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EXHIBIT 10.42
COMMERCIAL INTERTECH CORP.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(As Amended and Restated Effective as of January 1, 1996)
ARTICLE I
ESTABLISHMENT AND CONSTRUCTION
1.1 ESTABLISHMENT. Commercial Intertech Corp. (the "Company") established,
effective as of January 1, 1996, an unfunded deferred compensation plan
on behalf of certain designated management or highly compensated
employees ("Eligible Employees") of the company or any subsidiary
("Subsidiary") of the Company which has adopted 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.
Supplemental Executive Retirement Plan" (the "SERP").
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 of 1986. The Pension Plan contains
certain restrictions required by the Code that sometimes result in a
diminution of benefits available to certain highly compensated
employees. This SERP is established to replace benefits lost due to
this diminution for Eligible Employees or upon a Change of Control.
Also, this SERP is intended to be an unfunded deferred compensation
plan for 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").
1.3 APPLICATION OF SERP. The terms of this SERP are applicable only to
Eligible Employees who are in the active employ of the Company or any
Subsidiary on or after January 1, 1996.
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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 5.1 of this SERP, which has been delegated the
authority to administer this SERP.
(b) "PARTICIPANT" means a person who has satisfied the requirement
of section 3.1.
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.
2.3 EMPLOYMENT RIGHTS. Establishment of the SERP shall not be construed to
give any Participant the right to be retained by the Company or any
Subsidiary or to any benefits not specifically provided by the SERP.
2.4 SEVERABILITY. In the event any provision of the SERP shall be held
invalid or illegal for any reason, any illegality or invalidity shall
not affect the remaining parts of the SERP, but the SERP 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 SERP.
2.5 APPLICABLE LAW. This SERP is fully exempt from Titles II, III and IV of
ERISA. The SERP 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
PARTICIPATION
3.1 ELIGIBILITY TO PARTICIPATE. Each Member of the Pension Plan who is
designated by the Compensation Committee as eligible to participate in
this SERP shall be a Participant in this SERP and shall be eligible to
receive benefits hereunder. Each such person shall be set forth in the
schedule of Appendix I attached hereto. The Compensation Committee may
designate, on the schedule in Appendix II attached hereto, certain
Participants as "Group A" Participants who have all of the rights of
Participants as well as additional rights defined in this Plan. The
Compensation Committee may, in its sole discretion, create additional
groups for certain participants, granting or redefining rights as it
deems appropriate. The Compensation Committee may designate, on the
schedule in Appendix III attached hereto, certain Members of the
Pension Plan as "Group B Participants" who shall have certain limited
rights effective upon Change of Control, as defined herein.
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ARTICLE IV
BENEFITS
4.1 AMOUNT OF RETIREMENT BENEFITS. Benefits will commence to a Participant,
at the election of the Participant as provided in Section 4.2, and
shall equal the excess, if any, of (a) minus (b) where:
(a) is the Participant's benefit calculated under the Pension Plan
as if the provisions of the Pension Plan were administered
without regard to the benefit and compensation limitations
found in Code Sections 415 and 401(a)(17); and
(b) is the actual limited Pension Plan benefit which is payable to
such Participant.
4.2 FORM AND COMMENCEMENT OF BENEFITS. Benefits payable under this SERP
shall be paid in the same manner and form, and at the same time as
benefits payable under the Pension Plan. In the event of the
Participant's death prior to commencement of benefits under this Plan,
the Participant's Spouse will receive a benefit from this Plan
calculated in conjunction with the Pre-Retirement Survivor Annuity
under the Pension Plan.
4.3 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 such 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
4.1(a) above adjusted as follows:
(i) Compensation for a Group A Participant, for purposes
of this Section 4.3, shall mean Compensation as
defined in the Pension Plan and shall include annual
bonuses paid under the target award programs ("SEIP"
and "SMTIP), determined without regard to the
limitations of Section 401(a)(17) of the Code.
Compensation, for purposes of this Section 4.3, shall
not include the premium under the stock payout option
of the target award programs. For all other
Participants, Compensation, for purposes of this
Section 4.3, shall mean Compensation as defined in
the Pension Plan determined without regard to Section
401(a) (17) of the Code.
(ii) For purposes of this Section 4.3, Service and
Credited Service, as defined in the Pension Plan,
shall include any additional service granted under
the Severance Compensation Agreement, and the
granting of such service shall be solely defined by
the terms and conditions of such agreement.
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(b) In the event of a Change of Control, a monthly benefit shall
be payable to a Group B Participant equal to the excess, if
any, of (a) minus (b) where:
(a) is the Group B Participant's benefit under the Pension
Plan calculated using the definitions of Service and Credited
Service including any additional service granted under the
Severance Compensation Agreement, and the granting of such
service shall be defined solely by the terms and conditions of
such agreement: and
(b) is the actual Pension Plan Benefit which is payable to
such Participant.
The provisions of this Plan concerning form and commencement
of benefits shall apply equally to Participants and Group B
Participants.
(c) Unless the Participant elects to defer the commencement of
benefits to a later date, benefits under this Section 4.3
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.
(d) Benefits payable under this Section 4.3 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 4.3 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
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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).
4.4 EARLY DISTRIBUTION. Notwithstanding any other provision 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 V
GENERAL PROVISIONS
5.1 ADMINISTRATION. This SERP 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 SERP as the plan administrator under
the Pension Plan has under such Pension Plan.
5.2 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 SERP, including questions of construction and interpretation,
shall be final, binding and conclusive upon all persons.
5.3 EXPENSES. The expenses of administering the SERP shall be borne by the
Company.
5.4 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 SERP 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.
5.5 FUNDING. While all benefits payable under the SERP constitute general
corporate obligations, the Company shall establish a master rabbi trust
for the benefit of each Participant, which trust shall be subject to
the claims of the general creditors of the Company (and of any
Subsidiary which has employed the Participant and become obligated
under the SERP) in the event of such corporation's insolvency, to be
used as a reserve for the discharge of the Company's or Subsidiary's
obligations under the SERP 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 a Participant
under the trust for his benefit shall reduce dollar for dollar the
amount payable to the Participant from the general assets of the
Company or Subsidiary. The amounts payable under the SERP shall be
reflected on the accounting records of the Company or Subsidiary 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 a Participant) shall have any right, title
or interest whatever in or to any investment reserves, accounts, or
funds that the Company or any Subsidiary may purchase, establish or
accumulate to aid in providing benefits under this SERP. Nothing
contained in this SERP, 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 a Participant or any other person, except
as
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described above in this section. Neither a Participant nor Spouse of a
Participant shall acquire any interest greater than that of an
unsecured creditor.
5.6 CORPORATE ACTION. Any action required of or permitted by the Company or
any Subsidiary under this SERP shall be by resolution of its Board of
Directors or any person or persons authorized by resolution of such
Board of Directors.
5.7 INTERESTS NOT TRANSFERABLE. The interests of the Participants and their
Spouses under the SERP are not subject to the claims of their creditors
and may not be voluntarily or involuntarily transferred, assigned,
alienated or encumbered.
5.8 EFFECT ON OTHER BENEFIT PLANS. Amounts credited or paid under this SERP
shall not be considered to be compensation for the purposes of a
qualified 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.
5.9 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.
5.10 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 SERP.
5.11 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 VI
AMENDMENT AND TERMINATION
The Company by action of this Board of Directors reserves the right to amend
this SERP from time to time or to terminate the SERP at any time, but without
the written consent of each Participant, no such action may reduce or relieve
the Company or any Subsidiary of any obligation with respect to any benefit
accrued under the SERP 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/ Paul J. Powers
Name: Paul J. Powers
Title: Chief Executive Officer
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APPENDIX I
The Compensation Committee has appointed the following Members of the Pension
Plan to be Participants in this SERP:
Bruce C. Wheatley
Hubert Jacobs van Merlen
Gilbert M. Manchester
John Gilchrist
Robert A. Calcagni
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APPENDIX II
The Members of the Pension Plan who are Group A Participants in this SERP are:
Bruce C. Wheatley
Hubert Jacobs van Merlen
Gilbert M. Manchester
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APPENDIX III
The Compensation Committee has appointed the following Members of the Pension
Plan to be Group B Participants in this SERP:
Edward K. Barnard
William W. Cushwa
J. Patrick Downey
Steven J. Hewitt
Kenneth W. Marcum
Patrick C. Reardon
Shirley M. Shields
Kenneth E. Stumbaugh
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