EXHIBIT (10)K

 

ECOLAB SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(As Amended and Restated Effective as of January 1, 2005)

 

WHEREAS, the Company previously established the Ecolab Supplemental Executive
Retirement Plan (the “Plan”) to provide additional retirement benefits in
consideration of services performed and to be performed by certain participants
for the Company and certain related corporations; and

 

WHEREAS, the American Jobs Creation Act of 2004, P.L. 108-357 (the “AJCA”) added
a new Section 409A to the Code, which significantly changed the Federal tax law
applicable to “amounts deferred” under the Plan after December 31, 2004; and

 

WHEREAS, before the issuance by the U.S. Treasury and the Internal Revenue
Service (the “IRS”) of interpretive guidance with respect to Code Section 409A,
the Company amended the Plan to temporarily freeze the accrual of SERP Benefits
hereunder as of December 31, 2004; and

 

WHEREAS, the IRS and U.S. Treasury subsequently issued regulations and other
guidance regarding the requirements of and compliance with Code Section 409A;
and

 

WHEREAS, the Board of Directors of the Company directed and authorized
appropriate officers of the Company to amend the Plan to (a) reinstate the
accrual of SERP Benefits, effective retroactively as of January 1, 2005 and
(b) comply, with respect to the Non-Grandfathered SERP Benefits, with the
requirements of Code Section 409 and guidance issued thereunder;

 

NOW, THEREFORE, pursuant to Section 1.3 of the Plan and Section 5.1 of the
Ecolab Inc. Administrative Document for Non-Qualified Benefit Plans, the Company
hereby amends and restates the Plan in its entirety, effective as of January 1,
2005, to read as follows:

 

ARTICLE I
PREFACE

 

SECTION 1.1             EFFECTIVE DATE.  THE EFFECTIVE DATE OF THIS AMENDMENT
AND RESTATEMENT OF THE PLAN IS JANUARY 1, 2005.  THE BENEFIT, IF ANY, PAYABLE
WITH RESPECT TO A FORMER EXECUTIVE WHO RETIRED OR DIED PRIOR TO THE EFFECTIVE
DATE (AND WHO IS NOT REHIRED BY A MEMBER OF THE CONTROLLED GROUP THEREAFTER)
SHALL BE DETERMINED BY, AND PAID IN ACCORDANCE WITH, THE TERMS AND PROVISIONS OF
THE PLAN AS IN EFFECT PRIOR TO THE EFFECTIVE DATE, SUBJECT TO SECTIONS 1.4 AND
3.3(2)(C).  NOTWITHSTANDING ANY PROVISION OF THE PLAN TO THE CONTRARY, AN
EXECUTIVE’S SERP BENEFIT (WHICH WAS TEMPORARILY FROZEN FROM DECEMBER 31, 2004
THROUGH DECEMBER 31, 2008) SHALL BE RETROACTIVELY ADJUSTED ON JANUARY 1, 2009 TO
REFLECT THE BENEFIT THAT WOULD HAVE BEEN ACCRUED BY THE EXECUTIVE UNDER THE
PLAN, IN ACCORDANCE WITH SECTION 3.2, DURING THE PERIOD COMMENCING ON JANUARY 1,
2005 AND ENDING ON THE EARLIER OF DECEMBER 31, 2008 OR THE DATE ON WHICH THE
EXECUTIVE TERMINATED HIS SERVICES WITH THE EMPLOYERS AS AN EMPLOYEE.

 

SECTION 1.2             PURPOSE OF THE PLAN.  THE PURPOSE OF THIS PLAN IS TO
PROVIDE ADDITIONAL RETIREMENT BENEFITS FOR CERTAIN MANAGEMENT AND HIGHLY
COMPENSATED EMPLOYEES OF THE COMPANY WHO PERFORM MANAGEMENT AND PROFESSIONAL
FUNCTIONS FOR THE COMPANY AND CERTAIN RELATED ENTITIES.

 

SECTION 1.3             ADMINISTRATIVE DOCUMENT.  THIS PLAN INCLUDES THE ECOLAB
INC. ADMINISTRATIVE DOCUMENT FOR NON-QUALIFIED BENEFIT PLANS (THE
“ADMINISTRATIVE DOCUMENT”), WHICH IS INCORPORATED HEREIN BY REFERENCE.

 

SECTION 1.4             AMERICAN JOBS CREATION ACT OF 2004 (AJCA).

 

(1)           TO THE EXTENT APPLICABLE, IT IS INTENDED THAT THE PLAN (INCLUDING
ALL AMENDMENTS THERETO) COMPLY WITH THE PROVISIONS OF CODE SECTION 409A, AS
ENACTED BY THE AMERICAN JOBS CREATION ACT OF 2004, P.L.

 

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108-357 (THE “AJCA”), SO AS TO PREVENT THE INCLUSION IN GROSS INCOME OF ANY
AMOUNT OF SERP BENEFIT ACCRUED HEREUNDER IN A TAXABLE YEAR THAT IS PRIOR TO THE
TAXABLE YEAR OR YEARS IN WHICH SUCH AMOUNTS WOULD OTHERWISE BE ACTUALLY
DISTRIBUTED OR MADE AVAILABLE TO THE EXECUTIVES.  THE PLAN SHALL BE ADMINISTERED
IN A MANNER THAT WILL COMPLY WITH CODE SECTION 409A, INCLUDING REGULATIONS OR
ANY OTHER GUIDANCE ISSUED BY THE SECRETARY OF THE TREASURY AND THE INTERNAL
REVENUE SERVICE WITH RESPECT THERETO (COLLECTIVELY WITH THE AJCA, THE “409A
GUIDANCE”).  ALL PLAN PROVISIONS SHALL BE INTERPRETED IN A MANNER CONSISTENT
WITH THE 409A GUIDANCE..

 

(2)           THE ADMINISTRATOR SHALL NOT TAKE ANY ACTION HEREUNDER THAT WOULD
VIOLATE ANY PROVISION OF CODE SECTION 409A.  THE ADMINISTRATOR IS AUTHORIZED TO
ADOPT RULES OR REGULATIONS DEEMED NECESSARY OR APPROPRIATE IN CONNECTION WITH
THE 409A GUIDANCE TO ANTICIPATE AND/OR COMPLY WITH THE REQUIREMENTS THEREOF
(INCLUDING ANY TRANSITION OR GRANDFATHER RULES THEREUNDER).

 

(3)           NOTWITHSTANDING ANY PROVISION OF THE PLAN, ANY GRANDFATHERED SERP
BENEFITS (INCLUDING ANY PRE-RETIREMENT SERP BENEFITS ATTRIBUTABLE THERETO) SHALL
CONTINUE TO BE GOVERNED BY THE LAW APPLICABLE TO NONQUALIFIED DEFERRED
COMPENSATION PRIOR TO THE ADDITION OF SECTION 409A TO THE CODE AND SHALL BE
SUBJECT TO THE TERMS AND CONDITIONS SPECIFIED IN THE PLAN AS IN EFFECT PRIOR TO
JANUARY 1, 2005, EXCEPT AS OTHERWISE PROVIDED HEREIN.  NOTWITHSTANDING ANY
PROVISION OF THE PLAN TO THE CONTRARY, NEITHER THE COMPANY NOR THE ADMINISTRATOR
GUARANTEE TO ANY EXECUTIVE OR DEATH BENEFICIARY ANY SPECIFIC TAX CONSEQUENCES OF
PARTICIPATION IN OR ENTITLEMENT TO OR RECEIPT OF BENEFITS FROM, THE PLAN, AND
EACH EXECUTIVE OR THE EXECUTIVE’S DEATH BENEFICIARY SHALL BE SOLELY RESPONSIBLE
FOR PAYMENT OF ANY TAXES OR PENALTIES INCURRED IN CONNECTION WITH HIS
PARTICIPATION IN THE PLAN.

 

ARTICLE II
DEFINITIONS

 

Words and phrases used herein with initial capital letters which are defined in
the Pension Plan or the Administrative Document are used herein as so defined,
unless otherwise specifically defined herein or the context clearly indicates
otherwise.  The following words and phrases when used in this Plan with initial
capital letters shall have the following respective meanings, unless the context
clearly indicates otherwise:

 

SECTION 2.1             “ACTUARIAL EQUIVALENT” OR “ACTUARIALLY EQUIVALENT.”  A
BENEFIT IS THE “ACTUARIAL EQUIVALENT” OF ANOTHER BENEFIT IF, ON THE BASIS OF
ACTUARIAL FACTORS, THE PRESENT VALUES OF SUCH BENEFITS ARE EQUAL.

 

SECTION 2.2             “ACTUARIAL FACTORS”  SHALL MEAN THE ACTUARIAL
ASSUMPTIONS SET FORTH IN EXHIBIT A WHICH IS ATTACHED TO AND FORMS A PART OF THIS
PLAN.

 

SECTION 2.3             “CASH BALANCE PARTICIPANT”  SHALL MEAN AN EXECUTIVE FOR
WHOM A RETIREMENT ACCOUNT IS MAINTAINED UNDER THE PENSION PLAN.

 

SECTION 2.4             “DEATH BENEFICIARY.”

 

The term “Death Beneficiary” shall mean the beneficiary designated under this
Plan and the Mirror Pension Plan.  The designation of a Death Beneficiary may be
made, and may be revoked or changed only by an instrument (in form prescribed by
Administrator) signed by the Executive and delivered to the Administrator during
the Executive’s lifetime.  If the Executive is married on the date of his death
and has been married to such spouse throughout the one-year period ending on the
date of his death, his designation of a Death Beneficiary other than, or in
addition to, his spouse under the Plan shall not be effective unless such spouse
has consented in writing to such designation.  Any Mirror Pension Benefits
remaining to be paid after the death of a Death Beneficiary (or a contingent
Death Beneficiary, to the extent designated by the Executive) shall be paid to
the Death Beneficiary’s estate.  If no Death Beneficiary is designated by the
Executive or all the designated Death Beneficiaries predeceased the Executive,
the Executive’s Death Beneficiary shall be his spouse, and if there is no
surviving spouse, then the Executive’s estate.  The most recent Death
Beneficiary designation on file

 

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with the Administrator will be given effect, and in the event of conflicting
forms files simultaneously under this Plan and Mirror Pension Plan, the Death
Beneficiary designation under this Plan will govern.

 

SECTION 2.5             “DISABILITY” OR “DISABLED”  SHALL MEAN ANY MEDICALLY
DETERMINABLE PHYSICAL OR MENTAL IMPAIRMENT THAT CAN BE EXPECTED TO RESULT IN
DEATH OR CAN BE EXPECTED TO LAST FOR A CONTINUOUS PERIOD OF NOT LESS THAN SIX
MONTHS, WHERE SUCH IMPAIRMENT CAUSES THE EXECUTIVE TO BE UNABLE TO PERFORM THE
DUTIES OF HIS POSITION OF EMPLOYMENT OR ANY SUBSTANTIALLY SIMILAR POSITION OF
EMPLOYMENT.

 

SECTION 2.6             “EXECUTIVE”  SHALL MEAN AN EMPLOYEE WHO IS AN ELECTED
CORPORATE OFFICER OF AN EMPLOYER AND WHO IS SELECTED BY THE ADMINISTRATOR TO
PARTICIPATE IN THE PLAN OR SUCH OTHER EMPLOYEE WHO IS SELECTED BY THE CHIEF
EXECUTIVE OFFICER OF THE COMPANY TO PARTICIPATE IN THE PLAN.

 

SECTION 2.7             “FINAL AVERAGE COMPENSATION”  SHALL MEAN THE AVERAGE OF
AN EXECUTIVE’S ANNUAL COMPENSATION (AS DEFINED IN THE ADMINISTRATIVE DOCUMENT
BUT AS MODIFIED BY THE NEXT SENTENCE) FOR THE FIVE (5) CONSECUTIVE PLAN YEARS OF
EMPLOYMENT WITH THE EMPLOYERS PRECEDING THE DATE ON WHICH THE EXECUTIVE
TERMINATED HIS SERVICES WITH ALL EMPLOYERS AS AN EMPLOYEE OR DEATH (INCLUDING
THE YEAR IN WHICH THE EXECUTIVE SO TERMINATED HIS SERVICE OR DEATH) WHICH YIELDS
THE HIGHEST AVERAGE COMPENSATION.  NOTWITHSTANDING THE FOREGOING, FOR PURPOSES
OF CALCULATING THE FINAL ANNUAL COMPENSATION OF A DISABLED EXECUTIVE, THE
RULES APPLICABLE FOR DETERMINING THE FINAL ANNUAL COMPENSATION FOR PERSONS WHO
ACCRUE BENEFITS UNDER THE FINAL AVERAGE COMPENSATION FORMULA SPECIFIED IN
SECTION 4.6 OF THE PENSION PLAN SHALL APPLY.  IF AN EXECUTIVE HAS BEEN EMPLOYED
BY THE EMPLOYERS FOR A PERIOD OF LESS THAN FIVE (5) PLAN YEARS PRECEDING THE
DATE ON WHICH THE EXECUTIVE TERMINATED HIS SERVICES WITH ALL EMPLOYERS OR DEATH,
FINAL AVERAGE COMPENSATION SHALL BE CALCULATED USING THE EXECUTIVE’S TOTAL
PERIOD OF EMPLOYMENT WITH THE EMPLOYERS (CALCULATED USING COMPLETE MONTHS OF
EMPLOYMENT).

 

SECTION 2.8             “GRANDFATHERED SERP BENEFIT”  SHALL MEAN THE PORTION OF
AN EXECUTIVE’S SERP BENEFIT THAT IS DEEMED TO HAVE BEEN DEFERRED (WITHIN THE
MEANING OF THE 409A GUIDANCE) UNDER THE PLAN BEFORE JANUARY 1, 2005 AND THAT IS
EQUAL TO THE PRESENT VALUE AS OF DECEMBER 31, 2004 OF THE VESTED SERP BENEFIT TO
WHICH THE EXECUTIVE WOULD BE ENTITLED UNDER THE PLAN, AS IN EFFECT ON OCTOBER 3,
2004, IF THE EXECUTIVE VOLUNTARILY TERMINATED EMPLOYMENT WITH THE CONTROLLED
GROUP WITHOUT CAUSE ON DECEMBER 31, 2004 AND RECEIVED A PAYMENT, ON THE EARLIEST
POSSIBLE DATE ALLOWED UNDER THE PLAN, OF HIS SERP BENEFIT IN THE FORM WITH THE
MAXIMUM VALUE.  A GRANDFATHERED SERP BENEFIT SHALL BE INCREASED IN SUBSEQUENT
YEARS TO EQUAL THE PRESENT VALUE OF THE BENEFIT THE EXECUTIVE ACTUALLY BECOMES
ENTITLED TO RECEIVE, IN THE FORM AND AT THE TIME ACTUALLY PAID, DETERMINED UNDER
THE TERMS OF THE PLAN AS IN EFFECT ON OCTOBER 3, 2004, WITHOUT REGARD TO ANY
SERVICES RENDERED OR COMPENSATION INCREASES APPLICABLE AFTER DECEMBER 31, 2004.

 

SECTION 2.9             “MIRROR PENSION BENEFIT”  SHALL MEAN ONE-TWELFTH
(1/12TH) OF THE ANNUAL TOTAL BENEFIT PAYABLE TO AN EXECUTIVE UNDER THE ECOLAB
MIRROR PENSION PLAN CALCULATED ON A SINGLE LIFE ANNUITY BASIS COMMENCING AT AGE
65, AS DETERMINED BY THE ADMINISTRATOR.

 

SECTION 2.10           “NON-GRANDFATHERED SERP BENEFIT”  SHALL MEAN ANY SERP
BENEFIT THAT IS NOT A GRANDFATHERED SERP BENEFIT.

 

SECTION 2.11           “PENSION BENEFIT”  SHALL MEAN ONE-TWELFTH (1/12TH) OF THE
ANNUAL TOTAL PENSIONS PAID OR PAYABLE TO THE EXECUTIVE UNDER ANY PENSION PLAN
(OTHER THAN THE ECOLAB SAVINGS PLAN, AS SUCH PLAN MAY BE AMENDED FROM TIME TO
TIME) SPONSORED BY A MEMBER OF THE CONTROLLED GROUP WHICH SATISFIES THE
QUALIFICATION REQUIREMENTS OF THE CODE CALCULATED ON A SINGLE LIFE ANNUITY BASIS
COMMENCING AT AGE 65, AS DETERMINED BY THE ADMINISTRATOR INCLUDING (A) PROJECTED
PAYMENTS FROM ANY FORMER PENSION PLAN OR FORMER PROFIT SHARING PLAN WHICH
REDUCES THE PENSION PAYABLE UNDER THE PENSION PLAN, OR (B) PAYMENTS OF
RETIREMENT ACCOUNT BENEFITS UNDER THE PENSION PLAN, BUT DETERMINED AS IF FOR ANY
PLAN YEAR BEGINNING ON OR AFTER JANUARY 1, 2005, THE COMPENSATION USED IN
COMPUTING SUCH BENEFIT WERE EQUAL TO THE ANNUAL COMPENSATION LIMITATION UNDER
CODE SECTION 401(A)(17) AS IN EFFECT FOR EACH RELEVANT YEAR FOR WHICH ANNUAL
COMPENSATION AMOUNT UNDER THE PENSION PLAN BENEFIT FORMULA IS DETERMINED.

 

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SECTION 2.12           “PLAN”  SHALL MEAN THIS ECOLAB SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN, AS IT MAY BE AMENDED FROM TIME TO TIME.

 

SECTION 2.13           “PRIMARY INSURANCE AMOUNT”  SHALL MEAN THE MONTHLY
PRIMARY SOCIAL SECURITY BENEFIT TO WHICH THE EXECUTIVE WILL BE ENTITLED AT AGE
65, DETERMINED IN ACCORDANCE WITH EXHIBIT B WHICH IS ATTACHED TO AND FORMS A
PART OF THIS PLAN.

 

SECTION 2.14           “RETIREMENT” OR “RETIRED.”  THE RETIREMENT OF AN
EXECUTIVE SHALL OCCUR UPON HIS TERMINATION OF EMPLOYMENT FOR ANY REASON OTHER
THAN DEATH OR DISABILITY ON OR AFTER (1) HIS ATTAINMENT OF AGE 55 AND THE
COMPLETION OF AT LEAST 10 YEARS OF ELIGIBILITY SERVICE, OR (2) HIS ATTAINMENT OF
AGE 65.  FOR PURPOSES OF DETERMINING RETIREMENT UNDER THIS PLAN, THE EMPLOYMENT
OF A DISABLED EXECUTIVE SHALL BE DEEMED TO HAVE TERMINATED “FOR REASONS OTHER
THAN DISABILITY” TWELVE MONTHS AFTER THE EXECUTIVE BECOMES DISABLED, PROVIDED HE
DOES NOT RESUME ACTIVE EMPLOYMENT WITH THE CONTROLLED GROUP BEFORE SUCH DATE.

 

SECTION 2.15           “SAVINGS PLAN BENEFIT”  SHALL MEAN THE BENEFIT PAYABLE TO
THE EXECUTIVE CALCULATED AS OF JULY 1, 1994 IN ACCORDANCE WITH EXHIBIT C WHICH
IS ATTACHED TO AND FORMS A PART OF THIS PLAN.

 

SECTION 2.16           “SEPARATION FROM SERVICE” OR TO “SEPARATE FROM SERVICE” 
SHALL MEAN ANY TERMINATION OF EMPLOYMENT WITH THE CONTROLLED GROUP DUE TO
RETIREMENT, DEATH, DISABILITY OR OTHER REASON; PROVIDED, HOWEVER, THAT NO
SEPARATION FROM SERVICE IS DEEMED TO OCCUR WHILE THE EXECUTIVE (1) IS ON
MILITARY LEAVE, SICK LEAVE, OR OTHER BONA FIDE LEAVE OF ABSENCE THAT DOES NOT
EXCEED SIX (6) MONTHS (OR, IN THE CASE OF DISABILITY, TWELVE (12) MONTHS), OR IF
LONGER, THE PERIOD DURING WHICH THE EXECUTIVE’S RIGHT TO REEMPLOYMENT WITH THE
CONTROLLED GROUP IS PROVIDED EITHER BY STATUTE OR BY CONTRACT, OR (2) CONTINUES
TO PERFORM SERVICES FOR THE CONTROLLED GROUP AT AN ANNUAL RATE OF FIFTY PERCENT
(50%) OR MORE OF THE AVERAGE LEVEL OF SERVICES PERFORMED OVER THE IMMEDIATELY
PRECEDING 36-MONTH PERIOD (OR THE FULL PERIOD IN WHICH THE EXECUTIVE PROVIDED
SERVICES (WHETHER AS AN EMPLOYEE OR AS AN INDEPENDENT CONTRACTOR) IF THE
EXECUTIVE HAS BEEN PROVIDING SERVICES FOR LESS THAN 36 MONTHS).  WITH RESPECT TO
THE TERMS OF THE PLAN AFFECTING NON-GRANDFATHERED SERP BENEFITS, ANY REFERENCE
TO “TERMINATION OF EMPLOYMENT” IN THE PLAN SHALL MEAN SEPARATION FROM SERVICE AS
DEFINED IN THIS SECTION.  WHETHER AN EXECUTIVE HAS INCURRED A SEPARATION FROM
SERVICE SHALL BE DETERMINED IN ACCORDANCE WITH THE 409A GUIDANCE.

 

SECTION 2.17           “SERP BENEFIT”  SHALL MEAN THE RETIREMENT BENEFIT
DETERMINED UNDER ARTICLE III.

 

SECTION 2.18           “SERP PRE-RETIREMENT BENEFIT”  SHALL MEAN THE
PRE-RETIREMENT BENEFIT DETERMINED UNDER ARTICLE IV.

 

SECTION 2.19           “SPECIFIED EMPLOYEE”  SHALL MEAN “SPECIFIED EMPLOYEE” AS
DEFINED IN THE ADMINISTRATIVE DOCUMENT.

 

SECTION 2.20           “YEAR OF BENEFIT SERVICE.”

 

(1)           AN EXECUTIVE SHALL BE CREDITED WITH ONE YEAR OF BENEFIT SERVICE
FOR EACH YEAR OF “CREDITED SERVICE” (OR SUCH OTHER DEFINED TERM WHICH IS USED TO
DETERMINE SERVICE FOR BENEFIT ACCRUAL PURPOSES) AS DEFINED BY AND CREDITED TO
THE EXECUTIVE UNDER THE PENSION PLAN.  NOTWITHSTANDING THE FOREGOING, FOR
PURPOSES OF CALCULATING YEARS OF BENEFIT SERVICE FOR A CASH BALANCE PARTICIPANT,
THE RULES APPLICABLE FOR DETERMINING CREDITED SERVICE UNDER THE PENSION PLAN FOR
PERSONS WHO ACCRUE BENEFITS UNDER THE FINAL AVERAGE COMPENSATION FORMULA
SPECIFIED IN ARTICLE 4 OF THE PENSION PLAN SHALL APPLY.

 

(2)           A DISABLED EXECUTIVE SHALL CONTINUE TO ACCRUE YEARS OF BENEFIT
SERVICE DURING THE PERIOD OF TWELVE MONTHS FOLLOWING THE DATE ON WHICH HE
BECOMES DISABLED FOR PURPOSES OF DETERMINING THE AMOUNT OF HIS SERP BENEFIT
HEREUNDER.

 

(3)           IN NO EVENT SHALL AN EXECUTIVE’S YEARS OF BENEFIT SERVICE UNDER
THE PLAN EXCEED THIRTY (30) YEARS.

 

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SECTION 2.21           “YEAR OF ELIGIBILITY SERVICE.”

 

(1)           AN EXECUTIVE SHALL BE CREDITED WITH ONE YEAR OF ELIGIBILITY
SERVICE FOR EACH YEAR OF “CONTINUOUS SERVICE” (OR SUCH OTHER DEFINED TERM WHICH
IS USED TO DETERMINE SERVICE FOR VESTING PURPOSES) AS DEFINED BY AND CREDITED TO
THE EXECUTIVE UNDER THE PENSION PLAN.

 

(2)           A DISABLED EXECUTIVE SHALL CONTINUE TO ACCRUE YEARS OF ELIGIBILITY
SERVICE DURING THE FIRST TWELVE MONTHS OF HIS DISABILITY FOR PURPOSES OF
DETERMINING HIS VESTED INTEREST IN OF HIS SERP BENEFIT HEREUNDER.

 

SECTION 2.22           “YEAR OF PAST SERVICE CREDIT”  MEANS THE EXCESS, IF ANY,
OF THE THIRTY (30) YEARS OF BENEFIT SERVICE REQUIRED TO EARN THE MAXIMUM SERP
BENEFIT HEREUNDER OVER THE NUMBER OF YEARS OF BENEFIT SERVICE IT WOULD BE
POSSIBLE FOR THE EXECUTIVE TO ACCUMULATE BY HIS ATTAINMENT OF AGE 65 OR, IF
LATER, THE DATE OF HIS RETIREMENT.

 

ARTICLE III
SERP BENEFITS

 

SECTION 3.1             PARTICIPATION.

 

(1)           COMMENCEMENT OF PARTICIPATION.  ANY EMPLOYEE WHO AS OF THE
EFFECTIVE DATE IS A PARTICIPANT IN THE PLAN, SHALL CONTINUE TO PARTICIPATE,
SUBJECT TO SUBSECTION (2).  ANY OTHER EMPLOYEE SHALL BECOME A PARTICIPANT IN THE
PLAN AS OF THE FIRST DATE ON OR AFTER THE EFFECTIVE DATE ON WHICH HE IS AN
EXECUTIVE.

 

(2)           TERMINATION OF PARTICIPATION.  AN EXECUTIVE SHALL CEASE TO BE A
PARTICIPANT IN THE PLAN ON THE EARLIEST TO OCCUR OF (A) THE DATE THE EXECUTIVE
CEASES TO BE EMPLOYED BY THE CONTROLLED GROUP OR DIES BEFORE BECOMING VESTED IN
HIS SERP BENEFIT, OR (B) THE DATE ON WHICH THE EXECUTIVE’S SERP BENEFIT IS
DISTRIBUTED FROM THE PLAN.

 

SECTION 3.2             AMOUNT OF SERP BENEFITS.  EACH VESTED EXECUTIVE SHALL,
UPON TERMINATION OF EMPLOYMENT (SEPARATION FROM SERVICE WITH RESPECT TO THE
NON-GRANDFATHERED SERP BENEFIT), BE ENTITLED TO A SERP BENEFIT WHICH SHALL BE
DETERMINED AS HEREINAFTER PROVIDED.

 

(1)           THE SERP BENEFIT SHALL BE A MONTHLY RETIREMENT BENEFIT PAYABLE IN
THE FORM OF A FIFTEEN-YEAR (15) CERTAIN BENEFIT COMMENCING UPON THE EXECUTIVE’S
ATTAINMENT OF AGE 65 EQUAL TO THE SUM OF (A) AND (B), WHERE:

 

(a) =                      one-twelfth (1/12th) of the Executive’s Final Average
Compensation, multiplied by two percent (2%) for each of the Executive’s Years
of Benefit Service (up to a maximum of thirty (30)), reduced by (i) the Pension
Benefit, (ii) the Mirror Pension Benefit, (iii) fifty percent (50%) of the
Primary Insurance Amount, and (iv) the Savings Plan Benefit; and

 

(b) =                     the difference between (i) one-twelfth (1/12th) of the
Executive’s Final Average Compensation, and (ii) one-twelfth (1/12th) of the
Executive’s Annual Compensation for the Plan Year in which the Executive
commenced employment with the Controlled Group, such difference multiplied by
one percent (1%) for each of the Executive’s Years of Past Service Credit (if
any).

 

(2)           FOR PURPOSES OF SUBSECTION (1)(B)(II), IF THE EXECUTIVE WAS NOT AN
EMPLOYEE FOR THE ENTIRE PLAN YEAR, HIS ANNUAL COMPENSATION FOR SUCH PLAN YEAR
SHALL BE ANNUALIZED BASED ON THE NUMBER OF DAYS EMPLOYED BY THE CONTROLLED GROUP
OUT OF A PLAN YEAR OF 365 DAYS.

 

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(3)           NOTWITHSTANDING ANYTHING IN THIS SECTION 3.2 TO THE CONTRARY, IN
NO EVENT WILL ANY EXECUTIVE’S SERP BENEFIT BE LESS THAN SUCH EXECUTIVE’S
GRANDFATHERED SERP BENEFIT.

 

SECTION 3.3             TIME OF PAYMENT.

 

(1)           GRANDFATHERED SERP BENEFIT.  THE PROVISIONS OF THIS
SECTION 3.3(1) SHALL APPLY SOLELY WITH RESPECT TO THE PORTION OF AN EXECUTIVE’S
SERP BENEFIT THAT IS A GRANDFATHERED SERP BENEFIT.  PAYMENT OF ANY PORTION OF AN
EXECUTIVE’S SERP BENEFIT THAT IS A NON-GRANDFATHERED SERP BENEFIT SHALL BE MADE
IN ACCORDANCE WITH SECTION 3.3(2).

 

(A)           IN GENERAL.  AN EXECUTIVE’S SERP BENEFIT SHALL BE PAID OR COMMENCE
TO BE PAID WITHIN 90 DAYS AFTER THE LATER OF THE DATE THE EXECUTIVE ATTAINS AGE
65 OR THE DATE OF THE EXECUTIVE’S RETIREMENT.  NOTWITHSTANDING THE FOREGOING, IF
PAYMENT AT SUCH TIME IS PREVENTED DUE TO REASONS OUTSIDE OF THE ADMINISTRATOR’S
CONTROL, THE SERP BENEFITS SHALL COMMENCE TO BE PAID AS SOON AS PRACTICABLE
AFTER THE END OF SUCH 90-DAY PERIOD, AND THE FIRST PAYMENT HEREUNDER SHALL
INCLUDE ANY SERP BENEFITS NOT PAID AS A RESULT OF THE DELAY IN PAYMENT.

 

(B)           EARLY COMMENCEMENT.  NOTWITHSTANDING THE PROVISIONS OF SUBSECTION
(1)(A) OF THIS SECTION, UPON THE WRITTEN REQUEST OF THE EXECUTIVE (ON A FORM
PRESCRIBED BY THE ADMINISTRATOR) WHICH IS FILED WITH THE ADMINISTRATOR PRIOR TO
THE EXECUTIVE’S TERMINATION OF EMPLOYMENT WITH THE CONTROLLED GROUP BECAUSE OF
INVOLUNTARY TERMINATION, DEATH OR DISABILITY OR AT LEAST ONE (1) YEAR PRIOR TO
THE EXECUTIVE’S VOLUNTARY RETIREMENT, THE ADMINISTRATOR MAY, IN ITS COMPLETE AND
SOLE DISCRETION, COMMENCE PAYMENT OF THE SERP BENEFITS TO THE EXECUTIVE AT A
SPECIFIED DATE WHICH IS AFTER THE EXECUTIVE’S RETIREMENT BUT PRIOR TO THE
EXECUTIVE’S ATTAINMENT OF AGE 65; PROVIDED, HOWEVER, THAT THE AMOUNT OF THE SERP
BENEFIT SHALL BE REDUCED BY ONE/TWO HUNDRED AND EIGHTIETH (1/280TH) FOR EACH
MONTH THAT THE DATE OF THE COMMENCEMENT OF THE SERP BENEFITS PRECEDES THE DATE
ON WHICH THE EXECUTIVE WILL ATTAIN AGE 62.

 

(2)           NON-GRANDFATHERED SERP BENEFITS.  THE PROVISIONS OF THIS
SECTION 3.3(2) SHALL APPLY SOLELY WITH RESPECT TO THE PORTION OF AN EXECUTIVE’S
VESTED SERP BENEFIT THAT IS A NON-GRANDFATHERED SERP BENEFIT.  PAYMENT OF ANY
PORTION OF AN EXECUTIVE’S SERP BENEFIT THAT IS A GRANDFATHERED SERP BENEFIT
SHALL BE MADE IN ACCORDANCE WITH SECTION 3.3(1).

 

(A)           IN GENERAL.  EXCEPT AS PROVIDED IN SUBSECTION (B), AN EXECUTIVE’S
VESTED NON-GRANDFATHERED SERP BENEFIT SHALL BE PAID OR COMMENCE TO BE PAID ON
THE FIRST DAY OF THE THIRD MONTH FOLLOWING THE MONTH IN WHICH OCCURS THE LATER
OF THE DATE ON WHICH THE EXECUTIVE (I) ATTAINS AGE 55 OR (II) SEPARATES FROM
SERVICE, SUBJECT TO SECTION 3.3(2)(D), SECTION 3.4(2)(D) AND 3.4(2)(C) (AS
APPLICABLE).  THE AMOUNT OF ANY SUCH SERP BENEFIT PAID BEFORE THE EXECUTIVE’S
ATTAINMENT OF AGE 65 SHALL BE REDUCED BY ONE/TWO HUNDRED AND EIGHTIETH (1/280TH)
FOR EACH MONTH THAT THE DATE OF THE COMMENCEMENT OF THE SERP BENEFITS PRECEDES
THE DATE ON WHICH THE EXECUTIVE WILL ATTAIN AGE 62.

 

(B)           CASH BALANCE PARTICIPANT.  A CASH BALANCE PARTICIPANT’S
NON-GRANDFATHERED SERP BENEFIT SHALL BE PAID OR COMMENCE TO BE PAID ON THE FIRST
DAY OF THE THIRD MONTH FOLLOWING THE MONTH IN WHICH THE EXECUTIVE SEPARATES FROM
SERVICE, SUBJECT TO SECTION 3.3(2)(D) AND SECTION 3.4(2)(D) (AS APPLICABLE).

 

(C)           CERTAIN TRANSITION DISTRIBUTIONS TO TERMINATED EXECUTIVES.

 

(I)            AN EXECUTIVE WHO SEPARATED FROM SERVICE AFTER DECEMBER 31, 2004
AND BEFORE DECEMBER 31, 2008 AND HAS COMMENCED PAYMENTS OF HIS GRANDFATHERED
SERP BENEFITS AT ANY TIME BEFORE DECEMBER 31, 2008, SHALL RECEIVE HIS
NON-GRANDFATHERED SERP BENEFIT (IF ANY), FOR WHICH THE EXECUTIVE’S SERP BENEFIT
IS RETROACTIVELY ADJUSTED PURSUANT TO SECTION 1.1 ON JANUARY 1, 2009, IN THE
SAME FORM AND AT THE SAME TIME AS THE EXECUTIVE’S GRANDFATHERED BENEFIT, SUBJECT
TO SECTION 3.3(2)(D).  NOTWITHSTANDING THE FOREGOING, A CASH BALANCE

 

6

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PARTICIPANT’S NON-GRANDFATHERED SERP BENEFIT SHALL BE PAID ON MARCH 1, 2009,
SUBJECT TO SECTION 3.3(2)(D).

 

(II)           AN EXECUTIVE WHO SEPARATED FROM SERVICE AFTER DECEMBER 31, 2004
AND BEFORE DECEMBER 31, 2008 AND HAS NOT BEFORE DECEMBER 31, 2008 COMMENCED
PAYMENTS OF HIS NON-GRANDFATHERED SERP BENEFIT, SHALL RECEIVE HIS
NON-GRANDFATHERED SERP BENEFIT, FOR WHICH THE EXECUTIVE’S SERP BENEFIT IS
RETROACTIVELY ADJUSTED PURSUANT TO SECTION 1.2 ON JANUARY 1, 2009, IN A SINGLE
LUMP SUM ON MARCH 1, 2009.

 

(D)           PAYMENT DELAY FOR SPECIFIED EMPLOYEES.  NOTWITHSTANDING ANY
PROVISION OF THE PLAN, PAYMENTS TO A SPECIFIED EMPLOYEE SHALL BE MADE OR
COMMENCE ON THE LATEST OF (I) THE DATE SPECIFIED IN SECTION 3.3(2)(A), (B) OR
(C), (II) THE DATE SPECIFIED IN SECTION 3.4(2)(D)(I), IF THE EXECUTIVE MADE AN
ELECTION PURSUANT TO SUCH SECTION, OR (III) THE DATE THAT IS SIX (6) MONTHS
AFTER THE SPECIFIED EMPLOYEE’S SEPARATION FROM SERVICE; PROVIDED, HOWEVER, THAT
IF THE EXECUTIVE DIES BEFORE THE DATE SPECIFIED IN (I), (II) OR (III), THE
EXECUTIVE’S BENEFIT SHALL BE PAID OR COMMENCE ON THE DATE SPECIFIED IN
SECTION 4.2.  THE FIRST PAYMENT MADE TO THE SPECIFIED EMPLOYEE FOLLOWING THE
6-MONTH DELAY SHALL INCLUDE ANY SERP BENEFIT PAYMENTS THAT WERE NOT MADE AS A
RESULT OF THE DELAY IN PAYMENT PURSUANT TO THIS PARAGRAPH (D), WITH INTEREST AT
AN ANNUAL RATE OF FIVE PERCENT (5%) COMPOUNDED ANNUALLY.  NOTWITHSTANDING THE
FOREGOING, THIS PARAGRAPH (D) SHALL NOT APPLY TO ANY EXECUTIVE IF ON THE DATE OF
HIS SEPARATION FROM SERVICE, THE STOCK OF THE COMPANY AND CONTROLLED GROUP
MEMBERS IS NOT PUBLICLY TRADED ON AN ESTABLISHED SECURITIES MARKET (WITHIN THE
MEANING OF THE 409A GUIDANCE).

 

SECTION 3.4             FORM OF PAYMENT

 

(1)           GRANDFATHERED SERP BENEFIT.  THE PROVISIONS OF THIS
SECTION 3.4(1) SHALL APPLY SOLELY WITH RESPECT TO THE PORTION OF AN EXECUTIVE’S
SERP BENEFIT THAT IS A GRANDFATHERED SERP BENEFIT.

 

(A)           IN GENERAL.  AN EXECUTIVE WHO DOES NOT WANT HIS SERP BENEFIT TO BE
PAID IN THE FORM OF THE 15-YEAR CERTAIN BENEFIT DESCRIBED IN SECTION 3.2 MAY
ELECT TO RECEIVE HIS SERP BENEFIT IN ANY OF THE OPTIONAL FORMS OF BENEFIT
PAYMENT WHICH ARE PERMITTED UNDER THE PENSION PLAN.  ANY SUCH OPTIONAL FORM OF
BENEFIT SHALL BE THE ACTUARIAL EQUIVALENT OF THE SERP BENEFIT PAYABLE TO THE
EXECUTIVE IN THE FORM SPECIFIED IN SECTION 3.2.

 

(B)           LUMP SUM PAYMENT.

 

(I)            NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (1)(A) OF THIS
SECTION, AN EXECUTIVE MAY ELECT TO RECEIVE THE SERP BENEFIT IN THE FORM OF A
SINGLE LUMP SUM PAYMENT.

 

(II)           THE LUMP SUM PAYMENT DESCRIBED IN PARAGRAPH (B)(I) OF THIS
SUBSECTION SHALL BE CALCULATED BY CONVERTING THE EXECUTIVE’S SERP BENEFIT
(CALCULATED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 3.2) AT THE TIME OF THE
COMMENCEMENT OF SUCH BENEFIT INTO A LUMP SUM AMOUNT OF EQUIVALENT ACTUARIAL
VALUE WHEN COMPUTED USING THE ACTUARIAL FACTORS SPECIFIED IN EXHIBIT A FOR THIS
PURPOSE, AND THEN APPLYING THE TEN PERCENT (10%) REDUCTION, IF APPLICABLE,
PROVIDED FOR IN SUBSECTION (C) OF THIS SECTION.

 

(III)          NOTWITHSTANDING ANY PROVISION OF THE PLAN TO THE CONTRARY, IN THE
EVENT THE EQUIVALENT ACTUARIAL VALUE OF THE EXECUTIVE’S SERP BENEFIT, WHEN
COMPUTED USING THE ACTUARIAL FACTORS SPECIFIED IN EXHIBIT A FOR THIS PURPOSE,
DOES NOT EXCEED $25,000 , SUCH BENEFIT SHALL BE PAID IN THE FORM OF A SINGLE
LUMP SUM PAYMENT.

 

(C)           FORM/TIMING OF ELECTION.  ANY ELECTION OF AN OPTIONAL FORM OF
BENEFIT MUST BE IN WRITING (ON A FORM PROVIDED BY THE ADMINISTRATOR) AND FILED
WITH THE ADMINISTRATOR PRIOR TO THE EXECUTIVE’S TERMINATION OF EMPLOYMENT WITH
THE CONTROLLED GROUP BECAUSE OF INVOLUNTARY TERMINATION, DEATH OR DISABILITY OR
AT LEAST ONE (1) YEAR PRIOR TO THE EXECUTIVE’S VOLUNTARY RETIREMENT.  ANY SUCH
ELECTION MAY BE CHANGED AT ANY TIME AND FROM TIME TO TIME WITHOUT THE CONSENT OF
ANY EXISTING DEATH BENEFICIARY OR ANY OTHER PERSON (EXCEPT AS

 

7

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DESCRIBED IN SECTION 2.2), BY FILING A LATER SIGNED WRITTEN ELECTION WITH THE
ADMINISTRATOR; PROVIDED THAT ANY ELECTION MADE LESS THAN ONE (1) YEAR PRIOR TO
THE EXECUTIVE’S VOLUNTARY RETIREMENT SHALL NOT BE VALID, AND IN SUCH CASE,
PAYMENT SHALL BE MADE IN ACCORDANCE WITH THE LATEST VALID ELECTION OF THE
EXECUTIVE.  NOTWITHSTANDING THE FOREGOING, AN EXECUTIVE SHALL BE PERMITTED TO
MAKE AN ELECTION TO RECEIVE HIS SERP BENEFIT IN THE FORM OF A LUMP SUM PAYMENT
WITHIN THE ONE (1) YEAR PERIOD PRIOR TO HIS VOLUNTARY TERMINATION IF (AND ONLY
IF) THE AMOUNT OF THE SERP BENEFIT PAYABLE TO THE EXECUTIVE IS REDUCED BY TEN
PERCENT (10%).

 

(2)           NON-GRANDFATHERED SERP BENEFITS.  THE PROVISIONS OF THIS
SECTION 3.4(2) SHALL APPLY SOLELY WITH RESPECT TO THE PORTION OF AN EXECUTIVE’S
SERP BENEFIT THAT IS A NON-GRANDFATHERED SERP BENEFIT.

 

(A)           NORMAL PAYMENT FORM.  UNLESS AN EXECUTIVE MAKES AN ELECTION
PURSUANT TO SECTION 3.4(2)(B) OR (E), THE EXECUTIVE’S NON-GRANDFATHERED SERP
BENEFIT WILL BE PAID TO THE EXECUTIVE IN THE FORM OF ANNUAL INSTALLMENT PAYMENTS
PAYABLE OVER A PERIOD OF TEN (10) YEARS, THE AMOUNT OF WHICH IS ACTUARIALLY
EQUIVALENT TO THE SERP BENEFIT CALCULATED UNDER SECTION 3.2.

 

(B)           OPTIONAL FORMS OF BENEFIT.  IN LIEU OF THE NORMAL FORM OF PAYMENT,
AN EXECUTIVE MAY MAKE OR CHANGE AN ELECTION TO RECEIVE HIS NON-GRANDFATHERED
SERP BENEFIT IN ONE OF THE FOLLOWING ACTUARIALLY EQUIVALENT OPTIONAL FORMS OF
BENEFIT:

 

(I)            A SINGLE LIFE ANNUITY PAYABLE MONTHLY TO THE EXECUTIVE DURING THE
EXECUTIVE’S LIFE AND ENDING ON THE DATE OF THE EXECUTIVE’S DEATH.

 

(II)           A REDUCED JOINT AND SURVIVOR ANNUITY PAYABLE MONTHLY TO THE
EXECUTIVE DURING THE EXECUTIVE’S LIFE, AND AFTER THE EXECUTIVE’S DEATH, PAYABLE
MONTHLY TO THE EXECUTIVE’S SPOUSE WHO SURVIVES THE EXECUTIVE IN THE AMOUNT EQUAL
TO 50%, 75% OR 100% (AS THE EXECUTIVE ELECTS) OF SUCH REDUCED LIFETIME MONTHLY
AMOUNT.

 

(III)          A REDUCED LIFE AND PERIOD CERTAIN ANNUITY PAYABLE MONTHLY TO THE
EXECUTIVE DURING THE EXECUTIVE’S LIFE, WITH PAYMENT THEREOF GUARANTEED TO BE
MADE FOR A PERIOD OF FIVE (5) OR TEN (10) YEARS, AS ELECTED BY THE EXECUTIVE,
AND, IN THE EVENT OF THE EXECUTIVE’S DEATH BEFORE THE END OF SUCH 5- OR 10- YEAR
PERIOD, PAYABLE IN THE SAME REDUCED AMOUNT FOR THE REMAINDER OF SUCH 5- OR
10-YEAR PERIOD, TO THE DEATH BENEFICIARY DESIGNATED BY THE EXECUTIVE.

 

(IV)          ANNUAL INSTALLMENT PAYMENTS PAYABLE TO THE EXECUTIVE OVER A PERIOD
OF FIVE (5) OR TEN (10) YEARS, AS ELECTED BY THE EXECUTIVE.

 

(V)           A SINGLE LUMP SUM PAYMENT.

 

(C)           MANDATORY LUMP SUM.  NOTWITHSTANDING ANY PROVISION OF THE PLAN TO
THE CONTRARY, IN THE EVENT THAT THE PRESENT VALUE OF THE EXECUTIVE’S
NON-GRANDFATHERED SERP BENEFIT DOES NOT EXCEED $25,000 AT THE TIME OF
DISTRIBUTION, SUCH NON-GRANDFATHERED SERP BENEFIT SHALL BE PAID IN THE FORM OF A
SINGLE LUMP SUM PAYMENT ON THE DATE OF THE EXECUTIVE’S SEPARATION FROM SERVICE,
SUBJECT TO SECTION 3.3(2)(D).

 

(D)           ELECTION OF OPTIONAL FORM OF PAYMENT.  AN ELECTION OF AN OPTIONAL
FORM OF PAYMENT MUST BE IN WRITING (ON A FORM PROVIDED BY THE ADMINISTRATOR) AND
MUST SATISFY THE FOLLOWING REQUIREMENTS:

 

(I)            EXCEPT AS PROVIDED IN SECTION 3.4(2)(E), IF AN EXECUTIVE WISHES
TO ELECT AN OPTIONAL FORM OF PAYMENT UNDER SECTION 3.4(2)(B) ABOVE (OTHER THAN
THE NORMAL FORM OF PAYMENT) OR WISHES TO CHANGE HIS ELECTION MADE UNDER
SECTION 3.4(2)(E) (OTHER THAN AN ELECTION CHANGE DESCRIBED IN
SECTION 3.4(2)(D)(II)), THE ELECTION MUST BE FILED WITH THE ADMINISTRATOR AT
LEAST TWELVE (12) MONTHS BEFORE THE EXECUTIVE’S SEPARATION FROM SERVICE.  THE
MOST RECENT ELECTION ON FILE WITH THE ADMINISTRATOR (THAT WAS FILED AT LEAST
TWELVE (12) MONTHS BEFORE THE EXECUTIVE’S SEPARATION FROM SERVICE AND THAT
REMAINS ON FILE WITH THE ADMINISTRATOR AS OF THE DATE OF SEPARATION FROM
SERVICE) SHALL BE GIVEN EFFECT AND BECOME IRREVOCABLE ON THE DATE OF THE

 

8

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EXECUTIVE’S SEPARATION FROM SERVICE.  NO ELECTION FILED LESS THAN TWELVE (12)
MONTHS BEFORE THE EXECUTIVE’S SEPARATION FROM SERVICE SHALL HAVE ANY FORCE OR
EFFECT, EXCEPT AS PROVIDED IN SECTION 3.4(2)(D)(II).  THE PAYMENT PURSUANT TO AN
ELECTION MADE UNDER THIS SECTION 3.4(2)(D)(I) SHALL BE MADE OR COMMENCE ON THE
FIRST DAY OF THE MONTH COINCIDENT WITH OR IMMEDIATELY FOLLOWING THE FIFTH
ANNIVERSARY OF THE ORIGINAL COMMENCEMENT DATE SPECIFIED IN SECTION 3.3(2)(A) OR
(B) (AS APPLICABLE).

 

(II)           AN EXECUTIVE WHO ELECTED, PURSUANT TO SECTION 3.4(2)(D)(I) OR
3.4(2)(E), A LIFE ANNUITY FORM OF PAYMENT (WITHIN THE MEANING OF THE 409A
GUIDANCE) DESCRIBED IN SECTION 3.4(2)(B)(I), (II) OR (III), MAY, AT ANY TIME
BEFORE THE DATE OF SEPARATION FROM SERVICE, CHANGE THAT ANNUITY FORM OF PAYMENT
TO AN ACTUARIALLY EQUIVALENT LIFE ANNUITY FORM OF PAYMENT, PROVIDED THE
COMMENCEMENT DATE FOR SUCH ANNUITY, AS SPECIFIED IN, RESPECTIVELY,
SECTION 3.4(2)(D)(I) OR SECTION 3.4(2)(E), REMAINS UNCHANGED.

 

(E)           TRANSITION ELECTIONS.  NOTWITHSTANDING ANY PROVISION OF THE PLAN,
ANY EXECUTIVE WHO IS AN ACTIVE EMPLOYEE OF THE COMPANY OR A MEMBER OF THE
CONTROLLED GROUP DURING THE ELECTION PERIOD DESIGNATED BY THE ADMINISTRATOR,
ENDING NO LATER THAN DECEMBER 31, 2008, MAY MAKE AN ELECTION TO RECEIVE HIS
NON-GRANDFATHERED SERP BENEFIT IN ONE OF THE OPTIONAL FORMS SPECIFIED IN
SECTION 3.4(2)(B), COMMENCING ON THE DATE SPECIFIED IN SECTION 3.3(2)(A) OR
(B) (AS APPLICABLE); PROVIDED, HOWEVER, THAT SUCH ELECTION SHALL NOT APPLY IF
THE EXECUTIVE SEPARATES FROM SERVICE ON OR BEFORE DECEMBER 31, 2008 AND IS
SUBJECT TO THE PROVISION OF SECTION 3.3(2)(C).  THE TRANSITION ELECTION MUST BE
MADE IN WRITING, ON A FORM PROVIDED BY THE ADMINISTRATOR AND FILED WITH THE
ADMINISTRATOR WITHIN THE DESIGNATED TRANSITION ELECTION PERIOD.  THE TRANSITION
ELECTION MADE PURSUANT TO THIS PARAGRAPH (E) MAY NOT CAUSE ANY AMOUNT TO BE PAID
IN 2008 IF NOT OTHERWISE PAYABLE AND MAY NOT DELAY PAYMENT OF ANY AMOUNT THAT IS
OTHERWISE PAYABLE IN 2008.

 

(F)            COORDINATION OF PAYMENT ELECTIONS WITH MIRROR PENSION PLAN.  IF
AN EXECUTIVE IS ALSO A PARTICIPANT IN THE MIRROR PENSION PLAN, THE EXECUTIVE’S
NON-GRANDFATHERED MIRROR PENSION BENEFIT AND THE NON-GRANDFATHERED SERP BENEFIT
WILL BE PAID IN THE SAME FORM AND AT THE SAME TIME.  IF AN EXECUTIVE MAKES AN
ELECTION OF AN OPTIONAL PAYMENT FORM PURSUANT TO SECTION 3.4(2)(B) OF THE PLAN
OR SECTION 3.3(2)(B) OF THE MIRROR PENSION PLAN, THE MOST RECENT ELECTION FILED
WITH THE ADMINISTRATOR UNDER EITHER THIS PLAN OR THE MIRROR PENSION PLAN AT
LEAST TWELVE (12) MONTHS BEFORE THE SEPARATION FROM SERVICE (OR, IF APPLICABLE,
AT A DATE SPECIFIED IN PARAGRAPH (D)(II) OF THIS SUBSECTION) THAT REMAINS ON
FILE WITH THE ADMINISTRATOR ON THE DATE OF SEPARATION FROM SERVICE WILL GOVERN
THE FORM AND TIME OF PAYMENT UNDER THE PLAN.  IN THE EVENT OF CONFLICTING
ELECTION FORMS FILED SIMULTANEOUSLY UNDER THIS PLAN AND THE MIRROR PENSION PLAN,
THE ELECTION FILED UNDER THIS PLAN SHALL GOVERN.

 

SECTION 3.5             DEATH AFTER COMMENCEMENT OF NON-GRANDFATHERED SERP
BENEFITS.  IF AN EXECUTIVE DIES AFTER COMMENCING PAYMENT OF HIS
NON-GRANDFATHERED SERP BENEFIT UNDER THE PLAN BUT BEFORE HIS ENTIRE
NON-GRANDFATHERED SERP BENEFIT IS DISTRIBUTED, PAYMENTS TO THE EXECUTIVE’S DEATH
BENEFICIARY (IF ANY) WILL BE MADE (A) IN ACCORDANCE WITH THE ELECTED OPTIONAL
FORM OF PAYMENT DESCRIBED IN SECTION 3.4(2)(B)(II) OR (III) (IF ELECTED), OR
(B) NINETY (90) DAYS AFTER THE EXECUTIVE’S DEATH IN THE FORM OF A SINGLE LUMP
SUM, CALCULATED USING THE ACTUARIAL FACTORS IN EFFECT ON THE DATE OF
DISTRIBUTION, IF THE EXECUTIVE ELECTED ONE OF THE OPTIONAL FORMS OF PAYMENT
DESCRIBED IN SECTION 3.4(B)(IV).

 

ARTICLE IV
SERP PRE-RETIREMENT BENEFITS

 

SECTION 4.1             ELIGIBILITY.  THE DEATH BENEFICIARY OF AN EXECUTIVE WHO
DIES AFTER BECOMING VESTED IN HIS SERP BENEFITS (INCLUDING THE DEATH BENEFICIARY
OF AN EXECUTIVE WHO DIES WHILE HE IS DISABLED) BUT PRIOR TO COMMENCING TO
RECEIVE SERP BENEFITS HEREUNDER SHALL BE ENTITLED TO RECEIVE THE SERP
PRE-RETIREMENT BENEFITS DESCRIBED IN SECTION 4.2 IN LIEU OF ANY OTHER BENEFITS
DESCRIBED IN THE PLAN.

 

9

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SECTION 4.2             AMOUNT, FORM AND TIMING OF SERP PRE-RETIREMENT BENEFITS.

 

(1)           GRANDFATHERED SERP BENEFIT.  A DEATH BENEFICIARY WHO IS ELIGIBLE
FOR A SERP PRE-RETIREMENT BENEFIT HEREUNDER SHALL RECEIVE THE PORTION OF SUCH
SERP PRE-RETIREMENT BENEFIT THAT IS BASED ON THE EXECUTIVE’S GRANDFATHERED SERP
BENEFIT IN ACCORDANCE WITH THIS SUBSECTION (1).  THE SERP PRE-RETIREMENT BENEFIT
THAT IS BASED ON THE EXECUTIVE’S GRANDFATHERED SERP BENEFIT SHALL BE CALCULATED
IN ACCORDANCE WITH, AND PAYABLE AT THE SAME TIME AND (EXCEPT AS PROVIDED IN
SECTION 3.4(1)(B)) IN THE SAME MANNER AS, THE PRE-RETIREMENT DEATH BENEFITS AND
(IF APPLICABLE) THE OPTIONAL DEATH BENEFITS DESCRIBED IN THE PENSION PLAN, AS
DETERMINED BY THE ADMINISTRATOR.  NOTWITHSTANDING THE FOREGOING, THE DEATH
BENEFICIARY OF A CASH BALANCE PARTICIPANT WHO IS ELIGIBLE FOR A SERP
PRE-RETIREMENT BENEFIT, SHALL RECEIVE SUCH BENEFIT IN THE FORM OF A LUMP SUM
PAYMENT.

 

(2)           NON-GRANDFATHERED SERP BENEFIT.  A DEATH BENEFICIARY WHO IS
ELIGIBLE FOR A SERP PRE-RETIREMENT BENEFIT HEREUNDER SHALL RECEIVE THE PORTION
OF SUCH SERP PRE-RETIREMENT BENEFIT THAT IS BASED ON THE EXECUTIVE’S VESTED
NON-GRANDFATHERED SERP BENEFIT AS FOLLOWS.

 

(A)           IF AN EXECUTIVE (I) IS NOT MARRIED ON THE DATE OF HIS DEATH,
(II) HAS BEEN MARRIED FOR LESS THAN ONE YEAR PRIOR TO HIS DEATH AND DESIGNATES A
DEATH BENEFICIARY OTHER THAN HIS SPOUSE, OR (III) HAS BEEN MARRIED FOR AT LEAST
ONE YEAR PRIOR TO HIS DEATH AND THE EXECUTIVE’S SPOUSE CONSENTS TO THE
EXECUTIVE’S DESIGNATION OF A DEATH BENEFICIARY OTHER THAN THE SPOUSE, THE
EXECUTIVE’S DEATH BENEFICIARY SHALL RECEIVE HIS BENEFIT IN AN AMOUNT ACTUARIALLY
EQUIVALENT TO THE SURVIVOR BENEFIT DETERMINED AS IF THE EXECUTIVE HAD SEPARATED
FROM SERVICE ON THE EARLIER OF THE DATE OF HIS ACTUAL SEPARATION FROM SERVICE OR
THE DATE OF HIS DEATH, ELECTED TO RECEIVE HIS NON-GRANDFATHERED SERP BENEFIT IN
THE FORM OF A MONTHLY LIFE ANNUITY WITH (A) A FIVE (5) YEAR CERTAIN SURVIVOR
BENEFIT IF THE EXECUTIVE HAD SEPARATED FROM SERVICE BEFORE ATTAINING AGE 55, OR
(B) A TEN (10) YEAR CERTAIN SURVIVOR BENEFIT, IF THE EXECUTIVE HAD ATTAINED AGE
55 WHILE AN EMPLOYEE, HAD SURVIVED TO AGE 55 AND HAD DIED IMMEDIATELY FOLLOWING
HIS PAYMENT COMMENCEMENT DATE.  THE NON-GRANDFATHERED SERP PRE-RETIREMENT
BENEFIT SHALL BE PAID IN THE FORM OF AN ACTUARIALLY EQUIVALENT SINGLE LUMP SUM
PAYMENT ON THE FIRST DAY OF THE THIRD MONTH AFTER THE LATER OF THE DATE ON WHICH
THE EXECUTIVE WOULD HAVE ATTAINED AGE 55 OR THE DATE OF THE EXECUTIVE’S DEATH.

 

(B)           IF AN EXECUTIVE WHO DIES AFTER BECOMING VESTED IN HIS SERP BENEFIT
IS MARRIED ON THE DATE OF HIS DEATH AND PARAGRAPH (A) DOES NOT APPLY TO HIM,
THEN THE EXECUTIVE’S SURVIVING SPOUSE SHALL RECEIVE THE SERP PRE-RETIREMENT
BENEFIT AS FOLLOWS:

 

(I)            IF THE EXECUTIVE HAD SEPARATED FROM SERVICE BEFORE ATTAINING AGE
55, THE EXECUTIVE’S SPOUSE SHALL RECEIVE A REDUCED ANNUITY PAYABLE MONTHLY TO
THE EXECUTIVE’S SPOUSE DURING HIS LIFE, COMMENCING ON THE FIRST DAY OF THE THIRD
MONTH FOLLOWING THE LATER OF THE DATE ON WHICH THE EXECUTIVE WOULD HAVE ATTAINED
AGE 55 OR THE DATE OF THE EXECUTIVE’S DEATH AND ENDING ON THE DATE OF THE
EXECUTIVE’S SPOUSE’S DEATH, CALCULATED AS IF THE EXECUTIVE HAD SEPARATED FROM
SERVICE ON THE EARLIER OF THE DATE OF THE EXECUTIVE’S DEATH OR ACTUAL SEPARATION
FROM SERVICE, ELECTED A JOINT AND 50% SURVIVOR ANNUITY FORM OF PAYMENT DESCRIBED
IN SECTION 3.4(2)(B)(II), SURVIVED TO AGE 55 AND DIED ON THE DATE FOLLOWING THE
PAYMENT COMMENCEMENT DATE.

 

(II)           IF THE EXECUTIVE HAD ATTAINED AGE 55 WHILE AN EMPLOYEE, THE
EXECUTIVE’S SPOUSE SHALL RECEIVE A REDUCED ANNUITY PAYABLE MONTHLY TO THE
EXECUTIVE’S SPOUSE DURING HIS LIFE, COMMENCING ON THE FIRST DAY OF THE OF THE
THIRD MONTH AFTER THE DATE OF THE EXECUTIVE’S DEATH, CALCULATED AS IF THE
EXECUTIVE HAD DIED IMMEDIATELY AFTER COMMENCING PAYMENTS IN THE FORM OF AN
IMMEDIATE JOINT AND 100% SURVIVOR ANNUITY FORM OF PAYMENT DESCRIBED IN
SECTION 3.4(2)(B)(II).

 

(C)           NOTWITHSTANDING THE FOREGOING, (I) IF THE SERP PRE-RETIREMENT
BENEFIT UNDER THIS SUBSECTION (2) IS PAYABLE TO A CASH-BALANCE PARTICIPANT, SUCH
BENEFIT WILL BE DISTRIBUTED TO THE EXECUTIVE’S DEATH BENEFICIARY IN THE FORM OF
AN ACTUARIALLY EQUIVALENT SINGLE LUMP SUM 90 DAYS AFTER THE EXECUTIVE’S DEATH,
AND (II) IF THE PRESENT VALUE OF THE SERP PRE-RETIREMENT BENEFIT UNDER THIS
SUBSECTION (2) PAYABLE TO ANY

 

10

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EXECUTIVE NOT DESCRIBED IN (I) DOES NOT EXCEED $25,000, SUCH BENEFIT WILL BE
DISTRIBUTED TO THE EXECUTIVE’S DEATH BENEFICIARY IN THE FORM OF AN ACTUARIALLY
EQUIVALENT SINGLE LUMP SUM ON THE FIRST DAY OF THE THIRD MONTH FOLLOWING THE
LATER OF THE DATE ON WHICH THE EXECUTIVE WOULD HAVE ATTAINED AGE 55 OF THE DATE
OF THE EXECUTIVE’S DEATH.

 

ARTICLE V
VESTING

 

SECTION 5.1             VESTING.

 

(1)           IN GENERAL.  EXCEPT AS PROVIDED IN SUBSECTIONS (2) AND (3) OF THIS
SECTION, AN EXECUTIVE SHALL BECOME VESTED IN THE SERP BENEFITS UPON (A) HIS
ATTAINMENT OF AGE 65 WHILE IN THE EMPLOY OF THE CONTROLLED GROUP, (B) HIS
ATTAINMENT OF AGE 55 WHILE IN THE EMPLOY OF THE CONTROLLED GROUP AND HIS
COMPLETION OF 10 YEARS OF ELIGIBILITY SERVICE, OR (C) HIS ATTAINMENT OF AGE 55
DURING THE FIRST TWELVE-MONTH PERIOD OF HIS DISABILITY AND HIS COMPLETION OF 10
YEARS OF ELIGIBILITY SERVICE.

 

(2)           FORFEITURE PROVISION.

 

(A)           NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (1) HEREOF, BUT
SUBJECT TO THE REQUIREMENTS OF PARAGRAPH (B) OF THIS SUBSECTION, THE EMPLOYERS
SHALL BE RELIEVED OF ANY OBLIGATION TO PAY OR PROVIDE ANY FUTURE SERP BENEFITS
OR SERP PRE-RETIREMENT BENEFITS UNDER THIS PLAN AND SHALL BE ENTITLED TO RECOVER
AMOUNTS ALREADY DISTRIBUTED IF, WITHOUT THE WRITTEN CONSENT OF THE COMPANY, THE
EXECUTIVE, WHETHER BEFORE OR AFTER TERMINATION WITH THE CONTROLLED GROUP
(I) PARTICIPATES IN DISHONESTY, FRAUD, MISREPRESENTATION, EMBEZZLEMENT OR
DELIBERATE INJURY OR ATTEMPTED INJURY, IN EACH CASE RELATED TO THE COMPANY OR A
CONTROLLED GROUP MEMBER, (II) COMMITS ANY UNLAWFUL OR CRIMINAL ACTIVITY OF A
SERIOUS NATURE, (III) COMMITS ANY INTENTIONAL AND DELIBERATE BREACH OF A DUTY OR
DUTIES THAT, INDIVIDUALLY OR IN THE AGGREGATE, ARE MATERIAL IN RELATION TO THE
EXECUTIVE’S OVERALL DUTIES OR (IV) MATERIALLY BREACHES ANY CONFIDENTIALITY OR
NONCOMPETE AGREEMENT ENTERED INTO WITH THE COMPANY OR A CONTROLLED GROUP
MEMBER.  THE EMPLOYERS SHALL HAVE THE BURDEN OF PROVING THAT ONE OF THE
FOREGOING EVENTS HAVE OCCURRED.

 

(B)           NOTWITHSTANDING THE FOREGOING, AN EXECUTIVE SHALL NOT FORFEIT ANY
PORTION OF HIS SERP BENEFITS OR SERP PRE-RETIREMENT BENEFITS UNDER PARAGRAPH
(A) OF THIS SUBSECTION UNLESS (I) THE EXECUTIVE RECEIVES REASONABLE NOTICE IN
WRITING SETTING FORTH THE GROUNDS FOR THE FORFEITURE, (II) IF REQUESTED BY THE
EXECUTIVE, THE EXECUTIVE (AND/OR THE EXECUTIVE’S COUNSEL OR OTHER
REPRESENTATIVE) IS GRANTED A HEARING BEFORE THE FULL BOARD OF DIRECTORS OF THE
COMPANY (THE “BOARD”) AND (III) A MAJORITY OF THE MEMBERS OF THE FULL BOARD
DETERMINE THAT THE EXECUTIVE VIOLATED ONE OR MORE OF THE PROVISIONS OF PARAGRAPH
(A) OF THIS SUBSECTION.

 

(3)           ACCELERATION OF VESTING.  NOTWITHSTANDING THE PROVISIONS OF
SUBSECTION (1) HEREOF, THE SERP BENEFITS OF THE EXECUTIVES (A) WHO ARE EMPLOYED
BY THE CONTROLLED GROUP ON THE DATE OF A CHANGE IN CONTROL OR (B) WHOSE
EMPLOYMENT WITH THE COMPANY WAS TERMINATED PRIOR TO A CHANGE IN CONTROL BUT THE
EXECUTIVE REASONABLY DEMONSTRATES THAT THE TERMINATION OCCURRED AT THE REQUEST
OF A THIRD PARTY WHO HAS TAKEN STEPS REASONABLY CALCULATED TO EFFECT THE CHANGE
IN CONTROL, SHALL BECOME IMMEDIATELY ONE HUNDRED PERCENT (100%) VESTED UPON THE
OCCURRENCE OF SUCH CHANGE IN CONTROL.

 

ARTICLE VI
MISCELLANEOUS

 

SECTION 6.1             EFFECT OF AMENDMENT AND TERMINATION.  NOTWITHSTANDING
ANY PROVISION OF THE PLAN (INCLUDING THE ADMINISTRATIVE DOCUMENT) TO THE
CONTRARY, NO AMENDMENT OR TERMINATION OF THE PLAN SHALL, WITHOUT THE CONSENT OF
THE EXECUTIVE (OR, IN THE CASE OF HIS DEATH, HIS DEATH BENEFICIARY), ADVERSELY
AFFECT THE VESTED SERP BENEFIT OR VESTED SERP PRE-RETIREMENT BENEFIT UNDER THE
PLAN OF ANY EXECUTIVE OR DEATH BENEFICIARY AS SUCH BENEFIT EXISTS ON THE DATE OF
SUCH AMENDMENT OR TERMINATION; PROVIDED, HOWEVER, THAT THIS LIMITATION SHALL

 

11

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NOT APPLY TO THE EXTENT DEEMED NECESSARY BY THE COMPANY TO COMPLY WITH THE
REQUIREMENTS OF THE 409A GUIDANCE.

 

SECTION 6.2             PROTECTIVE PROVISIONS.  NOTWITHSTANDING ANY PROVISION OF
THE PLAN TO THE CONTRARY, IF AN EXECUTIVE COMMITS SUICIDE DURING THE TWO-YEAR
PERIOD BEGINNING ON THE DATE OF HIS COMMENCEMENT OF PARTICIPATION IN THE PLAN OR
MAKES ANY MATERIAL MISSTATEMENT OR NONDISCLOSURE OF MEDICAL HISTORY, THEN, IN
THE ADMINISTRATOR’S SOLE AND ABSOLUTE DISCRETION, NO SERP BENEFITS OR SERP
PRE-RETIREMENT BENEFITS SHALL BE PAYABLE HEREUNDER OR SUCH BENEFITS MAY BE PAID
IN A REDUCED AMOUNT (AS DETERMINED BY THE ADMINISTRATOR).

 

SECTION 6.3             LIMITATION ON PAYMENTS AND BENEFITS.  NOTWITHSTANDING
ANY PROVISION OF THIS PLAN TO THE CONTRARY, IF ANY AMOUNT OR BENEFIT TO BE PAID
OR PROVIDED UNDER THIS PLAN OR ANY OTHER PLAN OR AGREEMENT BETWEEN THE EXECUTIVE
AND A CONTROLLED GROUP MEMBER WOULD BE AN “EXCESS PARACHUTE PAYMENT,” WITHIN THE
MEANING OF CODE SECTION 280G, OR ANY SUCCESSOR PROVISION THERETO, BUT FOR THE
APPLICATION OF THIS SENTENCE, THEN THE PAYMENTS AND BENEFITS TO BE PAID OR
PROVIDED UNDER THIS PLAN SHALL BE REDUCED TO THE MINIMUM EXTENT NECESSARY (BUT
IN NO EVENT TO LESS THAN ZERO) SO THAT NO PORTION OF ANY SUCH PAYMENT OR
BENEFIT, AS SO REDUCED, CONSTITUTES AN EXCESS PARACHUTE PAYMENT; PROVIDED,
HOWEVER, THAT THE FOREGOING REDUCTION SHALL BE MADE ONLY IF AND TO THE EXTENT
THAT SUCH REDUCTION WOULD RESULT IN AN INCREASE IN THE AGGREGATE PAYMENT AND
BENEFITS TO BE PROVIDED TO THE EXECUTIVE, DETERMINED ON AN AFTER-TAX BASIS
(TAKING INTO ACCOUNT THE EXCISE TAX IMPOSED PURSUANT TO CODE SECTION 4999, OR
ANY SUCCESSOR PROVISION THERETO, ANY TAX IMPOSED BY ANY COMPARABLE PROVISION OF
STATE LAW, AND ANY APPLICABLE FEDERAL, STATE AND LOCAL INCOME TAXES).  IF
REQUESTED BY THE EXECUTIVE OR THE COMPANY, THE DETERMINATION OF WHETHER ANY
REDUCTION IN SUCH PAYMENTS OR BENEFITS TO BE PROVIDED UNDER THIS PLAN OR
OTHERWISE IS REQUIRED PURSUANT TO THE PRECEDING SENTENCE SHALL BE MADE BY THE
COMPANY’S INDEPENDENT ACCOUNTANTS, AT THE EXPENSE OF THE COMPANY, AND THE
DETERMINATION OF THE COMPANY’S INDEPENDENT ACCOUNTANTS SHALL BE FINAL AND
BINDING ON ALL PERSONS.  THE FACT THAT THE EXECUTIVE’S RIGHT TO PAYMENTS OR
BENEFITS MAY BE REDUCED BY REASON OF THE LIMITATIONS CONTAINED IN THIS
SECTION 6.3 SHALL NOT OF ITSELF LIMIT OR OTHERWISE AFFECT ANY OTHER RIGHTS OF
THE EXECUTIVE PURSUANT TO THIS PLAN.  THE EXECUTIVE’S BENEFIT WILL BE REDUCED
ONLY TO THE EXTENT THAT THE REDUCTION IN ANY CASH PAYMENTS DUE TO THE EXECUTIVE
IS INSUFFICIENT TO REDUCE OR ELIMINATE EXCESS PARACHUTE PAYMENT AS DESCRIBED IN
THIS SECTION.  THE EXECUTIVE’S NON-GRANDFATHERED SERP BENEFIT (IF ANY) SHALL BE
REDUCED IF REQUIRED BY THIS SECTION BEFORE ANY GRANDFATHERED SERP BENEFIT IS
REDUCED.

 

SECTION 6.4             ESTABLISHMENT OF TRUST FUND.

 

(1)           IN GENERAL.  THE PLAN IS INTENDED TO BE AN UNFUNDED, NON-QUALIFIED
RETIREMENT PLAN.  HOWEVER, THE COMPANY MAY ENTER INTO A TRUST AGREEMENT WITH A
TRUSTEE TO ESTABLISH A TRUST FUND (THE “TRUST FUND”) AND TO TRANSFER ASSETS
THERETO (OR CAUSE ASSETS TO BE TRANSFERRED THERETO), SUBJECT TO THE CLAIMS OF
THE CREDITORS OF THE EMPLOYERS, PURSUANT TO WHICH SOME OR ALL OF THE SERP
BENEFITS AND SERP PRE-RETIREMENT  BENEFITS SHALL BE PAID.  PAYMENTS FROM THE
TRUST FUND SHALL DISCHARGE THE EMPLOYERS’ OBLIGATION TO MAKE PAYMENTS UNDER THE
PLAN TO THE EXTENT THAT TRUST FUND ASSETS ARE USED TO SATISFY SUCH OBLIGATIONS.

 

(2)           UPON A CHANGE IN CONTROL.

 

(A)           WITHIN THIRTY (30) BUSINESS DAYS OF THE OCCURRENCE OF A CHANGE IN
CONTROL, TO THE EXTENT IT HAS NOT ALREADY DONE SO, THE COMPANY SHALL BE REQUIRED
TO ESTABLISH AN IRREVOCABLE TRUST FUND FOR THE PURPOSE OF PAYING SERP BENEFITS
AND SERP PRE-RETIREMENT BENEFITS.  EXCEPT AS DESCRIBED IN THE FOLLOWING
SENTENCE, ALL CONTRIBUTIONS TO THE TRUST FUND SHALL BE IRREVOCABLE AND THE
COMPANY SHALL NOT HAVE THE RIGHT TO DIRECT THE TRUSTEE TO RETURN TO THE
EMPLOYERS, OR DIVERT TO OTHERS, ANY OF THE ASSETS OF THE TRUST FUND UNTIL AFTER
SATISFACTION OF ALL LIABILITIES TO ALL OF THE EXECUTIVES AND THEIR DEATH
BENEFICIARIES UNDER THE PLAN.  ANY ASSETS DEPOSITED IN THE TRUST FUND SHALL BE
SUBJECT TO THE CLAIMS OF THE CREDITORS OF THE EMPLOYERS AND ANY EXCESS ASSETS
REMAINING IN THE TRUST FUND AFTER SATISFACTION OF ALL LIABILITIES SHALL REVERT
TO THE COMPANY.

 

(B)           IN ADDITION TO THE REQUIREMENTS DESCRIBED IN PARAGRAPH (A) ABOVE,
THE TRUST FUND WHICH BECOMES EFFECTIVE ON THE CHANGE IN CONTROL SHALL BE SUBJECT
TO THE FOLLOWING ADDITIONAL REQUIREMENTS:

 

12

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(I)            THE TRUSTEE OF THE TRUST FUND SHALL BE A THIRD PARTY CORPORATE OR
INSTITUTIONAL TRUSTEE;

 

(II)           THE TRUST FUND SHALL SATISFY THE REQUIREMENTS OF A GRANTOR TRUST
UNDER THE CODE; AND

 

(III)          THE TRUST FUND SHALL AUTOMATICALLY TERMINATE (A) IN THE EVENT
THAT IT IS DETERMINED BY A FINAL DECISION OF THE UNITED STATES DEPARTMENT OF
LABOR (OR, IF AN APPEAL IS TAKEN THEREFROM, BY A COURT OF COMPETENT
JURISDICTION) THAT BY REASON OF THE CREATION OF, AND A TRANSFER OF ASSETS TO,
THE TRUST, THE TRUST IS CONSIDERED “FUNDED” FOR PURPOSES OF TITLE I OF ERISA OR
(B) IN THE EVENT THAT IT IS DETERMINED BY A FINAL DECISION OF THE INTERNAL
REVENUE SERVICE (OR, IF AN APPEAL IS TAKEN THEREFROM, BY A COURT OF COMPETENT
JURISDICTION) THAT (I) A TRANSFER OF ASSETS TO THE TRUST IS CONSIDERED A
TRANSFER OF PROPERTY FOR PURPOSES OF CODE SECTION 83 OR ANY SUCCESSOR PROVISION
THERETO, OR (II) PURSUANT TO CODE SECTION 451 OR 409A OR ANY SUCCESSOR PROVISION
THERETO, AMOUNTS ARE INCLUDABLE AS COMPENSATION IN THE GROSS INCOME OF A TRUST
FUND BENEFICIARY IN A TAXABLE YEAR THAT IS PRIOR TO THE TAXABLE YEAR OR YEARS IN
WHICH SUCH AMOUNTS WOULD OTHERWISE BE ACTUALLY DISTRIBUTED OR MADE AVAILABLE TO
SUCH BENEFICIARY BY THE TRUSTEE.  UPON SUCH A TERMINATION OF THE TRUST, ALL OF
THE ASSETS IN THE TRUST FUND ATTRIBUTABLE TO THE ACCRUED SERP BENEFITS AND SERP
PRE-RETIREMENT BENEFITS SHALL BE IMMEDIATELY DISTRIBUTED TO THE EXECUTIVES AND
THE REMAINING ASSETS, IF ANY, SHALL REVERT TO THE COMPANY; PROVIDED, HOWEVER,
THAT DISTRIBUTIONS TO THE EXECUTIVES WILL BE MADE ONLY TO THE EXTENT AND IN THE
MANNER PERMITTED BY THE 409A GUIDANCE.

 

(C)           WITHIN FIVE (5) DAYS FOLLOWING ESTABLISHMENT OF THE TRUST FUND,
THE COMPANY SHALL TRANSFER (OR CAUSE THE EMPLOYERS TO TRANSFER) TO THE TRUSTEE
OF SUCH TRUST FUND AN AMOUNT EQUAL TO THE EQUIVALENT ACTUARIAL PRESENT VALUE OF
THE SERP BENEFITS AND SERP PRE-RETIREMENT BENEFITS WHICH HAVE BEEN ACCRUED AS OF
THE DATE OF THE CHANGE IN CONTROL ON BEHALF OF ALL OF THE EXECUTIVES UNDER THE
PLAN (USING THE ACTUARIAL FACTORS SPECIFIED IN EXHIBIT A FOR THIS PURPOSE).

 

(D)           IN JANUARY OF EACH YEAR FOLLOWING A FUNDING OF THE TRUST FUND
PURSUANT TO PARAGRAPH (C) ABOVE, THE COMPANY SHALL CAUSE TO BE DEPOSITED IN THE
TRUST FUND SUCH ADDITIONAL AMOUNT (IF ANY) BY WHICH THE AGGREGATE EQUIVALENT
ACTUARIAL PRESENT VALUE (DETERMINED USING THE ACTUARIAL FACTORS SPECIFIED IN
EXHIBIT A) OF THE SUM OF THE SERP BENEFITS AND SERP PRE-RETIREMENT BENEFITS FOR
ALL EXECUTIVES UNDER THE PLAN AS OF DECEMBER 31 OF THE PRECEDING YEAR EXCEEDS
THE FAIR MARKET VALUE OF THE ASSETS OF THE TRUST FUND AS OF SUCH DATE.

 

(E)           NOTWITHSTANDING THE FOREGOING, AN EMPLOYER SHALL NOT BE REQUIRED
TO MAKE ANY CONTRIBUTIONS TO THE TRUST FUND IF THE EMPLOYER IS INSOLVENT AT THE
TIME SUCH CONTRIBUTION IS REQUIRED.

 

(F)            THE ADMINISTRATOR SHALL NOTIFY THE TRUSTEE OF THE AMOUNT OF SERP
PENSION BENEFITS AND SERP PRE-RETIREMENT BENEFITS TO BE PAID TO OR ON BEHALF OF
THE EXECUTIVE FROM THE TRUST FUND AND SHALL ASSIST THE TRUSTEE IN MAKING
DISTRIBUTION THEREOF IN ACCORDANCE WITH THE TERMS OF THE PLAN.

 

(G)           NOTWITHSTANDING ANY PROVISION OF THE PLAN OR THE ADMINISTRATIVE
DOCUMENT TO THE CONTRARY, THE PROVISIONS OF THIS SECTION 6.4(2) HEREOF (I) MAY
NOT BE AMENDED FOLLOWING A CHANGE IN CONTROL AND (II) PRIOR TO A CHANGE IN
CONTROL MAY ONLY BE AMENDED (A) WITH THE WRITTEN CONSENT OF EACH OF THE
EXECUTIVES OR (B) IF THE EFFECTIVE DATE OF SUCH AMENDMENT IS AT LEAST TWO
(2) YEARS FOLLOWING THE DATE THE EXECUTIVES WERE GIVEN WRITTEN NOTICE OF THE
ADOPTION OF SUCH AMENDMENT; PROVIDED, HOWEVER, THAT THIS LIMITATION SHALL NOT
APPLY TO ANY AMENDMENT THAT IS DEEMED NECESSARY OR REASONABLE (AS DETERMINED IN
THE SOLE DISCRETION OF THE COMMITTEE) TO COMPLY WITH THE REQUIREMENTS OF THE
409A GUIDANCE.

 

SECTION 6.5             DELAY OF PAYMENTS SUBJECT TO CODE SECTION 162(M).  THE
COMPANY MAY DELAY THE DISTRIBUTION OF ANY AMOUNT OTHERWISE REQUIRED TO BE
DISTRIBUTED UNDER THE PLAN IF, AND TO THE EXTENT THAT, THE COMPANY REASONABLY
ANTICIPATES THAT THE COMPANY’S DEDUCTION WITH RESPECT TO SUCH DISTRIBUTION
OTHERWISE WOULD

 

13

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BE LIMITED OR ELIMINATED BY APPLICATION OF CODE SECTION 162(M).  IN SUCH EVENT,
(1) IF ANY PAYMENT IS DELAYED DURING ANY YEAR ON ACCOUNT OF CODE SECTION 162(M),
THEN ALL PAYMENTS THAT COULD BE DELAYED ON ACCOUNT OF CODE SECTION 162(M) DURING
SUCH YEAR MUST ALSO BE DELAYED; (2) SUCH DELAYED PAYMENTS MUST BE PAID EITHER
(I) IN THE FIRST YEAR IN WHICH THE COMPANY REASONABLY ANTICIPATES THE PAYMENT TO
BE DEDUCTIBLE, OR (II) THE PERIOD BEGINNING ON THE DATE OF THE EXECUTIVE’S
SEPARATION FROM SERVICE AND ENDING ON THE LATER OF THE END OF THE EXECUTIVE’S
YEAR OF SEPARATION OR THE FIFTEENTH (15TH) DAY OF THE THIRD MONTH AFTER SUCH
SEPARATION; AND (3) IF PAYMENT IS DELAYED TO THE DATE OF SEPARATION FROM SERVICE
WITH RESPECT TO AN EXECUTIVE WHO IS A SPECIFIED EMPLOYEE, SUCH PAYMENT SHALL
COMMENCE AFTER SUCH EXECUTIVE’S SEPARATION FROM SERVICE ON THE DATE IMMEDIATELY
FOLLOWING THE SIX-MONTH ANNIVERSARY OF THE SEPARATION FROM SERVICE, OR IF
EARLIER, ON THE DATE OF THE EXECUTIVE’S DEATH.

 

IN WITNESS WHEREOF, Ecolab Inc. has executed this Supplemental Executive
Retirement Plan and has caused its corporate seal to be affixed this 19th  day
of December, 2008.

 

 

ECOLAB INC.

 

 

 

 

 

By:

/s/ Steven L. Fritze

 

 

Steven L. Fritze

 

 

Chief Financial Officer

 

(Seal)

 

 

Attest:

 

 

/s/ Lawrence T. Bell

 

Lawrence T. Bell

 

General Counsel and Secretary

 

 

14

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EXHIBIT A

ACTUARIAL ASSUMPTIONS
FOR SERP BENEFITS AND
SERP PRE-RETIREMENT BENEFITS

 

 

1.

Interest Rate:

 

 

 

 

 

 

 

 

 

A. For Lump Sum

 

The interest rate will be 125% of the 10-year Treasury rate for the month of
October preceding the Plan Year (i.e., January 1) (1) in which the retirement or
other termination of employment is effective if the SERP Benefit is to commence
immediately following such retirement or termination of employment or (2) in
which the distribution becomes payable if the payment is to be deferred.

 

 

 

 

 

 

 

B. General Actuarial Equivalence

 

7.5% except as provided in item 4 below.

 

 

 

 

 

 

2.

Mortality - General Actuarial Equivalence

 

1971 Group Annuity Table.

 

 

 

 

 

 

3.

Annuity Values Weighted - General Actuarial Equivalence

 

75% male, 25% female.

 

 

 

 

 

 

4.

Early Commencement:

 

If payment is in the form of a single lump sum, the lump sum amount shall be
based on the lump sum interest rate defined in item 1 above, and the “early
retirement benefit” immediate annuity amount as determined under
Section 3.3(1)(b) or 3.3(2)(a).

 

 

--------------------------------------------------------------------------------

 

EXHIBIT B

PRIMARY SOCIAL SECURITY BENEFITS

 

(A)          For purposes of the Plan, an Executive’s monthly primary social
security benefit is the estimated social security benefit amount, under the Old
Age and Survivors Insurance Benefit Act of the United States in effect on the
first day of the calendar year during which the Executive terminates employment,
which the Executive is receiving, or would be entitled to receive, commencing at
his attainment of age 65, whether or not he applies for, or actually receives,
such benefits.

 

(B)           The amounts determined under section (A) hereof shall be based
upon the following assumptions:

 

(1)           except as otherwise provided in Subsection (5) hereof, the
Executive is assumed to have participated in social security starting at the
later of age 22 or January 1, 1951;

 

(2)           except as otherwise provided in Subsection (5) hereof, the
Executive’s compensation on which his social security benefit is based shall be
assumed to be that resulting from applying a decrease for years prior to the
mid-year of the years on which the Executive’s Final Average Compensation is
based, and an increase for years following such mid-year, at the same rates as
the national average total wages for adjusting earnings as used in computing
social security benefits, as published by the Social Security Administration for
each such year, with the rate for the last published year being used for any
years subsequent to such last published year;

 

(3)           except as otherwise provided in Subsection (5) hereof, the taxable
wage base, the factors for indexing wages, and the table or formula used to
determine the estimated monthly primary social security benefit amount will be
assumed to remain constant following the Executive’s termination of employment;

 

(4)           except as otherwise provided in Subsection (5) hereof, for an
Executive whose employment terminates prior to his attainment of age 65, it
shall be assumed that he earned no compensation from the date of termination of
his employment to his attainment of age 65;

 

(5)           for an Executive whose benefit is based, in whole or part, upon
the continuing accrual of Years of Benefit Service during the period of his
Disability, it shall be assumed that, during the period for which he accrues
Years of Benefit Service under those sections, he continued to earn Annual
Compensation at the same rate as during the Plan Year in which he became
Disabled; provided, however, that, in the event the Executive is receiving, or
is entitled to receive, a primary social security disability benefit, the amount
of such benefit shall be deemed to be his “primary social security benefit” for
purposes of the Plan, in lieu of the amount otherwise determined under this
Exhibit B;

 

(C)           an Executive who, for any reason, is not a participant in the
United States social security benefit program shall be deemed to participate
fully in such program for purposes of determining the Executive’s primary social
security benefit.

 

(D)          An Executive’s primary social security benefit may be determined by
reference to a schedule based upon pay brackets, provided such schedule is
prepared in accordance with the foregoing provisions of this Exhibit B.

 

--------------------------------------------------------------------------------

 

EXHIBIT C
SAVINGS PLAN BENEFIT

 

The Savings Plan Benefit shall be one-twelfth (1/12th) of the annual benefit,
determined by the Administrator, that would be provided by Employer
Contributions to the Ecolab Savings Plan (formerly the EL Thrift Plan)
(hereafter the “Savings Plan”) made on or prior to July 1, 1994, if the
Executive’s benefit under the Savings Plan as of July 1, 1994 were paid
commencing at the Executive’s attainment of age 65 on a straight life annuity
basis (based on an interest rate of 4.25% and the 1984 Unisex Pension Mortality
Table shifted forward one year) and assuming (1) that the Employers contributed
to the Savings Plan on the Executive’s behalf from (a) the later of January 1,
1977 or the date of the Executive’s first eligibility for participation in the
Savings Plan until (b) the earlier of the Executive’s Retirement or July 1,
1994, an annual amount equal to three percent (3%) of the Executive’s actual
Annual Compensation; provided, however, that the three percent (3%) shall be
reduced by the amount, if any, which could not be contributed in each year by
reason of the maximum contributions limitations of Code Section 415 and the
maximum compensation limitations of Code Section 401(a)(17), and (2) that such
Employer contributions to the Savings Plan on behalf of the Executive
accumulated earnings at an annual rate of eight percent (8%) for all periods
prior to January 1, 1991, and for each calendar year thereafter until the
earlier of the Executive’s attainment of age 65 or December 31, 1993, at an
interest rate established annually by the Administrator based on the PBGC’s
immediate annuity rate as of the December 31 of the immediately preceding year,
and for the period from January 1, 1994 until the attainment of age 65, at an
interest rate of 4.25% (the December 1993 PBGC immediate rate).

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I

PREFACE

1

 

 

 

 

Section 1.1

Effective Date

1

 

 

 

 

 

Section 1.2

Purpose of the Plan

1

 

 

 

 

 

Section 1.3

Administrative Document

1

 

 

 

 

 

Section 1.4

American Jobs Creation Act of 2004 (AJCA)

1

 

 

 

ARTICLE II

DEFINITIONS

2

 

 

 

 

Section 2.1

“Actuarial Equivalent” or “Actuarially Equivalent.”

2

 

 

 

 

 

Section 2.2

“Actuarial Factors”

2

 

 

 

 

 

Section 2.3

“Cash Balance Participant”

2

 

 

 

 

 

Section 2.4

“Death Beneficiary.”

2

 

 

 

 

 

Section 2.5

“Disability” or “Disabled”

3

 

 

 

 

 

Section 2.6

“Executive”

3

 

 

 

 

 

Section 2.7

“Final Average Compensation”

3

 

 

 

 

 

Section 2.8

“Grandfathered SERP Benefit”

3

 

 

 

 

 

Section 2.9

“Mirror Pension Benefit”

3

 

 

 

 

 

Section 2.10

“Non-Grandfathered SERP Benefit”

3

 

 

 

 

 

Section 2.11

“Pension Benefit”

3

 

 

 

 

 

Section 2.12

“Plan”

4

 

 

 

 

 

Section 2.13

“Primary Insurance Amount”

4

 

 

 

 

 

Section 2.14

“Retirement” or “Retired.”

4

 

 

 

 

 

Section 2.15

“Savings Plan Benefit”

4

 

 

 

 

 

Section 2.16

“Separation from Service” or to “Separate from Service”

4

 

 

 

 

 

Section 2.17

“SERP Benefit”

4

 

 

 

 

 

Section 2.18

“SERP Pre-Retirement Benefit”

4

 

 

 

 

 

Section 2.19

“Specified Employee”

4

 

 

 

 

 

Section 2.20

“Year of Benefit Service.”

4

 

 

 

 

 

Section 2.21

“Year of Eligibility Service.”

5

 

 

 

 

 

Section 2.22

“Year of Past Service Credit”

5

 

 

 

ARTICLE III

SERP BENEFITS

5

 

 

 

 

Section 3.1

Participation

5

 

 

 

 

 

Section 3.2

Amount of SERP Benefits

5

 

 

 

 

 

Section 3.3

Time of Payment

6

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

Section 3.4

Form of Payment

7

 

 

 

 

 

Section 3.5

Death After Commencement of Non-Grandfathered SERP Benefits

9

 

 

 

ARTICLE IV

SERP PRE-RETIREMENT BENEFITS

9

 

 

 

 

Section 4.1

Eligibility

9

 

 

 

 

 

Section 4.2

Amount, Form and Timing of SERP Pre-Retirement Benefits

10

 

 

 

ARTICLE V

VESTING

11

 

 

 

 

Section 5.1

Vesting

11

 

 

 

ARTICLE VI

MISCELLANEOUS

11

 

 

 

 

Section 6.1

Effect of Amendment and Termination

11

 

 

 

 

 

Section 6.2

Protective Provisions

12

 

 

 

 

 

Section 6.3

Limitation on Payments and Benefits

12

 

 

 

 

 

Section 6.4

Establishment of Trust Fund

12

 

 

 

 

 

Section 6.5

Delay of Payments Subject to Code Section 162(m)

13

 

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