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EXHIBIT 10(f)
TWIN DISC, INCORPORATED
SUPPLEMENTAL RETIREMENT PLAN
(As Amended and Restated Effective January 1, 1998)
July 1998
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TWIN DISC, INCORPORATED
SUPPLEMENTAL RETIREMENT PLAN
(as amended and restated effective January 1, 1998)
PREAMBLE
Effective January 1, 1984, the Company adopted the Twin Disc, Incorporated
Supplemental Retirement Plan to ensure the payment of a competitive level of
retirement income in order to retain and motivate selected executives. The
Plan was amended effective January 1, 1985 for executives named to the Plan on
or after January 1, 1985. Effective as of January 1, 1998, the Plan is hereby
amended and restated as set forth herein to, among other things, change the
formula for calculating the amount of benefits payable to executives who were
participants in the Plan as of December 31, 1997 but who had not yet termi
nated employment as of such date.
The rights and benefits, if any, of a Participant who terminated employment
prior to January 1, 1998, shall be determined in accordance with the provi
sions of the Plan as in effect on the date his employment terminated.
SECTION I - DEFINITIONS
1.1 "Actuarial Equivalent" means equality in value of the aggregate
amounts expected to be received under different forms of payment, based on the
1983 Group Annuity Mortality Table (male table only), with interest at 8.0%.
1.2 "Average Annual Earnings" means the average compensation used in
benefit calculations, determined in accordance with the Schedule applicable to
such Participant.
1.3 "Basic Plan" means the Twin Disc, Incorporated Retirement Plan for
Salaried Employees (amended and restated effective January 1, 1997), as
amended from time to time.
1.4 "Basic Qualified Plan Benefit" means twelve times the amount defined
in Section 1.2 ("Accrued Benefit") of the Basic Plan.
1.5 "Committee" means the Compensation Committee of the Board of Directors
of the Company, which has been given complete and discretionary authority by
the Board of Directors to administer and interpret this Plan.
1.6 "Company" means Twin Disc, Incorporated.
1.7 "Disabled" means that a Participant should cease to be an Employee
because of an illness or physical disability that will entitle him to receive
monthly disability income benefits under the Company's long term disability
plan.
1.8 "Earnings" means total compensation used in the calculation of Average
Annual Earnings, which is determined in accordance with the Schedule applica
ble to such Participant.
1.9 "Employee" means any person in the employ of the Company.
1.10 "Participant" means an employee of the Company designated as a
Participant by the Committee. An employee shall become a Participant in the
Plan as of the date he is individually selected by, and specifically named in
the resolutions of, the Committee for inclusion in the Plan. A Participant
shall cease to be an active Participant in this Plan and he shall not be
entitled to receive benefits hereunder if he ceases to be an Employee of the
Company for any reason other than Early Retirement or disability as defined in
Section 3.4 prior to his sixty-fifth (65th) birthday.
1.11 "Plan" means the Company's Supplemental Retirement Plan.
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1.12 "Plan Year" means the twelve (12) consecutive month period ending
June 30.
1.13 "Prior Plan" means the Twin Disc, Incorporated Supplemental Retire
ment Plan in effect immediately prior to January 1, 1998.
(1)
1.14 "Retirement" means the termination of a Participant's employment with
the Company on one of the retirement dates specified in Section 2.1.
1.15 "Service" means the aggregate of all periods of employment of an
Employee by the Company, including full and partial years, calculated from his
date of employment. Service will include the period of time, if any, during
which a Participant received disability income benefits under the Company's
long term disability plan.
1.16 "Surviving Spouse" means an individual who is a surviving spouse of a
Participant as defined under the Basic Plan.
(2)
The masculine gender, where appearing in the Plan will be deemed to include
the feminine gender, and the singular may include the plural, unless the
context clearly indicates the contrary.
SECTION II - ELIGIBILITY FOR BENEFITS
2.1 Each Participant is eligible to retire and receive a benefit under
this Plan beginning on one of the following dates:
(a) "Normal Retirement Date," which is the first day of the month
coinciding with or next following a Participant's sixty-fifth
(65th) birthday with at least five (5) years of Service.
(b) "Early Retirement Date," which is the first day of any month
following the month in which the Participant reaches the age
and service requirement set forth in the attached Schedule for
each Participant.
(c) "Postponed Retirement Date," which is the first day of the
month following the Participant's Normal Retirement Date in
which the Participant terminates employment with the Company.
2.2 If a Participant should become Disabled, he shall be entitled to
receive retirement benefits after cessation of his disability income benefits,
as described in Section 3.4 of the Plan.
2.3 Anything herein to the contrary notwithstanding, if any Participant
(including a Participant that has terminated employment with the Company)
engages in competition with the Company (without prior authorization given by
the Committee in writing) or is discharged for cause, or performs acts of
willful malfeasance or gross negligence in a matter of material importance to
the Company, all rights to any benefits payable under this Plan thereafter
(whether payable to such Participant or such Participant's Surviving Spouse)
shall, at the discretion of the Committee, be forfeited and the Company will
have no further obligation hereunder to such Participant or Surviving Spouse.
(3)
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SECTION III - AMOUNT AND FORM OF RETIREMENT BENEFIT
Amount of Benefit
- - - - - - - - - -
3.1 The annual benefit payable at a Normal Retirement Date will equal the
amount determined in accordance with the Schedule applicable to such
Participant.
3.2 The annual benefit payable at an Early Retirement Date will equal the
benefit determined in accordance with the Schedule applicable to such
Participant.
3.3 The annual benefit payable at a Postponed Retirement Date will be
equal to the benefit determined in accordance with Section 3.1 as of
the Participant's Postponed Retirement Date.
3.4 A Participant who becomes Disabled shall receive no benefits under
this Plan while he is entitled to receive disability income benefits
under the Company's long term disability plan. If payment of
disability income ceases before the Participant has attained either
his Early Retirement Date or his Normal Retirement Date and if he does
not then return to active employment with the Company he shall not be
entitled to receive any benefits under the Plan. If the Participant
does not return to active employment but payment of disability income
ceases on or after the Participant has attained his Early Retirement
Date or Normal Retirement Date, he shall be entitled to retire on an
Early or Normal Retirement Date, as the case may be. In either case
his Retirement Benefit shall be calculated and paid as described in
Section 3.1 or 3.2 of the Plan, whichever may be applicable, based on
Average Annual Earnings calculated at the time of his initial
disablement and Service calculated including the period of time he was
receiving benefits under the Company's long term disability plan plus
the elimination period, if any.
3.5 In no event will the annual benefit calculated under Sections 3.1, 3.2
or 3.3 of this Plan be less than the Actuarial Equivalent of the benefit
calculated under the Prior Plan, which is the benefit the Participant could
have received on December 31, 1997 if he had attained either his Early
Retirement Date or his Normal Retirement Date, had elected to retire, and
started receiving an immediate benefit in accordance with the terms of the
Prior Plan. For this purpose, the Actuarial Equivalent adjustment requires
converting the benefit from the ten-year temporary form defined in the Prior
Plan to the single life annuity form defined in this Plan. The amount
calculated under this Section 3.5 and payable at January 1, 1998 in the ten-
year temporary form is shown on the Schedule applicable to such Participant.
Form of Benefit
- - - - - - - - -
3.6 The benefit determined under this Plan in accordance with Section 3.1,
3.2 or 3.3 is calculated in the form of a single life annuity, providing
benefits for the life of the Participant with no benefits payable to any
beneficiary. The benefit determined under Section 3.7 is calculated in the
form of a single life temporary annuity, providing benefits for the shorter of
the life of the Participant or 120 monthly payments.
(4)
Any benefits payable under this Plan will automatically be paid as a lump sum
equal to the Actuarial Equivalent of the annual benefit payable under both the
single life annuity form and the single life temporary annuity form. If the
lump sum is equal to or less than $500,000, the lump sum will be paid in a
single payment. In the event that the lump sum is in excess of $500,000,
then the first payment will be limited to $500,000, with the unpaid balance
increasing with interest at 8% per year, and additional payments (also limited
to no more than $500,000 each) will be made on each twelve month anniversary
of the first payment until the balance is paid. If the Participant dies after
the first payment but prior to the time when the balance has been fully
discharged, the Surviving Spouse (or the named beneficiary) shall receive the
subsequent payment(s) at the same time and in the same amount as if the
Participant was alive to receive the payments.
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Payments of the benefits, if any, calculated under Section 3.7 may only be
paid in the form of a single life temporary annuity or a lump sum. Payments
of the benefits calculated under Sections 3.1, 3.2, or 3.3 may be paid under
one of the following optional forms of payment if the Participant files an
election in writing at least twelve (12) calendar months in advance of the
date his benefit payments begin.
The annual benefit payable under any optional form shall be determined as the
Actuarial Equivalent of the annual benefit payable under the Single Life
Annuity Form. A Participant may elect any optional form of payment listed
below:
(a) Single Life Annuity Form, under which monthly payments are
made to the Participant during his lifetime, with no further
payments from the Plan on his behalf after his death. This is
the calculated form of benefit and does not require an
Actuarial Equivalent adjustment.
(b) Contingent Annuitant Form, under which reduced monthly
payments are made to the Participant during his lifetime, with
payments from the Plan on his death equal to 50% of the rate
previously payable to the Participant to be continued to and
for the lifetime of his Surviving Spouse. The reduced
payments under this option shall be the Actuarial Equivalent
of the annual benefit payable under the Single Life Annuity
Form. In the event the Surviving Spouse dies prior to the
time his first payment commences, the form of benefit shall
automatically revert to the Single Life Annuity Form and there
shall be no reduction of his benefit.
(c) Ten Year Temporary Annuity Form, under which increased monthly
payments are made to the Participant for a ten year period as
long as the Participant is alive. Payments cease at the
earlier of the completion of the ten year period or the death
of the Participant. The increased payments under this option
shall be the Actuarial Equivalent of the annual benefit
payable under the Single Life Annuity Form.
Additional Basic Plan Benefit
- - - - - - - - - - - - - - - -
3.7 Upon Retirement, a Participant who elects to receive any or all of
their monthly benefits from the Basic Plan immediately in the form of a Joint
and Survivor Annuity for Married Participant
(5)
(Section 5.1(b) of the Basic Plan) will receive an additional benefit from
this Plan. This benefit is intended to make-up for the reduction in monthly
Basic Plan benefits due to Joint and Survivor coverage and is equal to the
difference, if any, between the monthly Basic Plan benefit payable immediately
in the single life form and the monthly Basic Plan benefit payable immediately
in the Joint and Survivor Annuity for Married Participant form. In the event
the Participant elects to receive all or a part of the Basic Plan benefit as a
single life annuity or as a lump sum, the additional benefit calculated in
this Section 3.7 will not be based on the portion of the Basic Plan benefit
that is paid in a form other than the Joint and Survivor Annuity for Married
Participant.
The benefit determined under this Section 3.7 is calculated in the form of a
single life temporary annuity, providing benefits for the shorter of the life
of the Participant or 120 monthly payments.
No additional benefit under this Section 3.7 shall be paid if the Participant
does not elect to receive Basic Plan benefits commencing at the same time as
any other benefits payable under this Plan.
(6)
SECTION IV - PAYMENT OF RETIREMENT BENEFITS
4.1 Benefits payable in accordance with Section III will commence on first
day of the month following the Participant's date of Retirement, or as soon
thereafter as administratively practical.
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If the Participant elected an optional form of payment, payments will
continue to be paid on the first day of each succeeding month. The last
payment will be on the first day of the month in which the retired Participant
dies unless otherwise elected in accordance with Section 3.6.
4.2 No benefits are payable under this Plan if a Participant terminates
employment for any reason other than Retirement, disability or death.
(7)
SECTION V - DEATH BENEFITS PAYABLE
5.1 If a Participant should die after attaining either his Early
Retirement Date or his Normal Retirement Date and before Retirement, the
Surviving Spouse will receive, in the form of a lump sum, a benefit equal to
the Participant's benefit determined in accordance with Section III as if the
Participant had retired and commenced receiving a benefit on the first of the
month following the date of his death. If the lump sum is equal to or less
than $500,000, the lump sum will be paid in a single payment. In the event
that the lump sum is in excess of $500,000, then the first payment will be
limited to $500,000, with the unpaid balance increasing with interest at 8%per
year, and additional payments (also limited to no more than $500,000) made on
each twelve month anniversary of the first payment until the balance is paid.
If the Surviving Spouse dies after the first payment but prior to the time
when the balance has been fully discharged, a named beneficiary shall receive
the subsequent payment(s) at the same time and in the same amount as if the
Surviving Spouse was alive to receive the payments.
5.2 The initial payment under this Section V will be paid within 60 days
following the month in which the Participant dies. If additional payments are
required, each such payment will be made on the date which follows the prior
payment by twelve months.
5.3 If a Participant should die prior to attaining his Early Retirement
Date or his Normal Retirement Date, no benefits will be payable from this
Plan. If a Participant should die without a Surviving Spouse, no benefit
under this Section V is payable.
(8)
SECTION VI - MISCELLANEOUS
6.1 The Committee may, in its sole discretion, terminate, suspend or amend
this Plan at any time or from time to time, in whole or in part. However, no
amendment or suspension of the Plan will affect any of the following:
(a) a retired Participant's right or the right of such retired
Participant's Surviving Spouse to continue to receive a benefit in accordance
with the terms of the Plan as in effect on the date in effect on the date such
Participant commenced to receive a benefit under the Plan; and
(b) the right of any Participant not covered under Section 6.1(a)
above to receive benefits that have been earned (with the amount of earned
benefit determined in accordance with Section 3 based on Earnings and Service
as of the date of the amendment or suspension) payable on the date they would
have been paid if the Plan had not been amended or suspended, all in accor
dance with the Plan in effect on the date of such amendment or suspension.
In the event the Plan is terminated, any earned benefits (whether or not in
pay status) will be nonforfeitable and the Company shall pay the Actuarial
Equivalent of the annual benefit earned to date in a lump sum to each Partici
pant within sixty (60) days following such termination.
6.2 Nothing contained herein will confer upon any Participant the right to
be retained in the service of the Company, nor will it interfere with the
right of the Company to discharge or otherwise deal with Participants without
regard to the existence of this Plan.
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6.3 This Plan is unfunded, and the Company will make Plan benefit payments
solely on a current disbursement basis from its general assets.
6.4 To the maximum extent permitted by law, no benefit under this Plan
shall be assignable or subject in any manner to alienation, sale, transfer,
claims of creditors, pledge, attachment or encumbrances of any kind.
6.5 The Committee may adopt rules and regulations to assist it in the
administration of the Plan. The Committee shall have complete and discretion
ary authority to determine eligibility, the amount of benefits payable under
the Plan and to otherwise interpret the provisions of the Plan.
6.6 Each Participant shall receive a copy of this Plan, and the Committee
will make available for inspection by any Participant a copy of the rules and
regulations used by the Committee in administering the Plan. Not withstanding
the immediately preceding sentence, to the extent any Participants are named
in Schedules to this Plan only those Participants shall receive a copy of such
Schedule.
6.7 This Plan is established under, and will be construed according to,
the laws of the State of Wisconsin, except to the extent preempted by ERISA or
other federal law.
(9)