exv10w3



 




Exhibit 10.3






GSI Commerce, Inc.




Leadership Team Deferral Plan




 









 





Contents




	 	 	 	 	 	 	 
	 	 	 	 	Page
	Article 1.	 	Plan Effective Date and Purpose
	 	 	1	 
	Article 2.	 	Definitions
	 	 	1-6	 
	Article 3.	 	Administration
	 	 	6	 
	Article 4.	 	Eligibility and Participation
	 	 	6-7	 
	Article 5.	 	Elective Deferrals
	 	 	8-10	 
	Article 6.	 	Discretionary Awards
	 	 	10	 
	Article 7.	 	Distribution Rules
	 	 	10-11	 
	Article 8.	 	Acceleration of Payments
	 	 	12	 
	Article 9.	 	Deferred Compensation Accounts
	 	 	13-14	 
	Article 10.	 	Rights of Participants
	 	 	14	 
	Article 11.	 	Withholding of Taxes
	 	 	15	 
	Article 12.	 	Amendment and Termination
	 	 	15-16	 
	Article 13.	 	Miscellaneous
	 	 	16-17	 
	Appendices A&B.	 	 	 	 






 









 





GSI Commerce, Inc.

Leadership Team Deferral Plan



(As amended and restated effective effective March 5, 2008)




Article 1. Plan Effective Date and Purpose



1.1 Effective Date. The Company established the Plan originally effective as of July 1,
2006. The Company hereby amends and restates the Plan in its entirety effective effective March 5,
2008.



1.2 Purpose. The Plan is a deferred compensation plan for key employees the primary
purpose of which is to provide certain key employees of the Company, its subsidiaries, and
affiliates with deferred cash awards and the opportunity to voluntarily defer a portion of their
Compensation, in each case subject to the terms of the Plan. By adopting the Plan, the Company
desires to enhance its ability to attract and retain employees of outstanding competence. This
Plan is intended to comply with the requirements of Section 409A and shall be interpreted in a
manner consistent with the requirements of Section 409A.



Article 2. Definitions



2.1 “Account Balance Plan” means any non-qualified deferred compensation account balance
plan (as defined in §31.3121(v)(2)-1(c)(1)(ii)(A) of the Treasury Regulations) that would be
aggregated with the Plan for purposes of Section 409A.



2.2 “Affiliate” means for purposes of determining whether a “Change in Control” has
occurred: (a) any corporation (other than the Company) in an unbroken ownership chain of
corporations ending with the Company, provided each corporation in the unbroken ownership chain
owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations in such ownership
chain, and (b) any corporation (other than the Company) in an unbroken ownership chain of
corporations beginning with the Company, provided each corporation (other than the last
corporation) in the unbroken ownership chain owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such ownership chain. The Board shall have the authority to
determine (x) the time or times at which the ownership tests are applied, and (y) whether
“Affiliate” includes entities other than corporations within the foregoing definition.



2.3 “Board” means the Board of Directors of the Company.



2.4 “Bonus” means any cash incentive award based on an assessment of performance, payable
by the Company to a Participant with respect to the Participant’s services during a Year,
including, but not limited to, amounts awarded under the Company’s Leadership Bonus Plan for that
Year, and excluding, specifically: (a) any RSU Awards or other equity-based incentive awards, and
(b) any Discretionary Award.



2.5 “Change in Control” shall mean any of the following events:




     (a) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power of the Company’s
then outstanding securities other than by virtue of a merger, consolidation or similar transaction,
which is



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covered by Section 2.5(b). Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur (A) on account of the acquisition of securities of the Company from the Company by
an investor, any affiliate (as such term is defined in Rule 405 of the Securities Act) thereof or
any other Exchange Act Person in a transaction or series of related transactions the primary
purpose of which is to obtain financing for the Company through the issuance of equity securities
or (B) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”)
exceeds the designated percentage threshold of the outstanding voting securities as a result of a
repurchase or other acquisition of voting securities by the Company reducing the number of shares
outstanding, provided that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of voting securities by the Company, and after such share
acquisition, the Subject Person becomes the Owner of any additional voting securities that,
assuming the repurchase or other acquisition had not occurred, increases the percentage of the then
outstanding voting securities Owned by the Subject Person over the designated percentage threshold,
then a Change in Control shall be deemed to occur;



     (b) there is consummated a merger, consolidation or similar transaction involving (directly or
indirectly) the Company and, immediately after the consummation of such merger, consolidation or
similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly
or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%)
of the combined outstanding voting power of the surviving Entity in such merger, consolidation or
similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power
of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each
case in substantially the same proportions as their Ownership of the outstanding voting securities
of the Company immediately prior to such transaction;



     (c) the stockholders of the Company approve or the Board approves a plan of complete
dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company
shall otherwise occur;



     (d) there is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its subsidiaries, other than a
sale, lease, license or other disposition of all or substantially all of the consolidated assets of
the Company and its subsidiaries to an Entity, more than fifty percent (50%) of the combined voting
power of the voting securities of which are Owned by stockholders of the Company in substantially
the same proportions as their Ownership of the outstanding voting securities of the Company
immediately prior to such sale, lease, license or other disposition; or



     (e) individuals who, on the date this Plan is adopted by the Board are directors (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the directors;
provided, however, that if the appointment or election (or nomination for election) of any new
director was approved or recommended by a majority vote of the Incumbent Board, such new director
shall, for purposes of this Plan, be considered a member of the Incumbent Board.



     (f) The term Change in Control shall not include a sale of assets, merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company.


2.6 “Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to
time.



2.7 “Committee” means the Compensation Committee of the Board or any other successor
committee appointed by the Board.




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2.8 “Company” means GSI Commerce, Inc.



2.9 “Company Stock Measurement Fund” shall mean the Measurement Fund which shall be deemed
invested in the Company’s common stock. Participants will have no rights as stockholders of the
Company with respect to allocations made to their Participant Accounts which are deemed invested in
the Company Stock Measurement Fund.



2.10 “Compensation” means the gross Salary, Bonus, RSU Awards, Discretionary Awards, and
any other payments eligible for deferral under the Plan, which are payable to a Participant with
respect to services performed during a Year.



2.11 “Dependent” means the Participant’s dependent as defined in Section 152 of the Code
without regard to Sections 152(b)(1), (b)(2) and (d)(1)(B) of the Code.



2.12 “Disability” will mean that a Participant is (a) unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period of not less than
twelve (12) months, or (b) by reason of any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last for a continuous period of not
less than twelve (12) months, receiving income replacement benefits for a period of not less than
three (3) months under an accident and health plan covering employees of the Company.
Determinations of Disability shall be made by the Committee in a manner consistent with its
definition as provided in Section 409A.



2.13 “Discretionary Award” means any cash award deferred under the Plan pursuant to Article
6.



2.14 “Election Form” means a form completed by a Participant (including an electronic form
via a pre-established website developed for such purpose) pursuant to which he or she elects to
participate in the Plan as described in Article 4.



2.15 “Elective Cash Deferral Account” means the portion of the Participant’s Account
reflecting elective deferrals of Salary and/or Bonus amounts under Article 5 which shall be
credited with each amount deferred under Article 5 as of the date that such amount otherwise would
have become due and payable to the Participant.



2.16 “Entity” means for purposes of determining whether a “Change in Control” has occurred:
a corporation, partnership, limited liability company or other entity.



2.17 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.



2.18 “Exchange Act” means the Securities Exchange Act of 1934, as amended.



2.19 “Exchange Act Person” means for purposes of determining whether a “Change in Control”
has occurred: any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d)
of the Exchange Act), except that “Exchange Act Person” shall not include (a) the Company or any
Affiliate, (b) any employee benefit plan of the Company or any Affiliate or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or any Affiliate, (c) an
underwriter temporarily holding securities pursuant to an offering of such securities, (d) an
Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same
proportions as their Ownership of stock of the Company; or (e) any natural person, Entity or
“group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of June 30,
2005, is the Owner, directly or indirectly, of


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securities of the Company representing more than fifty percent (50%) of the combined voting power
of the Company’s then outstanding securities.



2.20 “Key Employee” means an employee that meets any of the following requirements of at
any time during the 12-month period ending on December 31st  (the “Key Employee
Identification Date”):




     (a) An officer of the Company having an annual compensation greater than $145,000 (in 2007),
as adjusted at the same time and in the same manner as under Section 415(d) of the Code. Not more
than fifty (50) employees or, if less, the greater of three (3) employees or ten percent (10%) of
the Company’s employees shall be considered as officers for purposes of this subsection;



     (b) A five percent owner of the Company; or



     (c) A one percent owner of the Company having an annual compensation from the Company of more
than $150,000.


Whether an employee is a five percent owner or a one percent owner of the Company shall be
determined in accordance with Section 416(i)(1)(B) of the Code.



2.21 “Measurement Fund” shall mean, as applicable, one or more of the hypothetical mutual
fund, phantom investment or other methods selected by the Committee for the purpose of providing
the basis on which gains and losses shall be attributed to Participant Account balances under
Article 10 of the Plan.



2.22 “Non-Elective Account” means the portion of the Participant’s Account established for
a Participant on whose behalf an award has been made under Article 6, which shall be credited with
each such award as of the effective date of such award, as determined by the Committee.



2.23 “Own,” “Owned,” “Owner,” or “Ownership” means the following
for purposes of determining whether a “Change in Control” has occurred: a person or Entity shall be
deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of
securities if such person or Entity, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting power, which includes the power to
vote or to direct the voting, with respect to such securities.



2.24 “Participant” means a Company employee that has received notification of his or her
eligibility to participate in the Plan and the Plan enrollment materials or instructions for
participation in the Plan.



2.25 “Participant Account” means the individual bookkeeping account established and
maintained by the Company in the name of each Participant by or on behalf of whom deferrals have
been made under Article 5 or Article 6 herein.



2.26 “Performance-Based Compensation” means Compensation that meets the requirements of
performance-based compensation specified in Section 409A(a)(4)(B)(iii) of the Code and its
regulations and other guidance promulgated thereunder. Performance-Based Compensation shall be
designated as such by the Company as contingent upon the satisfaction of performance goals that
must relate to services performed by the Participant during a designated incentive period of at
least twelve (12) consecutive months, the performance goals must be preestablished by the Company
in writing no later than 90 days after the commencement of the performance period, and the outcome
must be substantially uncertain at the time the criteria are established.




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2.27 “Plan” means this GSI Commerce, Inc. Leadership Team Deferral Plan.



2.28 “Plan Year” or “Year” means the calendar year.



2.29 “RSU Account” shall mean (i) the sum of all of a Participant’s RSU Deferral Amounts,
plus (ii) the hypothetical deemed investment earnings and losses credited or charged in accordance
with all the applicable provisions of this Plan that relate to the Participant’s RSU Deferral
Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to
this Plan that relate to the Participant’s RSU Account.



2.30 “RSU Award” shall mean any restricted stock unit award granted by the Company to a
Participant which is eligible to be deferred under the Plan.



2.31 “RSU Deferral Amount” shall be the amount determined in accordance with Sections 4.5
and 10.5.



2.32 “Salary” means all regular, basic wages, before reduction for amounts deferred or
contributed pursuant to the Plan or any other plan of the Company, otherwise payable in cash to a
Participant for services to be rendered, exclusive of any Bonus, Discretionary Awards, other
special fees, awards, or incentive compensation, allowances, or amounts designated by the Company
as payment toward or reimbursement of expenses. Notwithstanding the foregoing, all such amounts
deferred or contributed to all Company plans will be included in calculating Salary that may be
deferred under the Plan only to the extent that the Participant’s contributions, deferrals and the
Company related withholding obligations under all Company plans, including the Plan, do not exceed
100% of the Participant’s total Compensation.



2.33 “Section 409A” means Internal Revenue Code Section 409A and any regulations and other
applicable guidance promulgated thereunder.



2.34 “Securities Act” means the Securities Act of 1933, as amended.



2.35 “Specified Date” means the elected future specified payout date selected by a
Participant on an Enrollment Form that may occur no earlier than one (1) year following the end of
the Plan Year in which the Compensation to be deferred is earned.



2.36 “Specified Date Deferral Election” means an election to receive payout of Compensation
deferred under the Plan on a Specified Date.



2.37 “Specified Employee” means for purposes of this Plan, and in accordance with Section
409A, a Key Employee of a corporation any stock in which is publicly traded on an established
securities market or otherwise on the date of the Termination of Service. If a person is a Key
Employee, the person is treated as a Specified Employee for the 12-month period beginning on the
April 1st that first follows the Key Employee Identification Date.



2.38 “Termination of Service” means a Participant’s “separation from service” for purposes
of Section 409A from the Company and its subsidiaries and affiliates for any reason. The
determination of whether a Participant has had a Termination of Service shall be made in a manner
consistent with Section 409A and the following provisions to the extent applicable:




     (a) While a Participant is on military leave, sick leave, or other bona fide leave of absence
authorized by the Company (such as temporary employment by the government) if the period of such



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leave does not exceed six months, or if longer, so long as the Participant’s right to
reemployment with the Company is provided either by statute or by contract, the Participant shall
continue to be considered employed and Compensation shall continue to be withheld in accordance
with the Participant’s deferral election during such leave of absence. If a Participant’s period
of leave of absence exceeds six months and the Participant’s right to reemployment is not provided
either by statute or by contract, the Participant’s employment relationship will be deemed to
terminate so that the Participant shall have a Termination of Service on the first date immediately
following such six-month period. The Participant’s deferral election shall be cancelled as soon as
administratively practicable following such Termination of Service and the Participant’s
distribution will commence in accordance with the provisions of Sections 5.5 and 5.6.



     (b) If the Participant provides insignificant services to the Company, the Participant will be
deemed to have incurred a Termination of Service. For this purpose, a Participant is considered to
be providing insignificant services if he or she provides services at an annual rate that is less
than twenty percent of the services rendered by such individual, on average, during the immediately
preceding three calendar years of employment (or such lesser period of employment) or the annual
remuneration for such services is less than twenty percent of the average annual remuneration
earned during the final three full calendar years of employment (or such lesser period of
employment).



     (c) If a Participant continues to provide services to the Company in a capacity other than as
an employee, the Participant will not be deemed to have a Termination of Service if the Participant
is providing services at an annual rate that is at least fifty percent of the services rendered by
such individual, on average, during the immediately preceding three calendar years of employment
(or such lesser period of employment) and the annual remuneration for such services is at least
fifty percent of the average annual remuneration earned during the final three full calendar years
of employment (or such lesser period of employment).



     (d) If a Participant serves the Company as both a member of the Board and an employee, to the
extent required by Section 409A, upon Participant’s severing of employment with the Company, a
Termination of Service will occur, notwithstanding that the Participant continues to provide
services as a member of the Board.


2.39 “Unforeseeable Emergency” means a severe financial hardship of the Participant
resulting from an illness or accident of the Participant, the Participant’s spouse, the
Participant’s beneficiary or the Participant’s Dependent; loss of the Participant’s property due to
casualty (including the need to rebuild a home following damage to a home not otherwise covered by
insurance, for example, not as a result of a natural disaster); or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of the Participant.
“Unforeseeable Emergency” may include, for example, the imminent foreclosure of or eviction from
the Participant’s primary residence or the need to pay for medical expenses, including
non-refundable deductibles, as well as for the costs of prescription drug medication and the need
to pay for the funeral expenses of a spouse, beneficiary or Dependent.




Article 3. Administration



3.1 The Committee. The Plan shall be administered by the Committee. The members of the
Committee shall be appointed by, and shall serve at the discretion of, the Board. The Committee
shall also have the authority, as it determines in its sole discretion to be necessary or
appropriate, to administer under the provisions of this Plan, and in a manner consistent with the
provisions of such other plans, any grants and awards made under any other plans of the Company
that are deferred under this Plan.




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3.2 Authority of the Committee. Except as limited by law or by the Company’s Certificate
of Incorporation or Bylaws, and subject to the provisions herein, the Committee shall have
authority to make all determinations that may be necessary or advisable for the administration of
the Plan. This includes but is not limited to Plan eligibility, terms and provisions and
operations. As permitted by law, the Committee may delegate any of its authority granted under the
Plan to such other person or entity it deems appropriate, including but not limited to, senior
management of the Company.



3.3 Guidelines. Subject to the provisions herein, the Committee may adopt written
guidelines for the implementation and administration of the Plan.



3.4 Decisions Binding. All determinations and decisions of the Committee arising under the
Plan shall be final, binding, and conclusive upon all parties.



3.5 Claim Procedures. The claims procedures set forth on Appendix A and Appendix B shall
apply for all benefits payable under the Plan. The Committee is the “Plan Administrator” for
purposes of the Plan’s claims procedures.




Article 4. Eligibility and Participation



4.1 Eligibility. Subject to Section 4.2, employees of the Company, its subsidiaries and
affiliates eligible to be selected to participate in the Plan during any Plan Year generally
include level 1, 2 and 3 executive employees, vice presidents and directors, as determined by the
Company’s compensation structure for a given Plan Year, and any other executive employees that the
Committee designates as eligible to participate in the Plan. Further, the Committee may place such
additional limitations on eligibility, as it deems necessary and appropriate under the
circumstances.



4.2 Participation. The Committee based upon the criteria set forth in Sections 4.1 herein
shall determine which eligible employees may participate in the Plan during any Year. An eligible
employee who is selected to participate in the Plan shall be so notified in writing and delivered
the Plan enrollment materials or instructions. Notwithstanding any other provisions of this Plan,
each employee that is selected as an eligible Participant for a Plan Year shall continue to be
eligible to participate in this Plan in future Plan Years as long as such employee remains in a
designated eligible position. A Participant who has had a Termination of Service is no longer
eligible to participate in the Plan. A Participant may not defer Compensation otherwise payable to
the Participant with respect to the period on or after his or her Termination of Service. In the
event a Participant selected to participate in the Plan on an elective basis has not had a
Termination of Service but no longer meets the criteria for participation, such individual shall
retain all the rights described under the Plan, except the right to make any deferrals for future
Plan Years, until such time that such individual again meets the criteria for participation and is
notified of his or her eligibility to participate in the Plan.



4.3 Initial Year Participation Elections. Except as provided in Section 5.3 for
Performance-Based Compensation and in Section 4.5 for RSU Awards, in order to defer compensation
attributable to services performed during the Year that the Participant first becomes eligible to
participate in the Plan, within thirty (30) calendar days of first becoming eligible to
participate, the eligible Participant must submit his or her enrollment elections in accordance
with the enrollment procedures established by the Committee, which may include completing an
Election Form and delivering it to the Committee or its designee. For purposes of the initial
eligibility election, a Participant that previously ceased to be eligible to participate in the
Plan will also be treated as being initially eligible to participate in the Plan if the Participant
has not been eligible to participate in the Plan (other than the accrual of earnings) at any time
during the 24-month period ending on the date the Participant again becomes eligible to participate
in the Plan.




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The initial deferral election will not be effective with respect to compensation attributable to
services performed prior to the filing of the election, is irrevocable once submitted, and will
take effect as soon as administratively possible following the filing of the election. Unless the
eligible Participant’s election can comply with the requirements in Section 5.3 for
Performance—Based Compensation, any deferral of annual Bonus to be received with respect to such
initial Year of eligibility shall be limited to a fraction of such annual Bonus, with the numerator
of the fraction being the number of days remaining in the performance period after the Election
Form is delivered and the denominator of which is the total number of days in the performance
period. The deferral election cannot be for the first Year that the Participant first becomes
eligible to participate in the Plan if the Participant previously was eligible to participate in
any other Account Balance Plan.



4.4 Subsequent Year Participation Elections. If a Participant does not elect to
participate in the Plan during the initial Year that he or she first becomes eligible to
participate, then in order for such Participant to participate in the Plan during subsequent Years,
except as provided in Section 5.3 for Performance-Based Compensation and in Section 4.5 for RSU
Awards, the Participant must complete an Election Form and deliver it to the Committee or its
designee during the Plan enrollment period preceding the Year for which the new election will begin
to apply. The deferral election will be effective with respect to compensation attributable to
services performed by such Participant beginning on the following January 1st.



4.5 Deferral of RSU Awards. Nowithstanding anything to the contrary set forth herein, and
subject to any terms and conditions imposed by the Committee, Participants may elect to defer RSU
Awards under the Plan if the following conditions are met: (a) the deferral Election Form must be
completed and signed by the Participant and timely delivered to the Committee or its designee no
later than thirty (30) days following the grant date of the RSU Award, and (b) such RSU Award must
not vest any earlier than thirteen (13) months following the grant date. Alternatively,
Participants may elect to defer RSU Awards under the Plan only if such deferral election is
otherwise made in compliance with the requirements of Section 409A of the Code and the regulations
and other guidance thereunder, and accepted by the Committee or its designee.



4.6 Participation Election Irrevocability, Duration and Changes. Except as permitted under
Section 8.2, any deferral election made for a Year shall be irrevocable with respect to such Year
once it is submitted and is unique to that Year. In order to participate in subsequent Years, a
Participant must make a new deferral election by filing with the Committee a new Election Form
during the Plan enrollment period preceding the Year for which the new deferral election will begin
to apply.



4.7 No Right to Participate. No employee shall have the right to be selected as a
Participant, or having been so selected for any given Year, to be selected again as an eligible
Participant for any other Year.




Article 5. Elective Deferrals



5.1 Amount That May Be Deferred. In accordance with rules established by the Committee, a
Participant may elect to defer, in any Year, up to one hundred percent (100%) of eligible
components of Compensation, including, but not limited to, Salary, Bonus and RSU Awards. The
Committee, in its sole discretion, may designate which components of Compensation are eligible for
deferral elections under the Plan, the minimum amount or increments of any single eligible
component of Compensation which may be deferred in any Year, and establish any other limitations as
it deems appropriate in any Year.



5.2 Timing of Deferral Elections and Withholding. An election to defer a component of
Compensation permitted by the Committee to be deferred by a Participant under the Plan shall
generally


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be given effect in accordance with the timing rules specified in Sections 4.3 and 4.4 above and in
compliance with Section 409A. For each Plan Year, the Salary portion of the deferral amount shall
be withheld from each regularly scheduled Salary payroll in equal amounts over each pay period, as
adjusted from time to time for increases and decreases in Salary. The Bonus and any other portion
of the deferral amount shall be withheld at the time the Bonus or other deferred amount otherwise
would be paid to the Participant, whether or not this occurs during the Plan Year itself.



5.3 Deferrals of Performance-Based Compensation. Notwithstanding anything to the contrary
set forth herein, for deferrals of Performance-Based Compensation, the Participant may file an
Election Form with the Committee or its designee at any time up to the date that is at least six
(6) months before the end of the performance period, provided that (A) such compensation has not
yet become readily ascertainable, and (B) the Participant has performed services continuously from
the later of (i) the beginning of the performance period, or (ii) the date the performance goals
are established, through the date of filing of the Election Form, each to the extent required by
Treas. Reg. 1.409A-2(a)(8) and other applicable guidance.



5.4 Content of Deferral Election. All deferral elections shall be made on an Election Form
as described herein. Participants shall make the following irrevocable elections at those times:




     (a) The percentage to be deferred with respect to each eligible component of Compensation for
the Year:



     (b) The length of the deferral period with respect to each eligible component of Compensation,
pursuant to the terms of Section 5.5 herein; and



     (c) The form of payment to be made to the Participant at the end of the deferral period(s),
pursuant to the terms of Section 5.6 herein.



     If the Participant does not make a valid election regarding the length of deferral period or
form of payment on the Election Form, the deferred amounts will be distributed in accordance with
the default provisions described in Sections 5.5(d) and 5.6(c) below. Notwithstanding the amounts
requested to be deferred pursuant to subparagraph (a) above, the limits on deferrals determined
under Section 5.1 herein shall apply to the requested deferrals each Year.


5.5 Length of Deferral.




     (a) The deferral periods elected by each Participant with respect to deferrals of Compensation
(and accumulated investment gains and losses thereon) for any Year shall be either (A) a Specified
Date, or (B) the date of the Participant’s Termination of Service. Notwithstanding any election
made by a Participant to commence distributions on a Specified Date, Plan distributions shall
earlier commence in the event of the Participant’s Termination of Service prior to such later
Specified Date. Therefore, either a lump sum distribution shall be paid, or installment payments
shall commence, no later than the Participant’s Termination of Service in accordance with Section
5.6 and the form of payment selected by the Participant on the Election Form.



     (b) Notwithstanding the deferral periods elected by a Participant on the Election Form, in the
event the Participant’s service with the Company is terminated by reason of the Participant’s death
or Disability, or the Participant is receiving installment payments and dies or becomes Disabled
prior to payment of all such installments, payment of deferred amounts and accumulated investment
gains or losses thereon will be accelerated and made to the Participant or his or her beneficiary
in a single lump



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sum in the calendar year immediately following the calendar year in which the Participant dies
or becomes Disabled.



     (c) Notwithstanding the foregoing, with respect to Specified Date Deferral Elections, the
Committee, in its sole discretion, is authorized to provide a Participant with the right to extend
the deferral period originally elected by such Participant to a later Specified Date if the
election change (i) does not take effect until at least twelve (12) months after the date on which
the new Election Form is filed with the Committee, (ii) the payment with respect to such change in
election is deferred for a period of not less than five (5) years after the original Specified Date
such payment would otherwise have been made or would commence to be paid (except to the extent
payable as a result of death or Disability), and (iii) the election change is made at least twelve
(12) months prior to the date the payment(s) would otherwise have commenced. In the case of an
ineffective change, benefits will be paid in accordance with the most recent valid Election Form.
For purposes of any election changes, payments to be made in annual installments shall be treated
as a single payment.



     (d) If the Participant did not make a valid election regarding the deferral period on the
Election Form, the Participant shall be deemed to have elected that the deferred amounts, together
with accumulated investment gains or losses thereon, be paid or commence to be paid as soon as
practicable following the Participant’s Termination of Service.



5.6 Payment of Deferred Amounts. Participants may elect to receive payment of electively
deferred amounts, together with accumulated investment gains or losses thereon, at the end of the
deferral period in a single lump sum cash payment or in installments as detailed below.



     (a) Lump Sum Payment. Subject to Section 8.1 herein, such payment shall be made in a single
lump sum as of the Specified Date or the Participant’s Termination of Service as specified by the
Participant as the date for payment of deferred Compensation as described in Section 5.5 herein, or
as soon thereafter as practicable, but in no event later than seventy (70) days following such date
or event.



     (b) Installment Payments. Participants may elect payout in annual installments, with a
minimum number of annual installments of two (2) and a maximum of ten (10). Subject to Section 8.1
herein, the initial annual payment shall be made as of the Specified Date or the Participant’s
Termination of Service as specified by the Participant as the date for payment of deferred
compensation as described in Section 5.5 herein, or as soon thereafter as practicable, but in no
event later than seventy (70) days following such date or event. The remaining annual installment
payments shall be made each year thereafter on or about the anniversary of the Specified Date or
the Participant’s Termination of Service, as specified by the Participant as the date or event for
commencement payment of deferred Compensation as described in Section 5.5 herein, until the
Participant’s entire deferred compensation account has been paid. Investment gains and losses
shall accrue on the deferred amounts in the Participant’s deferred compensation account, as
provided in Section 10.2 of this Plan. The amount of each installment payment shall be equal to
the balance remaining in the Participant’s deferred compensation account immediately prior to each
such payment, multiplied by a fraction, the numerator of which is one (1), and the denominator of
which is the number of annual installment payments remaining. An installment payment is treated as
a single payment for purposes of Section 409A.



     (c) If the Participant did not make a valid election regarding the form of distribution on the
Election Form, the Participant shall be deemed to have elected that the deferred amounts, together
with accumulated investment gains or losses thereon, be paid at the end of the deferral period in a
single lump sum cash payment.



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5.7 Form of Payout. Distributions of the Participant Account balance not including the
portion of the Participant Account balance allocated to the Company Stock Measurement Fund shall be
paid to Participants in cash. The portion of the Participant Account balance allocated to the
Company Stock Measurement Fund shall be paid to Participant’s in an equivalent number of shares of
the Company’s common stock credited to the Participant’s Account. The source of shares of Company
common stock distributed pursuant to this Plan shall be the Company’s 2005 Equity Incentive Plan
and any successor equity incentive plan adopted by the Company. Any portion of the Participant
Account balance designated to be distributed in shares of Company common stock, but which are not
sufficient to purchase one whole share of Company common stock shall instead be paid to the
Participant in cash.




Article 6. Discretionary Awards



6.1 Discretionary Deferred Cash Awards. The Committee may, at its discretion during any
Year, contribute deferred cash awards to the Plan on behalf of designated Participants, subject to
the applicable vesting requirements as provided under Section 6.3.



6.2 Deferred Period. With respect to each Year, the period of time during which each such
discretionary cash award shall be deferred, and the form, manner and timing of payment, shall be as
specified by the Committee in writing at the time of the grant of such deferred cash awards.
Notwithstanding the foregoing, (i) in the case of the death or Disability of a Participant, the
Participant’s benefits will be paid in a single lump payment, and such payment shall be made during
the calendary year that immediately follows the calendar year within which the Participant’s death
or Disability occurred (ii) in the event the Participant established the existence of an
Unforeseeable Emergency, the Committee may in its sole discretion, accelerate the payment of the
deferred cash award in accordance with Section 6.2 herein.



6.3 Vesting Requirements. The Committee at the time of granting a deferred cash award
under this Article 6 may, in its sole discretion, impose vesting requirements with respect to such
award pursuant to which all or a portion of such award may be forfeited under conditions specified
by the Committee. Notwithstanding the imposition of vesting requirements with respect to any award,
the entire amount of such award and any additions thereto pursuant to Section 10.2 shall become
100% vested and non-forfeitable in the following circumstances: (a) upon the occurrence of a Change
in Control prior to the Participant’s Termination of Service; (b) upon the termination of
employment of the Participant as a result of the Participant’s death; (c) upon the termination of
employment of the Participant as a result of the Participant’s Disability; (d) upon the termination
of employment of the Participant as a result of the Participant’s retirement under any retirement
plan of the Company or a subsidiary of the Company; or (e) upon the termination of employment of
the Participant which constitutes an involuntary termination of employment without cause. For
purposes of clause (d) above, the Committee shall make the determination of the existence of
“retirement” and such determination by the Committee shall be final. For purposes of clause (e)
above, “cause” shall mean an act of dishonesty, moral turpitude or an intentional or grossly
negligent act detrimental to the best interests of the Company or a subsidiary or affiliate of the
Company. In addition, the Committee shall have the discretion to fully vest the deferred cash
award of any Participant.




Article 7. Vesting



7.1 Vesting of Elective Cash Deferral Account. A Participant shall at all times be 100%
vested in his or her Elective Cash Deferral Account.



7.2 Vesting of Non-Elective Account. A Participant shall vest in his or her Non-Elective
Account as provided in Section 6.3




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7.3 Vesting of RSU Account. A Participant shall vest in the shares of Company common stock
credited to his or her RSU Account in accordance with the vesting schedule applicable to the
particular RSU Award, which may vary among Participants and among RSU Awards. In the event of a
Participant’s Termination of Service prior to the date on which all his or her RSU Awards have
vested, the unvested portion of such RSU Awards shall be forfeited, and neither the Company nor the
Plan shall be liable for the distribution of such shares to such Participant. Any shares credited
to a Participant’s RSU Account which are forfeited by such Participant pursuant to the preceding
sentence shall cease to be liabilities of the Company or the Plan and such shares shall be
immediately debited from the Participant’s RSU Account.




Article 8. Distribution Rules.



8.1 Payments to Specified Employees Upon Termination of Service. Notwithstanding anything
to the contrary set forth herein, with respect to distributions to a Specified Employee as a result
of a Termination of Service, whether the distribution is made in the form of a lump sum or
installments, the distribution shall not be made or the payments may not begin before the date
which is six (6) months following the date of the Termination of Service, or, if earlier, the date
of death of the Specified Employee. Any amounts otherwise payable during the six (6) month period
following the Termination of Service will accrue and be paid out as soon as administratively
practicable following the (6) month delay period. Any installment payments otherwise payable after
the six (6) month delay period following the Termination of Service will continue to be paid out in
accordance with the original payment schedule.



8.2 Unforeseeable Emergency Distributions. In the event that a Participant suffers an
Unforeseeable Emergency, the Participant shall be permitted to withdraw from his or her deferred
compensation account, including, at the sole discretion of the Committee, the amount of any vested
Discretionary Awards which have become part of the deferred compensation account, an amount equal
to the amount reasonably necessary to satisfy the emergency need (which may include amounts
necessary to pay any Federal, state, or local income taxes or penalties reasonably anticipated to
result from the distribution). The Participant must first submit a written withdrawal request to
the Committee explaining the nature of the Unforeseeable Emergency and the amount required to meet
the need. The Participant will be required to certify that the need cannot be reasonably met from
other sources (not taking into account amounts available under any qualified employer plan, or
amounts available from another nonqualified deferred compensation plan due to an Unforeseeable
Emergency). If a Participant qualifies for an Unforeseeable Emergency distribution under this
Section 8.2 or has received a hardship distribution pursuant to Treasury Regulation section
1.401(k)-1(d)(3) (or its successor), the Participant may cancel his deferral election with regard
to Compensation to be earned in the remainder of the Year. Any later deferral election will be
subject to the provisions under Section 409A of the Code governing initial deferral elections.
Whether a Participant is faced with an Unforeseeable Emergency shall be determined by the Committee
on the relevant facts and circumstances of each case, but, in any case, a distribution on account
of Unforeseeable Emergency may not be made to the extent that such emergency is or may be relieved
through reimbursement or compensation from insurance or otherwise, by liquidation of the
Participant’s assets (to the extent the liquidation of such assets would not cause severe financial
hardship), or by cessation of deferrals under the Plan. Investment gains and losses will be
credited in accordance with Article 10 up to the date of distribution.



8.3 Delay of Distributions to Preserve Section 162(m) Deduction. Notwithstanding anything
to the contrary set forth herein, distributions under this Plan shall be made to the maximum extent
allowable under the Participant’s deferral election, except that no distribution shall be made to
the extent that the receipt of such distribution, when combined with the receipt of all other
“applicable employee remuneration” (as defined in Section 162(m)(4) of the Code) is reasonably
anticipated to cause any remuneration received by the Participant to be nondeductible by the
Company under Section 162(m)(1) of


12









 






the Code. The commencement date of the lump sum payment or annual installment period (whichever is
applicable) shall be automatically extended, when necessary to satisfy the requirements of this
subsection, until the earliest date at which the Committee 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.



8.4 No Discretionary Distributions. Except as expressly provided herein, the Committee
shall not exercise discretion with respect to the timing or form of distributions from the Plan,
but shall make distributions at the time and in the form elected by the Participant on the Election
Form or as otherwise specified in the Plan. Notwithstanding anything to the contrary set forth
herein, the Committee retains the right, in its sole discretion, to delay or accelerate
distributions under the Plan to the extent permitted by Section 409A.




Article 9. Acceleration of Payments.




     Payments under the Plan may be accelerated only upon the occurrence of an event specified in
this Article 9 or in Section 8.2 herein.


9.1 Domestic Relations Order. A payment can be accelerated if such payment is made to an
alternate payee pursuant to and following the receipt and qualification of a domestic relations
order as defined in Section 414(p) of the Code.



9.2 Compliance with Ethics Agreements and Legal Requirements. A payment may be accelerated
as may be necessary to comply with ethics agreements with the Federal government or as may be
reasonably necessary to avoid the violation of Federal, state, local or foreign ethics law or
conflicts of interest law, in accordance with the requirements of Section 409A.



9.3 De Minimis Amounts. A payment may be accelerated if (i) the amount of the payment is
not greater than the applicable dollar amount under Section 402(g)(1)(B) of the Code, (ii) at the
time the payment is made the amount constitutes the Participant’s entire interest under the Plan
and all other Account Balance Plans.



9.4 Federal Insurance Contributions Act. A payment may be accelerated to the extent
required to pay the Federal Insurance Contributions Act tax imposed under Sections 3101, 3121(a)
and 3121(v)(2) of the Code with respect to Compensation deferred under the Plan (the “FICA
Amount”). Additionally, a payment can be accelerated to pay the income tax on wages imposed under
Section 3401 of the Code on the FICA Amount and to pay the additional income tax at source on wages
attributable to the pyramiding Section 3401 wages and taxes. The total payment under this Section
9.4 may not exceed the aggregate of the FICA Amount and the income tax withholding related to the
FICA Amount.



9.5 Section 409A Additional Tax. A payment may be accelerated to the extent required to
pay any income tax imposed under Section 409A of the Code (the “Section 409A Amount”) if at any
time the Participant’s deferred compensation arrangement under this Plan fails to meet the
requirements of Section 409A. The total payment under this Section 9.5 may not exceed the Section
409A Amount.



9.6 Corporate Events. A payment may be accelerated in the Committee’s discretion in
connection with any of the following events, in accordance with the requirements of Section 409A
(i) a corporate dissolution taxed under Section 331 of the Code, (ii) with the approval of a
bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1)(A); (iii) in connection with a change in
control event, as defined under Section 409A; (iv) the termination and liquidation of the Plan and
all other Account Balance Plans; and (v) such other events and conditions as permitted by Section
409A.




13









 







9.7 Offset. A payment may be accelerated in the Committee’s discretion as satisfaction of
a debt of the Participant to the Company, where such debt is incurred in the ordinary course of the
service relationship between the Participant and the Company, the entire amount of the reduction in
any of the Company’s taxable years does not exceed $5,000, and the reduction is made at the same
time and in the same amount as the debt otherwise would have been due and collected from the
Participant.




Article 10. Deferred Compensation Accounts



10.1 Participant Accounts. The Company shall establish and maintain the Participant
Accounts. Each Participant Account shall have subaccounts for the Elective Cash Deferral Account,
RSU Account, and the Non-Elective Account.



10.2 Investment Gains and Losses. The Participant’s Elective Cash Deferral Account and the
Participant’s Non-Elective Account shall be credited with investment gains and losses commencing on
the date the Elective Cash Deferral Account or the Non-Elective Account first have a positive
balance. The investment gains and losses shall be based on the performance of the hypothetical
investments described in Section 10.3 made available by the Committee from time to time, as
selected by the Participant in accordance with the rules of Section 10.4. The value of the deferred
compensation benefits paid under this Plan shall depend on the investment gains and losses credited
to the Elective Cash Deferral Account or the Non-Elective Account, based on the Participant’s
selections from among the hypothetical investment alternatives. There shall be no guaranteed rate
of return on the Elective Cash Deferral Account or the Non-Elective Account under this Plan.
Nothing contained herein shall require the Company to invest the deferred amounts in any actual
investments. Investment gains and losses credited on deferred amounts shall be paid out to
Participants at the same time and in the same manner as the underlying vested deferred amounts.



10.3 Hypothetical Investment Choices. The Committee from time to time may make available
any or all of the following hypothetical investments for Participant Elective Cash Deferral
Accounts and Non-Elective Accounts:




     (a) Interest-Bearing Cash Account. A Participant’s Elective Cash Deferral Account or
Non-Elective Account, as the case may be, shall be credited daily with interest at the rate
selected by the Committee and announced to Participants from time to time.



     (b) Phantom Investment Alternatives. Each “Phantom Investment Alternative” is a phantom
investment opportunity based on mutual fund or quoted benchmark such as the NASDAQ Combined
Composite Index or the S&P 500 Index. The Committee will name the investment choices available
under the Phantom Investment Alternatives from time to time. The portion of a Participant’s
Elective Cash Deferral Account or the Participant’s Non-Elective Account, as the case may be,
allocated to the Phantom Investment Alternatives will be credited with investment gains and losses
based on the investment performance as periodically reported by the proxy mutual funds or quoted
benchmarks using unit accounting as if the Participant’s deferred amounts had been invested in
those portfolios. The accounting for additions to Phantom Investment Alternatives or redemptions
therefrom shall be similarly based on unit accounting as of the date of the transaction.


10.4 Selection and Reallocation of Hypothetical Investment Choices. Investment choices may
be made or changed in accordance with the following rules:




     (a) A Participant shall designate on his Election Form the percentage of each deferred amount
of Compensation, which shall be allocated to each available hypothetical investment choice. If the
Participant does not elect a hypothetical investment choice for all or a portion of the
Participant’s



14









 







Account, such portion of the Participant’s Account shall be credited with investment gains and
losses in accordance with Section 10.3(a).



     (b) The Participant may request a change in the allocation of previously deferred portions of
his Elective Cash Deferral Account or Non-Elective Account, as the case may be, among the various
investment alternatives. Such changes may be made in accordance with rules established by the
Committee, and generally may be made daily and to become effective at the close of the market
(NASDAQ) on such day. The Participant may also change the allocation, which shall apply to any new
elective deferral amounts and deferred cash awards under the same rules.


10.5 Company Stock Measurement Fund. Notwithstanding any other provision of this Plan to
the contrary, the Company Stock Measurement Fund is not an available investment choice for either
the Elective Cash Deferral Account or Non-Elective Account portions of the Participant Accounts.
Each time a Participant timely elects to defer an RSU Award in accordance with Section 4.5, an
equivalent number of shares of Company common stock subject to such RSU Award shall be credited to
the Participant’s RSU Account. Notwithstanding any other provision of this Plan to the contrary,
RSU Accounts shall be automatically allocated to the Company Stock Measurement Fund and may not be
allocated to any other Measurement Fund.



10.6 Amounts Invested in the Company Stock Measurement Fund. With respect to the RSU
Account deemed invested in the Company Stock Measurement Fund, a number of shares of Company common
stock with a fair market value not greater than the value of the Participant’s RSU Account shall be
credited to the Participant’s RSU Account; provided however that in no event will a fractional
number of shares of Company common stock be allocated to the Participant’s RSU Account. In the
event that any amount allocated to the Company Stock Measurement Fund is less than the fair market
value of one whole share of Company common stock, such amount will instead be allocated to the
default hypothetical Measurement Fund available under Section 10.3 that is designated by the
Committee.



10.7 Change In Company Shares. If the outstanding shares of Company common stock are
hereafter changed into or exchanged for a different number or kind of shares or other securities of
the Company, or of another company, by reason of a dividend, distribution, stock split, reverse
stock split, stock dividend, combination or reclassification of the Company common stock,
reorganization, merger, consolidation, split-up, repurchase, liquidation, dissolution, sale,
transfer, exchange or other disposition of all or substantially all of the assets of the Company,
exchange of common stock or other securities of the Company, or other similar corporate transaction
or event, such that the Committee determines affects the Company’s common stock such that an
adjustment is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits intended to be made available under the Plan, the Committee shall make
an appropriate and equitable adjustment to the number of shares credited to the RSU Accounts. Any
such adjustment made by the Committee shall be final and binding upon a Participant, the Company
and all other interested persons.



10.8 Charges Against Accounts. There shall be charged against each Participant’s deferred
compensation account any payments made to the Participant or to his or her beneficiary, expenses
and investment losses allocable to the Participant’s account, and forfeitures of any unvested
amounts at termination of employment.




Article 11. Rights of Participants



11.1 Contractual Obligation. The Plan shall create a contractual obligation on the part of
the Company to make payments from the Participant Accounts when due. Payment of Participant Account
balances shall be made out of the general funds of the Company.




15









 







11.2 Unsecured Interest. No Participant or party claiming an interest in amounts deferred
by or on behalf of a Participant, including any investment gains or losses thereon, shall have any
interest whatsoever in any specific asset of the Company. Any and all investments remain the
property of the Company. To the extent that any party acquires a right to receive payments under
the Plan, such right shall be equivalent to that of an unsecured general creditor of the Company.
It is the intention of the Company that this Plan and the trust referenced in Section 11.3 below be
unfunded for purposes of the Code and for purposes of Title I of ERISA.



11.3 Authorization for Trust. The Company may, but shall not be required to, establish one
or more trusts, with such trustee as the Committee may approve, for the purpose of providing for
the payment of vested deferred amounts. Such trust or trusts may be irrevocable, but the assets
thereof shall be subject to the claims of the Company’s creditors. To the extent any amounts
deferred under the Plan are actually paid from any such trust, the Company shall have no further
obligation with respect thereto, but to the extent not so paid, such vested deferred amounts shall
remain the obligation of, and shall be paid by, the Company.



11.4 Employment. Nothing in the Plan shall interfere with nor limit in any way the right
of the Company to terminate any Participant’s employment at any time, or confer upon any
Participant any right to continue in the employ of the Company, its subsidiaries or affiliates.



11.5 Ownership of Life Insurance Policies. The Company may, but is not obligated to,
purchase life insurance policies to assist it in meeting it obligation to pay benefits under the
Plan. The Company will retain all incidents of ownership in such policies. The Participant shall
have no interest whatsoever in any such policy or policies, and at the request of the Company shall
submit to medical examinations and supply such information and execute such documents as may be
required by the insurance company or companies to whom the Company has applied for insurance. As a
condition of participation in the Plan, the Participant shall agree that the Company, at its
expense, is permitted to purchase life insurance on the life of the Participant.



11.6 Satisfaction of Claims. Any payment to a Participant or the Participant’s beneficiary
in accordance with the provisions of this Plan shall to the extent thereof, be in full satisfaction
of all claims for benefits under this Plan against the Committee and the Company.




Article 12. Withholding of Taxes




     All awards under the Plan are subject to withholding of all applicable taxes. There shall be
deducted from each payment made under this Plan or any other compensation payable by the Company to
the Participant (or his or her beneficiary) all taxes which are required to be withheld by the
Company in respect to such payment under this Plan. The Company shall have the right to reduce any
payment (or any other compensation) by the amount of cash sufficient to provide the amount of said
taxes.



     For each Plan Year in which a deferral amount is being contributed to the Plan, the Company
shall withhold from that portion of the Participant’s Salary, Bonus or other Compensation that is
not being deferred, in a manner determined by the Company, the Participant’s share of FICA and
other employment taxes on such deferral amount. If necessary, the Company may reduce the deferral
amount in order to comply with this Section.



     When a Participant becomes vested in a portion of his or her RSU Award, the Company shall
withhold from the Participant’s Salary, Bonus or other Compensation that is not deferred, in a
manner determined by the Company, the Participant’s share of FICA and other employment taxes. If
necessary,




16











 




the Company may reduce the Participant’s Elective Cash Deferral Amount in order to comply with this
Section.




     By electing to make a deferral under this Plan, the Participant authorizes any required
withholding from, at the Company’s election, distributions and any other amounts payable to the
Participant, and the Participant otherwise agrees to make adequate provision for any sums required
to satisfy the federal, state, local and foreign tax withholding obligations of the Company, if
any, which arise in connection with deferrals to, and payments from, this Plan. Unless the tax
withholding obligations of the Company and its subsidiaries are satisfied, the Company shall have
no obligation to make distributions under this Plan. The Committee, in its discretion, and subject
to such requirements as the Committee may impose prior to the occurrence of such withholding, may
permit such withholding obligations to be satisfied through cash payment by the Participant.



     Additionally, for distributions of the RSU Account, the tax withholding obligation may be
satisfied by a reduction in the number of shares of Company common stock issued to the Participant,
but only if such reduction in shares is approved by the Board or its Compensation Committee.
Furthermore, for distributions of the RSU Account, the Committee, in its discretion, and subject to
such requirements as it may impose, may permit the tax withholding obligation to be satisfied
pursuant to a “same-day sale” procedure under a Regulation T Program conducted with the assistance
of a brokerage firm.



Article 13. Securities Laws Compliance



13.1 Designation of Participants. Notwithstanding anything to the contrary set forth
herein, with respect to any employee who is then subject to Section 16 of the Exchange Act, only
the Board or its Compensation Committee may designate such individual as eligible to participate in
the Plan.



13.2 Action by Committee. With respect to any Participant who is then subject to Section
16 of the Exchange Act, notwithstanding anything to the contrary set forth herein, any function of
the Committee under the Plan relating to such Participant shall be performed solely by the Board or
its Compensation Committee, if and to the extent required to ensure the availability of an
exemption under Section 16 of the Exchange Act for any transaction relating to such Participant
under the Plan.



13.3 Compliance with Section 16. Notwithstanding any other provision of the Plan or any
rule, instruction, election form or other form, the Plan and any such rule, instruction or form
shall be subject to any additional conditions or limitations set forth in any applicable exemptive
rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are
requirements for the application of such exemptive rule. To the extent permitted by applicable
law, such provision, rule, instruction or form shall be deemed amended to the extent necessary to
conform to such applicable exemptive rule.




Article 14. Amendment and Termination




     This Plan may be amended at any time and in any respect by the Company, provided that the
Company may not unilaterally reduce the balance of any individual’s account without his/her
consent. 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 participating employee under Section 409A, 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.



17









 





     The Plan may be frozen at any time by the Company. In the event that the Plan is frozen,
benefits shall be held in the Plan and paid out in accordance with the terms of the Plan.



     The Plan may be terminated and liquidated at any time by the Company, provided that, to the
extent required by Section 409A (i) the termination and liquidation does not occur proximate to a
downturn in the financial health of the Company; (ii) all other Account Balance Plans are
terminated with respect to all Participants, (iii) no Participant Account balances are paid, other
than those otherwise payable under the terms of the Plan absent a termination of the Plan, within
12 months of the termination of the Plan, (iv) all Participant Account balances are paid within 24
months of the termination of the Plan, and (v) the Company does not adopt another Account Balance
Plan with respect to the Plan’s Participants at any time for a period of three years following the
date of termination of the Plan.



     The Committee may determine that a Participant who has not had a Termination of Service shall
no longer be eligible to participate in the Plan. If the Committee terminates a Participant’s
eligibility to participate in the Plan prior to the Participant’s Termination of Service, then the
Participant’s Account balance, if any, shall remain in the Plan and will be paid out in accordance
with the terms of this Plan and the applicable deferral election.



Article 15. Miscellaneous



15.1 Notice. Any notice or filing required or permitted to be given to the Company under
the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified
mail to the Senior Vice President — Human Resources at the principal office of the Company at 935
First Avenue, King of Prussia, PA 19406. Notice mailed to a Participant shall be at such address
as is given in the records of the Company. Notices 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.



15.2 Nontransferability. Participant’s rights to deferred amounts, contributions, and
investment gains and losses credited thereon under the Plan may not be sold, transferred, assigned,
or otherwise alienated or hypothecated, other than by will or by the laws of descent and
distribution. Except pursuant to Section 9.1, in no event shall the Company make any payment under
the Plan to any assignee or creditor of a Participant.



15.3 Severability. In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or invalid provision had not been
included.



15.4 Costs of the Plan. Except as determined by the Committee, all costs of implementing
and administering the Plan shall be borne by the Company.



15.5 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.



15.6 Status under ERISA. The Plan is intended to be an unfunded “top hat” plan which is
maintained primarily to provide deferred compensation benefits for a select group of “management or
highly compensated employees” within the meaning of Sections 201, 301, and 401 of ERISA, and to
therefore be exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA. The Plan shall
be administered and interpreted to the extent possible in a manner consistent with that intent.




18









 







15.7 Applicable Law. The Plan shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.



15.8 Successors. All obligations of the Company under the Plan shall be binding on any
successor to the Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.



15.9 Scrivener’s Error. Notwithstanding any other provision of this Plan to the contrary,
if there is a scrivener’s error in properly transcribing this Plan document, it shall not be a
violation of the Plan terms to operate the Plan in accordance with its proper provisions, rather
than in accordance with the terms of the Plan document, pending correction of the Plan document
through an amendment. In addition, any provisions of the Plan document improperly added as a
result of scrivener’s error shall be considered null and void as of the date such error occurred.



15.10 Compliance with Section 409A. This Plan is intended to comply with the requirements
of Section 409A. The Committee shall interpret the Plan provisions in a manner consistent with the
requirements of Section 409A. To the extent one or more provisions of this Plan do not comply with
Section 409A, such provision shall be automatically and immediately voided, and shall be amended as
soon as administratively feasible and shall be administered to so comply.



15.11 Disclaimer. It is the parties intention that this arrangement comply with the
provisions of Section 409A. Notwithstanding the foregoing or anything else to the contrary in the
Plan, the Company shall have no liability to any Participant should any provision of the Plan fail
to satisfy Section 409A.





19









 








Appendix A

Claims Procedures



The following claims procedures shall apply for all benefits payable under the Plan except for
Disability benefits. The claims procedures applicable to Disability benefits are set forth on
Appendix B.




          (a) Applications for Benefits and Inquiries. Any application for benefits, inquiries
about the Plan or inquiries about present or future rights under the Plan must be submitted to the
Plan Administrator in writing by an applicant (or his or her authorized representative).




          (b) Adverse Benefit Determination. In the event that any application for benefits
receives an Adverse Benefit Determination, as defined in Appendix B, the Plan Administrator must
provide the applicant with written or electronic notice of the Adverse Benefit Determination, and
of the applicant’s right to review the Adverse Benefit Determination. Any electronic notice will
comply with the regulations of the U.S. Department of Labor. The notice of Adverse Benefit
Determination will be set forth in a manner designed to be understood by the applicant and will
include the following:




               (i) the specific reason or reasons for the Adverse Benefit Determination;



               (ii) references to the specific Plan provisions upon which the Adverse Benefit Determination
is based;



               (iii) a description of any additional information or material that the Plan Administrator
needs to complete the review and an explanation of why such information or material is necessary;
and



               (iv) an explanation of the Plan’s review procedures and the time limits applicable to such
procedures, including a statement of the applicant’s right to bring a civil action under Section
502(a) of ERISA following an Adverse Benefit Determination on review of the claim, as described
below.


This notice of an Adverse Benefit Determination will be given to the applicant within a reasonable
period of time, but not later than ninety (90) days after the Plan Administrator receives the
application, unless special circumstances require an extension of time; in which case the Plan
Administrator has up to an additional ninety (90) days for processing the application. If an
extension of time for processing is required, written notice of the extension will be furnished to
the applicant before the end of the initial ninety (90) day period.



This notice of extension will describe the special circumstances necessitating the additional time
and the date by which the Plan Administrator is to render its decision on the application.




          (c) Request for a Review. Any person (or that person’s representative) for whom there
is an Adverse Benefit Determination may appeal the Adverse Benefit Determination by submitting a
request for a review to the Plan Administrator within sixty (60) days after the date of the Adverse
Benefit Determination. A request for a review shall be in writing and shall be addressed to the
Plan Administrator.



A request for review must set forth all of the grounds on which it is based, all facts in support
of the request and any other matters that the applicant feels are pertinent. The applicant (or his
or her representative) shall have the opportunity to submit (or the Plan Administrator may require
the applicant


1









 






to submit) written comments, documents, records and other information relating to his or her claim.
The applicant (or his or her representative) shall be provided, upon request and free of charge,
reasonable access to, and copies of, the Relevant Records, as defined in Appendix B. The review
shall take into account all Relevant Records and other information submitted by the applicant (or
his or her representative) relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.




          (d) Decision on Review. The Plan Administrator will act on each request for review
within a reasonable period of time, but not later than sixty (60) days after receipt of the
request, unless special circumstances require an extension of time (not to exceed an additional
sixty (60) days), for processing the request for a review. If an extension for review is required,
written notice of the extension will be furnished to the applicant within the initial sixty (60)
day period. This notice of extension will describe the special circumstances necessitating the
additional time and the date by which the Plan Administrator is to render its decision on the
review. If the extension of review is due to the applicant’s failure to submit information
necessary to decide a claim, the period for making the decision on review shall be tolled from the
date on which the notification of the extension is sent to the application until the date on which
the applicant responds to the request for additional information.




          (e) Denial of Appeal. The Plan Administrator will give prompt, written or electronic
notice of its decision to the applicant. Any electronic notice will comply with the regulations of
the U.S. Department of Labor. In the event of an Adverse Benefit Determination by the Plan
Administrator that confirms the original Adverse Benefit Determination, the notice will set forth,
in a manner calculated to be understood by the applicant, the following:




               (i) the specific reason or reasons for the Adverse Benefit Determination;



               (ii) references to the specific Plan provisions upon which the Adverse Benefit Determination
is based;



               (iii) a statement that the applicant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all Relevant Records; and



               (iv) a statement of the applicant’s right to bring a civil action under Section 502(a) of
ERISA.



          (f) Rules and Procedures. The Plan Administrator will establish rules and procedures,
consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its
responsibilities in reviewing benefit claims. The Plan Administrator may require an applicant who
wishes to submit additional information in connection with an appeal from the denial of benefits to
do so at the applicant’s own expense.




          (g) Exhaustion of Remedies. No legal action for benefits under the Plan may be
brought until the applicant (i) has submitted a written application for benefits in accordance with
the procedures described above, (ii) has been notified by the Plan Administrator that the
application is denied, (iii) has filed a written request for a review of the application in
accordance with the appeal procedure described above, and (iv) has been notified in writing that
the Plan Administrator has denied the appeal.




2









 








Appendix B

Disability Claims Procedures



The following claim procedures shall apply only for Disability benefits payable under the Plan. An
Authorized Representative may act on a Claimant’s behalf in pursuing a benefit claim or appeal of
an Adverse Benefit Determination.




     1. Definitions.



          A. “Adverse Benefit Determination” means any of the following:




               (ii) a denial, reduction, or termination of a benefit by the Plan, or a failure of the Plan to
provide or make payment (in whole or in part) for a benefit; and



               (iii) a denial, reduction, or termination of a benefit by the Plan, or a failure of the Plan
to provide or make payment (in whole or in part) for a benefit resulting from the application of
any utilization review.



          B. “Authorized Representative” means an individual who is authorized to represent a Claimant
with respect to any claims or appeals filed pursuant to these procedures. Whether an individual is
an Authorized Representative will be determined by the Plan Administrator in accordance with
reasonable procedures established by the Plan.




          C. “Claimant” means a Participant or his or her beneficiary who has submitted a claim for
benefits in accordance with these claims procedures.




          D. "Disability Claim” means a claim for benefits under the Plan for which the claimant must
show disability and the Plan Administrator must find make a determination of disability in order
for the Claimant to receive benefits.




          E. “Health Care Professional” means a physician or other health care professional who is
licensed, accredited, or certified to perform specified health services consistent with applicable
state law.




          F. “Relevant Records” means any document, record, or other information that:




               (i) the Plan Administrator relied upon in making a benefit determination for the Claimant’s
claim;



               (ii) was submitted, considered, or generated in the course of making the benefit determination
for a claim, without regard to whether such document, record, or other information was relied upon
in making the benefit determination;



               (iii) demonstrates compliance with the administrative processes and safeguards required
pursuant to Department of Labor Regulations in making the benefit determination for a claim; or



 









 





               (iv) constitutes a statement of policy or guidance with respect to the Plan concerning the
denied treatment option or benefit for a Claimant’s diagnosis, without regard to whether such
advice or statement was relied upon in making the benefit determination.



     2. Claims Procedure- Disability Claims. In the case of a Disability Claim, the Plan
Administrator will notify the Claimant of the Plan’s Adverse Benefit Determination within a
reasonable time, but not later than forty-five (45) days after the Plan receives the claim. The
Plan may extend this period for up to thirty (30) days, provided that the Plan Administrator both
(i) determines that such an extension is necessary due to matters beyond the control of the Plan,
and (ii) notifies the Claimant, prior to the expiration of the initial forty-five (45) day period,
of the circumstances requiring the extension of time and the date by which the Plan expects to make
a decision.



          If, prior to the end of the first thirty (30) day extension period, the Plan Administrator
determines that, due to matters beyond the control of the Plan, a decision cannot be rendered
within the first thirty (30) day extension period, the period for making a determination may be
extended for an additional thirty (30) days. Such additional extension is permitted only if (i)
the Plan Administrator notifies the Claimant, prior to the end of the first thirty (30) day
extension, of the circumstances requiring the second thirty (30) day extension and (ii) the Plan
Administrator notifies the Claimant of the date the Plan expects to render the decision.




          Any notice of extension will explain the standards on which the Claimant’s entitlement to a
benefit is based, the unresolved issues that prevent a decision on the claim, and the additional
information needed to resolve these issues. A Claimant will be given at least forty-five (45) days
to provide the requested information.




     3. Calculating Time Periods For Claims Procedure. The time within which a benefit
determination is required to be made will begin at the time a claim is filed in accordance with
these procedures, without regard to whether all the information necessary to make a benefit
determination accompanies the filing. In the event that the time within which a benefit
determination is required to be made is extended due to the Claimant’s failure to submit
information necessary to decide a claim, the period for making the benefit determination will be
suspended from the date on which the Plan Administrator sends the notification of extension to the
Claimant until the date on which the Claimant responds to the request for additional information.



     4. Notice of Benefit Determination. The Plan Administrator will provide the Claimant with
written or electronic notification of any Adverse Benefit Determination. If the notice of an
Adverse Benefit Determination is provided electronically, such notice will comply with the
standards imposed by the Department of Labor Regulations.



          Any notice of Adverse Benefit Determination will set forth, in a manner calculated to be
understood by the Claimant:




          A. the specific reason or reasons for the Adverse Benefit Determination;




          B. references to the specific Plan provisions on which the Adverse Benefit Determination is
based;




          C. 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;




 









 








          D. a description of the Plan’s review procedures and the time limits applicable to such
procedures, including a statement of the Claimant’s right to bring a civil action under Section
502(a) of ERISA following an Adverse Benefit Determination on review; and




          E. if an internal rule, guideline, protocol, or other similar criterion was relied upon in
making the Adverse Benefit Determination, either (i) the specific rule, guideline, protocol, or
other similar criterion, or (ii) a statement that such a rule, guideline, protocol, or other
similar criterion was relied upon in making the Adverse Benefit Determination and that a copy of
such rule, guideline, protocol, or other criterion will be provided free of charge to the Claimant
upon request.




     5. Review Procedure. If the Claimant receives an Adverse Benefit Determination, the Claimant
may appeal the Adverse Benefit Determination within one hundred eighty (180) days after the
Claimant’s receipt of the notice of Adverse Benefit Determination. The Claimant must make any
appeal in writing. The appeal must be addressed to the Review Panel of the Plan Administrator.



          During the one hundred eighty (180) day period, the Claimant may:




          A. submit written comments, documents, records, and other information relating to the claim
for benefits; and




          B. request and receive, free of charge, reasonable access to, and copies of, all Relevant
Records.




          The Review Panel shall consist of one or more individuals who are neither the individuals who
made the initial Adverse Benefit Determination, nor the subordinate of any of such individuals.
The review of the Claimant’s appeal will not give deference to the initial Adverse Benefit
Determination. The review will take into account all comments, documents, records, and other
information that the Claimant submits relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.




          In deciding the appeal of an Adverse Benefit Determination that is based in whole or in part
on a medical judgment, the Review Panel will consult with a health care professional who has
appropriate training and experience in the field of medicine involved in the medical judgment.
Such health care professional must be an individual who is neither the individual who was consulted
in connection with the initial Adverse Benefit Determination, nor the subordinate of such
individual.




          The Review Panel will provide the Claimant with the identification of medical or vocational
experts whose advice was obtained on behalf of the Plan in connection with the Claimant’s Adverse
Benefit Determination, without regard to whether the advice was relied upon in making the benefit
determination.




     6. Timing of Notice of Benefit Determination on Review. In the case of a Disability Claim,
the Plan Administrator will notify the Claimant of the Plan’s benefit determination on review
within a reasonable period, but not later than forty-five (45) days after the Plan receives the
Claimant’s request for review of an Adverse Benefit Determination. The Plan Administrator may
extend this period for up to an additional forty-five (45) days if the Plan Administrator
determines that special circumstances exist, such as the need to hold a hearing.



          If the Plan Administrator determines that an extension is required, the Plan Administrator
will provide the Claimant written notice of the extension before the end of the initial forty-five
(45) day




 









 







period. The extension notice will describe the special circumstances requiring the
extension and the date by which the Plan expects to make a decision on the Claimant’s appeal.




     7. Calculating Time Periods for Review Procedure. The period of time within which a benefit
determination on review is required to be made shall begin at the time an appeal is filed in
accordance with subsection (e), without regard to whether all the information necessary to make a
benefit determination on review accompanies the filing.



     8. Notice of Benefit Determination on Review. The Plan Administrator will provide the
Claimant with written or electronic notification of the Plan’s benefit determination on review.
Any electronic notification shall comply with the Department of Labor Regulations.



          In the case of an Adverse Benefit Determination, the notification will set forth, in a manner
calculated to be understood by the Claimant:




          A. the specific reason or reasons for the Adverse Benefit Determination;




          B. reference to the specific Plan provisions on which the benefit determination is based;




          C. a statement that the Claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all Relevant Records;




          D. a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA; and




          E. if an internal rule, guideline, protocol, or other similar criterion was relied upon in
making the Adverse Benefit Determination, either the specific rule, guideline, protocol, or other
similar criterion, or a statement that such rule, guideline, protocol, or other similar criterion
was relied upon in making the Adverse Benefit Determination and that a copy of the rule, guideline,
protocol, or other similar criterion will be provided free of charge to the Claimant upon request.




     9. Administration. The Administrator will establish rules and procedures, consistent with the
Plan and with ERISA, as necessary and appropriate in carrying out its responsibilities in reviewing
benefit claims. The Administrator may require an applicant who wishes to submit additional
information in connection with an appeal from the denial of benefits to do so at the applicant’s
own expense.



     10. Exhaustion of Remedies. No legal action for benefits under the Plan may be brought until
the Claimant (i) has submitted a written application for benefits in accordance with the procedures
described above, (ii) has been notified by the Administrator that the application is denied, (iii)
has filed a written request for a review of the application in accordance with the appeal procedure
described above, and (iv) has been notified in writing that the Administrator has denied the
appeal.