Exhibit 4.5
NOVASTAR MORTGAGE, INC.
DEFERRED COMPENSATION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF
JANUARY 1, 2005
NOVASTAR MORTGAGE, INC.
DEFERRED COMPENSATION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 2005
TABLE OF CONTENTS
SECTION 1 INTRODUCTION AND DEFINITIONS..............................1
1.1. STATEMENT OF PLAN.........................................1
1.2. DEFINITIONS...............................................1
1.2.1. Account...................................................1
1.2.2. Affiliate.................................................1
1.2.3. Annual Valuation Date.....................................1
1.2.4. Base Salary...............................................1
1.2.5. Beneficiary...............................................1
1.2.6. Board of Directors........................................1
1.2.7. Bonus.....................................................2
1.2.8. Change of Control.........................................2
1.2.9. Code......................................................3
1.2.10. Committee.................................................3
1.2.11. Common Stock..............................................3
1.2.12. Disabled or Disability....................................3
1.2.13. Employer..................................................3
1.2.14. Enrollment Period.........................................3
1.2.15 ERISA.....................................................3
1.2.16. Grandfathered Account.....................................3
1.2.17. NFI.......................................................3
1.2.18. Normal Retirement Age.....................................3
1.2.19. Participant...............................................3
1.2.20. Plan......................................................3
1.2.21. Plan Year.................................................3
1.2.22. Termination of Employment.................................3
1.2.23. Trust.....................................................4
1.2.24. Valuation Date............................................4
1.3. GENDER....................................................4
1.3.1. Gender and Number.........................................4
SECTION 2 PARTICIPATION.............................................4
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2.1. WHO MAY PARTICIPATE.......................................4
2.1.1. Eligible Participant......................................4
2.1.2. Terms and Conditions of Participation.....................4
2.1.3. Termination of Participation..............................4
SECTION 3 CREDITS TO ACCOUNTS.......................................4
3.1. DEFERRALS FROM SALARY.....................................4
3.1.1. Amount of Deferrals.......................................4
3.1.2. Additional Credits........................................5
3.2. DEFERRALS FROM BONUSES....................................5
3.3. DEFERRAL OF STOCK AWARDS..................................5
3.4. EMPLOYER DISCRETIONARY CONTRIBUTION.......................5
3.5. CREDITS FROM MEASURING INVESTMENTS........................5
3.6. OPERATIONAL RULES FOR DEFERRALS...........................5
SECTION 4 ADJUSTMENT OF ACCOUNTS....................................6
4.1. ESTABLISHMENT OF ACCOUNTS.................................6
4.2. ACCOUNTING RULES..........................................6
SECTION 5 VESTING OF ACCOUNTS.......................................6
5.1. GENERAL VESTING...........................................6
5.2. EMPLOYER DISCRETIONARY CONTRIBUTIONS......................6
5.3. EXCEPTIONS TO VESTING SCHEDULE............................6
SECTION 6 SPENDTHRIFT PROVISION.....................................6
SECTION 7 DISTRIBUTIONS.............................................7
7.1. GENERAL PROVISIONS........................................7
7.1.1. Application for Distribution..............................7
7.1.2. Form of Payment...........................................7
7.1.3. Code ss.162(m) Delay......................................7
7.1.4. Delayed Distribution For Key Employees....................7
7.2. BENEFIT UPON NORMAL RETIREMENTL...........................7
7.2.1. Form of Distribution......................................7
7.2.2. Manner and Time of Election...............................7
7.2.3. Calculation of Installment Amounts........................7
7.2.4. Request for Lump Sum Payment of Grandfathered Account.....8
7.3. BENEFIT UPON TERMINATION OF EMPLOYMENT....................8
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7.4. BENEFIT UPON DISABILITY...................................8
7.5. BENEFIT UPON DEATH........................................8
7.5.1. Pre-Retirement Death Benefit..............................8
7.5.2. Post-Retirement Death Benefit.............................8
7.5.3. Additional Death Benefit..................................8
7.5.4. Designation of Beneficiaries..............................9
7.5.5. Failure of Designation....................................9
7.5.6. Disclaimers by Beneficiaries..............................9
7.5.7. Death Prior to Full Distribution..........................9
7.6. BENEFIT PRIOR TO TERMINATION OF EMPLOYMENT................9
7.6.1. Pre-Selected In-Service Distributions.....................9
7.6.2. On Demand In-Service Distributions of Grandfathered
Accounts.................................................10
7.6.3. In-Service Distribution for Financial Hardship...........10
7.7. BENEFIT UPON CHANGE OF CONTROL...........................10
7.8. FACILITY OF PAYMENT......................................10
7.9. SPECIAL IRS TRANSITION RULE..............................11
SECTION 8 FUNDING OF PLAN..........................................11
8.1. UNFUNDED PLAN............................................11
8.2. CORPORATE OBLIGATION.....................................11
SECTION 9 AMENDMENT AND TERMINATION................................11
9.1. AMENDMENT AND TERMINATION................................11
9.2 NO ORAL AMENDMENTS.......................................12
9.3. PLAN BINDING ON SUCCESSORS...............................12
SECTION 10. DETERMINATIONS - RULES AND REGULATIONS...................12
10.1. DETERMINATIONS...........................................12
10.2. RULES AND REGULATIONS....................................12
10.3. METHOD OF EXECUTING INSTRUMENTS..........................12
10.4. CLAIMS PROCEDURE.........................................12
10.4.1. Original Claim...........................................12
10.4.2. Review of Denied Claim...................................13
10.4.3. General Rules............................................13
10.5. LIMITATIONS AND EXHAUSTION...............................13
10.5.1. Limitations..............................................13
10.5.2. Exhaustion Required......................................14
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SECTION 11 PLAN ADMINISTRATION......................................14
11.1. OFFICERS.................................................14
11.2. BOARD OF DIRECTORS.......................................14
11.3. COMMITTEE................................................14
11.4. DELEGATION...............................................15
11.5. CONFLICT OF INTEREST.....................................15
11.6. ADMINISTRATOR............................................15
11.7. SERVICE OF PROCESS.......................................15
11.8. EXPENSES.................................................15
11.9. TAX WITHHOLDING..........................................15
11.10. CERTIFICATIONS...........................................16
11.11. ERRORS IN COMPUTATIONS...................................16
SECTION 12 CONSTRUCTION.............................................16
12.1. APPLICABLE LAWS..........................................16
12.1.1. ERISA Status.............................................16
12.1.2. IRC Status...............................................16
12.1.3. References to Laws.......................................16
12.2. EFFECT ON OTHER PLANS....................................16
12.3. DISQUALIFICATION.........................................16
12.4. RULES OF DOCUMENT CONSTRUCTION...........................16
12.5. CHOICE OF LAW............................................17
12.6. NO EMPLOYMENT CONTRACT...................................17
12.7. CODE SS.409A COMPLIANCE..................................17
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NOVASTAR MORTGAGE, INC.
DEFERRED COMPENSATION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF
JANUARY 1, 2005
SECTION 1
INTRODUCTION AND DEFINITIONS
1.1. Statement of Plan. The Plan was originally adopted by NovaStar Mortgage,
Inc. (the "Sponsor") effective as of January 1, 2002, for the purpose of
providing eligible employees of the Sponsor and its Affiliates (collectively the
"Employer") with an opportunity to save additional funds for retirement or other
purposes. The Plan is designed as an unfunded, deferred compensation plan for
the benefit of a select group of management and highly compensated employees.
The original Plan was amended and restated in its entirety effective as of
January 1, 2004 (the "2004 Restatement"). The Sponsor now desires to amend and
restate the 2004 Restatement in its entirety to comply with Section 409A of the
Code and to make certain other changes. This Plan restatement is effective as of
January 1, 2005, except that certain provisions may have an earlier or later
effective date as set forth herein.
1.2. Definitions. When the following terms are used herein with initial capital
letters, they shall have the following meanings unless the context clearly
requires a different meaning:
1.2.1. Account means the separate bookkeeping account established with
respect to each person who is a Participant in the Plan which reflects the total
amounts that have been credited from time to time under the Plan on his behalf.
A separate "Grandfathered Account" shall be maintained to reflect the portion of
each Participant's account which was deferred and vested as of December 31,
2004, and which is not subject to Section 409A of the Code.
1.2.2. Affiliate means a business entity which is affiliated in ownership
with the Sponsor either directly or indirectly, and is recognized as an
Affiliate by the Committee for purposes of this Plan.
1.2.3. Annual Valuation Date means each December 31.
1.2.4. Base Salary means, with respect to a Participant, such Participant's
annual rate of base salary, plus commissions paid to such Participant by the
Employer before reduction because of salary deferrals into this Plan or any
other plan or arrangement of the Employer whereby compensation is deferred,
including, without limitation, a plan whereby compensation is reduced in
accordance with Code Section 401(k) or Code Section 125. The term Base Salary
shall exclude all other remuneration paid by the Participant's Employer, such as
Bonuses, stock options, distributions of compensation previously deferred,
restricted stock, allowances for expenses (including moving, travel expenses and
automobile expenses) and fringe benefits payable in a form other than cash.
1.2.5. Beneficiary means a person designated by a Participant (or
automatically by operation of the Plan) to receive all or a part of the
Participant's Account in the event of the Participant's death prior to full
distribution thereof. A person so designated shall not be considered a
Beneficiary until the death of the Participant.
1.2.6. Board of Directors means the Board of Directors of the Sponsor.
"Board of Directors" shall also mean and refer to any properly authorized
committee of the Board of Directors.
1.2.7. Bonus means, with respect to a Participant, the total cash
remuneration paid or payable under the various bonus programs by the Employer to
such individual, including any amount which would be included in the definition
of Bonus before reduction because of bonus deferrals into this Plan or any other
plan or arrangement of the Employer whereby compensation is deferred, including,
without limitation, a plan whereby compensation is reduced in accordance with
Code Section 401(k) or Code Section 125. The term Bonus shall exclude all other
remuneration paid by the Participant's Employer, such as Base Salary, stock
options, distributions of compensation previously deferred, restricted stock,
allowances for expenses (including moving, travel expenses and automobile
expenses) and fringe benefits payable in a form other than cash.
1.2.8. Change of Control shall be deemed to have occurred upon the
occurrence of one or more of the following events with respect to NFI:
(i) any person, or more than one person acting as a group within the
meaning of Code Section 409A and the regulations issued thereunder,
acquires a beneficial ownership (within the meaning of Rule l3d-3
promulgated under the Act) of more than 50 percent of the total fair market
value or total voting power of NFI's common stock;
(ii) any person, or more than one person acting as a group within the
meaning of Code Section 409A and the regulations issued thereunder,
acquires (or has acquired during the 12-month period ending on the date of
the most recent acquisition by such person or persons) 35 percent or more
of the total fair market value or total voting power of NFI's common stock;
(iii) a majority of members of NFI's board of directors is replaced
during any 12-month period by directors whose appointment or election is
not endorsed by a majority of the members of NFI's board of directors prior
to the date of the appointment or election; or
(iv) solely with respect to Grandfathered Accounts,
(A) the approval by the stockholders of NFI of a reorganization,
merger, or consolidation of NFI, in each case, with respect to which
persons who were stockholders of NFI immediately prior to such
reorganization, merger or consolidation do not, immediately
thereafter, own more than 50 percent of the combined voting power of
securities of the surviving entity;
(B) the approval by the stockholders of NFI of a complete
liquidation or dissolution of NFI or a sale of all or substantially
all of the assets of NFI; or
(C) the following individuals cease for any reason to constitute
at least two-thirds (2/3) of the number of directors of NFI then
serving: individuals who, on the effective date of the Plan,
constitute the board of directors of NFI and any new director (other
than a director whose initial assumption of office is in connection
with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of
directors of NFI, as such terms are used in Rule 14A-11 of the
Securities Exchange Act of 1934) whose appointment or election by the
board of directors of NFI or nomination of election by NFI's
stockholders was approved by a vote of at least two-thirds (2/3) of
NFI's directors then still in office who either were directors on the
effective date of the Plan, or whose appointment, election, or
nomination for election was previously approved; or
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(D) the adoption of a resolution by the board of directors of NFI
to the effect that any person has acquired effective control of the
business and affairs of NFI.
1.2.9. Code means the Internal Revenue Code of 1986, as amended.
1.2.10. Committee means the Retirement Committee designated by the Sponsor.
1.2.11. Common Stock means the common stock of NovaStar Financial, Inc.
1.2.12. Disabled or Disability, with respect to a Participant, shall have
the same definition as in the Employer's existing long term disability insurance
program, or in the absence of such program or if a Participant is not eligible
to participate in such program, any disability which the Committee, in its
discretion, reasonably expects will qualify such individual for disability
benefits under the Social Security Act.
1.2.13. Employer means the Sponsor and any Affiliate of the Sponsor that
adopts the Plan with respect to such Affiliate's employees.
1.2.14. Enrollment Period means the period of time designated by the
Committee prior to the first day of each Plan Year during which an eligible
person may elect to participate in the Plan. Notwithstanding the foregoing, in
the case of the first Plan Year in which an individual becomes eligible to
participate in the Plan, the Enrollment Period shall mean the 30 day period
immediately following the date the person is designated as being eligible for
the Plan. Any election to defer an amount pursuant to Sections 3.1, 3.2 or 3.3
that is entered into during such 30 day period shall apply only to compensation
for services performed subsequent to the individual's deferral election.
1.2.15. ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
1.2.16. Grandfathered Account (See "Account")
1.2.17. NFI means NovaStar Financial, Inc., the parent corporation of the
Sponsor.
1.2.18. Normal Retirement Age means the day a Participant reaches age 65
while in the employ of the Employer.
1.2.19. Participant means an employee of the Employer who is designated as
eligible to participate in this Plan in accordance with the provisions of
Section 2 and who has elected to defer compensation under Section 3. An employee
who has become a Participant shall be considered to continue as a Participant in
this Plan until the date of the Participant's death or, if earlier, the date
when the Participant no longer has any Account under this Plan (that is, the
Participant has received a distribution of all of the Participant's Account).
1.2.20. Plan means the NovaStar Mortgage, Inc. Deferred Compensation Plan,
as amended from time to time.
1.2.21. Plan Year means the twelve (12) consecutive month period ending
each December 31.
1.2.22. Termination of Employment means a complete severance of a
Participant's employment relationship with the Employer and all Affiliates, for
any reason other than the Participant's death or attainment of Normal Retirement
Age. A transfer from employment with the Employer to employment with an
Affiliate of the Employer shall not constitute a Termination of Employment. If
the
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Employer who is an Affiliate ceases to be an Affiliate because of a sale of
substantially all the stock or assets of the Employer, then Participants who are
employed by that Employer and who cease to be employed by a participating
Employer in this Plan on account of the sale of substantially all the stock or
assets of the Employer shall be deemed to have thereby had a Termination of
Employment for the purpose of commencing distributions from this Plan.
1.2.23. Trust means the NovaStar Mortgage, Inc. Deferred Compensation Trust
Agreement, as amended from time to time.
1.2.24. Valuation Date means the business day coincident with or next
preceding the Annual Valuation Date, and any other date designated by the
Committee in its discretion.
1.3. Gender.
1.3.1. Gender and Number. Except as otherwise indicated by context,
masculine terminology used herein also includes the feminine and neuter, and
terms used in the singular may also include the plural.
SECTION 2
PARTICIPATION
2.1. Who May Participate.
2.1.1. Eligible Participant. Only an employee of the Employer who is
eligible for the Plan and who is selected for participation in this Plan for a
particular Plan Year by the Committee shall be eligible to become a Participant
in this Plan.
2.1.2. Terms and Conditions of Participation. Each selected employee shall
be eligible to become a Participant as of the day designated by the Committee
(or, if the Committee does not designate a day of initial participation, as of
the first day of the next following Plan Year). The Committee shall not select
any employee for participation unless the Committee determines that such
employee is a member of a select group of management or highly compensated
employees (as that expression is used in ERISA). The Committee may at any time
determine that a Participant is no longer eligible to make voluntary deferrals
under Section 3.1 or Section 3.2.
2.1.3. Termination of Participation. Once an individual has become a
Participant in the Plan, participation shall continue until payment in full of
all benefits to which the Participant or Beneficiary is entitled under the Plan.
SECTION 3
CREDITS TO ACCOUNTS
3.1. Deferrals from Salary.
3.1.1. Amount of Deferrals. Subject to the policies and procedures
established by the Committee, a Participant may irrevocably elect to defer
between (and including) 1% and 75% of such Participant's Base Salary for a Plan
Year. The Committee may establish prospectively other limits or other pay
eligible for deferral. To be effective, a Base Salary deferral election must be
received by the Committee during the Enrollment Period. As a condition of
participating in this Plan for each Plan Year,
4
each Participant must elect to contribute to the Employer's 401(k) savings plan
the maximum elective deferrals permitted under Section 402(g) of the Code or the
maximum elective deferrals permitted under the terms of such 401(k) savings
plan.
3.1.2. Additional Credits. In the event any amount becomes distributable
under the Employer's 401(k) savings plan to a Participant by reason of such
401(k) plan exceeding the applicable limits under Sections 402(g), 401(k)(3) or
401(m) of the Code and the Treasury regulations issued thereunder (a "Corrective
Distribution"), such Participant shall be deemed to have elected to defer
receipt of such Corrective Distribution and an amount equal to such Corrective
Distribution shall be credited to the Participant's Account.
3.2. Deferrals from Bonuses. On forms furnished by and filed with the Committee,
a Participant may elect to defer up to 100% of such Participant's Bonus. To be
effective, a Bonus deferral election must be received by the Committee during
the Enrollment Period (or in the case of a Bonus attributable to a performance
period that is at least twelve (12) months in duration, no later than six (6)
months prior to the expiration of such performance period, provided that the
Participant was employed by the Employer continuously from the date the
performance criteria were established through the date of the Participant's
election, and that the payment of such Bonus is not substantially certain or
readily ascertainable at the time the deferral election is made).
3.3. Deferral of Stock Awards. Subject to the policies and procedures
established by the Committee, a Participant may elect to defer up to 100% of
such Participant's restricted stock or restricted stock units awarded under the
terms of the NovaStar Financial, Inc. 2004 Incentive Stock Plan (or any
successor plan). To be effective, a deferral election must be received by the
Committee at least 12 months before the scheduled vesting date of such award.
3.4. Employer Discretionary Contribution. The Employer, in its sole and absolute
discretion, may choose to make matching and/or discretionary contributions on
behalf of Participants who are employed by such Employer. Any Employer
contributions credited pursuant to this Section shall be subject to the vesting
rules of Section 5.
3.5. Credits from Measuring Investments. On forms furnished by and filed with
the Committee, each Participant shall designate one or more "Measuring
Investments" which shall be used to credit or debit hypothetical investment
gains or losses on such Participant's Account. The Measuring Investments shall
be selected by the Committee in its discretion and shall be used solely as a
device for computing the amount of benefits to be paid by the Employer under
this Plan. Effective upon the filing of a registration statement on Form S-8
with the Securities Exchange Commission, the Measuring Investments available
under the Plan shall include a deemed (but not actual) investment in Common
Stock of NFI. The Employer shall not be required to purchase any such Measuring
Investment.
Participants may elect to transfer their account balances between the Measuring
Investments in such manner and at such times as determined by the Committee in
its sole discretion; provided, however, a Participant may only direct that
prospective contributions (and not existing account balances) be credited into
the Common Stock Measuring Investment and no amounts credited to the Common
Stock Measuring Investment may be transferred to any other Measuring Investment.
3.6. Operational Rules for Deferrals. A Participant's election to defer under
Section 3.1 or 3.2 shall be "evergreen" (that is, it shall remain in effect for
such Plan Year and, unless timely revised by the Participant for a later Plan
Year before the beginning of such Plan Year, for all later Plan Years). If a
Participant's pay after deferrals is not sufficient to cover tax or other
payroll withholding requirements, the Committee shall reduce the Participant's
deferrals to the extent necessary to cover such requirements.
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SECTION 4
ADJUSTMENT OF ACCOUNTS
4.1. Establishment of Accounts. There shall be established for each Participant
an unfunded bookkeeping Account which shall be adjusted as of each Valuation
Date.
4.2. Accounting Rules. The Committee may adopt (and revise) accounting rules for
the Accounts.
SECTION 5
VESTING OF ACCOUNTS
5.1. General Vesting. Except as set forth in Section 5.2, a Participant shall be
vested his entire Account under the Plan at all times.
5.2. Employer Discretionary Contributions. Each Participant's interest in his
Account attributable to Employer contributions credited pursuant to Section 3.4
shall vest according to the following schedule:
Percentage of
Years Employer Contributions
Of Service Vested
---------- ------
1 25%
2 50%
3 75%
4 100%
For purposes of the foregoing, a Participant's years of service shall equal the
number of years of vesting service credited under the Employer's 401(k) savings
plan.
5.3. Exceptions to Vesting Schedule. Notwithstanding Section 5.2, a
Participant's interest in his Account attributable to Employer contributions
credited pursuant to Section 3.4 shall be fully vested upon a Participant's
death prior to Termination of Employment, Disability, or attainment of his
Normal Retirement Age.
SECTION 6
SPENDTHRIFT PROVISION
No Participant or Beneficiary shall have any interest in the Account which can
be transferred nor shall any Participant or Beneficiary have any power to
anticipate, alienate, dispose of, pledge or encumber the same while in the
possession or control of the Employer, nor shall the Committee recognize any
assignment thereof, either in whole or in part, nor shall the Account be subject
to attachment, garnishment, execution following judgment or other legal process
before the Account is distributed to the Participant or Beneficiary.
The power to designate Beneficiaries to receive the Account of a Participant in
the event of such Participant's death shall not permit or be construed to permit
such power or right to be exercised by the Participant so as thereby to
anticipate, pledge, mortgage or encumber such Participant's Account or any
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part thereof and any attempt of a Participant to so exercise said power in
violation of this provision shall be of no force and effect and shall be
disregarded by the Committee.
SECTION 7
DISTRIBUTIONS
7.1. General Provisions. A Participant's vested Account (reduced by the amount
of any applicable payroll, withholding and other taxes) shall be distributable
at the time and in the manner set forth in Sections 7.2 through 7.7, as
applicable.
7.1.1. Application for Distribution. A Participant shall not be required to
make application to receive payment. Distribution shall not be made to any
Beneficiary, however, until such Beneficiary shall have filed a written
application for benefits in a form acceptable to the Committee and such
application shall have been approved by the Committee.
7.1.2. Form of Payment. All distributions from this Plan shall be made in
cash, except with respect to the portion of a Participant's Account deemed
invested in the Common Stock Measuring Investment which shall be paid in shares
of Common Stock (and cash for fractional shares).
7.1.3. Code ss.162(m) Delay. Notwithstanding any provision in this Plan to
the contrary, if the CommitteE reasonably determines that paying an amount at
the scheduled time would cause the Employer's income tax deduction for the
payment to be limited or eliminated by Section 162(m) of the Code, the Employers
may unilaterally delay the time of the making or commencement of payments to the
earliest date the Committee determines the deduction for the payment(s) will not
be limited or eliminated by application of Section 162(m) of the Code.
7.1.4. Delayed Distribution For Key Employees. Notwithstanding any
provision in this Plan to the contrary, in the case of any Participant who is a
"specified employee" as defined in Section 409A of the Code, payment of such
Participant's Account (other than his Grandfathered Account which shall not be
subject to this Section 7.1.4) shall be delayed for a period of six months in
the event of any distribution payable by reason of such Participant's separation
from service. If any such affected Participant is scheduled to receive payment
of his benefits in installments, the installments payable for the first six
months following such Participant's separation from service shall be accumulated
and paid as soon as practicable following the end of such six month waiting
period.
7.2. Benefit Upon Normal Retirement.
7.2.1. Form of Distribution. In the event a Participant retires on or after
attaining Normal Retirement Age, the Participant's Account shall be distributed
at the Participant's election in either (a) a single lump sum or (b) a series of
5, 10 or 15 annual installments. In the absence of any such election,
distribution shall be made in a single lump sum.
7.2.2. Manner and Time of Election. On forms furnished by and filed with
the Committee, each Participant shall elect at the time of initial enrollment
whether distribution of his Normal Retirement Age benefit shall be made (i) in a
lump sum, or (ii) in either 5, 10 or 15 annual installments. Any pre-selected
distribution option may be changed, provided that such election is received by
the Committee at least five (5) years before the Participant's attainment of
Normal Retirement Age.
7.2.3. Calculation of Installment Amounts. The amount of each installment
(if any) shall be determined by dividing the vested balance of the Participant's
Account as of the Valuation Date as of
7
which the installment is being paid by the number of remaining installment
payments to be made (including the payment being determined). After the first
installment, the amount of future installments will be determined as of each
following January 1 (beginning with the January 1 immediately following the
first installment). Such installments shall be actually paid as soon as
practicable after each such determination.
7.2.4. Request for Lump Sum Payment of Grandfathered Account. On forms
furnished by and filed with the Committee, a Participant who is receiving
installments may elect to receive the total remaining balance of his
Grandfathered Account (but not part thereof) for any reason, provided that the
Grandfathered Account balance will be reduced by a penalty of 10%, with the
result that the Participant will receive 90% of the Grandfathered Account
balance and 10% of the Grandfathered Account balance will be forfeited to the
Employer. The amount of such distribution will be determined as of the Valuation
Date coincident with or next following receipt of the request by the Committee
and shall be actually paid by the Employer to the Participant as soon as
practicable after such determination.
7.3. Benefit Upon Termination of Employment. In the event a Participant
separates from service for any reason other than due to death or Disability or
on or after attaining Normal Retirement Age, the Participant's vested Account
shall be distributed in full in a single lump sum.
7.4. Benefit Upon Disability. In the event a Participant separates from service
as a result of his Disability, the Participant's vested Account shall be
distributed in full in a single lump sum (or in the case of a Participant who is
eligible to retire, in accordance with Section 7.2.1.).
7.5. Benefit Upon Death.
7.5.1. Pre-Retirement Death Benefit. In the event a Participant dies prior
to attaining his Normal Retirement Age, the Beneficiary of such Participant
shall receive distribution of the Participant's vested Account in a single lump
sum distribution.
7.5.2. Post-Retirement Death Benefit. In the event a Participant dies after
attaining his Normal Retirement Age, the Beneficiary of such Participant shall
receive payment of the Participant's remaining benefit in the same form and in
the same manner as the Participant would have received such benefit had the
Participant survived; provided, however, the Committee, in its discretion, may
direct that such benefit attributable to the Participant's Grandfathered Account
be paid in full in a single lump sum or that such benefits be paid in
installments over a shorter period of time.
7.5.3. Additional Death Benefit. If a Participant at the time of death
either (a) had a positive Account balance or (b) had a currently effective
deferral election under Section 3.1 or 3.2, then the Participant's Account
balance payable to his Beneficiary shall be increased as of the Valuation Date
following the Participant's death by an amount equal to the lesser of:
(i) 200% of the total amount of the Participant's voluntary deferrals
credited to his Account under Sections 3.1 and 3.2 (disregarding,
however, (a) any earnings adjustment relating to the Measuring
Investments, (b) any prior distributions, and (c) any amounts deemed
invested in the Common Stock Measuring Investment); or
(ii) $2,000,000.
Notwithstanding the foregoing, if the Participant dies by suicide within two (2)
years of initial enrollment, the additional death benefit under this Section
7.5.3 will not be added to the Account.
8
7.5.4. Designation of Beneficiaries. Each Participant may designate, upon
forms to be furnished by and filed with the Committee, one or more primary
Beneficiaries or alternative Beneficiaries to receive all or a specified part of
such Participant's Account in the event of such Participant's death. The
Participant may change or revoke any such designation from time to time without
notice to or consent from any Beneficiary. No such designation, change or
revocation shall be effective unless executed by the Participant and received by
the Committee during the Participant's lifetime.
7.5.5. Failure of Designation. If a Participant fails to designate a
Beneficiary, designates a Beneficiary and thereafter revokes such designation
without naming another Beneficiary, or designates one or more Beneficiaries and
all such Beneficiaries so designated fail to survive the Participant, then such
Participant's Account, or the part thereof as to which such Participant's
designation fails, as the case may be, shall be payable to the Participant's
surviving spouse (unless legally separated) or representative of Participant's
estate.
7.5.6. Disclaimers by Beneficiaries. A Beneficiary entitled to a
distribution of all or a portion of a deceased Participant's Account may
disclaim an interest therein subject to the following requirements. To be
eligible to disclaim, a Beneficiary must be a natural person, must not have
received a distribution of all or any portion of the Account at the time such
disclaimer is executed and delivered, and must have attained at least age
twenty-one (21) years as of the date of the Participant's death. Any disclaimer
must be in writing and must be executed personally by the Beneficiary before a
notary public. A disclaimer shall state that the Beneficiary's entire interest
in the undistributed Account is disclaimed or shall specify what portion thereof
is disclaimed. To be effective, duplicate original executed copies of the
disclaimer must be both executed and actually delivered to the Committee after
the date of the Participant's death but not later than one hundred eighty (180)
days after the date of the Participant's death. A disclaimer shall be
irrevocable when delivered to the Committee. A disclaimer shall be considered to
be delivered to the Committee only when actually received by the Committee. The
Committee shall be the sole judge of the content, interpretation and validity of
a purported disclaimer. Upon the filing of a valid disclaimer, the Beneficiary
shall be considered not to have survived the Participant as to the interest
disclaimed. A disclaimer by a Beneficiary shall not be considered to be a
transfer of an interest in violation of any other provisions under this Plan. No
other form of attempted disclaimer shall be recognized by the Committee.
7.5.7. Death Prior to Full Distribution. If, at the death of the
Participant, any payment to the Participant was due or otherwise pending but not
actually paid, the amount of such payment shall be included in the Account which
is payable to the Beneficiary (and shall not be paid to the Participant's
estate).
7.6. Benefit Prior To Termination of Employment.
7.6.1. Pre-Selected In-Service Distributions. If a Participant so elects
upon enrollment in the Plan for any Plan Year, such Participant may elect to
receive the vested portion of his Account prior to Termination of Employment
subject to the following rules:
(a) On forms furnished by and filed with the Committee, each Participant
may select during the Enrollment Period with respect to each Plan Year
one or more in-service distribution dates and amounts with respect to
deferred amounts attributable to such Plan Year, provided that any
such in-service distribution date is at least two years after the
first day of the Plan Year with respect to which such election is
made.
(b) Only one such distribution will be made in any Plan Year.
9
(c) On forms furnished by and filed with the Committee, any pre-selected
distribution date may be extended (one time only), provided that such
extension must be received by the Committee at least 12 months (or 6
months in the case of a Grandfathered Account) before the scheduled
date of distribution and the new extended distribution date selected
must be at least 5 years after the original distribution date (or at
least 1 year in the case of a Grandfathered Account).
(d) On forms furnished by and filed with the Committee, any pre-selected
distribution date relating solely to a Grandfathered Account may be
cancelled (whether or not previously extended), provided that such
cancellation must be received by the Committee at least 6 months
before the scheduled date of distribution.
7.6.2. On Demand In-Service Distributions of Grandfathered Accounts. On
forms furnished by and filed with the Committee, a Participant may request to
receive all or part of such Participant's vested Grandfathered Account prior to
Termination of Employment for any reason, provided that the requested
distribution amount will be reduced by a penalty equal to 10% of the requested
amount, with the result that the Participant will receive 90% of the requested
amount and 10% of the requested amount will be forfeited to the Employer. The
amount of such distribution shall be determined as of the Valuation Date
coincident with or next following receipt of the request by the Committee and
shall be actually paid to the Participant as soon as practicable after such
determination.
7.6.3. In-Service Distribution for Financial Hardship. On forms furnished
by and filed with the Committee, a Participant may request to receive all or
part of such Participant's vested Account prior to Termination of Employment to
alleviate a Financial Hardship. For purposes of the Plan, "Financial Hardship"
means a severe financial hardship to the Participant resulting from a sudden and
unexpected illness or accident of the Participant or a dependent (as defined in
Section 152(a) of the Code), loss of the Participant's property due to casualty,
or other similar extraordinary and unforeseeable emergency circumstances arising
as a result of events beyond the control of the Participant. If a hardship is or
may be relieved either (a) through reimbursement or compensation by insurance or
otherwise, (b) by liquidation of the Participant's assets (to the extent the
liquidation of such assets would not itself cause severe financial hardship), or
(c) by cessation of deferrals under this Plan, then the hardship shall not
constitute a Financial Hardship for purposes of this Plan. If a Participant
receives a distribution due to Financial Hardship, such Participant's deferrals
under the Plan will cease. The Participant may not again elect to defer
compensation until the Enrollment Period for the Plan Year that begins at least
12 months after such distribution. A Beneficiary of a deceased Participant may
also request an early distribution for Financial Hardship.
7.7. Benefit Upon Change of Control. Notwithstanding any provision in this Plan
to the contrary, in the event of a Change of Control of NFI, the Account balance
of each Participant or Beneficiary (including any individual receiving
installment payments) shall be paid to such Participant or Beneficiary in a
single lump sum.
7.8. Facility of Payment. In case of the legal disability of a Participant or
Beneficiary entitled to receive any distribution under this Plan, payment shall
be made, if the Committee shall be advised of the existence of such condition:
(i) to the duly appointed guardian, conservator or other legal representative of
such Participant or Beneficiary, or (ii) to a person or institution entrusted
with the care or maintenance of the incompetent or disabled Participant or
Beneficiary, provided such person or institution has satisfied the Committee
that the payment will be used for the best interest and assist in the care of
such Participant or Beneficiary, and provided further, that no prior claim for
said payment has been made by a duly appointed guardian, conservator or other
legal representative of such Participant or Beneficiary. Any
10
payment made in accordance with the foregoing provisions of this section shall
constitute a complete discharge of any liability or obligation pursuant to this
Plan.
7.9. Special IRS Transition Rule. Notwithstanding the preceding provisions of
this Section 7 or any other provision in this Plan to the contrary, each
Participant shall be allowed to modify any prior election regarding the time and
form of payment in accordance with IRS Notice 2005-1 and the proposed IRS
regulations under section 409A of the Code. Any such modifications shall be made
no later than December 31, 2006, or such later date as may be authorized under
applicable IRS guidance.
SECTION 8
FUNDING OF PLAN
8.1. Unfunded Plan. The obligation of the Employer to make payments under this
Plan constitutes only the unsecured (but legally enforceable) promise of the
Employer to make such payments. No Participant shall have any lien, prior claim
or other security interest in any property of the Employer. The Employer shall
have no obligation to establish or maintain any fund, trust or account (other
than a bookkeeping account or reserve) for the purpose of funding or paying the
benefits promised under this Plan. If such a fund, trust or account is
established, the property therein shall remain the sole and exclusive property
of the Employer. The Employer shall be obligated to pay the cost of this Plan
out of its general assets. All references to accounts, accruals, gains, losses,
income, expenses, payments, custodial funds and the like are included merely for
the purpose of measuring the Employer's obligation to Participants in this Plan
and shall not be construed to impose on the Employer the obligation to create
any separate fund for purposes of this Plan.
8.2. Corporate Obligation. Neither any officer of any Employer nor any member of
the Committee in any way secures or guarantees the payment of any benefit or
amount which may become due and payable hereunder to or with respect to any
Participant. Each Participant and other person entitled at any time to payments
hereunder shall look solely to the assets of the Employer for such payments as
an unsecured, general creditor. After benefits shall have been paid to or with
respect to a Participant and such payment purports to cover in full the benefit
hereunder, such former Participant or other person or persons, as the case may
be, shall have no further right or interest in the other assets of the Employer
in connection with this Plan. No person shall be under any liability or
responsibility for failure to effect any of the objectives or purposes of this
Plan by reason of the insolvency of the Employer.
SECTION 9
AMENDMENT AND TERMINATION
9.1. Amendment and Termination. The Board of Directors may unilaterally amend
the Plan prospectively, retroactively or both, at any time and for any reason
deemed sufficient by it without notice to any person affected by this Plan and
may likewise terminate this Plan both with regard to persons receiving benefits
and persons expecting to receive benefits in the future; provided, however,
that:
(a) the benefit, if any, payable to or with respect to a Participant who
has had a Termination of Employment as of the effective date of such
amendment or the effective date of such termination shall not be,
without the written consent of the Participant, diminished or delayed
by such amendment or termination (but the Board of Directors may
terminate the Plan completely and provide for immediate payment of all
Accounts under the Plan in single lump sum payments, subject to the
requirements of Section 409A of the Code and Treasury regulations
thereunder, as applicable), and
11
(b) the benefit, if any, payable to or with respect to each other
Participant determined as if such Participant had a Termination of
Employment on the effective date of such amendment or the effective
date of such termination shall not be, without the written consent of
the Participant, diminished or delayed by such amendment or
termination (but the Board of Directors may terminate the Plan
completely and provide for immediate payment of all Accounts under the
Plan in single lump sum payments, subject to the requirements of
Section 409A of the Code and Treasury regulations thereunder, as
applicable).
9.2. No Oral Amendments. No modification of the terms of the Plan or termination
of this Plan shall be effective unless it is in writing and signed on behalf of
the Board of Directors by a person authorized to execute such writing. No oral
representation concerning the interpretation or effect of the Plan shall be
effective to amend the Plan.
9.3. Plan Binding on Successors. The Employer will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of such Employer by
agreement, to expressly assume and agree to perform this Plan in the same manner
and to the same extent that such Employer would be required to perform it if no
such succession had taken place.
SECTION 10
DETERMINATIONS - RULES AND REGULATIONS
10.1. Determinations. The Committee shall make such determinations as may be
required from time to time in the administration of this Plan. The Committee
shall have the discretionary authority and responsibility to interpret and
construe the Plan and to determine all factual and legal questions under this
Plan, including but not limited to the entitlement of Participants and
Beneficiaries, and the amounts of their respective interests. Each interested
party may act and rely upon all information reported to them hereunder and need
not inquire into the accuracy thereof, nor be charged with any notice to the
contrary.
10.2. Rules and Regulations. Any rule not in conflict or at variance with the
provisions hereof may be adopted by the Committee.
10.3. Method of Executing Instruments. Information to be supplied or written
notices to be made or consents to be given by the Committee pursuant to any
provision of the Plan may be signed in the name of the Committee by any officer
who has been authorized to make such certification or to give such notices or
consents.
10.4. Claims Procedure. The claims procedure set forth in this Section 10.4
shall be the exclusive administrative procedure for the disposition of claims
for benefits arising under this Plan.
10.4.1. Original Claim. Any person may, if he or she so desires, file with
the Committee a written claim for benefits under this Plan. Within ninety (90)
days after the filing of such a claim, the Committee shall notify the claimant
in writing whether the claim is upheld or denied in whole or in part or shall
furnish the claimant a written notice describing specific special circumstances
requiring a specified amount of additional time (but not more than one hundred
eighty (180) days from the date the claim was filed) to reach a decision on the
claim. If the claim is denied in whole or in part, the Committee shall state in
writing:
(a) the specific reasons for the denial;
12
(b) the specific references to the pertinent provisions of the Plan on
which the denial is based;
(c) a description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such
material or information is necessary; and
(d) an explanation of the claims review procedure set forth in this
section.
10.4.2. Review of Denied Claim. Within sixty (60) days after receipt of
notice that the claim has been denied in whole or in part, the claimant may file
with the Board of Directors a written request for a review and may, in
conjunction therewith, submit written issues and comments. Within sixty (60)
days after the filing of such a request for review, the Board of Directors shall
notify the claimant in writing whether, upon review, the claim was upheld or
denied in whole or in part or shall furnish the claimant a written notice
describing specific special circumstances requiring a specified amount of
additional time (but not more than one hundred twenty (120) days from the date
the request for review was filed) to reach a decision on the request for review.
10.4.3. General Rules.
(a) No inquiry or question shall be deemed to be a claim or a request for
a review of a denied claim unless made in accordance with the claims
procedure. The Committee may require that any claim for benefits and
any request for a review of a denied claim be filed on forms to be
furnished by the Committee upon request.
(b) All decisions on original claims shall be made by the Committee and
all decisions on requests for a review of denied claims shall be made
by the Board of Directors.
(c) The Committee or the Board of Directors may, in their discretion, hold
one or more hearings on a claim or a request for a review of a denied
claim.
(d) A claimant may be represented by a lawyer or other representative (at
the claimant's own expense), but the Committee and the Board of
Directors reserve the right to require the claimant to furnish written
authorization. A claimant's representative shall be entitled, upon
request, to copies of all notices given to the claimant.
(e) The decision of the Committee on a claim and a decision of the Board
of Directors on a request for a review of a denied claim shall be
served on the claimant in writing.
(f) Prior to filing a claim or a request for a review of a denied claim,
the claimant or his or her representative shall have a reasonable
opportunity to review a copy of the Plan and all other pertinent
documents in the possession of the Committee and the Board of
Directors.
(g) The Committee and the Board of Directors may permanently or
temporarily delegate its responsibilities under this claims procedure
to an individual or a committee of individuals.
10.5. Limitations and Exhaustion.
10.5.1. Limitations. No claim shall be considered under these
administrative procedures unless it is filed with the Committee within one (1)
year after the claimant knew (or reasonably should
13
have known) of the principal facts on which the claim is based. Every untimely
claim shall be denied by the Committee without regard to the merits of the
claim. No legal action (whether arising under section 502 or section 510 of
ERISA or under any other statute or non-statutory law) may be brought by any
claimant on any matter pertaining to this Plan unless the legal action is
commenced in the proper forum before the earlier of:
(a) two (2) years after the claimant knew (or reasonably should have
known) of the principal facts on which the claim is based, or
(b) ninety (90) days after the claimant has exhausted these administrative
procedures.
Knowledge of all facts that a Participant knew (or reasonably should have known)
shall be imputed to each claimant who is or claims to be a Beneficiary of the
Participant (or otherwise claims to derive an entitlement by reference to a
Participant) for the purpose of applying the one (1) year and two (2) year
periods.
10.5.2. Exhaustion Required. The exhaustion of these administrative
procedures is mandatory for resolving every claim and dispute arising under this
Plan. As to such claims and disputes:
(a) no claimant shall be permitted to commence any legal action relating
to any such claim or dispute (whether arising under section 502 or
section 510 of ERISA or under any other statute or non-statutory law)
unless a timely claim has been filed under these administrative
procedures and these administrative procedures have been exhausted;
and
(b) in any such legal action all explicit and implicit determinations by
the Committee and the Board of Directors (including, but not limited
to, determinations as to whether the claim was timely filed) shall be
afforded the maximum deference permitted by law.
SECTION 11
PLAN ADMINISTRATION
11.1. Officers. Except as hereinafter provided, functions generally assigned to
the Employer shall be discharged by its officers or delegated and allocated as
provided herein.
11.2. Board of Directors. Notwithstanding the foregoing, the Board of Directors
shall have the exclusive authority, which may not be delegated, to amend the
Plan or to terminate this Plan.
11.3. Committee. The Committee shall:
(a) keep a record of all its proceedings and acts and keep all books of
account, records and other data as may be necessary for the proper
administration of the Plan; notify the Employer of any action taken by
the Committee and, when required, notify any other interested person
or persons;
(b) determine from the records of the Employer the compensation, status
and other facts regarding Participants and other employees;
(c) prescribe forms to be used for distributions, notifications, etc., as
may be required in the administration of the Plan;
14
(d) set up such rules, applicable to all Participants similarly situated,
as are deemed necessary to carry out the terms of this Plan;
(e) perform all other acts reasonably necessary for administering the Plan
and carrying out the provisions of this Plan and performing the duties
imposed on it by the Board of Directors.
(f) resolve all questions of administration of the Plan not specifically
referred to in this section;
(g) in accordance with regulations of the Secretary of Labor, provide
adequate notice in writing to any claimant whose claim for benefits
under the Plan has been denied, setting forth the specific reasons for
such denial, written in a manner calculated to be understood by the
claimant; and
(h) delegate or re-delegate to one or more persons, jointly or severally,
and whether or not such persons are members of the Committee or
employees of any Employer, such functions assigned to the Committee
hereunder as it may from time to time deem advisable.
If there shall at any time be three (3) or more members of the Committee serving
hereunder who are qualified to perform a particular act, the same may be
performed, on behalf of all, by a majority of those qualified, with or without
the concurrence of the minority. No person who failed to join or concur in such
act shall be held liable for the consequences thereof, except to the extent that
liability is imposed under ERISA.
11.4. Delegation. The Board of Directors and the members of the Committee shall
not be liable for an act or omission of another person with regard to a
responsibility that has been allocated to or delegated to such other person
pursuant to the terms of the Plan or pursuant to procedures set forth in the
Plan.
11.5. Conflict of Interest. If any individual to whom authority has been
delegated or re-delegated hereunder shall also be a Participant in this Plan,
such Participant shall have no authority with respect to any matter specially
affecting such Participant's individual rights hereunder or the interest of a
person superior to him or her in the organization (as distinguished from the
rights of all Participants and Beneficiaries or a broad class of Participants
and Beneficiaries), all such authority being reserved exclusively to other
individuals as the case may be, to the exclusion of such Participant, and such
Participant shall act only in such Participant's individual capacity in
connection with any such matter.
11.6. Administrator. The Sponsor shall be the administrator for purposes of
section 3(16)(A) of ERISA.
11.7. Service of Process. In the absence of any designation to the contrary by
the Committee, the General Counsel of the Sponsor and its Board of Directors is
designated as the appropriate and exclusive agent for the receipt of process
directed to this Plan in any legal proceeding, including arbitration, involving
this Plan.
11.8. Expenses. All expenses of administering this Plan shall be borne by the
Employer.
11.9. Tax Withholding. The Employer shall withhold the amount of any federal,
state or local income tax or other tax required to be withheld by the Employer
under applicable law with respect to any amount payable under this Plan.
15
11.10. Certifications. Information to be supplied or written notices to be made
or consents to be given by the Committee pursuant to any provision of this Plan
may be signed in the name of the Committee by any officer who has been
authorized to make such certification or to give such notices or consents.
11.11. Errors in Computations. The Employer shall not be liable or responsible
for any error in the computation of the Account or the determination of any
benefit payable to or with respect to any Participant resulting from any
misstatement of fact made by the Participant or by or on behalf of any survivor
to whom such benefit shall be payable, directly or indirectly, to the Employer
and used by the Committee in determining the benefit. The Committee shall not be
obligated or required to increase the benefit payable to or with respect to such
Participant which, on discovery of the misstatement, is found to be understated
as a result of such misstatement of the Participant. However, the benefit of any
Participant which is overstated by reason of any such misstatement or any other
reason shall be reduced to the amount appropriate in view of the truth (and to
recover any prior overpayment).
SECTION 12
CONSTRUCTION
12.1. Applicable Laws.
12.1.1. ERISA Status. This Plan is adopted with the understanding that it
is an unfunded plan maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees as
provided in section 201(2), section 301(3) and section 401(a)(1) of ERISA. Each
provision shall be interpreted and administered accordingly.
12.1.2. IRC Status. This Plan is intended to be a nonqualified deferred
compensation arrangement. The rules of section 401(a) et. seq. of the Code shall
not apply to this Plan. The rules of section 3121(v) and section 3306(r)(2) of
the Code shall apply to this Plan.
12.1.3. References to Laws. Any reference in the Plan to a statute or
regulation shall be considered also to mean and refer to any subsequent
amendment or replacement of that statute or regulation.
12.2. Effect on Other Plans. This Plan shall not alter, enlarge or diminish any
person's employment rights or obligations or rights or obligations under any
other employee pension benefit or employee welfare benefit plan.
12.3. Disqualification. Notwithstanding any other provision of the Plan or any
election or designation made under this Plan, any potential Beneficiary who
feloniously and intentionally kills a Participant shall be deemed for all
purposes of this Plan and all elections and designations made under this Plan to
have died before such Participant. A final judgment of conviction of felonious
and intentional killing is conclusive for this purpose. In the absence of a
conviction of felonious and intentional killing, the Committee shall determine
whether the killing was felonious and intentional for this purpose.
12.4. Rules of Document Construction.
(a) An individual shall be considered to have attained a given age on such
individual's birthday for that age (and not on the day before).
Individuals born on February 29 in a leap year shall be considered to
have their birthdays on February 28 in each year that is not a leap
year.
16
(b) Whenever appropriate, words used herein in the singular may be read in
the plural, or words used herein in the plural may be read in the
singular; the masculine may include the feminine; and the words
"hereof," "herein" or "hereunder" or other similar compounds of the
word "here" shall mean and refer to the entire Plan and not to any
particular paragraph or Section of the Plan unless the context clearly
indicates to the contrary.
(c) The titles given to the various Sections of the Plan are inserted for
convenience of reference only and are not part of the Plan, and they
shall not be considered in determining the purpose, meaning or intent
of any provision hereof.
(d) Notwithstanding anything apparently to the contrary contained in the
Plan, the Plan Statement shall be construed and administered to
prevent the duplication of benefits provided under this Plan and any
other qualified or nonqualified plan maintained in whole or in part by
the Employer.
12.5. Choice of Law. Except to the extent that federal law is controlling, this
instrument shall be construed and enforced in accordance with the laws of the
State of Maryland.
12.6. No Employment Contract. This Plan is not and shall not be deemed to
constitute a contract of employment between the Employer and any person, nor
shall anything herein contained be deemed to give any person any right to be
retained in the Employer's employ or in any way limit or restrict the Employer's
right or power to discharge any person at any time and to treat any person
without regard to the effect which such treatment might have upon him or her as
a Participant in this Plan. Neither the terms of the Plan nor the benefits under
this Plan or the continuance of the Plan shall be a term of the employment of
any employee. The Employer shall not be obliged to continue this Plan.
12.7. Code ss.409A Compliance. To the extent applicable, this Plan shall be
interpreted and construed iN accordance with Code Section 409A and Treasury
regulations and other interpretative guidance issued thereunder, including
without limitation any regulations or other guidance that may be issued after
the effective date of this restatement. Notwithstanding any provision of this
Plan to the contrary, the Employer may adopt such amendments to the Plan or
adopt other policies and procedures (including amendments, policies and
procedures having a retroactive effect), or take any other actions, that the
Employer determines is necessary or appropriate to preserve the intended tax
treatment of the benefits provided under the Plan and/or to comply with Code
Section 409A.
17
SIGNATURE PAGE
IN WITNESS WHEREOF, this amended and restated Plan is adopted this
29th day of November, 2006, but effective as of January 1, 2005.
NOVASTAR MORTGAGE, INC.
By: /s/ Gregory S. Metz
---------------------------------------------
Title: Chief Financial Officer
------------------------------------------
