Exhibit
10.26
QUEST
DIAGNOSTICS INCORPORATED
SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
(As Amended
and Restated Effective November 7, 2008)
QUEST
DIAGNOSTICS INCORPORATED
SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
TABLE OF
CONTENTS
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Page
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ARTICLE I DEFINITIONS
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1.1
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Definitions
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1
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1.2
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Rules of
Construction
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3
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ARTICLE II ELIGIBILITY AND
PARTICIPATION
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2.1
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Eligibility
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4
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2.2
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Participation
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4
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ARTICLE III RETIREMENT
BENEFIT AND DEATH BENEFIT
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3.1
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Retirement
Benefit
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5
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3.2
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Death
Benefit
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6
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ARTICLE IV FORM AND TIMING
OF RETIREMENT BENEFIT
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4.1
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Form
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8
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4.2
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Timing
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8
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ARTICLE V VESTING
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5.1
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Vesting
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9
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ARTICLE VI ADMINISTRATION
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6.1
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Committee
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10
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6.2
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Claims
Procedures
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10
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ARTICLE VII FUNDING
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7.1
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General
Rule
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11
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ARTICLE VIII AMENDMENT AND
TERMINATION
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8.1
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General
Rule
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12
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ARTICLE IX GENERAL
PROVISIONS
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9.1
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Payments to
Minors and Incompetents
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13
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9.2
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No
Contract
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13
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9.3
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Non-Alienation
of Benefits
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13
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9.4
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Income Tax
Withholding
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13
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9.5
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Governing
Law
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13
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i
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9.6
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Captions
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13
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9.7
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Severability
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13
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9.8
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Notices
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13
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Appendix A
– Actuarial Assumptions
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ii
PREAMBLE
Effective
December 14, 2004, Quest Diagnostics Incorporated (the
“Company”) established this nonqualified defined
benefit pension plan referred to as the Supplemental Executive
Retirement Plan (the “Plan”) for the benefit of the
Chief Executive Officer of the Company.
The
Plan was amended, effective December 14, 2004, to amend certain
definitions and the benefit multiplier.
The
Plan is hereby amended and restated, effective November 7, 2008, to
incorporate the foregoing amendment and to reflect amendments to
comply with Section 409A of the Code.
The
Plan is an unfunded nonqualified pension plan that is intended to
qualify as a “top hat plan” for purposes of the
Employee Retirement Income Security Act of 1974, as amended.
Furthermore, the Plan is intended to satisfy and comply with all
requirements of Section 409A of the Internal Revenue Code of 1986,
as amended, and shall be interpreted accordingly.
ARTICLE I
DEFINITIONS
1.1
Definitions . The following words and phrases when used in
the Plan shall have the meanings indicated in this Article
I.
“
Actuarial Equivalence ” or “ Actuarially
Equivalent ” means a benefit of equal value, determined
using the actuarial assumptions set forth in Appendix A.
“
Annual Bonus ” means the regular annual bonus paid (or
which would have been paid but for a deferral election by the
Participant) under the Company’s Management Incentive Plan
(as amended from time to time and any successor
thereto).
“
Annuity Forms of Benefit ” means the 50% Joint and
Survivor Annuity, the Five-Year Certain Annuity, and the Single
Life Annuity. All Annuity Forms of Benefit shall be of Actuarially
Equivalent value.
“
Base Pay ” means the monthly salary paid to the
Participant by the Company (or which would have been paid but for a
deferral election by the Participant).
“
Beneficiary ” means (a) the Participant’s Spouse
if the 50% Joint and Survivor Annuity is elected, or (b) any
individual designated in accordance with procedures established by
the Committee as the beneficiary, where the Participant has elected
the Five-Year Certain Annuity.
“
Benefit Starting Date ” means the first day of the
calendar month following a Termination from Service
Date.
“
Board ” means the Board of Directors of the
Company.
“
Cause ” means “Cause” as defined in
Section 10(a) of the Employment Agreement.
“
Chief Executive Officer ” or “
Participant ” means Dr. Surya N. Mohapatra.
“
Code ” means the Internal Revenue Code of 1986, as
amended.
“
Committee ” means the committee of the Board
designated by the Board to administer the Plan. Unless the Board
shall determine otherwise, the Committee shall be the Compensation
Committee of the Board.
“
Company ” means Quest Diagnostics Incorporated, a
Delaware corporation, and any entity that acquires or succeeds to
all or substantially all of the Company’s business or assets
and any successor to any such entity.
“
Credited Service ” means all calendar months of
employment with the Company, whether or not consecutive. Calendar
months in which a Participant was employed during the month shall
be treated as a period of Credited Service.
“
Disability ” means “disability” as defined
in Section 10(b) of the Employment Agreement.
“
Earliest Retirement Date ” means the first day of the
calendar month following the completion of 96 months of Credited
Service.
“
Employment Agreement ” is the Employment Agreement
Between Surya N. Mohapatra and Quest Diagnostics Incorporated, as
amended and restated effective November 7, 2008, and as may be
otherwise amended from time to time thereafter in accordance
therewith.
“
Employment Term ” means “Employment Term”
as defined in the Employment Agreement.
“
ERISA ” means the Employee Retirement Income Security
Act of 1974, as amended, and the regulations thereunder.
“
50% Joint and Survivor Annuity ” means a form of
payment whereby the benefit is paid in monthly installments
commencing on the Benefit Starting Date and continuing for the
lifetime of the Participant, with 50% of such amount being paid to
the Spouse of such Participant for as long as the Spouse survives
after the Participant’s death.
“
Final Average Pay ” means an annual amount, determined
in accordance with the formula P/Y, where “ P ”
is the sum of the Participant’s Base Pay and Annual Bonuses
for the highest three complete consecutive calendar years of the
Executive’s final five complete calendar years prior to his
Termination from Service Date and “ Y ” is
three. For this purpose, each Annual Bonus shall be taken into
account in the fiscal year for which it is earned, regardless of
when paid.
For purposes of
determining Final Average Pay, Base Pay and Annual Bonuses shall be
determined including amounts that may have been deferred pursuant
to any qualified or nonqualified plan of the Company.
“
Five-Year Certain Annuity ” means a form of payment
whereby the benefit is paid in monthly installments commencing on
the Benefit Starting Date and continuing for the longer of (a) the
lifetime of the Participant or (b) 60 months.
“
Good Reason ” means “Good Reason” as
defined in Section 10(d) of the Employment Agreement.
“
Lump Sum ” means the single sum benefit that is the
Actuarial Equivalent of an immediately commencing Retirement
Benefit.
“
Normal Retirement Date ” means the first of the month
coincident with or next following the Participant’s 62
nd anniversary of birth.
“
Plan ” means this Quest Diagnostics Supplemental
Executive Retirement Plan, as set forth herein and as amended from
time to time in accordance herewith.
“
Retirement Benefit ” has the meaning set forth in
Section 3.1.
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“
Single Life Annuity ” means a form of payment whereby
the benefit is paid in monthly installments commencing on the
Benefit Starting Date and continuing for the lifetime of the
Participant.
“
Spouse ” means the person to whom the Participant is
legally married on the Benefit Starting Date.
“
Termination from Service Date ” means the date on
which the Participant’s employment with the Company
terminates; provided, however, for purposes of this Plan with
respect to any payment or benefit due upon a termination of the
Participant’s employment that represents a “deferral of
compensation” within the meaning of Section 409A of the Code,
“Termination from Service Date” shall mean the date the
Participant has a “separation from service” (within the
meaning of Treas. Reg. 1.409A-1(h)).
“
Years of Credited Service ” means (a) the number of
completed calendar months of Credited Service from the
Participant’s original date of hire (taking into account all
consecutive and nonconsecutive periods of employment) times 1.13,
divided by (b) 12. However, if (a) the Company provides to the
Participant a notice of non-renewal of the Employment Agreement
(pursuant to Section 2 thereof) which causes the Employment Term to
end before he has attained age 60, or (b) the Participant’s
employment is otherwise terminated by the Company other than for
Cause or is terminated by the Participant for Good Reason before he
has attained age 60, then the multiplier shall be 1.29 rather than
1.13. If the Participant’s employment is terminated by the
Company other than for Cause or is terminated by the Participant
for Good Reason on or after the date the Participant attains age 60
and before the date he attains age 62, then for purposes of
calculating the Participant’s “Years of Credited
Service” he shall be credited with additional months of
Credited Service equal to the excess, if any, of (i) the number of
months of severance benefits the Participant is eligible to receive
under Section 11(e)(i) of the Employment Agreement (that is 24
months, or 36 months in the case of a CIC Severance Event, as
defined therein) over (ii) the number of months of service the
Participant has completed from the date he attained age 60 through
the Termination from Service Date.
1.2
Rules of Construction . The singular form of a word shall be
deemed to include the plural form, unless the context requires
otherwise. Unless indicated otherwise, references herein to
articles and sections are to articles and sections of the
Plan.
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ARTICLE II
ELIGIBILITY
AND PARTICIPATION
2.1
Eligibility. The Chief Executive Officer is the sole
Participant in this Plan.
2.2
Participation .
(a)
Commencement . The Chief Executive Officer shall commence
participation on December 14, 2004.
(b)
Duration . The Participant shall continue to be a
Participant as long as he is entitled to a Retirement Benefit under
the Plan.
(c)
Effect of Reemployment .
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(i)
If the Participant incurs a Termination from Service Date for any
reason he shall cease to accrue any benefits under this Plan and if
he is subsequently reemployed, no Base Salary or Annual Bonus paid
after such reemployment nor any Credited Service shall be taken
into account in determining any benefit under this Plan.
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(ii)
Notwithstanding anything in the Plan to the contrary, Annuity Forms
of Benefit shall not be suspended if the Participant is
subsequently reemployed by the Company.
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4
ARTICLE III
RETIREMENT
BENEFIT AND DEATH BENEFIT
3.1
Retirement Benefit .
(a)
Benefit Starting Date on or After Normal Retirement Date .
The annual Retirement Benefit payable to the Participant if his
Benefit Starting Date occurs on or after his Normal Retirement Date
is a life annuity equal to 1.2% times his Final Average Pay times
his Years of Credited Service accrued on or before July 31, 2006,
and 2.2% times his Final Average Pay times his Years of Credited
Service accrued after July 31, 2006.
(b)
Benefit Starting Date on or After Earliest Retirement Date .
The annual Retirement Benefit payable where the Participant’s
Benefit Starting Date occurs on or after his Earliest Retirement
Date but before his Normal Retirement Date shall be an immediately
commencing life annuity equal to 1.2% times the Participant’s
Final Average Pay times his Years of Credited Service accrued on or
before July 31, 2006, and 2.2% times his Final Average Pay times
his Years of Credited Service accrued after July 31, 2006, reduced
by 0.5% for each month that the Benefit Starting Date precedes the
Normal Retirement Date.
(c)
Benefit Starting Date Before Earliest Retirement Date . If
the Participant’s employment with the Company is terminated
before the Earliest Retirement Date (i) by the Company for Cause,
or (ii) by the Participant other than for (x) Good Reason, (y)
Disability or (z) death, then no benefit shall be payable from this
Plan. If