EXHIBIT 10.42
INTERCONTINENTAL LIFE CORPORATION
NONQUALIFIED DEFERRED COMPENSATION PLAN
SECTION 1
Definitions
1.1. Affiliate. "Affiliate" means any corporation, partnership, joint venture,
association or similar organization or entity that is required to be
aggregated with the Sponsor pursuant to Code Sections 414(b), (c), or (m).
1.2. Code. "Code" means the Internal Revenue Code of 1986, as amended from time
to time. Any reference to a section of the Code includes any comparable
section or sections of any future legislation that amends, supplements or
supersedes that section.
1.3. Participating Company. "Participating Company" means the Sponsor and any
subsidiary company of the Sponsor which has elected to become a
Participating Company. As of the Effective Date, the Sponsor and Investors
Life Insurance Company of North America are the Participating Companies.
1.4 Compensation. "Compensation" means Total taxable salary and bonuses paid to
a Participant by the Employer (determined without regard to any amounts in
the Participant's Deferred Compensation Account).
1.5. Deferred Compensation Account. "Deferred Compensation Account" means the
bookkeeping account maintained under the Plan in the Participant's name to
reflect amounts deferred under the Plan pursuant to Section 3 (as adjusted
under Section 4) and (if elected by the Sponsor) any Employer Discretionary
Contributions made on behalf of the Participant (as adjusted under Section
4).
1.6. Deferral Election. "Deferral Election" means a written notice filed by the
Participant with the Employer specifying the Compensation or bonus to be
deferred by the Participant.
1.7. Distribution Date. "Distribution Date" means the date elected by the
Participant which is not earlier than the date a Participant terminates
employment or association with the Employer for whatever reason, and not
later than "Normal Retirement Age."
- 1 -
1.8. Early Retirement Date. "Early Retirement Date" means the date the
Participant attains 55 years of age.
1.9. Effective Date. "Effective Date" means May 1, 1997.
1.10.Employee. "Employee" means an employee of a Participating Company who
meets the eligibility criteria set forth in Subsection 3.1 of the Plan and
who is a member of a select group of management or highly compensated
employees as defined under ERISA or the regulations thereunder.
1.11.Employer. "Employer" means, individually, the Sponsor and each Affiliate
of the Sponsor that adopts the Plan in accordance with Subsection 7.1. The
Sponsor and any Affiliates that adopt the Plan are sometimes collectively
referred to herein as the "Employers."
1.12.ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time. Any reference to a section of ERISA includes
any comparable section or sections of any future legislation that amends,
supplements or supersedes that section.
1.13.Normal Retirement Date. "Normal Retirement Date" means the date the
Participant attains 65 years of age.
1.14.Participant. "Participant" means an Employee who meets the eligibility
criteria set forth in Subsection 3.1 and who has made a Deferral Election
in accordance with the terms of the Plan.
1.15. Plan. "Plan" means the provisions of the Plan, as set forth herein.
1.16 Plan Administrator. The "Plan Administrator" means the Executive Committee
of the Sponsor.
1.17.Plan Year. "Plan Year" means the calendar year. However, if the Effective
Date of the Plan is other than January 1 of a year, the initial Plan Year
shall be a short Plan Year, beginning on the Effective Date and ending on
the following December 31.
1.18 Sponsor. "Sponsor" means InterContinental Life Corporation.
- 2 -
1.19.Unforeseeable Financial Emergency. "Unforeseeable Financial Emergency"
means a severe financial hardship of the Participant resulting from:
(a) A sudden and unexpected illness or accident of the Participant or of a
dependent of the Participant;
(b) Loss of the Participant's principal residence due to casualty; or
(c) Such other similar extraordinary and unforeseeable circumstances
resulting from events beyond the control of the Participant.
Whether a Participant has an Unforeseeable Financial Emergency shall be
determined in the sole discretion of the Plan Administrator.
1.20.Valuation Date. "Valuation Date" means the last day of any calendar
quarter.
1.21.Other Definitions. In addition to the terms defined in this Section 1,
other terms are defined when first used in later Sections of this Plan.
SECTION 2
Purpose and Administration
2.1. Purpose. The Sponsor has established the Plan primarily for the purpose of
providing deferred compensation to a select group of management or highly
compensated employees of the Employers. The Plan is intended to be a
top-hat plan described in Section 201(2) of ERISA. The Sponsor intends that
the Plan (and each Trust under the Plan (as described in Subsection 6.1)
shall be treated as unfunded for tax purposes and for purposes of Title I
of ERISA. An Employer's obligations hereunder, if any, to a Participant (or
to a Participant's beneficiary) shall be unsecured and shall be a mere
promise by the Employer to make payments hereunder in the future. A
Participant (or the Participant's beneficiary) shall be treated as a
general unsecured creditor of the Employer.
2.2. Administration. The Plan shall be administered by the Plan Administrator.
The Plan Administrator shall serve at the pleasure of the Sponsor's Board
of Directors and may be removed by such Board, with or without cause. The
Plan Administrator may resign upon prior written notice to the Sponsor's
Board of Directors.
- 3 -
The Plan Administrator shall have the powers, rights, and duties set forth
in the Plan and shall have the power, in the Plan Administrator's sole and
absolute discretion, to determine all questions arising under the Plan,
including the determination of the rights of all persons with respect to
the Plan and to interpret the provisions of the Plan and remedy any
ambiguities, inconsistencies, or omissions. Any decisions of the Plan
Administrator shall be final and binding on all persons with respect to the
Plan and the benefits provided under the Plan. The Plan Administrator may
delegate the Plan Administrator's authority under the Plan to one or more
officers or directors of the Sponsor; provided, however, that (a) such
delegation must be in writing, and (b) the officers or directors of the
Sponsor to whom the Plan Administrator is delegating authority must accept
such delegation in writing
If a Participant is serving as the Plan Administrator (either individually
or as a member of a committee), the Participant may not decide or determine
any matter or question concerning such Participant's benefits under the
Plan that the Participant would not have the right to decide or determine
if the Participant were not serving as the Plan Administrator.
SECTION 3
Eligibility, Participation, Deferral Elections,
and Employer Contributions
3.1. Eligibility and Participation. Subject to the conditions and limitations of
the Plan, executive officers of the Sponsor and affiliates of the Sponsor
are eligible to participate in the Plan:
An Employee shall become a Participant in the Plan upon the execution and
filing with the Plan Administrator of a written election to defer a portion
of the Employee's Compensation. A Participant shall remain a Participant
until the entire balance of the Participant's Deferred Compensation Account
has been distributed.
- 4 -
3.2. Rules for Deferral Elections. Any Participant may make a Deferral Election
to defer receipt of Compensation he or she otherwise would be entitled to
receive for a Plan Year in accordance with the rules set forth below:
(a) All Deferral Elections must be made in writing on a form prescribed by
the Plan Administrator will be effective only when filed with the Plan
Administrator no later than the date specified by the Plan
Administrator. In no event may a Deferral Election be made later than
the last day of the Plan Year preceding the Plan Year in which the
amount being deferred would otherwise be made available to the
Participant. However, in the case of a Participant's initial year of
employment with an Employer, the Participant may make a Deferral
Election with respect to compensation for services to be performed
subsequent to such Deferral Election, provided such election is made
no later than 30 days after the date the Participant first becomes
eligible for the Plan. Furthermore, in the case of a short initial
Plan Year, each Participant may make a Deferral Election with respect
to compensation for services to be performed subsequent to such
Deferral Election, provided such election is made no later than 30
days after the Effective Date.
(b) With respect to Plan Years following the Participant's initial Plan
Year of participation in the Plan, failure to complete a subsequent
Deferral Election shall constitute a waiver of the Participant's right
to elect a different amount of Compensation to be deferred for each
such Plan Year and shall be considered an affirmation and ratification
to continue the Participant's existing Deferral Election. However, a
Participant may, prior to the beginning of any Plan Year, elect to
increase or decrease the amount of Compensation to be deferred for the
next following Plan Year by filing another Deferral Election with the
Plan Administrator in accordance with paragraph (a) above.
(c) A Deferral Election in effect for a Plan Year may not be modified
during the Plan Year, except that a Participant may terminate the
Participant's Deferral Election during a Plan Year in the event of an
Unforeseeable Financial Emergency.
3.3. Amounts Deferred.:
Deferral of a Percentage of Compensation.
Commencing on the Effective Date, a Participant may elect to defer (a) up
to 10% of the Participant's Compensation for a Plan Year, other than that
portion of the Participant's Compensation which is a bonus, and (b) up to
100% of the Participant's bonus for a Plan Year. The amount of Compensation
and bonus deferred by a Participant shall be credited to the Participant's
Deferred Compensation Account as of the Valuation Date coincident with or
immediately following the date such Compensation and bonus would, but for
the Participant's Deferral Election, be payable to the Participant.
- 5 -
3.4. Employer Discretionary Contributions. If selected by the Sponsor, a
Participating Company may, in its sole discretion, credit to the Deferred
Compensation Account of any Participant employed by that Employer an amount
determined by the Participating Company in its sole discretion (an
"Employer Discretionary Contribution") for a Plan Year. Any Participating
Company Discretionary Contribution for a Plan Year will be credited to a
Participant's Deferred Compensation Account as of the Valuation Date
specified by the Sponsor.
Employer Discretionary Contributions may be made under the Plan for a Plan
Year as determined by each Employer in its sole discretion.
SECTION 4
Deferred Compensation Accounts
4.1 Deferred Compensation Accounts. All amounts deferred pursuant to one or
more Deferral Elections under the Plan and any Employer Discretionary
Contributions shall be credited to a Participant's Deferred Compensation
Account and shall be adjusted in accordance with the provisions of Section
4.2.
4.2 Deferral Account Adjustments and Investment Options. As of each Valuation
Date, the Plan Administrator shall adjust amounts in a Participant's
Deferred Compensation Account to reflect earnings (or losses) in the
Investment Options (as defined in Section 4.4) attributable to the
Participant's Deferred Compensation Account. Earnings (or losses) on
amounts in a Participant's Deferred Compensation Account shall accrue
commencing on the date the Deferred Compensation Account first has a
positive balance and shall continue to accrue until the entire balance in
the Participant's Deferred Compensation Account has been distributed.
Earnings (or losses) shall be credited to a Participant's Deferred
Compensation Account based on the realized rate of return (net of any
expenses and taxes paid from the Trust) on the Investment Options
attributable to the Participant's Deferred Compensation Account.
4.3 Vesting. A Participant shall be fully vested in the amounts in the
Participant's Deferred Compensation Account attributable to the
Participant's Deferral Elections. If Employer Discretionary Contributions
are made under the Plan, a Participant shall be vested in the amount in the
Participant's Deferred Compensation Account attributable to Employer
Discretionary Contributions in accordance with the following:
- 6 -
Seven Year Graded Vesting Schedule
Vesting for Participants will be determined by:
Years of Service with the Employer.
Nonforfeitable Percentage
Less than 3 years...................................0%
3 years............................................20%
4 years............................................40%
5 years............................................60%
6 years............................................80%
7 years...........................................100%
Notwithstanding the foregoing vesting schedule, the entire balance in a
Participant's Deferred Compensation Account attributable to Employer
Discretionary Contributions will be fully vested upon the Participant's
Early Retirement Date.
For the purpose of determining a Participan's vested benefit with respect
to Employer Discretionary Contributions, a "Year of Service" means each
twelve-month period of employment with a Participating Company or an
Affiliate, and a "Year of Participation" means each twelve-month period of
active participation in the Plan. Notwithstanding the foregoing, a
Participant shall be fully vested in the entire balance in the
Participant's Deferred Compensation Account upon the participant's Normal
Retirement Date, death or becoming disabled (as provided in Section 5.2
below), provided the date on which the Participant dies or becomes disabled
occurs while the Participant is actively employed by a Participating
Company or an Affiliate. The portion of a Participant's Deferred
Compensation Account in which the Participant is not fully vested shall be
forfeited to the Employer by the Participant.
4.4. Investment Options. Each Trust (as described in Section 6.1) shall contain
such investment funds ("Investment Options") as may be determined under the
terms of the Trust. A Participant may request that the Employer comply with
such Participant's directions with respect to investment of assets of the
Trust maintained with respect to such Participant that are equal to the
value of such Participant's Deferred Compensation Account. If the Employer
so complies, the Employer shall request that the trustee(s) of the Trust(s)
(the "Trustee") so comply with such directions. Such directions must be
made at least 30 days prior to the effective date of such direction.
- 7 -
SECTION 5
Payment of Benefits
5.1. Time and Method of Payment. Payment of the vested portion of a
Participant's Deferred Compensation Account shall be made as soon as
practicable following the Valuation Date coincident with or next following
the Participant's Distribution Date; provided, however, that if the Sponsor
has elected a daily Valuation Date, such payment will be made as soon as
practicable following the last business day of the month in which the
Participant's Distribution Date occurs. Payment of the vested portion of a
Participant's Deferred Compensation Account shall be made as follows:
Substantially equal annual installment payments for ten years with a
one-time option to receive a lump sum payment. The Participant may elect to
receive a single, lump sum payment in lieu of installment payments. Such
election must be made by filing a written election with the Plan
Administrator at least 30 days prior to the time installment payment would
otherwise begin, and such election is subject to approval by the Sponsor.
5.2. Payment Upon Disability. In the event a Participant becomes disabled (as
defined below) while the Participant is employed by a Participating
Company, payment of the Participant's Deferred Compensation Account shall
be made (or shall commence) as soon as practicable after the Valuation Date
coincident with or next following the date on which the Plan Administrator
determines that the Participant is disabled. For the purposes of this
Section 5.2, a Participant shall be considered disabled if the Participant
is unable to engage in any substantially gainful activity by reason of any
medically determined physical or mental impairment that can be expected to
result in death or that has lasted or can be expected to last for a
continuous period of not less than twelve months. Whether a Participant is
disabled for purposes of the Plan shall be determined by the Plan
Administrator, and in making such determination, the Plan Administrator may
rely on the opinion of a physician (or physicians) selected by the Plan
Administrator for such purpose.
5.3. Payment Upon Death of a Participant. A Participant's Deferred Compensation
Account shall be paid to the Participant's beneficiary (designated in
accordance with Section 5.4) in a single lump sum as soon as practicable
following the Valuation Date coincident with or next following the
Participant's death.
- 8 -
5.4 Beneficiary. If a Participant is married on the date of the Participant's
death, the Participant's beneficiary shall be the Participant's spouse,
unless the Participant names a beneficiary or beneficiaries (other than the
Participant's spouse) to receive the balance of Participant's Deferred
Compensation Account in the event of the Participant's death prior to the
payment of the Participant's entire Deferred Compensation Account. To be
effective, any beneficiary designation must be filed in writing with the
Plan Administrator in accordance with rules and procedures adopted by the
Plan Administrator for that purpose. A Participant may revoke an existing
beneficiary designation by filing another written beneficiary designation
received by the Plan Administrator shall be controlling. If no beneficiary
is named by a Participant, or if the Participant survives all of the
Participant's named beneficiaries and does not designate another
beneficiary, the Participant's Deferred Compensation Account shall be paid
in the following order of precedence:
(a) The Participant's spouse;
(b) The Participant's children (including adopted children) per stripes;
or
(c) The Participant's estate.
5.5. Unforeseeable Financial Emergency. If the Plan Administrator determines
that a Participant has incurred an Unforeseeable Financial Emergency, the
Participant may receive in cash the portion of the balance of the
Participant's Deferred Compensation Account needed to satisfy the
Unforeseeable Financial Emergency, but only if the Unforeseeable Financial
Emergency may not be relieved (a) through reimbursement or compensation by
insurance or otherwise or (b) by liquidation of the Participant's assets to
the extent the liquidation of such assets would not itself cause severe
financial hardship. A payment on account of an Unforeseeable Financial
Emergency shall not be in excess of the amount needed to relieve such
Unforeseeable Financial Emergency and shall be made as soon as practicable
following the date on which the Plan Administrator approves such payment.
5.6. Withholding of Taxes. In connection with the Plan, the Employers shall
withhold any applicable Federal, state or local income tax and any
employment taxes, including Social Security taxes, at such time and in such
amounts as is necessary to comply with applicable laws and regulations.
- 9 -
SECTION 6
Miscellaneous
6.1. Funding. Each Participating Company under the Plan shall establish and
maintain one or more grantor trusts (individually, a "Trust") to hold
assets to be used for payment of benefits under the Plan. A Trust shall
conform with the terms of Internal Revenue Service Revenue Procedure 92-64
(or any subsequent administrative ruling). The assets of the Trust with
respect to benefits payable to the Participants employed by or associated
with an Employer shall remain the assets of such Employer subject to the
claims of its general creditors. Any payments by a Trust of benefits
provided to a Participant under the Plan shall be considered payment by the
applicable Employer and shall discharge such Employer from any further
liability under the Plan for such payments.
6.2 Rights. Establishment of the Plan shall not be construed to give any
employee the rights to be retained by the Employers or to any benefits not
specifically provided by the Plan.
6.3. Interests Not Transferable. Except as to withholding of any tax under the
laws of the United States or any state or locality and the provisions of
Section 5.4, no benefit payable at any time under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, or any other encumbrance of any kind or to any attachment,
garnishment, or other legal process of any kind. Any attempt by a person
(including a Participant or a Participant's beneficiary) to anticipate,
alienate, sell, transfer, assign, pledge, or otherwise encumber any
benefits under the Plan, whether currently or thereafter payable, shall be
void. If any person shall attempt to, or shall alienate, sell, transfer,
assign, pledge, or otherwise encumber such person's benefits under the
Plan, or if by reason of such person's bankruptcy or other event happening
at any time, such benefits would devolve upon any other person or would not
be enjoyed by the person entitled thereto under the Plan, then the Plan
Administrator, in the Plan Administrator's sole discretion, may terminate
the interest in any such benefits of the person otherwise entitled thereto
under the Plan and may hold or apply such benefits in such manner as the
Plan Administrator may deem proper.
- 10 -
6.4. Forfeitures and Unclaimed Amounts. Unclaimed amounts shall consist of the
amounts in the Deferred Compensation Account of a Participant that cannot
be distributed because of the Plan Administrator's inability, after a
reasonable search, to locate a Participant or the Participant's
beneficiary, as applicable, within a period of two years after the
Distribution Date upon which the payment of benefits became due. Unclaimed
amounts shall be forfeited at the end of such two- year period. These
forfeitures will reduce the obligations of the Employers, if any, under the
Plan. After an unclaimed amount has been forfeited, the Participant or
beneficiary, as applicable, shall have no further right to amounts in the
Participant's Deferred Compensation Account.
6.5. Controlling Law. The law of the State of Texas shall be controlling in all
matters relating to the Plan to the extent not preempted by Federal Law.
6.6. Number. Words in the plural shall include the singular, and the singular
shall include the plural.
6.7. Action by the Employers. Except as otherwise specifically provided herein,
any action required of or permitted to be taken by an Employer under the
Plan shall be by resolution of its Board of Directors or by resolution of a
duly authorized committee of its Board of Directors or by action of a
Person or persons authorized by resolution of such Board of Directors or
such committee.
6.8. No Fiduciary Relationship. Nothing contained in this Plan, and no action
taken pursuant to its provisions by either the Employers or the
Participants shall create, or be construed to create a fiduciary
relationship between the Employer and the Participant, a designated
beneficiary, other beneficiaries of the Participant, or any other person.
6.9. Claims Procedures. Any person (hereinafter referred to as a "Claimant") who
believes that he or she is being denied a benefit to which he or she may be
entitled under the Plan may file a written request for such benefit with
the Plan Administrator. Such written request must set forth the Claimant's
claim and must be addressed to the Plan Administrator, at the Sponsor's
principal place of business. Upon receipt of a claim, the Plan
Administrator shall advise the Claimant that a reply will be forthcoming
within ninety days and shall deliver a reply within ninety days. The Plan
Administrator may, however, extend the reply period for an additional
ninety days for reasonable cause. If the claim is denied in whole or in
part, the Plan Administrator shall issue a written determination, using
language calculated to be understood by the Claimant, setting forth:
- 11 -
(a) The specific reason or reasons for such denial;
(b) The specific reference to pertinent provisions of the Plan upon which
such denial is based;
(c) A description of any additional material or information necessary for
the Claimant to perfect the Claimant's claim and an explanation why
such material or such information is necessary; and
(d) Appropriate information as to the steps to be taken if the Claimant
wishes to submit the claim for review, and the time limits for
requesting such a review.
Within sixty days after the receipt by the Claimant of the written
determination described above, the Claimant may request in writing, that
the Plan administrator review the Plan Administrator's determination. The
request must be addressed to the Plan administrator, at the Company's
principal place of business. The Claimant or the claimant's duly authorized
representative may, but need not, review the pertinent documents and submit
issues and comments in writing for consideration by the Plan Administrator,
If the Claimant does not request a review of the Plan Administrator's
determination within such sixty day period, the Claimant shall be barred
and estopped from challenging the Plan Administrator's determination.
Within sixty days after the Plan Administrator's receipt of a request for
review, the Plan Administrator will review the determination. After
considering all materials presented by the Claimant, the Plan Administrator
will render a written determination, written in a manner calculated to be
understood by the Claimant setting forth the specific reasons for the
decision and containing specific references to the pertinent provisions of
the Plan on which the decision is based. If special circumstances require
that the sixty-day time period be extended, the Plan Administrator will so
notify the Claimant and will render the decision as soon practicable, but
no later than one hundred twenty days after receipt of the request for
review.
- 12 -
6.10.Notice. Any notice required or permitted to be given under the provisions
of the Plan shall be in writing, and shall be signed by the party giving or
making the same. If such notice, consent or demand is mailed to a party
hereto, it shall be sent by United States certified mail, postage prepaid,
addressed to such party's last known address as shown on the records of the
Employers. Notices to the Plan Administrator should be sent in care of the
Sponsor at the Sponsor's principal place of business. The date of such
mailing shall be deemed the date of notice. Either party may change the
address to which notice is to be sent by giving notice of the change of
address in the manner set forth above.
SECTION 7
Employer Participation
7.1. Adoption of Plan. Any Affiliate of the Sponsor may, with the approval of
the Sponsor, adopt the Plan by filing with the Sponsor a resolution of its
Board of Directors to that effect.
7.2 Withdrawal from the Plan by Participating Company. Any Participating
Company shall have the right, at any time, upon the approval of, and under
such conditions as may be provided by the Plan Administrator, to withdraw
from the Plan by delivering to the Plan Administrator written notice of its
election so to withdraw. Upon receipt of such notice by the Plan
Administrator, the portion of the Deferred Compensation Account of
Participants and beneficiaries attributable to amounts deferred while the
Participants were employed by or associated with such withdrawing Employer
shall be distributed from the Trust at the direction of the Plan
Administrator in cash at such time or times as the Plan Administrator in
the Plan Administrator's sole discretion, may deem to be in the best
interest of such Participants and their beneficiaries. To the extent the
amounts held in the Trust for the benefit of such Participants and
beneficiaries are not sufficient to satisfy the Employer's obligation to
such Participants and their beneficiaries accrued on account of their
employment with the Employer, the remaining amount necessary to satisfy
such obligation shall be an obligation of the Employer, and the other
Employers shall have no further obligation to such Participants and
beneficiaries with respect to such amounts.
- 13 -
SECTION 8
Amendment and Termination
The Sponsor intends the Plan to be permanent, but reserves the right at any time
to modify, amend or terminate the Plan; provided, however, that: (i) no
amendment or termination of the Plan shall reduce or eliminate any balance in a
Participant's Deferred Compensation Account accrued through the date of such
amendment or termination and (ii) no amendment of the Plan shall alter or affect
the provisions of the Plan with respect to amounts deferred by a Participant
prior to the effective date of such amendment. Upon termination of the Plan, the
Sponsor may provide that notwithstanding the Participant's Distribution Date,
all Deferred Compensation Account balances will be distributed on a date
selected by the Sponsor; provided, however, that in no event shall such date be
later than the Participant's Normal Retirement Date.
IN WITNESS WHEREOF, the Sponsor has caused this Plan to be executed by its duly
authorized officers on this 1st day of May, 1997.
InterContinental Life Corporation
By: /s/ Roy F. Mitte
______________________________
Title: Chairman, President and Chief Executive Officer
By: /s/ Eugene E. Payne
______________________________
Title: Secretary
- 14 -