Exhibit 10.2

HORNBECK OFFSHORE SERVICES, INC.

DEFERRED COMPENSATION PLAN

Effective as of July 10, 2007

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TABLE OF CONTENTS

 

          Page

ARTICLE I - ESTABLISHMENT AND PURPOSE OF THE PLAN

   1

1.01

   Establishment of the Plan    1

1.02

   Purpose    1

ARTICLE II - DEFINITIONS

   1

ARTICLE III - ELIGIBILITY AND PARTICIPATION

   10

3.01

   Eligibility    10

3.02

   Cessation of Eligible Employee or Director Status    10

3.03

   Deferred Compensation - General Rules    10

3.04

   Deferred Compensation - Amounts    12

3.05

   Matching Contribution    13

3.06

   Discretionary Contribution    13

3.07

   FICA and Other Taxes    14

ARTICLE IV - BENEFITS AND VALUATION OF ACCOUNTS

   14

4.01

   Withholding and Crediting of Annual Deferral Amounts    14

4.02

   Employer Matching Contribution    15

4.03

   Employer Discretionary Contribution    15

4.04

   Periodic Determination of Participant's Deferred Account, Matching
Contribution Account and Discretionary Contribution Account    15

4.05

   Periodic Determination of Participant's Deferred Stock Account    17

4.06

   Vesting    18

4.07

   Distribution Elections    19

4.08

   Termination Benefit    20

4.09

   Retirement Benefit    20

4.10

   Disability    21

4.11

   Death    21

4.12

   Change Of Control Benefit    21

4.13

   Withdrawal Payout/Suspensions for Unforeseeable Emergencies    22

4.14

   Designation of Beneficiaries    23

4.15

   Forfeiture for Cause    24

4.16

   Unclaimed Benefits    24

ARTICLE V - SOURCE OF PAYMENT OF BENEFITS

   25

5.01

   Source of Funds    25

5.02

   Establishment of a Trust    25

5.03

   Interrelationship of the Plan and the Trust    26

5.04

   Distributions From the Trust    26

5.05

   Purchase of Insurance Policies or Contracts    26

 

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ARTICLE VI - ADMINISTRATION

   26

6.01

   Appointment of Committee    26

6.02

   Compensated Expenses of the Committee    26

6.03

   Secretary and Agents of the Committee    27

6.04

   Actions of Committee    27

6.05

   Authority of Committee    28

6.06

   General Administrative Powers    28

6.07

   Plan Administrator    28

6.08

   Duties of Administrative Personnel    28

6.09

   Indemnity    28

6.10

   Review Procedures Under ERISA    29

ARTICLE VII - PARTICIPATION BY EMPLOYERS

   32

7.01

   Participation in Plan by Affiliated Company    32

7.02

   Rights and Obligations of the Company and the Employers    32

7.03

   Withdrawal from Plan    32

7.04

   Continuance by Successor Company    32

ARTICLE VIII - TERMINATION OF PLAN, AMENDMENT OR MODIFICATION

   32

8.01

   Termination of Plan    32

8.02

   Amendment    33

ARTICLE IX - MISCELLANEOUS PROVISIONS

   33

9.01

   Status of Plan    33

9.02

   Unsecured General Creditor    34

9.03

   Employer's Liability    34

9.04

   No Right to Continue in Employment    34

9.05

   Binding Effect    34

9.06

   Furnishing Information    34

9.07

   Integrated Plan    34

9.08

   Controlling Law    34

9.09

   Expenses    34

9.10

   Notice    35

9.11

   Inalienability of Benefits    35

9.12

   Court Order    35

9.13

   Spouse's Interest    36

9.14

   Withholding    36

9.15

   Validity    36

9.16

   Incompetent    36

9.17

   Distribution in the Event of Income Inclusion Under 409A    36

9.18

   Deduction Limitation on Benefit Payments    36

9.19

   Obligations to the Company    37

 

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HORNBECK OFFSHORE SERVICES, INC.

DEFERRED COMPENSATION PLAN

ARTICLE I

ESTABLISHMENT AND PURPOSE OF THE PLAN

 

1.01 Establishment of the Plan. Hornbeck Offshore Services, Inc. (the “Company”)
desires to adopt and establish an unfunded deferred compensation plan for the
benefit of its non-employee Directors and a select group of its key management
and highly compensated employees. Effective as of July 10, 2007 (the “Effective
Date”), the Company has by execution of this document created a plan which shall
be known as the “Hornbeck Offshore Services, Inc. Deferred Compensation Plan.”

 

1.02 Purpose. The purpose of the Plan is to provide deferred compensation and
retirement income to non-employee Directors and a select group of key management
personnel and highly compensated employees who contribute materially to the
continued growth, development and future business success of the Company.

It is the intention of the Company that the Plan meet all of the requirements
necessary or appropriate to qualify it as a non-qualified, unfunded, unsecured
plan of deferred compensation for 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, and all Plan provisions shall be interpreted accordingly.

ARTICLE II

DEFINITIONS

 

2.01 “Account” or “Accounts” shall mean all or any of the Deferred Account and
the Deferred Stock Account maintained under Section 4.01, the Matching
Contribution Account and the Discretionary Contribution Account maintained under
Section 4.02 or any other Section of the Plan to reflect a Participant’s
interest (or the undistributed interest of a Beneficiary) under the Plan to the
extent any one or more of such Accounts have been created for a Participant or
Beneficiary. Each Account shall be a bookkeeping entry only and shall be
utilized solely as a devise for the measurement and determination of the amounts
to be paid to a Participant, or his designated Beneficiary, pursuant to this
Plan.

 

2.02

“Annual Installment Method” shall be an annual installment payment over the
number of years selected by the Participant in accordance with this Plan,
calculated as follows: (i) for the first annual installment, the Participant’s
vested Account shall be calculated as of the close of business on or around the
Participant’s Benefit Distribution Date, as determined by the Committee in its
sole discretion, and (ii) for remaining annual installments, the Participant’s
vested Account shall be calculated on every anniversary of such calculation
date, as applicable. Each annual installment shall be calculated by multiplying
the balance of the Participant’s Account attributable to the Participant’s

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Deferred Account, Deferred Stock Account, Matching Contribution Account and
Discretionary Contribution Account by a fraction, the numerator of which is one
and the denominator of which is the remaining number of annual payments due the
Participant. By way of example, if the Participant elects a ten (10) year Annual
Installment Method, the first payment shall be 1/10 of the vested Account,
calculated as described in this definition. The following year, the payment
shall be 1/9 of the vested Account, calculated as described in this definition.

 

2.03 “Base Salary” shall mean the annual base rate of cash compensation paid by
the Company to or for the benefit of a Participant for services rendered or
labor performed during any calendar year while a Participant, including base pay
a Participant could have received in cash in lieu of (A) deferrals pursuant to
Section 3.03 and (B) contributions made on his behalf to any retirement plan
which is qualified under section 401 of the Code and which is maintained by the
Company or any affiliated company, or to any cafeteria plan under section 125 of
the Code which is maintained by the Company or any affiliated company, if such
plans exist.

 

2.04 “Benefit Distribution Date” shall mean the date that triggers distribution
of a Participant’s vested Account. A Participant’s Benefit Distribution Date
shall be determined upon the occurrence of the earliest of the following dates:

 

  (a) If the Participant experiences a Termination of Employment, his or her
Benefit Distribution Date shall be the date on which the Participant experiences
a Termination of Employment; or

 

  (b) The date of the Participant’s Retirement; provided, however, in the event
the Participant has changed his or her retirement benefit election in accordance
with Section 4.09, his or her Benefit Distribution Date shall be postponed in
accordance with Section 4.09, as applicable; or

 

  (c) The date of the Participant’s death; or

 

  (d) The date on which the Participant becomes Disabled; or

 

  (e) The date on which the Company experiences a Change of Control, as
determined by the Committee in its sole discretion, if (i) the Participant has
elected to receive a distribution of his Account in connection with a Change of
Control Benefit, as set forth in Section 4.12(a) below, and (ii) if a Change of
Control occurs prior to the Participant’s Termination of Employment, Retirement,
death or Disability; or

 

  (f) The date, if any, elected by the Participant in accordance with
Section 4.07 below.

 

2.05 “Beneficiary” shall mean any person or entity, designated in accordance
with Section 4.14, entitled to receive benefits which are payable upon or after
a Participant’s death pursuant to the terms of this Plan.

 

2.06 “Board” shall mean the Board of Directors of the Company, as from time to
time constituted.

 

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2.07 “Bonus Compensation” shall mean, in addition to Base Salary, any cash
compensation earned by a Participant for services rendered during a Plan Year
under any cash incentive or other bonus plan maintained by the Company.

 

2.08 “Change of Control” means the occurrence of any of the following events:

 

  (a) Change in the ownership of a corporation.

 

  (1) A change in the ownership of a corporation occurs on the date that any one
person, or more than one person acting as a group (as defined in paragraph (2)),
acquires ownership of stock of the corporation that, together with stock held by
such person or group, constitutes more than 50 percent of the total fair market
value or total voting power of the stock of such corporation. However, if any
one person or more than one person acting as a group, is considered to own more
than 50 percent of the total fair market value or total voting power of the
stock of a corporation, the acquisition of additional stock by the same person
or persons is not considered to cause a change in the ownership of the
corporation (or to cause a change in the effective control of the corporation
(within the meaning of (b), below)). An increase in the percentage of stock
owned by any one person, or persons acting as a group, as a result of a
transaction in which the corporation acquires its stock in exchange for property
will be treated as an acquisition of stock for purposes of this section. This
section (a) applies only when there is a transfer of stock of a corporation (or
issuance of stock of a corporation) and stock in such corporation remains
outstanding after the transaction (see section (c) below for rules regarding the
transfer of assets of a corporation).

 

  (2) For purposes of paragraph (a), persons will not be considered to be acting
as a group solely because they purchase or own stock of the same corporation at
the same time, or as a result of the same public offering. However, persons will
be considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the corporation. If a person, including an
entity, owns stock in both corporations that enter into a merger, consolidation,
purchase or acquisition of stock, or similar transaction, such shareholder is
considered to be acting as a group with other shareholders in a corporation
prior to the transaction giving rise to the change and not with respect to the
ownership interest in the other corporation.

 

  (3)

For purposes of determining stock ownership, section 318(a) of the Code applies.
Stock underlying a vested option is considered owned by the individual who holds
the vested option (and the stock underlying an unvested option is not considered
owned by the individual who holds the unvested option). For purposes of the
preceding sentence, however, if a vested option is exercisable for stock that is
not substantially vested (as

 

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defined by Treas. Reg. § 1.83-3(b) and (j)), the stock underlying the option is
not treated as owned by the individual who holds the option. In addition, mutual
and cooperative corporations are treated as having stock for purposes of this
paragraph (3).

 

  (b) Change in the effective control of the corporation.

 

  (1) Notwithstanding that a corporation has not undergone a change in ownership
under section (a) above, a change in the effective control of a corporation
occurs on the date that either:

 

  (i) Any one person, or more than one person acting as a group (as determined
under paragraph (4)), acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons)
ownership of stock of the corporation possessing 35 percent or more of the total
voting power of the stock of such corporation; or

 

  (ii) A majority of members of the corporation’s board of directors is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the corporation’s board of directors
prior to the date of the appointment or election, provided that for purposes of
this paragraph (2) the term corporation refers solely to the relevant
corporation for which no other corporation is a majority shareholder (for
example, if Corporation A is a publicly held corporation with no majority
shareholder, and Corporation A is the majority shareholder of Corporation B,
which is the majority shareholder of Corporation C, the term corporation for
purposes of this paragraph (2) would refer solely to Corporation A).

In the absence of an event described in paragraph (i) or (ii), a change in the
effective control of a corporation will not have occurred.

 

  (2) A change in effective control also may occur in any transaction in which
either of the two corporations involved in the transaction has a Change in
Control under (a) or (c). Thus, for example, assume Corporation P transfers more
than 40 percent of the total gross fair market value of its assets to
Corporation O in exchange for 35 percent of O’s stock. P has undergone a change
in ownership of a substantial portion of its assets under (c) and O has a change
in effective control under this (b).

 

  (3) If any one person, or more than one person acting as a group, is
considered to effectively control a corporation (within the meaning of this
(b)), the acquisition of additional control of the corporation by the same
person or persons is not considered to cause a change in the effective control
of the corporation (or to cause a change in the ownership of the corporation
within the meaning of (a)).

 

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  (4) Persons will not be considered to be acting as a group solely because they
purchase or own stock of the same corporation at the same time, or as a result
of the same public offering. However, persons will be considered to be acting as
a group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the corporation. If a person, including an entity, owns stock in both
corporations that enter into a merger, consolidation, purchase or acquisition of
stock, or similar transaction, such shareholder is considered to be acting as a
group with other shareholders in a corporation only with respect to the
ownership in that corporation prior to the transaction giving rise to the change
and not with respect to the ownership interest in the other corporation.

 

  (5) For purposes of determining stock ownership, see (a)(3) above.

 

  (c) Change in the ownership of a substantial portion of a corporation’s
assets.

 

  (1) A change in the ownership of a substantial portion of a corporation’s
assets occurs on the date that any one person, or more than one person acting as
a group (as determined in paragraph (3)), acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person
or persons) assets from the corporation that have a total gross fair market
value equal to or more than 40 percent of the total gross fair market value of
all of the assets of the corporation immediately prior to such acquisition or
acquisitions. For this purpose, gross fair market value means the value of the
assets of the corporation, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such assets.

 

  (2) There is no Change in Control Event under this (c) when there is a
transfer to an entity that is controlled by the shareholders of the transferring
corporation immediately after the transfer, as provided in this paragraph (2). A
transfer of assets by a corporation is not treated as a change in the ownership
of such assets if the assets are transferred to -

 

  (i) A shareholder of the corporation (immediately before the asset transfer)
in exchange for or with respect to its stock;

 

  (ii) An entity, 50 percent or more of the total value or voting power of which
is owned, directly or indirectly, by the corporation;

 

  (iii) A person, or more than one person acting as a group, that owns, directly
or indirectly, 50 percent or more of the total value or voting power of all the
outstanding stock of the corporation; or

 

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  (iv) An entity, at least 50 percent of the total value or voting power of
which is owned, directly or indirectly, by a person described in paragraph
(iii).

For purposes of this paragraph (2) and except as otherwise provided, a person’s
status is determined immediately after the transfer of the assets. For example,
a transfer to a corporation in which the transferor corporation has no ownership
interest before the transaction, but which is a majority-owned subsidiary of the
transferor corporation after the transaction is not treated as a change in the
ownership of the assets of the transferor corporation.

 

  (3) Persons will not be considered to be acting as a group solely because they
purchase assets of the same corporation at the same time, or as a result of the
same public offering. However, persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of assets, or similar business
transaction with the corporation. If a person, including an entity shareholder,
owns stock in both corporations that enter into a merger, consolidation,
purchase or acquisition of stock, or similar transaction, such shareholder is
considered to be acting as a group with other shareholders in a corporation only
to the extent of the ownership in that corporation prior to the transaction
giving rise to the change and not with respect to the ownership interest in the
other corporation.

 

  (4) For purposes of determining stock ownership, see (a)(3) above.

 

2.09 “Code” shall mean the Internal Revenue Code of 1986, as amended from time
to time. References to any section of the Internal Revenue Code shall include
any successor provision thereto.

 

2.10 “Committee” shall mean the committee appointed in accordance with Article
VI hereof. If no Committee is appointed pursuant to Article IV hereof,
“Committee” shall mean the Board.

 

2.11 “Common Stock” shall mean the Common Stock, par value $.01 per share, of
the Company.

 

2.12 “Company” shall mean Hornbeck Offshore Services, Inc.

 

2.13 “Compensation” shall mean Base Salary, Bonus Compensation, Restricted Stock
Unit Awards and/or Director Fees.

 

2.14 “Deferred Account” shall mean the separate bookkeeping account established
and maintained by the Company to reflect the amount of Compensation deferred by
the Participant pursuant to Section 3.03 hereof, as adjusted in accordance with
Article IV hereof. A Participant shall have a 100% non-forfeitable interest in
his Deferred Account at all times.

 

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2.15 “Deferred Stock Account” shall mean the separate bookkeeping account
established and maintained by the Company to reflect the amount of Compensation
related to any shares of Common Stock the Participant is entitled to receive as
a result of the vesting of a right to receive Common Stock pursuant to a
Restricted Stock Unit Award deferred by the Participant pursuant to Section 3.03
hereof, as adjusted in accordance with Article IV hereof. A Participant shall
have a 100% non-forfeitable interest in his Deferred Stock Account at all times.

 

2.16 “Deferred Compensation Agreement” shall mean the form, which may be in
electronic format, established from time to time by the Committee, or its
designee, that an Eligible Employee completes, signs and returns to the
Committee in order to become a Participant in the Plan and to make any
applicable elections under the Plan.

 

2.17 “Director” shall mean a member of the Board and any individual designated
as an “Advisory Director” by the Committee.

 

2.18 “Director Fees” shall mean the annual cash compensation paid to a Director
for his service on or to the Board, including, but not limited to, annual
retainer fees and meeting fees.

 

2.19 “Disabled” or “Disability” shall mean the determination that a Participant:

 

  (a) is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, or

 

  (b) is, by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than 3 months under an accident and health
plan covering employees of his or her Employer.

 

2.20 “Discretionary Contribution” shall mean the amount the Company contributes
to the Plan on behalf of any Participant, pursuant to the provisions of
Section 3.06 hereof.

 

2.21 “Discretionary Contribution Account” shall mean the separate account
maintained for each Participant to record the Discretionary Contribution made to
the Plan on behalf of such Participant pursuant to Section 3.06 hereof, as
adjusted in accordance with Article IV hereof.

 

2.22 “ Effective Date” shall mean July 10, 2007.

 

2.23 “Eligible Employee” shall mean Employees who are selected by the Chief
Executive Officer or by the Committee to be eligible to participate in the Plan
in accordance with Section 3.01, and who, because of their positions and
responsibilities, contribute materially to the continued growth, development and
future business success of the Company, or a segment or subsidiary thereof, or
are charged with the overall management of the daily operating activities of the
Company, or a segment or subsidiary thereof.

 

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2.24 “Employee” shall mean a person who is an employee of an Employer.

 

2.25 “Employer” shall mean the Company and/or any of its subsidiaries (now in
existence or hereafter formed or acquired) that have been selected by the Board
to participate in the Plan.

 

2.26 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time. References to any section of ERISA shall include any
successor provision thereto.

 

2.27 “Fair Market Value” shall mean with respect to the Common Stock, as of any
date, (i) if the Common Stock is listed or admitted to trade on a national
securities exchange, the closing price of the Common Stock on the composite tape
of the principal national securities exchange on which the Common Stock is so
listed or admitted to trade, on such date or, if there is no trading in s the
Common Stock on such date, then the closing price of the Common Stock as quoted
on such composite tape on the next preceding date on which there was trading in
the Common Stock, as published in The Wall Street Journal or such other source
as the Committee or the Board deems reliable; (ii) if the Common Stock is not
listed or admitted to trade on a national securities exchange, then the closing
price of the Common Stock as quoted on the National Market System of the NASD;
(iii) if the Common Stock is not listed or admitted to trade on a national
securities exchange or the National Market System of the NASD, the mean between
the bid and asked price for the Common Stock on such date, as furnished by the
NASD through NASDAQ or a similar organization if NASDAQ is no longer reporting
such information; or (iv) if the Common Stock is not listed or admitted to trade
on a national securities exchange or the National Market System of the NASD and
if bid and asked prices for the Common Stock are not so furnished by the NASD or
a similar organization, the value established by the Board. Fair market value
shall be determined without regard to any restriction other than a restriction
which, by its terms, will never lapse.

 

2.28 “Matching Contribution” shall mean the amount the Company contributes to
the Plan on behalf of any Participant, pursuant to the provisions of
Section 3.05 hereof.

 

2.29 “Matching Contribution Account” shall mean the separate account maintained
for each Participant to record the Matching Contribution made to the Plan on
behalf of such Participant pursuant to Section 3.05 hereof, as adjusted in
accordance with the provisions of Article IV hereof.

 

2.30 “Participant” shall mean an Eligible Employee or Director who becomes a
participant in the Plan pursuant to Article III hereof and any former Eligible
Employee or Director who is entitled to benefits under the Plan.

 

2.31 “Plan” shall mean the Hornbeck Offshore Services, Inc. Deferred
Compensation Plan as set forth in this document, and as hereafter amended.

 

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2.32 “Plan Year” shall mean the twelve (12) consecutive month period ending on
December 31. For the first Plan Year there shall be an initial, short Plan Year
from July 10, 2007 to December 31, 2007.

 

2.33 “Qualified Plan” shall mean the Hornbeck Offshore Services, Inc. 401(k)
Plan as in effect from time to time.

 

2.34 “Retirement” shall mean, with respect to an Employee, Termination of
Employment with all Employers for any reason other than death or Disability, as
determined in accordance with section 409A of the Code and related Treasury
guidance and regulations, on or after the earlier of the attainment of (a) age
sixty-five (65), or (b) age sixty (60) with ten (10) Years of Service; and shall
mean with respect to a Director who is not an Employee, separation from service
as a Director with all Employers on or after five years of service. If a
Participant is both an Employee and a Director, Retirement shall not occur until
he or she Retires as both an Employee and a Director.

 

2.35 “Restricted Stock Awards” shall mean any shares of Common Stock granted to
a Participant that are subject to restrictions or substantial risk of
forfeiture.

 

2.36 “Restricted Stock Unit Awards” shall mean any unsecured promise of the
Company to issue shares of Common Stock to a Participant at some point in time
in the future which is subject to vesting or substantial risk of forfeiture.

 

2.37 “Termination of Employment” shall mean the separation from service with all
Employers, voluntarily or involuntarily, for any reason other than Retirement,
Disability or death, as determined in accordance with section 409A of the Code
and related Treasury guidance and regulations. If a Participant is a Director a
Termination of Employment shall occur when the Participant no longer serves on,
or advises in the case of an “Advisory Director,” the Board. If a Participant is
both an Employee and a Director, a Termination of Employment shall occur only
upon the termination of the last position held.

 

2.38 “Unforeseeable Emergency” shall mean a severe financial hardship of the
Participant resulting from (i) an illness or accident of the Participant, the
Participant’s spouse, or the Participant’s dependent (as defined in section
152(a) of the Code), (ii) a loss of the Participant’s property due to casualty,
or (iii) 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.

 

2.39 “Year of Vesting Service” shall mean a Plan Year during which the
Participant completes not less than 1,000 hours of service for an Employer or a
predecessor; provided, however, that such Participant’s service prior to the
Effective Date of this Plan shall not be counted in determining Years of Vesting
Service. With respect to a Director, “Year of Vesting Service” shall mean each
year an individual serves on or advises the Board.

 

2.40 The words “herein,” “hereof,” and “hereunder” shall refer to the Plan.

 

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ARTICLE III

ELIGIBILITY AND PARTICIPATION

 

3.01 Eligibility. Each Plan Year, the Chief Executive Officer or the Committee
shall select those Employees of an Employer who shall be Eligible Employees for
such Plan Year. A Director shall be eligible to participate in the Plan as of
the Effective Date or, if later, the date that he first serves as a Director.
Any Eligible Employee or Director shall become a Participant in the Plan by
making an election and executing a Deferred Compensation Agreement as set forth
in Section 3.03 below. The determination as to the eligibility of any individual
to participate in the Plan for any Plan Year, and the termination of such
individual’s eligibility to continue to participate in the Plan for any Plan
Year, shall be in the sole and absolute discretion of the Committee or its
designee, whose decision in that regard shall be conclusive and binding for all
purposes hereunder.

 

3.02 Cessation of Eligible Employee or Director Status. If any Participant does
not incur a Termination of Employment but ceases to be an Eligible Employee or
Director, then, during the period that such Participant is not an Eligible
Employee or Director: (i) such Participant’s deferred compensation election
under Section 3.03 hereof shall cease and such Participant shall not receive any
further allocation of Matching Contributions or Discretionary Contributions, if
any, under the Plan; and (ii) such Participant’s Account shall continue to be
adjusted as provided in Sections 4.04 and 4.05 hereof.

 

3.03 Deferred Compensation - General Rules.

 

  (a) An Eligible Employee or Director may elect, pursuant to a Deferred
Compensation Agreement entered into with the Company, to participate in the Plan
and to make an initial election to defer the receipt of a portion of the
Compensation otherwise payable to him by the Company. All elections made under
this Section 3.03 shall be (i) made in writing on a Deferred Compensation
Agreement or such other form as may be prescribed by the Committee or its
designee, (ii) filed with the Committee or its designee pursuant to procedures
established by the Committee, and (iii) irrevocable for the Plan Year for which
made. The Deferred Compensation Agreement must be signed by the Participant and
delivered to the Company at such time as required by the Committee or its
designee. For each Plan Year other than the Plan Year during which he first
becomes a Participant, an Eligible Employee’s or Director’s election to defer
receipt of Compensation, and contribute to his Deferred Account or Deferred
Stock Account established under this Plan, Compensation must be made prior to
the first day of the Plan Year in which such Compensation is earned.

 

  (b)

With respect to the first Plan Year an Employee is eligible to participate, the
Eligible Employee must execute his Deferred Compensation Agreement and make his
initial election within thirty (30) days after he first becomes eligible to
participate in the Plan, or within such other deadline as may be established by
the Committee, in its sole discretion, or such Participant will not be allowed
to

 

10

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defer Compensation for the Plan Year; provided, however, that, if an Eligible
Employee’s first date of eligibility is the first day of a Plan Year, the
Eligible Employee must make his first deferral election prior to the first day
of such Plan Year. Notwithstanding the foregoing, if Compensation is earned
based on a specified performance period, such as a Plan Year, and a deferral
election is made in the first year of eligibility but after the beginning of
such performance period, such Compensation shall, for purposes of such deferral
election, be deemed earned ratably throughout the performance period so that the
deferral election applicable to such Compensation shall be applicable to the
portion of the Compensation earned after the effective date of the deferral
election. That portion of such Compensation to which such deferral election
shall relate shall be determined by multiplying the total amount of such
Compensation by a fraction the numerator of which is the number of days
remaining in the performance period after the effective date of the deferral
election and the denominator of which is the total number of days in the
applicable performance period.

 

 

(c)

The rate of deferred compensation, if any, which each Participant elects for his
Compensation must be in whole percentage points or dollar amounts. An initial
election: (i) shall be made in accordance with this Section 3.03; (ii) shall be
effective as soon as practicable after the executed election form is delivered
to the Committee or its designee; (iii) shall only apply with respect to
Compensation that relates to services performed subsequent to the effective date
of the election; (iv) shall be irrevocable (except as provided in
Section 3.03(f) hereof); and (v) shall remain in force for the balance of the
Plan Year in which the Participant’s participation begins. If so specified on a
Deferred Compensation Agreement, a deferred compensation election will carry
over from Plan Year to Plan Year and, in that case, a Participant will complete
a new election only for a Plan Year for which he wishes to change his deferral
election. Notwithstanding the foregoing, if a Participant receives a legally
binding right to a payment which is payable in a Plan Year subsequent to the
Plan Year in which such legally binding right is received, and such legally
binding right is subject to a forfeiture restriction which is based on the
Participant’s continued service for a period of at least twelve (12) months from
the date the Participant obtains the legally binding right to the compensation,
the Participant may make an election to defer such compensation on or before the
thirtieth (30th) day after the Participant obtains the legally binding right to
such compensation, provided that the election is made at least twelve
(12) months in advance of the earliest date at which the forfeiture condition
could lapse.

 

  (d)

If a Participant is entitled to receive “performance-based compensation,” the
Committee may, in its sole discretion, determine that an irrevocable deferral
election pertaining to such compensation may be made by timely delivering an
Deferred Compensation Agreement to the Committee or its designee, in accordance
with its rules and procedures, no later than six (6) months before the end of
the applicable performance period. “Performance-based compensation” shall be
compensation, the payment or amount of which is contingent on pre-established

 

11

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organizational or individual performance criteria, which satisfies the
requirements of section 409A Code and related Treasury guidance or regulations.
In order to be eligible to make a deferral election for performance-based
compensation, a Participant must perform services continuously from a date no
later than the date upon which the performance criteria for such compensation
are established through the date upon which the Participant makes a deferral
election for such compensation. In no event shall an election to defer
performance-based compensation be permitted after such compensation has become
both substantially certain to be paid and readily ascertainable.

 

  (e) The Committee or its designee shall establish and communicate to
Participants uniform and nondiscriminatory procedures for the election of
deferred compensation and may, pursuant to the provisions of Article VII, change
said procedures at such times and in such manner as the Committee or its
designee may determine to be necessary or desirable.

 

  (f) A Participant may not change (increase or decrease) a deferred
compensation election for a Plan Year once that Plan Year has begun.
Notwithstanding the foregoing, a Participant’s deferral election under this Plan
will be automatically revoked by the Committee or its designee if the
Participant receives a distribution on account of an Unforeseeable Emergency as
provided in Section 4.13, or receives a hardship distribution from a plan
qualified under section 401(a) of the Code which includes a cash or deferred
arrangement as described in section 401(k) of the Code. A Participant whose
deferral election is discontinued during a Plan Year may not resume a deferred
compensation election until the Plan Year following the Plan Year with respect
to which the discontinuance occurred. Termination of Employment by a Participant
or the cessation of participation for any reason, including death, Disability or
Retirement, shall be deemed to revoke any election then in effect, effective
immediately following the close of the pay period in which such termination or
cessation occurs.

 

3.04 Deferred Compensation - Amounts.

 

  (a) Base Salary Deferrals. A Participant may elect to defer receipt of up to
80% of his Base Salary for any Plan Year. Deferrals of Base Salary under this
Plan shall be made before elective deferrals or contributions of Base Salary
under any other plan maintained by the Company. Base Salary deferrals made by a
Participant shall be credited to such Participant’s Deferred Account as of the
date the Base Salary deferred would have been received by such Participant in
cash had no deferral been made pursuant to this Section 3.04.

 

  (b)

Bonus Compensation Deferrals. A Participant may elect to defer receipt of up to
80% of his Bonus Compensation for any Plan Year. If Bonus Compensation for a
Plan Year is payable in more than one future Plan Year under the applicable
bonus or incentive pay plan, a Participant shall also make a separate election
under this Section 3.04 with respect to such Bonus Compensation for each Plan

 

12

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Year in which such Bonus Compensation is payable. Deferrals of Bonus
Compensation under this Plan shall be made before elective deferrals or
contributions of Bonus Compensation under any other plan maintained by the
Company. Bonus Compensation deferrals made by a Participant shall be credited to
such Participant’s Deferred Account as of the date the Bonus Compensation
deferred would have been received by such Participant had no deferral been made
pursuant to this Section 3.04.

 

  (c) Director Fees. A Director may elect to defer receipt of up to 100% of his
Director Fees for any Plan Year. Deferral of Director Fees made by a Participant
shall be credited to such Participant’s Deferred Account as of the date the
Director Fees deferred would have been received by such Participant in cash had
no deferral been made pursuant to this Section 3.04.

 

  (d) Restricted Stock Unit Award Deferrals. A Participant may elect to defer up
to 100% of the Restricted Stock Units the Participant is entitled to receive as
a result of the vesting of a right to receive Common Stock pursuant to a
Restricted Stock Unit Award. The number of Restricted Stock Units deferred
hereunder shall be credited to such Participant’s Deferred Stock Account as of
the date the shares of Common Stock that vested pursuant to the terms of a
Restricted Stock Unit Award would have otherwise been issued, as applicable, had
no deferral been made pursuant to this Section 3.04.

 

  (e) Minimum Limit. A Participant’s election to defer his Compensation must
reasonably be expected to result in a minimum deferral of One Thousand Dollars
($1,000) for any Plan Year that he elects deferral of any amounts of his
Compensation.

 

3.05 Matching Contribution. Each Plan Year, an Employer may make a Matching
Contribution to the Plan on behalf of a Participant as a percentage of the Base
Salary or Bonus Compensation deferred by the Participant for the Plan Year, such
percentage to be in such amount as the Employer in its sole discretion may
authorize; provided, however, that the Employer may determine that no Matching
Contribution shall be made for a Plan Year.

In addition, an Employer may elect to make as a Matching Contribution to a
Participant’s Matching Contribution Account established under this Plan the
portion of such Participant’s matching contributions the Participant would
otherwise be eligible to receive under the Qualified Plan which cannot be
credited to his or her account under the Qualified Plan because of a limitation
contained in the Qualified Plan or Code, including, but not limited to, sections
402(g), 401(k)(3), 401(m)(2), and 401(a)(17) of the Code; provided, however,
that no such matching contributions otherwise available under the Qualified Plan
which relate to a period of time prior to the Participant’s participation in
this Plan may be added to his Matching Contribution Account hereunder.

 

3.06 Discretionary Contribution. Each Plan Year, an Employer may make a
Discretionary Contribution to the Plan on behalf of a Participant in such amount
as the Employer in its sole discretion may authorize; provided, however, that an
Employer may determine that no Discretionary Contribution shall be made for a
Plan Year.

 

13

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3.07 FICA and Other Taxes.

 

  (a) Annual Deferral Amounts. For each Plan Year in which a Participant has
amounts withheld from his Compensation pursuant to Deferred Compensation
Agreement, the Participant’s Employer(s) shall, to the extent applicable,
withhold from that portion of the Participant’s Base Salary or Bonus, that is
not being deferred, in a manner determined by the Employer(s), the Participant’s
share, if any, of FICA and other employment taxes on such Annual Deferral Amount
that the Employer is required to withhold. If necessary, the Committee may
reduce the Annual Deferral Amount in order to comply with this Section 3.07.

 

  (b) Company Matching Contributions and Discretionary Contributions. When a
Participant becomes vested in a portion of his or her Company Matching
Contributions and/or Company Discretionary Contributions, the Participant’s
Employer(s) shall, to the extent applicable, withhold from that portion of the
Participant’s Base Salary and/or Bonus, that is not deferred, in a manner
determined by the Employer(s), the Participant’s share of FICA and other
employment taxes, if any, on such Company Matching Contributions and/or Company
Discretionary Contributions. If necessary, the Committee may reduce the vested
portion of the Participant’s Company Matching Contributions or Company
Discretionary Contributions, as applicable, in order to comply with this
Section 3.07.

 

  (c) Distributions. The Participant’s Employer(s), or the trustee of the trust,
if any, shall, to the extent applicable, withhold from any payments made to a
Participant under this Plan all federal, state and local income, employment and
other taxes required to be withheld by the Employer(s), or the trustee of the
Trust, if any, in connection with such payments, in amounts and in a manner to
be determined in the sole discretion of the Employer(s) and/or the trustee of
the Trust.

ARTICLE IV

BENEFITS AND VALUATION OF ACCOUNTS

 

4.01 Withholding and Crediting of Annual Deferral Amounts.

 

  (a)

For each Plan Year, the portion of a Participant’s Base Salary that the
Participant has elected to defer, pursuant to the execution of a Deferred
Compensation Agreement in accordance with Section 3.03, shall be withheld from
each regularly scheduled Base Salary payroll in equal amounts, as adjusted from
time to time for increases and decreases in Base Salary. The portion of a
Participant’s Bonus Compensation and/or Director Fees to be deferred and
contributed to the Plan pursuant to the Employee’s Deferred Compensation
Agreement shall be

 

14

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withheld at the time the Bonus Compensation or Director Fees are or otherwise
would be paid to the Participant, whether or not this occurs during the Plan
Year itself. Any such Compensation deferred pursuant to this Section 4.01(a)
shall be credited to a Participant’s Deferral Account at the time such amounts
would otherwise have been paid to the Participant.

 

  (b) For each Plan Year, the portion of any Restricted Stock Unit Award that a
Participant has elected to defer, pursuant to the execution of a Deferred
Compensation Agreement in accordance with Section 3.03, shall be deferred as of
the date the shares of Common Stock that vested pursuant to the terms of a
Restricted Stock Unit Award would have otherwise been issued, as applicable. Any
such Compensation deferred pursuant to this Section 4.01(b) shall be credited to
a Participant’s Deferred Stock Account at the time such amounts would otherwise
have been paid to the Participant.

 

4.02 Employer Matching Contribution. For each Plan Year, an Employer, in its
sole discretion, may, but is not required to, credit any amount it desires to
any Participant’s Matching Contribution Account under this Plan, which amount
shall be for that Participant for that Plan Year. The amount so credited to a
Participant’s Matching Contribution Account may be smaller or larger than the
amount credited to any other Participant, and the amount credited to any
Participant’s Matching Contribution Account for a Plan Year may be zero, even
though one or more other Participants receive a Company Matching Contribution
for that Plan Year. If a Participant is not employed by an Employer as of the
last day of a Plan Year, other than by reason of his or her Retirement or death
while employed, the annual Company Matching Contribution for that Plan Year
shall be zero. Under no circumstances shall the total amount of the annual
Company Matching Contribution for a Plan Year for all Participants of an
Employer exceed the maximum percentage determined for such Plan Year by the
Employer. The Company Matching Contribution described in this Section 4.02 if
any, shall be credited on a date or dates to be determined by the Committee, in
its sole discretion.

 

4.03 Employer Discretionary Contribution. For each Plan Year, an Employer, in
its sole discretion, may, but is not required to, credit any amount it desires
to any Participant’s Discretionary Contribution Account under this Plan, which
amount shall be for that Participant for that Plan Year. A Participant’s
Discretionary Contribution for any Plan Year shall be an amount determined by
the Employer, in its sole discretion. The amount so credited to a Participant
under this Plan for any Plan Year (i) may be smaller or larger than the amount
credited to any other Participant, and (ii) may differ from the amount credited
to such Participant in the preceding Plan Year. The Participant’s Discretionary
Contribution, if any, shall be credited on a date or dates to be determined by
the Committee, in its sole discretion.

 

4.04 Periodic Determination of Participant’s Deferred Account, Matching
Contribution Account and Discretionary Contribution Account. In accordance with,
and subject to, the rules and procedures that are established from time to time
by the Committee, in its sole discretion, amounts shall be credited or debited
to a Participant’s Deferred Account, Matching Contribution Account and
Discretionary Contribution Account in accordance with the following rules:

 

15

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  (a) Measurement Funds. The Participant may elect one or more of the
measurement funds selected by the Committee, in its sole discretion, which are
based on certain mutual funds or such other deemed investments as may be
determined by the Committee in its sole discretion (the “Measurement Funds”),
for the purpose of crediting or debiting additional amounts to his Deferred
Account, Matching Contribution Account and Discretionary Contribution Account.
As necessary, the Committee may, in its sole discretion, discontinue, substitute
or add a Measurement Fund. Each such action will take effect as of the first day
of the first calendar quarter that begins at least thirty (30) days after the
day on which the Committee gives Participants advance written notice of such
change.

 

  (b) Election of Measurement Funds. A Participant, in connection with his
initial deferral election in accordance with Section 3.03 above, shall elect, on
the Deferred Compensation Agreement, or on such other form as the Committee or
its designee may prescribe, one or more Measurement Fund(s) (as described in
Section 4.04(a) above) to be used to determine the amounts to be credited or
debited to his Deferred Account, Matching Contribution Account and Discretionary
Contribution Account. If a Participant does not elect any of the Measurement
Funds as described in the previous sentence, the Participant’s Deferred Account,
Matching Contribution Account and Discretionary Contribution Account shall
automatically be deemed to be allocated into the lowest-risk Measurement Fund,
as determined by the Committee, in its sole discretion. The Participant may (but
is not required to) elect, by submitting to the Committee a revised Deferred
Compensation Agreement, or such other form as the Committee or its designee may
prescribe, to add or delete one or more Measurement Fund(s) to be used to
determine the amounts to be credited or debited to his Deferred Account,
Matching Contribution Account and Discretionary Contribution Account, or to
change the portion of his Deferred Account, Matching Contribution Account and
Discretionary Contribution Account deemed allocated to each previously or newly
elected Measurement Fund. 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 Committee, 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 Committee, in its sole discretion, may impose limitations on
the frequency with which one or more of the Measurement Funds elected in
accordance with this Section 4.04 may be added or deleted by such Participant;
furthermore, the Committee, in its sole discretion, may impose limitations on
the frequency with which the Participant may change the portion of his Deferred
Account, Matching Contribution Account and Discretionary Contribution Account
deemed allocated to each previously or newly elected Measurement Fund.

 

16

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  (c) Proportionate Deemed Allocation. In making any election described in
Section 4.04(b) above, the Participant shall specify on the Deferred
Compensation Agreement, or such other form as the Committee or its designee may
prescribe, in increments of one percent (1%), the percentage of his Deferred
Account, Matching Contribution Account and Discretionary Contribution Account or
Measurement Fund, as applicable, to be deemed allocated/reallocated.

 

  (d) Crediting or Debiting Method. The performance of each Measurement Fund
(either positive or negative) will be determined on a daily basis based on the
manner in which such Participant’s Deferred Account, Matching Contribution
Account and Discretionary Contribution Account has been hypothetically allocated
among the Measurement Funds by the Participant. Such Measurement Fund
performance shall be credited or debited to a Participant’s Deferred Account,
Matching Contribution Account and Discretionary Contribution Account, as
applicable.

 

  (e) No Actual Investment. Notwithstanding any other provision of this Plan
that may be interpreted to the contrary, the Measurement Funds are to be used
for measurement purposes only, and a Participant’s election of any such
Measurement Fund, the allocation of his Deferred Account, Matching Contribution
Account, and Discretionary Contribution Account thereto, the calculation of
additional amounts and the crediting or debiting of such amounts to a
Participant’s Deferred Account, Matching Contribution Account and Discretionary
Contribution Account shall not be considered or construed in any manner as an
actual investment of his Deferred Account, Matching Contribution Account and
Discretionary Contribution Account in any such Measurement Fund. In the event
that the Company (or the trustee, if a trust is established pursuant to
Section 5.02), in its own discretion, decides to invest funds in any or all of
the investments on which the Measurement Funds are based, no Participant shall
have any rights in or to such investments themselves. Without limiting the
foregoing, a Participant’s Deferred Account, Matching Contribution Account and
Discretionary Contribution Account shall at all times be a bookkeeping entry
only and shall not represent any investment made on his or her behalf by the
Company or, if applicable, the trust; the Participant shall at all times remain
an unsecured creditor of the Company.

 

4.05 Periodic Determination of Participant’s Deferred Stock Account.

 

  (a) Amounts credited to a Participant’s Deferred Stock Account shall be deemed
invested in a Measurement Fund, each share of which (“Measurement Share”) is
based on the value of a share of Common Stock. Amounts credited to the Deferred
Stock Account shall continue to be deemed invested in Measurement Shares until
the distribution thereof; provided, however, that upon a tender offer for shares
of Common Stock, a Participant may direct the Company to tender the shares of
Common Stock represented by the value of any Measurement Shares then credited to
his Deferred Stock Account, in which case the consideration therefor shall be
credited upon receipt to the Participant’s Deferred Account.

 

17

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  (b) For all purposes of the Deferred Stock Account, the value of a Measurement
Share on any given date will be an amount equal to the Fair Market Value of a
share of Common Stock as of that date. The change in the value of a
Participant’s Deferred Stock Account shall be determined on a daily basis based
the change in the value of the total number of Measurement Shares credited to
the Participant’s Deferred Stock Account (either positive or negative).

 

  (c) A Participant’s Deferred Stock Account may be adjusted to reflect the
addition of the value of dividends issued on the Common Stock of the Company.

 

4.06 Vesting.

 

  (a) Deferred Account and Deferred Stock Account. A Participant shall at all
times be 100% vested in his Deferred Account and his Deferred Stock Account.

 

  (b) Matching Contribution Account and Discretionary Contribution Account. A
Participant shall vest in each Matching Contribution and Discretionary
Contribution, plus amounts credited and debited on such amount, on each
anniversary of the date on which any such Matching Contribution or Discretionary
Contribution was credited to the Matching Contribution Account or Discretionary
Contribution Account, as applicable, in accordance with the following schedule;
provided, however, that the Participant must be in the service of a the Company
as an Employee on each such anniversary to receive vesting credit:

 

Time Elapsed Following Crediting of a

Matching Contribution or

Discretionary Contribution

  

Vested Percentage

Less than 2 years

   0%

2 years or more, but less than 3

   20%

3 years or more, but less than 4

   40%

4 years or more, but less than 5

   60%

5 years or more, but less than 6

   80%

6 years or more

   100%

A new vesting schedule shall apply to each Matching Contribution or
Discretionary Contribution credited to the Participant’s Matching Contribution
Account or Discretionary Contribution Account, as applicable.

 

  (c)

Forfeitures. The percentage of a Participant’s Matching Contribution Account and
Discretionary Contribution Account that he does not receive on account of
Termination of Employment prior to 100% vesting in accordance with
Section 4.06(b) will be considered a “Forfeiture” and shall remain as a general
asset of the Company. In the event a trust is established for payment of
benefits as provided for in Article V, the Committee shall use Forfeitures
(calculated as of the last day of the Plan Year in which the Forfeitures occur)
to pay applicable Plan

 

18

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administration expenses or to reduce any Matching Contribution or Discretionary
Contribution made to Participants for such Plan Year. If no Matching
Contribution or Discretionary Contribution is made for such Plan Year, then such
Forfeitures shall be available to pay applicable Plan administration expenses or
to offset Matching Contributions or Discretionary Contributions made in a future
Plan Year and, until allocated to a Participant’s Account, no Participant shall
have any interest in or right to any Forfeiture.

 

  (d) Vesting Upon Disability, Death, or Retirement. A Participant’s right to
his Matching Contribution Account and Discretionary Contribution Account shall
be 100% vested due to such Participant’s Disability, death, or Retirement.

 

  (f) Vesting Upon a Change of Control. A Participant’s right to his Matching
Contribution Account and Discretionary Contribution Account shall be 100% vested
due to a Change of Control pursuant to Section 2.08.

 

  (g) Vesting in Event of Plan Termination. If the Plan terminates in accordance
with Section 8.01 hereof, each Participant shall be 100% vested in his Accounts.

 

4.07 Distribution Elections.

 

  (a) Time of Payment. With respect to each election by a Participant to defer
Compensation pursuant to Article III, such Participant may elect to commence
payment of such deferral (and the earnings credited thereto) as of a specific
future month and year, but not earlier than three (3) years from the date of the
deferral, and not later than the applicable Benefit Distribution Date.

 

  (b) Form of Payment.

 

  (i) Base Salary and Bonus Compensation. At the time a Participant makes an
election to defer Base Salary, Bonus Compensation, Director Fees or Restricted
Stock Units pursuant to Article III, such Participant shall elect a form of
payment with respect to such deferral and, to the extent provided on the
Deferred Compensation Agreement, all subsequent deferrals (and the earnings
credited thereto) from one of the following forms:

 

  (A) A lump sum; or

 

  (B) Annual Installment Method for a period of up to fifteen (15) years.

Payments pursuant to a Participant’s election shall commence no later than sixty
(60) days after the specific date elected by the Participant in (a) above.

 

  (ii) Matching Contribution Account and Discretionary Contribution Account. Any
distribution of Base Salary, Bonus Compensation and Director Fees shall include
any amounts the Participant’s Employer may have contributed to the Participant’s
Matching Contribution Account and Discretionary Contribution Account (and the
earnings credited thereto) and that are vested as of the applicable payment
date.

 

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  (iii) Payment Election Generally. Except as provided in Section 4.09,
elections made by a Participant in this Section 4.07 regarding the time and form
of payment of a deferral, and the earnings credited thereto, shall be
irrevocable once made.

 

4.08 Termination Benefit.

 

  (a) A Participant who has a Termination of Employment shall receive, as a
Termination Benefit, that portion of his or her vested Account, calculated as of
the close of business on or around the Participant’s Benefit Distribution Date,
as determined by the Committee in its sole discretion, that is not subject to an
election under Section 4.07.

 

  (b) The Termination Benefit shall be paid to the Participant in a lump sum
payment no later than sixty (60) days after the Participant’s Benefit
Distribution Date.

 

4.09 Retirement Benefit.

 

  (a) Upon a Participant’s Retirement, the Participant shall receive a
retirement benefit, which shall be equal to the entire amount credited to the
Participant’s Account that is not subject to an election under Section 4.07,
determined as provided in Sections 4.04 and 4.05, and calculated as of the close
of business on or around the Participant’s Benefit Distribution Date, such
amount to be determined by the Committee in its sole discretion.

 

  (b) Payment of Retirement Benefit.

 

  (i) In connection with his or her commencement of participation in the Plan, a
Participant may elect pursuant to Section 4.07(b) to receive his retirement
benefit either in a lump sum, or pursuant to an Annual Installment Method of up
to fifteen (15) years. If a Participant does not make any election with respect
to the payment of the retirement benefit, then such Participant shall be deemed
to have elected to receive the retirement benefit in a lump sum.

 

  (ii) The Participant may change the form of payment of his retirement benefit
by submitting an election changing his form of payment, on such form as may be
prescribed by the Committee or its designee, in accordance with the following
criteria:

 

  (A) The election to modify the retirement benefit shall have no effect until
at least twelve (12) months after the date on which the election is made; and

 

  (B) The first retirement benefit payment shall be delayed at least five
(5) years from the Participant’s originally scheduled Benefit Distribution Date
described in Section 2.04.

 

20

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For purposes of applying the requirements above, the right to receive the
retirement benefit in installment payments shall be treated as the entitlement
to a single payment. The Committee shall interpret all provisions relating to
changing the retirement benefit election under this Section 4.09 in a manner
that is consistent with section 409A of the Code and related Treasury guidance
or regulations.

The form of payment election most recently accepted by the Committee that has
become effective shall govern the payout of the retirement benefit.

 

  (iii) The lump sum payment shall be made, or installment payments shall
commence, no later than sixty (60) days after the Participant’s Benefit
Distribution Date. Remaining installments, if any, shall be paid no later than
sixty (60) days after each anniversary of the Participant’s Benefit Distribution
Date.

 

4.10 Disability. In the event of a Participant’s Disability, payment of the
entire amount credited to such Participant’s Deferred Account, Deferred Stock
Account, Matching Contribution Account and Discretionary Contribution Account
that is not subject to an election under Section 4.07 shall be distributed to
the Participant in a lump sum in cash within sixty (60) days following the
Participant’s Benefit Distribution Date.

 

4.11 Death. In the event of a Participant’s death at a time when amounts are
credited to such Participant’s Account, the entire amount credited to the
Participant’s Deferred Account, Matching Contribution Account and Discretionary
Contribution Account that is not subject to an election under Section 4.07 or
Section 4.09 shall be distributed in a lump sum in cash to such Participant’s
designated Beneficiary or Beneficiaries within sixty (60) days of the
Participant’s Benefit Distribution Date. Notwithstanding the foregoing, if a
Participant dies, and at the time of the Participant’s death the Participant was
receiving his benefits under the Plan in installments pursuant to an election
under Section 4.07(b) or Section 4.09(b), the balance of the amount subject to
such distribution election will continue to be paid in the same form to the
Participant’s Beneficiary.

 

4.12 Change Of Control Benefit.

 

  (a)

Election of Change of Control Benefit. A Participant, in connection with his or
her commencement of participation in the Plan, shall irrevocably elect on the
Deferred Compensation Agreement whether to (i) receive a Change of Control
Benefit upon the occurrence of a Change of Control, which shall be equal to the
Participant’s vested Account, calculated as of the close of business on or
around the Participant’s Benefit Distribution Date, as determined by the
Committee in its sole discretion, or (ii) to have his Account remain in the Plan
upon the occurrence of a Change of Control and to have his Account remain
subject to the terms and conditions of the Plan. If a Participant does not make
any election

 

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with respect to the payment of his Account in connection with a Change of
Control, then such Participant’s Account shall remain in the Plan upon a Change
of Control and shall be subject to the terms and conditions of the Plan.

 

  (b) Matching Contribution Account and Discretionary Contribution Account. In
the event of a Change of Control, the unvested balance in each Participant’s
Matching Contribution Account and Discretionary Contribution Account will
accelerate and vest, pursuant to Section 4.06(e) of the Plan.

 

  (c) Payment of Change of Control Benefit. The Change of Control Benefit, if
any, shall be paid to the Participant in a lump sum no later than sixty
(60) days after the Participant’s Benefit Distribution Date. Notwithstanding the
foregoing, the Committee shall interpret all provisions in this Plan relating
the payment of a benefit as a result of a Change of Control in a manner that is
consistent with section 409A of the Code and related Treasury guidance and
regulations.

 

4.13 Withdrawal Payout/Suspensions for Unforeseeable Emergencies.

 

  (a) If the Participant experiences an Unforeseeable Emergency, the Participant
may petition the Committee to receive a partial or full payout from the Plan,
subject to the provisions set forth below.

 

  (b) The payout, if any, from the Plan shall not exceed the lesser of (i) the
Participant’s vested Account, calculated as of the close of business on or
around the date on which the amount becomes payable, as determined by the
Committee in its sole discretion, or (ii) the amount necessary to satisfy the
Unforeseeable Emergency, plus amounts necessary to pay Federal, state, or local
income taxes or penalties reasonably anticipated as a result of the
distribution. Notwithstanding the foregoing, a Participant may not receive a
payout from the Plan to the extent that the Unforeseeable Emergency is or may be
relieved (A) through reimbursement or compensation by insurance or otherwise,
(B) by liquidation of the Participant’s assets, to the extent the liquidation of
such assets would not itself cause severe financial hardship or (C) by cessation
of deferrals under this Plan.

 

  (c) If the Committee, in its sole discretion, approves a Participant’s
petition for payout from the Plan, the Participant shall receive a payout from
the Plan within sixty (60) days of the date of such approval, and the
Participant’s deferrals under the Plan shall be terminated as of the date of
such approval.

 

  (d) In addition, a Participant’s deferral elections under this Plan shall be
terminated to the extent the Committee determines, in its sole discretion, that
termination of such Participant’s deferral elections is required pursuant to
Treas. Reg. §1.401(k)-1(d)(3) for the Participant to obtain a hardship
distribution from an Employer’s 401(k) Plan. If the Committee determines, in its
sole discretion, that a termination of the Participant’s deferrals is required
in accordance with the preceding sentence, the Participant’s deferrals shall be
terminated as soon as administratively practicable following the date on which
such determination is made.

 

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  (e) Notwithstanding the foregoing, the Committee shall interpret all
provisions relating to a payout and/or termination of deferrals under this
Section 4.13 in a manner that is consistent with section 409A of the Code and
related Treasury guidance and Regulations.

 

4.14 Designation of Beneficiaries. Each Participant shall have the right, at any
time, to designate the primary and contingent Beneficiary or Beneficiaries to
receive his Account balance under the Plan upon the death of the Participant.
The designated Beneficiary under the Plan may be the same or different from the
beneficiary designation under any other plan of the Employer in which the
Participant participates.

 

  (a) Spousal Consent for Beneficiary Designation Change. A Participant shall
designate a Beneficiary or change a Beneficiary designation by completing a
Beneficiary designation form, and returning the signed form to the Committee or
its designee, and otherwise complying with the terms of the Beneficiary
designation form and the Plan’s rules and procedures applicable to Beneficiary
designations. If the Participant names someone other than his spouse as the sole
primary Beneficiary, the Committee or its designee may, in its sole discretion,
determine whether spousal consent is required to be provided in a form
prescribed by the Committee or its designee, executed by such Participant’s
spouse and returned to the Committee or its designee. Upon the acceptance by the
Committee or its designee of a new Beneficiary designation form, all Beneficiary
designations previously filed shall be canceled. The Committee or its designee
shall be entitled to rely on the last Beneficiary designation form filed by the
Participant and accepted by the Committee or its designee prior to his death.

 

  (b) Revocation of Spousal Beneficiary Designation Upon Divorce. If a
Participant is divorced and the Participant’s former spouse is the Beneficiary
named by the Participant on a Beneficiary designation form accepted by the
Committee or its designee prior to the effective date of the divorce, the former
spouse shall be deemed to have predeceased the Participant and the Participant’s
Account balance under the Plan shall be paid to the remaining primary or
contingent Beneficiaries, as applicable, with the exception of any portion of
the Participant’s Account balance under the Plan previously awarded to the
Participant’s former spouse under Section 9.11 pursuant to a valid court order
issued in connection with a division of property in a divorce proceeding.

 

  (c) No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in this Section 4.14, or if all designated Beneficiaries
predecease the Participant or die prior to complete distribution of the
Participant’s Account, then the Participant’s designated Beneficiary shall be
deemed to be his surviving spouse. If the Participant has no surviving spouse,
the remaining Account balance under the Plan payable to a Beneficiary shall be
paid first in equal shares to the Participant’s surviving children and if the
Participant has no surviving children, in equal shares to the Participant’s
surviving parents and if the Participant has no surviving parents, to the
executor or personal representative of the Participant’s estate.

 

23

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  (d) Uncertainty Concerning Beneficiary. If the Committee or its designee is
uncertain about the proper Beneficiary to receive payments following the death
of a Participant, the Committee or its designee shall have the right,
exercisable in its discretion, to cause the Employer to withhold such payments
until the matter is resolved to the Committee’s satisfaction.

 

  (e) Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge the Employer and the Committee
from all further obligations under the Plan with respect to the Participant or
the Beneficiary.

 

4.15 Forfeiture for Cause. A Participant (or the Participant’s Beneficiary)
shall not be entitled to receive any portion of the amount credited to such
Participant’s Matching Contribution Account and Discretionary Contribution
Account, and all amounts credited to such Accounts shall be permanently
forfeited by the Participant as a result of the Participant’s termination of
employment for Cause. For purposes of this Section 4.15 “Cause” means
(i) “cause” as that term may be defined in any written employment agreement
between the Participant and an Employer which may at any time be in effect, or
(ii) in the absence of such a definition in a then-effective written employment
agreement (in the determination of the Committee) the occurrence of one or more
of the following events:

 

  (a) Participant’s failure to substantially perform such of Participant’s
duties with an Employer as determined by the Committee or the Employer;

 

  (b) Participant’s willful failure or refusal to perform specific directives of
his Employer, which directives are consistent with the scope and nature of
Participant’s duties and responsibilities;

 

  (c) Participant’s conviction of a felony;

 

  (d) a breach of Participant’s fiduciary duty to an Employer or any act or
omission of Participant that (A) results in the assessment of a criminal penalty
against an Employer, (B) is otherwise in violation of any federal, state, local
or foreign law or regulation (other than traffic violations and other similar
misdemeanors), (C) adversely affects or could reasonably be expected to
adversely affect the business reputation of an Employer, or (D) otherwise
constitutes willful misconduct, gross negligence, or any act of dishonesty or
disloyalty;

 

  (e) the violation by Participant of any policy, rule or directive established
by an Employer; or

 

  (f) an Employer’s determination that Participant’s performance or conduct was
unacceptable.

 

4.16

Unclaimed Benefits. In the case of a benefit payable on behalf of a Participant,
if the Committee or its designee is unable to locate the Participant or
Beneficiary to whom such benefit is payable, such benefit shall be forfeited to
the Company by the later of (a) the Committee’s determination that the
Participant or Beneficiary cannot be located, or (b)

 

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one (1) year from the last date on which any written communication was sent to
the Participant or Beneficiary. Notwithstanding the foregoing, if subsequent to
any such forfeiture the Participant or Beneficiary to whom such benefit is
payable makes a valid claim for such benefit, such forfeited benefit shall be
paid by the Employer or restored to the Plan by the Employer.

ARTICLE V

SOURCE OF PAYMENT OF BENEFITS

 

5.01 Source of Funds. The Plan is a nonqualified, unfunded, deferred
compensation plan. All benefits payable under the Plan shall be from the general
assets of the Company, which are subject to the claims of the Company’s general
creditors. Neither the Participants nor any Beneficiary shall have any right,
title or interest whatever in or to, or any claim, preferred or otherwise, in or
to, any particular assets of the Company as a result of participation in the
Plan, any policy or contract as provided for herein, or any trust that the
Company may establish to aid in providing the payments described in the Plan.
Nothing contained in the Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust or a fiduciary relationship of
any kind between the Company and a Participant or any other person. Neither a
Participant nor a Beneficiary of a Participant shall acquire any interest
greater than that of an unsecured creditor in any assets of the Company or in
any trust that the Company may establish for the purposes of paying benefits
hereunder.

 

5.02 Establishment of a Trust.

 

  (a) In order to provide assets from which to fulfill the obligations of the
Participants and their Beneficiaries under the Plan, the Company may establish a
trust by a trust agreement with a third party, the trustee, to which each
Employer may, in its discretion, contribute cash or other property, including
securities issued by the Company, to provide for the benefit payments under the
Plan (the “Trust”). All assets paid into any Trust shall at all times before
actual payment to a Participant or Beneficiary remain subject to the claims of
the general creditors of the Company. In the absence of action by the Committee,
nothing herein shall be construed to create or require the creation of a trust
for the purpose of paying benefits owing under the Plan.

 

  (b) To the extent a Trust established in connection with this Plan, if any,
has sufficient assets, the trustee of such Trust shall pay benefits to
Participants or their Beneficiaries, except to the extent an Employer pays the
benefits directly and provides adequate evidence of such payment to the Trustee.
To the extent the trustee does not or cannot pay benefits out of a Trust
established in connection with this Plan, the benefits shall be paid by the
Participant’s Employer. Any benefit payments made to a Participant or for his
benefit pursuant to any provision of the Plan shall be debited to such
Participant’s Deferred Account, Deferred Stock Account, Matching Contribution
Account or Discretionary Contribution Account, as appropriate.

 

25

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5.03 Interrelationship of the Plan and the Trust. The provisions of the Plan
shall govern the rights of a Participant to receive distributions pursuant to
the Plan. The provisions of the Trust shall govern the rights of the Employers,
Participants and the creditors of the Employers to the assets transferred to the
Trust. Each Employer shall at all times remain liable to carry out its
obligations under the Plan.

 

5.04 Distributions From the Trust. Each Employer’s obligations under the Plan
may be satisfied with Trust assets distributed pursuant to the terms of the
Trust, and any such distribution shall reduce the Employer’s obligations under
this Plan.

 

5.05 Purchase of Insurance Policies or Contracts. Although the Plan is to be
deemed totally unfunded, in addition to the discretionary authority to establish
a trust as provided for herein, the Company may, but shall not be obligated to,
purchase one or more life insurance or annuity policies or contracts for the
purpose of providing for its obligations hereunder. Any such policies or
contracts, if so purchased, shall name the Company or the trust as beneficiary
and sole owner, with all incidents of ownership therein, including (but not
limited to) the right to cash and loan values, dividends (if any), death
benefits, and the right of termination. Any such policies or contracts purchased
hereunder shall remain a general restricted asset of the Company or of the
trust. Unless otherwise provided by the Company, no policy or contract as
provided for herein shall be deemed to be held in trust for the benefit of a
Participant or any Beneficiary.

ARTICLE VI

ADMINISTRATION

 

6.01 Appointment of Committee. The administration of the Plan will be the
responsibility of the Committee or its designee. The Committee shall be
appointed by the Board and shall consist of one (1) or more members. Each member
of the Committee shall serve for a term of one (1) year and until his successor
shall be appointed. A member may serve for more than one (1) term. If the
Committee consists of more than one member, the Committee shall appoint one
(1) of the members as Chairman by majority vote. The Committee, by majority
vote, shall be authorized to remove any member of the Committee with or without
cause by notifying such member in writing, and may fill vacancies in the
Committee, however caused. A member of the Committee may resign upon ten
(10) days’ prior notice by delivery of his written resignation to the other
members of the Committee. Subject to its ability to delegate such authority to
its authorized designee as provided in Sections 6.03 and 6.08 herein, the
Committee shall have the sole power, duty and responsibility for directing the
administration of the Plan in accordance with its terms.

 

6.02

Compensated Expenses of the Committee. The members of the Committee shall serve
without compensation for their services as such, but the reasonable and
necessary

 

26

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expenses of the Committee shall be paid as provided in Section 9.09. When, in
its discretion, the Company or any adopting employer deems it advisable, the
Committee shall be authorized to have the records of the Committee audited by an
independent auditor, and reasonable and necessary expenses thereby incurred
shall be paid as provided in Section 9.09 hereof.

 

6.03 Secretary and Agents of the Committee. The Committee may appoint a
Secretary who may, but need not, be a member of the Committee, and may employ
such agents and such clerical and other personnel as reasonably may be required
for the purpose of administering the Plan. Such administrative personnel shall
carry out the duties and responsibilities assigned to them by the Committee. The
Committee in its sole discretion may delegate the duty and responsibility for
directing and administering the Plan in accordance with its terms to such
personnel or such other designees as the Committee may decide, in which case
such individuals will have the authority delegated to them by the Committee
until such time as the Committee revokes such authority. The Committee may also
appoint such accountants, counsel, and actuaries and other advisers as it deems
necessary or desirable in connection with the administration of the Plan.
Expenses necessarily incurred for such purpose shall be paid as provided in
Section 9.09 hereof.

 

6.04 Actions of Committee.

 

  (a) A majority of the members of the Committee shall constitute a quorum for
the transaction of business, and shall have full power to act hereunder. Action
by the Committee shall be official if approved by a vote of a majority of the
members present at any official meeting. The Committee may, without a meeting,
authorize or approve any action by written instrument signed by a majority of
all of the members. Any written memorandum signed by the Chairman, or any other
member of the Committee, or by any other person duly authorized by the Committee
to act, in respect of the subject matter of the memorandum, shall have the same
force and effect as a formal resolution adopted in open meeting.

 

  (b) A member of the Committee may not vote or decide upon any matter relating
solely to him or vote in any case in which his individual right or claim to any
benefit under the Plan is specifically involved. If, in any case in which a
Committee member is so disqualified to act, the remaining members then present
cannot, by majority vote, act or decide, the Committee will appoint a temporary
substitute member to exercise all of the powers of the disqualified member
concerning the matter in which he is disqualified.

 

  (c) The Committee shall maintain minutes of its meetings and written records
of its actions, and as long as such minutes and written records are maintained,
members may participate and hold a meeting of the Committee by means of
conference telephone or similar communications equipment which permits all
persons participating in the meeting to hear each other. Participation in such a
meeting constitutes presence in person at such meeting.

 

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6.05 Authority of Committee. The Committee or its designee is authorized to take
such actions as may be necessary to carry out the provisions and purposes of the
Plan and shall have the discretionary authority to control and manage the
operation and administration of the Plan. In order to effectuate the purposes of
the Plan, the Committee or its designee shall have the fiduciary power and
discretion to construe and interpret the Plan, to supply any omissions therein,
to reconcile and correct any errors or inconsistencies, to decide any questions
in the administration and application of the Plan, and to make equitable
adjustments for any mistakes or errors made in the administration of the Plan.
All such actions or determinations made by the Committee, and the application of
rules and regulations to a particular case or issue by the Committee, in good
faith, shall not be subject to review by any person or entity, but shall be
final, binding and conclusive on all persons ever interested hereunder. In
construing the Plan and in exercising its power under provisions requiring
Committee approval, the Committee shall attempt to ascertain the purpose of the
provisions in question and when such purpose is known or reasonably
ascertainable, such purpose shall be given effect to the extent feasible.
Likewise, the Committee is authorized to determine all questions with respect to
the individual rights of all Participants and their Beneficiaries under this
Plan, including, but not limited to, all issues with respect to valuation of
Accounts, and Retirement, Disability or Termination of Employment, and shall
direct any trustee concerning the allocation, payment and distribution of any
funds held in trust for purposes of the Plan.

 

6.06 General Administrative Powers. The Committee or its designee shall have
authority to make, and from time to time, revise rules and regulations for the
administration of the Plan.

 

6.07 Plan Administrator. “Plan Administrator” shall mean the Committee or its
designee. The Plan Administrator shall exercise such authority and
responsibility as it deems appropriate to comply with the provisions of federal
law and governmental regulations issued thereunder and to carry out any duties
imposed hereby.

 

6.08 Duties of Administrative Personnel. Administrative personnel appointed
pursuant to Section 6.03 hereof, shall be responsible for such matters as the
Committee shall delegate to them by written instrument, including, but not
limited to communications to Employees at the direction of the Committee,
reports to the Committee involving questions of eligibility and contributions,
and assisting Participants and Beneficiaries in the completion of forms
prescribed by the Committee. Administrative personnel may not make any decision
as to Plan policy, interpretations, practices or procedures unless the authority
to make such decisions has been delegated to them in writing by the Committee.
All administrative personnel shall perform their allocated function within the
policies, interpretations, rules, practices and procedures established by the
Committee, except that administrative personnel shall coordinate matters related
to the Plan with the appropriate departments of the Company and each adopting
employer as the Committee directs.

 

6.09

Indemnity. The Company shall indemnify and hold harmless each “Indemnified
Person,” as defined below, against any and all claims, demands, suits,
proceedings, losses, damages, interest, penalties, expenses (specifically
including, but not limited to counsel

 

28

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fees to the extent approved by the Company or otherwise provided by law, court
costs and other reasonable expenses of litigation), and liability of every kind,
including amounts paid in settlement, with the approval of the Company, arising
from any action or cause of action related to the Indemnified Person’s act or
acts or failure to act. Such indemnity shall apply regardless of whether such
claims, demands, suits, proceedings, losses, damages, interest, penalties,
expenses, and liability arise in whole or in part from the negligence or other
fault of the Indemnified Person, except when the same is judicially determined
to be due to gross negligence, fraud, recklessness, willful or intentional
misconduct of such Indemnified Person. “Indemnified Person” shall mean each
member of the Committee and each individual otherwise acting in an
administrative capacity with respect to the Plan.

 

6.10 Review Procedures Under ERISA.

 

  (a) Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as a
“Claimant”) may deliver to the Committee or its designee a written claim for a
determination with respect to the amounts distributable to such Claimant from
the Plan. If such a claim relates to the contents of a notice received by the
Claimant, the claim must be made within 60 days after such notice was received
by the Claimant. All other claims must be made within 180 days of the date on
which the event that caused the claim to arise occurred. The claim must state
with particularity the determination desired by the Claimant.

 

  (b) Notification of Decision. The Committee or its designee shall consider a
Claimant’s claim within a reasonable time, but no later than 90 days (45 days in
the case of a claim for Disability benefits) after receiving the claim. If the
Committee or its designee determines that special circumstances require an
extension of time for processing the claim (or in the case of a claim for
Disability benefits, an extension is necessary for reasons beyond the control of
the Plan), written notice of the extension shall be furnished to the Claimant
prior to the termination of the initial 90 day (or 45 day) period. In no event
shall such extension exceed a period of 90 days (30 days in the case of a claim
for Disability benefits which may be further extended for an additional 30 days
if the additional extension is due to reasons beyond the control of the Plan)
from the end of the initial period. The extension notice shall indicate the
special circumstances requiring an extension of time and the date by which the
Committee expects to render the benefit determination. The Committee or its
designee shall notify the Claimant in writing that the Claimant’s requested
determination has been made, and that the claim has been allowed in full; or
that the Committee has reached a conclusion contrary, in whole or in part, to
the Claimant’s requested determination, and such notice must set forth in a
manner calculated to be understood by the Claimant:

 

  (i) the specific reason(s) for the denial of the claim, or any part of it;

 

29

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  (ii) specific reference(s) to pertinent provisions of the Plan upon which such
denial was based;

 

  (iii) a description of any additional material or information necessary for
the Claimant to perfect the claim, and an explanation of why such material or
information is necessary;

 

  (iv) if the claim is a claim for Disability benefits, an internal rule,
guideline, protocol or other similar criterion which was relied on in connection
with the review of the claim and that such internal rule, guideline, protocol or
similar criterion may be obtained by the Claimant at the Claimant’s request free
of charge;

 

  (v) if the claim is a claim for Disability benefits, and the denial is based
on medical necessity or other similar exclusion or limit, Claimant’s right to
receive free of charge an explanation of how that exclusion or limit and any
related clinical judgments apply to the Claimant’s medical circumstances;

 

  (vi) an explanation of the claim review procedure set forth in Section 6.10(d)
below; and

 

  (vii) a statement of the Claimant’s right to bring a civil action under
section 502(a) of ERISA following an adverse benefit determination on review.

 

  (c) Review of a Denied Claim. On or before 60 days (180 days in the case of a
claim for Disability benefits) after receiving a notice from the Committee or
its designee that a claim has been denied, in whole or in part, a Claimant (or
the Claimant’s duly authorized representative) may file with the Committee or
its designee a written request for a review of the denial of the claim. The
Claimant (or the Claimant’s duly authorized representative):

 

  (i) may, upon request and free of charge, have reasonable access to, and
copies of, all documents, records and other information relevant to the claim
for benefits;

 

  (ii) may submit written comments or other documents; and/or

 

  (iii) may request a hearing, which the Committee or its designee, as
applicable, in its sole discretion, may grant.

 

  (d)

Decision on Review. The Committee or its designee shall render its decision on
review promptly, and no later than 60 days (45 days in the case of a claim for
Disability benefits) after the Committee or its designee receives the Claimant’s
written request for a review of the denial of the claim. If the Committee or its
designee determines that special circumstances require an extension of time for
processing the claim, written notice of the extension shall be furnished to the
Claimant prior to the termination of the initial 60 day (or 45 day) period. In
no

 

30

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event shall such extension exceed a period of 60 days (45 days in the case of a
Disability claim) from the end of the initial period. The extension notice shall
indicate the special circumstances requiring an extension of time and the date
by which the Committee or its designee expects to render the benefit
determination. In rendering its decision, the Committee or its designee shall
take into account all comments, documents, records and other information
submitted by the Claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination. In
the case of a claim for Disability benefits, the review on appeal must be made
by a different decision-maker from the Committee or its designee and the
decision-maker cannot give procedural deference to the original decision. The
decision must be written in a manner calculated to be understood by the
Claimant, and it must contain:

 

  (i) specific reasons for the decision;

 

  (ii) specific reference(s) to the pertinent Plan provisions upon which the
decision was based;

 

  (iii) a statement that the Claimant is entitled to receive, upon request and
free of charge, reasonable access to and copies of, all documents, records and
other information relevant (as defined in applicable ERISA regulations) to the
Claimant’s claim for benefits;

 

  (iv) if the claim is a claim for Disability benefits, an internal rule,
guideline, protocol or other similar criterion which was relied on in connection
with the review of the claim and that such internal rule, guideline, protocol or
similar criterion may be obtained by the Claimant at the Claimant’s request free
of charge;

 

  (v) if the claim is a claim for Disability benefits, and the denial is based
on medical necessity or other similar exclusion or limit, Claimant’s right to
receive free of charge an explanation of how that exclusion or limit and any
related clinical judgments apply to the Claimant’s medical circumstances; and

 

  (vi) a statement of the Claimant’s right to bring a civil action under section
502(a) of ERISA.

 

  (e) Legal Action. A Claimant’s compliance with the foregoing provisions of
this Section 6.10 is a mandatory prerequisite to a Claimant’s right to commence
any legal action with respect to any claim for benefits under the Plan.

 

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ARTICLE VII

PARTICIPATION BY EMPLOYERS

 

7.01 Participation in Plan by Affiliated Company. Any affiliated company of the
Company, whether or not presently existing, may, in the sole and absolute
discretion of the Board, participate in this Plan, effective as of the date
indicated by the Board. The provisions of this Plan shall apply only to each
Employer severally, except as otherwise specifically provided herein.

 

7.02 Rights and Obligations of the Company and the Employers. Throughout this
instrument, a distinction is purposely drawn between rights and obligations of
the Company and rights and obligations of each other Employer. The rights and
obligations specified as belonging to the Company shall belong only to the
Company. Each Employer shall have the obligation to pay the benefits owing to
its own Participants, and no Employer shall have the obligation to pay benefits
to the Participants of any other Employer. Any failure by an Employer to fulfill
its own obligations under this Plan shall have no effect upon any other
Employer. The Board, in its sole and absolute discretion, may provide for
withdrawal of any Employer without affecting any other Employer.

 

7.03 Withdrawal from Plan. Upon the withdrawal of an Employer pursuant to this
Article, the trustee of any trust established pursuant to Article V with respect
to such Employer shall segregate the share of the assets in the trust, the value
of which shall equal the total credited to the Accounts of Participants of the
withdrawing Employer.

 

7.04 Continuance by Successor Company. In the event of the liquidation,
dissolution, merger, consolidation or reorganization of an Employer, the
successor company may, in the sole and absolute discretion of the Board,
continue participation in the Plan for the benefit of the Employees of such
Employer. If such successor company does continue participation in the Plan, it
shall, in all respects, be substituted for such Employer under the Plan. Any
such substitution of such successor company shall constitute an assumption of
Plan liabilities by such successor company, and such successor company shall
have all of the powers, duties and responsibilities of such Employer under the
Plan. If such successor company does not continue participation in the Plan, the
Plan shall be terminated with respect to such Employer in accordance with the
provisions of the Plan.

ARTICLE VIII

TERMINATION OF PLAN, AMENDMENT OR MODIFICATION

 

8.01

Termination of Plan. Although the Company anticipates that it will continue the
Plan for an indefinite period of time, there is no guarantee that the Company
will continue the Plan or will not terminate the Plan at any time in the future.
Accordingly, the Company reserves the right to terminate the Plan in its
entirety or with respect to any Employer. In the event of a termination of the
Plan, the Measurement Funds available to Participants following the termination
of the Plan shall be comparable in number and type to those

 

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Measurement Funds available to Participants in the Plan Year preceding the Plan
Year in which the termination of the Plan is effective. Following a termination
of the Plan, Participant Accounts shall remain in the Plan until the Participant
becomes eligible for the benefits provided in Articles 5, 6, 7, 8, 9 or 10 in
accordance with the provisions of those Articles. The termination of the Plan
shall not adversely affect any Participant or Beneficiary who has become
entitled to the payment of any benefits under the Plan as of the date of
termination. Notwithstanding the foregoing, to the extent permissible under
section 409A of the Code and related Treasury guidance or Regulations, during
the thirty (30) days preceding or within twelve (12) months following a Change
in Control the Company may (i) terminate the Plan by action of the Board, and
(ii) distribute the vested Accounts to Participants in a lump sum no later than
twelve (12) months after the Change in Control, provided that all other
substantially similar arrangements sponsored by such the Company are also
terminated and all balances in such arrangements are distributed within twelve
(12) months of the termination of such arrangements.

 

8.02 Amendment.

 

  (a) The Company may, at any time, amend or modify the Plan in whole or in
part. Notwithstanding the foregoing, no amendment or modification shall be
effective to decrease the value of a Participant’s vested Account in existence
at the time the amendment or modification is made.

 

  (b) Notwithstanding any provision of the Plan to the contrary, in the event
that the Company determines that any provision of the Plan may cause amounts
deferred under the Plan to become immediately taxable to any Participant under
section 409A of the Code, and related Treasury guidance or Regulations, the
Company may (i) adopt such amendments to the Plan and appropriate policies and
procedures, including amendments and policies with retroactive effect, that the
Company determines necessary or appropriate to preserve the intended tax
treatment of the Plan benefits provided by the Plan and/or (ii) take such other
actions as the Company determines necessary or appropriate to comply with the
requirements of section 409A of the Code, and related Treasury guidance or
Regulations.

ARTICLE IX

MISCELLANEOUS PROVISIONS

 

9.01 Status of Plan. The Plan is intended to be a plan that is not qualified
within the meaning of section 401(a) of the Code and that “is unfunded and is
maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees”
within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. The
Plan shall be administered and interpreted (i) in a manner consistent with that
intent, and (ii) in accordance with section 409A of the Code and related
Treasury guidance and Regulations.

 

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9.02 Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or
claims in any property or assets of an Employer. For purposes of the payment of
benefits under this Plan, any and all of an Employer’s assets shall be, and
remain, the general, unpledged unrestricted assets of the Employer. An
Employer’s obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.

 

9.03 Employer’s Liability. An Employer’s liability for the payment of benefits
shall be defined only by the Plan. An Employer shall have no obligation to a
Participant under the Plan except as expressly provided herein.

 

9.04 No Right to Continue in Employment. The adoption and maintenance of this
Plan and the execution of any Deferred Compensation Agreement shall not be
deemed to constitute an employment contract between the Company or any of its
affiliated companies and any Eligible Employee or Director. Such employment is
hereby acknowledged to be an “at will” employment relationship that can be
terminated at any time for any reason, or no reason, with or without cause, and
with or without notice, unless expressly provided in a written employment
agreement. Nothing herein contained shall be deemed (i) to give to any Eligible
Employee the right to be retained in the employ of the Company or any of its
affiliated companies or any Director the right to be retained as a Director of
the Company or any of its affiliated companies; (ii) to affect the right of the
Company or any of its affiliated companies to discipline or discharge any
Eligible Employee at any time; or (iii) to affect any Eligible Employee’s or
Director’s right to terminate his employment at any time.

 

9.05 Binding Effect. This Plan shall be binding upon and inure to the benefit of
the Company, its successors and assigns, and the Participants, and their heirs,
assigns and personal representatives.

 

9.06 Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information requested by
the Committee and take such other actions as may be requested in order to
facilitate the administration of the Plan and the payments of benefits
hereunder, including but not limited to taking such physical examinations as the
Committee may deem necessary.

 

9.07 Integrated Plan. This Plan constitutes the final and complete expression of
agreement among the parties hereto with respect to the subject matter hereof.

 

9.08 Controlling Law. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State of Texas
without regard to its conflicts of laws principles.

 

9.09 Expenses. The expenses of agents or advisers and any other reasonable costs
and expenses relating to the adoption, implementation, interpretation and
administration of the Plan shall be paid by the Plan, to the extent not paid by
the Company.

 

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9.10 Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and hand-delivered,
or sent by registered or certified mail, to the address below:

 

  Compensation Committee     Hornbeck Offshore Services, Inc.    

Attention: Samuel A. Giberga, Senior

Vice President and General Counsel

   

103 Northpark Blvd., Suite 300

Covington, LA 70433

Fax: (985) 727-2006

 

Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.

Any notice or filing required or permitted to be given to a Participant under
this Plan shall be sufficient if in writing and hand-delivered, or sent by mail,
to the last known address of the Participant.

 

9.11 Inalienability of Benefits.

 

  (a) The right of any Participant or Beneficiary to any benefit or payment
under the Plan shall not be subject to alienation or assignment, and to the
fullest extent permitted by law, shall not be subject to attachment, execution,
garnishment, sequestration or other legal or equitable process. In the event a
Participant or Beneficiary who is receiving or is entitled to receive benefits
under the Plan attempts to assign, transfer or dispose of such right, or if an
attempt is made to subject said right to such process, such assignment, transfer
or disposition shall be null and void.

 

  (b) Notwithstanding the foregoing, if a Participant’s former spouse is awarded
all or a portion of a Participant’s Account under the Plan pursuant to a
division of property in connection with a divorce, such former spouse’s share of
the Participant’s Account shall be her separate property and shall be
transferable by the Participant’s former spouse by will or pursuant to the laws
of descent and distribution. In order to be effective, notice of such division
of the Participant’s Account under the Plan pursuant to a division of property
in connection with divorce must be provided in a form which generally complies
with the requirements of section 414(p)(1)(B) of the Code, as applicable, and
any other requirements prescribed by the Committee or its authorized
representative. Any such share of a Participant’s Account to which the
Participant’s former spouse may be entitled shall become immediately due and
payable to the former spouse and may be distributed to the former spouse at any
time.

 

9.12 Court Order. The Committee is authorized to comply with any court order in
any action in which the Plan or the Committee has been named as a party,
including any action involving a determination of the rights or interests in a
Participant’s benefits under the Plan. Notwithstanding the foregoing, the
Committee shall interpret this provision in a manner that is consistent with
section 409A of the Cod and other applicable tax law.

 

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9.13 Spouse’s Interest. The interest in a Participant’s Account hereunder of a
Participant’s spouse, if any, who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable by such
spouse or such spouse’s estate in any manner, including but not limited to such
spouse’s will, nor shall such interest pass under the laws of intestate
succession.

 

9.14 Withholding. The Plan Administrator shall determine whether or not federal
income tax withholding is required with respect to any distribution or
withdrawal hereunder. Notwithstanding any other provision of this Plan to the
contrary, all rights and benefits of a Participant or Beneficiary are subject to
withholding of any tax required by law to be withheld.

 

9.15 Validity. In case any provision of this Plan shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but this Plan shall be construed and enforced as if such illegal
or invalid provision had never been inserted herein.

 

9.16 Incompetent. If the Committee determines in its discretion that a benefit
under this Plan is to be paid to a minor, a person declared incompetent or to a
person incapable of handling the disposition of that person’s property, the
Committee may direct payment of such benefit to the guardian, legal
representative or person having the care and custody of such minor, incompetent
or incapable person. The Committee may require proof of minority, incompetence,
incapacity or guardianship, as it may deem appropriate prior to distribution of
the benefit. Any payment of a benefit shall be a payment for the account of the
Participant and the Participant’s Beneficiary, as the case may be, and shall be
a complete discharge of any liability under the Plan for such payment amount.

 

9.17 Distribution in the Event of Income Inclusion Under 409A. If any portion of
a Participant’s Account Balance under this Plan is required to be included in
income by the Participant prior to receipt due to a failure of this Plan to meet
the requirements of Code section 409A of the Code and related Treasury guidance
or regulations, the Participant may petition the Committee or Administrator, as
applicable, for a distribution of that portion of his Account that is required
to be included in his income. Upon the grant of such a petition, which grant
shall not be unreasonably withheld, the Participant’s Employer shall distribute
to the Participant immediately available funds in an amount equal to the portion
of his Account required to be included in income as a result of the failure of
the Plan to meet the requirements of section 409A of the Code and related
Treasury guidance or regulations, which amount shall not exceed the
Participant’s unpaid vested Account under the Plan. If the petition is granted,
such distribution shall be made within ninety (90) days of the date when the
Participant’s petition is granted. Such a distribution shall affect and reduce
the Participant’s benefits to be paid under this Plan.

 

9.18

Deduction Limitation on Benefit Payments. If the Company reasonably anticipates
that the Company’s deduction with respect to any distribution from this Plan
would be limited

 

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or eliminated by application of section 162(m) of the Code, then to the extent
deemed necessary by the Company to ensure that the entire amount of any
distribution from this Plan is deductible, the Company may delay payment of any
amount that would otherwise be distributed from this Plan. Any amounts for which
distribution is delayed pursuant to this Section shall continue to be
credited/debited with additional amounts in accordance with Sections 4.04 and
4.05, above. The delayed amounts (and any amounts credited thereon) shall be
distributed to the Participant (or his Beneficiary) at the earliest date the
Company reasonably anticipates that the deduction of the payment of the amount
will not be limited or eliminated by application of section 162(m) of the Code.

 

9.19 Obligations to the Company. If a Participant becomes entitled to a
distribution of benefits under the Plan, and if at such time the Participant has
outstanding any debt, obligation, or other liability representing an amount owed
to any Employer, then such Employer may offset such amounts owing it against the
amount of benefits otherwise distributable.

IN WITNESS WHEREOF, Hornbeck Offshore Services, Inc. has caused this Plan to be
executed by a duly authorized officer this 13th day of July, 2007.

 

HORNBECK OFFSHORE SERVICES, INC.   By:  

/s/ Todd M. Hornbeck

  Name:  

Todd M. Hornbeck

  Title:  

Chief Executive Officer

 

 

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