Exhibit 10.16.1
WESTCORP
EMPLOYEE STOCK OWNERSHIP PLAN
AND
SALARY SAVINGS PLAN
2001 RESTATEMENT
EFFECTIVE JANUARY 1, 2001
TABLE OF CONTENTS
Page
ARTICLE I OVERVIEW............................................................................. 1
ARTICLE II DEFINITIONS.......................................................................... 1
2.1 Account....................................................................................... 1
2.2 Administrative Committee...................................................................... 1
2.3 Affiliated Company............................................................................ 1
2.4 Aggregation Group............................................................................. 2
2.5 Alternate Payee............................................................................... 2
2.6 Annual Additions.............................................................................. 2
2.7 Average Contribution Percentage............................................................... 3
2.8 Average Deferral Percentage................................................................... 4
2.9 Beneficiary................................................................................... 4
2.10 Board of Directors............................................................................ 4
2.11 Break in Service.............................................................................. 4
2.12 Code.......................................................................................... 5
2.13 Company....................................................................................... 5
2.14 Company Contributions......................................................................... 5
2.15 Company Stock................................................................................. 5
2.16 Compensation.................................................................................. 5
2.17 Computation Period............................................................................ 6
2.18 Covered Employees............................................................................. 7
2.19 Determination Date............................................................................ 7
2.20 Disability.................................................................................... 7
2.21 Effective Date................................................................................ 8
2.22 Employee...................................................................................... 8
2.23 Employer Matching Contribution Account........................................................ 8
2.24 Employer Matching Contributions............................................................... 8
2.25 Employment Commencement Date.................................................................. 8
2.26 Entry Date.................................................................................... 9
2.27 ERISA......................................................................................... 9
2.28 ESOP Contribution Account..................................................................... 9
2.29 ESOP Contribution............................................................................. 9
2.30 Excess Aggregate Contributions................................................................ 9
2.31 Excess Contributions.......................................................................... 9
2.32 Excess Deferrals.............................................................................. 9
2.33 Family Leave of Absence....................................................................... 9
2.34 Five Percent Owner............................................................................ 10
2.35 Forfeiture.................................................................................... 11
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2.36 Highly Compensated Employee................................................................... 11
2.37 Hour of Service............................................................................... 12
2.38 Investment Manager............................................................................ 13
2.39 Key Employee.................................................................................. 13
2.40 Leased Employee............................................................................... 14
2.41 Leave of Absence.............................................................................. 14
2.42 Limitation Year............................................................................... 15
2.43 Non-Key Employee.............................................................................. 15
2.44 Normal Retirement Age......................................................................... 15
2.45 Officer....................................................................................... 15
2.46 One Percent Owner............................................................................. 16
2.47 Participant................................................................................... 16
2.48 Plan.......................................................................................... 16
2.49 Plan Administrator............................................................................ 16
2.50 Plan Year..................................................................................... 16
2.51 Qualified Non-elective Contributions.......................................................... 16
2.52 Reemployment Commencement Date................................................................ 16
2.53 Salary Savings Contributions.................................................................. 16
2.54 Salary Savings Contribution Account........................................................... 17
2.55 Severance..................................................................................... 17
2.56 Spouse........................................................................................ 17
2.57 Testing Period................................................................................ 17
2.58 Top-Heavy Group............................................................................... 17
2.59 Top-Heavy Plan................................................................................ 17
2.60 Trust and Trust Fund.......................................................................... 18
2.61 Trustee....................................................................................... 18
2.62 Valuation Date................................................................................ 18
2.63 Interest...................................................................................... 18
2.64 Year of Service............................................................................... 19
ARTICLE III ELIGIBILITY AND PARTICIPATION........................................................ 19
3.1 Eligibility To Participate.................................................................... 19
3.2 Special Participation Rules................................................................... 20
3.3 Participation Beyond Normal Retirement Age.................................................... 20
ARTICLE IV TRUST FUND AND CONTRIBUTIONS......................................................... 20
4.1 Trust Fund.................................................................................... 20
4.2 Company Contribution.......................................................................... 20
4.3 Irrevocability................................................................................ 21
4.4 Investments in Employer Securities and Employer Real Property................................. 21
4.5 Investment Direction by Participants.......................................................... 21
4.6 Investment of Employer Matching Contribution Accounts......................................... 21
4.7 ESOP Provisions............................................................................... 22
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ARTICLE V PARTICIPANT CONTRIBUTIONS............................................................ 25
5.1 Special Rules................................................................................. 25
5.2 Amount Subject to a Deferral Election......................................................... 25
5.3 Average Deferral Percentage Tests............................................................. 26
5.4 Prospective Reductions of Salary Savings Contributions........................................ 26
5.5 Distributions of Excess Deferrals............................................................. 27
5.6 Distributions of Excess Contributions......................................................... 27
5.7 Average Contribution Percentage Tests......................................................... 28
5.8 Multiple Use Test............................................................................. 29
5.9 Rollover Contributions........................................................................ 30
ARTICLE VI ALLOCATIONS TO PARTICIPANTS' ACCOUNTS................................................ 30
6.1 Participants' Accounts........................................................................ 30
6.2 Allocation of Employer Matching Contributions................................................. 30
6.3 Allocation of ESOP Contributions.............................................................. 31
6.4 Allocation of Salary Savings Contributions.................................................... 32
6.5 Allocation of Qualified Non-elective Contributions............................................ 32
6.6 Revaluation of Accounts....................................................................... 33
6.7 Forfeitures From Employer Matching Contribution Account....................................... 33
6.8 Forfeitures From ESOP Contribution Account.................................................... 34
6.9 Ordering of Allocations....................................................................... 34
6.10 Miscellaneous Allocation Rules................................................................ 34
ARTICLE VII VESTING.............................................................................. 35
7.1 General Rule.................................................................................. 35
7.2 Special Vesting Rules......................................................................... 35
7.3 Fully Vested Accounts......................................................................... 36
7.4 Forfeitures................................................................................... 36
ARTICLE VIII PAYMENT OF BENEFITS.................................................................. 36
8.1 Payment of Benefits........................................................................... 36
8.2 Latest Payment Date........................................................................... 37
8.3 Required Beginning Date....................................................................... 37
8.4 Consent to Receive Early Distribution......................................................... 38
8.5 Requirement of Spousal Content................................................................ 38
8.6 No Beneficiary Designation.................................................................... 39
8.7 Distributions to Partially Vested Participants................................................ 40
8.8 Distribution of Salary Savings Contribution Accounts.......................................... 41
8.9 Hardship Distributions........................................................................ 41
8.10 Distributions Due to Disability............................................................... 44
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8.11 Inability to Locate Participant or Beneficiary................................................ 44
8.12 Payees under Legal Disability................................................................. 45
8.13 Notice Regarding Tax Treatment of Distributions............................................... 45
8.14 Mailing of Payments........................................................................... 45
8.15 Withholding For Taxes......................................................................... 45
ARTICLE IX ANNUITY REQUIREMENTS................................................................. 45
9.1 Definitions................................................................................... 45
9.2 Form of Benefits Provided..................................................................... 46
9.3 Disclosure Requirements....................................................................... 46
9.4 Consent to Receive Early Distribution......................................................... 47
9.5 Direct Rollovers.............................................................................. 47
9.6 Distribution of Company Stock................................................................. 48
ARTICLE X TOP-HEAVY PLAN RULES................................................................. 49
10.1 Applicability................................................................................. 49
10.2 Special Valuation Rules....................................................................... 49
10.3 Minimum Contributions......................................................................... 50
10.4 Minimum Vesting............................................................................... 51
10.5 Maximum Annual Addition....................................................................... 51
10.6 Non-Eligible Employees........................................................................ 52
ARTICLE XI OPERATION AND ADMINISTRATION OF THE PLAN............................................. 52
11.1 Named Fiduciaries............................................................................. 52
11.2 Composition of Administrative Committee....................................................... 53
11.3 Administrative Committee's Powers............................................................. 53
11.4 Reporting and Disclosure...................................................................... 54
11.5 Multiple Fiduciary Capacities................................................................. 54
11.6 Funding Policy................................................................................ 54
11.7 Prohibition Against Certain Actions........................................................... 55
11.8 Committee Procedures.......................................................................... 55
11.9 Indemnification............................................................................... 56
11.10 Compensation of Committee and Plan Expenses................................................... 56
11.11 Bonding....................................................................................... 56
11.12 Notices and Communications.................................................................... 57
11.13 Standard of Care.............................................................................. 57
ARTICLE XII MERGER OF COMPANY, MERGER OF PLAN.................................................... 58
12.1 Effect of Reorganization or Transfer of Assets................................................ 58
12.2 Plan Merger Restriction....................................................................... 58
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ARTICLE XIII TERMINATION AND DISCONTINUANCE OF CONTRIBUTIONS...................................... 59
13.1 Plan Termination.............................................................................. 59
13.2 Discontinuance of Contributions............................................................... 59
13.3 Replacement Plan.............................................................................. 59
13.4 Partial Termination........................................................................... 59
ARTICLE XIV APPLICATION FOR BENEFITS............................................................. 60
14.1 Claim for Benefits............................................................................ 60
14.2 Content of Denial............................................................................. 60
14.3 Appeals....................................................................................... 61
14.4 Exhaustion of Remedies........................................................................ 61
ARTICLE XV LIMITATIONS ON CONTRIBUTIONS......................................................... 61
15.1 General Rule.................................................................................. 61
15.2 Definition of Earnings........................................................................ 62
15.3 Other Defined Contribution Plans.............................................................. 62
15.4 (Deleted effective January 1, 2000)........................................................... 63
15.5 Adjustments for Excess Annual Additions....................................................... 63
ARTICLE XVI RESTRICTION ON ALIENATION............................................................ 64
16.1 General Restrictions Against Alienation....................................................... 64
16.2 QDRO Definition............................................................................... 64
16.3 Impermissible Terms........................................................................... 65
16.4 Special Rules................................................................................. 65
16.5 Procedures.................................................................................... 66
16.6 Segregation of Funds.......................................................................... 66
16.7 Loans......................................................................................... 67
16.8 ESOP Loans.................................................................................... 70
ARTICLE XVII AMENDMENTS........................................................................... 75
17.1 Amendments.................................................................................... 75
17.2 Effect of Amendments.......................................................................... 75
17.3 Amendment of Vesting Schedule................................................................. 76
ARTICLE XVIII MISCELLANEOUS MATTERS................................................................ 76
18.1 No Enlargement of Employee Rights............................................................. 76
18.2 Interpretation................................................................................ 76
18.3 Applicable Law................................................................................ 77
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18.4 USERRA........................................................................................ 77
ARTICLE XIX RIGHTS OFFERING...................................................................... 77
19.1 2000 Rights Offering.......................................................................... 77
19.2 Subsequent Rights Offering.................................................................... 77
19.3 Authority of Administrative Committee......................................................... 77
19.4 Purchase Under 2000 Rights Offering and Subsequent Rights Offering............................ 77
19.5 Excess Annual Additions....................................................................... 78
19.6 Administrative Committee Powers............................................................... 78
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ARTICLE I
OVERVIEW
Westcorp, a California corporation, established this Employee Stock ownership
Plan and Salary Savings Plan effective January 1, 1975. This restatement is
effective January 1, 2001. This Plan is intended to be a tax-qualified employee
stock ownership plan under section 4975(e)(7) of the Internal Revenue Code of
1986, as amended.
ARTICLE II
DEFINITIONS
Whenever capitalized in the text, the following terms shall have the meaning set
forth below.
II.1 ACCOUNT. "Account" or "Accounts" shall mean the following
Accounts maintained for each Participant,
(a) Salary Savings Contribution Account,
(b) Rollover Account,
(c) ESOP Contribution Account, and
(d) Employer Matching Contribution Account.
II.2 ADMINISTRATIVE COMMITTEE. "Administrative Committee" or
"Committee" shall mean the Plan Committee appointed under
Article XI. The Administrative Committee shall be the named
fiduciary with respect to the Plan for purposes of ERISA.
II.3 AFFILIATED COMPANY.
(a) "Affiliated Company" shall mean:
(i) Any corporation that is included in a
controlled group of corporations, within the
meaning of Section 414(b) of the Code, of
which group the Company is also a member;
(ii) Any trade or business that is under common
control with the Company within the meaning
of Section 414(c) of the Code;
(iii) Any service organization that is included in
an affiliated service group, within the
meaning of Section 414(m) of the Code, of
which affiliated service group the Company
is also a member; and
(iv) Any other organization that is aggregated
with the Company pursuant to the regulations
under Code Section 414(o).
(b) For purposes of applying the limitations of Article
XV below, whether or not an entity is an Affiliated
Company shall be determined by applying the
percentage modifications contained in Code Section
415(h).
II.4 AGGREGATION GROUP.
(a) "Aggregation Group" means
(i) Each plan of the Company or an Affiliated
Company in which a Key Employee is or was a
Participant during the Testing Period
(regardless of whether the plan has been
terminated), and
(ii) Each other plan of the Company or an
Affiliated Company (regardless of whether
the plan has been terminated) which enables
any plan described in Subparagraph (i) above
to meet the requirements of Code Sections
401(a)(4) or 410.
(b) Any plan not required to be included in an
Aggregation Group under the rules of Paragraph (a)
above may be treated as being part of the group if
the group would continue to meet the requirements of
Code Sections 401(a)(4) and 410 with the plan being
taken into account
(c) Each plan maintained by the Company or an Affiliated
Company required to be included in an Aggregation
Group shall be treated as a Top-Heavy Plan if the
Aggregation Group is a Top-Heavy Group.
II.5 ALTERNATE PAYEE. "Alternate Payee" means any Spouse, former
Spouse, child, or other dependent of a Participant who is
recognized by a domestic relations order as having a right to
receive all or a portion of the benefits payable with respect
to the Participant.
II.6 ANNUAL ADDITIONS.
(a) "Annual Additions" shall include, for any Limitation
Year
(i) The amount credited to a Participant's
Accounts from Employer Contributions,
(ii) The Participant's Elective Deferrals,
(iii) Forfeitures, and
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(iv) In the case of a Key Employee, any amounts
allocated to an individual medical benefit
account established under a pension or
annuity plan.
(b) The following amounts shall not be considered part of
the Participant's Annual Additions:
(i) Repayments of loans; and
(ii) Any recontributions (of prior distributions)
made pursuant to Section 8.7(b) below.
(c) The following amounts shall be considered part of the
Participant's Annual Additions:
(i) Excess Deferrals that are distributed later
than April 15 of the calendar year following
the calendar year to which the amounts
relate;
(ii) Excess Contributions (even if timely
distributed); and
(iii) Excess Aggregate Contributions (even if
timely distributed or forfeited).
II.7 AVERAGE CONTRIBUTION PERCENTAGE.
(a) The "Average Contribution Percentage" for a Plan Year
for the Highly Compensated Employees and for all
other Covered Employees is the average of the ratios,
calculated separately for each Employee in the group,
of the amount of his Employer Matching Contributions
during the Plan Year to his compensation for the Plan
Year.
(i) In the case of a Participant who does not
defer anything under the Plan and who is not
credited with any Employer Matching
Contributions, his contribution percentage
shall be zero percent (0%).
(ii) The Average Contribution Percentage for each
group shall be calculated to the nearest
one-hundredth percent of compensation.
(b) If the Plan is treated as a single plan for purposes
of satisfying the requirements of Code Sections
401(a)(4) and 410 along with another plan that
contains a cash or deferred arrangement, both plans
shall be treated as a single plan for purposes of
this Section 2.7.
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(c) For purposes of this Section 2.7, a Participant's
compensation shall be determined in accordance with
the rules of Code Sections 414(s) and 401(m).
II.8 AVERAGE DEFERRAL PERCENTAGE.
(a) The "Average Deferral Percentage" for a Plan Year for
the Highly Compensated Employees and for all other
Covered Employees is the average of the ratios,
calculated separately for each Employee in the group,
of the amount of his Salary Savings Contributions and
Qualified Non-elective Contributions during the Plan
Year to his compensation for the Plan Year.
(i) In the case of a Participant who does not
defer anything under the Plan, his deferral
percentage shall be zero percent (0%).
(ii) The Average Deferral Percentage for each
group shall be calculated to the nearest
one-hundredth percent of compensation.
(b) If the Plan is treated as a single plan for purposes
of satisfying the requirements of Code Sections
401(a)(4) and 410 along with another plan that
contains a cash or deferred arrangement, all of the
cash or deferred arrangements shall be treated as a
single arrangement.
(c) If a Highly Compensated Employee is also a
participant in one or more other cash or deferred
arrangements maintained by the Company, all such
arrangements shall be treated as a single
arrangement.
(d) For purposes of this Section 2.8, a Participant's
compensation shall be determined in accordance with
the rules of Code Sections 414(s) and 401(k).
II.9 BENEFICIARY. "Beneficiary" shall mean the person designated by
a Participant in Article VIII to receive benefits under the
Plan upon the Participant's death.
II.10 BOARD OF DIRECTORS. "Board of Directors" or "Board" shall mean
the Board of Directors (or its delegate) of the Company.
II.11 BREAK IN SERVICE.
(a) "Break in Service" shall mean a Computation Period in
which the Employee does not complete more than five
hundred (500) Hours of Service (as set forth below)
including Hours of Service completed while on a
Family Leave of Absence.
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(b) An Employee will not be considered to have incurred a
Break in Service by reason of a
(i) Leave of Absence,
(ii) Temporary layoff (i.e., a period of not more
than ninety (90) days), or
(iii) Military service (to the extent required by
applicable law).
II.12 CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
II.13 COMPANY. "Company" or "Employer" shall mean Westcorp and any
other Affiliated Companies (or similar entities) which may be
included within the coverage of the Plan with the consent of
the Board of Directors.
II.14 COMPANY CONTRIBUTIONS.
(a) "Company Contributions" shall mean all amounts paid
by the Company into the Trust Fund, whether in the
form of Employer Matching Contributions, Qualified
Non-elective Contributions or ESOP Contributions.
(b) Except where the context indicates to the contrary,
Company Contributions shall not include Salary
Savings Contributions.
II.15 COMPANY STOCK. "Company Stock" means Westcorp common stock, $1
par value.
II.16 COMPENSATION.
(a) For purposes of allocating ESOP Contributions,
Employer Matching Contributions, Qualified
Non-elective Contributions or Salary Savings
Contributions for a period, a Participant's
"Compensation" shall mean all amounts paid to the
Participant by the Company during such period or
required to be reported on Federal Form W-2 for the
period except for the following:
(i) Auto allowance;
(ii) Moving and relocation expenses, whether or
not such expenses are included in the
Participant's gross income;
(iii) Ride share payments;
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(iv) Amounts includable in the Participant's
gross income from the exercise of stock
appreciation rights;
(v) Amounts includable in the Participant's
gross income attributable to group term life
insurance coverage;
(vi) Amounts excludable from the Participant's
gross income under a non-qualified plan of
deferred compensation maintained by the
Employer; and
(vii) Amounts includable in the Participant's
gross income attributable to the Employer's
recognition programs.
(b) In the case of a Participant who is a member of the
Board of Directors, his "Compensation" will not
include his director's fees.
(c) Except as otherwise expressly provided in this Plan
to the contrary, the term "Compensation" shall
include those amounts which represent the
Participant's Salary Savings Contributions and
pre-tax contributions to a cafeteria plan under
Section 125 of the Code.
In no event shall the amount of Compensation of any
Participant taken into account for purposes of
determining any benefits under the Plan for an Plan
Year exceed the Annual Compensation Limit. For these
purposes, the Annual Compensation Limit for Plan
Years beginning on or after January 1, 1994, is
$150,000, as adjusted by the Commissioner of Internal
Revenue for increases in the cost of living in
accordance with Section 410(a)(17)(B) of the Code.
The cost-of-living adjustment in effect for any
calendar year shall apply to any Plan Year beginning
in such calendar year. For Plan Years beginning on or
after January 1, 1989, but before January 1, 1994,
the Annual Compensation Limit is $200,000, as
adjusted by the Commissioner of Internal Revenue at
the same time and in the same manner as under Section
415(d) of the Code, with the exception that the
adjustment in effect on January 1 of any calendar
year is effective for any Plan Year beginning in such
calendar year and the first adjustment to the
$200,000 limitation is effective on January 1, 1990.
If a Plan Year consists of fewer than 12 months, the
Annual Compensation Limit for such Plan Year shall be
multiplied by a fraction, the numerator of which is
the number of months in such Plan Year and the
denominator of which is 12.
II.17 COMPUTATION PERIOD.
(a) "Computation Period" is the relevant period for
determining whether the Employee is to be credited
with a Year of Service or a Break in Service.
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(b) For purposes of determining eligibility to
participate, an Employee's initial Computation Period
shall be the twelve (12) consecutive month period
commencing with his Employment Commencement Date. All
subsequent eligibility Computation Periods shall be
the Plan Year, starting with the Plan Year commencing
within his initial Computation Period.
(c) For purposes of determining vesting the Computation
Period shall be the Plan Year.
II.18 COVERED EMPLOYEES. "Covered Employees" means those Employees
who have satisfied all of the requirements for eligibility to
participate in the Plan and are not otherwise precluded from
participating in the Plan.
II.19 DETERMINATION DATE.
(a) "Determination Date" means the last day of the
preceding Plan Year.
(b) In the case of the first plan year, "Determination
Date" shall mean the last day of that Plan Year.
II.20 DISABILITY.
(a) An individual is Disabled if, on the basis of proof
satisfactory to the Administrative Committee based on
the certification of at least one doctor, he is
unable to engage in any substantial gainful activity
by reason of any medically determinable physical or
mental impairment that can be expected to result in
death or that has lasted or can be expected to last
for a continuous period of not less than twelve (12)
months. Notwithstanding and except as otherwise
provided herein, a Participant shall be Disabled if
he is receiving disability benefits under the Social
Security Act.
(b) No Participant shall be deemed to have incurred a
Disability as a result of an injury or illness
incurred as a result of:
(i) The commission of a felony;
(ii) Service in the armed forces of any country;
(iii) Intentionally self-inflicted injury (while
sane or insane); or
(iv) Alcoholism or substance abuse.
(c) In the event of a dispute between a Participant and
the Administrative Committee as to the occurrence of
Disability, the dispute shall be settled
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by a majority decision of three doctors, one to be
appointed by the Administrative Committee, one to be
appointed by the Participant and the third by the two
doctors appointed.
II.21 EFFECTIVE DATE.
(a) The original "Effective Date" of the Plan was January
1, 1975.
(b) The Effective Date of this restatement of the Plan is
January 1, 2001.
(c) In the case of an Employee whose Severance occurred
prior to the Effective Date of this Restatement, his
benefit under the Plan will be determined under the
provisions of the Plan as it existed prior to this
Restatement.
II.22 EMPLOYEE. "Employee" shall mean each person qualifying as a
common law employee of the Company or an Affiliated Company.
Notwithstanding any provision in this Plan to the contrary,
the term "Employee" does not include any individual who is not
classified as an employee of the Employer for purposes of the
employer's payroll records (including, without limitation, any
leased employee or other individual employed by or through a
temporary help firm, technical help firm, employee leasing
firm, or professional employer organization), regardless of
whether such individual is a common law employee of the
Employer.
II.23 EMPLOYER MATCHING CONTRIBUTION ACCOUNT. The "Employer Matching
Contribution Account" of a Participant shall mean his
individual account in the Trust Fund in which are held his
allocated share of the Employer Matching Contributions and the
income thereon. Employer Matching Contribution Accounts shall
include where applicable a fully vested subaccount ("Hammond
Company Matching Account") in which is held amounts
transferred to the Plan on behalf of a Participant from the
Hammond Company 401(k) Plan.
II.24 EMPLOYER MATCHING CONTRIBUTIONS. "Employer Matching
Contributions" means those Company Contributions allocated
under Section 6.2.
II.25 EMPLOYMENT COMMENCEMENT DATE.
(a) "Employment Commencement Date" shall mean the date on
which an Employee first performs an Hour of Service.
(b) For purposes of determining his Employment
Commencement Date, an Employee shall not be deemed to
have commenced employment with an Affiliated Company
prior to the effective date on which the entity
became an Affiliated Company, except as is expressly
provided otherwise in this Plan or in resolutions of
the Board of Directors.
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II.26 ENTRY DATE. "Entry Date" shall mean the 1st and the 16th day
of each calendar month.
II.27 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
II.28 ESOP CONTRIBUTION ACCOUNT. The "ESOP Contribution Account" of
a Participant shall mean his individual account in the Trust
Fund in which are held his allocated share of the ESOP
Contributions, Forfeitures, and the income thereon.
II.29 ESOP CONTRIBUTION. "ESOP Contribution" shall mean those
Company Contributions allocated under Section 6.3.
II.30 EXCESS AGGREGATE CONTRIBUTIONS. "Excess Aggregate
Contributions" shall mean those contributions in excess of the
limitations of Section 5.7 below.
II.31 EXCESS CONTRIBUTIONS. "Excess Contributions" shall mean those
Salary Savings Contributions in excess of the limitation of
Section 5.2(a) below.
II.32 EXCESS DEFERRALS. "Excess Deferrals" shall mean those Salary
Savings Contributions in excess of the dollar limitation of
Section 5.2(a) below.
II.33 FAMILY LEAVE OF ABSENCE.
(a) The provisions of this Section 2.33 shall apply with
respect to an Employee who is absent from work
without pay for any period
(i) By reason of the pregnancy of the Employee,
(ii) By reason of the birth of a child of the
Employee,
(iii) By reason of the placement of a child with
the Employee in connection with the adoption
of the child by the Employee, or
(iv) For purposes of caring for the child for a
period beginning immediately following the
birth or placement.
(b) The number of Hours of Service to which an Employee
described in Paragraph (a) above shall be credited
with shall be
(i) The number which otherwise would normally
have been credited to the Employee but for
the absence, or
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(ii) If the number described in Subparagraph (i)
above is not capable of being determined,
eight (8) Hours of Service per day of the
absence.
(c) However, the total number of hours treated as Hours
of Service under Paragraph (b) above shall not exceed
five hundred one (501). Furthermore, these Hours of
Service shall be taken into account solely for the
purpose of determining whether or not the Employee
has incurred a Break in Service.
(d) The Hours described in Paragraph (b) above shall be
credited to the Computation Period
(i) In which the absence from work begins, if
the Employee would be prevented from
incurring a Break in Service in that
Computation Period solely because the period
of absence is treated as Hours of Service
under this Section 2.33, or
(ii) In any other case, in the immediately
following Computation Period.
(e) The above provisions of this Section 2.33 shall not
apply unless the Employee provides such timely
information as the Administrative Committee may
reasonably require to establish that
(i) The absence is for reasons described in
Paragraph (a) above, and
(ii) The number of days for which there was an
absence.
II.34 FIVE PERCENT OWNER.
(a) "Five Percent Owner" means any person who Owns (or is
considered as owning within the meaning of Section
318 of the Code) more than five percent (5%) of the
(i) Outstanding stock of the Company or an
Affiliated Company, or
(ii) The total combined voting power of all stock
of the Company or an Affiliated Company.
(b) The rules of Subsections (b), (c), and (m) of Code
Section 414 shall not apply for purposes of these
ownership rules. Thus, this ownership test shall be
applied separately with respect to the Company and
every Affiliated Company.
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(c) The constructive ownership rules of Code Section
318(a)(2)(c) shall be applied by substituting "five
percent (5%)" for "fifty percent (50%)" where it
appears therein
(d) For purposes of this Section 2.34, if an Employee's
ownership interest varies during a Plan Year, his
ownership interest shall be the largest interest he
owned at any time during the year.
II.35 FORFEITURE. "Forfeiture" means the nonvested portion of a
Participant's Employer Matching Contribution Account or ESOP
Contribution Account that is forfeited in accordance with the
rules of Article VII.
II.36 HIGHLY COMPENSATED EMPLOYEE.
(a) "Highly Compensated Employee" means any Employee who,
during the preceding Plan Year ("Lookback Year")
(i) Was at any time a Five Percent Owner or
(ii) Received Earnings from the Company and all
Affiliated Companies in excess of
eighty-five thousand dollars ($85,000), as
indexed for inflation in accordance with
Code Section 415(d). The Administrative
Committee may elect for a Plan Year, to
require that such an Employee be also in the
top twenty percent (20%) of all Employees
when ranked on the basis of Earnings paid
during the Plan Year ("Top-Paid Group").
(b) Unless an Employee is a Five Percent Owner, he will
not be treated as a Highly Compensated Employee for
the current Plan Year ("Determination Year") unless
he is a member of the group consisting of the one
hundred (100) Employees paid the greatest
Compensation during the Determination Year.
(c) For purposes of this Section 2.36, the amount of an
Employee's Earnings shall be determined,
(i) In accordance with Code Section 414(q)(7),
and
(ii) Without regard to the dollar limitation of
Section 2.14(c) above.
(d) For purposes of determining the number of Employees
in the Top-Paid Group (described in Paragraph (a)
(iii above), the following Employees shall be
excluded:
(i) Employees who have not completed six (6)
months of service,
- 11 -
(ii) Employees who normally work less than
seventeen and one-half (17-1/2) hours per
week,
(iii) Employees who normally work at least one (1)
Hour of Service in each of seven (7) or more
months in a year, and
(iv) Employees who have not attained age
twenty-one (21) by the end of the relevant
Plan Year.
Except to the extent provided in the regulations
under Code Section 414(q), Employees who are included
in a unit of Employees covered by an agreement which
the Secretary of Labor finds to be a collective
bargaining agreement between Employee representatives
and the Company must be taken into account.
(e) A former Employee shall be treated as a Highly
Compensated Employee if,
(i) He was a Highly Compensated Employee when he
separated from service, or
(ii) He was a Highly Compensated Employee at any
time after attaining age fifty-five (55).
(f) Notwithstanding the foregoing, non-resident aliens
without U.S. source income from the Company or an
Affiliated Company shall be disregarded for all
purposes in determining who are the Highly
Compensated Employees.
II.37 HOUR OF SERVICE.
(a) "Hour of Service" of an Employee shall mean each hour
for which he is paid or is entitled to payment by the
Company or an Affiliated Company:
(i) For the performance of services as an
Employee;
(ii) Which is attributable to a period of time
during which he performs no duties
(irrespective of whether or not his
employment has been terminated) due to a
vacation (including each hour for which
vacation pay is received but no vacation is
actually taken), holiday, illness,
incapacity (including pregnancy or
disability), layoff, jury duty, military
duty, or a leave of absence.
(A) However, no such hours shall be
credited to an Employee if
- 12 -
he is directly or indirectly paid
or entitled to payment for the
hours and the payment or
entitlement-
(iii) Is made or due under a plan maintained
solely for the purpose of complying with
applicable worker's compensation,
unemployment compensation, or disability
insurance laws, or
(iv) Is a payment which solely reimburses the
Employee for his medical or
medically-related expenses; or
(v) For which he is entitled to back pay,
irrespective of mitigation of damages,
whether awarded or agreed to by the Company
or an Affiliated Company, provided that he
has not previously been credited with an
Hour of Service with respect to that hour
under Subparagraph (i) or (ii) above.
(b) Notwithstanding the provisions of Paragraph (a)
above: no Employee shall be entitled to credit for
more than five hundred and one (501) Hours of Service
for any single continuous period during which he
performs no duties, whether or not the period occurs
in a single Computation Period.
(c) With the exception of Hours of Service attributable
to back pay, all Hours of Service determined under
the rules of Paragraph (a) above all be credited to
the Computation Period in which the payment is
actually made: determined in accordance with rules
prescribed by the Administrative Committee. Hour of
Service attributable to back pay will be attributed
to the Computation Period to which they relate. The
provisions of this Paragraph (c) shall be applied in
a manner consistent with the provisions of Department
of Labor Regulation Section 2530.200b-2.
(d) Unless the Board of Directors shall expressly
determine otherwise, or as may be expressly provided
in this Plan, an Employee shall not receive credit
for his Hours of Service completed with an Affiliated
Company prior to the date on which the entity became
an Affiliated Company.
II.38 INVESTMENT MANAGER. "Investment Manager" shall have the
meaning set forth in Section 3(38) of ERISA.
II.39 KEY EMPLOYEE.
(a) "Key Employee" shall mean any Employee or former
Employee who, at any time during the Testing Period,
is or was:
(i) An Officer;
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(ii) One of the ten (10) Employees
(A) Having annual Earnings from the
Company or an Affiliated Company of
more than the limitation in effect
under Section 15.1(a)(i) below, and
(B) Owning (or considered as owning
within the meaning of Code Section
318) during the Testing Period both
more than one-half percent (1/2%)
interest and one of the ten largest
interests in the Company or an
Affiliated Company.
For purposes of this Subparagraph (ii), if two (2)
Employees have the same interest in the Company or an
Affiliated Company, the Employee having the greater
annual earnings shall be treated as having the larger
interest;
(iii) A Five Percent Owner of the Company or an
Affiliated Company; or
(iv) A One Percent owner of the Company or an
Affiliated Company having an annual Earnings
of more than one hundred fifty thousand
dollars ($150,000).
(b) The term "Key Employee" shall include his
Beneficiaries.
(c) For purposes of this Section 2.39, an Employee's
Earnings shall be the amount indicated on the Form
W-2 issued to him for the calendar year ending with
or within the Plan Year.
II.40 LEASED EMPLOYEE.
(a) "Leased Employee" shall have the meaning set forth in
Section 414(n) of the Code.
(b) For purposes of determining the number or identity of
Highly Compensated Employees for nor purposes of the
pension requirements of Code section 414(n)(3),
Leased Employees shall be treated as Employees.
II.41 LEAVE OF ABSENCE.
(a) "Leave of Absence" shall mean any unpaid personal
leave from active employment duly authorized by the
Company under the Company's standard personnel
practices. Leaves of Absence shall not be granted in
a manner that discriminates in favor of Highly
Compensated Employees.
- 14 -
(b) An Employee shall not be deemed to have incurred a
Break in Service while on a Leave of Absence of not
more than ninety (90) days, provided he returns to
employment on or before the date on which the leave
expires.
(c) In the event an Employee does not return to
employment on or before the end of the leave, he
shall be deemed to have incurred a Severance as of
the first day of the leave, unless
(i) The failure was due to his death or
disability, or
(ii) The provisions of Section 2.33 apply.
II.42 LIMITATION YEAR. "Limitation Year" shall mean the Plan Year
for purposes of the limitations on contributions contained in
Article XV below.
II.43 NON-KEY EMPLOYEE. "Non-Key Employee" shall mean any Employee
who is not a Key Employee.
II.44 NORMAL RETIREMENT AGE. "Normal Retirement Age" shall mean the
Participant's sixty-fifth (65th) birthday. "Normal Retirement
Date" shall mean the first day of the month coincident with or
next following a Participant's Normal Retirement Age.
II.45 OFFICER.
(a) "Officer" shall mean any Employee who was at any time
an officer of the Company or an Affiliated Company
and received Earnings from the Company and all
Affiliated Companies greater than fifty percent (50%)
of the amount in effect under Code Section
415(b)(1)(A) for the year.
(b) However, the number of Employees who shall be treated
as Officers will not exceed the lesser of
(i) Fifty (50) Employees, or
(ii) The greater of three (3) Employees or ten
percent (10%) of the Employees.
(c) If no officer is described in Paragraph (a) above,
then the highest paid officer of the Company shall be
treated as being described therein.
(d) For purposes of Paragraph (b) above
(i) All Leased Employees and all part-time
Employees shall be taken into account, and
- 15 -
(ii) The number of Employees shall be the
greatest number at any time during the
relevant period.
II.46 ONE PERCENT OWNER. "One Percent Owner" means any person who
would be a Five Percent Owner if the minimum ownership
threshold were one percent (1%) instead of five percent (5%).
II.47 PARTICIPANT.
(a) "Participant" shall mean any Employee who has
satisfied the participation eligibility requirements
and has been enrolled in this Plan in accordance with
the provisions of Article III below.
(b) "Participant" does not include an Employee who has
incurred a Severance and has been paid the full
amount of his benefits under the Plan.
II.48 PLAN. "Plan" shall mean the Westcorp Employee Stock Ownership
Plan and Salary Savings Plan, as amended from time to time.
II.49 PLAN ADMINISTRATOR. "Plan Administrator" shall mean the
administrator of the Plan within the meaning of ERISA Section
3(16)(A), which shall be the Administrative Committee.
II.50 PLAN YEAR. "Plan Year" shall mean the twelve (12) month period
ending on December 31.
II.51 QUALIFIED NON-ELECTIVE CONTRIBUTIONS. "Qualified Non-elective
Contributions" means those Company Contributions that are
allocated to Participant's Salary Savings Contribution
Accounts under Section 6.5. Qualified Non-elective
Contributions shall be fully vested at all times and shall be
subject to the distribution restrictions of Section 8.8(a). A
Participant may not elect to receive cash compensation in lieu
of a Qualified Non-elective Contribution.
II.52 REEMPLOYMENT COMMENCEMENT DATE. In the case of an Employee who
incurs a Severance and who is subsequently reemployed by the
Company or an Affiliated Company, his "Reemployment
Commencement Date" shall be the first day following the
Severance on which he performs an Hour of Service.
II.53 SALARY SAVINGS CONTRIBUTIONS. "Salary Savings Contributions"
shall mean the pre-tax contributions made by Participants
pursuant to Article V.
II.54 SALARY SAVINGS CONTRIBUTION ACCOUNT. "Salary Savings
Contribution Account" of a Participant shall mean his
individual account in the Trust Fund in which are held his
Salary Savings Contributions and the income thereon.
- 16 -
II.55 SEVERANCE. "Severance" shall mean the termination of an
Employee's employment with the Company or an Affiliated
Company by reason of his retirement, death, resignation,
dismissal or otherwise.
II.56 SPOUSE. "Spouse" shall mean the person to whom a Participant
is married as of the relevant date.
II.57 TESTING PERIOD. "Testing Period" means the Plan Year
containing the Determination Date and the preceding four (4)
Plan Years.
II.58 TOP-HEAVY GROUP. "Top-Heavy Group" means any Aggregation Group
if the sum (as of the Determination Date) of
(a) The present value of the cumulative accrued benefits
for Key Employees under all defined benefit plans
included in the group, and
(b) The aggregate of the account balances of Key
Employees under all defined contribution plans
included in the group,
exceeds sixty percent (60%) of a similar sum determined for
all Employees.
II.59 TOP-HEAVY PLAN.
(a) Any defined benefit plan is a Top-Heavy Plan if, as
of the Determination Date, the present value of the
cumulative accrued benefits under the plan for Key
Employees exceeds sixty percent (60%) of the present
value of the cumulative accrued benefits under the
plan for all Employees.
(i) For purposes of this Paragraph (a), the
present value of an Employee's accrued
benefit shall be determined by using the
interest rate and the mortality assumptions
specified in that plan. The same actuarial
assumptions shall be used in measuring
accrued benefits under all defined benefit
plans.
(ii) The accrued benefit of any Employee (other
than a Key Employee) shall be determined
(A) Under the method that is used for
benefit accrual purposes for all
plans of the Company and all
Affiliated Companies, or
(B) If there is no such method, as if
the benefit accrued no more rapidly
than the slowest accrual rate
permitted under Section
411(b)(1)(C) of the Code.
- 17 -
(iii) The date on which the accrued benefit of
each Employee is measured (with respect to
each Determination Date) shall be the date
used for computing costs under the minimum
funding standards of Code Section 412,
determined as if he had incurred a Severance
on that date.
(b) Any defined contribution plan shall be a Top-Heavy
Plan if, as of the Determination Date, the aggregate
account balances of Key Employees under the plan
exceeds sixty percent (60%) of the present value of
the aggregate of the account balances of all
Employees under the plan.
(i) The date on which the account balance of
each Employee is measured (with respect to
each Determination Date) shall be the last
day of the relevant plan year.
(c) For purposes of this Section 2.59, the accrued
benefit and account balances of a Participant shall
include amounts attributable to Participant
contributions (whether or not the contributions are
includable in income). Furthermore, the same date
shall be used for valuing benefits under all plans.
II.60 TRUST AND TRUST FUND. "Trust" or "Trust Fund" shall mean the
Trust created by this Agreement.
II.61 TRUSTEE. "Trustee" shall mean the person(s) or entity acting
as Trustee of the Trust created under this Plan.
II.62 VALUATION DATE.
(a) "Valuation Date" shall mean the last day of each
calendar month or such other date or dates as may be
selected by the Administrative Committee for valuing
the assets of the Plan.
(b) The Administrative Committee may provide for interim
Valuation Dates, to protect the Plan from large
losses, in the event of precipitous losses. These
interim Valuation Dates may be established on a
retroactive basis.
II.63 INTEREST. "Vested Interest" shall mean the interest of a
Participant in the Trust Fund which has become vested pursuant
to the provisions of Article VII below.
II.64 YEAR OF SERVICE. Year of Service for vesting purposes shall
mean 12 months of service. An Employee will receive credit for
the aggregate of all time periods commencing with the
Employee's first day of employment or reemployment and ending
on the day a Break in Service begins. The first day of
employment is the
- 18 -
first day an Employee completes an Hour of Service.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
III.1 ELIGIBILITY TO PARTICIPATE.
(a) Effective January 1, 2001, every Employee shall be
eligible to participate in the 401(k) cash or
deferred portion of the Plan on or after an Entry
Date which is at least 3 months after the Employee's
employment commencement date (the date on which the
Employee first performs an Hour of Service) and every
Employee shall be eligible to participate in the
Employee Stock Ownership Plan portion of the Plan on
or after an Entry Date which is at least 6 months
after the Employee's employment commencement date
provided the Employee is still an Employee on such
Entry Date(s).
(b) Notwithstanding the above, each Employee who was a
Participant on the day before the Effective Date
shall be a Participant as of the Effective Date.
(c) Notwithstanding the above, the following classes of
Employees shall not be eligible to participate in the
Plan
(i) Employees who are included in a unit of
Employees covered by a collective bargaining
agreement, if there is evidence that
retirement benefits were the subject of good
faith bargaining between the Employee
representatives and the Company, unless the
collective bargaining agreement expressly
provides for coverage under this Plan;
(ii) Individuals classified as independent
contractors by the Company, regardless of
any determination to the contrary by the
Internal Revenue Service;
(iii) Leased Employees, if such leased employees
constitute less than twenty percent of the
Employer's nonhighly compensated workforce
(within the meaning of Code section
414(n)(1)(C)) and such leased employees are
covered by a plan described in Code section
414(n)(5).
- 19 -
III.2 SPECIAL PARTICIPATION RULES.
(a) In the case of an Employee who has met the
eligibility requirements of Section 3.1 but whose
Entry Date occurs after the Employee incurred a
Severance, the Employee shall be eligible to commence
participation in this Plan as of the Entry Date
following his Reemployment Commencement Date.
(b) A Participant who incurs a Severance and is
thereafter reemployed by the Company shall be
entitled to recommence participation in the Plan as
of his Reemployment Commencement Date following the
Severance.
III.3 PARTICIPATION BEYOND NORMAL RETIREMENT AGE. Participants who
have attained their Normal Retirement Age will continue to
participate in the Plan to the same extent as those
Participants who have not yet attained their Normal Retirement
Age.
ARTICLE IV
TRUST FUND AND CONTRIBUTIONS
IV.1 TRUST FUND. Pursuant to the terms of the Plan, the Company
established a trust, with the Trustee to hold and administer
in trust all amounts accumulated under the Plan.
IV.2 COMPANY CONTRIBUTION.
(a) For each Plan Year, the Company shall contribute to
the Trust Fund-
(i) The Salary Savings Contributions,
(ii) The Qualified Non-elective Contributions,
(iii) The ESOP Contributions, and
(iv) The Employer Matching Contributions.
(b) In no event shall the amount of the contributions by
the Company under this Plan (including Salary Savings
Contributions) exceed the maximum allowable deduction
available to the Company for its taxable year under
Code Section 404.
(c) No contribution shall be made by the Company at any
time when its allocation would be precluded by the
limitations of Article XV below.
- 20 -
(d) All contributions by the Company under this Plan may
be made in kind or in cash, or in both, and shall be
made directly to the Trustee on any date or dates
selected by the Company.
(e) All contributions by the Company for a Plan Year
shall be made within the time prescribed by law for
filing the Company's federal income tax return
(including extensions) for the Company's taxable year
corresponding to the Plan Year. Qualified
Non-elective Contributions for a Plan Year shall be
contributed no later than twelve (12) months after
the close of such Plan Year.
IV.3 IRREVOCABILITY. In no event shall any of the assets of the
Plan revert to the Company except as provided in this Section
4.3.
(a) In the case of a Company Contribution which is made
by reason of a mistake of fact, at the Company's
election, the contribution shall be returned to the
Company within one (1) year after it is made.
(b) All Company Contributions to the Plan are hereby
conditioned on their deductibility under Code Section
404. To the extent a deduction is disallowed, at the
Company's election, the contribution shall be
returned to the Company within one (1) year after the
disallowance.
(c) In the case where amounts are held in a Suspense
Account under Section 15.5 below that may not be
allocated to the Accounts of Participants when the
Plan is terminated, the excess amounts may revert to
the Company in accordance with the regulations under
Code Section 415.
IV.4 INVESTMENTS IN EMPLOYER SECURITIES AND EMPLOYER REAL PROPERTY.
The assets of the Plan may be invested, primarily or
exclusively, in qualifying employer securities (as defined in
Section 409(1) of ERISA).
IV.5 INVESTMENT DIRECTION BY PARTICIPANTS. Except as provided in
Article XIX and pursuant to such rules and procedures as may
be prescribed by the Administrative Committee, Participants
may direct the investment of the assets in some or all of
their Accounts.
The Plan is intended to constitute a plan described in ERISA
Section 404(c) and 29 CFR Section 2550.404c-1. It is intended
that the fiduciaries of the Plan shall be relieved of
liability for any losses which are the direct and necessary
result of investment instructions given by a Participant or
Beneficiary.
IV.6 INVESTMENT OF EMPLOYER MATCHING CONTRIBUTION ACCOUNTS.
Participant Employer Matching Contribution Accounts shall be
invested in Company Stock purchased on the open market or from
the Company Treasury at open market
- 21 -
prices. Fractional shares may be invested in cash and the
Administrative Committee may keep a portion of the Accounts
invested in cash for liquidity purposes.
IV.7 ESOP PROVISIONS.
(a) Except as provided in Section 4.7(c) below, the
Administrative Committee shall direct the Trustee to
invest Participants' ESOP Contribution Accounts in
Company Stock which has been purchased on the open
market or other investment alternatives permitted by
the Trust. Fractional shares may be invested in cash.
ESOP Contributions made in Company Stock shall remain
invested in Company Stock. ESOP Contributions made in
cash and other cash received by the Trust may be used
to purchase additional shares of Company Stock on the
open market at current market price at the time of
purchase. The Trustee may also invest such assets in
savings accounts, certificates of deposit,
high-grade, short-term securities or equity stock,
bonds or other investments or such assets may be held
in cash. All investments shall be made by the Trustee
only upon the direction of the Administrative
Committee and all purchases of Company Stock shall be
made at fair market value. The Administrative
Committee may direct that all of the Trust's ESOP
Contribution Accounts be invested and held in Company
Stock.
(b) Each Participant, or, in the event of his death, his
Beneficiary, shall have the right to instruct the
Trustee in writing as to the manner in which to vote
the vested and unvested shares of Company Stock
allocated to his ESOP Contribution Account and his
proportionate share of the shares of Company Stock
allocated to all Participants' ESOP Contribution
Accounts for which other Participants have not given
timely instructions regarding voting to the Trustee
as described herein, at any shareholders' meeting of
the Company.
The Company shall use its best efforts to timely
distribute or cause to be distributed to each
Participant or Beneficiary the information
distributed to shareholders of the Company in
connection with any such shareholders' meeting,
together with a form requesting confidential
instructions to the Trustee on how such shares of
Company Stock shall be voted on each such matter.
Upon timely receipt of such instructions, the Trustee
shall, on each such matter, vote as directed the
appropriate number of shares (including fractional
shares) of Company Stock.
Except as otherwise required by applicable law, the
instructions received by the Trustee from
Participants or Beneficiaries shall be held by the
- 22 -
Trustee in strict confidence and shall not be
divulged to any person, including employees, officers
and directors of the Company or any Affiliated
Company; provided, however, that, to the extent
necessary for the operation of the Plan, such
instructions may be relayed by the Trustee to a
recordkeeper, auditor or other persons providing
services to the Plan if such person (i) is not the
Company, an Affiliated Company, or any employee,
officer or director thereof, and (ii) agrees not to
divulge such directions to any other person,
including employees, officers and directors of the
Company or any Affiliated Company.
An individual's proportionate share of unvoted shares
of Company Stock for purposes of the first paragraph
of this Section 4.7(b) shall be a fraction, the
numerator of which shall be the number of shares held
in such individual's ESOP Contribution Account for
which he provides timely instruction to the Trustee
and the denominator of which shall be the aggregate
number of shares held in all such ESOP Contribution
Accounts for which timely instructions are provided
to the Trustee.
(c) Each Participant or, in the event of his death, his
Beneficiary, shall have the right to instruct the
Trustee in writing as to the manner in which to
respond to a tender or exchange offer with respect to
the shares of Company Stock allocated to his ESOP
Contribution Account. The Company shall use its best
efforts to timely distribute or cause to be
distributed to each Participant or Beneficiary the
information distributed to shareholders of the
Company in connection with any such tender or
exchange offer, together with a form requesting
confidential instructions to the Trustee on how to
respond to such tender or exchange offer.
Upon timely receipt of such instructions, the Trustee
shall respond as directed with respect to such shares
of Company Stock. If, and to the extent that, the
Trustee shall not have received timely instructions
from any individual given a right to instruct the
Trustee with respect to shares of Company Stock by
the first sentence of this Section 4.7(c), such
individual shall be deemed to have timely instructed
the Trustee not to tender or exchange such shares of
Company Stock.
Except as otherwise required by applicable law, the
instructions received by the Trustee from
Participants or Beneficiaries shall be held by the
Trustee in strict confidence and shall not be
divulged to any person, including employees, officers
and directors of the Company or any Affiliated
Company; provided, however, that, to the extent
necessary for the operation of the Plan, such
instructions may be relayed by the Trustee to a
recordkeeper, auditor or other persons providing
services to the Plan if such person (i) is not the
Company, an Affiliated Company, or any employee,
officer or director thereof, and (ii) agrees not to
divulge such
- 23 -
directions to any other person, including employees,
officers and directors of the Company or any
Affiliated Company.
(d) Each Participant shall have diversification rights
beginning with the first Plan Year in which the
Participant has both attained age fifty-five (55) and
completed ten (10) years of participation in the
Plan. Diversification rights shall apply to Company
Stock allocated to his ESOP Contribution Account
after December 31, 1986. A Participant's
diversification rights are:
(i) For each of the first Ave (5) Plan Years he
may elect to transfer an amount up to
twenty-five percent (25%) of his applicable
ESOP Contribution Account less any amounts
previously diversified under this Section
4.7(d), to the other investment options
provided under the Plan for Participants'
Salary Savings Contribution Accounts.
(ii) For the sixth (6th) Plan Year, he may elect
to transfer an amount up to fifty percent
(50%) of his applicable ESOP Contribution
Account, less any amounts previously
diversified under this Section 4.7(d), to
the other investment options provided under
the Plan for Participants' Salary Savings
Contribution Accounts.
(iii) A diversification election for a Plan Year
must be made in writing and filed with the
administrative committee within 90 days
after the close of such Plan Year.
(iv) The Administrative Committee may elect to
distribute amounts which Participants have
elected to diversify in lieu of permitting
the transfer of assets under Sections
4.7(d)(i) and (ii) above. The Administrative
Committee's election as to whether
diversification amounts will be transferred
or distributed for a Plan Year shall be
applied to Participants in a uniform and
non-discriminatory manner.
(v) The diversification requirement of this
Subsection (d) shall be satisfied if, at the
election of the Committee, the portion of
the Participant's ESOP Contribution Account
subject to diversification under this
Subsection (d) is made available for
distribution to such Participant and, unless
such Participant, or the Participant's
spouse, if applicable, shall fail to consent
to such distribution as provided for at
Section 8.4, is in fact distributed to such
Participant within 90 days after the last
day of the period during which the
Participant can elect diversification
hereunder. No distributions shall be made to
a Participant under this Paragraph (v)
unless the consent
- 24 -
requirements of Section 8.4 have been
satisfied; provided the diversification
requirements of this Subsection (d) shall be
deemed satisfied if a distribution is not
made to such Participant solely because of
the failure of the Participant, or the
Participant's spouse, if applicable, to
consent to such distribution, as required
under Section 8.4.
ARTICLE V
PARTICIPANT CONTRIBUTIONS
V.1 SPECIAL RULES.
(a) Pursuant to such rules and procedures as the
Administrative Committee may prescribe, each
Participant may elect to make Salary Savings
Contributions to the Plan.
(b) Salary Savings Contributions must be made in whole
percentages of the Participant's Earnings. The
maximum rate of Salary Savings Contributions is
fourteen percent (14%) of the Participant's
Compensation.
(c) The Administrative Committee shall prescribe such
rules and procedures as it deems necessary or
appropriate relating to the termination, resumption
or change in the rate of Salary Savings
Contributions.
(d) Salary Savings Contributions shall be treated as
Employer Contributions for purposes of Code Sections
401(k) and 414(h).
(e) Salary Savings Contributions shall be collected by
the Company only through payroll deductions.
(f) The Company shall remit the Salary Savings
Contributions to the Trustee as soon as practicable,
but in no event later than the 15th day of the month
following the month in which the Salary Savings
Contributions were deducted from a Participant's
Compensation.
V.2 AMOUNT SUBJECT TO A DEFERRAL ELECTION.
(a) Notwithstanding anything in this Plan to the
contrary, the maximum amount of Salary Savings
Contributions that a Participant may make in a single
calendar year is limited to $10,500. This amount
shall be adjusted for increases in the cost-of
living, as determined under Section 402(g) of the
Code.
(b) In no event will a Participant be permitted to make
Salary Savings
- 25 -
Contributions in excess of the maximum amount
permitted under Sections 5.3 or 5.7 below.
V.3 AVERAGE DEFERRAL PERCENTAGE TESTS.
(a) The Administrative Committee shall monitor the Salary
Savings Contributions and Qualified Non-elective
Contributions to insure that the requirements of
either Paragraph (b) or (c) are satisfied.
(b) The requirements of this Paragraph (b) are satisfied
if the Average Deferral Percentage for Highly
Compensated Employees for the Plan Year is not more
than the Average Deferral Percentage for all other
Covered Employees multiplied by 1.25.
(c) The requirements of this Paragraph (c) are satisfied
if
(i) The excess of the Average Deferral
Percentage of the group of Highly
Compensated Employees over that of all other
Covered Employees is not more than two (2)
percentage points, and
(ii) The Average Deferral Percentage for the
group of Highly Compensated Employees is not
more than twice the Average Deferral
Percentage for all other Covered Employees.
(d) The Administrative Committee shall maintain records
sufficient to demonstrate satisfaction of the
requirements of this Section 5.3.
(e) The provisions of this Section 5.3 are intended to
comply with the provisions of Code Section 401(k)(3)
and Regulations Section 1.401(k)-I(b), the provisions
of which are hereby incorporated into this Plan as
provided under Regulations Section
1.401(k)-1(b)(2)(iii).
V.4 PROSPECTIVE REDUCTIONS OF SALARY SAVINGS CONTRIBUTIONS.
(a) The Administrative Committee may determine prior to
the end of the Plan Year whether or not the Average
Deferral Percentage tests of section 5.3 are
satisfied. If it appears that the tests will not be
satisfied, the Administrative Committee may elect to
reduce the Salary Savings Contributions by the Highly
Compensated Employees on a prospective basis.
(b) In the event that Salary Savings Contributions by
Highly Compensated Employees must be reduced, these
reductions will be accomplished reducing Salary
Savings Contributions for the Highly Compensated
Employee whose Salary Savings Contributions for the
Plan Year are the
- 26 -
highest to the extent required to
(i) Enable the Plan to satisfy one of the
Average Deferral Percentage Tests of Section
5.3 above, or
(ii) Cause his Salary Savings Contributions to
equal those of the Highly Compensated
Employee with the next highest Salary
Savings Contributions. If this action does
not cause the Plan to satisfy one of the
Average Deferral Percentage Tests, this
process will be repeated until one of those
tests is satisfied.
V.5 DISTRIBUTIONS OF EXCESS DEFERRALS. In the event a Participant
deferred more than the maximum permitted under Section 5.2(a)
above ("Excess Deferrals"), whether under only this Plan, or
under this Plan and another plan, the Participant may notify
the Plan of the portion of his Excess Deferrals allocable to
the Plan no later than March 1 following the calendar year in
which the Excess Deferrals were made.
(a) Notwithstanding anything in this Plan to the
contrary, the Administrative Committee shall attempt
to distribute the amount of the Participant's Excess
Deferrals (and the earnings thereon) to the
Participant no later than April 15th of the calendar
year following the calendar year in which the Excess
Deferrals were made.
(b) Distributions may be made under this Section 5.5
without regard to the consent requirement of Section
8.5 below.
(c) Amounts that are distributed under this Section 5.5
will not be taken into account for poses of the
minimum distribution rules of Section 8.3 below.
V.6 DISTRIBUTIONS OF EXCESS CONTRIBUTIONS. In the event that the
Plan fails to satisfy the Average Deferral Percentage Tests of
Section 5.3 above as of the last day of the Plan Year, the
Salary Savings Contributions in excess of those limits and the
earnings thereon ("Excess Contributions") shall be distributed
from the Plan.
(a) The Administrative Committee shall attempt to
distribute these amounts within two and one-half
(2-1/2) months after the end of the Plan Year for
which the contributions were made, but in no event
later than the last day of the Plan Year following
the Plan Year in which the Excess Contributions were
made.
(b) In the event that the Excess Contributions are
distributed, the distributions will be accomplished
by distributing the lesser of the following amounts
to the Highly Compensated Employee whose deferral
amount is the greatest:
- 27 -
(i) An amount which will enable the Plan to
satisfy one of the Average Percentage Tests
of Section 5.3 above, or
(ii) An amount which will cause his Salary
Savings Contributions to equal those of the
Highly Compensated Employee with the next
highest Salary Savings Contributions. If
this action does not cause the Plan to
satisfy one of the Average Deferral
Percentage Tests, this process will be
repeated until one of those tests is
satisfied.
(c) The amount to be distributed to a Highly Compensated
Employee under Paragraph (b) above shall be
determined on the basis of the portion of the Excess
Contributions attributable to him.
(d) Distributions may be made under this Section 5.6
above without regard to the consent requirement of
Section 8.5 below.
(e) Amounts that are distributed under this Section 5.6
will not be taken info account for purposes of the
minimum distribution rules of Section 8.3 below.
V.7 AVERAGE CONTRIBUTION PERCENTAGE TESTS.
(a) The Administrative Committee shall monitor the
Employer Matching Contributions to insure that the
requirements of either Paragraph (b) or (c) are
satisfied.
(b) The requirements of this Paragraph (b) are satisfied
if the Average Contribution Percentage for Highly
Compensated Employees for the Plan Year is not more
than the Average Contribution Percentage for all
other Covered Employees multiplied by 1.25.
(c) The requirements of this Paragraph (c) are satisfied
if
(i) The excess of the Average Contribution
Percentage of the group of Highly
Compensated Employees over that of all other
Covered Employees is not more than two (2)
percentage points, and
(ii) The Average Contribution Percentage for the
group of Highly Compensated Employees is not
more than twice the Average Contribution
Percentage for all other Covered Employees.
(d) The Administrative Committee shall maintain records
sufficient to demonstrate satisfaction of the
requirements of this Section 5.7
(e) In the event that the Plan fails to satisfy the above
tests of this Section 5.7,
- 28 -
the non-vested Employer Matching Contributions in
excess of those test limits ("Excess Aggregate
Contributions") (and the income allocable thereto),
shall be forfeited. The vested Excess Aggregate
Contributions (and the income allocable thereto),
shall be distributed to the appropriate Highly
Compensated Employees after the close of the Plan
Year in which such vested Excess Aggregate
Contributions arose and within 12 months of the close
of that Plan Year. The Excess Aggregate Contributions
shall be determined by reducing the contributions
made on behalf of Highly Compensated Employees,
beginning with the individual with the highest amount
of contributions.
(f) The amount of the Excess Aggregate Contributions
shall be determined after
(i) First determining the amount of Excess
Deferrals; and
(ii) Then determining the amount of Excess
Contributions.
(g) The Company shall not be obligated to make any
Employer Matching Contributions with respect to the
excess of the maximum amount permitted under the
above rules of this Section 5.7.
(h) Distributions may be made under this Section 5.7
without regard to the consent requirement of Section
8.5 below.
(i) Amounts that are distributed under this Section 5.7
will not be taken into account for purposes of the
minimum distribution rules of Section 8.3 below.
(j) The provisions of this Section 5.7 are intended to
comply with the provisions of Code Section 401(m)(9)
and Regulations Section 1.401(m)-2, the provisions of
which are hereby incorporated into this Plan as
provided under Regulations Section
1.401(k)-1(b)(2)(iii).
V.8 MULTIPLE USE TEST.
Each Plan Year the Plan shall satisfy the multiple use test of
Regulations Section 1.401(m)-2, the provisions of which are hereby
incorporated into this Plan by reference as provided in Regulations
Section 1.401(m)-2(b).
The Administrative Committee shall reduce either (but not both of) the
Average Deferral Percentage or the Average Contribution Percentage for
the Plan Year with respect to all Highly Compensated Employees for the
Plan Year in order to satisfy the multiple use test.
- 29 -
V.9 ROLLOVER CONTRIBUTIONS.
A Participant or an Employee who is expected to become a Participant
may transfer amounts ("Rollover Contributions") previously distributed
to him from another employer's qualified plan (as described in Code
Section 401(a)) or from a "conduit" IRA (as described in Code Section
408).
Participants shall be required to provide the Administrative Committee
with proof satisfactory to the Administrative Committee that the
Rollover Contribution is an eligible rollover distribution within the
meaning of Code Section 402(f)(2)(A). Rollover Contributions shall
consist entirely of cash. The Administrative Committee shall not accept
any Rollover Contribution which would require the Plan to provide a
form of payment which is not provided for under Article IX.
ARTICLE VI
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
VI.1 PARTICIPANTS' ACCOUNTS. The Administrative Committee shall
open and maintain a separate Account for each type of
contribution permitted under the Plan for each Participant.
VI.2 ALLOCATION OF EMPLOYER MATCHING CONTRIBUTIONS.
(a) The Employer Matching Contribution for each
Participant shall be credited on the last day of each
Plan Year to the Employer Matching Contribution
Account of each Participant who was an Employee on
the last day of the Plan Year and who made Salary
Savings Contributions during the Plan Year.
(b) The amount of Employer Matching Contribution to be
allocated to an eligible Participant's Employer
Matching Contribution Account for a Plan Year shall
be
(i) 100% of up to the first $500 of Participant
Salary Savings contributions for a Plan Year
and
(ii) 50% of Participant Salary Savings
Contributions for a Plan Year in excess of
the first $500 and up to a maximum 6% of
Compensation.
(c) Employer Matching Contributions shall be allocated to
eligible Participants' Employer Matching Contribution
Accounts in the proportion that each eligible
Participant's Salary Savings Contributions for the
Plan Year bear to the aggregate Salary Savings
Contributions for the Plan Year
- 30 -
of all eligible Participants. For this purpose for a
Plan Year, a Participant's Salary Savings
Contributions that exceed a percentage of the
Participant's Compensation for the Plan Year shall be
uniformly disregarded, such percentage to be
determined by the Administrative Committee in its
sole discretion for such Plan Year.
VI.3 ALLOCATION OF ESOP CONTRIBUTIONS.
(a) The ESOP Contributions (if any) for each Plan Year
shall be allocated to the ESOP Contribution Account
of each Participant who is entitled to receive an
allocation in the proportion that his units bears to
the aggregate units of all Participants who are
entitled to receive an allocation during that Plan
Year.
(b) A Participant will be entitled to receive an
allocation of the ESOP Contributions if he --
(i) is employed by the Company on the last day
of the Plan Year, and
(ii) completed at least 1,000 Hours of Service
during the Plan Year.
(c) For purposes of this Section 6.3, each Participant
shall be credited with units for a Plan Year as
follows:
(i) one unit for each full one hundred dolls
($100) of Compensation paid to the
Participant by the Employer for the Plan
Year; and
(ii) one unit for each full Year of Service which
is continuous and uninterrupted. For
purposes of this allocation only, Years of
Service shall exclude periods prior to any
Break in Service, but shall include periods
during which a Participant was on a Leave of
Absence. If such computation results in the
total involving a fractional unit, then a
unit of one-half or less shall be
disregarded and more than one-half unit
shall be counted as one unit.
(d) Provisions of this Section 6.3 to the contrary
notwithstanding, in the event of a mid-year ESOP
Contribution or in the event of a release of any
shares, the acquisition of which was financed via an
Exempt Loan (as defined and set forth in Section 7.04
of the Trust Agreement), the Administrative Committee
may allocate such ESOP Contribution or release of
shares to the ESOP Contribution Account of each
Participant either as of a Valuation Date during the
Plan Year or at the end of the Plan Year. Allocations
will only be made to the ESOP Contribution Account of
Participants who are Employees (as defined in Section
2.22), as of the date of such ESOP Contribution. If
such ESOP Contribution or released shares
- 31 -
are allocated as of a Valuation Date during the Plan
Year, for purposes of allocation to Participant
Accounts under the formula contained in Section
6.3(c) above, "Compensation" and "Years of Service"
shall be projected to the end of the Plan Year
assuming the same rate of Compensation and the same
accrual of Service as has been experienced by the
Participant from the beginning of the Plan Year to
the Valuation Date.
(e) Notwithstanding any contrary provision in this Plan
and Trust, the ESOP contribution made in connection
with that certain 2000 Westcorp Subscription Rights
Offering ("Rights Offering") or the Subsequent Rights
Offering ("Subsequent Rights Offering") will be
allocated among the accounts based upon the ratio of
the number of Rights each Participant has in his or
her ESOP account bears to the total number of Rights
held in all accounts.
VI.4 ALLOCATION OF SALARY SAVINGS CONTRIBUTIONS.
A Participant's Salary Savings Contributions shall be
allocated to his Elective Deferral Account.
VI.5 ALLOCATION OF QUALIFIED NON-ELECTIVE CONTRIBUTIONS.
(a) The Qualified Non-elective Contributions (if any) for
each Plan Year shall be allocated to the Salary
Savings Contribution Accounts of each Participant who
is entitled to receive an allocation in the
proportion that his Compensation during that Plan
Year bears to the aggregate Compensation of all
Participants who are entitled to receive an
allocation during that Plan Year. Amounts shall be
credited to Participants' Salary Savings Contribution
Accounts as of the last day of the Plan Year.
(b) Each Plan Year for which the Employer makes Qualified
Non-elective Contributions to the Plan, the
Administrative Committee shall determine the group of
Participants who are entitled to receive an
allocation of Qualified Non-elective Contributions in
one of the following ways:
(i) All Participants who are not Highly
Compensated Employees; or
(ii) Such non Highly Compensated Employees or
former Employees as may be selected by the
Administrative Committee.
(iii) All Participants who have Compensation
for-the Plan Year which does not exceed a
dollar amount to be set by the
Administrative Committee for the Plan Year,
whether or not such Participants are Highly
Compensated Employees.
- 32 -
A Participant's entitlement to receive an allocation
of Qualified Non-elective Contributions for a Plan
Year shall not be contingent upon his participation
in the Plan or his performance of any services after
the last day of the Plan Year.
VI.6 REVALUATION OF ACCOUNTS.
(a) Within sixty (60) days after each Valuation Date, the
Trustee shall value the assets of the Trust on the
basis of fair market values.
(b) Upon receipt of the valuations from the Trustee, the
Administrative Committee shall revalue the Accounts
of each Participant as of the applicable Valuation
Date as to reflect a proportionate share in any
increase or decrease in the fair market value of the
assets in the Trust Fund, determined as of that date
as compared with the value of the assets in the Trust
Fund determined as of the immediately preceding
Valuation Date. The Administrative Committee shall
establish uniform and non-discriminatory accounting
procedures to allocate such changes in the market
value of Participants' Accounts.
VI.7 FORFEITURES FROM EMPLOYER MATCHING CONTRIBUTION ACCOUNT. Any
amount of a Participant's Employer Matching Contribution
Account that is forfeited shall be used in the following
manner:
(a) First, to restore the Employer Matching Contribution
Accounts or ESOP Contribution Accounts of former
Participants under Section 8.7 below;
(b) Second, to reduce the Employer Matching Contributions
to the Plan; and
(c) Third, to be allocated to the accounts of
Participants in a non-discriminatory manner, to
reduce Employer contributions not provided in
Sections 6.7 or 6.8, or to be allocated to the ESOP
Contribution Accounts pursuant to Section 6.3.
VI.8 FORFEITURES FROM ESOP CONTRIBUTION ACCOUNT. Any amount of a
Participant's ESOP Contribution Account that is forfeited
shall be used in the following manner:
(a) First, to restore the Employer Matching Contribution
Accounts or ESOP Contribution Accounts of former
Participants under Section 8.7 below; and/or
(b) Second, to be allocated to the accounts of
Participants in a non-discriminatory manner, to
reduce Employer contributions not provided in
Sections 6.7 or 6.8, or to be allocated to the ESOP
Contribution Accounts
- 33 -
pursuant to Section 6.3.
VI.9 ORDERING OF ALLOCATIONS. Allocations made pursuant to this
Article VI shall be made in the following order:
(a) Those required by Sections 6.7 and 6.8 above;
(b) Those required by Section 15.5 below;
(c) Those required by Section 6.4 above; and
(d) Those required by Sections 6.2, 6.3 and 6.5 above.
VI.10 MISCELLANEOUS ALLOCATION RULES.
(a) For purposes of making the allocations of Employer
Contributions under this Article VI, any Employer
Contributions made with respect to a particular Plan
Year that are made after the end of the year but on
or before the due date for the Company's federal
income tax return (including extensions) for its
taxable year relating to the Plan Year shall be
considered as having been made on the last day of the
Plan Year.
(b) Upon a Participant's Severance, pending distribution
of the Participant's Vested Interest, the
Participant's Accounts shall continue to be
maintained and accounted for in accordance with all
applicable provisions of this Plan.
(c) The Administrative Committee and the Trustee may
establish accounting procedures for the purpose of
making the allocations, valuations, and adjustments
to Participants' Accounts provided for in this
Article VI.
(d) The Company, the Administrative Committee and the
Trustee do not guarantee that the value of a
Participant's Accounts shall at any time equal or
exceed the amount previously contributed thereto.
ARTICLE VII
VESTING
VII.1 GENERAL RULE.
The Vested Interest of each Participant in his Employer
Matching Contribution Account shall be determined on the basis
of his Years of Service, in accordance with the following
schedule:
- 34 -
Years of Vested
Service Interest
------- --------
Less than 1 0%
1 30%
2 60%
3 100%
The Vested Interest of each Participant in his ESOP
Contribution Account shall be determined on the basis of his
Years of Service, in accordance with the following schedule:
Years of Vested
Service Interest
------- --------
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 100%
VII.2 SPECIAL VESTING RULES.
Notwithstanding the rules of Section 7.1 above, during a
Participant's period of employment with the Company or an
Affiliated Company, in the event of his death, Disability, or
attainment of Normal Retirement Age, he shall become one
hundred percent (100%) vested in his Employer Matching
Contribution Account and ESOP Contribution Account.
VII.3 FULLY VESTED ACCOUNTS. A Participant shall always be one
hundred percent (100%) vested in his Salary Savings
Contribution Account, Rollover Account and Hammond Company
Matching Account.
VII.4 FORFEITURES.
(a) The nonvested portions of a Participant's Employer
Matching Contribution Account and ESOP Contribution
Account shall be forfeited as of the earlier of
(i) The date of the distribution of his benefit,
or
(ii) The date on which he incurs five (5)
consecutive breaks in Service.
(b) In the case of any Participant who has incurred five
(5) consecutive Breaks
- 35 -
in Service, his Years of Service if any, completed
after the Breaks in Service shall not be taken into
account for purposes of determining his Vested
Interest in his Employer Matching Contribution
Account and ESOP Contribution Account that accrued
before the breaks in Service.
(c) If the Participant is rehired prior to incurring the
Forfeiture or the Participant repays the amount of
the prior distribution pursuant to Section 8.7(b), he
will continue to vest, starting at the point in the
vesting schedule where he incurred the Severance, in
both the Company Contributions made before and after
the Severance.
(d) Forfeitures will be used as provided in Sections 6.7
and 6.8.
ARTICLE VIII
PAYMENT OF BENEFITS
VIII.1 PAYMENT OF BENEFITS.
(a) Subject to the following rules of this Article VIII,
a Participant's Vested Interest shall not be
distributed prior to his Severance.
(b) All distributions to Participants or their
Beneficiaries shall be based on_the amount of the
Participant's Accounts as of the Valuation Date
immediately preceding the date on which the
Participant's Vested Interest is distributed.
(c) The Administrative Committee shall prescribe such
rules as it deems necessary regarding the timing of
payments and the written notice requirements for
distributions prior to Severance.
(d) In the case of a distribution made by reason of the
Participant's Severance, no distribution will be made
if the Participant's Reemployment Commencement Date
occurs before his Vested Interest is distributed.
VIII.2 LATEST PAYMENT DATE.
(a) Subject to the following rules of this Article VIII,
payment of the Participant's entire Vested Interest
under the Plan shall begin in no event later than hid
"Latest Payment Date," which is the sixtieth (60th)
day after the close of the Plan Year in which the
latest of the following events occurs:
(i) The Participant's Normal Retirement Age;
- 36 -
(ii) The tenth (10th) anniversary of the date on
which he commenced participation in the
Plan; or
(iii) The termination of his employment with the
Company or an Affiliated Company.
(b) If it is not possible to make payment to a
Participant by his Latest Payment Date because the
amount of his benefit cannot be ascertained by that
date, or because the Administrative Committee has
been unable to locate the Participant after making
reasonable efforts to do so, the payment shall be
made no later than sixty (60) days after the earliest
date on which the amount of the payment can be
ascertained or the date on which the Participant is
located (whichever is applicable).
VIII.3 REQUIRED BEGINNING DATE.
(a) The interest of each Participant shall be distributed
not later than his Required Beginning Date.
(b) "Required Beginning Date" shall mean April 1 of the
calendar year following the later of the calendar
year in which the Participant attains age seventy and
one-half (70-1/2) or the calendar year in which he
incurs a Severance.
(c) Except as may be provided in Article IX, if a
Participant dies before distribution of his Vested
Interest has begun, his entire Vested Interest shall
be distributed within five (5) years of his death.
(d) The provisions of this Article VIII are intended to
comply with the provisions of Code Section 401(a)(9)
and regulations thereunder. If there is any
discrepancy between the provisions of this Plan and
the provisions of Code Section 401(a)(9) and
regulations thereunder, such discrepancy shall be
resolved so as to give full effect to the provisions
of such Code Section and related regulations.
VIII.4 CONSENT TO RECEIVE EARLY DISTRIBUTION.
(a) If the Participant's Vested Interest exceeds five
thousand dollars ($5,000), either at the time of the
current distribution or at the time of a prior
distribution, no distribution shall occur prior to
the Participant's Normal Retirement Age, unless he
elects to receive the distribution.
(b) The Plan must provide the Participant with a notice
of his right, and a Participant may waive his right
in writing, to defer the receipt of the distribution
no less than thirty (30) and no more than ninety (90)
days
- 37 -
before the date of the distribution.
(c) The consent of the Participant must not be made
(i) Before he receives the notice, or
(ii) More than ninety (90) days before the date
of the distribution.
(d) A Participant may revoke an election to defer
receiving benefits at any time, so as to accelerate
the timing of the payment of his benefits.
(e) This consent requirement shall not apply in the case
of the
(i) Death of the Participant, or
(ii) Termination of the Plan, provided neither
the Company nor any Affiliated Company
maintains any other defined contribution
plan, other than an employee stock ownership
plan. If the Participant does not consent to
an immediate distribution from this Plan,
his benefit shall be transferred to the
other defined contribution plan.
VIII.5 REQUIREMENT OF SPOUSAL CONTENT.
(a) In the event of the death of a Participant, his
benefit shall be paid to a Beneficiary other than his
surviving Spouse only if the requirements of
Subparagraphs (i) or (ii) below are satisfied.
(i) The requirements of this Subparagraph (i)
are satisfied if the requirements of Clauses
(A), (B) and (C) below are met.
(A) The Spouse of the Participant
consents in writing to the
designation of Beneficiary.
(B) The election designates a
Beneficiary (or a form of benefits)
which may not be changed without
spousal consent (or the spousal
consent expressly permits
designations without any
requirement of further consent by
the Spouse).
(C) The Spouse's consent acknowledges
the effect of the designation and
is witnessed by a Plan
Representative or a notary public.
(ii) The requirements of this Subparagraph (ii)
are satisfied if it is established to the
satisfaction of a Plan Representative that
the
- 38 -
consent required by Subparagraph (i) above
may not be obtained--
(A) Because there is no Spouse,
(B) Because the Spouse cannot be
located, or
(C) Because of such other circumstances
as may be set forth in regulations
under Code Section 417(a)(2).
(b) Any consent by a Spouse (or establishment that the
consent of a Spouse may not be obtained) under the
above rules will be effective only with respect to
that Spouse.
(c) For purposes of this Section 8.5, "Plan
Representative" shall mean the person or persons
designated by the Administrative Committee to Witness
the execution of such documents.
VIII.6 NO BENEFICIARY DESIGNATION.
(a) The rules of Paragraph (b) below shall apply to the
distribution of a Participant's Vested Interest if-
(i) The deceased Participant failed to designate
a Beneficiary,
(ii) The Administrative Committee is unable to
locate a designated Beneficiary,
(iii) The Beneficiary predeceased the Participant,
or
(iv) The designation of the Beneficiary by the
Participant is legally ineffective.
(b) In the event the rules of Paragraph (a) above apply,
then any distribution on behalf of a Participant
shall be paid to the Participant's estate.
VIII.7 DISTRIBUTIONS TO PARTIALLY VESTED PARTICIPANTS. The following
rules shall apply if a Participant incurs a Severance prior to
becoming fully vested.
(a) In the event that a distribution of his Employer
Matching Account or Employer Profit Sharing Account
is made to a Participant at a time when he is not
fully vested in such Accounts, the nonvested portion
of the Participant's Account shall be forfeited in
accordance with the rules of Article VII above.
(b) A Participant who received a distribution described
in Paragraph (a) above
- 39 -
may recontribute the amount of the distribution he
received. The repayment must be made (if at all),
however, not later than the date specified below.
(i) In the case of a distribution upon
Severance, the earlier of-
(A) The fifth (5th) anniversary of his
Reemployment Commencement Date, or
(B) The date on which he incurs five
(5) consecutive Breaks in Service.
(ii) In any other case, the fifth (5th)
anniversary of the date of the withdrawal.
(c) If the Participant repays the amount of the
distribution within the prescribed time period, the
amount of his Company Contributions Account balance
shall be completely restored. Neither the amount
recontributed nor the Account balance (previously
forfeited) shall be adjusted for gains, losses, or
interest in the interim period.
(d) If the Participant does not repay the amount of the
distribution and he incurs a second Severance prior
to becoming fully vested, the amount to be
distributed to him shall be equal to the sum of-
(i) The amount in his Account as of the date of
the second distribution, and
(ii) The amount previously distributed to him,
multiplied by his vested percentage, but
reduced by the amount previously distributed
to him.
(e) Forfeitures shall be used as provided in Sections 6.7
and 6.8 above.
VIII.8 DISTRIBUTION OF SALARY SAVINGS CONTRIBUTION ACCOUNTS.
(a) Notwithstanding anything in this Plan to the
contrary, a Participant's Salary Savings Contribution
Account may not be distributed prior to the
occurrence of the earliest of any of the events
described below:
(i) Separation from service, death, or
disability;
(ii) Termination of the Plan without
establishment of a successor plan (as
defined in the regulations under Section
401(k) of the Code);
- 40 -
(iii) Sale of substantially all of the assets used
by the Company in a trade or business
(applicable only to the Employees who
continue employment with the corporation
acquiring such assets); or
(iv) Sale of the Company's interest in a
subsidiary corporation (applicable only to
the transferred Employees).
Distributions made pursuant to Subparagraphs (iii) or
(iv) must be made by the end of the second calendar
year after the end of the calendar year in which he
disposition occurred. Furthermore, distributions made
pursuant to Subparagraphs (ii), (iii) or (iv) above
must be made in the form of a lump sum distribution.
(b) Pursuant to rules and procedures prescribed by the
Administrative Committee, a Participant may make
withdrawals from his Salary Savings Contribution
Account if he incurs a hardship under the rules of
Section 8.9 below. Only the amount of the
Participant's Salary Savings Contributions and the
interest accrued before January 1, 1989 may be
distributed.
VIII.9 HARDSHIP DISTRIBUTIONS. A Participant will be entitled to
receive a distribution of his Salary Savings Contributions
because of a hardship only in accordance with the provisions
of this Section 8.9. The distribution must both made on
account of an immediate and heavy financial need (as
determined under Paragraph (a) below) and be necessary to
satisfy that need (as determined under Paragraph (b) below).
(a) The determination of whether a Participant has an
immediate and heavy financial need will be made on
the basis of all relevant facts and circumstances.
The need may still qualify even if it was reasonably
foreseeable or was voluntarily incurred by the
Participant. A distribution on account of any of the
following reasons will automatically qualify:
(i) Medical expenses (described in Section
213(d) of the Code) incurred by the
Participant, his Spouse, or Dependent (as
defined in Section 152 of the Code) or
necessary for these persons to obtain
medical care;
(ii) Costs directly related to the purchase of
the principal residence for the Participant
(excluding mortgage payments);
(iii) Payment of tuition and related educational
fees for the next twelve (12) months of
post-secondary education for the
Participant, or for his Spouse, children, or
dependents (as defined in Section 152 of the
Code); or
(iv) Need to prevent the eviction of the
Participant from his principal
- 41 -
residence or foreclosure on the mortgage on
his principal residence.
Furthermore, the amount of the distribution may
include any amounts necessary to pay the taxes
reasonably anticipated to result from the
distribution.
(b) Except as is provided below, the determination as to
whether a distribution is necessary to satisfy an
immediate and heavy financial need is determined on
the basis of the facts and circumstances. A
distribution will not satisfy this requirement if-
(i) The amount of the distribution is in excess
of the amount required to relieve the
financial need, or
(ii) The need may be satisfied from other
resources that are reasonably available to
the Participant.
(c) A distribution will qualify under Paragraph (b) above
if the Participant makes the representations that the
need cannot be relieved-
(i) Through reimbursement or compensation by
insurance or otherwise;
(ii) By reasonable liquidation of the
Participant's assets, to the extent the
liquidation itself would not cause an
immediate and heavy financial need. For this
purpose, the Participant's resources shall
include those of his Spouse and minor
children that are reasonably available to
him;
(iii) By cessation of his Salary Savings
Contributions;
(iv) By other distributions or nontaxable loans
from plans maintained by the Company or any
other employer; or
(v) By borrowing from commercial sources on
reasonable commercial terms.
The Administrative Committee may rely upon the
Participant's representations, unless it has actual
knowledge that the representation is untrue.
(d) A distribution will automatically be deemed to meet
the requirements of Paragraphs (a) and (b) above if
all of the following conditions are satisfied:
- 42 -
(i) The distribution is not in excess of the
immediate and heavy financial need of the
Participant;
(ii) The Participant has obtained all
distributions, other than hardship
distributions, and all nontaxable loans
currently available under all tax-qualified
retirement plans maintained by the Company;
(iii) The Plan and all other plans of deferred
compensation (whether or not tax-qualified)
maintained by the Company, provide that the
Participant's Salary Savings Contributions
will be suspended for at least twelve (12)
months after receipt of the hardship
distribution.
Upon expiration of the 12-month suspension
period a Participant will be permitted to
resume making Salary Savings Contributions.
This restriction will not apply to mandatory
contributions to defined benefit plans, or
to contributions to health and welfare
benefit plans (including cafeteria plans
under Section 125 of the Code, except to the
except that the cafeteria plan offers a cash
or deferred arrangement under Section 401(k)
of the Code).
The Participant will still be treated as
being eligible to participate in this Plan
for purposes of the Average Deferral
Percentage Tests of Section 5.3 and the
Average Contribution Percentage Tests of
Section 5.7 above; and
(iv) The Plan, and all other tax qualified
retirement plans maintained by the Employer,
preclude the Participant from making pre-tax
contributions for the calendar year
following the calendar year in which the
hardship distribution was made in excess of
the amount determined under Clause (A)
below.
(A) The Participant's maximum pre-tax
contributions for the next calendar
year will be the maximum Elective
Deferral amount permitted under
Section 5.2 for such year reduced
by.the amount of the Participant's
pre-tax contributions for the prior
calendar year.
- 43 -
VIII.10 DISTRIBUTIONS DUE TO DISABILITY.
If a Participant has a Severance due to Disability, he shall
become fully vested in his Account. His Account shall be
payable as provided under Articles VIII and IX except that
benefits shall commence no later than 60 days after the close
of the Plan Year in which the Severance occurred or, if later,
60 days after the earliest date on which the value of his
Account can be determined.
In the event of the full and complete recovery from Disability
of a former Participant prior to his Normal Retirement Date,
where such recovery is certified to the Administrative
Committee by competent medical authority satisfactory to the
Administrative Committee, and his subsequent rehire by the
Company, he shall commence participation in the Plan upon his
Reemployment Commencement Date and for purposes of vesting of
Company Contributions shall be credited for all Years of
Service earned prior to the Disability. Any unpaid Account
balance due to the Participant because of the Disability shall
remain fully vested.
VIII.11 INABILITY TO LOCATE PARTICIPANT OR BENEFICIARY.
(a) If the Participant or Beneficiary to whom benefits
are to be distributed cannot be located, the
Administrative Committee will cause the benefits to
be forfeited after three (3) years.
(b) In the event that an unlocatable Participant or
Beneficiary is later located, the benefits that were
forfeited shall be reinstated, without regard for any
gains or losses during the interim period.
VIII.12 PAYEES UNDER LEGAL DISABILITY.
(a) The Administrative Committee may have the payment, or
any part of it, made to the person(s) or institution
that it believes is caring for or supporting a payee
if the Administrative Committee believes that any
payee is
(i) A minor, or
(ii) Legally incapable of giving a valid receipt
and discharge for any payment due him.
(b) Any such payment shall be a payment for the account
of the payee and shall, to the extent thereof, be a
complete discharge of any liability under the Plan to
the payee.
VIII.13 NOTICE REGARDING TAX TREATMENT OF DISTRIBUTIONS. The Plan
Administrator
- 44 -
shall provide a written explanation regarding the Code
provisions relating to the tax treatment of distributions to
each distributee receiving a distribution any portion of which
may be rolled over tax-free to another tax qualified
retirement plan or to an individual retirement account.
VIII.14 MAILING OF PAYMENTS. All payments under the Plan shall be
delivered in person or mailed to the last address of the
Participant (or, in the case of the death of the Participant,
to the last address of his Beneficiary). Each Participant
shall be responsible for furnishing the Administrative
Committee with his current address and the name and current
address of his Beneficiary.
VIII.15 WITHHOLDING FOR TAXES. Any payments from the Plan may be
subject to withholding for taxes as may be required by any
applicable federal or state law.
ARTICLE IX
ANNUITY REQUIREMENTS
IX.1 DEFINITIONS.
(a) "Annuity Starting Date" means-
(i) The first day of the first period for which
an amount is received as an annuity, or
(ii) In the case of a benefit not payable in the
form of an annuity, the first day on which
all events have occurred which entitle the
Participant to the benefit.
(b) "Applicable Election Period" means the ninety (90)
day period ending on the Annuity Starting Date.
(c) "Qualified Joint and Survivor Annuity" means an
annuity for the life of the Participant with a
survivor annuity for the life of the Spouse which is
fifty percent (50%) of the amount of the annuity
which is payable during the joint lives of the
Participant and the Spouse.
IX.2 FORM OF BENEFITS PROVIDED.
(a) In the case of a Participant with a Vested Interest
in the Plan who does not die before his Annuity
Starting Date, his benefit shall be paid in the form
of a lump sum payment of cash or in a combination of
cash and Company Stock.
(b) In the case of a married Participant with a Vested
Interest who does not die
- 45 -
before his Annuity Starting Date and who elects not
to receive his benefit in the form provided under
Section 9.2(a) above, his benefit shall be paid in
the form of a Qualified Joint and Survivor Annuity.
(c) Provided the requirements of Section 9.4 below are
met and, for a married Participant, notwithstanding
Section 9.2(b) above, a Participant may elect that
his benefit be paid in the form of substantially
equal monthly or annual installments of cash or cash
and shares of Company Stock converted to cash over a
period not to exceed the Participant's life
expectancy or, in the case of a married Participant,
the joint life expectancy of the Participant and his
spouse. If the Participant dies after installments
have commenced, any unpaid installments shall
continue to be paid to the Participant's Beneficiary
according to the same schedule until all scheduled
payments have been made to the Participant and his
Beneficiary.
IX.3 DISCLOSURE REQUIREMENTS.
(a) Within a reasonable period of time before the
Participant's Annuity Starting Date (and consistent
with regulations under Section 417(a)(3)(a) of the
Code) each married Participant shall receive a
written explanation of-
(i) The terms and conditions of the Qualified
Joint and Survivor Annuity,
(ii) The Participant's right to make, and the
effect of, an election under Section 9.2
above to waive the Qualified Joint and
Survivor Annuity form of benefit, and
(iii) The rights of the Participant's Spouse under
Section 9.2 above.
(b) The person receiving the documents described in
Paragraph (a) above will have sixty (60) days from
the date of delivery of the written explanation to
request in writing additional information concerning
the specific financial effect of the election. The
Administrative Committee will honor one (1) such
request from each person and will furnish the
requested information within thirty (30) days of the
receipt of the written request.
- 46 -
IX.4 CONSENT TO RECEIVE EARLY DISTRIBUTION.
A distribution shall not immediately occur prior to the
Participant's Normal Retirement Age where the present value of
the Participant's Vested Interest exceeds five thousand
dollars ($5,000) unless the Participant and the Spouse (or
surviving Spouse) of the Participant elect to receive the
distribution (in a manner consistent with the regulations
under Section 417 of the Code) within ninety (90) days prior
to the distribution.
IX.5 DIRECT ROLLOVERS.
(a) Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a distributee's
election under this Article IX, a distributee may
elect, at the time and in the manner prescribed by
the Plan administrator, to have any portion of an
eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee
in a direct rollover.
(b) Definitions:
(i) Eligible rollover distribution:
An eligible rollover distribution is any
distribution of all or any portion of the
balance to the credit of the distributee,
except that an eligible rollover
distribution does not include any
distribution that is one of a series of
substantially equal periodic payments (not
less frequently than annually) made for the
life (or life expectancy) of the distributee
or the joint lives (or joint life
expectancies) of the distributee and the
distributee's designated beneficiary, or for
a specified period often 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 includable in gross income
(determined without regard to the exclusion
for net unrealized appreciation with respect
to employer securities).
(ii) Eligible retirement plan:
An eligible retirement plan is an individual
retirement account described in section
408(a) of the Code, an individual retirement
annuity described in section 408(b) of the
Code, or a qualified trust described in
section 401(a) of the Code, that accepts the
distributee's eligible rollover
distribution. However, in the case of an
eligible rollover distribution to the
surviving spouse, an eligible retirement
plan is an individual retirement account or
individual retirement annuity.
- 47 -
(iii) Distributee:
A distributee includes an employee or former
employee. In addition, the employee's or
former employee's surviving spouse and the
employee's or former employee's spouse or
former spouse who is the alternate payee
under a qualified domestic relations order,
as defined in section 414(p) of the Code,
are distributees with respect to the
interest of the spouse or former spouse.
(iv) Direct rollover:
A direct rollover is a payment by the Plan
to the eligible retirement plan specified by
the distributee.
IX.6 DISTRIBUTION OF COMPANY STOCK.
Distribution of a Participant's ESOP Contribution Account and
Employer Matching Contribution Account may be made in cash or
in shares of Company Stock, or both, provided, however, that
if a Participant or Beneficiary so demands, such benefit shall
be distribute in the form of shares of Company Stock, plus
cash in lieu of fractional shares. Any balance in a
Participant's ESOP Contribution
Account and Employer Matching Contribution Account shall be
applied to acquire the maximum number of whole shares of
Company Stock at the then fair market value. Any remaining
balance shall be distributed in cash.
The Administrative Committee shall advise the Participant or
his Beneficiary in writing prior to any distribution from his
ESOP Contribution Account or Employer Matching Contribution
Account of the right to demand that benefits from such
Accounts be paid in the form of Company Stock. If the
Participant or his Beneficiary fails to make such demand in
writing within 90 days after receipt of such written notice,
the Administrative Committee shall direct the Trustee to make
such distribution in cash.
ARTICLE X
TOP-HEAVY PLAN RULES
X.1 APPLICABILITY. Notwithstanding any provision in this Plan to
the contrary, the provisions of this Article X shall apply in
the case of any Plan Year in which the Plan is determined to
be a Top-Heavy Plan.
- 48 -
X.2 SPECIAL VALUATION RULES.
(a) For purposes of determining-
(i) The present value of the cumulative accrued
benefit of any Employee, or
(ii) The account balance of any Employee,
the present value or account balance shall be
increased by the aggregate distributions made with
respect to the Employee under the plan during the
five (5) year period ending on the Determination
Date. The preceding rule shall also apply to
distributions under a terminated plan that, if it had
not been terminated, would have been required to be
included in the Aggregation Group that includes the
transferee Plan.
(b) Any rollover contribution or similar transfer
initiated by the Employee and made after December
31,1983 to a plan shall not be taken into account
with respect, to the transferee plan for purposes of
determining whether the transferee plan is a
Top-Heavy Plan (or whether any Aggregation Group
which includes the transferee plan is a Top-Heavy
Group).
(c) If any individual-
(i) Is a Non-Key Employee with respect to any
plan for any plan year, but the individual
was a Key Employee with respect to the plan
for any prior plan year, or
(ii) Has not performed any services for the
Company or an Affiliated Company at any time
during the five (5) year period ending on
the Determination Date,
his accrued benefit and account balance shall not be
taken into account for purposes of determining
whether or not the plan is a Top-Heavy Plan.
X.3 MINIMUM CONTRIBUTIONS. For each Plan Year in which the Plan is
Top-Heavy, the minimum contributions for that year shall be
determined in accordance with the rules of this Section 10.3.
(a) Except as provided below, the minimum contribution
for each Participant who is a Non-Key Employee who is
employed on the last day Of the Plan Year shall be
not less than three percent (3%) of his Earnings,
regardless of the number of Hours of Service he
completes that Plan Year or his level of Earnings.
- 49 -
(b) The minimum required contribution under Paragraph (a)
above shall be reduced by the Company contributions
and forfeitures allocated to the Participant in any
other defined contribution plan included in the
Aggregation Group that includes the Plan; however,
Matching Contributions may not be taken into account.
(c) Subject to the following rules of this Paragraph (c),
the percentage set forth in Paragraph (a) above shall
not be required to exceed the percentage at which
contributions (including any Tax-Deferred
Contributions) are made (or are required to be made)
under the Plan for the year for the Key Employee for
whom the percentage is the highest for the year.
(i) For purposes of this Paragraph (c), all
defined contribution plans required to.be
included in an Aggregation Group shall be
treated as one plan.
(ii) The rules of this Paragraph (c) shall not
apply to any plan required to be included in
an Aggregation Group if the plan enables a
defined benefit plan to meet the
requirements of Sections 401(a)(4) or 410 of
the Code.
(d) The requirements of this Section 10.3 must be
satisfied without taking into account-
(i) Contributions under chapters 2 or 21 of the
Code, title II of the Social Security Act,
or any other Federal or State law, or
(ii) Salary Savings Contributions by Non-Key
Employees.
(e) In the event a Participant is covered by both a
defined contribution and a defined benefit plan
maintained by the Company or an Affiliated Company,
both of which are determined to be Top-Heavy, the
minimum benefit shall be provided under this Plan,
which shall be a contribution of at least five
percent (5%) of Compensation.
X.4 MINIMUM VESTING. For each Plan Year in which the Plan is
Top-Heavy, vesting shall be determined according to the
following schedule:
- 50 -
Years of Vested
Service Interest
------- --------
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
If the Plan is not Top-Heavy for a subsequent Plan Year, each
Participant's vested percentage shall not be less than his
vested percentage as of the last day of the last Plan Year in
which the Plan was Top-Heavy. If the Plan ceases to be
Top-Heavy, each Participant who has completed at least three
(3) Years of Service as of the first day of the first Plan
Year for which the Plan ceases to be Top-Heavy shall have the
right to have his Vested Interest determined in accordance
with the schedule contained in this Section 10.4 or the
schedule contained in Section 7.1, as provided under Section
17.3 as though the Plan's vesting schedule had been amended.
X.5 MAXIMUM ANNUAL ADDITION.
(a) Except as set forth below, in the case of any
Top-Heavy Plan, the rules of Sections 15.4(b)(ii) and
15.4(c)(ii) below shall be applied by substituting
"1.0" for "1.25".
(b) The rule set forth in Paragraph (a) above shall not
apply if the requirements of both Subparagraphs (i)
and (ii) are satisfied.
(i) The requirements of this Subparagraph (i)
are satisfied if the Plan would not be a
Top-Heavy Plan if "ninety percent (90%)"
were substituted for "sixty percent (60%)"
each place it appears in Section 2.58 above.
(ii) The requirements of this Subparagraph (ii)
are satisfied if the required minimum
contribution under Section 10.3 above would
be satisfied if it were applied by
substituting "four percent (4%)" for "three
percent (3%)" each place it appears therein.
(A) Notwithstanding the provisions of
the preceding sentence, in the case
of an Employee covered by both this
Plan and a defined benefit plan
maintained by the Company or an
Affiliated Company, both of which
are Top-Heavy, the minimum
contribution/benefit shall be
provided solely under this Plan,
which shall be applied by
substituting
- 51 -
"seven and one half percent
(7-1/2%)" for "three percent" each
place it appears in Section 10.3
above.
(c) The rules of Paragraph (a) shall not apply with
respect to any Employee for any Plan Year as long as
there are no-
(i) Annual Additions allocated to the Employee
under a defined contribution plan maintained
by the Company or an Affiliated Company, or
(ii) Accruals by the Employee under a defined
benefit plan maintained by the Company or an
Affiliated Company.
(d) The vesting schedule of Paragraph (a) above shall
apply, notwithstanding the Participant's withdrawal
of any mandatory contributions or in the event that
the Plan ceases to be Top-Heavy.
X.6 NON-ELIGIBLE EMPLOYEES. The rules of Section 10.3 above shall
not apply to any Employee--
(a) Included in a unit of Employees covered by an
agreement which the Secretary of Labor finds to be a
collective bargaining agreement between Employee
representatives and one or more employers, if there
is evidence that retirement benefits were the subject
of good faith bargaining between the Employee
representatives and the Company, or
(b) Whose employment was terminated before the Plan
became Top-Heavy.
ARTICLE XI
OPERATION AND ADMINISTRATION OF THE PLAN
XI.1 NAMED FIDUCIARIES. The provisions of this Section 11.1 shall
determine the various parties who are the "Named Fiduciaries"
(within the meaning of Section 402(a) of ERISA) of the Plan
and their respective responsibilities.
(a) The Board of Directors shall be the Named Fiduciary
with respect to appointing and/or removing the
Trustee, and the members of the Administrative
Committee.
(b) The Trustee shall be the Named Fiduciary with respect
to the management and investment of the assets of the
Plan, except to the extent that the Trustee is
subject to the directions of an Investment Manager,
the Administrative Committee or Participants.
- 52 -
(c) The Administrative Committee shall be the Named
Fiduciary with respect to all of the administrative
matters relating to the Plan, except the management
and investment of the assets of the Plan.
XI.2 COMPOSITION OF ADMINISTRATIVE COMMITTEE.
(a) The members of the Administrative Committee (who need
not be Participants or even Employees) shall be
appointed by the Board of Directors of the Company
and shall hold office until termination of such
status in accordance with the provisions of this
Article XI.
(b) The term of the office of each member of the
Administrative Committee shall be determined in
accordance with the following rules.
(i) Any member of the Administrative Committee
may resign at any time by giving written
notice to the other members and to the Board
of Directors, effective as of the date
indicated therein.
(ii) Any member of the Administrative Committee
may be removed by the Board of Directors at
any time.
(iii) In the case of a member of the
Administrative Committee who is also an
Employee of the Company, his status as a
member of the Administrative Committee shall
terminate as of the date of his Severance,
except as otherwise provided in resolutions
of the Board of Directors.
(c) Upon the death, resignation, or removal of any
Administrative Committee member, the Board of
Directors may appoint a successor. Notice of
appointment of a successor member shall be given by
the Company in writing to the Trustee and to the
other members of the Administrative Committee.
XI.3 ADMINISTRATIVE COMMITTEE'S POWERS. The Administrative
Committee shall have all powers necessary to supervise the
administration of the Plan and control its operations. In
addition to any powers and authority conferred on the
Administrative Committee elsewhere in the Plan or by law, the
Administrative Committee shall have the following powers and
authority:
(a) To allocate fiduciary responsibilities among the
Named Fiduciaries and to designate one or more other
persons, including Investment Managers, to carry out
fiduciary responsibilities.
(i) However, no allocation or delegation under
this Paragraph (a) shall be effective
- 53 -
(A) Until the person or persons to whom
the responsibilities have been
allocated or delegated agree to
assume the responsibilities, or
(B) With respect to Trustee
Responsibilities (within the
meaning of Section 405(c) of
ERISA);
(b) To employ such legal, actuarial, medical, accounting,
clerical and other assistance as.'it may deem
appropriate in carrying out the provisions of this
Plan, including one or more persons to render advice
with regard to any responsibility any member of the
Administrative Committee or any other fiduciary may
have under the Plan;
(c) To establish rules and procedures for the conduct of
the Administrative Committee's business and the
administration of this Plan; and
(d) To administer this Plan, to determine eligibility for
a benefit, to construe the terms of the Plan and to
decide all questions which may arise or which may be
raised under this Plan. The decisions of the
Administrative Committee shall be binding upon all
persons, to the maximum extent permitted under ERISA;
and
(e) To perform or cause to be performed such further acts
as it may deem to be necessary or appropriate to
administer the Plan.
(f) In addition to the Committee's other powers, it shall
also have the power and responsibility for exercising
the "Rights" that are allocated to each Participant's
ESOP account pursuant to the 2000 Rights Offering or
Subsequent Rights Offering and it shall also have the
power and responsibility for subscribing to any
overage that may exist with respect to such "Rights"
Offerings.
XI.4 REPORTING AND DISCLOSURE. The Plan Administrator shall be
responsible for the reporting and disclosure of information
required to be reported or disclosed pursuant to ERISA or any
other applicable law.
XI.5 MULTIPLE FIDUCIARY CAPACITIES. Any person or group of persons
may serve in more than one fiduciary capacity with respect to
the Plan.
XI.6 FUNDING POLICY.
(a) At periodic intervals the Administrative Committee
shall review the financial needs of the Plan and
shall determine a funding policy for the Plan
consistent with the objectives of the Plan.
- 54 -
(b) In establishing the funding policy, the
Administrative Committee shall review and take into
account-
(i) The short-term and long-term financial
objectives and liquidity requirements of the
Plan, determined by reference to the age and
tenure characteristics of the Participants,
(ii) The current and projected market conditions,
and
(iii) Such other considerations as appear
pertinent under the circumstances,
all with a view toward the realization by the Plan of
its maximum investment potential consistent with
prudent asset management and the need to pay benefits
in accordance with the terms of the Plan, taking into
account the ability of Participants to direct the
investment of the amounts in their Accounts.
XI.7 PROHIBITION AGAINST CERTAIN ACTIONS.
(a) In administering this Plan, the Administrative
Committee shall not discriminate in favor of Highly
Compensated Employees.
(b) The Plan Committees shall not cause the Plan to
engage in any transaction that constitutes a
nonexempt prohibited transaction under Section
4975(c) of the Code or ERISA Section 406(a).
(c) Any member of the Administrative Committee who is
also a Participant shall not be qualified to act or
vote on any matter relating solely to himself.
XI.8 COMMITTEE PROCEDURES.
(a) A majority of the members of the Administrative
Committee shall constitute a quorum, and any action
authorized by a majority of the members-
(i) Present at any meeting, or
(ii) In writing without a meeting,
shall constitute the actions of the Administrative
Committee.
(b) The Administrative Committee may designate one or
more of its members
- 55 -
("Designated Members") as authorized to execute any
document or documents on behalf of the Administrative
Committee. In such a case, the Administrative
Committee shall notify the Trustee of this action and
the name or names of the Designated Members.
XI.9 INDEMNIFICATION.
(a) To the maximum extent permitted by law, the Company
shall indemnify each member of the Board of Directors
and of the Administrative Committee and any other
Employee with duties under the Plan against expenses
(including any amount paid in settlement) reasonably
incurred by him in connection with any claims against
him by reason of the performance of his duties under
the Plan.
(b) This indemnity shall not apply if the individual
acted fraudulently or in bad faith in the performance
of his duties.
(c) Notwithstanding the above, the Company shall have the
right to select counsel and to control the
prosecution or defense of the suit. Furthermore, the
Company shall not be required to indemnify any person
for any amount incurred through any settlement or
compromise of any action unless the Company consents
in writing to the settlement or compromise.
(d) Payment of the indemnity, fees, or other expenses
shall be made solely from the assets of the Company,
and shall not be paid, directly or indirectly, from
the assets of the Plan.
XI.10 COMPENSATION OF COMMITTEE AND PLAN EXPENSES.
(a) Members of the Administrative Committee shall serve
without compensation unless the Board of Directors
shall otherwise determine. However, in no event shall
any member of the Administrative Committee who
receives full-time pay from the Company receive
compensation from the Plan for his services as a
member of the Administrative Committee, except for
reimbursement of expenses properly and actually
incurred.
(b) The expenses incurred in the administration of the
Plan, including but not limited to the expenses
incurred by the members of the administrative
committee in exercising their duties, shall be borne
by the Plan. However, the Company may elect to pay
these expenses.
- 56 -
XI.11 BONDING.
Members of the Administrative Committee and all other
Employees handling the assets of the Plan shall be bonded to
the extent required by Section 412 of ERISA or any other
applicable law.
XI.12 NOTICES AND COMMUNICATIONS.
(a) All communications from Participants to the
Administrative Committee shall be in writing, on
forms prescribed by the Administrative Committee.
(i) These documents shall be mailed or delivered
to the office designated by the
Administrative Committee, and shall be
deemed to have been given when received by
the office.
(b) Each communication directed to a Participant or
Beneficiary shall be in writing and may be delivered
in person or by mail.
(i) An item shall be deemed to have been
delivered and received by the Participant
three (3) days after the date when it is
deposited in the United States Mail with
postage prepaid, addressed to the
Participant or Beneficiary at his last
address of record with the Administrative
Committee.
XI.13 STANDARD OF CARE.
The Fiduciaries of the Plan (as defined in ERISA), including
the Trustee, the members of the Administrative Committee and
any Investment Manager, shall act in accordance with the
following standards of care and fiduciary responsibility
imposed under ERISA (to the extent they are applicable).
(a) Each fiduciary shall discharge his duties with
respect to the Plan solely in the interest of the
Participants and Beneficiaries, and-
(i) For the exclusive purposes of-
(A) Providing benefits to Participants
and their Beneficiaries, and
(B) Defraying reasonable expenses of
administering the Plan,
(ii) With the care, skill, prudence, and
diligence under the circumstances then
prevailing that a prudent man acting in a
like capacity and familiar with such matters
would use in the conduct of an enterprise of
a like character and with like aims,
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(iii) Subject to the exception for "eligible
individual account plans under Section
404(a)(2) of ERISA, by diversifying the
investments of the Plan so as to minimize
the risk of large losses, unless under the
circumstances it is clearly prudent not to
do so, and
(iv) In accordance with the terms of the Plan and
Trust Agreement, insofar as those documents
are consistent with the provisions of ERISA.
(b) A Fiduciary shall be liable for a breach of fiduciary
responsibility by another Fiduciary if-
(i) He participates knowingly in, or knowingly
undertakes to conceal an act or omission of
the other Fiduciary, knowing the act or
omission is a breach,
(ii) By his failure to fulfill his fiduciary
responsibilities, he has enabled the other
Fiduciary to commit a breach, or
(iii) He has knowledge of a breach by the other
Fiduciary, unless he makes reasonable
efforts under the circumstances to remedy
the breach
(c) The inclusion of this Section 11.14 in this document
is for the sole purpose of informing the appropriate
Fiduciaries of the standard of care that is demanded
of them under ERISA. It is not intended that this
provision impose any additional duties,
responsibilities, or liabilities upon such
Fiduciaries than would otherwise apply under ERISA.
ARTICLE XII
MERGER OF COMPANY, MERGER OF PLAN
XII.1 EFFECT OF REORGANIZATION OR TRANSFER OF ASSETS.
(a) in the event of a consolidation, merger, sale,
liquidation, or other transfer of substantially all
of the operating assets of the Company to any other
company, the ultimate successor to the business of
the Company shall automatically be deemed to have
elected to continue this Plan in full force and
effect, in the same manner as if the Plan had been
adopted by resolution of its board of directors.
(b) The presumption set forth in Paragraph (a) above
shall not apply if the successor, by resolution of
its board of directors, elects not to so continue
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this Plan in effect. In such a case, the Plan shall
terminate as of the effective date set forth in the
board resolution.
XII.2 PLAN MERGER RESTRICTION.
(a) This Plan shall not merge or consolidate with, or
transfer its assets and/or liabilities to any other
plan ("Transferee Plan") unless each affected
Participant in this Plan would receive a benefit from
the Transferee Plan immediately after the merger,
consolidation, or transfer (if the Transferee Plan
was then terminated) which is equal to or greater
than the benefit he would have been entitled to
receive immediately before the merger, consolidation,
or transfer under this Plan (if this Plan had then
terminated).
(b) Provided the requirements set forth in Paragraph (a)
above are satisfied, the Administrative Committee may
direct that the Plan may merge, consolidate with, or
transfer its assets and/or liabilities to, or receive
such a transfer from another tax-qualified retirement
plan.
ARTICLE XIII
TERMINATION AND DISCONTINUANCE OF CONTRIBUTIONS
XIII.1 PLAN TERMINATION.
(a) The Company may terminate the Plan at any time by an
instrument in writing executed in the name of the
Company by an officer duly authorized to execute the
instrument.
(b) The rights of all Employees who are employed by the
Company on the date of the termination of the Plan
shall automatically become fully vested as of that
date.
XIII.2 DISCONTINUANCE OF CONTRIBUTIONS.
On and after the effective date of a discontinuance of
Employer Contributions, the rights of all Employees who are
employed by the Company on the date of the discontinuance
shall automatically become fully vested as of that date.
XIII.3 REPLACEMENT PLAN.
The provisions of Sections 13.1 and 13.2 above shall not apply
in the event that the Plan is replaced by a comparable plan.
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XIII.4 PARTIAL TERMINATION.
(a) In the event of a partial termination of the Plan
within the meaning of Code Section 411(d)(3), all
Employees who are employed by the Company on the date
of the partial termination and who are affected by
the partial termination shall become fully vested as
of that date.
(b) This Section 13.4 is intended solely to meet the
requirements of Code Section 411 and is not intended
to create, nor shall it be construed as creating, any
contractual rights whatsoever.
ARTICLE XIV
APPLICATION FOR BENEFITS
XIV.1 CLAIM FOR BENEFITS.
(a) The Administrative Committee may require any person
claiming benefits under the Plan ("Claimant") to
submit an application therefor, together with such
other documents and information as the Administrative
Committee may require.
(b) Within ninety (90) days following receipt of the
application and all necessary documents and
information, the Administrative Committee's
authorized delegate reviewing the claim shall furnish
the Claimant with written notice of the decision
rendered with respect to the application.
(c) Should special circumstances require an extension of
time for processing the claim, written notice of the
extension shall be furnished to the Claimant prior to
the expiration of the initial ninety (90) day period.
(i) The notice shall indicate the special
circumstances requiring an extension of time
and the date by which a final decision is
expected to be rendered.
(ii) In no event shall the period of the
extension exceed ninety (90) days from the
end of the initial ninety (90) day period.
XIV.2 CONTENT OF DENIAL. In the case of a denial of the Claimant's
application, the written notice shall set forth:
(a) The specific reasons for the denial;
(b) References to the Plan provisions upon which the
denial is based;
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(c) A description of any additional information or
material necessary for perfection of the application
(together with an explanation of why the material or
information is necessary); and
(d) An explanation of the Plan's claim review procedure.
XIV.3 APPEALS.
(a) In order to appeal the decision rendered with respect
to his application for benefits or with respect to
the amount of his benefits, the Claimant must follow
the appeal procedures set forth in this Section 14.3.
(b) The appeal must be made, in writing-
(i) In the case where the claim is expressly
rejected, within sixty-five (65) days after
the date of notice of the decision with
respect to the application, or
(ii) In the case where the claim has neither been
approved nor denied within the applicable
period provided in Section 14.1 above,
within sixty-five (65) days after the
expiration of the period.
(c) The Claimant may request that his application be
given full and fair review by the Administrative
Committee. The Claimant may review all pertinent
documents and submit issues and comments in writing
in connection with the appeal.
(d) The decision of the Administrative Committee shall be
made promptly, and not later than sixty (60) days
after the Administrative Committee's receipt of a
request for review, unless special circumstances
require an extension of time for processing. In such
a case, a decision shall be rendered as soon as
possible, but not later than one hundred twenty (120)
days after receipt of the request for review.
(e) The decision on review shall be in writing and shall
include specific reasons for the decision, written in
a manner designed to be understood by the Claimant,
with specific references to the pertinent Plan
provisions upon which the decision is based.
XIV.4 EXHAUSTION OF REMEDIES. No legal action for benefits under the
Plan may be brought unless and until the Claimant has
exhausted his remedies under this Article XIV.
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ARTICLE XV
LIMITATIONS ON CONTRIBUTIONS
XV.1 GENERAL RULE.
(a) Notwithstanding anything to the contrary contained in
this Plan, the total Annual Additions under this Plan
to a Participant's Accounts for any Plan Year shall
not exceed the lesser of:
(i) Thirty thousand dollars ($30,000) or such
greater amount as may be permitted pursuant
to Code Section 415(d)(1) ("Dollar
Limitation"); or
(ii) Twenty-five percent (25%) of the
Participant's Earnings ("Percentage
Limitation").
(b) Because the Limitation Year is also the Plan Year, in
the case of a Plan Year of less than twelve (12)
months duration, the Dollar Limitation shall be
prorated by multiplying it by a fraction, the
numerator of which is the number of months in the
short Plan Year and the denominator of which is
twelve (12).
(c) The Dollar Limitation shall be adjusted annually by
the Internal Revenue Service for increases in the
cost of living, effective January l of the year for
which the adjustment is made. This adjustment shall
apply to the Limitation Year ending with or within
that calendar year.
(d) This Article XV is intended to comply with Code
Section 415 and regulations thereunder and any
discrepancy between the provisions of this Plan and
the provisions of Code Section 415 and regulations
thereunder shall be resolved so as to give full
effect to the provisions of such Code Section and
related regulations.
XV.2 DEFINITION OF EARNINGS. For purposes of this Article XV, a
Participant's "Earnings" includes all amounts that are subject
to income tax withholding under Section 3401 of the Code,
determined without regard to any rules that limit the
remuneration based on the-
(a) Nature or location of the employment, or
(b) Services performed.
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XV.3 OTHER DEFINED CONTRIBUTION PLANS.
(a) If the Company or an Affiliated Company is or was
contributing to any other defined contribution plan,
then the Participant's Annual Additions in the other
plan shall be aggregated with the Participant's
Annual Additions under this Plan for purposes of
applying the limitations of this Article XV.
(b) The rule of Paragraph (a) above shall apply whether
or not the other defined contribution plan has been
terminated.
XV.4 (DELETED EFFECTIVE JANUARY 1, 2000).
XV.5 ADJUSTMENTS FOR EXCESS ANNUAL ADDITIONS. Subject to the
limitations of Treasury Regulation Section 1.415-6, in the
event the Annual Additions to a Participant's Accounts under
this Plan would exceed the applicable limitations described
above in this Article XV, the excess amount shall be subject
to the following rules.
(a) Where there is an excess Annual Addition in a
Participant's account, the excess amount must be used
to reduce employer contributions for the next
limitation year (and succeeding limitation years, as
necessary) for that Participant if that Participant
is covered by the Plan as of the end of the
limitation year.
(b) If the Participant is not covered by the Plan as of
the end of the limitation year, then the excess
amount must be held unallocated in a suspense account
for the limitation year and allocated and reallocated
in the next limitation year to all of the remaining
Participants in the Plan.
(c) The excess amounts must be used to reduce Company
contributions for the next limitation year (and
succeeding limitation years, as necessary) for all of
the Participants in the Plan. Excess amounts may not
be distributed to Participants or former
Participants.
Pending allocation of any contribution made to the
ESOP made during the Plan Year, the Administrative
Committee shall exercise all Rights, powers and
privileges relating to such unallocated contribution,
including, but not limited to, the decision to
purchase additional shares of Company Stock with
unallocated cash pursuant to the 2000 Rights Offering
or Subsequent Rights Offering made by the Company.
The Administrative Committee shall make the decision
to exercise any offer, option or right to acquire
additional shares of Company Stock for the ESOP in
accordance with the terms of such offer, option or
right, including the decision of whether or not to
purchase additional shares of Company Stock pursuant
to the 2000 Rights Offering or any Subsequent Rights
Offering made during Plan
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Year.
(d) The Suspense Account shall be exhausted before any
Company Contributions or Salary Savings Contributions
shall be allocated to the Accounts.
(e) The Trustee shall segregate any amounts held in the
Suspense Account from other assets of the Plan and
may place the cash portions thereof in an
interest-bearing account in any bank or savings and
loan institution, including the Trustee's own banking
department (if applicable).
(i) Any amounts held in the Suspense Account
shall not participate in any allocation of
Forfeitures, or net income or loss of other
assets of the Trust Fund under Article VI
above.
(f) In the event the Plan shall terminate at a time when
all amounts in the suspense Account have not been
allocated to the Accounts of the Participants, the
amounts in the suspense Account shall be applied as
follows:
(i) The amount in the Suspense Account shall
first be allocated, as of the date of the
termination of the Plan, to Participants on
the same basis as specified in Paragraph (c)
above, with the allocation to be made to the
maximum extent permissible under the
Limitations of this Article XV; and
(ii) If after those allocations have been made,
any further amounts remain in the Suspense
Account, the residue shall revert to the
Company in accordance with the applicable
Treasury Regulations.
ARTICLE XVI
RESTRICTION ON ALIENATION
XVI.1 GENERAL RESTRICTIONS AGAINST ALIENATION. Benefit under the
Plan may not be assigned or alienated. The preceding sentence
shall not apply with respect to a "Qualified Domestic
Relations Order" described below.
XVI.2 QDRO DEFINITION. A "Qualified Domestic Relations Order" is a
judgment, decree, or order (including approval of a property
settlement agreement) that-
(a) Creates or recognizes the existence of an Alternate
Payee's right to, or assigns to an Alternate Payee
the right to receive all or a portion of the benefits
payable with respect to a Participant,
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(b) Relates to the provision of child support, alimony
payments, or marital property rights to a Spouse,
child, or other dependent of a Participant,
(c) Is made pursuant to a State domestic relations law
(including a community property law), and
(d) Clearly specifies:
(i) The name and last known mailing address (if
any) of the Participant and the name and
mailing address of each Alternate Payee
covered by the order (if the Plan
Administrator does not have-reason to know
that address independently of the order);
(ii) The amount or percentage of the
Participant's benefits to be paid to each
Alternate Payee, or the manner in which the
amount or percentage is to be determined;
(iii) The number of payments or period to which
the order applies; and
(iv) Each plan to which the order applies.
XVI.3 IMPERMISSIBLE TERMS. A domestic relations order is not a
Qualified Domestic Relations Order if it requires-
(a) The Plan to provide any type or form of benefit, or
any option not otherwise provided under the Plan
(b) The Plan to provide increased benefits (determined on
the basis of actuarial value), or
(c) The payment of benefits to an Alternate Payee that
are required to be paid to another Alternate Payee
under a previous Qualified Domestic Relations Order.
XVI.4 SPECIAL RULES.
(a) A domestic relations order will not be considered to
fail to satisfy the requirements of Section 16.3(a)
above with respect to any payment made before a
Participant has separated from service solely because
the order requires that payment of benefits be made
to an Alternate Payee-
(i) In the case of any payment before a
Participant has separated from service, on
or after the date on which the Participant
attains (or would have attained) Earliest
Retirement Age. "Earliest Retirement Age"
means the earlier of--
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(A) The date on which the Participant
is entitled to a distribution, or
(B) The later of
(I) The date the Participant
attains age fifty (50), or
(II) The earliest date on which
the Participant could begin
receiving benefits if he
separated from service,
(ii) As if the Participant had retired on the
date on which such payment is to begin under
the order (based on the value of the
Participant's Account balances at that
time), and
(iii) In any form in which the benefits may be
paid under the Plan to the Participant.
(b) However, if the Participant dies before his Earliest
Retirement Age, the Alternate Payee is entitled to
benefits (as the Beneficiary of the Participant) only
if the Qualified Domestic Relations Order requires
survivor benefits to be paid to the Alternate Payee.
XVI.5 PROCEDURES.
(a) In the case of any domestic relations order received
by the Plan-
(i) The Plan Administrator shall promptly notify
the Participant and any Alternate Payee of
the receipt of the order and the Plan's
procedures for determining the qualified
status of domestic relations orders, and
(ii) Within a reasonable period after the receipt
of the order, the Plan Administrator shall
determine whether the order is a Qualified
Domestic Relations Order and shall notify
the Participant and each Alternate Payee of
the determination.
(b) The Plan Administrator shall establish reasonable
procedures to determine the qualified status of
domestic relations orders and to administer
distributions under Qualified Domestic Relations
Orders.
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XVI.6 SEGREGATION OF FUNDS.
(a) During any period in which the issue of whether a
domestic relations order is a Qualified Domestic
Relations Order is being determined (by the Plan
Administrator, by a court of competent jurisdiction,
or otherwise), the Plan Administrator shall
separately account for the amounts which would have
been payable to the Alternate Payee during the period
if the order had been determined to be a Qualified
Domestic Relations Order.
(b) If within the eighteen (18) month period beginning
with the date on which the first payment would be
required to be made under the domestic relations
order, the order (or a modification thereof) is
determined to be a Qualified Domestic Relations
Order, the Plan Administrator shall pay the
segregated amounts (including any interest thereon)
to the person or persons entitled thereto.
(c) If within the eighteen (18) month period beginning
with the date on which the first payment would be
required to be made under the domestic relations
order-
(i) It is determined that the order is not a
Qualified Domestic Relations Order, or
(ii) The issue as to whether or not the order is
a Qualified Domestic Relations Order is not
resolved,
then the Plan Administrator shall pay the segregated
amounts (including any interest thereon) to the
person or persons who would have been entitled to the
amounts if there had been no order, or restore the
amount to the Participant's Account, whichever is
applicable.
(d) Any determination that an order is a Qualified
Domestic Relations Order that is made after the close
of the eighteen (18) month period shall be applied
prospectively only.
(e) Upon the receipt of information that any Participant
is anticipating or undergoing a proceeding to
establish a legal separation or divorce from his
Spouse, the Administrative Committee may (but is not
required to) elect to prohibit the Participant from
receiving any distributions until the rights of the
Participant and his Spouse to the amounts in the
Participant's Accounts are finally determined.
XVI.7 LOANS. The Administrative Committee may, upon written
application of a Participant, authorize a loan to such
Participant subject to the provisions of this Section 16.7 and
to such other written procedures and regulations as may be
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promulgated by the Administrative Committee and which shall
form a part of this Plan.
(a) Source of Loan:
A loan to a Participant shall be made from, in order,
each until exhausted, his Salary Savings Contribution
Account, his Rollover Account, his Hammond Company
Matching Account and his remaining Employer Matching
Contribution Account.
(b) Maximum Amount:
A Participant's loan may not exceed the lesser of:
(1) $50,000 reduced to the extent of (i) the
highest outstanding loan balance of the
Participant's loans outstanding during the
immediately prior 12-month period (ending
the day before the loan is granted) over,
(ii) the total of the all outstanding loans
the day the loan is granted;
or
(2) fifty percent (50%) of the Participant's
vested balance in the Plan.
For purposes of this Section, balances shall be
determined as of the Valuation Date coincident with
or next preceding the date of the Participant's
application.
(c) Minimum Amount:
No loan shall be made under this Section 16.7 for an
amount which is less than five hundred dollars
($500).
(d) Frequency of Loans:
A Participant may have only one (1) loan outstanding
at any time and one (1) loan may be approved during
any calendar.year. At least thirty (30) days must
elapse between the full repayment of a loan and the
approval of another loan.
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(e) Availability:
Loans shall be made available to all Participants on
a reasonably equitable basis without regard to an
individual's race, color, religion, sex, age or
national origin and such availability shall be
communicated to all Participants. The Administrative
Committee shall not approve a loan to a Participant
unless the Participant can demonstrate that he has an
immediate and heavy financial need as provided in
Section 8.9(a).
(f) Spousal Consent:
The Administrative Committee shall not approve a loan
to a married Participant unless the Participant's
Spouse consents to the loan as provided under Section
8.5 within the 90-day period ending on the date the
loan is secured.
(g) Interest Rate:
For each calendar month, a rate of interest equal to
the prime lending rate as published in The Wall
Street Journal on the last business day of the
previous month, plus one percent (1%), shall be
charged on each loan.
(h) Duration:
All loan agreements shall provide for repayment
within five (5) years from the date of the loan.
Notwithstanding the foregoing, if the loan is for the
purchase of the Participant's primary residence, the
loan agreement may provide for repayment within a
period not to exceed thirty (30) years from the date
of the loan.
(i) Security:
Each loan shall be secured by the Participant's
Vested Interest remaining in the Plan.
(j) Investments:
Each loan shall be treated as a separate investment
of the Participant's Account. Amounts shall be taken
pro-rata from the Investment Funds. Payments by a
Participant on any such loan shall be credited to
such Account in the various Funds in the same
proportion as the Participant's Salary Savings
Contributions are made to such Funds at the time such
loan payments are made.
- 69 -
(k) Other Rules:
(1) All qualified plans of the Company and
Affiliated Companies shall be combined for
purposes of maximum limits on loans.
(2) All loans must be evidenced by a written
loan agreement signed by all relevant
parties to the loan and evidenced by a
promissory note of the borrower wherein such
borrower personally guarantees the repayment
of the loan.
(3) The Administrative Committee shall not
direct the Trustee to foreclose on any
Participant's Account securing repayment of
the loan until a permissible distributable
event under Code Section 401(k) occurs.
(4) No distribution shall be made to any
Participant or Former Participant or to a
Beneficiary of any such Participant unless
and until all unpaid loans to such
Participant or Former Participant, including
accrued interest thereon, have been
liquidated.
(5) Repayment of loans shall be by payroll
deduction, or other approved method, on a
level amortization basis, with payment being
made no less frequently than quarterly,
except that a Participant may prepay all or
a portion of the outstanding principal
balance of his loan at any time.
(6) The Administrative Committee will notify the
Participant that, to the extent that his
loan is secured by the vested balance in the
Plan, no interest deduction is allowable.
(7) Loans shall become due and payable in full
upon the Participant's termination of
employment. In the event that the
Participant fails to repay the outstanding
balance of the loan by the close of the
60-day period which commences on the day
following his termination of employment, the
loan shall be deemed to be in default on the
last day of such period. Upon default, the
Participant's interest in his Accounts shall
be reduced to the extent necessary to retire
the outstanding balance of the loan. The
amount of such reduction shall be deemed to
be a distribution.
(8) The Administrative Committee shall impose an
administrative charge for preparing the
documents necessary to make a loan to a
Participant. Such charge shall be
reasonable, shall be deducted from the
proceeds of the loan and shall be imposed in
a uniform and nondiscriminatory manner.
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XVI.8 ESOP LOANS.
The Administrative Committee may direct the Trustee to borrow
funds for the benefit of the Trust. Provided that all loans
must be primarily for the benefit of the Participants and
their beneficiaries and, notwithstanding any other provision
of this Plan or the Trust, all Exempt Loans shall meet the
following requirements:
(a) At the time the Exempt Loan is made:
(1) The interest rate for the Exempt Loan and
the price of any Company Stock which is to
be acquired with the proceeds of the Exempt
Loan shall not be such as might drain the
Trust of its assets; and
(2) The terms of the Exempt Loan, whether or not
between independent parties, must be at
least as favorable to the Trust as the terms
of a comparable loan resulting from
arms-length negotiations between independent
parties.
(b) The Exempt Loan must be for a specific term and not
be payable at the demand of any person, except in the
case of default.
(c) The proceeds of an Exempt Loan must be used within a
reasonable time after their receipt by the Trustee
only for any or all of the following purposes:
(1) To acquire Company Stock which is both
common stock and publicly traded stock or,
if not publicly traded stock, is common
stock, which has a combination of voting
power and dividend rights equal to or in
excess of:
(A) That class of common stock of the
Company having the greatest voting
power; and
(B) That class of common stock of the
Company having the greatest
dividend rights.
(2) To repay such Exempt Loan;
(3) To repay a prior Exempt Loan.
Except as otherwise provided, no Company Stock
acquired with the proceeds of an Exempt Loan may be
subject to a put, call or other option, or buy-sell
or similar arrangement while held by and when
distributed
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from the Trust, whether or not the Plan is then an
Employee Stock Ownership Plan.
(d) The Exempt Loan must be without recourse against the
Trust. The only assets of the Trust which may be
given by the Trustee as collateral on an Exempt Loan
shall consist of shares of Company Stock which have
been acquired with the proceeds of the Exempt Loan or
which were used as collateral on a prior Exempt Loan
which has been repaid with proceeds of the current
Exempt Loan. No person entitled to payment under the
Exempt Loan shall have any right to any assets of the
Trust other than:
(1) Collateral given for the Exempt Loan;
(2) Contributions (other than contributions of
Company Stock) that are made under the Plan
to meet the Trust's obligations under the
Exempt Loan; and
(3) Earnings attributable to such collateral and
the investment of such contributions.
(e) The payments made with respect to an Exempt Loan by
the Trust during a Plan Year may not exceed an amount
equal to the sum of:
(1) Contributions (other than contributions of
Company Stock) that are made under the Plan
to meet the Trust's obligations under the
Exempt Loan; and
(2) Earnings attributable to the collateral
given for the Exempt Loan and the investment
of the contributions described in
Subparagraph (1) of this Paragraph (e). Such
contributions and earnings must be accounted
for separately until the Exempt Loan is
repaid.
(f) In the event of default upon an Exempt Loan, the
value of Trust assets transferred in satisfaction of
the Exempt Loan must not exceed the amount of the
default. In the event the lender is a "Disqualified
Person" as defined in Section 4975(e)(2) of the
Internal Revenue Code, or "Party in Interest", as
defined in Section 408(e) of the Employee Retirement
Income Security Act of 1974, the loan must provide
for a transfer of Trust assets only upon and to the
extent of the failure of the Trust to meet the
payment schedule of the Exempt Loan. For purposes of
this Paragraph, the making of a guarantee does not
make a person a lender.
(g) The interest rate for an Exempt Loan must not exceed
a reasonable rate of interest. In determining a
reasonable rate of interest, all relevant factors
shall be considered including the amount and duration
of the loan, the
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security and guarantee (if any) involved, the credit
standing of the Trust and the guarantor (if any), and
the interest rate prevailing for comparable loans.
Where these factors are considered, a variable
interest rate may be reasonable.
(h) An Exempt Loan must provide for the manner in which
Trust assets used as collateral for the Exempt Loan
are to be released from encumbrance and such
provision must be in compliance with either the
"General Rule" or the "Special Rule" as described
below, as selected by the Committee.
(1) General Rule: For each Plan Year during the
duration of the Exempt Loan, the number of
shares released from encumbrance must equal
the number of encumbered shares held
immediately before release for the current
Plan Year multiplied by a fraction:
(A) The numerator of which is the
amount of principal and interest
paid for the Plan Year: and
(B) The denominator of which is the sum
of the numerator plus the principal
and interest to be paid for all
future years.
(2) Special Rule:
(A) For each Plan Year during the
duration of the Exempt Loan, the
number of shares released from
encumbrance must equal the number
of encumbered shares held
immediately before release for the
current Plan Year multiplied by a
fraction:
(i) The numerator of which is
the amount of principal
paid for the Plan Year;
and
(ii) The denominator of which
is the sum of the
numerator plus the
principal to be paid for
all future Years.
(B) Anything herein to the contrary
notwithstanding, the Special Rule
described in this Paragraph (2) may
only be utilized with respect to an
Exempt Loan if:
(i) The Exempt Loan provides
for annual payments of
principal and interest at a
cumulative rate which is
not less rapid at any time
than level annual payments
of such amounts for 10
years.
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(ii) The interest included in
any payment is disregarded
only to the extent that it
would be determined to be
interest under standard
loan amortization tables;
and
(iii) The Exempt Loan provides
that the General Rule
described in Paragraph (1)
above shall be the method
utilized to determine the
assets released from
encumbrance from the time
that, by reason of a
renewal, extension or
refinancing, the sum of the
expired duration of the
Exempt Loan, the renewal
period, the extension
period and the duration of
a new Exempt Loan exceeds
10 years.
(3) In determining the number of shares to be
released for any Plan Year under either the
General Rule or the Special Rule:
(A) The number of future years under
the Exempt Loan must be definitely
ascertainable and must be
determined without taking into
account any possible extensions or
renewal periods.
(B) If the Exempt Loan provides for a
variable interest rate, the
interest to be paid for all future
Plan Years must be computed by
using the interest rate applicable
as of the end of the Plan Year for
which the determination is being
made.
(C) If the collateral for an Exempt
Loan includes more than one class
of shares, the number of shares of
each class to be released for a
Plan Year must be determined by
applying the applicable fraction
provided for in either Subparagraph
(1) or (2) of this Paragraph (h) to
each such class.
(i) The provisions of an Exempt Loan may not restrict the
payment provisions set forth with respect to "put
options" in Section 5.07 of the Plan unless such
restrictions are required by applicable state law.
(j) For purposes of this Section, the term "Exempt Loan"
shall mean a loan which is made in accordance with
the terms and provisions of this Trust and the Plan
and which is made to the Trust by a person who is a
"Disqualified Person" as defined in Section
4975(e)(2) of the Internal Revenue Code or a "Party
in Interest" as defined in Section 408(e) of the
Employee Retirement Income Security Act of 1974, or a
loan to the Trust which is guaranteed by such a
Disqualified Person or Party in Interest. For
purposes of this Section:
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(1) The term "loan " includes a direct loan of
cash, a purchase-money transaction, and an
assumption of an obligation of the Plan or
Trust.
(2) The term "guarantee" includes an unsecured
guarantee and the use of assets of a
Disqualified Person or Party in Interest as
collateral for a loan, even though the use
of assets may not be a guarantee under
applicable state law.
ARTICLE XVII
AMENDMENTS
XVII.1 AMENDMENTS. This Plan may be amended at any time by action of
the Administrative Committee; however, any amendment which
would increase the Company's contributions under the Plan or
the cost of administering the Plan or which would expand the
Administrative Committee's right to amend the Plan shall be
subject to review and approval by the Board of Directors.
However, except as otherwise permitted by law, no amendment
shall be made, the effect of which would be:
(a) To cause any assets of the Plan, at any time prior to
the satisfaction of all liabilities with respect to
Participants and their Beneficiaries, to be used for
or diverted to purposes other than-
(i) Providing benefits to the Participants and
their Beneficiaries, and
(ii) Defraying reasonable expenses of
administering the Plan;
(b) To increase or alter the responsibilities or
liabilities of a Trustee or an Investment Manager
without its written consent; or
(c) To have any retroactive effect so as to decrease the
accrued benefit of any Participant (within.the
meaning of Section 411(d)(6) of the Code). This
requirement will not be considered to be violated,
however, by amendments to the rules regarding
hardship distributions under Section 8.11 (including
amendments eliminating such form of distributions).
XVII.2 EFFECT OF AMENDMENTS.
(a) All amendments to the Plan are effective only on the
date on which the amendments are adopted, unless-
(i) A different effective date is expressly
provided by resolution of the Board of
Directors of the Company, or
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(ii) The amendment by its own express terms
becomes effective at another date.
(b) Unless and to the extent expressly stated to the
contrary in the terms of any amendment the amendment
shall not be construed to enlarge the rights of any
Participant whose Severance occurred prior to the
effective date of the amendment.
XVII.3 AMENDMENT OF VESTING SCHEDULE.
If an amendment changes the vesting schedule of Section 7.1,
each Participant who has completed at least three (3) Years of
Service for vesting purposes as of the effective date of such
amendment shall have the right to elect to have his vested
percentage determined without regard to such amendment. The
election period begins on the date the amendment is adopted
and ends 60 days after the later of:
(a) the date the amendment is adopted;
(b) the date the amendment is effective; or
(c) the date the Participant receives written notice of
the amendment from the Company or the Administrative
Committee.
ARTICLE XVIII
MISCELLANEOUS MATTERS
XVIII.1 NO ENLARGEMENT OF EMPLOYEE RIGHTS.
(a) Nothing contained in the Plan shall be deemed to give
any Employee the right to be retained in the employ
of the Company or to interfere with the right of the
Company to discharge any Employee at any time.
(b) No Employee shall have any right to, or interest in
any assets of the Plan, other than as specifically
provided in this Plan.
XVIII.2 INTERPRETATION.
(a) Article and Section headings are for convenient
reference only and shall not be deemed to be part of
the substance of the Plan or in any way to enlarge or
limit the contents of any Article or Section.
(b) Unless the context clearly indicates otherwise, the
masculine gender shall
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include the feminine, the singular shall include the
plural, and the plural shall include the singular.
(c) The provisions of this Plan shall be interpreted in a
manner that is consistent with this Plan satisfying
the applicable requirements of the Code and ERISA.
XVIII.3 APPLICABLE LAW.
The Plan shall be construed, administered and enforced
according to the laws of the United States and the laws of the
state of California to the extent that the latter are not
preempted by the former.
XVIII.4 USERRA.
Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with
Code Section 414(u). Loan repayments will be suspended under
this Plan as permitted under Code Section 414(u)(4).
ARTICLE XIX
RIGHTS OFFERING
This Article XIX is intended to set forth the policies and procedures
applicable to Company Contributions which have been or will be made in
connection with certain rights offerings made by the Company.
XIX.1 2000 RIGHTS OFFERING.
This Section references that certain rights offering made by
the Company as described in a prospectus dated May 24, 2000
(the "2000 Rights Offering").
XIX.2 SUBSEQUENT RIGHTS OFFERING.
This Section references those certain rights offerings made by
the Company (if any) subsequent to the 2000 Rights Offering
(the "Subsequent Rights Offering").
XIX.3 AUTHORITY OF ADMINISTRATIVE COMMITTEE.
Notwithstanding any provision in this Plan to the contrary,
pending the allocation of any contribution made in connection
with the 2000 Rights Offering or the Subsequent Rights
Offering, the Administrative Committee shall exercise all
rights, powers and privileges relating to such unallocated
contribution, including, but not limited to the decision to
purchase additional shares of Company Stock
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with unallocated cash pursuant to the 2000 Rights Offering or
the Subsequent Rights Offering.
XIX.4 PURCHASE UNDER 2000 RIGHTS OFFERING AND SUBSEQUENT RIGHTS
OFFERING.
Notwithstanding any provision in this Plan to the contrary,
the Administrative Committee shall have the exclusive power to
make the decision whether or not to exercise the "Right" to
acquire additional shares of Company Stock on behalf of
Participants in the ESOP pursuant to the 2000 Rights Offering
and the Subsequent Rights Offering. In other words,
Participants will not decide whether or not to exercise the
"Right", but instead the Committee will make such decision on
behalf of each Participant.
XIX.5 EXCESS ANNUAL ADDITIONS.
(a) Where there is an excess Annual Addition in a
Participant's account, the excess amount must be used
to reduce Company contributions for the next
limitation year (and succeeding limitation years, as
necessary) for that Participant if that Participant
is covered by the Plan as of the end of the
limitation year.
(b) If the Participant is not covered by the Plan as of
the end of the limitation year, then the excess
amount must be held unallocated in a suspense account
for the limitation year and allocated and reallocated
in the next limitation year to all of the remaining
Participants in the Plan.
(c) The excess amounts must be used to reduce Company
contributions for the next limitation year (and
succeeding limitation years, as necessary) for all of
the Participants in the Plan. Excess amounts may not
be distributed to Participants or former
Participants.
XIX.6 ADMINISTRATIVE COMMITTEE POWERS.
Pending allocation of any contribution made to the ESOP during
the Plan Year ended December 31, 2000, the Administrative
Committee will have exercised all rights, powers and
privileges related to such unallocated contribution,
including, but not limited to the decision to purchase
additional shares of Company Stock with unallocated cash
pursuant to the 2000 Rights Offering. The Administrative
Committee shall make the decision to exercise any offer,
option or right to acquire additional shares of Company Stock
for the ESOP in accordance with the Subsequent Rights
Offering.
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To signify its adoption of this restated Plan, Westcorp has caused its duly
authorized officer to execute this document.
Westcorp,
a California Corporation
By:
-----------------------------------------
Its:
----------------------------------------
Date:
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