This Insurance Agreement involves
Title: THE SHERWIN-WILLIAMS COMPANY 2008 AMENDED AND RESTATED EXECUTIVE LIFE INSURANCE PLAN
Industry: Retail (Home Improvement) Sector: Services
THE SHERWIN-WILLIAMS COMPANY
2008 AMENDED AND RESTATED
EXECUTIVE LIFE INSURANCE PLAN
The Sherwin-Williams Company, an Ohio corporation (the “Company”), on behalf of itself and Participating Affiliates, hereby establishes this 2008 Amended and Restated Executive Life Insurance Plan (the “Plan”), effective retroactive to January 1, 2004 to assure compliance with new securities and tax laws and regulations. The Plan has been operated in good faith compliance with and shall hereafter be interpreted in all respects to comply with final split dollar regulations, applicable federal securities laws, Internal Revenue Code Section 409A, to the extent applicable, and those provisions of the Employee Retirement Income Security Act of 1974, as amended, applicable to a welfare benefit plan maintained to provide life insurance benefits to a “select group of management or highly compensated employees.” The purpose of the Plan is to attract and retain high quality executives and to promote in key executives increased efficiency and an interest in the successful operation of the Company. Participation in this Plan is in lieu of participation in any other Company sponsored group life insurance plan.
1.1 Administrator shall mean the Compensation and Management Development Committee or such other person or persons appointed by the Board of Directors of the Company to administer the Plan pursuant to Article 7 of the Plan.
1.2 Base Salary shall mean the Participant’s base annual salary excluding incentive and discretionary bonuses and other non-regular forms of compensation, before reductions for contributions to or deferrals under any pension, deferred compensation or benefit plans sponsored by the Company.
1.3 Beneficiary shall mean the person(s) or entity designated as such in accordance with Article 6 of the Plan.
1.4 Class A Participant shall mean a Participant who has been designated by the Administrator to participate in the Class A Participant Program pursuant to Article 3.
1.5 Class A Participant Program shall mean the collateral assignment loan structure life insurance program provided to Class A Participants pursuant to Article 3.
1.6 Class B Participant shall mean a Participant who has been designated by the Administrator to participate in the Class B Participant Program pursuant to Article 4.
1.7 Class B Participant Program shall mean the endorsement structure life insurance program provided to Class B Participants pursuant to Article 4.
1.8 Company shall mean The Sherwin-Williams Company except that where the context requires, Company shall mean the Company or the Participating Affiliate whichever is the employer of the Participant.
1.9 Collateral Assignment shall mean the Collateral Assignment Agreement executed by a Class A Participant assigning the Policy to the Company as collateral security for the return of the Cumulative Company Loan pursuant to Article 3.
1.10 Coverage Maturity Date unless otherwise specified in the Participant Enrollment Form, the Coverage Maturity Date shall mean the later of the last day of the sixth month commencing after the Participant’s Retirement or the fifteenth (15 th ) anniversary date of the Policy (i.e. the end of the 15 th Policy year). The Coverage Maturity Date may be changed by amendment of the Participant Enrollment Form only if such change complies with all requirements of IRC Section 409A without the imposition of excise taxes.
1.11 Cumulative Company Contribution shall mean the total cumulative premiums actually paid on the Policy of a Class B Participant by the Company as of the relevant date net of any loans or withdrawals from the Policy by the Company and net of any amounts previously reimbursed to the Company by the Participant.
1.12 Cumulative Company Loan shall mean the total cumulative premiums actually paid on the Policy of a Class A Participant by the Company as of the relevant date net of any loans or withdrawals from the Policy by the Company and net of any amounts previously reimbursed to the Company by the Participant.
1.13 Disability shall mean that the Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant’s employer. The Administrator may require that the Participant submit evidence of such qualification for disability benefits in order to determine the Disability of the Participant under this Plan.
1.14 Early Retirement Eligibility Date shall mean the date on which the Participant has both attained age fifty-five (55) and completed at least twenty (20) Years of Service.
1.15 Economic Benefit Amount shall mean the value of the economic benefit of the life insurance coverage provided to a Class B Participant under the Plan as determined in the complete and sole discretion of the Administrator based on Treasury regulations, rulings issued by the Internal Revenue Service and other applicable authorities.
1.16 Eligible Executive shall mean an executive of the Company or a Participating Affiliate selected by the Administrator to be eligible to participate in the Plan. The Administrator shall designate whether an Eligible Executive is eligible to participate as either a Class A Participant or a Class B Participant.
1.17 ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended, as interpreted by regulations and applicable authorities promulgated thereunder.
1.18 Imputed Interest shall mean the interest imputed to the Participant under IRC Section 7872 by reason of the Cumulative Company Loan which shall be based on the blended annual federal statutory short-term rate which is in effect under IRC Section 1274(d) for the Plan Year for which the amount of forgone interest is being determined, compounded annually.
1.19 IRC shall mean the Internal Revenue Code of 1986, as amended, as interpreted by Treasury regulations and applicable authorities promulgated thereunder.
1.20 Normal Retirement Date shall mean the date on which the Participant attains age sixty-five (65).
1.21 Participant shall mean an Eligible Executive who has completed a Participant Enrollment Form pursuant to Article 2 of the Plan and shall include either a Class A Participant or a Class B Participant.
1.22 Participant Enrollment Form shall mean the written agreement to participate in the Plan submitted by a Participant to the Administrator pursuant to Article 2 of the Plan which shall specify the class in which the Participant shall participate in the Plan and the Coverage Maturity Date. The Participant Enrollment From may only be amended by mutual agreement of the Company and the Participant and in compliance with all requirements of IRC Section 409A, without the imposition of excise taxes. For example, any amendment to change the Coverage Maturity Date shall be made no less twelve (12) months prior to the original Coverage Maturity Date and shall delay the Coverage Maturity Date by a minimum of five (5) years.
1.23 Participating Affiliate shall mean The Sherwin-Williams Automotive Finishes Corporation and/or such other affiliate of the Company as may be designated by the Administrator to participate in the Plan and which has adopted the Plan and authorized the Administrator and The Sherwin-Williams Company to act on it’s behalf in administration of the Plan, as provided in Section 8.2.
1.24 Plan Year shall mean the calendar year.
1.25 Policy shall mean the life insurance policy or policies insuring the life of the Participant made subject to this Plan pursuant to Articles 3 or 4 of the Plan.
1.26 Retirement shall mean Termination of Employment on or after the earlier of the Early Retirement Eligibility Date or the Normal Retirement Date.
1.27 Target Death Benefit shall be based on a multiple of the Participant’s approximate projected Base Salary specified on a Schedule A to this Plan. The specified multiple and the approximation of Base Salary for this purpose may be adjusted from time to time by amendment of Schedule A in the complete and sole discretion of the Administrator.
1.28 Termination of Employment shall mean the date of the cessation of the Participant’s employment with the Company for any reason whatsoever, whether voluntary or involuntary, including by reason of Retirement, Disability or death. A transfer between the Company and a Participating Affiliate or among Participating Affiliates shall not be considered a Termination of Employment.
1.29 Years of Service shall mean the cumulative consecutive years of continuous full-time employment with the Company or a Participating Affiliate, beginning on the date the Participant first began service with the Company or Participating Affiliate, and counting each anniversary thereof.
2.1 Enrollment . An Eligible Executive shall enroll in the Plan by filing a completed and fully executed Participant Enrollment Form and such other insurance applications and forms as may be reasonably requested by the Administrator. An Eligible Executive shall become a Participant in the Plan when he or she is notified in writing that his or her participation in a particular class of coverage has been approved by the Administrator and that insurance coverage has been secured on his or her behalf.
2.2 Insurability . Eligible Executives are not automatically entitled to the insurance benefits provided under this Plan. Each Eligible executive must satisfy the requirements for obtaining insurance and be issued a Policy before he or she shall be covered (or coverage may be increased) under the Plan. The Eligible Executive shall cooperate with the Company by furnishing any and all information requested by the Administrator, in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Administrator may deem necessary and taking such other actions as may be requested by the Administrator. If the Eligible Executive refuses to so cooperate, the Company shall have no further obligation to the Eligible Executive under the Plan. In the event of the Eligible Executive’s suicide during the first two (2) years in the Plan, or if the Eligible Executive makes any material misstatement of information or non-disclosure of medical history, then no benefits shall be payable to the Eligible Executive under the Plan, except that benefits may be payable in a reduced amount in the sole discretion of the Administrator.
2.3 Addition or Removal of Participants . The Administrator may, at any time, in its discretion, designate additional Eligible Executives to participant in the Plan or remove a Participant or class of Participants from eligibility to participate in the Plan. The Administrator shall notify the Participant in writing whenever a Participant is no longer eligible to participate in the Plan, at which time (i) a Class A Participant shall have the right to repay the Cumulative Company Loan and retain the Policy under the same terms and conditions as if the Participant had experienced a Termination of Employment under Section 3.6 of this Plan, and (ii) a Class B Participant shall have the right to purchase the Policy for the net cash surrender value under the same terms and conditions as if the Participant had experienced a Termination of Employment under Section 4.6 of this Plan upon receipt of such notice. In the event that a Class A Participant becomes eligible for the Class B Participant Program, the Company shall purchase the Class A Participant’s Policy from the Participant for its net cash surrender value in excess of the Cumulative Company Loan as of the date of conversion and shall thereafter provide benefits to such Participant through the Class B Participant Program under such terms and conditions as may be specified in the new Participant Enrollment Form. A Class B Participant shall not be eligible for conversion to the Class A Participant Program.
Class A Participant Life Insurance Program
3.1 Policy . To provide the insurance benefits to Class A Participants under the Plan, the Participant shall be issued one or more insurance policies covering the life of the Participant (referred to together herein as the “Policy”). The Class A Participant shall be the owner of the Policy and shall hold all incidents of ownership therein. However, the Class A Participant shall execute a Collateral Assignment of the Policy in favor of the Company, securing to the Company, on a nonrecourse basis, the right to return of its Cumulative Company Loan, and the Class A Participant’s ownership rights in the Policy shall be subject to the terms of this Plan and the Collateral Assignment.
3.2 Premiums . Prior to the earlier of (i) Termination of Employment, other than by reason of Retirement or Disability, and (ii) the Coverage Maturity Date, the Company shall pay premiums on the Policy each Plan Year reasonably calculated to provide a death benefit under the Policy at least equal to the Cumulative Company Loan plus the Target Death Benefit.
3.3 Imputed Interest . The Company shall include in the Class A Participant’s income for income tax purposes each year Imputed Interest on the balance of the Cumulative Company Loan to the Class A Participant under the Plan for such Plan Year.
3.4 Policy Loans, Withdrawals, or Surrender . The Company shall have the right to obtain loans or make withdrawals from the Policy of a Class A Participant up to the amount of the Cumulative Company Loan so long as such loans or withdrawals do not reduce the net cash value in the Policy below the level required to provide a death benefit under the Policy at least equal to the remaining Cumulative Company Loan plus the Target Death Benefit. The Class A Participant shall have the right to obtain loans, make withdrawals or surrender the Policy in connection with a termination event and after, or for the purposes of, repayment of the Cumulative Company Loan.
3.5 Death Benefit . In the event of a Class A Participant’s death prior to release of the Policy and termination of this Plan and the Collateral Assignment, the Company shall be entitled to receive a portion of the death benefits payable under the Policy equal to the outstanding Cumulative Company Loan. The balance of the death benefits payable from the Policy (if any) shall be paid to the Beneficiary designated by the Participant.
3.6 Termination of Employment . Upon a Class A Participant’s Termination of Employment other than by reason of Retirement, Disability, or death the Company shall be entitled to the return of its Cumulative Company Loan. The Company shall withdraw its Cumulative Company Loan from the Policy and release the Collateral Assignment, and thereafter the Participant shall be the sole owner of the Policy and shall bear any and all costs of keeping the Policy in force.
3.7 Retirement . In the event of a Class A Participant’s Retirement, the Participant shall continue to be eligible to receive benefits under the Plan (subject to Article 5). The Company shall have the discretion to withdraw its Cumulative Company Loan from the Policy and release the Collateral Assignment at such time as the Administrator determines in its
complete and sole discretion that the cash value in the policy is sufficient to maintain the Target Death Benefit, and thereafter the Participant shall be the sole owner of the Policy and shall bear any and all costs of keeping the Policy in force.
3.8 Disability . In the event of a Class&nbs