CONVERGYS CORPORATION PENSION PLAN

Exhibit 10.22 to 2008 10-K

CONVERGYS CORPORATION

PENSION PLAN

(EGTRRA RESTATEMENT)

TABLE OF CONTENTS

 

CONVERGYS CORPORATION

PENSION PLAN

SECTION 1

NAME AND PURPOSE OF PLAN

1.1 Name of Plan . The plan set forth herein is the Convergys Corporation Pension Plan (the “Plan”).

1.2 Purpose . The Plan is a plan intended to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”).

SECTION 2

GENERAL

2.1 Defined Terms . For purposes of the Plan, the following terms shall have the meaning hereinafter set forth unless a different meaning is required by the context:

2.1.1 “Affiliated Employer” means the Company, each corporation which is a member of a controlled group of corporations (within the meaning of Section 414(b) of the Code) which includes the Company, each trade or business (whether or not incorporated) which is under common control (as defined in Section 414(c) of the Code) with the Company, each member of an affiliated service group (within the meaning of Section 414(m) of the Code) which includes the Company, and each other entity required to be aggregated with the Company under Section 414(o) of the Code.

2.1.2 “Approved Absence” means an absence from active service with an Affiliated Employer by reason of a vacation or leave of absence approved by the Affiliated Employer, any absence from active service with an Affiliated Employer while employment rights with the Affiliated Employer are protected by law and any other absence from active service with an Affiliated Employer which does not constitute a termination of employment with the Affiliated Employer under rules adopted by the Affiliated Employer and applied in a uniform and nondiscriminatory manner.

2.1.3 “CBI Plan Beneficiary” means the beneficiary of a person (a) who died prior to January 1, 1999, (b) who was a participant in the Cincinnati Bell Pension Plan (“CBPP”) or Cincinnati Bell Management Pension Plan (“CBMPP”) at the time of his death and (c) whose last employment as a common law employee of any direct or indirect subsidiary of Cincinnati Bell Inc. was with Convergys Information Management Group, Convergys Customer Management Group Inc. or any direct or indirect subsidiary of either of those corporations.

 

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2.1.4 “CBI Plan Participant” means a person who was a participant in CBPP or CBMPP on December 31, 1998 and (a) who, on January 1, 1999, is an Employee or (b) whose last employment as a common law employee of any direct or indirect subsidiary of Cincinnati Bell Inc. prior to January 1, 1999 was with Convergys Information Management Group, Convergys Customer Management Group Inc. or any direct or indirect subsidiary of either of those corporations.

2.1.5 “Committee” means the Convergys Corporation Employee Benefits Committee.

2.1.6 “Company” means Convergys Corporation.

2.1.7 “Covered Employee” means a person who is an Employee of a Participating Company, subject to the following:

(a) The term “Covered Employee” shall not include a person who is a “leased employee” within the meaning of Section 414(n) of the Code. For purposes of the preceding sentence, the term “leased employee” means any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person (leasing organization) has performed services for the recipient (or for the recipient and 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 year, and such services are performed under primary direction or control by the recipient.

(b) The term “Covered Employee” shall not include a person who is classified as a job bank employee; provided, however, that if a job bank employee becomes a Covered Employee on or prior to July 27, 1999, his service as a job bank employee shall be deemed to have been service as a Covered Employee.

(c) The term “Covered Employee” shall not include an Employee who is a co-op or intern; provided that if a co-op or intern becomes a Covered Employee, his service as a co-op or intern shall be deemed to have been service as a Covered Employee.

(d) The term “Covered Employee” shall not include any person (other than a Foreign Service Employee) who is employed at a location which is not within one of the States of the United States or any person who is a Rotational Employee. For purposes of this Section 2.1.7(d), “Foreign Service Employee” means an Employee who is a citizen of the United States and who has been classified by the Participating Company which employs him as a Foreign Service Employee and “Rotational Employee” means an Employee who is a nonresident alien employed within one of the States of the United States for a period not expected to exceed three years.

(e) The term “Covered Employee” shall not include any employee who is covered by a collective bargaining agreement that does not specifically provide for coverage under the Plan.

(f) The term “Covered Employee” shall not include any person who is not classified by an Affiliated Employer as a common law employee of an Affiliated Employer even if a court or administrative agency determines that such individual is a common law employee and not an independent contractor.

 

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(g) The term “Covered Employee” shall not include a person who is employed by Encore Receivable Management, Inc. and is classified as a collector unless (i) immediately prior to the date such person became employed by Encore Receivable Management, Inc. as a collector, he was employed by Convergys Customer Management Group Inc., or (ii) such individual is employed at a location where agent level employees of Convergys Customer Management Group Inc. are also employed.

(h) The term “Covered Employee” shall not include a person who is classified as a temporary employee.

2.1.8 “Employee” means any person who is employed as a common law employee of an Affiliated Employer, including any such person who is absent from active service with an Affiliated Employer by reason of an Approved Absence.

2.1.9 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

2.1.10 “Mandatory Portability Agreement” means that agreement, effective January 1, 1985, between and among Cincinnati Bell Telephone Company and certain other companies to comply with the mandatory portability provisions of the Deficit Reduction Act of 1984 and which provides for the portability of benefits with respect to certain employees who terminate employment with one company subject to the agreement and subsequently commence employment with another company subject to the agreement.

2.1.11 “Normal Retirement Date” means (a) in the case of an Employee who first became a Participant in CBPP or CBMPP prior to January 1, 1988, the Employee’s 65th birthday and (b) in the case of any other Employee, the later of (i) the Employee’s 65th birthday or (ii) the fifth anniversary of the earliest of the date the Employee first became a Participant in the Plan, the date the Employee first became a participant in CBPP or the date the Employee first became a Participant in CBMPP.

2.1.12 “Plan Year” means the calendar year.

2.1.13 “Participant” means a person who becomes a Participant on or after January 1, 1999 in accordance with the provisions of Section 4 and who remains a Participant under the Plan.

2.1.14 “Participating Company” means the Company, Convergys Information Management Group, Convergys Customer Management Group Inc., Convergys CMG Utah, Inc., Encore Receivable Management, Inc., Convergys Learning Solutions, Inc., Finali Corporation, and Convergys Government Solutions LLC. If a Participating Company ceases to be an Affiliated Employer, it shall thereupon cease to be a Participating Company.

2.1.15 Reserved.

 

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2.1.16 The “Required Beginning Date” of a Participant who is not a “5-percent owner” is the first day of April of the calendar year following the calendar year in which the later of the date he ceases to be an Employee or attainment of age 70-1/2 occurs. The “Required Beginning Date” of a Participant who is a “5-percent owner” is the first day of April following the calendar year in which the Participant attains age 70-1/2. A Participant is a “five percent owner” if he is a five percent owner, as defined in Code Section 416(i) and determined in accordance with Code Section 416, but without regard to whether the Plan is top-heavy, for the Plan Year ending with or within the calendar year in which the Participant attains age 70  ¹ / 2 . The Required Beginning Date of a Participant who is a “five percent owner” hereunder shall not be redetermined if the Participant ceases to be a five percent owner as defined in Code Section 416(i) with respect to any subsequent Plan Year.

2.1.17 “Trust” means Convergys Corporation Pension Trust.

2.1.18 “Trustee” means the person or corporation serving as Trustee of the Trust.

2.2 Gender and Number . For purposes of the Plan and Trust, words used in any gender shall include all other genders, the singular the plural and the plural the singular, as the context may require.

SECTION 3

CREDITED SERVICE

3.1 Hour of Service . An Employee’s “Hours of Service” to be counted for purposes of the Plan shall be computed as follows, subject to the rules contained in 29 CFR Sec. 2530.200b-2(b) and (c) (which are incorporated herein by reference):

3.1.1 One Hour of Service shall be credited for each hour for which an Employee is paid, or entitled to payment, by any Affiliated Employer for the performance of duties during the applicable computation period.

3.1.2 One Hour of Service shall be credited for each hour for which an Employee is paid, or entitled to payment, by an Affiliated Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. Notwithstanding the preceding sentence:

(a) No more than 501 Hours of Service are required to be credited under this Section 3.1.2 to an Employee on account of any single continuous period during which the Employee performs no duties (whether or not such period occurs in a single computation period);

(b) An hour for which an Employee is directly or indirectly paid, or entitled to payment, on account of a period during which no duties are performed is not required to be credited to the Employee if such payment is made or due under a plan maintained solely for the purpose of complying with applicable workers’ compensation, or unemployment compensation or disability insurance laws; and

 

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(c) Hours of Service are not required to be credited for a payment which solely reimburses an Employee for medical or medically related expenses incurred by the employee.

For purposes of this Section 3.1.2, a payment shall be deemed to be made by or due from an Affiliated Employer regardless of whether such payment is made by or due from an Affiliated Employer directly, or indirectly through, among others, a trust fund, or insurer, to which the Affiliated Employer contributes or pays premiums and regardless of whether contributions made or due to the trust fund, insurer or other entity are for the benefit of particular Employees or are on behalf of a group of Employees in the aggregate.

3.1.3 An Hour of Service shall be credited for each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by an Affiliated Employer. The same hours of service shall not be credited both under Section 3.1.1 or 3.1.2, as the case may be, and under this Section 3.1.3.

3.2 Break in Service Rules . Except for service which was disregarded on December 31, 1998 under the break in service rules of the CBMPP in effect on that date, for purposes of the Plan, no years of Eligibility Service or Vesting Service shall be disregarded because the Employee has incurred a break in service.

3.3 Employment Commencement Date . An Employee’s “Employment Commencement Date” shall be the date on which he first performs an Hour of Service as an Employee for which he is paid, or entitled to payment, by any Affiliated Employer.

3.4 Eligibility Service . An Employee shall be credited with one year of “Eligibility Service” as of the last day of the first Eligibility Computation Period during which he completes at least 1,000 Hours of Service. For purposes of the Plan, “Eligibility Computation Period” means the 12-month period commencing on his Employment Commencement Date and each calendar year commencing after his Employment Commencement Date.

3.5 Vesting Service . An Employee’s years of “Vesting Service” shall be computed as follows:

3.5.1 An Employee shall be credited with years of Vesting Service equal to the number of his Years of Vesting Service under CBPP or CBMPP as of December 31, 1998.

3.5.2 An Employee shall be credited with one year of Vesting Service for each calendar year ending after December 31, 1998 during which he is credited with at least 1,000 Hours of Service; provided that service prior to the calendar year in which the Employee attained age 18 shall not be counted for purposes of this Section 3.5.2.

3.6 Mandatory Portability Agreement . If any Participant who is a CBI Plan Participant completed service with any of the former Bell System companies (or their successors) and that service was required under the Mandatory Portability Agreement to be credited for his benefit as of December 31, 1998 under the CBPP or the CBMPP, then such prior service shall also be recognized under this Plan.

 

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3.7 Service with Predecessor Entities . For purposes of the Plan, in the case of an employee of a Predecessor Entity who became an employee of a CBI Entity as of the date on which the Predecessor Entity was acquired by a CBI Entity (“Acquisition Date”), from and after the Acquisition Date his service with the Predecessor Entity shall be deemed to be service with an Affiliated Employer which is not a Participating Company. For purposes of this Section 3.7, “Predecessor Entity” means NICE Corporation, Automated Phone Exchange Incorporated, Telephone Marketing Services, Inc., Ameritel Corporation, Waveland Associates, Inc., ADI Research, Inc., Information Systems Partnership and its predecessor, Information Systems Development, Inc., WATS Marketing of America, Inc., Software Support, Inc., Maritz, Inc. and American Transtech, Inc. (“ATI”) and “CBI Entity” means an entity which is an Affiliated Employer under CBMPP as of December 31, 1998. In the case of an employee of Scherers Communications, Inc. (“Scherers”) who became an Employee of Convergys Corporation Customer Management Group Inc. (“Convergys CMG”) on August 7, 1996, for purposes of the Plan, his service with Scherers prior to August 7, 1996 shall be deemed to be service with an Affiliated Employer which is not a Participating Company. In the case of an employee of AccuStaff Incorporated or People Systems Inc. (collectively, “AccuStaff”) who became an Employee of Convergys CMG during 1998 and who was supporting Convergys CMG immediately prior to the date on which he becomes an Employee of Convergys CMG, his service with AccuStaff prior to the date he became an employee of Convergys CMG shall be deemed to be service with an Affiliated Employer which is not a Participating Company. In the case of an employee of AT&T Corp. (“ATT”) who became an Employee of Convergys CMG on March 1, 1998, his service with ATT prior to the date on which he became an Employee of Convergys CMG shall be deemed to be service with an Affiliated Employer which is not a Participating Company. Effective June 15, 1999, in the case of an employee of Technology Applications, Inc. who became an Employee on June 15, 1999, for purposes of the Plan, his service with Technology Applications, Inc. prior to the date he became an Employee shall be deemed to be service with an Affiliated Employer which is not a Participating Company. In the case of an employee of Keane, Inc. (“Keane”) who became an Employee on February 9, 2001, for purposes of the Plan, his service with Keane prior to February 9, 2001 shall be deemed to be service with an Affiliated Employer which is not a Participating Company. In the case of an employee of Geneva Technology Inc. (“Geneva”) who became an Employee of a Participating Company on July 1, 2001, for purposes of the Plan, his service with Geneva prior to July 1, 2001 shall be deemed to be service with an Affiliated Employer which is not a Participating Company. Effective as of July 12, 2002, in the case of an employee of iBasis Inc. or iBasis Speech Solutions, Inc. (“iBasis”) who became an employee of a Participating Company on July 12, 2002, for purposes of the Plan, his service with iBasis prior to July 12, 2002 shall be deemed to be service with an Affiliated Employer which is not a Participating Company. Effective as of February 1, 2003, in the case of an employee of Cygent, Inc. (“Cygent”) who became an Employee of a Participating Company on February 1, 2003, for purposes of the Plan, his service with Cygent prior to February 1, 2003 shall be deemed to be service with an Affiliated Employer which is not a Participating Company. Effective as of January 1, 2004, in the case of an employee of ALLTEL Communications, Inc. (or a related entity) (“ALLTEL”) who became an Employee of a Participating Company on January 1, 2004, for purposes of the Plan, his service with ALLTEL prior to January 1, 2004 shall be deemed to be service with an

 

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Affiliated Employer which is not a Participating Company. Effective as of January 22, 2004, in the case of an employee of Sprint/United Management Company (or a related entity) (“Sprint”) in its Nashville, TN contact center who became an Employee of a Participating Company pursuant to the terms of the Statement of Work between International Business Machines Corporation and Convergys Customer Management Group Inc. dated January 22, 2004, for purposes of the Plan, his service with Sprint prior to becoming an employee shall be deemed to be service with an Affiliated Employer which is not a Participating Company. Effective as of May 1, 2004, in the case of an employee of Whisperwire, Inc. (“Whisperwire”) who became an Employee of a Participating Company on May 1, 2004, for purposes of the Plan, his service with Whisperwire prior to May 1, 2004 shall be deemed to be service with an Affiliated Employer which is not a Participating Company. Effective as of May 20, 2004, in the case of an employee of Encore Receivable Management, Inc. (“Encore”) who became an Employee of a Participating Company on May 20, 2004, for purposes of the Plan, his service with Encore prior to May 20, 2004 shall be deemed to be service with an Affiliated Employer which is not a Participating Company. Effective as of June 1, 2004, in the case of an employee of DigitalThink, Inc. (“DigitalThink”) who became an Employee of a Participating Company on June 1, 2004, for purposes of the Plan, his service with DigitalThink prior to June 1, 2004 shall be deemed to be service with an Affiliated Employer which is not a Participating Company. Effective as of January 1, 2005, in the case of an employee of Finali Corporation (“Finali”) who became an Employee of a Participating Company on January 1, 2005, for purposes of the Plan, his service with Finali prior to January 1, 2005 shall be deemed to be service with an Affiliated Employer which is not a Participating Company.

SECTION 4

ELIGIBILITY AND PARTICIPATION

4.1 Eligibility . The following persons shall be eligible to become Participants in the Plan:

4.1.1 Each person who is a CBI Plan Participant.

4.1.2 Each person (a) who is a Covered Employee; (b) who has attained age 21; and (c) who has been credited with at least one year of Eligibility Service.

4.2 Participation . Each CBI Plan Participant automatically shall become a Participant in this Plan on January 1, 1999. Each Employee who satisfies all of the eligibility requirements of Section 4.1.2 on January 1, 1999 shall become a Participant in this Plan on January 1, 1999. Each other Employee shall become a Participant in the Plan on the first date subsequent to January 1, 1999 on which he satisfies all of the eligibility requirements of Section 4.1.2 Each person who becomes a Participant in the Plan shall continue to be a Participant until he ceases to have any nonforfeitable right to an accrued benefit under the Plan.

4.3 Reemployment of Former Participants . If a former Participant is reemployed as a Covered Employee after January 1, 1999, he shall become a Participant as of the date on which he is reemployed as a Covered Employee.

 

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SECTION 5

RETIREMENT BENEFITS

5.1 Standard Form and Amount . Except as otherwise provided in this Section 5, the form and amount of retirement benefit payable to a Participant shall be as follows:

5.1.1 Normal Retirement . A Participant who ceases to be an Employee (other than by reason of his death) on or after his Normal Retirement Date and prior to his Required Beginning Date shall be entitled to receive a monthly retirement benefit, commencing on the day next following the date on which he ceases to be an Employee and payable for his life, which is actuarially equivalent to the amount credited to his Cash Balance Account on the date on which he ceases to be an Employee. Provided, however, that if the Participant so elects, his retirement benefit may commence on any day after he ceases to be an Employee (not earlier than the day following the day on which such election is filed with the Benefit Office and not later than his Required Beginning Date), in which event his monthly retirement benefit shall be actuarially equivalent to the amount credited to his Cash Balance Account on the date his retirement benefit commences.

5.1.2 Required Retirement Benefit . Notwithstanding any other provision of the Plan to the contrary, distribution of a Participant’s accrued benefit shall commence to the Participant no later than as provided in Section 18. In the event distributions are required to commence to a Participant under Section 18 prior to the date he ceases to be an Employee, the amount of a Participant’s monthly retirement benefit shall be adjusted on the date on which he ceases to be an Employee so that it is equal to the greater of (a) the amount of the Participant’s monthly retirement benefit in effect immediately prior to such date and (b) the monthly retirement benefit to which the Participant would have been entitled under the Plan on such date if he had not received any prior payments from the Plan less the actuarial value of the payments made to the Participant from the Plan prior to such date.

5.1.3 Vested Retirement. “Vested Participant” means a Participant who has been credited with at least five years of Vesting Service. If a Vested Participant ceases to be an Employee (other than by reason of his death) prior to his Normal Retirement Date, he shall be entitled to receive a monthly retirement benefit, commencing on his Normal Retirement Date and payable for his life, which is actuarially equivalent to the amount credited to his Cash Balance Account on his Normal Retirement Date. Provided, however, that if the Participant so elects, his retirement benefit may commence on any day after he ceases to be an Employee (not earlier than the day following the day on which such election is filed with the Benefit Office and not later than his Required Beginning Date), in which event his monthly retirement benefit shall be actuarially equivalent to the benefit commencing on his Normal Retirement Date.

5.1.4 Other Cessation of Employment . Except as otherwise provided in Section 6, if a Participant dies while an Employee or ceases to be an Employee for any reason other than his retirement under any of the foregoing provisions of this Section 5.1, the Participant’s accrued benefit under the Plan shall be immediately forfeited and his Cash Balance Account shall be reduced to zero; provided that if the Participant is reemployed as an Employee, he shall be reinstated as a Participant and his Cash Balance Account shall be restored as of the date on which he is reemployed as an Employee pursuant to Section 5.6.

 

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5.2 Joint and Survivor Retirement Benefit . The provisions of this Section 5.2 shall be applicable to any Participant who is married on the commencement date of his retirement benefit. Unless such Participant has otherwise elected, he and his spouse shall receive, in lieu of any other retirement benefit under the Plan, a retirement benefit payable in the form of a monthly annuity for the life of the Participant with a monthly survivor annuity for the life of his spouse which is one-half of the monthly annuity payable during the joint lives of the Participant and his spouse. During the joint lives of the Participant and his spouse, the amount of the monthly benefit payable to the Participant shall be a percentage of the monthly benefit otherwise payable to the Participant under Section 5.1, based upon the Participant’s attained age on the commencement date of his retirement benefit: less than 30 years, 97%; 30 but less than 40 years, 95%; 40 but less than 50 years, 92%; and 50 or more years, 90%. If the Participant’s spouse survives the Participant, the monthly benefit payable to the spouse shall be 50% of the monthly benefit payable to the Participant under the preceding sentence. If the Participant’s spouse predeceases the Participant, the amount of the monthly benefit payable to the Participant after the death of his spouse shall be restored, starting with the payment for the month following the month in which the death of the spouse occurs, to 100% of the monthly benefit otherwise payable to the Participant under Section 5.1.

5.2.1 Election . A married Participant whose retirement benefit would otherwise be payable in the form of a joint and survivor annuity under this Section 5.2 may elect to waive the joint and survivor annuity benefit under this Section 5.2, in which event the Participant’s retirement benefit shall be paid in the form provided under Section 5.1 or the form provided under Section 5.3. The period within which a married Participant may elect to waive the joint and survivor annuity under this Section 5.2 shall be the 90-day period ending on the date his retirement benefit commences. Any election under this Section 5.2.1 may be cancelled at any time within the applicable election period. Any election under this Section 5.2.1, and any cancellation thereof, must be made in writing and filed with the Committee within the applicable election period. No election under this Section 5.2.1 shall be valid unless the Participant’s spouse consents to such election. Such consent must be made in writing, acknowledge the effect of such consent, and be witnessed by a Plan representative or a notary public. Provided, however, that such spousal consent shall not be required if it is established to the satisfaction of a Plan representative that such consent may not be obtained because the spouse cannot be located or because of such other circumstances as the Secretary of the Treasury may by regulations prescribe.

5.2.2 Information Required . Not more than 90 days and not less than 30 days before the commencement date of a benefit to a Participant where such benefit will be distributed in the form of a joint and survivor annuity unless there is an election to waive such form pursuant to Section 5.2.1 (and consistent with such regulations as the Secretary of the Treasury may prescribe), the Committee will furnish the Participant a written explanation of (a) the terms and conditions of the joint and survivor annuity, (b) the Participant’s rights to make and the effect of an election to waive the joint and survivor annuity, (c) the rights of the Participant’s spouse, (d) the Participant’s right to make, and the effect of, a revocation of a previous election to waive the joint and survivor annuity at any time before the date as of which

 

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his benefit commences to be paid to him and (e) the relative values of the various optional forms of benefit under the Plan. Notwithstanding the foregoing, distribution may be made to a Participant (whether the Participant is married or not) as of a benefit commencement date even though distribution of the written explanation described above is provided less than 30 days before the benefit commencement date, but only if (i) the Committee provides to the Participant information that the Participant has a right to at least 30 days to consider whether to commence distribution and whether to waive the joint and survivor annuity and elect (with spousal consent) another form of distribution, (ii) the Participant elects distribution as of the benefit commencement date (and waives the right to be provided the written explanation at least 30 days before the benefit commencement date), (iii) the Participant is permitted to revoke a distribution election at least until the benefit commencement date, or, if later, at any time prior to the expiration of the 7-day period that begins the day after the written explanation is provided to the Participant, (iv) the benefit commencement date is after the date the written explanation is provided to the Participant and (v) distribution in accordance with the Participant’s election does not commence before the expiration of the 7-day period that begins the day after the written explanation is provided to the Participant.

5.3 Lump-sum Retirement Benefit . A Participant who is not married or who is married and has made the election called for in Section 5.2.1 may elect to receive, in lieu of the form of retirement benefit otherwise payable to him under Section 5.1, a lump-sum which is actuarially equivalent to the retirement benefit otherwise payable to him commencing on his Normal Retirement Date (or, if later, his benefit commencement date). Any election under this Section 5.3 must be made in writing, on forms furnished and in the manner prescribed by the Committee, and filed with the Committee within the 90-day period ending on the date his retirement benefit commences. A Participant who has elected a lump-sum benefit under this Section 5.3 may revoke such election by filing a written revocation, on forms furnished and in the manner prescribed by the Committee, with the Committee prior to the payment of the lump-sum benefit. In the case of a married Participant, (a) any election under this Section 5.3 shall be automatically revoked if the Participant cancels an election not to have his retirement benefit paid in the form of a joint and survivor annuity under Section 5.2, and (b) no election or revocation under this Section 5.3 shall be valid without the written consent of the Participant’s spouse in accordance with the provisions of the last three sentences of Section 5.2.1.

5.4 Cash Balance Account . A separate bookkeeping account (the “Cash Balance Account”) shall be established and maintained for each Participant.

5.4.1 Initial Cash Balance Amounts .

(a) In the case of a CBI Plan Participant who becomes a Participant in this Plan on January 1, 1999, there shall be credited to his Cash Balance Account, as of January 1, 1999, an amount equal to the balance credited to his cash balance account under CBPP or CBMPP as of December 31, 1998 plus one day of assumed interest on such balance at an annualized rate (without compounding) of 7.75%.

(b) In the case of a Participant other than a CBI Plan Participant who first becomes a Participant on January 1, 1999, there shall be credited to his Cash Balance Account (as of the date on which he first becomes a Participant) an amount equal to the amount which would have been credited to his Cash Balance Account on such date if the Plan did not require attainment of age 21 and completion of one year of Eligibility Service as conditions of becoming a Participant.

 

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(c) In the case of a Participant other than a CBI Plan Participant who first becomes a Participant after January 1, 1999, there shall be credited to his Cash Balance Account (as of the date on which he first becomes a Participant) an amount equal to the amount which would have been credited to his Cash Balance Account on such date if the Plan did not require attainment of age 21 and completion of one year of Eligibility Service as conditions of becoming a Participant.

5.4.2 Pension Credits .

(a) As of the last day of each calendar year subsequent to 1998 and prior to 2007 (or, in the case of a Participant who ceases to be an Employee during any such calendar year, as of the date on which he was last employed as an Employee), there shall be credited to the Cash Balance Account of each Participant who received Covered Compensation during the calendar year an amount equal to the product obtained by multiplying (a) the sum of (i) an amount equal to such Covered Compensation, plus (ii) an amount equal to that portion of such Covered Compensation in excess of the Social Security Wage Base for such year, times (b) the Applicable Percentage from the table set forth below in this Section 5.4.2(a), based upon his attained age, in completed years, on such December 31 (or, if he ceased to be an Employee during the year, his attained age as of the date on which he was last employed as an Employee).

 

(b) As of the last day of each calendar year subsequent to 2006 (or, in the case of a Participant who ceases to be an Employee during any such calendar year, as of the date on which he was last employed as an Employee), there shall be credited to the Cash Balance Account of each Participant who received Covered Compensation during the calendar year an amount equal to the sum of (i) the product obtained by multiplying such Covered Compensation by the Applicable Percentage from the table set forth below in this Section 5.4.2(b), plus (ii) the product obtained by multiplying that portion of such Covered Compensation in excess of the Social Security Wage Base for such year by 50% of the Applicable Percentage from the table set forth below in this Section 5.4.2(b), based upon his attained age, in completed years, on such December 31 (or, if he ceased to be an Employee during the year, his attained age as of the date on which he was last employed as an Employee).

 

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(c) For purposes of this Section 5.4.2, “Social Security Wage Base” means, with respect to any calendar year, the contribution and benefit base in effect for such year under Section 230 of the Social Security Act.

5.4.3 Interest Credits .

(a) On each day during calendar year 1999 after January 1, 1999, there shall be credited to the Cash Balance Account of each Participant who has a Cash Balance Account balance on January 1, 1999, assumed interest on such balance at an annualized rate (without compounding) of 7.75%.

(b) On each day during calendar year 2000 there shall be credited to the Cash Balance Account of each Participant who has a Cash Balance Account balance on December 31, 1999, assumed interest on such balance at an annualized rate (without compounding) of 7.75%.

(c) On each day during calendar year 2001 there shall be credited to the Cash Balance Account of each Participant who has a Cash Balance Account balance on December 31, 2000, assumed interest on such balance at an annualized rate (without compounding) of 8%.

(d) On each day during calendar year 2002 there shall be credited to the Cash Balance Account of each Participant who has a Cash Balance Account balance on December 31, 2001, assumed interest on such balance at an annualized rate (without compounding) of 6.5%.

(e) On each day during calendar year 2003 there shall be credited to the Cash Balance Account of each Participant who has a Cash Balance Account balance on December 31, 2002, assumed interest on such balance at an annualized rate (without compounding) of 5.5%.

(f) On each day subsequent to December 31, 2003, there shall be credited to the Cash Balance Account of each Participant who has a Cash Balance Account balance on the preceding December 31, assumed interest on such balance at an annualized rate (without compounding) of 4%.

(g) For the calendar year in which a Participant has an amount credited to his Cash Balance Account under Section 5.4.1(c), on each day subsequent to the

 

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date on which such amount is credited to his Cash Balance Account, there also shall be credited to his Cash Balance Account the product obtained by multiplying such amount times the applicable assumed interest rate from this Section 5.4.3.

(h) Notwithstanding the foregoing provisions of this Section 5.4.3, if a Participant is not employed as a Employee (or is employed as a leased employee, contingency employee or job bank employee) on a given day, the assumed interest rate to be applied on such day under this Section 5.4.3 shall be 3.5%; provided that no interest shall be applied to the account of such an employee after the Employee’s Normal Retirement Date.

5.4.4 Adjustments for Payments . To the extent that payments are made to a Participant under the Plan, the balance in the Participant’s Cash Balance Account shall be reduced to properly reflect the amount of such payments, including reduction to zero in the event benefits are paid or commenced or forfeited pursuant to the provisions of Section 5.1.

5.5 Covered Compensation . For purposes of the Plan, “Covered Compensation” means, with respect to any calendar year, the total salary, hourly wages, pay in lieu of paid time off, differential pay, company-paid short term disability pay, commissions, team awards and bonuses paid to him by a Participating Company during the year for services rendered as a Covered Employee, subject to the following:

5.5.1 “Covered Compensation” shall not include “spot” bonuses, referral bonuses, hiring bonuses, retention bonuses, patent bonuses, severance pay, relocation pay, imputed income, long term incentive payments (i.e., payments earned over a period longer than one year), overtime and any other special form of pay. In the case of a Participant on international assignment, his “Covered Compensation” shall not be increased or decreased by reason of any international service adjustments.

5.5.2 “Covered Compensation” shall include amounts which would have been paid to the Participant (and considered as Covered Compensation under the foregoing provisions of this Section 5.5) if the Participant had not entered into a cash or deferral arrangement described in Section 401(k) of the Code or elected nontaxable benefits under a cafeteria plan described in Section 125 of the Code or elected a qualified transportation fringe under Section 132 of the Code. “Covered Compensation” also shall include amounts which would have been paid to the Participant and considered as Covered Compensation under the foregoing provisions of this Section 5.5 if the Participant had not elected to participate in the Convergys Corporation Executive Deferred Compensation Plan, provided that such amounts shall be deemed to be compensation in excess of the limitations contained in Section 7.4.3 for purposes of calculating the Participant’s benefits under the Plan.

5.5.3 For purposes of the Plan, a Covered Employee’s “Covered Compensation” for any Plan Year shall not exceed $200,000 or such greater amount as may be permitted for such Plan Year under Section 401(a)(17) of the Code.

5.6 Reemployment of Participants . In the event that the Cash Balance Account of a Participant who ceased to be an Employee for any reason is reduced to zero pursuant to the provisions of Section 5.1.4 or 5.4.4 and such Participant resumes employment as an Employee,

 

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his Cash Balance Account shall be restored and credited with an amount equal to his Cash Balance Account as of his annuity start date (without taking into account any benefit enhancements or early retirement incentives) with interest credits on such amount at a rate of 3.5% (or 4% in the event the Participant had made an election under Section 6.3 to waive the death benefit) from his annuity start date through his rehire date, subject to the following:

5.6.1 If such Participant was receiving an annuity by reason of his earlier termination of employment: (a) if such earlier termination of employment occurred prior to December 31, 1993, the annuity payments shall be suspended during any period when he is reemployed as a Covered Employee, and (b) if such earlier termination of employment occurred on or after December 31, 1993, the annuity payments shall not be suspended by reason of his reemployment. Any such Participant’s retirement benefit payable at Normal Retirement Date shall be reduced by an amount equal to the Participant’s retirement benefit paid or payable at Normal Retirement Date by reason of his earlier termination.

5.6.2 If such Participant received a lump-sum benefit by reason of his earlier termination of employment and he does not repay the full amount of the lump-sum benefit (plus interest compounded annually from the original payment date to the repayment date at the rate determined for purposes of Section 411(c)(2)(C) of the Code) before the earlier of (a) five years after the first date on which he is reemployed as a Covered Employee and (b) the date he incurs five consecutive One Year Breaks in Service following the original payment date, his retirement benefit payable at Normal Retirement Date shall be reduced by the full amount of the lump sum benefit paid by reason of his earlier termination of employment plus interest compounded annually from the original payment date to his rehire date at the rate determined for purposes of Section 411(c)(2)(C) of the Code and from his rehire date to his Normal Retirement Date at the applicable rate(s) specified in Sections 5.4.3.

5.6.3 If a Vested Participant who ceases to be an Employee is reemployed as an Employee, and if such Participant does not receive or elect to receive either a lump-sum benefit or an annuity payable as of a date prior to the date on which he is reemployed as an Employee, neither he nor anyone claiming by or through him shall be entitled to receive any benefit by reason of his earlier termination of employment.

5.7 Employment After Age 65 . Notwithstanding any other provision hereof to the contrary, if a Participant who has attained age 65 completes less than 40 Hours of Service in any calendar month in which he is employed as an Employee, he shall be entitled to receive, for such calendar month, the retirement benefit (if any) he would have been entitled to receive under Section 5.1 if he had not been so employed; provided, however, that such retirement benefit shall not be paid unless and until the Participant notifies the Committee that he completed less than 40 Hours of Service during such month.

5.8 Missing Participants . If a Participant or beneficiary who is entitled to receive a benefit under any of the provisions of this Plan cannot be located within six months, after such investigation as the Committee deems appropriate, the benefit otherwise payable to such Participant or beneficiary shall thereupon be forfeited; provided that if such Participant or beneficiary thereafter makes a claim for the amount forfeited hereunder, the benefit so forfeited shall be restored and paid to such Participant or beneficiary.

 

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5.9 Actuarial Assumptions . For purposes of determining actuarial equivalence of benefits under the Plan with respect to annuity start dates on or after January 1, 1999, the following assumptions shall be used:

5.9.1 To convert a Cash Balance Account to a deferred annuity commencing at Normal Retirement Date, the assumptions reflected in Table 2 attached hereto.

5.9.2 To convert a deferred annuity commencing at Normal Retirement Date to an immediate lump sum, either the assumptions reflected in Table 2 attached hereto or the assumptions reflected in 5.9.5, whichever produces the greater amount.

5.9.3 To convert a deferred annuity commencing at Normal Retirement Date to an immediate annuity, the assumptions reflected in Table 1 attached hereto.

5.9.4 To convert a Cash Balance Account to an immediate survivor annuity, the assumptions reflect in 5.9.5.

5.9.5 For purposes of this Section 5.9 and 16.6, (a) for annuity start dates prior to January 1, 2000, UP 84 Mortality Table and the interest rate which would be used (as of the beginning of the calendar year in which the distribution occurs) by the Pension Benefit Guaranty Corporation to determine the present value of a lump-sum distribution on plan termination (or at 120% of such rate, in the case of a lump-sum amount in excess of $25,000) shall be used or (b) for annuity start dates on or after January 1, 2000, the applicable mortality table under Section 417(e) of the Code as prescribed from time to time by the Secretary of the Treasury (GAM 83 Mortality Table prescribed in Revenue Ruling 95-6 and for distributions with annuity start dates after December 30, 2002, the mortality table prescribed in Revenue Ruling 2001-62) and the applicable interest rate under Section 417(e) of the Code as specified by the Commissioner of Internal Revenue in revenue rulings, notices or other guidance published in the Internal Revenue Bulletin (currently based on the annual rate of interest on 30-year Treasury securities) for the fifth full calendar month (lookback month) which precedes the calendar year (stability period) in which the distribution occurs shall be used.

5.9.6 Notwithstanding the foregoing provisions of Section 5.9.5, the following shall apply. For distributions with annuity start dates on or after January 1, 2000 and prior to the adoption of the GUST restatement of the Plan, the distribution will be the greater of the amount that would be determined under the Plan without regard to the GUST restatement of the Plan and the amount determined under the Plan with regard to the GUST restatement. Further, for distributions with annuity start dates for the period beginning on January 1, 2000 and ending one year after the adoption date of the GUST restatement, the applicable interest rate under Section 417(e) of the Code will be the applicable interest rate for the fifth full calendar month which precedes the calendar year in which the distribution occurs or the applicable interest rate as of the beginning of the calendar year in which the distribution occurs, whichever produces the larger distribution.

5.10 Minimum Benefit . In the case of a Participant who is a CBI Plan Participant, in no event shall the value of his accrued benefit under this Plan be less than the actuarial equivalent of the value of his accrued benefit under CBPP or CBMPP, as the case may be, as of

 

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December 31, 1998. In the case of a CBI Plan Participant who does not have an Hour of Service as an Employee after December 31, 1998, he shall be entitled to received the same benefit under this Plan, and in the same form and amount, which he was entitled to receive under CBPP or CBMPP, as the case may be, as of December 31, 1998. In the case of the person who is a CBI Plan Beneficiary, such person shall be entitled to receive the same benefit under this Plan, and in the same form and amount, which he was entitled to receive under CBPP or CBMPP, as the case may be, as of December 31, 1998.

5.11 Military Service . Notwithstanding any other provision of this Plan to the contrary, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code.

SECTION 6

DEATH BENEFITS

6.1 Unmarried Participants . If an unmarried Vested Participant dies while an Employee or after ceasing to be an Employee but prior to his benefit commencement date, a lump-sum death benefit equal to the balance credited to his Cash Balance Account on the date of his death shall be paid to his Beneficiary, as provided in Section 6.4, as of the day following the date of his death. For purposes of this Section 6.1 and Section 6.2, the term “Vested Participant” shall include a Participant who is employed as an Employee on or after his Normal Retirement Date, whether or not he has been credited with at least five years of Vesting Service.

6.2 Married Participants . If a married Vested Participant dies while an Employee or after ceasing to be an Employee but prior to his benefit commencement date, a lump-sum death benefit equal to the balance credited to his Cash Balance Account on the date of his death shall be paid to his Beneficiary, as provided by Section 6.4, as of the day following the date of his death; provided, however, that if the Participant’s Beneficiary is the Participant’s spouse, the spouse may elect (in the form and manner prescribed by the Committee) in lieu of such death benefit to receive as of any day next following the Participant’s death (but not later than the date the Participant would have attained his Normal Retirement Date) a lump-sum death benefit equal to the balance credited to the Cash Balance Account or a monthly annuity payable for the life of the spouse which is actuarially equivalent (using the assumptions to convert a Cash Balance Account to an immediate survivor annuity) to the balance credited to the Cash Balance Account. If the spouse does not make an election, the death benefit shall be paid in the form of a monthly annuity payable for the life of the spouse commencing on the date the Participant would have attained his Normal Retirement Date.

6.3 Waiver of Death Benefit . If a Participant ceases to be an Employee but remains a Participant, he may elect to waive the death benefit otherwise applicable to him under Section 6.1 or 6.2. In the event of such a waiver, the assumed annualized interest rate applicable to his Cash Balance Account under Section 5.4.3 shall not be less than 4% while the waiver is in effect.

 

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6.3.1 In the case of an unmarried Participant, (a) the waiver may be elected or revoked in writing at any time prior to his death; and (b) the waiver shall be automatically revoked if the Participant marries and fails to make the election called for under Section 6.3.2.

6.3.2 In the case of a married Participant, (a) the waiver may be elected or revoked in writing at any time prior to his death, (b) the Participant’s spouse must consent in writing to the election of the waiver (such consent must acknowledge the effect of the election and must be witnessed by a Plan representative or notary public), and (c) within the applicable period, the Participant shall be provided a written explanation of the death benefit under Section 6.2 in a manner comparable to the explanation for meeting the requirements of Section 5.2.2. The “applicable period” for giving the written explanation under clause (c) of the preceding sentence shall be the two-year period ending one year after the date on which the Participant ceases to be an Employee.

6.4 Designation of Beneficiary . “Beneficiary” means, with respect to each Participant, the person or persons provided by this Section 6.4 who are to receive death benefits (if any) under this Section 6 after the Participant’s death.

6.4.1 In the case of an unmarried Participant, (a) the designation of a Beneficiary may be made or revoked by the Participant at any time prior to the Participant’s death in the form and manner prescribed by the Committee; and (b) the designation of Beneficiary shall be automatically revoked if the Participant marries. If an unmarried Participant has not properly designated a Beneficiary or if the Beneficiary designated by the Participant does not survive the Participant, the Participant’s Beneficiary shall be the Participant’s estate.

6.4.2 In the case of a married Participant, the Participant’s Beneficiary shall be the Participant’s spouse unless (a) the Participant waives the death benefit payable to the Participant’s spouse and designates a Beneficiary to receive the death benefit payable under Section 6.2, (b) the Participant’s spouse consents to the waiver and designation and such consent is in writing, acknowledges the effect of such waiver and designation and is witnessed by a Plan representative or notary public and (c) the waiver and designation and consent are made in the form and manner prescribed by the Committee. Consent of the Participant’s spouse shall not be required for a Participant’s designation of a Beneficiary if it is established to the satisfaction of the Committee that the Participant’s spouse cannot be located or because of such other circumstances as may be prescribed in regulations issued by the Internal Revenue Service. Any designation made pursuant to this Section 6.4.2 may be revoked prior to the Participant’s death (and a new designation made as provided in this Section 6.4.2). Consent of the Participant’s spouse shall not be effective with respect to any other subsequent spouse. A Participant’s designation of Beneficiary prior to the first day of the Plan Year in which the Participant attains age 35 shall be automatically revoked (and a new designation of Beneficiary must be made as provided in this Section 6.4.2) on the first day of the Plan Year in which the Participant attains age 35; provided, however, that a designation by a Participant after the Participant has terminated employment as an Employee shall not be automatically revoked under the foregoing provisions of this sentence. If a married Participant has not properly designated a Beneficiary or if the Beneficiary designated by the Participant does not survive the Participant, the Participant’s Beneficiary shall be the Participant’s spouse.

 

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6.4.3 The Committee shall provide the Participant with a written explanation of (a) the terms and conditions of the death benefit payable to the Participant’s spouse, (b) the Participant’s right to waive the death benefit payable to the Participant’s spouse and to designate a Beneficiary for the death benefit payable under Section 6.2 and the effect of such waiver and designation, (c) the rights of the Participant’s spouse, and (d) the Participant’s right to revoke any prior waiver and designation and the effect of such revocation. The written explanation shall be provided within a reasonable period after an Employee becomes a Participant and also within a reasonable period prior to the first day of the Plan Year in which the Participant attains age 35, or, if earlier, within a reasonable period after the Participant ceases to be an Employee.

6.4.4 A designation of Beneficiary made in accordance with Section 6.4.1 or 6.4.2 shall be automatically revoked if the Participant waives, in accordance with Section 6.3, the death benefit otherwise applicable to him under Section 6.1 or 6.2.

SECTION 7

LIMITATIONS ON BENEFITS

7.1 Section 415 Limitations .

7.1.1 General Rules . Notwithstanding any other provision of this Plan to the contrary, the “aggregate annual retirement benefit” accrued or payable to a Participant may not at any time within any “limitation year” exceed the lesser of the “defined benefit compensation limitation” or the “defined benefit dollar limitation”; provided, however, that the “aggregate annual retirement benefit” accrued or payable to a Participant shall be deemed not to exceed such limits if:

(a) The “aggregate annual retirement benefit” payable for a “limitation year” under any available form of payment does not exceed $10,000 multiplied by a fraction, the numerator of which is the Participant’s number of years (or part thereof, but not less than one) of service (not to exceed 10) with the Participating Companies and all “related employers” and the denominator of which is 10; and

(b) The Participating Companies, all “related employers”, and any “predecessor employer” have not at any time maintained a separate “defined contribution plan” in which the Participant participated.

7.1.2 Definitions .

(a) A Participant’s “aggregate annual retirement benefit” means the sum of his “annual retirement benefit” under the Plan and his “annual retirement benefit”, if any, under any and all other “defined benefit plans” (whether or not terminated) maintained by an Employer or any “related employer”. For purposes of applying the “defined benefit compensation limitation”, a Participant’s “aggregate annual retirement benefit” shall exclude any benefits accrued by the Participant under a multiemployer plan.

 

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(b) A Participant’s “annual retirement benefit” means the amount of retirement benefit attributable to Participating Company contributions which is payable to him annually under the Plan adjusted to the actuarially equivalent straight life annuity form using the factors prescribed in the following paragraphs if such benefit is to be paid in a manner other than to the Participant for his life only. A Participant’s “annual retirement benefit” includes Social Security supplements described in Section 411(a)(9) of the Code and benefits transferred from another “defined benefit plan”, other than transfers of distributable benefits pursuant to Section 1.411(d)-4, Q&A-3(c), of the Treasury regulations, but shall not include benefits attributable to a Participant’s “employee contributions.” If a Participant’s retirement benefit under the Plan includes “employee contributions”, it shall be adjusted to the actuarial equivalent of the retirement benefit attributable to the Participating Company contributions using the factors prescribed in paragraph (b)(i) below. For purposes of determining a Participant’s “annual retirement benefit”, the following shall apply:

(i) If the Participant’s retirement benefit includes “employee contributions” made by the Participant, the portion of the Participant’s retirement benefit that is attributable to Participating Company contributions shall be determined in accordance with the provisions of (A) or (B) below, as applicable. If payment is to be made in a form other than to the Participant for his life only, and such form is not subject to the requirements of Section 417(e)(3) of the Code, the actuarially equivalent straight life annuity shall be determined in accordance with the provisions of (A) or (B) below, as applicable.

(A) For “limitation years” beginning before July 1, 2007, the annual amount of straight life annuity commencing on the same benefit commencement date with the same actuarial present value as the Participant’s form of payment computed using the following factors, whichever produces the greater amount: (I) the actuarial assumptions used under the Plan for purposes of determining actuarial equivalence of optional forms not subject to the requirements of Section 417(e)(3) of the Code or (II) the “applicable mortality table” and 5 percent.

(B) For “limitation years” beginning on and after July 1, 2007, the greater of (I) the annual amount of straight life annuity, if any, payable to the Participant under the Plan commencing at the same benefit commencement date as the Participant’s form of payment or (II) the annual amount of straight life annuity commencing at the same benefit commencement date that has the same actuarially equivalent present value as the Participant’s form of payment computed using the “applicable mortality table” and an interest rate of 5 percent.

(ii) If payment is to be made to the Participant in a form that is subject to the requirements of Code Section 417(e)(3), the actuarially equivalent straight life annuity form shall be:

(A) For distributions with a benefit commencement date in the 2004 or 2005 Plan Year, the annual amount of straight life annuity commencing on the same benefit commencement date that has the same actuarially equivalent present value as the Participant’s form of payment determined using the following, whichever provides the greater annual amount: (I) the actuarial assumptions otherwise used under the Plan for

 

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purposes of determining actuarial equivalence of such optional form or (II) the “applicable mortality table” and an interest rate of 5.5 percent; provided, however, that for distributions with a benefit commencement date on or after the first day of the 2004 Plan Year and before the first day of the 2005 Plan Year, use of the interest rate specified in clause (II) shall not reduce the benefit payable to the Participant below the amount determined using the “applicable interest rate” in effect as of the last day of the last Plan Year beginning before January 1, 2004. For purposes of this paragraph (A), the “applicable interest rate” means the annual rate of interest on 30-year Treasury securities as in effect on the benefit commencement date, determined as provided in the actuarial assumptions otherwise used under the Plan for purposes of determining actuarial equivalence of such optional form.

(B) For distributions with a benefit commencement