EXHIBIT 4
NCS Supplemental Deferred Compensation Plan
(1999 Statement)
Adopted March 25, 1999
but first Effective May 1, 1999
NCS Supplemental Deferred Compensation Plan
(1999 Statement)
TABLE OF CONTENTS
PAGE
SECTION 1. INTRODUCTION AND DEFINITIONS 1
1.1. Statement of Plan
1.2. Definitions
1.2.1. Account
(a) Deferral Account
(b) ESOP Account
(c) Savings Plan Account
1.2.2. Affiliate
1.2.3. Annual Valuation Date
1.2.4. Beneficiary
1.2.5. Change-in-Control
1.2.6. Code
1.2.7. Compensation Committee
1.2.8. Earliest Retirement Date
1.2.9. Effective Date
1.2.10. Employers
1.2.11. ERISA
1.2.12. Event of Maturity
1.2.13. Index Fund
1.2.14. NCS
1.2.15. NCS ESOP
1.2.16. NCS Savings Plan
1.2.17. Normal Retirement Date
1.2.18. Participant
1.2.19. Plan
1.2.20. Plan Statement
1.2.21. Plan Year
1.2.22. Plan Administrator
1.2.23. Termination of Employment
1.2.24. Valuation Date
1.2.25. Service
SECTION 2. PARTICIPATION 4
2.1. Participation
2.1.1. Participation by Selection
2.1.2. Automatic Participation
2.1.3. Initial Enrollment
2.2. Specific Exclusion
SECTION 3. CREDITS TO ACCOUNTS 6
3.1. Deferral Credits
3.1.1. Amount of Credits
3.1.2. Crediting to Accounts
3.2. ESOP Credits
3.2.1. Amount of Credits
3.2.2. Crediting to Accounts
3.3. Savings Plan Credits
3.3.1. Amount of Credits.
3.3.2. Crediting to Accounts
SECTION 4. ADJUSTMENT OF ACCOUNTS 9
4.1. Establishment of Accounts
4.2. Adjustments of Accounts
4.2.1. Intermediate Payment
Subtraction
4.2.2. Investment Adjustment
4.2.3. Credit Addition
4.2.4. Final Payment Subtraction
SECTION 5. VESTING OF ACCOUNT 10
5.1. General Rule
5.2. Forfeiture for Misconduct
SECTION 6. MATURITY 11
SECTION 7. PAYMENTS 11
7.1. Termination Payments
7.1.1. Form of Payment
7.1.2. Time of Payment
7.1.3. Installment Amounts
7.1.4. New Designation
7.1.5. Default
7.1.6. No Spousal Rights
7.2. Previously Scheduled Payments
7.2.1. Enrolling for the Payment
7.2.2. Scheduled Payment
7.3. In Service Payments
7.3.1. When Available
7.3.2. Payment
7.3.3. Forfeiture
7.4. Hardship Distributions
7.4.1. When Available
7.4.2. Purposes
7.4.3. Limitations
7.4.4. Forfeiture
7.5. Accelerated Lump Sum Payment
7.5.1. When Available
7.5.2. Payment
7.5.3. Forfeiture
7.6. Payment on Account of a CIC
7.6.1. When Available
7.6.2. Payment
7.6.3. Forfeiture
7.7. Designation of Beneficiaries
7.7.1. Right to Designate
7.7.2. Failure of Designation
7.7.3. Disclaimers by Beneficiaries
7.7.4. Definitions
7.7.5. Special Rules
7.7.6. No Spousal Rights
7.8. Death Prior to Full Payment
7.9. Facility of Payment
7.10. Payments in Kind
SECTION 8. FUNDING OF PLAN 19
8.1. Unfunded Plan
8.2 Hedging Investments
8.3. Corporate Obligation
SECTION 9. AMENDMENT AND TERMINATION 20
9.1. Amendment and Termination
9.1.1. Before a Change-in-Control
9.1.2. After a Change-in-Control
9.2. No Oral Amendments
9.3. Plan Binding on Successors
SECTION 10. DETERMINATIONS --RULES AND REGULATIONS 22
10.1. Determinations
10.2. Rules and Regulations
10.3. Method of Executing Instruments
10.4. Claims Procedure
10.4.1. Original Claim
10.4.2. Review of Denied Claim
10.4.3. General Rules
10.5. Limitations and Exhaustion
10.5.1. Limitations
10.5.2. Exhaustion Required
10.5.3. Exhaustion Not Required
SECTION 11. PLAN ADMINISTRATION 25
11.1. Plan Administrator
11.1.1. Officers
11.1.2. Compensation Committee
11.1.3. Compensation Committee
11.2. Delegation
11.3. Conflict of Interest
11.4. Administrator
11.5. Service of Process
11.6. Expenses
11.7. Spendthrift Provision
11.8. Tax Withholding
11.9. Certifications
11.10. Errors in Computations
SECTION 12. CONSTRUCTION 27
12.1. Applicable Laws
12.1.1. ERISA Status
12.1.2. IRC Status
12.1.3. References to Laws
12.2. Effect on Other Plans
12.3. Disqualification
12.4. Rules of Document Construction
12.5. Choice of Law
12.6. No Employment Contract
NCS Supplemental Deferred Compensation Plan
(1999 Statement)
SECTION 1
INTRODUCTION AND DEFINITIONS
1.1. Statement of Plan . Effective May 1, 1999, NATIONAL COMPUTER SYSTEMS,
INC., a Minnesota corporation (hereinafter sometimes referred to as "NCS") and
certain affiliated corporations (together with NCS hereinafter sometimes
separately referred to as an "Employer" and collectively referred to as the
"Employers") hereby create a nonqualified, unfunded, elective deferral plan for
the purpose of allowing a select group of management and highly compensated
employees of the Employers to defer the receipt of incentive compensation which
would otherwise be paid to those employees.
1.2. Definitions . When the following terms are used herein with initial
capital letters, they shall have the following meanings:
1.2.1. Account -- the separate bookkeeping account representing the
separate unfunded and unsecured general obligation of the Employers established
with respect to each person who is a Participant in this Plan in accordance with
Section 2 and to which is credited the dollar amounts specified in Section 3 and
Section 4 and from which are subtracted forfeitures and payments made pursuant
to Section 5 and Section 7. The following Accounts will be maintained under this
Plan for Participants:
(a) Deferral Account -- the Account maintained for each
Participant to which are credited amounts in respect of
elective deferrals pursuant to Section 3.1.
(b) ESOP Account -- the Account maintained for each Participant
to which are credited amounts in respect of employer
contributions under the NCS ESOP pursuant to Sections 3.2.
(c) Savings Plan Account -- the Account maintained for each
Participant to which are credited amounts in respect of
employer contributions under the NCS Savings Plan pursuant to
Section 3.3.
1.2.2. Affiliate -- a business entity which is affiliated in
ownership with NCS or an Employer and is recognized as an Affiliate by the Plan
Administrator for the purposes of this Plan.
1.2.3. Annual Valuation Date -- each December 31.
1.2.4. Beneficiary -- a person designated by a Participant (or
automatically by operation of the Plan Statement) to receive all or a part of
the Participant's Account in the event of the Participant's death prior to full
payment thereof. A person so designated shall not be considered a Beneficiary
until the death of the Participant.
1.2.5. Change-in-Control -- an event described as a Change-in-
Control in the Appendix to this Plan Statement.
1.2.6. Code -- the Internal Revenue Code of 1986, as amended.
1.2.7. Compensation Committee -- the Compensation Committee of the
Board of Directors of NCS (or any successor committee).
1.2.8. Earliest Retirement Date -- the earlier of:
(i) the last day of the first calendar month in which a
Participant has attained at least age fifty-five (55)
years, and has completed at least ten (10) years of
service, and has attained an age (in years) and has
completed service (in years) totaling at least
sixty-five (65), or
(ii) the date a Participant attains Normal Retirement Date.
1.2.9. Effective Date -- May 1, 1999.
1.2.10. Employers -- NCS and any business entity affiliated with NCS
that employs persons who are designated for participation in this Plan.
1.2.11. ERISA -- the Employee Retirement Income Security Act of 1974,
as amended.
1.2.12. Event of Maturity -- any of the occurrences described in
Section 6 by reason of which a Participant or Beneficiary may become entitled to
a payment from this Plan.
1.2.13. Index Fund -- any of the following hypothetical investment
portfolios used for the purpose of measuring income, gains and losses to the
Accounts of Participants (as if the Accounts had in fact been so invested):
(a) the stock of a regulated investment company (mutual fund)
which is primarily invested in a balance of equities and
fixed income as selected from time to time by the Plan
Administrator;
(b) the stock of a regulated investment company (mutual fund)
which is primarily invested in international equities as
selected from time to time by the Plan Administrator;
(c) the stock of a regulated investment company (mutual fund)
which is primarily invested in a broad selection of equities
(e.g., an S&P 500 fund) as selected from time to time by the
Plan Administrator;
(d) the stock of a regulated investment company (mutual fund)
which is primarily invested in small and mid-capitalization
equities as selected from time to time by the Plan
Administrator;
(e) the stock of a regulated investment company (mutual fund)
which is primarily invested in money market investments as
selected from time to time by the Plan Administrator; and
(f) the stock of a regulated investment company (mutual fund)
which is primarily invested in investment quality bonds as
selected from time to time by the Plan Administrator.
1.2.14. NCS -- NATIONAL COMPUTER SYSTEMS, INC., a Minnesota
corporation, or any successor thereto.
1.2.15. NCS ESOP -- the tax-qualified stock bonus and leveraged
employee stock ownership plan of NCS established for the benefit of employees
eligible to participate therein, and known as the "National Computer Systems,
Inc. Employee Stock Ownership Plan."
1.2.16. NCS Savings Plan -- the tax-qualified profit sharing plan of
NCS established for the benefit of employees eligible to participate therein,
and known as the "National Computer Systems, Inc. 401(k) Employees' Savings
Plan."
1.2.17. Normal Retirement Date -- the last day of the calendar month
in which a Participant attains age sixty-five (65) years.
1.2.18. Participant -- an employee of an Employer who is designated
as eligible to participate in this Plan and becomes a Participant in this Plan
in accordance with the provisions of Section 2. 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 is no longer employed by an Employer or an Affiliate and upon which
the Participant no longer has any Account under this Plan (that is, the
Participant has received a payment of all of the Participant's Account).
1.2.19. Plan -- the nonqualified, income deferral program maintained
by NCS established for the benefit of Participants eligible to participate
therein, as set forth in the Plan Statement. (As used herein, "Plan" does not
refer to the documents pursuant to which this Plan is maintained. That document
is referred to herein as the "Plan Statement"). The Plan shall be referred to as
the "NCS Supplemental Deferred Compensation Plan."
1.2.20. Plan Statement -- this document entitled "NCS Supplemental
Deferred Compensation Plan (1999 Statement)" as adopted by the Compensation
Committee of NCS effective as of May 1, 1999, as the same may be amended from
time to time thereafter.
1.2.21. Plan Year -- the twelve (12) consecutive month period ending
on any Annual Valuation Date (provided, however, that the first Plan Year shall
commence May 1, 1999 and end December 31, 1999).
1.2.22. Plan Administrator -- NCS.
1.2.23. Termination of Employment -- a complete severance of an
employee's employment relationship with the Employers and all Affiliates, if
any, for any reason other than the employee's death. A transfer from employment
with an Employer to employment with an Affiliate of an Employer shall not
constitute a Termination of Employment. A decision by the Compensation Committee
to not select a Participant for participation for a subsequent Plan Year shall
not constitute a Termination of Employment. If an 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 an Employer 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 payments from this Plan.
1.2.24. Valuation Date -- the last day of each calendar month of the
Plan Year.
1.2.25. Service -- a measure of an employee's service with the
Employers and all Affiliates (stated as a number of years) which is equal to the
number of years of "Vesting Service" determined under the rules of the NCS ESOP
(or any similar successor plan) as those rules may exist at the time the
Participant's Service is being determined.
SECTION 2
PARTICIPATION
2.1. Participation .
2.1.1. Participation by Selection . The Compensation Committee shall,
in its sole discretion, select employees of an Employer for participation in
this Plan. The Compensation Committee shall not select any employee for
participation unless the Compensation Committee determines that such employee
will be for that Plan Year a member of a select group of management or highly
compensated employees (as that expression is used in ERISA). The Compensation
Committee shall select such employees for participation in this Plan on a Plan
Year by Plan Year basis. Selection for one Plan Year does not entitle the
employee to be selected the next Plan Year. Each employee of an Employer
selected for participation in this Plan for a particular Plan Year by the
Compensation Committee shall become a Participant in this Plan as of the first
day of that Plan Year.
2.1.2. Automatic Participation . The Chief Executive Officer, Senior
Vice Presidents and Executive Vice Presidents of NCS determined as of the first
day of such Plan Year shall automatically become a Participant in this Plan for
such Plan Year as of the first day of that Plan Year, whether or not such
employee was selected for participation under Section 2.1.1.
2.1.3. Initial Enrollment . Prior to the first day of the first Plan
Year that an employee selected for participation becomes a Participant, such
employee shall as a condition of participation in this Plan complete such forms
and make such elections as the Plan Administrator may require for the effective
administration of this Plan. At a minimum, the initial enrollment shall include
the following:
(a) Such initial enrollment shall designate the form and the time
for the payment of the Participant's Account following an
Event of Maturity (and if such designation is not clearly
made to the contrary shall be deemed to have been a
designation of a single lump sum payment to be made as soon
as practicable after the Annual Valuation Date for the Plan
Year in which the Event of Maturity occurred).
(b) Such initial enrollment shall specify whether there will be a
previously scheduled payment from the Account and the amount
and time of any such payment in accordance with Section 7.2.
(c) Such initial enrollment shall specify the Index Fund or Index
Funds to be used initially to measure income, gains and
losses on the Account.
The initial enrollment shall be made in writing upon forms furnished by the Plan
Administrator, shall be made at such time as the Plan Administrator shall
determine and shall conform to such other procedural and substantive rules as
the Plan Administrator shall establish.
2.2. Specific Exclusion.Notwithstanding anything apparently to the contrary
in the Plan Statement or in any written communication, summary, resolution or
document or oral communication, no individual shall be a Participant in this
Plan, develop benefits under this Plan or be entitled to receive benefits under
this Plan (either for himself or herself or his or her survivors) unless such
individual is a member of a select group of management or highly compensated
employees (as that expression is used in ERISA). If a court of competent
jurisdiction, any representative of the U.S. Department of Labor or any other
governmental, regulatory or similar body makes any direct or indirect, formal or
informal, determination that an individual is not a member of a select group of
management or highly compensated employees (as that expression is used in
ERISA), such individual shall not be (and shall not have ever been) a
Participant in this Plan at any time. If any person not so defined has been
erroneously treated as a Participant in this Plan, upon discovery of such error
such person's erroneous participation shall immediately terminate ab initio and
the individual's Account shall be forfeited immediately and such person shall be
obligated to reimburse NCS for all amounts erroneously paid to him or her.
SECTION 3
CREDITS TO ACCOUNTS
3.1. Deferral Credits .
3.1.1. Amount of Credits . Prior to the first day of any Plan Year,
an employee who has been selected for participation for that Plan Year may elect
to defer compensation for that Plan Year. An election made by a Participant for
a Plan Year shall remain in effect for subsequent Plan Years unless, prior to a
subsequent Plan Year, the election is changed or terminated by the Participant
or the Participant is not selected for participation for that subsequent Plan
Year. Each such election shall be subject to the following rules.
(a) Irrevocability. A Participant's election to defer shall be
irrevocable for the Plan Year with respect to which it is
made once it has been accepted by the Plan Administrator.
However, if the Participant applies to the Compensation
Committee and demonstrates to the satisfaction of the
Compensation Committee that continued deferrals would impose
an extreme financial hardship on the Participant, the
Compensation Committee may, in its sole discretion cancel the
Participant's election for the remainder of that Plan Year.
(b) Election and Limits. A Participant shall elect to defer the
amount or portion of the Participant's base compensation or
incentive compensation or both which is earned during that
Plan Year (without regard to whether it would be paid during
that or a subsequent Plan Year) which shall not be paid to
the Participant but instead shall be credited under this Plan
under Section 3 and distributed from this Plan under Section
7. The amount or portion may be designed as a dollar amount
or a percentage. The amount or portion of the base
compensation that can be elected shall not exceed seventy
percent (70%) of the Participant's base compensation nor more
than eighty percent (80%) of the Participant's incentive
compensation. No election shall be accepted unless, based on
facts as then known, the anticipated annual deferral is at
least Two Thousand Five Hundred Dollars ($2,500).
(c) Election Procedures. The election to defer shall be made in
writing upon forms furnished by the Plan Administrator, shall
be made at such time as the Plan Administrator shall
determine, shall be made before the beginning of the Plan
Year with respect to which it is made and shall conform to
such other procedural and substantive rules as the Plan
Administrator shall establish.
(d) Code ss.162(m) Mandatory Deferral. Notwithstanding the
foregoing, if the Plan Administrator determines that any
amount of compensation otherwise payable to a Participant
would not be fully deductible by the Employer when paid
because of the limitations in section 162(m) of the Code, the
Participant shall be conclusively deemed to have elected to
defer that amount of compensation.
3.1.2. Crediting to Accounts. The Plan Administrator shall credit to
the Deferral Account of each Participant the amount, if any, of compensation the
Participant elected to defer. Such amount shall be credited in cash. Such amount
shall be credited as nearly as practicable as of the time or times when the
compensation would have been paid to the Participant but for the election to
defer. The Plan Administrator shall comply with any federal, state or local
taxes or withholding requirements that may apply.
3.2. ESOP Credits .
3.2.1. Amount of Credits . The Plan Administrator shall determine
each Plan Year for each Participant who is also a participant in the NCS ESOP
the excess, if any, of the employer contribution that would have been allocated
to the NCS ESOP account for the Participant for that Plan Year under the NCS
ESOP if:
(a) there were no limitation on compensation that can be
recognized for NCS ESOP purposes pursuant to Code section
401(a)(17), and
(b) there were no limitations on annual additions pursuant to
Code section 415(c), and
(c) the Participant had not elected to defer any compensation
under this Plan (or under any other similar nonqualified plan
of deferred compensation maintained by an Employer), over
the employer contribution that was in fact allocated to the NCS ESOP account for
the Participant for that Plan Year. With respect to Plan Years ending before a
Change-in-Control, the Plan Administrator's determination of this amount shall
be final and binding on all Participants and not subject to review.
3.2.2. Crediting to Accounts . The Plan Administrator shall credit to
the ESOP Account of each Participant the amount, if any, determined under
Section 3.2.1. Such credit shall be in cash or in kind as the Plan Administrator
in its discretion shall determine. Such amount shall be credited as nearly as
practicable as of the time or times when the employer contribution would have
been allocated to the ESOP account for the Participant but for the limitations
described in Section 3.2.1. The Plan Administrator shall comply with any
federal, state or local taxes or withholding requirements that may apply.
3.3. Savings Plan Credits .
3.3.1. Amount of Credits. The Plan Administrator shall determine each
Plan Year for each Participant an amount equal to the lesser of:
(a) fifty percent (50%) of the elective deferrals made by that
Participant for the Plan Year under Section 3.1, or
(b) three and one half percent (3.5%) of the Participant's
compensation in excess of the dollar limitation in effect for
that Plan Year under Code section 401(a)(17).
With respect to Plan Years ending before a Change-in-Control, the Plan
Administrator's determination of this amount shall be final and binding on all
Participants and not subject to review. Prior to the beginning of each Plan
Year, the Compensation Committee may fix the fifty percent (50%) and the three
and one half percent (3.5%) for such Plan Year at a greater or a lesser percent
(including zero) for the succeeding Plan Year. The Compensation Committee may
from time to time and at any time increase either or both percentages
(prospectively or retroactively) or may decrease either or both percentages
(prospectively only) for a Plan Year.
3.3.2. Crediting to Accounts . The Plan Administrator shall credit to
the Savings Plan Account of each Participant the amount, if any, determined for
that Participant under Section 3.3.1. Such credit shall be in cash or in kind as
the Plan Administrator in its discretion shall determine. Such amount shall be
credited as nearly as practicable as of the time or times when the employer
matching contribution would have been allocated to the Participant's account in
the NCS Savings Plan. The Plan Administrator shall comply with any federal,
state or local taxes or withholding requirements that may apply.
SECTION 4
ADJUSTMENT OF ACCOUNTS
4.1. Establishment of Accounts . There shall be established for each
Participant unfunded, bookkeeping Accounts which shall be adjusted each
Valuation Date.
4.2. Adjustments of Accounts . As of each Valuation Date (the "current
Valuation Date"), the value of each Account determined as of the immediately
preceding Valuation Date (the "previous Account value") shall be increased (or
decreased) by the following adjustments made in the following sequence:
4.2.1. Intermediate Payment Subtraction . The previous Account value
shall be reduced by the total amount distributed in fact to (or with respect to)
the Participant (or forfeited) from such Account as of a date subsequent to the
immediately preceding Valuation Date but prior to the current Valuation Date.
4.2.2. Investment Adjustment . The previous Account value (as
adjusted above) shall be increased (or decreased) by income, gains and losses as
follows:
(a) In accordance with procedures to be established by the Plan
Administrator, each Participant shall elect, as part of the
initial enrollment process, and each Participant and
Beneficiary shall elect from time to time thereafter (but not
more frequently than once each calendar month) one or more
Index Funds that shall be used to measure income, gains and
losses during the succeeding calendar month.
(b) As of the last day of that succeeding calendar month, the
Account of each Participant shall be adjusted for income,
gains and losses as if the Account had in fact been invested
in the Index Funds so elected on the first business day of
that calendar month.
4.2.3. Credit Addition . The previous Account value (as adjusted
above) shall be increased by the credits, if any, to be made pursuant to Section
3.
4.2.4. Final Payment Subtraction . The previous Account value (as
adjusted above) shall be reduced by the total amount distributed in fact to (or
with respect to) the Participant (or forfeited) from such Account as of the
current Valuation Date.
SECTION 5
VESTING OF ACCOUNT
5.1. General Rule . Except as elsewhere specificall provided, the Account
of each Participant shall be fully (100%) vested and nonforfeitable at all
times.
5.2. Forfeiture for Misconduct. A Participant shall not be vested at all i
any ESOP Account or any Savings Plan Account (and shall completely forfeit all
claims to such Accounts for such Participant and all Beneficiaries) upon the
determination by the Plan Administrator that the Participant, either before or
after termination of employment:
(a) has engaged in a criminal or fraudulent activity resulting in
harm to an Employer or an Affiliate; or
(b) has divulged to a competitor any significant confidential
information or trade secrets of an Employer or an Affiliate;
or
(c) has provided an Employer or Affiliate with materially false
reports concerning such Participant's business interests or
employment; or
(d) has made materially false representations which are relied
upon by an Employer or an Affiliate in furnishing information
to a shareholder, auditors or any regulatory or governmental
agency; or
(e) has maintained an undisclosed, unauthorized and material
conflict of interest in the discharge of the duties owed by
such Participant to an Employer or an Affiliate; or
(f) has engaged in conduct causing a serious violation of state
or federal law by an Employer or an Affiliate; or
(g) has engaged in reckless or grossly negligent activity toward
an Employer or an Affiliate which is admitted or judicially
proven and which results in significant harm to an Employer
or an Affiliate; or
(h) has engaged in the theft of assets or funds of an Employer or
an Affiliate; or
(i) has engaged in fraud or dishonesty toward an Employer or an
Affiliate which is admitted or judicially proven; or
(j) has been convicted of any crime which directly or indirectly
arose out of such Participant's employment relationship with
an Employer or an Affiliate or materially affected such
Participant's ability to discharge the duties of employment
with an Employer or an Affiliate; or
(k) shall fail at or after the time of such Participant's
termination of employment to execute a form of release and
waiver prepared by and acceptable to an Employer releasing an
Employer (and is officers, directors, employees and agents)
from all direct or indirect claims for workers' compensation
benefits, unemployment compensation benefits, claims arising
as a result of employment discrimination, employment related
claims arising under tort, breach of contract (express or
implied) or any other law or theory and all other similar
types of claims (whether known or unknown) as an Employer may
specify or, after executing such a release or waiver, shall
fail to abide by its terms.
SECTION 6
MATURITY
A Participant's Account shall mature and shall become distributable in
accordance with Section 7 upon the earliest occurrence of any of the following
events while in the employment of an Employer or an Affiliate:
(a) the Participant's death, or
(b) the Participant's termination of employment, or
(c) termination of this Plan.
SECTION 7
PAYMENTS
7.1. Termination Payments. Upon the occurrence of an Event of Maturity
effective as to a Participant, the Plan Administrator shall commence payment of
such Participant's Account (reduced by the amount of any applicable payroll,
withholding and other taxes) in the form designated by the Participant in his or
her initial enrollment. A Participant shall not be required to make application
to receive payment. Payment 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 Plan Administrator and such application shall have been
approved by the Plan Administrator.
7.1.1. Form of Payment . Payment shall be made in whichever of the
following forms as the Participant shall have designated in writing at the time
of his or her initial enrollment (to the extent that such designation is
consistent with the rules of the Plan Statement):
(a) Term Certain Installments to Participant. If the Distributee
is a Participant, the Account at Event of Maturity is at
least Fifty Thousand Dollars ($50,000) and the Participant
had attained Earliest Retirement Date at Event of Maturity,
in a series of annual installments payable over five (5)
years, ten (10) years, fifteen (15) or twenty (20) years.
(b) Continued Term Certain Installments to Beneficiary. If the
Distributee is a Beneficiary of a deceased Participant and
payment had commenced to the deceased Participant before his
or her death over a five (5) year, ten (10) year, fifteen
(15) or twenty (20) year period as specified in paragraph (a)
above, in a series of annual installments payable over the
remainder of the period.
(c) Lump Sum to Participant or Beneficiary. If the Distributee is
a Participant, in a single lump sum. If the Distributee is a
Beneficiary of a deceased Participant and payment had not
commenced to the deceased Participant before the
Participant's death, in a single lump sum payment.
7.1.2. Time of Payment . Payment shall be made or commenced at
whichever of the following times as the Participant shall have designated in
writing at the time of his or her initial enrollment (to the extent that such
designation is consistent with the rules of the Plan Statement):
(a) Retirement. If the payment is made or commenced on account of
the Participant's Event of Maturity and the Participant's
Event of Maturity is on a date on or after the Participant's
Earliest Retirement Date, payment shall be made or commenced:
(i) as of the Annual Valuation Date coincident with or
immediately following the Participant's Event of
Maturity and shall be made or commenced as soon as
practicable after such Annual Valuation Date, or
(ii) as of the Annual Valuation Date coincident with or
immediately following the later of the Participant's
Event of Maturity or the Participant's Normal
Retirement Date and shall be made or commenced as soon
as practicable after such Annual Valuation Date, or
(iii) as of the Annual Valuation Date coincident with or
immediately following the Participant's Normal
Retirement Date and shall be made or commenced as soon
as practicable after such Annual Valuation Date.
(b) Death. If the payment is made or commenced on account of the
Participant's death, payment shall be made or commenced as of
the Annual Valuation Date coincident with or immediately
following the Participant's Event of Maturity and shall be
made or commenced as soon as practicable after such Annual
Valuation Date.
(c) Other. In all other cases, payment to the Participant shall
be made as of the Valuation Date immediately following the
Participant's Event of Maturity and shall be made as soon as
practicable after such Valuation Date.
(d) Code ss.162(m) Delay. If the Plan Administrator determines
that delaying the time the initial payments are made or
commenced would increase the probability that such payments
would be fully deductible for federal or state income tax
purposes, the Plan Administrator may unilaterally delay the
time of the making or commencement of payments for up to
twenty-four (24) months after the date such payments would
otherwise be payable.
7.1.3. Installment Amounts . The amount of the annual installments
shall be determined by dividing the amount of the Account as of the Annual
Valuation Date as of which the installment is being paid by the number of
remaining installment payments to be made (including the payment being
determined).
7.1.4. New Designation . At any time and from time to time, each
Participant may file with the Plan Administrator a new designation of a form and
time of payment. Each such subsequent designation shall supercede all prior
designations and shall be effective as to the Participant's entire Account
(including the portions of the Account attributable to periods before the new
designation is filed) as if the new designation had been made in writing at the
time of his or her initial enrollment. Notwithstanding the foregoing, any new
designation shall be disregarded as if it had never been filed (and the prior
effective designation shall be given effect) unless the designation:
(a) was filed with the Plan Administrator at least one (1) year
before the Event of Maturity, and
(b) was filed with the Plan Administrator at least one (1) year
after any other prior designation (including the designation
made as part of the initial enrollment) was filed with the
Plan Administrator.
A new designation shall be made in writing upon forms furnished by the Plan
Administrator and shall conform to such other procedural and substantive rules
as the Plan Administrator shall establish.
7.1.5. Default . If for any reason a Participant shall have failed to
make a timely written designation of form for payment (including reasons
entirely beyond the control of the Participant), the payment shall be made in a
single lump sum as of the Annual Valuation Date coincident with or immediately
following the Participant's Event of Maturity and shall be made as soon as
practicable after such Annual Valuation Date.
7.1.6. No Spousal Rights . No spouse, former spouse, Beneficiary or
other person shall have any right to participate in the Participant's
designation of a form or time of payment.
7.2. Previously Scheduled Payments .
7.2.1. Enrolling for the Payment . At the time of initial enrollment
under Section 2.1.3, each enrolling Participant shall have the opportunity to
elect to cause this Plan to make one (1) previously scheduled payment to the
Participant from the Account of a fixed dollar amount or percentage of Account
(not less than Two Thousand Dollars) as of an Annual Valuation Date designated
by the Participant in the initial enrollment which payment shall be made as soon
as practicable after such Annual Valuation Date.
7.2.2. Scheduled Payment . As of the Annual Valuation Date designated
by the Participant in his or her initial enrollment, the amount of the
previously scheduled payment elected by the Participant shall be distributed
from the Account to the Participant. Notwithstanding the dollar amount of the
previously scheduled payment elected by the Participant in the initial
enrollment, if the value of the Account that would remain after such previously
scheduled payment is made would be less than Five Thousand Dollars ($5,000) the
entire Account shall be distributed. In no event shall any previously scheduled
payment occur after the death of the Participant or after any other Event of
Maturity with respect to the Participant. In no event shall such scheduled
payments exceed the value of the Account when made. If the amount of the
previously scheduled payment elected by the Participant exceeds the value of the
Account, the entire Account shall be distributed in lieu of the amount
designated.
7.3. In Service Payments .
7.3.1. When Available . A Participant may apply for and receive an in
service payment of all or any portion of his or her Account (after reduction for
the forfeiture described in Section 7.3.3). To receive such an in service
payment, the Participant must file a written payment application with the Plan
Administrator. In the application, the Participant shall specify the dollar
amount to be distributed. The Plan Administrator shall approve the in service
payment if such application has been filed.
7.3.2. Payment . Payment shall be made as of the Valuation Date
coincident with or next following the approval of a completed application by the
Plan Administrator and such in service payment shall be made in a lump sum
payment as soon as administratively feasible after such Valuation Date.
7.3.3. Forfeiture . Upon the approval of an in service payment
application, there shall be irrevocably forfeited from the Account of the
Participant an amount equal to ten percent (10%) of the amount approved for
payment.
7.4. Hardship Distributions .
7.4.1. When Available . A Participant may apply for and receive a
hardship distribution from his or her Account if the Plan Administrator
determines that such hardship distribution is for a purpose described in Section
7.4.2 and the conditions in Section 7.4.3 have been fulfilled. To receive such a
distribution, the Participant must file a written hardship distribution
application with the Plan Administrator and furnish such supporting
documentation as the Plan Administrator may require. In the application, the
Participant shall specify the basis for the distribution and the dollar amount
to be distributed. If such hardship distribution is approved by the Plan
Administrator, distribution shall be made as of the Valuation Date coincident
with or next following the approval of a completed application by the Plan
Administrator and such hardship distribution shall be made in a lump sum payment
as soon as administratively feasible after such Valuation Date.
7.4.2. Purposes . Hardship distributions shall be allowed under
Section 7.4 only if the Participant establishes that the hardship distribution
is to be made on account of an immediate and heavy financial need of the
Participant for which the Participant does not have other available resources.
7.4.3. Limitations . The amount of the hardship distribution shall
not exceed the amount of the Participant's proven immediate and heavy financial
need. A hardship distribution shall not be made after the death of the
Participant or after the occurrence of any other Event of Maturity. The amount
of approved hardship distribution (and the forfeiture described below) shall not
exceed the value of the Account.
7.4.4. Forfeiture . There shall be no forfeitures from the Account
incident to this payment.
7.5. Accelerated Lump Sum Payment .
7.5.1. When Available . A Participant or Beneficiary who is receiving
annual installments may elect to receive an accelerated lump sum payment of his
or her entire Account (after reduction for the forfeiture described in Section
7.5.3). To receive such an accelerated lump sum payment, the Participant or
Beneficiary must file a written payment application with the Plan Administrator.
7.5.2. Payment . Payment of the accelerated lump sum payment (after
reduction for the forfeiture described in Section 7.5.3) shall be made as of the
Annual Valuation Date coincident with or next following the approval of a
completed application by the Plan Administrator. Such accelerated lump sum
payment shall be made in a lump sum payment as soon as administratively feasible
after such Valuation Date. The amount of the accelerated lump sum payment shall
be equal to the value of the Account as of such Annual Valuation Date (after
reduction for the forfeiture described below).
7.5.3. Forfeiture . Upon the approval of an accelerated lump sum
payment, there shall be irrevocably forfeited from the Account of the
Participant or Beneficiary an amount equal to ten percent (10%) of the Account
(minus the portion of the Account that would have been payable at the time of
the lump sum if the Participant had not elected to receive the accelerated lump
sum payment).
7.6. Payment on Account of a CIC .
7.6.1. When Available . If, within two (2) years following a Change
in Control, more than half of the individuals who were Participants on the date
of the Change in Control petition the Plan Administrator in writing to terminate
the Plan, the Accounts of all such Participants shall be distributed to them.
7.6.2. Payment . Payment shall be made as of the Valuation Date
coincident with or next following the receipt by the Plan Administrator of the
requisite petitions and such payment shall be made in a lump sum payment as soon
as administratively feasible after such Valuation Date.
7.6.3. Forfeiture . There shall be no forfeiture from any Accounts
incident to this payment.
7.7. Designation of Beneficiaries .
7.7.1. Right to Designate . Each Participant may designate, upon
forms to be furnished by and filed with the Plan Administrator, 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 Plan Administrator during the Participant's lifetime.
7.7.2. Failure of Designation . If a Participant:
(a) fails to designate a Beneficiary,
(b) designates a Beneficiary and thereafter revokes such
designation without naming another Beneficiary, or
(c) designates one or more Beneficiaries and all such
Beneficiaries so designated fail to survive the Participant,
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 first class of
the following classes of automatic Beneficiaries with a member surviving the
Participant and (except in the case of surviving issue) in equal shares if there
is more than one member in such class surviving the Participant:
Participant's surviving spouse
Participant's surviving issue per stirpes and not per capita
Participant's surviving parents Participant's surviving brothers and
sisters Representative of Participant's estate.
7.7.3. Disclaimers by Beneficiaries . A Beneficiary entitled to a
payment 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
payment 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 Plan
Administrator after the date of the Participant's death but not later than two
hundred seventy (270) days after the date of the Participant's death. A
disclaimer shall be irrevocable when delivered to the Plan Administrator. A
disclaimer shall be considered to be delivered to the Plan Administrator only
when actually received by the Plan Administrator. The Plan Administrator 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 the provisions of Section 6 and shall not be considered
to be an assignment or alienation of benefits in violation of federal law
prohibiting the assignment or alienation of benefits under this Plan. No other
form of attempted disclaimer shall be recognized by the Plan Administrator.
7.7.4. Definitions . When used herein and, unless the Participant has
otherwise specified in the Participant's Beneficiary designation, when used in a
Beneficiary designation, "issue" means all persons who are lineal descendants of
the person whose issue are referred to, including legally adopted descendants
and their descendants but not including illegitimate descendants and their
descendants; "child" means an issue of the first generation; "per stirpes" means
in equal shares among living children of the person whose issue are referred to
and the issue (taken collectively) of each deceased child of such person, with
such issue taking by right of representation of such deceased child; and
"survive" and "surviving" mean living after the death of the Participant.
7.7.5. Special Rules. Unless the Participant has otherwise specified
in the Participant's Beneficiary designation, the following rules shall apply:
(a) If there is not sufficient evidence that a Beneficiary was
living at the time of the death of the Participant, it shall
be deemed that the Beneficiary was not living at the time of
the death of the Participant.
(b) The automatic Beneficiaries specified in Section 7.7.2 and
the Beneficiaries designated by the Participant shall become
fixed at the time of the Participant's death so that, if a
Beneficiary survives the Participant but dies before the
receipt of all payments due such Beneficiary hereunder, such
remaining payments shall be payable to the representative of
such Beneficiary's estate.
(c) If the Participant designates as a Beneficiary the person who
is the Participant's spouse on the date of the designation,
either by name or by relationship, or both, the dissolution,
annulment or other legal termination of the marriage between
the Participant and such person shall automatically revoke
such designation. (The foregoing shall not prevent the
Participant from designating a former spouse as a Beneficiary
on a form executed by the Participant and received by the
Plan Administrator after the date of the legal termination of
the marriage between the Participant and such former spouse,
and during the Participant's lifetime.)
(d) Any designation of a nonspouse Beneficiary by name that is
accompanied by a description of relationship to the
Participant shall be given effect without regard to whether
the relationship to the Participant exists either then or at
the Participant's death.
(e) Any designation of a Beneficiary only by statement of
relationship to the Participant shall be effective only to
designate the person or persons standing in such relationship
to the Participant at the Participant's death.
A Beneficiary designation is permanently void if it either is executed or is
filed by a Participant who, at the time of such execution or filing, is then a
minor under the law of the state of the Participant's legal residence. The Plan
Administrator shall be the sole judge of the content, interpretation and
validity of a purported Beneficiary designation.
7.7.6. No Spousal Rights . Prior to the death of the Participant, no
spouse or surviving spouse of a Participant and no person designated to be a
Beneficiary shall have any rights or interest in the benefits credited under
this Plan including, but not limited to, the right to be the sole Beneficiary or
to consent to the designation of Beneficiaries (or the changing of designated
Beneficiaries) by the Participant.
7.8. Death Prior to Full Payment. 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 are payable to
the Beneficiary (and shall not be paid to the Participant's estate).
7.9. Facility of Payment. In case of the incompetency or legal disability,
including minority, of any person entitled to receive any payment under this
Plan, payment shall be made, if the Plan Administrator shall be advised of the
existence of such condition:
(a) to the duly appointed guardian, conservator or other legal
representative of such incompetent or disabled person
(excluding an attorney in fact acting under power of
attorney), or
(b) to a person or institution entrusted with the care or
maintenance of the incompetent or disabled person, provided
such person or institution has satisfied the Employer that
the payment will be used for the best interest and to assist
in the care of such incompetent or disabled person, 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 incompetent or disabled person
(excluding an attorney in fact acting under power of
attorney).
Any payment made in good faith shall constitute a complete discharge of any
liability or obligation of the Employer, all fiduciaries, and this Plan to make
such payment.
7.10. Payments in Kind. Payments from this Plan shall be made either in cash
or in kind as the Plan Administrator, in its discretion, shall determine.
SECTION 8
FUNDING OF PLAN
8.1. Unfunded Plan . The obligation of the Employers to make payments under
this Plan constitutes only the unsecured (but legally enforceable) promise of
the Employers to make such payments. No Participant shall have any lien, prior
claim or other security interest in any property of the Employers. The Employers
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 Employers. The Employers 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 Employers' obligation to
Participants in this Plan and shall not be construed to impose on the Employers
the obligation to create any separate fund for purposes of this Plan.
8.2 Hedging Investments . If NCS elects to finance all or a portion of the
Employers' costs in connection with this Plan through the purchase of life
insurance or other investments, the Participant agrees, as a condition of
participation in this Plan, to cooperate with NCS in the purchase of such
investment to any extent reasonably required by NCS and relinquishes any claim
the Participant or a Beneficiary might have to the proceeds of any such
investment or any other rights or interests in such investment. If a Participant
fails or refuses to cooperate, then notwithstanding any other provision of this
Plan, the Plan Administrator shall immediately and irrevocably terminate and
forfeit the Participant's entitlement to benefits under this Plan.
8.3. Corporate Obligation . Neither Employer's officers nor any member of
the Compensation 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 Employers 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 Employers 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 Employers.
SECTION 9
AMENDMENT AND TERMINATION
9.1. Amendment and Termination .
9.1.1. Before a Change-in-Control . Prior to the occurrence of a
Change-in-Control, the Compensation Committee may unilaterally amend the Plan
Statement 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 expecting to
receive benefits in the future and persons then receiving benefits; provided,
however, that:
(a) the benefit, if any, payable to or with respect to a
Participant who has had an Event of Maturity 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 Compensation Committee may amend the
Plan Statement to otherwise modify the payment of any such
benefit including, but not limited to, accelerating the value
of all remaining payments into a single lump sum payment),
and
(b) the benefit, if any, payable to or with respect to each other
Participant determined as if such Participant had an Event of
Maturity 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 Compensation Committee
may amend the Plan Statement to otherwise modify the payment
of any such benefit including, but not limited to,
accelerating the value of all remaining payments into a
single lump sum payment).
9.1.2. After a Change-in-Control .
(a) Existing Participants. After the occurrence of a
Change-in-Control, the Compensation Committee may only amend
the Plan Statement or terminate this Plan as applied to
Participants who are Participants on the date of the
Change-in-Control if:
(i) all benefits payable to or with respect to persons who
were Participants as of the Change-in-Control
(including benefits earned before and benefits earned
after the Change-in-Control) have been paid in full, or
(ii) eighty percent (80%) of all the Participants determined
as of the date of the Change-in-Control give knowing
and voluntary written consent to such amendment or
termination.
(b) New Participants. After the occurrence of a
Change-in-Control, as applied to Participants who are not
Participants on the date of the Change-in-Control, the
Compensation Committee may unilaterally amend the Plan
Statement 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.
9.2. No Oral Amendments. No modification of the terms of the Plan Statement
or termination of this Plan shall be effective unless it is in writing and
signed on behalf of the Compensation Committee by a person authorized to execute
such writing. No oral representation concerning the interpretation or effect of
the Plan Statement shall be effective to amend the Plan Statement.
9.3. Plan Binding on Successors . NCS 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 NCS), by agreement, to
expressly assume and agree to perform this Plan in the same manner and to the
same extent that NCS would be required to perform it if no such succession had
taken place.
SECTION 10
DETERMINATIONS -- RULES AND REGULATIONS
10.1. Determinations . The Plan Administrator shall make such determinations
as may be required from time to time in the administration of this Plan. The
Plan Administrator shall have the discretionary authority and responsibility to
interpret and construe the Plan Statement 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 Plan Administrator.
10.3. Method of Executing Instruments. Information to be supplied or written
notices to be made or consents to be given by the Plan Administrator pursuant to
any provision of the Plan Statement may be signed in the name of the Plan
Administrator 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 Plan Administrator a written claim for benefits under this Plan.
Within ninety (90) days after the filing of such a claim, the Plan Administrator
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 Plan Administrator shall state in writing:
(a) the specific reasons for the denial;
(b) the specific references to the pertinent provisions of the
Plan Statement 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 Plan Administrator 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 Plan Administrator 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 Plan Administrator
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 Plan Administrator upon request.
(b) All decisions on claims and on requests for a review of
denied claims shall be made by the Plan Administrator.
(c) The Plan Administrator may, in its 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 Plan
Administrator reserves 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 Plan Administrator on a claim and on a
request for a review of a denied claim shall be served on the
claimant in writing. If a decision or notice is not received
by a claimant within the time specified, the claim or request
for a review of a denied claim shall be deemed to have been
denied.
(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 Statement
and all other pertinent documents in the possession of the
Plan Administrator.
(g) The Plan Administrator 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 Plan Administrator within
one (1) year after the claimant knew (or reasonably should have known) of the
principal facts on which the claim is based. Every untimely claim shall be
denied by the Plan Administrator 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) sixty (60) days after the claimant has exhausted these
administrative procedures.
If or to the extent that the claim relates to a failure to effect investment
directions pursuant to Section 4.2.2(a) or to a Participant's election regarding
the deferral of compensation, the one (1) year period shall be thirty (30) days.
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 (or thirty day) and
two (2) year periods.
10.5.2. Exhaustion Required . Except as provided in Section 10.5.3,
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 Plan Administrator (including, but not
limited to, determinations as to whether the claim was timely
filed) shall be afforded complete deference unless the Plan
Administrator's determination was arbitrary and capricious.
10.5.3. Exhaustion Not Required . The exhaustion of these
administrative procedures is not mandatory for resolving any dispute arising
under this Plan insofar as the dispute pertains to any matter that arose after a
Change-in-Control or within the one hundred twenty (120) days before a
Change-in-Control. As to such matters:
(a) a claimant shall be permitted to commence a legal action
relating to any such matter (whether arising under section
502 or section 510 of ERISA or under any other statute or
non-statutory law) even if a timely claim has not been filed
under these administrative procedures and even if these
administrative procedures have not been exhausted; and
(b) in any legal action regarding the benefits payable to or with
respect to a Participant, notwithstanding Section 10.1,
determinations by the Plan Administrator (including
determinations regarding when any matter arose) shall not be
afforded any deference and the matter shall be heard de novo;
and
(c) if a Participant is the prevailing party in litigating any
claim for benefits under this Plan, the Employers shall be
jointly and severally liable to pay reasonable attorney's
fees and costs of the action to the Participant.
SECTION 11
PLAN ADMINISTRATION
11.1. Plan Administrator .
11.1.1. Officers . Except as hereinafter provided, functions
generally assigned to the Plan Administrator or to NCS shall be discharged by
the NCS officers or delegated and allocated as provided herein.
11.1.2. Compensation Committee . Except as hereinafter provided, the
Compensation Committee of NCS may delegate or redelegate and allocate and
reallocate to one or more persons or to a committee of persons jointly or
severally, and whether or not such persons are directors, officers or employees,
such functions generally assigned to the Plan Administrator or NCS as the
Compensation Committee may from time to time deem advisable.
11.1.3. Compensation Committee . Notwithstanding the foregoing, the
Compensation Committee shall have the exclusive authority, which may not be
delegated, to amend the Plan Statement, to terminate this Plan and to determine
eligibility to participate in this Plan under Section 2.
11.2. Delegation . The Plan Administrator and the members of the
Compensation 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 Statement or pursuant to
procedures set forth in the Plan Statement.
11.3. Conflict of Interest. If any individual to whom authority has been
delegated or redelegated 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 interest hereunder or the interest of a
person superior to him or her in the organization (as distinguished from the
interests 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.
11.4. Administrator . The Plan Administrator shall be the administrator
for purposes of section 3(16)(A) of ERISA.
11.5. Service of Process. In the absence of any designation to the contrary
by the Plan Administrator, the Secretary of NCS is designated as the appropriate
and exclusive agent for the receipt of service of process directed to this Plan
in any legal proceeding, including arbitration, involving this Plan.
11.6. Expenses . All expenses of administering this Plan shall be borne by
the Employers.
11.7. Spendthrift Provision . No Participant or Beneficiary shall have
any interest in any 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 Employers, nor shall
the Plan Administrator recognize any assignment thereof, either in whole or in
part, nor shall any 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 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 Plan Administrator.
11.8. Tax Withholding . The Plan Administrator shall cause to be withheld
the amount of any federal, state or local income tax or other tax required to be
withheld under applicable law with respect to any amount payable under this
Plan.
11.9. Certifications . Information to be supplied or written notices to be
made or consents to be given by the Plan Administrator pursuant to any provision
of this Plan may be signed in the name of the Plan Administrator by any officer
of NCS who has been authorized to make such certification or to give such
notices or consents.
11.10. Errors in Computations . The Plan Administrator 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 Plan Administrator and used by the Plan Administrator in
determining the benefit. The Plan Administrator 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. For the purposes of section 3121(v) and
section 3306(r)(2) of the Code, this Plan is a deferred compensation plan.
12.1.3. References to Laws . Any reference in the Plan Statement 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 diminis
any person's employment rights or obligations or rights or obligations under NCS
ESOP, the NCS Savings Plan or any other employee pension benefit or employee
welfare benefit plan. It is specifically contemplated that the NCS ESOP and the
NCS Savings Plan will, from time to time, be amended and possibly terminated.
All such amendments and termination shall be given effect under this Plan (it
being expressly intended that this Plan shall not lock in the benefit structures
of the NCS ESOP and the NCS Savings Plan or any other plan as they exist at the
adoption of this Plan or upon the commencement of participation or at any other
time).
12.3. Disqualification . Notwithstanding any other provision of the
Plan Statement or any election or designation made under this Plan, any
individual 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 Plan Administrator
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.
(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 Statement and not to any particular
paragraph or Section of the Plan Statement unless the context
clearly indicates to the contrary.
(c) The titles given to the various Sections of the Plan
Statement are inserted for convenience of reference only and
are not part of the Plan Statement, and they shall not be
considered in determining the purpose, meaning or intent of
any provision hereof.
(d) Any reference in this Plan Statement to a statute or
regulation shall be considered also to mean and refer to any
subsequent amendment or replacement of that statute or
regulation.
(e) Notwithstanding any thing apparently to the contrary
contained in the Plan Statement, 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
Employers.
12.5. Choice of Law . This instrument has been executed and delivered in
the State of Minnesota and has been drawn in conformity to the laws of that
State and shall, except to the extent that federal law is controlling, be
construed and enforced in accordance with the laws of the State of Minnesota.
12.6. No Employment Contract . This Plan is not and shall not be deemed
to constitute a contract of employment between an Employer and any person, nor
shall anything herein contained be deemed to give any person any right to be
retained in an 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 Statement nor the
benefits under this Plan nor the continuance of the Plan shall be a term of the
employment of any employee. The Employers shall not be obliged to continue this
Plan.
March 25, 1999 NATIONAL COMPUTER SYSTEMS, INC.
By /s/ Russell A. Gullotti
Its Chairman, President and CEO
APPENDIX
CHANGE IN CONTROL
AND RELATED DEFINITIONS
(a) "Acquiring Person" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of fifteen percent (15%) or more of the shares of Common Stock
then outstanding, but shall not include NCS, any Subsidiary of NCS or any
employee benefit plan of NCS or of any Subsidiary of NCS or any entity holding
shares of Common Stock organized, appointed or established for, or pursuant to
the terms of, any such plan. For purposes of this Appendix, any calculation of
the number of shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act
(c) "Beneficial Owner" means beneficial owner (as defined in Rule 13d-3
under the Exchange Act) and "beneficially own" has a meaning correlative
therewith.
(d) "Change in Control" means:
(i) a public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) is made by NCS
or any Person that such Person has become an Acquiring
Person, unless approved by the Board of Directors of NCS,
(ii) a public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) is made by NCS
or any Person that such Person beneficially owns more than
fifty percent (50%) of the Common Stock, regardless of
whether approved by the Board of Directors of NCS,
(iii) a tender or exchange offer by any Person (other than NCS, any
Subsidiary of NCS or any employee benefit plan of NCS or of
any Subsidiary of NCS or any entity holding shares of Common
Stock organized, appointed or established for, or pursuant to
the terms of, any such plan) is commenced (within the meaning
of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act), if, upon the consummation thereof, such
Person would be an Acquiring Person,
(iv) NCS enters into a merger, consolidation or statutory share
exchange with any other Person in which the surviving entity
would not have as its directors at least sixty percent (60%)
of the Continuing Directors and would not have at least sixty
percent (60%) of its common stock owned by the common
shareholders of NCS prior to such merger, consolidation or
statutory share exchange, or
(v) a sale or disposition of all or substantially all of the
assets of NCS or the dissolution of NCS.
(e) "Common Stock" means NCS's Common Stock, $.03 par value per share.
(f) "Continuing Director" means any Person who is a member of the Board
of Directors of NCS, is not an Acquiring Person or an Affiliate or Associate of
an Acquiring Person or a representative of an Acquiring Person or of any such
Affiliate or Associate, and was a member of the Board of Directors of NCS
immediately prior to a Change in Control. A Continuing Director also means any
Person who subsequently becomes a member of the Board of Directors of NCS and is
not an Acquiring Person or an Affiliate or Associate of an Acquiring Person or a
representative of an Acquiring Person or of any such Affiliate or Associate, if
such Person's initial nomination for election or initial election to the Board
of Directors of NCS is recommended or approved by a majority of the Continuing
Directors; provided that any Person who first becomes a member of the Board of
Directors of NCS in connection with a transaction described by clause (iv) of
the definition of "Change in Control" shall not be a Continuing Director.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(h) "Person" means any individual, firm, corporation or other entity, and
shall include any successor (by merger or otherwise) of such entity.
(i) "Subsidiary" means a corporation or other entity or enterprise,
whether incorporated or unincorporated, of which at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others serving similar functions
with respect to such corporation or other entity or enterprise is owned,
directly or indirectly, by NCS.