Exhibit 10-u
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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT
FOR
XXXXXXX X. XXXXXXX
First Effective November 1, 1990
AND
As Amended By
The FIRST AMENDMENT Adopted March 12, 1996
But Effective November 1, 1995
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT
FOR
XXXXXXX X. XXXXXXX
TABLE OF CONTENTS
Page
SECTION 1. INTRODUCTION.................................................. 1
1.1. Basis of Agreement
1.2. Definitions
1.2.1. Accrued Benefit
1.2.2. Actuarial Equivalent
1.2.3. Average Monthly Compensation
1.2.4. Board of Directors
1.2.5. Change in Control
1.2.6. Compensation
1.2.7. Disability, Disabled
1.2.8. Effective Date
1.2.9. Employer
1.2.10. Qualified Plans Benefit
1.2.11. Single Life Annuity
1.2.12. Social Security Benefit
1.2.13. Supplemental Retirement Benefit
1.2.14. Termination of Employment
1.3. Rules of Interpretation
SECTION 2. SUPPLEMENTAL RETIREMENT INCOME BENEFIT........................ 6
2.1. Supplemental Retirement Benefit
2.1.1. When Available
2.1.2. Amount
2.1.3. Form of Pension
2.1.4. Installment Amounts
2.1.5. Default
2.1.6. Time
2.2. Designation of Beneficiaries for Installment
Payments
2.2.1. Right To Designate
2.2.2. Failure of Designation
2.2.3. Disclaimers by Beneficiaries
2.2.4. Definitions
2.2.5. Special Rules
2.2.6. Spousal Rights
2.3. No Other Benefits
2.4. Facility of Payment
2.5. Forfeiture of Benefits
SECTION 3. DEATH BENEFITS................................................ 12
3.1. Death Before Benefit Commencement
3.1.1. When Available
3.1.2. Amount
3.1.3. Form of Benefit
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SECTION 4. FUNDING OF PLAN............................................... 13
4.1. Unfunded Agreement
4.2. Spendthrift Provisions
SECTION 5. AMENDMENT AND TERMINATION..................................... 14
SECTION 6. DETERMINATIONS -- RULES AND REGULATIONS....................... 15
6.1. Determinations
6.2. Rules and Regulations
6.3. Method of Executing Instruments
6.4. Claims Procedure
6.4.1. Original Claim
6.4.2. Claims Review Procedure
6.4.3. General Rules
SECTION 7. PLAN ADMINISTRATION........................................... 17
7.1. Employer
7.1.1. Officers
7.1.2. Delegation By Board
7.1.3. Non-Delegable Functions
7.2. Administrator
7.3. Service of Process
SECTION 8. MISCELLANEOUS RULES........................................... 18
SIGNATURES................................................................ 18
APPENDIX A -- DETERMINATION OF ACTUARIAL EQUIVALENT
TO SINGLE LIFE ANNUITY................................ A-1
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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT
FOR
XXXXXXX X. XXXXXXX
This Agreement made and entered into as of November 1, 1990 by and
between XXXXXXX X. XXXXXXX and ADC TELECOMMUNICATIONS, INC., a Minnesota
corporation, (hereinafter the "Employer").
SECTION 1
INTRODUCTION
1.1. Basis of Agreement. In consideration of the services performed by
XXXXXXX X. XXXXXXX for the Employer in the past and to be performed in the
future, the Employer hereby agrees to pay, in addition to other consideration to
be provided by the Employer, deferred compensation to him under the terms and
conditions hereinafter set forth. This Agreement creates an unfunded,
nonqualified plan maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees as
contemplated by the Employee Retirement Income Security Act of 1974 ("ERISA")
and shall be construed and administered accordingly.
1.2. Definitions. When used herein with initial capital letters, the
following words have the following meanings:
1.2.1. Accrued Benefit -- the dollar amount determined for XXXXXXX X.
XXXXXXX as of the date of his Termination of Employment (and payable monthly to
him in the Single Life Annuity form, beginning on the first day of the calendar
month following his Termination of Employment or age sixty (60) years, if later)
equal to the product of (a) multiplied by (b):
(a) Full Supplement. A dollar amount equal to:
(i) Fifty percent (50%) of his Average Monthly Compensation
determined as of the date of his Termination of
Employment, minus
(ii) The sum of: (A) his Qualified Plans Benefit determined
as of one day before the date of his Termination of
Employment, and (B) fifty percent (50%) of the monthly
amount of his Social Security Benefit determined as of
one day before the date of his Termination of
Employment.
(b) Service Ratio. A fraction, not greater than one (1):
(i) The numerator of which is the total years and fractions
of years of his service with the Employer from the
Effective Date through and including the date of his
Termination of Employment, and
(ii) The denominator of which is eight (8).
1.2.2. Actuarial Equivalent -- a benefit of equivalent value computed
on the basis of actuarial tables, factors and assumptions set forth in this
Agreement (including the Appendix - A to this Agreement).
1.2.3. Average Monthly Compensation -- one-sixtieth (1/60th) of the
total dollar amount of Compensation attributable to the sixty (60) consecutive
calendar months ending immediately before XXXXXXX X. XXXXXXX'X Termination of
Employment subject, however, to the following:
(a) Less Than 5 Years. If he shall have received Compensation
attributable to less than all of the sixty (60) consecutive
calendar months ending immediately before the Termination of
Employment, his Average Monthly Compensation shall be equal to
the total of all the Compensation attributable to all calendar
months to which any of his Compensation is attributable divided
by the greatest number of consecutive calendar months to which
any of his Compensation is attributable.
(b) Five-Year Limit. In determining his Average Monthly
Compensation, there shall be disregarded all Compensation
attributable any calendar months other than the sixty (60)
consecutive calendar months ending immediately before the
Termination of Employment.
(c) No Compensation. The absence of Compensation in any calendar
month shall not affect the requirement that only sixty (60)
consecutive calendar months ending immediately before the
Termination of Employment be considered in determining Average
Monthly Compensation.
1.2.4. Board of Directors -- the Board of Directors of the Employer or
a duly authorized committee of less than all the Directors.
1.2.5. Change in Control -- an event defined as a Change in Control in
section 7.6.2 of the ADC TELECOMMUNICATIONS, INC. PENSION PLAN (1885
Restatement), as that document and that definition may exist from time to time.
1.2.6. Compensation -- amounts paid to XXXXXXX X. XXXXXXX by the
Employer and all affiliates for services rendered, reported as income subject to
federal income taxes on Treasury Form W-2 for the applicable year; subject,
however, to the following:
(a) Excluded Items. In determining his Compensation, there shall
be excluded (i)all discretionary bonuses not paid pursuant to a
formal plan, and (ii) all foreign service allowances, foreign
tax equalization payments, expense reimbursements, moving
expense payments or other similar extra compensation, and (iii)
all noncash remuneration and (iv) all deferred compensation
(except as provided in (b) below), excess life insurance
premiums, the value of stock options (whether or not
exercised), and (iv) the value of restricted stock or similar
awards and any cash payments made in connection with any such
restricted stock award.
(b) Added Items. Remuneration which would have been paid by the
Employer or an affiliate but which was not paid because he
entered into an agreement to reduce earnings as a condition of
participation in a plan established under section 125 or
section 401(k) of the Internal Revenue Code, shall be
considered to have been paid at the time when it would have
been paid but for such agreement to reduce earnings.
Remuneration which would have been paid by the Employer or an
Affiliate but which was not paid because he entered into an
agreement to defer compensation under a nonqualified plan of
deferred compensation or under any other similar arrangement
(including but not limited to the "Executive Incentive Exchange
Plan") shall
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be considered to have been paid at the time it would have been
paid but for such agreement to defer earnings.
(c) Attribution to Periods. His Compensation shall be considered
attributable to the calendar month in which it is actually paid
(and not when earned or accrued) except that annual incentive
payments shall be considered attributable to the last day of
the last calendar month in the fiscal period with respect to
which they are paid.
(d) Excluded Periods. Amounts attributable to calendar months
commencing after the earliest of the date he became Disabled or
had a Termination of Employment shall not be taken into account
in determining his Compensation.
(e) Final Payments. Final payments on account of Termination of
Employment (i.e., severance payments) and settlement for
accrued but unused vacation and sick leave shall not be taken
into account in determining his Compensation.
1.2.7. Disability, Disabled -- a medically determinable physical or
mental impairment which constitutes disability under the Employer's separate
long term disability plan.
1.2.8. Effective Date -- November 1, 1990.
1.2.9. Employer -- ADC TELECOMMUNICATIONS, INC., a Minnesota
corporation, and any successor thereof that adopts this Agreement.
1.2.10. Qualified Plans Benefit -- a dollar amount determined for
XXXXXXX X. XXXXXXX as of the last day of the calendar month in which his
Termination of Employment occurs or, if later, the last day of the calendar
month in which he would attain age sixty (60) years (and expressed in terms of a
monthly annuity payable to him in the Single Life Annuity form beginning on the
first day of the calendar month following his Termination of Employment or, if
later, the first day of the calendar month following the date he would attain
age sixty years) which is the sum of the:
(a) accrued benefit developed for him as of the date of his
Termination of Employment under all qualified defined benefit
pension plans maintained by the Employer when expressed in the
form of a Single Life Annuity first payable on the first day of
the first calendar month following his Termination of
Employment or, if later, the first day of the calendar month
following the date he would attain age sixty (60) years; and
(b) the Actuarial Equivalent monthly amount of annuity payable to
him when expressed in the form of a Single Life Annuity
beginning on the first day of the first calendar month
following his Termination of Employment or, if later, the first
day of the calendar month following the date he would attain
age sixty (60) years to the extent such benefits are
attributable to contributions of the Employer (and exclusive of
any benefits attributable to contributions directly or
indirectly made by him) under all qualified defined
contribution pension, profit sharing or stock bonus plans
maintained by the Employer; and
(c) the Actuarial Equivalent monthly amount of annuity payable to
him when expressed in the form of a Single Life Annuity
beginning on the first day of the first calendar month
following his Termination of Employment or, if later, the first
day of the calendar month following the date he would attain
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age sixty (60) years to the extent such benefits are Employer-
provided benefits payable from a nonqualified plan maintained
by the Employer for the purpose of providing benefits which
cannot be provided from qualified pension, profit sharing or
stock bonus plans maintained by the Employer because of
limitations on such plans under section 401(a)(17), section
401(k), section 401(m), section 402(g), section 415 and other
similar provisions of the Internal Revenue Code.
1.2.11. Single Life Annuity -- a form of annuity that is payable
monthly to and for the lifetime of XXXXXXX X. XXXXXXX, the first such payment to
be due on the date specified in Section 2 hereof and the last such payment due
on the first day of the calendar month in which his death occurs.
1.2.12. Social Security Benefit -- the monthly amount available for the
benefit of XXXXXXX X. XXXXXXX at:
(a) at age sixty-two (62) years if his Termination of Employment is
before age sixty-two (62) years (calculated on the assumption
that he will have no additional earnings from his Termination
of Employment until age sixty-two (62) years); or
(b) the date of his Termination of Employment if his Termination of
Employment is after age sixty-two (62) years but before age
sixty-five (65) years; or
(c) age sixty-five (65) years, if his Termination of Employment is
at or after age sixty-five (65) years;
(excluding amounts available for spouse and dependents) as an old age benefit
under the provisions of Title II of the federal Social Security Act in effect on
the date of the Termination of Employment (or age sixty-five, if earlier),
whether or not payment of such amount is delayed, suspended or forfeited because
of failure to apply, acceptance of other work, or any other similar reason
within his control. For this purpose, unless he shall have furnished verified
proof of wages before his Termination of Employment, he shall be deemed to have
had taxable wages at or above the taxable wage base in all years prior to the
year of his Termination of Employment.
1.2.13. Supplemental Retirement Benefit -- the benefit payable under
this Plan upon the Termination of Employment of XXXXXXX X. XXXXXXX, subject to
the conditions and limitations set forth in this Plan Statement.
1.2.14. Termination of Employment -- a complete severance of XXXXXXX X.
XXXXXXX'X employment relationship with the Employer and its subsidiaries or
affiliates, if any, for any reason other than his death. A transfer from
employment with the Employer to employment with an affiliate of the Employer
shall not constitute a Termination of Employment.
1.3. Rules of Interpretation. An individual shall be considered to have
attained a given age on his birthday for that age (and not on the day before).
The birthday of any individual born on a February 29 shall be deemed to be
February 28 in any year that is not a leap year. Notwithstanding any other
provision of this Agreement or any election or designation made under this
Agreement, any individual who feloniously and intentionally kills XXXXXXX X.
XXXXXXX or any surviving spouse shall be deemed for all purposes of this
Agreement and all elections and designations made under this Agreement to have
died before him or his surviving spouse. A final judgment of conviction of
felonious and intentional killing is conclusive for the purposes of this
Section. In the absence of a conviction of felonious and intentional killing,
the Board of Directors shall determine whether the killing was felonious and
intentional for the purposes of this Section. Whenever appropriate, words used
herein in the singular may be read in the plural, or words used herein in the
plural may be read in the singular; the
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masculine may include the feminine; and the words "hereof," "herein" or
"hereunder" or other similar compounds of the word "here" shall mean and refer
to the entire Agreement and not to any particular paragraph or section of this
Agreement unless the context clearly indicates to the contrary. The titles
given to the various sections of this Agreement are inserted for convenience of
reference only and are not part of this Agreement, and they shall not be
considered in determining the purpose, meaning or intent of any provision
hereof. Any reference in this Agreement to a statute or regulation shall be
considered also to mean and refer to any subsequent amendment or replacement of
that statute or regulation. This instrument has been executed and delivered in
the State of Minnesota and has been drawn in conformity to the laws of that
State and shall, except to the extent that federal law is controlling, be
construed and enforced in accordance with the laws of the State of Minnesota.
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SECTION 2
SUPPLEMENTAL RETIREMENT INCOME BENEFIT
2.1. Supplemental Retirement Benefit.
2.1.1. When Available. Upon the Termination of Employment of XXXXXXX
X. XXXXXXX:
(a) at or after his attainment of age fifty (50) years; or
(b) at the written request of the Board of Directors; or
(c) within six (6) months after a Change in Control; or
(d) after, and on account of, his Disability.
and upon the filing of a written application with the Board of Directors, he
shall receive a Supplemental Retirement Benefit.
2.1.2. Amount. The amount of XXXXXXX X. XXXXXXX'X Supplemental
Retirement Benefit shall be the Actuarial Equivalent single lump sum of his
Accrued Benefit determined as of his Termination of Employment reduced, however,
five-twelfths of one percent (5/12%) for each month by which the payment of the
Supplemental Retirement Benefit precedes the last day of the calendar month in
which he attains age sixty (60) years.
2.1.3. Form of Pension. For the purpose of defining the amount of the
Supplemental Retirement Benefit in Section 2.1.1, the benefit is derived from a
Single Life Annuity, the first payment of which is due on the first day of the
calendar month which follows his Termination of Employment, or, if later, the
first day of the calendar month which follows the date he would attain age sixty
(60) years. Notwithstanding the foregoing, this annuity shall be, in all
cases, converted to an Actuarial Equivalent single lump sum on the first day of
the calendar month following his Termination of Employment (the "Lump Sum
Amount"). The payments (minus all withholding and payroll taxes which must be
deducted therefrom) shall be distributed from this Plan in the same manner as if
it had been paid or commenced from the general assets of the Employer to the
Participant. Such payment shall be in full and complete discharge of all
benefits payable to, or with respect to the Participant under this Plan
including, but not limited to, all survivor benefits and all optional forms of
benefit to which the Participant or spouse might otherwise have been entitled.
The consent of a spouse or other Beneficiary shall not be required before making
the single lump sum payment or the annual installment payments herein described.
Distribution of benefits accrued on or after April 1, 1996, shall be made in
whichever of the following forms the Participant shall have designated in
writing at the time required by the Employer (to the extent that such election
is consistent with the rules of this Plan Statement). The Employer shall
unilaterally designate the form of distribution of all benefits accrued prior to
April 1, 1996.
(a) Term Certain Installments to Participant. If the Participant
has elected distribution in a series of annual installments payable over ten
(10) years and the actuarially equivalent single lump sum value of the benefit
at the Termination of Employment is at least One Hundred Thousand Dollars
($100,000), distribution shall be made in a series of annual installments
payable over ten (10) years.
(b) Term Certain Installments to Beneficiary. If the Distributee
is the Beneficiary of the Participant who has elected
distribution in a series of
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annual installments payable over ten (10) years and died after
Termination of Employment but before distribution commenced and
the actuarially equivalent single lump sum value of the benefit
at death is at least One Hundred Thousand Dollars ($100,000),
distribution shall be made in a series of annual installments
payable over ten (10) years.
(c) Continued Term Certain Installments to Beneficiary. If the
Distributee is the Beneficiary of the deceased Participant and
distribution had commenced to the deceased Participant before
his death over a ten (10) year period as specified in paragraph
(a) above, in a series of annual installments payable over the
remainder of the ten (10) year period.
(d) Lump Sum. To the extent that the Distributee is either the
Participant or the Beneficiary of the deceased Participant and
none of the foregoing rules are applicable, in a single lump
sum payment.
2.1.4. Installment Amounts. If the Distributee's benefit will be
distributed in the form of a series of annual installments payable over ten (10)
years, a bookkeeping account ("Account") will be created for the purpose of
paying the benefit to the Distributee. The initial value of the Account shall
equal the Distributee's Lump Sum Account. The amount of the annual installments
shall be determined by dividing the amount of the Distributee's Account as of
the December 31 as of which the installment is being paid by the number of
remaining installment payments to be made (including the payment being
determined).
(a) Valuation and Adjustment of Accounts. Each Distributee's
Account shall be valued as of the last day of each calendar
month (the "Valuation Date"). As of each Valuation Date, the
value of each Account determined as of the immediately
preceding Valuation Date (the "Initial Account Value") shall be
increased (or decreased) by the following adjustment made in
the following sequence:
(i) The Initial Account Value shall be increased by an
amount equal to the balance of the Account as of the
preceding Valuation Date multiplied by the Interest
Rate and multiplied by a fraction, the numerator of
which is one (1) and the denominator of which is twelve
(12); and
(ii) The Initial Account Value (as adjusted above) shall be
reduced by the total amount distributed in fact to (or
with respect to) the Participant from such Account as
of the current Valuation Date.
(b) Interest Rate. For purposes of this Section 2.1, the "Interest
Rate" shall mean the rate of interest charged on the Valuation
Date for which interest is being credited by Norwest Bank
Minnesota, N.A., and in effect on that Valuation Date to its
most credit-worthy corporate customers on loans of not more
than ninety (90) days duration which are unsecured (that is,
the so called prime rate of interest).
2.1.5. Default. If for any reason a Participant shall have failed to
make a timely written designation of form for distribution (including reasons
entirely beyond the control of the Participant), the distribution shall be made
in a single lump sum. No spouse, former spouse or other person shall have any
right to participate in the Participant's selection of a form of benefit.
2.1.6. Time. Any lump sum payment shall be made as of the first day
of the calendar month following the Participant's Termination of Employment and
actual payment shall be made as soon as administratively feasible thereafter.
Any annual installment payments shall be commenced as of the December 31
coincident with or next following the Participant's Termination of Employment
and actual payment shall be commenced as soon as
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administratively feasible thereafter. If the Employer determines that delaying
the time the initial payments are made or commenced would increase the
probability that such payments would be fully deductible for federal or state
income tax purposes, for example because such payments would result in over one
million dollars ($1,000,000) of compensation for the taxable year with respect
to the Participant under section 162(m) of the Code, the Employer may
unilaterally delay the time of the making payment or transfer for up to twenty-
four (24) months after the date such payment or transfer would otherwise be
payable.
2.2. Designation of Beneficiaries for Installment Payments. This section 2.2
applies only to Participants who are entitled to receive a distribution in the
form of annual installments and who have elected to receive distribution of the
Participant's benefit in the form of annual installments.
2.2.1. Right To Designate. Each Participant may designate, upon forms
to be furnished by and filed with the Employer, one or more primary
Beneficiaries or alternative Beneficiaries to receive all or a specified part of
such Participant's account in the event of such Participant's death. The
Participant may change or revoke any such designation from time to time without
notice to or consent from any Beneficiary, except as provided in Section2.2.6.
No such designation, change or revocation shall be effective unless executed by
the Participant and received by the Employer during the Participant's lifetime.
2.2.2. Failure of Designation. If a Participant:
(a) fails to designate a Beneficiary,
(b) designates a Beneficiary and thereafter revokes such
designation without naming another Beneficiary, or
(c) designates one or more Beneficiaries and all such Beneficiaries
so designated fail to survive the Participant,
such Participant's account, or the part thereof as to which such Participant's
designation fails, as the case may be, shall be payable to the first class of
the following classes of automatic Beneficiaries with a member surviving the
Participant and (except in the case of surviving issue) in equal shares if there
is more than one member in such class surviving the Participant:
Participant's surviving spouse
Participant's surviving issue per stirpes and not per capita
Participant's surviving parents
Participant's surviving brothers and sisters
Representative of Participant's estate.
2.2.3. Disclaimers by Beneficiaries. A Beneficiary entitled to a
distribution of all or a portion of a deceased Participant's account may
disclaim an interest therein subject to the following requirements. To be
eligible to disclaim, a Beneficiary must be a natural person, must not have
received a distribution of all or any portion of the account at the time such
disclaimer is executed and delivered, and must have attained at least age
twenty-one (21) years as of the date of the Participant's death. Any disclaimer
must be in writing and must be executed personally by the Beneficiary before a
notary public. A disclaimer shall state that the Beneficiary's entire interest
in the undistributed account is disclaimed or shall specify what portion thereof
is disclaimed. To be effective, duplicate original executed copies of the
disclaimer must be both executed and actually delivered to the Employer after
the date of the Participant's death but not later than one hundred eighty (180)
days after the date of the Participant's death. A disclaimer shall be
irrevocable when delivered to the Employer. A disclaimer shall be considered to
be delivered to the Employer only when actually received by the Employer. The
Employer shall be the sole judge of the content, interpretation and validity of
a purported disclaimer. Upon the filing of a valid disclaimer, the Beneficiary
shall
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be considered not to have survived the Participant as to the interest
disclaimed. A disclaimer by a Beneficiary shall not be considered to be a
transfer of an interest in violation of the provisions of Section 8 and shall
not be considered to be an assignment or alienation of benefits in violation of
federal law prohibiting the assignment or alienation of benefits under this
Plan. No other form of attempted disclaimer shall be recognized by the
Employer.
2.2.4. Definitions. When used herein and, unless the Participant has
otherwise specified in the Participant's Beneficiary designation, when used in a
Beneficiary designation, "issue" means all persons who are lineal descendants of
the person whose issue are referred to, including legally adopted descendants
and their descendants but not including illegitimate descendants and their
descendants; "child" means an issue of the first generation; "per stirpes" means
in equal shares among living children of the person whose issue are referred to
and the issue (taken collectively) of each deceased child of such person, with
such issue taking by right of representation of such deceased child; and
"survive" and "surviving" mean living after the death of the Participant.
2.2.5. Special Rules. Unless the Participant has otherwise specified
in the Participant's Beneficiary designation, the following rules shall apply:
(a) If there is not sufficient evidence that a Beneficiary was
living at the time of the death of the Participant, it shall be
deemed that the Beneficiary was not living at the time of the
death of the Participant.
(b) The automatic Beneficiaries specified in Section 3.4.2 and the
Beneficiaries designated by the Participant shall become fixed
at the time of the Participant's death so that, if a
Beneficiary survives the Participant but dies before the
receipt of payments due such Beneficiary hereunder, such
payments shall be payable to the representative of such
Beneficiary's estate.
(c) If the Participant designates as a Beneficiary the person who
is the Participant's spouse on the date of the designation,
either by name or by relationship, or both, the dissolution,
annulment or other legal termination of the marriage between
the Participant and such person shall automatically revoke such
designation. (The foregoing shall not prevent the Participant
from designating a former spouse as a Beneficiary on a form
executed by the Participant and received by the Employer after
the date of the legal termination of the marriage between the
Participant and such former spouse, and during the
Participant's lifetime.)
(d) Any designation of a nonspouse Beneficiary by name that is
accompanied by a description of relationship to the Participant
shall be given effect without regard to whether the
relationship to the Participant exists either then or at the
Participant's death.
(e) Any designation of a Beneficiary only by statement of
relationship to the Participant shall be effective only to
designate the person or persons standing in such relationship
to the Participant at the Participant's death.
A Beneficiary designation is permanently void if it either is executed or is
filed by a Participant who, at the time of such execution or filing, is then a
minor under the law of the state of the Participant's legal residence. The
Employer shall be the sole judge of the content, interpretation and validity of
a purported Beneficiary designation.
2.2.6. Spousal Rights. No person designated to be a Beneficiary,
other than a spouse or surviving spouse, shall have any rights or interest in
the benefits accumulated under
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this Plan including, but not limited to, the right to be the sole Beneficiary or
to consent to the designation of Beneficiaries (or the changing of designated
Beneficiaries) by the Participant.
Notwithstanding the foregoing, a designation will not be valid for the
purpose of paying benefits from the Plan to anyone other than a surviving spouse
of the Participant (if there is a surviving spouse) unless that surviving spouse
consents in writing to the designation of another person as Beneficiary. To be
valid, the consent of such spouse must be in writing, must acknowledge the
effect of the designation of the Beneficiary and must be witnessed by a notary
public. The consent of the spouse to a Beneficiary is not a waiver of any
rights to pre-retirement death benefits under the Plan because a Beneficiary
designation under this Section2.2 is only effective for annual installment
payments due after the Participant's termination of employment. The consent of
the surviving spouse need not be given at the time the designation is made. The
consent of the surviving spouse need not be given before the death of the
Participant. The consent of the surviving spouse will be required, however,
before benefits can be paid to any person other than the surviving spouse. The
consent of a spouse shall be irrevocable and shall be effective only with
respect to that spouse.
2.3. No Other Benefits. No benefits are available under this Plan upon the
Termination of Employment of XXXXXXX X. XXXXXXX before he is entitled to the
Supplemental Retirement Benefit specifically enumerated herein.
2.4. Facility of Payment. In case of the legal disability, including
minority, of XXXXXXX X. XXXXXXX, joint annuitant or beneficiary entitled to
receive any distribution under the Agreement, payment shall be made, if the
Board of Directors shall be advised of the existence of such condition:
(a) to his or her duly appointed guardian, conservator or other
legal representative, or
(b) to a person or institution entrusted with the care or
maintenance of the incompetent or disabled person, provided
such person or institution has satisfied the Board of Directors
that the payment will be used for the best interest and assist
in the care of such person, and provided further, that no prior
claim for said payment has been made by a duly appointed
guardian, conservator or other legal representative of such
person.
Any payment made in accordance with the foregoing provisions of this section
shall constitute a complete discharge of any liability or obligation of the
Employer and the Board of Directors.
2.5. Forfeiture of Benefits. All unpaid benefits under this Plan payable to
or with respect to XXXXXXX X. XXXXXXX, including without limiting the generality
of the foregoing, undistributed commuted values, shall be immediately and
permanently forfeited upon the determination by the Board of Directors that he,
either before or after Termination of Employment:
(i) engaged in a felonious or fraudulent conduct resulting
in material harm to the Employer or an affiliate; or
(ii) made an unauthorized disclosure to a competitor of any
material confidential information, trade information,
or trade secrets of the Employer or an affiliate; or
(iii) provided the Employer or an affiliate with materially
false reports concerning his business interests or
employment; or
(iv) made materially false representations which are relied
upon by the Employer or an affiliate in furnishing
information to shareholders,
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accountants, a stock exchange, the Securities and
Exchange Commission or public or private regulatory
body; or
(v) maintained an undisclosed, unauthorized and material
conflict of interest in the discharge of the duties
owed by him to the Employer or an affiliate; or
(vi) engaged in conduct causing a serious violation of state
or federal law by the Employer or an affiliate; or
(vii) engaged in the theft of assets or funds of the Employer
or an affiliate; or
(viii) has been convicted of any crime which directly or
indirectly arose out of his employment relationship
with the Employer or an affiliate or materially
affected his ability to discharge the duties of his
employment with the Employer or an affiliate; or
(ix) engaged during his employment in any employment or
self-employment with a competitor of the Employer or an
affiliate; or
(x) engaged during a period of two (2) years after his
voluntary termination of employment with the Employer
in any employment or self-employment with a competitor
of the Employer or an affiliate within the geographical
area which is then served by the Employer or the
affiliate.
He shall be notified within thirty (30) days of any such decision by the Board
of Directors. He may contest such action by filing a claim as prescribed in
Section6.4.
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SECTION 3
DEATH BENEFITS
3.1. Death Before Benefit Commencement.
3.1.1. When Available. If upon the death of XXXXXXX X. XXXXXXX:
(a) his Supplemental Retirement Benefit under the Agreement had not
been paid as provided in Section 2.1, and
(b) he was married and had been married for the one (1) year
preceding his death, and
(c) he was entitled to some Accrued Benefit immediately before his
death;
a lump sum survivor benefit shall be payable to the surviving spouse to whom he
was married for at least one (1) year ending on the date of death.
3.1.2. Amount. The amount of the lump sum survivor benefit shall be:
(a) If he had not Terminated Employment at the date of his death,
the amount shall be the 85% of Actuarially Equivalent single
lump sum which he would have received if he had Terminated
Employment on the date of his death at the written request of
the Board of Directors (and not by reason of his death).
(b) If he had Terminated Employment at the date of his death, the
amount shall be the amount, if any, which he would have
received, if any, under Section 2.1 if he had lived to the date
of such payment.
3.1.3. Form of Benefit. The lump sum survivor benefit shall be due
on the first day of the calendar month after the death of XXXXXXX X. XXXXXXX.
Notwithstanding the foregoing, if that lump sum is equal to or greater than One
Hundred Thousand Dollars ($100,000) and the Participant has elected to receive
his benefit in annual installment payments, it shall be held in the Account
which is established under the Plan for the purpose of making payments in a
series of annual installments payable over ten (10) years and distributed from
the Plan to the surviving spouse in accordance with the rules under Section 2.1.
The benefit payment or payments (minus the withholding and payroll taxes which
must be deducted therefrom) shall be paid to the surviving spouse from the
general assets of the Employer. No other death benefit shall be payable with
respect to him if he dies under these circumstances. No death benefit shall be
payable with respect to him if he dies under any other circumstances.
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SECTION 4
FUNDING OF PLAN
4.1. Unfunded Agreement. All benefits payable under this Agreement shall be
paid exclusively from the general assets of the Employer. No fund or trust
shall be established apart from the general assets of the Employer for the
purposes of this Agreement. No assets or property shall be segregated or set
apart from the general assets of the Employer for the purpose of funding this
Agreement. The rights of XXXXXXX X. XXXXXXX under this Agreement (or of any
surviving spouse with respect to him) shall be solely those of an unsecured
general creditor of the Employer. If, for its own internal purposes, the
Employer elects to purchase life insurance policies on his life or any other
assets in connection with this Agreement, he will not be the beneficial owner or
beneficiary of such policies or assets (all such rights being retained by the
Employer) and shall not have any preferred claim or interest in any such
policies, assets or the proceeds thereof. The Employer makes no representation
that it will actually use any life insurance policies, other assets or proceeds
of the same which it may acquire for the purpose of paying any benefits under
this Agreement.
4.2. Spendthrift Provisions. Neither XXXXXXX X. XXXXXXX nor his surviving
spouse shall have any transferrable interest in any benefit nor shall he or his
surviving spouse have any power to anticipate, alienate, dispose of, pledge or
encumber the same nor shall the Employer or the Board of Directors recognize any
assignment thereof, either in whole or in part, nor shall it be subject to
attachment, garnishment, execution following judgment or other legal process.
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SECTION 5
AMENDMENT AND TERMINATION
This Agreement may be amended and terminated only by the written agreement of
the Employer and XXXXXXX X. XXXXXXX. The rights and obligations of the Employer
and him shall be binding upon them and their heirs, successors and assigns.
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SECTION 6
DETERMINATIONS -- RULES AND REGULATIONS
6.1. Determinations. The Board of Directors shall make such determinations as
may be required from time to time in the administration of the Agreement. Each
interested party may act and rely upon all information reported to them
hereunder and need not inquire into the accuracy thereof nor be charged with any
notice to the contrary.
6.2. Rules and Regulations. Any rule not in conflict or at variance with the
provisions hereof may be adopted by the Board of Directors.
6.3. Method of Executing Instruments. Information to be supplied or written
notices to be made or consents to be given by the Employer or the Board of
Directors pursuant to any provision of this Agreement may be signed in the name
of the Employer by any officer thereof who has been authorized to make such
certification or to give such notices or consents or by any Board of Directors
member.
6.4. Claims Procedure. Until modified by the Board of Directors, the claims
procedure set forth in this Section 6.4 shall be the claims procedure for the
resolution of disputes and disposition of claims arising under the Agreement.
An application for benefits under Section3 or Section 5 shall be considered as a
claim for the purposes of this Section 6.4.
6.4.1. Original Claim. XXXXXXX X. XXXXXXX or his surviving spouse
may, if he or she so desires, file with the Board of Directors a written claim
for benefits under the Agreement. Within ninety (90) days after the filing of
such a claim, the Board of Directors shall notify the claimant in writing
whether his claim is upheld or denied in whole or in part or shall furnish the
claimant a written notice describing specific special circumstances requiring a
specified amount of additional time (but not more than one hundred eighty days
from the date the claim was filed) to reach a decision on the claim. If the
claim is denied in whole or in part, the Board of Directors shall state in
writing:
(a) the specific reasons for the denial;
(b) the specific references to the pertinent provisions of this
Agreement on which the denial is based;
(c) 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
(d) an explanation of the claims review procedure set forth in this
section.
6.4.2. Claims Review Procedure. Within sixty (60) days after receipt
of notice that his claim has been denied in whole or in part, the claimant may
file with the Board of Directors a written request for a review and may, in
conjunction therewith, submit written issues and comments. Within sixty (60)
days after the filing of such a request for review, the Board of Directors shall
notify the claimant in writing whether, upon review, the claim was upheld or
denied in whole or in part or shall furnish the claimant a written notice
describing specific special circumstances requiring a specified amount of
additional time (but not more than one hundred twenty days from the date the
request for review was filed) to reach a decision on the request for review.
6.4.3. General Rules.
(a) No inquiry or question shall be deemed to be a claim or a
request for a review of a denied claim unless made in
accordance with the claims
-15-
procedure. The Board of Directors may require that any claim
for benefits and any request for a review of a denied claim be
filed on forms to be furnished by the Board of Directors upon
request.
(b) All decision on claims and on requests for a review of denied
claims shall be made by the Board of Directors.
(c) The Board of Directors may, in its discretion, hold one or more
hearings on a claim or a request for a review of a denied
claim.
(d) A claimant may be represented by a lawyer or other
representative (at their own expense), but the Board of
Directors reserves the right to require the claimant to furnish
written authorization. A claimant's representative shall be
entitled to receive copies of notices sent to the claimant.
(e) The decision of the Board of Directors on a claim and on a
request for a review of a denied claim shall be served on the
claimant in writing. If a decision or notice is not received
by a claimant within the time specified, the claim or request
for a review of a denied claim shall be deemed to have been
denied.
(f) Prior to filing a claim or a request for a review of a denied
claim, the claimant or his representative shall have a
reasonable opportunity to review a copy of this Agreement and
all other pertinent documents in the possession of the
Employer, and the Board of Directors.
-16-
SECTION 7
PLAN ADMINISTRATION
7.1. Employer.
7.1.1. Officers. Functions generally assigned to the Employer shall
be discharged by the officers of ADC TELECOMMUNICATIONS, INC. (other than
XXXXXXX X. XXXXXXX) or delegated and allocated as provided herein.
7.1.2. Delegation By Board. Except as hereinafter provided, the Board
of Directors of ADC TELECOMMUNICATIONS, INC. may delegate or redelegate and
allocate and reallocate to one or more persons or to a committee of persons
jointly or severally, and whether or not such persons are directors, officers or
employees, such functions assigned to the Employer hereunder as it may from time
to time deem advisable.
7.1.3. Non-Delegable Functions. The Board of Directors of ADC
TELECOMMUNICATIONS, INC. shall have the exclusive authority, which authority may
not be delegated, to act for the Employer to amend this Agreement and to
terminate the Agreement.
7.2. Administrator. ADC TELECOMMUNICATIONS, INC. shall be the administrator
for purposes of section 3(16)(A) of the Employee Retirement Income Security Act
of 1974.
7.3. Service of Process. In the absence of any designation to the contrary by
ADC TELECOMMUNICATIONS, INC., the Secretary of ADC TELECOMMUNICATIONS, INC. is
designated as the appropriate and exclusive agent for the receipt of service of
process directed to the Agreement in any legal proceeding, including
arbitration, involving the Agreement.
-17-
SECTION 8
MISCELLANEOUS RULES
The continuance of this Agreement shall not be a term of the employment of
XXXXXXX X. XXXXXXX. The Employer shall not be obliged to continue the
Agreement. The terms of this Agreement shall not give him the right to be
retained in the employment of the Employer. Neither the officers nor the
members of the Board of Directors of ADC TELECOMMUNICATIONS, INC. in any way
guarantee the payment of any benefit or amount which may become due and payable
hereunder to him, or surviving spouse. He and surviving spouse shall look
solely to the assets of ADC TELECOMMUNICATIONS, INC. for such payments.
IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be
executed as of the day and year first above written:
ADC TELECOMMUNICATIONS, INC. XXXXXXX X. XXXXXXX
By ___________________________ By ___________________________
Its________________________ Its________________________
-18-
APPENDIX A
DETERMINATION OF ACTUARIAL EQUIVALENT
TO SINGLE LIFE ANNUITY
Section 1. Lump Sum Settlements. When converting benefits to a single
lump sum for payment to XXXXXXX X. XXXXXXX, the benefit to be converted is the
Single Life Annuity form payable at the latest date such benefit may commence.
When converting benefits to a single lump sum for payment to any other person,
the benefit to be converted shall be the benefit payable to such other person at
the latest date such benefit may commence. The factors to be used to convert
the Single Life Annuity form to a lump sum benefit shall be:
Interest Assumption: During each stability period, the annual rate of
interest on 30-year Treasury securities for the
lookback month. The stability period shall be the Plan
Year. The lookback month shall be the second calendar
month preceding the commencement of the stability
period.
Mortality Assumption: The mortality rate determined from the table prescribed
by the Secretary of the Treasury under section
417(e)(3)(A)(ii)(I) of the Code based on the prevailing
commissioners' standard table used to determine
reserves for group annuity contracts.
Section 2. Defined Contribution Plan Accrual. To determine the Actuarial
Equivalent annuity value of XXXXXXX X. XXXXXXX'X account balances attributable
to contributions of the Employer in defined contribution plans as of a specified
date (expressed in the Single Life Annuity form beginning on the first day of
the calendar month following his Normal Retirement Age) the following steps
shall be followed:
(a) Determine the value of all such defined contribution plan accounts
as of the valuation date under each defined contribution plan which
is coincident with or immediately preceding such specified date;
(b) Increase such account balances from such valuation dates to the last
day of the calendar month in which his Termination of Employment
occurs or, if later, the last day of the calendar month in which he
would attain age sixty (60) years at an assumed rate of earnings
equal to eight percent (8%), compounded annually;
(c) Convert the resulting total to an Actuarial Equivalent amount of
monthly annuity in the Single Life Annuity form commencing on the
last day of the calendar month in which his Termination of
Employment occurs or, if later, the last day of the calendar month
in which he would attain age sixty (60) years by applying the
interest and mortality factors set forth in Section 1 above.
Section 3. General Factors. Except to the extent otherwise specified
in the Agreement, the following interest and mortality factors shall be used in
determining the Actuarial Equivalent amount of any benefit:
Interest Assumption: During each stability period, the annual rate of
interest on 30-year Treasury securities for the
lookback month. The
A-1
stability period shall be the Plan Year. The lookback
month shall be the second calendar month preceding the
commencement of the stability period.
Mortality Assumption: The mortality rate determined from the table prescribed
by the Secretary of the Treasury under section
417(e)(3)(A)(ii)(I) of the Code based on the prevailing
commissioners' standard table used to determine
reserves for group annuity contracts.
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