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EXHIBIT 10.18
IMS HEALTH INCORPORATED
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
As Amended and Restated Effective April 17, 2001
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TABLE OF CONTENTS
PAGE
INTRODUCTION.................................................................1
SECTION 1 - DEFINITIONS...................................................1
1.1 "Actuarial Equivalent Value".....................................1
1.2 "Affiliated Employer"............................................2
1.3 "Average Final Compensation".....................................2
1.4 "Basic Disability Plan"..........................................2
1.5 "Basic Disability Plan Benefit"..................................2
1.6 "Basic Plan".....................................................3
1.7 "Basic Plan Benefit".............................................3
1.8 "Board"..........................................................3
1.9 "Cause"..........................................................3
1.10 "Change in Control".............................................4
1.11 "Change in Control Agreement"....................................7
1.12 "Code"...........................................................7
1.13 "Company"........................................................7
1.14 "Compensation"...................................................7
1.15 "Covered Earnings"...............................................7
1.16 "Deferred Vested Benefit"........................................7
1.17 "Disability" or "Disabled".......................................8
1.18 "Disability Benefits"............................................8
1.19 "Effective Date".................................................8
1.20 "Former Member"..................................................8
1.21 "Good Reason"....................................................8
1.22 "Lump Sum Election".............................................10
1.23 "Member"........................................................10
1.24 "Other Disability Income".......................................10
1.25 "Other Retirement Income".......................................11
1.26 "Plan"..........................................................12
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TABLE OF CONTENTS
(CONTINUED)
PAGE
1.27 "Potential Change in Control"...................................12
1.28 "Predecessor to this Plan"......................................12
1.29 "Retirement"....................................................12
1.30 "Retirement Benefits"...........................................13
1.31 "Service".......................................................13
1.32 "Surviving Spouse"..............................................14
1.33 "Surviving Spouse's Benefits"...................................14
1.34 "Vested Former Member"..........................................14
1.35 "Plan Administrator"............................................14
SECTION 2 - PARTICIPATION.................................................15
2.1 Commencement of Participation...................................15
2.2 Termination of Participation....................................15
SECTION 3 - AMOUNT AND FORM OF BENEFITS...................................15
3.1 Retirement Benefits.............................................15
3.2 Deferred Vested Benefit.........................................17
3.3 Form of Payment.................................................19
3.4 Lump Sum Election...............................................21
3.5 Cessation of Benefits...........................................22
3.6 Notification of Cessation of Benefits...........................24
3.7 Repayment of Benefits Paid as Lump Sum..........................24
3.8 Change in Control...............................................25
SECTION 4 - DISABILITY BENEFITS...........................................27
4.1 Disability Benefits.............................................27
SECTION 5 - SURVIVING SPOUSE'S BENEFITS...................................28
5.1 Death Prior to Benefit Commencement.............................28
5.2 Death On or After Benefit Commencement..........................28
5.3 Commencement of Surviving Spouse's Benefit......................28
5.4 Lump Sum Payment................................................29
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.5 Reduction.......................................................30
SECTION 6 - PLAN ADMINISTRATOR............................................30
6.1 Duties and Authority............................................30
6.2 Claims Procedure................................................30
SECTION 7 - MISCELLANEOUS.................................................31
7.1 Amendment; Termination..........................................31
7.2 No Employment Rights............................................32
7.3 Payout in Discretion of the Plan Administrator..................32
7.4 Unfunded Status.................................................32
7.5 Arbitration.....................................................33
7.6 No Alienation...................................................33
7.7 Withholding.....................................................34
7.8 Governing Law...................................................34
7.9 Successors......................................................34
7.10 Integration.....................................................34
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IMS HEALTH INCORPORATED
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
As Amended and Restated Effective April 17, 2001
INTRODUCTION
Effective as of July 1, 1998, the IMS Health Incorporated Supplemental Executive
Retirement Plan (the "Plan") was established to provide a means of ensuring the
payment of a competitive level of retirement income and disability and survivor
benefits, and thereby attract, retain and motivate a select group of executives
of IMS Health Incorporated and its affiliated employers. This document
represents a complete restatement of the Plan effective as of April 17, 2001.
The provisions of this amendment and restatement of the Plan shall apply to
Members of the Plan who have not retired or terminated employment with the
Company as of April 17, 2001. The rights to benefits, if any, of any Former
Member or Vested Former Member who retired or otherwise terminated employment
before April 17, 2001, together with the amount of such benefits, shall continue
to be governed by the provisions of the Plan in effect as of the date of such
retirement or termination of employment.
SECTION 1 - DEFINITIONS
1.1 "ACTUARIAL EQUIVALENT VALUE" shall mean a benefit of equivalent value
computed on the basis of the 1983 Group Annuity Mortality Table and
interest equal to the yield on 30-year Treasury Bonds as of the last
business day of the Plan Year prior to the year in which the relevant
calculation occurs; provided, however, that for purposes of determining
the Actuarial Equivalent Value of the amount described in Section 1.25(a)
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for Members or Vested Former Members who participated in the Predecessor
to this Plan, the foregoing assumptions or the assumptions used in the
Predecessor to this Plan shall be used, whichever produces the greater
benefit for the Member or the Vested Former Member.
1.2 "AFFILIATED EMPLOYER" shall mean an entity affiliated with the Company.
1.3 "AVERAGE FINAL COMPENSATION" shall mean a Member's average annual
Compensation during the five consecutive 12-month periods in the last ten
consecutive 12-month periods of his or her Service (or during the total
number of consecutive 12-month periods if fewer than five), immediately
prior to the month following the Member's termination of employment with
the Company or an Affiliated Employer or, if earlier, removal from
participation under this Plan, affording the highest such Average Final
Compensation. If actual monthly Compensation for any month during the
120-month computational period is unavailable, Compensation for such month
shall be determined by dividing the Member's annual rate of base pay in
the month preceding such unavailable month by 12.
1.4 "BASIC DISABILITY PLAN" shall mean as to any Member the long-term
disability plan of the Company or an Affiliated Employer pursuant to which
long-term disability benefits are payable to such Member.
1.5 "BASIC DISABILITY PLAN BENEFIT" shall mean the amount of benefits payable
to a Member from the Basic Disability Plan.
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1.6 "BASIC PLAN" shall mean as to any Member or Vested Former Member the
defined benefit pension plan of the Company or an Affiliated Employer
intended to meet the requirements of Code Section 401(a) pursuant to which
retirement benefits are payable to such Member or Vested Former Member or
to the Surviving Spouse or designated beneficiary of a deceased Member or
Vested Former Member.
1.7 "BASIC PLAN BENEFIT" shall mean the amount of benefits payable from the
Basic Plan to a Member or Vested Former Member.
1.8 "BOARD" shall mean the Board of Directors of IMS Health Incorporated,
except that any action authorized to be taken by the Board hereunder may
also be taken by a duly authorized committee of the Board or its duly
authorized delegees.
1.9 "CAUSE". A Member shall not be deemed to have been terminated for "Cause"
under this Plan unless such Member shall have been terminated for "Cause"
under the terms of such Member's employment agreement with the Company, if
any. If no such employment agreement containing a definition of "Cause"
shall be in effect, for purposes of this Plan "Cause" shall mean a
Member's:
(a) willful and continued failure to substantially perform his or her
duties (other than any such failure resulting from incapacity due to
physical or mental illness or Disability or any failure after the
issuance of a notice of termination by the Member for Good Reason)
which failure is demonstrably and materially damaging to the
financial condition or reputation of the Company and/or its
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Affiliated Employers, and which failure continues more than 48 hours
after a written demand for substantial performance is delivered to
the Member by the Board, which demand specifically identifies the
manner in which the Board believes that the Member has not
substantially performed his or her duties; or
(b) the willful engaging by the Member in conduct which is demonstrably
and materially injurious to the Company, monetarily or otherwise.
No act, or failure to act, on the part of the Member shall be deemed
"willful" unless done, or omitted to be done, by the Member not in good
faith and without reasonable belief that his or her action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Member shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Member a copy of the
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of
the Board (after reasonable notice to the Member and an opportunity for
the Member, together with the Member's counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Member
was guilty of conduct set forth above in this definition and specifying
the particulars thereof in detail.
1.10 "CHANGE IN CONTROL". If a "Change in Control" shall have occurred or shall
be deemed to have occurred under the terms of a Member's or Vested Former
Member's Change in Control Agreement or employment agreement with the
Company, if any, a "Change in
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Control" shall be deemed to have occurred under this Plan, otherwise a
"Change in Control" shall be deemed to have occurred if:
(a) any "Person" as such term is used for purposes of Sections 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, or any company owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), becomes the "Beneficial
Owner" (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding
securities;
(b) during any period of 24 months (not including any period prior to
the Effective Date), individuals who at the beginning of such period
constitute the Board, and any new director (other than (i) a
director nominated by a Person who has entered into an agreement
with the Company to effect a transaction described in Sections
1.10(a), (c), or (d) hereof, (ii) a director nominated by any Person
(including the Company) who publicly announces an intention to take
or to consider taking actions (including, but not limited to, an
actual or threatened proxy contest) which if consummated would
constitute a Change in Control, or (iii) a director nominated by any
Person who is the Beneficial Owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined
voting power of the Company's securities) whose election by the
Board or nomination
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for election by the Company's stockholders was approved in advance
by a vote of at least two-thirds (2/3) 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 at least a majority
thereof;
(c) the stockholders of the Company approve any transaction or series of
transactions under which the Company is merged or consolidated with
any other company, other than a merger or consolidation (i) which
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) more than 66 2/3% of the combined voting
power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation,
and (ii) after which no "Person" holds 20% or more of the combined
voting power of the then outstanding securities of the Company or
such surviving entity;
(d) 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; or
(e) the Board adopts a resolution to the effect that, for purposes of
this Plan, a Change in Control has occurred.
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1.11 "CHANGE IN CONTROL AGREEMENT" shall mean any written agreement in effect
between any Member or Former Member or Vested Former Member and the
Company or an Affiliated Employer pursuant to which benefits may be
payable to such Member or Former Member or Vested Former Member in
connection with a Change in Control.
1.12 "CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
1.13 "COMPANY" shall mean IMS Health Incorporated.
1.14 "COMPENSATION" shall mean base salary, annual bonuses, commissions,
overtime and shift pay, in each case prior to reductions for elective
contributions under Sections 401(k) and 125 of the Code and deferred
compensation under any nonqualified deferred compensation plan.
Notwithstanding the foregoing, Compensation shall exclude severance pay
(including, without limitation, severance pay under the Company's Employee
Protection Plan), stay-on bonuses, long-term bonuses, retirement income,
change-in-control payments, contingent payments, amounts paid under this
Plan (other than Disability Benefits) or any other retirement plan or
deferred compensation plan, income derived from stock options, stock
appreciation rights and other equity-based compensation and other forms of
special remuneration.
1.15 "COVERED EARNINGS" shall mean a Member's Compensation in the 12 months
immediately preceding the onset of the Member's Disability.
1.16 "DEFERRED VESTED BENEFIT" shall mean the benefits described in Section
3.2(b) hereof
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1.17 "DISABILITY" OR "DISABLED" shall mean disability or disabled for purposes
of the Basic Disability Plan.
1.18 "DISABILITY BENEFITS" shall mean the benefits provided as described in
Section 4.1(b) hereof.
1.19 "EFFECTIVE DATE" shall mean July 1, 1998. The effective date of this
amendment and restatement of the Plan shall mean April 17, 2001.
1.20 "FORMER MEMBER" shall mean (i) a Member whose employment with the Company
or an Affiliated Employer terminates before he or she has completed five
or more years of Service, or (ii) a Member who was removed from
participation in the Plan, in accordance with Section 2.2 hereof, before
he or she has completed five or more years of Service.
1.21 "GOOD REASON". If a Member shall have terminated employment for "Good
Reason" under the terms of such Member's Change in Control Agreement or
employment agreement with the Company, if any, such Member shall be deemed
to have terminated employment for "Good Reason" under this Plan, otherwise
"Good Reason" shall mean, without the Member's express written consent,
the occurrence of any of the following circumstances unless, in the case
of subsections (a), (b), (c) or (d) hereof, such circumstances are fully
corrected prior to the date of termination specified in the notice of
termination given in respect thereof:
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(a) the assignment to the Member of any duties inconsistent with the
Member's position in the Company, or an adverse alteration in the
nature or status of the Member's responsibilities or the conditions
of the Member's employment;
(b) a reduction by the Company in the Member's annual base salary,
target bonus or perquisites except for across-the-board perquisite
reductions similarly affecting all senior executives of the Company
and all senior executives of any Person, as such term is used for
purposes of Sections 13(d) or 14(d) of the Securities Exchange Act
of 1934, as amended, in control of the Company;
(c) the relocation of the principal place of the Member's employment to
a location more than 50 miles from the location of such place of
employment; for this purpose, required travel on the Company's
business will not constitute a relocation so long as the extent of
such travel is substantially consistent with the Member's customary
business travel obligations;
(d) the failure by the Company to pay to the Member any portion of the
Member's compensation or to pay to the Member any portion of an
installment of deferred compensation under any deferred compensation
program of the Company within seven days of the date such
compensation is due;
(e) the failure by the Company to continue in effect any material
compensation or benefit plan in which the Member participated unless
an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with
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respect to such plan, or the failure by the Company to continue the
Member's participation therein (or in such substitute or alternative
plan) on a basis not materially less favorable, both in terms of the
amounts of benefits provided and the level of the Member's
participation relative to other participants;
(f) the failure of the Company to obtain a satisfactory agreement from
any successor to the Company to fully assume the Company's
obligations and to perform under this Plan, as contemplated in
Section 7.9 hereof;
(g) with respect to any Member who is a party to a Change in Control
Agreement, any purported termination of such Member's employment
that is not effected pursuant to the notice provisions, if any, in
such Member's Change in Control Agreement.
1.22 "LUMP SUM ELECTION" shall mean an election to receive all or portion of
the benefits payable hereunder in a lump sum pursuant to Section 3.4
hereof.
1.23 "MEMBER" shall mean an employee of the Company or an Affiliated Employer
who becomes a participant in the Plan pursuant to Section 2, but excludes
any Former Member or Vested Former Member.
1.24 "OTHER DISABILITY INCOME" shall mean (i) the disability insurance benefit
that the Member is entitled to receive under the Federal Social Security
Act while he or she is receiving the Basic Disability Plan Benefit and
(ii) the disability income payable to a Member from
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any supplemental executive disability plan of the Company or any
Affiliated Employer or from any other contract, agreement or other
arrangement with the Company or an Affiliated Employer (excluding any
Basic Disability Plan).
1.25 "OTHER RETIREMENT INCOME" shall mean:
(a) the Social Security retirement benefit that the Member or Former
Member is entitled to receive under the Federal Social Security Act,
assuming that for years prior to the Member's employment with the
Company and for years following the Member's termination of
employment with the Company until the Member attains age 62, the
Member earned compensation so as to accrue the maximum Social
Security benefits, and
(b) the retirement income payable to a Member or Vested Former Member
from any `excess benefit plan' as that term is defined in Section
3(36) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), any plan described in Section 201(2) of ERISA,
and any other contract, agreement or other arrangement providing a
defined pension benefit or defined contribution retirement benefit,
in any case, maintained or entered into with the Company or an
Affiliated Employer (excluding this Plan, any Basic Plan, any
defined contribution plan intended to meet the requirements of Code
Section 401(a) and any elective plan of deferred compensation).
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1.26 "PLAN" shall mean the IMS Health Incorporated Supplemental Executive
Retirement Plan, as embodied herein, and any amendments thereto.
1.27 "POTENTIAL CHANGE IN CONTROL". If a "Potential Change in Control" shall
have occurred or shall be deemed to have occurred under the terms of a
Member's Change in Control Agreement or employment agreement with the
Company, if any, or "Potential Change in Control" shall be deemed to have
occurred under this Plan, otherwise a "Potential Change in Control" shall
be deemed to have occurred if:
(a) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
(b) any Person (including the Company), as defined in Section 1.10(a)
hereof, publicly announces an intention to take or to consider
taking actions which if consummated would constitute a Change in
Control; or
(c) the Board adopts a resolution to the effect that, for purposes of
this Plan, a Potential Change in Control has occurred.
1.28 "PREDECESSOR TO THIS PLAN" shall mean the Supplemental Executive Benefit
Plan of The Dun & Bradstreet Corporation, as amended as of December 21,
1994.
1.29 "RETIREMENT" shall mean the termination of a Member's or Vested Former
Member's employment with the Company or an Affiliated Employer other than
by reason of death
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or Disability (i) after reaching age 55 and completing five years of
Service, or (ii) immediately following the cessation of the payment of
Disability Benefits under the Plan to such Member or Vested Former Member
while he or she is Disabled. In determining whether age 55 has been
attained under clause (i) of this definition, there shall be included as
years of age the number of additional years credited as "age" for purposes
of the Plan to the Member or Vested Former Member under a then-effective
employment agreement between the Company and such person.
1.30 "RETIREMENT BENEFITS" shall mean the benefits described in Section 3.1(b)
hereof.
1.31 "SERVICE" shall mean a Member's service defined as Vesting Service in the
Basic Plan, which is taken into account for vesting purposes thereunder
(including any such service prior to the date such individual becomes a
Member but not including any such service after participation hereunder
terminates), except that (i) Service will also include service while the
Member is receiving Disability Benefits under this Plan; (ii) if a Member
was employed by a company acquired by the Company or an Affiliated
Employer after the Effective Date, such Member's service with that company
prior to the date of acquisition will not constitute Service hereunder;
(iii) upon commencement of participation hereunder in accordance with
Section 2.1 hereof, the CEO (as defined in such section) may limit any
service otherwise to constitute Service hereunder with respect to periods
prior to the date of participation in the Plan; and (iv) no service of a
Former Member or Vested Former Member during any period after removal from
participation under Section 2.2 shall constitute Service for purposes of
the Plan. The foregoing notwithstanding, there shall be included as
Service under the Plan the number of additional years (or other
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additional period) credited as "service" for purposes of the Plan to the
Member or Former Member or Vested Former Member under an employment
agreement between the Company or an Affiliated Employer and such person in
effect at the time of such person's termination of employment.
1.32 "SURVIVING SPOUSE" shall mean the spouse of a deceased Member or Vested
Former Member to whom such Member or Vested Former Member is married under
applicable state law immediately preceding such Member or Vested Former
Member's death.
1.33 "SURVIVING SPOUSE'S BENEFITS" shall mean the benefits described in Section
5 hereof.
1.34 "VESTED FORMER MEMBER" shall mean (i) a Member whose employment with the
Company or an Affiliated Employer terminates on or after the date on which
he or she has completed five or more years of Service, or (ii) a Member
who was removed from participation in the Plan, in accordance with Section
2.2 hereof, on or after the date on which he or she has completed five or
more years of Service.
1.35 "PLAN ADMINISTRATOR" shall mean the Company, except that any action
authorized to be taken by the Plan Administrator hereunder may also be
taken by any committee or person(s) duly authorized by the Board or the
duly authorized delegees of such duly authorized committee or person(s).
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SECTION 2 - PARTICIPATION
2.1 COMMENCEMENT OF PARTICIPATION. The Chief Executive Officer ("CEO") of the
Company and such other key executives of the Corporation and its
Affiliated Employers as are designated by the CEO in writing and approved
by the Plan Administrator shall participate in the Plan as of a date
determined by the CEO.
2.2 TERMINATION OF PARTICIPATION. A Member's participation in the Plan shall
terminate upon termination of his or her employment with the Company or
any Affiliated Employer. Prior to termination of employment, a Member may
be removed, upon written notice by the CEO as approved by the Plan
Administrator, from further participation in the Plan. As of the date of
termination or removal, no further benefits shall accrue to such
individual hereunder.
SECTION 3 - AMOUNT AND FORM OF BENEFITS
3.1 RETIREMENT BENEFITS.
(a) ELIGIBILITY. Upon the Retirement of a Member or Vested Former Member
from the Company or an Affiliated Employer, he or she shall be
entitled to the Retirement Benefit described in Section 3.1(b)
hereof, payable in the form specified in Section 3.3.
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(b) AMOUNT. The Retirement Benefit of a Member or Vested Former Member
shall be an annual benefit equal to the difference between (i) and
the sum of (ii), (iii), (iv) and (v) where:
(i) is 5% of his or her Average Final Compensation multiplied by
the number of his or her years of Service not in excess of ten
years, plus 2% of such Average Final Compensation multiplied
by the number of his or her years of Service over ten but not
in excess of 15 years;
(ii) is the Basic Plan Benefit payable to the Member or Vested
Former Member as of the date of his or her Retirement
expressed in the form of an annual life annuity, or, if the
Basic Plan Benefit becomes payable after the Member's or
Vested Former Member's Retirement, the Actuarial Equivalent
Value of the Basic Plan Benefit payable in the form of an
annual life annuity as of such date, regardless of whether
such date precedes the earliest possible payment date under
the terms of the Basic Plan;
(iii) is the Other Retirement Income payable to the Member or Vested
Former Member as of the date of his or her Retirement
expressed in the form of an annual life annuity, or, if the
Other Retirement Income becomes payable after the Member's or
Vested Former Member's Retirement, the Actuarial Equivalent
Value of the Other Retirement Income payable in the form of an
annual life annuity as of such date, regardless of whether
such date
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precedes the earliest possible payment date under the terms of
the appropriate retirement arrangement; and
(iv) is the annual benefit payable to the Member or Vested Former
Member under the terms of the Predecessor to this Plan as of
the date of his or her Retirement, expressed in the form of an
annual life annuity, or, if the annual benefit payable under
the Predecessor to this Plan becomes payable after the
Member's or Vested Former Member's Retirement, the Actuarial
Equivalent Value of the annual benefit payable under the
Predecessor to this Plan, expressed in the form of an annual
life annuity, payable as of such date, regardless of whether
such date precedes the earliest possible payment date under
the terms of the Predecessor to this Plan.
3.2 DEFERRED VESTED BENEFIT.
(a) ELIGIBILITY. Each Member and Vested Former Member who has completed
five or more years of Service and whose employment with the Company
or an Affiliated Employer terminates prior to Retirement, for a
reason other than Cause, death or Disability shall be entitled to
the Deferred Vested Benefit described in Section 3.2(b) hereof,
payable in the form specified in Section 3.3.
(b) AMOUNT. The Deferred Vested Benefit of a Member or Vested Former
Member who terminates and who meets the eligibility requirements of
Section 3.2(a) shall
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be an annual benefit equal to the difference between (i) and the sum
of (ii), (iii), and (iv), where:
(i) is 5% of his or her Average Final Compensation, multiplied by
the number of his or her years of Service not in excess of ten
(10), plus 2% of such Average Final Compensation multiplied by
the number of his or her years of Service over ten but not in
excess of 15 years;
(ii) is the Basic Plan Benefit payable to the Member or Vested
Former Member as of the date his or her Deferred Vested
Benefit commences expressed in the form of an annual life
annuity, or, if the Basic Plan Benefit becomes payable after
the Member's or Vested Former Member's Deferred Vested Benefit
commences, the Actuarial Equivalent Value of the Basic Plan
Benefit payable in the form of an annual life annuity as of
such date, regardless of whether such date precedes the
earliest possible payment date under the terms of the Basic
Plan;
(iii) is the Other Retirement Income payable to the Member or Vested
Former Member as of the date his or her Deferred Vested
Benefit commences expressed in the form of an annual life
annuity, or, if the Other Retirement Income becomes payable
after the Member's or Vested Former Member's Deferred Vested
Benefit commences, the Actuarial Equivalent Value of the Other
Retirement Income payable in the form of an annual life
annuity as of such date, regardless of whether such date
precedes the earliest
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possible payment date under the terms of the appropriate
retirement arrangement; and
(iv) is the annual benefit payable to the Member or Vested Former
Member under the terms of the Predecessor to this Plan as of
the date his or her Deferred Vested Benefit commences,
expressed in the form of an annual life annuity, or, if the
annual benefit payable under the Predecessor to this Plan
becomes payable after the Member's or Vested Former Member's
Deferred Vested Benefit commences, the Actuarial Equivalent
Value of the annual benefit payable under the Predecessor to
this Plan, expressed in the form of an annual life annuity,
payable as of such date, regardless of whether such date
precedes the earliest possible payment date under the terms of
the Predecessor to this Plan.
3.3 FORM OF PAYMENT.
(a) Except as provided under Section 3.3(b) or Section 3.3(c), the
Retirement Benefit or Deferred Vested Benefit under this Plan, as
the case may be, shall be payable in monthly installments in the
form of a straight life annuity and without regard to any optional
form of benefits elected under the Basic Plan. Payments shall
commence on the first day of the calendar month coinciding with or
next following (i) the Member's or Vested Former Member's
Retirement, in the case of Retirement Benefits or (ii) the later of
the date the Member or Vested Former
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Member attains age 55 or terminates employment, in the case of
Deferred Vested Benefits.
(b) If a Member or Vested Former Member has made a Lump Sum Election
pursuant to Section 3.4 and such Lump Sum Election becomes effective
(i) prior to the date of such Member's or Vested Former Member's
Retirement or termination of employment with the Company or an
Affiliated Employer and (ii) while he or she was still a Member, the
Retirement Benefit, or Deferred Vested Benefit under this Plan, as
the case may be, shall be payable in the form or combination of
forms of payment elected pursuant to such Lump Sum Election under
Section 3.4 and without regard to any optional form of benefits
elected under the Basic Plan. Any portion of the benefits hereunder
payable in a lump sum shall be paid within 60 days following (i) the
Member's or Vested Former Member's Retirement, in the case of
Retirement Benefits or (ii) the later of the date the Member or
Vested Former Member attains age 55 or terminates employment, in the
case of Deferred Vested Benefits.
(c) Notwithstanding any Lump Sum Election made (or not made) under
Section 3.3, if the lump sum value, determined in the same manner as
provided under Section 3.4(a), of a Member's or Vested Former
Member's Retirement, or Deferred Vested Benefit is $10,000 or less
at the time such benefit is payable under this Plan, such benefit
shall be payable as a lump sum.
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3.4 LUMP SUM ELECTION.
(a) A Member or Vested Former Member may elect to receive all, none, or
a specified portion, as provided in Section 3.4(c), of his or her
Retirement Benefit or Deferred Vested Benefit under the Plan as a
lump sum and to receive any balance of such benefit in the form of
an annuity; provided that any such Lump Sum Election shall be
effective for purposes of this Plan only if the conditions of
Section 3.4(b) are satisfied. A Member or Vested Former Member may
elect a payment form different than the payment form previously
elected by him or her under this Section 3.4(a) by filing a revised
election form; provided that any such new election shall be
effective only if the conditions of Section 3.4(b) are satisfied
with respect to such new election. Any prior Lump Sum Election made
by a Member that has satisfied the conditions of Section 3.4(b)
shall remain effective for purposes of the Plan until such Member
has made a new election satisfying the conditions of Section 3.4(b).
The amount of any portion of a Member's or a Vested Former Member's
Retirement Benefit or Deferred Vested Benefit payable as a lump sum
under this Section 3.4 shall equal the present value of such portion
of the benefit, and such present value shall be determined (i) based
on a discount rate equal to 85% of the average of the 15-year
non-callable U.S. Treasury bond yields as of the close of business
on the last business day of each of the three months immediately
preceding the date the annuity value is determined and (ii) using
the 1983 Group Annuity Mortality Table.
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(b) A Member's Election under Section 3.4(a) becomes effective only if
all of the following conditions are satisfied: (i) such Member
remains in the employment of the Company or an Affiliated Employer,
as the case may be, for the full 12 calendar months immediately
following the date of such election (the "Election Date"), except in
the case of death or Disability of such Member (in which case
Section 3.4 (d) shall apply) and (ii) such Member complies with the
administrative procedures set forth by the Plan Administrator with
respect to the making of a Lump Sum Election.
(c) A Member making an election under Section 3.4(a) may specify the
portion of his Retirement or Deferred Vested Benefit under the Plan
to be received in a lump sum as follows: 0%, 25%, 50%, 75%, or 100%.
(d) In the event a Member who has made an Election pursuant to Section
3.4(a) dies or becomes Disabled while employed by the Company or an
Affiliated Employer and such death or total and permanent Disability
occurs during the 12 calendar-month period immediately following the
Election Date, the condition under Section 3.4(b)(i) shall be deemed
satisfied with respect to such Member.
3.5 CESSATION OF BENEFITS. Subject to Section 3.8 hereof, no benefits or no
further benefits, as the case may be, shall be paid to a Member, Vested
Former Member or Surviving Spouse if the Member or Vested Former Member
has:
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(a) become a stockholder (unless such stock is listed on a national
securities exchange or traded on a daily basis in the
over-the-counter market and the Member's or Vested Former Member's
ownership interest is not in excess of 2% of the company whose
shares are being purchased), employee, officer, director or
consultant of or to a company, or a member or an employee of or a
consultant to a partnership or any other business or firm, which
competes with any of the businesses identified in the Company's
Employee Protection Plan, or such Member or Vested Former Member
accepts any form of compensation from such competing entity;
(b) been discharged from employment with the Company or any Affiliated
Employer for Cause;
(c) failed to retain in confidence any and all confidential information
concerning the Company or any Affiliated Employer and its respective
business which was known or became known to the Member or Vested
Former Member, except as otherwise required by law and except
information (i) ascertainable or obtained from public information,
(ii) received by the Member or Vested Former Member at any time
after the Member's or Vested Former Member's employment by the
Company or any Affiliated Employer terminated, from a third party
not employed by or otherwise affiliated with the Company or any
Affiliated Employer, or (iii) which was or became known to the
public by any means other than a breach of this Section 3.5; or
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(d) made disparaging comments about the Company or any Affiliated
Employer in any communications, written or oral, with any
individual, company, government body or agency or any other entity
whatsoever. For purposes hereof, "disparage" shall mean any
communication, including, but not limited to, any statements,
actions or insinuations, made either directly or through a third
party, that would tend to lessen the standing or stature of the
Company or any Affiliated Employer in the eyes of a customer, a
prospective customer, a shareholder or a prospective shareholder.
3.6 NOTIFICATION OF CESSATION OF BENEFITS. Subject to Section 3.8 hereof, in
any case described in Section 3.5, the Member, Vested Former Member or
Surviving Spouse shall be given prior written notice that no benefits or
no further benefits, as the case may be, will be paid to such Member,
Vested Former Member or Surviving Spouse. Such written notice shall
specify the particular act(s), or failures to act, and the basis on which
the decision to cease paying his or her benefits has been made.
3.7 REPAYMENT OF BENEFITS PAID AS LUMP SUM.
(a) Subject to Section 3.8 hereof, a Member or Vested Former Member who
receives in a lump sum any portion of his or her Retirement Benefit
or Deferred Vested Benefit pursuant to a Lump Sum Election, shall
receive such lump sum portion of such Retirement Benefit or Deferred
Vested Benefit subject to the condition that if such Member or
Vested Former Member engages in any of the acts described in Section
3.5(a), then such Member or Vested Former Member shall, within 60
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days after written notice by the Company, repay to the Company the
amount described in Section 3.7(b).
(b) The amount described in this Section shall equal the amount of the
Member's or Vested Former Member's lump sum benefit paid under this
Plan to which such Member or Vested Former Member would not have
been entitled, if such lump sum benefit had instead been payable in
the form of an annuity under this Plan and such annuity payments
were subject to the provisions of Section 3.5.
3.8 CHANGE IN CONTROL.
(a) Anything in this Plan to the contrary notwithstanding:
(i) Any Member, whose employment with the Company or an Affiliated
Employer is involuntarily terminated by the Company or an
Affiliated Employer at or within two years following a Change
in Control for a reason other than Cause or whose employment
is voluntarily terminated by the Member with Good Reason at or
within two years following a Change in Control shall be deemed
to have completed five years of Service for purposes of
Section 3.2(a) hereof and shall be credited with three
additional years of Service for purposes of calculating the
benefits payable under Sections 3.1(b) or 3.2(b) hereof, as
the case may be. Notwithstanding the provisions of Section 3.3
of this Plan to the contrary, payment of the Actuarial
Equivalent Value of such benefits shall be made
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in the form provided in Section 3.3 commencing on the first
day of the calendar month coinciding with or next following
such Member's termination of employment; provided, however,
that such Actuarial Equivalent Value shall be determined by
crediting such Member with three additional years of age and
on the assumption that unreduced benefits are payable upon the
Member's attainment of age 55. Moreover, for purposes of
determining the Actuarial Equivalent Value of such benefits
payable in the form of a lump sum, the interest and mortality
factors specified in Section 3.4(a) shall apply. In addition,
in the event that a Member's Service shall have been limited
pursuant to Section 1.31(iii) to disregard Service prior to
such Member's participation in the Plan, such limitation shall
be eliminated in the event of such Member's termination of
employment at or within two years following a Change in
Control as provided above in this subsection (i).
(ii) In the event of a Potential Change in Control or Change in
Control, the Company shall, not later than 15 days thereafter,
have established one or more so-called "rabbi" trusts and
shall deposit therein cash in an amount sufficient to provide
for full payment of all potential benefits payable under the
Plan at or following a Change in Control. Such rabbi trust(s)
shall be irrevocable and shall provide that the Company may
not, directly or indirectly, use or recover any assets of the
trust(s) until such time as all obligations which potentially
could arise hereunder have been settled and paid in full,
subject only to the claims of creditors of the Company in the
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event of insolvency or bankruptcy of the Company; provided,
however, that if no Change in Control has occurred within two
years after such Potential Change in Control, such rabbi
trust(s) shall at the end of such two-year period become
revocable and may thereafter be revoked by the Company.
(iii) the provisions of Sections 3.5 through 3.7 shall be of no
force or effect with respect to Members who Retire or
terminate employment within a two-year period following a
Change in Control.
SECTION 4 - DISABILITY BENEFITS
4.1 DISABILITY BENEFITS.
(a) ELIGIBILITY. A Member who is enrolled for the maximum disability
insurance coverage available under the Basic Disability Plan and who
has become Disabled shall be entitled to the Disability Benefit
described in Section 4.1(b).
(b) AMOUNT. The Disability Benefit of a Member entitled thereto shall be
an annual benefit payable in monthly installments under this Plan
during the same period as disability benefits are actually paid by
the Basic Disability Plan, in an amount equal to 60% of the Member's
Covered Earnings, offset by the Member's (i) Basic Disability Plan
Benefit, (ii) Basic Plan Benefit, if the Basic Disability Plan
Benefit does not already include an offset for such Basic Plan
Benefit, and (iii) Other Disability Income.
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SECTION 5 - SURVIVING SPOUSE'S BENEFITS
5.1 DEATH PRIOR TO BENEFIT COMMENCEMENT. Upon the death of a Member or Vested
Former Member, prior to the commencement of his or her Retirement Benefit
or Deferred Vested Benefit hereunder, any such Member shall be deemed to
have completed five years of Service for purposes of Section 3.2(a) and
his or her Surviving Spouse will be entitled to a Surviving Spouse's
Benefit under this Plan equal to 50% of the Retirement or Deferred Vested
Benefit that would have been provided from the Plan had the Member or
Vested Member retired from or terminated employment with the Company or an
Affiliated Employer on the date of death.
5.2 DEATH ON OR AFTER BENEFIT COMMENCEMENT. Upon the death of a Vested Former
Member while he or she is receiving Retirement or Deferred Vested
Benefits, his or her Surviving Spouse shall receive a Surviving Spouse's
Benefit equal to 50% of the Benefit he or she was receiving at the time of
death. Notwithstanding the foregoing, no benefit shall be payable under
this Section 5.2 to the extent a Retirement Benefit or Deferred Vested
Benefit was previously paid to a Member or Vested Former Member in the
form of a lump sum.
5.3 COMMENCEMENT OF SURVIVING SPOUSE'S BENEFIT. Except as provided in Section
5.4, the Surviving Spouse's Benefit provided under Sections 5.1 or 5.2
will be payable monthly, commencing on the first day of the month
coincident with or next following the date of the Member's or Vested
Former Member's death, or if the Member or Vested Former Member had not
attained age 55, on the date such Member or Vested Former Member
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would have attained age 55 had he or she lived. Such benefits shall
continue until the first day of the month in which the Surviving Spouse
dies.
5.4 LUMP SUM PAYMENT.
(a) If a Member or a Vested Former Member made an Election under Section
3.4 but such Member or Vested Former Member died prior to such lump
sum payment, the Surviving Spouse's Benefit payable under Section
5.1 hereof will be payable in the form or combination of forms of
payment so elected by such Member or Vested Former Member pursuant
to such Lump Sum Election. The amount of any lump sum payment under
the Plan shall be determined using the actuarial assumptions set
forth in Section 3.4(a).
(b) If the lump sum value, determined in the same manner as provided
under Section 3.4(a), of a Surviving Spouse's Benefit is $10,000 or
less at the time such Surviving Spouse's Benefit is payable under
this Plan, such benefit shall be payable as a lump sum.
(c) Any Surviving Spouse's Benefit which is payable as a lump sum shall
be paid within 60 days after the date when any portion of such
benefit payable in annuity form commences or would commence if any
portion of such Surviving Spouse's Benefit were payable as an
annuity as set forth in Section 5.3.
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5.5 REDUCTION. Notwithstanding the foregoing provisions of Section 5, the
amount of a Surviving Spouse's Benefit shall be reduced by one percentage
point for each year (where a half year or more is treated as a full year)
in excess of ten years that the age of the Member or Vested Former Member
exceeds the age of the Surviving Spouse.
SECTION 6 - PLAN ADMINISTRATOR
6.1 DUTIES AND AUTHORITY. The Plan Administrator shall be responsible for the
administration of the Plan and may delegate to any management committee,
employee, director or agent its responsibility to perform any act
hereunder, including, without limitation, those matters involving the
exercise of discretion; provided, that such delegation shall be subject to
revocation at any time at the Plan Administrator's discretion. The Plan
Administrator shall have the sole discretion to determine all questions
arising in connection with the Plan, to interpret the provisions of the
Plan and to construe all of its terms, to adopt, amend, and rescind rules
and regulations for the administration of the Plan, and generally to
conduct and administer the Plan and to make all determinations in
connection with the Plan as may be necessary or advisable. All such
actions of the Plan Administrator shall be conclusive and binding upon all
Members, Former Members, Vested Former Members, Surviving Spouses and
other persons.
6.2 CLAIMS PROCEDURE. A Member, Former Member or Vested Former Member or his
or her authorized representative shall have 60 days after receipt of
written notification of denial of a claim for benefits under the Plan to
request a review of the denial by making written
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request to the Plan Administrator and may review pertinent documents and
submit issues and comments in writing within such 60-day period.
Not later than 60 days after receipt of the request for review, the Plan
Administrator shall render and furnish to the claimant a written decision,
which shall make specific references to pertinent Plan provisions on which
it is based. If special circumstances require an extension of time for
processing, the decision shall be rendered as soon as possible, but not
later than 120 days after receipt of the request for review, provided that
written notice and explanation of the delay are given to the claimant
prior to commencement of the extension. Such decision by the Plan
Administrator shall not be subject to further review. If a decision on
review is not furnished to a claimant within the specified time period,
the claim shall be deemed to have been denied on review.
SECTION 7 - MISCELLANEOUS
7.1 AMENDMENT; TERMINATION. The Board of Directors of the Company, may, in its
sole discretion, terminate, suspend or amend this Plan at any time or from
time to time, in whole or in part; provided, however, that no termination,
suspension or amendment of the Plan may adversely affect (a) a Member's or
Vested Former Member's benefit under the Plan to which he or she is
entitled hereunder, or, (b) a Vested Former Member's right or the right of
a Surviving Spouse to receive or to continue to receive a benefit in
accordance with the Plan, such benefits or rights as in effect on the date
immediately preceding the date of such termination, suspension or
amendment. Notwithstanding the foregoing, the Employee Benefits Committee
of the Company may amend the Plan
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without the approval of the Board of Directors of the Company with respect
to amendments that such Committee determines do not have a significant
effect on the cost of the Plan.
7.2 NO EMPLOYMENT RIGHTS. Nothing contained herein will confer upon any
Member, Former Member or Vested Former Member the right to be retained in
the service of the Company or any Affiliated Employee, nor will it
interfere with the right of the Company or any Affiliated Employer to
discharge or otherwise deal with Members, Former Members or Vested Former
Members with respect to matters of employment.
7.3 PAYOUT IN DISCRETION OF THE PLAN ADMINISTRATOR. Notwithstanding anything
herein to the contrary, at any time following the termination of service
of the Member or Vested Former Member, the Plan Administrator may
authorize, under uniform rules applicable to all Members, Vested Former
Members and Surviving Spouses under the Plan, a lump sum distribution of a
Member's, Vested Former Member's and/or Surviving Spouse's Retirement
Benefit or Surviving Spouse's Benefit under the Plan in an amount equal to
the Actuarial Equivalent Value of such Retirement Benefit or Surviving
Spouse's Benefit, in full satisfaction of all present and future Plan
liability with respect to such Member, Vested Former Member and/or
Surviving Spouse, if the amount of such present value is less than
$250,000. Such lump sum distribution may be made without the consent of
the Member, Vested Former Member or Surviving Spouse.
7.4 UNFUNDED STATUS. Members and Vested Former Members shall have the status
of general unsecured creditors of the Company, and this Plan constitutes a
mere promise by the
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Company to make benefit payments at the time or times required hereunder.
It is the intention of the Company that this Plan be unfunded for tax
purposes and for purposes of Title I of ERISA and any trust created by the
Company and any assets held by such trust to assist the Company in meeting
its obligations under the Plan shall meet the requirements necessary to
retain such unfunded status.
7.5 ARBITRATION. Any dispute or controversy arising under or in connection
with the Plan shall be settled exclusively by arbitration in New York, New
York in accordance with the rules of the American Arbitration Association
in effect at the time of such arbitration. The Company shall pay the
entire costs of any proceeding brought by a Member, Vested Former Member,
Former Member, or Surviving Spouse hereunder, including the fees and
expenses of counsel and pension experts engaged by such person, and such
expenses shall be reimbursed promptly upon evidence that such expenses
have been incurred without awaiting the outcome of the proceedings;
provided however, that such costs and expenses shall be repaid to the
Company by the recipient of same if it is finally determined by the
arbitrators that the position taken by such person was entirely without
merit. Failure of such person to prevail in any dispute or controversy
shall not be the sole basis on which such determination shall be made.
7.6 NO ALIENATION. A Member's or Vested Former Member's right to benefit
payments under the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment by creditors or such Member or Vested Former
Member or his or her Surviving Spouse.
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7.7 WITHHOLDING. The Company may withhold from any benefit under the Plan an
amount sufficient to satisfy its tax withholding obligations.
7.8 GOVERNING LAW. The Plan shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to
be performed in such state to the extent not preempted by federal law.
7.9 SUCCESSORS. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform the obligations of the Company under
this Plan in the same manner and to the same extent that the Company would
have been required to perform such obligations if no such succession had
taken place and such assumption shall be an express condition to the
consummation of any such purchase, merger, consolidation or other
transaction.
7.10 INTEGRATION. In the event of any conflict or ambiguity between this Plan
and the terms of any employment agreement between a Member and the Company
or any Change in Control Agreement between a Member and the Company (this
Plan and any such employment agreement or Change in Control Agreement
being collectively referred to herein as the "arrangements"), such
conflict or ambiguity shall be resolved in accordance with the terms of
that arrangement which are most beneficial to the Member; provided,
however, that no such resolution of any such conflict or ambiguity shall
operate to cause the Member to receive duplicate payments or benefits
under the arrangements.
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