TOM BROWN, INC.
DEFERRED COMPENSATION PLAN
EFFECTIVE AS OF MARCH 1, 2001
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TOM BROWN, INC.
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
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ARTICLE I GENERAL
Sec. 1.1 Name of Plan............................................................... 1
Sec. 1.2 Purpose.................................................................... 1
Sec. 1.3 Effective Date............................................................. 1
Sec. 1.4 Company.................................................................... 1
Sec. 1.5 Participating Employers.................................................... 1
Sec. 1.6 Construction and Applicable Law............................................ 1
ARTICLE II DEFINITIONS
Sec. 2.1 Accounts................................................................... 1
Sec. 2.2 Beneficiary................................................................ 2
Sec. 2.3 Board...................................................................... 2
Sec. 2.4 Code....................................................................... 2
Sec. 2.5 Compensation............................................................... 2
Sec. 2.6 Employer Credits........................................................... 2
Sec. 2.7 ERISA...................................................................... 2
Sec. 2.8 Investment Credits......................................................... 2
Sec. 2.9 Participant................................................................ 3
Sec. 2.10 Plan Year.................................................................. 3
Sec. 2.11 Qualified Employee......................................................... 3
Sec. 2.12 Retirement................................................................. 3
Sec. 2.13 Successor Employer......................................................... 3
Sec. 2.14 Termination of Employment.................................................. 3
Sec. 2.15 Valuation Date............................................................. 4
ARTICLE III PARTICIPATION
Sec. 3.1 Eligibility for Participation.............................................. 4
Sec. 3.2 Duration of Participation.................................................. 4
Sec. 3.3 No Guarantee of Employment................................................. 4
ARTICLE IV DEFERRED COMPENSATION AND CREDITS TO ACCOUNTS
Sec. 4.1 Election to Defer Compensation............................................. 5
Sec. 4.2 Employer Credits........................................................... 6
Sec. 4.3 Investment Credits and Valuation of Accounts............................... 6
Sec. 4.4 Unsecured Obligations...................................................... 8
ARTICLE V DISTRIBUTION OF ACCOUNTS
Sec. 5.1 Distribution of Retirement Account upon Retirement......................... 8
Sec. 5.2 Distribution of Retirement Account following Other Termination
of Employment ............................................................. 9
Sec. 5.3 Distributions from Fixed Period Account.................................... 10
Sec. 5.4 Distribution on Death...................................................... 10
Sec. 5.5 Beneficiary Designation.................................................... 10
Sec. 5.6 Distributions for Severe Financial Hardship................................ 11
Sec. 5.7 Payment of Small Benefits.................................................. 11
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Sec. 5.8 Modification of Elections for Tax Considerations........................... 11
Sec. 5.9 Withholding and Taxes...................................................... 11
Sec. 5.10 Distributions Following Change in Control.................................. 12
ARTICLE VI ADMINISTRATION
Sec. 6.1 Administration By the Company.............................................. 13
Sec. 6.2 Claims Procedure........................................................... 13
ARTICLE VII AMENDMENT AND TERMINATION
Sec. 7.1 Amendment.................................................................. 14
Sec. 7.2 Termination of Plan........................................................ 14
ARTICLE VIII MISCELLANEOUS
Sec. 8.1 Benefits May Not Be Assigned or Alienated.................................. 14
Sec. 8.2 Incompetency............................................................... 14
Sec. 8.3 Notices.................................................................... 14
Sec. 8.4 Severability............................................................... 15
Sec. 8.5 Headings................................................................... 15
Sec. 8.6 Capitalized Definitions.................................................... 15
Sec. 8.7 Gender..................................................................... 15
Sec. 8.8 Use of Compounds of Word "Here"............................................ 15
Sec. 8.9 Construed as a Whole....................................................... 15
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TOM BROWN, INC.
DEFERRED COMPENSATION PLAN
ARTICLE I
GENERAL
SEC. 1.1 NAME OF PLAN. The name of this plan is the "Tom Brown, Inc.
Deferred Compensation Plan" (referred to hereinafter as the "Plan").
SEC. 1.2 PURPOSE. The Plan has been established to provide
additional future income to certain select management or highly compensated
employees through voluntary deferrals of Compensation.
SEC. 1.3 EFFECTIVE DATE. The "Effective Date" of the Plan, the date
as of which the Plan was established, is March 1, 2001.
SEC. 1.4 COMPANY. For purposes of this Plan, "Company" means Tom
Brown, Inc., a Delaware corporation, and any Successor Employer thereof.
SEC. 1.5 PARTICIPATING EMPLOYERS. The Company is a "Participating
Employer" in the Plan. Each subsidiary or affiliate of the Company that employs
one or more Participants shall also be a Participating Employer. Each
Participating Employer shall pay the cost of the benefits to which a Participant
is entitled under the Plan attributable to service with that employer, and its
share of the other expenses of the Plan, in each case in such amounts as are
determined by the Company in its sole discretion. As of March 1, 2001, the only
other Participating Employer in the Plan is Retex Inc., a Wyoming corporation.
SEC. 1.6 CONSTRUCTION AND APPLICABLE LAW. The Plan is intended to be
an unfunded plan maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees,
within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. The
Plan is not intended to qualify under Code Section 401(a) or 403(a). The Plan
shall be administered and construed consistent with said intent. This Plan also
shall be governed and construed in accordance with the laws of the State of
Colorado as applied to contracts executed and to be wholly performed within said
state to the extent that such laws are not preempted by the laws of the United
States of America.
ARTICLE II
DEFINITIONS
SEC. 2.1 ACCOUNTS. "Accounts" shall be established for each eligible
Participant reflecting the amounts owed to the Participant or the Participant's
Beneficiary under the terms of this Plan. The following Accounts may be
established for each Participant:
(a) Retirement Account. A Retirement Account shall be established to
which shall be credited the amounts of Compensation deferred by the
Participant under Sec. 4.1 (other than amounts the Participant
elects to have credited to a Fixed Period Account), Employer Credits
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determined under Sec. 4.2, and the Investment Credits under Sec. 4.3
related to those deferrals and credits.
(b) Fixed Period Account. If the Participant so elects under Sec.
4.1(d), a Fixed Period Account shall be established to which shall
be credited the deferrals under Sec. 4.1 that the Participant elects
to have credited to this type of Account and the Investment Credits
under Sec. 4.3 related to those deferrals.
(1) The Participant may elect to establish separate Fixed Period
Accounts with different maturity dates for amounts deferred in
different Plan Years. However, deferrals during a particular
Plan Year may be allocated only to one Fixed Period Account,
and no more than five Fixed Period Accounts with different
maturity dates may exist for the Participant at any time.
(2) The maturity date of each Fixed Period Account is January 1st
of a year specified by the Participant that is at least two
years after the year for which the Account is originally
established.
The Company may maintain sub-accounts for a Participant within each Account to
reflect the amount deferred or credited for each Plan Year and Investment
Credits on that amount. Each Participant is always 100% vested in the amounts
credited to his or her Accounts.
SEC. 2.2 BENEFICIARY. "Beneficiary" means the person or persons
designated as such pursuant to the provisions of Sec. 5.5.
SEC. 2.3 BOARD. "Board" means the board of directors of the Company.
SEC. 2.4 CODE. "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute.
SEC. 2.5 COMPENSATION. "Compensation" for a Plan Year means the
compensation to which the Participant is entitled from the Participating
Employers during the Plan Year. For purposes of this Plan, Compensation includes
the following two sub-categories:
(a) Base Compensation means the Compensation classified as such by the
Company which is paid to the Participant by a Participating Employer
on a regular periodic basis during the Plan Year.
(b) Bonus Compensation means the amounts paid to the Participant during
a Plan Year under the Company's bonus program or programs covering
the Participant.
SEC. 2.6 EMPLOYER CREDITS. "Employer Credits" are the credits
allocable to the Participant's Retirement Account pursuant to Sec. 4.2.
SEC. 2.7 ERISA. "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any successor statute.
SEC. 2.8 INVESTMENT CREDITS. "Investment Credits" are the gains or
losses allocable to Accounts of Participants under Sec. 4.3 based on the
investment indexes elected by the Participant.
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SEC. 2.9 PARTICIPANT. A "Participant" is an individual described as
such in Article III.
SEC. 2.10 PLAN YEAR. A "Plan Year" is the 12-consecutive-month
period commencing on each January 1 and ending on the following December 31.
However, the first Plan Year of the Plan is the period commencing on March 1,
2001 and ending on December 31, 2001.
SEC. 2.11 QUALIFIED EMPLOYEE. "Qualified Employee" for a Plan Year
means any select management or highly compensated employee of the Company or
another Participating Employer who meets both of the following requirements:
(a) The employee has been designated in writing by the President of the
Company as eligible for this Plan for the current Plan Year.
(b) The employee qualifies as a "highly compensated employee" under Code
Section 414(q) for the current Plan Year based on his or her pay
during the preceding Plan Year which is recognized for purposes of
applying that section (determined after subtracting all deferrals
under this Plan during the preceding Plan Year). If the employee was
hired by the Participating Employers during the preceding Plan Year,
the employee's pay during the preceding Plan Year for purposes of
applying this subsection shall be the employee's annual rate of Base
Compensation on the last day of the preceding Plan Year. This
subsection shall not apply during the Plan Year in which the
employee is first employed by the Participating Employers.
SEC. 2.12 RETIREMENT. "Retirement" means the Termination of
Employment of a Participant (other than by reason of death) on or after the date
the Participant satisfies any of the following requirements:
(a) The Participant has reached age 59 1/2.
(b) The Participant has both reached age 55 and is credited with 10 or
more years of "vesting service" as defined in the Tom Brown, Inc.
401(k) Plan.
(c) The Participant has become disabled, regardless of age or service,
and has been determined to be eligible for benefits under the
Company's Long Term Disability Plan (or under a long term disability
plan maintained by another Participating Employer).
SEC. 2.13 SUCCESSOR EMPLOYER. A "Successor Employer" is any entity
that succeeds to the business of the Company through merger, consolidation,
acquisition of all or substantially all of its assets, or any other means and
which elects before or within a reasonable time after such succession, by
appropriate action evidenced in writing, to continue the Plan.
SEC. 2.14 TERMINATION OF EMPLOYMENT. The "Termination of Employment"
of an employee for purposes of the Plan shall be deemed to occur upon the
employee's resignation, discharge, retirement, death, failure to return to
active work at the end of an authorized leave of absence or the authorized
extension or extensions thereof, failure to return to work when duly called
following a temporary layoff, or upon the happening of any other event or
circumstance which, under the policy of the Company or another Participating
Employer as in effect from time to time, results in the termination of the
employer-employee relationship.
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SEC. 2.15 VALUATION DATE. "Valuation Date" means each date on which
the Accounts of Participants are valued for purposes of this Plan. Valuation
Dates shall include the last day of the Plan Year and such other dates as the
Company determines are necessary or advisable for the administration of the
Plan. Until the Company determines to use other Valuation Dates, the Valuation
Dates are each business day on which the New York Stock Exchange is open for
trading.
ARTICLE III
PARTICIPATION
SEC. 3.1 ELIGIBILITY FOR PARTICIPATION. An employee shall become a
Participant in the Plan on the later of the date on which he or she becomes a
Qualified Employee, or the effective date of an election by the individual to
make deferrals under Sec. 4.1. However, the individual shall become a
Participant on the date he or she first receives an Employer Credit under Sec.
4.2, if earlier.
SEC. 3.2 DURATION OF PARTICIPATION. An employee who becomes a
Participant shall continue to be eligible to make elections under Sec. 4.1
thereafter, subject to the following:
(a) The Participant's deferrals shall cease on the earliest of:
(1) The date the Participant's Termination of Employment occurs.
(2) The date on which the Participant ceases to be a Qualified
Employee.
(3) The date the Participant fails to meet the requirements of any
regulations which may be issued by the Department of Labor
that define the phrase "select group of management or highly
compensated employees" under ERISA.
(b) No deferrals under Sec. 4.1 shall be made from any Compensation that
is payable to the Participant after the earliest of the dates
specified in subsection (a) unless he or she again meets the
requirements for being a Qualified Employee for a subsequent Plan
Year. However, an individual shall continue to be a Participant for
purposes of the provisions of the Plan other than Sec. 4.1 or Sec.
4.2 until the date all of his or her Accounts have been distributed.
(c) If an employee who has elected to make deferrals under Sec. 4.1 for
a particular Plan Year is subsequently determined not to be a
Qualified Employee for that Plan Year, the employee's deferral
election for that year will be canceled and any amounts which may
have already been deferred for that year will be promptly refunded
to the employee.
SEC. 3.3 NO GUARANTEE OF EMPLOYMENT. Participation in the Plan does
not constitute a guarantee or contract of employment with any Participating
Employer. Such participation shall in no way interfere with any rights
Participating Employers would have in the absence of such participation to
determine the duration of the employee's employment.
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ARTICLE IV
DEFERRED COMPENSATION AND CREDITS TO ACCOUNTS
SEC. 4.1 ELECTION TO DEFER COMPENSATION. Prior to the first day of
any Plan Year beginning on or after the Effective Date, a Qualified Employee may
elect to have part or all of the Base Compensation and/or Bonus Compensation
payable during that Plan Year credited to his or her Accounts rather than being
paid in cash. The Compensation actually payable during the Plan Year to a
Participant who elects deferred compensation under this section shall be reduced
by the percentage or amount so elected, subject to the following:
(a) Elections shall be made on forms specified by the Company for
purposes of this Plan. Elections for each Plan Year must be filed
during the election period specified by the Company for such Plan
Year, which period must end on or prior to December 31 of the
previous year. Notwithstanding the previous sentence,
(1) An election by an individual who first becomes a Qualified
Employee during but after the first day of a Plan Year may be
filed within 30 days following the date the individual becomes
a Qualified Employee, and will be effective as of the first
day of the first pay period commencing after the election is
filed.
(2) Elections for the Plan Year commencing March 1, 2001 must be
filed on or before February 16, 2001, and shall apply to Base
Compensation payable on or after March 1, 2001 and to the
Bonus Compensation payable on or about March 1, 2001.
(b) The Participant may elect to defer any whole percent of Base
Compensation payable during each pay period ending in the Plan Year,
but not more than 50%. The Participant may also elect to defer any
dollar amount of Base Compensation, in even $1,000 increments and
spread evenly over the pay periods ending in the Plan Year, provided
that the total amount deferred may not exceed 50% of Base
Compensation. However, the amount of Base Compensation for the Plan
Year remaining after deducting the deferral elected by the
Participant for that Plan Year may not be less than the compensation
amount required during that year in order for an individual to be a
"highly compensated employee" under Code Section 414(q) for the
following year (which is $85,000 during 2001). The Participant's
deferral election shall be reduced as necessary to satisfy the limit
in the preceding sentence.
(c) The Participant may elect to defer any whole percent (not more than
100%) of any payment of Bonus Compensation to be made during the
Plan Year, any dollar amount of such Bonus Compensation (in even
$1,000 increments, and not to exceed 100% of such Bonus
Compensation), or 100% of any such Bonus Compensation in excess of a
specified dollar amount. Notwithstanding the foregoing, the amount
deferred may not exceed the Bonus Compensation that remains after
the deduction of any taxes attributable to the amounts deferred
which are required to be withheld and which are not withheld from
other compensation payable to the Participant.
(d) The Participant's election for each Plan Year shall specify the
percent of the amount deferred during that year that is to be
allocated to the Participant's Retirement Account and the percent
that is to be allocated to the Participant's Fixed Period Account.
The election must be stated in whole percents and must total 100%.
If the Participant fails to file an
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adequate election under this subsection, the entire amount deferred
(or the portion of the deferral which is not specifically allocated
to a Fixed Period Account, if applicable) shall be allocated to the
Participant's Retirement Account.
(e) The deferred compensation credited under the Plan on behalf of a
Participant for a Plan Year shall be allocated to the Accounts of
the Participant as of the date that the Base Compensation or Bonus
Compensation would otherwise have been paid to the Participant in
cash.
(f) The Participant must file a separate election with the Company for
each Plan Year for which deferrals are to be made under this Plan.
An election for a Plan Year shall become irrevocable on the first
day of that year, subject to subsection (g). Elections will not
carry over into subsequent Plan Years.
(g) Notwithstanding the foregoing provisions of this section:
(1) All deferrals by a Participant shall cease as of (i) the date
the Participant receives a hardship withdrawal under any
qualified defined contribution plan subject to Code Section
401(k) maintained by the Company or any of its affiliates
which requires that deferrals be suspended for a certain
period of time following such withdrawal, or (ii) the date the
Participant receives a withdrawal from this Plan for severe
financial hardship due to an unforeseeable emergency under
Sec. 5.6. Deferrals under this section may not recommence
until the first day of the second Plan Year beginning after
the date deferrals ceased under the previous sentence.
(2) The Company may in its sole discretion cancel a Participant's
deferral election for the current Plan Year upon the request
of a Participant if the Company determines that an event has
occurred which would make the Participant eligible for a
withdrawal for severe financial hardship due to an
unforeseeable emergency under Sec. 5.6. Deferrals under this
section may not recommence until the first day of the second
Plan Year beginning after the date deferrals ceased under the
previous sentence. The Participant may request that deferrals
cease under this paragraph whether or not the Participant
requests a withdrawal under Sec. 5.6.
SEC. 4.2 EMPLOYER CREDITS. The Compensation Committee of the Board
may determine in its sole discretion that a credit will be made by the Company
or other Participating Employer to the Retirement Account of one or more
eligible Participants for a particular Plan Year. If a credit is to be made for
a particular Participant for a Plan Year, the Committee will determine the
amount of the credit, the date or dates on which the amount will be credited to
the Participant's Retirement Account, and any rules the Participant must satisfy
to receive the credit. Such rules may include, but are not limited to,
requirements that the Participant must be employed by the Participating
Employers on a particular date during or after the end of the Plan Year, that
the Participant must complete a certain number of hours of service during the
Plan Year, or that the Participant must meet certain performance standards for
the year.
SEC. 4.3 INVESTMENT CREDITS AND VALUATION OF ACCOUNTS. The Accounts
of each Participant will be adjusted as of each Valuation Date to reflect
Investment Credits, deferrals allocated to the Account under Sec. 4.1, Employer
Credits allocated under Sec. 4.2, and distributions from the Account under
Article V, since the previous Valuation Date, subject to the following:
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(a) Investment Credits will be based on the investment index or indexes
selected by the Participant to measure the deemed rate of investment
return on his or her Accounts. The investment indexes will include
such investment options as the Company makes available under this
Plan from time to time. The Company may in its sole discretion add
additional options or delete existing options available to a
Participant at any time, provided the Participant has been notified
as described in Sec. 7.1. Notwithstanding anything in the Plan to
the contrary, the Company shall be under no obligation to purchase
any investments used for determining Investment Credits. The
investment indexes are used solely for the recordkeeping purpose of
measuring gains and losses on each Participant's Accounts, and the
Participant's Accounts are not actually being invested in the
indexes.
(b) All investment elections shall be filed in writing on a prescribed
form (or in such other manner as the Company may authorize from time
to time) with the Company or with such agent or agents as may be
designated from time to time by the Company for this purpose. Each
investment election shall remain in effect until a new election is
filed by the Participant.
(c) An initial investment election shall be filed by the Participant
when an Account is first established for the Participant.
Thereafter, the Participant may change the investment indexes for
existing Account balances and future credits effective as of any
Valuation Date, provided the change is filed prior to the deadline
that may be established by the Company or its designated agent from
time to time for the desired effective date. All investment
elections must be expressed in whole percent increments for each
option.
(d) A Participant may file separate investment elections for his or her
Retirement Account and Fixed Period Account, and may also file
separate investment elections for the existing Account balance and
for future amounts to be credited to each Account. If the
Participant fails to file an effective investment election for all
or part of an Account, that amount shall be credited with Investment
Credits according the yield on a default investment option
designated by the Company from time to time.
(e) If distributions are to be made in installments following the death
of a Participant who had begun receiving payments following
Retirement, each Beneficiary shall have the same right to make
investment elections for the portion of the Participant's Accounts
held on behalf of the Beneficiary as the Participant had prior to
death.
(f) All investment elections shall be in accordance with such rules and
regulations as the Company or its designated agent may establish
from time to time. The Company or its agent may also establish such
procedures for the valuation of Accounts as the Company or its agent
determines in its sole discretion will reasonably reflect the period
of time amounts were credited to each Account.
(g) Notwithstanding the foregoing, the Company may modify or disregard
an investment election filed by a Participant to the extent the
Company determines that such action is necessary to comply with the
terms of this Plan or to avoid adverse tax consequences to the
Participant or any Participating Employer. The Company may delay the
implementation of Participant investment elections under this
section to a date later than March 1, 2001, in which case the
Participant's Accounts will be credited during the period of the
delay with
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Investment Credits at a rate or index established by the Company for
this purpose prior to March 1, 2001.
SEC. 4.4 UNSECURED OBLIGATIONS. A Participant's credits in his or
her Accounts shall be an unsecured obligation of the Participating Employers to
pay the Participant (or the Participant's Beneficiary, in the event of the
Participant's death) the actual amount of the credits at the time designated in
Article V. Each Participant or Beneficiary is only a general creditor of the
Participating Employers with respect to his or her Accounts. Accounts are
maintained for recordkeeping purposes only. Notwithstanding the foregoing,
obligations to pay benefits under this Plan may be satisfied by distributions
from a grantor trust created by the Company in its sole discretion for such
purpose. Each Participant shall cooperate with the Company and shall execute any
documents or submit to any physical examination reasonably required by the
Company in connection with the administration of the Plan.
ARTICLE V
DISTRIBUTION OF ACCOUNTS
SEC. 5.1 DISTRIBUTION OF RETIREMENT ACCOUNT UPON RETIREMENT.
Following a Participant's Retirement, the Participant's Retirement Account will
be distributed commencing as soon as administratively feasible after the January
1 following the Participant's Retirement date. The distribution will be made in
the manner elected by the Participant, subject to the following:
(a) At the time the Participant first enrolls in the Plan pursuant to
Sec. 4.1, the Participant must file an election as to how the
balance in the Participant's Retirement Account will be distributed.
The election must be made on a form provided by the Company for this
purpose.
(1) The Participant may elect to have the Retirement Account paid
in any of the following forms:
(A) A single lump payment.
(B) Annual installments over a period of 5 or 10 years, as
specified by the Participant.
(2) Notwithstanding the foregoing, if an individual becomes a
Participant solely as a result of an Employer Credit being
allocated to his or her Retirement Account under Sec. 4.2, the
Participant may file the election under this subsection within
90 days after the date on which the first such Employer Credit
was allocated.
(3) Except as provided in paragraph (4) of this subsection and in
subsection (d) of this section, any election under this
subsection is irrevocable and applies to all future credits to
the Participant's Retirement Account. If the Participant fails
to file an election, he or she will be deemed to have elected
that a lump sum distribution is to be paid as soon as
administratively feasible following his or her Retirement
date.
(4) During the annual election period established by the Company
for purposes of Sec. 4.1, the Participant may file a new
election revoking the distribution method previously selected
under this subsection and designating a new distribution
method
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permitted under this subsection. Any such election shall be
effective on the second January 1st following the date it is
filed with the Company, and shall take effect on such January
1st only if the Participant has not had a Termination of
Employment or died prior to such date.
(b) The Participant's Retirement Account will be valued as of December
31 of the year in which the Participant's Retirement occurs. Any
lump sum distribution will be based on that valuation.
(c) If payments are to be made in installments, the payments will be
made as of the commencement date provided under this section and as
of each anniversary of that date (with the actual payments to be
made as soon as administratively feasible after such dates). The
annual amount to be paid in each calendar year will be equal to the
value of the Retirement Account on the December 31 preceding the
date the payment is to be made, divided by the number of annual
payments that remain, subject to the following:
(1) The Retirement Account will continue to be adjusted for
Investment Credits pursuant to Sec. 4.3 during the installment
period.
(2) In all events, installment payments will cease when the
balance of the Participant's Retirement Account is equal to
$0.
(3) The payment for the final year of installments will include
the entire balance remaining in the Retirement Account at that
time.
(d) Notwithstanding the foregoing, at any time following a Participant's
Retirement, the Participant (or the Beneficiary following the
Participant's death) may elect to receive a lump sum distribution of
up to 100% of the balance of the Participant's Accounts (including
any undistributed Fixed Period Account), subject to the following:
(1) Prior to the distribution under this subsection, an amount
equal to 10% of the amount to be withdrawn will be subtracted
from the amount withdrawn and will be forfeited to the
Company.
(2) Any election to withdraw 75% or more of the Participant's
entire Account balance will be deemed to be an election to
withdraw the entire Account balance minus the portion to be
forfeited under paragraph (1).
SEC. 5.2 DISTRIBUTION OF RETIREMENT ACCOUNT FOLLOWING OTHER
TERMINATION OF EMPLOYMENT. Upon a Participant's Termination of Employment for a
reason other than Retirement or death, the Participant's Retirement Account will
be paid to the Participant pursuant to the provisions of Sec. 5.1, except that
distribution of the Participant's Retirement Account shall occur or commence as
soon as administratively feasible after the January 1 following the
Participant's Termination of Employment. Any installment method selected by the
Participant shall be paid in accordance with Sec. 5.1(c), except that the
installment period shall not exceed five years regardless of the period elected
by the Participant.
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SEC. 5.3 DISTRIBUTIONS FROM FIXED PERIOD ACCOUNT. If the Participant
has elected to allocate deferrals under Sec. 4.1 to a Fixed Period Account,
distributions from that Account shall be determined as follows:
(a) At the time a Fixed Period Account is established, the Participant
must select a future year in which that Account is to be
distributed. The year selected must be at least two years after the
year in which that Account is first established.
(b) Each Fixed Period Account will be distributed commencing as soon as
administratively feasible after its maturity date in a single lump
sum, or in installments, as elected by the Participant for that
Account pursuant to Sec. 5.1(a) and (c).
(c) An election regarding the terms of a Fixed Period Account is
irrevocable as to that Account as provided in Sec 5.1(a), except as
provided in Sec. 5.1(a)(4) or (d) with respect to changes in the
method of distribution of the Account.
(d) Any Fixed Period Account that has not been distributed when a
Participant's Retirement occurs shall be distributed to the
Participant (or to the Beneficiary in the event of the Participant's
subsequent death) as provided in this Sec. 5.3. Any Fixed Period
Account that has not been distributed when any other Termination of
Employment occurs shall be distributed as provided in Sec. 5.2 or
Sec. 5.4, whichever is applicable.
SEC. 5.4 DISTRIBUTION ON DEATH. Upon the death of a Participant, the
Participant's Beneficiary or Beneficiaries shall be entitled to the entire
balance of the Participant's Accounts.
(a) Except as provided in subsection (b) or (c), such payment shall be
made in a single lump sum payment to the Participant's Beneficiary
or Beneficiaries within 90 days after the last day of the month in
which the Participant's death occurred, and shall be equal to the
value of the Participant's Accounts determined as of the last day of
the month in which the Participant's death occurred.
(b) If the Participant died after beginning to receive installment
payments under Sec. 5.1 following Retirement, the Beneficiary or
Beneficiaries shall receive the remaining installment payments at
the same times as the Participant would have received them if he or
she had survived.
(c) If the Participant died before beginning to receive installment
payments from an Account but had elected an installment payment
method for such Account pursuant to Sec. 5.1(a), the Beneficiary or
Beneficiaries shall receive installments according to that method,
except that the installment payments shall commence within 90 days
after the last day of the month in which the Participant's death
occurred.
SEC. 5.5 BENEFICIARY DESIGNATION. Each Participant shall have the
right, at any time, to designate any person or persons as Beneficiary or
Beneficiaries to whom payments under this Plan shall be made in the event of the
Participant's death prior to complete distribution of the amount credited to the
Participant's Accounts. Each Participant shall have the right to change his or
her Beneficiary designation at any time. Each Beneficiary designation shall
become effective only when filed in writing with the Company during the
Participant's life on a form prescribed by or approved by the Company. The
rights of each Beneficiary shall be subject to the terms and conditions
specified on the designation
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form to the extent consistent with the terms of the Plan. If a Participant fails
to designate a Beneficiary as provided above, or if all designated Beneficiaries
predecease the Participant, then the Beneficiary shall be the Participant's
estate.
SEC. 5.6 DISTRIBUTIONS FOR SEVERE FINANCIAL HARDSHIP.
Notwithstanding the foregoing sections of this Article V, the Company in its
sole discretion may approve a request by a Participant for a withdrawal from the
Participant's Accounts due to an unforeseeable emergency. An "unforeseeable
emergency" is an unanticipated emergency that is caused by an event beyond the
control of the Participant and that would result in severe financial hardship to
the Participant if an early withdrawal is not permitted. Any such early
withdrawal approved by the Company may not exceed the amount reasonably
necessary to meet the emergency. Upon a withdrawal under this section, deferrals
by the Participant will be suspended as provided in Sec. 4.1(g)(1). Only one
hardship withdrawal under this section will be allowed during any Plan Year.
SEC. 5.7 PAYMENT OF SMALL BENEFITS. Notwithstanding the foregoing
provisions of this Article V, if the total balance of the Participant's Accounts
upon his or her Retirement or other Termination of Employment is less than
$10,000, the Company will pay the entire balance in a single lump sum on a date
determined by the Company as soon as administratively feasible following the
Participant's Retirement or other Termination of Employment.
SEC. 5.8 MODIFICATION OF ELECTIONS FOR TAX CONSIDERATIONS.
Notwithstanding anything to the contrary in the foregoing sections of this
Article V or in any election filed by a Participant:
(a) If the Company determines, based on advice of legal counsel or a
final determination by the Internal Revenue Service or a court of
competent jurisdiction, that a Participant or Beneficiary may be
held to be in constructive receipt of benefits under this Plan and
required to recognize such benefit immediately or retroactively for
income tax purposes, the Company may in its sole discretion take
either of the following actions:
(1) Distribute the entire affected benefit in a single lump sum as
soon as administratively feasible.
(2) Take written action modifying the Participant's election
and/or the terms of the Plan (retroactively, if necessary) in
a manner that will eliminate the allegation of constructive
receipt while at the same time carrying out the Participant's
original intent to the extent possible.
(b) The Company may postpone any payment to be made to a Participant or
Beneficiary until a subsequent fiscal year of the Company to the
extent the Company determines to be necessary in order to avoid the
loss of an income tax deduction under Code Section 162(m).
SEC. 5.9 WITHHOLDING AND TAXES. The benefits payable under this Plan
shall be subject to the deduction of any federal, state, or local income taxes
or other taxes which are required to be withheld from such payments by
applicable laws and regulations. Any Social Security (FICA) taxes which must be
withheld prior to the distribution of benefits to the Participant shall be
withheld from the amounts deferred, or from the Participant's other
compensation, as determined by the Company. The Company provides no assurances
or guarantees regarding the tax treatment of amounts deferred or payments made
under this Plan. Each Participant is solely responsible for any applicable
income, excise and other taxes, penalties or interest (including any excise tax
under Code Section 4999).
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<PAGE> 15
SEC. 5.10 DISTRIBUTIONS FOLLOWING CHANGE IN CONTROL. Notwithstanding
any provision of the Plan to the contrary, if (i) a Change in Control occurs,
and (ii) at any time on or after the date the Change in Control occurs, the debt
of the Company (or the Company's ultimate parent in the event the Company has
become a subsidiary of another entity) is not or ceases to be of investment
grade, then the entire value of each Participant's Accounts (including any
Participant who has previously had a Termination of Employment but whose
Accounts have not yet been completely distributed) shall be distributed to the
Participant in a lump sum not later than 10 calendar days following the date the
requirements of both clause (i) and clause (ii) of this sentence have been
satisfied.
(a) For purposes of this section, "Change in Control" means the
occurrence of any of the following events:
(1) A majority of the directors of the Company are persons other
than persons (i) for whose election proxies have been
solicited by the Board or (ii) who are then serving as
directors appointed by the Board to fill vacancies on the
Board caused by death or resignation (but not by removal) or
to fill newly created directorships.
(2) After the Effective Date, beneficial ownership (as determined
by Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (or any successor thereto)) of more than 20% of all
outstanding voting stock of the Company is acquired in one or
more transactions by any person or group of persons acting in
concert (other than the Company).
(3) The stockholders of the Company approve a definitive agreement
or plan to accomplish any of the following transactions:
(A) Merge or consolidate the Company with or into another
corporation (other than (i) a merger or consolidation
with a corporation controlling the Company or controlled
by the Company within the meaning of Code Section 368(c),
or (ii) a merger in which the Company is the surviving
corporation and either (I) no outstanding voting stock of
the Company (other than fractional shares) held by
stockholders immediately prior to the merger is converted
into cash, securities or other property, or (II) all
holders of outstanding voting stock of the Company (other
than fractional shares) immediately prior to the merger
have substantially the same proportionate ownership of
the voting stock of the Company or its parent corporation
immediately after the merger).
(B) Exchange, pursuant to a statutory exchange of shares of
voting stock of the Company held by stockholders of the
Company immediately prior to the exchange, shares of one
or more classes or series of voting stock of the Company
for shares of another corporation.
(C) Sell or otherwise dispose of all or substantially all of
the assets of the Company (in one transaction or a series
of transactions).
(D) Liquidate or dissolve the Company.
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<PAGE> 16
(b) For purposes of this section, an entity's debt will cease to be of
"investment grade" on the date the entity is assigned a credit
rating that is less than investment grade by either Moody's
Investors Service (as of the Effective Date, less than BBB minus) or
Standard & Poor's Ratings Services (as of the Effective Date, less
than Baa minus). However, if the applicable entity does not have a
rating with either of said services, the entity's debt will be
treated as being of investment grade if its debt to book value
capitalization ratio is less than 45%.
ARTICLE VI
ADMINISTRATION
SEC. 6.1 ADMINISTRATION BY THE COMPANY. The Company shall administer
the Plan, shall establish, adopt, or revise such rules and regulations as it may
deem necessary or advisable for the administration of the Plan, and shall have
discretionary authority to interpret the provisions of the Plan. The
interpretations of the Company shall be conclusive on all parties.
SEC. 6.2 CLAIMS PROCEDURE. A Participant or Beneficiary may make a
claim for Plan benefits by filing a written request with the Company. The claim
shall be determined by the Company within 90 days after the receipt of the
written claim (unless the Company extends the period for up to an additional 90
days).
(a) Notice of the Company's decision shall be communicated to the
claimant in writing. If the claim is denied, the notice shall
include the specific reasons for the denial (including reference to
pertinent Plan provisions), a description of any additional material
or information necessary for the Company to reconsider the claim,
the reasons for any of such additional material or information, and
an explanation of the review procedure.
(b) The claimant or a duly authorized representative may, within 60 days
after receiving such written notice, request in writing that the
Company review its decision. The Company may afford the claimant a
hearing and shall afford the claimant the opportunity to review all
pertinent documents and submit issues and comments orally or in
writing. The Company shall render a review decision in writing
within 60 days after receipt of request for review (unless the
Company extends the review period for up to an additional 60 days).
The review proceeding shall be conducted in accordance with the
rules and regulations adopted from time to time by the Company.
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<PAGE> 17
ARTICLE VII
AMENDMENT AND TERMINATION
SEC. 7.1 AMENDMENT. The Plan may be amended in whole or in part at
any time for any reason by action of the Board or the Compensation Committee of
the Board, or by action of any person to whom that authority has been delegated
by the Board. No amendment shall decrease the benefits under the Plan which have
accrued prior to the date such amendment is adopted. However, (i) the Company
may modify the investment index options under Sec. 4.3 to be used to determine
Investment Credits for a Participant's Accounts commencing as of a date
specified by the Company, but not sooner than 30 days after the date a notice of
the change is either mailed or hand-delivered to the Participant, and (ii) Sec.
5.10 may be amended in any manner and without notice, provided no Change in
Control has occurred on or before the date the amendment is adopted.
SEC. 7.2 TERMINATION OF PLAN. The Company, by action of the Board,
may terminate the Plan at any time. After such termination, no employee shall
become a Participant, and no further amounts shall be credited pursuant to Sec.
4.1 or Sec. 4.2 to Accounts of Participants. At the discretion of the Company,
the amounts credited to the Accounts of Participants may be either (i)
distributed to Participants within 90 days after the date of termination based
on values determined as of the last day of the month in which the termination
occurred, (ii) distributed in annual installments over the three years following
the date of termination, or (iii) distributed in accordance with Article V.
ARTICLE VIII
MISCELLANEOUS
SEC. 8.1 BENEFITS MAY NOT BE ASSIGNED OR ALIENATED. Neither a
Participant nor any Beneficiary shall have the right to sell, assign, transfer,
encumber or otherwise convey any right to receive any payment hereunder. No part
of the amounts payable hereunder shall be subject to seizure or sequestration
for the payment of any debts or judgments owed by a Participant or any other
person (other than the Participating Employers). However, the Company may offset
the obligations to the Participant or the Participant's Beneficiary hereunder by
any amounts the Participant owes to the Company or any other Participating
Employer, provided that such amounts owed by the Participant are not related in
any way to the benefits payable under this Plan and were not incurred in
anticipation of the benefits to which the Participant may become entitled
hereunder.
SEC. 8.2 INCOMPETENCY. Every person receiving or claiming benefits
under this Plan shall be conclusively presumed to be mentally competent until
the date on which the Company receives a written notice in a form and manner
acceptable to the Company that such person is incompetent and that a guardian,
conservator or other person legally vested with the care of his or her estate
has been appointed. In such event, the Company may direct payments of benefits
to such guardian, conservator or other person legally vested with the care of
the person's estate and any such payments so made shall be a complete discharge
of the Participating Employers to the extent so made.
SEC. 8.3 NOTICES. Notices required by this Plan to be given to the
Company or a Participant shall be in writing and shall be considered to have
been duly given or served if personally delivered, or sent by first class,
certified or registered mail.
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SEC. 8.4 SEVERABILITY. The invalidity or partial invalidity of any
portion of this Plan shall not invalidate the remainder thereof, and said
remainder shall remain in full force and effect.
SEC. 8.5 HEADINGS. Headings at the beginning of articles and
sections hereof are for convenience of reference, shall not be considered a part
of the text of the Plan, and shall not influence its construction.
SEC. 8.6 CAPITALIZED DEFINITIONS. Capitalized terms used in the Plan
shall have their meaning as defined in the Plan unless the context clearly
indicates to the contrary.
SEC. 8.7 GENDER. Any references to the masculine gender include the
feminine and vice versa.
SEC. 8.8 USE OF COMPOUNDS OF WORD "HERE". Use of the words "hereof",
"herein", "hereunder", or similar compounds of the word "here" shall mean and
refer to the entire Plan unless the context clearly indicates to the contrary.
SEC. 8.9 CONSTRUED AS A WHOLE. The provisions of the Plan shall be
construed as a whole in such manner as to carry out the provisions hereof and
shall not be construed separately without relation to the context.
Dated: January 12, 2001 TOM BROWN, INC.
By /s/ James D. Lightner
---------------------------------------
Its President
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