SUPPLEMENTAL EXECUTIVE
RETIREMENT AND LIFE PLAN
OF
AVON PRODUCTS, INC.
AMENDED AND RESTATED AS OF JULY 1, 1998
TABLE OF CONTENTS
PAGE
SECTION 1 INTRODUCTION 1
SECTION 2 DEFINITIONS 1
SECTION 3 PARTICIPATION 8
SECTION 4 SUPPLEMENTAL RETIREMENT ALLOWANCES 9
SECTION 5 SURVIVOR RETIREMENT ALLOWANCES 12
SECTION 6 SUPPLEMENTAL LIFE ALLOWANCES 16
SECTION 7 FORMS OF PAYMENT 18
SECTION 8 ADMINISTRATION OF THE PLAN 19
SECTION 9 CERTAIN RIGHTS AND LIMITATIONS 20
SECTION 10 AMENDMENT AND TERMINATION OF THE PLAN 22
SECTION 11 CLAIM PROCEDURES 25
SECTION 1
INTRODUCTION
Avon Products, Inc. (the 'Company') adopted the Supplemental Executive
Retirement Plan and Supplemental Life Plan of Avon Products, Inc.,
originally effective as of January 1, 1982, and last amended and restated
such plan as of January 1, 1995 (the 'Plan'). The Company now wishes to
amend and restate the Plan to reflect changes to certain of the Company's
other retirement programs. The terms and conditions of participation and
benefits under the Plan are set out in this document. The terms of this
document shall be effective as of July 1, 1998.
The Company intends to maintain the Plan indefinitely and, in order
to afford Plan Participants and their Beneficiaries the maximum security,
has established a grantor trust (the 'Trust') to aid it in accumulating the
amounts necessary to satisfy its contractual liability to pay certain
benefits under the terms of the Plan. The Plan provides for the Company to
pay all benefits and administrative costs from its general assets to the
extent not paid by the Trust. The establishment of the Trust shall not
convey rights to the Participants which are greater than those of the
general creditors of the Company and shall not affect the Company's
continuing liability to pay Plan benefits and administrative costs, except
that the Company's liability shall be offset by actual benefits and
administrative cost payments, if any, made by the Trust.
SECTION 2
DEFINITIONS
As used in this Plan, the masculine pronoun shall include the feminine
and the feminine pronoun shall include the masculine unless otherwise
specifically indicated. In addition, the following words and phrases as
used in this Plan shall have the following meaning unless a different
meaning is plainly required by the context:
2.1 'Actuarial Equivalent' shall mean a benefit of equivalent
value, when computed on the basis of the same mortality table and the rate
or rates of interest and/or the empirical tables which are being used to
determine the Participant's benefit under the Retirement Plan. However,
in the case of lump sum distributions of a Participant's Supplemental
Retirement Allowance, the conversion factor used to determine the Actuarial
Equivalent shall be the same as specified in Section (e) of Appendix I of
the Retirement Plan, except that the applicable interest rate with regard
to any Participant shall not be greater than the lowest rate in effect at
any time on or after the date the Participant attains age 60, if the sum of
the Participant's age and Creditable Service is at least 85 years.
2.2 'Annual Benefit Offset' shall mean the aggregate annual retirement
allowance which would have been payable to a Participant under the Retirement
Plan and the Other Plans, expressed in the form of a single life annuity, which
form of benefit shall be the Actuarial Equivalent of the aggregate benefits
which would be payable under such plans if they commenced on the same date as
the Supplemental Retirement Allowance. For purposes of determining the annual
retirement allowance payable under the Retirement Plan in calculating
the Annual Benefit Offset, such allowance shall be deemed to be the annual
retirement allowance which would have been payable to the Participant under
the formula contained in the Retirement Plan on June 30, 1998, if such
formula had continued in effect after that date until the Participant's
retirement or death. At the Company's discretion, the Annual Benefit Offset
may exclude the Participant's annual retirement allowance payable to such
Participant under any non-qualified defined benefit plan sponsored by the
Company, including the Company's Benefit Restoration Plan, provided that
such Participant must irrevocably elect in writing to forego any benefit
under such excluded plan.
2.3 'Average Final Compensation' shall mean the average annual
Compensation of a Participant during the three (3) years of the Participant's
last ten (10) years of Creditable Service in which the Participant's
Compensation was highest. If a Participant has less than three (3)
years of Creditable Service, Average Final Compensation shall be computed
over all such years.
2.4 'Beneficiary' shall mean the person or persons designated by a
Participant as beneficiary in a time and manner determined by the Retirement
Board. If the Participant fails to designate a beneficiary or if the
beneficiary predeceases the Participant, the Participant's spouse
shall be the beneficiary, or if no spouse survives the Participant, the
Participant's estate shall be the beneficiary. A Participant may change his
designated beneficiary at the time and in the manner determined by the
Retirement Board.
2.5 'Board of Directors' shall mean the Board of Directors of Avon
Products, Inc.
2.6 'Change of Control' shall mean:
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act')) (a 'Person') of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of voting securities of the corporation where
such acquisition causes such person to own twenty percent (20%) or more
of the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors
(the 'Outstanding Company Voting Securities'); provided, however, that
for purposes of this Subsection (a), the following acquisitions shall
not be deemed to result in a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled
by the Company or (iv) any acquisition by any corporation pursuant to
a transaction that complies with clauses (i), (ii) and (iii) of
Subsection (c) below; and provided, further, that if any Person's
beneficial ownership of the Outstanding Company Voting Securities
reaches or exceeds twenty percent (20%) as a result of a transaction
described in clause (i) or (ii) above, and such Person subsequently
acquires beneficial ownership of additional voting securities of the
Company, such subsequent acquisition shall be treated as an acquisition
that causes such Person to own twenty (20%) or more of the Outstanding
Company Voting Securities; or
(b) individuals who as of the date hereof, constitute the
Board of Directors (the 'Incumbent Board') cease for any reason to
constitute at least a majority of the Board of Directors; provided,
however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least two-thirds
of the directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board of Directors; or
(c) the approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition
of allor substantially all of the assets of the Company ('Business
Combination') or, if consummation of such Business Combination is
subject, at the time of such approval by shareholders, to the consent of
any government or governmental agency, the obtaining of such consent
(either explicitly or implicitly by consummation); excluding, however,
such a Business Combination pursuant to which (i) all or substantially
all of the individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than sixty
percent (60%) of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that as a
result of such transaction owns the Company or all or substantially all
of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding
Company Voting Securities, (ii) no Person (excluding any employee
Benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly
or indirectly, twenty percent (20%) or more of, respectively, the then
outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (iii)
at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of
the Incumbent Board of Directors at the time of the execution of the
initial agreement, or of the action of the Board of Directors, providing
for such Business Combination; or
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, no Change of Control shall be deemed to have
occurred with respect to any individual by reason of any actions or events in
which such individual participates in a capacity other than in his or her
capacity as an officer or employee of the Company (or as a director of the
Company or a Subsidiary, where applicable).
2.7 'Company' shall mean Avon Products, Inc.
2.8 'Compensation' shall mean the regular salary or wages paid to an
Active Participant or deferred for services rendered to the Company or a
Subsidiary during any year in which the Participant accrues Creditable
Service, including any deferrals under a 401(k) plan or salary reduction under
a 125 plan of the Company or a Subsidiary, plus any bonus payable to an
employee (disregarding any election to defer the receipt thereof) under the
Management Incentive Plan and Variable Incentive Plan or any similar or
successor plan for services performed during the prior year; however, Active
Participants eligible to participate in the Management Incentive Plan are not
eligible to participate in the Variable Incentive Plan after January 1, 1998
but the bonus payable to the Active Participants participating in the Variable
Incentive Plan prior to January 1, 1998 will continue to be included in
Compensation. Compensation shall not include special termination or severance
payments or benefits, whether characterized as such, made pursuant to any
employment agreement, separation agreement, severance plan or policy or any
similar arrangement, unless such agreement, plan, policy or arrangement
provides that the special termination or severance payments or benefits are
to be included as Compensation under the Plan.
Notwithstanding the foregoing, with respect to any period of absence
(during which disability benefits are being paid to the Participant under the
Company's Short Term or Long Term Disability Plan) which is included as
Creditable Service, the Participant's annual Compensation for purposes of
the Plan during such period of absence shall be deemed to be the greater of
(i) his Compensation in the last full calendar year of his employment
immediately preceding the beginning of such absence, or (ii) the actual
Compensation he received in the year the absence began.
2.9 'Compensation Committee' means the Compensation Committee appointed
by the Board of Directors.
2.10 'Creditable Service' shall mean:
(a) The total number of years and completed months of service
rendered by an Active Participant as an employee of the Company or any
Subsidiary;
(b) Periods of authorized leaves of absence from the Company or
a Subsidiary approved by the Retirement Board, including but not limited
to leaves required to be granted pursuant to the Family and Medical Leave
Act of 1993 and the Uniformed Services Employment and Reemployment Rights
Act, and, notwithstanding any other provision of this Plan to the
contrary, any period of absence while disability benefits are being paid
to the Participant under the Company's Short Term or Long Term Disability
Plans;
(c) Any prior Creditable Service under this Plan rendered by an
employee who was formerly a Participant and who subsequently becomes a
new Active Participant pursuant to Plan Section 3.1 or 3.2;
(d) Service which is recognized for purposes of the Plan by
reason of any Outside Agreement. To the extent Creditable Service is
recognized under an Outside purposes of eligibility for the Supplemental
Retirement Allowance, it shall also be recognized for purposes of the
Supplemental Life Allowance unless otherwise specifically provided in
such Outside Agreement; and
(e) Solely for purposes of determining the time for the
commencement of benefits under the SERP, a Vested or Frozen Participant
shall continue to earn Creditable Service during the period in which he
is an employee of the Company or a Subsidiary.
Subject to approval by the Compensation Committee, a Participant may be
granted additional years of Creditable Service either for purposes of
determining the amount of allowance under the Plan or for purposes of
satisfying the service requirements necessary for benefits under the Plan,
or both. Additional service granted under a specific provision of the
Plan or under provisions of individual contracts with the Participant or under
any severance plan or policy of the Company covering the Participant shall
also be included in determining Creditable Service, but only in accordance
with the specific terms of such provisions.
2.11 'Dependent Child' shall mean any unmarried child, who has not
attained age 21, of the Participant or, effective January 1, 1999, a
Participant's Domestic Partner or any unmarried child, regardless of the
child's age, of the Participant or, effective January 1, 1999, the
Participant's Domestic Partner, if the child becomes incapacitated prior to
attaining age 19; provided, however, that such incapacitated child shall
cease to be a Dependent Child at the later of the date the child attains age
21 or ceases to be incapacitated. The term child shall include a child born
of the Participant or, effective January 1, 1999, a Participant's Domestic
Partner, a child legally adopted by the Participant or, effective January 1,
1999, a Participant's Domestic Partner, and a stepchild of the Participant,
in each instance living with the Participant or, effective January 1, 1999,
the Participant's Domestic Partner in a normal parent-child
relationship.
2.12 'Dependent Children's Allowance' shall mean the benefit payable to
the Dependent Children pursuant to the SERP and as described in Plan
Section 5.3.
2.13 'Domestic Partner' shall mean, effective January 1, 1999, an
individual of the same or opposite sex as the Participant, who shares a
committed and mutually dependent relationship with the Participant, and
(a) both the Participant and the Domestic Partner must be at
least the age of consent for marriage in the Participant's state of
residence; and
(b) the Domestic Partnership must be an exclusive relationship
with the Participant in which the Domestic Partner resides with the
Participant and intends to do so permanently; and
(c) the Domestic Partner must be mutually responsible with the
Participant for basic living expenses; and
(d) the Domestic Partners cannot be related by blood to a degree
of closeness that would prohibit legal marriage;
(e) the Domestic Partners cannot be married to or in a Domestic
Partner relationship with anyone else; and
(f) a Participant must have filed an Affidavit of Eligibility
for Domestic Partner Benefits with the Plan Administrator, and
(g) the Participant has not filed an Affidavit of Termination
of Domestic Partnership within the previous twelve (12) months;
An individual shall cease to be a Domestic Partner upon the filing by the
Participant of an Affidavit of Termination of Domestic Partnership with the
Plan Administrator.
2.13 'Nonforfeitable' shall refer only to the vested unsecured
contractual right of a Participant, his Beneficiary and his Dependent
Children, if any, to benefits under this Plan. In no event, however,
shall 'Nonforfeitable' imply any preferred claim on, or any beneficial
ownership interest in, any assets of the Company before those assets are
paid to any individual pursuant to the terms of the Plan. As provided in
Plan Section 9.5, certain events may result in the forfeiture even of
Nonforfeitable benefits.
2.14 'Normal Retirement Age' shall mean age 65.
2.15 'Other Plans' shall mean the employer-provided portion of any
defined benefit pension plan sponsored by the Company (other than the
Retirement Plan) or any Subsidiary and of any retirement or pension
allowance (but not any form of severance or special termination
payment) set forth and payable pursuant to any employment contract or any
other agreement (other than an individual deferred compensation contract
under which elective employee salary or bonus deferrals are made) between
the Participant and the Company or a Subsidiary.
The term 'Other Plans' shall also include the employer-provided portion
of any other pension or retirement plans sponsored by the predecessor
employer of a Participant and of any retirement or pension allowance
(but not any form of severance or special termination payment) set forth and
payable pursuant to any employment contract or any other agreement
(other than an individual deferred compensation contract under which
elective employee salary or bonus deferrals are made) between the Participant
and the predecessor employer of a Participant providing for benefits
attributable in whole or in part to service which is recognized under the
Plan as Creditable Service.
Notwithstanding the foregoing, the employer-provided portion of the
benefits paid or payable to or on behalf of a Participant pursuant to Other
Plans shall only include a proportionate share of such benefits based on the
ratio by which the portion of the service recognized under the Other Plan
which is recognized as Creditable Service bears to the total service
recognized under the Other Plan.
2.16 'Outside Agreement' shall mean a written agreement entered into
between a duly authorized officer of the Company with authority to act in the
matter and a Participant which recognizes any period of time prior to
the commencement of such Participant's employment with the Company as service
for purposes of certain retirement or other benefits or modifies any of the
benefits or provisions of the Plan.
2.17 'Participant' shall mean any Active Participant, Vested
Participant, Frozen Participant or Retired Participant.
(a) 'Active Participant' shall mean an employee from the time
participation in the Plan begins pursuant to Plan Section 3 until the
earliest of the time:
(i) the Participant retires,
(ii) the Participant dies,
(iii) the Participant terminates employment with the
Company and its Subsidiaries, or
(iv) the Plan is terminated.
In addition, if a Participant is placed on inactive employee status, as
defined by the Retirement Board from time to time under uniform and
nondiscriminatory rules, and, at the date of such change in status, the
Participant has attained age 62 or the sum of the Participant's age and
years of Creditable Service total at least 80 years, the Participant
will continue as an Active Participant in the Plan.
(b) 'Retired Participant' shall mean a former employee who has
retired on or after meeting the requirements for a Supplemental
Retirement Allowance under Plan Section 4.1.
(c) 'Vested Participant' shall mean an employee or former
employee of the Company or Subsidiary who ceased to be an Active
Participant, who has not become a Retired Participant and who,
immediately after ceasing to be an Active Participant, has a
Nonforfeitable right to benefits under Plan Section 10.
2.18 'Plan' shall mean this Supplemental Executive Retirement and
Life Plan of Avon Products, Inc., as from time to time amended.
2.20 'Pre-Retirement Beneficiary's Allowance' shall mean the benefit
payable to the Beneficiary of certain Participants, pursuant to the SERP and
as described in Plan Section 5.1.
2.19 'Post Retirement Beneficiary's Allowance' shall mean the benefit
payable to the Beneficiary of certain Participants pursuant to the SERP and
as described in Plan Section 5.2.
2.20 'Retirement Board' shall mean the person or persons appointed to
administer the Plan as provided in Plan Section 8.
2.21 'Retirement Plan' shall mean, prior to July 1, 1998, the
Employees' Retirement Plan of Avon Products, Inc. and thereafter, the Avon
Products, Inc. Personal Retirement Account Plan, as amended from time to time.
2.22 'SERP' shall mean the portion of the Plan pursuant to which
Supplemental Retirement Allowances, Pre-Retirement Beneficiary's Allowances,
Post-Retirement Beneficiary's Allowances and Dependent Children's Allowances
are payable.
2.23 'SLIP' shall mean the portion of the Plan pursuant to which
Supplemental Life Allowances are payable.
2.24 'Subsidiary' shall mean any majority-owned subsidiary of the
Company.
2.25 'Supplemental Life Allowance' shall mean the benefit referred
to in Plan Section 6.
2.26 'Supplemental Retirement Allowance' shall mean the benefit
referred to in Plan Section 4.
2.27 'Surviving Spouse' shall mean the spouse to whom the Participant
was married on the date the Participant's Supplemental Retirement Allowance
commenced under this Plan or on the Participant's date of death, if earlier.
SECTION 3
PARTICIPATION
3.1 Commencement of SERP Participation.
(a) Each individual who was a Participant in the SERP as of
June 30, 1998, shall be a Participant in the SERP on July 1, 1998.
A listing of Participants in the SERP as of July 1, 1998 is attached
to the Plan as Appendix A, which Appendix may thereafter be updated
from time to time, provided that all updates shall be attested by the
signatures of two members of the Retirement Board.
(b) The Compensation Committee shall have the authority to
include as Active Participants in the SERP officers of the Company on
the U.S. payroll, at the level of Senior Vice President or above, who
are covered by individual employment agreements with the Company which
have been approved by the Board of Directors, and such other management
or highly compensated employees of the Company or a Subsidiary (within
the meaning of Section 201(2) of the Employee Retirement Income
Security Act of 1974, as amended) as it deems fit.
3.2 Commencement of SLIP Participation.
Any employee who is an Active Participant in the SERP shall also be an
Active Participant in the SLIP.
3.3 Termination of SERP Participation.
When an individual ceases to be an Active Participant (as defined in
Section 2.17(a) hereof), he shall cease to be a Participant and shall
have no rights to a Supplemental Retirement Allowance unless he is a
Vested Participant or a Retired Participant.
3.4 Termination of SLIP Participation.
(a) If an individual who first became a Participant prior to
January 1, 1990, ceases to be an Active Participant, he shall continue
to be a Participant in the SLIP if he is eligible for a Supplemental
Life Allowance in accordance with the provisions of Plan Section 6.
(b) If an individual who first became a Participant on or
after January 1, 1990, ceases to be an Active Participant, he shall
cease to be a Participant in the SLIP on the date he ceases to be an
Active Participant.
SECTION 4
SUPPLEMENTAL RETIREMENT ALLOWANCES
4.1 Nonforfeitable Right to a Supplemental Retirement Allowance.
(a) An Active Participant who attains Normal Retirement Age
shall have a Nonforfeitable right to benefits under this Section 4,
subject to the provisions of Plan Section 9, and may retire and
receive payment of a Normal Retirement Allowance under the SERP.
Payment of the Normal Retirement Allowance shall commence not later than
thirty (30) days after the later of the date the Participant actually
retires or attains age 65.
(b) An Active Participant who has attained age 55 and has
fifteen (15) or more years of Creditable Service, or whose attained age
plus his Creditable Service totals at least 85 years, shall have a
Nonforfeitable right to benefits under this Section 4 and may retire
and apply for payment of an Early Retirement Allowance under the SERP.
Payment of the Early Retirement Allowance shall commence on the first
day of the calendar month next following his date of retirement.
(c) An Active Participant who has attained age 58 and completed
fifteen (15) or more years of Creditable Service and who is deemed to be
suffering from a hardship, as determined in the sole and unilateral
discretion of the Retirement Board on a case-by-case basis, shall have
a Nonforfeitable right to benefits under this Section 4 and may
retire and apply for payment of a Hardship Retirement Allowance. Payment
of the Hardship Retirement Allowance shall commence on the first day of
the month following the date the Participant's application for retirement
is approved by the Retirement Board.
(d) Approval by the Retirement Board under this Section 4
may be evidenced by the written consent of any two members of such
Board. In the event the Plan is amended or terminated or in the
event of a Change of Control of the Company, Participants shall have
the right to a Supplemental Retirement Allowance pursuant to
Plan Section 10.
4.2 Amount of Normal Retirement Allowance.
(a) The annual Normal Retirement Allowance under the SERP for
Participants who have a Nonforfeitable right to such an allowance
pursuant to Plan Section 4.1(a) shall be equal to:
(1) 2% of the Participant's Average Final Compensation
multiplied by the Participant's Creditable Service up to
twenty-five (25) years; plus
(2) 1% of the Participant's Average Final Compensation
multiplied by the Participant's Creditable Service in excess of
twenty-five (25) years but not in excess of thirty-five
(35) years; less
(3) the Annual Benefit Offset.
(b) Notwithstanding the provisions of Plan Subsection 4.2(a),
any Participant entitled to a benefit pursuant to Plan Section 4.1(a)
who (i) is or was an officer of the Company as of January 1, 1995, at
the level of Senior Vice President or above, and covered by an
individual employment agreement with the Company which had been
approved by the Board of Directors or (ii) is or was a senior executive
designated by the Compensation Committee as eligible to receive a minimum
allowance, shall receive an annual Normal Retirement Allowance which,
when added to the Actuarial Equivalent of the benefit paid or payable
to such Participant under the Retirement Plan and Other Plans
(expressed as an annual benefit in the same form as the benefit under
Plan Section 4.2 is payable), is not less than fifty percent (50%) of the
Participant's Average Final Compensation. Such offset shall be
calculated in a manner similar to that set forth in the definition of
Annual Benefit Offset.
4.3 Amount of Early Retirement Allowance.
(a) The annual Early Retirement Allowance under the SERP for
Participants who have a Nonforfeitable right to such an allowance
pursuant to Plan Section 4.1(b) shall be equal to the Normal
Retirement Allowance determined in accordance with Plan
Subsection 4.2(a), based on the Participant's Average Final
Compensation and Creditable Service at the date of retirement;
provided, however, that if the Participant retires before
the sum of such Participant's age and Creditable Service is 85 years,
the allowance shall be calculated by determining the benefit without
regard to the Annual Benefit Offset, by reducing the benefit 3/12ths of
1% for each month by which the date the allowance commences precedes
the month in which the Supplemental Retirement Allowance would
have commenced if the Participant retired at Normal Retirement Age and
by 5/12ths of 1% for each such month in excess of sixty (60) months and
by then applying the Annual Benefit Offset. The Early Retirement
Allowance payable to a Participant whose age and Creditable Service
total at least 85 years shall be equal to the allowance determined in
accordance with Plan Subsection 4.2(a) based on Average Final
Compensation and Creditable Service at the time of retirement without
reduction for commencement of payment prior to Normal Retirement Age;
provided, however, that if such allowance commences after the first day
of the calendar month following the month in which the Participant
retires, the allowance shall be increased so that it is the Actuarial
Equivalent of the allowance payable as of the first day of the month
following the month in which the Participant retires.
(b) Notwithstanding the provisions of Plan Subsection
4.3(a) above, any Participant entitled to a benefit pursuant to Plan
Section 4.1(b) who has attained age 60 and completed fifteen (15) years
of Creditable Service and who (i) is or was an officer of the Company
as of January 1, 1995, at the level of Senior Vice President or above,
and covered by an individual employment agreement with the Company
which had been approved by the Board of Directors or (ii) is or was a
senior executive designated by the Compensation Committee as eligible
to receive a minimum allowance, shall receive an annual Early
Retirement Allowance which, when added to the Actuarial Equivalent of
any retirement allowance paid or payable to such Participant under the
Retirement Plan and any Other Plans (expressed as an annual benefit in
the same form as the benefit payable pursuant to this Plan Section 4.3)
is not less than fifty percent (50%) of the Participant's Average Final
Compensation, reduced by 4/12ths of 1% for each month by which the
Participant's date of retirement precedes Normal Retirement Age; provided,
however, that if such allowance commences after the first day of the
calendar month following the month in which the Participant retires,
the allowance shall be increased so that it is the Actuarial Equivalent
of the allowance payable as of the first day of the month following the
month in which the Participant retires. The offset described in the
immediately preceding sentence shall be calculated in a manner similar
to that set forth in the definition of the Annual Benefit Offset.
4.4 Amount of Hardship Retirement Allowance.
The annual Hardship Retirement Allowance under the SERP for
Participants who have a Nonforfeitable right to such an allowance pursuant to
Plan Section 4.1(c) or 4.1(d) shall be equal to the Normal Retirement
Allowance determined in Plan Subsection 4.2(a), based on the Participant's
Average Final Compensation and Creditable Service at the date of retirement;
provided, however, such allowance shall in no event be less than the Early
Retirement Allowance to which such Participant would be entitled upon
retirement under Plan Subsection 4.3(b), if applicable.
4.5 Restoration of Retired Participants to Service.
Anything contained in this Plan to the contrary notwithstanding, if a
Participant who has received or is receiving a Supplemental Retirement
Allowance again becomes an employee of the Company or a Subsidiary, any
retirement allowance payable under this Plan shall cease upon reemployment
and such allowance shall commence to be paid when the Participant again
retires. On subsequent retirement, the Supplemental Retirement Allowance
payable to such Participant shall be based on Compensation and Creditable
Service before and after the period of prior retirement, reduced by an
amount which is the Actuarial Equivalent of the benefits the Participant
received prior to reemployment; provided, however, that such benefit shall
not be less than the benefit the Participant was receiving during prior
retirement.
4.6 Outside Agreements.
(a) To the extent an Outside Agreement provides for a benefit
in addition to (or on the terms and conditions different from) any
benefit otherwise payable under the Plan, such benefit under such
Outside Agreement shall be deemed to be, and shall be, payable under
this Plan.
(b) Nothing in Plan Subsection (a) above shall be construed to
limit any rights of any Participant under an Outside Agreement, except
that any benefits paid hereunder pursuant to this Plan Section 4.6 shall
be offset against any amounts payable with respect to any substantially
similar obligations under the Outside Agreement so as to avoid
duplication of payment.
SECTION 5
BENEFICIARY RETIREMENT ALLOWANCES
5.1 Pre-Retirement Beneficiary's Allowance.
(a) If, prior to receipt of a Supplemental Retirement Allowance,
a Participant dies while employed by the Company or a Subsidiary and
has at least ten (10) years of Creditable Service, or has attained age
65, or dies while receiving disability benefits under the Company's
Short Term or Long Term Disability Insurance Plans and after having
completed ten (10) years of Creditable Service, or dies with
Nonforfeitable benefits under Plan Section 10, his Beneficiary shall
receive a Pre-Retirement Beneficiary's Allowance under the SERP payable
during the Beneficiary's remaining lifetime.
(b) Payment of the annual Pre-Retirement Beneficiary's
Allowance under the SERP shall commence as of the first day of the
calendar month following the month in which the Participant died or
would have attained age 55, whichever is later. However, the
Retirement Board may, under rules uniformly applicable to all similarly
situated, approve a request made by a Beneficiary to commence payment on
the first day of any earlier calendar month after the Participant's death
('early commencement date' hereafter).
(c) If the Pre-Retirement Beneficiary's Allowance commences as
of the first day of the month following the month in which the
Participant died or would have attained age 55, whichever is later, the
Pre-Retirement Beneficiary's Allowance shall be an annual allowance for
the life of the Beneficiary, payable monthly, equal to the allowance
(based on the Participant's Creditable Service as of his date of death)
the Beneficiary would have received if the Participant had retired and
begun to receive the Supplemental Retirement Allowance in the form of a
100% joint and survivor annuity with such Beneficiary on the date of
death, or on the date such Participant would have attained age 55, if
later. Notwithstanding the foregoing, if the Participant was married
or had a Domestic Partner on the date of the Participant's death, and
the Pre-Retirement Beneficiary's Allowance is payable to such spouse or
Domestic Partner, the Pre-Retirement Beneficiary Allowance shall not be
less than an amount equal to twenty percent (20%) of the Participant's
annual rate of Compensation at the time of his death or earlier
termination of employment, less the Actuarial Equivalent of the amount
of any death benefit allowance (expressed as an annual amount payable for
the life of the Beneficiary and commencing on the same date as the Pre-
Retirement Beneficiary's Allowance commences, regardless of whether the
Beneficiary is the actual recipient of such death benefit allowance) paid
or payable on behalf of such Participant under the Retirement Plan and
any Other Plans.
(d) Notwithstanding Subsection (c) hereof, if a Participant
who as of the date of his death meets one of the requirements set forth
below, dies while employed by the Company or a subsidiary, his Pre-
Retirement Beneficiary's Allowance shall be determined pursuant to this
Section (d):
(1) Such Participant has attained age 65, or
(2) Such Participant has attained age 55 and completed
fifteen (15) or more years' Creditable Service, or
(3) The sum of such Participant's age and Creditable
Service is at least 85.
The amount of such Pre-Retirement Beneficiary's Allowance for such
Participant shall be the Actuarial Equivalent of the Normal Retirement
Allowance, or if applicable, the Early Retirement Allowance, otherwise
payable to the Participant if he had retired as of the date of his death.
Such Pre-Retirement Beneficiary's Allowance shall be payable only in
the form of a single lump sum payment in cash.
In anticipation of the probability that the Pre-Retirement Beneficiary's
Allowance will be subject to both Federal Income Taxes and Federal Estate
Taxes, the payment of a Pre-Retirement Beneficiary's Allowance, at the
Company's sole discretion, may be delayed, in whole or in part, for a
period of up to twelve (12) months following the date of the
Participant'sdeath, and may be subject to appropriate tax withholdings.
If payment is delayed more than sixty (60) days after the date of death,
however, the lump sum amount shall be increased until the actual payment
date using the factors utilized in valuing such lump sum.
(e) If the Retirement Board approves an early commencement date
with respect to the Pre-Retirement Beneficiary's Allowance under Plan
Subsection (b) above, the Pre-Retirement Beneficiary's Allowance shall
be a monthly allowance for the life of the Beneficiary and shall be
equal to the Pre-Retirement Beneficiary's Allowance the Beneficiary
would have received under Plan Subsection (c) above if the Retirement
Board had not approved the early commencement date, reduced by 1/12th of
5% for each month by which the date payments commence precedes the first
day of the month following the month in which the SERP Participant would
have attained age 55, provided that in no event shall such reduced
allowance be less than the Actuarial Equivalent of the allowance
otherwise payable under Plan Subsection (c) above.
5.2 Post-Retirement Beneficiary's Allowance.
The Beneficiary of a Retired Participant who dies prior to the
commencement of a Supplemental Retirement Allowance will receive a Post-
Retirement Beneficiary's Allowance from the Plan equal to fifty percent (50%)
of the Supplemental Retirement Allowance the Retired Participant would have
been receiving if benefits had commenced in the form provided for in Plan
Section 7.1(b) on the date of the Retired Participant's death. The Post-
Retirement Beneficiary's Allowance under the Plan shall begin on the first
day of the month following the Retired Participant's death and shall be paid
to the Beneficiary for such Beneficiary's remaining lifetime. The Beneficiary
of a Retired Participant who dies after the commencement of a Supplemental
Retirement Allowance under the SERP shall be entitled to receive benefits
from the SERP in accordance with the form of benefit payable to the Retired
Participant in accordance with the provisions of Plan Section 7.
5.3 Dependent Children's Allowance.
(a) Each Dependent Child, up to a maximum of four (4) such
children, shall receive a Dependent Children's Allowance from the SERP
which is a yearly allowance equal to ten percent (10%) of the yearly
amount of the Beneficiary's Allowance calculated under Plan Section 5.1
or 5.2, whichever is applicable, at the time of the Participant's death
(calculated as if the Beneficiary is the Surviving Spouse or Domestic
Partner even if such allowance is not payable to such beneficiaries),
plus ten percent (10%) of the yearly benefits which are payable to the
Surviving Spouse or the Participant's Domestic Partner under the
Retirement Plan and any Other Plan (or would be payable is such benefits
were payable to such Surviving Spouse or Domestic Partner)
(based on the assumption that benefits commence on the same date as
benefits commence hereunder).
(b) For purposes of Plan Subsection (a) above, if the spouse or
Domestic Partner of a Participant predeceases the Participant, the
allowance under Plan Section 5.1 or 5.2 shall be determined as if the
spouse or Domestic Partner had not predeceased the Participant and as if
yearly benefits under the Retirement Plan and any Other Plan are
payable to such predeceased spouse or Domestic Partner and shall be based
upon the spouse's or Domestic Partner's actuarially determined life
expectancy as of the date of the spouse's or Domestic Partner's death.
(c) For purposes of Plan Subsection (a) above, in the event that
the Participant had no spouse or Domestic Partner, other than for the
reason that the spouse or Domestic Partner predeceased the Participant,
the allowance under Plan Section 5.1 or 5.2 shall be based upon the
assumption that the Participant had a spouse or Domestic Partner who
was five (5) years younger than the Participant, that any yearly benefits
payable under the Retirement Plan and any Other Plan are payable to such
assumed spouse or Domestic Partner, and that the spouse's or Domestic
Partner's allowance under Plan Section 5.1 or 5.2, whichever is applicable,
had commenced on the date of the Participant's death.
(d) For purposes of Plan Subsection (a) above, in the event the
spouse or Domestic Partner of a Participant dies prior to commencement of
benefits under the Plan, the amount of the Dependent Children's Allowance
hereunder shall be determined on the assumption that the spouse's or
Domestic Partner's allowance under Plan Section 5.1 or 5.2, whichever is
applicable, had commenced on the date of the spouse's or Domestic
Partner's death and that any yearly benefits payable under the Retirement
Plan and any Other Plan had commenced on the date of the spouse's or
Domestic Partner's death.
(e) The Dependent Children's Allowance hereunder shall commence
on the day payment of the spouse's or Domestic Partner's allowance
commences (or would have commenced) under the SERP, or the earliest
date it could have commenced had the spouse or Domestic Partner not
predeceased the Participant, or if the Participant had no spouse for
any other reason, on the earliest date it could have commenced had the
Participant had a spouse or Domestic Partner who was five (5) years
younger than the Participant, and shall continue to be paid to each
Dependent Child until the earlier of the date such child ceases to be a
Dependent Child or dies.
(f) If there are more than four (4) Dependent Children, the
total amount otherwise payable to four (4) Dependent Children shall be
divided equally among all Dependent Children at the time such payment is
made. When a child ceases to be a Dependent Child or dies, the total
allowance then payable shall be reallocated among the remaining Dependent
Children to the extent applicable; provided, however, that no
Dependent Child shall be entitled to an allowance in excess of the benefit
set forth in Plan Subsection (a) above.
5.4 Allowance to Spouse Not Reduced.
The amount of any allowance payable to a Beneficiary under Plan Section
5.1 or 5.2 shall not be reduced due to the payment of a benefit under the Plan
to one or more Dependent Children.
5.5 Domestic Partner Benefits.
Notwithstanding anything contained in this Section 5 to the contrary, the
provisions of this Section 5 concerning Domestic Partners and Dependent
Children of Domestic Partners shall not be effective until January 1, 1999.
SECTION 6
SUPPLEMENTAL LIFE ALLOWANCES
6.1 Right to a Supplemental Life Allowance.
(a) A Participant becomes eligible for a Supplemental Life
Allowance payable to his Beneficiary if he dies:
(1) while an Active Participant who is either employed by
the Company or a Subsidiary or is receiving a disability benefit
under the Company's Short Term or Long Term Disability Plans; or
(2) while a Frozen Participant or a Retired Participant,
provided he became an Active Participant in the SLIP prior to
January 1, 1990;
(3) while an employee, provided he became an Active
Participant in the SLIP prior to January 1, 1990, and was an
Active Participant for at least five (5) years;
(b) A Participant who became an Active Participant in the
SLIP prior to January 1, 1990, and is a Participant at the time the
Plan is terminated or modified or at the time of a Change of Control
will be entitled to a Supplemental Life Allowance as provided in
Plan Section 10.
(c) A Participant shall become Nonforfeitable in a Supplemental
Life Allowance only if he dies under one of the circumstances described
in Subsection (a) of this Section, if he was an Active Participant in
the Plan prior to January 1, 1990 and becomes Nonforfeitable in a
Supplemental Retirement Allowance or as provided in Section 10.
6.2 Amount of Supplemental Life Allowance.
(a) If a Participant has a right to a Supplemental Life
Allowance as described above, the Beneficiary of such Participant
shall receive a Supplemental Life Allowance payable upon the death
of a Participant, provided that such Participant has not made the
election described in Plan Section 6.4 or 6.5.
(b) The amount of the Supplemental Life Allowance shall be
as established by the Compensation Committee upon the Participant's
commencement of participation in the Plan, except that the
Compensation Committee reserves the right to increase or reduce
the amount of such allowance from time to time, subject to the
provisions of Plan Section 10. Notwithstanding the foregoing, if
an Active Participant first became a Participant in the Plan prior
to January 1, 1990, his level of coverage under the SLIP may not be
reduced after he has been an Active Participant for at least two years
for so long as he remains an Active Participant. Further, if a
Participant has a right to a Supplemental Life Allowance pursuant to
Plan Section 6.1(a)(ii) or (iii), his benefit under the SLIP will
continue at the same level as in effect on the date preceding the date
he ceased to be an Active Participant.
6.3 Notwithstanding the foregoing, if the Company obtains a life
insurance policy (or policies) on the life of a Participant whether or not
in connection with this Plan and the insurer is not obligated to pay the
policy's death benefit proceeds on the grounds that the Participant committed
suicide or any other grounds based on actions or inactions on the part of the
Participant, then and in that event, the Company's obligation to make payments
of a Supplemental Life Allowance shall be terminated. The Company shall, in
its sole discretion, determine what steps are necessary and take such action
as it deems reasonably appropriate to pursue and obtain payment of any death
benefit under said policy or policies. Whatever steps are deemed appropriate
by the Company to pursue this matter shall be conclusive. In no event shall
any Participant have any ownership interest in such policy or policies.
6.4 Notwithstanding the foregoing, a SLIP Participant may elect not
to be covered by the Supplemental Life Allowance benefit provided under this
Plan Section 6.
6.5 Subject to the terms and conditions imposed by the Retirement Board
any Participant who is eligible for the Supplemental Life Allowance during the
time such Participant is a Retired Participant, may elect, subject to the
approval of the Retirement Board, to forego the Supplemental Life Allowance
coverage provided under this Plan Section 6 in exchange for a paid-up whole
life insurance policy or policies (based on the application of dividends to
pay premiums) on such Retired Participant's life in an amount to be determined
by the Retirement Board. In the case of any such election, the Company will
also pay cash to such Retired Participant in an amount sufficient to enable
such Participant to pay any federal, state, and local income taxes
(calculated at the highest applicable marginal rates) resulting from the
distribution of such policy or policies and the corresponding cash payment.
6.6 If (a) a Participant terminates employment prior to becoming a
Retired Participant or (b) the Company has obtained a life insurance policy
on the life of such Participant to assist it in meeting its obligations
under this Plan, and (c) such policy provides that it may be assigned,
then if the Company elects, the Participant may purchase such policy from
the Company on such terms and conditions as shall be determined by the
Retirement Board; provided, however, that in no event shall the Company
receive less than the amount of cash it could have received had it
surrendered such policy to the insurer.
SECTION 7
FORMS OF PAYMENT
7.1 Automatic Form.
(a) Except as otherwise provided for married Participants or,
effective January 1, 1999, Participants with Domestic Partners pursuant
to Plan Subsection 7.1(b), or unless an optional form of retirement
allowance has been requested by the Participant under Plan Section 7.2
and approved by the Retirement Board, the annual Supplemental Retirement
Allowance shall be payable in monthly installments for the life of the
Participant only, ending with the last monthly payment during the month
of the Participant's death.
(b) Unless an optional form of retirement allowance has been
requested by the Participant under Plan Section 7.2 and has been
approved by the Retirement Board, the automatic form of payment of
a Supplemental Retirement Allowance to a Participant who is married
or has a Domestic Partner at the date the retirement allowance begins
shall be a joint and survivor benefit payable to the Participant in the
amount determined pursuant to the applicable Subsection of Plan
Section 4 payable during the lifetime of the Participant with the
provision that after the Participant's death an annual Supplemental
Retirement Allowance shall be payable to the Surviving Spouse or
Domestic Partner of the Participant equal to one-half the
Supplemental Annual Retirement Allowance payable during the
Participant's life.
(c) Notwithstanding anything contained in Subsections (a) and
(b) of this Plan Section 7.1 to the contrary, if the Actuarial Equivalent
present value of any Supplemental Retirement Allowance payable to a
Participant (including the value of any benefit payable to his
Surviving Spouse or Domestic Partner after his death) does not exceed
$10,000, or such greater amount as the Retirement Board shall from time
to time determine under rules of uniform applicability, the Company may
pay the Participant or Beneficiary a single lump sum payment.
(d) Notwithstanding anything contained in the Plan to the
contrary, on and after a Change of Control, the normal form of
Supplemental Retirement Allowance shall be a single lump sum payment
in cash.
7.2 Request for Optional Form.
(a) Any Participant (other than Participants who have been
cashed out by the Company pursuant to Plan Subsection 7.1(c) or 7.1(d))
may, by written notice received by a member of the Retirement Board at
least two (2) months prior to retirement or in the case of a Vested
Participant, at least two months prior to the due date of the first
payment of the Supplemental Retirement Allowance, request that the
allowance be converted into an optional form of retirement allowance
of Actuarial Equivalent value, in accordance with any form of payment
as may be permitted under the Retirement Plan. Such request shall be
subject to the approval of the Retirement Board. For purposes of this
PlanSection 7.2, a retirement allowance of a Participant who is married
or has a Domestic Partner prior to conversion into an optional form
shall include the value of the benefit to be continued to the Surviving
Spouse or Domestic Partner after the Participant's death. In the event a
lump sum optional form of benefit is payable and such sum is not paid on
the date benefit payments are scheduled to commence, the lump sum
benefit shall be increased until the date paid by the interest rate
factors utilized in valuing such lump sum.
(b) A Beneficiary entitled to a Supplemental Retirement
Allowance pursuant to Plan Section 5.1 or 5.2 may, by written notice
received by a member of the Retirement Board within sixty (60) days
following the Participant's date of death, or if later, within
thirty (30) days following the Beneficiary's receipt of written notice
from the Company that he or she is entitled to an allowance under the
Plan, request that the allowance be converted into a lump sum optional
form of benefit of Actuarial Equivalent value. Such request shall be
subject to the approval of the Retirement Board. In the event a lump
sum optional form of benefit is payable and such sum is not paid on the
date benefit payments are scheduled to commence, the lump sum benefit
shall be increased until the date paid by the interest rate factors
utilized in valuing such lump sum.
7.3 Effective Optional Forms.
The optional form of Supplemental Retirement Allowance requested and
approved under Plan Section 7.2 shall become effective on the first day of
the month for which the Participant's allowance is payable. If the
Participant dies, or the designated Beneficiary dies before the first
day of the month for which the Participant's allowance is payable under a
contingent annuitant option, the approved option shall thereby be revoked.
7.4 Elective Transfer to Deferred Compensation Plan.
A Participant may elect by written notice delivered to the Company at
least six months prior to the date on which the Supplemental Retirement
Allowance would otherwise have been paid or commenced, or such other date
as the Company may establish, to have the lump sum Actuarial Equivalent
value of his or her Supplemental Retirement Allowance credited to the
Participant's account under the Avon Products, Inc. Deferred Compensation
Plan. If such election is made, the crediting of the Participant's account
in the Avon Products, Inc. Deferred Compensation Plan of the amount required
under this Section 7.4 shall be in complete discharge and satisfaction of
the Company's obligation to pay the Participant a Supplemental Retirement
Allowance pursuant to the SERP.
SECTION 8
ADMINISTRATION OF THE PLAN
8.1 Except as otherwise specifically provided in the Plan, the
Retirement Board shall be the administrator of the Plan. The Retirement
Board shall have full authority to determine all questions arising in
connection with the Plan, including the discretionary authority to interpret
the Plan, to adopt procedural rules and to employ and rely on such legal
counsel, actuaries, accountants and agents as it may deem advisable to assist
in the administration of the Plan. Decisions of the Retirement Board shall be
conclusive and binding on all persons. The Retirement Board shall provide to
the trustee of any Trust established pursuant to Plan Section 1, such
certification or other documentation as may be required by the trustee
in connection with the payment of benefits to Participants.
8.2 After a Change in Control, the Retirement Board may be changed by
the Company only with the consent of a majority of the Participants
(excluding Beneficiaries).
SECTION 9
CERTAIN RIGHTS AND LIMITATIONS
9.1 The establishment of the Plan shall not be construed as
conferring any legal rights upon any employee or other person for a
continuation of employment, nor shall it interfere with the rights of the
Company or a Subsidiary to discharge any employee and to treat such employee
without regard to the effect which such treatment might have upon such
employee as a Participant of the Plan.
9.2 If the Retirement Board shall find that a Participant or other
person entitled to a benefit is unable to care for his affairs because
of illness, accident or is a minor, the Retirement Board may direct that
any benefit payment due such participant or other person, unless claim
shall have been made therefor by a duly appointed legal representative, be
paid to the spouse, a child, parent or other blood relative, or to a person
with whom the Participant or other person resides. Any such payment so made
shall be a complete discharge of the liabilities of the Plan with respect to
such Participant or such other person.
9.3 Each Participant, before any benefit shall be payable to or on
behalf of such person under the Plan, shall file with a member of the
Retirement Board at least thirty (30) days prior to the time of retirement
or in the case of a Vested Participant prior to the earliest date the
retirement allowance can commence, such information, if any, as shall be
required to establish such person's rights and benefits under the Plan.
9.4 No benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, garnishment,
attachment, encumbrance or charge, and any attempt so to do shall be void;
nor shall any such benefit be in any manner liable for or subject to the
debts, contract liabilities, engagements or torts of the person entitled to
such benefit.
9.5 The obligation of the Company to make or continue payment of
any benefits hereunder shall cease with respect to any Participant who
(a) at any time is convicted of a crime involving dishonesty or fraud
relating to the Company (b) at the time, without the Company's written
consent knowingly uses or discloses any confidential or proprietary
information relating to the Company or (c) within three years following
termination of employment, without the Company's written consent, accepts
employment with, or provides consulting services to, a principal
competitor of the Company.
9.6 Except to the extent a Participant has a Nonforfeitable right to a
benefit pursuant to Plan Section 10, if, after written notice by the Company,
the Participant declines retirement at the request of the Company, or if the
Participant's voluntary retirement (other than for disability) prior to
age 62 is not approved by the Company, the Retirement Board shall have the
right to cause forfeiture of any benefit to or on account of the Participant
under the Plan.
9.7 A Participant at the time participation commences shall supply the
Retirement Board with such evidence of good health and insurability, including
a physical examination, as the Retirement Board may from time to time require
to satisfy any insurance company in connection with obtaining life insurance
for benefits under Plan Section 6. A Participant who fails to supply such
evidence when required shall not be entitled to such benefits under Plan
Section 6.
9.8 All benefits payable under the Plan shall be payable by the
Company from its general assets. The Plan shall not be funded by the Company.
However, solely for its own convenience the Company reserves the right to
provide for payment of benefits hereunder through a trust which may be
irrevocable but the assets of which shall be subject to the claims of
the Company's general creditors in the event of the Company's bankruptcy or
insolvency, as defined in the Trust established pursuant to Plan Section 1.
In no event shall the Company be required to segregate any amount credited to
any account, which shall be established merely as an accounting convenience;
no Participant, Beneficiary, Surviving Spouse or Dependent Child shall have
any rights whatsoever in any specific assets of the Company or the Trust; no
rights of any Participant, Beneficiary, Surviving Spouse or Dependent Child,
hereunder shall be subject to participation, alienation, sale, transfer,
assignment, pledge, garnishment, attachment or encumbrance nor to the debts,
contracts, liabilities, engagements or torts of any Participant, Beneficiary,
Surviving Spouse or Dependent Child.
9.9 When payments commence under the Plan, the Company shall have
the right to deduct from each payment made under the Plan any required
withholding taxes.
9.10 Notwithstanding any other provision of the Plan to the contrary,
the Company shall make payments hereunder before such payments are otherwise
due if it determines, based on a change in the tax or revenue laws of the
United States of America, a published ruling or similar announcement issued
by the Internal Revenue Service, a regulation issued by the Secretary of the
Treasury or his delegate, a decision by a court of competent jurisdiction
involving a Participant or Beneficiary, or a closing agreement made under
Internal Revenue Code section 7121 that is approved by the Internal Revenue
Service and involves a Participant or Beneficiary, that a Participant or
Beneficiary has recognized or will recognize income for federal income tax
purposes with respect to amounts that are or will be payable to him under the
Plans before they are paid to him.
SECTION 10
AMENDMENT AND TERMINATION OF THE PLAN
10.1 Right to Amend.
The Board of Directors (or the Compensation Committee to the extent it
has been delegated authority) reserves the right at any time and from time to
time, and retroactively if, to amend or modify in whole or in part, any or
all of the provisions of the Plan pursuant to its normal procedures; provided
that no such modification or amendment shall adversely affect the rights and
benefits of Participants which had accrued or become Nonforfeitable under this
Plan prior to the date such amendment or modification is adopted or becomes
effective, whichever is later. For purposes of this Plan Section 10,
'accrued' benefits refers to the benefits to which a Participant would be
entitled, based on his Creditable Service and Compensation as of the date
the determination is made, assuming the Participant had a Nonforfeitable
right to benefits as of such date.
10.2 Right to Terminate.
The Board of Directors (or the Compensation Committee to the extent it
has been delegated authority) may terminate the Plan for any reason at any
time provided that such termination shall not adversely affect the rights
and benefits of Participants which had accrued or become Nonforfeitable
under the Plan prior to the date termination is adopted or made effective,
whichever is later.
10.3 Effect of Plan Termination on Benefits.
(a) In the event the Plan is terminated, each Participant,
whether or not such Participant has met the age or service requirements
to be entitled to a benefit under the SERP or under the Retirement
Plan, shall have a Nonforfeitable right to: (i) the Supplemental
Retirement Allowance described in Plan Section 4, which such Participant
had accrued through the date of the termination of the Plan; and
(ii) to the death benefits described in Plan Section 5, based upon
the Plan Section 4 benefits accrued by the Participant through the
date of Plan termination.
(b) For purposes of Plan Section 4, such accrued benefit shall
be computed in accordance with Plan Section 4.3 as though the date
of termination of the Plan were the Participant's date of retirement,
provided that (i) if the Participant is less than age 55, his
minimum percentage benefit described in Plan Subsection 4.3(b) shall
be determined upon the assumption that the Participant were age 55,
and such minimum benefit shall then be multiplied by a fraction, the
numerator of which is the Participant's years of Creditable Service
and the denominator of which is his years of such Creditable Service
projected to age 55, and (ii) if the Participant terminates employment
involuntarily as described in Plan Section 10.5 before he attains age 65
and before his age and Creditable Service total 85 years and his
Supplemental Retirement Allowance commences on or after the date his
age and Creditable Service would have totaled 85 years if his
employment with the Company or a Subsidiary had continued, or it
commences on or after his attainment of age 65, his Supplemental
Retirement Allowance shall be computed without applying the reduction
for early commencement.
(c) The payment of the Supplemental Retirement Allowance
described in this Section shall commence at the time a Participant
(or the Participant's Beneficiary or Dependent Children) meets, under
the terms of the Plan at the time of its termination, the requirements
for payment of benefits whether or not employed by the Company at that
time. For this purpose, the Participant shall be considered to accrue
Creditable Service for purposes of determining the Participant's
eligibility for the receipt of a Supplemental Retirement Allowance
as if the Participant continued in the service of the Company as an
Active Participant in the Plan, whether or not the Participant remains
in the employ of the Company). Notwithstanding the foregoing, the
Company in its discretion can pay a lump sum of Actuarial Equivalent
value of any benefits due to the Participant or his Beneficiary or
Dependent Children at any time following the termination of the Plan.
(d) A Participant who participated in the SLIP prior to
January 1, 1990, shall have a right to the Supplemental Life Allowance at
the same level in effect at the time of Plan termination. The Company
shall fully satisfy all of its obligations to the Participant
with respect to such Supplemental Life Allowance by immediately
distributing or causing to be distributed to such Participant a fully
paid whole life insurance policy or policies on the Participant's life
which, as of the date of distribution and thereafter will provide,
without application of dividends, at death a death benefit at least
equal to one-half of the amount of the Supplemental Life Allowance.
In the case of any such distribution of a life insurance policy, the
Company will also pay enough cash to the Participant to enable the
Participant to pay any federal, state and local income taxes (calculated
at the highest applicable marginal rates) resulting from the
distribution of the policy and the corresponding cash payment made
pursuant to this sentence.
10.4 Effect of Plan Amendment on Benefits.
In the event the Plan is amended or modified in whole or in part to
reduce future accruals of benefits, Supplemental Retirement Allowances or
death benefits or to reduce or eliminate Supplemental Life Allowances, the
Participants affected by any such amendment or modification
shall be treated:
(a) with respect to the Supplemental Retirement Allowance
or death benefits based thereon that accrued through the date of such
amendment or modification and were affected by such amendment or
modification as if the Plan were terminated as of such date and their
rights and entitlement to these benefits shall be determined under
Plan Section 10.3; provided, however, that such Participants shall
be entitled to continue to accrue benefits after the date of such
amendment or modification under such modified or amended terms of the
Plan; and
(b) with respect to a Supplemental Life Allowance as of the
date of such amendment or modification as if the Plan were terminated
as of such date and their rights and entitlement to these benefits
shall be determined under Plan Section 10.3(d); provided, however,
that such Participants shall be entitled to continue to accrue benefits
after the date of such amendment or modification under such modified or
amended terms of the Plan.
10.5 Effect of a Change of Control.
In the event of a Change of Control of the Company, then, with respect to
(a) any person who has a right to a Supplemental Life Allowance
as described in Plan Section 6.1, whether retired, terminated or still
actively employed by the Company, and
(b) any person who is an Active Participant in the SERP at
the time of the Change of Control (or a former officer who is eligible
to be a Participant under Plan Section 4.1(d)) who subsequently either
ceases for any reason, other than voluntary termination of employment
as defined in Plan Section 10.6 below, to be an Active Participant or
becomes eligible for Plan participation at a reduced level,
then the Plan shall be deemed terminated at the date of the Change of Control
with respect to determining the Supplemental Life Allowance for persons
described in clause (a) above or the date of termination of employment with
respect to determining the Supplemental Retirement Allowance and death benefits
for persons described in clause (b) above. Any such person's right
and entitlement to Supplemental Retirement Allowances and death benefits
based on the Supplemental Retirement Allowance accrued through such date, and
Supplemental Life Allowances (including his or her right to an immediate
distribution of a fully paid whole life policy and income tax gross up)
payable to Participants who participated in the SLIP on January 1, 1990,
shall be determined under the provision of Plan Section 10.3; provided,
however that such Participants shall be entitled to continue to accrue
benefits after the date of the Change of Control under such terms of the Plan
if they are still eligible to continue participation
under the Plan.
10.6 Voluntary Termination of Employment.
For purposes of Plan Section 10.5, a voluntary termination of
employment shall mean any termination initiated by the Participant except
a termination initiated after:
(a) any substantial adverse change in position, duties, title
or responsibilities, other than merely by reason of the Company ceasing
to be a publicly-traded corporation;
(b) any material reduction in base salary or, unless replaced by
equivalent arrangements, any material reduction in annual bonus
opportunity or pension or welfare benefit plan coverages;
(c) any relocation required by the Company to an office or
location more than 25 miles from the Participant's current regular
office or location; or
(d) any failure of the Company to obtain the agreement of a
successor entity to assume the obligations set forth hereunder, provided
that the successor has had actual notice of the existence of this
arrangement and an opportunity to assume the Company's
responsibilities hereunder during a period of at least 10 business
days after receipt of such notice; provided that, in order for a
particular event to be treated as an exception to a 'voluntary
termination,' a Participant must assert such exception within 180 days
after actual knowledge of the events giving rise thereto by giving the
Company written notice thereof and an opportunity to cure.
Notwithstanding the foregoing, in the event that any employment
agreement between the Participant and the Company or a Subsidiary in
effect at the time of such termination provides a definition of
'constructive termination' or termination for 'good reason' or similar
terminology, such definition shall govern over the event described in
this Plan Section 10.6 to the extent that it provides addition
exceptions to the events which are considered a voluntary termination.
10.7 Effect of Merger or Acquisition.
If any company now or hereafter becomes a Subsidiary of the Company, the
Board of Directors (or the Compensation Committee to the extent it has been
delegated authority) may include an employee of such Subsidiary in the
membership of the Plan upon appropriate action by such company. In such
event, or, as a result of the merger or consolidation or as the result of
acquisition by the Company of all or part of the assets or business of
another company, the Board of Directors (or the Compensation Committee to the
extent it has been delegated authority) shall determine to what extent, if
any, benefits shall be granted for previous service with such Subsidiary,
or other company.
SECTION 11
CLAIM PROCEDURES
11.1 Every claim for benefits under the Plan shall be in writing
directed to a member of the Retirement Board.
11.2 Each claim filed shall be passed upon by the Retirement Board
within a reasonable time from its receipt. If a claim is denied in whole
or in part the claimant shall be given written notice of the denial in
language calculated to be understood by the claimant, which notice shall:
(a) specify the reason or reasons for the denial;
(b) specify the Plan provisions giving rise to the denial; and
(c) describe any further information or documentation necessary
for the claim to be honored, explain why such documentation or
information is necessary, and explain the Plan's review procedure.
11.3 Upon written request of any claimant whose claim has been denied
in whole or in part, the Retirement Board shall make a full and fair review
of the claim and furnish the claimant with a written decision concerning it.
IN WITNESS WHEREOF, the Company has caused this instrument to be
Executed as of , 1988.
AVON PRODUCTS, INC.
By: /s/ James E. Preston
Title: Chariman of the Board
ATTEST:
/s/ Ward M. Miller, Jr.
Ward M. Miller, Jr.
Secretary
[CORPORATE SEAL]
DOCUMENT
Supplemental Executive Retirement and Life Plan - Avon Products Inc.
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