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EXHIBIT 10 (mm)
THE ALLEN GROUP INC.
DEFERRED COMPENSATION PLAN
(EFFECTIVE DECEMBER 1, 1995)
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THE ALLEN GROUP INC.
DEFERRED COMPENSATION PLAN
The Allen Group Inc. does hereby establish the Allen Group
Inc. Deferred Compensation Plan on the terms and conditions hereinafter set
forth.
ARTICLE I
PREFACE
SECTION 1.1. EFFECTIVE DATE. The effective date of this
Plan is December 1, 1995.
SECTION 1.2. PURPOSE OF THE PLAN. The purpose of this Plan
is to provide for certain highly compensated and management employees of the
Employers a vehicle for deferring compensation.
SECTION 1.3. GOVERNING LAW. This Plan shall be regulated,
construed and administered under the laws of the State of Ohio, except when
preempted by federal law.
SECTION 1.4. GENDER AND NUMBER. For purposes of interpreting
the provisions of this Plan, the masculine gender shall be deemed to include
the feminine, the feminine gender shall be deemed to include the masculine, and
the singular shall include the plural unless otherwise clearly required by the
context.
ARTICLE II
DEFINITIONS
The following words and phrases shall have the following
respective meanings for purposes of this Plan.
SECTION 2.1. ACCOUNT shall mean the record maintained by the
Employer in accordance with Section 3.2.
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SECTION 2.2. BASE SALARY shall mean an Executive's base
salary in effect on January 1 of each Plan Year (including, for this purpose,
any salary reductions caused as a result of participation in (a) an
Employer-sponsored plan which is governed by Section 401(k) or 125 of the
Internal Revenue Code or (b) this Plan).
SECTION 2.3. BENEFICIARY shall mean the person or persons
designated by the Participant as his Beneficiary under this Plan, in accordance
with the provisions of Article VII hereof.
SECTION 2.4. BONUS. An Executive's Bonus for a Plan Year is
the annual cash incentive bonus which is earned with respect to services
performed by the Executive during such Plan Year, whether or not such Bonus is
actually paid to the Executive during such Plan Year. The Management
Compensation Committee of the Company's Board of Directors may designate other
bonus amounts payable under bonus programs hereafter established for Executives
as amounts to be treated as "Bonus" hereunder.
SECTION 2.5. CHANGE IN CONTROL shall mean any of the
following:
(a) If any "person", as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act)(other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company), 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 30% or more of the combined
voting power of the Company's then outstanding securities; or
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(b) If, during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of
the Company (the "Board"), and any new director (other than a director
designated by a person who has entered into an agreement with the
Company to effect a transaction described in Subsection (a), (c) or
(d) of this Section) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or
(c) If the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
80% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or a similar transaction)
in which no "person" (as defined in Subsection (a) above) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(d) If the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
SECTION 2.6. COMMITTEE shall mean the Employee Before-Tax
Savings Plan Committee, as appointed from time to time under The Allen Group
Inc. Employee Before-Tax Savings Plan.
SECTION 2.7. COMPANY shall mean The Allen Group Inc.
SECTION 2.8. CONTROLLED GROUP shall mean the Company and each
other entity the employees of which, together with the employees of the
Company, are required to be treated as if they were employed by a single
employer under Section 414 of the Internal Revenue Code.
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SECTION 2.9. DEFERRED COMPENSATION BENEFIT shall mean a
Deferred Compensation Benefit (as described in Article III) which is payable to
or with respect to a Participant under this Plan.
SECTION 2.10. EMPLOYER shall mean the Company and any other
Controlled Group member that adopts the Plan with the written consent of the
Company.
SECTION 2.11. EXECUTIVE DEFERRALS shall mean the amounts
described in Section 3.1(a) hereof.
SECTION 2.12. EXECUTIVE shall mean, for a particular Plan
Year, an Employee of an Employer whose participation herein is approved by the
Committee. It is intended generally that to be eligible to participate herein
the Executives shall be employees who are covered by the Company's qualified
pension or savings plan and whose Base Salary exceeds $100,000.
SECTION 2.13. INSOLVENT. For purposes of this Plan, an
Employer shall be considered Insolvent at such time as it (a) is unable to pay
its debts as they mature, or (b) is subject to a pending voluntary or
involuntary proceeding as a debtor under the United States Bankruptcy Code.
SECTION 2.14. INTEREST PERCENTAGE FACTOR. For a particular
month, the Prime Rate of the Bank of America (or such other bank as the
Committee from time to time may designate) as of the last business day of the
preceding calendar month minus 1%. In no event, however, will the Interest
Percentage Factor be less than 4% or more than 10%.
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SECTION 2.15. PARTICIPANT shall mean any Executive who makes
Executive Deferrals hereunder.
SECTION 2.16. PLAN shall mean The Allen Group Inc. Deferred
Compensation Plan, as herein set out or as duly amended.
SECTION 2.17. PLAN YEAR shall mean each calendar year
commencing with the 1995 calendar year.
SECTION 2.18. RETIREMENT shall mean the voluntary termination
of an Executive's employment on or after the later of the date on which the
Executive attains age 55 and the date the Executive completes 10 years of
"Continuous Service" (as defined in The Allen Group, Inc. Corporate Retirement
Plan).
SECTION 2.19. UNFORESEEABLE EMERGENCY shall mean an event
which results (or will result) in severe financial hardship to the Participant
as a consequence of an unexpected illness or accident or loss of the
Participant's property due to casualty or other similar extraordinary or
unforeseen circumstances out of the control of the Participant.
ARTICLE III
DEFERRED COMPENSATION BENEFITS
SECTION 3.1. DEFERRED COMPENSATION BENEFITS.
(a) AMOUNT OF EXECUTIVE DEFERRALS. Each Executive may, by
written notice to the Committee (in accordance with rules established by the
Committee), direct his Employer to reduce his Base Salary and/or Bonus as
described in the following sentences and to credit the amount of any such
reduction (collectively, the "Executive Deferrals") to the Account described in
Section 3.2 at
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the times described therein. Each Executive may at any time direct his
Employer to reduce his Base Salary which is payable for services yet to be
performed by a specified dollar amount or percentage (not exceeding 25% of Base
Salary for any Plan Year). In addition, prior to December 31 of any Plan Year,
each Executive may direct his Employer to reduce his Bonus for such Plan Year
by a specified dollar amount or percentage (not exceeding 50% of any such
Bonus).
(b) DEFERRAL PERIOD.
(i) Each deferral election described in Subsection (a) above
shall also contain the Executive's election regarding the time or times of the
payment or commencement of payment of the portion of his Account to which such
election applies (the "Payment Date" or "Payment Dates"). Any deferral
election may designate up to five (5) separate Payment Dates, but in no event
may an Executive designate more than five (5) Payment Dates for all Executive
Deferrals under the Plan. In addition, notwithstanding the Payment Date(s)
elected by the Executive, all Executive Deferrals shall be paid or commence to
be paid to the Executive upon the earlier of (A) as soon as practicable after
the date on which he ceases to be an employee of a Controlled Group member for
any reason (including disability, death or the termination of an Employer's
membership in the Controlled Group) other than Retirement or (B) immediately
following the date of a Change in Control. If an Executive elects installment
payments
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under Section 3.1(c)(ii), all such installment payments must commence on the
same Payment Date.
(ii) Notwithstanding the Payment Date(s) elected by the
Executive, the payment of all or any portion of the Executive's Account will be
deferred to the extent that any amount payable under the Plan, when added to
any other compensation received or to be received by the Executive in the same
calendar year, would not be deductible for federal income tax purposes by the
Executive's Employer by reason of Section 162(m) of the Internal Revenue Code
(the "Code"). The amount to be deferred will equal the amount that otherwise
would not be deductible by reason of Section 162(m) of the Code, but in no
event shall exceed the total amount otherwise payable to the Executive
hereunder. The deferred amount shall be paid at the earliest possible time
during the first succeeding calendar year (or years) in which such amount, when
added to all other compensation received or to be received by the Executive in
such calendar year, would not be non-deductible by reason of Section 162(m) of
the Code.
(c) FORM OF PAYMENT. Each deferral election described in
Subsection (a) above shall also contain the Executive's election regarding the
form of payment of the portion of his Account to which such election applies.
In each election form, the Executive may elect to receive payment of the
portion of his Account to which such election applies in one or a combination
of the following forms:
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(i) a lump sum payment; or
(ii) annual installment payments for a period not
exceeding ten years, with each installment being
based on the value of the portion of the Account
subject to such election on the date on which such
installment is to be paid and being a fraction of
such value in which the numerator is one and the
denominator is the total number of remaining
installments to be paid.
Notwithstanding the foregoing, (1) in the event of a Change in Control, all
unpaid Deferred Compensation Benefits (whether payable as a lump sum or in
installments) shall be paid in the form of a lump sum payment, and (2) the same
payout period must be elected with respect to all installment payments elected
by an Executive under the Plan.
(d) EFFECT AND DURATION OF DEFERRAL ELECTION. Any direction
by an Executive to make Executive Deferrals hereunder shall be effective with
respect to the Base Salary otherwise payable to the Executive and the Bonus
earned by the Executive during the period to which the direction relates, and
the Executive shall not be eligible to receive such Executive Deferrals on the
date they would otherwise be payable. Instead, such Executive Deferrals shall
be credited to the Executive's Account as provided in Section 3.2. Except as
specifically provided herein or in an election form, any directions made in
accordance with Subsections (a)(i), (b) or (c) above shall be irrevocable and
shall remain in effect for subsequent Plan Years unless changed or terminated
by the Executive by written notice to the Committee, on a form provided by the
Committee, prior to
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the first day of such subsequent Plan Year. Notwithstanding the foregoing, an
Executive's direction to make Executive Deferrals hereunder shall automatically
terminate on the earlier of the date (i) the Executive ceases employment with
the Employers, (ii) on which the Executive's Employer is deemed Insolvent,
(iii) the Executive is no longer eligible to make Executive Deferrals
hereunder, (iv) the Plan is terminated or (v) of a Change in Control.
SECTION 3.2. PARTICIPANT'S ACCOUNTS. Each Employer shall
establish and maintain on its books an Account for each Participant which shall
contain the following entries:
(a) Credits to an Account for the Executive Deferrals
described in Section 3.1, which shall be credited to the Account at the time
such Deferrals would otherwise have been paid to the Executive;
(b) Credits to the same Accounts for the earnings described
in Article IV, which shall continue until the Account has been distributed to
the Participant or his Beneficiary; and
(c) Debits for any distributions made from the Account.
ARTICLE IV
EARNINGS
SECTION 4.1. EARNINGS. At the end of each calendar month,
the Account of each Participant shall be credited with an amount determined by
applying one-twelfth of the Interest
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Percentage Factor to such Participant's Account balance at the beginning of
such month. The Account of a Participant who has terminated employment with
the Controlled Group shall be credited with earnings as described in this
Section until the Account has been distributed in full.
ARTICLE V
VESTING
A Participant shall always be 100% vested in his Account
hereunder.
ARTICLE VI
DISTRIBUTION OF BENEFITS TO PARTICIPANTS
SECTION 6.1. TIME AND MANNER OF PAYMENT.
(a) TIMING. Except as otherwise provided or
permitted by the Plan, the Deferred Compensation Benefit shall be paid (or
commence to be paid) to the Participant on the Payment Date(s) specified in the
Participant's deferral election form pursuant to Section 3.1(b).
(b) FORM. Except as otherwise provided or permitted
by the Plan, the Deferred Compensation Benefit shall be distributed to the
Participant in the form specified in the Participant's deferral election form
pursuant to section 3.1(c).
(c) UNFORESEEABLE EMERGENCY DISTRIBUTIONS.
Notwithstanding the foregoing, the Committee may at any time, upon written
request of the Participant, cause to be paid to such Participant an amount
equal to all or any part of such Participant's Account if the Committee
determines, in its
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absolute discretion based on such reasonable evidence that it shall require,
that such a payment or payments is necessary for the purpose of alleviating the
consequences of an Unforeseeable Emergency occurring with respect to the
Participant. Payments of amounts because of an Unforeseeable Emergency shall
be permitted only to the extent reasonably necessary to satisfy the emergency
need. Any Executive whose eligibility to make before-tax contributions to The
Allen Group Inc. Employee Before-Tax Savings Plan has been suspended because he
has taken a hardship withdrawal from such plan shall not be eligible to make
Executive Deferrals under this Plan for the period of his suspension from such
plan.
(d) SMALL SUB-ACCOUNTS. Notwithstanding the foregoing, in
the event that a Participant's Account does not exceed $20,000 at the time of
the Participant's termination of employment with the Controlled Group, such
Account shall automatically be paid to him in a single lump sum payment as soon
as practicable following his termination of employment.
(e) TAXES. The Employer shall deduct from the payments
hereunder any taxes required by law to be withheld therefrom.
SECTION 6.2. LIABILITY FOR PAYMENT/EXPENSES. Each Employer
shall be liable for the payment of the Deferred Compensation Benefits which are
payable hereunder to its employees. Expenses of administering the Plan shall
be paid by the Employers, as directed by the Company.
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ARTICLE VII
BENEFICIARIES
SECTION 7.1. BENEFICIARY DESIGNATIONS. A designation of a
Beneficiary hereunder may be made only by an instrument (in form acceptable to
the Committee) signed by the Participant and filed with the Committee prior to
the Participant's death. In the absence of such a designation and at any other
time when there is no existing Beneficiary designated hereunder, the
Beneficiary of a Participant shall be his surviving spouse or, if none, his
estate. A person designated by a Participant as his Beneficiary who or which
ceases to exist shall not be entitled to any part of any payment thereafter to
be made to the Participant's Beneficiary unless the Participant's designation
specifically provided to the contrary. If two or more persons designated as a
Participant's Beneficiary are in existence with respect to a single Deferred
Compensation Benefit, the amount of any payment to the Beneficiary under this
Plan shall be divided equally among such persons unless the Participant's
designation specifically provided to the contrary.
SECTION 7.2. CHANGE IN BENEFICIARY. A Participant may, at
any time and from time to time, change a Beneficiary designation hereunder
without the consent of any existing Beneficiary or any other person. Any change
in Beneficiary shall be made by giving written notice thereof to the Committee
and any change shall be effective only if received by the Committee prior to
the death of the Participant.
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SECTION 7.3. DISTRIBUTIONS TO BENEFICIARIES.
(a) AMOUNT OF BENEFITS. The Deferred Compensation Benefit
payable to a Participant's Beneficiary under this Plan shall be equal to such
Participant's Deferred Compensation Account balance on the date of the
distribution of the Account to the Beneficiary.
(b) TIME AND MANNER OF PAYMENT. The Deferred Compensation
Benefit payable to a Beneficiary under this Plan shall be paid in the form of a
lump sum payment as soon as practicable following the death of the Participant.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. LIABILITY OF EMPLOYER. Nothing in this Plan
shall constitute the creation of a trust or other fiduciary relationship
between an Employer and any Participant, Beneficiary or any other person.
SECTION 8.2. LIMITATION ON RIGHTS OF PARTICIPANTS AND
BENEFICIARIES - NO LIEN. The Plan is designed to be an unfunded, nonqualified
plan. Nothing contained herein shall be deemed to create a trust or lien in
favor of any Participant or Beneficiary on any assets of an Employer. The
Employers shall have no obligation to purchase any assets that do not remain
subject to the claims of the creditors of the Employers for use in connection
with the Plan. No Participant or Beneficiary or any other person shall have
any preferred claim on, or any beneficial ownership interest in, any assets of
the Employers prior to the
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time that such assets are paid to the Participant or Beneficiary as provided
herein. Each Participant and Beneficiary shall have the status of a general
unsecured creditor of the Employers.
SECTION 8.3. NO GUARANTEE OF EMPLOYMENT. Nothing in this
Plan shall be construed as guaranteeing future employment to Participants.
Except as otherwise set forth in a written agreement between an Executive and
an Employer, a Participant continues to be an employee of an Employer solely at
the will of such Employer subject to discharge at any time, with or without
cause.
SECTION 8.4. PAYMENT TO GUARDIAN. If a benefit payable
hereunder is payable to a minor, to a person declared incompetent or to a
person incapable of handling the disposition of his property, the Committee may
direct payment of such benefit to the guardian, legal representative or person
having the care and custody of such minor, incompetent or person. The
Committee may require such proof of incompetency, minority, incapacity or
guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Employers from all liability
with respect to such benefit.
SECTION 8.5. ASSIGNMENT. No right or interest under this
Plan of any Participant or Beneficiary shall be assignable or transferable in
any manner or be subject to alienation, anticipation, sale, pledge, encumbrance
or other legal process or in any manner be liable for or subject to the debts
or liabilities of the Participant or Beneficiary.
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SECTION 8.6. SEVERABILITY. If any provision of this Plan or
the application thereof to any circumstance(s) or person(s) is held to be
invalid by a court of competent jurisdiction, the remainder of the Plan and the
application of such provision to other circumstances or persons shall not be
affected thereby.
ARTICLE IX
ADMINISTRATION OF PLAN
SECTION 9.1. ADMINISTRATION. (a) IN GENERAL. The Plan
shall be administered by the Committee. The Committee shall have sole and
absolute discretion to interpret where necessary all provisions of the Plan
(including, without limitation, by supplying omissions from, correcting
deficiencies in, or resolving inconsistencies or ambiguities in, the language
of the Plan), to determine the rights and status under the Plan of
Participants, Executives, or other persons, to resolve questions or disputes
arising under the Plan and to make any determinations with respect to the
benefits payable under the Plan and the persons entitled thereto as may be
necessary for the purposes of the Plan. The Committee's determination of the
rights of any employee or former employee hereunder shall be final and binding
on all persons, subject only to the claims procedures outlined in Section 9.3
hereof.
(b) DELEGATION OF DUTIES. The Committee may delegate any of
its administrative duties, including, without limitation, duties with respect
to the processing, review, investigation,
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approval and payment of Deferred Compensation Benefits, to a named
administrator or administrators.
SECTION 9.2. REGULATIONS. The Committee shall promulgate any
rules and regulations it deems necessary in order to carry out the purposes of
the Plan or to interpret the provisions of the Plan; provided, however, that no
rule, regulation or interpretation shall be contrary to the provisions of the
Plan. The rules, regulations and interpretations made by the Committee shall,
subject only to the claims procedure outlined in Section 9.3 hereof, be final
and binding on all persons.
SECTION 9.3. CLAIMS PROCEDURES. The Committee shall
determine the rights of any employee or former employee to any Deferred
Compensation Benefits hereunder. Any employee or former employee who believes
that he has not received the Deferral Benefits to which he is entitled under
the Plan may file a claim in writing with the Committee. The Committee shall,
no later than 90 days after the receipt of a claim (plus an additional period
of 90 days if required for processing, provided that notice of the extension of
time is given to the claimant within the first 90 day period), either allow or
deny the claim in writing. If a claimant does not receive written notice of
the Committee's decision on his claim within the above-mentioned period, the
claim shall be deemed to have been denied in full.
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A denial of a claim by the Committee, wholly or partially,
shall be written in a manner calculated to be understood by the claimant and
shall include:
(a) the specific reasons for the denial;
(b) specific reference to pertinent Plan provisions on
which the denial is based;
(c) a description of any additional material or
information necessary for the claimant to perfect the
claim and an explanation of why such material or
information is necessary; and
(d) an explanation of the claim review procedure.
A claimant whose claim is denied (or his duly authorized
representative) may within 60 days after receipt of denial of a claim file with
the Committee a written request for a review of such claim. If the claimant
does not file a request for review of his claim within such 60-day period, the
claimant shall be deemed to have acquiesced in the original decision of the
Committee on his claim. If such an appeal is so filed within such 60 day
period, the Company (or its delegate) shall conduct a full and fair review of
such claim. During such review, the claimant shall be given the opportunity to
review documents that are pertinent to his claim and to submit issues and
comments in writing.
The Company shall mail or deliver to the claimant a written
decision on the matter based on the facts and the pertinent provisions of the
Plan within 60 days after the receipt of the request for review (unless special
circumstances require an extension of up to 60 additional days, in which case
written
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notice of such extension shall be given to the claimant prior to the
commencement of such extension). Such decision shall be written in a manner
calculated to be understood by the claimant, shall state the specific reasons
for the decision and the specific Plan provisions on which the decision was
based and shall, to the extent permitted by law, be final and binding on all
interested persons. If the decision on review is not furnished to the claimant
within the above-mentioned time period, the claim shall be deemed to have been
denied on review.
SECTION 9.4. REVOCABILITY OF COMMITTEE/COMPANY ACTION. Any
action taken by the Committee or the Company with respect to the rights or
benefits under the Plan of any employee or former employee shall be revocable
by the Committee or the Company as to payments not yet made to such person, and
acceptance of any Deferred Compensation Benefits under the Plan constitutes
acceptance of and agreement to the Committee's or the Company's making any
appropriate adjustments in future payments to such person (or to recover from
such person) any excess payment or underpayment previously made to him.
SECTION 9.5. AMENDMENT.
(a) The Board of Directors of the Company may at any time
(without the consent of any Employer) amend any or all of the provisions of
this Plan, except that (i) no such amendment may (1) reduce the balance of any
Participant's Account as of the date of such amendment, (2) change the time or
form of distribution from a Participant's Account or (3) change the
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provisions of the Plan applicable to a Participant's Account upon a Change in
Control, without the prior written consent of such Participant, and (ii) no
such amendment may suspend the crediting of earnings on the balance of a
Participant's Account, until the entire balance of such Account has been
distributed. Any amendment shall be in the form of a written instrument
executed by an officer of the Company pursuant to a resolution adopted by the
Board of Directors. Subject to the foregoing provisions of this Section, such
amendment shall become effective as of the date specified in such instrument
or, if no such date is specified, on the date of its execution.
(b) If, at any time, (i) there is a suspension of the
crediting of earnings on the balance of a Participant's Account or a reduction
below 4% in the rate at which earnings are credited on the balance of a
Participant's Account or (ii) any Executive does not receive a distribution of
his Account at the time such distribution is scheduled to commence or be made
(other than by reason of Section 3.1(b)(ii)), then all Deferred Compensation
Benefits may at the election of the Executive, become immediately due and
payable in the form of lump sum payments.
SECTION 9.6. TERMINATION.
The Board of Directors of the Company (without the consent of
any Employer), in its sole discretion, may terminate this Plan at any time and
for any reason whatsoever, except that (i) no such termination may (1) reduce
the balance of any
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Participant's Account as of the date of such termination or (2) change the
provisions of the Plan applicable to a Participant's Account upon a Change in
Control, without the prior written consent of such Participant, and (ii) no
such termination may suspend the crediting of earnings on the balance of a
Participant's Account, until the entire balance of such Account has been
distributed. Any such termination shall be expressed in the form of a written
instrument executed by an officer of the Company pursuant to a resolution
adopted by the Board of Directors. Subject to the foregoing provisions of this
Section, such termination shall become effective as of the date specified in
such instrument or, if no such date is specified, on the date of its execution.
Written notice of any termination shall be given to the Participants as soon as
practicable after the instrument is executed.
Executed this 1st day of December, 1995.
THE ALLEN GROUP INC.
By:
__________________________________
Title: