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EXHIBIT 10.31
GROUP 1 AUTOMOTIVE, INC.
DEFERRED COMPENSATION PLAN
Effective November 10, 1999
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TABLE OF CONTENTS
ARTICLE PAGE
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I - Definitions and Construction ........................ I-1
II - Participation ....................................... II-1
III - Account Credits and Allocations of Income or Loss ... III-1
IV - Deemed Investment of Funds........................... IV-1
V - Determination of Vested Interest and Forfeitures..... V-1
VI - In-Service Distributions ............................ VI-1
VII - Termination Benefits ................................ VII-1
VIII - Administration of the Plan........................... VIII-1
IX - Administration of Funds ............................. IX-1
X - Nature of the Plan .................................. X-1
XI - Miscellaneous ....................................... XI-1
(i)
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GROUP 1 AUTOMOTIVE, INC.
DEFERRED COMPENSATION PLAN
W I T N E S S E T H :
WHEREAS, Group 1 Automotive, Inc. has decided to adopt the following
Group 1 Automotive, Inc. Deferred Compensation Plan, hereinafter referred to as
the "Plan," to aid certain of its employees in making more adequate provision
for their retirement;
NOW THEREFORE, the Plan is hereby adopted as follows, effective as of
November 10, 1999:
(ii)
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I.
DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. Where the following words and phrases appear in the Plan,
they shall have the respective meanings set forth below, unless their context
clearly indicates to the contrary.
(1) ACCOUNT(S): A Member's Employer Account and/or Deferral Account, including
the amounts credited thereto.
(2) AFFILIATE: Each trade or business (whether or not incorporated) which
together with the Company would be deemed to be a "single employer" within
the meaning of subsections (b), or (c) of Section 414 of the Code.
(3) BASE SALARY: The base rate of pay paid in cash by the Employer to or for
the benefit of a Member for services rendered or labor performed while a
Member, including base pay a Member could have received in cash in lieu of
(i) Compensation deferrals pursuant to Section 3.1 and (ii) elective
contributions made on his behalf by the Employer pursuant to a qualified
cash or deferred arrangement (as defined in section 401(k) of the Code) or
pursuant to a plan maintained under section 125 of the Code.
(4) BOARD: The Board of Directors of the Company.
(5) BONUS: Each incentive bonus, if any, paid in cash by the Employer to or for
the benefit of a Member for services rendered or labor performed, including
the portion thereof that a Member could have received in cash in lieu of
(i) Compensation deferrals pursuant to Section 3.1 and (ii) elective
contributions made on his behalf by the Employer pursuant to a qualified
cash or deferred arrangement (as defined in section 401(k) of the Code) or
pursuant to a plan maintained under section 125 of the Code.
(6) CHANGE IN CONTROL: A "Change in Control" shall be conclusively deemed to
have occurred if (and only if) any of the following events shall have
occurred: (1) any merger, consolidation, or reorganization in which the
Company is not the surviving entity (or survives only as a subsidiary of an
entity), (2) any sale, lease, exchange, or other transfer of all or
substantially all of the assets of the Company to any other person or
entity other than a wholly-owned subsidiary of the Company (in one
transaction or a series of related transactions), (3) dissolution or
liquidation of the Company, (4) when any person or entity, including a
"group" as contemplated by Section 13(d)(3) of the Exchange Act acquires or
gains ownership or control (including, without limitation, power to vote)
of more than 50% of the outstanding shares of the Company's voting stock
(based upon voting power), or (5) during any two-year period, the persons
who were directors of the Company (together with any new directors whose
election by the Board or whose nomination for election by the Company's
shareholders was approved by a vote of at least three quarters of the
directors still in office who were either directors at the beginning of
such period or whose election or
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nomination for election was previously so approved) shall cease for any
reason to constitute a majority of the Board; provided, however, that the
term "Change in Control" shall not include any reorganization, merger,
consolidation, or similar transaction or series of transactions pursuant to
which the record holders of the voting stock of the Company immediately
prior to such transaction or series of transactions continue to hold
immediately following such transaction or series of transactions 50% or
more of the voting securities (based upon voting power) of (a) any entity
which owns (directly or indirectly) the stock of the Company, (b) any
entity with which the Company has merged, or (c) any entity that owns an
entity with which the Company has merged.
(7) CODE: The Internal Revenue Code of 1986, as amended.
(8) COMMITTEE: The administrative committee appointed by the Compensation
Committee to administer the Plan.
(9) COMPANY: Group 1 Automotive, Inc.
(10) COMPENSATION: Base Salary and/or Bonus.
(11) COMPENSATION COMMITTEE: The Compensation Committee of the Board.
(12) DISABILITY: The term "Disability" shall mean total and permanent disability
as determined under the Savings Plan.
(13) DEFERRAL ACCOUNT: An individual account for each Member to which is
credited his Member Deferrals pursuant to Section 3.1 and which is adjusted
to reflect changes in value as provided in Section 3.3.
(14) EFFECTIVE DATE: November 10, 1999.
(15) ELECTION DATE: The first day of each Plan Year; provided, however, that the
Election Date for the first Plan Year shall be December 15, 1999.
(16) ERISA: The Employee Retirement Income Security Act of 1974, as amended.
(17) EMPLOYER: The Company and any other adopting entity that adopts the Plan
pursuant to the provisions of Section 2.3.
(18) EMPLOYER ACCOUNT: An individual account for each Member to which is
credited the Employer Deferrals made on his behalf pursuant to Section 3.2
and which is adjusted to reflect changes in value as provided in Section
3.3.
(19) EMPLOYER DEFERRALS: Deferrals made by the Employer on a Member's behalf
pursuant to Section 3.2.
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(20) EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
(21) FUNDS: The investment funds, if any, designated from time to time for the
deemed investment of Accounts pursuant to Section 4.1.
(22) MEMBER: Each individual who has been selected by the Committee for
participation in the Plan and who has become a Member pursuant to Article
II.
(23) MEMBER DEFERRALS: Deferrals made by a Member pursuant to Section 3.1.
(24) PLAN: The Group 1 Automotive, Inc. Deferred Compensation Plan, as amended
from time to time.
(25) PLAN YEAR: The twelve-consecutive month period commencing January 1 of each
year; provided, however, that the first Plan Year shall commence on the
Effective Date and end on December 31, 1999.
(26) RETIREMENT DATE: The date upon which a Member attains age 55.
(27) SAVINGS PLAN: The Group 1 Automotive, Inc. 401(k) Savings Plan, as amended
from time to time.
(28) TERMINATION OF SERVICE: The termination of a Member's employment with the
Employer and all Affiliates for any reason whatsoever.
(29) TRUST: The trust, if any, established under the Trust Agreement.
(30) TRUST AGREEMENT: The agreement entered into between the Employer and the
Trustee pursuant to Article X.
(31) TRUST FUND: The funds and properties, if any, held pursuant to the
provisions of the Trust Agreement, together with all income, profits and
increments thereto.
(32) TRUSTEE: The trustee or trustees qualified and acting under the Trust
Agreement at any time.
(33) UNFORESEEABLE FINANCIAL EMERGENCY: An unexpected need of a Member for cash
that (i) arises from a sudden and unexpected illness or accident of the
Member or of a dependent of a Member, loss of the Member's property due to
casualty, or similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of such Member and (ii) would
result in severe financial hardship to such Member if his Compensation
deferral election was not canceled pursuant to Section 3.1(g) and/or if a
benefit payment pursuant to Section 6.2 or 7.5(b)(ii) was not permitted.
Cash needs arising from foreseeable events, such as the purchase of a house
or education expenses for children, shall not be considered to be the
result of an Unforeseeable Financial Emergency. Further, cash needs that
may be relieved (a) through reimbursement or compensation by insurance or
otherwise,
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(b) by liquidation of the Member's assets, to the extent the liquidation of
such assets would not itself cause severe financial hardship, or (c) by
cessation of deferrals under the Plan shall not be considered to be
Unforeseeable Financial Emergencies.
(34) VALUATION DATE: Each day that the New York Stock Exchange is open for
business; provided, however, that the Committee shall in its discretion
determine the Valuation Dates that will occur during any period for which
the provisions of Section 4.2 apply.
(35) VESTED INTEREST: The portion of a Member's Accounts which, pursuant to the
Plan, is nonforfeitable.
1.2 NUMBER AND GENDER. Wherever appropriate herein, words used in the
singular shall be considered to include the plural and words used in the plural
shall be considered to include the singular. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender.
1.3 HEADINGS. The headings of Articles and Sections herein are included
solely for convenience, and if there is any conflict between such headings and
the text of the Plan, the text shall control.
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II.
PARTICIPATION
2.1 PARTICIPATION. Prior to each Election Date, the Committee, in its sole
discretion, shall select and notify those management or highly compensated
employees of the Employer who shall be eligible to become Members as of such
Election Date. Any such eligible employee may become a Member on such Election
Date by executing and filing with the Committee, prior to such Election Date,
the Compensation deferral election prescribed by the Committee for the Plan Year
beginning on such date. Subject to the provisions of Section 2.2, a Member shall
remain eligible to defer Compensation hereunder and receive an allocation of
Employer Deferrals for each Plan Year following his commencement of
participation in the Plan.
2.2 CESSATION OF ACTIVE PARTICIPATION. Notwithstanding any provision
herein to the contrary, an individual who has become a Member of the Plan shall
cease to be entitled to defer Compensation hereunder and/or receive an
allocation of Employer Deferrals effective as of any date designated by the
Committee. Any such Committee action shall be communicated to the affected
individual prior to the effective date of such action. Such an individual may
again become entitled to defer Compensation hereunder and receive an allocation
of Employer Deferrals beginning on any subsequent Election Date selected by the
Committee in its sole discretion.
2.3 ADOPTING ENTITIES. It is contemplated that other entities may adopt
this Plan and thereby become an Employer. Any such entity, whether or not
presently existing, may become a party hereto by appropriate action of its
officers without the need for approval of its board of directors or of the
Committee or the Compensation Committee; provided, however, that such entity
must be an Affiliate. The provisions of the Plan shall apply separately and
equally to each Employer and its employees in the same manner as is expressly
provided for the Company and its employees, except that (a) the power to appoint
or otherwise affect the Committee and the Trustee and the power to amend or
terminate the Plan or amend the Trust Agreement shall be exercised by the
Compensation Committee alone and (b) the determination of whether a Change in
Control has occurred shall be made based solely on the Company. Transfer of
employment among Employers and Affiliates shall not be considered a termination
of employment hereunder. Any Employer may, by appropriate action of its officers
without the need for approval of its board of directors (or noncorporate
counterpart) or the Committee or the Compensation Committee, terminate its
participation in the Plan. Moreover, the Compensation Committee may, in its
discretion, terminate an Employer's Plan participation at any time.
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III.
ACCOUNT CREDITS AND ALLOCATIONS OF INCOME OR LOSS
3.1 MEMBER DEFERRALS.
(a) A Member meeting the eligibility requirements of Section 2.1 may:
(i) Elect to defer a portion of such Member's Base Salary for each
Plan Year commencing on or after January 1, 2000 in an amount equal to a
specific dollar amount per pay period of such Member's Base Salary or an
integral percentage of from 1% to 50% of such Member's Base Salary. If a
Member elects to defer an integral percentage of such Member's Base Salary,
such Member may elect to establish a maximum Base Salary deferral, the
dollar amount of which such Member's combined aggregate total of Base
Salary deferrals for any Plan Year shall not exceed; and/or
(ii) Elect to defer a portion of such Member's Bonus for each Plan
Year commencing on or after January 1, 2000 in an amount equal to a
specific dollar amount of such Member's Bonus or an integral percentage of
from 1% to 100% of such Member's Bonus. In addition, a Member meeting the
eligibility requirements of Section 2.1 for the first Election Date may
elect to defer a portion of such Member's Bonus for the 1999 calendar year
in an amount equal to a specific dollar amount of such Member's Bonus for
the 1999 calendar year or an integral percentage of from 1% to 100% of such
Member's Bonus for the 1999 calendar year. If a Member elects to defer an
integral percentage of such Member's Bonus, including a Member's Bonus for
the 1999 calendar year, such Member may elect to establish a maximum Bonus
deferral, the dollar amount of which such Member's Bonus deferral for any
Plan Year shall not exceed.
In the event that a Member elects to defer an amount of Compensation pursuant to
both Section 3.1(a)(i) and 3.1(a)(ii) for any Plan Year commencing on or after
January 1, 2000, such Member may also elect to establish a maximum combined Base
Salary and Bonus deferral, the dollar amount of which such Member's combined
aggregate total of Base Salary and Bonus deferrals for such Plan Year shall not
exceed.
(b) Paragraph (a) above notwithstanding, as of the first day of any
Plan Year commencing on or after January 1, 2000, a Member's Member Deferral
elections made pursuant to such paragraph must, in the opinion of the Committee,
be reasonably expected to result in minimum aggregate Member Deferrals for such
Member of $25,000 for such Plan Year. Member Deferral elections determined by
the Committee to not be reasonably expected to result in such minimum deferral
shall be void.
(c) Compensation for a Plan Year not deferred pursuant to elections
under Section 3.1(a) shall be received by such Member in cash. A Member's
election to defer an amount of his Compensation pursuant to this Section 3.1
shall be made by effecting, in the form prescribed by the
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Committee, a Member Deferral election pursuant to which the Member authorizes
the Employer to reduce his Compensation in the elected amount and the Employer,
in consideration thereof, agrees to credit an equal amount to such Member's
Deferral Account maintained under the Plan. The reduction in a Member's
Compensation pursuant to his Member Deferral election shall be effected by
Compensation reductions each payroll period as determined by the Committee
following the effective date of such election. Such Compensation reductions
shall be within the Plan Year to which the Member Deferral election relates,
except that Compensation reductions attributable to elections to defer a
Member's Bonus may be made within the next following Plan Year if the Bonus to
which the Member Deferral election relates is paid in such next following Plan
Year. Member Deferrals made by a Member shall be credited to such Member's
Deferral Account as of a date determined in accordance with procedures
established from time to time by the Committee; provided, however, that such
Member Deferrals shall be credited to the Member's Deferral Account no later
than 30 days after the date upon which the Compensation deferred would have been
received by such Member in cash if he had not elected to defer such amount
pursuant to this Section 3.1.
(d) A Member Deferral election pursuant to Section 3.1 shall become
effective as of the Election Date which is immediately after the date the
election is effected by the Member and filed with the Committee. A Member
Deferral election shall remain in force and effect for the entire Plan Year to
which such election relates. A Member Deferral election shall remain in force
and effect for each subsequent Plan Year (following the Member's initial year of
participation in the Plan) for which he satisfies the eligibility requirements
set forth in Section 2.1, unless and until such election is changed or revoked
by such Member prior to the Election Date of the subsequent Plan Year to which
such change or revocation relates; provided, however, that a Member Deferral
election with respect to a Member's Bonus for the 1999 calendar year shall not
remain in force and effect for any subsequent Plan Year. Plan provisions to the
contrary notwithstanding, a Member Deferral election shall be suspended during
any period of unpaid leave of absence from the Employer and shall terminate
immediately on the date such Member incurs a Termination of Service.
(e) A Member who has made a Member Deferral election may change his
election, as of the Election Date of any subsequent Plan Year, by effecting a
new Member Deferral election prior to such Election Date and within the time
period prescribed by the Committee.
(f) A Member who has made a Member Deferral election may cancel his
election, as of the Election Date of any subsequent Plan Year, by effecting the
same in the form prescribed by the Committee prior to such Election Date and
within the time period prescribed by the Committee. A Member who so cancels his
Member Deferral election may again make a new Member Deferral election for a
subsequent Plan Year, if he satisfies the eligibility requirements set forth in
Section 2.1, by effecting a new Member Deferral election prior to the Election
Date of such Plan Year and within the time period prescribed by the Committee.
(g) In the event that the Committee, upon written petition of a Member,
determines in its sole discretion that such Member has suffered an Unforeseeable
Financial Emergency or that such Member will, absent suspension of such Member's
Member Deferral election then in effect, suffer an Unforeseeable Financial
Emergency, then the Member Deferral election of such Member then in effect, if
any, shall be suspended as soon as administratively practicable after
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such determination. A Member whose Member Deferral election has been so
suspended may again make a new Member Deferral election for a subsequent Plan
Year that is at least twelve months after the effective date of such suspension,
if he satisfies the eligibility requirements set forth in Section 2.1, by
effecting a new Member Deferral election for such Plan Year and within the time
period prescribed by the Committee.
3.2 EMPLOYER DEFERRALS.
(a) (i) For each Plan Year, the Employer shall defer an amount on
behalf of each Member (1) who makes the maximum elective deferrals permitted
under the terms of the Savings Plan for such Plan Year, (2) who has an amount
forfeited (but does not receive a distribution of such forfeited amount) from
his "Employer Contribution Account" under the Savings Plan in order to satisfy
the requirements of Code sections 401(k)(3), 401(m)(2), and/or 401(m)(9) for
such Plan Year, and (3) who has not incurred a Termination of Service prior to
the date such forfeiture occurs under the terms of the Savings Plan. The amount
of each such Employer Deferral shall equal 100% of such forfeited amount.
(ii) Employer Deferrals made on a Member's behalf pursuant to this
Section 3.2(a) for a Plan Year shall be credited to such Member's Employer
Account as of the date the related forfeiture for such Plan Year occurs under
the terms of the Savings Plan.
(b) As of any date selected by the Employer, the Employer may credit a
Member's Account(s) with Employer Deferrals in such amount, if any, as the
Employer shall determine in its sole discretion. Such credits may be made on
behalf of some Members but not others, and such credits may vary among
individual Members in amount and/or with respect to the Account to which they
are credited.
3.3 VALUATION OF ACCOUNTS. All amounts credited to an Account shall be
deemed invested in accordance with Article IV on the date such amount is
credited to the Account, and, except as provided in Section 4.2, the balance of
each Account shall reflect the result of the daily pricing of the assets in
which such Account is deemed invested from the time of such crediting until the
time of distribution.
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IV.
DEEMED INVESTMENT OF FUNDS
4.1 MEMBER DIRECTIONS.
(a) Each Member shall designate, in accordance with the procedures
established from time to time by the Committee, the manner in which the amounts
allocated to his Accounts shall be deemed to be invested from among the Funds
made available from time to time for such purpose by the Committee. Such Member
may designate one of such Funds for the deemed investment of all the amounts
allocated to his Accounts or he may split the deemed investment of the amounts
allocated to his Accounts between such Funds in such increments as the Committee
may prescribe. If a Member fails to make a proper designation, then his Accounts
shall be deemed to be invested in the Fund or Funds designated by the Committee
from time to time in a uniform and nondiscriminatory manner. In the event that
during any Plan Year the Committee does not make available Funds for the
investment of the amounts in Members' Accounts, the amounts in each Member's
Accounts shall be credited with earnings at a rate of return set by the
Committee prior to the start of such Plan Year.
(b) A Member may change his deemed investment designation for future
deferrals to be allocated to his Accounts. Any such change shall be made in
accordance with the procedures established by the Committee, and such changes
may only be made on January 1 and July 1 of each Plan Year.
(c) A Member may elect to convert his deemed investment designation
with respect to the amounts already allocated to his Accounts. Any such
conversion shall be made in accordance with the procedures established by the
Committee, and such conversions may only be made on January 1 and July 1 of each
Plan Year.
4.2 CREDITING RATE IN THE ABSENCE OF FUNDS. Notwithstanding the provisions
of Sections 3.3 and 4.1, if for any Plan Year (or portion thereof) the Committee
does not make available Funds for the deemed investment of the amounts in
Members' Accounts, then the amounts in each Member's Accounts shall be credited
with earnings during such period based upon a rate of return set by the
Committee prior to the start of such period. The rate of return set by the
Committee may be fixed for the entire Plan Year (or portion thereof) or it may
vary from time to time based on one or more benchmark rates selected by the
Committee. As of each Valuation Date that occurs during a period for which this
Section 4.2 applies, each Account of a Member shall be increased to reflect an
earnings allocation as described in this Section 4.2 based upon the balance in
such Account as of the next preceding Valuation Date; provided, however, that
the balance of such Account as of the next preceding Valuation Date shall be
reduced by the amount of any withdrawals or distributions made therefrom since
the next preceding Valuation Date.
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V.
DETERMINATION OF VESTED INTEREST AND FORFEITURES
5.1 DEFERRAL ACCOUNT. A Member shall have a 100% Vested Interest in his
Deferral Account at all times.
5.2 EMPLOYER ACCOUNT. A Member's Vested Interest in his Employer Account
shall equal such Member's Vested Interest in his "Employer Contribution Account"
under the Savings Plan. Further, a Member who is employed by the Employer
immediately prior to a Change in Control shall have a 100% Vested Interest in
his Employer Account upon the occurrence of such Change in Control; provided,
however, that such accelerated vesting shall not occur if the consummation of
such Change in Control is contingent on using the pooling of interests
accounting methodology and the Committee determines that such accelerated
vesting will prevent the use of such accounting methodology.
5.3 FORFEITURES. A Member who has a Vested Interest in his Employer Account
that is less than 100% as of the date of his Termination of Service shall
forfeit to the Employer the nonvested portion of such Account as of the date of
such termination. Notwithstanding the preceding provisions of this Article V,
the vested portion of a Member's Account may be forfeited to the Employer under
Sections 6.3, 7.3(c), 7.5(b)(i), and 7.7.
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VI.
IN-SERVICE DISTRIBUTIONS
6.1 RESTRICTIONS ON IN-SERVICE DISTRIBUTIONS AND LOANS. Except as provided
in Sections 6.2 and 6.3, Members shall not be permitted to make withdrawals from
the Plan prior to incurring a Termination of Service. Members shall not, at any
time, be permitted to borrow from the Trust Fund. Following a Member's
Termination of Service, this Article VI shall not be applicable to the Member
and the amounts credited to such Member's Accounts shall be payable to such
Member in accordance with the provisions of Article VII.
6.2 EMERGENCY BENEFIT. In the event that the Committee, upon written
petition of a Member, determines in its sole discretion that such Member has
suffered an Unforeseeable Financial Emergency, such Member shall be entitled to
a benefit in an amount not to exceed the lesser of (a) the amount determined by
the Committee as necessary to meet such Member's needs created by the
Unforeseeable Financial Emergency or (b) the then value of such Member's
Deferral Account. Such benefit shall be paid in a single lump sum payment as
soon as administratively practicable after the Committee has made its
determinations with respect to the availability and amount of such benefit. If a
Member's Deferral Account is deemed to be invested in more than one Fund, such
benefit shall be distributed pro rata from each Fund in which such Account is
deemed to be invested.
6.3 ELECTIVE WITHDRAWAL. A Member may elect at any time, by following the
election procedure prescribed by the Committee, to withdraw as a benefit all or
a portion of his Deferral Account as of any Valuation Date, subject to a
withdrawal penalty of 10% of the amount of any such withdrawal. Upon any such
withdrawal, the withdrawal penalty referred to in the preceding sentence shall
be forfeited to the Employer. Further, upon any such withdrawal, such Member's
participation in the Plan shall terminate and no further Compensation deferrals
shall be made under the Plan on behalf of such Member until the first Election
Date following the date of such withdrawal. If a Member's Deferral Account is
deemed to be invested in more than one Fund, such withdrawal shall be
distributed pro rata from each Fund in which such Account is deemed to be
invested. Notwithstanding the preceding provisions of this Section 6.3, a Member
shall not be entitled to a withdrawal under this Section 6.3 if the Committee
determines, in its sole discretion, that the primary purpose of such withdrawal
is the cessation of Compensation deferrals under the Plan. The Committee shall
consider such factors as it deems appropriate in order to make a determination
pursuant to the preceding sentence, including, without limitation, the amount of
the requested withdrawal, the balance in the Member's Accounts, the Member's
Compensation deferral election then in effect, and the timing of such withdrawal
request.
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VII.
TERMINATION BENEFITS
7.1 AMOUNT OF BENEFIT. Upon a Member's Termination of Service, the Member,
or, in the event of the death of the Member while employed by the Employer or an
Affiliate, the Member's designated beneficiary, shall be entitled to a benefit
equal in value to the Member's Vested Interest in the balance in his Accounts as
of the Valuation Date next preceding the date the payment of such benefit is to
commence pursuant to Section 7.2.
7.2 TIME OF PAYMENT. Payment of a Member's benefit under Section 7.1 shall
commence as soon as administratively practicable after the Valuation Date
coincident with or next succeeding the date of the Member's Termination of
Service; provided, however, that, in a written election on the form prescribed
by the Committee, a Member may elect at the time specified in Section 7.3(c) to
defer the commencement of the payment of his benefit in the event of his
Termination of Service prior to his Retirement Date by reason of Disability to
the Valuation Date coincident with or next succeeding the earlier of (a) the
date of such Member's death or (b) such Member's Retirement Date.
7.3 ALTERNATIVE FORMS OF BENEFIT PAYMENTS.
(a) A Member's benefit under Section 7.1 shall be paid in the form of a
single lump sum payment if such Member's Termination of Service occurs prior to
his Retirement Date for a reason other than Disability.
(b) With respect to a Member whose Termination of Service occurs (i)
prior to his Retirement Date by reason of Disability or (ii) on or after his
Retirement Date, such Member shall receive his benefit payments in one of the
following forms elected by such Member in writing on the form prescribed by the
Committee at the time specified in Section 7.3(c):
(1) A single lump sum payment; or
(2) Annual installments for a period of five, ten, or fifteen years
as designated by such Member; provided, however, that in the event of such
Member's death prior to the end of such period, the remaining balance in
such Member's Account shall be paid as soon as administratively feasible in
one lump sum payment to such Member's designated beneficiary as provided in
Section 7.4. The amount of each annual installment shall be computed by
dividing the Member's Vested Interest in the unpaid balance in his Accounts
as of the Valuation Date next preceding the date of payment of such annual
installment by the number of annual installments remaining.
A separate election shall be made pursuant to this Section 7.3(b) by each Member
with respect to the form of distribution to be made in connection with a
Termination of Service that occurs (A) prior to such Member's Retirement Date by
reason of Disability or (B) on or after such Member's Retirement Date. In the
event such Member fails to timely elect in accordance with Section 7.3(c)
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the form in which his benefit payments are to be made, such benefit payments
shall be in the form of a single lump sum payment.
(c) A Member's elections pursuant to Sections 7.2 and 7.3(b) shall be
made on or before the date he first becomes a Member of the Plan.
Notwithstanding the foregoing, subject to the consent of the Committee in its
sole discretion, a Member may, on the form prescribed by the Committee, make one
change to each of his original elections made pursuant to Sections 7.2 and
7.3(b); provided, however, that (i) upon making any such change, the aggregate
balance in such Member's Accounts as of the Valuation Date coincident with or
next succeeding such change shall be reduced by 5% and such amount shall be
forfeited to the Employer and (ii) such change shall not be effective (but the
penalty described in clause (i) of this sentence shall still apply) if such
Member incurs a Termination of Service on or before the date that is thirteen
months after such Member delivers the form implementing such change to the
Committee.
7.4 DESIGNATION OF BENEFICIARIES.
(a) Each Member shall have the right to designate the beneficiary or
beneficiaries to receive payment of his benefit in the event of his death. Each
such designation shall be made by executing the beneficiary designation form
prescribed by the Committee and filing same with the Committee. Any such
designation may be changed at any time by execution of a new designation in
accordance with this Section.
(b) If no such designation is on file with the Committee at the time of
the death of the Member or such designation is not effective for any reason as
determined by the Committee, then the designated beneficiary or beneficiaries to
receive such benefit shall be as follows:
(i) If a Member leaves a surviving spouse, his benefit shall be
paid to such surviving spouse;
(ii) If a Member leaves no surviving spouse, his benefit shall be
paid to such Member's executor or administrator, or to his heirs at law if
there is no administration of such Member's estate.
7.5 ACCELERATED PAY-OUT OF CERTAIN BENEFITS.
(a) Notwithstanding any provision in Section 7.3(b) to the contrary, if
a Member's benefit payments are to be paid in a form other than entirely in a
single lump sum payment and the aggregate amount to be paid with respect to such
Member in any particular calendar year is less than $50,000, then the Committee
may, in its sole discretion, elect to cause the entire remaining Vested Interest
in the balance in such Member's Accounts to be paid in a single lump sum
payment.
(b) If a Member incurs a Termination of Service and such Member's
benefit payments are being, or are to be, paid in a form other than entirely in
a single lump sum payment, then:
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(i) Such Member may elect at any time, by following the election
procedure prescribed by the Committee, to receive the Vested Interest in
the remaining balance in his Accounts (reduced by the 10% penalty described
in the following sentence) in a single lump sum payment as soon as
administratively feasible after the date such Member delivers to the
Committee the form prescribed by the Committee requesting such
distribution. Upon such a request, the Vested Interest in the aggregate
balance in such Member's Accounts as of the date of such distribution shall
be reduced by 10% and such amount shall be forfeited to the Employer; and
(ii) In the event that the Committee, upon written petition of such
Member, determines in its sole discretion that such Member has suffered an
Unforeseeable Financial Emergency, such Member shall be entitled to an
emergency benefit in an amount and under conditions similar to those
described in Section 6.2.
7.6 PAYMENT OF BENEFITS. To the extent the Trust Fund has sufficient
assets, the Trustee shall pay benefits to Members or their beneficiaries, except
to the extent the Employer pays the benefits directly and provides adequate
evidence of such payment to the Trustee. To the extent the Trustee does not or
cannot pay benefits out of the Trust Fund, the benefits shall be paid by the
Employer. Any benefit payments made to a Member or for his benefit pursuant to
any provision of the Plan shall be debited to such Member's Accounts. All
benefit payments shall be made in cash to the fullest extent practicable.
7.7 UNCLAIMED BENEFITS. In the case of a benefit payable on behalf of a
Member, if the Committee is unable to locate the Member or beneficiary to whom
such benefit is payable, upon the Committee's determination thereof, such
benefit shall be forfeited to the Employer. Notwithstanding the foregoing, if
subsequent to any such forfeiture the Member or beneficiary to whom such benefit
is payable makes a valid claim for such benefit, such forfeited benefit (without
any adjustment for earnings or loss after the time of such forfeiture) shall be
restored to the Plan by the Employer and paid in accordance with the Plan.
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VIII.
ADMINISTRATION OF THE PLAN
8.1. APPOINTMENT OF COMMITTEE. The general administration of the Plan shall
be vested in the Committee which shall be appointed by the Compensation
Committee and shall consist of one or more persons. Any individual, whether or
not an employee of the Employer, is eligible to become a member of the
Committee.
8.2. TERM, VACANCIES, RESIGNATION, AND REMOVAL. Each member of the
Committee shall serve until he resigns, dies, or is removed by the Compensation
Committee. At any time during his term of office, a member of the Committee may
resign by giving written notice to the Compensation Committee and the Committee,
such resignation to become effective upon the appointment of a substitute member
or, if earlier, the lapse of thirty days after such notice is given as herein
provided. At any time during his term of office, and for any reason, a member of
the Committee may be removed by the Compensation Committee with or without
cause, and the Compensation Committee may in its discretion fill any vacancy
that may result therefrom. Any member of the Committee who is an employee of the
Employer or any Affiliate shall automatically cease to be a member of the
Committee as of the date he ceases to be employed by the Employer and all
Affiliates.
8.3. SELF-INTEREST OF MEMBERS. No member of the Committee shall have any
right to vote or decide upon any matter relating solely to himself under the
Plan or to vote in any case in which his individual right to claim any benefit
under the Plan is particularly involved. In any case in which a Committee member
is so disqualified to act and the remaining members cannot agree, the
Compensation Committee shall appoint a temporary substitute member to exercise
all the powers of the disqualified member concerning the matter in which he is
disqualified.
8.4. COMMITTEE POWERS AND DUTIES. The Committee shall supervise the
administration and enforcement of the Plan according to the terms and provisions
hereof and shall have all powers necessary to accomplish these purposes,
including, but not by way of limitation, the right, power, and authority:
(a) To make rules, regulations, and bylaws for the administration of
the Plan that are not inconsistent with the terms and provisions hereof, and to
enforce the terms of the Plan and the rules and regulations promulgated
thereunder by the Committee;
(b) To construe in its discretion all terms, provisions, conditions,
and limitations of the Plan;
(c) To correct any defect or to supply any omission or to reconcile any
inconsistency that may appear in the Plan in such manner and to such extent as
it shall deem in its discretion expedient to effectuate the purposes of the
Plan;
VIII-1
19
(d) To employ and compensate such accountants, attorneys, investment
advisors, and other agents, employees, and independent contractors as the
Committee may deem necessary or advisable for the proper and efficient
administration of the Plan;
(e) To determine in its discretion all questions relating to
eligibility;
(f) To determine whether and when a Member has incurred a Termination
of Service, and the reason for such termination;
(g) To make a determination in its discretion as to the right of any
person to a benefit under the Plan and to prescribe procedures to be followed by
distributees in obtaining benefits hereunder;
(h) To receive and review reports from the Trustee as to the financial
condition of the Trust Fund, including its receipts and disbursements; and
(i) To establish or designate Funds as investment options as provided
in Section 4.1.
8.5. CLAIMS REVIEW. In any case in which a claim for Plan benefits of a
Member or beneficiary is denied or modified, the Committee shall furnish written
notice to the claimant within 90 days (or within 180 days if additional
information requested by the Committee necessitates an extension of the 90-day
period), which notice shall:
(a) State the specific reason or reasons for the denial or
modification;
(b) Provide specific reference to pertinent Plan provisions on which
the denial or modification is based;
(c) Provide a description of any additional material or information
necessary for the Member, his beneficiary, or representative to perfect the
claim and an explanation of why such material or information is necessary; and
(d) Explain the Plan's claim review procedure as contained herein.
In the event a claim for Plan benefits is denied or modified, if the Member, his
beneficiary, or a representative of such Member or beneficiary desires to have
such denial or modification reviewed, he must, within 60 days following receipt
of the notice of such denial or modification, submit a written request for
review by the Committee of its initial decision. In connection with such
request, the Member, his beneficiary, or the representative of such Member or
beneficiary may review any pertinent documents upon which such denial or
modification was based and may submit issues and comments in writing. Within 60
days following such request for review the Committee shall, after providing a
full and fair review, render its final decision in writing to the Member, his
beneficiary, or the representative of such Member or beneficiary stating
specific reasons for such decision and making specific references to pertinent
Plan provisions upon which the decision is based. If special
VIII-2
20
circumstances require an extension of such 60-day period, the Committee's
decision shall be rendered as soon as possible, but not later than 120 days
after receipt of the request for review. If an extension of time for review is
required, written notice of the extension shall be furnished to the Member,
beneficiary, or the representative of such Member or beneficiary prior to the
commencement of the extension period.
8.6. MANDATORY ARBITRATION. If the Member, his beneficiary, or a
representative of such Member or beneficiary is not satisfied with the final
decision of the Committee pursuant to the Plan's claims review procedure, such
Member, his beneficiary, or a representative of such Member or beneficiary may,
within 180 days of receipt of the written final decision of the Committee,
request by written notice to the Committee, that his claim be submitted to
arbitration pursuant to the arbitration procedures then in effect as adopted by
the Committee. Such arbitration shall be the sole and exclusive procedure
available to the Member, his beneficiary, or a representative of such Member or
his beneficiary for review of a final decision of the Committee. In reviewing
the decision of the Committee, the arbitrator shall use the standard of review
which would be used by a Federal court in reviewing such decision under the
provisions of ERISA. The Member, his beneficiary, or a representative of such
Member or beneficiary and the Plan shall share equally the cost of such
arbitration. The arbitrator's decision shall be final and legally binding on
both parties. This Section shall be governed by the provisions of the Federal
Arbitration Act.
8.7. EMPLOYER TO SUPPLY INFORMATION. The Employer shall supply full and
timely information to the Committee, including, but not limited to, information
relating to each Member's Compensation, age, retirement, death, or other cause
of Termination of Service and such other pertinent facts as the Committee may
require. The Employer shall advise the Trustee of such of the foregoing facts as
are deemed necessary for the Trustee to carry out the Trustee's duties under the
Plan and the Trust Agreement. When making a determination in connection with the
Plan, the Committee shall be entitled to rely upon the aforesaid information
furnished by the Employer.
8.8. INDEMNITY. To the extent permitted by applicable law, the Company
shall indemnify and save harmless each member of the Committee and the
Compensation Committee against any and all expenses, liabilities and claims
(including legal fees incurred to defend against such liabilities and claims)
arising out of their discharge in good faith of responsibilities under or
incident to the Plan. Expenses and liabilities arising out of willful misconduct
shall not be covered under this indemnity. This indemnity shall not preclude
such further indemnities as may be available under insurance purchased by the
Company or provided by the Company under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, as such indemnities are
permitted under applicable law.
8.9. CHANGE IN CONTROL. Notwithstanding any provision in the Plan to the
contrary, upon the occurrence of a Change in Control, the Committee's powers and
duties under the Plan shall cease to the extent, if any, such powers and duties
are vested in the Trustee under the terms of the Trust Agreement.
VIII-3
21
IX.
ADMINISTRATION OF FUNDS
9.1. PAYMENT OF EXPENSES. All expenses incident to the administration of
the Plan and Trust, including but not limited to, legal, accounting, Trustee
fees, and expenses of the Committee, may be paid by the Employer and, if not
paid by the Employer, shall be paid by the Trustee from the Trust Fund, if any.
9.2. TRUST FUND PROPERTY. All income, profits, recoveries, contributions,
forfeitures and any and all moneys, securities and properties of any kind at any
time received or held by the Trustee, if any, shall be held for investment
purposes as a commingled Trust Fund pursuant to the terms of the Trust
Agreement. The Committee shall maintain one or more Accounts in the name of each
Member, but the maintenance of an Account designated as the Account of a Member
shall not mean that such Member shall have a greater or lesser interest than
that due him by operation of the Plan and shall not be considered as segregating
any funds or property from any other funds or property contained in the
commingled fund. No Member shall have any title to any specific asset in the
Trust Fund, if any.
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X.
NATURE OF THE PLAN
The Employer intends and desires by the adoption of the Plan to recognize
the value to the Employer of the past and present services of employees covered
by the Plan and to encourage and assure their continued service with the
Employer by making more adequate provision for their future retirement security.
The establishment of the Plan is made necessary by certain benefit limitations
which are imposed on the Savings Plan by ERISA and by the Code. The Plan is
intended to constitute an unfunded, unsecured plan of deferred compensation for
a select group of management or highly compensated employees of the Employer.
Plan benefits herein provided are a contractual obligation of the Employer which
shall be paid out of the Employer's general assets. Nevertheless, subject to the
terms hereof and of the Trust Agreement, the Employer may transfer money or
other property to the Trustee to provide Plan benefits hereunder, and the
Trustee shall pay Plan benefits to Members and their beneficiaries out of the
Trust Fund. To the extent that Employer transfers assets to the Trustee pursuant
to the Trust Agreement, the Committee may, but need not, establish procedures
for the Trustees to invest the Trust Fund in accordance with each Member's
designated deemed investments pursuant to Section 4.1 respecting the portion of
the Trust Fund assets equal to such Member's Accounts.
The Compensation Committee, in its sole discretion, may establish the Trust
and direct the Employer to enter into the Trust Agreement. In such event, the
Employer shall remain the owner of all assets in the Trust Fund and the assets
shall be subject to the claims of the Employer's creditors if the Employer ever
becomes insolvent. For purposes hereof, the Employer shall be considered
"insolvent" if (a) the Employer is unable to pay its debts as such debts become
due or (b) the Employer is subject to a pending proceeding as a debtor under the
United Sates Bankruptcy Code (or any successor federal statute). The chief
executive officer of the Employer and its board of directors shall have the duty
to inform the Trustee in writing if the Employer becomes insolvent. Such notice
given under the preceding sentence by any party shall satisfy all of the
parties' duty to give notice. When so informed, the Trustee shall suspend
payments to the Members and hold the assets for the benefit of the Employer's
general creditors. If the Trustee receives a written allegation that the
Employer is insolvent, the Trustee shall suspend payments to the Members and
hold the Trust Fund for the benefit of the Employer's general creditors, and
shall determine in the manner specified in the Trust Agreement whether the
Employer is insolvent. If the Trustee determines that the Employer is not
insolvent, the Trustee shall resume payments to the Members. No Member or
beneficiary shall have any preferred claim to, or any beneficial ownership
interest in, any assets of the Trust Fund, and, upon commencement of
participation in the Plan, each Member shall have agreed to waive his priority
credit position, if any, under applicable state law with respect to the assets
of the Trust Fund.
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XI.
MISCELLANEOUS
11.1 NO CONTRACT OF EMPLOYMENT. The adoption and maintenance of the Plan
shall not be deemed to be a contract between the Employer and any person or to
be consideration for the employment of any person. Nothing herein contained
shall be deemed to (a) give any person the right to be retained in the employ of
the Employer, (b) restrict the right of the Employer to discharge any person at
any time, (c) give the Employer the right to require any person to remain in the
employ of the Employer, or (d) restrict any person's right to terminate his
employment at any time.
11.2 ALIENATION OF INTEREST FORBIDDEN. The interest of a Member or his
beneficiary or beneficiaries hereunder may not be sold, transferred, assigned,
or encumbered in any manner, either voluntarily or involuntarily, and any
attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber, or
charge the same shall be null and void; neither shall the benefits hereunder be
liable for or subject to the debts, contracts, liabilities, engagements or torts
of any person to whom such benefits or funds are payable, nor shall they be an
asset in bankruptcy or subject to garnishment, attachment or other legal or
equitable proceedings.
11.3 WITHHOLDING. All Compensation deferrals and Employer Deferrals and
payments provided for hereunder shall be subject to applicable withholding and
other deductions as shall be required of the Employer under any applicable
local, state or federal law.
11.4 AMENDMENT AND TERMINATION. The Compensation Committee may from time to
time, in its discretion, amend, in whole or in part, any or all of the
provisions of the Plan; provided, however, that no amendment may be made that
would impair the rights of a Member with respect to amounts already allocated to
his Accounts. The Compensation Committee may terminate the Plan at any time. In
the event that the Plan is terminated, the Vested Interest in the balance in a
Member's Accounts shall be paid to such Member or his designated beneficiary in
the manner specified by the Compensation Committee, which may include the
payment of a single lump sum payment in full satisfaction of all of such
Member's or beneficiary's benefits hereunder.
11.5 SEVERABILITY. If any provision of this Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof; instead, each provision shall be fully severable
and the Plan shall be construed and enforced as if said illegal or invalid
provision had never been included herein.
11.6 GUARANTY. Notwithstanding any provisions of the Plan to the contrary,
in the event any Employer fails to make payment of the benefits due under the
Plan on behalf of its Members, whether directly or through the Trust, the
Company shall be liable for and shall make payment of such benefits due as a
guarantor of such entity's obligations hereunder. The guaranty obligations
provided herein shall be satisfied directly and not through the Trust.
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11.7 GOVERNING LAWS. All provisions of the Plan shall be construed in
accordance with the laws of Texas except to the extent preempted by federal law.
XI-2
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EXECUTED this 9th day of December, 1999.
GROUP 1 AUTOMOTIVE, INC.
By: /s/ B. B. HOLLINGSWORTH, JR.
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Name: B. B. Hollingsworth, Jr.
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Title: Chairman, Chief Executive
Officer and President
---------------------------------
(iii)