BENEFITS EQUALIZATION PLAN
OF
COLTEC INDUSTRIES INC
Effective January 1, 1976
Amended and Restated as of January 1, 1989
BENEFITS EQUALIZATION PLAN OF
COLTEC INDUSTRIES INC
INTRODUCTION
The purpose of this Plan is to provide a means for select officers of the
Corporation who are, or would be, impacted by the application of Internal
Revenue Code Sections 401(a)(17), 401(k), 402(g), or 415 ("IRS limits") to the
Retirement Plan for Salaried Employees of Coltec Industries Inc and the Coltec
Industries Inc Retirement Savings Plan for Salaried Employees to receive the
same benefits from such plans as they would be entitled to in the absence of
such IRS limits. In addition, to the extent that salary deferrals hereunder
cannot be recognized for purposes of the benefits payable under the Retirement
Plan for Salaried Employees of Coltec Industries Inc, any benefit attributable
to such amounts would be paid hereunder.
This Plan was originally effective January 1, 1976, and has been amended from
time to time. The provisions contained herein reflect subsequent amendments
effective January 1, 1989, and January 1, 1997, as well as the merger of the
Supplemental Retirement Savings Plan of Coltec Industries Inc into the Plan.
BENEFITS EQUALIZATION PLAN OF
COLTEC INDUSTRIES INC
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS........................................................1
ARTICLE II. COMPUTATION OF SUPPLEMENTAL BENEFITS..............................4
ARTICLE III. SUPPLEMENTAL CONTRIBUTIONS.......................................5
ARTICLE IV. SOURCE OF PAYMENT AND BENEFITS....................................8
ARTICLE V. AMENDMENT AND TERMINATION.........................................11
ARTICLE VI. GENERAL PROVISIONS...............................................12
ARTICLE VII. CHANGE IN CONTROL...............................................13
BENEFITS EQUALIZATION PLAN OF
COLTEC INDUSTRIES INC
ARTICLE 1. DEFINITIONS
1.01 "Board" means the Board of Directors of the Corporation.
1.02 "Code" means the Internal Revenue Code of 1986. All references to any
Section of the Code shall be deemed to refer not only to such Section but
also to any amendment thereof and any successor statutory provisions.
1.03 "Committee" means the Retirement Committee appointed by the Board to
administer the Retirement Plan.
1.04 "Corporation" means Coltec Industries Inc.
1.05 "Deferred Contributions" means contributions made on behalf of a
participant in the Savings Plan pursuant to his deferral election
thereunder.
1.06 "Employee" means an individual who (a) at any time before the termination
of this Plan is an employee of a participating employer and while so
employed is a member of the Retirement Plan or the Savings Plan and (b)
has been designated as a participant in the Plan by action of the Board
or of a committee of the Board. In addition, an employee who previously
participated in the Supplemental Retirement Savings Plan of Colt
Industries Inc shall participate in this Plan, effective December 31,
1996.
1.07 "Employer Contributions" means matching contributions made to the Savings
Plan by participating employers.
1.08 "Plan" means this Benefits Equalization Plan of Coltec Industries Inc, as
at any time in effect.
1.09 "Restricted Retirement Allowance" means the portion of the Total
Retirement Allowance of a member of the Retirement Plan that is payable
thereunder in any calendar year.
1.10 "Retirement Plan" means the Retirement Plan for Salaried Employees of
Coltec Industries Inc, as at any time in effect.
1.11 "Savings Plan" means the Coltec Industries Inc Retirement Savings Plan
for Salaried Employees.
1.12 "Total Retirement Allowance" means the allowance that would be payable in
any calendar year under the Retirement Plan to a member or his
beneficiary, determined (a) without regard to any IRS limits and (b) by
including in the determination of the "Average Final Compensation" under
the Retirement Plan the amount of the member's salary reduction pursuant
to Section 3.02 hereof (to the extent not includible under the Retirement
Plan).
1.13 "Key Executive" means an employee of a participating employer who entered
into an individual deferred compensation agreement with his participating
employer and who was given the opportunity to transfer the entire amount
so deferred into the Plan.
Wherever used herein, words in the masculine form shall be deemed to refer to
females as well as to males.
ARTICLE II. COMPUTATION OF SUPPLEMENTAL BENEFITS
If during any calendar year after 1975 the Total Retirement allowance payable to
any person in such year will exceed the Restricted Retirement Allowance payable
to him in such year, he shall be entitled to receive under this Plan in such
year a supplemental benefit in an amount equal to the excess of such Total
Retirement Allowance over such Restricted Retirement Allowance.
ARTICLE III. SUPPLEMENTAL CONTRIBUTIONS
3.01 For each year in which an Employee is, or could be, prevented from making
Deferred Contributions under the Savings Plan as a consequence of the IRS
limits, a participating employer shall record on its books a supplemental
contribution equal to the sum of (a) and (b) below:
(a) the amount of the Employee's salary reduction under the agreement
described in Section 3.02, which shall not be greater than an amount
equal to (1) minus (2):
(1) the Employee's compensation for the year multiplied by a
percentage equal to the maximum percentage of Deferred
Contributions permitted for such year under the Savings Plan
without regard to any IRS limits; minus
(2) the amount of Deferred Contributions which could be made on the
Employee's behalf for the year under the Savings Plan (whether or
not made); plus
(b) an amount equal to the excess of (1) over (2):
(1) the Employer Contribution that would have been made on the
Employee's behalf for the year under the Savings Plan, without
regard to any IRS limits, based on the Employee's actual Deferred
Contributions plus the amount treated as Deferred Contributions
pursuant to (a) above; less
(2) the actual amount of Employer Contributions made on the
Employee's behalf for the year under the Savings Plan.
Notwithstanding the foregoing, no contributions shall be made under the
foregoing paragraph (b)(l) if the Employee does not have the maximum amount of
Deferred Contributions which could be made on the Employee's behalf under the
Savings Plan credited to such plan due to: the Employee's voluntary suspension,
or reduction, in the rate of such contributions under the Savings Plan; or the
Employee's incurrence of a suspension of contributions attributable to a
withdrawal under the Savings Plan.
3.02 Prior to the beginning of any calendar year after 1988 during which an
Employee desires to have contributions credited on his behalf pursuant to
Section 3.01, the Employee shall execute an irrevocable salary reduction
agreement specifying the percentage by which his compensation is to be
reduced in the following year. Such percentage shall be expressed as an
aggregate total percentage of no less than 6 percent, reduced by the
percentage of his compensation which could be contributed to the Savings
Plan for the year as Deferred Contributions. Any such election shall remain
in effect for the entire calendar year and cannot be modified or revoked by
the Employee during such year. Prior to the beginning of any subsequent
year, an employee will need to execute a new salary reduction agreement for
such subsequent year.
3.03 Supplemental contributions credited for the benefit of an Employee pursuant
to Section 3.01 and amounts deferred by Key Executives pursuant to
individual deferred compensation agreements shall be credited (or debited)
annually with the investment earnings (or losses) and appreciation (or
depreciation) generated by an investment in one or more investment vehicles
selected by the Committee and made available for election by Employees and
Key Executives hereunder. The investment experience of the vehicle selected
by the Employee and Key Executive shall be reflected on the books of the
participating employer and shall be paid to the Employee or Key Executive,
as the case may be, as provided in Article IV in addition to the
contributions credited pursuant to Section 3.01.
Participating employers shall be under no obligation to purchase any
investment vehicle, the earnings and appreciation of which are used to
measure the investment return payable to an Employee hereunder, and all
payments to Employees under this Plan shall be made from the general assets
of participating employers.
ARTICLE IV. SOURCE OF PAYMENT AND BENEFITS
4.01 Payment of any supplemental benefit under Article II of this Plan shall be
made in cash at the same time in the same form and to the same person or
persons as payment of allowances under the Retirement Plan. Payment of any
supplemental amounts under Article III of this Plan shall be made in cash
(i) to the Employee, or his beneficiary, in a lump sum as soon as
practicable following the Employee's termination of employment or (ii) to
the Employee, at the written election of the Employee delivered to the
Committee prior to the date on which payment of supplemental amounts are
scheduled to commence, in either five or ten annual installments, each
installment shall be equal to a fraction of the value of the supplemental
amounts to which the election is applicable as of the date any such
installment is due, the numerator of which fraction shall be one (1) and
the denominator of which shall be the number of installments then remaining
to be paid. Payment of such installments shall commence as soon as
practicable following the Employee's termination of employment and shall be
made as of each subsequent anniversary of such date for the duration of the
period during which installments are to be paid. If the Employee shall die
prior to receiving all of such installments, the remaining installments
shall be paid to his beneficiary in a lump sum.
Notwithstanding the foregoing, in the case of any Employee who (a) begins
retirement on or after January 1, 1997, or (b) began retirement prior to
January 1, 1997, was a director of the Corporation at retirement, continued
to serve as a director of the Corporation thereafter, is presently a
director of the Corporation and ceases to be a director after January 1,
1997, payment of any supplemental benefit under Article II of this Plan
shall be made in a lump sum as soon as administratively feasible after the
Employee's retirement or after ceasing to be a director of the Corporation;
provided, however, that if the Employee gives a written notification to the
Corporation not less than 90 days prior to his annuity starting date under
the Retirement Plan that he elects not to receive payment of any
supplemental benefit under Article II of the Plan in a lump sum, such
payment shall instead be made at the same time in the same form, and to the
same person or persons as payment of allowances under the Retirement Plan.
The amount of such lump
sum distribution shall be determined using the factors that would be used
for valuing a single sum distribution under the Retirement Plan as of the
date of valuation. Such lump sum shall be in lieu of all supplemental
benefits under Article II of the Plan, but shall have no effect on the
form, timing, or amount of any distribution made under the Retirement Plan.
4.02 Payment of supplemental amounts or benefits under this Plan shall be made
by the participating employer who employed the Employee in respect of whom
such amounts are payable. In case such amounts or benefits are payable in
respect of an Employee whose service included employment with more than one
participating employer, the Committee shall determine the proportion of
such amounts or benefits to be paid by each such participating employer.
4.03 The Corporation or other participating employer making a payment under this
Plan shall withhold any amount required to be withheld under applicable
Federal, state, and local income tax laws, and any such payment shall be
reduced by the amount so withheld.
4.04 In addition to the payment of any supplemental benefit under Article II and
any supplemental amount under Article III, payment of any amounts deferred
by Key Executives pursuant to individual deferred compensation agreements
shall be in the same form and in the same manner as payment of supplemental
amounts contributed under Article III of the Plan. Payment shall be made by
the participating employer of the Key Executive at the time such amounts
were deferred.
ARTICLE V. AMENDMENT AND TERMINATION
The Board may amend this Plan in any respect or terminate it at any time;
provided, however, that no such amendment or termination shall have the effect
of reducing the amount of supplemental amounts payable hereunder with respect to
the service of any Employee prior to such amendment or termination.
In the event of termination, any amounts which are payable by reason of the
service of Employees prior to the time of termination shall be paid as follows:
(a) with respect to any supplemental benefits under Article II, through the
purchase from an insurance company of a fully paid-up and non-transferable
annuity in the amount determined under Article II as of the date of
termination of the Plan; and
(b) with respect to any supplemental amounts under Article III, in the form of
an immediate cash lump sum.
ARTICLE VI. GENERAL PROVISIONS
6.01 This Plan shall be administered by the Committee, which shall maintain such
records as will enable it to determine the Employees or their beneficiaries
who are entitled to receive supplemental amounts hereunder and the amount
of such benefits.
6.02 No right or interest of any person entitled to a benefit under this Plan
shall be subject to voluntary or involuntary alienation, assignment, or
transfer of any kind.
6.03 The establishment of the Plan shall not be construed as conferring any
legal rights upon an Employee or any person for a continuation of
employment, nor shall it interfere with the rights of a participating
employer to discharge any Employee and to treat him without regard to the
effect that such treatment may have upon him as an Employee.
6.04 This Plan shall be construed and administered in accordance with the laws
of the State of New York.
6.05 This Plan shall be effective January 1, 1976, as to amounts payable on or
after that date in respect of any Employee.
ARTICLE VII. CHANGE IN CONTROL
7.01 Notwithstanding anything to the contrary contained in this Plan. the
provisions of this Article VII shall apply in the event of a Change in
Control or a Potential Change in Control, as defined below:
(a) A "Change in Control" shall be deemed to occur:
(1) upon the acquisition, other than from the Corporation by any
individual, entity, or group (within the meaning of Section
13(d)(3) or 14(d) of the Securities Act of 1934 (the "Exchange
Act") of the beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20 percent or more
of either the then outstanding shares of common stock of the
Corporation or the combined voting securities of the Corporation
entitled to vote generally in the election of directors;
provided. however, that for any individual. entity, or group that
has a beneficial ownership in shares of common stock or voting
securities as of the date of adoption of this Article VII, a
Change in Control shall occur only upon the acquisition of an
additional 20 percent or more of the total outstanding shares of
common stock or voting securities; or
(2) when individuals who, as of the date of the adoption of this
Article VII, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board,
provided that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual was a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the directors of the Corporation (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
(3) upon the approval by the shareholders of the Corporation of (i) a
reorganization, merger, or consolidation, in each case, with
respect to which the individuals and entities who were the
respective beneficial owners of the common stock and voting
securities of the Corporation immediately prior to such
reorganization, merger, or consolidation do not, following such
reorganization, merger, or consolidation, beneficially own,
directly or indirectly, more than 50 percent of, respectively,
the then outstanding shares of common stock, and the combined
voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may
be, of the corporation resulting from such reorganization,
merger, or consolidation; (ii) a complete liquidation or
dissolution of the Corporation; or (iii) the sale or other
disposition of all or substantially all of the assets of the
Corporation.
(b) A "Potential Change in Control" shall be deemed to occur:
(1) at the time the Corporation enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control; or
(2) at the time the Corporation or any individual, entity, or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) publicly announces an intention to take actions,
which if consummated, would constitute a Change in Control; or if
the Board in its discretion determines, based on facts and
circumstances, that there is a possible Change in Control.
7.02 Upon the occurrence of Potential Change in Control, the Corporation shall
set aside in a grantor trust, either existing or to be established, an
amount equal to the outstanding benefit obligations under the Plan as of
the date of the Potential Change in Control, less any amounts previously
set aside in a grantor trust to provide benefits under the Plan.
If a Change in Control does not occur within a reasonable time from the
date such funds are set aside, the funds, adjusted for any gains or losses,
shall revert to the Corporation.
7.03 Upon the occurrence of a Change in Control, each Employee who has accrued
or been allocated a benefit under the Plan as of the date of the Change in
Control or the related Potential Change in Control shall become fully
vested in his benefit under the Plan.
7.04 As soon as administratively practicable after the later of the adoption of
this Article VII or the date an Employee first accrues or is allocated a
benefit under the Plan, the Committee shall provide each such Employee with
an opportunity to make an irrevocable election to receive an immediate lump
sum distribution of his entire vested benefit under the Plan as of the date
of a Change in Control, or to receive his benefit in the manner otherwise
provided under the Plan as if no Change in Control had occurred. The
receipt of such a lump sum benefit upon a Change in Control shall in no way
affect the right of the Employee to continue to participate in the Plan
following such distribution.
7.05 As soon as administratively practicable after the adoption of this Article
VII, the Committee shall provide each participant then in receipt of
periodic benefits under the Plan or who terminated service with a right to
a benefit under the Plan with an opportunity to make an irrevocable
election to receive, upon a Change in Control, an immediate lump sum
distribution of his remaining benefit under the Plan or to continue to
receive benefit payments as if no Change in Control had occurred.
7.06 Within the 30-day period following a Change in Control, any Employee who
did not elect to receive a lump sum distribution under Section 7.04 may
elect to receive a lump sum distribution in an amount equal to his total
benefit under the Plan reduced by a percentage equal to the LIBOR rate as
of the date of the Change in Control plus 1 percent. Such distribution
shall be in lieu of all remaining benefits under the Plan.
7.07 For purposes of valuing any lump sum distribution of a supplemental benefit
under Article II of the Plan under Sections 7.04, 7.05, or 7.06, the
mortality factor shall be that used under the Retirement Plan as of the
Change in Control date, and the interest rate shall be the annual 30-year
U.S. Treasury rate published by the Board of Governors of the Federal
Reserve System for the month preceding the month containing the Change in
Control date.