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Exhibit 10.23
July 16, 1999
Xxxxxxx X. Xxxxxxx
President and Chief Operating Officer
Commercial Intertech Corp.
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Re: Change of Control Nonqualified Deferred Compensation Benefit
Dear Xxxxx:
In your employment agreement, the Company agreed to provide you with a
supplemental executive retirement plan (SERP). The primary purpose of the SERP
is to make up the amount of your retirement benefit lost from the Pension Plan
for Salaried Employees of Commercial Intertech Corp. (Pension Plan) due to
federal laws that limit the amount of compensation taken into account under, and
the amount of benefit payments provided by, qualified retirement plans. Certain
Commercial Intertech SERPs also consider bonus in the formula that is excluded
under the Pension Plan formula. Normal retirement benefits to you under the SERP
will vest after the completion of five years of service with the Company,
identical to the vesting provisions of the Pension Plan. Furthermore, the
Company agreed to provide you some coverage in the event of a change of control
prior to vesting in five years. This letter will clarify the latter concept.
The Company will adopt a plan to provide the above benefit, named the
Commercial Intertech Corp. Nonqualified Deferred Compensation Plan for Xxxxxxx
X. Xxxxxxx, incorporating the non-change of control concepts set forth above.
Furthermore, the Plan will include change of control benefit concepts as
follows:
- change of control benefit vests immediately upon change of
control, as such phrase is defined in your Change of Control
Agreement;
- at your election, the change of control benefit may be received as
a lump sum under actuarial principles (mortality tables and
interest rates) as provided in other Company SERPs;
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- service, for purposes of the calculation of the change of control
benefit, will be the greater of (1) four years of service or (2)
your actual years of service with the Company; and
- compensation, for purposes of the calculation of the change of
control benefit, will be the greater of (1) $500,000 per year or
(2) your actual compensation as defined in the plan, base salary
plus base target award plan bonus.
A nonqualified deferred compensation plan document will be prepared and
submitted to the Management Evaluation and Compensation Committee. If you have
any questions concerning this please do not hesitate to call. Otherwise,
acknowledge your understanding of these provisions by signing below.
Very truly yours,
Xxxxx X. Xxxxxxxx
Senior Vice President - Administration
Agreed:
____________________________
Xxxxxxx X. Xxxxxxx
BCW:ljl
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COMMERCIAL INTERTECH CORP.
NONQUALIFIED DEFERRED COMPENSATION PLAN
FOR XXXXXXX X. XXXXXXX
(Effective as of May 1, 1999)
ARTICLE I
ESTABLISHMENT AND CONSTRUCTION
1.1 ESTABLISHMENT. Commercial Intertech Corp. (the "Company") establishes,
effective as of May 1, 1999, this unfunded deferred compensation plan
on behalf of Xxxxxxx X. Xxxxxxx to be provided to supplement the
Pension Plan for Salaried Employees of Commercial Intertech Corp.
("Pension Plan"). This document shall be known as the "Commercial
Intertech Corp. Nonqualified Deferred Compensation Plan for Xxxxxxx X.
Xxxxxxx" (the "Plan").
1.2 PURPOSE. The Company maintains the Pension Plan which is intended to
meet the requirements of a "qualified" retirement plan under Section
401(a) of the Internal Revenue Code. The Pension Plan contains certain
restrictions required by the Code that sometimes result in a diminution
of benefits available to certain highly compensated employees. This
Plan is established to replace some of the benefits lost due to this
diminution and preclusion or upon a Change of Control. Also, this Plan
is intended to be an unfunded deferred compensation plan for a member
of a select group of management or highly compensated employees, as
described in Sections 201(2), 301(a)(3), and 401(a)(1) of the Employee
Retirement Income Security Act of 1974 ("ERISA").
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ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS. The following terms shall have the meaning stated below
unless the context clearly indicates otherwise.
(a) "COMMITTEE" means the Compensation Committee described in
section 4.1 of this Plan, which has been delegated the
authority to administer this Plan.
(b) "MONTHLY PAY" means one-twelfth (1/12) of a Participant's
Compensation, as defined in the Pension Plan, received from
the Company and any Subsidiary, and shall include annual
bonuses paid under the target award programs ("SMTIP" and
"SEIP") but shall not include the premium under the stock
payout option of the target award programs, determined without
regard to the limitations of Section 401(a)(17) of the Code.
(c) "PARTICIPANT" means Xxxxxxx X. Xxxxxxx.
(d) "YEARS OF CREDITED SERVICE"
(i) with respect to separation from service with the
Company or any Subsidiary prior to age sixty five
(65) after completion of five (5) years of Service,
his Credited Service under the Pension Plan;
(ii) with respect to separation from service with the
Company or any Subsidiary at or after attainment of
age sixty-five (65), twenty-five (25) years;
(iii) with respect to death after completion of five (5)
years of Service and prior to age sixty-five (65),
his Years of Credited Service determined as if he had
separated from service at age sixty-five (65) reduced
by the number of years and fractional years (1/12th
for each complete calendar month) by which his actual
date of death precedes the date as of which he would
have attained age sixty-five (65).
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Unless the context clearly indicates otherwise, terms not defined in
this document shall have the meaning specified in the Pension Plan (if
defined therein). Where the defined meaning is intended, the term is
capitalized.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the context,
words in the masculine gender shall include the feminine and neuter
genders; the plural shall include the singular and the singular shall
include the plural.
2.3 EMPLOYMENT RIGHTS. Establishment of the Plan shall not be construed to
give the Participant the right to be retained by the Company or any
Subsidiary or to any benefits not specifically provided by the Plan.
2.4 SEVERABILITY. In the event any provision of the Plan shall be held
invalid or illegal for any reason, any illegality or invalidity shall
not affect the remaining parts of the Plan, but the Plan shall be
construed and enforced as if the illegal or invalid provision had never
been inserted, and the Company shall have the privilege and opportunity
to correct and remedy such questions of illegality or invalidity by
amendment as provided in the Plan.
2.5 APPLICABLE LAW. This Plan is fully exempt from Titles II, III and IV of
ERISA. The Plan shall be governed and construed in accordance with
Title I of ERISA and the laws of the State of Ohio.
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ARTICLE III
BENEFITS
3.1 AMOUNT OF RETIREMENT BENEFITS. If the Participant separates from
service with the Company after attainment of five (5) years of Service,
as defined in the Pension Plan, benefits will be payable to the
Participant and will commence, at the election of the Participant as
provided in Section 3.2, and shall equal the excess, if any, of (a)
minus (b) where:
(a) is the benefit calculated under the Pension Plan as if the
provisions of the Pension Plan were administered using this
Plan's definition of compensation (Monthly Pay) and Years of
Credited Service and without regard to the benefit and
compensation limitations found in Code Sections 415 and
401(a)(17); and
(b) is (i) the actual limited Pension Plan benefit which is
payable to such Participant, plus (ii) in the event the
Participant is credited with twenty five (25) years of
Credited Service under this Plan, the benefit(s), attributable
to employer contributions, payable to the Participant pursuant
to qualified retirement plans of previous employers, expressed
as a single life annuity(ies).
3.2 FORM AND COMMENCEMENT OF BENEFITS. Provided the Participant is vested
in the benefits in this Plan, benefits payable under this Plan shall be
paid in the same manner and form and at the same time as benefits
payable under the Pension Plan. Except as provided in Section 3.4, the
Participant will not voluntarily separate from service with the Company
until after due consultation with the Company and the Committee.
3.3 DEATH BENEFITS. No death benefit shall be paid under this Plan except
as provided in this Section.
(a) SPOUSE'S BENEFIT. If the Participant dies after completion of
five (5) years of Service but before benefit payments begin
under the Plan, the Spouse, at the date of the Participant's
death, shall be paid a monthly benefit under the Plan in the
form of a life annuity calculated as under section 3.1
adjusted by applying the provisions of the Pre-Retirement
Survivor Annuity under the Pension Plan.
(b) If the Participant dies before benefit payments begin under
the Plan and has no Spouse, no death benefit shall be payable
under this Plan.
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(c) If the Participant dies after benefit payments begin under
this Plan, a death benefit shall be payable under the Plan to
the Spouse of the Participant only if a death benefit is
payable to such Spouse under the form of payment selected by
the Participant.
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3.4 CHANGE OF CONTROL.
(a) "Change of Control" shall have the meaning as defined in the
agreement providing severance compensation to the Participant
upon a change in control of the management of the Company then
existing between the Company and the Participant (the
"Severance Compensation Agreement"). In the event of a Change
of Control, the Participant shall be fully vested in the
benefit under section 3.4 of this Plan and the Participant
shall be paid a benefit equal to the benefit calculated in
Subsection 3.1(a) above, adjusted as follows:
(i) Monthly Pay, for purposes of this Section 3.4,
shall mean the Participant's Monthly Pay determined
without regard to the limitations of Section
401(a)(17) of the Code but in no case shall be less
than $41,667 per month; and
(ii) Years of Credited Service, for purposes of this
Section 3.4 , shall mean the greater of (1) four (4)
years or (2) the Years of Credited Service as defined
in Section 2.1(d) above.
(b) Unless the Participant elects to defer the commencement of benefits
to a later date, benefits under this Section 3.4 shall be payable to
the Participant, beginning on the first day of the month coincident
with or next following his separation from service with the Company or
a Subsidiary.
(c) Benefits payable under this Section 3.4 shall be paid in the same
manner as benefits payable under the Pension Plan. However, in the sole
discretion of the Participant, any benefit due to the Participant under
the Plan may be paid in any of the forms of benefit payments available
to the Participant under the Pension Plan or in the form of annual
installments for a specified period of years. Each alternate form of
payment shall be the Actuarial Equivalent of a single life annuity.
Additionally, a Participant may elect to have a benefit due under this
Section 3.4 paid in a single lump sum payment, provided notice thereof
is received by the Compensation Committee prior to separation from
service. The lump sum shall be the present value of the annuity
calculated under this Plan using the basis defined below that produces
the largest lump sum amount:
(1) the UP-1984 mortality table and the PBGC interest
rate used for purposes of determining present value
of a lump sum
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distribution on plan termination as in effect on the
date of the Participant's election, or
(2) the UP-1984 mortality table and the PBGC interest
rate used for purposes of determining present value
of a lump sum distribution on plan termination as in
effect on the date six (6) months prior to the date
of the Participant's election, or
(3) the 1983 GAM mortality table and the applicable
interest rate promulgated by the Internal Revenue
Service under Code Section 417(e)(3) for the month in
which the Participant's election occurs, or
(4) the 1983 GAM mortality table and the applicable
interest rate promulgated by the Internal Revenue
Service under Code Section 417(e)(3) for the month
which is six (6) months prior to the Participant's
election.
The Participant may elect any combination of form of benefits not exceeding two
(2).
3.5 EARLY DISTRIBUTION. Notwithstanding any other provision contained in
this Plan, the Company shall make distributions to the Participant
before such distributions otherwise are payable under this Plan if it
determines upon the advice of counsel, based on a change in the Code, a
published ruling or similar announcement issued by the Internal Revenue
Service ("IRS"), a regulation issued by the Secretary of the Treasury
or his delegate, a decision of a court of competent jurisdiction
involving the Participant or a closing agreement involving the
Participant that is approved by the IRS, that the Participant has
recognized or will recognize income for federal income tax consequences
with respect to amounts that are or will be distributable to him.
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ARTICLE IV
GENERAL PROVISIONS
4.1 ADMINISTRATION. This Plan shall be administered by the Compensation
Committee of the Board of Directors. The Compensation Committee shall
have, to the extent appropriate, the same powers, rights, duties and
obligations with respect to this Plan as the plan administrator under
the Pension Plan has under such Pension Plan.
4.2 FINALITY OF DETERMINATION. Except with respect to questions arising
from benefits payable upon a Change of Control, the determination of
the Compensation Committee as to any disputed questions arising under
this Plan, including questions of construction and interpretation,
shall be final, binding and conclusive upon all persons.
4.3 EXPENSES. The expenses of administering the Plan shall be borne by the
Company.
4.4 INDEMNIFICATION AND EXCULPATION. The members of the Compensation
Committee, its agents and officers, directors and employees of the
Company and the Subsidiaries shall be indemnified and held harmless by
the Company against and from any and all loss, cost, liability or
expense that may be imposed upon or reasonably incurred by them in
connection with or resulting from any claim, action, suit or proceeding
to which they may be a party or in which they may be involved by reason
of any action taken or failure to act under this Plan and against and
from any and all amounts paid by them in settlement (with the Company's
written approval) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding. The foregoing provision shall not be
applicable to any person if the loss, cost, liability or expense is due
to such person's gross negligence or willful misconduct.
4.5 FUNDING. While all benefits payable under the Plan constitute general
corporate obligations, the Company shall establish a master rabbi trust
for the benefit of the Participant, which trust shall be subject to the
claims of the general creditors of the Company (and of any Subsidiary
which has employed the Participant and become obligated under the Plan)
in the event of such corporation's insolvency, to be used as a reserve
for the discharge of the Company's or Subsidiary's obligations under
the Plan to such Participant. The Company shall contribute to such
trust an amount sufficient to fund the aggregate present value of all
liabilities potentially owed to the Participant under this Plan and
such funding shall occur no later than the date on which
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a Change of Control occurs. Any payments made to the Participant under
the trust for his benefit shall reduce dollar for dollar the amount
payable to the Participant from the general assets of the Company or
Subsidiary. The amounts payable under the Plan shall be reflected on
the accounting records of the Company or Subsidiary but shall not be
construed to create or require the creation of a trust, custodial or
escrow account, except as described above in this section. The
Participant (or Spouse of Participant) shall not have any right, title
or interest whatever in or to any investment reserves, accounts or
funds that the Company or any Subsidiary may purchase, establish or
accumulate to aid in providing benefits under this Plan. Nothing
contained in this Plan, and no action taken pursuant to its provisions,
shall create a trust or fiduciary relationship of any kind between the
Company or any Subsidiary and the Participant or any other person,
except as described above in this section. Neither the Participant nor
Spouse of the Participant shall acquire any interest greater than that
of an unsecured creditor.
4.6 CORPORATE ACTION. Any action required of or permitted by the Company or
any Subsidiary under this Plan shall be by resolution of its Board of
Directors or any person or persons authorized by resolution of such
Board of Directors.
4.7 INTERESTS NOT TRANSFERABLE. The interests of the Participant and his
Spouse under the Plan are not subject to the claims of their creditors
and may not be voluntarily or involuntarily transferred, assigned,
alienated or encumbered.
4.8 EFFECT ON OTHER BENEFIT PLANS. Amounts credited or paid under this Plan
shall not be considered to be compensation for the purposes of the
Pension Plan maintained by the Company or any Subsidiary. The treatment
of such amounts under other employee benefits plans shall be determined
pursuant to the provisions of such plans.
4.9 TAX LIABILITY. The Company or Subsidiary may withhold from any payment
of benefits hereunder any taxes required to be withheld and such sum as
such employer may reasonably estimate to be necessary to cover any
taxes for which the Company or Subsidiary may be liable and which may
be assessed with regard to such payment.
4.10 LEGAL FEES AND EXPENSES. The Company shall pay all legal fees and
expenses which the Participant may incur as a result of the Company's
or any Subsidiary's contesting the validity, enforceability or the
Participant's interpretation of, or determinations under, this Plan.
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4.11 SUCCESSORS AND ASSIGNS. This Plan and all of the obligations hereunder
shall be binding on the successors and assigns of the Company.
4.12 NONDUPLICATION OF BENEFITS. The benefits payable under this Plan to a
Participant are intended to replace such benefits payable to such
Participant under the Commercial Intertech Corp. Supplemental Executive
Retirement Plan, and the Participant's benefits under such plan are
terminated.
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ARTICLE V
AMENDMENT AND TERMINATION
The Company by action of this Board of Directors reserves the right to amend
this Plan from time to time or to terminate the Plan at any time, but without
the written consent of the Participant, no such action may reduce or relieve the
Company or any Subsidiary of any obligation with respect to any benefit accrued
under the Plan by such Participant as of the date of such amendment or
termination.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by
its duly authorized officers on this ____ day of _____________, 1999.
COMMERCIAL INTERTECH CORP.
By:_______________________________
Title:____________________________
