INGERSOLL-RAND COMPANY
ELECTED OFFICERS SUPPLEMENTAL PROGRAM
(As Amended and Restated Effective March 3, 1999)
Introduction
Ingersoll-Rand Company (the "Company") adopted the Ingersoll-Rand
Company Elected Officers Supplemental Program (the "Program")
effective June 30, 1995 to provide retirement benefits to certain
individuals employed by the Company in addition to the benefits
provided from other qualified and non-qualified plans maintained
by the Company. This amendment and restatement of the Program is
effective as of March 3, 1999 and supersedes the prior provisions
of the Program.
The Program is intended to be treated as a plan which is unfunded
and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly
compensated employees within the meaning of the Employee
Retirement Income Security Act of 1974, as amended.
Generally, the provisions of the Program as set forth herein
shall apply only to an Employee who terminates employment on or
after March 3, 1999. The rights and benefits, if any, of an
Employee who terminated employment prior to March 3, 1999 shall
be determined in accordance with the provisions of the Program in
effect on the date he terminated employment.
INGERSOLL-RAND COMPANY
ELECTED OFFICERS SUPPLEMENTAL PROGRAM
TABLE OF CONTENTS
Page
INTRODUCTION i
ARTICLE 1 - DEFINITIONS
1.1 Actuarial Equivalent 1
1.2 Board 1
1.3 Change in Control 1
1.4 Company 1
1.5 Committee 1
1.6 Deferral Plan 1
1.7 Elected Officer 1
1.8 Employee 1
1.9 Estate Program 1
1.10 Final Average Pay 1
1.11 Pension Pla 2
1.12 Program 2
1.13 Year of Service 2
ARTICLE 2 - PARTICIPATION
2.1 Commencement of Participation 3
2.2 Duration of Participation 3
ARTICLE 3 - AMOUNT OF BENEFIT
3.1 Amount of Benefit 4
ARTICLE 4 - VESTING
4.1 Vesting 5
4.2 Forfeiture for Cause 5
ARTICLE 5 - DISTRIBUTIONS
5.1 Retirement 6
5.2 Form of Distribution 7
5.3 Disability 7
5.4 Death 8
5.5 Payment of Benefits 8
ARTICLE 6 - FUNDING
6.1 Funding 9
6.2 Company Obligation 9
ARTICLE 7 - CHANGE IN CONTROL
7.1 Contributions to Trust 10
7.2 Amendments 10
ARTICLE 8 - MISCELLANEOUS
8.1 Amendment and Termination 11
8.2 No Contract of Employment 11
8.3 Withholding 11
8.4 Loans 11
8.5 Compensation and Nominating Committee 11
8.6 Entire Agreement; Successors 12
8.7 Severability 12
8.8 Governing Law 12
8.9 Participant as General Creditor 12
8.10 Nonassignability 12
APPENDIX A 14
ARTICLE 1
DEFINITIONS
1.1 "Actuarial Equivalent" means an amount having equal value
when computed on the basis of the 1983 Group Annuity
Mortality Table (blended) and an interest rate equal to the
average of the monthly rates for ten-year Constant
Maturities for US Treasury Securities for the twelve-month
period immediately preceding the month prior to the month in
which a determination of benefit occurs, such rate as
published in Federal Reserve statistical release H.15(519).
1.2 "Board" means the Board of Directors of Ingersoll-Rand
Company.
1.3 "Change in Control" shall have the same meaning as such term
is defined in the most recent Company Incentive Stock Plan,
unless a different definition is used for purposes of a
change in control event in any severance or employment
agreement between an Employer and an Employee, in which
event as to such Employee such definition shall apply.
1.4 "Company" means Ingersoll-Rand Company, and its successors
or assigns.
1.5 "Committee" means the Compensation and Nominating Committee
of the Board.
1.6 "Deferral Plan" means the Ingersoll-Rand Company Executive
Deferred Compensation and Stock Bonus Plan.
1.7 "Elected Officer" means an individual elected by the Board
as an officer of the Company.
1.8 "Employee" means an individual eligible to participate in
the Program as provided in Section 2.1.
1.9 "Estate Program" means the Ingersoll-Rand Company Estate
Enhancement Program.
1.10 "Final Average Pay" means, except as provided in Section 5.3
for purposes of disability, the sum of the following:
(a) the average of each of the five highest bonus awards
(whether the awards are paid to the Employee, are a
Deferral Amount (as such term is defined in the
Deferral Plan) or the Employee has elected to forego a
bonus award pursuant to the Estate Program) during the
six most recent calendar years, including the year
during which the Employee's retirement or death occurs,
or a Change in Control occurs, but excluding
Supplemental Contributions (as such term is defined in
the Deferral Plan) or any amounts paid from the
Deferred Compensation Account (as such term is defined
in the Deferral Plan) or any other account under the
Deferral Plan including, but not limited to, amounts
paid consisting of Deferral Amounts and Supplemental
Contributions and their earnings, and any amounts paid
by the Company pursuant to the Estate Program, and
(b) the Employee's annualized base salary in effect
immediately prior to the date of determination.
1.11 "Pension Plan" means the Ingersoll-Rand Pension Plan Number
One as in effect on March 3, 1999 and as amended from time
to time.
1.12 "Program" means the Ingersoll-Rand Company Elected Officers
Supplemental Program as stated herein and as may be amended
from time to time.
1.13 "Year of Service" shall be determined in accordance with the
provisions of the qualified defined benefit pension plan(s)
(as defined below) in which an individual participates while
an Employee that are applicable to determining years of
vesting service under such plan. For purposes of this
Section a qualified defined benefit pension plan means a
plan (a) sponsored by the Company, any domestic entity in
which the Company owns (directly or indirectly) a 50% or
more interest, or any other entity designated by the Company
and (b) which is defined in Section 414(j) of the Internal
Revenue Code of 1986, as amended. Notwithstanding any
provision of the Program to the contrary, in the event an
Employee earns one or more hours of service during a
calendar year, he shall be credited with a Year of Service
with respect to such year for purposes of the Program.
Whenever the word "he", "his," or "him" is used in the
Program, such word is intended to embrace within its purview
the word "she" or "her", as may be appropriate.
ARTICLE 2
PARTICIPATION
2.1 Commencement of Participation
An individual employed by the Company shall commence
participation in the Program upon becoming an Elected
Officer of the Company.
2.2 Duration of Participation
An Employee shall continue to participate in the Program
until the earlier of his termination of employment, death,
or election to waive the benefit provided under the Program.
ARTICLE 3
AMOUNT OF BENEFIT
3.1 Amount of Benefit
An Employee shall be entitled to receive a benefit under the
Program equal to (a) minus (b) minus (c) below:
(a) the product of:
(i) his Final Average Pay,
(ii) his Years of Service (up to a maximum of 35 Years of
Service), and
(iii)1.9%
(b)the amount set forth in Appendix A as attached hereto
(c)the benefit he would be entitled to receive under
Section 5.2 of the Program but for his election to
forego such benefit pursuant to the Estate Program.
ARTICLE 4
VESTING
4.1 Vesting
An Employee shall become vested in the benefit provided
under the Program upon the earlier of (i) the attainment of
age 55 and the completion of 15 Years of Service, (ii) the
attainment of age 62, (iii) death, or (iv) a Change in
Control.
4.2 Forfeiture for Cause
All benefits for which an Employee would otherwise be
eligible hereunder may be forfeited, at the discretion of
the Committee, prior to the occurrence of a Change in
Control under the following circumstances:
(a) The Employee is discharged by the Company for cause,
which shall be a breach of the standards set forth in
the Ingersoll-Rand Company Code of Conduct; or
(b) Determination by the Committee no later than 12 months
after termination of employment that the Employee has
engaged in serious or willful misconduct in connection
with his employment with the Company; or
(c) The Employee (whether while employed or for two years
thereafter) without the written consent of the Company
is employed by, becomes associated with, renders
service to, or owns an interest in any business that is
competitive with the Company or with any business in
which the Company has a substantial interest as
determined by the Committee; provided, however, that an
Employee may own up to 1% of the publicly traded equity
securities of any business, notwithstanding the
foregoing.
ARTICLE 5
DISTRIBUTIONS
5.1 Retirement
Employee retirement distributions under the Program shall be
as follows:
(a) Normal Retirement - An Employee shall retire and
receive the benefit under Section 3.1 upon attaining
age 62, provided that the Chief Executive Officer of
the Company (or in the case of the Chief Executive
Officer, the Board) may request an Employee to remain
in the employ of the Company after the Employee has
attained age 62.
(b) Early Retirement - An Employee may retire under the
Program at any time after he becomes vested in
accordance with Section 4.1. In the event he retires
before age 62, he will receive a benefit under the
Program in accordance with Section 5.5. Such benefit
shall be equal to the benefit he would have received at
age 62 under Section 3.1, provided however that:
(i) the amount determined under Section 3.1(a) shall
be reduced by 0.429% for each month that the
benefit commences prior to age 62,
(ii)the benefit offset amount derived from defined
contribution account balances, if any, as
identified in the applicable Appendix, shall be
converted to immediate annuities using the
Actuarial Equivalent as defined in Section 1.1,
and shall be based on the Employee's age at date
of retirement,
(iii)the benefit offset amount derived from defined
benefit plans, as identified in Appendix A and
as adjusted for retirement at the earliest date
on which the Employee may retire and begin
receiving a benefit under such defined benefit
plans and as further adjusted, if necessary, to
the Actuarial Equivalent of the benefit payable
on the date benefits under the Program
commence, shall be as determined under the
applicable plans irrespective of whether the
Employee elects to receive a benefit under such
plans, and
(iv)for years prior to Social Security normal
retirement age, the Social Security Primary
Insurance Amount shall be reduced by the same
factors used by the Social Security
Administration to adjust benefits payable at age
62 or later, and by .3% for each month that
benefits under the Program commence prior to age
62.
(c) Late Retirement - If an Employee retires after age 62
as provided under (a) above, he will receive a benefit
equal to the greater of:
(i) the benefit determined under Section 3.1 as of
his date of retirement, or
(ii)the benefit he would have received had he
retired at age 62, credited with interest from
the date he attained age 62 until his date of
retirement. For purposes of this subsection
(ii), the interest rate will be equal to the
rate of return earned by the Fixed Income Fund
of the Ingersoll-Rand Company Savings and Stock
Investment Plan during such period.
5.2 Form of Distribution
Benefits under the Program shall be payable solely in a
single lump sum. The lump sum amount, determined as of the
Employee's date of retirement, shall be the Actuarial
Equivalent value of a single life annuity of the benefit
under Section 3.1 adjusted, if applicable, to reflect the
provisions of Section 5.1. The lump sum distribution
determined under this Section 5.2 shall be credited with
interest at a rate equal to the rate of return earned by the
Fixed Income Fund of the Ingersoll-Rand Company Savings and
Stock Investment Plan from the Employee's date of retirement
until the date of distribution.
Notwithstanding the foregoing, an Employee who retires under
the Program and receives a lump sum payment under this
Section 5.2 may elect within the 30-day period immediately
preceding his date of retirement to have his benefit
determined as of his date of retirement using an alternative
interest rate. The alternative interest rate used to
determine the Actuarial Equivalent benefit payable in a lump
sum shall be the interest rate equal to the 10-Year Treasury
Note rate as published in The New York Times in the Key Rate
Table under the Credit Market Section, or, if such rate is
unavailable, as provided by Telerate, in both cases as of
the business day immediately preceding the date payment is
made to the Employee. In the event an Employee elects to
have his benefit determined under this paragraph, no
interest will be payable from the Employee's date of
retirement until the date of distribution.
5.3 Disability
An Employee who becomes disabled and who remains
continuously disabled until attaining age 65 shall continue
to accrue benefits under the Program as if he continued to
be employed by the Company. Such Employee shall receive an
immediate lump sum payment determined under Section 5.2 of
the Program as of the Employee's 65th birthday.
Notwithstanding any other provision of the Program to the
contrary, when determining Final Average Pay for an Employee
who is disabled under the provisions of this Section, Final
Average Pay means the sum of:
(a) the average of each of the five highest bonus awards
(whether the awards are paid to the Employee, are a
Deferral Amount (as such term is defined in the
Deferral Plan) or the Employee has elected to forego a
bonus award pursuant to the Estate Program) during the
six most recent calendar years, including the year
during which the Employee's disability occurs, (or, if
the average of the five highest bonus awards would be
greater, the six most recent calendar years prior to
the year in which the Employee's disability occurs),
but excluding Supplemental Contributions (as such term
is defined in the Deferral Plan) or any amounts paid
from the Deferred Compensation Account (as such term is
defined in the Deferral Plan) or any other account
under the Deferral Plan including, but not limited to,
amounts paid consisting of Deferral Amounts and
Supplemental Contributions and their earnings, and any
amounts paid by the Company pursuant to the Estate
Program, and
(b) the Employee's annualized base salary in effect as of
the date he becomes disabled.
An Employee who is no longer disabled under this Section and
who returns to the employ of the Company or an affiliated
company, shall be entitled to accrue benefits under this
Section for the period of his disability.
An Employee who is no longer disabled under this Section and
who does not return to the employ of the Company or an
affiliated company, shall not be entitled to accrue any
benefits under this Section for any portion of the period of
his disability.
For purposes of the Program, an Employee shall be disabled
if he is unable to continue to perform the duties of his
position due to a physical or mental impairment.
5.4 Death
In the event that an Employee dies prior to retirement, his
beneficiary shall receive a lump sum payment determined
under Section 5.2 of the Program as of the date of the
Employee's death as if the Employee retired on the date of
his death; provided that if the Employee's death occurs
prior to his attainment of age 55, his benefit shall be
reduced by .3% for each month that the benefit commences
before the Employee would have reached age 65. The
Employee's beneficiary under the Program shall be the
beneficiary under the Ingersoll-Rand Company Savings and
Stock Investment Plan unless the Employee designates another
beneficiary in writing, and such written designation has
been received by the Committee prior to the date of death.
An Employee may change the designated beneficiary under the
Program at any time by providing such designation in writing
to the Committee.
5.5 Payment of Benefits
The benefit under the Program shall be paid on the later of
(i) the first business day of the sixth month following the
Employee's retirement or death, or (ii) the first business
day of the calendar year following the Employee's
retirement.
In the event an Employee is disabled in accordance with
Section 5.3, his benefit shall be paid on the first day of
the month following the date that the Employee attains age
65.
ARTICLE 6
FUNDING
6.1 Funding
Except as provided in Section 8.9 hereof, the Company shall
have no obligation to fund the benefit that an Employee
earns under the Program.
6.2 Company Obligation
Notwithstanding the provisions of any trust agreement or
similar funding vehicle to the contrary, the Company shall
remain obligated to pay benefits under the Program. Nothing
in the Program or any trust agreement shall relieve the
Company of its liabilities to pay benefits under the Program
except to the extent that such liabilities are met by the
distribution of trust assets.
ARTICLE 7
CHANGE IN CONTROL
7.1 Contributions to Trust
In the event that a Change in Control has occurred, the
Company shall be obligated to establish a trust and to
contribute to the trust an amount necessary to fund the
accrued benefit earned by the Employee under the Program
(assuming immediate benefit commencement) as of the last day
of the calendar month immediately preceding the date the
Board determines that a Change in Control has occurred. If
the Employee shall not have attained age 55, his annual
benefit shall be determined on the same basis used to
determine his accrued benefit in the case of death as
specified in Section 5.4.
7.2 Amendments
Following a Change in Control of the Company, any amendment
modifying or terminating the Program shall have no force or
effect.
ARTICLE 8
MISCELLANEOUS
8.1 Amendment and Termination
Except as provided in Section 7.2 hereof, the Program may,
at any time and from time to time, be amended or terminated
without the consent of any Employee or beneficiary, (a) by
the Board, or (b) in the case of amendments which do not
materially modify the provisions hereof, the Committee or
such other committee appointed by the Board; provided,
however, that no such amendment or termination shall reduce
any benefits accrued under the terms of the Program prior to
the date of termination or amendment.
8.2 No Contract of Employment
The establishment of the Program or any modification hereof
shall not give any Employee or other person the right to
remain in the service of the Company or any of its
subsidiaries, and all Employees and other persons shall
remain subject to discharge to the same extent as if the
Program had never been adopted.
8.3 Withholding
The Company shall be entitled to withhold from any payment
due under the Program any and all taxes of any nature
required by any government to be withheld from such payment.
8.4 Loans
No loans to Employees shall be permitted under the Program.
8.5 Compensation and Nominating Committee
The Program shall be administered by the Committee (or any
successor committee) of the Board. The primary
responsibility of the Committee is to administer the Program
for the exclusive benefit of the Employees and their
beneficiaries, subject to the specific terms of the Program.
The Committee shall administer the Program in accordance
with its terms to the extent consistent with applicable law,
and shall have the power to determine all questions arising
in connection with the administration, interpretation, and
application of the Program. Any such determination by the
Committee shall be conclusive and binding upon all affected
parties. Any denial by the Committee of a claim for benefits
under the Program by an Employee or beneficiary shall be
stated in writing by the Committee and delivered or mailed
to the Employee or beneficiary. Such notice shall set forth
the specific reasons for the Committee's decision. In
addition, the Committee shall afford a reasonable
opportunity to any Employee or beneficiary whose claim for
benefits has been denied for a review of the decision
denying this claim.
8.6 Entire Agreement; Successors
The Program, including any subsequently adopted amendments,
shall constitute the entire agreement or contract between
the Company and any Employee regarding the Program. There
are no covenants, promises, agreements, conditions or
understandings, either oral or written, between the Company
and any Employee relating to the subject matter hereof,
other than those set forth herein. The Program and any
amendment hereof shall be binding on the Company and the
Employees and their respective heirs, administrators,
trustees, successors and assigns, including but not limited
to, any successors of the Company by merger, consolidation
or otherwise by operation of law, and on all designated
beneficiaries of the Employee.
8.7 Severability
If any provisions of the Program shall, to any extent, be
invalid or unenforceable, the remainder of the Program shall
not be affected thereby, and each provision of the Program
shall be valid and enforceable to the fullest extent
permitted by law.
8.8 Governing Law
The laws of the State of New Jersey shall govern the
Program.
8.9 Participant as General Creditor
Benefits under the Program shall be payable by the Company
out of its general funds. The Company shall have the right
to establish a reserve or make any investment for the
purposes of satisfying its obligations hereunder for payment
of benefits at its discretion, provided, however, that no
Employee eligible to participate in the Program shall have
any interest in such investment or reserve. To the extent
that any person acquires a right to receive benefits under
the Program, such rights shall be no greater than the right
of any unsecured general creditor of the Company.
8.10 Nonassignability
To the extent permitted by law, the right of any Employee or
any beneficiary in any benefit hereunder shall not be
subject to attachment or any other legal process for the
debts of such Employee or beneficiary nor shall any such
benefit be subject to anticipation, alienation, sale,
transfer, assignment or encumbrance.
APPENDIX A
Unless otherwise specified in another Appendix attached hereto,
the sum of the following shall be used for purposes of Section
3.1(b) of the Program:
(a) All employer-paid benefits under any qualified defined
benefit plan (as defined in Section 414(j) of the Internal
Revenue Code of 1986, as amended) and associated supplemental
plans sponsored by the Company, Ingersoll-Dresser Pump Company,
and Dresser Industries, Inc., provided that the Employee's
intervening employment between employment with Dresser
Industries, Inc. and the Company is solely with Ingersoll
-Dresser Pump Company. For purposes of this Paragraph
(a), the amount of any pension payable under the Clark
Equipment Company Retirement Program for Salaried
Employees shall be determined without reduction by the
lifetime pension equivalent of the Employee's vested
interest in his PPOA Account (as such term is defined in
the I-R/Clark Leveraged Employee Stock Ownership Plan).
For purposes of determining the benefit under Section
3.1 of the Program, the Employee's benefit, if any,
under any qualified defined benefit plan and associated
supplemental plans described in the previous paragraph,
shall be determined as a life annuity at the date of
determination.
(b) The Social Security Primary Insurance Amount as defined
in the Pension Plan estimated at age 65, multiplied by a
fraction, the numerator of which is his Years of Service
(up to a maximum of 35 Years of Service), and the
denominator of which is 35.
For purposes of the Program, "Social Security Primary
Insurance Amount" means the amount of the Employee's
annual primary old age insurance determined under the
Social Security Act in effect at the date of
determination and payable in accordance with (i) or
(ii) below.
(i) For benefits determined on or after age 65,
payable for the year following his date of
retirement.
(ii)For benefits determined before the Employee
attains age 65, payable for the year following
his retirement or death (or which would be
payable when he first would have become eligible
if he were then unemployed), assuming he will
not receive after retirement (or death) any
income that would be treated as wages for
purposes of the Social Security Act.
For purposes of determining the Social Security Benefit
under paragraphs (i) and (ii) above, an Employee's
covered earnings under said Act for each calendar year
preceding the Employee's first full calendar year of
employment shall be determined by multiplying his
covered earnings subsequent to the year being
determined by the ratio of the average per worker total
wages as reported by the Social Security Administration
for the calendar year being determined to such average
for the calendar year subsequent to the year being
determined.
(c) An Employee's accrued benefit under any qualified
defined benefit pension plan (as defined in Section
414(j) of the Internal Revenue Code of 1986, as
amended) and any nonqualified pension plan with respect
to any business that was acquired by the Company
("Acquired Business"), (each such pension plan shall be
referred to in this Paragraph (c) as a "Former Plan"),
shall be used for purposes of Section 3.1(b) of the
Program if the Employee:
(i) was an employee of the Acquired Business on the
date it was acquired by the Company,
(ii)became an employee of the Company as a result of
the acquisition of the Acquired Business, and
(iii)was granted vesting service under any qualified
defined benefit pension plan (as defined in
Section 414(j) of the Internal Revenue Code of
1986, as amended) sponsored by the Company, any
domestic entity in which the Company owns
(directly or indirectly) a 50% or more
interest, and any other entity designated by
the Company for service performed while an
employee of the Acquired Business.
The Employee's accrued benefit under the Former Plan
shall be determined as a life annuity payable as of the
date of determination, using the Former Plan's early
retirement factors, if applicable.
Notwithstanding anything to the contrary in this
Paragraph (c), if the Committee determines that the
accrued benefit under a Former Plan cannot reasonably
be calculated due to lack of information about the
Former Plan or otherwise, the provisions of this
Paragraph (c) shall not apply with respect to such
Former Plan.