MATRIX BANCORP, INC.
Executive Deferred Compensation Plan
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Section 1 - Purpose
1.01 Purpose. Matrix Bancorp, Inc. and its subsidiaries ("Subsidiaries"),
together the Company ("Company"), by action of its Board of Directors,
hereby establishes the Matrix Bancorp, Inc. Executive Deferred
Compensation Plan ("Plan"). The Plan is intended to help the Company
attract and retain key employees and directors by allowing them to
defer a portion of their compensation.
The Plan is to be construed as a plan maintained to provide deferred
compensation to a "select group of management or highly compensated
employees" within the meaning of Section 201(2) of the Employee Retirement
Income Security Act of 1974 ("ERISA"), as amended from time to time. The
Plan is intended to be exempt from the participation, vesting, funding and
fiduciary requirements of Title I of ERISA, to the fullest extent
permitted under the law. The Plan shall at all times be "unfunded" within
the meaning of ERISA and the Internal Revenue Code of 1986, as amended
from time to time.
1.02 Gender and Number. Where the context permits, words in any gender shall
include any other gender, words in the singular shall include the plural,
and the plural shall include the singular.
Section 2 - Definitions. As used herein, the following terms shall have the
meaning indicated:
2.01 Account shall mean the account established to record the interest of a
Participant under the Plan. A Participant's Account shall consist of the
value of any Compensation amounts the Participant elects to defer, any
Matching Contributions made by the Company, and any income credited or
debited thereto.
2.02 Beneficiary shall mean the person or persons entitled to receive a
distribution under the Plan in the event of a Participant's death.
2.03 Board shall mean the Board of Directors of the Company.
2.04 Change of Control event shall mean any of the following (other than as a
result of a public offering of shares of the Company):
(a) Any transaction (which shall include a series of transactions
occurring within 60 days or occurring pursuant to a plan) that
has the result that shareholders of the Company immediately
before such transaction cease to own at least 51% of (x) the
voting stock of the Company or (y) any entity that results from
the participation of the Company in a reorganization,
consolidation, merger, liquidation or any other form of corporate
transaction;
(b) A merger, consolidation, reorganization, liquidation or
dissolution in which the Company does not survive;
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(c) A sale, lease, exchange or other disposition of all or substantially
all of the property and assets of the Company.
2.05 Code shall mean the Internal Revenue Code of 1986, as amended from time to
time, all successor laws thereto, and any regulations or guidance
promulgated thereunder. Where the Plan refers to a particular section of
the Code, the reference shall also apply to any successor to that section.
2.06 Compensation shall mean the actual cash remuneration paid to an Employee
or Director by the Employer in consideration of services rendered.
Compensation may include base salary, bonus, commission, incentive,
directors' fees, etc. Compensation may not include relocation allowances
or any reimbursement paid to Employee or Director in connection with his
employment or service.
2.07 Deferral Election shall mean an election made under Section 5.01.
2.08 Director shall mean a member of the Board or an advisory director of
the Board.
2.09 Disability shall mean the Total Disability of a Participant, as defined
in the Matrix Bancorp, Inc. Long Term Disability Insurance Plan.
2.10 Eligible Person shall mean (a) an Employee of the Employer earning annual
Compensation of at least $120,000, (b) a member of the Board of Directors,
including advisory directors, of the Company, or (c) such others selected
by the Board in its sole and absolute discretion, to make Compensation
Deferral Elections under the Plan pursuant to Section 5.01 (a) and (b).
However, an otherwise Eligible Person shall not be eligible to make such
Deferral Elections and any prior Deferral Elections shall become invalid
following any distribution of benefits under the Plan pursuant to Section
7.
2.11 Employee shall mean any person who is an employee of the Company or who
is an employee of any Subsidiary.
2.12 Employer shall mean Matrix Bancorp, Inc. or any Subsidiary to which the
Employee provides services in exchange for Compensation.
2.13 Entry Date shall mean January 1st and July 1st of any Plan Year.
2.14 Matching Contribution shall mean a contribution, as described in Section
5.03 which is determined annually by the Board.
2.15 Participant shall mean an Eligible Person who has filed a completed and
executed Deferral Election Agreement and Deferral Enrollment Agreement
with the Administrator and is participating in the Plan in accordance with
the provisions of Section 5.
2.16 Payout Date shall mean the date on which the Participant elected pursuant
to his completed and executed Enrollment Election Agreement, to commence
receiving
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deferred monies but in no event later than Termination. The date
the Participant elects for distribution shall be at least five (5) years
from the date of original deferral.
2.17 Penalty shall mean twenty-five percent (25%) of the Participant's vested
balance in any Matching Contributions and any income credited or debited
thereto.
2.18 Plan Administrator shall mean the administrator described in Section
3.01.
2.19 Plan Year shall mean the calendar year (January I - December 31).
2.20 Retirement shall mean a Participant ceasing to be an Employee or Director
of the Company on or after attainment of any combination of age and Years
of Service equal to sixty-five (65).
2.21 Subsidiary shall mean any corporation in any unbroken chain of
corporations beginning with the Company, if, at the time of reference,
each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
2.22 Termination shall mean termination of employment, termination of a
Director's service on the Board, or Retirement other than by reason of
death.
2.23 Years of Service means the total number of full years in which a
Participant has been employed by the Company or has served on the Board.
For purposes of this definition, a year of service commences on the
Employee's date of hire or date Board membership begins and commences on
an anniversary of that hire date or Board membership. Any partial year of
employment or Board membership shall not be counted.
Section 3 - Administration of the Plan
3.01 Administration. This Plan shall be administered by the Board, which
may appoint a Plan Administrator.
The Plan Administrator shall have all powers necessary or appropriate to
carry out the provisions of the Plan. The Plan Administrator may, from
time to time, establish rules for the administration of the Plan and the
transaction of the Plan's business.
The Plan Administrator shall have the exclusive right to make any finding
of fact necessary or appropriate for any purpose under the Plan,
including, but not limited to, the determination of eligibility for and
amount of any benefit.
The Plan Administrator shall have the exclusive right to interpret the
terms and provisions of the Plan and to determine any and all questions
arising under the Plan or in connection with its administration,
including, without limitation, the right to remedy or resolve possible
ambiguities, inconsistencies, or omissions by general rule or particular
decision, all in its sole and absolute discretion.
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All findings of fact, determinations, interpretations and decisions of the
Plan Administrator shall be conclusive and binding upon all person(s)
having or claiming to have any interest or right under the Plan and shall
be given the maximum deference allowed by law.
3.02 Tax Withholding. The Company or the appropriate Employer may withhold from
any payment under this Plan any and all withholdings under all
jurisdictions including federal, state, local or foreign taxes required by
law to be withheld with respect to the payment and any sum the Company or
the appropriate Employer may reasonably estimate as necessary to cover any
taxes for which they may be liable and that may be assessed with regard to
the payment.
Section 4 - Eligibility
4.01 Participation shall be limited to a "select group of management of highly
compensated employees" within the meaning of ERISA Section 201(2).
4.02 The Plan Administrator may permit any person who first becomes an Eligible
Person on or after the first day of a Plan Year to enroll in the Plan
within 30 days following his eligibility. The Deferral Election shall be
effective only for Compensation earned after the 30-day period.
4.03 The Plan Administrator may permit an Eligible Person to enroll in the Plan
and commence participation in the Plan on any Entry Date during a Plan
Year.
4.04 Once a Participant makes a Deferral Election of Compensation, this
percentage cannot be increased but may be decreased during any Entry Date
during a Plan Year.
4.05 The Plan Administrator may permit any person, who through job transfer or
demotion no longer meets the "Eligible Person" definition of Section 2, to
cease his Deferral Election immediately. If a Participant no longer
satisfies the definition of "Eligible Person" or, in the Plan
Administrator's discretion, no longer satisfies the requirements of
Section 4.01, the Participant's Deferral Election automatically and
immediately terminates. At such time, the Participant will be deemed to
have reached a Payout Date as defined in Section 2.16 and will be eligible
for a benefit as explained in Section 7.
4.06 Participation in or eligibility for the Plan shall not constitute a
guarantee or contract of employment and shall not give any Employee the
right to be retained in the employment of the Company. Nor shall
participation in or eligibility for constitute any right to claim any
benefit under the terms of the Plan, unless this right or claim has
specifically vested under the terms of the Plan.
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Section 5 - Deferral Elections and Matching Contributions
5.01 Deferral Elections. A Participant may elect to defer a specified amount or
percentage of his Compensation. The maximum deferral allowed is one
hundred percent (100%), less any required withholding under Section 5.02,
of the Participant's Compensation.
A Participant who wishes to defer receipt of all or a portion of any
Compensation to be earned during the Plan Year shall provide the Plan
Administrator with a completed and executed Deferral Election Agreement
and Deferral Enrollment Agreement according to the rules established by
the Board in its sole and absolute discretion. A Participant's election to
defer any Compensation shall be received by the Plan Administrator no
later than the next Entry Date to which the election will take effect.
5.02 Rules Regarding Withholdings. No Participant shall be allowed to defer
Compensation to the extent the Company determines that such Compensation
should be withheld to pay the Participant's portion of taxes under the
Federal Insurance Contributions Act ("FICA"), and federal, state or local
income taxes, payments required to maintain coverage for the Participant
or the Participant's dependents under any welfare plan or program of the
Company, or any similar payment.
5.03 Matching Contributions. The Company, in its discretion, may make
matching contributions for each Participant who elects to defer a
portion of his Compensation.
(a) The amount of the matching contribution, if any, shall be determined
by the Board and may be tied to Company and/or individual
performance.
(b) The matching contribution may be made in cash, or, if approved by
the shareholders of the Company, in common stock of the Company.
(c) In no event will the matching contribution exceed $50,000 per
Participant on an annual basis.
(d) A Participant will be eligible to receive a matching contribution if
employed or if serving as a Director on December 31st of the year in
which the Matching Contribution relates.
5.04 Investment Equivalents. Except to the extent other arrangements are
established by the Plan Administrator, amounts in the Participant's
Account under the Plan shall be credited (or debited) with investment
gains (or losses) corresponding to investment equivalents established by
the Plan Administrator and selected by the Participant. The Participant's
election of the investment equivalent or equivalents upon which such
crediting and debiting will be based, including the right to change such
election with respect to his future contributions and his existing account
balance, shall be handled in the manner prescribed by the Plan
Administrator. Neither the Company, nor any Subsidiary, nor the Trustee of
the Rabbi Trust, shall be required to invest amounts corresponding to the
investment equivalents. The Participant may choose from the following
investment
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choices. The Plan Administrator shall have the right to change
the investment choices as long as a diversified selection is maintained:
Fund or Investment Name
Aim Limited Maturity Treasury
Aim Charter
Aim Value
Aim Constellation
Aim Aggressive Growth
Section 6 - Vesting; Employment Taxes
6.01 General. Each Participant shall be 100% vested in any Compensation
deferred. Except as provided in Section 6.03, each Participant shall have
a nonforfeitable right or vested interest in his Matching Contribution
based on the following vesting schedule:
Years of Service Vested Percentage
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1 20%
2 40%
3 60%
4 80%
5 100%
6.02 Forfeitures. If any amount of Matching Contribution is forfeited upon
Termination, such forfeiture shall be placed in a suspense account which
win used to offset future Company Matching Contributions. The suspense
account may continue to accrue earnings until such funds are used to
offset Company Matching Contributions.
6.03 Special. Notwithstanding Section 6.01 above, a Participant shall have a
nonforfeitable right or vested interest in his Account (including Matching
Contributions) upon the Participant's Retirement, death, or Disability.
6.04 FICA and Other Taxes. For each Plan Year during which a Participant vests
in a new portion of his Account, the Company shall remit the Participant's
share of FICA and other employment taxes, if any, that are attributable to
such vesting.
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Section 7 - Benefits Distribution
7.01 Benefit. A Participant is eligible for a benefit under the Plan when he
has reached a Payout Date (as defined in Section 2). The benefit will be
based on the total vested value of the Account of the Participant.
7.02 Benefit Upon Termination. Termination shall create a lump sum
distribution notwithstanding the Participant's Deferral Enrollment
Agreement.
7.03 Benefit Upon Disability. Disability shall create a lump sum
distribution notwithstanding the Participant's Deferral Enrollment
Agreement.
7.04 Benefit Upon Change of Control. A Change of Control, as defined in Section
2.04, shall create a lump sum distribution notwithstanding the
Participant's Deferral Enrollment Agreement. However, the Participant's
Deferral Enrollment Agreement shall remain in effect if the surviving
corporation assumes this Plan.
7.05 Benefit Amount. Any amount to be distributed shall be determined as of
the date coincident with or immediately preceding the Payout Date.
7.06 Time and Form. Distributions shall be made in the form, and as soon as
practicable, after the dates specified in the Participant's Deferral
Enrollment Agreement, unless distribution is due to Termination.
The Deferral Enrollment Agreement shall state:
(a) the Payout Date with respect to the Participant's Account, and
(b) the form of payment, whether in one lump sum or annual installments
over 5 or 10 years.
If distribution is due to Termination (other than Retirement), payment
shall be made within 60 days of the calendar year following the date of
Termination. If distribution is due to Termination caused by Retirement,
payment may be made in one lump sum or over a five (5) or ten (10) year
period in annual installments.
7.07 Rules Regarding Modification of Deferral Enrollment Agreement
("Modified Enrollment Agreement").
(a) The form and timing of payment may be modified by the Participant if
communicated to the Plan Administrator prior to the end of the Plan
Year preceding: (i) the scheduled lump sum payment or installment
payment, or (ii) Termination, provided however that such
modifications must be made at least one year prior to the scheduled
payment date.
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7.08 Participant's Death.
(a) If a Participant dies after payments of Benefits under the Plan have
commenced, payments shall continue to be made in the same form and
for the same duration as elected by the Participant. However, such
payments of Benefits shall be made to his Beneficiary. The
Beneficiary may elect to receive a lump sum payment of the Benefit
with the approval of the Plan Administrator or the Board of
Directors.
(b) If a Participant dies prior to the commencement of a payment of his
Benefits under the Plan, distributions of his Account shall be made
to his Beneficiary. The payment shall be made in one lump sum.
(c) Each Participant shall submit a written, signed, and dated list
of his designated Beneficiary to the Plan Administrator on a form
approved by the Plan Administrator ("Matrix Beneficiary
Designation Form"). The Participant may change the Beneficiary
at any time without the consent of any prior Beneficiary. If no
Beneficiary survives the Participant or if no valid Beneficiary
designation is in effect, the Participant's Beneficiary shall be
his estate. A married participant's designation of Beneficiary
other than his or her spouse as primary Beneficiary must be
consented to by the spouse.
7.09 Emergency Benefit. In the event that the Plan Administrator, on written
petition of the Participant, determines, in its sole discretion, that the
Participant has suffered an unforeseeable financial emergency, the Company
shall pay to the Participant, as soon as practicable following such
determination, an amount up to the balance of his deferrals as necessary
to meet the emergency (the "Emergency Benefit"). For purposes of the Plan,
an unforeseeable financial emergency is an unexpected need for cash
arising from an illness, casualty loss, sudden financial reversal, or
other such unforeseeable occurrence. The amount of the benefits otherwise
payable under the Plan shall thereafter be adjusted to reflect the payment
of the Emergency Benefit. Applications for Emergency Benefits and the
determinations thereon by the Plan Administrator shall be in writing, and
a Participant may be required to furnish written proof of the financial
emergency. Any Participant who receives an Emergency Benefit will be
precluded from electing to make new deferrals under the Plan until the
next enrollment period that occurs at least twelve (12) months following
payment of the Emergency Benefit. No payment shall be made under this
Section if the Plan Administrator determines that such payment would leave
any other amounts deferred hereunder to be deemed constructively received
under the Code.
7.10 Early Distribution. Notwithstanding a Participant's election under Section
5, a Participant may elect to receive his entire vested Account in a
single lump sum payment less an immediate Penalty as defined in Section
2.17. Such Participant will cease to become an Eligible Person for the
24-month period commencing on the Early Distribution.
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7.11 Small Benefit. In the event the Plan Administrator determines that the
vested balance of a Participant's Account is less than $25,000 at the time
of commencement of payment of his Benefit, or that the portion of the
balance of the Participant's Account payable to any Beneficiary is less
than $25,000 at the time of commencement of payment of a survivor Benefit
to such Beneficiary, the Plan Administrator may pay the Benefit in the
form of a lump sum payment, notwithstanding any provision of this Section
7 to the contrary. Such lump sum payment shall be equal to the vested
balance of the Participant's Account or the portion thereof payable to a
Beneficiary.
7.12 Tax Withholdings. To the extent required by law in effect at the time
payments of deferred amounts are made, the Company shall withhold from
payments made hereunder the taxes required to be withheld by the federal
or any state or local governments.
Section 8 - Rabbi Trust
8.01 Rabbi Trust. The Company shall maintain a single Rabbi Trust as part
of the Plan to implement the provisions of the Plan.
8.02 Contributions. The Employer shall make contributions to the Rabbi Trust
from time to time. Contributions shall be made equal to the amounts
deferred pursuant to each respective Participant's Deferral Election
Agreement.
8.03 Investments of the Rabbi Trust. The Company shall vest in itself or the
trustee of the Rabbi Trust, responsibility for the management and control
of the assets of the Rabbi Trust.
No Participant or Beneficiary shall have any interest whatsoever in any
specific asset of the Company, Subsidiaries or Rabbi Trust. To the extent
that any person acquires a right to receive payments under the Plan, such
right shall be no greater than the rights of any unsecured general
creditor of the appropriate Employer.
8.04 No Reversion. Except as specified below and in the Rabbi Trust agreement,
the Company and the Subsidiaries shall not have any right, title, or
interest in the Contributions made to (or earnings under) the Rabbi Trust.
No part of the Rabbi Trust shall revert to any Employer except upon
complete termination of the Plan after the satisfaction of all fixed and
contingent liabilities of the Plan.
Section 9 - Amendment and Termination of the Plan
9.01 Amendment and Termination. While the Company expects and intends to
continue the Plan, the Company must reserve and hereby reserves the right
to amend or to terminate the Plan in any way, at any time, for any reason;
except that no amendment shall reduce a Participant's Benefits to less
than the amount the Participant would have been entitled to receive if the
Participant had resigned from the employment or Board service of the
Company or its Subsidiaries on the effective date of amendment or
termination.
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In the event of a Change of Control solely with respect to one or more
Subsidiaries, such Subsidiaries may elect to stop participating in the
Plan by giving reasonable notice to the Board. The Board shall coordinate
in good faith with the Subsidiaries to effectively cause the Plan to
terminate solely with respect to the employees of that former Subsidiary.
9.02 Distribution Upon Termination of the Plan. If the Plan is terminated after
the payment of Benefits under the Plan have commenced, distributions shall
be made pursuant to the elections made on the participant election form.
However, the Board may, in its sole and absolute discretion, direct that
distribution be made in any form at any time selected by the Board,
regardless of whether payments of Benefits under the Plan have commenced.
Section 10 - General Provisions
10.01 Applicable Laws. The Plan shall be construed and administered under the
laws of the State of Colorado, without regard to conflict of laws
provisions, to the extent that such laws are not pre-empted by the laws of
the United States of America.
10.02 Benefits Payable from General Assets. Amounts payable hereunder shall be
paid exclusively from the general assets of the Employer, and no person
entitled to payment hereunder shall have any claim, right, security
interest, or other interest in any fund, trust, account, insurance
contract, or asset of the Employer which may be looked to for such
payment, other than the right of an unsecured general creditor against the
Employer, in respect of the Account of such Participant established
hereunder. There shall be no ability to obtain the general assets of the
Employer except in the case of bankruptcy or insolvency.
10.03 Cost of the Plan. All costs of the Plan, including the administration
thereof, shall be borne by the Company and no contributions from
Participants shall be required or permitted.
10.04 Severability. If any provision of the Plan is held illegal or invalid, the
illegality or invalidity shall not affect its remaining parts. The Plan
shall be construed and enforced as if it did not contain the illegal or
invalid provision.
10.05 No Assignment of Rights. No interest, right, or claim in or to any payment
hereunder shall be assignable, transferable, or subject to sale, mortgage,
pledge, hypothecation, commutation, anticipation, garnishment, attachment,
execution, or levy of any kind. The Company and Subsidiaries shall not
recognize any attempt to assign, transfer, sell, mortgage, pledge,
hypothecate, commute or anticipate the same, except to the extent required
by law.
10.06 Successors to Company. The Plan shall inure to the benefit of, and shall
be binding upon, the Company and the Participants and their successors or
assigns.
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10.07 Legal Fees to Enforce Rights After Change of Control. The Company is aware
that upon the occurrence of a Change of Control, the Board (which might
then be composed of new members) or a shareholder of the Company, or of
any successor corporation might then cause or attempt to cause the Company
or such successor to refuse to comply with its obligations under the Plan
and might cause or attempt to cause the Company to institute, or may
institute, litigation seeking to deny Participants the benefits intended
under the Plan.
In these circumstances, the purpose of the Plan could be frustrated.
Accordingly, if, following a Change of Control, it should appear to any
Participant that the Company has failed to comply with any of its
obligations under the Plan or any agreement thereunder or, if the Company
or any other person takes any action to declare the Plan void or
unenforceable or institutes any litigation or other legal action designed
to deny, diminish or to recover from any Participant the benefits intended
to be provided, then the Company irrevocably authorizes such Participant
to retain counsel of his or her choice at the expense of the Company to
represent such Participant in connection with the initiation or defense of
any litigation or other legal action, whether by or against the Company or
any director, officer, shareholder or other person affiliated with the
Company or any successor thereto in any jurisdiction.
Section 11 - Claims Procedures
11.01 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 Plan Administrator a written claim for a
determination with respect to the amounts distributable to such Claimant
from the Plan. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within 60 days after such
notice was received by the Claimant. The claim must state with
particularity the determination desired by the Claimant. All other claims
must be made within 180 days of the date on which the event that caused
the claim to arise occurred. The claim must state with particularity the
determination desired by the Claimant.
11.02 Notification of Decision. The Plan Administrator shall consider a
Claimant's claim within a reasonable time, and shall notify the Claimant
in writing:
(i) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(ii) that the Plan Administrator has reached a conclusion contrary, in
whole or in part, to the Claimant's requested determination, and
such notice must set forth in a manner calculated to be understood
by the Claimant:
(1) the specific reason(s) for the denial of the claim, or any
part of it;
(2) specific reference(s) to pertinent provisions of the Plan
upon which such denial was based;
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(3) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is necessary;
and
(4) an explanation of the claim review procedure set forth in
Section 11.03 below.
11.03 Review of a Denied Claim. Within 60 days after receiving a notice from the
Plan Administrator that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file with
the Plan Administrator a written request for a review of the denial of the
claim. Thereafter, but not later than 30 days after the review procedure
began, the Claimant (or the Claimant's duly authorized representative):
(i) may review pertinent documents;
(ii) may submit written comments or other documents; and/or
(iii) may request a hearing, which the Plan Administrator, in its sole
discretion, may grant.
11.04 Decision on Review. The Plan Administrator shall render its decision on
review promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the Plan
Administrator's decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be understood by
the Claimant, and it must contain:
(i) specific reasons for the decision;
(ii) specific reference(s) to the pertinent Plan provisions upon which
the decision was based; and
(iii) such other matters as the Plan Administrator deems relevant.
11.05 Legal Action. A Claimant's compliance with the foregoing provisions of
this Article 11 is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for Benefits under the
Plan.
