EXHIBIT 10.2
 
 

 
 

 
Charming Shoppes, Inc.
 
Supplemental Executive Retirement Plan
Amended and Restated Effective January 1, 2005
 

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Contents

     
Article 1.
 
Establishment, Purpose, and Duration
 
1
 
Article 2.
 
Definitions
 
1
 
Article 3.
 
Participation
 
4
 
Article 4.
 
Vesting
 
5
 
Article 5.
 
Retirement Benefit Account
 
5
 
Article 6.
 
Payment of the Retirement Benefit
 
7
 
Article 7.
 
Administration
 
10
 
Article 8.
 
Miscellaneous
 
12
 

 

 
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Article 1.  Establishment, Purpose, and Duration
 
1.1  Establishment of the Plan. Charming Shoppes, Inc. (the “Company”), a
corporation incorporated under the laws of the Commonwealth of Pennsylvania,
hereby amends and restates the Charming Shoppes Supplemental Retirement Plan
(the “Plan”) effective January 1, 2005. This January 1, 2005 amendment and
restatement shall not affect Grandfathered Accounts (as defined below), which
shall continue to be subject to, and governed by, the terms of the Plan as in
effect on December 31, 2004 (the “Effective Date”).
 
1.2  Purpose of the Plan. The primary purpose of the Plan is to provide
supplemental retirement benefits for a select group of management and highly
compensated employees, within the meaning of Section 201 of ERISA, as a means to
attract and retain key talent now and in the future.
 
1.3  Duration of the Plan. The Plan shall commence upon approval by the Board
and shall remain in effect, subject to the right of the Board of Directors of
the Company to terminate the Plan at any time pursuant to Section 7.5.
 
Article 2.  Definitions
 
Whenever used in the Plan, the following terms shall have the meanings set forth
below. Unless the context clearly indicates to the contrary, when the defined
meaning is intended, the initial letter of the word is capitalized:
 

(a)  
“Affiliate” means any firm, partnership, or corporation that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with the Company. “Affiliate” also includes any other
organization similarly related to the Company that is designated as such by the
Board.

 

(b)  
“Annual Bonus” means an amount awarded under the Company’s annual bonus plan and
any special recognition bonus the Committee, in its sole discretion, declares to
be an Annual Bonus.

 

(c)  
“Beneficiary” means the person or persons selected by the Participant, on a form
provided by the Committee, to receive benefits provided under the Plan that are
payable after the Participant’s death, or in the absence of such selection, the
Participant’s estate.

 

(d)  
“Benefit Percentage” means the percentage, determined under Section 5.2, of
Salary and Annual Bonus added each month to a Participant’s Retirement Benefit
Account.

 

(e)  
“Board of Directors” or “Board” means the Board of Directors of the Company, and
shall also mean any committee of the Board of Directors which has been delegated
selected by the Committee), as of the close of the first business day of each
calendar quarter for which earnings are determined under Section 5.4.

 
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(f)  
“Cause” means the occurrence of any one or more of the following:
 

(i)  
The willful and continued failure by the Eligible Executive to substantially
perform his duties of employment (other than any such failure resulting from the
Eligible Executive’s Disability), after a written demand for substantial
performance is delivered to the Eligible Executive that specifically identifies
the manner in which the Committee believes that the Eligible Executive has not
substantially performed his duties, and the Eligible Executive has failed to
remedy the situation within a reasonable period of time; or

 

(ii)  
The Eligible Executive’s plea of nolo contendre to or conviction for committing
an act of fraud, embezzlement, theft, or other constituting a felony involving
moral turpitude (with all rights of appeal having been exhausted); or

 

(iii)  
The willful engaging by the Eligible Executive in gross misconduct materially
and demonstrably injurious to the Company, monetarily or otherwise. However, no
act or failure to act on the Eligible Executive’s part shall be considered
“willful” unless done, or omitted to be done, by the Eligible Executive not in
good faith and without reasonable belief that his action or omission was in the
best interest of the Company.

 

(g)  
“Change in Control” means the occurrence of an event described under Section
2.10 (“Change of Control”) of the Amended and Restated Charming Shoppes Variable
Deferred Compensation Plan for Executives.

 

(h)  
“Committee” means the Compensation Committee of the Board of Directors, or other
persons delegated pursuant to Section 7.1 to assist the Committee, that will
administer the Plan in accordance with Section 7.1.

 

(i)  
“Company” means Charming Shoppes, Inc., a corporation organized and existing
under the laws of the Commonwealth of Pennsylvania or its successor or
successors.

 

(j)  
“Disability” means a mental or physical condition which qualifies a Participant
for benefits under the Charming Shoppes Long-Term Disability Plan.

 

(k)  
“Effective Date” means the effective date of the Plan as amended and restated,
which is January 1, 2005.

 

(l)  
“Eligible Executive” means an individual member of a group of select management
or highly compensated employees of the Company or an Affiliate.

 

(m)  
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, or any successor act thereto.

 
 
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(n)  
“Grandfathered Accounts” means that portion of a Participant’s Retirement
Benefit Account that was earned and vested as of December 31, 2004, and shall
include earnings whenever credited to such amount under the terms of the Plan.
The Grandfathered Account shall be calculated in accordance with Section 409A of
the Code. The Company shall maintain a separate record of Grandfathered
Accounts. All Grandfathered Accounts shall be subject to, and governed by, the
terms of the Plan as in effect on December 31, 2004, as set forth on Exhibit A.

 

(o)  
Interest Rate” means the sum of (a) three percent (3%) and (b) the “10-Year
Treasury Note Yield”, published in the Wall Street Journal (or such other
business publication selected by the Committee), as of the close of the first
business day of each calendar quarter for which earnings are determined under
Section 5.4.

 

(p)  
“Participant” means an Eligible Executive designated and selected by the
Committee for participation in the Plan in accordance with the provisions of
Article 3.

 

(q)  
“Plan” means the Charming Shoppes Supplemental Executive Retirement Plan, the
plan set forth herein, as amended from time to time.

 

(r)  
“Plan Service” means the product of one-twelfth (1/12) times the number of
complete calendar months of Service a Participant has performed since February
1, 2003.

 

(s)  
“Plan Year” means the consecutive twelve (12) month period commencing on January
1 and ending on December 31.

 

(t)  
“Retirement Benefit” means the amount determined under Article 6 payable to a
Participant or Beneficiary following the Participant’s termination of
employment.

 

(u)  
“Retirement Benefit Account” means the bookkeeping account established for the
Participant as described under Article 5.

 

(v)  
“Retirement Credits” means the amounts determined under Section 5.2 that are
added to a Participant’s Retirement Benefit Account.

 

(w)  
“Salary” means all regular, basic wages before reduction for amounts deferred
pursuant to any plan of the Company, payable in cash to a Participant for
services to be rendered, exclusive of any Annual Bonus, other special fees,
awards or incentive compensation, imputed income, allowances, or amounts
designated by the Company as payment toward or reimbursement of expenses.

 

(x)  
“Service” means the period of time during which an employment relationship
exists between an employee and the Company or an Affiliate, including any period
during which the employee is on an approved leave of absence, whether paid or
unpaid.

 
 
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(y)  
“Vesting Percentage” means the percentage, determined under Article 4, of a
Participant’s Retirement Benefit Account that the Participant is entitled to
receive following termination of employment with the Company or an Affiliate.

 

(z)  
“Year of Service” or “Years of Service” means the “years of service” credited to
a Participant under the Charming Shoppes, Inc. Employees’ Retirement Savings
Plan.

 
Article 3.  Participation
 
3.1  Participation. The Committee, in its sole discretion, reserves the right to
select Eligible Executives to participate in the Plan.
 
3.2  Notification. 
 

(a)  
Eligible Executives who have been selected and approved for participation in the
Plan by the Committee shall be notified in writing of their selection at least
thirty (30) calendar days prior to the first Plan Year of participation, or as
soon as possible thereafter. The Participant shall not have any contractual
rights under the Plan until notified. A Participant’s participation in the Plan
shall constitute acknowledgment that all decisions, interpretations and
determinations by the Committee shall be final and binding on the Company,
Affiliates, Participants, Beneficiaries and any other persons having or claiming
an interest thereunder. An Eligible Employee who is hired or promoted during a
Plan Year and is selected and approved by the Committee for participation in the
Plan to commence during the Plan Year shall be notified in writing of his or her
selection as soon as practicable thereafter, but in no event later than thirty
(30) calendar days after such selection and approval.

 

(b)  
In the event that a Participant is deemed by the Committee to be ineligible to
continue participation in the Plan for any reason, such Participant shall be
notified in writing of such decision and such Participant shall become an
inactive Participant, retaining all the rights relating to the Retirement
Benefit previously accrued, which shall continue to vest as otherwise provided
herein and shall be distributed as otherwise provided under the Plan.

 
 
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Article 4.  Vesting
 
4.1  Vesting Percentage. A Participant’s Vesting Percentage shall be measured as
follows:
 
 
Actual Age + Years of Service
 
 
Vesting Percentage
 
   
Under 55
     0%
55 + 10 Years of Service
     50%
56 + 10 Years of Service
     60%
57 + 10 Years of Service
     70%
58 + 10 Years of Service
     80%
59 + 10 Years of Service
     90%
60 and Over + 5 Years of Service
    100%
   

 
4.2  Vesting Upon Special Events. Notwithstanding the Vesting Percentage shown
in the table above, a Participant’s Retirement Benefit Account will become fully
vested, and the Participant’s Vesting Percentage shall equal one hundred percent
(100%), upon death, Disability, a Change in Control, or termination of the Plan
if the Participant is then an employee of the Company or an Affiliate.
 
4.3  Termination for Cause. Notwithstanding anything to the contrary hereunder,
if a Participant is terminated for Cause, whether determined before or after the
Participant’s actual termination date, the Participant’s Vesting Percentage
shall be zero percent (0%), and the Participant shall not be entitled to any
Retirement Benefit under this Plan.
 
Article 5.  Retirement Benefit Account
 
5.1  Retirement Benefit Account. The Company shall establish and maintain an
individual bookkeeping account (the “Retirement Benefit Account”) in the name of
each Participant. Each month a Participant’s Retirement Benefit Account shall be
increased by Retirement Credits and earnings calculated for such month as
determined under Section 5.2 and Section 5.4, respectively, and shall be
decreased by any Retirement Benefit payment(s) occurring in such month as
required under Section 5.3.
 
5.2  Retirement Credits. At the end of each month during a Plan Year, if the
Participant is actively employed by the Company or an Affiliate, a Retirement
Credit will be calculated. The Retirement Credit for any given month is equal to
the Benefit Percentage determined as of the beginning of the Plan Year times the
sum of: (a) any Salary and (b) any Annual Bonus paid during such month
(including any Salary or Annual Bonus deferred under the Charming Shoppes
Variable Deferred Compensation Plan for Executives). The Benefit Percentage as
of the beginning of the Plan Year is equal to the percentage reflected in the
table below and modified, as appropriate, under Section 5.2(a) and Section
5.2(b).
 

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Sum of Age and Plan Service
At Beginning of Plan Year
 
 
Benefit Percentage At
Beginning of Plan Year
 
   
Under 60
            8%
60-69
            12%
Over 69
            15%
   

 
For purposes of calculating the Benefit Percentage as of the beginning of a Plan
Year, the Participant’s age and Plan Service are measured in years and complete
months. For example, a Participant who is fifty-seven (57) years and five (5)
months old as of the beginning of a particular Plan Year and whose Plan Service
is two (2) years and seven (7) months as of the beginning of that Plan Year
would have a score of sixty (60) for purposes of calculating the Benefit
Percentage for that Plan Year.
 

(a)  
For those Participants hired before February 1, 2003 who have attained age fifty
(50) before February 1, 2003, the Benefit Percentages determined above will be
increased by one percent (1%) for each full Year of Service performed prior to
February 1, 2003 (up to a maximum increase often percent (10%)).

 

(b)  
Furthermore, for those Participants hired before February 1, 2003, the Benefit
Percentage (as modified above, if applicable) will be increased by an additional
ten percent (10%) for all Plan Years beginning after the Plan Year during which
the Participant attains age 55.

 
Therefore, the maximum Benefit Percentage used to calculate a Retirement Credit
is thirty-five percent (35%).
 
5.3  Charges Against Account. At the end of each month, each Participant’s
Retirement Benefit Account shall be charged for all Retirement Benefit payments
made during such month to the Participant or to the Participant’s Beneficiary.
 
5.4  Earnings Calculation. At the end of each calendar month, the balance of the
Participant’s Retirement Benefit Account, determined after deducting any charges
against the account but before adding any Retirement Credits for the month (the
“end of month” balance), shall be increased with earnings. Such earnings shall
equal one-twelfth (1/12) of the product of the end of month balance times the
Interest Rate.
 
5.5  Statements. The Committee shall furnish each Participant with a statement
of the balance credited to the Participant’s Retirement Benefit Account on at
least an annual basis.
 
 
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Article 6.  Payment of the Retirement Benefit
 
6.1  Retirement Benefit. The Retirement Benefit is a lump-sum amount equal to
the product of: (a) the balance in the Participant’s Retirement Benefit Account
(immediately preceding the date of payment) times (b) the Participant’s Vesting
Percentage determined as of the date the Participant’s termination of Service
occurs. Any unvested portion of the Retirement Benefit Account shall be
forfeited as of the date of the Participant’s termination of Service.
 
6.2  Distribution of the Retirement Benefit.
 

(a)  
Except as otherwise required by Section 6.3(a) or Section 6.9, the vested
Retirement Benefit shall be distributable to the Participant (or the
Participant’s Beneficiary, if applicable) as soon as practicable (but no later
than 90 days) after the Participant terminates Service with the Company.

 

(b)  
In accordance with the election made by the Participant pursuant to Section 6.6,
6.7 or 6.8, as applicable, the Participant’s vested Retirement Benefit shall be
distributed in (i) a lump sum equal to the value of the Participant’s vested
Retirement Benefit as of the day preceding the date of payment, or (ii) annual
installments over a period not to exceed ten (10) years. Annual installment
payments shall be equal to (i) the value of such vested Retirement Benefit as of
the day preceding the date of payment, divided by (ii) the number of annual
installment payments elected by the Participant in the election. The remaining
annual installments shall be paid in each succeeding Plan Year on the
anniversary date of the date the Participant terminated Service, in an amount
equal to (i) the value of such vested Retirement Benefit as of the day preceding
the date of payment divided by (ii) the number of installments remaining.
Earnings shall continue to be added to the Participant’s Retirement Benefit
Account as required under Section 5.4 until the vested Retirement Benefit
Account is fully distributed.

 

(c)  
Except as otherwise provided in an election made pursuant to Section 6.6, 6.7 or
6.8, or as required pursuant to paragraph (a), above, or Section 6.9, all
Retirement Benefit distributions will occur or commence as soon as practicable
(but no later than 90 days) after the Participant terminates Service.

 
6.3  Form of Payment. 
 

(a)  
In the case of a Participant whose vested Retirement Benefit (including any
amounts in a Grandfathered Account and amounts credited to a Participant under
the Company’s Variable Deferred Compensation Plan or any other account balance
deferred compensation plan that is required to be aggregated with this Plan
within the meaning of Code Section 409A) is less than $50,000 at the time of the
Participant’s termination of Service, the Participant’s vested Retirement
Benefit (excluding any Grandfathered account) shall be distributed in the form
of a lump sum payment as soon as practicable, but not later than 90 days
following the Participant’s termination of Service, except as otherwise required
by Section 6.9.

 
 
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(b)  
In the case of a Participant whose vested Retirement Benefit (including any
amounts in a Grandfathered Account and amounts credited to a Participant under
the Company’s Variable Deferred Compensation Plan or any other account balance
deferred compensation plan that is required to be aggregated with this Plan
within the meaning of Code Section 409A) is at least $50,000 at termination of
Service, the Participant’s vested Retirement Benefit (excluding any
Grandfathered account shall be distributed in accordance with the Participant’s
election as to the time and manner of distribution made pursuant to Section 6.6,
6.7 or 6.8 and in accordance with the options set forth in Section 6.2(b),
except as otherwise required by Section 6.9. A Participant who fails to make a
distribution election will receive his vested Retirement Benefit in a lump sum.

 
6.4  Payment to Beneficiary. In the event of a Participant’s death prior to the
payment of all benefits due the Participant under Section 6.2, remaining
Retirement Benefit payments otherwise due the Participant shall be paid to the
Participant’s Beneficiary. Each Participant may designate a Beneficiary or
Beneficiaries (which Beneficiary may be an entity other than a natural person)
to receive any payments which may be made following the Participant’s death.
Such designation may be changed or canceled at any time without the consent of
any such Beneficiary. Any such designation, change, or cancellation must be made
in a form approved by the Committee and shall not be effective until received by
the Committee, or its designee. If no Beneficiary has been named, or the
designated Beneficiary or Beneficiaries shall have predeceased the Participant,
the Beneficiary shall be the Participant’s estate. If a Participant designates
more than one Beneficiary, the interests of such Beneficiaries shall be paid in
equal shares, unless the Participant has specifically designated otherwise.
 
6.5  Facility of Payment. If, in the Committee’s judgment, any person to whom
benefits are payable hereunder is under a legal disability or unable to care for
his affairs because of illness, accident, or other incapacity, any payment due
may be paid to his spouse, parent, brother, sister, or any other person as the
Committee may determine (unless prior claim therefore shall have been made by a
duly qualified guardian, committee, or other legal representative). Any such
payment shall be payment for the account of such person and shall, to the extent
thereof, be a complete discharge of any liability under the Plan to such person.
 
6.6  Retirement Benefit Distribution Election. Within 30 days of the date
notified of selection pursuant to Section 3.2, a Participant may elect, on a
form and according to such terms as the Committee may determine, to have his
Retirement Benefit distributed in a lump sum or in annual installments over a
period not to exceed ten years as described in Section 6.2 and the date, which
shall not be earlier than the Participant’s termination of Service, for
distribution (or commencement thereof).
 
6.7  Special 2006 Elections. Notwithstanding anything in this Article 6 to the
contrary, to the extent permitted under section 409A of the Code and the
regulations issued thereunder, a Participant may make an election on or before
December 31, 2006 as to the time and manner of payment of amounts credited to
his Retirement Benefit Account on such terms as shall be determined by the
Committee, provided that a Participant shall not be permitted in calendar year
2006 to (a) change payment elections in a manner that will defer distribution of
amounts that the Participant otherwise would have received in 2006 or (b) cause
payments to be made in 2006 pursuant to the special 2006 election.
 

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6.8  Special Second Election Rules. To the extent permitted under section 409A
of the Code and the regulations issued thereunder, a Participant may change the
timing and/or method previously selected for distribution of his Retirement
Benefit Account at any time by submitting a new distribution election form to
the Committee. However, a change in time or manner of any distribution shall be
effective only if: (a) the Committee receives the new distribution election form
at least 12 full months before distributions under the Plan related to that
change commence, (b) the new distribution election is not effective for a period
of 12-months from the date made, (c) the first payment with respect to which the
new election is made is deferred for a period of five years from the date such
payment otherwise would have been made, and (d) the new election does not result
in an impermissible acceleration of payment as described in section 409A of the
Code and the regulations thereunder.
 
6.9  Special Rule for Key Employees.
 

(a)  
Notwithstanding any provision of the Plan to the contrary, if a Participant who
is a Key Employee (as defined below) becomes entitled to receive a distribution
on account of separation from Service, the distribution may not be made earlier
than six months following the date of the Participant’s separation from Service,
if required by section 409A of the Code and the regulations thereunder. If
distributions are delayed pursuant to section 409A of the Code, the accumulated
amounts withheld on account of section 409A shall be paid on the first business
day after the end of the six-month period. If the Participant dies during such
six-month period, the amounts withheld on account of section 409A shall be paid
to the Participant’s Beneficiary on or around 90 days after the date of the
Participant’s death.

 

(b)  
The term “Key Employee” means (i) an officer of the Company or its Affiliates
having annual compensation greater than $130,000 (adjusted for inflation as
described in section 416(i) of the Code), (ii) a five percent owner of the
Company and its Affiliates, or (iii) a one percent owner of the Company and its
Affiliates who has annual compensation from the Company and its Affiliates
greater than $150,000, as determined by the Committee in accordance with section
409A of the Code. The number of officers who are considered Key Employees shall
be limited to 50 employees as described in section 416(i) of the Code. The
Committee shall determine the Key Employees each year in accordance with section
416(i) of the Code, the “specified employee” requirements of section 409A of the
Code, and applicable regulations. Key employees shall be identified as of
December 31 of each year with respect to the 12-month period beginning on the
next following April 1.

 

(c)  
The terms of this Plan as amended and restated effective January 1, 2005,
including this Section 6.9, shall not apply to Grandfathered Accounts, which
shall continue to be subject to, and governed by, the terms of the Plan as in
effect on December 31, 2004.

 
 
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Article 7.  Administration
 
7.1  Committee. The Committee shall administer the Plan and it shall have the
full power, discretion, and authority to interpret and administer the Plan in a
manner that is consistent with the Plan’s provisions. The Committee shall have
the authority to delegate administrative duties to officers, employees, or
directors of the Company. Each Participant by participating in the Plan, agrees
to accept the terms of the Plan and the authority and discretion of the
Committee as set forth in the Plan.
 
7.2  Powers and Duties of the Committee. The Committee shall carry out the
duties assigned to it under the Plan and shall administer the Plan in accordance
with its terms. The Committee shall have all powers as may be necessary to carry
out its duties under the Plan, including, but not by way of limitation, the
following: (a) to construe and interpret the provisions of the Plan; (b) to
decide any disputes which may arise under the Plan; (c) to decide all questions
that shall arise under the Plan, including questions as to the eligibility to
become Participants, and the amount, manner, and time of payment of any benefits
under the Plan; (d) to employ or appoint legal counsel, accountants, actuaries,
consultants, or any person to assist in the administration of the Plan and any
other agents it deems advisable. The Committee shall also have the power to
allocate and delegate responsibilities. The Committee shall have the power and
authority to direct the investment of a trust fund created pursuant to Section
8.3, and in connection with such power, may delegate in writing authority to
manage assets of the trust fund to one or more investment managers. The
Committee may adopt from time to time written investment policies and guidelines
which shall govern the manner in which the assets of such trust fund are to be
invested, which policies and guidelines shall be followed by the investment
managers.
 
7.3  Amendment and Termination. The Plan may be amended, suspended, discontinued
or terminated at any time by the Board; provided, however, that no such
amendment, suspension, discontinuance, or termination shall reduce or in any
manner adversely affect the rights of any Participant or Beneficiary with
respect to benefits that are payable or would become payable under the terms of
the Plan assuming there had not been such amendment, suspension, discontinuance
or termination, and assuming a Retirement Credit of zero for all months
following such amendment, suspension, discontinuance or termination.
 
7.4  Merger or Consolidation of Plan. In the event of any merger or
consolidation of the Plan with another retirement or pension plan, provision
shall be made so that each Participant in the Plan as of the date of such merger
or consolidation will receive a benefit after the merger or consolidation which
is actuarially equivalent to or greater than the benefit he would have been
entitled to receive immediately prior to the merger or consolidation if the Plan
had then terminated.
 
7.5  Payment Upon Plan Termination. In the event of termination of the Plan
pursuant to Section 7.3, the vested amount credited to the Retirement Benefit
Account of each Participant, determined in accordance with Section 4.2, shall be
paid to the Participant in accordance with Article 6 of the Plan or in a lump
sum payment, consistent with section 409A of the Code. Notwithstanding anything
in the Plan to the contrary, if a Change in Control that constitutes a “change
in control” event within the meaning of Code section 409A occurs, the Plan shall
terminate as of the date of the Change in Control and the Retirement Benefit of
each Participant shall be distributed in a lump sum payment as soon as
practicable thereafter, but no later than 90 days after such termination
consistent with section 409A.
 

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7.6  Indemnification. The Company shall indemnify each member of the Committee,
and the directors, officers, and employees of the Company involved in the
operation and administration of the Plan against any and all claims, losses,
damages, expenses, and liabilities arising from any action or failure to act,
except when the same is determined by the Board of Directors to be due to gross
negligence or willful misconduct of such member.
 
7.7  Claims Procedure. A Participant or Beneficiary shall have the right to file
a claim, inquire if he has any right to benefits and the amounts thereof; or
appeal the denial of a claim.
 

(a)  
Initial Claim. A claim will be considered as having been filed when a written
communication is made by the Participant, Beneficiary, or his or her authorized
representative to the attention of the Committee (the “claimant”). The Committee
shall notify the claimant in writing within ninety (90) days after receipt of
the claim if the claim is wholly or partially denied. If an extension of time
beyond the initial ninety (90) day period for processing the claim is required,
written notice of the extension shall be provided to the claimant prior to the
expiration of the initial ninety (90) day period. In no event shall the period,
as extended, exceed one hundred eighty (180) days. The extension notice shall
indicate the special circumstances requiring an extension of time and the date
by which the Committee expects to render a final decision.

 

(b)  
Content of Denial. Notice of a wholly or partially denied claim for benefits
will be in writing, in a manner calculated to be understood by the claimant, and
shall include:

 

(i)  
The specific reason or reasons for denial;

 

(ii)  
Specific reference to the Plan provisions on which the denial is based;

 

(iii)  
A description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary, and

 

(iv)  
An explanation of the Plan’s claim appeal procedure, including a statement of
the claimant’s right to bring a civil action under Section 502(a) of ERISA
following an adverse benefit determination on appeal.

 

(c)  
Right to Appeal. If a claim is wholly or partially denied, the claimant may file
a written appeal requesting the Committee to conduct a full and fair review of
his or her claim. For purposes of this review, the Committee may appoint an
individual or committee (other than the individual or committee that heard the
initial claim) to act on its behalf. An appeal must be made in writing no more
than sixty (60) days after the claimant receives written notice of the denial.
The claimant may submit written comments, documents, records, and other
information relating to the claim for benefits, and may access and copy (free of
charge) all documents, records, and other information relevant to the claimant’s
claim. The Committee shall take into account all comments, documents, records,
and other information submitted by the claimant in reviewing the claim, without
regard to whether such information was submitted in the initial determination.

 

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(d)  
Notice of Appeal Determination. The decision of the Committee regarding the
appeal shall be given to the claimant in writing no later than sixty (60) days
following receipt of the appeal. However, if the Committee, in its sole
discretion, grants a hearing, or there are special circumstances involved, the
decision will be given no later than one hundred twenty (120) days after
receiving the appeal. If such an extension of time for review is required,
written notice of the extension shall be furnished to the claimant prior to the
commencement of the extension. In the case of an adverse benefit determination,
the Committee’s decision shall include:

 

(i)  
The specific reason or reasons for denial;

 

(ii)  
Specific reference to the Plan provisions on which the denial is based;

 

(iii)  
A statement that the claimant is entitled to access and copy (free of charge)
all documents, records, and other information relevant to the claimant’s claim
for benefits; and

 

(iv)  
A statement of the claimant’s right to bring a civil action under Section 502(a)
of ERISA following an adverse benefit determination.

 

(e)  
Exhaustion of Administrative Remedy. Notwithstanding any provision in the Plan
to the contrary, no employee or Participant may bring any legal or
administrative claim or cause of action against the Plan, the Committee, or the
Company in court or any other venue until the employee or Participant has
exhausted its administrative remedies under this Section 7.7.

 

(f)  
Suspension of Payment. If the Committee is in doubt concerning the entitlement
of any person to any payment claimed under the Plan, the Company may suspend
payment until satisfied as to the person’s entitlement to the payment.
Notwithstanding the foregoing, no Participant or Beneficiary may bring a claim
for Plan benefits to arbitration, court, or through any other legal action or
process until the administrative claims process of this Section 7.7 has been
exhausted.

 
Article 8.  Miscellaneous
 
8.1  Unfunded Plan. This Plan is intended to be an unfunded plan maintained
primarily to provide supplemental pension benefits for “a select group of
management or highly compensated employees” within the meaning of Sections 201,
301, and 401 of ERISA, and therefore is further intended to be exempt from the
provisions of Parts 2, 3, and 4 of Title I of ERISA. Accordingly, the Committee
may terminate the Plan, subject to Article 7 herein, for any or all
Participants, in order to achieve and maintain this intended result.
 

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8.2  Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors, and assigns shall have no secured legal or equitable rights,
interest, or claims in any property or assets of the Company or its Affiliates,
nor shall they be Beneficiaries of; or have any rights, claims, or interests in
any life insurance policies, annuity contracts, or the proceeds therefrom owned
or which may be acquired by the Company or its Affiliates. Except as provided
under Section 8.3, such policies, annuity contracts, or other assets of the
Company or its Affiliates shall not be held under any trust for the benefit of
Participants, their beneficiaries, heirs, successors, or assigns, or held in any
way as collateral security for the fulfilling of the obligations of the Company
under this Plan. Any and all of the Company’s assets and policies, and those of
its Affiliates, shall be, and remain, the general, unpledged, unrestricted
assets of the Company or of its Affiliates as the case may be. The Company’s
obligation under this Plan shall be that of an unfunded and unsecured promise to
pay money in the future.
 
8.3  Authorization for Trust. The Company may, but shall not be required to,
establish one (1) or more trusts, with such trustee as the Committee may
approve, for the purpose of providing for the payment of benefits under the
Plan. Such trust or trusts may be irrevocable, but the assets thereof shall be
subject to the claims of the Company’s creditors. To the extent any amounts
payable under the Plan are actually paid from any such trust, the Company shall
have no further obligation with respect thereto, but to the extent not so paid,
such amounts shall remain the obligation of, and shall be paid by, the Company.
 
8.4  Costs of the Plan. All costs of implementing and administering the Plan,
and all costs incurred in providing the benefits described herein, shall be
borne by the Company.
 
8.5  Tax Withholding. The Company shall have the right to require Participants
to remit to the Company an amount sufficient to satisfy federal, state, and
local tax withholding requirements, or to deduct from all payments made pursuant
to the Plan amounts sufficient to satisfy such withholding requirements.
 
8.6  Nontransferability. Except as provided under a court-approved divorce
agreement, the interest of an individual or an entity to a benefit under the
Plan shall not be anticipated, alienated, sold, transferred, assigned, pledged,
encumbered, or subjected to any charge or legal process. No interest or right to
receive a benefit may be taken, either voluntarily or involuntarily, for the
satisfaction of the debts of, or other obligations or claims against, such
individual or entity, including claims for alimony, support, separate
maintenance, and claims in bankruptcy proceedings.
 
8.7  Successors. All obligations of the Company under the Plan shall be binding
upon any successor to the Company, whether the existence of such successor is
the result of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business and/or assets of the
Company.
 
 
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8.8  Severability. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.
 
8.9  Applicable Law. To the extent not preempted by federal law, the Plan shall
be governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania without giving effect to principles of conflicts of laws.
 
8.10  No Enlargement of Rights. The Plan is strictly a voluntary undertaking on
the part of the Company and shall not be deemed to constitute an employment
contract between the Company and any Participant, or to be consideration for, or
an inducement to, or condition of, the employment of any Participant. Nothing
contained in the Plan shall be deemed to give any Participant employment rights
with the Company or to interfere with the right of the Company to discharge any
Participant at any time regardless of the effect such discharge shall have upon
him as a Participant of the Plan. No Participant shall have any right to a
Retirement Benefit, except to the extent provided in the Plan.
 
8.11  Gender and Number. The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, and the singular may include the
plural, unless the context clearly indicates to the contrary. The words
“hereof,” “herein,” “hereunder,” and other similar compounds of the word “here”
shall mean and refer to the entire Plan, not to any particular provision or
Section. Section headings are included for convenience of reference and are not
intended to add to, or subtract from, the terms of the Plan.
 
8.12  Notice of Address. Each person entitled to benefits under the Plan must
file with the Committee, in writing, his post office address and each change of
post office address. Any communication, statement, or notice addressed to such a
person at his latest post office address as filed with the Committee will be
binding upon such person for all purposes of the Plan, and neither the trustee
nor the Company shall be obliged to search for or ascertain the whereabouts of
any such person. In addition, any notice or filing required or permitted to be
given to the Committee under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the Company’s human
resources department, or to such other entity as the Committee may designate
from time to time. Such notice shall be deemed given as to the date of delivery,
or, if delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
 
8.13  Headings and Captions. Headings and captions are inserted in this Plan for
convenience of reference only and are to be ignored in the construction of the
provisions of the Plan.
 
8.14  Section 409A of the Code. The Plan is intended to comply with the
applicable requirements of section 409A of the Code and its corresponding
regulations and related guidance, and shall be maintained and administrated in
accordance with section 409A of the Code to the extent section 409A of the Code
applies to the Plan. Notwithstanding anything in the Plan to the contrary,
distributions from the Plan may only be made in a manner, and upon an event,
permitted by section 409A of the Code.
 

 

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Exhibit A
 
[Supplemental Executive Retirement Plan
 
Effective February 1, 2003]