Document:

EX-10.1

 Exhibit 10.1 

March 14, 2014 
 Nancy Saltzman 

7 Adrian Circle 
 Scarsdale, NY 10583 

Re: Employment Offer Letter 
 Dear Nancy: 

We are pleased to offer you employment with EXLservice.com, Inc. in the positions of General Counsel and Executive Vice President of
EXLservice.com, Inc. In addition, you have been offered the positions of General Counsel, Secretary and Executive Vice President of ExlService Holdings, Inc. (the “Company”), the parent company of EXLservice.com, Inc., and this
employment offer letter is between you and the Company. As General Counsel, Secretary and Executive Vice President of the Company, you will be reporting directly to the Company’s Vice Chairman & CEO, and you will be generally
responsible for the legal affairs of the Company. 
 The minimum annual salary for this position on and after the date of this employment
offer letter is $325,000 (the “Base Salary”), payable as per the Company’s payroll policies. Currently, the payroll periods end on the 15th and 30th of each month. This offer of employment is not to be considered a contract
guaranteeing employment for any specific duration. As an at-will employee, both you and, subject to the severance terms in this letter, the Company, have the right to terminate your employment at any time, 

Incentive Compensation: You will be eligible to earn an annual performance bonus for each calendar year of your employment with
the Company. The target annual bonus will be 50% of your Base Salary for the year (the “Target Bonus”). This Target Bonus will be earned based upon the terms of the Company’s bonus policy as approved by the Board of Directors
of the Compensation Committee thereof. In accordance with the current Company’s bonus policy, you must be employed and must not be serving any notice period on the date bonuses are paid for you to be eligible for receipt. 

Restricted Stock Units: Employees of the Company and its subsidiaries and affiliates are generally eligible to participate in
the Company’s 2006 Omnibus Award Plan (as amended from time to time) (the “Plan”). You will be recommended for a grant of restricted stock units (“RSUs”) with respect to 20,000 shares of Company common stock (the
“Initial Equity Grant”) at the next regularly scheduled meeting of the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”). The Initial Equity Grant will be subject to the approval of
the Compensation Committee in its sole discretion. The terms and conditions of the Initial Equity Grant will be determined and approved by the Compensation Committee and shall be evidenced by the Company’s standard form restricted stock unit
award agreement (with a schedule that provides for vesting of 10%, 20%, 30% and the remaining 40% of the RSUs on the first, second, third and fourth anniversaries of your date of hire, subject to your continued employment through each such vesting
date), and other terms set forth in the award agreement and the Plan. 

  
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 Annual performance reviews by the Chief Executive Officer of the Company will be conducted to
assess professional development opportunities as well as to consider increases to your compensation (including, without limitation, increasing Base Salary and the percentage Target Bonus as well as granting of additional equity compensation). 

Benefits: As an employee of the Company, you will be eligible to participate in health, dental, vision, life insurance and
disability plans generally available to senior management of the Company residing in the United States. 
 You will also be eligible to
participate in the Company’s 401(k) plan, in accordance with its terms. 
 You will also be covered by the Company’s director and
officer insurance and be indemnified on the same basis as other officers in the Company. The foregoing right of indemnification shall not be exclusive of any right to Indemnification to which you may be entitled under the Company’s Articles of
Incorporation or By-Laws, as a matter of law or otherwise, or any other power that the Company may have to indemnify you or hold you harmless. 

Vacation and Sick Leave: You will be entitled to four weeks accrued vacation per calendar year to be taken in accordance with
the policies in your employee’s handbook. Refer to your employee’s handbook for sick leave allowances. 
 Business
Expenses: The Company will pay for or reimburse authorized and proper business related expenses that you may incur in discharging your duties, including expenses in connection with maintaining your license to practice law. 

Confidentiality and Non-Compete Agreement: Prior to commencement of employment, as a condition of your employment, you will be
required to execute additional documentation relating to confidentiality, non-disclosure, non-competition and other restrictive covenants. The form of this agreement is attached to this letter as [Attachment A.] 

Outside Employment: Your position with the Company is a full time responsibility requiring your full loyalty and dedication. So
that you can do your best, we require that you do not work for another employer while you are employed with the Company. Furthermore, the Company prohibits its employees from working for or investing money in any competitor of the Company or
conducting their own business in competition with the Company whether during the Company’s working hours or after the Company’s work hours. 

Termination: The Company shall give you 30 days advance notice of any termination of your employment without Cause. You shall
give the Company 30 days advance notice of any voluntary resignation of your employment. If the Company terminates your employment other than for “Cause” (which is defined below), subject to the execution (an non-revocation during
any applicable revocation period) of a standard release of all employment-related claims against the Company and its subsidiaries and each of their employees, officers and directors (a 

  
 2 

 
“Release”), you shall be entitled to (i) a one-time lump sum severance payment, payable within three business days of termination of employment, equal to three
(3) months of your Base Salary then in effect, and (ii) a continuing payment (per the Company’s payroll policies) of your then current Base Salary for a nine-month period commencing on the third month anniversary of termination of
employment; provided, however, that during such nine-month severance period you actively seek comparable employment and upon subsequent employment the Company’s obligation to you shall be reduced by any base salary you earn
(whether paid currently or deferred) during such severance period from your subsequent employer. In addition, the Company shall maintain your health and dental insurance coverage until the last day of such foregoing severance period or, if earlier
and in respect of each of health and dental coverage considered separately, until such time as you and your eligible dependents are covered under a future employer’s health or dental insurance coverage. At the Company’s option such
continued health and dental coverage shall be through its payment of your COBRA premiums for the applicable period and, if the Company elects that method of satisfying this obligation, you agree to timely make any elections required in order to
secure COBRA coverage. “Cause” shall mean (A) a final non-appealable conviction of, or a pleading of no contest to, (i) a crime of moral turpitude which causes serious economic injury or serious injury to the
Company’s reputation or (ii) a felony; or (B) fraud, embezzlement, gross negligence, self-dealing, dishonesty or other gross and willful misconduct which has caused serious and demonstrable injury to the Company; (C) material
violation by you of any material Company policy and, except for violations that by their nature are not curable, your failure to cure such breach within 30 days after receiving written notice thereof; (D) willful and continuing failure to
substantially perform your duties (other than for reason of physical or mental incapacity) which failure to perform continues beyond fifteen (15) days after a written demand for substantial improvement in your performance, identifying
specifically and in detail the manner in which improvement is sought, is delivered to you by the Company; provided that a failure to achieve performance objectives shall not by itself constitute Cause and no act or failure to act by you shall be
considered “willful” unless done or failed to be done by you in bad faith and without a reasonable belief that your actions or omission was in the best interest of the Company; (E) your failure to reasonably cooperate in an
investigation involving the Company by any governmental authority; (F) your material, knowing and intentional failure to comply with applicable laws with respect to the execution of the Company’s business operations, including, without
limitation, a knowing and intentional failure to comply with the Prevention of Corruption Act of India, 1988, or the United States Foreign Corrupt Practices Act of 1977, as amended; provided, that, if all of the following conditions exist, there
will be a presumption that you have acted in accordance with such applicable laws: you are following, in good faith, the written advice of counsel, such counsel having been approved by the Board of Directors of the Company as outside counsel to the
Company for regulatory and compliance matters, in the form of a legal memorandum or a written legal opinion, and you have, in good faith, provided to such counsel all accurate and truthful facts necessary for such counsel to render such legal
memorandum or written legal opinion; (G) your failure to follow the lawful directives of the Board which is not remedied within fifteen (15) days after your receipt of written notice from the Company specifying such failure; or
(H) your use of alcohol or drugs which materially interferes with the performance of your duties. 
 In the event that (i) your
employment with the Company is terminated without Cause (other than on account of your disability) (a) within one (1) year following a Change in Control or (b) in specific contemplation of a Change in Control or (ii) you resign
with “Good Reason” 

  
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(as defined below) within one (1) year following a Change of Control, you shall, upon and subject to your execution (an non-revocation during any applicable revocation period) of a Release,
be entitled, in addition to the severance specified above, to immediate vesting as of the termination date of any portion of the RSUs which is unvested as of the termination date. “Change in Control” has the meaning given to such
term in the Plan. Unless otherwise specified in the applicable grant agreement, the term “Good Reason” shall mean the occurrence, without the Participant’s prior written consent, of any of the following events: (A) a
substantial reduction of the Participant’s duties or responsibilities, or the Participant being required to report to any person other than the Board or the Company’s Chief Executive Officer or President; provided that, if there is a
Change in Control and the Participant retains a similar title and similar duties with the Company or any entity that acquires the Company (or any affiliate or subsidiary of such entity) following such Change in Control, any change in the
Participant’s title shall not a constitute a significant reduction of the Participant’s duties and authorities hereunder; (B) the Participant’s job title is adversely changed, provided that if there is a Change in Control and the
Participant retains a similar title and similar duties with the Company or any entity that acquires the Company (or any affiliate or subsidiary of such entity) following such Change in Control, any change in the Participant’s title shall not
constitute a significant reduction of the Participant’s duties and authorities hereunder; (C) following a Change in Control, a change in the office or location where the Participant is based of more than thirty (30) miles, which new
location is more than thirty (30) miles from the Participant’s primary residence; or (D) following a Change in Control, a breach by the Company of any material term of the Participant’s employment letter or any successor thereto;
provided that, a termination by the Participant with Good Reason shall be effective only if, within thirty (30) days following the Participant’s first becoming aware of the circumstances giving rise to Good Reason, the Participant delivers
a “notice of termination” for Good Reason to the Company, and the Company within fifteen (15) days following its receipt of such notification has failed to cure the circumstances giving rise to Good Reason. The release of claims
referred to in the foregoing must be delivered and have become irrevocable in accordance with its terms not later than 60 days following your termination date. Any severance payments that were not paid pending the delivery of such irrevocable
release shall be paid within 5 days following the date on which the release becomes irrevocable. 
 Nondisparagement: During
your employment with the Company and for a period of one (1) year thereafter you shall make no unfavorable, disparaging or negative comment, remark or statement, whether written or oral (a “Disparaging Statement”), about the
Company or any of its affiliates, officers, directors, shareholders, consultants, or employees; provided that you may give truthful testimony before a court, governmental agency, arbitration panel, or similar person or body with apparent
jurisdiction and may discuss such matters in confidence with your attorney(s) and other professional advisors. During the foregoing period, the Company and its officers and directors (acting in their capacity as officers and directors of the
Company) shall make no Disparaging Statement about you; provided that any officer or director may give truthful testimony before a court, governmental agency, arbitration panel, or similar person or body with apparent jurisdiction and may discuss
such matters in confidence with their or the Company’s attorney(s) and other professional advisors. 
 This letter agreement supersedes
any prior oral or written understanding about the terms of your employment with the Company and any change to such terms must be in writing and signed by you and the Company. 

  
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 All issues and questions concerning the construction, validity, enforcement and interpretation of
this letter agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to the conflict of laws principles of such State. Any dispute regarding this letter agreement shall be resolved by
binding confidential arbitration, to be held in New York, New York in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon the award rendered by arbitrator(s) may be entered in any court having
jurisdiction thereof. 
 This letter agreement may be executed and delivered via facsimile in two or more counterparts, each of which is
deemed to be an original, but all of which taken together shall constitute one and the same agreement. 
 To indicate your acceptance of the
terms of this agreement, please sign and date this Employment Letter in the space provided below, and return it to any of the undersigned on behalf of the Company. 

 

	
	Regards,
	
	 /s/ Rohit Kapoor

	Rohit Kapoor
	Vice Chairman and Chief Executive Officer

  

	
	Accepted:
	
	 /s/ Nancy Saltzman

	
	Date: March 14, 2014

  
 5CAT_EX_10.1_3.31.2015

Exhibit 10.1
Solar Turbines Incorporated Pension Plan 
For
European Foreign Service Employees 
(Amended and Restated Effective January 1, 2015) 

 
 

TABLE OF CONTENTS
	
		
	PREAMBLE
	 

	ARTICLE I
	DEFINITIONS

	ARTICLE II
	ELIGIBILITY AND SERVICE

	ARTICLE III
	RETIREMENT DATES  

	ARTICLE IV
	BENEFITS

	ARTICLE V
	DISABILITY PENSION

	ARTICLE VI
	PRERETIREMENT SPOUSES AND ELIGIBLE CHILDREN   

	ARTICLE VII
	MAXIMUM BENEFITS

	ARTICLE VIII
	MODES OF BENEFIT PAYMENT

	ARTICLE IX
	DEATH BENEFITS

	ARTICLE X
	VESTING

	ARTICLE XI 
	CONTRIBUTIONS

	ARTICLE XII
	ADMINISTRATION OF THE PLAN

	ARTICLE XIII
	AMENDMENT OR TERMINATION

	ARTICLE XIV
	GENERAL PROVISIONS

 
 

PREAMBLE
The Solar Turbines Incorporated Pension Plan for European Foreign Service Employees (the “Plan”) was established as of January 1, 1987.  The Plan has been and is intended to be an unfunded plan maintained primarily to provide retirement benefits for a select group of management employees or highly compensated employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended, and Department of Labor Regulations 29 C.F.R. §2520.104-23, and shall be so construed.  
Effective June 1, 2011, participation in the Plan was frozen. Any individual who was not a Participant in the Plan on or before May 31, 2011 is not eligible to become a participant in the Plan after such date.
Effective January 1, 2020, benefit accruals under the Plan shall cease for all Participants. No one shall accrue any benefits under the Plan for any period of employment on or after January 1, 2020. For avoidance of doubt, a Participant shall continue to receive service credit for any period of employment on or after such date for purposes of determining the Participant's vesting and eligibility to commence benefits under the Plan.
The Plan is hereby amended and restated effective as of January 1, 2015.
 
ARTICLE I 
DEFINITIONS
1.1    “Accrued Benefit” or “Accrued Retirement Benefit” means, as of any date, the Retirement Benefit computed in accordance with Article IV, based on the Participant’s Pensionable Earnings on such date, and assuming termination occurred on the Normal Retirement Date, multiplied by a fraction. The numerator of the fraction shall be the Participant’s actual years of Credited Service and the denominator shall be the years of Credited Service he would have completed if he had continued in employment until his Normal Retirement Date.
1.2    “Actuarial Equivalent” means the value of the Retirement Benefit otherwise payable to a Participant determined in accordance with the actuarial equivalent factors selected by the Company and in effect at the time the computation is made.

 

1.3    “Annuity Commencement Date” means the first day of the month in which a Participant’s Retirement Benefit is due to commence pursuant to the provisions of the Plan.
1.4    “Associate Employer” means Caterpillar Inc. and its subsidiaries and divisions, excluding Solar Turbines Incorporated and its subsidiaries and divisions.
1.5    “Beneficiary” means the person designated in writing by a Participant to receive any death benefit payments hereunder.
1.6    “Code” means the U.S. Internal Revenue Code of 1986, as amended.
1.7    “Company” means Solar Turbines Incorporated and all of its subsidiaries and divisions.
1.8    “Compensation” means the amount of base salary paid to a Participant in a month during which he is an EFSE and a Participant under the provisions of this Plan; subject to the following:
For Participants who are eligible for the Company’s Target Total Cash Compensation under plans in effect on and after January 1, 1985, Compensation will include a Participant’s job rate, performance incentive, merit alternative if applicable, bookings, margin and/or revenue incentives. However, the cumulative total of bookings, margin and/or revenue incentives earned for the includable period cannot exceed the cumulative total of the related bookings, margin or revenue incentive target amount for the same period.
Payments for bonus, premiums, living allowance, differentials or any other additional compensation will not be included.
1.9    “Credited Service” means all full years and full months of continuous service, not to exceed 35 years, with the Company while an EFSE and a Participant under the provisions of this Plan. Time spent on an approved paid leave of absence shall be considered as continuous service for purposes of this Plan, provided the leave is ended by return to work, retirement, death or Disability.

 

Time spent on approved unpaid leave of absence in excess of 30 days for other than total Disability, shall be deducted from continuous service. A Participant who fails to return to work from an approved leave of absence shall be considered as having terminated his employment on the last day that he was at work.
Once an employee is designated as an EFSE, all prior credited service under a Company-sponsored pension plan shall be considered Credited Service for the purpose of accruing benefits under this Plan. However, for employees who are designated as EFSEs on or after July 1, 1999, Credited Service shall only include continuous service while an EFSE.
Notwithstanding the foregoing, Participants shall not receive Credited Service for benefit accrual purposes for any periods of employment on or after January 1, 2020. For avoidance of doubt, a Participant shall continue to receive Credited Service for any period of service on or after January 1, 2020 for purposes of determining the Participant's vesting and eligibility to commence benefits under the Plan.
1.10    “Disability” means total and permanent disability of a Participant due to bodily or mental injury, sickness or disease, which prevents him from engaging in any employment or occupation for remuneration or profit for more than six months. Such total disability chart be determined on the basis of a medical examination by a qualified physician selected by the Company.
The definition of Disability shall not include illness or injury resulting from:
(A)    chronic alcoholism; or
(B)    addiction to narcotics; or
(C)    injury suffered while engaged in a felonious or criminal act or enterprise; or
(D)    service in the armed forces; or
(E)    participation in war or act of war.

 

1.11    “EFSE” means an employee designated as a European Foreign Service Employee by the Company.
1.12    “Normal Retirement Date” means the first day of the month coinciding with or next following a Participant’s 65th birthday.
1.13    “Participant” means an employee designated pursuant to Article II and who continues to be entitled to any benefits under the Plan.
1.14    “Pensionable Earnings” means the average Compensation which has been paid to a Participant on account of continuous service during those 36 consecutive months of EFSE employment, included within the last 60 full months of his EFSE employment prior to Normal Retirement (or actual period of employment, if less) for which he received his highest Compensation during such periods.
If a Participant who has ten (10) years or more of continuous service and who is over fifty-five (55) years of age is transferred prior to retirement to a part-time status without interruption of continuity of service, his Pensionable Earnings shall be determined by the Company as if such employee had retired when placed on a part-time status.
Notwithstanding the foregoing, Pensionable Earnings shall not include Compensation earned or paid on or after January 1, 2020.
1.15    “Plan” means the Solar Turbines Incorporated Pension Plan for European Foreign Service Employees as herein set forth and as it may thereafter be amended from time to time.
1.16    “Plan Year” means the 12-month period beginning January 1.
1.17    “Retirement Benefit” means the benefits provided to Participants and their Beneficiaries in accordance with the applicable provisions of Articles IV, V and VI. The Retirement Benefit will be computed in U.S. Dollars and is normally paid in U.S. Dollars.

 

1.18    “Same-Sex Domestic Partner” means the sole, same-sex person who is in a civil union, domestic partnership, or legal relationship similar thereto, with the Participant as recognized under the laws of the federal government or a state government of the United States of America, including its territories and possessions and the District of Columbia (or, with respect to any other country, legally recognized by the equivalent government(s) thereof). The Plan shall continue to treat such relationship as a same-sex domestic partnership, regardless of whether the Participant and his Same-Sex Domestic Partner remain in the jurisdiction where the relationship was legally entered into. In the event more than one person meets this definition for a given Participant, then the “Same-Sex Domestic Partner” shall be the person who first met the criteria in this definition. Notwithstanding anything herein to the contrary, if a Participant has a Spouse recognized for purposes of federal law, no person will qualify as the Participant's Same-Sex Domestic Partner unless such Participant's marriage to such Spouse is first lawfully dissolved. Except with respect to determining the length of time the Same-Sex Domestic Partner has satisfied the definition of Same-Sex Domestic Partner under the Plan, a Participant shall be considered to have a Same-Sex Domestic Partner only with respect to periods beginning on or after January 1, 2013, regardless of when such same-sex partnership was created.
1.19    “Social Security Benefit” means all benefits (including the actuarial equivalent of lump sum benefits expressed as a lifetime pension) available to the Participant as of his Normal Retirement Date under the provisions of governmental, provincial or state Social Security Act(s). If a Participant terminates his employment before Normal Retirement, his Social Security Benefit will be estimated by assuming: a) that he will receive no further earnings if he then satisfies the requirements for Early Retirement or Disability Retirement under Article III; or b) that his earnings will continue at the same rate as in effect on the date of termination of employment if he does not then satisfy the requirements for Early Retirement or Disability Retirement under Article III.

 

The Company may adopt rules governing the computation of such amounts, and the fact that the Participant does not actually receive such amounts because of failure to apply, or continuance of work, or for any other reason, shall be disregarded.
1.20    “Spouse”  means the person who is a Participant’s spouse for federal tax purposes pursuant to applicable Internal Revenue Service guidance; provided, however, that effective on and after June 26, 2013, the term Spouse shall include a lawful same-sex spouse recognized by a state or other jurisdiction in which the ceremony establishing the marital relationship was performed - even if the Participant and Spouse now reside in a state or other jurisdiction that does not recognize same-sex marriage.  To the extent provided in any domestic relations order applicable to benefits payable under this Plan, a Participant’s former spouse may be treated as the surviving Spouse for purposes of this Plan.
1.21     “Vested Percentage” means a Participant’s right to an Accrued Benefit pursuant to Article X.
  
ARTICLE II
ELIGIBILITY AND SERVICE
2.1    Eligibility. Each EFSE who commenced employment with the Company on or before January 1, 1987, became a Participant on January 1, 1987. Other employees became Participants coincident with or on the first day of the month next following their designation as an EFSE by the Company.
2.2    Participation Frozen. Effective June 1, 2011, participation in the Plan was frozen. Any individual who was not a Participant in the Plan on or before May 31, 2011 is not eligible to become a Participant in the Plan after such date. Any Participant whose employment terminates on or after June 1, 2011, shall not be eligible to resume participation in the Plan if subsequently reemployed by the Company or an Associate Employer. Similarly, any Participant who ceases to be an EFSE on or after June 1, 2011, shall not be eligible to resume participation in the Plan if on or after June 1, 2011, such individual is re-designated as an EFSE by the Company.

 

      
ARTICLE III 
RETIREMENT DATES
3.1    Normal Retirement Date. A Participant’s Normal Retirement Date shall be the first day of the month coinciding with or next following his 65th birthday. A Participant whose employment is terminated on his Normal Retirement Date shall be considered to have retired and shall receive a Normal Retirement Benefit in accordance with Article IV.
3.2    Early Retirement Date. Each Participant whose employment is terminated prior to his Normal Retirement Date, but after he has attained age 55 and completed at least 10 years of Credited Service, may elect to retire with the approval of the Company.  Such Participant’s Early Retirement Date shall be the first day of the month next following the month in which such termination of employment occurs. Early Retirement Benefits will be determined in accordance with Article IV.
3.3    Late Retirement Date. Each Participant may continue his service with the Company after the Normal Retirement Date with the approval of the Company. No payment of any benefit shall be made to such Participant until his actual retirement. The Participant will not earn any Credited Service after the Normal Retirement Date, and will be paid in accordance with Article IV.
3.4    Disability Retirement Date. A Participant whose employment is terminated prior to his Normal Retirement Date by reason of a Disability shall be eligible for Disability Retirement and shall receive a benefit in accordance with Article V.
 

 

ARTICLE IV
BENEFITS
4.1    Normal Retirement. A Participant retiring on his Normal Retirement Date shall be entitled, commencing on such date, to receive a monthly Retirement Benefit for life computed in accordance with the provisions of Section 4.5.
4.2    Early Retirement. A Participant retiring on his Early Retirement Date, as defined in Section 3.2, shall be entitled to receive a deferred Retirement Benefit, commencing on his Normal Retirement Date, equal to 100% of his Accrued Benefit.  A reduced Retirement Benefit can be elected prior to the Normal Retirement Date, equal to 100% of the Accrued Benefit, but reduced by 1/240th for each month that the date of commencement precedes the Participant’s Normal Retirement Date.
4.3    Late Retirement. A Participant retiring on his Late Retirement Date, as defined in Section 3.3, shall be entitled, commencing on such date, to receive a monthly Retirement Benefit for life. Such Late Retirement Benefit will be determined as the Actuarial Equivalent of the Normal Retirement Benefit computed as of the Participant’s Normal Retirement Date.
4.4    Vested Benefits. A Participant who has terminated employment with a Vested Percentage shall be entitled to receive a deferred monthly benefit commencing on his Normal Retirement Date equal to his Accrued Benefit.  Alternatively, a reduced monthly benefit can be elected to commence after attainment of age 55, computed in accordance with Section 4.2.
4.5    Form of Normal Retirement Benefit. Subject to Article VIII, the primary form of Retirement Benefit payable to a Participant shall be a monthly annuity payable to the Participant for life, equal to (A) minus the aggregate of (B), (C), and (D).  In no event, however, shall the monthly annuity amount calculated pursuant to this Section 4.5 exceed the amount set forth in (E).
(A)    .0175 times Credited Service times Pensionable Earnings.

 

(B)    100% of the monthly benefits for old age pension to which the Participant is entitled as a result of service with the Company and which the Participant can collect (or has collected or could collect by proper application) under any compulsory program, i.e. Social Security Benefits, a compulsory benefit payable as a result of union or collective bargaining agreements, and governmental decrees or directives having the force of law. For purposes of this Article IV, such offsets shall exclude benefits payable to the Spouse (or other family members) which are attributable to the Participant’s service with the Company, and for which the Company did not make additional contributions.
Normal Retirement Benefits shall be determined assuming the Participant is eligible to receive Social Security Benefits. If the Participant is not eligible for Social Security Benefits, or receives Social Security Benefits in a lesser amount than determined under the Plan, it is the Participant’s responsibility to provide proof either of ineligibility or the amount of the actual Social Security Benefit received. Proof must be submitted within 60 days following the date of retirement.
(C)    100% of the value of the retirement benefits which the Participant is entitled to under any formal or informal private benefit plan established by the Company or Associate Employer in any country for the same period of service.  Such retirement benefits shall include both defined benefit formula benefits and defined contribution, non-elective contribution formula benefits, with the value of such benefits calculated as the Actuarial Equivalent of the Participant’s entire benefit, payable as a monthly, single life annuity calculated as of the date the offset is applied.  Notwithstanding the foregoing, to the extent a Participant was required to contribute to a defined benefit plan, only 50% of such benefits will be considered. Notwithstanding the preceding sentence, to the extent the Participant is entitled to a benefit from the Caterpillar Inc. Retirement Income Plan (“RIP”) for a period of service during which the Participant also accrued a benefit under the Plan, the benefit determined under RIP shall be excluded from the offset described in this paragraph (C); provided, however, that any monthly benefits paid under the applicable supplement of RIP that reflects the provisions and benefits of the Solar Turbines Incorporated Retirement Plan on and after the merger of the 

 

Solar Turbines Incorporated Retirement Plan with and into the RIP effective as of 11:59 PM CST on December 31, 2014 shall be included in the offset described in this paragraph (C).  For the avoidance of doubt, any employer matching contributions shall not be considered or included when calculating the offset under this Section.
(D)    The actuarial equivalent of any lump sum termination indemnity as a lifetime monthly income multiplied by a fraction, the numerator of which is years of participation in this Plan and the denominator of which is the total years of service used to determine the indemnity benefit. For purposes of this Section 4.5(D), only lump sum termination indemnities which represent payment of the Participant’s accrued pension liability shall be included.
(E)    Notwithstanding any provision of this Section to the contrary, the benefit payable hereunder shall be subject to the limitations on retirement income set forth in final Treasury Regulations issued under Section 415 of the Code and any other regulations, rulings or other administrative guidance issued pursuant thereto by the Internal Revenue Service, to the same extent as if such regulations, rulings and guidance applied to this Plan.
(F)    Effective January 1, 2020, benefit accruals under the Plan shall cease for all Participants. No Participant shall accrue any benefits under the Plan for any period of employment on or after January 1, 2020.
 ARTICLE V
DISABILITY PENSION
5.1    Disability Pension. In the event a Participant becomes disabled in accordance with Section 1.10 when he is an EFSE and a Participant under the provisions of this Plan, he shall be entitled to a pension calculated in accordance with Section 4.5 except that:
(A)    Pensionable Earnings shall mean that annual compensation being paid to the Participant on the date Disability commenced, and

 

(B)    Credited Service shall be deemed to include the years and months between the date Disability commenced and the Participant’s Normal Retirement Date.
 ARTICLE VI 
PRERETIREMENT SPOUSES AND ELIGIBLE CHILDREN PENSION
6.1    Preretirement Spouses’ and Eligible Children Pension. 
(A)    If a Participant dies prior to his commencement of benefits hereunder and while such Participant is no longer an employee of the Company or Associate Employer, there shall be paid to his Spouse, a pension equal to 50% of the pension calculated in accordance with Section 4.4 except that the benefit shall be reduced by the applicable amount of the Spouse's Social Security benefit, and not the amount of the Participant's Social Security Benefit.  If the Spouse’s Social Security benefit is not provided or cannot be determined, one-half of the amount of the Participant’s Social Security Benefit shall be used.
(B)    If a Participant dies prior to his commencement of benefits hereunder and while such Participant is an employee of the Company or Associate Employer, there shall be paid to his Spouse, a pension equal to 50% of the pension calculated pursuant to Section 6.2.
(C)    If a Participant dies prior to his commencement of benefits hereunder and while such Participant is an employee of the Company or Associate Employer, there shall be paid to each eligible child (as defined below), a pension equal to 10% of the amount determined in Section 6.2, such amount shall be doubled to 20% if the Spouse of the Participant has predeceased the Participant. For purposes of this Article VI, an “eligible child” is a child of the Participant who is the natural, adopted, step-child or a child for whom the Participant has legal responsibility, who has not yet attained age 19, or age 25 if a full-time student.
(D)    Any pension being paid to the Spouse pursuant to this Section 6.1 shall be paid for the Spouse's lifetime, except that such pension shall cease in the event of remarriage of such Spouse. Any 

 

pension being paid to the eligible child of a Participant pursuant to this Section 6.1 shall cease when such child is no longer an eligible child.
(E)    Notwithstanding the foregoing or anything in this Article VI to the contrary, the total of all amounts paid pursuant to this Section 6.1 shall not exceed 100% of the benefit calculated in accordance with Section 6.2.
6.2    Benefit Calculation. For purposes of Section 6.1 above (excluding Section 6.1(A)), the pension amount shall be calculated in accordance with Section 4.5, except that:
(i)    Pensionable Earnings shall mean the annual compensation being paid to the Participant on the date of death, and
(ii)    Credited Service shall be deemed to include the years and months between the date of death and the Participant's Normal Retirement Date (had the Participant lived until his or her Normal Retirement Date).
For purposes of determining the Spouse's and eligible child's benefits described in Article VI, the benefit determined pursuant to this Section 6.2 shall be reduced by the applicable amount of the Spouse's or eligible child's Social Security benefit, and not the amount of the Participant's Social Security Benefit.  If the Spouse’s Social Security benefit is not provided or cannot be determined, one-half of the amount of the Participant’s Social Security Benefit shall be used.
6.3     Other Death Benefit. If a Participant dies prior to his Normal Retirement Date and while such Participant is an employee of the Company or Associate Employer and while such Participant is not married and has no eligible children (as defined in Section 6.1 above), there shall be paid a lump sum amount equal to two times the Participant's annual compensation to such Beneficiary or Beneficiaries, as the Participant may designate. Such lump sum death benefit shall be paid as soon as administratively practicable following 

 

the death of the Participant, but in no event more than 60 days following the date of the Participant's death.  If the Participant is no longer actively accruing a benefit under the Plan on the date of the Participant’s death, annual compensation shall be determined based on the Participant’s annual compensation in effect on the last date the Participant actively accrued a benefit under the Plan.
ARTICLE VII
MAXIMUM BENEFITS
7.1    Maximum Benefits. The maximum pension from all Company sources may never exceed 80% of the Pensionable Earnings. The factors to be considered in this limit are:
(i)    The Retirement Benefit as calculated in Article IV, V or VI.
(ii)    Other company sponsored plans.
(iii)    Social Security Benefits (as defined in Section 1.19).
(iv)    Social benefits provided by the Company.
(v)    The monthly equivalent, on an actuarial basis, of any termination indemnity.
7.2    Reemployment. If a retired Participant returns to the employ of the Company, his monthly Retirement Benefit shall cease for as long as he continues to be employed.
Upon subsequent retirement, the Participant shall be eligible to recommence a monthly Retirement Benefit attributable to his Accrued Benefit. However, the amount payable will be recomputed taking into account such Compensation and Credited Service as allowed under Article IV, but only to the extent the Participant was an EFSE during the period of reemployment. Credited Service shall not include service during the period of retirement prior to reemployment.
Such recomputed Retirement Benefit shall be reduced by the Actuarial Equivalent of the value, at the Participant’s subsequent retirement date, of the Accrued Benefit payments previously received. In no event 

 

shall the recomputed Retirement Benefit, after such Actuarial Equivalent reduction, be less than the Retirement Benefit to which the Participant was entitled prior to his date of reemployment.
Any Participant whose employment terminates on or after June 1, 2011, shall not be eligible to resume participation in the Plan if subsequently reemployed by the Company or an Associate Employer.
7.3    No Participant shall be entitled to receive benefits under this Plan unless he meets the requirements of the Company regarding required participation in the various government pension plans in the Participant’s home country and/or country of assignment.  The contributions to such plans are paid directly or indirectly by the Company.
 ARTICLE VIII  
MODES OF BENEFIT PAYMENT
8.1    Retirement Benefit. Subject to the other provisions of this Article, a Participant may elect to have the Retirement Benefits paid under any of the optional forms of payment described in Section 8.2.
8.2    Optional Modes of Payment. A Participant may elect to receive Retirement Benefits under any one of the following options:
(A)    Joint and Survivor Annuity:
A reduced rate of Retirement Benefit during his lifetime, with income at 50%, 75% or 100%, whichever the Participant elects, of that reduced rate continuing to his Beneficiary. The joint and survivor annuity will be the Actuarial Equivalent of the Retirement Benefit provided under Article IV or V.
(B)    Years Certain and Life Annuity:
A Retirement Benefit which is the Actuarial Equivalent of the Retirement Benefit provided under Section 4.5, payable for his lifetime, but guaranteed for a period of ten (10) or twenty (20) years, whichever the Participant elects.

 

If the Participant dies before expiration of the guaranteed period, the remaining certain payments shall continue to his Beneficiary, or in the absence of a surviving Beneficiary, the commuted value of such payments shall be paid to the Participant’s estate.
If the Beneficiary dies while further payments are due, and after having received at least one (1) payment, such further payments shall be made to any person designated by the Participant as an alternate Beneficiary. In the absence of an alternate surviving Beneficiary, the commuted value of such payments shall be paid to the estate of the last surviving Beneficiary.
(C)    Lump Sum:
A Participant shall have the option to elect to have the Actuarial Equivalent of his Accrued Benefit paid to him in a lump sum.
Such lump sum payment shall satisfy the liability of the Company in full, such that if the Participant were to be subsequently reemployed by the Company, he would be treated, for purposes of determining his Credited Service, as a new employee.
8.3    Election of Other Options. The following rules and requirements must be met in order for any of the options described in Section 8.2 to be effective:
(A)    The election must be made on an appropriate form prior to commencement of benefits, and it is generally recommended that such form be submitted at least ninety (90) days prior to the elected commencement date to ensure sufficient time to process the election.
(B)    The effective date of the election shall be the Participant’s commencement date.
(C)    The name of the Beneficiary and address and relationship to the Participant must be stated on the form unless a lump sum is elected. The percentage of the Retirement Benefit to the Participant to be continued to the Joint Annuitant after the Participant’s death, as well as the Beneficiary’s sex and date 

 

of birth, must also be stated on the election form. Proof of date of birth, acceptable to the Company, must be submitted prior to commencement of benefits.
(D)    The consent of the Beneficiary shall not be required for the election of an option.
(E)    The election of an option may be cancelled or modified, subject to the same conditions that apply to the election of an option. However, the conditions for the cancellation or modification of an option may be waived by the Company if, in its opinion, the waiver of such conditions would have no adverse actuarial effect. A Participant may not change the joint annuitant under Section 8.2, paragraph (A), other than by modification of the option in accordance with the foregoing rules. The election of an option may not be cancelled or modified subsequent to the annuity commencement date.
8.4    Converted Pension. A Participant or Beneficiary may elect to have his or her Retirement Benefit converted into a currency other than U.S. Dollars. A converted pension election under this Section can be exercised only at the time a benefit is due from the Plan and must be approved by the Company. Once a converted pension payment is selected and approved, it is irrevocable.
      
ARTICLE IX 
DEATH BENEFITS
9.1    Pre-Retirement - A death benefit will be payable. This benefit will be in accordance with Article VI.
9.2    Post-Retirement - The benefit payable will be determined by the Retirement Benefit option selected by the Participant at date of retirement.
      
ARTICLE X 
VESTING
10.1    If a Participant’s employment terminates for any reason other than death or Disability, he shall have a non-forfeitable right to the Accrued Retirement Benefit according to the following schedule:

 

	
		
	Years of Credited Service
	Vested %

	less than 5
	0

	5 or more
	100

10.2    A Participant whose employment is terminated for any reason, other than death or Disability, prior to the completion of 5 years of Credited Service shall cease to be a Participant; his Accrued Retirement Benefit will be cancelled, and he shall not be entitled to any benefits under the Plan.
10.3    If the Company decides that a Participant is no longer eligible, the Participant’s Accrued Benefit shall be frozen until he qualifies for a pension under any provision in Article III.
10.4    Should a Participant resign or be discharged before satisfaction of the requirements for a pension under Article III, no person shall have any vested claim to benefits under this Plan except as provided in Section 10.1. Should any Participant die after becoming eligible for a Retirement Benefit under the Plan, no person shall have any claim to benefits under this Plan except as provided by the Participant through the selection of an optional annuity as prescribed by the Company.
10.5    Any Participant who leaves the employ of the Company and is subsequently reemployed shall be considered, for purposes of this Plan, as a new employee from the date of his reemployment, unless otherwise determined by the Company.
10.6    For the calculation of Credited Service, all service as an EFSE or previously known as International Employees or European Employees shall be counted.
 ARTICLE XI  
CONTRIBUTIONS
11.1    Employer Contributions. For periods before January 1, 2005, this Section is intended to clarify the Plan as in effect since it was established.  Subject to Section 14.1, the Company will contribute to an insurance 

 

contract such amounts as it considers appropriate based on actuarial calculations to provide the benefits under this Plan. The Company is under no obligation to make any contributions under the Plan after the Plan is terminated, whether or not benefits accrued or vested prior to such date or termination have been fully funded.
 ARTICLE XII  
ADMINISTRATION OF THE PLAN
12.1    This Plan is administered by the Company.
The Company shall have the power and authority to interpret the provisions of this Plan and to devise and make effective from time to time such procedures, including but not limited to claims and appeals review procedures, as may, in its judgment, be advisable and necessary to carry out said provisions. Whenever, in the Company’s opinion, a person entitled to receive any payment of a benefit or installment thereof hereunder is under a legal disability or is incapacitated in any way so as to be unable to manage his or her financial affairs, the Company may direct payments to such person or to his legal representative for his benefit, or to apply the payment for the benefit of such person in such manner as the Company considers advisable. Determination by the Company as to the interpretation and application of this Plan shall be conclusive on all parties and its action shall not be subject to any review other than the internal Company claims and appeals review procedures, if applicable, which may be adopted from time to time.
The Company reserves the right to carefully review the situation of each employee and if necessary, to modify the provisions of this Plan to adapt the underlying philosophy and objectives to a particular employee or employment situation. 
Nothing contemplated herein shall be inconsistent with any applicable provisions of Section 409A of the Code.

 

 ARTICLE XIII 
AMENDMENT OR TERMINATION
13.1    Subject to the provisions of this Article XIII, the Company and the Company's parent, Caterpillar Inc., each may amend the Plan at any time as designated by a written instrument duly adopted on behalf of the Company or Caterpillar Inc., as applicable. However, no amendment or modification shall make it possible to deprive any Participant of a previous vested Accrued Retirement Benefit.
No amendment which becomes effective subsequent to the most recent retirement or other termination of employment of a Participant, shall in any way affect the amount or conditions of payment of any benefit to which such Participant is, or may become, entitled hereunder, except to the extent expressly so provided in such amendment.
13.2    While the Company and the Company's parent, Caterpillar Inc., intend to continue the Plan indefinitely, nevertheless they assume no contractual obligation as to its continuance and the Company or Caterpillar Inc. each may terminate the Plan.  However, if for any unforeseen reason the Plan is terminated, the Participant retains the right to the vested Accrued Retirement Benefit determined as of the date of termination.
 ARTICLE XIV 
GENERAL PROVISIONS
14.1    For periods before January 1, 2005, this Section is intended to clarify the Plan as in effect since it was established.  To the extent that the Company acquires or holds designated assets in connection with its obligation hereunder (including the insurance contract described in Section 11.1), the Plan at all times shall nonetheless be entirely unfunded, and the right of a Participant or his Beneficiary to receive benefits under the Plan shall be an unsecured claim against such assets.  All amounts accrued by Participants hereunder, or designated assets acquired or held by the Company in connection with its obligation hereunder, shall constitute general assets of the Company and may be disposed of by the Company at such time and for such purposes as it may deem appropriate.  The Company will make contributions to an insurance contract pursuant to 

 

Section 11.1, but any assets thereof shall be available to pay the claims of the Company’s general creditors in the event of the Company’s insolvency.
14.2    This Plan shall not be deemed to constitute a contract between the Company and any employee or other person whether or not in the employ of the Company, nor shall anything herein contained be deemed to give any employee or other person, whether or not in the employ of the Company, any right to be retained in the employ of the Company, or to interfere with the right of the Company to discharge any employee at any time and to treat him without regard to the effect which such treatment might have upon him as Participant of the Plan.
14.3    Except as may otherwise be provided by law, no distribution or payment under the Plan to any Participant or Beneficiary shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, whether voluntary or involuntary, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void; nor shall any such distribution or payment be in any way liable for or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to such distribution or payment, voluntarily or involuntarily.
The Company, in its discretion, may hold, or cause to be held or applied, such distribution or payment or any part thereof to or for the benefit of such Participant or Beneficiary, in such manner as the Company shall direct.
14.4    If the Company determines that any person entitled to payments under the Plan is an infant, or incompetent by reason of physical or mental disability, it may cause all payments thereafter becoming due to such person to be made to any other person for the benefit of the person entitled to payment, without responsibility to follow applications of amounts so paid.
14.5    Subject to Section 14.1, the insurance contract and other designated assets acquired and held by the Company in connection with its obligation hereunder shall be the sole source of benefits under this Plan, and 

 

each employee, Participant, Beneficiary, or any other person who shall claim the right to any payment or benefit under this Plan shall be entitled to look only to the insurance contract and such assets for payment of benefits. The Company shall have no further liability to make or continue from its own funds the payment of any benefit under the Plan.
14.6    If it is determined that the benefits under the Plan should not have been paid or should have been paid in a lesser amount, written notice thereof shall be given to the recipient of such benefits (or his legal representative) and he shall repay the amount of overpayment to the Company.  If he fails to repay such amount of overpayment promptly, the Company shall arrange to recover for the Plan the amount of the overpayment by making an appropriate deduction or deductions from any future benefit payment or payments payable to that person (or his survivor or Beneficiary) under the Plan or from any other benefit plan of the Company.
14.7    Notwithstanding any provision of the Plan to the contrary, and to the extent permitted by law, the amounts payable pursuant to the Plan may be assigned or alienated pursuant to a “Domestic Relations Order” (as such term is defined in Section 414(p)(1)(B) of the Code), subject to such uniform rules and procedures as may be adopted by the Plan administrator from time to time.
14.8    Special Rules for Participants With Same-Sex Domestic Partners.
(A)    Generally. Except as specified under this Section 14.8 or as prohibited by applicable law, to the extent the Plan provides for any benefit, right, feature, restriction, or obligation relating to, or upon, a Participant's Spouse, Beneficiary, survivor, or surviving Spouse (or any individual having a similar relationship to the Participant), the Plan administrator shall also apply such benefit, right, feature, restriction, or obligation to a Participant's Same-Sex Domestic Partner in a uniform and non-discriminatory manner that is similar to how a Spouse would be treated under the Plan.

 

(B)    Domestic Relations Orders. Only a Spouse or another “alternate payee” (as defined under Section 414(p) of the Code) may enforce a domestic relations order against the Plan or a Participant's interests hereunder pursuant to Section 14.7.

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