THE INCENTIVE SAVINGS PLAN OF
THE CONTINENTAL CORPORATION
(Amended and Restated as of January 1, 1994)
(Incorporates Amendments No. 1 through 28)
To encourage and assist their employees to save regularly, The
Continental Corporation and certain of its United States affiliates
have established the Incentive Savings Plan of The Continental
Corporation hereinafter set forth.
ARTICLE I
Definitions
The following terms when used herein, unless the context clearly
indicates otherwise, shall have the meanings set forth below:
1.1 Accounts. The Participant After-Tax Contributions
Account, Participant Tax-Deferred Contributions Account,
an Employee's Rollover Account and the Company
Contributions Account maintained for a Participant.
1.2 Administrator. An individual appointed by the Incentive
Savings Plan Committee to serve in this capacity. The
Administrator is not precluded from serving as a Trustee.
1.3 Affiliated Corporation.
(a) A corporation controlling, controlled by or under
common control with the Company, through ownership,
directly or indirectly through one or more
intermediaries, of at least a majority of the
voting stock of the controlled corporation; or
(b) A corporation which is a member of a controlled
group of corporations (within the meaning of
Section 1563(a) of the Internal Revenue Code,
determined without regard to Sections 1563(a)(4)
and 1563(e)(3)(C) thereof) of which any Employer is
a member.
1.4 Board of Directors. The Board of Directors of the
Company.
1.5 Break in Service. A period of at least twelve
consecutive months beginning on a person's severance from
service date (as defined in Section 1.12) and ending on
the first anniversary thereof, during which a person does
not perform an Hour of Service.
However, for the purpose of the foregoing, in the event
a person incurs a severance from service date (as defined
in Section 1.12) (i) by reason of such person's
pregnancy, (ii) by reason of the birth of a child of such
person, (iii) by reason of the placement of a child with
such person in connection with the adoption of a child by
such person, or (iv) for the purpose of caring for such
child for a period beginning immediately following such
birth or placement, then a "Break in Service" shall mean
a period of at least twenty-four consecutive months
beginning on the person's severance from service date (as
defined in Section 1.12) and ending on the second
anniversary thereof, during which the person does not
perform an Hour of Service. Additionally, the period
between the first and second anniversaries of the first
day of absence from work shall neither be a period of
service nor a period of severance.
1.6 Company. The Continental Corporation, a New York
corporation.
1.7 Company Contributions. The amounts contributed under the
Plan by the Employers for the benefit of Participants.
1.8 Company Contributions Account. The assets, Investment
Shares and Investment Units credited to a Participant
that are attributable to Company Contributions made with
respect to such Participant.
1.9 Compensation. The regular basic compensation payable to
a Participant by an Employer prior to reduction for
tax-deferred contributions under Section 2.4 of this Plan
or reduction to reflect tax-exempt contributions or
benefit payments, excluding Company contributions under
this or any other employee benefit plan of an Employer,
overtime pay, bonuses, commissions (except to the extent
that under the rules of an Employer commissions are in
lieu of base salary or wages), fees and other occasional
or extraordinary payments. In no event will Compensation
for any pay period exceed $200,000 in 1989, or such
amount as increased by the Secretary of the Treasury for
years after 1988, divided by the number of pay periods in
the calendar year. In no event will Compensation for any
pay period exceed $150,000 in 1994, or such amount as
increased by the Secretary of the Treasury for years
after 1994, divided by the number of pay periods in the
calendar year.
1.10 Employee. A person employed by an Employer excluding any
officer or director who is not compensated by regular
salary.
1.11 Employer. The Company and those of its Affiliated
Corporations it designates.
1.12 Employment. That period of time which begins on a
person's employment or reemployment commencement date and
ends on his severance from service date. A person's
employment commencement date is the date on which he
first performs an Hour of Service. A person's
reemployment commencement date is the first date on which
he performs an Hour of Service after a period of
severance. A period of severance commences on a person's
severance from service date and ends on the first date
thereafter on which he performs an Hour of Service. A
severance from service date is the earlier of the date on
which a person quits, is discharged, retires or dies, or
the first anniversary of the date on which he does not
perform an Hour of Service for any other reason.
1.13 Entry Date. Any pay date.
1.14 ERISA. The Employee Retirement Income Security Act of
1974, as amended from time to time.
1.15 Hour of Service. An hour for which a person is directly
or indirectly compensated (including back pay
irrespective of mitigation of damages) by an Employer or
an Affiliated Corporation which is not an Employer. In
addition, eight Hours of Service shall be credited for
each scheduled workday for which a person is on:
(a) Any period of absence on leave without pay (in the
granting of which, persons in similar circumstances
will be treated in a uniform and nondiscriminatory
manner), provided the person returns to Employment
at or prior to the termination of the leave; and
(b) Any period of absence in the service of the armed
forces of the United States in time of war or
national emergency, provided the person returns to
Employment within 90 days after the termination of
his service in such armed forces or within such
longer period as his employment rights are
protected by law. Notwithstanding the foregoing,
any person who is scheduled to work for the regular
workweek of an Employer or an Affiliated
Corporation at the person's location (or who was
scheduled to do so at the beginning of a period of
absence described in clauses (a) or (b) of the
preceding sentence), shall be credited with 190
Hours of Service for each calendar month for which
he is entitled to be credited with at least one
Hour of Service under the preceding sentence. The
foregoing shall be construed so as to avoid
duplication of credit for Hours of Service for a
single hour.
Hour of Service shall be computed and credited in
accordance with paragraphs (b) and (c) of section
2530.200b-2 of the Department of Labor regulations.
1.16 (a) Investment Shares. The undivided interests in the
Vanguard/Wellington Fund, Vanguard U.S. Growth
Portfolio and Vanguard Index Trust-500 Portfolio of
the Trust Fund provided for in Article IV of the
Plan.
(b) Investment Units. The undivided interests in the
Continental Stock Fund and Interest Savings Fund of
the Trust Fund provided for in Article IV of the
Plan.
1.17 Participant. A person for whom an Account is maintained
under the Plan (other than an Employee for whom only a
Rollover Account is maintained).
1.18 (a) Participant After-Tax Contributions Account. The
assets, Investment Shares and Investment Units
credited to a Participant that are attributable to
all of his own contributions made prior to January
1, 1984 and attributable to his After-Tax
Contributions made after January 1, 1984.
After-Tax Contributions shall mean Participant
Contributions other than Tax-Deferred
Contributions.
(b) Participant Tax-Deferred Contributions Account.
The assets, Investment Shares and Investment Units
credited to a Participant that are attributable to
his own Tax-Deferred Contributions made after
January 1, 1984. Participant Tax-Deferred
Contributions are contributions not subject to
federal income tax when made in accordance with
Section 401(k) of the Internal Revenue Code of 1986
as amended and applicable regulations.
1.19 Plan. This Incentive Savings Plan as herein set forth or, if
hereafter amended, as so amended.
1.19A Plan Year. The Plan Year and the limitation year shall be a
calendar year.
1.20 Trust Agreement. The agreement described in Article IV of the
Plan.
1.21 Trustees. The trustees provided for in Article IV of the Plan
or any successor trustees designated in accordance with the terms
of the Trust Agreement.
1.22 Trust Fund. The cash and investments held at any one time by the
Trustees.
1.23 Years of Vesting Service. One Year of Vesting Service shall be
credited for each 12 months of Employment:
(a) For periods prior to January 1, 1976, measured from the date
a person first became eligible to elect to become a
Participant;
(b) For periods after December 31, 1975, including periods of
no more than twelve months' duration between periods of
Employment (i) which are begun by reason of quit, discharge
or retirement or (ii) which are begun for any other reason
but in the course of which a quit, discharge or retirement
occurs. Periods during which an Employee otherwise eligible
to become a Participant does not become one solely by reason
of his declining to contribute to the Plan are not, however,
included.
Service of individuals who are leased employees or employed in
noncovered employment for the Employer controlled group and
affiliated service group will be counted for vesting purposes.
1.24 Incentive Savings Plan Committee (or "Committee"). A Committee
whose members are the named fiduciaries (as defined by ERISA) of
the Plan. Members of the Incentive Savings Plan Committee are
individuals appointed by the Compensation Committee to serve in
this capacity.
1.25 Compensation Committee. The Compensation Committee of the Board
of Directors as appointed from time to time.
ARTICLE II
Participation and Participants' Contributions
2.1 Participants On January 1, 1993. Every person who is an Employee
on January 1, 1993 and who was a Participant on December 31, 1992
shall continue to be a Participant on January 1, 1993.
2.2 Eligibility.
(a) Every Employee shall be eligible to participate in
accordance with the rules set forth in Section 2.2(b) of
this plan unless he is:
(i) an Employee who is compensated exclusively on a
commission or fee basis (except to the extent that
under the rules of an Employer commissions are in lieu
of base salary or wages);
(ii) an Employee covered by a collective bargaining
agreement between employee representatives and one or
more Employers, if such agreement does not expressly
provide for coverage by this Plan and if retirement
benefits were the subject of good faith bargaining
between such employee representatives and such
Employer or Employers;
(iii) Employee employed in Canada; or
(iv) an Employee employed outside the United States who is
not a citizen of the United States.
(b) Every Employee eligible to participate under Subsection
2.2(a) shall be eligible to elect to become a Participant
on any Entry Date (provided he is then an Employee)
following the close of any twelve-month period during which
he completed 1,000 Hours of Service. A Participant who
incurs a period of severance but returns to Employment shall
again be eligible for Plan participation as of the first
Entry Date coincident with or next following his
reemployment commencement date, provided:
(i) he is eligible to participate under Subsection 2.2(a),
and
(ii) he again satisfies the conditions of Section 2.3.
2.3 Election to Participate. Participation in the Plan by Employees
is voluntary. An Employee who is eligible to elect to become a
Participant on any Entry Date and who wishes to participate in
the Plan must elect to do so by signing and filing with the
Administrator at least 14 days before an Entry Date the form of
election provided by the Administrator for such purpose. In the
form of election to participate, the Employee shall specify the
percentage of Compensation he elects to contribute under the Plan
on each pay date and authorize such amounts to be taken from his
Compensation, and shall agree to be bound by all the terms and
provisions of the Plan. Upon filing such election he shall
become a Participant, and the percentage of Compensation he
elected to contribute under the Plan shall begin to be taken from
his Compensation with the Entry Date elected.
2.4 (a) Amount and Allocation of Participants' Contributions. A
Participant may elect to contribute under the Plan on each
pay date any whole number percentage but not more than 15%
of his Compensation, subject to the limitations of Section
415 of the Internal Revenue Code of 1986, as amended (after
the application of Section 3.1 of this Plan). Participant
Contributions may be After-Tax Contributions or Tax-Deferred
Contributions. However, in no event may the Tax-Deferred
Contribution for a Participant exceed $8,994 during 1993 or
such amount as increased by the Secretary of the Treasury
for years after 1993. In the event that the percentage of
compensation a Participant elects to contribute and allocate
to Tax-Deferred Contributions would result in exceeding the
dollar limitation in the preceding sentence, any excess over
such limitation shall automatically be reallocated to
After-Tax Contributions unless the Participant elects to
cease contributions for the balance of the calendar year.
The percentage of Compensation that the Participant elects
to contribute under the Plan and the allocation of such
percentage between Tax-Deferred (subject to the dollar
limitation in this paragraph) and After-Tax Contributions
will continue in effect so long as he continues to
participate except that effective on any Entry Date after
he becomes a Participant he may increase or decrease the
percentage of Compensation he will contribute on each pay
date thereafter, change such allocation or he may suspend
making contributions, in each case by signing and filing
with the Administrator, at least 14 days before a pay date,
a form provided by the Administrator for such purpose,
specifying (unless he suspends making contributions) the
percentage of Compensation he elects to contribute under the
Plan for each pay date thereafter and authorizing such
amount to be taken from his Compensation or the new
allocation thereof. Upon filing such form, unless he has
elected to suspend making contributions, the new percentage
of Compensation he has elected to contribute under the Plan
and/or the new allocation shall begin to be taken from his
Compensation on the pay date elected. A Participant who has
suspended making contributions may resume making
contributions effective as of any Entry Date thereafter by
complying with the requirements set forth above for
increasing the percentage of Compensation to be contributed.
(b) Contribution Limitations for Employees Residing in Puerto
Rico. The provisions in Section 2.4(a) notwithstanding, if
a Participant resides in Puerto Rico, the Participant's
Tax-Deferred Contributions in any calendar year may not
exceed 10% of compensation and shall be subject to any other
limitations established by applicable laws of the
Commonwealth of Puerto Rico.
(c) Actual Deferral Percentage Limitation. The rules in
subsection 2.4(a) notwithstanding, the following rules and
limitation shall apply to a Participant's Tax Deferred
Contributions. In the event that the Administrator shall
at any time determine that the spread between the percentage
of compensation contributed to the Plan as Tax-Deferred
Contributions for (i) "highly compensated employees" (within
the meaning of Section 414(q) of the Code and the
regulations thereunder) of the participating Employers, and
(ii) all other eligible Employees will not meet either of
the following tests:
(i) the actual deferral percentage for the group of
"highly compensated employees" is not more than the
actual deferral percentage for all other eligible
employees multiplied by 1.25; or
(ii) the excess of the actual deferral percentage for the
group of "highly compensated employees" over that of
all other eligible Employees is not more than 2
percentage points, and the actual deferral percentage
for the group of "highly compensated employees" is
not more than the actual deferral percentage of all
other eligible Employees multiplied by 2.0,
the Administrator, in his sole discretion, may unilaterally
reduce, on a prospective basis, the maximum percentage of
compensation which such "highly compensated employees"
elected to be Tax-Deferred Contributions under the Plan.
Upon written notice from the Administrator to an affected
Participant, the Participant's election of Tax-Deferred
Contributions shall be automatically adjusted as of the date
specified by such notice, without any further action on the
part of such Participant or his Employer, to conform to the
new limitation imposed by the Administrator and unless such
Participant otherwise instructs the Administrator in a
written notice, his election of After-Tax Contributions (if
any) also shall be automatically adjusted so as to increase
the percentage of his compensation which shall be
contributed pursuant thereto by the amount of such automatic
adjustment to the Participant's Tax-Deferred Contributions.
The Administrator, in his sole discretion, may at any time
remove any limitation imposed by him under this Subsection
2.4(c) and, upon written notice from the Administrator to
the affected Participants, any modifications to the
Participant's Tax-Deferred Contributions and Participant's
After-Tax Contributions resulting from such limitation shall
automatically cease to be effective and such elections shall
continue in effect under the terms that existed immediately
prior to such modifications.
If after the close of the Plan Year, the Administrator shall
determine that the spread, as determined by the tests above,
between the percentage of compensation contributed to the
Plan by means of Tax-Deferred Contributions for (i) "highly
compensated employees" of the Participating Employers, and
(ii) the remaining Employees required to be considered under
Section 401(k) of the Code and the regulations thereunder,
for the Plan Year then ended is such that the Tax-Deferred
Contributions would fail to qualify as a "qualified cash or
deferred arrangement" under Section 401(k) of the Code for
such Plan Year, then, to the extent necessary to so qualify
and as permitted by the Internal Revenue Service, a portion
of the Tax-Deferred Contributions for such Plan Year of some
or all of the "highly compensated employees" automatically
shall be converted into After-Tax Contributions or paid to
the Participants. Such conversion will be made by
converting the Tax-Deferred Contributions, to the extent
permitted, of the highly compensated employee with the
highest deferral percentage to After-Tax Contributions to
the extent necessary to meet the applicable test, or to the
extent necessary to equal the deferral percentage of the
next highest deferral percentage of a highly compensated
employee. This process will be repeated until the
applicable test is satisfied. Affected participants will
be notified of conversion within 2-1/2 months after the end
of the applicable year. If payment is required, such
payment shall include a pro rata share of investment
earnings credited to the participant's accounts for the
affected period as determined in accordance with Internal
Revenue Service regulations and shall be paid to the
Participants not later than 2-1/2 months after the end of
the applicable calendar year. The Tax-Deferred and
After-Tax Contributions Accounts of any affected Participant
shall be adjusted accordingly, and the Administrator shall
take, and instruct the appropriate Employers to take, such
other action as shall be necessary or appropriate to
effectuate such conversion or payment. The Administrator
shall notify the affected Participants of the conversion or
payment within 2-1/2 months after the end of the applicable
calendar year.
For purposes of this Section 2.4(c) and Sections 2.4(d) and
2.4(e), the term "compensation" shall mean all compensation
payable by an Employer that is reportable as includable
gross income of an Employee for the applicable year, plus
any amounts not so included for such year that represent
Tax-Deferred Contributions under Section 2.4(a) or
tax-exempt contributions by an Employee that are permissible
under Section 125 of the Internal Revenue Code.
For purposes of this Section 2.4(c) and Sections 2.4(d) and
2.4(e), the Administrator may elect, for the purpose of
determining who are "highly compensated employees", that
(pursuant to the applicable regulations under Section 414(q)
of the Code) the look-back year calculation for a
determination year shall be on the basis of the calendar
year ending with the applicable determination year. If the
Administrator makes the foregoing election, then such
election will also apply to any plan of the Employer or an
Affiliated Corporation which is not an Employer which
qualifies under Section 401(a) of the Code.
(d) Actual Contribution Percentage Limitation. The rules in
Subsection 2.4(a), 2.4.(b) or 2.4(c) notwithstanding, the
following rules and limitations shall apply to a
Participant's After-Tax Contributions. In the event that
the Administrator shall at any time determine that the
spread between the sum of the percentage of compensation
contributed to the Plan as After-Tax Contributions and the
Company Contributions for (i) "highly compensated employees"
(within the meaning of Section 414(q) of the Code and the
regulations thereunder) of the participating Employers, and
(ii) all other eligible Employees will not meet either of
the following tests:
(i) the average of the sum of the percentage of
compensation contributed as After-Tax Contributions
plus Company Contributions calculated separately for
each member of the group of "highly compensated
employees" is not more than the average of such
percentages for all other eligible employees
multiplied by 1.25;
(ii) the excess of the average of the sum of such
percentages for the group of "highly compensated
employees" over that of all other eligible Employees
is not more than 2 percentage points, and the average
of the sum of such percentages for the group of
"highly compensated employees" is not more that the
sum of the average of such percentages of all other
eligible employees multiplied by 2.0,
the Administrator, in his sole discretion, may unilaterally
reduce the maximum percentage of compensation which such
"highly compensated employees" elected to be After-Tax
Contributions under the Plan. Upon written notice from the
Administrator to an affected Participant, the Participant's
election of After-Tax Contributions shall be automatically
adjusted as of the date specified by such notice, without
any further action on the part of such Participant or his
Employer, to conform to the new limitation imposed by the
Administrator, and the Participant's direct compensation
shall be increased by the amount of such adjustment. The
Administrator, in his sole discretion, may at any time
remove any limitation imposed by him under this Subsection
2.4(d) and, upon written notice from the Administrator to
the affected Participants, any modifications to the
Participant's After-Tax Contribution resulting from such
limitation shall automatically cease to be effective and
such elections shall continue in effect under the terms that
existed immediately prior to such modifications.
If after the close of the Plan Year, the Administrator shall
determine that the spread, as determined by the test above,
between the average of the sum of the percentages of
After-Tax and Company Contributions for (i) the group of
"highly compensated employees" of the Participating
Employers, and (ii) the remaining eligible Employees for the
Plan Year then ended is such that the After-Tax and Company
Contributions would fail to qualify under Section 401(m) of
the Code for such Plan Year, then, to the extent necessary
to so qualify, a portion of the After-Tax Contributions for
such Plan Year of some or all of the "highly compensated
employees" shall be reduced by payment of the excess portion
of such contributions, together with a pro rata share of
investment earnings for the applicable year as determined
in accordance with Internal Revenue Service regulations, to
the affected Participants within 2-1/2 months of the end of
such Plan year.
(e) Aggregate Contribution Limitation. Each year after the
determination of the limits and adjustments, if any, to the
contributions of highly compensated employees as required
by Subsections (c) or (d) of this Section 2.4, the rules of
those subsections notwithstanding, the Administrator shall
make further adjustments to the Tax-Deferred Contributions
or After-Tax Contributions of highly compensated employees
if the aggregate contribution limit is exceeded. The
aggregate contribution limit is the sum of (i) and (ii)
where
(i) is 125 percent of the greater of the actual deferral
percentage, as determined under Section 2.4(c), of
non-highly compensated employees eligible to
participate in the Plan or the actual contribution
percentage, as determined under Section 2.4(d) for
such employees, and
(ii) is two percentage points plus the lesser of the actual
deferral percentage or the actual contribution
percentage of the non-highly compensated employees
eligible to participate in the Plan,but not more than
200 percent of the lesser of such percentages.
If an adjustment is required because the aggregate
contribution limit is exceeded, the Administrator shall
reduce the After-Tax Contributions of the highly compensated
employees who are Participants to the extent necessary to
meet the aggregate contribution limit. Such reduction will
be determined using the method described in Section 2.4(c)
for conversions of Tax-Deferred Contributions to After-Tax
Contributions. The amount of any necessary reductions will
be paid, together with the pro rata share of investment
earnings credited to such accounts, to the affected highly
compensated Participants within 2-1/2 months after the end
of the applicable year.
(f) Contribution Limitations. Anything in this Section 2.4 to
the contrary notwithstanding, in no event shall
contributions to this Plan exceed the maximum contributions
permitted under Sections 401(k) and 401(m) of the Internal
Revenue Code of 1986.
2.5 Payment of Participants' Contributions to Trustees. As promptly
as practicable after each pay date, the Employers will transmit
the Participant's contributions to the Trustees to be held in the
Trust Fund for the benefit of the respective Participants. The
amount of each Participant's contributions will be credited to
his Participant After-Tax Contributions Account or Tax-Deferred
Contributions Account as elected in accordance with Section 2.4
and invested in accordance with Article IV of the Plan.
2.6 Rollover Contributions and Account. Subject to the approval of
the Administrator, an Employee (even if not a Participant) may
transfer to the Trust Fund the cash amounts and/or property
accumulated for the Employee under any other qualified corporate
retirement or profit sharing plan or plans, either directly or
through a rollover IRA.
However, the Employee must certify to the Administrator that the
cash amounts and/or property being transferred qualifies as a
"rollover contribution" under application law and regulations.
Such rollover contribution, upon receipt by the Trustee, shall
be converted into cash and deposited in the Employee's Rollover
Account and shall become subject to all of the terms and
conditions of this Plan and the Trust Agreement after it is
transferred. The Employee shall be 100% vested at all times in
his Rollover Account. No transfer subject to Code Section
401(a)(11) will be permitted.
ARTICLE III
Company Contributions
3.1 Amount of Company Contributions. The Employers will contribute
under the Plan on each pay date, out of the current or
accumulated earnings or profits of the Employers, an amount that
shall match the first 6% of Compensation contributed on that pay
date by Participants in accordance with the following schedule:
Amount to be Contributed By
Employers as a Percentage
Fund to Which Participant Has of First 6%of Compensation
Allocated His Contribution Contributed By Participants
Continental Stock Fund 110%
All Other Funds 100%
Company Contributions shall be allocated among the investment
funds in the same proportions as elected by the Participant for
his Contributions.
In addition, the Company Contributions during a Plan Year on
behalf of any Participant shall not exceed the limitations of
Section 415 of the Internal Revenue Code of 1986, as amended.
The provisions of Code Section 415 and the Treasury Department
Regulations promulgated thereunder, shall be incorporated by
reference into the Plan, provided, however, that in the case of
any Participant as to whom the sum of the defined benefit plan
fraction and the defined contribution plan fraction for any year
exceeds 1.0 (prior to the application of this paragraph and
Section 2.4(a)), the projected annual retirement benefit payable
under The Retirement Plan of The Continental Corporation shall
be reduced to the extent required to make such sum 1.0.
The Employers will also contribute, out of the current or
accumulated earnings or profits of the Employers, any amounts
restored for a former Participant pursuant to Section 5.8
hereof. During each year for which an Employer joins in the
filing of a consolidated Federal income tax return, those
Employers joining in such filing will pay the portion of the
Company Contributions made during such year with respect to
Participants who are in the employ of such Employers in such
proportions as may be designated by the Company, provided that,
if the Company has joined in such filing, all such Company
Contributions will be paid by the Company. During each year for
which an Employer does not join in filing a consolidated Federal
income tax return, such Employer will pay the portion of the
Company Contributions made during such year with respect to
Participants who are in the employ of such Employer, but, if
such Employer is prevented from making a contribution which it
would otherwise have made under the Plan, by reason of having
no current or accumulated earnings or profits or because such
earnings or profits are less than the contribution which it
would otherwise have made, then so much of the contribution
which such Employer was so prevented from making may be made,
for the benefit of the employees of such Employer, by any other
Employer or Employers to the extent and in the manner permitted
by Section 404(a)(3)(B) of the Internal Revenue Code as then in
effect or any successor provision of the Federal income tax
laws.
3.2 In the event that Company Contributions made to the Plan can not
be allocated to the accounts of Participants as a result of the
operation of the limitations in Sections 2.4(c), (d) or (e) or
3.1, such Company Contributions will be allocated to a suspense
account and shall be used to reduce future Company Contributions
required under this Plan.
3.3 Payment of Company Contributions to Trustees. Except in the
case of Company Contributions made in Continental Common Stock
to the Continental Stock Fund, which shall be made as promptly
as practicable after each Stock Purchase Date, as defined in
Section 4.2(d), as promptly as practicable after each pay date,
when the Employers transmit the contributions taken from the
Participant's Compensation to the Trustees, the Employers will
also transmit Company Contributions to the Trustees to be held
in the Trust Fund for the benefit of the Participants. When
each Participant's contributions are credited to his Participant
Contribution Accounts, as provided in Section 2.5 hereof, there
will also be credited to the Company Contributions Account
maintained for such Participant the Company Contribution with
respect to such Participant, which shall be invested in
accordance with Article IV of the Plan.
ARTICLE IV
Trust Fund
4.1 Trustees. All Participant's contribution and Company
Contributions shall be paid into, and all distributions herein
provided for shall be paid from, a Trust Fund maintained by
agreement between the Company, on behalf of the Employers, and
Trustees designated by the Compensation Committee. No part of
the Trust Fund may be used for or diverted to purposes other
than for the exclusive benefit of Participants. The Trust
Agreement shall be in such form and contain such provisions as
the Compensation Committee may deem appropriate, including, but
not limited to, provisions with respect to the powers and
authority of the Trust Agreement, the authority of the Board of
Directors or Compensation Committee to amend the Trust
Agreement, the authority of the Board of Directors or
Compensation Committee to settle the accounts of the Trustees
on behalf of all persons having an interest in the Trust Fund,
and the authority of the Compensation Committee to remove a
Trustee and appoint a successor Trustee. When entered into, the
Trust Agreement shall form a part of the Plan and all rights and
benefits that may accrue to any person under the Plan shall be
subject to all the terms and provisions of the Trust Agreement.
The Trustees shall choose brokers to effectuate transactions for
all investment funds.
4.2 (a) Investment of Trust Fund. Except as set forth in Article
VIII, the Trustees at the direction of the Incentive
Savings Plan Committee shall invest and reinvest the Trust
Fund and the income therefrom in either the
Vanguard/Wellington Fund described in Section 4.2(b), the
Interest Savings Fund described in Section 4.2(c), the
Continental Stock Fund described in Section 4.2(d), the
Vanguard U.S. Growth Portfolio described in Section 4.2(e),
or the Vanguard Index Trust - 500 Portfolio described in
Section 4.2(f) maintained in the Trust Fund for this
purpose. Each Participant shall designate, by filing a
notice with the Administrator in the manner prescribed by
the Administrator, the percentage of such Participant
Contributions and Company Contributions made in his behalf
to be invested in each of the investment funds in
multiples of 1% of such contributions. A Participant may
change his election of investment funds for future
Participant and Company Contributions made on his behalf
daily by filing a notice with the Administrator in the
manner prescribed by the Administrator for such purpose.
The election by a Participant of allocations between
investment funds shall be applicable to all contributions
then being made in his behalf.
A Participant may direct the transfer of the total value
of his Accounts from one or more of the investment funds,
as set forth in this Section 4.2, to any other investment
funds as set forth therein. Except for transfers out of
the Continental Stock Fund, a Participant may make such an
election under this Section 4.2(a) daily by filing a
notice with the Administrator in the manner prescribed by
the Administrator. A Participant may make such an election
under this Section 4.2(a) with regard to transfers out of
the Continental Stock Fund by filing a notice with the
Administrator, no more than twice in any calendar quarter,
in the manner prescribed by the Administrator.
(b) Vanguard/Wellington Fund. The Trustees shall invest and
reinvest the Vanguard/Wellington Fund, and the income
therefrom, without distinction between principal and
income, in shares of the Vanguard/Wellington Fund, Inc.,
a diversified investment company which is managed by The
Vanguard Group, Inc. and is a member of The Vanguard Group
of Investment Companies. The Trustees shall maintain such
part of the Vanguard/Wellington Fund in cash uninvested as
they shall deem necessary or desirable. The Trustees shall
be the owner of and have title to all the assets of the
Vanguard/Wellington Fund and shall have full power to
manage the same. Brokerage commissions, transfer taxes,
and other charges and expenses in connection with the
purchase and sale of investments of the Vanguard/Wellington
Fund shall be charged to the Vanguard/Wellington Fund.
(c) Interest Savings Fund. The Trustees at the direction of
the Incentive Savings Plan Committee shall invest and
reinvest the Interest Savings Fund, and the income
therefrom, without distinction between principal and
income, in short-term investments such as credit
investments, commercial paper, certificates of deposit,
bankers' acceptances, U.S. Government or Agency securities,
repurchase agreements and demand notes, all with maturities
of less than one year, and in floating rate notes that
include a provision for resetting the interest rate at
least once each year during the term of the note, or bonds,
notes or other evidence of indebtedness which may be put
back to the issuer within one year of purchase by an
investor. Alternately, the Trustees are authorized to
invest and reinvest the Interest Savings Fund, and the
income therefrom, without distinction between principal and
income, in Guaranteed Interest Contracts ("GIC") and
similar financial instruments guaranteed by an insurance
company, bank or an agency of the U.S. Government.
However, in no event may the Trustees invest the Interest
Savings Fund in any securities or debt instruments of any
kind issued by an Employer or Affiliated Corporation. The
Trustees at the direction of the Incentive Savings Plan
Committee shall maintain such part of the Interest Savings
Fund in cash uninvested as they shall deem necessary or
desirable. The Trustees shall be the owner of and have
title to all the assets of the Interest Savings Fund and
shall have full power to manage the same at the direction
of the Incentive Savings Plan Committee. Brokerage
commissions, transfer taxes, and other charges and expenses
in connection with the purchase and sale of investments of
the Interest Savings Fund shall be charged to the Interest
Savings Fund.
(d) Continental Stock Fund. The Trustee at the direction of
the Incentive Savings Plan Committee shall invest and
reinvest the Continental Stock Fund, and the income
therefrom, in the common stock of The Continental
Corporation. Purchases of common stock of The Continental
Corporation by the Trustee shall be made on any day but,
if purchases cannot be made on such date because the stock
exchanges on which such stock is traded are closed or
because trading in the common stock of The Continental
Corporation has been suspended or halted on such date, the
purchases will be made on the next date on which such
exchanges are open for trading or trading in the Common
Stock of The Continental Corporation is resumed, as the
case may be (the "Stock Purchase Date"). For temporary
periods, until stock purchases are made, the Trustee will
invest cash in short-term investments as permitted for the
Interest Savings Fund and described in Section 4.2(c).
Continental common stock may be purchased from the Company
or from Employers or from other sources, provided that (i)
if the Company issues to its shareholders warrants or
rights for the purchase of Continental common stock or
makes available a dividend reinvestment plan for
shareholders, the Trustee in its discretion may exercise
any warrants or rights the Trustee may hold or subscribe
to such dividend reinvestment plan and (ii) the Company or
any other Employer may, at its election contribute newly
issued or Treasury shares of Continental common stock to
the Trustee in lieu of the equivalent amount of cash, as
provided in Section 3.2. The dollar amount of the Company
Contribution shall be established as soon as practicable
after each payday, however, in the event that the Company
or any other Employer elects to contribute shares of
Continental Common Stock in lieu of cash or if the Trustee
purchases such shares from the Company or any of its
subsidiaries, the purchase price of such shares so
contributed or so purchased shall be the mean of the high
and low prices for sales of common stock of The Continental
Corporation as reported on the composite tape of the New
York Stock Exchange on the next Stock Purchase Date.
Brokerage commissions, transfer taxes, and other charges
and expenses in connection with the purchase and sale of
Continental Common Stock for the Continental Stock Fund
shall be charged to the Continental Stock Fund.
(e) Vanguard U.S. Growth Portfolio. The Trustees shall invest
and reinvest the Vanguard U.S. Growth Portfolio, and the
income therefrom, without distinction between principal and
income, in shares of the Vanguard U.S. Growth Portfolio,
a diversified investment company which is managed by The
Vanguard Group, Inc. and is a member of The Vanguard Group
of Investment Companies. The Trustees shall maintain such
part of the Vanguard U.S. Growth Portfolio in cash
univested as they shall deem necessary or desirable. The
Trustees shall be the owner of and have title to all the
assets of the Vanguard U.S. Growth Portfolio and shall have
full power to manage the same. Brokerage commissions,
transfer taxes, and other charges and expenses in
connection with the purchase and sale of investments of the
Vanguard U.S. Growth Portfolio shall be charged to the
Vanguard U.S. Growth Portfolio.
(f) Vanguard Index Trust - 500 Portfolio. The Trustees shall
invest and reinvest the Vanguard Index Trust - 500
Portfolio, and the income therefrom, without distinction
between principal and income, in shares of the Vanguard
Index Trust - 500 Portfolio, a diversified investment
company which is managed by The Vanguard Group, Inc. and
is a member of The Vanguard Group of Investment Companies.
The Trustees shall maintain such part of the Vanguard Index
Trust -500 Portfolio in cash univested as they shall deem
necessary or desirable. The Trustees shall be the owner
of and have title to all the assets of the Vanguard Index
Trust - 500 Portfolio and shall have full power to manage
the same. Brokerage commissions, transfer taxes, and other
charges and expenses in connection with the purchase and
sale of investments of the Vanguard Index Trust - 500
Portfolio shall be charged to the Vanguard Index Trust -
500 Portfolio.
4.3 Valuation of Investment Shares and Investment Units. The value
of an Investment Share or an Investment Unit shall be determined
on each business day by the Trustees.
4.4 Annual Statement to Participants. As soon as practicable after
the last day of each year the Administrator will furnish by mail
or otherwise to each Participant a statement showing the amount
of his contributions that has been credited to his Participant
After-Tax Contributions Account, his Tax-Deferred Contributions
Account and his Rollover Account, the amount of the Company
Contributions that has been credited to his Company
Contributions Account, and the value of all assets, Investment
Shares and Investment Units credited to his Accounts as of the
last day of such year.
ARTICLE V
Distribution to Participants
5.1 Termination of Employment at or After Age 60 if Employment
Commenced Prior to January 1, 1988, or on Account of Disability
or After 5 Years of Vesting Service. A Participant who
terminates Employment at or after age 60, if employment
commenced prior to January 1, 1988, or who at any age terminates
Employment and is granted long-term disability benefits under
the Company's Long-Term Disability Plan, or who at any age
terminates Employment after 5 Years of Vesting Service, shall,
unless he elects optional deferred distribution in accordance
with Section 5.6, receive a distribution, equal to the value as
of the date the Trustee receives the required documentation of
all assets, Investment Shares and Investment Units then credited
to his Accounts. Notwithstanding the foregoing, a Participant
who is granted long-term disability benefits under the Company's
Long-Term Disability Plan may make an irrevocable election in
writing on or before the date his long-term disability benefits
commence to defer the distribution from his accounts until the
last day of the twelfth month after his long-term disability
benefits commence. The distribution to which the Participant
shall be entitled if he elects such deferral shall be equal to
the value of all assets, Investment Shares and Investment Units
credited to his Accounts as of the deferred distribution date.
5.2 Death of Participant. A Participant may file with the
Administrator a designation of beneficiary, on a form provided
by the Administrator, and at any time may change or revoke the
same by filing with the Administrator a form provided by the
Administrator for such purposes. However, if the Participant
is married and the designated beneficiary is other than the
Participant's spouse, then the foregoing form must be
accompanied by the written consent of such spouse to the
designation of the beneficiary. The consent of the spouse must
acknowledge the effect of the designation and must either be
notarized or witnessed by a plan representative. If a
Participant does not file a designation of beneficiary, or there
is no designated beneficiary living at the Participant's death,
then the Participant's spouse, or if none, the executor of the
Participant's will or the administrator of his estate shall be
deemed to be his beneficiary for the purposes of the Plan. Upon
the death of a Participant, his beneficiary shall receive a
distribution equal to the value, as of the date the Trustee
receives the required documentation, of all assets, Investment
Shares and Investment Units then credited to the Participant's
Account.
5.3 Termination of Participant's Employment for Other Reasons.
Except as provided in Section 8.4 in case of a Change in
Control, a Participant who has not yet been credited with 5
years of Vesting Service and who, if his Employment commenced
prior to January 1, 1988, before age 60 terminates Employment
(other than on account of a disability for which he is granted
long-term disability benefits under the Company's Long Term
Disability Plan) shall, unless he elects optional deferred
distribution in accordance with Section 5.6, receive a
distribution equal to the value, as of the date the Trustee
receives the required documentation, of all assets,, Investment
Shares and Investment Units then credited to his Participant
Contribution Accounts and his Rollover Accounts, in which the
Participant is always 100% vested, and of the percentage of the
assets, Investment Shares and Investment Units then credited to
his Company Contributions Account in which he is then vested
according to the following table:
Number of Full Years Percentage of Company
of Vesting Service Contributions Account
At Termination of Employment Vested in Participant
Less than 1 0
1 20
2 40
3 60
4 80
5 or more 100
In addition, a Participant shall be 100% vested in all his
Accounts upon attaining his Normal Retirement Age which shall
be the later of (a) the date the Participant attains age 65, or
(b) the fifth anniversary of the time the Participant commences
participation in the Plan.
5.4 Forfeiture. When a Participant terminates Employment pursuant
to Section 5.3 hereof and receives a distribution under Section
5.5 hereof, the value of any assets, Investment Shares and
Investment Units credited to his Company Contributions Account
in which he is not vested pursuant to Section 5.3 hereof, shall
be forfeited as of the date his Employment terminates, and shall
be left in the Trust Fund. However, if a Participant terminates
Employment pursuant to Section 5.3 hereof and defers
distribution, then the value of any assets, Investment Shares
and Investment Units credited to his Company Contributions
Account in which he is not vested pursuant to Section 5.3 hereof
shall be forfeited as of the date in which the earlier of the
following events occurs (i) his receipt of a distribution under
Section 5.5 hereof, or (ii) his completion of a five year Break
in Service as defined in Section 1.5 hereof. Forfeitures for
any calendar year shall not increase the benefits any
Participant would otherwise receive under the Plan but shall be
applied to reduce the Company Contributions under the Plan for
that calendar year or to pay the expenses of the Plan as set
forth in Section 7.5 of the Plan.
5.5 Distributions. Subject to Sections 5.6 and 5.7 hereof, a
distribution to a Participant or his beneficiary shall be made
in a single payment as soon as practicable after the earlier of
the death of the Participant, the termination of the
Participant's Employment, or no later than the April 1 next
following the December 31 of the year in which the Participant
attains age 70-1/2, and may be made in cash or in kind or partly
in each, as the Administrator in his sole discretion shall
determine. If a Participant continues to make contributions to
this Plan after the calendar year in which the Participant
attains age 70-1/2, the vested balance in the Participant's
accounts at the end of each calendar year shall be paid in a
single payment as described in the preceding sentence. Benefits
under the Plan will begin, unless the Participant otherwise
elects in writing, no later than the 60th day after the latest
of the Plan year in which (a) the Participant either reaches age
65 or the Plan's Normal Retirement Age, whichever comes first,
(b) occurs the fifth anniversary of the year in which the
Participant began participation under the Plan, or (c) the
Participant terminates Service with the Employer.
5.6 Optional Deferred Distribution. If the value of his Accounts
is more than $3,500 on the applicable valuation date, a
Participant may elect by written notice given in advance of his
termination of Employment to defer a distribution until the
last day of the twelfth month after his Employment terminates
if he terminates prior to age 69-1/2 or, until his 65th birthday
if he terminated prior to age 65. If a Participant electing a
deferred distribution has an outstanding loan under Section 6.6
at the date of deferral, such loan must be repaid by the
Participant through a direct payment to the Plan or a reduction
of his remaining account balances before such deferral may
become effective. Notwithstanding the foregoing, any
Participant who (i) is a Retained Employee (as that term is
defined in Section 5.1(a) of the Stock Purchase Agreement among
The Continental Corporation, The Continental Insurance Company,
Continental Reinsurance Corporation and Mellon Bank Corporation,
dated as of June 30, 1993), (ii) has an outstanding loan under
Section 6.6 and (iii) elects to defer his distribution for a
twelve-month period shall be permitted to continue to repay the
outstanding loan as provided for in Section 6.6. If a
Participant makes an election after December 31, 1988 to defer
a distribution in accordance with this Section 5.6, the vested
value of the Participant's Accounts as determined in Sections
5.1 or 5.3 shall be transferred to the Interest Savings Fund.
The distribution to which the Participant shall be entitled
shall be equal to the value of the Investment Units credited to
such Participant's Accounts as of the last day of the twelfth
month after the Participant's Employment terminates or the date
of his 65th birthday, whichever is applicable. This election
shall be irrevocable and shall constitute a waiver of the
provisions of Article VI of the Plan, but it shall be
inoperative if before his Employment terminates the Participant
dies or becomes disabled. In the event a Participant returns
to Employment prior to the end of his deferral period and again
makes Participant Contributions, the deferral election shall be
cancelled as of the Entry Date on which such Participant
Contributions commence.
5.7 Distribution of Employer Securities. Any Participant or his
beneficiary entitled to a distribution under this Article V of
the Plan from the Continental Stock Fund may elect, by written
request received by the Administrator not later than the
valuation date for such distribution, to receive payment in
common stock of The Continental Corporation held by the Trust
Fund or cash. Any common stock of The Continental Corporation
distributed subject to such election shall be in whole shares
only with the value of fractional share paid in cash.
5.8 Restoration of Forfeited Amounts. If a Participant forfeits any
of his Company Contributions Account pursuant to Section 5.3
hereof and reenters Employment before he has a Break in Service
of at least 60 consecutive months, the dollar amount which he
forfeited shall be restored as of the first Entry Date
coinciding with or next following the date he reenters
Employment in a separate account established for such
Participant as a part of his Company Contributions Account.
Section 5.3 notwithstanding, the Participant shall be vested at
any time thereafter in that amount of such separate account
equal to:
P(AB + (R x D)) - (R x D),
where P is the Participant's vested percentage determined under
Section 5.3 hereof at such time; AB is the balance in the
separate account at such time; D is the amount of the prior
distribution from his Company Contributions Account; and R is
the ratio of the balance in the separate account at such time
to the Participant's balance in his Company Contributions
Account immediately after the prior distribution (but prior to
any forfeiture).
5.9 Payment of Distribution. Any distribution to be made pursuant
to this Article V shall be made as soon as reasonably
practicable after the valuation of the Participant's Accounts
necessary for determining the amount of such distribution has
been completed.
ARTICLE VI
Withdrawals and Loans
6.1 Limitation on Withdrawals. A Participant who makes a withdrawal
from the Plan pursuant to Section 6.2 hereof may not make
another withdrawal pursuant to such section while he remains in
Employment until 12 months after the date following such earlier
withdrawal. He is not, however, precluded from making a
hardship withdrawal pursuant to the provisions of Section 6.4
hereof or receiving a loan pursuant to the provisions of Section
6.6 hereof.
6.2 Amount of Withdrawal. By giving notice in writing to the
Administrator, any Participant may make a withdrawal from his
Accounts while he remains in Employment, subject to Section 6.1
hereof. Such withdrawal may be a specific dollar amount but not
less than $1,000, or the amount of his After-Tax Contributions,
or the value, as of the date such notice is received by the
Trustee, of all assets and Investment Units then credited to
Accounts to the extent vested and available as described in
Section 6.3. If the Participant wishes to withdraw less than
$1,000 he must withdraw the full amount of his Vested accounts
then available unless the withdrawal is limited to his After-Tax
Contributions.
6.3 Order of Withdrawal From Accounts. Any withdrawal requested by
a Participant shall be withdrawn from his Accounts in the
following order until the amount of such withdrawal is obtained.
Withdrawals shall first be made from a Participant's After-Tax
Contributions Account, then if necessary from his Company
Contributions Account (but not to exceed his then Vested
interest therein), then from his Tax-Deferred Contributions
Account and last from his Rollover Account provided that no
withdrawal may be made under this Section from his Tax-Deferred
Contributions Account or amounts in his Rollover Account unless
the Participant has attained age 59-1/2 at the date of such
withdrawal.
6.4 Hardship Withdrawal.
(a) In case of a Participant's illness, unusual need,
emergency, or for the purpose of acquiring or preserving
a home, or of providing for the education of the
Participant or his dependents, the Administrator, in his
sole discretion but in accordance with uniform policies
established by the Administrator providing for treatment
of Participants in similar circumstances in a similar
fashion, may permit such Participant to make a hardship
withdrawal from his After-Tax, or Vested Company
Contributions Accounts (in that order) while he remains in
Employment, upon such Participant's application therefor
and if such Participant, at the time such application is
made, has applied for all withdrawals under Section 6.2
which he is eligible to make at such time. Such hardship
withdrawal shall be in cash and shall equal an amount, as
determined by the Administrator, not exceeding the value,
as of the date the withdrawal becomes effective, of the
assets, Investment Shares and Investment Units then
credited to such Participant's Accounts to which the
Participant would be entitled pursuant to Sections 5.1 or
5.3 hereof if such Participant terminated Employment (other
than on account of a disability for which he is granted
disability benefits under the Company's Long-Term
Disability Plan) on the date the withdrawal becomes
effective. The amount to be withdrawn shall first be
withdrawn from his Participant After-Tax Contributions
Account and to the extent the amount to be withdrawn would
exceed the values of both such accounts combined, the
excess shall be withdrawn from his Company Contributions
Account.
(b) An additional hardship withdrawal from a Participant's
Tax-Deferred Contributions Account or Rollover Account may
be approved by the Administrator, if such withdrawal is
necessary to satisfy an immediate and heavy financial need
of the Participant, and the amount of the additional
hardship withdrawal does not exceed the amount necessary
to satisfy such need. Whether an immediate and heavy
financial need exists shall be determined based on the
relevant facts and circumstances. An immediate and heavy
financial need will be considered to exist for purposes of
this section of the Plan if a withdrawal is requested on
account of:
(i) medical expenses incurred by the Participant, the
Participant's spouse, or any other dependents of the
Participant;
(ii) purchase (excluding mortgage payments) of a principal
residence for the Participant;
(iii) payment of tuition for the next semester or
quarter of post-secondary education for the
Participant, his or her spouse, children, or
other dependents;
(iv) the need to prevent the eviction of the Participant
from his principal residence or foreclosure on the
mortgage of the Participant's principal residence; or
(v) other financial need considered to be immediate and
heavy by the Administrator,
and the Participant has represented, on a form provided by
the Administrator, that the financial need can not
reasonably be met from other financial resources available
to him, including loans under Section 6.6. However, to the
extent that a hardship withdrawal is made from a
Participant's Tax-Deferred Contributions Account, or
Rollover Account, on or after January 1, 1989 and prior to
the Participant attaining age 59-1/2, such withdrawal may
be made only to the extent of the Participant's
contributions to such Accounts, and may not include
investment earnings credited to such Accounts on or after
January 1, 1989.
6.5 Withdrawal of Less Than Full Account Value. In the event that
any withdrawal is for less than the full value of an Account and
such Account includes assets, Investment Shares or Investment
Units in any of the investment funds such withdrawal shall be
made, to the extent possible, proportionately from each
investment fund under rules established by the Administrator for
such purpose.
6.6 Loans. In accordance with uniform policies established by the
Administrator providing for treatment of Participants in similar
circumstances in a similar fashion, the Administrator may, for
any reasonable purpose he approves, lend to a Participant from
the Trust Fund upon such Participant's application therefor, an
amount not exceeding the value, on the day the loan is made, of
the assets, Investment Shares and Investment Units then credited
to his Accounts, subject to the following maximum. The
Participant may borrow up to 50% of the (i) value of his
Participant Contributions Accounts plus his Rollover Account and
(ii) vested value of his Company Contributions Account.
However, in no event may the outstanding balance of all loans
to any Participant exceed $50,000. The $50,000 maximum shall
be reduced by the excess (if any) of the highest outstanding
loan balance from the Plan to such Participant during the
preceding twelve-month period over the outstanding balance of
loans from the Plan on the date the loan is made. Such loan
shall bear interest at such reasonable rates as the
Administrator may from time to time establish, shall be
adequately secured, and shall be repaid over a period not to
exceed five years, or fifteen years in the case of a loan used
to acquire any dwelling unit which within a reasonable time is
to be used (determined at the time the loan is made) as the
principal residence of the Participant, in level payments made
at least quarterly. If at the date of a distribution or
withdrawal of his account balances a Participant has an
outstanding loan balance, such loan balance shall reduce his
account balances available for distribution or withdrawal. If
at the date of termination of employment a Participant has an
outstanding loan balance and elects deferred distribution under
Section 5.6 of the Plan, then any loan balance shall reduce his
account balances being deferred unless he has repaid such loan
by direct payment to the Plan. Notwithstanding the foregoing,
any Participant who (i) is a Retained Employee (as that term is
defined in Section 5.6) and (ii) has an outstanding loan balance
as of the date he makes an election to defer his distribution
for twelve months as provided for in Section 5.6, may continue
to repay his outstanding loan balance by direct payment to the
Plan on the same terms and at the same rate he was repaying such
loan at the date of his deferral election, except that the
payments shall be made on a quarterly basis. Any remaining loan
balance at the end of the twelve-month deferral period shall
reduce his account balances available for distribution. All
loans to a Participant shall be made pro rata from such
Participant's Accounts invested in the investment funds.
6.7 Payment of Withdrawal. Payment of any withdrawal pursuant to
this Article VI shall be made as soon as reasonably practicable
after the valuation of a Participant's Accounts necessary for
determining the amount of such withdrawal has been completed.
6.8 Determination of Vesting After A Withdrawal. Section 5.3
notwithstanding, if a Participant withdraws funds from his
Company Contributions Account before he is 100% vested, then the
Participant shall be vested at any time thereafter in that
amount of his Company Contributions Account equal to:
P(AB + D) - D,
where, for purposes of this Section 6.8, P is the Participant's
vested percentage determined under Section 5.3 hereof at such
time; AB is the balance in his Company Contributions Account at
such time; and D is the amount of the prior withdrawal from his
Company Contributions Account.
ARTICLE VII
Administration of the Plan
7.1 Powers of the Incentive Savings Plan Committee. The Incentive
Savings Plan Committee shall administer the Plan in accordance
with its terms and shall have all powers and authority necessary
or appropriate for carrying out their duties in that respect.
Not in limitation but in amplification of the foregoing, the
Incentive Savings Plan Committee, subject to the provisions of
the Plan, from time to time shall adopt and establish such rules
as they deem necessary or desirable for administering the Plan
and shall establish a procedure for establishing and carrying
out a funding policy and method consistent with the objectives
of the Plan and the requirements of the law, which policy and
method shall be reviewed at least annually. The Incentive
Savings Plan Committee shall have full power and authority to
interpret, construe and administer the Plan, and determine all
questions that may arise hereunder. The Incentive Savings Plan
Committee may correct any error or defect or supply any omission
or reconcile any inconsistency in such manner and to such extent
as they shall deem expedient to carry the Plan into effect, and
they shall be the sole and final judge of such expediency. The
interpretations and constructions of the Incentive Savings Plan
Committee and all other acts and determinations of the Incentive
Savings Plan Committee done or made in good faith, shall be
final, conclusive and binding upon all parties, including each
of the Affiliated Corporations, their employees, and the
beneficiaries of Participants. The Incentive Savings Plan
Committee may appoint in writing such persons, who need not be
members of the Incentive Savings Plan Committee, as they may
deem necessary or desirable for the effective exercise of the
duties and responsibilities of the Incentive Savings Plan
Committee, and may delegate to such persons in writing such
duties and confer upon them in writing such powers,
discretionary or otherwise, as the Incentive Savings Plan
Committee may deemed expedient or appropriate. With respect to
all or any portion of the Plan assets, the Incentive Savings
Plan Committee may appoint an investment manager or managers,
pursuant to Sections 402(c)(3) and 405(c)(1) of ERISA, to
manage, acquire, or dispose of any assets of the Plan. Each
such investment manager shall accept appointment as a fiduciary
of the Plan and shall be either registered as an investment
adviser under the Investment Advisers Act of 1940, a bank as
defined under that Act, or an insurance company qualified under
the laws of more than one state to manage, acquire, or dispose
of Plan assets.
7.2 Procedure of the Trustees. Except where the Trustee is a
corporate Trustee, the following provisions shall govern. Where
a corporate Trustee is appointed, it may act through any one or
more of its duly authorized officers or employees. The Trustees
shall designate one of their number as Chairman, and shall
appoint a Secretary, who may, but need not, be a Trustee. The
Chairman shall preside at all meetings of the Trustees at which
he is present, but in his absence any Trustee may call the
meeting to order and preside. The Secretary shall duly record
or cause to be recorded all acts and determinations of the
Trustees, and all records shall be preserved in his custody or
as the Trustees may direct. Any act or determination that the
Plan authorizes or requires the Trustees to do or make may be
done or made by a majority of the Trustees at the time acting
hereunder, and the act or determination of such majority of the
Trustees expressed at any time and from time to time by a vote
at a meeting or in writing without a meeting shall constitute
the act or determination of the Trustees and shall have the same
effect for all purposes as if assented to by all the Trustees
serving at the time. Any person dealing with the Trustees or
with any agent or representative of the Trustees shall be
entitled to rely upon the certificate of the Chairman or
Secretary as to the fact that any act or determination is the
act or determination of the Trustees. The Trustees shall have
the power to adopt rules for the time and place of their
meetings, the notice to be given of such meetings, and all
similar matters governing the conduct of the Trustees' business.
7.3 Administrator. The Administrator shall have the duties and
responsibilities set forth in this Plan and the duties and
responsibilities imposed by law on the administrator of an
employee benefit plan. In addition, the Administrator shall
perform such other duties and responsibilities as may be
delegated to him in writing by the Incentive Savings Plan
Committee, and shall have such powers as may be conferred on him
in writing by the Incentive Savings Plan Committee. The
Administrator may appoint in writing such persons as he may deem
necessary or desirable for the effective exercise of his duties
and may delegate to such persons in writing such duties and
responsibilities and confer upon them in writing such powers,
discretionary or otherwise, as he may deem expedient or
appropriate.
7.4 Advice. The Trustees, Incentive Savings Plan Committee and the
Administrator (and any person or persons to whom the Trustees,
Incentive Savings Plan Committee or the Administrator have
delegated any duties or responsibilities) may employ one or more
persons to render advice with regard to any of the duties or
responsibilities of the Trustees, Incentive Savings Plan
Committee or the Administrator under the Plan.
7.5 Expenses. The expenses of the Trustees, Incentive Savings Plan
Committee and the Administrator in the administration of the
Plan shall be paid, to the extent possible, from forfeitures in
the Trust Fund. Any such expenses not paid from the Trust Fund
shall be defrayed by the Company.
7.6 Exoneration. The Trustees, Incentive Savings Plan Committee and
the Administrator shall be entitled to rely upon all
certificates and reports made by any independent public
accountant, and upon all opinions of law given by any counsel
(who may be counsel to an Employer) and shall be fully protected
in respect to any act done or permitted or determination made
in good faith in reliance upon any such certificate, report or
opinion. Neither a Trustee, Incentive Savings Plan Committee
nor the Administrator shall be liable to an Employer or to any
employee or to any beneficiary of an employee on account of any
act done or omitted or determination made in the performance of
his duties under the Plan, nor for any act done or omitted by
any agent or representative of the Trustees, Incentive Savings
Plan Committee or the Administrator so long as such Trustee,
Incentive Savings Plan Committee or Administrator has acted with
the care, skill prudence, and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. Neither
shall any Trustee be liable to any person for any act done or
omitted by any other Trustee except to the extent prescribed by
law. The Company agrees to indemnify and hold harmless the
Trustees, Incentive Savings Plan Committee and the Administrator
from and against any liability they may incur in the
administration of the Plan, unless arising from their own
negligence or willful misconduct. The provisions of this
Section 7.6 shall be effective only to the extent permitted by
law.
7.7 Benefit Claims Procedure.
(a) In the event that any person makes a claim for benefits
under this Plan and such claim is denied in whole or part,
the Administrator, within a reasonable time, shall furnish
to such person a written notice of such denial setting
forth the specific reasons for such denial, specific
references to the provisions of the Plan upon which such
denial is based, a description of any additional material
or information necessary for such person to provide
including an explanation why such material or information
is necessary, and an explanation of the review procedure
under this Plan.
(b) Any person whose claim for benefits is denied in whole or
part may, within sixty days after receiving the foregoing
notice, request in writing addressed to the Administrator
a review by the Incentive Savings Plan Committee of the
denial. In addition, any person who makes a claim for
benefits under this Plan and does not receive any decision
on such claim within a reasonable time may request a review
by the Incentive Savings Plan Committee of the claim. Any
person requesting a review under this Subsection 7.7(b)
shall have the opportunity to review pertinent documents
and to submit a written statement to the Incentive Savings
Plan Committee, shall be entitled to request a hearing
before the Incentive Savings Plan Committee, and shall be
entitled to have representation in connection with this
review procedure.
(c) Upon receipt of a request for review under Subsection
7.7(b) hereof, the Incentive Savings Plan Committee, shall
render a decision as promptly as possible and in any event
within sixty days from such receipt, unless special
circumstances, such as the need to hold a hearing, require
an extension of time for processing; in which case a
decision shall be rendered as soon as possible, but not
later than 120 days from such receipt. The decision of the
Incentive
Savings Plan Committee shall be in writing and shall
include the specific grounds for the decision and specific
reference to the provisions of this Plan upon which the
decision is based.
ARTICLE VIII
Voting Rights, Tender Offers and Changes in Control
8.1 In General. All rights with respect to Employer Securities in
the Contiental Stock Fund shall be exercised and all directions
to tender Employer Securities in the Continental Stock Fund
pursuant to a tender offer shall be made in accordance with the
following provisions of this Article VIII.
8.2 Notice by Company to Participants and Participants'
Instructions.
Within one hundred and twenty hours of the commencement of a
tender offer (which shall be deemed to commence at 12:01 A.M.
New York time on the day the tender offer is first published or
distributed to shareholders) and in accordance with the Trust
Agreement, the Company shall provide to each Participant (1) the
written tender offer information provided to the shareholders
of the Company, (2) a statement of the number of full and
fractional shares of Employer Securities which the Participant
may direct the Trustees to tender, and (3) the means established
and paid for by the Company by which the Participant may
expeditiously instruct the Trustees to tender or not to tender
part or all of the number of shares of Employer Securities held
in his account in the Continental Stock Fund. Thereafter,
during the pendency of the tender offer, the Company shall
promptly provide each Participant with any additional written
tender offer information that is provided to shareholders of the
Company; but except for directions as to how to use the forms
provided for giving instructions, the Company shall not provide
to Participants any information or guidance not provided to all
shareholders. The Trustees shall tender or not tender (or
withdraw from tender) shares in accordance with such
instructions. The Trustees shall not tender shares for which
no timely instructions have been received. In any event, they
shall not tender any shares until a time not sooner than three
hours before the last time (the "Expiration Time") shares can
be tendered under the terms of the tender offer as announced
prior to the time of tender, except that in the case of an offer
for less than all of the Company's shares, if the pro-ration
period ends before the Expiration Time, the Trustees will tender
such shares not sooner than three hours before the end of the
pro-ration period. If permitted to do so under the terms of the
tender offer and applicable law, the Trustees will withdraw from
the tender offer any shares tendered pursuant to the offer on
behalf of a Participant if the Participant shall have requested
the withdrawal of such shares. A Participant shall not be
limited as to the number of instructions to tender or withdraw
that he may give to the Trustees. All shares that have been
tendered pursuant to Participant's instructions and have not
been withdrawn prior to the expiration of the tender offer will
be withdrawn from the Continental Stock Fund and will be sold
by the Trustees in accordance with the terms of the tender
offer. All proceeds of such sales, the right to receive such
proceeds, and the reinvestment of such proceeds shall be held
in the Participant's account in the Continental Stock Fund.
Tender offer instructions received from Participants shall be
held in confidence by the Trustees and shall not be divulged to
the Company or to any officer or employee thereof, or to any
other person other than such agents of the Trustees as they may
appoint to perform their duties under this Section. In
implementing the foregoing procedures, the Company will act
fairly, in the best interests of each Participant, and in a
manner which will not impose undue pressure on any Participant
as to what tender offer instructions he or she should give to
the Trustees. Specifically, the Company (a) shall assure that
all written information provided to all other shareholders of
the Company about the terms of the tender offer is provided to
Participants on a timely basis and that clearly false or
misleading information is not provided (or is corrected if it
has been provided to Participants by other parties) and (b)
shall not mislead Participants or exert pressure on Participants
to give particular tender offer instructions. The Company shall
certify to the Trustees in writing upon the Trustees' request
that the Company has complied with the provisions of the
previous sentence.
8.3 General. The Trustees shall have no duty to solicit directions
from Participants except as specified herein and in the Trust
Agreement. The Trustees shall have no liability with respect
to the tender or failure to tender of any shares of Employer
Securities made in accordance with the provisions of this
Article VIII.
Notwithstanding the above, no Participant shall have by reason
of this Article VIII any right, title or interest in Employer
Securities or the Continental Stock Fund. However, a
Participant will have the right to instruct the Trustees with
respect to such Employer Securities in the case of a tender
offer as set forth in Section 8.2 of this Plan.
8.4 Change in Control. After a Change in Control, as defined below,
any Participant who terminates Employment shall receive a
distribution, valued as of the date his Employment terminates,
of all assets, Investment Shares and Investment Units then
credited to his Accounts. For purposes of this section, a
"Change in Control" means the occurrence of any of the following
events: (i) any "person" or "group" of persons (as such terms
are used in sections 13 and 14 of the Securities Exchange Act
of 1934, as amended), other than any employee benefit plan
sponsored by the Company, becomes the "beneficial owner" (as
such term is used in section 13 of such Act) of 30% or more of
the outstanding shares of the Company's capital stock entitled
to vote for the election of directors; or (ii) any shares of any
class of the Company's capital stock are purchased pursuant to
a tender or exchange offer (other than an offer by the Company
or a subsidiary thereof); or (iii) the approval by the requisite
vote of the Company's shareholders of any merger, consolidation,
sale of assets, liquidation or reorganization as a result of
which the Company will not survive as a publicly-owned
corporation; or (iv) a change in the composition of the Board
of Directors during any period of two consecutive years such
that individuals who at the beginning of such period were
members of the Board Directors cease for any reason to
constitute at least a majority thereof, unless the election, or
the nomination for election by the Corporation's shareholders,
of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were
directors at the beginning of the period.
8.5 Voting of Other Shares of Continental Stock Held in Continental
Stock Fund. Any other provisions of this Article VIII
notwithstanding, the Trustees shall provide each Participant who
has shares of Continental Corporation common stock credited to
his Accounts invested in the Continental Stock Fund, with a copy
of the proxy solicitation material for each annual meeting or
special meeting of the shareholders of the Corporation, together
with a request for instructions as to how such shares should be
voted at the meeting. Upon receipt of such instructions, the
Trustees shall vote all such shares as instructed. The Trustees
shall vote such shares for which they have not received
instructions in proportion to those shares for which they
receive instructions.
ARTICLE IX
Amendment, Modification or Termination
9.1 Amendment, Modification or Termination.
(a) The Company, on behalf of the Employers, reserves the
right, by and through the Board of Directors or the
Compensation Committee, at any time to terminate the Plan,
in whole or in part, and at any time and from time to time
to amend or modify the Plan. The Office of the Chairman
(or, in the cases of clauses (i) and (iii) below, the
senior Human Resources officer) may approve in writing any
amendment to the Plan when it finds that such amendment:
(i) is required to conform the Plan to applicable laws or
regulations, (ii) will not increase the annual cost of the
Plan by more than the greater of 5% or $1 million, or (iii)
is intended only to implement transactions approved by the
Board. However, no amendment or modification of the Plan
shall make it possible, at any time prior to the
satisfaction of all liabilities with respect to employees
and their beneficiaries under the Plan, for any part of the
corpus or income of the Trust Fund to be (within the
taxable year or thereafter) used for or diverted to,
purposes other than for the exclusive benefit of employees
or their beneficiaries.
(b) If the Board of Directors or Compensation Committee
terminates the Plan, in whole or in part, then every
affected Participant at the date the termination takes
effect shall receive a distribution of the value as of the
date of distribution of all cash and Investment Units
credited to his accounts as of the date of termination.
Distribution to each affected Participant shall be made in
a single payment as soon after termination as practicable,
and may be made in cash or in kind or partly in cash, as
the Administrator in his sole discretion shall determine.
In the event that the Plan is terminated, or upon complete
discontinuance of Company Contributions under the Plan,
with respect to all or some of the Participants, the rights
of all affected Participants at the date the termination
takes effect or at the date of such complete discontinuance
of Company Contributions, as the case may be, to the
amounts credited to their respective Accounts shall become
nonforfeitable.
9.2 Merger, Consolidation and Transfer of Plan Assets. The Board
of Directors or Compensation Committee may direct the
Administrator to do all things necessary to effect a merger or
consolidation of the Plan with, or the transfer of all or a part
of the assets and liabilities of the Plan to, another plan (or
plans) if and only if
(a) Each trust forming a part of such plan (or plans) is a
qualified trust under Section 401 of the Internal Revenue
Code of 1986 and that each such trust is exempt from
Federal income tax under Section 501 of the Internal
Revenue Code of 1986;
(b) Each Participant in the Plan would (if the Plan then
terminated) received a benefit immediately after the
merger, consolidation or transfer which is equal to or
greater than the benefit he would have been entitled to
receive immediately before the merger, consolidation or
transfer (if the Plan had then terminated); and
(c) The Administrator shall have timely filed, pursuant to
Section 6058 of the Internal Revenue Code of 1954, an
actuarial statement of valuation evidencing compliance with
(b) above.
The Board of Directors, the Compensation Committee, the
Trustees and the Administrator shall be entitled to rely
conclusively on the certificate of any actuary stating that
the condition set forth in (b) above has been met.
ARTICLE X
Miscellaneous
10.1 No Right to Continued Employment. The Plan confers no right on
any employee to continue in employment and confers upon no
person any right, claim or interest to any payment under the
Plan or from the Trust Fund except as expressly provided in the
Plan.
10.2 Prohibition of Assignment of Interest. No interest, right or
claim in or to any part of the Trust Fund or any payment
therefrom shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, commutation, anticipation,
garnishment, attachment, execution or levy of any kind, and the
Administrator shall not recognize any attempt to assign,
transfer, sell, mortgage, pledge, hypothecate, commute, or
anticipate the same, except to the extent required by law.
10.3 Facility of Payments. In the event that the Administrator shall
find that any person to whom a benefit is payable under the Plan
is unable to care for his affairs because of illness or
accident, or otherwise, the Administrator may direct that any
benefit payments due shall be paid to the duly appointed legal
representative of such person, or if there be no duly appointed
legal representative, to the spouse, a child, a parent or other
blood relative of the person, or to any person deemed by the
Administrator to have incurred expense for the benefit of such
person, and any such payments so made shall be a complete
discharge of the liabilities of the Plan therefor.
10.4 Refund of Company Contributions. Once a contribution is made
to the Plan by an Employer on behalf of its Employees, it is not
refundable to the Employer unless the contribution:
(a) was made by a mistake of fact;
(b) was made conditioned upon a favorable determination by the
Internal Revenue Service and such a determination is not
received; or
(c) was made conditioned upon the contribution being allowed
as a deduction for Federal income tax purposes and such
deduction is disallowed.
Any refund under (a) must be made within one year from the
date the contribution was made to the Plan, and any refund
under (b) and (c) must be made within one year from the
date of failure to receive a favorable determination, or
the date of disallowance of the tax deduction,
respectively.
10.5 Number and Gender. Where from the context it appears
appropriate, each term used in this Plan in either the singular
or the plural shall include the singular and the plural, and
pronouns stated in either the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter.
10.6 Captions. Captions and Sections of this Plan are inserted for
convenience of reference only, and the Plan is not to be
construed by interpretation thereof.
10.7 Applicable Law. This Plan shall be interpreted, construed and
administered in accordance with the laws of the State of New
York (to the extent not preempted by ERISA), and with a view
toward compliance with ERISA.
ARTICLE XI
Top-Heavy Plan Provisions
11.1 General Rule. For any Plan Year (calendar year) commencing on
or after January 1, 1984 and in which this Plan is a "Top-Heavy
Plan" as defined in Section 11.7 in accordance with Section 416
of the Code and any applicable regulations thereunder, any other
provisions of this Plan to the contrary notwithstanding, this
Plan shall be subject to the following provisions:
(a) The vesting provisions of Section 11.2.
(b) The minimum contribution provision of Section 11.3.
(c) The limitation on compensation set by Section 11.4.
(d) The limitation on contributions set by Section 11.5.
11.2 Vesting Provisions. Each Participant who (i) has completed an
hour of service during any plan year in which the plan is
top-heavy and (ii) has completed the number of years of vesting
service specified in the following table shall have a
nonforfeitable right to the percentage of the benefit accrued
under this plan (derived from employer contributions)
correspondingly specified in the following table:
Percentage of
Years of Nonforfeitable
Vesting Service Benefit
Less than 1 0
1 20
2 40
3 60
4 80
5 of more 100
(a) Vesting Service" as used in this Section 11.2 shall
constitute Years of Vesting Service as defined in Section
1.23 of this Plan and used to determine the percentage of
nonforfeitable benefits under Section 5.3.
(b) Each Participant's nonforfeitable accrued benefit shall not
be less than his nonforfeitable accrued benefit determined
as of the last day of the last plan year in which the Plan
was a Top-Heavy Plan. If the Plan ceases to be top-heavy,
each Participant with five or more years of service,
whether or not consecutive, shall have his nonforfeitable
accrued benefit determined in accordance with this section
and Section 5.3. Each such Participant shall have the
right to elect the applicable schedule within 60 days after
the day the Participant is issued written notice by the
Administrator, or as otherwise provided in accordance with
regulations issued under the provisions of the Internal
Revenue Code of 1954, as amended, relating to change in the
vesting schedule.
(c) This provision shall apply without regard to contributions
or benefits under Social Security or any other Federal or
State Law.
11.3 Minimum Contribution Provisions. Each Employee eligible to
participate in the Plan who (i) is a Non-Key Employee (as
defined in Section 11.9 below) and (ii) is employed on the last
day of the Plan Year shall be entitled to have Company
contributions (including forfeitures) allocated to his Account
of not less than three percent (the "minimum contribution
percentage") of the Participant's Compensation (within the
meaning of Section 415 of the Code).
The minimum contribution percentage set forth above shall be
reduced for any Plan Year to the percentage at which Company
contributions (including forfeitures) are made (or required to
be made) under the Plan for the Plan Year for the Key Employee
for who such percentage is the highest for such Plan Year. For
this purpose, the percentage with respect to a Key Employee (as
defined in Section 11.8 below) shall be determined by dividing
the contributions (including forfeitures) made for such Key
Employees by so much of his Compensation for the Plan Year as
does not exceed $200,000 (adjusted in the same manner as the
amount set forth in Section 11.4 below).
Contributions taken into account under the immediately
preceeding sentence shall include contributions under this Plan
and under all other defined contribution plans required to be
included in an Aggregation Group (as defined in Section 11.7(c)
below) but shall not include any plan required to be included
in such required Aggregation Group if such plan enables a
defined contribution plan required to be included in such group
to meet the requirements of the Code prohibiting discrimination
as to contributions or benefits in favor of employees who are
officers, shareholders or the highly-compensated or prescribing
the minimum participation standards.
Contributions taken into account under this Section 11.3 shall
not include any contributions under the Social Security Act or
any other federal or state law. Participant Tax-Deferred
Contributions shall be taken into account as Company
contributions for purposes of this paragraph.
11.4 Limitation on Compensation. Compensation taken into account
under this section and under Section 1.9 for purposes of
computing contributions under this Plan shall not exceed the
first $200,000, provided that such limit shall be adjusted
automatically for each Plan Year to the amount prescribed by the
Secretary of the Treasury or his delegate pursuant to
regulations for the calendar year in which such Plan Year
commences.
11.5 Limitation on Contributions. In the event that the Company also
maintains a defined benefit plan the following shall apply:
(a) If for the Plan Year this Plan would not be a "Top-Heavy
Plan" as defined in Section 11.7 below if "90 percent" were
substituted for "60 percent", then Section 11.3 shall apply
for such Plan Year as if amended so that "four percent"
were substituted for "three percent" therein.
(b) If for the Plan Year this Plan would continue to be a
"Top-Heavy Plan" as defined in Section 11.7 below if "90
percent" were substituted for "60 percent", then the
denominator of both the defined contribution plan fraction
and the defined benefit plan fraction shall be calculated
as set forth in Section 3.1 for the Plan Year ending by
substituting 1.0 for 1.25 in each place such figure appears
in Sections 415(e)(2)(B) or 415(e)(3)(B) of the Code.
11.6 Coordination with Other Plans. In the event that a defined
benefit plan maintained by an Employer provides contributions
or benefits on behalf of Participants in this Plan, such other
plan shall be treated as a part of this Plan pursuant to
applicable principles (such as Rev. Rul. 81-202 or any successor
ruling) in determining whether this plan satisfies the
requirements of Section 11.3, thereby providing benefits at
least equal to the defined benefit minimum. Such determination
shall be made upon the advice of counsel by the Plan's
Committee.
11.7 Top-Heavy Definition. This Plan shall be a "Top-Heavy Plan" for
any Plan Year if, as of the Determination Date (as defined in
Section 11.7(a) below), the aggregate value of the Accounts
under the Plan for Participants (including former Participants)
who are Key Employees (as defined in Section 11.8 below) exceeds
60 percent of the aggregate value of the Accounts for all
Participants, or if this Plan is in a Required Aggregation Group
which for such Plan Year is a Top-Heavy Group (as defined in
Section 11.7(d) below). For purposes of making this
determination, the present value of the aggregate of the
accounts for a Participant (i) who is not a key employee but who
was a key employee in a prior year or (ii) for plan years
beginning after 12/31/84, who has not performed any service of
the employer at any time during the 5-year period ending on the
determination date, shall be disregarded. However, the Plan
shall not be considered a "Top-Heavy Plan" for any Plan Year in
which the Plan is a part of a Required or Permissive Aggregation
Group which is not top-heavy.
(a) "Determination Date" means for any Plan Year the last day
of the immediately preceding Plan Year (except that for the
first Plan Year of this Plan the determination date means
the last day of such Plan Year).
(b) The present value shall be determined as of the most recent
valuation date that is within the twelve-month period
ending on the determination date, and as described in the
regulations under the Internal Revenue Code as of 1954, as
amended.
(c) "Aggregation Group" means the group of plans, if any, that
includes both the group of plans that are required to be
aggregated and the group of plans that are permitted to be
aggregated.
(A) The group of plans that are required to be aggregated
(the "required aggregation group") includes:
(i) Each plan (including any terminated plan) of an
Employer (as defined in Section 11.10 below) in
which a Key Employee is a Participant, including
collectively-bargained plans, and
(ii) Each other plan (including any terminated plan),
including collectively-bargained plans of the
Employer which enables a plan in which a Key
Employee is a Participant to meet the
requirements of the Code prohibiting
discrimination as to contributions or benefits
in favor of Employees who are officers,
shareholders or the highly-compensated or
prescribing the minimum participation standards.
(B) The group of plans that are permitted to be
aggregated (the "permissive aggregation group")
includes the required Aggregation Group plus one or
more plans of an Employer that is not part of the
Required Aggregation Group and that the Committee
certifies as constituting a plan within the
permissive aggregate group. Such plan or plans may
be added to the permissive aggregation group only if,
after the addition, the aggregation group as a whole
continues not to discriminate as to contributions or
benefits in favor of officers, shareholders or the
highly-compensated and to meet the minimum
participation standards under the Code.
(d) "Top-Heavy Group" means the Aggregation Group, if as of the
applicable Determination Date, the sum of the present value
of the cumulative accrued benefits for Key Employees under
all defined benefit plans included in the Aggregation Group
plus the aggregate of the accounts of Key Employees under
all defined contribution plans included in the Aggregation
Group exceeds 60% of the sum of the present value of the
cumulative accrued benefits for all employees, excluding
former Key Employees, under all such defined benefit plans,
plus the aggregate accounts for all employees, excluding
former Key Employees, under such defined contribution
plans. If the Aggregation Group that is a Top-Heavy Group
is a required Aggregation Group, each plan in the group
will be top-heavy. If the Aggregation Group that is a
Top-Heavy Group is a permissive aggregation Group, only
those plans that are part of the required Aggregation Group
will be treated as top-heavy. If the Aggregation Group is
not a Top-Heavy Group, no plan within such group will be
top-heavy.
(e) In determining whether this Plan constitutes a "Top-Heavy
Plan", the Committee (or its agent) shall make the
following adjustments in connection therewith:
(A) When more than one plan is aggregated, the Committee
shall determine separately for each plan as of each
plan's determination date the present value of the
accrued benefits or account balance. The results
shall then
be aggregated by adding the results of each plan as
the determination dates for such plans that fall
within the same calendar year.
(B) In determining the present value of the cumulative
accrued benefit or the amount of the account of any
employee, such present value or account shall include
the amount in dollar value of the aggregate
distributions made to such employee under the
applicable plan during the five-year period ending on
the determination date, unless reflected in the value
of the accrued benefit or account balance as of the
most recent valuation date. Such amounts shall
include distributions to employees which represented
the entire amount credited to their accounts under
the applicable plan.
(C) Further, in making such determination, such present
value or such account shall include any rollover
contribution or plan-to-plan transfer, as follows:
(i) If the rollover contribution or plan-to-plan
transfer is initiated by the employee or made to
or from a plan maintained by another Employer,
the plan providing the distribution shall
include such distribution in the present value
or such account; the plan accepting the
distribution shall not include such distribution
in the present value or such account unless the
plan accepted it before January 1, 1984.
(ii) If the rollover contribution or plan-to plan
transfer is not initiated by the employer or
made to or from a plan maintained by another
Employer, the plan accepting the distribution
shall include such distribution in the present
value or such account, whether or not the plan
accepted the distribution before January 1,
1984; the plan making the distribution shall not
include the distribution in the present value or
such account.
(D) Effective January 1, 1985, if any individual has not
received any compensation from any Employer
maintaining the plan (other than benefits under the
plan) at any time during the 5-year period ending on
the Determination Date, any accrued benefit for such
individual (and the account of such individual) shall
not be taken into account.
11.8 Key Employee. The term "Key Employee" means any employee or
former employee under this Plan who, at any time during the Plan
Year containing the Determination Date or during any of the four
preceding Plan Years, is or was one of the following:
(a) An officer of the Employer. However, an officer earning
not more than one and one-half times the then applicable
limit in Section 415(c)(1)(A) of the Code shall not be
considered a Key Employee.
Whether an individual is an officer shall be determined by
the committee on the basis of all the facts and
circumstances, such as an individual's authority, duties
and term of office, not on the mere fact that the
individual has the title of an officer. For any such Plan
Year, there shall be treated as officers no more than the
lesser of:
(A) 50 employees, or
(B) the greater of three employees or 10 percent of the
employees.
For the purpose of the preceding sentence, the
highest-paid officers shall be selected first.
(b) One of the ten employees owning (or considered as owning,
within the meaning of the constructive ownership rules of
the Code) the largest interests in the Employer. An
employee who has some ownership interest is considered to
be one of the top ten owners unless at least ten other
employees own a greater interest than that employee.
However, an employee will not be considered a top ten owner
for a Plan Year if the employee does not earn more than the
applicable limitation in Section 415(c)(1)(A) of the Code.
(c) Any person who owns (or is considered as owning within the
meaning of the constructive ownership rules of the Code)
more than five percent of the outstanding stock of the
Employer or stock possessing more than five percent of the
combined total voting power of all stock of the Employer.
(d) A person satisfying (c) above if "one percent" were
substituted for "five percent" and having an annual
Compensation of more than $150,000.
For purposes of parts (a), (b), (c) and (d) of this Section
11.8, a beneficiary of a Key Employee shall be treated as a
Key Employee. For purposes of Subclauses (b), (c) and (d),
each individual Employer is treated separately in determining
ownership percentages; but, in determining the amount of
compensation, all Employers are taken into account.
11.9 Non-Key Employee. The term "Non-Key Employee" means any
employee (and any beneficiary of an employee) who is not a
Key Employee.
11.10 Employer. The term "Employer" means the definition of
Company in Section 1.6 and any Affiliated Corporation as
defined in Section 1.3.
11.11 Collective Bargaining Rules. The provisions of Section 11.2,
11.3 and 11.4 above do not apply with respect to any employee
included in a unit of employees covered by a collective
bargaining agreement if there is evidence that retirement
benefits were the subject of good faith bargaining, unless
the application of such subsections has been agreed upon with
the collective bargaining agent.
11.12 Distributions to 5% Owners. Any other provision of this Plan
to the contrary notwithstanding, distribution of a Member's
interest in this Plan to each person who is or at any time
has been a 5% owner shall commence no later than April 1 of
the calendar year following the calendar year in which he
attains age 70-1/2.
ARTICLE XII
Employees Subject to Securities Exchange Act
12.1 Limitation on Common Stock Transactions. The Incentive
Savings Plan Committee shall establish in writing such rules
so that any transaction by an Employee who is an officer of
the Company (on an Affiliated Corporation) who is subject to
Section 16 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") shall be in compliance with Rule 16b-3
of the Exchange Act with regards to any aspect of
participation in the Plan which involves the investment in
or disposition of shares of stock in the Continental Stock
Fund for the account of such officer.
12.2 Administration. The rules established pursuant to Section
12.1 shall be enforced in a manner determined by the
Incentive Savings Plan Committee.
ARTICLE XIII
DIRECT ROLLOVERS
13.1 Distributee's Election. This Article applies to
distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under
this Article, a distributee may elect, at the time and in the
manner prescribed by the Administrator, to have any portion
of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a
direct rollover.
13.2 Eligible Rollover Distribution. An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, 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 distributee or the
joint lives (or joint life expectancies) of the distributee
and the distributee'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; and the portion of any distribution
that is not includiblein gross income (determined without
regard to the exclusion for net unrealized appreciation with
respect to employer securities).
13.3 Eligible Retirement Plan. 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 distributee'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.
13.4 Distributee. A distributee includes an Employee or former
Employee. 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 qualified
domestic relations order, as defined in section 414(p) of the
Code, are distributees with regard to the interest of the spouse
or former spouse.
13.5 Direct Rollover. A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.