EXHIBIT 10.35
▇▇▇▇ CORPORATION
ESTATE PRESERVATION PLAN
1. PURPOSE
The purpose of the ▇▇▇▇ Corporation Estate Preservation Plan (the "Plan")
is to create a plan under which ▇▇▇▇ Corporation ("Lear") can assist
certain Executives in the acquisition of life insurance coverage.
2. DEFINITIONS
For purposes of this Plan, the following terms have the meanings set forth
below:
2.01 AGREEMENT means the Agreement executed by a Participant (or a
Participant's Assignee) implementing the terms of this Plan.
2.02 ALTERNATIVE DEATH BENEFIT AMOUNT means, with respect to a
Participant, a payment amount which, after subtracting any Lear
federal, state, and local income tax savings resulting from the
deductibility of the payment for corporate tax purposes, is equal to
the Participant's Coverage Amount. The Alternative Death Benefit
Amount shall be determined at the time the payment is to be made,
based on ▇▇▇▇'▇ federal, state and local income tax rate (calculated
at the highest marginal tax rate then applicable to Lear but net of
any federal deduction for state and local taxes) at the time of the
payment, and shall be determined by Lear.
2.03 ASSIGNEE means that person or entity designated as such in the
Agreement.
2.04 CHANGE IN CONTROL means a Change in Control of Lear, as such term is
defined from time to time in the ▇▇▇▇ Corporation Long-Term
Incentive Plan.
2.05 COMMITTEE means the Compensation Committee of the Board of Directors
of Lear.
2.06 COMPETITOR means an entity which could not have interlocking
directors with Lear under 15 U.S.C. Section 19, as the same may be
amended from time to time.
2.07 COVERAGE AMOUNT means the insurance death benefit amount indicated
in the Participant's Agreement.
2.08 EFFECTIVE DATE means January 1, 1998.
2.09 ELIGIBLE POSITION means the Chief Executive Officer or a position
designated as an Eligible Position by the Chief Executive Officer of
Lear.
2.10 EXECUTIVE means an employee or officer of Lear (or of any subsidiary
or affiliate of Lear which is designated by the Plan Administrator
to participate in this Plan) who is employed in an Eligible
Position.
2.11 INSURER means, with respect to a Participant's Policy, the insurance
company issuing the Policy on the Participant's life (or on the
joint lives of the Participant and the Participant's spouse, in the
case of a Survivorship Policy) pursuant to the provisions of the
Plan.
2.12 PARTICIPANT means an eligible Executive who elects to participate in
the Plan.
2.13 PERMANENT POLICY means a Participant's Policy which is projected to
have Policy cash values at least equal to the Participant's Coverage
Amount when the Participant reaches age ninety-five (95), or, if the
Policy is a Survivorship Policy, when the younger of the Participant
and the Participant's spouse reaches age 100 (the "Maturity Date"),
and Policy death benefits are equal to at least 125% of the
Participant's Coverage Amount at all times to the Maturity Date,
considering premiums paid prior to the time the determination is
made, as well as future projected premiums. The determination shall
be made by Lear based on projections provided by the Insurer or its
agent. Projections shall be based on then current mortality charges
and the lower of: (i) the dividend or interest crediting rate
applicable to the Policy at the time the determination is made, or
(ii) the monthly average of the applicable Policy dividend or
interest crediting rate for the thirty-six (36) months immediately
preceding the time of determination (or the monthly average for such
shorter period as data is available, if it is not available for the
full thirty-six (36) months).
2.14 PLAN ADMINISTRATOR means, with respect to ▇▇▇▇'▇ Chief Executive
Officer, the Committee. For all other Executives, the Plan
Administrator means the Chief Executive Officer of Lear.
2.15 POLICY means the life insurance coverage acquired on the life of the
Participant (or on the joint lives of the Participant and the
Participant's spouse in the case of a Survivorship Policy) by the
owner of the Policy.
2.16 POLICY SURRENDER VALUE means, with respect to a Participant's
Policy, the actual cash surrender value of the Policy, net of any
applicable surrender charges, which would be available upon a
complete surrender of the Policy.
2.17 PREMIUM means with respect to a Policy on the life of a Participant
(or the lives of a Participant and a Participant's Spouse, if the
Policy is a Survivorship Policy), the amount that Lear is obligated,
pursuant to the terms of the Plan, to pay to the Insurer with
respect to such Policy.
2.18 SURVIVORSHIP POLICY means a Policy insuring the lives of the
Participant and a Participant's spouse, with the death benefit
payable at the death of the last survivor of the Participant and his
or her spouse.
2.19 TERMINATED FOR CAUSE means any meaning set forth in any unexpired
employment or severance agreement between the Participant and the
Company and/or an affiliate, and, in the absence of any such
agreement, shall mean (i) the willful and continued failure of the
Participant to substantially perform his or her duties with or for
the Company or an affiliate, (ii) the engaging by the Participant in
conduct which is significantly injurious to the Company or an
affiliate, monetarily or otherwise, (iii) the Participant's
conviction of a felony, (iv) the Participant's abuse of illegal
drugs or other controlled substances or (v) the Participant's
habitual intoxication. Unless otherwise defined in the Participant's
employment or severance agreement, an act or omission is "willful"
for this purpose if such act or omission was knowingly done, or
knowingly omitted to be done, by the Participant not in good faith
and without reasonable belief that such act or omission was in the
best interest of the Company or an affiliate.
2.20 VESTED EXECUTIVE means an Executive who is currently employed and
age 65 or older, who has ten or more Years of Service and who has
been employed in an Eligible Position for at least five years;
provided, that in the sole discretion of, and by written action of,
the Committee or the Board of Directors of Lear, an Executive who is
not age 65, who has fewer than ten Years of Service and/or who has
not been employed in an Eligible Position for at least five years
may be designated a Vested Executive. Notwithstanding the foregoing,
an Executive will not be treated as a Vested Executive if the
Executive is Terminated for Cause or at any time within three years
of the Participant's termination of employment provides services
without ▇▇▇▇'▇ consent to an entity which is a Competitor. A former
employee of Lear shall not be considered a Vested Executive unless
he or she qualifies as a Vested Executive as of the date of his or
her termination of employment, unless otherwise designated a Vested
Executive by the Committee.
2.21 YEAR OF SERVICE shall have the definition specified in the ▇▇▇▇
Corporation Pension Plan.
3. ELIGIBILITY AND COVERAGE AMOUNT
The eligibility of an Executive, as well as the applicable Coverage
Amount, will be determined by the Plan Administrator.
If, during the insurance application and underwriting process, it is
determined that the Executive's health (or the health of the Executive's
spouse) is such that the cost of the insurance would be prohibitive, the
Plan Administrator may, in its sole discretion, determine that the
Executive will not be eligible to participate in the Plan, provide a
reduced Coverage Amount or take any other action it deems appropriate.
4. AMOUNT AND TYPE OF COVERAGE
The amount and type of coverage provided under the Policy shall be that
amount and type specified in the Agreement.
5. PAYMENT OF PREMIUMS
5.01 LEAR PAYMENTS. Subject to Sections 7.01, 7.02, 9 and 12.01, Lear
shall pay all Policy Premiums necessary to maintain the Policy death
benefit at a level at least equal to the Participant's Coverage
Amount.
5.02 PARTICIPANT PAYMENTS. Except as otherwise provided herein, a
Participant (or the Participant's Assignee) shall pay to Lear,
within sixty (60) days of the receipt by the Participant of an
invoice from Lear, that portion of the Premium for such Policy year
equal to the economic benefit of such life insurance coverage for
federal income tax purposes determined based upon the age of the
Participant (or ages of the Participant and the Participant's
spouse, in the case of a Survivorship Policy) at the beginning of
the Policy Year. The amount shall be determined in accordance with
the guidelines set forth in Revenue Ruling 66-110 and Revenue Ruling
67-154, the Insurer's published one year term life insurance rates,
and shall be conclusively determined by Lear. Such obligation to pay
premiums shall terminate when a Participant attains age sixty-five
(65) or, if later, after the payment of five (5) annual premiums by
the Participant (or Assignee); if a Participant dies before the
obligation to pay premiums terminates, such obligation shall
terminate at the death of the Participant.
6. POLICY OWNERSHIP
6.01 OWNERSHIP. Lear shall be the owner of a Participant's Policy and
shall be entitled to exercise the rights of ownership.
Notwithstanding the foregoing, the following rights shall be
exercisable by the Participant (or Assignee if any): (i) the right
to designate the beneficiary or beneficiaries to receive payment of
the portion of the death benefit under the Participant's Policy
equal to the Coverage Amount; and (ii) the right to assign any part
or all of the Participant's rights under the Policy to any person,
entity or trust by the execution of a written instrument prescribed
by Lear which is delivered to Lear. Also, except as provided in
Section 7, Lear shall not borrow from, hypothecate, surrender in
whole or in part, cancel, or in any other manner encumber a
Participant's Policy without the prior written consent of the
Participant's Assignee or, if there is no Assignee, the Participant.
6.02 POSSESSION OF POLICY. Lear shall keep possession of the Policy. Lear
agrees to make the Policy available to the Participant (or Assignee)
or to the Insurer at such times as, and on such terms as, Lear
determines for the sole purposes of endorsing or filing any change
of beneficiary or assignment on the Policy.
7. TERMINATION EVENTS
7.01 TERMINATION EVENTS. Except as provided in Section 7.02, ▇▇▇▇'▇
obligations to maintain the Coverage Amount specified in a
Participant's Agreement and to pay Premiums with respect to a
Participant's Policy shall terminate:
a. Automatically upon the death of the Participant (or upon the
death of the survivor of the Participant and the Participant's
spouse, if the Policy is a Survivorship Policy).
b. Automatically upon a Participant's Termination for Cause.
c. Automatically upon a Participant's termination of employment
with Lear (or any subsidiary or affiliate of Lear) other than
a Termination for Cause, prior to becoming a Vested Executive.
d. Upon the written action of the Plan Administrator, if the
Participant (or Assignee) fails to pay the applicable portion
of the Premium pursuant to Section 5.02 within sixty (60) days
following written notice by Lear to the Participant (and, if
applicable, Assignee) of the amount payable.
e. Automatically should a Participant at any time within three
years of the Participant's termination of employment provide
services, without ▇▇▇▇'▇ consent, to a Competitor.
f. Upon the mutual agreement of Lear and the Participant's
Assignee (or the Participant, if there is no Assignee).
7.02 IRREVOCABLE OBLIGATION. Notwithstanding any other provision of the
Plan, (i) ▇▇▇▇'▇ obligations to maintain the Coverage Amount
specified in a Participant's Agreement and to pay Policy Premiums
for a Vested Executive shall be irrevocable while such person is
employed by Lear and shall remain irrevocable thereafter, unless
such Participant is Terminated for Cause or unless the provisions of
Section 7.01 (d), (e) or (f) apply; and (ii) ▇▇▇▇'▇ obligations to
maintain the Coverage Amount specified in a Participant's Agreement
and to pay Policy Premiums for a Participant who obtains an
irrevocable right pursuant to the provisions of Section 9 hereof
(relating to Change in Control), shall thereafter be irrevocable.
7.03 ALLOCATION OF DEATH BENEFIT. In the event of the death of the
Participant (or the death of the survivor of the Participant and the
Participant's spouse, if the Policy is a Survivorship Policy), the
death benefit paid under the Participant's Policy shall be divided
as follows:
a. The beneficiary or beneficiaries of the Participant (or Assignee)
shall be entitled to receive an amount equal to the Coverage
Amount.
▇. ▇▇▇▇ shall be entitled to receive the excess of the death
benefit over the Coverage Amount.
In no event shall the amount payable hereunder exceed the
Policy proceeds payable at the death of the Participant. Lear
agrees to execute an endorsement to the Policy issued to it by
the Insurer providing for the division of the death benefit in
accordance with the provisions of this Section.
Notwithstanding the provisions of this Section, if the Policy
death benefit becomes payable while there is an Alternative
Death Benefit Election in effect for the Participant pursuant
to Section 8, then the entire Policy death benefit shall be
paid to Lear.
7.04. DISPOSITION OF POLICY. If ▇▇▇▇'▇ obligations to maintain the
Coverage Amount specified in a Participant's Agreement and to pay
Premiums with respect to a Policy terminates under Section 7.01(c),
(d) or (f), the Participant's Assignee (or the Participant, if there
is no Assignee) may acquire the Participant's Policy from Lear by
paying Lear an amount equal to the Policy Surrender Value (or any
lesser amount determined by the Plan Administrator). In order to
exercise this right, the person entitled to exercise the right
shall notify Lear, in writing, of the intention to exercise the
option to purchase the policy within sixty (60) days following the
termination of ▇▇▇▇'▇ obligations. If Lear is so notified, Lear
shall, within thirty (30) days after being notified, provide a
written notice to the Assignee (or Participant, if there is no
Assignee) indicating the payment amount required. Within thirty (30)
days after receiving such notice from Lear, the Assignee (or
Participant, if there is no Assignee) shall make the required
payment to Lear. If the payment is not made within the required
time, the right to acquire the Policy shall terminate. If the
required payment is received on a timely basis, Lear shall submit to
the Insurer, within ten (10) business days after receiving the
payment, the forms required to transfer the Policy ownership to the
Assignee (or Participant, if there is no Assignee). If the Assignee
(or Participant, if there is no Assignee) does not exercise his or
her rights to acquire the Participant's Policy, the Assignee's (or
Participant's) rights under the Plan and any related Agreement shall
terminate, and Lear may, thereafter, take any action it deems
appropriate with respect to the Participant's Policy, free from any
restrictions or limitations imposed by the Plan or Agreement.
8. ALTERNATIVE DEATH BENEFIT ELECTION
Following the termination of a Participant's obligation to pay Premiums
under Section 5.02, a Participant (or the Participant's Assignee, if the
Participant has assigned his or her Policy interest) may elect to receive
an Alternative Death Benefit in lieu of the insurance benefit provided
under the Plan. The Alternative Death Benefit shall be paid by Lear from
the general funds of Lear, and shall not constitute an insurance benefit.
It shall be paid by Lear to the Participant's (or Assignee's) beneficiary
at the time the Participant's death benefit under the Policy would have
been paid. The amount of the payment shall be equal to the Alternative
Death Benefit Amount. As long as an Alternative Death Benefit Election is
in effect, the beneficiary or beneficiaries of the Participant (or
Assignee) shall receive the Alternative Death Benefit only, and shall not
be entitled to receive any portion of any death benefits which become
payable under the Participant's Policy, and the Participant (or Assignee)
shall cooperate with Lear in effecting a change of beneficiary of the
Participant's Policy to achieve such result.
An election under this Section may be revoked. Any election (or revocation
of an election) shall be in writing and shall be effective when received
and acknowledged by Lear, and when the necessary Policy documentation has
been completed in accordance with the procedures of the Insurer. A
Participant (or Assignee) shall not be limited in the number of times an
Alternative Death Benefit Election can be made (or revoked).
9. CHANGE IN CONTROL
If there is a Change in Control:
a. the Plan, and ▇▇▇▇'▇ obligations to maintain the Coverage Amount
specified in a Participant's Agreement and to pay Policy Premiums,
shall become irrevocable for all Participants in the Plan at the
time of the Change in Control and the Participant's (or Assignee's)
obligation to pay that portion of the Policy Premium specified in
Section 5.02 shall terminate;
▇. ▇▇▇▇ shall immediately transfer the ownership of all Participants'
Policies to an irrevocable trust established to: 1) pay any premiums
projected to be payable on all Participants' Policies after the
Change in Control, in order to qualify each Participant's Policy as
a Permanent Policy, and 2) pay any Alternative Death Benefit which
becomes payable under Section 8 of this Plan;
▇. ▇▇▇▇ shall immediately fund such irrevocable trust with an amount
sufficient to pay all necessary projected future premiums for all
Participants' Policies in order to qualify each Participant's Policy
as a Permanent Policy; and,
▇. ▇▇▇▇'▇ rights under Section 12.01 to amend or terminate the Plan and
any obligations hereunder shall immediately terminate.
Notwithstanding the creation and funding of an irrevocable trust in
accordance with the provisions of this Section, Lear, or its successor,
shall continue to be responsible for the Premiums associated with the
Participants' Policies and any Alternative Death Benefits payable under
Section 8 if such amounts are not paid by the trust for any reason, or if
the trust's assets become insufficient to pay any required amounts.
The assets of any irrevocable trust created pursuant to this Section shall
be used for the sole purpose of maintaining the Plan benefits pursuant to
this Section, but such assets, including the Policies, shall be subject to
the claims of creditors of the Company in the event the Company becomes
insolvent. Provided, however, the ownership rights and interests of any
such creditors related to any Policies shall be limited to those rights
and interests possessed by the Company pursuant to Sections 6 and 7 of the
Plan, and any other applicable provisions of the Plan or the Agreements
between the Company and the Participants.
10. GOVERNING LAWS & NOTICES
10.01 GOVERNING LAW. This Plan shall be governed by and construed in
accordance with the substantive law of the State of Michigan
without giving effect to the choice of law rules of the State
of Michigan.
10.02 NOTICES. All notices hereunder shall be in writing and sent by first
class mail with postage prepaid. Any notice to Lear shall be
addressed to the Attention of the Secretary at ▇▇▇▇
Corporation, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇. Box 5008, Southfield,
MI 48086-5008. Any notice to the Participant (or Assignee)
shall be addressed to the Participant (or Assignee) at the
address following such party's signature on his Agreement. Any
party may change the address for such party herein set forth
by giving written notice of such change to the other parties
pursuant to this Section.
11. MISCELLANEOUS PROVISIONS
11.01 This Plan and any Agreement executed hereunder shall not be deemed
to constitute a contract of employment between an Executive
and Lear or a Participant and Lear, nor shall any provision
restrict the right of Lear to discharge an Executive or
Participant, or restrict the right of an Executive or
Participant to terminate employment.
11.02 The masculine pronoun includes the feminine and the singular
includes the plural where appropriate.
11.03 In order to be eligible to participate in this Plan, the Participant
(and, in the case of a Survivorship Policy, the Participant's
spouse) shall cooperate with the Insurer by furnishing any and
all information requested by the Insurer in order to
facilitate the issuance of the Policy, including furnishing
such medical information and taking such physical examinations
as the Insurer may deem necessary. In the absence of such
cooperation, Lear shall have no further obligation to the
Participant to allow him to begin participation in the Plan.
11.04 If a Participant (or a Participant's spouse, if the Policy is a
Survivorship Policy) commits suicide within two years of the
Participant Policy's issue, or if the Participant (or
Participant's spouse if the Policy is a Survivorship Policy)
makes any material misstatement of information or
nondisclosure of medical history and dies within two years of
the Participant's Policy's issue, then no benefits will be
payable to the beneficiary of such Participant (or of the
Participant's Assignee, where applicable).
11.05 The Insurer shall be fully discharged from its obligations under the
Policy by payment of the Policy death benefit to the
beneficiary
or beneficiaries named in the Policy, subject to the terms and
conditions of the Policy. In no event shall the Insurer be
considered a party to the Plan or any Agreement, or any
modification or amendment. No provision of this Plan or any
Agreement, nor of any modification or amendment, shall in any
way be construed as enlarging, changing, varying or in any
other way affecting the obligations of the Insurer as
expressly provided in the Policy.
12. AMENDMENT, TERMINATION, ADMINISTRATION, AND SUCCESSORS
12.01 AMENDMENT/TERMINATION. The Board of Directors of Lear, or its
delegate, may amend, modify or terminate the Plan at any time,
but any such amendment, modification or termination will not
affect the rights of any Participant (or Assignee) under any
Agreement entered into with Lear prior to the date of such
amendment, modification or termination without the
Participant's (or Assignee's) written consent; provided,
however, that the Board of Directors of Lear, or its delegate,
shall have the unilateral right to terminate the Plan and
cancel ▇▇▇▇'▇ obligations hereunder and under any Agreements
entered into hereunder if there is any material adverse change
(as determined by Lear in its sole discretion) in the tax
treatment resulting to Lear with respect to the Plan.
12.02 ADMINISTRATION. This Plan shall be administered by the Plan
Administrator. The Plan Administrator (or its designee) shall
have the authority to make, amend, interpret, and enforce all
rules and regulations for the administration of the Plan and
decide or resolve any and all questions, including
interpretations of the Plan, as may arise in connection with
the Plan in the Plan Administrator's sole discretion. In the
administration of this Plan, the Plan Administrator from time
to time may employ agents and delegate to them or to others
(including Executives) such administrative duties as it sees
fit. The Plan Administrator from time to time may consult with
counsel, who may be counsel to Lear. The decision or action of
the Plan Administrator (or its designee) with respect to any
question arising out of or in connection with the
administration, interpretation and application of this Plan
shall be final and conclusive and binding upon all persons
having any interest in the Plan. Lear shall indemnify and hold
harmless the Plan Administrator and any designee, against any
and all claims, loss, damage, expense or liability arising
from any action or failure to act with respect to this Plan,
except in the case of gross negligence or willful misconduct
by the Plan Administrator or its designee
12.03 SUCCESSORS. The terms and conditions of this Plan shall inure to the
benefit of and bind Lear and the Participant and their
successors, assignees, and representatives.
13. CLAIMS PROCEDURE; PLAN INFORMATION
13.01 NAMED FIDUCIARY. The Plan Administrator is hereby designated as the
named fiduciary under this Plan. The named fiduciary shall
have authority to control and manage the operation and
administration of this Plan.
13.02 CLAIMS PROCEDURES. Any controversy or claim arising out of or
relating to this Plan shall be filed with the Plan
Administrator, ▇▇▇▇, Corporation, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
Box 5008, Southfield, MI 48086-5008, Attention: Secretary. The
Plan Administrator (or its designee) shall make all
determinations concerning such claim. Any decision by the Plan
Administrator (or its designee) denying such claim shall be in
writing and shall be delivered to all parties in interest in
accordance with the notice provisions of Section 10.02 hereof.
Such decision shall set forth the reasons for denial in plain
language. Pertinent provisions of the Plan shall be cited and,
where appropriate, an explanation as to how the claimant can
perfect the claim will be provided. This notice of denial of
benefits will be provided within 90 days of the Plan
Administrator's receipt of the claimant's claim for benefits.
If the Plan Administrator fails to notify the claimant of its
decision regarding the claim, the claim shall be considered
denied, and the claimant then shall be permitted to proceed
with the appeal as provided in this Section.
A claimant who has been completely or partially denied a
benefit shall be entitled to appeal this denial of his/her
claim by filing a written statement of his/her position with
the Plan Administrator no later than sixty (60) days after
receipt of the written notification of such claim denial.
Following the review of any additional information submitted
by the claimant, the Plan Administrator shall render a
decision on the review of the denied claim in the following
manner:
a. The Plan Administrator shall make its decision regarding
the merits of the denied claim within 60 days following
receipt of the request for review (or within 120 days
after such receipt, in a case where there are special
circumstances requiring extension of time for reviewing
the appealed claim). The Plan Administrator shall
deliver the decision to the claimant in writing. If an
extension of time for reviewing the appealed claim is
required because of
special circumstances, written notice of the extension
shall be furnished to the claimant prior to the
commencement of the extension. If the decision on review
is not furnished within the prescribed time, the claim
shall be deemed denied on review.
b. The decision on review shall set forth specific reasons
for the decision, and shall cite specific references to
the pertinent Plan provisions on which the decision is
based.