Exhibit 10.01
EMPLOYMENT AGREEMENT
This Employment Agreement (the “
Agreement
”) is entered into between Centuri Construction Group, Inc.
(“
Centuri
”) and Paul M. Daily (“
Employee
”) on this 18
th
day of April, 2016 (the “
Effective Date
”). For purposes of this Agreement,
“Employer” shall mean Centuri or any other affiliated entity that is deemed to be the employer of Employee, and “
Employer Group
” shall mean Centuri and its predecessors, successors, and past, present and future operating
companies, divisions, subsidiaries and/or affiliates.
WHEREAS, Centuri has offered to Employee, subject to the terms and conditions of this Agreement, employment in the position of
President and Chief Executive Officer of Centuri and Employee has agreed to accept such employment pursuant to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the promises and obligations of Employer and Employee under this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employer and Employee hereby agree as follows:
A.
Position and Duties
. Employee is hereby employed by Employer as President and Chief Executive Officer. Employee shall
have the primary responsibilities, duties and authority described in
Exhibit A
hereto, as the same may be modified from time to time by the Board of Directors of Centuri (“
Board
”) or the Chairman of the Board in their
discretion in a manner consistent with Employee’s position. Employee shall devote his full business time, attention and effort to the performance of this Agreement and to his duties as described herein.
1. Employee shall faithfully adhere to, execute and fulfill the duties described in
Exhibit A
hereto, as in effect from
time to time, and any such other duties as shall be assigned to Employee from time to time by the Board or the Chairman of the Board.
2. Employee agrees to devote full business time, attention and effort to the business and affairs of Employer, to discharge the
responsibilities assigned to Employee hereunder, and to use Employee’s reasonable best efforts to perform faithfully and efficiently such responsibilities.
3. Employee shall not, during the term of his employment, be engaged in any other business activity pursued for gain, profit or
other pecuniary advantage if such activity interferes with Employee’s duties and responsibilities to Employer. The foregoing limitations shall not be construed as prohibiting Employee from serving on corporate, civic or charitable boards or
committees, delivering lectures or fulfilling speaking engagements, teaching at educational institutions, or making personal investments, so long as (i) such activities do not significantly interfere with the performance of Employee’s
responsibilities to Employer as set forth in this Agreement or present a conflict of interest and (ii) any outside board position is approved by the Chairman of the Board.
4. In the performance of his duties, Employee shall use his best efforts to
adhere to the legal requirements codified in statutes, ordinances and governmental regulations applicable to Employer.
B.
Term
. The initial term of this Agreement shall begin on the Effective Date and shall continue until April 18, 2018, unless terminated sooner pursuant to the provisions of this Agreement (the “
Initial Term
”). At the
expiration of the Initial Term, unless terminated sooner pursuant to the provisions of this Agreement, and each annual anniversary thereafter, this Agreement will renew automatically for an additional one (1) year period (the “
Renewal
Term
”) unless either party notifies the other party in writing of its or his intention not to renew this Agreement (the “
Renewal Termination Notice
”) not less than six (6) months prior to the expiration of the Initial
Term or of any Renewal Term (the Initial Term and any Renewal Term are referred to collectively as the “
Term
”).
1.
Termination upon Death
. This Agreement (and all of Employee’s rights and Employer’s obligations hereunder
except as provided for in Employer’s welfare benefit or incentive plans that Employee participates in at time of death) shall terminate as of the date of Employee’s death.
2.
Termination upon Disability
. If Employee becomes Disabled as defined herein, Employer may, by written notice to
Employee, terminate this Agreement and Employee’s employment hereunder. For purposes of this Agreement, “
Disabled
” or “
Disability
” means, as determined by the Board, that (i) Employee is unable to engage
in any substantial gainful activity by reason of a physical or mental impairment that is expected to result in death or last twelve (12) months or more, or Employee receives replacement income for three (3) months or more due to such
physical or mental impairment or (ii) such other definition that complies with the definition of disability under Section 409A of the Internal Revenue Code of 1986, as amended (the “
Code
”) and the regulations promulgated
thereunder.
3.
Termination for Cause
. Employer may terminate this Agreement and Employee’s employment
hereunder for Cause by providing written notice to Employee of its intention to do so. For purposes of this Agreement, “
Cause
” shall mean:
a) Employee’s negligence in the performance of, intentional nonperformance of, or inattention to his material duties and
responsibilities hereunder, any of which continue for five (5) business days after receipt of written notice of need to cure the same;
b) Employee’s willful dishonesty, fraud or material misconduct with respect to the business or affairs of Employer;
c) the violation by Employee of any of Employer’s policies or procedures, which violation is not cured by Employee within
five (5) business days after Employee has been given written notice thereof;
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d) a conviction of, a plea of nolo contendere, a guilty plea, or confession by
Employee to, an act of fraud, misappropriation or embezzlement or any crime punishable as a felony or any other crime that involves moral turpitude;
e) Employee’s use of illegal substances or habitual drunkenness; or
f) the breach by Employee of this Agreement if Employee does not cure such breach within five (5) business days after
Employee has been given written notice thereof.
4.
Termination for Good Reason
. Employee may terminate this
Agreement and his employment hereunder for Good Reason in the twenty-four (24) months following a Change in Control by providing written notice to Employer of his intention to do so. For purposes of this Agreement, “
Good
Reason
” shall mean:
a) the assignment to Employee of any duties inconsistent with Employee’s position
(including offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section II.A of this Agreement and as in effect immediately prior to the Change in Control, or any other action by Employer that results
in a diminution in such position, authority, duties or responsibilities (excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith);
b) any material breach of this Agreement by Employer, including any requirement that Employee be based at any office or
location that results in a violation of Section II.E of this Agreement;
c) any failure by Employer to comply with any of
the provisions of Section III of this Agreement (excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith);
d) any failure by Employer to continue in effect any cash or
stock-based
incentive or
bonus plan, retirement plan, welfare benefit plan or other compensation, retirement or benefit plan and policy, unless the aggregate value (as computed by an independent employee benefits consultant selected by Employer and reasonably acceptable to
Employee or Employee’s legal representative) of all such compensation, retirement or benefit plans and policies provided to Employee is not materially less than their aggregate value as in effect at any time during the one hundred twenty
(120) day period immediately preceding a Change in Control or, if more favorable to Employee, those provided generally at any time after the Change in Control to other peer employees of Employer and its affiliated companies;
e) Employee’s receipt from Employer of a Renewal Termination Notice as provided in Section II.B; and
f) in the event of a pending Change in Control, Employer and Employee have not received written notice at least five
(5) business days prior to the anticipated closing date of the transaction giving rise to the Change in Control from the successor to all or a substantial portion of the Employer Group’s business and/or assets that such successor is
willing as of the closing to assume and agree to perform Employer’s obligations under this Agreement in the same manner and to the same extent that Employer is hereby required to perform.
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Employee must provide written notice to Employer of the existence of the condition(s) described
in Section II.B.4.a through Section II.B.4.d above within 90 days of the initial existence of the condition(s). Employer shall have 30 days after such notice is given during which to remedy the condition(s), and such occurrence shall not be deemed
to constitute Good Reason if such event or circumstance has been fully corrected by Employer within the 30 day cure period and Employee has been reasonably compensated for monetary losses or damages resulting therefrom.
For purposes of this Agreement, “
Change in Control
” shall mean (1) the sale (other than to a member of the Employer
Group) of substantially all of the operating assets of (a) Centuri and its subsidiaries or (b) the Parent Company and its subsidiaries, (2) the acquisition (other than by a member of the Employer Group) of more than fifty percent
(50%) of the stock of Centuri by a group of shareholders or an entity which acquires control of Centuri, (3) a merger or consolidation of Centuri with any other entity, other than a merger or consolidation which would result in the voting
securities of Centuri outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) fifty percent (50%) or more of the total voting power
represented by the voting securities of Centuri or such surviving entity outstanding immediately after such merger or consolidation, (4) a merger or consolidation of Parent Company with any other entity, other than a merger or consolidation
which would result in the voting securities of Parent Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) fifty percent
(50%) or more of the total voting power represented by the voting securities of Parent Company or such surviving entity outstanding immediately after such merger or consolidation, (5) any “person” (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), but excluding any person described in and satisfying the conditions of Rule 13d-1(b)(1) thereunder), becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Parent Company representing more than 30% of the combined voting power of the Parent Company’s then outstanding securities entitled to then vote
generally in the election of directors of the Parent Company, or (6) during any period not longer than two (2) consecutive years, individuals who at the beginning of such period constituted the board of directors of the Parent Company
cease to constitute at least a majority thereof, unless the election, or the nomination for election by the Parent Company’s shareholders, of each new board member was approved by a vote of at least three-fourths (3/4) of the board members
then still in office who were board members at the beginning of such period (including for these purposes, new members whose election was so approved). For purposes of this Agreement, “
Parent Company
” shall mean Southwest Gas
Corporation or, following the reorganization described in Southwest Gas Corporation’s Form 8-K filed with the Securities and Exchange Commission on October 13, 2015, the new publicly traded holding company that will directly or indirectly
hold majority equity interests of Southwest Gas Corporation and Centuri. It is expressly understood that the reorganization described in such Form 8-K will not constitute a Change in Control.
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C.
Notice of Termination
. Any termination by Employer for Cause or
Disability or by Employee for Good Reason shall be communicated by a Notice of Termination provided to the other party pursuant to the provisions of Section VIII.C of this Agreement. For purposes of this Agreement, “
Notice of
Termination
” means a written notice that: (1) indicates the specific termination provision or provisions as set forth in this Agreement relied upon by either Employer or Employee; (2) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide the basis for termination under the provision or provisions of this Agreement relied upon by either Employer or Employee; and (3) if the Date of Termination (as defined below) is
other than the date of receipt of such Notice of Termination, specifies the termination date. The failure by either Employer or Employee to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Cause or
Good Reason shall not waive any right of Employer or Employee or preclude Employer or Employee from asserting such fact or circumstance in enforcing Employer’s or Employee’s rights or obligations under this Agreement.
D.
Date of Termination
. According to this Agreement, “
Date of Termination
” shall mean: (1) if
Employee’s employment is terminated for Cause or Disability, or by Employee for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein or as required under this Agreement; (2) if Employee’s
employment is terminated by Employer other than for Cause or Disability, the Date of Termination shall be the date on which Employer notifies Employee of such termination; (3) if Employee’s employment is terminated by reason of death, the
Date of Termination shall be the date of the death of Employee; or (4) if Employee voluntarily terminates his employment, the Date of Termination shall be the date on which Employee and Employer shall agree to be the Date of Termination.
E.
Place of Performance
. Nothing contained in this Agreement shall be deemed to require Employee to relocate from
Phoenix, Arizona to another geographic location in order to carry out Employee’s duties and responsibilities under this Agreement, other than normal business travel consistent with Employee’s duties, responsibilities and position.
F.
Representation
. Employee represents and warrants to Centuri that Employee is not bound by any covenant not to compete
or similar agreement that would prohibit Employee from performing, or would restrict or limit Employee in Employee’s performance of, Employee’s job duties for Centuri. Employee shall indemnify and hold harmless Employer Group and its
officers, managers, members, agents and representatives from and against any damages, losses, claims, costs (including attorneys’ fees) incurred by any of them arising out of or resulting from any breach of the foregoing representation and
warranty by Employee. Centuri acknowledges that Employee is subject to a non-solicitation of IEA employees until September 3, 2016.
A.
Annual Base Salary
. Employer agrees to compensate and pay Employee, or to cause Employee to be compensated and paid
no less than, an annual base salary of $475,000, payable on a regular basis in accordance with Employer’s standard payroll procedures but not less frequently than monthly.
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On at least an annual basis, the Board or a duly constituted committee thereof will review
Employee’s performance and may make increases to Employee’s annual base salary if, in its sole discretion, any such increase is warranted.
B.
Bonus
. Employee shall participate in Employer’s short-term, long-term and supplemental incentive bonus plans (as
applicable) at a level commensurate with Employee’s position. Employee’s target cash award opportunity is 120% of base salary for the Short-Term Incentive Plan and 50% of base salary for the Long Term Incentive Plan, subject to the
provisions contained in the plan documents, copies of which have been provided to Employee. Employee may participate in other current and future incentive bonus plans as determined by the Board or a duly constituted committee thereof. During his
first thirty (30) days of employment, Employee must elect to have his Short-Term Incentive Plan payout for fiscal year 2016 either fixed at target or based on actual performance results for 2016 (which could cause the payout to be above or
below target). The election must be provided in writing to the Chairman of the Board. If no election is timely made, the Short-Term Incentive Plan will payout based on actual performance results for 2016. In either case, the 2016 payment will be
prorated to nine (9) months.
C.
Incentive, Savings and Retirement Plans; Perquisites; LTCIP Contributions
.
Employee shall be entitled to participate in all incentive, deferred compensation, savings and retirement plans, perquisites, practices, policies and programs generally applicable to other peer employees of Employer. Employee is required to
participate in the Long-Term Capital Investment Plan (“LTCIP”). The LTCIP currently requires Employee to invest at least fifty percent (50%) of his short-term incentive until he meets the established investment requirement. On both
the first and second anniversaries of Employee’s hire date, if Employee is still employed by Employer, Centuri will deposit $237,500 into Employee’s LTCIP account. The Centuri contribution will count toward the total investment
requirement, but it does not negate Employee’s obligation to contribute at least fifty percent (50%) of his short-term incentive each year until the investment requirement is met. During the Initial Term, Employer shall provide Employee an
annual vehicle allowance of no less than $23,400 with the business cost of gasoline paid by the Company, social club membership consistent with its existing policies, $5,000 allowance every 3 years for basic estate and financial planning (not to be
used for income tax filings). Following the Initial Term, any vehicle allowance, social club membership or basic estate and financial planning allowance will be based on current Centuri policies then in effect.
D.
Welfare Benefit Plans
. Employee and Employee’s eligible dependents shall receive coverage under the welfare
benefit plans, practices, policies and programs provided by Employer including, but not limited to, medical, prescription, dental, disability, group life (no less than $500,000 life insurance coverage paid by Employer for Employee), accidental death
and travel accident insurance plans and programs, generally applicable to other peer employees of Employer, the terms and conditions of which shall be no less favorable than those available to other similarly situated officers of Employer. Employee
will be entitled to no less than four (4) weeks of annual vacation.
E.
Reimbursement of Expenses
. Employer
shall reimburse Employee or cause Employee to be promptly reimbursed for all reasonable and necessary expenses incurred by Employee in furtherance of the business and affairs of the Employer Group including, but not
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limited to, all travel expenses and living expenses while away from home on business or at the request of Employer or the Board. Such reimbursement shall be effected as soon as reasonably
practicable after such expenditures are made, against presentation of signed, itemized expense reports in accordance with the travel and business expense reimbursement policies of Employer. This provision does not apply to relocation expenses.
F.
Relocation
. In lieu of reimbursement under the Employer’s relocation policy, Employer will pay Employee
$150,000, payable in $50,000 installments following each of the first three (3) months of Employee’s employment. If Employee’s employment hereunder terminates for any reason other than his death or disability or termination by
Employer without Cause during the Initial Term, Employee agrees to promptly reimburse Centuri for a portion of the $150,000 payment, based on the following fraction: the number of months remaining in the Initial Term as of the Date of Termination
over twenty-four (24) months.
G.
Severance Benefits upon Termination
. As set forth below, the following
obligations are imposed upon Employer upon termination of this Agreement; provided, however, that to be entitled to such severance benefits, Employee will be required to execute, and not revoke, a Confidential Severance Agreement and Release
provided by Employer as more fully described in Section III.J below.
1.
Death
. If Employee’s employment is
terminated due to his death, Employee shall not be entitled to any severance benefits under the terms of this Agreement.
2.
Disability
. If Employee’s employment is terminated due to his Disability, Employee shall be entitled to
severance benefits equal to one (1) year of Employee’s annual base salary. Subject to Employee’s compliance with the requirements of Section III.J below, such severance benefits shall be paid to Employee in a
lump-sum
payment within sixty (60) days of the Date of Termination.
3.
Cause
. If Employee’s employment is terminated for Cause as defined under this Agreement, Employee shall not be entitled to any severance benefits under the terms of this Agreement except for payment of amounts of Base Salary accrued
through the termination date.
4.
Without Cause
. If Employee’s employment is terminated by Employer without
Cause (other than within the twenty-four (24) months following a Change in Control), Employee shall be entitled to severance benefits equal to two (2) years of Employee’s annual base salary plus payment of any unpaid Short-Term
Incentive Plan bonus from the year prior to the year of termination, and for a period of two (2) years following Employee’s termination continuation of medical, dental and vision benefit coverage for Employee and Employee’s dependents
at least equal to those that would have been provided to the same in accordance with the plans, programs, practices and policies described in Section III.D of this Agreement if Employee’s employment had not been terminated or, if more favorable
to Employee, as in effect generally at any time thereafter with respect to other peers of Employee; provided, however, that if Employee becomes reemployed with another employer and is eligible to
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receive medical, dental or vision benefits under another employer provided plan, the medical, dental and vision benefits described herein shall be secondary to those provided under such other
plan during such applicable period of eligibility. Subject to Employee’s compliance with the requirements of Section III.J below, payment in respect of base salary shall be paid to Employee in a
lump-sum
payment within sixty (60) days of the Date of Termination. In the event that Employee is entitled to receive severance benefits under Section III.H, Employee will not be entitled to receive severance benefits under this Section.
5.
Resignation by Employee
. If Employee resigns his employment, Employee shall not be entitled to any severance benefits
under the terms of this Agreement unless (i) Employer is in material breach of the provisions of Section III.A through III.F of this Agreement taken as a whole (excluding for this purpose any isolated, insubstantial and inadvertent action not
taken in bad faith; (ii) Employee is required to relocate from Phoenix, Arizona inconsistent with Section II.E.; (iii) during the Initial Term of this Agreement John P. Hester ceases to serve in the capacity of Chief Executive Officer of
the Parent Company of Centuri and Employee resigns for Good Reason within twelve (12) months of Mr. Hester’s termination as Chief Executive Officer; or (iv) Employee resigns his employment for Good Reason within the twenty-four
(24) months following a Change in Control as described in Section III.H below. If Employee’s resignation is not subject to Section III.H. below and is due to events described in (i), (ii) or (iii) of this paragraph, Employee
shall be entitled to severance benefits as described in Section II.G.4.
H.
Severance Benefits upon Change in
Control
. Employee shall be entitled to the severance benefits provided in this Section III.H if, within twenty-four (24) months after a Change in Control: (i) the Employee terminates his employment with the Employer for Good Reason or
(ii) Employee’s employment is terminated by the Employer for any reason other than (x) Employee’s death, (y) Employee’s Disability or (z) Cause:
1. Any restricted stock awards, restricted stock units, stock options, stock appreciation rights or performance shares to
purchase or relating to the Employer Group held by the Employee on the date of such termination, which are not then currently vested or exercisable, shall on such date automatically become vested or exercisable and shall remain exercisable for
ninety (90) days thereafter (subject to any fixed term of such award, unit, option, right or share set forth in the document evidencing such award, unit, option, right or share).
2. A lump-sum severance payment equal to the sum of:
(a) twenty-four (24) months of the Employee’s yearly base salary in effect as of the date of such termination or, if
greater, as of the date of such Change in Control, and
(b) an amount equal to any incentive compensation that would be
payable to the Employee under any short-term incentive compensation plan of Centuri, calculated at the designated award opportunity for the Employee at the Date of Termination or, if greater, as of the date of such Change in Control, and at 100% of
the target, for the period during the applicable plan year preceding the date of such termination and for the severance period of twenty-four (24) months following the date of such termination (such post-termination period, the “Severance
Period”), and
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(c) an amount equal to any incentive compensation that would be payable to the
Employee under any long-term incentive compensation plan of Centuri, calculated at the designated award opportunity for the Employee at the Date of Termination or, if greater, as of the date of such Change in Control, for the period during the
applicable plan years preceding the date of such termination as if Employee was retirement eligible under the applicable plan and for the Severance Period at two (2) times target for the most recent three-year cycle (i.e. $475,000 using base
salary, target and award opportunity at the time of execution of this Agreement), and
(d) an amount equal to the full
cost of health and dental coverage for Employee (and his eligible dependents) for the Severance Period, which amount shall be calculated based on the full cost of continued health and dental coverage for Employee (and his eligible dependents) under
the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, as of the date of termination or, if greater, as of the date of such Change in Control, and
(e) an amount equal to the full cost of replacement disability and life insurance coverage for Employee (other than
travel/accident) for the Severance Period, which cost shall be calculated as of the Date of Termination or, if greater, as of the date of such Change in Control.
Subject to the limits in Section III.I. below, payment of the foregoing lump-sum severance payment shall be made in accordance with
Centuri’s regular payroll procedures and be made to Employee on the first regularly scheduled Centuri executive pay date that occurs sixty (60) days after the termination of Employee’s employment.
3. Centuri shall pay Employee any benefits under Centuri’s benefit plans, which are fully vested on the date of such
termination, in accordance with their terms, including with respect to applicable payment schedules and any applicable elections.
4. Employee shall be entitled to reimbursement of reasonable expenses actually incurred by Employee directly related to
outplacement services, which reimbursement shall not exceed Thirty Thousand Dollars ($30,000). Such reimbursement shall only be made for outplacement services directly related to such termination. Such expenses must be incurred not later than the
end of the second calendar year following the calendar year of such termination. Such expense must be submitted by Employee to Centuri as promptly as practicable, and in no event later than required by Centuri in order for Centuri to make such
reimbursement no later than last day of the third calendar year following the calendar year in which such termination occurs. In no event shall Centuri make any such reimbursement later than the last day of the third calendar year following the
calendar year in which such termination occurs.
5. If Employee’s employment is terminated by Employer prior to the
occurrence of a Change in Control, and if it can be shown that Employee’s termination (a) was at the direction or request of a third party that had taken steps reasonably calculated to effect the Change in Control thereafter, or
(b) otherwise occurred in connection with, or in furtherance of, the Change in Control, Employee shall have the rights described in this Section III.H above, as if a Change in Control had occurred on the date immediately preceding such
termination.
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6.
Limitation on Severance Benefits
. Anything in this Agreement to the
contrary notwithstanding, in the event that it shall be determined (as herein after provided) that any payment or distribution by Employer or any of its affiliates to or for the benefit of Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program, or arrangement including, without limitation, any stock option, restricted stock, stock appreciation right or
similar right, or the lapse or termination of any restriction on, or the vesting or exercisability of, any of the foregoing (individually and collectively, a “
Payment
”), would be subject, but for the application of this Section
III.H.6 to the excise tax imposed by Section 4999 of the Code, or any successor provision thereto (hereinafter the “Excise Tax”), by reason of being considered “contingent on a change in ownership or control” of Employer,
within the meaning of Section 280G(b)(2) of the Code, or any successor provision thereto, then:
a) if the
After-Tax
Payment Amount would be greater by reducing the amount of the Payment otherwise payable to Employee to the minimum extent necessary (but in no event less than zero) so that, after such reduction, no
portion of the Payment would be subject to the Excise Tax, then the Payment shall be so reduced; and
b) if the
After-Tax
Payment Amount would be greater without the reduction then there shall be no reduction in the Payment.
As used in this Section III.H.6,
“After-Tax
Payment Amount
” means (i) the amount
of the Payment, less (ii) the amount of federal income taxes payable with respect to the Payment calculated at the maximum marginal income tax rate for each year in which the Payment shall be paid to Employee (based upon the rate in effect for
such year as set forth in the Code at the time of the Payment), less (iii) the amount of the Excise Tax, if any, imposed upon the Payment. For purposes of any reduction made under Section III.H.2, the Payments that shall be reduced shall be
those that provide Employee the best economic benefit, and to the extent any Payments are economically equivalent, each shall be reduced pro rata.
I.
Compliance with Section 409A of the Code
. The payments to be made under this Agreement are intended to be exempt
from or compliant with Section 409A of the Code. Specifically, the severance payments and benefits under Section III.G and Section III.H hereof are intended to be exempt from Section 409A of the Code by compliance with the
short-term
deferral exemption as specified in 26 C.F.R.
Section 1.409A-1(b)(4)
and/or the separation pay exemption as specified in 26 C.F.R.
Section 1.409A-1(b)(9)
or are intended to comply with Section 409A of the Code including, but not limited to, being paid upon disability pursuant to 26 C.F.R.
Section 1.409-3(i)(4),
pursuant to change in control event pursuant to 26 C.F.R.
Section 1.409A-3(i)(5)
or pursuant to a fixed schedule or specified date
pursuant to 26 C.F.R.
Section 1.409A-3(a),
and the provisions of this Agreement will be administered, interpreted and construed accordingly. Notwithstanding the foregoing, Employer makes no representation
or warranty and shall have no liability to Employee or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code and do not satisfy an exemption from, or the
conditions of, Section 409A of the Code.
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For all purposes of this Agreement, Employee shall be considered to have terminated employment
with Employer when Employee incurs a “separation from service” with the Employer Group within the meaning of Section 409A(a)(2)(A)(i) of the Code.
If Centuri determines that severance payments due under this Agreement on account of termination of Employee’s employment constitute
“deferred compensation” subject to Section 409A of the Code, and that Employee is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code and 26 C.F.R.
Section 1.409A-1(i),
then such severance payments shall commence on the first payroll date of the seventh month following the month in which Employee’s termination occurs (with the first such payment
being a lump sum equal to the aggregate severance payments Employee would have received during the prior six-month period if no such delay had been imposed). For purposes of this Agreement, whether Employee is a “specified employee” will
be determined by Centuri.
All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance
with the requirements of Section 409A of the Code and the regulations to the extent that such reimbursements or in-kind benefits are not excepted from Section 409A of the Code, including where applicable, the requirement that (i) any
reimbursement is for expenses incurred during Employee’s lifetime (or during a shorter period of time specified in the Agreement); (ii) the amount of expenses eligible for reimbursement during the calendar year may not affect the expenses
eligible for reimbursement in any other calendar year; (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred; and (iv) the right to
reimbursement is not subject to set off or liquidation or exchange for any other benefit.
J.
Confidential Severance
Agreement and Release
. Notwithstanding any provision herein to the contrary, if Employee has not delivered to Employer an executed Confidential Severance Agreement and Release (the “
Release
”) on or before the fiftieth
(50th) day after the Date of Termination, or if Employee revokes such executed Release prior to the sixtieth (60th) day after the Date of Termination, Employee shall forfeit all of the payments and benefits described in Section III.G.2 or
Section III.G.4, as applicable; provided, however, that Employee shall not forfeit such amounts if Employer has not delivered to Employee the required form of Release on or before the 25th day following the Date of Termination. A form of Release is
attached as
Exhibit B
hereto. Employee acknowledges that Employer retains the right to modify the required form of the Release as Employer deems necessary in order to effectuate a full and complete release of claims against the Employer Group
and its affiliates, officers and directors.
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IV.
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COMPANY-RELATED
INVENTIONS AND DEVELOPMENTS
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A.
Records of Inventions
. Employee shall keep complete and current written records of Inventions
and Developments made during the course of his employment with Employer and promptly disclose all such Inventions and Developments in writing to Employer so that it may adequately determine its rights in such Inventions and Developments. Employee
shall supplement any such disclosure to the extent Employer may request. If Employee has any doubt as to whether or not to disclose any Inventions and Developments, Employee shall disclose the same to Employer.
11
B.
Ownership of Inventions
. All
Company-Related
Inventions and Developments made by Employee during the term of his employment with Employer shall be the sole and exclusive property of the applicable member(s) of the Employer Group. Employee
shall assign, and does hereby assign, his entire right, title and interest in such
Company-Related
Inventions and Developments to the applicable member(s) of the Employer Group. Employer’s ownership and
the foregoing assignment shall apply, without limitation, to all rights under the patent, copyright, and trade secret laws of any jurisdiction relating to
Company-Related
Inventions and Developments. If
Employee asserts any property right in any Inventions and Developments made by Employee during the term of his employment with Employer, Employee shall promptly notify Employer of the same in writing.
C.
Cooperation with Employer
. Employee shall assist and fully cooperate with Employer in obtaining and maintaining the
fullest measure of legal protection which the Employer Group elects to obtain and maintain for Inventions and Developments in which the Employer Group has a property right. Employee shall execute any lawful document requested by Employer relating to
obtaining and maintaining legal protection for any said Inventions and Developments including, but not limited to, executing applications, assignments, oaths, declarations and affidavits. Employee shall make himself available for interviews,
depositions and testimony relating to any said Inventions and Developments. These obligations shall survive the termination of Employee’s employment with Employer, provided that Employer shall compensate Employee at a reasonable rate after such
termination for time actually spent by Employee at Employer’s requests on such assistance. In the event Employer is unable for any reason whatsoever to secure Employee’s signature to any document reasonably necessary or appropriate for any
of the foregoing purposes including, but not limited to, renewals, extensions, continuations, divisions or continuations in part, in a timely manner, Employee irrevocably designates and appoints Employer and its duly authorized officers and agents
as his agents and
attorneys-in-fact
to act for Employee and on his behalf, but only for purposes of executing and filing any such document and doing all other lawfully
permitted acts to accomplish the foregoing purposes with the same legal force and effect as if executed by Employee.
D.
Pre-employment
Inventions
. Employee shall completely identify on
Exhibit C
attached hereto, without disclosing any trade secret or other proprietary and confidential information, all Inventions
and Developments made by Employee prior to his employment with Employer or prior to execution of this Agreement in which Employee has an ownership interest and which is not the subject matter of an issued patent or a printed publication at the time
Employee executes this Agreement.
E.
Disclosure of Inventions after Termination
. Employee shall promptly and
completely disclose in writing to Employer’s law department all
Company-Related
Inventions and Developments made by Employee during the one (1) year immediately following Employee’s termination
of employment, whether voluntarily or involuntarily, for the purposes of determining Employer’s rights in each such invention. It will be presumed that
Company-Related
Inventions and Developments
conceived by Employee which are reduced to practice within one (1) year after termination of Employee’s employment, whether voluntary or involuntary, were conceived during the term of Employee’s employment with Employer unless
Employee is able to establish a later conception date by clear and convincing evidence.
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F. As used in this Agreement, “
Proprietary and Confidential
Information
” means any and all
non-public
information or data in any form or medium, tangible or intangible, which has commercial value and which the Employer Group possesses or to which the Employer
Group has rights. Proprietary and Confidential Information includes, by way of example and without limitation, information concerning the Employer Group’s specific manner of doing business, including, but not limited to, the processes, methods
or techniques utilized by the Employer Group, the Employer Group’s customers, marketing strategies and plans, pricing information, sources of supply and material specifications, the Employer Group’s computer programs, system documentation,
special hardware, related software development, and the Employer Group’s business models, manuals, formulations, equipment, compositions, configurations,
know-how,
ideas, improvements and inventions.
Proprietary and Confidential Information also includes information developed by Employee during his course of employment with Employer or
otherwise relating to
Company-Related
Inventions and Developments, as hereinafter defined, as well as other information to which he may be given access to in connection with his employment.
G. As used in this Agreement, “
Inventions and Developments
” means any and all inventions, developments,
creative works and useful ideas of any description whatsoever, whether or not patentable. Inventions and Developments include, by way of example and without limitation, discoveries and improvements that consist of or relate to any form of
Proprietary and Confidential Information.
H. As used in this Agreement,
“
Company-Related
Inventions and Developments
” means all Inventions and Developments that: (a) relate at the time of conception or development to the actual business of the Employer Group
or to its actual research and development or to business or research and development that is the subject of active planning at the time; (b) result from or relate to any work performed for Employer, whether or not during normal business hours;
(c) are developed on Employer’s time; or (d) are developed through the use of the Employer Group’s Proprietary and Confidential Information, equipment, software, or other facilities and resources.
I. For purposes of this Agreement, “
make
” or “
made
,” when used in relation to Inventions and
Developments, includes any one or any combination of: (a) conception; (b) reduction to practice; or (c) development; and is without regard to whether Employee is a sole or joint inventor.
J.
Acknowledgement
. As of the date of this Agreement, the Employer Group is engaged primarily in the business of
specialty contracting and construction for customers in: the energy sector (which includes natural gas, electric power, oil, and solar and other such renewables); pipeline; conduit; telecommunications; municipal water; waste management;
transportation; manufacturing; and traffic control. As such, the Employer Group has developed and continues to develop and use certain trade secrets and other Proprietary and Confidential Information, as hereinafter defined. The Employer Group has
spent a substantial amount of time, effort and money, and will continue to do so in the future, to develop or acquire such Proprietary and Confidential Information and promote and increase its good will. Employer and Employee acknowledge and agree
that Proprietary and Confidential Information is an asset of particular and immeasurable value to the Employer Group.
13
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V.
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OBLIGATIONS RELATING TO PROPRIETARY AND CONFIDENTIAL INFORMATION
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A.
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Obligations of Employer
.
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1.
Proprietary and Confidential Information
. Employer shall provide Employee, during his employment, with valuable
Proprietary and Confidential Information for the purpose of assisting Employee in the performance of his job requirements and responsibilities with Employer. In addition, Employer shall provide to Employee, during his employment, with the equipment,
materials and facilities necessary to assist Employee in the performance of his job requirements and responsibilities with Employer.
2.
Training
. Employer shall provide Employee with any and all specialized training necessary to assist Employee in the
performance of his job requirements and responsibilities with Employer including, but not limited to, training relating to the Employer Group’s cost structures, methods of operation, the Employer Group’s products and marketing techniques,
the Employer Group’s business strategies, plans and models.
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B.
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Obligations of Employee
.
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1.
Nondisclosure of Proprietary and Confidential Information
. Both during and after the termination of employment,
whether such termination is voluntary or involuntary, Employee shall keep in confidence and trust all Proprietary and Confidential Information. Both during and after the termination of employment, whether such termination is voluntary or
involuntary, Employee shall not use or disclose Proprietary or Confidential Information without the written consent of Employer, except as may be necessary in the ordinary course of performing his duties to Employer.
2.
Return of Proprietary and Confidential Information
. All documents and tangible things (whether written or electronic)
embodying or containing Proprietary and Confidential Information are the Employer Group’s exclusive property. Employee shall be provided with or given access to such Proprietary and Confidential Information solely for performing his duties of
employment with Employer. Employee shall protect the confidentiality of their content and shall return all such Proprietary and Confidential Information, including all copies, facsimiles and specimens of them in any tangible or electronic forms in
Employee’s possession, custody or control to Employer before leaving the employment of Employer for any reason, whether voluntary or involuntary.
3.
Confidential Information from Previous Employment
. Employee shall not disclose or use during his employment with
Employer any proprietary and confidential information which Employee has acquired as a result of any previous employment or under a contractual obligation of confidentiality before his employment with Employer and, furthermore, Employee shall not
bring to the premises of Employer any copies or other tangible embodiments of any such proprietary and confidential information.
14
4.
Conflict of Interest
. Employee shall not engage in outside employment
or other activities in the course of which Employee would use or might be tempted or induced to use Proprietary and Confidential Information in other than the Employer Group’s own interest.
5.
Agreement Not to Compete/Solicit
a)
Non-Compete.
Employee agrees that during the Covenant Period (as defined below), he
shall not, without Employer’s written consent, directly or indirectly, for himself or on behalf of or in conjunction with any other person, persons, company, partnership, corporation or business venture of any nature:
(i) engage, as an officer, director, shareholder, owner, partner, joint venturer or in a managerial capacity, whether as an
employee, independent contractor, consultant, advisor or sales representative, in the Business of Employer Group (as the Business exists at the Date of Termination), within any state or province of the United States, Canada or any other country in
which the Employer Group conducts business, including without limitation any territory serviced by the Employer Group (the “
Territory
”);
(ii) call upon any person or entity which is a Customer of the Employer Group within the Territory for the purpose of
soliciting or selling products or services in competition with the Employer Group; or
(iii) call upon any prospective
acquisition candidate, on Employee’s own behalf or on behalf of any competitor, which candidate was, to Employee’s actual knowledge after due inquiry, either called upon by the Employer Group or for which the Employer Group made an
acquisition analysis for the purpose of acquiring such entity.
For purposes of this provision, “
Business
” shall mean
providing any of the products or services offered by the Employer Group, as of the Date of Termination, and includes without limitation, the (i) installation, replacement, repair, inspection and maintenance of any infrastructure within the
energy sector, whether relating to oil, natural gas, electric power, or solar or other such renewables; (ii) installation, replacement, repair, inspection and maintenance of underground or overhead pipeline, cable, wire and conduit;
(iii) street and roadway repairs, whether by asphalt or concrete; (iv) installation, replacement, repair, inspection and maintenance of any infrastructure relating to municipal water and waste management; (v) installation,
replacement, repair, inspection and maintenance of industrial facilities, including shop fabrication; and (vi) traffic control.
For
purposes of this provision, “Customer” shall include any person or entity (i) for which Employer Group provided Business services within the twenty-four (24) months preceding the Date of Termination; (ii) for which Employer
Group sought to provide Business services within the twenty-four (24) months preceding the Date of Termination (which includes without limitation responding to a Request For Information or a Request For Quotation); and/or (iii) that has a
valid contract for Business services with a member of Employer Group as of the Date of
15
Termination. Employee hereby acknowledges the reasonableness of the twenty-four month look back for the purposes of determining the Employer Group’s Customers, given the seasonal nature of
the relevant construction industry and long lead time until contract execution.
b)
Non-Solicitation
. Employee agrees that during the Covenant Period, he shall not, without Employer’s written consent, employ, hire, solicit, induce or identify for employment or attempt to employ,
hire, solicit, induce or identify for employment, directly or indirectly, any employee(s) of the Employer Group on the Date of Termination to leave his or her employment and become an employee, consultant or representative of any other entity
including, but not limited to, Employee’s new employer, if any.
c)
Publicly Traded Securities
. The provisions
of Section VI.B.5 of this Agreement shall not prevent Employee from acquiring or holding publicly traded stock or other public securities of a competing company, so long as Employee’s ownership does not exceed two percent (2%) of the
outstanding securities of such company.
d)
Agreement to Inform Subsequent Employers
. For a period of two
(2) years after the termination of Employee’s employment with Employer, whether voluntary or involuntary, Employee agrees to inform each new employer, prior to accepting employment, of the existence of this Agreement and provide that
employer with a copy of this Agreement.
e)
Reasonableness of Restrictions
. Employee acknowledges that the
restrictions set forth in Section V.B.5 of this Agreement are intended to protect the Employer Group’s legitimate business interests and its Proprietary and Confidential Information and established relationships and good will. Employee
acknowledges that the time, geographic and scope of activity limitations set forth herein are reasonable and necessary to protect the Employer Group’s legitimate business interests. However, if in any judicial proceeding, a court shall refuse
to enforce this Agreement as written, whether because the time limitation is too long or because the restrictions contained herein are more extensive (whether as to geographic area, scope of activity or otherwise) than is necessary to protect the
legitimate business interests of the Employer Group, it is expressly understood and agreed between the parties hereto that this Agreement is deemed modified to the extent necessary to permit this Agreement to be enforced in any such proceedings.
f)
Ability to Obtain Other Employment
. Employee acknowledges that (1) in the event of the termination of his
employment with Employer (whether voluntary or involuntary), Employee’s knowledge, experience and capabilities are such that Employee can obtain employment in business activities which are of a different and
non-competing
nature than those performed in the course of his employment with Employer or in the geographic areas outside of the Territory and (2) the enforcement of a remedy hereunder including, but not
limited to, injunctive relief, will not prevent Employee from earning a reasonable livelihood.
g)
Injunctive
Relief
. Employee acknowledges that compliance with Section VI.B of this Agreement is necessary to protect the good will and other legitimate business interests of the Employer Group and that a breach of any or all of these provisions will give
rise to irreparable and continuing injury to the Employer Group that is not adequately compensable in monetary damages or at law. Accordingly, Employee agrees that Employer, its successors and assigns, may obtain injunctive relief against the breach
or threatened breach of
16
any or all of these provisions, in addition to any other legal or equitable remedies which may be available to the Employer Group at law or in equity or under this Agreement. Because Employee
further acknowledges that it would be difficult to measure any damages caused to the Employer Group that might result from any breach by Employee of any promises set forth in this Agreement, Employee agrees that Employer shall be entitled to an
injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual damage to the Employer Group, as well as to be relieved of any obligation to provide further payment or benefits to Employee or
Employee’s dependents.
h)
Other Remedies
. If Employee violates and/or breaches this Agreement, Employer shall
be entitled to an accounting and repayment of all lost profits, compensation, commissions, remuneration or benefits that Employee directly or indirectly has realized or may realize as a result of any such violation or breach. Employer shall also be
entitled to recover for all lost sales, profits, commissions, good will and customers caused by Employee’s
improper acts, in addition
to and not in limitation of any injunctive relief or other rights or remedies that Employer is or may be entitled to at law or in equity or under this Agreement.
i)
Costs
. Employee acknowledges that should it become necessary for Employer to file suit to enforce the provisions
contained herein, and any court of competent jurisdiction awards the Employer Group any damages and/or an injunction due to the acts of Employee, then Employer shall be entitled to recover its reasonable costs incurred in conducting the suit
including, but not limited to, reasonable attorneys’ fees and expenses.
j)
Covenant Period
. For purposes of
this Section V.B.5, the Covenant Period shall mean the period from and during the Term of this Agreement and ending on the date that is two (2) years after Employee’s employment with Employer terminates, whether voluntary or involuntary.
For purposes of clarity, in the event that Employee’s employment with Employer terminates for any reason, whether voluntary or involuntary, after Employee receives a Renewal Termination Notice and before the end of the Term, the Covenant Period
shall end on the date that is two (2) years after the termination of Employee’s employment and not two (2) years from the Renewal Termination Notice date.
6.
Nondisparagement
. Employee acknowledges and agrees that both during and after his employment with Employer, whether
such termination is voluntary or involuntary, Employee shall not disparage, denigrate or comment negatively upon, either orally or in writing, the Employer Group or any of their respective officers, directors, employees or representatives, to or in
the presence of any person or entity unless compelled to act by a valid subpoena or other legal mandate; provided, however, if Employee receives such a valid subpoena or legal mandate, he shall provide Employer with written notice of the same at
least five (5) business days prior to the date on which Employee is required to make the disclosure.
Employer agrees to use
reasonable efforts to cause the directors and executive officers of Centuri and Parent Company not to disparage, denigrate or comment negatively upon Employee, either orally or in writing, to any person or entity that is not an officer, director or
employee of Employer Group unless compelled to act by a valid subpoena or other legal
17
mandate; provided, however, if Employer receives such a valid subpoena or legal mandate, it shall provide Employee with written notice of the same at least five (5) business days prior to
the date on which Employer is required to make the disclosure. Employer and the directors and officers of Centuri and Parent Company will not provide any references to future employers or third parties without receiving a written request from
Employee with an executed release from any liability for Employer and its directors, officers, and employees.
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VI.
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WAIVER OF RIGHT TO JURY TRIAL
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EMPLOYER AND EMPLOYEE HEREBY
VOLUNTARILY, KNOWINGLY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY FOR ALL CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT, AS WELL AS FOR ALL CLAIMS ARISING OUT OF EMPLOYEE’S EMPLOYMENT WITH EMPLOYER OR TERMINATION
THEREFROM INCLUDING, BUT NOT LIMITED TO:
A. Any and all claims and causes of action arising under contract, tort or other
common law including, without limitation, breach of contract, fraud, estoppel, misrepresentation, express or implied duties of good faith and fair dealing, wrongful discharge, discrimination, retaliation, harassment, negligence, gross negligence,
false imprisonment, assault and battery, conspiracy, intentional or negligent infliction of emotional distress, slander, libel, defamation and invasion of privacy;
B. Any and all claims and causes of action arising under any federal, state or local law, regulation or ordinance, including,
without limitation, claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act and all corresponding
state laws; and
C. Any and all claims and causes of action for wages, employee benefits, vacation pay, severance pay,
pension or profit sharing benefits, health or welfare benefits, bonus compensation, commissions, deferred compensation or other remuneration, employment benefits or compensation, past or future loss of pay or benefits or expenses.
Employer and Employee acknowledge and agree that this Agreement shall be
interpreted, governed by and construed in accordance with the laws of the State of Nevada, without regard to the conflict of laws principles or rules thereof.
Employer and Employee irrevocably and unconditionally agree that any legal suit, action or proceeding arising out of or relating to this
Agreement, as well as to all claims arising out of Employee’s employment with Employer or termination therefrom, shall be brought in either the Federal District Court for Nevada or in a judicial district court of Clark County, Nevada
(hereinafter referred to as the “
Nevada Courts
”). In that regard, Employer and Employee waive, to the fullest extent allowed, any objection that Employer or Employee may have to the venue of any such proceeding being brought in the
Nevada Courts, and any claim that any such
18
action or proceeding brought in the Nevada Courts has been brought in an inconvenient forum. In addition, Employer and Employee irrevocably and unconditionally submit to the exclusive
jurisdiction of the Nevada Courts in any such suit, action or proceeding. Employer and Employee acknowledge and agree that a judgment in any suit, action or proceeding brought in the Nevada Courts shall be conclusive and binding on each and may be
enforced in any other courts to whose jurisdiction Employer or Employee is or may be subject to, by suit upon such judgment.
In the event
Employee obtains a final judgment in his favor by a court of competent jurisdiction with respect to any dispute regarding Employer’s failure to pay Employee on a timely basis the amounts to which he is entitled under this Agreement or as a
result of any other breach of this Agreement by Employer, Employer shall pay all amounts and damages to which Employee may be entitled as a result of such breach, including interest thereon and all reasonable legal fees and expense and other costs
incurred by Employee to enforce Employee’s rights hereunder.
VIII.
MISCELLANEOUS
A.
Publicity Release
. By executing this Agreement, Employee forever gives the Employer Group, its successors, assigns,
licensees and any other designees, the absolute right and permission, throughout the world: (1) to copyright (and to renew and extend any copyright), use, reuse, publish and republish photographic portraits and pictures, motion or still, of
Employee, or in which Employee may be included, in whole or in part, or composite or distorted character in any form, whether heretofore taken or to be taken in the future, in conjunction with Employee’s own or a fictitious name or title (which
Employee now has or may have in the future), or reproductions thereof, in color or otherwise, made through any media at any place, for art, advertising, trade or any other purpose whatsoever; and (2) to record, reproduce, amplify, simulate,
“double” and/or “dub” Employee’s voice and transmit the same by any mechanical or electronic means, for any purpose whatsoever. Employee further consents to the use of any printed matter giving Employee, or not giving
Employee, a credit, in the sole discretion of any of the aforementioned parties to whom this authorization and release is given, in conjunction therewith. Employee waives any right he may have to inspect and/or approve the finished product or the
advertising copy or printed matter that may be used in connection therewith, or the use to which it may be applied.
B.
Withholding
. Employer may withhold from any amounts payable under this Agreement such federal, state, local, F.I.C.A., foreign or other taxes as shall be required to be withheld pursuant to any applicable law or regulation.
C.
Notices
. All notices, consents, requests, instructions, approvals and other communications provided for in this
Agreement shall be in writing and shall be addressed as follows:
19
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To Employer:
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Centuri Construction Group, Inc.
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c/o Southwest Gas Corporation
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5241 Spring Mountain Road
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Las Vegas, NV 88150
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Attention: General Counsel
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To Employee:
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Paul M. Daily
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Notice shall be deemed given and effective: (1) upon receipt, if delivered personally; (2) three
(3) days after it has been deposited in the U.S. mail, addressed as required above, and sent via registered or certified mail, return receipt requested, postage prepaid; or (3) the next business day after it has been sent via a recognized
overnight courier. Employer and/or Employee may change the address for notice purposes by notifying the other of such change in accordance with this Section VIII.C.
D.
Severability
. If any provision of this Agreement is held to be invalid, inoperative or unenforceable for any reason,
it shall be modified rather than voided, if possible, in order to achieve the intent of the parties hereto to the maximum extent possible. In any event, if any provision of this Agreement is held to be invalid, inoperative or unenforceable for any
reason, the other provisions of this Agreement shall be deemed valid and operative and, so far as is reasonable and possible, effect shall be given to the intent manifested by the provision or provisions held invalid or inoperative.
E.
Survival of Certain Obligations
. The obligations of the parties set forth in this Agreement that by their terms
extend beyond or survive the termination of this Agreement, whether voluntarily or involuntarily, will not be affected or diminished in any way by the termination of this Agreement.
F.
Headings
. The headings contained in this Agreement are for purposes of reference and convenience only and are not
intended in any way to describe, interpret, define or limit the extent or intent of this Agreement.
G.
Entire
Agreement
. This Agreement supersedes any other agreements, written or oral, between the Employer Group and Employee, and Employee has no oral representations, understandings or agreements with the Employer Group or any of their respective
officers, directors or representatives covering the same subject matter as this Agreement. This written Agreement is the final, complete and exclusive statement and expression of the agreement between Employer and Employee and of all the terms of
this Agreement. This Agreement cannot be modified, varied, contradicted or supplemented by evidence of any prior or contemporaneous oral or written agreements.
H.
Amendment/Waiver
. Neither this Agreement nor any term hereof may be modified or amended except by written instrument
signed by a duly authorized officer of Employer and by Employee. No term of this Agreement may be waived other than by written instrument signed by the party waiving the benefit of such term. Any such waiver shall constitute a waiver only with
respect to the specific matter described in such written instrument and shall in no way impair the rights of the party granting such waiver in any other respect or
20
at any other time. Neither the waiver by Employer or Employee of a breach of or a default under any of the provisions of this Agreement, nor the failure by either Employer or Employee, on one or
more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any such provisions, rights or
privileges hereunder.
I.
Assignment
. This Agreement is personal to the parties and neither party may assign any
rights or obligations under the same without the prior written consent of the other; provided, however, that in the event of a sale of the Employer Group’s business to a third party (whether by sale of all or a majority of the Employer
Group’s issued and outstanding equity securities, by a merger or reorganization, or by a sale of all or substantially of the Employer Group’s assets), then this Agreement may be assigned by Employer to such third party purchaser without
the prior written consent of Employee, provided that such third party purchaser agrees to assume and abide by all of Employer’s obligations set forth in this Agreement and provides written notice thereof to Employee. In the event of any such
assignment, all references to “Centuri” hereunder shall mean the assignee, and to the extent any entity becomes the successor to Centuri, all obligations hereunder shall be the obligations of the successor and “Centuri” mean the
successor entity.
J.
Counterparts
. This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
[Signature page follows.]
21
IN WITNESS, WHEREOF, the parties hereto have executed this Agreement as of the
date first written above, but to be effective as of the Effective Date.
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CENTURI CONSTRUCTION GROUP, INC.:
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By:
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/s/ John P. Hester
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John P. Hester
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Chairman
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EMPLOYEE:
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/s/ Paul M. Daily
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Paul M. Daily
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22
Exhibit 10.02
NPL Executive Deferred
Compensation Plan
IMPORTANT NOTE
This document
has not been approved by the Department of Labor, Internal Revenue Service or any other governmental entity. An adopting Employer must determine whether the Plan is subject to the Federal securities laws and the securities laws of the various
states. An adopting Employer may not rely on this document to ensure any particular tax consequences or to ensure that the Plan is “unfunded and maintained primarily for the purpose of providing deferred compensation to a select group of
management or highly compensated employees” under Title I of the Employee Retirement Income Security Act of 1974, as amended, with respect to the Employer’s particular situation. Fidelity Employer Services Company, its affiliates and
employees cannot provide you with legal advice in connection with the execution of this document. This document should be reviewed by the Employer’s attorney prior to execution.
TABLE OF CONTENTS
PREAMBLE
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ARTICLE 1 – GENERAL
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1.1
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Plan
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1-1
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1.2
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Effective Dates
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1-1
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1.3
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Amounts Not Subject to Code Section 409A
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1-1
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ARTICLE 2 – DEFINITIONS
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2-1
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2.1
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Account
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2-1
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2.2
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Administrator
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2-1
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2.3
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Adoption Agreement
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2-1
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2.4
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Beneficiary
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2-1
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2.5
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Board or Board of Directors
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2-1
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2.6
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Bonus
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2-1
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2.7
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Change in Control
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2-1
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2.8
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Code
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2-1
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2.9
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Compensation
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2-1
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2.10
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Director
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2-1
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2.11
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Disabled
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2-2
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2.12
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Eligible Employee
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2-2
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2.13
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Employer
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2-2
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2.14
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ERISA
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2-2
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2.15
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Identification Date
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2-2
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2.16
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Key Employee
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2-2
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2.17
|
|
Participant
|
|
2-2
|
|
2.18
|
|
Plan
|
|
2-2
|
|
2.19
|
|
Plan Sponsor
|
|
2-2
|
|
2.20
|
|
Plan Year
|
|
2-2
|
|
2.21
|
|
Related Employer
|
|
2-2
|
|
2.22
|
|
Retirement
|
|
2-3
|
|
2.23
|
|
Separation from Service
|
|
2-3
|
|
2.24
|
|
Unforeseeable Emergency
|
|
2-4
|
|
2.25
|
|
Valuation Date
|
|
2-4
|
|
2.26
|
|
Years of Service
|
|
5-1
|
|
|
|
|
ARTICLE 3 – PARTICIPATION
|
|
5-1
|
|
3.1
|
|
Participation
|
|
5-1
|
|
3.2
|
|
Termination of Participation
|
|
5-1
|
i
|
|
|
|
|
|
|
ARTICLE 4 – PARTICIPANT ELECTIONS
|
|
5-1
|
|
4.1
|
|
Deferral Agreement
|
|
5-1
|
|
4.2
|
|
Amount of Deferral
|
|
5-1
|
|
4.3
|
|
Timing of Election to Defer
|
|
5-1
|
|
4.4
|
|
Election of Payment Schedule and Form of Payment
|
|
5-1
|
|
|
|
|
ARTICLE 5 – EMPLOYER CONTRIBUTIONS
|
|
5-1
|
|
5.1
|
|
Matching Contributions
|
|
5-1
|
|
5.2
|
|
Other Contributions
|
|
5-1
|
|
|
|
|
ARTICLE 6 – ACCOUNTS AND CREDITS
|
|
8-1
|
|
6.1
|
|
Establishment of Account
|
|
8-1
|
|
6.2
|
|
Credits to Account
|
|
8-1
|
|
|
|
|
ARTICLE 7 – INVESTMENT OF CONTRIBUTIONS
|
|
8-1
|
|
7.1
|
|
Investment Options
|
|
8-1
|
|
7.2
|
|
Adjustment of Accounts
|
|
8-1
|
|
|
|
|
ARTICLE 8 – RIGHT TO BENEFITS
|
|
9-1
|
|
8.1
|
|
Vesting
|
|
9-1
|
|
8.2
|
|
Death
|
|
9-1
|
|
8.3
|
|
Disability
|
|
9-1
|
|
|
|
|
ARTICLE 9 – DISTRIBUTION OF BENEFITS
|
|
9-2
|
|
9.1
|
|
Amount of Benefits
|
|
9-2
|
|
9.2
|
|
Method and Timing of Distributions
|
|
9-2
|
|
9.3
|
|
Unforeseeable Emergency
|
|
9-2
|
|
9.4
|
|
Payment Election Overrides
|
|
9-3
|
|
9.5
|
|
Cashouts of Amounts Not Exceeding Stated Limit
|
|
9-3
|
|
9.6
|
|
Required Delay in Payment to Key Employees
|
|
9-3
|
|
9.7
|
|
Change in Control
|
|
9-4
|
|
9.8
|
|
Permissible Delays in Payment
|
|
9-8
|
|
9.9
|
|
Permitted Acceleration of Payment
|
|
9-9
|
ii
|
|
|
|
|
|
|
ARTICLE 10 – AMENDMENT AND TERMINATION
|
|
11-1
|
|
10.1
|
|
Amendment by Plan Sponsor
|
|
11-1
|
|
10.2
|
|
Plan Termination Following Change in Control or Corporate Dissolution
|
|
11-1
|
|
10.3
|
|
Other Plan Terminations
|
|
11-1
|
|
|
|
|
ARTICLE 11 – THE TRUST
|
|
11-1
|
|
11.1
|
|
Establishment of Trust
|
|
11-1
|
|
11.2
|
|
Grantor Trust
|
|
11-1
|
|
11.3
|
|
Investment of Trust Funds
|
|
11-1
|
|
|
|
|
ARTICLE 12 – PLAN ADMINISTRATION
|
|
12-1
|
|
12.1
|
|
Powers and Responsibilities of the Administrator
|
|
12-1
|
|
12.2
|
|
Claims and Review Procedures
|
|
12-2
|
|
12.3
|
|
Plan Administrative Costs
|
|
12-3
|
|
|
|
|
ARTICLE 13 – MISCELLANEOUS
|
|
13-3
|
|
13.1
|
|
Unsecured General Creditor of the Employer
|
|
13-3
|
|
13.2
|
|
Employer’s Liability
|
|
13-3
|
|
13.3
|
|
Limitation of Rights
|
|
13-3
|
|
13.4
|
|
Anti-Assignment
|
|
13-3
|
|
13.5
|
|
Facility of Payment
|
|
13-4
|
|
13.6
|
|
Notices
|
|
13-4
|
|
13.7
|
|
Tax Withholding
|
|
13-4
|
|
13.8
|
|
Indemnification
|
|
13-4
|
|
13.9
|
|
Successors
|
|
13-5
|
|
13.10
|
|
Disclaimer
|
|
13-6
|
|
13.11
|
|
Governing Law
|
|
13-6
|
iii
PREAMBLE
The Plan is intended to be a “plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees” within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended, or an “excess benefit
plan” within the meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended, or a combination of both. The Plan is further intended to conform with the requirements of Internal Revenue Code
Section 409A and the final regulations issued thereunder and shall be interpreted, implemented and administered in a manner consistent therewith.
ARTICLE 1 – GENERAL
|
1.1
|
Plan.
The Plan will be referred to by the name specified in the Adoption Agreement.
|
|
|
(a)
|
Original Effective Date.
The Original Effective Date is the date as of which the Plan was initially
adopted.
|
|
|
(b)
|
Amendment Effective Date.
The Amendment Effective Date is the date specified in the Adoption Agreement
as of which the Plan is amended and restated. Except to the extent otherwise provided herein or in the Adoption Agreement, the Plan shall apply to amounts deferred and benefit payments made on or after the Amendment Effective Date.
|
|
|
(c)
|
Special Effective Date.
A Special Effective Date may apply to any given provision if so specified in
Appendix A of the Adoption Agreement. A Special Effective Date will control over the Original Effective Date or Amendment Effective Date, whichever is applicable, with respect to such provision of the Plan.
|
|
1.3
|
Amounts Not Subject to Code Section 409A
|
Except as otherwise indicated by the Plan Sponsor in Section 1.01 of the Adoption Agreement, amounts deferred before
January 1, 2005 that are earned and vested on December 31, 2004 will be separately accounted for and administered in accordance with the terms of the Plan as in effect on December 31, 2004.
1-1
ARTICLE 2 – DEFINITIONS
Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise. Wherever
used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:
|
2.1
|
“Account”
means an account established for the purpose of recording amounts credited on
behalf of a Participant and any income, expenses, gains, losses or distributions included thereon. The Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid
to a Participant or to the Participant’s Beneficiary pursuant to the Plan.
|
|
2.2
|
“Administrator”
means the person or persons designated by the Plan Sponsor in
Section 1.05 of the Adoption Agreement to be responsible for the administration of the Plan. If no Administrator is designated in the Adoption Agreement, the Administrator is the Plan Sponsor.
|
|
2.3
|
“Adoption Agreement”
means the agreement adopted by the Plan Sponsor that establishes the
Plan.
|
|
2.4
|
“Beneficiary”
means the persons, trusts, estates or other entities entitled under
Section 8.2 to receive benefits under the Plan upon the death of a Participant.
|
|
2.5
|
“Board” or “Board of Directors”
means the Board of Directors of the Plan Sponsor.
|
|
2.6
|
“Bonus”
means an amount of incentive cash remuneration payable by the Employer to a
Participant.
|
|
2.7
|
“Change in Control”
means the occurrence of an event involving the Plan Sponsor that is
described in Section 9.7.
|
|
2.8
|
“Code”
means the Internal Revenue Code of 1986, as amended.
|
|
2.9
|
“Compensation”
has the meaning specified in Section 3.01 of the Adoption Agreement.
|
|
2.10
|
“Director”
means a non-employee member of the Board who has been designated by the Employer
as eligible to participate in the Plan.
|
2-1
|
2.11
|
“Disabled”
means a determination by the Administrator that the Participant is either
(a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12
months, or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or last for a continuous period of not less than twelve months, receiving income replacement benefits for a period
of not less than three months under an accident and health plan covering employees of the Employer. A Participant will be considered Disabled if he is determined to be totally disabled by the Social Security Administration or the Railroad Retirement
Board.
|
|
2.12
|
“Eligible Employee”
means an employee of the Employer who satisfies the requirements in
Section 2.01 of the Adoption Agreement.
|
|
2.13
|
“Employer”
means the Plan Sponsor and any other entity which is authorized by the Plan
Sponsor to participate in and, in fact, does adopt the Plan.
|
|
2.14
|
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.
|
|
2.15
|
“Identification Date”
means the date as of which Key Employees are determined, which is
specified in Section 1.06 of the Adoption Agreement.
|
|
2.16
|
“Key Employee”
means an employee who satisfies the conditions set forth in Section 9.6.
|
|
2.17
|
“Participant”
means an Eligible Employee or Director who commences participation in the Plan
in accordance with Article 3.
|
|
2.18
|
“Plan”
means the unfunded plan of deferred compensation set forth herein, including the
Adoption Agreement and any trust agreement, as adopted by the Plan Sponsor and as amended from time to time.
|
|
2.19
|
“Plan Sponsor”
means the entity identified in Section 1.03 of the Adoption Agreement or
any successor by merger, consolidation or otherwise.
|
|
2.20
|
“Plan Year”
means the period identified in Section 1.02 of the Adoption Agreement.
|
|
2.21
|
“Related Employer”
means the Employer and (a) any corporation that is a member of a
controlled group of corporations as defined in Code Section 414(b) that includes the Employer and (b) any trade or business that is under common control as defined in Code Section 414(c) that includes the Employer.
|
2-2
|
2.22
|
“Retirement”
has the meaning specified in 6.01(f) of the Adoption Agreement.
|
|
2.23
|
“Separation from Service”
means the date that the Participant dies, retires or otherwise has
a termination of employment with respect to all entities comprising the Related Employer. A Separation from Service does not occur if the Participant is on military leave, sick leave or other bona fide leave of absence if the period of leave does
not exceed six months or such longer period during which the Participant’s right to re- employment is provided by statute or contract. If the period of leave exceeds six months and the Participant’s right to re-employment is not provided
either by statute or contract, a Separation from Service will be deemed to have occurred on the first day following the six-month period. If the period of leave is due to any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than six months, where the impairment causes the Participant to be unable to perform the duties of his or her position of employment or any substantially similar
position of employment, a 29-month period of absence may be substituted for the six-month period.
|
Whether a termination of employment has occurred is based on whether the facts and circumstances indicate that the Related
Employer and the Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Participant would perform after such date (whether as an employee or as an independent
contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36 month period (or the full period of
services to the Related Employer if the employee has been providing services to the Related Employer for less than 36 months). If a Participant continues to provide services to a Related Employer in a capacity other than as an employee, the
Participant will not be deemed to have a termination of employment if the Participant is providing services at an annual rate that is at least 50 percent of the services rendered by such individual, on average, during the immediately preceding
36-month period of employment (or such lesser period of employment).
An independent contractor is considered to have
experienced a Separation from Service with the Related Employer upon the expiration of the contract (or, in the case of more than one contract, all contracts) under which services are performed for the Related Employer if the expiration constitutes
a good-faith and complete termination of the contractual relationship.
2-3
If a Participant provides services as both an employee and an independent
contractor of the Related Employer, the Participant must separate from service both as an employee and as an independent contractor to be treated as having incurred a Separation from Service. If a Participant ceases providing services as an
independent contractor and begins providing services as an employee, or ceases providing services as an employee and begins providing services as an independent contractor, the Participant will not be considered to have experienced a Separation from
Service until the Participant has ceased providing services in both capacities.
If a Participant provides services both as
an employee and as a member of the board of directors of a corporate Related Employer (or an analogous position with respect to a noncorporate Related Employer), the services provided as a director are not taken into account in determining whether
the Participant has incurred a Separation from Service as an employee for purposes of a nonqualified deferred compensation plan in which the Participant participates as an employee that is not aggregated under Code Section 409A with any plan in
which the Participant participates as a director.
If a Participant provides services both as an employee and as a member
of the board of directors of a corporate Related Employer (or an analogous position with respect to a noncorporate Related Employer), the services provided as an employee are not taken into account in determining whether the Participant has
experienced a Separation from Service as a director for purposes of a nonqualified deferred compensation plan in which the Participant participates as a director that is not aggregated under Code Section 409A with any plan in which the
Participant participates as an employee.
All determinations of whether a Separation from Service has occurred will be made
in a manner consistent with Code Section 409A and the final regulations thereunder.
|
2.24
|
“Unforeseeable Emergency”
means a severe financial hardship of the Participant resulting from
an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependent (as defined in Code Section 152, without regard to Code section 152(b)(i), (b)(2) and (d)(i)(B);
loss of the Participant’s property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.
|
|
2.25
|
“Valuation Date”
means each business day of the Plan Year that the New York Stock Exchange is
open.
|
2-4
|
2.26
|
“Years of Service”
means each one year period for which the Participant receives service
credit in accordance with the provisions of Section 7.01(d) of the Adoption Agreement.
|
ARTICLE 3 –
PARTICIPATION
|
3.1
|
Participation.
The Participants in the Plan shall be those Directors and employees of the Employer who
satisfy the requirements of Section 2.01 of the Adoption Agreement.
|
|
3.2
|
Termination of Participation.
The Administrator may terminate a Participant’s participation in the
Plan in a manner consistent with Code Section 409A. If the Employer terminates a Participant’s participation before the Participant experiences a Separation from Service, the Participant’s vested Accounts shall be paid in accordance
with the provisions of Article 9.
|
ARTICLE 4 – PARTICIPANT ELECTIONS
|
4.1
|
Deferral Agreement.
If permitted by the Plan Sponsor in accordance with Section 4.01 of the
Adoption Agreement, each Eligible Employee and Director may elect to defer his Compensation within the meaning of Section 3.01 of the Adoption Agreement by executing in writing or electronically, a deferral agreement in accordance with rules
and procedures established by the Administrator and the provisions of this Article 4.
|
A new deferral agreement must be
timely executed for each Plan Year during which the Eligible Employee or Director
desires to defer Compensation. An
Eligible Employee or Director who does not timely execute a deferral agreement shall be deemed to have elected zero deferrals of Compensation for such Plan Year.
A deferral agreement may be changed or revoked during the period specified by the Administrator. Except as provided in
Section 9.3 or in Section 4.01(c) of the Adoption Agreement, a deferral agreement becomes irrevocable at the close of the specified period.
|
4.2
|
Amount of Deferral.
An Eligible Employee or Director may elect to defer Compensation in any amount
permitted by Section 4.01(a) of the Adoption Agreement.
|
|
4.3
|
Timing of Election to Defer.
Each Eligible Employee or Director who desires to defer Compensation
otherwise payable during a Plan Year must execute a deferral agreement within the period preceding the Plan Year specified by the Administrator. Each Eligible Employee who desires to defer Compensation that is a Bonus must execute a deferral
agreement within the period preceding the Plan Year during which the Bonus is earned that is specified by the Administrator, except that if the Bonus can be
|
5-1
|
|
treated as performance based compensation as described in Code Section 409A(a)(4)(B)(iii), the deferral agreement may be executed within the period specified by the Administrator, which
period, in no event, shall end after the date which is six months prior to the end of the period during which the Bonus is earned, provided the Participant has performed services continuously from the later of the beginning of the performance period
or the date the performance criteria are established through the date the Participant executed the deferral agreement and provided further that the compensation has not yet become ‘readily ascertainable’ with the meaning of Reg. Sec
1.409A-2(a)(8). In addition, if the Compensation qualifies as ‘fiscal year compensation’ within the meaning of Reg. Sec. 1.409A -2(a)(6), the deferral agreement may be made not later than the end of the Employer’s taxable year
immediately preceding the first taxable year of the Employer in which any services are performed for which such Compensation is payable.
|
Except as otherwise provided below, an employee who is classified or designated as an Eligible Employee during a Plan Year or a
Director who is designated as eligible to participate during a Plan Year may elect to defer Compensation otherwise payable during the remainder of such Plan Year in accordance with the rules of this Section 4.3 by executing a deferral agreement
within the thirty (30) day period beginning on the date the employee is classified or designated as an Eligible Employee or the date the Director is designated as eligible, whichever is applicable, if permitted by Section 4.01(b)(ii) of
the Adoption Agreement. If Compensation is based on a specified performance period that begins before the Eligible Employee or Director executes his deferral agreement, the election will be deemed to apply to the portion of such Compensation equal
to the total amount of Compensation for the performance period multiplied by the ratio of the number of days remaining in the performance period after the election becomes irrevocable and effective over the total number of days in the performance
period. The rules of this paragraph shall not apply unless the Eligible Employee or Director can be treated as initially eligible in accordance with Reg. Sec. 1.409A-2(a)(7).
|
4.4
|
Election of Payment Schedule and Form of Payment.
|
All elections of a payment schedule and a form of payment will be made in accordance with rules and procedures established by
the Administrator and the provisions of this Section 4.4.
(a) If the Plan Sponsor has elected to permit annual
distribution elections in accordance with Section 6.01(h) of the Adoption Agreement the following rules apply. At the time an Eligible Employee or Director completes a deferral agreement, the Eligible Employee or Director must elect a
distribution event (which includes a specified time) and a form of payment for the Compensation subject to the deferral agreement from among the options the Plan Sponsor has made available for this purpose and which are specified in 6.01(b) of the
Adoption Agreement. Prior to the
5-1
time required by Reg. Sec. 1.409A-2, the Eligible Employee or Director shall elect a distribution event (which includes a specified time) and a form of payment for any Employer contributions that
may be credited to the Participant’s Account during the Plan Year. If an Eligible Employee or Director fails to elect a distribution event, he shall be deemed to have elected Separation from Service as the distribution event. If he fails to
elect a form of payment, he shall be deemed to have elected a lump sum form of payment.
(b) If the Plan Sponsor has
elected not to permit annual distribution elections in accordance with Section 6.01(h) of the Adoption Agreement the following rules apply. At the time an Eligible Employee or Director first completes a deferral agreement but in no event later
than the time required by Reg. Sec. 1.409A-2, the Eligible Employee or Director must elect a distribution event (which includes a specified time) and a form of payment for amounts credited to his Account from among the options the Plan Sponsor has
made available for this purpose and which are specified in Section 6.01(b) of the Adoption Agreement. If an Eligible Employee or Director fails to elect a distribution event, he shall be deemed to have elected Separation from Service in the
distribution event. If the fails to elect a form of payment, he shall be deemed to have elected a lump sum form of payment.
ARTICLE 5
– EMPLOYER CONTRIBUTIONS
|
5.1
|
Matching Contributions.
If elected by the Plan Sponsor in Section 5.01(a) of the Adoption
Agreement, the Employer will credit the Participant’s Account with a matching contribution determined in accordance with the formula specified in Section 5.01(a) of the Adoption Agreement. The matching contribution will be treated as
allocated to the Participant’s Account at the time specified in Section 5.01(a)(iii) of the Adoption Agreement.
|
|
5.2
|
Other Contributions.
If elected by the Plan Sponsor in Section 5.01(b) of the Adoption Agreement,
the Employer will credit the Participant’s Account with a contribution determined in accordance with the formula or method specified in Section 5.01(b) of the Adoption Agreement. The contribution will be treated as allocated to the
Participant’s Account at the time specified in Section 5.01(b)(iii) of the Adoption Agreement.
|
5-1
ARTICLE 6 – ACCOUNTS AND CREDITS
|
6.1
|
Establishment of Account.
For accounting and computational purposes only, the Administrator will
establish and maintain an Account on behalf of each Participant which will reflect the credits made pursuant to Section 6.2, distributions or withdrawals, along with the earnings, expenses, gains and losses allocated thereto, attributable to
the hypothetical investments made with the amounts in the Account as provided in Article 7. The Administrator will establish and maintain such other records and accounts, as it decides in its discretion to be reasonably required or appropriate to
discharge its duties under the Plan.
|
|
6.2
|
Credits to Account.
A Participant’s Account will be credited for each Plan Year with the amount of
his elective deferrals under Section 4.1 at the time the amount subject to the deferral election would otherwise have been payable to the Participant and the amount of Employer contributions (if any) treated as allocated on his behalf under
Article 5.
|
ARTICLE 7 – INVESTMENT OF CONTRIBUTIONS
|
7.1
|
Investment Options.
The amount credited to each Account shall be treated as invested in the investment
options designated for this purpose by the Administrator.
|
|
7.2
|
Adjustment of Accounts.
The amount credited to each Account shall be adjusted for hypothetical
investment earnings, expenses, gains or losses in an amount equal to the earnings, expenses, gains or losses attributable to the investment options selected by the party designated in Section 9.01 of the Adoption Agreement from among the
investment options provided in Section 7.1. If permitted by Section 9.01 of the Adoption Agreement, a Participant (or the Participant’s Beneficiary after the death of the Participant) may, in accordance with rules and procedures
established by the Administrator, select the investments from among the options provided in Section 7.1 to be used for the purpose of calculating future hypothetical investment adjustments to the Account or to future credits to the Account
under Section 6.2 effective as of the Valuation Date coincident with or next following notice to the Administrator. Each Account shall be adjusted as of each Valuation Date to reflect: (a) the hypothetical earnings, expenses, gains and
losses described above; (b) amounts credited pursuant to Section 6.2; and (c) distributions or withdrawals. In addition, each Account may be adjusted for its allocable share of the hypothetical costs and expenses associated with the
maintenance of the hypothetical investments provided in Section 7.1.
|
8-1
ARTICLE 8 – RIGHT TO BENEFITS
|
8.1
|
Vesting.
A Participant, at all times, has a 100% nonforfeitable interest in the amounts credited to his
Account attributable to his elective deferrals made in accordance with Section 4.1.
|
A
Participant’s right to the amounts credited to his Account attributable to Employer contributions made in accordance with Article 5 shall be determined in accordance with the relevant schedule and provisions in Section 7.01 of the Adoption
Agreement. Upon a Separation from Service and after application of the provisions of Section 7.01 of the Adoption Agreement, the Participant shall forfeit the nonvested portion of his Account.
|
8.2
|
Death.
The Plan Sponsor may elect to accelerate vesting upon the death of the Participant in accordance
with Section 7.01(c) of the Adoption Agreement and/or to accelerate distributions upon Death in accordance with Section 6.01(b) or Section 6.01(d) of the Adoption Agreement. If the Plan Sponsor does not elect to accelerate
distributions upon death in accordance with Section 6.01(b) or Section 6.01(d) of the Adoption Agreement, the vested amount credited to the Participant’s Account will be paid in accordance with the provisions of Article 9.
|
A Participant may designate a Beneficiary or Beneficiaries, or change any prior designation of
Beneficiary or Beneficiaries in accordance with rules and procedures established by the Administrator.
A copy of the death
notice or other sufficient documentation must be filed with and approved by the Administrator. If upon the death of the Participant there is, in the opinion of the Administrator, no designated Beneficiary for part or all of the Participant’s
vested Account, such amount will be paid first to any surviving spouse to whom the Participant was legally married to at the time of his death, or if there is no surviving spouse, to his estate (such estate shall be deemed to be the Beneficiary for
purposes of the Plan) in accordance with the provisions of Article 9.
|
8.3
|
Disability.
If the Plan Sponsor has elected to accelerate vesting upon the occurrence of a Disability
in accordance with Section 7.01(c) of the Adoption Agreement and/or to permit distributions upon Disability in accordance with Section 6.01(b) or Section 6.01(d) of the Adoption Agreement, the determination of whether a Participant
has incurred a Disability shall be made by the Administrator in its sole discretion in a manner consistent with the requirements of Code Section 409A.
|
9-1
ARTICLE 9 – DISTRIBUTION OF BENEFITS
|
9.1
|
Amount of Benefits.
The vested amount credited to a Participant’s Account as determined under
Articles 6, 7 and 8 shall determine and constitute the basis for the value of benefits payable to the Participant under the Plan.
|
|
9.2
|
Method and Timing of Distributions.
Except as otherwise provided in this Article 9, distributions under
the Plan shall be made in accordance with the elections made or deemed made by the Participant under Article 4. Subject to the provisions of Section 9.6 requiring a six-month delay for certain distributions to Key Employees, distributions
following a payment event shall commence at the time specified in Section 6.01(a) of the Adoption Agreement. If permitted by Section 6.01(g) of the Adoption Agreement, a Participant may elect, at least twelve months before a scheduled
distribution event, to delay the payment date for a minimum period of sixty months from the originally scheduled date of payment. The distribution election change must be made in accordance with procedures and rules established by the Administrator.
The Participant may, at the same time the date of payment is deferred, change the form of payment but such change in the form of payment may not effect an acceleration of payment in violation of Code Section 409A or the provisions of Reg. Sec.
1.409A-2(b). For purposes of this Section 9.2, a series of installment payments is always treated as a single payment and not as a series of separate payments.
|
|
9.3
|
Unforeseeable Emergency.
A Participant may request a distribution due to an Unforeseeable Emergency if
the Plan Sponsor has elected to permit Unforeseeable Emergency withdrawals under Section 8.01(a) of the Adoption Agreement, provided such withdrawal does not violate Code Section 409A or the provisions of Reg. Sec. 1.409A-2(b), if
applicable. The request must be in writing and must be submitted to the Administrator along with evidence that the circumstances constitute an Unforeseeable Emergency. The Administrator has the discretion to require whatever evidence it deems
necessary to determine whether a distribution is warranted, and may require the Participant to certify that the need cannot be met from other sources reasonably available to the Participant. Whether a Participant has incurred an Unforeseeable
Emergency will be determined by the Administrator on the basis of the relevant facts and circumstances in its sole discretion, but, in no event, will an Unforeseeable Emergency be deemed to exist if the hardship can be relieved: (a) through
reimbursement or compensation by insurance or otherwise, (b) by
|
9-2
liquidation of the Participant’s assets to the extent such liquidation would
not itself cause severe financial hardship, or (c) by cessation of deferrals under the Plan. A distribution due to an Unforeseeable Emergency must be limited to the amount reasonably necessary to satisfy the emergency need and may include any
amounts necessary to pay any federal, state, foreign or local income taxes and penalties reasonably anticipated to result from the distribution. The distribution will be made in the form of a single lump sum cash payment. If permitted by
Section 8.01(b) of the Adoption Agreement, a Participant’s deferral elections for the remainder of the Plan Year will be cancelled upon a withdrawal due to an Unforeseeable Emergency. If the payment of all or any portion of the
Participant’s vested Account is being delayed in accordance with Section 9.6 at the time he experiences an Unforeseeable Emergency, the amount being delayed shall not be subject to the provisions of this Section 9.3 until the expiration of
the six-month period of delay required by section 9.6.
|
9.4
|
Payment Election Overrides.
If the Plan Sponsor has elected one or more payment election overrides in
accordance with Section 6.01(d) of the Adoption Agreement, the following provisions apply. Upon the occurrence of the first event selected by the Plan Sponsor, the remaining vested amount credited to the Participant’s Account shall be paid
in the form designated to the Participant or his Beneficiary regardless of whether the Participant had made different elections of time and /or form of payment or whether the Participant was receiving installment payments at the time of the event.
|
|
9.5
|
Cashouts Of Amounts Not Exceeding Stated Limit.
If the vested amount credited to the Participant’s
Account does not exceed the limit established for this purpose by the Plan Sponsor in Section 6.01(e) of the Adoption Agreement at the time he separates from service with the Related Employer for any reason, the Employer shall distribute such
amount to the Participant at the time specified in Section 6.01(a) of the Adoption Agreement in a single lump sum cash payment following such termination regardless of whether the Participant had made different elections of time or form of
payment as to the vested amount credited to his Account or whether the Participant was receiving installments at the time of such termination. A Participant’s Account, for purposes of this Section 9.5, shall include any amounts described
in Section 1.3.
|
|
9.6
|
Required Delay in Payment to Key Employees
.
Except as otherwise provided in this
Section 9.6, a distribution made on account of Separation from Service (or Retirement, if applicable) to a Participant who is a Key Employee as of the date of his Separation from Service (or Retirement, if applicable) shall not be made before
the date which is six months after the Separation from Service (or Retirement, if applicable).
|
9-3
(a) A Participant is treated as a Key Employee if (i) he is employed by a
Related Employer any of whose stock is publicly traded on an established securities market, and (ii) he satisfies the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii), determined without regard to Code
Section 416(i)(5), at any time during the twelve-month period ending on the Identification Date.
(b) A Participant
who is a Key Employee on an Identification Date shall be treated as a Key Employee for purposes of the six-month delay in distributions for the twelve-month period beginning on the first day of a month no later than the fourth month following the
Identification Date. The Identification Date and the effective date of the delay in distributions shall be determined in accordance with Section 1.06 of the Adoption Agreement.
(c) The Plan Sponsor may elect to apply an alternative method to identify Participants who will be treated as Key Employees for
purposes of the six-month delay in distributions if the method satisfies each of the following requirements. The alternative method is reasonably designed to include all Key Employees, is an objectively determinable standard providing no direct or
indirect election to any Participant regarding its application, and results in either all Key Employees or no more than 200 Key Employees being identified in the class as of any date. Use of an alternative method that satisfies the requirements of
this Section 9.6(c) will not be treated as a change in the time and form of payment for purposes of Reg. Sec. 1.409A-2(b).
(d) The six-month delay does not apply to payments described in Section 9.9(a), (b) or (d) or to payments that
occur after the death of the Participant. If the payment of all or any portion of the Participant’s vested Account is being delayed in accordance with this Section 9.6 at the time he incurs a Disability which would otherwise require a
distribution under the terms of the Plan, no amount shall be paid until the expiration of the six-month period of delay required by this Section 9.6.
|
9.7
|
Change in Control.
If the Plan Sponsor has elected to permit distributions upon a Change in Control,
the following provisions shall apply. A distribution made upon a Change in Control will be made at the time specified in Section 6.01(a) of the Adoption Agreement in the form elected by the Participant in accordance with the procedures
described in Article 4. Alternatively, if the Plan Sponsor has elected in accordance with Section 11.02 of the Adoption Agreement to require distributions upon a Change in Control, the Participant’s remaining vested Account shall be paid
to the Participant or the Participant’s Beneficiary at the time specified in Section 6.01(a) of the Adoption Agreement as a single lump sum
|
9-4
payment. A Change in Control, for purposes of the Plan, will occur upon a change
in the ownership of the Plan Sponsor, a change in the effective control of the Plan Sponsor or a change in the ownership of a substantial portion of the assets of the Plan Sponsor, but only if elected by the Plan Sponsor in Section 11.03 of the
Adoption Agreement. The Plan Sponsor, for this purpose, includes any corporation identified in this Section 9.7. All distributions made in accordance with this Section 9.7 are subject to the provisions of Section 9.6.
If a Participant continues to make deferrals in accordance with Article 4 after he has received a distribution due to a Change
in Control, the residual amount payable to the Participant shall be paid at the time and in the form specified in the elections he makes in accordance with Article 4 or upon his death or Disability as provided in Article 8.
Whether a Change in Control has occurred will be determined by the Administrator in accordance with the rules and definitions
set forth in this Section 9.7. A distribution to the Participant will be treated as occurring upon a Change in Control if the Plan Sponsor terminates the Plan in accordance with Section 10.2 and distributes the Participant’s benefits
within twelve months of a Change in Control as provided in Section 10.3.
|
|
(a)
|
Relevant Corporations.
To constitute a Change in Control for purposes of the Plan, the event must
relate to (i) the corporation for whom the Participant is performing services at the time of the Change in Control, (ii) the corporation that is liable for the payment of the Participant’s benefits under the Plan (or all corporations
liable if more than one corporation is liable) but only if either the deferred compensation is attributable to the performance of services by the Participant for such corporation (or corporations) or there is a bona fide business purpose for such
corporation (or corporations) to be liable for such payment and, in either case, no significant purpose of making such corporation (or corporations) liable for such payment is the avoidance of federal income tax, or (iii) a corporation that is
a majority shareholder of a corporation identified in (i) or (ii), or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in
(i) or (ii). A majority shareholder is defined as a shareholder owning more than fifty percent (50%) of the total fair market value and voting power of such corporation.
|
|
|
(b)
|
Stock Ownership.
Code Section 318(a) applies for purposes of determining stock ownership. Stock
underlying a vested option is considered owned by the individual who owns the vested option (and the stock underlying an unvested option is not considered owned by the individual who holds the unvested option). If, however, a vested option is
exercisable for stock that is not substantially vested (as defined by Treasury Regulation Section 1.83-3(b) and (j)), the stock underlying the option is not treated as owned by the individual who holds the option.
|
9-5
|
|
(c)
|
Change in the Ownership of a Corporation.
A change in the ownership of a corporation occurs on the date
that any one person or more than one person acting as a group, acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or
total voting power of the stock of such corporation. If any one person or more than one person acting as a group is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of a
corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation as discussed below in
Section 9.7(d)). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition
of stock. Section 9.7(c) applies only when there is a transfer of stock of a corporation (or issuance of stock of a corporation) and stock in such corporation remains outstanding after the transaction. For purposes of this Section 9.7(c),
persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time or as a result of a public offering. Persons will, however, be considered to be acting as a group if they are
owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a person, including an entity, owns stock in both corporations that enter into a merger,
consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders only with respect to ownership in that corporation prior to the transaction giving rise to the
change and not with respect to the ownership interest in the other corporation.
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|
|
(d)
|
Change in the effective control of a corporation.
A change in the effective control of a corporation
occurs on the date that either (i) any one person, or more than one person acting as a group, acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such person or persons) ownership of
stock of the corporation possessing thirty percent (30%) or more of the total voting power of the stock of such corporation, or (ii) a majority of members of the corporation’s board of directors is
|
9-6
|
|
replaced during any twelve-month period by directors whose appointment or election is not endorsed by a
majority of the members of the corporation’s board of directors prior to the date of the appointment or election, provided that for purposes of this paragraph (ii), the term corporation refers solely to the relevant corporation identified in
Section 9.7(a) for which no other corporation is a majority shareholder for purposes of Section 9.7(a). In the absence of an event described in Section 9.7(d)(i) or (ii), a change in the effective control of a corporation will not
have occurred. A change in effective control may also occur in any transaction in which either of the two corporations involved in the transaction has a change in the ownership of such corporation as described in Section 9.7(c) or a change in
the ownership of a substantial portion of the assets of such corporation as described in Section 9.7(e). If any one person, or more than one person acting as a group, is considered to effectively control a corporation within the meaning of this
Section 9.7(d), the acquisition of additional control of the corporation by the same person or persons is not considered to cause a change in the effective control of the corporation or to cause a change in the ownership of the corporation
within the meaning of Section 9.7(c). For purposes of this Section 9.7(d), persons will or will not be considered to be acting as a group in accordance with rules similar to those set forth in Section 9.7(c) with the following
exception. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other
shareholders in a corporation only with respect to the ownership in that corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.
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|
|
(e)
|
Change in the ownership of a substantial portion of a corporation’s assets.
A change in the
ownership of a substantial portion of a corporation’s assets occurs on the date that any one person, or more than one person acting as a group (as determined in accordance with rules similar to those set forth in Section 9.7(d)), acquires
(or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than forty percent (40%) of the
total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation or the value of the assets being
disposed of determined without regard to any liabilities associated with such assets. There is no Change in Control event under this Section 9.7(e) when there is a transfer to an entity that is controlled by the shareholders of the transferring
|
9-7
|
|
corporation immediately after the transfer. A transfer of assets by a corporation is not treated as a change
in ownership of such assets if the assets are transferred to (i) a shareholder of the corporation (immediately before the asset transfer) in exchange for or with respect to its stock, (ii) an entity, fifty percent (50%) or more of the
total value or voting power of which is owned, directly or indirectly, by the corporation, (iii) a person, or more than one person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or
voting power of all the outstanding stock of the corporation, or (iv) an entity, at least fifty (50%) of the total value or voting power of which is owned, directly or indirectly, by a person described in Section 9.7(e)(iii). For
purposes of the foregoing, and except as otherwise provided, a person’s status is determined immediately after the transfer of assets.
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|
9.8
|
Permissible Delays in Payment.
Distributions may be delayed beyond the date payment would otherwise
occur in accordance with the provisions of Articles 8 and 9 in any of the following circumstances as long as the Employer treats all payments to similarly situated Participants on a reasonably consistent basis.
|
|
|
(a)
|
The Employer may delay payment if it reasonably anticipates that its deduction with respect to such payment
would be limited or eliminated by the application of Code Section 162(m). Payment must be made during the Participant’s first taxable year in which the Employer reasonably anticipates, or should reasonably anticipate, that if the payment
is made during such year the deduction of such payment will not be barred by the application of Code Section 162(m) or during the period beginning with the Participant’s Separation from Service and ending on the later of the last day of
the Employer’s taxable year in which the Participant separates from service or the 15th day of the third month following the Participant’s Separation from Service. If a scheduled payment to a Participant is delayed in accordance with this
Section 9.8(a), all scheduled payments to the Participant that could be delayed in accordance with this Section 9.8(a) will also be delayed. In the case of a Participant who is a Key Employee, the date that is six months after the
Participant’s Separation from Service in the second sentence of this Section 9.8(a).
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|
|
(b)
|
The Employer may also delay payment if it reasonably anticipates that the making of the payment will violate
federal securities laws or other applicable laws provided payment is made at the earliest date on which the Employer reasonably anticipates that the making of the payment will not cause such violation.
|
9-8
|
|
(c)
|
The Employer reserves the right to amend the Plan to provide for a delay in payment upon such other events and
conditions as the Secretary of the Treasury may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.
|
|
9.9
|
Permitted Acceleration of Payment
.
The Employer may permit acceleration of the
time or schedule of any payment or amount scheduled to be paid pursuant to a payment under the Plan provided such acceleration would be permitted by the provisions of Reg. Sec. 1.409A- 3(j)(4), including the following events:
|
|
|
(a)
|
Domestic Relations Order.
A payment may be accelerated if such payment is made to an alternate payee
pursuant to and following the receipt and qualification of a domestic relations order as defined in Code Section 414(p).
|
|
|
(b)
|
Compliance with Ethics Agreements and Legal Requirements.
A payment may be accelerated as may be
necessary to comply with ethics agreements with the Federal government or as may be reasonably necessary to avoid the violation of Federal, state, local or foreign ethics law or conflicts of laws, in accordance with the requirements of Code Section
409A.
|
|
|
(c)
|
De Minimis Amounts.
A payment will be accelerated if (i) the amount of the payment is not greater
than the applicable dollar amount under Code Section 402(g)(1)(B), (ii) at the time the payment is made the amount constitutes the Participant’s entire interest under the Plan and all other plans that are aggregated with the Plan
under Reg. Sec. 1.409A-1(c)(2).
|
|
|
(d)
|
FICA Tax.
A payment may be accelerated to the extent required to pay the Federal Insurance
Contributions Act tax imposed under Code Sections 3101, 3121(a) and 3121(v)(2) of the Code with respect to compensation deferred under the Plan (the “FICA Amount”). Additionally, a payment may be accelerated to pay the income tax on wages
imposed under Code Section 3401 of the Code on the FICA Amount and to pay the additional income tax at source on wages attributable to the pyramiding Code Section 3401 wages and taxes. The total payment under this subsection (d) may
not exceed the aggregate of the FICA Amount and the income tax withholding related to the FICA Amount.
|
|
|
(e)
|
Section 409A Additional Tax.
A payment may be accelerated if the Plan fails to meet the
requirements of Code Section 409A; provided that such payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Code Section 409A.
|
9-9
|
|
(f)
|
Offset.
A payment may be accelerated in the Employer’s discretion as satisfaction of a debt of the
Participant to the Employer, where such debt is incurred in the ordinary course of the service relationship between the Participant and the Employer, the entire amount of the reduction in any of the Employer’s taxable years does not exceed
$5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant.
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|
|
(g)
|
Other Events.
A payment may be accelerated in the Administrator’s discretion in connection with
such other events and conditions as permitted by Code Section 409A.
|
ARTICLE 10
–
AMENDMENT AND
TERMINATION
|
10.1
|
Amendment by Plan Sponsor.
The Plan Sponsor reserves the right to amend the Plan (for itself and each
Employer) through action of its Board of Directors. No amendment can directly or indirectly deprive any current or former Participant or Beneficiary of all or any portion of his Account which had accrued and vested prior to the amendment.
|
|
10.2
|
Plan Termination Following Change in Control or Corporate Dissolution.
If so elected by the Plan
Sponsor in 11.01 of the Adoption Agreement, the Plan Sponsor reserves the right to terminate the Plan and distribute all amounts credited to all Participant Accounts within the 30 days preceding or the twelve months following a Change in Control as
determined in accordance with the rules set forth in Section 9.7. For this purpose, the Plan will be treated as terminated only if all agreements, methods, programs and other arrangements sponsored by the Related Employer immediately after the
Change in Control which are treated as a single plan under Reg. Sec. 1.409A-1(c)(2) are also terminated so that all participants under the Plan and all similar arrangements are required to receive all amounts deferred under the terminated
arrangements within twelve months of the date the Plan Sponsor irrevocably takes all necessary action to terminate the arrangements. In addition, the Plan Sponsor reserves the right to terminate the Plan within twelve months of a corporate
dissolution taxed under Code Section 331 or with the approval of a bankruptcy court pursuant to 11 U. S. C. Section 503(b)(1)(A), provided that amounts deferred under the Plan are included in the gross incomes of Participants in the latest
of (a) the calendar year in which the termination and liquidation occurs, (b) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture, or (c) the first calendar year in which payment is
administratively practicable.
|
11-1
|
10.3
|
Other Plan Terminations.
The Plan Sponsor retains the discretion to terminate the Plan if (a) all
arrangements sponsored by the Plan Sponsor that would be aggregated with any terminated arrangement under Code Section 409A and Reg. Sec. 1.409A-1(c)(2) are terminated, (b) no payments other than payments that would be payable under the
terms of the arrangements if the termination had not occurred are made within twelve months of the termination of the arrangements, (c) all payments are made within twenty-four months of the date the Plan Sponsor takes all necessary action to
irrevocably terminate and liquidate the arrangements, (d) the Plan Sponsor does not adopt a new arrangement that would be aggregated with any terminated arrangement under Code Section 409A and the regulations thereunder at any time within the
three-year period following the date of termination of the arrangement, and (e) the termination does not occur proximate to a downturn in the financial health of the Plan sponsor. The Plan Sponsor also reserves the right to amend the Plan to
provide that termination of the Plan will occur under such conditions and events as may be prescribed by the Secretary of the Treasury in generally applicable guidance published in the Internal Revenue Bulletin.
|
ARTICLE 11
–
THE TRUST
|
11.1
|
Establishment of Trust.
The Plan Sponsor may but is not required to establish a trust to hold amounts
which the Plan Sponsor may contribute from time to time to correspond to some or all amounts credited to Participants under Section 6.2. If the Plan Sponsor elects to establish a trust in accordance with Section 10.01 of the Adoption
Agreement, the provisions of Sections 11.2 and 11.3 shall become operative.
|
|
11.2
|
Grantor Trust.
Any trust established by the Plan Sponsor shall be between the Plan Sponsor and a
trustee pursuant to a separate written agreement under which assets are held, administered and managed, subject to the claims of the Plan Sponsor’s creditors in the event of the Plan Sponsor’s insolvency. The trust is intended to be
treated as a grantor trust under the Code, and the establishment of the trust shall not cause the Participant to realize current income on amounts contributed thereto. The Plan Sponsor must notify the trustee in the event of a bankruptcy or
insolvency.
|
|
11.3
|
Investment of Trust Funds
.
Any amounts contributed to the trust by the Plan Sponsor shall be
invested by the trustee in accordance with the provisions of the trust and the instructions of the Administrator. Trust investments need not reflect the hypothetical investments selected by Participants under Section 7.1 for the purpose of
adjusting Accounts and the earnings or investment results of the trust need not affect the hypothetical investment adjustments to Participant Accounts under the Plan.
|
11-1
ARTICLE 12
–
PLAN ADMINISTRATION
|
12.1
|
Powers and Responsibilities of the Administrator.
The Administrator has the full discretionary power to
administer the Plan in all of its details, subject, however, to the applicable requirements of ERISA. The Administrator’s powers include, but are not limited to, the following:
|
|
|
(a)
|
To make and enforce such rules and procedures as it deems necessary or proper for the efficient administration
of the Plan;
|
|
|
(b)
|
To interpret the Plan, its interpretation thereof to be final, except as provided in Section 12.2, on all
persons claiming benefits under the Plan;
|
|
|
(c)
|
To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;
|
|
|
(d)
|
To administer the claims and review procedures specified in Section 12.2;
|
|
|
(e)
|
To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary
in accordance with the provisions of the Plan;
|
|
|
(f)
|
To determine the person or persons to whom such benefits will be paid;
|
|
|
(g)
|
To authorize the payment of benefits;
|
|
|
(h)
|
To comply with the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA;
|
|
|
(i)
|
To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering
the Plan;
|
|
|
(j)
|
By written instrument, to allocate and delegate its responsibilities, including the formation of an
Administrative Committee to administer the Plan.
|
12-1
|
12.2
|
Claims and Review Procedures.
|
If any person believes he is being denied any rights or benefits under the Plan, such person may file a claim in writing with
the Administrator. If any such claim is wholly or partially denied, the Administrator will notify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to
pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) a description of the
Plan’s review procedures and the time limits applicable to such procedures, including a statement of the person’s right to bring a civil action following an adverse decision on review. Such notification will be given within 90 days (45
days in the case of a claim regarding Disability) after the claim is received by the Administrator. The Administrator may extend the period for providing the notification by 90 days (30 days in the case of a claim regarding Disability) if special
circumstances require an extension of time for processing the claim and if written notice of such extension and circumstance is given to such person within the initial 90-day period (45-day period in the case of a claim regarding Disability). If
such notification is not given within such period, the claim will be considered denied as of the last day of such period and such person may request a review of his claim.
Within 60 days (180 days in the case of a claim regarding Disability) after the date on which a person receives a written
notification of denial of claim (or, if written notification is not provided, within 60 days (180 days in the case of a claim regarding Disability) of the date denial is considered to have occurred), such person (or his duly authorized
representative) may (i) file a written request with the Administrator for a review of his denied claim and of pertinent documents and (ii) submit written issues and comments to the Administrator. The Administrator will notify such person
of its decision in writing. Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific references to pertinent Plan provisions. The notification
will explain that the person is entitled to receive, upon request and free of charge,
12-2
reasonable access to and copies of all pertinent documents and has the right to
bring a civil action following an adverse decision on review. The decision on review will be made within 60 days (45 days in the case of a claim regarding Disability). The Administrator may extend the period for making the decision on review by 60
days (45 days in the case of a claim regarding Disability) if special circumstances require an extension of time for processing the request such as an election by the Administrator to hold a hearing, and if written notice of such extension and
circumstances is given to such person within the initial 60-day period (45 days in the case of a claim regarding Disability). If the decision on review is not made within such period, the claim will be considered denied.
|
12.3
|
Plan Administrative Costs.
All reasonable costs and expenses (including legal, accounting, and employee
communication fees) incurred by the Administrator in administering the Plan shall be paid by the Plan to the extent not paid by the Employer.
|
ARTICLE 13
–
MISCELLANEOUS
|
13.1
|
Unsecured General Creditor of the Employer.
Participants and their Beneficiaries, heirs, successors and
assigns shall have no secured or special legal or equitable rights, interests or claims in any property or assets of the Employer. For purposes of the payment of benefits under the Plan, any and all of the Employer’s assets shall be, and shall
remain, the general, unpledged, unrestricted assets of the Employer. Each Employer’s obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.
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13.2
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Employer’s Liability
.
Each Employer’s liability for the payment of benefits
under the Plan shall be defined only by the Plan and by the deferral agreements entered into between a Participant and the Employer. An Employer shall have no obligation or liability to a Participant under the Plan except as provided by the Plan and
a deferral agreement or agreements. An Employer shall have no liability to Participants employed by other Employers.
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13.3
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Limitation of Rights
.
Neither the establishment of the Plan, nor any amendment thereof,
nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to the Participant or any other person any legal or equitable right against the Employer, the Plan or the Administrator, except as provided herein;
and in no event will the terms of employment or service of the Participant be modified or in any way affected hereby.
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13.4
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Anti-Assignment
.
Except as may be necessary to fulfill a domestic relations order
within the meaning of Code Section 414(p), none of the benefits or rights of a Participant or any Beneficiary of a Participant shall be subject to
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13-3
the claim of any creditor. In particular, to the fullest extent permitted by law, all such benefits and rights shall be free from attachment, garnishment, or any other legal or equitable process
available to any creditor of the Participant and his or her Beneficiary. Neither the Participant nor his or her Beneficiary shall have the right to alienate, anticipate, commute, pledge, encumber, or assign any of the payments which he or she may
expect to receive, contingently or otherwise, under the Plan, except the right to designate a Beneficiary to receive death benefits provided hereunder. Notwithstanding the preceding, the benefit payable from a Participant’s Account may be
reduced, at the discretion of the administrator, to satisfy any debt or liability to the Employer.
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13.5
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Facility of Payment
.
If the Administrator determines, on the basis of medical reports or
other evidence satisfactory to the Administrator, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Administrator may direct the Employer
to disburse such payments to a person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under State law for the care and control of such recipient. The
receipt by such person or institution of any such payments therefore, and any such payment to the extent thereof, shall discharge the liability of the Employer, the Plan and the Administrator for the payment of benefits hereunder to such recipient.
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13.6
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Notices.
Any notice or other communication to the Employer or Administrator in connection with the Plan
shall be deemed delivered in writing if addressed to the Plan Sponsor at the address specified in Section 1.03 of the Adoption Agreement and if either actually delivered at said address or, in the case or a letter, 5 business days shall have
elapsed after the same shall have been deposited in the United States mails, first-class postage prepaid and registered or certified.
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13.7
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Tax Withholding
.
If the Employer concludes that tax is owing with respect to any deferral
or payment hereunder, the Employer shall withhold such amounts from any payments due the Participant or from amounts deferred, as permitted by law, or otherwise make appropriate arrangements with the Participant or his Beneficiary for satisfaction
of such obligation. Tax, for purposes of this Section 13.7 means any federal, state, local or any other governmental income tax, employment or payroll tax, excise tax, or any other tax or assessment owing with respect to amounts deferred, any
earnings thereon, and any payments made to Participants under the Plan.
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13.8
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Indemnification.
(a) Each Indemnitee (as defined in Section 13.8(e)) shall be indemnified and
held harmless by the Employer for all actions taken by him and for all failures to take action (regardless of the date of any such action or failure to take action), to the fullest extent permitted by the law of the jurisdiction in which the
Employer is incorporated, against all expense, liability, and loss (including, without limitation, attorneys’ fees, judgments, fines, taxes, penalties, and amounts paid or to be paid in settlement)
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13-4
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reasonably incurred or suffered by the Indemnitee in connection with any Proceeding (as defined in Subsection (e)). No indemnification pursuant to this Section shall be made, however, in any case
where (1) the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness or (2) there is a settlement to which the Employer does not consent.
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(b) The right to indemnification provided in this Section shall include the right to have the expenses
reasonably incurred by the Indemnitee in defending any Proceeding paid by the Employer in advance of the final disposition of the Proceeding, to the fullest extent permitted by the law of the jurisdiction in which the Employer is incorporated;
provided that, if such law requires, the payment of such expenses incurred by the Indemnitee in advance of the final disposition of a Proceeding shall be made only on delivery to the Employer of an undertaking, by or on behalf of the Indemnitee, to
repay all amounts so advanced without interest if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified under this Section or otherwise.
(c) Indemnification pursuant to this Section shall continue as to an Indemnitee who has ceased to be such and shall inure to
the benefit of his heirs, executors, and administrators. The Employer agrees that the undertakings made in this Section shall be binding on its successors or assigns and shall survive the termination, amendment or restatement of the Plan.
(d) The foregoing right to indemnification shall be in addition to such other rights as the Indemnitee may enjoy as a matter of
law or by reason of insurance coverage of any kind and is in addition to and not in lieu of any rights to indemnification to which the Indemnitee may be entitled pursuant to the by-laws of the Employer.
(e) For the purposes of this Section, the following definitions shall apply:
(1) “Indemnitee” shall mean each person serving as an Administrator (or any other person who is an employee,
director, or officer of the Employer) who was or is a party to, or is threatened to be made a party to, or is otherwise involved in, any Proceeding, by reason of the fact that he is or was performing administrative functions under the Plan.
(2) “Proceeding” shall mean any threatened, pending, or completed action, suit, or proceeding (including, without
limitation, an action, suit, or proceeding by or in the right of the Employer), whether civil, criminal, administrative, investigative, or through arbitration.
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13.9
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Successors
.
The provisions of the Plan shall bind and inure to the benefit of the Plan Sponsor,
the Employer and their successors and assigns and the Participant and the Participant’s designated Beneficiaries.
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13-5
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13.10
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Disclaimer.
It is the Plan Sponsor’s intention that the Plan comply with the requirements of Code
Section 409A. Neither the Plan Sponsor nor the Employer shall have any liability to any Participant should any provision of the Plan fail to satisfy the requirements of Code Section 409A.
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13.11
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Governing Law
.
The Plan will be construed, administered and enforced according to the
laws of the State specified by the Plan Sponsor in Section 12.01 of the Adoption Agreement.
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13-6
