Exhibit (10)(iii)(i)
HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR CECP PARTICIPANTS
(CECP SERP)
(Amended Through September 20, 1994)
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 ACT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 BASE PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 CORPORATE EXECUTIVE COMPENSATION PLAN (CECP) . . . . . . . . . . 1
1.6 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 EARNINGS LIMITATION. . . . . . . . . . . . . . . . . . . . . . . 2
1.8 EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 HONEYWELL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 MID-CAREER SERP. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 NORMAL RETIREMENT. . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 PARTICIPANT. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 PERMANENT AND TOTAL DISABILITY . . . . . . . . . . . . . . . . . 2
1.14 PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.15 SPOUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II - PLAN FORMULA. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 CECP SERP FORMULA. . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III - BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 NORMAL RETIREMENT. . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 EARLY RETIREMENT . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 CHANGE IN CONTROL. . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 PERMANENT AND TOTAL DISABILITY . . . . . . . . . . . . . . . . . 7
3.5 IMMEDIATE PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. . . . . . . . 8
3.6 DEFERRED PRE-RETIREMENT SURVIVING SPOUSE BENEFIT . . . . . . . . 8
3.7 SURVIVING CHILDREN'S BENEFIT . . . . . . . . . . . . . . . . . . 8
3.8 VESTED PARTICIPANT'S BENEFIT . . . . . . . . . . . . . . . . . . 9
ARTICLE IV - PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . 10
4.1 FORM OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 TIME OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 PAYMENT SUBSEQUENT TO CHANGE IN CONTROL. . . . . . . . . . . . . 11
4.4 PAYMENTS SUBSEQUENT TO THE PARTICIPANT'S RETIREMENT. . . . . . . 13
ARTICLE V - ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . 14
5.1 PERSONNEL COMMITTEE. . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . 15
6.1 AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . . . . . 15
ARTICLE VII - GENERAL CONDITIONS . . . . . . . . . . . . . . . . . . . . . . 16
7.1 NON-ASSIGNABILITY OF THE RIGHT TO RECEIVE BENEFITS . . . . . . . 16
7.2 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VIII - FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.1 SOURCE OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . 17
8.2 STATUS OF PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . 17
8.3 FICA AND FUTA CONTRIBUTIONS ON PLAN BENEFITS . . . . . . . . . . 17
ARTICLE IX - CLAIMS PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . 19
9.1 FILING OF A CLAIM FOR BENEFITS . . . . . . . . . . . . . . . . . .19
9.2 NOTIFICATION TO CLAIMANT OF DECISION . . . . . . . . . . . . . . 19
9.3 CONTENT OF NOTICE. . . . . . . . . . . . . . . . . . . . . . . . 19
9.4 REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . 20
9.5 DECISION ON REVIEW . . . . . . . . . . . . . . . . . . . . . . . 20
TABLE I:
ACTUARIAL ASSUMPTIONS FOR LUMP SUM PAYMENTS . . . . . . . . . . . . . . 22
TABLE II:
VESTED ACCRUED BENEFITS UNDER THE CECP SERP THROUGH
DECEMBER 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
HONEYWELL SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN
FOR CECP PARTICIPANTS
(CECP SERP)
(Amended Through September 20, 1994)
ARTICLE I - DEFINITIONS
1.1 ACT. The Employee Retirement Income Security Act of 1974, as from time to
time amended.
1.2 BASE PLAN. The Honeywell Retirement Benefit Plan, as from time to time
amended.
1.3 CODE. The Internal Revenue Code of 1986, as from time to time amended.
1.4 COMPANY. Honeywell Inc. and any subsidiary which is designated for
inclusion in the Plan, as hereafter defined, by the Board of Directors of
Honeywell Inc.
1.5 CORPORATE EXECUTIVE COMPENSATION PLAN (CECP). An incentive compensation
plan maintained by the Company to provide incentive compensation for a select
group of management or highly compensated employees, as from time to time
amended.
1.6 EARLY RETIREMENT. Retirement by a Participant under his or her Base Plan,
which is defined as the termination of employment on or after his or her 55th
birthday and after he or she has been credited with 10 or more years of
"Credited Service for Benefit Accrual," under the Base Plan.
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1.7 EARNINGS LIMITATION. The maximum amount of compensation of a Participant
and his or her family members permitted to be taken into account under the Base
Plan pursuant to Section 401(a)(17) of the Code (as it may be adjusted from time
to time pursuant to the Code).
1.8 EFFECTIVE DATE. The original effective date of this Plan is January 1,
1985.
1.9 HONEYWELL. Honeywell Inc., a Delaware corporation.
1.10 MID-CAREER SERP. The Honeywell Supplementary Executive Retirement Plan
for Mid-Career Hires, as it may be amended from time to time, maintained for
certain executives or highly compensated employees of the Company to provide
augmented credited service for retirement benefit determination.
1.11 NORMAL RETIREMENT. Retirement by a Participant on or after his or her
"Social Security Retirement Age" as defined under his or her Base Plan.
1.12 PARTICIPANT. An employee of the Company who was covered under the
Corporate Executive Compensation Plan at the time of his or her cessation of
active work with the Company, and who is both a participant in the Base Plan on
or after January 1, 1985 and a participant in the Corporate Executive
Compensation Plan on or after January 1, 1985, whose earnings recognized under
the Base Plan do not include deferred incentive payments under the Corporate
Executive Compensation Plan.
1.13 PERMANENT AND TOTAL DISABILITY. The disability of a Participant whereby
such Participant is wholly disabled by bodily injury or disease and will be
permanently, continuously and wholly prevented thereby for life from engaging in
any occupation or employment for wage or profit.
1.14 PLAN. This Honeywell Supplementary Executive Retirement Plan for
Corporate Executive Compensation Plan ("CECP SERP") Participants, effective
January 1, 1985 and amended through September 15, 1992.
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1.15 SPOUSE. A person who is formally married to a Participant as determined
by the Honeywell Pension and Retirement Administrative Committee for purposes of
the Base Plan by applying the laws of the state or country in which it
determines that the Participant is domiciled at the time of such determination
of status.
3
ARTICLE II - PLAN FORMULA
2.1 CECP SERP FORMULA. That annual benefit equal to Paragraph (a) minus
Paragraph (b).
(a) The applicable benefit computed for a Participant under the Base Plan:
(i) by including under the definition of "Earnings" for the purpose
of arriving at "Final Average Earnings" under the Base Plan the
amount of any "Earnings" under the Base Plan which are in excess
of the Earnings Limitation;
(ii) by including under the definition of "Earnings" for purposes of
arriving at "Final Average Earnings" under the Base Plan the
amount of any deferred incentive award in the year in which the
award would otherwise have been paid by the Corporate Executive
Compensation Plan;
(iii) by disregarding the provisions of the Base Plan limiting the
maximum benefit payable thereunder to the maximum benefit
permitted by the provisions of Section 415 of the Code in a
pension plan qualifying under Section 401 of the Code;
(iv) by not exceeding the Participant's frozen "Accrued Benefit"
determined under the Base Plan as of June 30, 1989 (or June 30,
1990, whichever may be applicable) as required by Section 8.2 of
the Base Plan; and
(v) by excluding "Augmented Credited Service for Benefit Accrual"
under the Mid-Career SERP, if the Mid-Career SERP is applicable
to the Participant.
(b) the applicable benefit computed for a Participant under the Base Plan:
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(i) by including under the definition of "Earnings" for the purpose
of arriving at "Final Average Earnings" under the Base Plan the
amount of any "Earnings" under the Base Plan which are in excess
of the Earnings Limitation;
(ii) by excluding under the definition of "Earnings" for purposes of
arriving at "Final Average Earnings" under the Base Plan the
amount of any defined incentive award in the year in which the
award would otherwise have been paid by the Corporate Executive
Compensation Plan;
(iii) by disregarding the provisions of the Base Plan limiting the
maximum benefit payable thereunder to the maximum benefit
permitted by the provisions of Section 415 of the Code in a
pension plan qualifying under Section 401 of the Coded;
(iv) by not exceeding the Participant's frozen "Accrued Benefit"
determined under the Base Plan as of June 30, 1989 (or June 30,
1990, whichever may be applicable) as required by Section 8.2 of
that Plan; and
(v) by excluding "Augmented Credited Service for Benefit Accrual"
under the Mid-Career SERP, if applicable.
5
ARTICLE III - BENEFITS
3.1 NORMAL RETIREMENT. Upon Normal Retirement, a Participant shall be
eligible for life for an annual benefit determined by calculating the
Participant's annual "Normal Retirement Benefit" under the Base Plan in
accordance with the CECP SERP Formula as prescribed in Section 2.1.
3.2 EARLY RETIREMENT. Upon Early Retirement, a Participant shall be eligible
for life for an annual benefit determined by calculating the Participant's
annual "Early Retirement Benefit" under the Base Plan in accordance with the
CECP SERP Formula as prescribed in Section 2.1.
3.3 CHANGE IN CONTROL. In the event of a "Change in Control," as defined in
this Section for all purposes of this Plan, each Participant's accrued benefit
under this Plan shall become immediately and fully vested and shall be paid to
the Participant in accordance with Section 4.3(a) of this Plan.
For purposes of this Plan, a "Change in Control" of Honeywell shall have
occurred if:
(a) any "person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than Honeywell, any subsidiary of Honeywell, any "person" (as
hereinabove defined) acting on behalf of Honeywell as underwriter
pursuant to an offering who is temporarily holding securities in
connection with such offering, any trustees or other fiduciary
holding securities under an employee benefit plan of Honeywell or
any corporation owned, directly or indirectly, by the stockholders
of Honeywell in substantially the same proportions as their
ownership of stock of Honeywell and excluding Honeywell subsidiaries
and underwriters), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Honeywell representing 30% or more of the combined
voting power of Honeywell's then outstanding securities;
6
(b) during any period not to exceed two consecutive years (not including
any period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board of Directors of
Honeywell (the "Board"), and any new director (other than a director
designated by a "person" who has entered into an agreement with
Honeywell to effect a transaction described in clause (a), (c) or
(d) of this Section) whose election by the Board of nomination for
election by Honeywell's stockholders was approved by a vote of at
least two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(c) the stockholders of Honeywell approve a merger or consolidation of
Honeywell with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of
Honeywell outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50 percent
of the combined voting power of the voting securities of Honeywell
or such surviving entity outstanding immediately after such merger
or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of Honeywell (or similar transaction)
in which no "person" (as hereinabove defined) acquires more than 30
percent of the combined voting power of Honeywell's then outstanding
securities; or
(d) the stockholders of Honeywell approve a plan of complete liquidation
of Honeywell or an agreement for the sale or disposition by
Honeywell of all or substantially all of the Company's assets (or
any transaction having a similar effect).
3.4 PERMANENT AND TOTAL DISABILITY. Upon the receipt of benefits by a
Participant under his or her Base Plan based on a determination of Permanent and
Total Disability, he or she shall be eligible for life for an annual benefit
determined by calculating the
7
Participant's annual "Disability Retirement Benefit" under the Base Plan in
accordance with the CECP SERP Formula as prescribed in Section 2.1.
3.5 IMMEDIATE PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. Upon the death of a
married Participant who is eligible for Early Retirement under his or her Base
Plan but who has not yet retired under such plan, his or her surviving Spouse on
the date of his or her death shall be eligible for life for an annual benefit
determined by calculating the surviving Spouse's annual "Pre-Retirement
Surviving Spouse Benefit" under the Participant's Base Plan in accordance with
the CECP SERP Formula as prescribed in Section 2.1.
3.6 DEFERRED PRE-RETIREMENT SURVIVING SPOUSE BENEFIT. Upon the death of a
married Participant who is vested but not eligible for Early Retirement under
his or her Base Plan and who is in the "Active Service" of the Company (as
defined in the Base Plan) on the date of his or her death, on the first day of
the month following the date such Participant would have attained his or her
earliest retirement eligibility under his or her Base Plan as a vested
Participant, his or her surviving Spouse on the date of his or her death shall
be eligible for life for an annual benefit determined by calculating the
surviving Spouse's annual "Deferred Pre-retirement Surviving Spouse Benefit"
under the Participant's Base Plan in accordance with the CECP SERP Formula as
prescribed in Section 2.1.
3.7 SURVIVING CHILDREN'S BENEFIT. Upon the death of a Participant who is
eligible for Early Retirement under his or her Base Plan and who is in the
"Active Service" of the Company (as defined in the Base Plan), the surviving
"Child" (as defined in the Base Plan) of a Participant (a) who has no surviving
Spouse on the date of his or her death, or (b) whose surviving Spouse dies while
receiving or while eligible to receive survivor benefits under the Base Plan
shall be eligible until such Child's attainment of age 23 for an annual benefit
determined by calculating the Child's annual "Surviving Children's Benefit"
under the Participant's Base Plan in accordance with the CECP SERP Formula as
prescribed in Section 2.1.
8
The benefit shall be divided equally among all such Children as defined in the
Base Plan and an equal share shall be paid to such Child while he qualifies as a
Child. The portion of the benefit payable to each such Child shall be
redetermined as of the last day of the month following the date any recipient
ceases to be a Child and the remaining such Children shall thereupon receive an
equal share of such benefit.
3.8 VESTED PARTICIPANT'S BENEFIT. Upon the receipt of benefits by a
Participant under his or her Base Plan who is not eligible for Early Retirement
but for whom a specified accrued benefit has been determined under this Plan in
accordance with Section 8.3 of this Plan, he or she shall be eligible for life
for an annual benefit determined by calculating the Participant's "Vested
Terminated Participant Benefit" under the Participant's Base Plan in accordance
with the CECP SERP Formula as prescribed in Section 2.1.
9
ARTICLE IV - PAYMENT OF BENEFITS
4.1 FORM OF PAYMENT.
(a) NORMAL FORM OF PAYMENT.
Except as otherwise provided in Paragraph (b) of this Section 4.1, a
benefit under this Plan shall be paid in the form of the benefit
paid with respect to the Participant under his or her Base Plan.
Any election, designation of a beneficiary(ies) or contingent
annuitant(s), or revocation made prior to the Participant's "Benefit
Starting Date" and in effect under the Participant's Base Plan shall
be in effect under this Plan.
(b) LUMP SUM FORM OF PAYMENT.
Notwithstanding the provisions of Paragraph (a) of this Section 4.1,
a Participant, who is eligible for Early Retirement, or who will
become eligible for Early Retirement within 13 months, may elect to
receive the present value of the benefits payable to him or her
under this Plan, as computed as of the last day of the month in
which the earlier of the date of the Participant's Early Retirement
or Normal Retirement occurs by utilizing the interest rate and
mortality assumptions set forth in Table I, which may be modified
from time to time by the Board of Directors of Honeywell Inc. (or,
in the case of the Participant's earlier death, the present value of
such benefits so computed as of the later of the last day of the
month in which the Participant's death or the Participant's earliest
retirement eligibility under his or her Base Plan occurs) in a lump
sum cash payment. The Participant's written election to receive a
lump sum cash payment shall be submitted on a form provided for that
purpose by the Company, and consented to by the Participant's Spouse
in writing if the Participant is married, and delivered to the Vice
President, Corporate Compensation and Benefits of Honeywell, at
least 13 months prior to the Participant's Early Retirement, Normal
Retirement. Such Spouse's consent must acknowledge the effect of
such election and be witnessed by a notary public. If a Participant
dies after making such election and prior to his or her Early
Retirement or Normal Retirement, the lump sum
10
cash payment shall be made to the Participant's surviving Spouse in
accordance with Section 3.5 or Section 3.6, whichever may be
applicable, or to the Participant's surviving Children in accordance
with Section 3.7.
4.2 TIME OF PAYMENTS. Benefit payments pursuant to Sections 3.1 or 3.2,
respectively, shall begin (or, in the event that the Participant has complied
with Section 4.1(b), be paid) 30 days after the Participant's Normal Retirement
or Early Retirement, as the case may be. Payments pursuant to Section 3.4 of
the Plan shall commence 30 days after the later of (a) the last day of the
calendar month in which the Participant is determined to be Permanently and
Totally Disabled , or (b) 6 months after his or her last full day of active
employment if he or she elects an immediate disability benefit under his or her
Base Plan; but if he or she elects a deferred disability benefit under his or
her Base Plan, payments shall commence (or, in the event that the Participant
has complied with Section 4.1(b), the present value of such benefits shall be
paid) 30 days after his or her Early Retirement or Normal Retirement. Payments
pursuant to Section 3.5 and 3.6 of this Plan, shall commence (or, in the event
that the Participant has complied with Section 4.1(b), the present value of such
benefits shall be paid) 30 days after the Participant's death if he or she was
eligible for Early Retirement of 30 days after the date he or she would have
attained his or her earliest retirement eligibility under his or her Base Plan.
Payments pursuant to Section 3.7 of this Plan shall commence (or, in the event
that the Participant has complied with Section 4.1(b), the present value of such
benefits shall be paid) 30 days after the date of the Participant's death.
4.3 PAYMENT SUBSEQUENT TO CHANGE IN CONTROL.
(a) PAYMENT UPON TERMINATION OF EMPLOYMENT. Notwithstanding any Plan
provision to the contrary, if within 3 years subsequent to a Change
in Control, a Participant's employment shall be terminated by the
Participant for "Good Reason" (as defined in the Honeywell Key
Employee Severance Plan) or by the Company other than for "Cause"
(as defined in the Honeywell Key Employee Severance Plan) or
Permanent and Total Disability, the present value of the benefits
payable pursuant to Section 3.3 (utilizing the interest rate and
mortality assumptions set forth in Table
11
I, which may be modified from time to time by the Board of Directors
of Honeywell Inc.) and mortality assumptions shall be paid as a lump
sum cash payment to the Participant on the fifth day after such
termination.
(b) PAYMENTS UPON IMPOSITION OF FEDERAL OR STATE TAXES. If subsequent
to a Change in Control, any Participant is determined to be subject
to Federal or state income tax on any amount accrued on his or her
behalf under this Plan prior to the time of payment hereunder,
Federal or state taxes attributable to the amount determined to be
so taxable shall be distributed by the Plan to such Participant. An
amount accrued on his or her behalf under this Plan shall be
determined to be subject to Federal income tax upon the earliest of:
(i) a final determination by the United States Internal Revenue
Service (hereinafter referred to as "IRS") addressed to the
Participant which is not appealed to the courts;
(ii) a final determination by the United States Tax Court or any
other Federal Court affirming any such determination by the
IRS; or
(iii) an opinion by the Tax Counsel of the Company, addressed to
the Company and the Trustee, that, by reason of Treasury
Regulations, amendments to the Code, published IRS rulings,
court decisions or other substantial precedent, amounts
accrued on a Participant's behalf hereunder are subject to
Federal or state income tax prior to payment.
The Company shall undertake at its sole expense to defend any tax claims
described herein which are asserted by the IRS or by any state revenue
authority against any Participant subsequent to a Change in Control,
including attorney fees and costs of appeal, and shall have the sole
authority to determine whether or not to appeal any determination made by
the IRS, by any state revenue authority or by a lower court. The Company
also agrees to reimburse
12
any Participant for any interest or penalties in respect of Federal or
state tax claims hereunder upon receipt of documentation of same. Any
distributions from this Plan to a Participant under this Section 4.3(b)
shall be applied in an equitable manner to reduce Company liabilities to
such Participant under the Plans.
4.4 PAYMENTS SUBSEQUENT TO THE PARTICIPANT'S RETIREMENT. At any time before
or after a Change in Control, a Participant, after he or she has retired under
the provisions of the Base Plan on or after December 17, 1991, or the surviving
Spouse or beneficiary of the Participant, after the Participant's death
subsequent to such retirement on or after December 17, 1991, may elect to
receive the present value of such benefits or remaining benefits to which he or
she is entitled under this Plan in one lump sum cash payment at any time after
the Participant's date of retirement or death, respectively, as computed as of
the last day of the month in which the request is received by the Vice
President, Corporate Compensation and Benefits of Honeywell, by utilizing the
interest rate and mortality assumptions set forth in Table I, which may be
modified from time to time by the Board of Directors of Honeywell, and then
reduced by a penalty, which shall be forfeited to the Company which is equal, to
10 percent of the present value of any unpaid benefits. Payment of such
benefits shall be effected on the last day of the next month following the month
in which the request is received.
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ARTICLE V - ADMINISTRATION OF THE PLAN
5.1 PERSONNEL COMMITTEE. The Plan shall be administered by the Personnel
Committee of Honeywell's Board of Directors which shall have the authority to
determine Plan eligibility and the amount of Plan benefits to which a
Participant or beneficiary is entitled to receive, to interpret the Plan,
maintain records and issue such regulations as it shall from time to time deem
appropriate. The Committee shall have absolute discretion in carrying out its
responsibilities. The interpretations of such Committee shall be final.
14
ARTICLE VI - AMENDMENT AND TERMINATION
6.1 AMENDMENT AND TERMINATION. The Board of Directors of Honeywell Inc. may
amend or terminate the Plan at any time except in the event of a Change in
Control as defined in Section 3.3; provided, however, that no such amendment or
termination shall adversely affect a benefit payable on the Normal or Early
Retirement, death or Permanent and Total Disability of a Participant with
respect to the Participant's employment by the Company prior to the date of such
amendment or termination unless such benefit is or becomes payable under another
plan or practice adopted by such Board of Directors. In the event of a Change
in Control as defined in Section 3.3, the Board may not amend or terminate the
Plan in any manner that shall adversely affect a benefit payable on the Normal
or Early Retirement, death or Permanent and Total Disability of, or any
available optional form of payment to, a Participant for a period of 3 years
from the date of the Change in Control. In the event of termination of the
Plan, any benefits which have accrued hereunder shall be paid in the form and at
the time determined under Section 4.3(a) of the Plan.
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ARTICLE VII - GENERAL CONDITIONS
7.1 NON-ASSIGNABILITY OF THE RIGHT TO RECEIVE BENEFITS. The right to receive
benefits under the Plan may not be anticipated, alienated, sold, transferred,
assigned, pledged, encumbered, or subjected to any charge or legal process.
7.2 APPLICABLE LAW. All questions pertaining to the construction, validity
and effect of this Plan shall be determined in accordance with the laws of the
United States and the State of Minnesota, other than its laws respecting choice
of law.
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ARTICLE VIII - FUNDING
8.1 SOURCE OF PAYMENTS. All payments hereunder shall be paid in cash from the
general funds of the Company, and no special or separate fund shall be
established since it is the intent to pay benefits as they become payable from
operating revenue. The Company may, however, in its sole discretion, establish
a separate reserve which may be held by it from which such benefits may be paid.
The foregoing shall not preclude the establishment by the Company of a "rabbi
trust" or the use of assets contributed to a "rabbi trust" to pay benefits under
the Plan.
8.2 STATUS OF PARTICIPANTS. A Participant shall have no right, title, or
interest whatever in or to any investments which the Company may make to aid it
in meeting its obligations hereunder. Nothing contained in this Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship, between the Company and a
Participant or any beneficiary. To the extent that any person acquires a right
to receive payments from the Company, such right shall be no greater than the
right of an unsecured creditor.
8.3 FICA AND FUTA CONTRIBUTIONS ON PLAN BENEFITS. All amounts which have
accrued to a Participant under this Plan with respect to a Participant's service
with the Company after December 31, 1983, as provided in this Section 8.3 shall
be considered "wages" for purposes of the Federal Insurance Contribution Act
("FICA") and the Federal Unemployment Tax Act ("FUTA") as of the earliest of (i)
the date of the commencement of the Participant's Normal Retirement benefits,
Early Retirement benefits, Total and Permanent Disability benefits, or
commencement of Pre-retirement Surviving Spouse Benefits to the Participant's
spouse or Surviving Children's Benefit to his or her Child or Children ("Benefit
Commencement Date"); (ii) the date in 1993 on which an active Participant
submitted an application for retirement benefits under the Base Plan or resigned
his or her employment with the Company, effective in 1994 but prior to July 1,
1994; or (iii) the date in 1993 on which a specified vested accrued benefit is
determined with respect to any other Participant in this Plan who is designated
by the Vice President Corporate Human Resources and approved by the Chief
Executive Officer of the Company prior to December 31, 1993. Attached hereto
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as Table II is a list of the Participants described in subparts (ii) and (iii)
above and the amount of their accrued benefits under this Plan which became
vested in 1993.
Effective with the first payment made under the Plan after December 31, 1990,
any amount taken into account as wages with respect to a Participant's Benefit
Commencement Date occurring after the applicable effective date specified in the
Social Security Amendment of 1983 by reason of this Section 8.3 shall not again
be treated as wages for FICA or FUTA purposes. However, no Participant shall be
entitled to a refund from the Company of any previously paid FICA or FUTA
contributions as a result of the application of this Section 8.3.
In order to compute the present value of a Participant's benefit under this Plan
for purposes of determining the amount of any FICA or FUTA contribution payable
with respect to such benefit, such present value shall be determined in
accordance with Table I.
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ARTICLE IX - CLAIMS PROCEDURE
9.1 FILING OF A CLAIM FOR BENEFITS. Upon denial of benefits by the Company,
the Participant or the Participant's beneficiary shall make a claim to the
Personnel Committee for the benefits provided under the Plan in the manner
provided in this Article.
9.2 NOTIFICATION TO CLAIMANT OF DECISION. If a claim is wholly or partially
denied, notice of the decision, meeting the requirements of Section 9.3 shall be
furnished to the claimant within 90 days after receipt of the claim by the
Personnel Committee, unless special circumstances, such as the need to hold a
hearing, require an extension of time for processing the claim. If an extension
of time is required, written notice of the extension shall be furnished to the
claimant prior to the end of the initial 90 day period, indicating the special
circumstances requiring the extension and the date by which a final decision is
expected. An extension of time shall in no event exceed a period of 90 days
from the end of the initial 90 day period. If notice of the denial of a claim
is not furnished in accordance with the provisions of this Section, the claim
shall be deemed denied and the claimant may proceed with the review procedure
set forth in Section 9.4.
9.3 CONTENT OF NOTICE. The Personnel Committee shall provide to any claimant
who is denied a claim for benefits written notice setting forth in a manner
calculated to be understood by the claimant, the following:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent provisions of this Plan on which the
denial is based;
(c) A description of any additional material or information necessary
for the claimant to perfect the claim, and an explanation of why
that material or information is necessary; and
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(d) An explanation of this Plan's claim review procedure, as set forth
in Sections 9.4 and 9.5, together with any review procedures
specified by the Personnel Committee.
9.4 REVIEW PROCEDURE. The purpose of the review procedures set forth in this
Section 9.4 as follows is to provide a procedure by which a claimant under this
Plan may have a reasonable opportunity to appeal a denial of a claim to the
Personnel Committee for a full and fair review. To accomplish that purpose, the
claimant or his or her duly authorized representative:
(a) May request a review upon written application to the Personnel
Committee,
(b) May review pertinent documents; and
(c) May submit issues and comments in writing.
A claimant (or his or her duly authorized representative) shall request a review
by filing a written application for review with the Personnel Committee at any
time within 60 days after receipt by the claimant of written notice of the
denial of the claim.
9.5 DECISION ON REVIEW. A decision of a denied claim shall be made in the
following manner:
(a) The decision on review shall be made by the Personnel Committee ,
which may in its discretion hold a hearing on the denied claim. The
Personnel Committee shall make its decision promptly, and not later
than 60 days after receipt of the request for review, unless special
circumstances (such as the need to hold a hearing) require an
extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than 120 days after
receipt of the request for review. If an extension of time for
review is required because of special circumstances, written notice
of the extension shall be furnished to the
20
claimant prior to the commencement of the extension. If the
decision on review is not furnished within the time specified, the
claim shall be deemed denied on review.
(b) The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to
be understood by the claimant, and specific references to the
pertinent provisions of the Plan on which the decision is based.
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TABLE I
Actuarial Assumptions for Lump Sum Payments
(Amended through December 21, 1993)
The present value of Plan benefits for purposes of Section 4.1(b),
Section 4.3(a), Section 4.4, and Section 8.3 shall be calculated using
the following actuarial assumptions:
Interest: 8-1/2 percent per annum discount rate
Mortality: 1983 Group Annuity Mortality Table for
healthy males
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TABLE II
VESTED ACCRUED BENEFITS UNDER THE CECP
SERP THROUGH DECEMBER 31, 1993
The following Participant, who was determined in accordance with the provisions
of Section 8.3 (ii) or Section 8.3(iii) of this Plan, has a vested accrued
benefit under this Plan payable at his actual early retirement date under the
Base Plan, in the indicated monthly amount as calculated on a life annuity
basis:
NAME MONTHLY LIFE ANNUITY
--------------------------------------------------------------------------------
Burns, John R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $286.98
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