EXHIBIT A
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FRONTIER UNION 401(K) SAVINGS PLAN
INTRODUCTION
This plan was established, effective (except as otherwise set forth herein)
as of June 29, 2001, the date Citizens Communications Company acquired the stock
of the Participating Employers listed on Appendix A.
The Plan is intended to qualify as a profit sharing plan pursuant to the
provisions of Code Sections 401(a) and 401(k).
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Article I
Definitions
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1.1 "Affiliated Company" means the Company and
(a) any other company which is included within a "controlled group of
corporations" within which the Company is also included, as determined
under Section 1563 of the Code without regard to Subsections (a)(4)
and (e)(3)(C) of said Section 1563; or
(b) any other trades or businesses (whether or not incorporated) with
which the Company is affiliated which, based on principles similar to
those defining a "controlled group of corporations" for the purposes
of (a) above, are under common control; or
(c) any other entities required to be aggregated with the Company pursuant
to Code Section 414.
1.2 "Basic Contributions" means a Participant's contributions to the Plan in
any whole percentage of Compensation up to a maximum of 3% of Compensation
in accordance with Section 3.2 of the Plan and, where applicable, Appendix
B.
1.3 "Beneficiary" means the Participant's surviving spouse or, in the event
there is no surviving spouse or the surviving spouse elects in writing not
to receive any death benefits under the Plan, the person or persons
(including a trust) designated by a Participant to receive any death
benefit which shall be payable under the Plan.
1.4 "Board" means the Board of Directors of the Company or any committee of the
Board of Directors authorized to act on behalf of the Board. Any such Board
committee shall be composed of at least three members of the Board of
Directors. As used in the Plan the term "Board-appointed committee" means
the Committee and any other committee appointed by the Board which need not
be comprised of at least three Board members but may include or consist
entirely of management personnel who are not members of the Board.
1.5 "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any regulations issued pursuant thereto.
1.6 "Committee" means the Retirement Committee of the Company.
1.7 "Company" means Citizens Communications Company, a Delaware corporation,
its predecessor or its successor. The Company is the sponsor of the Plan.
1.8 "Company Stock" means Citizens Communications Company common stock.
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1.9 "Compensation" means the total of a Participant's basic salary or wages,
bonuses, overtime and commissions paid by a Participating Employer for
services actually rendered by the Participant to a Participating Employer.
A Participant's Compensation shall not include imputed long term disability
premiums, pension payments or any other form of extra remuneration of
whatever nature except bonuses and commissions included under the preceding
sentence, nor any annual remuneration in excess of the limitation set forth
in Section 401(a)(17) of the Code. For any Participant receiving disability
pay from a Participating Employer during a payroll period (other than a
disability pension), the term "Compensation" means such disability pay. For
any Employee who is making Pre-Tax Contributions pursuant to Section 3.7 of
the Plan, pre-tax contributions under the Company's or a Participating
Employer's cafeteria plan (Code Section 125) or pre-tax contributions under
the Company's or a Participating Employer's qualified transportation fringe
benefit program (Code Section 132(f)), the term Compensation shall be based
on his wages, salary, commissions and bonuses, all as defined above, prior
to any salary reduction. Notwithstanding the foregoing, if a particular
collective bargaining agreement requires a modification of the term
"Compensation" as set forth above, the modification shall be set forth in
the appropriate Schedule under Appendix B and shall be used with respect to
any Participant whose Plan participation is governed by such Schedule.
Notwithstanding any provision to the contrary, for purposes of the
contributions set forth in Article IV of the Plan, in no event shall a
Participant's Compensation include amounts paid prior to his or her
becoming a Participant in the Plan.
1.10 "Early Retirement Age" means age 55.
1.11 "Effective Date" means June 29, 2001.
1.12 "Election Period" means the period of time during which a Participant can
elect, with the consent of his spouse, to waive the Qualified Joint and
Survivor Annuity or the Qualified Pre-Retirement Survivor Annuity or can
elect to revoke such a waiver. In the case of a Qualified Joint and
Survivor Annuity, the Election Period is the 90 day period preceding the
annuity starting date. In the case of a Qualified Pre-Retirement Survivor
Annuity, the Election Period begins on the first day of the Plan Year in
which a Participant attains age 35 and ends on the date of the
Participant's death, provided that if a Participant terminates employment
prior to age 35, his Election Period shall begin on his termination date.
1.13 "Employee" means any individual who is employed by a Participating
Employer.
1.14 "Employer Fixed Contributions" means a contribution by a Participating
Employer as specified in Section 4.1 of the Plan and Appendix B. These
contributions are not contingent on the level of Participant contributions.
1.15 "Employer Matching Contributions" means the contributions of a
Participating Employer that are contingent upon a Participant's Basic
Contributions in an amount specified for the Participating Employer in
Appendix B.
1.16 "Employer Profit Sharing Contributions" means the contributions of a
Participating Employer that are not contingent on the level of Participant
contributions and are specified, if any, in Appendix B for each
Participating Employer.
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1.17 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations issued pursuant thereto.
1.18 "Excess Contributions" means, with respect to any Plan Year, the excess of:
(a) The aggregate amount of Employer contributions actually taken into
account in computing the ADP of Highly Compensated Employees for such
Plan Year, over
(b) The maximum amount of such contributions permitted by the ADP test
(determined by hypothetically reducing contributions made on behalf of
Highly Compensated Employees in order of the ADPs, beginning with the
highest of such percentages).
1.19 "Excess Aggregate Contributions" means, with respect to any Plan Year, the
excess of:
(a) The aggregate contribution percentage amounts taken into account in
computing the numerator of the contribution percentage actually made
on behalf of Highly Compensated Employees for such Plan Year, over
(b) The maximum contribution percentage amounts permitted by the ACP test
(determined by hypothetically reducing contributions made on behalf of
Highly Compensated Employees in order of their contribution
percentages beginning with the highest of such percentages).
Such determination shall be made after first determining excess
tax-deferred contributions pursuant to Section 4.1(l) of the Plan and
Excess Contributions pursuant to Section 1.18 of the Plan.
1.20 "Forfeiture" means that portion of a Participant's Restricted Employer
Contribution Account which is forfeited before full vesting.
1.21 "Global Stock" means Global Crossing, Ltd. common stock.
1.22 "Global Stock Account" means the account established under the Plan to hold
Global Stock held by a Participant under the Prior Plan on the day before
the Effective Date. No additional Global Stock may be contributed to the
Global Stock Account on or after the Effective Date.
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1.23 "Highly Compensated Employee" means, any Employee who:
(a) was a "5% owner", as defined in Section 416(i)(1) of the Code, during
the current or preceding Plan Year; or
(b) received Compensation from a Participating Employer or an Affiliated
Company which, in total, exceeded $85,000 for the preceding Plan Year,
and, if the Company so elects, was in the top-paid group for the
preceding Plan Year.
The $85,000 dollar amount shall be adjusted for cost of living
increases as provided under the Code. The determination of whether an
Employee is a Highly Compensated Employee will be made in accordance
with Code Section 414(q) and the rules and regulations promulgated
thereunder.
1.24 "Investment Manager" means any individual or corporation selected by the
Board or by any Board-appointed committee having the authority to select
such person who (i) is registered as an investment adviser under the
Investment Advisers Act of 1940; (ii) is a bank, as defined in that Act; or
(iii) is an insurance company qualified to manage, acquire or dispose of
plan assets under the laws of more than one state and each individual or
corporation acknowledges in writing that he or the corporation, as the case
may be, is a fiduciary with respect to the Plan.
1.25 "Leased Employee" means any person who is not otherwise an Employee and
who, pursuant to an agreement between a Participating Employer and any
other person or organization, has performed services for the Participating
Employer, or for the Participating Employer and related persons (determined
in accordance with Section 414(n)(6) of the Code), on a basis whereby if
such person were an Employee, such person would have become an eligible
Employee hereunder either in the initial eligibility computation period or
any Plan Year thereafter, and such services are performed under the primary
direction or control of the Participating Employer, provided, that a person
shall not be treated as a Leased Employee for any Plan Year if, during such
Plan Year: (i) such person is covered by a money purchase pension plan
described in Section 414(n)(5)(B) of the Code, and (ii) not more than 20%
of the Employees who are not Highly Compensated Employees are Leased
Employees. Once a person is classified as a Leased Employee, such person
shall remain a Leased Employee for every Plan Year for which the person
completes at least 1000 Hours of Service.
1.26 "Non-Highly Compensated Employee" means an Employee who is not a Highly
Compensated Employee.
1.27 "Normal Retirement Age" means age 65.
1.28 "Participant" means an Employee who meets the eligibility requirements set
forth in Section 2.1 of the Plan.
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1.29 "Participant Account" means, as of any Valuation Date, the then amount of a
Participant's contributions and the Participating Employer's contributions
allocated on behalf of the Participant adjusted to reflect any investment
earnings and losses attributable to such contributions, withdrawals and
distributions, at the then market value of the Trust. Where appropriate, a
Participant Account shall have the following subaccounts: a Restricted
Employer Contribution Account to record Employer contributions that must be
invested in Company Stock, an Unrestricted Employer Contribution Account to
record Employer contributions which are no longer restricted to investment
in Company Stock, a Participant Pre-Tax Contribution Account to record
Pre-Tax Contributions, a Participant Post-Tax Contribution Account to
record Post-Tax Contributions and a Rollover Account to record rollover
contributions. Participant Account shall also include the Global Stock
Account established under the Plan. Earnings associated with each type of
contribution shall be allocated to the account to which the associated
contributions are allocated.
1.30 "Participating Employer" means each Affiliated Company that has adopted the
Plan for the benefit of its eligible Employees. Participating Employers are
listed in Appendix A.
1.31 "Plan" means this Frontier Union 401(k) Savings Plan as set forth herein
and as it may be amended from time to time.
1.32 "Plan Year" means the calendar year. The Plan Year shall be the limitation
year as this term is used in ERISA.
1.33 "Post-Tax Contributions" means a Participant's contributions which are
non-deductible for income tax purposes at the time they are made.
1.34 "Pre-Tax Contributions" means a Participant's contributions which are not
included in his income for income tax purposes at the time they are made.
1.35 "Prior Plan" means the Frontier Group Bargaining Unit Employees' Retirement
Savings Plan as in effect on June 28, 2001.
1.36 "Qualified Joint and Survivor Annuity" means an annuity for the life of the
Participant with a survivor annuity for the life of the Participant's
spouse which is 50% of the amount which is payable during the joint lives
of the Participant and the Participant's spouse and which is purchased from
an insurance company with the Participant's Account balance.
1.37 "Qualified Pre-Retirement Survivor Annuity" means a life annuity payable to
the surviving spouse of a deceased Participant which is purchased from an
insurance company with the Participant's Account balance.
1.38 "Restricted Stock" means Company Stock that has been allocated to a
Participant's Restricted Employer Contribution Account for a period of less
than five years from the date of the initial allocation.
1.39 "Supplemental Contributions" means a Participant's contributions to the
Plan in excess of his Basic Contributions in accordance with Section 3.2 of
the Plan.
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1.40 "Trust" or "Trust Fund" means the trust established to hold assets in
accordance with the Plan and consists of such investment options as from
time to time may be designated by the Board or a Board-appointed committee.
1.41 "Trust Agreement" means any agreement entered into between the Company and
any Trustee to carry out the purposes of the Plan, which agreement shall
constitute a part of the Plan.
1.42 "Trustee" means any bank or trust company selected by the Board or a
Board-appointed committee to serve as Trustee pursuant to the provisions of
the Trust Agreement.
1.43 "Valuation Date" means the last day the Trust may have been valued provided
that the Trust shall be valued no less frequently than on the last day of
each calendar quarter.
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Article II
Eligibility
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2.1 Eligibility Requirements. An Employee who fits within the eligible class
set forth in Appendix B for his Participating Employer and who is not
excluded pursuant to the following sentence is eligible to become a
Participant in accordance with the provisions set forth in Appendix B. For
purposes of applying any minimum service requirement under such provisions,
an Employee's credited service under the Prior Plan shall be credited
towards any such service requirement. An Employee is not eligible to
participate in the Plan if (1) the Employee is a temporary or summer
employee; (2) the Employee is a Leased Employee; (3) the Employee is
eligible to be an active participant in the Citizens 401(k) Savings Plan;
or (4) the Employee is an independent contractor (or a person who is
treated by a Participating Employer as an independent contractor, or who is
otherwise classified as not being an Employee of the Participating
Employer, irrespective of any subsequent reclassification of such
individual as a common-law employee of the Participating Employer by the
Company, the Participating Employer, an agency or a court.
In the discretion of the Committee, an eligible Employee of a Participating
Employer that has adopted the Plan who is transferred to an Affiliated
Company that has not adopted the Plan may participate in the Plan under
such arrangements as the Committee may prescribe.
2.2 Reemployment. If an Employee terminates employment and is subsequently
reemployed by a Participating Employer, he will be eligible to begin
participation in the Plan on the first day of the month following
completion of one month of service measured from his reemployment date. All
service of such an Employee with a Participating Employer or any Affiliated
Company prior to termination of employment shall be credited to such
Employee for purposes of the vesting provisions of Section 7.2 of the Plan.
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Article III
Participation and Participant Contributions
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3.1 Participation. An eligible Employee may become a Participant by filing a
written application with the Committee, or by telephonic or electronic
processing, as the Committee shall determine. The application shall
indicate the amount of his initial Basic and Supplemental Contributions and
whether he intends to have such Contributions made as Post-Tax
Contributions or as Pre-Tax Contributions. Except as the Committee in its
discretion may otherwise determine, participation will commence with the
first payroll period as is administratively practicable to meet following
the date such election is received by the Committee or its designee.
Participation shall thereafter continue until all amounts in the
Participant's Account have been distributed even though current
contributions may be suspended.
3.2 Amount of Contributions. Contributions may be made by any Participant who
has enough Compensation during any payroll period to make a contribution by
payroll deduction. Each Participant may contribute, at his option, Basic
Contributions in any whole percentage of his Compensation during a payroll
period with a minimum contribution of 1% of Compensation and a maximum
contribution of 3% of Compensation. If a Participant is making Basic
Contributions at the maximum rate of 3% of Compensation, he may also elect
to make Supplemental Contributions of any whole percentage from 1% to 13%
of his Compensation during a payroll period. All Participant contributions
will be in cash in the form of Employee-authorized payroll deductions on
either a post-tax basis or, pursuant to Section 3.7 of the Plan, on a
pre-tax basis. Notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to qualified
military service as defined in Section 414(u)(5) of the Code will be
provided in accordance with Section 414(u) of the Code.
3.3 Change in Amount of Contributions. The percentage, or percentages if more
than one, of Compensation designated by the Participant as his contribution
rate will continue in effect, notwithstanding any change in his
Compensation, until he elects to change such percentage. A Participant, by
filing a written election form furnished by the Committee, or by telephonic
or electronic processing, as the Committee shall determine, may change his
percentage of contributions as frequently during the Plan Year and pursuant
to such rules as the Committee may prescribe. Any such change will become
effective on the first payroll period as is administratively practicable to
meet after the date such election is received by the Committee or its
designee. If a Participant's total contribution rate is in excess of 3% of
Compensation, any such change will first be applied to adjust the amount of
his Supplemental Contributions and then, if necessary, to adjust the amount
of his Basic Contributions. If a Participant's total contribution rate is
less than 3% of Compensation, any such change will first be applied to
adjust the amount of his Basic Contributions and then, if necessary, to
provide for Supplemental Contributions.
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3.4 Suspension of Participant Contributions. A Participant, by filing a written
election with the Committee, or by telephonic or electronic processing, as
the Committee shall determine, may elect to suspend either his Basic or
Supplemental Contributions, or both, at any time. Any such suspension will
become effective with the first payroll period as is administratively
practicable to meet after the date such election is received by the
Committee or its designee. A suspension of all Basic Contributions will
automatically suspend all Supplemental Contributions. In order to resume
making contributions, the Participant must follow the procedure outlined in
Section 3.1 of the Plan as though he were a new Participant. A Participant
will not be permitted to make up suspended contributions. Participant
contributions will be suspended automatically for any payroll period in
which the Participant is not in receipt of Compensation. Such automatic
suspension shall be lifted beginning with the next payroll period that the
Participant receives Compensation. The suspension of Supplementa1
Contributions, in the absence of an election to the contrary, will not
affect Basic Contributions.
3.5 Remittance of Participant Contributions to the Trustee. Participant
contributions will be remitted as soon as administratively practicable to
the Trustee.
3.6 Termination of Participant Contributions. A Participant's contributions
will terminate effective with the payroll period that ends or includes the
date the Participant terminates employment for any reason, including
retirement or death.
3.7 Pre-Tax Contributions Option. A Participant shall have the option of having
his Basic and Supplemental Contributions to the Plan made on a tax-deferred
basis pursuant to the terms of this Section. Basic and Supplemental Pre-Tax
Contributions may be made solely pursuant to a salary reduction agreement
between an individual Participant and his Employer. Under this agreement,
the Participant agrees to reduce his Compensation by a specified percentage
(as outlined in Section 3.2 of the Plan) and the Participating Employer
agrees to contribute to the Plan the identical amount on behalf of the
Participant. The agreement shall be in such form and subject to such rules
as the Committee may prescribe. The Committee, in its sole discretion, may
limit the number of salary reduction agreements a Participant may make
during a Plan Year, except that an agreement may be terminated at any time,
in which event the Participant shall specify whether all of his
contributions shall cease or continue to be made as Post-Tax Contributions.
3.8 Rollovers to the Plan. Notwithstanding the limitations on contributions set
forth in the preceding Sections of this Article III, any active Employee
may make rollover contributions (as defined in Sections 402(c)(4),
403(a)(4) and 408(d)(3) of the Code) to the extent the Committee in its
discretion may permit and in accordance with rules it shall establish. In
addition, the Committee in its sole discretion may arrange for a
Participant's account in any other tax-qualified plan to be transferred
directly to the Plan. No rollover contribution or transfer shall be
permitted if it could adversely affect the tax qualification of the Plan.
All rollovers and transfers to the Plan shall be credited to a
Participant's Rollover Account.
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Article IV
Participating Employer Contributions
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4.1 Employer Contributions. Subject to the limitations of Section 4.4 of the
Plan, each Participating Employer shall contribute Employer Fixed
Contributions, Employer Matching Contributions or Employer Profit Sharing
Contributions as specified in Appendix B for such Participating Employer.
All Participating Employer contributions shall be made in cash or in
Company Stock, and will be invested in accordance with Article V.
4.2 Remittance of Employer Contributions. Employer Matching Contributions shall
be remitted to the Trustee on a regular and periodic basis following the
payroll period to which they relate but in no event shall they be made less
frequently than quarterly. Employer Profit Sharing Contributions for a Plan
Year shall be remitted to the Trustee by a Participating Employer no later
than the date the Participating Employer's tax return is due for the year
within which ends the Plan Year to which the contributions relate.
4.3 Effect of Suspension of Participant Contributions on Employer
Contributions. During any period in which a Participant's Basic
Contributions are suspended, Employer Matching Contributions on his behalf
will also be suspended.
4.4 Maximum Contributions. Notwithstanding the contribution levels specified in
Article III and the preceding Sections of this Article IV, no contributions
will be permitted in excess of the limits set forth below:
1. Code Section 402(g) Limits. A Participant's Pre-Tax Contributions to
the Plan and any tax-deferred contributions under any other cash or
deferred arrangement in which he may participate shall not exceed
$10,500 (adjusted for cost of living increases as provided under the
Code) in any taxable year of the Participant. To meet this limit, no
contribution to the Plan in excess of $10,500 (as adjusted) shall be
accepted on behalf of any Participant during a calendar year. If a
Participant participates in more than one plan, he shall notify the
Committee of any excess contribution in a calendar year by March 1 of
the following year. The Committee shall then cause the portion of such
excess allocated to the Plan to be returned to the Participant by
April 15 following the calendar year to which the excess contribution
relates.
2. Code Section 401(k) Limits. The following provisions of this
Subsection 2 shall not apply in any Plan Year during which the Plan
qualifies as a safe harbor plan under Section 401(k)(12) of the Code.
The Actual Deferral Percentage, or ADP, for Participants who are
Highly Compensated Employees for each Plan Year and the ADP for
Participants who are Non-Highly Compensated Employees for the same
Plan Year must satisfy one of the following tests:
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(a) The ADP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ADP for Participants who are
Non-Highly Compensated Employees for the same Plan Year
multiplied by 1.25; or
(b) The ADP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ADP for Participants who are
Non-Highly Compensated Employees for the same Plan Year
multiplied by 2.0, provided that the ADP for Participants who are
Highly Compensated Employees does not exceed the ADP for
Participants who are Non-Highly Compensated Employees by more
than two percentage points.
In applying these tests, the ADP for the Highly Compensated Employees
for a Plan Year shall be the average of the percentages, calculated
separately, for each eligible Employee in the group, obtained by
dividing the sum of the Employee's tax-deferred contributions pursuant
to Section 3.2 of the Plan by the Employee's Compensation for the Plan
Year. The ADP for the Non-Highly Compensated Employees for a Plan Year
shall be calculated in the same manner as for the Highly Compensated
Employees, except that tax-deferred contributions and Compensation
used in calculating the percentages shall be those of the preceding
Plan Year. If an Employee was not eligible to participate for the
entire Plan Year, the Compensation taken into account for purposes of
these tests shall be his Compensation for the period he was eligible
to participate.
The ADP for any Participant who is a Highly Compensated Employee for
the Plan Year and who is eligible to have elective deferrals (and
qualified non-elective contributions, if treated as elective deferrals
for purposes of the ADP test) allocated to his accounts under two or
more arrangements described in Section 401(k) of the Code, that are
maintained by a Participating Employer, shall be determined as if such
elective deferrals (and, if applicable, such qualified non-elective
contributions) were made under a single arrangement. If a Highly
Compensated Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or deferred
arrangements ending with or within the same calendar year shall be
treated as a single arrangement.
For purposes of the ADP test, compensation means compensation as
defined in Section 414(s) of the Code. The period during which
compensation is determined for a Plan Year shall be either the Plan
Year or the calendar year ending with or within the Plan Year as
determined by the Committee. The period selected shall be applied
uniformly to all eligible Employees.
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In the event that the Plan satisfies the requirements of Sections
401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one
or more other plans, or if one or more other plans satisfy the
requirements of such Sections of the Code only if aggregated with the
Plan, then this Section shall be applied by determining the ADP of
Employees as if all such plans were a single plan. Plans may be
aggregated in order to satisfy Section 40l(k) of the Code only if they
have the same Plan Year.
For purposes of determining the ADP test, elective deferrals and
qualified non-elective contributions must be made before the last day
of the 12-month period immediately following the Plan Year to which
the contributions relate.
The Company shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of qualified non-elective
contributions used in such test.
The determination and treatment of the ADP amounts of any Participant
shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury, including, without limitation, Internal
Revenue Service Notice 98-1.
3. Code Section 401(m) Limits. The following provisions of this
Subsection 3 shall not apply in any Plan Year in which the Plan
qualifies as a safe harbor plan under Section 401(m)(11) of the Code.
The Average Contribution Percentage, or ACP, for Participants who are
Highly Compensated Employees for each Plan Year and the ACP for
Participants who are Non-Highly Compensated Employees for the same
Plan Year must satisfy one of the following tests:
(a) The ACP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ACP for Participants who are
Non-Highly Compensated Employees for the same Plan Year
multiplied by 1.25; or
(b) The ACP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ACP for Participants who are
Non-Highly Compensated Employees for the same Plan Year
multiplied by two, provided that the ACP for Participants who are
Highly Compensated Employees does not exceed the ACP for
Participants who are Non-Highly Compensated Employees by more
than two percentage points.
In applying these tests, the ACP for the Highly Compensated Employees
for a Plan Year shall be the average of the percentages, calculated
separately, for each eligible Employee in the group, obtained by
dividing the sum of the Employee's Post-Tax Contributions if
applicable under Section 3.2 of the Plan and the Employer's Matching
Contributions under Section 4.1 of the Plan by the Employee's
Compensation for the Plan Year. The ACP for the Non-Highly Compensated
Employees for a Plan Year shall be calculated in the same manner as
for the Highly Compensated Employees, except that Post-Tax
Contributions, Employer Matching Contributions and Compensation used
in calculating the percentages shall be those of the preceding Plan
Year. If an Employee was not eligible to participate for the entire
Plan Year, the Compensation taken into account for purposes of these
tests shall be his Compensation for the period he was eligible to
participate.
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If one or more Highly Compensated Employees participate in both a cash
or deferred arrangement as defined in Section 401(k) of the Code and a
plan subject to the ACP test maintained by a Participating Employer
and the sum of the ADP and ACP of those Highly Compensated Employees
subject to either or both tests exceeds the aggregate limit, then the
ADP of those Highly Compensated Employees who also participate in the
plan subject to the ACP test will be reduced (beginning with the
Highly Compensated Employee whose ADP is the highest) so that the
limit is not exceeded. The amount by which each Highly Compensated
Employee's ADP is reduced shall be treated as an Excess Contribution.
If reduction of the ADPs of Highly Compensated Employees fails to
result in the Plan's satisfying the aggregate limit, then the ACP of
those Highly Compensated Employees who also participate in the cash or
deferred arrangement will next be reduced (beginning with the Highly
Compensated Employee whose ACP is the highest) so that the limit is
not exceeded. The amount by which each Highly Compensated Employee's
contribution percentage amounts is reduced shall be treated as an
Excess Aggregate Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections required to
meet the ADP and ACP tests. Multiple use does not occur if both the
ADP and ACP of the Highly Compensated Employees does not exceed 1.25
multiplied by the ADP and ACP of the Non-Highly Compensated Employees.
For purposes of this Section, the contribution percentage for any
Participant who is a Highly Compensated Employee and who is eligible
to have contribution percentage amounts allocated to his account under
two or more plans described in Section 401(a) of the Code, or
arrangements described in Section 401(k) of the Code that are
maintained by a Participating Employer, shall be determined as if the
total of such contribution percentage amounts was made under each
plan. If a Highly Compensated Employee participates in two or more
cash or deferred arrangements that have different Plan Years, all cash
or deferred arrangements ending with or within the same calendar year
shall be treated as a single arrangement.
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In the event that the Plan satisfies the requirements of Sections
401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the
requirements of such Sections of the Code only if aggregated with the
Plan, then this Section shall be applied by determining the
contribution percentages of Employees as if all such plans were a
single plan. Plans may be aggregated in order to satisfy Section
401(m) of the Code only if they have the same Plan Year.
For purposes of determining the contribution percentage test, matching
contributions and qualified non-elective contributions will be
considered made for a Plan Year if made no later than the end of the
12-month period beginning on the day after the close of the Plan Year.
The Company shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of qualified non-elective
contributions used in such test.
The Committee shall have the responsibility for monitoring compliance
with this test and shall have the power to take any steps it deems
appropriate to ensure compliance, including limiting the amount of
salary reduction permitted by the Highly Compensated Employees or
requiring that the contributions for the Highly Compensated Employees
be delayed or held in escrow before being paid over to the Trustee
until such time as the Committee determines that contributions can be
made on behalf of the Highly Compensated, Employees without violating
the requirements of Code Section 401(k). Within two and one-half
months following the end of a Plan Year the Committee shall distribute
such contributions (and earnings attributable thereto) as may be in
excess of the amounts required to satisfy the special
nondiscrimination test under this Section, or shall make such
additional contributions under Sections 3.4 and 3.5 of the Plan as
necessary to satisfy the test.
The determination and treatment of the contribution percentage of any
Participant shall satisfy such other requirements as may be prescribed
by the Secretary of the Treasury, including, without limitation,
Internal Revenue Service Notice 98-1.
4. Distribution of Excess Contributions. Notwithstanding any other
provision of the Plan, Excess Contributions, plus any income and minus
any loss allocable thereto, shall be distributed no later than the
last day of each Plan Year to Participants to whose accounts such
Excess Contributions were allocated for the preceding Plan Year. If
such excess amounts are distributed more than two and one-half months
after the last day of the Plan Year in which such excess amounts
arose, a 10% excise tax will be imposed on the Participating Employer
maintaining the Plan with respect to such amounts. Excess
Contributions are allocated to Highly Compensated Employees with the
largest amount of Employer Contributions taken into account in
calculating the ADP test for the year in which the excess arose,
beginning with the Highly Compensated Employee with the largest amount
of such Employer contributions and continuing in descending order
until all the Excess Contributions have been allocated. For purposes
of the preceding sentence, the "largest amount" is determined after
distribution of any Excess Contributions. Excess Contributions shall
be treated as annual additions under the Plan.
-15-
Excess Contributions shall be adjusted for any income or loss up to
the date of distribution. The income or loss allocable to Excess
Contributions is the sum of: (1) income or loss allocable to the
Participant's elective deferral account (and, if applicable, the
qualified non-elective contribution account) for the Plan Year
multiplied by a fraction, the numerator of which is such Participant's
Excess Contributions for the year and the denominator of which is the
Participant's account balance attributable to elective deferrals (and
qualified non-elective contributions, if any of such contributions are
included in the ADP test) without regard to any income or loss
occurring during such Plan Year; and (2) 10% of the amount determined
under (1) multiplied by the number of whole calendar months between
the end of the Plan Year and the date of distribution, counting the
month of distribution if distribution occurs after the 15th of such
month.
Excess Contributions shall be distributed from the Participant's
elective deferral account (if applicable) in proportion to the
Participant's elective deferrals (to the extent used in the ADP test)
for the Plan Year. Excess Contributions shall be distributed from the
Participant's qualified non-elective contribution account only to the
extent that such Excess Contributions exceed the balance in the
Participant's elective deferral account.
5. Distribution of Excess Aggregate Contributions. Notwithstanding any
other provision of the Plan, Excess Aggregate Contributions, plus any
income and minus any loss allocable thereto, shall be forfeited, if
forfeitable, or if not forfeitable, distributed, no later than the
last day of each Plan Year to Participants to whose accounts such
Excess Aggregate Contributions were allocated for the preceding Plan
Year. If such Excess Aggregate Contributions are distributed more than
two and one-half months after the last day of the Plan Year in which
such excess amounts arose, a 10% excise tax will be imposed on the
Participating Employer maintaining the Plan with respect to those
amounts. Excess Aggregate Contributions are allocated to the Highly
Compensated Employees with the largest contribution percentage amounts
taken into account in calculating the ACP test for the year in which
the excess arose, beginning with the Highly Compensated Employee with
the largest amount of such contribution percentage amounts and
continuing in descending order until all of the Excess Aggregate
Contributions have been allocated. For purposes of the preceding
sentence, the "largest amount" is determined after distribution of any
Excess Aggregate Contributions. Excess Aggregate Contributions shall
be treated as annual additions under the Plan.
-16-
Excess Aggregate Contributions shall be adjusted for any income or
loss up to the date of distribution. The income or loss allocable to
Excess Aggregate Contributions is the sum of: (1) income or loss
allocable to the Participant's matching contribution account (if any,
and if all amounts therein are not used in the ADP test) and, if
applicable, qualified non-elective contribution account and elective
deferral account for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Aggregate
Contributions for the year and the denominator of which is the
Participant's account balance attributable to contribution percentage
amounts without regard to any income or loss occurring during such
Plan Year; and (2) 10% of the amount determined under (1) multiplied
by the number of whole calendar months between the end of the Plan
Year and the date of distribution, counting the month of distribution
if distribution occurs after the 15th of such month.
Forfeitures of Excess Aggregate Contributions may either be
reallocated to the accounts of Non-Highly Compensated Employees or
applied to reduce Employer contributions, as elected by the Company.
Excess Aggregate Contributions shall be forfeited, if forfeitable, or
distributed on a pro-rata basis from the Participant's matching
contribution account (and, if applicable, the Participant's qualified
non-elective contribution account or elective deferral account, or
both).
6. Code Section 415 Limits. Pursuant to Code Section 415, the total of
the Employee and Participating Employer contributions on behalf of a
Participant for each Plan Year (his "annual additions") shall not
exceed the lesser of $35,000 (or such larger amounts as reflect cost
of living increases pursuant to Section 415 of the Code) or 25% of the
Participant's total compensation for such Plan Year. For purposes of
this Section, the term "annual additions" means the total each Plan
Year of a Participating Employer's contributions, the Employee's
contributions and Forfeitures. Rollover contributions and loan
repayments are not annual additions for this purpose. For purposes of
applying these limitations, the term "compensation" shall have the
meaning ascribed to it in regulations under Code Section 415. In
general, these regulations define compensation to mean an Employee's
W-2 compensation from a Participating Employer but excluding income
derived from the exercise of stock options, from the disqualification
of an incentive stock option, from restricted stock or from income
imputed from the payment of life insurance premiums, and shall
include, any elective deferral (as defined in Code Section 402(g)(3)),
and any amount which is contributed or deferred by the Participating
Employer at the election of the Participant and which is not
includible in the gross income of the Participant by reason of Code
Sections 125, 132 or 457.
-17-
In addition to the amounts calculated under the Plan, annual additions
shall include such amounts, similarly calculated, that are contributed
with respect to the Participant to any other defined contribution plan
maintained by a Participating Employer or by any Affiliated Company
and Participating Employer contributions to an individual medical
account as described in Code Sections 415(1) and 419A(d)(2). In
determining whether a corporation is an Affiliated Company for this
purpose only, the percentage control test set forth in Section 1563(a)
of the Code shall be a 50% test in place of the 80% test each place
the 80% test appears in said Code Section.
If Plan contributions exceed the limits of this Section, first the
Participant's contributions shall be reduced, as necessary, to
eliminate the excess, in the following order of priority: Post-Tax
Supplemental Contributions; Post-Tax Basic Contributions; Pre-Tax
Supplemental Contributions; and Pre-Tax Basic Contributions. Post-Tax
and Pre-Tax Contributions by a Participant which cause the excess,
plus the earnings attributable to such contributions may be returned
to the Participant in the event the excess is caused by a reasonable
error in estimating a Participant's annual compensation or any other
cause which is acceptable under Treasury Regulation Section
1.415-6(b)(6). If an excess still exists, the Participating Employer's
contribution shall be reduced as necessary.
-18-
Article V
Investment of Contributions
---------------------------
5.1 Investment Funds. The Trustee shall establish a Company Stock fund and such
other investment funds as shall be designated from time to time by any
Boardappointed committee authorized to select investment funds.
Notwithstanding any other provision of the Plan or Trust Agreement, the
assets of the Plan may be invested in any common or collective investment
fund or funds, including without limitation, group trusts, which are
maintained by a bank or trust company supervised by a state or federal
agency, notwithstanding that the bank or trust company is the Trustee,
Investment Manager, or otherwise a party-in-interest of the Plan.
5.2 Investment of Employer Contributions. All Participating Employer
contributions and the earnings thereon shall be invested initially in
Company Stock. All Company Stock so invested shall remain in the Company
Stock fund and allocated to the Participant's Restricted Employer
Contribution Account until the fifth anniversary of the date of investment.
At the expiration of the five year period the Restricted Stock in a
Participant's Restricted Employer Contribution Account shall lose its
investment restriction and may be invested by the Participant pursuant to
Section 5.5 of the Plan and any rules established by the Committee
thereunder, in any other fund option or left in the Company Stock fund.
5.3 Investment of Participant Contributions. Each Participant will direct, at
the time he elects to become a Participant under the Plan, that his
Participant contributions be invested in one or more available fund options
in accordance with any rules the Committee in its discretion may establish.
In the event no election is made, all contributions will be invested in a
fixed income fund option designated by the Committee for this purpose.
5.4 Changing the Current Investment Election. A Participant's investment
election for his Participant contributions will continue in effect until
changed by the Participant. A Participant may change his current investment
election as to his future Participant contributions effective no later than
the first payroll period as is administratively practicable after the date
such election to change is received by the Committee or its designee. Such
changes may be made only as frequently as the Committee in its sole
discretion may permit and in accordance with any rules the Committee in its
discretion may establish.
5.5 Changing the Investment of Accumulated Contributions. A Participant may
change his investment election as to some or all of his entire Participant
Account balance except for the Restricted Employer Contribution Account.
Such changes may be elected only as frequently as the Committee in its sole
discretion may permit and in accordance with any rules the Committee in its
discretion may establish.
-19-
5.6 Voting Rights with Respect to Company Stock and Global Stock. Each
Participant shall have the right to vote all shares of Company Stock and of
Global Stock held in the Participant's Account. Each Participant shall also
have the right to direct the Trustee whether to tender such shares of
Company Stock or Global Stock in the event an offer is made by any person
other than the Company or Global Crossing, Ltd., respectively, to purchase
such shares. The Committee shall make any such arrangements with the
Trustee as may be appropriate to pass such voting or tender offer rights
through to a Participant. In the event a Participant fails to vote his
shares or fails to indicate his preference with respect to a tender offer,
the Trustee shall vote the Participant's shares or tender his shares in the
same proportions as those Plan Participants who did respond, cast their
votes or tendered their shares.
-20-
Article VI
Participant Accounts
--------------------
6.1 Individual Accounts. The Committee shall create and maintain (or direct to
be created and maintained) individual accounts as records for disclosing
the interest in the Trust of each Participant, former Participant and
Beneficiary. Such accounts shall record credits and charges in the manner
herein described. When appropriate, a Participant shall have six separate
accounts, a Restricted Employer Contribution Account, an Unrestricted
Employer Contribution Account, a Participant Pre-Tax Contribution Account,
a Participant Post-Tax Contribution Account, a Rollover Account and a
Global Stock Account. The maintenance of individual accounts is only for
accounting purposes, and a segregation of the assets of the Trust to each
account shall not be required.
6.2 Account Adjustments. Participant Accounts shall be adjusted as follows:
(a) Earnings: The earnings (including losses as well as gains) of the
Trust shall be allocated to the Participant Accounts of Participants
who have balances in their Accounts on each Valuation Date. The
allocation shall be made in the proportion that the amounts in each
Participant Account bear to the total amounts in all of the
Participant Accounts similarly invested. In determining the value of
Plan assets, each valuation shall be based on the fair market value of
assets in the Trust on the Valuation Date.
Notwithstanding the foregoing paragraph or any other provision of the
Plan, to the extent that Participants' Accounts are invested in mutual
funds or other assets for which daily pricing is available ("Daily
Pricing Media"), all amounts contributed to the Trust Fund will be
invested at the time of their actual receipt by the Daily Pricing
Media, and the balance of each Account shall reflect the results of
such daily pricing from the time of actual receipt until the time of
distribution. Investment elections and changes pursuant to Article V
shall be effective upon receipt by the Daily Pricing Media. References
elsewhere in the Plan to the investment of contributions "as of" a
date other than that described in this Section 6.2(a) shall apply only
to the extent, if any, that assets of the Trust Fund are not invested
in Daily Pricing Media.
(b) Participating Employer Contributions: If Daily Pricing Media is in
effect as described in Section 6.2(a) of the Plan, Employer Fixed,
Matching and Profit Sharing Contributions will be invested at the time
of actual receipt by the Daily Pricing Media. If Daily Pricing Media
is not in effect, as of the end of each month the Employer Fixed,
Matching and Profit Sharing Contributions on behalf of a Participant
during the month shall be allocated to the Participant's Restricted
Employer Contribution Account.
(c) Participant Contributions: If Daily Pricing Media is in effect as
described in Section 6.2 (a) of the Plan, a Participant's
contributions will be invested at the time of actual receipt by the
Daily Pricing Media. If Daily Pricing Media is not in effect, a
Participant's contributions made during a month shall be allocated to
his Pre-Tax or Post-Tax Contribution Account, as the case may be, as
of the end of each month.
-21-
(d) Distributions and Withdrawals: Distributions and withdrawals from a
Participant's Account shall be charged to the account as of the date
paid.
(e) Forfeitures: As of the end of each Plan Year, Forfeitures which have
become available during such Plan Year and are not required for
allocation under Section 6.2(f) of the Plan below shall be used to
reduce the Participating Employer's current or its next succeeding
contributions to the Plan.
(f) Forfeiture Account: In the event a Participant is entitled to receive
a vested benefit pursuant to the terms of Section 7.2 of the Plan but
later returns to the service of a Participating Employer prior to
incurring five consecutive one year breaks in service, the
nonforfeitable amount in his pre-termination Restricted Employer
Contribution Account plus the amount of his Forfeiture at the time of
termination shall be credited to a separate account as of the end of
the Plan Year when he returns. The restoration of the Forfeiture shall
be made, first, from any other Forfeitures arising in such Year prior
to disposition under Section 6.2(e) of the Plan and, if not available
from such Forfeitures, from Participating Employer contributions for
the Year. At any relevant time, the Participant's nonforfeitable
portion of the separate account will be equal to an amount ("X")
determined by the formula:
X = P (AB + (R x D)) - (R x D)
For purposes of applying this formula: P is the nonforfeitable
percentage at the relevant time; AB is the account balance at the
relevant time; D is the amount of the distribution; and R is the ratio
of the account balance at the relevant time to the account balance
after distribution.
The separate account need not be maintained after a Participant has
incurred five consecutive one year breaks in service after the
distribution of benefits to him. For purposes of this Section, a one
year break in service means a Plan Year during which an Employee
performs no services for a Participating Employer or an Affiliated
Company.
6.3 Statements to Participants. On a periodic basis, but no less frequently
than once during each Plan Year, the Committee (or its designee) will
provide each Participant with a statement showing his interests in the
Plan's various investment funds. The statement may show a Participant's
interest in the Company Stock and Global Stock funds in terms of the number
of shares of Company Stock and Global Stock, respectively, their dollar
value, or both. As an alternative to showing the dollar or stock value of
each account, the Committee in its discretion may express each
Participant's interest in terms of units.
-22-
6.4 Transfer of Accounts Among Related Company Plans. If a Participant ceases
to be within an eligible class of Participants under the Plan but becomes
covered by a substantially similar 401(k) plan sponsored by the Company or
any Affiliated Company, the Committee may in its sole discretion transfer
the Participant's Account to the other 401(k) plan without the
Participant's consent. Similarly, if a Participant in the Plan previously
participated in another such 401(k) plan, the Participant's accounts in the
other 401(k) plan may be transferred to the Plan without the Participant's
consent. In any event, the value of the Participant's accounts subject to
any such transfer shall be the same immediately following the transfer as
they were immediately prior to the transfer and any other benefits, rights
and features of the transferor plan which are "protected benefits" within
the meaning of Code Section 411(d)(6) shall continue to apply to the
transferred funds within the transferee plan. The timing and the mechanics
of any transfer shall be within the sole discretion of the Committee.
-23-
Article VII
Retirement or Other Termination of Employment
---------------------------------------------
7.1 Retirement or Disability. If a Participant's employment with a
Participating Employer is terminated (i) at or after his Normal Retirement
Age, (ii) at or after his Early Retirement Age, or (iii) at an earlier age
because of disability, the Participant's Account shall all be fully vested
and he shall be entitled to receive the entire balance of such account in
accordance with the provisions of Article IX. For purposes of this Section
7.1 the term "disability" means a physical or mental condition which, in
the judgment of the Committee, based on medical reports and other evidence
satisfactory to the Committee, will permanently prevent an Employee from
satisfactorily performing his usual duties for a Participating Employer and
which entitle the Employee to receive Social Security disability benefits.
If a Participant terminates employment, whether voluntarily or
involuntarily, prior to suffering a disability or prior to age 55, he shall
receive only that portion of his accounts that have become vested under
Section 7.2 of the Plan.
7.2 Vested Benefits. If a Participant terminates employment with a
Participating Employer before he reaches age 55 or suffers a disability, he
shall be entitled to receive the entire amount credited to his Participant
Pre-Tax Contribution Account, his Participant Post-Tax Contribution Account
and his Rollover Account plus the amount in his Restricted Employer
Contribution Account which has become vested. The vested amount in the
Restricted Employer Contribution Account shall be determined in accordance
with the provisions of Appendix B.
If any Plan amendment changes the Plan's vesting schedule, each Participant
in the Plan as of the date the new schedule is adopted shall have his
vested percentage determined under the vesting schedule which provides him
with the greatest vested benefit at any particular point in time.
Any Forfeiture that may arise by virtue of the application of this Section
shall be treated in accordance with the provisions of Section 6.2(e) of the
Plan.
Notwithstanding the foregoing, any benefit that is currently payable from
the Plan to a recipient who cannot be located despite reasonable efforts to
do so, shall be forfeited. All forfeitures with respect to lost
Participants and Beneficiaries shall be used to reduce a Participating
Employer's current or next succeeding contributions to the Plan. In the
event the lost Participant or Beneficiary subsequently makes a claim for
the forfeited benefits, the Participating Employer shall restore to the
Plan the forfeited benefit plus earnings based on returns from the Plan's
fixed income investment option from the date of forfeiture to the date the
forfeited benefit is restored.
-24-
Article VIII
Death
-----
8.1 Death While Actively Employed. If a Participant dies while actively
employed, the Participant's Beneficiary will be entitled to receive 100% of
the value of his Participant Account. This amount shall consist of the
account's value as of the distribution date.
8.2 Death After Retirement. If a Participant dies after retirement, any benefit
payable to the Participant's Beneficiary will depend upon the method that
has been employed to distribute the value of his Participant Account in
accordance with Article IX.
8.3 Beneficiary. If a Participant is married, his Beneficiary shall be his
spouse who shall be entitled to receive his remaining account balance, upon
the Participant's death. Upon the written election of the Participant, with
his spouse's written consent, a Participant may designate another
Beneficiary. This election and spousal consent must either be notarized or
be witnessed by a Plan representative and returned to the Committee. If
such election has been made or if the Participant is not married, the
Participant will designate the Beneficiary (along with alternate
Beneficiaries) to whom, in the event of his death, any benefit is payable
hereunder. Each Participant has the right, subject to the spousal consent
requirement noted above, to change any designation of Beneficiary. A
designation or change of Beneficiary must be in writing on forms supplied
by the Committee and any change of Beneficiary will not become effective
until such change of Beneficiary is filed with the Committee, whether or
not the Participant is alive at the time of such filing; provided, however,
that any such change will not be effective with respect to any payments
made by the Trustee in accordance with the Participant's last designation
and prior to the time such change was received by the Committee. The
interest of any Beneficiary who dies before the Participant will terminate
unless otherwise provided. If a Beneficiary is not validly designated, or
is not living or cannot be found at the date of payment, any amount payable
pursuant to the Plan will be paid to the spouse of the Participant if
living at the time of payment, otherwise in equal shares to such children
of the Participant as may be living at the time of payment; provided,
however, that if there is no surviving spouse or child at the time of
payment, such payment will be made to the estate of the Participant.
-25-
Article IX
Payment of Benefits
-------------------
9.1 Form of Payment. Except as may be restricted by Sections 9.2 and 9.3 of the
Plan, any Participant or, if the choice is his, any Beneficiary who is
entitled to receive benefits under Articles VII or VIII may elect to
receive the amount in the Participant Account in accordance with one of the
following elections, all of which shall be actuarial equivalents:
OPTION A: A lump sum.
OPTION B: Periodic payments of substantially equal amounts for a specified
number of years not in excess of 20. Such periodic payments shall be made
at least annually. In the event periodic payments are elected, the
Participant shall direct how the remaining balance of his account is to be
invested.
OPTION C: With respect to any accounts transferred to the Plan from the
Prior Plan, any option available under the other plan as set forth in
Appendix B, but only with respect to the portion of the transferred funds
from the Prior Plan as to which such option was available under the Prior
Plan. Amounts allocated to a Participant Account after the transfer date of
such funds shall be paid out only under Option A or Option B.
9.2 Option C Requirements for Married Participants. If a married Participant
elects an annuity under Option C, unless he makes a written election, as
outlined below, to the contrary his form of benefit shall be a Qualified
Joint and Survivor Annuity. If benefits become payable on account of the
death of a married Participant to whom an annuity option is available under
Option C, the normal form of benefit shall be a Qualified Pre-Retirement
Survivor Annuity.
These benefits shall become automatically payable unless the Participant or
his spouse, as the case may be, makes a written election within the
Election Period to receive one of the alternate forms of benefits specified
in Section 9.1 of the Plan or Appendix B. An election by the Participant
must be consented to by his spouse in writing. The spouse's consent shall
acknowledge the effect of the election and shall be either notarized or
witnessed by a Plan representative. Failure to obtain the spouse's consent
or the revocation of a previously designated optional method of payment
shall result in payment of benefits in the form of a Qualified Joint and
Survivor Annuity or a Qualified Pre-Retirement Survivor Annuity, as the
case may be, unless another election is made.
To assist the Participant and his spouse in making any election with
respect to waiving the Qualified Joint and Survivor Annuity, the Committee
shall provide the Participant, not less than 30 nor more than 90 days
before his 55th birthday a retirement application form describing the
normal and optional forms of benefit payments, including their relative
financial effects in terms of dollars per annuity payment on the
Participant and his spouse. This form shall provide a place for the
Participant to indicate his annuity starting date and the form of benefit
he desires.
-26-
A Participant may elect (with the consent of his or her spouse where
spousal consent is required) to waive the requirement that a written
explanation of certain payment options be provided at least 30 days before
the annuity starting date (and the 30 day applicable election period for
making certain elections) if the actual distribution commences more than
seven days after the written explanation is provided.
In the case of a Qualified Pre-Retirement Survivor Annuity, a substantially
similar notice shall be provided to the Participant during the period
beginning on the first day of the Plan Year in which the Participant
attains age 32 and ending on the last day of the Plan Year preceding the
Plan Year in which the Participant attains age 35.
9.3 Payments from Company Stock Fund Account or Global Stock Account. If a
recipient elects a lump sum payment under Option A of Section 9.1 of the
Plan or installment payments under Option B of Section 9.1 of the Plan,
payment from the Participant's Company Stock Fund Account or Global Stock
Account, or both, may be made either in cash or in Company Stock or Global
Stock, as applicable. If a person elects, or pursuant to Section 9.2 of the
Plan is required, to receive any annuity option under Section 9.2 of the
Plan or Option C, the amounts in his Company Stock Account or Global Stock
Account, as applicable, shall be liquidated and combined with his amounts
in all other investment funds to purchase an annuity contract pursuant to
which only cash benefits will be paid.
9.4 Time of Payment. A Participant or Beneficiary who becomes entitled to
receive a benefit at any time when the Participant Account is $5,000 or
less will be cashed out for the full amount of the account balance as soon
as administratively practicable. If the account balance is in excess of
$5,000 it shall be paid prior to Normal Retirement Age only with the
written consent of the Participant and, if married, with the consent of the
Participant's spouse in a writing which acknowledges the effect of such
consent and which is witnessed by a Plan representative or is notarized. In
the case of death, the written consent of the Participant's Beneficiary
shall be required for the distribution of amounts in excess of $5,000.
Benefit payments shall normally begin not later than the April 1 following
the calendar year during which the event giving rise to the eligibility for
payment shall have occurred. In no event shall benefits begin later than 60
days after the close of the Plan Year in which the latest of the following
occurs: (1) the Participant's attainment of age 65; (2) the 10th
anniversary of the year in which the Participant commenced participation in
the Plan; (3) the termination of the Participant's service with a
Participating Employer; or (4) the date specified in writing to the
Committee by the Participant (but not later than the year in which he
attains age 70 1/2 ).
-27-
Distributions shall commence no later than the April 1 of the calendar year
following the later of the calendar year in which the Participant attains
age 70 1/2 or the calendar year in which the Participant terminates
employment with the Participating Employer. Notwithstanding the foregoing,
a 5% owner of the Participating Employer shall commence receipt of benefits
no later than the Apri1 1 of the calendar year following the year he
reaches age 70 1/2 even if he remains in the active employ of the
Participating Employer.
Notwithstanding any direction by the Participant to the contrary, all
payments must be payable pursuant to a schedule whereby the entire amount
in the Participant's Account is paid over a period that does not extend
beyond the life of the Participant or over the lives of the Participant and
any individual he has designated as his Beneficiary (or over the life
expectancies of the Participant and his designated individual Beneficiary).
In addition, unless the benefit is payable as a Qualified Joint and
Survivor Annuity, the payment method selected must provide that more than
50% of the present value of the payments projected to be paid to the
Participant and his Beneficiary will be paid to the Participant during his
life expectancy.
In the event of the death of a Participant, former Participant or
Beneficiary while benefits are being paid under a schedule which meets the
requirements of the preceding paragraph, payments shall continue pursuant
to a schedule which is at least as rapid as the period selected. In the
event of the death of a Participant or former Participant before benefit
payments have commenced, any death benefit shall be distributed within five
years of death unless the following conditions are met:
(i) payments are made to an individual Beneficiary designated by the
Participant;
(ii) payments are made for the life of such individual Beneficiary or over
a period not extending beyond his life expectancy; and
(iii) payments commence within one year of death.
If the designated Beneficiary is the Participant's spouse, payments will be
paid within a reasonable period of time after the Participant's death, but
may be delayed until the date the Participant would have attained age 70
1/2, if the Beneficiary so elects. If the spouse dies before payments
begin, the rules of this paragraph shall be applied as if the spouse were
the Participant. Notwithstanding the provisions of this Section, the
distribution requirements of Code Section 401(a)(9) and the regulations
thereunder are hereby incorporated by this reference and shall supersede
any conflicting Plan provisions.
9.5 Death of Participant Prior to Receiving Full Distribution. Except as
provided in Section 8.2 of the Plan, if a Participant dies after having
terminated employment and prior to receiving a distribution of his
Participant Account, then the payments that would otherwise have been made
to the Participant will be made to his Beneficiary, or, in the absence of a
Beneficiary, to his estate in accordance with applicable state law.
-28-
9.6 QDROs. Benefits shall be payable under the Plan to an alternate payee
pursuant to the terms of any qualified domestic relations order ("QDRO").
The Committee has the responsibility for determining if a domestic
relations order is qualified and whether its payment terms are consistent
with the terms of the Plan. If appropriate, the amounts subject to a QDRO
may be segregated from the Participant's Account and placed in a separate
account for the benefit of the alternate payee who shall thereupon be
treated for Plan purposes as a Participant. Any amounts payable to an
alternate payee may, at the alternate payee's request, be paid from the
Plan immediately pursuant to the terms of the QDRO and the Plan.
9.7 Direct Rollovers from the Plan. Notwithstanding any provision of the Plan
to the contrary that would otherwise limit a Participant's election under
this Section, a Participant may elect, at the time and in the manner
prescribed by the Committee, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
Participant in a direct rollover. An eligible rollover distribution is any
distribution of all or any portion of the balance to the credit of the
Participant except that an eligible rollover distribution does not include
any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the Participant or the joint lives (or joint life
expectancies) of the Participant and the Participant's designated
Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Section
401(a)(9) of the Code; the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to Company securities); and any
withdrawal on account of hardship as described in Code Section
401(k)(2)(B)(i)(IV).
An eligible retirement plan is an individual retirement account described
in Section 408(a) of the Code, an individual retirement annuity described
in Section 408(b) of the Code, an annuity plan described in Section 403(a)
of the Code, or a qualified trust described in Section 401(a) of the Code,
that accepts the Participant's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or individual
retirement annuity.
For these purposes, a Participant includes an Employee or former Employee
who has an account balance in the Plan. In addition, the Employee's or
former Employee's surviving spouse and the Employee's or former Employee's
spouse or former spouse who is the alternate payee under a QDRO, as defined
in Section 414(p) of the Code, are Participants with respect to the
interest of the spouse or former spouse. A direct rollover is a payment by
the Plan to the eligible retirement plan specified by the Participant.
-29-
Article X
Withdrawals and Loans During Employment
---------------------------------------
10.1 Age 59 1/2 Withdrawals. A Participant who has reached age 59 1/2 but who
has not yet terminated employment may withdraw all or a portion of his
vested accumulated account balance under the Plan subject to the
limitations specified in Section 10.4 of the Plan.
10.2 Participant Post-Tax Contributions. A Participant may, by filing a request
with the Committee, signed by the Participant and the Participant's spouse,
elect to withdraw amounts in his Participant Post-Tax Contribution Account
as follows:
(a) Contributions. A withdrawal of up to 100% of Participant Post-Tax
Contributions or, if less, 100% of the then value of such
contributions may be made from the Plan.
(b) Earnings. A withdrawal of up to 100% of the earnings on Post-Tax
Contributions may be made by a Participant from the Plan.
10.3 Participant Pre-Tax Contributions. No earnings in a Participant's Pre-Tax
Contribution Account may be withdrawn prior to age 59 1/2. A Participant
may withdraw his Pre-Tax Contributions from his Participant Pre-Tax
Contribution Account prior to age 59 1/2 only if the withdrawal is made on
account of an immediate and heavy financial need of the Participant that
cannot be satisfied from other resources available to the Participant. For
purposes of this Section an immediate and heavy financial need shall mean
(1) expenses incurred for medical care or necessary to obtain medical care
for a Participant, a Participant's spouse or a Participant's dependent; (2)
the purchase of a Participant's principal residence; (3) tuition and
related educational fees for post-secondary education but only for the next
12 months for a Participant, a Participant's spouse or a Participant's
dependent, or remedial school tuition; (4) prevention of eviction or
mortgage foreclosure; (5) expenses arising from the death of a spouse or
dependent; (6) financial loss due to a sudden catastrophe; (7)
extraordinary legal expenses; (8) adoption expenses; (9) any other need
recognized by the Internal Revenue Service in documents of general
applicability. A Participant will be deemed to lack other resources if all
of the following conditions are satisfied: (1) the Participant must have
obtained all distributions (except hardship) and all nontaxable loans
available from all plans of any Participating Employer; (2) the Participant
may not make any contributions to any plan of any Participating Employer
for at least 12 months following the hardship withdrawal and (3) the dollar
limit on pre-tax contributions ($10,500 as indexed for inflation after
2001) for the calendar year following the hardship shall be reduced by the
amount of the hardship withdrawal. If the foregoing conditions are not
satisfied, the Committee may reasonably rely on statements and
representations made by the Participant with respect to his lack of other
financial resources. The amount of the withdrawal cannot exceed the amount
required to relieve the financial need (including any amounts necessary to
pay federal, state or local income taxes or penalties reasonably
anticipated to result from the distribution).
-30-
10.4 Limitations on In-Service Withdrawals.
(a) No more than two in-service withdrawals are permitted in any one Plan
Year.
(b) No withdrawal will be permitted under this Article unless the amount
to be withdrawn is at least $200 or 100% of the aggregate value of the
Participant's relevant account from which withdrawals are being
requested if such value is less than $200.
(c) Unless otherwise specified by the Participant, any withdrawal of
Participant contributions from his Participant Post-Tax Contribution
Account will be satisfied first by a withdrawal of his pre-1987
contributions, if any, and then by a withdrawal of his post-1986
contributions and/or earnings on contributions.
(d) Any withdrawal from a Participant's Post-Tax Contribution Account will
result in an automatic suspension of the Participant's right to make
future Plan contributions for a period of six months from the date of
the withdrawal. During the period of suspension, Employer Matching
Contributions will also be suspended. Finally, after the Participant
resumes making contributions to the Plan, no make-up contributions
will be permitted for the period of the suspension.
10.5 Fund to be Charged with Withdrawal. A Participant may specify the
investment fund or combination of funds to which a withdrawal is to be
charged. If the Participant fails to make any designation, a distribution
will be made out of the Participant's interest in each of the funds in
proportion to the Participant's share in these funds.
10.6 Loans to Participants. The Trustee shall, if the Committee directs, make a
loan to a Participant from any or all of the Participant's Accounts subject
to such rules as the Committee may prescribe and subject to the following
conditions:
(a) An application for a loan by a Participant shall be made in writing to
the Committee, or through telephonic or electronic processing, as the
Committee may determine;
(b) Loans will be granted only to active Participants;
(c) A loan must be for a minimum of $500, only two loans (only one for the
purchase of a principal residence) may be outstanding at any one time,
and no refinancings will be permitted except as may be specifically
permitted by the Committee;
-31-
(d) No loan shall be made to the extent that such loan when added to all
other loans to the Participant would exceed the lesser of (1) 50% of
the vested amounts in the Participant's Account under the Plan or (2)
$50,000 reduced by the excess, if any, of the highest outstanding
balance of loans during the one year period ending on the day before
the loan is made over the outstanding balance of loans to the
Participants on the date the loan is made. In determining whether the
foregoing loan limits are satisfied, all loans from all plans of a
Participating Employer and of any Affiliated Company shall be
aggregated;
(e) The period of repayment for any loan shall be arrived at by mutual
agreement between the Committee and the borrower, but such period in
no event shall exceed five years except that a loan may be granted for
a period not to exceed 25 years if the proceeds are used to purchase
the Participant's principal residence;
(f) All loans must be repaid under a substantially level amortization
period with payments being made at least quarterly;
(g) Each loan shall be made against collateral being the assignment of 50%
of the borrower's entire right, title and interest in and to the Trust
Fund, supported by the borrower's collateral promissory note for the
amount of the loan, including interest, payable to the order of the
Trustee and/or such other collateral as the Committee may require;
(h) Each loan shall bear interest at a rate fixed by the Committee. The
rate shall be commensurate with the rates charged by persons in the
business of lending money for loans which would be made under similar
circumstances. Interest rates granted at different times and to
Participants in differing circumstances may vary depending on such
differences;
(i) A loan shall be treated as a directed investment by the borrower with
respect to his accounts. The interest paid on the loan shall be
credited to the borrower's accounts and he shall not share in the
earnings of the Plan's assets with respect to the amounts borrowed and
not yet repaid;
(j) A loan to a married Participant requires the written, notarized
consent of the Participant's spouse;
(k) No distribution shall be made to any Participant, former Participant
or Beneficiary unless and until all unpaid loans, including accrued
interest thereon, have been liquidated or offset against the account;
(l) The Committee may, in its discretion, charge a fee to process and
maintain Plan loans, which shall be deducted from the accounts of
Participants who take loans. The amounts of such fees shall be
determined from time to time by the Committee; and
(m) Loan repayments will be suspended under the Plan as permitted under
Section 414(u)(4) of the Code.
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Article XI
Plan Administration
--------------------
11.1 Appointment of Committee. The Board shall appoint a committee to administer
the Plan. Any person, including an officer or other employee of a
Participating Employer, is eligible for appointment as a member of the
Committee. Such members shall serve at the pleasure of the Board. Any
member may resign by delivering his written resignation to the Board.
Vacancies in the Committee shall be filled by the Board.
11.2 Named Fiduciary and Plan Administrator. The Committee shall be the named
fiduciary and plan administrator as these terms are used in ERISA. The
Committee shall appoint a Secretary who shall also be the agent for the
service of legal process.
11.3 Powers and Duties of Committee. The Committee shall administer the Plan in
accordance with its terms and shall have all powers necessary to carry out
the provisions of the Plan, except such powers as are specifically reserved
to the Board or some other person. The Committee's powers include the power
to make and publish such rules and regulations as it may deem necessary to
carry out the provisions of the Plan. The Committee shall interpret the
Plan and shall determine all questions arising in the administration,
interpretation, and application of the Plan.
The Committee shall notify the Trustee of the liquidity and other
requirements of the Plan from time to time.
11.4 Operation of Committee. The Committee shall act by a majority of its
members at the time in office, and such action may be taken either by a
vote at a meeting or without a meeting. Any action taken without a meeting
shall be reflected in a written instrument signed by a majority of the
members of the Committee. A member of the Committee who is also a
Participant shall not vote on any question relating specifically to
himself. Any such question shall be decided by the majority of the
remaining members of the Committee. The Committee may authorize any one or
more of its members to execute any document on behalf of the Committee, in
which event the Committee shall notify the Trustee in writing of such
action and the name or names of its member or members so designated. The
Trustee thereafter shall accept and rely upon any document executed by such
member or members as representing action by the Committee until the
Committee shall file with the Trustee a written revocation of such
designation. The Committee may adopt such by-laws or regulations as it
deems desirable for the conduct of its affairs.
The Committee shall keep a record of all its proceedings and acts and shall
keep all such books of account, records, and other data as may be necessary
for the proper administration of the Plan.
-33-
11.5 Power to Appoint Advisers. The Committee may appoint such actuaries,
accountants, attorneys, consultants, other specialists and such other
persons as it deems necessary or desirable in connection with the
administration of the Plan. Such persons may, but need not, be performing
services for a Participating Employer. The Committee shall be entitled to
rely upon any opinions or reports which shall be furnished to it by any
such actuary, accountant, attorney, consultant or other specialist.
11.6 Expenses of Plan Administration. The members of the Committee shall serve
without compensation for their services as such, but their reasonable
expenses shall be paid by the Company. To the extent not paid from Fund
assets, as determined from time to time by any Board-appointed committee,
all reasonable expenses of administering the Plan shall be paid by the
Company, including, but not limited to, fees of the Trustee, accountants,
attorneys, consultants, and other specialists.
11.7 Duties of Fiduciaries. All fiduciaries under the Plan and Trust shall act
solely in the interests of the Participants and their Beneficiaries and in
accordance with the terms and provisions of the Plan and Trust Agreement
insofar as such documents are consistent with ERISA, and with the care,
skill, prudence, and diligence under the circumstances then prevailing that
a prudent person acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of like character and with like
aims. Any person may serve in more than one fiduciary capacity with respect
to the Plan and Trust.
11.8 Liability of Members. No member of the Committee shall incur any liability
for any action or failure to act, excepting only liability for his own
breach of fiduciary duty. To the extent not covered by insurance, the
Company shall indemnify each member of the Committee and any
Board-appointed committee and any Employee acting on their behalf against
any and all claims, loss, damages, expense and liability arising from any
action or failure to act.
11.9 Allocation of Responsibility. The Board, Trustee, Investment Manager and
the committees established to administer the Plan possess certain specified
powers, duties, responsibilities and obligations under the Plan and Trust.
It is intended under the Plan that each be solely responsible for the
proper exercise of its own functions and that each shall not be responsible
for any act or failure to act of another, unless otherwise responsible as a
breach of its own fiduciary duty.
(a) Generally, the Board shall be responsible for appointing the members
of the committees it may establish to administer the Plan. If the Plan
shall at any time permit Employees to invest any portion of Plan
assets in Company securities, the Board shall have sole authority to
terminate the Plan and to make any discretionary amendments, while any
Board-appointed committee given such authority shall have authority
for making non-discretionary amendments and for recommending to the
Board any other Plan amendments it deems appropriate.
-34-
(b) The Board-appointed committees so authorized shall have the
responsibilities of making Plan amendments not specifically reserved
to the Board in the preceding Subsection, including sole discretion to
amend the Plan if Employees are not authorized to invest Plan assets
in Company securities, to select Investment Managers, to direct the
Trustee and the Investment Managers with respect to all matters
relating to the investment of Plan assets, to review and report to the
Board on the investment policy and performance of Plan assets and
generally to administer the Plan according to its terms.
(c) The Trustee or the Investment Manager, as the case may be, is
responsible for the management and control of the Plan's assets as
specifically provided in the Trust Agreement or investment manager
agreement.
(d) The Board may dissolve any committee it appoints or reserve to itself
any of its powers previously delegated to a Board-appointed committee.
In addition, the Board may reorganize the committees it establishes
from time to time and reallocate their responsibilities among them or
assign them to other persons or committees provided that the Committee
shall at all times continue as plan administrator and named fiduciary
as these terms are defined in ERISA unless the Board formally amends
the Plan to reallocate these responsibilities. The Board and the
various committees may designate persons, including committees, other
than named fiduciaries to carry out their responsibilities (other than
trustee responsibilities) under the Plan.
11.10Claims Review Procedure. The Committee shall maintain a procedure under
which any Participant or Beneficiary may assert a claim for benefits under
the Plan. Any such claim shall be submitted in writing to the Committee
within such reasonable period as the rules of the Committee may provide.
The Committee shall take action on the claim within 60 days following its
receipt and if it is denied shall at such time give the claimant written
notice which clearly sets forth the specific reason or reasons for such
denial, the specific Plan provision or provisions on which the denial is
based, any additional information necessary for the claimant to perfect the
claim, if possible, an explanation of why such additional information is
needed, and an explanation of the Plan's claims review procedure. The
review procedure shall allow a claimant at least 60 days after receipt of
the written notice of denial to request a review of such denied claim, and
the Committee shall make its decision based on such review within 60 days
(120 days if special circumstances require more time) of its receipt of the
request for review. The decision on review shall be in writing and shall
clearly describe the reasons for the Committee's decision.
-35-
Article XII
Amendment and Termination
-------------------------
12.1 Right to Amend or Terminate. Any amendment may be made to the Plan which
does not cause any part of the Plan's assets to be used for, or diverted
to, any purpose other than the exclusive benefit of Participants, former
Participants, or Beneficiaries, provided however, that any amendment may be
made, with or without retroactive effect, if such amendment is necessary or
desirable to comply with applicable law and provided further that any
amendment shall be consistent with the terms and conditions of any relevant
collective bargaining agreement whose terms and conditions are not in
conflict with applicable law. Except in the case where approved by the
Secretary of Labor because of substantial business hardship, as provided in
Section 412(c)(8) of the Code, no amendment shall be made to the Plan if it
would decrease the accrued benefit of any Participant, eliminate or reduce
an early retirement benefit or eliminate an optional form of benefit as may
be provided in regulations under Code Section 411(d)(6). If any provisions
of the Plan relating to the percentage of a Participant's accrued benefit
that is vested are changed, any Participant with at least three years of
service may elect, by filing a written request with the Committee within 60
days after the later of (1) the date the amendment was adopted, (2) the
date the amendment was effective, or (3) the date the Participant received
written notice of such amendment, to have his vested interest computed
under the provisions of the Plan as in effect immediately prior to such
amendment.
12.2 Full Vesting Upon Termination of Plan. Upon full or partial termination of
the Plan or upon complete discontinuance of Participating Employer
contributions, each affected Participant will become 100% vested in the
value of his Participant Account as of the Valuation Date next following
such termination or discontinuance.
-36-
Article XIII
Top-Heavy Provisions
--------------------
13.1 Rules to Apply if Plan is Top-Heavy. Notwithstanding any other relevant
provision of the Plan to the contrary, the following rules will apply for
any Plan Year that the Plan becomes "top-heavy" (as defined in Section 13.2
of the Plan):
(a) Vesting. Vesting will remain 100% at all times after completion of six
months' service.
(b) Minimum Contributions. For each top-heavy Plan Year the minimum
contribution allocated to the Participant Account of each non-key
Employee shall be equal to or greater than the lesser of the following
amounts:
(i) 3% of such non-key Employee's compensation; or
(ii) the highest percentage-of-compensation allocation made to the
Participant Account of any key Employee.
If the highest rate allocated to a key Employee is less than 3% of
compensation, amounts contributed as a result of a salary reduction
agreement shall be included in determining the rate of contribution on
behalf of key Employees. For purposes of this Subsection,
"compensation" shall have the same meaning as in Section 4.4 of the
Plan. Minimum contributions will be made to Participant's Account
without regard to his level of compensation or his hours of service
during a Plan Year.
(c) Limitation on Benefits. In applying the dollar limitations under
Section 415(e) of the Code, the 1.25 limitation shall be supplanted by
a 1.0 limitation for each year during which the Plan is top-heavy.
(d) Maximum Compensation. The maximum annual compensation of each Employee
that may be taken into account under the Plan shall not exceed
$170,000 (or such larger amount based on cost of living adjustments as
may be permitted under the Code).
13.2 Top-Heavy Definition. For purposes of this Section, the Plan will be
considered "top-heavy" if on any given determination date (the last day of
the preceding Plan Year or, in the case of the Plan's first year, the last
day of such Year) the sum of the account balances for key Employees is more
than 60% of the sum of the account balances of all Employees, excluding
former key Employees. The account balances shall include distributions made
during any given Plan Year containing the determination date and the
preceding four Plan Years but shall not include the account balances for
any person who has not received any compensation from any Participating
Employer at any time during the five-year period ending on the
determination date. The method of determining the top-heavy ratio shall be
made in accordance with Code Section 416.
-37-
In making the top-heavy calculation, (a) all the Participating Employer's
plans in which a key Employee participates shall be aggregated with all
other Participating Employer plans which enable a plan in which a key
Employee participates to satisfy the Code's non-discrimination
requirements; and (b) all Participating Employer plans not included in
subparagraph (a), above, may be aggregated with the Participating
Employer's plans included in subparagraph (a), above, if all of the
aggregated plans would be comparable and satisfy the Code's
non-discrimination requirements.
13.3 Key Employee Definition. A key Employee will be, for the purpose of this
Article, any Employee or former Employee who at any time during the Plan
Year containing the determination date or the four preceding Plan Years is
such within the meaning of Code Section 416. As of the effective date, the
term key Employee includes the following individuals:
(a) an officer (but not more than 50 persons or, if lesser, the greater of
3% or 10% of Employees) having an annual compensation greater than 50%
of the dollar limit for benefits payable from a defined benefit plan
under Code Section 415(b)(1)(A);
(b) one of ten Employees who has annual compensation from the
Participating Employer of more than the amount in effect under Code
Section 415(c)(l)(A) owning the largest interests of the Participating
Employer. The Employee having the greater annual compensation from the
Participating Employer shall be considered to own the larger interest
in the Participating Employer if two or more Employees had the same
ownership interest in the Participating Employer;
(c) a 5% owner of the Participating Employer; and
(d) a 1% owner of the Participating Employer whose annual compensation
from the Participating Employer exceeds $170,000.
13.4 Relationship of the Normal and the Top-Heavy Vesting Schedules. If the
Plan's top-heavy status changes and this change alters the Plan's normal
vesting schedule, no Participant's vested accrued benefit immediately prior
to such change in status shall be diminished on account of the change in
the vesting schedule. In addition, the vesting for each Participant in the
Plan at the time of the change in status shall be determined under
whichever schedule provides the greatest vested benefit at any particular
point in time.
13.5 Participation in Other Plans. A non-key Employee who participates in both a
defined contribution plan and a defined benefit plan of the Participating
Employer shall not be entitled to receive minimum benefits and/or minimum
contributions under all such plans. Instead, the Employee shall receive a
minimum benefit equal to the lesser of 20% of such non-key Employee's
average compensation or 2% of his average compensation multiplied by his
number of Years of Service, as set forth in such defined benefit plan.
-38-
Article XIV
General Provisions
------------------
14.1 Employment Relationship. Nothing contained herein will be deemed to give
any Employee the right to be retained in the service of a Participating
Employer or to interfere with the rights of a Participating Employer to
discharge any Employee at any time.
14.2 Non-Alienation of Benefits. Except as provided in Section 9.6 of the Plan,
benefits payable under the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution, or levy of any kind, either voluntary or
involuntary, including any such liability which arises from the
Participant's bankruptcy, prior to actually being received by the person
entitled to the benefit under the terms of the Plan; and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or
otherwise dispose of any right to benefits payable hereunder, shall be
void. The Trust shall not in any manner be liable for, or subject to the
debts, contracts, liabilities, engagements or torts of any person entitled
to benefits hereunder. Nothing in this Section shall preclude payment of
Plan benefits pursuant to a qualified domestic relations order pursuant to
Section 9.6 of the Plan.
14.3 Use of Masculine and Feminine; Singular and Plural. Wherever used in the
Plan, the masculine gender will include the feminine gender and the
singular will include the plural, unless the context indicates otherwise.
14.4 Plan for Exclusive Benefit of Employees. No part of the corpus or income of
the Trust will be used for, or diverted to, purposes other than the
exclusive benefit of Participants and their Beneficiaries. Anything in the
foregoing to the contrary notwithstanding, the Plan and Trust are
established on the express condition that they will be considered, by the
Internal Revenue Service, as initially qualifying under the provisions of
the Code. In the event that the Internal Revenue Service issues an
unfavorable determination with respect to a timely request for a
determination that the amended and restated Plan and Trust qualify under
the Code, the Plan and Trust will be of no effect and the value of all
contributions made by a Participating Employer and Participants since the
amendment and restatement will be returned to the Participating Employer
and Participants, respectively, within one year from the date of the denial
of the determination request. Furthermore, if, or to the extent that, a
Participating Employer's tax deduction for contributions made to the Plan
is disallowed, the Participating Employer will have the right to obtain the
return of any such contributions (to the extent disallowed) for a period of
one year from the date of disallowance. All Participating Employer
contributions to the Plan are contingent upon their deductibility under the
Code. Finally, if a Participating Employer's contribution to the Plan is
made by a mistake in fact, the Participating Employer will have the right
to obtain the return of such contribution for a period of one year from the
date the contribution was made.
-39-
14.5 Nonduplication of Benefits. In no event shall benefits under the Plan
duplicate benefits under the Prior Plan or any other plan.
14.6 Merger or Consolidation of Plan. There will be no merger or consolidation
with, or transfer of any assets or liabilities to, any other plan, unless
each Participant will be entitled to receive a benefit immediately after
such merger, consolidation, or transfer as if the Plan were then terminated
which is at least equal to the benefit he would have been entitled to
receive immediately before such merger, consolidation, or transfer as if
the Plan had been terminated.
14.7 Payments to Minors and Incompetents. If a Participant or Beneficiary
entitled to receive any benefits hereunder is a minor or is deemed by the
Committee, or is adjudged to be, legally incapable of giving valid receipt
and discharge for such benefits, they will be paid to such persons as the
Committee might designate or to the duly appointed guardian.
14.8 Governing Law. To the extent that Delaware law has not been preempted by
ERISA, the provisions of the Plan will be construed in accordance with the
laws of the State of Delaware without regard to its conflict of laws
provisions.
-40-
APPENDIX A
Participating Employers
Effective Date of
Name of Employer Participation
---------------- -----------------
Frontier Communications of AuSable Valley, Inc. 6/29/01
Frontier Communications of Illinois, Inc. 6/29/01
Frontier Communications of Iowa, Inc. 6/29/01
Frontier Communications of Lakeside, Inc. 6/29/01
Frontier Communications of Michigan, Inc. 6/29/01
Frontier Communications - Midland, Inc. 6/29/01
Frontier Communications of Minnesota, Inc. 6/29/01
Frontier Communications of Mt. Pulaski, Inc. 6/29/01
Frontier Communications of New York, Inc. 6/29/01
Frontier Communications - Prairie, Inc. 6/29/01
Frontier Communications of Sylvan Lake, Inc. 6/29/01
Frontier Telephone of Rochester, Inc. 6/29/01
A-I
APPENDIX B
SCHEDULE B (1)
FRONTIER COMMUNICATIONS OF AUSABLE VALLEY, INC.
Class of Eligible Employees: Employees must be within a unit covered by a
collective bargaining agreement that provides for coverage of such Employees by
the Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Employer):
2000: 3% of Compensation
2001: 3% of Compensation
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's Compensation that he elects to contribute to the
Plan.
Discretionary Contributions: None.
Form of Employer Contributions: All Employer contributions will be made in
Restricted Stock.
Vesting Schedule: 100% immediately.
Payment Option C: A straight life annuity on the life of the Participant is the
only Option C benefit available.
1
SCHEDULE B(2)
FRONTIER COMMUNICATIONS OF ILLINOIS, INC.
Class of Eligible Employees: Those Employees who are represented by the Local 51
of the International Brotherhood of Electrical Workers bargaining unit are
eligible to participate in the Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Employer):
1997: $3,000
1998: 3% of Compensation
1999: 3% of Compensation
2000: 3% of Compensation
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's Compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: The Employer shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional options apply to account balances
under the Prior Plan as of December 31, 1994:
o Installments over any period up to the joint life expectancies of the
Participant and any designated beneficiary.
o A straight life annuity for unmarried Participants.
o A Qualified Joint and 50% Survivor Annuity for married Participants
with the Participant's spouse as the contingent annuitant.
B-2
SCHEDULE B (3)
FRONTIER COMMUNICATIONS OF IOWA, INC.
Class of Eligible Employees: Those Employees who are represented by the CWA
Local 7171 bargaining unit are eligible to participate in the Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions: Each payroll period the Employer shall contribute one-half
of 1% of the payroll period Compensation of each of its Employees in the class
of eligible Employees.
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's Compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: To the extent required or permitted in a relevant
collective bargaining agreement, Frontier Communications of Iowa, Inc. may
contribute each year in its discretion the same flat dollar amount or percentage
of Compensation for each of its eligible Employees.
Retention Incentive Contributions: To the extent required in a relevant
collective bargaining agreement, Frontier Communications of Iowa, Inc. shall
contribute each year as a Retention Incentive Contribution the same flat dollar
amount to the account of each Employee who satisfies the eligibility
requirements for such Retention Incentive Contribution under the terms of such
collective bargaining agreement. Such Retention Incentive Contribution shall be
treated as a Profit Sharing Contributions for all other purposes of the Plan.
Vesting Schedule: 100% immediately.
Payment Option C: None.
B-3
SCHEDULE B (4)
FRONTIER COMMUNICATIONS OF LAKESIDE, INC.
Class of Eligible Employees: Those Employees who are represented by the Local 51
of the International Brotherhood of Electrical Workers bargaining unit are
eligible to participate in the Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Employer):
1997: $3,000
1998: 3% of Compensation
1999: 3% of Compensation
2000: 3% of Compensation
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's Compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: The Employer stall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional options apply to account balances
under the Prior Plan as of December 31, 1994:
o Installments over any period up to the joint life expectancies of the
Participant and any designated beneficiary.
o A straight life annuity for unmarried Participants.
o A Qualified Joint and 50% Survivor Annuity for married Participants
with the Participant's spouse as the contingent annuitant.
B-4
SCHEDULE B (5)
FRONTIER COMMUNICATIONS OF MICHIGAN, INC.
Class of Eligible Employees: Those Employees who are represented by Local 1106
of the International Brotherhood of Electrical Workers bargaining unit are
eligible to participate in the Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Employer):
1997: $750
1998: 3% of Compensation
1999: 3% of Compensation
2000: 3% of Compensation
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's Compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: The Employer shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: None.
B-5
SCHEDULE B (6)
FRONTIER COMMUNICATIONS - MIDLAND, INC.
Class of Eligible Employees: Those Employees who are represented by the Local 51
of the International Brotherhood of Electrical Workers bargaining unit are
eligible to participate in the Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Employer):
1997: $3,000
1998: 3% of Compensation
1999: 3% of Compensation
2000: 3% of Compensation
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's Compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: The Employer shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional options apply to account balances
under the Prior Plan as of December 31, 1994:
o Installments over any period up to the joint life expectancies of the
Participant and any designated beneficiary.
o A straight life annuity for unmarried Participants.
o A Qualified Joint and 50% Survivor Annuity for married Participants
with the Participant's spouse as the contingent annuitant.
B-6
SCHEDULE B(7)
FRONTIER COMMUNICATIONS OF MINNESOTA, INC.
Class of Eligible Employees: Those Employees who are represented by the CWA
Local 7270 bargaining unit are eligible to participate in the Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions: Each payroll period the Employer shall contribute one-half
of 1% of the payroll period Compensation of each of its Employees in the class
of eligible Employees.
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's Compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: To the extent required or permitted in a relevant
collective bargaining agreement, Frontier Communications of Minnesota, Inc. may
contribute each year in its discretion the same flat dollar amount or percentage
of Compensation for each of its eligible Employees.
Retention Incentive Contributions: To the extent required in a relevant
collective bargaining agreement, Frontier Communications of Minnesota, Inc.
shall contribute each year as a Retention Incentive Contribution the same flat
dollar amount to the account of each Employee who satisfies the eligibility
requirements for such Retention Incentive Contribution under the terms of such
collective bargaining agreement. Such Retention Incentive Contribution shall be
treated as a Profit Sharing Contributions for all other purposes of the Plan.
Vesting Schedule: 100% immediately.
Payment Option C: None.
B-7
SCHEDULE B (8)
FRONTIER COMMUNICATIONS OF MT. PULASKI, INC.
Class of Eligible Employees: Employees must be within a unit covered by a
collective bargaining agreement that provides for coverage of such Employees by
the Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Employer):
1997: $3,000
1998: 3% of Compensation
1999: 3% of Compensation
2000: 3% of Compensation
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's Compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: The Employer shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional options apply to account balances
under the Prior Plan as of December 31, 1994:
o Installments over any period up to the joint life expectancies of the
Participant and any designated beneficiary.
o A straight life annuity for unmarried Participants.
o A Qualified Joint and 50% Survivor Annuity for married Participants
with the Participant's spouse as the contingent annuitant.
B-8
SCHEDULE B (9)
FRONTIER COMMUNICATIONS OF NEW YORK, INC.
Class of Eligible Employees: Those Employees who are represented by the Local
503 International Brotherhood of Electrical Workers bargaining unit are eligible
to participate in the Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Employer):
1998: None
1999: 3% of Compensation
2000: 3% of Compensation
Matching Contributions (Employer): The matching contribution will be equal to
100% of the first 3% of a Participant's Compensation that he elects to
contribute to the Plan.
Profit Sharing Contributions (Employer): None
Vesting Schedule: 100% immediately.
Payment Option C: With respect to the portion of a Participant's Account balance
transferred to the Plan from the Prior Plan attributable to amounts that were
originally transferred to the Prior Plan from the Frontier Communications of New
York, Inc. Employee Savings and 401(k) Plan, periodic partial distributions are
available prior to termination of employment as follows:
c. Periodic Partial Distributions. If an Employee so elects during the
month of November of the fourth Plan Year in which he has been a
Participant, or during the month of November of any Plan Year thereafter,
there shall be distributed to him all the fully vested amounts in all
accounts as of December 31, 1997 other than, if he has not reached age 59
1/2, his Tax-Deferred Contribution Account attributable to the Plan Year
ending three years prior to the end of the Plan Year in which such election
is made. Such an election shall be made on a form provided for this purpose
and shall be signed by the Employee and delivered to the Committee. For
purposes of determining the amount of the distribution, all valuations
shall be made as of the last Valuation Date in the Plan Year in which the
election is made. Such distribution will involve no forfeiture by the
Employee and will not affect his withdrawal rights under other provisions
of the Plan.
B-9
SCHEDULE B(10)
FRONTIER COMMUNICATIONS - PRAIRIE, INC.
Class of Eligible Employees: Those Employees who are represented by the Local 51
of the International Brotherhood of Electrical Workers bargaining unit are
eligible to participate in the Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Employer):
1997: $3,000
1998: 3% of Compensation
1999: 3% of Compensation
2000: 3% of Compensation
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's Compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: The Employer shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional options apply to account balances
under the Prior Plan as of December 31, 1994:
o Installments over any period up to the joint life expectancies of the
Participant and any designated beneficiary.
o A straight life annuity for unmarried Participants.
o A Qualified Joint and 50% Survivor Annuity for married Participants
with the Participant's spouse as the contingent annuitant.
B-10
SCHEDULE B(11)
FRONTIER COMMUNICATIONS OF SYLVAN LAKE, INC.
Class of Eligible Employees: Those Employees who are represented by the Local
320 International Brotherhood of Electrical Workers bargaining unit are eligible
to participate in the Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Employer):
1998: None
1999: 3% of Compensation
2000: 3% of Compensation
Matching Contributions (Employer): The matching contribution will be equal to
100% of the first 3% of a Participant's Compensation that he elects to
contribute to the Plan.
Profit Sharing Contributions (Employer): None
Vesting Schedule: 100% immediately.
Payment Option C: A straight life annuity on the life of the Participant is the
only Option C benefit available.
B-11
SCHEDULE B(12)
FRONTIER TELEPHONE OF ROCHESTER, INC./CWA
Class of Eligible Employees: Those Employees who are represented by the CWA
Local 1170 bargaining unit are eligible to participate in the Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions: Each payroll period the Employer shall contribute one-half
of 1% of the payroll period Compensation of each of its Employees in the class
of eligible Employees.
Matching Contributions: Each payroll period the Employer shall contribute for
each of its Employees in the class of eligible Employees 100% of such Employee's
contribution up to the first 3% of Compensation.
Profit Sharing Contributions: The Employer shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional payment options are available to a
Participant under Option C:
o A straight life annuity.
o A reduced retirement income payable monthly during his life with the
provision that in the event of his death prior to receiving 120
monthly installments, the remainder thereof shall be paid to his
beneficiary.
o For married Participants, a reduced retirement income, payable during
his life, with the provision that after his death such reduced income
shall be continued during the life of, and shall be paid to, the
Participant's spouse.
B-12
SCHEDULE B(13)
FRONTIER TELEPHONE OF ROCHESTER, INC./RTWA
Class of Eligible Employees: Those Employees who are represented by the RTWA
bargaining unit are eligible to participate in the Plan.
Eligibility: Eligible Employees will begin participation in the Plan on their
employment date.
Fixed Contributions: Each payroll period the Employer shall contribute one-half
of 1% of the payroll period Compensation of each of its Employees in the class
of eligible Employees.
Matching Contributions: Each payroll period the Employer shall contribute for
each of its Employees in the class of eligible Employees 100% of such Employee's
contribution up to the first 3% of Compensation, and 50% of such Employee's
contributions up to the next 2% of Compensation.
Profit Sharing Contributions: The Employer shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional payment options are available to a
Participant under Option C:
o A straight life annuity.
o A reduced retirement income payable monthly during his life with the
provision that in the event of his death prior to receiving 120
monthly installments, the remainder thereof shall be paid to his
beneficiary.
o For married Participants, a reduced retirement income, payable during
his life, with the provision that after his death such reduced income
shall be continued during the life of, and shall be paid to, the
Participant's spouse.
B-13
TABLE OF CONTENTS
Page
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INTRODUCTION ...............................................................................1
Article I Definitions....................................................................2
Article II Eligibility....................................................................8
Article III Participation and Participant Contributions....................................9
Article IV Participating Employer Contributions..........................................12
Article V Investment of Contributions...................................................20
Article VI Participant Accounts..........................................................22
Article VII Retirement or Other Termination of Employment.................................25
Article VIII Death.........................................................................26
Article IX Payment of Benefits...........................................................27
Article X Withdrawals and Loans During Employment.......................................31
Article XI Plan Administration...........................................................35
Article XII Amendment and Termination.....................................................38
Article XIII Top-Heavy Provisions..........................................................39
Article XIV General Provisions............................................................42
Appendix A Participating Employers................................................................A-1
Appendix B Plan Features Unique to Participating Employers........................................B-1
i