Document:

Exhibit 10.14

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the 15th day of May, 2013 (the “Effective Date”) by and between Royal Gold, Inc., a Delaware corporation (the “Company”), and Karli Anderson (the “Executive”).

 

Recitals

 

A.                                           The Company desires to employ Executive as Vice President, Investor Relations of the Company, and Executive desires to accept such employment with the Company in said capacity, subject to the at-will employment relationship between the Company and Executive; and

 

B.                                           Each party desires to set forth in writing the terms and conditions of their understandings and agreements.

 

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and obligations contained herein, and other good and valuable consideration, the receipt and adequacy of which the Company and Executive hereby acknowledge, the Company and Executive hereby agree as follows:

 

Agreement

 

1.                                      Position.

 

(a)                                 The Company agrees to employ Executive in the position of Vice President, Investor Relations.  Executive shall serve and perform the duties which may from time to time be assigned to her by the President and/or the Board of Directors of the Company (the “Board”).  The Board may delegate its authority to take any action under this Agreement to the Compensation, Nominating and Corporate Governance Committee of the Board (the “Compensation Committee”).

 

(b)                                 Executive agrees to serve as Vice President, Investor Relations and agrees that she will devote her best efforts and full business time and attention to the Company.  Executive agrees that she will faithfully and diligently carry out the duties of the Vice President, Investor Relations.  Executive further agrees to comply with all Company policies as in effect from time to time and to comply with all laws, rules and regulations, including, but not limited to, those applicable to the Company.

 

(c)                                  Executive agrees to travel as necessary to perform her duties under this Agreement.

 

(d)                                 Nothing herein shall preclude Executive from (i) serving as a member of the board of directors of up to two (2) for-profit businesses; (ii) serving as a member of the board of directors of such other affiliated or non-affiliated entities at the request of the Board; (iii) engaging in charitable and community activities; (iv) participating in industry and trade

 

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organization activities; and (v) managing her and her family’s personal investments and affairs; provided, that such activities do not (x) materially interfere with the regular performance of her duties and responsibilities under this Agreement or (y) constitute activities that compete with the business of Company.

 

2.                                      Term.  The term of this Agreement shall commence on the Effective Date and continue until September 15, 2013 (the “Term”), unless otherwise terminated pursuant to Section 4 of this Agreement.  Executive’s continued employment after the expiration of the Initial Term shall be in accordance with and governed by this Agreement, unless modified by the parties to this Agreement in writing.

 

3.                                      Compensation and Benefits.

 

(a)                                 Base Salary.  The Company shall pay Executive a base salary of $250,000 per year (“Base Salary”).  The Base Salary may be increased annually by an amount as may be approved by the Board or the Compensation Committee, and, upon such increase, the increased amount shall thereafter be deemed to be the Base Salary for purposes of this Agreement.

 

(b)                                 Bonus Opportunities.  For each fiscal year during the Term, Executive shall be eligible to be considered to receive incentive compensation (an “Annual Bonus”) from the Company in an amount determined by the Board or the Compensation Committee and in accordance with the Company’s compensation policies and practices as in effect from time to time.

 

(c)                                  Long-Term Incentive Award Opportunities.  Executive shall be eligible to participate throughout the Term in the Company’s 2004 Omnibus Long-Term Incentive Plan (the “LTIP”) or other equity incentive plans as may be in effect from time to time (the “Equity Incentive Plans”), in accordance with the Company’s compensation policies and practices as in effect from time to time and the terms and provisions of the LTIP or other Equity Incentive Plan.

 

(d)                                 Payment.  Payment of all compensation to Executive hereunder shall be made in accordance with applicable law, the terms of this Agreement and applicable Company policies and practices as in effect from time to time, including normal payroll practices, and shall be subject to all applicable withholdings and taxes.

 

(e)                                  Welfare Benefits and Retirement Plans.  During the Term, Executive shall be allowed to participate, on the same basis generally as other similarly situated executive officers of the Company, in all general employee benefit plans and programs, including improvements or modifications of the same, which on the Effective Date or thereafter are made available by the Company or its affiliates to all or substantially all of the Company’s similarly situated executive officers.  Such benefits, plans, and programs may include, without limitation, health, vision care, dental care, medical reimbursement, prescription drug, life insurance, disability protection, and qualified and non-qualified retirement plans.  Except as specifically provided herein, nothing in this Agreement is to be construed or interpreted to increase or alter in any way the rights, participation, coverage, or benefits under such benefit plans or programs from those provided to similarly situated executive officers pursuant to the terms and conditions

 

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of such benefit plans and programs.  The Company shall be permitted to modify such benefits from time to time consistent with any modifications that impact other similarly situated executive officers of the Company.

 

(f)                                   Fringe Benefits.  During the Term, Executive shall be entitled to fringe benefits of the kind and quality which are provided to similarly situated executive officers of the Company in accordance with the Company’s policies and practices as in effect from time to time.

 

(g)                                  Vacation.  Executive shall be entitled to paid vacation for up to three (3) weeks during each calendar year, and such vacation shall be taken in accordance with the Company’s policies and practices as in effect from time to time.

 

(h)                                 Holidays.  Executive shall be entitled to paid holidays, personal days, and sick days consistent with the Company’s policies and practices as in effect from time to time.

 

(i)                                     Reimbursement of Expenses.  Promptly following presentation of expense statements, receipts, vouchers, or such other information and documentation as the Company may reasonably require, the Company shall reimburse Executive for all business expenses that are reasonable and necessary and incurred by Executive while performing her duties under this Agreement.

 

(j)                                    Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company and for which Executive may qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under any other agreement with the Company or any of its affiliated companies.  Except as otherwise provided herein, amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan or program of the Company at or subsequent to the date of termination of employment shall be payable in accordance with such plan or program.

 

4.                                      Termination of Employment.

 

(a)                                 Termination by Company without Cause. The Company may terminate Executive’s employment and this Agreement for any reason immediately upon transmittal of written notice to Executive in accordance with this Agreement.

 

(b)                                 Termination by Company for Cause.  The Company may terminate Executive’s employment and this Agreement at any time for Cause.  For purposes of this Agreement, “Cause” for termination of Executive’s employment by the Company shall be deemed to exist if: (i) Executive is found guilty by a court of having committed fraud, theft, embezzlement or misappropriation against the Company or any of its affiliates and such conviction is affirmed on appeal or the time for appeal has expired; (ii) Executive is found guilty by a court of having committed a felony or any other crime involving moral turpitude and such conviction is affirmed on appeal or the time for appeal has expired; (iii) in the reasonable judgment of the Board, Executive has compromised Proprietary and Confidential Information (as defined below) or has engaged in gross or willful misconduct that causes substantial and material

 

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harm to the business and operations of the Company or any of its affiliates, in each case the continuation of which will continue to substantially and materially harm the business and operations of the Company or any of its affiliates in the future; or (iv) Executive materially breaches this Agreement and fails to cure such breach within ten (10) days of being informed of such breach in writing by the Company.

 

(c)                                  Termination by Executive for Good Reason.  Executive may terminate her employment and this Agreement for Good Reason.  For purposes of this Agreement, “Good Reason” means, without Executive’s express written consent, the occurrence of any of the following circumstances if Executive has given notice of the circumstances within ninety (90) days of the occurrence and such circumstances have not been fully corrected within thirty (30) days of the notice given in respect thereof: (i) any material adverse change in Executive’s title or responsibilities with the Company, (ii) any material reduction in Executive’s Base Salary, (iii) receipt of notice that Executive’s principal workplace will be relocated by more than fifty (50) miles from the job-site immediately prior to the Effective Date, or (iv) if a Change of Control (as defined below) has occurred, failure to provide for Executive’s participation in bonus, stock option, restricted stock, incentive awards and other compensation plans which provide opportunities to receive compensation that are not less than (x) the opportunities provided by the Company to similarly situated executive officers of the Company and (y) the opportunities under any such plans in which the Executive was participating immediately prior to the date on which a Change of Control occurs.

 

(d)                                 Termination by Executive without Good Reason.  Executive may terminate her employment and this Agreement for reasons other than Good Reason upon transmittal of at least sixty (60) days’ written notice to the Company in accordance with this Agreement.

 

(e)                                  Disability.  The Company may terminate Executive’s employment and this Agreement at any time Executive shall have sustained a Disability (as defined below) as determined by the Board, by giving Executive written notice of its intention to terminate Executive’s employment, and Executive’s employment with the Company shall terminate effective on the ninetieth (90th) day after receipt of such notice (the “Disability Effective Date”).  For purposes of this Agreement, “Disability” means Executive is unable due to a physical or mental condition to perform the essential functions of her position with or without reasonable accommodation for a period of three (3) consecutive months or based on the written certification of a licensed physician selected by the Board and approved by Executive (which approval shall not be unreasonably withheld, delayed or conditioned) of the likely continuation of such condition for such period.

 

(f)                                   Death.  This Agreement and Executive’s employment shall terminate automatically upon Executive’s death.

 

5.                                      Obligations upon Termination.  Other than as specifically set forth or referenced in this Agreement, Executive shall not be entitled to any benefits on or after termination of employment or this Agreement.

 

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(a)                                 Termination by Company without Cause; or by Executive for Good Reason.  If (i) the Company terminates Executive’s employment or this Agreement without Cause during the Term, or (ii) Executive terminates her employment or this Agreement for Good Reason during the Term, and any such termination does not occur within two (2) years after the occurrence of a Change of Control, then the Company shall, after receipt of an executed release agreement between the Company and Executive, which will consist in substance of the language attached as Exhibit A (the “Release Document”) pay to Executive, and Executive shall be entitled to receive, the following:

 

(i)                                     the unpaid portion of Executive’s Base Salary as of the date of termination of Executive’s employment, pro rated through the date of termination, and a payment for any vacation Executive has accrued but not used through the date of termination payable in accordance with Section 3(d);

 

(ii)                                  promptly following submission by Executive of supporting documentation, any costs and expenses paid or incurred by Executive which would have been payable under Section 3(i) if Executive’s employment had not terminated; and

 

(iii)                               one (1) times Executive’s Base Salary (the “Severance Payment”), payable within thirty (30) business days of the date of termination of Executive’s employment.

 

(b)                                 Termination by the Company for Cause; or by Executive other than for Good Reason.  If (i) Executive’s employment is terminated for Cause, or (ii) Executive terminates her employment other than for Good Reason, then this Agreement shall terminate without further obligations by the Company to Executive under this Agreement, and the Company shall pay Executive, and Executive shall be entitled to receive, the following:

 

(i)                                     the unpaid portion of Executive’s Base Salary as of the date of termination of Executive’s employment, pro rated through the date of termination, and a payment for any vacation Executive has accrued but not used through the date of termination payable in accordance with Section 3(d); and

 

(ii)                                  promptly following submission by Executive of supporting documentation, any costs and expenses paid or incurred by Executive which would have been payable under Section 3(i) if Executive’s employment had not terminated.

 

(c)                                  Death.            If Executive’s employment is terminated by reason of Executive’s death, then this Agreement shall terminate without further obligations by the Company to Executive’s legal representatives under this Agreement other than those obligations under the terms of a Company plan or program that take effect at the date of Executive’s death, and the Company shall pay Executive’s estate, and Executive’s estate shall be entitled to receive, the following:

 

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(i)                                     the unpaid portion of Executive’s Base Salary as of the date of termination of Executive’s employment, pro rated through the date of termination, and a payment for any vacation Executive has accrued but not used through the date of termination payable in accordance with Section 3(d); and

 

(ii)                                  promptly following submission by Executive’s legal representatives of supporting documentation, any costs and expenses paid or incurred by Executive which would have been payable under Section 3(i) if Executive’s employment had not terminated.

 

(d)                                 Disability.  If Executive’s employment is terminated by reason of Executive’s Disability, then this Agreement shall terminate without further obligations by the Company to Executive under this Agreement except for obligations which expressly continue after termination of employment due to Disability, and the Company shall pay Executive, and Executive shall be entitled to receive, the following:

 

(i)                                     the unpaid portion of Executive’s Base Salary as of the date of termination of Executive’s employment, pro rated through the date of termination, and a payment for any vacation Executive has accrued but not used through the date of termination payable in accordance with Section 3(d);

 

(ii)                                  promptly upon submission by Executive of supporting documentation, any costs and expenses paid or incurred by Executive which would have been payable under Section 3(i) if Executive’s employment had not terminated; and

 

(iii)                               any disability benefits payable in accordance with the Company’s plans, programs and policies as in effect from time to time.

 

(e)                                  Change of Control.  If (i) the Company terminates Executive’s employment or this Agreement without Cause during the Term, or (ii) Executive terminates her employment or this Agreement for Good Reason during the Term, and any such termination occurs within two (2) years after the occurrence of a Change of Control, then after receipt of the executed Release Document:

 

(i)                                     the Company shall pay to Executive, and Executive shall be entitled to receive, the following:

 

(A)                               the unpaid portion of Executive’s Base Salary as of the date of termination of Executive’s employment, pro rated through the date of termination, and a payment for any vacation Executive has accrued but not used through the date of termination payable in accordance with Section 3(d);

 

(B)                               promptly following submission by Executive of supporting documentation, any costs and expenses paid or incurred by Executive which would have been payable under Section 3(i) if Executive’s employment had not terminated;

 

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(C)                               one and one-half (1.5) times Executive’s Base Salary, payable within thirty (30) business days of the date of termination of Executive’s employment; and

 

(D)                               one and one-half (1.5) times the average of the Annual Bonuses paid to Executive for the three (3) full fiscal years ending immediately prior to the date of termination of Executive’s employment, payable within thirty (30) business days of the date of termination of Executive’s employment, provided, however that if Executive has not been eligible to receive an Annual Bonus for three (3) fiscal years at the time of such determination, then the average under this clause (D) shall be based on the lesser number of fiscal years for which Executive has been eligible to receive an Annual Bonus, and provided, further that if Executive has received an Annual Bonus for a portion of a fiscal year, then the amount of such Annual Bonus shall be annualized solely for purposes of the determination made under this clause (D) (collectively, clauses (C) and (D) of this Section 5(e)(i) the “Change of Control Severance Payment”);

 

(ii)                                  if Executive (and Executive’s eligible dependants) timely elect participation in the Company’s group health insurance plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) or any Colorado statute that provides for the continuation of benefits under such plan (“Colorado Continuation Statute”), the Company will pay the normal monthly employer’s cost of coverage under the Company’s group health insurance plan for full-time employees toward such COBRA coverage or Colorado Continuation Statute coverage for twelve (12) months following the date of termination of Executive’s employment.  Executive acknowledges and agrees that Executive is responsible for paying the balance of any costs not paid by the Company under this Agreement which are associated with Executive’s (and Executive’s eligible dependants’) participation in the Company’s health insurance plan and that Executive’s failure to pay such costs may result in the termination of Executive’s (and Executive’s eligible dependants’) participation in such plan.  The Company’s obligations under this Section 5(e)(ii) will cease on the date on which Executive becomes eligible for health insurance coverage under another employer’s group health insurance plan, and, within five (5) business days of Executive becoming eligible for health insurance coverage under another employer’s group health insurance plan, Executive shall inform the Company of such fact in writing; and

 

(iii)                               the Company will arrange to provide for Executive (and Executive’s eligible dependants) benefits provided under any vision care, dental care, medical reimbursement, prescription drug, life insurance and disability protection group insurance plans maintained by the Company for full-time employees for twelve (12) months following the date of termination of Executive’s employment.  If and to the extent that the Company cannot provide coverage to Executive (and Executive’s eligible dependants) under any such vision care, dental care, medical reimbursement, prescription drug, life insurance and disability protection group insurance plans (i) solely due to the fact that Executive is no longer an employee or officer of the Company or (ii) as a result of the amendment or termination of any vision care, dental care, medical reimbursement, prescription drug, life insurance and disability protection group insurance plan, the Company will then pay or provide for the payment of such vision care, dental care, medical reimbursement, prescription drug, life insurance and disability protection group

 

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insurance plan during the twelve (12) months following the date of termination of Executive’s employment.  Executive acknowledges and agrees that Executive is responsible for paying the balance of any costs not paid by the Company under this Agreement which are associated with Executive’s (and Executive’s eligible dependants’) participation in any vision care, dental care, medical reimbursement, prescription drug, life insurance and disability protection group insurance plan and that Executive’s failure to pay such costs may result in the termination of Executive’s (and Executive’s eligible dependants’) participation in such plan.  The Company’s obligations under this Section 5(e)(iii) will cease on the date on which Executive becomes eligible for any vision care, dental care, medical reimbursement, prescription drug, life insurance and disability protection group insurance plan (but only with respect to the particular coverage(s) available), and, within five (5) business days of Executive becoming eligible for any insurance coverage(s) under another employer’s group insurance plan, Executive shall inform the Company of such fact in writing.

 

For purposes of this Agreement, “Change of Control” means any of the following:  (i) the dissolution or liquidation of the Company or a merger, consolidation, or reorganization of the Company with one (1) or more other entities in which the Company is not the surviving entity, (ii) a sale of substantially all of the assets of the Company to another person or entity, (iii) any transaction (including without limitation a merger or reorganization in which the Company is the surviving entity) which results in any person or entity (other than persons who are stockholders or affiliates immediately prior to the transaction) owning fifty percent (50%) or more of the combined voting power of all classes of stock of the Company, or (iv) during any period of two (2) consecutive years, members who at the beginning of such period constituted the Board shall have ceased for any reason to constitute a majority thereof, unless the election, or nomination for election by the Company’s equity holders, of each director shall have been approved by the vote of at least a majority of the directors then still in office and who were directors at the beginning of such period (so long as such director was not nominated by a person who has expressed an intent to effect a Change of Control or engage in a proxy or other control contest).

 

(f)                                   Resignation from Boards of Directors.  If Executive is a director of the Company or any of its affiliates and her employment is terminated for any reason, Executive shall, if requested by the Company, immediately resign as a director of the Company and/or any affiliate and any committees of such boards of directors.  If such resignation is not received within ten (10) business days after Executive receives written notice from the Company requesting the resignations, Executive shall forfeit any right to receive any payments pursuant to this Agreement.

 

(g)                                  Release.  Notwithstanding any other provision in this Agreement to the contrary, as a condition precedent to receiving any Severance Payment or Change of Control Severance Payment, Executive agrees to execute (and not revoke) the Release Document on or before the thirtieth (30th) business day following the date of termination of Executive’s Employment, which is when any Severance Payment or Change of Control Severance Payment is otherwise payable in accordance with Section 5(a)(iii) or Section 5(e)(i)(C), respectively.  If Executive fails to execute and deliver the Release Document, or revokes the Release Document, Executive agrees that she shall not be entitled to receive the Severance Payment or Change of Control Severance Payment, as applicable.

 

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6.                                      Limitations Under Code Section 409A. Notwithstanding anything to the contrary in this Agreement, in the event that, as a result of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) (and any related regulations or other pronouncements), any of the payments that Executive is entitled to under the terms of this Agreement or any other plan involving deferred compensation (as defined under Section 409A of the Code) may not be made at the time contemplated by the terms thereof without causing Executive to be subject to constructive receipt at a date prior to actual payment and/or an income tax penalty and interest and the timing of payment is the sole cause of such adverse tax consequences, the Company will make such payment on the first day permissible under Section 409A of the Code without Executive incurring such adverse tax consequences.  In particular, with respect to any lump sum payment otherwise required hereunder, in the event of any delay in the payment date as a result of Section 409A(a)(2)(A)(i) and (B)(i) of the Code, the Company will adjust the payments to reflect the deferred payment date by crediting interest thereon at the prime rate in effect at the time such amount first becomes payable, as quoted by the Company’s principal bank.  In addition, other provisions of this Agreement or any other such plan notwithstanding, the Company shall have no right to accelerate any such payment or to make any such payment as the result of any specific event except to the extent permitted under Section 409A of the Code.  The Company shall not be obligated to reimburse Executive for any tax penalty or interest or provide a gross-up in connection with any tax liability of Executive under Section 409A of the Code.

 

7.                                      Excise Tax-Related Provisions.

 

(a)                                 Notwithstanding anything in this Agreement to the contrary, if any payment or benefit Executive would receive from the Company pursuant to a Change of Control or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this Section 7(a), be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal to the Reduced Amount (as defined below).  For the avoidance of doubt, a Payment shall not be considered a parachute payment for purposes of this paragraph if such Payment is approved by the shareholders of the Company in accordance with the procedures set forth in Section 280G(b)(5)(A)(ii) and (B) of the Code and the regulations thereunder, and at the time of such shareholder approval, no stock of the successor corporation is readily tradable on an established securities market or otherwise (within the meaning of Section 280G(b)(5)(A)(ii)(I) of the Code).  The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax, or (y) the Payment or a portion thereof after payment of the applicable Excise Tax, whichever amount after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax payable by Executive (all computed at the highest applicable marginal rate), results in Executive’s receipt, on an after-tax basis, of the greatest amount of the Payment to Executive.  If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order unless Executive elects in writing a different order (provided, however, that such election shall be subject to Company approval if made on or after the date on which the event that triggers the Payment occurs): by first reducing or eliminating the portion of the Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order

 

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beginning with payments or benefits which are to be paid the farthest in time from the Change of Control or other event.

 

(b)                                 All determinations under this Section 7 shall be made by a nationally recognized public accounting or consulting firm selected by the Company and subject to the approval of Executive, which approval shall not be unreasonably withheld, conditioned or delayed.  Such determination shall be binding upon Executive and the Company.  The Company shall bear all expenses with respect to the determinations by such accounting or consulting firm required to be made hereunder.

 

(c)                                  The accounting or consulting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and Executive within fifteen (15) calendar days after the date on which Executive’s right to a Payment is triggered (if requested at that time by the Company or Executive) or such other time as requested by the Company or Executive.

 

8.                                      Ownership and Protection of Intellectual Property and Confidential Information.

 

(a)                                 All information, ideas, concepts, improvements, discoveries, and inventions, whether patentable or not, which are conceived, made, developed or acquired by Executive, individually or in conjunction with others, during Executive’s employment by the Company or any of its affiliates (whether during business hours or otherwise and whether on the Company’s premises or otherwise) which relate to the business, products or services of the Company or its affiliates (including, without limitation, all such information relating to corporate opportunities; geological, metallurgical, and other technical data and information, including operations, reserve information and exploration data; research, financial and sales data; pricing and trading terms; evaluations; opinions; interpretations; acquisition prospects; the identity of customers or their requirements; the identity of key contacts within the customer’s organizations or within the organization of acquisition prospects; or marketing and merchandising techniques, prospective names, and marks), and all correspondence, memoranda, notes, records, data or information, analyses, or other documents (including, without limitation, any computer-generated, computer-stored or electronically-stored materials) of any type embodying any of such items, shall be the sole and exclusive property of the Company or its affiliates, as the case may be.

 

(b)                                 Executive acknowledges that the Company’s business is highly competitive and that the Company has developed and owns valuable information which is confidential, unique and specific to the Company and its affiliates (“Proprietary and Confidential Information”) and which includes, without limitation, financial information; geological, metallurgical, and other technical data and information, including operations, reserve information and exploration data; marketing plans; business and implementation plans; engineering plans and processes; models and templates; prospect lists; technical information concerning products, services and processes; names and other information (such as credit and financial data) concerning customers and business affiliates; and other trade secrets, concepts, ideas, plans, strategies, analyses, surveys and proprietary information related to the past, present or anticipated business of the Company and its affiliates.  Executive further acknowledges that

 

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protection of such Proprietary and Confidential Information against unauthorized disclosure and use is of critical importance to the Company and its affiliates in maintaining their competitive position.  Executive hereby agrees that she shall not, at any time during or after her employment by the Company, disclose to others, permit to be disclosed, use, permit to be used, copy or permit to be copied, any such Proprietary and Confidential Information (whether or not developed by Executive and whether or not received as an employee) without the prior written consent of the Chief Executive Officer of the Company.  Executive further agrees to maintain in confidence any proprietary and confidential information of third parties received or of which she has knowledge as a result of her employment.  The prohibitions of this Section 8(b) shall not apply, however, to information in the public domain (but only if the same becomes part of the public domain through means other than a disclosure prohibited hereunder).  The above notwithstanding, a disclosure shall not be unauthorized if (i) it is required by law or by a court of competent jurisdiction or (ii) it is in connection with any judicial, arbitration, dispute resolution or other legal proceeding in which Executive’s legal rights and obligations as an employee or under this Agreement are at issue; provided, however, that Executive shall, to the extent practicable and lawful in any such events, give prior notice to the Company of her intent to disclose any such Proprietary and Confidential Information in such context so as to allow the Company or its affiliates an opportunity (which Executive shall not oppose) to obtain such protective orders or similar relief with respect thereto as may be deemed appropriate.

 

(c)                                  All written materials, records, data and information, analyses, and other documents (including, without limitation, any computer-generated, computer-stored or electronically-stored data and other materials), and all copies thereof, made, composed or received by Executive solely or jointly with others, and which are in Executive’s possession, custody or control and which are related in any manner to the past, present or anticipated business of the Company or any of its affiliates (collectively, the “Company Documents”) shall be and remain the property of the Company, or its affiliates, as the case may be.  Upon termination of Executive’s employment with the Company, for any reason, Executive promptly shall deliver the Company Documents, and all copies thereof, to the Company.

 

9.                                      Covenant Not to Compete and Other Restrictive Covenants.

 

(a)                                 For a period of twelve (12) months after the date of termination of employment, Executive shall restrict her activities as follows:

 

(i)                                     Executive shall not, directly or indirectly, for himself or others, own, manage, operate, control, be employed by (whether in an executive, managerial, supervisory or other capacity), consult with, assist or otherwise engage or participate in or allow her skill, knowledge, experience or reputation to be used in connection with, the ownership, management, operation or control of, any company or other business enterprise engaged in the Subject Business (as defined below) within any of the Subject Areas (as defined below); provided, however, that nothing contained herein shall prohibit Executive from making passive investments as long as Executive does not beneficially own more than one percent (1%) of the equity interests of a business enterprise listed on a national securities exchange or publicly traded on a nationally recognized over-the-counter market engaged in the Subject Business within any of the Subject Areas.  For purposes of this paragraph, “beneficially own” shall have the same

 

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meaning ascribed to that term in Rule 13d-3 under the Securities Exchange Act of 1934, as amended;

 

(ii)                                  Executive shall not call upon any customer of the Company or its affiliates for the purpose of soliciting, diverting or enticing away the business of such person or entity, or otherwise disrupting any previously established relationship existing between such person or entity and the Company or its affiliates;

 

(iii)                               Executive shall not solicit, induce, influence or attempt to influence any supplier, lessor, lessee, licensor, partner, joint venturer, potential acquiree or any other person who has a business relationship with the Company or its affiliates, or who on the date of termination of Executive’s employment is engaged in discussions or negotiations to enter into a business relationship with the Company or its affiliates, to discontinue or reduce or limit the extent of such relationship with the Company or its affiliates; and

 

(iv)                              Without the consent of the Company, Executive shall not make contact with any of the employees or consultants of the Company or its affiliates with whom she had contact during the course of her employment with the Company for the purpose of soliciting such employee or consultant for hire, whether as an employee or independent contractor, or otherwise disrupting such employee’s or consultant’s relationship with the Company or its affiliates.

 

For purpose of this Agreement, (x) “Subject Areas” mean (A) the continents of North America, Central and South America, Africa, Europe and Australia and (B) the nation of Russia, and (y) “Subject Business” means the business of creating, financing, or acquiring and managing royalties involving mineral properties.

 

(b)                                 Acknowledgements.

 

(i)                                     Executive acknowledges that (x) the compensation provided to Executive during the Term, (y) the agreement to provide the Severance Payment or Change of Control Severance Payment to Executive in connection with certain terminations of Executive’s employment, and (z) the specialized training and the Proprietary and Confidential Information provided to Executive pursuant to her employment with the Company give rise to the Company’s interest in restraining Executive from competing with the Company, that the noncompetition and nonsolicitation covenants are designed to enforce such consideration, that the Company’s royalty business is worldwide in geographic scope and that any limitations as to time, geographic scope and scope of activity to be restrained as defined herein are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the Company.  Executive further acknowledges that as an executive of a publicly traded company she falls within the exception to C.R.S 8-2-113(2)(d), which exempts executive and management personnel, officers and employees who constitute professional staff to executive and management personnel from the prohibitions of non-compete provisions under Colorado law.

 

(ii)                                  Executive and the Company hereby agree to reasonably allocate an amount of the Change of Control Severance Payment to the non-competition covenant set forth

 

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in this Section 9, which amount will be established by the parties in good faith negotiations, relying upon third party advisers to the extent reasonably determined by the parties, at the time a Change of Control transaction is reasonably likely or at such earlier time as is determined by the parties in good faith.

 

(c)                                  Survival of Covenants.  Sections 8 and 9 shall survive the expiration or termination of this Agreement for any reason. Executive agrees not to challenge the enforceability or scope of Sections 8 and 9.  Executive further agrees to notify all future persons or businesses with which she becomes affiliated or employed, of the restrictions set forth in Sections 8 and 9, prior to the commencement of any such affiliation or employment.

 

10.                               Severability and Reformation.  If any one or more of the terms, provisions, covenants or restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions shall remain in full force and effect, and the invalid, void or unenforceable provisions shall be deemed severable.  Moreover, if any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be reformed by limiting and reducing it to the minimum extent necessary, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.

 

11.                               Indemnification.  The Company and Executive have executed and delivered an Indemnification Agreement (the “Indemnification Agreement”) dated the same date as this Agreement.  To the extent any provision set forth in the Indemnification Agreement is in conflict with any provision set forth in this Agreement, the provision set forth in the Indemnification Agreement shall govern.  Further, Executive shall be entitled to coverage under the Directors and Officers Liability Insurance program to the same extent as other similarly situated executive officers of the Company.

 

12.                               Miscellaneous.

 

(a)                                 Entire Agreement. This Agreement sets forth the entire agreement between the parties hereto and fully supersedes any and all prior agreements or understandings, written or oral, between the parties hereto pertaining to the subject matter hereof.

 

(b)                                 Notices.  Whenever under this Agreement it becomes necessary to give notice, such notice shall be in writing, signed by the party or parties giving or making the same, and shall be served on the person or persons for whom it is intended or who should be advised or notified, by (i) personal delivery, (ii) Federal Express or other similar overnight service or (iii) certified or registered mail, return receipt requested, postage prepaid and addressed to such party at the address set forth below or at such other address as may be designated by such party by like notice:

 

13

 

	
 
    	
If   to the Company:
    
	
 
    	
 
    
	
 
    	
Royal   Gold, Inc.
    
	
 
    	
1660   Wynkoop Street, Suite 1000
    
	
 
    	
Denver,   CO 80202
    
	
 
    	
Attention: Chief   Executive Officer
    
	
 
    	
 
    
	
 
    	
If   to Executive:
    
	
 
    	
 
    
	
 
    	
Karli Anderson
    
	
 
    	
3066 S. Saint   Paul Street
    
	
 
    	
Denver, Colorado   80210
    

 

In the case of personal delivery, such notice or advice shall be effective on the date of delivery, in the case of Federal Express or other similar overnight service, such notice or advice shall be effective on the next business day, and, in the cases of certified or registered mail, such notice or advice shall be effective three (3) business days after deposit into the mails for delivery by the U.S. Post Office.

 

(c)                                  Governing Law and Venue.  This Agreement is governed by and is to be construed, administered, and enforced in accordance with the laws of the State of Colorado, without regard to conflicts of law principles.  If under the governing law, any portion of this Agreement is at any time deemed to be in conflict with any applicable statute, rule, regulation, ordinance, or other principle of law, such portion shall be deemed to be modified or altered to the extent necessary to conform thereto or, if that is not possible, to be omitted from this Agreement.  Any action or arbitration in regard to this Agreement or arising out of its terms and conditions, pursuant to Sections 12(n) and 12(o), shall be instituted and litigated only in the City and County of Denver, Colorado.

 

(d)                                 Assignment.  This Agreement and Executive’s rights and obligations hereunder may not be assigned by Executive.  Any purported assignment or delegation by Executive in violation of the foregoing shall be null and void ab initio and of no force and effect.  The Company may assign this Agreement and its rights, together with its obligations hereunder, to an affiliate of the Company or to a person or entity which is a successor in interest to substantially all of the business operations of the Company.  Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate, successor, person or entity.

 

(e)                                  Counterparts.  This Agreement may be executed in counterparts, each of which shall take effect as an original, and all of which shall evidence one and the same Agreement.

 

(f)                                   Amendment. This Agreement may be amended only in writing signed by Executive and by a duly authorized representative of the Company (other than Executive).

 

14

 

(g)                                  Construction.  The headings and captions of this Agreement are provided for convenience only and are intended to have no effect in construing or interpreting this Agreement. The language in all parts of this Agreement shall be in all cases construed in accordance to its fair meaning and not strictly for or against the Company or Executive.

 

(h)                                 Non-Waiver.  The failure by either party to insist upon the performance of any one or more terms, covenants or conditions of this Agreement shall not be construed as a waiver or relinquishment of any right granted hereunder or of any future performance of any such term, covenant or condition, and the obligation of either party with respect hereto shall continue in full force and effect, unless such waiver shall be in writing signed by the Company (other than by Executive) and Executive.

 

(i)                                     Use of Name, Likeness and Biography.  The Company shall have the right (but not the obligation) to use, publish and broadcast, and to authorize others to do so, the name, approved likeness and approved biographical material of Executive to advertise, publicize and promote the business of Company and its affiliates, but not for the purposes of direct endorsement without Executive’s consent.  This right shall terminate upon the termination of this Agreement.  An “approved likeness” and “approved biographical material” shall be, respectively, any photograph or other depiction of Executive, or any biographical information or life story concerning the professional career of Executive, as approved by Executive from time to time.

 

(j)                                    Right to Insure.  The Company shall have the right to secure, in its own name or otherwise, and at its own expense, life, health, accident or other insurance covering Executive, and Executive shall have no right, title or interest in and to such insurance.  Executive shall assist Company in procuring such insurance by submitting to reasonable examinations and by signing such applications and other reasonable instruments as may be required by the insurance carriers to which application is made for any such insurance.

 

(k)                                 Assistance in Litigation.  Executive shall reasonably cooperate with the Company in the defense or prosecution of any claims or actions now in existence or that may be brought in the future against or on behalf of the Company that relate to events or occurrences that transpired while Executive was employed by the Company.  Executive’s cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times.  Executive also shall cooperate fully with the Company in connection with any investigation or review by any federal, state, or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while Executive was employed by the Company.  The Company shall pay Executive a reasonable hourly rate for Executive’s cooperation pursuant to this Section 12(k).

 

(l)                                     No Inconsistent Obligations. Executive represents and warrants that to her knowledge she has no obligations, legal, in contract, or otherwise, inconsistent with the terms of this Agreement or with her continued employment with the Company to perform the duties described herein.  Executive shall not disclose to the Company, or use, or induce the Company to use, any confidential, proprietary, or trade secret information of others. Executive represents and

 

15

 

warrants that to her knowledge she has returned all property and confidential information belonging to all prior employers, if she is obligated to do so.

 

(m)                             Binding Agreement.  This Agreement shall inure to the benefit of and be binding upon Executive, her heirs and personal representatives, and the Company and its successors.

 

(n)                                 Remedies.  The parties recognize and affirm that in the event of a breach of Sections 8 and 9 of this Agreement, money damages would be inadequate and the Company would not have an adequate remedy at law.  Accordingly, the parties agree that in the event of a breach or a threatened breach of Sections 8 and 9, the Company may, in addition and supplementary to other rights and remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security).  In addition, Executive agrees that in the event a court of competent jurisdiction or an arbitrator finds that Executive violated Section 9, the time periods set forth in Section 9 shall be tolled until such breach or violation has been cured.  Executive further agrees that the Company shall have the right to offset the amount of any damages awarded to the Company resulting from a breach by Executive of Sections 8 or 9 against any payments due Executive under this Agreement.

 

(o)                                 Arbitration.  Other than as stated in Section 12(n), the parties agree that any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be resolved by arbitration in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association.  The arbitration shall take place in Denver, Colorado.  All disputes shall be resolved by one (1) arbitrator chosen by agreement of the parties in accordance with the National Rules for the Resolution of Employment Disputes.  The arbitrator shall have the authority to award the same remedies, damages, and costs that a court could award.  The arbitrator shall issue a reasoned award explaining the decision, the reasons for the decision, and any damages awarded.  The arbitrator’s decision shall be final and binding.  The judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  The arbitration proceedings, any record of the same, and the award shall be considered Proprietary and Confidential Information under this Agreement.  This provision and any decision and award hereunder can be enforced under the Federal Arbitration Act.

 

(p)                                 Voluntary Agreement.  Each party to this Agreement has read and fully understands the terms and provisions hereof, has had an opportunity to review this Agreement with legal counsel, has executed this Agreement based upon such party’s own judgment and advice of counsel (if any), and knowingly, voluntarily, and without duress, agrees to all of the terms set forth in this Agreement.  The parties have participated jointly in the negotiation and drafting of this Agreement.  If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party because of authorship of any provision of this Agreement.  Except as expressly set forth in this Agreement, neither the parties nor their affiliates, advisors and/or their attorneys have made any representation or warranty, express or implied, at law or in equity with respect to the subject matter contained herein.  Without limiting

 

16

 

the generality of the previous sentence, the Company, its affiliates, advisors, and/or attorneys have made no representation or warranty to Executive concerning the state or federal tax consequences to Executive regarding the transactions contemplated by this Agreement, other than any determination that may be made pursuant to Section 7(b).

 

(q)                                 Jury Trial Waiver.  THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT.

 

(r)                                    Survival.  The rights and obligations of the Company and Executive contained in Sections 8, 9 and 12(s) of this Agreement shall survive the termination of the Agreement.  Following termination of Executive’s employment and this Agreement, each party shall have the right to enforce all rights, and shall be bound by all obligations, of such party that are continuing rights and obligations under this Agreement.

 

(s)                                   Non-disparagement.  Executive shall not make any disparaging, derogatory or detrimental comments about the Company or any of its affiliates or any of their directors, officers, employees, partners, members, managers or shareholders, or any investor or other person or entity having a business relationship with the Company or any of its affiliates.  The Company, each of its affiliates and the directors and officers of the Company and its affiliates shall not make any disparaging, derogatory or detrimental comments about Executive.

 

(t)                                    Certain Definitions.  For purposes of this Agreement:

 

(i)                                     an “affiliate” of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person, and includes subsidiaries;

 

(ii)                                  a “business day” means the period from 9:00 am to 5:00 pm on any weekday that is not a banking holiday in the State of Colorado; and

 

(iii)                               a “subsidiary” of any person means another person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no such voting interests or no board of directors or other governing body, fifty percent (50%) or more of the equity interests of which) is owned directly or indirectly by such first person.

 

[SIGNATURE PAGE FOLLOWS]

 

17

 

IN WITNESS WHEREOF, the Company and Executive have executed this Agreement, effective as of the day and year first above written.

 

 

	
 
    	
ROYAL   GOLD, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Tony   Jensen
    
	
 
    	
Name:
    	
Tony Jensen
    
	
 
    	
Title:
    	
President and   CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Karli   Anderson
    
	
 
    	
KARLI ANDERSON
    

 

18

 

EXHIBIT A

 

RELEASE

 

For and in consideration of the payments and other benefits due to Karli Anderson (the “Executive”) pursuant to the Employment Agreement dated effective May 15, 2013 (the “Employment Agreement”), by and between Royal Gold, Inc., a Delaware corporation (the “Company”) and Executive, and for other good and valuable consideration, Executive hereby agrees, for Executive, Executive’s spouse and child or children (if any), Executive’s heirs, beneficiaries, devisees, executors, administrators, attorneys, personal representatives, successors and assigns, to forever release, discharge and covenant not to sue the Company, or any of its divisions, affiliates, subsidiaries, parents, branches, predecessors, successors, assigns, and, with respect to such entities, their officers, directors, trustees, employees, agents, shareholders, administrators, general or limited partners, representatives, attorneys, insurers and fiduciaries, past, present and future (the “Released Parties”) from any and all claims of any kind arising out of, or related to, her employment with the Company, its affiliates and subsidiaries (collectively, with the Company, the “Affiliated Entities”) or Executive’s separation from employment with the Affiliated Entities, which Executive now has or may have against the Released Parties, whether known or unknown to Executive, by reason of facts which have occurred on or prior to the date that Executive has signed this Release.  Such released claims include, without limitation, any and all claims relating to the foregoing under federal, state or local laws pertaining to employment, including, without limitation, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000e et. seq., the Fair Labor Standards Act, as amended, 29 U.S.C. Section 201 et. seq., the Americans with Disabilities Act, as amended, 42 U.S.C. Section 12101 et. seq., the Reconstruction Era Civil Rights Act, as amended, 42 U.S.C. Section 1981 et. seq., the Rehabilitation Act of 1973, as amended, 29 U.S.C. Section 701 et. seq., the Family and Medical Leave Act of 1992, 29 U.S.C. Section 2601 et. seq., the Older Workers Benefit Protection Act of 1990, the Pregnancy Discrimination Act, the Equal Pay Act of 1963, the Colorado Civil Rights Act, the Colorado Anti-Discrimination Act and any and all state or local laws regarding employment discrimination and/or federal, state or local laws of any type or description regarding employment, including but not limited to any claims arising from or derivative of Executive’s employment with, or termination from, the Affiliated Entities, as well as any and all such claims under contract or tort law, including, without limitation, any and all claims for wrongful discharge, breach of implied or express contract, promissory estoppel, breach of any covenant of good faith and fair dealing, intentional or negligent infliction of emotional distress, defamation, or any claim that the Company has dealt with Executive unfairly or in bad faith.  Executive represents and warrants that she has not sold or otherwise assigned any claim or any portion of any claim to any third party.

 

Executive has read this Release carefully, acknowledges that Executive has been given at least twenty-one (21) days to consider all of its terms and has been advised to consult with an attorney and any other advisors of Executive’s choice prior to executing this Release.  Executive fully understands that by signing below Executive is voluntarily giving up any right which Executive may have to sue or bring any claims against the Released Parties, including any rights and claims under the Age Discrimination in Employment Act.  Executive also understands that

 

 

Executive has a period of seven (7) days after signing this Release within which to revoke her agreement by written notice delivered to the Company in accordance with the Employment Agreement, and that neither the Company nor any other person is obligated to make any payments or provide any other benefits to Executive pursuant to the Employment Agreement until eight (8) days have passed since Executive’s signing of this Release without Executive’s signature having been revoked, other than any accrued obligations or other benefits payable pursuant to the terms of the Company’s normal payroll practices or employee benefit plans.  Finally, Executive has not been forced or pressured in any manner whatsoever to sign this Release, and Executive agrees to all of its terms voluntarily.

 

Notwithstanding anything else herein to the contrary, this Release shall not affect: (i) the Company’s obligations under any compensation or employee benefit plan, program or arrangement (including, without limitation, obligations to Executive under the Employment Agreement, any stock option, stock award or agreements or obligations under any pension, deferred compensation or retention plan) provided by the Affiliated Entities where Executive’s compensation or benefits are intended to continue or Executive is to be provided with compensation or benefits, in accordance with the express written terms of such plan, program or arrangement, beyond the date of Executive’s termination; (ii) rights to indemnification Executive may have under the Employment Agreement or a separate agreement entered into with the Company; or (iii) rights Executive may have as a shareholder.

 

Executive agrees that Executive shall not make any disparaging, derogatory or detrimental comments about the Company or any of the Affiliated Entities or any of their directors, officers, employees, partners, members, managers or shareholders, or any investor or other person or entity having a business relationship with the Company or any of the Affiliated Entities.  Executive also acknowledges that the terms of this Release constitute Proprietary and Confidential Information (as defined in the Employment Agreement).

 

This Release is final and binding and may not be changed or modified except in a writing signed by both parties.  This Release is governed by and is to be construed, administered, and enforced in accordance with the laws of the State of Colorado, without regard to conflicts of law principles.

 

 

	
 
    	
/s/Karli   Anderson
    
	
 
    	
KARLI ANDERSON
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ROYAL GOLD, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/Tony Jensen
    
	
 
    	
Name:
    	
Tony Jensen
    
	
 
    	
Title:
    	
President and   CEO
    

 

2Exhibit 10.1

 

THE MACERICH COMPANY

 

ELIGIBLE DIRECTORS’

DEFERRED COMPENSATION/PHANTOM STOCK PLAN

(As Amended and Restated as of January 1, 2013)

 

 

THE MACERICH COMPANY

 

ELIGIBLE DIRECTORS’

DEFERRED COMPENSATION/PHANTOM STOCK PLAN

(As Amended and Restated as of January 1, 2013)

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I
    	
TITLE, PURPOSE AND AUTHORIZED SHARES
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
2.1
    	
Account
    	
1
    
	
 
    	
 
    	
 
    
	
2.2
    	
Additional   Compensation
    	
1
    
	
 
    	
 
    	
 
    
	
2.3
    	
Additional   Compensation Approval Date
    	
2
    
	
 
    	
 
    	
 
    
	
2.4
    	
Average   Fair Market Value
    	
2
    
	
 
    	
 
    	
 
    
	
2.5
    	
Award   Date
    	
2
    
	
 
    	
 
    	
 
    
	
2.6
    	
Board   of Directors
    	
2
    
	
 
    	
 
    	
 
    
	
2.7
    	
Cash   Account
    	
2
    
	
 
    	
 
    	
 
    
	
2.8
    	
Cash   or Combination Dividends
    	
2
    
	
 
    	
 
    	
 
    
	
2.9
    	
Change   in Control Event
    	
2
    
	
 
    	
 
    	
 
    
	
2.10
    	
Code
    	
4
    
	
 
    	
 
    	
 
    
	
2.11
    	
Common   Stock
    	
4
    
	
 
    	
 
    	
 
    
	
2.12
    	
Committee
    	
4
    
	
 
    	
 
    	
 
    
	
2.13
    	
Company
    	
4
    
	
 
    	
 
    	
 
    
	
2.14
    	
Compensation
    	
4
    
	
 
    	
 
    	
 
    
	
2.15
    	
Current   Cash Account
    	
4
    
	
 
    	
 
    	
 
    
	
2.16
    	
Current   Dividend Equivalent Cash Account
    	
4
    
	
 
    	
 
    	
 
    
	
2.17
    	
Current   Dividend Equivalent Stock Account
    	
4
    
	
 
    	
 
    	
 
    
	
2.18
    	
Current   Stock Unit Account
    	
4
    
	
 
    	
 
    	
 
    
	
2.19
    	
Disability
    	
5
    
	
 
    	
 
    	
 
    
	
2.20
    	
Discount   Rate
    	
5
    
	
 
    	
 
    	
 
    
	
2.21
    	
Disinterested   Director
    	
5
    

 

i

 

	
2.22
    	
Distribution Subaccount
    	
5
    
	
 
    	
 
    	
 
    
	
2.23
    	
Dividend   Equivalent
    	
5
    
	
 
    	
 
    	
 
    
	
2.24
    	
Dividend   Equivalent Cash Account
    	
5
    
	
 
    	
 
    	
 
    
	
2.25
    	
Dividend   Equivalent Stock Account
    	
5
    
	
 
    	
 
    	
 
    
	
2.26
    	
Effective   Date
    	
5
    
	
 
    	
 
    	
 
    
	
2.27
    	
Eligible   Director
    	
5
    
	
 
    	
 
    	
 
    
	
2.28
    	
Exchange   Act
    	
5
    
	
 
    	
 
    	
 
    
	
2.29
    	
Fair   Market Value
    	
5
    
	
 
    	
 
    	
 
    
	
2.30
    	
Interest   Rate
    	
6
    
	
 
    	
 
    	
 
    
	
2.31
    	
Plan
    	
6
    
	
 
    	
 
    	
 
    
	
2.32
    	
Plan   Year
    	
6
    
	
 
    	
 
    	
 
    
	
2.33
    	
Prior   Cash Account
    	
6
    
	
 
    	
 
    	
 
    
	
2.34
    	
Prior   Dividend Equivalent Cash Account
    	
6
    
	
 
    	
 
    	
 
    
	
2.35
    	
Prior   Dividend Equivalent Stock Account
    	
6
    
	
 
    	
 
    	
 
    
	
2.36
    	
Prior   Stock Unit Account
    	
6
    
	
 
    	
 
    	
 
    
	
2.37
    	
Special   Compensation
    	
6
    
	
 
    	
 
    	
 
    
	
2.38
    	
Special   Meeting Fees
    	
7
    
	
 
    	
 
    	
 
    
	
2.39
    	
Stock   Unit or Unit
    	
7
    
	
 
    	
 
    	
 
    
	
2.40
    	
Stock   Unit Account
    	
7
    
	
 
    	
 
    	
 
    
	
2.41
    	
Unforeseeable   Emergency
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    	
PARTICIPATION
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    	
DEFERRAL ELECTIONS
    	
7
    
	
 
    	
 
    	
 
    
	
4.1
    	
Initial   Elections
    	
7
    
	
 
    	
 
    	
 
    
	
4.2
    	
Subsequent   Annual Elections
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    	
DEFERRAL ACCOUNTS
    	
8
    
	
 
    	
 
    	
 
    
	
5.1
    	
Cash   Account
    	
8
    
	
 
    	
 
    	
 
    
	
5.2
    	
Stock   Unit Account
    	
9
    
	
 
    	
 
    	
 
    
	
5.3
    	
Dividend   Equivalents; Dividend Equivalent Cash Account; Dividend Equivalent Stock   Account
    	
11
    
	
 
    	
 
    	
 
    
	
5.4
    	
Vesting
    	
13
    
	
 
    	
 
    	
 
    
	
5.5
    	
Distribution   of Benefits
    	
14
    
	
 
    	
 
    	
 
    
	
5.6
    	
Adjustments   in Case of Changes in Common Stock
    	
17
    
	
 
    	
 
    	
 
    
	
5.7
    	
Company’s   Right to Withhold
    	
17
    

 

ii

 

	
5.8
    	
Stockholder   Approval
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    	
ADMINISTRATION
    	
18
    
	
 
    	
 
    	
 
    
	
6.1
    	
The   Administrator
    	
18
    
	
 
    	
 
    	
 
    
	
6.2
    	
Committee   Action
    	
18
    
	
 
    	
 
    	
 
    
	
6.3
    	
Rights   and Duties
    	
18
    
	
 
    	
 
    	
 
    
	
6.4
    	
Indemnity   and Liability
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    	
PLAN CHANGES AND TERMINATION
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    	
MISCELLANEOUS
    	
20
    
	
 
    	
 
    	
 
    
	
8.1
    	
Limitation   on Eligible Directors’ Rights
    	
20
    
	
 
    	
 
    	
 
    
	
8.2
    	
Beneficiaries
    	
20
    
	
 
    	
 
    	
 
    
	
8.3
    	
Benefits   Not Assignable; Obligations Binding Upon Successors
    	
20
    
	
 
    	
 
    	
 
    
	
8.4
    	
Governing   Law; Severability
    	
20
    
	
 
    	
 
    	
 
    
	
8.5
    	
Compliance   With Laws
    	
21
    
	
 
    	
 
    	
 
    
	
8.6
    	
Headings   Not Part of Plan
    	
21
    

 

iii

 

THE MACERICH COMPANY

 

ELIGIBLE DIRECTORS’

DEFERRED COMPENSATION/PHANTOM STOCK PLAN

(As Amended and Restated as of January 1, 2013)

 

ARTICLE I
  TITLE, PURPOSE AND AUTHORIZED SHARES

 

This Plan shall be known as “The Macerich Company Eligible Directors’ Deferred Compensation/Phantom Stock Plan.”  The purpose of this Plan is to attract, motivate and retain experienced and knowledgeable directors of The Macerich Company by permitting them to defer compensation and affording them the opportunity to link that compensation to an equity interest in the Company.  The total number of shares of Common Stock that may be delivered pursuant to awards under this Plan is 500,000, subject to adjustments contemplated by Section 5.6.  This version of this Plan applies to Compensation and/or Special Compensation payable to an Eligible Director for service on the Board or any Board committee on or after January 1, 2013.  For the provisions applicable to Compensation and/or Special Compensation payable to an Eligible Director for service prior to such date, see the version of this Plan in effect as of the applicable date.

 

ARTICLE II
  DEFINITIONS

 

Whenever the following terms are used in this Plan they shall have the meaning specified below unless the context clearly indicates to the contrary:

 

2.1                               Account shall mean one or more of an Eligible Director’s Cash Account(s), Stock Unit Account(s), Dividend Equivalent Cash Account(s) and Dividend Equivalent Stock Account(s).  Each Account includes, to the extent applicable, any Distribution Subaccounts.

 

2.2                               Additional Compensation with respect to a particular calendar year shall mean the difference (if any) between (i) the amount of an Eligible Director’s Compensation for such calendar year taken into account on the Award Date, and (ii) the amount of Compensation the Eligible Director would actually have been paid for such calendar year, solely to the extent that such difference in the Eligible Director’s Compensation for such calendar year is attributable to (1) changes in the Company’s compensation policy for non-employee directors that are approved by the Board of Directors and take effect during or prior to such calendar year and/or (2) changes in the Eligible Director’s annual retainer levels as a result of such Eligible Director’s becoming or ceasing to be a member of a Board committee or the chairperson or presiding/lead director of the Board or the chairperson of a Board committee.  For purposes of clarity, “Additional Compensation” may be a negative number.  Notwithstanding any other provision herein, an amount of Compensation that is treated as Additional Compensation hereunder shall not in any event be treated as Special Compensation.

 

1

 

2.3                               Additional Compensation Approval Date shall mean, as applicable, the date on which the Board of Directors approves the change in the Company’s compensation policy for non-employee directors that gives rise to the Additional Compensation or, in the case of an Eligible Director’s becoming or ceasing to be a member of a Board committee or the chairperson or presiding/lead director of the Board or the chairperson of a Board committee, the date on which the Board of Directors approves such change in the Eligible Director’s status (or, if later, the effective date of such change).

 

2.4                               Average Fair Market Value shall mean (i) for purposes of crediting any Stock Units hereunder pursuant to Section 5.2(a)(1), the average of the Fair Market Values of a share of Common Stock of the Company during the last 10 trading days preceding the Award Date, (ii) for purposes of crediting any Stock Units hereunder pursuant to Section 5.2(a)(2), the average of the Fair Market Values of a share of Common Stock of the Company during the last 10 trading days preceding the related Additional Compensation Approval Date, and (iii) for purposes of crediting any Stock Units hereunder pursuant to Section 5.2(a)(3), the average of the Fair Market Values of a share of Common Stock of the Company for the trading days occurring in the calendar year preceding the March 31 on which such Stock Units are credited.

 

2.5                               Award Date with reference to elections under Section 4.2 shall mean the January 1 that next follows the date of an Eligible Director’s election made pursuant to Section 4.2.  Award Date with reference to elections under Section 4.1 shall mean the date next following the date that the Eligible Director files his or her election under Section 4.1.

 

2.6                               Board of Directors or Board shall mean the Board of Directors of the Company.

 

2.7                               Cash Account shall mean a Current Cash Account and/or a Prior Cash Account.

 

2.8                               Cash or Combination Dividends shall mean cash dividends and distributions to holders of shares of Common Stock, and dividends in connection with which holders of shares of Common Stock have the right to elect to receive cash, shares of Common Stock of equivalent value, or a combination thereof.

 

2.9                               Change in Control Event

 

(a)                                 with respect to the provisions of Section 5.5A of the Plan set forth in Appendix A, which apply to the distribution of amounts deferred prior to January 1, 2005 and credited to Prior Cash Accounts, Prior Dividend Equivalent Cash Accounts, Prior Dividend Equivalent Stock Accounts and Prior Stock Unit Accounts, shall have the meaning specified for such term under The Macerich Company Amended and Restated 1994 Incentive Plan, as amended from time to time; and

 

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(b)                                 with respect to the provisions of the Plan that apply to distributions from Current Cash Accounts, Current Dividend Equivalent Cash Accounts, Current Dividend Equivalent Stock Accounts and Current Stock Unit Accounts, shall mean

 

(1)                                 the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (such individual, entity, or group, a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of stock possessing 33% or more of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a Change in Control Event; (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliate of the Company or successor or (D) any acquisition by a Person having beneficial ownership of more than 50% of the Outstanding Company Voting Securities prior to the acquisition;

 

(2)                                 individuals who, as of any date (the “Initial Date”) after the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason, at any time within 12 months following the Initial Date, to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Initial Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (including for these purposes, the new members whose election or nomination was so approved, without counting the member and his predecessor twice) shall be considered as though such individual were a member of the Incumbent Board;

 

(3)                                 consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case if, following such Business Combination, any Person (excluding any entity resulting from such Business Combination or a parent of any such entity or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination or parent of any such entity) beneficially owns, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of stock of the entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that the ownership in excess of 50% existed prior to the Business Combination; or

 

(4)                                 consummation of a sale or other disposition of all or substantially all of the assets of the Company (an “Asset Transfer”), other than a transfer to (A) one or more of the beneficial owners (immediately before the

 

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Asset Transfer) of the then-outstanding shares of stock of the Company (“Outstanding Company Stock”) in exchange for or with respect to such Outstanding Company Stock of such beneficial owners, or (B) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, or (C) a Person that owns, directly or indirectly, 50% or more of the total value or voting power of the Outstanding Company Stock, or (D) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by a Person described in the preceding clause (C).

 

Each event comprising a Change in Control Event under this Subsection (b) is intended to constitute a “change in ownership or effective control” or a “change in the ownership of a substantial portion of the assets” of the Company as such terms are defined for purposes of Section 409A of the Internal Revenue Code and such definition of “Change in Control Event” as used herein shall be interpreted consistently therewith.

 

2.10                        Code shall mean the Internal Revenue Code of 1986, as amended.

 

2.11                        Common Stock shall mean the Common Stock of the Company.

 

2.12                        Committee shall mean a Committee of the Board of Directors acting in accordance with Article VI and applicable Maryland law, or the Board of Directors.

 

2.13                        Company shall mean The Macerich Company, a Maryland corporation, and its successors and assigns.

 

2.14                        Compensation shall mean the annual retainer fees payable by the Company to an Eligible Director for a calendar year.

 

2.15                        Current Cash Account shall mean a bookkeeping account maintained by the Company on behalf of each Eligible Director who elects to defer Compensation and Special Meeting Fees earned after December 31, 2004 in cash in accordance with Section 5.1.

 

2.16                        Current Dividend Equivalent Cash Account shall mean a bookkeeping account maintained by the Company on behalf of an Eligible Director that is credited with Dividend Equivalents in the form of cash deferrals attributable to Stock Units credited to the Eligible Director’s Current Stock Unit Account (with respect to Compensation and Special Meeting Fees earned after December 31, 2004) in accordance with Section 5.3(b)(1).

 

2.17                        Current Dividend Equivalent Stock Account shall mean a bookkeeping account maintained by the Company on behalf of an Eligible Director that is credited with Dividend Equivalents in the form of Stock Units attributable to Stock Units credited to the Eligible Director’s Current Stock Unit Account (with respect to

 

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Compensation and Special Meeting Fees earned after December 31, 2004) in accordance with Section 5.3(c)(1).

 

2.18                        Current Stock Unit Account shall mean a bookkeeping account maintained by the Company on behalf of each Eligible Director who elects to defer Compensation and Special Meeting Fees earned after December 31, 2004 in Stock Units in accordance with Section 5.2.

 

2.19                        Disability shall mean a 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 12 months that renders an Eligible Director unable to engage in any substantial gainful activity.

 

2.20                        Discount Rate shall mean an interest rate equal to 5% per annum.

 

2.21                        Disinterested Director shall mean a member of the Board of Directors who is not generally disqualified from making decisions concerning this Plan or all actions hereunder under any applicable legal requirements, but in no event shall a member of the Board of Directors participate in any decision affecting only his or her benefits under this Plan.

 

2.22                        Distribution Subaccount shall mean a subaccount of an Eligible Director’s Account established to separately account for deferred Compensation and Special Meeting Fees (and Dividend Equivalents or other earnings or losses thereon) that are subject to different distribution elections.

 

2.23                        Dividend Equivalent shall mean the amount of Cash or Combination Dividends paid by the Company after January 31, 1995 on that number of shares of Common Stock equivalent to the number of Stock Units then credited to an Eligible Director’s Stock Unit Account, or Stock Unit Accounts, as applicable, and Dividend Equivalent Stock Account, or Dividend Equivalent Stock Accounts, as applicable, which amount shall be allocated as additional Stock Units to the Eligible Director’s Dividend Equivalent Stock Account(s) or as additional deferrals to the Eligible Director’s Dividend Equivalent Cash Account(s), as provided in Section 5.3.

 

2.24                        Dividend Equivalent Cash Account shall mean a Current Dividend Equivalent Cash Account and/or a Prior Dividend Equivalent Cash Account.

 

2.25                        Dividend Equivalent Stock Account shall mean a Current Dividend Equivalent Stock Account and/or a Prior Dividend Equivalent Stock Account.

 

2.26                        Effective Date shall mean July 29, 1994.

 

2.27                        Eligible Director shall mean a member of the Board of Directors of the Company who is compensated in such capacity and (as to any outstanding Account balances under this Plan) any such person who has Account balances under the Plan.

 

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2.28                        Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

2.29                        Fair Market Value shall mean on any date the closing price of the stock on the Composite Tape, as published in the Western Edition of The Wall Street Journal, of the principal securities exchange or market on which the stock is so listed, admitted to trade, or quoted on such date, or, if there is no trading of the stock on such date, then the closing price of the stock as quoted on such Composite Tape on the next preceding date on which there was trading in such shares; provided, however, if the stock is not so listed, admitted or quoted, the Committee may designate such other exchange, market or source of data as it deems appropriate for determining such value for purposes of this Plan.

 

2.30                        Interest Rate shall mean the rate that is 120% of the federal long-term rate for compounding on a quarterly basis, determined and published by the Secretary of the United States Department of Treasury under Section 1274(d) of the Code, for the month in which interest is credited.

 

2.31                        Plan shall mean The Macerich Company Eligible Directors’ Deferred Compensation/Phantom Stock Plan, as amended from time to time.

 

2.32                        Plan Year shall mean the applicable calendar year.

 

2.33                        Prior Cash Account shall mean a bookkeeping account maintained by the Company on behalf of each Eligible Director who elects to defer Compensation and Special Meeting Fees earned before January 1, 2005 in cash in accordance with Section 5.1.

 

2.34                        Prior Dividend Equivalent Cash Account shall mean a bookkeeping account maintained by the Company on behalf of an Eligible Director that is credited with Dividend Equivalents in the form of cash deferrals attributable to Stock Units credited to the Eligible Director’s Prior Stock Unit Account (with respect to Compensation and Special Meeting Fees earned before January 1, 2005) in accordance with Section 5.3(b)(2).

 

2.35                        Prior Dividend Equivalent Stock Account shall mean a bookkeeping account maintained by the Company on behalf of an Eligible Director that is credited with Dividend Equivalents in the form of Stock Units attributable to Stock Units credited to the Eligible Director’s Prior Stock Unit Account (with respect to Compensation and Special Meeting Fees earned before January 1, 2005) in accordance with Section 5.3(c)(2).

 

2.36                        Prior Stock Unit Account shall mean a bookkeeping account maintained by the Company on behalf of each Eligible Director who elects to defer Compensation and Special Meeting Fees earned before January 1, 2005 in Stock Units in accordance with Section 5.2.

 

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2.37                        Special Compensation with respect to a particular calendar year shall mean the difference (if any) obtained by subtracting (i) the sum of (a) the amount of an Eligible Director’s Compensation for such calendar year taken into account on the Award Date, and (b) the amount of the Eligible Director’s Additional Compensation (if any) taken into account for such calendar year at any time after the Award Date, from (ii) the amount of Compensation the Eligible Director would actually have been paid for such calendar year (including, without limitation, any Special Meeting Fees, and any other Compensation not taken into account on the Award Date or as Additional Compensation after the Award Date), in each case without giving effect to any election by the Eligible Director to defer Compensation hereunder.  For purposes of clarity, “Special Compensation” may be a negative number.

 

2.38                        Special Meeting Fees shall mean the meeting fees (if any) that are paid by the Company after January 31, 1995 to an Eligible Director for meetings during a deferral period.

 

2.39                        Stock Unit or Unit shall mean a non-voting unit of measurement that is deemed for bookkeeping purposes to be equivalent to one outstanding share of Common Stock of the Company solely for purposes of this Plan.

 

2.40                        Stock Unit Account shall mean a Current Stock Unit Account and/or a Prior Stock Unit Account.

 

2.41                        Unforeseeable Emergency shall mean a severe financial hardship to the Eligible Director resulting from an illness or accident of the Eligible Director, the Eligible Director’s spouse or a dependent (as defined in Section 152(a) of the Code) of the Eligible Director, loss to the Eligible Director’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Eligible Director.

 

ARTICLE III
  PARTICIPATION

 

Each Eligible Director shall become a participant in the Plan by electing to defer his or her Compensation or Special Meeting Fees in accordance with Article IV.

 

ARTICLE IV
  DEFERRAL ELECTIONS

 

4.1                               Initial Elections.  On or before the 30th day after first becoming an Eligible Director, a new Eligible Director may make an irrevocable election to defer all or a portion (in 10% increments) of his or her Compensation and/or Special Meeting Fees payable for services to be rendered by the Eligible Director after the date such election is filed with the Committee and during the remainder of the calendar year during which the Eligible Director first becomes an Eligible Director and/or during the next one or two calendar years in (a) cash, in accordance with Section 5.1, or (b) Stock Units, in accordance with Section 5.2.  Such election shall be in writing on a form provided by the

 

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Company and approved by the Committee and must be filed no later than the 30th day following the date that the Eligible Director first becomes an Eligible Director.  Such election may also specify that the amounts deferred pursuant to such election shall be paid under one of the optional forms of benefits set forth in Section 5.5(a).

 

4.2                               Subsequent Annual Elections.

 

(a)                                 General Rule.  On or before the date set forth in the applicable election agreement (but in no event later than December 31 of the year preceding the first year to which the election applies), each Eligible Director may make an irrevocable election to defer all or a portion (in 10% increments) of his or her Compensation and/or Special Meeting Fees payable for services to be rendered by the Eligible Director during the next one, two, or three calendar years in (a) cash, in accordance with Section 5.1, or (b) Stock Units, in accordance with Section 5.2.  Such election shall be in writing on forms provided by the Company and approved by the Committee.  Such election may also specify that the amounts deferred pursuant to such election shall be paid under one of the optional time and forms of distribution set forth in Section 5.5(a).

 

(b)                                 Special Rule for 2005 and 2006 Deferrals.  Any Eligible Director who filed a deferral election under this Plan prior to December 31, 2003 with respect to Compensation and/or Special Meeting Fees to be earned in 2005 and/or 2006 (a “Pre-Existing Deferral Election”) may file a new distribution election with respect to amounts to be deferred in 2005 and/or 2006 pursuant to such Pre-Existing Deferral Election (the “2005-2006 Deferrals”) no later than December 31, 2005.  If the Eligible Director does not file such a distribution election for such 2005-2006 Deferrals, then he or she shall be deemed to have elected to receive a distribution of his 2005-2006 Deferrals as provided in the Eligible Director’s most recent effective distribution election filed prior to December 31, 2004 with the Committee in accordance with Section 5.5A(b) with respect to all amounts deferred under such Pre-Existing Deferral Election.  Any further changes to the time and manner of distribution of the Participant’s 2005-2006 Deferrals shall be made in accordance with, and governed by, the provisions of Section 5.5(b) and not Section 5.5A(b).

 

(c)                                  2008 Distribution Elections.  Notwithstanding the provisions of Sections 4.1, 4.2(a), 4.2(b) and 5.5 hereof, a Participant may elect to change his or her distribution election with respect to his or her Current Cash Accounts, Current Dividend Equivalent Cash Accounts, Current Dividend Equivalent Stock Accounts and Current Stock Unit Accounts from among the optional times and forms of distribution set forth in Section 5.5(a) by filing a new election with the Committee on or after January 1, 2008 and on or before December 31, 2008.  Any such election change shall apply only to amounts that would not otherwise be payable in 2008 and shall not cause any amount to be paid in 2008 that would not otherwise be payable in 2008.

 

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ARTICLE V
  DEFERRAL ACCOUNTS

 

5.1                               Cash Account.

 

(a)                                 Current Cash Account.  Effective January 1, 2005, if an Eligible Director has elected or elects in accordance with Article IV to defer Compensation and/or Special Meeting Fees earned after December 31, 2004 in cash, the Committee shall establish and maintain a Cash Account for the Eligible Director under the Plan, which Account shall be a memorandum account on the books of the Company and shall be such Eligible Director’s “Current Cash Account.”  An Eligible Director’s Current Cash Account shall be credited as follows:

 

(1)                                 As of the last day of each calendar quarter, the Committee shall credit the Eligible Director’s Current Cash Account with an amount equal to the elected percentage of the Compensation deferred by the Eligible Director during such quarter;

 

(2)                                 As of the date payment of any Special Meeting Fees would otherwise be made, the Eligible Director’s Current Cash Account shall be credited with an amount equal to the elected percentage of the Eligible Director’s Special Meeting Fees; and

 

(3)                                 As of the last day of each calendar quarter, the Eligible Director’s Current Cash Account shall be credited with earnings equal to an amount determined by multiplying the balance credited to such Account as of the last day of the preceding quarter by one-fourth of the Interest Rate.

 

(b)                                 Prior Cash Account.  Effective January 1, 2005, the Cash Account (if any) established for an Eligible Director prior to January 1, 2005 shall be that Eligible Director’s “Prior Cash Account,” and no amount of Compensation or Special Meeting Fees earned after December 31, 2004 that such Eligible Director elects to defer under this Plan shall be credited to such Prior Cash Account.  As of the last day of each calendar quarter, the Eligible Director’s Prior Cash Account shall be credited with earnings equal to an amount determined by multiplying the balance credited to such Account as of the last day of the preceding quarter by one-fourth of the Interest Rate.

 

5.2                               Stock Unit Account.

 

(a)                                 Current Stock Unit Account.  Effective January 1, 2005, if an Eligible Director has elected or elects in accordance with Article IV to defer his or her Compensation and/or Special Meeting Fees earned after December 31, 2004 in Stock Units, the Committee shall establish and maintain a Stock Unit Account for the Eligible Director under the Plan, which Account shall be a memorandum account on the books of the Company and shall be such Eligible Director’s “Current Stock Unit Account.”  An Eligible Director’s Current Stock Account shall be credited as follows:

 

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(1)                                 Regular Compensation.  If an Eligible Director has elected or elects to defer his or her Compensation earned after December 31, 2004 in Stock Units, the Committee shall credit on the Award Date to the Current Stock Unit Account of the Eligible Director a number of Units determined by dividing the present value of the Compensation deferred by the Eligible Director by the Average Fair Market Value of a share of Common Stock.  The present value shall be computed assuming the Compensation deferred would have been paid on the first day of the calendar year to which it relates (or, in the case of Compensation deferred under an election under Section 4.1 for the remainder of the calendar year in which the Eligible Director first becomes an Eligible Director,  on the Award Date) at the prevailing rate of Compensation at the time of the election made in accordance with Article IV, discounted to present value using the Discount Rate.

 

(2)                                 Additional Compensation.  If an Eligible Director has elected or elects to defer his or her Compensation and/or Special Meeting Fees earned after December 31, 2004 in Stock Units and such Eligible Director has any Additional Compensation for a particular calendar year to which such deferral election applies, the Committee shall, on the first day of the month following the month in which the event giving rise to the related Additional Compensation occurs: (i) in the event such Additional Compensation is a positive number, credit the Eligible Director’s Current Stock Unit Account with a number of Units determined by dividing the present value of the portion of the Eligible Director’s Additional Compensation that is deferred by the Eligible Director under this Plan for that calendar year and any future calendar year subject to such deferral election by the Average Fair Market Value of a share of Common Stock, or (ii) in the event such Additional Compensation is a negative number, debit the Eligible Director’s Current Stock Unit Account a number of Units determined by dividing the present value of the portion of the Eligible Director’s Additional Compensation for that calendar year and any future calendar year subject to such deferral election by the Average Fair Market Value of a share of Common Stock.  In no event, however, shall the Company make any reduction, during or after a particular year, in the level of Compensation and/or Special Meeting Fees for any Eligible Director for that particular year to the extent such reduction would result in the Eligible Director receiving any amount that would be treated as a “substitute for a payment of deferred compensation” within the meaning of Treas. Reg. Section 1.409A-3(f), or that would otherwise violate Section 409A of the Code, and would result in any tax, penalty or interest under Section 409A of the Code.  The present value for purposes of this Section 5.2(a)(2) shall be computed assuming the Additional Compensation subject to the Eligible Director’s deferral election would have been paid on the first day of the calendar year to which it relates (or, in the case of Additional Compensation subject to such deferral election that relates to the remainder of the calendar year in which the Additional Compensation Approval Date occurs, on the Additional Compensation Approval Date), discounted to present value using the Discount Rate.

 

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(3)                                 Special Compensation.  If an Eligible Director has elected or elects to defer his or her Compensation and/or Special Meeting Fees earned after December 31, 2004 in Stock Units, the Committee shall, on the March 31st following the year in which there is any Special Compensation with respect to such Eligible Director: (i) in the event such Special Compensation is a positive number, credit the Eligible Director’s Current Stock Unit Account with a number of Units determined by dividing the portion of the Eligible Director’s Special Compensation that is deferred by the Eligible Director under this Plan for that year by the Average Fair Market Value of a share of Common Stock, or (ii) in the event such Special Compensation is a negative number, debit the Eligible Director’s Current Stock Unit Account a number of Units determined by dividing the portion of the Eligible Director’s Special Compensation subject to such deferral election by the Average Fair Market Value of a share of Common Stock.  In no event, however, shall the Company make any reduction, during or after a particular year, in the level of Compensation and/or Special Meeting Fees for any Eligible Director for that particular year to the extent such reduction would result in the Eligible Director receiving any amount that would be treated as a “substitute for a payment of deferred compensation” within the meaning of Treas. Reg. Section 1.409A-3(f), or that would otherwise violate Section 409A of the Code, and would result in any tax, penalty or interest under Section 409A of the Code.

 

(4)                                 Payment of Additional and Special Compensation.  Notwithstanding any other provision herein, any Stock Units credited to an Eligible Director’s Current Stock Unit Account pursuant to Section 5.2(a)(2) or Section 5.2(a)(3) shall be subject to the same payment rules as apply to the Eligible Director’s existing deferral elections of Compensation and/or Special Meeting Fees for the applicable calendar year.

 

(b)                                 Prior Stock Unit Account.  Effective January 1, 2005, the Stock Units Account (if any) established for an Eligible Director prior to January 1, 2005 shall be that Eligible Director’s “Prior Stock Unit Account,” and no amount of Compensation or Special Meeting Fees earned after December 31, 2004 that such Eligible Director elects to defer under this Plan shall be credited to such Prior Stock Unit Account.

 

(c)                                  Transfers of Stock Units Attributable to 2005 and 2006 Deferrals.  Effective January 1, 2005, any Units credited to an Eligible Director’s Prior Stock Unit Account prior to January 1, 2005 that are attributable to Compensation to be earned after December 31, 2004 shall be transferred to such Eligible Director’s Current Stock Unit Account established pursuant to Section 5.2(a).

 

(d)                                 Limitations on Rights Associated with Units.  An Eligible Director’s Current Stock Unit Account and/or Prior Stock Unit Account shall each be a memorandum account on the books of the Company.  The Units credited to an Eligible Director’s Stock Unit Account(s) shall be used solely as a device for the determination of the number of shares of Common Stock to be eventually distributed to such Eligible Director in accordance with this Plan.  The Units shall not be treated as property or as a

 

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trust fund of any kind.  All shares of Common Stock or other amounts attributed to the Units shall be and remain the sole property of the Company, and each Eligible Director’s right in the Units is limited to the right to receive shares of Common Stock in the future as herein provided.  No Eligible Director shall be entitled to any voting or other shareholder rights with respect to Units granted under this Plan.  The number of Units credited under this Section shall be subject to adjustment in accordance with Section 5.6.

 

(e)                                  Credited Units Not Vested.  The Units credited to an Eligible Director’s Stock Unit Account(s) shall only become vested in accordance with Section 5.4(a).

 

5.3                               Dividend Equivalents; Dividend Equivalent Cash Account; Dividend Equivalent Stock Account.

 

(a)                                 Allocation of Dividend Equivalents.  Each Eligible Director shall, at the time of making an election in accordance with Article IV, elect to have all Dividend Equivalents attributable to Units credited to his or her Stock Unit Account pursuant to such election credited to either (1) a Dividend Equivalent Cash Account for such Eligible Director in accordance with subsection (b) below or (2) a Dividend Equivalent Stock Account for such Eligible Director in accordance with subsection (c) below.  Such election shall be irrevocable and shall remain in effect with respect to all Stock Units credited to the Eligible Director’s Stock Unit Account and Dividend Equivalent Stock Account in accordance with the Eligible Director’s election made pursuant to Article IV.

 

(b)                                 Dividend Equivalent Cash Account.

 

(1)                                 Current Dividend Equivalent Cash Account.  Effective January 1, 2005, if an Eligible Director has elected or elects to have Dividend Equivalents with respect to Compensation and/or Special Meeting Fees deferred in Stock Units after December 31, 2004 credited to his or her Dividend Equivalent Cash Account, the Committee shall establish and maintain a Dividend Equivalent Cash Account for the Eligible Director under the Plan, which Account shall be a memorandum account on the books of the Company and shall be such Eligible Director’s “Current Dividend Equivalent Cash Account.”  In such case, the Committee shall, as of each dividend payment date, credit the Eligible Director’s Current Dividend Equivalent Cash Account with an amount equal to the amount of Dividend Equivalents attributable to Stock Units then credited to the Eligible Director’s Current Stock Unit Account.  In addition, as of the last day of each calendar quarter, the Eligible Director’s Current Dividend Equivalent Cash Account shall be credited with earnings in an amount equal to that determined by multiplying the balance credited to such account as of the last day of the preceding quarter by an amount equal to one-fourth of the Interest Rate.

 

(2)                                 Prior Dividend Equivalent Cash Account.   Effective January 1, 2005, the Dividend Equivalent Cash Account (if any) established for an Eligible Director prior to January 1, 2005 shall be that Eligible Director’s

 

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“Prior Dividend Equivalent Cash Account.”  The Committee shall, as of each dividend payment date, credit the Eligible Director’s Prior Dividend Equivalent Cash Account with an amount equal to the amount of Dividend Equivalents attributable to Stock Units then credited to the Eligible Director’s Prior Stock Unit Account.  In addition, as of the last day of each calendar quarter, the Eligible Director’s Prior Dividend Equivalent Cash Account shall be credited with earnings in an amount equal to that determined by multiplying the balance credited to such account as of the last day of the preceding quarter by an amount equal to one-fourth of the Interest Rate.

 

(3)                                 Transfer of Dividend Equivalents Attributable to 2005 and 2006 Deferrals.  Effective January 1, 2005, any Dividend Equivalents that were credited to an Eligible Director’s Prior Dividend Equivalent Cash Account prior to January 1, 2005 that were attributable to Stock Units credited to his or her Stock Unit Account with respect to Compensation to be earned after December 31, 2004 shall be transferred to such Eligible Director’s Current Dividend Equivalent Cash Account established pursuant to Section 5.3(b)(1).

 

(c)                                  Dividend Equivalent Stock Account.

 

(1)                                 Current Dividend Equivalent Stock Account.  Effective January 1, 2005, if an Eligible Director has elected or elects to have Dividend Equivalents credited to his or her Dividend Equivalent Stock Account, the Committee shall establish and maintain a Dividend Equivalent Stock Account for the Eligible Director under the Plan, which Account shall be a memorandum account on the books of the Company and shall be such Eligible Director’s “Current Dividend Equivalent Stock Account.”  In such case, the Committee shall, as of each dividend payment date, credit the Eligible Director’s Current Dividend Equivalent Stock Account with an amount of Units determined by dividing the amount of Dividend Equivalents attributable to Stock Units then credited to the Eligible Director’s Current Stock Unit Account by the Fair Market Value of a share of Common Stock as of such date.  The Units credited to an Eligible Director’s Current Dividend Equivalent Stock Account shall be subject to adjustment under Section 5.6.

 

(2)                                 Prior Dividend Equivalent Stock Account.  Effective January 1, 2005, the Dividend Equivalent Stock Account (if any) established for an Eligible Director prior to January 1, 2005 shall be that Eligible Director’s “Prior Dividend Equivalent Stock Account.”  The Committee shall, as of each dividend payment date, credit the Eligible Director’s Prior Dividend Equivalent Stock Account with an amount of Units determined by dividing the amount of Dividend Equivalents attributable to Stock Units then credited to the Eligible Director’s Prior Stock Unit Account by the Fair Market Value of a share of Common Stock on such date.  The Units credited to an Eligible Director’s Prior Dividend Equivalent Stock Account shall be subject to adjustment under Section 5.6.

 

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(3)                                 Transfer of Dividend Equivalents Attributable to 2005 and 2006 Deferrals.  Effective January 1, 2005, any Dividend Equivalents that were credited to an Eligible Director’s Prior Dividend Equivalent Stock Account prior to January 1, 2005 that were attributable to Stock Units credited to his or her Stock Unit Account with respect to Compensation to be earned after December 31, 2004 shall be transferred to such Eligible Director’s Current Dividend Equivalent Stock Account established pursuant to Section 5.3(c)(1).

 

(d)                                 Credited Dividends Account Not Vested.  Amounts credited to the Dividend Equivalent Cash Account or the Dividend Equivalent Stock Account shall only become vested in accordance with Sections 5.4(a) or (c), as the case may be.

 

5.4                               Vesting.

 

(a)                                 Stock Unit Account; Dividend Equivalent Stock Account.  The rights of each Eligible Director in respect of his or her Stock Unit Account and Dividend Equivalent Stock Account shall vest as the Eligible Director’s services (to which the deferred Compensation and deferred Special Meeting Fees relate) are rendered.  Accordingly, effective as of the date the Eligible Director ceases to be a member of the Board of Directors, the number of Units credited to the Eligible Director’s Stock Unit Account and Dividend Equivalent Stock Account shall be reduced to the number of Units that would have been in such accounts on the date the Eligible Director ceased to serve on the Board of Directors had the Compensation and Special Meeting Fees the Eligible Director elected to defer included only Compensation and Special Meeting Fees payable for the period of actual service as a director, less any vested Units previously distributed as shares of Common Stock pursuant to the Eligible Director’s election to receive installment payments and/or a distribution under Section 5.5(d) or 5.5A(d) or (e).  For purposes of calculating the number of Units that would have been credited to the Eligible Director’s Stock Unit Account and Dividend Equivalent Stock Account, the Eligible Director’s annual retainer shall be prorated for the year of cessation on a monthly basis.  Notwithstanding the preceding sentence, if an Eligible Director ceases to be a member of the Board of Directors by reason of death or Disability, or upon or following a Change in Control Event, the Eligible Director’s Stock Unit Account and Dividend Equivalent Stock Account shall immediately become fully vested.

 

(b)                                 Cash Account.  The rights of each Eligible Director in respect of his or her Cash Account shall at all times be fully vested.

 

(c)                                  Dividend Equivalent Cash Account.  The rights of each Eligible Director in respect of his or her Dividend Equivalent Cash Account shall vest as the Eligible Director’s services (to which the deferred Compensation and deferred Special Meeting Fees relate) are rendered.  Accordingly, effective as of the date the Eligible Director ceases to be a member of the Board of Directors, the Company shall reduce any amount credited to the Eligible Director’s Dividend Equivalent Cash Account by an amount equal to any Dividend Equivalents (together with any related earnings) attributable to any Units which are forfeited in accordance with Section 5.4(a) and/or previously distributed as shares of Common Stock in accordance with the Eligible

 

14

 

Director’s election to receive installment payments and/or a distribution under Section 5.5(d) or 5.5A(d) or (e).  Notwithstanding the preceding, if an Eligible Director ceases to be a member of the Board of Directors by reason of death or Disability, or upon or following a Change in Control Event, the Eligible Director’s Dividend Equivalent Cash Account shall immediately become fully vested.

 

5.5                               Distribution of Benefits.  The provisions of this Section 5.5 shall apply only with respect to distributions from Current Cash Accounts, Current Dividend Equivalent Cash Accounts, Current Dividend Equivalent Stock Accounts and Current Stock Unit Accounts.  The provisions of Section 5.5A as set forth in Appendix A to this Plan document govern the distribution from Prior Cash Accounts, Prior Dividend Equivalent Cash Accounts, Prior Dividend Equivalent Stock Accounts and Prior Stock Unit Accounts.

 

(a)                                 Time and Manner of Distribution.

 

(i)                                     The vested amounts credited an Eligible Director’s Accounts shall be distributed to the Eligible Director (or, in the event of his or her death, the Eligible Director’s Beneficiary) upon his or her termination from service on the Board of Directors; provided, however, that a termination of service shall not be deemed to have occurred for any purpose under the Plan unless such termination from service constitutes a “separation from service” as defined under Section 409A of the Code and any regulations promulgated thereunder.  Notwithstanding the foregoing, on the annual or multiple-year deferral election form that a Participant files in accordance with the provisions of Article IV of the Plan for any Plan Year or series of two or three Plan Years beginning on or after January 1, 2005, an Eligible Director may elect to have the amounts credited to his or her Accounts with respect to such annual or multiple-year deferral period distributed to him or her on any one of the following optional distribution dates:  (A) January 1 following the Eligible Director’s termination of service, (B) January 1 of a specified year designated by the Eligible Director, which shall be no earlier than 3 years after the Plan Year to which the deferral relates, or (C) the earlier to occur of (A) or (B).

 

(ii)                                  The benefits payable under this Plan shall be distributed to the Eligible Director (or, in the event of his or her death, the Eligible Director’s Beneficiary) in a lump sum or, if elected by the Eligible Director in writing on the annual or multiple-year deferral election form that a Participant files in accordance with the provisions of Article IV of the Plan for a Plan Year beginning on or after January 1, 2005, in annual installments for up to 10 years.

 

(iii)                               An Eligible Director shall be permitted to make a different election with respect to each annual or multiple-year deferral period as to the time and manner in which his or her benefits shall be distributed.  For each Eligible Director who makes one or more distribution elections pursuant to this Section 5.5(a), each of his or her Accounts shall be divided into two or more Distribution Subaccounts as necessary to separately account for deferrals that are payable at

 

15

 

different times and/or in different manners.  For purposes of calculating installments, the Eligible Director’s vested Accounts (and Distribution Subaccounts if applicable) will be valued as of December 31 of each year, and divided by the number of remaining installments to determine the amount of the installment to be paid in the following year.  Subsequent installments will be adjusted accordingly for the next calendar year, according to procedures established by the Committee.  Such installment payments shall commence as of the date benefits become distributable under this Section 5.5(a).

 

(iv)                              Notwithstanding any other provision of this Section 5.5, in the event that an Eligible Director becomes entitled to a credit of Stock Units pursuant to Section 5.2(a)(2) and such Stock Units would otherwise have been payable pursuant to this Section 5.5 prior to the date such Units are credited to the Eligible Director’s Current Stock Unit Account, such Units shall be paid not later than thirty (30) days following the date such Units are credited pursuant to Section 5.2(a)(2).

 

(b)                                 Change in Time or Manner of Distribution.  Notwithstanding subsection (a), an Eligible Director may elect to further defer the commencement of any distribution to be made, or change the manner of any distribution election from a lump sum to annual installments made, with respect to benefits payable under this Plan by filing a new written election with the Committee on a form approved by the Committee; provided, however, that (A) no such election shall be effective until one year after the date on which the election is made, (B) the first payment with respect to which such election is made must be deferred for a period of not less than five years from the date such payment would otherwise have been made or payments would have commenced, and (C) any election related to a payment that commences on any date other than the date of the Eligible Director’s termination of service shall only be effective if it is made at least twelve months prior to the date of the first scheduled payment under such election.

 

(c)                                  Effect of Change in Control Event.  Notwithstanding subsections (a) and (b), if a Change in Control Event and a termination of service occurs, the vested portions of an Eligible Director’s Accounts shall be distributed immediately in a lump sum.

 

(d)                                 Distribution for Unforeseeable Emergencies.  An Eligible Director (which for purposes of this Section 5.5(d) includes former Eligible Directors) may request a distribution for an Unforeseeable Emergency without penalty of an amount not greater than the value of the Eligible Director’s vested benefit under this Plan.  Such distribution for an Unforeseeable Emergency shall be subject to approval by the Committee in its sole discretion and may be made only to the extent necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved (1) through reimbursement or compensation by insurance or otherwise or (2) by liquidation of the Eligible Director’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship.  Amounts distributed pursuant to this Section 5.5(d) shall be distributed only from vested amounts

 

16

 

credited to his or her Accounts and shall be distributed first from an Eligible Director’s Cash and Dividend Equivalent Cash Accounts, and, to the extent the balance of the Participant’s Cash and Dividend Equivalent Cash Accounts is not sufficient to satisfy the severe financial hardship, next as a distribution of shares of the Company’s Common Stock with a Fair Market Value equal to such deficiency from the vested portion of such Eligible Director’s Stock Unit and Dividend Equivalent Stock Accounts.

 

(e)                                  Form of Distribution.  Stock Units credited to an Eligible Director’s Stock Unit Account and Dividend Equivalent Stock Account shall be distributed in an equivalent whole number of shares of the Company’s Common Stock.  Fractions shall be disregarded.  Amounts credited to an Eligible Director’s Cash Account and vested in the Eligible Director’s Dividend Equivalent Cash Account shall be distributed in cash.

 

(f)                                   Small Benefit Exception.  Notwithstanding any other provision of this Plan to the contrary, if at the time any partial or installment distribution is to be made to an Eligible Director hereunder the total vested balance remaining in the Eligible Director’s Current Cash Account and Current Dividend Equivalent Cash Account is less than $2,000 and the number of vested Units credited to the Eligible Director’s Current Stock Unit Account of Current Dividend Equivalent Stock Account is less than 100, then all such remaining vested balances and vested Units shall be distributed in a lump sum on the date scheduled for such partial or installment distribution.  This provision is intended to comply with Treasury Regulations Section 1.409A-2(b)(2)(iii) and shall be interpreted accordingly.

 

(g)                                 Distributions to Specified Employees.  Notwithstanding any other provision of this Plan to the contrary, and solely to the extent that a delay in payment is required in order to avoid the imposition of any tax under Section 409A of the Code, if an Eligible Director is a “specified employee” for purposes of Section 409A(a)(2)(B) of the Code, and any amounts to be distributed under this Agreement are considered to be non-qualified deferred compensation payable in connection with the Eligible Director’s separation from service with the Company for purposes of Section 409A of the Code, which otherwise would be payable at any time during the six-month period immediately following such separation from service, then such amounts shall not be paid prior to, and shall instead be payable in a lump sum within ten (10) business days following, the expiration of such six-month period.

 

5.6                               Adjustments in Case of Changes in Common Stock.  If any stock dividend, stock split, recapitalization, merger, consolidation, combination or exchange of shares, sale of all or substantially all of the assets of the Company, split-up, split-off, spin-off, liquidation or similar change in capitalization or any similar extraordinary dividend distribution to holders of the Company’s Common Stock (other than Cash or Combination Dividends) shall occur, proportionate and equitable adjustments shall be made in the number and type of shares of Common Stock or other property reserved and of Units (both credited and vested) under this Plan.

 

17

 

5.7                               Company’s Right to Withhold.  The Company shall satisfy any state or federal income tax withholding obligation arising upon distribution of an Eligible Director’s accounts by reducing the number of shares of Common Stock otherwise deliverable to the Eligible Director by the appropriate number of shares, valued at the average of the Fair Market Values of a share of Common Stock during the last 10 trading days preceding the date of distribution, required to satisfy such tax withholding obligation.  If the Company, for any reason, cannot satisfy the withholding obligation in accordance with the preceding sentence, the Eligible Director shall pay or provide for payment in cash of the amount of any taxes which the Company may be required to withhold with respect to the benefits hereunder.

 

5.8                               Stockholder Approval.  This Plan, and all the elections, actions and accruals with respect to Stock Units and Dividend Equivalents made prior to stockholder approval, was originally approved by the stockholders of the Company at their 1995 annual meeting.  Amendments to the Plan have been approved by the Board of Directors pursuant to Article VII.

 

ARTICLE VI
  ADMINISTRATION

 

6.1                               The Administrator.  The Committee hereunder shall consist of two (2) or more Disinterested Directors appointed from time to time by the Board of Directors to serve as the administrator of this Plan at its pleasure.  Any member of the Committee may resign by delivering a written resignation to the Board of Directors.  Members of the Committee shall not receive any additional compensation for administration of this Plan.

 

6.2                               Committee Action.  The Committee may, for the purpose of administering this Plan, choose a Secretary who may be, but is not required to be, a member of the Committee, who shall keep minutes of the Committee’s proceedings and all records and documents pertaining to the Committee’s administration of this Plan.  A member of the Committee shall not vote or act upon any matter which relates solely to himself or herself as a Participant in this Plan.  The Secretary may execute any certificate or other written direction on behalf of the Committee.  Action of the Committee with respect to the administration of this Plan shall be taken pursuant to a majority vote or by unanimous written consent of its members.

 

6.3                               Rights and Duties.  Subject to the limitations of this Plan, the Committee shall be charged with the general administration of this Plan and the responsibility for carrying out its provisions, and shall have powers necessary to accomplish those purposes, including, but not by way of limitation, the following:

 

(a)                                 To construe, interpret and administer this Plan;

 

(b)                                 To resolve any questions concerning the amount of benefits payable to an Eligible Director (except that no member of the Committee shall participate in a decision relating solely to his or her own benefits);

 

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(c)                                  To make all other determinations required by this Plan;

 

(d)                                 To maintain all the necessary records for the administration of this Plan; and

 

(e)                                  To make and publish forms, rules and procedures for elections under and for the administration of this Plan.

 

The determination of the Committee made in good faith as to any disputed question or controversy and the Committee’s determination of benefits payable to Eligible Directors shall be conclusive.  In performing its duties, the Committee shall be entitled to rely on information, opinions, reports or statements prepared or presented by:  (1) officers or employees of the Company whom the Committee believes to be reliable and competent as to such matters; and (2) counsel (who may be employees of the Company), independent accountants and other persons as to matters which the Committee believes to be within such persons’ professional or expert competence.  The Committee shall be fully protected with respect to any action taken or omitted by it in good faith pursuant to the advice of such persons.  The Committee may delegate ministerial, bookkeeping and other non-discretionary functions to individuals who are officers or employees of the Company.

 

6.4                               Indemnity and Liability.  All expenses of the Committee shall be paid by the Company and the Company shall furnish the Committee with such clerical and other assistance as is necessary in the performance of its duties.  No member of the Committee shall be liable for any act or omission of any other member of the Committee nor for any act or omission on his or her own part, excepting only his or her own willful misconduct or gross negligence.  To the extent permitted by law, the Company shall indemnify and save harmless each member of the Committee against any and all expenses and liabilities arising out of his or her membership on the Committee, excepting only expenses and liabilities arising out of his or her own willful misconduct or gross negligence, as determined by the Board of Directors.

 

ARTICLE VII
  PLAN CHANGES AND TERMINATION

 

The Board of Directors shall have the right to amend this Plan in whole or in part from time to time or may at any time suspend or terminate this Plan.  In addition, The Committee may amend the Plan to (a) ensure that this Plan complies with the requirements of Section 409A of the Code for deferral of taxation on compensation deferred hereunder after December 31, 2004 until the time of distribution and (b) to make other changes to the provisions regarding elections as to the time and manner of distributions that comply with such requirements of Section 409A.  Notwithstanding the foregoing, no amendment or termination shall cancel or otherwise adversely affect in any way, without his or her written consent, any Eligible Director’s rights with respect to Stock Units and Dividend Equivalents credited to his or her Stock Unit Account, Dividend Equivalent Cash Account or Dividend Equivalent Stock Account which are then vested (assuming solely for such purposes a voluntary termination of services as of

 

19

 

the date of such amendment or termination) or to any amounts previously credited to his or her Cash Account; provided, however, that in no event shall such consent be required for an amendment that is necessary to comply with applicable law, including without limitation, an amendment required under Section 409A of the Code or the regulations thereunder to preserve the deferral of taxation on compensation deferred hereunder until the time of distribution.  Any amendments authorized hereby shall be stated in an instrument in writing, and all Eligible Directors shall be bound thereby upon receipt of notice thereof.

 

It is the current expectation of the Company that this Plan shall be continued until August 1, 2029, but continuance of this Plan is not assumed as a contractual obligation of the Company.  In the event that the Board of Directors decides to discontinue or terminate this Plan, it shall notify the Committee and participants in this Plan of its action in an instrument in writing, and this Plan shall be terminated at the time therein set forth, and all participants shall be bound thereby.  In such event, the then vested benefits of an Eligible Director shall be distributed in accordance with the time and manner of distribution elected by him or her under Section 5.5 and/or 5.5A.

 

ARTICLE VIII
  MISCELLANEOUS

 

8.1                               Limitation on Eligible Directors’ Rights.  Participation in this Plan shall not give any Eligible Director the right to continue to serve as a member of the Board of Directors or any rights or interests other than as herein provided.  No Eligible Director shall have any right to any payment or benefit hereunder except to the extent provided in this Plan.  This Plan shall create only a contractual obligation on the part of the Company as to such amounts and shall not be construed as creating a trust.  This Plan, in and of itself, has no assets.  Eligible Directors shall have only the rights of general unsecured creditors of the Company with respect to amounts credited or vested and benefits payable, if any, on their Accounts.

 

8.2                               Beneficiaries.

 

(a)                                 Beneficiary Designation.  Upon forms provided by the Company each Eligible Director may designate in writing the Beneficiary or Beneficiaries (as defined in Section 8.2(b)) whom such Eligible Director desires to receive any amounts payable under this Plan after his or her death.  An Eligible Director from may from time to time change his or her designated Beneficiary or Beneficiaries without the consent of such Beneficiary or Beneficiaries by filing a new designation in writing with the Committee.  However, if a married Eligible Director wishes to designate a person other than his or her spouse as Beneficiary, such designation shall be consented to in writing by the spouse.  The Eligible Director may change any election designating a Beneficiary or Beneficiaries without any requirement of further spousal consent if the spouse’s consent so provides.  Notwithstanding the foregoing, spousal consent shall not be necessary if it is established that the required consent cannot be obtained because the spouse cannot be located or because of other circumstances prescribed by the Committee.  The Company

 

20

 

and the Committee may rely on the Eligible Director’s designation of a Beneficiary or Beneficiaries last filed in accordance with the terms of this Plan.

 

(b)                                 Definition of Beneficiary.  An Eligible Director’s “Beneficiary” or “Beneficiaries” shall be the person, persons, trust or trusts so designated by the Eligible Director or, in the absence of such designation, entitled by will or the laws of descent and distribution to receive the Eligible Director’s benefits under this Plan in the event of the Eligible Director’s death, and shall mean the Eligible Director’s executor or administrator if no other Beneficiary is identified and able to act under the circumstances.

 

8.3                               Benefits Not Assignable; Obligations Binding Upon Successors.  Benefits of an Eligible Director under this Plan shall not be assignable or transferable and any purported transfer, assignment, pledge or other encumbrance or attachment of any payments or benefits under this Plan, or any interest therein, other than by operation of law or pursuant to Section 8.2, shall not be permitted or recognized.  Obligations of the Company under this Plan shall be binding upon successors of the Company.

 

8.4                               Governing Law; Severability.  The validity of this Plan or any of its provisions shall be construed, administered and governed in all respects under and by the laws of the state of incorporation of the Company.  If any provisions of this instrument shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective.

 

8.5                               Compliance With Laws.  This Plan and the offer, issuance and delivery of shares of Common Stock and/or the payment of money through the deferral of compensation under this Plan are subject to compliance with all applicable federal and state laws, rules and regulations (including but not limited to state and federal securities law) and to such approvals by any listing, agency or any regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith.  Any securities delivered under this Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements.

 

8.6                               Headings Not Part of Plan.  Headings and subheadings in this Plan are inserted for reference only and are not to be considered in the construction of the provisions hereof.

 

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APPENDIX A

 

The provisions set forth in this Appendix A set forth the provisions of Section 5.5A of the Plan which apply to the distribution of amounts deferred prior to January 1, 2005 and credited to Prior Cash Accounts, Prior Dividend Equivalent Cash Accounts, Prior Dividend Equivalent Stock Accounts and Prior Stock Unit Accounts.

 

5.5A                      Distribution of Benefits.

 

(a)                                 Time and Manner of Distribution.  Each Eligible Director shall be entitled to receive a distribution of the vested portion of his or her Accounts upon his or her termination from service on the Board of Directors or at such time as may be elected by the Eligible Director at the time of an election under Article IV and set forth in writing on forms provided by the Company.  The benefits payable under this Plan shall be distributed to the Eligible Director (or, in the event of his or her death, the Eligible Director’s Beneficiary) in a lump sum or, if elected by the Eligible Director in writing on forms provided by the Company at least 12 months in advance of the date benefits become distributable under subsection (a), in annual installments for up to 10 years.  An Eligible Director shall be permitted to make a different election with respect to each annual deferral period as to the time and manner in which his or her benefits shall be distributed.  For each Eligible Director who makes one or more distribution elections pursuant to this Section 5.5A(a), each of his or her Accounts shall be divided into two or more Distribution Subaccounts as necessary to separately account for deferrals which are payable at different times and/or in different manners.  For purposes of calculating installments, the Eligible Director’s vested Accounts (and Distribution Subaccounts if applicable) will be valued as of December 31 of each year, and divided by the number of remaining installments to determine the amount of the installment to be paid in the following year.  Subsequent installments will be adjusted accordingly for the next calendar year, according to procedures established by the Committee.  Such installment payments shall commence as of the date benefits become distributable under this Section 5.5A(a).

 

(b)                                 Change in Time or Manner of Distribution.  Notwithstanding subsection (a):

 

(1)                                 An Eligible Director may elect to further defer the commencement of any distribution to be made with respect to benefits payable under this Plan by filing a new written election with the Committee on a form approved by the Committee; provided, however, that (A) no such new election shall be effective until 12 months after such election is filed with the Committee, (B) no such new election shall be effective with respect to any Account(s) after the distribution of benefits with respect to such Account(s) shall have commenced, and (C) no more than three new elections with respect to each annual deferral period shall be valid as to any Eligible Director.  An election made pursuant to this Section 5.5A(b)(1) shall not affect the manner of distribution (i.e., lump

 

A-1

 

sum versus installments), the terms of which shall be subject to Section 5.5A(a) above or Section 5.5A(b)(2) below.

 

(2)                                 An Eligible Director may change the manner of any distribution election from a lump sum to annual installments (or vice versa) made with respect to amounts credited under his or her Accounts by filing a written election with the Committee on a form provided by the Committee; provided, however, that no such election shall be effective until 12 months after such election is filed with the Committee, and no such election shall be effective if it is made with respect to any Account(s) after the distribution of benefits with respect to such Account(s) have commenced.  An election made pursuant to this Section 5.5A(b)(2) shall not affect the date of the commencement of benefits.

 

(3)                                 On or before September 30, 2000, an Eligible Director may make a one-time, irrevocable election (subject to other express provisions of this Plan), on forms provided for this purpose, to receive a distribution of his or her accumulated balances under this Plan as of September 30, 2000 on:  (A) a date elected by the Eligible Director, but in no event before 2003, or (B) the earlier of a date elected by the Eligible Director, but in no event before 2003, or the date of his or her termination of service from the Board of Directors.  The benefits payable under such an election shall be distributed to the Eligible Director (or in the event of his or her death, the Eligible Director’s Beneficiary) in a lump sum or, if elected by the Eligible Director in writing on forms provided by the Company at least 12 months in advance of the date benefits become distributable under Section 5.5A(a) above, in annual installments for up to 10 years, as so elected.

 

(c)                                  Effect of Change in Control Event.  Notwithstanding subsections (a) and (b), if a Change in Control Event and a termination of service occurs, the vested portions of an Eligible Director’s Accounts shall be distributed immediately in a lump sum.

 

(d)                                 Early Distributions.  Each Eligible Director (which for purposes of this Section 5.5A(d) includes former Eligible Directors) shall be permitted to elect to withdraw not less than 50% of the vested portion of his or her Accounts, reduced by the withdrawal penalty described below, prior to the applicable payment date(s) or payment commencement date(s) (“Early Distributions”), subject to the following restrictions:

 

(1)                                 The election to take an Early Distribution shall be made in writing on a form provided by and filed with the Committee;

 

(2)                                 The amount of the Early Distribution shall equal 90% of the amount the Eligible Director has elected to withdraw; and

 

A-2

 

(3)                                 The remaining 10% of the amount the Eligible Director has elected to withdraw shall be permanently forfeited, and the Eligible Director or his or her Beneficiary shall have no rights with respect to such forfeited amounts.

 

Notwithstanding the foregoing, the Eligible Director’s Accounts will continue to vest in accordance with Section 5.4 and the Dividend Equivalent Stock Account and/or Dividend Equivalent Cash Account of such Eligible Director shall continue to be credited with Dividend Equivalents in accordance with Section 5.3.

 

(e)                                  Distribution for Unforeseeable Emergencies.  An Eligible Director (which for purposes of this Section 5.5A(e) includes former Eligible Directors) may request a distribution for an Unforeseeable Emergency without penalty of an amount not greater than the value of the Eligible Director’s vested benefit under this Plan.  Such distribution for an Unforeseeable Emergency shall be subject to approval by the Committee in its sole discretion and may be made only to the extent necessary to satisfy the hardship and only from vested amounts credited to his or her Accounts.  The Committee may treat a distribution as necessary for an Unforeseeable Emergency if it relies on the Eligible Director’s written representation, without actual knowledge to the contrary, that the hardship cannot reasonably be relieved (1) through timely reimbursement or compensation by insurance or otherwise or (2) by liquidation of the Eligible Director’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship.  Amounts distributed pursuant to this Section 5.5A(e) shall be distributed first from an Eligible Director’s Cash and Dividend Equivalent Cash Accounts, and, to the extent the balance of the Participant’s Cash and Dividend Equivalent Cash Accounts is not sufficient to satisfy the severe financial hardship, next as a distribution of shares of the Company’s Common Stock with a Fair Market Value equal to such deficiency from the vested portion of such Eligible Director’s Stock Unit and Dividend Equivalent Stock Accounts.

 

(f)                                   Form of Distribution.  Stock Units credited to an Eligible Director’s Stock Unit Account and Dividend Equivalent Stock Account shall be distributed in an equivalent whole number of shares of the Company’s Common Stock.  Fractions shall be disregarded.  Amounts credited to an Eligible Director’s Cash Account and vested in the Eligible Director’s Dividend Equivalent Cash Account shall be distributed in cash.

 

(g)                                 Small Benefit Exception.  Notwithstanding any other provision of this Plan to the contrary, if at the time of any distribution the vested balance remaining in an Eligible Director’s Prior Cash Account or Prior Dividend Equivalent Cash Account is less than $2,000 or, if the number of vested Units credited to the Eligible Director’s Prior Stock Unit Account or Prior Dividend Equivalent Stock Account is less than 100, then such remaining vested balances shall be distributed in a lump sum.

 

A-3

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