Exhibit (3)(10)(i)
AN UNFUNDED, NON-QUALIFIED DEFERRED
COMPENSATION AGREEMENT BY AND
BETWEEN ECHLIN INC.
AND
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(Participant)
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AS AMENDED AND RESTATED
AS OF APRIL 8, 1996
THIS AGREEMENT made as of ___________, 19__, by and between ECHLIN
INC. ("Echlin"), a Connecticut corporation, 100 Double Beach Road, Branford,
Connecticut 06405 and ________________ ("Participant") residing at ________
_______, _____________.
W I T N E S S E T H:
WHEREAS, effective as of January 1, 1977, Echlin established an
Unfunded, Non-Qualified Deferred Compensation Plan; and
WHEREAS, the parties desire to enter into an agreement pursuant to said
Plan.
NOW, THEREFORE, in consideration of the premises, and the mutual
promises and agreements herein contained, the parties hereto agree as follows:
1. Definitions
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As used in this Agreement, the following words and phrases shall
have the meanings indicated:
(a) "Account Fund" - All compensation that is deferred under
this Agreement plus interest added thereto as provided hereunder.
(b) "Average Prime Rate" - The Prime Rate in effect on the last
business day of each month, aggregated and divided by 12.
(c) "Beneficiary" - The individual or entity designated in
Schedule B annexed hereto, or if none is designated or living at the time of the
Participant's death, the Participant's estate.
(d) "Commercial Paper Average Interest Rate" - The weighted
average interest rate paid for commercial paper by Echlin for each month during
the preceding fiscal year, aggregated and divided by 12.
(e) "Committee" - The Compensation and Management Development
Committee of the Board of Directors of Echlin.
(f) "Deferred Compensation" - The amount of Participant's
Employee's Compensation or Director's Fees deferred pursuant to Section 2 of
this Agreement.
(g) "Deferred Compensation Account" or "Account" - The account
described in Section 3 of this Agreement.
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(h) "Director" - Director means persons elected to serve on
the Board of Directors of Echlin who are not full-time salaried officers or
employees of Echlin.
(i) "Director's Fees" - For purposes of this Agreement,
"Director's Fees" shall mean fees paid to Directors as annual retainers, for
attending meetings of the Board of Directors or of Committees of the Board of
Directors in person or by telephone.
(j) "Disability" - Medical certification by a licensed
physician, selected by or satisfactory to Echlin, that Participant is no longer
able to continue to perform his or her present job or serve on the Board of
Directors and will not be able to do so for at least a period of twelve months.
(k) "Employee" - For purposes of this Agreement, "Employee"
shall mean such full-time officers and salaried employees of Echlin or its
subsidiaries who are approved by the Committee for participation under the
Deferred Compensation Plan.
(l) "Employee's Compensation" - For purposes of this
Agreement, "Employee's Compensation" shall mean "Annual Base Salary", "Bonus"
and "Performance Unit Plan Payments" as such terms are defined below.
(i) "Annual Base Salary" - The annual rate of salary of the
Participant in effect at any time, excluding all fringe benefits.
(ii) "Bonus" - Compensation that may be payable to an
Employee under the Executive Bonus Plan of Echlin.
(iii) "Performance Unit Plan Payments" - Amounts payable to
an Employee under The Echlin Inc. Performance Unit Plan.
(m) "Net Earnings" - The after tax earnings of Echlin and its
subsidiaries for the fiscal year, as reported in the Annual Report submitted to
the stockholders of Echlin for such fiscal year.
(n) "Participant" - For the purposes of this Agreement,
"Participant" means either a Director or an Employee approved for participation
under this Plan by the Committee.
(o) "Prime Rate" - The Corporate Base Rate (the interest charged
to the largest and most credit-worthy commercial borrower on 90-day commercial
loans) of The First National Bank of Chicago.
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(p) "Retirement" - As used in this Agreement, "Retirement", as
applied to an Employee, shall have the same meaning as it does under the Pension
Plan for Echlin Inc. Employees. "Retirement", as applied to a Director, shall
mean that the Director's service on the Board of Directors of Echlin has ended
for any reason other than the death or disability of the Director.
(q) "Total Assets" - The total value of the assets of Echlin and
its subsidiaries at the end of a fiscal year, as reported in the Annual Report
submitted to the stockholders of Echlin for such fiscal year.
2. Deferral of Earnings
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Echlin and the Participant agree to irrevocably defer (i) if the
Participant is an Employee (a) a portion of the Employee's Annual Base Salary
and of the Bonus awarded to him or her as may be designated by him or her
pursuant to Schedule A; provided, however, that the amount to be deferred in any
calendar year shall not exceed twenty-five (25) percent of the aggregate of the
Participant's Annual Base Salary and Bonus which would otherwise be payable to
him or her in such year; and (b) up to 100% of Performance Unit Plan Payments
which would otherwise be payable to him or her in said year; or (ii) if the
Participant is a Director, all or a portion of his or her Director's Fees as may
be designated by him or her pursuant to Schedule A.
With respect to the next succeeding year or years, an Employee
may elect to change the portion of his or her Annual Base Salary, Bonus and
Performance Unit Plan Payments to be deferred by him or her, and a Director may
elect to change the portion of his or her Director's Fees to be deferred by him
or her. Schedule A shall be amended in writing to reflect such change. In the
first year of this Agreement or in the first year of Participant's eligibility
for participation in this Agreement, an election may be made to defer for a part
of the year. Participant understands that he or she may elect only to defer
prospectively.
3. Deferred Compensation Account
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(a) Echlin shall establish a Deferred Compensation Account for
each Participant which shall be credited with an amount equal to one hundred
percent of the Deferred Compensation as of the end of the month in which such
Deferred Compensation would have otherwise been payable to the Participant.
(b) Echlin shall maintain the Deferred Compensation Account as
if Echlin had invested the Deferred Compensation on the first business day after
such Deferred Compensation was credited to the Account.
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(c) (i) As of the end of each calendar year, Echlin shall
credit the Deferred Compensation Account with an amount obtained by multiplying
the amount of said Account by the greater of (i) the Commercial Paper Average
Interest Rate, or (ii) a fraction, the numerator of which is the Net Earnings
and the denominator being the Total Assets, both as of the end of the preceding
fiscal year. Amounts deferred during the calendar year shall be included in such
computation only for the number of full months in which such deferrals were a
part of the Account. The amounts so credited will then become a part of the
Account Fund in the Participant's Deferred Compensation Account.
(ii) All amounts credited to the Participant's Deferred
Compensation Account shall immediately vest to the benefit of the Participant.
(iii) Title to and beneficial ownership of the Account Fund
shall at all times remain in Echlin and the Participant shall not have any
property interest whatsoever in any specific assets of Echlin.
(iv) The value of the Deferred Compensation Account shall
be determined in accordance with this Section 3. On or before March 31 of each
year, Echlin shall notify the Participant in writing of the value of his or her
Deferred Compensation Account as of the preceding December 31.
4. Distribution of Deferred Compensation Account
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(a) Distribution Upon Retirement, Disability or Death. Unless
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the Participant has elected otherwise, in accordance with Subsection 4(b)(i)
below, commencing not later than six (6) months following the date of the
Participant's retirement, disability or death, Echlin shall pay to Participant
or Beneficiary, in ten annual installments, the unpaid balance of the Deferred
Compensation Account multiplied by a fraction, the numerator of which is one and
the denominator of which is the number of installments remaining to be paid. As
of the end of each calendar year during the period of distribution of the
Account Fund, the undistributed balance of such Account Fund shall be credited
with interest thereon at the Average Prime Rate during such calendar year plus
one (1) percent.
(b) Distribution Prior to Retirement, Disability or Death
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(i) Election to Receive Distribution at a Specific Age. By
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irrevocable election on Schedule C, annexed hereto and made a part of this
Agreement, the Participant may elect to have the distribution from the Deferred
Compensation Account commence on the date the Participant reaches the age
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specified in Schedule C, provided the Participant has not retired, is not
disabled or has not died prior to such date. If he or she does so elect,
commencing not later than sixty (60) days after the Participant reaches the age
specified in Schedule C, Echlin shall pay to the Participant or Beneficiary, in
ten annual installments, the unpaid balance of the Deferred Compensation Account
multiplied by a fraction, the numerator of which is one and the denominator of
which is the number of installments remaining to be paid. As of the end of each
calendar year during the period of distribution of the Account Fund, the
undistributed balance of such Account Fund shall be credited with interest
thereon at the Average Prime Rate in effect during such calendar year, but not
to exceed seven and one half (7 1/2) percent.
(ii) Distribution Resulting From Termination Prior to
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Retirement. Unless the Participant has elected otherwise in accordance with
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Subsection 4(b)(i) above, commencing not later than six (6) months following the
date the Participant is terminated (other than for retirement, disability or
death), Echlin shall pay in annual installments equal in number to the number of
years from the date that the deferral commenced until the Participant's
termination date, but in no more than ten annual installments, the unpaid
balance of the Deferred Compensation Account multiplied by a fraction, the
numerator of which is one and the denominator of which is the number of
installments remaining to be paid. As of the end of each calendar year during
the period of distribution of the Account Fund, the undistributed balance of
such Account Fund shall be credited with interest thereon at the Average Prime
Rate in effect during such calendar year, but not to exceed seven and one-half
(7 1/2) percent.
(c) Petitions of the Participant or Beneficiary. If the
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Participant dies either before distribution starts, or after it has commenced
but has not yet been completed, the Beneficiary designated on Schedule B assumes
the place of the Participant as to the remaining annual installments to be paid.
The Committee may be petitioned by the Participant (in the case of disability)
or the Beneficiary (in the case of death) for approval by the Committee of more
frequent installments and/or installments of greater amount. The Committee will
respond to the petition within sixty (60) days, and the decision of the
Committee shall be binding.
(d) Irrevocable Election. The Participant acknowledges that the
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election made prior to the deferral of Annual Base Salary, Bonus, Performance
Unit Plan Payments or Director's Fees is irrevocable.
(e) Hardship. The Committee or the Board of Directors (if a
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Committee member/Participant is involved), in its sole
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discretion, may elect to make more frequent installments than required by this
Section 4, but will do so only under circumstances of hardship, as determined by
the Committee or the Board of Directors, if applicable.
(f) Subsidiaries of Echlin. For the purpose of this Section 4, a
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Participant who is an Employee shall not be deemed to have terminated his or her
employment if he is transferred from the employ of Echlin to the employ of a
corporation in which Echlin owns more than fifty (50%) percent of the equity
interest.
5. Emergency Condition
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If a Participant establishes to the satisfaction of the Committee
or the Board of Directors (if a Committee member/Participant is involved), the
existence of an emergency condition in his or her personal financial affairs
resulting from illness, disability, the need to pay educational expenses, or any
other circumstances deemed by the Committee to be a financial hardship, the
Committee or Board, if applicable, may, in its sole discretion, pay to the
Participant from the Account Fund the value of his or her Deferred Compensation
Account (as determined in accordance with Section 3 of this Agreement).
6. No Assignment
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Neither the Participant nor his or her Beneficiary shall have any
right to commute, sell, assign, transfer or otherwise convey or encumber the
right to receive any payments hereunder, which payments and all the rights
thereto are expressly declared and agreed to be non-assignable and non-
transferable.
7. No Employment Contract
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This Agreement does not constitute a contract for the continued
employment by Echlin of an Employee or of continued service as a Director.
Echlin reserves the right to modify the Employee's Compensation of any Employee
at any time and from time to time as it considers appropriate and to terminate
the employment of any Employee for any reason at any time notwithstanding this
Agreement and to modify the Director's Fees payable at any time and from time to
time as it considers appropriate.
8. Non-Competition
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In consideration for the rights and privileges extended in this
Agreement to an Employee or Director, such Employee or Director agrees that he
or she will, for a period of three years after his or her termination or
retirement, refrain from working in any capacity with another organization which
is engaged in the
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manufacture and/or sale of any of the principal products of Echlin. Such
Employee or Director agrees that if at any time during the three-year period
following his or her termination from Echlin, the Committee, in its sole
discretion and judgment, determines that such Employee or Director has worked in
some capacity with another organization which is so engaged, the Committee may
elect to distribute all amounts in such Employee's Deferred Compensation Account
over a period of three years, and from and after such determination the
Employee's Deferred Compensation Account shall no longer be credited with any
interest.
9. Termination
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Echlin may terminate this Agreement at any time. If Echlin
terminates this Agreement, Echlin may in satisfaction of its obligations
hereunder, at its option;
(a) pay the Participant, on the date this Agreement is
terminated, an amount equal to the value his or her Deferred Compensation
Account (as determined in accordance with Section 3 of this Agreement); or
(b) pay the Participant on termination of his or her employment
or his or her services as a Director an amount equal to the value of his or her
Deferred Compensation Account (as determined in accordance with Section 3 of
this Agreement) valued as of the date this Agreement is terminated plus interest
from the date of termination to the date of such payment at a rate to be
determined by the Committee, but not less then the Prime Rate plus one percent
(1%).
10. Notice
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Any notice to the Participant hereunder may be given either by
delivering it to the Participant or by depositing it in the United States mail,
postage prepaid, addressed to his or her last-known address.
11. No Waiver
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Failure to insist upon strict compliance with any of the terms,
covenants, or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
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12. Invalidity
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The invalidity or unenforceability of any provision hereof shall
in no way effect the validity or enforceability of any other provision.
13. Amendment
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This Agreement may be changed, modified, or amended only in
writing signed by both parties.
14. Benefit
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Except as otherwise provided herein, this Agreement shall inure
to the benefit of and be binding upon Echlin its successors and assigns
including, but not limited to, any corporation which may acquire all or
substantially all of Echlin's assets and businesses or into which Echlin may be
consolidated or merged.
15. Governing Law
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This Agreement shall be governed by the laws of the State of
Connecticut.
16. Counterparts
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This Agreement has been executed in several counterparts each of
which shall be an original, but such counterparts shall together constitute but
one instrument. The Participant acknowledges that he or she has read all parts
of this Agreement and has sought and obtained satisfactory answer(s) to any
questions he or she may have had as to his or her rights, obligations and
potential liabilities under this Agreement prior to affixing his or her
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signature and initials to any part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ECHLIN INC.
ATTEST: By
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Vice President, Secretary
and General Counsel
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Title
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Participant
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Witness
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SCHEDULE A
ELECTIONS IN CONNECTION WITH
DEFERRED COMPENSATION AGREEMENT
Section 1.
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(a) Employee
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I hereby irrevocably elect to defer, effective on __________ until my
retirement or other termination of employment, (i) $__________ a month of my
Annual Base Salary, and further, I elect to defer _____ percent (____%) of my
bonus; provided, however, that the amount deferred under this Section 1(a)(i)
shall not exceed twenty-five percent (25%) of the aggregate of my Annual Base
Salary and Bonus in any calendar year; and (ii) _____ percent (____%) of all
Performance Unit Plan Payments.
Participant's initials: _______; Date ________.
(b) Director
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I hereby irrevocably elect to defer, effective on __________ until my
retirement or other termination of service, all or a portion of my Director's
Fees as follows:
Check only one:
______ All (100%)
______ A portion equal to ___%, or
______ Amount $_______
Participant's initials: _______; Date ________.
Section 2. Change in Election as to Compensation to be Deferred
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NOTE: THIS SECTION IS TO BE USED ONLY IF YOU WANT TO MAKE A CHANGE IN THE
ELECTION THAT YOU PREVIOUSLY MADE UNDER PARAGRAPH 2 OF THIS AGREEMENT
(a) Employee
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I hereby irrevocably elect to change my election under my Deferred
Compensation Agreement dated __________ and to defer,
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until my retirement or other termination of employment, (i) $__________ a month
of my Annual Base Salary, and further, I elect to defer _____ percent (____%) of
my bonus; provided, however, that the amount deferred under this Section 2(a)(i)
shall not exceed twenty-five percent (25%) of the aggregate of my Annual Base
Salary and Bonus in any calendar year; and (ii) _____ percent (____%) of all
Performance Unit Plan Payments (up to 100%).
Participant's initials: _______; Date ________.
(b) Director
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I hereby irrevocably elect to change my election under my Deferred
Compensation Agreement dated __________ and to defer, effective on __________
until my retirement or other termination of service, all or a portion of my
Director's Fees as follows:
Check only one:
______ All (100%)
______ A portion equal to ___%, or
______ Amount $_______
Participant's initials: _______; Date ________.
Section 3. Employee or Director
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I hereby irrevocably elect to discontinue deferring my Employee's
Compensation or Director's Fees.
Participant please initial here _______; Date ________.
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Witness Employee
Accepted by ECHLIN INC.
______ day of _________, 199_
By
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Vice President, Corporate Secretary
and General Counsel
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SCHEDULE B
DESIGNATION OF BENEFICIARY
For distribution of my Deferred Compensation Plan:
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The undersigned hereby makes the above beneficiary designation(s) under the
foregoing Agreement in the event of the Participant's death prior to, or during
the distribution period therein and agrees that if no such designation is made,
the beneficiary thereunder shall be the Participant's estate.
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Witness Participant
Date:
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