AVIS RENT A CAR SYSTEM, LLC PENSION PLAN EFFECTIVE JUNE 1, 2006 AVIS RENT A CAR SYSTEM, LLC PENSION PLAN INTRODUCTION

Exhibit 10.20

AVIS RENT A CAR SYSTEM, LLC

PENSION PLAN

EFFECTIVE JUNE 1, 2006

AVIS RENT A CAR SYSTEM, LLC PENSION PLAN

INTRODUCTION

This amended and restated Avis Rent A Car System, LLC Pension Plan (the “Plan”) is made effective as of June 1, 2006. The Plan is an amendment and restatement of Part II of the Cendant Corporation Pension Plan in connection with the spin-off of Realogy Corporation by Cendant Corporation (the “Sponsor”) as part of a special dividend distribution to its shareholders (the “Dividend Distribution”). This Plan is identical in all material respects to Part II of the Cendant Corporation Pension Plan.

In connection with the Dividend Distribution, the Sponsor and Realogy Corporation agreed to separate the Cendant Corporation Pension Plan into two plans, this Plan and the Realogy Corporation Pension Plan. The Realogy Corporation Pension Plan is effective June 1, 2006 and is identical in all material respects to Part I of the Cendant Corporation Pension Plan. Also effective on June 1, 2006, the Realogy Corporation Pension Plan assumed all liabilities and obligations under Part I of the Cendant Corporation Pension Plan, as a successor employer. Accordingly, the Plan is being amended pursuant to this restatement to reflect that the terms and provisions of the Cendant Corporation Pension Plan, Part I are no longer applicable, as the remaining assets and liabilities were transferred to the Realogy Corporation Pension Plan.

 

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AVIS RENT A CAR SYSTEM, LLC PENSION PLAN

TABLE OF CONTENTS

 

 

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ARTICLE 1.

Definitions

The following words and phrases shall, when used herein, have the meanings set forth below, unless a different meaning is clearly required by the context:

1.1. “Absence in Military Service” shall mean absence of an Employee in military service for the United States of America provided that the Employee returns to the employ of the Company by the end of any period prescribed by the laws of the United States during which he has reemployment rights with the Company. Notwithstanding any provision in the Plan to the contrary, effective as of December 12, 1994, contributions and benefits with respect to “qualified military service” will be provided in accordance with section 414(u) of the Code.

1.2. “Absence on Authorized Leave” shall mean any absence approved by the Company other than absence which qualifies as Absence in Military Service under Section 1.1. All such leaves of absence shall be granted in a nondiscriminatory manner so that all Employees in similar situations shall receive uniform treatment. The following periods of Absence on Authorized Leave shall be included in determining a Member’s Service:

(i) the period of any such absence, not exceeding two years, including any such absence during which the Member does not receive Compensation from the Company;

(ii) the period of any such absence, not exceeding two years, except as required by law, for service with any governmental agency or any department of the United States;

(iii) the period of any such absence during which sickness or accident benefits are being paid by the Company.

1.3. “Acquisition Date” shall mean, with respect to any Predecessor Corporation, the date on which the business and assets of such Predecessor Corporation, or such part thereof as shall have been acquired by the Company, were first acquired.

1.4. “Annuity Starting Date” shall mean the date as of which payment of a Member’s Retirement Pension or Vested Benefit is scheduled to commence in accordance with Articles 4 and 6 of this Plan.

1.5. “Actuary” shall mean the actuarial consultant or actuarial consultants designated from time to time to make actuarial computations in connection with the Plan.

1.6. “Associated Company” shall mean any division, subsidiary or affiliate of the Company designated by the Board of Directors, or by the Committee pursuant to authority delegated to it by the Board of Directors, as an Associated Company for purposes of the Plan

 

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during the period for which such designation exists. For the period of time before the Company was divested from International Telephone and Telegraph Corporation, Associated Company shall also mean any Company which was designated as an Associated Company under the Prior Salaried Plan.

1.7. “Average Final Compensation” means the average of a Member’s five highest consecutive years of Compensation during the ten calendar years prior to the earlier of: (a) the Member’s Normal, Deferred or Early Retirement Date or the date of his Termination of Employment, whichever is applicable or (b) January 1, 1999; provided, however, that if the Member’s Compensation for his last year of employment is included in the averaging period and such last year of employment is less than twelve months, his Average Final Compensation shall include Compensation during the last year of employment, the four preceding calendar years and a pro rata portion of Compensation in the fifth preceding calendar year in order to average Compensation for five full years.

For purposes of determining the Average Final Compensation of a Member whose consecutive years of Compensation during the ten calendar years prior to the Member’s Normal, Deferred or Early Retirement Date, or the date of his Termination of Employment, whichever is applicable, are interrupted by an Absence in Military Service, an Absence on Authorized Leave or any other absence if his Service prior to such absence is restored pursuant to Section 1.14.2, the years of Compensation preceding and following such absence shall be considered consecutive.

1.8. “Beneficiary” shall mean any person, including the spouse or Joint Annuitant of a Member, eligible to receive any benefits payable upon the death of the Member.

1.9. “Board of Directors” shall mean the Board of Directors of Cendant Corporation (the “Plan Sponsor”) or any successor by merger, purchase or otherwise.

1.10. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

1.11. “Committee” shall mean the Committee appointed to administer the Plan pursuant to Article 11.

1.12. “Company” shall mean Cendant Car Rental, Inc. (formerly HFS Car Rental, Inc.), Avis Rent A Car System, Inc. or any successor by merger, purchase or otherwise, with respect to its Employees, and any other Participating Corporation or Participating Division with respect to its Employees. Effective, June 1, 2006, “Company” shall mean Avis Rent A Car System, LLC.

1.13. “Compensation” shall mean the total remuneration paid to a Member (whether before or after membership in the Plan) for service rendered to the Company, the Prior Company, an Associated Company, or a Predecessor Corporation, including any bonuses (but excluding any bonuses received pursuant to the Senior Executive Long-Term Bonus Plan) and including any severance or separation payments and final vacation pay (but only to the extent

 

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that such severance or separation payments and final vacation pay are granted by the Company on a nondiscriminatory basis to employees similarly situated), but excluding automobile, relocation or other special allowances of a similar nature, and provided that Compensation shall be determined before giving effect to any salary reduction or similar arrangement under a plan described in section 125 of the Code, or a transportation fringe benefit arrangement referred to in section 132(f)(4) of the Code or any elective deferral described in section 402(g)(3) of the Code. Effective for Plan Years beginning after December 31, 2001, the annual compensation limit shall remain $170,000 and shall not be adjusted for increases in the cost-of-living or other legislative increases in accordance with section 401(a)(17) of the Code.

A Member’s Compensation taken into account under the Plan for each Plan Year commencing after June 30, 1989 and prior to July 1, 1994, shall not exceed $200,000, as adjusted by the Secretary of the Treasury at the same time and in the same manner as under section 415(d) of the Code. In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, for Plan Years beginning on or after July 1, 1994, the annual Compensation of each Member taken into account under the Plan shall not exceed the OBRA ‘93 annual compensation limit. The OBRA ‘93 annual compensation limit is $150,000, as adjusted by the Commissioner for increases in the cost-of-living in accordance with section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA ‘93 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12.

For Plan Years beginning on or after July 1, 1994, any reference in this Plan to the limitation under section 401(a)(17) of the Code shall mean the OBRA ‘93 annual compensation limit set forth in this provision.

If Compensation for any prior determination period is taken into account in determining a Member’s contributions in the current Plan Year, the Compensation for that prior determination period is subject to the OBRA ‘93 annual compensation limit in effect for that prior determination period. For this purpose, for determination periods beginning before the first day of the first Plan Year beginning on or after July 1, 1994, the OBRA ‘93 annual compensation limit is $150,000.

Furthermore, effective July 1, 1989 and for Plan years ending prior to January 1, 1997, in determining “Compensation,” the rules of section 414(q)(6) of the Code shall apply, except that in applying such rules, the term “family” shall include only the spouse of the Member and any lineal descendants of the Member who have not attained age 19 before the close of the calendar year. Notwithstanding the foregoing, effective January 1, 1997, the family aggregation rules of section 414(q)(6) of the Code shall no longer apply.

1.14. “Credited Service,” for purposes of determining the amount of any benefit payable to or on behalf of a Member, shall mean (a) the Member’s Credited Service as of December 31, 1975, as determined under the Salaried Plan and/or the Hourly Plan, including any

 

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periods of service prior to September 18, 1956 which were not treated as Credited Service under the Salaried Plan and/or the Hourly Plan only because such service was rendered prior to September 18, 1956, and (b) the Member’s Service as determined under Section 1.34(b).

1.14.1 Notwithstanding the foregoing or Section 1.14.4, a Member’s Credited Service shall not include (a) Service prior to January 1, 1976, when an Employee was not employed on a “full-time” basis (as hereinafter defined), and (b) Service during which a Member was not an “Employee” (as defined in Section 1.17). A “full-time” Employee is one who worked the regular schedule in effect for his job classification in accordance with Company policy in effect at such time.

1.14.2 If, after incurring a Break in Service after a Severance Date (as described in Sections 1.34.1 and 1.34.2) occurring on or after January 1, 1976, a Member is re-employed and completes a year of Service following his Reemployment Commencement Date, his prior years of Service and Credited Service shall be restored for all Plan purposes, if (a) he had fulfilled the requirements for a Vested Benefit under Section 6.2 as of such Severance Date, or (b) the period of the Member’s Break in Service, computed to the nearest 1/12th year, is less than the greater of (i) five and (ii) the aggregate number of his years of Service prior to such Severance Date.

1.14.3 If a Member who had fulfilled the requirements for a Vested Benefit under Section 6.2 shall not have received any distribution under the Plan following his prior Termination of Employment, his Service and Credited Service shall be reinstated, in accordance with the provisions of Section 1.14.2, following his Reemployment Commencement Date so that his Retirement Pension or Vested Benefit upon his subsequent Termination of Employment shall be determined on the basis of his Service, Credited Service and Average Final Compensation as of the date of such subsequent Termination of Employment. If the Member shall have received any distribution under the Plan following his prior Termination of Employment, his Service shall be so reinstated, but his Credited Service shall be so reinstated only if such distribution was not a lump sum payment made in lieu of all other benefits to which the Member may have become entitled under the Plan (a “lump sum distribution”). If such distribution was not a lump sum distribution, the Retirement Pension or Vested Benefit payable in respect of the Member upon his subsequent Termination of Employment shall be computed so as to give effect to any Retirement Pension or Vested Benefit previously paid to the Member on account of his prior Termination of Employment. Notwithstanding the foregoing, if the Member had received any distribution under the Plan following his prior Termination of Employment, his Credited Service shall, in all events, be reinstated if the Member repays the full amount of such distribution, together with interest thereon to the date of repayment computed at the rate currently determined by the Secretary of the Treasury pursuant to the provisions of section 411(c)(2)(C) of the Code, not later than the end of the five-year period beginning with the Member’s resumption of employment as an Employee.

1.14.4 A Member’s Credited Service shall include, in the case of an Employee who became a Member of the Prior Plan on January 1, 1976, and who had been excluded from membership in the Salaried Plan by reason of the fact that he had reached his fifty-fifth birthday prior to his Date of Original Employment, Service with the Company before January 1, 1976.

 

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1.14.5 For purposes of Section 1.14.1, in the case of a Member who was employed by a Predecessor Corporation prior to its acquisition by the Company, the Member’s Credited Service as of December 31, 1975 shall be the greater of (a) or (b) below:

(a) The Member’s most recent period of continuous employment with the Company which includes December 31, 1975; or

(b) If the Acquisition Date was before July 22, 1965, the Member’s period of continuous employment with both the Predecessor Corporation and the Company which includes December 31, 1975 and the Acquisition Date.

1.14.6 For purposes of Section 1.14, the Committee may, in its discretion, and subject to the provisions of applicable law, determine the extent to which a Member’s continuous employment with a Predecessor Corporation acquired by the Company on or after July 22, 1965, shall be deemed Credited Service under this Plan.

1.14.7 If a former Member of the Salaried Plan or the Hourly Plan, who had not fulfilled the requirements for a vested benefit under either Plan, incurred a Termination of Employment prior to January 1, 1976, and thereafter was re-employed by the Company and becomes a Member of the Plan, the Member’s Credited Service before such Termination of Employment shall be restored and included in his total Credited Service under the Plan, using the rule of either (a) or (b) below, whichever produces the greater total Credited Service:

(a) The Member’s prior Credited Service shall be restored if the period of time between the date of his Termination of Employment and the date of his reemployment by the Company is less than his aggregate Credited Service prior to such Termination of Employment.

(b) The Member’s prior Credited Service shall be restored if, after his reemployment by the Company, such Member renders a period of Credited Service equal to the lesser of (i) the period of his absence or (ii) ten years.

1.14.8 For purposes of Section 1.14.1, a Member’s Credited Service shall include any period during which such Member was employed by International Telephone and Telegraph Corporation prior to 1972, if such Member was employed or rehired by the Company prior to January 1, 1976.

1.14.9 Notwithstanding anything contained herein to the contrary, for purposes of Article 4, Service by a Member with the Company subsequent to December 31, 1998 shall not be recognized in determining the Member’s Credited Service. The Credited Service of a Member (i) whose employment with the Company has not terminated as of December 31, 1998 or (ii) who is named in Appendix B hereof, shall be equal to the sum of (A) the Member’s Credited Service as otherwise determined under Section 1.14 plus (B) two years.

1.15. “Date of Original Employment” shall mean the Date of Original Employment by the Company or by an Associated Company.

 

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1.16. “Effective Date of the Salaried Plan” shall mean January 1, 1972.

1.17. “Employee” shall mean any person employed by the Company and with respect to persons employed by Cendant Car Rental, Inc. only, those persons who were previously employed by the Prior Company, and who receives Compensation, whether on an annual or hourly basis or otherwise, other than a pension or retainer; provided, however, that except as the Board of Directors may otherwise provide on a basis uniformly applicable to all persons similarly situated, no person shall be an Employee for purposes of the Plan who (a) is engaged as a consultant or (b) is accruing benefits in respect of current service under any other pension, retirement, qualified profit-sharing or other similar plan of the Company or the Prior Company or of any Associated Company or of any subsidiary or affiliated company of the Company; and provided, further, that no person shall be an Employee for purposes of the Plan whose terms and conditions of employment are determined by a collective bargaining agreement with the Company which does not make this Plan applicable to him.

1.17.1 For all purposes of the Plan, any person who is an employee of an entity (herein referred to as a “Designated Foreign Corporation”) (a) which is created under the laws of a country other than the United States of America, (b) of which a majority interest is owned directly or indirectly by the Company, and (c) which has previously notified the Committee that an agreement hereinafter described has become effective, shall be deemed to be an Employee during his continuous employment thereafter by such Designated Foreign Corporation, provided that the Company has entered into an agreement under section 3121(1) of the Code and has satisfied the provisions of section 406 of the Code.

1.17.2 The Committee may designate on a non-discriminatory basis such resident aliens of the United States, who are employed by a Designated Foreign Corporation, who shall be deemed Employees under the Plan.

1.17.3 Resident aliens of the United States who are employed by the Company within the United States shall be treated as Employees for all Plan purposes while so employed.

1.17.4 Any person (other than an Employee) who provides services to the Company or an affiliate of the Company and who is treated as an Employee of the Company or such affiliate for purposes of certain pension requirements under section 414(n) of the Code (a “Leased Employee”), shall be deemed to be an Employee of the Company or such affiliate for purposes of the service definitions and rules of the Plan. Leased Employee means any person (other than an Employee of the Company or affiliate) who, pursuant to an agreement between the Company or affiliate and any other person (“leasing organization”), has performed services for the Company or affiliate (or for the Company or affiliate and any related persons determined in accordance with section 414(n)(6) of the Code) on a substantially full-time basis for a period of at least one (1) year, and such services are, prior to January 1, 1997, of a type historically performed by employees in the business field of the Company, and on or after January 1, 1997, performed under the primary direction and control of the Company or affiliate. Notwithstanding the foregoing, no Leased Employee shall be eligible to participate in this Plan by reason of this Section 1.17.4. For purposes of participation in the Plan, the term Employee shall exclude any

 

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person, including but not limited to a Leased Employee, who performs services for, and receives remuneration from, the Company or any affiliate of the Company under an agreement, contract or arrangement under which said individual is designated, characterized or classified as an independent contractor, as a consultant or in any category or classification other than as an employee of the Company or an affiliate of the Company, without regard to whether any determination by an agency, governmental or otherwise, or by a court concludes that such classification or characterization was in error, and without regard to whether the individual is treated as an employee of the Company pursuant to Sections 414(b), 414(c) or 414(m) of the Code or any regulations that may be issued under section 414(o) of the Code.

1.18. “Employment Commencement Date” or “Reemployment Commencement Date” shall mean the date upon which an Employee completes an Hour of Service for the Company or Prior Company following his initial employment or, in the case of reemployment, following his most recent Severance Date (as described in Sections 1.34.1 and 1.34.2).

1.19. “Equivalent Actuarial Value” shall mean, except as provided in Appendix A and Section 5.3.2 hereof, equivalent value when computed on the basis of the 1984 UP Mortality Table and the interest rate promulgated by the Pension Benefit Guaranty Corporation as applicable for valuing immediate annuities as of the first day of the Plan Year in which the Annuity Starting Date occurs.

In the case of a Member who continues employment with the Company after age 65, Equivalent Actuarial Value shall be computed on the basis of the actuarial factors in effect under the Plan on the date of the Member’s actual retirement.

1.20. “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

1.21. “Fund” shall mean the cash, securities and other property held for the purposes of the Plan as set forth in Article 10.

1.22. “Hour of Service” shall mean each hour for which an Employee is directly or indirectly compensated by the Company or Prior Company.

1.23. “Hourly Plan” shall mean the ITT Avis, Inc. Pension Plan for Hourly Employees, effective April 1, 1968.

1.24. “Joint Annuitant” shall mean a person designated by a Member in accordance with Article 7 to receive payments under Section 7.3 in the event of the Member’s death.

1.25. “Member” shall mean any person included in the membership of the Plan as provided in Article 2.

1.26. “Participating Corporation” shall mean any Associated Company which has by appropriate action of the Board of Directors been designated as a Participating Corporation and the board of directors of which shall have taken appropriate action to adopt the Plan.

 

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The Board of Directors, if it so elects, may limit participation in the Plan to one or more operating or other units of any Participating Division or Participating Corporation or may exclude one or more of such units from participation in the Plan and in either such event persons employed by any operating or other unit of such Participating Division or Participating Corporation not covered by the designation thereof as such shall not be deemed to be Employees for purposes of the Plan until further action by the Board of Directors.

1.27. “Participating Division” shall mean any division of a Company or an Associated Company which has by appropriate action of the Board of Directors been designated as a Participating Division.

1.28. (a) “Plan” shall mean the Avis Rent A Car System, LLC Pension Plan as it may be amended from time to time. Any reference to “Plan” prior to June 1, 2006 shall refer to the Cendant Corporation Pension Plan, Part II, unless otherwise specifically identified or it is otherwise clear from the context.

(b) “Prior Plan” shall mean the Retirement Plan for Salaried and Hourly Employees of Avis Rent A Car System, Inc., as in effect on June 30, 1985.

1.29. “Plan Year” shall mean the calendar year.

1.30. (a) “Predecessor Corporation” shall mean any subsidiary or affiliated company of the Company, and any predecessor or subsidiary thereof, to the extent that all or part of the business and assets of any such corporation shall have been acquired by the Company either before or after the Effective Date of the Salaried Plan.

(b) “Prior Company” shall mean ARAC with respect to those Cendant Car Rental, Inc. employees who were previously employed by ARAC and who became employees of Cendant Car Rental, Inc. pursuant to an agreement between Cendant and ARAC, effective September 23, 1997.

1.31. “Prior Salaried Plan” shall mean the International Telephone Retirement Plan for Salaried Employees as in effect on December 31, 1971 as applicable to ARAC.

1.32. “Retirement Pension” shall mean a pension or other benefit payable to a Member or his Beneficiary pursuant to Articles 4, 6 or 8 hereof.

1.33. “Salaried Plan” shall mean the Retirement Plan for Salaried Employees of Avis Rent A Car System, Inc., effective as of January 1, 1972.

1.34. “Service” shall mean, (a) with respect to periods prior to January 1, 1976, a Member’s most recent period of continuous employment with the Company or Prior Company which includes December 31, 1975 and (b) with respect to periods after December 31, 1975,

 

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periods of his employment (i) beginning on the later of January 1, 1976 or his Employment or Reemployment Commencement Date and (ii) ending on his “Severance Date” (as described in Sections 1.34.1 and 1.34.2). In addition, for the purposes of Article 2 and Article 6 of the Plan, a Member’s Service, under clause (b) of the preceding sentence, shall include the period of his absence from employment after his most recent Severance Date, provided that he returns to employment with the Company or Prior Company within twelve months of such date.

1.34.1 A Member’s “Severance Date” shall mean the earlier of (a) the date on which he retires or dies or his employment with the Company or Prior Company as an Employee otherwise is terminated or (b) the first anniversary of the first date of a period in which he remains absent from employment with the Company or Prior Company for any other reason; provided, however, that if a Member retires or dies or his employment as an Employee otherwise is terminated during a period in which he is absent from employment with the Company or Prior Company for any other reason, his Severance Date shall be the date of such retirement, death or other termination of employment.

1.34.2 Notwithstanding the provisions of Section 1.34.1, no Severance Date shall occur for a Member during a period of his Absence in Military Service or Absence on Authorized Leave; provided, however, that periods of a Member’s Absence on Authorized Leave shall be included in his Service only to the extent provided in Section 1.1 or Section 1.2, as applicable.

1.34.3 In addition, in computing a Member’s Service for the purposes of Article 2 and Article 6 of the Plan, there shall be included (a) a Member’s last period of continuous employment with a Predecessor Corporation which includes the Acquisition Date and (b) the period of employment during which an Employee previously performed work for the Company or Prior Company and did not accrue benefits under either the Salaried Plan or the Hourly Plan but instead accrued benefits for such work under a pension plan sponsored by an organization other than the Company or Prior Company.

1.34.4 In addition, the period of time with respect to which a Member receives any severance or separation payment or final vacation pay shall, for all Plan purposes, be included in such Member’s Service, unless the severance or separation payment or final vacation pay is paid to the Member as a single lump sum payment.

1.34.5 A Member’s Service for all Plan purposes shall be expressed in terms of completed years and months, rounding up or down, as the case may be, to the nearest whole month.

1.34.6 A Member’s Service shall also include any period of employment by the Company or Prior Company or by an Affiliated Company (as defined in Section 16.4), to the extent recognized as such under Article 16 of the Plan relating to Transfers.

1.34.7 “Break in Service” shall mean any Severance Period greater than twelve (12) months, excluding any period of up to twelve (12) months during which an Employee is on a maternity/paternity leave. The term “maternity/paternity leave” means any absence of an Employee from work for reasons of (i) the pregnancy of the Employee, (ii) the birth of a child of the Employee or the placement of a child with the Employee for the purposes of adoption, or (iii) the care of a child for a period beginning immediately following such birth or placement.

 

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1.34.8 “Severance Period” means each period beginning on an Employee’s Severance Date and ending on his next Reemployment Commencement Date.

1.35. “Social Security Benefit” shall mean, except as otherwise specified below, the estimated amount which is payable to a Member at age 65 under Title II of the Social Security Act as in effect on the date his Service terminates, or the estimated amount which would be payable to a Member if he were not disqualified from receiving benefits by continuing in employment, or for any other reason. Notwithstanding the foregoing, any Social Security Benefit determined under this Section 1.35 subsequent to December 31, 1998, shall be based on the provisions of Title II of the Social Security Act as in effect on December 31, 1998. In the case of a Member who has reached his fifty-fifth birthday and has completed ten years of Service as of December 31, 1998, his Social Security Benefit shall be the estimated amount which would be payable to the Member at age 65, calculated on the assumption that the Member would have no further earnings for Social Security purposes after the earlier of his Early Retirement Date or December 31, 1998. In the case of a Member who has not reached his fifty-fifth birthday and who has not completed ten years of Service as of December 31, 1998, his Social Security Benefit shall be the estimated amount which would be payable to the Member at age 65, calculated on the assumption that the Member will continue to receive earnings until his Normal Retirement Date at his rate of Compensation as in effect at the earlier of the date his Service terminates or December 31, 1998. All such estimated amounts shall be determined by the Committee on the advice of the Actuary in accordance with rules applied in a nondiscriminatory manner and without regard to Service, Compensation or changes in Title II of the Social Security Act after December 31, 1998.

Notwithstanding the foregoing, the benefit of a Member shall be calculated or recalculated based on his actual Social Security earnings history, if such Member submits an official copy of his Social Security earnings history to the Committee within six months of the later of his Severance Date or the date he is first notified of this right. Any Member whose benefit is recalculated in accordance with the preceding sentence shall have his benefit adjusted retroactive to his Annuity Starting Date, if appropriate.

1.36. “Spouse Joint and Survivor Annuity” shall mean an annuity which provides (i) actuarially reduced monthly payments to the Member during the Member’s lifetime commencing on his Annuity Starting Date, and (ii) if the Member predeceases his spouse, monthly payments to such spouse for the spouse’s lifetime, equal to 50 percent of the monthly payment which the Member was receiving as of the date of his death. The Spouse Joint and Survivor Annuity referred to in Section 5.2 shall be subsidized, in that the actuarial reduction of the Member’s Retirement Pension for purposes of calculating the Spouse Joint and Survivor Annuity shall be equal to one-half of the actuarial reduction which would otherwise be required to establish for such Member an Equivalent Actuarial Value between this form of benefit and an unsubsidized 50 percent joint and survivor annuity benefit.

 

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1.37. “Terminated Member’s Spouse Joint and Survivor Annuity” shall mean an annuity which provides (i) actuarially reduced monthly payments to the Member during the Member’s lifetime commencing on his Annuity Starting Date, and (ii) if the Member predeceases his spouse, monthly payments to such spouse for the spouse’s lifetime equal to 50 percent of the monthly payment which the Member was receiving as of the date of his death. The Terminated Member’s Spouse Joint and Survivor Annuity shall be the Equivalent Actuarial Value of the Vested Benefit which would be payable to the Member under Section 6.4 if he were not married.

1.38. “Termination of Employment” shall mean a Member’s ceasing to be employed by the Company other than by reason of death. A Member’s ceasing to be an Employee (as defined herein) shall not be deemed a Termination of Employment if such Member either (i) continues to be employed by the Company other than as an Employee, or (ii) continues to be employed by an Affiliated Company (as defined in Section 16.4).

1.39. “Total and Permanent Disability” shall mean disability due to bodily or mental injury or disease, either occupationally or non-occupationally caused, which the Committee determines, on the basis of medical evidence satisfactory to it, is likely to be permanent and has disabled the Member from further performance of his normal work. The Committee shall apply uniform standards, including reference to medical certification, in determining whether such a disability exists. In the event that a dispute arises between the Member and the Committee as to the existence of such a disability, it shall be settled by a majority decision of three licensed physicians, one to be appointed by the Committee, one by the Member, and a third to be appointed by the two physicians so appointed.

1.40. “Trustee” shall mean the trustee or trustees by which the funds of the Plan are held as provided in Article 10.

 

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ARTICLE 2.

Membership

2.1. Members on June 30, 1985 . Each Employee of the Company or Prior Company on July 1, 1985 (including an Employee on an Absence on Authorized Leave or Total and Permanent Disability) who was a Member of the Prior Plan on June 30, 1985 shall be a Member of the Plan on July 1, 1985.

2.2. Break in Service . Each Member who has a Reemployment Commencement Date after incurring a Break in Service and each Employee who (i) was a Member of the Prior Plan at any time prior to June 30, 1985, (ii) did not become a Member on July 1, 1985 and (iii) has a Reemployment Commencement Date after incurring a Break in Service occurring on or after January 1, 1976, shall not be eligible to participate in the Plan, except that such Member or Employee shall be reinstated as a Member of the Plan, as of the first day of the month coincident with or next following his Reemployment Commencement Date, if his Service is restored pursuant to Section 1.14.2.

2.3. Prior Plan Requirement . Except as otherwise provided in Section 2.2 hereof, no person who was not a member of the Prior Plan on June 30, 1985 shall become a Member of this Plan.

2.4. Termination of Membership . A Member’s membership in the Plan shall terminate if he (i) ceases to be an Employee, other than by reason of retirement under the Plan, and (ii) does not have a Reemployment Commencement Date before incurring a Break in Service, except that a Member’s membership shall continue during any period of Absence in Military Service or Absence on Authorized Leave or while he is not an Employee (as defined in Section 1.17) but is in the employ of the Company, an Associated Company, or an Affiliated Company (as defined in Section 16.4).

2.5. Furnishing Information Required by Committee . Before any Retirement Pension shall be payable to or on the account of a Member or former Member entitled to a Vested Benefit under the Plan, such Member or former Member shall file with the Committee such information as it shall require to establish his rights under the Plan.

ARTICLE 3.

Retirement Dates

3.1. Normal Retirement Date . The “Normal Retirement Date” of a Member shall be the first day of the month coinciding with or next following his sixty-fifth birthday; provided, however, that each Member’s accrued benefit under the Plan shall become one hundred percent (100%) vested and nonforfeitable upon his sixty-fifth birthday notwithstanding any contrary provision of the Plan.

3.2. Early Retirement Date . A Member who has reached his fifty-fifth birthday and has completed ten years of Service may thereafter elect to retire on the first day of any calendar month (herein referred to as his “Early Retirement Date”) prior to his Normal Retirement Date.

 

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Notwithstanding the foregoing, the “Early Retirement Date” of a Member who was a participant in the Hourly Plan on December 31, 1975 shall be the first day of any month prior to his Normal Retirement Date and coinciding with or next following the date on which he completes three years of Service and reaches his sixtieth birthday, on which he elects to retire, if such date is earlier than the date specified above.

3.3. Disability Retirement Date . A Member who suffers Total and Permanent Disability before his Normal Retirement Date shall retire on the first day of any calendar month (herein referred to as his “Disability Retirement Date”) coincident with or next following the date on which it is determined that he suffered such Total and Permanent Disability.

3.4. Deferred Retirement Date . The “Deferred Retirement Date” of a Member shall be the first day of the month coincident with or next following the date of his actual retirement after his Normal Retirement Date.

ARTICLE 4.

Retirement Pensions

4.1. Normal Retirement Pension . A Member who retires on his Normal Retirement Date shall be entitled to an annual “Normal Retirement Pension” equal to 1-1/2 percent of the Member’s Average Final Compensation multiplied by the number of years of his Credited Service, not in excess of 35 years (37 years with respect to any Member who receives an additional two years of Credited Service pursuant to section 1.14.9(ii)), less 1-3/7 percent of his annual Social Security Benefit multiplied by the number of years of the Member’s Credited Service not in excess of 35 years (37 years with respect to any Member who receives an additional two years of Credited Service pursuant to section 1.14.9(ii)). A Normal Retirement Pension shall commence on the Member’s Normal Retirement Date.

Unless otherwise provided under the Plan, effective on January 1, 1994, each Section 401(a)(17) Employee’s accrued benefit under this Plan shall be the greater of the Accrued Benefit determined for the Employee under (a) or (b) below:

(a) the Employee’s accrued benefit determined with respect to the benefit formula applicable for the Plan Year beginning on or after January 1, 1994, as applied to the Employee’s total years of Credited Service taken into account under the Plan for the purposes of benefit accruals, or

(b) the sum of:

(i) the Employee’s accrued benefit as of June 30, 1994, frozen in accordance with Section 1.401(a)(4)-13 of the Treasury Regulations, and

 

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(ii) the Employee’s accrued benefit determined under the benefit formula applicable for the Plan Year beginning on or after January 1, 1994, as applied to the Employee’s years of Credited Service credited to the Employee for Plan Years beginning on or after January 1, 1994, for purposes of benefit accruals.

A Section 401(a)(17) Employee means an Employee whose current accrued benefit as of a date on or after the first day of the first Plan Year beginning on or after January 1, 1994, is based on Compensation for a year beginning prior to the first day of the first Plan Year beginning on or after January 1, 1994, that exceeded $150,000.

4.2. Early Retirement Pension . A Member who elects to retire on an Early Retirement Date shall be entitled to an annual “Early Retirement Pension” determined in the manner of a Normal Retirement Pension but based on his Average Final Compensation and Credited Service as of his Early Retirement Date. An Early Retirement Pension shall commence on the Member’s Normal Retirement Date.

Notwithstanding this Section 4.2, a Member may elect to receive his Early Retirement Pension commencing on his Early Retirement Date, or on the first day of any calendar month following his Early Retirement Date and prior to his Normal Retirement Date. If payment of a Member’s Early Retirement Pension commences prior to his Normal Retirement Date, the Member’s Early Retirement Pension determined under Section 4.2 shall be reduced by 1/4 of 1 percent for each full month by which the commencement of benefits precedes the Member reaching age 62.

4.3. Disability Retirement Pension . A Member who has suffered Total and Permanent Disability shall be entitled to an annual “Disability Retirement Pension” determined in the manner of a Normal Retirement Pension but based on the Member’s Average Final Compensation and Credited Service as computed in Section 4.3.1 or Section 4.3.2, as applicable. A Disability Retirement Pension shall commence on the Member’s Normal Retirement Date.

4.3.1 For purposes of Section 4.3 only, the Average Final Compensation of a Member who suffers Total and Permanent Disability prior to December 31, 1994, shall be computed assuming that he continues to receive Compensation during the period between the date he suffers Total and Permanent Disability and the date his Disability Retirement Pension commences at an annual rate of Compensation equal to his rate of Compensation for the 12 month period immediately preceding such Total and Permanent Disability; and such a Member’s Credited Service shall include any portion of the period between the date he suffers Total and Permanent Disability and the date his Disability Retirement Pension commences during which he either (1) receives (or would receive if he were eligible) long-term disability benefits under any plan funded by the Company or Prior Company or (2) receives disability benefits under the Social Security Act then in effect.

4.3.2 For purposes of Section 4.3 only, the Average Final Compensation of a Member who suffers Total and Permanent Disability on or after December 31, 1994, shall be computed assuming that he does not continue to receive Compensation during the period between the date he suffers Total and Permanent Disability and the date his Disability

 

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Retirement Pension commences; and such a Member’s Credited Service shall not include any portion of the period between the date he suffers Total and Permanent Disability and the date his Disability Retirement Pension commences.

4.3.3 A Member entitled to a Disability Retirement Pension may elect to have such Retirement Pension commence at any time prior to his Normal Retirement Date after he both reaches his fifty-fifth birthday and completes ten years of Service. In such event, his Disability Retirement Pension determined under Sections 4.3 and 4.3.1 shall be reduced by 1/4 of 1 percent for each full month by which the commencement of benefits precedes the Member reaching age 65.

4.3.4 If a Member entitled to a Disability Retirement Pension ceases to have a Total and Permanent Disability prior to qualifying for a Vested Benefit, such Member shall not be entitled to a Disability Retirement Pension hereunder, but the period of such Total and Permanent Disability shall be recognized as Service under the Plan.

4.4. Deferred Retirement Pension . A Member who retires on a Deferred Retirement Date shall be entitled to an annual “Deferred Retirement Pension” determined in the manner of a Normal Retirement Pension but based on his Average Final Compensation and Credited Service on his Deferred Retirement Date; provided, however, that the Deferred Retirement Pension of a Member whose Normal Retirement Date occurred prior to January 1, 1979 and who did not have a Termination of Employment prior to January 1, 1979 shall be the greater of (i) the amount determined under this Section 4.4 or (ii) the Equivalent Actuarial Value of the Normal Retirement Pension determined under Section 4.1 which would have been payable if he had retired on his Normal Retirement Date. A Deferred Retirement Pension shall commence on the Member’s Deferred Retirement Date.

4.5. Employment After Normal Retirement Date and Reemployment After Normal Retirement Date. In the case of a former Member who is re-employed by the Company or an Associated Company (a “Re-employed Member”), and who has a Reemployment Commencement Date more than twelve months after a Severance Date (as described in Sections 1.34.1 and 1.34.2), the total benefit payable to him upon his subsequent Termination of Employment, including any earlier benefit he may have retained under the Plan, shall be limited to the amount it would have been if the Re-employed Member’s total periods of Service had been one continuous period of Service. Payment of any Retirement Pension or Vested Benefit to a Re-employed Member and payment of a Normal Retirement Pension to a Member who continues his employment with the Company or an Affiliated Company after his Normal Retirement Date, shall be suspended effective with the first monthly benefit payable after the date of his reemployment or his continued employment after his Normal Retirement Date. In order for the benefit payment to be suspended under this Section 4.5, with respect to any calendar month, a Re-employed Member or a Member continuing his employment after his Normal Retirement Date must (i) complete at least eight (8) days of employment during such calendar month (or such other standard as may be applicable under Section 203(a)(3)(B) of ERISA) which employment constitutes “Section 203(a)(3)(B) Service” as defined in Section 2530.203-3(c) of the Code of Federal Regulations and (ii) be furnished with a notice containing:

 

(a)

a description of the specific reasons for the discontinuance of payments;

 

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(b)

a general description of the Plan provisions relating to the discontinuance;

 

(c)

a copy of such Plan provisions;

 

(d)

a statement to the effect that applicable Department of Labor regulations may be found in Section 2530.203-3 of the Code of Federal Regulations; and

 

(e)

a description of the Plan’s claims procedure.

4.6. Deductions from Benefits . Unless the Board of Directors otherwise provides under rules uniformly applicable to all Employees similarly situated, the Committee shall deduct from the amount of any Retirement Pension or Vested Benefit under the Plan any amount paid or payable to or on account of any Member under the provisions of any present or future law, pension or benefit scheme of any sovereign government, or any political subdivision thereof, or any fund or organization or government agency or department, on account of which contributions have been made or premiums or taxes paid by the Company, the Prior Company, any Participating Corporation, any Associated Company or any Predecessor Corporation with respect to any service which is Credited Service for purposes of computation of benefits under the Plan; provided, however, that pensions payable for governmental service or benefits under Title II of the Social Security Act are not to be used to reduce the benefits otherwise provided under this Plan except as specifically provided herein.

There shall be deducted from any Retirement Pension or Vested Benefit payable under this Plan the part of any pension or comparable benefit, including any lump sum payment, provided by employer contributions of the Company or the Prior Company, an Affiliated Company (as defined in Section 16.4) or a Predecessor Corporation under any pension plan or other agreement with respect to any service which is treated as Credited Service under this Plan; provided, however, that no such deduction from the Retirement Pension or Vested Benefit payable under this Plan shall occur if the pension plan or other agreement of any such Affiliated Company (as defined in Section 16.4) contains a deduction provision comparable to this Section 4.6.

4.7. No Reduction in Benefits for Members of Salaried or Hourly Plans . Notwithstanding anything to the contrary herein, in the case of any Member who was a member of the Salaried Plan or the Hourly Plan prior to January 1, 1976, the portion of his Retirement Pension attributable to Service prior to January 1, 1976 shall not be less than the retirement pension he had accrued under such Salaried Plan or Hourly Plan.

ARTICLE 5.

Normal Forms of Retirement Pension

5.1. Normal Form of Retirement Pension — Unmarried Member . For a Member who is not married on his Annuity Starting Date, the Member’s Retirement Pension shall be in the form of an annuity, payable monthly for life, commencing on the Member’s Annuity Starting Date and terminating with the last monthly payment preceding such Member’s death.

 

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5.2. Normal Form of Retirement Pension — Married Member . For a Member who is married on his Annuity Starting Date, the Member’s Retirement Pension shall be in the form of a Spouse Joint and Survivor Annuity.

5.2.1 A married Member may elect (and may revoke such election and thereafter re-elect) pursuant to a Qualified Election (as defined below), at any time before the end of the period described in Section 5.2.2 (herein referred to as the “Election Period”), not to have his Retirement Pension paid as a Spouse Joint and Survivor Annuity pursuant to Section 5.2. The election under this Section 5.2.1 shall be made in writing by the Member to the Committee.

5.2.2 The Election Period shall be the ninety-day (90-day) period ending on the Member’s Annuity Starting Date; provided, however, that in no event shall the Election Period end within ninety (90) days after the information described in Section 5.2.3 is mailed or delivered to the Member, unless he requests the additional information described in Section 5.2.4, in which case the Election Period shall end, if later, sixty (60) days after the additional information is mailed or delivered to him. Notwithstanding the foregoing and pursuant to the requirements of section 417(a)(7)(B) of the Code, a Member may elect, with the consent of the Member’s spouse, to commence his distribution in the Spouse Joint and Survivor Annuity form of payment, as provided in this Section 5.2 or Section 6.5 or an optional form of payment, as provided in Section 7.6, on an Annuity Starting Date which is less than thirty (30) days after the written explanation required herein has been provided to the Member by the Committee or as of an Annuity Starting Date which precedes the date as of which such written explanation is provided to the Member by the Committee, provided that (i) the Committee informs the Member that the Member has the right to a period of at least thirty (30) days after receiving such written explanation to consider whether to waive the Spouse Joint and Survivor Annuity payable under the terms of this Plan and to elect a method of distribution provided in Section 7.6; (ii) the Member is permitted to revoke an affirmative distribution election at any time prior to the Annuity Starting Date or, if later, at any time prior to the expiration of the seven (7) day period that begins on the day after the day the Member receives such written explanation; and (iii) the commencement of payments does not occur prior to the expiration of the seven (7) day period that begins on the day after the day the Member receives such written explanation.

5.2.3 At least nine (9) months prior to the Member’s earliest Annuity Starting Date, the Committee shall furnish to him (by mail or personal delivery) a written explanation of: (i) the terms and conditions of the Spouse Joint and Survivor Annuity; (ii) the Member’s right to make and the effect of an election to waive the Spouse Joint and Survivor Annuity form of benefit; (iii) the rights of a Member’s spouse; (iv) the right to make, and effect of, a revocation of a previous election to waive the Spouse Joint and Survivor Annuity; and (v) the relative value of the various optional forms of benefit under the Plan. The explanation shall also state that the Committee will provide the information described in Section 5.2.4, if he requests such information in writing within sixty (60) days after the foregoing statement is mailed or delivered.

 

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5.2.4 Upon written request made by the Member within sixty (60) days of the date the statement described in Section 5.2.3 was mailed or delivered, the Committee shall furnish to him (by mail or personal delivery) a written explanation in nontechnical language of the terms and conditions of the Spouse Joint and Survivor Annuity provisions of the Plan and the financial effects upon the Member’s Retirement Pension of his making the election under Section 5.2.1. Such explanation shall be personally delivered or mailed to the Member within thirty (30) days from the date of the Member’s written request.

5.2.5 A “Qualified Election” means a waiver of a Spouse Joint and Survivor Annuity. The waiver must be in writing and must be consented to by the Member’s spouse. The spouse’s consent to a waiver must be witnessed by a representative of the Committee or a notary public. Notwithstanding this consent requirement, if the Member establishes to the satisfaction of the Committee that such written consent cannot be obtained because there is no spouse or the spouse cannot be located, a waiver by the Member shall be deemed a Qualified Election. Any consent necessary under this provision shall be valid only with respect to the spouse who signs the consent, or in the event of a deemed Qualified Election, the designated spouse. Additionally, a revocation of a prior waiver may be made by a Member without the consent of the spouse at any time before the Member’s Annuity Starting Date. The number of such revocations shall not be limited.

5.3. Small Payments . If the monthly benefit payable to a Member at his Normal Retirement Date is less than $25 per month, the Equivalent Actuarial Value of such benefit on a lump sum basis shall be paid to the Member at the time of his Termination of Employment. If the monthly benefit payable to a Member at any other Annuity Starting Date is less than $25 per month, the Equivalent Actuarial Value of such benefit on a lump sum basis shall be paid to the Member at such Annuity Starting Date.

5.3.1 If the actuarial equivalent lump sum value, as determined in Section 5.3.2, of a Member’s benefit payable under the Plan is less than or equal to $3,500 ($5,000 effective January