EXHIBIT 10(hh)(1)
ARKLA, INC.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
Arkla, Inc. (herein "Arkla" or "the Company"), a Delaware corporation,
hereby establishes the following Arkla, Inc. Deferred Compensation Plan for
Directors (the "Plan").
1. Purpose. Each member of the Board of Directors of Arkla, or of any
successor company, and of Advisory Board(s) of divisions of the Company (herein
collectively referred to as "Director"), is entitled to receive compensation for
services rendered as a member of such Board of Directors or Advisory Board (the
"Boards"), and for attendance at the meetings of the Boards and the meetings of
certain committees thereof of which the Director is a member. It is the purpose
of this Plan to provide an alternate method of compensation for Directors in
order to enhance the ability of the Company to retain and to attract persons of
experience, ability, industry, loyalty and inventiveness to serve on their
respective Boards.
2. Adoption of Plan. Arkla hereby adopts this Plan in the establishment
thereof. The Executive Compensation Committee of the Board of Directors of the
Company ("the Committee") shall administer the plan, and to the extent
necessary, make all determinations thereunder.
3. Participation. Any Director of Arkla or Advisory Director of any of
its divisions who is entitled to receive compensation as a Director, may elect
to have all or any part of the compensation otherwise payable to such Director
deferred ("Deferred Compensation") and paid at the time and in the manner
prescribed in Paragraph 5 below. Such election shall be made by notice in
writing delivered to the Secretary of the Company substantially in the form
attached hereto as Exhibit A and shall be applicable only with respect to
compensation for services rendered subsequent to the date of delivery of such
written notice. The election shall operate as a
deferral only with respect to compensation directly related to a participating
Director's membership on one or more of the Boards and attendance at meetings of
such Board(s) or Committee(s) thereof, and shall have no application with
respect to compensation earned in any other capacity. The election may be
revoked or modified as to subsequent periods of service by filing with the
Secretary a new election to be effective with respect to compensation otherwise
payable for services rendered on or after the first day of the month following
the month in which such election is delivered, or such later date as is
specified herein.
4. Deferred Compensation Account.
(a) Establishment of Account. The Company shall establish a
Deferred Compensation Account for each participating Director which shall be
credited with an amount equal to the amount of the Deferred Compensation as of
the date on which such Deferred Compensation would have been paid to each such
participating Director if such amount had not been deferred.
(b) Ownership and Control of Amounts Credited to Deferred
Compensation Account. The Company shall exercise sole control over each Deferred
Compensation Account established and maintained for each participating Director.
All sums credited thereto and any assets represented by such credits shall at
all times remain the unrestricted property of the Company, subject to the claims
of its general creditors, and shall at all times be available for use by the
Company for whatever purpose it desires.
(c) Increase to Account. The Company shall credit each
Deferred Compensation Account established and maintained for each participating
Director with an amount determined by multiplying the account balance by the
greater of:
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(i) the prime commercial lending rate of interest
established from time to time by Morgan Guaranty Trust Company of New
York;
(ii) the weighted-average rate of interest applicable
to the Company's consolidated long-term debt obligations outstanding as
of December 31 of the year preceding that for which the Account is to
be credited (long-term debt obligations are defined for purposes of
this agreement as those obligations with a maturity date of one year or
more from December 31 of the year for which the determination is made);
or
(iii) seven percent.
The amounts determined pursuant to this paragraph shall be
calculated on a daily basis and shall be accumulated (but not credited
to the account) for each quarter and then, at the end of each quarter,
the account shall be credited with the amount so accumulated for the
quarter.
(d) Charges Against Account. The Company shall charge each
Deferred Compensation Account established and maintained for each
participating Director with the amount actually distributed from such
account to the participating Director or his or her Beneficiaries
pursuant to Paragraphs 5 or 6 of this Agreement.
5. Payment of Benefits.
(a) Deferred Payments to Participating Director. At the time
of a Director's initial election to participate in the Plan, and each
time a new deferral election is made, the Director shall also make an
election with respect to the distribution of amounts deferred under
such election plus the amounts accumulated in the account. A
participating Director may elect to receive the amounts subject to each
separate election in one payment or in a series of installments,
payable quarterly, semi-annually or annually, as the Director shall
elect over a period not to exceed 10 years. The first installment (or
the single payment if the Director has so
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elected) shall be paid on the date such participating Director shall have
designated in the applicable election form. Subsequent installments shall be
paid on the first day of each succeeding period specified in the election until
the entire amount credited to the participating Director's Deferred Compensation
Account pursuant to such election shall have been paid. Amounts held pending
distribution pursuant to this Paragraph 5 shall continue to be credited with
increases thereto pursuant to the provisions of Paragraph 4(c).
(b) Effect of Participating Director Ceasing to be Director.
Any Deferred Compensation attributable to services rendered prior to the date a
participating Director ceases to be a Director shall continue to be deferred,
and shall be distributed in accordance with the election made by such Director.
Amounts held pending distribution pursuant to such election shall continue to be
credited with increases there to pursuant to the provisions of Paragraph 4(c).
(c) Nature and Source of Payments. The amounts credited by the
Company to the Deferred Compensation Accounts pursuant to Paragraph 4 hereof are
compensation for services, and the benefits provided under the Plan with respect
to such amounts shall constitute a liability of the Company to the participating
Directors in accordance with the terms hereof. Such payments shall be made from
the general funds of the Company. No special or separate fund need be
established, nor other segregation of assets made, to assure the payment of such
benefits, and no participating Director shall have any interest in any
particular asset of the Company by virtue of the existence of a credit balance
in any of such participating Director's Deferred Compensation Account(s).
6. Early Distributions with a Five Percent (5%) Penalty. If a
participating Director establishes to the satisfaction of the Committee the
existence of an emergency condition in his personal financial affairs, the
Committee may, in its discretion, authorize the payment to such
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participating Director of an amount not to exceed the balance of the Deferred
Compensation Account, provided that such participating Director shall forfeit
and have deducted therefrom an amount equal to five percent (5%) of the payment
authorized. A participating Director shall have no right to any such early
distribution, and the Committee shall have the sole power and discretion to
authorize or refuse any such early distribution as it may from time to time see
fit. Nor shall any exercise by the Committee of such discretion to authorize
such early distribution from time to time constitute a waiver of the right to
refuse such early distribution at some later time, or otherwise be construed as
providing any participating Director with the right to demand any such early
distribution.
7. Non-Alienation of Benefits. No benefit which shall be payable under
this Plan shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt to so
alienate or encumber any such benefit shall be void. No such benefit shall be
subject to any debt, contract, liability, engagement, or tort of the person who
shall be entitled to such benefit, nor shall it be subject to attachment or
legal process.
8. Amendment or Termination of the Plan. The Board of Directors of
Arkla, Inc. may terminate the Plan at any time and may amend or modify the terms
of the Plan at any time and from time to time; provided, however, that the
amendment or termination of the Plan shall in no way affect the rights of
participating Directors or their designated beneficiaries or estates to the
receipt of payments or benefits to the extent of the aggregate amount credited
to the Deferred Compensation Account of each participating Director at the time
of such amendment or termination plus amounts credited thereafter to such
account pursuant to Subparagraph (c) of Paragraph 4 hereof.
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IN WITNESS WHEREOF, the Company has adopted these presents as evidenced
by the signatures affixed hereto of its duly authorized officers, in a number of
copies, all of which shall constitute one and the same instrument, this 10th day
of November, 1988.
ARKLA, INC.
By: /s/ THOMAS F. MCLARTY, III
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Thomas F. McLarty, III
Chairman of the Board & Chief
Executive Officer
ATTEST:
/s/ B. D. KLINE
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B. D. Kline, Secretary
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