Exhibit 10.2
EGL, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
EFFECTIVE JANUARY 1, 2002
TABLE OF CONTENTS
<Table>
ARTICLE I PURPOSE................................................1
ARTICLE II DEFINITIONS............................................1
2.1 Accelerated Distribution.............................................1
2.2 Account Earnings.....................................................1
2.3 Beneficiary..........................................................1
2.4 Board. "Board" means the Board of Directors of the Company..........1
2.5 Bonus Deferral Commitment............................................1
2.6 Change of Control....................................................1
2.7 Commission Deferral Commitment.......................................2
2.8 Committee............................................................2
2.9 Company Contribution Account.........................................2
2.10 Compensation.........................................................2
2.11 Compensation Committee...............................................3
2.12 Deferral Commitment..................................................3
2.13 Deferral Period......................................................3
2.14 Disability...........................................................3
2.15 Early Withdrawal.....................................................3
2.16 Earnings Index or Earnings Indices...................................3
2.17 Elective Deferral Account............................................3
2.18 Elective Deferred Compensation.......................................3
2.19 Employer.............................................................3
2.20 Financial Hardship...................................................3
2.21 Hardship Withdrawal..................................................4
2.22 Participant..........................................................4
2.23 Participation Agreement..............................................4
2.24 Plan Benefit.........................................................4
2.25 Retirement...........................................................4
2.26 Salary Deferral Commitment...........................................4
ARTICLE III PARTICIPATION AND DEFERRAL COMMITMENTS.................4
3.1 Eligibility and Participation........................................4
3.2 Elective Deferrals...................................................5
3.3 Limitations on Deferral Commitments..................................5
3.4 Modification of Deferral Commitment..................................5
ARTICLE IV DEFERRED COMPENSATION ACCOUNTS.........................6
4.1 Accounts.............................................................6
4.2 Elective Deferred Compensation.......................................6
4.3 Discretionary Company Contributions..................................6
4.4 Allocation of Accounts...............................................6
4.5 Account Earnings.....................................................6
4.6 Determination of Accounts............................................6
4.7 Vesting of Accounts..................................................7
4.8 Statement of Accounts................................................7
ARTICLE V PLAN BENEFITS..........................................7
5.1 Prior to Termination of Employment...................................7
</Table>
Executive Deferred Compensation Plan Page i
<Table>
5.2 After Termination of Employment......................................8
5.3 Form of Benefit Payment..............................................8
5.4 Commencement of Benefit Payment.....................................10
5.5 Change of Election..................................................10
5.6 Tax Withholding.....................................................10
5.7 Valuation and Settlement............................................10
5.8 Payment to Guardian.................................................10
ARTICLE VI BENEFICIARY DESIGNATION...............................10
6.1 Beneficiary Designation.............................................10
6.2 Changing Beneficiary................................................10
6.3 Community Property..................................................11
6.4 No Beneficiary Designation..........................................11
ARTICLE VII ADMINISTRATION........................................12
7.1 Committee...........................................................12
7.2 Agents..............................................................12
7.3 Binding Effect of Decisions.........................................12
7.4 Indemnification of Committee........................................12
ARTICLE VIII CLAIMS PROCEDURE......................................12
8.1 Claim...............................................................12
8.2 Review of Claim.....................................................12
8.3 Notice of Denial of Claim...........................................13
8.4 Reconsideration of Denied Claim.....................................13
8.5 Employer to Supply Information......................................13
ARTICLE IX AMENDMENT AND TERMINATION OF PLAN.....................14
9.1 Amendment...........................................................14
9.2 Right to Terminate Plan.............................................14
ARTICLE X MISCELLANEOUS.........................................14
10.1 Unfunded Plan.......................................................14
10.2 Unsecured General Creditor..........................................14
10.3 Trust Fund..........................................................15
10.4 Nonalienability.....................................................15
10.5 Not a Contract of Employment........................................15
10.6 Protective Provisions...............................................15
10.7 Governing Law.......................................................15
10.8 Validity............................................................16
10.9 Notice..............................................................16
10.10 Successors..........................................................16
</Table>
ii
EGL, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I
PURPOSE
The purpose of this Executive Deferred Compensation Plan (this
"Plan") is to provide current tax planning opportunities as well as supplemental
funds for the retirement or death of certain select key employees of EGL, Inc.,
a Texas corporation (the "Company"). The Plan shall be in addition to existing
deferred compensation plans and arrangements maintained by the Company. It is
intended that the Plan will aid in retaining and attracting employees of
exceptional ability by providing them with these benefits. This Plan shall be
effective as of January 1, 2002.
ARTICLE II
DEFINITIONS
For purposes of this Plan, the following terms shall have the
meanings indicated, unless the context clearly indicates otherwise:
2.1 Accelerated Distribution. "Accelerated Distribution" means the
distribution made pursuant to Section 5.1(c).
2.2 Account Earnings. "Account Earnings" means the amount to be
credited to the Participant's Elective Deferral Account and Company Contribution
Account pursuant to Section 4.5.
2.3 Beneficiary. "Beneficiary" means the person, persons or entity
entitled under Article VI to receive any Plan benefits payable after a
Participant's death.
2.4 Board. "Board" means the Board of Directors of the Company.
2.5 Bonus Deferral Commitment. "Bonus Deferral Commitment" means the
bonus deferral made pursuant to Section 3.2(b).
2.6 Change of Control. "Change of Control" means the occurrence of any
of the following events:
(a) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than the Company's current shareholders or a trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or any corporation owned, directly or indirectly, by the
Company's shareholders in substantially the
Executive Deferred Compensation Plan Page 1
same proportions as their ownership of the Company's stock, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the total combined voting power of the
Company's then outstanding securities; or
(b) The majority of the members of the Board ceases to be
comprised of individuals who are Continuing Members; for such purpose,
a "Continuing Member" shall mean an individual who is a member of the
Board on the effective date of this Plan and any successor of a
Continuing Member who is elected to the Board or nominated for such
election by action of a majority of Continuing Members then serving on
the Board, or
(c) The shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least fifty percent (50%)
of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation, or the shareholders of the Company approve a
plan of complete liquidation or dissolution of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
2.7 Commission Deferral Commitment. "Commission Deferral Commitment"
means the commission deferral made pursuant to Section 3.2(c).
2.8 Committee. "Committee" means the administrative committee made up
of at least three individuals appointed by the Compensation Committee. The
Committee shall be responsible for administering the Plan.
2.9 Company Contribution Account. "Company Contribution Account" means
the Account maintained in accordance with Article IV with respect to Company
contributions pursuant to Section 4.3 of this Plan. The Company Contribution
Account shall be utilized solely as a device for the determination and
measurement of the amounts to be paid to the Participant pursuant to this Plan.
The Company Contribution Account shall not constitute or be treated as a trust
fund of any kind.
2.10 Compensation. "Compensation" means the salary, bonus, and
commissions payable to a Participant during the calendar year and considered to
be "wages" for purposes of federal income tax withholding, before reduction for
amounts deferred under this Plan, salary reduction contributions under Section
401(k) of the Internal Revenue Code, as amended from time to time (the "Code"),
or any other deferral arrangements. Compensation does not include expense
reimbursements, severance wages, any form of noncash compensation or benefits,
group life insurance premiums, income from the exercise of stock options or
other receipt of Company stock, or any other payments or benefits other than
normal compensation.
Deferred Compensation Plan Page 2
2.11 Compensation Committee. "Compensation Committee" means the
Compensation Committee of the Board.
2.12 Deferral Commitment. "Deferral Commitment" means an election to
defer Compensation made by a Participant pursuant to Article III and for which
the Participant has submitted a separate Participation Agreement to the
Committee.
2.13 Deferral Period. "Deferral Period" means the period over which a
Participant has elected to defer a portion of his Compensation. Each calendar
year shall be a separate Deferral Period.
2.14 Disability. "Disability" means a mental or physical condition
that, in the opinion of a licensed physician approved by the Committee, renders
a Participant permanently incapable of satisfactorily performing his usual
duties for the Company or the duties of such other position as the Company may
make available for him for which he is qualified by reason of training,
education or experience.
2.15 Early Withdrawal. "Early Withdrawal" means a distribution from a
Participant's Elective Deferral Account pursuant to Section 5.1(a).
2.16 Earnings Index or Earnings Indices. "Earnings Index" or "Earnings
Indices" means the portfolios or funds selected by the Committee to be used in
calculating Account Earnings. Each Earnings Index shall be treated as a phantom
investment fund that shall be credited with earnings (whether a gain or loss)
according to the performance of the actual fund or portfolio.
2.17 Elective Deferral Account. "Elective Deferral Account" means the
Account maintained by the Company in accordance with Article IV with respect to
any elective deferral of Compensation pursuant to Section 4.2 of this Plan. A
Participant's Elective Deferral Account shall be utilized solely as a device for
the determination and measurement of the amounts to be paid to the Participant
pursuant to this Plan and shall not constitute or be treated as a trust fund of
any kind.
2.18 Elective Deferred Compensation. "Elective Deferred Compensation"
means the amount of Compensation that a Participant elects to defer pursuant to
a Deferral Commitment.
2.19 Employer. "Employer" means EGL, Inc. or any successor to the
business thereof, and any affiliated or subsidiary entities designated by the
Committee.
2.20 Financial Hardship. "Financial Hardship" means an immediate and
severe financial need of the Participant, resulting from any of the following:
(a) expenses which are not covered by insurance and which the
Participant or his or her spouse or dependent has incurred as a result
of, or is required to incur in order to receive, medical care;
Deferred Compensation Plan Page 3
(b) the need to prevent eviction from the Participant's
personal residence or foreclosure on the mortgage of the Participant's
principal residence; or
(c) any other circumstance that is determined by the Committee
in its sole discretion to constitute a financial hardship which is not
covered by insurance and which cannot reasonably be relieved by the
liquidation of the Participant's assets.
2.21 Hardship Withdrawal. "Hardship Withdrawal" means a distribution
from a Participant's Elective Deferral Account pursuant to Section 5.1(b).
2.22 Participant. "Participant" means any individual who is
participating or has participated in this Plan as provided in Article III.
2.23 Participation Agreement. "Participation Agreement" means the
agreement submitted by a Participant to the Committee prior to the beginning of
the Deferral Period, with respect to a Deferral Commitment made for such
Deferral Period.
2.24 Plan Benefit. "Plan Benefit" means the benefit payable to a
Participant as calculated in Article V.
2.25 Retirement. "Retirement" means termination after the earlier of:
(a) Age 62, or
(b) Age 55, provided that, on the termination date, the
Participant's age plus years of service is greater than or equal to 62.
2.26 Salary Deferral Commitment. "Salary Deferral Commitment" means the
salary deferral made pursuant to Section 3.2(a).
ARTICLE III
PARTICIPATION AND DEFERRAL COMMITMENTS
3.1 Eligibility and Participation.
(a) Eligibility. An employee of the Employer shall be eligible
to participate in this Plan if the employee is a management or highly
compensated employee and is named by the Committee to be a Participant
in this Plan.
(b) Participation. An eligible employee may elect to
participate in this Plan with respect to any Deferral Period by
submitting a Participation Agreement to the Committee by December 31 of
the calendar year immediately preceding the Deferral Period.
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(c) Partial Year Participation. In the event that an employee
first becomes eligible to participate during a calendar year, a
Participation Agreement must be submitted to the Committee no later
than thirty (30) days following notification to the employee of
eligibility to participate. Such Participation Agreement shall be
effective only with regard to Compensation earned following the
submission of the Participation Agreement to the Committee.
3.2 Elective Deferrals. A Participant may elect Deferral Commitments in
the Participation Agreement as follows:
(a) Salary Deferral Commitment. A Salary Deferral Commitment
shall be related to the salary payable by Company to the Participant
during the Deferral Period. The amount to be deferred shall be stated
as a percentage of the salary to be paid during the Deferral Period, as
a flat dollar amount for the Deferral Period, or in such other form as
allowed by the Committee.
(b) Bonus Deferral Commitment. A Bonus Deferral Commitment
shall be related to the bonus payable to the Participant during the
Deferral Period. The amount to be deferred shall be stated as a
percentage of any bonus payable during the Deferral Period, as a flat
dollar amount from any bonus payable during the Deferral Period, or in
such other form as allowed by the Committee.
(c) Commission Deferral Commitment. A Commission Deferral
Commitment shall be related to the commissions payable to the
Participant during the Deferral Period. The amount to be deferred shall
be stated as a percentage of any commissions payable during the
Deferral Period, as a flat dollar amount from any commissions payable
during the Deferral Period, or in such other form as allowed by the
Committee.
3.3 Limitations on Deferral Commitments. The following limitations
shall apply to Deferral Commitments:
(a) Minimum. The minimum deferral amount for a Salary and
Bonus Deferral Commitment shall be two thousand dollars ($2,000) per
Deferral Period.
(b) Maximum. The maximum deferral amount for a Salary, Bonus,
or Commission Deferral Commitment shall be ninety percent (90%) of any
such salary, bonus, or commission to be paid or payable during the
Deferral Period.
(c) Changes in Minimum or Maximum. The Committee may amend the
plan to change the minimum or maximum deferral amounts from time to
time by giving written notice to all Participants. No such change may
affect a Deferral Commitment made prior to the Committee's action.
3.4 Modification of Deferral Commitment. A Deferral Commitment shall be
irrevocable except that the Committee shall permit a Participant to reduce the
amount to be deferred, or waive the remainder of the Deferral Commitment upon a
finding that the Participant has suffered a Financial Hardship. The Committee
may, in its discretion, allow a Participant to
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reduce or waive a Deferral Commitment for reasons other than Financial Hardship
upon Participant's application to the Committee. If the Committee grants the
application, the Participant will not be allowed to enter into a new Deferral
Commitment for the remainder of the Deferral Period. Any resumption of the
Participant's deferrals under this Plan shall be made only at the election of
the Participant in accordance with this Article III.
ARTICLE IV
DEFERRED COMPENSATION ACCOUNTS
4.1 Accounts. For record keeping purposes only, separate accounts shall
be maintained for each Participant to reflect his or her Elective Deferral
Account and Company Contribution Account (collectively referred to herein as
"Accounts"). Separate sub-accounts shall be maintained to the extent necessary
to properly reflect the Participant's election of Earnings Indices and vesting
of Company contributions under Sections 4.4 and 4.7.
4.2 Elective Deferred Compensation. A Participant's Elective Deferred
Compensation shall be credited to the Participant's Elective Deferral Account as
the corresponding nondeferred portion of the Compensation becomes or would have
become payable. Any withholding of taxes or other amounts which is required by
state, federal or local law with respect to deferred Compensation shall be
withheld from the Participant's nondeferred Compensation to the maximum extent
possible with any excess reducing the amount deferred.
4.3 Discretionary Company Contributions. The Company may make
discretionary Company contributions to the Participant's Company Contribution
Account. Discretionary Company contributions shall be credited at such times and
in such amounts as the Committee in its sole discretion shall determine. The
Committee shall notify Participants of contributions to their Company
Contribution Account under this Section 4.3.
4.4 Allocation of Accounts. A Participant shall allocate the Accounts
among the Earning Indices selected by the Committee. The Committee may change
the Earnings Indices at any time. The Elective Deferral Account and Company
Contribution Account shall be treated as if invested in the Earnings Indices
chosen by the Participant. The Participant's initial allocation shall be set
forth in the Participation Agreement. A change in allocation among Earning
Indices will be allowed once each day in the form and manner prescribed by the
Committee. Changes made while the New York Stock Exchange is open will be
effective at the end of the day on which the change was made. Changes made when
the New York Stock Exchange is closed will be effective at the end of the next
day on which the New York Stock Exchange is open.
4.5 Account Earnings. The Accounts of each Participant shall be
credited with earnings as if such Accounts were actually invested in the
Earnings Indices elected by the Participant or retired Participant pursuant to
Section 4.4.
4.6 Determination of Accounts. Each Participant's Elective Deferral
Account as of each day shall consist of the balance of such account as of the
immediately preceding day, plus (a) the Participant's Elective Deferred
Compensation credited during the day, and (b) the applicable Account Earnings,
minus the amount of any distributions from such account made
Deferred Compensation Plan Page 6
during the day. Each Participant's Company Contribution Account as of each day
shall consist of the balance of such account as of the immediately preceding
day, plus (a) any discretionary Company contributions credited during the day,
and (b) the applicable Account Earnings, minus the amount of any distributions
from such account made during the day. The specific method of valuing the
Accounts shall be under the sole discretion of the Committee.
4.7 Vesting of Accounts. Participants shall be vested in their Accounts
as follows:
(a) Each Participant's Elective Deferral Account, including
earnings thereon, shall be 100% vested at all times.
(b) Each discretionary Company contribution credited to each
Participant's Company Contribution Account under Section 4.3 and
earnings thereon shall be vested according to the sole discretion of
the Committee. The vesting schedule applied to each discretionary
Company contribution shall be communicated to the Participant at the
same time that the Participant is informed of such discretionary
Company contribution. Notwithstanding the vesting schedule established
by the Committee with respect to a discretionary Company contribution,
such discretionary Company contribution and the earnings thereon shall
become 100% vested on the occurrence of any of the following events:
(i) The Participant's Retirement,
(ii) The Participant's Disability,
(iii) The Participant's death, or
(iii) A Change of Control of the Company.
4.8 Statement of Accounts. The Committee shall submit to each
Participant, within ninety (90) days after the close of each calendar year and
at such other time as determined by the Committee, a statement setting forth the
balance of and the credits to the Accounts maintained for such Participant.
ARTICLE V
PLAN BENEFITS
5.1 Prior to Termination of Employment. A Participant's Elective
Deferral Account may be distributed to the Participant prior to termination of
employment as follows:
(a) Early Withdrawal. A Participant may elect in a
Participation Agreement to withdraw all or any portion of the amount
deferred by that Participation Agreement, and the earnings thereon, as
of a date specified in the Participation Agreement. Such date shall not
be sooner than two (2) years after the date the Deferral Period
commences. Such election shall be made at the time the Deferral
Commitment is made and shall be irrevocable. For purposes of Early
Withdrawals under this Section 5.1(a), the Participant's Elective
Deferral Account
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shall be valued as of the end of the day specified by the Participant
in the Participation Agreement.
(b) Hardship Withdrawals. Upon a finding that a Participant
has suffered a Financial Hardship, the Committee may, in its sole
discretion, make distributions from the Participant's Elective Deferral
Account. A Participant requesting a Hardship Withdrawal shall apply in
writing to the Committee and shall provide such additional information
as the Committee may require. The amount of the Hardship Withdrawal
shall be limited to the amount reasonably necessary to meet the
Participant's needs resulting from the Financial Hardship, including
any amounts necessary to pay federal, state and/or local income taxes
reasonably anticipated to result from the distribution. If a
distribution is made due to Financial Hardship in accordance with this
Section 5.1(b), the Participant's deferrals under this Plan shall cease
for the remainder of the Deferral Period. Any resumption of the
Participant's deferrals under this Plan shall be made only at the
election of the Participant in accordance with Article III herein.
(c) Accelerated Distribution. Notwithstanding any other
provision of this Plan to the contrary, a Participant shall be entitled
to receive, upon written request to the Committee, a lump sum
distribution equal to ninety percent (90%) of the Participant's
Elective Deferral Account as of the end of the day immediately
preceding the date on which the Committee receives the written request
("Accelerated Distribution"). The remaining balance of the
Participant's Elective Deferral Account shall be forfeited by the
Participant. After an Accelerated Distribution, the Participant's
deferrals under this Plan shall cease for the remainder of the Deferral
Period. Any resumption of the Participant's deferrals under this Plan
shall be made only at the election of the Participant in accordance
with Article III herein.
5.2 After Termination of Employment. Upon a Participant's termination
of employment with the Employer for any reason, the Participant shall become
entitled to receive the payment of the Participant's Elective Deferral Account
and the vested portion of the Participant's Company Contribution Account. The
benefit will be paid in the form set forth in Section 5.3.
5.3 Form of Benefit Payment. Benefits payable under Sections 5.1 and
5.2 shall be payable in the following form:
(a) Distributions Prior to Termination. Early Withdrawals
under Section 5.1(a) will be paid as elected by the Participant in the
Participation Agreement. Hardship Withdrawals under Section 5.1(b) will
be paid in a lump sum within thirty (30) days after the Committee's
decision. Accelerated Distributions under Section 5.1(c) will be paid
in a lump sum within thirty (30) days of the receipt of the request by
the Committee.
(b) Termination Prior to Retirement, Disability, or Change of
Control. Benefits payable as a result of termination for any reason
other than the
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Participant's Retirement or Disability or prior to a Change of Control
of the Company shall be paid in a lump sum during the month of April in
the year immediately following the Participant's termination.
(c) Termination Due to Retirement, Disability, or After Change
of Control. Benefits payable as a result of termination due to the
Participant's Retirement or Disability or after a Change of Control of
the Company shall be paid in the form selected by the Participant at
the time of the Deferral Commitment. Options for the form of benefit
payment shall include:
(i) A lump sum payment, or
(ii) Substantially equal annual installments of the
Account over a period of five (5), ten (10), or fifteen (15)
years. Account Earnings shall continue to accrue during the
payment period on the unpaid balance in the Participant's
Accounts.
(d) Death Benefits.
(i) Upon the death of the Participant prior to
termination of employment, the Company shall pay to the
Participant's Beneficiary, as designated in Article VI, an
amount equal to the balance of the Participant's Elective
Deferral Account and Company Contribution Amount in the form
selected by the Participant at the time of the Deferral
Commitment. Options for the form of benefit payment shall
include a lump sum payment or substantially equal annual
installments of the Participant's Accounts over a period of
five (5), ten (10), or fifteen (15) years; provided, however,
that any benefits payable hereunder to a trust or estate shall
be made in a lump sum. Account Earnings shall continue to
accrue during the payment period on the unpaid balance of the
Participant's Accounts.
(ii) Upon the death of a Participant after benefit
payments have commenced, the Participant's Beneficiary shall
receive the remaining unpaid balance in the Participant's
Accounts in the same manner as the Participant was being paid
prior to the Participant's death; provided, however, that any
benefits payable hereunder to a trust or estate shall be made
in a lump sum. The Committee may, in its sole discretion, pay
any death benefit hereunder in the form of a lump sum.
(e) Small Account(s). Notwithstanding any provision of this
Section 5.3 to the contrary, after a Participant becomes entitled to
receive benefit payments, if the total amount of the Participant's
Accounts is less than ten thousand dollars ($10,000) on a payment date,
the Accounts shall be paid in a lump sum.
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5.4 Commencement of Benefit Payment. Except as otherwise provided in
Section 5.3(a), benefits shall commence during the month of April in the year
immediately following a Participant's termination of employment. If such
Participant selected payment in the form of substantially equal annual
installments, as described in Section 5.3(c)(ii), then benefits shall commence
during the month of April in the year immediately following the Participant's
termination and each annual installment thereafter shall be paid during the
month of April in the respective year until full payment has been made.
5.5 Change of Election. A Participant may change a previous election
regarding the form of benefit payment as long as the new election is filed with
the Committee at least twelve (12) full months prior to such Participant's
termination of employment. Any new election regarding the form of benefit
payment that is filed with the Committee during the twelve (12) months prior to
the Participant's termination of employment shall be ignored and reference shall
be made to the prior filed election in determining the form of benefit payment.
5.6 Tax Withholding. To the extent required by federal, state, or local
law in effect at the time payments are made, the Employer shall withhold from
any amount that is included in the Participant's income hereunder any taxes
required to be withheld by such law(s).
5.7 Valuation and Settlement. The amount of a lump sum payment and the
initial amount of installments shall be based on the value of the Participant's
Accounts as of the end of the last day of the Participant's employment.
5.8 Payment to Guardian. The Committee may direct payment to the duly
appointed guardian, conservator, or other similar legal representative of a
Participant or Beneficiary to whom payment is due. In the absence of such a
legal representative, the Committee may, in its sole and absolute discretion,
make payment to a person having the care and custody of a minor, incompetent or
person incapable of handling the disposition of property upon proof satisfactory
to the Committee of incompetency, minority, or incapacity. Such distribution
shall completely discharge the Committee from all liability with respect to such
benefit.
ARTICLE VI
BENEFICIARY DESIGNATION
6.1 Beneficiary Designation. Subject to Section 6.3, each Participant
shall have the right, at any time, to designate one (1) or more persons or an
entity as Beneficiary (both primary as well as secondary) to whom benefits under
this Plan shall be paid in the event of such Participant's death prior to
complete distribution of the Participant's Accounts. Each Beneficiary
designation shall be in a written form prescribed by the Committee and shall be
effective only when filed with the Committee during the Participant's lifetime.
6.2 Changing Beneficiary. Subject to Section 6.3, any Beneficiary
designation may be changed by a Participant without the consent of the
previously named Beneficiary by the filing of a new Beneficiary designation with
the Committee. The filing of a new Beneficiary designation shall cancel all
Beneficiary designations previously filed.
Deferred Compensation Plan Page 10
6.3 Community Property. If the Participant resides in a community
property state, the following rules shall apply:
(a) Designation by a married Participant of a Beneficiary
other than the Participant's spouse shall not be effective unless the
Participant's spouse executes a written consent that acknowledges the
effect of the Beneficiary designation, or it is established that the
consent cannot be obtained because the spouse cannot be located.
(b) A married Participant's Beneficiary designation may be
changed by a Participant with the consent of the Participant's spouse
as provided for in Section 6.3(a) by the filing of a new Beneficiary
designation with the Committee.
(c) If the Participant's marital status changes after the
Participant has designated a Beneficiary, the following shall apply:
(i) If the Participant is married at the time of
death but was unmarried when the Beneficiary designation was
made, the Beneficiary designation shall be void unless the
spouse has consented to it in the manner prescribed in Section
6.3(a).
(ii) If the Participant is unmarried at the time of
death but was married when the Beneficiary designation was
made:
a) The Beneficiary designation shall be void
if the Participant's spouse was named as a
Beneficiary.
b) The Beneficiary designation shall remain
valid if the Participant's spouse was not named as a
Beneficiary.
(iii) If the Participant was married when the
Beneficiary designation was made and is married to a different
spouse at death, the Beneficiary designation shall be void
unless the new spouse has consented to it in the manner
prescribed in Section 6.3(a).
6.4 No Beneficiary Designation. If any Participant fails to designate a
Beneficiary in the manner provided in Section 6.1, if the Beneficiary
designation is void, or if the Beneficiary designated by a deceased Participant
dies before the Participant or before complete distribution of the Participant's
Accounts, the Participant's Beneficiary shall be the person in the first of the
following classes in which there is a survivor:
(a) The Participant's spouse;
(b) The Participant's children in equal shares, except that if
any of the children predeceases the Participant but leaves issue
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surviving, then such issue shall take, by right of representation, the
share the parent would have taken if living; or
(c) The Participant's estate.
ARTICLE VII
ADMINISTRATION
7.1 Committee. This Plan shall be administered by the Committee. The
Committee shall have the discretionary authority to interpret and enforce all
appropriate rules and regulations for the administration of this Plan and decide
or resolve any and all questions, including interpretations of this Plan, as may
arise. A majority vote of the Committee members shall control any decision.
Members of the Committee may be Participants under this Plan.
7.2 Agents. The Committee may, from time to time, employ agents and
delegate to them such administrative duties as it sees fit, and may, from time
to time, consult with counsel who may be counsel to the Company.
7.3 Binding Effect of Decisions. The decision or action of the
Committee with respect to any question arising out of or in connection with the
administration, interpretation and application of this Plan and the rules and
regulations promulgated hereunder shall be final, conclusive and binding upon
all persons having any interest in this Plan.
7.4 Indemnification of Committee. The Company shall indemnify and hold
harmless the members of the Committee against any and all claims, loss, damage,
expense or liability arising from any action or failure to act with respect to
this Plan on account of such member's service on the Committee, except in the
case of gross negligence or willful misconduct by such member or as expressly
provided by statute.
ARTICLE VIII
CLAIMS PROCEDURE
8.1 Claim. The Committee shall establish rules and procedures to be
followed by Participants and Beneficiaries in (a) filing claims for benefits,
and (b) for furnishing and verifying proofs necessary to establish the right to
benefits in accordance with this Plan, consistent with the remainder of this
Article VIII. Such rules and procedures shall require that claims and proofs be
made in writing and directed to the Committee.
8.2 Review of Claim. The Committee shall review all claims for
benefits. Upon receipt by the Committee of such a claim, it shall determine all
facts which are necessary to establish the right of the claimant to benefits
under the provisions of this Plan and the amount thereof as herein provided
within ninety (90) days of receipt of such claim. If prior to the expiration of
the initial ninety (90) day period, the Committee determines additional time is
needed to come to a determination on the claim, the Committee shall provide
written notice to the Participant, Beneficiary or other claimant of the need for
the extension, not to exceed a total of one hundred eighty (180) days from the
date the application was received.
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8.3 Notice of Denial of Claim. In the event that any Participant,
Beneficiary or other claimant claims to be entitled to a benefit under this
Plan, and the Committee determines that such claim should be denied, in whole or
in part, the Committee shall, in writing, notify such claimant that the claim
has been denied, in whole or in part, setting forth the specific reasons for
such denial. Such notification shall be written in a manner reasonably expected
to be understood by such claimant, shall refer to the specific sections of this
Plan relied on, shall describe any additional material or information necessary
for the claimant to perfect the claim, shall provide an explanation of why such
material or information is necessary, and, where appropriate, shall include an
explanation of how the claimant can obtain reconsideration of such denial.
8.4 Reconsideration of Denied Claim.
(a) Within sixty (60) days after receipt of the notice of the
denial of a claim, such claimant or duly authorized representative may
request, by mailing or delivery of such written notice to the
Committee, a reconsideration by the Committee of the decision denying
the claim. If the claimant or duly authorized representative fails to
request such a reconsideration within such sixty (60) day period, it
shall be conclusively determined for all purposes of this Plan that the
denial of such claim by the Committee is correct. If such claimant or
duly authorized representative requests a reconsideration within such
sixty (60) day period, the claimant or duly authorized representative
shall have thirty (30) days after filing a request for reconsideration
to submit additional written material in support of the claim, review
pertinent documents, and submit issues and comments in writing.
(b) After such reconsideration request, the Committee shall
determine within sixty (60) days of receipt of the claimant's request
for reconsideration whether such denial of the claim was correct and
shall notify such claimant in writing of its determination. The written
notice of the Committee's decision shall be in writing and shall
include specific reasons for the decision, shall be written in a manner
reasonably calculated to be understood by the claimant, and shall
identify specific references to the pertinent Plan provisions on which
the decision is based. In the event of special circumstances determined
by the Committee, the time for the Committee to make a decision may be
extended by an additional sixty (60) days upon written notice to the
claimant prior to the commencement of the extension.
8.5 Employer to Supply Information. To enable the Committee to perform
its duties, the Employer shall supply full and timely information to the
Committee of all matters relating to the Retirement, Disability, death, or other
cause for termination of employment of all Participants, and such other
pertinent facts as the Committee may require.
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ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
9.1 Amendment. The Committee may at any time amend this Plan by written
instrument, notice of which is given to all Participants and to any
Beneficiaries to whom a benefit is due. No amendment shall reduce the amount
accrued in any Accounts as of the date such notice of the amendment is given.
Material changes to this Plan will be effective immediately, but must be
ratified and approved at the Compensation Committee meeting immediately
following the effective date of such amendment. After a Change of Control of the
Company, this Plan may not be amended without the consent of at least 75% of the
Participants.
9.2 Right to Terminate Plan. The Compensation Committee may at any time
partially or completely terminate this Plan if, in its judgment, the tax,
accounting, or other effects of the continuance of this Plan would not be in the
best interests of the Employer.
(a) Partial Termination. The Compensation Committee may
partially terminate this Plan by instructing the Committee not to
accept any additional Deferral Commitments. If such a partial
termination occurs, this Plan shall continue to operate and be
effective with regard to Deferral Commitments entered into prior to the
effective date of such partial termination.
(b) Complete Termination. The Compensation Committee may
completely terminate this Plan by choosing not to accept any additional
Deferral Commitments, and by terminating all ongoing Deferral
Commitments. If such a complete termination occurs, this Plan shall
cease to operate and the Employer shall pay out all Accounts. Payment
shall be made in a lump sum within sixty (60) days after the
Compensation Committee terminates this Plan.
(c) Termination After Change of Control. After a Change of
Control of the Company, this Plan may be completely or partially
terminated at the sole discretion of the Employer.
ARTICLE X
MISCELLANEOUS
10.1 Unfunded Plan. This Plan is an unfunded plan maintained primarily
to provide deferred compensation benefits for a select group of management or
highly compensated employees within the meaning of Sections 201, 301 and 401 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and,
therefore, is exempt from the provisions of Parts 2, 3 and 4 of Title I of
ERISA.
10.2 Unsecured General Creditor. Participants and Beneficiaries shall
be unsecured general creditors, with no secured or preferential right to any
assets of the Employer or any other party for payment of benefits under this
Plan. Any mutual fund shares, stocks, bonds or other property purchased by the
Employer in connection with this Plan shall remain the Employer's
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general, unpledged, and unrestricted assets. The Employer's obligation under
this Plan shall be an unfunded and unsecured promise to pay money in the future.
10.3 Trust Fund. At its discretion, the Employer may establish one (1)
or more trusts, with such trustees as the Committee may approve, for the purpose
of providing for the payment of benefits owed under this Plan. Although such a
trust shall be irrevocable, its assets shall be held for payment of all the
Company's general creditors in the event of the Company's insolvency or
bankruptcy. To the extent any benefits provided under this Plan are paid from
any such trust, the Employer shall have no further obligation to pay them. If
not paid from the trust, such benefits shall remain the obligation of the
Employer. After the occurrence of a Change of Control, the Employer will deposit
an amount in trust at least equal to the amount necessary to cause the trust's
assets to equal the total of all Accounts under this Plan. Thereafter, the
Employer will make additional deposits, no less often than monthly, as required
to maintain trust assets at a level at least equal the total of all Accounts
under this Plan.
10.4 Nonalienability. The Committee may recognize the right of an
alternate payee named in a domestic relations order to receive all or a portion
of a Participant's benefit under this Plan, provided that (a) the domestic
relations order would be a "qualified domestic relations order" within the
meaning of Code Section 414(p) if Code Section 414(p) were applicable to this
Plan; (b) the domestic relations order does not purport to give the alternate
payee any right to assets of the Company or its affiliates; and (c) the domestic
relations order does not purport to give the alternate payee any right to
receive payments under this Plan before the Participant is eligible to receive
such payments. If the domestic relations order purports to give the alternate
payee a share of a benefit to which the Participant currently has a contingent
or nonvested right, the alternate payee shall not be entitled to receive any
payment from this Plan with respect to the benefit unless the Participant's
right to the benefit becomes nonforfeitable. Except as set forth in the
preceding two sentences with respect to domestic relations orders, and except as
required under applicable federal, state, or local laws concerning the
withholding of tax, rights to benefits payable under this Plan are not subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
attachment or other legal process, or encumbrance of any kind. Any attempt to
alienate, sell, transfer, assign, pledge, or otherwise encumber any such
supplemental benefit, whether currently or thereafter payable, shall be void.
10.5 Not a Contract of Employment. This Plan shall not constitute a
contract of employment between the Employer and the Participant. Nothing in this
Plan shall give a Participant the right to be retained in the service of the
Employer or to interfere with the right of the Employer to discipline or
discharge a Participant at any time.
10.6 Protective Provisions. A Participant shall cooperate with the
Employer by furnishing any and all information and taking other actions as
requested by the Employer in order to facilitate the administration of this Plan
and the payment of benefits hereunder.
10.7 Governing Law. The provisions of this Plan shall be construed and
interpreted according to the laws of the state of Texas, except as preempted by
federal law.
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10.8 Validity. In case any provision of this Plan shall be held 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 and invalid provision had never been inserted herein.
10.9 Notice. Any notice required or permitted under this Plan shall be
sufficient if in writing and hand delivered or sent by registered or certified
mail. Such notice shall be deemed as 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. Mailed notice to the Committee shall be
directed to the Company's address. Mailed notice to a Participant or Beneficiary
shall be directed to the individual's last known address in the Employer's
records.
10.10 Successors. The provisions of this Plan shall bind and inure to
the benefit of the Employer and its successors and assigns. The term
"successors" as used herein shall include any corporate or other business entity
which shall, whether by merger, consolidation, purchase or otherwise, acquire
all or substantially all of the business and assets of the Employer, and
successors of any such corporation or other business entity.
EGL, INC.
By: Dated:
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