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TWIN DISC,
INCORPORATED
SUPPLEMENTAL RETIREMENT
PLAN
(As Amended
and Restated Effective July 24, 2008)
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TWIN DISC,
INCORPORATED
SUPPLEMENTAL RETIREMENT
PLAN
(as amended
and restated effective July 24 2008)
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Effective
January 1, 1984, the Company adopted the Twin Disc, Incorporated
Supplemental Retirement Plan to ensure the payment of a competitive
level of retirement income in order to retain and motivate selected
executives. The Plan was amended effective January 1, 1985 for
executives named to the Plan on or after January 1, 1985. Effective
as of January 1, 1998, the Plan was amended and restated to, among
other things, change the formula for calculating the amount of
benefits payable to executives who were participants in the Plan as
of December 31, 1997 but who had not yet terminated employment as
of such date.
The rights and benefits,
if any, of a Participant who terminated employment prior to January
1, 1998, shall be determined in accordance with the provisions of
the Plan as in effect on the date his employment
terminated.
Effective
July 28, 2005, the Committee amended and restated the Plan to
comply with section 409A of the Internal Revenue Code by
eliminating elections among distribution options and imposing a
uniform method of distributing Plan benefits for all Participants.
All amounts deferred under the Plan as of July 28, 2005, but not
yet paid to Participants, whether or not earned and vested (within
the meaning of IRS Notice 2005-1) as of December 31, 2004, shall be
subject to the revised provisions of the Plan as stated herein.
Between December 31, 2004, and July 28, 2005, no Participant
retired and no Participant made an election to receive an optional
form of distribution under the Plan provisions as in effect prior
to July 28, 2005.
Effective
July 24, 2008, the Committee amended and restated the Plan to
comply with the final regulations issued under Section 409A of the
Internal Revenue Code.
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1.1
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"Actuarial Equivalent"
means equality in value of the aggregate amounts expected to be
received under different forms of payment, based on the 1983 Group
Annuity Mortality Table (male table only), with interest at
8.0%.
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1.2
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"Average Annual Earnings"
means the average compensation used in benefit calculations,
determined in accordance with the Schedule applicable to such
Participant.
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1.3
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"Basic Plan" means the
Twin Disc, Incorporated Retirement Plan for Salaried Employees
(amended and restated effective January 1, 1997), as amended from
time to time.
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1.4
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"Basic Qualified Plan
Benefit" means twelve times the amount defined in Section 1.2
(“Accrued Benefit”) of the Basic Plan.
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1.5
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"Committee" means the
Compensation Committee of the Board of Directors of the Company,
which has been given complete and discretionary authority by the
Board of Directors to administer and interpret this
Plan.
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1.6
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"Company" means Twin
Disc, Incorporated.
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1.7
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"Disabled" means that a
Participant is receiving monthly disability income benefits under
the Company’s long term disability plan.
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1.8
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"Earnings" means total
compensation used in the calculation of Average Annual Earnings,
which is determined in accordance with the Schedule applicable to
such Participant.
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1.9
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“Employee”
means any person in the employ of the Company.
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1.10
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"Participant" means an
Employee of the Company designated as a Participant by the
Committee. An Employee shall become a Participant in the Plan as of
the date he is individually selected by, and specifically named in
the resolutions of, the Committee for inclusion in the Plan. A
Participant shall cease to be an active Participant in this Plan
and he shall not be entitled to receive benefits hereunder if he
ceases to be an Employee of the Company for any reason other than
Early Retirement or disability as defined in Section 3.4 prior to
his sixty-fifth (65th) birthday.
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2
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1.11
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"Plan" means the
Company's Supplemental Retirement Plan as stated herein.
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1.12
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"Plan Year" means the
twelve (12) consecutive month period ending June 30.
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1.13
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“Prior Plan”
means the Twin Disc, Incorporated Supplemental Retirement Plan in
effect immediately prior to January 1, 1998.
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1.14
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"Retirement" or
“Retire” means a Participant’s Separation from
Service on or after one of the retirement dates specified in
Section 2.1.
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1.15
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“Separation from
Service” means a termination of employment with the Company
and all affiliates within the meaning of Section 409A(a)(2)(A) of
the Internal Revenue Code and the default rules set forth in
Treasury Regulation section 1.409A-1(h)
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1.16
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"Service" means the
aggregate of all periods of employment of an Employee by the
Company, including full and partial years, calculated from his date
of employment. Service will include the period of time, if any,
during which a Participant received disability income benefits
under the Company’s long term disability plan.
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1.17
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"Surviving Spouse" means
an individual who is a surviving spouse of a Participant as defined
under the Basic Plan.
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The
masculine gender, where appearing in the Plan will be deemed to
include the feminine gender, and the singular may include the
plural, unless the context clearly indicates the
contrary.
3
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SECTION II - ELIGIBILITY
FOR BENEFITS
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2.1
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Each Participant is
eligible to Retire and receive a benefit under this Plan beginning
on or after one of the following dates:
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(a)
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"Normal Retirement
Date,” which is the first day of the month coinciding with or
next following a Participant’s sixty-fifth (65th) birthday
with at least five (5) years of Service.
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(b)
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"Early Retirement
Date,” which is the first day of any month following the
month in which the Participant reaches the age and Service
requirement set forth in the attached Schedule for each
Participant.
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(c)
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"Postponed Retirement
Date,” which is the first day of the month following the
Participant's Normal Retirement Date in which the Participant
terminates employment with the Company.
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2.2
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If a Participant
experiences a Separation from Service before one of the Retirement
dates listed in Section 2.1, his benefit shall be forfeited.
Notwithstanding the foregoing, if a Participant has a Separation
from Service before one of the Retirement dates listed in Section
2.1 due to becoming Disabled, he shall vest in his benefits under
this Plan and shall be paid his benefits under this Plan only as
described in Section 3.4 below.
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2.3
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Anything herein to the
contrary notwithstanding, if any Participant (including a
Participant that has terminated employment with the Company)
engages in competition with the Company (without prior
authorization given by the Committee in writing) or is discharged
for cause, or performs acts of willful malfeasance or gross
negligence in a matter of material importance to the Company, all
rights to any benefits payable under this Plan thereafter (whether
payable to such Participant or such Participant’s Surviving
Spouse) shall, at the discretion of the Committee, be forfeited and
the Company will have no further obligation hereunder to such
Participant or Surviving Spouse.
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4
SECTION III - AMOUNT AND
FORM OF RETIREMENT BENEFIT
Amount
of Benefit
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3.1
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The annual benefit
payable at a Normal Retirement Date will equal the amount
determined in accordance with the Schedule applicable to such
Participant.
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3.2
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The annual benefit
payable at an Early Retirement Date will equal the benefit
determined in accordance with the Schedule applicable to such
Participant.
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3.3
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The annual benefit
payable at a Postponed Retirement Date will be equal to the benefit
determined in accordance with Section 3.1 as of the Participant's
Postponed Retirement Date.
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3.4
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With respect to a
Participant who experiences a Separation from Service due to
becoming Disabled before reaching his Early Retirement Date or
Normal Retirement Date:
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(a)
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Subject to subsection
(b), such Participant shall vest in his benefits under the Plan on
the date that he would have attained his Early Retirement Date or
Normal Retirement Date (or, if later, on the first day of the
seventh month following the month in which he became Disabled). The
period of time that such Participant is Disabled shall be counted
in determining whether and when the Participant would have attained
his Early Retirement Date or Normal Retirement Date. Such
Participant’s Retirement Benefit shall be calculated and paid
as described in Section 3.1 or 3.2 of the Plan, whichever may be
applicable, based on Average Annual Earnings calculated at the time
of his initial disablement and Service that would have accumulated
has the Participant remained employed by the Company from the date
he became Disabled until the earlier of the date he would have
attained his Early Retirement Date or Normal Retirement
Date.
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(b)
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Notwithstanding
subsection (a), should a Participant who experiences a Separation
from Service due to becoming Disabled before attaining his Early
Retirement Date or Normal Retirement Date cease to be Disabled
before vesting in his benefits under subsection (a) and refuse an
offer by the Company to return to active employment with the
Company in a position that is substantially comparable to the
position he held when he became Disabled, his benefit under the
Plan shall be forfeited.
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3.5
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The benefit determined
under this Plan in accordance with Section 3.1, 3.2 or 3.3 is
calculated in the form of a single life annuity, stated in terms of
benefits for the life of the Participant with no benefits payable
to any beneficiary.
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Any benefits payable
under this Plan will automatically be paid in a Two Payment
Deferred Lump Sum Form, under which two equal payments will be made
to the Participant (or his Surviving Spouse or named beneficiary if
the Participant dies prior to all of the payments being made), with
the first payment to be made on the February 1 following the
calendar year of Retirement, and the second payment to be made on
February 1 of the following year. The two payments shall be the
Actuarial Equivalent of the annual benefit calculated under the
single life annuity form. Notwithstanding the foregoing:
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5
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(a)
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If each of the two lump
sum payments described herein would otherwise exceed $500,000, each
such payment shall be limited to $500,000, with the unpaid balance
following the second such payment increasing at 8% per year
beginning on the date of the second such payment, and additional
payments (also limited to $500,000 each) will be made on each
subsequent February 1 until the balance is paid; and
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(b)
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If the commencement of
benefits is based upon a Participant’s Separation from
Service, the first payment to or with respect to such Participant
shall be no earlier than the date that is six months after the date
of the Participant’s Separation from Service (or, if earlier,
the date of death of the Participant).
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Additional Basic Plan
Benefit
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3.6
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Upon Retirement, a
Participant who elects to receive any or all of their monthly
benefits from the Basic Plan immediately in the form of a Joint and
Survivor Annuity for Married Participant (Section 5.1(b) of the
Basic Plan) will receive an additional benefit from this Plan. This
benefit is intended to make-up for the reduction in monthly Basic
Plan benefits due to Joint and Survivor coverage and is equal to
the difference, if any, between the monthly Basic Plan benefit
payable immediately in the single life form and the monthly Basic
Plan benefit payable immediately in the Joint and Survivor Annuity
for Married Participant form. In the event the Participant elects
to receive all or a part of the Basic Plan benefit as a single life
annuity or as a lump sum, the additional benefit calculated in this
Section 3.7 will not be based on the portion of the Basic Plan
benefit that is paid in a form other than the Joint and Survivor
Annuity for Married Participant.
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The benefit determined
under this Section 3.6 is calculated in the form of a single life
temporary annuity, stated in terms of benefits for the shorter of
the life of the Participant or 120 monthly payments. The Actuarial
Equivalent of such benefit shall be added to, and paid in the form
of, the Two Payment Deferred Lump Sum described in Section 3.5
above. The $500,000 limit on any given payment described in Section
3.5 shall apply to the combined benefit determined under Section
3.1, 3.2 or 3.3 and this Section 3.6.
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No additional benefit
under this Section 3.6 shall be paid if the Participant does not
elect to receive Basic Plan benefits commencing at the same time as
any other benefits payable under this Plan.
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6
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SECTION IV - PAYMENT OF
RETIREMENT BENEFITS
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