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Exhibit 10(s)
Exhibit (10)(s)* to Report
on Form 10-K for Fiscal
Year Ended June 30, 2000
by Parker-Hannifin Corporation
Parker-Hannifin Corporation Executive Deferral Plan, as restated
*Numbered in accordance with Item 601 of Regulation S-K.
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PARKER-HANNIFIN CORPORATION
EXECUTIVE DEFERRAL PLAN
WHEREAS, the Parker-Hannifin Corporation Executive Deferral Plan (the
"Plan") was originally established as of October 1, 1994, for the purpose of
attracting high quality executives and promoting in its executives increased
efficiency and an interest in the successful operation of the Company by
offering a deferral opportunity to accumulate capital on favorable economic
terms; and
WHEREAS, pursuant to the authority granted in Article 14 of the Plan,
Parker-Hannifin Corporation (the "Company"), has the authority to amend the
Plan; and
WHEREAS, the Plan has been amended from time to time; and
WHEREAS, the Company now desires to further amend the Plan;
NOW, THEREFORE, the Plan is hereby amended and restated as of July 1,
1999 (except as otherwise specifically set forth hereinafter) to read as
follows:
ARTICLE 1
DEFINITIONS
1.1 ACCOUNT shall mean the sum of the Annual Deferral Account and all
LTI Deferral Accounts (vested and unvested).
1.2 ADMINISTRATOR shall mean the Company or, if applicable, the
committee appointed by the Board of Directors of the Company to administer the
Plan pursuant to Article 12 of the Plan.
1.3 ANNUAL DEFERRAL shall mean the amount of Compensation which the
Participant elects to defer for a Plan Year pursuant to Articles 2 and 3 of the
Plan.
1.4 ANNUAL DEFERRAL ACCOUNT shall mean the notional account established
with respect to a Participant's Annual Deferrals and Automatic Deferrals for
recordkeeping purposes pursuant to Article 4 of the Plan.
1.5 AUTOMATIC DEFERRAL shall mean any amount automatically deferred to
this Plan pursuant to Section 3.4 of this Plan.
1.6 BENEFICIARY shall mean the person or persons or entity designated
as such in accordance with Article 13 of the Plan.
1.7 BOARD shall mean the Board of Directors of the Company.
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1.8 BONUSES shall mean amounts paid in cash to the Participant by the
Company in the form of annual and other regular periodic bonuses before
reductions for deferrals under this Plan, the Savings Plan or the Savings
Restoration Plan. "Annual and other regular periodic bonuses" shall include
amounts payable under the Company's Return on Net Assets Plan (RONA) and the
Target Incentive Program, but shall exclude any payments under any long-term
incentive program, any volume incentive or similar bonus program, and any other
extraordinary bonus or incentive program.
1.9 CHANGE IN CONTROL shall mean any of the following events have
occurred:
(i) any "person" (as such term is defined in Section 3(a)(9)
of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "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 eligible to
vote for the election of the Board (the "Company Voting Securities"); provided,
however, that the event described in this paragraph shall not be deemed to be a
Change in Control by virtue of any of the following situations: (A) an
acquisition by the Company or any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities or interests of such
corporation or other entity (a "Subsidiary"); (B) an acquisition by any employee
benefit plan sponsored or maintained by the Company or any Subsidiary; (C) an
acquisition by any underwriter temporarily holding securities pursuant to an
offering of such securities; (D) a Non-Control Transaction (as defined in
paragraph (iii)); (E) as pertains to a Participant, any acquisition by the
Participant or any group of persons (within the meaning of Sections 13(d)(3) and
14(d)(2) of the Exchange Act) including the Participant (or any entity in which
the Participant or a group of persons including the Participant, directly or
indirectly, holds a majority of the voting power of such entity's outstanding
voting interests); or (F) the acquisition of Company Voting Securities from the
Company, if a majority of the Board approves a resolution providing expressly
that the acquisition pursuant to this clause (F) does not constitute a Change in
Control under this paragraph (i);
(ii) individuals who, at the beginning of any period of
twenty-four (24) consecutive months, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof;
provided, that (A) any person becoming a director subsequent to the beginning of
such twenty-four (24) month period, whose election, or nomination for election,
by the Company's shareholders was approved by a vote of at least two-thirds of
the directors comprising the Incumbent Board who are then on the Board (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to such
nomination) shall be, for purposes of this paragraph (ii), considered as though
such person were a member of the Incumbent Board; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
any other actual
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or threatened solicitation of proxies or consents by or on behalf of any person
other than the Board shall be deemed to be a member of the Incumbent Board;
(iii) the consummation of a merger, consolidation, share
exchange or similar form of corporate reorganization of the Company or any
Subsidiary that requires the approval of the Company's stockholders, whether for
such transaction or the issuance of securities in connection with the
transaction or otherwise (a "Business Combination"), unless (A) immediately
following such Business Combination: (1) more than 50% of the total voting power
of the corporation resulting from such Business Combination (the "Surviving
Corporation") or, if applicable, the ultimate parent corporation which directly
or indirectly has beneficial ownership of 100% of the voting securities eligible
to e1ect directors of the Surviving Corporation (the "Parent Corporation"), is
represented by Company Voting Securities that were outstanding immediately prior
to the Business Combination (or, if applicable, shares into which such Company
Voting Securities were converted pursuant to such Business Combination), and
such voting power among the holders thereof is in substantially the same
proportion as the voting power of such Company Voting Securities among the
holders thereof immediately prior to the Business Combination, (2) no person
(other than any employee benefit plan sponsored or maintained by the Surviving
Corporation or the Parent Corporation) is or becomes the beneficial owner,
directly or indirectly, of 20% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation),
and (3) at least a majority of the members of the board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation), following the Business Combination, were members of the Incumbent
Board at the time of the Board's approval of the execution of the initial
agreement providing for such Business Combination (a "Non-Control Transaction")
or (B) the Business Combination is effected by means of the acquisition of
Company Voting Securities from the Company, and a majority of the Board approves
a resolution providing expressly that such Business Combination does not
constitute a Change in Control under this paragraph (iii); or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or the sale or other
disposition of all or substantially all of the assets of the Company and its
Subsidiaries.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any person acquires beneficial ownership of more than
20% of the Company Voting Securities as a result of the acquisition of Company
Voting Securities by the Company which, by reducing the number of Company Voting
Securities outstanding, increases the percentage of shares beneficially owned by
such person; provided, that if a Change in Control would occur as a result of
such an acquisition by the Company (if not for the operation of this sentence),
and after the Company's acquisition such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control shall then occur.
Notwithstanding anything in this Plan to the contrary, if the
Participant's employment is terminated prior to a Change in Control, and the
Participant reasonably demonstrates that such
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termination was at the request of a third party who has indicated an intention
or taken steps reasonably calculated to effect a Change in Control (a "Third
Party"), then for all purposes of this Plan, the date immediately prior to the
date of such termination of employment shall be deemed to be the date of a
Change in Control for such Participant.
1.10 CODE shall mean the Internal Revenue Code of 1986, as amended from
time to time.
1.11 COMPENSATION shall mean the sum of the Participant's Salary and
anticipated Bonuses for a Plan Year before reductions for deferrals under this
Plan, the Savings Plan, the Savings Restoration Plan, or the Benefits Plus
Program. Compensation shall not include any amounts payable on account of
Termination of Employment, whether paid periodically or in a lump sum.
1.12 CREDITING RATE shall mean any notional gains or losses equal to
those generated as if the Participant's Account balance had been invested in one
or more of the investment portfolios designated as available by the
Administrator, less separate account fees and less applicable administrative
charges determined annually by the Administrator.
A Participant (or after his death, his Beneficiary) may elect to
allocate his Account among the available portfolios. The gains or losses shall
be credited based upon the daily unit values for the portfolio(s) selected by
the Participant. The rules and procedures for allocating the Account balance
among the portfolios shall be determined by the Administrator. The Participant's
allocation is solely for the purpose of calculating the Crediting Rate.
Notwithstanding the method of calculating the Crediting Rate, the Company shall
be under no obligation to purchase any investments designated by the
Participant.
1.13 DISABILITY shall mean any long term disability as defined under
the Company's long term disability plan. The Administrator, in its complete and
sole discretion, shall determine a Participant's Disability. The Administrator
may require that the Participant submit to an examination on an annual basis, at
the expense of the Company, by a competent physician or medical clinic selected
by the Administrator to confirm Disability. On the basis of such medical
evidence, the determination of the Administrator as to whether or not a
condition of Disability exists or continues shall be conclusive.
1.14 EARLY RETIREMENT DATE shall mean age 55 with ten or more years of
employment with the Company; provided, however, that any Early Retirement prior
to age 60 must be with the consent of the Compensation Committee of the Board.
1.15 ELIGIBLE EXECUTIVE shall mean a key employee of the Company or any
of its subsidiaries who: (a) is designated by the Administrator as eligible to
participate in the Plan (subject to the restriction in Sections 9.2, 10.3 and
11.2 of the Plan); and (b) qualifies as a member of the "select group of
management or highly compensated employees" under ERISA.
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1.16 ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.17 FINANCIAL HARDSHIP shall mean an unexpected need for cash arising
from an illness, casualty loss, sudden financial reversal, or other such
unforeseeable occurrence as determined by the Administrator. Cash needs arising
from foreseeable events such as the purchase of a residence or education
expenses for children shall not, alone, be considered a Financial Hardship.
1.18 IN-SERVICE DISTRIBUTION shall mean a distribution elected by the
Participant pursuant to Article 10 of the Plan.
1.19 LTI PAYMENT shall mean the amount that would otherwise be payable
to an Eligible Executive for a Plan Year under any long-term incentive program
of the Company.
1.20 LTI DEFERRAL shall mean the amount of any LTI Payment which the
Participant elects to defer with respect to a Plan Year pursuant to Articles 2
and 3 of the Plan.
1.21 LTI DEFERRAL ACCOUNT shall mean the one or more notional accounts
established with respect to a Participant's LTI Deferrals for recordkeeping
purposes pursuant to Article 4 of the Plan.
1.22 NORMAL RETIREMENT DATE shall mean the date on which a Participant
attains age 65.
1.23 PARTICIPANT shall mean an Eligible Executive who has elected to
participate and has completed a Participation Agreement pursuant to Article 2 of
the Plan.
1.24 PARTICIPATION AGREEMENT shall mean the Participant's written
election to participate in the Plan.
1.25 PLAN YEAR shall mean the calendar year.
1.26 RETIREMENT shall mean a termination of employment following Normal
or Early Retirement Date.
1.27 SALARY shall mean the Participant's annual basic rate of pay from
the Company (excluding Bonuses, commissions and other non-regular forms of
compensation) before reductions for deferrals under this Plan, the Savings Plan
or the Savings Restoration Plan.
1.28 SAVINGS PLAN shall mean The Parker Retirement Savings Plan as it
currently exists and as it may subsequently be amended.
1.29 SAVINGS RESTORATION PLAN shall mean the Parker-Hannifin
Corporation Savings Restoration Plan as it currently exists and as it may
subsequently be amended.
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1.30 SCHEDULED WITHDRAWAL shall mean a distribution of all or a portion
of the entire vested amount credited to the Participant's Account requested by
the Participant pursuant to the provisions of Article 10 of the Plan.
1.31 TERMINATION OF EMPLOYMENT shall mean the Participant's employment
with the Company ceases for any reason whatsoever, whether voluntary or
involuntary, other than Retirement or death.
1.32 UNSCHEDULED WITHDRAWAL shall mean a distribution of all or a
portion of the entire amount credited to the Participant's Account requested by
the Participant pursuant to the provisions of Article 10 of the Plan.
1.33 VALUATION DATE shall mean each day on which the New York Stock
Exchange is open, except that for purposes of determining the value of a
distribution under Article 5, 6, 7, 8 or 14, it shall mean the 24th day of each
month (or the most recent business day preceding such date) immediately
preceding the month in which a distribution is to be made.
ARTICLE 2
PARTICIPATION
2.1 PARTICIPATION AGREEMENT/DEFERRALS.
(a) An Eligible Executive shall become a Participant in the Plan on the
first day of the Plan Year following appointment as an Eligible Executive and
submission to the Administrator of an Annual Participation Agreement. To be
effective, the Eligible Executive must submit the Annual Participation Agreement
to the Administrator during the enrollment period designated by the
Administrator. In the Annual Participation Agreement, and subject to the
restrictions in Article 3, the Eligible Executive shall designate the Annual
Deferral for the covered Plan Year.
(b) In addition, an Eligible Executive shall become a Participant
automatically as of the date Automatic Deferrals are credited to his Account
pursuant to Section 3.4.
(c) With respect to those Participants who are eligible for an LTI
Payment, the Administrator shall provide for a separate enrollment period and
separate LTI Participation Agreements each year under which the Participant may
designate any LTI Deferrals for a specified Plan Year.
2.2 CONTINUATION OF PARTICIPATION. An Eligible Executive who has become
a Participant in the Plan shall continue as a Participant in the Plan even
though such executive ceases to be an Eligible Executive. However, a Participant
shall not be eligible to elect a new Annual Deferral or LTI Deferral unless the
Participant is an Eligible Executive for the Plan Year for which the election is
made.
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ARTICLE 3
EXECUTIVE DEFERRALS
3.1 DEFERRAL COMMITMENT.
(a) A Participant may elect in the Annual Participation Agreement to
defer an amount equal to a specified dollar amount of Salary and a specified
dollar amount or percentage of Bonuses to be earned by such Participant during
the next Plan Year.
(b) A Participant may elect in the LTI Participation Agreement to defer
an amount equal to a specified dollar amount or a percentage of LTI Payment that
may be payable to the Participant in the next Plan Year.
(c) Annual Deferrals and LTI Deferrals under this Plan shall be
irrevocable.
3.2 MINIMUM ANNUAL DEFERRAL.
(a) The Annual Deferral for a Plan Year must equal at least five
thousand dollars ($5,000), from either Salary or Bonuses or a combination of
Salary and Bonuses.
(b) The LTI Deferral for a Plan Year must equal at least five thousand
dollars ($5,000).
(c) Where a Participant elects to defer a specified percentage of
Salary, Bonuses, and/or LTI Payment, the determination of whether the Annual
Deferral or LTI Deferral is at least five thousand dollars ($5,000) shall be
made by multiplying the applicable elected percentages of Salary, Bonuses,
and/or LTI Payment to be deferred by the Participant's anticipated Salary,
Bonuses, and/or LTI Payment in the Plan Year immediately preceding the Plan Year
for which the Deferral is being made. The Administrator may, in its sole
discretion, permit Participants to elect to defer amounts in the form of a
percentage based on anticipated future Salary, Bonuses, and/or LTI Payments.
3.3 MAXIMUM DEFERRAL COMMITMENT.
(a) The Annual Deferral for any Plan Year may not exceed 20% of Salary
plus 75% of Bonuses; provided, that the Annual Deferral may not reduce the
Participant's income to an amount below the old age, survivor, and disability
insurance wage base under Social Security.
(b) The LTI Deferral for a Plan Year may be 100% of the LTI Payment.
(c) Notwithstanding the foregoing, the Administrator may reduce the
amount of an Annual Deferral and/or an LTI Deferral to the extent necessary to
insure the Participant will have
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sufficient earnings from the Company from which to take any taxes required to be
withheld from the Participant's earnings under federal, state or local law.
3.4 AUTOMATIC DEFERRALS. An amount equal to any Compensation that is
not paid to an Eligible Executive because it cannot be deducted by the Company
by reason of Section 162(m) of the Code shall be deemed to have been deferred
under this Plan.
3.5 VESTING. Subject to Section 11.3:
(a) The Participant's right to the value of his Annual Deferral
Account, as adjusted for gains and losses, shall be 100% vested at all times.
(b) The Participant's right to the value of each LTI Deferral Account,
as adjusted for gains and losses, shall be 100% vested as of the third June 30
following the time the LTI Deferral Account is established; provided, however,
that the Participant shall be fully vested in all LTI Deferrals as of the time:
(1) he reaches age 60; (2) he retires prior to age 60 with permission of the
Compensation Committee of the Board; (3) he retires due to Disability; (4) he
dies; (5) there is a Change in Control; or (6) the Plan terminates.
ARTICLE 4
ACCOUNTS
4.1 ACCOUNTS. Solely for recordkeeping purposes, the Company shall
maintain for each Participant one Annual Deferral Account for all Annual
Deferrals and all Automatic Deferrals, and shall maintain for each Participant a
separate LTI Deferral Account with respect to each LTI Deferral made by the
Participant.
4.2 TIMING OF CREDITS--PRE-TERMINATION. Each Plan Year, the Company
shall credit to the Annual Deferral Account a Participant's Annual Deferrals and
any Automatic Deferrals as of the time the deferrals would otherwise have been
paid to the Participant but for the Annual Deferral election or the operation of
Section 162(m) of the Code, and shall credit to a separate LTI Deferral Account
a Participant's LTI Deferral as of the time the deferrals would otherwise have
been paid to the Participant but for the LTI Deferral election. Gains or losses
shall be credited to the Participant's Account as of the close of business on
each Valuation Date, based on the Crediting Rate(s) in effect for the day under
Section 1.6.
4.3 TERMINATIONS. Following a Participant's Termination of Employment,
Retirement or death, gains or losses shall continue to be credited to the
Participant's Account through the final Valuation Date.
4.4 STATEMENT OF ACCOUNTS. The Administrator shall provide periodically
to each Participant a statement setting forth the balance of the Annual Deferral
Account and each LTI Deferral Account maintained for such Participant.
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ARTICLE 5
RETIREMENT BENEFITS
5.1 AMOUNT. Upon Retirement, the Company shall pay to the Participant
the value of his Account at the time and in the manner selected by the
Participant pursuant to the rules set forth in Sections 5.2 and 5.3.
5.2 FORM OF RETIREMENT BENEFITS. The retirement benefit shall be paid
monthly over a period of fifteen (15) years or the number of whole years
required to result in a monthly benefit of at least one thousand dollars
($1,000), if less; provided, however, that the Participant may elect to have
payment made in one of the following options:
(i) a single lump sum payment in cash;
(ii) monthly installments over 5, 10 or 15 years; provided,
that if a monthly benefit is less than $1,000, the Administrator may shorten the
payout period in whole year increments to assure that each monthly payment is at
least $1,000; or
(iii) Effective as of January 1, 2000, an annual lump sum
amount payable as of January 1 of each year equal to a specified whole number
percentage (1-8%) of the account balance as of the Valuation Date preceding each
such annual payment, plus monthly installments of the remaining balance of the
account over 5, 10 or 15 years; provided, that if a monthly benefit is less than
$1,000, the Administrator may shorten the payout period in whole year increments
to assure that each monthly payment is at least $1,000.
Payments shall be made or shall begin as of the first day of the month
no later than the date sixty (60) days after the Participant's Retirement,
unless the Participant has elected to have payments begin as of January l of a
later year. However, in no event shall payments commence later than the January
1 occurring five (5) years after Retirement or, if earlier, the date the
Participant attains age seventy (70). Notwithstanding the foregoing, the Company
may postpone all or a portion of any scheduled payment until the next fiscal
year to avoid loss of the corporate tax deduction under Internal Revenue Code
Section 162(m). Except as provided under Article 6, 9, 10 or 14, the Participant
may change the election of the form of payment at any time, except that if the
election is not filed at least thirteen (13) months prior to the Participant's
Retirement (on and after January 1, 2000, scheduled date of commencement), the
election shall be ineffective unless the Participant agrees to take a ten
percent (10%) reduction in the value of the Account.
5.3 SMALL BENEFIT EXCEPTION. Notwithstanding any of the foregoing, if
the sum of all benefits payable to the Participant is less than or equal to ten
thousand dollars ($10,000), the Company shall pay such benefits in a single lump
sum.
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ARTICLE 6
TERMINATION BENEFITS
6.1 AMOUNT. As of the first day of the month beginning no later than
sixty (60) days after Termination of Employment, the Company shall pay to the
Participant a termination benefit equal to the balance as of the Valuation Date
of the Annual Deferral Account and each LTI Deferral Account in which he is
vested under Section 3.5(b).
6.2 FORM OF TERMINATION BENEFITS. The Company shall pay the termination
benefits in a single lump sum; provided, however, that except following a Change
in Control the Company may, in its sole discretion, elect to pay the termination
benefits over a period of three (3) years in monthly installments, in which
event the Account shall continue to be credited with gains and losses based on
the Crediting Rate(s) elected by the Participant from time to time.
ARTICLE 7
SURVIVOR BENEFITS
7.1 PRE-COMMENCEMENT SURVIVOR BENEFIT. If the Participant dies prior to
the commencement of installment payments, the Company shall pay the balance of
the Account to the Participant's Beneficiary in one of the following forms,
based on the Participant's election:
(i) a single lump sum payment in cash;
(ii) monthly installments over 5, 10 or 15 years; provided,
that if a monthly benefit is less than $1,000, the Administrator may shorten the
payout period in whole year increments to assure that each monthly payment is at
least $1,000; or
(iii) an annual lump sum amount equal to a specified
percentage (1-8%) of the account balance as of the Valuation Date preceding each
such annual payment, plus monthly installments of the remaining balance of the
account over 5, 10 or 15 years; provided, that if a monthly benefit is less than
$1,000, the Administrator may shorten the payout period in whole year increments
to assure that each monthly payment is at least $1,000.
Payments shall be made or shall begin as of the first day of the month
no later than the date sixty (60) days after the Participant's death unless the
Participant has elected to have payments begin as of January l of a later year.
However, in no event shall payments commence later than the January 1 occurring
five (5) years after death or, if earlier, the date the Participant would have
attained age seventy (70). Except as provided in Article 9, 10 or 14 the
Participant (or after his death, his Beneficiary) may change the election of the
form of payment at any time, except that if the election is not filed at least
thirteen (13) months prior to the Participant's death, the election shall be
ineffective unless the Beneficiary agrees to take a ten percent (10%) reduction
in the value of the Account.
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7.2 POST-COMMENCEMENT SURVIVOR BENEFIT. If the Participant dies after
the time installment payments have commenced, the Company shall pay the
remaining balance of the Account to the Participant's Beneficiary in accordance
with the following rules, based on the Participant's election:
(i) continue in the form in effect before the Participant's
death; or
(ii) a single lump sum in cash to be paid the first of the
month no later than the date 60 days after the Participant's death.
7.3 SMALL BENEFIT PAYMENT. Notwithstanding any of the foregoing, in the
event the sum of all benefits payable to the Beneficiary is less than or equal
to ten thousand dollars ($10,000), the Company shall pay such benefits in a
single lump sum.
ARTICLE 8
DISABILITY
If a Participant suffers a Disability, the Company shall pay the
balance of the Participant's Account as of the Valuation Date to the Participant
in accordance with Article 5 as if the date of the Participant's Termination of
Employment for Disability were the Participant's Normal Retirement Date.
ARTICLE 9
CHANGE IN CONTROL
9.1 DISTRIBUTION.
(a) If a Change in Control occurs, the Participant (or after the
Participant's death the Participant's Beneficiary) shall receive a lump sum
payment of the balance of the Account within thirty (30) days after the Change
of Control. In the event such a distribution is made, the Participant shall
receive an additional adjustment payment calculated in accordance with the
formula set forth in Exhibit A hereto.
(b) In addition to any other amounts payable hereunder, in the event it
shall be determined that any payment, distribution or acceleration of vesting of
any benefit hereunder would be subject to the excise tax imposed by Section 4999
of the Code, or any successor provision, or any interest or penalties are
incurred by the Participant with respect to such excise tax, then the
Participant shall be entitled to receive an additional "gross-up payment"
calculated as set forth in the change in control severance agreement in effect
between the Company and the Participant as of the date of the Change in Control;
provided, however, that if the Participant does not have a change in control
severance agreement, the payment under this Section shall be
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determined in accordance with the calculation set forth in the most recent
change in control severance agreement entered into by the Company and any
executive of the Company; provided, further, that there shall be no duplication
of such additional payment under this Plan and any change in control severance
agreement.
ARTICLE 10
SCHEDULED AND UNSCHEDULED WITHDRAWALS, FINANCIAL HARDSHIP DISTRIBUTIONS
10.1 PAYMENT OF SCHEDULED WITHDRAWAL. No later than the last day of
March of the Plan Year designated in the initial Annual Participation Agreement
for a Scheduled Withdrawal (which date shall be no sooner than the January 1
following 5 years of participation), the Company shall pay to the Participant,
in a lump sum or four approximately equal annual installments, all or a portion
of the vested balance in the Participant's Annual Deferral and/or his LTI
Deferral Account as of the Valuation Date preceding the time payment is made or
commences.
10.2 UNSCHEDULED WITHDRAWAL. A Participant (or Beneficiary if the
Participant is deceased) may request an Unscheduled Withdrawal of all or any
portion of the vested balance credited to the Participant's Account as of the
Valuation Date on which the written request is received by the Administrator,
which shall be paid in a single lump sum as soon as practicable following
receipt of the request; provided, however, (i) that the minimum withdrawal shall
be twenty-five percent (25%) of the vested Account balance, and (ii) that an
election to withdraw seventy-five percent (75%) or more of the vested Account
balance shall be deemed to be an election to withdraw the entire vested Account
balance.
10.3 UNSCHEDULED WITHDRAWAL PENALTY. There shall be a penalty deducted
from the Account prior to an Unscheduled Withdrawal equal to ten percent (10%)
of the Unscheduled Withdrawal, which shall be ratably allocated among the
Participant's Annual Deferral Account and each of his vested LTI Deferral
Accounts. If a Participant elects such a withdrawal, any on-going Annual
Deferral shall cease, any election of an LTI Deferral that otherwise would be
effective before the first day of the Plan Year beginning one full Plan Year
after such withdrawal shall not be effective, and the Participant may not make
any further deferrals until one entire Plan Year following the Plan Year in
which such withdrawal was made has elapsed.
10.4 FINANCIAL HARDSHIP DISTRIBUTION. Upon a finding that the
Participant or the Beneficiary has suffered a Financial Hardship, the
Administrator may in its sole discretion, permit the Participant to request
distribution of a portion or all of his vested benefits under the Plan in the
amount reasonably necessary to alleviate such Financial Hardship, which shall be
ratably allocated among the Participant's Annual Deferral Account and each of
his vested LTI Deferral Accounts. If a distribution is to be made to a
Participant on account of Financial Hardship, any on-going Annual Deferrals
shall cease, any election of an LTI Deferral that otherwise would be effective
before the first day of the Plan Year beginning one full Plan Year after such
withdrawal shall not be effective, and the Participant may not make any further
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deferrals until one entire Plan Year following the Plan Year in which such
withdrawal was made has elapsed; however, there shall be no withdrawal penalty
assessed.
10.5 SMALL BENEFIT EXCEPTION. Notwithstanding any of the foregoing, if
the sum of all vested benefits payable to the Participant or Beneficiary who has
requested any withdrawal under this Article 10 is less than or equal to ten
thousand dollars ($10,000), the Company shall elect to pay out the entire vested
Account balance (reduced, if applicable, by the ten percent (10%) penalty) in a
single lump sum.
10.6 LIMIT ON WITHDRAWALS. Notwithstanding any of the foregoing, no
Eligible Executive in a position described in Section 162(m)(3) of the Code (or
who the Company reasonably believes will be in such a position) shall be
permitted to take any distribution from the Plan in any year in which he is in
or is believed to be a position described in Section 162(m)(3) of the Code.
ARTICLE 11
CONDITIONS RELATED TO BENEFITS
11.1 NONASSIGNABILITY. The benefits provided under the Plan may not be
alienated, assigned, transferred, pledged or hypothecated by or to any person or
entity, at any time or in any manner whatsoever. These benefits shall be exempt
from the claims of creditors of any Participant or other claimants and from all
orders, decrees, levies, garnishment or executions against any Participant to
the fullest extent allowed by law.
11.2 NO RIGHT TO COMPANY ASSETS. The benefits paid under the Plan shall
be paid from the general funds of the Company, and the Participants and any
Beneficiaries shall be no more than unsecured general creditors of the Company
with no special or prior right to any assets of the Company for payment of any
obligations hereunder.
11.3 PROTECTIVE PROVISIONS. The Participant shall cooperate with the
Company by furnishing any and all information requested by the Administrator, in
order to facilitate the payment of benefits hereunder, taking such physical
examinations as the Administrator may deem necessary and taking such other
actions as may be requested by the Administrator. If the Participant refuses to
cooperate, the Company shall have no further obligation to the Participant under
the Plan. If the Participant makes any material misstatement of information or
nondisclosure of medical history, then no benefits shall be payable to the
Participant or the Participant's Beneficiary or estate under the Plan beyond the
sum of the Participant's Annual Deferrals and LTI Deferrals.
11.4 WITHHOLDING. The Participant or the Beneficiary shall make
appropriate arrangements with the Company for satisfaction of any federal, state
or local income tax withholding requirements and Social Security or other
employee tax requirements applicable to the payment of benefits under the Plan.
If no other arrangements are made, the Company may provide, at its discretion,
for such withholding and tax payments as may be required.
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ARTICLE 12
ADMINISTRATION OF PLAN
The Company shall administer the Plan, provided, however, that the
Company may elect to appoint a committee of three (3) or more individuals to
administer the Plan. All references to the Administrator herein shall refer to
the Company or, if such committee has been appointed, the committee.
The Administrator shall administer the Plan and shall have
discretionary authority to interpret, construe and apply its provisions in
accordance with its terms. The Administrator shall further establish, adopt or
revise such rules and regulations as it may deem necessary or advisable for the
administration of the Plan. All decisions of the Administrator shall be final
and binding. The individuals serving on the committee shall, except as
prohibited by law, be indemnified and held harmless by the Company from any and
all liabilities, costs, and expenses (including legal fees), to the extent not
covered by liability insurance arising out of any action taken by any member of
the committee with respect to the Plan, unless such liability arises from the
individual's own gross negligence or willful misconduct.
ARTICLE 13
BENEFICIARY DESIGNATION
The Participant shall have the right, at any time, to designate any
person or persons as Beneficiary (both primary and contingent) to whom payment
under the Plan shall be made in the event of the Participant's death. The
Beneficiary designation shall be effective when it is submitted in writing to
the Administrator during the Participant's lifetime on a form prescribed by the
Administrator.
The submission of a new Beneficiary designation shall cancel all prior
Beneficiary designations. Any finalized divorce or marriage of a Participant
subsequent to the date of a Beneficiary designation shall revoke such
designation, unless in the case of divorce the previous spouse was not
designated as Beneficiary and unless in the case of marriage the Participant's
new spouse has previously been designated as Beneficiary. The spouse of a
married Participant shall consent to any designation of a Beneficiary other than
the spouse, and the spouse's consent shall be witnessed by a notary public.
If a Participant fails to designate a Beneficiary as provided above, or
if the Beneficiary designation is revoked by marriage, divorce, or otherwise
without execution of a new designation, or if every person designated as
Beneficiary predeceases the Participant or dies prior to complete distribution
of the Participant's benefits, then the Administrator shall direct the
distribution of such benefits to the Participant's estate.
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ARTICLE 14
AMENDMENT AND TERMINATION OF PLAN
14.1 AMENDMENT OF PLAN. Except as provided in Section 14.3, the Company
may at any time amend the Plan in whole or in part, provided, however, that such
amendment: (a) shall not decrease the balance of the Participant's Account at
the time of such amendment; and (b) shall not retroactively decrease the
applicable Crediting Rate of the Plan prior to the time of such amendment. The
Company may amend the Crediting Rate or Fixed Crediting Rate of the Plan
prospectively, in which case, the Company shall notify the Participant of such
amendment in writing within thirty (30) days after such amendment.
14.2 TERMINATION OF PLAN. Except as provided in Section 14.3, the
Company may at any time terminate the Plan. If the Company terminates the Plan,
the date of such termination shall be treated as the date of Retirement or
Termination of Employment for the purpose of calculating Plan benefits, and the
Company shall pay to the Participant the benefits the Participant is entitled to
receive under the Plan in monthly installments over a thirty-six (36) month
period. Interest at an annualized rate equal to 90% of the Ten-Year United
States Treasury Note rate as of January 1 of the year in which the Plan is
terminated will be credited to the Participant's Account prospectively
commencing as of the date of the Plan's termination and continuing until
distribution under this Section is completed
14.3 AMENDMENT OR TERMINATION AFTER CHANGE IN CONTROL. Notwithstanding
the foregoing, the Company shall not amend or terminate the Plan without the
prior written consent of affected Participants for a period of two calendar
years following a Change in Control and shall not thereafter amend or terminate
the Plan in any manner which affects any Participant (or Beneficiary) who
commences receiving payment of benefits under the Plan prior to the end of such
two year period following a Change in Control.
14.4 COMPANY ACTION. Except as provided in Section 14.3 or 14.5, the
Company's power to amend or terminate the Plan shall be exercisable by the
Company's Board of Directors or by the committee or individual authorized by the
Company's Board of Directors to exercise such powers.
14.5 CONSTRUCTIVE RECEIPT TERMINATION. In the event the Administrator
determines that amounts deferred under the Plan have been constructively
received by Participants and must be recognized as income for federal income tax
purposes, the Plan shall terminate and distributions shall be made to
Participants in accordance with the Provisions of Section 14.2 or as may be
determined by the Administrator. The determination of the Administrator under
this Section shall be binding and conclusive.
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ARTICLE 15
MISCELLANEOUS
15.1 SUCCESSORS OF THE COMPANY. The rights and obligations of the
Company under the Plan shall inure to the benefit of, and shall be binding upon,
the successors and assigns of the Company.
15.2 ERISA PLAN. The Plan is intended to be an unfunded plan maintained
primarily to provide deferred compensation benefits for "a select group of
management or highly compensated employees" within the meaning of Sections 201,
301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I
of ERISA.
15.3 TRUST. The Company shall be responsible for the payment of all
benefits under the Plan. At its discretion, the Company may establish one or
more grantor trusts for the purpose of providing for payment of benefits under
the Plan. Such trust or trusts may be irrevocable, but the assets thereof shall
be subject to the claims of the Company's creditors. Benefits paid to the
Participant from any such trust shall be considered paid by the Company for
purposes of meeting the obligations of the Company under the Plan.
15.4 EMPLOYMENT NOT GUARANTEED. Nothing contained in the Plan nor any
action taken hereunder shall be construed as a contract of employment or as
giving any Participant any right to continued employment with the Company.
15.5 GENDER, SINGULAR AND PLURAL. All pronouns and variations thereof
shall be deemed to refer to the masculine, feminine, or neuter, as the identity
of the person or persons may require. As the context may require, the singular
may be read as the plural and the plural as the singular.
15.6 CAPTIONS. The captions of the articles and sections of the Plan
are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
15.7 VALIDITY. If any provision of the Plan is held invalid, void or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provisions of the Plan.
15.8 WAIVER OF BREACH. The waiver by the Company of any breach of any
provision of the Plan by the Participant shall not operate or be construed as a
waiver of any subsequent breach by the Participant.
15.9 APPLICABLE LAW. The Plan shall be governed and construed in
accordance with the laws of Ohio except where the laws of Ohio are preempted by
ERISA.
15.10 NOTICE. Any notice or filing required or permitted to be given to
the Company under the Plan shall be sufficient if in writing and hand-delivered,
or sent by first class mail, facsimile or electronic mail to the principal
office of the Company, directed to the attention of
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the Administrator. Such notice shall be deemed given as of the date of delivery,
or, if delivery is made by mail, as of the date shown on the postmark.
ARTICLE 16
CLAIMS AND REVIEW PROCEDURES
16.1 CLAIMS PROCEDURE. The Company shall notify a Participant in
writing, within ninety (90) days after his or her written application for
benefits, of his or her eligibility or noneligibility for benefits under the
Plan. If the Company determines that a Participant is not eligible for benefits
or full benefits, the notice shall set forth: (a) the specific reasons for such
denial; (b) a specific reference to the provisions of the Plan on which the
denial is based; (c) a description of any additional information or material
necessary for the claimant to perfect his or her claim, and a description of why
it is needed; and (d) an explanation of the Plan's claims review procedure and
other appropriate information as to the steps to be taken if the Participant
wishes to have the claim reviewed. If the Company determines that there are
special circumstances requiring additional time to make a decision, the Company
shall notify the Participant of the special circumstances and the date by which
a decision is expected to be made, and may extend the time for up to an
additional ninety-day period.
16.2 REVIEW PROCEDURE. If a Participant is determined by the Company
not to be eligible for benefits, or if the Participant believes that he or she
is entitled to greater or different benefits, the Participant shall have the
opportunity to have such claim reviewed by the Company by filing a petition for
review with the Company within sixty (60) days after receipt of the notice
issued by the Company. Said petition shall state the specific reasons which the
Participant believes entitle him or her to benefits or to greater or different
benefits. Within sixty (60) days after receipt by the Company of the petition,
the Company shall afford the Participant (and counsel, if any) an opportunity to
present his or her position to the Company orally or in writing, and the
Participant (or counsel) shall have the right to review the pertinent documents.
The Company shall notify the Participant of its decision in writing within the
sixty-day period, stating specifically the basis of its decision, written in a
manner calculated to be understood by the Participant and the specific
provisions of the Plan on which the decision is based. If, because of the need
for a hearing, the sixty-day period is not sufficient, the decision may be
deferred for up to another sixty-day period at the election of the Company, but
notice of this deferral shall be given to the Participant. In the event of the
death of the Participant, the same procedures shall apply to the Participant's
beneficiaries.
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EXHIBIT A
The purpose of the adjustment payment to be added to the distribution made
pursuant to Section 9.1(a) (the "Make Whole Amount") is to offset the
Participant's inability to defer until retirement or later the payment of taxes
on the amounts deferred and the earnings and interest that would have otherwise
accrued between the date of the Change in Control and the date on which the
Participant elected to commence receipt of his Account (the "Commencement Date")
under the Plan.
The Make Whole Amount shall be calculated as follows:
1. The Participant's Account balance under the Plan as of the date of the
Change in Control (exclusive of Automatic Deferrals) (the "EDP Amount")
will be projected forward to the Commencement Date at an assumed
tax-deferred annual earnings rate equal to the Moody's Seasoned Baa
Corporate Bond Yield Average for the last twelve full calendar months
prior to the Change in Control (the "Moody's Rate") (such projected
amount shall be known as the "Projected Balance"). The Projected
Balance will then be converted into annual installment benefit payments
based upon the Participant's elected form of retirement payments under
the Plan, assuming continued tax-deferred earnings on the undistributed
balance at the Moody's Rate (the "Projected Annual Payouts"). The
Projected Annual Payouts will then be reduced for assumed income taxes
at the highest applicable federal, state and local marginal rates of
taxation in effect in the Participant's taxing jurisdiction(s) for the
calendar year in which the Make Whole Amount is paid (the "Tax Rate").
The after-tax Projected Annual Payouts will be known as the "After-Tax
Projected Benefits".
2. The term "Made Whole Amount", as used herein, shall mean the EDP Amount
plus the Make Whole Amount. The Make Whole Amount is the amount which,
when added to the EDP Amount, will yield After-Tax Annuity Benefits (as
hereinafter defined) equal to the After-Tax Projected Benefits, based
on the following assumptions:
a. The Made Whole Amount will be taxed at the Tax Rate
upon receipt by the Participant.
b. The after-tax Made Whole Amount will be deemed to be
invested by the Participant in a tax-deferred annuity
that is structured to make payments beginning on the
Commencement Date in the same form as elected by the
Participant under the Plan (the "Annuity").
c. The Annuity will accrue interest at the Moody's Rate,
less 80 basis points (i.e., 0.80%).
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d. Annual Annuity payments will be taxed at the Tax Rate
(after taking into account the annuity exclusion
ratio), yielding "After-Tax Annuity Benefits".
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