EXHIBIT 10 (a)
December 18, 2001
EXECUTIVE DEFERRED COMPENSATION PLAN
OF
HUNTINGTON BANCSHARES INCORPORATED
EFFECTIVE OCTOBER 1, 2001
EXECUTIVE DEFERRED COMPENSATION PLAN
OF HUNTINGTON BANCSHARES INCORPORATED
TABLE OF CONTENTS
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ARTICLE 1 - DEFINITIONS
1.01 Accounts .......................................................... 1
1.02 Beneficiary ....................................................... 1
1.03 Bonus ............................................................. 1
1.04 Bonus Deferral Agreement .......................................... 1
1.05 Bonus Deferrals ................................................... 1
1.06 Cash Deferral Account ............................................. 2
1.07 Change in Control ................................................. 2
1.08 Code .............................................................. 2
1.09 Common Stock ...................................................... 2
1.10 Common Stock Deferral Account ..................................... 2
1.11 Compensation ...................................................... 2
1.12 Compensation Committee ............................................ 2
1.13 Corporation ....................................................... 3
1.14 Deferrals ......................................................... 3
1.15 Distribution Election Form ........................................ 3
1.16 Effective Date .................................................... 3
1.17 Eligible Employee ................................................. 3
1.18 ERISA ............................................................. 3
1.19 Investment Funds .................................................. 3
1.20 Long-Term Incentive ............................................... 4
1.21 Long-Term Incentive Deferral Agreement ............................ 4
1.22 Long-Term Incentive Deferrals ..................................... 4
1.23 Member ............................................................ 4
1.24 Net Shares ........................................................ 4
1.25 Plan .............................................................. 4
1.26 Plan Year ......................................................... 5
1.27 Restricted Stock Award ............................................ 5
1.28 Restricted Stock Deferral Agreement ............................... 5
1.29 Restricted Stock Deferrals ........................................ 5
1.30 Salary Deferral Agreement ......................................... 5
1.31 Salary Deferrals .................................................. 5
1.32 Stock Option Deferral Account ..................................... 5
1.33 Stock Option Deferral Agreement ................................... 6
1.34 Stock Option Deferrals ............................................ 6
1.35 Trust ............................................................. 6
1.36 Valuation Date .................................................... 6
EXECUTIVE DEFERRED COMPENSATION PLAN
OF HUNTINGTON BANCSHARES INCORPORATED
TABLE OF CONTENTS
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ARTICLE 2 - PARTICIPATION
2.01 Eligibility ....................................................... 7
2.02 Participation ..................................................... 8
ARTICLE 3 - CONTRIBUTIONS
3.01 Amount of Deferral Contributions .................................. 13
3.02 Stock Option Exercise ............................................. 15
3.03 Investment of Accounts ............................................ 16
3.04 Valuation of Accounts ............................................. 17
3.05 Vesting of Account ................................................ 18
3.06 Individual Accounting ............................................. 19
ARTICLE 4 - PAYMENT OF ACCOUNT
4.01 Payment of Accounts ............................................... 20
4.02 Method of Payment ................................................. 20
4.03 Hardship Distributions ............................................ 22
4.04 Other Distributions ............................................... 22
4.05 Accelerated Tax Distributions ..................................... 23
4.06 Compensation Committee Deferral of Distributions .................. 23
4.07 Death Benefit ..................................................... 23
4.08 Designation of Beneficiary ........................................ 24
ARTICLE 5 - CHANGE IN CONTROL
5.01 Definition of Change in Control ................................... 25
5.02 Application in Change in Control .................................. 26
5.03 Payments to and by the Trust ...................................... 27
5.04 Legal Fees and Expenses ........................................... 28
EXECUTIVE DEFERRED COMPENSATION PLAN
OF HUNTINGTON BANCSHARES INCORPORATED
TABLE OF CONTENTS
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ARTICLE 6 - GENERAL PROVISIONS
6.01 Establishment of Rules ............................................ 29
6.02 Funding ........................................................... 30
6.03 No Contract of Employment ......................................... 31
6.04 Facility of Payment ............................................... 31
6.05 Withholding Taxes ................................................. 32
6.06 Nonalienation ..................................................... 32
6.07 Construction ...................................................... 32
6.08 Limitations on Liability .......................................... 33
6.09 Administrative Expense ............................................ 33
6.10 Claims and Review Procedures ...................................... 33
6.11 Illegal or Invalid Provision ...................................... 35
6.12 Gender and Number ................................................. 36
6.13 Successors ........................................................ 36
ARTICLE 7 - AMENDMENT OR TERMINATION ...................................... 37
EXECUTION PAGE ............................................................ 38
EXECUTIVE DEFERRED COMPENSATION PLAN
OF HUNTINGTON BANCSHARES INCORPORATED
INTRODUCTION
This Executive Deferred Compensation Plan of Huntington Bancshares Incorporated
is authorized by the Board of Directors of Huntington Bancshares Incorporated
effective on and after October 1, 2001. The purpose of this Plan is to provide a
means to defer receipt of compensation and current income tax liability thereon
for selected managers and highly compensated employees in addition to the
amounts that can be deferred under the Corporation's qualified retirement plan.
This Plan is intended to constitute a nonqualified unfunded deferred
compensation plan for a select group of management or highly compensated
employees under Title I of the ERISA. All benefits payable under the Plan shall
be paid out of the general assets of Huntington Bancshares Incorporated.
Huntington Bancshares Incorporated may establish and fund a trust as provided
herein in order to aid it in providing benefits due under the Plan.
EXECUTIVE DEFERRED COMPENSATION PLAN
OF HUNTINGTON BANCSHARES INCORPORATED
ARTICLE 1. DEFINITIONS
1.01 "ACCOUNTS" means the device used to measure and determine the amount of
deferred compensation to be paid to a Member or Beneficiary under the Plan
and may include the Cash Deferral Account, the Common Stock Deferral
Account, and the Stock Option Deferral Account.
1.02 "BENEFICIARY" means the individual, trust or other recipient to whom a
deceased Member's benefits are payable, as provided in Section 4.07.
1.03 "BONUS" means any annual bonus or other similar bonus payable to an
Eligible Employee and any other bonus payable to an Eligible Employee and
designated by the Corporation through other program documents or otherwise
as eligible for deferral under this Plan.
1.04 "BONUS DEFERRAL AGREEMENT" means the agreement entered into by the Member
pursuant to Section 2.02 under which he elects to defer all or a portion
of his Bonus under this Plan.
1.05 "BONUS DEFERRALS" means the amount of contributions credited to a Member's
Accounts under Section 3.01, with respect to his Bonus.
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1.06 "CASH DEFERRAL ACCOUNT" means the account credited with Salary Deferrals,
cash Bonus Deferrals and cash Long-Term Incentive Deferrals and the
earnings credited to that Account pursuant to Section 3.03.
1.07 "CHANGE IN CONTROL" means the events described in Section 5.01.
1.08 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
1.09 "COMMON STOCK" means the Huntington Bancshares Incorporated common stock
with no par value per share.
1.10 "COMMON STOCK DEFERRED ACCOUNT" means the account credited with Common
Stock from deferred Common Stock in relation to Bonus Deferrals, Long-term
Incentive Deferrals and Restricted Stock Deferrals and the dividend
equivalents with respect to the Common Stock credited to that Account
pursuant to Section 3.03.
1.11 "COMPENSATION" means base salary or commissions earned by an Eligible
Employee from the Corporation for each payroll period during a Plan Year,
including any salary reduction contributions made under any plan
maintained by the Corporation pursuant to Sections 401(k), 125 and 132(f)
of the Code.
1.12 "COMPENSATION COMMITTEE" means the Compensation and Stock Option Committee
of the Board of Directors of the Corporation.
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1.13 "CORPORATION" means Huntington Bancshares Incorporated, a Maryland
corporation, together with any and all subsidiaries, and any successor
thereto as provided in Section 6.13. A subsidiary or subsidiaries means
any corporation or other entity whose financial statements are
consolidated with the Corporation.
1.14 "DEFERRALS" means collectively the Salary, Bonus, Long-Term Incentive,
Restricted Stock and Net Shares, unless indicated otherwise.
1.15 "DISTRIBUTION ELECTION FORM" means the form or forms completed by a Member
to elect alternative payment options and/or alternative payout timing.
1.16 "EFFECTIVE DATE" means October 1, 2001.
1.17 "ELIGIBLE EMPLOYEE" means a manager or highly compensated employee of the
Corporation who has been selected by the Compensation Committee or its
delegate to participate in this Plan as described in Section 2.01.
1.18 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.19 "INVESTMENT FUNDS" mean such investment funds that the Corporation may, in
its discretion, make available in determining the earnings (or losses) on
a Member's Cash Deferrals.
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1.20 "LONG-TERM INCENTIVE" means any long-term award payable to an Eligible
Employee by the Corporation and designated by the Corporation through
other program documents or otherwise as eligible for deferral under this
Plan.
1.21 "LONG-TERM INCENTIVE DEFERRAL AGREEMENT" means the agreement entered into
by the Member pursuant to Section 2.02 under which he elects to defer all
or a portion of his Long-Term Incentive under this Plan.
1.22 "LONG-TERM INCENTIVE DEFERRALS" means the amount of contributions credited
to a Member's Accounts under Section 3.01, with respect to his Long-Term
Incentive.
1.23 "MEMBER" means each Eligible Employee who has made the election described
in Section 2.02.
1.24 "NET SHARES" with respect to an election made pursuant to Section 3.02,
means the difference between the number of shares of Common Stock subject
to the stock option exercise and the number of shares of Common Stock
delivered to satisfy the stock option exercise price, less any shares used
to satisfy FICA or any other taxes due upon the option exercise as may be
designated by the Corporation.
1.25 "PLAN" means the Executive Deferred Compensation Plan of Huntington
Bancshares Incorporated.
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1.26 "PLAN YEAR" means the twelve (12)-month period beginning on any January 1;
the first Plan Year shall begin October 1, 2001 and ends December 31,
2001.
1.27 "RESTRICTED STOCK AWARD" means any restricted stock awards of Common Stock
payable to an Eligible Employee by the Corporation and designated by the
Corporation through a restricted stock award document or otherwise as
eligible for deferral under this Plan.
1.28 "RESTRICTED STOCK DEFERRAL AGREEMENT" means the agreement entered into by
the Member pursuant to Section 2.02 under which he elects to defer all or
a portion of his Restricted Stock Award under the Plan.
1.29 "RESTRICTED STOCK DEFERRALS" means the amount of contributions credited to
a Member's Accounts under Section 3.01, with respect to his Restricted
Stock Award.
1.30 "SALARY DEFERRAL AGREEMENT" means the agreement entered into by the Member
pursuant to Section 2.02 under which he elects to defer all or a portion
of his Compensation under this Plan.
1.31 "SALARY DEFERRALS" means the amount of contributions credited to a
Member's Account under Section 3.01, with respect to his Compensation.
1.32 "STOCK OPTION DEFERRAL ACCOUNT" means the account credited with the
deferred Net Shares and the dividend equivalents with respect to those Net
Shares credited to that Account pursuant to Section 3.03.
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1.33 "STOCK OPTION DEFERRAL AGREEMENT" means the agreement entered into by the
Member pursuant to Section 2.02 under which he elects to defer all or a
portion of his Net Shares under this Plan.
1.34 "STOCK OPTION DEFERRALS" means the amount of contributions credited to a
Member's Accounts under Section 3.01, with respect to his Net Shares.
1.35 "TRUST" means the trust that may be established by the Corporation as
provided in Section 6.02(b).
1.36 "VALUATION DATE" means the last business day of each calendar month. All
distributions under the Plan shall be based upon the value of the Member's
Accounts as of the Valuation Date specified in Article 4 with respect to
the distribution and shall include any contributions made by a Member, but
not yet credited to the Member's Accounts.
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ARTICLE 2. PARTICIPATION
2.01 ELIGIBILITY
(a) In addition to a designation of eligibility to participate in this
Plan contained in other Corporation programs for its managers and
highly compensated employees, the Compensation Committee or its
delegate, in its sole discretion, shall select from time-to-time
either individually or by class, those managers and highly
compensated employees of the Corporation who shall be eligible to
participate in this Plan under Section 2.02. The Compensation
Committee may select different employees or classes of employees to
participate in the various Deferrals. The Compensation Committee
shall make its selection from those managers and highly compensated
employees who it deems to be in a select group of management or
highly compensated employees as defined under Title I of ERISA. Said
employees shall be notified of their eligibility for participation
in the Plan by the Corporation as soon as practicable after the
Compensation Committee has made its selection and, for purposes of
authorizing any Deferrals under Section 3.01, in any event prior to
the first day of eligibility after said employee is designated an
Eligible Employee. An Eligible Employee may become a Member for any
or all Deferrals he is eligible for under Section 3.01.
(b) In its sole discretion, the Compensation Committee may withdraw its
approval for participation in the Plan for any Member at any time
with respect to any future deferral opportunity whether or not a
deferral election has been made by the Member. In the event of such
withdrawal, the Member with existing Accounts will remain a Member
in relation to the right to direct investment and elect distribution
options from those Accounts. Such Member shall be notified of such
withdrawal in
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writing as soon as practicable following such action.
Notwithstanding the foregoing, in the event a Change in Control
occurs, the Compensation Committee may not thereafter withdraw its
participation approval for any Member.
2.02 PARTICIPATION
(a) INITIAL PLAN YEAR.
(i) SALARY DEFERRALS will be available beginning in 2002 and to be
effective must be made by an Eligible Employee by executing
and delivering to the Corporation a Salary Deferral Agreement
by December 31, 2001. The Salary Deferral Agreement shall
apply to Compensation earned by the Eligible Employee in the
payroll periods beginning after December 31, 2001.
(ii) An election to become a Member and authorize a BONUS DEFERRAL
to be effective for a 2001 Bonus (payable in 2002) must be
made by an Eligible Employee, by executing and delivering to
the Corporation, an irrevocable Bonus Deferral Agreement by
December 31, 2001.
(iii) An election to become a Member and authorize a LONG-TERM
INCENTIVE DEFERRAL to be effective for cycle eight (8)
payments ending on December 31, 2002 payable in 2003 must be
made by the Eligible Employee by executing and delivering to
the Corporation an irrevocable Long-term Incentive Deferral
Agreement as provided in Section 2.02(b)(iii).
(iv) STOCK OPTION DEFERRAL will be available beginning in 2003 and
to be effective must be made by an Eligible Employee by
executing and
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delivering to the Corporation a Stock Option Deferral
Agreement at any time prior to exercising a particular Common
Stock Option.
(b) INITIAL PARTICIPATION FOR 2002 PLAN YEAR AND THEREAFTER.
(i) In the case of a newly hired Eligible Employee or an employee
who first becomes an Eligible Employee during a Plan Year,
that Eligible Employee must execute and deliver to the
Corporation a Salary Deferral Agreement within 30 days of
notification of eligibility to participate in the Plan. Salary
Deferrals will begin in the first full payroll period
following receipt of the Salary Deferral Agreement.
(ii) For purposes of BONUS DEFERRALS, the initial irrevocable Bonus
Deferral Agreement must be executed and delivered to the
Corporation before the later of the date established for
current Members to submit their Plan Year Bonus Deferral
Agreement or thirty (30) days after being designated an
Eligible Employee, to apply to the Bonus attributable to that
Plan Year, which becomes payable in the next following Plan
Year. The Bonus Deferral Agreement for subsequent Plan Years
may be changed in accordance with the procedures in paragraph
(c)(ii) below. Notwithstanding the foregoing, in relation to
any other bonus, the irrevocable Bonus Deferral Agreement must
be made at such time and in such manner as established by the
Corporation in its discretion.
(iii) For purposes of LONG-TERM INCENTIVE DEFERRALS and for
RESTRICTED STOCK DEFERRALS, the initial irrevocable Long-Term
Incentive Deferral Agreement or Restricted Stock Deferral
Agreement, as the case may be, must be executed and delivered
to the Corporation before the later of the date
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established for current Members to submit their next plan
year's payment Deferral Agreement or thirty (30) days after
being designated an Eligible Employee for purposes of the
Long-Term Incentive Deferral and/or Restricted Stock Award
Deferral.
(iv) For purposes of STOCK OPTION DEFERRALS effective initially in
2003, the initial Stock Option Deferral Agreement must be
executed and delivered to the Corporation before the date
established for current Members to submit their Deferral
Agreement for the next Common Stock option exercise.
(c) CONTINUING PARTICIPATION.
(i) After the initial year for eligibility, an Eligible Employee
may authorize or change a previously authorized SALARY
DEFERRAL for any Plan Year by executing and delivering to the
Corporation a Salary Deferral Agreement at a date determined
by the Corporation, but no later than December 31 of the Plan
Year immediately preceding the Plan Year in which the
Compensation would otherwise be paid to the Member. Once a
Salary Deferral Agreement is made, it will remain in effect
for that Plan Year and subsequent Plan Years until suspended
or changed in accordance with these terms.
(ii) A Bonus Deferral Agreement must be executed for any Plan Year
that a BONUS DEFERRAL is desired. An irrevocable Bonus
Deferral Agreement must be delivered to the Corporation prior
to the last business day of March in order to defer that Plan
Year's Bonus, payable in the following Plan Year. A Bonus
Deferral Agreement is irrevocable, but may be changed for
subsequent Plan Years in accordance with these terms.
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(iii) A Long-Term Incentive Deferral Agreement must be executed for
each payout year that a LONG-TERM INCENTIVE DEFERRAL is
desired. The Long-Term Incentive Deferral Agreement must be
delivered to the Corporation prior to the last business day of
March of the year prior to the plan year of payment. This
Long-Term Incentive Deferral Agreement is irrevocable, but
will only apply to the Long-Term Incentive designated in the
Agreement.
(iv) A Restricted Stock Deferral Agreement must be executed for
each payment that a RESTRICTED STOCK DEFERRAL is desired. The
Restricted Stock Deferral Agreement must be delivered to the
Corporation more than six (6) months prior to the vesting in
the Restricted Stock Award and in the Plan Year prior to the
year in which the Restricted Stock Award vests. This Deferral
Agreement is irrevocable, but will only apply to the
Restricted Stock Award designated in the Agreement.
(v) A Stock Option Deferral Agreement must be executed for each
Common Stock option exercised that a STOCK OPTION DEFERRAL is
desired. The Stock Option Deferral Agreement must be delivered
to the Corporation by the end of the business day immediately
prior to the day on which the stock option is exercised for
which the deferral is elected. This Stock Option Deferral
Agreement is irrevocable, but will only apply to the stock
option designated in the Agreement.
(d) PARTICIPATION PROCEDURE. In order to commence participation in the
Plan, an Eligible Employee must complete and timely deliver to the
Corporation the following forms:
(i) one or more of the Deferral Agreements referred to above;
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(ii) a Distribution Election Form which applies to one or more of
the Accounts for which Deferrals are elected; and
(iii) a Beneficiary Designation Form which applies to the Accounts.
(e) ELECTION NOT TO DEFER. An Eligible Employee or Member may elect from
time-to-time not to defer any amount he is eligible to defer
hereunder without affecting the eligibility to defer at any time in
the future as long as he remains an Eligible Employee.
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ARTICLE 3. CONTRIBUTIONS
3.01 AMOUNT OF DEFERRAL CONTRIBUTIONS
The amount of contributions to be recorded on the books of the Corporation
on behalf of a Member's Accounts pursuant to this Section 3.01 shall be
equal to the total of the Deferrals described herein.
(a) SALARY DEFERRALS. For each payroll period beginning on or after the
effective date of an Eligible Employee's Salary Deferral Agreement,
his Cash Deferral Account shall be credited with an amount of Salary
Deferrals, if applicable. The amount of Salary Deferrals shall be
equal to the designated percentage of Compensation elected by the
Member in his Salary Deferral Agreement by agreeing to accept a
reduction in Compensation equal to a stated whole percentage of
Compensation per payroll period which is not less than five percent
(5%) nor more than one hundred percent (100%) of Compensation.
(b) BONUS DEFERRAL. The amount of Bonus Deferrals shall be elected by
the Member by agreeing to accept a reduction in Bonus equal to a
stated whole percentage in his Bonus Deferral Agreement for that
year, which is not less than five percent (5%) or one hundred (100)
shares of Common Stock nor more than one hundred percent (100%) of
Bonus.
(c) LONG-TERM INCENTIVE DEFERRAL. The amount of a Long-Term Incentive
Deferral shall be elected by the Member by agreeing to accept a
reduction in the Long-Term Incentive equal to a stated whole
percentage in the applicable Long-Term Incentive Deferral Agreement,
which is not less than five percent (5%) or one hundred (100) shares
of Common Stock nor more than one hundred percent (100%) of the
Long-Term Incentive.
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(d) RESTRICTED STOCK DEFERRAL. The amount of a Restricted Stock Deferral
shall be elected by the Member by agreeing to accept a reduction in
the Restricted Stock Award equal to a stated whole percentage of his
Common Stock covered in the applicable Restricted Stock Deferral
Agreement, which is not less than one hundred (100) shares of Common
Stock nor more than one hundred percent (100%) of the award (in
whole shares).
(e) STOCK OPTION DEFERRAL. The amount of a Stock Option Deferral shall
be elected by the Member by agreeing to accept a reduction in Net
Shares deliverable to him equal to a stated whole percentage of his
Net Shares for that Stock Option Deferral Agreement, which is not
less than one hundred (100) shares of Common Stock nor more than one
hundred percent (100%) of the Net Shares (in whole shares).
(f) The Corporation, in its sole discretion, may allow Deferrals in
dollar amounts, or a combination of percentages and dollar amounts.
(g) No election for Deferrals will be effective unless the cash amount
or Common Stock amount payable to the Member to which the Deferral
applies is sufficient to satisfy such election.
(h) In no event shall the Deferrals of Compensation, Bonus, Long-Term
Incentive, Common Stock or Net Shares be reduced below the amount
required for federal, state and local tax and any other required or
elected withholding amounts (including amounts elected under the
Corporation's various benefit plans).
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3.02 STOCK OPTION EXERCISE
(a) This Section describes the special procedures for deferring the
delivery and receipt of Common Stock which a Member may receive from
the exercise of a nonqualified stock option granted to the Member by
the Corporation. The stock options are governed by the stock option
plan under which they are granted. No stock options or shares of
Common Stock are authorized to be issued under the Plan. A Member
who elects to defer receipt of Common Stock issuable upon the
exercise of stock options will have no rights as a stockholder of
the Corporation with respect to allocations made to his Stock Option
Deferral Account except the right to receive dividend equivalent
allocations as hereafter described.
(b) A Member may elect to defer receipt of Net Shares of Common Stock
resulting from a stock-for-stock exercise of an exercisable stock
option issued to the Member by completing and submitting to the
Corporation his Stock Option Deferral Agreement as provided in
Section 2.02. The stock option exercise must occur on or prior to
the expiration date of the stock option and must be accomplished by
delivering Common Stock or using another acceptable method, such as,
attestation, on or prior to the exercise date, shares of Common
Stock which have been personally owned by the Member for at least
six (6) months prior to the exercise date and have not been used in
a stock swap in the prior six (6) months. A Member's Stock Option
Deferral Agreement shall not be effective if the stock option as to
which the Member has made the deferral election terminates prior to
the exercise date selected by the Member. If the Member dies or
fails to deliver shares of Common Stock which have been personally
owned by the Member at least six (6) months prior to the exercise
date (and have not been used in a stock
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swap in the prior six (6) months) in payment of the exercise price,
then the Stock Option Deferral Agreement shall not be effective.
Only whole Net Shares may be deferred.
3.03 INVESTMENT OF ACCOUNTS
(a) The Accounts of each Member shall be credited with an additional
amount of hypothetical net earnings (or losses) determined under
this Section.
(b) Except for the Common Stock Deferral Account and the Stock Option
Deferral Account, each Member shall elect the manner in which his
Accounts are to be credited with net earnings (and losses) by
designating how the Accounts are to be invested on a hypothetical
basis from among the Investment Funds. The election shall be made in
writing on a form provided by the Corporation. An investment
election shall be effective for the Valuation Date established by
the Corporation following its receipt. Modifications may be made to
investment elections on the same basis.
(c) If the Corporation exercises its discretion to establish the Trust,
it reserves the right to determine the amount of contributions to
the Trust and the types of investments used, including, but not
limited to, mutual funds, annuities and life insurance contracts.
(d) Bonus Deferrals, Long-Term Incentive Deferrals, Restricted Stock
Deferrals and Stock Option Deferrals of Common Stock may be
maintained in their respective Accounts on the books of the
Corporation or the Common Stock may be held in the Trust.
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3.04 VALUATION OF ACCOUNTS
(a) On the first Valuation Date, the Member's Accounts shall equal:
(i) the amount of the Member's Deferrals, if any, credited to the
Member's Accounts during the period from the Effective Date
through the first Valuation Date; plus
(ii) the proportionate share of the net earnings or losses, if any,
since the Effective Date on the Investment Funds, made
available in determining the net earnings or losses on a
Member's Deferrals;
(iii) for purposes of the Common Stock valuation, all dividend
equivalents payable in relation to Common Stock shall be
credited in the form of additional whole and fractional shares
of Common Stock since the Effective Date.
(b) On each subsequent Valuation Date, the Member's Accounts shall
equal:
(i) the Member's Accounts balance as of the immediately preceding
Valuation Date; plus
(ii) the proportionate share of the net earnings or losses, if any,
since the immediately preceding Valuation Date on the
Investment Funds, made available in determining the net
earnings or losses on a Member's Deferrals; plus
(iii) all dividend equivalents payable in relation to the Common
Stock (credited in the form of additional shares) since the
immediately preceding Valuation Date; plus
(iv) the then value of the Member's Deferrals, if any, credited
since the immediately preceding Valuation Date; and less
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(v) any payments or distributions made in accordance with the
terms of the Plan from the Member's Accounts since the
immediately preceding Valuation Date.
(c) The Corporation reserves the right to change from time-to-time the
procedures used in valuing the Accounts or crediting (or debiting)
the Accounts if it determines that such an action is justified in
that it results in a more accurate reflection of the fair market
value of assets. In the event of a conflict between the provisions
of this Section and such new administrative procedures, those new
administrative procedures shall prevail.
(d) In the event that the Corporation determines that any
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase
or exchange of Common Stock or other securities of the Corporation,
issuance of warrants or other rights to purchase Common Stock or
other securities of the Corporation, or other similar corporate
transactions or events affects the Common Stock, an appropriate
adjustment to the Member's Common Stock Deferral Account and Stock
Option Deferral Account shall be made to prevent reduction or
enlargement of the Member's benefits under the Plan.
3.05 VESTING OF ACCOUNT
The Member shall be fully vested in his Deferrals and earnings credited to
his Accounts.
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3.06 INDIVIDUAL ACCOUNTING
The Corporation shall maintain, or cause to be maintained, records showing
the individual balances of each of the Member's Accounts. At least once a
year, each Member shall be furnished with a statement setting forth the
value of his Accounts.
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ARTICLE 4. PAYMENT OF ACCOUNT
4.01 PAYMENT OF ACCOUNTS
A Member shall be entitled to receive payment of his Accounts upon the
Member's termination of employment from the Corporation for any reason.
4.02 METHOD OF PAYMENT
(a) Unless otherwise elected as provided hereinafter, payment of the
Accounts shall be made in a single lump sum payment on or as soon as
administratively possible following the Valuation Date for the month
following the month in which the Member terminates employment.
(b) In lieu of receiving an immediate lump sum payment, the Member may
elect from time-to-time on a Distribution Election Form to receive
his Accounts:
(i) in annual installments over a period allowed by the
Corporation ranging from two (2) to ten (10) years as follows:
(A) with respect to Cash Deferral Accounts, annual cash
payments calculated by multiplying (I) the balance in
the Cash Deferral Account as of the Valuation Date on
which such installment payment is being made, times (II)
a fraction equal to the reciprocal of the number of
years remaining in the annual installment period elected
by the Member; and
(B) with respect to Common Stock Deferral Accounts and Stock
Option Deferral Accounts, approximately equal annual
installments of Common Stock, or
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(ii) in a lump sum payment or in installments as provided in
subparagraph (i) above beginning as of a specified Valuation
Date either before or after his termination of employment in
accordance with terms established by the Corporation.
(c) An installment payout election under paragraph (b) above is subject
to the approval of the Corporation and to be effective must be made
no later than:
(i) the end of the Plan Year prior to the Plan Year in which the
election will be effective; and
(ii) at least six (6) months prior to the commencement payout date.
(d) A Member may complete one Distribution Election Form at the time of
the Member's initial Deferral hereunder electing a date or dates on
which any Member Deferrals will be distributed or begin to be
distributed to the Member other than the Member's termination of
employment. The initial Deferral election period on the Distribution
Election Form must be at least three (3) Plan Years from the Plan
Year in which that Deferral occurs. The Member may subsequently
extend any Deferral payout date, if the Member's subsequent
Distribution Election Form is executed and delivered to the
Corporation at least two (2) Plan Years prior to the then elected
payout date.
(e) The Corporation may establish rules and procedures which allow a
Member to complete a separate Distribution Election Form for each
Account within the Member's Accounts or for an amount in any one of
his Accounts based on the value of separate Deferral Agreements. In
either situation, the Corporation shall revise the Distribution
Election Form procedures under paragraph (d) above to
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allow current and subsequent elections to apply to each Account or
to amounts in the Accounts based on separate deferral agreements.
4.03 HARDSHIP DISTRIBUTIONS
The Corporation may, pursuant to rules adopted by it and applied in a
uniform manner, accelerate the date of distribution of a Member's Accounts
(except the Common Stock Deferral Account and the Stock Option Deferral
Account) because of hardship at any time. "Hardship" shall include an
unforeseeable, severe financial condition resulting from (a) a sudden and
unexpected illness or accident of the Member or his dependents (as defined
in Section 152(a) of the Code); (b) loss of the Member's property due to
casualty; or (c) other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Member, but which may not be relieved through other available resources of
the Member, as determined by the Corporation. The amount of the
distribution may not be in excess of the amount of the financial need to
satisfy the hardship, including any amounts necessary to pay any federal,
state or local tax reasonably anticipated to result from the distribution.
4.04 OTHER DISTRIBUTIONS
A Member shall be permitted to accelerate payment from his Accounts on or
as soon as administratively possible following the Valuation Date
coincident with or occurring after at least thirty (30) days written
notice to the Corporation. Such payment shall be subject to a ten percent
(10%) penalty reduction to the Accounts and the Member's future Deferrals
shall be suspended. The Member shall be permitted to reauthorize Deferrals
for the Plan Year following the expiration of a twelve (12)-month period
after said distribution, provided he still is an Eligible Employee.
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4.05 ACCELERATED TAX DISTRIBUTIONS
In the event any Deferral is finally determined to be income taxable to
the Eligible Employee prior to any distribution event hereunder, then the
Account holding that Deferral shall be distributable to the Eligible
Employee. The Eligible Employee shall notify the Corporation of the final
determination of taxability and will provide all information required by
the Corporation.
4.06 COMPENSATION COMMITTEE DEFERRAL OF DISTRIBUTIONS
The Compensation Committee may, in its sole discretion, defer payment to a
future date of any otherwise scheduled distribution that would otherwise
result in the loss of a corporate income tax deduction under Internal
Revenue Code Section 162(m).
4.07 DEATH BENEFIT
If a Member dies before payment of the entire balance of his Accounts, an
amount equal to the unpaid portion thereof as of the date of his death
shall be made in a single lump sum payment to his Beneficiary on or as
soon as administratively possible following the Valuation Date for the
month following the month in which the Member dies.
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4.08 DESIGNATION OF BENEFICIARY
Each Member shall file with the Corporation a written designation of one
or more persons, trust or other recipient as the Beneficiary who shall be
entitled to receive the amount, if any, payable from his Accounts under
the Plan upon his death pursuant to this Section 4.07. A Member may, from
time to time revoke or change his Beneficiary designation without the
consent of any prior Beneficiary by filing a new designation with the
Corporation. The last such designation received by the Corporation shall
be controlling; provided however, that no designation, or change or
revocation thereof, shall be effective unless received by the Corporation
prior to the Member's death, and in no event shall it be effective as of a
date prior to such receipt. If no such Beneficiary designation is in
effect at the time of the Member's death, or if no designated Beneficiary
survives the Member, the Corporation shall distribute the Member's
benefits to the following persons in the following order of priority:
(a) The Member's surviving spouse;
(b) The Member's surviving children, in equal shares; or
(c) The legal representative of the Member's estate.
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ARTICLE 5. CHANGE IN CONTROL
5.01 DEFINITION OF CHANGE IN CONTROL
Change in Control means any of the following events:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act as in effect as of the date of this Plan), other
than the Corporation or any "person" who as of the Effective Date is
a director or officer of the Corporation or whose shares of Common
Stock of the Corporation are treated as "beneficially owned" (as
such term is used in Rule 13d-3 of the Exchange Act as in effect as
of the Effective Date) by any such director or officer, becomes the
beneficial owner, directly or indirectly, of securities of the
Corporation representing twenty-five percent (25%) or more of the
combined voting power of the Corporation's then outstanding
securities;
(b) Individuals who, as of the Effective Date, constitute the Board of
Directors of the Corporation (the "incumbent board") cease for any
reason to constitute at least a majority of such Board of Directors,
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election, was approved by a vote of at least a majority of the
directors comprising the "incumbent board" shall be considered as
though such individual were a member of the "incumbent board," but
excluding for this purpose any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Regulation
14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
"person" other than such Board of Directors;
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(c) A merger or consolidation of the Corporation, other than a merger or
consolidation in which the voting securities of the Corporation
immediately prior to the merger or consolidation continue to
represent (either by remaining outstanding or being converted into
securities of the surviving entity) fifty-one percent (51%) or more
of the combined voting power of the Corporation or surviving entity
immediately after the merger or consolidation with another entity;
(d) A sale, exchange, lease, mortgage, pledge, transfer, or other
disposition (in a single transaction or a series of related
transactions) of all or substantially all of the assets of the
Corporation which shall include, without limitation, the sale of
assets or earning power aggregating more than fifty percent (50%) of
the assets or earning power of the Corporation on a consolidated
basis;
(e) A liquidation or dissolution of the Corporation;
(f) A reorganization, reverse stock split, or recapitalization of the
Corporation which would result in any of the foregoing; or
(g) A transaction or series of related transactions having, directly or
indirectly, the same effect as any of the foregoing.
5.02 APPLICATION IN CHANGE IN CONTROL
To the extent applicable, the provisions of this Article shall control and
shall supersede any other provisions of the Plan to the extent
inconsistent with the provisions of this Article.
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5.03 PAYMENTS TO AND BY THE TRUST
If the Corporation determines that it is probable that a Change in Control
may occur within the six (6)-month period immediately following the date
of determination, or if a Change in Control in fact occurs in those
situations where the Corporation has not otherwise made such a
determination, the Corporation shall make a contribution to the Trust (if
in existence at the date of determination or the date of the Change in
Control, as the case may be) in accordance with the provisions of the
Trust. Solely for purposes of determining the amount of such contribution
(but in no way in limitation of the Corporation's liability under the Plan
as determined under other provisions of the Plan), the Corporation's total
liability under the Plan shall be equal to the value of all Accounts
established under the Plan, which remain unpaid by the Corporation as of
the date of determination or the date of the Change in Control, as the
case may be, whether or not amounts are otherwise currently payable to
Members or Beneficiaries under the Plan. All such contributions shall be
made as soon as possible after the date of determination or of the Change
in Control, as the case may be, and shall be made in cash and/or Common
Stock. Further the Corporation may, in its discretion, make other
contributions to the Trust from time-to-time for purposes of providing
benefits hereunder, whether or not a Change in Control has occurred or may
occur.
Notwithstanding the foregoing, any contributions to the Trust, as well as
any net earnings or losses thereon, shall be at all times subject to the
provisions of the Trust.
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5.04 LEGAL FEES AND EXPENSES
The Corporation shall reimburse any Member or Beneficiary for all
reasonable legal fees and expenses incurred by such Member or Beneficiary
after the date of any Change in Control in seeking to obtain any right or
benefit provided by the Plan.
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ARTICLE 6. GENERAL PROVISIONS
6.01 ESTABLISHMENT OF RULES
The Corporation shall be responsible for providing for the general
administration of the Plan and for carrying out the provisions of the
Plan. The Corporation from time-to-time shall establish rules for the
administration of the Plan and the transaction of its business. The
Corporation shall have total and complete discretion to interpret the
Plan, including, but not limited to, the discretion to:
(a) determine all questions arising in the administration,
interpretation and application of the Plan, including the power to
construe and interpret the Plan;
(b) decide all questions relating to an individual's eligibility for
benefits and the amounts thereof;
(c) decide all facts relevant to the determination of eligibility for
benefits or participation;
(d) make such adjustments which it deems necessary or desirable to
correct any arithmetical or accounting errors; and
(e) determine the amount, form and timing of any distribution to be made
hereunder.
In making its decision, the Corporation shall be entitled to, but need not
rely upon, information supplied by a Member, Beneficiary, or
representative thereof. The Corporation may correct any defect, supply any
omission, or reconcile any inconsistency in such manner and to such extent
as it shall deem necessary to carry out the purposes of this Plan. The
Corporation's decisions in such matters shall be binding and conclusive as
to all parties. In providing for the administration of the Plan, the
Corporation may delegate responsibilities for the operation and
administration of the Plan by a written document or documents filed with
the Plan records.
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6.02 FUNDING
(a) All amounts payable in accordance with this Plan shall constitute a
general unsecured obligation of the Corporation. Such amounts, as
well as any administrative costs relating to the Plan, shall be paid
out of the general assets of the Corporation, to the extent not paid
by a grantor trust established pursuant to paragraph (b) below. To
the extent the Member or any other person acquires a right to
receive benefits under this Plan, such right shall be no greater
than the right of any unsecured general creditor of the Corporation.
(b) The Corporation may, for administrative reasons, establish a grantor
trust for the benefit of Members participating in the Plan. The
Corporation reserves the right to determine the amount of
contributions to the Trust and the types of investments used,
including, but not limited to, mutual funds, annuities and life
insurance contracts. The assets of said trust will be held separate
and apart from other Corporation funds, and shall be used
exclusively for the purposes set forth in the Plan and the
applicable trust agreement, subject to the following conditions:
(i) the creation of said trust shall not cause the Plan to be
other than "unfunded" for purposes of Title I of ERISA;
(ii) the Corporation shall be treated as "grantor" of said trust
for purposes of Section 677 of the Code; and
(iii) said trust agreement shall provide that its assets may be used
to satisfy claims of the grantor's general creditors in the
event of its insolvency, and the rights of such general
creditors are enforceable by them under federal and state law.
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(c) All Accounts under the Plan shall be for bookkeeping purposes only
and shall not represent a claim against specific assets of the
Corporation. Nothing contained in this Plan shall be deemed to
create a trust of any kind or create any fiduciary relationship.
Payments of amounts credited to Accounts under the Plan with respect
to those Members and Beneficiaries for whom Trust contributions are
made shall be made at the Corporation's option by the Corporation or
from the Trust in accordance with the terms of the Trust, but, to
the extent not paid by the Corporation, shall be paid by the Trust.
6.03 NO CONTRACT OF EMPLOYMENT
The establishment of the Plan shall not be construed as conferring any
legal rights upon any person for a continuation of employment, nor shall
it interfere with the rights of the Corporation to discharge any officer
and to treat him without regard to the effect which such treatment might
have upon him as a Member of the Plan.
6.04 FACILITY OF PAYMENT
In the event that the Corporation shall find that a Member is unable to
care for his affairs because of illness or accident, the Corporation may
direct that any benefit payment due him, unless claim shall have been made
therefor by a duly appointed legal representative, be paid to his spouse,
a child, a parent or other blood relative, or to a person with whom he
resides, and any such payment so made shall be a complete discharge of the
liabilities of the Plan therefor.
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6.05 WITHHOLDING TAXES
The Corporation shall have the right to deduct from each payment to be
made under the Plan any required withholding taxes. In the event
employment tax liability or state or local tax liability is assessed on
amounts paid or payable under this Plan, the Corporation shall have the
right to deduct from the payment or from the Member's other Compensation
any required employee portion of the employment tax liability or income
tax withholding.
6.06 NONALIENATION
Subject to any applicable law, no benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt so to do shall be void, nor
shall any such benefit be in any manner liable for or subject to
garnishment, attachment, execution or levy, or liable for or subject to
the debts, contracts, liabilities, engagements or torts of the Member or
any liability for equitable distribution, alimony or other payments for
the support of a spouse or former spouse, or for any other relative of any
Member.
6.07 CONSTRUCTION
The Plan is intended to constitute an unfunded deferred compensation
arrangement for a select group of management or highly compensated
employees. Except to the extent superseded by Federal law, all rights
hereunder shall be governed by and construed in accordance with the laws
of the State of Ohio (including its statute or limitations provisions).
The Plan shall be construed to effectuate its purpose and the
Corporation's intent that the Plan be exempt from ERISA, as amended and
that amounts deferred hereunder not be subject to Federal income tax until
distributed.
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Except as otherwise provided by law, any action to enforce a right or
obligation hereunder shall be brought in a court of competent jurisdiction
in the County of Franklin and State of Ohio.
6.08 LIMITATIONS ON LIABILITY
Notwithstanding any of the preceding provisions of the Plan, neither the
Corporation nor any individual acting as employee or agent of the
Corporation shall be liable to any Member, former Member or other person
for any claim, loss, liability or expense incurred in connection with the
Plan. The Corporation does not undertake any responsibility to any Member
for the tax consequences of a particular Member's election to defer income
under this Plan.
6.09 ADMINISTRATIVE EXPENSE
All expenses of administering this Plan shall be paid by the Corporation
and no part of the expenses or taxes on the Corporation shall be charged
against any Member's Accounts or any benefits distributed under the Plan.
6.10 CLAIMS AND REVIEW PROCEDURES
(a) In accordance with any rules and procedures adopted by the
Corporation, applications for benefits shall be submitted to the
Corporation on a prescribed form signed by the Member or, in the
case of a death benefit, by his Beneficiary.
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The Corporation shall, within 90 days after the receipt of a written
claim, send written notification to the Participant or Beneficiary
(referred to in the remainder of this Section as the "claimant") as
to its disposition, unless special circumstances require an
extension of time for processing the claim. If such an extension is
required, written notice of the extension shall be furnished to the
claimant prior to the termination of the initial ninety (90)-day
period. In no event shall such extension exceed a period of ninety
(90) days from the end of such initial period. The extension notice
shall indicate the special circumstances requiring an extension of
time and the date by which the Corporation expects to render the
final decision.
In the event the claim is wholly or partially denied, the written
notification shall state the specific reason or reasons for the
denial, include specific references to pertinent Plan provisions on
which the denial is based, provide an explanation of any additional
material or information necessary for the claimant to perfect the
claim and a statement of why such material or information is
necessary, and set forth the procedure by which the claimant may
appeal the denial of the claim. If the claim has not been granted
and notice is not furnished within the time period specified in the
preceding paragraph, the claim shall be deemed denied for the
purpose of proceeding to appeal in accordance with paragraph (b)
below.
(b) In the event a claimant wishes to appeal the denial of his claim, he
may request a review of such denial by making written application to
the Corporation within sixty (60) days after receipt of the written
notice of denial (or the date on which such claim is deemed denied
if written notice is not received within the applicable time
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period specified in paragraph (a) above). Such claimant (or his duly
authorized representative) may, upon written request to the
Corporation, review documents which are pertinent to such claim, and
submit in writing issues and comments in support of his position.
Within sixty (60) days after receipt of the written appeal (unless
an extension of time is necessary due to special circumstances or is
agreed to by the parties, but in no event more than one hundred
twenty (120) days after such receipt), the Corporation shall notify
the claimant of its final decision. Such final decision shall be in
writing and shall include specific reasons for the decision and
specific references to the pertinent Plan provisions on which the
decision is based. If an extension of time for review is required
because of special circumstances, written notice of the extension
shall be furnished to the claimant prior to the commencement of the
extension. If the claim has not been granted and written notice is
not provided within the time period specified above, the appeal
shall be deemed denied.
(c) If the claimant does not follow the procedures set forth in
paragraphs (a) and (b) above, the claimant shall be deemed to have
waived his right to appeal benefit determinations under the Plan. In
addition, the decisions, actions, and records of the Corporation
shall be conclusive and binding upon the Corporation and all persons
having or claiming to have any right or interests in or under the
Plan.
6.11 ILLEGAL OR INVALID PROVISION
In case any provision of the Plan shall be held illegal or invalid for any
reason, such illegal or invalid provision shall not affect the remaining
parts of the Plan, but the Plan shall be construed and enforced without
regard to such illegal or invalid provision.
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6.12 GENDER AND NUMBER
Except as otherwise indicated by context, masculine terminology used
herein also includes the feminine, and terms used in the singular may also
include the plural.
6.13 SUCCESSORS
All obligations of the Corporation under the Plan shall be binding on any
successor to the Corporation, whether the existence of such successor is
the result of a direct or indirect purchase of all or substantially all of
the business and/or assets of the Corporation, or a merger, consolidation
or otherwise.
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ARTICLE 7. AMENDMENT OR TERMINATION
The Corporation reserves the right to modify or to amend, in whole or in part,
or to terminate this Plan any time by action of its Compensation Committee,
taken at a meeting held either in person or by telephone or other electronic
means, or by unanimous written consent by lieu of a meeting. However, no
modification or amendment of the Plan shall adversely affect the right of any
Member to receive the benefits granted under the Plan by the Corporation in
respect to such Member as of the date of modification or amendment.
If the Plan is terminated, payments from the Accounts of all Members and
Beneficiaries shall be made as soon as administratively convenient in the form
of monthly payments over a three (3)-year period; however, the Compensation
Committee, in its sole discretion, may pay benefits in a lump sum.
Notwithstanding the foregoing, following a Change in Control no modification,
amendment or termination of the Plan shall change the right of any Member to
direct investments, to direct the investment forms, to make distribution
elections whether in-service or at termination of service from those rights the
Member had at the date of modification, amendment or termination, without the
written consent of a majority in number of the Members, except when to comply
with legal or regulatory requirements necessary to maintain the tax deferred
status of any Deferrals.
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