Attached files
file | filename |
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EX-15 - EX-15 - PENTAIR plc | c54142exv15.htm |
EX-32.2 - EX-32.2 - PENTAIR plc | c54142exv32w2.htm |
EX-10.1 - EX-10.1 - PENTAIR plc | c54142exv10w1.htm |
EX-32.1 - EX-32.1 - PENTAIR plc | c54142exv32w1.htm |
EX-31.2 - EX-31.2 - PENTAIR plc | c54142exv31w2.htm |
EX-31.1 - EX-31.1 - PENTAIR plc | c54142exv31w1.htm |
10-Q - FORM 10-Q - PENTAIR plc | c54142e10vq.htm |
Exhibit 10.2
PENTAIR, INC.
NON-QUALIFIED DEFERRED COMPENSATION PLAN
As Amended and Restated Through July 29, 2009
TABLE OF CONTENTS
Article I HISTORY, PURPOSE AND EFFECTIVE DATE OF PLAN | 1 | |||||
Article II DEFINITIONS AND CONSTRUCTION | 3 | |||||
Section 2.1. |
Definitions. | 3 | ||||
Section 2.2. |
Eligibility to Participate. | 7 | ||||
Section 2.3. |
Purpose. | 8 | ||||
Section 2.4. |
Construction. | 8 | ||||
Article III PARTICIPANT DEFERRALS | 9 | |||||
Section 3.1. |
Election to Participate. | 9 | ||||
Section 3.2. |
Amount of Participants Deferrals. | 10 | ||||
Section 3.3. |
Payment of Deposits to Trustee. | 11 | ||||
Article IV EMPLOYER CONTRIBUTIONS | 12 | |||||
Section 4.1. |
Employer Discretionary Contribution. | 12 | ||||
Section 4.2. |
Employer Matching Contribution. | 12 | ||||
Section 4.3. |
Limit on Compensation for Purposes of Employer Contributions. | 13 | ||||
Section 4.4. |
Payment of Deposits to Trustee. | 13 | ||||
Article V TRUSTEE AND TRUST AGREEMENT | 14 | |||||
Section 5.1. |
Appointment. | 14 | ||||
Section 5.2. |
Fees and Expenses. | 14 | ||||
Section 5.3. |
Use of Trust. | 14 | ||||
Section 5.4. |
Responsibility and Authority for Fund Management. | 14 | ||||
Section 5.5. |
Trust Assets. | 15 | ||||
Article VI INVESTMENT; PARTICIPANTS ACCOUNTS | 16 | |||||
Section 6.1. |
Allocation and Reallocation of Before-Tax Deposits and Employer Contributions. | 16 | ||||
Section 6.2. |
Allocation of Deferred Equity Awards. | 16 | ||||
Section 6.3. |
Investment of Deposits and Employer Contributions. | 17 | ||||
Section 6.4. |
Participants Accounts. | 18 | ||||
Section 6.5. |
Beneficiaries. | 18 | ||||
Article VII PAYMENT OF ACCOUNTS | 19 | |||||
Section 7.1. |
Time and Form of Payments. | 19 | ||||
Section 7.2. |
Distribution Due to Death. | 20 | ||||
Section 7.3. |
Payment of Employer Contributions. | 20 | ||||
Section 7.4. |
Later Payment Deferral Elections. | 21 | ||||
Section 7.5. |
Miscellaneous. | 21 | ||||
Article VIII EMERGENCY WITHDRAWALS | 22 | |||||
Section 8.1. |
Restricted Withdrawals. | 22 |
i
Article IX PLAN ADMINISTRATION | 23 | |||||
Section 9.1. |
Committee. | 23 | ||||
Section 9.2. |
Organization and Procedure. | 24 | ||||
Section 9.3. |
Delegation of Authority and Responsibility. | 24 | ||||
Section 9.4. |
Use of Professional Services. | 24 | ||||
Section 9.5. |
Fees and Expenses. | 24 | ||||
Section 9.6. |
Communications. | 24 | ||||
Section 9.7. |
Claims. | 25 | ||||
Article X PLAN AMENDMENTS, PLAN TERMINATION, AND MISCELLANEOUS | 26 | |||||
Section 10.1. |
Amendments and Termination. | 26 | ||||
Section 10.2. |
Non-Guarantee of Employment. | 27 | ||||
Section 10.3. |
Rights to Trust Asset. | 27 | ||||
Section 10.4. |
Suspension of Rules. | 27 | ||||
Section 10.5. |
Requirement of Proof. | 28 | ||||
Section 10.6. |
Indemnification. | 28 | ||||
Section 10.7. |
Non-Alienation and Taxes. | 28 | ||||
Section 10.8. |
Not Compensation Under Other Benefit Plans. | 29 | ||||
Section 10.9. |
Savings Clause. | 29 | ||||
Section 10.10. |
Facility of Payment. | 30 | ||||
Section 10.11. |
Requirement of Releases. | 30 | ||||
Section 10.12. |
Board Action. | 30 | ||||
Section 10.13. |
Computational Errors. | 30 | ||||
Section 10.14. |
Unclaimed Benefits. | 30 | ||||
Section 10.15. |
Communications. | 30 | ||||
Article XI TRANSITIONAL RULES | 31 | |||||
Section 11.1. |
Introduction. | 31 | ||||
Section 11.2. |
Amounts Deferred Under Prior Plan. | 31 |
ii
PENTAIR, INC.
NON-QUALIFIED DEFERRED COMPENSATION PLAN
ARTICLE I
HISTORY, PURPOSE AND EFFECTIVE DATE OF PLAN
HISTORY, PURPOSE AND EFFECTIVE DATE OF PLAN
Effective January 1, 1993, Pentair, Inc. (Pentair) established a non-qualified deferred
compensation plan (the Plan) for the benefit of certain management and highly compensated
employees of Pentair and various companies in the Pentair controlled group. Under the Plan as so
initially established, eligible participants could elect to defer receipt of base and bonus
compensation in exchange for the unfunded, unsecured promise of the participants employing company
to pay the amounts deferred, plus earnings, at the time and in the manner selected by the
participant when making a deferral election. Until the time of payment, the amounts deferred under
the Plan, adjusted for any earnings credited with respect to those amounts, remain subject to the
claims of the general creditors of the participants employing company.
Pentair amended and restated the Plan, effective January 1, 1996, January 1, 1999, and January
1, 2002. As so amended and restated, the Plan continued to permit eligible employees of Pentair
and its affiliates to defer receipt of base and bonus compensation in exchange for the unsecured
promise of the participants employing company to pay these amounts, as adjusted for earnings or
losses by reference to deemed investment options selected by each participant, and commencing
January 1, 1996 provided for the replacement of benefits no longer available to certain
participants under the Pentair Retirement Savings and Stock Incentive Plan due to certain
limitations imposed by the Internal Revenue Code of 1986.
Pentair amended the Plan in 2005 to reflect the 2004 acquisition of the WICOR, Inc. group of
companies, and the extension of the Plan in 2005 to eligible employees of such group, and to
qualify generally the Plan, the elections made thereunder, and the Plans administration, for
amounts deferred and contributed for periods after 2004, by the provisions of Section 409A of the
Internal Revenue Code of 1986 and guidance thereunder issued by the Internal Revenue Service.
Pentair now hereby amends and restates the Plan effective January 1, 2009. This document
reflects changes made to the Plan to reflect final Treasury Regulations under Section 409A of the
Internal Revenue Code of 1986, as well as certain other changes. This document governs amounts
deferred on or after January 1, 2005. Amounts deferred prior to January 1, 2005, are governed by
terms of the Plan as in effect on December 31, 2004, which are contained in a separate document.
The Plan is for the benefit of a select group of management and highly compensated employees.
Benefits under the Plan are unfunded and unsecured general obligations of Pentair and its
participating affiliates. Plan participants have the status of unsecured general creditors of
their employing company. Any assets acquired or set aside for purposes of providing or measuring,
or both, this deferred compensation may be held in a grantor
trust as the property of the participants employing company and subject to the claims of its
general creditors. To the extent any assets are held in a grantor trust, the terms and provisions
of the trust document will control in all cases where it is in conflict with the Plan.
2
ARTICLE II
DEFINITIONS AND CONSTRUCTION
DEFINITIONS AND CONSTRUCTION
Section 2.1. Definitions.
Unless the context clearly or necessarily indicates the contrary, when capitalized the following
words and phrases shall have the meanings shown when used in this Article or other parts of the
Plan.
(1) Accounts are the accounts under the Plan to be maintained for each Participant or the
Beneficiary of a deceased former Participant.
(2) Administrator is the person assigned by the Company or Committee to handle the
day-to-day administration of the Plan.
(3) Base Compensation is remuneration from which an Employee may elect before-tax deposits
under the RSIP, with such remuneration determined without regard to the dollar limit imposed under
Code section 401(a)(17), but excluding amounts included in Bonus Compensation; plus, if not taken
into account as such remuneration under the RSIP but without duplication of an amount described in
the immediately preceding sentence, any Before-tax Deposits. If and during the period an Employee
is not eligible to participate in the RSIP, his or her Base Compensation shall be determined as
through he or she were eligible to participate in the RSIP.
(4) Before-tax Deposits are compensation deferrals of Base Compensation and/or Bonus
Compensation made under the Plan at the election of a Participant pursuant to Article III.
(5) Beneficiary is the individual, trust or other entity designated as such in writing by a
Participant in accordance with applicable Plan provisions, or such person as otherwise determined
under the Plan, to receive benefits accumulated hereunder in the event of the Participants death.
If a Participant is married at the time of death, the sole Beneficiary shall be the Participants
Spouse at such time unless the Spouse has otherwise waived or released the right to be named as a
beneficiary hereunder, or to be considered as the Participants surviving Spouse for such purposes
(e.g., an enforceable prenuptial agreement), as determined in the discretion of the Committee, or
the Spouse has consented in writing to the designation of a different Beneficiary and such consent
is witnessed by an authorized Plan representative or a notary public.
(6) Bonus Compensation is compensation awarded to an Employee pursuant to the Employers
annual performance-based management bonus plan or plans, and may also include other bonuses or
other non-periodic items or performance-based compensation for services rendered, as determined by
the Committee. Bonus Compensation includes only items from which an Employee may elect before-tax
deposits under the RSIP determined without regard to the dollar limit imposed under Code section
401(a)(17). Bonus Compensation shall not include Equity Awards.
(7) Change in Control or CIC is any one of the following:
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(i) | When a person, or more than one person acting as a group, acquires more than fifty percent (50%) of the total fair market value or total voting power of the Companys stock; | ||
(ii) | When a person, or more than one person acting as a group, acquires within a twelve (12) month consecutive period, ending with the date of the most recent stock acquisition, stock of the Company possessing at least thirty percent (30%) of the total voting power of the Companys stock; | ||
(iii) | When a majority of the members of the Companys board of directors is replaced within a twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of such board as constituted before such appointment or election; or | ||
(iv) | When a person, or more than one person acting as a group, acquires within a twelve (12) month consecutive period assets from the Company or an entity controlled by the Company that have a total gross fair market value equal to seventy-five percent (75%) of the total fair market value of the assets of the Company and all such entities. |
Once a person or group acquires stock meeting the thresholds set forth in paragraphs (i) and (ii)
immediately preceding, additional acquisitions of such stock by that person or group shall be
ignored in determining whether another CIC has occurred. Asset transfers between or among
controlled entities as determined before such transfers shall not be considered in applying
paragraph (iv) immediately preceding. This provision shall be interpreted and administered in a
manner consistent with the definition of a change of control under Code section 409A.
(8) Code is the Internal Revenue Code of 1986, as amended and in effect from time to time.
Any reference to a specific provision of the Code shall be deemed to refer to successor provisions
thereto and the regulations promulgated thereunder.
(9) Committee is the Committee described in Article IX.
(10) Company is Pentair, Inc., a Minnesota corporation, or any successor thereto.
(11) Disabled or Disability is a physical or mental condition, resulting from physical or
mental sickness or injury, which prevents the individual while an Employee from engaging in any
substantial gainful activity, and which condition can be expected to last for a continuous period
of not less than twelve (12) months. For purposes of applying Section 3.2(c), however, the
immediately preceding sentence shall be applied by substituting six (6) months for twelve (12)
months.
(12) Employee is an individual who is (i) employed by a Participating Employer, (ii) a
highly compensated or key management employee of a Participating Employer as determined by the
Committee, (iii) in an employment position or salary grade classified by the Company as eligible to
participate in the Plan, and (iv) eligible to participate in the RSIP. In the event an individual
satisfies the foregoing requirements except he or she is not eligible to
4
participate in the RSIP (e.g., an individual within an employee group to which the RSIP has
not been extended), such individual may, in the discretion of the Committee, be considered an
Employee solely for purposes of allowing such individual to elect Before-tax Deposits and not for
purposes of being eligible for Employer Contributions.
(13) Employer is the Company and, except as prescribed by the Committee, each other
corporation or unincorporated business which is a member of a controlled group of corporations or a
group of trades or businesses under common control (within the meaning of Code section 414(b) or
(c)) which includes the Company, but with respect to other business entities during only the
periods of such common control with the Company.
(14) Employer Contributions are amounts contributed under the Plan by Participating
Employers pursuant to Article IV, and includes Employer Discretionary Contributions described in
Section 4.1 and Employer Matching Contributions described in Section 4.2.
(15) Equity Awards are stock-related awards granted under the Omnibus Incentive Plan that
are designated as eligible to be deferred under this Plan in the award letter or other document
evidencing such award.
(16) ERISA is the Employee Retirement Income Security Act of 1974, as amended. Any
reference to a specific provision of the Code shall be deemed to refer to successor provisions
thereto and the regulations promulgated thereunder.
(17) Fair Market Value has the meaning ascribed in the Omnibus Incentive Plan.
(18) Investment Fund is a deemed investment made available by the Committee and selected (or
deemed selected) by a Participant for purposes of crediting investment earnings and losses to a
Participants Account.
(19) Omnibus Incentive Plan is the Pentair, Inc. 2008 Omnibus Stock Incentive Plan, or any
successor thereto, as it may be amended from time to time.
(20) Participant is an individual who has validly elected to participate hereunder and who
has elected Before-tax Deposits, deferrals of Equity Awards or is entitled to receive Employer
Contributions. An individual who has become a Participant shall continue as a Participant until
the earlier of his or her death and the date the balance in his or her Account has been paid.
(21) Participating Employer is the Company and each other Employer, except as otherwise
prescribed by the Committee or the terms of any purchase agreement entered into with respect to the
Companys or an affiliates acquisition of such Employer.
(22) Performance-Based Compensation is Bonus Compensation or Equity Awards the amount of
which, or the entitlement to which, is contingent on the satisfaction of preestablished
organizational or individual performance criteria relating to a performance period of at least
twelve (12) months. Goals are considered preestablished if established in writing no
5
later than ninety (90) days after the commencement of the performance period.
Performance-Based Compensation does not include any amount or payment that will be paid either
regardless of performance, or based upon a level of performance that is substantially certain to be
met at the time the criteria is established. Notwithstanding the foregoing, Bonus Compensation or
Equity Awards will be considered Performance-Based Compensation if the compensation will be paid
regardless of satisfaction of the performance goals in the event of the Participants death,
Disability or a CIC, provided that payment under such circumstances without regard to the
satisfaction of the performance criteria will not constitute Performance-Based Compensation.
(23) Plan Year is the calendar year.
(24) Pre-Deferral Compensation is the combined amount of Base and Bonus Compensation which
would have been paid in a Plan Year but for a Before-tax Deposit election hereunder or a before-tax
deposit election under the RSIP, or both.
(25) Retirement is an individuals Separation from Service on or after the attainment of age
fifty-five (55) and the completion of at least ten (10) years of service with one or more
Employers.
(26) RSIP is the Pentair, Inc. Retirement Savings and Stock Incentive Plan, as amended, or
any successor plan thereto.
(27) Separation from Service is the termination of employment as an employee, from all
business entities that comprise the Employer, for reasons other than death or Disability. A
Participant will be deemed to have incurred a Separation from Service when the level of bona fide
services performed by the Participant for the Employer permanently decreases to a level equal to
twenty percent (20%) or less of the average level of services performed by the Participant for the
Employer during the immediately preceding thirty-six (36) month period (or such lesser period of
service). Notwithstanding the foregoing, a Participant on a bona fide leave of absence from an
Employer shall be considered to have incurred a Separation from Service no later than the six (6)
month anniversary of the absence (or twenty-nine (29) months in the event of an absence due to a
Disability described in the last sentence of Section 2.1(11)) or the end of such longer period
during which the individual has the right by law or agreement to return to employment upon the
expiration of the leave. Notwithstanding the foregoing, if following the Participants termination
of employment from the Employer the Participant becomes a non-employee director or becomes or
remains a consultant to the Employer, then the date of the Participants Separation from Service
may be delayed until the Participant ceases to provide services in such capacity to the extent
required by Code section 409A.
(28) Share is a share of the Companys Common Stock, par value of $0.16-2/3. No Shares
have been authorized for issuance under this Plan. All Shares payable under this Plan are issued
from the Omnibus Incentive Plan.
(29) Share Unit Fund is the Investment Fund described in Section 6.2(b), which is deemed
invested in Shares. The Share Unit Fund shall be used solely as a means to track deferrals of
Equity Awards.
(30) Share Unit is a unit that has a value equal to one Share.
6
(31) Specified Employee is a Participant who is a key employee for a Plan Year, with such
status as to that period becoming effective as of April 1st next following such Plan Year and
lasting until the following April 1st. A key employee is an employee of an Employer who (i) at any
time during the Plan Year owns at least five percent (5%) of the stock (or capital or profits
interest) of an Employer, (ii) owns one percent (1%) of the stock (or capital or profits interest)
of an Employer and whose compensation exceeds the dollar limit for such period described in Code
section 416(1)(iii), or (iii) is an officer of an Employer and whose compensation exceeds the
dollar limit for such period described in Code section 416(1)(i), as adjusted. No more than the
lesser of fifty (50) employees or ten percent (10%) of all employees shall be treated as officers
for that period by reason of clause (iii) immediately preceding. In the event the number of
officers exceeds such number, the employees included in such number will be those with the highest
compensation for that period.
(32) Spouse is an individual, of a sex opposite to that of a Participant, whose marriage to
a Participant is recognized under the laws of the United States (or one of the United States) or
any other generally recognized jurisdiction.
(33) Trust is the Pentair, Inc. Non-Qualified Deferred Compensation Plan Trust.
(34) Trustee is the person appointed as the trustee under the Trust.
(35) Unforeseeable Emergency is a severe financial hardship to the Participant resulting
from: an illness or accident to the Participant or his or her Spouse or tax-dependent; the loss of
a home due to an uncompensated (by insurance or otherwise) casualty; and other similar
extraordinary and unforeseeable circumstances beyond the control of the Participant.
(36) Valuation Date is, with respect to Investment Funds which correspond to funds available
under the RSIP, a date as of which such corresponding funds are valued under the RSIP; with respect
to other Investment Funds, it is the last day of each Plan Year and such other dates as are
prescribed by the Committee.
Section 2.2. Eligibility to Participate.
(a) Eligibility to Make Before-tax Deposits and Deferrals of Equity Awards. Subject
to the provisions of Article III, all Employees are eligible to elect Before-tax Deposits and to
defer Equity Awards.
(b) Eligibility for Employer Contributions. Employees eligible to receive an Employer
Discretionary Contribution for a Plan Year are described in Section 4.1(a), and Employees eligible
to receive an Employer Matching Contribution for a Plan Year are described in Section 4.2(a).
(c) Suspension of Eligibility. (1) Failure to Qualify as an Employee. Once
an individual becomes an Employee, such individual shall remain an Employee, regardless of the
identity of his or her Participating Employer, so long as he or she continues to be described in
Section 2.1(12). In the event an individual becomes an Employee and thereafter remains
7
employed by an Employer but not as an Employee or such Employer is not then a Participating
Employer, except as directed by the Committee such individuals eligibility to elect Before-tax
Deposits or deferrals of Equity Awards shall be suspended at the end of the Plan Year in which such
status change occurs and such individuals eligibility to receive an allocation of Employer
Contributions shall be suspended immediately on the date such status change occurs.
(2) Resumption. Upon resuming status as an Employee, an individual whose eligibility
to participate in the Plan has been suspended may again elect Before-tax Deposits or deferrals of
Equity Awards under the Plan pursuant to the provisions of Article III.
Section 2.3. Purpose.
As a tax-qualified plan, the RSIP is subject to various Code provisions which limit artificially
the contributions which can be made on behalf of participants. The Plan is designed to offer the
same contribution formulas (without duplication) as are offered under the RSIP but without regard
to such Code provisions, including Code sections 401(a)(17) (compensation cap), 401(k) and 401(m)
(annual discrimination tests and related rules for elective and matching contributions), 402(g) and
414(v) (annual dollar limit on elective contributions), and 415(c) (limit on annual additions). In
addition, the Plan is designed to offer participants the ability to defer certain items of
compensation that would not be able to be deferred under the RSIP, such as equity awards granted
under the Omnibus Incentive Plan. It is intended that all Accounts represent retirement income
within the meaning of 4 USC § 114(b)(1)(I)(ii) if paid after termination of employment. The Plan
is not solely intended to provide benefits in excess of the Code section 415 limits, however, and
therefore it is not an excess benefit plan as defined in ERISA section 3(36).
Section 2.4. Construction.
(a) General. Wherever any words are used herein in the singular, masculine, feminine
or neuter form, they shall be construed as though they were used in the plural, feminine, masculine
or non-neuter form, respectively, in all cases where such interpretation is reasonable. The words
hereof , herein, hereunder, and other similar compounds of the word here shall mean and
refer to this entire document and not to any particular Article or Section. Titles of Articles and
Sections are for general information only, and the Plan is not to be construed by reference
thereto.
(b) Applicable Law. To the extent not preempted by ERISA or any other federal
statute, the Plan shall be construed and its validity determined according to the substantive laws
of the State of Minnesota, without reference to conflict of law principles thereof. In case any
provision of the Plan shall be held illegal or invalid for any reason, the Plan shall be construed
and enforced as if it did not include such provision.
8
ARTICLE III
PARTICIPANT DEFERRALS
PARTICIPANT DEFERRALS
Section 3.1. Election to Participate.
(a) General. (1) Annual Election. Prior to January 1 of each Plan Year, an
Employee may elect: (A) to make Before-tax Deposits from his or her Base Compensation that will be
earned and paid in such Plan Year, (B) to make Before-tax Deposits from his or her Bonus
Compensation that will be earned (or begin to be earned) in such Plan Year, (C) to defer all or a
portion of his or her Equity Awards that will be granted in such Plan Year (for this purpose, an
Equity Award shall be considered granted when the Company takes action to approve such grant), and
(D) the form and time of distribution of the Account with respect to such Plan Year, as permitted
by Section 7.1(b). Such election shall be made as of the times the Committee may prescribe and
shall be irrevocable as of December 31 of the year immediately preceding the Plan Year for which
such elections are effective.
(2) Mid-Year Elections: Bonus Compensation or Equity Award. If and to the extent
allowed by the Committee, an Employee also may elect Before-tax Deposits from his or her Bonus
Compensation and may elect to defer all or a portion of his or her Equity Awards as follows:
(i) | If the Bonus Compensation or Equity Award qualifies as Performance-Based Compensation, the election may be made no later than six (6) months before the end of the performance period; or | ||
(ii) | If the Bonus Compensation or Equity Award is subject to a substantial risk of forfeiture that will not lapse until at least thirteen (13) months after the date of award or grant (or earlier upon death, Disability or a CIC), the election may be made no later than the first thirty (30) days after the date of award or grant; provided that if the Bonus Compensation actually vests within the first thirteen (13) months by reason of the Employees death, Disability, or a CIC, then the deferral election shall be cancelled; or | ||
(iii) | If the Bonus Compensation or Equity Award is subject to a substantial risk of forfeiture that will not lapse until at least one year after the date of grant, the election may be made at least one year prior to the date such award will vest, provided that the amount is deferred for a minimum of five (5) years from the date the Bonus Compensation or Equity Award vests. |
Such election shall be made as of the times the Committee may prescribe and shall be
irrevocable as of the latest date permitted hereunder. If an Employee has not previously elected a
time and form of distribution with respect to the Account to which the deferrals described herein
will be credited, he or she may do so as part of his or her deferral election hereunder.
9
(b) Participation During Plan Year.
(1) Initial Participation. An Employee who first becomes eligible to participate in
the Plan during a Plan Year may elect, within the first thirty (30) days of becoming so eligible,
(A) Before-tax Deposits from his or her Base Compensation for that Plan Year earned and paid after
such election, and (B) the form and time of distribution of the Account with respect to such Plan
Year, as permitted by Section 7.1(b). Such individual may also make the elections described in
Section 3.1(a)(2), if applicable.
(2) Resumption of Participation. An individual who has been eligible to participate
in the Plan, who loses such eligibility by reason of a Separation from Service or otherwise, and
who again becomes eligible to participate in the Plan, shall not be eligible to participate in the
Plan for purposes of authorizing Before-tax Deposits or deferrals of Equity Awards, and shall not
be eligible to receive an allocation of Employer Contributions, for the Plan Year in which he or
she again becomes so eligible unless he or she (i) has not been eligible to make Before-tax
Deposits or deferrals of Equity Awards for two (2) or more consecutive years or (ii) has previously
incurred a Separation from Service and been paid all benefits under the Plan after such separation
and before again becoming eligible for the Plan.
Section 3.2. Amount of Participants Deferrals.
(a) Deferral Elections. At the time an Employee elects to make Before-tax Deposits or
defer an Equity Award for a Plan Year, he or she shall designate the percentage of Base
Compensation, Bonus Compensation, or Equity Awards to be deferred. Except as described subsection
(c), the percentage elected shall be irrevocable with respect to the compensation to which it
relates. In the event a payroll period with respect to Base Compensation straddles the end of a
Plan Year, the election, if any, to defer for the Plan Year in which the payroll period ends shall
control the amount or rate to be deferred.
(b) Maximum Deferrals and Coordination with the RSIP. The maximum deferrals which may
be elected by a Participant for a Plan Year shall be established from time to time by the Committee
and may be expressed as a maximum amount or percentage. Different maximums may be applied to
deferrals of Base, Bonus Compensation, and Equity Awards or different items of Bonus Compensation
and Equity Awards. Such maximums shall be established before a Plan Year and shall apply
throughout that year, or shall apply to the award to which the maximum relates. Any such maximums
on Base and Bonus Compensation shall be first absorbed by Before-tax Deposits and then, to the
extent the maximum has not been reached, by before-tax deposits under the RSIP.
(c) Intra-Year Cessation of Before-tax Deposits. In the event a Participant dies,
becomes Disabled, or, as directed by the Committee, applies for and is granted a distribution
pursuant to Article VIII, Before-tax Deposits on behalf of such Participant for the balance of the
Plan Year shall be suspended. The suspension shall be effective no later than the second payroll
period ending after the Participants death; two and one-half (2-1/2) months after the Participant
becomes Disabled; or the second payroll period ending after the Committee approves the distribution
and directs the suspension, whichever is applicable.
10
Section 3.3. Payment of Deposits to Trustee.
Unless otherwise directed by the Committee, a Participating Employer shall remit amounts withheld
as Before-tax Deposits to the Trustee as soon as administratively feasible after such amounts are
withheld. In the event the Committee so otherwise directs or if the Trust (or some other funding
arrangement) does not then exist, then the amounts so withheld shall be retained by the
Participating Employer as part of its general assets and, in order to determine investment earnings
and losses thereon, shall be allocated to one or more Investment Funds as determined by the
Committee no later than the first day of the second calendar month immediately following the
calendar month of such withholding.
11
ARTICLE IV
EMPLOYER CONTRIBUTIONS
EMPLOYER CONTRIBUTIONS
Section 4.1. Employer Discretionary Contribution.
(a) Eligibility for Employer Discretionary Contributions. Employees eligible to
receive an Employer Discretionary Contributions for a Plan Year shall be those individuals
(i) | eligible to elect Before-tax Deposits for that year; | ||
(ii) | who are eligible to receive an employer discretionary contribution under the RSIP for that year, | ||
(iii) | whose covered compensation under the RSIP for that Plan Year is: |
(1) | actually limited by the applicable dollar amount provided for under Code section 401(a)(17), or | ||
(2) | reduced by reason of Before-tax Deposits; and |
(iv) | who are employed by an Employer as of the end of that Plan Year; provided, however, that such year-end employment shall not be required for the year in which employment ends due to death, Disability, or Retirement. |
(b) Amount of Discretionary Contribution. Participating Employers shall make an
Employer Discretionary Contribution on behalf of their eligible Employees for a Plan Year in an
amount equal to (i) the employer standard discretionary contribution rate in effect under the RSIP
for the Plan Year (as determined by the Committee) multiplied by the eligible Employees
Pre-Deferral Compensation for the Plan Year, up to the applicable dollar limit under Section 4.3,
less (ii) the employer standard discretionary contribution (as determined by the Committee) made on
behalf of such Employee to the RSIP for that year.
Section 4.2. Employer Matching Contribution.
(a) Eligibility for Employer Matching Contributions. Employees eligible to receive an
Employer Matching Contribution for a Plan Year shall be those individuals
(i) | who are eligible to receive an employer matching contribution under the RSIP for such year, | ||
(ii) | whose covered compensation under the RSIP for that Plan Year is: |
(1) | actually limited by the applicable dollar amount provided for under Code section 401(a)(17), or | ||
(2) | reduced by reason of Before-tax Deposits; and |
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(iii) | who are employed by an Employer as of the end of that Plan Year; provided, however, that such employment shall not be requested for the year in which such employment ends due to death, Disability, or Retirement. |
(b) Amount of Matching Contribution. With respect to each Employee eligible to
receive an Employer Matching Contribution for a Plan Year, that Employees Participating Employer
shall contribute a matching contribution equal to A B, where A equals the matching contribution
which would have been made on his or her behalf under the RSIP for that year assuming:
(i) | the covered compensation limit thereunder was the applicable dollar limit for that year under Section 4.3, | ||
(ii) | the provisions of Code sections 401(k) and (m), 402(g), 414(v), and 415(c) (and any similar or analogous Code limits on the amount or rate of contributions under the RSIP) did not apply, | ||
(iii) | all Before-tax Deposits for such year had been made for that year under the RSIP, | ||
(iv) | covered compensation thereunder included Before-tax Deposits made with respect to that year, and |
B equals the matching contributions made on his or her behalf under the RSIP for that year. In
determining B, payment of the matching contribution to the Employee under the RSIP to satisfy Code
section 401(m) shall be ignored but any forfeiture of such contribution shall, if in fact taken
into account in determining B, reduce B.
Section 4.3. Limit on Compensation for Purposes of Employer Contributions.
The maximum amount of the aggregate of a Participants Base Compensation and Bonus Compensation
that will be considered for purposes of determining Employer Contributions shall be established
from time to time by the Committee and shall be communicated to the Participants. For the Plan
Year beginning January 1, 2008, the maximum amount of the aggregate of a Participants Base
Compensation and Bonus Compensation for purposes of determining Employer Contributions shall be
$700,000.
Section 4.4. Payment of Deposits to Trustee.
Unless otherwise directed by the Committee, a Participating Employer shall pay its share of the
Employer Contributions for a Plan Year as soon as administratively feasible after the entire
Employer Contribution for such year has been determined. In the event the Committee so otherwise
directs or if the Trust (or some other funding arrangement) does not then exist, then such share
shall be retained by the Participating Employer as part of its general assets and, in order to
determine investment earnings and losses thereon, shall be allocated to one or more Investment
Funds as determined by the Committee no later than the first day of the calendar
month immediately following the calendar month in which such entire Contribution has been
determined.
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ARTICLE V
TRUSTEE AND TRUST AGREEMENT
TRUSTEE AND TRUST AGREEMENT
Section 5.1. Appointment.
(a) General. The Plan is an unfunded deferred compensation arrangement. Neither the
Company nor any Participating Employer shall be required to establish a trust or to in any way
segregate assets for purposes of funding or otherwise providing benefits under the Plan. The
Company may, however, in its sole discretion, establish and maintain an unfunded grantor trust with
one or more persons selected by the Committee to act as Trustee. If a Trustee is so appointed,
such Trustee shall hold, manage, administer and invest the assets of the Trust, reinvest any
income, and make distributions in accordance with the directions of the Committee and the
provisions of the Plan and Trust. The trust agreement shall be in such form and contain such
provisions as the Committee deems necessary and appropriate to effectuate the purposes of the Plan.
The terms and provisions of the trust agreement shall control in case of a conflict between the
terms and provisions of such agreement and the terms and provisions of the Plan.
(b) Removal and Resignation. Pursuant to the notice requirements and other procedures
contained in the Trust agreement, and in accordance with the Trust agreement, the Committee may, at
any time and from time to time, remove a Trustee or any successor Trustee and any such Trustee or
any successor Trustee may resign. If the provisions of the Trust agreement remain in effect at the
time of removal or resignation of the Trustee, the Committee shall appoint a successor Trustee.
Section 5.2. Fees and Expenses.
Except as directed by the Company, the Trustees fee, and related fees and expenses, shall be paid
by the Company and Participating Employers. Brokerage fees, asset-based fees for custodial,
investment and management services, and other investment expenses (e.g., participant record-keeping
fees) which relate to Investment Funds, shall be paid out of the Trust and charged to the fund of
the Trust and the Accounts of the Participant to which such fees and costs are attributable.
Section 5.3. Use of Trust.
To the extent any assets are held in the Trust, such assets shall at all times be the property of
the Company or a Participating Employer and, as such, shall remain subject to the claims of general
creditors of the Company or the Participating Employer, as the case may be, in the event of
bankruptcy or insolvency. No Participant or Beneficiary shall by reason of the Plan and Trust have
any rights to any assets of the Trust, the Company or a Participating Employer nor to Investment
Funds or other property generally, and neither the existence of the Plan nor the establishment of a
Trust shall be interpreted or construed as a guaranty that any funds which may be held in trust
will be available or sufficient for the payment of benefits under the Plan.
Section 5.4. Responsibility and Authority for Fund Management.
The Company may, in its sole discretion, establish and maintain a funding policy, and may delegate
to the Committee the following duties and authority:
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(i) | to establish Investment Funds for purposes of crediting investment earnings and losses to Accounts, including the authority to add to or change the number and nature of the Investment Funds from time to time; | ||
(ii) | to direct the investment and reinvestment of all or any portion of the assets, if any, held by the Trustee under the Trust; and | ||
(iii) | to periodically review the performance of the Investment Funds. |
Section 5.5. Trust Assets.
Neither the Company, a Participating Employer nor the Trustee shall be obligated to purchase any
asset or Investment Fund designated by a Participant pursuant to the provisions of Article VI for
purposes of crediting investment earnings and losses to such Participants Accounts. To the extent
the Company and Participating Employers remit Before-tax Deposits or Employer Contributions to the
Trustee, however, and the Investment Fund designated by the Participant as a deemed investment for
his or her Accounts consists of an asset which the Trustee cannot purchase or an investment which
is not readily available on the open market, the Trustee shall, subject to the direction of the
Committee, return any such amounts to the Company and Participating Employers in the form of cash.
To the extent a Participant reallocates all or a portion of the balance in his or her Accounts into
an Investment Fund which consists of an asset the Trustee cannot purchase, the Trustee shall
withdraw from the Trust cash equal to the fair market value of such investment designation and
return such cash to the Company or other Participating Employers.
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ARTICLE VI
INVESTMENT; PARTICIPANTS ACCOUNTS
INVESTMENT; PARTICIPANTS ACCOUNTS
Section 6.1. Allocation and Reallocation of Before-Tax Deposits and Employer Contributions.
(a) Allocation. For purposes of crediting earnings to his or her Accounts, a
Participant shall elect to allocate Before-tax Deposits and Employer Contributions to one or more
of the Investment Funds. A Participant may elect to change the mix of such allocations in
accordance with rules prescribed by the Committee. An election under this Section 6.1(a) shall
remain in effect unless changed by the Participant; provided, however, that neither the Company, a
Participating Employer, the Committee nor the Trustee shall be obligated to purchase any investment
designated by a Participant. Investment Funds are selected by a Participant solely for purposes of
determining the investment earnings and losses to be credited to a Participants Accounts.
(b) Reallocation. In accordance with rules prescribed by the Committee, a Participant
may reallocate the balance credited to his or her Accounts among the available Investment Funds.
Any such reallocation shall apply to the entire balance of such Accounts attributable to
participation in the Plan, and not just to Before-tax Deposits and Employer Contributions made
subsequent to such reallocation.
(c) Participant-Directed Investment. (1) General. The availability of
Investment Funds for purposes of crediting earnings to Accounts is not a recommendation to
designate a deemed investment in any one Investment Fund. The selection of deemed investments is
solely the responsibility of each Participant. No officer, employee or other agent of an Employer
or the Trustee is authorized to advise or make any recommendation concerning the selection of
Investment Funds and no such person is responsible for determining the suitability or advisability
of any such selection.
(2) Participant Responsibility. Participants shall be solely responsible for
selecting, monitoring, and changing the Investment Funds in or by which their Account balances are
invested. Neither the Company, a Participating Employer, Committee member, nor the Administrator
shall be responsible for such investment decisions. To the extent a Participant does not expressly
exercise investment discretion over his or her Accounts, he or she shall be deemed to have elected
to direct investments to or by the same Investment Fund used for such purposes under the RSIP,
except as otherwise provided by the Committee.
Section 6.2. Allocation of Deferred Equity Awards.
(a) Allocation. Deferrals of Equity Awards shall be automatically allocated to the
Share Unit Fund on the date of vesting, unless otherwise determined by the Committee. A
Participant shall not have the right to re-allocate such deferrals out of the Share Unit Fund.
(b) Share Unit Fund. A deferral of an Equity Awards shall be allocated, to the Share
Unit Fund as follows: (i) if the deferral relates to Shares, or Equity Awards whose value
equals the Fair Market Value of a Share, the Participants Account shall be credited with a
number of Shares Units equal to the number of Shares (or Share-related Equity Awards)
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deferred, or (ii) if the deferral relates to cash (such as dividend equivalents), such amount shall be converted
to whole and fractional Share Units, with fractional units calculated to three decimal places, by
dividing the amount to be allocated by the Fair Market Value of a Share on the effective date of
such allocation. If any dividends or distributions (other than in the form of Shares) are paid on
Shares while a Participant has Share Units credited to his Account, such Participant shall be
credited with additional Shares Units equal to the amount of the cash dividend paid or Fair Market
Value of other property distributed on one Share, multiplied by the number of Share Units credited
to the Participants Account on the date the dividend is declared. Any other provision of this
Plan to the contrary notwithstanding, if a dividend is paid on Shares in the form of a right or
rights to purchase shares of capital stock of the Company or any entity acquiring the Company, no
additional Share Units shall be credited to the Participants Account with respect to such
dividend, but each Share Unit credited to a Participants Account at the time such dividend is
paid, and each Share Unit thereafter credited to the Participants Account at a time when such
rights are attached to Shares, shall thereafter be valued as of any point in time on the basis of
the aggregate of the then Fair Market Value of one Share plus the then Fair Market Value of such
right or rights then attached to one Share.
(c) Transactions Affecting Common Stock. In the event of any transaction affecting
Shares that would cause an adjustment to be made under Section 16(a) of the Omnibus Incentive Plan,
the Committee may make appropriate equitable adjustments with respect to the Share Units credited
to the Account of each Participant, including without limitation, adjusting the date as of which
such units are valued and/or distributed, as the Committee determines is necessary or desirable to
prevent the dilution or enlargement of the benefits intended to be provided under the Plan.
(d) No Shareholder Rights With Respect to Share Units. Participants shall have no
rights as a stockholder pertaining to Share Units credited to their Accounts.
Section 6.3. Investment of Deposits and Employer Contributions. The Committee may, in its discretion, direct the Trustee to invest a Participants Before-tax
Deposits and Employer Contributions in the Investment Funds designated by the Participant, to the
extent such investment is available on the open market and can be purchased by the Trustee and
owned by the Trust. Regardless of whether any deposits or Employer Contributions are actually
invested in the Investment Funds designated by Participants, however, the Committee shall maintain
a bookkeeping account on behalf of each Participant to which shall be credited the investment
results of each Investment Fund so designated to adjust the amounts in each Participants Accounts.
At least each calendar quarter, the Committee shall make available or cause to be made available a
report or other information indicating the increase or decrease in the value of each Participants
Accounts. Any earnings of an Investment Fund shall be deemed to be reinvested in the same
Investment Fund for purposes of maintaining a Participants Accounts.
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Section 6.4. Participants Accounts.
(a) Establishment of Accounts. Separate Accounts shall be established and maintained
for each Participant by Plan Year and Investment Fund. To the extent necessary or appropriate to
provide for proper administration of the Plan, including the tracking of payment date and form
elections, a Participants Account for a Plan Year shall include separate balances or subaccounts
for interests derived from Before-tax Deposits, deferred Equity Awards, Employer Contributions and
such other separate balances as the Committee shall determine. The Committee shall also identify
or otherwise maintain separate Accounts or subaccounts for Participants by reference to the
identity of the Participants Employer, to the extent practicable.
(b) Crediting of Accounts. The appropriate Accounts of each Participant shall be
credited with the amounts of Before-tax Deposits, deferred Equity Awards and Employer Contributions
made for each Plan Year. The reallocation of a Participants Accounts, if permitted, shall be
appropriately credited as of the Valuation Date coincident with or next following the effective
date of the reallocation. The maintenance of such Accounts shall not, however, entitle a
Participant to any ownership, preferred claim or beneficial interest in any Investment Fund or in
any specific asset of the Trust. Investment Funds are deemed investments and used solely for
purposes of determining the earnings and losses to be credited to a Participants Accounts.
(c) Vesting of Accounts. A Participants Account shall be fully vested, except that
the portion of the Account arising from the deferral of an Equity Award shall vest in accordance
with the terms of the Equity Award to which it relates.
Section 6.5. Beneficiaries. The foregoing provisions of this Article VI shall be applied, to the extent relevant, with respect
to Accounts payable under the Plan to a Beneficiary of a deceased former Participant.
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ARTICLE VII
PAYMENT OF ACCOUNTS
PAYMENT OF ACCOUNTS
Section 7.1. Time and Form of Payments.
(a) General. Except as otherwise provided in the Plan, a Participant shall receive
his or her entire vested Account balance allocable to a Plan Year in a lump sum within ninety (90)
days of the first to occur of his or her (i) Separation from Service, (ii) Disability, or (iii) a
CIC. In the event the payment event is due to a Separation from Service and as of the date of the
Separation from Service the Participant is a Specified Employee, however, the lump sum shall be
paid within thirty (30) days after the six (6) month anniversary of such date.
(b) Election of Distribution. A Participant may elect, in accordance with Section 3.1
and subject to such limitations as may be prescribed by the Committee, to receive distribution of
his or her vested Account balance allocable to a Plan Year:
(1) Time of Payment. As of one specific future date, provided such date is at least
two (2) years following the last date by which such an election can be made for that year (or with
respect to the portion of the Account relating to an Equity Award, the date the award is fully
vested, if later) and such date cannot be more than five (5) years after the earlier of the date
the Participant becomes Disabled and the date he or she has a Separation from Service. In the
event the date finally selected is less than two (2) years, the Participant shall be treated as
having not made a specific date election for that year, or, by reason of subsequent event, is more
than five (5) years after the relevant date, the Participant shall be treated as having selected
the fifth (5th) anniversary of such date as the date of payment. Except as provided in Section
8.5, such an election once finally effective cannot be changed by the Participant.
(2) Calculation of Payment. In annual installments over five (5) or ten (10) years.
Each such installment shall be determined by using the vested Account balance for such year as of
the most recent Valuation Date before the payment date and dividing such balance by the number of
years left in the installment period and the final installment shall include the remaining vested
Account balance. The second year and later installments shall be paid, as far as practicable, on
the anniversary date of the first installment. Except as provided in Section 7.4, such an election
once finally effective cannot be changed by the Participant. In the event the payment event is due
to a Separation from Service, and as of the date of Separation from Service the Participant is a
Specified Employee, however, the first installment payment may not be made until after the six (6)
month anniversary of such date.
(c) Form of Payment. All payments made under a Participants Account, other than from
the Share Unit Fund, shall be made in cash. Payment from the Share Unit Fund shall be distributed
in the form of Shares, with each whole Share Unit being paid in the form of one Share. Fractional
Share Units shall be distributed in cash by multiplying the fractional Share Unit by the Fair
Market Value of a Share immediately prior to the date of payment. All Shares payable under the
Plan shall be issued from the Omnibus Incentive Plan.
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Section 7.2. Distribution Due to Death.
(a) Death Benefit. If a Participant dies before receiving payment of all of the
vested amounts allocated to his or her Accounts, then notwithstanding the payment dates or forms of
payment elected, and regardless of whether the Participant had Separated from Service before death
or was a Specified Employee as of such separation, all such unpaid benefits shall be paid to his or
her Beneficiary within ninety (90) days of the date of death. Notwithstanding the foregoing, the
Employer shall not be obligated to make payment to a Beneficiary (and will not be liable for any
failure to make distribution within ninety (90) days of the date of death) unless and until the
Committee has verified the identity of the Beneficiary and the Beneficiary has established the
right to receive payment of such benefits.
(b) Default. If a Participant fails to make a valid Beneficiary designation, makes
such a designation but is not survived by any named Beneficiary, or makes such a designation but
the designation does not effectively dispose of all benefits payable after the Participants death,
then, to the extent benefits are payable after the Participants death, all such benefits shall be
paid to the Participants Spouse (if the Spouse survives the Participant), or if the Participant
has no Spouse or such Spouse does not survive the Participant, the personal representative or
equivalent of the Participants estate or, if no such person has been appointed, then in accordance
with the laws of intestate succession of the jurisdiction in which the Participant was domiciled as
of the date of death.
(c) Form of Distribution. Distribution to a Beneficiary shall be made in a lump sum
in cash or Shares in accordance with Section 7.1(c).
(d) Death of Beneficiary. If a Beneficiary dies after the Participant but before
receiving payment of all benefits under the Plan which would have been paid to such Beneficiary but
for his or her death, then all such unpaid benefits shall be paid within ninety (90) days after
such death to the personal representatives or equivalent of such beneficiarys estate.
Notwithstanding the foregoing, the Employer shall not be obligated to make payment to the
beneficiarys estate (and will not be liable for any failure to make distribution within ninety
(90) days of the date of death) unless and until the Committee has verified the identity of such
representative.
Section 7.3. Payment of Employer Contributions. To the extent a Participant or Beneficiary, as the case may be, has received or commenced
receiving benefits hereunder, and the Participant or former Participant is subsequently determined
to be entitled to an allocation of Employer Contributions for the Plan Year in which the
Participants active participation in the Plan ceased, then the Company or Participating Employer
shall timely pay any such contribution to such person or, if such person is receiving an
installment form of distribution, the Committee shall adjust the balance of the installments due to
reflect the amount of such Employer Contribution effective with the due date of the next
installment payment. Any such amount shall remain subject to all applicable provisions of the Plan
until so paid.
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Section 7.4. Later Payment Deferral Elections.
(a) General. A Participant who elected a specific payment date pursuant to Section
7.1(b) may, in accordance with the provisions of this Section 7.4 and while an Employee, elect to
change the date or form, or both, of payment of the vested Account balance allocable to a Plan
Year. No more than two (2) such elections shall be allowed as to the Account balance for a Plan
Year.
(b) Election Rules. The later election must be otherwise valid pursuant to Section
7.2(b), as if an original election, and must be (i) made at least one (1) year before the then
scheduled payment date and (ii) extend the then scheduled payment date by five (5) or more years.
(c) Form of Payment. For purposes of applying this Section 7.4 and implementing the
six (6) month delay rule for Specified Employees, each of the forms of payment awards under the
Plan shall be treated as a single payment due to be made as of the first scheduled payment date.
Section 7.5. Miscellaneous.
(a) De Minimis Amount Payout. In the event a Participant who has a Separation from
Service has a vested Account balance or portion thereof for all years which in the aggregate (under
all such arrangements treated as the same plan for this purpose under Section 409A and Treasury
Regulations thereunder) is $15,500 (or such higher amount described in Code section 402(g)(1)(B) as
is then in effect) or less, then such vested balance or portion under all such plans so combined
shall be immediately paid in a cash lump sum notwithstanding the other Plan provisions or the
Participants payment elections.
(b) Permissible Delay and Acceleration. The payment provisions of Article VII are
subject to exceptions or overrides in the discretion of the Committee or other person, other than
the Participant concerned, as otherwise provided in the Plan or as allowed under Code section 409A.
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ARTICLE VIII
EMERGENCY WITHDRAWALS
EMERGENCY WITHDRAWALS
Section 8.1. Restricted Withdrawals.
(a) General. A Participant who is not otherwise then entitled to an immediate lump
sum distribution may, upon a showing of an Unforeseeable Emergency which cannot be satisfied by
other available liquid assets, request a withdrawal from the Participants vested Account balance,
but excluding amounts allocated to the Share Unit Fund. An emergency withdrawal cannot be
requested more frequently than once each Plan Year.
(b) Determination. The Committee or its delegate shall determine whether the relevant
facts and circumstances represent an Unforeseeable Emergency and the amount necessary to satisfy
such need. The Committee may require such proof as it deems appropriate to evidence the existence
of and the amount necessary to satisfy the emergency or extraordinary circumstances, including a
certification that the need cannot be relieved (i) through reimbursement from insurance, (ii) by
reasonable liquidation of other assets (but such available assets shall be determined without
regard to the Participants account balances under the RSIP and the Plan, whether attributable to
amounts deferred before 2005 or after 2004), or (iii) by cessation of Before-tax Deposits. If and
to the extent the cessation of Before-tax Deposits can remedy such need, the Committee may direct
such immediate cessation and suspend the Participants right, for such period of time as it deems
appropriate, to elect Before-tax Deposits.
(c) Time for Payment. Distributions pursuant to this Article shall be made in cash
within ninety (90) days after the withdrawal is approved by the Committee. If a Participant should
die after requesting an emergency withdrawal, but prior to the distribution thereof, the withdrawal
election shall be deemed revoked.
(d) Committee Discretion. Approval of an emergency withdrawal shall be in the sole
discretion of the Committee, and no such approval shall be given if the Committee determines that
allowing such withdrawal may have an adverse tax consequence to the Company, Participating
Employers, the Plan or other Participants. In the Committees sole discretion, such approval may
require the suspension of a Participants right to elect Before-tax Deposits for such period of
time as the Committee directs.
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ARTICLE IX
PLAN ADMINISTRATION
PLAN ADMINISTRATION
Section 9.1. Committee.
(a) General. The Committee shall consist of the persons listed on Schedule A. The
Committee shall have exclusive responsibility for the general administration and operation of the
Plan and the power to take any action necessary or appropriate to carry out such responsibilities.
In addition, the Committee shall provide generally for the operation of the Plan and be a liaison
between Employers to assure uniform procedures as appropriate. The duties of the Committee shall
include, but not be limited to, the following:
(i) | to prescribe, require and use appropriate forms; | ||
(ii) | to formulate, issue and apply rules and regulations; | ||
(iii) | to prepare and file reports, notices and any other documents relating to the Plan which may be required by law; | ||
(iv) | to interpret and apply the provisions of the Plan; | ||
(v) | to authorize and direct benefit payments. |
In exercising such powers and duties, and other powers and duties granted under the Plan or Trust
to the Committee, the Committee and each member thereof is granted such discretion as is
appropriate or necessary to carry out the duties and powers so delegated. This discretion
necessarily follows from the fact that the Plan, the Trust and related documents do not, and are
not intended to, prescribe all rules necessary to administer the Plan or anticipate all
circumstances or events which may arise in the course of such administration.
(b) Code Section 409A. The Plan shall be administered, and the Committee, its
delegate and the Administrator shall exercise their discretionary authority under the Plan, in a
manner consistent with Code section 409A. Any permissible discretion to accelerate or defer a Plan
payment under such Regulations, the power to exercise which is not otherwise described expressly in
the Plan, shall be exercised by the Committee. In the event the matter over which such discretion
may be exercised relates to a Committee member, or such member is otherwise unable to fairly
exercise such discretion, such member shall not take part in the deliberations and decisions
regarding that matter.
(c) Allocation to Participating Employers. To the extent practicable, the Committee
shall account for the Trust assets in such manner as will permit the accurate allocation of
Accounts or parts thereof, including the investment earnings and losses attributable thereto, to
the relevant Participating Employer. The Committee shall provide to each Participating Employer all
information necessary to permit each such Employer to prepare any reports or tax filings which may
be required by reason of its status as a Participating Employer.
(d) Action by Compensation Committee of the Board. Notwithstanding the foregoing, if
any action or determination of the Committee as set forth in the Plan is required to
23
be taken by the Compensation Committee of the Board of Directors of the Company in order to
comply with applicable law, the Companys governance charters or the listing requirements of any
exchange on which the Companys common stock is then listed, then all references herein to the
Committee shall include the Compensation Committee of the Board to the extent deemed necessary or
advisable.
Section 9.2. Organization and Procedure. The Committee may have a chairman, a secretary, and such other officers as it deems appropriate.
Subject to Section 9.1, action on any matter shall be taken on the vote of at least a majority of
all members of the Committee at any meeting or upon unanimous written consent of all members
without a meeting. The Committee may adopt such bylaws, procedures and operating rules as it deems
appropriate.
Section 9.3. Delegation of Authority and Responsibility. The Committee may, in writing, delegate to any one or more of its members the authority to execute
documents on behalf of the Committee and to represent the Committee in any matters or dealings
involving such Committee.
The Committee may delegate in writing certain of its powers to a person employed by an
Employer under such terms and conditions as may be specified by the Committee. Employees of an
Employer who are not members of the Committee or persons to whom powers are delegated, shall
perform such duties and functions relating to the Plan as the Committee may direct and supervise.
It is expressly provided, however, that the Committee shall retain full and exclusive authority
and responsibility for and respecting any such activities by other employees, and nothing contained
in this Section 9.3 shall be construed to confer upon any such employee any discretionary authority
or control respecting the administration or operation of the Plan.
Section 9.4. Use of Professional Services. The Committee may obtain the services of such attorneys, accountants, record keepers or other
persons as it deems appropriate, any of whom may be the same persons who are providing services to
an Employer. In any case in which the Committee utilizes such services, it shall retain exclusive
discretionary authority and control over the administration and operation of the Plan.
Section 9.5. Fees and Expenses. Committee members who are employees of the Company or a Participating Employer shall serve without
compensation but shall be reimbursed for all reasonable expenses incurred in their capacity as
Committee members. No employee members of the Committee or persons performing services pursuant
to Section 9.4 shall receive greater than reasonable compensation for their services. All
compensation for services and expenses shall be paid from the Trust unless the Company, in its sole
discretion, elects to pay them. To the extent not paid by the Company, such compensation and
expenses shall be paid out of the principal or income of the Trust and charged to Accounts.
Section 9.6. Communications. Requests, claims, appeals, and other communications related to the Plan and directed to the Company
or the Committee shall be in writing and shall be made by transmitting the same via the U.S. Mail,
certified, return receipt requested, to the Sidekick Committee, c/o Senior Vice President of Human
Resources, at the address listed in the latest summary description for the Plan.
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Section 9.7. Claims.
(a) Filing Claims. A Participant or Beneficiary (or a person who in good faith
believes he or she is a Participant or Beneficiary, i.e., a claimant) who believes he or she has
been wrongly denied benefits under the Plan may file a written claim for benefits with the
Administrator. Although no particular form of written claim is required, no such claim shall be
considered unless it provides a reasonably coherent explanation of the claimants position.
(b) Decision on Claim. The Administrator shall in writing approve or deny the claim
within sixty (60) days of receipt, provided that such sixty (60) day period may be extended for
reasonable cause by notifying the claimant. If the claim is denied, in whole or in part, the
Administrator shall provide notice in writing to the claimant, setting forth the following:
(1) the specific reason or reasons for the denial;
(2) a specific reference to the pertinent Plan provisions on which the denial is based;
(3) a description of any additional material or information necessary for the claimant to
perfect the claim and an explanation of why such material is necessary; and
(4) the steps to be taken if the claimant wishes to appeal the decision to the Committee.
(c) Appeal of Denied Claim. (1) Filing Appeals. A claimant whose claim has
been denied in whole or in part may appeal such denial to the Committee by filing a written appeal
with the Administrator within sixty (60) days of the date of the denial. A decision of the
Administrator which is not appealed within the time herein provided shall be final and conclusive
as to any matter which was presented to the Administrator.
(2) Rights on Appeal. A claimant (or a claimants duly authorized representative) who
appeals the Administrators decision shall, for the purpose of preparing such appeal, have the
right to review any pertinent Plan documents, and submit issues and comments in writing to the
Committee.
(d) Decision by Appeals Committee. The Committee shall make a final and full review
of any properly appealed decision of the Administrator within sixty (60) days after receipt of the
appeal, provided that such period may be extended for reasonable cause by notifying the claimant.
The Committees decision shall be in writing and shall include specific reasons for its decisions and
specific references to the pertinent Plan provisions on which its decision is based.
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ARTICLE X
PLAN AMENDMENTS, PLAN TERMINATION,
AND MISCELLANEOUS
PLAN AMENDMENTS, PLAN TERMINATION,
AND MISCELLANEOUS
Section 10.1. Amendments and Termination.
(a) General. While it is intended the Plan shall continue in effect indefinitely, the
Company may from time to time modify, alter or amend the Plan or the Trust, provided that no
amendment affecting the rights, duties or responsibilities of the Trustee may be made without the
Trustees consent. Except as otherwise inconsistent with Section 9.1(b), the Company may at any
time order the temporary suspension or complete discontinuance of Before-tax Deposits, deferrals of
Equity Awards or Employer Contributions, or may terminate the Plan. Except as described in
subsection (b) following, no such amendment shall reduce the balance in any Participants Accounts
determined as of the later of the date the amendment is adopted or effective.
(b) Amendments to Comply with Applicable Law. Nothing herein shall be construed to
prevent any modification, alteration or amendment of the Plan or Trust which is required to comply
with the provision of any applicable law or regulation relating to the establishment or maintenance
of this Plan and Trust. Except as otherwise provided herein, or as necessary to comply with such
law or regulation, no such amendment shall reduce the balance in any Participants Accounts
determined as of the later of the date the amendment is adopted or effective.
(c) Participating Employers. An Employer may become a Participating Employer by
agreeing to withhold and make contributions for its Employees as provided for herein. An Employer
which becomes a Participating Employer thereby agrees to pay or provide for the payment of benefits
hereunder to those Participants (and their Beneficiaries) employed by it, but only to the extent
such benefits are attributable to contributions, and investment earnings and losses credited
thereon, related to the period of such employment. A Participating Employer shall have no
discretionary authority or control over the administration of the Plan or the Fund.
An Employer, other than the Company, which becomes a Participating Employer thereby agrees
that any subsequent modifications, alterations and amendments to the Plan by the Company shall be
deemed to have been adopted by the Participating Employer.
An Employer, other than the Company, may cease to be a Participating Employer by adopting a
written resolution of its board of directors and delivering such resolution to the Committee. No
resolution ending participation in the Plan shall be effective until thirty (30) days after it is
received by the Committee. Unless otherwise provided herein, ceasing to be a Participating
Employer shall not relieve such Employer of its obligation hereunder to provide for the payment of
benefits credited to Accounts on behalf of Participants during the time such Employer was a
Participating Employer.
(d) Plan Termination. If the Plan is terminated, the Committee may elect to either
terminate or retain the Trust. Any decision to terminate the Plan or the Trust shall not reduce
the balance of a Participants Accounts under the Plan as of the effective date of such
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termination, nor shall it terminate, amend or otherwise change the liability of the Company or
Participating Employer to pay or provide for the payment of benefits under the Plan.
Section 10.2. Non-Guarantee of Employment. Nothing contained in this Plan shall be construed as a contract of employment between an Employer
and a Participant, or as a right of any Participant to be continued in the employment of an
Employer, or as a limitation on the right of an Employer to discharge any Participant with or
without notice or with or without cause.
Section 10.3. Rights to Trust Asset.
(a) Rights of Participants. No Participant or any other person shall have any right
to, or interest in, any part of the Trust assets upon termination of employment or otherwise,
except as otherwise provided under the Plan. If the assets of the Trust are insufficient to pay
the vested amounts credited to a Participants Accounts, the Participants Employer shall pay any
such amounts from its other general assets. If such Employer does not timely pay such benefits,
then, except as described in Section 10.2(b), the sole recourse of a claimant Participant or
Beneficiary shall be against such Employer and neither the Company nor any other Employer shall be
responsible to pay or provide for the payment of such benefits or liable for the nonpayment
thereof.
(b) Company Assumption of Liability. If the Participants employment is terminated
due to the sale of the stock (or rights analogous to stock) or assets of his or her Employer by the
Company, the Company shall assume and be responsible for the payment of benefits to such
Participant as necessary pursuant to this Section 10.3 even though it may not have been such
Participants Employer. The Companys obligation under this Section 10.3(b) shall cease as of the
earlier of the date all such benefits are paid to the affected Participant or the date the person
who purchased such stock or assets, or a person who controls such person, agrees in writing to
assume the liability for the benefits credited to the affected Participants by reason of their
participation in the Plan.
Section 10.4. Suspension of Rules.
(a) Federal Securities and Other Laws. Notwithstanding anything in the Plan to the
contrary, and to the extent and for the time reasonably necessary to comply with federal securities
laws (or other applicable laws or regulations), elective deferrals, Participant
investment-direction, and payment dates and forms under the Plan may be suspended, changed, or
delayed as necessary to comply with such laws or regulations; provided, however, any payments so
delayed shall be paid to the Participant or Beneficiary as of the earliest date the Committee
determines that such payment will not cause a violation of any such laws or regulations.
(b) Section 162(m). If the Committee reasonably determines that a scheduled payment
of benefits under the Plan will not be deductible by an Employer by reason of Code section 162(m),
it may, if and to the extent permitted by Code section 409A, suspend all such payments to the
extent not so deductible. Payments so suspended shall be paid by the fifteenth (15th) day of the
third month after the affected Participant dies, becomes Disabled, or incurs a Separation from
Service, or if earlier, when such payment is deductible by the Company;
27
provided, however, if the Participant is a Specified Employee when he or she incurs a Separation
from Service, payments suspended pursuant to this subsection shall be paid as described except the
six (6) month anniversary of the actual Separation from Service shall be treated as the date the
affected Participant Separated from Service.
(c) Offset for Amounts Due. A Participants vested Account balance may be reduced by
one or more offsets to repay any amounts then due and owing to an Employer, unless another means of
repayment is agreed to by the Committee. Except for the right to immediate offset for an amount up
to $5,000, or such higher amount as allowed under Treasury Regulations or other directives, the
Account balance shall not be so offset before it is otherwise scheduled to be paid to the
Participant or Beneficiary and the amount then offset shall not exceed the amount that would be
otherwise so paid.
Section 10.5. Requirement of Proof. In discharging their duties and responsibilities under the Plan, the Committee or other individual
may require proof of any matter concerning this Plan, and no person shall acquire any rights or be
entitled to receive any benefits under this Plan until such proof is furnished.
Section 10.6. Indemnification. The Company shall indemnify each member of the Committee and hold each of them harmless from the
consequences of acts or conduct when done in their capacity as Committee members. This provision
shall apply only if the member acted in good faith and in a manner reasonably believed to be solely
in the best interests of the Participants and Beneficiaries and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the conduct was unlawful. Such
indemnification shall cover any and all reasonable attorneys fees and expenses, judgments, fines
and amounts paid in settlement, but only to the extent such amounts are (i) actually and reasonably
incurred, (ii) not otherwise paid or reimbursable under an applicable Employer paid insurance
policy, and (iii) not duplicative of other payments made or reimbursements due by the Company or
its affiliates under other indemnity agreements.
In no event shall this Section 10.6 be construed to require the Company to indemnify third
parties with whom it may contract to perform administrative or investment management duties or to
indemnify the Trustee to any extent beyond what may be required under such contract or the Trust
agreement, respectively.
Section 10.7. Non-Alienation and Taxes.
(a) General. Except as otherwise expressly provided herein or as otherwise required
by law, no right or interest of any Participant or Beneficiary in the Plan and the Trust shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, attachment, garnishment, execution, levy, bankruptcy, or any other disposition of any
kind, either voluntary or involuntary, prior to actual receipt of payment by the person entitled to
such right or interest under the provisions hereof, and any such disposition or attempted
disposition shall be void.
(b) Tax Withholdings. (1) General. Benefits earned under the Plan and
payment of such benefits shall be subject to tax reporting and withholding as required by law and
28
the amount of such withholding may be determined by treating such benefits as being in the nature
of supplemental wages. If tax withholdings must be made before such benefits are paid to a
Participant or Beneficiary (e.g., FICA taxes on Before-tax Deposits), they shall be made from other
wages paid to such individual apart from the Plan to the extent reasonably possible; provided,
however, if such other wages are insufficient for that purpose, the withholdings shall be made from
and reduce Before-tax Deposits or Employer Contributions, as applicable, for the individual
concerned or, if no such contributions are available, the relevant Employer shall advance the
withholdings, the appropriate Account balance of the individual concerned shall be reduced in the
same amount, and upon the direction of the Committee the Trustee shall remit to the Employer an
amount equal to such reduction.
(2) Tax Consequences. Neither the Company nor any other Employer represents or
guarantees that any particular federal, foreign, state or local income, payroll, or other tax
consequence will result from participation in this Plan or payment of benefits under the Plan.
(c) Coordination with Code Section 457A. If a Participant is subject to Code Section
457A in a Plan Year, then to the extent required by Code Section 457A:
(1) His or her Before-tax Deposits for such year shall be deducted from the Participants Base
Compensation and/or Bonus Compensation on an after-tax basis, and as a result the Employer Matching
and Discretionary Contributions shall be calculated by taking into considered that such deposits
are includible in the Participants compensation for such year;
(2) All allocations made during such Plan Year, including Employer Contributions and earnings
credited on deferred amounts, shall be considered taxable income to the extent vested in such year;
(3) All prior deferred amounts shall be considered taxable income in such year to the extent
vested (and not previously included in income); provided that with regard to amounts deferred that
are attributable to services performed prior to January 1, 2009, such amounts shall not be required
to be included in taxable income until December 31, 2017.
Notwithstanding any provision of the Plan to the contrary, the Administrator may authorize the
payment of amounts in the year such amounts are included in income under this subsection (c) unless
payment at such time would violate Code Section 409A.
Section 10.8. Not Compensation Under Other Benefit Plans. No amounts allocated to a Participants Account shall be deemed to be salary or compensation for
purposes of the RSIP or any other employee benefit plan of the Company or any other Employer except
as and to the extent otherwise specifically provided in such other plan.
Section 10.9. Savings Clause. If any term, covenant, or condition of this Plan, or the application thereof to any person or
circumstance, shall to any extent be held to be invalid or unenforceable, the remainder of this
Plan, or the application of any such term, covenant, or condition to persons or circumstances other
than those as to which it has been held to be invalid or unenforceable, shall not be affected
thereby, and, except to the extent of any such invalidity or
29
unenforceability, this Plan and each term, covenant, and condition hereof shall be valid and shall be enforced to the fullest extent
permitted by law.
Section 10.10. Facility of Payment. If the Committee shall determine a Participant or Beneficiary entitled to a distribution hereunder
is incapable of caring for his or her own affairs because of illness or otherwise, it may direct
any distribution from such Participants Accounts be made, in such shares as it shall determine, to
the Spouse, child, parent or other blood relative of such Participant or Beneficiary, or any of
them, or to such other person or persons as the Committee may determine, until such date as it
shall determine such incapacity no longer exists; provided, however, the exercise of this
discretion shall not cause an acceleration or delay in the time of payment of Plan benefits except
to the extent, and only for the duration of, the time reasonably necessary to resolve such matters
or otherwise protect the interests of the Plan. The Committee shall be under no obligation to see
to the proper application of the distributions so made to such person or persons and any such
distribution shall be a complete discharge of any liability under the Plan to such Participant or
Beneficiary, to the extent of such distribution.
Section 10.11. Requirement of Releases. If in the opinion of the Committee, any present or former Spouse or dependent of a Participant or
other person shall by reason of the law of any jurisdiction appear to have any bona fide interest
in Plan benefits that may become payable to a Participant or with respect to a deceased
Participant, or otherwise has asserted such a claim, the Committee may direct such benefits be
withheld pending receipt of such written releases as it deems necessary to prevent or avoid any
conflict or multiplicity of claims with respect to the payment of such benefits, but only to the
extent and for the duration reasonably necessary to resolve such matters or otherwise protect the
interests of the Plan.
Section 10.12. Board Action. Any action which is required or permitted to be taken by the Board of Directors of the Company
under the Plan may be taken by the Compensation Committee of such board or any other authorized
committee of such board.
Section 10.13. Computational Errors. In the event mathematical, accounting, or similar errors are made in processing or paying a benefit
under the Plan, the Committee may make such equitable adjustments as it deems appropriate (which
may be retroactive) to correct such errors.
Section 10.14. Unclaimed Benefits. In the event any person who is entitled to benefits hereunder cannot be located despite reasonable
and diligent efforts to do so, then such persons benefits shall be automatically forfeited as of
the last day of the Plan Year next following the year in which such benefits first became payable;
provided, however, in the event such person subsequently makes a valid claim for such forfeited
benefits prior to the termination of the Plan, such benefits shall be reinstated and immediately
paid.
Section 10.15. Communications. The Committee, or its delegate, or the Trustee, as to the function or authority concerned, shall
prescribe such forms of communication, including forms for benefit application and the like, with
respect to the Plan and Fund as it deems appropriate. Except as otherwise prescribed by such
persons or otherwise provided by governing statute or regulation, any such communication and assent
or consent thereto may be handled by electronic means.
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ARTICLE XI
TRANSITIONAL RULES
TRANSITIONAL RULES
Section 11.1. Introduction. This Plan document is effective on January 1, 2009 (i.e., the effective date) and, except as
otherwise provided herein, shall apply only to those Participants who are eligible to actively
participate in the Plan on or after the effective date. For the period that began on January 1,
2005 and ended December 31, 2008, the Plan as in effect on December 31, 2004 governed the rights
and obligations of the Company and Participants, except as modified by the Company in its
discretion so that the Plan and its operations were in good faith compliance with Code Section
409A.
Section 11.2. Amounts Deferred Under Prior Plan. Account balances (including earnings and losses on such balances regardless of when incurred)
attributable to deposits and contributions for periods before 2005 shall be accounted for
separately from account balances attributed to deposits and contributions for periods after 2004
and such pre-2005 deferrals shall be governed by the terms and conditions of the Plan as in effect
on December 31, 2004, which are contained in a separate plan document; provided that if any such
amounts are includible in income under Code Section 457A, then payment of such amounts shall be
subject to the provisions of Section 10.7(c) hereof .
The undersigned, by the authority of the Board of Directors of Pentair, Inc., does hereby
approve the form and content of this amended and restated Plan document.
Dated:
|
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SCHEDULE A
COMMITTEE MEMBERS
1. | Senior Vice President of Human Resources | |
2. | Vice President of Compensation and Benefits | |
3. | Vice President of Treasury and Tax |
32