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EXHIBIT 10.39
COMMERCIAL INTERTECH CORP.
NONQUALIFIED DEFERRED COMPENSATION PLAN
FOR PAUL J. POWERS
(As Amended and Restated Effective January 1, 1996)
ARTICLE I
ESTABLISHMENT AND CONSTRUCTION
1.1 ESTABLISHMENT. Commercial Intertech Corp. (the "Company") established,
effective as of January 1, 1995, an unfunded deferred compensation plan
on behalf of Paul J. Powers to be provided to supplement the Pension
Plan for Salaried Employees of Commercial Intertech Corp. ("Pension
Plan"). This document amends and restates the provisions of such plan
effective January 1, 1996 and shall be known as the "Commercial
Intertech Corp. Nonqualified Deferred Compensation Plan for Paul J.
Powers" (the "Plan").
1.2 PURPOSE. The Company maintains the Pension Plan which is intended to
meet the requirements of a "qualified" retirement plan under Section
401(a) of the Internal Revenue Code. The Pension Plan contains certain
restrictions that sometimes result in a diminution of benefits
available to certain highly compensated employees or preclude payment
of a full benefit without twenty-five (25) years of service. This Plan
is established to replace benefits lost under specified circumstances
due to this diminution and preclusion or upon a Change of Control.
Also, this Plan is intended to be an unfunded deferred compensation
plan for a member of a select group of management or highly compensated
employees, as described in Sections 201(2), 301(a)(3), and 401(a)(1) of
the Employee Retirement Income Security Act of 1974 ("ERISA").
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ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS. The following terms shall have the meaning stated below
unless the context clearly indicates otherwise.
(a) "COMPENSATION COMMITTEE" means the Committee described in
section 4.1 of this Plan, which has been delegated the
authority to administer this Plan.
(b) "MONTHLY PAY" means one-twelfth (1/12) of a Participant's
Compensation, as defined in the Pension Plan, received from
the Company and any Subsidiary, determined without regard to
the limitations of Section 401(a)(17) of the Code. If the
Participant separates from service at or after attainment of
age sixty-two (62) or dies as an active employee of the
Company or Subsidiary, a Participant's Compensation shall also
include annual bonuses paid under the target award programs
("SEIP" and "SMTIP"). However, a Participant's Compensation
shall not include the premium under the stock payout option of
the target award programs.
(c) "PARTICIPANT" means Paul J. Powers.
(d) "YEARS OF CREDITED SERVICE" means
(i) with respect to separation from service, or death
while in active employment, with the Company or a
Subsidiary at or after attainment of age sixty-two
(62), twenty-five (25) years;
(ii) with respect to separation from service with the
Company or a Subsidiary prior to attainment of age
sixty-two (62), his Credited Service under the
Pension Plan; or
(iii) with respect to death while in active employment with
the Company or a Subsidiary prior to age sixty-two
(62), his Years of Credited Service determined as if
he had separated from service at age sixty-two (62)
(as if the amount determined in (i) above were based
on attainment of age sixty-two (62)) reduced by the
number of years and fractional years (1/12th for each
complete calendar month) by which his actual date of
death precedes the date as of which he would have
attained age sixty-two (62).
Years of Credited Service shall not be affected by a
Participant performing services for Cuno Incorporated prior to
separation from service with the Company or a Subsidiary.
Unless the context clearly indicates otherwise, terms not defined in
this document shall have the meaning specified in the Pension Plan (if
defined therein). Where the defined meaning is intended, the term is
capitalized.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
words in the masculine gender shall include the feminine and neuter
genders; the plural shall include the singular and the singular shall
include the plural.
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2.3 EMPLOYMENT RIGHTS. Establishment of the Plan shall not be construed to
give the Participant the right to be retained by the Company or any
Subsidiary or to any benefits not specifically provided by the Plan.
2.4 SEVERABILITY. In the event any provision of the Plan shall be held
invalid or illegal for any reason, any illegality or invalidity shall
not affect the remaining parts of the Plan, but the Plan shall be
construed and enforced as if the illegal or invalid provision had never
been inserted, and the Company shall have the privilege and opportunity
to correct and remedy such questions of illegality or invalidity by
amendment as provided in the Plan.
2.5 APPLICABLE LAW. This Plan is fully exempt from Titles II, III and IV of
ERISA. The Plan shall be governed and construed in accordance with
Title I of ERISA and the laws of the State of Ohio.
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ARTICLE III
BENEFITS
3.1 AMOUNT OF RETIREMENT BENEFITS. Except as provided in Section 3.2,
benefits will commence to a Participant, at the election of the
Participant as provided in Section 3.3, in amounts hereinafter
described.
(a) COMMENCEMENT OF BENEFITS ON AND AFTER ATTAINMENT OF AGE
SIXTY-TWO (62). Benefits under the Plan become payable to the
Participant on or after the date he attains age sixty-two
(62). The monthly benefit calculated in the form of a single
life annuity under the Plan to the Participant shall be equal
to (1) minus (2) where -
(1) is two percent (2%) of the average of the
Participant's Monthly Pay during the highest three
(3) years during the ten (10) year period immediately
preceding his Normal Retirement Date, or if earlier,
his separation from service date, times his Years of
Credited Service (not to exceed twenty-five (25)
years);
(2) is the sum of the monthly benefit which would be
payable under the Pension Plan had such benefit
commenced on the same date and been paid in the form
of a single life annuity to the Participant, and
fifty percent (50%) of the Participant's primary
Social Security Retirement Benefit estimated to be
payable as of such date.
(b) COMMENCEMENT OF BENEFITS PRIOR TO ATTAINMENT OF AGE SIXTY-TWO
(62). If benefits under the Plan become payable to the
Participant prior to his attainment of age sixty-two (62), the
monthly benefit payable in the form of a single life annuity
under the Plan to the Participant shall be equal to (1) minus
(2) where -
(1) is the amount determined in 3.1(a)(1) reduced
three-tenths of one percent (3/10 of 1%) for each
complete calendar month by which the date of
commencement precedes the date as of which the
Participant attains sixty-two (62); and
(2) is the sum of the monthly benefit which would be
payable, if any, under the Pension Plan had such
benefit commenced on the same date and been paid in
the form of a single life annuity to the Participant,
and fifty percent (50%) of the Participant's primary
Social Security Benefit estimated to be payable at
the later of actual retirement or his attainment of
age sixty-two (62), reduced by three-tenths of one
percent (3/10 of 1%) for each complete calendar month
by which the date of commencement precedes the date
as of which the Participant attains age sixty-two
(62).
3.2 DISABILITY BENEFITS. If a Participant's employment terminates at any
time by reason of a disability, the benefit payable under this Plan,
calculated under Section 3.1, shall be reduced by:
(a) any monthly disability benefits paid to the Participant
pursuant to a long-term disability plan maintained by the
Company or any Subsidiary and any monthly
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(or equivalent) wage replacement amounts paid to the
Participant pursuant to Worker's Compensation laws; and
(b) if the Participant receives disability benefits under Social
Security, fifty percent (50%) of the excess of such monthly
disability benefit over the Participant's primary Social
Security Retirement Benefit used in Sections 3.1(a)(2) or
3.1(b)(2), as adjusted.
The existence of a disability shall be determined by the Compensation
Committee in its sole discretion. Such determination shall be based
upon such criteria and medical evidence as the Compensation Committee
deems appropriate. Benefits to a Participant whose employment
terminates by reason of a disability shall begin on the first day of
the month following the Compensation Committee's declaration that the
Participant is disabled. The benefits payable to a disabled Participant
shall not be reduced to reflect the early starting date thereof.
3.3 FORM AND COMMENCEMENT OF RETIREMENT BENEFITS
(a) FORM. Benefits payable under this Plan shall be paid in the
same manner as benefits payable under the Pension Plan.
However, in the sole discretion of the Participant, any
benefit due to the Participant under the Plan may be paid in
any of the forms of benefit payments available to the
Participant under the Pension Plan. Each alternate form of
payment shall be the Actuarial Equivalent of a single life
annuity. Additionally, a Participant may elect to have a
benefit due under the Plan paid in a single lump sum payment,
provided notice thereof is received by the Compensation
Committee at least six months prior to the Participant's
separation from service with the Company. The lump sum shall
be the present value of the annuity calculated under this Plan
using the basis defined below that produces the largest lump
sum amount:
(1) the UP-1984 mortality table and the PBGC interest
rate used for purposes of determining present value
of a lump sum distribution on plan termination as in
effect on the date of the Participant's retirement,
or
(2) the UP-1984 mortality table and the PBGC interest
rate used for purposes of determining present value
of a lump sum distribution on plan termination as in
effect on the date six (6) months prior to the date
of the Participant's retirement, or
(3) the 1983 GAM mortality table and the applicable
interest rate promulgated by the Internal Revenue
Service under Code Section 417(e)(3) for the month in
which the Participant's retirement occurs, or
(4) the 1983 GAM mortality table and the applicable
interest rate promulgated by the Internal Revenue
Service under Code Section 417(e)(3) for the month
which is six (6) months prior to the Participant's
retirement.
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(b) COMMENCEMENT. Benefits under Section 3.1 of this Plan shall be
payable to the Participant, beginning on the first day of the
month coincident with or next following his separation from
service with the Company or a Subsidiary.
3.4 DEATH BENEFITS. No death benefit shall be paid under this Plan except
as provided in this Section.
(a) SPOUSE'S BENEFIT. If the Participant dies before benefit
payments begin under the Plan, the Spouse of such Participant
at the date of his death shall be paid a monthly benefit under
the Plan as calculated under Section 3.1(b), but without
inclusion of the early payment reduction in Section 3.1(b)(1),
and adjusted under the assumption that the Participant had
commenced to receive benefits from the Plan on the day
immediately prior to his date of death and had elected to
receive a fifty percent (50%) joint and survivor annuity. For
this purpose, the Spouse shall be entitled to make the same
elections with respect to the form and commencement of this
death benefit as would have been available to the Participant
had he lived, provided, however, Actuarial Equivalency shall
be based upon the life expectancy of the Spouse and benefit
commencement dates shall be based upon the life of the
Participant had he not died.
(b) If the Participant dies before benefit payments begin under
the Plan and has no Spouse, no death benefit shall be payable
under this Plan.
(c) If a Participant dies after benefit payments begin under this
Plan, a death benefit shall be payable under the Plan to a
Spouse of the Participant only if a death benefit is payable
under the optional form of payment selected by the
Participant.
3.5 CHANGE OF CONTROL.
(a) "Change of Control" shall have the meaning as defined in the
agreement providing severance compensation to the Participant
upon a change in the control of the management of the Company
then existing between the Company and the Participant (the
"Severance Compensation Agreement"). In the event of a Change
of Control, a monthly benefit shall be payable to the
Participant equal to the benefit calculated in Subsection
3.1(a) above adjusted as follows:
(i) "Years of Credited Service", as defined in
Section 2.1(d), for purposes of this Section 3.5,
shall mean twenty five (25) years.
(ii) "Monthly Pay", as defined in Section 2.1(b), for
purposes of this Section 3.5, shall mean one twelfth
(1/12) of a Participant's Compensation, as defined in
the Pension Plan. A Participant's Compensation also
shall include annual bonuses paid under the target
award programs ("SEIP" and "SMTIP") received from the
Company or any Subsidiary, determined without regard
to the limitations of Section 401(a)(17) of the Code.
A Participant's Compensation, for purposes of this
Section 3.5, shall not include the twenty percent
(20%) premium under the stock payment option of the
target award programs.
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(b) Unless the Participant elects to defer the commencement of benefits
to a later date, benefits under this Section 3.5 shall be payable to
the Participant, beginning on the first day of the month coincident
with or next following his separation from service with the Company or
a Subsidiary.
(c) Benefits payable under this Section 3.5 shall be paid in the same
manner as benefits payable under the Pension Plan. However, in the sole
discretion of the Participant, any benefit due to the Participant under
the Plan may be paid in any of the forms of benefit payments available
to the Participant under the Pension Plan or in the form of annual
installments for a specified period of years. Each alternate form of
payment shall be the Actuarial Equivalent of a single life annuity.
Additionally, a Participant may elect to have a benefit due under this
Section 3.5 paid in a single lump sum payment, provided notice thereof
is received by the Compensation Committee prior to separation from
service. The lump sum shall be the present value of the annuity
calculated under this Plan using the basis defined below that produces
the largest lump sum amount:
(1) the UP-1984 mortality table and the PBGC interest
rate used for purposes of determining present value
of a lump sum distribution on plan termination as in
effect on the date of the Participant's election, or
(2) the UP-1984 mortality table and the PBGC interest
rate used for purposes of determining present value
of a lump sum distribution on plan termination as in
effect on the date six (6) months prior to the date
of the Participant's election, or
(3) the 1983 GAM mortality table and the applicable
interest rate promulgated by the Internal Revenue
Service under Code Section 417(e)(3) for the month in
which the Participant's election occurs, or
(4) the 1983 GAM mortality table and the applicable
interest rate promulgated by the Internal Revenue
Service under Code Section 417(e)(3) for the month
which is six (6) months prior to the Participant's
election.
The Participant may elect any combination of form of benefits not
exceeding two (2).
3.6 MINIMUM BENEFIT. Notwithstanding any other provision contained in this
Plan, the monthly benefit calculated in the form of a single life
annuity under the Plan, prior to the Pension plan offset, to the
Participant shall not be less than forty one thousand six hundred and
sixty seven dollars ($41,667) per month.
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3.7 EARLY DISTRIBUTION. Notwithstanding any other provision contained in
this Plan, the Company shall make distributions to the Participant
before such distributions otherwise are payable under this Plan if it
determines upon the advice of counsel, based on a change in the Code, a
published ruling or similar announcement issued by the Internal Revenue
Service ("IRS"), a regulation issued by the Secretary of the Treasury
or his delegate, a decision of a court of competent jurisdiction
involving the Participant or a closing agreement involving the
Participant that is approved by the IRS, that the Participant has
recognized or will recognize income for federal income tax consequences
with respect to amounts that are or will be distributable to him.
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ARTICLE IV
GENERAL PROVISIONS
4.1 ADMINISTRATION. This Plan shall be administered by the Compensation
Committee of the Board of Directors. The Compensation Committee shall
have, to the extent appropriate, the same powers, rights, duties and
obligations with respect to this Plan as the plan administrator under
the Pension Plan has under such Pension Plan.
4.2 FINALITY OF DETERMINATION. Except with respect to questions arising
from benefits payable upon a Change of Control, the determination of
the Compensation Committee as to any disputed questions arising under
this Plan, including questions of construction and interpretation,
shall be final, binding and conclusive upon all persons.
4.3 EXPENSES. The expenses of administering the Plan shall be borne by the
Company.
4.4 INDEMNIFICATION AND EXCULPATION. The members of the Compensation
Committee, its agents and officers, directors and employees of the
Company and the Subsidiaries shall be indemnified and held harmless by
the Company against and from any and all loss, cost, liability or
expense that may be imposed upon or reasonably incurred by them in
connection with or resulting from any claim, action, suit or proceeding
to which they may be a party or in which they may be involved by reason
of any action taken or failure to act under this Plan and against and
from any and all amounts paid by them in settlement (with the Company's
written approval) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding. The foregoing provision shall not be
applicable to any person if the loss, cost, liability or expense is due
to such person's gross negligence or willful misconduct.
4.5 FUNDING. While all benefits payable under the Plan constitute general
corporate obligations, the Company shall establish a separate
irrevocable grantor trust for the benefit of the Participant, which
trust shall be subject to the claims of the general creditors of the
Company in the event of such corporation's insolvency, to be used as a
reserve for the discharge of the Company's obligations under the Plan
to such Participant. The Company shall contribute to such trust an
amount sufficient to fund the aggregate present value of all
liabilities potentially owed to the Participant under this Plan and
such funding shall occur no later than the date on which a Change of
Control occurs. Any payments made to the Participant under the separate
trust for his benefit shall reduce dollar for dollar the amount payable
to the Participant from the general assets of the Company. The amounts
payable under the Plan shall be reflected on the accounting records of
the Company but shall not be construed to create or require the
creation of a trust, custodial or escrow account, except as described
above in this section. No Participant (or Spouse of the Participant)
shall have any right, title or interest whatever in or to any
investment reserves, accounts, or funds that the Company or Subsidiary
may purchase, establish or accumulate to aid in providing benefits
under this Plan. Nothing contained in this Plan, and no action taken
pursuant to its provisions, shall create a trust or fiduciary
relationship of any kind between the Company or any Subsidiary and the
Participant or any other person, except as described above in this
section. Neither the Participant nor his Spouse shall acquire any
interest greater than that of an unsecured creditor.
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4.6 CORPORATE ACTION. Any action required of or permitted by the Company or
any Subsidiary under this Plan shall be by resolution of its Board of
Directors or any person or persons authorized by resolution of such
Board of Directors.
4.7 INTERESTS NOT TRANSFERABLE. The interests of the Participant and his
Spouse under the Plan are not subject to the claims of their creditors
and may not be voluntarily or involuntarily transferred, assigned,
alienated or encumbered.
4.8 EFFECT ON OTHER BENEFIT PLANS. Amounts credited or paid under this Plan
shall not be considered to be compensation for the purposes of the
Pension Plan maintained by the Company or any Subsidiary. The treatment
of such amounts under other employee benefits plans shall be determined
pursuant to the provisions of such plans.
4.9 TAX LIABILITY. The Company or Subsidiary may withhold from any payment
of benefits hereunder any taxes required to be withheld and such sum as
such employer may reasonably estimate to be necessary to cover any
taxes for which the Company or Subsidiary may be liable and which may
be assessed with regard to such payment.
4.10 LEGAL FEES AND EXPENSES. The Company shall pay all legal fees and
expenses which the Participant may incur as a result of the Company's
or any Subsidiary's contesting the validity, enforceability or the
Participant's interpretation of, or determinations under, this Plan.
4.11 SUCCESSORS AND ASSIGNS. This Plan and all of the obligations hereunder
shall be binding on the successors and assigns of the Company.
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ARTICLE V
AMENDMENT AND TERMINATION
The Company by action of this Board of Directors reserves the right to amend
this Plan from time to time or to terminate the Plan at any time, but without
the written consent of the Participant, no such action may reduce or relieve the
Company or any Subsidiary of any obligation with respect to any benefit accrued
under the Plan by such Participant as of the date of such amendment or
termination.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its
duly authorized officers on this 25 day of September, 1996.
COMMERCIAL INTERTECH CORP.
By: /s/ J. Patrick Downey
Name: J. Patrick Downey
Title: Vice President and Assistant
Secretary