First Defiance Exhibit 10.1
Deferred Compensation Plan
Master Plan Document
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Effective December 31, 2005
Copyright (C) 2005
By Clark Consulting, Inc.
Executive Benefits Practice
All Rights Reserved
First Defiance
Deferred Compensation Plan
Master Plan Document
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TABLE OF CONTENTS
Page
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ARTICLE 1 Definitions.............................................................1
ARTICLE 2 Selection, Enrollment, Eligibility......................................6
2.1 Selection by Committee..................................................6
2.2 Enrollment and Eligibility Requirements; Commencement of Participation..6
2.3 Termination of a Participant's Eligibility..............................7
ARTICLE 3 Deferral Commitments/Company Contribution Amounts/
Vesting/Crediting/Taxes.................................................7
3.1 Minimum Deferrals.......................................................7
3.2 Maximum Deferral........................................................8
3.3 Election to Defer; Effect of Election Form..............................8
3.4 Withholding and Crediting of Annual Deferral Amounts....................9
3.5 Company Contribution Amount.............................................9
3.6 Crediting of Amounts after Benefit Distribution........................10
3.7 Vesting................................................................10
3.8 Crediting/Debiting of Account Balances.................................10
3.9 FICA and Other Taxes...................................................12
ARTICLE 4 Scheduled Distribution; Unforeseeable Financial Emergencies............13
4.1 Scheduled Distribution.................................................13
4.2 Postponing Scheduled Distributions.....................................13
4.3 Other Benefits Take Precedence Over Scheduled Distributions............14
4.4 Payout/Suspensions for Unforeseeable Financial Emergencies.............14
ARTICLE 5 Retirement Benefit.....................................................15
5.1 Retirement Benefit.....................................................15
5.2 Payment of Retirement Benefit..........................................15
ARTICLE 6 Termination Benefit....................................................16
6.1 Termination Benefit....................................................16
6.2 Payment of Termination Benefit.........................................16
ARTICLE 7 Disability Benefit.....................................................16
7.1 Disability Benefit.....................................................16
7.2 Payment of Disability Benefit..........................................16
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ARTICLE 8 Death Benefit..........................................................17
8.1 Death Benefit..........................................................17
8.2 Payment of Death Benefit...............................................17
ARTICLE 9 Beneficiary Designation................................................17
9.1 Beneficiary............................................................17
9.2 Beneficiary Designation; Change; Spousal Consent.......................17
9.3 Acknowledgement........................................................17
9.4 No Beneficiary Designation.............................................17
9.5 Doubt as to Beneficiary................................................17
9.6 Discharge of Obligations...............................................18
ARTICLE 10 Leave of Absence.......................................................18
10.1 Paid Leave of Absence..................................................18
10.2 Unpaid Leave of Absence................................................18
ARTICLE 11 Termination of Plan, Amendment or Modification.........................19
11.1 Termination of Plan....................................................19
11.2 Amendment..............................................................19
11.3 Plan Agreement.........................................................19
11.4 Effect of Payment......................................................20
ARTICLE 12 Administration.........................................................20
12.1 Committee Duties.......................................................20
12.2 Administration Upon Change In Control..................................20
12.3 Agents.................................................................20
12.4 Binding Effect of Decisions............................................20
12.5 Indemnity of Committee.................................................21
12.6 Employer Information...................................................21
ARTICLE 13 Other Benefits and Agreements..........................................21
13.1 Coordination with Other Benefits.......................................21
ARTICLE 14 Claims Procedures......................................................21
14.1 Presentation of Claim..................................................21
14.2 Notification of Decision...............................................21
14.3 Review of a Denied Claim...............................................22
14.4 Decision on Review.....................................................22
14.5 Legal Action...........................................................23
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ARTICLE 15 Trust..................................................................23
15.1 Establishment of the Trust.............................................23
15.2 Interrelationship of the Plan and the Trust............................23
15.3 Distributions From the Trust...........................................23
ARTICLE 16 Miscellaneous..........................................................23
16.1 Status of Plan.........................................................23
16.2 Unsecured General Creditor.............................................23
16.3 Employer's Liability...................................................23
16.4 Nonassignability.......................................................24
16.5 Not a Contract of Employment...........................................24
16.6 Furnishing Information.................................................24
16.7 Terms..................................................................24
16.8 Captions...............................................................24
16.9 Governing Law..........................................................24
16.10 Notice.................................................................24
16.11 Successors.............................................................25
16.12 Spouse's Interest......................................................25
16.13 Validity...............................................................25
16.14 Incompetent............................................................25
16.15 Court Order............................................................25
16.16 Insurance..............................................................25
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FIRST DEFIANCE
DEFERRED COMPENSATION PLAN
Effective December 31, 2005
Purpose
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The purpose of this Plan is to provide specified benefits to Directors and
a select group of management or highly compensated Employees who contribute
materially to the continued growth, development and future business success of
First Defiance Financial Corp., an Ohio corporation, and its subsidiaries and
affiliates, if any, that sponsor this Plan. This Plan shall be unfunded for tax
purposes and for purposes of Title I of ERISA.
Effective December 31, 2005 (the "Restatement Date"), the provisions of
this Plan shall amend and restate the plan provisions of each Salary Deferral
Plan, effective as of September 1, 2002, entered into between First Federal Bank
of the City of Defiance, State of Ohio, and the applicable individual identified
in such agreement, including such agreements as have been attested to by the
First Federal Bank of the Midwest (each, a "Salary Deferral Plan"), with respect
to amounts credited to such Salary Deferral Plan. Any and all such balances
accrued by a Participant under a Salary Deferral Plan shall be credited to the
Participant's "Transfer Account" (subject to the terms and conditions of this
Plan) on or around the Restatement Date.
The Plan is intended to comply with all applicable law, including Code
Section 409A and related Treasury guidance and Regulations, and shall be
operated and interpreted in accordance with this intention. Consistent with the
foregoing, and in order to transition the arrangements described above to the
requirements of Code Section 409A and related Treasury guidance and Regulations,
the Committee has made available to Participants certain limited transition
relief described more fully in Appendix A of this Plan, in accordance with
Notice 2005-1 promulgated pursuant to Code Section 409A.
ARTICLE 1
Definitions
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For the 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, an entry on
the records of the Employer equal to the sum of (i) the Deferral Account
balance, (ii) the Company Contribution Account balance and (iii) the
Participant's Transfer Account balance. The 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 Deferral Amount" shall mean that portion of a Participant's Base
Salary, Bonus, Commissions, Director Fees and LTIP Amounts that a
Participant defers in accordance with Article 3 for any one Plan Year,
without regard to whether such amounts are withheld and credited during
such Plan Year. In the event of a Participant's Retirement, Disability,
death or
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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.
1.3 "Annual Installment Method" shall be an annual installment payment over
the number of years selected by the Participant in accordance with this
Plan, calculated as follows: (i) for the first annual installment, the
Participant's vested Account Balance shall be calculated as of the close
of business on or around the Participant's Benefit Distribution Date, as
determined by the Committee in its sole discretion, and (ii) for remaining
annual installments, the Participant's vested Account Balance shall be
calculated on every anniversary of such calculation date, as applicable.
Each annual installment shall be calculated by multiplying this balance by
a fraction, the numerator of which is one and the denominator of which is
the remaining number of annual payments due to the Participant. By way of
example, if the Participant elects a ten (10) year Annual Installment
Method for the Retirement Benefit, the first payment shall be 1/10 of the
vested Account Balance, calculated as described in this definition. The
following year, the payment shall be 1/9 of the vested Account Balance,
calculated as described in this definition. Shares of Stock that shall be
distributable from a Participant's Deferral Account shall be distributable
in shares of actual Stock in the same manner previously described.
However, the Committee may, in its sole discretion, adjust the annual
installments in order to distribute whole shares of actual Stock.
1.4 "Base Salary" shall mean the annual cash compensation relating to services
performed during any calendar year, excluding distributions from
nonqualified deferred compensation plans, bonuses, commissions, overtime,
fringe benefits, stock options, relocation expenses, incentive payments,
non-monetary awards, director fees and other fees, and 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). Base Salary shall be calculated before reduction for compensation
voluntarily deferred or contributed by the Participant pursuant to all
qualified or nonqualified plans of any Employer and shall be calculated to
include amounts not otherwise included in the Participant's gross income
under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans
established by any Employer; provided, however, that all such amounts will
be included in compensation only to the extent that had there been no such
plan, the amount would have been payable in cash to the Employee.
1.5 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, that are entitled to
receive benefits under this Plan upon the death of a Participant.
1.6 "Beneficiary Designation Form" shall mean the form established from time
to time by the Committee that a Participant completes, signs and returns
to the Committee to designate one or more Beneficiaries.
1.7 "Benefit Distribution Date" shall mean the date that triggers distribution
of a Participant's vested Account Balance. A Participant's Benefit
Distribution Date shall be determined upon the occurrence of any one of
the following:
(a) If the Participant Retires, his or her Benefit Distribution Date
shall be the last day of the six-month period immediately following
the date on which the Participant Retires; provided, however, in the
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event the Participant changes his or her Retirement Benefit
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election in accordance with Section 5.2(b), his or her Benefit
Distribution Date shall be postponed in accordance with Section 5.2(b); or
(b) If the Participant experiences a Termination of Employment, his or
her Benefit Distribution Date shall be the last day of the six-month
period immediately following the date on which the Participant
experiences a Termination of Employment; or
(c) The date on which the Committee is provided with proof that is
satisfactory to the Committee of the Participant's death, if the
Participant dies prior to the complete distribution of his or her
vested Account Balance; or
(d) The date on which the Participant becomes Disabled.
1.8 "Board" shall mean the board of directors of the Company.
1.9 "Bonus" shall mean any compensation, in addition to Base Salary,
Commissions and LTIP Amounts, earned by a Participant for services
rendered during a Plan Year, under any Employer's annual bonus and cash
incentive plans, or other arrangement designated by the Committee, as
further specified on an Election Form.
1.10 "Change in Control" shall mean any "change in control event" as defined in
accordance with Treasury guidance and Regulations related to Code Section
409A, including but not limited to Notice 2005-1 and such other Treasury
guidance or Regulations issued after the effective date of this Plan.
1.11 "Claimant" shall have the meaning set forth in Section 14.1.
1.12 "Code" shall mean the Internal Revenue Code of 1986, as it may be amended
from time to time.
1.13 "Commissions" shall mean the cash commissions earned by a Participant from
any Employer for services rendered during a Plan Year, excluding Bonus,
LTIP Amounts or other additional incentives or awards earned by the
Participant.
1.14 "Committee" shall mean the committee described in Article 12.
1.15 "Company" shall mean First Defiance Financial Corp., an Ohio corporation,
and any successor to all or substantially all of the Company's assets or
business.
1.16 "Company Contribution Account" shall mean (i) the sum of the Participant's
Company Contribution Amounts, plus (ii) amounts credited or debited to the
Participant's Company Contribution Account in accordance with this Plan,
less (iii) all distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the Participant's Company
Contribution Account.
1.17 "Company Contribution Amount" shall mean, for any one Plan Year, the
amount determined in accordance with Section 3.5.
1.18 "Death Benefit" shall mean the benefit set forth in Article 8.
1.19 "Deferral Account" shall mean (i) the sum of all of a Participant's Annual
Deferral Amounts, plus (ii) amounts credited or debited to the
Participant's Deferral Account in accordance with this Plan, 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.
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1.20 "Director" shall mean any member of the board of directors of any
Employer.
1.21 "Director Fees" shall mean the annual fees earned by a Director from any
Employer, including retainer fees and meetings fees, as compensation for
serving on the board of directors.
1.22 "Disability" or "Disabled" shall mean that a Participant is (i) unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result
in death or can be expected to last for a continuous period of not less
than 12 months, or (ii) by reason of any medically determinable physical
or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months,
receiving income replacement benefits for a period of not less than 3
months under an accident or health plan covering employees of the
Participant's Employer.
1.23 "Disability Benefit" shall mean the benefit set forth in Article 7.
1.24 "Election Form" shall mean the form, which may be in electronic format,
established from time to time by the Committee that a Participant
completes, signs and returns to the Committee to make an election under
the Plan.
1.25 "Employee" shall mean a person who is an employee of any Employer.
1.26 "Employer(s)" shall mean the Company and/or any of its subsidiaries or
affiliates (now in existence or hereafter formed or acquired) that have
been selected by the Board to participate in the Plan and have adopted the
Plan as a sponsor.
1.27 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.
1.28 "LTIP Amounts" shall mean any portion of the compensation attributable to
a Plan Year that is earned by a Participant as an Employee under any
Employer's long-term incentive plan or any other long-term incentive
arrangement designated by the Committee.
1.29 "Participant" shall mean any Employee or Director (i) who is selected to
participate in the Plan, (ii) who submits an executed Plan Agreement,
Election Form and Beneficiary Designation Form, which are accepted by the
Committee, and (iii) whose Plan Agreement has not terminated.
1.30 "Plan" shall mean the First Defiance Deferred Compensation Plan, which
shall be evidenced by this instrument and by each Plan Agreement, as they
may be amended from time to time.
1.31 "Plan Agreement" shall mean a written agreement, as may be amended from
time to time, which is entered into by and between an Employer and a
Participant. Each Plan Agreement executed by a Participant and the
Participant's Employer 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
Employer 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
otherwise provided under the Plan; provided, however, that any such
additional benefits or benefit limitations must be agreed to by both the
Employer and the Participant.
1.32 "Plan Year" shall mean a period beginning on January 1 of each calendar
year and continuing through December 31 of such calendar year.
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1.33 "Retirement", "Retire(s)" or "Retired" shall mean, with respect to an
Employee, separation from service with all Employers for any reason other
than a leave of absence, death or Disability, as determined in accordance
with Code Section 409A and related Treasury guidance and Regulations, on
or after the attainment of age fifty-five (55) with five (5) Years of
Service; and shall mean with respect to a Director who is not an Employee,
separation from service as a Director with all Employers. If a Participant
is both an Employee and a Director, Retirement shall not occur until he or
she Retires as both an Employee and a Director.
1.34 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.35 "Scheduled Distribution" shall mean the distribution set forth in Section
4.1.
1.36 "Stock" shall mean First Defiance Financial Corp. common stock, $0.01 par
value, or any other equity securities of the Company designated by the
Committee.
1.37 "Terminate the Plan", "Termination of the Plan" shall mean a determination
by an Employer's board of directors that (i) all of its Participants shall
no longer be eligible to participate in the Plan, (ii) all deferral
elections for such Participants shall terminate, and (iii) such
Participants shall no longer be eligible to receive company contributions
under this Plan.
1.38 "Termination Benefit" shall mean the benefit set forth in Article 6.
1.39 "Termination of Employment" shall mean the separation from service with
all Employers, voluntarily or involuntarily, for any reason other than
Retirement, Disability, death or an authorized leave of absence, as
determined in accordance with Code Section 409A and related Treasury
guidance and Regulations. If a Participant is both an Employee and a
Director, a Termination of Employment shall occur only upon the
termination of the last position held.
1.40 "Trust" shall mean one or more trusts established by the Company in
accordance with Article 15.
1.41 "Unforeseeable Financial Emergency" shall mean an unforeseeable emergency
that is caused by an event beyond the control of the Participant that
would result in severe financial hardship to the Participant resulting
from (i) a sudden and unexpected 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) such 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 Committee.
1.42 "Years of Service" shall mean the total number of full years in which a
Participant has been employed by one or more Employers. For purposes of
this definition, a year of employment shall be a 365 day period (or 366
day period in the case of a leap year) that, for the first year of
employment, commences on the Employee's date of hiring and that, for any
subsequent year, commences on an anniversary of that hiring date. The
Committee shall make a determination as to whether any partial year of
employment shall be counted as a Year of Service.
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ARTICLE 2
Selection, Enrollment, Eligibility
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2.1 Selection by Committee. Participation in the Plan shall be limited to
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Directors and, as determined by the Committee in its sole discretion, a
select group of management or highly compensated Employees. The Committee
shall determine, in its sole discretion, from among the select group of
management or highly compensated Employees, which Employees may actually
participate in this Plan.
2.2 Enrollment and Eligibility Requirements; Commencement of Participation.
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(a) As a condition to participation, each Director or selected Employee
who is eligible to participate in the Plan effective as of the first
day of a Plan Year shall complete, execute and return to the
Committee a Plan Agreement, an Election Form and a Beneficiary
Designation Form, prior to the first day of such Plan Year, or such
other earlier deadline as may be established by the Committee in its
sole discretion. In addition, the Committee shall establish from
time to time such other enrollment requirements as it determines, in
its sole discretion, are necessary.
(b) A Director or selected Employee who first becomes eligible to
participate in this Plan after the first day of a Plan Year must
complete these requirements within thirty (30) days after he or she
first becomes eligible to participate in the Plan, or within such
other earlier deadline as may be established by the Committee, in
its sole discretion, in order to participate for that Plan Year. In
such event, such person's participation in this Plan shall not
commence earlier than the date determined by the Committee pursuant
to Section 2.2(c) and such person shall not be permitted to defer
under this Plan any portion of his or her Base Salary, Bonus, LTIP
Amounts, Commissions and/or Director Fees that are paid with respect
to services performed prior to his or her participation commencement
date, except to the extent permissible under Code Section 409A and
related Treasury guidance or Regulations.
(c) Each Director or selected Employee who is eligible to participate in
the Plan shall commence participation in the Plan on the date that
the Committee determines, in its sole discretion, that the Director
or Employee has met all enrollment requirements set forth in this
Plan and required by the Committee, including returning all required
documents to the Committee within the specified time period.
Notwithstanding the foregoing, the Committee shall process such
Participant's deferral election as soon as administratively
practicable after such deferral election is submitted to and
accepted by the Committee.
(d) If a Director or an Employee fails to meet all requirements
contained in this Section 2.2 within the period required, that
Director or Employee shall not be eligible to participate in the
Plan during such Plan Year.
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2.3 Termination of a Participant's Eligibility. If the Committee determines
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that an Employee Participant no longer qualifies as a member of a select
group of management or highly compensated employees, as membership in such
group is determined in accordance with Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA, or that the inclusion of Directors in this Plan could
jeopardize the status of this Plan as a plan intended to be "unfunded" and
"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 ERISA Sections 201(2), 301(a)(3) and
401(a)(1), the Committee shall have the right, in its sole discretion, to
(i) terminate any deferral election the Participant has made for the
remainder of the Plan Year in which the Committee makes such
determination, (ii) prevent the Participant from making future deferral
elections, and/or (iii) take further action that the Committee deems
appropriate. Notwithstanding the foregoing, in the event of a Termination
of the Plan, the termination of the affected Participants' eligibility for
participation in the Plan shall not be governed by this Section 2.3, but
rather shall be governed by Section 11.1. In the event that a Participant
is no longer eligible to defer compensation under this Plan, the
Participant's Account Balance shall continue to be governed by the terms
of this Plan until such time as the Participant's Account Balance is paid
in accordance with the terms of this Plan.
ARTICLE 3
Deferral Commitments/Company Contribution Amounts/
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Vesting/Crediting/Taxes
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3.1 Minimum Deferrals.
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(a) Annual Deferral Amount. For each Plan Year, a Participant may elect
----------------------
to defer, as his or her Annual Deferral Amount, Base Salary, Bonus,
Commissions, LTIP Amounts and/or Director Fees in the following
minimum amounts for each deferral elected:
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Deferral Minimum Amount
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Base Salary, Bonus, Commissions $2,000 aggregate
and/or LTIP Amounts
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Director Fees $0
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If the Committee determines, in its sole discretion, prior to the
beginning of a Plan Year that a Participant has made an election for
less than the stated minimum amounts, or if no election is made, the
amount deferred shall be zero. If the Committee determines, in its
sole discretion, at any time after the beginning of a Plan Year that
a Participant has deferred less than the stated minimum amounts for
that Plan Year, any amount credited to the Participant's Account
Balance as the Annual Deferral Amount for that Plan Year shall be
distributed to the Participant within sixty (60) days after the last
day of the Plan Year in which the Committee determination was made.
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(b) Short Plan Year. Notwithstanding the foregoing, if a Participant
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first becomes a Participant after the first day of a Plan Year, the
minimum Annual Deferral Amount shall be an amount equal to the
minimum set forth above, multiplied by a fraction, the numerator of
which is the number of complete months remaining in the Plan Year
and the denominator of which is 12.
3.2 Maximum Deferral.
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(a) Annual Deferral Amount. For each Plan Year, a Participant may elect
----------------------
to defer, as his or her Annual Deferral Amount, Base Salary, Bonus,
Commissions, LTIP Amounts and/or Director Fees up to the following
maximum percentages for each deferral elected:
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Deferral Maximum Percentage
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Base Salary 80%
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Bonus 100%
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Commissions 80%
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LTIP Amounts 100%
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Director Fees 100%
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(b) Short Plan Year. Notwithstanding the foregoing, if a Participant
---------------
first becomes a Participant after the first day of a Plan Year, the
maximum Annual Deferral Amount shall be limited to the amount of
compensation not yet earned by the Participant as of the date the
Participant submits a Plan Agreement and Election Form to the
Committee for acceptance, except to the extent permissible under
Code Section 409A and related Treasury guidance or Regulations.
3.3 Election to Defer; Effect of Election Form.
------------------------------------------
(a) First Plan Year. In connection with a Participant's commencement of
---------------
participation in the Plan, the Participant shall make an irrevocable
deferral election for the Plan Year in which the Participant
commences participation in the Plan, along with such other elections
as the Committee deems necessary or desirable under the Plan. For
these elections to be valid, the Election Form must be completed and
signed by the Participant, timely delivered to the Committee (in
accordance with Section 2.2 above) and accepted by the Committee.
(b) Subsequent Plan Years. For each succeeding Plan Year, an irrevocable
---------------------
deferral election for that Plan Year, and such other elections as
the Committee deems necessary or desirable under the Plan, shall be
made by timely delivering a new Election Form to the Committee, in
accordance with its rules and procedures, before the end of the Plan
Year preceding the Plan Year for which the election is made. If no
such Election Form is timely delivered for a Plan Year, the Annual
Deferral Amount shall be zero for that Plan Year.
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(c) Performance-Based Compensation. Notwithstanding the foregoing, the
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Committee may, in its sole discretion, determine that an irrevocable
deferral election pertaining to performance-based compensation may
be made by timely delivering an Election Form to the Committee, in
accordance with its rules and procedures, no later than six (6)
months before the end of the performance service period.
"Performance-based compensation" shall be compensation based on
services performed over a period of at least twelve (12) months, in
accordance with Code Section 409A and related Treasury guidance or
Regulations. Until such time as Treasury guidance provides the
requirements for an amount to qualify as "performance-based
compensation" under Code Section 409A, the Committee may utilize the
definition of "bonus compensation" provided in Treasury Notice
2005-1 in determining which amounts may be deferred by delivering an
Election Form to the Committee, in accordance with its rules and
procedures, no later than six (6) months before the end of the
performance service period.
3.4 Withholding and Crediting of Annual Deferral Amounts.
----------------------------------------------------
(a) For each Plan Year, the Base Salary portion of the Annual Deferral
Amount shall be withheld from each regularly scheduled Base Salary
payroll in equal amounts, as adjusted from time to time for
increases and decreases in Base Salary. The Bonus, Commissions, LTIP
Amounts and/or Director Fees portion of the Annual Deferral Amount
shall be withheld at the time the Bonus, Commissions, LTIP Amounts
or Director Fees are or otherwise would be paid to the Participant,
whether or not this occurs during the Plan Year itself. Annual
Deferral Amounts shall be credited to a Participant's Deferral
Account at the time such amounts would otherwise have been paid to
the Participant.
(b) Notwithstanding any provision or election under this Plan to the
contrary, if necessary to comply with Code Section 409A or to
facilitate administration of the Company's payroll system, the
Committee, in its sole discretion, may choose to either (i) not
withhold Base Salary or Commissions during any payroll period in
which any portion of such Base Salary or Commissions relates to
services performed in a prior Plan Year, or (ii) withhold Base
Salary or Commissions during any payroll period in which any portion
of such Base Salary or Commissions relates to services performed in
a prior Plan Year in accordance with the Participant's deferral
election submitted for the prior Plan Year. Accordingly, in order to
carry out the intent of this provision, the Committee may adjust a
Participant's Base Salary or Commissions deferral election submitted
pursuant to this Article 3.
3.5 Company Contribution Amount.
---------------------------
(a) For each Plan Year, an Employer may be required to credit amounts to
a Participant's Company Contribution Account in accordance with
employment or other agreements entered into between the Participant
and the Employer. Such amounts shall be credited on the date or
dates prescribed by such agreements.
(b) For each Plan Year, an Employer, in its sole discretion, may, but is
not required to, credit any amount it desires to any Participant's
Company Contribution Account under this Plan, which amount shall be
for that Participant the Company Contribution Amount for that Plan
Year. The amount so credited to a Participant may be smaller or
larger than the amount credited to any other Participant, and the
amount credited to any Participant for a
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Plan Year may be zero, even though one or more other Participants
receive a Company Contribution Amount for that Plan Year. The
Company Contribution Amount described in this Section 3.5(b), if
any, shall be credited on a date or dates to be determined by the
Committee, in its sole discretion.
3.6 Crediting of Amounts after Benefit Distribution. Notwithstanding any
---------------------------------------------------
provision in this Plan to the contrary, should the complete distribution
of a Participant's vested Account Balance occur prior to the date on which
any portion of the Annual Deferral Amount that a Participant has elected
to defer in accordance with Section 3.3, or the Company Contribution
Amount, would otherwise be credited to the Participant's Account Balance,
such amounts shall not be credited to the Participant's Account Balance,
but shall be paid to the Participant in a manner determined by the
Committee, in its sole discretion. However, should an issue arise
regarding the application of this Section 3.6, the Committee may provide
for its resolution in accordance with the powers provided to the Committee
under Section 12.1 and in accordance with the intent of this Plan, as
described in Section 16.1.
3.7 Vesting.
-------
(a) A Participant shall at all times be 100% vested in his or her
Deferral Account and Transfer Account.
(b) A Participant shall be vested in his or her Company Contribution
Account in accordance with the vesting schedule(s) set forth in his
or her Plan Agreement, employment agreement or any other agreement
entered into between the Participant and his or her Employer. If not
addressed in such agreements, a Participant shall vest in his or her
Company Contribution Account in accordance with a vesting schedule
declared by the Committee in its sole discretion.
(c) Notwithstanding anything to the contrary contained in this Section
3.7, upon a Participant's (i) death while employed by an Employer,
(ii) Disability, or (iii) Retirement that occurs on or after the
Participant's attainment of age sixty-five (65), the Participant's
Company Contribution Account shall immediately become 100% vested
(if it is not already vested in accordance with the above vesting
schedules).
3.8 Crediting/Debiting of Account Balances. In accordance with, and subject
----------------------------------------
to, the rules and procedures that are established from time to time by the
Committee, in its sole discretion, amounts shall be credited or debited to
a Participant's Account Balance in accordance with the following rules:
(a) Measurement Funds. Subject to the restrictions found in Section
------------------
3.8(c) below, the Participant may elect one or more of the
measurement funds selected by the Committee, in its sole discretion,
which are based on certain mutual funds (the "Measurement Funds"),
for the purpose of crediting or debiting additional amounts to his
or her Account Balance. As necessary, the Committee may, in its sole
discretion, discontinue, substitute or add a Measurement Fund. Each
such action will take effect as of the first day of the first
calendar quarter that begins at least thirty (30) days after the day
on which the Committee gives Participants advance written notice of
such change.
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(b) Election of Measurement Funds. Subject to the restrictions found in
-----------------------------
Section 3.8(c) below, a Participant, in connection with his or her
initial deferral election in accordance with Section 3.3(a) above,
shall elect, on the Election Form, one or more Measurement Fund(s)
(as described in Section 3.8(a) above) to be used to determine the
amounts to be credited or debited to his or her Account Balance. If
a Participant does not elect any of the Measurement Funds as
described in the previous sentence, the Participant's Account
Balance shall automatically be allocated into the lowest-risk
Measurement Fund, as determined by the Committee, in its sole
discretion. Subject to the restrictions found in Section 3.8(c)
below, the Participant may (but is not required to) elect, by
submitting an Election Form to the Committee that is accepted by the
Committee, to add or delete one or more Measurement Fund(s) to be
used to determine the amounts to be credited or debited to his or
her Account Balance, or to change the portion of his or her Account
Balance allocated to each previously or newly elected Measurement
Fund. If an election is made in accordance with the previous
sentence, it shall apply as of the first business day deemed
reasonably practicable by the Committee, in its sole discretion, and
shall continue thereafter for each subsequent day in which the
Participant participates in the Plan, unless changed in accordance
with the previous sentence. Notwithstanding the foregoing, the
Committee, in its sole discretion, may impose limitations on the
frequency with which one or more of the Measurement Funds elected in
accordance with this Section may be added or deleted by such
Participant; furthermore, the Committee, in its sole discretion, may
impose limitations on the frequency with which the Participant may
change the portion of his or her Account Balance allocated to each
previously or newly elected Measurement Fund.
(c) First Defiance Stock Unit Fund.
------------------------------
(i) The Committee, in its sole discretion, may permit a
Participant to initially elect to irrevocably allocate all or
a portion of his or her future Director Fees, in accordance
with the terms of this Plan, to the First Defiance Stock Unit
Fund. Any deferrals of Director Fees allocated to the First
Defiance Stock Unit Fund by such Participant cannot be
re-allocated to any other Measurement Fund and shall only be
distributable in actual shares of Stock.
(ii) Any stock dividends, cash dividends or other non-cash
dividends that would have been payable on the Stock credited
to such Participant's Account Balance shall be credited to the
Participant's Account Balance in the form of additional shares
of Stock and shall automatically and irrevocably be deemed to
be re-invested in the First Defiance Stock Unit Fund until
such amounts are distributed to the Participant. The number of
shares credited to the Participant for a particular stock
dividend shall be equal to (a) the number of shares of Stock
credited to the Participant's Account Balance as of the
payment date for such dividend in respect of each share of
Stock, multiplied by (b) the number of additional or
fractional shares of Stock actually paid as a dividend in
respect of each share of Stock. The number of shares credited
to the Participant for a particular cash dividend or other
non-cash dividend shall be equal to (a) the number of shares
of Stock credited to the Participant's Account Balance as of
the payment date for such dividend in respect of each share of
Stock, multiplied by (b) the fair market value of the
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dividend, divided by (c) the "fair market value" of the Stock
on the payment date for such dividend.
(iii) The number of shares of Stock credited to the Participant's
Account Balance may be adjusted by the Committee, in its sole
discretion, to prevent dilution or enlargement of
Participants' rights with respect to the portion of his or her
Account Balance allocated to the First Defiance Stock Unit
Fund in the event of any reorganization, reclassification,
stock split, or other unusual corporate transaction or event
which affects the value of the Stock, provided that any such
adjustment shall be made taking into account any crediting of
shares of Stock to the Participant under Section 3.8.
(iv) For purposes of this Section 3.8(c), the "fair market value"
of the Stock shall be determined by the Committee in its sole
discretion.
(d) Proportionate Allocation. In making any election described in
-------------------------
Section 3.8(b) above, the Participant shall specify on the Election
Form, in increments of one percent (1%), the percentage of his or
her Account Balance or Measurement Fund, as applicable, to be
allocated/reallocated.
(e) Crediting or Debiting Method. The performance of each Measurement
-----------------------------
Fund (either positive or negative) will be determined on a daily
basis based on the manner in which such Participant's Account
Balance has been hypothetically allocated among the Measurement
Funds by the Participant.
(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 of 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 investments on which the
Measurement Funds are based, 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 creditor of the Company.
3.9 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
Participant's Employer(s) shall withhold from that portion of the
Participant's Base Salary, Bonus, Commissions and/or LTIP Amounts
that is not being deferred, in a manner determined by the
Employer(s), the Participant's share of FICA and other employment
taxes on such Annual Deferral Amount. If necessary, the Committee
may reduce the Annual Deferral Amount in order to comply with this
Section 3.9.
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(b) Company Contribution Account. When a Participant becomes vested in a
----------------------------
portion of his or her Company Contribution Account, the
Participant's Employer(s) shall withhold from that portion of the
Participant's Base Salary, Bonus, Commissions and/or LTIP Amounts
that is not deferred, in a manner determined by the Employer(s), the
Participant's share of FICA and other employment taxes on such
Company Contribution Amount. If necessary, the Committee may reduce
the vested portion of the Participant's Company Contribution
Account, as applicable, in order to comply with this Section 3.9.
(c) Distributions. The Participant's Employer(s), or the trustee of the
-------------
Trust, shall withhold from any payments made to a Participant under
this Plan all federal, state and local income, employment and other
taxes required to be withheld by the Employer(s), 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 Employer(s)
and the trustee of the Trust.
ARTICLE 4
Scheduled Distribution; Unforeseeable Financial Emergencies
-----------------------------------------------------------
4.1 Scheduled Distribution. In connection with each election to defer an
-----------------------
Annual Deferral Amount, a Participant may irrevocably elect to receive a
Scheduled Distribution, in the form of a lump sum payment, from the Plan
with respect to all or a portion of the Annual Deferral Amount. The
Scheduled Distribution shall be a lump sum payment in an amount that is
equal to the portion of the Annual Deferral Amount the Participant elected
to have distributed as a Scheduled Distribution, plus amounts credited or
debited in the manner provided in Section 3.8 above on that amount,
calculated as of the close of business on or around the date on which the
Scheduled Distribution becomes payable, as determined by the Committee in
its sole discretion. Subject to the other terms and conditions of this
Plan, each Scheduled Distribution elected shall be paid out during a sixty
(60) day period commencing immediately after the first day of any Plan
Year designated by the Participant (the "Scheduled Distribution Date"). A
Participant may only select one Scheduled Distribution Date for each
elected Scheduled Distribution; a Participant may not elect to receive a
Scheduled Distribution in the form of installment payments. The Plan Year
designated by the Participant must be at least three (3) Plan Years after
the end of the Plan Year to which the Participant's deferral election
described in Section 3.3 relates. By way of example, if a Scheduled
Distribution is elected for Annual Deferral Amounts that are earned in the
Plan Year commencing January 1, 2006, the earliest Scheduled Distribution
Date that may be designated by a Participant would be January 1, 2010, and
the Scheduled Distribution would become payable during the sixty (60) day
period commencing immediately after such Scheduled Distribution Date.
4.2 Postponing Scheduled Distributions. A Participant may elect to postpone a
----------------------------------
Scheduled Distribution described in Section 4.1 above, and have such
amount paid out during a sixty (60) day period commencing immediately
after an allowable alternative distribution date designated by the
Participant in accordance with this Section 4.2. In order to make this
election, the Participant must submit a new Scheduled Distribution
Election Form to the Committee in accordance with the following criteria:
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(a) Such Scheduled Distribution Election Form must be submitted to and
accepted by the Committee in its sole discretion at least twelve
(12) months prior to the Participant's previously designated
Scheduled Distribution Date;
(b) The new Scheduled Distribution Date selected by the Participant must
be the first day of a Plan Year, and must be at least five years
after the previously designated Scheduled Distribution Date; and
(c) The election of the new Scheduled Distribution Date shall have no
effect until at least twelve (12) months after the date on which the
election is made.
4.3 Other Benefits Take Precedence Over Scheduled Distributions. Should a
---------------------------------------------------------------
Benefit Distribution Date occur that triggers a benefit under Articles 5,
6, 7 or 8, any Annual Deferral Amount that is subject to a Scheduled
Distribution 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. Notwithstanding the foregoing, the Committee shall
interpret this Section 4.3 in a manner that is consistent with Code
Section 409A and other applicable tax law, including but not limited to
Treasury guidance and Regulations issued after the effective date of this
Plan.
4.4 Payout/Suspensions for Unforeseeable Financial Emergencies.
----------------------------------------------------------
(a) If the Participant experiences an Unforeseeable Financial Emergency,
the Participant may petition the Committee to suspend deferrals of
Base Salary, Bonus, Commissions, Director Fees and LTIP Amounts to
the extent deemed necessary by the Committee to satisfy the
Unforeseeable Financial Emergency. If suspension of deferrals is not
sufficient to satisfy the Participant's Unforeseeable Financial
Emergency, or if suspension of deferrals is not required under Code
Section 409A and other applicable tax law, the Participant may
further petition the Committee to receive a partial or full payout
from the Plan. The Participant shall only receive a payout from the
Plan to the extent such payout is deemed necessary by the Committee
to satisfy the Participant's Unforeseeable Financial Emergency, plus
amounts necessary to pay taxes reasonably anticipated as a result of
the distribution.
(b) The payout shall not exceed the lesser of (i) the Participant's
vested Account Balance, calculated as of the close of business on or
around the date on which the amount becomes payable, as determined
by the Committee in its sole discretion, or (ii) the amount
necessary to satisfy the Unforeseeable Financial Emergency, plus
amounts necessary to pay taxes reasonably anticipated as a result of
the distribution. Notwithstanding the foregoing, a Participant may
not receive a payout from the Plan to the extent that the
Unforeseeable Financial Emergency is or may be relieved (A) through
reimbursement or compensation by insurance or otherwise, (B) by
liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe financial
hardship or (C) by suspension of deferrals under this Plan, if the
Committee, in its sole discretion, determines that suspension is
required by Code Section 409A and other applicable tax law.
(c) If the Committee, in its sole discretion, approves a Participant's
petition for suspension, the Participant's deferrals under this Plan
shall be suspended as of the date of such
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approval. If the Committee, in its sole discretion, approves a
Participant's petition for suspension and payout, the Participant's
deferrals under this Plan shall be suspended as of the date of such
approval and the Participant shall receive a payout from the Plan
within sixty (60) days of the date of such approval.
(d) Notwithstanding the foregoing, the Committee shall interpret all
provisions relating to suspension and/or payout under this Section
4.4 in a manner that is consistent with Code Section 409A and other
applicable tax law, including but not limited to Treasury guidance
and Regulations issued after the effective date of this Plan.
ARTICLE 5
Retirement Benefit
------------------
5.1 Retirement Benefit. A Participant who Retires shall receive, as a
-------------------
Retirement Benefit, his or her vested Account Balance, calculated as of
the close of business on or around the Participant's Benefit Distribution
Date, as determined by the Committee in its sole discretion.
5.2 Payment of Retirement Benefit.
-----------------------------
(a) A Participant, in connection with his or her commencement of
participation in the Plan, shall elect on an Election Form to
receive the Retirement Benefit in a lump sum or pursuant to an
Annual Installment Method of up to fifteen (15) years. If a
Participant does not make any election with respect to the payment
of the Retirement Benefit, then such Participant shall be deemed to
have elected to receive the Retirement Benefit in a lump sum.
(b) A Participant may change the form of payment of the Retirement
Benefit by submitting an Election Form to the Committee in
accordance with the following criteria:
(i) The election to modify the Retirement Benefit shall have no
effect until at least twelve (12) months after the date on
which the election is made; and
(ii) The first Retirement Benefit payment shall be delayed at least
five (5) years from the Participant's originally scheduled
Benefit Distribution Date described in Section 1.7(a).
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Notwithstanding the foregoing, the Committee shall interpret
all provisions relating to changing the Retirement Benefit
election under this Section 5.2 in a manner that is consistent
with Code Section 409A and other applicable tax law, including
but not limited to Treasury guidance or Regulations issued
after the effective date of this Plan. Accordingly, if a
Participant's subsequent Retirement Benefit distribution
election would result in the shortening of the length of the
Retirement Benefit payment period (e.g., a Participant changes
an existing distribution election from annual installments to
a lump sum payment; from 15 annual installments to 5 annual
installments, etc.), and the Committee determines such
election to be inconsistent with Code Section 409A or other
applicable tax law, the election shall not be effective.
The Election Form most recently accepted by the Committee
shall govern the payout of the Retirement Benefit.
(c) The lump sum payment shall be made, or installment payments
shall commence, no later than sixty (60) days after the
Participant's Benefit Distribution Date. Remaining
installments, if any, shall be paid no later than sixty (60)
days after each anniversary of the Participant's Benefit
Distribution Date.
ARTICLE 6
Termination Benefit
-------------------
6.1 Termination Benefit. A Participant who experiences a Termination of
--------------------
Employment shall receive, as a Termination Benefit, his or her vested
Account Balance, calculated as of the close of business on or around the
Participant's Benefit Distribution Date, as determined by the Committee in
its sole discretion.
6.2 Payment of Termination Benefit. The Termination Benefit shall be paid to
-------------------------------
the Participant in a lump sum payment no later than sixty (60) days after
the Participant's Benefit Distribution Date.
ARTICLE 7
Disability Benefit
------------------
7.1 Disability Benefit. Upon a Participant's Disability, the Participant shall
------------------
receive a Disability Benefit, which shall be equal to the Participant's
vested Account Balance, calculated as of the close of business on or
around the Participant's Benefit Distribution Date, as selected by the
Committee in its sole discretion.
7.2 Payment of Disability Benefit. The Disability Benefit shall be paid to the
-----------------------------
Participant in a lump sum payment no later than sixty (60) days after the
Participant's Benefit Distribution Date.
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ARTICLE 8
Death Benefit
-------------
8.1 Death Benefit. The Participant's Beneficiary(ies) shall receive a Death
-------------
Benefit upon the Participant's death, which will be equal to the
Participant's vested Account Balance, calculated as of the close of
business on or around the Participant's Benefit Distribution Date, as
selected by the Committee in its sole discretion.
8.2 Payment of Death Benefit. The Death Benefit shall be paid to the
---------------------------
Participant's Beneficiary(ies) in a lump sum payment no later than sixty
(60) days after the Participant's Benefit Distribution Date.
ARTICLE 9
Beneficiary Designation
-----------------------
9.1 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 to a beneficiary 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 an Employer in which the Participant participates.
9.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall
---------------------------------------------------
designate his or her Beneficiary by completing and signing the Beneficiary
Designation Form, and returning it to the Committee or its designated
agent. 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 Committee's rules and procedures, as
in effect from time to time. If the Participant names someone other than
his or her spouse as a Beneficiary, spousal consent is required and shall
be provided in a form designated by the Committee, executed by such
Participant's spouse and returned to the Committee. Upon the acceptance by
the Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The Committee shall be
entitled to rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his or her death.
9.3 Acknowledgment. No designation or change in designation of a Beneficiary
--------------
shall be effective until received and acknowledged in writing by the
Committee or its designated agent.
9.4 No Beneficiary Designation. If a Participant fails to designate a
----------------------------
Beneficiary as provided in Sections 9.1, 9.2 and 9.3 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. 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.
9.5 Doubt as to Beneficiary. If the Committee has any doubt as to the proper
------------------------
Beneficiary to receive payments pursuant to this Plan, the Committee shall
have the right, exercisable in its discretion, to cause the Participant's
Employer to withhold such payments until this matter is resolved to the
Committee's satisfaction.
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9.6 Discharge of Obligations. The payment of benefits under the Plan to a
--------------------------
Beneficiary shall fully and completely discharge all Employers and the
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.
ARTICLE 10
Leave of Absence
----------------
10.1 Paid Leave of Absence. If a Participant is authorized by the Participant's
---------------------
Employer to take a paid leave of absence from the employment of the
Employer, (i) the Participant shall continue to be considered eligible for
the benefits provided in Articles 4, 5, 6, 7 or 8 in accordance with the
provisions of those Articles, and (ii) the Annual Deferral Amount shall
continue to be withheld during such paid leave of absence in accordance
with Section 3.3.
10.2 Unpaid Leave of Absence. If a Participant is authorized by the
--------------------------
Participant's Employer to take an unpaid leave of absence from the
employment of the Employer for any reason, such Participant shall continue
to be eligible for the benefits provided in Articles 4, 5, 6, 7 or 8 in
accordance with the provisions of those Articles. However, the Participant
shall be excused from fulfilling his or her Annual Deferral Amount
commitment that would otherwise have been withheld during the remainder of
the Plan Year in which the unpaid leave of absence is taken. During the
unpaid leave of absence, the Participant shall not be allowed to make any
additional deferral elections. However, if the Participant returns to
employment, the Participant may elect to defer an Annual Deferral Amount
for the Plan Year following his or her return to employment and for every
Plan Year thereafter while a Participant in the Plan, provided such
deferral elections are otherwise allowed and an Election Form is delivered
to and accepted by the Committee for each such election in accordance with
Section 3.3 above.
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ARTICLE 11
Termination of Plan, Amendment or Modification
----------------------------------------------
11.1 Termination of Plan. Although each Employer anticipates that it will
--------------------
continue the Plan for an indefinite period of time, there is no guarantee
that any Employer will continue the Plan or will not terminate the Plan at
any time in the future. Accordingly, each Employer reserves the right to
Terminate the Plan. In the event of a Termination of the Plan, the
Measurement Funds available to Participants following the Termination of
the Plan shall be comparable in number and type to those Measurement Funds
available to Participants in the Plan Year preceding the Plan Year in
which the Termination of the Plan is effective. Following a Termination of
the Plan, Participant Account Balances shall remain in the Plan until the
Participant becomes eligible for the benefits provided in Articles 4, 5,
6, 7 or 8 in accordance with the provisions of those Articles. 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. Notwithstanding the foregoing, to
the extent permissible under Code Section 409A and other applicable tax
law, including but not limited to Notice 2005-1 and such other Treasury
guidance or Regulations issued after the effective date of this Plan,
following a Change in Control the Employer shall be permitted to (i)
terminate the Plan by action of its board of directors, and (ii)
distribute the vested Account Balances to Participants in a lump sum no
later than twelve (12) months after the Change in Control.
11.2 Amendment.
---------
(a) Any Employer may, at any time, amend or modify the Plan in whole or
in part with respect to that Employer. Notwithstanding the
foregoing, (i) no amendment or modification shall be effective to
decrease the value of a Participant's vested Account Balance in
existence at the time the amendment or modification is made, and
(ii) no amendment or modification of this Section 11.2 or Section
12.2 of the Plan shall be effective.
(b) Notwithstanding any provision of the Plan to the contrary, in the
event that the Company determines that any provision of the Plan may
cause amounts deferred under the Plan to become immediately taxable
to any Participant under Code Section 409A, and related Treasury
guidance or Regulations, the Company may (i) adopt such amendments
to the Plan and appropriate policies and procedures, including
amendments and policies with retroactive effect, that the Company
determines necessary or appropriate to preserve the intended tax
treatment of the Plan benefits provided by the Plan and/or (ii) take
such other actions as the Company determines necessary or
appropriate to comply with the requirements of Code Section 409A,
and related Treasury guidance or Regulations.
11.3 Plan Agreement. Despite the provisions of Sections 11.1 and 11.2 above, if
--------------
a Participant's Plan Agreement contains benefits or limitations that are
not in this Plan document, the Employer may only amend or terminate such
provisions with the written consent of the Participant.
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11.4 Effect of Payment. The full payment of the Participant's vested Account
-----------------
Balance under Articles 4, 5, 6, 7 or 8 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.
ARTICLE 12
Administration
--------------
12.1 Committee Duties. Except as otherwise provided in this Article 12, this
-----------------
Plan shall be administered by a Committee, which shall consist of the
Board, or such committee as the Board shall appoint. Members of the
Committee may be Participants under this Plan. The Committee shall also
have the discretion and authority to (i) make, amend, interpret, and
enforce all appropriate rules and regulations for the administration of
this Plan, and (ii) decide or resolve any and all questions, including
benefit entitlement determinations and interpretations of this Plan, as
may arise in connection with the Plan. Any individual serving on the
Committee who is a Participant shall not vote or act on any matter
relating solely to himself or herself. When making a determination or
calculation, the Committee shall be entitled to rely on information
furnished by a Participant or the Company.
12.2 Administration Upon Change In Control. Within one hundred and twenty (120)
-------------------------------------
days following a Change in Control, the individuals who comprised the
Committee immediately prior to the Change in Control (whether or not such
individuals are members of the Committee following the Change in Control)
may, by written consent of the majority of such individuals, appoint an
independent third party administrator (the "Administrator") to perform any
or all of the Committee's duties described in Section 12.1 above,
including without limitation, the power to determine any questions arising
in connection with the administration or interpretation of the Plan, and
the power to make benefit entitlement determinations. Upon and after the
effective date of such appointment, (i) the Company must pay all
reasonable administrative expenses and fees of the Administrator, and (ii)
the Administrator may only be terminated with the written consent of the
majority of Participants with an Account Balance in the Plan as of the
date of such proposed termination.
12.3 Agents. In the administration of this Plan, the Committee or the
------
Administrator, as applicable, may, from time to time, employ agents and
delegate to them such administrative duties as it sees fit (including
acting through a duly appointed representative) and may from time to time
consult with counsel.
12.4 Binding Effect of Decisions. The decision or action of the Committee or
-----------------------------
Administrator, as applicable, with respect to any question arising out of
or in connection with the administration, interpretation and application
of the Plan and the rules and regulations promulgated hereunder shall be
final and conclusive and binding upon all persons having any interest in
the Plan.
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12.5 Indemnity of Committee. All Employers shall indemnify and hold harmless
the members of the Committee, any Employee to whom the duties of the
Committee may be delegated, and the Administrator against any and all
claims, losses, damages, expenses or liabilities arising from any action
or failure to act with respect to this Plan, except in the case of willful
misconduct by the Committee, any of its members, any such Employee or the
Administrator.
12.6 Employer Information. To enable the Committee and/or Administrator to
perform its functions, the Company and each Employer shall supply full and
timely information to the Committee and/or Administrator, as the case may
be, on all matters relating to the Plan, the Trust, the Participants and
their Beneficiaries, the Account Balances of the Participants, the
compensation of its Participants, the date and circumstances of the
Retirement, Disability, death or Termination of Employment of its
Participants, and such other pertinent information as the Committee or
Administrator may reasonably require.
ARTICLE 13
----------
Other Benefits and Agreements
-----------------------------
13.1 Coordination with Other Benefits. The benefits provided for a Participant
--------------------------------
and 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 Participant's Employer. The Plan shall supplement and
shall not supersede, modify or amend any other such plan or program except
as may otherwise be expressly provided.
ARTICLE 14
Claims Procedures
-----------------
14.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
----------------------
Participant (such Participant or Beneficiary being referred to below as a
"Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such Claimant
from the Plan. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within sixty (60) days
after such notice was received by the Claimant. All other claims must be
made within 180 days of the date on which the event that caused the claim
to arise occurred. The claim must state with particularity the
determination desired by the Claimant.
14.2 Notification of Decision. The Committee shall consider a Claimant's claim
------------------------
within a reasonable time, but no later than ninety (90) days after
receiving the claim. If the Committee determines that special
circumstances require an extension of time for processing the claim,
written notice of the extension shall be furnished to the Claimant prior
to the termination of the initial ninety (90) day period. In no event
shall such extension exceed a period of ninety (90) days from the end of
the initial period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the
Committee expects to render the benefit determination. The Committee shall
notify the Claimant in writing:
(a) that the Claimant's requested determination has been made, and that
the claim has been allowed in full; or
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(b) that the Committee has reached a conclusion contrary, in whole or in
part, to the Claimant's requested determination, and such notice
must set forth in a manner calculated to be understood by the
Claimant:
(i) the specific reason(s) for the denial of the claim, or any
part of it;
(ii) specific reference(s) to pertinent provisions of the Plan upon
which such denial was based;
(iii) 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;
(iv) an explanation of the claim review procedure set forth in
Section 14.3 below; and
(v) a statement of the Claimant's right to bring a civil action
under ERISA Section 502(a) following an adverse benefit
determination on review.
14.3 Review of a Denied Claim. On or before sixty (60) days after receiving a
------------------------
notice from the Committee that a claim has been denied, in whole or in
part, a Claimant (or the Claimant's duly authorized representative) may
file with the Committee a written request for a review of the denial of
the claim. The Claimant (or the Claimant's duly authorized
representative):
(a) may, upon request and free of charge, have reasonable access to, and
copies of, all documents, records and other information relevant (as
defined in applicable ERISA regulations) to the claim for benefits;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion,
may grant.
14.4 Decision on Review. The Committee shall render its decision on review
------------------
promptly, and no later than sixty (60) days after the Committee receives
the Claimant's written request for a review of the denial of the claim. If
the Committee determines that special circumstances require an extension
of time for processing the claim, written notice of the extension shall be
furnished to the Claimant prior to the termination of the initial sixty
(60) day period. In no event shall such extension exceed a period of sixty
(60) days from the end of the initial period. The extension notice shall
indicate the special circumstances requiring an extension of time and the
date by which the Committee expects to render the benefit determination.
In rendering its decision, the Committee shall take into account all
comments, documents, records and other information submitted by the
Claimant relating to the claim, without regard to whether such information
was submitted or considered in the initial benefit determination. The
decision must be written in a manner calculated to be understood by the
Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which
the decision was based;
(c) a statement that the Claimant is entitled to receive, upon request
and free of charge, reasonable access to and copies of, all
documents, records and other information relevant (as defined in
applicable ERISA regulations) to the Claimant's claim for benefits;
and
(d) a statement of the Claimant's right to bring a civil action under
ERISA Section 502(a).
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14.5 Legal Action. A Claimant's compliance with the foregoing provisions of
------------
this Article 14 is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for benefits under
this Plan.
ARTICLE 15
Trust
-----
15.1 Establishment of the Trust. In order to provide assets from which to
----------------------------
fulfill the obligations of the Participants and their beneficiaries under
the Plan, the Company may establish a trust by a trust agreement with a
third party, the trustee, to which each Employer may, in its discretion,
contribute cash or other property, including securities issued by the
Company, to provide for the benefit payments under the Plan, (the
"Trust").
15.2 Interrelationship of the Plan and the Trust. The provisions of the Plan
--------------------------------------------
and the Plan Agreement shall govern the rights of a Participant to receive
distributions pursuant to the Plan. The provisions of the Trust shall
govern the rights of the Employers, Participants and the creditors of the
Employers to the assets transferred to the Trust. Each Employer shall at
all times remain liable to carry out its obligations under the Plan.
15.3 Distributions From the Trust. Each Employer'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 Employer's
obligations under this Plan.
ARTICLE 16
Miscellaneous
-------------
16.1 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 ERISA Sections 201(2), 301(a)(3) and
401(a)(1). The Plan shall be administered and interpreted (i) in a manner
consistent with that intent, and (ii) in accordance with Code Section 409A
and related Treasury guidance and Regulations.
16.2 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 an Employer. For purposes of the
payment of benefits under this Plan, any and all of an Employer's assets
shall be, and remain, the general, unpledged unrestricted assets of the
Employer. An Employer's obligation under the Plan shall be merely that of
an unfunded and unsecured promise to pay money in the future.
16.3 Employer's Liability. An Employer's liability for the payment of benefits
--------------------
shall be defined only by the Plan and the Plan Agreement, as entered into
between the Employer and a Participant. An Employer shall have no
obligation to a Participant under the Plan except as expressly provided in
the Plan and his or her Plan Agreement.
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16.4 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, if any, payable hereunder, or any
part thereof, which are, and all rights to which are expressly declared to
be, unassignable and non-transferable. No part of the amounts payable
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.
16.5 Not a Contract of Employment. The terms and conditions of this Plan shall
----------------------------
not be deemed to constitute a contract of employment between any Employer
and the Participant. 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 any Employer, either as an Employee or a Director, or to
interfere with the right of any Employer to discipline or discharge the
Participant at any time.
16.6 Furnishing Information. A Participant or his or her Beneficiary will
-----------------------
cooperate with the Committee by furnishing any and all information
requested by the 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 Committee may deem necessary.
16.7 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.
16.8 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.
16.9 Governing Law. Subject to ERISA, the provisions of this Plan shall be
--------------
construed and interpreted according to the internal laws of the State of
Ohio without regard to its conflicts of laws principles.
16.10 Notice. Any notice or filing required or permitted to be given to the
------
Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address
below:
First Defiance Financial Corp.
------------------------------
Attn: Chief Financial Officer
------------------------------
601 Clinton Street
------------------------------
Defiance, Ohio 43512
------------------------------
Such notice 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.
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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.
16.11 Successors. The provisions of this Plan shall bind and inure to the
----------
benefit of the Participant's Employer and its successors and assigns and
the Participant and the Participant's designated Beneficiaries.
16.12 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.
16.13 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.
16.14 Incompetent. If the 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 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 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.
16.15 Court Order. The Committee is authorized to comply with any court order in
-----------
any action in which the Plan or the Committee has been named as a party,
including any action involving a determination of the rights or interests
in a Participant's benefits under the Plan. Notwithstanding the foregoing,
the Committee shall interpret this provision in a manner that is
consistent with Code Section 409A and other applicable tax law, including
but not limited to guidance issued after the effective date of this Plan.
16.16 Insurance. The Employers, on their own behalf or on behalf of the trustee
---------
of the Trust, and, in their sole discretion, may apply for and procure
insurance on the life of the Participant, in such amounts and in such
forms as the Trust may choose. The Employers 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 Employers 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 Employers have applied for insurance.
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IN WITNESS WHEREOF, the Company has signed this Plan document as of
___________________, 2005.
"Company"
First Defiance Financial Corp.,
an Ohio corporation
By: __________________________________
Title: _______________________________
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APPENDIX A
LIMITED TRANSITION RELIEF MADE AVAILABLE DURING 2005
----------------------------------------------------
IN ACCORDANCE WITH NOTICE 2005-1
--------------------------------
Unless otherwise provided below, the capitalized terms below shall have the same
meaning as provided in the Plan.
1.1 Opportunity to Make New Payment Elections. Notwithstanding the required
------------------------------------------
deadline for the submission of an initial payment election under Article
5, and in accordance with Q&A-19(c) of Notice 2005-1, a Participant who
participated in a Salary Deferral Plan may make a new Retirement Benefit
election that will govern the form in which his or her Account Balance
(including the Transfer Account) will be paid upon his or her Retirement
Benefit Distribution Date by submitting an Election Form to the Committee
prior to the deadline established by the Committee in its sole discretion,
which in no event shall be later than December 31, 2005. In the event a
Participant with a Transfer Account does not submit a Retirement Benefit
election by such deadline, then the Participant shall be deemed to have
elected to receive his or her Retirement Benefit, including the portion of
the Retirement Benefit attributable to the Transfer Account, in a lump
sum.
For purposes of clarification, any payment election made in accordance
with this Section is intended to comply with the requirements of Q&A-19(c)
of Notice 2005-1, and shall not be considered a change to any
Participant's prior payment election made under a Salary Deferral Plan,
for purposes of Code Section 409A or this Plan. Following the deadline
established by the Committee, in its sole discretion, for exercising the
right described above, a Participant may only change his or her election
for the Retirement Benefit, including for the portion of the Retirement
Benefit attributable to the Transfer Account, in accordance with the terms
and conditions of Section 5.2(b).
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