Exhibit 10.20
FLIR SYSTEMS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT
PLAN
EFFECTIVE JANUARY 1,
2001
AS AMENDED AND RESTATED ON
OCTOBER 22, 2008, EFFECTIVE JANUARY 1, 2005,
FOR BENEFITS ACCRUED AND/OR
VESTED AFTER DECEMBER 31, 2004
This FLIR Systems, Inc. Supplemental
Executive Retirement Plan (the “Plan”) was originally
adopted effective January 1, 2001. The Plan is intended to
promote the best interests of the Company by enabling the Company
to retain in its employ those key employees who have materially
contributed to the success of the business through their
outstanding efforts, and to attract persons of outstanding ability
to its key management positions. Throughout the Plan, the term
“Company” shall mean FLIR Systems, Inc., but shall also
include wherever applicable (with such applicability determined
solely in the discretion of the Committee) any entity that is
directly or indirectly controlled by the Company. The Plan is
amended and restated effective January 1, 2005 for the purpose
of complying with Section 409A of the Code and the Treasury
Regulations and other guidance issued thereunder. The Company
intends to take full advantage of the grandfathering available
under Section 409A of the Code. Benefits that were accrued and
vested under the Plan as of December 31, 2004 will remain
subject to the terms of the Plan in effect on December 31,
2004. Benefits accrued and vested after December 31, 2004
shall be subject to this Plan as amended and restated
herein.
ARTICLE I
DEFINITIONS
Whenever used herein, the masculine
pronoun shall be deemed to include the feminine, and the singular
to include the plural, unless the context clearly indicates
otherwise. The following definitions shall govern the
Plan:
1.1 “ 409A Minimum
Benefit ” means the portion of an Employee’s
Minimum Benefit that was accrued and/or vested after
December 31, 2004, determined under Section 4.2(e) of the
Plan.
1.2 “ 409A Subaccount
” means the portion of an Employee’s Account that was
accrued and/or vested after December 31, 2004 and all earnings
credited with respect to such amounts.
1.3 “ Account ”
means the account established under the Plan for each Employee to
which the benefit amounts and Account Earnings under Article III
shall be separately credited.
1.4 “ Account Earnings
” means the earnings which shall be credited to Employee
Accounts pursuant to Article III.
1.5 “ Board of
Directors ” or “ Board ” means the
Board of Directors of FLIR Systems, Inc.
1.6 “ Cause ”
means an Employee’s:
(a) Willful engagement in any
misconduct in the performance of his duties that materially harms
the Company, monetarily or otherwise;
(b) Performance of any act which, if
known to the Company’s customers, clients or stockholders,
would materially and adversely affect the Company’s business;
or
(c) Willful and substantial
nonperformance of assigned duties (other than any such failure
resulting from the Employee’s incapacity due to physical or
mental illness) which has continued after the Board has given
written notice of such nonperformance to the Employee, which notice
specifically identifies the manner in which the Board believes that
the Employee has not substantially performed his duties
and
-1-
which indicates the Board’s
intention to terminate the Employee’s employment because of
such nonperformance. For purposes of (a) and (c) above,
no act or omission on the Employee’s part shall be deemed
“willful” if committed or omitted in good faith and
with a reasonable belief that his action was in the best interest
of the Company.
1.7 “ Change of Control
” means a merger or consolidation to which the Company is a
party if the individuals and entities who were stockholders of the
Company immediately prior to the effective date of such merger or
consolidation have beneficial ownership (as defined in Rule 13d-3
under the Securities Exchange Act of 1934) of less than fifty
percent (50%) of the total combined voting power for election
of directors of the surviving corporation immediately following the
effective date of such merger or consolidation; provided
that any such transaction shall constitute a Change of Control with
respect to an Employee’s 409A Subaccount or 409A Minimum
Benefit only if it qualifies as a change in ownership of the
Company, a change in effective control of the Company, or a change
in ownership of a substantial portion of the assets of the Company
as such terms are defined in Treasury Regulation
§1.409A-3(i)(5)(v), (vi), and (vii), respectively.
1.8 “ Code ”
means the Internal Revenue Code of 1986, as amended.
1.9 “ Committee ”
means the administrative committee appointed by the CEO to
administer the Plan. The Committee shall consist of not less than
two persons and shall be responsible for administration of the
Plan.
1.10 “ Compensation
” means the salary, bonus (including the value on the date of
grant of any Company stock received in lieu of bonus) and
commissions payable to an Employee during the Plan Year and
considered to be “wages” for purposes of federal income
tax withholding, before reduction for salary reduction
contributions under Section 401(k) of the Code, or amounts
deferred under any other deferral arrangements. Compensation does
not include expense reimbursements, severance pay, any form of
noncash compensation or benefits, group life insurance premiums,
income from the exercise of stock options or other receipt of
company stock (other than stock received in lieu of bonus),
payments triggered by a change of control under employment
agreements or other agreements between an Employee and the Company,
or any other payments or benefits other than normal salary, bonus,
or commissions.
1.11 “ Disability
” means the Employee qualifies for a disability benefit under
the Company’s Long Term Disability Plan; provided that
with respect to an Employee’s 409A Subaccount and 409A
Minimum Benefit the Employee also is either:
(a) unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months; or
(b) is, by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits
for a period of not less than three months under an accident and
health plan covering the employees of the Company.
1.12 “ Early Retirement
” means termination of employment with the Company at or
after age 55 with at least five full years of prior service with
the Company.
-2-
1.13 “ Earnings Rate
” means the interest rate to be applied to Employee Accounts.
The Earnings Rate shall be used to determine Account Earnings which
will be compounded quarterly. The Earnings Rate shall equal the
prime lending rate plus 200 basis points and shall be established
at the end of each quarter for the following quarter. The Earnings
Rate shall be communicated to Employees after it is established
each quarter. After a Change of Control, the Earnings Rate may not
be reduced below the Earnings Rate in effect on the date of the
Change of Control.
1.14 “ Effective Date
” means January 1, 2001.
1.15 “ Employee ”
means a highly compensated or key management employee who has been
designated by the CEO as eligible to participate in this
Plan.
1.16 “ Grandfathered
Minimum Benefit ” means the portion of an
Employee’s Minimum Benefit that was accrued and vested as of
December 31, 2004, determined under Section 4.2(e) of the
Plan.
1.17 “ Grandfathered
Subaccount ” means the portion of an Employee’s
Account that was accrued and vested as of December 31, 2004
and all earnings thereafter credited with respect to such
amount.
1.18 “ Normal
Retirement ” means termination of employment with the
Company at or after age 60.
1.19 “ Plan ”
shall mean this FLIR Systems, Inc. Supplemental Executive
Retirement Plan, as it may be amended from time to time.
1.20 “ Plan Year
” means the 12-month period commencing on January 1 and
ending on December 31.
1.21 “ Specified
Employee ” means each Employee who participates in the
Plan.
ARTICLE II
ELIGIBILITY
2.1 Eligible Persons .
Eligibility for participation in the Plan shall be limited to the
Chief Executive Officer of the Company (the “CEO”) and
employees of the Company on its U.S. payroll who report directly to
the CEO and who are designated as eligible to participate by the
CEO, in his sole discretion. Individuals who are eligible shall be
notified by the Company in writing as to their eligibility to
participate in the Plan.
2.2 Commencement of
Participation . The initial group of eligible Employees began
participating in the Plan on Effective Date. Employees who became
or become eligible after the Effective Date have begun, or shall
begin, participation in the Plan on the date chosen by the
CEO.
2.3 Termination of
Participation . Active participation in the Plan shall end when
an Employee’s employment terminates for any reason. Upon
termination of employment, an Employee shall remain an inactive
participant in the Plan until all of the benefits to which he or
she is entitled hereunder have been paid in full.
-3-
ARTICLE III
PLAN ACCOUNTS
3.1 Retirement
Account
(a) A separate Account shall be
established for each eligible Employee. All Accounts will be
maintained on the books of the Company and the Company is under no
obligation to segregate any assets to provide for the Accounts
established under the Plan.
(b) After the Effective Date, on the
last day of the Plan Year, Accounts of active Employees shall be
credited with an amount equal to 10% of the Employee’s
Compensation paid to the Employee during the Plan Year.
(c) At the end of each calendar
quarter, Employee Accounts will be credited with Account Earnings
which shall be compounded quarterly. Account Earnings shall
continue to be credited to the Account as long as an Employee has a
positive Account balance.
(d) Each Employee’s Account as
of the end of each quarter shall consist of the amounts credited
under Section 3.1(b) plus Account Earnings under
Section 3.1(c) minus the amount of any distributions made
during the quarter.
(e) Each Employee’s Account
shall be segregated into a Grandfathered Subaccount and a 409A
Subaccount. The Grandfathered Subaccount shall include the value of
the accrued and vested Account as of December 31, 2004 and all
future earnings credited with respect to such amount. The 409A
Subaccount shall include that portion of the Account accrued and/or
vested after December 31, 2004 and all future earnings
credited with respect to such amounts.
3.2 Account Vesting
.
(a) Accounts of Employees who are
younger than 50 years old upon initially becoming a Plan
participant shall vest at the rate of ten percent (10%) for
each full year of participation in the Plan. Vesting increases
shall occur on the first day of the Plan Year following the year in
which the vesting increase is earned.
(b) Accounts of Employees who are
age 50 or older upon initially becoming a Plan participant shall
vest ratably over the number of years between the Employee’s
age at the end of the first Plan Year of participation and age 60.
( Example: An Employee is age 56 on the last day of the first
Plan Year of participation. Such Employee will vest in the Plan
benefit over 4 years, with 1/4 of such vesting occurring upon
completion of each year of participation in the plan). Such
ratable vesting shall take into account any additional service
credits received under Sections 3.2(c) or (d) below. (
Example: The same Employee receives 5 years of prior service
credits under Section 3.2(c) which results in an initial
vesting percentage of 25%. Such Employee will achieve the remaining
75% vesting in equal increments over the following four years of
participation in the Plan). Vesting increases shall occur on
the first day of the Plan Year following the year in which the
vesting increase is earned.
-4-
(c) Employees with prior years of
service with the Company shall receive vesting credits of 5% for
each full year of prior service with the Company, to a maximum
additional vesting of twenty-five percent (25%).
(d) In its sole discretion, the
Committee may grant an Employee additional vesting credits for
service at a company acquired by the Company. Such prior service
credits shall be granted upon entry into the Plan and shall be
communicated to the Employee at that time. Additional vesting
credits under this section and Section 3.2(c) shall not exceed
twenty-five percent (25%) in total.
(e) If an Employee terminates
employment for any reason prior to Normal Retirement, death, or
Disability, the Employee will forfeit the non-vested portion of his
Account. Amounts forfeited under the Plan shall not be credited to
Accounts of other Employees, but shall reduce the liability of the
Company under the Plan.
(f) In the event an Employee
terminates employment with the Company at Normal Retirement or on
account of death or Disability, the Employee shall be fully vested
in his or her Account and no part of such Account may be thereafter
forfeited under Section 3.2(e).
(g) In the event of a Change of
Control, all Employees shall be fully vested in their Accounts, and
no amounts shall thereafter be forfeited under
Section 3.2(e).
3.3 No Withdrawal . Amounts
credited to an Employee’s Account may not be withdrawn or
borrowed by the Employee and shall be paid to the Employee only in
accordance with the provisions of this Plan.
ARTICLE IV
DISTRIBUTION OF PLAN
BENEFITS
4.1 Normal Retirement Benefit
. An Employee who terminates employment with the Company as a
result of Early Retirement, Normal Retirement or within two years
after a Change of Control, shall be entitled to receive payment of
his or her vested Account balance in substantially equal annual
installments, including principal and interest, over 20 years, with
the first such payment due within 60 days of termination (subject
to the application of Section 4.4 with respect to the transfer
of an annuity to the Employee and Section 4.7 with respect to
Specified Employees).
4.2 Minimum Re
