Document:

EXHIBIT 10.15

 

GREENPOINT
FINANCIAL CORP.

 

Deferred
Compensation Plan

 

 

GREENPOINT
FINANCIAL CORP.

 

Deferred
Compensation Plan

 

	
  1.

  	
  Purpose

  
	
   

  	
   

  
	
  2.

  	
  Definitions

  
	
   

  	
   

  
	
  3.

  	
  Administration

  
	
   

  	
   

  
	
  4.

  	
  Participation

  
	
   

  	
   

  
	
  5.

  	
  Deferrals

  
	
   

  	
   

  
	
  6.

  	
  Deferral Accounts

  
	
   

  	
   

  
	
  7.

  	
  Company Contributions

  
	
   

  	
   

  
	
  8.

  	
  Distribution or Withdrawal of Deferral
  Accounts

  
	
   

  	
   

  
	
  9.

  	
  Provisions Relating to Section 16 of the
  Exchange Act and Section 162(m) of the Code

  
	
   

  	
   

  
	
  10.

  	
  Statements

  
	
   

  	
   

  
	
  11.

  	
  Sources of Stock

  
	
   

  	
   

  
	
  12.

  	
  Amendment and Termination

  
	
   

  	
   

  
	
  13.

  	
  General Provisions

  
	
   

  	
   

  
	
  14.

  	
  Effective Date

  

 

2

 

1.                                      Purpose.  The purpose of the GreenPoint Financial
Corp. Deferred Compensation Plan (the “Plan”) is to provide to members of a
select group of management or highly compensated employees of GreenPoint
Financial Corp. (the “Company”) and its subsidiaries and/or its affiliates who
are selected for participation in the Plan a means to defer receipt of
compensation on a pre-tax basis and accumulate wealth by having such deferred
amounts treated as if invested in specified investment vehicles, in order to
enhance the Company’s ability to attract and retain qualified key personnel
necessary for the continued success and progress of the Company, and to
encourage such persons to retain a long-term equity stake in the Company.

 

2.                                      Definitions.  In addition to the terms defined in Section
1 above, the following terms used in the Plan shall have the meanings set forth
below:

 

(a)                                  “Administrative Committee” means the
committee of officers of the Company designated by the Committee to administer
the Plan, which is composed of the Director of Human Resources, an Assistant
General Counsel, and the Manager of Compensation.  The Committee may perform any function of the Administrative
Committee hereunder, in which case the term “Administrative Committee” shall
refer to the Committee.

 

(b)                                 “Beneficiary” means the person (including
any trust) who is a beneficiary in accordance with Section 13(a).

 

(c)                                  “Board” or “Board of Directors” means the
Board of Directors of the Company.

 

(d)                                 “Cause” means, unless otherwise provided by
the Administrative Committee, (1) “Cause” as defined in any employment,
consulting or similar agreement between a Participant and the Company or one of
its subsidiaries or affiliates to which the Participant is a party, or (2) if
there is no such agreement or if it does not define Cause: an intentional
failure to perform stated duties, willful misconduct, breach of a fiduciary
duty involving personal profit, or acts or omissions of personal dishonesty,
any of which results in material loss to the Company or any of its subsidiaries
or affiliates or, any willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease-and-desist order
which results in material loss to the Company or any of its subsidiaries or
affiliates.  The Administrative
Committee shall, unless otherwise provided in an agreement with the
Participant, have the sole discretion to determine whether “Cause” exists, and
its determination shall be final.

 

(e)                                  “Cash Deferral” means that portion of the
credits to a Participant’s Deferral Account which is attributable to cash-based
deferrals or contributions and hypothetical income and appreciation and
depreciation in value thereof.

 

(f)                                    “Change in Control” means the happening of
any of the following events after any amounts have been deferred under the
Plan:

 

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(i)                                     The acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (A) the then
outstanding shares of Stock of the Company (the “Outstanding Company Common
Stock”) or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that for purposes of this subsection (i), the following acquisitions shall not
constitute a Change in Control: (1) any acquisition directly from the Company,
(2) any acquisition by the Company, (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (4) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) below; or

 

(ii)                                  Individuals who, as of the effective date of
the Plan, constitute the Board (the “Incumbent Board”) cease for any reason not
to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the effective date of the Plan
whose election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or

 

(iii)                               Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a “Business Combination”), in each case, unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
Stock and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (B) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (C) at least
a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or

 

(iv)                              Approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company.

 

(g)                                 “Code” means the Internal Revenue Code of
1986, as amended.  References to any
provision of the Code or regulation (including a proposed regulation)
thereunder shall include any successor provisions or regulations.

 

(h)                                 “Committee” means the Compensation
Committee of the Board.  The Board may
perform any function of the Committee hereunder, in which case the term
“Committee” shall refer to the Board.

 

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(i)                                     “Company Contributions Account” means the
subaccount under a Participant’s Deferral Account which reflects Company
Contributions under the Plan and amounts of hypothetical income and
appreciation and depreciation in value of such subaccount.

 

(j)                                     “Company Contributions” means contributions
to a Participant’s Company Contributions Account made in accordance with
Section 7.

 

(k)                                  “Deferral Account” means the account or
subaccount established and maintained by the Company to account for deferrals
by a Participant, any Company Contributions, and amounts of hypothetical income
and appreciation and depreciation in value of such account or subaccount, as
described in Section 6.  Deferral
Accounts will be maintained solely as bookkeeping entries by the Company to
evidence unfunded obligations of the Company.

 

(l)                                     “Deferred Stock” means that portion of the
credits to a Participant’s Deferral Account which is attributable to
Stock-based deferrals or contributions and dividend equivalents.  Each credited share of Deferred Stock
represents the right to receive one share of Stock at distribution or
withdrawal together with rights to dividend equivalents and other rights and limitations
specified in the Plan.

 

(m)                               “Disability” means,
unless otherwise provided by the Administrative Committee, “disability” or
“disabled” as defined in the Company’s pension plan or, if not so defined,
shall mean that the Participant is eligible to receive disability benefits
under the Company’s long-term disability program.

 

(n)                                 “Exchange Act” means the Securities
Exchange Act of 1934, as amended. 
References to any provision of the Exchange Act or rule thereunder shall
include any successor provisions or rules.

 

(o)                                 “Fair Market Value” means, in the case of
Stock, as of any given date, the closing price per share of Stock on such date
or, if there are no reported sales on such date, on the last day prior to such
date on which there were sales of the Stock on the New York Stock Exchange or,
if not listed on such exchange, on any other national securities exchange on
which the Stock is listed or on Nasdaq.  
If there is no regular public trading market for the Stock, the Fair
Market Value of the Stock shall be determined by the Administrative Committee
in good faith.  In the case of property
other than Stock, the amount a willing buyer would pay to a willing seller for
such property with neither party acting under duress, as determined by the
Administrative Committee.

 

(p)                                 “Participant” means any person who, as an
employee of the Company or any subsidiary or affiliate of the Company, is
designated as eligible to participate and who thereafter participates or makes
an election to participate in the Plan.

 

(q)                                 “Plan Year” means the period from January 1
through December 31 of a given year. 
The initial Plan Year will be January 1, 2002 through December 31, 2002.

 

(r)                                    “Retirement” means, unless otherwise
determined by the Administrative Committee, a Participant’s termination of
employment from the Company and its subsidiaries and affiliates after at least
ten years of service and with the sum of the Participant’s age and years of
service equal to or exceeding 75.  For
this purpose, “years of service” shall equal “ Vested Service” determined under
the Company’s pension plan.

 

(s)                                  “Stock” means the Company’s common stock,
par value $.01 per share, as adjusted in accordance with Section 6(c)(v).

 

(t)                                    “Trust” means any trust or trusts
established by the Company as part of the Plan pursuant to Section 6(e).

 

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3.                                      Administration.

 

(a)                                  Authority.  The Administrative Committee shall
administer the Plan in accordance with its terms and any directions of the
Committee, and shall have all powers necessary to accomplish such purpose,
including the power and authority to construe and interpret the Plan, to define
the terms used herein, to prescribe, amend and rescind rules and regulations,
agreements, forms, and notices relating to the administration of the Plan, to
make all other determinations necessary or advisable for the administration of
the Plan, and to determine whether to terminate participation of and accelerate
distributions to Participants.  Any
actions of the Committee or Administrative Committee with respect to the Plan
and determinations in all matters hereunder shall be conclusive and binding for
all purposes and upon all persons, including the Company, Participants,
Beneficiaries, employees, and their respective successors in interest.

 

(b)                                 Service on Committee or Administrative Committee.  
Persons serving on the Administrative Committee shall be appointed by
and remain in office at the will of, and may be removed with or without cause
by, the Committee.  The Administrative
Committee may delegate administrative and other functions under the Plan to
officers or employees of the Company or its subsid­iaries, or other agents,
except as limited by the Plan.  No
member of the Committee or Administrative Committee shall be entitled to act on
or decide any matter relating solely to himself or herself or any of his or her
rights or benefits under the Plan.  No
bond or other security shall be required in connection with the Plan of the
Committee or the Administrative Committee or any member thereof in any jurisdiction.

 

4.                                      Participation.  The Administrative Committee shall determine
the employees of the Company and its subsidiaries and/or affiliates, from among
those who qualify as a select group of management or highly compensated
employees, who will be eligible to participate in the Plan.  The Administrative Committee may limit
participation by otherwise eligible employees in its discretion, including, for
example, for a specified period following a Participant’s withdrawal from a
Deferral Account under Section 8(e).

 

5.                                      Deferrals.  To the extent authorized by the
Administrative Committee, a Participant may elect to defer compensation or
awards which may be in the form of cash, Stock, Stock-denominated awards or
other property to be received from the Company or a subsidiary or affiliate of
the Company.  Stock-denominated awards
that the Administrative Committee may authorize for deferral include (i) stock
units granted under the Company’s 1999 Stock Incentive Plan, 2001 Stock Plan,
or other Company plans and (ii) the shares representing the profit upon
exercise of stock options granted under any such plan, in circumstances in
which the option exercise price is paid by the surrender of previously acquired
shares.  In addition, the Administrative
Committee may authorize the exchange of awards of restricted stock units for
outstanding restricted stock, in order to permit the deferral of such
restricted stock units under the Plan, provided that substantially identical
vesting terms and other obligations of the employee applicable to the
surrendered restricted stock will apply to the replacement restricted stock
units.  (All deferrals of
Stock-denominated awards under the Plan are referred to as Deferred Stock,
including awards originally denominated “restricted stock units” or “stock
units”).

 

(a)                                  Limits on Amounts Deferred.  The foregoing
notwithstanding, with respect to a given Plan Year, a Participant may defer
receipt of not more than 50% of the Participant’s annual base salary, and the
amount of a Participant’s deferrals in a given Plan Year will be reduced to the
extent necessary so that his or her cash compensation not deferred under the
Plan and any other contributory plan of the Company will equal or exceed the
aggregate of FICA (including Medicare), any other applicable employment tax,
employee benefit plan contributions, and mandatory income tax required to be
withheld by the Company or its subsidiaries or affiliates for that Plan Year
with respect to the Participant.  In
addition to such limitations, and any terms and conditions of deferral set
forth under plans, programs or arrangements from which receipt of compensation
or awards is deferred under this Plan, the Administrative Committee may impose
limitations on the amounts permitted to be deferred and other terms and
conditions on deferrals under the Plan. 
Any such limitations, and other terms and conditions of deferral, shall
be specified in documents setting forth terms and conditions of deferrals under
the Plan, rules relating to the Plan or election forms, other forms, or
instructions published by or at the direction of the Administrative
Committee.  The Administrative Committee
may permit awards and other amounts to be treated as deferrals under the Plan,
including deferrals that may be mandatory under the terms of another plan or
arrangement of the Company, for administrative convenience or otherwise to
serve the purposes of the Plan and such other plan or arrangement.

 

6

 

(b)                                 Elections.  An election to defer compensation or awards
hereunder must be received by the Administrative Committee prior to the
deadline specified by the Administrative Committee.  A Participant’s elections on a properly completed election form shall
become irrevocable at such times as the Administrative Committee may determine
in its discretion.  Under no
circumstances may a Participant defer compensation or awards to which the
Participant has attained, at the time of deferral, a legally enforceable right
to current receipt of such compensation or awards.

 

6.                                      Deferral Accounts.

 

(a)                                  Establishment; Crediting of Amounts Deferred. 
One or more Deferral Accounts will be established for each Participant,
as determined by the Administrative Committee. 
The amount of compensation or awards deferred by a Participant hereunder
will be credited to the appropriate Deferral Account as of a date not later
than five business days after the date on which such amounts would have been
paid to the Participant but for the Participant’s election to defer, unless
otherwise determined by the Administrative Committee.  With respect to any fractional shares relating to a
Stock-denominated award, the Administrative Committee shall determine whether
to credit the Deferral Account with a fraction of a share of Deferred Stock, to
pay cash in lieu of the fractional share or carry forward such cash amount
under the Plan, round to the nearest whole share, round to the next whole
share, or round down to eliminate the fractional share or otherwise make
provision for the fractional share. 
Amounts of hypothetical income and appreciation and depreciation in
value of the Deferral Account will be credited and debited to, or otherwise
reflected in, such Deferral Account from time to time.

 

(b)                                 Hypothetical Investment Vehicles.

 

(i)                                     Subject to the provisions of this Section
6(b) and Sections 6(d) and 9, Cash Deferral amounts shall be deemed to be
invested, at the Participant’s direction, in one or more hypothetical
investment vehicles as may be specified from time to time by the Administrative
Committee; provided, however, that the right of the Administrative Committee to
approve or disapprove any investment direction given by a Participant is hereby
reserved. The Administrative Committee may change or discontinue any or all of the
hypothetical investment vehicles available under the Plan in its discretion;
provided, however, that each affected Participant shall be given the
opportunity to redirect the allocation of his or her Cash Deferral amount
deemed invested in the discontinued hypothetical investment vehicle(s) among
the other hypothetical investment vehicles, if any.

 

(ii)                                  Amounts credited as Deferred Stock to a
Participant’s Deferral Account may not be reallocated or deemed reinvested in
any other hypothetical investment vehicle, but shall remain as Deferred Stock
until such time as the Deferral Account is distributed or withdrawn in
accordance with Section 8.

 

(c)                                  Dividend Equivalents and Adjustments. 
Deferred Stock credited to a Participant’s Deferral Account will be
credited with dividend equivalents and subject to adjustment as provided in
this Section 6(c):

 

(i)                                     Cash Dividends.   If the Company declares and
pays a dividend or distribution on Stock in the form of cash, then a number of
additional shares of Deferred Stock shall be credited to each Participant’s
Deferral Account as of the payment date for such dividend or distribution equal
to the number of shares of Deferred Stock credited to the Deferral Account as
of the record date for such dividend or distribution multiplied by the amount
of cash actually paid as a dividend or distribution on each outstanding share
of Stock at such payment date, divided by the Fair Market Value of a share of
Stock at such payment date.

 

7

 

(ii)                                  Non-Stock Dividends.  If the Company declares and
pays a dividend or distri­bution on Stock in the form of property other than
shares of Stock, then a number of additional shares of Deferred Stock shall be
credited to each Participant’s Deferral Account as of the payment date for such
dividend or distribution equal to the number of shares of Deferred Stock
credited to the Deferral Account as of the record date for such dividend or
distribution multiplied by the Fair Market Value of such property actually paid
as a dividend or distribution on each outstanding share of Stock at such
payment date, divided by the Fair Market Value of a share of Stock at such
payment date; provided, however, that, in lieu of crediting additional Deferred
Stock, the Administrative Committee may determine to set aside the same amount
and type of property distributed to a holder of a share of Stock for delivery
to the Participant at the time of distribution or withdrawal of each share of
Deferred Stock, in such manner and on such terms as the Administrative
Committee may specify.

 

(iii)                               Stock Dividends and Splits.  If
the Company declares and pays a dividend or distribution on Stock in the form
of additional shares of Stock, or there occurs a forward split of Stock, then a
number of additional shares of Deferred Stock shall be credited to each
Participant’s Deferral Account as of the payment date for such dividend or
distribution or forward split equal to the number of shares of Deferred Stock
credited to the Deferral Account as of the record date for such dividend or
distribution or split multiplied by the number of additional shares of Stock
actually paid as a dividend or distribution or issued in such split in respect
of each outstanding share of Stock.

 

(iv)                              Modifications to Dividend Equivalents Policy.  Other provisions of this Section 6(c) notwithstanding, the
Administrative Committee may modify the manner of payment or crediting of
dividend equivalents hereunder, in order to coordinate the value of Deferral
Accounts with any trust established under Section 6(e) holding shares of Stock,
for administrative convenience, or for any other reason.

 

(v)                                 Adjustments.  The number of shares of
Deferred Stock credited to the Participant’s Deferral Account may be
appropriately adjusted by the Administrative Committee in order to prevent
dilution or enlargement of Participants’ rights with respect to Deferred Stock,
in the event of any unusual corporate transaction or event which affects the
value of Stock, provided that any such adjustment shall be made taking into
account any crediting of Deferred Stock to the Participant under other
provisions of this Section 6(c) in connection with such transaction or event.

 

(d)                                 Allocation and Reallocation of Hypothetical Investments.  A
Participant may allocate the Cash Deferral portion of his or her Deferral
Account to one or more of the hypothetical invest­ment vehicles authorized
under the Plan.  Subject to Section
6(b)(ii) and any rules established by the Ad­ministrative Committee, a
Participant may reallocate such Cash Deferrals at times specified by the Admin­istrative
Committee to one or more of such hypothetical investment vehicles, by filing a
notice in such form and manner as may be specified by the Administrative
Committee.  The Administrative Committee
may, in its discretion, prohibit or restrict allocation into or reallocation by
all or specified Participants into or out of specified hypothetical investment
vehicles, restrict the frequency of reallocation, or specify minimum or maximum
amounts that may be allocated or reallocated by Participants.

 

(e)                                  Trusts.  The Administrative Committee may, in its
discretion, establish one or more Trusts (including sub-accounts under such
Trust(s)), and deposit therein amounts of cash, Stock, or other property in
connection with the Company’s obligations with respect to a Participant’s
Deferral Account established under this Section 6.  If so determined by the Administrative Committee in any case in
which deposited amounts or other assets represent the economic equivalent of
the Participant’s deemed investment in his or her Deferral Account, the amounts
of hypothetical income and appreciation and depreciation in value of such
Deferral Account may be deemed to be equal to the actual income on, and
appreciation and depreciation of, such assets. 
Other provisions of this Section 6 notwithstanding, the timing of
allocations and reallocations of assets in such a Deferral Account, and the
hypothetical investment vehicles available with respect to the Cash Deferral portion
of the Deferral Account, may be varied to reflect the timing and nature of the
actual investments relating to such assets.

 

8

 

(f)                                    Restrictions on Participant Direction. 
The provisions of Section 6(b) and 6(d) notwithstanding, the
Administrative Committee may restrict or prohibit reallocations of amounts into
or out of specified hypothetical investment vehicles.

 

(g)                                 Modifications to Comply with Accounting Rules. 
Other provisions of the Plan notwithstanding, the Administrative
Committee may vary the manner in which Deferred Stock is credited to Deferral
Accounts, provisions relating to in-service withdrawals and distributions with
respect to Deferred Stock, and other terms relating to Deferred Stock, in order
to comply with applicable accounting rules and prevent recognition of expense
by the Company after the initial measurement and recognition in connection with
awards deferred as Deferred Stock hereunder.

 

7.                                      Company Contributions.

 

The Committee may provide for crediting of
Company Contributions under the Plan, subject to this Section 7.  Such Company Contributions may be in the
form of matching contributions or other discretionary contributions, including
the crediting of additional Deferred Stock as a premium or inducement to
Participants to elect deferrals that will be credited as Deferred Stock.  Company Contributions on behalf of a
Participant shall be subject to such vesting rules, risks of forfeiture, and
other terms and conditions as may be specified by the Committee.

 

8.                                      Distribution or Withdrawal of Deferral
Accounts.

 

(a)                                  Form of Payment.  The Company shall distribute
the amount credited to a Participant’s Deferral Account, and discharge all of
its obligations to pay deferred compensation under the Plan with respect to
such Deferral Account, as follows:

 

(i)                                     with respect to amounts credited to a
Participant’s Deferral Account other than Deferred Stock, payment of cash or,
in the discretion of the Administrative Committee, by delivery of other liquid
assets having a Fair Market Value equal to the amount credited to the Deferral
Account; provided, however, that, to the extent practicable, any assets
delivered in distribution under this Section 8(a)(i) shall be of the same type
as the hypothetical investment vehicle in which the Participant’s Deferral
Account balances (other than Deferred Stock) were deemed invested at the time
of distribution; or

 

(ii)                                  with respect to Deferred Stock, by delivery
of shares of Stock.

 

(b)                                 Forfeitures.  If a Cash Deferral or
Deferred Stock is subject to a risk of forfeiture pursuant to the terms of
another plan, program, employment agreement or other arrangement, the election
to defer under the Plan and any crediting of amounts to the Participant’s
Deferral Account will not affect such risk of forfeiture.  In the event of a forfeiture of such
amounts, the Participant shall likewise forfeit any hypothetical earnings,
appreciation or depreciation, or dividend equivalents directly or indirectly
resulting from the forfeited Cash Deferral or Deferred Stock.

 

(c)                                  Timing of Payments.  The Administrative Committee
shall determine minimum and maximum deferral periods and any limitations on
terms of deferrals.  Subject to these
limitations, payments in distribution of a Deferral Account shall be made as
soon as practicable after the date or dates (before or after termination of
employment with the Company and its subsidiaries and affiliates), and in such
number of installments, as may be directed by the Participant in his or her
election relating to such Deferral Account, provided that, if a Participant’s
employment with the Company and its subsidiaries and affiliates terminates for
reasons other than Retirement, Disability, or involuntary termination (other
than for Cause), a single lump sum payment in distribution of his or her
Deferral Account shall be made as promptly as practicable following such
termination, unless otherwise determined by the Administrative Committee.

 

9

 

(d)                                 Hardship Withdrawal Due to Financial Emergency. 
Other provisions of the Plan (except Section 9) notwithstanding, if,
upon the written application of a Participant, the Administrative Committee
determines that the Participant has an unanticipated financial emergency of
such a substantial nature, beyond the Participant’s control, and as to which
the Participant lacks other readily available assets that could be used to
timely address the emergency, so that withdrawal by the Participant of amounts
previously deferred under the Plan is warranted, the Administrative Committee
may direct the payment in a single lump sum to the Participant of all or a
portion of the balance of a Deferral Account and the time and manner of such
payment, provided that the amounts withdrawn shall be limited to that
determined by the Administrative Committee to be necessary to address the
emergency.  Hardship withdrawals under
this Section 8(d) shall be permitted only in case of a illness or accident
affecting the Participant or his or her dependent, a casualty loss to
Participant’s property, or other similar circumstances arising out of events
beyond Participant’s control.  A
Participant claiming a hardship will be required to submit documentation
demonstrating the hardship and proof that any emergency or loss cannot be
addressed by other assets or means.  The
Administrative Committee may, in its discretion, determine that a Participant
making a withdrawal under this Section 8(d) shall become ineligible to make
deferrals under the Plan for the remainder of the Plan Year in which the
withdrawal is made and for the next succeeding Plan Year, except for mandatory
deferrals under other plans and programs of the Company.

 

(e)                                  Non-Scheduled Voluntary Withdrawal With 10% Penalty. 
Other provisions of the Plan notwithstanding, a Participant may
voluntarily withdraw all or a portion of his or her Deferral Account balance
upon prior written notice to the Administrative Committee, subject to a penalty
equal to 10% of the amount withdrawn. 
Withdrawn amounts will be paid to the Participant in a single lump sum
payment as promptly as practicable.  The
amount of any penalty under this Section 8(e) will be forfeited.  In addition, upon a withdrawal under this
Section 8(e), the Participant shall become ineligible to make deferrals under
the Plan for the remainder of the Plan Year in which the withdrawal is made and
for the next succeeding Plan Year, except for mandatory deferrals under other
plans and programs of the Company.

 

9.                                      Provisions Relating to Section 16 of the
Exchange Act and Section 162(m) of the Code.

 

(a)                                  Avoidance of Liability Under Section 16. 
With respect to a Participant who is then subject to the reporting
requirements of Section 16(a) of the Exchange Act as a director or officer of
the Company, the Administrative Committee shall implement transactions under
the Plan and administer the Plan in a manner that will ensure that each
transaction by such Participant is exempt from liability under Rule 16b-3 or
otherwise will not result in actual liability under Section 16(b) of the
Exchange Act.

 

(b)                                 Compliance with Code Section 162(m). 
It is the intent of the Company that any compensation (including any
award) deferred under the Plan by a person who is, with respect to the year of
distribution or withdrawal, determined by the Administrative Committee likely
to be a “covered employee” within the meaning of Code Section 162(m) and
regulations thereunder shall not, as a result of deferral hereunder, become
compensation with respect to which the Company would not be entitled to a tax
deduction under Code Section 162(m). 
Accordingly, unless otherwise determined by the Administrative
Committee, if any payment in distribution or withdrawal of a Deferral Account
prior to a Change in Control would be subject to a loss of deductibility by the
Company at the time of a scheduled distribution or non-scheduled withdrawal
hereunder or non-scheduled penalty withdrawal under Section 8(e), the portion
of the distribution or withdrawal that would be non-deductible shall be
automatically deferred until the earliest date at which the payment may be made
such that the payment, and other compensation deemed by the Administrative
Committee likely to be paid to the Participant in the same year, will be fully
deductible by the Company.

 

10.                               Statements. 
The Administrative Committee will furnish a statement, after the
completion of each Plan Year, to each Participant reflecting the amounts
credited to a Participant’s Deferral Account and other information deemed relevant
by the Administrative Committee.

 

10

 

11.                               Sources of Stock. 
Shares of Stock deliverable in distribution or upon withdrawal of
Deferred Stock, including shares deposited under the Plan in a Trust pursuant
to Section 6, in connection with a deferral of a Stock-denominated award
granted or acquired under another plan, program, or other arrangement that
provides for the issuance of shares shall be deemed to have originated, and
shall be counted against the number of shares reserved, under such other plan,
program or arrangement.  Shares of Stock
actually delivered in distribution or upon withdrawal of such deferral shall be
originally issued shares or treasury shares in accordance with the terms of
such other plan, program or arrangement.

 

12.                               Amendment and Termination. 
The Committee may, with prospective or retroactive effect, amend, alter,
suspend, discontinue, or terminate the Plan at any time without the consent of
Participants, Beneficiaries, stockholders, or any other person; provided,
however, that, without the consent of a Participant, no such action shall
materially and adversely affect such Participant’s rights to payment of amounts
credited to such Participant’s Deferral Account.  Subject to the foregoing, the Administrative Committee may amend
the Plan (i) in any manner which does not materially increase the cost of
providing benefits under the Plan, or (ii) to reflect any amendments to the
Plan that are required or desirable in the judgment of the Administrative
Committee to comply with applicable laws, rules or regulations.  The foregoing notwithstanding, the Committee
may terminate the Plan and distribute to each Participant the amounts credited
to his or her Deferral Accounts, and the Committee reserves the right to
accelerate the distribution of individual Participants’ Deferral Accounts (in
whole or in part).

 

13.                               General Provisions.

 

(a)                                  Limits on Transfer of Awards. 
No right, title or interest of any kind in the Plan or to a Deferral
Account shall be transferable or assignable by a Participant or his or her
Beneficiary, shall be subject to alienation, anticipation, encumbrance,
garnishment, attachment, levy, execution or other legal or equitable process,
or shall be subject to the debts, contracts, liabilities or engagements, or
torts of any Participant or his or her Beneficiary, except that rights to
payment may be transferred in connection with the death of a Participant by
will or the laws of descent and distribution or pursuant to a valid Beneficiary
designation filed with the Administrative Committee in accordance with such
rules as the Administrative Committee may prescribe.  Any attempt to alienate any interest of a Participant or
Beneficiary under the Plan, in any manner described in the preceding sentence
or otherwise (except as permitted in connection with the Participant’s death)
shall be void.  A Participant may
designate a Beneficiary in writing by filing with the Administrative Committee
a properly completed Beneficiary Designation Form.

 

(b)                                 Receipt and Release.  Payments of distributions or
withdrawals (in any form) to any Participant or Beneficiary in accordance with
the provisions of the Plan shall, to the extent thereof, be in full
satisfaction of all claims for the compensation or awards deferred and relating
to the Deferral Account to which the payments relate against the Company or any
subsidiary or affiliate, and the Administrative Committee may require such
Participant or Beneficiary, as a condition to such payments, to execute a
receipt and release to such effect.  In
the case of any payment under the Plan of less than all amounts then credited
to a Deferral Account in the form of Deferred Stock, the amounts paid shall be
deemed to relate to the Deferred Stock credited to the Deferral Account at the
earliest time.

 

(c)                                  Unfunded Status of Awards.  The Plan constitutes an
“unfunded” plan for deferred compensation and Participants shall rely solely on
the unsecured promise of the Company for payment hereunder.  The establishment and maintenance of, or
allocations and credits to, the Deferral Account of any Participant or the
establishment of a Trust or Trusts shall not vest in any Participant any right,
title or interest in and to any Company assets or any assets held in the
Trust(s).  Nothing contained in the Plan
shall give a Participant any rights that are greater than those of a general
unsecured creditor of the Company.

 

(d)                                 Compliance.  The Company shall impose such restrictions
on Stock delivered to a Participant hereunder and any other interest
constituting a security as it may deem advisable in order to comply with the
Securities Act of 1933, as amended, the requirements of any stock exchange or
automated quotation system upon which the Stock is then listed or quoted, any
state securities laws applicable to such a transfer, any provision of the
Company’s Certificate of Incorporation or Bylaws, any policy maintained by the
Company, or any other law, regulation, or binding contract to which the Company
is a party.

 

11

 

(e)                                  Other Participant Rights.  No Participant shall have any
of the rights or privileges of a stockholder of the Company under the Plan,
including as a result of the crediting of Deferred Stock or other amounts to a
Deferral Account, or the creation of any Trust and deposit of Stock therein,
except at such time as Stock may be actually delivered in distribution or upon
withdrawal of a Deferral Account.  The
Plan and transactions thereunder shall not constitute a contract of employment,
and adoption of the Plan and participation therein shall not confer upon any
employee any right to continued employment, nor shall they interfere in any way
with the right of the Company or any subsidiary or affiliate to terminate the
employment of any employee at any time or with the right of the Company or a
subsidiary or affiliate to increase or decrease the amount of any compensation
payable to a Participant.  Subject to
the limitations set forth in Section 13(a) hereof, the Plan shall inure to the
benefit of, and be binding upon, the parties hereto and their successors and
assigns.

 

(f)                                    Tax Withholding.  The Company and any
subsidiary or affiliate shall have the right to deduct from amounts otherwise
payable by the Company or any subsidiary or affiliate to the Participant,
including compensation not subject to deferral as well as amounts payable
hereunder in distribution or upon withdrawal of the Participant’s Deferral
Account, any sums that federal, state, local or foreign tax law or employment
law requires to be withheld with respect to the deferral of compensation
hereunder, transactions affecting the Participant’s Deferral Account, and
payments in distribution or upon withdrawal of the Participant’s Deferral
Account, including FICA (including Medicare) and other employment taxes.  Stock may be withheld to satisfy such
mandatory withholding obligations relating to Deferred Stock if so authorized
by, and in accordance with, the terms of the plan, program, or other
arrangement from which the Stock-denominated award was deferred.

 

(g)                                 Right of Setoff.  The Company may, to the
extent permitted by applicable law, deduct from and set off against any amounts
payable in distribution or upon withdrawal of a Participant’s Deferral Account
such amounts as may be owed by the Participant to the Company or its
subsidiaries or affiliates, although the Participant shall remain liable for
any part of the Participant’s payment obligation not satisfied through such
deduction and setoff.  Such right of
setoff may be exercised only in connection with the payment of a distribution
or withdrawal under the Plan, at the time such payment otherwise would be made
to the Participant.  By electing to
participate in the Plan and defer compensation hereunder, the Participant
agrees to any deduction or setoff under this Section 13(g).

 

(h)                                 Governing Law.  The Plan and rules and
regulations, deferrals and other agreements hereunder shall be governed and
construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.

 

(i)                                     Responsibility for Losses.  A Participant and his or her
Beneficiary shall assume all risk in connection with any decrease in value of
the Deferral Account and neither the Company, the Committee, the Administrative
Committee nor other parties assisting in the administration of the Plan shall
be liable or responsible therefore.

 

(j)                                     Construction.  The captions and numbers
preceding the sections of the Plan are included solely as a matter of
convenience of reference and are not to be taken as limiting or extending the
meaning of any of the terms and provisions of the Plan.  Whenever appropriate, words used in the
singular shall include the plural or the plural may be read as the singular,
and masculine gender shall include the feminine and vice versa.

 

(k)                                  Severability.  In the event that any
provision of the Plan shall be declared illegal or invalid for any reason, said
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.

 

14.                               Effective Date.  The Plan shall be effective as of September
11, 2001, with deferrals of payments to be permitted commencing January 1,
2002.

 

12Exhibit 10.40

 

February 25, 2003

 

American Spectrum Realty, Inc.

7700 Irvine Center Drive

Irvine, CA 92618

 

Ladies and Gentlemen:

 

We acknowledge that we owe to

you the principal sum of $1,187,695 as indemnification of a portion of the cost

of settlement of the Teachout litigation.

 

We propose to discharge the

foregoing, in full settlement of our obligation to indemnify you for the

Teachout litigation, as follows:  We

will pay to you the principal sum of $1,187,695, plus interest thereon at the

annual rate of 6% from March 15, 2003, in the form of the assignment to you of

our right to receive $1,187,695 of principal payments on the notes payable to

us and our affiliates by reason of the Teachout settlement, plus all interest

payable on such principal amount of notes.

 

Please confirm your agreement

with the foregoing by executing a copy of this letter in the space provided

below, whereupon this letter shall be a binding agreement among us, and we and

our affiliates will deliver to you assignments in such form as shall be

reasonably acceptable to you.

 

Sincerely yours

 

	

   

  	

  /s/ William J. Carden

  	

   

  	

   

  
	

   

  	

  William J.

  Carden

  	

   

  

 

 

	

   

  	

  /s/ John N. Galardi

  	

   

  	

   

  
	

   

  	

  John N.

  Galardi

  	

   

  

 

AGREED TO AND ACCEPTED BY

 

AMERICAN SPECTRUM REALTY, INC.

 

	

   

  	

  By:

  	

  /s/  Patricia

  A. Nooney

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Date:

  	

  March 21,

  2003

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