretion, designates as a
Valuation Date.
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1.54 "Years of Plan Participation" shall mean the total number of full Plan
Years a Participant has been selected for participation in the Plan
prior to his or her Termination of Employment (determined without regard
to whether deferral elections have been made by the Participant for any
Plan Year). Any partial year shall not be counted. Notwithstanding the
previous sentence, a Participant's first Plan Year of participation
shall be treated as a full Plan Year for purposes of this definition,
even if it is only a partial Plan Year of participation.
1.55 "Years of Service" shall mean the total number of full years in which a
Participant has been employed by one or more Employers. 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. Any partial year of employment
shall not be counted. Notwithstanding any provision of this Plan that
may be construed to the contrary, for purposes of this definition, the
Committee may, in its sole and absolute discretion, deem a Participant
to be credited with additional Years of Service.
ARTICLE 2
SELECTION, ENROLLMENT, ELIGIBILITY
2.1 SELECTION BY COMMITTEE. Participation in the Plan shall be limited to a
select group of Employees of the Employers, each of whom is a member of
management or is highly compensated. From the group of Employees who are
management or highly compensated, the Committee shall select, in its
sole discretion, Employees to participate in the Plan.
2.2 ENROLLMENT REQUIREMENTS. As a condition to participation, each selected
Employee shall complete, execute and return to the Committee a Plan
Agreement, an Election Form and a Beneficiary Designation Form, all
within the number of days specified by the Committee after he or she is
selected to participate in the Plan. In addition, the Committee may
establish from time to time such other enrollment requirements as it
determines in its sole discretion are necessary.
2.3 ELIGIBILITY; COMMENCEMENT OF PARTICIPATION. Provided an Employee
selected to participate in the Plan 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, that Employee shall commence participation in the Plan on
the first day of the month following the month in which the Employee
completes all enrollment requirements. If an Employee fails to meet all
such requirements within the period required, in accordance with Section
2.2, that Employee shall not be eligible to participate in the Plan
until the first day of the Plan Year following the delivery to and
acceptance by the Committee of the required documents.
2.4 TERMINATION OF PARTICIPATION AND/OR DEFERRALS. If the Committee
determines in good faith that a 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
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Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall
have the right, in its sole discretion, to (i) terminate any deferral
election the Participant has made for the remainder of the Plan Year in
which the Participant's membership status changes, and (ii) prevent the
Participant from making future deferral elections or, in the Committee's
discretion, may also (iii) immediately distribute the Participant's then
Account Balance as a Termination Benefit and terminate the Participant's
participation in the Plan.
ARTICLE 3
DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING/TAXES
3.1 MINIMUM DEFERRALS.
(a) ANNUAL BASE SALARY AND ANNUAL BONUS. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral
Amount, Annual Base Salary or Annual Bonus, or both, in the
following minimum amounts for each deferral elected:
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DEFERRAL MINIMUM AMOUNT
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Annual Base Salary $2,000
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Annual Bonus $2,000
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If an election is made for less than 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,
or in the case of the first Plan Year of the Plan itself, the
minimum Annual Base Salary deferral 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.
(c) STOCK OPTION AMOUNT. For each Eligible Stock Option, a
Participant may elect to defer, as his or her Stock Option
Amount, the receipt of shares of Stock to which the Participant
is entitled upon exercise of such option, provided that the
election pertains to at least the number of shares having
following minimum percentage of Qualifying Gain (as a percentage
of all of the Qualifying Gain with respect to exercise of the
Eligible Stock Option:
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DEFERRAL MINIMUM PERCENTAGE
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Qualifying Gain 25%
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provided, however, that such Stock Option Amount shall be no less
than the lesser of $50,000 or 100% of such Qualifying Gain.
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(d) RESTRICTED STOCK AMOUNT. For Restricted Stock, a Participant may
elect to defer, as his or her Restricted Stock Amount, the
following minimum percentage of the Participant's Restricted
Stock as to which the condition to vesting is lapsing at that
time:
------------------------------------------------------
DEFERRAL MINIMUM PERCENTAGE
------------------------------------------------------
Restricted Stock 25%
------------------------------------------------------
provided, however, that the Annual Restricted Stock Amount shall
be no less than the lesser of $50,000 or 100% of the
Participant's Restricted Stock then vesting.
3.2 MAXIMUM DEFERRAL.
(a) ANNUAL BASE SALARY AND ANNUAL BONUS. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral
Amount, Annual Base Salary and Annual Bonus up to the following
maximum percentages for each deferral elected:
------------------------------------------------------
DEFERRAL MAXIMUM PERCENTAGE
------------------------------------------------------
Annual Base Salary 75%
------------------------------------------------------
Annual Bonus 75%
------------------------------------------------------
(b) Notwithstanding the foregoing, if a Participant first becomes a
Participant after the first day of a Plan Year, or in the case of
the first Plan Year of the Plan itself, the maximum Annual
Deferral Amount, with respect to Annual Base Salary and Annual
Bonus 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) For each Eligible Stock Option, a Participant may elect to defer,
as his or her Stock Option Amount, receipt of Stock having
Qualifying Gain up to the following maximum percentage with
respect to exercise of the Eligible Stock Option:
------------------------------------------------------
DEFERRAL MAXIMUM PERCENTAGE
------------------------------------------------------
Qualifying Gain 100%
------------------------------------------------------
(d) Stock Option Amounts may also be limited by other terms or
conditions set forth in the stock option plan or agreement under
which such options are granted.
(e) A Participant may elect to defer up to 100% of his or her
Restricted Stock as to which restrictions lapse.
3.3 ELECTION TO DEFER; EFFECT OF ELECTION FORM.
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(a) FIRST PLAN YEAR. Within thirty days after being designated by the
Committee for participation in the Plan, the Participant shall
make an irrevocable deferral election for the Plan Year in which
the Participant commences participation, along with such other
elections as the Committee deems necessary or desirable under the
Plan. Notwithstanding anything in this Plan to the contrary, a
Participant may not defer any portion of his/her Annual Base
Salary to the Plan unless and until that Participant has deferred
into the 401(k) Plan for the calendar year the maximum amount
authorized by Section 402(g). 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 above) and accepted by the Committee.
Notwithstanding a timely filed election, deferrals of a
Participant's Annual Base Salary under this Plan shall not be
effected in any calendar year until such time as the aggregate
amount deferred under the 401(k) Plan from Annual Base Salary and
Annual Bonus in that calendar year equals the maximum amount
authorized by Section 402(g) for that calendar year.
(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 the
Plan, shall be made by timely delivering 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,
a new Election Form. If no such Election Form is timely delivered
for a Plan Year, the Annual Deferral Amount shall be zero for
that Plan Year. Notwithstanding anything in this Plan to the
contrary, a Participant may not defer any portion of his/her
Annual Base Salary to the Plan unless and until that Participant
has deferred into the 401(k) Plan the maximum amount authorized
by Section 402(g). Notwithstanding a timely filed election,
deferrals of a Participant's Annual Base Salary under this Plan
shall not be effected in any calendar year until such time as the
aggregate amount deferred under the 401(k) Plan from Annual Base
Salary and Annual Bonus in that calendar year equals the maximum
amount authorized by Section 402(g) for that calendar year.
(c) STOCK OPTION DEFERRAL. For an election to defer gain upon an
Eligible Stock Option exercise to be valid: (i) a separate
irrevocable Election Form must be completed and signed by the
Participant with respect to the Eligible Stock Option; (ii) the
Election Form must be timely delivered to the Committee and
accepted by the Committee at least six (6) months prior to the
date the Participant elects to exercise the Eligible Stock
Option; (iii) the Eligible Stock Option must be exercised using
an actual or phantom Stock-for-Stock payment method; and (iv) the
Stock actually or constructively delivered by the Participant to
exercise the Eligible Stock Option must have been owned by the
Participant during the entire six (6) month period prior to its
delivery.
(d) RESTRICTED STOCK. For an election to defer Restricted Stock
Amounts to be valid: (i) a separate irrevocable Election Form
must be completed and signed by the Participant, with respect to
such Restricted Stock; and (ii) such Election Form must be timely
delivered to the Committee and accepted by the Committee at least
six (6) months prior
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<PAGE>
to the date such Restricted Stock vests under the terms of the
Company's stock incentive plan.
3.4 WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS. For each Plan Year, for each
Participant, the Annual Base Salary portion of the Annual Deferral
Amount shall be withheld from each regularly scheduled Annual Base
Salary payroll in equal amounts after the 401(k) Plan has been funded to
the 402(g) limit for that Participant, as adjusted from time to time for
increases and decreases in Annual Base Salary. The Annual Bonus portion
of the Annual Deferral Amount shall be withheld at the time the Annual
Bonus is or otherwise would be paid to the Participant, provided this is
after the 401(k) Plan has been funded to the 402(g) limit for that
Participant, whether or not this occurs during the Plan Year itself.
3.5 ANNUAL COMPANY CONTRIBUTION AMOUNT. 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, which amount shall be for that Participant the Annual 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 an
Annual Company Contribution Amount for that Plan Year. The Annual
Company Contribution Amount, if any, shall be credited as of the last
day of the Plan Year. If a Participant is not employed by an Employer as
of the last day of a Plan Year for a reason other than his or her
Retirement or death while employed, the Annual Company Contribution
Amount for that Plan Year shall be zero.
3.6 ANNUAL COMPANY MATCHING AMOUNT. A Participant's Annual Company Matching
Amount for any Plan Year shall be the sum of all Pay Period Company
Matching Contributions for the Plan Year. For this purpose, a Pay Period
Company Matching Contribution shall mean an amount which, when added to
the matching contribution allocated to the Participant's account under
the 401(k) Plan for the same pay period, equals the match the
Participant would have received under the 401(k) Plan during the
corresponding plan year of the 401(k) Plan, if the portion of Annual
Base Salary elected to be deferred had instead been elected and
contributed as a salary deferral contribution under the 401(k) Plan
(determined as if the 401(k) Plan was not subject to the limitations
imposed under Code Sections 401(a)(17), 401(k)(3), 402(g) and 415). The
Annual Company Matching Amount shall be credited during the Plan Year on
a pay period-by-pay period basis. Notwithstanding any provision of this
Plan to the contrary, the Company shall have the right, in its sole and
absolute discretion, to alter the manner in which the Annual Company
Matching Amount is calculated and/or to terminate the Annual Company
Matching Amount.
3.7 STOCK OPTION AMOUNT. Subject to any terms and conditions imposed by the
Committee, Participants may elect to defer, under the Plan, receipt of
Stock to which they are entitled as a result of an Eligible Stock Option
exercise. Stock Option Amounts, equal to the Qualifying Gains
attributable to the Stock as to which receipt is deferred shall be
credited to the Participant
12
<PAGE>
on the books of the Employer at the time Stock would otherwise have been
delivered to the Participant pursuant to the Eligible Stock Option
exercise, but for the election to defer.
3.8 RESTRICTED STOCK AMOUNT. Subject to any terms and conditions imposed by
the Committee, Participants may elect to defer, under the Plan, receipt
of Restricted Stock. Restricted Stock Amounts shall be credited to the
Participant on the books of the Employer in connection with such an
election at the time the Restricted Stock would otherwise vest (i.e.,
the restrictions on such Stock would otherwise lapse) under the terms of
the Company's stock incentive plan, but for the election to defer, and
the certificates representing such shares of Stock, if previously
delivered to the Participant, shall be returned to the Employer before
such time.
3.9 ROLLOVER AMOUNT. If an Employee has an account balance in the
Supplemental Deferral Plan, the Company will specify a Transfer Date on
which the Employee's Supplemental Deferral Plan account balance, as
determined as of the Transfer Date, shall be transferred and added to
the Participant's Account Balance under this Plan, and shall thereafter
be governed by the terms and conditions of this Plan and shall be
referred to as the "Rollover Amount." All elections made by a
Participant with respect to his or her account balance under the
Supplemental Deferral Plan shall apply to his or her Rollover Amount
under this Plan.
3.10 INVESTMENT OF TRUST ASSETS. The Trustee of the Trust shall be
authorized, upon written instructions received from the Committee or
investment manager appointed by the Committee, to invest and reinvest
the assets of the Trust in accordance with the applicable Trust
Agreement, including the disposition of Stock and reinvestment of the
proceeds in one or more investment vehicles designated by the Committee.
3.11 SOURCES OF STOCK. If Stock is credited under the Plan in the Trust in
connection with an Eligible Stock Option exercise or in connection with
a deferral of Restricted Stock, the shares so credited shall be deemed
to have originated, and shall be counted against the number of shares
reserved, under such other plan, program or arrangement.
3.12 VESTING.
(a) A Participant shall at all times be 100% vested in his or her
Deferral Account, Stock Option Account, Restricted Stock Account
and Rollover Account.
(b) A Participant shall be vested in his or her Company Contribution
Account in accordance with the vesting schedules established by
the Committee, in its sole and absolute discretion, for each
Annual Company Contribution Amount (and amounts credited or
debited thereon) at the time each such Annual Company
Contribution Amount is first credited to the Participant's
Account Balance under the Plan. The vesting schedules established
by the Committee for each Annual Company Contribution Amount may
be different for different Participants.
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<PAGE>
(c) A Participant shall be vested in his or her Annual Company
Matching Amount in accordance with the following schedule:
-----------------------------------------------------------------------------
YEARS OF SERVICE ON DATE VESTED PERCENTAGE OF ANNUAL COMPANY
OF TERMINATION OF EMPLOYMENT MATCHING ACCOUNT
-----------------------------------------------------------------------------
Less than 1 year 0%
-----------------------------------------------------------------------------
1 year or more, but less than 2 10%
-----------------------------------------------------------------------------
2 years or more, but less than 3 25%
-----------------------------------------------------------------------------
3 years or more, but less than 4 50%
-----------------------------------------------------------------------------
4 years or more, but less than 5 75%
-----------------------------------------------------------------------------
5 years or more 100%
-----------------------------------------------------------------------------
(d) Notwithstanding anything to the contrary contained in this
Section 3.12, except as provided in subsection (d) below, in the
event of a Change in Control, a Participant's Company
Contribution Account and Company Matching Account shall
immediately become 100% vested (without regard to whether it is
already vested in accordance with the above vesting schedules).
(e) Notwithstanding subsection (d) in this Section 3.12, the vesting
schedule for a Participant's Company Contribution Account shall
not be accelerated to the extent that the Committee determines
that such acceleration would cause the deduction limitations of
Section 280G of the Code to become effective. In the event that
any portion of a Participant's Company Contribution Account is
not vested pursuant to such a determination, the Participant may
request independent verification of the Committee's calculations
with respect to the application of Section 280G. In such case,
the Committee must provide to the Participant within 15 business
days of such a request an opinion from a nationally recognized
accounting firm selected by the Participant (the "Accounting
Firm"), to the effect that, in the Accounting Firm's opinion that
any limitation in the vested percentage hereunder is necessary to
avoid the limits of Section 280G, and containing supporting
calculations, or, in the absence of such an opinion, shall cause
the relevant portion of the Participant's Company Contribution
Account to become vested. The cost of such opinion shall be paid
for by the Company.
3.13 CREDITING/DEBITING OF ACCOUNT BALANCES. In accordance with, and subject
to, the rules and procedures that are established from time to time by
the Committee, in its sole discretion, amounts shall be credited or
debited to a Participant's Account Balance in accordance with the
following rules:
(a) ELECTION OF MEASUREMENT FUNDS. Subject to Section 3.13(f) below,
a Participant, in connection with his or her initial deferral
election in accordance with Section 3.3(a) above, shall elect, on
the Election Form, one or more Measurement Fund(s) to be used to
determine the additional amounts to be credited to his or her
Account Balance for the first business day in which the
Participant commences participation in the Plan and continuing
thereafter for each subsequent day in which the Participant
participates in the
14
<PAGE>
Plan, unless changed in accordance with the next sentence.
Subject to Section 3.13(f) below, commencing with the first
business day that follows the Participant's commencement of
participation in the Plan and continuing thereafter for each
subsequent day in which the Participant participates in the Plan,
the Participant may (but is not required to) elect, by submitting
an Election Form to the Committee that is accepted by the
Committee, to add or delete one or more Measurement Fund(s) to be
used to determine the additional amounts to be credited to his or
her Account Balance, or to change the portion of his or her
Account Balance allocated to each previously or newly elected
Measurement Fund. If an election is made in accordance with the
previous sentence, it shall apply to the next business day and
continue thereafter for each subsequent day in which the
Participant participates in the Plan, unless changed in
accordance with the previous sentence.
(b) PROPORTIONATE ALLOCATION. In making any election described in
Section 3.13(a) above, the Participant shall specify on the
Election Form, in increments of five percentage points (5%), the
percentage of his or her Account Balance to have gains and losses
measured by a Measurement Fund.
(c) MEASUREMENT FUNDS. From time to time, the Committee in its sole
discretion shall select and announce to Participants its
selection of mutual funds, insurance company separate accounts,
indexed rates or other methods, one of which shall be the Stock
(each, a "Measurement Fund"), for the purpose of providing the
basis on which gains and losses shall be attributed to Account
Balances under the Plan. The Committee may, in its sole
discretion, discontinue, substitute or add a Measurement Fund at
any time, provided, however, that the Committee may never
discontinue or substitute the Company Stock Measurement Fund.
Each such action will take effect as of the first day of the
calendar quarter that follows by thirty (30) days the day on
which the Committee gives Participants advance written notice of
such change.
(d) CREDITING OR DEBITING METHOD. The performance of each elected
Measurement Fund (either positive or negative) will be determined
by the Committee, in its reasonable discretion, based on
available reports of the performance of the Measurement Funds. A
Participant's Account Balance shall be credited or debited on a
daily basis based on the performance of each Measurement Fund
selected by the Participant, as determined by the Committee in
its sole discretion, as though (i) a Participant's Account
Balance were invested in the Measurement Fund(s) selected by the
Participant, in the percentages applicable to such day, as of the
close of business on such day, at the closing price on such date;
(ii) the portion of the Annual Deferral Amount that was actually
deferred during any day were invested in the Measurement Fund(s)
selected by the Participant, in the percentages applicable to
such day, no later than the close of business on the first
business day after the day on which such amounts are actually
deferred from the Participant's Annual Base Salary through
reductions in his or her payroll, at the closing price on such
date; and (iii) any distribution made to a Participant that
decreases such
15
<PAGE>
Participant's Account Balance ceased being invested in the
Measurement Fund(s), in the percentages applicable to such day,
no earlier than one business day prior to the distribution, at
the closing price on such date. The Participant's Annual Stock
Option Amount(s) shall be credited to his or her Stock Option
Account no later than the close of business on the first business
day after the day on which the Eligible Stock Option was
exercised. The Participant's Annual Restricted Stock Amounts
shall be credited to his or her Restricted Stock Account no later
than the close of business on the first business day after the
day on which the Restricted Stock to which it relates would have
vested, but for the election to defer.
(e) NO ACTUAL INVESTMENT. Notwithstanding any other provision of this
Plan that may be interpreted to the contrary, the Measurement
Funds are to be used for measurement purposes only, and a
Participant's election of any such Measurement Fund, the
allocation to his or her Account Balance thereto, the calculation
of additional amounts and the crediting or debiting of such
amounts to a Participant's Account Balance shall not be
considered or construed in any manner as an actual investment of
his or her Account Balance in any such Measurement Fund. In the
event that the Company or the Trustee (as that term is defined in
the Trust), in its own discretion, decides to invest funds in any
or all of the Measurement Funds, no Participant shall have any
rights in or to such investments themselves. Without limiting the
foregoing, a Participant's Account Balance shall at all times be
a bookkeeping entry only and shall not represent any investment
made on his or her behalf by the Company or the Trust; the
Participant shall at all times remain an unsecured creditor of
the Company.
(f) STOCK OPTION ACCOUNT AND RESTRICTED STOCK ACCOUNT MUST BE
ALLOCATED TO COMPANY STOCK MEASUREMENT FUND. Notwithstanding any
provision of this Plan that may be construed to the contrary, a
Participant's Stock Option Account and Restricted Stock Account
must always be allocated to the Company Stock Measurement Fund,
may never be reallocated to any other Measurement Fund and must
be distributed from this Plan in the form of actual shares of
Stock.
3.14 FICA AND OTHER TAXES.
(a) ANNUAL DEFERRAL AMOUNTS. For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the
Participant's Employer(s) shall withhold from that portion of the
Participant's Annual Base Salary or Annual Bonus that is not
being deferred, in a manner determined by the Employer(s), the
Participant's share of FICA, other employment taxes and other
employee contributions on such Annual Deferral Amount. If
necessary, the Committee may reduce the Annual Deferral Amount in
order to comply with this Section 3.14.
(b) COMPANY MATCHING AMOUNTS. When a participant becomes vested in a
portion of his or her Company Matching Account, the Participant's
Employer(s) shall withhold from the Participant's Annual Base
Salary or Annual Bonus that is not deferred, in a manner
16
<PAGE>
determined by the Employer(s), the Participant's share of FICA
and other employment taxes. If necessary, the Committee may
reduce the vested portion of the Participant's Company Matching
Account in order to comply with this Section 3.14.
(c) ANNUAL STOCK OPTION AMOUNTS AND ANNUAL RESTRICTED STOCK AMOUNTS.
For each Plan Year in which an Annual Stock Option Amount or
Annual Restricted Stock Amount is being first withheld from a
Participant, the Participant's Employer(s) shall withhold from
that portion of the Participant's Annual Base Salary or Annual
Bonus that is not being deferred, in a manner determined by the
Employer(s), the Participant's share of FICA and other employment
taxes on such Annual Stock Option Amount or Annual Restricted
Stock Amount. If necessary, the Committee may reduce the Annual
Deferral Amount in order to comply with this Section 3.14.
3.15 DISTRIBUTIONS. The Participant's Employer(s), or the trustee of the
Trust, shall withhold from any payments made to a Participant under this
Plan all federal, state and local income, employment and other taxes
required to be withheld by the Employer(s), or the trustee of the Trust,
in connection with such payments, in amounts and in a manner to be
determined in the sole discretion of the Employer(s) and the trustee of
the Trust, respectively (whichever is making the payment).
ARTICLE 4
SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES;
WITHDRAWAL ELECTION
4.1 SHORT-TERM PAYOUT. In connection with each election to defer an Annual
Deferral Amount, a Participant may irrevocably elect to receive a future
"Short-Term Payout" from the Plan with respect to such Annual Deferral
Amount. Subject to the Deduction Limitation, the Short-Term Payout shall
be a lump sum payment in an amount that is equal to the Annual Deferral
(or a specified portion thereof) plus amounts credited or debited in the
manner provided in Section 3.13 above on that amount, determined at the
time that the Short-Term Payout becomes payable (rather than the date of
a Termination of Employment) or, alternatively if so elected by the
Participant, a fixed stated sum, up to the total Account. Subject to the
Deduction Limitation and the other terms and conditions of this Plan,
each Short-Term Payout elected shall be paid out during a 60 day period
commencing immediately after the last day of any Plan Year designated by
the Participant that is at least three Plan Years after the Plan Year in
which the Annual Deferral Amount is actually deferred.
4.2 OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM. Should an event occur
that triggers a benefit under Article 5, 6, 7 or 8, any Annual Deferral
Amount, plus amounts credited or debited thereon, that is subject to a
Short-Term Payout election under Section 4.1 shall not be paid in
accordance with Section 4.1 but shall be paid in accordance with the
other applicable Article.
17
<PAGE>
4.3 WITHDRAWAL PAYOUT/SUSPENSIONS FOR UNFORESEEABLE FINANCIAL EMERGENCIES.
If the Participant experiences an Unforeseeable Financial Emergency, the
Participant may petition the Committee to (i) suspend any deferrals
required to be made by a Participant or (ii) receive a partial or full
payout from the Plan. The payout shall not exceed the lesser of the
Participant's Account Balance, calculated as if such Participant were
receiving a Termination Benefit, or the amount reasonably needed to
satisfy the Unforeseeable Financial Emergency. If, subject to the sole
discretion of the Committee, the petition for a suspension and/or payout
is approved, suspension shall take effect upon the date of approval and
any payout shall be made within 60 days of the date of approval. The
payment of any amount under this Section 4.3 shall not be subject to the
Deduction Limitation.
4.4 WITHDRAWAL ELECTION. A Participant (or, after a Participant's death, his
or her Beneficiary) may elect, at any time, to withdraw a portion or all
of his or her Account Balance, calculated as if there had occurred a
Termination of Employment as of the day of the election, less a
withdrawal penalty equal to 10% of the amount withdrawn (the net amount
shall be referred to as the "Withdrawal Amount"). This election can be
made at any time, before or after Retirement, Disability, death or
Termination of Employment, and whether or not the Participant (or
Beneficiary) is in the process of being paid pursuant to an installment
payment schedule. If made before Retirement, Disability or death, a
Participant's Withdrawal Amount shall be his or her Account Balance (or
portion of his or her Account Balance elected by the Participant)
calculated as if there had occurred a Termination of Employment as of
the day of the election. Notwithstanding anything in this Section or the
Plan to the contrary, a Participant may not elect a Withdrawal Amount
less than $5,000. The Participant (or his or her Beneficiary) shall make
this election by giving the Committee advance written notice of the
election in a form determined from time to time by the Committee. The
Participant (or his or her Beneficiary) shall be paid the Withdrawal
Amount within 60 days of his or her election and the Participant's
Account shall concurrently be reduced by the Withdrawal Amount plus the
10% penalty. The payment of this Withdrawal Amount shall not be subject
to the Deduction Limitation.
ARTICLE 5
RETIREMENT BENEFIT
5.1 RETIREMENT BENEFIT. Subject to the Deduction Limitation, a Participant
who Retires shall receive, as a Retirement Benefit, his or her Account
Balance.
5.2 PAYMENT OF RETIREMENT BENEFIT. A Participant, in connection with his or
her commencement of participation in the Plan, shall elect on an
Election Form the form in which the Retirement Benefit will be paid, if
that benefit becomes payable under the terms of the Plan, which form
shall be a lump sum or an Annual Installment Method of 5, 10, or 15
years. The Participant may annually change his or her election to an
allowable alternative payout period by submitting a new Election Form to
the Committee, provided that the last such Election Form that is
submitted at least 1 year prior to the Participant's Retirement and is
accepted by the Committee
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<PAGE>
in its sole discretion shall be the governing Election Form as to this
matter. If a Participant does not make any election with respect to the
payment of the Retirement Benefit, then such benefit shall be payable in
a lump sum. The lump sum payment shall be made, or installment payments
shall commence, no later than 60 days after the Participant Retires. Any
payment made shall be subject to the Deduction Limitation.
5.3 DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT. If a Participant dies
after Retirement but before the Retirement Benefit is paid in full, the
Participant's unpaid Retirement Benefit payments shall continue and
shall be paid to the Participant's Beneficiary (a) over the remaining
number of years and in the same amounts as that benefit would have been
paid to the Participant had the Participant survived, or (b) in a lump
sum, if requested by the Beneficiary and allowed in the sole discretion
of the Committee, that is equal to the Participant's unpaid remaining
Account Balance.
ARTICLE 6
PRE-RETIREMENT SURVIVOR BENEFIT
6.1 PRE-RETIREMENT SURVIVOR BENEFIT. Subject to the Deduction Limitation,
the Participant's Beneficiary shall receive a Pre-Retirement Survivor
Benefit equal to the Participant's Account Balance if the Participant
dies before he or she Retires, experiences a Termination of Employment
or suffers a Disability.
6.2 PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT. A Participant, in connection
with his or her commencement of participation in the Plan, shall elect
on an Election Form whether the Pre-Retirement Survivor Benefit shall be
received by his or her Beneficiary in a lump sum or pursuant to an
Annual Installment Method of 5, 10 or 15 years. The Participant may
annually change this election to an allowable alternative payout period
by submitting a new Election Form to the Committee, which form must be
accepted by the Committee in its sole discretion. The Election Form most
recently accepted by the Committee prior to the Participant's death
shall govern the payout of the Participant's Pre-Retirement Survivor
Benefit. If a Participant does not make any election with respect to the
payment of the Pre-Retirement Survivor Benefit, then such benefit shall
be paid in a lump sum. Despite the foregoing, if the Participant's
Account Balance at the time of his or her death is less than $25,000,
payment of the Pre-Retirement Survivor Benefit may be made, in the sole
discretion of the Committee, in a lump sum or pursuant to an Annual
Installment Method of not more than 5 years. The lump sum payment shall
be made, or installment payments shall commence, no later than 60 days
after the Committee is provided with proof that is satisfactory to the
Committee of the Participant's death. Any payment made shall be subject
to the Deduction Limitation.
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<PAGE>
ARTICLE 7
TERMINATION BENEFIT
7.1 TERMINATION BENEFIT. Subject to the Deduction Limitation, the
Participant shall receive a Termination Benefit, which shall be equal to
the Participant's Account Balance if a Participant experiences a
Termination of Employment prior to his or her Retirement, death or
Disability.
7.2 PAYMENT OF TERMINATION BENEFIT. The Termination Benefit shall be paid to
a Participant in a lump sum. Notwithstanding the foregoing or anything
in this Plan to the contrary, to the extent a Participant's Account
Balance is equal to or greater than $25,000 at the time of Termination
of Employment, the Participant may request that the Committee cause the
Termination Benefit to be paid pursuant to a method other than lump sum.
The Committee may, in its sole discretion, accept, modify or reject the
request of a Participant to pay the Termination Benefit pursuant to a
method other than lump sum. The lump sum payment shall be made, or
installment payments shall commence, no later than 60 days after
Participant terminates his or her employment. Notwithstanding anything
in this Section 7.2 or the Plan to the contrary, a Participant may
request that the Company pay the lump sum payment or commence the
installment payments 60 days after the end of the Plan Year in which the
Participant terminates his or her employment. The Committee may, in its
sole discretion, accept or reject such a request from a Participant.
ARTICLE 8
DISABILITY WAIVER AND BENEFIT
8.1 DISABILITY WAIVER.
(a) WAIVER OF DEFERRAL. A Participant who is determined by the
Committee to be suffering from a Disability shall (i) have no
further deferrals of the Annual Deferral Amount that would
otherwise have been withheld from a Participant's Annual Base
Salary or Annual Bonus for the Plan Year during which the
Participant first suffers a Disability and (ii) have no deferral
of any unvested Restricted Stock Amount or unexercised Stock
Option Amount as to which the Participant had previously elected
deferral. During the period of Disability, the Participant shall
not be allowed to make any additional deferral elections, but
will continue to be considered a Participant for all other
purposes of this Plan.
(b) RETURN TO WORK. If a Participant returns to employment with an
Employer, after a Disability ceases, the Participant may elect to
defer an Annual Deferral Amount, Stock Option Amount and
Restricted Stock Amount for the Plan Year following his or her
return to employment or service and for every Plan Year
thereafter while a Participant in the Plan; provided such
deferral elections are otherwise allowed and an Election Form is
delivered to and accepted by the Committee for each such election
in accordance with Section 3.3 above.
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8.2 CONTINUED ELIGIBILITY; DISABILITY BENEFIT. A Participant suffering a
Disability shall, for benefit purposes under this Plan, continue to be
considered to be employed and shall be eligible for the benefits
provided for in Articles 4, 5, 6 or 7 in accordance with the provisions
of those Articles. Notwithstanding the above, the Committee shall have
the right to, in its sole and absolute discretion and for purposes of
this Plan only, and must in the case of a Participant who is otherwise
eligible to Retire, deem the Participant to have experienced a
Termination of Employment, or in the case of a Participant who is
eligible to Retire, to have Retired, at any time (or in the case of a
Participant who is eligible to Retire, as soon as practicable) after
such Participant is determined to be suffering a Disability, in which
case the Participant shall receive a Disability Benefit equal to his or
her Account Balance at the time of the Committee's determination;
provided, however, that should the Participant otherwise have been
eligible to Retire, he or she shall be paid in accordance with Article
5. The Disability Benefit shall be paid in a lump sum within 60 days of
the Committee's exercise of such right. Any payment made shall be
subject to the Deduction Limitation.
ARTICLE 9
BENEFICIARY DESIGNATION
9.1 BENEFICIARY. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary and contingent) to
receive any benefits payable under the Plan to a beneficiary upon the
death of a Participant. The Beneficiary designated under this Plan may
be the same as or different from the Beneficiary designation under any
other plan of an Employer in which the Participant participates.
9.2 BENEFICIARY DESIGNATION; CHANGE; SPOUSAL CONSENT. A Participant shall
designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee or its
designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the
terms of the Beneficiary Designation Form and the Committee's rules and
procedures, as in effect from time to time. A Participant may name
someone other than his or her spouse as a Beneficiary only if a spousal
consent, in the form designated by the Committee, is signed by that
Participant's spouse and returned to the Committee. Upon the acceptance
by the Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The Committee shall be
entitled to rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his or her death.
9.3 ACKNOWLEDGMENT. No designation or change in designation of a Beneficiary
shall be effective until received and acknowledged in writing by the
Committee or its designated agent.
9.4 NO BENEFICIARY DESIGNATION. If a Participant fails to designate a
Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the
Participant's designated Beneficiary shall be deemed to be his or her
surviving spouse. If the Participant has no
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surviving spouse, the Participant's designated Beneficiary shall be
deemed to be the Participant's estate.
9.5 DOUBT AS TO BENEFICIARY. If the Committee has any doubt as to the proper
Beneficiary to receive payments pursuant to this Plan, the Committee
shall have the right, exercisable in its discretion, to cause the
Participant's Employer to withhold such payments until this matter is
resolved to the Committee's satisfaction.
9.6 DISCHARGE OF OBLIGATIONS. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to
the Participant, and that Participant's Plan Agreement shall terminate
upon such full payment of benefits.
ARTICLE 10
LEAVE OF ABSENCE
10.1 PAID LEAVE OF ABSENCE. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of absence
from the employment of the Employer, the Participant shall continue to
be considered employed by the Employer and the Annual Deferral Amount
shall continue to be withheld during such paid leave of absence in
accordance with Section 3.3.
10.2 UNPAID LEAVE OF ABSENCE. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave of absence
from the employment of the Employer, the Participant shall continue to
be considered employed by the Employer and deferrals shall not be made,
in the absence of compensation. Upon such expiration of the unpaid leave
and resumption of entitlement to compensation, deferrals shall resume
for the remaining portion of the Plan Year in which the return occurs,
based on the deferral election, if any, made for that Plan Year. If no
election was made for that Plan Year, no deferral shall be withheld.
ARTICLE 11
TERMINATION, AMENDMENT OR MODIFICATION
11.1 TERMINATION. Although the Company anticipates that it will continue the
Plan for an indefinite period of time, there is no guarantee that the
Company will continue the Plan or will not terminate the Plan at any
time in the future. Accordingly, the Company reserves the right to
discontinue its sponsorship of the Plan and to terminate the Plan at any
time with respect to any or all of its participating Employees, by
action of its Board of Directors. Upon the termination of the Plan, the
Plan Agreements of the affected Participants shall terminate and their
Account Balances, determined as if they had experienced a Termination of
Employment on the date of Plan termination or, if Plan termination
occurs after the date upon which a Participant was eligible to Retire,
then with respect to that Participant as if he or she had Retired on the
date of Plan termination, shall be paid to the Participants as follows:
Prior to a Change in Control, if the Plan is terminated with respect to
all of its Participants, the Company shall have the right, in its sole
discretion, and notwithstanding any elections made by the Participant,
to pay such
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benefits in a lump sum or pursuant to an Annual Installment Method of up
to 15 years, with amounts credited and debited during the installment
period as provided herein. Prior to a Change in Control, if the Plan is
terminated with respect to less than all of its Participants, the
Company shall be required to pay such benefits in a lump sum. After a
Change in Control, the Company shall be required to pay such benefits in
a lump sum. The termination of the Plan shall not adversely affect any
Participant or Beneficiary who has become entitled to the payment of any
benefits under the Plan as of the date of termination; provided however,
that the Company shall have the right to accelerate installment payments
without a premium or prepayment penalty by paying the Account Balance in
a lump sum or pursuant to an Annual Installment Method using fewer
years.
11.2 AMENDMENT. The Company may, at any time, amend or modify the Plan in
whole or in part by the action of its Board of Directors; provided,
however, that: (i) no amendment or modification shall be effective to
decrease or restrict the value of a Participant's Account Balance in
existence at the time the amendment or modification is made, calculated
as if the Participant had experienced a Termination of Employment as of
the effective date of the amendment or modification or, if the amendment
or modification occurs after the date upon which the Participant was
eligible to Retire, the Participant had Retired as of the effective date
of the amendment or modification, (ii) no amendment or modification
shall be effective upon or after a Change in Control without the prior
written consent of a majority of the Participants, and (iii) no
amendment or modification of this Section 11.2 or Section 12.2 of the
Plan shall be effective. The amendment or modification of the Plan shall
not affect any Participant or Beneficiary who has become entitled to the
payment of benefits under the Plan as of the date of the amendment or
modification; provided, however, that the Employer shall have the right
to accelerate installment payments by paying the Account Balance in a
lump sum or pursuant to an Annual Installment Method using fewer years
(provided that the present value of all payments that will have been
received by a Participant at any given point of time under the different
payment schedule shall equal or exceed the present value of all payments
that would have been received at that point in time under the original
payment schedule).
11.3 PLAN AGREEMENT. Despite the provisions of Sections 11.1 and 11.2 above,
if a Participant's Plan Agreement contains benefits or limitations that
are not in this Plan document, the Company may only amend or terminate
such provisions with the consent of the Participant.
11.4 EFFECT OF PAYMENT. The full payment of the applicable benefit under
Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries
under this Plan and the Participant's Plan Agreement shall terminate.
ARTICLE 12
ADMINISTRATION
12.1 COMMITTEE DUTIES. Except as otherwise provided in this Article 12, this
Plan shall be administered by a Committee, which shall consist of the
Board, or such committee as the Board shall appoint. Members of the
Committee may be Participants under this Plan. The Committee
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shall also have the discretion and authority to (i) make, amend,
interpret, and enforce all appropriate rules and regulations for the
administration of this Plan and (ii) decide or resolve any and all
questions including interpretations of this Plan, as may arise in
connection with the Plan. Any individual serving on the Committee who is
a Participant shall not vote or act on any matter relating solely to
himself or herself. When making a determination or calculation, the
Committee shall be entitled to rely on information furnished by a
Participant, the Company or any Employer.
12.2 ADMINISTRATION UPON CHANGE IN CONTROL. For purposes of this Plan, the
Company shall be the "Administrator" at all times prior to the
occurrence of a Change in Control. Upon and after the occurrence of a
Change in Control, the "Administrator" shall be an independent third
party selected by the Trustee and approved by the individual who,
immediately prior to such event, was the Company's Chief Executive
Officer or, if not so identified, the Company's highest ranking officer
(the "Ex-CEO"). The Administrator shall have the discretionary power to
determine all questions arising in connection with the administration of
the Plan and the interpretation of the Plan and Trust including, but not
limited to benefit entitlement determinations; provided, however, upon
and after the occurrence of a Change in Control, the Administrator shall
have no power to direct the investment of Plan or Trust assets or select
any investment manager or custodial firm for the Plan or Trust. Upon and
after the occurrence of a Change in Control, the Company must: (1) pay
all reasonable administrative expenses and fees of the Administrator;
(2) indemnify the Administrator against any costs, expenses and
liabilities including, without limitation, attorney's fees and expenses
arising in connection with the performance of the Administrator
hereunder, except with respect to matters resulting from the gross
negligence or willful misconduct of the Administrator or its employees
or agents; and (3) supply full and timely information to the
Administrator or all matters relating to the Plan, the Trust, the
Participants and their Beneficiaries, the Account Balances of the
Participants, the date of circumstances of the Retirement, Disability,
death or Termination of Employment of the Participants, and such other
pertinent information as the Administrator may reasonably require. Upon
and after a Change in Control, the Administrator may be terminated (and
a replacement appointed) by the Trustee only with the approval of the
Ex-CEO. Upon and after a Change in Control, the Administrator may not be
terminated by the Company.
12.3 AGENTS. In the administration of this Plan, the Committee and the
Administrator may, from time to time, employ agents and delegate to them
such of their respective administrative duties as they see fit
(including acting through a duly appointed representative) and may from
time to time consult with counsel who may be counsel to any Employer.
12.4 BINDING EFFECT OF DECISIONS. The decision or action of the Administrator
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules
and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.
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12.5 INDEMNITY OF COMMITTEE. All Employers shall indemnify and hold harmless
the members of the Committee, and any Employee to whom the duties of the
Committee may be delegated, and the Administrator against any and all
claims, losses, damages, expenses or liabilities arising from any action
or failure to act with respect to this Plan, except in the case of
willful misconduct by the Committee, any of its members, any such
Employee or the Administrator.
12.6 EMPLOYER INFORMATION. To enable the Committee and Administrator to
perform their respective functions, the Company and each Employer shall
supply full and timely information to the Committee or Administrator, as
the case may be, on all matters relating to the compensation of its
Participants, the date and circumstances of the Retirement, Disability,
death or Termination of Employment of its Participants, and such other
pertinent information as the Committee or Administrator may reasonably
require.
ARTICLE 13
OTHER BENEFITS AND AGREEMENTS
13.1 COORDINATION WITH OTHER BENEFITS. The benefits provided for a
Participant and Participant's Beneficiary under the Plan are in addition
to any other benefits available to such Participant under any other plan
or program for employees of the Participant's Employer. The Plan shall
supplement and shall not supersede, modify or amend any other such plan
or program except as may otherwise be expressly provided.
ARTICLE 14
CLAIMS PROCEDURES
14.1 PRESENTATION OF CLAIM. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as
a "Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such Claimant
from the Plan. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within 60 days after
such notice was received by the Claimant. All other claims must be made
within 180 days of the date on which the event that caused the claim to
arise occurred. The claim must state with particularity the
determination desired by the Claimant.
14.2 NOTIFICATION OF DECISION. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in
writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or
in part, to the Claimant's requested determination, and such
notice must set forth in a manner calculated to be understood by
the Claimant:
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(i) the specific reason(s) for the denial of the claim, or any
part of it;
(ii) specific reference(s) to pertinent provisions of the Plan
upon which such denial was based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is
necessary; and
(iv) an explanation of the claim review procedure set forth in
Section 14.3 below.
14.3 REVIEW OF A DENIED CLAIM. Within 60 days after receiving a notice from
the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file
with the Committee a written request for a review of the denial of the
claim. Thereafter, but not later than 30 days after the review procedure
began, the Claimant (or the Claimant's duly authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole
discretion, may grant.
14.4 DECISION ON REVIEW. The Committee shall render its decision on review
promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the
Committee's decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be understood by
the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which
the decision was based; and
(c) such other matters as the Committee deems relevant.
14.5 LEGAL ACTION. A Claimant's compliance with the foregoing provisions of
this Article 14 is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for benefits under
this Plan.
ARTICLE 15
TRUST
15.1 ESTABLISHMENT OF THE TRUST. The Company may establish the Trust, and
each Employer may transfer over to the Trust such assets as the Employer
determines, in its sole discretion, to
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provide for its respective future liabilities created with respect to
the Annual Deferral Amounts, Annual Company Contribution Amounts,
Company Matching Amounts, Annual Stock Option Amounts and Annual
Restricted Stock Amounts for such Employer's Participants for all
periods prior to the transfer, as well as any debits and credits to the
Participants' Account Balances for all periods prior to the transfer,
taking into consideration the value of the assets in the trust at the
time of the transfer.
15.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUST. The provisions of the Plan
and the Plan Agreement shall govern the rights of a Participant to
receive distributions pursuant to the Plan. The provisions of the Trust
shall govern the rights of the Employers, Participants and the other
creditors of the Employers to the assets transferred to the Trust. Each
Employer shall at all times remain liable to carry out its obligations
under the Plan.
15.3 DISTRIBUTIONS FROM THE TRUST. Each Employer's obligations under the Plan
may be satisfied with Trust assets distributed pursuant to the terms of
the Trust, and any such distribution shall reduce the Employer's
obligations under this Plan.
15.4 STOCK TRANSFERRED TO THE TRUST. Notwithstanding any other provision of
this Plan or the Trust, if assets are distributed to a Participant in a
distribution which reduces the Participant's Stock Option Account
balance or Restricted Stock Account balance under this Plan, such
distribution must be made in the form of Stock.
ARTICLE 16
MISCELLANEOUS
16.1 STATUS OF PLAN. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that "is unfunded and is
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 Plan shall be administered and interpreted
to the extent possible in a manner consistent with that intent.
16.2 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights,
interests or claims in any property or assets of an Employer. For
purposes of the payment of benefits under this Plan, the Employer's
assets shall be, and remain, neither pledged nor restricted under or as
a result of this Plan. An Employer's obligation under the Plan shall be
merely that of an unfunded and unsecured promise to pay money in the
future.
16.3 EMPLOYER'S LIABILITY. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Plan Agreement, as
entered into between the Employer and a Participant. An Employer shall
have no obligation to a Participant under the Plan except as expressly
provided in the Plan and his or her Plan Agreement.
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16.4 NONASSIGNABILITY. Neither a Participant nor any other person shall have
any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate, alienate or
convey in advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are
expressly declared to be, unassignable and non-transferable. No part of
the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant
or any other person, be transferable by operation of law in the event of
a Participant's or any other person's bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or
otherwise.
16.5 NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this Plan
shall not be deemed to constitute a contract of employment between any
Employer and the Participant. Such employment is hereby acknowledged to
be an "at will" employment relationship that can be terminated at any
time for any reason, or no reason, with or without cause, and with or
without notice, except to the extent expressly provided in a written
employment agreement, if any. Nothing in this Plan shall be deemed to
give a Participant the right to be retained in the service of any
Employer or to interfere with the right of any Employer to discipline or
discharge the Participant at any time.
16.6 FURNISHING INFORMATION. A Participant or his or her Beneficiary, as a
condition to entitlement to benefits hereunder, shall cooperate with the
Committee by furnishing any and all information requested by the
Committee and take such other actions as may be requested in order to
facilitate the administration of the Plan and the payments of benefits
hereunder, including but not limited to taking such physical
examinations as the Committee may deem necessary.
16.7 TERMS. Whenever any words are used herein in the masculine, they shall
be construed as though they were in the feminine in all cases where they
would so apply; and whenever any words are used herein in the singular
or in the plural, they shall be construed as though they were used in
the plural or the singular, as the case may be, in all cases where they
would so apply.
16.8 CAPTIONS. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
16.9 GOVERNING LAW. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State of
California without regard to its conflicts of laws principles.
16.10 NOTICE. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address
below:
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Vice President, Taxation
------------------------------------
Kaufman and Broad Home
Corporation, Inc.
------------------------------------
10990 Wilshire Boulevard
------------------------------------
Los Angeles, California 90024
------------------------------------
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered, or
sent by mail, to the last address of the Participant shown on the
records of the Company.
16.11 SUCCESSORS. The provisions of this Plan shall bind and inure to the
benefit of the Participant's Employer and its successors and assigns and
the Participant and the Participant's designated Beneficiaries.
16.12 SPOUSE'S INTEREST. The interest in the benefits hereunder of a spouse of
a Participant who has predeceased the Participant shall automatically
pass to the Participant and shall not be transferable by such spouse in
any manner, including but not limited to such spouse's will, nor shall
such interest pass under the laws of intestate succession.
16.13 VALIDITY. In case any provision of this Plan shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as
if such illegal or invalid provision had never been inserted herein.
16.14 INCOMPETENT. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of that
person's property, the Committee may direct payment of such benefit to
the guardian, legal representative or person having the care and custody
of such minor, incompetent or incapable person. The Committee may
require proof of minority, incompetence, incapacity or guardianship, as
it may deem appropriate prior to distribution of the benefit. Any
payment of a benefit shall be a payment for the account of the
Participant and the Participant's Beneficiary, as the case may be, and
shall be a complete discharge of any liability under the Plan for such
payment amount.
16.15 COURT ORDER. The Committee is authorized to cause the Company or any
Employer to make any payments directed by court order in any action in
which the Plan or the Committee has been named as a party. In addition,
if a court determines that a spouse or former spouse of a Participant
has an interest in the Participant's benefits under the Plan in
connection with a property settlement or otherwise, the Committee, in
its sole discretion, shall have the right, notwithstanding any election
made by a Participant, to immediately cause the Company or any
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Employer to distribute the spouse's or former spouse's interest in the
Participant's benefits under the Plan to that spouse or former spouse.
16.16 DISTRIBUTION IN THE EVENT OF TAXATION.
(a) IN GENERAL. If, for any reason, all or any portion of a
Participant's benefits under this Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the
Committee before a Change in Control, or the trustee of the Trust
after a Change in Control, for a distribution of that portion of
his or her benefit that has become taxable. Upon the grant of
such a petition, which grant shall not be unreasonably withheld
(and, after a Change in Control, shall be granted), a
Participant's Employer shall distribute to the Participant
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 Account Balance under the Plan). If the
petition is granted, the tax liability distribution shall be made
within 90 days of the date when the Participant's petition is
granted. Such a distribution shall affect and reduce the benefits
to be paid under this Plan.
(b) TRUST. If the Trust terminates in accordance with its terms and
benefits are distributed from the Trust to a Participant in
accordance with that Section, the Participant's Account, and
accordingly the benefits under this Plan, shall be reduced to the
extent of such distributions.
16.17 INSURANCE. The Employers, on their own behalf or on behalf of the
trustee of the Trust, and, in their sole discretion, may apply for and
procure insurance on the life of the Participants, in such amounts and
in such forms as the Trust may choose. The Employers or the trustee of
the Trust, as the case may be, shall be the sole owner and beneficiary
of any such insurance. The Participants shall have no interest
whatsoever in any such policy or policies, and at the request of the
Employers shall submit to medical examinations and supply such
information and execute such documents as may be required by the
insurance company or companies to whom the Employers have applied for
insurance.
16.18 LEGAL FEES TO ENFORCE RIGHTS AFTER CHANGE IN CONTROL. The Company and
each Employer is aware that upon the occurrence of a Change in Control,
the Board or the board of directors of a Participant's Employer (which
might then be composed of new members) or a shareholder of the Company
or the Participant's Employer, or of any successor corporation might
then cause or attempt to cause the Company, the Participant's Employer
or such successor to refuse to comply with its obligations under the
Plan and might cause or attempt to cause the Company or the
Participant's Employer to institute, or may institute, litigation
seeking to deny Participants the benefits intended under the Plan. In
these circumstances, the purpose of the Plan could be frustrated.
Accordingly, if, following a Change in Control, it should appear to any
Participant that the Company, the Participant's Employer or any
successor corporation has failed to comply with any of its obligations
under the Plan or any agreement thereunder or, if the Company, such
Employer or any other person takes any action to declare the Plan void
or unenforceable or institutes any litigation or other legal action
designed to deny, diminish or to
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recover from any Participant the benefits intended to be provided, then
the Company and the Participant's Employer irrevocably authorize such
Participant to retain counsel of his or her choice at the expense of the
Company and the Participant's Employer (who shall be jointly and
severally liable) to represent such Participant in connection with the
initiation or defense of any litigation or other legal action, whether
by or against the Company, the Participant's Employer or any director,
officer, shareholder or other person affiliated with the Company, the
Participant's Employer or any successor thereto in any jurisdiction.
IN WITNESS WHEREOF, the Company has signed this Plan document as of
March 1, 2001.
"Company"
KB Home, a Delaware corporation
By: /s/ Cory F. Cohen
-----------------------------
Title: Vice President, Tax
--------------------------
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