Document:

Exhibit 10.1

 

MAGELLAN HEALTH SERVICES, INC,

SUPPLEMENTAL ACCUMULATION PLAN

As Amended and Restated

Effective January 1, 2005

 

 

MAGELLAN HEALTH
SERVICES, INC.

SUPPLEMENTAL
ACCUMULATION PLAN

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1   DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  ACCOUNT

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.2

  	
   

  	
  ADMINISTRATOR

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.3

  	
   

  	
  BENEFICIARY

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.4

  	
   

  	
  CODE

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.5

  	
   

  	
  COMPANY

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.6

  	
   

  	
  COMPENSATION

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.7

  	
   

  	
  COMPENSATION DEFERRAL ACCOUNT

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.8

  	
   

  	
  COMPENSATION DEFERRALS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.9

  	
   

  	
  DESIGNATION DATE

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.10

  	
   

  	
  DISCRETIONARY CONTRIBUTIONS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.11

  	
   

  	
  DISCRETIONARY CONTRIBUTIONS ACCOUNT

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.12

  	
   

  	
  EFFECTIVE DATE

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.13

  	
   

  	
  ELIGIBLE EMPLOYEE

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.14

  	
   

  	
  EMPLOYER

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.15

  	
   

  	
  ENTRY DATE

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.16

  	
   

  	
  KEY EMPLOYEE

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.17

  	
   

  	
  PARTICIPANT

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.18

  	
   

  	
  PAYMENT DATE

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.19

  	
   

  	
  PLAN

  	
   

  	
  3

  

 

 i
 

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  
	
  1.20

  	
   

  	
  PLAN YEAR

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.21

  	
   

  	
  TRUST

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.22

  	
   

  	
  TRUSTEE

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.23

  	
   

  	
  VALUATION DATE

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2   ELIGIBILITY AND PARTICIPATION

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  REQUIREMENTS

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  RE-EMPLOYMENT

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  CHANGE OF EMPLOYMENT CATEGORY

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3   CONTRIBUTIONS AND CREDITS

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  EMPLOYER CONTRIBUTIONS

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  PARTICIPANT COMPENSATION DEFERRALS

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  CONTRIBUTIONS TO THE TRUST

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4   ALLOCATION OF FUNDS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  ALLOCATION OF EARNINGS OR LOSSES ON ACCOUNTS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  ACCOUNTING FOR DISTRIBUTIONS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
   

  	
  SEPARATE ACCOUNTS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.4

  	
   

  	
  INTERIM VALUATIONS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.5

  	
   

  	
  DEEMED INVESTMENT DIRECTIONS OF PARTICIPANTS

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.6

  	
   

  	
  EXPENSES

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.7

  	
   

  	
  TAXES

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5   ENTITLEMENT TO BENEFITS

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  PAYMENT DATE; SEPARATION FROM SERVICE

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.2

  	
   

  	
  SEPARATION FROM SERVICE UPON DISPOSITION OF ASSETS
  OR SUBSIDIARIES

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.3

  	
   

  	
  HARDSHIP DISTRIBUTIONS

  	
   

  	
  10

  

 

 ii
 

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  
	
  5.4

  	
   

  	
  APPLICATION TO TRUSTEE

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.5

  	
   

  	
  TREATMENT OF FORFEITURES

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.6

  	
   

  	
  RE-EMPLOYMENT OF RECIPIENT

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6   DISTRIBUTION OF BENEFITS

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  DISTRIBUTABLE AMOUNT

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  METHOD OF PAYMENT

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.3

  	
   

  	
  DEATH BENEFITS

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7   BENEFICIARIES; PARTICIPANT DATA

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  DESIGNATION OF BENEFICIARIES

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  INFORMATION TO BE FURNISHED BY PARTICIPANTS AND
  BENEFICIARIES; INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8   ADMINISTRATION

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  ADMINISTRATIVE AUTHORITY

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.2

  	
   

  	
  UNIFORMITY OF DISCRETIONARY ACTS

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.3

  	
   

  	
  LITIGATION

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.4

  	
   

  	
  CLAIMS PROCEDURE

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.5

  	
   

  	
  ACTION BY THE ADMINISTRATOR

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.6

  	
   

  	
  PARTICIPATION BY ADMINISTRATORS

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.7

  	
   

  	
  ALLOCATION OF DUTIES

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9   AMENDMENT

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  RIGHT TO AMEND

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF PLAN

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10   TERMINATION

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  TERMINATION OF SUSPENSION OF PLAN

  	
   

  	
  17

  

 

 iii
 

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  
	
  10.2

  	
   

  	
  AUTOMATIC TERMINATION OF PLAN

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.3

  	
   

  	
  SUSPENSION OF DEFERRALS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.4

  	
   

  	
  ALLOCATION AND DISTRIBUTION

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.5

  	
   

  	
  SUCCESSOR TO EMPLOYER

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11   THE TRUST

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  ESTABLISHMENT OF TRUST

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.2

  	
   

  	
  UNFUNDED STATUS OF PLAN

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12   MISCELLANEOUS

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  LIMITATIONS ON LIABILITY OF EMPLOYER

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.2

  	
   

  	
  CONSTRUCTION

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.3

  	
   

  	
  SPENDTHRIFT PROVISION

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.4

  	
   

  	
  NO EMPLOYMENT CONTRACT

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.5

  	
   

  	
  NOTICES

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.6

  	
   

  	
  CONSENT TO PLAN

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.7

  	
   

  	
  BINDING ON SUCCESSORS

  	
   

  	
  21

  

 

 iv

MAGELLAN HEALTH
SERVICES, INC.

SUPPLEMENTAL
ACCUMULATION PLAN

As Amended and
Restated

Effective as of
January 1, 2005

RECITALS

The Magellan
Health Services, Inc. Supplemental Accumulation Plan (the “Plan”) is adopted by
Magellan Health Services, Inc. (the “Company”) for the benefit of the
directors, officers and certain executive, management and other highly
compensated employees of the Company and its subsidiaries and affiliates.  The purpose of the Plan is to offer those directors
and employees an opportunity to elect to defer the receipt of compensation in
order to provide deferred compensation benefits taxable pursuant to section 451
of the Internal Revenue Code of 1986, as amended (the “Code”).  The Plan is intended to be a “top-hat” plan
(i.e., an unfunded deferred compensation plan maintained for a select group of
management or highly-compensated employees) under sections 201(2), 301(a)(3)
and 401(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”).

Accordingly, the
following Plan is adopted.

ARTICLE 1

DEFINITIONS

1.1           ACCOUNT.  Account means the balance credited to a
Participant’s or Beneficiary’s Plan account, including contribution credits and
income, gains and losses (as determined by the Administrator, in its
discretion) credited thereto.  A
Participant’s or Beneficiary’s Account shall be determined as of the Valuation
Date.

1.2           ADMINISTRATOR.  Administrator means the committee described
in Article 8, which is responsible for the administration of this Plan.

1.3           BENEFICIARY.  Beneficiary means any person or persons so
designated in accordance with the provisions of Article 7.

1.4           CODE.  Code means the Internal Revenue Code of 1986
and the regulations thereunder, as amended from time to time.

1.5           COMPANY.  Company means Magellan Health Services, Inc.
and its successors and assigns.

 

1.6           COMPENSATION.  Compensation means the total current cash
remuneration that would be payable in a Plan Year by the Employer to an
Eligible Employee with respect to his or her service for the Employer as an
employee, ignoring any election to make Compensation Deferrals under this
Plan.  In the case of a director, “Compensation”
means the compensation which would otherwise have been payable currently for
services as a member of the Board of Directors of the Company or any other
Employer, including fees payable for services as a member of a committee of the
Board.

1.7           COMPENSATION DEFERRAL ACCOUNT.  Compensation Deferral Account is defined in
Section 3.2.

1.8           COMPENSATION DEFERRALS.  Compensation Deferrals is defined in Section
3.2.

1.9           DESIGNATION DATE.  Designation Date means the date or dates as
of which a designation of deemed investment directions by an individual
pursuant to Section 4.5, or any change in a prior designation of deemed
investment directions by an individual pursuant to Section 4.5, shall become
effective.  The Designation Dates in any
Plan Year shall be the first day of each calendar quarter or such other dates
as may be designated by the Administrator.

1.10         DISCRETIONARY CONTRIBUTIONS.  Discretionary Contributions mean the
contributions made by an Employer, as described in Section 3.1(a).

1.11         DISCRETIONARY CONTRIBUTIONS ACCOUNT.  Discretionary Contributions Account means the
account established to record the Discretionary Contributions credited to a
Participant each Plan Year and the earnings, losses and expenses attributable
thereto, as described in Section 3.1.

1.12         EFFECTIVE DATE.  Effective Date means the effective date of
the Plan, which, as amended and restated, shall be January 1, 2005.

1.13         ELIGIBLE EMPLOYEE.  Eligible Employee means, for any Plan Year
(or applicable portion thereof), a director of the Company or another Employer
or a person regularly employed by an Employer, who is paid through a U.S.
payroll system, and who is determined by the Administrator to be a member of a
select group of management or highly compensated employees and who is
designated by the Company’s Board of Directors or the Company’s Chief Executive
Officer to be an Eligible Employee under the Plan.  The Company shall notify those individuals,
if any, who will be Eligible Employees for the next Plan Year, typically by
October 1 of the preceding calendar year. 
If the Company determines that an individual first becomes an Eligible
Employee during a Plan Year, the Company shall notify such individual of its
determination and of the date during the Plan Year on which the individual
shall first become an Eligible Employee. 
Solely for the purposes of this Plan, a director of the Company or
another Employer shall be deemed to be in the employment of the Company or any
other Employer so long as he or she serves in the capacity of a director by the
Company or any other Employer.

 2
 

 

1.14         EMPLOYER.  Employer means the Company and its successors
unless otherwise herein provided or any subsidiary of the Company (or its
successors) which, with the consent of the Company’s Board of Directors or the
Company’s Chief Executive Officer, assumes the obligations of an Employer
hereunder.

1.15         ENTRY DATE.  Entry Date with respect to an individual
means the first day of the first pay period following the date on which the
individual (i) first becomes an Eligible Employee and (ii) with respect to
Compensation Deferrals has made an election to defer within thirty (30) days
after such date.

1.16         KEY EMPLOYEE.  Key Employee means “key employee” as defined
in Section 416(i) of the Code, disregarding Section 416(i)(5).  Key Employees shall be determined as of
December 31 of each Plan Year, based upon compensation received in such Plan
Year, and designation of an individual as a Key Employee shall be effective as
of the immediately following April 1.

1.17         PARTICIPANT.  Participant means any person so designated in
accordance with the provisions of Article 2, including, where appropriate according
to the context of the Plan, any former employee or director who is or may
become (or whose Beneficiaries may become) eligible to receive a benefit under
the Plan.

1.18         PAYMENT DATE.  Payment Date means the fixed date, as
selected by the Administrator, as of which a Participant’s Plan benefits are to
be paid or commence to be paid to the Participant.  The Payment Date shall be a date which is as
soon as administratively practical following the Participant’s separation from
service with all Employers, provided it shall not be later than the later of
(i) the end of the calendar year in which the Participant separates from
service with all Employers, or (ii) the 15th day of the third month following the date of
the Participant’s separation from service, and provided further that a
Participant who is a Key Employee on the date of separation from service shall
not receive any payment on account of such separation from service until six
(6) months after such separation from service.

1.19         PLAN.  Plan means this Magellan Health Services,
Inc. Supplemental Accumulation Plan, as amended from time to time.

1.20         PLAN YEAR.  Plan Year means the calendar year.

1.21         TRUST.  Trust means the Trust, if any, established
pursuant to Article 11.

1.22         TRUSTEE.  Trustee means the trustee of the Trust
established pursuant to Article 11.

1.23         VALUATION DATE.  Valuation Date means the last day of each
calendar month or any other date that the Administrator, in its sole
discretion, designates as a Valuation Date.

 3
 

 

ARTICLE 2

ELIGIBILITY AND PARTICIPATION

2.1           REQUIREMENTS.  Every Eligible Employee on the Effective Date
shall be eligible to become a Participant on the Effective Date.  Every other Eligible Employee shall be
eligible to become a Participant on the first Entry Date occurring on or after
the date on which he or she becomes an Eligible Employee.  No individual shall become a Participant,
however, if he or she is not an Eligible Employee on the date his or her
participation is to begin.  No Eligible
Employee may become a Participant on a date other than January 1 unless the
Eligible Employee does not participate in any other account balance deferred
compensation plan that would be aggregated with this Plan under Section 409A of
the Code.

Participation in
the Plan is voluntary.  In order to
participate in the Plan, an otherwise Eligible Employee must make written
application in such manner as may be required by Section 3.2 and by the
Company.

2.2           RE-EMPLOYMENT.  If a Participant whose employment with the
Employer is terminated is subsequently re-employed, he or she shall become a
Participant in accordance with the provisions of Section 2.1, provided he or
she then qualifies as an Eligible Employee. 
A Participant who terminates employment with all of the Employers and is
reemployed by an Employer within the same Plan Year shall not be eligible to
make Compensation Deferrals again prior to January 1 of the following Plan
Year.

2.3           CHANGE OF EMPLOYMENT CATEGORY.  During any period in which a Participant
remains in the employ of the Employer, but ceases to be an Eligible Employee,
he or she shall not be eligible to make Compensation Deferrals hereunder.  A Participant who ceases to be an Eligible
Employee and again becomes an Eligible Employee within the same Plan Year shall
not be eligible to make Compensation Deferrals again
hereunder until January 1 of the following Plan Year.

ARTICLE 3

CONTRIBUTIONS AND CREDITS

3.1           EMPLOYER CONTRIBUTIONS.  The following contributions shall be made by
each Employer each Plan Year:

(a)           Discretionary Contributions:  The Discretionary Contributions credited to a
Participant for each Plan Year shall be an amount (if any) determined by the
Employer, in its sole and absolute discretion, and contributed by the Employer
to the Plan as a Discretionary Contribution on the Participant’s behalf.  The Employer may make Discretionary
Contributions for any Plan Year in a different amount for each Participant or
for any group of Participants and may choose to make no Discretionary
Contributions for any Participant or for any group of Participants, in its
absolute discretion.  The Discretionary
Contributions credited to a Participant for each Plan year and the subsequent
earnings, losses and expenses attributable to those contributions shall be 

 4
 

 

separately accounted for
in a Discretionary Contribution Account in the Participant’s name.  Whenever the Discretionary Contributions for
the Plan Year are so credited, they shall be credited to the Participant’s
Discretionary Contribution Account and subject to the Participant’s deemed
investment directions.

(b)           Earnings, Losses and Expenses:  The Participant’s Discretionary Contributions
Account shall be credited or debited, as applicable, as of each Valuation Date,
with the deemed earnings or losses, as applicable, and expenses attributable to
that account, as determined by the Administrator hereunder, in its sole and
absolute discretion.  The Administrator
shall have the sole and absolute discretion to allocate such deemed earnings or
losses and expenses among the Participants’ Discretionary Contributions
Accounts pursuant to such allocation rules as the Administrator deems to be
reasonable and administratively practicable.

(c)           Vesting:  A Participant shall be fully vested in
amounts credited to his or her Discretionary Contributions Account.

3.2           PARTICIPANT COMPENSATION DEFERRALS.

(a)           In General.  In accordance with rules established by the
Administrator, a Participant may elect to defer Compensation which is due to be
earned and which would otherwise be paid to the Participant; provided, however,
that (1) the Participant’s deferrals from his or her base salary shall not
exceed fifty percent (50%) of base salary, (2) the Participant’s deferrals from
sales commissions and bonuses and incentive compensation may be up to one hundred
percent (100%) of those compensation items, and (3) the minimum amount
projected to be deferred pursuant to the Participant’s deferral election(s) for
any Plan Year shall be five thousand dollars ($5,000), pro-rated on a monthly
basis in any case where the Participant’s period of participation in the Plan
for the Plan Year is less than twelve (12) months.  Notwithstanding the foregoing, in no event
shall the Compensation Deferral for any pay period during which a Participant’s
deferral election is in effect reduce the Participant’s net Compensation
(determined after subtraction of the Compensation Deferral amount) below the
amount necessary to satisfy for that pay period the aggregate employment and
withholding taxes, as well as deductions, withholdings and/or salary reductions
with respect to any employee benefit, that are applicable to the Participant’s
Compensation for that pay period. 
Amounts so deferred will be considered a Participant’s “Compensation
Deferrals.”

(b)           Timing of Election.  A Participant shall make such an election
with respect to a coming twelve (12) month Plan Year by (i) no later than
December 31st of the prior Plan
Year in the case of deferrals from regular salary, and sales bonuses and
commissions (which the Participant may earn in the subsequent Plan Year by
reason of the Employer receiving payment for such sales in the subsequent Plan
Year), and (ii) no later than June 30 of that prior Plan Year in the case of
annual incentive compensation (other than sales bonuses or commissions) earned
over a period of at least twelve (12) months, such as the Short-Term Incentive
Plan (or, if earlier, a date prior to the date such performance compensation
has become both substantially certain to be paid and readily ascertainable), or
(iii) during such other period prior to the beginning of the coming Plan 

 5
 

 

Year designated by the
Administrator.  In the first year in
which an individual becomes an Eligible Employee (and was not previously
eligible to participate in any other account balance plan of deferred
compensation aggregated with this Plan under Section 409A of the Code), such
newly Eligible Employee may make a Compensation Deferral election within thirty
(30) days after the date the individual becomes eligible, provided such
election applies only with respect to Compensation to be paid for services to
be performed subsequent to the election.

(c)           Election Procedure.  Compensation Deferrals shall be made (i)
through regular payroll deductions from salary (and sales bonuses and
commissions), and/or (ii) through an election by the Participant to defer the
payment of an annual bonus not yet paid and payable no sooner than the
following Plan Year.  A deferral election
may not be made with respect to a bonus payment that is payable in the year the
deferral election is made, except to the extent permitted by Section 409A of
the Code.  All deferral elections shall
be made in writing on a form provided by or acceptable to the Administrator and
filed with the Administrator by no later than the date designated by the
Administrator as the due date for that election (which date shall be, for
deferral of salary, sales bonuses and sales commissions, a date occurring
before the beginning of the Plan Year to which the election applies or, in the
case of a new Participant, a date occurring before his or her Entry Date).  Except to the extent the Administrator
otherwise provides, all Compensation Deferral elections shall be stated as a
whole percentage of the Compensation item to which it applies.  The Participant may not terminate his or her
Compensation Deferral election at any time during the Plan Year to which it
applies unless the Participant qualifies for a hardship distribution under
Section 5.3.  In the case of a Compensation
Deferral election for annual incentive compensation (other than sales bonuses
and commissions), except to the extent the Administration otherwise provides,
the Participant may file a written deferral election with the Employer on or
before June 30 of the Plan Year preceding the Plan Year in which that annual
incentive payment first would become payable. 
Once made, a Compensation Deferral election (whether for regular payroll
or annual incentive pay) shall continue in force indefinitely until affirmatively
changed.  A Participant may change a
Compensation Deferral for future years by filing a revised written deferral
election in accordance with this Section 3.2(c); for example, by filing an
election with respect to regular salary prior to the first day of the next Plan
Year, in accordance with the procedures specified above.  Compensation Deferrals shall be deducted by
the Employer from the pay of a deferring Participant and shall be credited to
the Account of the deferring Participant within a reasonable time of the date
that the deferral amount would otherwise have been paid to the Participant.

(d)           Suspension of Contributions.  Notwithstanding anything to the contrary, in
any case where a Participant receives a hardship withdrawal under Section 5.3,
the Participant’s Compensation Deferrals shall be suspended for Compensation
earned in the remainder of the Plan Year following the Plan Year in which that
withdrawal was made (including annual incentive Compensation earned in such
Plan Year but payable in the next Plan Year).

(e)           Compensation Deferral Account.  There shall be established and maintained by
the Employer a Compensation Deferral Account in the name of each 

 6
 

 

Participant to which
shall be credited or debited:  (a)
amounts equal to the Participant’s Compensation Deferrals; (b) amounts equal to
any deemed earnings or losses (as determined by the Administrator, in its sole
and absolute discretion) attributable or allocable thereto; and (c) expenses
charged to that Account.

(f)            Vesting.  A Participant shall at all times be fully
vested in amounts credited to his or her Participant Compensation Deferral
Account.

3.3           CONTRIBUTIONS TO THE TRUST.  An amount shall be contributed by the
Employer to the Trust, if any, maintained under Section 11.1 equal to the
amount(s) required to be credited to the Participant’s Account under Sections
3.1 and 3.2.

ARTICLE 4

ALLOCATION OF FUNDS

4.1           ALLOCATION OF EARNINGS OR LOSSES
ON ACCOUNTS.  Subject to Section 4.5,
each Participant shall have the right to direct the Administrator as to how
amounts in his or her Plan Account shall be deemed to be invested among the
investment funds made available by the Administrator in its absolute
discretion.  Subject to such limitations
as may from time to time be required by law, imposed by the Administrator or
contained elsewhere in the Plan, and subject to such operating rules and
procedures as may be imposed from time to time by the Administrator, prior to
the date on which a direction will become effective, the Participant shall have
the right to direct the Administrator as to how amounts in his or her Account
shall be deemed to be invested.  The
Administrator shall direct the Trustee to invest the account maintained in the
Trust, if any, with respect to the Participant pursuant to the deemed
investment directions the Administrator properly has received from the
Participant.  As of each Valuation Date,
each Participant’s Account will be credited or debited with earnings or losses
of the designated deemed investments in an amount equal to that determined by
multiplying the balance credited to such designated deemed investment for the
Participant’s Account as of the prior Valuation Date by the net rate of gain or
loss on the assets of such designated deemed investment since the last
Valuation Date.

4.2           ACCOUNTING FOR DISTRIBUTIONS.  As of the date of any distribution hereunder,
the distribution made hereunder to the Participant or his or her Beneficiary or
Beneficiaries shall be charged to such Participant’s Account.  Such amounts generally shall be charged on a
pro rata basis against the investments in which the Participant’s Account is
deemed to be invested.

4.3           SEPARATE ACCOUNTS.  A separate account under the Plan shall be
established and maintained by the Administrator to reflect the Account for each
Participant with sub-accounts to show separately the deemed earnings and losses
credited or debited to such Account, and the applicable deemed investments of
the Account.

4.4           INTERIM VALUATIONS.  If it is determined by the Administrator that
the value of the Participant’s Account as of any date on which distributions
are to be 

 7
 

 

made differs materially
from the value of the Participant’s Account on the prior Valuation Date upon
which the distribution is to be based, the Administrator, in its sole and
absolute discretion, shall have the right to designate any date in the interim
as a Valuation Date for the purpose of revaluing the Participant’s Account so
that the Account will, prior to the distribution, reflect its share of such
material difference in value.

4.5           DEEMED INVESTMENT DIRECTIONS OF
PARTICIPANTS.  Subject to such
limitations as may from time to time be required by law, imposed by the
Administrator or contained elsewhere in the Plan, and subject to such operating
rules and procedures as may be imposed from time to time by the Administrator,
prior to and effective for each Designation Date, each Participant may
communicate to the Administrator a direction as to how his or her Account
should be deemed to be invested among such deemed investment funds as may be
made available by the Administrator hereunder. 
The Administrator may, in its absolute discretion, select the investment
funds to be made available from time to time as deemed investments under the
Plan and may add or remove investment funds as it deems appropriate, provided
that the Administrator generally shall give at least thirty (30) days’ advance
notice to the participant before any investment fund is removed or made
unavailable.  Such direction shall
designate the percentage (in whole percentages or such other increments
permitted by the Administrator) of each portion of the Participant’s Account
which is requested to be deemed to be invested in such deemed investment funds,
and shall be subject to the following rules:

(a)           Any initial or subsequent deemed
investment direction shall be made in the manner designated by the
Administrator, and shall be effective as of the next Designation Date which is
at least ten (10) business days (or such lesser number of days permitted by the
Administrator) after such filing.

(b)           All amounts credited to the
Participant’s account shall be deemed to be invested in accordance with the
then effective deemed investment direction; and as of the effective date of any
new deemed investment direction, all or a portion of the Participant’s Account
at that date shall be reallocated among the designated deemed investment funds
according to the percentages specified in the new deemed investment direction
unless and until a subsequent deemed investment direction shall be filed and
become effective.  An election concerning
deemed investment choices shall continue indefinitely as provided in the
Participant’s most recent election form, or other form specified by the
Administrator.

(c)           If the Administrator receives an
initial or revised deemed investment direction which it deems to be incomplete,
unclear or improper, the Participant’s investment direction then in effect
shall remain in effect (or, in the case of a deficiency in an initial deemed
investment direction, the Participant shall be deemed to have filed no deemed
investment direction) until the next Designation Date, unless the Administrator
provides for, and permits the application of, corrective action prior thereto.

(d)           If the Administrator possesses (or is
deemed to possess as provided in (c), above) at any time directions as to the
deemed investment of less than all of a 

 8
 

 

Participant’s Account,
the Participant shall be deemed to have directed that the undersigned portion
of the Account be deemed to be invested in a money market, fixed income or
similar fund made available under the Plan as determined by the Administrator
in its discretion.

(e)           Each Participant hereunder, as a
condition to his or her participation hereunder, agrees to indemnify and hold
harmless the Company, each Employer, the Administrator and their agents and
representatives from any losses or damages of any kind relating to the deemed
investment of the Participant’s Account hereunder.

(f)            Each reference in this Section to a
Participant shall be deemed to include, where applicable, a reference to any
Beneficiary of the Participant.

4.6           EXPENSES.  The Company anticipates that it will pay all
expenses of administering the Plan and the Trust and all fees and expenses with
respect to which the Trustee is entitled to compensation or reimbursement.  If not so paid, the fees and expenses shall
be paid from the Trust.  If any fees or
other expenses are paid from the Trust or if any assets of the Trust are distributed
from the Trust other than for purposes of paying benefits under the Plan (e.g.,
are used to pay claims of the Employer’s general Insolvency creditors, such
fees, expenses or other charges shall be charged against each Plan Participant’s
interest in the Trust, pro  rata based upon the relative value of
each such Participant’s interest in the Trust as of the Valuation Date next
preceding the applicable payment or charge. 
Taxes allocable to a particular Participant’s interest in the Trust
shall be charged against that Participant’s interest.

4.7           TAXES.  Any taxes allocable to an Account (or portion
thereof) maintained under the Plan which are payable prior to the distribution
of the Account (or portion thereof), as determined by the Administrator, in its
sole and absolute discretion, shall be charged against that Account as an expense
of the Account, in the manner provided in Section 4.6.

ARTICLE 5

ENTITLEMENT TO BENEFITS

5.1           PAYMENT DATE; SEPARATION FROM
SERVICE.

(a)           General Rule.  The Payment Date applicable to the
Participant’s Discretionary Contribution Account and the Participant’s
Compensation Deferral Account shall be the Payment Date, as selected by the
Administrator, which shall not be later than the later of (i) the end of the
calendar year in which the Participant separates from service with all
Employers or (ii) the 15th day of the third month following the date on
which the Participant separates from service with all Employers.

(b)           Key Employees.  Except to the extent permitted under Code
Section 409A, a Participant who is a Key Employee on the date he or she
separates from service with all the Employers shall not be entitled to a
distribution on account of such separation from service until six months after
such 

 9
 

 

separation from service
(or if earlier, the date of the Participant’s death).

(c)           Grandfathered Accounts.  With respect to those Compensation Deferral
Accounts credited under the Plan as of December 31, 2004 (“Grandfathered
Account”), for which the Participant elected, prior to the Effective Date, a
fixed payment date, such Grandfathered Account, as adjusted for subsequent
earnings and losses therein (and specifically excluding any additional
Compensation Deferral elections) shall be paid in the form of a lump sum as of
such previously elected fixed payment date.

5.2           SEPARATION FROM SERVICE UPON
DISPOSITION OF ASSETS OR SUBSIDIARIES. 
Upon the disposition of the stock of a subsidiary of the Company or
substantially all of the assets of either the Company or a subsidiary of the
Company, a Participant affected by that sale or disposition shall not be
considered to have separated from service for purposes of this Plan if all of
the following conditions are satisfied: 
(a) the Participant continues employment with either the Company or the
subsidiary, as the case may be, or the entity acquiring such assets; (b) the purchaser
agrees to assume responsibility for payment of the vested and unvested benefit
obligations to the Participant and all other similarly situated Participants accrued hereunder as of the sale date; and (c) assets equal
to the value of the Participant’s and all other similarly situated Participants benefits accrued hereunder as of the sale date are
transferred from the Trust to a similar trust established or designated by the
purchaser.  If any of the foregoing
conditions are not satisfied, then the Participant shall be deemed to have
separated from service for purposes of this Plan upon the disposition of the
stock of such subsidiary or substantially all of the assets of the Company or a
subsidiary of the Company by which the Participant was employed.

5.3           HARDSHIP DISTRIBUTIONS.  In the event of financial hardship of the
Participant, as hereinafter defined, the Participant may apply to the
Administrator for the distribution of all or any part of his or her
Compensation Deferral Account and Discretionary Contribution Account.  The Administrator shall consider the
circumstances of each such case, and the best interests of the Participant and
his or her family, and shall have the right, in its sole and absolute discretion,
if applicable, to allow such distribution, or, if applicable, to direct a
distribution of part of the amount requested, or to refuse to allow any
distribution.  Upon a finding of
financial hardship, the Administrator shall make or cause the appropriate
distribution to be made to the Participant from amounts held by the
Administrator or the Trustee in respect of the Participant’s vested
Compensation Deferral Account and Discretionary Contribution Account.  In no event shall the aggregate amount of the
distribution exceed either the full value of the Participant’s vested
Compensation Deferral Account and Discretionary Contribution Account or the amount determined by the Administrator, in its sole
and absolute discretion, to be necessary to alleviate the Participant’s
financial hardship (which financial hardship may be considered to include any
taxes due because of the distributions occurring because of this Section), and
which is not reasonably available from other resources of the Participant.  For purposes of this Section, the value of
the Participant’s Compensation Deferral Account and Discretionary Contribution
Account shall be determined as of the date of
the distribution.  “Financial hardship”
means (a) a 

 10
 

 

severe financial hardship
to the Participant resulting from a sudden and unexpected illness or accident
of the Participant or of a dependent (as defined in Code section 152(a)) of the
Participant, (b) loss of the Participant’s property due to casualty, or (c)
other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant, each as determined to exist by
the Administrator.  A distribution may be
made under this Section only with the consent of the Administrator and only to
the extent it satisfies the requirements for a distribution on account of an
unforeseeable emergency, pursuant to Section 409A of the Code.

5.4           APPLICATION TO TRUSTEE.  On the date or dates on which a Participant
or Beneficiary is entitled to payment under Section 5.1, the Participant or
Beneficiary need not make application for payment to the Administrator, but
instead may make application for payment directly to the Trustee who shall,
subject to any restrictions or limitations contained in the Trust, pay the
Participant or Beneficiary the appropriate amount directly from the Trust
without the consent of the Administrator. 
The Trustee shall report the amount of each such payment, and any
withholding thereon, to the Administrator.

5.5           RE-EMPLOYMENT OF RECIPIENT.  If a Participant receiving installment
distributions pursuant to Section 6.2 is re-employed by the Employer, the
remaining distributions due to the Participant shall continue without
interruption.

ARTICLE
6

DISTRIBUTION OF BENEFITS

6.1           DISTRIBUTABLE AMOUNT.  Upon the occurrence of a Payment Date applicable
to any portion of a Participant’s Account, the vested portion of the
Participant’s Account that is subject to that Payment Date (the “Distributable
Amount”) shall be paid or commence to be paid to the Participant under Section
6.2.  Any payment due hereunder from the
Trust which is not paid by the Trust for any reason will be paid by the
Employer from its general assets.

6.2           METHOD OF PAYMENT.

(a)           Cash Or In-Kind Payments.  Payments under the Plan shall generally be
made in cash; provided, however, that to the extent payment is made directly
from the Trust, payment may be made in cash or in-kind as elected by the
Participant, as permitted by the Administrator in its sole and absolute
discretion and subject to applicable restrictions on transfer as may be
applicable legally and contractually.

(b)           Timing and Manner of Payment.

(i)            Minimum Distribution:  If at the time a Participant separates from
service with all of the Employers, the Participant’s entire Account balance
under the Plan (and any other account balance plan that would be aggregated
with the Plan under Section 409A of the Code) is less than $50,000, then,
regardless of any method of payment that may have been elected by the
Participant, the Distributable 

 11
 

 

Amount shall be paid in
one lump sum payment to the Participant on the applicable Payment Date.

(ii)           Election of Form of Distribution.  If an Eligible Employee first becomes a
Participant as a result of Compensation Deferrals, he or she shall file with
the Administrator an election regarding the form of payment of his Accounts, at
the same time as he or she files the initial deferral election.  If an Eligible Employee first becomes a
Participant as a result of a Discretionary Contribution, he or she shall file
with the Administrator an election regarding the from of payment of his
Accounts prior to the date such Discretionary Contribution is credited to his
Account.

(iii)          Alternative Forms of Distribution.  A Participant may elect to have his or her
Account distributed on the Payment Date in the form of:  (a) a lump sum payment, (b) twenty (20)
quarterly payments, commencing on the Payment Date, or (c) forty (40) quarterly
payments, commencing on the Payment Date. 
Each quarterly payment shall equal a fraction of the Participant’s total
accounts; the numerator of the fraction shall be 1, and the denominator shall
be the remaining number of installments.

(iv)          Changes in Payment Elections.  A Participant may not change his or her
election regarding the method of payment (i.e., a lump sum or installments).

(v)           Investments.  If the whole or any part of a payment
hereunder is to be in installments, the total to be so paid shall continue to
be deemed to be invested pursuant to Sections 4.1 and 4.5 under such procedures
as the Administrator may establish, in which case any deemed income, gain, loss
or expense attributable thereto (as determined by the Trustee, in its
discretion) shall be reflected in the Account when the amount of each
installment payment is determined.

(vi)          Default:  If the Distributable Amount equals or exceeds
$50,000 at the Participant’s separation from service with all of the Employers
and the Participant has not elected another method of payment under this
Section, the Distributable Amount (as adjusted for subsequent gains, losses, expenses
and required withholdings) shall be paid to the Participant in one lump sum
cash payment on the applicable Payment Date.

6.3           DEATH BENEFITS.  If a Participant dies before separating from
service with all Employers, the entire undistributed value of the Participant’s
Account shall be paid on the Payment Date, in the form of a lump sum payment,
to the person or persons designated as the Participant’s Beneficiary(ies) in
accordance with Section 7.1.  If a
Participant dies after separating from service and before he or she has
received all payments to which he or she is entitled under the Plan, the entire
undistributed value of the Participant’s Account shall be paid to the person or
persons designated in accordance with Section 7.1, in the form of a lump sum no
later than the later of (i) December 31 of the year in which the Participant
died or (ii) March 15 of the year immediately succeeding the year in which the
Participant died.

 12

 

ARTICLE 7

BENEFICIARIES; PARTICIPANT DATA

7.1           DESIGNATION OF BENEFICIARIES.  Each Participant from time to time may
designate any person or persons (who may be named contingently or successively)
to receive such benefits as may be payable under the Plan upon or after the
Participant’s death, and such designation may be changed from time to time by
the Participant by filing a new designation. 
Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Administrator, and will be
effective only when filed in writing with the Administrator during the
Participant’s lifetime.

In the absence of
a valid Beneficiary designation, or if, at the time any benefit payment is due
to a Beneficiary, there is no living Beneficiary validly named by the
Participant, the Administrator shall cause the payment of any such benefit
payment to be made to the Participant’s spouse, if then living, but otherwise
to the Participant’s then living descendants, if any, per  stirpes,
but, if none, to the Participant’s estate. 
In determining the existence or identity of anyone entitled to a benefit
payment, the Administrator may rely conclusively upon information supplied by
the Participant’s personal representative, executor or administrator.  If a question arises as to the existence or
identity of anyone entitled to receive a benefit payment as aforesaid, or if a
dispute arises with respect to any such payment, then, notwithstanding the
foregoing, the Administrator, in its sole and absolute discretion, may direct
the Employer to distribute such payment to the Participant’s estate without
liability for any tax or other consequences which might flow therefrom, or may
take such other action as the Administrator deems to be appropriate.

7.2           INFORMATION TO BE FURNISHED BY
PARTICIPANTS AND BENEFICIARIES; INABILITY TO LOCATE PARTICIPANTS OR
BENEFICIARIES.  Any communication,
statement or notice addressed to a Participant or to a Beneficiary at his or
her last post office address as shown on the Employer’s records shall be
binding on the Participant or Beneficiary for all purposes of the Plan.  The Administrator shall not be obliged to
search for any Participant or Beneficiary beyond the sending of a registered
letter to such last know address.  If the
Administrator notifies any Participant or Beneficiary that he or she is
entitled to an amount under the Plan and the Participant or Beneficiary fails
to claim such amount or make his or her location known to the Administrator
within three (3) years thereafter, then, except as otherwise required by law,
if the location of one or more of the next of kin of the Participant is known
to the Administrator, the Administrator may direct distribution of such amount
to any one or more or all of such next of kin, and in such proportions as the
Administrator determines.  If the
location of none of the foregoing persons can be determined, the Administrator
shall have the right to direct that the amount payable shall be deemed to be a
forfeiture and paid to the Employer, except that the dollar amount of the
forfeiture, unadjusted for deemed gains or losses in the interim, shall be paid
by the Employer if a claim for the benefit subsequently is made by the
Participant or Beneficiary to whom it was payable.  If a benefit payable to an unlocated
Participant or Beneficiary is subject to escheat 

 13
 

 

pursuant to applicable
state law, the Employer shall not be liable to any person for any payment made
in accordance with such law.

ARTICLE 8

ADMINISTRATION

8.1           ADMINISTRATIVE AUTHORITY.  The Company may appoint one or more persons
to serve as Administrator at its pleasure from time to time.  Persons appointed as Administrator may
include employees of an Employer and Participants.  During any period when no person is currently
serving as Administrator, the Company is charged with the Administrator’s
duties.  Where two or more persons are
concurrently serving as Administrator, they are jointly responsible for all of
the Administrator’s duties, except to the extent specific duties may have been
allocated between them pursuant to Section 8.7. 
A person serving as Administrator may resign at any time by giving
advance written notice to the Company. 
The Company may, in its discretion, remove any person serving as
Administrator, with or without cause, by giving that person written notice of
his removal.  Any individual who was an
Employee when appointed as Administrator is automatically removed at
termination of employment by all Employers, without the necessity of any
notice, unless his or her continued appointment is expressly requested by the
Company.  Any successor Administrator
succeeds to all rights and duties of the predecessor.  The Company is to notify the Trustee of all
appointments, resignations or removals of Administrators.  Except as otherwise specifically provided
herein, the Administrator, in its sole and absolute discretion, shall have the
sole responsibility for and the sole control of the operation and
administration of the Plan, and shall have the power and authority to take all
action and to make all decisions and interpretations which may be necessary or
appropriate in order to administer and operate the Plan, including, without
limiting the generality of the foregoing, the power, duty and responsibility
to:

(a)           Resolve and determine all disputes or
questions arising under the Plan, and to remedy any ambiguities,
inconsistencies or omissions in the Plan;

(b)           Adopt such rules of procedure and
regulations as in its opinion may be necessary for the proper and efficient
administration of the Plan and as are consistent with the Plan;

(c)           Implement the Plan in accordance with
its terms and the rules and regulations adopted as above;

(d)           Make determinations with respect to
the eligibility of any Eligible Employee as a Participant and make
determinations concerning the crediting of Plan Accounts; and

(e)           Appoint any persons or firms, or
otherwise act to secure specialized advice or assistance, as it deems necessary
or desirable in connection with the administration and operation of the Plan,
and the Administrator shall be entitled to rely conclusively upon, and shall be
fully protected in any action or omission taken by it in 

 14
 

 

good faith reliance upon,
the advice or opinion of such firms or persons. 
The Administrator shall have the power and authority to delegate from
time to time by written instrument all or any part of its duties, powers or
responsibilities under the Plan, both ministerial and discretionary, as it
deems appropriate, to any person or committee, and in the same manner to revoke
any such delegation of duties, powers or responsibilities.  Any action of such person or committee in the
exercise of such delegated duties, powers or responsibilities shall have the
same force and effect for all purposes hereunder as if such action had been
taken by the Administrator.  Further, the
Administrator may authorize one or more persons to execute any certificate or
document on behalf of the Administrator, in which event any person notified by
the Employer of such authorization shall be entitled to accept and conclusively
rely upon any such certificate or document executed by such person as
representing action by the Administrator until such notified person shall have
been notified of the revocation of such authority.

8.2           UNIFORMITY OF DISCRETIONARY ACTS.  Whenever in the administration or operation
of the Plan discretionary actions by the Administrator are required or
permitted, such actions shall be consistently and uniformly applied to all
persons similarly situated, and no such action shall be taken which shall
discriminate in favor of any particular person or group of persons.

8.3           LITIGATION.  Except as may be otherwise required by law,
in any action or judicial proceeding affecting the Plan, no Participant or
Beneficiary shall be entitled to any notice or service of process, and any
final judgment entered in such action shall be binding on all persons
interested in, or claiming under, the Plan.

8.4           CLAIMS PROCEDURE.  Any person claiming a benefit under the Plan
(a “Claimant”) shall present the claim, in writing, to the Administrator, and
the Administrator shall respond in writing. 
In the claim is denied, the written notice of denial shall state, in a
manner calculated to be understood by the Claimant:

(a)           The specific reason or reasons for
the denial, with specific references to the Plan provisions on which the denial
is based;

(b)           A description of any additional
material or information necessary for the Claimant to perfect his or her claim
and an explanation of why such material or information is necessary; and

(c)           An explanation of the Plan’s claims
review procedure.

The written notice
denying or granting the Claimant’s claim shall be provided to the Claimant
within ninety (90) days after the Administrator’s receipt of the claim, unless
special circumstances require an extension of time for processing the
claim.  If such an extension is required,
written notice of the extension shall be furnished by the Administrator to the
Claimant within the initial ninety (90) day period and in no event shall such
an extension exceed a period of ninety (90) days from the end of the initial
ninety (90) day period.  Any extension
notice shall indicate the special circumstances requiring the extension and the
date on which the Administrator expects to render a 

 15
 

 

decision on the
claim.  Any claim not granted or denied
within the period noted above shall be deemed to have been denied.

Any Claimant whose
claim is denied, or deemed to have been denied under the preceding sentence (or
such Claimant’s authorized representative), may, within sixty (60) days after
the Claimant’s receipt of notice of the denial, or after the date of the deemed
denial, request a review of the denial by notice given, in writing, to  the Administrator.  Upon such a request for review, the claim
shall be reviewed by the Administrator (or its designated representative) which
may, but shall not be required to, grant the Claimant a hearing.  In connection with the review, the Claimant
may have representation, may examine pertinent documents, and may submit issues
and comments in writing.

The decision on
review normally shall be made within sixty (60) days of the Administrator’s
receipt of the request for review.  If an
extension of time is required due to special circumstances, the Claimant shall
be notified, in writing, by the Administrator, and the time limit for the
decision on review shall be extended to one hundred twenty (120) days.  The decision on review shall be in writing
and shall state, in a manner calculated to be understood by the Claimant, the
specific reasons for the decision and shall include references to the relevant
Plan provisions on which the decision is based. 
The written decision on review shall be given to the Claimant within the
sixty (60) day (or, if applicable, the one hundred twenty (120) day) time limit
discussed above.  If the decision on
review is not communicated to the Claimant within the sixty (60) day (or, if
applicable, the one hundred twenty (120) day) period discussed above, the claim
shall be deemed to have been denied upon review.  All decisions on review shall be final and
binding with respect to all concerned parties.

8.5           ACTION BY THE ADMINISTRATOR.  If more than one Administrator has been
appointed, they may elect a chairman and secretary and adopt rules for the
conduct of their business.  A majority of
the persons then serving constitutes a quorum for the transaction of
business.  All action taken by the
Administrator is to be by vote of a majority of those present at such meeting
and entitled to vote or without a meeting upon written consent signed by at
least a majority of the Administrators. 
All documents are to be executed on the Administrator’s behalf by either
the chairman or the secretary, if any, except that any Administrator has the
power to execute all documents necessary or required by an insurer in
connection with the application for insurance policies, and the act of that
Administrator is binding on all Administrators to the same extent as though
that instrument had been executed  by the
chairman or the secretary.

8.6           PARTICIPATION BY ADMINISTRATORS.  No Administrator shall be precluded from
becoming a Plan Participant, if he or she would be otherwise eligible, but he
may not vote or act upon matters relating specifically to his or her own
participation under the Plan, except when such matters relate to benefits
generally.  If this disqualification
results in the lack of a quorum, then the Company shall appoint a sufficient
number of temporary Administrators to serve for the sole purpose of determining
that question.

 16
 

 

8.7           ALLOCATION OF DUTIES.  The Administrator’s duties, powers and
responsibilities may be allocated among its members so long as that allocation
is pursuant to written procedures adopted by the Administrator, in which case,
except as may be required by ERISA, no Administrator shall have any liability
with respect to any duties, powers or responsibilities not allocated to him, or
for the acts or omissions of any other Administrator.

ARTICLE 9

AMENDMENT

9.1           RIGHT TO AMEND.  The Company, by written instrument executed
by the Company, shall have the right to amend the Plan, at any time and with
respect to any provisions hereof, and all parties hereto or claiming any
interest hereunder shall be bound by such amendment; provided, however, that no
such amendment shall deprive a Participant or a Beneficiary of a material right
accrued hereunder prior to the date of the amendment.

9.2           AMENDMENTS TO ENSURE PROPER
CHARACTERIZATION OF PLAN. 
Notwithstanding the provisions of Section 9.1, the Plan may be amended
by the Company at any time, retroactively if required, if found necessary, in
the opinion of the Company, in order to ensure that the Plan is characterized
as “top-hat” plan of deferred compensation maintained for a select group of
management or highly compensated employees as described under ERISA sections
201(2), 301(a)(3), an 401(a)(1), to comply with Section 409A of the Code, and
to conform the Plan to the provisions and requirements of any applicable law
(including ERISA and the Code).  No such
amendment shall be considered prejudicial to any interest of a Participant or a
Beneficiary hereunder.

ARTICLE 10

TERMINATION

10.1         TERMINATION OF SUSPENSION OF PLAN.  The Employer reserves the right to terminate
the Plan as to some or all of its Eligible Employees and/or its obligation to
make further credits to Plan Accounts. 
The Company reserves the right to suspend the operation of the Plan for
a fixed or indeterminate period of time.

10.2         AUTOMATIC TERMINATION OF PLAN.  The Plan automatically shall terminate upon
the dissolution of the Company, or upon its merger into or consolidation with
any other corporation or business organization if there is a failure by the
surviving corporation or business organization to adopt specifically and agree
to continue the Plan, provided that distributions of Accounts shall not be made
to a Participant upon any such events if it would result in the Participant
incurring a penalty under Section 409A of the Code.

 17
 

 

10.3         SUSPENSION OF DEFERRALS.  In the event of a suspension of the Plan, the
Company and the Employer shall continue all aspects of the Plan, other than
Compensation Deferrals and Employer Contribution Credits, during the period of
the suspension, in which event payments hereunder will continue to be made
during the period of the suspension in accordance with Articles 5 and 6.

10.4         ALLOCATION AND DISTRIBUTION.  This Section shall become operative on a
complete termination of the Plan.  The
provisions of this Section also shall become operative in the event of a
partial termination of the Plan, as determined by the Administrator, in its
sole and absolute discretion, but only with respect to that portion of the Plan
attributable to the Participants to whom the partial termination is applicable.  Upon the effective date of any such event,
notwithstanding any other provisions of the Plan, no persons who were not
theretofore Participants shall be eligible to become Participants, the value of
the interest of all Participants and Beneficiaries shall be determined and,
after deduction of estimated expenses in liquidating and, if applicable, paying
Plan benefits, paid to them as soon as is practicable after such termination,
provided such payment can be made in compliance with Section 409A of the Code.

10.5         SUCCESSOR TO EMPLOYER.  Any corporation or other business
organization which is a successor to an Employer by reason of a consolidation,
merger or purchase of substantially all of the assets of an Employer shall have
the right to become a party to the Plan by adopting the same by resolution of
the entity’s board of directors or other appropriate governing body, subject to
the approval by the Company in its role discretion.  If, within ninety (90) days from the
effective date of such consolidation, merger or sale of assets, such new entity
does not become a party hereto, as above provided, the Plan automatically shall
be terminated as to that Employer, and the provisions of Section 10.4 shall
become operative.

ARTICLE 11

THE TRUST

11.1         ESTABLISHMENT OF TRUST.  The Company may establish the Trust with the
Trustee pursuant to such terms and conditions as are set forth in the Trust
agreement to be entered into between the Company and the Trustee.  The Trust is intended to be treated as a “grantor”
trust under the Code; the establishment of the Trust is not intended to cause
the Participant to realize current income on amounts contributed thereto; the
Trust is not intended to cause the Plan to be “funded” under ERISA and the
Code; and the Trust shall be so interpreted.

11.2         UNFUNDED STATUS OF PLAN.  This Plan constitutes a mere contractual
promise by the Company and the other Employers to make benefit payments in the
future, and each Participant’s rights shall be those of a general, unsecured
creditor of the Company and/or Employer. 
No Participant shall have any beneficial interest in any specific assets
that an Employer may hold or set aside in connection with this Plan.

 18
 

 

ARTICLE 12

MISCELLANEOUS

12.1         LIMITATIONS ON LIABILITY OF EMPLOYER.  Neither the establishment of the Plan nor any
modification thereof, nor the creation of any account under the Plan, nor the
payment of any benefits under the Plan shall be construed as giving to any
Participant or other person any legal or equitable right against the Employer, or
any officer or employee thereof except as provided by law or by any Plan
provision.  Neither the Company nor any
other Employer in any way guarantees any Participant’s Account from loss or
depreciation, whether caused by poor investment performance or the inability to
realize upon an investment due to an insolvency affecting an investment vehicle
or any other reason.  In no event shall
the Company, an Employer, or any successor, employee, officer, director or
stockholder of the Company or an Employer, be liable to any person on account
of any claim arising by reason of the provisions of the Plan or of any
instrument or instruments implementing its provisions, or for the failure of
any Participant, Beneficiary or other persons to be entitled to any particular
tax consequences with respect to the Plan, or any credit or distribution
hereunder.

12.2         CONSTRUCTION.  If any provision of the Plan is held to be
illegal or void, such illegality or invalidity shall not affect the remaining
provisions of the Plan, but shall be fully severable, and the Plan shall be
construed and enforced as if said illegal or invalid provision had never been
inserted herein.  For all purposes of the
plan, where the context admits, the singular shall include the plural, and the
plural shall include the singular. 
Headings of Articles and Sections herein are inserted only for
convenience of reference and are not to be considered in the construction of
the Plan.  The laws of the State of
Maryland shall govern, control and determine all questions of law arising with
respect to the Plan and the interpretation and validity of its respective
provisions, except where those laws are preempted by the laws of the United
States.  Participation under the Plan will
not give any Participant the right to be retained in the service of the
Employer nor any right or claim to any benefit under the Plan unless such right
or claim has specifically accrued hereunder.

The Plan is
intended to be and at all times shall be interpreted and administered so as to
comply with Section 409A of the Code, to qualify as an unfunded deferred
compensation plan, and no provision of the Plan shall be interpreted so as to
give any individual any right in any assets of the Employer which right is
greater than the rights of a general unsecured creditor of the Employer.

This Plan is
intended to be a “top-hat” plan under ERISA. 
In the event the Administrator determines that the participation of
certain individuals as Eligible Employees under the Plan causes the Plan to
fail to qualify as a “top-hat” plan, the Company, in its sole and absolute
direction, is authorized to take whatever action it deems necessary to preserve
the status of the Plan as a “top-hat” plan, including, but not limited to,
termination of an otherwise eligible employee’s participation in the Plan and
(notwithstanding any provisions of the Plan to the contrary) immediate
distribution of 

 19
 

 

such individual’s
Account, provided such distribution complies with Section 409A of the Code.

12.3         SPENDTHRIFT PROVISION.  No amount payable to a Participant or a
Beneficiary under the Plan shall, except as otherwise specifically provided by
law, be subject in any manner to anticipation, alienation, attachment,
garnishment, sale, transfer, assignment (either at law or in equity), levy,
execution, pledge, encumbrance, charge or any other legal or equitable process,
and any attempt to do so will be void; nor will any benefit be in any manner
liable for or subject to the debts, contracts, liabilities, engagements or
torts of the person entitled thereto. 
Further, none of the following shall be construed as an assignment or
alienation:  (i) the withholding of taxes
from Plan benefit payments, (ii) the recovery under the Plan of overpayments of
benefits previously made to a Participant or Beneficiary; (iii) if applicable,
the transfer of benefit rights from the Plan to another plan, (iv) the direct
deposit of benefit payments to an account in a banking or investment
institution (if not actually part of an arrangement constituting an assignment
or alienation), or (v) the segregation of all or a part of an Account in
accordance with a court-approved domestic relations order.

In the event that
any Participant’s or Beneficiary’s benefits hereunder are garnished or attached
by order of any court, the Administrator or Trustee may bring an action or a
declaratory judgment in a court of competent jurisdiction to determine the
proper recipient of the benefits to be paid under the Plan.  During the pendency of said action, any
benefits that become payable shall be held as credits to the Participant’s or
Beneficiary’s Account or, if the Administrator or Trustee prefers, paid into
the court as they become payable, to be distributed by the court to the
recipient as the court deems proper at the close of said action.

12.4         NO EMPLOYMENT CONTRACT.  Neither this Plan nor a Participant’s
Compensation Deferral election, either singly or collectively, shall in any way
obligate any Employer to continue the employment of a Participant with the
Employer, nor does either this Plan or a Compensation Deferral election limit
the right of an Employer at any time and for any reason to terminate the
Participant’s employment.  In no event
shall this Plan by its terms or implications constitute an employment contract
of any nature whatsoever between the Company and a Participant.

12.5         NOTICES.  Any written notice to the Company referred to
herein shall be made by mailing or delivering such notice to the Company to the
attention of Vice President, Human Resources at 6950 Columbia Gateway Drive,
Suite 400, Columbia, Maryland  21046 or
any other address designated by the Company. 
Any written notice to a Participant shall be made by delivery to the
Participant in person, through electronic transmission, or by mailing such
notice to the Participant at his place of residence or business address.

12.6         CONSENT TO PLAN.  By electing to become a Participant
hereunder, each Participant shall be deemed conclusively to have accepted and
consented to all of the terms of this Plan and all actions or decisions made by
the Administrator or the Employer.

 20
 

 

12.7         BINDING ON SUCCESSORS.  The provision of this Plan and the
Compensation Deferral elections hereunder shall be binding upon and inure to
the benefit of the Company, its successors, and its assigns, and to the
Participants and their heirs, executors, administrators, and legal
representatives.

IN WITNESS
WHEREOF, the Company has caused the Plan to be executed and its seal to be
affixed hereto, on this the 24th day of October, 2006.

	
  ATTEND/WITNESS

  	
   

  	
  MAGELLAN HEALTH SERVICES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Caskie Lewis-Clapper

  	
   

  	
  By:

  	
   

  	
  /s/ Daniel Gregoire

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print:

  	
   

  	
  Caskie Lewis-Clapper

  	
   

  	
  Print Name:

  	
   

  	
  Daniel Gregoire

  

 

 21Exhibit 10.2

AMENDMENT
TO EMPLOYMENT AGREEMENT           (TIER
II)

This Amendment to
Employment Agreement between Magellan Health Services, Inc. (“Employer”)
and Jeffrey West entered into as of this 28th day of July, 2006 (“Employee”).

WHEREAS,
Employer and Employee desire to amend the terms of the Employment Agreement
currently in effect between Employer and Employee (the “Employment Agreement”).

NOW THEREFORE,
Employer or Employee agree that the Employment Agreement is hereby amended as
follows:

I.  New Change in Control
Provisions — Add the following new paragraphs:

1.                                       Termination Without Cause by the Company or With Good Reason By
Executive In connection With, Or Within Eighteen Months After, A Change In
Control:  If Employer
terminates this Agreement and Employee’s employment without cause, or if
Employee terminates this Agreement and Employee’s employment with Good Reason,
in connection with a Change in Control (as defined below) (whether before or at
the time of such Change in control) or within eighteen months after a change in
Control, Employee shall receive the following, in lieu of the amounts and
benefits described in Section 6:

(i)            Base
Salary through the date of termination;

(ii)                                  pro-rata
Target Bonus for the year in which termination occurs, payable in a single
installment immediately after termination;

(iii)                               1.5
times the sum of (a) Base Salary plus (b) Target bonus, payable in a single
cash installment immediately after termination;

(iv)                              if
employee elects COBRA coverage for health, dental and vision benefits, Employer
shall pay Employer’s contributions for health insurance and Employee shall pay
Employee’s contributions rate for health, dental and vision insurance for up to
eighteen (18) months after termination.

(v)                                 any
other amounts earned, accrued or owing to Executive but not yet paid;

(vi)                              other
payments, entitlements or benefits, if any, that are payable in accordance with
applicable plans, programs, arrangements or other agreements of the company or
any affiliate; and

(vii)                           all
stock options granted to Employee from January 4, 2004 and prior to March 10,
2005 shall vest and become immediately exercisable.

 

2.                         Definitions:

A.  Change in
Control:

A “Change in Control” of
the Company shall mean the first to occur after the date hereof of any of the
following events:

(i)                                     any
“person,” as such term is used in Sections 3(a)(9) and 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), becomes a “beneficial
owner,” as such term is used in Rule 13d-3 promulgated under the Exchange
Act, of 51% or more of the Voting Stock (as defined below) of the Company;

(ii)                                  the
majority of the Board of Directors of the Company consists of individuals other
than “Continuing Directors,” which shall mean the members of the Board on the
date hereof, provided that any person becoming a director subsequent to the
date hereof whose election or nomination for election was supported by  a vote of the directors who then comprised
the Continuing Directors, shall be considered to be a Continuing Director;

(iii)                               the
Board of Directors of the Company adopts and, if required by law or the
certificate of incorporation of the Corporation, the shareholders approve the
dissolution of the Company or a plan of liquidation or comparable plan
providing for the disposition of all or substantially all of the Company’s
assets;

(iv)                              all
or substantially all of the assets of the Company are disposed of pursuant to a
merger, consolidation, share exchange, reorganization or other transaction
unless the shareholders of the Company immediately prior to such merger,
consolidation, share exchange, reorganization or other transaction beneficially
own, directly or indirectly, in substantially the same proportion as they
previously owned the Voting Stock or other ownership interests of the Company,
51% of the Voting Stock or other ownership interests of the entity or entities,
if any, that succeed to the business of the Company; or

(v)                                 the
Company merges or combines with another company and, immediately after the
merger or combination, the shareholders of the Company immediately prior to the
merger or combination own, directly or indirectly, 50% or less of the Voting
Stock of the successor company, provided that in making such determination
there shall be excluded from the number of shares of Voting Stock held by such
shareholders, but not from the Voting Stock of the successor company, any
shares owned by Affiliates of such other company who were not also Affiliates
of the Company prior to such merger or combination.

 2
 

 

B. “Cause” in connection with a Change in Control
shall mean:

(i)                                     Employee
is convicted of (or pleads guilty or nolo contendere to) a felony or a crime
involving moral turpitude;

(ii)                                  Employee’s
commission of an act of fraud or dishonesty involving his or her duties on
behalf of the Company;

(iii)                               Employee’s
willful failure or refusal to faithfully and diligently perform duties lawfully
assigned to Employee as an officer or employee of the Company or other willful
breach of any material term of any employment agreement at the time in effect
between the Company and Employee; or

(iv)                              Employee’s
willful failure or refusal to abide by the Company’s policies, rules,
procedures or directives, including any material violation of the Company’s
Code of Ethics.

C.  “Good Reason”
shall mean:

(i)                                     a
reduction in Employee’s salary in effect at the time of a Change in Control,
unless such reduction is comparable in degree to the reduction that takes place
for all other employees of the Company of comparable rank, or a reduction in
Employee’s target bonus opportunity for the year in which or any year after the
year in which the Change of Control occurs from Employee’s target bonus
opportunity for the year in which the Change in Control occurs (if any) as
established under any employment agreement Employee has with the Company or any
bonus plan of the Company applicable to Employee (or, if no such target bonus
opportunity has yet been established for Employee under a bonus plan applicable
to Employee for the year in which the Change of Control has occurred, the  target bonus opportunity so established for
Employee for the immediately preceding year, if any);

(iii)                               a
material diminution in Employee’s position, duties or responsibilities as in
effect at the time of a Change in Control, or the assignment to Employee of
duties which are materially inconsistent with such position, duties and
authority, unless in either case such change is made with the consent of the
Employee; or

(iv)                              the
relocation by more than 50 miles of the offices of the Company which constitute
at the time of the Change in Control Employee’s principal location for the
performance of his or her services to the Company;

provided
that, in each such case, such event or condition continues uncured for a period
of more than 15 days after Employee gives notice thereof to the Company.

 3
 

 

D.                                  “Company”
shall include any entity that succeeds to all or substantially all of the
business of the Company,

E.                                      “Affiliate”
of a person or other entity shall mean a person or other entity that directly
or indirectly controls, is controlled by, or is under common control with the
person or other entity specified,

F.                                      “Voting
Stock” shall mean any capital stock of any class or classes having general
voting power under ordinary circumstances, in the absence of contingencies, to
elect the directors of a corporation and reference to a percentage of Voting
Stock shall refer to such percentage of the votes that all such Voting Stock is
entitled to cast.

II.  Other Changes

1.             Amendment to Section 6(c)

Section 6 (c) in the Employment Agreement is hereby amended to change
the reference in the fifth line from “35 miles” to “50 miles”.

2.                                       Amendment
to Section 7(b)(i):

Section 7(b)(i) is hereby amended to delete it and insert the following
in place thereof:

(i)            Employee covenants
and agrees that during any period in which Base Salary is continued after
termination of this Agreement (or in respect of which Base Salary is paid in a
lump sum) or for one year after Employee’s voluntary termination of employment
without Good Reason or termination of Employee’s employment for cause, he or
she will not, on his or her own behalf or as a partner, officer, director,
employee, agent, or consultant of any other person or entity, directly or
indirectly, engage or attempt to engage in the business of providing or selling
services in the United States that are services offered by Employer at the time
of the termination of this Agreement, unless waived in writing by Employer in
its sole discretion.  Employee recognizes
that the above restriction is reasonable and necessary to protect the interest
of the Employer and its controller subsidiaries and affiliates.

IN WITNESS WHEREOF,
Employer and Employee have executed this Amendment to Employment Agreement as
of the date first above written.

	
   Magellan
  Health Services, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   

  	
  /s/ Caskie Lewis-Clapper

  	
   

  	
   

  
	
   

  	
   

  	
  Duly Authorized

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Jeffrey West

  	
   

  	
   

  
	
  Employee

  	
   

  	
   

  

 

 4

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