Exhibit 10.2
CRAWFORD & COMPANY
DEFERRED COMPENSATION PLAN
FOR ELIGIBLE EMPLOYEES AND ELIGIBLE DIRECTORS
(AS AMENDED AND RESTATED AS OF JANUARY 1, 2003)
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TABLE OF CONTENTS
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SECTION 1 PURPOSE 40
SECTION 2 DEFINITIONS 40
2.1. Account 40
2.2. Account Balance 40
2.3. Annual Deferral Amount 40
2.4. Beneficiary 40
2.5. Board of Directors 40
2.6. Cash Compensation 40
2.7. Cause 41
2.8. Change of Control 41
2.9. Company 41
2.10. Company Discretionary Credit 41
2.11. Committee 41
2.12. Eligible Director 42
2.13. Eligible Employee 42
2.14. Entry Date 42
2.15. Long Term Incentive Credit 42
2.16. Plan 42
2.17. Restoration Benefit 42
2.18. Retirement Plan 42
2.19. Savings Plan 42
2.20. Service Credit 42
2.21. Subsidiary 42
2.22. Year 42
SECTION 3 ELIGIBLE EMPLOYEES AND DIRECTORS 42
3.1. Starting Date 42
(a) Eligible Employee 43
(b) Eligible Director 43
3.2. Ending Date 43
(a) Eligible Employee 43
(b) Transfer 43
(c) Eligible Director 43
3.3. Enrollment 43
3.4. Participation 43
SECTION 4 DEFERRAL ELECTION RULES AND PROCEDURES 43
4.1. Cash Compensation Only 43
4.2. Classification and Limitations 44
(a) General Rules 44
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(b) Base Salary 44
(c) Bonuses, Incentive Compensation and Profit Sharing 44
(d) Directors' Fees 44
(e) Short Year 44
4.3. Irrevocable Election and Filing Deadlines 44
(a) General Rule 44
(b) Special Rule 44
(c) Expiration of Election 44
(d) Irrevocable Election 45
(e) Revocation of Election 45
(f) Annual Election 46
(g) Percentage Figure 46
4.4. Withholding of Deferral Amounts and FICA 46
4.5. Subsidiary 46
SECTION 5 ALLOCATION OF COMPANY DISCRETIONARY CREDIT AND SERVICE
CREDIT 46
5.1. Company Discretionary Credit 46
5.2. Service Credit 47
SECTION 6 ALLOCATION OF LONG TERM INCENTIVE CREDIT 47
6.1. Eligibility for Long Term Incentive Credit 47
6.2. Allocation of Long Term Incentive Credit 48
6.3. Vesting of Long Term Incentive Credit 48
6.4. Forfeiture of Long Term Incentive Credit 48
SECTION 7 MAINTENANCE OF ACCOUNTS 49
SECTION 8 DISTRIBUTIONS 49
8.1. Distribution Events 49
8.2. Manner of Distribution 49
8.3. Installments 49
(a) Portion of Account Distributed in Installments 49
(b) Installment Election 49
(c) Failure to Elect Installments 50
(d) Payment of Installments 50
8.4. Short-term Distribution 50
8.5. Distribution of Company Discretionary Credit 50
8.6. Unforeseeable Emergency 50
8.7. Distribution of Restoration Benefits 51
SECTION 9 DEEMED INTEREST CREDITING 51
9.1. Interest Rate 51
9.2. Prior to Distribution 51
9.3. Installments 51
(a) Interest Rate 52
(b) "Deemed" Installment Payments 52
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(c) Amortization 52
(d) Monthly Payments 52
SECTION 10 SOURCE OF DISTRIBUTION 52
SECTION 11 CLAIMS PROCEDURES 52
11.1. Presentation of Claim 52
11.2. Notification of Decision 53
11.3. Review of a Denied Claim 53
11.4. Decision on Review 53
11.5. Manner of Notification 54
11.6. Legal Action 54
SECTION 12 MISCELLANEOUS 54
12.1. Beneficiary 54
12.2. No Assignment; Binding Effect 54
12.3. ERISA 55
12.4. Committee Powers 55
12.5. Construction 55
12.6. Employment Contract 55
12.7. Term of Office 55
12.8. Amendment and Termination 55
12.9. Distribution in the Event of Taxation 55
12.10. Furnishing Information 56
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CRAWFORD & COMPANY
DEFERRED COMPENSATION PLAN
FOR ELIGIBLE EMPLOYEES AND ELIGIBLE DIRECTORS
AS EFFECTIVE AS OF
JANUARY 1, 1995
(AMENDED AND RESTATED AS JANUARY 1, 2003)
SECTION 1 PURPOSE
The purpose of this Plan is to allow each Eligible Employee of the Company or a
Subsidiary and each Eligible Director of the Company to defer the payment of a
percentage of his or her Cash Compensation otherwise actually payable during
each Year for services rendered and to provide a benefit equal to the benefit
the Eligible Employee would have had if the amounts deferred under this Plan had
been treated as "compensation" for purposes of the Retirement Plan (the
Restoration Benefit) and for purposes of the "service contribution" under the
Savings Plan (the Service Credit). Certain employees will also receive Long Term
Incentive Credits under this Plan. In addition, the Company or a Subsidiary, in
its sole discretion may credit an Eligible Employee's Account with a Company
Discretionary Credit.
SECTION 2 DEFINITIONS
2.1 Account -- means the bookkeeping entry maintained as part of the
Company's books and records in accordance with Section 7 to show as of
any date the interest of each Eligible Employee and each Eligible
Director in this Plan.
2.2 Account Balance -- means as of any date for each Account the amount
that is in excess of credits to such Account over debits to such
Account where (i) credits are the total dollar amount, if any, deferred
under Section 4 through such date, the Company Discretionary Credits
and Service Credits, if any, contributed under Section 5 through such
date and the deemed interest credited under Section 9, if applicable,
through such date and (ii) debits are the total dollar amount
distributed through such date under Section 8.
2.3 Annual Deferral Amount -- means for any Year, that portion of an
Eligible Employee's or Eligible Director's Cash Compensation which is
deferred pursuant to such Eligible Employee's or Eligible Director's
election for that Year.
2.4 Beneficiary -- means the person or persons designated as such in
accordance with Section 12.1.
2.5 Board of Directors -- means the Board of Directors of the Company.
2.6 Cash Compensation -- means the following types of compensation payable
to an Eligible Employee or Eligible Director by the Company or a
Subsidiary in cash or cash equivalents:
(a) For each Eligible Employee: (1) base salary, including basic wages
and commission payments, but excluding draws (guaranteed or
otherwise), reimbursed expenses, fringe benefits, moving expenses
and auto allowances; (2) bonuses; (3) incentive compensation and
(4) profit sharing.
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(b) For each Eligible Director who is not an Eligible Employee,
directors' meeting and committee fees.
2.7 Cause -- means one or more of the following reasons:
(a) a violation of any law;
(b) insubordination;
(c) violation of Company policies;
(d) unsatisfactory attendance or performance;
(e) refusal or failure to comply with a change in job conditions; or
(f) refusal to cooperate with transition or redeployment activities;
each as determined by the Chief Executive Officer in his or her
absolute discretion.
2.8 Change of Control -- means the first to occur of any of the following
events:
(a) any "person" (as that term is used in Section 13 and 14(d)(2) of
the Securities Exchange Act of 1934 (the "Exchange Act")) is or
becomes the beneficial owner (as that term is used in Section 13(d)
of the Exchange Act), directly or indirectly, of 50% or more of the
Company's capital stock entitled to vote in the election of
directors;
(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors cease
for any reason to constitute at least a majority thereof, unless
the election or the nomination for election by the Company's
shareholders of each new director was approved by a vote of at
least three-quarters of the directors still in office who were
directors at the beginning of the period;
(c) any consolidation or merger of the Company, other than a merger of
the Company in which the holders of the shares of stock of the
Company entitled to vote immediately prior to the merger hold more
than 50% of the shares of stock of the surviving corporation
entitled to vote immediately after the merger;
(d) the liquidation or dissolution of the Company; or
(e) substantially all of the assets of the Company are sold or
otherwise transferred to a parties that are not within a
"controlled group of corporations" (as defined in Section 1563 of
the Internal Revenue Code of 1986, as amended) of which the Company
is member.
2.9 Company -- means Crawford & Company, a Georgia corporation, and any
successor to such corporation.
2.10 Company Discretionary Credit -- means for any Year, any amount that the
Company or a Subsidiary, in its sole discretion, may credit to the
Account of an Eligible Employee.
2.11 Committee -- means the committee chosen by the Board of Directors to
manage and administer the Plan.
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2.12 Eligible Director -- means a member of the Board of Directors.
2.13 Eligible Employee -- means an employee of the Company or a Subsidiary
who is designated as such by the Committee in its sole discretion.
2.14 Entry Date -- means, in the case of an Eligible Employee, the first day
of the Year following the date on which the Committee designates an
employee as an Eligible Employee and the Eligible Employee complies
with all the requirements under Section 3.3, or, in the case of an
Eligible Director, the first day of the Year following the date on
which the director commences serving on the Board of Directors and
complies with all the requirements under Section 3.3, or, in the case
of either an Eligible Employee or an Eligible Director, such other date
as determined by the Committee in its sole discretion.
2.15 Long Term Incentive Credit -- means an amount credited to an Eligible
Employee's account under Section 6 of the Plan.
2.16 Plan -- means this Crawford & Company Deferred Compensation Plan for
Eligible Employees and Eligible Directors as amended and restated,
effective January 1, 2003.
2.17 Restoration Benefit -- means, for an Eligible Employee, the difference
between (a) the benefit that would be paid under the Retirement Plan
based on employment completed on or before December 31, 2002 if base
salary, bonuses and profit sharing deferred under this Plan through
such date is included in the definition of compensation under the
Retirement Plan at the time the deferral is made, and (b) the benefit
that is actually payable under the Retirement Plan, calculated based on
a single life annuity form of payment.
2.18 Retirement Plan -- means the Crawford & Company Retirement Plan and
Trust Agreement, as amended from time to time.
2.19 Savings Plan -- means the Crawford Savings and Investment Plan, as
amended from time to time.
2.20 Service Credit -- means for each Eligible Employee for each Year the
excess of (a) the "company service contribution" (as that term is
defined in the Savings Plan) that would have been contributed to the
Savings Plan if "compensation" (as defined in the Savings Plan) was
determined by including amounts deferred under this Plan at the time
the deferral is made over (b) the "company service contribution" that
is actually allocated to the Eligible Employee's account under the
Savings Plan for such Year.
2.21 Subsidiary -- means a direct or indirect subsidiary of which the
Company owns (directly or indirectly) fifty percent (50%) or more of
the outstanding voting stock.
2.22 Year -- means a calendar year.
SECTION 3 ELIGIBLE EMPLOYEES AND DIRECTORS
3.1 Starting Date.
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(a) Eligible Employee. An Eligible Employee shall be treated as such
under this Plan starting as of the later of (1) January 1, 1995, or
(2) the date he or she is so designated by the Committee.
(b) Eligible Director. An Eligible Director shall be treated as such
under this Plan starting as of the later of (1) January 1, 1995, or
(2) the date his or her election to the Board of Directors becomes
effective.
3.2 Ending Date.
(a) Eligible Employee. Except with regard to any Restoration Benefit,
an Eligible Employee's treatment as such under this Plan shall end
as of the earlier of (1) the date his or her employment by the
Company or a Subsidiary terminates for any reason whatsoever, or
(2) the date the Committee revokes his or her designation as an
Eligible Employee, and any deferral election made by him or her
under Section 4 automatically shall become ineffective on such date
as to any Cash Compensation otherwise payable on or after such
date. With regard to any Restoration Benefit, an Eligible
Employee's treatment as such shall continue until all Restoration
Benefits are paid to such Eligible Employee under this Plan.
(b) Transfer. A transfer from the Company to a Subsidiary, from one
Subsidiary to another Subsidiary or from a Subsidiary to the
Company shall not be treated as a termination of employment under
this Plan.
(c) Eligible Director. An Eligible Director's treatment as such under
this Plan shall end as of the date he or she no longer serves as a
member of the Board of Directors, and any deferral election made by
him or her under Section 4 automatically shall become ineffective
on such date as to any Cash Compensation payable on or after such
date.
3.3 Enrollment. As a condition to participation, each Eligible Employee and
Eligible Director shall complete, execute and submit to the Committee,
at least 15 days prior to his or her Entry Date, such agreements,
election forms, consents and other forms as the Committee deems are
necessary for enrollment in the Plan. In the event the Eligible
Employee or Eligible Director fails to meet all applicable enrollment
requirements at least 15 days prior to his or her Entry Date, such
Eligible Employee or Eligible Director shall not be eligible to
participate in the Plan until the first day of the Year next following
the date upon which such enrollment requirements are satisfied.
3.4 Participation. An Eligible Employee's or Eligible Director's
participation in the Plan shall commence on his or her Entry Date.
SECTION 4 DEFERRAL ELECTION RULES AND PROCEDURES
4.1 Cash Compensation Only. Subject to Section 4.2, each Eligible Employee
and Eligible Director can elect to defer the payment of a portion of
his or her Cash Compensation otherwise payable during each Year. No
election shall be effective as to compensation otherwise payable in a
form other than in cash or cash equivalents, and an election shall
(except as provided in Section 3.2, Section 4.3(e)(2) and Section 7.5)
be effective only for Cash Compensation otherwise actually payable
during the Year covered by such election under Section 4.3.
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4.2 Classification and Limitations.
(a) General Rules.
(1) An election to defer the payment of a percentage of
an Eligible Employee's or Eligible Director's Cash
Compensation otherwise actually payable during any
Year shall not be effective to the extent that such
election either fails to meet the minimum or exceeds
the maximum limits set forth in this Section 4.2.
(2) Cash Compensation shall be deemed "otherwise actually
payable" under this Plan on the date such
compensation otherwise actually would have been paid
under the compensation and payroll practices of the
Company, and a deferral shall be credited to the
Eligible Employee or Eligible Director as of that
date.
(b) Base Salary. If an election applies to base salary, such election
shall apply to no less than two percent (2%) and no more than fifty
percent (50%) of an Eligible Employee's base salary otherwise
actually payable during the Year covered by such election under
Section 4.3.
(c) Bonuses, Incentive Compensation and Profit Sharing. If an election
applies to bonuses, incentive compensation and profit sharing such
election shall apply to no less than two percent (2%) and no more
than one hundred percent (100%) of any cash bonus, incentive
compensation or profit sharing otherwise actually payable during
the Year covered by such election under Section 4.3.
(d) Directors' Fees. If an election applies to directors' meeting and
committee fees, such election shall apply collectively to no more
than one hundred percent (100%) of an Eligible Director's meeting
and committee fees otherwise payable during the Year covered by
such election.
(e) Short Year. If an Eligible Employee commences participation after
the first day of a Year, the minimum Cash Compensation which may
be deferred shall be an amount equal to five percent (5%) of such
Eligible Employee's Cash Compensation.
4.3 Irrevocable Election and Filing Deadlines.
(a) General Rule. An election to defer the payment of a percentage of
an Eligible Employee's or Eligible Director's Cash Compensation
shall be made on the form provided for this purpose by the
Committee. Such election shall be effective for the Year which
begins after the date the Eligible Employee or Eligible Director
files the election form with the Committee.
(b) Special Rule. If an Eligible Employee's or Eligible Director's
Entry Date is not the first day of a Year, he or she can elect to
defer the payment of a portion of his or her Cash Compensation
otherwise actually payable during the remainder of such Year.
(c) Expiration of Election. An election made for any Year shall expire
on the last day of the Year unless such election is earlier revoked
in accordance with Section 4.3(e).
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(d) Irrevocable Election. An election which becomes effective for a
Year under Section 4.3(a) or for the remainder of a Year under
Section 4.3(b) shall (except as provided in Section 4.3(e)(2),
Section 4.3(e)(4), Section 3.2 or Section 7.5) be irrevocable for
the remainder of such Year.
(e) Revocation of Election.
(1) An Eligible Employee or Eligible Director can revoke
an election otherwise effective for any Year if he or
she delivers written notice of such revocation to the
Committee in a form acceptable to the Committee
before the beginning of such Year.
(2) An Eligible Employee may request the Committee to
revoke his or her election after the beginning of any
Year. If an election applies to an Eligible
Employee's base salary under Section 4.2(b) or
bonuses, incentive compensation or profit-sharing
under Section 4.2(c), the Committee shall have the
power to revoke such an election for any Year if such
Eligible Employee demonstrates to the Committee's
satisfaction that a failure to so revoke such
election will result in a severe financial hardship
for him or her for such Year, and any such revocation
shall be effective for payroll periods (otherwise
covered by such election) which begin after the date
the Committee exercises such power under this Section
4.3(e)(2). If an Eligible Employee's election for any
Year is revoked under this Section 4.3(e)(2), he or
she shall be ineligible to make or to continue any
deferral elections under this Plan with respect to
Cash Compensation otherwise actually payable during:
(i) the remainder of the Year which includes the date
the Committee exercises its power under this Section
4.3(e)(2), and (ii) for a period of one Year
thereafter.
(3) The election of an Eligible Employee on an authorized
unpaid leave of absence shall be revoked during the
period of such unpaid absence. At such time as the
Eligible Employee returns to active employment, the
Committee shall resume deferrals for the remainder of
the Year in accordance with the election filed by the
Eligible Employee for that Year.
(4) The Committee shall have the authority to offer an
Eligible Employee the opportunity to revoke his
election and, at the Eligible Employee's option, make
a new election during any Year in which the Eligible
Employee's compensation package is significantly
modified by the Company or a Subsidiary such that the
Committee determines that the Eligible Employee's
current election form is no longer reflective of the
original intent regarding the deferral of the
Eligible Employee's Cash Compensation. This
determination shall be made by the Committee in its
sole discretion. In no event shall a new election
apply to amounts otherwise payable to the Eligible
Employee prior to the effective date of the revised
election. The Eligible Employee may elect to defer a
different type of Cash Compensation or a different
percentage of amount of such Cash Compensation but
shall not be permitted to modify the form and timing
of the distribution as described in Section 7 hereof.
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(f) Annual Election. An Eligible Employee or Eligible Director shall
make a new election for each Year during which he or she wishes to
defer his or her Cash Compensation otherwise payable during that
Year by submitting a completed and executed election form to the
Committee no later than December 15th of the Year prior to the Year
for which the Eligible Employee or Eligible Director wishes to make
the election.
(g) Percentage Figure. An election may only describe a deferral as a
percentage of Cash Compensation.
4.4 Withholding of Deferral Amounts and FICA. For Each Year that an
election is in effect with respect to an Eligible Employee's Cash
Compensation, the Company shall withhold the Annual Deferral Amount
from an Eligible Employee's Cash Compensation in the percentage
specified in his or her election pursuant to Section 4.3 or the special
election in Section 4.3(b). The portion of the Annual Deferral Amount
to be deferred from all other types of Cash Compensation shall be
withheld at such time as the Cash Compensation is otherwise due to be
paid to the Eligible Employee or Eligible Director. The Company shall
withhold the Eligible Employee's or Eligible Director's share of FICA
taxes from that portion of the Eligible Employee's or Eligible
Director's Cash Compensation which is not being deferred. In the event
FICA taxes required to be withheld on the Annual Deferral Amount or the
Company Discretionary Credit exceed the amount of Cash Compensation not
being deferred by the Eligible Employee or Eligible Director, the
Eligible Employee's or Eligible Director's Annual Deferral Amount shall
be automatically reduced by that amount by which FICA taxes exceed the
Eligible Employee's or Eligible Director's Cash Compensation not being
deferred.
4.5 Subsidiary. If an Eligible Employee is employed by a Subsidiary and
makes a deferral election under this Section 4, the Committee shall
direct such Subsidiary to stop paying the Cash Compensation which he or
she has elected to defer in accordance with his or her election under
this Section 4 to the extent that such election is effective with
respect to such Cash Compensation. Similarly, if an Eligible Employee
terminates a deferral election under this Section 4, the Committee
shall direct the Subsidiary to resume paying his or her Cash
Compensation in accordance with the termination of such election to the
extent that such termination of election is effective under this Plan
with respect to such Cash Compensation. The Subsidiary shall withhold
the Eligible Employee's or Eligible Director's share of FICA taxes from
that portion of the Eligible Employee's or Eligible Director's Cash
Compensation which is not being deferred. In the event FICA taxes
required to be withheld on the Annual Deferral Amount or the Company
Discretionary Credit exceed the amount of Cash Compensation not being
deferred by the Eligible Employee or Eligible Director, the Eligible
Employee's or Eligible Director's Annual Deferral Amount shall be
automatically reduced by that amount by which FICA taxes exceed the
Eligible Employee's or Eligible Director's Cash Compensation not being
deferred.
SECTION 5 ALLOCATION OF COMPANY DISCRETIONARY CREDIT AND SERVICE CREDIT
5.1 Company Discretionary Credit. A Company Discretionary Credit may be
credited to the Account of an Eligible Employee at any time, in the
sole discretion of the Company or a Subsidiary, regardless of whether
such Eligible Employee has elected to participate in the Plan for the
Year during which the Company Discretionary Credit is made.
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5.2 Service Credit. For each Year with respect to which the Company makes a
"company service contribution" under the Savings Plan, the Company
shall credit the Account of each Eligible Employee to whom is allocated
a "company service contribution" under the Savings Plan a Service
Credit under this Plan. If an Eligible Employee terminates his or her
employment with the Company or a Subsidiary before attaining five
"years of service" (as defined under the Savings Plan), then his or her
Service Credits under this Plan shall be forfeited to the same extent
they would be forfeited if they were a Company Service Contribution
under the Savings Plan.
SECTION 6 ALLOCATION OF LONG TERM INCENTIVE CREDIT
6.1 Eligibility for Long Term Incentive Credit. An Eligible Employee is
eligible for allocation of a Long Term Incentive Credit if he or she:
(a) works in the United States as an active, full-time employee;
(b) is assigned to the Technical Services organization; and
(c) is in one of the following job codes:
(1) RA2600 - Executive General Adjuster,
(2) DB1100 - Technical Services Non-Contract Manager, or
(3) DA4350 - Managing Director, Technical Services.
(d) An Eligible Employee who is on "positive improvement" (under the
Company's evaluation criteria) will not be eligible for allocation
of a Long Term Incentive Credit to his or her Account until the
first January 1 when (1) the Eligible Employee is not on "positive
improvement" and (2) the Eligible Employee has a "coaching for
continuous improvement" rating of 3.5 or better (under the
Company's evaluation criteria).
(e) An Eligible Employee must maintain a 3.5 or better "coaching for
continuous improvement" rating to have a Long Term Incentive Credit
allocated to his or her Account. An Eligible Employee who receives
a "coaching for continuous improvement" rating of less than 3.5
will not be eligible to have a Long Term Incentive Credit allocated
to his or her Account for the Year in which the rating drops.
(f) An Eligible Employee who is terminated for Cause or demoted to an
ineligible position shall not be eligible for allocation of a Long
Term Incentive Contribution for the Year in which the demotion or
termination occurred.
(g) Eligible Employees in job code RA2600 must meet the following
performance requirements for allocation of a Long Term Incentive
Credit to his or her Account:
(1) The Eligible Employee must achieve at least $250,000
annual net production (net of any billing
adjustments) while maintaining acceptable accounts
receivable within the Year.
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(2) An acceptable level of management of accounts
receivable includes both year end accounts receivable
unbilled of less than 84 workdays and year end
accounts receivable billed of less than 116 workdays.
(3) To qualify for the Long Term Incentive Credit, the
Eligible Employee must meet both the production
threshold and the accounts receivable management
threshold.
6.2 Allocation of Long Term Incentive Credit. A Long Term Incentive Credit
will be allocated to the account of an Eligible Employee who meets the
requirements of Section 6.1, as follows:
(a) Allocations for Eligible Employees in job code RA2600 will be made
according to the following production thresholds:
(1) The Eligible Employee must achieve in excess of
$275,000 annual net production (net of any billing
adjustments) while maintaining acceptable accounts
receivable (as described in Section 6.1(g)), within
the Year for allocation of a Long Term Incentive
Credit equal to 5% of the sum of base salary and
incentive compensation paid during the Year.
(2) The Eligible Employee must achieve between $250,000
and $275,000 annual net production (net of any
billing adjustments) while maintaining acceptable
accounts receivable (as described in Section 6.1(g)),
within the Year for allocation of a Long Term
Incentive Credit equal to 3% of the sum of base
salary and incentive compensation paid during the
Year.
(b) The annual Long Term Incentive Credit for Eligible Employees in
job codes DB1100 and DA4350 will be 5% of the sum of base salary
and incentive compensation paid during the Year.
(c) The Long Term Incentive Credit will be allocated to the Account of
each Eligible Employee entitled to receive such a credit not later
than the end of February following the Year to which such Long Term
Incentive Credit relates.
6.3 Vesting of Long Term Incentive Credit. Long Term Incentive Credits will
become vested in five years following the end of the Year for which
such credit was allocated, provided the Eligible Employee remains
employed by the Company or a Subsidiary during that five-year period.
All Long Term Incentive Credits become vested upon the earliest of (i)
the Eligible Employee's attainment of age 62, (ii) the Eligible
Employee's having completed ten (10) years continuous service after
January 1, 2003 or (iii) the Eligible Employee's death while employed
by the Company or a Subsidiary.
6.4 Forfeiture of Long Term Incentive Credit. In the event that an Eligible
Employee's employment with the Company or a Subsidiary is terminated
for Cause, his or her Long Term Incentive Credits shall be forfeited.
Further, if an Eligible Employee is employed by a person or entity
other than the Company or a Subsidiary as a technical adjuster, then
his or her Long Term Incentive Credit shall be forfeited. Forfeiture
shall occur without regard to whether such Long Term Incentive Credits
are vested.
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SECTION 7 MAINTENANCE OF ACCOUNTS
The Committee shall maintain for each Eligible Employee or Eligible
Director separate Accounts for his or her Company Discretionary Credits, if any;
Service Credits, if any; Long Term Incentive Credits, if any; and for Annual
Deferral Amounts, if any; which shall show as of any date (1) the Account
Balance, at the end of each such date and (2) such other data as the Committee
deems relevant. Each Account shall be cancelled when the Account Balance reaches
zero. If an Account is maintained during a Year for an Eligible Employee or
Eligible Director, the Committee after the end of such Year (or such other time
as the Committee determines) shall furnish a statement to that Eligible Employee
or Eligible Director which shows the Account Balance in each of his or her
Accounts at the end of such Year and (at the Committee's discretion) such other
Account data as the Committee deems appropriate.
SECTION 8 DISTRIBUTIONS
8.1 Distribution Events. The distribution of an Eligible Employee's or
Eligible Director's Account shall commence at the direction of the
Committee as soon as practical after the earlier of (a) the date his or
her employment by the Company or a Subsidiary terminates for any reason
whatsoever, including death or retirement, (b) the date he or she no
longer serves as a member of the Board of Directors as to any Account
maintained for him or her as an Eligible Director, (c) the date upon
which an Annual Deferral Amount is scheduled to be distributed pursuant
to the election made by the Eligible Employee or Eligible Director with
respect to that Annual Deferral Amount pursuant to Section 8.4 hereof,
(d) such other date as determined by the Committee in its sole
discretion pursuant to Section 8.6 hereof, or (e) a Change of Control
of the Company. Each distribution to an Eligible Employee or Eligible
Director under this Section 8 shall become a debit against his or her
Account as of the date the distribution is made by the Company.
8.2 Manner of Distribution. Subject to Section 8.3 and Section 8.5, the
distribution of the Account for Annual Deferral Amounts, Company
Discretionary Credits or Service Credits to an Eligible Employee or
Eligible Director shall be made in a lump sum. An Account for Long Term
Incentive Credits is not subject to distribution in a lump sum and must
be distributed in installments as provided in Section 8.3.
8.3 Installments. An Eligible Employee who terminates employment by
"retirement" and an Eligible Employee whose Account includes Long Term
Incentive Credits may elect (on a form provided by the Committee for
this purpose) to receive monthly installments over five (5), ten (10)
or fifteen (15) years commencing as of the date of termination.
(a) Portion of Account Distributed in Installments. For an Eligible
Employee whose Account includes Long Term Incentive Credits, the
election shall apply only to the portion of his or her Account
attributable to the Long Term Incentive Credits (unless he or she
also terminates employment by "retirement"). For an Eligible
Employee who terminates employment by "retirement", the election
shall apply to his or her entire Account.
(b) Installment Election. An election for installments must be made on
or before the last business day of the Year prior to the final Year
during which an Annual Deferral Amount is deferred or for which a
Long Term Incentive Credit is allocated before termination of
employment. By way of example, an Eligible Employee could elect to
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receive his or her Account Balances in monthly installments over
ten (10) years if he or she submitted a form containing such
election on or before the last business day of 2002, deferred a
portion of her salary during 2003, and retired in 2003 or later. An
election to receive an installment payout made on the last business
day of 2002 would not be effective if the Eligible Employee did not
defer any amounts under this Plan or have any Long Term Incentive
Credits allocated to his or her Account after 2002. An Eligible
Employee terminates employment by retirement if he or she
terminates on or after the earlier of: (i) the date he or she
attains age 65 or (ii) the date he or she attains age 55 with ten
(10) years of service to the Company or a Subsidiary. Years of
service shall be calculated, for purposes of this Plan, in the same
manner as "vesting service" is calculated under the terms of the
Retirement Plan as in effect on the date the calculation is made
hereunder.
(c) Failure to Elect Installments. If an Eligible Employee fails to
properly elect installments under this Section 8.3, his or her
Account Balance attributable to Company Discretionary Credits,
Service Credits and Annual Deferral Amounts shall be distributed in
a lump sum as provided in Section 8.2, and his or her Account
Balance attributable to Long Term Incentive Credits shall be paid
in monthly installments over fifteen (15) years. In the event an
Eligible Employee makes more than one election hereunder, the
election made latest in time, in compliance with this Section 8.3,
shall govern such Eligible Employee's payout.
(d) Payment of Installments. All monthly installments shall be
distributed as of the first day of a month, and the calculation of
each monthly installment shall be made as provided in Section 9.3
hereof.
8.4 Short-term Distribution. An Eligible Employee or Eligible Director may
elect, with respect to any Annual Deferral Amount, to receive a lump
sum distribution of that Annual Deferral Amount, plus deemed interest
credited to his or her Account with respect to that Annual Deferral
Amount, within sixty (60) days after the first day of any Year that is
either: (a) seven (7) Years; or (b) fifteen (15) Years after the Year
in which the Annual Deferral Amount is deferred.
8.5 Distribution of Company Discretionary Credit. If a Company
Discretionary Credit is credited on behalf of an Eligible Employee who
has elected to participate in the Plan for such Year, the Company
Discretionary Credit shall be paid to the Eligible Employee at the same
time and in the same manner as the accompanying Annual Deferral Amount.
If a Company Discretionary Credit is credited on behalf of an Eligible
Employee who has elected not to participate in the Plan for such Year,
the Company Discretionary Credit shall be paid at such time as the
Eligible Employee may elect pursuant to Section 8.4, or, in the absence
of such election, as provided by Section 8.1, and, if the Eligible
Employee satisfies the requirements of Section 8.3, the Eligible
Employee may elect to receive distribution of the Company Discretionary
Credit in monthly installments as provided by Section 8.3, or, absent
such election, distribution shall be made in the manner provided by
Section 8.2. Any election made by an Eligible Employee under this
Section 8.5 shall be made on the same forms and shall be subject to the
same election periods as elections made with respect to Annual Deferral
Amounts.
8.6 Unforeseeable Emergency. The Committee shall have the power in its
absolute discretion to distribute all or a portion of an Eligible
Employee's or Eligible Director's Account Balances attributable to
Annual Deferral Amounts, Company Discretionary
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Credits or Service Credits on any date in the event that the Eligible
Employee or Eligible Director, in the judgment of the Committee,
experiences an "unforeseeable emergency". Account Balances attributable
to Long Term Incentive Credits are not available for distribution in
the event of an "unforeseeable emergency." An "unforeseeable emergency"
is an event or circumstance which would, but for an immediate
distribution, result in a severe financial hardship to the Eligible
Employee or Eligible Director resulting from a sudden and unexpected
illness or accident of the Eligible Employee or Eligible Director or a
dependent of the Eligible Employee or Eligible Director, disability of
the Eligible Employee or Eligible Director, loss of the Eligible
Employee's or Eligible Director's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Eligible Employee or
Eligible Director. The need to send an Eligible Employee's or Eligible
Director's dependent to college or the desire to purchase a home shall
not be an "unforeseeable emergency". The Committee shall have the
authority to require such evidence as it deems necessary to determine
if, and to what extent, a distribution is warranted. The Committee also
shall have the power, in its absolute discretion, to accelerate the
distribution of an Eligible Employee's Accounts (other than the Account
for his or her Long Term Incentive Credit, if any) under Section 8.3 to
the extent the Committee acting in its absolute discretion deems
appropriate under the circumstances to meet the "unforeseeable
emergency". No Eligible Employee or Eligible Director shall have the
right to make or to continue any deferral election under this Plan with
respect to Cash Compensation otherwise actually payable during: (i) the
remainder of the Year which includes the date the Committee exercises
its power under this Section 8.6 to distribute, or to accelerate the
distribution of, his or her Accounts, and (ii) for a period of one Year
thereafter.
8.7 Distribution of Restoration Benefits. An Eligible Employee's
Restoration Benefit shall commence at the same time that benefits
commence to such Eligible Employee under the Retirement Plan based on
the employment completed on or before the December 31, 2002. Except as
provided below, if an Eligible Employee is receiving monthly payments
from the Plan at the time that his or her Restoration Benefit
commences, the Restoration Benefit shall be paid monthly. In all other
circumstances, Restoration Benefits shall be paid in a lump sum,
calculated using the actuarial assumptions used for calculating lump
sum benefits under the Retirement Plan. If at any time the present
value of an Eligible Employee's Restoration Benefit is less than
$10,000, such amount shall be paid in a lump sum.
SECTION 9 DEEMED INTEREST CREDITING
9.1 Interest Rate. Deemed interest shall be credited to each Account
monthly at an annual rate to be determined by the Committee and
specified in advance of the Eligible Employee's or Eligible Director's
election for the Year.
9.2 Prior to Distribution. Deemed interest shall be credited and compounded
monthly on each Eligible Employee's or Eligible Director's Account on
the last day of each calendar month. If a distribution is made, for
purposes of crediting deemed interest, an Eligible Employee's or
Eligible Director's Account Balance shall be reduced as of the first
day of the month in which the distribution is made.
9.3 Installments. In the event an Account or any portion thereof is
distributed in installments, installment amounts shall be determined in
the following manner:
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(a) Interest Rate. The interest rate to be used to calculate
installment payment amounts shall be a fixed interest rate that is
determined by averaging the interest rates for the Year in which
installment payments commence and the four (4) preceding Years. If
an Eligible Employee has participated in the Plan for fewer than
five (5) Years, this average shall be determined using the interest
rate for the Years during which the Eligible Employee participated
in the Plan.
(b) "Deemed" Installment Payments. For purposes of calculating
installment payment amounts only (and notwithstanding the fact that
installment payments shall actually be paid monthly), installment
payments for each twelve (12) month period, starting with the date
that the Eligible Employee becomes eligible to receive a
distribution of an Account under this Plan (the "Eligibility Date")
and continuing thereafter for each additional twelve (12) month
period until the Eligible Employee's Account Balances are paid in
full, shall be deemed to have been paid in one sum as of the first
day of each such twelve (12) month period. (The result of this is
that interest crediting shall be made on an annual basis after
taking into account the "deemed" annual installment payment for the
twelve (12) month period.)
(c) Amortization. Based on the interest rate determined in accordance
with Section 9.1 above and the "deemed" form of installment
payments determined in accordance with Section 9.3(b) above, the
Eligible Employee's Account Balances shall be amortized in equal
annual installment payments over the term of the specified payment
period (starting as of the Eligibility Date and stated in years
rather than months).
(d) Monthly Payments. The annual installment payment determined in
Section 9.3(c) above shall be divided by twelve (12), and the
resulting number shall be the monthly installment payment that is
to be paid each month during the specified payment period in
accordance with Section 8.3.
SECTION 10 SOURCE OF DISTRIBUTION
All distributions under this Plan shall be made by the Company, from
its general assets, and the status of each Eligible Employee's or Eligible
Director's claim to his or her Accounts (and the claim of any Beneficiary) shall
be the same as the status of a claim against the Company by any of its general
and unsecured creditors. No person whomsoever shall look to, or have any claim
whatsoever against, any officer, director, employee or agent of the Company or
any Subsidiary in his or her individual capacity for the payment of any amounts
under this Plan.
SECTION 11 CLAIMS PROCEDURES
11.1 Presentation of Claim. Any Participant or beneficiary (such Participant
or beneficiary being referred to below as a "Claimant") may deliver to
the Committee a written claim for a determination with respect to the
amounts distributable to such Claimant from the Plan. If such a claim
relates to the contents of a notice received by the Claimant, the claim
must be made within 60 days after such notice was received by the
Claimant. All other claims must be made within 180 days of the date on
which the event that caused the claim to arise occurred. The claim must
state with particularity the determination desired by the Claimant.
52
11.2 Notification of Decision. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant not later
than 90 days after receipt of the claim:
(a) that the Claimant's requested determination has been made, and that
the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or
in part, to the Claimant's requested determination, and such notice
must set forth in a manner calculated to be understood by the
Claimant:
(1) the specific reason(s) for the denial of the claim,
or any part of it;
(2) specific reference(s) to pertinent provisions of the
Plan upon which such denial was based;
(3) a description of any additional material or
information necessary for the Claimant to perfect
the claim, and an explanation of why such material or
information is necessary;
(4) an explanation of the claim review procedure, and
(5) a statement of the Claimant's right to bring a civil
action under Section 502(a) of the Employee
Retirement Income Security Act of 1974, as amended,
following an adverse determination on review.
11.3 Review of a Denied Claim. Within 60 days after receiving a notice from
the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file
with the Committee a written request for a review of the denial of the
claim. Thereafter, the Claimant (or the Claimant's duly authorized
representative):
(a) may review all documents relevant to the claim for benefits under
this Plan and receive copies of such documents upon request and
free of charge;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion,
may grant.
11.4 Decision on Review. The Committee shall render its decision on review
promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the
decision must be rendered within 120 days after such date. If special
circumstances, such as the need to hold a hearing, require additional
time, the Claimant will be provided with notice of the need for
additional time before the end of the initial 60-day period. The
decision must be written in a manner calculated to be understood by the
Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which
the decision was based;
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(c) a statement of the Claimant's right to bring a civil action under
Section 502(a) of the Employee Retirement Income Security Act of
1974, as amended;
(d) a statement of the Claimant's right receive upon request and free
of charge, copies of all documents relevant to the claim for
benefits under this Plan; and
(e) such other matters as the Committee deems relevant.
11.5 Manner of Notification. The Committee may notify a Claimant of its
decision either in writing or, where electronic notification would be
appropriate under ERISA, electronically.
11.6 Legal Action. A Claimant's compliance with the foregoing provisions of
this Section 11 is a mandatory prerequisite to Participant's or
beneficiary's right to commence any legal action with respect to any
claim for benefits under this Plan.
SECTION 12 MISCELLANEOUS
12.1 Beneficiary. Each Eligible Employee and Eligible Director (for whom an
Account is maintained) shall designate a Beneficiary, or more than one
Beneficiary, to receive the balance, if any, of his or her Accounts
under this Plan in the event of his or her death. Such designation
shall be made on a form acceptable to the Committee and shall become
effective when received by such Committee. An Eligible Employee or
Eligible Director who is legally married shall be required to provide
the Committee with a properly executed spousal consent form in order to
name any individual or entity other than the Eligible Employee's or
Eligible Director's current spouse as Beneficiary of fifty percent
(50%) or more of the Eligible Employee's or Eligible Director's
aggregate Account Balances. An Eligible Employee or Eligible Director
may revoke any such designation by delivering a properly executed form
revoking such prior designation and designating a new Beneficiary to
the Committee, provided such form is received by the Committee prior to
the date of the Eligible Employee's or Eligible Director's death. If no
such designated Beneficiary survives an Eligible Employee or Eligible
Director or if no designation is made, the Eligible Employee's or
Eligible Director's estate shall be deemed his or her designated
Beneficiary under this Plan. Upon the death of an Eligible Employee or
Eligible Director before distribution of the Eligible Employee's or
Eligible Director's Accounts has begun, the Company shall distribute
the Eligible Employee's or Eligible Director's Accounts to the
Beneficiary designated by such Eligible Employee or Eligible Director
at such time and in such manner as the Eligible Employee or Eligible
Director had elected. Upon the death of an Eligible Employee or
Eligible Director after distribution has begun, the Company shall pay
the Accounts to the Beneficiary in the same manner such distribution as
being made before the Eligible Employee's or Eligible Director's death.
12.2 No Assignment; Binding Effect. No Eligible Employee, Eligible Director
or Beneficiary shall have the right to alienate, assign, commute or
otherwise encumber an Account or Restoration Benefit for any purpose
whatsoever, and any attempt to do so shall be disregarded completely as
null and void. The provisions of this Plan shall be binding on each
Eligible Employee, Eligible Director and Beneficiary (and on each
person who claims a benefit under the foregoing) and on the Company.
54
12.3 ERISA. The Company intends that this Plan come within the various
exceptions and exemptions to the Employee Retirement Income Security
Act of 1974, as amended, for an unfunded deferred compensation plan
maintained primarily for a select group of management or highly
compensated employees, and any ambiguities in this Plan shall be
construed to effect that intent.
12.4 Committee Powers. The Committee, in the administration of this Plan,
shall have the power to take such equitable and other action as the
Committee acting in its absolute discretion deems proper or appropriate
under the circumstances (including the power to delegate Committee
functions to others) to the extent that such action is not inconsistent
with the express provisions of this Plan as approved by the Board of
Directors. The Committee shall have the exclusive responsibility and
complete discretionary authority to control the operation, management
and administration of this Plan, with all powers necessary to enable it
properly to carry out such responsibilities, including (but not limited
to) the power to construe this Plan, to determine eligibility for
benefits, to resolve all interpretative, operational, equitable and
other questions that arise under this Plan and to settle disputed
claims. The decisions of the Committee shall be final and binding upon
all persons. Members of the Committee who are Eligible Employees or
Eligible Directors may defer Cash Compensation in accordance with the
terms of the Plan; provided, however, that no member of the Committee
shall act on any determination under Section 4.3(e)(2) or Section 8.5
which relates to him or her.
12.5 Construction. This Plan shall be construed in accordance with the laws
of the State of Georgia. Headings and subheadings have been added only
for convenience of reference and shall have no substantive effect. All
references to sections shall be to sections of this Plan. References to
the singular shall include the plural whenever appropriate. The term
"Eligible Employee" and "Eligible Director" shall include (except under
Section 4) a former Eligible Employee or Eligible Director and any
Beneficiary of a deceased Eligible Employee or Eligible Director.
12.6 Employment Contract. Participation in this Plan shall not constitute an
employment contract, and the Company shall have the right at any time
to terminate an Eligible Employee's employment, to reduce his or her
Cash Compensation or other compensation or to take such other action in
connection with his or her employment as the Company deems appropriate
without regard to this Plan.
12.7 Term of Office. An Eligible Director's participation in this Plan shall
not constitute a contract for him or her to serve as a member of the
Board of Directors for any particular term or any particular fee, and
participation in this Plan shall have no bearing on such terms, fees or
any other conditions of membership on the Board of Directors.
12.8 Amendment and Termination. The Company acting through the Committee
shall have the right at its discretion to amend this Plan from time to
time and to terminate this Plan at any time. In the event the Plan is
terminated, all deferrals shall cease and the Company shall retain all
Accounts until distribution is scheduled to commence under Section 8.
12.9 Distribution in the Event of Taxation. If, for any reason, all or any
portion of an Eligible Employee's or Eligible Director's Accounts
become taxable to the Eligible Employee or Eligible Director prior to
distribution, an Eligible Employee or Eligible Director may petition
the Committee for a distribution of the Accounts sufficient to meet the
Eligible Employee's or Eligible Director's tax liability (including
penalties and interest).
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12.10 Furnishing Information. An Eligible Employee or Eligible Director shall
cooperate with the Committee by furnishing all information requested by
the Committee and shall take such other actions as may be requested in
order to facilitate administration of the Plan and the distribution of
Accounts or Restoration Benefits hereunder, including without
limitation, taking such physical examinations as the Committee may deem
necessary.
IN WITNESS WHEREOF, Grover L. Davis, Chairman & Chief Executive Officer, has
executed this Plan this 21st day of August, 2003.
/s/ Grover L. Davis
---------------------------
GROVER L. DAVIS
CHAIRMAN & CHIEF EXECUTIVE OFFICER
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