MAGNETEK, INC.
PERFORMANCE-BASED
PENSION RESTORATION PLAN
(Effective as of January 1, 1997)
MAGNETEK, INC.
PERFORMANCE-BASED PENSION RESTORATION PLAN
ARTICLE 1. ESTABLISHMENT AND PURPOSES
1.1 ESTABLISHMENT. MagneTek, Inc., a Delaware corporation (the
"Company"), hereby establishes, effective as of January 1, 1997, a deferred
compensation plan for key employees as described herein, which shall be known
as the "MagneTek, Inc. Performance-Based Pension Restoration Plan" (the
"Plan").
The Plan is intended to be an unfunded plan maintained primarily to
provide deferred compensation benefits for a select group of "management or
highly compensated employees" within the meaning of Sections 201, 301, and
401 of ERISA, and therefore to be exempt from the provisions of Parts 2, 3,
and 4 of Title I of ERISA.
1.2 PURPOSE. The primary purpose of the Plan is to supplement the
benefits payable to certain key employees of the Company under the MagneTek,
Inc. FlexCare Plus Retirement Pension Plan. By adopting the Plan, the Company
desires to enhance its ability to attract and retain employees of outstanding
competence.
ARTICLE 2. DEFINITIONS
Whenever used herein, the following terms shall have the meanings set
forth below, and, when the defined meaning is intended, the term is
capitalized:
(a) "Board" or "Board of Directors" means the Board of Directors of
the Company.
(b) "Bonus" means any incentive award based on an assessment of
performance, payable by the Company to a Participant with respect to
the Participant's services, including incentive amounts deferred
pursuant to the MagneTek, Inc. Deferral Investment Plan. A Bonus shall
be deemed earned only upon award by the Company. For purposes of the
Plan, "Bonus" shall not include incentive awards which relate to a
period exceeding one (1) year.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
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(d) "Committee" means the Compensation Committee of the Board or such
other committee of two (2) or more non-employee directors appointed by
the Board to administer the Plan pursuant to Article 3.
(e) "Company" means MagneTek, Inc., a Delaware corporation.
(f) "Compensation" means an Employee's gross Salary and Bonus.
(g) "Employee" means a non-union, full-time, salaried employee of the
Company.
(h) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
(i) "Participant" means an Employee who has met and continues to meet the
eligibility requirements described in Section 4.1.
(j) "Plan" means this MagneTek, Inc. Performance-Based Pension Restoration
Plan, as it may be amended from time to time.
(k) "Retirement" shall have the meaning ascribed to such term in the
MagneTek, Inc. FlexCare Plus Retirement Pension Plan.
(l) "Salary" means all regular, basic wages, before reduction for amounts
deferred pursuant to any other plan of the Company, payable in cash to
a Participant for services to be rendered during the Year, exclusive
of any Bonus, other special fees, awards, or incentive compensation,
allowances, or amounts designated by the Company as payment toward or
reimbursement of expenses.
(m) "Year" means a calendar year.
ARTICLE 3. ADMINISTRATION
3.1 AUTHORITY OF THE COMMITTEE. The Plan shall initially be
administered by the Compensation Committee of the Board. Subject to the terms
of this Plan, the Board may appoint a successor Committee to administer the
Plan, provided that such Committee consists solely of two (2) or more
non-employee Directors within the meaning of Section 16(b) of the Securities
Exchange Act of 1934. The members of the Committee shall be appointed by and
shall serve at the discretion of the Board.
Subject to the provisions herein, the Committee shall have full power and
discretion to determine the terms and conditions of each Employee's
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participation in the Plan; to construe and interpret the Plan and any
agreement or instrument entered into under the Plan; to establish, amend, or
waive rules and regulations for the Plan's administration; to amend (subject
to the provisions of Article 9 herein) the terms and conditions of the Plan;
and to make other determinations which may be necessary or advisable for the
administration of the Plan. Subject to the terms of the Plan, the Committee
may delegate any or all of its authority granted under the Plan to the Chief
Human Resources Director or any other executive or executives of the Company.
3.2 DECISIONS BINDING. All determinations and decisions of the
Committee as to any disputed question arising under the Plan, including
questions of construction and interpretation, shall be final, conclusive, and
binding on all parties and shall be given the maximum possible deference
allowed by law.
3.3 ARBITRATION. Any individual making a claim for benefits under this
Plan may contest the Committee's decision to deny such claim or appeal
therefrom only by submitting the matter to binding arbitration before a
single arbitrator. Any arbitration shall be held in Nashville, Tennessee,
unless otherwise agreed to by the Committee. The arbitration shall be
conducted pursuant to the Commercial Arbitration Rules of the American
Arbitration Association.
The arbitrator's authority shall be limited to the affirmance or reversal
of the Committee's denial of the claim or appeal, and the arbitrator shall
have no power to alter, add to, or subtract from any provision of this Plan.
Except as otherwise required by ERISA, the arbitrator's decision shall be
final and binding on all parties, if warranted on the record and reasonably
based on applicable law and the provisions of this Plan. The arbitrator shall
have no power to award any punitive, exemplary, consequential, or special
damages, and under no circumstances shall an award contain any amount that in
any way reflects any of such types of damages. Each party shall bear its own
attorney's fees and costs of arbitration. Judgment on the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof.
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3.4 INDEMNIFICATION. Each person who is or shall have been a member of
the Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may
be a party, or in which he or she may be involved by reason of any action
taken or failure to act under the Plan, and against and from any and all
amounts paid by him or her in settlement thereof, with the Company's
approval, or paid by him or her in satisfaction of any judgment in any such
action, suit, or proceeding against him or her, provided he or she shall give
the Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own behalf.
The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under
the Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.
ARTICLE 4. ELIGIBILITY AND PARTICIPATION
4.1 ELIGIBILITY. Persons eligible to participate in the Plan shall be
those Employees whose Compensation for a Year exceeds the compensation limit
in effect under Code Section 401(a)(17) for that Year, and who constitute a
select group of management or highly compensated employees under ERISA, as
determined by the Committee.
4.2 PARTICIPATION. An Employee who has satisfied the eligibility
requirements of Section 4.1 shall become a Participant effective as of the
first day of any Year in which those requirements are satisfied.
In the event a Participant no longer meets the requirements for
participation in the Plan, such Participant shall become an inactive
Participant, retaining all the rights described under the Plan with respect
to the vested benefits, if any, accrued as of the last day of his or her
active participation.
ARTICLE 5. CONTRIBUTIONS
5.1 ALLOCATION TO ACCOUNT. Each Participant shall be credited with
contributions from the Company for a Year equal to the amount determined by
multiplying the portion of his or her Compensation in excess of the
compensation limit in effect under Code Section 401(a)(17) for that Year by
an amount equal to--
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(a) Eight percent (8%); times
(b) The amount determined from the following table, based on the Company's
achievement of the primary corporate financial measure used under its
annual management short-term incentive program, as determined by the
Committee in its sole and absolute discretion:
----------------------------------------
Rating in Multiple of
Incentive Program Plan Contribution
----------------------------------------
1.5 200%
1.4 180%
1.3 160%
1.2 140%
1.1 120%
1.0 100%
.9 90%
.8 80%
.7 70%
.6 60%
.5 or below 50%
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5.2 VESTING IN ACCOUNT. A Participant shall have a nonforfeitable
interest in his or her account upon completing at least five (5) years of
continuous participation in the Plan or attaining age 65. Except as provided
below, if a Participant terminates employment for any reason before either
completing five (5) years of continuous participation or attaining age 65,
the entire balance of his or her account shall be forfeited.
Notwithstanding the foregoing, a Participant shall also have a
nonforfeitable interest in his or her account upon the occurrence of any of
the following events prior to (or concurrent with) the Participant's
termination of employment:
(a) The merger or consolidation of the Company with or into another
corporation, other than a merger or consolidation in which (i) the
Company is the surviving corporation, (ii) no person or group
acquires 40 percent (40%) or more of the Company's outstanding
voting stock, and (iii) the shares of the Company's common stock
outstanding prior to the merger or consolidation remain outstanding
thereafter;
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(b) The acquisition by another corporation or person of all or
substantially all of the Company's assets or 40 percent (40%) or
more of the Company's then outstanding voting stock; or
(c) The liquidation or dissolution of the Company.
5.3 PAYMENT OF ACCOUNT. If a Participant is vested in his or her
account pursuant to Section 5.2, the Participant shall be paid the amounts
allocated to this account, together with earnings accrued thereon. Payment
shall be made in cash or shares of Company common stock, or any combination
thereof, as directed by the Committee in its sole and absolute discretion.
In the event that any such Participant's employment with the Company is
terminated for any reason other than by Retirement, the Participant shall be
paid his or her account in a single lump sum payment in January following the
Year in which the Participant's termination of employment occurs.
Except as provided below, in the event that any such Participant's
employment with the Company is terminated by reason of Retirement, the
Participant shall be paid his or her account in a single lump sum payment or
by means of installments, as elected by the Participant within 30 days of
initial Plan participation (or at such other times permitted by the
Committee) and in a manner prescribed by the Committee. If no election is
made, the Participant will be paid in a single lump sum.
(a) LUMP SUM PAYMENT. Such payment shall be made in January following the
Year in which the Participant's Retirement occurs.
(b) INSTALLMENT PAYMENTS. Participants may elect to receive payout in
installments, with a minimum number of installments of two (2), and
a maximum of ten (10). The initial payment shall be made in January
following the Year in which the Participant's Retirement occurs, and
the remaining installment payments shall be made in January of each
Year thereafter, until the Participant's entire account has been
paid in full. Earnings shall accrue on the unpaid balance in the
Participant's account, as provided in Section 6.2 of this Plan. The
amount of each installment payment shall be equal to the balance
remaining in the Participant's account immediately prior to each
such payment, multiplied by a fraction, the numerator of which is
one (1), and the denominator of which is the number of installment
payments remaining.
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A Participant may elect to change a form of benefit elected pursuant to
this Section 5.3 by filing a revised election form, as prescribed by the
Committee, specifying the new form of distribution, subject to the following
rules:
(1) Any election to change the form of distribution must be made prior to
the Participant's Retirement and no later than December 31 at least
one (1) full Year prior to the payout date (or payment commencement
date). If a new election is submitted after this date, the election
shall be null and void, and the form of distribution shall be
determined under the Participant's original election.
(2) Only one election to change a form of distribution shall be permitted
for each Participant.
(3) Any election to change the form of distribution from installments to a
lump sum is subject in all cases to the approval of the Committee.
Notwithstanding the foregoing, in the event of termination of employment
due to a Participant's Retirement, the Committee may elect, in its sole and
absolute discretion, to make payment of the Participant's account in a single
lump sum in January following the Year in which Retirement occurs,
notwithstanding the Participant's election to receive such amounts in the
form of installments.
ARTICLE 6. DEFERRED COMPENSATION ACCOUNTS
6.1 PARTICIPANTS' ACCOUNTS. The Company shall establish and maintain an
individual bookkeeping account for contributions allocated each Participant
under Article 5 herein. Each account shall be credited with additional
allocations as of the last day of the Year.
6.2 EARNINGS ON AMOUNTS. Amounts allocated under Article 5 shall accrue
earnings based on a phantom stock growth rate determined as the sum of (a)
the value of one share of Company common stock as of the end of the calendar
quarter, and (b) dividends paid during the calendar quarter, divided by the
value of one share of Company common stock at the beginning of the calendar
quarter. Each Participant's account shall be credited on the last day of each
calendar quarter with earnings computed on the average balance in the account
during such quarter.
6.3 CHARGES AGAINST ACCOUNTS. There shall be charged against each
Participant's account any payments made to the Participant or to his or her
beneficiary.
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6.4 PAYMENT TO BENEFICIARY. If a Participant dies before his or her
account has been distributed, but after becoming vested in the account
pursuant to Section 5.2, the account shall be paid to the beneficiary or
beneficiaries designated by the Participant. This payment shall be made in a
single lump sum as soon as administratively practical after the Participant's
death. Payments shall be made in cash or shares of Company common stock, or
any combination thereof, as directed by the Committee in its sole and
absolute discretion.
All designations shall be signed by the Participant, and shall be in such
form as prescribed by the Committee. Each designation shall be effective as
of the date delivered to the Chief Human Resources Officer of the Company by
the Participant. Participants may change their designations of beneficiary on
such form as prescribed by the Committee. The payment of amounts under the
Plan shall be in accordance with the last unrevoked written designation of
beneficiary that has been signed by the Participant and delivered by the
Participant to the Chief Human Resources Officer of the Company prior to the
Participant's death.
In the event that all the beneficiaries named by a Participant pursuant
to this Section 6.4 predecease the Participant, the amounts that would have
been paid to the Participant or the Participant's beneficiaries shall be paid
to the Participant's estate.
In the event a Participant does not designate a beneficiary, or for any
reason such designation is ineffective, in whole or in part, the amounts that
otherwise would have been paid to the Participant or the Participant's
beneficiaries under the Plan shall be paid to the Participant's estate.
ARTICLE 7. RIGHTS OF PARTICIPANTS
7.1 CONTRACTUAL OBLIGATION. The Plan shall create a contractual
obligation on the part of the Company to make payments from the Participants'
accounts when due. Payment of account balances shall be made out of the
general funds of the Company.
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7.2 UNSECURED INTEREST. No Participant or party claiming an interest in
a Participant's account shall have any interest whatsoever in any specific
asset of the Company. To the extent that any party acquires a right to
receive payments under the Plan, such right shall be equivalent to that of an
unsecured general creditor of the Company. Each Participant, by participating
hereunder, agrees to waive any priority creditor status for wage payments
with respect to benefits due hereunder. The Company shall have no duty to set
aside or invest any amounts credited to Participants' accounts under this
Plan.
Nothing contained in this Plan shall create a trust of any kind or a
fiduciary relationship between the Company and any Participant. Nevertheless,
the Company may establish one or more trusts, with such trustee as the
Committee may approve, for the purpose of providing for the payment of
accounts. Such trust or trusts may be irrevocable, but the assets thereof
shall be subject to the claims of the Company's general creditors. To the
extent any amounts under the Plan are actually paid from any such trust, the
Company shall have no further obligation with respect thereto, but to the
extent not so paid, such amounts shall remain the obligation of, and shall be
paid by, the Company.
7.3 EMPLOYMENT OR SERVICE. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate a Participant's
employment or service at any time, or confer upon any Participant any right
to continue in the employ or service of the Company.
ARTICLE 8. WITHHOLDING OF TAXES
The Company shall have the right to require Participants to remit to the
Company an amount sufficient to satisfy Federal, state, and local withholding
tax requirements, or to deduct from all payments made pursuant to the Plan
amounts sufficient to satisfy withholding tax requirements.
ARTICLE 9. AMENDMENT AND TERMINATION
The Company hereby reserves the right to amend, modify, or terminate the
Plan at any time by action of the Committee, with or without prior notice.
Except as described below in this Article 9, no such amendment or termination
shall in any material manner adversely affect any Participant's rights to
contributions already made or earnings thereon up to the point of amendment
or termination, without the consent of the Participant.
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The Board may terminate the Plan and commence termination payout for all
or certain Participants, or remove certain Employees as Participants, if it
is determined by the United States Department of Labor or a court of
competent jurisdiction that the Plan constitutes an employee pension benefit
plan within the meaning of Section 3(2) of ERISA which is not exempt from the
provisions of Parts 2, 3, and 4 of Title I of ERISA. If payout is commenced
pursuant to the operation of this Article 9, the payment of such amounts
shall be made in a single lump sum payment.
ARTICLE 10. MISCELLANEOUS
10.1 NOTICE. Any notice or filing required or permitted to be given to
the Company under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail to the Chief Human
Resources Officer of the Company. Notice to the Chief Human Resources of the
Company, if mailed, shall be addressed to the principal executive offices of
the Company. Notice mailed to a Participant shall be at such address as is
given in the records of the Company. Notices shall be deemed given as of the
date of delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
10.2 NONTRANSFERABILITY. Except as provided below, Participants' rights
to contributions and earnings accrued thereon under the Plan may not be sold,
transferred, assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution, nor shall the Company make
any payment under the Plan to any assignee or creditor of a Participant.
Notwithstanding the foregoing, the Committee shall provide for
distributions from a Participant's account to the extent required by a court
order that the Committee determines to satisfy the requirements of a
qualified domestic relations order within the meaning of Section 206(d)(3) of
ERISA. The amounts assigned to an alternate payee under such an order shall
be paid in a lump sum distribution as soon as administratively practical
after the Committee determines that the order meets the requirements of a
qualified domestic relations order. All payments made pursuant to any such
order shall be charged against the Participant's account.
10.3 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
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10.4 GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular, and the singular shall include the plural.
10.5 COSTS OF THE PLAN. All costs of implementing and administering the
Plan shall be borne by the Company.
10.6 SUCCESSORS. All obligations of the Company under the Plan shall be
binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company
10.7 APPLICABLE LAW. Except to the extent preempted by applicable
federal law, the Plan shall be governed by and construed in accordance with
the laws of the state of Tennessee.
IN WITNESS WHEREOF, MagneTek, Inc. has caused this document to be executed by
its duly authorized officer on January ___, 1997, effective as of the date
set forth above.
MAGNETEK, INC.
ATTEST:
By:
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Its
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By:
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Its (Corporate Seal)
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CONTENTS
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PAGE
Article 1. Establishment and Purposes 1
Article 2. Definitions 1
Article 3. Administration 2
Article 4. Eligibility and Participation 4
Article 5. Contributions 4
Article 6. Accounts 6
Article 7. Rights of Participants 7
Article 8. Withholding of Taxes 8
Article 9. Amendment and Termination 8
Article 10. Miscellaneous 9