HRE PROPERTIES
EXCESS BENEFIT AND DEFERRED COMPENSATION PLAN
SECTION 1. PURPOSE.
Effective November 1, 1995, the Board of Directors of HRE Properties
adopted the HRE Properties Excess Benefit and Deferred Compensation Plan. The
Plan is intended to provide eligible employees of the Company who elect to
participate in the Plan with benefits in excess of the benefits which may be
provided under the Company's tax-qualified retirement plan, due to the
limitations on contributions and benefits imposed by Section 415 and Section
401(a)(17) of the Internal Revenue Code of 1986, as amended (the "Code"), and to
provide such employees with the opportunity to defer all or a portion of their
compensation as provided in the Plan. It is intended that the Plan qualify as an
"excess benefit plan" within the meaning of Section 3(36) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and as an unfunded
deferred compensation arrangement for a select group of highly compensated or
management employees under Section 201(2) of ERISA.
SECTION 2. DEFINITIONS.
As used herein, the following terms shall have the meanings set forth
below:
(a) "BENEFICIARY" shall mean the person or persons designated
as a Participant's beneficiary under the Profit Sharing and Savings Plan unless
a Participant shall have designated another beneficiary under this Plan.
(b) "BOARD OF DIRECTORS" shall mean the board of directors of
the Company.
(c) "COMMITTEE" shall mean the Compensation Committee of the
Board of Directors as in office from time to time.
(d) "COMPANY" shall mean HRE Properties, a Massachusetts
voluntary association (of the type commonly referred to as a "Massachusetts
business trust") established under Declaration of Trust dated July 7, 1969, as
amended, and its successors and assigns.
(e) "DEFERRED COMPENSATION ACCOUNT" shall mean a bookkeeping
record maintained by the Company for each Participant who is or was an employee
of such entity, which account shall consist of the accumulated annual deferrals
of compensation made under Section 6 of the Plan, as adjusted for earnings
credited in respect of such deferrals pursuant to Section 7 of the Plan.
(f) "ELECTIVE CONTRIBUTION" shall mean a contribution elected
by a Participant to the Profit Sharing and Savings Plan which meets the
requirements of Section 401(k) or 401(m) of the Code.
(g) "EXCESS BENEFIT ACCOUNT" shall mean a bookkeeping record
maintained by the Company for each Participant who is or was an employee of such
entity, which account shall consist of the accumulated annual allocations made
under Section 5 of the Plan on behalf of such Participant, as adjusted for
earnings credited in respect of such allocations pursuant to Section 7 of the
Plan.
(h) "MATCHING CONTRIBUTION" shall mean a contribution made by
the Company to a Participant's Matching Contribution Account.
(i) "MATCHING CONTRIBUTION ACCOUNT" shall mean a bookkeeping
record maintained by the Company for each Participant who is or was an employee
of such entity, which account shall consist of the accumulated Matching
Contributions made under Section 6 of the Plan, as adjusted for earnings
credited in respect of such deferrals pursuant to Section 7 of the Plan.
(j) "PARTICIPANT" shall mean a person described in Section 4 of
the Plan as eligible to receive equalization benefits under Section 5 of the
Plan.
(k) "PLAN" shall mean this HRE Properties Excess Benefit and
Deferred Compensation Plan, as herein set forth and as amended from time to
time.
(l) "PROFIT SHARING AND SAVINGS PLAN" shall mean the HRE
Properties Profit Sharing and Savings Plan, a tax-qualified defined contribution
retirement plan sponsored by the Company, as in effect as of the Effective Date
or adopted thereafter, and as amended from time to time.
(m) "VALUATION DATE" shall mean the last day of each calendar [
month].
SECTION 3. EFFECTIVE DATE.
The Effective Date of the Plan shall be November 1, 1995.
SECTION 4. PARTICIPATION.
Any employee of the Company who is a participant in the Profit Sharing
and Savings Plan shall become a Participant in this Plan if, with respect to any
calendar year, the amount of contributions to be made to the Profit Sharing and
Savings Plan by the Company (other than Elective Contributions) and to be
allocated to the employee's account under the Profit Sharing and Savings Plan is
restricted as a result of the limitations of Section 401(a)(17) or Section 415
of the Code or any successor provisions thereto.
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SECTION 5. PROFIT SHARING AND SAVINGS PLAN EXCESS BENEFIT.
An amount shall be credited to each Participant's Excess Benefit
Account under the Plan for each "Plan Year" (as defined in the Profit Sharing
and Savings Plan) beginning on or after the Effective Date equal to the excess,
if any, of (a) the amount of aggregate contributions (other than Elective
Contributions) of the Company which would have been allocated to the
Participant's account for such Plan Year under the Profit Sharing and Savings
Plan if the provisions set forth in the Profit Sharing and Savings Plan to
comply with the limitations of Section 401(a)(17) and Section 415 of the Code
were not applicable, over (b) the amount of such aggregate Company contributions
actually allocated to the Participant's account for such Plan Year under the
Profit Sharing and Savings Plan. The amount of a Participant's "compensation" as
defined in the Profit Sharing and Savings Plan shall be used to calculate
amounts to be credited to the Participant's Excess Benefit Account; provided
that such "compensation" shall be increased by any amounts deferred pursuant to
Section 6 hereof.
SECTION 6. DEFERRED COMPENSATION.
(a) Each Participant employed by the Company may elect to defer
the receipt of all or a whole percentage (or other portion as the Company may
permit) of his or her compensation and to have such amount credited to his or
her Deferred Compensation Account provided that the Participant's compensation
as defined in the Profit Sharing and Savings Plan (including both cash and any
deferred amounts) is expected to exceed the compensation limitation of Section
401(a)(17) of the Code for the year in which the deferral is to be made. Any
such Participant election shall be made annually on a calendar year basis. A
Participant election with respect to compensation to be paid in the calendar
year in which the Plan is adopted shall be made within thirty (30) days
following the date of the adoption of the Plan by the Board of Directors. A
Participant election shall remain binding for subsequent calendar years until
revoked or revised by the Participant, provided that he or she continues to meet
the requirements of Section 4 in any such subsequent calendar year. Elections
may be revoked or revised for a subsequent calendar year by executing and
delivering a new deferral election form prior to the first day of the calendar
year for which such revocation or revision is to be effective.
(b) In its sole discretion, the Company may make a Matching
Contribution to Participants who make an election to defer a portion of their
compensation under Section 6(a). Such contribution will be allocated to the
Participant's Matching Contribution Account.
SECTION 7. EARNINGS.
The Committee shall meet each year to designate an interest or other
rate to be applied to the Participants' Accounts each year. Any interest or
earnings on amounts credited under the Plan shall be credited, respectively, to
the Participant's Excess Benefit Account, Deferred Compensation Account, and
Matching Contribution Account as of each Valuation Date. The Committee shall
promulgate such rules and regulations as it in its sole discretion determines
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necessary to implement and administer the Plan and the and to determine any
earnings or interest credited to a Participant under the Plan.
SECTION 8. VESTING.
(a) EXCESS BENEFIT ACCOUNT. A Participant (and his or her
Beneficiary) shall vest in his or her Excess Benefit Account at the same rate he
or she vests in the account (other than Elective Contributions) to which
contributions of the Company are allocated under the Profit Sharing and Savings
Plan.
(b) DEFERRED COMPENSATION ACCOUNT. A Participant (and his or
her Beneficiary) shall at all times be fully vested in his or her Deferred
Compensation Account.
(c) MATCHING CONTRIBUTION ACCOUNT. A Participant (and his or
her Beneficiary) shall vest in his or her Matching Contribution Account at the
same rate he or she vests in the account (other than Elective Contributions) to
which matching contributions of the Company are allocated under the Profit
Sharing and Savings Plan.
SECTION 9. PAYMENT OF BENEFITS.
(a) Upon a Participant's death, disability or other termination
of employment with the Company for any reason, vested benefits in his or her
Excess Benefit Account, Deferred Compensation Account, and Matching Contribution
Account shall be payable in a single lump sum payment not later than thirty (30)
days following the Valuation Date coincident with or next following the date on
which such death, disability or other termination of employment occurs. The
valuation of such benefit shall be based on the Valuation Date coincident with
or next following the Participant's date of death, disability or other
termination of employment.
(b) In the case of an "unforeseen emergency," the Committee
may, at its sole and absolute discretion, provide for early payment of benefits
under the Plan. An "unforeseen emergency" is a circumstance caused by an event
beyond the control of a Participant or Beneficiary that would result in severe
financial hardship to the individual if early withdrawal were not permitted.
Early withdrawals under the Plan are limited to the amount necessary to meet the
emergency.
(c) The Company shall deduct from any payment such amounts as
may be required to be withheld under any federal, state or local tax laws.
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SECTION 10. CHANGE OF CONTROL.
In the case of a "change of control", as defined herein, the
Committee, at its sole and absolute discretion, may accelerate the vesting of
benefits under the Plan and may provide for the early payment of such vested
benefits. A "change of control" will be deemed to occur for this purpose if any
one of the following events occurs:
(i) any person who becomes the owner of 20% or
more of the Company's Common Shares and,
thereafter, individuals who were not
Trustees of the Company prior to the date
such person became a 20% owner are elected
as Trustees pursuant to an arrangement or
understanding with, or upon the request of
or nomination by, such person and constitute
at least two of the Trustees, or
(ii) there occurs a change of control of the
Company of a nature that would be required
to be reported in response to Item 1a of
Form S-K pursuant to Section 13 or 15 under
the Securities Exchange Act of 1934
("Exchange Act"), or in any other filing by
the Company with the Securities and Exchange
Commission (the "Commission"); or
(iii) there occurs any solicitation of proxies by
or on behalf of any person other than the
Trustees of the Company and thereafter
individuals who were not Trustees prior to
the commencement of such solicitation are
elected as Trustees pursuant to an
arrangement or understanding with, or upon
the request of or nomination by, such person
and constitute at least two of the Trustees.
(iv) the Company executes an agreement of
acquisition, merger or consolidation which
contemplates that:
(A) after the effective date provided
for in the agreement, all or
substantially all of the business
and/or assets of the Company shall
be owned, leased or otherwise
controlled by another corporation or
other entity; and
(B) individuals who are Trustees of the
Company when such agreement is
executed shall not constitute a
majority of the Trustees or board of
directors of the survivor or
successor entity immediately after
the effective date provided for in
such agreement; provided, however,
for purposes of this paragraph (c),
that if such agreement requires a
condition precedent approval by the
Company's shareholders of the
agreement or transaction, a Change
of Control shall not be
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deemed to have taken place unless
and until such approval is secured.
11. UNFUNDED PLAN.
This Plan is intended to constitute an unfunded, nonqualified deferred
compensation arrangement for the benefit of a select group of management or
highly compensated employees. Except as set forth below, all benefits payable
under the Plan shall be paid by the Company out of its general assets and
nothing contained in this Plan and no action taken pursuant to the provisions of
this Plan shall create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Company and any Participant, Beneficiary or
any other person; no money, property or shares of common stock shall be
segregated for the benefit of any Participant or Beneficiary; no special or
separate fund shall be established or other segregation of assets made to assure
payment of benefits hereunder; and no Participant or Beneficiary shall have any
preferred claim on, or any beneficial ownership interest in, any assets of the
Company prior to the time that benefits payable under the Plan are paid to him
or her as provided herein. The right of a Participant or Beneficiary to receive
a distribution hereunder shall be a general unsecured claim against the assets
of the Company. Measures representing the value of a Participant's benefits
under the Plan are bookkeeping entries only and shall not constitute property of
any kind or any interest in the Company. Notwithstanding the foregoing, the
Company may, in its sole discretion, elect to establish a grantor trust that
meets the requirements of Internal Revenue Service Revenue Procedure 92-64 to
provide the benefits payable from Excess Benefit Accounts, Deferred Compensation
Accounts, and Matching Contribution Accounts; provided, that the Plan and such
trust shall continue to constitute an unfunded deferred compensation arrangement
and Participants shall not be deemed to be in constructive receipt of amounts
held by the trust. Any such trust shall be established with the approval of the
Company.
SECTION 12. ADMINISTRATION.
The Plan shall be administered by the Committee in accordance with its
terms and purposes. The Company shall have the sole and complete responsibility
for the administration of the Plan and shall have discretionary authority to
determine all questions arising in the administration, interpretation and
application of the Plan, including the remedying of any omission, inconsistency
or ambiguity, and to construe the terms of the Plan, including the eligibility
of Participants for any benefit hereunder and the amount thereof and its
decision or action in respect thereof shall be conclusive and binding on all
persons.
SECTION 13. AMENDMENT AND TERMINATION.
The Committee may amend or terminate the Plan with respect to future
periods at any time and for any reason it may deem appropriate. In the event of
the termination of the Plan, no person shall be entitled to accrue additional
benefits under the Plan with respect to any period after the effective date of
termination determined by the Committee; provided, however, that any
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benefits under the Plan accrued prior to the effective date of termination
determined by the Committee shall not be reduced on account of such termination.
SECTION 14. MISCELLANEOUS.
(a) Nothing contained in the Plan shall be construed as a
contract of employment between the Company and a Participant, or as a right of
any Participant to continue in the employ of the Company or as a limitation of
the right of the Company to discharge any Participant, with or without cause.
(b) Except as otherwise required by law (including any law that
requires the withholding of any tax under the laws of the United States or any
state or locality or any foreign government), no amounts payable at any time
pursuant to the Plan shall be subject in any manner to alienation, sale,
transfer, assignment, pledge, attachment or other legal process, or encumbrance
of any kind. Any attempt to alienate, sell, transfer, assign, pledge or
otherwise encumber any such benefit, whether currently or thereafter payable,
shall be void. Except as otherwise specifically provided by law, no amounts
payable hereunder shall, in any manner, be liable for or subject to the debts or
liabilities of a Participant or any other person entitled to such benefit.
(c) All claims for benefits under the Plan shall be made in
writing to the Committee. Such claims for benefits, responses thereto and any
appeals thereof shall be made in accordance with the provisions for claims
procedures set forth in the Profit Sharing and Savings Plan.
(d) The provisions of the Plan shall be binding on the
successors and assigns of the Company.
(e) The Plan shall be governed, to the extent provided
thereunder, by ERISA and to the extent not preempted by ERISA, by the laws of
the State of Massachusetts.
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Top Hat Plan Exemption
Pension and Welfare Benefit Administration
Room N-5644
U.S. Department of Labor
200 Constitution Avenue, N.W.
Washington, D.C. 20210
Re: Alternative Method of Compliance
With Reporting and Disclosure Requirement
Under DOL Regulations ss. 2520.104-23
Dear Sir or Madam:
This letter constitutes the plan administrator's statement as to the
alternative method of compliance with reporting and disclosure requirements of
Part 1 of Title I of the Employee Retirement Income Security Act of 1974, as
amended, with respect to unfunded or insured pension plans maintained by an
employer for a select group of management or highly compensated employees, as
provided by ss. 2520.104-23 of the Department of Labor Regulations.
HRE Properties (EIN: ) maintains one arrangement which may constitute
an unfunded or insured pension plan for a select group of highly compensated
employees. individuals employed by HRE Properties presently
participate in such arrangement. This notice is filed on behalf of HRE
Properties.
Very truly yours,