Attached files
Exhibit
10.1
ATRION CORPORATION
NONQUALIFIED DEFERRED COMPENSATION PLAN
1. Establishment
of Plan. Atrion Corporation (the “Company”)
hereby adopts and establishes this unfunded deferred compensation
plan for a select group of key management or highly compensated
employees of the Company and its Affiliates which shall be known as
the Atrion Corporation Nonqualified Deferred Compensation Plan (the
“Plan”).
2. Purpose
of Plan. The purpose of the Plan is to provide a select
group of management or highly compensated employees (within the
meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA) of
the Company and its Affiliates who contribute significantly to the
future business success of the Company with supplemental retirement
income benefits through the deferral of Base Salary and Bonus
Compensation and through Company contributions. This Plan provides
for the deferral of compensation within the meaning of Section 409A
and is intended to be operated in accordance with the applicable
provisions of said Section 409A.
3. Definitions.
3.1 “Acceleration
Events” is defined in Section 11 hereof.
3.2 “Account”
means a hypothetical bookkeeping account or accounts established in
the name of each Participant and maintained by the Company to
reflect each Participant’s interests under the
Plan.
3.3 “Affiliate”
means any corporation, trade, or business which is treated as a
single employer with the Company under Sections 414(b) or 414(c) of
the Code and any other entity designated by the Committee as an
“Affiliate” for purposes of the Plan.
3.4 “Base
Salary” means the annual rate of base pay paid by the Company
or an Affiliate to or for the benefit of the Participant for
services rendered.
3.5 “Beneficiary”
means any person or entity, designated in accordance with
Section
16.7, entitled to
receive benefits which are payable upon or after a
Participant’s death pursuant to the terms of the
Plan.
3.6 “Board”
means the Board of Directors of the Company, as constituted from
time to time.
3.7 “Bonus
Compensation” means any cash compensation earned by a
Participant for services rendered by a Participant under any bonus
or cash incentive plan maintained by the Company or an
Affiliate.
3.8 “Change in
Control” means the first to occur of any of the following
events:
(a) the date one
person (or more than one person acting as a group) acquires
ownership of stock of the Company that, together with the stock
held by such person or group, constitutes more than fifty percent
(50%) of the total fair market value or total voting power of the
stock of the Company; provided that a Change in Control shall not
occur if any person (or more than one person acting as a group)
owns more than fifty percent (50%) of the total fair market value
or total voting power of the Company’s stock and acquires
additional stock;
(b) the date one
person (or more than one person acting as a group) acquires (or has
acquired during the twelve (12) month period ending on the date of
the most recent acquisition) ownership of the Company’s stock
possessing thirty percent (30%) or more of the total voting
power;
(c) the date a
majority of the members of the Board are replaced during any twelve
(12) month period by directors whose appointment or election is not
endorsed by a majority of the Board before the date of appointment
or election; or
(d) the date one
person (or more than one person acting as a group) acquires (or has
acquired during the twelve (12) month period ending on the date of
the most recent acquisition) assets from the Company that have a
total gross fair market value equal to or more than forty percent
(40%) of the total gross fair market value of all of the assets of
the Company immediately before such acquisition or acquisitions.
For this purpose, gross fair market value means the value of the
assets of the Company, or the value of the assets being disposed
of, determined without regard to any liabilities associated with
such assets. There is no Change in Control under this subsection
when there is a transfer to an entity that is controlled by the
stockholders of the transferring corporation immediately after the
transfer.
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Notwithstanding
the foregoing, a Change in Control shall not occur unless such
transaction constitutes a change in the ownership of the Company, a
change in the effective control of the Company, or a change in the
ownership of a substantial portion of the Company’s assets
under Section 409A.
3.9 “Claimant”
has the meaning set forth in Section 17.
3.10 “Code”
means the U.S. Internal Revenue Code of 1986, as amended, or any
successor statute, and the Treasury Regulations and other
authoritative guidance issued thereunder.
3.11 “Committee”
means the Compensation Committee of the Board.
3.12 “Company”
means Atrion Corporation, a Delaware corporation, or any successor
thereto.
3.13 “Deferral
Election” means an election by an Eligible Employee to defer
Base Salary or Bonus Compensation. A Participant shall make new
Deferral Elections for every Plan Year.
3.14 “Determination
Date” means the last Valuation Date of the week preceding the
payment date.
3.15 “Disabled or
Disability” means that a Participant is: (a) unable to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than twelve (12) months; (b) by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than 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 Company or its
Affiliates; or (c) determined to be totally disabled by the Social
Security Administration.
3.16 “Distribution
Date” means a date specified by a Participant in his or her
Election Form for the payment of all or a portion of such
Participant’s Account.
3.17 “Effective
Date” means September 1, 2017.
3.18 “Election
Form” means the form, which may be in electronic format,
established from time to time by the Committee for making Deferral
Elections under the Plan. The Election Form includes the percentage
of Base Salary or Bonus Compensation to be deferred (subject to
minimum and maximum percentages established by the Committee); the
Distribution Date; and the form of distribution (lump sum or
installments). Each Election Form shall be completed in accordance
with such procedures as established by the Committee and shall
become irrevocable as of the last day of the Election
Period.
3.19 “Election
Period” means the period established by the Committee with
respect to each Plan Year during which Deferral Elections for such
Plan Year must be made in accordance with the requirements of
Section 409A, as follows:
(a) Except as provided
in (b), (c), and (d) below, the Election Period shall end no later
than the last day of the Plan Year immediately preceding the Plan
Year to which the Deferral Election relates.
(b) If any Bonus
Compensation constitutes “performance-based
compensation” within the meaning of Treas. Reg. Section
1.409A-1(e), then the Election Period for such amounts shall end no
later than six (6) months before the end of the Plan Year during
which the Bonus Compensation is earned (and in no event later than
the date on which the amount of the Bonus Compensation becomes
readily ascertainable).
(c) The Election
Period for newly Eligible Employees shall end no later than thirty
(30) days after the Employee first becomes eligible to participate
in the Plan and shall apply only with respect to compensation
earned after the date of the Deferral Election.
(d) The Election
Period for Deferral Elections for Bonus Compensation payable for
each plan year under the Atrion Corporation Short-Term Incentive
Compensation Plan shall end on the September 30 preceding the next
Plan Year.
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3.20 “Elective
Deferrals” means Base Salary deferrals and Bonus Compensation
deferrals.
3.21 “Eligible
Employee” means an Employee who is selected by the Committee
to participate in the Plan. Participation in the Plan is limited to
a select group of key management or highly compensated employees of
the Company and its Affiliates.
3.22 “Employee”
means an employee of the Company or any Affiliate.
3.23 “Entry
Date” means, with respect to an Eligible Employee, the first
day of the pay period commencing on or following the effective date
of such Eligible Employee’s participation in the
Plan.
3.24 “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
3.25 “FICA
Amount” has the meaning set forth in Section 11.3.
3.26 “401(k)
Plan” means the Atrion Corporation 401(k) Savings
Plan.
3.27 “Investment
Options” an investment fund, index, or vehicle selected by
the Committee and made available to Participants for the deemed
investment of their Accounts.
3.28 “Make-Up
Contribution” has the meaning set forth in Section 6.
3.29 “Participant”
means an Eligible Employee who elects to participate in the Plan by
filing an Election Form in accordance with Section 5.1 and any former Eligible
Employee who continues to be entitled to a benefit under the
Plan.
3.30 “Payment
Event” has the meaning set forth in Section 9.1.
3.31 “Plan
Year” means the twelve (12) consecutive month period which
begins on January 1 and ends on the following December 31 except
the first Plan Year which begins on September 1, 2017 and ends on
December 31, 2017.
3.32 “Re-deferral
Election” has the meaning set forth in Section 5.4.
3.33 “Section
409A” means Section 409A of the Code and the regulations
promulgated thereunder.
3.34 “Separation
from Service” means the termination of the Participant's
employment with the Company and its Affiliates for any reason,
other than death or Disability, as determined in accordance with
Section 409A. Whether a Separation from Service takes place is
determined based on the facts and circumstances surrounding the
termination of the Participant's employment and whether the Company
and the Participant intended for the Participant to provide
significant services for the Company or its Affiliates following
such termination. A change in the Participant's employment status
will not be considered a Separation from Service if:
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(a) the Participant
continues to provide services as an Employee of the Company or
Affiliate at an annual rate that is twenty percent (20%) or more of
the services rendered, on average, during the immediately preceding
three full calendar years of employment (or, if employed less than
three years, such lesser period) and the annual remuneration for
such services is twenty percent (20%) or more of the average annual
remuneration earned during the final three full calendar years of
employment (or, if less, such lesser period), or
(b) the Participant
continues to provide services to the Company or an Affiliate in a
capacity other than as an Employee at an annual rate that is fifty
percent (50%) or more of the services rendered, on average, during
the immediately preceding three full calendar years of employment
(or if employed less than three years, such lesser period) and the
annual remuneration for such services is fifty percent (50%) or
more of the average annual remuneration earned during the final
three full calendar years of employment (or if less, such lesser
period).
3.35 “Specified
Employee” has the meaning set forth in Section
409A(a)(2)(B)(i) of the Code and Treas. Reg. Section
1.409A-1(i).
3.36 “Specified
Employee Distribution Date” has the meaning set forth in
Section
9.4.
3.37 “State,
Local, and Foreign Tax Amount” has the meaning set forth in
Section
11.6.
3.38 “Unforeseeable
Emergency” means a severe financial hardship of the
Participant resulting from (a) an illness or accident of the
Participant, the Participant’s spouse, the
Participant’s beneficiary, or the Participant’s
dependent; (b) a loss of the Participant’s property due to
casualty; or (c) such other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of
the Participant, all as determined in the sole discretion of the
Committee in accordance with, and subject to, Section
409A.
3.39 “Valuation
Date” means each business day of the Plan Year.
4. Eligibility;
Participation.
4.1 Requirements for
Participation. Before the beginning of each Plan Year (other
than the first Plan Year), the Committee shall select those
Employees who shall be Eligible Employees for such Plan Year. Any
Eligible Employee may participate in the Plan commencing as of the
Entry Date occurring on or after the date on which he or she
becomes an Eligible Employee.
4.2 Election to
Participate. An Eligible Employee may become a Participant
in the Plan by making a Deferral Election in accordance with
Section
5.
4.3 Cessation of
Participation. If a Participant ceases to be an Eligible
Employee for a Plan Year, then the Participant’s Deferral
Elections shall no longer be effective. However, such
Participant’s Account shall continue to be credited with
gains and losses until the applicable Determination
Date.
5.1 Deferral
Election. An Eligible Employee may elect to defer Base
Salary or Bonus Compensation by completing an Election Form and
returning it to the Committee during the Election Period. The
Election Form must specify:
(a) The percentage of
Base Salary or Bonus Compensation to be deferred (subject to any
minimum and maximum percentages established by the
Committee);
(b) The Distribution
Date for the Participant’s Account (subject to the provisions
of the Plan);
(c) The percentage or
amount of the Participant’s Account to be allocated to each
Investment Option available under the Plan; and
(d) The form of
distribution for the Participant’s Account (lump sum or
installments).
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5.2 Base Salary
Deferrals. A Participant may elect to defer receipt of no
less than a minimum percentage and up to a maximum percentage of
the Participant’s Base Salary for any Plan Year by making a
Deferral Election in accordance with this Section 5, with such minimum and
maximum percentages to be established by the Committee. Base Salary
deferrals shall be credited to a Participant’s Account on, or
as soon as practicable after, the date the Base Salary otherwise
would have been paid.
5.3 Bonus Compensation
Deferrals. A Participant may elect to defer receipt of no
less than a minimum percentage and up to a maximum percentage of
the Participant’s Bonus Compensation for any Plan Year by
making a Deferral Election in accordance with this Section 5, with such minimum and
maximum percentages to be established by the Committee. Bonus
Deferrals shall be credited to a Participant’s Account on, or
as soon as practicable after, the date the deferred Bonus
Compensation otherwise would have been paid.
5.4 Re-deferrals and
Changing the Form of Distribution. The Participant may make
an election to re-defer all or a portion of the amounts in his or
her Account until a later Distribution Date or to change the form
of a distribution (a “Re-deferral Election”); provided
that, the following requirements are met:
(a) The Re-deferral
Election is made at least twelve (12) months before the original
Distribution Date;
(b) The Distribution
Date for the re-deferred amounts is at least five (5) years later
than the original Distribution Date; and
(c) The Re-deferral
Election will not take effect for at least twelve (12) months after
the Re-deferral Election is made.
For
purposes of this Section
5.4, all payments, other than installment payments, shall be
treated as separate payments, and a series of installment payments
shall be treated as one payment, under Section 409A. The provisions
of this Section 5.4
are intended to comply with Section 409A and shall be interpreted
in a manner consistent with the requirements thereof.
6. Make-Up Contributions. The
Company shall credit Make-Up Contributions to the Account of each
Participant who is eligible to participate in the 401(k) Plan and
who makes a Deferral Election for Base Salary hereunder for any
Plan Year that results in a reduction in the Company's matching
contributions for such Participant in the 401(k) Plan. The Make-Up
Contributions for each Participant shall be equal to the amount by
which the Company's matching contributions to the 401(k) Plan for
such Participant are reduced as a result of the Participant's
Deferral Election hereunder. The Make-Up Contributions shall be
made no later than thirty (30) days after the Company’s total
matching contributions to the 401(k) Plan for such Plan Year have
been determined and made.
7. Accounts.
7.1 Crediting or Debiting of
Accounts. In accordance with, and subject to, the rules and
procedures that are established from time to time by the Committee,
amounts shall be credited or debited to a Participant’s
Account in accordance with the following:
(a) Each Participant
may elect one or more of the Investment Options selected by the
Committee for the purpose of crediting or debiting amounts to his
or her Account. As necessary, the Committee may, in its sole
discretion, discontinue, substitute, or add an Investment
Option.
(b) A Participant, in
connection with his or her initial Deferral Election in accordance
with Section 5.1 above, shall
elect, on the Election Form, one (1) or more Investment Options (as
described in Section 7.1(a) above) to
be used to determine the amounts to be credited or debited to his
or her Account. If a Participant does not elect any of the
Investment Options as described in the previous sentence, the
Participant’s Account shall be allocated to the Investment
Option or Options determined by the Committee in its sole
discretion. The Participant may (but is not required to) elect, by
completing an Election Form in accordance with such rules and
procedures established by the Committee, to add or delete one or
more Investment Options to be used to determine the amounts to be
credited or debited to his or her Account, or to change the portion
of his or her Account allocated to each previously or newly elected
Investment Option. If an election is made in accordance with the
previous sentence, it shall apply as of the first business day
deemed reasonably practicable by the Company, in its sole
discretion, and shall continue thereafter for each subsequent day
in which the Participant participates in the Plan, unless changed
in accordance with the previous sentence. Notwithstanding the
foregoing, the Company, in its sole discretion, may impose
limitations on the frequency with which one (1) or more of the
Investment Options elected in accordance with this Section 7.1(b) may be added or
deleted by such Participant; furthermore, the Company, in its sole
discretion, may impose limitations on the frequency with which a
Participant may change the portion of his or her Account allocated
to each previously or newly elected Investment Option.
(c) In making any
election described in this Section 7.1, the
Participant shall specify on the Election Form, in increments of
one percent (1%), the percentage of his or her Account or
Investment Option, as applicable, to be allocated or
reallocated.
(d) Each Account
(including Accounts from which payments are being made in
installments) shall be adjusted for gains and losses based on the
performance of the Investment Options selected. Gains and losses
shall be computed on each Valuation Date. The amount paid to a
Participant on the payment date shall be determined as of the
applicable Determination Date.
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7.2 Nature of
Accounts. Accounts are not actually invested in any
Investment Option, and Participants do not have any real or
beneficial ownership in any Investment Option. Each Investment
Option is solely a device for the measurement and determination of
the amounts to be paid to the Participant pursuant to the Plan, and
a Participant’s Account shall not constitute or be treated as
a trust fund of any kind.
7.3 Statements.
Each Participant shall be provided with statements setting out the
amounts in his or her Account which shall be delivered quarterly or
at such other intervals as determined by the
Committee.
8. Vesting of Base
Salary Deferrals, Bonus Compensation Deferrals, and Make-Up
Contributions. Participants shall be fully vested at all
times in their Base Salary deferrals, their Bonus Compensation
deferrals, and Make-Up Contributions, and any earnings
thereon.
9. Payment
of Participant Accounts.
9.1 In General.
Payment of a Participant’s Account shall be made (or
commence, in the case of installments) on the earliest to occur of
the following events (each a “Payment
Event”):
(a) The Distribution
Date specified in the Participant’s Deferral Election;
provided that, the Participant must select from among the available
Distribution Dates designated by the Committee and set forth in the
Election Form;
(b) The
Participant’s Separation from Service;
(c) The
Participant’s death;
(d) The
Participant’s Disability; and
(e) The occurrence of
a Change in Control.
9.2 Timing of
Valuation. The value of a Participant’s Account on the
payment date shall be determined as of the applicable Determination
Date.
9.3 Timing of
Payments . Except as otherwise provided in this Section 9, payments shall be
made or commence within thirty (30) days following a Payment Event
and installment payments shall be made annually on such date as
determined by the Committee.
9.4 Timing of Payments
to Specified Employees. Notwithstanding anything in the Plan
to the contrary, if a Participant is a Specified Employee as of the
date of his or her Separation from Service, then no distribution of
such Participant’s Account shall be made upon the
Participant’s Separation from Service until the first day of
the seventh month following the Participant’s Separation from
Service or, if earlier, upon the date of the Participant’s
death (the “Specified Employee Distribution Date”). Any
payments to which a Specified Employee otherwise would have been
entitled under the Plan during the period between the
Participant’s Separation from Service and the Specified
Employee Distribution Date shall be accumulated and paid in a lump
sum payment on the Specified Employee Distribution
Date.
9.5 Death. In the event a
Participant dies while there are amounts remaining in his or her
Account:
(a) If, at the
time of the Participant’s death, installment payments of the
Participant’s Account have commenced pursuant to this
Section 9, such
payments shall continue to the Participant’s Beneficiary at
the same time and in the same form as if the Participant had
remained alive until the last installment payment was scheduled to
be made. Notwithstanding the foregoing, a Beneficiary may make a
request for payment pursuant to Section 10 upon an
Unforeseeable Emergency, applying the provisions of said
Section 10 by
substituting the term “Beneficiary” for
“Participant” as the context requires
thereunder.
(b) If, at the time of
the Participant’s death, payments of the Participant’s
Account have not commenced pursuant to this Section 9, the payments made
pursuant to this Section
9.5 shall be made to the Participant’s Beneficiary in
the form (lump sum or installments) elected by the Participant in
accordance with the Participant’s last valid Election Form
and shall be paid or commence within ninety (90) days after the
Participant’s death. Notwithstanding the foregoing, a
Beneficiary may make a request for payment pursuant to Section 10 upon an
Unforeseeable Emergency or change the timing and form of payment
pursuant to Section
9.6 applying the provisions of said Sections by substituting
the term “Beneficiary” for “Participant” as
the context requires thereunder.
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(c) In the event a
Beneficiary dies while there are amounts remaining in his or her
Account, the remaining amounts shall be paid to the
Beneficiary’s estate in a lump sum within ninety (90) days
after the Beneficiary’s death.
9.6 Form of
Payment. Each Participant shall specify in his or her
Election Form the form of payment (lump sum or installments) for
amounts in his or her Account that are covered by the election;
provided that, if the Participant elects to have amounts paid in
installments, the Participant must select from among the
permissible installment schedules selected by the Committee and set
forth in the Election Form. In the absence of a valid election with
respect to the form of payment, amounts will be paid in a single
lump sum.
9.7 Medium of
Payment. All payments from a Participant’s Account
shall be made in cash.
10. Payments
Due to Unforeseeable Emergency.
10.1 Request for
Payment. If a Participant suffers an Unforeseeable
Emergency, he or she may submit a written request to the Committee
for payment of his or her Account.
10.2 No Payment If
Other Relief Available. The Committee will evaluate the
Participant’s request for payment due to an Unforeseeable
Emergency taking into account the Participant’s circumstances
and the requirements of Section 409A. In no event will payments be
made pursuant to this Section 10 to the extent that
the Participant’s hardship can be relieved: (a) through
reimbursement or compensation by insurance or otherwise; or (b) by
liquidation of the Participant’s assets, to the extent that
liquidation of the Participant’s assets would not itself
cause severe financial hardship; or (c) by the cessation of
deferrals under the Plan.
10.3 Limitation on
Payment Amount. The amount of any payment made on account of
an Unforeseeable Emergency shall not exceed the amount reasonably
necessary to satisfy the Participant’s financial need,
including amounts necessary to pay any Federal, state or local
income taxes or penalties reasonably anticipated to result from the
payment, as determined by the Committee.
10.4 Timing of
Payment. Payments shall be made from a Participant’s
Account as soon as practicable and in any event within thirty (30)
days following the Committee’s determination that an
Unforeseeable Emergency has occurred and authorization of payment
from the Participant’s Account.
10.5 Cessation of
Deferrals. If a Participant receives payment on account of
an Unforeseeable Emergency, the Participant may make no more
Elective Deferrals for the remainder of the Plan Year.
11. Acceleration
Events.
Notwithstanding anything in the Plan to the contrary, the
Committee, in its sole discretion, may accelerate payment of all or
a portion of a Participant’s Account upon the occurrence of
any of the events (“Acceleration Events”) set forth in
this Section 11.
The Committee’s determination of whether payment may be
accelerated in accordance with this Section 11 shall be made in accordance
with Treas. Reg. Section 1.409A-3(j)(4).
11.1 Domestic Relations Orders. The
Committee may accelerate payment of a Participant’s Account
to the extent necessary to comply with a domestic relations order
(as defined in Section 414(p)(1)(B) of the Code).
11.2 Limited Cashouts. The Committee
may accelerate payment of a Participant’s Account to the
extent that (i) the aggregate amount in the Participant’s
Account does not exceed the applicable dollar amount under Section
402(g)(1)(B) of the Code, (ii) the payment results in the
termination of the Participant’s entire interest in the Plan
and any plans that are aggregated with the Plan pursuant to Treas.
Reg. Section 1.409A-1(c)(2), and (iii) the Committee’s
decision to cash out the Participant’s Account is evidenced
in writing no later than the date of payment.
11.3 Payment of Employment Taxes.
The Committee may accelerate payment of all or a portion of a
Participant’s Account (i) to pay the Federal Insurance
Contributions Act (“FICA”) tax imposed under Sections
3010, 3121(a), and 3121(v)(2) of the Code (the “FICA
Amount”), or (ii) to pay the income tax at source on wages
imposed under Section 3401 of the Code or the corresponding
withholding provisions of applicable state, local, or foreign tax
laws as a result of the payment of the FICA Amount and the
additional income tax at source on wages attributable to the
pyramiding Section 3401 wages and taxes; provided, however, that
the total payment under this Section 11.3 shall not exceed
the FICA Amount and the income tax withholding related to the FICA
Amount.
11.4 Payment Upon Income Inclusion.
The Committee may accelerate payment of all or a portion of a
Participant’s Account to the extent that the Plan fails to
meet the requirements of Section 409A; provided that the amount
accelerated shall not exceed the amount required to be included in
income as a result of the failure to comply with Section
409A.
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11.5 Termination of the Plan. The
Committee may accelerate payment of all or a portion of a
Participant’s Account upon termination of the Plan in
accordance with Treas. Reg. Section
1.409A-3(j)(4)(ix).
11.6 Payment of State, Local, or Foreign
Taxes. The Committee may accelerate payment of all or a
portion of a Participant’s Account for:
(a) the payment of
state, local, or foreign tax obligations arising from participation
in the Plan that relate to an amount deferred under the Plan before
the amount is paid or made available to the Participant (the
“State, Local, and Foreign Tax Amount”); provided,
however, the accelerated payment amount shall not exceed the taxes
due as a result of participation in the Plan, or
(b) the payment of
income tax at source on wages imposed under Section 3401 of the
Code as a result of such payment and the payment of the additional
income tax at source on wages imposed under Section 3401 of the
Code attributable to the additional Section 3401 wages and taxes;
provided however, the accelerated payment amount shall not exceed
the aggregate of the State, Local, and Foreign Tax Amount and the
income tax withholding related to such amount.
11.7 Certain Offsets. The Committee
may accelerate payment of all or a portion of the
Participant’s Account to satisfy a debt of the Participant to
the Company or an Affiliate incurred in the ordinary course of the
service relationship between the Company and the Participant;
provided, however, the amount accelerated shall not exceed Five
Thousand and No/100 Dollars ($5,000.00) and the payment shall be
made at the same time and in the same amount as the debt otherwise
would have been due and collected from the
Participant.
11.8 Bona Fide Disputes as to Right to
Payment. The Committee may accelerate payment of all or a
portion of a Participant’s Account where the payment is part
of a settlement between the Company or an Affiliate and the
Participant of an arm’s length, bona fide dispute as to the
Participant’s right to the deferred amount.
11.9 Ethics or Conflicts of
Interest. The Committee may accelerate payment of all or a
portion of a Participant’s Account to comply with bona fide
foreign ethics or conflicts of interest law.
11.10 Federal Debt Collection Laws.
The Committee may accelerate payment of all of a portion of a
Participant’s Account to comply with federal debt collection
laws.
12. Payments
to Beneficiaries. Notwithstanding any other provision of the
Plan, the Committee may accelerate the payment of all or a portion
of a Participant’s Account in connection with the death,
Disability, or Unforeseeable Emergency of a Beneficiary who has
become entitled to payment of a Participant’s Account under
the Plan pursuant to Section 16.7 hereof. Payments made
pursuant to this Section
12 shall be subject to the same terms and conditions as
payments made to Participants pursuant to Section 9 hereof.
13. Section
162(m) of the Code. If the Committee reasonably anticipates
that if a payment were made as scheduled under the Plan it would
result in a loss of the Company’s tax deduction due to the
application of Section 162(m) of the Code, such payment can be
delayed and paid (a) during the Participant’s first taxable
year in which the Committee reasonably anticipates that the
Company’s tax deduction will not be limited or eliminated by
the application of Section 162(m) of the Code or (b) subject to
Section
9.4, during the
period beginning with the Participant’s Separation from
Service and ending on the later of the last day of the
Company’s taxable year in which the Participant separates
from service or the 15th day of the third month following the
Participant’s Separation from Service. Notwithstanding the
foregoing, no payment under the Plan may be deferred in accordance
with this Section
13 unless all
scheduled payments to the Participant that could be delayed in
accordance with Treas. Reg. Section 1.409A-2(b)(7)(i) are also
delayed.
14. Plan
Administration.
14.1 Administration by
Committee. The Plan shall be administered by the Committee
which shall have the authority to:
(a) construe and
interpret the Plan and apply its provisions;
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(b) promulgate, amend,
and rescind rules and regulations relating to the administration of
the Plan;
(c) authorize any
person to execute, on behalf of the Company, any instrument
required to carry out the purposes of the Plan;
(d) determine minimum
or maximum percentages or amounts that Participants may elect to
defer under the Plan;
(e) select, subject to
the limitations set forth in the Plan, those Employees who shall be
Eligible Employees;
(f) evaluate whether a
Participant who has requested payment from his or her Account on
account of an Unforeseeable Emergency has experienced an
Unforeseeable Emergency and the amount of any payment necessary to
satisfy the Participant’s emergency need;
(g) calculate deemed
investment gains and losses;
(h) interpret,
administer, reconcile any inconsistency in, correct any defect in,
and supply any omission in the Plan and any instrument, Election
Form, or agreement relating to the Plan; and
(i) exercise
discretion to make any and all other determinations which it
determines to be necessary or advisable for the administration of
the Plan.
14.2 Non-Uniform
Treatment. The Committee’s determinations under the
Plan need not be uniform and any such determinations may be made
selectively among the Participants. Without limiting the generality
of the foregoing, the Committee shall be entitled, among other
things, to make non-uniform and selective determinations with
regard to the terms or conditions of any Elective
Deferrals.
14.3 Committee
Decisions Final. Subject to Section 17, all decisions made by the
Committee pursuant to the provisions of the Plan shall be final and
binding on the Company and the Participants, unless such decisions
are determined by a court having jurisdiction to be arbitrary and
capricious.
14.4 Indemnification.
No member of the Committee or any designee shall be liable for any
action, failure to act, determination, or interpretation made in
good faith with respect to the Plan, except for any liability
arising from his or her own willful malfeasance, gross negligence,
or reckless disregard of his or her duties.
15. Amendment
and Termination. The Board may, at any time, and in its
discretion, alter, amend, modify, suspend, or terminate the Plan or
any portion thereof; provided, however, that no such amendment,
modification, suspension, or termination shall, without the consent
of a Participant, adversely affect such Participant’s rights
with respect to amounts credited to or accrued in his or her
Account, and provided, further, that, no payment of benefits shall
occur upon termination of the Plan unless the requirements of
Section 409A have been met.
16. Miscellaneous.
16.1 No Employment or
Other Service Rights. Nothing in the Plan or any instrument
executed pursuant hereto shall confer upon any Participant any
right to continue to serve the Company or an Affiliate or interfere
in any way with the right of the Company or any Affiliate to
terminate the Participant’s employment or service at any time
with or without notice and with or without cause.
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16.2 Tax
Withholding. The Company and its Affiliates shall have the
right to deduct from any amounts credited or otherwise payable
under the Plan any federal, state, local, or other applicable taxes
required to be withheld.
16.3 Governing
Law. The Plan shall be administered, construed, and governed
in all respects under and by the laws of Texas, without reference
to the principles of conflicts of law (except and to the extent
preempted by applicable Federal law).
16.4 Section
409A. The Company intends that the Plan comply with the
requirements of Section 409A, and the Plan shall be operated and
interpreted consistent with that intent. Notwithstanding the
foregoing, the Company makes no representation that the Plan
complies with Section 409A and shall have no liability to any
Participant for any failure to comply with Section 409A. This Plan
shall constitute an “account balance plan” as defined
in Treas. Reg. Section 31.3121(v)(2)-1(c)(1)(ii)(A). For purposes
of Section 409A, all amounts deferred under this Plan shall be
aggregated with amounts deferred under other account balance
plans.
16.5 General
Assets. All amounts provided under the Plan shall be paid
from the general assets of the Company and no separate fund shall
be established to secure payment.
16.6 No
Warranties. Neither the Company nor the Committee warrants
or represents that the value of any Participant’s Account
will increase. Each Participant assumes the risk in connection with
the deemed investment of his or her Account.
16.7 Beneficiary
Designation. Each Participant under the Plan may from time
to time name any Beneficiary or Beneficiaries to receive the
Participant’s interest in the Plan in the event of the
Participant’s death. Each designation will revoke all prior
designations by the same Participant, shall be in a form reasonably
prescribed by the Committee, and shall be effective only when filed
by the Participant in writing with the Company during the
Participant’s lifetime. If a Participant fails to designate a
Beneficiary, then the Participant’s designated Beneficiary
shall be deemed to be the Participant’s estate.
16.8 No
Assignment. Neither a Participant nor any other person shall
have any right to sell, assign, transfer, pledge, anticipate, or
otherwise encumber, transfer, hypothecate, or convey any amounts
payable hereunder prior to the date that such amounts are paid
(except for the designation of beneficiaries pursuant to
Section
16.7).
16.9 Expenses.
The costs of administering the Plan shall be paid by the
Company.
16.10 Severability.
If any provision of the Plan is held to be invalid, illegal, or
unenforceable, whether in whole or in part, such provision shall be
deemed modified to the extent of such invalidity, illegality, or
unenforceability and the remaining provisions shall not be
affected.
16.11 Headings and
Subheadings. Headings and subheadings in the Plan are for
convenience only and are not to be considered in the construction
of the provisions hereof.
17.1 Filing a
Claim. Any Participant or other person claiming an interest
in the Plan (the “Claimant”) may file a claim in
writing with the Committee. The Committee shall review the claim
itself or appoint an individual or entity to review the
claim.
17.2 Claim
Decision. The Claimant shall be notified within ninety (90)
days after the claim is filed whether the claim is approved or
denied, unless the Committee determines that special circumstances
beyond the control of the Committee require an extension of time,
in which case the Committee may have up to an additional ninety
(90) days to process the claim. If the Committee determines that an
extension of time for processing is required, the Committee shall
furnish written or electronic notice of the extension to the
Claimant before the end of the initial ninety (90) day period. Any
notice of extension shall describe the special circumstances
necessitating the additional time and the date by which the
Committee expects to render its decision.
10
17.3 Notice of
Denial. If the Committee denies the claim, it must provide
to the Claimant, in writing or by electronic communication, a
notice which includes:
(a) The specific
reasons for the denial;
(b) Specific reference
to the pertinent Plan provisions on which such denial is
based;
(c) A description of
any additional material or information necessary for the Claimant
to perfect his or her claim and an explanation of why such material
or information is necessary;
(d) A description of
the Plan’s appeal procedures and the time limits applicable
to such procedures, including a statement of the Claimant’s
right to bring a civil action under Section 502(a) of ERISA
following a denial of the claim on appeal; and
(e) If an internal
rule was relied on to make the decision, either a copy of the
internal rule or a statement that this information is available at
no charge upon request.
17.4 Appeal
Procedures. A request for appeal of a denied claim must be
made in writing to the Committee within sixty (60) days after
receiving notice of denial. The decision on appeal will be made
within sixty (60) days after the Committee’s receipt of a
request for appeal, unless special circumstances require an
extension of time for processing, in which case a decision will be
rendered not later than one hundred twenty (120) days after receipt
of a request for appeal. A notice of such an extension must be
provided to the Claimant within the initial sixty (60) day period
and must explain the special circumstances and provide an expected
date of decision. The reviewer shall afford the Claimant an
opportunity to review and receive, without charge, all relevant
documents, information and records and to submit issues and
comments in writing to the Committee. The reviewer shall take into
account all comments, documents, records, and other information
submitted by the Claimant relating to the claim regardless of
whether the information was submitted or considered in the initial
benefit determination.
17.5 Notice of Decision
on Appeal. If the Committee denies the appeal, it must
provide to the Claimant, in writing or by electronic communication,
a notice which includes:
(a) The specific
reasons for the denial;
(b) Specific
references to the pertinent Plan provisions on which such denial is
based;
(c) A statement that
the Claimant may receive on request all relevant records at no
charge;
(d) A description of
the Plan’s voluntary procedures and deadlines, if
any;
(e) A statement of the
Claimant’s right to sue under Section 502(a) of ERISA;
and
(f) If an internal
rule was relied on to make the decision, either a copy of the
internal rule or a statement that this information is available at
no charge upon request.
17.6 Claims Procedures
Mandatory. The internal claims procedures set forth in this
Section
17 are mandatory.
If a Claimant fails to follow these claims procedures or to timely
file a request for appeal in accordance with this Section 17, the denial of the Claim
shall become final and binding on all persons for all
purposes.
* * * *
* *
11