CROWN CORK & SEAL COMPANY, INC. Exhibit 10.d
SENIOR EXECUTIVE RETIREMENT PLAN
Amended and Restated June 30, 1999
INDEX
ARTICLE PAGE
I. DEFINITIONS........................................................ 1
II. PARTICIPATION.......................................................6
2.1 Eligibility Requirements...................................6
2.2 Participation Commencement Date............................6
III. RETIREMENT BENEFITS.................................................7
3.1 Normal Retirement Benefits.................................7
3.2 Early Retirement Benefit...................................8
3.3 Total Disability Benefit...................................8
3.4 Deferred Vested Benefit....................................9
3.5 Reduction of Payments to Group B, C and D Participants
on Account of Surviving Spouse Benefit Elections...........9
IV. VESTING............................................................10
4.1 Vesting - Retirement Benefits.............................10
4.2 Vesting - Death and Surviving Spouse Benefits.............10
4.3 Vesting - Elective Deferral Benefits......................10
V. DEATH BENEFITS.....................................................10
5.1 Group A Participants......................................10
5.2 Group B, Group C and Group D Participants.................11
VI. PAYMENT OF RETIREMENT, DEATH AND SURVIVOR BENEFITS.................12
6.1 Payment of Retirement Benefits............................12
6.2 Payment of Death and Surviving Spouse Benefits............12
6.3 Lump Sum Retirement Benefits..............................12
VII. ELECTIVE DEFERRALS.................................................13
7.1 Election to Defer.........................................13
7.2 Date of Filing Election...................................13
7.3 Commencement of Deferral..................................13
7.4 Reduction or Termination of Future Deferral...............14
VIII. INVESTMENT ALTERNATIVES FOR ELECTIVE DEFERRALS.....................14
8.1 Establishment of an Account...............................14
8.2 Investment of the Account.................................14
8.3 Function of Committee.....................................14
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IX. DISTRIBUTION OF PARTICIPANT ELECTIVE DEFERRAL ACCOUNTS.............15
9.1 Distributions.............................................15
9.2 Hardship Distributions....................................15
9.3 Administration of Hardship Distributions..................15
9.4 Termination of Employment.................................15
9.5 Participant's Death.......................................15
9.6 Form of Distribution......................................15
X. SHORT TERM DISABILITY BENEFIT......................................16
10.1 Eligibility for Short Term Disability Benefit.............16
10.2 Short Term Disability.....................................16
10.3 Amount of Short Term Disability Benefit...................16
XI. HEALTH AND RELATED BENEFITS........................................16
XII. CONTRIBUTIONS......................................................17
12.1 Contributions.............................................17
12.2 Contributions Immediately Before Change in Control
of the Company............................................17
12.3 General Assets............................................17
XIII. ADMINISTRATION.....................................................17
13.1 Administration by the Committee...........................17
13.2 Acceleration of Payments of Benefits......................17
XIV. AMENDMENT AND TERMINATION..........................................18
14.1 Amendment.................................................18
14.2 Termination of the Plan...................................18
XV. MISCELLANEOUS......................................................18
15.1 Title to Assets...........................................18
15.2 Non-alienation............................................18
15.3 Incapacity................................................18
15.4 No Employment Contract....................................19
15.5 Succession................................................19
15.6 Gender and Number.........................................19
15.7 Governing Law.............................................19
SCHEDULE A-1
SCHEDULE A-2
SCHEDULE B
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CROWN CORK & SEAL COMPANY, INC.
SENIOR EXECUTIVE RETIREMENT PLAN
This is the Crown Cork & Seal Company, Inc. Senior Executive
Retirement Plan, which is an amendment and restatement effective June 30, 1999
of the Crown Cork & Seal Company, Inc. Executive Deferred Compensation Plan,
originally effective November 8, 1991, and previously amended and restated
effective January 1, 1994, that Crown Cork & Seal Company, Inc. maintains to
provide retirement and death benefits to certain of its key management employees
and those of its affiliated companies, and to their beneficiaries and surviving
spouses.
ARTICLE I. DEFINITIONS.
The following words and phrases as used herein have the following
meanings unless a different meaning is plainly required by the context:
1.1. "Account" means the separate bookkeeping account established under Article
VIII.
1.2. "Agreement" means a Senior Executive Retirement Agreement, including
amendments thereto, between the Company and a Participant.
1.3. "Average Annual Compensation" means 12 times the average of the
Compensation payable to the Participant by the Employer during the 60
consecutive months in the last 120 consecutive months ending immediately before
termination of employment that produces the highest average.
1.4. "Board of Directors" means the Board of Directors of the Company.
1.5. "Change in Control" means if:
1.5.1. A "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company, is or becomes the "beneficial owner" (as defined
in Rule 13D-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities; or
1.5.2. During any period of two consecutive years (not including
any period prior to the original effective date of the Plan, November
8, 1991), individuals who at the beginning of such period constitute
the Board of Directors and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in Section 1.5.1, Section
1.5.3 or Section 1.5.4 hereof whose election by the Board of Directors
or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved), cease
for any reason to constitute a majority thereof; or
1.5.3. The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 75% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or
1.5.4. The stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
1.6. "Committee" means the Compensation Committee of the Board of Directors.
1.7. "Company" means Crown Cork & Seal Company, Inc.
1.8. "Compensation" means (a) base salary, including amounts deferred from
salary under Article VII, below, and under any tax-qualified employee pension
benefit plan maintained by the Employer, (b) incentive awards, including
portions of awards that are deferred for payment at a later date, and (c) salary
continuation payments on account of short-term disability under Article X,
below. Compensation shall not include (i) the compensatory portion of any
exercise of a stock option, (ii) the value of any stock appreciation right, or
(iii) any amounts previously deferred under (a) or (b) above, and included in
the Participant's pay by the Employer in a subsequent year.
1.9. "Crown Pension" means the annual amount or amounts payable to the
Participant under the basic pension benefit portion of the Salaried Pension Plan
or the basic pension benefit portion of any other tax-qualified employee defined
benefit pension plan maintained by the Employer, as a single life annuity
beginning at or after retirement age 65.
1.10. "Crown Thrift Amount" means the amount or amounts payable to the
Participant under any tax-qualified employee defined contribution pension plan
maintained by the Employer, and that are attributable to employer matching
contributions to such plan by the Company, any other Employer while it is a
member of the Company's controlled group or any acquired company. Crown Thrift
Amount shall not include amounts attributable to the Crown Cork & Seal Company,
Inc. Employee Stock Ownership Plan and employer profit sharing contributions.
The amount shall first be determined as of the Participant's date of termination
of employment, then converted to an annuity beginning at the Participant's
Normal Retirement Date under the Plan by (a) accumulating the balance to such
Normal Retirement Date at the interest rate payable on 30 year Treasury
securities at termination of employment and (b) dividing by the applicable
annuity factor in Schedule A-1.
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1.11. "Deferred Vested Benefit Date" means:
1.11.1. for a Group A Participant, the Early Retirement Date set
forth in the Agreement between the Company and the Group A
Participant; or
1.11.2. for a Group B Participant, a Group C Participant or a
Group D Participant, his Early Retirement Date.
1.12. "Early Retirement Date" means:
1.12.1. for a Group A Participant, the Early Retirement Date set
forth in the Agreement between the Company and the Group A
Participant; or
1.12.2. for a Group B Participant, a Group C Participant or a
Group D Participant, the later of age 62 or the first day of the month
after the completion of five years of participation in the Plan.
1.13. "Employer" means Crown Cork & Seal Company, Inc. and any affiliate
thereof.
1.14. "Group A Participant" means an eligible employee of the Company designated
as a Participant by the Committee before January 1, 1994. Each employee so
designated shall, as a condition of participation, enter into an Agreement with
the Company, setting forth, among other things, the amount of retirement and
death benefits to which he is entitled under the Plan. The names of all Group A
Participants are set forth on Schedule B attached hereto and made a part hereof.
1.15. "Group B Participant" means an eligible employee of the Employer who is an
executive vice president and designated as a Group B Participant by the
Committee, with the consent of the Board of Directors, after December 31, 1993.
Each employee so designated shall, as a condition of participation, enter into
an Agreement with the Company, setting forth, among other things, the amount of
retirement and death benefits to which he is entitled under the Plan. The names
of all Group B Participants are set forth on Schedule B attached hereto.
1.15.A "Group C Participant" means an eligible employee of the Employer who is
a senior vice president, or employee of a lower rank, and designated as a Group
C Participant by the Committee, with the consent of the Board of Directors,
after December 31, 1997. Each employee so designated shall, as a condition of
participation, enter into an Agreement with the Company, setting forth, among
other things, the amount of retirement and death benefits to which he is
entitled under the Plan. The names of all Group C Participants are set forth on
Schedule B attached hereto.
1.15.B "Group D Participant" means an eligible employee of the Employer who is a
vice president, or any employee of a lower rank, and designated as a Group D
Participant by the Committee, with the consent of the Board of Directors, after
December 31, 1997. Each employee so designated shall, as a condition of
participation, enter into an Agreement with the Company, setting forth, among
other things, the amount of retirement and death benefits to which he is
entitled under the Plan. The names of all Group D Participants are set forth on
Schedule B attached hereto.
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1.16. "Hardship" means, as determined by the Committee, a severe financial
hardship to the Participant resulting from a sudden and unexpected illness or
accident of the Participant or Participant's dependent (as defined in section
152 of the Internal Revenue Code of 1986, as amended), loss of the Participant's
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant.
1.17. "Normal Retirement Date" means:
1.17.1. for a Group A Participant, the Normal Retirement Date set
forth in the Agreement between the Company and the Group A
Participant; or
1.17.2. for a Group B Participant, a Group C Participant or a
Group D Participant, the later of age 65 or the first day of the month
after the completion of five years of participation in the Plan, or
(if earlier) the Normal Retirement Date set forth in the Agreement
between the Company and such Participant.
1.18. "Participant" means an eligible employee who has been designated as a
Group A Participant, a Group B Participant, a Group C Participant or a Group D
Participant.
1.19. "Plan" means the Crown Cork & Seal Company, Inc. Senior Executive
Retirement Plan as set forth in this document, the related Agreements, the
related trust agreement pursuant to which the Trust is maintained and any
amendments thereto.
1.20. "Primary Insurance Amount Offset" means the annual amount payable to the
Participant under the old age portion of the Social Security Act beginning at
age 65, without reduction for Medicare premiums, (a) determined by considering
in the calculation only compensation paid to the Participant by the Employer,
and (b) based on the provisions of the Social Security Act in effect at the date
of the Participant's termination of employment.
1.21. "Salaried Pension Plan" means the Crown Cork & Seal Company, Inc.
Salaried Pension Plan or any successor plan.
1.22. "Termination Following a Change in Control" means a termination of
employment upon or within the five year period beginning immediately following a
Change in Control either:
1.22.1. initiated by the Employer other than for "cause," which
shall mean misappropriation of funds, habitual insobriety, substance
abuse, conviction of a crime involving moral turpitude, willful and
material misrepresentation to the directors or officers of the
Employer or gross negligence in the performance of the Participant's
duties having a material adverse effect on the business, operations,
assets, properties or financial condition of the Employer; or
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1.22.2. initiated by the Participant following one or more of the
following occurrences:
1.22.2.1. an assignment to the Participant of any
duties inconsistent with, or a reduction or change by the
Employer in the nature or scope of the authority, duties or
responsibilities of the Participant from those assigned to
or held by the Participant immediately prior to the Change
in Control;
1.22.2.2. any removal of the Participant from the
officer positions held immediately prior to the Change in
Control, except in connection with promotions to positions
of greater responsibility and prestige;
1.22.2.3. any reduction by the Employer in the
Participant's Compensation as in effect immediately prior to
the Change in Control or as the same may be increased
thereafter;
1.22.2.4. revocation or any modification of any
employee benefit plan or any action taken pursuant to the
terms of any such plan, that materially reduces the
opportunity of the Participant to receive benefits under any
such plan;
1.22.2.5. a transfer or relocation of the site of
employment of the Participant immediately preceding the
Change in Control, without the Participant's express written
consent, to a location more than 20 miles distant therefrom,
or that is otherwise an unacceptable commuting distance from
the Participant's principal residence at the date of the
Change in Control; or
1.22.2.6. a requirement that the Participant undertake
business travel to an extent substantially greater than the
Participant's business travel obligations immediately prior
to the Change in Control.
1.23. "Total Disability" means the total permanent incapacity of a Participant,
as defined in the Salaried Pension Plan, irrespective of his number of years of
service under that plan.
1.24. "Total Disability Date" means, the first day of the month after the later
of the date a Participant incurs a Total Disability or the date he has received
all salary continuation payments on account of short term disability under
Article X, below; provided that he has not then reached his Normal Retirement
Date.
1.25. "Trust" means the grantor trust created by the trust agreement between the
Company and the Trustee, fixing the rights and liabilities with respect to
controlling and managing assets for the purposes of the Plan.
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1.26. "Trustee" means the corporation with fiduciary powers that is appointed by
the Board of Directors as trustee or successor trustee and named in the trust
agreement or any amendment thereto; provided that, on or after a Change in
Control, the appointment or removal of the Trustee or any successor trustee by
the Board of Directors shall be effective only if at least two-thirds of the
Participants in the Plan at such time give written consent to such action.
1.27. "Value" means:
1.27.1. the sum of a Participant's deferred compensation under
Section 7.1 and earnings, gains and losses thereon, less any
distributions to the Participant, valued as of the date of
distribution of his Account; or
1.27.2. if a Participant elects to receive a distribution of his
Account in cash, the amount of cash that the liquidation of the
investments of the Participant's Account, or any portion thereof,
yields as of the date of such liquidation.
1.28. "Years of Service" means (a) all years (and fractions thereof) of
employment of the Participant, whether or not continuous, with the Employer,
measured from the later of the Participant's date of hire or the date his
employer becomes an affiliate of the Company, unless otherwise stated in the
Participant's Agreement, (b) all periods during which the Participant receives
salary continuation payments on account of short-term disability under Article
X, below, and (c) for the purpose of calculating a Participant's early and
normal retirement benefits, all periods during which the Participant receives
Total Disability benefits under Section 3.3. Notwithstanding the foregoing, in
the case of an individual who becomes a Participant after July 31, 1997, no
service after the Participant reaches his Normal Retirement Date, as defined in
Section 1.17, shall be counted in determining his Normal Retirement Benefit
under Section 3.1. The foregoing provision shall not apply to an individual who
was a Participant as of July 31, 1997. The Committee may grant credit for
service with a previous employer for purposes of determining a Participant's
Years of Service.
ARTICLE II. PARTICIPATION.
2.1. Eligibility Requirements. Each employee who has been designated as a Group
A Participant, a Group B Participant, a Group C Participant or a Group D
Participant shall be eligible to participate in the Plan.
2.2 Participation Commencement Date. An employee shall be a
Participant effective as of the first day of the month following the
later of the month in which he has been designated as a Participant or
the month in which his Agreement is effective.
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ARTICLE III. RETIREMENT BENEFITS.
3.1. Normal Retirement Benefits.
3.1.1.Benefit Formula for Group A Participants, Group B
Participants and Certain Group C Participants. The formula for the
annual benefit of a Group A or a Group B Participant or an individual
who becomes a Group C Participant before November 1, 1998, payable
monthly beginning upon his retirement at or after his Normal
Retirement Date, shall be the product of A times B, minus the sum of C
and D and E, where:
A = Participant's Years of Service multiplied by 2.25% for the
first 20 years of such service and by 1.67% for the next 15
years of such service
B = Participant's Average Annual Compensation
C = Participant's Crown Pension
D = Participant's Crown Thrift Amount
E = Participant's Primary Insurance Amount Offset.
3.1.2. Benefit Formula for Certain Group C Participants and Group
D Participants. The formula for the annual benefit of an individual
who becomes a Group C Participant after October 31, 1998 or a Group D
Participant, payable monthly beginning upon his retirement at or after
his Normal Retirement Date, shall be the product of A times B, minus
the sum of C and D, where:
A = Participant's Years of Service multiplied by 2.00% for the
first 20 years of such service and by 1.45% for the next
15 years of such service
B = Participant's Average Annual Compensation
C = Participant's Crown Pension
D = Participant's Primary Insurance Amount Offset.
3.1.3. Additional Service Credit - All Participants. The
Committee, in its sole discretion, may grant additional benefit credit
to a Participant under Section 3.1.1 or Section 3.1.2 for Years of
Service in excess of 35 years, at a rate not to exceed 1% for each
such additional year.
3.1.4. Amount of Normal Retirement Benefit - All Participants.
The normal retirement benefit of a Participant shall be the greater of
the amount set forth in his Agreement or the amount determined under
Section 3.1.1 or Section 3.1.2, as applicable, and Section 3.1.3, if
applicable.
3.1.5. No Effect on Annual Benefit Formula for Changes in Group
Designation. If an individual first designated as a Group C
Participant after October 31, 1998 or as a Group D Participant is
subsequently designated as a Group A Participant or as a Group B
Participant, his annual benefit shall nonetheless continue to be
calculated under Section 3.1.2, rather than Section 3.1.1
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3.2. Early Retirement Benefit.
3.2.1. Amount of Early Retirement Benefit - Group A Participants.
The early retirement benefit of a Group A Participant who retires on
or after his Early Retirement Date but before his Normal Retirement
Date shall be the greater of (a) the amount set forth in his Agreement
or (b) the amount determined under Section 3.1.1, and, if applicable,
Section 3.1.3, reduced by either the rate applicable under the early
retirement reduction formula in the Salaried Pension Plan or as
otherwise stated in the Participant's Agreement, for the period by
which the beginning date of the payments precedes his Normal
Retirement Date.
3.2.2. Amount of Early Retirement Benefit - Group B, C and D
Participants. The early retirement benefit of a Group B Participant, a
Group C Participant or a Group D Participant who retires on or after
his Early Retirement Date but before his Normal Retirement Date shall
be the amount determined under Section 3.1.1 or Section 3.1.2, as
applicable, and Section 3.1.3, if applicable, reduced by the rate
applicable under the early retirement reduction formula in the
Salaried Pension Plan, for the period by which the beginning date of
the payments precedes his Normal Retirement Date.
3.3. Total Disability Benefit.
3.3.1. Initial Benefit. The initial total disability benefit of a
Participant who retires at a Total Disability Date shall be the amount
described below for him less the amount of Employer - paid long-term
disability benefits, based upon the greater of his rate of
Compensation for the calendar year in which his Total Disability
occurs or the average rate of Compensation for the three consecutive
calendar years ending immediately before the calendar year in which
his Total Disability occurs.
3.3.1.1. A Group A Participant or a Group B Participant,
100% of the amount calculated above;
3.3.1.2. A Group C Participant, 75% of the amount calculated
above; or
3.3.1.3. A Group D Participant, 50% of the amount calculated
above.
3.3.2. Annual Cost of Living Increases. A Participant's total
disability benefit determined under Section 3.3.1 shall be increased,
if at all, as of January 1 of each successive year that follows by at
least 12 months the calendar year in which the Participant's Total
Disability Date occurs. The increase shall be equal to the increase in
the Consumer Price Index for the Philadelphia Metropolitan Area,
published by the United States Department of Labor (or the comparable
successor standard), for the 12 months ending on the December 31
immediately preceding each such January 1.
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3.3.3. Cessation of Benefit Payments. Payment of a Participant's
total disability benefit shall cease as of the first to occur of the
Participant's:
3.3.3.1. cessation of Total Disability;
3.3.3.2. death; or
3.3.3.3. reaching his Normal Retirement Date.
Upon the cessation of payments under this Section 3.3.3 by reason of the
Participant's reaching his Normal Retirement Date, he shall be entitled to
receive his normal retirement benefit calculated for him under Section 3.1,
without further cost of living increases, subject in the case of a Group B
Participant, a Group C Participant or a Group D Participant, to any election of
a surviving spouse benefit under Section 5.2.2.3.
3.4. Deferred Vested Benefit.
3.4.1. Group A Participants. The vested retirement benefit, if
any, payable to a Group A Participant who terminates employment before
his Early Retirement Date or Total Disability Date shall be the
greater of (a) the amount set forth in his Agreement or (b) the amount
determined under Section 3.1.1, and shall be paid beginning on the
Participant's Deferred Vested Benefit Date. If payments are made
pursuant to Section 3.4.1(b), above, the amount shall be reduced by
either the rate applicable under the deferred vested benefit reduction
formula in the Salaried Pension Plan or as otherwise stated in the
Participant's Agreement, for the period by which the beginning date of
the payments precedes the Participant's Normal Retirement Date.
3.4.2. Group B, C and D Participants. The vested retirement
benefit, if any, payable to a Group B Participant, a Group C
Participant or a Group D Participant, who terminates employment before
his Early Retirement Date or Total Disability Date, shall be paid
beginning on or after the Participant's first possible Early
Retirement Date and by his Normal Retirement Date, as elected by the
Participant. The amount of the benefit shall be as determined under
Section 3.1.1, reduced, if payments begin before Normal Retirement
Date, by the rate applicable under the deferred vested benefit
reduction formula in the Salaried Pension Plan, for the period by
which the beginning date of the payments precedes the Participant's
Normal Retirement Date. A Participant's election to receive payments
hereunder before his Normal Retirement Date shall be made by December
31 of the calendar year before the calendar year in which payments are
to begin.
3.5. Reduction of Payments to Group B, C and D Participants on Account of
Surviving Spouse Benefit Elections. If an eligible Group B Participant elects
surviving spouse benefits pursuant to Section 5.2.2.3, his retirement benefit
under this Article III shall be reduced accordingly.
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ARTICLE IV. VESTING.
4.1. Vesting - Retirement Benefits. A Participant who, before his Early
Retirement Date, terminates employment for any one of the three following
conditions or reasons shall be 100% vested in his retirement benefit under the
Plan:
4.1.1. after five years of participation in the Plan, or
4.1.2. by reason of a Termination Following a Change in Control,
or
4.1.3. by reason of a Total Disability.
The vested deferred retirement benefit shall be payable either in accordance
with Section 3.4, beginning at the Participant's Deferred Vested Benefit Date,
if termination is after five years of participation or by reason of a
Termination Following a Change in Control, or in accordance with Section 3.3
beginning immediately if termination is by reason of Total Disability. A
Participant who, before his Early Retirement Date, terminates employment due to
"cause" (as defined in Section 1.22.1) or death shall not be entitled to a
retirement benefit under the Plan, irrespective of his number of years of
participation in the Plan.
4.2. Vesting - Death and Surviving Spouse Benefits. The beneficiary or surviving
spouse of a Participant who terminates employment due to death or who has
previously terminated employment with a vested right to a retirement benefit
under Section 4.1 or a right to a normal, early or disability benefit shall be
entitled to death or surviving spouse benefits only as provided in Articles V
and IX. No other death benefits shall be payable under the Plan.
4.3. Vesting - Elective Deferral Benefits. A Participant shall be 100% vested in
his elective deferral benefits under Article VII.
ARTICLE V. DEATH BENEFITS.
5.1. Group A Participants.
5.1.1. Lump Sum Death Benefits. The named beneficiary of a Group
A Participant who dies after meeting the requirements of Section 4.2
shall receive a death benefit equal to five times the Participant's
annual normal retirement benefit, as set forth in his Agreement, and
shall be subject to reduction or offset, if any, also as set forth in
his Agreement.
5.1.2. Surviving Spouse Benefits. The surviving spouse of a Group
A Participant who dies after meeting the requirements of Section 4.2
shall receive a survivor benefit equal to 50%, subject to reduction as
described below, of the Participant's normal retirement benefit, as
described in Section 3.1.2, payable in the form and manner described
in Section 6.2.2, for the life of the surviving spouse. The amount
payable hereunder shall be reduced proportionately by an amount
calculated to reflect the portion of the deceased Participant's
retirement benefit he elected to receive as a lump sum payment under
Section 6.3.1, so that if the Participant elected to receive his
entire retirement benefit as a lump sum, no amount shall be payable to
the surviving spouse under this Section 5.1.2. This provision shall
not adversely affect any right the surviving spouse may have as a
named beneficiary to receive a lump sum death benefit under Section
5.1.1 above.
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5.2. Group B, Group C and Group D Participants.
5.2.1. Lump Sum Death Benefits. The named beneficiary of a Group
B Participant, a Group C Participant or Group D Participant who dies
after meeting the requirements of Section 4.2 shall receive a death
benefit equal to five times his annual normal retirement benefit, as
determined under Section 3.1 accrued as of the date of his death, and
shall be subject to reduction or offset, if any, also as set forth in
his Agreement. Notwithstanding the foregoing, the minimum lump sum
death benefit for such a Participant shall be $200,000.
5.2.2. Surviving Spouse Benefits. The surviving spouse of a Group
B, Group C or Group D Participant who meeting the requirements of
Sections 4.1 and 4.2 shall receive a survivor benefit, if any, as
follows:
5.2.2.1. Death Before Termination of Employment or After
Termination of Employment but Before Retirement Payments Begin.
If the Group B Participant, Group C Participant or Group D
Participant dies (a) before termination of employment but after
meeting the requirements of Section 5.2.2, above, or (b) after
termination of employment and after meeting the requirements of
Section 5.2.2, above, but before payment of his retirement
benefits has begun, his surviving spouse shall be entitled to
receive as a survivor benefit the survivor portion of the benefit
the Participant would have received under a joint and 50% to
survivor benefit with his spouse, with the joint and 50% to
survivor benefit being the actuarial equivalent of his retirement
benefit payable immediately.
5.2.2.2. Death After Termination of Employment and After
Retirement Payments Begin. If the Group B Participant, Group C
Participant or Group D Participant dies after termination of
employment but (a) after meeting the requirements of Section
5.2.2, above and (b) after payment of his retirement benefits has
begun, his surviving spouse shall be entitled to receive any
survivor benefit elected by the Participant before his death, in
accordance with Section 5.2.2.3, below.
5.2.2.3. Election of Surviving Spouse Benefit. An eligible
Group B Participant, Group C Participant or Group D Participant
under Section 5.2.2.2 may elect, in accordance with procedures
established by the Committee, and subject to reduction as
described below if the Participant elects a partial lump sum
retirement benefit payment under Section 6.3.1, to have his
retirement benefit reduced and to have 100%, 75%, 50% or 25% of
such reduced amount, as elected by the Participant, paid to the
surviving spouse of the Participant for the life of the surviving
spouse. The amount payable in such event to the Participant and
his spouse shall be the actuarial equivalent of the amount
payable to the Participant as a single life annuity, using the
factors set forth in Schedule A-1 attached hereto. The election
hereunder shall be irrevocable once retirement payments have
begun. If the Participant elects a partial lump sum retirement
benefit payment under Section 6.3.1, the amount used hereunder in
determining the joint and survivor benefit of the Participant and
his spouse shall first be reduced proportionately by an amount
calculated to reflect the portion of the Participant's retirement
benefit he elected to receive as a lump sum payment under Section
6.3.1, so that if the Participant elects to receive his entire
retirement benefit as a lump sum, no amount shall be payable to
the surviving spouse under this Section 5.2.2.3. This provision
shall not adversely affect any right the surviving spouse may
have as a named beneficiary to receive a lump sum death benefit
under Section 5.2.1 above.
-11-
ARTICLE VI. PAYMENT OF RETIREMENT, DEATH AND SURVIVOR BENEFITS.
6.1. Payment of Retirement Benefits. Subject to Section 6.3, the retirement
benefit due to a Participant pursuant to the Plan shall be paid in cash in
monthly installments for the life of the Participant.
6.2. Payment of Death and Surviving Spouse Benefits.
6.2.1. The death benefits due a beneficiary shall be paid in cash in a
lump sum.
6.2.2. The survivor benefit due a surviving spouse shall be paid in
cash in monthly installments for the life of the surviving spouse.
6.3. Lump Sum Retirement Benefits.
6.3.1. Group A and B Participants - Retirement Prior to Change in
Control. A Group A Participant or a Group B Participant eligible to receive
a normal or early retirement benefit under Section 3.1 or Section 3.2 may
make a single election to receive any whole percentage between 1% and 100%
of the present value of his retirement benefit in cash in a lump sum in
lieu of all or a portion of the retirement benefit under Section 3.1 and
Section 3.2, and to receive the balance, if any, as determined and payable
under Section 3.1 or Section 3.2, as applicable. The lump sum shall be paid
as of the date retirement benefits are payable to the Participant under
Section 3.1 or Section 3.2, as applicable. In order to elect a partial or
full lump sum payment, the Participant shall file a written election with
the Committee at least 13 months in advance of the date monthly installment
payments of such benefit are scheduled to begin. The present value of such
benefit shall be determined by using the factors set forth on Schedule A-1
attached hereto. A Participant's election to receive a partial or full lump
sum payment shall reduce proportionately any surviving spouse benefit under
Section 5.1.2 or Section 5.2.2. If any portion of a lump sum payment
elected under this Section 6.3.1 is not eligible to be claimed as a
deduction by the Employer by reason of section 162(m) of the Code for the
year otherwise payable, the Employer shall first pay to the Participant any
monthly installment payments due him and so much of the lump sum payment as
is not subject to section 162(m) of the Code in such year and the Employer
shall pay the balance of the lump sum, without adjustment, to the
Participant on March 31 of the following year.
6.3.2. Groups A, B, C and D Participants - Change in Control. A Group
A, Group B, Group C or a Group D Participant (including a Group A or a
Group B Participant who has made a prior lump sum election under Section
6.3.1) who has a Termination Following a Change in Control shall
immediately receive 100% of the present value of his normal retirement
benefit in cash in a lump sum, unless he elects to receive monthly
installments of such retirement benefit by filing a written election to
receive installments with the Committee by the last day of the calendar
year immediately before the calendar year in which the Termination
Following a Change in Control occurs. The present value of such lump sum
benefit shall be determined by using the factors set forth on Schedule A-1
attached hereto.
6.3.3. Groups A, B, C and D Participants - Gross-Up Payments. Any
Group A, Group B, Group C or Group D Participant who receives a lump sum
payment under Section 6.3.2 on account of a Termination Following a Change
in Control shall, contemporaneously therewith, also receive an additional
lump sum payment from the Plan such that the Participant receives, on a
net, after-tax basis, the amount the Participant would have received if the
lump sum payment had not been subject to any federal, state or local tax
imposed on the lump sum payment, including, without limitation, any income,
wage, payroll, or excise taxes and any interest, penalties or other
additions to tax thereon (other than those related to actions taken by the
Participant or actions that the Participant fails to take). The
determination of the amount of the additional lump sum payment shall be
made by such one of the six largest national certified public accounting
firms as the Participant shall select. All fees of such accounting firm
shall be paid by the Employer.
-12-
ARTICLE VII. ELECTIVE DEFERRALS.
7.1. Election to Defer. A Participant may elect to defer receipt of up to 15% of
his Compensation for any calendar year by filing an election form with the
Committee, which form shall specify:
7.1.1. the amount or percentage of Compensation to be
deferred; and
7.1.2. the beneficiary of his Account in the event of the
Participant's death.
An election to defer Compensation pursuant to this Article VII shall remain in
effect until amended or revoked in accordance with Section 7.4.
7.2. Date of Filing Election. An election to defer a
Participant's Compensation shall be filed by the Participant with the
Committee before the date such Compensation first becomes currently
available to the Participant.
7.3. Commencement of Deferral. The deferral period for a
Participant's Compensation paid during a calendar year shall begin as
soon as administratively feasible after the filing of the
Participant's election to defer Compensation.
7.4. Reduction or Termination of Future Deferral.
7.4.1. A Participant may elect to reduce the amount of
Compensation that will be deferred in the future or may elect to
terminate the deferral election for the future by filing an
election with the Committee; the election shall specify the
amount of future Compensation, if any, that shall continue to be
deferred.
7.4.2. The reduction or termination of the deferral of
future Compensation shall be effective as of the first day of the
next calendar quarter following the receipt of the election by
the Committee.
ARTICLE VIII. INVESTMENT ALTERNATIVES FOR ELECTIVE DEFERRALS.
8.1. Establishment of an Account. The Committee shall establish an Account for
each Participant who elects deferrals under Article VII. Compensation deferred
into the Account shall be credited to such Account not later than 60 days after
the date such Compensation would otherwise have been paid to the Participant.
Earnings, gains and losses, if any, on the balance standing to the credit of the
Account shall be credited to the Account as provided in Section 8.2.
8.2. Investment of the Account. The Committee may cause each
Participant's Account to be invested in accordance with a written
investment request provided to the Committee by the Participant. A
Participant may only request that the Committee invest his Account in
any security listed on a national securities exchange and in shares of
regulated investment companies registered under the Investment Company
Act of 1940 and eligible for sale in Pennsylvania. Such requests shall
not be binding upon the Committee. A Participant may file an amended
investment request not more often than one time in any six month
calendar period. A Participant's Account shall be credited or debited
with all earnings, gains, losses and ordinary expenses incurred
through execution of the Committee's investment instructions. If the
Committee determines not to invest the Participant's Account, the
Account shall be assumed to be invested at the interest rate at which
Citibank, N.A. is lending to its most credit-worthy customers, less
2%; provided that in no event shall such rate exceed 8%.
8.3. Function of Committee. By deferring Compensation pursuant to
Article VII, each Participant agrees that the Company, Employer and
Committee are in no way responsible for the investment results of the
Participant's Account, whether or not the Account is invested in
accordance with the Participant's request.
-13-
ARTICLE IX. DISTRIBUTION OF PARTICIPANT ELECTIVE DEFERRAL ACCOUNT.
9.1. Distributions. A Participant's Account shall be distributed only in
accordance with Section 9.2, Section 9.4 or Section 9.5.
9.2. Hardship Distributions. A Participant may request that all
or a portion of the Value of his Account be distributed at any time
before termination of employment by submitting a written request to
the Committee, provided that the Participant has incurred a Hardship,
and the distribution is necessary to alleviate such Hardship. The
Committee shall deem a distribution to be necessary to alleviate a
Hardship if:
9.2.1. the distribution is not in excess of the amount of
the Participant's Hardship; and
9.2.2. the Hardship may not be relieved through
reimbursement by insurance or otherwise, by liquidation of the
Participant's assets (to the extent that such liquidation would
not itself cause severe financial hardship) or by cessation of
deferrals under the Plan.
9.3. Administration of Hardship Distributions. The Account
balance that is not distributed pursuant to Section 9.2 shall remain
in the Plan. Distributions to alleviate a Hardship shall be made as
soon as administratively feasible after the Committee has reviewed and
approved the request. Deferral of Compensation shall be suspended
effective with the beginning of the pay period following the date of
the Committee's approval of the request and may not be resumed until
the beginning of the next calendar year.
9.4. Termination of Employment. A Participant who has terminated
employment with the Employer (for any reason other than death,
including retirement or involuntary termination) shall receive a
distribution of the entire Value of his Account as soon as
administratively feasible following the Participant's written request
to the Committee.
9.5. Participant's Death. If the Participant dies while employed
by the Employer, the entire Value of the Participant's Account shall
be distributed to his beneficiary as soon as administratively feasible
following delivery of the beneficiary's written request to the
Committee, but in no event later than two years after the
Participant's death.
9.6. Form of Distribution. The Value of the Account of a
Participant shall be distributed to such Participant, or to his
beneficiary if distribution is on account of the Participant's death,
in cash less costs of distribution and applicable taxes.
-14-
ARTICLE X. SHORT TERM DISABILITY BENEFIT.
10.1. Eligibility for Short Term Disability Benefit. A Participant shall be
eligible for short term disability benefits under the Plan in lieu of any other
short term disability benefits that the Employer provides for its salaried
employees. To be eligible to receive short term disability benefits, the
Participant shall be required to have met the conditions of a short term
disability, as defined in Section 10.2.
10.2. Short Term Disability. For purposes of this Article X,
short term disability means the temporary incapacity of a Participant
that, as determined by the Committee in a uniformly-applied manner,
renders the Participant temporarily incapable of engaging in his usual
executive function and as a result the Participant is under the direct
care and treatment of a physician who certifies to such incapacity.
10.3. Amount of Short Term Disability Benefit. A Participant who
meets the conditions set forth in Section 10.2 shall receive a short
term disability benefit, payable monthly, for the following applicable
period:
10.3.1. Chief executive officer: an amount equal to one year
of base salary and incentive payments, at the rates for such
payments in effect for the calendar year in which disability
begins;
10.3.2. Executive vice president: an amount equal to six
months of base salary and incentive payments, at the rates for
such payments in effect for the calendar year in which disability
begins; and
10.3.3. Any other Participant: an amount equal to three
months of base salary and incentive payments, at the rates for
such payments in effect for the calendar year in which disability
begins;
provided that all payments under this Article X shall cease as of the earliest
of the Participant's cessation of short term disability, occurrence of Total
Disability, death or attainment of his first possible Early Retirement Date or
his Normal Retirement Date.
-15-
ARTICLE XI. HEALTH AND RELATED BENEFITS. A Participant who (a) has a Termination
Following a Change in Control, (b) retires or (c) becomes disabled, and the
surviving spouse of such a Participant, shall be entitled to receive health and
dental benefits until the date each reaches the age of entitlement for Medicare
benefits. The Employer shall pay the cost of such health and dental benefits and
such benefits shall be no less comprehensive than those in effect for senior
executives of the Company and their spouses immediately before (x) the Change in
Control, (y) the Participant's retirement, or (z) the Participant's disability,
as the case may be.
ARTICLE XII. CONTRIBUTIONS.
12.1. Contributions. In order to meet its obligation hereunder, the Employer
will contribute to the Trust the funds necessary to provide the benefits
hereunder or life insurance policies covering the lives of the Participants
or the funds necessary for the purchase of such policies.
12.2. Contributions Immediately Before Change in Control of the
Company. Immediately before a Change in Control of the Company, the
Company shall transfer to the Trust cash, marketable securities or
other property having a fair market value in an amount equal to the
sum of the amounts, determined by an actuary selected by the Company
and satisfactory to a majority of the Participants, using reasonable
assumptions, that will be sufficient to fund fully the Employer's
obligations to pay the full amount of all benefits to which the
Participants (and their beneficiaries and spouses) may become entitled
pursuant to the Plan.
12.3. General Assets. Notwithstanding Sections 12.1 and 12.2
above, however, the Employer's obligations hereunder shall constitute
general, unsecured obligations, payable solely out of its general
assets, and no Participant or other person shall have any right to
specific assets.
ARTICLE XIII. ADMINISTRATION
13.1. Administration by the Committee. The Plan shall be administered by the
Committee; provided, however, that any member of the Committee who is a
Participant in the Plan shall be precluded from voting on any matter relating
solely to his rights under the Plan. The Committee shall have the authority,
responsibility and discretion to interpret and construe the Plan and to decide
all questions arising thereunder, including, without limitation, questions of
eligibility for participation, eligibility for benefits and the time of the
distribution thereof, and shall have the authority to deviate from the literal
terms of the Plan to the extent the Committee shall determine to be necessary or
appropriate to operate the Plan in compliance with the provisions of applicable
law.
13.2. Acceleration of Payments of Benefits. Upon a Participant's
written request on the basis of a demonstrated financial hardship,
subject solely to the Committee's discretion, which shall be uniformly
applied, the Committee may accelerate the beginning date of payment of
benefits under Section 3.4, if it determines such action is in the
best interest of the Employer and the Participant.
-16-
ARTICLE XIV. AMENDMENT AND TERMINATION
14.1. Amendment. The Company reserves the right, by action of its Board of
Directors, to amend the Plan at any time, in any manner whatsoever, after
delivery of written notification to all Participants and to surviving spouses
and beneficiaries then entitled to benefits of its intention and the effective
date thereof; provided, however, that no such amendment shall operate to reduce
the benefit that any Participant who is participating at the time such amendment
is adopted would otherwise receive hereunder at retirement, or that his
surviving spouse or beneficiary would receive in the event of his death, and no
amendment shall operate to limit the Employer's obligations in the event of a
Change in Control of the Company.
14.2. Termination of the Plan. Continuance of the Plan is
completely voluntary, and is not assumed as a contractual obligation
of the Company or other Employer. The Company, and each other
Employer, having adopted the Plan, shall have the right, at any time,
prospectively to discontinue the Plan as to its eligible employees;
provided, however, that such termination shall not operate to reduce
the benefit that any Participant who is participating at the time such
amendment is adopted would otherwise receive hereunder at retirement,
or that his surviving spouse or beneficiary would receive in the event
of his death. Furthermore, the Company shall not have the right to
terminate the Plan as to existing Participants (or the surviving
spouses or beneficiaries of deceased Participants) upon or following a
Change in Control of the Company.
ARTICLE XV. MISCELLANEOUS
15.1. Title to Assets. Title to and beneficial ownership of any assets, whether
cash or investments, that the Employer may set aside or earmark to meet its
obligations hereunder, shall at all times remain in the Employer; provided that
legal title to any assets placed in the Trust shall be in the Trustee. No
Participant, surviving spouse or beneficiary shall under any circumstances
acquire any property interest in any specific assets set aside in trust by the
Employer. Any funds that may be invested under the provisions of the Plan shall
continue for all purposes to be a part of the general funds of the Employer and
no person other than the Employer shall by virtue of the provisions of the Plan
have any interest in such funds. To the extent that any person acquires a right
to receive payments under the Plan, such right shall be no greater than the
right of any unsecured general creditor of the Employer.
15.2. Non-alienation. The right of a Participant or any other
person to the payment of any benefit hereunder shall not be assigned,
transferred, pledged or encumbered.
15.3. Incapacity. If the Committee shall find that any person to
whom any payment is due under the Plan is unable to care for his
affairs because of illness or accident, or is a minor, any payment due
(unless a prior claim therefor shall have been made by a duly
appointed guardian, committee or other legal representative) may be
paid to the spouse, a child, a parent, or a brother or sister, or to
any person deemed by the Committee to have incurred expense for such
person otherwise entitled to payment, in such manner and proportions
as the Committee may determine. Any such payment shall be a complete
discharge, to the extent of the payment, of the liabilities of the
Plan, the Employer, the Committee, and the Trustee.
15.4. No Employment Contract. Nothing contained herein or in any
Agreement shall be construed as conferring upon a Participant the
right to continue in the employ of the Employer in any capacity.
15.5. Succession. The Plan and the related Agreements shall be
binding upon and inure to the benefit of the Company and the Employer,
their successors and assigns, and the Participants and their heirs,
executors, administrators and legal representatives.
15.6. Gender and Number. For purposes of the Plan, the singular
shall include the plural and the masculine shall include the feminine,
and vice versa.
15.7. Governing Law. The Plan shall be construed in accordance
with and governed by the laws of the Commonwealth of Pennsylvania,
except to the extent superseded by federal law.
-17-
IN WITNESS WHEREOF, Crown Cork & Seal Company, Inc. has caused
this amendment and restatement of the Plan to be executed and attested by its
duly authorized officers as of the date first above written.
[CORPORATE SEAL] CROWN CORK & SEAL COMPANY, INC.
Attest: /s/ Richard L. Krzyzanowski By: /s/ Alan W. Rutherford
Secretary Executive Vice President
-18-
CROWN CORK & SEAL COMPANY, INC.
SENIOR EXECUTIVE RETIREMENT PLAN
SCHEDULE A-1
ACTUARIAL FACTORS USED IN CALCULATING
LUMP SUM VALUES
- -------------------------------------------------------------------------------------------------------------------------------
Retirement Interest Rate
- -------------------------------------------------------------------------------------------------------------------------------
Age 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0%
- -------------------------------------------------------------------------------------------------------------------------------
55 15.1133 14.3411 13.6338 12.9846 12.3874 11.8371 11.3288 10.8585 10.4225 10.0175 9.6408
56 14.7897 14.0510 13.3732 12.7499 12.1756 11.6455 11.1551 10.7007 10.2788 9.8864 9.5209
57 14.4583 13.7530 13.1045 12.5072 11.9558 11.4460 10.9737 10.5353 10.1278 9.7482 9.3942
58 14.1191 13.4467 12.8275 12.2560 11.7277 11.2383 10.7842 10.3621 9.9691 9.6026 9.2603
59 13.7720 13.1324 12.5421 11.9965 11.4911 11.0222 10.5864 10.1808 9.8025 9.4493 9.1189
60 13.4175 12.8102 12.2487 11.7286 11.2462 10.7978 10.3804 9.9913 9.6279 9.2881 8.9699
61 13.0563 12.4807 11.9476 11.4530 10.9933 10.5654 10.1664 9.7939 9.4455 9.1193 8.8133
62 12.6892 12.1448 11.6397 11.1701 10.7330 10.3254 9.9449 9.5889 9.2556 8.9430 8.6495
63 12.3174 11.8035 11.3258 10.8809 10.4661 10.0787 9.7164 9.3770 9.0587 8.7597 8.4787
64 11.9421 11.4579 11.0070 10.5865 10.1936 9.8260 9.4817 9.1588 8.8554 8.5702 8.3015
65 11.5648 11.1096 10.6848 10.2880 9.9166 9.5686 9.2421 8.9353 8.6468 8.3751 8.1189
66 11.1873 10.7601 10.3607 9.9869 9.6365 9.3076 8.9986 8.7078 8.4339 8.1755 7.9316
67 10.8112 10.4110 10.0361 9.6846 9.3546 9.0444 8.7525 8.4773 8.2178 7.9726 7.7409
68 10.4378 10.0635 9.7123 9.3824 9.0722 8.7801 8.5047 8.2449 7.9994 7.7672 7.5473
69 10.0676 9.7182 9.3897 9.0807 8.7896 8.5150 8.2558 8.0109 7.7791 7.5596 7.3514
70 9.7008 9.3751 9.0685 8.7796 8.5069 8.2494 8.0059 7.7754 7.5570 7.3499 7.1532
71 9.3368 9.0340 8.7483 8.4787 8.2239 7.9828 7.7545 7.5381 7.3327 7.1377 6.9523
72 8.9750 8.6939 8.4284 8.1774 7.9397 7.7145 7.5010 7.2982 7.1056 6.9224 6.7480
73 8.6151 8.3549 8.1086 7.8754 7.6543 7.4445 7.2452 7.0557 6.8754 6.7037 6.5401
74 8.2577 8.0173 7.7895 7.5734 7.3682 7.1731 6.9876 6.8109 6.6426 6.4821 6.3289
75 7.9041 7.6825 7.4722 7.2724 7.0823 6.9014 6.7290 6.5647 6.4080 6.2583 6.1152
76 7.5560 7.3522 7.1584 6.9740 6.7984 6.6309 6.4712 6.3187 6.1730 6.0337 5.9004
77 7.2156 7.0284 6.8502 6.6804 6.5183 6.3637 6.2159 6.0746 5.9395 5.8101 5.6862
78 6.8846 6.7130 6.5494 6.3932 6.2439 6.1013 5.9648 5.8342 5.7090 5.5891 5.4740
79 6.5645 6.4074 6.2573 6.1138 5.9765 5.8451 5.7193 5.5986 5.4829 5.3719 5.2652
80 6.2561 6.1124 5.9749 5.8432 5.7171 5.5963 5.4803 5.3691 5.2622 5.1595 5.0608
- -------------------------------------------------------------------------------------------------------------------------------
CROWN CORK & SEAL COMPANY, INC.
SENIOR EXECUTIVE RETIREMENT PLAN
SCHEDULE A-2
DESCRIPTIONS OF LUMP SUM VALUE AND
GROSS-UP PAYMENT CALCULATIONS
These are descriptions of (i) how the lump sum values of early
and normal retirement benefits are calculated for Participants in the
Supplemental Executive Retirement Plan ("Plan"), using the Monthly Life Annuity
Factors set forth in Schedule A-1, and (ii) how a gross-up payment is calculated
for Participants under Section 6.3.3 of the Plan. THESE DESCRIPTIONS ARE FOR
ILLUSTRATIVE PURPOSES ONLY. ALL CALCULATIONS OF LUMP SUM VALUES AND GROSS-UP
PAYMENTS ARE PREPARED IN ACCORDANCE WITH THE TERMS OF THE PLAN.
I. BACKGROUND
Schedule A-1 is used to convert a monthly annuity value to a
present, lump sum amount. In general, the lump sum value of an annuity benefit
is determined by multiplying the monthly amount of a Participant's benefit by 12
(to determine the annual amount of the Participant's benefit). This amount is
then multiplied by the applicable factor from Schedule A-1. The applicable
factor is determined by cross referencing on Schedule A-1 the Participant's age
and the relevant interest rate. Therefore, three variables must be known to use
Schedule A-1: (a) the amount of the Participant's monthly annuity, (b) the
Participant's age, and (c) the applicable interest rate.
The amount of the Participant's monthly annuity is a function
of the terms of the Plan. If the lump sum value of a Participant's early
retirement benefit is being determined, for example, it is first necessary to
actuarially reduce the Participant's normal retirement benefit, as provided in
Section 3.2 of the Plan, using the early retirement reduction factor in the
Crown Salaried Pension Plan, to determine the monthly annuity value of the
Participant's early retirement benefit. This monthly amount is then converted to
a lump sum value.
For purposes of Schedule A-1, the Participant's age is the age
on which the monthly annuity payments are expected to start, rather than the
Participant's age on the date the calculation is performed. For instance, if a
Participant is age 55 and would like to determine the lump sum value of his
early retirement benefit (which is payable only upon reaching age 62), the
Participant's age, for purposes of Schedule A-1, is age 62, not age 55.
The applicable interest rate will be the then current interes
rate payable on 30-year U.S. Treasury Bonds.
II. CALCULATING THE LUMP SUM VALUE OF AN EARLY OR NORMAL RETIREMENT BENEFIT
Section 6.3.1 of the Plan provides that a Participant may
elect to receive between 1% and 100% of the value of his early or normal
retirement benefit in a lump sum. Accordingly, to determine the amount that a
Participant may elect to receive in a lump sum, it is necessary to convert the
Participant's monthly annuity to a lump sum amount.
A. LUMP SUM VALUE OF A NORMAL RETIREMENT BENEFIT
Assume for purposes of this example that a Participant is age
65 and his monthly normal retirement benefit amount is $3,500. Also assume that
the applicable interest rate is 6.5%.
As described above, the lump sum value of the Participant's
annuity benefit is determined by multiplying his monthly annuity benefit
($3,500) by 12 ($42,000) and then multiplying this amount by the applicable
factor from Schedule A-1. The applicable factor is determined by cross
referencing the Participant's age (65) and the relevant interest rate (6.5%) on
Schedule A-1, which, in this case, yields a factor of 9.5686. Therefore, the
lump sum value of the Participant's normal retirement benefit is $401,881
($42,000 x 9.5686). The Participant would receive 50% of this amount in a lump
sum ($200,940) and a monthly benefit of $1,750 (i.e., the other 50% of his
normal retirement benefit).
B. LUMP SUM VALUE OF AN EARLY RETIREMENT BENEFIT
Assume for purposes of this example that a Participant is age
62 and the monthly value of his normal retirement benefit is $3,500. Also assume
that the applicable interest rate is 7.5%.
To determine the lump sum value of the Participant's early
retirement benefit, his normal retirement benefit must be actuarially reduced to
reflect an annuity starting date of age 62, rather than age 65. Assume that this
yields a monthly early retirement benefit of $3,000. The lump sum value of this
amount is determined in the same manner as described above. First, the monthly
annuity benefit ($3,000) is multiplied by 12 ($36,000). This amount is then
multiplied by the applicable factor derived from Schedule A-1. The applicable
factor for an individual age 62 with an interest rate assumption of 7.5% is
9.5889. Therefore, the lump sum value of the Participant's early retirement
benefit is $345,200 ($36,000 x 9.5889). The Participant would receive 50% of
this amount in a lump sum ($172,600) and a monthly benefit of $1,500 (i.e., the
other 50% of his early retirement benefit).
-2-
III. LUMP SUM VALUE OF BENEFIT AFTER A CHANGE IN CONTROL
In addition to providing a partial lump sum distribution upon
a Participant's normal or early retirement, Section 6.3.2 of the Plan also
permits a Participant to receive a total distribution of the present value of
the Participant's normal retirement benefit in the event of a termination
following a Change in Control. Section 6.3.3 further provides that this amount
will be "grossed up" to compensate the employee for the payment of taxes on the
distribution. Therefore, the calculation of payment upon termination following a
Change in Control involves two parts: (a) the calculation of the lump sum value
of the Participant's normal retirement benefit, and (b) the calculation of the
amount of the additional gross-up payment.
A. CALCULATION OF PRESENT VALUE OF NORMAL RETIREMENT BENEFIT
The calculation for the present value of a Participant's
normal retirement benefit is similar to that described above. However, because
the Plan provides that the Participant will receive a distribution of the
present value of his normal retirement benefit, the Participant's age, for
purposes of the calculation, will always be his normal retirement age,
regardless of his age on the date the calculation is performed. The lump sum
value of this benefit is then present valued using the applicable interest rate.
Assume a Participant is age 55 and has a monthly normal
retirement benefit of $2,750. Also assume that the applicable interest rate is
6%.
To determine the lump sum value of the Participant's normal
retirement benefit, his monthly benefit at normal retirement age ($2,750) is
multiplied by 12 ($33,000). This amount is then multiplied by the applicable
factor derived from Schedule A-1. As noted above, the Participant's age for this
purpose is his normal retirement age (65) and not his current age (55). The
applicable factor for an individual age 65 and an interest rate of 6% is 9.9166.
Therefore, the lump sum value of the Participant's normal retirement benefit is
$327,248 ($33,000 x 9.9166). However, Section 6.3.2 provides that a Participant
is entitled to receive only the present value of his normal retirement benefit.
Because the value determined above ($327,248) is the lump sum value of the
Participant's normal retirement benefit as if he were age 65 (i.e., 10 years in
the future), this amount must be present valued using the same 6% interest rate.
The present value of $327,248 paid beginning 10 years in the future using a 6%
interest rate assumption is approximately $176,260. Accordingly, the Participant
would be entitled to a lump sum distribution of $176,260, which is the present,
lump sum value of his normal retirement benefit.
-3-
B. CALCULATION OF GROSS-UP PAYMENT
The amount of a gross-up payment is generally determined under
the following formula:
Amount of Distribution x Tax Rate
--------------------
(1 - Tax Rate)
The "Tax Rate" for this purpose is the Participant's marginal
tax rate, taking into account all federal, state and local taxes, including
income, employment and excise taxes.
To continue the example above, assume that the Participant is
entitled to a distribution of $176,260 and his marginal tax rate is 45%. The
amount of the gross-up payment to which the Participant would be entitled is
equal to:
$176,260 x .45 = $144,212.
---------
1 - .45
Therefore, in the example the Participant would be entitled to
a lump sum distribution of $176,260 and a gross-up payment of $144,212. Thus,
his total distribution would equal $320,472.
* * *
June 1999
-4-
CROWN CORK & SEAL COMPANY, INC.
SENIOR EXECUTIVE RETIREMENT PLAN
SCHEDULE B
----------
GROUP A PARTICIPANTS
Name Effective Date of Participation
William J. Avery November 10, 1991
Michael J. McKenna November 10, 1991
Mark W. Hartman November 10, 1991
Ronald R. Thoma November 10, 1991
Richard L. Krzyzanowski November 10, 1991
Alan W. Rutherford April 29, 1993
* * *
GROUP B PARTICIPANTS
Name Effective Date of Participation
John W. Conway July 28, 1994
William H. Voss December 12, 1996
* * *
GROUP C PARTICIPANTS
Name Effective Date of Participation
Craig L. Calle December 11, 1997
Frank J. Mechura December 11, 1997
Robert J. Truitt December 11, 1997
Clint J. Waring December 11, 1997
Daniel A. Abramowicz December 10, 1998