ADOPTION AGREEMENT DEFERRED COMPENSATION PLAN
EXHIBIT 4.1
DEFERRED COMPENSATION PLAN
The undersigned Company acting on behalf of itself and each Participating Employer, having been duly advised by its own counsel as to the legal and tax consequences of adopting this Deferred Compensation Plan, and having determined that adoption of this Plan as an unfunded, nonqualified deferred compensation plan (intending that the same comply with the applicable requirements of Section 409A of the Internal Revenue Code of 1986, as amended) would better enable the Company to attract and retain key personnel, HEREBY ADOPTS the attached Deferred Compensation Plan, subject to the following terms, conditions and elections, all of which are integral parts of the Plan adopted hereby:
Company Name: | Royal Gold, Inc. |
Company Address: | 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000 |
Plan Name: | Royal Gold Deferred Compensation Plan for Non-Employee Directors |
Effective Date of the Plan: August 1, 2017
Additional Participating Employers: N/A
Capitalized terms used in this Adoption Agreement that are defined in the Plan document attached hereto and not separately defined herein shall have the respective defined meanings set forth in the attached Plan document.
The Company acting on behalf of itself and each Participating Employer hereby elects, for purposes of this Plan, as follows (insert check xxxx or "X" for each desired election and fill in appropriate blanks):
I. | Pay Types from which Annual Deferral Amounts may be deferred by Participants are as follows: |
Pay Type β U,S. Directors | Maximum Percentage | |||
x Meeting Fees (cash) | 100% | |||
x Annual Retainer Fee (cash) | 100% | |||
x Annual Chairman Retainer Fee (cash) | 100% | |||
x Equity Dividends (deferred in cash) | 0% or 100% | |||
x Annual Equity Grant (deferred in stock) | 0% or 100% |
Pay Type β Non U.S Directors | Maximum Percentage | |||
x Annual Equity Grant (deferred in stock) | 0% or 100% |
II. | Annual Company Matching Amounts: The Company may credit Annual Company Matching Amounts for selected Participants: |
Β¨ Yes x No
a. | Matching Contribution Formula: (select (i) or (ii) below) |
(i) | Β¨ Percent of Participant deferrals formula, subject to a specified limit, as follows: |
(a) | Β¨ Matching Contribution Rate: _____% of (specify paytype names): |
(b) | Β¨ Matching Contribution Limit: ______% of each applicable Pay Type |
(ii) | Β¨ Other matching formula: ___________________________________ |
III. | Discretionary Contributions. The Company may credit Annual Company Discretionary Amounts for selected Participants. The amounts to be calculated in one of the following manners (select one): |
a. | x No Discretionary Contributions |
b. | Β¨ Permissible but amount discretionary |
c. | Β¨ Annual contribution amount or formula: _____________________________________________ |
IV. | Vesting. |
a. | The following Vesting Schedule shall apply to all ANNUAL EQUITY GRANTS, as follows (select one): |
Β¨ | Immediate vesting (100%) as amounts are credited |
Β¨ | Cliff vesting: 100% at the end of ____ years (commencing as specified below) |
x | Incremental annual vesting, as follows (complete chart below): |
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Years Completed | % of Contribution Vested | |||
Year 0 | 50 | % | ||
Year 1 | 100 | % | ||
Year 2 | % | |||
Year 3 | % | |||
Year 4 | % |
EXAMPLE:
Vesting date | Date of Grant | |||||||||||||||||||
8/1/2017 | 8/1/2018 | 8/1/2019 | 8/1/2020 | 8/1/2021 | ||||||||||||||||
8/1/2017 | 50 | % | ||||||||||||||||||
8/1/2018 | 100 | % | 50 | % | ||||||||||||||||
8/1/2019 | 100 | % | 50 | % | ||||||||||||||||
8/1/2020 | 100 | % | 50 | % | ||||||||||||||||
8/1/2021 | 100 | % | 50 | % | ||||||||||||||||
8/1/2022 | 100 | % |
b. | The Vesting Commencement Date shall be determined as follows (select one): |
Β¨ | Years of participation β based on plan participation date |
Β¨ | Years of service β based on date of hire |
Β¨ | Age β based on date of birth |
x | Contribution Date |
c. | The Vesting Increase timing shall be determined as follows (select one): |
Β¨ On the last day of the vesting year
x On the first day of the vesting year (the anniversary of the Commencement Date)
d. | The Vesting Acceleration events that will automatically vest 100% shall be determined as follows (select all that apply): |
x Retirement eligibility
x Disability
x Death
x Change in Control
Β¨ Other _____________________________________________________
e. | Rehires: A former Participant who is rehired following a Termination of Employment, and who is selected for participation in accordance with the terms of the Plan, shall be treated as a new employee and new participant for purposes of determining such individualβs Vesting Commencement Date, without regard to earlier dates of hire or enrollment prior to such Termination of Employment. |
V. | Retirement Eligibility Date (select all that apply): |
Β¨ Age _____
x Age 0 plus 15 years of cumulative service
Β¨ Age _____ plus ____ years of plan participation
Β¨ Age _____ plus ____ years of cumulative service and _____ years of plan participation
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VI. | Distributions. |
a. | Specified Date (aka In-Service) Distributions x Yes Β¨ No |
(i) | May include employer contributions: |
Company Match: Β¨ Yes Β¨ No x N/A
Annual Equity Grant x Yes Β¨ No Β¨ N/A
(ii) | Type of election is (select one): |
x Class year - each yearβs balance may have a different distribution election
Β¨ User-created accounts (max number of accounts: _______ ) - each yearβs balance is directed to one or more date-specific accounts.
(iii) | Alternative forms of distribution (select all that apply): |
x Lump Sum
x Annual installments for any whole number of years up to 5
Β¨ Other: ___________________________
(iv) | The Minimum Deferral Period for vested balances, is 2 years* measured from the beginning of the Plan Year For example: when enrolling for the 2017 plan year, the earliest allowable Distribution date is 1/1/2019 |
(*Recommend no earlier than the time at which company contributions are 100% vested. Unvested portions at the time of the scheduled payments would be paid out upon separation from service.)
b. | Retirement Distribution β N/A |
(i) | Type of election applies as (select one): |
Β¨ A single election
Β¨ Class year β each yearβs balance may have a different distribution election (not recommended if user-created accounts is selected for In-service distributions)
(ii) | Alternative forms of distribution (select all that apply): |
Β¨ Lump Sum
Β¨ Annual installments for any whole number of years up to 5
Β¨ Other: ___________________________
c. | Separation (Termination) Distribution |
(i) | Type of election applies as (select one): |
Β¨ Default only (recommended)
Β¨ A single election
x Class year β each yearβs balance may have a different distribution election (not recommended if user-created accounts is selected for In-service distributions)
(ii) | Alternative forms of distribution (select all that apply): |
x Lump Sum (recommended)
x Annual installments for any whole number of years up to 5
Β¨ Other: __________________________
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d. | Disability Distribution |
(i) | x In accordance with the participant Separation election (recommended), |
Or if different from participantβs Retirement election:
(ii) | Type of distribution election applies as (select one): |
Β¨ Default only
Β¨ A single election
Β¨ Class year β each yearβs balance may have a different distribution election (not recommended if user-created accounts is selected for In-service distributions)
Alternative forms of distribution (select all that apply):
Β¨ Lump Sum
Β¨ Annual installments for any whole number of years up to _____
Β¨ Other: ___________________________
e. | Death Benefit Distribution (pre-commencement vs. post-commencement) |
(i) | Alternative forms of distribution pre-commencement of separation distribution |
Β¨ In accordance with Participantβs separation elections, or
Or if different from Participantβs separation elections (select all that apply):
x Lump Sum (recommended)
Β¨ Annual installments for any whole number of years up to _____
Β¨ Other: ___________________________
(ii) | Alternative forms of distribution post-commencement of separation distribution |
Β¨ Continue in accordance with Participantβs elections (recommended)
Or if different from Participantβs separation elections (select all that apply):
x Lump Sum
Β¨ Annual installments for any whole number of years up to _____
Β¨ An amount to be determined by the Committee
Β¨ Other: ___________________________
f. | Additional Supplemental Death Benefit (may require consent for life insurance) |
x None
Β¨ Discretionary amount to be determined by the Committee
Β¨ Specified amount: _______________________________
g. | Change in Control Distribution Β¨ Yes x No |
(i) | Distribution is (select one): |
Β¨ Mandatory
Β¨ Optional (declinable)
(ii) | Alternative forms of distribution (select all that apply): |
Β¨ Lump Sum
Β¨ Annual installments for any whole number of years up to _____
Β¨ Other: ___________________________
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h. | Separation within 12 months following a Change in Control x Yes Β¨ No |
(iii) | Distribution is (select one): |
x Mandatory
Β¨ Optional (declinable)
(iv) | Alternative forms of distribution (select all that apply): |
x Lump Sum
Β¨ Annual installments for any whole number of years up to _____
Β¨ Other: ___________________________
i. | Default Distribution (if none selected then the Default Distribution election for all events will be Lump Sum at separation from service) |
(i) | Alternative forms of distribution (select one): |
x Lump Sum (recommended)
Β¨ Annual installments for _______ years
Β¨ Other: ___________________________
(ii) | Time of Distribution: |
x Separation from service (recommended)
Β¨ Other: ___________________________
j. | Small Accounts payment |
(NOTE: this is in addition to the default deminimis provision in Section 6.10 that allows the Company to pay the Participantβs vested Account Balance at any time if it does not exceed the then applicable limit of Β§402(g)(1)(B) of the Code and results in the termination of the Participantβs entire interest in the Plan.)
Β¨ None (recommended)
x Notwithstanding any payment election made by the Participant, if at the time any distribution becomes due and the vested balance of all installments associated with that distribution does not exceed $50,000 then the balance will be paid in a single lump sum, subject to compliance with Section 409A.
k. | The Planβs Identification Date for purposes of determining Specified Employee status is December 31 unless a different date is specified: _____________________ (for public companies only) |
VII. | Cause: If the definition for "Cause" is different than that specified in the Plan, specify the alternative definition that shall apply for purpose of this Plan: (if blank, Plan definition will apply): |
VIII. | Rabbi Trust: The Sponsor elects to establish a grantor trust (rabbi trust) under the Plan: |
Β¨ Yes x No
IX. | Governing Law: The Plan will generally be governed by federal law but the governing state law, to the extent not preempted by federal law, and in any case subject to the choice of law rules of any court before which any suit or proceeding affecting this Plan may be heard, shall be the laws of the following state (specify state): |
DELAWARE
(if none specified, the state under which laws the Company was formed).
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IN WITNESS WHEREOF, the Company, on behalf of itself and each Participating Employer, has caused its duly authorized representative to execute this Adoption Agreement, under seal, as of the Effective Date set forth above, intending that the Company shall be bound hereby, and that each Participant, Committee Member and Record Keeper may rely hereon.
COMPANY: Royal Gold, Inc. | ||
By: |
Print Name: |
Title: | ||
Duly authorized |
Date: |
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SPECIMEN FORM: There are many possible forms that could be used to implement a nonqualified deferred compensation plan that is subject to Section 409A. The advisability of using this form and the tax implications resulting from its adoption in its existing form should be determined by each company's attorney and other tax advisers in light of circumstances, laws and regulations then applicable to the adopting company. This specimen is NOT a qualified plan for ERISA nor income tax purposes.
DEFERRED COMPENSATION PLAN
This Plan is adopted as of the date and by the Company, on behalf of itself and any Participating Employers, as set forth in the attached Adoption Agreement, which is an integral part of this Plan. The Company, having been duly advised by its own counsel as to the legal and tax consequences of adopting this Plan, intends that the Plan shall at all times be administered and interpreted in such a manner as to constitute an unfunded plan maintained primarily for a select group of management or highly compensated employees who contribute materially to the management of the Company or Participating Employer, so as to qualify for all available exemptions from the provisions of Title I of ERISA and to fulfill the applicable requirements of Section 409A.
ARTICLE 1
1.1 | DEFINED TERMS. Certain words and phrases are defined when first used in later paragraphs of this Plan or in the Adoption Agreement pursuant to which this Plan was adopted. In addition, the following words and phrases when used herein, unless the context clearly requires otherwise, shall have the following respective meanings: |
"Account" means, with respect to any Participant, a bookkeeping entry used as a measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan and subject to such limits, rules and procedures as the Committee from time to time may adopt under this Plan. The Committee and the Record Keeper may establish and use sub-accounts and other record keeping entries with respect to any Participant's Account, including without limitation any Deferral Account, Company Contribution Account and Company Discretionary Account applicable to such Participant.
βAccount Balanceβ means, with respect to any Participant at any particular time, the sum at such time of such Participant's (i) Deferral Account balance, (ii) Company Matching Account balance and (iii) Company Discretionary Account balance. The Account Balance shall be a bookkeeping entry only and shall be utilized solely as a measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.
βAdoption Agreementβ means the agreement pursuant to which the Company has adopted this Plan, which Adoption Agreement is incorporated herein by reference, including without limitation any terms defined therein. Adoption Agreements may be completed and/or signed using such online systems and other electronic means as the Committee or Record Keeper from time to time may designate for such purpose.
βAffiliateβ means a corporation, partnership, limited liability company or other entity that is required to be considered, together with the Company, as a single employer under Β§414(b) of the Code (employees of controlled group of Companies) or Β§414(c) of the Code (employees of partnerships or limited liability companies under common control). For purposes of determining a controlled group of Companies under Β§414(b) of the Code, the language βat least 50 percentβ shall be used instead of βat least 80 percentβ each place it appears in Β§1563(a)(1), (2), and (3) of the Code. For purposes of determining trades or businesses that are under common control for purposes of Β§414(c) of the Code, βat least 50 percentβ shall be used instead of βat least 80 percentβ each place it appears in Treasury Regulation Β§1.414(c)-2. An entity shall not be considered an βAffiliateβ for any period of time prior to satisfying the controlled group or common control tests described above.
βAnnual Company Discretionary Amountβ means the benefit amount, if any, for any one Plan Year that is determined for a Participant in accordance with Section 3.5.
βAnnual Company Matching Amountβ means the benefit amount, if any, for any one Plan Year that is determined for a Participant in accordance with Section 3.4.
βAnnual Deferral Amountβ means that portion of a Participant's Pay Type(s) that a Participant elects to have deferred, and is deferred, in accordance with Article 3, for any one Plan Year. In the event of a Participant's Retirement, Disability, 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 deferred in such Plan Year prior to such event.
βBase Salaryβ means base salary earned with respect to services performed and payable in cash, exclusive of any of the following: Bonuses, Commissions, overtime, incentive payments and other performance-based forms of compensation, director and other special fees, expense allowances and reimbursements, severance, and any other forms of compensation, earnings or payments that are not regular in frequency and form (before reductions for, contributions to or deferrals under this Plan or any other profit sharing, 401(k), pension, deferred compensation or benefit plan sponsored by the Company or any Affiliate).
βBeneficiaryβ means one or more persons, trusts, estates, or other entities, designated in accordance with Article 8 that are entitled to receive benefits under this Plan upon the death of a Participant.
βBeneficiary Designation
Formβ means the form established from time to time by the Committee that a Participant completes, signs and returns to
the Company to designate one or more Beneficiaries. Beneficiary Designation Forms may be completed and/or signed using such online
systems and other electronic means as the Committee or Record Keeper from time to time may designate for such purpose.
βBoard of Directorsβ shall mean the Board of Directors, Managers, Trustees or other group having the legal authority to act as the governing body of the Company.
βBonusβ means any compensation relating to services performed that is granted or awarded apart from Base Salary and Commissions and that is identified by the applicable Company or Affiliate as a βbonusβ (before reductions for, contributions to or deferrals under this Plan or any other profit sharing, 401(k), pension, deferred compensation or benefit plan sponsored by the Company or any Affiliate).
βCalendar Yearβ means the annual period measured from January 1 to December 31.
"Cause", unless otherwise defined in the Adoption Agreement, means: (a) with respect to each Participant who has an employment agreement containing a definition of "cause" or "for cause", said definition as set forth in his or her employment agreement; and (b) with respect to all other Participants, and as determined in good faith by the Committee, willfully engaging in misconduct which is demonstrably and materially injurious to the Company or any Affiliate, unless the act or omission giving rise to such misconduct is done, or omitted to be done, by a Participant in good faith and with a sound reason to believe that such action or omission was in the best interest of the Company and its Affiliates.
βChange in Controlβ means, with respect to the applicable Participating Employer, a change in the ownership or effective control of the Participating Employer, or in the ownership of a substantial portion of the assets of the Participating Employer. Unless otherwise specified in the Adoption Agreement, a Change in Control shall be defined as follows:
(a) | For purposes of this section, a change in the ownership of the Participating Employer occurs on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of the Participating Employer that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Participating Employer. |
(b) | A change in the effective control of the Participating Employer occurs on the date on which either: (i) a person, or more than one person acting as a group, acquires ownership of stock of the Participating Employer possessing 30% or more of the total voting power of the stock of the Participating Employer, taking into account all such stock acquired during the 12-month period ending on the date of the most recent acquisition, or (ii) a majority of the members of the Participating Employerβs Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such Board of Directors prior to the date of the appointment or election, but only if no other corporation is a majority shareholder of the Participating Employer. |
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(c) | A change in the ownership of a substantial portion of assets occurs on the date on which any one person, or more than one person acting as a group, other than a person or group of persons that is related to the Participating Employer, acquires assets from the Participating Employer that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Participating Employer immediately prior to such acquisition or acquisitions, taking into account all such assets acquired during the 12-month period ending on the date of the most recent acquisition. |
An event constitutes a Change in Control with respect to a Participant only if the Participantβs relationship to the affected Participating Employer satisfies the requirements of Treasury Regulation Β§1.409A-3(i)(5)(ii).
To qualify as a Change in Control event, the occurrence of the event must be objectively determinable and any requirement that any other person or group, such as a plan administrator or compensation committee, certify the occurrence of a Change in Control must be strictly ministerial and not involve any discretionary authority. If the Adoption Agreement provides for a payment on a Change in Control, such payment shall only be made if the event specified in the Adoption Agreement also qualifies as a change in control event within the meaning of Code Section 409A (Treasury Regulation Β§1.409A-3(i)(5)).
To the extent permitted by the Internal Revenue Service, a Change of Control may also occur in the event of changes in ownership of a partnership and change in the ownership of a substantial portion of the assets of a partnership and the provisions set forth above respecting such changes relative to a corporation shall be applied by analogy. It is the Company's responsibility to determine whether a Change in Control has occurred and to advise the Committee and the Record Keeper accordingly.
"Change in Control Distribution" shall have the meaning set forth in Section 6.4
βClaimantβ shall have the same meaning set forth in Section 10.1.
βCodeβ means the Internal Revenue Code of 1986, as the same may be amended from time to time.
βCommissionsβ
(a) | Sales Commission Compensation. A Participant earning sales commission compensation (as defined in Treasury Regulation Β§1.409A-2(a)(12)) is treated as providing the services to which such compensation relates only in the Companyβs taxable Year in which the customer remits payment to the Company or, if applied consistently to all similarly situated Participants, the Companyβs taxable Year in which the sale occurs. |
(b) | Investment Commission Compensation. A Participant earning investment commission compensation (as defined Treasury Regulation Β§1.409A-2(a)(12)) is treated as providing the services to which such compensation relates over the 12 months preceding the date as of which the overall value of the assets or asset accounts is determined for purposes of the calculation of the investment commission compensation. |
It is the Company's responsibility to determine whether a Pay Type qualifies as Commissions in accordance with the foregoing requirements with respect to any Participant and to advise the Record Keeper accordingly.
"Committee" means the person(s) designated as Committee members or such other persons as the Company's Board of Directors from time to time may designate to serve as members of the Committee hereunder. In the absence of any Committee, or should the Committee be unable or unwilling to serve, the Company shall perform the duties of the Committee under this Plan.
βCompanyβ means the entity identified as the βCompanyβ in the Adoption Agreement pursuant to which this Plan has been adopted and may include the applicable Participating Employer as the context requires.
βCompany Discretionary Accountβ means, with respect to any Participant (but subject in the case of each Participant to Section 3.7), an Account consisting of the sum of (i) all of the Participant's Annual Company Discretionary Amounts, plus (ii) Notional Investment Adjustments in value credited or debited thereon in accordance with Article 4 of this Plan, less (iii) all distributions from such account.
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βCompany Matching Accountβ means, with respect to any Participant (but subject in the case of each Participant to Section 3.7), an Account consisting of the sum of (i) all of the Participant's Annual Company Matching Amounts, plus (ii) Notional Investment Adjustments in value credited or debited thereon in accordance with Article 4 of this Plan, less (iii) all distributions from such account.
βDayβ means a calendar day or any part thereof.
βDeferral Accountβ means an Account consisting of the sum of (i) all of a Participant's Annual Deferral Amounts, plus (ii) Notional Investment Adjustments in value credited or debited thereon in accordance with Article 4 of this Plan, less (iii) all distributions from such account.
βDeferral Election Formβ means notice filed by a Participant with the Record Keeper specifying the amount of the Participant's Pay Type(s) to be deferred, and the time and form of distribution payments as defined in the Adoption Agreement. Deferral Election Forms may be completed and/or signed using such online systems and other electronic means as the Committee or Record Keeper from time to time may designate for such purpose.
βDisabilityβ or βDisabledβ shall mean the Participant is: (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Participantβs employer. The Adoption Agreement may also provide that a Participant will be deemed to be Disabled if determined to be totally disabled by the Social Security Administration or Railroad Retirement Board. The determination of Disability shall be made by the Committee in accordance with Section 409A Requirements. The Committee may require that the Participant submit to an examination by the Company or its agent to determine the existence of a Disability.
βDisability Benefitβ means the benefit set forth in Section 6.3.
βEligible Employeeβ means any employee of the Company or other Participating Employer who is selected to participate herein in accordance with the provisions of Article 2 hereof, and is one of a select group of management or highly compensated employees. Eligible Employee may also include selected Independent Contractors as determined in the complete and sole discretion of the Committee.
βEmployeeβ means any individual who is employed by or providing services to the Employer. Employee means βservice providerβ as used in Treasury Regulation Β§1.409A-1(f).
βEmployerβ or βParticipating Employerβ means the Company or Affiliate who is the legal employer of the Employee or service recipient in the case of an Independent Contractor.
βERISAβ means the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.
βFirst Plan Yearβ means the period beginning on the Effective Date set forth in the Adoption Agreement and ending on December 31 immediately following the Effective Date.
"Hardship Distribution" means any distribution or waiver of deferral granted by the Committee pursuant to Article 7.
βIdentification Dateβ for the purpose of identifying Specified Employees means each December 31 or such other date as defined in the Adoption Agreement.
βIndependent Contractorβ means a non-employee director or an independent contractor for whom deferred amounts will be subject to Section 409A as provided in Treasury Regulation Β§1.409A-1(f)(2).
"In-Service Distribution" means a distribution made pursuant to Section 6.5.
"Matching Contribution Limit" means, with respect to each Pay Type, the Maximum Contribution Limit set forth for such Pay Type in the Adoption Agreement, to be used and calculated as a limit on Annual Company Matching Amounts pursuant to Section 3.4.
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"Matching Contribution Rate" means, with respect to each Pay Type, the respective percentage rate, if any, set forth in the Adoption Agreement for such Pay Type, which rate shall be used to calculate Annual Company Matching Amounts pursuant to Section 3.4, subject to the Matching Contribution Limit, if any, applicable to such Pay Type.
"Notional Investment" means any security, fund, account, sub-account, index, formula or other instrument, asset, measure or method from time to time designated by the Committee as a means to calculate the amount of any Notional Investment Adjustment.
"Notional Investment Adjustment" means earnings, gains, losses and any other adjustments made with respect to any Annual Deferral Amount, Annual Company Matching Amount or Annual Company Discretionary Amount, which adjustments are made based on the performance of a Notional Investment pursuant to Article 4.
βNotional Investment Election Formβ means notice filed with the Record Keeper by or on behalf of a Participant (or his or her Beneficiaries, as provided below) specifying the allocation of the Participant's Annual Deferral Amount and how the Participant's Annual Deferral Amount, Annual Company Matching Amount and Annual Company Discretionary Amount, if any, are to be allocated under the Plan among the Notional Investments provided under the Plan. Notional Investment Election Forms may be completed and/or signed using such online systems and other electronic means as the Committee or Record Keeper from time to time may designate for such purpose. Upon the death of a Participant, for so long as such Participant's Beneficiaries retain an interest in such Participant's Account hereunder, such Beneficiaries may file Notional Investment Election Forms with respect to such Account in accordance with such policies and procedures as the Committee from time to time may specify for such purpose.
βParticipantβ means any Eligible Employee (i) who is selected to participate in the Plan, (ii) who elects to participate in the Plan, (iii) who signs a Participation Agreement, a Deferral Election Form, a Notional Investment Election Form, (iv) whose signed Participation Agreement, Deferral Election Form, and Notional Investment Election Form are accepted by the Committee, and (v) who commences participation in the Plan. A spouse or former spouse (or beneficiary) of a Participant shall not be treated as a Participant in 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.
"Participation Agreement" means the form established from time to time by the Committee that a Participant completes, signs and returns to the Company to become a Participant in this Plan. Participation Agreements may be completed and/or signed using such online systems and other electronic means as the Committee or Record Keeper from time to time may designate for such purpose.
βPay Typeβ means the forms of compensation selected in the Adoption Agreement as eligible for deferral and for inclusion in the calculation of Annual Deferral Amounts under the Plan. References to one or more βPay Typesβ with respect to any particular Calendar Year means said forms of compensation relating to services performed during such Calendar Year, whether or not paid in such Calendar Year or included on a Federal Income Tax Form W-2 for such Calendar Year (except and to the extent otherwise required under any applicable Section 409A Requirements). The Committee from time to time may adopt and amend such rules and procedures as it deems appropriate to more particularly define or classify any particular Pay Type for further clarification in the administration of this Plan.
βPermissible Change Electionβ means an election to change the time or form of payment of any benefit under the Plan that:
a) | does not take effect until at least 12 months after the date on which such election to delay or change is made; |
b) | is made at least 12 months prior to the date previously scheduled for the payment affected thereby; |
c) | postpones the payment affected thereby for a period of not less than 5 years from the date when such payment otherwise would have been made; provided, however, that this restriction shall not apply in the case of a payment on account of a Disability, death or an Unforeseeable Emergency; and |
d) | does not accelerate the scheduled time for payment of any distribution, except as permitted under Section 409A Requirements. |
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For purposes of the foregoing, unless otherwise provided in the Adoption Agreement or otherwise required under applicable Section 409A Requirements, any distribution that a Participant elects to receive in a series of installments shall be treated as being a single payment on the date of the first installment of such series. Additionally, any Participant in the Plan that is not a U.S. taxpayer shall have no right to change the time or form of payment of any benefit under the Plan.
βPlanβ means this Plan, as evidenced by the Adoption Agreement and this document, each as amended and in effect from time to time.
βPlan Yearβ means each Calendar Year except that the first Plan Year shall commence on the Effective Date of the Plan specified in the Adoption Agreement and end on December 31 of the same Calendar Year.
"Pre-Commencement Death Benefit" means the death benefit payable under Section 6.6.1.
"Post-Commencement Death Benefit" means the death benefit payable under Section 6.6.2.
βRecord Keeperβ means the party designated as the Record Keeper, as such designation may be amended from time to time in the discretion of the Committee. In the absence of any such designation, or should the Record Keeper be unable or unwilling to serve, the Company shall perform the duties of the Record Keeper under this Plan.
βRetirementβ means the Termination of Employment of a Participant on or after such Participantβs Retirement Eligibility Date.
βRetirement Benefitβ means the benefit set forth in Section 6.1.
βRetirement Eligibility Dateβ means the date when the Participant satisfies the requirements of Retirement Eligibility Date as designated in the Adoption Agreement.
βSection 409Aβ means Section 409A of the Code, as the same may be amended from time to time, and any successor statute thereto. References to Section 409A or any requirement under Section 409A, as the same may be interpreted, construed or applied to this Plan at any particular time, shall be deemed to mean and include, to the extent then applicable and then in force and effect (but not to the extent overruled, limited or superseded), published guidance, regulations, notices, rulings and similar announcements issued by the Internal Revenue Service or by the Secretary of the Treasury under or interpreting Section 409A, decisions by any court of competent jurisdiction involving a Participant or a beneficiary and any closing agreement made under Β§7121 of the Code that is approved by the Internal Revenue Service and involves a Participant, all as determined by the Committee in good faith, which determination may (but shall not be required to) be made in reliance on the advice of such tax counsel or other tax professional(s) with whom the Committee from time to time may elect to consult with respect to any such matter.
βSection 409A Discretionary Payment Periodβ means with respect to any designated payment date, the period during which payments will be treated as having been made upon such designated payment date under Treasury Regulation Β§1.409A-3(d), providing for payments to be treated as timely if made no earlier than thirty (30) days prior to such designated payment date and no later than the end of the Calendar Year in which such designated payment date occurs, or if later, by the 15th day of the third calendar month following such designated payment date.
βSection 409A Requirementβ means any requirement under Section 409A, the failure of which would result in the imposition or accrual of interest or additional taxes under Section 409A on or with respect to any income intended to be deferred under the Plan.
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βSpecified Employeeβ means, at any time when stock of the Company (or other Participating Employer as applicable) is publicly traded on an established securities market or otherwise (as determined in accordance with Section 409A Requirements), those service providers who are βspecified employeesβ within the meaning of Section 409A. The determination shall be made consistent with all Section 409A Requirements as follows: (a) a key employee of the Company (within the meaning of Code Section 409A(a)(2)(B)) any stock of which is publicly traded on an established securities market or otherwise will be considered a key employee if the service provider meets the requirements of Code Β§416(i)(1)(A)(i),(ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Code Β§416(i)(5)) at any time during the 12-month period ending on an Identification Date specified in the Adoption Agreement; (b) if a person is a key employee as of an Identification Date, the person is treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following the Identification Date; (c) if no alternative Identification Date is designated in the Adoption Agreement, the Identification Date shall be December 31. Whether any stock of the Company is publicly traded on an established securities market or otherwise must be determined as of the date of the Participantβs Separation from Service. The application of rules regarding βSpecified Employeesβ to spinoffs and mergers and nonresident alien employees shall be determined pursuant to applicable guidance. It is the Companyβs responsibly to elect which rules under Section 409A shall apply when determining who is a Specified Employee, to annually determine who are the Specified Employees, and to timely provide a list of Specified Employees to the Record Keeper.
βTermination Benefitβ means the benefit set forth in Section 6.2.
βTerminationβ, βTermination of Employmentβ or "Separation from Service" shall be interpreted consistently with all Section 409A Requirements according to the following specifications:
(a) | Employee. Any absence from service that ends the employment of an individual with the employer shall be deemed to be a Termination of Employment. However, the employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fide leave of absence (such as temporary employment by the government) if the period of such leave does not exceed six months, or if longer, so long as the individualβs right to reemployment with the Company is provided whether by statute or by contract. If the period of leave exceeds six months and the individualβs right to reemployment is not provided either by statue or by contract, the employment relationship is deemed to terminate on the first date immediately following such six month period. The determination of whether an Employee has a Termination of Employment shall be determined pursuant to the Adoption Agreement and Treasury Regulation Β§1.409A-1(h). If the Adoption Agreement does not specify the percentage of average level of bona fide services to constitute a Termination of Employment, a Termination of Employment will occur once an Employeeβs services decrease to 20% or less of the average level of bona fide services compared to services performed over the preceding 36 month period. |
(b) | Independent Contractor. An Independent Contractor is considered to have a Termination or Separation from Service upon (i) retirement as a director, or (ii) the expiration of the contract (or in the case of more than one contract, all contracts) under which services are performed if the expiration constitutes a good-faith and complete termination of the contractual relationship. |
It is the Company's responsibility to determine whether there is a Termination of Employment/Separation from Service in accordance with Section 409A with respect to any Participant and to advise the Record Keeper accordingly.
βUnforeseeable Emergencyβ means, with respect to any particular Participant, (i) a severe financial hardship of such Participant resulting from an illness or accident suffered by such Participant, by such Participantβs spouse or by a dependent (within the meaning of Β§152 of the Code without regard to Β§152(b)(1), (b)(2) and (d)(1)(B) of the Code) of such Participant; (ii) a Participant's loss of property due to casualty; or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. It is the Company's responsibility to determine whether there is an Unforeseeable Emergency in accordance with Section 409A with respect to any Participant and to advise the Record Keeper accordingly.
* * * * * *
It is intended that the Plan shall conform with all applicable Section 409A Requirements. Accordingly, in interpreting, construing or applying any of the foregoing definitions or any of the terms, conditions or provisions of the Plan, the same shall be construed in such manner as shall meet and comply with Section 409A Requirements then applicable thereto, and in the event of any inconsistency with any Section 409A Requirements, the same shall be reformed so as to meet such Section 409A Requirements to the fullest extent then permitted without penalty (and without imposition or accrual of interest or additional taxes) under Section 409A.
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ARTICLE 2
ARTICLE 3
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3.2 | ELECTION TO DEFER. |
(i) | The performance period is at least 12 months in length |
(ii) | Such compensation has not become readily ascertainable. Compensation is readily ascertainable when the amount is first both calculable and substantially certain to be paid. The performance-based compensation is bifurcated between the portion that is readily ascertainable and the amount that is not readily ascertainable. Accordingly, in general any minimum amount that is both calculable and substantially certain to be paid will be treated as readily ascertainable; |
(iii) | The compensation must be contingent on the satisfaction of pre-established organizational or individual performance criteria (established no later than 90 days after the beginning of the service period); |
The term Performance-Based Compensation includes payments based upon subjective performance criteria, provided that the subjective performance criteria are bona fide and relate to the performance of the Eligible Employee, a group of employees that includes the Eligible Employee, or a business unit for which the Eligible Employee provides services (which may include the entire organization), and the determination that any subjective performance criteria have been met is not made by the Eligible Employee or a family member of the Eligible Employee (as defined in Β§267(c)(4) of the Code applied as if the family of an individual includes the spouse or any member of the family), or a person under the effective control of the Eligible Employee or such a family member, and no amount of the compensation of the person making such determination is effectively controlled in whole or in part by the Eligible Employee or such a family member.
It is the Company's responsibility to determine whether a Pay Type qualifies as Performance-Based Compensation in accordance with the foregoing requirements with respect to any Participant and to advise the Record Keeper accordingly.
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ARTICLE 4
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ARTICLE 5
VESTING
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ARTICLE 6
6.6 | DEATH BENEFIT |
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6.8.1 To the extent that any amounts allocated to the Company Stock Notional Investment are to be distributed to a Participant from the Plan, settlement of such Company Stock shall be in the form of newly issued shares of Company Stock at that time.
6.9.1 | to the extent that such benefit (or this Plan as it pertains thereto in the case of any particular Participant) fails to meet Section 409A Requirements, but only in an amount equal to the amount required to be included in income as a result of the failure to comply with Section 409A Requirements; |
6.9.2 | for payment to an individual other than a Participant, to the extent necessary to fulfill a domestic relations order as provided in Section 11.6; |
6.9.3 | to pay Federal Insurance Contributions Act tax imposed under Β§3101, Β§3121(a) and Β§3121(v)(2) of the Code, where applicable, on compensation deferred under this Plan (hereinafter, the "FICA Amount"), or to pay the income tax at source on wages imposed under Β§3401 of the Code or the corresponding withholding provisions of applicable state, local or foreign tax laws as a result of the payment of the FICA Amount, and to pay additional income tax at source on wages attributable to the pyramiding Β§3401 wages and taxes, but not in excess of the FICA Amount and the income tax withholding related to such FICA Amount; or |
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6.9.4 as more particularly provided in Section 6.10, Article 7 or Section 11.8.
6.13 | TAX WITHHOLDING AND REPORTING. The Company shall have the right to deduct any required withholding taxes from any payment made under this Plan. |
ARTICLE 7
UNFORESEEABLE EMERGENCIES
7.1 | APPLICATION FOR HARDSHIP DISTRIBUTION OR DEFERRAL ELECTION TERMINATION. In the event that any Participant incurs an Unforeseeable Emergency, if consistent with applicable Section 409A Requirements, such Participant may apply to the Committee for a Hardship Distribution in the form of (i) cancellation of existing Annual Deferral Amount elections for Pay Types not yet earned by such Participant, and (ii) to the extent cancellation of all such elections is insufficient to satisfy the needs resulting from such Unforeseeable Emergency, an accelerated payment (βHardship Distributionβ) of some or all of such Participantβs vested Account Balance. The Committee shall consider the circumstances of each such case, and the best interests of the Participant and his or her family, and shall have the right, in its sole discretion, to allow such application, in full or in part, or to refuse to make a Hardship Distribution. In the event that any Participant receives a distribution from a plan due to an unforeseeable emergency or a hardship pursuant to Treasury Regulation Β§1.401(k)-1(d)(3) (or successor regulation thereto, to the extent recognized for these purposes under Section 409A Requirements), such Participantβs existing Annual Deferral Amount elections for Pay Types not yet earned by such Participant shall be cancelled for the remainder of the Plan Year. |
7.2 | AMOUNT OF DISTRIBUTION. In no event shall the amount of any Hardship Distribution payment exceed the lesser of: (a) the Participant's vested Account Balance, or (b) the amount determined by the Committee to be necessary to alleviate the hardship, including any taxes payable by the Participant as a result of receiving such Hardship Distribution, and which is not reasonably available from other resources of the Participant, including reimbursement or compensation from insurance or otherwise, by liquidation of the Participant's assets (unless liquidation of such assets would cause severe financial hardship) or by cessation of deferrals under this Plan or other nonqualified plans in which such Participant participates, all in a manner consistent with any applicable Section 409A Requirements. |
7.3 | RULES ADOPTED BY COMMITTEE. The Committee shall have the authority to adopt additional rules and procedures relating to Hardship Distributions. The request to take a Hardship Distribution shall be made by filing a form provided by and filed with the Committee and shall be accompanied by appropriate documentation evidencing the existence and extent of the hardship consistent with Section 409A Requirements. |
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ARTICLE 8
8.3 | ACKNOWLEDGEMENT. No designation or change in designation of a Beneficiary shall be effective until received and accepted by the Committee. |
ARTICLE 9
MANAGEMENT AND ADMINISTRATION OF THIS PLAN
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ARTICLE 10
(i) | the specific reason(s) for the denial of the claim, or any part of it; |
(ii) | specific reference(s) to pertinent provisions of this 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; |
(iv) | an explanation of the claim review procedure set forth in Section 10.3 below; and |
(v) | a statement of the Claimantβs right to bring a civil action under ERISA Β§502(a) following an adverse benefit determination on review. |
10.3.1 | may, upon request and free of charge, have reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits; |
10.3.2 | may submit written comments or other documents; and/or |
10.3.3 | may request a hearing, which the Company, in its sole discretion, may grant. |
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10.4.1 | specific reasons for the decision; |
10.4.2 | specific reference(s) to the pertinent provisions of this Plan upon which the decision was based; |
10.4.3 | a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimantβs claim for benefits; and |
10.4.4 | a statement of the Claimantβs right to bring a civil action under ERISA Β§502(a). |
ARTICLE 11
In the event that, in its discretion, the Company purchases an insurance policy or policies insuring the life of a Participant or any other property, to allow the Company to recover or meet the cost of providing benefits, in whole or in part, hereunder, no Participant or Beneficiary shall have any rights whatsoever therein or in the proceeds therefrom. The Company shall be the sole owner and beneficiary of any such insurance policy or property and shall possess and may exercise all incidents of ownership therein.
11.3 | 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. |
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The interest in the benefits hereunder of a spouse of a Participant who predeceases 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.
Notwithstanding the foregoing, to the extent necessary to comply with the terms of a "domestic relations order" (as defined in Β§414(p)(1)(B) of the Code) the Committee may cause all or a portion of a Participant's Account balance to be segregated into a sub-Account for the benefit of the Participant's spouse, child or other dependent identified in such order as the alternative payee and give such alternative payee (or their legal representative if such alternative payee is incompetent or a minor), as applicable (i) the same Notional Investment alternatives as are available to the Participant under the Plan with respect to such sub-Account until distributed, and (ii) the same distribution form and timing options as are available to the Participant under the Plan or an immediate lump sum payment, all as directed by the domestic relations order and subject to compliance with Code Section 409A Requirements.
The Company and each participating Employer reserve the right to terminate its participation in this Plan. Except as otherwise provided below, the termination of the Plan shall not affect the distribution provisions in effect for the Accounts maintained under the Plan, and all amounts deferred prior to the date of any such Plan termination shall continue to become due and payable in accordance with the distribution provisions in effect immediately prior to such Plan termination. Payment of the Account Balances may be accelerated upon Plan termination and liquidation of the Plan only in compliance with all Section 409A Requirements as then in effect. Section 409A regulations currently permits acceleration of distributions under the following circumstances:
(i) | The calendar year in which the plan termination and liquidation occurs |
(ii) | The calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or |
(iii) | The first calendar year in which the payment is administratively practicable. |
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11.8.3 | Termination of All Plans. The Plan may be terminated and liquidated at any time provided that: |
(i) | The termination and liquidation does not occur proximate to a downturn in the financial health of the Company or applicable Participating Employer. |
(ii) | All agreements, methods, programs, and other arrangements sponsored by the Company that would be aggregated with any terminated and liquidated agreements, methods, programs, and other arrangement under Treasury Regulation Β§1.409A-1(c) if the same Participant had deferrals of compensation under all of the agreements, methods, programs, and other arrangements that are terminated and liquidated; |
(iii) | No payments are made other than payments that would be payable under the terms of the plans if the termination and liquidation had not occurred are made within 12 months of the termination date; |
(iv) | All payments are made within 24 months of the date the Company takes all necessary action to irrevocably terminate and liquidate the plan; and |
(v) | The Company does not adopt a new arrangement that would be aggregated with the plan under Treasury Regulation Β§1.409A-1(c) provision for the deferral of compensation at any time within 3 years following the date of termination of the Plan. |
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