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INTERNATIONAL UNION OF ELEC. v. UNISYS CORP.

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK


August 3, 1994

INTERNATIONAL UNION OF ELECTRONIC, ELECTRICAL, SALARIED, MACHINE, AND FURNITURE WORKERS, AFL-CIO, and its Affiliated Locals 165, 445, 450, 470 and 792 and WILLIAM POWELL, ELIZABETH BALZANO, EMIL PHIL MARTINO, PETER F. SZCZYBEK, JOHN T. McDANIEL, CHARLES ZALEWSKI, ROBERT KENNEDY and ALFRED ESCHWEGE, as individuals for and on behalf of those similarly situated, Plaintiffs,
v.
UNISYS CORPORATION and the UNISYS CORPORATION MEDICAL PLAN, Defendants. LOCAL UNIONS 3 AND 1667 OF THE INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, and AGNES RAHUBA and STEPHEN J. ROTH, as individuals for and on behalf of those similarly situated, Plaintiffs, v. UNISYS CORPORATION and THE UNISYS CORPORATION MEDICAL PLAN, Defendants.

The opinion of the court was delivered by: JOANNA SEYBERT

MEMORANDUM AND ORDER

 SEYBERT, District Judge:

 The parties in the instant consolidated class action petition the Court for approval of a proposed settlement pursuant to Rule 23(e) of the Federal Rules of Civil Procedure. For the reasons discussed herein, the settlement is approved.

 BACKGROUND

 A. Overview Of The Claims Asserted, Class Certification, And Orders Leading Up To The Fairness Hearing

 This is a consolidated action consisting of two separate class actions brought against defendants Unisys Corporation and The Unisys Corporation Medical Plan [hereinafter referred to jointly as "Unisys"] under the Labor Management Relations Act ("LMRA"), the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the common law. The plaintiffs in these class actions assert claims on behalf of certain retirees of Unisys, and their surviving spouses and dependents who are eligible to receive retiree benefits [hereinafter referred to jointly as "the Conference Board retirees"]. The plaintiffs allege, inter alia, that Unisys breached certain collective bargaining agreements that it had entered into with the International Union of Electronic, Electrical, Salaried, Machine, and Furniture Workers, AFL-CIO ["IUE"] and the International Brotherhood of Electrical Workers, AFL-CIO ["IBEW"] by unilaterally changing the benefit coverage of the Conference Board retirees and their spouses and dependents, effective January 1, 1993. As a result of these unilateral changes, the plaintiffs would be required to make additional contributions to ensure their continued receipt of specified medical benefits.

 By Order dated March 11, 1994, the Court, pursuant to Rules 23(b)(1) and 23(b)(2) of the Federal Rules of Civil Procedure, conditionally certified the settlement class, defining it in terms of nine separate subclasses. By this same Order, the Court also conditionally certified the named plaintiffs as class representatives and their counsel as class counsel.

 On April 8, 1994 the Court issued two separate orders in connection with the parties' efforts to settle this consolidated class action. First, the Court preliminarily approved a Stipulation of Settlement and Dismissal ("Stipulation of Settlement") for the instant consolidated class action subject to the provisions of an accompanying preliminary order. *fn1"

 On this same date, the Court entered an "Order Regarding Proposed Settlement of Class Action and Notice to Class" (the "Preliminary Order.") The Preliminary Order contains several provisions. Among other things, the Preliminary Order (i) reaffirmed the appropriateness of the Settlement Class and the subclasses as set forth in the Court's earlier Order Conditionally Granting Class Certification dated March 11, 1994, (ii) preliminarily approved the terms and conditions of the Stipulation of Settlement entered into between the parties, (iii) determined that the proposed notices to class members submitted by the parties met the requirements of Fed. R. Civ. P. 23 and due process, (iv) scheduled a fairness hearing for June 3, 1994, (v) established procedures whereby any settlement class member could appear at the hearing or otherwise object to the settlement, and (vi) enjoined all members of the Settlement Class from prosecuting, either individually or in a representative capacity, any claim or cause of action against Unisys with respect to matters embraced within the scope of the complaints to the consolidated actions.

 The Preliminary Order also approved a "'Bar Notice' described in paragraphs 4 and 5 of the Stipulation [of Settlement], and attached to the Stipulation [of Settlement] as Exhibit C." Preliminary Order P 5. In addition, the Preliminary Order authorized the Settling Defendants, by April 15, 1994, to cause the Bar Notice to be mailed to such persons as mutually agreed upon by the parties. See id. P 6.

 The Bar Notice served three distinct purposes. First, it informed the persons receiving it of the proposed settlement with Unisys Corporation. Second, it informed such persons of the establishment, pursuant to the Stipulation of Settlement, of two settlement trust accounts for the members of subclasses 7, 8 and 9. Last, it informed persons, who are neither parties to the action nor members of a settlement class, of the parties' intention to obtain a judgment that would extinguish their claims with respect to the establishment of the settlement trust accounts and the methods used to fund them. Further to this point, the Bar Notice conferred standing upon persons who are not represented in this action, subject to certain procedures, to object to the proposed settlement by appearance before the Court.

 By Memorandum and Order dated May 17, 1994, the Court vacated its prior approval of the Bar Notice, finding that the same was part of an impermissible "greater design to obtain a binding final order and judgment that, as a matter of res judicata, would purport to extinguish the right of unrepresented persons to challenge the establishment of the settlement trust accounts and the methods used to fund them." *fn2" International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers v. Unisys Corp., 92- CV-5719 (JS), 155 F.R.D. 41, 47 (E.D.N.Y. May 17, 1994) [hereinafter "Memorandum and Order"]. By the same Memorandum and Order, the Court denied an application by James Wasserman, Esq. of the law firm of Vladeck, Waldman, Elias, & Engelhard, P.C. to file a motion to permit certain current and prospective Local 444 retirees to intervene in the instant consolidated action for purposes of moving to vacate the Stipulation of Settlement. *fn3" Nevertheless, in view of his clients' adversity of interest to the settling parties which would heighten the Court's ability to monitor the scope of the forthcoming proposed final order and judgment, and permit a response to be filed to a then-pending motion by the defendants to certify additional subclasses of unrepresented persons without first joining them to the action by service of a complaint, *fn4" the Court conferred amicus curiae status upon Mr. Wasserman. The Court further instructed counsel for each of the parties to the instant consolidated action to serve a copy of all prospective correspondences to the Court upon Mr. Wasserman until such time that the Court directed otherwise. See Memorandum and Order, 155 F.R.D. at 49. Finally, the Court explicitly instructed counsel for each of the parties to this action that it would not approve any proposed final settlement that sought a final adjudication of rights with respect to persons who are unrepresented (i.e., non-class members) in the instant consolidated action. See id. at 48.

 B. The Proposed Settlement

 The proposed settlement accords different rights to each of subclasses in exchange for the release of their claims. This variance in rights is due to the subclasses' independent chronologies, as each Unisys facility and local union generally had its own unique collective bargaining history and contract language. The medical benefits provided to retirees by Unisys and its predecessor in interest ("Sperry") also varied from location to location and, in some instances, from contract to contract at the same location. It therefore became impracticable for the parties to fashion a settlement that applied the same terms to each retiree covered by the instant consolidated action.

 A summary of the proposed settlement's provisions with respect to each of the subclasses follows.

 Subclass No. 1 - Vickers-Jackson Subclass

 This Subclass is a class comprised of all retirees who (1) were eligible for retiree medical benefits, (2) were employed by Unisys or its corporate predecessor, (3) retired from Unisys' Jackson, Mississippi facility, and (4) were covered at the time of their retirement by a collective bargaining agreement between Unisys (or its predecessor) and IUE and its Local 792, which provided medical benefits for retirees, and/or their spouses and dependents eligible to receive medical benefits.

 Provided that they can establish insurability, individuals in this Subclass whose coverage has not expired as of the relevant implementation date (the "Implementation Date")--either as a result of attaining a specified age or reaching a coverage cap--may choose between two options with respect to their coverage and retiree contributions for that coverage. As a first option, each family group in this Subclass, whose coverage has not already expired, may make a one-time election, on or before the Implementation Date, to continue coverage for all eligible family members under the plan of benefits in effect for the family group on December 31, 1992. For those electing such coverage, said coverage will continue until its expiration and will require a participant contribution equal to 20% of the participant's allocated cost, computed actuarially by reference to the actual cost experience of the covered individuals within this Subclass.

 Unisys has agreed that it will not exercise any right to amend or otherwise change any such pre-1993 benefit plans in effect for this Subclass and waives any reservation of its right to do so.

 If at any time after the Implementation Date the coverage of a participant or an eligible spouse expires, such individual, upon the occurrence of the first of these events, will be afforded a one-time option (per family) to enroll all eligible family members in the then-current Unisys PRM Plan at the same terms and conditions offered at that time and in the future to non-bargaining unit participants, at the lower of (1) the applicable contribution schedule announced by Unisys in October 1992, and (2) the rate for the Unisys PRM Plan which might result from any final court order in a pending multidistrict litigation action in the United States District Court for the Eastern District of Pennsylvania [the "Multidistrict Litigation Action"].

 As a second option, individuals in this Subclass whose coverage has not expired will be afforded a one-time election (per family) to enroll all eligible family members in the current Unisys PRM Plan at the same terms and conditions offered at that time and in the future to non-bargaining-unit participants, at the lower of (1) the applicable contribution schedule announced by Unisys in October 1992, and (2) the rate for the Unisys PRM Plan which might result from any final court order in the Multidistrict Litigation Action.

 Subclass No. 2 - Vickers-Troy Subclass

 This Subclass is a class comprised of all retirees who (1) were eligible for retiree medical benefits, (2) were employed by Unisys or its predecessor, (3) retired from Unisys' Troy, Michigan facility, and (4) were covered at the time of their retirement by a collective bargaining agreement between Unisys (or its predecessor) and IUE and its Local 945 which provided medical benefits for retirees, and/or their spouses and dependents eligible to receive medical benefits.

 Provided that they can establish insurability, individuals in this Subclass whose coverage has not already expired as of the Implementation Date, through the realization of the coverage cap, may choose between two options with respect to their coverage and retiree contributions for that coverage. As a first option, each family group in this Subclass, whose coverage has not already expired, will be afforded a one-time election on or before the Implementation Date to continue to have all eligible family members covered by the plan of benefits which was in effect for the family group on December 31, 1992. For those electing such coverage, such coverage will continue until the expiration of that coverage through the realization of the coverage cap, and the electing persons will contribute 20% of the plan's cost in payment for such coverage. Such cost will be actuarially determined based upon the actual experience of the covered group.

 Unisys has agreed that it will not exercise any right to amend or otherwise change any pre-1993 benefit plans in effect for this Subclass and waives any reservation of its right to do so.

 If at any time after the Implementation Date the coverage of a participant or an eligible spouse expires, such individual, upon the occurrence of the first of these events, will be afforded a one-time election (per family) to enroll all eligible family members in the then-current Unisys PRM Plan at the same terms and conditions offered at that time and in the future to non-bargaining-unit participants. The applicable contribution schedule will be the lower of (1) the applicable contribution schedule announced by Unisys in October 1992, and (2) the rate for the Unisys PRM Plan which might result from any final court order in the Multidistrict Litigation Action.

 As a second option, individuals in this Subclass whose coverage has not already expired through the attainment of a coverage cap, will be afforded a one-time election (per family) to enroll all eligible family members in the current Unisys PRM Plan at the same terms and conditions offered at that time and in the future to non-bargaining-unit participants, at the lower of (1) the applicable contribution schedule announced by Unisys in October 1992, and (2) the rate for the Unisys PRM Plan which might result from any final court order in the Multidistrict Litigation Action.

 Subclass No. 3 - Blue Bell Subclass

 This Subclass is a class comprised of all retirees who (1) were eligible for retiree medical benefits, (2) were employed by Unisys or its predecessor, (3) retired from Unisys' Blue Bell, Pennsylvania facility, and (4) were covered at the time of their retirement by a collective bargaining agreement between Unisys (or its predecessor) and IUE and its Local 165 which provided medical benefits for retirees, and/or their spouses and dependents eligible to receive medical benefits.

 Provided that they can establish insurability, individuals in this Subclass who retired after December 31, 1984 will be given the option to continue to participate in and be covered by the Unisys PRM Plan at the same terms and conditions offered at that time and in the future to non-bargaining-unit participants. Their coverage and contribution rates, however, will be adjusted to conform to any final court order in the Multidistrict Litigation Action covering similarly situated, non-bargaining-unit retirees at Unisys' Blue Bell, Pennsylvania facility.

 Individuals in this Subclass who retired on or before December 31, 1984 shall receive the remaining unutilized amount of their retiree medical benefits, if any, up to $ 1,064.00, in a lump-sum payment, upon the receipt of which they will forfeit any further entitlement to retiree medical coverage.

 Subclass No. 4 - Waterbury Subclass

 This Subclass is a class comprised of all retirees who (1) were eligible for retiree medical benefits, (2) were employed by Unisys or its predecessor, (3) retired from Unisys' Waterbury, Connecticut facility, and (4) were covered at the time of their retirement by a collective bargaining agreement between Unisys (or its predecessor) and IBEW Local 1667 which provided medical benefits for retirees, and/or their spouses and dependents eligible to receive medical benefits.

 Provided that they can establish insurability, individuals in this Subclass will be given the option to participate in and be covered by the Unisys PRM Plan at the same terms and conditions offered at that time and in the future to non-bargaining-unit participants, except as provided below. Alternatively, individuals in this Subclass may elect to receive a lump-sum payment of $ 700.00, upon the receipt of which they will forfeit any further entitlement to retiree medical coverage.

 Individuals who elect coverage in the Unisys PRM Plan will pay monthly contributions which will be the lesser of (1) a percentage of the plan's cost for that coverage, or (2) a certain dollar maximum.

 The aforementioned cost percentage will be determined actuarially based upon the actual cost experience of the applicable group during the upcoming calendar year. The applicable percentage contribution rate for individuals in this Subclass will be 30% in 1994, 40% in 1995, and 5% in 1996 and thereafter.

 The monthly contribution rates will be subject to the following ceilings: (1) for individuals who retired before January 1, 1987, the monthly maximum contribution will be $ 50.00 for participants 65 years of age or older, and $ 75.00 for participants under age 65; (2) for individuals who retired on or after January 1, 1987, the monthly maximum contribution will be $ 65.00 for participants 65 years of age or older, and $ 130.00 for participants under age 65. Finally, in no event will the contribution rate be higher than the rate for the Unisys PRM Plan which might result from any final court order in the Multidistrict Litigation Action for similarly-situated non-bargaining-unit retirees. Should the Unisys PRM Plan be terminated and a new plan of benefits offered to all of the then-current Unisys PRM Plan participants, the members of this Subclass will be offered that substitute plan of benefits under the same premium contribution terms as applied above for the Unisys PRM Plan.

 Should the Unisys PRM Plan be terminated and no new plan of benefits offered to all of the then-current Unisys PRM Plan participants, the members of this Subclass will be offered a plan of benefits, selected through a special designee [the "Special Designee"] upon notice and advice of members of the Subclass and with the approval of the Court. The above retiree contribution percentages and maximum retiree contribution rates will apply to any such subsequent plan, except that Unisys will continue its contributions for Subclass members at the per-participant dollar levels it was funding at the time of the termination of the Unisys PRM Plan. The amount contributed by Unisys in subsequent years may be increased by as much as 5% annually, but the actual amount of increase up to that amount will be indexed to the medical component of the Consumer Price Index. If the cost of any such subsequent plan exceeds the per-participant cost of the terminated Unisys PRM Plan, the members of the Subclass will be responsible for any additional cost.

 Subclass No. 5 - Van Nuys Subclass

 This Subclass is a class comprised of all retirees who (1) were eligible for retiree medical benefits, (2) were employed by Unisys or its predecessor, (3) retired from Unisys' Van Nuys, California facility, and (4) were covered at the time of their retirement by a collective bargaining agreement between Unisys (or its predecessor) and IUE and its Locals 854 or 1514 which provided medical benefits for retirees, and/or their spouses and dependents eligible to receive medical benefits.

 The individuals in this Subclass currently enrolled in the Unisys PRM Plan will remain entitled to participate in such plan upon the same terms and conditions offered at that time and in the future to non-bargaining participants, for which such individuals will pay the retiree contribution schedule announced by Unisys in October 1992, or such individuals may elect a lump-sum payment of $ 400.00, upon the receipt of which they will forfeit any further entitlement to retiree medical coverage.

 Subclass No. 6 - VRIP Subclass

 This Subclass is a class comprised of all retirees who (1) were eligible for retiree medical benefits, (2) were employed by Unisys or its predecessor, (3) retired from Unisys' Great Neck, New York facility as part of the 1986 Voluntary Retirement Incentive Plan, and (4) were covered at the time of their retirement by a collective bargaining agreement between Unisys (or its predecessor) and IUE and its Locals 445, 450 and 470 or IBEW Local 3 which provided medical benefits for retirees, and/or their spouses and dependents eligible to receive medical benefits.

 Individuals in this Subclass will be subject to the same provisions as set forth for Subclass No. 8, provided that upon any final order or settlement for identically-situated 1986 VRIP non-bargaining unit Sperry retirees in the Multidistrict Litigation Action, individuals in this Subclass will upon reasonable notice from Unisys be afforded at least thirty days to make a one-time election to accept the terms established by said Multidistrict Litigation Action, and provided further that such election will be available only if the Unisys PRM Plan is in effect at that time. Upon such election, the terms and conditions established for these individuals under the provisions applicable to Subclass No. 8 will be forfeited.

 All retiree contributions made by a retiree prior to such election will remain in the trust account established by the Stipulation of Settlement for Subclasses Nos. 7 and 8. There will be no refund or credit for contributions paid by the retiree prior to his or her election to participate in the Unisys PRM Plan.

 For each individual who elects to participate in the Unisys PRM Plan, a determination will be made actuarially as to Unisys' share of the amount no longer required for securing that individual's benefit under the provisions applicable to Subclass No. 8. If Unisys has not yet deposited or transferred into the Primary Settlement Account an amount sufficient to bring the level of funding for the Covered Group up to 90% of Unisys' share of its cost for providing the Plan of Benefits for this group, the amount determined to be no longer required for securing the electing individuals' benefits will remain in the Primary Settlement Account to the extent necessary to reach the 90% level. If the 90% level has been reached, any amount in excess of the 90% level will then be credited from the Primary Settlement Account into a general account in the Harris Trust and Savings Bank [the "Harris Trust"] to be used consistent with the purpose and operation of the Harris Trust, including but not limited to payment of that individual's benefit.

 Subclass No. 7 - Great Neck GHI Subclass

 This Subclass is a class comprised of all retirees who (1) were eligible for retiree medical benefits, (2) were employed by Unisys or its predecessor, (3) retired from Unisys' Great Neck, New York facility, and (4) were covered at the time of their retirement by a collective bargaining agreement between Unisys (or its predecessor) and IUE and its Locals 445, 450 and 470 in effect prior to September 26, 1979, or by a corresponding agreement with IBEW Local 3, which provided medical benefits for retirees, and/or their spouses and dependents eligible to receive medical benefits.

 Individuals in this Subclass, which includes individuals covered by a GHI or GHP plan, and their spouses and eligible dependents, will continue to receive their present coverage, which for GHI participants consists of (1) payment of the Medicare Part A deductible (currently $ 696 per year), and (2) a free annual physical examination at a designated physician's office.

 In addition, all individuals in this Subclass will be offered the opportunity to purchase prescriptions at the Unisys PRM Plan discount rate at participating pharmacies, including the mail order prescription drug program. A list of such participating pharmacies, and a card identifying the individuals in this Subclass as eligible for this discount, will be provided to each member of this Subclass.

 Individuals in this Subclass will not be required to make any contribution for their coverage, and their benefits will be secured by the Primary Settlement Account described and defined below in the provisions concerning Subclass No. 8.

 Unisys has agreed that it will not exercise any right to amend or otherwise change the benefits described above and waives any reservation of its right to do so.

 Subclass No. 8 - Great Neck 1979-1991 Subclass

 This Subclass is a class comprised of all retirees who (1) were eligible for retiree medical benefits, (2) were employed by Unisys or its predecessor, (3) retired from Unisys' Great Neck, New York facility, and (4) were covered at the time of their retirement by a collective bargaining agreement between Unisys (or its predecessor) and IUE and its Locals 445, 450 and 470 in effect on or after September 26, 1979, but before September 6, 1991, or by a corresponding agreement with IBEW Local 3, which provided medical benefits for retirees, and/or their spouses and dependents eligible to receive medical benefits.

 (A) Definitions

 The following definitions apply in connection with the settlement for this Subclass.

 1. Present Value of Medical Costs

 This is defined as the present value, measured as of a particular date, of (1) the expected cost of medical and drug claims under the Plan of Benefits agreed upon by the parties, as discussed and defined within the Stipulation of Settlement (the "Plan of Benefits"), and (2) the cost of administering the Plan of Benefits. This amount will be measured based upon assumptions agreed upon by the actuaries, or if the actuaries do not agree, by the independent actuary appointed under the provisions set forth in the Stipulation of Settlement. This amount will include any payments, charges, assessments, contributions, premiums, maintenance of effort provisions, any taxes or expenses in any form as well as any administrative costs related to the computation or payment of the same required by any federal or state law, or related to the provision of medical coverage to individuals covered by this settlement.

 2. Present Value of Future Retiree Contributions

 This is defined as the present value, measured as of a particular date, of the expected retiree contributions for the Plan of Benefits agreed upon by the parties. This amount will be measured based upon assumptions agreed upon by the actuaries, or if the actuaries do not agree, by the independent actuary appointed under the provisions set forth in the Stipulation of Settlement. This amount will reflect any change in future retiree contributions due to the implementation and operation of any of the three Triggers, as discussed infra, at any point prior to the measurement date or at the time of any future valuation.

 3. Retiree Share

 The retiree share of the cost of providing for future medical benefits is equal to the Present Value of Future Retiree Contributions (measured as of the Implementation Date) divided by the Present Value of Future Medical Costs (measured as of the Implementation Date).

 4. Retiree Assets

 A separate accounting will be made within the commingled assets of the trust for Retiree Assets. The initial value of the Retiree Assets as of the Implementation Date will be zero. The Retiree Assets will be credited with the retiree contributions made under the Stipulation of Settlement and with a pro rata share of the actual investment earnings of the commingled fund (including realized and unrealized gains and losses). The Retiree Assets will be charged with (1) the cost of medical and drug claims under the benefit arrangements agreed to by the parties multiplied by the Retiree Share, and (2) the cost of administering the Plan of Benefits multiplied by the Retiree Share (Cost of Benefits x Retiree Share Cost of Administration x Retiree Share = Charge to Retiree Assets).

 5. Valuation Date

 The three Triggers, as defined in the Stipulation of Settlement, will be measured in the year specified as of July 1st.

 (B) The Primary Settlement Account

 Within twenty days after the Implementation Date, Unisys will establish a new account within an existing trust (the "Harris Trust"). This new account is referred to by the Stipulation of Settlement as the "Primary Settlement Account."

 Within twenty days after the Implementation Date, Unisys will credit to the Primary Settlement Account an amount, as calculated by the formula specified below, to be used to fund substantially the Plan of Benefits described in the Stipulation of Settlement for this Subclass and also for Subclass No. 7 (the "Covered Group"). In Unisys' discretion, these funds may be credited to the Primary Settlement Account from funds currently held in the Harris Trust and/or from funds contributed by Unisys to the Harris Trust in the future.

 The amount to be credited will be equal to 80% of Unisys' share of its cost for providing the Plan of Benefits to this Covered Group, i.e., the Present Value of Medical Costs for the Covered Group of Great Neck Conference Board retirees, as of the Implementation Date, minus the Present Value of Future Retiree Contributions for this Covered Group, as of the Implementation Date.

 Thereafter, Unisys has agreed that, within two years of the Implementation Date, it will credit to the Primary Settlement Account an amount sufficient to bring the level of funding for the Covered Group up to 90% of Unisys' share of its cost for providing the Plan of Benefits for this group. In Unisys' discretion, these funds may be credited to the Primary Settlement Account from funds currently held in the Harris Trust and/or from funds contributed by Unisys to the Harris Trust in the future.

 Unisys is responsible for 100% of its share of the cost for providing the Plan of Benefits for this Covered Group, provided that Unisys' costs will be capped and any requirement for additional contributions will be released under the following circumstances:

 

1) Trigger Two, as discussed infra, is activated for three consecutive years; or

 

2) Trigger Three, as discussed infra, is activated; or

 

3) Unisys credits to the Primary Settlement Account within four (4) years of the Implementation Date the remaining 10% needed to bring Unisys' contributions for its share of the cost of providing the Plan of Benefits for the Covered Group to 100%. In Unisys' discretion, these funds may be credited to the Primary Settlement Account from funds currently held in the Harris Trust and/or from funds contributed by Unisys to the Harris Trust in the future.

 (C) Actuarial Assumptions

 The actuarial assumptions to be used by the parties will be determined upon their mutual agreement, and such agreement constitutes a material condition of the Stipulation of Settlement. If in respect to any future valuations, the parties cannot agree on any actuarial assumption(s), the issue(s) will be submitted to an independent actuary, who will hear the arguments of the parties and make a binding decision concerning the assumption(s) to be used. The parties will endeavor to reach an agreement upon such independent actuary, but if they are unable to do so, on petition of either party, the Court will designate the actuary subject only to for-cause challenge by either party, which will be determined by the Court.

 In order to enhance the accuracy of the actuarial calculations used in the Stipulation of Settlement, such calculations will not be performed until after it is determined with finality the identity of all retirees, and eligible spouses and dependents thereof, who will be in the Covered Group and what Plan of Benefits will be selected by each individual. Such election will be made at least ten (10) days prior to the Implementation Date.

 (D) The Plan of Benefits

 Subclass members will have the option of choosing between three different types of coverage:

 1. The Comprehensive Settlement Plan of Benefits

 Under the first option Subclass members, provided that they can establish insurability, can elect a form of comprehensive medical coverage that contains a prescription drug plan (the "Comprehensive Settlement Plan of Benefits"). This coverage will use as its base the plan of benefits received by individuals who retired under the Conference Board Collective Bargaining Agreements in effect on January 1, 1991 for the Great Neck, New York facility with certain specific modifications, which were set forth in a chart attached to the Notice sent to Subclass members, and have been incorporated by reference into the Stipulation of Settlement.

 2. The HMO Plan of Benefits

 Subclass members who are currently covered by HMO's will continue to receive the same plan of benefits offered by the HMO in which they are currently enrolled, on the same basis as currently exists, as long as that HMO continues to offer a plan of benefits to those retirees (the "HMO Plan of Benefits"). Each individual currently enrolled in a HMO will retain the option, during the annual enrollment period, to change his or her coverage to receive the Comprehensive Settlement Plan of Benefits. Each participant who wishes to remain in a HMO will make the agreed upon premium contributions, as described below, plus any difference above the per-participant cost of the Comprehensive Settlement Plan of Benefits. In the event the individual moves outside a HMO's service area or a HMO's plan of coverage is terminated, the individual will be offered the opportunity of choosing the Comprehensive Settlement Plan of Benefits as described above or the Settlement Drug-Only Option described infra. This is a one-time option and once an individual switches to the Comprehensive Settlement Plan of Benefits or the Settlement Drug-Only Option he or she cannot thereafter switch to a HMO.

 3. The Settlement Drug-Only Option

 Subclass members may choose a plan that provides only prescription drug coverage without any other type of benefits (the "Settlement Drug-Only Option"). These retirees must make this election at least ten days prior to the Implementation Date so that accurate actuarial calculations, which could be affected by levels of participation, can be made. A retiree who elects the Settlement Drug-Only Option will not be permitted to change this election in the future. Further, if elected, this option must apply to the retiree and each eligible spouse and dependent. Persons who elect the Comprehensive Settlement Plan of Benefits will be afforded subsequent windows on every five-year anniversary of the Implementation Date to change their election to the Settlement Drug-Only Option.

 Any Subclass member who chooses the Settlement Drug-Only Option will pay $ 7.50 per month per covered participant in 1994. This amount will be adjusted in future years by the National Bureau of Labor Statistics published medical component of the Consumer Price Index, measured as of July 1, 1994 and each subsequent July 1. Any adjustment which results from any such measurement will be implemented on January 1 following the measurement.

 (E) Retire Contributions

 1. Retiree contributions for the Comprehensive Settlement Plan of Benefits defined above will be made as follows:

 (a) All pre-65 retirees and their spouses and dependents will pay $ 100 per month per covered participant until the participant becomes age 65. This monthly payment is per covered participant, but is subject to a contribution ceiling whereby no retiree with a spouse and more than one other dependent enrolled in the Plan will have to pay more than $ 300 per month.

 (b) All post-65 retirees who retired during the term of the 1979 Collective Bargaining Agreements among Unisys and the IUE and IBEW Local 3 will pay $ 25 per month per covered participant in 1994 and $ 40 per month per covered participant thereafter, subject to the 20% Maximum Percentage discussed and defined below, effective January 1, 2004 or sooner in the event that Trigger One, as discussed infra, is activated. These monthly payments are per covered participant at the applicable rate.

  (c) All post-65 retirees who retired after the expiration of the 1979 Collective Bargaining Agreements will pay $ 25 per month in 1994, $ 40 per month in 1995 and $ 50 per month thereafter. This is also a per-covered-participant rate and is subject to the 20% Maximum Percentage discussed below, effective January 1, 2004 or sooner in the event that Trigger One, as discussed infra, is activated. (d) In chart form, the monthly contributions of retirees (per covered participant) will be: 1994 1995 1996 1997 1998-2003 Age 65 and Over $ 25 $ 40** $ 50 $ 50 $ 50* Full Coverage with Prescription Drug Plan Pre-65 Full Coverage $ 100 *** $ 100 $ 100 $ 100 $ 100 with Prescription Drug Pan Prescription Drug $ 7.50 Only Plan (over and under 65) For 1995 and beyond, the $ 7.50 cost will be adjusted by the health care component of the Consumer Price Index.

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© 1992-2004 VersusLaw Inc.



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