Exhibit 10.9 to 2004 10-K

 

CONVERGYS CORPORATION

 

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

(As amended effective February 27, 2001)

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CONVERGYS CORPORATION

 

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

TABLE OF CONTENTS

 

          Page

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SECTION 1.    STATEMENT OF PURPOSE.    1 SECTION 2.    DEFINITIONS; GENDER AND
NUMBER.    1 SECTION 3.    ADMINISTRATION.    2 SECTION 4.    BENEFITS.    2
SECTION 5.    GENERAL PROVISIONS.    4 SECTION 6.    PLAN MODIFICATION.    8

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CONVERGYS CORPORATION

 

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

SECTION 1. STATEMENT OF PURPOSE.

 

The purpose of the Convergys Corporation Supplemental Executive Retirement Plan
(the “Plan”) is to provide supplementary pension benefits and death benefits for
Senior Managers of Convergys Corporation (“Convergys”) and its affiliates.

 

SECTION 2. DEFINITIONS; GENDER AND NUMBER.

 

2.l. For purposes of the Plan, the following terms shall have the meanings
hereinafter set forth unless the context otherwise requires:

 

2.1.1 “Board of Directors” means the Board of Directors of Convergys.

 

2.1.2 “Committee” means the Compensation Committee of the Board of Directors.

 

2.1.3 “Convergys Entity” means Convergys and each direct and indirect subsidiary
of Convergys.

 

2.1.4 “Designated Beneficiary” mean the person or entity designated by a Senior
Manager, on forms furnished and in the manner prescribed by the Committee, to
receive any benefit payable under the Plan after the Senior Manager’s death. If
a Senior Manager fails to designate a beneficiary or if, for any reason, such
designation is not effective, his “Designated Beneficiary” shall be his
surviving spouse, or, if none, his estate.

 

2.1.5 “Effective Date” means the date on which Cincinnati Bell Inc. distributes
to its shareholders all of the common shares of Convergys owned by Cincinnati
Bell Inc.

 

2.1.6 “Employee” means any person who is employed as a common law employee of a
Convergys Entity.

 

2.1.7 “Pension Plan” means the Convergys Corporation Pension Plan.

 

2.1.8 “Senior Manager” means an Employee whose participation in the Plan has
been approved by the Board of Directors or the Committee.

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2.1.9 “Years of Service” means a Senior Manager’s full years of service as an
Employee, computed on the basis that 12 full months of service (whether or not
consecutive) constitutes one full year of service. For purposes of the Plan,
service with Cincinnati Bell Inc. and its affiliates prior to the Effective Date
shall be deemed to be service with Convergys.

 

2.2 For purposes of the Plan, words used in any gender shall include all other
genders, words used in the singular form shall include the plural form and words
used in the plural form shall include the singular form.

 

SECTION 3. ADMINISTRATION.

 

3.1 Convergys shall be the Plan Administrator and the Sponsor of the Plan as
those terms are defined in the Employee Retirement Income Security Act of 1974.

 

3.2 The Committee shall have the specific powers elsewhere herein granted to it
and shall have such other powers as may be necessary in order to enable it to
administer the Plan, except for powers herein granted or provided to be granted
to others.

 

3.2.1 The Committee may adopt such rules and regulations and may employ such
persons as it deems appropriate for the proper administration of the Plan.

 

3.2.2 The Committee shall grant or deny claims for benefits under the Plan, and
authorize disbursements according to this Plan. Notice shall be provided in
writing to any participant or beneficiary whose claim has been denied, setting
forth the specific reasons for such denial. In the event that a claim for
benefits has been denied, the Committee shall afford the claimant a full and
fair review of the decision denying the claim.

 

3.2.3 The Committee shall determine conclusively for all parties all questions
arising in the administration of the Plan.

 

3.2.4 The expenses of the Committee in administering the Plan shall be borne by
the Convergys Entities in such proportions as the Committee may determine.

 

3.2.5 The Board of Directors and the Committee each may designate in writing
other persons to carry out their responsibilities under the Plan, and may employ
persons to advise them with regard to any such responsibilities.

 

SECTION 4. BENEFITS.

 

4.1 If a Senior Manager who has attained age 55 and completed at least 10 Years
of Service ceases to be an Employee for any reason (other than his death), he
shall be entitled to receive a monthly benefit, commencing on the day next
following the date

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he ceases to be an Employee and payable for his life, equal to the result
obtained (not less than zero) by subtracting (a) his Pension Benefit from (b)
55% of his Average Monthly Compensation. Provided, however, that if the number
of the Senior Manager’s years of age and Years of Service total less than 75,
the amount determined under clause (b) of the preceding sentence shall be
reduced by 2.5% for each year by which the number of his full years of age and
Years of Service total less than 75.

 

4.1.1 For purposes of this Section 4.1, a Senior Manager’s “Average Monthly
Compensation” shall be the average obtained by dividing (a) his base salary and
annual bonuses from all Convergys Entities earned for the 36-month period during
the 60-month period ending on the date he ceases to be an Employee which
produces the highest dollar result by (b) 36; provided, however, that if the
Senior Manager has been employed as an Employee for less than 36 months, his
“Average Monthly Compensation” shall be the average obtained by dividing his
base salary and annual bonuses from all Convergys Entities earned for the entire
period of his employment as an Employee by the number of months during such
period.

 

4.1.2 For purposes of this Section 4.1, “Pension Benefit” means the pension
benefit (if any) which the Senior Manager is entitled to receive under the
Pension Plan, expressed as a monthly benefit commencing on the day following the
date on which he ceases to be an Employee and payable for his life, including
any Excess Pension Benefit (as defined in Section 5.6.3). If a Senior Manager
has received or is entitled to receive a benefit from a Convergys Entity which,
in the opinion of the Committee, is intended to supplement or be in lieu of a
benefit under the Pension Plan, the value of such other benefit shall be deemed
to be a benefit under the Pension Plan.

 

4.2 If a Senior Manager dies while an active Employee, his Designated
Beneficiary shall be entitled to receive a benefit payable in fifteen annual
installments, commencing as of the day following the date of the Senior
Manager’s death, which shall be actuarially equivalent (as determined by the
Committee) to the Senior Manager’s accrued benefit on the date of his death. For
purposes of this Section 4.2, the accrued benefit of a Senior Manager who has
attained age 55 and completed at least 10 Years of Service shall be the benefit
which would have been payable to the Senior Manager under Section 4.1 if he had
ceased to be an Employee (other than by reason of his death) on the date of his
death. For purposes of this Section 4.2, the accrued benefit of a Senior Manager
who either has not attained age 55 or has not completed at least 10 Years of
Service shall be a monthly benefit, commencing on the date the Senior Manager
would have attained age 55 and completed 10 years of service if he had remained
an active Employee, which is a fraction of the benefit which would have been
payable to the Senior Manager under Section 4.1 if the Senior Manager had
remained an active Employee through the date on which he both attained age 55
and completed 10 Year of Service and if the Senior Manager’s Average Monthly
Compensation neither increased nor decreased after the date of his death. The
numerator of the fraction in the preceding sentence shall be equal to the number
of the Senior Manager’s Years of Service as of the date of his death and the
denominator of such fraction shall be the number of Years of Service the Senior
Manager would have completed if he has remained an active Employee through the
date on which he both attained age 55 and completed at least 10 Years of
Service.

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4.3 The Committee, in its sole discretion, may elect to waive in whole or in
part any service or age reduction or discount, or any minimum age or service
requirement, otherwise applicable to the amount of a benefit payable to a Senior
Manager under the Plan, on such terms and conditions as the Committee may
prescribe.

 

4.4 In the case of a Senior Manager who retires prior to attaining age 62, the
Committee may, in its sole discretion, elect to provide the Senior Manager with
a monthly Social Security supplement from the date of his retirement through the
date he attains age 62 (or, if earlier, to the date of his death) in the amount
of the Senior Manager’s unreduced monthly primary Social Security benefit at age
62. This Social Security supplement shall be in addition to any other benefits
provided under the Plan.

 

4.5 In lieu of a monthly benefit payable for the life of the Senior Manager,
with the consent of the Committee, and subject to such rules as the Committee
may prescribe, a Senior Manager may elect to have his benefit paid in one of the
following forms: (a) fifteen equal annual installments; or (b) an annuity
payable for the life of the Senior Manager and continuing to the Senior
Manager’s contingent annuitant for his life at one-half of the rate payable
during their joint lives. Any optional form of benefit hereunder shall be
actuarially equivalent (as determined by the Committee) to the standard form of
benefit otherwise payable to the Senior Manager. If a Senior Manager whose
benefit is being paid in fifteen annual installments dies before receiving all
of the installments, the remaining installments shall be paid, when due, to his
Designated Beneficiary.

 

4.6 Except as otherwise provided in this Section 4 and Section 5, if a Senior
Manager ceases to be an Employee for any reason, neither he nor any person
claiming by or through him shall be entitled to receive any benefit under the
Plan.

 

SECTION 5. GENERAL PROVISIONS.

 

5.1 All benefits for which a Senior Manger would be otherwise eligible hereunder
may be forfeited, in the sole and absolute discretion of the Committee, under
the following circumstances:

 

(a) The Senior Manager is discharged for cause (as determined by the Board of
Directors or the Committee in its sole and absolute discretion); or

 

(b) Determination by the Board of Directors or the Committee, in its sole and
absolute discretion, that the Senior Manager engaged in misconduct in connection
with his employment with a Convergys Entity; or

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(c) The Senior Manager, without the express written consent of the Board of
Directors or the Committee, at any time is employed by, becomes associated with,
renders service to, or owns an interest in any business that, in the sole and
absolute discretion of the Board of Directors or the Committee, is competitive
with any Convergys Entity or with any business in which a Convergys Entity has a
substantial interest (other than as a shareholder with a nonsubstantial interest
in such business).

 

5.2 Assignment or alienation of pensions or other benefits under this Plan will
not be permitted or recognized.

 

5.3 In all questions relating to age and service for eligibility for any benefit
hereunder, or relating to term of employment and rates of pay for determining
benefits, the decision of the Committee, based upon this Plan and upon the
records of the Participating Company last employing such individual and insofar
as permitted by applicable law shall be final.

 

5.4 All benefits payable pursuant to the Plan shall be paid from Convergys
Entity operating expenses, or through the purchase of insurance from an
insurance company or otherwise, as the Committee may determine. If any Convergys
Entity elects to purchase insurance or other assets to provide benefits under
the Plan, no Senior Manager, beneficiary or annuitant shall have any right or
interest in such insurance or other assets.

 

5.5 Benefits payable to a former employee or retiree unable to execute a proper
receipt may be paid to other person(s) on behalf of the former employee or
retiree.

 

5.6 In the event of a Change in Control, the provisions of this Section 5.6 will
supersede any conflicting provisions of the Plan.

 

5.6.1 In the event of a Change in Control, the full present value of all accrued
benefits under the Plan and the full present value of any Excess Benefit, as
determined in accordance with the provisions of the Plan and the Convergys
Corporation Grantor Trust (the “Trust”), shall be fully funded to the Trust in
cash or other property acceptable to the trustee, within five business days of
such Change in Control. The determination of the full present value of the
accrued benefits under the Plan shall be made using the following assumptions:
(i) the date of retirement for each Senior Manager shall be considered to be the
later of the date on which such Senior Manager’s full years of age and Years of
Service total 75 or the date of the Change in Control, and (ii) the interest and
mortality assumptions shall be the same as those used for funding the Pension
Plan for the plan year in which the Change in Control occurs or if such
assumptions are not yet established, the assumptions used in the immediately
preceding year. In addition, the following assumptions also apply to the
determination of accrued benefits under the Plan: (i) for the purpose of the
benefit formula under Section 4 of this Plan (or any equivalent successor
provisions of such Plan or any successor Plan) each Senior Manager who has
attained age 55 and completed at least 10 Years of Service will be considered to
have a total of 75 years of age and Years of Service, and (ii) no Social
Security Supplements shall be granted.

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5.6.2 In the event that the Plan is terminated or partially terminated on or
after a Change in Control and prior to the second anniversary of such Change in
Control as defined hereinafter, each Senior Manager affected by such termination
or partial determination may elect, within 90 days of the proposed distribution
date (as defined below), to receive the full present value of the benefit
accrued under this Plan and the Excess Pension Benefit, referred to in Section
5.6.3, accrued under the Pension Plan to the date of the termination in a single
lump sum payment. If the Senior Manager so elects in accordance with this
Section 5.6.2 to receive a lump sum, such lump sum shall be distributed to the
Senior Manager or, in the event of the Senior Manager’s death, the Senior
Manager’s Designated Beneficiary in the amount which equals the present value of
the benefit or benefits projected to be paid under the Plan to the Senior
Manager, actuarially determined using the assumptions used by the Plan’s actuary
for funding the Plan; provided, however, that such amount shall be further
reduced by an amount equal to 10% prior to distribution of such lump sum. The
proposed distribution date of the lump sum distribution shall be no later than
one year following the date of the termination or partial termination of the
Plan. Once such amount is paid, the obligation of the Plan to such Senior
Manager and/or his Designated Beneficiary shall be considered to be fully and
irrevocably satisfied. No Senior Manager shall have any right under this Section
5.6.2 prior to the occurrence of a Change in Control.

 

5.6.3 For purposes of the Plan, “Excess Benefit” means that portion of the
Senior Manager’s pension under the Pension Plan, determined as of the proposed
distribution date, that is in excess of the permissible amount which may be
distributed from the Pension Plan in accordance with Sections 401(a)(17) and 415
of the Internal Revenue Code and with respect to which payments are to be made
in accordance with the Pension Plan.

 

5.6.4 For the purposes of this Section 5.6, a “Change in Control” means and
shall be deemed to occur if, on or after the Effective Date:

 

(i) a tender offer shall be made and consummated for the ownership of 30% or
more of the outstanding voting securities of Convergys;

 

(ii) Convergys shall be merged or consolidated with another corporation and as a
result of such merger or consolidation less than 75% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the former shareholders of Convergys other than affiliates (within
the meaning of the Securities Exchange Act of 1934) of any party to such merger
or consultation, as the same shall have existed immediately prior to such merger
or consolidation;

 

(iii) Convergys. shall sell substantially all of its assets to another
corporation which is not a wholly owned subsidiary;

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(iv) a person within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as
in effect on the Effective Date) of the Securities Exchange Act of 1934, shall
acquire 20% or more of the outstanding voting securities of Convergys (whether
directly, indirectly, beneficially or of records), or a person, within the
meaning of Section 3(a)(9) or Section 13 (d)(3) (as in effect on the Effective
Date) of the Securities Exchange Act of 1934, controls in any manner the
election of a majority of the directors of Convergys, or

 

(v) within any period of two consecutive years commencing on or after the
Effective Date, individuals who at the beginning of such period constitute the
Board of Directors cease for any reason to constitute at least a majority
thereof, unless the election of each director who was not a director at the
beginning of such period has been approved in advance by directors representing
at least two-thirds of the directors then in office who were directors at the
beginning of the period. For purposes hereof, ownership of voting securities
shall take into account and shall include ownership as determined by applying
the provisions of Rule 13d-3(d)(1)(i) (as in effect on the Effective Date)
pursuant to the Securities Exchange Act of 1934.

 

5.6.5 In the event of a Change in Control, the provisions of Section 5.6 may not
be deleted or amended on or subsequent to the Change in Control in any manner
whatsoever which would be adverse to one or more Senior Managers without the
consent of each such Senior Manager who would be so affected; provided, however,
the Board of Directors may make minor or administrative changes to Section 5.6
or changes to conform to applicable legal requirements. This Section 5.6.5 shall
not limit the Board of Directors from making any amendment to or deleting all or
any portion of Section 5.6 prior to a Change in Control.

 

5.6.6 In the case of a Change in Control, each Senior Manager who is
participating in the Plan immediately prior to the Change in Control shall be
deemed to be a Vested Senior Manager for purposes of Section 6. If a Senior
Manager who is participating in the Plan immediately prior to a Change in
Control ceases to be an Employee for any reason (other than his death) on or
after the Change in Control, and if such Senior Manager either has not attained
age 55 or has not completed 10 Years of Service, he shall be entitled to receive
a monthly benefit, commencing on the date he would have attained age 55 or, if
later, the date when the sum of the Senior Manager’s years of age and Years of
Service would total 75 if he had remained an active Employee (or such earlier
date as may be permitted under Section 5.6.2 in the event the Plan is terminated
on or after the Change in Control), which is a fraction of the benefit which
would have been payable to the Senior Manager under Section 4.1 if the Senior
Manager had remained an active Employee through the date on which the sum of his
years of age and Years of Service total 75. The numerator of the fraction in the
preceding sentence shall be equal to the number of the Senior Manager’s Years of
Service as of the Change in Control and the denominator of such fraction shall
be equal to the number of Years of Service the Senior Manager would have
completed if he had remained an active Employee through the date on which the
sum of his years of age and Years of Service total 75.

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SECTION 6. PLAN MODIFICATION.

 

The Board of Directors retains the right to amend or terminate the Plan in whole
or in part at any time, for any reason, with or without notice. Subject to the
provisions of Section 5.6, said amendment or termination may result, at the
discretion of the Board of Directors, in the cancellation of any entitlements or
future entitlements to active Senior Managers; provided, however, that the
amendment, termination or partial termination of the Plan shall not reduce the
accrued benefit of any Vested Senior Manager, retired Senior Manager or his
beneficiary. For purposes of the Plan, vested Senior Manager means a Senior
Manager who has attained age 55 and who has completed at least ten years of
service.

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AMENDMENT TO

CONVERGYS CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

The Convergys Corporation Supplemental Executive Retirement Plan (the “Plan”) is
hereby amended, effective as of January 1, 2004, in the following respects.

 

1. Section 4.1.1 of the Plan is amended to read as follows:

 

4.1.1 For purposes of this Section 4.1, a Senior Manager’s “Average Monthly
Compensation” shall be the amount obtained by dividing (a) the Senior Manager’s
highest “annual cash compensation target” in effect at any time during the 5
year period ending on the date he ceases to be an Employee by (b) 12. A Senior
Manager’s “annual cash compensation target” is the Senior Manager’s annual base
salary and annual incentive target regardless of whether all or part of such
compensation is deferred by the Senior Manager pursuant to a deferred
compensation plan or agreement, 401(k) plan and/or cafeteria plan, or paid in
the form of securities or other property which are not immediately taxable to
the Senior Manager.

 

2. The Plan is amended by the addition of a new Section 4.2.1 reading as
follows:

 

4.2.1 In lieu of the benefit, if any, payable to a Senior Manager’s Designated
Beneficiary upon the Senior Manager’s death as provided in Section 4.2, and
subject to such rules as the Committee may prescribe (which rules shall require
that an election for a lump sum to be paid be made no less than six months prior
to the date of death of the Senior Manager), a Senior Manager may elect to have
the benefit, if any, payable to the Senior Manager’s Designated Beneficiary upon
the Senior Manager’s death be paid in a lump sum. The lump sum shall be
actuarially equivalent to the benefit otherwise payable to the Senior Manager’s
Designated Beneficiary as provided in Section 4.2. The actuarial equivalent lump
sum shall be the average of the cost quotes, obtained by the Committee from at
least two insurance companies that (a) have a rating equivalent to A.M. Best A+
or higher and (b) are licensed to do business in the State of Ohio, for the
purchase of an annuity contract providing the death benefit; provided however,
that if the cost quotes from the two insurance companies chosen by the Committee
differ by more than 5%, a third cost quote will be obtained by the Committee
from a third insurance company that meets the criteria described in this
section, and the average of the two highest quotes will be used to determine the
death benefit.

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3. The Plan is amended by the addition of a new Section 4.5.1 reading as
follows:

 

4.5.1 In lieu of a monthly benefit payable for the life of the Senior Manager
and any optional from of benefit provided in Section 4.5, and subject to such
rules as the Committee may prescribe (which rules shall require that an election
to receive a lump sum be made no less than six months prior to the date the
Senior Manager ceases to be an Employee), a Senior Manager may elect to have his
benefit paid in a lump sum. The lump sum shall be actuarially equivalent to the
standard form of benefit otherwise payable to the Senior Manager. The actuarial
equivalent lump sum shall be the average of the cost quotes, obtained by the
Committee from at least two insurance companies that (a) have a rating
equivalent to A.M. Best A+ or higher and (b) are licensed to do business in the
State of Ohio, for the purchase of an annuity contract providing the standard
form of benefit; provided however, that if the cost quotes from the two
insurance companies chosen by the Committee differ by more than 5%, a third cost
quote will be obtained by the Committee from a third insurance company that
meets the criteria described in this section, and the average of the two highest
quotes will be used to determine the actuarial equivalent lump sum.