Exhibit 10.1
McDERMOTT INTERNATIONAL, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Amended and Restated
Effective December 1, 1999
TABLE OF CONTENTS
SECTION 1 PARTICIPATION AND OTHER EMPLOYERS...................................1
1.1 DEFINITIONS...........................................................1
1.2 PARTICIPATION........................................................10
1.3 OTHER EMPLOYERS......................................................11
SECTION 2 AMOUNT AND PAYMENT OF RETIREMENT INCOME............................12
2.1 RETIREMENT - AMOUNT OF RETIREMENT INCOME.............................12
2.2 EARLY RETIREMENT - AMOUNT OF RETIREMENT INCOME.......................14
2.3 PAYMENT OF RETIREMENT INCOME.........................................15
2.4 BENEFITS OTHER THAN ON RETIREMENT....................................15
2.5 INCREASE IN BENEFITS.................................................20
2.6 LUMP SUM ELECTION....................................................21
SECTION 3 SPECIAL PROVISIONS REGARDING PAYMENT OF BENEFITS...................23
3.1 BENEFITS APPLICABLE TO PARTICIPANT WHO HAS BEEN OR IS
EMPLOYED BY TWO OR MORE EMPLOYERS...................................23
3.2 PARTICIPANTS TO FURNISH REQUIRED INFORMATION.........................23
3.3 BENEFITS NOT ASSIGNABLE..............................................25
3.4 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN........................26
3.5 ABANDONMENT OF BENEFITS..............................................26
3.6 WRITTEN COMMUNICATIONS REQUIRED......................................27
3.7 CONDUCT INJURIOUS TO THE COMPANY.....................................27
SECTION 4 ADMINISTRATION.....................................................28
4.1 ADMINISTRATION BY COMMITTEE..........................................28
4.2 RULES AND REGULATIONS OF COMMITTEE...................................29
4.3 POWERS OF COMMITTEE..................................................29
4.4 LIABILITY OF COMMITTEE...............................................30
4.5 INDEMNIFICATION......................................................30
4.6 APPLICABLE LAW.......................................................31
SECTION 5 GENERAL PROVISIONS.................................................31
5.1 AMENDMENT AND DISCONTINUANCE.........................................31
5.2 SOURCE OF BENEFITS...................................................32
5.3 BINDING ON COMPANY, EMPLOYEES AND THEIR SUCCESSORS...................32
-i-
SECTION 1
PARTICIPATION AND OTHER EMPLOYERS
1.1 DEFINITIONS
The following words and phrases shall have the meaning stated below unless
a different meaning is plainly required by the context:
(1) "Actuarial equivalent" or "equivalent actuarial value" means equality
in value of the aggregate amounts expected to be received under
similar or different forms of payment, based upon actuarial
assumptions as provided in this Plan or as adopted from time to time
by the Committee.
(2) "Affiliate" or "Affiliated Company" means a company which is not a
Subsidiary but in which 20% or more of the voting stock is owned,
directly or indirectly, by the Company.
(3) "Compensation" means the base salary earned by a Participant in
respect of services with one or more Employers (regardless of when
such salary is actually paid), and awards determined by the committee
designated under the Company's Variable Supplemental Compensation Plan
are allocable to such Participant (regardless of when such awards are
actually paid), but shall exclude all the other bonuses, any severance
pay, retirement or other income under this or any other pension,
profit sharing, thrift saving or similar plans, stock awards of stock
options, other allowances and other additional remuneration in any
form.
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(4) "Committee" means a Committee consisting of the Chief Financial
Officer, the Chief Administrative Officer and the Corporate Secretary
of the Company or such other committee appointed by the Board of
Directors of the Company, which Committee shall administer the Plan
pursuant to the provisions of Section 4 hereof. Said Committee shall
serve under the direction and at the pleasure of the Board of
Directors of the Company and shall be designated the "SERP Committee."
(5) "Company" means McDermott International, Inc., a Panama Corporation,
and its successor or successors.
(6) "Disability" means a mental or physical condition which, in the
opinion Committee, is likely to be continuous and permanent such that
the Participant is wholly prevented from engaging in any occupation
for wage or profit. A Participant will not be considered disabled for
purposes of the Plan, if in the opinion of the Committee, the
disability is a, result of:
(a) excessive and habitual use by the participant of drugs or
narcotic, except on the prescription of a duly licensed physician
or surgeon;
(b) injury or disease sustained by the participant while willfully
and illegally participating in fights, riots, civil insurrections
or while committing a felony;
(c) injury or disease sustained by the participant while serving in
any armed forces,
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(d) injury or disease sustained by the participant which was
diagnosed or discovered subsequent to the date his employment was
terminated; or
(e) injury or disease sustained by the participant (other than a
loaned employee) for anyone other than the Employer and arising
out of such employment.
The Committee before approving the disability of a Participant
hereunder shall require satisfactory proof, which may be evidence
satisfactory to the Committee that the Participant is entitled to
disability insurance benefits under the Social Security Act or may be
in the form of a certificate from a duly licensed physician selected
by the Committee, that the Participant has become disabled as provided
herein. A Participant will not be considered disabled for purposes of
the Plan until the date the Employee considers the Participant to have
been dropped from its employment rolls.
(7) "Employee" means any officer (other than a person acting only as a
director) of an Employer.
(8) "Employer" means, collectively or distributively as the context Company
and any Subsidiary or Affiliated Company which has in accordance with
Section 1.3 hereof.
(9) "Final Adverse Monthly Compensation" means the Participant's average
monthly rate of three (3) Fiscal Years in the last ten (10) Fiscal Years of
the Participant's employment by an Employer prior to retirement such
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average. Such three (3) Fiscal Years need not be consecutive. The
Participant's average monthly rate of Compensation will be determined by
dividing the total Compensation attributable to such three (3) Fiscal
Years, as determined in accordance with rules established by the Committee,
by the number of full or partial months of the Participant's employment
during such three (3) Fiscal Years. Compensation attributable to a
particular Fiscal Year shall not include base salary earned (or Variable
Supplemental Compensation awards determined to be paid) for periods prior
to or following such Fiscal Year, regardless of whether payment occurs
during such Fiscal Year.
(10) "Monthly Retirement Plan Offset" means:
(a) If payment(s) under any other retirement or pension plan(s) or
similar fund(s) or program(s) (including The Retirement and
Restoration of Retirement Income Plans of McDermott Incorporated
and The Babcock & Wilcox Company, and similar plans) maintained
by the Employers, any Subsidiary or Affiliated Company or any
other previous employer is made monthly for life only, or monthly
under a joint and survivor form of payment or in monthly
installment's over a period equal to or greater than ten (10)
years, to the Participant. or to his spouse or other Joint
pensioner or beneficiary, the "Monthly Retirement Plan Offset"
shall be equal to such payments when and as they are made; or
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(b) If payment(s) under said other retirement or pension plan(s), or
other similar fund(s) or program(s), is made in a lump sum or in
any method of payment other than monthly payment for life only,
monthly joint and survivor payments or monthly installments over
a period equal to or greater than ten (10) years, to the
Participant or to his spouse or other joint pensioner or
beneficiary, the "Monthly Retirement Plan Offset" shall be an
actuarial equivalent amount, as determined by the Committee based
upon the interest and mortality assumptions used under the
plan(s) maintained by the Employers or any Subsidiary or as may
be determined from time to time by the Committee under Section
1.1(1), hereof with respect to such plan(s) or fund(s) or
program(s) maintained by any other previous employer.
However, if any such Participant shall have contributed to the source
of payment(s) or fund(s) out of which said retirement or pension
payment(s) shall be paid or is payable, then the "Monthly Retirement
Plan Offset" shall not include any portion of said amount attributable
to the Participant's own contributions. The term "Monthly Retirement
Plan Offset", with respect to the Profit Sharing and Stock Bonus
Retirement Plan of McDermott Incorporated and Hudson Engineering
Corporation's Profit Sharing Trust Plan (which plans were terminated
on August 31, 1988) shall mean the Monthly Profit Sharing and Stock
Bonus Retirement Offset determined under Section 1.1(A)(29) of the
Retirement Plan for Employees of McDermott Incorporated and Subsidiary
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and Affiliated Companies. If any Participant shall become entitled to
or shall be paid any pension or retirement income payment(s) or
payment(s) of similar kind, under any plan in respect of which the
Employer, any Subsidiary or Affiliate of any previous employer have
directly or indirectly contributed by reason of any law of the United
States or of any state thereof or of any foreign country, then the
total amount paid or payable to him in respect of any such allowance
or payments shall be considered a retirement or pension plan
maintained by the Employer, any Subsidiary or Affiliate or any other
previous employer for purposes of this Plan. United States Social
Security payment(s), Workmen's Compensation and similar benefits,
shall, however, not be included in "Monthly Retirement Plan Offset".
(11) "Number of Years of Credited Service" means:
(a) For those Participants covered by Section 2.1(A), the total
period of an Employee's Service computed in completed years until
he attains age 60, or if earlier, his retirement under Section
2.2. hereof, provided that Service prior to an Employees
attaining age 35 shall not be counted for purposes of the Plan.
If an Employee has a period of Service upon his attaining age 60
of less than a completed year, there shall be added to his Number
of Years of Credited Service a fraction, the numerator of which
shall be the number of his months of Service for said period,
computed in completed months and the denominator of which shall
be 12.
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(b) For those Participants covered by Section 2.l(B), the total
period of an Employee's Service computed in completed years until
he attains age 65, or if earlier. his retirement under Section
2.2. hereof, provided that Service prior to an Employees
attaining age 35 shall not be counted for purposes of the Plan.
If an Employee has a period of Service upon his attaining age 65
of less than a completed year, there shall be added to his Number
of Years of Credited Service a fraction, the numerator of which
shall be the number of his months of Service for said period,
computed in completed months and the denominator of which shall
be 12.
(c) For those Participants covered by Section 2.1(C), the total
period of an Employee's Service computed in completed years until
he attains age 65, or if earlier, his retirement under Section
2.2. hereof, provided that Service prior to an Employees
attaining age 45 shall not be counted for purposes of the Plan.
If an Employee has a period of Service upon his attaining age 65
of less than a completed year, there shall be added to his Number
of Years of Credited Service a fraction, the numerator of which
shall be the number of his months of Service for said period,
computed in completed months and the denominator of which shall
be 12.
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(12) "Participant" means any Employee of an Employer who under Section 1.2
has been selected to participate in the Plan.
(13) "Plan" means the McDermott International, Inc. Supplemental Executive
Retirement Plan as set forth in this document and as it may hereafter be
amended from time to time.
(14) "Retirement Date" means:
(a) For those Participants covered by Section 2.1(A), the first day
of the month coincident with or next following the date a
Participant attains age 60.
(b) For those Participants covered by Section 2.1(B), the first day
of the month coincident with or next following the date a
Participant attains age 65.
(c) For those Participants covered by Section 2.1(C), the first day
of the month coincident with or next following the date a
Participant attains age 65.
(15) "Subsidiary" means a company in which more than 50% of the voting
stock is owned, directly or indirectly, by the Company.
(16) "Service" means that period of employment with an Employer, or with
any. Subsidiary or Affiliate, including any predecessor, from the
Employee's date of hire to the date of termination of his service. Transfer
of employment among the Employers and other Subsidiaries or Affiliates
shall not be deemed an interruption of employment for purposes of the Plan,
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and no period of Service rendered for a given Employer shall count as
Service for more than one Employer. Employment with any person, firm or
corporation to which the Employee was transferred and loaned for such
employment by an Employer will be included in the Employee's Service in the
same manner as if such employment had been with an Employer. Any Employee
who is absent from active employment due to accident or illness and during
such absence remains on the payroll shall be deemed to be in employment
during such absence. Any voluntary termination and any other absence from
active employment not deemed a leave of absence shall terminate an
Employee's Service as of the date the Employer considers the Employee to
have been dropped from its employment rolls. A period of authorized leave
of absence granted by the Employer or absence for the purpose of military
service pursuant to the requirement of law or by enlistment for not longer
than the minimum period required by law, shall be counted as service if the
Employee resumes his employment with an Employer at the end of such leave
of absence or within the period prescribed by law for the exercise of his
reemployment rights.
(17) The masculine pronoun whenever used includes the feminine pronoun, and
nouns stated in the singular shall include the plural whenever appropriate.
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(18) "Effective Change in Control" means an event or series of events by
which (A) any "person" or "group" (as such terms are used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act")) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act, except that a person shall be deemed to be
the "beneficial owner" of all shares that any such person has the right to
acquire pursuant to any agreement or arrangement or upon exercise of
conversion rights, warrants, options or otherwise, without regard to the
sixty day period referred to in such Rule), directly or indirectly, of
securities representing 50% or more of the combined voting power of the
Company's then outstanding voting securities, excluding for these purposes
the Company's Series A Participating Preferred Stock; or (B) during any
period of two consecutive years (not including any period prior to the
effective date of this provision of the Plan), individuals who at the
beginning of such period constituted the Board and any new directors, 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
Company's directors then still in office who either were the Company's
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.
(19) "Fiscal Year" means the fiscal year of the Company.
1.2 PARTICIPATION
Each Employee shall become a Participant as of the date the Committee
selects the Employee for participation in the Plan. Subject to obtaining
the consent of the Committee, any participating Employer may elect by
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proper action of its board of directors, to designate a person or
committee, other than the Committee, which committee shall have the
exclusive authority to select Employees of such Employer for participation
in the Plan, but whose authority shall consist solely of selecting
Employees of such Employer for participation in the Plan. Any Employee who
continues in the employment of the Employers beyond his Retirement Date
shall no longer qualify as a Participant under this Plan and, except as
otherwise provided in Section 2.4(D), he and his spouse shall not be
entitled to any benefits whatsoever under this Plan. Also, if a Participant
remains in the employment of the Employers but has a change in his
employment status so that he no longer qualifies as an Employee as defined
herein, such person shall no longer qualify as a Participant under this
Plan and, except as otherwise provided in Section 2.4(D), he and his spouse
shall not be entitled to any benefits whatsoever under this Plan unless he
has a subsequent change in his employment status so that he qualifies as an
Employee hereunder and the applicable committee selects him for
participation in the Plan.
1.3 OTHER EMPLOYERS
Any Subsidiary or Affiliate may adopt this Plan by proper action of its
board of directors, provided, however, that the administrative powers and
control of the Company, as provided in the Plan shall not be deemed
diminished under the Plan by reason of the participation of any other
Employers in the Plan. Except as otherwise provided in Section 1.2 with
respect to the selection Employees for participation in the Plan, the
administrative powers and control granted in Section 4 of the Plan to the
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Company with respect to the administration of the Plan by the Committee and
other matters shall apply only with respect to the Company and not to any
other Employer. Each Employer shall have the obligation to pay the
retirement benefits under this Plan for its own Employees and no other
Employer shall have such obligation, and any failure by a particular
Employer to live up to its obligation under the Plan shall have non effect
on any other Employer.
SECTION 2
AMOUNT AND PAYMENT OF RETIREMENT INCOME
2.1 RETIREMENT - AMOUNT OF RETIREMENT INCOME
(A) Except as to those Participants described in Section 2.1(B), each
Participant who joined the Plan prior to April 1, 1989, other than a
Participant to whom the provisions of Section 2.2 or 2.4 apply, who
retires on his Retirement Date shall be entitled to receive a monthly
retirement benefit equal to:
(1) 2% of his Final Average Monthly Compensation multiplied by his
Number of Years of Credited Service after attaining age 35; plus
(2) 2% of his Final Average Monthly Compensation multiplied by his
Number of Years of Credited Service after attaining age 55; less
(3) the amount, if any, of the Participant's Monthly Retirement Plan
Offset;
provided, however, that in any event, the monthly retirement income
payable to a Participant (prior to giving effect to the Participant's
Monthly Retirement Plan Offset) shall not exceed 60% of his Final
Average Monthly Compensation.
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(B) Each Participant who joined the Plan prior to April 1, 1989 and was
actively employed by any Employer on March 31, 1989, that is offered
in writing, in the sole discretion of the Committee or the Board of
Directors, the opportunity to delay his Retirement Date under the Plan
until the age of 65 (or age 67 in the case of R.E. Howson) and who
then accepts and consents to such offer in writing, shall be entitled
to receive a monthly retirement benefit equal to:
(1) 2% of his Final Average Monthly Compensation multiplied by his
Number of Years of Credited Service after attaining age 35; plus
(2) 2% of his Final Average Monthly Compensation multiplied by his
Number of Years of Credited Service after attaining age 55; less
(3) The amount, if any, of the Participant's Monthly Retirement Plan
Offset; provided, however, that in any event, the monthly
retirement income payable to a Participant (prior to giving
effect to the Participant's Monthly Retirement Plan Offset) shall
not exceed 65% of his Final Average Monthly Compensation.
Notwithstanding the foregoing, the monthly retirement income
payable to R.E. Howson hereunder (prior to giving effect to his
Monthly Retirement Plan Offset) shall not exceed 73% of his Final
Average Monthly Compensation.
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(C) Each Participant who joins the Plan on or after April 1, 1989, other
than a Participant to whom the provisions of Section 2.2 or 2.4 apply,
who retires on his Retirement Date shall be entitled to receive a
monthly retirement benefit equal to:
(1) 3% of his Final Average Monthly Compensation multiplied by his
Number of Years of Credited Service after attaining age 45; less
(2) the amount, if any, of the participant's Monthly Retirement Plan
Offset; provided, however, that in any event, the monthly
retirement income payable to a Participant (prior to giving
effect to the Participant's Monthly Retirement Plan Offset) shall
not exceed 60% of his Final Average Monthly Compensation.
2.2 EARLY RETIREMENT - AMOUNT OF RETIREMENT INCOME
A Participant who retires prior to his Retirement Date with the consent of
the Employer (which consent may be withheld in the Employer's sole
discretion) shall be entitled to receive a monthly retirement income as
determined in accordance with the applicable provision of Section 2.1
hereof based upon the Participant's Number of Years of Credited Service as
determined on his early retirement date and Final Average Monthly
Compensation as determined on his early retirement date, or as to a
Participant covered by Section 2.1(B) on the date he attains age 60,
whichever is greater.
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2.3 PAYMENT OF RETIREMENT INCOME
The monthly retirement income under Section 2.1 and 2.2 hereof will be
payable on the first day of each month. The first payment will be made on
the Participant's Retirement Date, or upon his retirement under Section 2.2
hereof, whichever is earlier, and the last payment will be the payment due
next preceding the retired Participant's death, provided, however, that
following a retired Participant's death, one half of the retired
Participant's monthly retirement income shall be paid to his spouse if she
shall have been married to the Participant on the date of his retirement
under Section 2.1 or Section 2.2, whichever is applicable, and shall have
survived him, for her lifetime.
2.4 BENEFITS OTHER THAN ON RETIREMENT
(A) Benefit Payable in the Event of Death on or Prior to Retirement Date:
If the service of a Participant is terminated by reason of his death
on or prior to his Retirement Date, his surviving spouse shall be
entitled to receive for her remaining lifetime a monthly income equal
to the monthly retirement income to which the Participant would have
been entitled under Section 2.1 if he had retired on his Retirement
Date and if his Compensation for the one year period prior to his
death had continued without change to his Retirement Date; provided,
however, that on the deceased Participant's Retirement Date, the
amount of monthly income payable to his surviving spouse shall be
reduced to one-half of said monthly income.
(B) Benefits Payable in the Event of Disability: In the event an Employee
becomes disabled while a Participant in the Plan, he shall be entitled
to receive a monthly retirement income equal to the amount of monthly
15
retirement income to which he would have been entitled on his
Retirement Date, computed as for retirement in accordance with Section
2.1 hereof, as if his employment had not been terminated but had
continued uninterrupted from the date of disability to his Retirement
Date and as if his Compensation for the one year period prior to his
disability had continued without change to his Retirement Date. The
monthly retirement income under this Section 2.4(B) will be payable
commencing on the first day of each month coincident with or next
following said Participant's disability as determined under Section
1.1(5) hereof. The last payment will be as follows:
(1) if the Participant recovers from his disability prior to his
Retirement Date, the last payment shall be the payment due next
preceding the date of such recovery; or
(2) if the Participant attains his Retirement Date while still
disabled, the last payment will be the payment next preceding the
Participant's death, provided, however, that following a
Participant's death, one half of the Participant's monthly
retirement income shall be paid to his spouse if she shall have
been married to the Participant on his Retirement Date and shall
have survived him, for her lifetime.
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(C) Benefit Payable in the Event of Death of Disabled:
Participant prior to Retirement Date: If a disabled Participant dies
prior to his Retirement Date, his surviving spouse shall be entitled
to receive for her remaining lifetime a monthly income equal to the
monthly retirement income to which the Participant would have been
entitled under Section 2.1 if he had retired on his Retirement Date
and if his Compensation for the one year period prior to his
disability had continued without change to his Retirement Date;
provided, however, that on the deceased Participant's Retirement Date,
the amount of monthly income payable to his surviving spouse shall be
reduced to one-half of said monthly income.
(D) (1) Benefits on Termination of Service: In the event that a
Participant who has attained age 60 on or before December 31, 1993
terminates employment on or after December 31, 1993 for reasons other
than his death disability or retirement under Section 2.2 hereof. he
shall be entitled to receive a monthly retirement income as determined
in accordance with the applicable provision of Section 2.1 hereof,
based upon the Participant's Number of Years of Credited Service and
Final Average Monthly Compensation as determined on December 31, 1993.
The monthly retirement payment under this paragraph will be payable
commencing on the Participant's Retirement Date as determined under
Section 1.1(14) hereof, and the last payment will be the payment due
next preceding the terminated Participant's death, provided, however
that following a terminated Participant's death, one-half of the
retired Participant's monthly retirement income shall be paid to his
17
spouse if she shall have been married to the Participant on the date
his monthly retirement payments commenced, and shall have survived
him, for her lifetime. If a Participant should die after termination
of employment and before monthly retirement income payments commence,
no benefits whatsoever shall be payable under this Plan.
(2) Except as to those Participants described in paragraph (1) above,
in the event that a Participant terminates employment for any
reason other than his death, disability or retirement under
Section 2.2 hereof, he, and his spouse, shall not be entitled to
any benefits whatsoever under this Plan.
(3) Notwithstanding any other provision of this Plan to the contrary,
in the event a Participant's employment is terminated for any
reason whatsoever after the date of an Effective Change in
Control but prior to his Retirement Date, such Participant (or
his surviving spouse, if any) shall be vested in and entitled to
receive the greater of (i) the benefits to which such Participant
or surviving spouse may be entitled to under any other provisions
of this Plan, or (ii) the Deferred Vested Benefit provided below.
The Deferred Vested Benefit with respect to such a Participant
shall be a non forfeitable benefit determined in accordance with
Section 2.1 hereof based on such Participant's Number of Years of
Credited Service and Final Average Monthly Compensation
determined of the date of the Effective Change in Control;
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provided, however, that the amount of such Deferred Vested
Benefit payable to a Participant who is employed by any Employer
other than J. Ray McDermott S.A. and its Subsidiary and
Affiliated Companies (prior to giving effect to the Participant's
Monthly Retirement Plan Offset) shall not be less than 21% of the
Participant's Final Average Monthly Compensation determined as of
the date of his termination of employment. The benefits payable
to a Participant under this subparagraph (3) shall be paid in the
form of a lump sum distribution equal to the present value of the
monthly income amounts that would otherwise be received under the
Plan, commencing as of the Participant's date of termination of
employment.
The amount of such lump sum distribution to be paid to any
Participant shall be calculated using the following assumptions:
(a) The mortality table based on the prevailing commissioners'
standard table (described in Section 807(d)(5)(A) of the
Code) used to determine reserves for group annuity contracts
issued on the date as of which present value is determined
(without regard to any other subparagraph of Section
807(d)(5) of the Code) that is prescribed by the
Commissioner of Internal Revenue in revenue rulings, notices
or other guidance published in the Internal Revenue
Bulletin; and
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(b) The annual rate of interest on 30-year Treasury securities
as specified by the Commissioner of Internal Revenue in
revenue rulings, notices or other guidance published in the
Internal Revenue Bulletin for the month of August
immediately preceding the first day of the Plan Year in
which the Participant's Retirement Date occurs. The
applicable interest rate shall be determined annually.
Payment hereunder shall be made within thirty (30) days of the
date of the Participant's termination of employment. If a
Participant should die after terminating employment with a vested
right hereunder and prior to the payment of a lump sum
distribution, such distribution shall be payable to his surviving
spouse, if any, at the time it would have been paid to the
Participant, if such spouse shall have been married to the
Participant on the date he terminated employment with the
Employer.
2.5 INCREASE IN BENEFITS
In the event a Participant, or his surviving spouse, is receiving benefits
under Sections 2.1, 2.2 or 2.4 (A) through (C) hereof and the Retirement
Plan for Employees of McDermott Incorporated and Subsidiary and Affiliated
Companies provides for an increase in pension payments after retirement as
a result of cost of living or similar adjustments, then the benefits
payable under Sections 2.1, 2.2 or 2.4 (A) through (C) hereof shall be
similarly increased based upon the same cost of living or similar
adjustments as set forth in such retirement plan.
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2.6 LUMP SUM ELECTION
Notwithstanding anything to the contrary which may be contained in the
Plan, a Participant retiring under Section 2.1 or 2.2 after attaining the
age of 60 or terminating employment with a vested interest under Section
2.4(D)(1) shall have the right, with the consent of the Committee, to elect
a lump sum distribution equal to the present value of the monthly income
amounts that would otherwise be received under the Plan. If a Participant
retires at age 65, such Participant must have requested, in writing the
consent of the Committee to make such election at least twelve (12) months
but not more than eighteen (18) months prior to such Participant's 65th
birthday. If a Participant should die after reaching age 60 and before
retiring, the spouse shall also have the right, with the written consent of
the Committee, to elect a lump sum distribution.
The amount of the lump sum distribution to be paid to any Participant shall
be calculated using the following criteria:
(A) The form of benefit (e.g., joint and 50% survivor) shall be the same
as that elected by the Participant under the ERISA qualified plan
applicable to the Participant;
(B) The mortality table based on the prevailing commissioners' standard
table (described in Section 807(d)(5)(A) of the Code) used to
determine reserves for group annuity contracts issued on the date as
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of which present value is determined (without regard to any other
subparagraph of Section 807(d)(5) of the Code) that is prescribed by
the Commissioner of Internal Revenue in revenue rulings, notices or
other guidance published in the Internal Revenue Bulletin; and
(C) The annual rate of interest on 30-year Treasury securities as
specified by the Commissioner of Internal Revenue in revenue rulings,
notices or other guidance published in the Internal Revenue Bulletin
for the month of August immediately preceding the first day of the
Plan Year in which the Participant's Retirement Date occurs. The
applicable interest rate shall be determined annually Payment
hereunder shall be made within thirty days of the date of the
Participant's retirement; provided, however that if the payment of a
lump sum distribution hereunder would cause the Applicable Employee
Remuneration (as defined in Section 162(m)(4) of the Internal Revenue
Code of 1986, as amended) to exceed the limitation of Section
162(m)(1) of the Code, then in its sole discretion the Committee may
defer such payment. Deferred payment hereunder shall be made within
thirty days of the first day of the fiscal year of the Employer next
following the Participant's retirement date.
A deferred lump sum distribution shall earn interest from the
Participant's date of retirement until paid, compounded daily, at the
minimum commercial lending rate charged from time to time by Morgan
Guaranty Trust Company of New York for loans in New York City. If a
Participant should die after retiring and prior to the payment of a
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deferred lump sum distribution, such distribution shall be payable to
his spouse at the time it would have been paid to the Participant, if
she shall have been married to him on his Retirement Date and shall
have survived him. Any payment made under this Section 2.6 shall be in
complete satisfaction of any amounts which may be due to any
Participant or his surviving spouse or any other person claiming under
either of them pursuant to any other provisions of the Plan."
SECTION 3
SPECIAL PROVISIONS REGARDING PAYMENT OF BENEFITS
3.1 BENEFITS APPLICABLE TO PARTICIPANT WHO HAS BEEN OR IS EMPLOYED BY TWO OR
MORE EMPLOYERS
In the event that a Participant or his surviving spouse is entitled to
benefits under the Plan and such Participant has been or is employed by any
two or more Employers, his retirement benefit shall be computed by applying
the benefit formulas as if all the Employers were a single Employer,
provided there is a proper allocation (taking into account the Credited
Service and Compensation applicable to each Employer) of the costs of the
resulting benefits among the Employers by which such Participant has been
or is employed.
3.2 PARTICIPANTS TO FURNISH REQUIRED INFORMATION
Each Participant will furnish to the Committee such information as the
Committee considers necessary or desirable for purposes of administering
the Plan, and the provisions of the Plan respecting any payments thereunder
are conditional upon the Participant's furnishing promptly such true, full
and complete information as the Committee may request.
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Each Participant will submit proof of his age to the Committee at such time
as required by the Committee. The Committee will, if such proof of age is
not submitted as required, use as conclusive evidence thereof, such
information as is deemed by it to be reliable, regardless of the source of
such information. Any adjustment required by reason of lack of proof or the
misstatement of the age of persons entitled to benefits hereunder, by the
Participant or otherwise, will be in such manner as the Committee deems
equitable.
Any notice or information which, according to the terms of the Plan or the
rules of the Committee, must be filed with the Committee, shall be deemed
so filed at the time that it is actually received by the Committee.
The Employers, the Committee, and any person or persons involved in the
administration of the Plan shall be entitled to rely upon any
certification, statement, or representation made or evidence furnished by a
Participant with respect to his age or other facts required to be
determined under any of the provisions of the Plan, and shall not be liable
on account of the payment of any monies or the doing of any act or failure
to act in reliance thereon. Any such certification, statement,
representation, or evidence, upon being duly made or furnished, shall be
conclusively binding upon the person furnishing same; but it shall not be
binding upon the Employers, the Committee, or any other person or persons
involved in the administration of the Plan, and nothing herein contained
shall be construed to prevent any of such parties from contesting any such
certification, statement, representation, or evidence or to relieve the
Participant from the duty of submitting satisfactory proof of any such
fact.
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3.3 BENEFITS NOT ASSIGNABLE
Except for any indebtedness of a Participant to an Employer, no benefits or
rights shall exist under the Plan which are subject in any manner to
voluntary or involuntary anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge and any attempt so to anticipate,
alienate, transfer, assign, pledge, encumber or charge the same shall be
void; nor shall any such benefit or right be in any manner liable for or
subject to the debts, contracts, liabilities, engagements, torts or other
obligations of the person entitled to such benefit or right, except as
specifically provided in the Plan; nor shall any benefit or right under the
Plan constitute an asset of a Participant or of any person entitled to
benefits under the Plan in case of the bankruptcy, receivership or divorce
of said person; and any such benefit or right shall be payable only
directly to the Participant or to his surviving spouse.
If a Participant or any other person entitled to benefits under this Plan
becomes bankrupt or makes an assignment for the benefit of creditors or in
any way suffers a lien or judgment against his personal assets, or in any
way attempts to anticipate, alienate, sell, assign, pledge, encumber or
charge a benefit or right, except as specifically provided in the Plan,
then such benefit or right in the discretion of the Committee may cease and
terminate.
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3.4 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN
The establishment and maintenance of the Plan will not be construed as
conferring any legal rights upon any Participant to the continuation of his
employment with an Employer, nor will the Plan interfere with the right of
an Employer to discipline, lay off or discharge any Participant. The
adoption and maintenance of the Plan shall not be deemed to constitute a
contract between the Employer and any Employee or to be a consideration
for, inducement to, or condition of employment of any person.
3.5 ABANDONMENT OF BENEFITS
Each Participant and other person entitled to benefits hereunder shall file
with the Committee from time to time, in writing, his post office address
and each change of post office address, and any check representing payment
hereunder and any communication addressed to a Participant, a retired
Participant, or a surviving spouse at his or her last address filed with
the Committee (or, if no such address has been filed, then at his last
address as indicated on the records of the Employer) shall be binding on
such person for all purposes of the Plan, and the Committee shall not be
obliged to search for or ascertain the location of any such person.
If the Committee, for any reason, is in doubt as to whether retirement
income payments are being received by the person entitled thereto, it may,
by registered mail addressed to the person concerned at his address last
known to the Committee, notify such person that all unmailed and future
retirement income payments shall be henceforth withheld until he provides
the Committee with evidence of his continued life and his proper mailing
26
address. Further, his right to any retirement income whatsoever including,
without limitation, payments withheld as provided in the preceding sentence
and payment checks returned or not cashed shall, at the option of the
Committee, be cancelled forever if, at the expiration of three years from
the date of such mailing, he shall not have provided the Committee with
evidence of his continued life and his proper mailing address.
3.6 WRITTEN COMMUNICATIONS REQUIRED
Any notice, request, instruction, or other communication to be given or
made hereunder shall be in writing and either personally delivered to the
addressee or deposited in the United States mail fully postpaid and
properly addressed to such addressee at the last address for notice shown
on the Committee's records (or if no address has been filed with the
Committee, then at the last address for such addresses as indicated on the
records of the Employer).
3.7 CONDUCT INJURIOUS TO THE COMPANY
Notwithstanding anything in the Plan to the contrary, any and all benefits
otherwise payable to any Participant hereunder, except to the extent of any
prior distributions under the Plan, shall be forever forfeited if it is
determined by the Committee, in its sole discretion, that such Participant
has engaged in conduct injurious to the Company or any Subsidiary or
Affiliated Company, including but not limited to the following:
(a) dishonesty while in the employ Of the Company or any Subsidiary or
Affiliated Company;
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(b) imparting, disclosing or appropriating proprietary information for
himself or to or for any other person, firm, corporation, association
or entity for any reason or purpose whatsoever, except if required by
law or at the Company's direction;
(c) performing any act or engaging in any course of conduct which has or
may reasonably have the effect of demeaning the name or business
reputation of the Company or any Subsidiary or Affiliated Company; and
(d) providing goods or services to or becoming an employee, owner,
officer, agent, consultant, advisor or director of any firm or person
in any geographic area which competes with the Company or any
Subsidiary or Affiliated Company in any phase of any of the business
lines or services offered by the Company or any Subsidiary or
Affiliated Company as of the Participant's Retirement Date.
Any determination by the Committee that a Participant has engaged in
conduct injurious to the Company shall be conclusive and binding on all
parties.
SECTION 4
ADMINISTRATION
4.1 ADMINISTRATION BY COMMITTEE
The Plan will be administered by the Committee which shall appoint one of
its members as a Chairman and may appoint a secretary, who may, but need
not, be a member of the Committee and the Committee may employ such agents,
clerical and other services, legal counsel, accountants and actuaries as
may be required for the purpose of administering the Plan. A majority of
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the members of the Committee shall constitute a quorum for the transaction
of business and shall have full power to act hereunder. The Committee may
act either at a meeting at which a quorum is present or by a writing
subscribed by at least a majority of the members then serving. Any written
memorandum signed by the secretary or any member of the Committee who has
been authorized to act on behalf of the Committee shall have the same force
and effect as a formal resolution adopted in an open meeting. Minutes of
all meetings of the Committee and a record of any action taken by the
Committee shall be kept in written form by the secretary appointed by the
Committee.
4.2 RULES AND REGULATIONS OF COMMITTEE
The Committee shall have the authority to make such rules and regulations
and to take such action as may be necessary to carry out the provisions of
the Plan and will, subject to the provisions of the Plan, decide any
questions arising in the administration, interpretation and application of
the Plan, which decisions shall be conclusive and binding on all parties.
The Committee may delegate any part of its authority and duties as it deems
expedient.
4.3 POWERS OF COMMITTEE
In order to effectuate the purposes of the Plan, the Committee shall have
the power to construe the Plan and to make equitable adjustments for any
mistakes or errors made in the administration of the Plan, and all such
actions or determinations made by the Committee in good faith shall not be
subject to review by anyone.
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4.4 LIABILITY OF COMMITTEE
No member of the Committee shall be liable for any loss unless resulting
from his own fraud, bad faith or intentional wrongdoing and no member shall
be personally liable upon or with respect to any agreement, act,
transaction or omission executed, committed or suffered to be committed by
the Committee or by himself as a member of the Committee or by any other
member, agent, representative or employee of the Committee. The Committee
and any individual member of the Committee and any agent thereof shall be
fully protected in relying upon the advice of consultant(s) or advisor(s)
employed by the Company or the Committee, including but without any
limitation, any attorney insofar as legal matters are concerned, any
accountant insofar as accounting matters are concerned and any actuary
insofar as actuarial matters are concerned.
4.5 INDEMNIFICATION
The Company agrees to hold harmless and indemnify the members of the
Committee and all directors, officers, and employees of the Company and of
any Subsidiary or Affiliate which has adopted this Plan against any and all
claims and causes of action whomsoever, and any losses therefrom, including
without limitation costs of defense and attorneys' fees, based upon or
arising out of any act or omission relating to or in connection with this
Plan, its interpretation or administration, other than losses resulting
from the fraud, bad faith or intentional wrongdoing of the party asserting
the right to indemnification.
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4.6 APPLICABLE LAW
The Plan shall be construed, administered and enforced in accordance with
the applicable provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the laws of the State of Louisiana where
ERISA pre-emption does not apply.
SECTION 5
GENERAL PROVISIONS
5.1 AMENDMENT AND DISCONTINUANCE
The Plan may be amended from time to time in any respect whatever, by
resolution of the Board of Directors of the Company specifying such
amendment and amendments may be made retroactively which, in the judgment
of the Committee, is necessary or advisable provided that such retroactive
amendment does not deprive a retired or disabled Participant, or his
spouse, without his or her consent, of a right to receive benefits
hereunder.
The participation in the Plan of Employers other than the Company shall not
limit the power of the Company under the foregoing provision, and
amendments by the Company shall be binding upon all other Employers to the
extent accepted by such Employers. Acceptance by each such Employer shall
be presumed. However the discontinuance of the Plan shall not affect the
rights of retired or disabled Participants (or their spouses) who are
receiving benefits under this Plan on the date of such discontinuance.
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5.2 SOURCE OF BENEFITS
All benefits payable to Participants of the Company under this Plan shall
be paid from the general assets of the Company and all benefits payable to
Participants of any Subsidiary or Affiliate which has adopted this Plan
shall be paid from the general assets of such Subsidiary or Affiliate.
Benefits shall not be paid from any special or separate fund and no special
or separate fund shall be established, or other segregation of assets made
to make payment of benefits to eligible Participants or their surviving
spouses hereunder. No Participant or surviving spouse or any other person
shall have, under any circumstances, any interest whatever in any
particular property or assets of the Company or any Subsidiary or Affiliate
by virtue of this Plan.
5.3 BINDING ON COMPANY, EMPLOYEES AND THEIR SUCCESSORS
This Plan shall be binding upon and inure to the benefit of the Company and
to the Subsidiaries and Affiliated Companies which have adopted this Plan,
their successors and assigns and the Participant and his heirs, executors,
administrators, tutors, and legal representatives.
IN WITNESS WHEREOF, McDermott International, Inc. has caused this instrument to
be executed by its duly authorized officers on this 7th day of February, 2000.
ATTEST MCDERMOTT INTERNATIONAL, INC.
/s/ John Tsai By: /s/ R.E. Tetrault
- ------------------------------------- ---------------------------------
Assistant Secretary R.E. Tetrault
Chairman of the Board and
Chief Executive Officer
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