Exhibit 10.6

OLD SECOND BANCORP, INC.

AMENDED AND RESTATED

VOLUNTARY DEFERRED COMPENSATION PLAN

FOR DIRECTORS

PLAN DOCUMENT

 

 

 

September 1,  2008

 

 

 

 

TABLE OF CONTENTS

 

 

 

 

 

ARTICLE 1

NAME AND PURPOSE

    

1

1.1

Name

 

1

1.2

Purpose

 

1

1.3

Plan for a Select Group

 

1

1.4

Not a Funded Plan

 

1

 

 

 

 

ARTICLE 2

DEFINITIONS

 

1

2.1

Account

 

1

2.2

Administrator

 

1

2.3

Affiliated Company

 

1

2.4

Appeals Committee

 

1

2.5

Beneficiary

 

1

2.6

Benefit Commencement Date

 

1

2.7

Benefit Payment

 

1

2.8

Board

 

1

2.9

Change of Control

 

2

2.10

Code

 

3

2.11

Company

 

3

2.12

Compensation

 

3

2.13

Compensation Committee

 

4

2.14

Deferral Account

 

4

2.15

Deferral Amount

 

4

2.16

Deferral Election

 

4

2.17

Director

 

4

2.18

Effective Date

 

4

2.19

ERISA

 

4

2.20

Measurement Funds

 

5

2.21

Normal Retirement Date

 

5

2.22

Participant

 

5

2.23

Participant Access System

 

5

2.24

Plan

 

5

2.25

Plan Year

 

5

2.26

Pre-2005 Deferral Account

 

5

2.27

Preexisting Balance

 

5

2.28

Preretirement Distribution Election

 

6

2.29

Retire or Retirement

 

6

2.30

Section 409A

 

6

2.31

Termination Date

 

6

2.32

Termination of Tenure

 

6

2.33

Unforeseeable Emergency

 

6

 

 

 

 

ARTICLE 3

ELIGIBILITY AND PARTICIPATION

 

1

3.1

Eligibility

 

1

3.2

Participation

 

1

 

 

 

 

ARTICLE 4

CONTRIBUTIONS

 

1

 

i

 

 

 

 

 

 

4.1

Deferral Elections

    

1

4.2

Establishment of Deferral Accounts

 

2

4.3

Crediting of Deferral Amounts

 

3

4.4

Adjustment of Accounts

 

3

4.5

Measurement Funds

 

3

 

 

 

 

ARTICLE 5

GRANDFATHERED PROVISIONS APPLICABLE TO PRE-2005 DEFERRAL ACCOUNTS

 

1

5.1

Application

 

1

5.2

Definitions

 

1

5.3

Preretirement Distribution Election

 

2

5.4

Forms of Benefit Distribution.

 

3

5.5

Benefit Commencement Events.

 

5

 

 

 

 

ARTICLE 6

PRERETIREMENT DISTRIBUTION; UNFORESEEABLE EMERGENCIES

 

1

6.1

Preretirement Distribution Election

 

1

6.2

Hardship Withdrawals

 

1

 

 

 

 

ARTICLE 7

BENEFITS DISTRIBUTIONS

 

1

7.1

Benefit Commencement Date

 

1

7.2

Time of Distribution

 

1

7.3

Change to Elections for Time and Form of Payment

 

2

7.4

Consent Not Required

 

2

7.5

Correction of Amounts Payable

 

3

7.6

Timing of Payments

 

3

7.7

Transition Rule

 

3

 

 

 

 

ARTICLE 8

BENEFIT DISTRIBUTION EVENTS

 

1

8.1

Retirement Benefits.

 

1

8.2

Termination of Tenure.

 

1

8.3

Death.

 

1

8.4

Change of Control.

 

2

8.5

Benefit Payment Delay in the Event of Allegations

 

2

 

 

 

 

ARTICLE 9

BENEFICIARIES

 

1

9.1

Automatic Beneficiary

 

1

9.2

Designated Beneficiary or Beneficiaries

 

1

9.3

Death of Beneficiary

 

1

 

 

 

 

ARTICLE 10

RIGHTS OF PARTICIPANTS AND BENEFICIARIES

 

1

10.1

Creditor Status of Participant and Beneficiary

 

1

10.2

Rights with Respect to a Trust

 

1

10.3

Investments

 

1

 

 

 

 

ARTICLE 11

TRUST

 

1

11.1

Establishment of Trust

 

1

11.2

Obligations of the Company

 

1

11.3

Trust Terms

 

1

 

 

 

 

ARTICLE 12

CLAIMS PROCEDURE

 

1

12.1

Claim for Benefits

 

1

 

ii

 

 

 

 

 

 

12.2

Request for Review of a Denial of a Claim for Benefits

 

2

12.3

Appeals Procedure

 

2

12.4

Decision upon Review of Denial of Claim for Benefits

 

3

12.5

Establishment of Appeals Committee

 

4

12.6

Operations of Appeals Committee

 

5

12.7

Special Provisions Relating to Change of Control

 

6

 

 

 

 

ARTICLE 13

ADMINISTRATION

 

1

13.1

Appointment of Administrator

 

1

13.2

Powers and Duties of the Administrator

 

1

13.3

Engagement of Advisors

 

2

13.4

Payment of Costs and Expenses

 

2

 

 

 

 

ARTICLE 14

AMENDMENT AND TERMINATION

 

1

14.1

Power to Amend or Terminate

 

1

14.2

Effects of Plan Termination

 

1

14.3

No Liability for Plan Amendment or Termination

 

2

 

 

 

 

ARTICLE 15

MISCELLANEOUS

 

1

15.1

Non-Alienation

 

1

15.2

Tax Withholding

 

1

15.3

Incapacity

 

1

15.4

Administrative Forms

 

2

15.5

Independence of Plan

 

2

15.6

Responsibility for Legal Effect

 

2

15.7

Limitation of Duties

 

2

15.8

Limitation of Sponsor Liability

 

2

15.9

Successors

 

3

15.10

Controlling Law

 

3

15.11

Notice

 

3

15.12

Headings and Titles

 

3

15.13

General Rules of Construction

 

3

15.14

Severability

 

3

15.15

Indemnification

 

4

 

 

iii

 

 

OLD SECOND BANCORP, INC.

AMENDED AND RESTATED

VOLUNTARY DEFERRED COMPENSATION PLAN FOR DIRECTORS

The Old Second Bancorp, Inc., Amended and Restated Voluntary Deferred
Compensation Plan for Directors (hereinafter referred to as “the Plan”) is
hereby further amended and restated by Old Second Bancorp, Inc., a corporation
organized and existing under and by virtue of the laws of the State of Delaware
and its subsidiaries (hereinafter referred to as “Company”);

W I T N E S S E T H:

WHEREAS, the Company now desires to amend and restate the Plan to make the
following  desired changes to the Plan:

(i)         to memorialize the grandfathering of the amounts deferred and
credited to the Plan on and before December 31, 2004 such that these amounts
(plus any earnings thereon) will not be subject to the provisions of
Section 409A; and

 

(ii)       to bring the Plan into compliance with the final regulations issued
under Section 409A for all amounts credited to Participants under the Plan on or
after January 1, 2005.

 

WHEREAS, the Company previously adopted the Plan in order to permit members of
the Company’s and Affiliated Company’s Boards of Directors (hereinafter referred
to as “Participant(s)”) to make deferrals of their directors’ fees;

WHEREAS, the Company previously amended and restated the Plan on February 1,
2006, to comply with the preliminary regulations issued under Section 409A; and

NOW, THEREFORE, the Company hereby adopts the amended and restated Plan,
effective September 1, 2008, as follows:

 

 

 

 

 

ARTICLE 1

 

NAME AND PURPOSE

1.1      Name.  The name of the Plan shall be the OLD SECOND BANCORP, INC.,
AMENDED AND RESTATED VOLUNTARY DEFERRED COMPENSATION PLAN FOR DIRECTORS.

1.2      Purpose.  The Plan is hereby established to provide unfunded deferred
compensation to directors of the Company and the Affiliated Companies under
certain conditions specified herein.

1.3      Plan for a Select Group.  The Plan shall only cover directors of the
Company and Affiliated Companies.

1.4      Not a Funded Plan.  It is the intention and purpose of the Company and
the Affiliated Companies that the Plan shall be deemed to be “unfunded” for tax
purposes and deemed a plan as would properly be described as “unfunded” for
purposes of Title I of ERISA.  The Plan shall be administered in such a manner,
notwithstanding any contrary provision of the Plan, in order that it will be so
deemed and would be so described.

 

 

1-1

 

ARTICLE 2

 

DEFINITIONS

Unless the context otherwise indicates, the following words used herein shall
have the following meanings wherever used in this instrument:

2.1      Account.  The word “Account” shall refer to a Participant’s Pre-2005
Deferral Account and Deferral Account, collectively.

2.2      Administrator.  The word “Administrator” shall mean the person or
persons, corporation or partnership designated as Administrator under Article 13
herein.

2.3      Affiliated Company.  The words “Affiliated Company” shall mean any
corporation or business organization that, directly or indirectly, through one
or more intermediaries’ controls, is controlled by, or is under common control
of the Company, and particularly shall mean any corporation of which eighty
percent (80%) of the voting stock is directly or indirectly owned by the
Company.

2.4      Appeals Committee.  The words “Appeals Committee” shall mean the
Appeals Committee established pursuant to Article 12 herein.

2.5      Beneficiary.  The word “Beneficiary” shall mean any person who
receives, or is designated to receive, payment of any benefit under the terms of
the Plan because of the participation of a Participant in the Plan.

2.6      Benefit Commencement Date.  The words “Benefit Commencement Date” shall
mean the first date as of which benefits are to be paid pursuant to the terms of
the Plan.

2.7      Benefit Payment.  The words “Benefit Payment” shall mean the benefit as
set forth in Articles 5 through 8, as applicable.

2.8      Board.  The word “Board” shall mean the Board of Directors of Old
Second Bancorp, Inc. or any of its Affiliated Companies, as applicable.

2-1

 

2.9      Change of Control.  The words “Change of Control” shall be deemed to
have occurred upon the first to occur of any of the following events:

(a)        Any one person or group (as determined under Treasury Regulation
§1.409A-3(g)(5)(v)(B)), acquires ownership of stock of the Company that,
together with stock held by such person or group, constitutes more than fifty
percent (50%) of the total fair market value or total voting power of the stock
of the Company, or

(b)        Notwithstanding that the Company has not undergone a Change of
Control as described in 2.9(a), a Change of Control of the Company occurs only
on the date that either:

(i)         Any one person, or more than one person acting as a group (as
determined under Treasury Regulation §1.409A-3(g)(5)(v)(B)), 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 Company
possessing thirty percent (30%) or more of the total voting power of the stock
of such corporation; or

(ii)       A majority of members of the Company’s Board is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Company’s Board prior to the date of the
appointment or election; or

(c)        Any one person or group (as determined under Treasury Regulation
§1.409A-3(g)(5)(v)(B)), 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 Company that have a total gross fair market value equal to or
more than forty percent (40%) of all the assets of the Company immediately prior
to such acquisition or acquisitions. For this purpose, gross fair market value
means the value of the assets of the Company, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets.

 

2-2

 

However, in no event shall a Change of Control be deemed to have occurred, with
respect to a Participant if the Participant is part of a purchasing group which
consummates the Change of Control transaction.  The Participant shall be deemed
“part of a purchasing group” for purposes of the preceding sentence if the
Participant is an equity participant in the purchase company or group (except
for (i) passive ownership of less than two percent (2%) of the stock of the
purchasing company; or (ii) ownership of equity participation in the purchasing
company or group which is otherwise not significant, as determined prior to the
Change of Control by a majority of the non-employee continuing Directors).

2.10    Code.  The word “Code” shall mean the Internal Revenue Code of 1986 and
any regulations or other pronouncements promulgated thereunder.  Whenever a
reference is made herein to a specific Code section, such reference shall be
deemed to include any successor Code section having the same or a similar
purpose.

2.11    Company.  The word “Company” shall mean Old Second Bancorp, Inc., its
subsidiaries and any successor corporation or business organization which shall
assume the duties and obligations of Old Second Bancorp, Inc., under the Plan.

2.12    Compensation.  The word “Compensation” shall mean all remuneration which
is paid to a Director in cash for the performance of services for the Company as
a Director that Plan Year, and which must be reported as income on the
Director’s Form 1099 for income tax purposes, adjusted as follows:

(a)        Increased by any deferred compensation amounts; and

(b)        Reduced by all of the following amounts even if they are taxable to
the Director:

(i)         Expense reimbursements, expense allowances or moving expenses; and

(ii)       Cash and non‑cash fringe benefits and welfare benefits.

2-3

 

Finally, the Director’s Compensation with respect to a Plan Year (as defined
hereinafter) shall be that Compensation which is earned for such Plan Year,
without regard to when such Compensation is actually paid to the Director.

2.13    Compensation Committee.  The words “Compensation Committee” shall mean
the Compensation Committee of the Board of the Company or any successor thereto.

2.14    Deferral Account.  The words “Deferral Account” shall mean the
bookkeeping account maintained by the Administrator on behalf of each
Participant to reflect the Participant’s Deferral Amounts (as defined
hereinafter) for each Plan Year commencing on and after January 1, 2005 and all
earnings, gains and losses thereon.

2.15    Deferral Amount.  The words “Deferral Amount” shall mean for each
Participant an amount equal to the amount by which the Participant’s
Compensation is reduced by means of a Deferral Election (as defined hereinafter)
pursuant to Article 4 herein.

2.16    Deferral Election.  The words “Deferral Election” shall mean a
percentage or whole dollar amount of Compensation that the Participant elects to
defer to the Plan pursuant to Article 4 herein.

2.17    Director.  The word “Director” shall mean a member of the Board.

2.18    Effective Date.  The words “Effective Date” shall mean the date the
amended and restated Plan becomes effective, the date of which is September 1,
2008.

2.19    ERISA.  The acronym “ERISA” shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any regulations or other pronouncements
promulgated thereunder.  Whenever a reference is made herein to a specific ERISA
Section, such reference shall be deemed to include any successor ERISA
Section having the same or a similar purpose.

2-4

 

2.20    Measurement Funds.  The words “Measurement Funds” shall mean
hypothetical investments the Participant may elect to value his or her Account
balance.

2.21    Normal Retirement Date.  The words “Normal Retirement Date” shall mean
the date on which a Participant attains age seventy (70).

2.22    Participant.  The word “Participant” shall mean any eligible Director
who has performed all the acts required by the Plan to become a Participant, who
has become a Participant in accordance with Article 3 herein, and who remains a
Participant hereunder.

2.23    Participant Access System.  The words “Participant Access System” shall
mean the online administration system that provides participants with continual
access to Account balances and important Plan information, as well as the
ability to reallocate Measurement Funds.

2.24    Plan.  The word “Plan” shall mean the Old Second Bancorp, Inc., Amended
and Restated Voluntary Deferred Compensation Plan for Directors as set forth
herein, effective as of the Effective Date, and as it may be later amended.

2.25    Plan Year.  The words “Plan Year” shall mean the twelve (12) month
period ending on December 31 in each calendar year.

2.26    Pre-2005 Deferral Account.  The words “Pre-2005 Deferral Account” shall
mean an account established on behalf of each Participant having a balance under
the Plan as of December 31, 2004, to which a Participant’s vested balance under
the Plan as of December 31, 2004 is credited, plus any earnings or losses
attributable thereto.

2.27    Preexisting Balance.  The words “Preexisting Balance” shall mean a
Participant’s balance, if any, in the Old Second Bancorp, Inc. Voluntary
Deferred Compensation Plan for Directors as of March 14, 2004 or existing, as of
March 14, 2004 phantom stock units granted to the Participant.

2-5

 

2.28    Preretirement Distribution Election.  The words “Preretirement
Distribution Election” shall mean a percentage or whole dollar amount of the
Participant’s Deferral Amount for the Plan Year which the Participant elects to
defer until a date prior to Retirement as specified by the Participant pursuant
to Article 6.1 herein.

2.29    Retire or Retirement.  The word “Retire” or “Retirement” shall mean a
Termination of Tenure of a Participant, on or after the Participant’s Normal
Retirement Date; provided that such retirement qualifies as a separation from
service under Section 409A.

2.30    Section 409A.  The words “Section 409A” shall mean Code Section 409A,
related U.S. Treasury regulations and guidance thereunder, including such
regulations and guidance promulgated after the Effective Date of the Plan, as
deemed appropriate by the Administrator.

2.31    Termination Date.  The words “Termination Date” shall mean the date as
of which the Company ceases to sponsor and maintain the Plan.

2.32    Termination of Tenure.  The words “Termination of Tenure” shall mean for
any Director voluntarily terminating, for any reason including Retirement, from
all Boards on which the Director serves; provided that such Termination of
Tenure qualifies as a separation from service under Section 409A.

2.33    Unforeseeable Emergency.  The words “Unforeseeable Emergency” shall have
the meaning given by Section  409A and the Regulations thereunder and shall
generally mean a severe financial hardship to the Participant or Beneficiary
resulting from (i) illness or accident of the Participant or Beneficiary, the
Participant’s spouse, a dependent (as defined in Code Section 152(a)) of the
Participant, (ii) a loss of the Participant’s or Beneficiary’s property due to
casualty, or (iii) such other similar extraordinary and unforeseeable 

2-6

 

circumstances arising as a result of events beyond the control of the
Participant or Beneficiary.

 

 

2-7

 

ARTICLE 3

 

ELIGIBILITY AND PARTICIPATION

3.1      Eligibility.  The Compensation Committee may, from time to time, in its
discretion, designate one or more Directors as eligible to participate in the
Plan.

3.2      Participation.  Each Director who has been designated as eligible to
participate in the Plan shall become a Participant on or as of the date of
designation as a Director eligible to participate in the Plan, or as soon
thereafter as Director reasonably can be enrolled in the Plan, provided that
Director complies with appropriate administrative requirements for enrollment of
Participants, and shall remain a Participant until the date of Participant’s
Termination of Tenure.

 

 

3-1

 

ARTICLE 4

 

CONTRIBUTIONS

4.1      Deferral Elections.  If a Participant makes a Deferral Election under
the Plan for a Plan Year, then a portion of the Compensation which would
normally be paid to the Participant by or through the Company or an Affiliated
Company shall be retained by the Company or an Affiliated Company, as
applicable, and, in lieu thereof, an amount equal thereto, shall constitute a
Deferral Amount hereunder and shall be credited to the Participant’s Deferral
Account pursuant to Article 4.3 herein.  Such elections shall be subject to the
following rules:

(a)        Compensation Deferral.  With respect to each Plan Year, a Participant
may elect to defer a portion of Participant’s Compensation by making a Deferral
Election via the Participant Access System or in writing as is required by the
Administrator prior to deferral hereunder.  A Participant’s Deferral Election
shall specify a stated percentage or dollar amount of the Participant’s
Compensation, which specified percentage or dollar amount shall not exceed one
hundred percent (100%) of the Participant’s Compensation.  The amount so elected
under the Deferral Election shall be credited to the Participant’s Deferral
Account under the Plan.

(b)        General Deferral Election Rules.  A Participant’s Deferral Election
shall be irrevocable for the entire Plan Year for which it is made. All
elections to make deferrals under the Plan, and all resulting deferrals, shall
be subject to such rules, procedures, limits and restrictions as the
Administrator may establish from time to time.

(c)        Specific Deferral Election Rules.  The following rules govern all
Deferral Elections to a Participant’s Deferral Account under the Plan:

4-1

 

(i)         A Participant must complete a Deferral Election prior to the first
day of the applicable Plan Year, or such earlier deadline as may be established
by the Administrator, in its sole discretion.

(ii)       Upon first becoming eligible to participate in the Plan after the
first day of the Plan Year, a Participant must complete, either in writing or
via the Participant Access System, a Deferral Election within thirty (30) days
after he or she first becomes eligible to participate in the Plan, or within
such other earlier deadline as may be established by the Administrator, in its
sole discretion, in order to participate for the Plan Year.  In such event, such
person’s participation in the Plan shall not commence earlier than the date
determined by the Administrator pursuant to subsection (iii) below and such
person shall not be permitted to defer under this Plan any portion of his or her
Compensation that are paid with respect to services performed prior to his or
her participation commencement date, except to the extent permissible under
Section 409A.

(iii)      A selected Director’s participation commencement date shall be the
date the Administrator determines, in its sole discretion, that the Director has
met all enrollment requirements as set forth in the Plan and required by the
Administrator.  Notwithstanding the foregoing, the Administrator shall process
each Participant’s Deferral Election as soon as administratively practicable
after such Deferral Election is submitted and accepted by the Administrator.

(iv)       No Deferral Election shall be effective with respect to Compensation
paid before the satisfactory completion of the requirements described in this
Article 4.1(c) and any other requirements the Administrator may determine are
necessary.

(v)        Notwithstanding the foregoing, the Administrator shall interpret this
Article 4.1(c) as it applies to amounts in a Participant’s Deferral Account in a
manner that is consistent with Section 409A.

4.2      Establishment of Deferral Accounts.  The Administrator or designated
representative shall establish a Deferral Account in the name of each
Participant on its books and records for amounts credited to Participants on and
after January 1, 2005 under the terms of the Plan.  To the extent a Participant
had an existing balance under the Plan on December 31, 2004, the Administrator
or designated representative shall establish a Pre-2005 Deferral Account in the
name of such Participant on its books and records for such amounts.  All amounts
credited to all Accounts of any Participant, or Beneficiary shall constitute a

4-2

 

general, unsecured liability of the Company or an Affiliated Company, as
applicable, to such person.

4.3      Crediting of Deferral Amounts.  Deferral Amounts shall be credited to
the Participant’s Deferral Account as of the date the Compensation would have
otherwise been paid to the Director.

4.4      Adjustment of Accounts.  Participants’ Accounts shall be adjusted for
earnings, gains and losses as if such Accounts held actual assets and such
assets were invested in Measurement Funds in accordance with Article 4.5
herein.  The value of each Participant’s Accounts shall be determinable on a
daily basis as follows, using the terms and methods in the order defined below:

(a)        Beginning Balance.  The balance at the beginning of the day.  This
equals the Ending Balance (as described below) as of the end of the most recent
business day, which for purposes of this Plan shall mean those days on which the
New York Stock Exchange was open for trading.

(b)        Sub-Ending Balance.  The Beginning Balance, plus Deferral Amounts,
less any Benefit Payments, which are made on or occur as of such date.

(c)        Investment Earnings.  Investment earnings, gains and losses
determined pursuant to this Article will be credited to each Participant’s
Accounts as of each business day, which for purposes of this Plan shall mean
those days on which the New York Stock Exchange is open for trading.

(d)        Ending Balance.  The Sub-Ending Balance plus Investment Earnings.

4.5      Measurement Funds.  The Company shall designate Measurement Funds for
the valuation of Participant’s Accounts as if such Accounts held actual
assets.  The Measurement Funds

4-3

 

may include but shall not be limited to the following types of funds as
determined by the Company:

(a)        money market funds;

(b)        mutual funds;

(c)        equity funds;

(d)        fixed income funds;

(e)        balanced funds;

(f)        any insurance company’s general account; or

(g)        any special account established and maintained by any insurance
company.

The Company shall have the sole discretion to determine the number of
Measurement Funds to be designated hereunder and the nature of the funds and may
change or eliminate the Measurement Funds designated hereunder from time to
time.  Participants shall direct the allocation of their Accounts among the
Measurement Funds designated by the Company as though such Accounts held actual
assets.  Any such directions of investment shall be subject to such rules as the
Company and Administrator may prescribe, including, but not limited to, rules
concerning the manner of providing investment directions and the frequency of
changing such investment directions.  In the event a Participant does not direct
the investment of any portion of Participant’s Accounts, such undirected portion
shall be deemed to be invested in the money market fund.

To the extent a portion of the Participant’s Existing Balance includes units of
phantom stock ownership, the Participant’s Deferral Account may continue to be
allocated to the Company’s stock Measurement Fund or may be allocated to any of
the Plan’s Measurement Funds.  No additional deferral amounts may be allocated
to the Company’s stock

4-4

 

Measurement Fund.  If a portion of the Participant’s Deferral Account that is
credited with a phantom stock ownership measurement is subsequently reallocated
to a Measurement Fund, such amount may not be allocated back to the Company’s
phantom stock ownership measurement.

Example:  A Participant is credited with a phantom stock ownership balance of 20
units.  The Participant may continue to allocate an amount in the Plan to
Company stock up to 20 units.  If the Participant allocates the value of 6 units
to a Measurement Fund, the total amount that may be allocated to Company stock
from that point forward is 14 units.

 

 

4-5

 

ARTICLE 5

 

GRANDFATHERED PROVISIONS APPLICABLE TO PRE-2005 DEFERRAL ACCOUNTS

5.1      Application.  This Article 5 shall supersede all other provisions of
the Plan as they apply to a Participant’s Pre-2005 Deferral Account balance,
including any earnings or losses thereon.  It is the intent of the Company that
the preservation of the provisions of the Plan as they existed on October 3,
2004 shall exempt all Pre-2005 Deferral Account balances from the application of
Section 409A.

5.2      Definitions.  Notwithstanding any provision of the Plan to the
contrary, the following definitions shall apply for purposes of this Article 5:

(a)        Change of Control.  The words “Change of Control” shall be deemed to
have occurred upon the first to occur of any of the following events:

(i)         Any person other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or becomes the
beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing twenty percent
(20%) or more of the total voting power represented by the Company’s then
outstanding voting securities; or

(ii)       During any period of two (2) consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the Company
and any new Director whose election by the Board of Directors or nomination for
election by the Company’s stockholders was approved by a vote of at least
two-thirds (2/3) of the Directors then still in office who either were Directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;
or

(iii)      The stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least eighty percent (80%) of the total voting power represented

5-1

 

 

by the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or with respect to
employees of an Affiliated Company, of such employee’s Affiliated Company or an
agreement for the sale or disposition by the Company of all or substantially all
the Company’s or such Affiliated Company’s assets.

However, in no event shall a Change of Control be deemed to have occurred, with
respect to a Participant if the Participant is part of a purchasing group which
consummates the Change of Control transaction.  The Participant shall be deemed
“part of a purchasing group” for purposes of the preceding sentence if the
Participant is an equity participant in the purchase company or group (except
for (i) passive ownership of less than two percent (2%) of the stock of the
purchasing company; or (ii) ownership of equity participation in the purchasing
company or group which is otherwise not significant, as determined prior to the
Change of Control by a majority of the non-employee continuing Directors).

(b)        Termination of Tenure. The words “Termination of Tenure” shall mean
for any Director voluntarily terminating, for any reason including Retirement,
from all Boards on which the Director serves.

5.3      Preretirement Distribution Election.  A Participant may make a
Preretirement Distribution Election applicable to all or a portion of
Participant’s Pre-2005 Deferral Amount for a Plan Year.  A Participant
Preretirement Distribution Election shall specify a stated percentage or dollar
amount of the Participant’s Deferral Amount for the Plan Year, which specified
percentage or dollar amount shall not exceed one hundred percent (100%) of the
Participant’s Deferral Amount for the Plan Year that will be distributed on a
date that is prior to Normal Retirement Date.  The Deferral subject to a
Preretirement Distribution Election shall be for a definite period and shall be
payable in the form elected and on the date specified by the Participant,
provided that the following shall be applicable:

(a)        The deferral must be until at least the fifth Plan Year following the
Plan Year from which the Compensation is deferred; and

 

5-2

 

 

(b)        The Preretirement Distribution Election will be superseded by the
other Plan distribution provisions applicable to death, Retirement, Termination
of Tenure, the Termination Date or a previous withdrawal of such amounts (to the
extent thereof) pursuant to Article 5.3(a) or (b) herein, before the date as of
which the amount is payable.

 

5.4      Forms of Benefit Distribution.

(a)        Normal Form.  Unless elected to the contrary, the normal form of
benefit distributions to a Participant who is eligible therefore pursuant to
Article 5.5 herein shall be the lump sum payment form.

(b)        Election of Distribution Forms.  Subject to certain restrictions
described herein, in lieu of receiving retirement benefits in accordance with
the normal form set forth in Article 5.1 herein, a Participant or former
Participant who is eligible to receive retirement benefits pursuant to Article 5
herein may elect, in writing, to receive retirement benefits on the basis of any
other form of retirement benefits described in Article 5.3 herein.  Any election
of another form of retirement benefits shall be made by a Participant at the
time the deferral election is submitted.  Any such election may be revoked and
made again any number of times as long as such revocation and new election is
made at least thirteen (13) months prior to the Benefit Commencement Date.  Such
election shall be on a form prescribed for the purpose by the Administrator and
signed by the Participant.  Such election shall be deemed to be made when it has
been received by the Administrator or designated representative.

(c)        Forms.  The forms of retirement benefits payable under the Plan are
as follows:

5-3

 

 

Form 1.  Installment Form.  A Participant who receives Benefit Payments under
the installment form shall receive a retirement benefit commencing on the
Benefit Commencement Date and in the form of up to 20 equal annual
installments.  If the Participant dies prior to the completion of said
installments, the remaining amount shall be paid in a lump sum payment form to
the Beneficiary within sixty (60) days following the date of the Participant’s
death.

Form 2.  Lump Sum Payment Form.  A Participant who receives payment of
retirement benefits under the lump sum form shall receive a single sum payment
on the Benefit Commencement Date in lieu of payments under
Form 1.  Notwithstanding the foregoing, the lump sum payment form is only
available:

(i)         to a Participant in payment of a withdrawal pursuant to Article 6.4
herein;

(ii)       to a Participant in payment of a distribution pursuant to
Article 12.2 herein upon termination of the Plan; or

(iii)      to a Participant who experiences a Termination of Tenure prior to the
Normal Retirement Date.

(d)        Terms and Conditions of Forms.  The forms of retirement benefits
described in Article 5.4 herein shall be subject to the following conditions:

(i)         except for lump sum payments, Benefit Payments shall be paid
annually on the first day of the Plan Year;

(ii)       if any Participant dies before his or her pre-2005 Deferral Account
has been paid in full, then any remaining Benefit Payments shall be paid to the
Participant’s Beneficiary in a single lump sum form within sixty (60) days
following the date of the Participant’s death;

(iii)      Participant shall be entitled to designate a new Beneficiary;

(iv)       if any Participant is receiving retirement benefits under Form 1 and
Participant’s Beneficiary dies after the Benefit Commencement Date, but prior to
the death of the Participant, such Participant shall continue to 

5-4

 

 

receive the annual retirement benefits payable under such form and shall be
entitled to designate a new Beneficiary; or

(v)        for purposes of Benefit Payments under the installment form described
in Article 5.4(c) only, payments shall be calculated on the basis of the value
of the Participant’s Pre-2005 Deferral Account determined as of the November 1st
preceding the last payment date, except that the final payment shall use the
current value.

(e)        Revocation or Modification of Elected Forms.  Any Participant may at
any time at least thirteen (13) months before the Benefit Commencement Date:

(i)         revoke an election previously made under Article 5.4(b) herein by
written notice duly filed with the Administrator or its designated
representative in which event the Participant shall be treated the same as
though an optional election had not been filed; or

(ii)       change election from one to another of the forms described in
Article 5.4(c) herein by written notice and designation duly made and filed with
the Administrator or its designated representative pursuant to Article 5.4(b)
herein.

5.5      Benefit Commencement Events.

(a)        Normal Retirement.  A Participant who continues to be a Director
until the Normal Retirement Date shall receive a distribution of the amount
credited to his or her Pre-2005 Deferral Account hereunder, in such form as is
provided in Article 5 herein.  The Benefit Commencement Date for a Participant
who retires from the Board on or after the Normal Retirement Date shall be the
date elected by the Participant, not to exceed the January 1st immediately
following the Participant’s 75th birthday.

(b)        Termination of Tenure Prior to Normal Retirement Date.  A Participant
who has a Termination of Tenure prior to Normal Retirement Date shall receive a
distribution of the amounts credited to his or her Pre-2005 Deferral Account
hereunder, in the form of a lump sum payment, as is provided in Article 5.4(c) 

5-5

 

 

herein.  The Benefit Commencement Date for a Participant who has a Termination
of Tenure prior to Normal Retirement Date shall be, as soon as administratively
feasible, but not later than sixty (60) days following the date of such
Termination of Tenure.

(c)        Death.  A Participant who dies prior to receipt of any unpaid balance
hereunder shall have distributed in accordance with Article 5.4 to the
Participant’s Beneficiaries the amounts credited to the Participant’s Pre-2005
Deferral Account hereunder.

(d)        Withdrawal Rights and Preretirement Distributions.

(i)         Withdrawal Rights Following Change of Control.   Upon a Change of
Control, the Company may elect in its sole discretion to distribute in a lump
sum payment as described in Article 5.4(c) herein, the amounts credited to the
Participant’s Pre-2005 Deferral Account.

(ii)       Hardship Withdrawal.  In the event that the Administrator, upon
application of a Participant, determines in its sole discretion, that the
Participant has suffered an “unforeseeable financial emergency” as defined for
purposes of Section 457 of the Code, the Company shall first suspend Deferral
Amounts for the remainder of the then current Plan Year and then pay to the
Participant an amount, not in excess of the sum of the Participant’s Pre-2005
Deferral Account necessary to satisfy the emergency.  For purposes of the Plan,
an unforeseeable financial emergency is an unanticipated emergency that is
caused by an event beyond the control of the Participant that would result in
severe financial hardship to the Participant if the distribution were not
permitted, as may result from illness, casualty loss or sudden financial
reversal.  Cash needs arising from foreseeable events, such as the purchase of a
residence or education expenses for children, shall not be considered the result
of an unforeseeable financial emergency.  Such distribution shall be made in a
lump sum payment as described in Article 5.4(c) herein.  To the extent of such
withdrawal, the Participant’s Pre-2005 Deferral Account balances shall be
canceled.

(iii)      Preretirement Distributions.  In the event that the Participant, in
accordance with Article 5.3 herein, has elected to defer a portion of
compensation to a specific date, such payments shall be made as either a lump
sum or up to five (5) annual installments as of such specified date, subject to
the superseding provisions of Article 5.3 herein.

5-6

 

 

(e)        Benefit Payment Delay in the Event of Allegations.  In the event the
Company levies allegations of embezzlement, theft or similar allegations against
the Participant, Benefit Payments to the Participant shall be delayed until the
date a final adjudication is reached.  If such allegations are found to be true,
the Participant’s Deferral Account shall be forfeited to the extent necessary to
provide restitution.  Any forfeiture of the Participant’s Deferral Account shall
be offset by any amounts outside the Plan the Participant uses to provide
restitution.

(f)        Election of Earlier Benefit Commencement Date.  A Participant shall
elect the Benefit Commencement Date including form of the distribution, at the
time the Deferral Election is submitted.  A Participant may subsequently change
such election if the change is submitted at least thirteen (13) months prior to
such earlier Benefit Commencement Date.  Such election shall be in a form
prescribed for this purpose by the Administrator and signed by the
Participant.  Such election shall be deemed to be made when it shall have been
received by the Administrator or designated representative.

(g)        Timing of Payments.  Payments of Pre-2005 Deferral Accounts under the
Plan shall be made as of the time specified elsewhere in the
Plan.  Notwithstanding the foregoing provision of this Article 5.5 and such
other provisions to the contrary, the requirement that a distribution commence
on or before a particular date shall not apply if the amount of payment required
to be made on such date cannot be ascertained by such date, or the Administrator
is unable to locate the Participant or the Beneficiary after making reasonable
efforts to do so, provided that, within sixty (60) days after such amount can be
ascertained or the Participant or the 

5-7

 

 

Beneficiary is located, a payment is made retroactive to such date.  This
Article 5.5(g) is not intended to permit a Participant or Beneficiary to elect
to defer payment beyond the dates otherwise provided herein.

 

 

5-8

 

 

ARTICLE 6

 

PRERETIREMENT DISTRIBUTION; UNFORESEEABLE EMERGENCIES

6.1      Preretirement Distribution Election.  A Participant may make a
Preretirement Distribution Election applicable to all or a portion of the
amounts credited to his or her Deferral Account for a given Plan Year.  A
Participant’s Preretirement Distribution Election shall specify a stated
percentage or dollar amount of the amounts to be credited to his or her Deferral
Account for the Plan Year, which specified percentage or dollar amount shall not
exceed one hundred percent (100%) of the Participant’s Deferral Amount for the
Plan Year, that will be distributed on a date that is prior to the Participant’s
Normal Retirement Date.  The Deferral Election subject to a Preretirement
Distribution Election shall be for a definite period and shall be payable in the
form elected, either a single lump sum or up to five (5) annual installments,
and on the date specified by the Participant, provided that the following shall
be applicable:

(a)        the distribution must not occur until at least the fifth (5th) Plan
Year following the Plan Year of such Preretirement Distribution Election;

(b)        the Preretirement Distribution Election will be superseded by the
other Plan distribution provisions applicable to death, Retirement, Termination
of Tenure of the Participant, the Plan’s Termination Date or a previous
withdrawal of such amounts under the provisions of Articles 6.1 or 6.2, before
the date as of which the amount is payable.

6.2      Hardship Withdrawals.  In the event that the Administrator, upon
application of a Participant, determines in its sole discretion, that the
Participant has suffered an Unforeseeable Emergency, the Company shall terminate
the Participant’s Deferral Election for the remainder of the then current Plan
Year and permit the Participant to take a hardship 

6-1

 

withdrawal.  Upon the Administrator’s approval, the Participant shall receive a
payout from the Plan not to exceed the lesser of (i) the Participant’s Deferral
Account, 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 payout.  Notwithstanding the
foregoing, 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 (other than tax-qualified retirement 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.  Such distribution shall be made
in a lump sum payment.  To the extent of such withdrawal, the Participant’s
Deferral Account balances shall be canceled.  Notwithstanding the foregoing, for
hardship withdrawals from a Participant’s Deferral Account, the Administrator
shall interpret all provisions relating to termination and/or payout hereunder
in a manner that is consistent with Section 409A.

 

 

 

6-2

 

ARTICLE 7

 

BENEFITS DISTRIBUTIONS

7.1      Benefit Commencement Date.  A Participant’s Benefit Commencement Date
shall be the earliest of the following dates:

(a)        The post-Retirement Date selected by the Participant as provided in
Article 8.1; provided, however, such date shall not exceed the January 1st
immediately following the Participant’s 75th birthday;

(b)        The Participant’s Termination of Tenure prior to Retirement as
provided in Article 8.2;

(c)        The date(s) selected by the Participant prior to his or her
Retirement as provided in Article 6.1;

(d)        The date of a Change of Control as provided in Article 8.4; or

(e)        The date the Participant dies.

In the event that a Participant has not made an election as to his Benefit
Commencement Date, the default Benefit Commencement Date shall be his or her
Termination of Tenure.

7.2      Time of Distribution.  Distributions pursuant to this Plan shall be
paid in accordance with Articles 6 and 8, provided that:

(a)        Any distribution to be made in a lump sum shall be paid no later than
sixty (60) days after the Participant’s Benefit Commencement Date.

(b)        Any distribution to be made pursuant to the Installment Method shall
commence no later than sixty (60) days after the Participant’s Benefit
Commencement Date and thereafter shall be made no later than sixty (60) days
after the last business day of the preceding year.

7-1

 

7.3      Change to Elections for Time and Form of Payment.  A Participant may
delay his or her Benefit Commencement Date and if benefits are payable pursuant
to Article 8.1(b) change the form of payment of the Participant’s Deferral
Account by submitting a new election form to the Administrator in accordance
with the following criteria:

(a)        With respect to payments described in Article 6.1, the new election
may not be made less than twelve (12) months prior to the first scheduled
payment under the Participant’s originally scheduled Benefit Commencement Date.

(b)        The election to modify the time or form of distribution shall have no
effect until at least twelve (12) months after the date on which the new
election is made.

(c)        With respect to payments, other than as described in Article 6.2, the
first payment pursuant to the modified election shall be delayed for a period of
not less than five (5) years from the Participant’s originally scheduled Benefit
Commencement Date.

(d)        Notwithstanding the foregoing, the Administrator shall interpret all
provisions relating to changing an election under this Article 7.3 in a manner
that is consistent with Section 409A.  Accordingly, if a Participant’s
subsequent distribution election would result in the shortening of the length of
the Benefit Payment period, and the Administrator determines such an election to
be inconsistent with Section 409A, the election shall not be effective.

(e)        The election most recently accepted by the Administrator, which has
become effective, shall govern the payout of any benefit.

7.4      Consent Not Required.  No consent shall be required of the Company in
order to elect another form of retirement benefits or to revoke such an
election.

7-2

 

7.5      Correction of Amounts Payable.  Anything contained in this Article 7 to
the contrary notwithstanding, if, after the Retirement or other Termination of
Tenure of a Participant, the amount of retirement benefit which would have been
payable under the Plan is subject to any deduction, change, offset or
correction, then the amount payable to such Participant and the Participant’s
Beneficiary shall be adjusted to reflect any such deduction, change, offset or
correction.

7.6      Timing of Payments.  Payments of a Participant’s Deferral Account
balance under the Plan shall be made as of the time specified elsewhere in the
Plan.  Notwithstanding the foregoing provision of this Article 7 and such other
provisions to the contrary, the requirement that a distribution commence on or
before a particular date shall not apply if the amount of payment required to be
made on such date cannot be ascertained by such date, or the Administrator is
unable to locate the Participant or the Beneficiary after making reasonable
efforts to do so, provided that, within sixty (60) days after such amount can be
ascertained or the Participant or the Beneficiary is located, a payment is made
retroactive to such date.  This Article 7 is not intended to permit a
Participant or Beneficiary to elect to defer payment beyond the dates otherwise
provided herein.  Notwithstanding the foregoing, payments delayed pursuant to
this Article 7 shall be made no later than the end of the calendar year in which
the payment became due in order to comply with Section 409A.

7.7      Transition Rule.  Notwithstanding any provision of the Plan to the
contrary, in a manner that is consistent with Section 409A, the Administrator
may solicit new election forms from Participants in order for the Participants
to change the method or timing of distributions of all amounts subject to
Section 409A under the Plan, provided such elections 

7-3

 

are solicited and properly made prior to December 31, 2008.  In the event the
Administrator elects to solicit new election forms under this Section, the
failure by the Participant to submit a complete, timely and proper election form
will result in the application of the most recently submitted complete, timely
and proper election form.

 

 

 

7-4

 

ARTICLE 8

 

BENEFIT DISTRIBUTION EVENTS

8.1      Retirement Benefits.

(a)        Retirement Benefit.  A Participant who continues to be a Director
until his or her Normal Retirement Date shall receive a distribution of the
amounts credited to Participant’s Deferral Account hereunder, calculated as of
the close of business on or around the Participant’s Benefit Commencement Date;
provided, however, if the Participant elected to receive annual installments (as
described in (b) below), the annual payment amounts shall be determined as of
the November 1st preceding the last payment date, except that the final payment
shall use the current value.

(b)        Payment of Retirement Benefit.  A Participant shall receive his or
her Retirement Benefit Payment in a lump sum, unless such Participant elected,
in connection with his or her commencement of participation in the Plan, to
receive a Retirement Benefit Payment in the form of up to twenty (20) equal
annual installments.

8.2      Termination of Tenure.

(a)        Termination Benefit.  A Participant who has a Termination of Tenure
prior to his or her Normal Retirement Date shall receive a distribution of the
amounts credited to his or her Deferral Account hereunder, as soon as
administratively feasible but not later than sixty (60) days following the date
of such Termination of Tenure.

(b)        Payment of Termination Benefit.  A Participant shall receive his or
her Termination Benefit Payment in a lump sum.

8.3      Death.

(a)        Death Benefit.  If a Participant dies prior to his or her Benefit
Commencement Date or prior to receiving the entire balance in his or her
Deferral Account, the

8-1

 

Participant’s Beneficiaries shall receive a death Benefit Payment which shall be
equal to the Participant’s Deferral Account balance, calculated as of the close
of business on the first business day following the date of the Participant’s
death.

(b)        Payment of Death Benefit.  The death Benefit Payment shall be paid to
the Participant’s Beneficiaries in a single lump sum within sixty (60) days
following the date of the Participant’s death.

8.4      Change of Control.

(a)        Change of Control Benefit.  Notwithstanding Article 8.1 through 8.3,
a Participant will receive a Benefit Payment upon a Change of Control at the
time the Change of Control occurs.  A Participant’s Change of Control Benefit
Payment shall be equal to his or her entire Deferral Account balance, calculated
as of the close of business on the day the Change of Control is deemed to have
occurred, as determined by the Administrator in its sole discretion.

(b)        Payment of Change of Control Benefit.  Any Change of Control Benefit
Payment shall be paid in a single lump sum.

8.5      Benefit Payment Delay in the Event of Allegations.  In the event the
Company levies allegations of embezzlement, theft or similar allegations against
the Participant, Benefit Payments to the Participant shall be delayed until the
date a final adjudication is reached to the extent permitted under Section
409A.  If such allegations are found to be true, the Participant’s Deferral
Account shall be forfeited to the extent necessary to provide restitution.  Any
forfeiture of the Participant’s Deferral Account shall be offset by any amounts
outside the Plan the Participant uses to provide restitution.

 

 

8-2

 

ARTICLE 9

 

BENEFICIARIES

9.1      Automatic Beneficiary.  Unless a Participant or former Participant has
designated a Beneficiary in accordance with the provisions of Article 9.2
herein, the Participant’s Beneficiary shall be deemed to be the person or
persons in the first of the following classes in which there are any survivors
of such Participant or former Participant:

(a)        spouse at the time of Participant’s death;

(b)        issue, per stirpes;

(c)        parents; or

(d)        executor or administrator of Participant’s estate.

9.2      Designated Beneficiary or Beneficiaries.  A Participant or former
Participant may sign a document designating a Beneficiary or Beneficiaries to
receive any benefit payable under Article 8.3.  In the event a Participant or
former Participant dies at a time when a designation is on file which does not
dispose of the total benefit distributable under Article 8.3, then the portion
of such benefit distributable on behalf of said Participant or former
Participant, the disposition of which was not determined by the deceased
Participant’s or former Participant’s designation, shall be distributed to a
Beneficiary determined under Article 8.3.  Any ambiguity in a Participant’s or
former Participant’s Beneficiary designation shall be resolved by the
Administrator.

9.3      Death of Beneficiary.  If a Participant is receiving his or her
Retirement Benefit in the form of annual installments and his or her Beneficiary
dies prior to the complete distribution of the Participant’s Deferral Account
and prior to the Participant, such Participant shall continue to receive the
annual Retirement Benefit payments and shall be entitled to designate a new
Beneficiary.

 

9-1

 

ARTICLE 10

 

RIGHTS OF PARTICIPANTS AND BENEFICIARIES

10.1    Creditor Status of Participant and Beneficiary.  The Plan constitutes
the unfunded, unsecured promise of the Company to make Benefit Payments to each
Participant and Beneficiary in the future and shall be a liability solely
against the general assets of the Company or Affiliated Company, as
applicable.  The Company or Affiliated Company, as applicable, shall not be
required to segregate, set aside or escrow any amounts for the benefit of any
Participant or Beneficiary.  Each Participant and Beneficiary shall have the
status of a general unsecured creditor of the Company or Affiliated Company, as
applicable, and may look only to the Company or Affiliated Company, as
applicable, and their general assets for payment of benefits under the Plan.

10.2    Rights with Respect to a Trust.  Any trust and any assets held thereby
to assist the Company or affiliated Company, as applicable, in meeting their
obligations under the Plan, shall in no way be deemed to controvert the
provisions of Article 10.1 herein.

10.3    Investments.  In its sole discretion, the Company or Affiliated Company,
as applicable, may acquire insurance policies, annuities or other financial
vehicles for the purpose of providing future assets of the Company or Affiliated
Company, as applicable, to meet their anticipated liabilities under the
Plan.  Such policies, annuities or other investments shall at all times be and
remain unrestricted general property and assets of the Company or Affiliated
Company, as applicable, or property of a trust.  Participants and Beneficiaries
shall have no rights, other than as general creditors, with respect to such
policies, annuities or other acquired assets.

 

10-1

 

 

ARTICLE 11

 

TRUST

11.1    Establishment of Trust.  Notwithstanding any other provision or
interpretation of the Plan, the Company or an Affiliated Company, as applicable,
may establish a trust in which to hold cash, insurance policies or other assets
to be used to make, or reimburse the Company or an Affiliated Company, as
applicable, for payments to the Participants or Beneficiaries of all or part of
the benefits under the Plan.  Any trust assets shall at all times remain subject
to the claims of general creditors of the Company or an Affiliated Company, as
applicable, in the event of their insolvency as more fully described in the
trust.

11.2    Obligations of the Company.  Notwithstanding the fact that a trust may
be established under Article 11.1 herein, the Company or an Affiliated Company,
as applicable, shall remain liable for paying the benefits under the
Plan.  However, any payment of benefits to a Participant or a Beneficiary made
by such a trust shall satisfy the Company’s or the Affiliated Company’s, as
applicable, obligation to make such payment to such person.

11.3    Trust Terms.  A trust established under Article 11.1 herein may be
revocable by the Company or an Affiliated Company, as applicable; provided,
however, that such a trust may become irrevocable in accordance with its terms
in the event of a Change of Control.  Such a trust may contain such other terms
and conditions as the company or an Affiliated Company, as applicable, may
determine to be necessary or desirable.  The Company or an Affiliated Company,
as applicable, may terminate or amend a trust established under Article 11.1
herein at any time, and in any manner it deems necessary or desirable, subject
to the preceding sentence and the terms of any agreement under which any such
trust is established or maintained.

 

11-1

 

ARTICLE 12

 

CLAIMS PROCEDURE

12.1    Claim for Benefits.  Any claim for benefits under the Plan shall be made
in writing to the Administrator in such a manner as the Administrator shall
reasonably prescribe.  The Administrator shall process each such claim and
determine entitlement to benefits within thirty (30) days following the receipt
of a completed application for benefits unless special circumstances require an
extension of time for processing the claim.  If such an extension of time for
processing is required, written notice of the extension shall be furnished to
the claimant prior to the termination of the initial thirty (30) day period.  In
no event shall such extension exceed a period of thirty (30) days from the end
of such initial period.  The extension notice shall indicate the special
circumstances requiring an extension of time and the date as of which the
Administrator expects to render the final decision.

If such a claim is wholly or partially denied by the Administrator, the
Administrator shall notify the claimant of the denial of the claim in writing,
delivered in person or mailed by first class mail to the claimant’s last known
address.  Such notice of denial shall contain:

(a)        the specific reason or reasons for denial of the claim;

(b)        a reference to the relevant Plan provisions upon which the denial is
based;

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

(d)        an explanation of the Plan’s claim review procedure.

If no such notice is provided, and if the claim has not been granted within the
time specified above for approval of the claim, the claim shall be deemed denied
and subject to review as described below.  The interpretations, determinations
and decisions of the Administrator

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shall be final and binding upon all persons with respect to any right, benefit
and privilege hereunder, subject to the review procedures set forth in this
Article 12.

12.2    Request for Review of a Denial of a Claim for Benefits.  Any claimant or
authorized representative of the claimant whose claim for benefits under the
Plan has been denied or deemed denied, in whole or in part, by the Administrator
may upon written notice delivered to the Appeals Committee request a review by
the Appeals Committee of such denial of Participant’s claim for benefits.  Such
claimant shall have sixty (60) days from the date the claim is deemed denied, or
sixty (60) days from receipt of the notice denying the claim, as the case may
be, in which to request such a review.  The claimant’s notice must specify the
relief requested and the reason such claimant believes the denial should be
reversed.

12.3    Appeals Procedure.  The Appeals Committee is hereby authorized to review
the facts and relevant documents, including the Plan document, to interpret the
Plan and other relevant documents and to render a decision on the appeal of the
claimant.  Such review may be made by written briefs submitted by the claimant
and the Administrator or at a hearing, or by both, as shall be deemed necessary
by the Appeals Committee.  Upon receipt of a request for review, the Appeals
Committee shall schedule a hearing to be held (subject to reasonable scheduling
conflicts) not less than thirty (30) nor more than forty-five (45) days from the
receipt of such request.  The date and time of such hearing shall be designated
by the Appeals Committee upon not less than fifteen (15) days notice to the
claimant and the Administrator unless both accept shorter notice.  The notice
shall specify that such claimant must indicate, in writing, at least
five (5) days in advance of the time established for such hearing, claimant’s
intention to appear at the appointed time and place, or the hearing will
automatically be canceled.  The reply shall specify any other persons who will
accompany

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claimant to the hearing, or such other persons will not be admitted to the
hearing.  The Appeals Committee shall make every effort to schedule the hearing
on a day and at a time which is convenient to both the claimant and the
Administrator.  The hearing will be scheduled at the Company’s headquarters
unless the Appeals Committee determines that another location would be more
appropriate.  The claimant, or the claimant’s duly authorized representative,
may review all pertinent documents relating to the claim in preparation for the
hearing and may submit issues and comments in writing prior to or during the
hearing.

12.4    Decision upon Review of Denial of Claim for Benefits.  After the review
has been completed, the Appeals Committee shall render a decision, in writing, a
copy of which shall be sent to both the claimant and the Administrator.  In
making its decision, the Appeals Committee shall have full power, authority, and
discretion to determine any and all questions of fact, resolve all questions of
interpretation of this instrument or related documents which may arise under any
of the provisions of the Plan or such documents as to which no other provision
for determination is made hereunder, and exercise all other powers and
discretions necessary to be exercised under the terms of the Plan which it is
herein given or for which no contrary provision is made and to determine the
right to benefits of, and the amount of benefits, if any, payable to, any person
in accordance with the provisions of the Plan.  The Appeals Committee shall
render a decision on the claim review promptly, but not more than
sixty (60) days after the receipt of the claimant’s request for review, unless a
hearing is held, in which case the sixty (60) day period shall be extended to
thirty (30) days after the date of the hearing.  Such decision shall include
specific reasons for the decision, written in a manner calculated to be
understood by the

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claimant, and shall contain specific references to the pertinent provisions of
the Plan and related documents upon which the decision is based.  The decision
on review shall be furnished to the claimant within the appropriate time
described above.  If the decision on review is not furnished within such time,
the claim shall be deemed denied on review at the end of such period.  There
shall be no further appeal from a decision rendered by the Appeals
Committee.  The decision of the Appeals Committee shall be final and binding in
all respects on the Administrator, the Company and the claimant.  Except as
otherwise provided by law, the review procedures of this Article 12 shall be the
claimant’s sole and exclusive remedy and shall be in lieu of all actions at law,
in equity, pursuant to arbitration or otherwise.

12.5    Establishment of Appeals Committee.  The Board shall appoint the members
of an Appeals Committee which shall consist of three (3) or more members.  The
members of the Appeals Committee shall remain in office at the will of the
Board, and the Board, from time to time, may remove any of said members of the
Appeals Committee with or without cause.  A member of the Appeals Committee may
resign upon written notice to the remaining member or members of the Appeals
Committee and to the Board, respectively.  The fact that a person is a
Participant or a former Participant or a prospective Participant shall not
disqualify the Participant from acting as a member of the Appeals Committee, nor
shall any member of the Appeals Committee be disqualified from acting on any
question because of Participant’s interest therein, except that no member of the
Appeals Committee may act on any claim which such member has brought as a
Participant, former Participant or Beneficiary under the Plan.  In the case of
death, resignation or removal of any member of the Appeals Committee, the
remaining members shall act until a successor-member shall

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be appointed by the Board.  At the Administrator’s request, the Secretary of the
Company shall notify the Administrator in writing of the names of the original
members of the Appeals Committee, of any and all changes in the membership of
the Appeals Committee, of the member designated as Chairman, and the member
designated as Secretary, and of any changes in either office.  Until notified of
a change, the Administrator shall be protected in assuming that there has been
no change in the membership of the Appeals Committee or the designation of
Chairman or of Secretary since the last notification was filed with it.  The
Administrator shall be under no obligation at any time to inquire into the
membership of the Appeals Committee or its officers.  All communications to the
Appeals Committee shall be addressed to its Secretary at the address of the
Company.  Unless the Board shall appoint others as the Appeals Committee, the
three (3) Board members with the longest period of active service on the Board
shall constitute such Appeals Committee.

12.6    Operations of Appeals Committee.  On all matters and questions, a
decision of a majority of the members of the Appeals Committee shall govern and
control.  Meetings may be held in person or by electronic means.  In lieu of a
meeting, decisions may be made by unanimous written consent.  The Appeals
Committee shall appoint one of its members to act as its Chairman and another
member to act as Secretary.  The terms of office of these members shall be
determined by the Appeals Committee, and either or both the Secretary and
Chairman may be removed by the other members of the Appeals Committee for any
reason which such other members may deem just and proper.  The Secretary shall
do all things directed by the Appeals Committee.  Although the Appeals Committee
shall act by decision of a majority of its members as above provided,
nevertheless in the absence of written notice to the contrary, every person may
deal with the Secretary and consider the

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Secretary’s acts as having been authorized by the Appeals Committee.  Any notice
served or demand made on the Secretary shall be deemed to have been served or
made upon the Appeals Committee.

12.7    Special Provisions Relating to Change of Control.  In the event of a
Change of Control, notwithstanding the contrary provisions of this Article, for
the two (2) year period following such Change of Control, the
three (3) Participants having the greatest amounts accrued under the Plan shall
assume the responsibilities of the Appeals Committee set forth in this
Article.  If one or more of them shall not be able to serve or to continue to
serve, the individual or individuals, as applicable, having the next largest
amounts accrued under the Plan will serve in such Participants’ place.  If at
any time during such two (2) year period fewer than three (3) Participants have
amounts accrued under the Plan, such Participant or Participants shall perform
the duties of the Appeals Committee.  If only one (1) Participant has amounts
accrued under the Plan, the Appeals Committee shall not consist of such
Participant but of an individual as the Participant and the Company shall
agree.  If Participant and the Company fail to agree on a single individual, the
Appeals Committee shall consist of three (3) Participants, one appointed by the
Company, one appointed by the Participant claiming benefits hereunder, and a
third selected by the other two (2).

 

 

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ARTICLE 13

 

ADMINISTRATION

13.1    Appointment of Administrator.  The Board shall appoint the Administrator
which shall be any person(s), corporation or partnership (including the Company
itself) as the Board shall deem desirable in its sole discretion.  The
Administrator may be removed or resign upon thirty (30) days written notice or
such lesser period of notice as is mutually agreeable.  Unless the Board
appoints another Administrator, the Compensation Committee shall be the
Administrator.

13.2    Powers and Duties of the Administrator.  Except as expressly otherwise
set forth herein, the Administrator shall have the authority and responsibility
granted or imposed on an “administrator” by ERISA.  The Administrator shall
determine any and all questions of fact, resolve all questions of interpretation
of the Plan which may arise under any of the provisions of the Plan as to which
no other provision for determination is made hereunder, and exercise all other
powers and discretions necessary to be exercised under the terms of the Plan
which it is herein given or for which no contrary provision is made.  The
Administrator shall have full power and discretion to interpret the Plan and
related documents, to resolve ambiguities, inconsistencies and omissions, to
determine any question of fact, and to determine the rights and benefits, if
any, of any Participant or other applicant, in accordance with the provisions of
the Plan.  Subject to the provisions of any claims procedure hereunder, the
Administrator’s decision with respect to any matter shall be final and binding
on all parties concerned, and neither the Administrator nor any of its
directors, officers, employees or delegates nor, where applicable, the
directors, officers or employees of any delegate, shall be liable in that regard
except for gross abuse of the discretion given it and them under the terms of
the Plan.  All determinations of the

13-1

 

 

Administrator shall be made in a uniform, consistent and nondiscriminatory
manner with respect to all Participants and Beneficiaries in similar
circumstances.  The Administrator, from time to time, may designate one or more
persons or agents to carry out any or all of its duties hereunder.

13.3    Engagement of Advisors.  The Administrator may employ actuaries,
attorneys, accountants, brokers, employee benefit consultants, and other
specialists to render advice concerning any responsibility the Administrator,
Appeals Committee or Compensation Committee has under the Plan.  Such persons
may also be advisors to the Company.

13.4    Payment of Costs and Expenses.  The costs and expenses incurred in the
administration of the Plan shall be paid in either of the following manners as
determined by the Company in its sole discretion:

(a)        the expenses may be paid directly by the Company; or

(b)        the expenses may be paid out of the trust, if any (subject to any
restriction contained in such trust or required by law).

Such costs and expenses include those incident to the performance of the
responsibilities of the Administrator, Appeals Committee or Compensation
Committee, including but not limited to, claims, administration fees and costs,
fees of accountants, legal counsel and other specialists, bonding expenses, and
other costs of administering the Plan.  Notwithstanding the foregoing, in no
event will any person serving in the capacity of Administrator, Appeals
Committee member or Compensation Committee member who is a full-time employee of
the Company be entitled to any compensation for such services.

 

 

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ARTICLE 14

 

AMENDMENT AND TERMINATION

14.1    Power to Amend or Terminate.  Except as otherwise provided herein
following a Change of Control, the Plan may be amended by the Company at any
time, and may be terminated by the Company at any time, but no such amendment,
modification or termination shall reduce the amounts credited to the Deferral
Account of any Participant, determined as of the date of such amendment,
modification or termination.  Such amendment or termination shall be in writing,
executed by two or more Directors of the Company whose actions are authorized or
ratified by the Board.  The Plan may not be amended (but may be terminated)
during the two (2) year period following a Change of Control except that
amendments may be made as required by law.  Notwithstanding the foregoing, no
amendment or modification shall be made unless such amendment or modification
complies with Section 409A, and, in the event that the Company determines that
any provision of the Plan may violate or otherwise not comply with Section 409A,
the Company may, without the consent of the Participant, (a) 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 treatment of the Plan or the
benefits provided by the Plan, and/or (b) take such other actions as the Company
determines necessary or appropriate to comply with the requirements of Section
409A.

14.2    Effects of Plan Termination.  If the Plan is terminated, then, on and
after the Termination Date, all deferrals and allocations hereunder shall cease.

(a)        If (i) the Plan is terminated within the period 30 days prior to and
12 months following a Change of Control, and (ii) all agreements, methods,
programs and other arrangements sponsored by the Company which are to be treated
as a single

14-1

 

 

plan under Treasury Regulations Section 1.409A-1(c)(2) are terminated and
liquidated with respect to each Participant, then the amounts credited to the
Accounts of each Participant as of the Termination Date shall be distributed to
such Participant in a lump sum as soon as reasonably feasible but no later than
ninety (90) days after the Termination Date.

(b)        If (i) the Plan is terminated and liquidated outside the period
described in subsection (a), and (ii) all agreements, methods, programs and
other arrangements sponsored by the Company which are to be treated as a single
plan under Treasury Regulations Section 1.409A-1(c)(2) are terminated and
liquidated with respect to each Participant, then the amounts credited to the
Accounts of each Participant as of the Termination Date shall be distributed to
such Participant in a lump sum no earlier than the date that is 12 months after
the Termination Date and no later than the date that is 24 months after the
Termination Date.  The receipt and continued retention by the Participant of
payments under this section is conditioned on the requirement that the Company
does not adopt a new plan that would be aggregated with any terminated and
liquidated plan of the Company under Treasury Regulations Section 1.409A-1(c)
for three years after the Termination Date.  Notwithstanding anything to the
contrary in this subsection, no distribution of any amounts may be made in
connection with the termination of the Plan if the termination and liquidation
of the Plan occurs proximate to a downturn in the financial health of the
Company.

14.3    No Liability for Plan Amendment or Termination.  Neither the Company,
any officer, employee nor Director thereof shall have any liability as a result
of the amendment or termination of the Plan.  Without limiting the generality of
the foregoing, the Company

14-2

 

 

shall have no liability for terminating the Plan notwithstanding the fact that a
Participant may have expected to make future deferrals and have future
allocations made on Participant’s behalf hereunder had the Plan remained in
effect.

 

 

 

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ARTICLE 15

 

MISCELLANEOUS

15.1    Non-Alienation.  No benefits or amounts credited to any Account under
the Plan shall be subject in any manner to be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered, attached, garnished or charged in
any manner (either at law or in equity), and any attempt to so anticipate,
alienate, sell, transfer, assign, pledge, encumber, attach, garnish or charge
the same shall be void; nor shall any such benefits or amounts in any manner be
liable for or subject to the debts, contracts, liabilities, engagements or torts
of the person entitled to such benefits or amounts as are herein provided to
Participant.

15.2    Tax Withholding.  The Company may withhold from a Participant’s
compensation or any payment made by it under the Plan such amount or amounts as
may be required for purposes of complying with the tax withholding or other
provisions of the Code or the Social Security Act or any state or local income
or employment tax act or for purposes of paying any estate, inheritance or other
tax attributable to any amounts payable hereunder, provided that any tax
withholding under this Section must occur in accordance with 409A.

15.3    Incapacity.  If the Administrator determines that any Participant or
other person entitled to payments under the Plan is incompetent by reason of
physical or mental disability and is consequently unable to give a valid receipt
for payments made hereunder, or is a minor, the Administrator may order the
payments becoming due to such person to be made to another person for
Participant’s benefit, without responsibility on the part of the Administrator
to follow the application of amounts so paid.  Payments made pursuant to this
Article shall completely discharge the Administrator, the Company and the
Appeals Committee with respect to such payments.

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15.4    Administrative Forms.  All applications, elections and designations in
connection with the Plan made by a Participant or other person shall become
effective only when duly executed on forms or via the Plan’s Participant Access
System as provided by the Administrator and filed with the Administrator.

15.5    Independence of Plan.  Except as otherwise expressly provided herein,
the Plan shall be independent of, and in addition to, any other benefit
agreement or plan of the Company or any rights that may exist from time to time
thereunder.

15.6    Responsibility for Legal Effect.  Neither the Company, the
Administrator, the Compensation Committee, Appeals Committee, nor any officer,
member, delegate or agent of any of them, makes any representations or
warranties, express or implied, or assumes any responsibility concerning the
legal, tax, or other implications or effects of the Plan.  Without limiting the
generality of the foregoing, the Company shall not have any liability for the
tax liability which a Participant may incur resulting from participation in the
Plan or the payment of benefits hereunder.

15.7    Limitation of Duties.  The Company, the Compensation Committee, the
Administrator, the Appeals Committee, and their respective officers, members,
employees and agents shall have no duty or responsibility under the Plan other
than the duties and responsibilities expressly assigned to them herein or
delegated to them pursuant hereto.  None of them shall have any duty or
responsibility with respect to the duties or responsibilities assigned or
delegated to another of them.

15.8    Limitation of Sponsor Liability.  Any right or authority exercisable by
the Company, pursuant to any provision of the Plan, shall be exercised in the
Company’s capacity as sponsor of the Plan, or on behalf of the Company in such
capacity, and not in a fiduciary 

15-2

 

 

capacity, and may be exercised without the approval or consent of any person in
a fiduciary capacity.  Neither the Company, nor any of its respective officers,
members, employees, agents and delegates, shall have any liability to any party
for its exercise of any such right or authority.

15.9    Successors.  The terms and conditions of the Plan shall inure to the
benefit of and bind the Company, the Affiliated Companies, as applicable, and
their successors, the Participants, their Beneficiaries and the personal
representatives of the Participants and their Beneficiaries.

15.10  Controlling Law.  The Plan shall be construed in accordance with the laws
of the State of Illinois to the extent not preempted by laws of the United
States.

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

Old Second Bancorp, Inc.

37 South River Street

Aurora, Illinois  60506

Attn:    Administrator, Old Second Bancorp, Inc.
Voluntary Deferred Compensation Plan for Directors

15.12  Headings and Titles.  The Article headings and titles of Articles used in
the Plan are for convenience of reference only and shall not be considered in
construing the Plan.

15.13  General Rules of Construction.  The masculine gender shall include the
feminine and neuter, and vice versa, as the context shall require.  The singular
number shall include the plural, and vice versa, as the context shall
require.  The present tense of a verb shall include the past and future tenses,
and vice versa, as the context may require.

15.14  Severability.  In the event that any provision or term of the Plan, or
any agreement or instrument required by the Administrator hereunder, is
determined by a judicial, quasi-

15-3

 

 

judicial or administrative body to be void or not enforceable for any reason,
all other provisions or terms of the Plan or such agreement or instrument shall
remain in full force and effect and shall be enforceable as if such void or
nonenforceable provision or term had never been a part of the Plan, or such
agreement or instrument except as to the extent the Administrator determines
such result would have been contrary to the intent of the Company in
establishing and maintaining the Plan.

15.15  Indemnification.  The Company shall indemnify, defend, and hold harmless
any employee, officer or Director of the Company for all acts taken or omitted
in carrying out the responsibilities of the Company, Compensation Committee,
Administrator or Appeals Committee under the terms of the Plan or other
responsibilities imposed upon such individual by law.  This indemnification for
all such acts taken or omitted is intentionally broad, but shall not provide
indemnification for any civil penalty that may be imposed by law, nor shall it
provide indemnification for embezzlement or diversion of Plan funds for the
benefit of any such individual.  The Company shall indemnify any such individual
for expenses of defending an action by a Participant, Beneficiary, service
provider, government entity or other person, including all legal fees and other
costs of such defense.  The Company shall also reimburse any such individual for
any monetary recovery in a successful action against such individual in any
federal or state court or arbitration.  In addition, if a claim is settled out
of court with the concurrence of the Company, the Company shall indemnify any
such individual for any monetary liability under any such settlement, and the
expenses thereof.  Such indemnification will not be provided to any person who
is not a present or former employee, officer or Director of the Company nor
shall it be provided for any claim by a Participating Company against any such
individual.

15-4

 

 

IN WITNESS WHEREOF, Old Second Bancorp, Inc., by its appropriate officers duly
authorized, has caused the Plan to be executed and adopted as of the 1st day of
September, 2008.

 

 

 

 

Old Second Bancorp, Inc.

    

 

 

 

 

By:

/s/ William B. Skoglund

 

 

Date: _September 1, 2008_____

 

William B. Skoglund

 

 

 

 

Chairman of the Board, Director

 

 

 

 

 

 

 

 

15-5