EXHIBIT 10.33
MOTOROLA ELECTED OFFICERS SUPPLEMENTARY RETIREMENT PLAN
AS AMENDED EFFECTIVE AS OF JUNE 30, 2005
Motorola, Inc. (the "Company") heretofore established the Elected Officers
Supplementary Retirement Plan (the "Plan"). Effective November 9, 1988, the
Board of Directors of the Company approved extensive amendments to the Plan.
This document sets forth the Plan as amended on November 9, 1988 and includes
all additional amendments effective through June 30, 2005, along with such
technical conforming changes as are deemed necessary in order to designate this
document as an amendment and complete restatement of the Plan effective as of
said date. The Plan and the Trust created to fund the Company's obligations
under the Plan are not intended to be qualified under Sections 401(a) and 501(a)
of the Internal Revenue Code.
Section 1. Definitions. Where the following words and phrases appear in
this Plan, they shall have the respective meanings set forth below, unless the
context clearly indicates to the contrary:
1.1 ACTUARIAL (OR ACTUARIALLY) EQUIVALENT: Equality in value of the
aggregate amounts expected to be received under different forms of payment, and
except as provided below, based on the actuarial assumptions, tables and
interest rates which are adopted by the Committee from time to time for this
purpose and are set forth in Appendix A hereto.
1.2 AFFILIATED EMPLOYER: Any corporation which is a member of a controlled
group of corporations (as defined in Section 414 (b) of the Internal Revenue
Code) which includes the Company.
1.3 ANNUITY STARTING DATE: As defined in Section 8.1 hereof.
1.4 AVERAGE MIP AWARD: As defined in Section 6 hereof.
1.5 BOARD OF DIRECTORS: The Board of Directors of the Company, and shall
also mean any committee of the Board of Directors which has been delegated
authority to exercise the powers and authority of the Board of Directors with
respect to the Plan.
1.6 CHANGE IN CONTROL: The occurrence of any of the following events: a
change in control of the Company of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), or any
successor provision thereto, whether or not the Company is then subject to such
reporting requirement; provided that, without limitation, such a Change in
Control shall be deemed to have occurred if (A) any "person" or "group" (as such
terms are used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under 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 (other than the Company or
any employee benefit plan of the Company; and, for purposes of the Plan, no
Change in Control shall be deemed to have occurred as a result of the
"beneficial ownership," or changes therein, of the Company's securities by
either of the foregoing), (B) there shall be consummated (i) any consolidation
or merger of the Company in which the Company is not the surviving or continuing
corporation or pursuant to which shares of the Company's common stock would be
converted into or exchanged for cash, securities or other property, other than a
merger of the Company in which the holders of the Company's common stock
immediately prior to the merger have, directly or indirectly, at least a 65%
ownership interest in the outstanding common stock of the surviving corporation
immediately after the merger, or (ii) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, other than any such transaction
with entities in which the holders of the Company's common stock, directly or
indirectly, have at least a 65% ownership interest, (C) the shareholders of the
Company approve any plan or proposal for the liquidation or dissolution of the
Company, or (D) as the result of, or in connection with, any cash tender offer,
exchange offer, merger or other business combination, sale of assets, proxy or
consent solicitation (other than by the Board), contested election or
substantial stock accumulation (a "Control Transaction"), the members of the
Board immediately prior to the first public announcement relating to such
Control Transaction shall thereafter cease to constitute a majority of the
Board.
1.7 COMMITTEE: The persons appointed pursuant to Section 12 to assist the
Company in the administration of the Plan in accordance with said Section.
1.8 COMPANY: Motorola, Inc., a corporation organized and existing under
the laws of the State of Delaware or its successor or successors.
1.9 DISABILITY: DISABLED: The Committee shall determine, in its reasonable
discretion, whether any Participant has a Disability or is Disabled.
1.10 EARLY RETIREMENT DATE: The first day of the calendar month coincident
with or immediately following the Participant's 60th birthday.
1.11 EARLY RETIREMENT AGE: The Participant's 60th birthday.
1.12 EFFECTIVE DATE: November 9, 1988, the date on which the provisions of
this Plan as amended on November 9, 1988 become effective.
1.13 ERISA: The Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.14 ERISA EXCESS FORMULA: As defined in Section 6 hereof.
1.15 HOUR OF SERVICE:
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(a) each hour for which an employee is paid, or entitled to payment, for
the performance of duties for the Company. These hours will be credited to
the employee for the computation period in which the duties are performed;
(b) each hour for which an employee is paid, or entitled to payment, by
the Company on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
Disability), layoff, jury duty, military duty or leave of absence. No more
than 501 Hours of Service will be credited under this paragraph for a
single computation period (whether or not the period of time during which
no duties are performed occurs in a single computation period). Hours
under this paragraph will be calculated and credited pursuant to section
2530.200b-2 of the Department of Labor Regulations which are incorporated
herein by this reference; and
(c) each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Company. The same Hours of Service
will not be credited both under paragraph (a) or paragraph (b), as the
case may be, and under this paragraph (c). These hours will be credited to
the employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement, or payment is made. Solely for purposes of determining whether
a One Year Break in Service for vesting purposes has occurred in a
computation period, an employee who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service which
would otherwise have been credited to such employee but for such absence,
or in any case in which such hours cannot be determined, 8 hours of
service per day of such absence. For purposes of this paragraph, an
absence from work for maternity or paternity reasons means an absence (1)
by reason of the pregnancy of the employee, (2) by reason of a birth of a
child of the employee, (3) by reason of the placement of a child with the
employee in connection with the adoption of such child by such employee,
or (4) for purposes of caring for such child for a period beginning
immediately following such birth or placement. The Hours of Service
credited under this paragraph shall be credited (1) in the computation
period in which the absence begins if the crediting is necessary to
prevent a One Year Break in Service in that period, or (2) in all other
cases, in the following computation period. The total Hours of Service
Required to be credited for maternity or paternity reasons shall not
exceed 501 hours. As used in this definition, the term Company includes
all Affiliated Employers.
1.16 NORMAL FORMULA: As defined in Section 6 hereof.
1.17 NORMAL RETIREMENT AGE: The Participant's 65th birthday.
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1.18 NORMAL RETIREMENT DATE: A Participant's Normal Retirement Date is the
first day of the calendar month coincident with or immediately following the
Participant's 65th birthday.
1.19 OFFICER: An officer of the Company elected by the Board of Directors,
or designated by the Chief Executive Officer of the Company and deemed having
been so elected in accordance with powers delegated by the Board of Directors.
1.20 ONE YEAR BREAK IN SERVICE: An employee shall incur a One Year Break
in Service if in any computation period, as described in the definition of a
Year of Service, he does not complete more than five hundred (500) Hours of
Service. In the case of an employee who is absent from work for maternity or
paternity reasons, as described in Section 1.15, Hours of Service shall be
credited to such employee in accordance with Section 1.15.
1.21 PBGC: Pension Benefit Guaranty Corporation, a body corporate within
the Department of Labor established under the provisions of Title IV of ERISA.
1.22 PARTICIPANT: An officer participating in the Plan in accordance with
the provisions of Section 3.
1.23 PENSION PLAN: The Motorola, Inc. Pension Plan.
1.24 PLAN: Motorola Elected Officers Supplementary Retirement Plan, the
plan set forth herein, as amended from time to time.
1.25 PLAN YEAR: The 12-month period commencing on January 1 and ending on
December 31.
1.26 QUALIFIED JOINT AND SURVIVOR ANNUITY: As defined in Section 8.1
hereof.
1.27 QUALIFIED PRE-RETIREMENT ANNUITY: As defined in Section 8.2 hereof.
1.28 RETIREMENT BENEFIT: As defined in Section 6 hereof.
1.29 SALARY: The amount paid to an Officer by the Company as annual basic
compensation, excluding awards under the Motorola Incentive Plan (MIP) (as well
as any prior awards under the Motorola Executive Incentive Plan (MEIP) and the
Performance Excellence=Rewards (PE=R) program), Mid Range Incentive Plan and
Long Range Incentive Plan, moving expense reimbursements, the imputed fair
market value of a Company provided automobile or excess group-term life
insurance coverage and similar imputed income items, and including the officer's
elective contributions to the Motorola Management Deferred Compensation Plan of
amounts that would otherwise meet the above definition of Salary but for their
contribution to the Motorola Management Deferred Compensation Plan.
1.30 SCRP: The Motorola Supplementary Contributory Retirement Plan.
1.31 SERVICE CREDIT: As defined in Section 6 hereof.
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1.32 SUBSIDIARY: Any corporation more than fifty percent (50%) of the
outstanding voting stock of which (other than directors' qualifying shares) is
at the time directly or indirectly owned by the Company or by one or more
Subsidiaries or by the Company and one or more Subsidiaries.
1.33 SURVIVOR ANNUITY STARTING DATE: As defined in Section 8.2 hereof.
1.34 TRUST: Any trust established for receiving, holding, investing and
disposing of the Trust Fund and for implementing and carrying out the provisions
of the Plan.
1.35 TRUSTEE: The person or entity named as trustee herein or in any
separate Trust forming part of this Plan, and any successors.
1.36 TRUST AGREEMENT: As defined in Section 14.1 hereof.
1.37 TRUST FUND: The Plan assets held by the Trustee under the Trust.
1.38 YEAR OF SERVICE: A twelve (12) consecutive month period (computation
period) during which period the employee has completed at least one thousand
(1,000) Hours of Service. The computation period of an employee shall begin with
the date he commences employment with the Company and additional computation
periods shall begin on each succeeding anniversary of the date the employee
commences employment with the Company. In the event an employee's employment
with the Company is terminated and such employee has a One Year Break in Service
following the termination of his employment, and if such employee is later
reemployed by the Company, the computation period shall begin with the date such
employee is reemployed by the Company, and additional computation periods shall
begin on each succeeding anniversary of the date the employee was reemployed by
the Company. All Years of Service (both pre-break and post-break) will be
counted for vesting purposes and for calculating the Retirement Benefit under
the Normal Formula. Years of Service with any Affiliated Employer shall be
counted as Years of Service with the Company.
Section 2. Construction. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, and the singular may
include the plural, unless the context clearly indicates to the contrary. The
words "hereof," "herein," "hereunder," and other similar compounds of the word
"here" shall mean and refer to the entire Plan, not to any particular provision
or Section. Section headings are included for convenience of reference and are
not intended to add to, or subtract from, the terms of the Plan.
Section 3. Participation. Each officer who is age 55 or older on the
Effective Date shall become a Participant in the Plan, as amended, on the
Effective Date. After the Effective Date, an Officer shall become a Participant
in the Plan upon the earlier of (i) his designation as a Participant by the
Committee at any age under age 55, (ii) attaining age 55, (iii) his election as
an officer if age 55 or older at that time, (iv) a Change in Control or (v) his
Disability; provided, however, that there shall be no new Participants in the
Plan after December 31, 1999. A Participant whose right to a Retirement Benefit
was not vested on
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December 31, 1999, shall no longer participate in the Plan upon the
Participant's acceptance of the offer to exchange his or her's interest in the
Plan for other consideration from Motorola.
Section 4. Vesting. A Participant's right to a Retirement Benefit shall be
vested and nonforfeitable as follows:
(a) For a Participant who has not attained age 60, when he has completed
at least five Years of Service;
(b) For a Participant who is age 60 or older but who has not attained age
65, when he has completed at least two Years of Service;
(c) Upon attainment of age 65 (Normal Retirement Age) regardless of his
Years of Service;
(d) Upon a Change in Control of the Company regardless of the
Participant's age or number of Years of Service;
(e) At the time he becomes Disabled regardless of the Participant's age or
number of Years of Service.
Section 5. Eligibility for Retirement Benefits. To be eligible for a
Retirement Benefit under the Plan, a Participant must also be a participant in
the Pension Plan if eligible for participation, or the pension plan of a
Subsidiary if the Subsidiary has a pension plan and the Participant is eligible
to participate in it, and he must meet the other eligibility requirements stated
herein. A Participant who is vested and who retires on or after age 60 shall be
eligible to receive an unreduced Retirement Benefit upon retirement. A
Participant who retires at any age because of Disability shall be eligible to
receive an unreduced Retirement Benefit upon retirement. A Participant whose
employment with the Company terminates at any age because of a Change in Control
shall be eligible to receive an unreduced Retirement Benefit upon retirement at
or after age 55. A Participant who is vested and ceases to be an Officer or
ceases to be employed by the Company for any reason (other than Disability or a
Change in Control) before he has attained age 57 shall be eligible to receive a
deferred unreduced Retirement Benefit upon retirement at or after age 60 or,
subject to the condition stated hereinbelow, a deferred actuarially reduced
Retirement Benefit determined as provided in this Section 5 upon retirement at
or after age 57. A Participant who is vested and who retires at or after age 57
but prior to age 60 shall, subject to the condition stated hereinbelow, be
eligible to receive an actuarially reduced Retirement Benefit upon retirement
determined as follows:
(a) With respect to the lump sum payment option, the lump sum amount to be
paid to the Participant will be equal to the cost to purchase (from an insurance
company selected by the Company) a deferred annuity for the Participant at
retirement which would provide the full Retirement Benefit with payments
commencing at age 60.
(b) With respect to the lifetime income payments option, such payments
will be determined by the amount of lifetime income which could be provided by
purchasing an
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annuity with the lump sum amount determined in (a) above. The other optional
forms of payment under the Plan will also be available to the Participant on an
actuarially reduced basis.
Notwithstanding the foregoing, as a condition to the availability of a
Retirement Benefit at or after age 57 but prior to age 60, the Participant shall
enter into an agreement not to compete with the Company.
Section 6. Determination of Amount of Retirement Benefit. A benefit for
each Participant shall be calculated under the Normal Formula. A benefit for
each Participant who participates in the Pension Plan shall also be calculated
under the ERISA Excess Formula. The formula which produces the greater benefit
will be the applicable formula for Participants who participate in the Pension
Plan. The benefit so calculated for each Participant, whether determined under
the Normal Formula or the ERISA Excess Formula, shall be reduced by the amount
(computed on a life annuity basis) payable to such Participant under the Pension
Plan (but not including SCRP payments), the pension plan of any Subsidiary, the
Company's Long Term Disability Plan, and the disability plan of any Subsidiary,
whichever plan or plans is or are at the time applicable to such Participant.
The results obtained shall be the Participant's "Retirement Benefit," provided,
however, that the Retirement Benefit payable annually to any Participant shall
not exceed seventy percent (70%) of the lesser of (i) his Salary as of the date
immediately prior to retirement, or (ii) his Salary as of June 30, 2005 if he
was an officer on said date.
Normal Formula. The monthly benefit under the Normal Formula expressed as
lifetime income shall be calculated as follows: One-Twelfth (1/12) times the sum
of (i) Salary as of the date immediately prior to retirement (or as of such
earlier date as may be mutually agreed upon by the Company and the Officer
affected) or in the case of a deferred vested Retirement Benefit, as of the date
of the Participant's termination of employment; provided, that in no event shall
a Participant's Salary for purposes of this clause (i) be greater than the
Participant's Salary as of June 30, 2005 if he was an Officer on said date, plus
(ii) the five year Average MIP Award paid to the Officer under the Motorola
Incentive Plan (MIP) (and taking into account for this purpose any previous
awards under the Motorola Executive Incentive Plan (MEIP) or Performance
Excellence = Rewards program (PE=R) as provided in the definition of "Average
MIP Award" below) times forty percent (40%) plus an additional percentage
("Service Credit") equal to one-fourth (1/4) of one percent (1%) for each Year
of Service of the Officer in excess of ten (10) Years of Service, subject to the
following maximums:
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Age At Age At
Retirement Maximum Retirement Maximum
- ---------- ------- ---------- -------
55 42.50% 61 44.00%
56 42.75% 62 44.25%
57 43.00% 63 44.50%
58 43.25% 64 44.75%
59 43.50% 65 & over 45.00%
60 43.75%
If the Service Credit determined as above is less than the Early Service Credit
calculated under the Plan as it existed prior to the Effective Date for any
Participant, the Early Service Credit shall be used for such Participant in lieu
of the Service Credit determined as above.
"Average MIP Award" shall mean and shall be calculated as follows:
(i) For each of the eight full calendar years prior to retirement, each
year's MIP award (which term shall include any prior MEIP and/or PE=R
awards during the applicable period), including any portion thereof which
the officer elects to contribute under the Motorola Management Deferred
Compensation Plan) is calculated as a percentage of that year's actual
earnings from Salary.
(ii) The five calendar years which produce the highest percentages are
then determined.
(iii) The average of the percentages for those five years is then
determined.
(iv) The average of the percentages so determined is then applied to the
Officer's Salary at retirement (or at such earlier date as may be mutually
agreed upon by the Company and the officer affected) to determine the
Average MIP Award amount for purposes of this Plan.
Following is an example of the calculation:
Actual MIP Award as %
Earnings from MIP of Actual Earnings
Year Salary Award from Salary
- ---- ------------- ------- ------------------
1 $190,000 $57,000 30.0%
2 $180,000 36,000 20.0%
3 $170,000 30,600 18.0%
4 $160,000 20,800 13.0%
5 $150,000 48,000 32.0%
6 $140,000 -0- 0
7 $130,000 28,600 22.0%
8 $110,000 17,600 16.0%
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* Average MIP rate for five years which produces the highest percentage 24.4%
Final Salary = $200,000
Average MIP Award (24.4% of $200,000 final Salary) = $48,800
Payments made under the Mid Range Incentive Plan and Long Range Incentive
Plan shall not be taken into account in determining the Average MIP Award.
ERISA Excess Formula. The monthly benefit under the ERISA Excess Formula
expressed as lifetime income shall be calculated in the same manner as the
Normal Retirement Benefit is calculated under Section 6.1 of the Pension Plan.
The benefit calculated under this formula shall not be subject to the
limitations of Sections 401(a)(17) and 415 of the Internal Revenue Code and
shall be calculated without giving effect to any reduction in earnings
attributable to the Participant's elective contributions to the Motorola
Management Deferred Compensation Plan.
Notwithstanding the method prescribed above for calculating Average MIP
Award, if, under extraordinary circumstances which are in the interest of the
Company, as determined by the Company (acting through the Board of Directors or
any committee thereof to whom authority has been delegated) in its sole
discretion, an officer extends his or her employment beyond his or her planned
retirement date at the request of the Company, the Company may, with the consent
of the Officer affected, calculate the Officer's Average MIP Award by using the
MIP awards for the calendar years that would have been used if the officer had
retired on the date originally planned.
Section 7. Payment of Retirement Benefit. A Participant's Retirement
Benefit shall be paid in monthly installments commencing as follows: (i) in the
case of a vested Participant who retires prior to or on or after his Early
Retirement Age, on the first day of the month coinciding with or immediately
following the date of his retirement, (ii) in the case of a Participant who
retires before his Early Retirement Age because of Disability, on the first day
of the month coinciding with or immediately following the date of Disability,
and (iii) in the case of a Participant who has a deferred vested Retirement
Benefit, on the first day of the month selected by the Participant after he has
attained his Early Retirement Age, or if a Change in Control has occurred, after
he has attained age 55 rather than his Early Retirement Age. Such payments shall
continue on the first day of each succeeding month until the benefit terminates
as provided in the Plan for the type of benefit being paid to the Participant.
Unless the Participant elects otherwise, in writing, payment of benefits under
the Plan will begin not later than the 60th day after the latest of the close of
the Plan Year in which:
(1) the Participant attains Normal Retirement Age;
(2) occurs the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or
(3) the Participant terminates his service with the Company.
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7.1 FACILITY OF PAYMENT: If, in the Committee's judgment, any person to
whom benefits are payable hereunder is under a legal disability or unable to
care for his affairs because of illness, accident, or other incapacity, any
payment due (unless prior claim therefor shall have been made by a duly
qualified guardian, committee, or other legal representative) may be paid to his
spouse, parent, brother or sister, or any other person as the Committee may
determine. Any such payment shall be a payment for the account of such person
and shall, to the extent thereof, be a complete discharge of any liability under
the Plan to such person.
Section 8. Qualified Joint and Survivor Annuity and Qualified
Pre-Retirement Survivor Annuity.
8.1 QUALIFIED JOINT AND SURVIVOR ANNUITY.
(a) Unless otherwise elected as provided below, a Participant who is
married on the Annuity Starting Date and who does not die before the
Annuity Starting Date shall receive the value of his benefit in the form
of a Qualified Joint and Survivor Annuity. An unmarried Participant shall
receive the value of his benefit in the form of a life annuity. Such
unmarried Participant, however, may elect in writing to waive the life
annuity. The election must comply with the provisions of this Section as
if it were an election to waive the joint and survivor annuity by a
married Participant, but without the spousal consent requirement. The
joint and survivor annuity and the life annuity form of distribution shall
be the Actuarial Equivalent of the benefits due the Participant.
(b) Any election to waive the Qualified Joint and Survivor Annuity must be
made by the Participant in writing during the election period, must be
consented to in writing by the Participant's spouse and must indicate that
the Participant alone is to receive the benefit or designate a specific
beneficiary or beneficiaries, including any class of beneficiaries or a
contingent beneficiary and a form of benefit payment which may not be
changed (except back to a Qualified Joint and Survivor Annuity) without
spousal consent, unless the consent of the spouse expressly permits
designations by the Participant without any requirement of further consent
by the spouse. Such spouse's consent shall be irrevocable and must
acknowledge the effect of such election and be witnessed by a Plan
representative or a notary public. A consent that permits designations by
the Participant without any requirement of further consent by such spouse
must acknowledge that the spouse has the right to limit consent to a
specific beneficiary and a specific form of benefit, where applicable and
that the spouse voluntarily elects to relinquish either or both of such
rights. Such consent shall not be required if it is established to the
satisfaction of the Committee that the required consent cannot be obtained
because there is no spouse, the spouse cannot be located, or other
circumstances that may be prescribed by Treasury regulations. The election
made by the Participant and consented to by his spouse may be revoked by
the Participant in writing
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without the consent of the spouse at any time during the election period.
The number of revocations shall not be limited. Any new election must
comply with the requirements of this paragraph. A former spouse's waiver
shall not be binding on a new spouse.
(c) The election period to waive the joint and survivor annuity and to
revoke an election shall be the ninety (90) day period ending on the
Annuity Starting Date.
(d) "Annuity Starting Date" means the first day of the first period for
which an amount is paid as an annuity, or, in the case of a Retirement
Benefit not payable in the form of an annuity, the first day on which all
events have occurred which entitles the Participant to such Retirement
Benefit.
(e) "Qualified Joint and Survivor Annuity" means a reduced annuity for the
life of the Participant with a survivor annuity for the life of the spouse
which is either 50 percent (50%), 75 percent (75%) or 100 percent (100%)
(as selected by the Participant, and if no selection is made, it will be
50%) of the amount of the annuity which is payable during the joint lives
of the Participant and the spouse and which is the Actuarial Equivalent of
the normal form of benefit.
(f) With regard to the election, the Committee shall provide the
Participant no less than thirty (30) days and no more than ninety (90)
days prior to the Annuity Starting Date (and consistent with Treasury
regulations), a written explanation of:
(i) the terms and conditions of the Qualified Joint and Survivor
Annuity,
(ii) the Participant's right to make and the effect of an election
to waive the Qualified Joint and Survivor Annuity,
(iii) the right of the Participant's spouse to consent to any
election to waive the qualified Joint and Survivor Annuity,
(iv) the right of the Participant to revoke such election, and the
effect of such revocation, and
(v) the relative values of the various optional forms of benefit
under the Plan.
(g) The distribution of a benefit in the form of a Qualified Joint and
Survivor Annuity shall not require the consent of the Participant's spouse
if such distribution commences prior to the later of his Normal Retirement
Age or age 62.
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8.2 QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY. In the case of a vested
Participant who dies before the Annuity Starting Date, whether or not separated
from service with the Company at the time of death, and who has a surviving
spouse, a Qualified Pre-Retirement Survivor Annuity shall be paid to the
surviving spouse of such Participant. This form of benefit may not be waived nor
may another beneficiary be selected. Under this form of benefit, the
Participant's surviving spouse will receive a lifetime annuity payable in
monthly installments equal to fifty percent (50%) of the Retirement Benefit
calculated for the deceased Participant as of the date immediately prior to his
death. For purposes of this Section 8.2, a surviving spouse will begin to
receive payments on the first day of the month immediately following the date of
the Participant's death unless such surviving spouse elects a later date. A
surviving spouse's benefit will be paid in a lump sum upon such spouse's written
request made prior to the date benefit payments begin. The date on which a
surviving spouse begins to receive payments as an annuity or receive a lump sum
payment under this Section 8.2 shall be referred to as the "Survivor Annuity
Starting Date."
8.3 NON-QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY. In addition to the
Qualified Pre-Retirement Survivor Annuity provided for in Section 8.2 hereof, in
the case of a vested Participant who dies before his of her Annuity Starting
Date, whether or not separated from service with the Company at the time of
death, and who has a surviving spouse, a Non-Qualified Pre-Retirement Survivor
Annuity shall be paid to the surviving spouse of such Participant. This form of
benefit may not be waived nor may another beneficiary be selected. Under this
form of benefit, the Participant's surviving spouse will receive a lifetime
annuity payable in monthly installments equal to fifty percent (50%) of the
Retirement Benefit calculated for the deceased Participant as of the date
immediately prior to his of her death. For purposes of this Section 8.3, a
surviving spouse will begin to receive payments on the first day of the month
immediately following the date of the Participant's death unless such surviving
spouse elects a later date. A surviving spouse's benefit will be paid in a lump
sum upon such spouse's written request made prior to the date benefit payments
begin. The date on which a surviving spouse begins to receive payments as an
annuity or receive a lump sum payment under this Section 8.3 shall be referred
to as the "Survivor Annuity Starting Date."
Section 9. Optional Methods of Payment. If a married Participant has duly
waived the Qualified Joint and Survivor Annuity form of benefit or if an
unmarried Participant has duly waived the life annuity form of benefit in
accordance with the requirements of Section 8.1, upon the written request of
such a Participant filed with the Committee before the Annuity Starting Date in
accordance with the rules governing such requests, the Committee shall provide
for him an optional form of Retirement Benefit, in one of the forms set forth
below, which shall be the Actuarial Equivalent of the Retirement Benefit to
which he would be otherwise entitled hereunder except that no optional form
shall be granted which would reduce the value of the Participant's Retirement
Benefit payable to him personally by more than fifty percent (50%):
(i) a lump sum payment;
(ii) in the case of a married Participant, in the form of a life annuity;
or
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(iii) a life-ten years certain form as set forth in Section 6.7(b) of the
Pension Plan.
Section 10. Limitations on Benefits. All rights and benefits, including
elections, provided to a Participant in the Plan shall be subject to the rights
afforded to any alternate payee under a qualified domestic relations order as
those terms are defined in Section 206(d) of ERISA.
Section 11. Nonalienation of Benefits. No benefit which shall be payable
out of the Trust Fund to any person (including a Participant or his
beneficiary), or any other amount or asset set aside or purchased under Section
13 to fund a Participant's Retirement Benefit, shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, or charge the same shall be void; and no such benefit shall in any
manner be liable for, or subject to, the debts, contracts, liabilities,
engagements, or torts of any such person, nor shall it be subject to attachment
or legal process for or against such person, and the same shall not be
recognized by the Trustee, except to such extent as may be required by law. This
provision shall also apply to the creation, assignment or recognition of a right
to a benefit payable with respect to a Participant pursuant to a domestic
relations order as defined in Section 206(d) of ERISA: unless such order is
determined to be a qualified domestic relations order as defined in Section
206(d) of ERISA; provide, however, a domestic relations order entered prior to
January 1, 1985 may, in the discretion of the Officers Plan Committee or its
delegate, be treated as a Qualified Domestic Relations Order, even though the
order does not satisfy the requirement of Section 206(d) of ERISA. The Committee
shall establish a written procedure to determine the qualified status of
domestic relations orders and to administer distributions under such qualified
orders.
Section 12. Administration.
12.1 OFFICERS PLAN COMMITTEE: The Board of Directors shall appoint a
committee to be known as the Officers Plan Committee to administer the Plan. The
Committee shall be the Named Fiduciary for purposes of Section 402 (a) of ERISA.
The Committee shall consist of one or more persons appointed by the Board of
Directors, and each member shall serve until his resignation or removal or until
his successor is appointed. Each member may, but need not, be a director,
officer or employee of the Company. A member of the Committee may resign by
delivering his written resignation to the Board of Directors. Any member of the
Committee may be removed, with or without cause, by the Board of Directors.
12.2 POWERS AND DUTIES OF THE COMMITTEE: The Committee shall carry out the
duties assigned to it under the Plan and shall administer the Plan in accordance
with its terms. The Committee shall have all powers as may be necessary to carry
out its duties under the Plan, including, but not by way of limitation, the
following: to construe and interpret the provisions of the Plan; to decide any
disputes which may arise under the Plan; to decide all questions that shall
arise under the Plan, including questions as to the eligibility to become
Participants, and the amount, manner and time of payment of any benefits under
the Plan; to decide questions submitted by the Trustee on all matters necessary
for it to properly discharge its duties,
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powers and obligations; to employ or appoint legal counsel, accountants,
actuaries, consultants or any person to assist in the administration of the Plan
and any other agents it deems advisable. The Committee shall also have the power
to allocate and delegate fiduciary responsibilities. The Committee shall have
the power and authority to direct the investment of the Trust Fund, and in
connection with such power, may delegate in writing authority to manage assets
of the Trust Fund to one or more investment managers. The Committee may adopt
from time to time written investment policies and guidelines which shall govern
the manner in which the assets of the Trust Fund are to be invested, which
policies and guidelines shall be followed by the investment managers. With
respect to Retirement Benefits funded under Section 13.1(b) or (c) hereof, the
Committee shall have the discretion to appoint such agents as are necessary to
act on its behalf and shall have the authority to direct the investment of
amount held to fund such Retirement Benefits.
12.3 MEETINGS OF THE COMMITTEE: The Committee shall act by a majority of
its members at the time in office, and such action may be taken either by a vote
at a meeting or in writing without a meeting. The Committee may authorize any
person or persons, who may but need not be a member or members of the Committee,
to execute any document or documents on behalf of the Committee, in which event
the Committee shall notify the Trustee in writing of such action and the name or
names of such person or persons so designated. The Trustee thereafter may accept
and rely upon any document executed by such person or persons as representing
action by the Committee until the Committee shall file with the Trustee a
written revocation of such designation.
12.4 ADOPTION OF RULES BY THE COMMITTEE: The Committee may adopt such
rules as it deems necessary, desirable or appropriate. All rules and decisions
of the Committee shall be uniformly and consistently applied to all Participants
in similar circumstances. When making a determination or calculation, the
Committee shall be entitled to rely upon information furnished by a Participant
or beneficiary, the Company, the legal counsel of the Company, or the Trustee.
12.5 INSTRUCTIONS TO TRUSTEE: The Committee shall advise the Trustee in
writing with respect to all benefits which become payable under the terms of the
Plan and shall direct the Trustee to pay such benefits from the Trust Fund.
12.6 REPORTS AND RECORDS: The Committee shall keep a record of all its
proceedings and acts and shall keep all such books of account, records, and
other data as may be necessary for the proper administration of the Plan. The
Committee shall file or cause to be filed all such annual reports, financial and
other statements as may be required by any federal or state statute, agency or
authority within the time prescribed by the law or regulations for filing said
documents. The Committee shall furnish such reports, statements and other
documents to Participants and Beneficiaries of the Plan as may be required by
any federal or state statute or regulation within the time prescribed for
furnishing such documents.
12.7 INSPECTION OF RECORDS OF THE COMMITTEE: The Committee's records and
books of account shall be open to inspection at all reasonable times by the
Company or the Board of
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Directors, or both, or any person designated from time to time by the Company or
Board of Directors.
12.8 INDEMNIFICATION: The Company shall indemnify each member of the
Committee, and the directors, officers and employees of the Company involved in
the operation and administration of the Plan against any and all claims, losses,
damages, expenses and liabilities arising from any action or failure to act,
except when the same is determined by the Board of Directors to be due to gross
negligence or willful misconduct of such member.
12.9 CLAIMS PROCEDURE: The Committee shall make all determinations as to
the right of any person to a benefit. Any denial by the Committee of the claim
for benefits under the Plan by a Participant or beneficiary shall be stated in
writing by the Committee and delivered or mailed to the Participant or
beneficiary. Such notice shall set forth the specific reasons for the denial,
written in a manner that may be understood without legal or actuarial counsel.
In addition, the Committee shall afford a reasonable opportunity to any
Participant or beneficiary whose claim for benefits has been denied for a review
of the decision denying the claim.
Section 13. Funding of Retirement Benefits.
13.1 DISCRETION OF COMMITTEE ON FORM OF FUNDING: The Plan is intended to
be a funded plan for purposes of ERISA, and is intended to be a permanent as
distinguished from a temporary program. Provided that the minimum funding
standards of ERISA are met, the Committee shall have the discretion to fund the
payment of each Participant's vested Retirement Benefit through one or more of
the following:
(a) making contributions on such Participant's behalf to the Trust;
(b) purchasing a commercial annuity contract or contracts and, to the
extent the Committee deems advisable, transferring the annuity contract or
contracts to such Participant; or
(c) implementing any other funding method which the Committee, in its sole
discretion, shall consider appropriate.
The Committee's decision to use one method for funding one Participant's
Retirement Benefit shall not in any way limit the Committee's discretion to use
any other method for funding another Participant's Retirement Benefit.
Similarly, the Committee's decision to use one method for funding a portion of a
particular Participant's Retirement Benefit shall not limit the Committee's
discretion with respect to the funding of the remainder of such Participant's
Retirement Benefit. Moreover, the Committee shall have the discretion to change,
to the extent practicable, the method for funding any Participant's Retirement
Benefit. If at any time a Participant's Retirement Benefit is funded through one
or more methods which do not require the use of the Trust, all references herein
to the Trust, the Trust Fund and the Trustee shall, with respect to such
Participant, be disregarded.
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13.2 EARLY DISTRIBUTION: Under Section 13.1, the Committee may select a
method of funding that provides for distributions to be made to a Participant or
beneficiary before the Annuity Starting Date or the Survivor Annuity Starting
Date, as the case may be; provided, however, that to the extent ERISA requires
the consent of the Participant, his spouse, a beneficiary, or any combination
thereof, to any such distribution, no distribution shall be made unless such
consent or consents have been given.
13.3 EMPLOYEE CONTRIBUTIONS: Under Section 13.1, the Committee may select
a method of funding that permits Participants to make contributions to fund
Retirement Benefits.
13.4 PAYMENT'S FOR TAXES: To the extent that the Committee's funding of a
Participant's Retirement Benefit pursuant to Section 13.1 results in adverse
foreign (non-United States), federal, state or local tax consequences to such
Participant which would not have resulted if such Participant's Retirement
Benefit had not been funded, the Committee may, in its discretion, authorize the
payment to such Participant, either by the Company or out of the Trust Fund, of
an amount sufficient to indemnify such Participant against some or all of such
adverse tax consequences.
13.5 OVERFUNDING OF BENEFITS: The funding of Retirement Benefits under
Section 13.1 is intended solely to allow the Committee to establish a fund from
which the Company's liability to pay Retirement Benefits to Participants may be
satisfied, and not to increase in any way the Retirement Benefit to which a
Participant is entitled. Accordingly, to the extent the Committee funds a
Participant's Retirement Benefit pursuant to Section 13.1 based on certain
assumptions, but the actual payments resulting from such funding would exceed
such Participant's Retirement Benefit as determined under Section 6, the
Committee may, in its discretion, reallocate the excess among other Participants
who are presently covered by the Plan or who may be so covered in the future.
The Company shall have no right, title or interest in or to amounts or assets
used to fund Retirement Benefits, and no part of any such amounts or assets
shall revert to the Company except that any amounts or assets remaining, because
of overpayments, after satisfaction of all liabilities of the Plan with regard
to Participants may revert to the Company. Any amounts or assets contributed to
fund Retirement Benefits under a mistake of fact shall be returned to the
Company, to the extent practicable, upon request within one (1) year after such
funding.
13.6 UNDERFUNDED BENEFITS: The Committee's funding of some or all of a
Participant's Retirement Benefit under Section 13.1 shall not reduce the
Company's liability to provide to a Participant the Retirement Benefit to which
he is entitled under Section 6; provided, however, that if as a result of the
funding method adopted by the Committee any Participant or his beneficiary (i)
receives any distribution of cash from the Trust or any other entity prior to
the Annuity Starting Date or the Survivor Annuity Starting Date, as the case may
be, and (ii) fails to recontribute the after-tax amount of such distribution (as
defined in the following sentence) in order to fund a portion of such
Participant's Retirement Benefit, then the Committee may reduce such
Participant's Retirement Benefit by the sum of such after-tax amounts not
recontributed and the investment income the Trust would have earned
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thereon. For purposes of this Section 13.6, the after-tax amount of a
distribution shall be the amount of such distribution reduced by the amount of
any federal, state and local taxes incurred by the Participant because of such
distribution; provided, however, that no such reduction will be made to the
extent that the Participant receives a payment from the Company indemnifying him
for such taxes.
Section 14. Trust Fund.
14.1 TRUST AGREEMENT: As a part of the Plan, the Company may enter into a
Trust Agreement under which the Trustee would receive contributions of the
Company to the Trust Fund. The provisions of and benefits under the Plan are
subject to the terms and provisions of such Trust Agreement.
14.2 CONTRIBUTIONS TO THE TRUST FUND: Subject to Section 13.4 hereof, no
contribution shall be required from any Participant. An individual account will
be established in the Trust Fund for each Participant whose Retirement Benefit
is funded, in whole or in part, through the Trust.
Section 15. Benefits of Retired Officers and Spouses of Deceased Officers.
15.1 FUNDING OF BENEFITS: The benefits payable to Officers who retired
prior to the Effective Date shall continue to be paid by the Company under the
Plan provisions as they existed prior to the Effective Date; provided, however,
that on or before December 31, 1988, the Retirement Benefit of each retired
Officer shall be funded through the Trust; and, provided further, that effective
January 1, 1989, the Retirement Benefit of each retired officer will be
recalculated under the formulas set forth in Section 6 of the Plan. Each retired
Officer will be given the right to elect, within a time period to be set by the
Committee, payment of the recalculated Retirement Benefit in a lump sum or in
the form of a Qualified Joint and Survivor Annuity or one of the optional
methods of payment specified in Section 9 of the Plan. If a retired Officer
elects to receive payment other than in a lump sum, the Committee will direct
the Trustee to purchase an annuity contract from the Trust Fund to fund the
benefit. The benefit currently being paid to a spouse of a deceased Officer
shall remain the same except that (i) on or before December 31, 1988 the benefit
payable to each such spouse shall be funded through the Trust and (ii) each such
spouse shall, within a reasonable time period to be set by the Committee, be
allowed to elect to receive a lump sum payment from the Trust or to continue to
receive installment payments. If a surviving spouse elects to continue to
receive installment payments, the Committee will direct the Trustee to purchase
an annuity contract from the Trust Fund to fund the benefit.
15.2 UNDERFUNDING OF BENEFITS: The Committee's funding of some or all of a
retired officer's or surviving spouse's benefit under Section 15.1 shall not
reduce the Company's liability to provide such retired Officer or surviving
spouse with the benefit to which he otherwise is entitled.
15.3 PAYMENT FOR TAXES: To the extent the funding of a retired Officer's
or surviving spouse's benefit (either through the funding of the Trust or the
purchase of an annuity) results
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in adverse federal, state, or local tax consequences to such retired Officer or
surviving spouse which would not have resulted if such retired officer's or
surviving spouse's benefit had not been funded, the Committee may, in its
discretion, authorize the payment to such retired officer or surviving spouse,
either by the Company or out of the Trust Fund, of an amount sufficient to
indemnify such retired officer or surviving spouse against some or all of such
adverse tax consequences.
Section 16. Merger or Consolidation of Plan; Transfer of Assets. In the
event of any merger or consolidation of the Plan with another retirement or
pension plan, or in the event of any transfer of assets or liabilities from the
Plan to another retirement or pension plan, provision shall be made so that each
Participant in the Plan on the date thereof (if the Plan then terminated), would
receive a benefit immediately after the merger, consolidation or transfer which
is equal to or greater than the benefit he would have been entitled to receive
immediately prior to the merger, consolidation or transfer (if the Plan had then
terminated).
Section 17. Amendments. The Board of Directors shall have the right at any
time to amend the Plan, the Trust Agreement and any other document entered into
as a result of a funding method adopted by the Committee under Section 13.1
hereof. However, no such amendment shall authorize or permit any part of the
Trust Fund or any other asset purchased or amount set aside to fund
Participants' Retirement Benefits (other than such part as is required to pay
administration expenses) to be used for or diverted to purposes other than for
the exclusive benefit of the Participants, either current or future, or their
beneficiaries or estates. No such amendment shall cause any reduction in the
vested accrued benefit of any Participant. The Company further reserves the
right to discontinue or suspend the payment of contributions to any fund held
under the Trust Agreement or under any other funding method adopted under
Section 13.1 hereof.
Section 18. Termination. The Board of Directors shall have the right to
terminate the Plan at any time. Upon termination the amount credited to the
account of each Participant shall become fully vested and shall not thereafter
be subject to forfeiture. Upon termination of the Plan, the Company, by written
notice to the Trustee, may direct either:
(i) continuation of the Trust and the distribution of benefits at such
time and in such manner as though the Plan had not been terminated; or
(ii) complete distribution of the assets in the Trust Fund to the
Participants in a manner consistent with the Plan. In such case, the
Trustee shall distribute to each Participant in the Plan and to each
retired Participant, the amount then credited to his account in the Trust
Fund, subject to provision for expenses of administration or liquidation.
The balance, if any, of the assets due to erroneous actuarial computation held
by the Trust Fund after such distribution shall be returned to the Company, but
only after satisfaction of all liabilities with respect to Participants and
Retirement Benefits under the Plan.
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Section 19. Miscellaneous.
19.1 NO ENLARGEMENT OF RIGHTS: The Plan is strictly a voluntary
undertaking on the part of the Company and shall not be deemed to constitute a
contract between the Company and any Officer, or to be consideration for, or an
inducement to, or condition of, the employment of any Officer. Nothing contained
in the Plan shall be deemed to give any Officer the right to be retained in the
employment of the Company or to interfere with the right of the Company to
discharge any Officer at any time regardless of the effect which such discharge
shall have upon him as a Participant of the Plan. No officer, prior to his
retirement under conditions of eligibility for retirement benefits or prior to
his acquiring vested rights, shall have any right or interest in or to any
portion of any funds arising from Company contributions under the Plan, and no
person shall have any right to Retirement Benefits, except to the extent
provided in the Plan.
19.2 NOTICE OF ADDRESS: Each person entitled to benefits under the Plan
must file with the Committee, in writing, his post office address and each
change of post office address. Any communication, statement, or notice addressed
to such a person at his latest post office address as filed with the Committee
will be binding upon such person for all purposes of the Plan, and neither the
Trustee nor the Company shall be obliged to search for or ascertain the
whereabouts of any such person.
19.3 DATA: All persons entitled to benefits under the Plan must furnish to
the Committee or Trustee such documents, evidence, or information as the
Committee or Trustee considers necessary or desirable for the purpose of
administering the Plan, or to protect the Committee or Trustee, and it shall be
a condition of the Plan that each such person must furnish promptly true and
complete data, evidence, or information and sign such documents as the Committee
or Trustee may require before any benefits become payable under the Plan. In the
event that any data so furnished is found by the Company to be incorrect, any
payments thereafter due shall be adjusted on an actuarial basis to correct for
any previous overpayments or underpayments, as the case may be. After such
adjustment is made, all future payments shall be based on the corrected data.
19.4 GOVERNING LAW: The Plan shall be governed by and construed in
accordance with ERISA and the laws of the State of Illinois to the extent not
preempted by ERISA.
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APPENDIX A
ACTUARIAL EQUIVALENCE
The purpose of this Appendix A is to specify the assumptions and tables to
be used to determine Actuarial Equivalence as provided in Section 1.1 thereof.
Section 1.1
Except as specifically stated elsewhere in this Appendix A, Actuarial
Equivalence shall be based on the 1984 Unisex Pension Mortality Table as
published, setback 2 years, and 6% interest.
Optional Payment Forms
The normal form benefit (payable as a life annuity) is to be multiplied by the
factor shown in the table to obtain the reduced benefit payable under the
applicable optional payment form.
1. Joint and Survivor Option Factors
Joint Annuitant's Age As Percentage of Participant's
Related to Participant's Reduced Benefit Continued to
Age Joint Annuitant
- ---------------------------- ----------------------------
50% 75% 100%
--- --- ---
5 or more years older .91 .87 .83
Difference less than 5 years .87 .82 .77
5, less than 10, younger .84 .78 .73
10, less than 15, younger .82 .75 .69
15, less than 20, younger .80 .72 .66
20 or more years younger .76 .67 .60
Example: Participant is 65 years old with normal pension of $300 per month. He
elects 50% continuation for his wife, aged 62. Since the difference in age is
less than five years, the reduction factor is .87. The Participant receives
$261.00 per month under the Option (.87 x $300), and his wife will receive 50%
of $261.00, or $130.00 per month, if she survives him. If the wife were 57 years
old (5 but less than 10 years younger than the Participant), the reduction
factor would be .84 instead of .87.
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2. Life - Ten Years Certain Option Factor
Retiree's Age When
Pension Payments Begin Reduction Factor
- ---------------------- ----------------
Age 66 & older .90
Age 61 - 65 .94
Age 55 - 60 .96
Example: Participant is 65 years with normal pension of $300 per month. The
participant receives $282.00 (.94 x $300) per month for his or her life. If the
Participant becomes deceased before 120 monthly payments are made, the
beneficiary will receive $282.00 per month until the total monthly payments to
the Participant and the beneficiary equal 120. If the Participant would have
been age 60 rather than age 65, he or she would have received $288.00 monthly
(.96 x $300).
3. Increase Factors for Postponed Retirement
Age at Increase Age at Increase
Retirement Factor Retirement Factor
---------- -------- ---------- --------
65 1.00 70 1.55
66 1.09 71 1.69
67 1.19 72 1.84
68 1.30 73 2.00
69 1.42 74 2.17
75 2.35
Factors should be interpolated to completed months of age.
Lump Sum Cashout Amounts
For purposes of determining the present value of accrued benefits upon lump sum
distribution, Actuarial Equivalence shall be based on the 1984 Unisex Pension
Mortality Table, as published , setback 2 years, and 6% interest.
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APPENDIX B
EARLY RETIREMENT OPEN WINDOW
B-1. Purpose. The purpose of this Appendix B is to set forth the terms of
a special involuntary retirement benefit extended to certain Participants in the
Plan by the Company. All terms and provisions of the Plan shall apply to this
Appendix B, except that where the terms and provisions of the Plan and this
Appendix B conflict, the terms and provisions of this Appendix B shall control.
B-2. Eligibility. Each Participant who is involuntarily retired (i)
between January 1, 2002 and December 31, 2003 (inclusive) and (ii) after the
Participant has attained age 57 years, shall be eligible for benefits under this
Appendix B; provided, that as a condition of receiving such Appendix B Benefits,
the Participant must execute a separation agreement (containing a release)
prepared by the Company prior to his retirement date. If an eligible Participant
revokes that separation agreement or the release contained therein, no Appendix
B benefits shall be payable to him nor shall additional Service be granted to
him for vesting purposes under this Appendix B. A Participant eligible for
benefits under this Appendix B who timely executes (and does not revoke) such
separation agreement shall be known as an `Appendix B Participant.'
B-3. Vesting. An Appendix B Participant who at his retirement date has not
yet completed sufficient Years of Service to be vested in accordance with
Section 4 of the Plan, shall be granted the amount of additional service credit
necessary to be vested in his Retirement Benefit hereunder at his retirement
date.
B-4. Appendix B Benefits. The benefit payable to an Appendix B Participant
shall be equal to the Retirement Benefit otherwise payable to such Participant
under Sections 5, 6, and 7 of the Plan, except that the actuarial reduction
provided in Article 5 of the Plan for early commencement of benefits prior to
age 60, shall not apply.
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