1
4.28 FAMILY PRODUCTION PLAN OF COLTEC INDUSTRIES INC.
COLTEC INDUSTRIES INC.
FAMILY PROTECTION PLAN
In recognition of the services provided to Coltec Industries Inc. (the
"Company") by certain of its key executives and other key employees, the Company
has maintained a family protection program since 1974 to provide those
individuals with death benefit coverage from the Company's assets for their
designated beneficiaries (the "Program"). Effective January 1, 1998, the
Company's, Retirement Committee, as authorized by the Board of Directors, has
determined to document a formal plan to provide for insurance protection for
those individuals under the terms and conditions set forth below. Accordingly,
the Family Protection Plan is hereby adopted to read, in its entirety, as
follows:
SECTION 1
Definitions
As used herein, the following words and phrases shall have the meaning described
below:
1.1 "Beneficiary" means the person(s) designated by a Participant to
receive any benefits payable under this Plan subsequent to the Participant's
death. In the event a Participant has not filed a beneficiary designation with
the Company, the Beneficiary shall be the Participant's surviving spouse, or if
there is no surviving spouse, his estate.
1.2 "Board" means the Board of Directors of Coltec Industries Inc.
1.3 "Effective Date" means January 1, 1998.
1.4 "Eligible Executive" means an Employee employed by the Company in
an executive capacity, as designated by the Board. "Eligible Officer" means an
Eligible Executive who is elected by the Board and is serving as an officer of
the Company at the time of death, retirement or Separation from Employment.
1.5 "Employee" means any individual employed on a regular basis by
the Company but excluding any non-resident alien and any leased employee within
the meaning of Code Section 414(n)(2), or
2
any individual not characterized by the Company as an "employee," no matter how
characterized by the Internal Revenue Service, other governmental agency or a
court. Any change of characterization of an individual shall take effect on the
actual date of such change without regard to any retroactive recharacterization.
1.6 "Employment Agreement" means an employment contract or change in
control agreement entered into between the Company and a Participant and as the
same may be amended or superseded from time to time.
1.7 "Interest" means all premiums the Company paid on the Policy for
a Participant or the cash surrender value of the Policy at the time the
Participant Separates from Employment if less.
1.8 "Participant" means any Employee who satisfies the requirements
for eligibility set forth in Section 2 below and is designated as a Participant
thereunder.
1.9 "Plan" means the Coltec Industries, Inc. Family Protection Plan
as set forth herein.
1.10 "Plan Administrator" means the Company's Retirement Committee.
1.11 "Policy" means a whole life insurance policy or policies
purchased in accordance with the provisions of Section 2.3.
1.12 "Retirement Date" means the first day of any month following a
Participant's attainment of age 55 and completion of 10 Years of Service as an
Employee.
1.13 "Separates from Employment" means a Participant's (i) termination
of employment from the Company for any reason other than death, Retirement or
"disability," as defined in the Company's long-term disability plan, or (ii)
reduction in employment grade or status such that the Participant no longer
qualifies as an Eligible Executive. Except as otherwise provided herein or in an
Employment Agreement, a "Separation from Employment" shall be deemed to have
occurred on the last day of the Participant's service to the Company.
1.14 "Years of Service" means a Participant's total service as an
Employee of the Company, as credited to a Participant under the Company's
Retirement Plan.
3
SECTION 2
Participation
2.1 Any Employee who was a Participant in the Program prior to the
Effective Date shall participate in the Plan in accordance with its terms.
2.2 Each other Employee who becomes an Eligible Executive shall be
eligible to become a Participant at the designation of the Company's Chief
Executive Officer. All Participants shall be listed on Exhibit "A" hereto as
they are so designated.
2.3 Upon becoming a Participant, each Eligible Executive shall
purchase a Policy, from the insurance company or companies specified by the Plan
Administrator, for an annual premium in an amount designated by the Company's
Chief Executive Officer and which generally will be at least $20,000 (with the
actual amount being listed opposite the Participant's name on Exhibit A hereto,
as modified from time to time) for each of the succeeding 10 Plan Years;
provided, however, that with respect to Participants on the Effective Date who
have already purchased or otherwise own a Policy that the Company has authorized
for use under the Plan, such Policy, and the premiums due thereunder, shall
qualify for the purposes of this Section and shall be listed on Exhibit A
hereto. The Participant shall be obligated to pay the so-called "P.S. 58" costs
under the Policy, which shall be deducted from the Participant's wages if not
otherwise paid on a timely basis, and the Company shall pay the balance of all
premiums due under the Policy. The Policy shall have an initial face amount
sufficient to provide a death benefit to the Participant's Beneficiary under
Section 3.1 and to return to the Company, from the cash surrender value of the
Policy, the Company's Interest under the Policy by the date on which the
Eligible Executive attains age 65. Such Policy shall also contain a waiver of
premium in the case of disability. In addition, the Participant (or the
Participant's assignee(s) if all incidents of ownership have been transferred by
the Participant) shall execute a collateral assignment split dollar agreement in
the form specified by the Committee to secure the Company's Interest under the
Policy. Notwithstanding anything herein to the contrary, the Company will
continue to pay the annual premium for more than 10 Plan Years if required in
order to make the Policy sufficient to provide both the death benefit and the
Company's Interest.
4
2.4 Notwithstanding the above, no Employee shall be eligible to
participate in this Plan nor will any benefits be paid hereunder on and after
the date, if any, on which the Employee violates the terms and conditions of any
Employment Agreement, service contract or any agreement relating to matters of
confidentiality of the Company or competition with the Company, or if the
Employee is terminated for "cause" as defined in the Company's personnel
policies or, alternatively, in any Employment Agreement. In any such case, the
Employee shall be deemed to have immediately Separated from Employment and not
to have been an Eligible Officer.
SECTION 3
Death Benefits, Termination Rules, Annual Bonus and Change of
Control
3.1 Subject to the provisions of Section 4.5, upon the death of a
Participant while an Eligible Executive, or thereafter if the Participant
terminated employment on or after the Participant's Retirement Date, as provided
in Section 3.3, the Beneficiary shall receive an insured death benefit under the
Policy purchased upon entry of the Participant into the Plan as provided in
Section 2.3. The benefit shall be paid as soon as practicable following the date
of death and shall be the death benefit under the Policy.
3.2 If the Participant Separates from Employment prior to death, all
payments of premium by the Company to the Policy shall
immediately cease and the Participant must surrender the Policy
to the Company.
3.3 Notwithstanding the provisions of Section 3.2:
(a) A Participant who Separates from Employment prior to death may
elect to continue a Policy by paying all premiums due thereafter under the
Policy provided the Participant repays the Company its Interest within 60 days
following the date of Separation from Employment.
(b) A Participant who Separates from Employment on a Retirement Date
but who is an Eligible Officer on that date may elect to (i) continue the
Policy as described in subsection (a) or (ii) continue the Policy by causing
the Policy to be converted, with no further premiums being paid by the Company,
such that the cash surrender value of the Policy, and the death benefit, are
5
sufficient to return to the Company its Interest upon the Participant's death.
3.4 On an annual basis, no later than 30 days after the premium is
paid on the Policy, the Company shall pay each Participant a bonus equal to the
sum of the amount paid by the Participant pursuant to the second sentence of
Section 2.3 and the taxes needed to be paid by the Participant, including all
Federal, state and local taxes, by reason of the payments to the Participant
under this Section 3.4 such that the amount received by the Participant net of
any tax liability shall equal the amount paid by the Participant pursuant to
the second sentence of Section 2.3 (and assuming that the Participant is in the
maximum Federal, state and local income tax bracket).
3.5 Notwithstanding anything in this Plan to the contrary, in the
event that the Participant has entered into an Employment Agreement and,
thereafter, a "Change-in-Control" occurs, as such term is defined in the
Employment Agreement, the provisions of the Employment Agreement shall control
and shall not be superseded by this Plan and the Company hereby agrees that it
shall take the action required by the Employment Agreement with respect to the
Participant's Policy. In addition, actions under this Section 3.5 shall not
abrogate the Participant's (or trustee's, if the Participant has transferred
all of the rights under the Policy to a trust) obligations under the Plan;
provided, however, that neither a Change-in-Control nor a Separation from
Employment in connection therewith shall accelerate those obligations under the
Plan.
SECTION 4
Miscellaneous
4.1 Nothing contained herein (a) shall be deemed to exclude a
Participant from any compensation, bonus, pension, insurance, severance pay or
other benefit to which he otherwise is or might become entitled to as an
Employee of the Company, or (b) shall be construed as conferring upon an
Employee the right to continue in the employ of the company as an executive or
in any other capacity.
4.2 Any amounts payable by the Company hereunder shall not be deemed
salary or other compensation to a Participant for the purposes of computing
benefits to which he may be entitled under
6
any retirement-type plan of the Company or any other arrangement of the Company
for the benefit of its employees.
4.3 The Company's obligation to contribute to the Policies under this
Plan shall constitute a general, unsecured obligation, payable solely out of
its general assets, and no Participant shall have any right to any specific
assets of the Company
4.4 The rights and obligations created hereunder shall be binding on
a Participant's heirs, executors and administrators and on the successors and
assigns of the Company.
4.5 Except as to the Chairman of the Company on the Amendment
Effective Date, the Board, in its sole discretion, may amend, modify or
terminate the Plan at any time; provided, however, that during the term of any
Employment Agreement any such action as to a Participant covered by the
Employment Agreement must be consistent with the provisions of the Employment
Agreement applicable to such Participant.
4.6 The masculine pronoun whenever used shall include the feminine
and the singular shall be construed as the plural, where applicable.
4.7 The rights of any Participant under this Plan are personal and
may not be assigned, transferred, pledged or encumbered; provided, however,
that nothing herein shall prevent or shall be construed to prevent a further
transfer of the policy transferred to the Participant, if any, under Section
3.3 above. Any other attempt to do so shall be void.
4.8 The Plan Administrator, or its designee, shall have full power
and authority to interpret and administer this Plan and his actions in so doing
shall be final and binding on all persons interested in this Plan. The Plan
Administrator may, from time to time, adopt rules and regulations governing the
Plan.
4.9 Neither the Company nor any member of the Board shall be
responsible or liable in any manner to any Participant, Beneficiary or any
person claiming through them for any benefit or action taken or omitted in
connection with the granting of benefits, the continuation of benefits, or the
interpretation and administration of the Plan.
4.10 The Plan created hereby shall be construed in accordance with and
governed by the laws of the State of North Carolina.
7
SECTION 5
Claims Procedure
5.1 The Plan Administrator will advise the Beneficiary of any benefit
to which the Beneficiary is entitled under the Plan and shall have the power to
interpret this Plan and make all required determinations including factual
determinations. The Plan Administrator's decisions shall be final and binding
on the Company, the Employee, the Beneficiary and all persons claiming an
interest in this Plan through the Employee. If the Beneficiary believes that
the Plan Administrator has failed to provide any benefit to which the
Beneficiary is entitled, the Beneficiary may file a written claim with the Plan
Administrator. The claim shall be reviewed, and a response provided, within a
reasonable time after receiving the claim. The Beneficiary shall be provided
with written notice setting forth in a manner calculated to be understood by
the Beneficiary:
(1) the specific reasons or reasons for the denial;
(2) specific reference to pertinent Agreement provisions on
which denial is based;
(3) a description of any additional material or information
necessary for the claimant to perfect the claim; and
(4) an explanation of the claims review procedure set forth
in paragraph (b), below.
5.2 Within 60 days of receipt by the Beneficiary of a notice denying
a claim under the Agreement, the Beneficiary or duly authorized representative
may request in writing a full and fair review of the claim by the Plan
Administrator. The Plan Administrator may extend the 60-day period where the
nature of the benefit involved or other attendant circumstances make such
extension appropriate. In connection with such review, the Beneficiary or duly
authorized representative may review pertinent documents and may submit issues
and comments in writing. The Plan Administrator shall make a decision promptly,
and not later than 60 days after the Plan Administrator's receipt of a request
for review, unless special circumstances require an extension of time for
processing, in which case a decision shall be rendered as soon as possible, but
not later than 120 days after receipt of a request for review. The decision on
review shall be in writing and shall include specific reasons for the decision,
written in a
8
manner calculated to be understood by the Beneficiary, and specific references
to the pertinent Agreement provisions on which the decision is based.