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EXHIBIT 10.8
DEFERRED COMPENSATION PLAN
THE J. JILL GROUP, INC.
PLAN DOCUMENT
- --------------------------------------------------------------------------------
RESTATED AS OF JANUARY 1, 2003
COPYRIGHT (C) 2001
BY WESTPORT WORLDWIDE, LLC
ALL RIGHTS RESERVED
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TABLE OF CONTENTS
<Table>
<Caption>
PAGE
ARTICLE 1 DEFINITIONS..........................................................1
1.1 "Account Balance".................................................1
1.2 "Annual Base Salary"..............................................1
1.3 "Annual Company Contribution Amount"..............................1
1.4 "Annual Company Matching Amount"..................................1
1.5 "Annual Deferral Amount"..........................................1
1.6 "Beneficiary".....................................................2
1.7 "Beneficiary Designation Form"....................................2
1.8 "Board"...........................................................2
1.9 "Board Member"....................................................2
1.10 "Board Member Fees"...............................................2
1.11 "Change in Control"...............................................2
1.12 "Claimant"........................................................3
1.13 "Code"............................................................3
1.14 "Committee" or "Plan Committee"...................................3
1.15 "Company".........................................................3
1.16 "Company Contribution Account"....................................3
1.17 "Company Matching Account"........................................3
1.18 "Compensation Committee"..........................................3
1.19 "Deduction Limitation"............................................3
1.20 "Deferral Account"................................................4
1.21 "Disability"......................................................4
1.22 "Disability Benefit"..............................................4
1.23 "Effective Date"..................................................4
1.24 "Election Form"...................................................4
1.25 "Employee"........................................................4
1.26 "ERISA"...........................................................4
1.27 "401(k) Plan".....................................................4
1.28 "Incentive Payments"..............................................5
1.29 "Participant".....................................................5
1.30 "Plan"............................................................5
1.31 "Plan Agreement"..................................................5
1.32 "Plan Year".......................................................5
1.33 "Pre-Retirement Survivor Benefit".................................5
1.34 "Retirement"......................................................5
1.35 "Retirement Benefit"..............................................5
1.36 "Short-Term Payout"...............................................5
1.37 "Termination Benefit".............................................5
1.38 "Termination of Employment".......................................6
1.39 "Trust"...........................................................6
1.40 "Unforeseeable Financial Emergency"...............................6
1.41 "Yearly Installment Method".......................................6
1.42 "Years of Service"................................................6
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<Table>
ARTICLE 2 SELECTION, ENROLLMENT, ELIGIBILITY...................................6
2.1 Eligibility.......................................................6
2.2 Enrollment Requirements...........................................7
2.3 Commencement of Participation.....................................7
2.4 Termination of Participation and/or Deferrals.....................7
ARTICLE 3 DEFERRAL COMMITMENTS, COMPANY CONTRIBUTIONS, CREDITING, TAXES........7
3.1 Minimum Deferral..................................................7
3.2 Maximum Deferral..................................................8
3.3 Election to Defer, Effect of Election Form........................8
3.4 Withholding of Annual Deferral Amounts............................9
3.5 Annual Company Contribution Amount................................9
3.6 Annual Company Matching Amount....................................9
3.7 Investment of Trust Assets.......................................10
3.8 Vesting..........................................................10
3.9 Crediting, Debiting of Account Balances..........................10
3.10 FICA and Other Taxes.............................................12
3.11 Distributions....................................................12
ARTICLE 4 SHORT-TERM PAYOUT, UNFORESEEABLE FINANCIAL EMERGENCIES,
WITHDRAWAL ELECTION...............................................13
4.1 Short-Term Payout................................................13
4.2 Other Benefits Take Precedence Over Short-Term Payout............13
4.3 Withdrawal Payout, Suspensions for Unforeseeable Financial
Emergencies......................................................13
4.4 Withdrawal Election..............................................14
ARTICLE 5 RETIREMENT BENEFIT..................................................14
5.1 Retirement Benefit...............................................14
5.2 Payment of Retirement Benefit....................................14
5.3 Death Prior to Completion of Retirement Benefit..................14
ARTICLE 6 PRE-RETIREMENT SURVIVOR BENEFIT.....................................15
6.1 Pre-Retirement Survivor Benefit..................................15
6.2 Payment of Pre-Retirement Survivor Benefit.......................15
ARTICLE 7 TERMINATION BENEFIT, CHANGE IN CONTROL BENEFIT......................15
7.1 Termination Benefit..............................................15
7.2 Payment of Termination Benefit...................................15
7.3 Change in Control Benefit........................................15
ARTICLE 8 DISABILITY WAIVER AND BENEFIT.......................................16
8.1 Disability Waiver................................................16
8.2 Continued Eligibility, Disability Benefit........................16
ARTICLE 9 BENEFICIARY DESIGNATION.............................................16
9.1 Beneficiary......................................................16
9.2 Beneficiary Designation, Change..................................16
9.3 Acknowledgment...................................................17
9.4 No Beneficiary Designation.......................................17
9.5 Doubt as to Beneficiary..........................................17
</Table>
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<Table>
9.6 Discharge of Obligations.........................................17
ARTICLE 10 LEAVE OF ABSENCE...................................................18
10.1 Paid Leave of Absence............................................18
10.2 Unpaid Leave of Absence..........................................18
ARTICLE 11 TERMINATION, AMENDMENT OR MODIFICATION.............................18
11.1 Termination......................................................18
11.2 Amendment........................................................18
11.3 Plan Agreement...................................................19
11.4 Effect of Payment................................................19
11.5 Amendment to Ensure Proper Characterization of the Plan..........19
11.6 Fail-safe Provision..............................................19
ARTICLE 12 ADMINISTRATION.....................................................20
12.1 Committee Duties.................................................20
12.2 Agents...........................................................20
12.3 Binding Effect of Decisions......................................20
12.4 Indemnity of Committees..........................................21
12.5 Company Information..............................................21
ARTICLE 13 OTHER BENEFITS AND AGREEMENTS......................................21
13.1 Coordination with Other Benefits.................................21
ARTICLE 14 CLAIMS PROCEDURES..................................................21
14.1 Presentation of Claim............................................21
14.2 Notification of Decision.........................................21
14.3 Review of a Denied Claim.........................................22
14.4 Decision on Review...............................................22
14.5 Legal Action.....................................................22
ARTICLE 15 TRUST..............................................................23
15.1 Establishment of the Trust.......................................23
15.2 Interrelationship of the Plan and the Trust......................23
15.3 Distributions from the Trust.....................................23
ARTICLE 16 MISCELLANEOUS......................................................23
16.1 Status of Plan...................................................23
16.2 Unsecured General Creditor.......................................23
16.3 Company's Liability..............................................23
16.4 Nonassignability.................................................23
16.5 Not a Contract of Employment.....................................24
16.6 Furnishing Information...........................................24
16.7 Terms............................................................24
16.8 Captions.........................................................24
16.9 Governing Law....................................................24
16.10 Notice...........................................................24
16.11 Successors.......................................................25
16.12 Spouse's Interest................................................25
</Table>
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16.13 Validity ........................................................25
16.14 Incompetent......................................................25
16.15 Court Order......................................................25
16.16 Distribution in the Event of Taxation............................25
16.17 Insurance........................................................26
</Table>
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THE J. JILL GROUP, INC.
DEFERRED COMPENSATION PLAN
EFFECTIVE, AS RESTATED, JANUARY 1, 2003
PURPOSE
The purpose of this Plan is to provide specified benefits to a select
group of management or highly compensated employees and members of the Board of
Directors of The J. Jill Group, Inc. (the "Company"). This Plan shall be
unfunded for tax purposes and for purposes of Title I of ERISA.
ARTICLE 1
DEFINITIONS
For purposes of this Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
1.1 "Account Balance" shall mean, with respect to a Participant, a credit on
the records of the Company equal to the sum of (i) the Deferral Account
balance, (ii) the Company Contribution Account balance and (iii) the
Company Matching Account balance. The Account Balance, and each other
specified account balance, shall be a bookkeeping entry only and shall be
utilized solely as a device for the measurement and determination of the
amounts to be paid to a Participant, or his or her designated
Beneficiary, pursuant to this Plan.
1.2 "Annual Base Salary" shall mean the annual cash compensation relating to
services performed during any calendar year, whether or not paid in such
calendar year or included on the Federal Income Tax Form W-2 for such
calendar year, excluding incentives, bonuses, commissions, overtime,
fringe benefits, stock options, relocation expenses, non-monetary awards,
Board Member Fees and other fees, automobile and other allowances paid to
a Participant for employment services rendered (whether or not such
allowances are included in the Employee's gross income). Annual Base
Salary shall be calculated without regard to any reductions for
compensation voluntarily deferred or contributed by the Participant
pursuant to all qualified or non-qualified plans of the Company (and
therefore shall be calculated to include amounts not otherwise included
in the Participant's gross income under Code Sections 125, 402(e)(3) or
402(h) pursuant to plans established by the Company).
1.3 "Annual Company Contribution Amount" shall mean, for the Plan Year of
reference, the amount determined in accordance with Section 3.5.
1.4 "Annual Company Matching Amount" shall mean, for the Plan Year of
reference, the amount determined in accordance with Section 3.6.
1.5 "Annual Deferral Amount" shall mean that portion of a Participant's
Annual Base Salary, Incentive Payments and/or Board Member Fees that a
Participant elects to have, and is, deferred in accordance with Article
3, for the Plan Year of reference. In the event of a
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Participant's Retirement, Disability (if deferrals cease in accordance
with Section 8.1), death or a Termination of Employment prior to the end
of a Plan Year, such year's Annual Deferral Amount shall be the actual
amount withheld prior to such event.
1.6 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, that are entitled to
receive benefits under this Plan upon the death of a Participant.
1.7 "Beneficiary Designation Form" shall mean the form established from time
to time by the Committee that a Participant completes, signs and returns
to the Committee to designate one or more Beneficiaries.
1.8 "Board" shall mean the board of directors of the Company.
1.9 "Board Member" shall mean any member of the Board.
1.10 "Board Member Fees" shall mean the fees paid to a Board Member by the
Company, including retainer fees, meeting fees, and stipends as
compensation for serving on the Board.
1.11 "Change in Control" shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been
satisfied:
(i) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of J. Jill (not including in the
securities beneficially owned by such Person any
securities acquired directly from J. Jill or its
affiliates) representing 50% or more of the combined
voting power of J. Jill's then outstanding securities; or
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this
Agreement), individuals who at the beginning of such
period constitute the Board and any new director (other
than a director designated by a Person who has entered
into an agreement with J. Jill to effect a transaction
described in clause (i), (iii) or (iv) of this paragraph)
whose election by the Board or nomination for election by
J. Jill's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or
whose election or nomination for election was previously
so approved (a "Continuing Director"), cease for any
reason to constitute a majority thereof; or
(iii) the stockholders of J. Jill approve a merger or
consolidation of J. Jill with any other corporation, other
than (a) a merger or consolidation which would result in
the voting securities of J. Jill outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities
of the surviving entity) at least 50% of the combined
voting power of the voting securities of J. Jill or such
surviving entity outstanding immediately after such merger
or consolidation, or (b) a merger or consolidation
effected to implement a recapitalization of J. Jill (or
similar transaction ) in which no Person
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acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or
(iv) the stockholders of J. Jill approve a plan of complete
liquidation of J. Jill or an agreement for the sale or
disposition by J. Jill of all or substantially all J.
Jill's assets.
The foregoing to the contrary notwithstanding, a Change in Control shall
not be deemed to have occurred with respect to the Executive if the
Executive is "part of a purchasing group" which consummates the Change in
Control transaction. The Executive shall be deemed "part of a purchasing
group" for purposes of the preceding sentence if the Executive is an
equity participant or has agreed to become an equity participant in the
purchasing company or group (except for (a) passive ownership of less
than 5% of the stock of the purchasing company or (b) ownership of equity
participation in the purchasing company or group which is otherwise not
deemed to be significant, as determined prior to the Change in Control by
a majority of the non-employee Continuing Directors).
1.12 "Claimant" shall have the meaning set forth in Section 14.1.
1.13 "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
1.14 "Committee" or "Plan Committee" shall mean the committee described in
Section 12.1 or its designee, which committee is responsible generally
for performing the day-to-day ministerial functions associated with
operating the Plan.
1.15 "Company" shall mean The J. Jill Group, Inc., together with its
wholly-owned, consolidated subsidiaries, and any successor to all or
substantially all of the Company's assets or business.
1.16 "Company Contribution Account" shall mean (i) the sum of the
Participant's Annual Company Contribution Amounts, plus (ii) amounts
credited or debited in accordance with all the applicable crediting
provisions of this Plan that relate to the Participant's Company
Contribution Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that relate
to the Participant's Company Contribution Account.
1.17 "Company Matching Account" shall mean (i) the sum of all of a
Participant's Annual Company Matching Amounts, plus (ii) amounts credited
or debited in accordance with all the applicable crediting provisions of
this Plan that relate to the Participant's Company Matching Account, less
(iii) all distributions made to the Participant or his or her Beneficiary
pursuant to this Plan that relate to the Participant's Company Matching
Account.
1.18 "Compensation Committee" shall mean the compensation committee of the
Board.
1.19 "Deduction Limitation" shall mean the following described limitation on a
benefit that may otherwise be distributable pursuant to the provisions of
this Plan. Except as otherwise provided, this limitation shall be applied
to all distributions that are "subject to the Deduction Limitation" under
this Plan. If the Company determines in good faith that
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there is a reasonable likelihood that any compensation paid to a
Participant for a taxable year of the Company would not be deductible by
the Company solely by reason of the limitation under Code Section 162(m),
then to the extent deemed necessary by the Company to ensure that the
entire amount of any distribution to the Participant pursuant to this
Plan is deductible, the Company may defer all or any portion of a
distribution under this Plan. Any amounts deferred pursuant to this
limitation shall continue to be credited or debited with additional
amounts in accordance with Section 3.9 below, even if such amount is
being paid out in installments. The amounts so deferred and amounts
credited or debited thereon shall be distributed to the Participant or
his or her Beneficiary (in the event of the Participant's death) at the
earliest possible date, as determined by the Company in good faith, on
which the deductibility of compensation paid or payable to the
Participant for the taxable year of the Company during which the
distribution is made will not be limited by Code Section 162(m).
Notwithstanding anything to the contrary in this Plan, the Deduction
Limitation shall not apply to any distributions made after a Change in
Control.
1.20 "Deferral Account" shall mean (i) the sum of all of a Participant's
Annual Deferral Amounts, plus (ii) amounts credited or debited in
accordance with all the applicable crediting provisions of this Plan that
relate to the Participant's Deferral Account, less (iii) all
distributions made to the Participant or his or her Beneficiary pursuant
to this Plan that relate to his or her Deferral Account.
1.21 "Disability" shall mean a period of disability during which a Participant
qualifies for permanent disability benefits under the Company's long-term
disability plan, or, if a Participant does not participate in such a
plan, a period of disability during which the Participant would have
qualified for permanent disability benefits under such a plan had the
Participant been a participant in such a plan, as determined in the sole
discretion of the Compensation Committee. If the Company does not sponsor
such a plan, or discontinues to sponsor such a plan, Disability shall be
determined by the Compensation Committee in its sole discretion.
1.22 "Disability Benefit" shall mean the benefit set forth in Article 8.
1.23 "Effective Date" of the Plan, as restated, shall be January 1, 2003.
The effective date of the Plan, as originally adopted, was January 1,
2002.
1.24 "Election Form" shall mean the form or forms established from time to
time by the Committee that a Participant completes, signs and returns to
the Committee to make an election under the Plan.
1.25 "Employee" shall mean a person who is an employee of the Company and
holds the position of Chief Executive Officer, President, Vice President
or Director.
1.26 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
1.27 "401(k) Plan" shall mean the Company's tax qualified 401(k) retirement
plan, as amended from time to time.
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1.28 "Incentive Payments" shall mean any compensation paid to a Participant
under any incentive plans, special bonus plans or bonus arrangements of
the Company relating to services performed during any calendar year,
whether or not paid in such calendar year or included on the Federal
Income Tax Form W-2 for such calendar year.
1.29 "Participant" shall mean any Board Member and any Employee (i) who elects
to participate in the Plan, (ii) who signs a Plan Agreement, an Election
Form(s) and a Beneficiary Designation Form, (iii) whose signed Plan
Agreement, Election Form(s) and Beneficiary Designation Form are accepted
by the Committee, (iv) who commences participation in the Plan, and (v)
whose Plan Agreement has not terminated. A spouse or former spouse of a
Participant shall not be treated as a Participant in the Plan or have an
Account Balance under the Plan under any circumstance.
1.30 "Plan" shall mean this Deferred Compensation Plan, as evidenced by this
instrument and by each Plan Agreement, as they may be amended from time
to time.
1.31 "Plan Agreement" shall mean a written agreement, as may be amended from
time to time, executed by a Participant and the Company that shall
provide for the entire benefit to which such Participant is entitled
under the Plan; should there be more than one Plan Agreement, the Plan
Agreement bearing the latest date of acceptance by the Company shall
supersede all previous Plan Agreements in their entirety and shall govern
such entitlement. The terms of any Plan Agreement may be different for
any Participant, and any Plan Agreement may provide additional benefits
not set forth in the Plan or limit the benefits otherwise provided under
the Plan; provided, however, that any such additional benefits or benefit
limitations must be agreed to by both the Company and the Participant.
1.32 "Plan Year" shall mean a period beginning on January 1 of each calendar
year and continuing through December 31 of such calendar year during
which this Plan is in effect.
1.33 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
1.34 "Retirement", "Retire(s)" or "Retired" shall mean, with respect to an
Employee, severance from employment from the Company for any reason other
than a leave of absence, death or Disability on or after the earlier of
the attainment of (i) age sixty-five (65) or (ii) age fifty-five (55)
with ten (10) Years of Service; and shall mean with respect to a Board
Member who is not an Employee, severance of his or her directorship with
the Company on or after the attainment of age seventy (70). If a
participant is both an Employee and a Board Member, Retirement shall
occur when he or she Retires as an Employee, which Retirement shall be
deemed to be a Retirement as an Employee; provided, however, that such a
Participant may elect, at least twelve (12) months prior to Retirement
and in accordance with the policies and procedures established by the
Compensation Committee, to Retire for purposes of this Plan at the time
he or she Retires as a Board Member, which Retirement shall be deemed to
be a Retirement as a Board Member.
1.35 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.36 "Short-Term Payout" shall mean the payout set forth in Section 4.1.
1.37 "Termination Benefit" shall mean the benefit set forth in Article 7.
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1.38 "Termination of Employment" shall mean the severing of employment with
the Company, or service as a Board Member of the Company, voluntarily or
involuntarily, for any reason other than Retirement, Disability, death or
an authorized leave of absence. If a Participant is both an Employee and
a Board Member, a Termination of Employment shall occur upon termination
as an Employee; provided, however, that such a Participant may elect, at
least twelve (12) months before Termination of Employment and in
accordance with either the policies and procedures established by the
Compensation Committee, to be treated for purposes of this Plan as having
experienced a Termination of Employment at the time he or she ceases his
or her directorship.
1.39 "Trust" shall mean the trust established pursuant to this Plan, as
amended from time to time.
1.40 "Unforeseeable Financial Emergency" shall mean an unanticipated emergency
that is caused by an event beyond the control of the Participant that
would result in severe financial hardship to the Participant resulting
from (i) a sudden and unexpected illness or accident of the Participant
or a dependent of the Participant, (ii) a loss of the Participant's
property due to casualty, or (iii) such other extraordinary and
unforeseeable circumstances arising as a result of events beyond the
control of the Participant, all as determined in the sole discretion of
the Compensation Committee.
1.41 "Yearly Installment Method" shall be a yearly installment payment over
the number of years selected by the Participant in accordance with this
Plan, calculated as follows: The Account Balance of the Participant shall
be calculated as of the close of business on the date of reference (or,
if the date of reference is not a business day, on the immediately
following business day), and shall be paid as soon as practicable
thereafter. The date of reference with respect to the first yearly
installment payment shall be as provided in Section 5.2 or Section 7.2,
as applicable, and the date of reference with respect to subsequent
yearly installment payments shall be the last day of the applicable Plan
Year. The yearly installment shall be calculated by multiplying this
balance by a fraction, the numerator of which is one (1), and the
denominator of which is the remaining number of yearly payments due the
Participant. By way of example, if the Participant elects a ten (10) year
Yearly Installment Method, the first payment shall be one-tenth (1/10) of
the Account Balance, calculated as described in this definition. The
following year, the payment shall be one-ninth (1/9) of the Account
Balance, calculated as described in this definition.
1.42 "Years of Service" shall mean the total number of full years in which a
Participant has been employed by the Company. For purposes of this
definition, a year of employment shall be a three hundred sixty five
(365) day period (or three hundred sixty six (366) day period in the case
of a leap year) that, for the first year of employment, commences on the
Employee's date of hiring and that, for any subsequent year, commences on
an anniversary of that hiring date. Any partial year of employment shall
not be counted.
ARTICLE 2
SELECTION, ENROLLMENT, ELIGIBILITY
2.1 ELIGIBILITY. Participation in the Plan shall be limited to Board Members
and to Employees who the Compensation Committee determines, in its sole
discretion, meet the
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requirement of ERISA that they be members of a select group of management
or highly compensated employees of the Company.
2.2 ENROLLMENT REQUIREMENTS. As a condition to participation, each qualifying
Employee and each Board Member shall complete, execute and return to the
Committee a Plan Agreement, an Election Form(s) and a Beneficiary
Designation Form, all within thirty (30) days after he or she is notified
of his or her eligibility to participate in the Plan. In addition, the
Committee or the Compensation Committee shall establish from time to time
such other enrollment requirements as it determines in its sole
discretion are necessary.
2.3 COMMENCEMENT OF PARTICIPATION. Provided a qualifying Employee or a Board
Member has met all enrollment requirements set forth in this Plan and
required by the Committee or the Compensation Committee, including
returning all required documents to the Committee within the specified
time period, that Employee or Board Member shall commence participation
in the Plan on the first day of the month following the month in which
the Employee or Board Member completes all enrollment requirements. If an
Employee or Board Member fails to meet all such requirements within the
period required, in accordance with Section 2.2, that Employee or Board
Member shall not be eligible to participate in the Plan until the first
day of the following Plan Year, again subject to timely delivery to and
acceptance by the Committee of the required documents.
2.4 TERMINATION OF PARTICIPATION AND/OR DEFERRALS. If the Compensation
Committee determines in good faith that an Employee no longer qualifies
as a member of a select group of management or highly compensated
employees, as membership in such group is determined in accordance with
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Compensation
Committee shall have the right, in its sole discretion, to (i) terminate
any deferral election the Participant has made for the remainder of the
Plan Year in which the Participant's membership status changes, (ii)
prevent the Participant from making future deferral elections and/or
(iii) immediately distribute the Participant's then vested Account
Balance as a Termination Benefit and terminate the Participant's
participation in the Plan.
ARTICLE 3
DEFERRAL COMMITMENTS, COMPANY CONTRIBUTIONS, CREDITING, TAXES
3.1 MINIMUM DEFERRAL.
(a) ANNUAL BASE SALARY, INCENTIVE PAYMENTS AND BOARD MEMBER FEES.
Subject to Section 3.12, for each Plan Year, a Participant may
elect to defer, as his or her Annual Deferral Amount, Annual Base
Salary, Incentive Payments and/or Board Member Fees, in the
minimum amount of two thousand dollars ($2,000) in the aggregate.
Notwithstanding the foregoing, the Compensation Committee may, in
its sole discretion, establish for any Plan Year a different
minimum amount (including establishing different minimum amounts
for Annual Base Salary, Incentive Payments and Board Member
Fees). If an election is made for less than the
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stated minimum amount(s), or if no election is made, the amount
deferred shall be zero (0).
(b) SHORT PLAN YEAR. Notwithstanding the foregoing, if a Participant
first becomes a Participant after the first day of a Plan Year,
the minimum deferral shall be an amount equal to the minimum set
forth above, multiplied by a fraction, the numerator of which is
the number of complete months remaining in the Plan Year and the
denominator of which is twelve (12).
3.2 MAXIMUM DEFERRAL.
(a) ANNUAL BASE SALARY, INCENTIVE PAYMENTS AND BOARD MEMBER FEES. For
each Plan Year, a Participant may elect to defer, as his or her
Annual Deferral Amount, Annual Base Salary, Incentive Payments
and/or Board Member Fees, up to the following maximum percentages
for each deferral elected:
<Table>
<Caption>
Deferral Maximum Amount
--------------------- ---------------------
Annual Base Salary 75%
Incentive Payments 100%
Board Member Fees 100%
</Table>
(b) PROVISOS. Notwithstanding the foregoing, (i) the Compensation
Committee may, in its sole discretion, establish for any Plan
Year maximum percentages which differ from those set forth above,
and (ii) if a Participant first becomes a Participant after the
first day of a Plan Year, the maximum Annual Deferral Amount with
respect to Annual Base Salary, Incentive Payments and/or Board
Member Fees shall be limited to the amount of such compensation
not yet earned by, or not yet paid to, the Participant as of the
date the Participant submits a Plan Agreement and Election
Form(s) to the Committee for acceptance.
3.3 ELECTION TO DEFER, EFFECT OF ELECTION FORM.
(a) FIRST PLAN YEAR. In connection with a Participant's commencement
of participation in the Plan, the Participant shall make a
deferral election for the Plan Year in which the Participant
commences participation in the Plan, along with such other
elections as the Committee deems necessary or desirable under the
Plan. For these elections to be valid, the Election Form(s) must
be completed and signed by the Participant, timely delivered to
the Committee (in accordance with Section 2.2 above) and accepted
by the Committee.
(b) SUBSEQUENT PLAN YEARS. For each succeeding Plan Year, a deferral
election for that Plan Year, and such other elections as the
Committee deems necessary or desirable under the Plan, shall be
made by timely delivering to the Committee, in accordance with
its rules and procedures, before the end of the Plan Year
preceding the Plan Year for which the election is made, a new
Election Form(s). If no such Election Form(s) is timely delivered
for a Plan Year, the Annual Deferral Amount shall be zero (0) for
that Plan Year.
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(c) CHANGE IN ELECTION. A deferral election shall not be subject to
change; provided, however, that a Participant may revoke
completely a deferral election for Annual Base Salary, Incentive
Payments or Board Member Fees not yet payable at the time of the
Participant's revocation election (which revocation will itself
be irrevocable for the remainder of the Plan Year).
3.4 WITHHOLDING OF ANNUAL DEFERRAL AMOUNTS. For each Plan Year, the Annual
Base Salary portion of the Annual Deferral Amount shall be withheld from
each regularly scheduled Annual Base Salary payroll in equal amounts, as
adjusted from time to time for increases and decreases in Annual Base
Salary. The Incentive Payments and Board Member Fees portion of the
Annual Deferral Amount, if any, shall be withheld at the time the
Incentive Payments and Board Member Fees are or otherwise would be paid
to the Participant, whether or not this occurs during the Plan Year
itself.
3.5 ANNUAL COMPANY CONTRIBUTION AMOUNT. For each Plan Year, the Compensation
Committee, in its sole discretion, may, but is not required to, credit
any amount it desires to any Participant's Company Contribution Account
under this Plan, which amount shall be for that Participant the Annual
Company Contribution Amount for that Plan Year. The amount so credited to
a Participant may be smaller or larger than the amount credited to any
other Participant, and the amount credited to any Participant for a Plan
Year may be zero (0), even though one or more other Participants receive
an Annual Company Contribution Amount for that Plan Year. The Annual
Company Contribution Amount, if any, shall be credited as determined by
the Compensation Committee. Unless otherwise specified by the
Compensation Committee, if a Participant to whom an Annual Company
Contribution Amount is credited is not employed by the Company or has
discontinued service as a Board Member as of the last day of a Plan Year
other than by reason of his or her Retirement, death or Disability, the
Annual Company Contribution Amount for that Plan Year shall be zero (0).
3.6 ANNUAL COMPANY MATCHING AMOUNT. Solely with respect to a Participant who
is an Employee, the Participant's Annual Company Matching Amount, if any,
for the Plan Year of reference shall be equal to (i) the amount of the
Company's matching contribution that would be made to the 401(k) Plan on
the Participant's behalf for the plan year of the 401(k) Plan that
corresponds to the Plan Year if the 401(k) Plan were permitted to include
in its definition of "compensation" for Company matching contribution
purposes the Participant's Annual Deferral Amount, plus (ii) an amount
equal to the difference between (x) the amount of the Company's matching
contribution that would be made to the 401(k) Plan on the Participant's
behalf for the plan year of the 401(k) Plan that corresponds to the Plan
Year if the Participant's Annual Deferral Amount were aggregated with the
Participant's 401(k) pre-tax deferrals up to the Code section 402(g)
limit and without regard to the nondiscrimination tests applicable to the
401(k) Plan under Code sections 401(k)(3) and 401(m)(3), minus (y) the
sum of the amount of the Company's matching contributions that actually
are made to the 401(k) Plan on the Participant's behalf for the plan year
of the 401(k) Plan that corresponds to the Plan Year and the amount of
the match determined under subparagraph (i) hereof. A Participant who is
not eligible for the plan year of the 401(k) Plan (or for any portion
thereof) to receive an allocation of Company matching contributions under
the 401(k) Plan shall not be eligible for the allocation of an Annual
Company Matching Amount hereunder.
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3.7 INVESTMENT OF TRUST ASSETS. The trustee of the Trust shall be authorized,
upon written instructions received from the Committee or investment
manager appointed by the Compensation Committee, to invest and reinvest
the assets of the Trust in accordance with the applicable Trust
agreement, including the reinvestment of the proceeds in one or more
investment vehicles designated by the Compensation Committee.
3.8 VESTING.
(a) A Participant shall at all times be one hundred percent (100%)
vested in his or her Deferral Account.
(b) A Participant shall become vested in his or her Company
Contribution Account pursuant to a vesting schedule, if any,
approved and documented by the Compensation Committee at the time
the Annual Company Contribution Amount is credited to the
Participant's Company Contribution Account for that Plan Year.
(c) A Participant shall become vested in his or her Company Matching
Account as and to the extent that the Participant becomes vested
in Company matching contributions under the 401(k) Plan.
(d) Notwithstanding anything to the contrary contained in this
Section 3.8, in the event of a Change in Control, Retirement,
Disability or death while in service, a Participant's Company
Contribution Account and Company Matching Account shall
immediately become one hundred percent (100%) vested (if it is
not already vested in accordance with a vesting schedule).
3.9 CREDITING, DEBITING OF ACCOUNT BALANCES. In accordance with, and subject
to, the rules and procedures that are established from time to time by
the Committee, in its sole discretion, amounts shall be credited or
debited to a Participant's Account Balance in accordance with the
following rules:
(a) ELECTION OF MEASUREMENT FUNDS. A Participant, in connection with
his or her initial deferral election in accordance with Section
3.3(a) above, shall elect, on the Election Form(s), one or more
Measurement Fund(s) (as described in Section 3.9(c) below) to be
used to determine the additional amounts to be credited or
debited to his or her Account Balance for the first business day
of the Plan Year, continuing thereafter unless changed in
accordance with the next sentence. Commencing with the first
business day of the Plan Year, and continuing thereafter for the
remainder of the Plan Year (unless the Participant ceases during
the Plan Year to participate in the Plan), the Participant may
(but is not required to) elect daily, by submitting an Election
Form(s) to the Committee that is accepted by the Committee (which
submission may take the form of an electronic transmission, if
required or permitted by the Committee), to add or delete one or
more Measurement Fund(s) to be used to determine the additional
amounts to be credited or debited to his or her Account Balance,
or to change the portion of his or her Account Balance allocated
to each previously or newly elected Measurement Fund. If an
election is made in accordance with the previous sentence, it
shall apply to the next business day and continue thereafter for
the remainder of the Plan Year (unless the Participant ceases
during the Plan Year to participate in the Plan), unless changed
in accordance with the previous sentence.
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(b) PROPORTIONATE ALLOCATION. In making any election described in
Section 3.9(a) above, the Participant shall specify on the
Election Form(s), in whole percentage points, the percentage of
his or her Account Balance to be allocated to a Measurement Fund
(as if the Participant was making an investment in that
Measurement Fund with that portion of his or her Account
Balance).
(c) MEASUREMENT FUNDS. The Participant may elect one or more of the
Measurement Funds set forth on SCHEDULE A (the "Measurement
Funds"), for the purpose of crediting or debiting additional
amounts to his or her Account Balance. The Compensation Committee
may, in its sole discretion, discontinue, substitute or add a
Measurement Fund. Each such action will take effect as of the
first day of the calendar quarter that follows by thirty (30)
days the day on which the Committee gives Participants advance
written notice of such change. If the Committee receives an
initial or revised Measurement Funds election which it deems to
be incomplete, unclear or improper, the Participant's Measurement
Funds election then in effect shall remain in effect (or, in the
case of a deficiency in an initial Measurement Funds election,
the Participant shall be deemed to have filed no deemed
investment direction). If the Committee possesses (or is deemed
to possess as provided in the previous sentence) at any time
directions as to Measurement Funds of less than all of the
Participant's Account Balance, the Participant shall be deemed to
have directed that the undesignated portion of the Account
Balance be deemed to be invested in a money market, fixed income
or similar Measurement Fund made available under the Plan as
determined by the Committee in its discretion. Each Participant
hereunder, as a condition to his or her participation hereunder,
agrees to indemnify and hold harmless the Committee, the
Compensation Committee and the Company, and their agents and
representatives, from any losses or damages of any kind relating
to (i) the Measurement Funds made available hereunder and (ii)
any discrepancy between the credits and debits to the
Participant's Account Balance based on the performance of the
Measurement Funds and what the credits and debits otherwise might
be in the case of an actual investment in the Measurement Funds.
(d) CREDITING OR DEBITING METHOD. The performance of each elected
Measurement Fund (either positive or negative) will be determined
by the Compensation Committee, in its sole discretion, based on
the performance of the Measurement Funds themselves. A
Participant's Account Balance shall be credited or debited on a
daily basis based on the performance of each Measurement Fund
selected by the Participant, or as otherwise determined by the
Compensation Committee in its sole discretion, as though (i) a
Participant's Account Balance were invested in the Measurement
Fund(s) selected by the Participant, in the percentages elected
by the Participant as of such date, at the closing price on such
date; (ii) the portion of the Annual Deferral Amount that was
actually deferred was invested in the Measurement Fund(s)
selected by the Participant, in the percentages elected by the
Participant, no later than the close of business on the third
(3rd) business day after the day on which such amounts are
actually deferred from the Participant's Annual Base Salary,
Incentive Payments and/or Board Member Fees through reductions in
his or her payroll, at the closing price on such date; and (iii)
any distribution made to a Participant that decreases such
Participant's Account Balance ceased being invested in the
Measurement
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Fund(s), in the percentages applicable to such date, no earlier
than three (3) business days prior to the distribution, at the
closing price on such date.
(e) NO ACTUAL INVESTMENT. Notwithstanding any other provision of this
Plan that may be interpreted to the contrary, the Measurement
Funds are to be used for measurement purposes only, and a
Participant's election of any such Measurement Fund, the
allocation to his or her Account Balance thereto, the calculation
of additional amounts and the crediting or debiting of such
amounts to a Participant's Account Balance shall not be
considered or construed in any manner as an actual investment of
his or her Account Balance in any such Measurement Fund. In the
event that the Company or the trustee (as that term is defined in
the Trust), in its own discretion, decides to invest funds in any
or all of the Measurement Funds, no Participant shall have any
rights in or to such investments themselves. Without limiting the
foregoing, a Participant's Account Balance shall at all times be
a bookkeeping entry only and shall not represent any investment
made on his or her behalf by the Company or the Trust; the
Participant shall at all times remain an unsecured general
creditor of the Company.
(f) BENEFICIARY ELECTIONS. Each reference in this Section 3.9 to a
Participant shall be deemed to include, where applicable, a
reference to a Beneficiary.
3.10 FICA AND OTHER TAXES.
(a) ANNUAL DEFERRAL AMOUNTS. For each Plan Year in which an Annual
Deferral Amount is being withheld from a Participant, the Company
shall withhold from that portion of the Participant's Annual Base
Salary and/or Incentive Payments that are not being deferred, in
a manner determined by the Company, the Participant's share of
FICA and other employment taxes on the Participant's Annual
Deferral Amount, Annual Company Matching Amount and Annual
Company Contribution Amount. If necessary, the Committee may
reduce the Annual Deferral Amount, Annual Company Matching Amount
and Annual Company Contribution Amount in order to comply with
this Section 3.10.
(b) ANNUAL COMPANY MATCHING AMOUNTS OR ANNUAL COMPANY CONTRIBUTION
AMOUNTS. When a Participant becomes vested in a portion of his or
her Company Matching Account or Company Contribution Account, the
Company shall have the discretion to withhold from the
Participant's Annual Base Salary and/or Incentive Payments that
are not deferred, in a manner determined by the Company, the
Participant's share of FICA and other employment taxes. If
necessary, the Committee may reduce the vested portion of the
Participant's Company Matching Account or Company Contribution
Account in order to comply with this Section 3.10.
3.11 DISTRIBUTIONS. The Company, or the trustee of the Trust, shall withhold
from any payments made to a Participant under this Plan all Federal,
state and local income, employment and other taxes required to be
withheld by the Company, or the trustee of the Trust, in connection with
such payments, in amounts and in a manner to be determined in the sole
discretion of the Company and the trustee of the Trust.
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ARTICLE 4
SHORT-TERM PAYOUT, UNFORESEEABLE FINANCIAL EMERGENCIES,
WITHDRAWAL ELECTION
4.1 SHORT-TERM PAYOUT. In connection with each Annual Deferral Amount and
Annual Company Matching Amount, a Participant may irrevocably elect to
receive a future "Short-Term Payout" from the Plan with respect to the
vested portion of each such amount. Subject to the Deduction Limitation,
the Short-Term Payout shall be a lump sum payment in an amount that is
equal to the Annual Deferral Amount and the vested Annual Company
Matching Amount, plus amounts credited or debited thereto in the manner
provided in Section 3.9 above on those amounts, determined at the time
that the Short-Term Payout becomes payable (rather than the date of a
Termination of Employment). Subject to the Deduction Limitation and the
other terms and conditions of this Plan, each Short-Term Payout elected
shall be paid out during a period beginning one (1) day and ending sixty
(60) days after the last day of any Plan Year designated by the
Participant that is at least two (2) Plan Years after the Plan Year in
which the Annual Deferral Amount and vested Annual Company Matching
Amount have been contributed to the Plan. By way of example, if a two (2)
year Short-Term Payout is elected for vested amounts that have been
contributed in the Plan Year commencing January 1, 2002, the two (2) year
Short-Term Payout would become payable during a sixty (60) day period
commencing January 1, 2005. Notwithstanding the preceding sentences or
any other provision of this Plan that may be construed to the contrary, a
Participant who is an active Employee or active Board Member may, with
respect to each Short-Term Payout, on a form determined by the Committee,
make one additional deferral election (a "Subsequent Election") to defer
payment of such Short-Term Payout to a Plan Year subsequent to the Plan
Year originally elected; provided, however, any such Subsequent Election
will be null and void unless accepted by the Committee no later than one
(1) year prior to the first day of the Plan Year in which, but for the
Subsequent Election, such Short-Term Payout would be paid, and such
Subsequent Election is at least two (2) Plan Years from the Plan Year in
which the Short-Term Payout, but for the Subsequent Election, would be
paid.
4.2 OTHER BENEFITS TAKE PRECEDENCE OVER SHORT-TERM PAYOUT. Should an event
occur that triggers a benefit under Article 5, 6, 7 or 8, any Annual
Deferral Amount or vested Annual Company Matching Amount, plus amounts
credited or debited thereon, that is subject to a Short-Term Payout
election under Section 4.1 shall not be paid in accordance with Section
4.1 but shall be paid in accordance with the other applicable Article.
4.3 WITHDRAWAL PAYOUT, SUSPENSIONS FOR UNFORESEEABLE FINANCIAL EMERGENCIES.
If the Participant experiences an Unforeseeable Financial Emergency, the
Participant may petition the Compensation Committee to (i) suspend any
deferrals required to be made by a Participant and/or (ii) receive a
partial or full payout from the Plan. The payout shall not exceed the
lesser of the Participant's vested Account Balance, calculated as if such
Participant were receiving a Termination Benefit, or the amount
reasonably needed to satisfy the Unforeseeable Financial Emergency. If,
subject to the sole discretion of the Compensation Committee, the
petition for a suspension and/or payout is approved, suspension shall
take effect upon the date of approval and any payout shall be made within
sixty (60) days of the date of approval. The payment of any amount under
this Section 4.3 shall not be subject to the Deduction Limitation.
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4.4 WITHDRAWAL ELECTION. A Participant (or, after a Participant's death, his
or her Beneficiary) may elect, at any time, to withdraw all of his or her
vested Account Balance, calculated as if there had occurred a Termination
of Employment as of the day of the election, less a withdrawal penalty
equal to ten percent (10%) of such amount (the net amount shall be
referred to as the "Withdrawal Amount"). This election can be made at any
time, before or after Retirement, Disability, death or Termination of
Employment, and whether or not the Participant (or his or her
Beneficiary) is in the process of being paid pursuant to an installment
payment schedule. If made before Retirement, Disability or death, a
Participant's Withdrawal Amount shall be his or her vested Account
Balance calculated as if there had occurred a Termination of Employment
as of the day of the election. No partial withdrawals of the Withdrawal
Amount shall be allowed. The Participant (or his or her Beneficiary)
shall make this election by giving the Committee advance written notice
of the election in a form determined from time to time by the Committee.
The Participant (or his or her Beneficiary) shall be paid the Withdrawal
Amount as soon as practicable after his or her election. Once the
Withdrawal Amount is paid, the Participant's participation in the Plan
shall terminate and the Participant shall not be eligible to participate
in the Plan for the remainder of the Plan Year in which the withdrawal
election is made and for the Plan Year that follows. The payment of this
Withdrawal Amount shall not be subject to the Deduction Limitation. Any
Participant who elects a withdrawal under this Section 4.4 shall be
subject to the bankruptcy regulations regarding preference payments.
ARTICLE 5
RETIREMENT BENEFIT
5.1 RETIREMENT BENEFIT. Subject to the Deduction Limitation, a Participant
who Retires shall receive, as a Retirement Benefit, his or her Account
Balance.
5.2 PAYMENT OF RETIREMENT BENEFIT. A Participant, in connection with his or
her commencement of participation in the Plan, shall elect on an Election
Form to receive the Retirement Benefit in a lump sum or pursuant to a
Yearly Installment Method of five (5), ten (10) or fifteen (15) years.
The Participant may change his or her election to an allowable
alternative payout period by submitting a new Election Form to the
Committee, provided that any such Election Form is submitted at least one
(1) year prior to the Participant's Retirement and is accepted by the
Committee in its sole discretion. The Election Form most recently
accepted by the Committee shall govern the payout of the Retirement
Benefit. If a Participant does not make any election with respect to the
payment of the Retirement Benefit, then such benefit shall be payable in
a lump sum. The lump sum payment shall be made, or installment payments
shall commence, as soon as practicable after the date of the
Participant's Retirement. Any payment made shall be subject to the
Deduction Limitation.
5.3 DEATH PRIOR TO COMPLETION OF RETIREMENT BENEFIT. If a Participant dies
after Retirement but before the Retirement Benefit is paid in full, the
Participant's unpaid Retirement Benefit payments shall continue and shall
be paid to the Participant's Beneficiary (i) over the remaining number of
years and in the same amounts as that benefit would have been paid to the
Participant had the Participant survived, or (ii) in a lump sum, if
requested by the Participant's Beneficiary and allowed in the sole
discretion of the Compensation Committee, that is equal to the
Participant's unpaid remaining
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Account Balance. Any payment made hereunder shall not be subject to the
Deduction Limitation.
ARTICLE 6
PRE-RETIREMENT SURVIVOR BENEFIT
6.1 PRE-RETIREMENT SURVIVOR BENEFIT. The Participant's Beneficiary shall
receive a Pre-Retirement Survivor Benefit equal to the Participant's
Account Balance if the Participant dies before he or she Retires,
experiences a Termination of Employment or suffers a Disability.
6.2 PAYMENT OF PRE-RETIREMENT SURVIVOR BENEFIT. The Pre-Retirement Survivor
Benefit shall be paid in a lump sum as soon as practicable following the
date of death. Notwithstanding the foregoing, if the Participant's
Account Balance at the time of his or her death is twenty-five thousand
dollars ($25,000) or greater, the Compensation Committee may, in its sole
discretion, cause the Pre-Retirement Survivor Benefit to be paid pursuant
to a Yearly Installment Method of not more than five (5) years to
commence as soon as practicable following the date of death. Any payment
made hereunder shall not be subject to the Deduction Limitation.
ARTICLE 7
TERMINATION BENEFIT, CHANGE IN CONTROL BENEFIT
7.1 TERMINATION BENEFIT. Subject to the Deduction Limitation, the Participant
shall receive a Termination Benefit, which shall be equal to the
Participant's vested Account Balance if a Participant experiences a
Termination of Employment prior to his or her Retirement, death or
Disability.
7.2 PAYMENT OF TERMINATION BENEFIT. If the Participant's vested Account
Balance at the time of his or her Termination of Employment is less than
fifty thousand dollars ($50,000), payment of his or her Termination
Benefit shall be paid in a lump sum. If the Participant's vested Account
Balance at such time is equal to or greater than that amount, the
Compensation Committee may, in its sole discretion, cause payment of the
Participant's Termination Benefit to be made pursuant to a Yearly
Installment Method of not more than five (5) years. The lump sum payment
shall be made, or installment payments shall commence, as soon as
practicable following the date of Termination of Employment. Any payment
made shall be subject to the Deduction Limitation.
7.3 CHANGE IN CONTROL BENEFIT. Notwithstanding anything herein to the
contrary, upon a Change in Control of the Company, each Participant shall
become entitled to receive his or her entire Account Balance in a single
lump sum payment on the sixtieth (60th) day following the Change in
Control (or as soon thereafter as is administratively feasible).
Notwithstanding the preceding, the Participant may irrevocably elect,
prior to the end of such sixty (60) day period, to waive his or her right
to receive such Change in Control distribution. If such waiver election
is timely made, the Participant shall receive his or her entire Account
Balance as previously elected by the Participant.
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ARTICLE 8
DISABILITY WAIVER AND BENEFIT
8.1 DISABILITY WAIVER.
(a) WAIVER OF DEFERRAL. Upon application, a Participant who is
determined by the Compensation Committee to be suffering from a
Disability may suspend for the period of the Disability that
portion of the Annual Deferral Amount commitment that would
otherwise have been withheld from a Participant's Annual Base
Salary, Incentive Payments and/or Board Member Fees for the Plan
Year during which the Participant first suffers a Disability.
(b) RETURN TO WORK. If a Participant returns to employment or service
as a Board Member with the Company after a Disability ceases, the
Participant may elect to defer an Annual Deferral Amount for the
Plan Year following his or her return to employment or service
and for every Plan Year thereafter while a Participant in the
Plan; provided such deferral elections are otherwise allowed and
an Election Form is delivered to and accepted by the Committee
for each such election in accordance with Section 3.3 above.
8.2 CONTINUED ELIGIBILITY, DISABILITY BENEFIT. A Participant suffering a
Disability shall, for benefit purposes under this Plan, continue to be
considered to be employed by, or in the service as a Board Member of, the
Company, and shall be eligible for the benefits provided for in Articles
4, 5, 6 or 7 in accordance with the provisions of those Articles.
Notwithstanding the above, the Compensation Committee shall have the
right to, in its sole and absolute discretion and for purposes of this
Plan only, and must in the case of a Participant who is otherwise
eligible to Retire, deem the Participant to have experienced a
Termination of Employment, or in the case of a Participant who is
eligible to Retire, to have Retired, at any time (or in the case of a
Participant who is eligible to Retire, as soon as practicable) after such
Participant is determined to be suffering a Disability, in which case the
Participant shall receive a Disability Benefit equal to his or her
Account Balance at the time of the Compensation Committee's
determination; provided, however, that should the Participant otherwise
have been eligible to Retire, he or she shall be paid in accordance with
Article 5. This Disability Benefit shall be paid in a lump sum as soon as
practicable following the Compensation Committee's exercise of such
right. Any payment made hereunder shall not be subject to the Deduction
Limitation.
ARTICLE 9
BENEFICIARY DESIGNATION
9.1 BENEFICIARY. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as
contingent) to receive any benefits payable under the Plan upon the death
of a Participant. The Beneficiary designated under this Plan may be the
same as or different from the Beneficiary designation under any other
plan of the Company in which the Participant participates.
9.2 BENEFICIARY DESIGNATION, CHANGE. A Participant shall designate his or her
Beneficiary by completing and signing the Beneficiary Designation Form,
and returning it to the Committee or its designated agent. A Participant
shall have the right to change a
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Beneficiary by completing, signing and otherwise complying with the terms
of the Beneficiary Designation Form and the Committee's rules and
procedures, as in effect from time to time. Upon the acceptance by the
Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The Committee shall be
entitled to rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his or her death.
9.3 ACKNOWLEDGMENT. No designation or change in designation of a
Beneficiary shall be effective until received and acknowledged in writing
by the Committee or its designated agent.
9.4 NO BENEFICIARY DESIGNATION. If a Participant fails to designate a
Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the
Participant's designated Beneficiary shall be deemed to be his or her
surviving spouse, or, if the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a Beneficiary shall be
payable to the executor or personal representative of the Participant's
estate.
9.5 DOUBT AS TO BENEFICIARY. If the Committee has any doubt as to the proper
Beneficiary to receive payments pursuant to this Plan, the Committee
shall have the right, exercisable in its discretion, to cause the Company
to withhold such payments until this matter is resolved to the
Committee's satisfaction.
9.6 DISCHARGE OF OBLIGATIONS. The payment of benefits under the Plan to a
person believed in good faith by the Committee to be a valid Beneficiary
shall fully and completely discharge the Company and the Committee from
all further obligations under this Plan with respect to the Participant,
and that Participant's Plan Agreement shall terminate upon such full
payment of benefits. Neither the Committee nor the Company shall be
obliged to search for any Participant or Beneficiary beyond the sending
of a registered letter to such last known address. If the Committee
notifies any Participant or Beneficiary that he or she is entitled to an
amount under the Plan and the Participant or Beneficiary fails to claim
such amount or make his or her location known to the Committee within
three (3) years thereafter, then, except as otherwise required by law, if
the location of one or more of the next of kin of the Participant is
known to the Committee, the Committee may direct distribution of such
amount to any one or more or all of such next of kin, and in such
proportions as the Committee determines. If the location of none of the
foregoing persons can be determined, the Committee shall have the right
to direct that the amount payable shall be deemed to be a forfeiture and
paid to the Company, except that the dollar amount of the forfeiture,
unadjusted for deemed gains or losses in the interim, shall be paid by
the Company if a claim for the benefit subsequently is made by the
Participant or the Beneficiary to whom it was payable. If a benefit
payable to an unlocated Participant or Beneficiary is subject to escheat
pursuant to applicable state law, neither the Committee nor the Company
shall be liable to any person for any payment made in accordance with
such law.
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ARTICLE 10
LEAVE OF ABSENCE
10.1 PAID LEAVE OF ABSENCE. If a Participant is authorized by the Company for
any reason to take a paid leave of absence from the service of the
Company, the Participant shall continue to be considered in the service
of the Company and the Annual Deferral Amount shall continue to be
withheld during such paid leave of absence in accordance with Section
3.4.
10.2 UNPAID LEAVE OF ABSENCE. If a Participant is authorized by the Company
for any reason to take an unpaid leave of absence from the service of the
Company, the Participant shall continue to be considered in the service
of the Company and the Participant shall be excused from making deferrals
until the earlier of the date the leave of absence expires or the
Participant returns to a paid employment or directorship status. Upon
such expiration or return, deferrals shall resume for the remaining
portion of the Plan Year in which the expiration or return occurs, based
on the deferral election, if any, made for that Plan Year. If no election
was made for that Plan Year, no deferral shall be withheld.
ARTICLE 11
TERMINATION, AMENDMENT OR MODIFICATION
11.1 TERMINATION. Although the Company anticipates that it will continue the
Plan for an indefinite period of time, there is no guarantee that the
Company will continue the Plan or will not terminate the Plan at any time
in the future. Accordingly, the Company reserves the right to discontinue
its sponsorship of the Plan and/or to terminate the Plan at any time with
respect to any or all of its participating Employees or Board Members, by
action of the Board. Upon a complete or partial termination of the Plan,
the Plan Agreements of the affected Participants shall terminate and
their vested Account Balances, determined as if they had experienced a
Termination of Employment on the date of Plan termination or, if Plan
termination occurs after the date upon which a Participant was eligible
to Retire, then with respect to that Participant as if he or she had
Retired on the date of Plan termination, shall be paid to the
Participants in accordance with their distribution elections in effect at
the time of the Plan termination; provided that, if the Participant
requests and the Compensation Committee, in its sole discretion, permits,
payment may be made as soon as practicable following Plan termination in
a lump sum. The termination of the Plan shall not adversely affect any
Participant or Beneficiary who has become entitled to the payment of any
benefits under the Plan as of the date of termination.
11.2 AMENDMENT. The Company may, at any time, amend or modify the Plan in
whole or in part by the action of the Board; provided, however, that no
amendment or modification shall be effective to decrease or restrict the
value of a Participant's vested Account Balance in existence at the time
the amendment or modification is made, calculated as if the Participant
had experienced a Termination of Employment as of the effective date of
the amendment or modification or, if the amendment or modification occurs
after the date upon which the Participant was eligible to Retire, the
Participant had Retired as of the effective date of the amendment or
modification. The amendment or modification of the Plan shall not affect
any Participant or Beneficiary who has become entitled to the payment of
benefits under the Plan as of the date of the amendment or modification;
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provided, however, that the Company shall have the right to accelerate
installment payments by paying the vested Account Balance in a lump sum
or pursuant to a Yearly Installment Method using fewer years (provided
that the present value of all payments that will have been received by a
Participant at any given point of time under the different payment
schedule shall equal or exceed the present value of all payments that
would have been received at that point in time under the original payment
schedule).
11.3 PLAN AGREEMENT. Despite the provisions of Sections 11.1 and 11.2 above,
if a Participant's Plan Agreement contains benefits or limitations that
are not in this Plan document, the Company may only amend or terminate
such provisions with the consent of the Participant.
11.4 EFFECT OF PAYMENT. The full payment of the applicable benefit under
Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries
under this Plan and the Participant's Plan Agreement shall terminate.
11.5 AMENDMENT TO ENSURE PROPER CHARACTERIZATION OF THE PLAN. Notwithstanding
the previous Sections of this Article 11, the Plan may be amended at any
time, retroactively if required, if found necessary, in the opinion of
the Company, in order to ensure that the Plan is characterized as a
non-tax-qualified "top hat" plan of deferred compensation maintained for
a select group of management or highly compensated employees, as
described under ERISA Sections 201(2), 301(a)(3) and 401(a)(1), to ensure
that amounts under the Plan are not considered to be taxed to a
Participant under the Federal income tax laws prior to the Participant's
receipt of the amounts or to conform the Plan and the Trust to the
provisions and requirements of any applicable law (including ERISA and
the Code).
11.6 FAIL-SAFE PROVISION
(a) OPERATION. This Section 11.6 shall become operative upon
the enactment of any change in applicable statutory law or
the promulgation by the Internal Revenue Service of a
final regulation or other pronouncement having the force
of law, which statutory law, as changed, or final
regulation or pronouncement, as promulgated, would cause
any Participant to include in his or her federal gross
income amounts accrued by the Participant under the Plan
on a date (an "Early Taxation Event") prior to the date on
which such amounts are made available to him or her
hereunder.
(b) AFFECTED RIGHT OR FEATURE NULLIFIED. Notwithstanding any
other Section of this Plan to the contrary (but subject to
subsection (c) below), as of an Early Taxation Event, any
right or feature of this Plan that would cause the Early
Taxation Event shall be null and void, to the extent, and
only to the extent, required to prevent the Participant
from being required to include in his or her federal gross
income amounts accrued by the Participant under the Plan
prior to the date on which such amounts are made available
to him or her hereunder. By way of example, but not by way
of limiting the generality of the foregoing, if a statute
is enacted that
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would require a Participant to include in his or her
federal gross income amounts accrued by the Participant
under the Plan prior to the date on which such amounts are
made available to him or her because of the Participant's
right to receive a distribution of a portion of his or her
Account under Section 4.4, the right of all Participants
to receive distributions under Section 4.4 shall be null
and void as of the effective date of that statute. If only
a portion of a Participant's Account is impacted by the
change in the law, then only such portion shall be subject
to this Section, with the remainder of the Account not so
affected being subject to such rights and features as if
the law were not changed. If the law only impacts
Participants who have a certain status with respect to the
Company, then only such Participants shall be subject to
this Section.
(c) TAX DISTRIBUTION. If an Early Taxation Event is earlier
than the date on which the statute, regulation or
pronouncement giving rise to the Early Taxation Event is
enacted or promulgated, as applicable (i.e., if the change
in the law is retroactive), there shall be distributed to
each Participant, as soon as practicable following such
date of enactment or promulgation, the amounts that became
taxable on the Early Taxation Event.
ARTICLE 12
ADMINISTRATION
12.1 COMMITTEE DUTIES. This Plan shall be administered by the Company's Plan
Committee, which, unless and until reconstituted by the Board, shall be
comprised of the Company's (i) President of Corporate Services, Chief
Financial Officer and Treasurer, (ii) Vice President, Finance and
Corporate Controller and (iii) Benefits Administrator. Members of the
Committee may be Participants under this Plan. The Plan Committee shall
have the responsibility for the administration of the Plan, except to the
extent that any Plan administrative functions have been assigned
hereunder to the Compensation Committee. In carrying out its duties, the
Plan Committee shall have the discretion and authority to (i) interpret
and enforce all appropriate rules and regulations for the administration
of this Plan and (ii) decide or resolve any and all questions including
interpretations of this Plan, as may arise in connection with the Plan.
Any individual serving on the Plan Committee who is a Participant shall
not vote or act on any matter relating solely to himself or herself. When
making a determination or calculation, the Plan Committee shall be
entitled to rely on information furnished by a Participant or the
Company.
12.2 AGENTS. In the administration of this Plan, both the Plan Committee and
the Compensation Committee may, from time to time, employ agents and
delegate to them such administrative duties as they see fit (including
acting through a duly appointed representative) and may from time to time
consult with counsel who may be counsel to the Company.
12.3 BINDING EFFECT OF DECISIONS. The decision or action of both the Plan
Committee and the Compensation Committee with respect to any question
arising out of or in connection with the administration, interpretation
and application of the Plan and the rules and regulations promulgated
hereunder shall be final and conclusive and binding upon all persons
having any interest in the Plan.
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12.4 INDEMNITY OF COMMITTEES. The Company shall indemnify and hold harmless
the members of both the Plan Committee and the Compensation Committee,
and any Employee to whom the duties of the Plan Committee or the
Compensation Committee may be delegated, against any and all claims,
losses, damages, expenses or liabilities arising from any action or
failure to act with respect to this Plan, except in the case of willful
misconduct by the Plan Committee or the Compensation Committee or any of
its members or any such Employee. This indemnification shall be in
addition to, and not in limitation of, any other indemnification
protections of the Plan Committee or the Compensation Committee.
12.5 COMPANY INFORMATION. To enable the Plan Committee and the Compensation
Committee to perform their functions, the Company shall supply full and
timely information to them on all matters relating to the compensation of
the Participants, the date and circumstances of the Retirement,
Disability, death or Termination of Employment of the Participants, and
such other pertinent information as the Plan Committee or the
Compensation Committee may reasonably require.
ARTICLE 13
OTHER BENEFITS AND AGREEMENTS
13.1 COORDINATION WITH OTHER BENEFITS. The benefits provided for a Participant
or a Participant's Beneficiary under the Plan are in addition to any
other benefits available to such Participant under any other plan or
program for Employees or Board Members of the Company. The Plan shall
supplement and shall not supersede, modify or amend any other plan or
program except as may otherwise be expressly provided.
ARTICLE 14
CLAIMS PROCEDURES
14.1 PRESENTATION OF CLAIM. Any Participant or Beneficiary of a deceased
Participant (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 sixty (60) days
after such notice was received by the Claimant. All other claims must be
made within one hundred and eighty (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.
14.2 NOTIFICATION OF DECISION. The Committee or the Compensation Committee (if
a claim relates to a function of the Compensation Committee) shall
consider a Claimant's claim within a reasonable time, and shall notify
the Claimant in writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee or the Compensation 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:
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(i) the specific reason(s) for the denial of the claim, or any
part of it;
(ii) specific reference(s) to pertinent provisions of the Plan
upon which such denial was based;
(iii) 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; and
(iv) an explanation of the claim review procedure set forth in
Section 14.3 below.
14.3 REVIEW OF A DENIED CLAIM. Within sixty (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, but not later than thirty (30) days after the review
procedure began, the Claimant (or the Claimant's duly authorized
representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee or the Compensation
Committee (if a claim relates to a function of the Compensation
Committee), in its sole discretion, may grant.
14.4 DECISION ON REVIEW. The Committee or Compensation Committee shall render
its decision on review promptly, and not later than sixty (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 Committee's or Compensation Committee's decision must
be rendered within one hundred and twenty (120) days after such date.
Such 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; and
(c) such other matters as the Committee or Compensation Committee
deems relevant.
14.5 LEGAL ACTION. A Claimant's compliance with the foregoing provisions of
this Article 14 is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for benefits under
this Plan.
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ARTICLE 15
TRUST
15.1 ESTABLISHMENT OF THE TRUST. The Company has established the Trust, and
the Company intends, but is not required, to transfer over to the Trust
at least annually such assets as the Company determines, in its sole
discretion, are necessary to provide, on a present value basis, for its
respective future liabilities created with respect to the Annual Deferral
Amounts, Annual Company Contribution Amounts and Annual Company Matching
Amounts for the Participants.
15.2 INTERRELATIONSHIP OF THE PLAN AND THE TRUST. The provisions of the Plan
and the Plan Agreement shall govern the rights of a Participant to
receive distributions pursuant to the Plan. The provisions of the Trust
shall govern the rights of the Company, Participants and the creditors of
the Company to the assets transferred to the Trust. The Company shall at
all times remain liable to carry out its obligations under the Plan.
15.3 DISTRIBUTIONS FROM THE TRUST. The Company's obligations under the Plan
may be satisfied with Trust assets distributed pursuant to the terms of
the Trust, and any such distribution shall reduce the Company's
obligations under this Plan.
ARTICLE 16
MISCELLANEOUS
16.1 STATUS OF PLAN. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that "is unfunded and is
maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated
employee" within the meaning of ERISA Sections 201(2), 301(a)(3) and
401(a)(1). The Plan shall be administered and interpreted to the extent
possible in a manner consistent with that intent.
16.2 UNSECURED GENERAL CREDITOR. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests
or claims in any property or assets of the Company. For purposes of the
payment of benefits under this Plan, any and all of the Company's assets
shall be, and remain, the general, unpledged unrestricted assets of the
Company. The Company's obligation under the Plan shall be merely that of
an unfunded and unsecured promise to pay money in the future.
16.3 COMPANY'S LIABILITY. The Company's liability for the payment of benefits
shall be defined only by the Plan and the Plan Agreement, as entered into
between the Company and a Participant. The Company shall have no
obligation to a Participant under the Plan except as expressly provided
in the Plan and his or her Plan Agreement.
16.4 NONASSIGNABILITY. Neither a Participant nor any other person shall have
any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate, alienate or convey
in advance of actual receipt, the amounts, if any, payable hereunder, or
any part thereof, which are, and all rights to which are expressly
declared to be, unassignable and non-transferable. No part of the amounts
payable shall, prior to actual payment, be subject to seizure,
attachment, garnishment or sequestration
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for the payment of any debts, judgments, alimony or separate maintenance
owed by a Participant or any other person, be transferable by operation
of law in the event of a Participant's or any other person's bankruptcy
or insolvency or be transferable to a spouse as a result of a property
settlement or otherwise.
16.5 NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this Plan shall
not be deemed to constitute a contract of employment between the Company
and the Participant. Such employment is hereby acknowledged to be an "at
will" employment relationship that can be terminated at any time for any
reason, or no reason, with or without cause, and with or without notice,
unless expressly provided in a written employment agreement. Nothing in
this Plan shall be deemed to give a Participant the right to be retained
in the service of the Company either as an Employee or Board Member, or
to interfere with the right of the Company to discipline or discharge the
Participant at any time.
16.6 FURNISHING INFORMATION. A Participant or his or her Beneficiary will
cooperate with the Committee or Compensation Committee by furnishing any
and all information requested by the Committee or Compensation Committee
and take such other actions as may be requested in order to facilitate
the administration of the Plan and the payments of benefits hereunder,
including but not limited to taking such physical examinations as the
Committee or Compensation Committee may deem necessary.
16.7 TERMS. Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they
would so apply; and whenever any words are used herein in the singular or
in the plural, they shall be construed as though they were used in the
plural or the singular, as the case may be, in all cases where they would
so apply.
16.8 CAPTIONS. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.
16.9 GOVERNING LAW. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of Delaware
without regard to its conflicts of laws principles.
16.10 NOTICE. Any notice or filing required or permitted to be given to the
Committee or the Compensation Committee under this Plan shall be
sufficient if in writing and hand-delivered, or sent by registered or
certified mail, to the address below:
President of Corporate Services, Chief Financial Officer and Treasurer
The J. Jill Group, Inc.
4 Batterymarch Park
Quincy, Massachusetts 02169
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
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Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered, or
sent by mail, to the last known address of the Participant.
16.11 SUCCESSORS. The provisions of this Plan shall bind and inure to the
benefit of the Company and its successors and assigns and the Participant
and the Participant's designated Beneficiaries.
16.12 SPOUSE'S INTEREST. The interest in the benefits hereunder of a spouse of
a Participant who has predeceased the Participant shall automatically
pass to the Participant and shall not be transferable by such spouse in
any manner, including but not limited to such spouse's will, nor shall
such interest pass under the laws of intestate succession.
16.13 VALIDITY. In case any provision of this Plan shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as
if such illegal or invalid provision had never been inserted herein.
16.14 INCOMPETENT. If the Committee determines in its discretion that a benefit
under this Plan is to be paid to a minor, a person declared incompetent
or to a person incapable of handling the disposition of that person's
property, the Committee may direct payment of such benefit to the
guardian, legal representative or person having the care and custody of
such minor, incompetent or incapable person. The Committee may require
proof of minority, incompetence, incapacity or guardianship, as it may
deem appropriate prior to distribution of the benefit. Any payment of a
benefit shall be a payment for the account of the Participant and the
Participant's Beneficiary, as the case may be, and shall be a complete
discharge of any liability under the Plan for such payment amount.
16.15 COURT ORDER. The Committee is authorized to make any payments directed by
court order in any action in which the Plan or the Committee has been
named as a party. In addition, if a court determines that a spouse or
former spouse of a Participant has an interest in the Participant's
benefits under the Plan in connection with a property settlement or
otherwise, the Committee, in its sole discretion, shall have the right,
notwithstanding any election made by a Participant, to immediately
distribute the spouse's or former spouse's interest in the Participant's
benefits under the Plan to that spouse or former spouse.
16.16 DISTRIBUTION IN THE EVENT OF TAXATION.
(a) IN GENERAL. If, for any reason, all or any portion of a
Participant's benefits under this Plan becomes taxable to the
Participant prior to receipt, the Participant may petition the
Compensation Committee, for a distribution of that portion of his
or her benefit that has become taxable. Upon the grant of such a
petition, which grant shall not be unreasonably withheld (and,
after a Change in Control, shall be granted), the Company shall
distribute to the Participant immediately available funds in an
amount equal to the taxable portion of his or her benefit (which
amount shall not exceed a Participant's unpaid vested Account
Balance under the Plan). If the petition is granted, the tax
liability distribution shall be made within ninety (90) days of
the date when the Participant's petition is granted. Such a
distribution shall affect and reduce the benefits to be paid
under this Plan.
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(b) TRUST. If the Trust terminates in accordance with the provisions
of the Trust and benefits are distributed from the Trust to a
Participant in accordance with such provisions, the Participant's
benefits under this Plan shall be reduced to the extent of such
distributions.
16.17 INSURANCE. The Company, on its own behalf or on behalf of the trustee of
the Trust, and, in its sole discretion, may apply for and procure
insurance on the life of the Participant, in such amounts and in such
forms as the Trust may choose. The Company or the trustee of the Trust,
as the case may be, shall be the sole owner and beneficiary of any such
insurance. The Participant shall have no interest whatsoever in any such
policy or policies, and at the request of the Company shall submit to
medical examinations and supply such information and execute such
documents as may be required by the insurance company or companies to
whom the Company has applied for insurance.
IN WITNESS WHEREOF, the Company has signed this Plan document, as amended and
restated, as of January 1, 2003.
The J. Jill Group, Inc.
By: /s/ Olga L. Conley
--------------------------------
Title: Chief Financial Officer
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