Attached files
Exhibit 10.9
NEW CENTURY TRANSPORTATION INC.
EXECUTIVE SERP PLAN
Revised and Restated
January 1, 2008
January 1, 2008
TABLE OF CONTENTS
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PREAMBLE | 1 | |||||
ARTICLE I DEFINITIONS | 1 | |||||
1.1. | Account | 1 | ||||
1.2. | Account Balance | 1 | ||||
1.3. | Administrator | 2 | ||||
1.4. | Allocation Date | 2 | ||||
1.5. | Alternate Payee | 2 | ||||
1.6. | Beneficiary | 2 | ||||
1.7. | Benefit Commencement Date | 2 | ||||
1.8. | Board of Directors or Board | 2 | ||||
1.9. | Cash or Deferred Plan | 2 | ||||
1.10. | Cashout Amount | 2 | ||||
1.11. | Change In Control | 3 | ||||
1.12. | Code | 3 | ||||
1.13. | Committee | 3 | ||||
1.14. | Compensation | 3 | ||||
1.15. | Controlled Group | 4 | ||||
1.16. | Deferral Agreement | 4 | ||||
1.17. | Deferrals | 4 | ||||
1.18. | Disability | 4 | ||||
1.19. | Distributable Event | 4 | ||||
1.20. | Distribution Date | 4 | ||||
1.21. | Effective Date | 4 | ||||
1.22. | Elective Deferral or Deferral | 5 | ||||
1.23. | Eligible Employee | 5 | ||||
1.24. | Employer | 5 | ||||
1.25. | Employer Contribution Accrual | 6 | ||||
1.26. | Employer Contribution Accrual Account | 6 | ||||
1.27. | Entry Date | 6 | ||||
1.28. | ERISA | 6 | ||||
1.29. | Insolvent | 6 | ||||
1.30. | Involuntary Separation From Service | 6 | ||||
1.31. | Key Employee | 7 | ||||
1.32. | Management Services | 7 | ||||
1.33. | Matching Contribution Accrual | 7 | ||||
1.34. | Matching Contribution Accrual Account | 7 | ||||
1.35. | Nonqualified Deferred Compensation Plan | 7 | ||||
1.36. | Participant | 7 | ||||
1.37. | Plan | 7 | ||||
1.38. | Plan Year | 8 | ||||
1.39. | Qualified Domestic Relations Order | 8 | ||||
1.40. | Qualified Employer Plan | 8 |
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TABLE OF CONTENTS
(continued)
(continued)
Page | ||||||
1.41. | Qualified Plan | 8 | ||||
1.42. | Retirement Age | 8 | ||||
1.43. | Salary Deferral Accrual Account | 8 | ||||
1.44. | Salary Deferral Agreement | 8 | ||||
1.45. | Salary Deferrals | 8 | ||||
1.46. | Separation From Service | 8 | ||||
1.47. | Service Provider | 10 | ||||
1.48. | Specified Employee | 10 | ||||
1.49. | Substantial Risk Of Forfeiture | 10 | ||||
1.50. | Spouse | 11 | ||||
1.51. | Trust | 11 | ||||
1.52. | Trustee | 11 | ||||
1.53. | Unforeseeable Emergency | 11 | ||||
1.54. | Valuation Date | 11 | ||||
1.55. | Year Of Service | 11 | ||||
ARTICLE II ELIGIBILITY REQUIREMENTS | 11 | |||||
2.1. | Participation | 11 | ||||
2.2. | Service With Controlled Groups | 12 | ||||
2.3. | Continued Participation | 12 | ||||
2.4. | Change In Classification Of Employment | 12 | ||||
2.5. | Computation Period | 12 | ||||
ARTICLE III REFERRAL OF COMPENSATION | 12 | |||||
3.1. | Notification | 12 | ||||
3.2. | Salary Deferral Agreement | 12 | ||||
3.3. | Initial Deferral Election | 13 | ||||
3.4. | Salary Deferral Procedure | 13 | ||||
3.5. | Amending Salary Deferral Agreements | 14 | ||||
3.6. | Relief For Termination Of Grandfathered Plan Not Extended | 14 | ||||
3.7. | Termination Of Salary Deferral Agreement | 14 | ||||
ARTICLE IV CONTRIBUTIONS | 15 | |||||
4.1. | Employee Salary Deferrals | 15 | ||||
4.2. | Employer Matching Contributions | 15 | ||||
4.3. | Employer Discretionary Contributions | 15 | ||||
4.4. | Grandfathering Rules | 16 | ||||
4.5. | Responsibility For Contributions | 16 | ||||
4.6. | Assets Of The Plan | 16 | ||||
ARTICLE V PARTICIPANT ACCOUNTS AND REPORTS | 17 | |||||
5.1. | Establishment Of Accounts | 17 | ||||
5.2. | Account Maintenance | 17 | ||||
5.3. | Calculation Of Amount Of Compensation Deferred | 17 |
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TABLE OF CONTENTS
(continued)
(continued)
Page | ||||||
5.4. | Valuation Of Assets | 18 | ||||
5.5. | Valuation | 18 | ||||
5.6. | Allocation Methods | 18 | ||||
5.7. | Allocating Investment Earnings And Losses | 18 | ||||
5.8. | Participant Statements | 19 | ||||
5.9. | Cash Or Deferred Nondiscrimination Testing | 20 | ||||
ARTICLE VI VESTING | 20 | |||||
6.1. | Vesting | 20 | ||||
6.2. | Vesting Service | 20 | ||||
6.3. | Change of Control | 20 | ||||
6.4. | Death Or Disability | 20 | ||||
6.5. | Employer's Financial Health | 20 | ||||
6.6. | Acceleration Of Payment | 21 | ||||
ARTICLE VII PAYMENTS | 23 | |||||
7.1. | Benefits | 23 | ||||
7.2. | Distributable Event | 23 | ||||
7.3. | Calculation of Distributable Amount | 24 | ||||
7.4. | Distribution Or Transfer Of Distributable Amount | 25 | ||||
7.5. | Effect Of Deferral Of Distributable Amount On Matching Contribution Actual Account | 25 | ||||
7.6. | Effect Of Distribution Of Distributable Amount To Employee On Matching Contribution Accrual Accounts | 26 | ||||
7.7. | Cashout Amount | 26 | ||||
7.8. | Unforeseeable Emergency | 26 | ||||
7.9. | Form Of Distribution | 27 | ||||
7.10. | Election Of Times And Form Of Distributions | 28 | ||||
7.11. | Designation Of Time And Form of Payment For Non-Elective Arrangements | 28 | ||||
7.12. | Subsequent Elections To Delay Distributions | 28 | ||||
7.13. | No Acceleration Of Benefits | 29 | ||||
7.14. | Payment Medium | 29 | ||||
7.15. | Termination of Employment | 30 | ||||
7.16. | Death Benefits | 30 | ||||
7.17. | Beneficiary Designation | 30 | ||||
7.18. | No Beneficiary | 30 | ||||
7.19. | Claims Procedure | 31 | ||||
7.20. | Disputed Payments And Refusal To Pay | 32 | ||||
7.21. | Intervening Payment Events | 32 | ||||
7.22. | Forfeiture Of Non-Vested Amounts | 32 | ||||
7.23. | Substitutions | 32 | ||||
7.24. | Taxes | 33 |
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TABLE OF CONTENTS
(continued)
(continued)
Page | ||||||
7.25. | Withholding And Reporting Requirements | 33 | ||||
7.26. | Treatment Of Participants In An Asset Sale | 33 | ||||
7.27. | Forfeiture Of Non-Vested Amounts | 34 | ||||
ARTICLE VIII PLAN ADMINISTRATION | 34 | |||||
8.1. | The Administrative Committee | 34 | ||||
8.2. | Powers Of The Committee | 34 | ||||
8.3. | Employer | 35 | ||||
8.4. | Administrative Fees And Expenses | 35 | ||||
8.5. | Plan Administration And Interpretation | 35 | ||||
8.6. | Powers, Duties, Procedures | 36 | ||||
8.7. | Information | 36 | ||||
8.8. | Indemnification Of The Members Of The Committee By The Employer | 36 | ||||
8.9. | Liabilities For Which Members Of The Committee Are Indemnified | 36 | ||||
8.10. | Employer's Right to Settle Claims | 36 | ||||
ARTICLE IX TRUST FUND | 36 | |||||
9.1. | Trust | 36 | ||||
9.2. | Unfunded Plan | 37 | ||||
9.3. | Deemed Investments | 37 | ||||
9.4. | Funding A Non-Qualified Plan During A Restricted Period | 37 | ||||
9.5. | Assignment And Alienation | 38 | ||||
9.6. | Jurisdiction Of Trust Assets | 38 | ||||
ARTICLE X AMENDMENT AND TERMINATION | 38 | |||||
10.1. | Amendment | 38 | ||||
10.2. | Existing Rights | 39 | ||||
10.3. | Exceptions To The Prohibition Of Termination Or Distribution Of Benefits | 39 | ||||
10.4. | Material Modifications | 39 | ||||
ARTICLE XI MISCELLANEOUS | 40 | |||||
11.1. | Total Agreement | 40 | ||||
11.2. | Employment Rights | 40 | ||||
11.3. | Non-Assignability | 40 | ||||
11.4. | Binding Agreement | 40 | ||||
11.5. | Receipt And Release | 40 | ||||
11.6. | Governing Law | 41 | ||||
11.7. | Interpretation Of Plan | 41 | ||||
11.8. | Electronic Delivery | 41 | ||||
11.9. | Heading And Subheadings | 41 | ||||
11.10. | Gender | 41 | ||||
11.11. | Singular And Plural | 41 |
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PREAMBLE
The Employer, restates the New Century Transportation Inc. Executive SERP Plan to comply with the
requirements of Code Section 409A. Under the terms of the Plan, certain select Employees may elect
to defer receipt of their Compensation and/or receive Employer discretionary or matching
contributions.
The purpose of the Plan is to permit designated executives of the Employer to accumulate additional
retirement income through a nonqualified deferred compensation plan that enables Participants to
make Elective Deferrals in excess of those permitted under the New Century Transportation Inc. 401
(k) Plan and to receive Matching and/or Non-Elective contributions than are precluded by the
provisions of that Plan or by applicable law,
Participants shall have no right, either directly or indirectly to anticipate, sell, assign or
otherwise transfer any benefit accrued under the Plan. In addition, no Participant shall have any
interest in any Employer assets set aside as a source of funds to satisfy its benefit obligations
under the Plan, including the establishment of any trust under the terms of Revenue Procedure 92-64
and IRS Notice 2006-33 or any amendment thereof or successor thereto. Participants shall have the
status of general unsecured creditors of the Employer and the Plan constitutes an unsecured promise
by the Employer to make benefit payments in the future.
The Plan is Intended to be a plan which is unfunded and is maintained by an employer primarily for
the purpose of providing deferred compensation for a select group of management or highly
compensated employees within the meaning of Sections 201(2) and 301 (a)(3) of the Employee
Retirement Income Security Act of 1974 (ERISA), and shall be interpreted and administered to the
extent possible in a manner consistent with that intent. The Plan is intended to comply with the
requirements of Code Section 409 of the Internal Revenue Code of 1986 and the regulations issued
thereunder.
ARTICLE I
DEFINITIONS
Whenever used herein, the following terms have the meanings set forth below, unless a different
meaning is clearly required by the intent.
1.1. Account
The account established for the benefit of each Plan Participant under the Plan in accordance with
Article V.
1.2. Account Balance
The total amount accumulated in the Plan and invested on a Participants behalf. A Participants
Account Balance shall include all amounts attributable to the following types of contributions to
the Plan to the extent that the Adoption Agreement permits such types of contributions, employee
Salary Deferrals, Employer Matching and Discretionary contributions.
1.3. Administrator
The individual or committee appointed by the Employee to administer the Plan as provided herein. If
no such appointment is made, the Compensation Committee (Compensation Committee) of the Board Of
Directors (the Board) of the Employer shall serve as the Administrator. If a Compensation
Committee does not exist and no appointment is made by the Board, then the Board shall serve as the
Administrator. In no event shall any Participant who sits on the Compensation Committee or Board
determine the amount of his or her benefits under this Plan.
1.4. Allocation Date
The last day of the Plan Year and any other date established by the Committee.
1.5. Alternate Payee
Any person to whom all or a portion of a Participants Account Balance is payable pursuant to a
Qualified Domestic Relations Order which meets the requirements of Code Section 414(p).
1.6. Beneficiary
An individual, individuals, trust or other entity designated by the Participant to receive his or
her benefit in the event of the Participants death. If more than one Beneficiary survives the
Participant, payments shall be made equally to all such Beneficiaries, unless otherwise provided in
the beneficiary designation form. Nothing herein shall prevent the Participant from designating
primary and contingent Beneficiaries. Elections made by a Participant as to the timing and method
of payment shall be binding on all Beneficiaries named by the Participant in his most recently
dated Beneficiary form.
1.7. Benefit Commencement Date
The date specified on which a Participants benefit is payable under the Plan. A Participant shall
have no right to receive payment of his or her benefit until reaching his or her Benefit
Commencement Date.
1.8.Board of Directors or Board
The Board of Directors of New Century Transportation Inc. Executive SERP Plan.
1.9. Cash or Deferred Plan
A qualified stock bonus or profit-sharing plan sponsored by the Employer which includes a cash or
deferred arrangement described at Code §401(k)(2).
1.10. Cashout Amount
An amount equal to the lesser of:
(a) A Participants Deferrals under this Plan for a Plan Year as adjusted for investment
losses but not for investment gains, or
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(b) The maximum elective deferrals permitted under the Employers Cash or Deferred Plan less
the Participants Elective Deferrals actually made to the Cash or Deferred 401(k) Plan with respect
to the same Plan Year. The maximum elective deferrals are determined by the Employer considering
the maximum elective deferrals under Code §402(g), the maximum annual addition under Code §415 and
after application of the antidiscrimination taste under Code §§401(k)(3) and 401(m)(2). The
determinations under this paragraph shall be made by the Employer not later than January 31
following the close of each Plan Year.
1.11. Change In Control
The purchase or other acquisition by any person, entity or group of persons within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (Act), (or any comparable successor
provisions), of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Act of
thirty percent (30%) or more of either the outstanding shares of common stock or the combined
voting power of the Employers then outstanding voting securities entitled to vote generally, or
the approval by the stockholders of the Employer of a reorganization, merge for consolidation, in
each case, with respect to which persons who were stockholders of the Employer immediately prior to
such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote generally in the election of directors
of the reorganized, merged or consolidated Employers then outstanding securities, or a liquidation
or dissolution of the Employer or of the sale of all or substantially all of the Employers assets.
1.12. Code
The Internal Revenue Code of 1986, (the Code) as amended from time to time, Reference to any
section or subsection of the Code includes reference to any comparable or succeeding provisions of
any legislation which amends, supplement or replaces such section or subsection.
1.13. Committee
The individual or individual(s) appointed by the Employer to administer the Plan as provided
herein. If no such appointment is made, the Compensation Committee (Compensation Committee) of
the Board Of Directors (Board) of the Employer shall serve. If a Compensation Committee does not
exist and no appointment is made by the Board, then the Board shall serve. In no event shall any
Participant who sits on the Compensation Committee or Board determine the amount of his or her
benefits under this Plan.
1.14. Compensation
The total annual remuneration for employment or contracted services received by an Employee from
the Employer and reported on his or her tax Form W-2. Compensation shall also include amounts
deferred under this Plan, under a Cafeteria Plan described at Code §125, under a Cash or Deferred
Plan described at Code §401(k) and under any other plan qualified under Code §401(a) sponsored by
the Employer. Compensation shall, only include remuneration earned while an individual is an
Employee of the Employer. Compensation excludes all stock option transactions, relocation
reimbursements, and automobile allowances.
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1.15. Controlled Group
The Controlled Group rules are defined in Code Section 414, under which certain affiliated
corporations and unincorporated businesses are treated as a single Employer, and will apply to any
Plan established hereunder, except as otherwise provided by Treasury Regulations.
1.16. Deferral Agreement
The written agreement between an eligible Employee and the Employer to defer receipt by the
Employee of Compensation not yet earned. Such agreement shall state the deferral amount or
percentage of Compensation to be withheld from the Employees Compensation and shall state the date
on which the agreement is effective as provided at paragraph 3.2.
1.17. Deferrals
That portion of an Employees Compensation which is deferred under the terms of this Plan. Such
Compensation cannot yet have been earned by the Employee at the time of the Participants election
to defer.
1.18. Disability
A Participant is considered disabled if the Participant meets one of the following requirements:
(a) The Participant is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment, which can be expected to resist in death or
can be expected to last for a continuous period of not less than twelve (12) months.
(b) The Participant is by reason of any medically determinable physical or mental impairment
that can be expected to last for a continuous period of not less than twelve (12) months, receiving
income replacement benefits for a period of not less than three (3) months under an accident and
health plan covering Employees of the Participants Employer.
1.19. Distributable Event
The portion of a Participants Salary Deferral Accruals for a particular Plan Year eligible for
with distribution in cash or deferral under the Qualified Plan in accordant with the provisions in
Article VI.
1.20. Distribution Date
The date specified or Participants payment election agreement on which a Participants benefit is
payable under the Plan. A Participant shall have no right to receive a payment of his or her
benefit until reaching his or her Distribution Date, except as specifically provided herein.
1.21. Effective Date
The Effective Date of the Plan was October 1, 2005. The Effective Date of this restatement is
January 1, 2008.
Except as otherwise provided in the Plan, Code Section 409A applies with respect to amounts
deferred in taxable years beginning after December 31, 2004, and with respect to amounts deferred
in taxable years beginning before January 1, 2005, if the Plan is materially modified
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after October 3, 2004. For amounts deferred in taxable years beginning before January 1, 2005,
under a Plan that is materially modified after October 3, 2004, whether the Plan complies with the
requirements of Code Section 409A and these Regulations is determined by reference to the terms of
the Plan in effect as of, and any actions taken under the Plan on or after, the date of the
material modification. Code Section 409A is applicable with respect to earnings on amounts deferred
only to the extent that Code Section 409A is applicable with respect to the amounts deferred.
Accordingly, Code Section 409A does not apply with respect to earnings on amounts deferred before
January 1, 2005, unless Code Section 409A applies with respect: to the amounts deferred. For this
purpose, a right to earnings that is subject to a Substantial Risk of Forfeiture [as defined in
Treasury Regulation §1.83-3(c)] or a requirement to perform further services, on an amount deferred
that is not subject to a Substantial Risk of Forfeiture [as defined in Treasury Regulation
§1.83-3(c)] or a requirement to perform further services, is not treated as earnings on the amount
deferred, but a separate right to Compensation. Except as otherwise provided in applicable
guidance, the provisions of Treasury Regulation §1.409A-1 through 1.409A-5 provide the exclusive
means of identifying agreements, methods, programs, or other arrangements subject to Code Section
409A, and the exclusive means of satisfying the requirements of Code Section 409A with respect to
such agreements, methods, programs, or other arrangements.
1.22. Elective Deferral or Deferral
The portion of Compensation that is being deferred by a Participant pursuant to paragraph 3.2.
1.23. Eligible Employee
An Employee of the Employer who satisfies the eligibility criteria for participation in the Plan as
established by the Board of Directors. Individuals who shall be treated as Eligible Employees for
purposes of the Plan shall be limited to those individuals who are within a select group of
management including those high level directors who are a Vice President and a non-shareholder or
highly compensated employees as determined by the Employer in its sole discretion. An Employee
under Code Section 409A is limited to (1) an individual; (2) a personal service corporation as
defined in Code Section 269(A)(b)(1); or (2) an entity that would be a personal service corporation
if it were a corporation; or (3) a qualified personal service corporation as defined in Code
Section 448(d)(2), or an entity that would be a personal service corporation if it were a
corporation, for any year in which such an individual, corporation, subchapter S corporation,
partnership, or other entity accounts for gross income from the performance of services under the
cash receipts and disbursements method of accounting. The term Employee generally includes a person
who has separated from Service (a former Employee).
Code Section 409A refers to Service Providers, a term which incorporates service relationships
beyond the employer-employee relations. For purposes of the Plan, Service Provider refers to
Employees.
1.24. Employer
New Century Transportation Inc. which has adopted this Plan including any successor to all or a
major portion of the Employers assets or business which assumes the obligations of the Employer
and each other entity that is affiliated with the Employer and any member of a
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controlled group, of corporations as defined at Code §414(b), all commonly controlled trades or
businesses as defined at Code §414(c) and any member of an affiliated service group as defined at
Code §414(m), which may adopt the Plan with the consent of the Employer, provided that the Employer
shall have the sole power to amend this Plan. Except as otherwise specifically provided in
Treasury Regulation §1.409A, a Employer (otherwise referred to herein as the Service Recipient)
means the person for whom the Services are performed and with respect to whom the legally binding
right to compensation arises, and all persons with who such person would be considered a single
employer under Code Section 414(b) or 414(c) (employees of a partnership, proprietorships, etc.,
under common control). Notwithstanding the foregoing, Code Section 409A applies to a plan that
provides for the deferral of Compensation, even if the payment of Compensation is not made by the
person for whom the services are performed.
The definition of Employer is based on the controlled group definition applicable for qualified
plan purposes, so that it includes both the direct service recipient and all other entities with
which it is aggregated under Code Sections 414(b) or (c).
Code Section 409A refers to Service Recipients, a term which incorporates service relationships
beyond the employer-employee relations. For purposes of the Plan, Service Recipient refers to
Employers.
1.25. Employer Contribution Accrual
An amount credited to a Participants account in accordance with paragraph 4.3.
1.26. Employer Contribution Accrual Account
The account established to record Employer Contribution Accruals on a Participants behalf.
1.27. Entry Date
The payroll period following a Participant becoming eligible to participate in the Plan.
1.28. ERISA
The Employee Retirement Income Security Act of 1974, as amended. Reference to any section or
subsection of ERISA includes reference to any comparable or succeeding provisions of any
legislation which amends, supplements or replaces such section or subsection.
1.29. Insolvent
Means either (i) the Employer is unable to pay its debts as they become due, or (ii) the Employer
is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.
1.30. Involuntary Separation From Service
A separation from Service is involuntary if the Employer independently exercises its unilateral
authority to terminate the Employee or Participant. This may include but its not limited to the
Employers failure to renew a contract provided that the Employee or Participant was willing and
able to renew. Any characterization of the Separation from Service as voluntary and involuntary by
the parties is presumed to be correct but the presumption may be rebutted where the facts and
circumstances indicate otherwise.
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1.31. Key Employee
As defined in Code Section 416(i), but generally, an Employee who at any time during the Plan Year
is:
(a) an officer of the Employer having an annual Compensation greater than $130,000 (adjusted
for inflation);
(b) owns more than five percent (5%) of the Employer, or
(c) owns more than one percent (1%) of the Employer and has annual Compensation greater than
$150,000.
Officer status is based on job duties, not title, and is limited to the fifty (50) highest paid
officers.
1.32. Management Services
Service involving control of the financial or operational aspects of the Employers business, or
investment advisory services that are integral to the trade or business which involves the
management of investments.
1.33. Matching Contribution Accrual
An amount credited to a Participants account in accordance with paragraph 4.2.
1.34. Matching Contribution Accrual Account
The account established to record Matching Contribution Accruals on a Participants behalf.
1.35. Nonqualified Deferred Compensation Plan
A plan, within the meaning of Code §409A, the purpose of which is to provide for the deferral of
Compensation of one or more persons other than a Qualified Employer Plan or any other bona fide
vacation, sick leave, compensatory time, disability pay or death benefit plan which permits a
select group of management or highly compensated Employees to defer receipt of a portion of their
Compensation to a future date, or any other plan specifically excluded from Code §409A by
applicable law.
1.36. Participant
An Employee who is eligible to participate in the Plan and who is currently deferring a portion of
his or her Compensation under this Plan. An Employee or former Employee who has previously deferred
a portion of his or her Compensation under the Plan and who is still entitled to the payment of
benefits under the Plan shall also be considered a Participant.
1.37. Plan
New Century Transportation Inc. 401(k) Plan as amended from time to time. The term Plan has the
meaning provided in Treasury Regulation Section 1.409A-1 (c).
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1.38. Plan Year
The twelve (12) consecutive month period beginning January 1st to December
31st. There will be a short Plan Year beginning on October 1, 2005 and ending on
December 31, 2005. Thereafter, the Plan Year shall be as stated above.
1.39. Qualified Domestic Relations Order
All rights and benefits including elections provided to a Participant in this Plan shall be subject
to the rights afforded to any Alternate Payee under a Qualified Domestic Relations Order as defined
in Section 414 (p) of the Code or Section 206(d)(3)(B) of ERISA. A distribution to an Alternate
Payee shall be permitted if the distributions authorized by a Qualified Domestic Relations Order.
1.40. Qualified Employer Plan
Any plan described in Code Section 401(a) that include a trust exempt from tax under Code 501(a);
any annuity plan described in Code Section 403(a); any annuity contract described in Code Section
403(b); any simplified employee pension [within the meaning of Code Section 408(k)]; any Simple
Retirement Account (within the meaning of Code Section 408(p); any arrangement under which an
active participant makes deductible contributions to a trust described in Code Section 501(c)(18);
any eligible deferred compensation plan [within the meaning of Code Section 457(b)]; and any plan
described in Code Section 415(m).
1.41. Qualified Plan
The New Century Transportation Inc. 401(k) Plan, as amended from time to time.
1.42. Retirement Age
The attainment of age sixty-five (65).
1.43. Salary Deferral Accrual Account
The account established pursuant to a Salary Deferral Agreement.
1.44. Salary Deferral Agreement
The written agreement between an Eligible Employee and the Employer to defer receipt by the
Employee of Compensation not yet earned. Such agreement shall state the deferral amount or
percentage of Compensation to be withheld from the Employees Compensation, the date on which
distributions shall commence including the form and amount. The agreement shall also specify the
effective date of the agreement, as provided at paragraph 3.2.
1.45. Salary Deferrals
That portion of an Employees Compensation which is deferred under the terms of this Nonqualified
Deferred Compensation Plan. Such Compensation cannot yet have been earned by the Employee at the
time of the Participants election to defer.
1.46. Separation From Service
The severance of a Participants employment with the Employer upon the retirement, death or other
termination of Service. A termination occurs when it is anticipated that no future services
8
will be performed or that the level of services (whether as an Employee or an Independent
Contractor) will permanently decrease to no more than twenty percent (20%) of the average level of
services performed over the immediately preceding thirty six (36) month period [or the full period
of services if less than thirty six (36) months]. A rebuttable presumption applies that no
termination has occurred if the Participant continues to provide services at a fifty percent (50%)
or higher level.
Certain resignations with good-reason may be treated as an involuntary Separation from Service.
To be an involuntary separation, the Employers actions must cause a material negative change in
the employment relationship. A facts and circumstances test shall be applied to determine whether
such change has occurred using the following good reason safe harbor:
(a) The termination must occur within two (2) years after the good reason event.
(b) The event is limited to specified material negative change events; the following are
considered good reasons under the safe harbor:
(1) Material diminution in a Participants base Compensation;
(2) Material diminution in the Participants authority, duties, or responsibilities;
(3) Material diminution in the authority, duties, or responsibilities of the Participants
supervisor;
(4) Material diminution in the budget over which the Participant retains authority;
(5) Material change in the geographic location at which the Participant must perform services;
and
(6) any other action or inaction that constitutes a material breach of the agreement by the
Employer of the agreement under which the Participant provides services.
The amount time, and form of payment upon the Separation from Service must be substantially
identical to the severance (if any) that would otherwise be paid upon an involuntary separation.
The Participant must provide the Employer notice of the good reason event within a ninety (90) day
period after the event and the Employer has thirty (30) days to remedy the condition. Any severance
paid upon a good reason termination may qualify for the involuntary separation pay exclusion from
Code Section 409A.
The employment relationship is treated as continuing intact while the Participant is on military
leave, sick leave, or other bona fide leave of absence, if the period of the leave does not exceed
six (6) months or if longer, as long as the Participants right to reemployment with the Employer
9
is provided by statute or contract, A leave of absence is bona fide only if there is a reasonable
expectation that the Employee will return to perform Services for the Employer. If the period of
leave exceeds six (6) months and the Participants right to reemployment is not provided by statute
or contract, the employment relationship is deemed to terminate on the first day immediately
following the six (6) month period.
For Independent Contractors, Separation From Service occurs upon the expiration of the contract and
only if the expiration constitutes a good faith and complete termination of the contract.
This provision with respect to Separation From Service applies only to the Plan, and does not limit
or amend the terms of any Employees employment agreement.
1.47. Service Provider
An individual or business entity who is retained by the Administrator on behalf of the Plan to
provide specified administrative services to the Plan.
1.48. Specified Employee
An Employee of a publicly traded employer (on a controlled group basis) who:
(a) owns more than 5% of the Employer;
(b) owns more than 1% of the Employer and has annual Compensation greater than $150,000; or
(c) is an officer of the Employer whose annual Compensation is greater than $150,000 (for
2008, indexed for inflation). Officer status is based on job duties, not title, and is limited to
the fifty (50) highest paid officers.
The Employer must determine its group of Specified Employees on a uniform identification date each
year (generally December 31). The determination generally does not take effect until the beginning
of the fourth calendar month following the identification date, with the identified employees as
Specified Employees for the next twelve (12) months.
1.49. Substantial Risk Of Forfeiture
Compensation is subject to a Substantial Risk of Forfeiture if entitlement to the amount is
conditioned on the performance of substantial future services by any person of the occurrence of a
condition related to a purpose of the Compensation and the possibility of forfeiture is
substantial. For purposes of this paragraph, a condition related to a purpose of the Compensation
must relate to the Participants performance for the Employer or the Employers business activities
or organizational goals (for example, the attainment of a prescribed level of earnings or equity
value or completion of an initial public offering). For purposes of this paragraph, if a
Participants entitlement to the amount is conditioned on the occurrence of the Participants
Involuntary Separation from Service without cause, the right is subject to a Substantial Risk of
Forfeitures if the possibility of forfeiture is substantial. An amount is not subject to a
Substantial
10
Risk of Forfeiture merely because the amount is conditioned, directly or indirectly, upon
refraining from the performance of services.
1.50. Spouse
The individual to whom a Participant is married or was married in the case of a deceased
Participant who was married at the time of his or her death. A former spouse will be treated in the
same manner as a Spouse to the extent provided under a Qualified Domestic Relations Order as
described in Code Section 414(p).
1.51. Trust
The agreement, drafted in accordance with Revenue Procedure 92-64, as may be amended or superseded,
between the Employer and the Trustee under which any assets delivered by the Employer to the
Trustee will be held and managed. Any assets held under the terms of the Trust shall be the
exclusive property of the Employer and shall be subject to the creditor claims of the Company.
Participants shall have no right, secured or unsecured, to any assets held under the terms of the
Trust.
1.52. Trustee
The institution or individual(s) named by the Employer in the Trust agreement and any institution
which succeeds the Trustee, merger or by acquisition of assets or operation of law.
1.53. Unforeseeable Emergency
A severe financial hardship to the Participant resulting from an illness or accident of the
Participant (or his or her Spouse or dependents); loss of the Participants property due to
casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. The amount available shall not exceed the amount
which is necessary to relieve the financial burden including amounts necessary to pay resulting
taxes.
1.54. Valuation Date
The date on which Participant accounts under this Plan are valued, the last day of the Plan Year
and such other dates as specified by the Administrator and agreed to by the Trustee.
1.55. Year Of Service
A twelve (12) consecutive month period commencing with the Employees first day of employment or
reemployment, and each twelve (12) consecutive month period thereafter.
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1. Participation
Any Employee who elects to defer part of his or her Compensation in accordance with paragraph 3.2,
shall become a Participant in the Plan as of the date such deferral commences in accordance with
Article IV. In the event an Employee who is not a member of the eligible class of Employees
becomes a member of the eligible class, such Employee shall be eligible to
11
participate on the Entry Date immediately following the date on which the Employee becomes a member
of the eligible class. Any Employee who is not already a Participant and whose Account is credited
with an Employer Discretionary Contribution shall become a Participant as of the date such amount
is credited.
2.2. Service With Controlled Groups
All Years of Service with other members of a controlled group of corporations as defined in Code
Section 414(b), trades or businesses under common control as defined in Code Section 414(c) or
members of an affiliated service group as defined in Code Section 414(m), if applicable, shall be
credited for purposes of determining an Employees eligibility to participate.
2.3. Continued Participation
A Participant in the Plan shall continue to be a Participant so long as any amount remains credited
in his or her Account.
2.4. Change In Classification Of Employment
In the event a Participant becomes ineligible to participate because he or she is no longer a
member of an eligible class of Employees, such Employee shall be eligible to participate on the
Entry Date which follows his or her return to an eligible class of Employees.
2.5. Computation Period
To determine Years of Service for eligibility purposes, the twelve (12) consecutive month period
shall commence on the date on which an Employee first performs an hour of service for the Employer
and each anniversary thereof, such that the succeeding twelve (12) consecutive-month period
commences with the employees first anniversary of employment and so on. An hour of service shall
mean, each hour for which an Employee is paid, or entitled to payment, for the performance of
duties for the Employer.
ARTICLE III
REFERRAL OF COMPENSATION
3.1. Notification
The Administrator shall provide written notification to an Employee of his or her eligibility to
participate in the Nonqualified Deferred Compensation Plan and to elect to defer Compensation under
the Plan, and shall further provide such Employee with a Salary Deferral Agreement. The
notification shall describe the requirements and limitations on the Employees Salary Deferrals,
the Plans distributable events and the optional forms of payment, which must be selected by the
Participant prior to the period of service for which the deferral is made.
3.2. Salary Deferral Agreement
The Participant shall enter into a Salary Deferral Agreement with the Employer authorizing the
deferral of all or part of the Participants Compensation under the Plan earned during the period
in which the individual participates in the Plan. Eligible Participants elect prior to the
beginning of the applicable Plan Year to defer a specified portion of the Compensation. The
Salary
12
Deferral Agreement shall also specify the commencement date and method of payment with respect to
benefits attributable to Salary Deferrals and Employer contributions, if any, for the applicable
Plan Year.
Employees who are eligible on the date the Plan is first effective and were not previously
participating in an unfunded deferred compensation plan of the Employer may make an election to
defer Compensation within thirty (30) days after the Effective Date for services to be performed
after the Effective Date. Notwithstanding the preceding sentence, if the Employer selects the
Effective Date as the initial date of participation, then the period of service upon which
deferrals are based shall commence after the date the Employee elects to defer Compensation.
Employees first becoming eligible after the date the Plan is effective may make an election to
defer Compensation within thirty (30) days after the Participants initial eligibility date for
services to be performed after the election. In no event shall an Employee be permitted to defer
Compensation for a pay period which has commenced prior to the date on which the Salary Deferral
Agreement is signed by the Participant and accepted by the Administrator. The Salary Deferral
Agreement shall remain in effect until amended in accordance with paragraph 3.5 below.
An Election to defer a percentage or dollar amount of Compensation for any Plan Year shall apply
for any subsequent Plan years unless changed or revoked.-
3.3. Initial Deferral Election
The initial deferral election, if applicable, must be made no later than the close of the taxable
year preceding the taxable year in which the Participant performs the services giving rise to the
Compensation to be deferred. In the first year of participation, the election may be made within
thirty (30) days after the date the Participant first becomes eligible under the Plan. For
performance-based Compensation based on services performed over a period of at least twelve (12)
months, the election may be made no later than six (6) months before the end of the performance
period. The time and form of distribution must be specified at the time of the initial deferral.
In the case of separation pay [as defined in Treasury Regulation Section 1.409A-1(m)], where such
separation pay is the subject of bona fide, arms length negotiations at the time of the Separation
from Service, as initial deferral election may be made at any time up to the time the Participant
obtains a legally binding right to the payment. This paragraph does not apply to any separation
pay to which the Participant obtained a legally binding right before negotiations at the time of
the Separation from Service, including a right to the payment subject to a condition such as that
the Participant Separate from Service other than for cause. In the case of separation pay due to
participation in a window program [as defined in Treasury Regulation Section 1.409A-1(b)(9)(vi)],
an initial deferral election may be made at any time before the time the election to participate in
the window program becomes irrevocable.
3.4. Salary Deferral Procedure
The Administrator upon receipt of a properly completed and executed Salary Deferral Agreement shall
notify the Employer to commence to withhold that portion of the Participants
13
Compensation specified in the Agreement. In no event will the Participant be permitted to defer
more than the amount specified by the Employer on the Salary Deferral Agreement.
3.5. Amending Salary Deferral Agreements
A Participant shall be permitted to increase or decrease his of her Salary Deferrals by filing an
amended Salary Deferral Agreement with the Administrator. Such amendment shall be effective on the
first day of the first payroll period beginning in the next Plan Year which follows the date on
which the amended Salary Deferral Agreement is received by the Administrator.
3.6. Relief For Termination Of Grandfathered Plan Not Extended
A cessation of deferrals under, or termination of the Plan, pursuant to the provisions of the Plan,
is not a material modification. Amending the Plan, to stop future Participant Salary Deferrals
thereunder is not a material modification of the Plan. Amending the Plan to provide Participants an
election whether to terminate participation in a Plan constitutes a material modification of the
Plan.
A grandfathered Plan may be terminated without having a material modification, but altering the
Plan provisions to allow for a payment upon Plan termination would cause a material modification.
The negative implication here is that a grandfathered arrangement that has provisions allowing for
payment upon Plan termination could be terminated and make such payments without running afoul of
Code Section 409A.
3.7. Termination Of Salary Deferral Agreement
The Employer shall have the right to terminate a Participants Salary Deferral Agreement at any
time upon written notice to -the Participant. Such termination shall be effective on the first day
of the next payroll period. In no event shall the Employer have the right to terminate a Salary
Deferral Agreement with respect to Compensation already deferred. The Participant shall also have
the right to terminate his or her Salary Deferral Agreement upon written notice to the
Administrator. Such termination shall be effective on the first day of the first payroll period in
the Plan Year following the date on which the termination request is received by the Administrator.
The Participant shall not be permitted to reinstate a new Salary Deferral Agreement until the first
day of the first payroll period beginning in the Plan Year following the date on which a new Salary
Deferral Agreement is received by the Administrator.
The Plan may also provide for a cancellation of an Employees Salary Deferral election, or a
cancellation of such election may be made, where such cancellation occurs by the later of the end
of the taxable year of the Employee or the fifteenth day of the third month following the date the
Employee incurs a Disability. For purposes of this paragraph, a Disability refers to any medically
determinate physical or mental impairment resulting in the Employees inability to perform the
duties of his or her position or any substantially similar position, where such impairment can be
expected to result in death or can be expected to last for a continuous period of not less than six
(6) months.
14
ARTICLE IV
CONTRIBUTIONS
4.1. Employee Salary Deferrals
The Employer shall remit to the Trustee all amounts deferred by Participants under the terms of
their respective Salary Deferral Agreements. A Participant may make Salary Deferrals in an amount
of up to fifty percent (50%) of a Participants total compensation and up to one-hundred percent
(100%) of a Participants Compensation in excess of the Code §401(a)(17) limit on Compensation as
indexed. Remittance by the Employer shall be made as soon as administratively feasible following
the date amounts were withheld from the Participants Compensation but not later than fifteen (15)
business days following the end of the month during which they were withheld. Any such Salary
Deferrals and earnings held by the Trustee shall remain the property of the Employer and shall be
subject to the claims of the Employers creditors.
The Participants Account shall be credited with an amount equal to that percentage of Compensation
payment which would have been payable currently to the participant but for the terms of the
Deferral elections.
Any such Salary Deferrals and earnings held by the Trustee shall remain the property of the
Employer and shall be subject to the claims of the Employers creditors.
4.2. Employer Matching Contributions
The amount of such Matching contributions made on behalf of Salary Deferral Agreements shall be an
amount, if any, equal to that percentage of each Participants Salary Deferral Agreement which the
Committee, in its sole discretion, determines from year to year. In no event shall any Matching
Contribution made to any Salary Deferral in excess of one-hundred percent (100%) of the
Participants Compensation. The Matching Contribution will be credited, as of the later of the date
it is received by the Trustee or the date the Trust receives from the Committee such instructions
as the Trustee may reasonably require to allocate the amount received to Participants Accounts in
accordance with the amount of Elective Deferrals of each Participant, which are taken into account
in calculating the matching contribution.
4.3. Employer Discretionary Contributions
In addition to other contributions provided for under the Plan, the Employer may, in its sole
discretion, select one or more Participants to receive a discretionary contribution to his or her
Account upon such terms and as the Employer shall specify at the time it makes the contribution.
For example, the Employer may contribute an amount to a Participants Account and condition the
payment of that amount and accrued earnings hereon upon the Participant remaining employed by the
Employer for an additional specified period of time. The terms specified by the Employer shall
supersede any other provision of this Plan regarding discretionary contributions and earnings with
respect thereto, provided that if the Employer does not specify a method of distribution, the
discretionary contribution shall be distributed in a manner consistent with the election last made
by the Participant prior to the time in which the discretionary contribution is
15
made. The Employer, in its discretion, may permit the Participant to designate a distribution
schedule for a particular discretionary contribution provided that such designation is made prior
to the time that the Employer finally determines that the Participant will receive the
discretionary contributions.
4.4. Grandfathering Rules
For purposes of determining whether Section 409A is applicable with respect to an amount, the
amount is considered deferred before January 1, 2005, if before January 1, 2005, the Employee had a
legally binding right to be paid the amount, and the right to the amount was earned and vested. For
purposes of this paragraph, a right to an amount was earned and vested only if the amount was not
subject to a Substantial Risk of Forfeiture [as defined in Treasury Regulations Section 1.83-3(c)]
or a requirement to perform further services. Amounts to which the Employee did not have a legally
binding right before January 1, 2005 (for example because the Employer retained discretion to
reduce the amount), will not be considered deferred prior to January 1, 2005.
Amendments to conform a plan to the requirements of Code Section 409A with respect to deferrals
under a plan occurring after December 31, 2004. will not constitute a material modification of the
plan with respect to amounts deferred that earned and vested on or before December 31, 2004,
provided that there is no concurrent material modification with respect to the amount of, or rights
to, amounts deferred that were earned and vested on or before December 31, 2004. Similarly, a grant
of an additional benefit under a new arrangement adopted after October 3, 2004, and before January
1, 2005, will not be treated as a material modification of an existing plan to the extent that the
new arrangement explicitly identifies additional deferrals of Compensation and provides that the
additional deferrals of Compensation are subject to Code Section 409A.
4.5. Responsibility For Contributions
The Employer has sole responsibility for remitting Employee Salary Deferrals and Employer
contributions to the Trustee. The Trustee shall have no duty to determine whether the amounts
forwarded by the Employer are the correct amount or that they have been transmitted in a timely
manner.
4.6. Assets Of The Plan
Any such contributions plus the earnings shall be held by the Trustee but shall remain the property
of the Employer and shall be subject to the claims of the Employers creditors. Any Employer
contributions made under the Plan shall be transmitted to the Trustee not less frequently than
annually.
16
ARTICLE V
PARTICIPANT ACCOUNTS AND REPORTS
5.1. Establishment Of Accounts
The Administrator shall establish and maintain individual recordkeeping Accounts on behalf of each
Participant for purposes of determining each Participants benefits under the Plan. Separate
sub-accounts shall be established for each participant with respect to each Salary Deferral
Agreement for which a different form of payment has been selected.
5.2. Account Maintenance
The Administrator shall add to each Participants Account amounts representing:
(a) Employee Salary Deferrals,
(b) Employer matching or discretionary contributions, if applicable, and
(c) investment earnings.
The Administrator shall deduct from each Participants Account amounts representing:
(d) distributions to the Participant or Beneficiary,
(e) investment losses,
(f) Plan administrative expenses (if applicable): and
(g) the Participants or Beneficiarys proportionate share of any increase in the fair market
value of the Trust since the last Valuation Date.
5.3. Calculation Of Amount Of Compensation Deferred
(a) the amount of Compensation deferred before January 1, 2005, equals of the portion of the
Participants Account Balance as of December 31, 2004, the right to which has earned and vested as
of December 31. 2004, plus any future contributions to the account, the right to which was earned
and vested as of December 31, 2004, to the extent such contributions are actually made.
(b) Earnings on amounts deferred under the Plan before January 1, 2005, include only income
(whether actual or notional) attributable to the amounts deferred under a Plan as of December 31,
2004, or to such income. For example, notional interest earned under the Plan on amounts deferred
as of December 31, 2004. generally will be treated as earnings on amounts deferred under the Plan
before January 1, 2005.
17
5.4. Valuation Of Assets
As of each Valuation Date the Administrator shall determine the fair market value of all assets
held under the terms of the Plan. The valuation of securities traded on a national securities
exchange shall be determined on the last business day of the valuation period in accordance with
established or recognized industry standards for the valuation of traded securities. The value of
any illiquid or thinly; traded investment shall be determined by an appraisal prepared by an
independent qualified appraiser to the security or other such investment. Notwithstanding the
first sentence of this paragraph, an appraisal of non-traded securities shall be prepared as of the
last day of each Plan Year and as required with respect to the determination of benefit payments.
5.5. Valuation
Participant accounts shall be valued on the date(s) agreed upon by the Employer and the Trustee
provided that Accounts shall be valued not less frequently than at the end of each Plan Year and
that the value of non-traded securities shall be determined in accordance with paragraph 5.4.
5.6. Allocation Methods
The Employers matching and discretionary contributions, if any, shall be allocated to eligible
Participants in accordance with the allocation formula determined at the discretion of the
Employer.
5.7. Allocating Investment Earnings And Losses
(a) Account Balances are adjusted to reflect actual income and investment gains and losses
from the period beginning the day following the last Valuation Date and ending on the current
Valuation Date. Each Participants Account shall receive a proportionate share of the actual
income and investment gains and losses during the period. The value of Accounts for allocation
purposes shall be based on the value of all Participant Accounts (without regard to any portion of
any such Account attributable to segregated investments) as of the last Valuation Date less
withdrawals, distributions and expenses plus any contributions including deferrals if any, paid
from or to the Trust since the last Valuation Date. Investment gains and losses shall be credited
to all Participant Accounts having a balance on the Valuation Date regardless of She vested status
of such Account and regardless of the Participants employment status. The Administrator shall
also have the right to adopt an alternative procedure for allocating income and investment gains
and losses provided that such alternative procedure is uniform and nondiscriminatory. Any change in
procedure shall be effective as of the next following Valuation Date or such other date as agreed
to by the Employer and the Administrator. Accounts with segregated investments shall receive the
income or loss on such segregated investments. Investment gains or losses are determined separately
for each investment alternative offeree under the Plan.
(b) Earnings may be treated separately from the other amounts deferred under the Plan for
purposes of designating the time and form of payment under the Plan provided that actual or
notional earnings are credited at least annually. For this purpose, a right to dividend equivalents
may be treated analogous to a right to actual or notional earnings on an amount of
18
deferred compensation. Dividend equivalents means the right to an amount equal to all or a
specified portion of dividends declared and paid, if any, on a specified number of shares of stock.
(c) The value of a Participants Account invested in a mutual fund (Registered Investment
Company) will equal the value of a share in such fund multiplied by the number of shares credited
to the Participants Account.
(d) In the case of any pooled investment vehicle, earnings, gains or losses on the pooled
investment vehicle will be allocated among the Participants Accounts in proportion to the value of
each Participants Account invested in that investment vehicle immediately prior to the Valuation
Date. The gain or loss attributed to each investment vehicle will be credited to or charged against
the Participants Account. Alternatively, the Administrator or his designate may establish unit
values for each pooled investment vehicle offered under the Plan in accordance with uniform
procedures established by the Administrator for this purpose. The value of the portion of a
Participants Account invested in a pooled investment vehicle will equal the value of a unit in
such investment vehicle multiplied by the number of units credited to the Account.
(e) In the case of any investment that is held specifically for a Participants Account, any
gain or loss on such investment will be charged or credited to that Participants Account.
(f) The Administrator or his designate, if applicable, shall have the right to redetermine the
value of Participant Accounts if a previous allocation or valuation was performed incorrectly. Such
redetermination shall be made without regard to the reason for the incorrect allocation. Such
reasons may include, but are not limited to, incorrect contribution or Employee information
provided by the Employer or representative of the Employer, incorrect valuation of Plan assets,
incorrect determination of investment income and gains or losses, improper interpretation of the
Plans allocation formulas or procedures, and failure to transmit, receive or interpret amendments
to the allocation formulas, methods or procedures. Subject to express limits that may be imposed
under the Code, the Administrator reserves the right to delay the processing of any contribution,
distribution or other transaction for any legitimate business reason (including, but not limited
to, failure of systems or computer programs, failure of means of transmission of data, force
majeure, the failure of any Service Provider to timely receive values or prices, or to correct for
its errors omissions or the errors or omissions of any Service Provider). After having made any
necessary adjustments, the Administrator or his designate, if applicable, may issue either revised
or adjusted statements to Participants with an explanation of the allocation adjustments.
5.8. Participant Statements
The Administrator shall prepare a statement for each Participant not less frequently than annually.
Statements may be prepared more frequently as agreed between the Administrator and the entity
responsible for the maintenance of Plan records or for valuing Plan assets. Each statement shall
show the additions to and subtractions from the Participants Account for the period since the last
such statement and shall show the fair market value of the Participants Account as of the current
statement date. If necessary, the Administrator may establish different uniform and
19
nondiscriminatory procedures for determining the fair market value of Participants Accounts under
the Plan.
5.9. Cash Or Deferred Nondiscrimination Testing
Prior to the close of the Plan Year, the Employer performs preliminary nondiscrimination tasting
for the cash or deferred 401(k) Plan to determine how much the tandem Plan Participants can defer
under that Plan without causing it to fail the tests. The amount thus calculated is contributed to
the cash or deferred 401(k) Plan on their behalf, and their nonqualified account balances are
reduced accordingly. The outcome is that the eligible Participants are able to choose how much of
their pay to defer and have the maximum amount permitted deferred under a qualified retirement Plan
rather than a nonqualified Plan.
ARTICLE VI
VESTING
6.1. Vesting
A Participant shall immediately be vested in all Elective Deferrals and income and gain
attributable thereto, credited to his or her Account. A Participant shall become vested in the
portion of his or her Account. A Participant shall become vested in the portion of his or her
Account attributable to Employer contributions after five (5) years of Plan participation subject
to earlier vesting, upon reaching a Distributable Event as defined in paragraph 7.2, subject to
earlier vesting in accordance with paragraphs 6.3 and 6.4.
6.2. Vesting Service
For purposes of applying the vesting schedule, the rules governing vesting service under the
Employers 401(k) Plan shall also be controlling under this Plan.
6.3. Change of Control
A Participant shall become fully vested in his or her Account immediately prior to a Change of
Control of the Employer in accordance with applicable law and regulations issued thereunder.
6.4. Death Or Disability
A Participant shall become fully vested in his or her Account immediately prior to termination of
the Participants employment, by reason of the Participants death or Disability. Whether a
Participants termination of employment is by reason of the Participants shall be determined by
the Administrator pursuant to paragraph 1.8.
6.5. Employers Financial Health
No Compensation deferred under this Plan may be subject to a provision, which provides that assets
of the Plan will become restricted to the payment of benefits under the Plan in connection with a
change in the employers financial health.
20
This provision will not apply when assets are restricted to the payment of benefits upon a Change
in Control, or if assets are periodically restricted under a structured schedule and the
restriction coincides with the change in the employers financial health.
6.6. Acceleration Of Payment
Except as otherwise expressly provided, the Plan may provide for the acceleration of a payment in
accordance with Treasury Regulation Section 1.409A-3(j)(4)(ii) through (xiv), or provide the
Employer discretion to accelerate payments in accordance with the provisions of Treasury Regulation
Section 1.409A-3(j)(4)(ii) through (xiv).
The Employers waiver of a condition resulting in a Substantial Risk of Forfeiture is not an
acceleration of vesting, if the requirements of Code Section 409A (including the requirement that
the payment be made upon a permissible payment event) are otherwise satisfied.
The following are permissible exceptions to the anti-acceleration rules of Code Section 409A:
(a) Domestic Relations Order Accelerations are permitted as required pursuant to a domestic
relations order as defined in Code Section 414(p)(1)(B).
(b) Conflicts of Interest Accelerations allowed as necessary to comply with a certificate of
divestiture [as defined in Code Section 1943(b)(2)]. The Plan may permit such acceleration of the
time or schedule of payment as is necessary to satisfy requirements established pursuant to a
written determination by the Office of Government Ethics that (a) divestiture of the financial
interest or termination of the financial arrangement is reasonably to comply with any Federal
conflict of interest statute, regulation, rule or executive order (including Section 208 of title
18, United States Code), or is requested by a congressional committee as a condition of
confirmation; and (b) specifies the financial interest to be divested or terminated.
(c) De Minimis Amounts
(1) Lump Sum. A Plan may permit the acceleration of the time or schedule of a payment if (a)
the entirety of the Participants interest in the Plan is terminated (and all similar
arrangements), (b) the payment is made on or before the later of December 31 of the calendar year
of the Participants Separation from Service, or the fifteenth day of the third month following the
Separation from Service, (c) the amount is not greater than the applicable dollar amount under Code
Section 402(g)(1)(B), and (d) no election is available regarding receipt of the lump sum payment.
(2) Cash Out. A Plan may permit that if an Participants interest under the Plan has a value
less than the applicable dollar amount under Code Section 402(g)(1)(B) for that calendar year, then
the Participants entire interest under the plan shall be distributed as a lump sum payment.
(d) Payment of FICA An acceleration is permitted if the amount is necessary to pay the
Federal Insurance Contributions Act (FICA) tax. and the amount necessary to pay any
21
income tax withholding as a result of such payment. The total payment may not exceed the
aggregate of the FICA amount and the income tax withholding related to the PICA
(e) Payments upon Income Inclusion under Code Section 409A The acceleration of the time or
schedule of a payment to a Participant to pay the amount the Participant includes in income as a
result of the Plan failing to meet the requirements of Code Section 409A.
(f) Cancellation of Deferrals following an Unforeseeable Emergency or Hardship Distribution -
A cancellation of a Participants Salary Deferral election due to an Unforeseeable Emergency or a
hardship distribution pursuant to §1.401 (k)-1(d)(3) will not be considered an acceleration.
(g) Terminations Acceleration is permitted upon a Plan termination under any one of the (3)
provisions:
(1) Bankruptcy or Dissolution. The Employer may terminate the Plan if within twelve (12)
months of a corporate dissolution taxed under Code Section 331, or the approval of a bankruptcy
court. The distributions must be included in the Participants gross income in the latest of the
year of Plan termination, the year of Substantial Risk of Forfeiture lapse, or the first calendar
year in which the payment is administratively practicable.
(2) Change in Control. The Employer may terminate the Plan within thirty (30) days preceding
or the twelve (12) months following a Change in Control event. All substantially similar
arrangements sponsored by the Employer must b6 terminated.
(3) Complete Plan Termination. The Employer may terminate a Plan if:
(A) All arrangements sponsored by the Employer that would be aggregated with any terminated
arrangements are terminated;
(B) No payments other than payments that would be payable under the terms of the arrangements
if the termination had not occurred are made within twelve (12) months of the termination;
(C) All payments are made within twenty four (24) months of the termination; and
(D) The service recipient does not adopt a new arrangement within five (5) years following the
Plan termination.
(h) Payment of Taxes The acceleration of the time and form of payment, or a payment may be
made under the Plan to reflect the payment of state, local, or foreign tax obligations arising from
participation in the Plan that apply to an amount deferred under the Plan before the amount is paid
or made available to the Participant. Any payment may not exceed the amount of such taxes due as a
result of participation in the Plan.
22
(i) Cancellation of Deferral Elections due to a Disability A cancellation of a Participants
deferral election, may be made, pursuant to paragraph 3.7.
(j) Distributions to avoid a Nonallocation Year under Section 409(p) A payment to prevent
occurrence of a nonallocation year [within the meaning of Code Section 409(p)(3)] in the Plan Year
of the Employee Stock Ownership Plan next following the current Plan Year, will not be an
acceleration provided that the amount distributed may not exceed 125% of the minimum amount of
distribution necessary to avoid the occurrence of a nonallocation year.
(k) Bona fide Disputes as to a Right to a Payment The acceleration of the time or schedule
of one or more payments, may be made under the Plan, where such payment occurs as part of a
settlement between the Participant and the Employer of an arms length, bona fide dispute as to the
Participants right to the deferral amount. Discretion to accelerate payments, other than due to an
arms length settlement of a bona fide dispute as to the Participants right to the deferral
amount, is not permitted. Whether a payment qualifies for this exception is based on all relevant
facts and circumstances.
(l) Acceleration of Vesting in Satisfaction of a Debt An acceleration of the time or
schedule of a payment or a payment may be made under the Plan as satisfaction of a debt of the
Employee to the Employer. Where such debt is incurred in the ordinary course of the service
relationship between the Employer and the Employee, the entire amount of the reduction in any of
the Employers taxable years does not exceed $5,000 and the reduction is made at the same time and
in the same amount as the debt otherwise would have been due and collected from the Employee.
ARTICLE VII
PAYMENTS
7.1. Benefits
A Participants or Beneficiarys benefit payable under the Plan shall be the value of the
Participants Account at the time of includes any assets held in the Trust. In no event will a
Participants right to a benefit under this Plan give such Participant a secured right or claim on
any assets held in the Trust.
7.2. Distributable Event
A Participants benefit shall be payable within thirty (30) days following the Distribution Date
coincident with or first following the earlier of the date on which:
(a) the Participant incurs a Separation from Service as determined under Treasury Regulations,
subject to a six (6) month post-termination waiting period for Key Employees of public companies
(waived in tile event the Key Employee dies prior to the end of the waiting period);
(b) the Participant dies;
23
(c) the Participant becomes Disabled;
(d) the Employer undergoes a Change in Control;
(e) the Participant incurs an Unforeseeable Emergency;
(f) at the time or pursuant to a fixed date or fixed schedule established by the Participant
prior to deferral of Compensation.
No Participant shall have any right to receive payment of his or her benefit under the Plan prior
to the occurrence of a Distributable Event.
The Controlled Group rules apply to a Separation from Service, such that the Separation from
Service from one entity within a Controlled Group followed by continued service for another entity
within the group should not constitute a permissible Distributable Event, it is also intended that
the Change in Control of one member of a Controlled Group would not necessarily be a permissible
Distributable Event under a Plan of another member of the Controlled Group.
7.3. Calculation of Distributable Amount
As soon as administratively practicable after the end of each Plan Year in which such Compensation
is earned the Committee shall determine each Participants Distributable Amount, which equals the
lesser of:
(a) the excess, if any, of:
(i) the Elective Deferral that a Participant could have made under the Qualified Plan without
causing Elective Deferrals and Matching Contributions under the Qualified Plan to exceed the
limitations of Code §401(k)(3), Code §402(g), or Code §401(m), over
(ii) any Elective Deferrals the Participant actually contributed directly to the Qualified
Plan, or
(b) except for any Participant for whom paragraph 6.3(a)(i) above would be limited by Code
§402(g) limitation for the year, the Participants Salary Deferral Accruals for the Plan Year.
Paragraph 6.3(a)(i) above will be calculated on a percentage basis for all Participants. For
Participants electing to have their Distributable Amount distributed directly to them in the form
of cash, the percentage so calculated will be as follows:
Formula 1: P = (MA* NH)-DR)/(NP+1),
Under Formula 1, P equals the percentage to be calculated, MA equals the maximum Actual
Deferral Percentage of all Participants in the Qualified Plan, as defined in the Qualified Plan
document, who qualify as highly compensated participants for the year, NH equals the total number
of participants in the Qualified Plan who are highly compensated employees for the
24
year, DR equals the sum of the ratios of elective contributions to the Qualified Plan to
Compensation determined tor each individual who is a highly compensated employee for the year by
who is not a Participant in the Plan, and NP equals the number of Participants in the Plan who have
elected to transfer their distributable amount to the Qualified Plan.
For Participants electing to have their Distributable Amount transferred to the Qualified
Plan, the percentage so calculated will be as follows:
Formula 2: P2 = ((MA *NH)-DR/(NP+1),
Under Formula 2, P2 equals the percentage to be calculated. MA equals the maximum Actual
Deferral Percentage of all participants in the Qualified Plan who quality as highly compensated
participants for the year, NH equals the total number of participants in the Qualified Plan who
are highly compensated employees for the year, DR equals the sum of the ratios of elective
contributions to the Qualified Plan to Compensation, determined for each individual who is a highly
compensated employee for the year but who is not a Participant in the Plan, and NP equals the
number of Participants in the Plan who have elected to transfer their distributable amount to
Qualified Plan. Notwithstanding anything else to the contrary in this paragraph 6.3, the
Participants Distributable Amount shall not exceed the Salary Deferral Accruals that are
attributable to amounts that the Participant could have contributed directly to the Qualified Plan
as an Elective Deferral under the terms of the Qualified Plan. The amount described by the
preceding sentence shall be determined by taking into account all provisions of the Qualified Plan
that affect the amount and manner in which participants in the Qualified Plan who are not
Participants in this Plan may take Elective Deferrals under the Qualified Plan.
7.4. Distribution Or Transfer Of Distributable Amount
No later than two and one-half (21/2) months after the end of each Plan Year, each Participants
Salary Deferral Accrual Account will be reduced by his Distributable Amount, and the Employer will
transfer an amount equal to the Distributable Amount to the Qualified Plan as Elective Deferrals,
except to the extent that he or she has elected in the Salary Deferral Agreement for the Plan Year
to have the Distributable Amount distributed to himself in the form of cash. The Employer shall
have no discretion to retain the Distributable amount, calculated pursuant to paragraph 6.3 above
to hold under the terms of the Plan, or to alter the calculation of the Distributable Amount for a
Participant.
7.5. Effect Of Deferral Of Distributable Amount On Matching Contribution Actual Account
If a Participants Distributable Amount is contributed to the Qualified Plan as an Elective
Deferral, his or her Matching Contribution Accrual Account will be reduced by an amount equal to
the matching contributions made on his behalf under the Qualified Plan on account of the deferred
Distributable Amount.
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7.6. Effect Of Distribution Of Distributable Amount To Employee On Matching Contribution Accrual
Accounts
If a Participants Distributable Amount is distributed to the Participant within two and one-half
(21/2) months after the end of the Plan Year and is not deferred into the Qualified Plan pursuant to
paragraph 6.3 above his Matching Contribution Accrual Amount will be reduced by an amount equal to
the matching contribution amount that would have been made on his behalf under this Plan on account
of the Distributable Amount. This Matching Contribution Accrual amount shall be forfeited by the
Participant.
7.7. Cashout Amount
A Participants Cashout Amount shall be distributed to the Participant, if so elected, by the
Participant in his or her Deferral Agreement, within 21/2 months following the close of the Plan Year
to which the cashout relates. Any Employer matching Contribution attributable to the Participants
Cashout Amount shall be administered as provided by the Company in the Adoption Agreement. If the
Participant elects to transfer the Cashout Amount to the Employers Cash or Deferred 401(k) Plan,
such transfer shall be made within 21/2 months following the close of the Plan Year. If the transfer
election is made, the Employer shall also transfer any Matching Contribution attributable to the
Deferral made under this Plan to the Cash or Deferred 401(k) Plan provided that the Matching
Contribution so transferred does not exceed the match the Participant would have received if the
Deferral had been made under the terms of the Cash or Deferred Plan. The trustee of the Cash or
Deferred 401(k) Plan shall be advised by the Administrator that the Participants Deferrals and
Employer Matching contribution, if any, are to be credited to the Participants account in the Cash
or Deferred Plan for the same Plan Year as such amounts were received or receivable under this
Plan.
7.8. Unforeseeable Emergency
An Unforeseeable Emergency is a severe financial hardship to a Participant resulting from an
illness or accident of the Participant, the Participants Spouse,: the Participants Beneficiary,
or the Participants dependent [as defined in Code Section 152, without regard to Code Section
152(b)(1), (b)(2), and (d)(1)(B)]; loss of the Participants property due to casualty (including
the need to rebuild a home following damage to a home not otherwise covered by insurance, for
example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant. For example,
the imminent foreclosure of or eviction from the Participants primary residence; may constitute an
Unforeseeable Emergency. In addition, the need to pay for medical expenses, including
non-refundable deductibles, as well as for the costs of prescription drug medication, may
constitute an Unforeseeable Emergency. Finally, the need to pay for the funeral expenses of a
Spouse, a Beneficiary, or a dependent [as defined in Code Section 152, without regard to Code
Section 1t2(b)(1), (b)(2), and (d)(1)(B)] may also constitute an Unforeseeable Emergency. Except as
otherwise provided in this paragraph, the purchase of a home and the payment of college tuition are
not Unforeseeable Emergencies. Whether a Participant is faced with an Unforeseeable Emergency
permitting a distribution under this paragraph is to be determined based on the relevant facts and
circumstances of each case, but, in any case, a distribution on account of Unforeseeable Emergency
may not be made to the extent that such emergency is or may be
26
relieved through reimbursement or compensation from insurance or otherwise, by liquidation of
the Participants assets, to the extent the liquidation of such assets would not cause severe
financial hardship, or by cessation of deferrals under the Plan. A Plan may provide for a payment
upon a specific type or types of Unforeseeable Emergency, without providing for payment upon all
Unforeseeable Emergencies, provided that any event upon which payment may be made qualifies as an
Unforeseeable Emergency.
Distributions because of an Unforeseeable Emergency must be limited to the amount reasonably
necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal,
state, local, or foreign income taxes or penalties reasonably anticipated to result from the
distribution). Determinations of amounts reasonably necessary to satisfy the emergency need must
take into account any additional Compensation that is available if the Plan provides for
cancellation of a deferral election upon a payment due to an Unforeseeable Emergency. However,
the determination of amounts reasonably necessary to satisfy the emergency need is not retired to
take into account any additional Compensation that due to the Unforeseeable Emergency is available
under another Nonqualified Deferred Compensation Plan but has not actually been paid, or that is
available due to the Unforeseeable Emergency under another Plan that would provide for deferred
Compensation except due to the application of the Effective Date provisions under Treasury
Regulation Section 1.409A-6. The payment may be made from any Plan in which the Participant
participates that provides for payment upon an Unforeseeable Emergency, provided that the Plan
under which the payment was made must be designated at the time of payment.
If elected in the Adoption Agreement, the Plan may provide for a cancellation of a Participants
Deferral election or such a cancellation may be made, due to an Unforeseeable Emergency or a
hardship distribution pursuant to Treasury Regulation Section 1.401(k)-1(d)(3). The Salary Deferral
election must be cancelled, not merely postponed or otherwise delayed. Any subsequent Deferral
Election will be subject to the provisions governing initial deferral election.
7.9. Form Of Distribution
A Participants benefit shall be paid in the form of a lump sum or installments. Pursuant to
paragraph 3.2, any election of a form of Payment must be made by the Participant prior to the
period of service for which the Salary Deferral is made. A different form of payment may be
selected with respect to each separate deferral election made by the Participant.
As soon as possible following a Change in Control of the Employer, each Participant shall be paid
his or her entire Account Balance (including any amount vested pursuant to paragraph 6.3) in a
single lump sum.
Upon termination of a Participants employment for any reason other than death and prior to the
attainment of the Retirement Age, the vested portion of the Participants Account (including any
portion vested pursuant to paragraph 6.4 as a consequence of the Participants Disability) shall be
paid to the Participant in a single lump sum as soon as practicable following the date of such
termination; provided, however that the Administrator, in its solo discretion, may pay out a
27
Participants Account balance in annual installments if the Participants employment terminates
by reason of the Participants Disability.
7.10. Election Of Times And Form Of Distributions
The timing and form of payment with respect to the distributions must be specified at the time of
the initial Elective Deferral election. There may be multiple payout events [e.g., fifty percent
(50%) of the Account payable at age fifty-five (55) and the balance payable upon Separation from
Service] and Participants1 may be permitted to elect different forms of payments for different
permissible Distributable Events.
Deferrals in pay status prior in January 1, 2008, shall either continue to made consistent with the
terms of this Plan as of the date on which payments commenced and in compliance with the transition
rules or payments may be stopped and the Plan may be amended comply with the final Regulations. If
all events required for a Participant to receive payment have occurred and payment has not
commenced by January 1, 2008, payments may either continue under the terms of the Plan as of
December 31 , 2007, which must comply with the transition guidance, or be made under the terms of a
Plan.
In no event may a Participant in 2007 change a payment election with respect to payments the
Participant would have otherwise received in 2007, or cause payments to be made in 2007 that would
otherwise be payable in 2007.
7.11. Designation Of Time And Form of Payment For Non-Elective Arrangements
An arrangement that provides for a deferral of Compensation for Services performed during an
Participants taxable year that does not provide the Participant with an opportunity to elect the
time of payment of such Compensation must specify the time of the payment no later than the time
the Employee first has a legally binding right to the Compensation. Similarly an arrangement that
provides for a deferral of Compensation for services performed during a Employees taxable year
that does not provide the Employee with an opportunity to elect the form of payment of such
Compensation must specify the form of payment no later than the time the Employee first had a
legally binding right to the Compensation.
Any amounts deferred under the Plan that are made during the period ending on or before December
31, 2007, where these amounts have been paid in compliance with the transitional guidance under
Code Section 409A, shall not be subject to the provisions of Code Section 409A. In no event may a
Participant in 2007 change a payment election with respect to payments the Participant would
otherwise receive in 2007, or cause payments to be made in 2007 that would otherwise be payable in
2007.
7.12. Subsequent Elections To Delay Distributions
Subsequent elections to delay the timing or to change the form of payments must:
(a) not take effect until at least twelve (12) months after the date of the election;
28
(b) except in the case of elections relating to distributions on death, Disability or
Unforeseeable Emergency provide an additional deferral period of at feast five (5) years from the
date such payment would otherwise have been made; and
(c) if related to a payment at a specified time or pursuant to a fixed schedule, be made at
least twelve (12) months prior to the date of the first scheduled payment.
The restriction of providing that certain additional deferrals must be for a period of not less
than five (5) years is not limited to the first payment for which a deferral is made. If the
Employer sponsoring the Plan is a public corporation, distributions to a Participant who is a
specified Employee shall not begin until six (6) months after the Participants Separation from
Service or death.
The term payment refers to each separately identified amount to which a Participant is entitled to
payment under a Plan on a determinate date, and includes amounts applied for the benefit of the
Participant. An amount separately identified only if the amount may be objectively determined.
A payment may be made upon the earlier of, or the later of, multiple specified permissible payment
events. A different form of payment may be elected by the Participant depending upon the payment
event. The subsequent deferral election rules are applied separately to each payment due upon each
payment event. An intervening event that is a Code Section 409A event may override an existing
payment schedule already in payout status. The addition of a permissible payment event to amounts
previously deferred is subject to the subsequent deferral rules if the addition results in a charge
in time of form of payment.
7.13. No Acceleration Of Benefits
The Plan shall, not permit the acceleration of distributions, except as otherwise provided in
paragraph 6.6. This rule against acceleration will not be violated because the Plan provides a
choice between different forms of actuarially equivalent life annuity payments, or between cash and
taxable property if the timing and amount of income inclusion is the same for each form of
distribution.
Exceptions to the non-acceleration rule are permitted when the accelerated distribution is not
elective (i.e., court-approved settlements incident to divorce) or for automatic cash-outs of small
amounts upon the occurrence of a distributable event [e.g., automatic cash-out of balances less
than the Code Section 402(g) limit for 401(k) deferrals ($15,5000 in 2008), regardless of a
Participants distribution election].
Payments may be considered accelerated if a Participants deferred Compensation is reduced or
applied to offset a debt that the Employee may otherwise owe to the Employer (or another entity).
7.14. Payment Medium
The Employer may elect to pay the Participants lump sum or installment benefits in the form of
cash, securities or any other property acceptable to the Participant and to the Employer.
29
7.15. Termination of Employment
Upon termination of a Participants employment for any reason other than death and prior to the
attainment of the Retirement Age, the vested portion of the Participants Account (including any
portion vested pursuant to paragraph 6.4 as a consequence of the Participants Disability) shall be
paid to the Participant in a single lump sum as soon as practicable following the date of
termination provided, however, that the Administrator, in its sole discretion, may payout a
Participants Account Balance in annual installments if the Participants employment terminates by
reason of the Participants Disability.
A leave of absence does not trigger a Separation from Service payment event for the first six (6)
months of the leave. The employment relationship continues during a period of military, sick or
other bona fide leave of absence if that period is not greater than six (6) months. A leave of
absence greater than the six (6) month period is not treated as a termination of employment if the
Participant s tight is guaranteed by statue or contract.
If the leave of absence does trigger a Separation From Service, the last day of the six (6) month
period is considered to the date of the Separation From Service.
7.16. Death Benefits
If a Participant dies prior to the complete distribution of his or her Account, the balance of the
Account shall be paid as soon as practicable to the Participants designated Beneficiary or
Beneficiaries. Such death benefit shall be paid as a jump sum unless the Participant was receiving
payment of his or her benefit in installments at the time of the Participants death. In such
event, the Participants Beneficiary shall continue to receive installment payments in the same
manner as the Participant.
7.17. Beneficiary Designation
A Participant shall have the right to designate a Beneficiary and to amend or revoke such
designation at any time in writing. Such designation, amendment or revocation shall be effective
upon receipt by the Administrator. A Participant may not, however, change his or her Beneficiary
(during the life of such Beneficiary) after payments have commenced under an installment payment
option where the payment period is determined by reference to the life expectancy of the
Participant and his or her Beneficiary.
An election to change the identity of a Beneficiary does not constitute an acceleration of a
payment merely because the election changes the identity of the recipient of the payment, provided
the time and form of the payment is not otherwise changed. In addition, an election before the
commencement of a life annuity to change the identity of a Beneficiary does not constitute an
acceleration of a payment if the change in the time of payments stems solely from the different
life expectancy of the new Beneficiary such as in the case of a joint and survivor annuity, and
does not change the commencement.
7.18. No Beneficiary
If no Beneficiary designation is made, or if the Beneficiary designation is held invalid, or if no
Beneficiary survives the Participant and benefits are determined to be payable following the
30
Participants death, the Administrator shall direct that payment of benefits be made to the person
or persons in the first category in which there is a survivor. The categories of successor
Beneficiaries, in order, are as follows:
(a) Participants Spouse;
(b) Participants descendants, per stirpes (eligible descendants shall be determined by the
intestacy laws of the state in which the decedent was domiciled);
(c) Participants parents;
(d) Participants brothers and sisters (including step brothers and sisters); and
(e) Participants estate.
7.19. Claims Procedure
Participant or authorized representative of a Participant may submit to the Administrator questions
regarding Plan benefits or a claim for the payment of benefits. Such question of claim may be
submitted at any time. However, benefit payments shall not be payable earlier than permitted by
the Plan. The Administrator shall accept, reject, or modify such request and shall send written
notification to the Participant setting forth the response of the Administrator and in the case of
a denial or modification the Administrator shall:
(a) state the specific reason or reasons for the denial,
(b) provide specific reference to pertinent Plan provisions on which the denial is based,
(c) provide a description of any additional material, data or information necessary for the
Participant or his Representative to perfect the claim and an explanation of why such material or
information is necessary, and
(d) explain the Plans claim review procedure.
In the event the request is rejected or modified, the Participant or his representative may appeal
within sixty (60) days following receipt by the Participant or representative of such rejection or
modification, by submitting a written request for review by the Administrator of its initial
decision. Within sixty (60) days following such request for review, the Administrator shall render
its final decision in writing to the Participant or representative stating specific reasons for
such decision. If the Participant or representative is not satisfied with the Administrators final
decision, the Participant or representative can institute an action in a court of competent
jurisdiction.
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7.20. Disputed Payments And Refusal To Pay
If a Employer fails to make a payment in whole or in part as of the date specified under the Plan,
either intentionally or unintentionally, other than with the express or implied consent of the
Employee, the payment will be treated as-made upon the date specified if, the Employee accepts the
portion (if any) of the payment that the Employer is willing to make (unless such acceptance will
result in a relinquishment of the claim to ail or part of the remaining amount), makes prompt and
reasonable, good faith efforts to collect the remaining portion of the payment, and any further
payment (including payment a lesser amount that satisfies the obligation to make the payment) is
made no later than the end of the first taxable year of the Employee in which the Employer and the
Employee enter into a legally binding settlement of such dispute, the Employer concedes that the
amount la payable, or the Employer is required to make such payment pursuant to a final and
nonappealable judgment or other binding decision. For purposes of this paragraph, efforts to
collect the payment will be presumed not to be prompt, reasonable, good faith efforts, unless the
Employee provides notice to the Employer within ninety (90) days of the latest date upon which the
payment could have been timely made in accordance with the terms of The Plan and these Regulations,
and unless, it not paid, the Employee takes further enforcement measures within 180 days after such
latest date. For purposes of this paragraph, an Employer is not treated as having failed to make a
payment pursuant to the terms of the Plan the Employee is required to request payment, or otherwise
information or take any other action, and the Employee has failed to take such action. In
addition, for purposes of this paragraph, the Employee is deemed to have requested that a payment
not be made, rather than the Employee having failed to make such payment, where the Employers
decision to refuse to make the payment is made by the Employee or a member of the Employees family
(as defined in Code Section 267(c)(4) applied as if the family of an individual includes the Spouse
of any member of the family), or any person or group of persons over whom the Employee or
Employees family member has effective control, or any person any portion of whose Compensation is
controlled the Employee or Employees family member.
7.21. Intervening Payment Events
A payment is not considered an acceleration if the payment is pursuant to the terms of the Plan (or
an election made at the time of the initial deferral) that require accelerated payment upon
Separation from Service, death, Disability, Unforeseeable Emergency or Change in Control.
7.22. Forfeiture Of Non-Vested Amounts
To the extent that any amounts credited to a Participants Account are not vested at the time such
amounts are otherwise payable under paragraph 7.1, such amounts shall be forfeited and shall be
used to satisfy the Employers obligation to make contributions to the Trust under the Plan.
7.23. Substitutions
Except as otherwise provided under Regulations, the payment of an amount as a substitute for a
payment of deferred Compensation will be treated as a payment of the deferred Compensation. A
forfeiture or voluntary relinquishment of an amount of deferred Compensation will not be treated as
a payment of the Compensation, but there is no forfeiture or voluntary relinquishment for this
purpose if an amount is paid, or a legally binding right to a payment is created, that acts as a
32
substitute for the forfeited or voluntarily relinquished amount. Whether a payment or a right to a
payment acts as a substitute for a payment of deferred Compensation is determined based on all the
facts and circumstances. However, where the payment of an amount results in an actual or potential
reduction of, or current or future offset to an amount of deferred Compensation or if the
Participant receives a loan the repayment of which is secured by or may be accomplished through an
offset of or a reduction in an amount deferred under a Nonqualified Deferred Compensation Plan, the
payment or loan is a substitute for the deferred Compensation, in addition, where a Participants
right to deferred Compensation is made subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the
Participants Beneficiary, the deferred Compensation is treated as having been paid. Even where
there is no explicit reduction or offset, the payment of an amount or creation of a new right to a
payment proximate to the purported forfeiture or voluntary relinquishment of a right to deferred
Compensation is presumed to be a substitute for the deferred Compensation. The presumption is
rebuttable by a showing that the Compensation paid would have been received regardless of the
forfeiture or voluntary relinquishment of the right to deferred compensation. Factors indicating
that a payment would have been received regardless of such forfeiture or voluntarily relinquishment
include that the amount paid is materially less than the forfeited or relinquished amount, or
consists of a type of payment customarily made in the ordinary course of business of the Employer
to Participants who do not forfeit or relinquish deferred Compensation (for example, a payment of
accrued but unused leave or a payment for a release of actual or potential claims).
7.24. Taxes
All Federal, state or local taxes that the Administrator determines are required to be withheld
from any payments made pursuant to this Article VII shall be withheld.
7.25. Withholding And Reporting Requirements
Code Section 409A deferred compensation is subject to the following requirements:
(a) The Employer must report all deferrals for the Plan Year under this Plan on a Form W-2 or
a Form 1099.
(b) Code Section 3401(a) provides that the term wages includes any amount includible in
gross income of an Employee under Code Section 409A.
(c) Code Section 6041 requires that a payer report amounts includible in gross income under
Code Section 409A that are not treated as wages under Code Section 3401(a) as gross income.
7.26. Treatment Of Participants In An Asset Sale
As a part of a sale of assets by one Employer (seller) to an unrelated employer (buyer) whereby, a
Participant of the seller would otherwise experience a Separation from service with the seller, the
seller and the buyer may specify whether the Participant has experienced a Separation from Service.
This requires that: (1) the asset purchase results from bona fide, arms length negotiations; (2)
all Participants providing services to the seller immediately before the
33
transaction and providing services to the buyer after the transaction are treated consistently
under the provisions of any Nonqualified Deferred Compensation Plan; and (3) such treatment is
specified no later than the closing date of the asset purchase transaction.
7.27. Forfeiture Of Non-Vested Amounts.
To the extent that any amounts credited to a Participants Account are not vested at the time such
amounts are otherwise payable under paragraph 7.1, such amounts shall be forfeited and shall be
used to satisfy the Employers obligation to make contributions to the Trust under the Plan.
ARTICLE VIII
PLAN ADMINISTRATION
8.1. The Administrative Committee
The Plan shall be administered by a Committee consisting of one or more persons appointed by the
Board of Directors. The Board may remove any member of the Committee at any time, with or without
cause, and may fill any vacancy. If a vacancy occurs, the remaining member or members of the
Committee have full authority to act. The Board is responsible for transmitting to the Trustee the
names and authorized signatures of the members of the Committee and, as changes take place in
membership, the names and signatures of new members. Any member of the Committee may resign by
delivering his written resignation to the Board, the Trustee and Committee. Any such resignation
becomes effective upon its receipt by the Board or on such other date as is agreed to by the Board
and the resigning member. The Committee acts by a majority of its members at the time in office and
may take action either by vote at a meeting or by consent in writing without a meeting. The
Committee may adopt such rules and appoint such subcommittees as it deems desirable for the conduct
of its affairs and the administration of the Plan.
8.2. Powers Of The Committee
In carrying out its duties with respect to the general administration of the Plan, the Committee
has, in addition to any other powers conferred by the Plan or by law, the following powers:
(a) To determine all questions relating to eligibility to participate in the Plan;
(b) Communicating with Participants in connection with their rights and benefits under the
Plan;
(c) Reviewing investment preferences received from Participants;;
(d) Arranging for the payment of taxes (including income tax withholding), expenses and
benefit payments to Participants under the Plan;
(e) Filing any returns and reports due with respect to the Plan;
34
(f) Interpreting and construing Plan provisions and settling claims and domestic relations
orders in connection with Plan benefits;
(g) Maintaining all records necessary for the administration of the Plan that are not
maintained by the Employer or the Trustee;
(h) Serving as the Plans designed representative for the service of advises, reports, claims
or legal process; and
(i) Employing any agents such as accountants, auditors, attorneys, actuaries or any other
professionals it deems necessary in the performance of any of its duties.
8.3. Employer
The Employer has sole responsibility for the establishment and maintenance of the Plan. The
Employer through its Board of Directors shall have the power and authority to appoint the
Administrator, Trustee and any other professionals as may be required for the administration of the
Plan or the Trust. The Employer shall also have the right to remove any individual or party
appointed to perform administrative, investment, fiduciary or other function under the Plan. The
Employer may delegate any of its powers to the Administrator, Board Member or a Committee of the
Board.
8.4. Administrative Fees And Expenses
All fees for investment and administrative services and all reasonable costs, charges and expenses
incurred by the Committee or the Trustee in connection with the administration of the Plan or the
Trust shall be paid by the Employer, if. such fees, costs, charges and/or expenses are not paid by
the Employer within a reasonable period or lime from the date on which the Employer is billed for
such fees, costs, charges and/or expenses, the Trustee shall be specifically authorized to pay the
bill from Trust assets. If the Trust has insufficient liquid assets to cover the amount due, the
Trustee shall have the right to liquidate assets held in the Trust to raise cash to pay any amount
due. Notwithstanding the foregoing, no compensation other than reimbursement for expenses shall be
paid to a member of the Committee who is an Employee of the Employer.
8.5. Plan Administration And Interpretation
The Committee shall have complete control and authority to determine the rights and benefits and
all claims, demands actions arising out of the provisions of the Plan of any Participant,
Beneficiary, deceased Participant, or other person having or claiming to have any interest under
the Plan. The Committee shall have complete discretion to interpret the Plan and to decide all
matters under the Plan. Such interpretation and decision shall be final, conclusive, and binding
on all Participants and any person claiming under or through any Participant, in the absence of
clear and convincing evidence that the Committee acted arbitrarily and capriciously. Any
individual(s) serving as a member of the Committee who is a Participant will not vote or act on any
matter relating solely to himself or herself. When making a determination or calculation, the
Committee shall be entitled to rely on information furnished by a Participant, a Beneficiary, the
Employer, or the Trustee. The Committee shall have the responsibility for complying with any
reporting and disclosure requirements of ERISA.
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8.6. Powers, Duties, Procedures
The Committee shall have such powers and duties, may adopt such rules and tables, may act in
accordance with such procedures, may appoint such officers or agents, may delegate such powers and
duties, may receive such reimbursement and compensation, and shall follow such claims and appeal
procedures with respect to the Plan as it may establish.
8.7. Information
To enable the Administrator to perform its functions, the Employer shall supply full and timely
information to the Administrator on all matters relating to the compensation of Participants, their
employment, retirement, death, termination of employment, and such other pertinent facts as the
Administrator may require.
8.8. Indemnification Of The Members Of The Committee By The Employer
The Employer agrees to Indemnify and to defend each member of the Committee against to the fullest
extent permitted by law any officer(s) or Employee(s) who serve as a member of the Committee
(including any such individual who formerly served as a Committee member) against all liabilities,
damages, costs and expenses (including attorneys fees and amounts paid in settlement of any claims
approved by the Employer) occasioned by any act or omission to act in connection with the Plan, if
such act or omission was in good faith.
8.9. Liabilities For Which Members Of The Committee Are Indemnified
Liabilities and expenses which a member of the Committee is indemnified hereunder include, without
limitation the amount of any settlement or judgment, costs, counsel fees and related charges
reasonably incurred in connection with a claims asserted or a proceeding brought against him or the
settlement thereof.
8.10. Employers Right to Settle Claims
The Employer may, at its own expense, settle any claim asserted or proceeding brought against any
member of the Committee when such settlement appears to be in the best interests of the Employer.
ARTICLE IX
TRUST FUND
9.1. Trust
Coincident with the establishment of the Plan, the Employer shall establish a Trust for the purpose
of accumulating assets which may, but need not be used, by the Employer to satisfy some or all of
its financial obligations to provide benefits to Participants under this Plan. All assets held in
the Trust shall remain the exclusive property of the Employer and shall be available to pay
creditor claims of the Employer in the event of bankruptcy. The assets held in Trust shall be
administered in accordance with the terms of the separate Trust Agreement between the Trustee and
the Employer.
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9.2. Unfunded Plan
In no event will the assets accumulated by the Employer in the Trust be construed as creating a
funded Plan under the applicable provisions of the Employee Retirement Income Security Act, as
amended, or under the Internal Revenue Code of 1986, as amended, or under the provisions of any
other applicable statute or regulation. Any funds set aside by the Employer in trust shall be
administered in accordance with the terms of the Trust.
9.3. Deemed Investments
A Participant may select, from the vestment options or other investment media selected by the
Administrator and approved by the Employer, the investments in which all or part of his or her
Account shall be deemed to be invested. In no event shall any Participant be entitled to have any
such investments made other than on a deemed basis. The Accounts maintained pursuant to this Plan
are for bookkeeping purposes only, and neither the Employer nor the Trustee is under any obligation
to invest any amounts credited to such Accounts.
The Participant shall make an investment designation (on the election form used to elect to defer
Compensation under paragraph 3.2 or in such other manner as specified by the Administrator or the
Employer) which shall remain effective until another valid direction has been made by the
Participant. The Participant may amend the Participants investment designation at such times and
in such manner as prescribed by the Administrator. A timely change to the Participants investment
designation shall become effective as soon as administratively practicable in accordance with the
procedures established by the Administrator. The investment options or investment media deemed to
be made available to the Participant, and any limitation on the minimum or maximum percentages of
the Participants account that may be deemed to be invested in any particular option or investment,
shall be the same as from time to time communicated to the Participant by the Administrator.
9.4. Funding A Non-Qualified Plan During A Restricted Period
The ability to set assets aside in a trust (or other arrangement such as a rabbi trust) during
any restricted period is limited. Any violation of this provision results in the amounts being
treated as property transferred in connection with the performance of services under Code Section
83 and subject to the Code Section 409A excise tax and additional interest payments. Earnings on
the transferred or restricted assets are treated as additional transfers of property. Further, the
existence of a rabbi trust does not protect the amounts from Code Section 409A.
The restricted period includes:
(a) Any period during which the plan is in at-risk status (as defined in the Pension
Protection Act of 2006).
(b) Any period the Employer is a debtor in a case under Title 11, United States Code, or
similar Federal or state law.
(c) The twelve (12) month period beginning on the date which is six (6) months before the
termination date of the Plan if, as of the termination date, the Plan is not sufficient for
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benefit liabilities (within the meaning of Section 4041 of the Employee Retirement Income
Security Act of 1974).
(d) Notwithstanding the foregoing, no compensation other than reimbursement for expenses
incurred shall be paid to a Plan Administrator who is the Employer or Employee of the Employer.
These provisions do not apply to amounts set aside before the restricted period. This prevision
applies to the Code Section 162(m) individuals (the chief executive officer and the four highest
compensated officers for the taxable year) and individuals subject to Section 16(a) of the
Securities Exchange Act of 1934.
Any increase in the payment under the Plan to cover Federal, state or local income taxes with
respect to any Compensation required to be included in income will be subject to the Code Section
409A excise tax and additional interest payments and such a payment will not be deductible by the
Employer.
9.5. Assignment And Alienation
No Participant or Beneficiary of a deceased Participant shall have the right to anticipate, assign,
transfer, sell, mortgage, pledge or hypothecate any benefit under this Plan. The Administrator
shall not recognize any attempt by a third party to attach, garnish or levy upon any benefit under
the Plan except as provided by law or under the terms of a domestic relations order as described at
Code Section 414(p).
9.6. Jurisdiction Of Trust Assets
No assets under a Plan established hereunder may set aside or restricted (directly or indirectly)
under any funding arrangement (offshore trust or otherwise) if they are located or subsequently
transferred outside the United States. The exception to this requirement if substantially all of
the services of the Participant to which the Nonqualified Deferred Compensation Plan relates are
performed in the foreign jurisdiction.
ARTICLE X
AMENDMENT AND TERMINATION
10.1. Amendment
The Employer shall have the right to amend this Plan without the consent of any Participant or
Beneficiary hereunder, provided that any amendment shall become effective on the first day of the
Plan Year following the date on which the amendment is adopted by the Employer and that
Participants and Beneficiaries be notified of such amendment not less than thirty (30) days prior
to the effective date thereof. The notice shall include an explanation of the amendment and its
effects on the Participants rights and benefits under the Plan. No amendment shall deprive a
Participant or Beneficiary of any of the benefits which he or she has already accrued under the
Plan.
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10.2. Existing Rights
No amendment of the Plan shall adversely affect the rights of any Participant with respect to
amounts that have been credited to his or her Account prior to the date of such amendment or
termination.
10.3. Exceptions To The Prohibition Of Termination Or Distribution Of Benefits
The exceptions to the immediate liquidation of Plan account balances are as follows:
(a) The Employer may terminate all Plans of the same type for all Participants, as long as all
payments are made between twelve (12) months and twenty four (24) months from the date of
termination. The Employer may not adopt a successor plan of the same type within three (3) years of
termination.
(b) The Employer may terminate the Plan and make payments to Participants during the twelve
(12) month period after a Change in Control. All substantially similar arrangements sponsored by
the Employer must be terminated.
(c) The Employer who is in bankruptcy may terminate the Plan if deferrals are included in the
Participants gross income by the latest of (a) the calendar year in which the termination occurs;
(b) the calendar year in which the amount is no longer subject to a substantial Risk of Forfeiture
or (c) the first calendar year in which the payment is administratively practicable.
(d) The Employer may terminate the Plan if all Plan arrangements sponsored by the Employer
that would be aggregated with any terminated Plan arrangements are terminated. No payments other
than payments that would be payable under the terms of the Plans if the termination has not
occurred are made within twelve (12) months of the termination. All payments from the Plan must be
made within twenty four (24) months of the termination and the Employer may not adopt a new plan or
arrangement within five (5) years following the termination.
10.4. Material Modifications
Except as otherwise provided, a modification of a Plan is a material modification if a benefit or
right existing as of October 3, 2004, is materially enhanced or a new material benefit or right is
added, and such material enhancement or addition affects amounts earned and vested before January
1, 2005. Such material benefit enhancement or addition is a material modification whether it occurs
pursuant to an amendment or to the Employee exercise of discretion upon the terms of the Plan. For
example, an amendment to a Plan to add a provision that payments of deferred amounts earned and
vested before January 1, 2005, may be allowed upon request if Employees are required to forfeit
twenty percent (20%) of the amount of the payment (a haircut) would be a material modification to
the Plan. Similarly, a material modification would occur if an Employee exercised discretion to
accelerate vesting of a benefit under the Plan to a date on or before December 31, 2004. However,
it is not a material modification for an Employee to exercise discretion over the time and manner
of payment of a benefit to the extent such discretion is provided under the terms of the Plan as of
October 3, 2004 nor is it a material modification for
39
an Employee to exercise a right permitted under the Plan as in effect on October 3, 2004. The
amendment of a Plan to bring the Plan into compliance with the provisions of Code Section 409A will
not be treated as a material modification. However, a Plan amendment or the exercise of discretion
under the terms of the Plan that materially enhances an existing benefit or right or adds a new
material benefit or right will be considered a material modification even if the enhanced or added
benefit would be permitted under; Code Section 409A. For example, the addition of a right to a
payment upon an Unforeseeable Emergency of an amount earned and vested before January 1, 2005 would
be considered a material modification. The reduction of an existing benefit is not a material
modification. For example, the removal of a haircut provision generally would not constitute a
material modification.
ARTICLE XI
MISCELLANEOUS
11.1. Total Agreement
This executed Plan and the Salary Deferral Agreement, Beneficiary designation and other
administrative forms shall constitute the total agreement between the Employer and the Participant
regarding the Plan. No oral statement regarding the Plan may be relied upon by the Participant.
11.2. Employment Rights
Neither the establishment of this Plan nor any modification thereof, nor the creation of any Trust
or Account, nor the payment of any benefits, shall be construed as giving a Participant or other
person a right to employment with the Employer or any other legal or equitable right against the
Employer except as provided in the Plan. In no event shall the terms of employment of any Employee
or Participant be modified or in any way he affected by the Plan.
11.3. Non-Assignability
None of the benefits, payments, proceeds or claims of any Participant or Beneficiary shall be
subject to attachment or garnishment or other legal process by any creditor of such Participant or
Beneficiary, nor shall any Participant or Beneficiary have the right to alienate, commute, pledge,
encumber or assign any other the benefits or payments or proceeds which he or she may expect
receive, contingently or otherwise under the Plan.
11.4. Binding Agreement
Any action with respect to the Plan taken by the Administrator or the Employer or the Trustee or
any action authorized by or taken at the direction of the Administrator, the Employer or the
Trustee shall be conclusive upon all Participants and Beneficiaries entitled to benefits under the
Plan.
11.5. Receipt And Release
Any payment to any Participant or Beneficiary in accordance with the provisions of the Plan shall,
to the extent thereof, be in full satisfaction of all claims against the Employer, the
Administrator and the Trustee under the Plan, and the Administrator may require such
40
Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and
release to such effect. If any Participant or Beneficiary is determined by the Administrator to be
incompetent by reason of physical or mental disability (including not being the age of majority) to
give a valid receipt and release, the Administrator may cause payment or payments becoming due to
such person to be made to another person for his or her benefit without responsibility on the part
of the Administrator, the Employer or the Trustee to follow the application of such funds.
11.6. Governing Law
Construction, validity and administration of this Plan and the Trust shall be governed by
applicable Federal law and the state of New Jersey law. If any provision shall be held by a court
of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall
continue to be fully effective.
11.7. Interpretation Of Plan
Each provision of the Plan shall be interpreted to be consistent with the requirements of Code
Section 409A and the Regulations issued thereunder and any provisions of the Plan that does not
satisfy those requirements will be of no legal force or effect. Headings and captions in this Plan
are inserted as a matter of convenience for organizational purposes, and do not construe, define,
extend, interpret, or limit any provision in the Plan. Any reference in the Plan to a statutory or
regulatory provision shall include corresponding successor provisions.
11.8. Electronic Delivery
Any reference in the Plan to a written document shall include any document delivered electronically
or posted on the Employers intranet.
11.9. Heading And Subheadings
Headings and subheadings in this Plan are inserted for convenience only and are not to be
considered in the interpretation of the provisions hereof.
11.10. Gender
Unless clearly inappropriate, all pronouns of whatever gender refer indifferently to persons or
objects of any gender.
11.11. Singular And Plural
Unless clearly inappropriate, singular terms refer also to the plural number and vice versa.
IN WITNESS WHEREOF, New Century Transportation Inc. has executed this document by its duly
authorized officer and its corporate seal, hereunto affixed by authority of its Board of Directors
this day of , 2008.
New Century Transportation Inc.
By:
|
/s/ Brian J. Fitzpatrick
|
[Corporate seal]
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