Document:

pennantservicedcplandoc

                    THE NONQUALIFIED DEFERRED COMPENSATION PLAN    PLAN DOCUMENT                                 

 

2 THE NONQUALIFIED DEFERRED COMPENSATION PLAN     Section 1.  Purpose   By execution of the Adoption Agreement, the Company has adopted the Plan set forth herein,  and in the Adoption Agreement, to provide a means by which certain management Employees or  Independent Contractors of the Employer may elect to defer receipt of current Compensation  from the Employer in order to provide retirement and other benefits on behalf of such Employees  or Independent Contractors of the Employer, as selected in the Adoption Agreement. The Plan is  intended to be a nonqualified deferred compensation plan that complies with the provisions of  Section 409A of the Internal Revenue Code (the "Code"). The Plan is also intended to be an  unfunded plan maintained primarily for the purpose of providing deferred compensation benefits  for a select group of management or highly compensated employees under Sections 201(2),  301(a)(3) and 401(a)(l) of the Employee Retirement Income Security Act of 1974 (“ERISA”) or  independent contractors. Notwithstanding any other provision of this Plan, this Plan shall be  interpreted, operated and administered in a manner consistent with these intentions.      Section 2.  Definitions      2.0 “401(k) Refund Offset” means a deferral of the Participant’s base salary equal to  the gross amount of a 401(k)-refund caused by Average Deferral Percentage (ADP) testing  failures in the qualified plan.  The 401(k) refund itself shall be paid to the Participant from the  401(k) plan and reported on Form 1099-R. This deferral shall not apply to Roth 401(k) refunds  or any other refund not generated due to failed testing.   

 

3 2.1 "Active Participant" means, with respect to any day or date, a Participant who is in  Service on such day or date; provided, that a Participant shall cease to be an Active Participant  (i) immediately upon a determination by the Committee that the Participant has ceased to be an  Employee or Independent Contractor, or (ii) at the end of the Plan Year that the committee  determines the Participant no longer meets the eligibility requirements of the Plan.   2.2 "Adoption Agreement" means the written agreement pursuant to which the  Company adopts the Plan. The Adoption Agreement is a part of the Plan as applied to the  Company.   2.3 "Beneficiary" means the person, persons, entity or entities designated or  determined pursuant to the provisions of Section 13 of the Plan.   2.4 "Board" means the Board of Directors of the Company, if the Company is a  corporation. If the Company is not a corporation, "Board" shall mean the Company.   2.5  "Change in Control Event" means an event described in Section 409A(a)(2)(A)(v)  of the Code (or any successor provision thereto) and the regulations thereunder.   2.6 "Committee" means the Employer, an administrative committee appointed by the  Board to serve at the pleasure of the Board, the Board itself, any other person or persons as  determined in the Employer’s discretion, or any other person or persons noted in the Adoption  Agreement. The Recordkeeper is not the Committee.   2.7 "Company" means the company designated in the Adoption Agreement.   2.8 "Compensation" shall have the meaning designated in the Adoption Agreement.   2.9 "Crediting Date" means the date any corresponding asset payment used to  informally finance the Plan, if applicable, is credited to the Employer’s corporate owned  

 

4 investment account or any other day directed by the Employer.  Otherwise, all Credits shall be  credited on any business day as specified by the Employer.   2.10 "Deferred Compensation Account" means the account maintained with respect to  each Participant under the Plan. The Deferred Compensation Account shall be credited with  Participant Deferral Credits and Employer Credits, credited or debited for deemed investment  gains or losses, and adjusted for payments in accordance with the rules and elections in effect  under Section 8. As permitted in the Adoption Agreement, the Deferred Compensation Account  of a Participant may consist of one or more accounts. A Participant may elect payment options  for each account as described in Section 7.1 and deemed investments for each account as  described in Section 8.2.   2.11 "Disabled or Disability" means Disabled or Disability within the meaning of  Section 409A of the Code and the regulations thereunder. Generally, this means that the  Participant is unable to engage in any substantial gainful activity by reason of any medically  determinable physical or mental impairment which can be expected to result in death or can be  expected to last for a continuous period of not less than 12 months, or is, by reason of any  medically determinable physical or mental impairment which can be expected to result in death  or can be expected to last for a continuous period of not less than 12 months, receiving income  replacement benefits for a period of not less than three months under an accident and health plan  covering Employees of the Employer.   2.12 “Education Account” is an In-Service Account which will be used by the  Participant for educational purposes.   2.13 "Effective Date" shall be the date designated in the Adoption Agreement.   

 

5 2.14 "Employee" means an individual in the Service of the Employer if the relationship  between the individual and the Employer is the legal relationship of employer and employee. An  individual shall cease to be an Employee upon the Employee's Separation from Service.   2.15 "Employer" means the Company, as identified in the Adoption Agreement, and  any Participating Employer which adopts this Plan. An Employer may be a corporation, a limited  liability company, a partnership or sole proprietorship.   2.16 "Employer Credits" means the amounts credited to the Participant's Deferred  Compensation Account by the Employer pursuant to the provisions of Section 4.2.   2.17 "Grandfathered Amounts" means, if applicable, the amounts that were deferred  under the Plan and were earned and vested within the meaning of Section 409A of the Code and  regulations thereunder as of December 31, 2004. Grandfathered Amounts shall be subject to the  terms designated in the Plan which were in effect as of October 3, 2004.   2.18 "Independent Contractor" means an individual in the Service of the Employer if  the relationship between the individual and the Employer is not the legal relationship of employer  and employee. An individual shall cease to be an Independent Contractor upon the termination  of the Independent Contractor's Service. An Independent Contractor shall include a director of  the Employer who is not an Employee.   2.19 "In-Service Account" means a separate account to be kept for each Participant that  has elected to take in-service distributions as described in Section 5.4. The In-Service Account  shall be adjusted in the same manner and at the same time as the Deferred Compensation Account  under Section 8 and in accordance with the rules and elections in effect under Section 8.   2.20 "Normal Retirement Age", which may also be called “Full Vesting Age”, of a  Participant means the age designated in the Adoption Agreement.   

 

6 2.21 "Participant" means with respect to any Plan Year an Employee or Independent  Contractor who has been designated by the Committee as a Participant and who has entered the  Plan or who has a Deferred Compensation Account under the Plan; provided that if the  Participant is an Employee, the individual must be a member of a select group of management  or highly compensated employee of the Employer within the meaning of Sections 201(2),  301(a)(3) and 401(a)(1) of ERISA.   2.22 "Participant Deferral Credits" means the amounts credited to the Participant's  Deferred Compensation Account by the Employer pursuant to the provisions of Section 4.1.   2.23 "Participating Employer" means any trade or business (whether or not  incorporated) which adopts this Plan with the consent of the Company identified in the Adoption  Agreement.   2.24 "Participation Agreement" means a written agreement, including electronic  submissions by the Participant or at the Participant’s direction, entered into between a Participant  and the Employer pursuant to the provisions of Section 4.1   2.25 "Performance-Based Compensation" means compensation where the amount of,  or entitlement to, the compensation is contingent on the satisfaction of preestablished  organizational or individual performance criteria relating to a performance period of at least  twelve months. Organizational or individual performance criteria are considered preestablished  if established in writing within 90 days after the commencement of the period of service to which  the criteria relates, provided that the outcome is substantially uncertain at the time the criteria are  established. Performance-based compensation may include payments based upon subjective  performance criteria as provided in regulations and administrative guidance promulgated under  Section 409A of the Code.   

 

7 2.26 "Plan" means the name of the Plan as designated in the Adoption Agreement.   2.27  "Plan-Approved Domestic Relations Order" shall mean a judgment, decree, or  order (including the approval of a settlement agreement) which is:               2.27.1  Issued pursuant to a State's domestic relations law;     2.27.2 Relates to the provision of child support, alimony payments or marital  property rights to a Spouse, former Spouse, child or other dependent of the  Participant;     2.27.3 Creates or recognizes the right of a Spouse, former Spouse, child or other  dependent of the Participant to receive all or a portion of the Participant's benefits  under the Plan;     2.27.4 Requires payment to such person of an interest in the Participant's benefits  in a lump sum payment or any other form of payment allowed under the Plan at a  specific time; and     2.27.5 Meets such other requirements established by the Committee.     2.28 "Plan Year" means the twelve-month period ending on the last day of December,  unless otherwise noted in the Adoption Agreement, provided, that the initial Plan Year may have  fewer than twelve months.   2.28.1 “Recordkeeper” means the individual or entity responsible for keeping records of  Plan activity including the tracking of Participant Deferred Compensation Account balances.  As  to applicable tax and regulatory rules, the actions of the Recordkeeper are limited to executing the  decisions and directions of the Committee. The Recordkeeper does not make plan administration  decisions.   2.29 "Qualifying Distribution Event"  means (i) the Separation from Service   of the  Participant, (ii) the date the Participant becomes Disabled, (iii) the death of the Participant, (iv)  the time specified by the Participant for an In-Service Distribution, (v) a Change in Control  Event, or (vi) an Unforeseeable Emergency, each to the extent provided in Section 5.    

 

8 2.30 "Seniority Date" which may also be called “Installment Eligibility Date” shall have  the meaning designated in the Adoption Agreement and shall apply to both the initial deferral  election described in Section 4 and the Subsequent deferral election described in Section 7.5.   2.31 "Separation from Service" or "Separates from Service" means a "separation from  service" within the meaning of Section 409A of the Code.   2.32 "Service" as an Employee means employment by the Employer. For purposes of  the Plan, the employment relationship is treated as continuing intact while the Employee is on  military leave, sick leave, or other bona fide leave of absence if the period of such leave does not  exceed six months, or if longer, so long as the Employee's right to reemployment is provided  either by statute or contract. If the Participant is an Independent Contractor, "Service" shall mean  the period during which the contractual relationship exists between the Employer and the  Participant. The contractual relationship is not terminated if the Participant anticipates a renewal  of the contract or becomes an Employee. A Participant who has a Deferred Compensation  Account which contains amounts deferred or contributed as an Employee and a member of the  Board (Dual Status), Services performed in those capacities will be looked at independently when  determining if a Separation from Service has occurred.  Services as a member of the Board and  Independent Contractor (in a capacity not on the Board) will be looked collectively when  determining if a Separation from Service has occurred.  2.33 "Service Bonus" means any bonus that does not meet the definition of  Performance-Based Compensation that is paid to a Participant by the Employer as noted in the  Adoption Agreement.   2.34 "Specified Employee" means an Employee who meets the requirements for key  employee treatment under Section 416(i)(l)(A)(i), (ii) or (iii) of the Code (applied in accordance  

 

9 with the regulations thereunder and without regard to Section 416(i)(5) of the Code) at any time  during the twelve month period ending on December 31 of each year (the "identification date").  If the person is a key employee as of any identification date, the person is treated as a Specified  Employee for the twelve-month period beginning on the first day of the fourth month following  the identification date. Unless binding corporate action is taken to establish different rules for  determining Specified Employees for all plans of the Company and its controlled group members  that are subject to Section 409A of the Code, the foregoing rules and the other default rules under  the regulations of Section 409A of the Code shall apply.   2.35 "Spouse" or ''Surviving Spouse" means, except as otherwise provided in the Plan,  a person who is the legally married spouse or surviving spouse of a Participant.   2.36 "Unforeseeable Emergency" means an "unforeseeable emergency" within the  meaning of Section 409A of the Code.   2.37 "Years of Service" means each Plan Year of Service completed by the Participant.  For vesting purposes, Years of Service shall be calculated from the date designated in the  Adoption Agreement and Service shall be based on service with the Company and all  Participating Employers.   Section 3.  Participation  The Committee in its discretion shall designate each Employee or Independent  Contractor who is eligible to participate in the Plan. A Participant who Separates from Service  with the Employer and who later returns to Service may be eligible consistent with Section 409A  of the Code and upon satisfaction of such terms and conditions as the Committee shall establish.         

 

10 Section 4.  Credits to Deferred Compensation Account    4.1 Participant Deferral Credits. To the extent provided in the Adoption Agreement,  each Active Participant may elect, by entering into a Participation Agreement with the  Employer, to defer the receipt of Compensation from the Employer by a dollar amount or  percentage specified in the Participation Agreement. The amount of Compensation the  Participant elects to defer, the Participant Deferral Credit, shall be credited by the Employer to  the Deferred Compensation Account maintained for the Participant pursuant to Section 8. The  following special provisions shall apply with respect to the Participant Deferral Credits of a  Participant:  4.1.1  The Employer shall credit to the Participant's Deferred Compensation  Account on each Crediting Date an amount equal to the total Participant Deferral  Credit for the period ending on such Crediting Date.    4.1.2  An election pursuant to this Section 4.1 shall be made by the Participant by  executing and delivering a Participation Agreement to the Committee. Except as  otherwise provided in this Section 4.1, the Participation Agreement shall become  effective with respect to such Participant as of the first day of January following  the date such Participation Agreement is received by the Committee. A  Participant's election may be changed at any time prior to the last permissible date  for making the election as permitted in this Section 4.1, and shall thereafter be  irrevocable. Any election of a Participant shall continue in effect for the time  period as set forth in the Adoption Agreement.    4.1.3  A Participant may execute and deliver a Participation Agreement to the  Committee within 30 days after the date the Participant first becomes eligible to  participate in the Plan. After the 30-day period expires, or after any shorter time  period as agreed to by the Participant and the Committee, the latest election made  by the Participant during that period becomes irrevocable. Such election shall then  be effective as of the first payroll period commencing following the date the  Participation Agreement becomes irrevocable. Whether a Participant is treated as  newly eligible for participation under this Section shall be determined in  accordance with Section 409A of the Code and the regulations thereunder,  including (i) rules that treat all elective deferral account balance plans as one plan,  and (ii) rules that treat a previously eligible Employee as newly eligible if the  Participant’s benefits had been previously distributed or if the Participant has been  ineligible for 24 months. For Compensation that is earned based upon a specified  

 

11 performance period (for example, an annual bonus), where a deferral election is  made under this Section but after the beginning of the performance period, the  election will only apply to the portion of the Compensation equal to the total  amount of the Compensation for the service period multiplied by the ratio of the  number of days remaining in the performance period after the date the election  becomes irrevocable over the total number of days in the performance period.    4.1.4  A Participant may unilaterally modify a Participation Agreement (either to  terminate, increase or decrease future Compensation which is subject to deferral  within the percentage limits set forth in Section 4.1 of the Adoption Agreement)  by providing a written modification of the Participation Agreement to the  Committee. The modification shall become effective as of the first day of January  following the date such written modification is received by the Committee, or at  such later date as required under Section 409A of the Code.    4.1.5  If the Participant performed services continuously from the later of the  beginning of the performance period or the date upon which the performance  criteria are established through the date upon which the Participant makes an initial  deferral election, a Participation Agreement relating to the deferral of Performance-  Based Compensation may be executed and delivered to the Committee no later than  the date which is 6 months prior to the end of the performance period, provided that  in no event may an election to defer Performance-Based Compensation be made  after such Compensation has become readily ascertainable.    4.1.6  If the Employer has a fiscal year other than the calendar year, Compensation  relating to Service in the fiscal year of the Employer (such as a bonus based on the  fiscal year of the Employer), of which no amount is paid or payable during the  fiscal year, may be deferred at the Participant's election if the election to defer is  made not later than the close of the Employer's fiscal year next preceding the first  fiscal year in which the Participant performs any services for which such  Compensation is payable.    4.1.7  Compensation payable after the last day of the Participant's taxable year  solely for services provided during the final payroll period containing the last day  of the Participant's taxable year (i.e., generally December 31) is treated for  purposes of this Section 4.1 as Compensation for services performed in the  subsequent taxable year.    4.1.8  The Committee may from time to time establish policies or rules consistent  with the requirements of Section 409A of the Code to govern the manner in which  Participant Deferral Credits may be made.    4.1.9  If a Participant becomes Disabled all currently effective deferral elections  for such Participant shall be cancelled. At the time the participant is no longer  Disabled, subsequent elections to defer future compensation will be permitted  under this Section 4.  

 

12   4.1.10  If a Participant applies for and receives a distribution on account of an  Unforeseeable Emergency, all currently effective deferral elections for such  Participant shall be cancelled. Subsequent elections to defer future compensation  will be permitted under this Section 4. Furthermore, a Participant may apply to the  Committee to cancel all deferral elections due to an Unforeseeable Emergency.    4.2 Employer Credits. If designated by the Employer in the Adoption Agreement,  the Employer shall cause the Committee to credit to the Deferred Compensation Account of  each Active Participant an Employer Credit as determined in accordance with the Adoption  Agreement. A Participant must make distribution elections with respect to any Employer  Credits credited to the Deferred Compensation Account by the deadline that would apply under  Section 4.1 for distribution elections with respect to Participant Deferral Credits credited at the  same time, on a Participation Agreement that is timely executed and delivered to the Committee  pursuant to Section 4.1. If no distribution election is made, vested amounts in the Deferred  Compensation Account will be distributed in a lump sum upon the earliest of any Qualifying  Distribution Event limited to Separation from Service, Disability, Death or Change in Control.  4.3. Deferred Compensation Account. All Participant Deferral Credits and Employer  Credits shall be credited to the Deferred Compensation Account of the Participant as provided  in Section 8.      Section 5.  Qualifying Distribution Events    5.1  Separation from Service. If the Participant Separates from Service with the  Employer, the vested balance in the Deferred Compensation Account shall be paid to the  Participant by the Employer as provided in Section 7. Notwithstanding the foregoing, no  distribution shall be made earlier than six months after the date of Separation from Service  

 

13 (or, if earlier, the date of death) with respect to a Participant who as of the date of Separation  from Service is a Specified Employee of a corporation (or a member of such corporation's  controlled group) the stock in which is traded on an established securities market (either foreign  or domestic) or otherwise. Any payments to which such Specified Employee would be entitled  during the first six months following the date of Separation from Service shall be accumulated  and paid on the first day of the seventh month following the date of Separation from Service,  and shall be adjusted for deemed investment gain and loss incurred during the six month period.   5.2 Disability. If the Employer designates in the Adoption Agreement that  distributions are permitted under the Plan when a Participant becomes Disabled, and the  Participant becomes Disabled while in Service, the vested balance in the Deferred Compensation  Account shall be paid to the Participant by the Employer as provided in Section 7.  5.3 Death. If the Participant dies while in Service, the Employer shall pay a benefit  to the Participant's Beneficiary in the amount of the vested balance in the Deferred Compensation  Account and any additional amount designated in the Adoption Agreement.  Payment of such  benefit shall be made by the Employer as provided in Section 7.  5.4 In-Service Distributions. If the Employer designates in the Adoption Agreement  that in-service distributions are permitted under the Plan, a Participant may designate in the  Participation Agreement to have a specified amount credited to the Participant's In-Service  Account for in-service distributions at the date specified by the Participant. In no event may an  in- service distribution of an amount be made before the date that is two years after the first day  of the year in which any deferral election to such In-Service Account became effective.  Notwithstanding the foregoing, if a Participant incurs a Qualifying Distribution Event prior to the  date on which the entire balance in the In-Service Account has been distributed, then the vested  

 

14 balance in the In-Service Account on the date of the Qualifying Distribution Event shall be paid  as provided under Section 7.1 for payments on such Qualifying Distribution Event.  5.5 Change in Control Event. If the Employer designates in the Adoption Agreement  that distributions are permitted under the Plan upon the occurrence of a Change in Control Event,  the Participant may designate in the Participation Agreement to have the vested balance in the  Deferred Compensation Account paid to the Participant upon a Change in Control Event by the  Employer as provided in Section 7.  5.6 Unforeseeable Emergency. If the Employer designates in the Adoption  Agreement that distributions are permitted under the Plan upon the occurrence of an  Unforeseeable Emergency event, a distribution from the Deferred Compensation Account may  be made to a Participant in the event of an Unforeseeable Emergency, subject to the following  provisions:  5.6.1  A Participant may, make an application to the Committee to cancel all active  deferral elections or to cancel deferral elections and receive a distribution in a lump  sum of all or a portion of the vested balance in the Deferred Compensation Account  (determined as of the date the distribution, if any, is made under this Section 5.6)  because of an Unforeseeable Emergency. A distribution because of an  Unforeseeable Emergency shall not exceed the amount required to satisfy the  Unforeseeable Emergency plus amounts necessary to pay taxes reasonably  anticipated as a result of such distribution, after taking into account the extent to  which the Unforeseeable Emergency may be relieved through reimbursement or  compensation by insurance or otherwise or by liquidation of the Participant's assets  (to the extent the liquidation of such assets would not itself cause severe financial  hardship) or by stopping current deferrals under the Plan pursuant to Section 4.1.10.    5.6.2  The Participant's request for a distribution on account of Unforeseeable  Emergency must be made in writing to the Committee. The request must specify  the nature of the financial hardship, the total amount requested to be distributed  from the Deferred Compensation Account, and the total amount of the actual  expense incurred or to be incurred on account of the Unforeseeable Emergency.    5.6.3  If a cancellation of deferral elections is approved such cancellation will be  effective as soon as practicable.  If a distribution under this Section 5.6 is approved  by the Committee, such distribution will be made as soon as practicable following  

 

15 the date it is approved. The processing of the request shall be completed as soon  as practicable from the date on which the Committee receives the properly  completed written request for a distribution on account of an Unforeseeable  Emergency. If a Participant's Separation from Service occurs after a request is  approved in accordance with this Section 5.6.3, but prior to distribution of the full  amount approved, the approval of the request shall be automatically null and void  and the benefits which the Participant is entitled to receive under the Plan shall be  distributed in accordance with the applicable distribution provisions of the Plan.    5.6.4  The Committee may from time to time adopt additional policies or rules  consistent with the requirements of Section 409A of the Code to govern the manner  in which such distributions may be made so that the Plan may be conveniently  administered.        Section 6.  Vesting    A Participant shall be fully vested in the portion of the Deferred Compensation Account  attributable to Participant Deferral Credits, and all income, gains and losses attributable thereto.  A Participant shall become fully vested in the portion of the Deferred Compensation Account  attributable to Employer Credits, and income, gains and losses attributable thereto, in accordance  with the vesting schedule and provisions designated by the Employer in the Adoption  Agreement.  Once a Participant achieves vesting on an Employer Credit, it cannot be reduced or  eliminated.  If Change in Control was elected as a vesting event in the Adoption Agreement  participants accounts shall be fully vested upon a Change in Control, however new vesting  schedules may be applied to future Employer Credits. If a Participant's Deferred Compensation  Account is not fully vested upon Separation from Service, the portion of the Deferred  Compensation Account that is not fully vested shall be forfeited.         

 

16 Section 7.  Distribution Rules    7.1 Payment Options. The Employer shall designate in the Adoption Agreement the  payment options which may be elected by the Participant.  The Participant may at such time elect  a method of payment for Qualifying Distribution Events as specified in the Adoption Agreement.  If the Participant is permitted by the Employer in the Adoption Agreement to elect different  payment options and does not make a valid election, the vested balance in the Deferred  Compensation Account will be distributed as a lump sum upon the Qualifying Distribution Event.  Notwithstanding the foregoing, if certain Qualifying Distribution Events occur prior to  the date on which the vested balance of a Participant's Deferred Compensation Account is  completely paid pursuant to this Section 7.1 following the occurrence of certain Qualifying  Distribution Events, the following rules apply:  7.1.1 If the currently effective Qualifying Distribution Event is a Separation from  Service or Disability, and the Participant subsequently dies, the remaining unpaid  vested balance of a Participant's Deferred Compensation Account shall be paid as a  lump sum.    7.1.2 If the currently effective Qualifying Distribution Event is a Change in  Control Event, and any subsequent Qualifying Distribution Event occurs (except an  In-Service Distribution described in Section 2.29(iv)), the remaining unpaid vested  balance of a Participant's Deferred Compensation Account shall be paid as provided  under Section 7.1 for payments on such subsequent Qualifying Distribution Event.    7.2 Timing of Payments. Payment shall be made in the manner elected by the  Participant and shall commence as soon as practicable after the distribution date specified for the  Qualifying Distribution Event. Distribution shall be no later than within 60 days following the day after  the Qualifying Distribution Event. Such payment shall not be deemed late if the payment is made  on or before the later of (i) December 31 of the calendar year in which the Qualifying  Distribution Event occurs, or (ii) the date that is 2-1/2 months after the Qualifying Distribution  

 

17 Event occurs. Participants shall not have any influence as to the tax year or timing of the  distribution.  For each payment, the Committee must specify a date for the Deferred  Compensation Account(s) to be valued. In the event the Participant fails to make a valid election  of the payment method, the distribution will be made in a single lump sum payment as soon as  practicable after the Qualifying Distribution Event. A payment may be further delayed to the  extent permitted in accordance with regulations and guidance under Section 409A of the Code.   7.3 Installment Payments. If the Participant elects to receive installment payments  upon a Qualifying Distribution Event, the payment of each installment shall be made on the  anniversary of the date of the first installment payment, and the amount of the installment shall  be adjusted on such anniversary for credits or debits to the Participant's account pursuant to  Section 8 of the Plan. Such adjustment shall be made by dividing the balance in the Deferred  Compensation Account on such date by the number of installments remaining to be paid  hereunder; provided that the last installment due under the Plan shall be the entire amount  credited to the Participant's account on the date of payment.  7.4 De Minimis Amounts. Notwithstanding any payment election made by the  Participant, if the Employer designates a pre-determined de minimis amount in the Adoption  Agreement, the vested balance in all Deferred Compensation Accounts of the Participant will be  distributed in a single lump sum payment if at the time of a permitted Qualifying Distribution  Event the vested balance does not exceed such pre-determined de minimis amount; provided,  however, that such distribution will be made only where the Qualifying Distribution Event is a  Separation from Service, death, Disability, or Change in Control Event. In addition, the Employer  may distribute a Participant's vested balance in all of the Participant’s Deferred Compensation  Accounts at any time if the balance does not exceed the limit in Section 402(g)(1)(B) of the Code  

 

18 and results in the termination of the Participant's entire interest in the Plan as provided under  Section 409A of the Code.  7.5 Subsequent Elections. With the consent of the Committee, a Participant may  delay or change the method of payment of the Deferred Compensation Account subject to the  following requirements:  7.5.1  The new election may not take effect until at least 12 months after the date  on which the new election is made.    7.5.2  If the new election relates to a payment for a Qualifying Distribution Event  other than the death of the Participant, the Participant becoming Disabled, or an  Unforeseeable Emergency, the new election must provide for the deferral of the  payment for a period of at least five years from the date such payment would  otherwise have been made.    7.5.3  If the new election relates to a payment from the In-Service Account, the  new election must be made at least 12 months prior to the date of the first scheduled  payment from such account.    For purposes of this Section 7.5 and Section 7.6, a payment is each separately identified amount  to which the Participant is entitled under the Plan; provided, that entitlement to a series of  installment payments is treated as the entitlement to a single payment.  7.6  Acceleration Prohibited. The acceleration of the time or schedule of any payment  due under the Plan is prohibited except as expressly provided in regulations and administrative  guidance promulgated under Section 409A of the Code (such as accelerations for domestic  relations orders and employment taxes). It is not an acceleration of the time or schedule of  payment if the Employer waives or accelerates the vesting requirements applicable to a benefit  under the Plan.   7.7 Residual Distributions. If calculation of the amount of any credit to a Participant’s  Deferred Compensation Account is not administratively practicable due to events beyond the  

 

19 control of the Employer, payments may be made to the Participant for residual amounts  contributed to or remaining in a Deferred Compensation Account after payments under the  provisions of this Section 7 have commenced or been completed. The residual amount shall be  credited to the Deferred Compensation Account when the calculation of the amount becomes  administratively practicable. Examples of residual amounts include, but are not limited to,  additional investment returns credited after payment (due to dividends or pricing changes) or  additional contributions made after payment (such as an annual bonus deferral or an Employer  Credit). Payments that would have been made had the residual amount been calculable at the  benefit commencement date shall be made up as soon as practicable after crediting to the  Deferred Compensation Account, in no case later than the end of the year in which calculation  of the amount becomes administratively practicable.  7.8 Ineffective Deferrals. If a Participant deferral election under Section 4 to contribute  to an In-Service Account carries over to a subsequent year (an evergreen election) and the  deferral election is ineffective (i.e., the distribution election would cause payment in the current  or prior years), the amount deferred will be credited to a Deferred Compensation Account that is  not an In-Service Account. If the Participant only has one account of this type, the amount  deferred will be credited to that account. If the Participant has multiple accounts of this type, and  one of the accounts has a lump sum at Separation from Service distribution election, the amount  deferred will be credited to that account. If the Participant has multiple accounts of this type and  does not have an account with a lump sum at Separation from Service distribution election, one  will be established with a lump sum at Separation from Service distribution election and the  amount deferred will be credited to this account.    

 

20 Section 8.  Accounts; Deemed Investment; Adjustments to Account    8.1 Accounts. The Committee shall establish a book reserve account, entitled the  "Deferred Compensation Account," on behalf of each Participant. The Committee shall also  establish an In-Service Account as a part of the Deferred Compensation Account of each  Participant, if applicable. The amount credited to the Deferred Compensation Account shall be  adjusted pursuant to the provisions of Section 8.3.  8.2 Deemed Investments. The Deferred Compensation Account of a Participant shall  be credited with an investment return determined as if the account were invested in one or more  investment funds made available by the Committee. The Participant shall elect the investment  funds in which the Participant’s Deferred Compensation Account shall be deemed to be invested.  Such election shall be made in the manner prescribed by the Committee and shall take effect  upon the entry of the Participant into the Plan. The investment election of the Participant shall  remain in effect until a new election is made by the Participant. In the event the Participant fails  for any reason to make an effective election of the investment return to be credited to the account,  the investment return shall be determined by the Committee.  8.3 Adjustments to Deferred Compensation Account. With respect to each Participant  who has a Deferred Compensation Account under the Plan, the amount credited to such account  shall be adjusted by the following debits and credits, at the times and in the order stated:  8.3.1  The Deferred Compensation Account shall be debited each business day with  the total amount of any payments made from such account since the last preceding  business day. Unless otherwise specified by the Employer, each deemed investment  fund will be debited pro-rata based on the value of the investment funds as of the  end of the preceding business day.    8.3.2  The Deferred Compensation Account shall be credited on each Crediting  Date with the total amount of any Participant Deferral Credits and Employer  Credits to such account since the last preceding Crediting Date.  

 

21   8.3.3  The Deferred Compensation Account shall be credited or debited on each day  securities are traded on a national stock exchange with the amount of deemed  investment gain or loss resulting from the performance of the deemed investment  funds elected by the Participant in accordance with Section 8.2. The amount of  such deemed investment gain or loss shall be determined by the Committee and  such determination shall be final and conclusive upon all concerned.        Section 9.  Administration by Committee    9.1 Membership of Committee. If the Committee consists of individuals appointed by  the Board, they will serve at the pleasure of the Board. Any member of the Committee may  resign, and any successor shall be appointed by the Board.  9.2 General Administration. The Committee shall be responsible for the operation and  administration of the Plan and for carrying out its provisions. The Committee shall have the full  authority and discretion to make, amend, interpret, and enforce all appropriate rules and  regulations for the administration of this Plan and decide or resolve any and all questions,  including interpretations of this Plan, as may arise in connection with this Plan. Any such action  taken by the Committee shall be final and conclusive on any party. To the extent the Committee  has been granted discretionary authority under the Plan, the Committee’s prior exercise of such  authority shall not obligate it to exercise its authority in a like fashion thereafter. The Committee  shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and  reports furnished by any actuary, accountant, controller, counsel or other person employed or  engaged by the Employer with respect to the Plan. The Committee may, from time to time,  employ agents and delegate to such agents, including Employees of the Employer, such  administrative or other duties as it sees fit.  9.3  Indemnification. To the extent not covered by insurance, the Employer shall  

 

22 indemnify the Committee, each Employee, officer, director, and agent of the Employer, and all  persons formerly serving in such capacities, against any and all liabilities or expenses, including  all legal fees relating thereto, arising in connection with the exercise of duties and responsibilities  with respect to the Plan, provided however that the Employer shall not indemnify any person  for liabilities or expenses due to that person’s own gross negligence or willful misconduct.    Section 10.  Contractual Liability, Trust    10.1 Contractual Liability. Unless otherwise elected in the Adoption Agreement, the  Company shall be obligated to make all payments hereunder. This obligation shall constitute a  contractual liability of the Company to the Participants, and such payments shall be made from  the general funds of the Company. The Company shall not be required to establish or maintain  any special or separate fund, or otherwise to segregate assets to assure that such payments shall  be made, and the Participants shall not have any interest in any particular assets of the Company  by reason of its obligations hereunder. To the extent that any person acquires a right to receive  payment from the Company under the Plan, such right shall be no greater than the right of an  unsecured creditor of the Company.    10.2 Trust. The Employer may establish a trust to assist it in meeting its obligations  under the Plan. Any such trust shall conform to the requirements of a grantor trust under Revenue  Procedures 92-64 and 92-65 and at all times during the continuance of the trust the principal and  income of the trust shall be subject to claims of general creditors of the Employer under federal  and state law. The establishment of such a trust would not be intended to cause Participants to  realize current income on amounts contributed thereto, and the trust would be so interpreted and  administered.  

 

23 Section 11. Allocation of Responsibilities The persons responsible for the Plan and the duties and responsibilities allocated to each  are as follows:  11.1 Board.    (i)     To amend the Plan;  (ii) To appoint and remove members of the Committee; and  (iii) To terminate the Plan as permitted in Section 14.    11.2 Committee.  (i) To designate Participants;  (ii) To interpret the provisions of the Plan and to determine the rights of the  Participants under the Plan, except to the extent otherwise provided in Section 16  relating to claims procedure;    (iii) To administer the Plan in accordance with its terms, except to the extent powers to  administer the Plan are specifically delegated to another person or persons as provided  in the Plan;    (iv) To account for the amount credited to the Deferred Compensation Account of a  Participant;    (v) To direct the Employer in the payment of benefits;    (vi) To file such reports as may be required with the United States Department of  Labor, the Internal Revenue Service and any other government agency to which reports  may be required to be submitted from time to time; and      (vii) To administer the claims procedure to the extent provided in Section 16.  Section 12.  Benefits Not Assignable; Facility of Payments    12.1 Benefits Not Assignable. No portion of any benefit credited or paid under the Plan  with respect to any Participant shall be subject in any manner to anticipation, alienation, sale,  transfer, assignment, pledge, encumbrance or charge, and any attempt so to anticipate, alienate,  sell, transfer, assign, pledge, encumber or charge the same shall be void, nor shall any portion of  

 

24 such benefit be in any manner payable to any assignee, receiver or any one trustee.  12.2 Plan-Approved Domestic Relations Orders. The Committee shall establish  procedures for determining whether an order directed to the Plan is a Plan- Approved Domestic  Relations Order. If the Committee determines that an order is a Plan- Approved Domestic  Relations Order, the Committee shall cause the payment of amounts pursuant to or segregate a  separate account as provided by (and to prevent any payment or act which might be inconsistent  with) the Plan-Approved Domestic Relations Order notwithstanding Section 12.1.  12.3 Payments to Minors and Others. If any individual entitled to receive a payment  under the Plan shall be physically, mentally or legally incapable of receiving or acknowledging  receipt of such payment, the Committee, upon the receipt of satisfactory evidence of incapacity  and satisfactory evidence that another person or institution is maintaining custody of that person  and that no guardian or committee has been appointed, may cause any payment otherwise payable  to that person to be made to such person or institution so maintaining custody. Payment to such  person or institution shall be in full satisfaction of all claims by or through the Participant to the  extent of the amount thereof.  Section 13.  Beneficiary    The Participant's Beneficiary shall be the person, persons, entity or entities designated by  the Participant on the Beneficiary designation form provided by and filed with the Committee or  its designee. If the Participant does not designate a Beneficiary, the Beneficiary shall be the  Surviving Spouse. If the Participant does not designate a Beneficiary and has no Surviving  Spouse, the Beneficiary shall be the Participant's estate. The designation of a Beneficiary may  be changed or revoked only by filing a new Beneficiary designation form with the Committee or  its designee. If a Beneficiary (the "primary Beneficiary") is receiving or is entitled to receive  

 

25 payments under the Plan and dies before receiving all of the payments due, the balance to which  the Beneficiary is entitled shall be paid to the contingent Beneficiary, if any, named in the  Participant's current Beneficiary designation form. If there is no contingent Beneficiary, the  balance shall be paid to the estate of the primary Beneficiary. Any Beneficiary may disclaim all  or any part of any benefit to which such Beneficiary shall be entitled hereunder by filing a written  disclaimer with the Committee before payment of such benefit is to be made. Such a disclaimer  shall be made in a form satisfactory to the Committee and shall be irrevocable when filed. Any  benefit disclaimed shall be payable from the Plan in the same manner as if the Beneficiary who  filed the disclaimer had predeceased the Participant.    Section 14.  Amendment and Termination of Plan    The Employer may amend any provision of the Plan or terminate the Plan at any time;  provided, that in no event shall such amendment or termination reduce the balance in any  Participant's Deferred Compensation Account, including reduction in vesting percentage, as of  the date of such amendment or termination, nor shall any such amendment materially adversely  affect the Participant relating to the payment of such Deferred Compensation Account.  Notwithstanding the foregoing, the following special provisions shall apply:  14.1 Termination and liquidation of the Plan in the Discretion of the Employer. The  Employer in its discretion may terminate the Plan and distribute vested benefits in a single lump  sum to Participants subject to the following requirements and any others specified under Section  409A of the Code:  14.1.1 All arrangements sponsored by the Employer that would be aggregated  with the Plan under Section 1.409A-l(c) of the Treasury Regulations are terminated.    14.1.2 No payments other than payments that would be payable under the terms  

 

26 of the Plan if the termination had not occurred are made within 12 months of the  termination date.    14.1.3 All benefits under the Plan are paid within 24 months of the termination  date.    14.1.4 The Employer does not adopt a new arrangement that would be aggregated  with the Plan under Section 1.409A-1(c) of the Treasury Regulations providing for  the deferral of compensation at any time within 3 years following the date of  termination of the Plan.    14.1.5 The termination does not occur proximate to a downturn in the financial  health of the Employer.    Distribution of benefits shall occur in the same tax year for all Participants.    14.2 Termination and liquidation of the Plan Upon Change in Control Event. If the  Employer terminates the Plan within thirty days preceding or twelve months following a Change  in Control Event, the vested Deferred Compensation Account of each Participant shall become  payable to the Participant in a lump sum within twelve months following the date of termination,  subject to the requirements of Section 409A of the Code. Distribution of benefits shall occur in  the same tax year for all Participants.  14.3 Termination and liquidation of the Plan upon Corporate Dissolution.  The Plan  may be terminated within 12 months of a corporate dissolution taxed under Section 331, or with  the approval of a bankruptcy court provided the amounts deferred under the plan are included in  the Participant’s gross income as required under Section 409A of the Code.  Section 15. Communication to Participants The Employer shall make a copy of the Plan available for inspection by Participants and  Beneficiaries during reasonable hours at the principal office of the Employer.      

 

27 Section 16.  Claims Procedure    The following claims procedure shall apply with respect to the Plan:    16.1 Filing of a Claim for Benefits. If a Participant or Beneficiary (the "claimant")  believes there is an entitlement to benefits by the claimant under the Plan which is not being paid  or which is not being accrued for the claimant’s benefit, the claimant shall file a written claim  therefore with the Committee.  16.2 Notification to Claimant of Decision. Within 90 days after receipt of a claim by  the Committee (or within 180 days if special circumstances require an extension of time), the  Committee shall notify the claimant of the decision with regard to the claim. In the event of such  special circumstances requiring an extension of time, there shall be furnished to the claimant  prior to expiration of the initial 90-day period written notice of the extension, which notice shall  set forth the special circumstances and the date by which the decision shall be furnished. If such  claim shall be wholly or partially denied, notice thereof shall be in writing and worded in a  manner calculated to be understood by the claimant, and shall set forth: (i) the specific reason or  reasons for the denial; (ii) specific reference to pertinent provisions of the Plan on which the denial  is based; (iii) a description of any additional material or information necessary for the claimant  to perfect the claim and an explanation of why such material or information is necessary; and  (iv) an explanation of the procedure for review of the denial and the time limits applicable to such  procedures, including a statement of the claimant's right to bring a civil action under ERISA  following an adverse benefit determination on review.  16.3 Procedure for Review. Within 60 days following receipt by the claimant of notice  of denying a claim, in whole or in part, or, if such notice shall not be given, within 60 days  following the latest date on which such notice could have been timely given, the claimant may  

 

28 appeal denial of the claim by filing a written application for review with the Committee.  Following such request for review, the Committee shall fully and fairly review the decision  denying the claim. Prior to the decision of the Committee, the claimant shall be given an  opportunity to review pertinent documents and to submit issues and comments in writing.  16.4 Decision on Review. The decision on review of a claim denied in whole or in part  by the Committee shall be made in the following manner:  16.4.1 Within 60 days following receipt by the Committee of the request for  review (or within 120 days if special circumstances require an extension of time),  the Committee shall notify the claimant in writing of its decision with regard to the  claim. In the event of such special circumstances requiring an extension of time,  written notice of the extension shall be furnished to the claimant prior to the  commencement of the extension.    16.4.2 With respect to a claim that is denied in whole or in part, the decision on  review shall set forth specific reasons for the decision, shall be written in a manner  calculated to be understood by the claimant, and shall set forth:    (i) the specific reason or reasons for the adverse determination;    (ii) specific reference to pertinent Plan provisions on which the adverse  determination is based;    (iii) a statement that the claimant is entitled to receive, upon request and free of  charge, reasonable access to, and copies of, all documents, records, and other  information relevant to the claimant’s claim for benefits; and    (iv) a statement describing any voluntary appeal procedures offered by the Plan and  the claimant’s right to obtain the information about such procedures, as well as a  statement of the claimant’s right to bring an action under ERISA section 502(a).    16.4.3 The decision of the Committee shall be final and conclusive.    16.5 Action by Authorized Representative of Claimant.  All actions set forth in this  Section 16 to be taken by the claimant may likewise be taken by a representative of the claimant  duly authorized by the claimant to act on the claimant’s behalf on such matters. The Committee  may require such evidence of the authority to act of any such representative as it may reasonably  

 

29 deem necessary or advisable.  16.6 Disability Claims.  Notwithstanding any provision of the Plan to the contrary, if  a claim for benefits is based on Disability, the following claims procedures shall apply: The  Committee shall maintain a procedure under which any Participant or Beneficiary can file a claim  for benefits under this Plan based on Disability.  16.6.1 After receiving a claim for benefits, the Committee will notify the  Participant or Beneficiary of its claim determination within 45 days of the receipt  of the claim. This period may be extended by 30 days if an extension is necessary  to process the claim due to matters beyond the control of the Committee. A written  notice of the extension, the reason for the extension and when the Committee  expects to decide the claim, will be furnished to the Participant or Beneficiary  within the initial 45-day period. This period may be extended for an additional 30  days beyond the original extension. A written notice of the additional extension,  the reason for the additional extension and when the Committee expects to decide  the claim, will be furnished to the Participant or Beneficiary within the first 30-day  extension period if an additional extension of time is needed. However, if a period  of time is extended due to a Participant or Beneficiary’s failure to submit  information necessary to decide a claim, the period for making the benefit  determination by the Committee will be tolled from the date on which the  notification of the extension is sent to the Participant or Beneficiary until the date  on which the Participant or Beneficiary responds to the request for additional  information.    16.6.2 If a claim for benefits is denied, in whole or in part, a Participant or  Beneficiary or an authorized representative, will receive a written notice of the  denial. The notice will follow the rules of 29 C.F.R. § 2560.503-1(o) for      culturally and linguistically appropriate notices and will be written in a manner calculated  to be understood by the Participant or Beneficiary. The notice will include:    (i) the specific reason(s) for the denial,    (ii)  references to the specific Plan provisions on which the benefit determination  was based,    (iii) a description of any additional material or information necessary to perfect a  claim and an explanation of why such information is necessary,    (iv) a description of the Committee’s appeals procedures and applicable time  limits, including, to the extent applicable, a statement of the right to bring a civil  action under section 502(a) of ERISA following an adverse benefit determination  on review,    

 

30 (v) a discussion of the decision, including an explanation of the basis for  disagreeing with or not following: (i) the views presented by the claimant to the  Committee of health care professionals treating the claimant and vocational  professionals who evaluated the claimant; (ii) the views of medical or vocational  experts whose advice was obtained on behalf of the Committee in connection with  a claimant’s adverse benefit determination, without regard to whether the advice  was relied upon in making the benefit determination; and (iii) a disability  determination regarding the claimant presented by the claimant to the Committee  made by the Social Security Administration,    (vi) if the determination is based on medical necessity or experimental treatment  or similar exclusion or limit, either an explanation of the scientific or clinical  judgment for the determination, applying the terms of the Plan to the relevant  medical circumstances, or a statement that such explanation will be provided free  of charge upon request,    (vii) either the specific internal rules, guidelines, protocols, standards or other  similar criteria of the Plan relied upon in making the adverse benefit determination,  or a statement that such rules, guidelines, protocols, standards, or other similar  criteria of the Plan do not exist, and    (viii) a statement that the Participant or Beneficiary is entitled to receive, upon  request and free of charge, reasonable access to, and copies of, all documents,  records, and other information relevant to the claim for benefits.    16.6.3 If a claim for benefits is denied, a Participant, Beneficiary, or  representative, may appeal the denied claim in writing within 180 days of receipt  of the written notice of denial. The Participant or Beneficiary may submit any  written comments, documents, records and any other information relating to the  claim. Upon request, the Participant or Beneficiary will also have access to, and the  right to obtain copies of, all documents, records and information relevant to the  claim free of charge.    16.6.4 A full review of the information in the claim file and any new information  submitted to support the appeal will be conducted. The claim decision will be made  by a first review appeals committee appointed by the Employer. This committee  will consist of individuals who were not involved in the initial benefit  determination, nor will such individuals be subordinate to any person involved in  the initial benefit determination. This review will not afford any deference to the  initial benefit determination.    16.6.5 If the initial adverse decision was based in whole or in part on a medical  judgment, the first review appeals committee will consult with a healthcare  professional who has appropriate training and experience in the field of medicine  involved in the medical judgment, was not consulted in the initial adverse benefit  determination and is not a subordinate of the healthcare professional who was  consulted in the initial adverse benefit determination.  

 

31   16.6.6 Before an adverse benefit determination on review is issued, the first review  appeals committee will provide the Participant or Beneficiary, free of charge, with  any new or additional evidence considered, relied upon, or generated by the  committee or other person making the benefit determination (or at the direction of  the committee or such other person) in connection with the claim. Such evidence  will be provided as soon as possible and sufficiently in advance of the date on  which the notice of adverse benefit determination on review is required to be  provided to give the Participant or Beneficiary a reasonable opportunity to respond  prior to that date.    16.6.7 Before the first review appeals committee issues an adverse benefit  determination on review based on a new or additional rationale, the committee will  provide the Participant or Beneficiary, free of charge, with the rationale. The  rationale will be provided as soon as possible and sufficiently in advance of the date  on which the notice of adverse benefit determination on review is required to be  provided to give the Participant or Beneficiary a reasonable opportunity to respond  prior to that date.    16.6.8 The first review appeals committee will make a determination on an  appealed claim within 45 days of the receipt of an appeal request. This period may  be extended for an additional 45 days if the committee determines that special  circumstances require an extension of time. A written notice of the extension, the  reason for the extension and the date that the committee expects to render a decision  will be furnished to the Participant or Beneficiary within the initial 45-day period.  However, if the period of time is extended due to a Participant’s or Beneficiary’s  failure to submit information necessary to decide the appeal, the period for making  the benefit determination will be tolled from the date on which the notification of  the extension is sent until the date on which the Participant or Beneficiary responds  to the request for additional information.    16.6.9 If the claim on appeal is denied in whole or in part, a Participant or  Beneficiary will receive a written notification of the denial. The notice will follow  the rules of 29 C.F.R. § 2560.503-1(o) for culturally and linguistically appropriate  notices and will be written in a manner calculated to be understood by the claimant.  The notice will include:      (i) the specific reason(s) for the adverse determination,    (ii) references to the specific Plan provisions on which the determination was  based,    (iii) a statement regarding the right to receive upon request and free of charge  reasonable access to, and copies of, all records, documents and other information  relevant to the benefit claim,    (iv) a description of the first review appeals committee’s review procedures and  

 

32 applicable time limits, including a statement of the right to bring a civil action  under section 502(a) of ERISA following an adverse benefit determination on  review,    (v) a discussion of the decision, including an explanation of the basis for  disagreeing with or not following: (i) the views presented by the claimant to the  committee of health care professionals treating the claimant and vocational  professionals who evaluated the claimant; (ii) the views of medical or vocational  experts whose advice was obtained by or on behalf of the committee in connection  with a claimant’s adverse benefit determination, without regard to whether the  advice was relied upon in making the benefit determination; and (iii) a disability  determination regarding the claimant presented by the claimant to the committee  made by the Social Security Administration,    (vi) if the determination is based on medical necessity or experimental treatment or  similar exclusion or limit, either an explanation of the scientific or clinical  judgment for the determination, applying the terms of the Plan to the relevant  medical circumstances, or a statement that such explanation will be provided free  of charge upon request, and    (vii) either the specific internal rules, guidelines, protocols, standards or other  similar criteria of the Plan relied upon in making the adverse benefit determination,  or a statement that such rules, guidelines, protocols, standards, or other similar  criteria of the Plan do not exist.    16.6.10 If the appeal of the benefit claim denial is denied, a Participant,  Beneficiary, or representative, may make a second appeal of the denial in writing  to the Committee within 180 days of the receipt of the written notice of denial. The  Participant or Beneficiary may submit with the second appeal any written  comments, documents, records and any other information relating to the claim.  Upon request, the Participant or Beneficiary will also have access to, and the right  to obtain copies of, all documents, records and information relevant to the claim  free of charge.    16.6.11 Upon receipt of the second appeal, a full review of the information in the  claim file and any new information submitted to support the appeal will be  conducted. The claim decision will be made by a second review appeals committee  appointed by the Employer. This committee will consist of individuals who were  not involved in the initial benefit determination or the first review appeals  committee, nor will such individuals be subordinate to any person involved in the  initial benefit or first appeal determination.    16.6.12 If the first appeal was based in whole or in part on a medical judgment,  the second appeals review committee will consult with a healthcare professional  who has appropriate training and experience in the field of medicine involved in  the medical judgment, was not consulted in the initial adverse benefit  determination nor in the first appeal and is not a subordinate of the healthcare  

 

33 professional(s) consulted in the initial adverse benefit determination and first  appeal.    16.6.13 Before the second appeals review committee issues a denial of the second  claim appeal, the committee will provide the Participant or Beneficiary, free of  charge, with any new or additional evidence considered, relied upon, or generated  by the committee or other person making the benefit determination (or at the  direction of the committee or such other person) in connection with the claim. Such  evidence will be provided as soon as possible and sufficiently in advance of the  date on which the notice of adverse benefit determination on review is required to  be provided to give the Participant or Beneficiary a reasonable opportunity to respond  prior to that date.    16.6.14 Before the second review appeals committee issues a denial of the second  claim appeal based on a new or additional rationale, the committee will provide  the Participant or Beneficiary, free of charge, with the rationale. The rationale will  be provided as soon as possible and sufficiently in advance of the date on which the  notice of adverse benefit determination on review is required to be provided to give  the Participant or Beneficiary a reasonable opportunity to respond prior to that date.    16.6.15 The second appeals review committee will make a determination on the  second claim appeal within 45 days of the receipt of the appeal request. This period  may be extended for an additional 45 days if the committee determines that special  circumstances require an extension of time. A written notice of the extension, the  reason for the extension and the date that the committee expects to render a  decision will be furnished to the Participant or Beneficiary within the initial 45-day  period. However, if the period of time is extended due to the Participant’s or  Beneficiary’s failure to submit information necessary to decide the appeal, the  period for making the benefit determination will be tolled from the date on which  the notification of the extension is sent until the date on which the Participant or  Beneficiary responds to the request for additional information.    16.6.16 If the claim on appeal is denied in whole or in part for a second time, the  Participant or Beneficiary will receive a written notification of the denial. The  notice will follow the rules of 29 C.F.R. § 2560.503-1(o) for culturally and  linguistically appropriate notices and will be written in a manner calculated to be  understood by the applicant. The notice will include the same information that was  included in the first adverse determination letter and will identify the contractual  limitations period that applies to the Participant’s or Beneficiary’s right to bring an  action under section 502(a) of ERISA including the calendar date on which the  contractual limitations period expires for the claim.    16.6.17 A claimant may not commence a judicial proceeding against any person,  including the Committee, the Employer, the Board, the first or second appeals  review committee(s), or any other person or committee, with respect to a claim for  benefits without first exhausting the claims procedures set forth in the preceding  paragraphs. No suit or legal action contesting in whole or in part any denial of  

 

34 benefits under the Plan shall be commenced later than the earlier of (i) the first  anniversary of (A) the date of the notice of the Committee’s final decision on  appeal, or (B) if the claimant fails to request any level of administrative review  within the timeframe permitted under this Section 16.6, the deadline for requesting  the next level of administrative review, and (ii) the last date on which such legal  action could be commenced under the applicable statute of limitations under ERISA  (including, for this purpose, any applicable state statute of limitations that applies  under ERISA to such legal action).    16.6.18 A claimant has the right to request a written explanation of any violation  of these claims procedures. The Committee will provide an explanation within 10  days of the request.       Section 17.  Miscellaneous Provisions    17.1 Set off. The Employer may at any time offset a Participant's Deferred  Compensation Account by an amount up to $5,000 to collect the amount of any loan, cash  advance, extension of other credit or other obligation of the Participant to the Employer that is  then due and payable in accordance with the requirements of Section 409A of the Code.  17.2 Notices. Each Participant who is not in Service and each Beneficiary shall be  responsible for furnishing the Committee or its designee with the current address, and direct  deposit information if desired, for the mailing of notices and benefit payments. Any notice  required or permitted to be given to such Participant or Beneficiary shall be deemed given if  directed to such address and mailed by regular United States mail, first class, postage prepaid. If  any benefit distribution is rejected or returned to the Employer, benefit payments will be  suspended until the Participant or Beneficiary furnishes the proper information. This provision  shall not be construed as requiring the mailing of any notice or notification otherwise permitted  to be given by posting or by other publication.  17.3 Lost Distributees. A benefit shall be deemed forfeited if the Committee is unable  to locate the Participant or Beneficiary to whom payment is due by the fifth anniversary of the  

 

35 date payment is to be made or commence; provided, that the deemed investment rate of return  pursuant to Section 8.2 shall cease to be applied to the Participant's account following the first  anniversary of such date; provided further, however, that such benefit shall be reinstated if a valid  claim is made by or on behalf of the Participant or Beneficiary for all or part of the forfeited benefit.  The  Employer and Committee will be responsible for determining whether unclaimed property laws  are applicable to forfeited benefits.  17.4 Reliance on Data. The Employer and the Committee shall have the right to rely on  any data provided by the Participant or by any Beneficiary. Representations of such data shall be  binding upon any party seeking to claim a benefit through a Participant, and the Employer and  the Committee shall have no obligation to inquire into the accuracy of any representation made  at any time by a Participant or Beneficiary.  17.5 Headings. The headings and subheadings of the Plan have been inserted for  convenience of reference and are to be ignored in any construction of the provisions hereof.  17.6 Continuation of Employment. The establishment of the Plan shall not be construed  as conferring any legal or other rights upon any Employee or any persons for continuation of  employment, nor shall it interfere with the right of the Employer to discharge any Employee  without regard to the effect thereof under the Plan.  17.7 Merger or Consolidation; Assumption of Plan. No Employer shall consolidate or  merge into or with another corporation or entity, or transfer all or substantially all of its assets to  another corporation, partnership, trust or other entity (a "Successor Entity") unless such  Successor Entity shall assume the rights, obligations and liabilities of the Employer under the  Plan and upon such assumption, the Successor Entity shall become obligated to perform the terms  and conditions of the Plan. Nothing herein shall prohibit the assumption of the obligations and  

 

liabilities of the Employer under the Plan by any Successor Entity.  17.8 Construction. The Employer shall designate in the Adoption Agreement the state  or commonwealth according to whose laws the provisions of the Plan shall be construed and  enforced, except to the extent that such laws are superseded by ERISA and the applicable  requirements of the Code.  17.9 Taxes. The Employer or other payor may withhold a benefit payment under the Plan  or a Participant's wages, or the Employer may reduce a Participant's Deferred Compensation  Account balance, in order to meet any federal, state, or local or employment tax withholding  obligations with respect to Plan benefits, as permitted under Section 409A of the Code. The  Employer or other payor shall report Plan payments and other Plan-related information to the  appropriate governmental agencies as required under applicable laws.            17.10    Administration Fees.  Any Plan or Plan related fees related to the administration  of the Plan shall be paid by the Employer.         17.11    Savings Clause.  To the extent that any of the provisions of the Plan are found by  a court of competent jurisdiction to be illegal, invalid, or unenforceable for any reason, such  provision shall be deleted, and the balance of the Plan shall not be affected.  36Document

Exhibit 10.1

THE TJX COMPANIES, INC.
FORM OF PERFORMANCE SHARE UNIT AWARD
GRANTED UNDER STOCK INCENTIVE PLAN

[    ]

This certificate evidences an award (the “Award”) of performance share units (“PSUs”) granted to the grantee named below (“Grantee”) under the Stock Incentive Plan (the “Plan”) of The TJX Companies, Inc. (the “Company”).  The Award is subject to the terms and conditions of the Plan, the provisions of which, as from time to time amended, are incorporated by reference in this certificate.  Terms defined in the Plan are used in this certificate as so defined; terms not defined in the Plan shall have the meanings specified herein. 

The Award consists of the right to receive, on the terms provided herein and in the Plan, one share of Stock with respect to each performance share unit forming part of the Award, subject to adjustment pursuant to Section 3 of the Plan. 

									
	1.	Grantee:	[    ]
	2.	Target Number of PSUs Subject to the Award:	[    ]
	3.	Date of Award:	[    ]

4.Vesting and Settlement of Award:  Except as provided in Section 5, the Award shall become earned and shall vest, if at all, as to the target number of PSUs multiplied by the product of the percentage determined under Section 4(a) (Performance conditions) multiplied by the percentage determined under Section 4(b) (Service conditions):

[    ]

As soon as practicable and in all events within [    ] days following the applicable Settlement Date, the Company shall transfer to Grantee (or, if Grantee has died, to Grantee’s Beneficiary) the shares of Stock underlying the portion of the Award that has become earned and vested hereunder.

5.Change of Control:  Upon the occurrence of a Change of Control occurring while any portion of the Award is outstanding, the following provisions shall apply:

a)Upon consummation of the Change of Control, if the Committee does not provide for Rollover Awards as described in Section 5(b) below, the Award to the extent outstanding immediately prior to consummation of the Change of Control shall be deemed earned and vested as though each of the Section 4(a) percentage and the Section 4(b) percentage was, as of immediately prior to consummation of the Change of Control, one hundred percent (100%).

b)The Committee in its discretion may, but shall not be required to, provide in connection with the Change of Control that, in lieu of the acceleration described in Section 5(a) above, the Award (including for purposes of this Section 5(b) any replacement award or any arrangement involving stock, cash or other property into which the Award may be converted or for which it may be exchanged in connection with the Change of Control) (the Award or any such replacement award or other arrangement, the “Rollover Award”) shall be continued on such terms and conditions as the Committee considers appropriate in the circumstances to reflect the transaction, subject to the following provisions of this Section 5(b).  With respect to any Rollover Award, in lieu of the treatment provided in Section 5(a) above, (i) the Section 4(a) percentage shall at all times from and after the Change of Control be deemed to be one hundred percent (100%), and (ii) Section 4(b) shall be applied without modification except that in the event of and upon a qualifying termination of Grantee’s employment occurring upon or within twenty-four months following the Change of Control, the Section 4(b) percentage shall not be less than one hundred percent (100%).  
1

For purposes of this Section 5(b), “qualifying termination” shall mean either of the following:  (i) an involuntary termination (other than for Cause) by the Company or a Subsidiary of Grantee’s employment with the Company and its Subsidiaries (including any successors thereto or affiliates of such successor) or (ii) a termination of Grantee’s employment by reason of death or Disability.  If immediately prior to the Change of Control, Grantee is party to an employment, severance or similar agreement with the Company or a Subsidiary, or is eligible to participate in a Company plan, in each case that has been approved by the Committee and that provides for severance or similar benefits upon a voluntary termination for “good reason” in connection with a change of control of the Company, a “qualifying termination” for purposes of this Section 5(b) shall also include a voluntary termination by Grantee for “good reason” (as defined in the applicable agreement or plan).  

As soon as practicable and in all events within [    ] days following the applicable Settlement Date the Company shall transfer to Grantee (or, if Grantee has died, to Grantee’s Beneficiary) the shares of Stock underlying the earned and vested portion of the Award; it being understood that if the Settlement Date is the Change of Control, the Company shall transfer such shares of Stock immediately prior to the consummation of such Change of Control.  All references to the Committee in this Section 5 shall be construed to refer to the Committee as constituted and acting prior to consummation of the Change of Control.  For the avoidance of doubt, no Committee action permitted by this Section 5 will be treated as an action requiring Grantee’s consent under Section 10 of the Plan.  

6.Termination of Employment: Subject to the provisions of Section 5, in the event of the termination of the employment of Grantee with the Company and its Subsidiaries for any reason prior to the earlier of the Determination Date and the consummation of a Change of Control: 

a)one hundred percent (100%) of the Award, less the percentage of the Award described in Section 4(b), shall be immediately and automatically forfeited upon termination of employment; and 

b)if greater than zero percent (0%), the percentage of the Award described in Section 4(b) shall (except in the event of termination due to death or Disability) remain eligible to be earned (and shall be earned, if at all) on the first to occur of (i) the consummation of the Change of Control, by applying one hundred percent (100%) as the relevant Section 4(a) percentage or (ii) the Determination Date, by applying as the relevant Section 4(a) percentage the percentage (if greater than zero) then certified or otherwise determined by the Committee, provided that any such portion of the Award that is not earned on the Determination Date and that has not previously been forfeited shall be immediately and automatically forfeited on the Determination Date.  In the event of the termination of the employment of Grantee with the Company and its Subsidiaries by reason of death or Disability occurring prior to the earlier of the Determination Date and the consummation of a Change of Control, the percentage of the Award described in Section 4(b) shall be earned as of immediately prior to such termination by applying one hundred percent (100%) as the relevant Section 4(a) percentage, provided, that if such termination by reason of death or Disability occurs after the last day of the Performance Period, the Award shall remain eligible to be earned as of the Determination Date by applying as the relevant Section 4(a) percentage the greater of (I) one hundred percent (100%) and (II) the percentage certified or otherwise determined by the Committee on the Determination Date.

With respect to any Rollover Award under Section 5(b), in the event of the termination of the employment of Grantee with the Company and its Subsidiaries prior to [    ], the portion of the Rollover Award that is not then earned and vested (determined after giving effect to any vesting provided in Section 4(b) or 5(b)) shall be immediately and automatically forfeited.  Notwithstanding the foregoing, upon a termination of Grantee’s employment for Cause (as defined in the Plan) all portions of the Award then outstanding, whether vested or unvested and whether or not earned, shall immediately and automatically be forfeited and cancelled in their entirety. For the avoidance of doubt, in determining Grantee’s entitlements, if any, under this Award, all determinations related to a 
2

termination of Grantee’s employment (including, but not limited to, the reason therefor) shall be made in accordance with Plan terms (including, but not limited to, Section 9 of the Plan or any successor provision).

7.Additional Forfeiture Conditions:  

[    ]

8.Certain Definitions:  For purposes of this Award, the following definitions shall apply:

a)“Beneficiary”:  the beneficiary or beneficiaries designated by Grantee in writing, any such designation to be in such form, and delivered prior to Grantee’s death to such person at the Company, as may be specified by the Company, or, in the absence of any surviving beneficiary so designated, the legal representative of Grantee’s estate.
 
b)“Determination Date”:  as defined in Section 4(a) above.

c)“Performance Period”:  the three-fiscal-year period beginning on [    ] and ending on [    ].

d)“Rollover Award”:  as defined in Section 5(b) above.

e)“Section 409A”:  Section 409A of the Code.

f)“Settlement Date”: the date on or following and by reference to which any vested performance share units subject to an Award are to be settled, if at all, in whole or in part, through the delivery of shares of Stock.  [    ]  

For the avoidance of doubt, in determining Grantee’s entitlements, if any, under this Award, all determinations related to Grantee’s termination of employment (including, but not limited to, the reason therefor) shall be made in accordance with Plan terms (including, but not limited to, Section 9 of the Plan or any successor provision).

9.Rights as Shareholder: Grantee shall have no voting or other shareholder rights in respect of any share of Stock subject to the Award except as provided in the following sentence.  Grantee shall have the rights of a shareholder, including without limitation dividend rights, only as to those shares of Stock, if any, that are actually delivered under the Award.

10.Unsecured Obligation; No Transfers: The Award is unfunded and unsecured, and Grantee’s rights to any shares of Stock or other property (including cash) hereunder shall be no greater than those of an unsecured general creditor of the Company. The Award may not be assigned, transferred, pledged, hypothecated or otherwise disposed of, except for disposition at death as provided above, and will automatically lapse and be forfeited upon any attempt at any such assignment, transfer, pledge, hypothecation or other disposition.

11.Section 409A: The Award and the Dividend Equivalent Payment, if any, described in Section 13 below are intended to constitute arrangements that qualify for exemption from the requirements of Section 409A and shall be construed accordingly.  Notwithstanding the foregoing, neither the Company, nor any other person acting on behalf of the Company, will be liable to Grantee or any other person by reason of any acceleration of income, or any additional tax (including any interest and penalties), asserted with respect to the Award or the Dividend Equivalent Payment by reason of the failure of the Award or the Dividend Equivalent Payment to satisfy the applicable requirements of Section 409A in form or in operation.

12.Withholding: As a condition to the grant, vesting and settlement of this Award, Grantee shall, no later than the date as of which any shares of Stock or other amounts provided hereunder first become includable in the gross income of Grantee for U.S. Federal or other income tax purposes or as wages 
3

subject to employment taxes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any national, federal, state, or local taxes of any kind required by law to be withheld with respect to such income.  The Company in its discretion may, but need not, satisfy any withholding obligation by withholding a portion of the shares of Stock to be delivered to Grantee hereunder up to the maximum extent permitted under the Plan. Grantee understands that any individual tax, social contribution, or other liability that may arise in relation to this Award is solely Grantee’s (and not the Company’s or Subsidiary’s) responsibility and that such liability may exceed any amounts withheld.  Grantee further understands that Grantee is solely responsible for filing any relevant documentation (including, without limitation, tax returns or reporting statements) that may be required in relation to this Award (including, without limitation, any such documentation related to the holding of shares of Stock or any bank or brokerage account, the subsequent sale of shares of Stock, or the receipt of any dividends). Grantee further acknowledges that the Company does not commit to and is under no obligation to structure the terms or any aspect of the Award to reduce or eliminate Grantee’s liability for taxes or other amounts due or to achieve any particular tax result. Grantee also understands that varying share of Stock or Award valuation methods may apply for purposes of tax calculations and reporting, and the Company assumes no liability in relation thereto.

13.Dividend Equivalent Payment: Upon the delivery of any shares of Stock in respect of any vested performance share units subject hereto, Grantee shall be entitled to a cash payment by the Company in an amount equal to the amount that Grantee would have received, if any, as a regular cash dividend had Grantee held such shares of Stock from the Date of Award to the date such shares of Stock are delivered hereunder, less all applicable taxes and withholding obligations. Any such payment shall be paid, if at all, without interest on the date such shares of Stock are delivered hereunder.

14.No Employment Rights or Other Entitlements:  Grantee agrees that any awards under the Plan, including this Award and these terms and conditions, do not confer upon Grantee any right to continued employment with the Company or a Subsidiary, nor do they interfere in any way with the right of the Company or a Subsidiary to terminate the employment of Grantee at any time.  Nothing contained in these terms and conditions shall be deemed to constitute or create a contract of employment, nor shall these terms and conditions constitute or create the right to remain associated with or in the employ of the Company or a Subsidiary for any particular period of time.  Furthermore, this grant is made solely at the discretion of the Company, and these terms and conditions, the Plan, and any other Plan documents (i) are not part of Grantee’s employment contract, if any, and (ii) do not guarantee either Grantee’s right to receive any future grants under the Plan or the inclusion of the value of any grants in the calculation of severance payments, if any, upon termination of employment.

15.Compliance with Law:  Notwithstanding anything to the contrary herein, the Company shall not be obligated to issue any Stock pursuant to this Award, at any time, if the offering of the Stock covered by this Award, violates or is not in compliance with any laws, rules or regulations of the United States or any state or country.  Furthermore, Grantee understands that, to the extent applicable, the laws of the country in which he/she is working at the time of grant, vesting, and/or settlement of this Award (including any rules or regulations governing securities, foreign exchange, tax, labor or other matters) may restrict or prevent settlement of this Award or may subject Grantee to additional procedural or regulatory requirements he/she is solely responsible for and will have to independently fulfill in relation to this Award, and that sales of Stock may be subject to restrictions under United States federal securities laws, and the laws, rules or regulations of any other relevant federal, state or local jurisdiction, and under Company policies including insider trading policies and procedures. Summaries of potentially applicable legal restrictions and requirements furnished in connection with the Plan, including in the Addendum and in the Prospectus for the Plan, are not intended to be exhaustive, and Grantee acknowledges that other rules may apply. The Company reserves the right to impose other requirements on Grantee’s participation in the Plan, and any Stock acquired under the Plan, to the extent the Company determines it is necessary or advisable to comply with applicable law or facilitate the administration of the Plan.

4

16.Governing Law and Forum: Grantee acknowledges that the Plan is administered in the United States and the terms and conditions of this certificate shall be governed by and interpreted, construed, and enforced in accordance with the laws of the Commonwealth of Massachusetts without regard to its or any other jurisdiction's conflicts of laws provisions. For purposes of resolving any dispute that may arise directly or indirectly from this certificate, the parties hereby submit and consent to the exclusive jurisdiction of the Commonwealth of Massachusetts in the United States and agree that any litigation shall be conducted only in the United States District Court for the District of Massachusetts or a court of the Commonwealth of Massachusetts.

17.Other:  The provisions of this Award are severable, and if any one or more of the provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.  To the extent applicable, the international and country-specific terms and conditions in the attached Addendum shall apply to this Award. By signing this Award in the space indicated below, Grantee hereby acknowledges and agrees as follows: (i) that Grantee has received the Plan text and will become a party to and be subject to the terms of the Plan; (ii) that Grantee’s abovementioned participation is voluntary and that Grantee has not been induced to participate by expectation of employment or continued employment; and (iii) that Grantee has reviewed the terms and conditions set forth in this certificate, including the attached Addendum, and that this Award shall be deemed to satisfy fully any entitlement to receive a grant or grants of any stock options, stock awards or other equity-based awards that Grantee may have under an employment or similar agreement, including but not limited to an offer letter or other contract for employment, a restrictive covenant or similar agreement, or any other agreement with, or a policy or practice of, the Company or its Subsidiaries.

                        THE TJX COMPANIES, INC.

                        BY:  
                                ______________________________
                                

Agreed:    ______________________________

Date:    
5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00328-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00328-of-00352.parquet"}]]