EXHIBIT 10.6
SUPPLEMENTAL EXECUTIVE
RETIREMENT AND LIFE PLAN
OF
AVON PRODUCTS, INC.
AMENDED AND RESTATED AS OF SEPTEMBER 1, 1994
TABLE OF CONTENTS
PAGE
SECTION 1
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 3
PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4
SUPPLEMENTAL RETIREMENT ALLOWANCES. . . . . . . . . . . . 9
SECTION 5
SURVIVOR RETIREMENT ALLOWANCES. . . . . . . . . . . . . . 12
SECTION 6
SUPPLEMENTAL LIFE ALLOWANCES. . . . . . . . . . . . . . . 15
SECTION 7
FORMS OF PAYMENT. . . . . . . . . . . . . . . . . . . . . 17
SECTION 8
ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . 18
SECTION 9
CERTAIN RIGHTS AND LIMITATIONS. . . . . . . . . . . . . . 19
SECTION 10
AMENDMENT AND TERMINATION OF THE PLAN . . . . . . . . . . 21
SECTION 11
CLAIM PROCEDURES. . . . . . . . . . . . . . . . . . . . . 25
<PAGE 1>
SECTION 1
INTRODUCTION
Avon Products, Inc. (the "Company") adopted the Supplemental
Executive Retirement Plan and Supplemental Life Plan of Avon Products,
Inc., originally effective as of January 1, 1982, and last amended and
restated such plan as of July 1, 1991. The Company now wishes to merge
the Supplemental Life Plan of Avon Products, Inc., which was established
effective January 1, 1990, into the Supplemental Executive Retirement
Plan and Supplemental Life Plan of Avon Products, Inc., effective as of
January 1, 1995 and to rename such plan the "Supplemental Executive
Retirement and Life Plan of Avon Products, Inc." (the "Plan"). The
terms and conditions of participation and benefits under the Plan are
set out in this document. The Plan provides additional retirement
income and death benefit protection to elected or appointed officers of
the Company and to selected other employees of the Company and its
Subsidiaries in recognition of their contribution to the Company in
carrying out senior management responsibilities.
The Company intends to maintain the Plan indefinitely and,
in order to afford Plan Participants and their Beneficiaries the
maximum security, has established a grantor trust (the "Trust")
to aid it in accumulating the amounts necessary to satisfy its
contractual liability to pay certain benefits under the terms of
the Plan. The Plan provides for the Company to pay all benefits
and administrative costs from its general assets to the extent
not paid by the Trust. The establishment of the Trust shall not
convey rights to the Participants which are greater than those of
the general creditors of the Company and shall not affect the
Company's continuing liability to pay Plan benefits and
administrative costs, except that the Company's liability shall
be offset by actual benefits and administrative cost payments, if
any, made by the Trust.
SECTION 2
DEFINITIONS
As used in this Plan, the masculine pronoun shall include
the feminine and the feminine pronoun shall include the masculine
unless otherwise specifically indicated. In addition, the
following words and phrases as used in this Plan shall have the
following meaning unless a different meaning is plainly required
by the context:
2.1 "Actuarial Equivalent" shall mean a benefit of
equivalent value, when computed on the basis of the same
mortality table and the rate or rates of interest and/or the
empirical tables which are being used to determine the
Participant's benefit under the Retirement Plan. However, in the
case of lump sum distributions of a Participant's Supplemental
Retirement Allowance, the conversion factor used to determine the
Actuarial Equivalent shall be the same as specified in Section
(e) of Appendix I of the Retirement Plan, except that (A) clauses
(i) and (ii) of such Section (e) shall be inapplicable, and (B)
the applicable interest rate with regard to any Participant shall
not be greater than the lowest rate in effect at any time on or
after the date the Participant attains age 60, if the sum of the
Participant's age and Creditable Service is at least 85 years.
<PAGE 2>
2.2 "Annual Benefit Offset" shall mean the aggregate annual
retirement allowance which would have been payable to a
Participant under the Retirement Plan and the Other Plans,
expressed in the form of (A) a joint and 50% survivor annuity with the
Participant's spouse as the survivor annuitant, if the Participant is
married on the date the Supplemental Retirement Allowance is payable
under Plan Section 4, or (B) a single life annuity if the Participant
is not married on that date, which form of benefit shall be the
Actuarial Equivalent of the aggregate benefits which would be payable
under such plans if they commenced on the same date as the Supplemental
Retirement Allowance.
2.3 "Average Final Compensation" shall mean the average annual
Compensation of a Participant during the three years of theParticipant's
last 10 years of Creditable Service in which the Participant's
Compensation was highest. If a Participant has less than three years
of Creditable Service, Average Final Compensation shall be computed over
all such years.
2.4 "Beneficiary" shall mean the person or persons designated by
aParticipant as beneficiary in a time and manner determined by the
Retirement Board. If the Participant fails to designate a beneficiary
or if the beneficiary predeceases the Participant, the Participant's
spouse shall be the beneficiary, or if no spouse survives the
Participant, the Participant's estate shall be the beneficiary. A
Participant may change hisdesignated beneficiary at the time and in the
manner determined by the Retirement Board.
2.5 "Board of Directors" shall mean the Board of Directors
of Avon Products, Inc.
2.6 "Change of Control" shall mean:
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of voting securities
of the corporation where such acquisition causes such person to own
20% or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this
Subsection (a), the following acquisitions shall not be deemed to
result in a Change of Control: (i) any acquisition directly
from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction that complies with
clauses (i), (ii) and (iii) of Subsection (c) below; and
provided, further, that if any Person's beneficial ownership
of the Outstanding Company Voting Securities reaches or
exceeds 20% as a result of a transaction described in clause
(i) or (ii) above, and such Person subsequently acquires
beneficial ownership of additional voting securities of the
Company, such subsequent acquisition shall be treated as an
acquisition that causes such Person to own 20% or more of
the Outstanding Company Voting Securities; or
<PAGE 3>
(b) individuals who as of the date hereof, constitute
the Board of Directors (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was
approved by a vote of at least two-thirds of the directors
then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election
or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board of Directors; or
(c) the approval by the shareholders of the Company of
a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company ("Business Combination") or, if consummation of such
Business Combination is subject, at the time of such
approval by shareholders, to the consent of any government
or governmental agency, the obtaining of such consent
(either explicitly or implicitly by consummation);
excluding, however, such a Business Combination pursuant to
which (i) all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding
Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more
than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation that as a
result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Voting
Securities, (ii) no Person (excluding any employee benefit
plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least
a majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board of Directors at the time of
the execution of the initial agreement, or of the action of
the Board of Directors, providing for such Business
Combination; or
(d) approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
<PAGE 4>
Notwithstanding the foregoing, no Change of Control shall be
deemed to have occurred with respect to any individual by reason
of any actions or events in which such individual participates in
a capacity other than in his or her capacity as an officer or
employee of the Company (or as a director of the Company or a
Subsidiary, where applicable).
2.7 "Company" shall mean Avon Products, Inc.
2.8 "Compensation" shall mean the regular salary or wages
paid to an Active Participant or deferred for services rendered
to the Company or a Subsidiary during any year in which the
Participant accrues Creditable Service, including any deferrals
under a 401(k) plan or salary reduction under a 125 plan of the
Company or a Subsidiary, plus any bonus payable to an employee
(disregarding any election to defer the receipt thereof) under
the Management Incentive Plan and Variable Incentive Plan or any
similar or successor plan for services performed during the prior
year. Compensation shall not include special termination or
severance payments or benefits, whether characterized as such,
made pursuant to any employment agreement, separation agreement,
severance plan or policy or any similar arrangement, unless such
agreement, plan, policy or arrangement provides that the special
termination or severance payments or benefits are to be included
as Compensation under the Plan.
Notwithstanding the foregoing, with respect to any period of
absence (during which disability benefits are being paid to the
Participant under the Company's Short Term or Long Term
Disability Plan) which is included as Creditable Service, the
Participant's annual Compensation for purposes of the Plan during
such period of absence shall be deemed to be the greater of (i)
his Compensation in the last full calendar year of his employment
immediately preceding the beginning of such absence, or (ii) the
actual Compensation he received in the year the absence began.
2.9 "Compensation Committee" means the Compensation
Committee appointed by the Board of Directors.
2.10 "Creditable Service" shall mean:
(a) The total number of years and completed months of
service rendered by an Active Participant as an employee of
the Company or any Subsidiary;
(b) Periods of authorized leaves of absence from the
Company or a Subsidiary approved by the Retirement Board,
including but not limited to leaves required to be granted
pursuant to the Family and Medical Leave Act of 1993 and the
Uniformed Services Employment and Reemployment Rights Act,
and, notwithstanding any other provision of this Plan to the
contrary, any period of absence while disability benefits
are being paid to the Participant under the Company's Short
Term or Long Term Disability Plans;
<PAGE 5>
(c) Any prior Creditable Service under this Plan
rendered by an employee who was formerly a Participant and
who subsequently becomes a new Active Participant pursuant
to Plan Section 3.1 or 3.2;
(d) Service which is recognized for purposes of the
Plan by reason of any Outside Agreement. To the extent
Creditable Service is recognized under an Outside Agreement
for purposes of eligibility for the Supplemental Retirement
Allowance, it shall also be recognized for purposes of the
Supplemental Life Allowance unless otherwise specifically
provided in such Outside Agreement; and
(e) Solely for purposes of determining the time for
the commencement of benefits under the SERP, a Vested or
Frozen Participant shall continue to earn Creditable Service
during the period in which he is an employee of the Company
or a Subsidiary.
Subject to approval by the Compensation Committee, a
Participant may be granted additional years of Creditable Service
either for purposes of determining the amount of allowance under
the Plan or for purposes of satisfying the service requirements
necessary for benefits under the Plan, or both. Additional
service granted under a specific provision of the Plan or under
provisions of individual contracts with the Participant or under
any severance plan or policy of the Company covering the
Participant shall also be included in determining Creditable
Service, but only in accordance with the specific terms of such
provisions.
2.11 "Dependent Child" shall mean any unmarried child of the
Participant who has not attained age 21, or any unmarried child
of the Participant regardless of the child's age, if the child
becomes incapacitated prior to attaining age 19; provided,
however, that such incapacitated child shall cease to be a
Dependent Child at the later of the date the child attains age 21
or ceases to be incapacitated. The term child shall include a
child born of the Participant, a child legally adopted by the
Participant, and a stepchild of the Participant, in each instance
living with the Participant in a normal parent-child
relationship.
2.12 "Dependent Children's Allowance" shall mean the benefit
payable to the Dependent Children of certain Participants
pursuant to the SERP and as described in Plan Section 5.3.
2.13 "Nonforfeitable" shall refer only to the vested
unsecured contractual right of a Participant, his Surviving
Spouse and his Dependent Children, if any, to benefits under this
Plan. In no event, however, shall "Nonforfeitable" imply any
preferred claim on, or any beneficial ownership interest in, any
assets of the Company before those assets are paid to any
individual pursuant to the terms of the Plan. As provided in
Plan Section 9.5, certain events may result in the forfeiture
even of Nonforfeitable benefits.
2.14 "Normal Retirement Age" shall mean age 65.
<PAGE 6>
2.15 "Other Plans" shall mean the employer-provided portion
of any defined benefit pension plan sponsored by the Company
(other than the Retirement Plan) or any Subsidiary and of any
retirement or pension allowance (but not any form of severance or
special termination payment) set forth and payable pursuant to
any employment contract or any other agreement (other than an
individual deferred compensation contract under which elective
employee salary or bonus deferrals are made) between the
Participant and the Company or a Subsidiary.
The term "Other Plans" shall also include the employer-
provided portion of any other pension or retirement plans
sponsored by the predecessor employer of a Participant and of any
retirement or pension allowance (but not any form of severance or
special termination payment) set forth and payable pursuant to
any employment contract or any other agreement (other than an
individual deferred compensation contract under which elective
employee salary or bonus deferrals are made) between the
Participant and the predecessor employer of a Participant
providing for benefits attributable in whole or in part to
service which is recognized under the Plan as Creditable Service.
Notwithstanding the foregoing, the employer-provided portion
of the benefits paid or payable to or on behalf of a Participant
pursuant to Other Plans shall only include a proportionate share
of such benefits based on the ratio by which the portion of the
service recognized under the Other Plan which is recognized as
Creditable Service bears to the total service recognized under
the Other Plan.
2.16 "Outside Agreement" shall mean a written agreement
entered into between a duly authorized officer of the Company
with authority to act in the matter and a Participant which
recognizes any period of time prior to the commencement of such
Participant's employment with the Company as service for purposes
of certain retirement or other benefits or modifies any of the
benefits or provisions of the Plan.
2.17 "Participant" shall mean any Active Participant, Vested
Participant, Frozen Participant or Retired Participant.
(a) "Active Participant" shall mean an employee from
the time participation in the Plan begins pursuant to Plan
Section 3 until the earliest of the time:
(i) the Participant retires,
(ii) the Participant dies,
(iii) the Participant terminates employment with
the Company and its Subsidiaries, or
(iv) the Plan is terminated.
<PAGE 7>
In addition, if a Participant is placed on inactive employee
status, as defined by the Retirement Board from time to time
under uniform and nondiscriminatory rules, and, at the date
of such change in status, the Participant has attained age
62 or the sum of the Participant's age and years of
Creditable Service total at least 80 years, the Participant
will continue as an Active Participant in the Plan.
(b) "Retired Participant" shall mean a former employee
who has retired on or after meeting the requirements for a
Supplemental Retirement Allowance under Plan Section 4.1.
(c) "Vested Participant" shall mean an employee or
former employee of the Company or Subsidiary who ceased to
be an Active Participant, who has not become a Retired
Participant and who, immediately after ceasing to be an
Active Participant, has a Nonforfeitable right to benefits
under Plan Section 10.
2.18 "Plan" shall mean this Supplemental Executive
Retirement and Life Plan of Avon Products, Inc., as from time to
time amended.
2.19 "Pre-Retirement Spouse's Allowance" shall mean the
benefit payable to the Surviving Spouse of certain Participants,
pursuant to the SERP and as described in Plan Section 5.1.
2.20 "Post Retirement Spouse's Allowance" shall mean the
benefit payable to the Surviving Spouse of certain Participants
pursuant to the SERP and as described in Plan Section 5.2.
2.21 "Retirement Board" shall mean the person or persons
appointed to administer the Plan as provided in Plan Section 8.
2.22 "Retirement Plan" shall mean the Employees' Retirement
Plan of Avon Products, Inc., as amended from time to time.
2.23 "SERP" shall mean the portion of the Plan pursuant to
which Supplemental Retirement Allowances, Pre-Retirement Spouse's
Allowances, Post-Retirement Spouse's Allowances and Dependent
Children's Allowances are payable.
2.24 "SLIP" shall mean the portion of the Plan pursuant to
which Supplemental Life Allowances are payable.
2.25 "Subsidiary" shall mean any majority-owned subsidiary
of the Company.
2.26 "Supplemental Life Allowance" shall mean the benefit
referred to in Plan Section 6.
<PAGE 8>
2.27 "Supplemental Retirement Allowance" shall mean the
benefit referred to in Plan Section 4.
2.28 "Surviving Spouse" shall mean the spouse to whom the
Participant was married on the date the Participant's
Supplemental Retirement Allowance commenced under this Plan or on
the Participant's date of death, if earlier.
SECTION 3
PARTICIPATION
3.1 Commencement of SERP Participation.
(a) Each individual who was a Participant in the SERP
as of August 31, 1994, shall be a Participant in the SERP on
September 1, 1994. A listing of Participants in the SERP as
of January 1, 1995 is attached to the Plan as Appendix A,
which Appendix may thereafter be updated from time to time,
provided that all updates shall be attested by the
signatures of two members of the Retirement Board.
(b) All officers of the Company as of September 1,
1994, on the U.S. payroll at the level of Senior Vice
President or above who are covered by individual employment
agreements with the Company approved by the Board of
Directors are Active Participants in the SERP.
(c) The Compensation Committee shall have the
authority to include as Active Participants in the SERP such
other management or highly compensated employees of the
Company or a Subsidiary (within the meaning of Section
201(2) of the Employee Retirement Income Security Act of
1974, as amended) as it deems fit.
3.2 Commencement of SLIP Participation.
Any employee who is an Active Participant in the SERP shall
also be an Active Participant in the SLIP.
3.3 Termination of SERP Participation.
When an individual ceases to be an Active Participant (as
defined in Section 2.17(a) hereof), he shall cease to be a
Participant and shall have no rights to a Supplemental Retirement
Allowance unless he is a Vested Participant or a Retired
Participant.
<PAGE 9>
3.4 Termination of SLIP Participation.
(a) If an individual who first became a Participant
prior to January 1, 1990, ceases to be an Active
Participant, he shall continue to be a Participant in the
SLIP if he is eligible for a Supplemental Life Allowance in
accordance with the provisions of Plan Section 6.
(b) If an individual who first became a Participant on
or after January 1, 1990, ceases to be an Active
Participant, he shall cease to be a Participant in the SLIP
on the date he ceases to be an Active Participant.
SECTION 4
SUPPLEMENTAL RETIREMENT ALLOWANCES
4.1 Nonforfeitable Right to a Supplemental Retirement
Allowance.
(a) An Active Participant who attains Normal
Retirement Age shall have a Nonforfeitable right to benefits
under this Section 4, subject to the provisions of Plan
Section 9, and may retire and receive payment of a Normal
Retirement Allowance under the SERP. Payment of the Normal
Retirement Allowance shall commence not later than 30 days
after the later of the date the Participant actually retires
or attains age 65.
(b) An Active Participant who has attained age 55 and
has 15 or more years of Creditable Service, or whose
attained age plus his Creditable Service totals at least 85
years, shall have a Nonforfeitable right to benefits under
this Section 4 and may retire and apply for payment of an
Early Retirement Allowance under the SERP. Payment of the
Early Retirement Allowance shall commence on the first day
of the calendar month next following his date of retirement.
(c) An Active Participant who has attained age 58 and
completed 15 or more years of Creditable Service and who is
deemed to be suffering from a hardship, as determined in the
sole and unilateral discretion of the Retirement Board on a
case-by-case basis, shall have a Nonforfeitable right to
benefits under this Section 4 and may retire and apply for
payment of a Hardship Retirement Allowance. Payment of the
Hardship Retirement Allowance shall commence on the first
day of the month following the date the Participant's
application for retirement is approved by the Retirement
Board.
(d) Approval by the Retirement Board under this
Section 4 may be evidenced by the written consent of any two
members of such Board. In the event the Plan is amended or
terminated or in the event of a Change of Control of the
Company, Participants shall have the right to a Supplemental
Retirement Allowance pursuant to Plan Section 10.
<PAGE 10>
4.2 Amount of Normal Retirement Allowance.
(a) The annual Normal Retirement Allowance under the
SERP for Participants who have a Nonforfeitable right to
such an allowance pursuant to Plan Section 4.1(a) shall be
equal to:
(i) 2% of the Participant's Average Final
Compensation multiplied by the Participant's Creditable
Service up to 25 years; plus
(ii) 1% of the Participant's Average Final
Compensation multiplied by the Participant's Creditable
Service in excess of 25 years but not in excess of 35
years; less
(iii) the Annual Benefit Offset.
(b) Notwithstanding the provisions of Plan
Subsection 4.2(a), any Participant entitled to a benefit
pursuant to Plan Section 4.1(a) who (i) is or was an officer
of the Company as of January 1, 1995, at the level of Senior
Vice President or above, and covered by an individual
employment agreement with the Company which had been
approved by the Board of Directors or (ii) is or was a
senior executive designated by the Compensation Committee as
eligible to receive a minimum allowance, shall not receive
an annual Normal Retirement Allowance which, when added to
the Actuarial Equivalent of the benefit paid or payable to
such Participant under the Retirement Plan and Other Plans
(expressed as an annual benefit in the same form as the
benefit under Plan Section 4.2 is payable), is less than 50%
of the Participant's Average Final Compensation. Such
offset shall be calculated in a manner similar to that set
forth in the definition of Annual Benefit Offset.
4.3 Amount of Early Retirement Allowance.
(a) The annual Early Retirement Allowance under the SERP for
Participants who have a Nonforfeitable right to such an allowance
pursuant to Plan Section 4.1(b) shall be equal to the Normal
Retirement Allowance determined in accordance with Plan Subsection
4.2(a), based on the Participant's Average Final Compensation and
Creditable Service at the date of retirement; provided, however,
that if the Participant retires before the sum of suchParticipant's
age and Creditable Service is 85 years, the allowance shall be
calculated by determining the benefit without regard to the Annual
Benefit Offset, by reducing the benefit 3/12ths of 1% for each
month by which the date the allowance commences precedes the month
in which the Supplemental Retirement Allowance would have commenced
if the Participant retired at Normal Retirement Age and by
5/12ths of 1% for each such month in excess of 60 months and
by then applying the Annual Benefit Offset. The Early Retirement
Allowance payable to a Participant whose age and Creditable Service
total at least 85 years shall be equal to
the allowance determined in
<PAGE 11>
accordance with Plan Subsection
4.2(a) based on Average Final Compensation and Creditable
Service at the time of retirement without reduction for
commencement of payment prior to Normal Retirement Age;
provided, however, that if such allowance commences after
the first day of the calendar month following the month in
which the Participant retires, the allowance shall be
increased so that it is the Actuarial Equivalent of the
allowance payable as of the first day of the month following
the month in which the Participant retires.
(b) Notwithstanding the provisions of Plan Subsection
4.3(a) above, any Participant entitled to a benefit pursuant
to Plan Section 4.1(b) who has attained age 60 and completed
15 years of Creditable Service and who (i) is or was an
officer of the Company as of January 1, 1995, at the level
of Senior Vice President or above, and covered by an
individual employment agreement with the Company which had
been approved by the Board of Directors or (ii) is or was a
senior executive designated by the Compensation Committee as
eligible to receive a minimum allowance, shall not receive
an annual Early Retirement Allowance which, when added to
the Actuarial Equivalent of any retirement allowance paid or
payable to such Participant under the Retirement Plan and
any Other Plans (expressed as an annual benefit in the same
form as the benefit payable pursuant to this Plan Section
4.3) is less than 50% of the Participant's Average Final
Compensation, reduced by 4/12ths of 1% for each month by
which the Participant's date of retirement precedes Normal
Retirement Age; provided, however, that if such allowance
commences after the first day of the calendar month
following the month in which the Participant retires, the
allowance shall be increased so that it is the Actuarial
Equivalent of the allowance payable as of the first day of
the month following the month in which the Participant
retires. The offset described in the immediately preceding
sentence shall be calculated in a manner similar to that set
forth in the definition of the Annual Benefit Offset.
4.4 Amount of Hardship Retirement Allowance.
The annual Hardship Retirement Allowance under the SERP for
Participants who have a Nonforfeitable right to such an allowance
pursuant to Plan Section 4.1(c) or 4.1(d) shall be equal to the
Normal Retirement Allowance determined in Plan Subsection 4.2(a),
based on the Participant's Average Final Compensation and
Creditable Service at the date of retirement; provided, however,
such allowance shall in no event be less than the Early
Retirement Allowance to which such Participant would be entitled
upon retirement under Plan Subsection 4.3(b), if applicable.
4.5 Restoration of Retired Participants to Service.
Anything contained in this Plan to the contrary
notwithstanding, if a Participant who has received or is
receiving a Supplemental Retirement Allowance again becomes an
employee of the Company or a Subsidiary, any retirement allowance
payable under this Plan shall cease upon
<PAGE 12>
reemployment and such allowance shall commence to be paid when the
Participant again retires. On subsequent retirement, the Supplemental
Retirement Allowance payable to such Participant shall be based on
Compensation and Creditable Service before and after the period of prior
retirement, reduced by an amount which is the Actuarial Equivalent of
the benefits the Participant received prior to reemployment; provided,
however, that such benefit shall not be less than the benefit the
Participant was receiving during prior retirement.
4.6 Outside Agreements.
(a) To the extent an Outside Agreement provides for a
benefit in addition to (or on the terms and conditions
different from) any benefit otherwise payable under the
Plan, such benefit under such Outside Agreement shall be
deemed to be, and shall be, payable under this Plan.
(b) Nothing in Plan Subsection (a) above shall be
construed to limit any rights of any Participant under an
Outside Agreement, except that any benefits paid hereunder
pursuant to this Plan Section 4.6 shall be offset against
any amounts payable with respect to any substantially
similar obligations under the Outside Agreement so as to
avoid duplication of payment.
SECTION 5
SURVIVOR RETIREMENT ALLOWANCES
5.1 Pre-Retirement Spouse's Allowance.
(a) If, prior to receipt of a Supplemental Retirement
Allowance, a Participant dies while employed by the Company
or a Subsidiary and has at least 10 years of Creditable
Service, or has attained age 65, or dies while receiving
disability benefits under the Company's Short Term or Long
Term Disability Insurance Plans and after having completed
10 years of Creditable Service, or dies with Nonforfeitable
benefits under Plan Section 10, his Surviving Spouse shall
receive a Pre-Retirement Spouse's Allowance under the SERP
payable during the Surviving Spouse's remaining lifetime.
(b) Payment of the annual Pre-Retirement Spouse's
Allowance under the SERP shall commence as of the first day
of the calendar month following the month in which the
Participant died or would have attained age 55, whichever is
later. However, the Retirement Board may, under rules
uniformly applicable to all similarly situated, approve a
request made by a Surviving Spouse to commence payment on
the first day of any earlier calendar month after the
Participant's death ("early commencement date" hereafter).
<PAGE 13>
(c) If the Pre-Retirement Spouse's Allowance commences
as of the first day of the month following the month in
which the Participant died or would have attained age 55,
whichever is later, the Pre-Retirement Spouse's Allowance
shall be an annual allowance for the life of the spouse,
payable monthly, equal to the greater of:
(i) 20% of the Participant's annual rate of
Compensation at the time of his death or earlier
termination of employment, less the Actuarial
Equivalent of the amount of any spouse's allowance
(expressed as an annual amount payable for the life of
the spouse and commencing on the same date as the Pre-
Retirement Spouse's Allowance commences) paid or
payable on behalf of such Participant under the
Retirement Plan and any Other Plans, or
(ii) the allowance (based on the Participant's
Creditable Service as of his date of death) the
Surviving Spouse would have received if the Participant
had retired and begun to receive the Supplemental
Retirement Allowance in the form of a 100% joint and
survivor annuity on the date of death, or on the date
such Participant would have attained age 55, if later.
(d) If the Retirement Board approves an early
commencement date with respect to the Pre-Retirement
Spouse's Allowance under Plan Subsection (b) above, the Pre-
Retirement Spouse's Allowance shall be a monthly allowance
for the life of the Surviving Spouse and shall be equal to
the Pre-Retirement Spouse's Allowance the Surviving Spouse
would have received under Plan Subsection (c) above if the
Retirement Board had not approved the early commencement
date, reduced by 1/12th of 5% for each month by which the
date payments commence precedes the first day of the month
following the month in which the SERP Participant would have
attained age 55, provided that in no event shall such
reduced allowance be less than the Actuarial Equivalent of
the allowance otherwise payable under Plan Subsection (c)
above.
5.2 Post-Retirement Surviving Spouse's Allowance.
The Surviving Spouse of a Retired Participant who dies prior
to the commencement of a Supplemental Retirement Allowance will
receive a Post-Retirement Surviving Spouse's Allowance from the
Plan equal to 50% of the Supplemental Retirement Allowance the
Retired Participant would have been receiving if benefits had
commenced in the form provided for in Plan Section 7.1(b) on the
date of the Retired Participant's death. The Post-Retirement
Surviving Spouse's Allowance under the Plan shall begin on the
first day of the month following the Retired Participant's death
and shall be paid to the Surviving Spouse for such spouse's
remaining lifetime. The Surviving Spouse of a Retired
Participant who dies after the commencement of a Supplemental
Retirement Allowance under the SERP shall be entitled to receive
benefits from the SERP in accordance with the form of benefit
payable to the Retired Participant in accordance with the
provisions of Plan Section 7.
<PAGE 14>
5.3 Dependent Children's Allowance.
(a) Each Dependent Child, up to a maximum of four such
children, shall receive a Dependent Children's Allowance
from the SERP which is a yearly allowance equal to 10% of
the yearly amount of the spouse's allowance calculated under
Plan Section 5.1 or 5.2, whichever is applicable, at the
time of the Participant's death, plus 10% of the yearly
benefits which are payable to the Surviving Spouse under the
Retirement Plan and any Other Plan (based on the assumption
that benefits commence on the same date as benefits commence
hereunder).
(b) For purposes of Plan Subsection (a) above, if the
spouse predeceases the Participant, the allowance under Plan
Section 5.1 or 5.2 shall be determined as if the spouse had
not predeceased the Participant and as if yearly benefits
under the Retirement Plan and any Other Plan are payable to
such predeceased spouse and shall be based upon the spouse's
actuarially determined life expectancy as of the date of the
spouse's death.
(c) For purposes of Plan Subsection (a) above, in the
event that the Participant had no spouse, other than for the
reason that the spouse predeceased the Participant, the
allowance under Plan Section 5.1 or 5.2 shall be based upon
the assumption that the Participant had a spouse who was
five years younger than the Participant, that any yearly
benefits payable under the Retirement Plan and any Other
Plan are payable to such assumed spouse, and that the
spouse's allowance under Plan Section 5.1 or 5.2, whichever
is applicable, had commenced on the date of the
Participant's death.
(d) For purposes of Plan Subsection (a) above, in the
event the spouse of a Participant dies prior to commencement
of benefits under the Plan, the amount of the Dependent
Children's Allowance hereunder shall be determined on the
assumption that the spouse's allowance under Plan Section
5.1 or 5.2, whichever is applicable, had commenced on the
date of the spouse's death and that any yearly benefits
payable under the Retirement Plan and any Other Plan had
commenced on the date of the spouse's death.
(e) The Dependent Children's Allowance hereunder shall
commence on the day payment of the spouse's allowance
commences under the SERP, or the earliest date it could have
commenced had the spouse not predeceased the Participant, or
if the Participant had no spouse for any other reason, on
the earliest date it could have commenced had the
Participant had a spouse who was five years younger than the
Participant, and shall continue to be paid to each Dependent
Child until the earlier of the date such child ceases to be
a Dependent Child or dies.
(f) If there are more than four Dependent Children, the total
amount otherwise payable to four Dependent Children shall be
divided equally among all Dependent
<PAGE 15>
Children at the time such payment is made. When a child
ceases to be a Dependent Child or dies, the total allowance
then payable shall be reallocated among the remaining
Dependent Children to the extent applicable; provided,
however, that no Dependent Child shall be entitled to an
allowance in excess of the benefit set forth in Plan
Subsection (a) above.
5.4 Allowance to Spouse Not Reduced.
The amount of any allowance payable to a Surviving Spouse
under Plan Section 5.1 or 5.2 shall not be reduced due to the
payment of a benefit under the Plan to one or more Dependent
Children.
SECTION 6
SUPPLEMENTAL LIFE ALLOWANCES
6.1 Right to a Supplemental Life Allowance.
(a) A Participant becomes eligible for a Supplemental
Life Allowance payable to his Beneficiary if he dies:
(i) while an Active Participant who is either
employed by the Company or a Subsidiary or is receiving
a disability benefit under the Company's Short Term or
Long Term Disability Plans; or
(ii) while a Frozen Participant or a Retired
Participant, provided he became an Active Participant
in the SLIP prior to January 1, 1990;
(iii) while an employee, provided he became an
Active Participant in the SLIP prior to January 1,
1990, and was an Active Participant for at least five
(5) years;
(b) A Participant who became an Active Participant in
the SLIP prior to January 1, 1990, and is a Participant at
the time the Plan is terminated or modified or at the time
of a Change of Control will be entitled to a Supplemental
Life Allowance as provided in Plan Section 10.
(c) A Participant shall become Nonforfeitable in a
Supplemental Life Allowance only if he dies under one of the
circumstances described in Subsection (a) of this Section,
if he was an Active Participant in the Plan prior to January
1, 1990 and becomes Nonforfeitable in a Supplemental
Retirement Allowance or as provided in Section 10.
<PAGE 16>
6.2 Amount of Supplemental Life Allowance.
(a) If a Participant has a right to a Supplemental Life
Allowance as described above, the Beneficiary of such Participant
shall receive a Supplemental Life Allowance payable upon the death
of a Participant, provided that such Participant has not made the
election described in Plan Section 6.4 or 6.5.
(b) The amount of the Supplemental Life Allowance shall be as
established by the Compensation Committee upon theParticipant's
commencement of participation in the Plan, except that the
Compensation Committee reserves the right to increase or reduce the
amount of such allowance from time to time, subject to the
provisions of Plan Section 10. Notwithstanding the foregoing, if
an Active Participant first became a Participant in the Plan prior
to January 1, 1990, his level of coverage under the SLIP may not be
reduced after he has been an Active Participant for at least two
years for so long as he remains an Active Participant. Further, if
a Participant has a right to a Supplemental Life Allowance pursuant
to Plan Section 6.1(a)(ii) or (iii), his benefit under the slip
will continue at the same level as in effect on the date preceding
the date he ceased to be an Active Participant.
6.3 Notwithstanding the foregoing, if the Company obtains a
life insurance policy (or policies) on the life of a Participant
whether or not in connection with this Plan and the insurer is
not obligated to pay the policy's death benefit proceeds on the
grounds that the Participant committed suicide or any other
grounds based on actions or inactions on the part of the
Participant, then and in that event, the Company's obligation to
make payments of a Supplemental Life Allowance shall be
terminated. The Company shall, in its sole discretion, determine
what steps are necessary and take such action as it deems
reasonably appropriate to pursue and obtain payment of any death
benefit under said policy or policies. Whatever steps are deemed
appropriate by the Company to pursue this matter shall be
conclusive. In no event shall any Participant have any ownership
interest in such policy or policies.
6.4 Notwithstanding the foregoing, a SLIP Participant may
elect not to be covered by the Supplemental Life Allowance
benefit provided under this Plan Section 6.
6.5 Subject to the terms and conditions imposed by the
Retirement Board any Participant who is eligible for the
Supplemental Life Allowance during the time such Participant is a
Retired Participant, may elect, subject to the approval of the
Retirement Board, to forego the Supplemental Life Allowance
coverage provided under this Plan Section 6 in exchange for a
paid-up whole life insurance policy or policies (based on the
application of dividends to pay premiums) on such Retired
Participant's life in an amount to be determined by the
Retirement Board. In the case of any such election, the Company
will also pay cash to such Retired Participant in an amount
sufficient to enable such Participant to pay any federal, state,
and local income taxes (calculated at the highest applicable
marginal rates) resulting from the distribution of such policy or
policies and the corresponding cash payment.
<Page 17>
6.6 If (a) a Participant terminates employment prior to
becoming a Retired Participant or (b) the Company has obtained a
life insurance policy on the life of such Participant to assist
it in meeting its obligations under this Plan, and (c) such
policy provides that it may be assigned, then if the Company
elects, the Participant may purchase such policy from the Company
on such terms and conditions as shall be determined by the
Retirement Board; provided, however, that in no event shall the
Company receive less than the amount of cash it could have
received had it surrendered such policy to the insurer.
SECTION 7
FORMS OF PAYMENT
7.1 Automatic Form.
(a) Except as otherwise provided for married
Participants pursuant to Plan Subsection 7.1(b), or unless
an optional form of retirement allowance has been requested
by the Participant under Plan Section 7.2 and approved by
the Retirement Board, the annual Supplemental Retirement
Allowance shall be payable in monthly installments for the
life of the Participant only, ending with the last monthly
payment during the month of the Participant's death.
(b) Unless an optional form of retirement allowance
has been requested by the Participant under Plan Section 7.2
and has been approved by the Retirement Board, the automatic
form of payment of a Supplemental Retirement Allowance to a
Participant who is married at the date the retirement
allowance begins shall be a joint and survivor benefit
payable to the Participant in the amount determined pursuant
to the applicable Subsection of Plan Section 4 payable
during the lifetime of the Participant with the provision
that after the Participant's death an annual Supplemental
Retirement Allowance shall be payable to the Surviving
Spouse of the Participant equal to one-half the Supplemental
Annual Retirement Allowance payable during the Participant's
life.
(c) Notwithstanding anything contained in Subsections
(a) and (b) of this Plan Section 7.1 to the contrary, if the
Actuarial Equivalent present value of any Supplemental
Retirement Allowance payable to a Participant (including the
value of any benefit payable to his Surviving Spouse after
his death) does not exceed $10,000, or such greater amount
as the Retirement Board shall from time to time determine
under rules of uniform applicability, the Company may pay
the Participant or Beneficiary a single lump sum payment.
(d) Notwithstanding anything contained in the Plan to
the contrary, on and after a Change of Control, the normal
form of Supplemental Retirement Allowance shall be a single
lump sum payment in cash.
<PAGE 18>
7.2 Request for Optional Form.
(a) Any Participant (other than Participants who have
been cashed out by the Company pursuant to Plan Subsection
7.1(c) or 7.1(d)) may, by written notice received by a
member of the Retirement Board at least two months prior to
retirement or in the case of a Vested Participant, at least
two months prior to the due date of the first payment of the
Supplemental Retirement Allowance, request that the
allowance be converted into an optional form of retirement
allowance of Actuarial Equivalent value, in accordance with
any form of payment as may be permitted under the Retirement
Plan. Such request shall be subject to the approval of the
Retirement Board. For purposes of this Plan Section 7.2, an
eligible married Participant's retirement allowance prior to
conversion into an optional form shall include the value of
the benefit to be continued to the Surviving Spouse after
the Participant's death. In the event a lump sum optional
form of benefit is payable and such sum is not paid on the
date benefit payments are scheduled to commence, the lump
sum benefit shall be increased until the date paid by the
interest rate factors utilized in valuing such lump sum.
(b) A surviving spouse entitled to a Supplemental
Retirement Allowance pursuant to Plan Section 5.1 or 5.2
may, by written notice received by a member of the
Retirement Board within 60 days following the Participant's
date of death, or if later, within 30 days following the
surviving spouse's receipt of written notice from the
Company that he or she is entitled to a spouse's allowance
under the Plan, request that the allowance be converted into
a lump sum optional form of benefit of Actuarial Equivalent
value. Such request shall be subject to the approval of the
Retirement Board. In the event a lump sum optional form of
benefit is payable and such sum is not paid on the date
benefit payments are scheduled to commence, the lump sum
benefit shall be increased until the date paid by the
interest rate factors utilized in valuing such lump sum.
7.3 Effective Optional Forms.
The optional form of Supplemental Retirement Allowance
requested and approved under Plan Section 7.2 shall become
effective on the first day of the month for which the
Participant's allowance is payable. If the Participant dies, or
the designated Beneficiary dies before the first day of the month
for which the Participant's allowance is payable under a
contingent annuitant option, the approved option shall thereby be
revoked.
SECTION 8
ADMINISTRATION OF THE PLAN
8.1 Except as otherwise specifically provided in the Plan,
the Retirement Board shall be the administrator of the Plan. The
Retirement Board shall have full authority to determine all
<PAGE 19>
questions arising in connection with the Plan, including the
discretionary authority to interpret the Plan, to adopt
procedural rules and to employ and rely on such legal counsel,
actuaries, accountants and agents as it may deem advisable to
assist in the administration of the Plan. Decisions of the
Retirement Board shall be conclusive and binding on all persons.
The Retirement Board shall provide to the trustee of any Trust
established pursuant to Plan Section 1, such certification or
other documentation as may be required by the trustee in
connection with the payment of benefits to Participants.
8.2 After a Change in Control, the Retirement Board may be
changed by the Company only with the consent of a majority of the
Participants (excluding Beneficiaries).
SECTION 9
CERTAIN RIGHTS AND LIMITATIONS
9.1 The establishment of the Plan shall not be construed as
conferring any legal rights upon any employee or other person for
a continuation of employment, nor shall it interfere with the
rights of the Company or a Subsidiary to discharge any employee
and to treat such employee without regard to the effect which
such treatment might have upon such employee as a Participant of
the Plan.
9.2 If the Retirement Board shall find that a Participant
or other person entitled to a benefit is unable to care for his
affairs because of illness, accident or is a minor, the
Retirement Board may direct that any benefit payment due such
participant or other person, unless claim shall have been made
therefor by a duly appointed legal representative, be paid to the
spouse, a child, parent or other blood relative, or to a person
with whom the Participant or other person resides. Any such
payment so made shall be a complete discharge of the liabilities
of the Plan with respect to such Participant or such other
person.
9.3 Each Participant, before any benefit shall be payable
to or on behalf of such person under the Plan, shall file with a
member of the Retirement Board at least 30 days prior to the time
of retirement or in the case of a Vested Participant prior to the
earliest date the retirement allowance can commence, such
information, if any, as shall be required to establish such
person's rights and benefits under the Plan.
9.4 No benefit under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, garnishment, attachment, encumbrance or charge, and any
attempt so to do shall be void; nor shall any such benefit be in
any manner liable for or subject to the debts, contract
liabilities, engagements or torts of the person entitled to such
benefit.
9.5 The obligation of the Company to make or continue
payment of any benefits hereunder shall cease with respect to any
Participant who (a) at any time is convicted of a crime involving
<PAGE 20>
dishonesty or fraud relating to the Company (b) at the time, without the
Company's written consent knowingly uses or discloses any confidential
or proprietary information relating to theCompany or (c) within three
years following termination ofemployment, without the Company's written
consent, accepts employment with, or provides consulting services to,
a principal competitor of the Company.
9.6 Except to the extent a Participant has a Nonforfeitable right
to a benefit pursuant to Plan Section 10, if, after written notice by
the Company, the Participant declines retirement at the request of the
Company, or if the Participant's voluntary retirement (other than for
disability) prior to age 62 is not approved by the Company, the
Retirement Board shall have the right to cause forfeiture of any benefit
to or on account of the Participant under the Plan.
9.7 A Participant at the time participation commences shall supply
the Retirement Board with such evidence of good health and insurability,
including a physical examination, as the Retirement Board may from time
to time require to satisfy any insurance company in connection with
obtaining life insurance for benefits under Plan Section 6. A
Participant who fails to supply such evidence when required shall not be
entitled to such benefits under Plan Section 6.
9.8 All benefits payable under the Plan shall be payable by
the Company from its general assets. The Plan shall not be
funded by the Company. However, solely for its own convenience
the Company reserves the right to provide for payment of benefits
hereunder through a trust which may be irrevocable but the assets
of which shall be subject to the claims of the Company's general
creditors in the event of the Company's bankruptcy or insolvency,
as defined in the Trust established pursuant to Plan Section 1.
In no event shall the Company be required to segregate any amount
credited to any account, which shall be established merely as an
accounting convenience; no Participant, Beneficiary, Surviving
Spouse or Dependent Child shall have any rights whatsoever in any
specific assets of the Company or the Trust; no rights of any
Participant, Beneficiary, Surviving Spouse or Dependent Child,
hereunder shall be subject to participation, alienation, sale,
transfer, assignment, pledge, garnishment, attachment or
encumbrance nor to the debts, contracts, liabilities, engagements
or torts of any Participant, Beneficiary, Surviving Spouse or
Dependent Child.
9.9 When payments commence under the Plan, the Company
shall have the right to deduct from each payment made under the
Plan any required withholding taxes.
9.10 Notwithstanding any other provision of the Plan to the
contrary, the Company shall make payments hereunder before such
payments are otherwise due if it determines, based on a change in
the tax or revenue laws of the United States of America, a
published ruling or similar announcement issued by the Internal
Revenue Service, a regulation issued by the Secretary of the
Treasury or his delegate, a decision by a court of competent
jurisdiction involving a Participant or Beneficiary, or a closing
agreement made under Internal Revenue Code section 7121 that is
approved by the Internal Revenue Service and involves a
Participant or Beneficiary, that a Participant or Beneficiary has
<PAGE 21>
recognized or will recognize income for federal income tax purposes with
respect to amounts that are or will be payable to him under the Plans
before they are paid to him.
SECTION 10
AMENDMENT AND TERMINATION OF THE PLAN
10.1 Right to Amend.
The Board of Directors (or the Compensation Committee to the extent
it has been delegated authority) reserves the right at any time and from
time to time, and retroactively if deemed necessary r appropriate, to
amend or modify in whole or in part, any or all of the provisions of the
Plan pursuant to its normal procedures; provided that no such
modification or amendment shall adversely affect the rights and benefits
of Participants which had accrued or become Nonforfeitable under this
Plan prior to the date such amendment or modification is adopted or
becomes effective, whichever is later. For purposes of this Plan
Section 10, "accrued" benefits refers to the benefits to which a
Participant would be entitled, based on his Creditable Service and
Compensation as of the date the determination is made, assuming the
Participant had a Nonforfeitable right to benefits as of such date.
10.2 Right to Terminate.
The Board of Directors (or the Compensation Committee to the
extent it has been delegated authority) may terminate the Plan
for any reason at any time provided that such termination shall
not adversely affect the rights and benefits of Participants
which had accrued or become Nonforfeitable under the Plan prior
to the date termination is adopted or made effective, whichever
is later.
10.3 Effect of Plan Termination on Benefits.
(a) In the event the Plan is terminated, each
Participant, whether or not such Participant has met the age
or service requirements to be entitled to a benefit under
the SERP or under the Retirement Plan, shall have a
Nonforfeitable right to: (i) the Supplemental Retirement
Allowance described in Plan Section 4, which such
Participant had accrued through the date of the termination
of the Plan; and (ii) to the death benefits described in
Plan Section 5, based upon the Plan Section 4 benefits
accrued by the Participant through the date of Plan
termination.
(b) For purposes of Plan Section 4, such accruedbenefit shall
be computed in accordance with Plan Section 4.3 as though the date
of termination of the Plan were the Participant's date of
retirement, provided that (i) if the Participant is less than age
55, his minimum percentage benefit described in Plan Subsection
4.3(b) shall be determined upon the assumption that the Participant
<PAGE 22>
were 55, and such minimum benefit shall then be multiplied by
a fraction, the numerator of which is the Participant's
years of Creditable Service and the denominator of which is
his years of such Creditable Service projected to age 55,
and (ii) if the Participant terminates employment
involuntarily as described in Plan Section 10.5 before he
attains age 65 and before his age and Creditable Service
total 85 years and his Supplemental Retirement Allowance
commences on or after the date his age and Creditable
Service would have totaled 85 years if his employment with
the Company or a Subsidiary had continued, or it commences
on or after his attainment of age 65, his Supplemental
Retirement Allowance shall be computed without applying the
reduction for early commencement.
(c) The payment of the Supplemental Retirement Allowance
described in this Section shall commence at the time a Participant
(or the Participant's Surviving Spouse or Dependent Children)
meets, under the terms of the Plan at the time of its termination,
the requirements for payment of benefits whether or not employed by
the Company at that time. For this purpose, the Participant shall
be considered to accrue Creditable Service for purposes of
determining the Participant's eligibility for the receipt of a
Supplemental Retirement Allowance as if the Participant continued
in the service of the Company as an Active Participant in the Plan,
whether or not the Participant remains in the employ of the
Company). Notwithstanding the foregoing, the Company in its
discretion can pay a lump sum of Actuarial Equivalent value
of any benefits due to the Participant or his Surviving
Spouse or Dependent Children at any time following the
termination of the Plan.
(d) A Participant who participated in the SLIP prior
to January 1, 1990, shall have a right to the Supplemental
Life Allowance at the same level in effect at the time of
Plan termination. The Company shall fully satisfy all of
its obligations to the Participant with respect to such
Supplemental Life Allowance by immediately distributing or
causing to be distributed to such Participant a fully paid
whole life insurance policy or policies on the Participant's
life which, as of the date of distribution and thereafter
will provide, without application of dividends, at death a
death benefit at least equal to one-half of the amount of
the Supplemental Life Allowance. In the case of any such
distribution of a life insurance policy, the Company will
also pay enough cash to the Participant to enable the
Participant to pay any federal, state and local income taxes
(calculated at the highest applicable marginal rates)
resulting from the distribution of the policy and the
corresponding cash payment made pursuant to this sentence.
10.4 Effect of Plan Amendment on Benefits.
In the event the Plan is amended or modified in whole or in
part to reduce future accruals of benefits, Supplemental
Retirement Allowances or death benefits or to reduce or eliminate
Supplemental Life Allowances, the Participants affected by any
such amendment or modification shall be treated:
<PAGE 23>
(a) with respect to the Supplemental Retirement
Allowance or death benefits based thereon that accrued
through the date of such amendment or modification and were
affected by such amendment or modification as if the Plan
were terminated as of such date and their rights and
entitlement to these benefits shall be determined under Plan
Section 10.3; provided, however, that such Participants
shall be entitled to continue to accrue benefits after the
date of such amendment or modification under such modified
or amended terms of the Plan; and
(b) with respect to a Supplemental Life Allowance as
of the date of such amendment or modification as if the Plan
were terminated as of such date and their rights and
entitlement to these benefits shall be determined under Plan
Section 10.3(d); provided, however, that such Participants
shall be entitled to continue to accrue benefits after the
date of such amendment or modification under such modified
or amended terms of the Plan.
10.5 Effect of a Change of Control.
In the event of a Change of Control of the Company, then,
with respect to
(a) any person who has a right to a Supplemental Life
Allowance as described in Plan Section 6.1, whether retired,
terminated or still actively employed by the Company, and
(b) any person who is an Active Participant in the
SERP at the time of the Change of Control (or a former
officer who is eligible to be a Participant under Plan
Section 4.1(d)) who subsequently either ceases for any
reason, other than voluntary termination of employment as
defined in Plan Section 10.6 below, to be an Active
Participant or becomes eligible for Plan participation at a
reduced level,
then the Plan shall be deemed terminated at the date of the
Change of Control with respect to determining the Supplemental
Life Allowance for persons described in clause (a) above or the
date of termination of employment with respect to determining the
Supplemental Retirement Allowance and death benefits for persons
described in clause (b) above. Any such person's right and
entitlement to Supplemental Retirement Allowances and death
benefits based on the Supplemental Retirement Allowance accrued
through such date, and Supplemental Life Allowances (including
his or her right to an immediate distribution of a fully paid
whole life policy and income tax gross up) payable to
Participants who participated in the SLIP on January 1, 1990,
shall be determined under the provision of Plan Section 10.3;
provided, however that such Participants shall be entitled to
continue to accrue benefits after the date of the Change of
Control under such terms of the Plan if they are still eligible
to continue participation under the Plan.
<PAGE 24>
10.6 Voluntary Termination of Employment.
For purposes of Plan Section 10.5, a voluntary termination
of employment shall mean any termination initiated by the
Participant except a termination initiated after:
(a) any substantial adverse change in position,
duties, title or responsibilities, other than merely by
reason of the Company ceasing to be a publicly-traded
corporation;
(b) any material reduction in base salary or, unless
replaced by equivalent arrangements, any material reduction
in annual bonus opportunity or pension or welfare benefit
plan coverages;
(c) any relocation required by the Company to an
office or location more than 25 miles from the Participant's
current regular office or location; or
(d) any failure of the Company to obtain the agreement
of a successor entity to assume the obligations set forth
hereunder, provided that the successor has had actual notice
of the existence of this arrangement and an opportunity to
assume the Company's responsibilities hereunder during a
period of at least 10 business days after receipt of such
notice; provided that, in order for a particular event to be
treated as an exception to a "voluntary termination," a
Participant must assert such exception within 180 days after
actual knowledge of the events giving rise thereto by giving
the Company written notice thereof and an opportunity to
cure. Notwithstanding the foregoing, in the event that any
employment agreement between the Participant and the Company
or a Subsidiary in effect at the time of such termination
provides a definition of "constructive termination" or
termination for "good reason" or similar terminology, such
definition shall govern over the event described in this
Plan Section 10.6 to the extent that it provides addition
exceptions to the events which are considered a voluntary
termination.
10.7 Effect of Merger or Acquisition.
If any company now or hereafter becomes a Subsidiary of the
Company, the Board of Directors (or the Compensation Committee to
the extent it has been delegated authority) may include an
employee of such Subsidiary in the membership of the Plan upon
appropriate action by such company. In such event, or, as a
result of the merger or consolidation or as the result of
acquisition by the Company of all or part of the assets or
business of another company, the Board of Directors (or the
Compensation Committee to the extent it has been delegated
authority) shall determine to what extent, if any, benefits shall
be granted for previous service with such Subsidiary, or other
company.
<PAGE 25>
SECTION 11
CLAIM PROCEDURES
11.1 Every claim for benefits under the Plan shall be in
writing directed to a member of the Retirement Board.
11.2 Each claim filed shall be passed upon by the Retirement
Board within a reasonable time from its receipt. If a claim is
denied in whole or in part the claimant shall be given written
notice of the denial in language calculated to be understood by
the claimant, which notice shall:
(a) specify the reason or reasons for the denial;
(b) specify the Plan provisions giving rise to the
denial; and
(c) describe any further information or documentation
necessary for the claim to be honored, explain why such
documentation or information is necessary, and explain the
Plan's review procedure.
11.3 Upon written request of any claimant whose claim has
been denied in whole or in part, the Retirement Board shall make
a full and fair review of the claim and furnish the claimant with
a written decision concerning it.
IN WITNESS WHEREOF, the Company has caused this instrument
to be executed as of MARCH 17TH, 1995.
AVON PRODUCTS, INC.
By: /s/
Marcia L. Worthing
Title: Senior Vice President
Human Resources and
Corporate Affairs
ATTEST:
/s/
Ward M. Miller, Jr.
Secretary
[CORPORATE SEAL]