EXHIBIT 4.1
DEFERRED COMPENSATION PLAN [photographs of human faces omitted]
ROLLINS, INC.
PLAN DOCUMENT
AMENDED AND RESTATED
EFFECTIVE JULY 1, 2005
TABLE OF CONTENTS
Purpose........................................................................1
ARTICLE 1 Definitions........................................................1
ARTICLE 2 Selection/Enrollment/Eligibility...................................8
2.1 Eligibility........................................................8
2.2 Enrollment Requirements............................................8
2.3 Commencement of Participation......................................8
2.4 Termination of Participation and/or Deferrals......................8
ARTICLE 3 Deferral Commitments/Company Contributions/Former Western Plan
Accounts/Crediting/Taxes.........................................9
3.1 Minimum Deferral...................................................9
3.2 Maximum Deferral...................................................9
3.3 Election to Defer/Change in Election...............................9
3.4 Withholding of Annual Deferral Amounts............................11
3.5 Annual Company Discretionary Amount...............................11
3.6 Annual Company Discretionary Benefit Restoration Amount...........12
3.7 Investment of Trust Assets........................................13
3.8 Former Western Plan Accounts......................................13
3.9 Vesting...........................................................14
3.10 Crediting/Debiting of Account Balances............................14
3.11 FICA and Other Taxes..............................................18
3.12 Distributions.....................................................18
ARTICLE 4 Short-Term Payout/Unforeseeable Financial Emergencies.............19
4.1 Short-Term Payout.................................................19
4.2 Other Benefits Take Precedence Over Short-Term Payout.............20
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial
Emergencies.....................................................20
ARTICLE 5 Retirement Benefit................................................21
5.1 Retirement Benefit................................................21
5.2 Payment of Retirement Benefit.....................................21
ARTICLE 6 Survivor Benefit..................................................22
6.1 Pre-Retirement Survivor Benefit...................................22
6.2 Payment of Pre-Retirement Survivor Benefit..................... ..22
6.3 Death Prior to Completion of Retirement Benefit or Termination
Benefit........................................................ 23
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ARTICLE 7 Termination Benefit...............................................23
7.1 Termination Benefit...............................................23
7.2 Payment of Termination Benefit....................................23
ARTICLE 8 Beneficiary Designation...........................................23
8.1 Beneficiary.......................................................23
8.2 Beneficiary Designation/Change....................................24
8.3 Acknowledgment....................................................24
8.4 No Beneficiary Designation........................................24
8.5 Doubt as to Beneficiary...........................................24
8.6 Discharge of Obligations..........................................24
ARTICLE 9 Leave of Absence..................................................25
9.1 Paid Leave of Absence.............................................25
9.2 Unpaid Leave of Absence...........................................25
ARTICLE 10 Termination/Amendment/Modification................................25
10.1 Termination.......................................................25
10.2 Amendment.........................................................26
10.3 Effect of Payment.................................................26
10.4 Amendment to Ensure Proper Characterization of the Plan...........27
10.5 Changes in Law Affecting Taxability...............................27
10.6 Prohibited Acceleration/Distribution Timing.......................28
ARTICLE 11 Administration........ ..........................................28
11.1 Administration....................................................28
11.2 Determinations....................................................29
11.3 General...........................................................29
ARTICLE 12 Other Benefits and Agreements.....................................29
12.1 Coordination with Other Benefits...................................29
ARTICLE 13 Claims Procedures.................................................30
13.1 Scope of Claims Procedures........................................30
13.2 Initial Claim.....................................................30
13.3 Review Procedures.................................................31
13.4 Calculation of Time Periods.......................................32
13.5 Legal Action......................................................32
ARTICLE 14 Trust.............................................................32
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14.1 Establishment of the Trust........................................32
14.2 Interrelationship of the Plan and the Trust.......................32
14.3 Investment of Trust Assets........................................33
14.4 Distributions from the Trust......................................33
ARTICLE 15 Miscellaneous.....................................................33
15.1 Status of Plan....................................................33
15.2 Unsecured General Creditor........................................33
15.3 Company's Liability...............................................33
15.4 Nonassignability..................................................34
15.5 Not a Contract of Employment......................................34
15.6 Furnishing Information............................................34
15.7 Terms.............................................................34
15.8 Captions..........................................................34
15.9 Governing Law.....................................................35
15.10 Notice............................................................35
15.11 Successors........................................................35
15.12 Spouse's Interest.................................................35
15.13 Validity..........................................................35
15.14 Incompetent.......................................................36
15.15 Court Order.......................................................36
15.16 Insurance.........................................................36
15.17 Aggregation of Employers..........................................36
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ROLLINS, INC.
DEFERRED COMPENSATION PLAN
Amended and Restated
Effective July 1, 2005
PURPOSE
The purpose of this Rollins, Inc. Deferred Compensation Plan is to provide
specified benefits to a select group of management or highly compensated
employees of Rollins, Inc. and those of its affiliates that are participating
employers under this Plan as set forth in Section 1.13. This Plan shall be
unfunded for tax purposes and for purposes of Title I of the Employee Retirement
Income Security Act of 1974, as amended. This Plan is intended to comply with
the requirements of Section 409A of the Internal Revenue Code of 1986, as
amended, as added by the American Jobs Creation Act of 2004 and the Treasury
regulations and any other authoritative guidance issued thereunder.
ARTICLE 1
DEFINITIONS
For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
1.1 "Account Balance" shall mean, with respect to a Participant, a credit on
the records of the Company equal to the sum of (i) the Deferral Account
balance, (ii) the Company Discretionary Account balance, (iii) the Company
Discretionary Benefit Restoration Account balance, and (iv) the Former
Western Plan Account balance. The Account Balance, and each other specified
account balance, shall be a bookkeeping entry only and shall be utilized
solely as a device for the measurement and determination of the amounts to
be paid to a Participant, or his or her designated Beneficiary, pursuant to
this Plan.
1.2 "Annual Base Salary" shall mean the annual cash compensation relating to
services performed during any calendar year, whether or not paid in such
calendar year or included on the Federal Income Tax Form W-2 for such
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calendar year, excluding Annual Bonus Payments and any other bonus or
incentive payments, commissions, overtime, fringe benefits, stock options,
relocation expenses, non-monetary awards, fees, automobile and other
allowances paid to a Participant for employment services rendered (whether
or not such allowances are included in the Employee's gross income). Annual
Base Salary shall be calculated without regard to any reductions for
compensation voluntarily deferred or contributed by the Participant
pursuant to all qualified or non-qualified plans of the Company (and
therefore shall be calculated to include amounts not otherwise included in
the Participant's gross income under Code Sections 125, 402(e)(3) or 402(h)
pursuant to plans established by the Company).
1.3 "Annual Bonus Payments" shall mean any compensation paid to a Participant
under any incentive plans or bonus arrangements of the Company with respect
to which the Plan Committee in its discretion permits deferrals to be made
hereunder, which compensation is based on the performance by the
Participant of services for the Company over a period of at least twelve
(12) months (whether or not paid in such performance period or included on
the Federal Income Tax Form W-2 for such performance period) and which
qualifies as "performance-based compensation" under Section 409A.
1.4 "Annual Company Discretionary Amount" shall mean, for the Plan Year of
reference, the amount determined in accordance with Section 3.5.
1.5 "Annual Company Discretionary Benefit Restoration Amount" shall mean, for
the Plan Year of reference, the amount determined in accordance with
Section 3.6.
1.6 "Annual Deferral Amount" shall mean that portion of a Participant's Annual
Base Salary and Annual Bonus Payments that a Participant elects to have,
and is, deferred in accordance with Article 3, for the Plan Year of
reference. In the event of a Participant's Retirement, death or a
Termination of Employment prior to the end of a Plan Year, such year's
Annual Deferral Amount shall be the actual amount withheld prior to such
event.
1.7 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 8, that are entitled to
receive benefits under this Plan upon the death of a Participant.
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1.8 "Beneficiary Designation Form" shall mean the form established from time to
time by the Plan Committee that a Participant completes, signs and returns
to the Plan Committee to designate one or more Beneficiaries.
1.9 "Board" shall mean the board of directors of the Sponsor or, if the Board
so directs, a committee of such Board acting on behalf of the Board in the
exercise of any and all powers and duties of the Board pursuant to this
Plan.
1.10 "Claimant" shall have the meaning set forth in Section 13.2.
1.11 "Change In Control" shall mean a change in the ownership or effective
control of the Sponsor within the meaning of Section 409A(a)(2)(A)(v) and
any guidance issued thereunder from time to time by the Internal Revenue
Service, including Notice 2005-1.
1.12 "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
1.13 "Company" shall mean, collectively, the Sponsor and any affiliate of the
Sponsor that adopts this Plan with the approval of the Sponsor, as set
forth on Schedule B, and any successor to all or substantially all of the
Company's assets or business.
1.14 "Company Discretionary Account" shall mean (i) the sum of the Participant's
Annual Company Discretionary Amounts, plus (ii) amounts credited or debited
in accordance with all the applicable crediting provisions of this Plan
that relate to the Participant's Company Discretionary Account, less (iii)
all distributions made to the Participant or his or her Beneficiary
pursuant to this Plan that relate to the Participant's Company
Discretionary Account.
1.15 "Company Discretionary Benefit Restoration Account" shall mean (i) the sum
of the Participant's Annual Company Discretionary Benefit Restoration
Amounts, plus (ii) amounts credited or debited in accordance with all the
applicable crediting provisions of this Plan that relate to the
Participant's Company Discretionary Benefit Restoration Account, less (iii)
all distributions made to the Participant or his or her Beneficiary
pursuant to this Plan that relate to the Participant's Company
Discretionary Benefit Restoration Account.
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1.16 "Deduction Limitation" shall mean the following described limitation on a
benefit that may otherwise be distributable pursuant to the provisions of
this Plan. Except as otherwise provided, this limitation shall be applied
to all distributions that are "subject to the Deduction Limitation" under
this Plan. If the Plan Committee determines in good faith that there is a
reasonable likelihood that any compensation paid to a Participant for a
taxable year of the Company would not be deductible by the Company solely
by reason of the limitation under Code Section 162(m), then to the extent
deemed necessary by the Plan Committee to ensure that the entire amount of
any distribution to the Participant pursuant to this Plan is deductible,
the Plan Committee may defer all or any portion of a distribution under
this Plan. Any amounts deferred pursuant to this limitation shall continue
to be credited or debited with additional amounts in accordance with
Section 3.9 below, even if such amount is being paid out in installments.
The amounts so deferred and amounts credited or debited thereon shall be
distributed to the Participant or his or her Beneficiary (in the event of
the Participant's death) at the earliest possible date, as determined by
the Plan Committee in good faith, on which the deductibility of
compensation paid or payable to the Participant for the taxable year of the
Company during which the distribution is made will not be limited by Code
Section 162(m). Notwithstanding the foregoing, this Section 1.16 shall
apply only to the extent permitted by Section 409A.
1.17 "Deferral Account" shall mean (i) the sum of all of a Participant's Annual
Deferral Amounts, plus (ii) amounts credited or debited in accordance with
all the applicable crediting provisions of this Plan that relate to the
Participant's Deferral Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate to
his or her Deferral Account.
1.18 "Effective Date" shall mean the effective date of this Plan, which is July
1, 2005.
1.19 "Election Form" shall mean the form or forms established from time to time
by the Plan Committee that a Participant completes, signs and returns to
the Plan Committee to make an election under the Plan (which form or forms
may take the form of an electronic transmission, if required or permitted
by the Plan Committee).
1.20 "Employee" shall mean an individual whom the Company treats as an
"employee" for Federal income tax withholding purposes.
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1.21 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.22 "Former Western Plan Account" shall mean, with respect to any Participant
with an account balance under the Western Industries-North, Inc. Deferred
Compensation Plan (the "Western Plan") as of December 31, 2007 who does not
incur a distribution event under the terms of the Western Plan prior to
January 1, 2008, (i) the amount credited to the Participant's account under
the Western Plan as of December 31, 2007 which is credited to the
Participant's Former Western Plan Account under this Plan as of January 1,
2008 in accordance with Section 3.8, plus (ii) amounts credited or debited
in accordance with all the applicable crediting provisions of this Plan
that relate to the Participant's Former Western Plan Account, less (iii)
all distributions made to the Participant or his or her Beneficiary
pursuant to this Plan that relate to the Participant's Former Western Plan
Account.
1.23 "Participant" shall mean any Employee who is selected by the Plan Committee
to participate in the Plan, provided such individual (i) elects to
participate in the Plan, (ii) signs a Plan Agreement, an Election Form(s)
and a Beneficiary Designation Form, (iii) has his or her signed Plan
Agreement, Election Form(s) and Beneficiary Designation Form accepted by
the Plan Committee, (iv) commences participation in the Plan, and (v) does
not have his or her Plan Agreement terminated. A spouse or former spouse of
a Participant shall not be treated as a Participant in the Plan or have an
Account Balance under the Plan under any circumstance.
1.24 "Plan" shall mean this Rollins, Inc. Deferred Compensation Plan, as
evidenced by this instrument and by each Plan Agreement, as they may be
further amended from time to time.
1.25 "Plan Agreement" shall mean a written agreement (which may take the form of
an electronic transmission, if required or permitted by the Plan
Committee), as may be amended from time to time, which is entered into by
and between the Company and a Participant. Each Plan Agreement executed by
a Participant and the Company shall provide for the entire benefit to which
such Participant is entitled under the Plan; should there be more than one
Plan Agreement, the Plan Agreement bearing the latest date of acceptance by
the Company shall supersede all previous Plan Agreements in their entirety
and shall govern such entitlement. The terms of any Plan Agreement may be
different for any Participant, and any Plan Agreement may provide
additional benefits not set forth in the Plan or limit the benefits
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otherwise provided under the Plan; provided, however, that any such
additional benefits or benefit limitations must be agreed to by both the
Company and the Participant. In the Plan Agreement, each Participant shall
acknowledge that he or she accepts all of the terms of the Plan including
the discretionary authority of the Plan Committee as set forth in Article
11.
1.26 "Plan Committee" shall mean the Plan committee appointed by the Sponsor,
which, except as otherwise specified, shall be responsible for the general
administration of the Plan, or a designated agent of such Plan Committee.
1.27 "Plan Year" shall mean a period beginning on January 1 of each calendar
year and continuing through December 31 of such calendar year during which
this Plan is in effect; provided, however, that the Plan shall experience a
short first Plan Year beginning July 1, 2005 and ending December 31, 2005.
1.28 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
1.29 "Retirement", "Retire(s)" or "Retired" shall mean Separation from Service
with the Company for any reason other than an authorized leave of absence
or death on or after (i) the attainment of age sixty-five (65) or (ii) the
attainment of age sixty (60) with twenty (20) Years of Service.
1.30 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.31 "Section 409A" shall mean Code Section 409A and the Treasury regulations
and other authoritative guidance issued thereunder.
1.32 "Separation from Service" shall mean separation from service within the
meaning of Section 409A.
1.33 "Short-Term Payout" shall mean the payout set forth in Article 4.
1.34 "Sponsor" shall mean Rollins, Inc., a Delaware corporation, and any
successor to all or substantially all of the Sponsor's assets or business.
1.35 "Termination Benefit" shall mean the benefit set forth in Article 7.
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1.36 "Termination of Employment" shall mean Separation from Service with the
Company, voluntarily or involuntarily, for any reason other than
Retirement, death or an authorized leave of absence.
1.37 "Trust" shall mean the trust established pursuant to this Plan, as amended
from time to time.
1.38 "Unforeseeable Financial Emergency" shall mean a severe financial hardship
to the Participant resulting from (i) an illness or accident of the
Participant, the Participant's spouse or a dependent (as defined in Code
Section 152(a)) of the Participant, (ii) a loss of the Participant's
property due to casualty, or (iii) an other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
control of the Participant, all as determined in the sole discretion of the
Plan Committee.
1.39 "Yearly Installment Method" shall be a yearly installment payment over the
number of years selected by the Participant in accordance with this Plan,
calculated as follows: The Account Balance of the Participant (or the
appropriate portion thereof) shall be calculated as of the close of
business on the date of reference (or, if the date of reference is not a
business day, on the immediately following business day), and shall be paid
as soon as practicable thereafter. The date of reference with respect to
the first (1st) yearly installment payment shall be as provided in Section
5.2, and the date of reference with respect to subsequent yearly
installment payments shall be the anniversary of the first (1st) yearly
installment payment. The yearly installment shall be calculated by
multiplying this balance by a fraction, the numerator of which is one (1),
and the denominator of which is the remaining number of yearly payments due
the Participant. By way of example, if the Participant elects a ten (10)
year Yearly Installment Method, the first payment shall be one-tenth (1/10)
of the Account Balance, calculated as described in this definition. The
following year, the payment shall be one-ninth (1/9) of the Account
Balance, calculated as described in this definition.
1.40 "Years of Service" shall mean at any time the number of years of service
with which a Participant has been credited under a 401(k) plan sponsored by
the Company. If, at any time, the Participant has been credited with years
of service under more than one Company-sponsored 401(k) plan, the
Participant's Years of Service under this Plan shall be determined by
reference to that Company-sponsored 401(k) plan under which the Participant
has been credited with the greatest number of years of service.
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ARTICLE 2
SELECTION/ENROLLMENT/ELIGIBILITY
2.1 Eligibility. Participation in the Plan shall be limited to Employees whom
the Plan Committee, in its sole discretion, designates, for participation,
provided that Employees may not participate in the Plan unless they are
members of a select group of management or highly compensated employees of
the Company, as membership in such group is determined for purposes of
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA (which determination
shall be made by the Plan Committee in its sole discretion).
2.2 Enrollment Requirements. As a condition to initial participation, each
selected Employee shall complete, execute and return to the Plan Committee
a Plan Agreement, an Election Form(s) and a Beneficiary Designation Form,
all within thirty (30) days after he or she is notified of his or her
eligibility to participate in the Plan. In addition, the Plan Committee
shall establish from time to time such other enrollment requirements as it
determines in its sole discretion are necessary.
2.3 Commencement of Participation. Provided a selected Employee has met all
enrollment requirements set forth in this Plan and required by the Plan
Committee, including returning all required documents to the Plan Committee
within the specified time period, that individual shall commence
participation in the Plan on the first day of the month following the month
in which he or she has completed all enrollment requirements (or as soon as
practicable thereafter as the Plan Committee may determine). If he or she
fails to meet all such requirements within the period required by Section
2.2, that individual shall not be eligible to participate in the Plan until
the first day of the following Plan Year, again subject to timely delivery
to and acceptance by the Plan Committee of the required documents.
2.4 Termination of Participation and/or Deferrals. If the Plan Committee
determines in good faith that a Participant no longer qualifies as a member
of a select group of management or highly compensated employees of the
Company (as defined in Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA),
the Plan Committee shall have the right, in its sole discretion and subject
to Section 409A, to (i) terminate any deferral election the Participant has
made for the remainder of the Plan Year in which the Participant's
membership status changes, (ii) prevent the Participant from making future
deferral elections and/or (iii) immediately distribute the Participant's
8
then vested Account Balance as a Termination Benefit and terminate the
Participant's participation in the Plan.
ARTICLE 3
DEFERRAL COMMITMENTS/COMPANY CONTRIBUTIONS/FORMER WESTERN PLAN
ACCOUNTS/CREDITING/TAXES
3.1 Minimum Deferral. For each Plan Year, a Participant may elect to defer, as
his or her Annual Deferred Amount, Annual Base Salary and/or Annual Bonus
Payments in the minimum amount of two thousand dollars ($2,000) for each
such type of compensation.
Notwithstanding the foregoing, the Plan Committee may, in its sole
discretion, establish for any Plan Year a different minimum amount for
Annual Base Salary and/or Annual Bonus Payments.
3.2 Maximum Deferral.
(a) Annual Base Salary and Annual Bonus Payments. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral Amount,
Annual Base Salary and/or Annual Bonus Payments up to the following
maximum percentages for each type of compensation:
Compensation Maximum Deferral Percentage
Annual Base Salary 50%
Annual Bonus Payments 100%
(b) Plan Committee's Discretion. Notwithstanding the foregoing, (i) the
Plan Committee may, in its sole discretion, establish for any Plan
Year maximum percentages which differ from those set forth above, and
(ii) if a Participant first becomes a Participant after the first day
of a Plan Year, the maximum Annual Deferral Amount with respect to
Annual Base Salary and Annual Bonus Payments shall be limited to the
percentage of such compensation not yet earned by the Participant as
of the date the Participant submits a Plan Agreement and Election
Form(s) to the Plan Committee for acceptance.
3.3 Election to Defer/Change in Election.
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(a) Timing of Elections.
(i) Elections with Respect to Annual Base Salary. An Annual Base
Salary election must be made within the deadlines established by
the Plan Committee, provided that, except as provided in
paragraph (iii) below, in no event shall such an election be made
after the last day of the Plan Year preceding the Plan Year in
which the services giving rise to the Annual Base Salary to be
deferred are to be performed.
(ii) Elections with Respect to Annual Bonus Payments. An Annual Bonus
Payment election must be made within the deadlines established by
the Plan Committee, provided that, except as provided in
paragraph (iii) below, in no event shall such an election be made
later than six (6) months prior to the last day of the period
over which the services giving rise to the Annual Bonus Payments
to be deferred are performed.
(iii)First Year of Eligibility. Notwithstanding paragraphs (i) and
(ii) above, if and to the extent permitted by the Plan Committee,
in the case of the first Plan Year in which an Employee becomes
eligible to participate in the Plan, the Employee may make a
deferral election at times other than those permitted by
paragraphs (i) and (ii) above, provided that such election is
made no later than thirty (30) days after the date the Employee
becomes eligible to participate in the Plan. Such election will
apply only with respect to compensation attributable to services
performed after the date the election is made. This paragraph
(iii) will apply with respect to the short Plan Year commencing
July 1, 2005 and ending December 31, 2005, as well as to Plan
Years commencing on and after January 1, 2006.
(b) Manner of Election. Deferral elections (and any other elections the
Plan Committee deems necessary or desirable under the Plan) shall be
made by timely delivering to the Plan Committee an Election Form,
along with such other forms the Plan Committee deems necessary or
desirable under the Plan. For these elections to be valid, the
Election Form(s) must be completed and signed by the Participant,
timely delivered to the Plan Committee (in accordance with Sections
2.2 and 3.3(a) above) and accepted by the Plan Committee. If no such
10
Election Form(s) is timely delivered for a Plan Year (or portion
thereof), the Annual Deferral Amount shall be zero (0) for that Plan
Year (or portion thereof).
(c) Change in Election. A Participant may not change his or her deferral
election that is in effect for a Plan Year, unless permitted by the
Plan Committee in compliance with Section 409A.
(d) Validity of Elections. The Plan Committee reserves the right to
determine the validity of all deferral elections made under the Plan
in accordance with the requirements of applicable law, including
Section 409A. If the Plan Committee, in its sole discretion,
determines that an election is not valid under applicable law, the
Plan Committee may treat the deferral election as null and void, and
pay Annual Base Salary and/or Annual Bonus Payments to the affected
Participant without regard to the Participant's deferral election. By
way of example and not limitation, if the Plan Committee determines
that a deferral election should have been made at a time that is
earlier than the time it is actually made (even if such election would
otherwise comply with the terms of the Plan, including Section 3.3(a)
above), the Plan Committee will have the right to disregard such
election and pay Annual Base Salary and/or Annual Bonus Payments to
the affected Participant without regard to the Participant's deferral
election.
3.4 Withholding of Annual Deferral Amounts. For each Plan Year, the Annual Base
Salary portion of the Annual Deferral Amount shall be withheld from each
regularly scheduled Annual Base Salary payment in the percentage elected by
the Participant. The Annual Bonus Payments portion of the Annual Deferral
Amount shall be withheld at the time the Annual Bonus Payments are or
otherwise would be paid to the Participant, whether or not this occurs
during the Plan Year for which the election is made.
3.5 Annual Company Discretionary Amount. For each Plan Year, the Plan
Committee, acting on behalf of the Company and in its sole discretion, may,
but is not required to, credit any amount it desires to any Participant's
Company Discretionary Account under this Plan, which amount shall be for
that Participant the Annual Company Discretionary Amount for that Plan
Year. The amount so credited on behalf of a Participant may be smaller or
larger than the amount credited on behalf of any other Participant, and the
amount credited on behalf of any Participant for a Plan Year may be zero
(0), even though one or more other Participants receive an Annual Company
11
Discretionary Amount for that Plan Year.
Unless otherwise specified by the Plan Committee, the Annual Company
Discretionary Amount, if any, shall be credited as soon as practicable
after the last day of the Plan Year. Unless otherwise specified by the Plan
Committee, if a Participant to whom an Annual Company Discretionary Amount
would otherwise be credited is not employed by the Company as of the last
day of a Plan Year, the Annual Company Discretionary Amount for that Plan
Year shall be zero (0).
3.6 Annual Company Discretionary Benefit Restoration Amount. For each Plan
Year, the Plan Committee, acting on behalf of the Company and in its sole
discretion, may, but is not required to, credit an amount to any
Participant's Company Discretionary Benefit Restoration Account under this
Plan, which amount shall be for that Participant the Annual Company
Discretionary Benefit Restoration Amount for that Plan Year.
Unless otherwise specified by the Plan Committee, in order to be eligible
to receive an Annual Company Discretionary Benefit Restoration Amount
credit for a Plan Year, a Participant must: (a) have a most recent hire
date of no later than June 30, 1999; (b) be employed by the Company for all
of 2006; (c) have completed at least five (5) full years of participation
in the Company's qualified defined benefit pension plan; and (d) be
employed as of the last day of the Plan Year for which the Annual Company
Discretionary Benefit Restoration Amount is credited, all as determined by
the Plan Committee.
A Participant's Annual Company Discretionary Benefit Restoration Amount for
the Plan Year of reference, if any, shall be a percentage of the
Participant's Annual Base Salary for the Plan Year not exceeding two
hundred and ten thousand dollars ($210,000), or such other maximum
established by the Plan Committee, determined as follows:
NUMBER OF POINTS ANNUAL COMPANY DISCRETIONARY BENEFIT
RESTORATION AMOUNT
Less than 55 0% of Annual Base Salary
55 to 64.99 1.5% of Annual Base Salary
65 or more 3% of Annual Base Salary
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For purposes of the preceding, the Participant's number of points shall be
calculated as:
Participant's age + (Participant's Years of Service X 1.5)
For purposes of the preceding, the Participant's age will be determined as
of June 30, 2005. The Participant's Years of Service will be determined as
of June 30, 2005, based on the Participant's most recent hire date (i.e.,
if the Participant was rehired, he or she will not receive Years of Service
credit for purposes of this Section for service the Participant performed
prior to his or her rehire date).
Unless otherwise specified by the Plan Committee, the Annual Company
Discretionary Benefit Restoration Amount, if any, shall be credited as soon
as practicable after the last day of the Plan Year. Unless otherwise
specified by the Plan Committee, these Annual Company Discretionary Amounts
will be credited for five (5) Plan Years, with the first Annual Company
Discretionary Amounts being credited in January 2007 (for the 2006 Plan
Year) for those eligible Participants who are employed by the Company for
all of 2006 and who are still in active employment by the Company as of
December 31, 2006.
3.7 Investment of Trust Assets. The trustee of the Trust shall be authorized,
upon written instructions received from the Plan Committee or investment
manager appointed by the Plan Committee, to invest and reinvest the assets
of the Trust in accordance with the applicable Trust agreement, including
the reinvestment of the proceeds in one or more investment vehicles
designated by the Plan Committee.
3.8 Former Western Plan Accounts. Effective as of January 1, 2008, the Western
Industries-North, Inc. Deferred Compensation Plan (the "Western Plan")
merges with and into this Plan. With respect to any Participant with an
account balance under the Western Plan as of December 31, 2007 who does not
incur a distribution event under the terms of the Western Plan prior to
January 1, 2008, the amount credited to the Participant's account under the
Western Plan as of December 31, 2007 shall be credited, as of January 1,
2008, to the Participant's Former Western Plan Account under this Plan.
With respect to any Participant who incurs a distribution event under the
terms of the Western Plan prior to January 1, 2008, his or her Western Plan
account balance shall be governed in accordance with the terms of the
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Western Plan prior to January 1, 2008.
3.9 Vesting.
(a) A Participant shall at all times be one hundred percent (100%) vested
in his or her Deferral Account, Company Discretionary Benefit
Restoration Account and Former Western Plan Account.
(b) A Participant shall become vested in his or her Company Discretionary
Account as and to the extent that the Participant becomes vested in
Company matching contributions under a 401(k) plan sponsored by the
Company, or (if earlier) as of the date of a Change in Control. If
Company matching contributions have been allocated on behalf of the
Participant under more than one Company-sponsored 401(k) plan, the
401(k) plan referenced in the preceding sentence shall be that
Company-sponsored 401(k) plan under which the Participant has attained
the greatest percentage of vesting in his or her Company matching
contributions.
3.10 Crediting/Debiting of Account Balances. In accordance with, and subject to,
the rules and procedures that are established from time to time by the Plan
Committee, in its sole discretion, amounts shall be credited or debited to
a Participant's Account Balance in accordance with the following rules:
(a) Sub-Accounts. Separate sub-accounts shall be established and
maintained with respect to each Participant's Account Balance
(together, the "Sub-Accounts"), if and as applicable, one attributable
to the portion of the Participant's Account Balance which represents
Annual Base Salary deferrals, another attributable to the portion of
the Participant's Account Balance which represents Annual Bonus
Payments deferrals, another attributable to the portion of the
Participant's Account Balance which represents Annual Company
Discretionary Amounts and Annual Company Discretionary Benefit
Restoration Amounts, and another attributable to the portion of the
Participant's Account Balance which represents the balance credited to
the Participant's Former Western Plan Account, if applicable.
(b) Election of Measurement Funds. A Participant, in connection with his
or her initial deferral election in accordance with Section 3.3 above
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(and/or, with respect to the Sub-Account representing the
Participant's Former Western Plan Account, during the applicable
election period established by the Plan Committee in connection with
the merger of the Western Industries-North, Inc. Deferred Compensation
Plan with and into this Plan), shall elect, on the Election Form(s),
one or more Measurement Fund(s) (as described in Section 3.10(d)
below) to be used to determine the additional amounts to be credited
or debited to each of his or her Sub-Accounts for the first business
day of the Plan Year, continuing thereafter unless changed in
accordance with the next sentence. Commencing with the first business
day of the Plan Year, and continuing thereafter for the remainder of
the Plan Year (unless the Participant ceases during the Plan Year to
participate in the Plan), the Participant may (but is not required to)
elect, by submitting an Election Form(s) to the Plan Committee that is
accepted by the Plan Committee (which submission may take the form of
an electronic transmission, if required or permitted by the Plan
Committee), to add or delete one or more Measurement Fund(s) to be
used to determine the additional amounts to be credited or debited to
each of his or her Sub-Accounts, or to change the portion of each of
his or her Sub-Accounts allocated to each previously or newly elected
Measurement Fund(s); provided, however, that any such election(s) will
be processed on a monthly basis, as described in the following
sentence. If, during a given month, a Participant makes one or more
elections in accordance with the previous sentence, all such elections
made by the Participant during the month shall be collected and the
last such election made prior to 4:00pm EST on the last market day of
the month will be processed and shall continue to apply for the
remainder of the Plan Year (unless the Participant ceases during the
Plan Year to participate in the Plan), unless changed in accordance
with the above.
(c) Proportionate Allocation. In making any election described in Section
3.10(b) above, the Participant shall specify on the Election Form(s),
in whole percentage points, the percentage of each of his or her
Sub-Account(s) to be allocated to a Measurement Fund (as if the
Participant was making an investment in that Measurement Fund with
that portion of his or her Account Balance).
(d) Measurement Funds. The Participant may elect one or more of the
Measurement Funds set forth on Schedule A (the "Measurement Funds")
for the purpose of crediting or debiting additional amounts to his or
15
her Account Balance. The Plan Committee may, in its sole discretion,
discontinue, substitute or add a Measurement Fund(s). Each such action
will take effect as of the first business day that follows by thirty
(30) days the day on which the Plan Committee gives Participants
advance written (which shall include e-mail) notice of such change. If
the Plan Committee receives an initial or revised Measurement Fund(s)
election which it deems to be incomplete, unclear or improper, the
Participant's Measurement Fund(s) election then in effect shall remain
in effect (or, in the case of a deficiency in an initial Measurement
Fund(s) election, the Participant shall be deemed to have filed no
deemed investment direction). If the Plan Committee possesses (or is
deemed to possess as provided in the previous sentence) at any time
directions as to Measurement Fund(s) of less than all of the
Participant's Account Balance, the Participant shall be deemed to have
directed that the undesignated portion of the Account Balance be
deemed to be invested in a money market, fixed income or similar
Measurement Fund made available under the Plan as determined by the
Plan Committee in its discretion. Each Participant hereunder, as a
condition to his or her participation hereunder, agrees to indemnify
and hold harmless the Plan Committee and the Company, and their agents
and representatives, from any losses or damages of any kind relating
to (i) the Measurement Funds made available hereunder and (ii) any
discrepancy between (a) the credits and debits to the Participant's
Account Balance based on the performance of the Measurement Funds and
the application of the crediting and debiting method described in
Section 3.10(e) below and (b) what the credits and debits otherwise
might be in the case of an actual investment in the Measurement Funds.
(e) Crediting or Debiting Method. The performance of each elected
Measurement Fund (either positive or negative) will be determined by
the Plan Committee, in its sole discretion, based on the performance
of the Measurement Funds themselves. A Participant's Account Balance
shall be credited or debited on a daily basis based on the performance
of each Measurement Fund selected by the Participant, or as otherwise
determined by the Plan Committee in its sole discretion, as though (i)
a Participant's Account Balance were invested in the Measurement
Fund(s) selected by the Participant, in the percentages elected by the
Participant as of such date, at the closing price on such date; (ii)
the portion of the Annual Deferral Amount that was actually deferred
16
was invested in the Measurement Fund(s) selected by the Participant,
in the percentages elected by the Participant, no later than the close
of business on the third (3rd) business day after the day on which
such amounts are actually deferred from the Participant's Annual Base
Salary and Annual Bonus Payments through reductions in his or her
amounts otherwise payable, at the closing price on such date; (iii)
any Annual Company Discretionary Amounts and/or Annual Company
Discretionary Benefit Restoration Amounts credited to a Participant's
Account Balance were invested in the Measurement Fund(s) selected by
the Participant, in the percentages elected by the Participant, as
soon as administratively practicable following the date such amount(s)
were credited to the Participant's Plan Account; (iv) any amount(s)
credited to the Participant's Former Western Plan Account were
invested in the Measurement Fund(s) selected by the Participant, in
the percentages selected by the Participant, as soon as
administratively practicable following the date such amounts(s) were
credited to the Participant's Former Western Plan Account; and (v) any
distribution made to a Participant that decreases such Participant's
Account Balance ceased being invested in the Measurement Fund(s), in
the percentages applicable to such calendar month, no earlier than
three (3) business days prior to the distribution, at the closing
price on such date.
(f) No Actual Investment. Notwithstanding any other provision of this Plan
that may be interpreted to the contrary, the Measurement Funds are to
be used for measurement purposes only, and a Participant's election of
any such Measurement Fund, the allocation to his or her Account
Balance thereto, the calculation of additional amounts and the
crediting or debiting of such amounts to a Participant's Account
Balance shall not be considered or construed in any manner as an
actual investment of his or her Account Balance in any such
Measurement Fund. In the event that the Company or the trustee (as
that term is defined in the Trust), in its own discretion, decides to
invest funds in any or all of the Measurement Funds, no Participant
shall have any rights in or to such investments themselves. Without
limiting the foregoing, a Participant's Account Balance shall at all
times be a bookkeeping entry only and shall not represent any
investment made on his or her behalf by the Company or the Trust; the
Participant shall at all times remain an unsecured general creditor of
the Company.
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(g) Beneficiary Elections. Each reference in this Section 3.10 to a
Participant shall be deemed to include, where applicable, a reference
to a Beneficiary.
3.11 FICA and Other Taxes.
(a) Annual Deferral Amounts. For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the Company
shall withhold from that portion of the Participant's Annual Base
Salary and/or Annual Bonus Payments that is not being deferred, in a
manner determined by the Company, the Participant's share of FICA and
other employment taxes on such Annual Deferral Amount. If necessary,
the Plan Committee may reduce the Annual Deferral Amount in order to
comply with this Section 3.11.
(b) Annual Company Discretionary Amounts. When a Participant becomes
vested in a portion of his or her Company Discretionary Account, the
Company shall have the discretion to withhold from the Participant's
Annual Base Salary and/or Annual Bonus Payments that is not deferred,
in a manner determined by the Company, the Participant's share of FICA
and other employment taxes on such vested portion of his or her
Company Discretionary Amount. If necessary, the Plan Committee may
reduce the vested portion of the Participant's Annual Company
Discretionary Amounts in order to comply with this Section 3.11.
(c) Annual Company Discretionary Benefit Restoration Amounts. For each
Plan Year in which an Annual Company Discretionary Benefit Restoration
Amount is credited to the Account Balance of a Participant, the
Company shall have the discretion to withhold from the Participant's
Annual Base Salary and/or Annual Bonus Payments that is not deferred,
in a manner determined by the Company, the Participant's share of FICA
and other employment taxes on such Annual Company Discretionary
Benefit Restoration Amount. If necessary, the Plan Committee may
reduce the vested portion of the Participant's Annual Company
Discretionary Benefit Restoration Amounts in order to comply with this
Section 3.11.
3.12 Distributions. Notwithstanding anything herein to the contrary, (i) any
payments made to a Participant under this Plan shall be in cash form, and
(ii) the Company, or the trustee of the Trust, shall withhold from any
18
payments made to a Participant under this Plan all Federal, state and local
income, employment and other taxes required to be withheld by the Company,
or the trustee of the Trust, in connection with such payments, in amounts
and in a manner to be determined in the sole discretion of the Company or
the trustee of the Trust, as applicable.
ARTICLE 4
SHORT-TERM PAYOUT/UNFORESEEABLE FINANCIAL EMERGENCIES
4.1 Short-Term Payout. In connection with each election to defer Annual
Deferral Amounts for a given Plan Year (and/or, with respect to the
Participant's Former Western Plan Account balance, during the applicable
election period established by the Plan Committee ending no later than
December 31, 2005), a Participant may irrevocably elect to receive a future
"Short-Term Payout" from the Plan. Except as otherwise required by the Plan
Committee, such election may be made separately with respect to each Plan
Year's Annual Base Salary and/or Annual Bonus Payments that have been
deferred. In addition, except as otherwise required by the Plan Committee,
such election may be made separately with respect to the Participant's
Former Western Plan Account balance. Subject to the Deduction Limitation
and to Section 3.12, the Short-Term Payout shall be a lump sum payment in
an amount that is equal to the Annual Base Salary and/or Annual Bonus
Payments deferrals (and/or, if applicable, the Participant's Former Western
Plan Account balance) subject to the Short-Term Payout election, and
amounts credited or debited thereon in the manner provided in Section 3.10
above, determined at the time that the Short-Term Payout becomes payable
(rather than the date of a Termination of Employment). Subject to the terms
and conditions of this Plan, each Short-Term Payout elected shall be paid
out during the month of January of the Plan Year designated by the
Participant that is at least three (3) Plan Years after the Plan Year in
which the Annual Base Salary and/or Annual Bonus Payments deferrals subject
to the Short-Term Payout election are actually deferred (and/or with
respect to the Participant's Former Western Plan Account balance, during
the month of January of the Plan Year designated by the Participant that is
2010 or later), as specifically elected by the Participant. By way of
example, if a three (3) year Short-Term Payout is elected by a Participant
for Annual Base Salary deferrals that are deferred in the Plan Year
commencing July 1, 2005, the three (3) year Short-Term Payout would become
payable during January of 2009. Notwithstanding the preceding sentences or
any other provision of this Plan that may be construed to the contrary, a
19
Participant who is an active Employee may, with respect to each Short-Term
Payout, on a form determined by the Plan Committee, make one (1) or more
additional deferral elections (a "Subsequent Election") to defer payment of
all or any portion (as elected by the Participant in accordance with
procedures established by the Plan Committee) of such Short-Term Payout to
a Plan Year subsequent to the Plan Year originally (or subsequently)
elected; provided, however, any such Subsequent Election will be null and
void unless accepted by the Plan Committee no later than one (1) year prior
to the first day of the Plan Year in which, but for the Subsequent
Election, such Short-Term Payout would be paid, and such Subsequent
Election provides for a deferral of at least five (5) Plan Years following
the Plan Year in which the Short-Term Payout, but for the Subsequent
Election, would be paid.
Notwithstanding the preceding, that portion of a Participant's Account
Balance, if any, attributable to Annual Company Discretionary Amounts
and/or Annual Company Discretionary Benefit Restoration Amounts shall not
be eligible for a Short-Term Payout under the Plan.
4.2 Other Benefits Take Precedence Over Short-Term Payout. Should an event
occur that triggers a benefit under Article 5, 6 or 7, any Annual Base
Salary and/or Annual Bonus Payments deferrals (and/or amount(s) credited to
a Participant's Former Western Plan Account), plus amounts credited or
debited thereon, that are subject to a Short-Term Payout election under
Section 4.1 shall not be paid in accordance with Section 4.1 but shall be
paid in accordance with the other applicable Article.
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies. If a
Participant experiences an Unforeseeable Financial Emergency, the
Participant may petition the Plan Committee to (i) suspend any deferrals
required to be made by a Participant to the extent permitted under Section
409A and/or (ii) receive a partial or full payout from the Plan. The payout
shall not exceed the lesser of the Participant's vested Account Balance,
calculated as if such Participant were receiving a Termination Benefit, or
the amount reasonably needed to satisfy the Unforeseeable Financial
Emergency, taking into account the extent to which the Unforeseeable
Financial Emergency is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the
Participant's assets (to the extent the liquidation of assets would not
itself cause severe financial hardship), plus amounts necessary to pay
taxes reasonably anticipated as a result of the payout. A suspension of
20
deferrals or payout under this Section 4.3 shall be permitted only to the
extent permitted under Section 409A, as determined by the Plan Committee in
its sole discretion. A suspension of deferrals that is approved by the Plan
Committee will take effect as soon as administratively feasible after such
approval is granted. A payout that is approved by the Plan Committee will
be made within sixty (60) days of the date of approval. The payment of any
amount under this Section 4.3 shall not be subject to the Deduction
Limitation.
ARTICLE 5
RETIREMENT BENEFIT
5.1 Retirement Benefit. A Participant who Retires shall receive, as a
Retirement Benefit, his or her vested Account Balance.
5.2 Payment of Retirement Benefit. In connection with each election to defer
Annual Deferral Amounts for a given Plan Year (and/or, with respect to the
Participant's Former Western Plan Account balance, during the applicable
election period established by the Plan Committee ending no later than
December 31, 2005), a Participant shall elect on an Election Form to
receive such Annual Deferral Amounts (and/or, if applicable, the
Participant's Former Western Plan Account balance), and amounts credited or
debited thereon in the manner provided in Section 3.10 above, upon
Retirement in a lump sum or pursuant to a Yearly Installment Method of
between two (2) and fifteen (15) years. Except as otherwise required by the
Plan Committee, such election may be made separately with respect to each
Plan Year's Annual Base Salary and/or Annual Bonus Payments that have been
deferred. In addition, except as otherwise required by the Plan Committee,
such election may be made separately with respect to the Participant's
Former Western Plan Account balance. If a Participant does not make any
election with respect to the payment of the Retirement Benefit, then such
benefit shall be payable in a lump sum.
Notwithstanding the above or anything herein that may suggest otherwise,
the portion (if any) of the Participant's vested Account Balance
attributable to Annual Company Discretionary Amounts and Annual Company
Discretionary Benefit Restoration Amounts shall be payable to the
Participant solely as a lump sum payment.
21
Unless an election is changed by the Participant as provided below, such
Retirement Benefit shall be paid (or shall commence, in the case of
installment payments) as follows: (i) if the Participant's Retirement
occurs during January through June of any Plan Year, the Retirement Benefit
shall be paid (or commence) on or after January 2 of the Plan Year
following the Plan Year of the Participant's Retirement; (ii) if the
Participant's Retirement occurs during July through December of any Plan
Year, the Retirement Benefit shall be paid (or commence) on or after July 2
of the Plan Year following the Plan Year of the Participant's Retirement.
The Participant may change his or her election to an allowable alternative
payout period by submitting a new Election Form to the Plan Committee,
provided that any such Election Form is submitted at least one (1) year
prior to the Participant's Retirement and, if required by Section 409A,
provides for a distribution (or commencement of distributions) date which
is at least five (5) Plan Years from the distribution date then in effect.
The Election Form most recently accepted by the Plan Committee shall govern
the payout of the Retirement Benefit with respect to the portion of the
Participant's Account Balance to which it pertains.
Notwithstanding anything above or elsewhere in the Plan to the contrary,
except as otherwise permitted by Section 409A, no change submitted on an
Election Form shall be accepted by the Company if the change accelerates
the time over which distributions are to be made to the Participant, and
the Company shall deny any change made to an election if the Plan Committee
determines that the change violates any requirement under Section 409A,
including the requirement that the first payment with respect to which such
election is made be deferred for a period of not less than five (5) years
from the date such payment would otherwise have been made.
ARTICLE 6
SURVIVOR BENEFIT
6.1 Pre-Retirement Survivor Benefit. The Participant's Beneficiary shall
receive a Pre-Retirement Survivor Benefit equal to the Participant's vested
Account Balance if the Participant dies while an Employee.
6.2 Payment of Pre-Retirement Survivor Benefit. The Pre-Retirement Survivor
Benefit shall be paid in a lump sum as soon as practicable following the
date on which the Plan Committee has been provided with proof that is
satisfactory to the Plan Committee of the Participant's death. Any payment
22
made hereunder shall not be subject to the Deduction Limitation.
6.3 Death Prior to Completion of Retirement Benefit or Termination Benefit. If
a Participant dies after Retirement or Termination of Employment but before
the Retirement Benefit or Termination Benefit is paid in full, the
Participant's unpaid Retirement Benefit or Termination Benefit payments
shall continue and shall be paid to the Participant's Beneficiary over the
remaining number of years and in the same amounts as that benefit would
have been paid to the Participant had the Participant survived. Any payment
made hereunder shall not be subject to the Deduction Limitation.
ARTICLE 7
TERMINATION BENEFIT
7.1 Termination Benefit. A Participant shall receive a Termination Benefit,
which shall be equal to the Participant's vested Account Balance if the
Participant experiences a Termination of Employment prior to his or her
Retirement or death.
7.2 Payment of Termination Benefit. The Termination Benefit shall be paid in a
lump sum as follows: (i) if the Participant's Termination of Employment
occurs during January through June of any Plan Year, the Termination
Benefit shall be paid on or after January 2 of the Plan Year following the
Plan Year of the Participant's Termination of Employment; (ii) if the
Participant's Termination of Employment occurs during July through December
of any Plan Year, the Termination Benefit shall be paid on or after July 2
of the Plan Year following the Plan Year of the Participant's Termination
of Employment.
ARTICLE 8
BENEFICIARY DESIGNATION
8.1 Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as contingent)
to receive any benefits payable under the Plan upon the death of a
Participant. The Beneficiary designated under this Plan may be the same as
or different from the Beneficiary designation under any other plan of the
Company in which the Participant participates.
23
8.2 Beneficiary Designation/Change. A Participant shall designate his or her
Beneficiary by completing and signing the Beneficiary Designation Form and
returning it to the Plan Committee. A Participant shall have the right to
change a Beneficiary by completing, signing and otherwise complying with
the terms of the Beneficiary Designation Form and the Plan Committee's
rules and procedures, as in effect from time to time. Upon the acceptance
by the Plan Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled. The Plan
Committee shall be entitled to rely on the last Beneficiary Designation
Form filed by the Participant and delivered to the Plan Committee prior to
his or her death.
8.3 Acknowledgment. No designation or change in designation of a Beneficiary
shall be effective until received and acknowledged in writing by the Plan
Committee or its designated agent.
8.4 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in Sections 8.1, 8.2 and 8.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the Participant's
designated Beneficiary shall be deemed to be his or her surviving spouse,
or, if the Participant has no surviving spouse, the benefits remaining
under the Plan to be paid to a Beneficiary shall be payable to the executor
or personal representative of the Participant's estate.
8.5 Doubt as to Beneficiary. If the Plan Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the Plan
Committee shall have the right, exercisable in its sole discretion, to
cause the Company to withhold such payments until this matter is resolved
to the Plan Committee's satisfaction.
8.6 Discharge of Obligations. The payment of benefits under the Plan to a
person believed in good faith by the Plan Committee to be a valid
Beneficiary shall fully and completely discharge the Company and the Plan
Committee from all further obligations under this Plan with respect to the
Participant, and that Participant's Plan Agreement shall terminate upon
such full payment of benefits. Neither the Plan Committee nor the Company
shall be obliged to search for any Participant or Beneficiary beyond the
sending of a registered letter to such Participant's or Beneficiary's last
known address. If the Plan Committee notifies any Participant or
Beneficiary that he or she is entitled to an amount under the Plan and the
Participant or Beneficiary fails to claim such amount or make his or her
24
location known to the Plan Committee within three (3) years thereafter,
then, except as otherwise required by law, if the location of one or more
of the next of kin of the Participant is known to the Plan Committee, the
Plan Committee may direct distribution of such amount to any one or more or
all of such next of kin, and in such proportions as the Plan Committee
determines. If the location of none of the foregoing persons can be
determined, the Plan Committee shall have the right to direct that the
amount payable shall be deemed to be a forfeiture and paid to the Company,
except that the dollar amount of the forfeiture, unadjusted for deemed
gains or losses in the interim, shall be paid by the Company if a claim for
the benefit subsequently is made by the Participant or the Beneficiary to
whom it was payable. If a benefit payable to an unlocated Participant or
Beneficiary is subject to escheat pursuant to applicable state law, neither
the Plan Committee nor the Company shall be liable to any person for any
payment made in accordance with such law.
ARTICLE 9
LEAVE OF ABSENCE
9.1 Paid Leave of Absence. If a Participant is authorized by the Company for
any reason to take a paid leave of absence from his or her service to the
Company, the Participant shall continue to be considered employed by the
Company, and the Annual Deferral Amount shall continue to be withheld
during such paid leave of absence in accordance with Section 3.4.
9.2 Unpaid Leave of Absence. If a Participant is authorized by the Company for
any reason to take an unpaid leave of absence from his or her service to
the Company, the Participant shall continue to be considered employed by
the Company, and the Participant shall be excused from making deferrals
until the earlier of the date the leave of absence expires or the
Participant returns to a paid service status. Upon such expiration or
return, deferrals shall resume for the remaining portion of the Plan Year
in which the expiration or return occurs, based on the deferral election,
if any, made for that Plan Year. If no election was made for that Plan
Year, no deferral shall be withheld.
ARTICLE 10
TERMINATION/AMENDMENT/MODIFICATION
10.1 Termination. Although the Sponsor anticipates that it will continue the
Plan for an indefinite period of time, the Sponsor reserves the right to
discontinue its sponsorship of the Plan and/or to terminate the Plan at any
25
time with respect to any or all of the Participants. No such action may be
taken without the approval of the Board. Upon a complete or partial
termination of the Plan, the Plan Agreements of the affected Participants
shall terminate and their vested Account Balances (determined as if the
affected participants had experienced a Termination of Employment on the
date of Plan termination or, if Plan termination occurs after the date upon
which a Participant was eligible to Retire, then with respect to that
Participant, as if he or she had Retired on the date of Plan termination),
shall, subject to Section 10.6, be paid to the Participants in accordance
with their distribution elections in effect at the time of the Plan
termination. Notwithstanding the preceding, if distribution of a
Participant's Account Balance as a result of the termination of the Plan is
not permitted by Section 409A, the payment of the Account Balance shall be
made only after Plan benefits otherwise become due hereunder. The
termination of the Plan shall not adversely affect any Participant or
Beneficiary who has become entitled to the payment of any benefits under
the Plan as of the date of termination.
Without limiting the generality of the foregoing, but subject to Section
409A, the Sponsor reserves the right to terminate the Plan (or for a
successor of the Sponsor to terminate the Plan), in its discretion, and to
distribute to Participants their vested Account Balances within twelve (12)
months of a Change In Control.
10.2 Amendment. The Sponsor may, at any time, amend or modify the Plan in whole
or in part by the action of the Board; provided, however, that no amendment
or modification shall be effective to decrease or restrict the value of a
Participant's vested Account Balance in existence at the time the amendment
or modification is made, calculated as if the Participant had experienced a
Termination of Employment as of the effective date of the amendment or
modification or, if the amendment or modification occurs after the date
upon which the Participant was eligible to Retire, the Participant had
Retired as of the effective date of the amendment or modification.
10.3 Effect of Payment. The full payment of the applicable benefit under
Articles 4, 5, 6 or 7 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries under
this Plan and the Participant's Plan Agreement shall terminate.
26
10.4 Amendment to Ensure Proper Characterization of the Plan. Notwithstanding
the previous Sections of this Article 10, the Plan may be amended at any
time, retroactively if required, if necessary, in the opinion of the Board,
to ensure that the Plan is characterized as a "top hat" plan of deferred
compensation maintained for a select group of management or highly
compensated employees, as described Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA, to conform the Plan to the provisions of Section 409A,
to ensure that amounts deferred under the Plan are not taxable to a
Participant under the Federal income tax laws prior to the date on which
such amounts are made available to the Participant and to conform the Plan
to the provisions and requirements of any other applicable law (including
ERISA and the Code).
10.5 Changes in Law Affecting Taxability.
(a) Operation. This Section shall become operative upon the enactment of
any change in applicable statutory law or the promulgation by the
Internal Revenue Service of a final regulation or other pronouncement
having the force of law, which statutory law, as changed, or final
regulation or pronouncement, as promulgated, would cause any
Participant to include in his or her Federal gross income amounts
deferred by the Participant under the Plan on a date (an "Early
Taxation Event") prior to the date on which such amounts are made
available to him or her hereunder; provided, however, that no portion
of this Section shall become operative to the extent that portion
would result in a violation of Section 409A (e.g., by causing an
impermissible distribution under Section 409A).
(b) Affected Right or Feature Nullified. Notwithstanding any other Section
of this Plan to the contrary (but subject to subsection (c), below),
as of an Early Taxation Event, the feature or features of this Plan
that would cause the Early Taxation Event shall be null and void, to
the extent, and only to the extent, required to prevent the
Participant from being required to include in his or her federal gross
income amounts deferred by the Participant under the Plan prior to the
date on which such amounts are made available to him or her hereunder.
If only a portion of a Participant's Account Balance is impacted by
the change in the law, then only such portion shall be subject to this
Section, with the remainder of the Account Balance not so affected
being subject to such rights and features as if the law were not
changed. If the law only impacts Participants who have a certain
27
status with respect to the Company, then only such Participants shall
be subject to this Section.
(c) Tax Distribution. If an Early Taxation Event is earlier than the date
on which the statute, regulation or pronouncement giving rise to the
Early Taxation Event is enacted or promulgated, as applicable (i.e.,
if the change in the law is retroactive), there shall be distributed
to each Participant, as soon as practicable following such date of
enactment or promulgation, the amounts that became taxable on the
Early Taxation Event.
10.6 Prohibited Acceleration/Distribution Timing. This Section shall take
precedence over any other provision of the Plan or this Article 10 to the
contrary. No provision of this Plan shall be followed if it would result in
the acceleration of the time or schedule of any payment from the Plan in a
manner that would violate the requirements of Section 409A. In addition, if
the timing of any distribution election would result in any tax or other
penalty (other than ordinarily payable Federal, state or local income or
payroll taxes), which tax or penalty can be avoided by payment of the
distribution at a later time, then the distribution shall be made (or
commence, as the case may be) on (or as soon as practicable after) the
first date on which such distributions can be made (or commence) without
such tax or penalty.
ARTICLE 11
ADMINISTRATION
11.1 Administration. Except as otherwise provided herein, the Plan shall be
administered by the Plan Committee. The Plan Committee shall be the named
fiduciary for purposes of the claims procedure set forth in Article 13 only
and shall, except as the Plan Committee may otherwise determine, have
authority to act to the full extent of its absolute discretion to:
(a) Interpret the Plan;
(b) Resolve and determine all disputes or questions arising under the
Plan, including the power to determine the rights of Participants and
Beneficiaries, and their respective benefits, and to remedy any
ambiguities, inconsistencies or omissions in the Plan;
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(c) Create and revise rules and procedures for the administration of the
Plan and prescribe such forms as may be required for Participants to
make elections under, and otherwise participate in, the Plan; and
(d) Take any other actions and make any other determinations as it may
deem necessary and proper for the administration of the Plan.
Any expenses incurred in the administration of the Plan shall be paid by
the Sponsor or the Company.
11.2 Determinations. Except as the Plan Committee may otherwise determine (and
subject to the claims procedure set forth in Article 13), all decisions and
determinations by the Plan Committee shall be final and binding upon all
Participants and Beneficiaries.
11.3 General. No member of the Plan Committee shall participate in any matter
involving any questions relating solely to his own participation or
benefits under this Plan. The Plan Committee shall be entitled to rely
conclusively upon, and shall be fully protected in any action or omission
taken by it in good faith reliance upon, the advice or opinion of any
persons, firms or agents retained by it, including but not limited to
accountants, actuaries, counsel and other specialists. Nothing in this Plan
shall preclude the Sponsor or any Company from indemnifying the members of
the Plan Committee for all actions under this Plan, or from purchasing
liability insurance to protect such persons with respect to the Plan.
ARTICLE 12
OTHER BENEFITS AND AGREEMENTS
12.1 Coordination with Other Benefits. The benefits provided for a Participant
or a Participant's Beneficiary under the Plan are in addition to any other
benefits available to such Participant under any other plan or program for
Employees of the Company. The Plan shall supplement and shall not
supersede, modify or amend any other such plan or program except as may
otherwise be expressly provided.
29
ARTICLE 13
CLAIMS PROCEDURES
13.1 Scope of Claims Procedures. This Article is based on final regulations
issued by the Department of Labor and published in the Federal Register on
November 21, 2000 and codified at 29 C.F.R. section 2560.503-1. If any
provision of this Article conflicts with the requirements of those
regulations, the requirements of those regulations will prevail.
13.2 Initial Claim. Any claim arising out of or relating to the Plan shall be
filed with the Plan Committee. The Plan Committee shall review the claim
itself or appoint an individual or an entity to review the claim.
(a) Initial Decision. The person making the claim (a "Claimant") shall be
notified within ninety (90) days after the claim is filed whether the
claim is allowed or denied, unless the Claimant receives written
notice from the Plan Committee or appointee of the Plan Committee
prior to the end of the ninety (90) day period stating that special
circumstances require an extension of the time for decision, such
extension not to extend beyond the day which is one hundred eighty
(180) days after the day the claim is filed.
(b) Manner and Content of Denial of Initial Claims. If the Plan Committee
denies a claim, it must provide to the Claimant, in writing or by
electronic communication:
(i) The specific reasons for the denial;
(ii) A reference to the Plan provision upon which the denial is based
(iii) A description of any additional information or material that
the Claimant must provide in order to perfect the claim;
(iv) An explanation of why such additional material or information is
necessary;
(v) Notice that the Claimant has a right to request a review of the
claim denial and information on the steps to be taken if the
Claimant wishes to request a review of the claim denial; and
30
(vi) A statement of the Participant's right to bring a civil action
under ERISA Section 502(a) following a denial on review of the
initial denial.
13.3 Review Procedures.
(a) Request for Review. A request for review of a denied claim must be
made in writing to the Plan Committee within sixty (60) days after
receiving notice of denial. The decision upon review will be made
within sixty (60) days after the Plan Committee's receipt of a request
for review, unless special circumstances require an extension of time
for processing, in which case a decision will be rendered not later
than one hundred twenty (120) days after receipt of a request for
review. A notice of such an extension must be provided to the Claimant
within the initial sixty (60) day period and must explain the special
circumstances and provide an expected date of decision.
The reviewer shall afford the Claimant an opportunity to review and
receive, without charge, all relevant documents, information and
records and to submit issues and comments in writing to the Plan
Committee. The reviewer shall take into account all comments,
documents, records and other information submitted by the Claimant
relating to the claim regardless of whether the information was
submitted or considered in the initial benefit determination.
(b) Manner and Content of Notice of Decision on Review. Upon completion of
its review of an adverse initial claim determination, the Plan
Committee will give the Claimant, in writing or by electronic
notification, a notice containing:
(i) its decision;
(ii) the specific reasons for the decision;
(iii) the relevant Plan provisions on which its decision is based;
(iv) a statement that the Claimant is entitled to receive, upon
request and without charge, reasonable access to, and copies of,
all documents, records and other information in the Plan's files
which is relevant to the Claimant's claim for benefits;
31
(v) a statement describing the Claimant's right to bring an action
for judicial review under ERISA Section 502(a); and
(vi) if an internal rule, guideline, protocol or other similar
criterion was relied upon in making the adverse determination on
review, a statement that a copy of the rule, guideline, protocol
or other similar criterion will be provided without charge to the
Claimant upon request.
13.4 Calculation of Time Periods. For purposes of the time periods specified in
this Article, the period of time during which a benefit determination is
required to be made begins at the time a claim is filed in accordance with
the Plan procedures without regard to whether all the information necessary
to make a decision accompanies the claim. If a period of time is extended
due to a Claimant's failure to submit all information necessary, the period
for making the determination shall be tolled from the date the notification
is sent to the Claimant until the date the Claimant responds.
13.5 Legal Action. A Claimant's compliance with the foregoing provisions of this
Article is a mandatory prerequisite to a Claimant's right to commence any
legal action with respect to any claims for benefits under the Plan. A
Claimant must bring legal action within two (2) years of when the claim
first arose, otherwise such Claimant shall be barred from bringing legal
action.
ARTICLE 14
TRUST
14.1 Establishment of the Trust. The Company may, in its sole discretion,
establish the Trust, in which event the Company intends, but is not
required, to contribute to the Trust at such times and in such amounts as
the Company shall determine appropriate, assets to provide for its future
liabilities created with respect to the Annual Deferral Amounts, Annual
Company Discretionary Amounts, Annual Company Discretionary Benefit
Restoration Amounts and, if applicable, Former Western Plan Account amounts
for the Participants.
14.2 Interrelationship of the Plan and the Trust. The provisions of the Plan and
the Plan Agreement shall govern the rights of a Participant with respect to
amounts deferred under the Plan. The provisions of the Trust shall govern
the rights of the Company, Participants and the creditors of the Company to
32
the assets held by the Trust. The Company shall at all times remain liable
to carry out its obligations under the Plan.
14.3 Investment of Trust Assets. The trustee of the Trust shall be authorized,
upon written instructions received from the Plan Committee or investment
manager appointed by the Plan Committee, to invest and reinvest the assets
of the Trust in accordance with the applicable Trust agreement, including
the reinvestment of the proceeds in one or more investment vehicles
designated by the Plan Committee.
14.4 Distributions from the Trust. The Company's obligations under the Plan may
be satisfied with Trust assets distributed pursuant to the terms of the
Trust, and any such distribution shall reduce the Company's obligations
under this Plan.
ARTICLE 15
MISCELLANEOUS
15.1 Status of Plan. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that "is unfunded and is
maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated
employees" within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1)
of ERISA. The Plan shall be administered and interpreted to the extent
possible in a manner consistent with that intent.
15.2 Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests
or claims in any property or assets of the Company. For purposes of the
payment of benefits under this Plan, any and all of the Company's assets
shall be, and remain, the general, unpledged unrestricted assets of the
Company. The Company's obligation under the Plan shall be merely that of an
unfunded and unsecured promise to pay money in the future.
15.3 Company's Liability. The Company's liability for the payment of benefits
shall be defined only by the Plan and the Plan Agreement. The Company shall
have no obligation to a Participant under the Plan except as expressly
provided in the Plan and his or her Plan Agreement.
33
15.4 Nonassignability. Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate, alienate or convey in advance of
actual receipt, the amounts deferred hereunder, or any part thereof, which
are, and all rights to which are expressly declared to be, unassignable and
non-transferable. Except as set forth in Section 15.15, no part of the
amounts deferred hereunder shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant or
any other person, be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or otherwise.
15.5 Not a Contract of Employment. The terms and conditions of this Plan shall
not be deemed to constitute a contract of employment between the Company
and the Participant. Subject to any employment agreement to which the
Company and the Participant may be parties, such employment is hereby
acknowledged to be an "at will" employment relationship that can be
terminated at any time for any reason, or no reason, with or without cause,
and with or without notice, unless expressly provided in a written
employment agreement. Nothing in this Plan shall be deemed to give a
Participant the right to be retained in the service of the Company or to
interfere with the right of the Company to discipline or discharge the
Participant at any time.
15.6 Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Plan Committee by furnishing any and all information
requested by the Plan Committee and take such other actions as may be
requested in order to facilitate the administration of the Plan and the
payments of benefits hereunder, including but not limited to taking such
physical examinations as the Plan Committee may deem necessary.
15.7 Terms. Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they would
so apply; and whenever any words are used herein in the singular or in the
plural, they shall be construed as though they were used in the plural or
the singular, as the case may be, in all cases where they would so apply.
15.8 Captions. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.
34
15.9 Governing Law. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State of
Georgia without regard to its conflicts of laws principles.
15.10 Notice. Any notice or filing required or permitted to be given to the Plan
Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address
below:
Director of Benefits
Benefits Administration
Rollins, Inc. Deferred Compensation Plan
Rollins, Inc.
2170 Piedmont Road NE
Atlanta, Georgia 30324
Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered, or
sent by mail, to the last known address of the Participant.
Such notices or filings shall be deemed given as of the date of delivery
or, if delivery is made by mail, as of the date shown on the postmark on
the receipt for registration or certification.
15.11 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Company and its successors and assigns and the Participant
and the Participant's designated Beneficiaries.
15.12 Spouse's Interest. The interest in the benefits hereunder of a spouse of a
Participant who has predeceased the Participant shall automatically pass
to the Participant and shall not be transferable by such spouse in any
manner, including but not limited to such spouse's will, nor shall such
interest pass under the laws of intestate succession.
15.13 Validity. In case any provision of this Plan shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as
if such illegal or invalid provision had never been inserted herein.
35
15.14 Incompetent. If the Plan Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of that
person's property, the Plan Committee may direct payment of such benefit
to the guardian, legal representative or person having the care and
custody of such minor, incompetent or incapable person. The Plan Committee
may require proof of minority, incompetence, incapacity or guardianship,
as it may deem appropriate prior to distribution of the benefit. Any
payment of a benefit shall be a payment for the account of the Participant
and the Participant's Beneficiary, as the case may be, and shall be a
complete discharge of any liability under the Plan for such payment
amount.
15.15 Court Order. The Plan Committee is authorized to make any payments
directed by court order in any action in which the Plan or the Plan
Committee has been named as a party. In addition, if a court determines
that a spouse or former spouse of a Participant has an interest in the
Participant's benefits under the Plan under applicable community property
or similar laws, the Plan Committee, in its sole discretion, shall have
the right, notwithstanding any election made by a Participant, to
immediately distribute the spouse's or former spouse's interest in the
Participant's benefits under the Plan to that spouse or former spouse in
accordance with Section 409A.
15.16 Insurance. The Company, on its own behalf or on behalf of the trustee
of the Trust, and, in its sole discretion, may apply for and procure
insurance on the life of a Participant, in such amounts and in such
forms as the Company may choose. The Company or the trustee of the
Trust, as the case may be, shall be the sole owner and beneficiary of
any such insurance. The Participant shall have no interest whatsoever
in any such policy or policies, and at the request of the Company shall
submit to medical examinations and supply such information and execute
such documents as may be required by the insurance company or companies
to whom the Company has applied for insurance.
15.17 Aggregation of Employers. To the extent required under Section 409A, if
the Company is a member of a controlled group of corporations or a
group of trades or business under common control (as described in Code
ss.414(b) or (c)), all members of the group shall be treated as a
single Company for purposes of whether there has occurred a Separation
from Service and for any other purposes under the Plan as Section 409A
shall require.
36
IN WITNESS WHEREOF, the Sponsor has signed this Plan document as of July 1,
2005.
ROLLINS, INC.
By: /s/ Gary W. Rollins
-----------------------------------
Title: President
-----------------------------------
37
Schedule A
Measurement Funds
Pursuant to Section 3.9(d), the Participant may elect one or more of the
following Measurement Funds:
- --------------------------------------------------------------------------------
Fund Class Measurement Funds
- --------------------------------------------------------------------------------
Capital Preservation Vanguard VVIF Money Market Portfolio
Income PIMCO VIT Total Return Portfolio
Balanced Vanguard VVIF Balanced Portfolio (Wellington)
Large Value Vanguard VVIF Diversified Value Portfolio (Windsor II)
Large Growth Fidelity VIP Contrafund Portfolio
Large Cap Stock Blend Vanguard VIF Equity Index Portfolio
Mid Cap Value Third Avenue VST Value Portfolio
Mid Cap Growth Fidelity VIP Mid Cap Growth Portfolio
Small Cap Royce Capital Small Cap Portfolio
Foreign Stock First Eagle VF Overseas Variable Fund
Schedule B
Participating Employers
Pursuant to Section 1.13, the following affiliates of the Sponsor have elected
to adopt the Plan and become participating employers under the Plan:
- --------------------------------------------------------------------------------
NAME OF PARTICIPATING EMPLOYER
- --------------------------------------------------------------------------------
Industrial Fumigant Company
- --------------------------------------------------------------------------------
Western Industries-North, Inc.
- --------------------------------------------------------------------------------
Orkin, Inc.
- --------------------------------------------------------------------------------
Rollins Supply, Inc.
- --------------------------------------------------------------------------------
Western Industries-South, Inc.
- --------------------------------------------------------------------------------