Pension Benefit Equalization Plan - The Dun & Bradstreet Corp.
PENSION BENEFIT EQUALIZATION PLAN
OF
THE DUN & BRADSTREET CORPORATION
As in effect on June 17, 1998 with certain earlier effective dates
I. Purpose of the Plan
The purpose of the Pension Benefit Equalization Plan of The
Dun & Bradstreet Corporation (the "Plan") is to provide a means of equalizing
the benefits of those employees participating in the Retirement Account of The
Dun & Bradstreet Corporation (the "Retirement Plan") whose funded benefits under
the Retirement Plan are or will be limited by the application of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Internal
Revenue Code of 1986, as amended (the "Code") or any applicable law or
regulation. The Plan is intended to be an "excess benefit plan" as that term is
defined in Section 3(36) of ERISA with respect to those participants whose
benefits under the Retirement Plan have been limited by Section 415 of the Code,
and a "top hat" plan meeting the requirements of Sections 201(2), 301(a)(3),
401(a)(1) and 4021(b)(6) of ERISA with respect to those participants whose
benefits under the Retirement Plan have been limited by Section 401(a)(17) of
the Code.
II. Administration of the Plan
The Board and the Compensation and Benefits Committee
appointed by the Board (the "Committee") severally (and not jointly) shall be
responsible for the administration of the Plan. The Committee shall consist of
not less than three (3) nor more than seven (7) members, as may be appointed by
the Board from time to time. Any member of the Committee may resign at will by
notice to the Board or be removed at any time (with or without cause) by the
Board.
The members of the Committee may from time to time allocate
responsibilities among themselves and may delegate to any management committee,
employee, director or agent its responsibility to perform any act hereunder,
including without limitation those matters involving the exercise of discretion,
provided that such delegation shall be subject to revocation at any time at its
discretion.
The Committee (and their delegees) shall have the exclusive
authority to interpret the provisions of the Plan and construe all of its terms
(including, without limitation, all disputed and uncertain terms), to adopt,
amend, and rescind rules and regulations for the administration of the Plan, and
generally to conduct and administer the Plan and to make all determinations in
connection with the Plan as may be necessary or advisable. All such actions of
the Committee shall be conclusive and binding upon all Participants, Former
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Participants, Vested Former Participants and Surviving Spouses. All deference
permitted by law shall be given to such interpretations, determinations and
actions.
Any action to be taken by the Committee shall be taken by a
majority of its members, either at a meeting or by written instrument approved
by such majority in the absence of a meeting. A written resolution or memorandum
signed by one Committee member and the secretary of the Committee shall be
sufficient evidence to any person of any action taken pursuant to the Plan.
Any person, corporation or other entity may serve in more than
one fiduciary capacity under the Plan.
III. Participation in the Plan
All members of the Retirement Plan shall be eligible to
participate in this Plan whenever their benefits under the Retirement Plan as
from time to time in effect would exceed the limitations on benefits and
contributions imposed by Sections 401, 415 or any other applicable Section of
the Code, calculated from and after September 2, 1974. For purposes of this
Plan, benefits of a participant in this Plan shall be determined as though no
provision were contained in the Retirement Plan incorporating limitations
imposed by Sections 401, 415 or any other Section of the Code.
IV. Benefit Limitations
For purposes of this Plan and the Retirement Plan, the
limitations imposed by Section 415 of the Code shall be deemed to be met when
the sum of the participant's defined benefit plan fraction and his defined
contribution plan fraction equals 1.0, as such fractions are computed for
purposes of Section 415 of the Code and Section 19.4 of the Retirement Plan.
V. Equalized Benefits
The Corporation shall pay to each eligible member of the
Retirement Plan and his beneficiaries a supplemental pension benefit equal to
the benefit which would have been payable to them under the Retirement Plan, as
if no provision were set forth therein incorporating limitations imposed by
Sections 401, 415 or any other applicable Section of the Code, to the extent
that such benefit otherwise payable under the Retirement Plan exceeds the
benefit limitations related to the Retirement Plan as described in Section III
of this Plan.
Subject to Section XII of this Plan, such supplemental pension
benefits shall be payable in accordance with all of the terms and conditions
applicable to the participant's benefits under the Retirement Plan including
whatever optional benefits he may have elected; provided, however, if an
Election (as defined in Section IX of this Plan) or a Special Election (as
defined in Section X of this Plan) has been made and becomes effective prior to
the date when benefits under this Plan would otherwise be payable, the form of
payment of benefits under this Plan shall be in the form so elected pursuant to
such Election or Special Election;
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provided further that notwithstanding any Election or Special Election, if the
lump sum value, determined in the same manner as provided under Section IX
below, of the benefits payable under this Plan is $10,000 or less at the time
such benefits are payable under this Plan, such benefits shall be payable as a
lump sum.
Any portion of the benefits payable under this Plan as a lump
sum, including any amounts payable as a lump sum under Section VI, shall be paid
60 days after the date when payments of the same benefits under this Plan, if
payable in the form of an annuity, would otherwise commence, or as soon as
practicable thereafter, provided the Committee has approved such payment. Any
such lump sum distribution of a participant's or beneficiary's benefits under
this Plan shall fully satisfy all present and future Plan liability with respect
to such participant or beneficiary for such portion or all of such benefits so
distributed. Any portion of the benefits payable under this Plan as an annuity
shall commence on the date when annuity benefits under this Plan would otherwise
commence, without regard to any Election or Special Election.
VI. Payments of Benefits in the Event of Death
In case of the death of the participant, the amount in his
account shall, where applicable and subject to Section XII of this Plan, be
distributed to the surviving beneficiary who has been designated to receive
benefits under the Retirement Plan and in the manner which has been elected
under the Retirement Plan; provided, however, if an Election (as defined in
Section IX of this Plan) or a Special Election (as defined in Section X of this
Plan) has been made and becomes effective prior to the date when benefits under
this Plan would otherwise be payable, the form of payment of benefits payable to
such surviving beneficiary under this Plan shall be in the form so elected
pursuant to such Election or Special Election; provided further that
notwithstanding any Election or Special Election, if the lump sum value,
determined in the same manner as provided under Section IX below, of the
benefits payable under this Plan is $10,000 or less at the time such benefits
are payable to such surviving beneficiary under this Plan, such benefits shall
be payable as a lump sum.
If the participant has not designated a beneficiary under the
Retirement Plan, or if no such beneficiary is living at the time of the
participant's death, the amount, if any, in the participant's account that is
distributable upon his death shall be distributed to the person or persons who
would otherwise be entitled to receive a distribution of the participant's
Retirement Plan benefits. Payment to such person or persons shall completely
discharge the Plan with respect to the amount so paid.
VII. Change in Control
Upon the occurrence of a "Change in Control" of the
Corporation, as such term is defined below, (i) each participant and beneficiary
already receiving benefits and/or survivor's benefits under the Plan shall
receive a lump sum distribution of their unpaid benefits and/or survivor's
benefits under the Plan in an amount equal to the present value of such benefits
and/or survivor's benefits in full satisfaction of all present and future Plan
liability with respect to such participant or beneficiary, and (ii) each vested
participant who is
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not already receiving benefits under the Plan shall receive (A) a lump sum
distribution of the present value of his accrued benefit under the Plan as of
the date of such Change in Control, within 30 days of the date of such Change in
Control and (B) a lump sum distribution of the present value of his additional
benefit, if any, accrued under the Plan from the date of the Change in Control
until the date he retires or terminates employment with the Corporation, within
30 days from the date of the participant's retirement or termination of
employment with the Corporation. In determining the amount of the lump sum
distributions to be paid under this Section VII, the following actuarial
assumptions shall be used: (i) the interest rate used shall be the interest rate
used by the Pension Benefit Guaranty Corporation for determining the value of
immediate annuities as of January 1st of either the year of the occurrence of
the Change in Control or the participant's retirement or termination of
employment, whichever is applicable, (ii) the 1983 Group Annuity Mortality Table
shall be used; and (iii) it shall be assumed that all participants retired or
terminated employment with the Corporation on the date of the occurrence of the
Change in Control for purposes of determining the amount of the lump sum
distribution to be paid upon the occurrence of the Change in Control.
For purposes of this Plan, a "Change in Control" shall be
deemed to have occurred if
(a) any "Person," as such term is used in Section 13 (d) and
14 (d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Corporation, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Corporation, or any corporation owned, directly or indirectly, by the
shareholders of the Corporation in substantially the same proportions
as their ownership of stock of the Corporation), is or becomes the
"Beneficial Owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
20% or more of the combined voting power of the Corporation's then
outstanding securities;
(b) during any period of twenty-four months (not including any
period prior to the effective date of this provision), individuals who
at the beginning of such period constitute the Board, and any new
director (other than (1) a director designated by a person who has
entered into an agreement with the Corporation to effect a transaction
described in clause (a), (c) or (d) of this Section), (2) a director
designated by any Person (including the Corporation) who publicly
announces an intention to take or to consider taking actions
(including, but not limited to, an actual or threatened proxy contest)
which if consummated would constitute a Change in Control or (3) a
director designated by any Person who is the Beneficial Owner, directly
or indirectly, of securities of the Corporation representing 10% or
more of the combined voting power of the Corporation's securities)
whose election by the Board or nomination for election by the
Corporation's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved cease for any reason
to constitute at least a majority thereof;
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(c) the shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other company, other than (1)
a merger or consolidation which would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Corporation or
such surviving entity outstanding immediately after such merger or
consolidation and (2) after which no Person holds 20% or more of the
combined voting power of the then outstanding securities of the
Corporation or such surviving entity; or
(d) the shareholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
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VIII. Funding
Benefits payable under this Plan shall not be funded and shall
be made out of the general funds of the Corporation; provided, however, that the
Corporation reserves the right to establish one or more trusts to provide
alternate sources of benefit payments under this Plan, provided, further,
however, that upon the occurrence of a "Potential Change in Control" of the
Corporation, as defined below, the appropriate officers of the Corporation are
authorized to make contributions to such a trust fund, established as an
alternate source of benefits payable under the Plan, as are necessary to fund
the lump sum payments to Plan participants required pursuant to Section VII of
this Plan in the event of a Change in Control of the Corporation; provided,
further, however, that if payments are made from such trust fund, such payments
will satisfy the Corporation's obligations under this Plan to the extent made
from such trust fund.
In determining the amount of the necessary contribution to the
trust fund in the event of a Potential Change in Control, the following
actuarial assumptions shall be used: (i) the interest rate used shall be the
interest rate used by the Pension Benefit Guaranty Corporation for determining
the value of immediate annuities as of January 1st of the year of the occurrence
of the Potential Change in Control, (ii) the 1983 Group Annuity Mortality Table
shall be used; and (iii) it shall be assumed that all participants will retire
or terminate employment with the Corporation as soon as practicable after the
occurrence of the Potential Change in Control.
For the purposes of this Plan, "Potential Change in Control"
means:
(a) the Corporation enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control of the
Corporation;
(b) any person (including the Corporation) publicly announces
an intention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Corporation;
(c) any person, other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation
(or a Corporation owned, directly or indirectly, by the stockholders of
the Corporation in substantially the same proportions as their
ownership of stock of the Corporation), who is or becomes the
beneficial owner, directly or indirectly, of securities of the
Corporation representing 9.5% or more of the combined voting power of
the Corporation's then outstanding securities, increases his beneficial
ownership of such securities by 5% or more over the percentage so owned
by such person; or
(d) The Board of Directors of the Corporation adopts a
resolution to the effect that, for purposes of this Plan, a Potential
Change in Control of the Corporation has occurred.
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IX. Election of Form of Payment
A participant under this Plan may make an election, on a form
supplied by the Committee, to receive all, none, or a specified portion of his
benefits under this Plan in a lump sum and to receive any balance of such
benefits in the form of an annuity (an "Election"); provided that any such
Election shall be effective for purposes of this Plan only if (i) such
participant remains in the employment of the Corporation or an Affiliate (as
defined under Section XII below), as the case may be, for the full twelve
calendar months immediately following the Election Date of such Election, except
in the case of such participant's death or disability as provided below and (ii)
such participant complies with the administrative procedures set forth by the
Committee with respect to the making of the Election. A participant making such
Election shall be subject to the provisions of Section XII of this Plan.
A participant may elect a payment form different than the
payment form previously elected by him under this Section IX by filing a revised
election form; provided that any such new Election shall be effective only if
the conditions in clauses (i) and (ii) of the immediately preceding paragraph
are satisfied with respect to such new Election. Any prior Election made by a
participant that has satisfied such conditions remains effective for purposes of
this Plan until such participant has made a new Election that satisfies such
conditions.
A participant making an election under this Section IX may
specify the portion of his benefits under this Plan to be received in a lump sum
as follows: 0 percent, 25 percent, 50 percent, 75 percent or 100 percent.
In the event a participant who has made an Election dies or
becomes "totally disabled" as defined in The Dun & Bradstreet Corporation Long
Term Disability Plan while employed by the Corporation or an Affiliate and such
death or total disability occurs during the twelve-calendar-month period
immediately following the Election Date of such Election, the condition that
such participant remain employed with the Corporation or an Affiliate (as
defined in Section XII) for such twelve-month-period shall be deemed to be
satisfied and such Election shall be effective with respect to benefits payable
to such participant or participant's beneficiaries under this Plan.
The amount of any portion of the benefits payable as a lump
sum under this Section IX will equal the present value of such portion of such
benefits, and the present value shall be determined (i) based on a discount rate
equal to the average of 85% of the 15-year non-callable U.S. Treasury bond
yields as of the close of business on the last business day of each of the three
months immediately preceding the date the annuity value is determined and (ii)
using the 1983 Group Annuity Mortality Table.
"Election Date" for purposes of this Plan means the date that
a properly completed election form with respect to an Election or Special
Election (as defined in Section X below) is received by the Corporate Assistant
Treasurer of the Corporation.
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X. Special Election of Form of Payment
Any participant under this Plan (except for the Chairman of
the Board of Directors of the Corporation on December 21, 1994) who as of
December 31, 1994 (i) is age 54 or older and (ii) has at least 4 years of
Credited Service (as defined in the Corporation's Supplemental Executive Benefit
Plan) may make an election, on a form supplied by the Committee, to receive all,
none, or a specified portion, in the same percentages as described in Section IX
above, of his benefits under this Plan in a lump sum and to receive any balance
of such benefits in the form of an annuity (a "Special Election"); provided that
any such Special Election shall be effective for purposes of this Plan only if
such participant remains in employment with the Corporation or an Affiliate (as
defined in Section XII below), as the case may be, for the one calendar month
immediately following the Election Date, except in the case of death or
disability as provided below and complies with the administrative procedures set
forth by the Committee with respect to the making of the Special Election; and
provided further that the Election Date with respect to any such Special
Election may not be later than January 31, 1995. A participant making such
Special Election shall be subject to the provisions of Section XII of this Plan.
In the event a participant who has made a Special Election
dies or becomes "totally disabled" as defined in The Dun & Bradstreet
Corporation Long Term Disability Plan while employed by the Corporation or an
Affiliate (as defined in Section XII below) and such death or total disability
occurs during the one-calendar-month-period immediately following the Election
Date of such Special Election, the participant shall for purposes of this
Section X be deemed to have been employed with the Corporation or an Affiliate
(as defined in Section XII below), as the case may be, for such one
calendar-month period, and such Special Election shall be effective with respect
to benefits payable to such participant or participant's beneficiaries under
this Plan.
The amount of any portion of the benefits payable as a lump
sum under this Section X will equal the present value of such portion of such
benefits, and the present value shall be determined (i) based on a discount rate
equal to the average of 85% of the 15-year non-callable U.S. Treasury bond
yields as of the close of business on the last business day of each of the three
months immediately preceding the date the annuity value is determined and (ii)
using the 1983 Group Annuity Mortality Table.
XI. Indemnification
Subject to certain conditions as provided below, the
Corporation shall indemnify each participant or beneficiary who receives any
benefits under this Plan in the form of an annuity for any interest and
penalties that may be assessed by the U.S. Internal Revenue Service (the
"Service") with respect to U.S. Federal income tax on such benefits (payable
under the Plan in the form of an annuity) upon final settlement or judgment with
respect to any such assessment in favor of the Service, provided the basis for
the assessment is that the amendment of this Plan to provide for the Election or
the Special Election causes the participant or the beneficiary, as the case may
be, to be treated as being in constructive
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receipt of such benefits prior to the time when such benefits are actually
payable under the Plan.
In case any such assessment shall be made against a
participant or beneficiary, such participant or beneficiary, as the case may be
(the "indemnified party"), shall promptly notify the Corporation's Treasurer in
writing and the Corporation, upon request of such indemnified party, shall
select and retain an accountant or legal counsel reasonably satisfactory to the
indemnified party to represent the indemnified party in connection with such
assessment and shall pay the fees and expenses of such accountant or legal
counsel related to such representation, and the Corporation shall have the right
to determine how and when such assessment by the Service should be settled,
litigated or appealed. In connection with any such assessment, any indemnified
party shall have the right to retain his own accountant or legal counsel, but
the fees and expenses of such accountant or legal counsel shall be at the
expense of such indemnified party unless the Corporation and the indemnified
party shall have mutually agreed to the retention of such accountant or legal
counsel.
The Corporation shall not be liable to a participant or
beneficiary for any payments under this Section XI with respect to any
assessment described in the second preceding paragraph if such participant or
beneficiary against whom such assessment is made has not notified or allowed the
Corporation to participate with respect to such assessment in the manner
described above or, following demand by the Corporation, has not made the
deposit to avoid additional interest or penalties as described below, or has
agreed to, or otherwise settled with the Service with respect to, such
assessment without the Corporation's written consent, provided, however, (i) if
such assessment is settled with such consent or if there is a final judgment for
the Service, (ii) the Corporation has been notified and allowed to participate
in the manner as provided above and (iii) such participant or beneficiary has
made any required deposit to avoid additional interest or penalties as described
below, the Corporation agrees to indemnify the indemnified party to the extent
set forth in this Section XI.
In the event a final settlement or judgment with respect to an
assessment as described under this Section XI has been made against a
participant or beneficiary, such participant or beneficiary may elect to receive
a portion or all of his benefits that is otherwise payable as an annuity under
the Plan in the form of a lump sum in accordance with procedures as the
Committee may set forth, and such lump sum distribution will be made as soon as
practicable after any such election. At the time such assessment is made against
such participant or beneficiary (the "assessed party") and prior to any final
settlement or judgement with respect to such assessment, if so directed by the
Corporation, such assessed party shall, as a condition to receiving an indemnity
under this Section XI, as soon as practicable after notification of such
assessment make a deposit with the Service to avoid any additional interest or
penalties with respect to such assessment and, upon the request of such assessed
party, the Corporation shall lend, or arrange for the lending to, such assessed
party a portion of his remaining benefit under the Plan, not to exceed the lump
sum value of such benefit under the Plan, determined using the actuarial
assumptions set forth in Section IX, solely for purposes of providing the
assessed party with funds to make a deposit with the Service to avoid any
additional interest or penalties with respect to such assessment.
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XII. Limitations on Payment of Benefits
If a participant under this Plan has at any time made an
Election or a Special Election to have all or a portion of the benefits under
this Plan distributed in a lump sum, such participant shall be subject to this
Section XII.
Notwithstanding any other provision of this Plan to the
contrary, no benefits or no further benefits, as the case may be, shall be paid
to a participant who is subject to this Section XII if the Committee reasonably
determines that such participant has:
(i) To the detriment of the Corporation or any Affiliate,
directly or indirectly acquired, without the prior written consent of
the Committee, an interest in any other company, firm, association, or
organization (other than an investment interest of less than 1% in a
publicly-owned company or organization), the business of which is in
direct competition with the business (present or future) of the
Corporation or any of its Affiliates;
(ii) To the detriment of the Corporation or any Affiliate,
directly or indirectly competed with the Corporation or any Affiliate
as an owner, employee, partner, director or contractor of a business,
in a field of business activity in which the participant has been
primarily engaged on behalf of the Corporation or any Affiliate or in
which he has considerable knowledge as a result of his employment by
the Corporation or any Affiliate, either for his own benefit or with
any person other than the Corporation or any Affiliate, without the
prior written consent of the Committee; or
(iii) Been discharged from employment with the Corporation
or any Affiliate for "Cause."
An "Affiliate" for purposes of this Plan means any
corporation, partnership, division or other organization controlling, controlled
by or under common control with the Corporation or any joint venture entered
into by the Corporation.
"Cause" for purposes of this Section XII shall include the
occurrence of any of the following events or such other dishonest or disloyal
act or omission as the Committee determines to be "cause":
(a) The participant has misappropriated any funds or property
of the Corporation or any Affiliate;
(b) The participant has, without the prior knowledge or
written consent of the Committee, obtained personal profit as a result
of any transaction by a third party with the Corporation or any
Affiliate; or
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(c) The participant has sold or otherwise imparted to any
person, firm, or corporation the names of the customers of the
Corporation or any Affiliate or any confidential records, data,
formulae, specifications and other trade secrets or other information
of value to the Corporation or any Affiliate derived by his or her
association with the Corporation or any Affiliate.
In any case described in this Section XII, the participant shall be given prior
written notice that no benefits or no further benefits, as the case may be, will
be paid to such participant. Such written notice shall specify the particular
act(s), or failures to act, on the basis of which the decision to terminate his
benefits has been made.
Notwithstanding any other provision of this Plan to the
contrary, a participant who receives in a lump sum any portion of his benefits
under this Plan pursuant to an Election or Special Election shall receive such
lump sum portion of his benefits subject to the condition that if such
participant engages in any of the acts described in clause (i) or (ii) of this
Section XII, then such participant shall within 60 days after written notice by
the Corporation repay to the Corporation the amount described in the immediately
following sentence. The amount to be repaid shall equal the amount, as
determined by the Committee, of the participant's lump sum benefit paid under
this Plan to which such participant would not have been entitled, if such lump
sum benefit had instead been payable in the form of an annuity under this Plan
and such annuity payments were subject to the provisions of this Section XII.
XIII. Miscellaneous
This Plan may be terminated at any time by the Board of
Directors of the Corporation, in which event the rights of participants to their
accrued benefits shall become nonforfeitable. This Plan may also be amended at
any time by the Board of Directors of the Corporation, except that no such
amendment shall deprive any participant of his benefits accrued at the time of
such amendment.
No right to payment or any other interest under this Plan may
be alienated, sold, transferred, pledged, assigned, or made subject to
attachment, execution, or levy of any kind.
Nothing in this Plan shall be construed as giving any employee
the right to be retained in the employ of the Corporation. The Corporation
expressly reserves the right to dismiss any employee at any time without regard
to the effect which such dismissal might have upon him under the Plan.
This Plan shall be construed, administered and enforced
according to the laws of the State of New York.
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XIV. Effective Date
This Plan shall be effective as of October 17, 1990, upon its
adoption by the Board of Directors of The Dun & Bradstreet Corporation.