APL RETIREMENT ACCOUNT PLAN
(Amended and Restated as of June 1, 1997)
Execution Copy
TABLE OF CONTENTS
Page
PREAMBLE v
ARTICLE 1 DEFINITIONS 1
ARTICLE 2 ELIGIBILITY 9
2.1 Date of Participation 9
2.2 Participation Requirements 9
ARTICLE 3 RETIREMENT DATE 11
3.1 Retirement Date 11
3.2 Normal Retirement Date 11
3.3 Early Retirement Date 11
3.4 Vested Termination Date 11
3.5 Postponed Retirement Date 11
3.6 In-Service Retirement Date 12
ARTICLE 4 AMOUNT OF RETIREMENT INCOME 13
4.1 Retirement Income 13
4.2 Minimum Benefit 13
4.3 Retirement Account 13
4.4 Supplemental Retirement Income 16
4.5 Protected Benefit 16
4.6 Late Retirement 17
4.7 Special Rule for Any Participant Who
Ceased To Be an Eligible Employee Prior to
June 1, 1997 and Who Again Becomes an
Eligible Employee After June 1, 1997 17
4.8 Retirement Income Limitations 17
4.9 Return to Employment Following Retirement 23
4.10 Deemed Termination After Normal
Retirement Date 23
4.11 Grandfathered Participants 23
4.12 Participants Transferring to/from Another
Company-Supported Plan 24
ARTICLE 5 TERMINATION OF EMPLOYMENT PRIOR TO
RETIREMENT 25
5.1 Termination of Service After Vesting 25
5.2 Termination of Service Before Vesting 25
5.3 Forfeitures 25
ARTICLE 6 FORMS OF BENEFIT PAYMENT 26
6.1 Normal Form of Retirement Income 26
6.2Normal Form of Supplemental Retirement Income 26
6.3 Optional Forms of Retirement Income 27
6.4 Small Payments 30
6.5 General Rule on Commencement Dates 31
ARTICLE 7 PRERETIREMENT DEATH BENEFITS 32
7.1 Benefit Eligibility 32
7.2 Payment of Death Benefit 32
7.3 Form and Amount of Death Benefit 32
7.4 Involuntary Lump Sum Cash-Outs 33
7.5 Beneficiary Designation for Preretirement
Death Benefit 33
7.6 Notice of Death Benefit Options 34
7.7 Other Death Benefits 35
ARTICLE 8 FINANCING THE PLAN 36
8.1 Participant Contributions 36
8.2 Employer Contributions 36
8.3 Trust Agreement 36
8.4 Reversion of Assets 36
ARTICLE 9 ADMINISTRATION OF THE PLAN AND
MANAGEMENT OF ASSETS 38
9.1 Plan Sponsor and Plan Administrator 38
9.2 Administrative Responsibilities 38
9.3 Management of Plan Assets 38
9.4 Trustee and Investment Managers 38
9.5 Delegation of Fiduciary Responsibilities 39
9.6 Enrolled Actuary 39
9.7 Reliance Upon Advice 39
9.8 Funding Policy 40
9.9 Communication of Financial Needs 40
9.10 Administrative Expenses 40
9.11 Manner of Payments 40
ARTICLE 10 AMENDMENT OR TERMINATION 41
10.1 Amendments 41
10.2 Merger, Consolidation or Transfer 41
10.3 Rights and Obligations Upon Termination 41
10.4 Limitations Upon Highest-Paid Employees 42
ARTICLE 11 GENERAL PROVISIONS 44
11.1 No Implied Employment Contract 44
11.2 Benefits Not Assignable 44
11.3 Payments Under Qualified Domestic
Relations Order (QDRO) 44
11.4 Payments of Benefits to Infants or
Incompetents 45
11.5 Proof of Age and Marriage 45
11.6 Source of Benefits 45
11.7 Overpayments and Underpayments 45
11.8 Service in Multiple Fiduciary Capacities 46
11.9 Criminal Acts 46
11.10 IRS Qualification 46
11.11 Construction of Plan 46
11.12 Forms for Plan Communications 47
11.13 Governing Law 47
ARTICLE 12 PERIOD OF SERVICE 48
12.1 Period of Employment Relationship 48
12.2 Interval Between Periods of Employment 48
12.3 Predecessor Companies 49
12.4 Other Periods 49
12.5 Years in a Period of Service 49
ARTICLE 13 CLAIMS AND INQUIRIES 51
13.1 Application for Benefits 51
13.2 Denial of Application 51
ARTICLE 14 REVIEW OF DENIED CLAIMS 52
14.1 Review Panel 52
14.2 Request for Review 52
14.3 Decision on Review 52
14.4 Rules and Interpretations 53
14.5 Exhaustion of Remedies 53
ARTICLE 15 TOP-HEAVY PROVISIONS 54
15.1 Determination of Top-Heavy Status 54
15.2 Minimum Benefit 54
15.3 Minimum Vesting 54
15.4 Effect of Change in Top-Heavy Status 54
15.5 Impact on Benefit Limitations 54
15.6 Definitions 55
ARTICLE 16 EXECUTION 57
APPENDIX A ACTUARIAL EQUIVALENT FACTORS 58
APPENDIX B DIRECT ROLLOVER PROVISIONS 62
APPENDIX C GRANDFATHERED BENEFIT 64
APPENDIX D SUPPLEMENTAL RETIREMENT INCOME 73
APPENDIX E MINIMUM CASH BALANCE BENEFITS 75
PREAMBLE
The APL Retirement Account Plan, as set forth herein,
shall become effective as of June 1, 1997, except as
otherwise provided. It constitutes an amendment and
restatement and continuation of the Plan effective as of
January 1, 1993. Except as may specifically be provided
otherwise in the Plan, the rights of Participants who
retired or who terminated their employment prior to June 1,
1997, shall be determined solely in accordance with the
provisions of the Plan then in effect. In addition, the
rights of Participants who retire on an Early, Normal or
Postponed Retirement Date prior to June 1, 1997, shall be
determined in accordance with the provisions of the Plan in
effect on May 31, 1997, and the amendments taking effect on
June 1, 1997, shall not apply to such Participants.
The Plan is a defined benefit pension plan intended to
qualify under section 401(a) of the Internal Revenue Code of
1986, as amended. The purpose of this Plan is to provide
Eligible Employees with retirement income. Effective as of
June 1, 1997 these benefits are provided pursuant to the
cash balance formula set forth herein. All accrued benefits
under the provisions of the Plan in effect as of May 31,
1997 shall be preserved and continued under the Plan.
ARTICLE 1
DEFINITIONS
Unless clearly indicated by the context, the capitalized
terms set forth in this Plan shall have the meanings set
forth below.
1.1 "Actuarial Equivalent" means the equivalent of the
benefit otherwise payable to a Participant, determined
in accordance with the actuarial equivalent factors set
forth in Appendix A to the Plan, attached hereto.
1.2 "Affiliate" means any member of a group of one or more
chains of corporations connected through stock
ownership with the Company, if:
(A) Stock possessing at least eighty
percent (80%) of the total combined voting power
of all classes of stock entitled to vote or at
least eighty percent (80%) of the total value of
shares of all classes of stock of each of the
corporations, except the Company, is owned by one
or more of the other corporations; and
(B) The Company owns stock possessing at least
eighty percent (80%) of the total combined voting
power of all classes of stock entitled to vote or
at least eighty percent (80%) of the total value
of shares of all classes of stock of at least one
of the other corporations excluding, in computing
such voting power or value, stock owned directly
by such other corporations.
In addition, the term "Affiliate" includes any other
entity which the Company has designated in writing as
an Affiliate for purposes of the Plan. An entity shall
be considered an Affiliate only with respect to periods
for which such designation is in effect or during which
the relationship described in Paragraphs (A) and (B)
above exists.
1.3 "Allocation Percentage" means the percentage determined
in accordance with Section 4.3(D).
1.4 "Alternate Payee" means any spouse, former spouse,
child or other dependent of a Participant who is
recognized by a qualified domestic relations order (as
defined in section 414(p) of the Code) as having a
right to receive all or a portion of the benefits
payable under the Plan with respect to the Participant.
1.5 "Base Compensation" means a Participant's basic
earnings while the Participant is an Eligible Employee,
including amounts contributed on a pretax basis under
sections 125 or 401(k) of the Code to a plan maintained
by the Employer, and excluding overtime pay, bonuses,
commissions, incentive compensation and Employer
contributions (other than salary deferrals) to this or
any other benefit plan.
1.6 "Beneficiary" means one or more persons designated by
the Participant by filing the prescribed form with the
Company prior to his death. If the Participant has not
designated a Beneficiary, or if the designated
Beneficiary (or Beneficiaries) are not living at the
time any payment is to be made hereunder, then (i) the
spouse of the deceased Participant shall be his or her
Beneficiary; or (ii) if the Participant has no spouse
living at the time of such payment, his or her then
living children shall be his or her Beneficiaries, in
equal shares; or (iii) if the Participant has neither a
spouse nor children living at the time of such payment,
his or her then living parents shall be his or her
Beneficiaries, in equal shares; or (iv) if none of the
individuals described in (i) through (iii) are living
at the time of such payment, his or her estate shall be
his or her Beneficiary. The designation of a
Beneficiary other than the Participant's Spouse to
receive a death benefit under Article 7 shall be
subject to the rules, including the spousal consent
rules, described in Section 7.5.
1.7 "Benefit Compensation" shall mean a Participant's
Eligible Compensation divided by two. Benefit
Compensation taken into account under the Plan shall in
no event exceed the limitation in effect for that year
under section 401(a)(17) of the Code. This limitation
shall automatically be adjusted for each calendar year
to reflect the cost-of-living adjustment (if any)
announced by the Commissioner of Internal Revenue for
such calendar year.
1.8 "Benefit Distribution Date" means the first day of the
period for which Retirement Income is paid as an
annuity or, in the case of Retirement Income payable in
the form of a lump sum, the date on which the lump sum
is paid.
1.9 "Cash Balance Benefit" means the benefit provided based
on the Participant's Retirement Account.
1.10 "Code" means the Internal Revenue Code of 1986, as
amended.
1.11 "Company" means APL Limited, a Delaware corporation.
1.12 "Death Benefit" means the benefit provided to a
Participant's Beneficiary pursuant to Article 7.
1.13 "Eligible Compensation" for any calendar year means the
sum of:
(A) The Participant's annual Base Compensation
during such calendar year;
(B) Any bonus that he receives during the 1997
calendar year under the Company's year-end bonus
plan for executives and key employees;
(C) Any overtime pay that he receives during such
calendar year as an Eligible Employee;
(D) Any payment he receives during such calendar
year under the Company's Team Up For Success
program during the 1997 calendar year;
(E) Any bonus received under the Company's
Worldwide Bonus program during such calendar year;
and
(F) Any portion of a Participant's annual
earnings (including any bonus which would
otherwise be includible as Eligible Compensation)
deferred by the Participant pursuant to a
nonqualified plan sponsored by the Participant's
Employer.
1.14 "Eligible Employee" means an Employee who meets the
requirements of Section 2.2, except an Employee who is
a "leased employee" (within the meaning of section
414(n) of the Code) with respect to an Employer.
1.15 "Employee" means an individual who is (i) a common-law
employee of an Employer or (ii) a "leased employee"
(within the meaning of section 414(n) of the Code) with
respect to an Employer.
1.16 "Employee Aggregate Contributions" shall have the
meaning set forth in Appendix D.
1.17 "Employer" means each Affiliate which has been
designated in writing as an Employer by the Company,
while such designation is in effect. The Company, in
writing, may designate an Affiliate as an Employer with
respect to certain Employees, to the exclusion of the
other Employees of such Affiliate.
1.18 "Enrolled Actuary" means an individual who has been
approved by the Joint Board for the Enrollment of
Actuaries to perform actuarial services required by
ERISA or the regulations thereunder.
1.19 "ERISA" means Public Law No. 93-406, the Employee
Retirement Income Security Act of 1974, as amended.
1.20 "Grandfathered Benefit" means the amount of Retirement
Income accrued by a Grandfathered Participant in
accordance with Section 4.11(B).
1.21 "Grandfathered Participant" means an individual who is
both a Participant and an Eligible Employee on June 1,
1997 and who satisfies the following requirements:
(A) Has attained age 45 on or before June 1,
1997;
(B) Has a Period of Service equal to five (5) or
more years as of June 1, 1997; and
(C) The sum of his age and Period of Service
equals or exceeds fifty-five (55) as of June 1,
1997.
For purposes of Section 1.21(C), the sum of a
Participant's age and Period of Service shall be
determined in the same manner as the Participant's
"Allocation Points" are determined under Section
4(D).
1.22 "Highly Compensated Employee" means an active Employee
who:
(A) During the look-back year received Total
Compensation of more than $80,000 (or such
larger amount as may be adopted by the
Commissioner of Internal Revenue to reflect a
cost-of-living adjustment) and was a member
of the Top-Paid Group; or
(B) At any time during the look-back year or
the determination year was a five-percent
owner (as defined in section 416(i)(1) of the
Code).
For purposes of this Section, the determination year
shall be the Plan Year and the look-back year shall be
the 12-month period immediately preceding the
determination year, unless the Company has made the
calendar-year election described in Income Tax
Regulations section 1.414(q)-1T A-14(b) or its
successor.
The determination of who is a Highly Compensated
Employee, including the determinations of the number
and identity of Employees in the Top-Paid Group and the
Total Compensation that is considered, will be made in
accordance with section 414(q) of the Code and
regulations thereunder.
The Company may elect to modify the method described in
this Section for defining "Highly Compensated Employee"
by electing to apply the $80,000 limit described above
without regard to whether an Employee is in the Top-
Paid Group.
1.23 "Highly Compensated Former Employee" means a former
Employee who separated from service (or is deemed to
have separated) prior to the determination year,
performs no service for any member of the Affiliated
Group during the determination year, and was a Highly
Compensated Employee as an active Employee for either
the separation year or any determination year ending on
or after the Employee's 55th birthday. The
determination of who is a Highly Compensated Former
Employee will be made in accordance with section 414(q)
of the Code and regulations thereunder.
1.24 "Hour of Service" means:
(A) Each hour for which an Employee is directly
or indirectly paid, or entitled to payment, by an
Employer for the performance of services,
(B) Each hour for which an Employee is directly
or indirectly paid, or entitled to payment, by an
Employer on account of a period of time during
which no services are performed (without regard to
whether the employment relationship between the
Employee and the Employer has terminated) due to
vacation, holiday, illness, incapacity,
disability, layoff, jury duty, military duty or
leave of absence with pay, and
(C) Each hour for which an Employee is directly
or indirectly paid, or entitled to payment of an
amount as back pay (without regard to mitigation
of damages) either awarded or agreed to by an
Employer.
The foregoing notwithstanding:
(1) No more than 501 Hours of
Service shall be credited to an Employee
under Paragraph (B) or (C) above on
account of any single continuous period
of time during which no services are
performed.
(2) An hour for which an Employee
is directly or indirectly paid or
entitled to payment by an Employer on
account of a period during which no
services are performed shall not
constitute an Hour of Service hereunder
if such payment is made or due under a
plan maintained solely for the purpose
of complying with applicable workers'
compensation, unemployment compensation
or disability insurance laws.
(3) Hours of Service shall not be
credited for payments that solely
reimburse an Employee for medical or
medically related expenses.
(4) The same Hour of Service shall
not be credited to an Employee both
under Paragraph (A) or (B) and under
Paragraph (C).
(5) The computation period to
which Hours of Service determined under
Paragraph (B) or (C) are to be credited
shall be determined under applicable
federal law and regulations, including,
without limitation, Department of Labor
Regulation section 2530.204-2.
Each Employee for whom monthly records are
not kept shall be credited with 190 hours for each
month for which such Employee would be entitled to
credit for one Hour of Service under Subsection
(A), (B) or (C) above.
The Company shall determine the number of
Hours of Service, if any, to be credited to an
Employee under the foregoing rules in a uniform
and nondiscriminatory manner and in accordance
with applicable federal laws and regulations,
including, without limitation, Department of Labor
Regulations section 2530.200b-2.
1.25 "Interest" means the rate determined in accordance with
Section 4.3(C).
1.26 "Investment Manager" means any person who is
(i) registered as an investment adviser under the
Investment Advisers Act of 1940, (ii) a bank, as
defined in such Act, or (iii) an insurance company
qualified to perform investment management services
under the laws of more than one state.
1.27 "Married Participant" means a Participant who is
lawfully married, as determined under the laws of the
state where such Participant is domiciled.
1.28 "Payroll" means the system used by an entity to pay
those individuals it regards as its common law
employees for their services and to withhold employment
taxes from the compensation it pays to such common law
employees. "Payroll" does not include any system an
entity uses to pay individuals whom it does not regard
as its common law employees and for whom it does not
actually withhold employment taxes (including, but not
limited to, individuals it regards as independent
contractors) for their services.
1.29 "Participant" means an Eligible Employee who becomes a
Participant pursuant to Article 2 and who continues to
be entitled to any benefits under the Plan.
1.30 "Period of Service" means an individual's period of
employment with any Affiliate, as determined under
Article 12.
1.31 "Plan" means this APL Retirement Account Plan, as
amended from time to time.
1.32 "Plan Year" means the twelve (12) consecutive month
period ending each May 31.
1.33 "Retirement Account" shall mean the hypothetical
account established for each Participant to which the
allocations and credits described in Section 4.3 are
made.
1.34 "Retirement Income" means the retirement benefits
provided to Participants and their spouses, joint
annuitants and Beneficiaries in accordance with the
applicable provisions of Articles 4 and 5, except that
such term shall not include any benefits which are
payable to an Alternate Payee pursuant to a qualified
domestic relations order under section 414(p) of the
Code.
1.35 "Supplemental Retirement Income" means the benefit
provided by Appendix D.
1.36 "Termination Date" means the date on which a
Participant ceases to be an Employee.
1.37 "Top-Paid Group" for any Plan Year means the top
20 percent (in terms of Total Compensation) of all
Employees of the Company and its Affiliates, excluding
the following:
(A) Any Employee covered by a collective
bargaining agreement who is not an Eligible
Employee;
(B) Any Employee who is a nonresident alien with
respect to the United States who receives no
income with a source within the United States from
a the Company or its Affiliates;
(C) Any Employee who has not completed six months
of service by the end of the applicable year
(including service in the preceding year);
(D) Any Employee who normally works less than 17 1/2
hours per week;
(E) Any Employee who normally works no more than
six months during any year; and
(F) Any Employee who has not attained the age of
21 at the end of the Plan Year."
1.38 "Total Compensation" means "wages" as defined in
section 3401(a) of the Code for purposes of income tax
withholding at the source, but determined:
(A) Without regard to any rules that limit the
remuneration included in "wages" based on the
nature or location of the employment or the
services performed (such as the exception for
agricultural labor in section 3401(a)(2) of the
Code); and
(B) By including amounts deferred but not
refunded under a cafeteria plan, as such term is
defined in section 125(c) of the Code and under a
plan qualified under section 401(k) of the Code.
1.39 "Trust Agreement" means the trust agreement between the
Company and the Trustee, established for the purpose of
funding benefits under the Plan, or any successor trust
agreement or agreements.
1.40 "Trustee" means the trustee or trustees appointed by
the Company pursuant to Section 9.3.
1.41 "Trust Fund" means all money or other property held by
the Trustee pursuant to the terms of the Trust
Agreement.
1.42 "United States" means the 50 states of the United
States, the District of Columbia, Puerto Rico and Guam.
ARTICLE 2
ELIGIBILITY
2.1 Date of Participation
Each individual who is an Employee and who meets the
requirements specified in Section 2.2 shall become a
Participant upon completion of one hour of service.
2.2 Participation Requirements
The requirements for becoming a Participant are that
the Employee must be employed in the United States, or
be employed outside the United States and be eligible
for home leave. In addition, to be eligible, an
Employee must be paid on the U.S. dollar Payroll.
Notwithstanding anything in this Plan to the contrary,
an individual shall be ineligible to become a
Participant if he is:
(A) A member of a collective bargaining unit
covered by a collective bargaining agreement,
unless such agreement provides for coverage of the
bargaining unit members under the Plan;
(B) Classified by the Company as a temporary
employee;
(C) Eligible to participate in or accrue benefits
under any other funded pension or retirement plan
to which his Employer makes contributions, other
than federal Social Security and the APL Limited
SMART Plan;
(D) Designated by the Company in writing as an
individual or member of a class not eligible to
participate in the Plan;
(E) Compensated for services by a person other
than an Employer and for any reason is deemed to
be an Employee;
(F) A leased employee within the meaning of
section 414(n) of the Code, or would be a leased
employee but for the period-of-service requirement
of Code section 414(n)(2)(B), and who is providing
services to an Employer;
(G) Subject to a written agreement that provides
that such individual shall not be eligible to
participate in the Plan;
(H) Not on the Payroll of an Employer and who, at
any time and for any reason, is deemed to be an
Employee;
If, during any period, the Employer has not regarded an
individual as an Employee and, for that reason, has not
withheld employment taxes with respect to that
individual, then that individual shall not be a
Participant for that period, even in the event that the
individual is determined, retroactively, to have been
an Employee during all or any portion of that period.
An individual's status as a Participant shall be
determined by the Company. All such determinations
shall be conclusive and binding on all persons.
ARTICLE 3
RETIREMENT DATE
3.1 Retirement Date
A Participant's "Retirement Date" shall be his Normal,
Early, Postponed or In-Service Retirement Date or his
Vested Termination date (whichever is applicable)
unless the Participant's Retirement Income commences or
is paid as of another date pursuant to Section 3.3 or
5.1, which date shall be his Retirement Date. In no
event, however, shall a Participant's Retirement Income
commence later than his In-Service Retirement Date.
3.2 Normal Retirement Date
A Participant's "Normal Retirement Date" shall be the
first day of the month coincident with or next
following his sixty-fifth (65th) birthday.
3.3 Early Retirement Date
An individual who became a Participant before
November 11, 1986, may retire on the first day of any
month coincident with or subsequent to his fifty-fifth
(55th) birthday, which day shall be his "Early
Retirement Date."
An individual who becomes a Participant on or after
November 11, 1986, may retire on the first day of any
month coincident with or subsequent to the later of
(i) his fifty-fifth (55th) birthday or (ii) the date
when he completes a Period of Service of five (5)
years, which day shall be his "Early Retirement Date."
3.4 Vested Termination Date
Notwithstanding any provision of this Plan to the
contrary, a Participant who separates from all service
with any Affiliate shall, if the Participant's
Retirement Income is 100% vested, be entitled to elect
to receive an immediate distribution of his Retirement
Income. In such case the Participant's "Vested
Termination Date" shall be the first day of any month
coincident or subsequent to the Participant's
Termination Date.
3.5 Postponed Retirement Date
If a Participant continues in the service of any
Affiliate beyond his Normal Retirement Date, the first
day of the month coincident with or next following the
termination of his employment after his Normal
Retirement Date shall be his "Postponed Retirement
Date."
ARTICLE 4
AMOUNT OF RETIREMENT INCOME
4.1 Retirement Income
This Plan is a defined-benefit plan within the meaning
of section 3(35) of ERISA (without regard to
paragraphs (A) and (B) thereof). Under the Plan,
subject to the second paragraph of this Section 4.1, a
Participant's Retirement Income shall be determined
based on the Participant's Cash Balance Benefit. The
Participant's Cash Balance Benefit is equal to the
amount of the benefit which may be provided by the
Retirement Account described below in Section 4.3.
This Retirement Account represents the benefit promised
by the Plan and is not an actual account to which Plan
assets and investment income are allocated. The
account balance is credited with interest at the rate
specified in Section 4.3 to the Participant's
Retirement Date.
Subject to the remaining Sections of this Article 4 and
the provisions of Article 6 (Forms of Benefit Payment)
and Section 10.4 (Limitations Upon Highest-Paid
Employees), a Participant's Retirement Income
commencing on his Retirement Date, shall be equal to
the greater of the amount described in Sections 4.2,
4.3 or 4.5. In addition, a Grandfathered Participant's
Retirement Income shall not be less than the amount
described in Section 4.11. Any Participant who is not
described in Section 4.3(B), except for a Participant
described in Section 4.7, shall receive as his
Retirement Income the amount accrued under the Plan as
of May 31, 1997.
4.2 Minimum Benefit
As a minimum benefit, a Participant shall be entitled
to receive the greater of:
(A) a single life annuity commencing on the
Participant's Normal Retirement Date equal to one
thousand dollars ($1,000) per year; or
(B) a Cash Balance Benefit which is based on the
amount of his Retirement Account as set forth in
Appendix E.
4.3 Retirement Account
A Participant's Retirement Account consists of the sum
of the following hypothetical credits to the account of
the Participant: the Participant's "Basic Employer
Allocations," the Participant's "Initial Employer
Allocation" (if any) and "Interest" credited on such
allocations. Initial Employer Allocations under
Section 4.3 shall be credited as of June 1, 1997. A
Participant may alternatively receive an Initial
Employer Allocation under Section 4.7 under the terms
therein described. These hypothetical allocations and
the Interest credit are determined as follows:
(A) Basic Employer Allocation
For each Plan Year commencing on or after
June 1, 1997, at the end of each calendar year, a
Participant's Retirement Account shall be credited
with an amount equal to the Participant's
Allocation Percentage multiplied by the
Participant's Benefit Compensation. With respect
to the period from June 1, 1997 to December 31,
1997, the amount determined under this Subsection
shall be multiplied by 7/12; provided, however,
that this sentence shall be inapplicable to any
individual who first becomes a Participant on or
after June 1, 1997.
Notwithstanding the above, with respect to
any Participant who terminates employment during
any Plan Year, the allocation described above
shall occur as of the Participant's Termination
Date, provided, however, with respect to any
Participant whose Termination Date is on or after
June 1, 1997, but before December 31, 1997, any
allocation with respect to such a terminated
Participant shall equal the Participant's
Allocation Percentage multiplied by the
Participant's Benefit Compensation multiplied by a
fraction, the numerator of which is the number of
days between June 1, 1997 and the Termination Date
(inclusive) and the denominator of which is the
number of days between January 1, 1997 and the
Termination Date (inclusive).
(B) Initial Employer Allocation
Each Participant who is (i) an Eligible
Employee on June 1, 1997; and who is (ii) either
(1) receiving Compensation from the Employer, or
(2) on short-term sick or other paid leave shall
receive an initial allocation as of June 1, 1997
equal to the greater of:
(1) the Actuarially Equivalent single
sum present value of the Participant's
adjusted Retirement Income under this Plan as
of May 31, 1997, determined under the terms
of the Plan as then in effect (taking into
account the factors set forth in Appendix A)
as though the Participant had a Termination
Date of May 31, 1997. With respect to any
Participant who was hired on or after June 1,
1996, but prior to June 1, 1997, and who is
an Eligible Employee on June 1, 1997, such a
Participant shall receive an initial
allocation as of June 1, 1997 equal to the
Actuarial Equivalent single sum present value
of the Participant's adjusted Retirement
Income as determined under the terms of this
Plan as in effect on May 31, 1997 (taking
into account the factors set forth in
Appendix A), but disregarding the one-year of
service participation requirement in effect
on May 31, 1997 and substituting the
Participant's rate of pay when he became an
Eligible Employee for the rate of pay on June
1; or
(2) the amount set forth in Appendix E.
The Initial Employer Allocation shall not
include any amount attributable to the
Participant's Supplemental Retirement Income.
(C) Interest
As of December 31 of each Plan Year beginning
on or after June 1, 1997 and prior to the
Participant's Retirement Date, a Participant's
Retirement Account shall be increased by the rate
of Interest.
The rate of Interest shall be determined
as of the beginning of each calendar year.
This rate shall be equal to the annual rate
of interest on 30-year Treasury Securities
(within the meaning of section 417(e)(3) of
the Code) for the month of November which
precedes the beginning of the applicable
calendar year. With regard to any partial
allocation of Interest, the allocation shall
be made based on the number of days in the
applicable period divided by 365.
(D) Allocation Percentage
As of the end of each calendar year, each
Participant's Allocation Percentage shall be
determined based upon the Participant's Allocation
Points (determined as of the allocation date
determined pursuant to Section 4.3(A)). The
Applicable Percentage shall be determined from the
chart set forth below:
Allocation Applicable Percentage
Points
On all Benefit On Benefit
Compensation Compensation
over One-half
of the FICA
Wage Basis
Under 45 6% 6%
45 and over, 8% 8%
but under 55
55 and over, 10% 10%
but under 65
65 and over 12% 10%
A Participant's "Allocation Points" shall be
the sum of the Participant's Period of Service and
age. Solely for purposes of Section 1.21 and this
Section 4.3(D), a Participant's age shall be
expressed as a number rounded to the fourth
decimal place determined by dividing the number of
days from the Participant's birth date to the
allocation date by three hundred sixty-five (365).
The amount of Allocation Points obtained by adding
together the Participant's Period of Service and
age shall not be rounded up.
4.4 Supplemental Retirement Income
If a Participant is described in Appendix D, then, in
addition to his Retirement Income, the Participant
shall also be entitled to receive a Supplemental
Retirement Income.
4.5 Protected Benefit
(A) Notwithstanding any provision of this Plan to
the contrary, the Participant's Retirement Income
under this Plan shall not be less than his or her
accrued benefit under the terms of the Plan as in
effect through May 31, 1997, based on the terms of
the Plan in effect on May 31, 1997.
(B) With respect to a period of reemployment, a
Participant shall cease to be entitled to a
protected benefit under this Section 4.5 if prior
to his reemployment the Participant received a
lump sum distribution of his entire nonforfeitable
interest in the Plan.
4.6 Late Retirement
Any Participant who is entitled to receive a pension
under Section 3.5 and whose In-Service Retirement Date
precedes his Termination Date shall nonetheless
continue to be credited with allocations under
Section 4.3 for service on or after his In-Service
Retirement Date. This additional accrual shall be
distributed to the Participant in the same form as
previously elected by the Participant.
4.7 Special Rule for Any Participant Who Ceased To Be an
Eligible Employee Prior to June 1, 1997 and Who Again
Becomes an Eligible Employee After June 1, 1997
If a Participant ceased be an Eligible Employee prior
to June 1, 1997 (or ceased active participation in the
Plan due to a leave of absence or disability) and again
becomes an active Participant in the Plan after June 1,
1997 upon again becoming an Eligible Employee (or
returning from such a leave or disability) and if such
Participant has earned Retirement Income attributable
to his prior period of active participation in the
Plan, the Retirement Income shall be converted to an
Initial Employer Allocation credited as of December 31
of the calendar year in which the Eligible Employee
again becomes an active Participant in the Plan. The
initial allocation under this Section 4.7 shall be made
in a manner consistent with Section 4.3(B) utilizing
the actuarial factors applicable on June 1, 1997.
4.8 Retirement Income Limitations
The provisions of this Section 4.8 shall apply with
respect to all calendar years after December 31, 1986.
(A) General Rule
Unless the alternative limitation of
Paragraph (B) below applies, a Participant's
Annual Benefit shall not exceed the lesser of the
following amounts:
(1) Ninety thousand dollars ($90,000),
adjusted as described below; or
(2) The amount of the Participant's
Average Annual Compensation, as defined in
Paragraph (I) below.
As of January 1 of each calendar year, the
adjusted dollar limitation for such calendar year
announced by the Commissioner of Internal Revenue
pursuant to section 415(d) of the Code shall
automatically be substituted for the ninety
thousand dollar ($90,000) amount set forth in
Subparagraph (1) above and shall become the dollar
limitation applicable under the Plan during such
calendar year. The adjusted dollar limitation for
a calendar year shall apply in determining the
amount of all Annual Benefits commencing in such
calendar year, and such Annual Benefits thereafter
shall not be adjusted (except as provided in the
following sentence). In the case of a Participant
whose Employment terminates on or after January 1,
1993, and whose Annual Benefit is limited by the
dollar limitation under Subparagraph (1) above,
such Annual Benefit shall automatically be
recalculated as of January 1 of each calendar year
following the termination of his Employment,
commencing on January 1, 1994, to reflect the
adjusted dollar limitation for such calendar year.
An increased Retirement Benefit resulting from the
recalculation of the Annual Benefit shall be
payable under the Plan in the same form as the
original Retirement Benefit. No further
adjustments shall be made once the adjusted dollar
limitation exceeds the amount of the Annual
Benefit.
If a Participant's Annual Benefit would
exceed the limitation of this Section 4.8, then
such Annual Benefit shall be reduced by reducing
the components thereof as necessary in the order
in which they are listed in Paragraph (H) below;
provided, however, that a Participant's Annual
Benefit shall in no event be reduced below the
amount of such Annual Benefit as of December 31,
1986, determined under the applicable plans
(including their benefit limitations) as then in
effect.
(B) Alternative Limitation for Retirement Income
up to $10,000
A Participant's Retirement Income shall not
be subject to the limitations of Paragraph (A)
above if each of the following requirements is
met:
(1) The sum of the Participant's annual
Retirement Income under this Plan and his
aggregate annual retirement benefits under
all other qualified defined-benefit plans
maintained by any Affiliate does not exceed
the lesser of (i) ten thousand dollars
($10,000) or (ii) the amount determined under
Paragraph (D) below (concerning only
Particiants whose Period of Service is less
than ten (10) years); and
(2) The Participant has never
participated in a qualified
defined-contribution plan maintained by any
Affiliate.
(C) Reduced Limitations for Participants With
Less Than 10 Years of Participation
In the case of a Participant whose Credited
Period of Service is less than ten (10) years, the
amount described in Paragraph (A)(1) above shall
be multiplied by a fraction determined as follows:
(1) The numerator of such fraction
shall be the number of completed months in
such Credited Period of Service (but not less
than twelve (12)); and
(2) The denominator of such fraction
shall be one hundred twenty (120).
To the extent provided in Income Tax
Regulations, this Paragraph (C) shall apply
separately to each change in the benefit structure
of the Plan, as if such change caused the
commencement of a new Credited Period of Service.
(D) Reduced Limitations for Participants With
Less Than 10 Years of Service
In the case of a Participant whose Period of
Service is less than ten (10) years, the amount
described in Paragraph (A)(2) above and the ten
thousand dollar ($10,000) amount described in
Paragraph (B)(1) above shall be multiplied by a
fraction determined as follows:
(1) The numerator of such fraction
shall be the number of completed months in
such Period of Service (but not less than
twelve (12)); and
(E) Adjusted Dollar Limitation for Benefits
Commencing Before or After the Social
Security Retirement Age
In the case of a Participant whose Retirement
Income commences before his Social Security
retirement age, the dollar amount described in
Paragraph (A)(1) above shall be reduced. The
reduced dollar amount shall be determined by
treating the dollar limitation in Paragraph (A)(1)
above as an annual annuity payable for life
commencing at the Participant's Social Security
retirement age and then converting it to an
actuarially equivalent annual annuity payable for
life commencing as of the date when the
Participant's Retirement Income commences.
Actuarial equivalency for this purpose shall be
based on the following actuarial assumptions:
(1) For calendar years prior to
January 1, 1995, the actuarial assumptions
specified in Appendix A, provided that the
interest rate assumption shall equal the
greater of the rate specified in Appendix A
or five percent (5%); and
(2) For calendar years after
December 31, 1994, an interest rate
assumption equal to the greater of the rate
specified in Appendix A or the Applicable
Interest Rate.
In the case of a Participant whose Retirement
Income commences after his Social Security
retirement age, the amount described in Paragraph
(A)(1) above shall be increased. The increased
dollar limit shall be determined by treating the
dollar limitation in Paragraph (A)(1) above as an
annual annuity payable for life commencing at the
Participant's Social Security retirement age and
then converting it to an actuarially equivalent
annual annuity payable for life commencing as of
the date when the Retirement Income commences.
Actuarial equivalency for this purpose shall be
based on the following actuarial assumptions:
(1) For calendar years prior to
January 1, 1995, the actuarial assumptions
specified in Appendix A, provided that the
interest rate assumption shall equal the
lesser of the rate specified in Appendix A or
five percent (5%); and
(2) For calendar years after
December 31, 1994, an interest rate
assumption equal to the lesser of the rate
specified in Appendix A or five percent (5%).
For purposes of this Paragraph (E), a
Participant's "Social Security retirement age"
means the age determined pursuant to the following
schedule:
Date of Participant's Birth Age
Before January 1, 1938 65
On or after January 1, 1938
but before January 1, 1955 66
On or after January 1, 1955 67
(F) Combined Limitation on Benefits and
Contributions
The sum of a Participant's Defined-Benefit
Plan Fraction and his Defined-Contribution Plan
Fraction shall not exceed one (1) with respect to
any calendar year beginning prior to January 1,
2000. The terms "Defined-Benefit Plan Fraction"
and "Defined-Contribution Plan Fraction" shall
have the meaning given to such terms by
section 415(e) of the Code and the regulations
thereunder. If a Participant would exceed the
foregoing limitation, then his Annual Benefit
shall be reduced as necessary pursuant to
Paragraph (A) above; provided, however, that the
changes in this Section 4.8 taking effect on
January 1, 1987 shall in no event reduce a
Participant's Annual Benefit (in any form) below
the amount of such Annual Benefit as of
December 31, 1986, determined under the applicable
plans (including their benefit limitations) as
then in effect.
(G) Affiliate
For purposes of this Section 4.8, the term
"Affiliate" shall include any Affiliate (as
defined in Section 1.2), except that, for purposes
of this Section 4.8 only, the phrase "more than
fifty percent (50%)" shall be substituted for the
phrase "at least eighty percent (80%)" wherever it
occurs in Section 1.2, and the penultimate
sentence of Section 1.2 shall not apply.
(H) Annual Benefit
For purposes of this Section 4.8, a
Participant's "Annual Benefit" shall be equal to
the sum of the following:
(1) The annual Retirement Income to
which the Participant is entitled under this
Plan; and
(2) The aggregate annual retirement
benefits (if any) to which the Participant is
entitled under all other qualified
defined-benefit plans maintained by any
Affiliate.
A Participant's Supplemental Retirement
Income shall not be considered a part of the
Participant's "Annual Benefit."
If an Annual Benefit (or any portion thereof)
is payable in any form other than a single-life
annuity or a qualified joint and survivor annuity,
as defined in section 417(b) of the Code, then
such Annual Benefit (or such portion) shall, for
purposes of this Paragraph (H), be converted into
a single-life annuity which is its actuarial
equivalent. Actuarial equivalency for this
purpose shall be based on the following actuarial
assumptions:
(1) For calendar years prior to
January 1, 1995, the actuarial assumptions
specified in Appendix A, provided that the
interest rate assumption shall equal the
greater of the rate specified in Appendix A
or five percent (5%); and
(2) For calendar years after
December 31, 1994, the Applicable Mortality
Table and an interest rate assumption equal
to the greater of the rate specified in
Appendix A or the Applicable Interest Rate.
(I) Applicable Interest Rate
For purposes of this Section 4.8, the term
"Applicable Interest Rate" shall mean the annual
rate of interest set forth in Appendix A for these
purposes.
(J) Applicable Mortality Table
For purposes of this Section 4.8, the term
"Applicable Mortality Table" shall mean the table
prescribed by Appendix A for these purposes.
(K) Average Annual Compensation
For purposes of this Section 4.8 only, the
term "Average Annual Compensation" shall mean the
Participant's annual Compensation, as defined in
Paragraph (L) below, averaged over that series of
consecutive twelve (12) month periods (not in
excess of three (3)) for which his cumulative
Compensation is highest. In the case of a
Participant who has severed from all employment
with any Affiliate, the amount determined under
the preceding sentence shall be increased with
respect to any calendar year following his
separation from employment by multiplying it by a
fraction determined as follows:
(1) The numerator of such fraction
shall be the amount described in
Paragraph (A)(1) above, as in effect for such
calendar year; and
(2) The denominator of such fraction
shall be the amount described in
Paragraph (A)(1) above, as in effect for the
calendar year in which the Participant
severed from all employment with any
Affiliate; provided that such denominator
shall in no event be greater than the
numerator described in Subparagraph (1)
above.
(L) Compensation
For purposes of this Section 4.8 only, the
term "Compensation" shall mean "wages," as defined
in section 3401(a) of the Code for purposes of
income tax withholding at the source, but
determined without regard to any rules that limit
the remuneration included in "wages" based on the
nature or location of the employment or the
services performed (such as the exception for
agricultural labor in section 3401(a)(2) of the
Code).
4.9 Return to Employment Following Retirement
If a Participant returns to the service of an Employer
after his Retirement Date (other than an In-Service
Retirement Date) and is receiving annuity or
installment payments, then payment of his Retirement
Income and Supplemental Retirement Income benefits
shall continue to be paid to him during his period of
reemployment.
4.10 Deemed Termination After Normal Retirement Date
Section 4.6 notwithstanding, in the case of a
Participant who is employed beyond his Normal
Retirement Date, the Participant's employment shall be
deemed to terminate for the purposes of the Plan
immediately prior to the first day of any calendar
month in which there are less than eight days during
which he is paid (or is entitled to payment) by an
Affiliate, whether for the performance of duties or for
any other reason. Accordingly, the first day of such
month shall be considered a Postponed Retirement Date
and payment of the Participant's Retirement Income and
Supplemental Retirement Income (if any) shall commence
as of such date, as provided in Section 4.6. Upon a
Participant's actual Postponed Retirement Date or In-
Service Retirement Date, this Section 4.10 shall cease
to apply and the Participant's Retirement Income and
Supplemental Retirement Income shall be recomputed in
the manner described in Section 4.6. For the purposes
of this Section 4.10, whether a corporation is an
Affiliate shall be determined as of the Participant's
Normal Retirement Date and without regard to the
penultimate sentence of Section 1.2.
4.11 Grandfathered Participants
The Retirement Income of each Participant who is a
Grandfathered Participant shall equal the greater of:
(A) The Cash Balance Benefit determined pursuant
to the provisions of this Article 4, without
regard to this Section 4.11; and
(B) The single sum value of the Participant's
adjusted Retirement Income calculated in
accordance with the provisions of Appendix C
(taking into account the factors set forth in
Appendix A).
Notwithstanding the above, effective June 1, 2007, the
benefit determined in accordance with Section 4.11(B)
shall be converted on June 1, 2007 into an Initial
Employer Allocation (in a manner consistent with
Section 4.3(B) utilizing the actuarial factors
applicable on June 1, 2007) and, thereafter, the
Participant shall have his Retirement Income determined
in accordance with the method set forth in Section 4.3.
4.12 Participants Transferring to/from Another
Company-Supported Plan
In the case of an Employee who becomes eligible to
participate in another plan funded at least in part by
Employer contributions (and who, therefore, ceases
active participation in this Plan pursuant to
Section 2.2), the Retirement Income shall be computed
as of the date he ceases active participation pursuant
to Section 2.2 and upon the Plan's benefit formula then
in effect. With respect to any Participant who was a
participant in the Retirement Plan for Employees of
American President Lines, Ltd. Represented by The
Professional, Office and Industrial Division, Marine
Engineers' Beneficial Association (AFL-CIO) and The
Marine Clerks Association, Local 63, I.L.W.U. (the
"Bargained Retirement Plan") and who becomes eligible
to participate in this Plan, the Company may elect to
transfer from the Bargained Retirement Plan to this
Plan assets and liabilities associated with the
benefits of such a Participant. Any such transfer
shall be made in accordance with section 414(l) of the
Code and shall not result in the reduction of any
protected benefits within the meaning of section
411(d)(6) of the Code and the regulations promulgated
thereunder. After any such transfer, the affected
Participant shall cease to be a Participant in the
Bargained Retirement Plan and shall receive his entire
benefit from this Plan.
ARTICLE 5
TERMINATION OF EMPLOYMENT PRIOR TO RETIREMENT
5.1 Termination of Service After Vesting
If a Participant (i) separates from all service with
any Affiliate prior to an Early Retirement Date, other
than by reason of death, and (ii) has completed a five
(5) or more year Period of Service, then he shall be
entitled to receive one hundred percent (100%) of the
Retirement Income accrued by him pursuant to Article 4
commencing as of a date determined in accordance with
Article 3.
5.2 Termination of Service Before Vesting
A Participant who separates from all service with any
Affiliate prior to his attainment of age sixty-five
(65), and prior to his completion of a five (5) year
Period of Service or death, for reasons other than
retirement on his Retirement Date, shall not be
entitled to any Retirement Income benefits under the
Plan.
5.3 Forfeitures
Prior to the termination of the Plan, any forfeiture
arising from the operation of this Article 5 or any
other provision of the Plan shall be used to reduce
future Employer contributions pursuant to Article 8.
ARTICLE 6
FORMS OF BENEFIT PAYMENT
6.1 Normal Form of Retirement Income
Although a Participant may, in accordance with the
provisions of this Article 6, elect to receive his
Retirement Income in the form of a lump sum payment, a
Participant's "Normal Form of Retirement Income" shall
be the form of benefit described in this Section 6.1.
(A) Single Participants
Except as otherwise provided for Married
Participants pursuant to Paragraph (B) below, the
Retirement Income shall be payable in the form of
a life annuity commencing as of the Participant's
Retirement Date and terminating with the last
monthly payment due prior to his death. The life
annuity shall be the Actuarial Equivalent of the
Participant's Retirement Income.
(B) Married Participants
In the case of a Married Participant who has
been married for at least one (1) year at the time
of his death and had been married to the same
spouse before his Benefit Distribution Date, the
Actuarial Equivalent of the Participant's
Retirement Income shall be payable to him in the
form of a monthly payment commencing as of the
Participant's Retirement Date and, after the
Participant's death, such spouse who is living at
the time of the Participant's death shall continue
to receive fifty percent (50%) of such monthly
payments for life.
6.2 Normal Form of Supplemental Retirement Income
(A) Single Participants
Except as otherwise provided for Married
Participants pursuant to Paragraph (B) below, or
unless an optional form of Retirement Income
described in Section 6.3 is duly elected by a
Participant pursuant to Section 6.3(F), the
Supplemental Retirement Income provided pursuant
to Section 4.4 and Appendix D, if any, shall be
payable in the form of a monthly payment
commencing as of his Retirement Date and
terminating with the last monthly payment due
prior to his death.
(B) Married Participants
Solely with respect to Married Participants,
unless an optional form of Retirement Income
described in Section 6.3 is duly elected, the
Supplemental Retirement Income provided pursuant
to Section 4.4 and Appendix D shall be the
Actuarial Equivalent of the Supplemental
Retirement Income provided under Paragraph (A)
above, payable as a reduced monthly Supplemental
Retirement Income to such Married Participant for
life commencing as of his Retirement Date. Upon
the death of the Married Participant, fifty
percent (50%) of the reduced Supplemental
Retirement Income shall be paid to and during the
life of the spouse to whom the Participant was
married on the date when the Supplemental
Retirement Income became payable, if such spouse
is then living. Such payments shall terminate
with the last monthly payment due prior to the
spouse's death.
6.3 Optional Forms of Retirement Income
Within a reasonable time before the Participant's
Benefit Distribution Date, the Company shall make
available to such Participant (i) a written explanation
of the terms and conditions of the normal form of
Retirement Income, (ii) a written explanation of the
Participant's right to make or revoke an election of an
optional form of Retirement Income and of the effect of
such election or revocation, (iii) a written
explanation of the effect of a failure to make an
election of an optional form of payment and (iv) a
written explanation of the rights of the Participant's
spouse under Paragraph (F) below.
In lieu of the normal form of Retirement Income
provided in Section 6.1 and the normal form of
Supplemental Retirement Income provided in Section 6.2,
a Participant may elect one of the following options,
subject to the conditions of Paragraph (F) below:
(A) Supplemental Retirement Income Options
A Participant who is not eligible to receive
a Retirement Income but who is eligible to receive
a Supplemental Retirement Income pursuant to
Section 4.4 and Appendix D may elect, during the
election period described in Paragraph (F) below,
to receive his Employee Aggregate Contributions in
a single lump sum, payable upon his separation
from all service with any Affiliate. The amount
of his Employee Aggregate Contributions shall
contain interest accrued to the date of payment in
accordance with Section 1(e) of Appendix D. In
the case of a Married Participant, the election
shall be effective only when agreed to in writing
by such Participant's spouse in the manner
described in Paragraph (F) below.
A Married Participant who (i) does not elect
to receive his Supplemental Retirement Income
pursuant to the foregoing paragraph and (ii) does
not elect to receive an optional form of
Retirement Income pursuant to Paragraphs (B) or
(D) below may elect, during the election period
described in Paragraph (F) below, to receive his
Supplemental Retirement Income commencing upon his
Retirement Date and terminating with the last
monthly payment prior to his death. Such
Supplemental Retirement Income shall be the
Actuarial Equivalent of the Supplemental
Retirement Income otherwise payable under
Section 6.2(B). The election shall be effective
only when agreed to in writing by the Married
Participant's spouse in the manner described in
Paragraph (F) below. However, the election may be
revoked by the Married Participant by means of a
written notice to the Company at any time prior to
the commencement of such payments, which
revocation shall become effective immediately.
A Participant who (i) does not elect to
receive his Supplemental Retirement Income in an
optional form described above and (ii) elects to
receive his Retirement Income in an optional form
pursuant to Paragraphs (B), (C) or (D) below shall
receive his Supplemental Retirement Income in the
same form as his Retirement Income. If
Paragraph (B) below is elected, the actual
Supplemental Retirement Income payable shall be
the Actuarial Equivalent of the benefit payable
under Section 6.2. If a lump sum payment under
Paragraph (D) below is elected, the Participant
shall receive his employee contributions with
interest accrued to the date of payment pursuant
to Section 1(e) of Appendix D. If an installment
distribution under Paragraph (D) below is elected,
the Participant's employee contributions with
interest accrued to the date of the first
installment pursuant to Section 1(e) of Appendix
D shall be added to the Participant's entire
interest pursuant to Paragraph (D).
(B) Contingent Annuitant Options
A Participant may elect to receive the
Actuarial Equivalent of the Retirement Income
otherwise payable under Section 6.1, commencing
upon his Retirement Date and, after his death,
payable to the contingent annuitant designated by
the Participant, if then living, in the same
amount or in an amount equal to fifty percent
(50%) of the payments made to the Participant.
If the Participant's contingent annuitant
dies before the Participant's Benefit Distribution
Date, the normal form of Retirement Income
automatically shall become payable, as if a
contingent annuitant option had not been elected,
unless the Participant elects another optional
form of payment within the applicable election
period. If the contingent annuitant predeceases
the Participant after his Benefit Distribution
Date, the Retirement Income payments to the
Participant will not be adjusted and will cease
upon the Participant's death. Except as provided
in Article 7, no income will be payable to a
surviving contingent annuitant if the Participant
dies before his Benefit Distribution Date.
An election of a contingent annuitant option
shall not become effective if an annual rate of
Retirement Income of less than one hundred twenty
dollars ($120) would be payable either to the
Participant or to his contingent annuitant.
(C) Single Life Annuity for Married Participant
A Married Participant may elect to receive
his Retirement Income in the form of a monthly
payment commencing as of the Participant's
Retirement Date and terminating with the last
monthly payment due prior to his death. An
election pursuant to this Paragraph (C) shall be
effective only when agreed to in writing by such
Participant's spouse in the manner described in
Paragraph (F) below.
(D) Payment in a Lump Sum or in Installments
At the request of the Participant, payment to
a retiring Participant may be made in a lump sum
or, in the case of a Participant who is an
Employee on December 31, 1992, in annual
installments. The lump sum payment of a
Participant's Cash Balance Benefit shall equal the
Participant's Retirement Account. The lump sum
payment of any other benefit payable under this
Plan shall equal the Actuarial Equivalent of the
Participant's normal form of Retirement Income as
of his Retirement Date.
Installments shall be paid over one of the
following periods:
(1) A period certain not longer than
the life expectancy of the Participant; or
(2) A period certain not longer than
the joint life expectancy of the Participant
and his spouse.
The amount to be distributed each year shall
not be smaller than the amount obtained by
dividing the entire interest of the Participant at
the time the distribution is made by the life
expectancy of the Participant or the joint life
expectancy of the Participant and his spouse
(whichever is applicable). However, no
distribution need be made in any year, or a lesser
amount may be distributed, if the aggregate
amounts distributed by the end of such year are at
least equal to the aggregate of the minimum
amounts required by this Paragraph (D) to be
distributed by the end of such year. Any
installments that remain unpaid upon the
Participant's death shall be paid to his
Beneficiary in a lump sum.
A Participant's "entire interest" shall equal
the lump sum value of his Retirement Income as of
the Participant's Retirement Date, increased by
earnings (in accordance with Section 6.3(E) or, if
the Participant's entire interest is maintained in
a separate interest-bearing account at a financial
institution, the amount actually earned), and
decreased by the amount of installment payments
previously made.
Life expectancies shall be determined in
accordance with the regulations and tables issued
under section 72 of the Code.
(E) Interest on Installments
If the payment of a Participant's Retirement
Income is made in installments, the unpaid amount
shall be credited with interest compounded
annually at the rate prescribed in Section 4.3(C).
(F) Election Requirements
An election of an optional form of payment or
a Retirement Date before the Normal Retirement
Date shall be made by a Participant on the
prescribed form and filed with the Company. Such
election may be made only during an election
period consisting of the ninety (90) consecutive
days prior to the Participant's Benefit
Distribution Date. A Participant may revoke such
an election by providing a written notice to the
Company on the prescribed form at any time prior
to the end of the election period.
6.4 Small Payments
If the Actuarial Equivalent of all benefits payable to
any person under the Plan, expressed as a lump sum, is
not more than three thousand five hundred dollars
($3,500), then the Actuarial Equivalent of such
benefits shall be paid to such person in a single lump
sum in lieu of monthly payments. For this purpose, a
Retirement Income of $0 shall be deemed paid to any
Participant who separates from service without being
entitled to any Retirement Income benefits, as provided
under Section 5.2 of the Plan. The lump sum payment
shall be made as soon as reasonably practicable after
the Participant separates from service or, in the case
of a death benefit, the date of the Participant's
death. However, no distribution shall be made under
the preceding sentence after a Married Participant's
Benefit Distribution Date, unless the Married
Participant and his spouse (or surviving spouse if the
Married Participant has died) consent in writing to the
distribution within the ninety- (90-) day period prior
to distribution.
6.5 General Rule on Commencement Dates
All distributions under the Plan shall be made in
accordance with the Income Tax Regulations under
section 401(a)(9) of the Code. Such regulations are
incorporated in the Plan by reference and shall
override any inconsistent provisions of the Plan. In
applying such regulations, no individual's life
expectancy shall be recalculated with respect to the
payment of any Retirement Income under the Plan, except
to the extent that a recalculation is requested by such
individual in writing and is permitted by such
regulations.
ARTICLE 7
PRERETIREMENT DEATH BENEFITS
7.1 Benefit Eligibility
The Beneficiary of a Participant shall be entitled to a
Death Benefit under this Article 7 if the Participant
dies prior to his Benefit Distribution Date, but on or
after June 1, 1997. Any benefit payable with respect
to a Participant who dies prior to June 1, 1997 shall
be determined in accordance with the provisions of the
Plan in effect on May 31, 1997.
7.2 Payment of Death Benefit
(A) If the Beneficiary is not the surviving
spouse of the Participant, payment shall be made
as soon as is practicable after the Participant's
death.
(B) If the Beneficiary is the surviving spouse of
the Participant, payment of the Death Benefit
shall commence as of the first day of the month
coincident or next following the later of (1) the
Participant's Normal Retirement Date or (2) the
date of the Participant's death. If the
Participant's death occurs prior to the
Participant's Normal Retirement Date, the
surviving spouse may, in the manner prescribed by
the Company, elect to receive the Death Benefit on
an earlier commencement date, provided the
surviving spouse's election is made within the
ninety (90) day period prior to the desired
commencement date. If, pursuant to Section 7.3,
the Death Benefit is to be paid in a lump sum
payment, then the payment shall be made as soon as
practicable on or after the date set forth herein.
If payment is in the form of an annuity, the
payments shall be computed as of the date set
forth herein and shall commence as soon as
practicable on or after such date.
7.3 Form and Amount of Death Beneficiary
If the Participant's Beneficiary is not the surviving
spouse, payment of the Death Benefit shall be made in a
lump-sum payment in cash. If the Participant's
Beneficiary is not the surviving spouse, and if the
Participant is eligible for the Supplemental Retirement
Income provided by Appendix D, then the Participant's
death benefit shall also include the Participant's
employee contributions plus interest pursuant to the
provisions of Section 1(e) of Appendix D to the date of
payment.
If the Participant's surviving spouse is his
Beneficiary, payment shall be made as an annuity for
the life of the surviving spouse that is payable
monthly, unless the surviving spouse elects to receive
the benefit as a lump-sum payment in cash. For
purposes of this Section 7.3:
(A) If payable in a lump-sum and accrued under
Section 4.3, the vested portion of the Death
Benefit shall be in an amount equal to the
Participant's Cash Balance Benefit as of the date
payment of such benefit is commenced. If payable
in a lump-sum and accrued under any other
provision of the Plan, the Death Benefit shall be
equal to the Actuarial Equivalent of the vested
Retirement Income based on the factors set forth
in Appendix A.
(B) If payable to the surviving spouse as a
single- life annuity and accrued under Section
4.3, the Death Benefit shall be payable in an
Actuarially Equivalent single-life annuity based
on the factors set forth in Appendix A and the
surviving spouse's age at the time the benefit is
commenced in accordance with the factors set forth
in Appendix A. If the Participant is eligible for
the Supplemental Retirement Income provided by
Appendix D, then the Death Benefit shall also
include an amount, payable for the life of such
spouse, which is the Actuarial Equivalent of the
Participant's employee contributions plus interest
pursuant to Section 1(e) of Appendix D. If,
however, the spouse does not survive to receive a
total Death Benefit equal to the Participant's
employee contributions plus interest pursuant to
Section 1(e) of Appendix D at his death, then the
excess shall be paid in a lump sum to the
Participant's Beneficiary.
7.4 Involuntary Lump Sum Cash-Outs
Any other provision of the Article notwithstanding, if
the value of the Participant's vested Retirement Income
is not more than $3,500 as of the date of his death,
payment of the Death Benefit shall be made to the
Beneficiary in a single lump-sum payment in cash as
soon as practicable after the date of the Participant's
death.
7.5 Beneficiary Designation for Preretirement Death Benefit
The Participant may not designate a non-spouse
Beneficiary to receive the Death Benefit under this
Article 7 without the consent of his spouse in
accordance with this Section 7.5. Any spousal consent
under this Section 7.5 above shall be in writing, shall
identify the non-spouse Beneficiary, shall acknowledge
the effect of such election and shall be witnessed by a
Plan representative (if permitted by the Employer) or
by a notary public. A consent, once given by a spouse,
shall not be revocable by such spouse, unless the
Participant revokes the designation. The spouse's
consent shall not be required if (a) the Participant
establishes to the Employer's satisfaction that the
spouse's consent cannot be obtained because the spouse
cannot be located or (b) the Participant is legally
separated or has been abandoned (within the meaning of
local law) and has an appropriate court order (unless a
qualified domestic relations order provides otherwise)
and, in either such case, (c) the Participant's
designated Beneficiary agrees in writing that, if the
Employer is compelled by a court of competent
jurisdiction or other authority to pay all or any
portion of the Death Benefit to or on behalf of such
spouse, the designated Beneficiary will indemnify the
Employer, by paying to the Employer, upon written
demand, an amount equal to such payment, together with
reasonable attorneys' fees and expenses. The Employer
may, in its sole discretion, waive the indemnification
requirement. If the spouse is legally incompetent to
give consent, the spouse's legal guardian (including
the Participant) may give consent.
7.6 Notice of Death Benefit Options
The Employer shall provide each Participant within the
applicable period, a written explanation of the Death
Benefit detailing the terms and conditions on which the
Death Benefit will be paid to the surviving spouse of
the Participant, the Participant's right to elect a non-
spouse Beneficiary to receive the Death Benefit, the
right of the spouse with respect to the Death Benefit,
and the effect on the spouse of the spouse's consent to
the Participant's designation of a non-spouse
Beneficiary.
For purposes of this Section 7.6, the "applicable
period" is whichever of the following periods ends
last:
(A) The period beginning with the first day of
the Plan Year in which the Participant attains age
32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant
attains age 35; except that in the case of a
Participant who separates from service before
attaining age 35, the applicable period means the
period beginning one year before the separation
from service and ending one year after such
separation. If such a Participant is later
reemployed, notice will be given during the
reemployment applicable period.
(B) A reasonable period ending after the
individual becomes a Participant. A "reasonable
period" is the period beginning one year prior to
and ending on the earlier of 30 days prior to the
Benefit Distribution Date or one year after the
date the individual becomes a Participant.
7.7 Other Death Benefits
If a Participant's death occurs after commencement of
his Retirement Income, the Plan shall not provide any
death benefits except in the following cases:
(A) If the form of Retirement Income which the
Participant was receiving contains provisions for
the payment of benefits after the Participant's
death, a benefit shall be paid accordingly; and
(B) If the Participant made employee
contributions under the Natomas Plan or a Prior
Plan, his Beneficiary shall receive, when the
later to survive of the Participant or his spouse
dies, a lump sum payment equal to the excess (if
any) of the Participant's employee contributions
plus interest pursuant to Section 1(e) of Appendix
D as of the Benefit Distribution Date over the
total amount of Retirement Income and Supplemental
Retirement Income received by the Participant and
his spouse. Payment shall be made as soon as
practicable (but in no event later than five (5)
years) after the Participant's death.
ARTICLE 8
FINANCING THE PLAN
8.1 Participant Contributions
Participants are not required or permitted to
contribute to the Plan. However, for any Participant
who was a Participant in a Prior Plan or the Natomas
Plan and had a balance in his contribution account when
his participation in the Prior Plan or the Natomas Plan
concluded, his balance in that account shall become a
part of the Trust Fund and shall be payable in
accordance with the provisions of this Plan.
8.2 Employer Contributions
Each Employer shall make such contributions from time
to time as it deems necessary to provide the benefits
of the Plan. The minimum amount of such contributions
shall be that amount which is required to meet the
minimum funding standard of ERISA and any governmental
regulations and rulings issued in connection with
ERISA. However, the Employer is under no obligation to
make any contributions under the Plan after the Plan is
terminated, whether or not benefits accrued or vested
prior to the date of termination have been fully
funded.
8.3 Trust Agreement
The Company has entered into a Trust Agreement, which
shall be a part of the Plan. All contributions made
pursuant to this Article 8 shall be paid to the Trust
Fund. All such contributions and increments thereon
shall be held and disbursed in accordance with the
provisions of the Plan and the Trust Agreement. No
person shall have any interest in, or right to, any
part of the funds held in the Trust Fund, except as
expressly provided in the Plan or Trust Agreement.
8.4 Reversion of Assets
Prior to the termination of the Plan, the assets of the
Plan shall not inure to the benefit of an Employer and
shall be held for the exclusive purposes of providing
benefits to Participants and their contingent
annuitants and Beneficiaries and for defraying the
reasonable expenses of administering the Plan, except
that:
(A) In the case of an Employer contribution which
is made because of a mistake of fact, such
contribution shall be returned to the Employer
within one (1) year after the payment of the
contribution; and
(B) Each Employer contribution is expressly condi
tioned upon the deductibility of the contribution
under section 404 of the Code. If the deducti
bility of a contribution is disallowed, the amount
for which a deduction was disallowed (reduced by
any losses incurred with respect to such amount)
shall be returned to the Employer within one (1)
year after the date of disallowance.
ARTICLE 9
ADMINISTRATION OF THE PLAN AND MANAGEMENT OF ASSETS
9.1 Plan Sponsor and Plan Administrator
The Company is the "plan sponsor" and the "plan
administrator" of the Plan, as such terms are used in
ERISA and the Code.
9.2 Administrative Responsibilities
The Company shall be the named fiduciary which has the
authority to control and manage the operation and
administration of the Plan. The Company in its sole
discretion shall make such rules, interpretations and
computations and take such other actions to administer
the Plan as the Company may deem appropriate. The
Company shall have sole discretion to interpret the
terms of the Plan and to determine eligibility for
benefits pursuant to the objective criteria set forth
in the Plan. The rules, interpretations, computations
and other actions of the Company shall be binding and
conclusive on all persons. In administering the Plan,
the Company shall act in a nondiscriminatory manner to
the extent required by section 401(a) and related
provisions of the Code and shall at all times discharge
its duties with respect to the Plan in accordance with
the standards set forth in section 404(a)(1) of ERISA.
9.3 Management of Plan Assets
The Company shall be a named fiduciary with respect to
control and management of the assets of the Plan, but
only to the extent that it shall have the authority
(i) to appoint one or more trustees to hold the assets
of the Plan in trust and to enter into a trust
agreement with each trustee it appoints, (ii) to
appoint one or more Investment Managers for any assets
of the Plan and to enter into an investment management
agreement with each Investment Manager it appoints,
(iii) to direct the investment of any Plan assets not
assigned to an Investment Manager and (iv) to remove
any trustee or Investment Manager it previously
appointed. Each Investment Manager so appointed shall
acknowledge in writing that it is a fiduciary with
respect to the Plan.
9.4 Trustee and Investment Managers
The Trustee shall have the exclusive authority and
discretion to control and manage the Plan assets held
in trust by it, except to the extent that (i) the
Company directs how such assets shall be invested or
(ii) the Company allocates the authority to manage such
assets to one or more Investment Managers. Each
Investment Manager appointed under Section 9.3 shall
have the exclusive authority to manage, including the
power to acquire and dispose of, the Plan assets
assigned to it by the Company. The Trustee and any
Investment Manager shall be solely responsible for
diversifying the investment, in accordance with section
404(a)(1)(C) of ERISA, of the Plan assets assigned to
them by the Company, except to the extent that the
Company directs how such assets shall be invested.
9.5 Delegation of Fiduciary Responsibilities
The Company may engage such attorneys, actuaries,
accountants, consultants or other persons to render
advice or to perform services with regard to any of its
responsibilities under the Plan as it shall determine
to be necessary or appropriate. The Company may
designate by written instrument (signed by both
parties) one or more persons to carry out, where
appropriate, fiduciary responsibilities of the Company.
The duties and responsibilities of the Company under
the Plan shall be carried out by the directors,
officers and employees of the Company, acting on behalf
and in the name of the Company in their capacities as
directors, officers and employees and not as individual
fiduciaries. Except as provided in Section 14.1
(Review Panel), the Company is specifically prohibited
from designating any director, officer or employee of
the Company as a fiduciary and from allocating or
delegating to any such person any of its fiduciary
responsibilities.
9.6 Enrolled Actuary
The Company shall appoint an Enrolled Actuary to make
actuarial valuations of the liabilities under the Plan;
to recommend to it the actuarial funding method and
actuarial assumptions for use from time to time in
actuarial and other computations for any purpose under
the Plan; to recommend to it the range of permissible
contributions to be made by each Employer; and to
perform such other services as the Company shall deem
necessary or desirable in connection with the
administration of the Plan.
9.7 Reliance Upon Advice
To the extent permitted by law, the Company shall be
entitled to rely conclusively upon, and shall be fully
protected in any action taken or suffered in good faith
in reliance upon, any attorney, actuary, accountant,
consultant or other person selected by the Company, or
in reliance upon any tables, valuations, certificates,
opinions or reports which shall be furnished by any of
them or by the Trustee.
9.8 Funding Policy
The Company shall have the fiduciary responsibility for
establishing a funding policy and method that satisfies
the requirements of Part 3 of Subtitle B of Title I of
ERISA, and shall review the funding policy and method
at least annually.
9.9 Communication of Financial Needs
The Company shall communicate to the Trustee (or
Investment Manager, where appropriate) from time to
time (but at least annually) its determination of the
Plan's short- and long-term financial needs.
9.10 Administrative Expenses
All expenses that arise in connection with the
administration of the Plan, including (but not limited
to) the compensation of the Trustee, administrative
expenses and proper charges or disbursements of the
Trustee and compensation or other charges and expenses
of any Investment Manager, attorney, actuary,
accountant, consultant, or other person who shall be
employed by the Company in connection with the
administration of the Plan, shall be paid from the
Trust Fund to the extent not paid by the Company. The
Company shall have complete and unfettered discretion
to determine whether an expense of the Plan shall be
paid by the Company or out of the Trust Fund, and the
Company's discretion and authority to direct the
payment of expenses out of the Trust Fund shall not be
limited in any way by any prior decision or practice
regarding payment of the expenses of the Plan.
9.11 Manner of Payments
Subject to the provisions of the Trust Agreement, the
Company shall determine the manner in which the funds
of the Plan shall be disbursed pursuant to the Plan.
ARTICLE 10
AMENDMENT OR TERMINATION
10.1 Amendments
The Company may amend (retroactively or prospectively)
any or all of the provisions of the Plan at any time
by action of its board of directors or by action of a
committee or individual(s) acting pursuant to a valid
delegation of authority; provided, however, that no
amendment shall make it possible for any part of the
corpus or income of the Trust Fund to be used for, or
diverted to, purposes other than the exclusive benefit
of Participants and their contingent annuitants and
Beneficiaries prior to the satisfaction of all
liabilities with respect to Participants and their
contingent annuitants and Beneficiaries under the
Plan; and provided that no amendment shall make it
possible to deprive any Participant of a previously
accrued benefit, except to the extent permitted by
section 412(c)(8) of the Code.
10.2 Merger, Consolidation or Transfer
Except as otherwise provided in regulations under the
Code, in the event of any merger or consolidation
with, or transfer of assets or liabilities to, any
other plan, the benefit that each Participant would be
entitled to receive if the Plan were to terminate
immediately after the merger, consolidation or
transfer shall not be less than the benefit he would
have been entitled to receive if the Plan had
terminated immediately before the merger,
consolidation or transfer.
10.3 Rights and Obligations Upon Termination
(A) It is the intention of the Company that the
Plan will continue indefinitely, but the Company
may, at any time and for any reason, by action of
its board of directors or by action of a
committee or individual(s) acting pursuant to a
valid delegation of authority, terminate the Plan
or permanently discontinue Company contributions
with respect to any or all Employers hereunder
without terminating the Trust Agreement or the
other provisions of the Plan. Any other
provision hereof notwithstanding, no Employer
shall have any obligation to continue to make
contributions to the Plan after the termination
thereof with respect to such Employer. Upon
termination of the Plan, the accrued benefits of
all Employees (to the extent funded) shall become
fully vested and nonforfeitable.
(B) It is the intent of this Section 10.3 that
any termination of the Plan be accomplished in
accordance with ERISA section 4044 and sections
401(a)(4) and 411(d)(3) of the Code and related
regulations. Prior to any intended termination
of the Plan, the Plan shall be amended to provide
for allocation and distribution of Plan assets
attributable to accrued benefits among
Participants and Beneficiaries in compliance with
such laws, and such allocation and distribution
shall then be made by the Company in accordance
with the Plan as so amended. Upon termination of
the Plan, excess assets of the Trust Fund shall
revert to the Company to the extent permitted by
ERISA.
(C) If any partial termination (as determined by
the Company in accordance with applicable Code
provisions) of the Plan occurs, then the accrued
benefits of those Employees with respect to whom
the Plan is so terminated (to the extent funded)
shall become fully vested and nonforfeitable.
(D) Until the final distribution of all Plan
assets allocated on account of any termination or
partial termination of the Plan, the Trust Fund
shall continue, and the Company and the Trustee
shall continue to have and may exercise all of
the powers conferred upon them by the Plan and
the Trust Agreement.
10.4 Limitations Upon Highest-Paid Employees
(A) Restriction on Benefits
In the event of the termination of the Plan,
the benefit of any Highly Compensated Employee or
any Highly Compensated Former Employee shall be
limited to a benefit that is nondiscriminatory
under section 401(a)(4) of the Code.
(B) Pre-Termination Restrictions on Distributions
(1) Limit on Annual Payments
The annual payments to a Restricted
Employee under the Plan shall be restricted
to an amount equal to the payments that would
be made on behalf of such Restricted Employee
under a single-life annuity that is the
Actuarial Equivalent of the sum of his
accrued benefit and his other Benefits under
the Plan. The restrictions in this Section
10.4 shall not apply, however, if:
(a) After payment to a
Restricted Employee of all Benefits, the
value of the Plan's assets equals or
exceeds one hundred ten percent (110%)
of the value of current liabilities (as
defined in section 412(l)(7) of the
Code); or
(b) The value of the Benefits
for a Restricted Employee is less than
one percent (1%) of the value of current
liabilities; or
(c) The value of the Benefits
for a Restricted Employee is $3,500 or
less.
(2) Definition of Benefit
For purposes of this Section 10.4
only, the term "Benefit" shall include, among
other benefits, loans in excess of the amount
set forth in section 72(p)(2)(A) of the Code,
any periodic income, any withdrawal values
payable to a living Participant and any death
benefits not provided by insurance on the
Participant's life.
(3) Definition of Restricted Employee
For purposes of this Section 10.4
only, the term "Restricted Employee" with
respect to any Plan Year shall mean one of
the twenty-five (25) Highly Compensated
Employees and Highly Compensated Former
Employees whose Compensation (as defined in
Section 4.8) is highest for such Plan Year.
ARTICLE 11
GENERAL PROVISIONS
11.1 No Implied Employment Contract
The Plan shall not be deemed (i) to give any Employee
or other person any right to be retained in the employ
of an Employer nor (ii) to interfere with the right of
an Employer to discharge any Employee or other person
at any time and for any reason.
11.2 Benefits Not Assignable
Except as otherwise provided in Section 11.7 or
section 414(p) of the Code with respect to qualified
domestic relations orders, no distribution or payment
under the Plan to any Participant, Beneficiary or
contingent annuitant shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, whether voluntary or
involuntary, and any attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge the
same shall be void; nor shall any distribution or
payment in any way be liable for or subject to the
debts, contracts, liabilities, engagements or torts of
any person entitled to the distribution or payment.
If any Participant, Beneficiary or contingent
annuitant has been adjudicated a bankrupt or has
purported to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge any distribution or
payment, voluntarily or involuntarily, then the
Company, in its discretion, may direct the Trustee to
hold or apply the distribution or payment or any part
thereof to or for the benefit of such Participant,
Beneficiary or contingent annuitant in such manner as
the Company shall direct. The Company shall establish
reasonable procedures to determine the qualified
status of domestic relations orders and to administer
distributions under qualified domestic relations
orders.
11.3 Payments Under Qualified Domestic Relations Order
The creation or recognition of the right of an
Alternate Payee to any Retirement Income payable with
respect to a Participant by, and the payment of
benefits pursuant to, a qualified domestic relations
order (as defined in section 414(p) of the Code) shall
not constitute a violation of Section 11.2. The
Company shall establish reasonable, written procedures
to determine the qualified status of a domestic
relations order and to administer distributions under
such orders. Pursuant to a qualified domestic
relations order, the Plan may distribute the Actuarial
Equivalent of any benefit payable to an Alternate
Payee prior to the Participant's Benefit Distribution
Date, but no earlier than the Participant's Early
Retirement Date or (if earlier) Normal Retirement
Date, without regard to whether the Participant is
then retired. An Alternate Payee's election of a
contingent annuitant option, lump sum option or
installment option for distribution of his Plan
benefit shall be conditioned upon satisfying any
election requirement equivalent to those applicable to
the Participant. To the extent that a qualified
domestic relations order creates, assigns or
recognizes an Alternate Payee's right to any portion
of the Retirement Income otherwise payable to or with
respect to a Participant, such portion thereafter
shall not be taken into account in determining the
Retirement Income payable to or with respect to such
Participant.
11.4 Payments of Benefits to Infants or Incompetents
If the Company determines that any person entitled to
payments under the Plan is an infant or is incompetent
by reason of a physical or mental disability, then it
may cause all payments thereafter becoming due to such
person to be made to any other person for his benefit,
without responsibility for the application of amounts
so paid. Payments made pursuant to this provision
shall completely discharge the Employer, the Trustee
and the Company.
11.5 Proof of Age and Marriage
Participants, spouses and contingent annuitants shall
furnish proof of age and marital status satisfactory
to the Company at such time or times as the Company
may prescribe. Subject to Section 6.5, the Company
may delay the disbursement of any benefit due under
the Plan until all pertinent information with respect
to age and marital status has been so furnished.
11.6 Source of Benefits
The Trust Fund shall be the sole source of benefits
under the Plan, and each Employee, Participant,
contingent annuitant, Beneficiary or other person who
claims the right to any payment or benefit under the
Plan shall only be entitled to look to the Trust Fund
for such payment or benefit and shall not have any
right, claim or demand therefor against any Employer
or any officer or director of the Employer.
11.7 Overpayments and Underpayments
If any person has received a payment from the Plan in
excess of the amount (if any) to which he was entitled
under the Plan, then the excess may be withheld from
one or more subsequent payments to such person (or to
any person who derives his rights under the Plan from
the person who received the overpayment); provided
that no single periodic payment under the Plan shall
be reduced by more than twenty-five percent (25%) on
account of one or more prior overpayments. In
addition, the Company may employ any other lawful
means to recover overpayments on behalf of the Plan.
If any person has received less than the amount to
which he is entitled under the Plan, then the entire
amount of the deficiency shall be paid to him (or to
his representative) as soon as reasonably practicable
after the discovery of the underpayment.
11.8 Service in Multiple Fiduciary Capacities
Any person or group of persons may serve in more than
one fiduciary capacity with respect to the Plan and
Trust Agreement.
11.9 Criminal Acts
Any Participant who (i) has not attained the age of
sixty-five (65), (ii) has less than a five (5) year
Period of Service and (iii) admits to, or is convicted
of, any criminal act against an Employer shall not be
entitled to any Retirement Income benefits for service
after November 15, 1972, attributable to Employer
contributions, unless the Plan is terminated prior to
the date when he admits to, or is convicted of, such
criminal act.
11.10 IRS Qualification
The Company intends that the Plan (including the Trust
Agreement forming a part thereof) shall be a qualified
pension plan for the exclusive benefit of Employees
and their Beneficiaries, as provided in
sections 401(a) and 501(a) of the Code.
11.11 Construction of Plan
Headings to the Articles, Sections or Subsections of
the Plan are for reference only. In the event of a
conflict between a heading and the text of the Plan,
the text of the Plan shall control. In the event of a
conflict between the text of the Plan and any summary,
description or other information regarding the Plan,
the text of the Plan shall control.
Words indicating gender shall be construed to include
males and females wherever appropriate. The singular
shall include the plural, and the plural shall include
the singular, unless the context otherwise requires.
11.12 Forms for Plan Communications
All communications from a Participant or other person
with regard to the Plan shall become effective only
when made in writing and filed with the Company. If
the Company has adopted prescribed forms for any
communications, such communications shall be effective
only if filed on such forms.
11.13 Governing Law
The provisions of the Plan shall be construed,
administered and governed according to ERISA and, to
the extent not superseded by ERISA, the laws of the
State of California.
ARTICLE 12
PERIOD OF SERVICE
12.1 Period of Employment Relationship
An individual's Period of Service shall include any
period during which he maintains an employment
relationship with any Affiliate, determined as
follows:
(A) General Rule
An individual's employment relationship shall
begin as of the date on which he first performs
duties as an employee of any Affiliate for which
he receives (or is entitled to receive)
compensation and shall end as of the date on
which he retires, dies, quits, is discharged or
otherwise severs from all employment with any
Affiliate.
(B) Approved Absence
If an individual is absent (with or without
pay) with the approval of an Affiliate and if the
absence does not exceed twelve (12) months, then
the absence shall not be considered a quit. If
the absence exceeds twelve (12) months but the
individual complies with all terms and conditions
imposed from time to time by the Affiliate (which
may include a requirement of reemployment), then
the absence also shall not be considered a quit.
If the absence exceeds twelve (12) months and if
the individual fails to comply with such terms
and conditions, then the absence shall be
considered a quit as of the expiration of the
first twelve (12) months.
(C) Military Leave
If an individual enters into military service
with the United States, then his entry into
military service shall not be considered a quit;
provided, however, that the entry into military
service shall be considered a quit as of the time
when it occurs if the individual fails to return
to employment with an Affiliate within the period
during which his reemployment rights are
protected by law.
12.2 Interval Between Periods of Employment
The Period of Service of an individual who is rehired
by an Affiliate within 365 days after the end of his
previous employment relationship with an Affiliate, as
determined pursuant to Section 12.1, shall include the
period between the end of the previous employment
relationship and the commencement of the new
employment relationship.
12.3 Predecessor Companies
In determining an individual's nonforfeitable interest
in his Retirement Income, his Period of Service also
shall include any Period of Service with a company
merged or consolidated with an Employer, or a
substantial part of the assets or business of which
has been acquired by an Employer (hereafter
"Predecessor Company"):
(A) If the Employer continues to maintain an
employee pension benefit plan of such Predecessor
Company;
(B) If, and to the extent, such employment with
the Predecessor Company is required to be treated
as employment with the Employer under regulations
prescribed by the Secretary of the Treasury; or
(C) If, and to the extent, granted by the Company
in its sole discretion, effected on a
nondiscriminatory basis, regarding all persons
similarly situated.
For purposes of determining an individual's Retirement
Income benefit, his Period of Service also may include
a Period of Service with a Predecessor Company to the
extent granted by the Company in its sole discretion,
effected on a nondiscriminatory basis regarding all
persons similarly situated.
12.4 Other Periods
An individual's Period of Service shall include the
following:
(A) Any period recognized under the terms of the
Plan as in effect on May 31, 1997; and
(B) Any other period which constitutes a Period
of Service under such written, uniform and
nondiscriminatory rules as the Company may adopt
from time to time.
12.5 Years in a Period of Service
All of an individual's Periods of Service determined
pursuant to this Article 12 shall be aggregated on the
basis of days. The number of years in the
individual's aggregate Period of Service shall be
expressed as a number rounded to the fourth decimal
place determined by dividing the aggregate number of
days in such period by three hundred sixty-five (365).
ARTICLE 13
CLAIMS AND INQUIRIES
13.1 Application for Benefits
Applications for benefits and inquiries concerning the
Plan (or concerning present or future rights to
benefits under the Plan) shall be submitted to the
Company in writing. An application for benefits shall
be submitted on the prescribed form and shall be
signed by the Participant or, in the case of a benefit
payable after his death, by his surviving spouse or
Beneficiary.
13.2 Denial of Application
In the event that an application for benefits is
denied in whole or in part, the Company shall notify
the applicant in writing of the denial and of the
right to a review of the denial. The written notice
shall set forth, in a manner calculated to be
understood by the applicant, specific reasons for the
denial, specific references to the provisions of the
Plan on which the denial is based, a description of
any information or material necessary for the
applicant to perfect the application, an explanation
of why the material is necessary, and an explanation
of the review procedure under the Plan. The written
notice shall be given to the applicant within a
reasonable period of time (not more than ninety (90)
days) after the Company received the application,
unless special circumstances require further time for
processing and the applicant is advised of the
extension. In no event shall the notice be given more
than one hundred eighty (180) days after the Company
received the application.
ARTICLE 14
REVIEW OF DENIED CLAIMS
14.1 Review Panel
The Company shall from time to time appoint a panel
(the "Review Panel") which shall consist of three (3)
individuals who may, but need not, be Employees. The
Review Panel shall be the named fiduciary which has
the authority to act with respect to any appeal from a
denial of benefits or a determination of benefit
rights.
14.2 Request for Review
An applicant whose application for benefits was denied
in whole or in part, or the applicant's duly
authorized representative, may appeal from the denial
by submitting to the Review Panel a request for a
review of the application within ninety (90) days
after receiving written notice of the denial from the
Company. The Company shall give the applicant or his
representative an opportunity to review pertinent
materials, other than legally privileged documents, in
preparing the request for a review. The request for a
review shall be in writing. The request for a review
shall set forth all of the grounds on which it is
based, all facts in support of the request, and any
other matters which the applicant deems pertinent.
The Review Panel may require the applicant to submit
such additional facts, documents or other material as
it may deem necessary or appropriate in making its
review.
14.3 Decision on Review
The Review Panel shall act on each request for a
review within sixty (60) days after receipt, unless
special circumstances require further time for
processing and the applicant is advised of the
extension. In no event shall the decision on review
be rendered more than one hundred twenty (120) days
after the Review Panel received the request for a
review. The Review Panel shall give prompt written
notice of its decision to the applicant and to the
Company. In the event that the Review Panel confirms
the denial of the application for benefits in whole or
in part, the notice shall set forth, in a manner
calculated to be understood by the applicant, the
specific reasons for the decision and specific
references to the provisions of the Plan on which the
decision is based.
14.4 Rules and Interpretations
The Review Panel shall adopt such rules, procedures
and interpretations of the Plan as it deems necessary
or appropriate in carrying out its responsibilities
under this Article 14.
14.5 Exhaustion of Remedies
No legal action for benefits under the Plan shall be
brought unless and until the claimant (i) has
submitted a written application for benefits in
accordance with Section 13.1, (ii) has been notified
by the Company that the application is denied, (iii)
has filed a written request for a review of the
application in accordance with Section 14.2 and (iv)
has been notified in writing that the Review Panel has
affirmed the denial of the application; provided,
however, that legal action may be brought after the
Company or the Review Panel has failed to take any
action on the claim within the time prescribed by
Sections 13.2 and 14.3, respectively.
ARTICLE 15
TOP-HEAVY PROVISIONS
15.1 Determination of Top-Heavy Status
Any other provision of the Plan notwithstanding, this
Article 15 shall become effective for any Plan Year
beginning after December 31, 1983, in which the Plan
is a Top-Heavy Plan. The Plan shall be considered a
"Top-Heavy Plan" for a Plan Year if, as of the
Determination Date for such Plan Year, the Top-Heavy
Ratio for the Aggregation Group exceeds sixty percent
(60%).
15.2 Minimum Benefit
The annual Normal Retirement Income of each
Participant shall not be less than the product of
(i) two percent (2%) of the Participant's Average
Compensation, as defined in Section 15.6(C), and
(ii) the number of the Participant's Qualifying Years
not in excess of ten (10).
15.3 Minimum Vesting
Any other provision of the Plan notwithstanding, the
vesting requirement under Section 5.1 shall be a three
(3) or more year Period of Service (instead of a five
(5) or more year Period of Service) for each
Participant who completes any Period of Service in a
Plan Year in which the Plan is a Top-Heavy Plan.
15.4 Effect of Change in Top-Heavy Status
If the Plan at any time is a Top-Heavy Plan and
thereafter ceases to be a Top-Heavy Plan, each
Participant who would be vested under Section 15.3 as
of the May 31 in the last Plan Year in which the Plan
is a Top-Heavy Plan shall thereafter continue to be
vested. Each other Participant shall be vested in
accordance with Article 4 or 5, whichever is
applicable. After the Plan ceases to be a Top-Heavy
Plan, a Participant's Retirement Income shall be
determined under Article 4 or 5, whichever is
applicable, except that such benefit shall not be less
than the benefit accrued under Section 15.2 as of the
May 31 in the last Plan Year in which the Plan was a
Top-Heavy Plan.
15.5 Impact on Benefit Limitations
For each calendar year within a Plan Year in which the
Plan is a Top-Heavy Plan, the number "1.00" shall be
substituted for the number "1.25" wherever it appears
in sections 415(e)(2) and (3) of the Code; provided,
however, that such substitution shall not have the
effect of reducing any benefit accrued under this Plan
or any other defined-benefit plan maintained by any
Affiliate prior to the first day of the Plan Year in
which this Section 15.5 becomes applicable.
15.6 Definitions
For purposes of this Article 15, the following
definitions shall apply:
(A) "Affiliate" means each Affiliate, as defined
in Section 1.3, except that the penultimate
sentence of Section 1.3 shall not apply.
(B) "Aggregation Group" means a group of
qualified plans consisting of:
(1) Each plan of the Affiliates in
which a Key Employee participates and each
other plan of the Affiliates which enables
any plan in which a Key Employee participates
to meet the requirements of sections
401(a)(4) and 410 of the Code; or
(2) All plans of the Affiliates
included under (1) above, plus, at the
election of the Company, one or more
additional plans of the Affiliates which,
when all such plans are considered together,
satisfy the requirements of sections
401(a)(4) and 410 of the Code.
(C) "Average Compensation" means the
Participant's average annual Compensation for the
series of consecutive Plan Years (not in excess
of five (5)) during which the Participant had the
greatest aggregate Compensation. For purposes of
the preceding sentence, the following Plan Years
shall be disregarded (and the preceding and
following Plan Years shall be considered
consecutive):
(1) Any Plan Year during which the
Participant has no Period of Service;
(2) Any Plan Year ending before June 1,
1984; and
(3) Any Plan Year commencing after the
close of the last Plan Year in which the Plan
was a Top Heavy Plan.
(D) "Compensation" shall have the meaning given
such term in Section 4.8.
(E) "Determination Date" means the last day of
the preceding Plan Year.
(F) "Key Employee" means a key employee, as
defined by section 416(i) of the Code and the
regulations thereunder. In applying section
416(i) of the Code, the term "compensation" shall
have the meaning set forth in Paragraph (D)
above.
(G) "Qualifying Year" means each Plan Year with
respect to which all of the following
requirements are met:
(1) The Plan is a Top-Heavy Plan;
(2) The Participant is not a Key
Employee;
(3) The Participant completes any
Period of Service; and
(4) The Plan Year commenced on or after
June 1, 1984.
(H) "Top-Heavy Ratio" means the top-heavy ratio
for the Affiliates, as computed in accordance
with section 416(g) of the Code and the
regulations thereunder. In applying section
416(g) of the Code, the present value of accrued
benefits shall be determined on the basis of the
interest assumption and the mortality assumptions
used for the computation of plan costs under
section 412 of the Code, and the valuation date
shall be the last day of the Plan Year.
ARTICLE 16
EXECUTION
To record this amendment and restatement of the Plan to read
as set forth herein, effective as of June 1, 1997, the
Company has caused its authorized officer to execute this
document this 14 day of August, 1997.
APL LIMITED
By /s/ Timothy J. Windle
Assistant Secretary
ACTUARIAL EQUIVALENT FACTORS
SECTION 1. DEFINITIONS.
As used herein, the following terms shall have the
following meanings:
(a) "Applicable Interest Rate" means the annual rate
of interest described in section 417(e)(3)(A)(ii)(II) of the
Code. This rate shall be determined for each Plan Year, and
shall remain stable throughout the Plan Year. This
determination shall be made as of the "Lookback Month" for
the applicable Plan Year. The "Lookback Month" shall be the
month of April which precedes the Plan Year for which the
determination is being made.
(b) "Applicable Mortality Table" means the table
described in section 417(e)(3)(A)(ii)(I) of the Code.
Capitalized terms used in this Appendix A that are not
defined above shall have the same meaning as those terms do
in the Plan.
SECTION 2. INITIAL EMPLOYER ALLOCATION.
For purposes of determining a Participant's Initial
Employer Allocation as of May 31, 1997, the determination
shall be made utilizing the Applicable Mortality Table in
effect as of June 1, 1997 and an interest rate assumption of
7 percent (7%). A Participant's "adjusted Retirement
Income" shall equal his Retirement Income as of May 31,
1997; however, in the case of a Participant whose Retirement
Income on May 31, 1997 was the Participant's "COLA-Adjusted
Retirement Income" (as defined by the Plan document in
effect on May 31, 1997), the "adjusted Retirement Income"
shall be equal to such COLA-Adjusted Retirement Income
adjusted by applying the following factors:
Factors for Determining Eligibility
for a COLA-Adjusted Retirement Income
Single Factors
Age 2.5% Factors 1.5% Factors
55 1.276 1.166
56 1.269 1.161
57 1.262 1.157
58 1.255 1.153
59 1.248 1.149
60 1.241 1.145
61 1.235 1.141
62 1.228 1.137
63 1.221 1.133
64 1.215 1.129
65 1.208 1.125
Married Factors
Age 2.5% Factors 1.5% Factors
55 1.430 1.307
56 1.423 1.302
57 1.415 1.297
58 1.407 1.293
59 1.399 1.288
60 1.391 1.283
61 1.385 1.279
62 1.377 1.274
63 1.369 1.270
64 1.362 1.266
65 1.354 1.261
Married Factors = Single Factors / 89.2%
SECTION 3. CONVERSION OF RETIREMENT ACCOUNT TO A LIFE
ANNUITY.
For purposes of converting a Participant's Retirement
Account into a life annuity, the life annuity shall be the
Actuarial Equivalent of the Retirement Account determined
utilizing the Applicable Interest Rate and the Applicable
Mortality Table.
SECTION 4. SINGLE SUM VALUE OF GRANDFATHERED BENEFIT.
For purposes of Section 4.11(B), the single sum value
of the Grandfathered Benefit shall be made based on the
Applicable Mortality Table and the Applicable Interest Rate
in effect at the time of such determination. If a
Participant's Grandfathered Benefit is equal to his "COLA-
Adjusted Retirement Income" (as defined in Section 2(d) of
Appendix C), then the determination of the single sum value
shall be made by also taking into account the "Factors for
Determining Eligibility for a COLA-Adjusted Retirement
Income" set forth in Section 2 of this Appendix A.
SECTION 5. JOINT-AND-SURVIVOR ANNUITY OPTION FACTORS.
Joint-and-survivor option factors shall be determined
by the following formulas:
100% Continuation:
Retirement at age 65 80.6% plus .8% for each year
the contingent annuitant is
older than the Employee or
minus .8% for each year the
contingent annuitant is
younger than the Employee, but
in no event greater than 98%.
Retirement at other
than age 65 The initial factor shall
be increased by .6%
for each year the Employee is
under age 65 and decreased by
.6% for each year the Employee
is over age 65, but the result
shall in no event be greater
than 98%.
50% Continuation:
Retirement at age 65 89.2% plus .5% for each year
the contingent annuitant is
older than the Employee or
minus .5% for each year the
contingent annuitant is
younger than the Employee, but
in no event greater than 98%.
Retirement at other
than age 65 The initial factor shall
be increased by .4%
for each year the Employee is
under age 65 and decreased by
.4% for each year the Employee
is over age 65, but the result
shall in no event be greater
than 98%.
Tables Illustrating Joint-and-Survivor
Option Factors at Various Ages
Contingent
Employee's Annuitant's
Age on Age on Nearest 100% 50%
Birthday Birthday Continuance Continuance
65 70 .846 .917
65 65 .806 .892
65 60 .766 .867
65 55 .726 .842
62 64 .840 .914
62 60 .808 .894
60 62 .852 .922
55 53 .850 .922
SECTION 6. ALL OTHER CALCULATIONS.
For all other purposes under the Plan, except as may be
set forth in the applicable Section, calculations shall be
made based on the Applicable Interest Rate and the
Applicable Mortality Table.
APPENDIX B
DIRECT ROLLOVER PROVISIONS
SECTION 1. DIRECT ROLLOVER OPTION.
Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election
under this Appendix B, a Distributee may elect, subject to
the conditions and administrative procedures prescribed by
the Company, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover, as
described in section 401(a)(31) of the Code. In the event
that the Distributee elects to receive a portion of the
Eligible Rollover Distribution and to transfer a portion to
another Eligible Retirement Plan in a Direct Rollover, the
Direct Rollover portion must be at least $500.
SECTION 2. DEFINITIONS.
As used herein, the following terms have the following
meanings:
(a) "Eligible Rollover Distribution" means 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 10
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
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities); and a distribution of less than $200.
(b) "Eligible Retirement Plan" means 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 an
individual retirement annuity.
(c) "Distributee" means a Member, the Member's
surviving spouse and the Member's spouse or former spouse
who is an Alternate Payee.
(d) "Direct Rollover" means a payment by the Plan to
an Eligible Retirement Plan, including payment effected by
delivering to the Distributee a check made payable to the
Eligible Retirement Plan's custodian or trustee.
Capitalized terms used in this Appendix B that are not
defined herein shall have the same meaning as those terms do
in the Plan.
APPENDIX C
GRANDFATHERED BENEFIT
This Appendix C shall be applicable solely with respect
to Grandfathered Participants, as set forth in the Plan.
This Appendix shall be effective as of June 1, 1997.
SECTION 1. DEFINITIONS.
Capitalized terms used in this Appendix C that are not
defined herein shall have the same meaning as those terms do
in the Plan. For purposes of this Appendix C, "Natomas
Company," "Natomas Plan" and "Prior Plan" shall have the
meanings set forth in Appendix D.
(a) "Average Annual Compensation" means one fifth (1/5) of
the highest sum of a Participant's Grandfather Benefit
Compensation for any five (5) consecutive calendar years
during the Participant's Credited Period of Service. If the
Participant's Credited Period of Service contains fewer than
five (5) June 1 dates, "Average Annual Compensation" means
the sum of his Grandfather Benefit Compensation for each of
the calendar years that contain a June 1 date divided by the
number of such years. If a Participant is on an approved
absence (within the meaning of Section 12.1(B)), without
receiving any Base Grandfather Compensation from an
Employer, on June 1 of any calendar year, then the
Participant's Grandfather Benefit Compensation for the
calendar year that contains the June 1 date immediately
preceding the start of the absence shall be substituted in
the computation.
(b) "Average Social Security Base" means "covered
compensation," as defined in section 401(l)(5)(E) of the
Code.
(c) "Base Grandfather Compensation" means a Participant's
rate of basic earnings on June 1 while the Participant is an
Eligible Employee, including amounts contributed on a pretax
basis under section 125 or 401(k) of the Code to a plan
maintained by the Employer, and excluding overtime pay,
bonuses, commissions, incentive compensation and Employer
contributions (other than salary deferrals) to this or any
other benefit plan.
(d) "Credited Period of Service" means:
(1) The credited period of service completed by
the Participant prior to August 31, 1983, under
the provisions of a Prior Plan applicable to
service for benefit accrual purposes, determined
without regard to any breaks in service; plus
(2) Any period completed by the Participant on or
after August 31, 1983, to the extent that (i) such
period constitutes a Period of Service under
Article 12 and (ii) the Participant is an Eligible
Employee during such period; plus
(3) In the case of an individual who first
becomes an Employee on or after January 1, 1993
and who thereafter becomes a Participant, any
period completed by such individual prior to
becoming a Participant to the extent that (i) such
period constitutes a Period of Service under
Article 12 and (ii) the individual is an Eligible
Employee during such period; plus
(4) In the case of a Natomas Transferee, the
credited period of service completed by the
Natomas Transferee prior to his transfer, as
determined under the provisions of the Natomas
Plan applicable to service for benefit accrual
purposes; minus
(5) The number of years (and fractions thereof)
included in Paragraphs (1), (2), (3) and (4) above
that were used to calculate a Retirement Income
that was paid to the Participant in the form of a
lump sum distribution under the Plan, unless the
Participant is reemployed as an Eligible Employee
and repays the lump sum distribution, together
with interest thereon at the rate specified in
Section 1(a) of Appendix D, prior to his
subsequent Benefit Distribution Date.
(6) For purposes of applying Article 12 to
determine a Participant's Credited Period of
Service under this Section of Appendix C, the
following provision shall replace Section 12.5
under Article 12: All of an individual's Periods
of Service determined pursuant to Article 12 shall
be aggregated on the basis of months. The number
of years in the individual's aggregate Period of
Service is determined by dividing the number of
months in such period by twelve (12). Partial
months of service are rounded up to the next
higher whole month.
(e) "Eligible Grandfather Compensation" means, for any
calendar year the sum of:
(1) The Participant's annual Base Grandfather
Compensation during such calendar year;
(2) Any bonus that he receives during such
calendar year under the Company's year-end bonus
plan for executives and key employees;
(3) The total amount of any overtime pay that he
receives during such calendar year, except that
any overtime pay received during a calendar year
in which he completes a Credited Period of Service
of less than twelve (12) months shall be divided
by the number of completed months in such Credited
Period of Service and then multiplied by twelve
(12);
(4) For Plan Years ending on or before May 31,
1997, the total amount of any commissions that he
receives during such calendar year, except that
any commissions received during a calendar year in
which he completes a Credited Period of Service of
less than twelve (12) months shall be divided by
the number of completed months in such Credited
Period of Service and then multiplied by twelve
(12);
(5) Any payment he receives under the Company's
Team Up For Success program during the 1997
calendar year;
(6) Any bonus received under the Company's
Worldwide Bonus program during such calendar year;
and
(7) Any portion of a Participant's annual
earnings (including any bonus which would
otherwise be includible as Eligible Grandfather
Compensation) deferred by the Participant pursuant
to a nonqualified plan sponsored by the
Participant's Employer.
(f) "Grandfather Benefit Compensation" shall mean a
Grandfathered Participant's Eligible Grandfather
Compensation divided by two (2). Grandfather Benefit
Compensation taken into account under the Plan shall in no
event exceed the limitation in effect for that year under
section 401(a)(17) of the Code. This limitation shall
automatically be adjusted for each calendar year to reflect
the cost-of-living adjustment (if any) announced by the
Commissioner of Internal Revenue for such calendar year.
(g) "Natomas Transferee" means a Participant who was a
participant in the Natomas Plan and who, at any time prior
to November 30, 1983, has transferred directly from
employment with Natomas Company, or with another corporation
which adopted the Natomas Plan, to employment with an
Employer as an Eligible Employee.
(h) "Primary Social Security Benefit" means the estimated
annual benefit to which a Participant will be entitled under
the Federal Social Security program upon attaining age 65.
A Participant's Primary Social Security Benefit shall be
estimated by the Company as of the date the Participant
ceases to be an Employee on the basis of:
(1) In the case of a Participant who retires on a
Retirement Date, the assumption that such
Participant has no income that constitutes "wages"
for purposes of the Federal Social Security
program after the earlier of his Retirement Date
or age sixty-five (65);
(2) In the case of a Participant who ceases to be
an Employee prior to a Retirement Date, the
assumption that his income that constitutes
"wages" for purposes of the Federal Social
Security program for each calendar year beginning
with the year in which he ceases to be an Employee
and ending with the year that includes his sixty-
fifth (65th) birthday is equal to the annualized
rate of his compensation from the Affiliates that
constitutes "wages" for purposes of the Federal
Social Security program immediately prior to the
date such Participant ceases to be an Employee;
and
(3) The Participant's annualized rate of
compensation during the Participant's initial
period as an Employee (as determined by the
Company), projected backward to reflect growth at
the rate of the National Average Wage Index plus
two percentage points; provided, however, that a
Participant may supply the Company with
documentation of the Participant's actual earnings
history prior to the commencement of benefits
under the Plan, in which case the Participant's
Primary Social Security Benefit shall be estimated
on the basis of such actual earnings history.
SECTION 2. GRANDFATHERED RETIREMENT BENEFIT.
The benefit described in Section 4.11(B) shall be
determined in accordance with the provisions of this
Section 2 of Appendix C.
(a) Normal Retirement Benefit. Subject to the remaining
Sections of this Appendix, Section 4.8, the provisions of
Article 6 (Forms of Benefit Payment) and Section 10.4
(Limitations Upon Highest-Paid Employees), a Participant's
annual rate of Retirement Income, commencing on his Normal
Retirement Date, shall be equal to the amount described in
Paragraph (1) below, minus the amount described in
Paragraph (2) below, but not greater than the amount
described in Paragraph (3) below.
(1) The amount described in this Paragraph (1)
shall be equal to a percentage of the
Participant's Average Annual Compensation. Such
percentage shall be equal to the sum of:
(A) The product of four and two-fifths
percent (4-2/5%) times the number of years in
the Participant's Credited Period of Service
completed prior to January 1, 1993 not in
excess of twenty (20); plus
(B) The product of two percent (2%)
times the number of years in the
Participant's Credited Period of Service
completed prior to January 1, 1993 in excess
of twenty (20); plus
(C) The product of three and one-thirds
percent (3-1/3%) times the number of years in
the Participant's Credited Period of Service
completed after December 31, 1992.
(2) The amount described in this Paragraph (2)
shall be equal to a percentage of the
Participant's Primary Social Security Benefit
equal to the product of one and two-thirds percent
(1-2/3%) times the number of years in the
Participant's Credited Period of Service.
(3) The amount described in this
Paragraph (3) shall be equal to fifty percent
(50%) of the amount (if any) by which the
Participant's Average Annual Compensation
exceeds his Primary Social Security Benefit.
Solely for purposes of this Section 2(a)(3),
a Participant's Average Annual Compensation
shall be determined based on the definition
of "Grandfather Benefit Compensation"
contained in Section 1(f) of this Appendix C,
but substituting "one (1)" for "two (2)."
Partial years in the Participant's Credited Period of
Service shall be rounded up to the next higher whole
month and then counted as the appropriate fraction of a
year.
(b) Participants Transferring Among Certain Companies. In
the case of a Natomas Transferee, the annual rate of
Retirement Income, commencing on his Normal Retirement Date,
shall be the larger of the amounts described in
Paragraph (1) or (2) below.
(1) The amount described in this Paragraph (1)
shall be equal to the amount computed pursuant to
Section 2(b) of this Appendix C. For this
purpose, the Natomas Transferee's credited period
of service under the Natomas Plan shall be
included, as provided in Section 1(d)(4) of this
Appendix C.
(2) The amount described in this Paragraph (2)
shall be equal to the sum of:
(A) The amount computed pursuant to
Section 2(a) of this Appendix C, except that
Section 1(d)(4) of this Appendix shall be
disregarded and the Natomas Transferee's
credited period of service under the Natomas
Plan shall be excluded; plus
(B) The annual normal retirement
benefit which the Natomas Transferee had
accrued under the Natomas Plan as of the date
of his transfer to an Employer (in the form
of a single-life annuity).
In the case of a Participant who (i) had been
transferred between Pacific Far East Lines, Inc.
("PFEL") and an Employer prior to July 1, 1971,
(ii) was employed by an Employer on such date and
(iii) retires while employed by an Employer after
March 1, 1973, the Participant's Retirement Income
provided in Section 2(a) of this Appendix C first shall
be computed as if employment with PFEL had been with an
Employer. The amount so determined then shall be
reduced by the annual normal retirement benefit which
the Participant is eligible to receive (in the form of
a single-life annuity) from the retirement plan of
PFEL.
(c) Early Retirement Income. A Participant who retires on
an Early Retirement Date may elect to receive one of the
following:
(1) Commencing on his Normal Retirement Date, or
on the first day of any month prior to his Normal
Retirement Date but coinciding with or following
his sixty-second (62nd) birthday, the Retirement
Income benefit accrued by him pursuant to
Section 2(a) of this Appendix C.
(2) Commencing on his Early Retirement Date or on
the first day of any month between his Early
Retirement Date and his sixty-second (62nd)
birthday (as selected by the Participant pursuant
to Section 6.3(F)), the Retirement Income benefit
described in Paragraph (1) above, reduced by the
interest rate assumption set forth in Appendix A.
For the purpose of determining a Participant's
eligibility to receive a Retirement Income pursuant to
this Section of Appendix C (but not the amount of such
Retirement Income), a Participant who transferred from
another company described in Section 2(b) of this
Appendix C shall be credited with a Credited Period of
Service for his employment with the other company. The
amount of such Retirement Income shall be determined
pursuant to such Section in conjunction with this
Section of Appendix C.
(d) COLA-Adjusted Retirement Income. In lieu of a
Retirement Income determined under Section 2(a) of this
Appendix C, a Participant who retires or separates from
service after becoming vested pursuant to Article 5 shall be
entitled to receive his benefit accrued as of December 31,
1992, increased annually pursuant to this Section 2(d) of
Appendix C (a "COLA-Adjusted Retirement Income"), beginning
on the June 1 next following the commencement of his
Retirement Income, provided that the Company determines that
the present value of the Participant's COLA-Adjusted
Retirement Income is greater than that of his Retirement
Income when both are expressed as Actuarially Equivalent
lump sums as of the date of the Participant's retirement or
separation from service. The surviving spouse or contingent
annuitant of a Participant who receives a COLA-Adjusted
Retirement Income shall also be entitled to receive a
benefit increased annually pursuant to this Section 2(d) of
Appendix C. In the case of a Participant whom the Company
determines is entitled to a COLA-Adjusted Retirement Income
(or such Participant's surviving spouse or contingent
annuitant), references in the Plan to a Participant's
Retirement Income shall be deemed to mean such Participant's
COLA-Adjusted Retirement Income.
Subject to the limitations in the next two sentences,
the COLA-Adjusted Retirement Income that a Participant,
spouse or contingent annuitant eligible under the preceding
paragraph receives for any Plan Year shall be the benefit
which results from multiplying the portion of the original
benefit he received attributable to his benefit accrued as
of December 31, 1992 by the ratio of (i) the CPI-W for U.S.
Cities on the February 1 preceding the starting date of the
increased benefit to (ii) the CPI-W for U.S. Cities on the
February 1 preceding the starting date of the original
benefit. However, the increase in any Plan Year in a
benefit accrued before September 1, 1990, shall never be
larger than two and one-half percent (2 1/2%) of the benefit
received in the immediately preceding Plan Year. The
increase in any Plan Year in a benefit accrued after
August 31, 1990 and prior to January 1, 1993, shall never be
larger than one and one-half percent (1 1/2%) of the benefit
received in the immediately preceding Plan Year. The
"benefit accrued before September 1, 1990," shall be deemed
to be equal to the Retirement Income that the Participant or
his surviving spouse would have received if the Participant
had separated from all service with Affiliates on August 31,
1990. The "benefit accrued as of December 31, 1992," shall
be deemed to be equal to the Retirement Income that the
Participant or his surviving spouse would have received if
the Participant had separated from all service with
Affiliates on December 31, 1992. The "benefit accrued after
August 31, 1990 and prior to January 1, 1993," shall be
deemed to be equal to (i) the entire Retirement Income that
the Participant or his surviving spouse would have received
if the Participant had separated from all service with
Affiliates on December 31, 1992 minus (ii) the Retirement
Income that the Participant or his surviving spouse would
have received if the Participant had separated from all
service with Affiliates on August 31, 1990.
This Section 2(d) of Appendix C shall be administered
so that changes in the base period of years used in
computing the CPI-W for U.S. Cities that occur after a
Participant's retirement or separation from service shall
not affect the cost-of-living adjustments for such
Participant, his surviving spouse or contingent annuitant.
The cost-of-living adjustment provided by this Section
2(d) of Appendix C shall not apply to the Supplemental
Retirement Income payable to a Participant, his spouse or
contingent annuitant.
(e) Prior Benefit Accrual. The provisions of this Section
2(e) of Appendix C shall supersede any conflicting
provisions of the Plan.
(1) In the case of a Participant who was an
Employee on May 31, 1989, his total Retirement
Income shall in no event be less than his
Retirement Income calculated (A) by counting only
his Credited Period of Service before June 1,
1989, and (B) by applying all of the provisions of
the Plan in effect from time to time before
June 1, 1989. This calculation shall be made on
the assumption that the Participant separated from
all service with Affiliates on May 31, 1989, and
without regard to any changes in the amount of his
Average Annual Compensation or primary Social
Security benefit after May 31, 1989.
In calculating Average Annual Compensation
for purposes of this Paragraph (1) only, the
dollar limits described in Section 1(d) of this
Appendix C shall not apply.
(2) In the case of a Participant who was an
Employee on December 31, 1992, his total
Retirement Income shall in no event be less than
his Retirement Income calculated (A) by counting
only his Credited Period of Service before
January 1, 1993 and (B) by applying all of the
provisions of the Plan in effect from time to time
before January 1, 1993. This calculation shall be
made on the assumption that the Participant
separated from all service with Affiliates on
December 31, 1992, and without regard to any
changes in the amount of his Average Annual
Compensation or Average Social Security Base after
December 31, 1992.
(3) In the case of a Participant who was an
Employee on May 31, 1994, his total Retirement
Income shall in no event be less than the sum of:
(A) his Retirement Income calculated by counting
only his Credited Period of Service before June 1,
1994, and applying all of the provisions of the
Plan in effect from time to time before June 1,
1994 (ignoring the effects of Section 4.9(B) and
Section 2(d) of this Appendix C, and (B) his
Retirement Income calculated by counting only his
Credited Period of Service on and after June 1,
1994, and applying all of the provisions of the
Plan in effect from time to time on and after
June 1, 1994. The calculation in (i) above shall
be made on the assumptions that the Participant
separated from all service with Affiliates on
May 31, 1994 and that the limitation in effect
under Code section 401(a)(17) was $235,840 for all
Plan Years before June 1, 1994, and without regard
to any changes in the amount of his Average Annual
Compensation or primary Social Security benefit
after May 31, 1994.
(f) Disabled Participants. Any other provision of the Plan
to the contrary notwithstanding, if a Participant becomes
disabled before his Normal Retirement Date he shall be
subject to the following provisions of this Section 2(f) of
this Appendix C. For periods prior to June 1, 1997, a
disabled Participant shall be considered to be a Participant
and an Employee in the service of the Employer (for purposes
of this Plan only). Subject to the additional provisions of
this Appendix, the disabled Participant shall continue to
receive credit toward his Period of Service and Credited
Period of Service during the period of his disability, the
latter based on the assumption that his Compensation for
such period is equal to his rate of basic earnings last paid
by the Employer. For purposes of this Section, "Disabled"
means a Participant who is eligible for and receiving
benefits under the Company's Long Term Disability Plan.
Effective June 1, 1997, a Participant who is Disabled
shall cease to accrue benefits under this Plan.
(g) Cessation of Disability. If a Participant who was
disabled ceases to be disabled before his Retirement Date,
no further Retirement Income shall be credited to him
pursuant to Section 2(f) of this Appendix C. If such
Participant shall not then resume active employment with an
Employer, he shall be deemed a terminated Employee as of the
date he became disabled and his right to receive Retirement
Income, if any, from the Plan shall be determined pursuant
to Article 5 (Termination of Employment Prior to
Retirement). If such Participant shall resume active
employment with an Employer, he shall be immediately
eligible to resume benefit accruals pursuant under the Plan.
The retirement Income standing to his credit by reason of
Section 2(f) of this Appendix C, as well as benefits
credited after such resumption of employment, shall be
subject to all the provisions of the Plan as then in effect.
APPENDIX D
SUPPLEMENTAL RETIREMENT INCOME
SECTION 1. DEFINITIONS.
Capitalized terms used in this Appendix D that are not
defined herein shall have the same meaning as those terms do
in the Plan.
(a) "Employee Aggregate Contributions" means the aggregate
of a Participant's employee contributions, if any, under a
Prior Plan or the Natomas Plan, with interest credited in
accordance with such plan to August 31, 1983, and compounded
annually at the rate of five percent (5%) for the period
from September 1, 1983, through May 31, 1988, and at the
rate prescribed by section 411(c)(2)(C) of the Code for all
periods subsequent to May 31, 1988.
(b) "Natomas Company" means Natomas Company, a California
corporation and, prior to August 31, 1983, the parent
corporation of the Company.
(c) "Natomas Plan" means the Retirement Plan for Employees
of Natomas Company and Participating Companies, a qualified
defined-benefit pension plan maintained by Natomas Company,
as in effect on August 31, 1983.
(d) "Prior Plan" means (i) the Retirement Plan for Non-
Bargaining Unit Employees of American President Lines, Ltd.,
as in effect prior to August 31, 1983, and (ii) each "prior
plan," as defined therein.
(e) "Supplemental Retirement Income" means the annual
benefit to which the Participant would be entitled,
commencing on his Normal Retirement Date, in the form of a
single-life annuity equal to the product of (i) his employee
contributions (if any) under a Prior Plan or the Natomas
Plan, plus interest credited in accordance with such plan to
August 31, 1983, and compounded annually at the rate of five
percent (5%) for the period from September 1, 1983, to the
date on which he would attain his Normal Retirement Date,
times (ii) a conversion factor of ten percent (10%).
SECTION 2. ELIGIBILITY.
An Employee shall be eligible to receive Supplemental
Retirement Income pursuant to this Appendix D only if the
Employee made employee contributions under a Prior Plan or
the Natomas Plan.
SECTION 3. BENEFIT PAYMENT.
If a Participant who is eligible for a Supplemental
Retirement Income separates from all service with any
Affiliate the Participant shall receive a Supplemental
Retirement Income determined under Section 1(e) of this
Appendix D. Such Supplemental Retirement Income shall
commence on the Participant's Normal Retirement Date, unless
he receives a Retirement Income on a Retirement Date other
than the Normal Retirement Date.
If a Participant elects to have his Retirement Income
commence on a Retirement Date which precedes his Normal
Retirement Date, his Supplemental Retirement Income also
shall commence on such Retirement Date and shall be reduced
by one one-hundred-eightieth (1/180th) for each of the first
sixty (60) months and by one three-hundred-sixtieth
(1/360th) for each of the next sixty (60) months by which
the commencement of benefits precedes his Normal Retirement
Date.
If a Participant's Retirement Income commences on his
Postponed or In Service Retirement Date, his Supplemental
Retirement Income also shall commence on his Postponed or In-
Service Retirement Date and shall be increased by one
percent (1%) for each month by which retirement is postponed
beyond his Normal Retirement Date.
A Participant's Supplemental Retirement Income shall be
payable in a form described in Article 6. Death Benefits
payable from the Plan shall include an amount attributable
to the Supplemental Retirement Income in the manner
described in Section 7.
APPENDIX E
MINIMUM CASH BALANCE BENEFITS
The following table specifies the minimum Cash Balance
Benefit described in Section 4.2(B) for the affected
Participants. Each listed Participant is identified by the
employee identification number associated with him or her in
the Plan's records:
Participant's Employee ID Number Minimum Cash Balance
Benefit
2975 $364,103.75
7659 $157,522.06
6029 $ 90,965.43
9743 $209,774.97
3765 $833,934.88
2267 $389,278.60