Exhibit 10.28
ADVANCED TECHNOLOGY LABORATORIES, INC.
RETIREMENT PLAN
AMENDED AND RESTATED
EFFECTIVE
JANUARY 1, 1994
Prepared for review by legal counsel.
TABLE OF CONTENTS
Page
----
PREAMBLE..................................................................... 1
SECTION 1 -- DEFINITIONS..................................................... 2
1.1 Accrued Benefit................................................ 2
1.2 Actuarially Equivalent/Actuarially............................. 2
1.3 Affiliated Companies........................................... 2
1.4 Annuity Starting Date.......................................... 2
1.5 Beneficiary.................................................... 3
1.6 Code........................................................... 3
1.7 Committee...................................................... 3
1.8 Compensation................................................... 3
1.9 Credited Service............................................... 3
1.10 Disabled....................................................... 3
1.11 Earnings....................................................... 3
1.12 Effective Date................................................. 5
1.13 Eligible Employee.............................................. 5
1.14 Employee....................................................... 5
1.15 Employer....................................................... 6
1.16 Employment Commencement Date................................... 6
1.17 ERISA.......................................................... 6
1.18 Final Average Monthly Earnings................................. 6
1.19 Foreign Employee............................................... 6
1.20 Hour of Service................................................ 7
1.21 Participant.................................................... 7
1.22 Period of Service.............................................. 7
1.23 Period of Severance............................................ 8
1.24 Plan........................................................... 8
1.25 Plan Administrator............................................. 8
1.26 Plan Year...................................................... 8
1.27 Service........................................................ 8
1.28 Severance From Service Date.................................... 8
1.29 Social Security Retirement Age................................. 9
1.30 Temporarily Terminated......................................... 9
1.31 Terminated..................................................... 9
1.32 Trust or Trust Fund............................................ 9
1.33 Trustee........................................................ 9
1.34 Additional Definitions in Plan................................. 9
SECTION 2 -- PARTICIPATION................................................... 11
2.1 Eligibility for Participation.................................. 11
2.2 Reemployment After a Termination............................... 11
TABLE OF CONTENTS
(continued)
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2.3 Employees in a Bargaining Unit................................. 12
2.4 Waiver of Participation........................................ 12
SECTION 3 -- RETIREMENT DATES................................................ 13
3.1 Normal Retirement Date......................................... 13
3.2 Early Retirement Date.......................................... 13
3.3 Deferred Retirement Date....................................... 13
3.4 Retirement Date................................................ 13
3.5 Vested Termination Date........................................ 13
SECTION 4 -- RETIREMENT BENEFITS............................................. 14
4.1 Accrued Benefit................................................ 14
4.2 Normal Retirement Benefit...................................... 15
4.3 Early Retirement Benefit....................................... 15
4.4 Deferred Retirement Benefit.................................... 16
4.5 Vested Termination Benefit..................................... 16
4.6 Reemployment After Retirement.................................. 16
4.7 Benefits For Terminated Participants........................... 16
4.8 Benefits Payable From SpaceLabs Medical, Inc. Retirement Plan.. 16
SECTION 5 -- FORMS OF PAYMENT................................................ 17
5.1 Forms of Payment............................................... 17
5.2 Automatic Form of Benefit...................................... 18
5.3 Limitation on Forms of Payment................................. 18
5.4 Explanation of Forms of Payment................................ 19
5.5 Directed Rollovers............................................. 19
SECTION 6 -- DEATH AND DISABILITY BENEFITS................................... 21
6.1 Spouse's Death Benefit......................................... 21
6.2 Disability Benefits............................................ 22
SECTION 7 -- VESTING........................................................ 23
7.1 Vesting........................................................ 23
7.2 Termination Prior to Vesting................................... 23
7.3 Forfeitures.................................................... 23
SECTION 8 -- LIMITATIONS ON BENEFITS......................................... 24
8.1 Limitation on Benefits......................................... 24
TABLE OF CONTENTS
(continued)
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8.2 Maximum Annual Benefit Payable Under the Plan.................. 25
8.3 Additional Limitation Relating to Defined Contribution Plans... 27
SECTION 9 -- TOP HEAVY PROVISIONS........................................... 28
9.1 Scope.......................................................... 28
9.2 Top Heavy Status............................................... 28
9.3 Minimum Benefit................................................ 30
9.4 Benefit Limitation............................................. 31
9.5 Vesting........................................................ 31
SECTION 10 -- ADMINISTRATION OF THE PLAN..................................... 33
10.1 Plan Administrator............................................. 33
10.2 Organization and Procedures.................................... 33
10.3 Duties and Authority of the Committee.......................... 33
10.4 Expenses....................................................... 34
10.5 Bonding and Insurance.......................................... 35
10.6 Commencement of Benefits....................................... 35
10.7 Appeal Procedure............................................... 36
10.8 Plan Administration - Miscellaneous............................ 37
10.9 Domestic Relations Orders...................................... 38
10.10 Plan Qualification............................................. 40
10.11 Deductible Contribution........................................ 40
10.12 Payment of Benefits Through Purchase of Annuity Contract....... 40
SECTION 11 -- AMENDMENT AND TERMINATION...................................... 41
11.1 Amendment General.............................................. 41
11.2 Amendment - Consolidation or Merger............................ 41
11.3 Termination of the Plan........................................ 41
11.4 Allocation of the Trust Fund on Termination of Plan............ 41
SECTION 12 -- FUNDING........................................................ 43
12.1 Contributions to the Trust..................................... 43
12.2 Trust Fund for Exclusive Benefit of Participants............... 43
12.3 Disposition of Credits and Forfeitures......................... 43
12.4 Trustee........................................................ 43
12.5 Investment Manager............................................. 43
SECTION 13 -- FIDUCIARIES.................................................... 45
13.1 Limitation of Liability of the Employer and Others............. 45
TABLE OF CONTENTS
(continued)
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13.2 Indemnification of Fiduciaries................................. 45
13.3 Scope of Indemnification....................................... 45
SIGNATURE PAGE............................................................... 46
APPENDIX I................................................................... 47
PREAMBLE
THIS RETIREMENT PLAN (hereinafter referred to as the "Plan," formerly known
as the Westmark International Incorporated Retirement Plan and now known as the
Advanced Technology Laboratories, Inc. Retirement Plan) is amended and restated
effective January 1, 1994, by Advanced Technology Laboratories, Inc., a Delaware
corporation (hereinafter "Employer").
WHEREAS, the purpose of the Plan is to provide retirement benefits to
Employees who become covered under the Plan; and
WHEREAS, the Plan was originally known as the Advanced Technology
Laboratories Floor Retirement Plan, and was adopted effective January 1, 1981 by
Advanced Technology Laboratories, Inc.; and
WHEREAS, the Plan was amended and restated effective January 1, 1987, the
name was changed to the Westmark International Incorporated Floor Retirement
Plan, and Westmark International Incorporated became the plan sponsor, in
connection with the distribution of shares of Westmark International
Incorporated to the shareholders of Squibb Corporation; and
WHEREAS, the Plan was amended and restated effective January 1, 1990 and
the name was changed to the Westmark International Incorporated Retirement Plan;
and
WHEREAS, effective June 26, 1992, the corporate name of Westmark
International Incorporated was changed to Advanced Technology Laboratories,
Inc., and assets and liabilities of the Plan attributable to SpaceLabs, Inc. as
a participating employer in this Plan were spun off to form the SpaceLabs
Medical, Inc. Retirement Plan; and
WHEREAS, effective June 26, 1992 the Plan was amended and restated to
change the name to the Advanced Technology Laboratories, Inc. Retirement Plan
and to effect certain other changes; and
WHEREAS, the Employer desires to amend and restate the Plan to effect
certain changes; and
WHEREAS, the Plan shall be maintained for the exclusive benefit of covered
Employees, and is intended to comply with the Internal Revenue Code of 1986, as
amended, the Employee Retirement Income Security Act of 1974, as amended, and
other applicable law;
NOW, THEREFORE, effective January 1, 1994 unless otherwise specified
herein, the Employer does hereby amend and restate the June 26, 1992 Plan as set
forth in the following pages.
1
SECTION 1
DEFINITIONS
The following terms when used herein shall have the following meaning, unless a
different meaning is plainly required by the context. Capitalized terms are
used throughout the Plan text for terms defined by this and other sections.
1.1 Accrued Benefit
---------------
"Accrued Benefit" means, on any date, the benefit determined under the
formula specified in Section 4.1 as of such date.
1.2 Actuarially Equivalent/Actuarially
----------------------------------
"Actuarially Equivalent" and similar terms (for purposes other than
determining contributions to the Trust Fund) means that the present value
of two payments or series of payments shall be of equal value when computed
at an 8% rate of interest and on the basis of the 1984 Unisex Pension
Mortality Table; provided, however, that the interest rate for calculating
lump sum benefits shall be the Pension Benefit Guaranty Corporation (PBGC)
interest rate for immediate or deferred annuities from a single employer
plan in effect on the first day of the Plan Year which contains the
proposed distribution date.
1.3 Affiliated Companies
--------------------
"Affiliated Companies" means:
(a) the Employer,
(b) any other corporation which is a member of a controlled group of
corporations which includes the Employer (as defined in Section 414(b)
of the Code),
(c) any other trade or business under common control with the Employer (as
defined in Section 414(c) of the Code), or
(d) any other member of an affiliated service group which includes the
Employer (as defined in Section 414(m) of the Code).
For purposes of the limitation on benefits in Sections 8.2 and 8.3, the
determination of whether an entity is an Affiliated Company will be made by
modifying Sections 414(b) and (c) of the Code as specified in Section
415(h) of the Code.
1.4 Annuity Starting Date
---------------------
"Annuity Starting Date" means the first day of the first period for which a
Plan benefit is payable as an annuity, or any other form.
2
1.5 Beneficiary
-----------
"Beneficiary" means the person or persons designated to be the Beneficiary
by the Participant in writing to the Benefits Committee. In the event a
married Participant designates someone other than his or her spouse as
Beneficiary, such initial designation or subsequent change shall be invalid
unless the spouse consents in a writing which names the designated
Beneficiary and is notarized or witnessed by a Plan representative.
1.6 Code
----
"Code" means the Internal Revenue Code of 1986, as amended and including
all regulations promulgated pursuant thereto.
1.7 Committee
---------
"Committee" means the Advanced Technology Laboratories, Inc. Benefits
Committee as from time to time constituted and appointed by the
Compensation Committee of the Board of Directors of the Employer to
administer the Plan.
1.8 Compensation
------------
"Compensation" for any tax year has the meaning set forth in Section
415(c)(3) of the Code.
1.9 Credited Service
----------------
"Credited Service" means all completed years and fractions of years of
Service for the Employer during a Period of Service, excluding Periods of
Service forfeited due to a Period of Severance.
Notwithstanding the foregoing, Service while a Foreign Employee which is
completed before January 1, 1987 shall be disregarded for purposes of
determining a Participant's Credited Service.
1.10 Disabled
--------
"Disabled" means a Participant is entitled to benefits under an Employer-
sponsored long term disability plan, or a long term disability plan to
which the Employer contributes on behalf of the Participant.
1.11 Earnings
--------
"Earnings" for each Plan Year means:
(a) for all Participants who are not Foreign Employees, for Credited
Service prior to January 1, 1989: the straight-time pay earned by an
Employee from the Employer prior to reduction for any contributions
determined on a salary
3
reduction basis under a flexible benefit plan established pursuant to
Section 125 of the Code or under the Westmark International
Incorporated Incentive Savings and Stock Ownership Plan, including
shift differentials, special geographical location allowances, holiday
pay, sick leave pay (exempt and non-exempt), short-term disability
(exempt and non-exempt), retroactive pay as it applies to any of the
above, and pay for vacation hours taken. Earnings will not include
non-refundable draw, bonuses, commissions, employee referral bonuses,
stock option payments, special bonuses, lump-sum payments or cash
payoffs for unused vacation, severance pay, hiring bonus, long-term
disability payments (exempt and non-exempt), finder's fees, any
relocation payments in the form of reimbursement or relocation bonus
and overtime.
(b) for all Participants who are not Foreign Employees, for Credited
Service after December 31, 1988: the straight-time pay earned by an
Employee from the Employer prior to reduction for any contributions
determined on a salary reduction basis under a flexible benefit plan
established pursuant to Section 125 of the Code or under the Westmark
International Incorporated Incentive Savings and Stock Ownership Plan
or Advanced Technology Laboratories, Inc. Incentive Savings and Stock
Ownership Plan, including:
(i) special geographical location allowances, holiday pay, sick leave
pay (exempt and non-exempt), short-term disability (exempt and
non-exempt), retroactive pay as it applies to any of the above,
and pay for vacation hours taken;
(ii) overtime pay, shift differentials, and bonuses (including MICP
and bullet bonuses), not in excess of 50% of annualized straight-
time pay prior to reduction as described above;
(iii)for Credited Service after December 31, 1988 and before January
1, 1993: salesman commissions and service commissions/incentives
to the extent such amounts when added to the amount determined
under (ii) above do not exceed 125% of annualized straight-time
pay prior to reduction as described above; and
(iv) for Credited Service after December 31, 1992, salesman
commissions and service commissions/incentives.
Earnings will not include non-refundable draw, employee referral
bonuses, Performance Unit Plan awards, car allowances, stock option
payments, restricted stock awards, lump-sum payments or cash payoffs
for unused vacation, severance pay, retention bonus, hiring bonus,
long-term disability payments (exempt and non-exempt), and any
relocation payments in the form of reimbursement or relocation bonus.
(c) For all Foreign Employees, the annual notional salary and the actual
bonus, if any, stated in U.S. dollars established in a uniform and
nondiscriminatory manner
4
for each Foreign Employee, on or after January 1, 1987. Notional
salary shall not include any special relocation or foreign assignment
allowances.
Notional salary shall include an equitable adjustment to reflect any
retirement benefit which is expected to be earned under a foreign
retirement plan to the extent attributable to contributions by an
Employer or any foreign subsidiary of an Employer.
Notional salary for each Foreign Employee shall be approved by the
President of the applicable business unit.
Notwithstanding the foregoing, annual Earnings in excess of the limit
indicated below shall be disregarded; provided, however, that the $150,000
limit for 1994 shall be automatically adjusted for future years to the
maximum permissible dollar limitation permitted by the Commissioner of the
Internal Revenue Service.
Plan Year Dollar Limitation
--------- -----------------
1989 - 1993 $235,840
1994 and later $150,000 (indexed)
In determining Earnings of a Participant for purposes of this limitation,
the family aggregation rules of Section 414(q)(6) of the Code shall apply,
except in applying such rules, the term "family" shall include only the
spouse of the Participant and any lineal descendants of the Participant who
have not attained age 19 before the close of the year. If as a result of
the application of such rules the limitation is exceeded, then the
limitation shall be prorated among the affected individuals in proportion
to each such individual's Earnings as determined under this Section 1.11
prior to the applications of this limitation.
1.12 Effective Date
--------------
"Effective Date" means January 1, 1981, or with respect to any Employer
specified in appendices to this Plan, the date such Employer adopted the
Plan.
1.13 Eligible Employee
-----------------
"Eligible Employee" means any Employee who is on the active, regular
payroll of the Employer, provided, however, the term "Eligible Employee"
does not include any temporary, cooperative or leased employee.
1.14 Employee
--------
"Employee" means any person (including any officer or director) who is
employed by, and as such is enrolled on the active payroll of the Employer
and is performing services in the United States, and any person who is a
Foreign Employee.
5
"Employee" shall include any leased employee within the meaning of Code
Section 414(n)(2); provided, however, if leased employees constitute twenty
percent or less of the Employer's non-highly compensated work force, the
term "Employee" shall not include a leased employee who is covered by a
plan maintained by the leasing organization which meets the requirements of
Code Section 414(n)(5).
1.15 Employer
--------
"Employer" means Advanced Technology Laboratories, Inc., a Delaware
corporation. For purposes other than sections 10, 11 and 12, the term
"Employer" shall also include other Affiliated Companies that adopt the
Plan with the approval of the Board of Directors of Advanced Technology
Laboratories, Inc. (Delaware), as provided from time to time in Appendix I
to this Plan.
1.16 Employment Commencement Date
----------------------------
"Employment Commencement Date" means the later of the Effective Date and
the date on which an Employee first completes an Hour of Service for the
Employer or an Affiliated Company during the current period of employment.
"Hour of Service" for purposes of this definition means each hour for which
an Employee is paid or entitled to payment for the performance of duties
for the Employer or any Affiliated Companies.
1.17 ERISA
-----
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, including all regulations thereunder.
1.18 Final Average Monthly Earnings
------------------------------
"Final Average Earnings" means one twelfth of the highest average Earnings
received by the Participant during any 60 consecutive month period. In the
event the Participant has less than 60 consecutive months of employment,
-----------
the computation period shall be based upon (1) the most recent 60 months of
employment (whether or not consecutive), or (2) the total Period of Service
with the Employer, whichever is less. Earnings for partial years are pro-
rated.
1.19 Foreign Employee
----------------
"Foreign Employee" means any person (including an officer or director) who
is employed by, and as such is on the active payroll of the Employer or a
foreign subsidiary or branch of an Employer, who relocates to a country
outside the United States and outside such individual's country of
citizenship to complete a temporary assignment for an Employer or a foreign
subsidiary or branch of an Employer which is expected to be completed
within five years from the initial date of the assignment.
6
1.20 Hour of Service
---------------
"Hour of Service" means each hour for which an Employee is paid or entitled
to payment by the Company or any Affiliated Companies on account of:
(a) Performance of duties;
(b) A period of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff, jury
duty, military duty, or leave of absence. No more than 501 Hours of
Service shall be credited under this paragraph for any single
continuous period (whether or not such period occurs in a single
computation period). Hours under this paragraph shall be calculated
and credited pursuant to 29 CFR 2530.200b-2(b) and (c), which are
incorporated herein by this reference; and
(c) An award of back pay, irrespective of mitigation of damages, agreed to
by the Participating Company or any Affiliated Company. However,
hours credited under (a) or (b) above shall not also be credited under
this subsection (c).
1.21 Participant
-----------
"Participant" means any Eligible Employee who qualifies for participation
pursuant to Section 2.1 or 2.2. A nonvested Participant shall cease to be
a Participant on the date he or she incurs a one-year Period of Severance.
A vested Participant shall cease to be a Participant when his or her
benefit payments from the Plan are completed.
1.22 Period of Service
-----------------
"Period of Service" means the period of time commencing with the Employment
Commencement Date and ending on the Severance From Service Date. Non-
successive periods are aggregated to determine the Employee's total Period
of Service. For vesting and participation purposes, an Employee's Period
of Service shall also include the following:
(a) Periods not in Service due to Temporary Terminations; and
(b) Periods of Service with an Affiliated Company.
Notwithstanding the above, for an individual with respect to whom assets
and liabilities are transferred to the SpaceLabs Medical, Inc. Retirement
Plan between June 26 and December 31, 1992, the individual's Period of
Service for all purposes under the Plan shall begin on the individual's
first Employment Commencement Date following the date of such transfer.
7
1.23 Period of Severance
-------------------
"Period of Severance" means the period of time commencing at the Severance
From Service Date and ending on the date the Employee again performs an
Hour of Service for the Employer; provided however, such period shall
commence one year later if a male or female Employee is absent due to
pregnancy, birth or adoption of a child, or caring for a child immediately
following birth or adoption.
1.24 Plan
----
"Plan" means the Advanced Technology Laboratories, Inc. Retirement Plan
either in its previous or present form or as amended from time to time.
1.25 Plan Administrator
------------------
"Plan Administrator" means the person or entity designated in Section 10 to
administer the Plan.
1.26 Plan Year
---------
"Plan Year" means the twelve month period commencing each January 1 and
ending each December 31.
1.27 Service
-------
"Service" means periods for which an Employee is paid or entitled to
payment for the performance of duties for the Employer or an Affiliated
Company.
For purposes of Section 2 (Participation) and Section 7 (Vesting) only,
Service for an Employee who transfers employment from an employing company
under the Squibb Corporation Pension Plan to the Employer on or before
August 31, 1987, without intervening employment with another employer,
shall also include any prior period of employment with an employing company
under the Squibb Corporation Pension Plan to the extent such employment was
credited as "service" for vesting purposes under the Squibb Corporation
Pension Plan.
1.28 Severance From Service Date
---------------------------
"Severance From Service Date" means the earlier of the date on which an
Employee quits, retires, is discharged or dies, or the first anniversary of
absence from work for any other reason. An individual employed by an
Affiliated Company other than the Employer shall incur a Severance from
Service Date if the individual's employer ceases to be an Affiliated
Company of the Employer.
8
1.29 Social Security Retirement Age
------------------------------
"Social Security Retirement Age" means the following ages depending on the
Participant's year of birth: age 65 for Participants born prior to 1938,
age 66 for Participants born after 1937 but prior to 1959, and age 67 for
Participants born after 1959.
1.30 Temporarily Terminated
----------------------
Termination is deemed "Temporary" if the Employee is rehired and in Service
within one year of the initial date of absence from work.
1.31 Terminated
----------
"Terminated" means no longer in Service or employed as an Employee with the
Employer for reasons of quit, retirement, discharge or death. An Employee
shall also be deemed Terminated on the first anniversary of the initial
date of absence for any other reason, provided such absence lasts at least
twelve months.
1.32 Trust or Trust Fund
-------------------
"Trust" or "Trust Fund" means the trust fund into which shall be paid all
contributions and from which all benefits shall be paid under this Plan.
1.33 Trustee
-------
"Trustee" means the trustee or trustees who receive, hold, invest and
disburse the assets of the Trust in accordance with the terms and
provisions set forth in a trust agreement.
1.34 Additional Definitions in Plan
------------------------------
The following terms are defined in the following sections of the Plan:
Section
--------
Aggregate Account 9.2
Aggregation Group 9.2
Deferred Retirement Benefit 4.5
Deferred Retirement Date 3.3
Determination Date 9.2
Early Retirement Benefit 4.4
Early Retirement Date 3.2
Investment Manager 12.5
Joint and Survivor Annuity 5.1(b)
Key Employee 9.2
Lump Sum 5.1(d)
Normal Retirement Benefit 4.3
9
Normal Retirement Date 3.1
Present Value of Accrued Benefits 9.2
Qualified Domestic Relations Order 10.9
Retirement Date 3.4
Statutory 50% Joint and Survivor Annuity Option 5.2(a)
Super Top Heavy 9.2
Top Heavy 9.2
Valuation Date (for Top Heavy) 9.2
Vested Termination Date 3.5
Vested Termination Benefit 4.6
Whole Life Annuity 5.1(a)
10
SECTION 2
PARTICIPATION
2.1 Eligibility for Participation
-----------------------------
(a) Full-Time Employees
-------------------
Each Eligible Employee (other than a Part-time Employee as described
below) who is not already a Participant shall become a Participant
under this Plan on the later of the first of the month coinciding with
or next following completion of a one-year Period of Service and the
date his or her employer becomes an Employer for Plan purposes.
(b) Part-Time Employees
-------------------
An Eligible Employee who is a Part-Time Employee shall become a
Participant on the first day of any subsequent month following a
twelve-month period during which he or she is credited with at least
1,000 Hours of Service. Such twelve-month period shall commence on
the Employee's Employment Commencement Date and each January 1
thereafter.
Part-Time Employee means an Employee who is employed for less than a
full-time basis based on uniform rules established by the Committee
and consistently applied to all persons similarly situated.
(c) Foreign Employees
-----------------
Notwithstanding the foregoing, a Foreign Employee must complete an
enrollment form prior to the date participation commences.
2.2 Reemployment After a Termination
--------------------------------
Upon the reemployment of a Terminated former Participant as an Eligible
Employee, he or she shall immediately become a Participant.
An Employee who Terminates prior to becoming a Participant and is later
reemployed shall become a Participant upon satisfying the requirements of
Section 2.1. If the Employee's Period of Severance equals or exceeds five
years, the Period of Service preceding the Period of Severance shall be
disregarded. If the Employee's Period of Severance is less than five
years, the Period of Service before the Period of Severance shall be
aggregated with the subsequent Period of Service.
11
2.3 Employees in a Bargaining Unit
------------------------------
An Employee belonging to a collective bargaining unit, which has entered an
agreement with the Employer which does not provide for retirement benefits
under this Plan, shall not qualify for participation and the period of
employment shall not be included in determining his or her Credited
Service. If such an Employee is a Participant when such an agreement is
entered, the Employee shall cease to accrue Credited Service on the
effective date of the bargaining agreement. If such an agreement provides
for Plan participation, a covered Employee may continue or resume
participation and accrual of Credited Service.
2.4 Waiver of Participation
-----------------------
A Foreign Employee may elect in writing to waive his or her right to be a
Participant in this Plan by submitting a form to the Committee. A waiver
of participation shall be effective on the first day of the Plan Year
preceding the date of election. A Foreign Employee may prospectively
rescind a waiver in writing to the Committee at any time, effective on the
date of rescission. During such period of non-participation, the Foreign
Employee shall accrue no Periods of Service or Credited Service, nor shall
he or she have any other rights inherent with participation in the Plan.
12
SECTION 3
RETIREMENT DATES
3.1 Normal Retirement Date
----------------------
The Normal Retirement Date for a Participant shall be the first day of the
month coinciding with or next following the attainment of age 65.
3.2 Early Retirement Date
---------------------
Each Participant who attains age 55 and completes a five year Period of
Service may elect, in writing, an Early Retirement Date. Such Early
Retirement Date shall be before the Normal Retirement Date and after
Termination on the first day of any month coinciding with or following the
date the early retirement requirements are met.
3.3 Deferred Retirement Date
------------------------
The Deferred Retirement Date for a Participant who continues working after
the Normal Retirement Date shall be the first day of the month coinciding
with or next following his or her Termination date; provided, however, the
Deferred Retirement Date shall not be later than April 1 following the
calendar year in which the Participant attains age 70-1/2.
3.4 Retirement Date
---------------
The Retirement Date for a Participant shall be one of the dates specified
in Sections 3.1, 3.2 or 3.3 above, on which benefits are to commence. The
Retirement Date for a Participant who Terminates prior to retirement with a
vested Accrued Benefit shall be Normal Retirement Date, unless such
Participant qualifies for and elects to receive benefits at an Early
Retirement Date.
3.5 Vested Termination Date
-----------------------
A vested Participant, whose Accrued Benefit has an Actuarially Equivalent
present value not in excess of $10,000, who Terminates employment with the
Employer and any Affiliated Companies prior to Early Retirement Date may
elect in writing to receive the Vested Termination Benefit either as a lump
sum or an annuity on a Vested Termination Date, which is the first day of
any month following the date of Termination and prior to his or her
earliest Retirement Date. In the event a married Participant elects to
receive benefits on a Vested Termination Date and his or her Vested
Termination Benefit exceeds $3,500, such election shall be void unless the
election is signed by the Participant's spouse, acknowledges the effect of
the election, and the spouse's signature is notarized or witnessed by a
Plan representative.
13
SECTION 4
RETIREMENT BENEFITS
4.1 Accrued Benefit
---------------
The Accrued Benefit for any Participant shall be the excess, if any, of the
monthly benefit (as described in (a) below) over the frozen monthly amount
determined by reference to the former Westmark Discretionary Contribution
Retirement Plan offset (as described in (b) below), and then adjusted for
any prior distribution (Section 4.6) and/or form of payment (Section 5.1).
(a) Monthly Benefit
---------------
The monthly benefit payable to a Participant at the Normal Retirement
Date shall equalthe greater of (i) or (ii) below:
(i) 1.0% of Final Average Monthly Earnings as of December 31, 1993,
multiplied by Credited Service as of December 31, 1993, plus 1.0%
of Final Average Monthly Earnings taking into account all periods
multiplied by Credited Service earned after December 31, 1993, or
(ii) 1.0% of Final Average Monthly Earnings, multiplied by the
Participant's Credited Service.
(b) Frozen Discretionary Contribution Plan Offset
---------------------------------------------
The monthly frozen discretionary contribution plan offset shall equal
the amount determined under subparagraph (i) less the amount
determined under subparagraph (ii) below, accumulated with 8% interest
compounded annually to the later of January 1, 1989 and the Normal
Retirement Date and then divided by 100:
(i) The Participant's account balance in the Westmark International
Incorporated Discretionary Contribution Plan on December 31,
1988.
(ii) The greater of (A) or (B) below:
(A) the amount determined under subparagraph (1) less the amount
determined under subparagraph (2) below, accumulated with 8%
interest compounded annually from December 31, 1982 through
December 31, 1988.
(1) the Participant's account balance in the Westmark
International Incorporated Discretionary Contribution
Plan as of December 31, 1982.
14
(2) the maximum amount of the Participant's account
balance in the Westmark International Incorporated
Discretionary Contribution Plan (exceeding any
rollover or transfer amount), as of December 31, 1982,
which, when accumulated with 8% interest compounded
annually to the later of January 1, 1989 and the
Normal Retirement Date and then divided by 100, does
not exceed the Participant's floor benefit under the
Predecessor Plan as of December 31, 1982.
(B) The amount determined under subparagraph (1) less the amount
determined under subparagraph (2) below:
(1) the Participant's account balance in the Westmark
International Incorporated Discretionary Contribution
Plan as of December 31, 1988.
(2) the maximum amount of the Participant's account balance
in the Westmark International Incorporated
Discretionary Contribution Plan (excluding any rollover
or transfer amount), as of December 31, 1988, which,
when accumulated with 8% interest compounded annually
to the later of January 1, 1989 and the Normal
Retirement Date and then divided by 100, does not
exceed the Participant's monthly benefit under this
Plan as of December 31, 1988.
Notwithstanding the foregoing, a Participant's Accrued Benefit shall not be
less than his or her Accrued Benefit on the date immediately preceding the
date on which any Plan term that affects the Accrued Benefit is amended.
The Accrued Benefit is payable in the form of a Whole Life Annuity
commencing at Normal Retirement Date.
4.2 Normal Retirement Benefit
-------------------------
A Participant's monthly Normal Retirement Benefit shall equal his or her
vested Accrued Benefit as of the date of Termination, and then adjusted for
form of payment.
4.3 Early Retirement Benefit
------------------------
A Participant's monthly Early Retirement Benefit shall equal his or her
vested Accrued Benefit as of the date of Termination, reduced by 1/2 of 1%
for each month that the Early Retirement Date precedes the Normal
Retirement Date, and then adjusted for form of payment.
15
4.4 Deferred Retirement Benefit
---------------------------
A Participant's monthly Deferred Retirement Benefit shall equal his or her
vested Accrued Benefit as of the date of Termination, and then adjusted for
form of payment. Service and Earnings beyond the Normal Retirement Date
shall be taken into consideration. In no event shall the benefit provided
under this paragraph be less than the retirement benefit to which the
Participant would have been entitled if he or she had actually retired on
the Normal Retirement Date, Actuarially increased to reflect the deferred
commencement of payments.
In the event a Participant continues working after the date benefits are
required to commence following age 70-1/2 pursuant to Section 10.6, the
Deferred Retirement Benefit shall be recalculated and adjusted annually.
4.5 Vested Termination Benefit
--------------------------
A Participant's Vested Termination Benefit shall equal his or her Accrued
Benefit as of the date of Termination, Actuarially reduced to reflect the
early commencement of payment of benefits, and then adjusted for form of
payment.
4.6 Reemployment After Retirement
-----------------------------
Upon reemployment, a retired Participant shall cease receiving retirement
benefits under the Plan, until the earlier of subsequent Termination or the
date benefits are required to commence following age 70-1/2 pursuant to
Section 10.6. At the Participant's subsequent retirement, benefits payable
shall be based on his or her total Credited Service and Earnings at the
time of subsequent retirement, and shall be reduced by the Actuarially
Equivalent value of benefits previously received by the Participant. In no
event shall the benefit upon subsequent retirement, after any reduction for
previously received benefits, be less than the initial retirement benefit.
4.7 Benefits For Terminated Participants
------------------------------------
Benefits under the Plan shall be determined and paid in accordance with the
provisions of the Plan as in effect on the most recent date of a
Termination of employment.
4.8 Benefits Payable From SpaceLabs Medical, Inc. Retirement Plan
-------------------------------------------------------------
Notwithstanding anything herein to the contrary, if an individual was a
Participant in this Plan and assets and liabilities attributable to the
individual's Accrued Benefit under this Plan were transferred from this
Plan to the SpaceLabs Medical, Inc. Retirement Plan between June 26 and
December 31, 1992, the Accrued Benefit of such individual with respect to
Credited Service earned prior to such transfer shall be payable from the
SpaceLabs Medical, Inc. Retirement Plan and shall not be payable from this
Plan.
16
SECTION 5
FORMS OF PAYMENT
5.1 Forms of Payment
----------------
The following forms of benefit payments are available under this Plan:
(a) Whole Life Annuity:
------------------
A Whole Life Annuity shall be payable monthly from the Retirement Date
to the first of the month preceding death. The amount of the monthly
benefit shall equal the monthly Normal, Early or Deferred Retirement
Benefit, whichever applies.
(b) Joint and Survivor Annuity:
--------------------------
A reduced Joint and Survivor Annuity shall be payable monthly to a
retired Participant from the Retirement Date or Vested Termination
Date to the first of the month preceding death. Following the
Participant's death, a retirement benefit equal to 50% or 100% of the
reduced amount payable to the retired Participant shall be payable for
life to the joint annuitant, if living at the time of the
Participant's death. A Participant may elect, before benefits
commence, which percentage shall be payable to the joint annuitant.
If the joint annuitant dies after the Participant's retirement income
begins, the Participant's payments will be in the same reduced amount
as is otherwise payable under the Joint and Survivor Annuity. If the
joint annuitant dies prior to the date as of which the Participant's
retirement income begins, any election of a form of benefit under this
Section 5.1(b) shall be automatically canceled. If the Participant
dies prior to the date as of which his or her retirement income is to
begin, the joint annuitant shall not be entitled to receive any
payments under this Section 5.1(b). However, a spouse joint annuitant
may be entitled to a benefit under Section 6.1.
The Joint and Survivor Annuity shall be Actuarially Equivalent to the
Participant's retirement benefit payable in the form of a Whole Life
Annuity.
(c) Lump Sum:
--------
A Lump Sum distribution shall be a single sum payment. The Lump Sum
distribution shall be Actuarially Equivalent to the Participant's
retirement benefit payable in the form of a Whole Life Annuity, and
shall represent the Participant's entire interest in the Plan. Lump
sum distributions may not exceed $10,000.
17
5.2 Automatic Form of Benefit
-------------------------
Unless a Participant elects otherwise, benefits shall be paid as provided
below:
(a) Married Participants
--------------------
Any Participant who is married on his or her Annuity Starting Date or
Vested Termination Date shall automatically be deemed to have elected
the 50% Joint and Survivor Annuity option, effective as of such date,
with his or her spouse on the Annuity Starting Date as the joint
annuitant (the "Statutory 50% Joint and Survivor Annuity Option").
A married Participant may reject the Statutory 50% Joint and Survivor
Annuity Option, or elect a nonspouse joint annuitant pursuant to
Section 5.3, by filing a written notice with the Committee within
ninety days prior to his or her Annuity Starting Date. Such notice
must specify the form of payment elected, name the non-spouse joint
annuitant if any, acknowledge the effect of the election, and must be
signed by the Participant's spouse. The spouse's signature must be
notarized or witnessed by a Plan representative.
A married Participant may file a rejection or joint annuitant election
notice or revoke any such notice at any time during the ninety-day
election period immediately preceding the Annuity Starting Date.
(b) Other Participants
------------------
An unmarried Participant shall receive his or her retirement benefits
in the form of a Whole Life Annuity.
An unmarried Participant may reject the Whole Life Annuity option and
elect either a Joint and Survivor Annuity or a Lump Sum option by
filing a written notice with the Committee within ninety days prior to
his or her Annuity Starting Date. An unmarried Participant may file
or revoke such a notice at any time during the ninety-day period
immediately preceding the Annuity Starting Date.
5.3 Limitation on Forms of Payment
------------------------------
A Participant may elect a joint annuitant other than his or her spouse. A
Participant must elect a form of payment under which payments will be
completed within the Participant's and Beneficiary's life times or within
their life expectancies. If a Participant elects a joint annuitant other
than his or her spouse, the percentage selected by the Participant to be
payable to the joint annuitant cannot exceed the percentage in the table
set forth in Q&A A-6 of Section 1.401(a)(9)-2 of the proposed Income Tax
Regulations, determined according to the age difference between the
Participant and the joint annuitant.
18
5.4 Explanation of Forms of Payment
-------------------------------
The Committee shall furnish each Participant with a written explanation of
the terms and conditions of the forms of payment within a reasonable period
(at least thirty but not more than ninety days) prior to the Participant's
Annuity Starting Date.
5.5 Directed Rollovers
------------------
(a) General Rule
------------
A Participant or spouse Beneficiary who is entitled to a lump sum
benefit pursuant to Section 10.8(c), or who elects a Lump Sum
distribution pursuant to Section 5.1(c) may direct the Committee to
pay part or all of the benefit to a trustee or custodian of another
employer's qualified plan which accepts such directed rollovers or an
individual retirement account (IRA), subject to the following
provisions:
(i) A Participant or Beneficiary may only direct such a rollover if
the expected benefit payment during the Plan Year is $200 or
more.
(ii) A Participant or Beneficiary may not request a directed rollover
of an amount distributed due to the minimum required distribution
provision under Section 10.6(b).
(iii)The rollover of a distribution may only be directed to one
qualified plan or IRA.
(iv) A Participant or Beneficiary may direct the rollover of a portion
of the distribution and elect to receive the remaining portion of
a distribution only if the rollover amount is at least $200.
(v) A surviving spouse Beneficiary or a former spouse who is an
alternate payee pursuant to Section 10.9 may direct a rollover
under the same terms and conditions as a Participant, except that
such spouse or former spouse may only direct a rollover to an
IRA.
(vi) A non-spouse Beneficiary may not direct a rollover pursuant to
this section.
(vii)A Participant or Beneficiary provides the information or
documentation reasonably requested by the Committee.
(b) Notice to Participants
----------------------
The Committee shall furnish each Participant and Beneficiary eligible
for a directed rollover under this Section 5.5 with a written
explanation of the directed rollover opportunity and related
withholding consequences of not choosing a directed rollover within a
reasonable period (at least thirty (30) but not more than
19
ninety (90) days) prior to the Participant's or Beneficiary's Annuity
Starting Date; provided, however, that a Participant or Beneficiary
may waive in writing the thirty (30) day period with respect to a
distribution of small benefits equal to $3,500 or less.
20
SECTION 6
DEATH AND DISABILITY BENEFITS
6.1 Spouse's Death Benefit
----------------------
In the event a vested Participant dies before commencing to receive
retirement benefits or Vested Termination Benefits under the Plan, his or
her spouse shall receive a pre-retirement death benefit provided they were
married throughout the one year period ending on the date of death. The
amount of the spouse's benefit and time of commencement is described below.
The spouse of a nonvested Participant, or a Participant who has started to
receive benefits, or a spouse who was married to the Participant less than
one year, is not entitled to this death benefit.
(a) Death Following Early Retirement Date
-------------------------------------
If the Participant dies after he or she becomes eligible to elect an
Early Retirement Date, the spouse's benefit shall be paid monthly from
the first of the month coinciding with or following the Participant's
death through the first of the month preceding the spouse's death.
The benefit shall equal the amount payable to the surviving spouse
under a 50% Joint and Survivor Annuity form of payment if the
Participant had commenced receiving retirement benefit payments as of
the date spouse benefits commence, based upon the Participant's vested
Accrued Benefit at the date of death.
(b) Death Prior to Early Retirement Date
------------------------------------
If the Participant dies prior to becoming eligible to elect an Early
Retirement Date, the spouse's benefit shall be paid monthly from the
Participant's earliest Retirement Date (determined as if he or she had
survived) through the first of the month preceding the spouse's death.
The benefit shall equal the amount payable to the surviving spouse
under a 50% Joint and Survivor Annuity form of payment if the
Participant had Terminated on the date of death, survived to the date
spouse benefits commence and commenced receiving retirement benefit
payments on such date.
Notwithstanding the foregoing, in the event a Participant dies prior to
Normal Retirement Date, a spouse entitled to benefits under (a) or (b)
above, may elect prior to the date benefits commence thereunder, to
postpone commencement of benefits to the first day of any month on or
before the Participant's Normal Retirement Date determined as if he or she
had survived. The benefit payable at such delayed commencement date shall
be the Actuarial Equivalent of the spouse's death benefit payable at the
terms specified under (a) or (b) above.
21
6.2 Disability Benefits
-------------------
A Participant who becomes Disabled shall be deemed to be in Service for
purposes of vesting and benefit accrual until the earlier of (i) the date
of recovery from Disability, (ii) an Early Retirement Date elected by the
Participant, or (iii) Normal Retirement Date. For purposes of determining
a Participant's Accrued Benefit, average Earnings for the twelve months
preceding the date of Termination are deemed to be in effect during
Disability.
22
SECTION 7
VESTING
7.1 Vesting
-------
Each Participant shall have a vested, nonforfeitable right to his or her
Accrued Benefit multiplied by the appropriate vesting percentage in
accordance with the following table:
Periods of Service Percent Vested
------------------ --------------
Less than 5 years 0%
5 years or more 100%
In addition, each Participant shall have a 100% nonforfeitable right to his
or her Accrued Benefit on the first day of the month preceding his or her
Normal Retirement Date, provided he or she is an Employee on such date. An
Employee who Terminates with 0% vested shall be deemed "nonvested."
7.2 Termination Prior to Vesting
----------------------------
(a) Forfeiture of Service
---------------------
In the event a nonvested Participant incurs a Period of Severance, and
the number of years in such Period of Severance equals or exceeds five
consecutive years, his or her Period of Service and Credited Service
preceding the Severance from Service Date shall be disregarded, and
any Accrued Benefit earned prior to the Severance from Service Date
shall be forfeited. If a vested Participant incurs a Period of
Severance, all Periods of Service and Credited Service before and
after the Period of Severance shall be aggregated.
(b) Deemed Cash-Out of Accrued Benefit
----------------------------------
If an Employee Terminates at a time when the present value of the
Employee's vested Accrued Benefit is zero, the Employee shall be
deemed to have received a distribution of such vested Accrued Benefit,
and shall no longer be a Participant. If the individual resumes
employment with the Employer before incurring a five-consecutive-year
Period of Severance, the Accrued Benefit will be restored to the
amount of such Accrued Benefit on the date of the deemed distribution.
7.3 Forfeitures
-----------
Any forfeitures arising under this Plan shall be used only to offset future
Employer contributions and shall not affect any Participant's Accrued
Benefit.
23
SECTION 8
LIMITATIONS ON BENEFITS
8.1 Limitation on Benefits
----------------------
(a) General Rule
------------
In the event the Plan terminates, the benefit of any highly
compensated employee (and any highly compensated former employee)
shall be limited to a benefit that is nondiscriminatory under Code
Section 401(a)(4).
(b) Limit on Annual Payments
------------------------
Annual payments to an Employee in the "Restricted Group" (as defined
below) are restricted to an amount equal to the payments that would be
made on behalf of the Employee under a single life annuity that is
Actuarially Equivalent to the sum of the Employee's Accrued Benefit
and the Employee's other benefits under the Plan (other than a Social
Security supplement), plus the amount of the payments that the
Employee is entitled to receive under a Social Security supplement.
This restriction will not apply if:
(1) After payment to an Employee in the Restricted Group of all
"Benefits" (as defined below), the value of Plan assets equals or
exceeds 110% of the value of current liabilities, as defined in
Code Section 412(l)(7),
(2) The value of the Benefits for an Employee in the Restricted Group
is less than 1% (one percent) of the value of current
liabilities, or
(3) The value of the Benefits for an Employee in the Restricted Group
does not exceed the amount described in Code Section
411(a)(11)(A).
(c) Definitions
-----------
(1) the Restricted Group consists of the twenty-five highest-paid
current and former Highly Compensated Employees (as defined in
Code Section 414(q)), or all current and former Highly
Compensated Employees if less than twenty-five.
(2) Benefit means loans in excess of the amounts set forth in Code
Section 72(p)(2)(A), any periodic income, any withdrawal values
payable to a living employee, and any death benefits not provided
for by insurance on the Employee's life.
24
(d) Regulatory Authority
--------------------
This Section 81 is intended to comply with Treasury regulation
(S)1.401(a)(4)-5(b), and shall be superseded to the extent any
provision of such regulation in final form conflicts with the
limitations stated herein.
8.2 Maximum Annual Benefit Payable Under the Plan
---------------------------------------------
For purposes of this Section 8.2, the Employer and any Affiliated Companies
shall be considered a single employer, to the extent required by the Code.
(a) Primary Rule
------------
Notwithstanding any other Plan provision to the contrary, the annual
Employer provided benefit payable to or on behalf of a Participant
under the Plan (after any adjustments required under the Plan to
reflect commencement of benefits other than at Normal Retirement Date,
an optional form of payment or death benefit coverage) after 1982
shall not exceed the lesser of:
(i) $90,000 (adjusted in accordance with this Section 8.2) or, if
greater, the Participant's current Accrued Benefit on December
31, 1982, or
(ii) the Participant's average annual Compensation from the
Employer for the consecutive calendar years (not in excess of
three such years) during which he was an active Participant in
the Plan and for which such average is highest.
(b) Cost-of-Living Adjustment
-------------------------
The $90,000 limit prescribed above shall be automatically adjusted for
cost-of-living increases, to the maximum permissible dollar limitation
determined by the Commissioner of Internal Revenue. The dollar amount
applicable in computing the benefit payable to any Participant shall
be the dollar amount in effect for the calendar year in which the
benefit commences. For 1992, the limit is $112,221.
(c) Adjustment for Early or Late Retirement
---------------------------------------
For purposes of 8.2 and 8.3, if the Participant's benefit commences
before Social Security Retirement Age, the limit prescribed in Section
8.2(a)(1) shall be Actuarially reduced to reflect such early
commencement. If the Participant's benefit commences after Social
Security Retirement Age, the limit prescribed in Section 8.2(a)(1)
shall be Actuarially increased for purposes of Section 8.2 and Section
8.3 to reflect such late commencement.
25
(d) Annual Benefit
--------------
Notwithstanding the foregoing, if the benefit to be paid to a
Participant under the Plan is not in the form of an Annual Benefit as
described below, the benefit considered to be payable to a Participant
under the Plan for purposes of Sections 8.2 and 8.3 shall be
Actuarially adjusted to the extent required under Section 415(b)(2) of
the Code. For purposes of the foregoing, Annual Benefit means the
benefit payable annually in the form of a straight life annuity
without ancillary benefits or in the Statutory 50% Joint and Survivor
Annuity Option.
(e) Interest Rate
-------------
Any Actuarial adjustments under this Section 8.2 shall be based on the
Actuarial factors applicable for comparable purposes under the Plan on
the applicable date, except that
(i) the interest rate assumption for purposes of adjusting the
$90,000 limitation for benefits commencing before Social Security
------
Retirement Age shall be the greater of 5% or the Plan rate; and
-------
(ii) the interest rate assumption for purposes of adjusting the
$90,000 limitation for benefits commencing after Social Security
-----
Retirement Age shall be the lesser of 5% or the Plan rate.
------
(f) Special Provisions Regarding Participants With Fewer Than Ten Years of
----------------------------------------------------------------------
Participation or Service
------------------------
In the case of any Participant who participated in the Plan for fewer
than ten years, the maximum dollar benefit otherwise applicable under
Section 8.2(a)(i) shall be multiplied by a fraction whose numerator is
the Participant's years of participation in the Plan (including
fractions thereof, but not less than one) and whose denominator is
ten.
In the case of any Participant who was employed by the Employer for
fewer than ten years, the maximum benefit otherwise applicable under
Sections 8.2(a)(ii) and 8.3 shall be multiplied by a fraction whose
numerator is the Participant's years of employment with the Employer
(including fractions thereof, but not less than one) and whose
denominator is ten.
(g) Transition Rule
---------------
The limitations of this Section 8.2 shall not reduce a Participant's
annual benefit to less than his or her Accrued Benefit as of December
31, 1986, disregarding any change in the terms of the Plan and any
cost-of-living adjustments after May 5, 1986.
26
(h) Aggregation With Other Defined Benefit Plans
--------------------------------------------
If a Participant also participates in any other defined benefit
pension plan maintained by the Employer, the provisions of Section 8.2
and 8.3 shall be applied on an aggregate basis to the benefits payable
under this Plan and each such other plan. Any reduction in the
aggregate benefits payable under this Plan and any such other plan due
to the application of this Section shall be made on a pro-rata basis.
8.3 Additional Limitation Relating to Defined Contribution Plans
------------------------------------------------------------
(a) Primary Rule
------------
For Participants who participate in this Plan and a defined
contribution plan maintained by the Employer, the sum of (1) and (2)
below for any calendar year may not exceed 1.0.
(i) The defined benefit plan fraction for any year is equal to the
quotient of (i) divided by (ii) below expressed as a fraction:
(i) The projected annual benefit (determined by projecting
service, but not Earnings, to normal retirement age) of the
Participant under the Plan determined as of the close of the
year.
(ii) The lesser of: (a) 1.25 multiplied by the limitation
determined under Section 8.2(a)(1) in effect for such year,
or (b) 1.4 multiplied by the limitation determined under
Section 8.2(a)(2) (generally 100% of the Participant's
average annual Compensation).
(ii) The defined contribution plan fraction for any year is equal to
the quotient of (i) divided by (ii) below expressed as a
fraction:
(i) The sum of the "annual additions" to the Participant's
accounts for the current year, as of the close of the year,
and for all prior years.
(ii) The sum of the lesser of the following amounts for such year
and for each prior year of service with the Employer
(regardless of whether a plan was in existence during those
years): (a) 1.25 multiplied by the dollar limitation in
effect for defined contribution plans under Section 415 of
the Code for such year, or (b) 1.4 multiplied by 25% of a
Participant's Compensation for such year.
(b) Remedy
------
If such sum exceeds 1.0, the benefit under this defined benefit Plan
shall be reduced to the extent necessary to satisfy the limitations of
this section.
27
SECTION 9
TOP HEAVY PROVISIONS
9.1 Scope
-----
Notwithstanding any Plan provision to the contrary, for any Plan Year in
which the Plan is Top Heavy within the meaning of Section 416(g) of the
Code, the provisions of this Section 9 shall govern to the extent they
conflict with or specify additional requirements to the Plan provisions
governing Plan Years which are not Top Heavy.
9.2 Top Heavy Status
----------------
(a) Top Heavy
---------
This Plan shall be "Top Heavy" if, as of the Determination Date, (1)
the sum of the Aggregate Accounts of Key Employees, or (2) the Present
Value of Accrued Benefits of Key Employees under this Plan and any
plan of an Aggregation Group, exceeds 60% of the Aggregate Accounts or
the Present Value of Accrued Benefits of all Participants under this
Plan and any plan of an Aggregation Group.
The Present Value of Accrued Benefits and/or Aggregate Account balance
of a Participant who was previously a Key Employee but is no longer a
Key Employee (or his or her Beneficiary), shall not be taken into
account for purposes of determining Top Heavy status. Further, a
Participant's Present Value of Accrued Benefits and/or Aggregate
Account balance shall not be taken into account if he or she has not
performed services for the Affiliated Companies during the five year
period ending on the Determination Date.
(b) Super Top Heavy
---------------
This Plan shall be "Super Top Heavy" if, as of the Determination Date,
(1) the sum of the Aggregate Accounts of Key Employees, or (2) the
Present Value of Accrued Benefits of Key Employees under this Plan and
any plan of an Aggregation Group, exceeds 90% of the Aggregate
Accounts or the Present Value of Accrued Benefits of all Participants
under this Plan and any plan of an Aggregation Group.
(c) Determination Date
------------------
Whether the Plan is Top Heavy for any Plan Year shall be determined as
of the Determination Date. "Determination Date" means (a) the last
day of the preceding Plan Year, or (b) in the case of the first Plan
Year, the last day of such Plan Year.
28
(d) Valuation Date
--------------
"Valuation Date" means, for purposes of determining Top Heaviness, the
Determination Date.
(e) Aggregate Account
-----------------
"Aggregate Account" means, with respect to a Participant, his or her
adjusted account balance in a defined contribution plan, as determined
under the top heavy provisions of such plan.
(f) Present Value of Accrued Benefits
---------------------------------
"Present Value of Accrued Benefits" means the sum of:
(i) the Actuarial Equivalent present value of the accrued normal
retirement benefit under the Plan as of the Valuation Date, and
(ii) distributions prior to the Valuation Date, made during the
Plan Year that contains the Determination Date and the four
preceding Plan Years. Unrelated rollovers or transfers from
this plan shall be considered distributions. A related
rollover or transfer from this Plan shall not be considered
a distribution.
An unrelated rollover or transfer is one which is both initiated by
the Employee and made between plans of different employers. A related
rollover or transfer is one which is either not initiated by the
Employee or made between plans of the same employer.
(g) Key Employee
------------
"Key Employee" means an Employee or former Employee (and his or her
Beneficiaries) who, at any time during the Plan Year containing the
Determination Date or any of the four preceding Plan Years, is
included in one of the following categories as within the meaning of
Section 416(i) of the Code and regulations thereunder.
(i) an officer of the Employer whose annual aggregate Compensation
from the Affiliated Companies exceeds 50% of the dollar
limitation under Section 415(c)(1)(A) of the Code ($56,111 for
the Plan Year ending in 1992), provided that no more than 50
Employees shall be considered officers, or if less, the greater
of 10% of the Employees or 3,
(ii) one of the ten Employees owning the largest interest in the
Employer who owns more than a 0.5% interest of the Employer, and
whose annual aggregate Compensation from the Affiliated Companies
exceeds the dollar limitation under Section 415(c)(1)(A) of the
Code ($30,000 for the Plan Year ending in 1992),
29
(iii)an Employee who owns more than 5% of the Employer, or
(iv) an Employee who owns more than 1% of the Employer with annual
aggregate Compensation from the Affiliated Companies that
exceeds $150,000.
(h) Aggregation Group
-----------------
"Aggregation Group" means the group of plans that must be considered
as a single plan for purposes of determining whether the plans within
the group are Top Heavy (Required Aggregation Group), or the group of
plans that may be aggregated for purposes of Top Heavy testing
(Permissive Aggregation Group). The Determination Date for each plan
must fall within the same calendar year in order to aggregate the
plans.
(i) The Required Aggregation Group includes each plan of the
Affiliated Companies in which a Key Employee is a participant in
the Plan Year containing the Determination Date or any of the
four preceding Plan Years, and each other plan of the Affiliated
Companies which, during this period, enables any plan in which a
Key Employee participates to meet the minimum participation
standards or nondiscriminatory contribution requirements of Code
Sections 401(a)(4) and 410.
(ii) A Permissive Aggregation Group may include any plan sponsored
by an Affiliated Company, provided the group as a whole continues
to satisfy the minimum participation standards and
nondiscriminatory contribution requirements of Code Sections
401(a)(4) and 410.
Each plan belonging to a Required Aggregation Group shall be deemed
Top Heavy or non-Top Heavy in accordance with the group's status. In
a Permissive Aggregation Group that is determined Top Heavy only those
plans that are required to be aggregated shall be Top Heavy. In a
Permissive Aggregation Group that is not Top Heavy, no plan in the
group shall be Top Heavy.
9.3 Minimum Benefit
---------------
(a) General Rule
------------
For any Top Heavy Plan Year, a non-Key Employee who completes a Year
of Service shall have an Accrued Benefit at least equal to the minimum
benefit described herein. The minimum Accrued Benefit at any point in
time equals the lesser of:
(i) two percent multiplied by Top Heavy Years of Service, or
(ii) twenty percent,
30
multiplied by such Participant's "average Compensation." "Average
Compensation" means a Participant's average Compensation for the five
consecutive years when such Participant had the highest aggregate
Compensation from the Employer. However, Compensation received for
non-Top Heavy Plan Years shall be disregarded. The benefit described
herein is expressed as an annual benefit in the form of a single life
annuity (with no ancillary benefits), commencing at normal retirement
age.
A non-Key Employee shall not be denied this minimum benefit because he
or she was not employed on a specified date, failed to make any
mandatory Employee contribution, or failed to earn a specified amount
of Compensation.
(b) Special Two Plan Rule
---------------------
Where this Plan and a defined contribution plan belong to an
Aggregation Group that is determined Top Heavy, the Employer shall not
be required to provide the minimum benefit under (a) above on behalf
of any non-Key Participant who also participates in the defined
contribution plan if the Employer contributions and forfeitures under
the defined contribution plan equal 5% of each non-Key Participant's
Compensation.
9.4 Benefit Limitation
------------------
For any Top Heavy Plan Year in which the Employer does not make the extra
minimum allocation provided below, 1.0 shall replace the 1.25 factor found
in the denominators of the defined benefit and defined contribution plan
fractions for purposes of calculating the combined limitation on benefits
under a defined benefit and defined contribution plan pursuant to Section
415(e) of the Code (see Section 8.3).
If this Plan is Top Heavy, but is not Super Top Heavy, the above referenced
fractions shall remain unchanged provided the Employer provides an extra
minimum Accrued Benefit for each non-Key Employee. The extra benefit (in
addition to the minimum benefit set forth in Section 9.3) shall equal the
lesser of:
(i) one percent multiplied by Top Heavy years of Service, or
(ii) ten percent,
multiplied by such Participant's "average Compensation", as defined in
Section 9.3.
9.5 Vesting
-------
(a) Top Heavy Schedule
------------------
For any Top Heavy Plan Year, each Participant who completes an Hour of
Service in such Year shall become vested and have a nonforfeitable
right to retirement benefits he or she has earned under the Plan in
accordance with the following table:
31
Periods of Service Vesting Percentage
------------------ ------------------
Less than 2 Years 0%
2 Years 20%
3 Years 40%
4 Years 60%
5 Years 100%
Provided, however, that a Participant's vesting percentage shall not
be less than the percentage determined under the table in Section 7.1.
(b) Return to Non-Top Heavy Status
------------------------------
If the Plan becomes Top Heavy and ceases to be Top Heavy in any
subsequent Plan Year, the vesting schedule shall automatically revert
to the vesting schedule in effect before the Plan became Top Heavy.
Such reversion shall be treated as a Plan amendment pursuant to the
terms of the Plan, and shall not cause a reduction of any
Participant's nonforfeitable interest in the Plan on the date of such
amendment.
A Participant with three or more Years of Service with the Employer as
of the end of the election period, may elect to remain covered by the
Top Heavy vesting schedule. The Participant's election period shall
commence on the adoption date of the amendment and shall end 60 days
after the latest of:
(i) the adoption date of the amendment,
(ii) the effective date of the amendment, or
(iii)the date the Participant receives written notice of the
amendment from the Committee.
32
SECTION 10
ADMINISTRATION OF THE PLAN
10.1 Plan Administrator
------------------
The Plan Administrator shall be the Employer. The Compensation Committee
of the Board of Directors of the Employer shall appoint a Committee
composed of one or more persons which shall carry out the general
administration of the Plan. Every member of the Committee shall be deemed
a fiduciary. No Committee member who is an Employee shall receive
compensation with respect to his or her service on the Committee. Any
member of the Committee may resign by delivering written resignation to
the Compensation Committee of the Board of Directors of the Employer and to
the Committee. The Compensation Committee of the Board of Directors of the
Employer may remove or replace any member of the Committee at any time.
10.2 Organization and Procedures
---------------------------
The Compensation Committee of the Board of Directors of the Employer shall
designate a chairman from the members of the Committee. The Committee
shall appoint a secretary, who may or may not be a member of the Committee.
The secretary shall have the primary responsibility for keeping a record of
all meetings and acts of the Committee and shall have custody of all
documents, the preservation of which shall be necessary or convenient to
the efficient functioning of the Committee. The chairman of the Committee
shall be the agent of the Plan for service of legal process. All reports
required by law may be signed by the chairman on behalf of all members of
the Committee.
The Committee shall act by a majority of its members in office and may
adopt such by-laws and regulations as it deems desirable for the conduct of
its affairs.
10.3 Duties and Authority of the Committee
-------------------------------------
(a) Administrative Duties
---------------------
The Committee shall administer the Plan in a nondiscriminatory manner
for the exclusive benefit of Participants and their Beneficiaries.
The Committee shall perform all such duties as are necessary to
supervise the administration of the Plan and to control its operation
in accordance with the terms thereof, including, but not limited to,
the following:
(i) Make and enforce such rules and regulations as it shall deem
necessary or proper for the efficient administration of the Plan;
(ii) Interpret the provisions of the Plan and determine any question
arising under the Plan, or in connection with the administration
or operation thereof;
33
(iii)Determine all considerations affecting the eligibility of any
Employee to be or become a Participant;
(iv) Determine eligibility for and amount of retirement benefits for
any Participant;
(v) Authorize and direct the Trustee with respect to all
disbursements of benefits under the Plan;
(vi) Employ and engage such persons, counsel and agents and obtain
such administrative, clerical, medical, legal, audit and
actuarial services as it may deem necessary in carrying out the
provision of the Plan;
(vii)Delegate and allocate specific responsibilities and duties
imposed by the Plan to one or more Employees, officers or such
other persons as the Committee deems appropriate.
(b) Investment Authority
--------------------
The Trustee and/or designated Investment Manager shall have
responsibility or authority with respect to the management,
acquisition, disposition or investment of Plan assets.
(c) General Authority
-----------------
The Committee shall have all powers necessary or appropriate to carry
out its duties, including the discretionary authority to interpret the
provisions of the Plan and the facts and circumstances of claims for
benefits. Any interpretation or construction of or action by the
Committee with respect to the Plan and its administration shall be
conclusive and binding upon any and all parties and persons affected
hereby, subject to the exclusive appeal procedure set forth in Section
10.7.
(d) Amendment Authority
-------------------
The Committee shall have responsibility and authority to approve
documents for the Plan and to approve amendments that may be required
to the Plan from time to time to keep the Plan in compliance with
relevant law or to facilitate the administration of the Plan. The
Chairman of the Committee is authorized to execute any such documents
or amendments on behalf of the Company.
10.4 Expenses
--------
All reasonable expenses which are necessary to operate and administer the
Plan may be deducted from the Trust Fund or, at the election of the
Employer, paid directly by the Employer.
34
10.5 Bonding and Insurance
---------------------
To the extent required by law, every Committee member, every fiduciary of
the Plan and every person handling Plan funds shall be bonded. The
Committee shall take such steps as are necessary to assure compliance with
applicable bonding requirements. The Committee may apply for and obtain
fiduciary liability insurance insuring the Plan against damages by reason
of breach of fiduciary responsibility at the Plan's expense and insuring
each fiduciary against liability to the extent permissible by law at the
Employer's expense.
10.6 Commencement of Benefits
------------------------
(a) Conditions of Payment
---------------------
Benefit payments under the Plan shall not be payable prior to the
fulfillment of the following conditions:
(i) The Committee has been furnished with such applications, proofs
of birth or death, address, form of benefit election, spouse
consent if required, and other information the Committee deems
necessary;
(ii) The Participant has Terminated employment with the Employer,
reached age 70-1/2 or died; and
(iii)The Participant or Beneficiary is eligible to receive benefits
under the Plan as determined by the Committee.
(b) Commencement of Payment
-----------------------
The payment of benefits shall commence no later than 60 days after the
retirement date specified herein for commencement of such benefits,
provided that payments shall not commence later than the April 1
following the calendar year in which the Participant reaches age
70-1/2.
In no event shall payments commence in a form other than the automatic
form described in Section 5.2 prior to the Participant's Normal
Retirement Age if the Actuarially Equivalent present value of the
Participant's Accrued Benefit at the time benefits commence exceeds
$3,500 without the written consent of the Participant and the spouse.
Spouse consent must acknowledge the effect of such election and must
be notarized or witnessed by a Plan representative.
If the information required in Section 10.6(a) above is not available
prior to such date, the amount of payment will not be ascertainable.
In such event, the commencement of payment shall be delayed until no
more than 60 days after the date the amount of such payment is
ascertainable, at which time a lump-sum payment retroactive to the
applicable date shall be made and monthly payments commenced.
35
10.7 Appeal Procedure
----------------
(a) Submission of Claim
-------------------
A claim for benefit payment shall be considered filed when an
application form is submitted to the Committee.
(b) Notice of Denial
----------------
Any time a claim for benefits is wholly or partially denied, the
Participant or Beneficiary (hereinafter "Claimant") shall be given
written notice of such action within 90 days after the claim is filed,
unless special circumstances require an extension of time for
processing. (If there is an extension, the Claimant shall be notified
of the extension and the reason for the extension within the initial
90 day period. The extension shall not exceed 180 days after the
claim is filed.) Such notice will indicate the reason for denial, the
pertinent provisions of the Plan on which the denial is based, an
explanation of the claims appeal procedure set forth herein, and a
description of any additional material or information necessary to
perfect the claim and an explanation of why such material or
information is necessary.
(c) Right to Request Review
-----------------------
Any person who has had a claim for benefits denied by the Committee,
who disputes the amount of benefit payment determined by the
Committee, or who is otherwise adversely affected by action of the
Committee, shall have the right to request review by the Committee.
Such request must be in writing, and must be made within 60 days after
such person is advised of the Committee's action. If written request
for review is not made within such 60-day period, the Claimant shall
forfeit his or her right to review. The Claimant or a duly authorized
representative of the Claimant may review all pertinent documents and
submit issues and comments in writing.
(d) Review of Claim
---------------
The Committee shall then review the claim. It may hold a hearing if
it deems it necessary and shall issue a written decision reaffirming,
modifying or setting aside its former action within 60 days after
receipt of the written request for review, or 120 days if special
circumstances, such as a hearing, require an extension. The Claimant
shall be notified in writing of any such extension within 60 days
following the request for review. A copy of the decision shall be
furnished to the Claimant. The decision shall set forth its reasons
and pertinent Plan provisions on which it is based. The decision
shall be final and binding upon the Claimant and the Committee and all
other persons involved.
36
10.8 Plan Administration - Miscellaneous
-----------------------------------
(a) Limitations on Assignments
--------------------------
Benefits under the Plan may not be assigned, sold, transferred, or
encumbered, and any attempt to do so shall be void. The interest of a
Participant in benefits under the Plan shall not be subject to debts
or liabilities of any kind and shall not be subject to attachment,
garnishment or other legal process, except as provided in Section 10.8
relating to Domestic Relations Orders, or otherwise permitted by law.
(b) Masculine and Feminine, Singular and Plural
-------------------------------------------
Whenever used herein, pronouns shall include the opposite gender, and
the singular shall include the plural and the plural shall include the
singular whenever the context shall plainly so require.
(c) Small Benefits
--------------
In cases where the Actuarially Equivalent present value of a vested or
payable benefit is less than or equal to the maximum permissible
amount under the Code which may be distributed without the consent of
a Participant or his or her spouse (in 1990, this amount was $3,500),
the Committee shall direct such present value be paid in a lump sum
distribution as soon as practical following termination and prior to
the Annuity Starting Date. No payment shall be made pursuant to this
Section 10.8(c) after a Participant's Annuity Starting Date unless the
Participant and his spouse consent to such payment in a written
document filed with the Committee.
(d) No Additional Rights
--------------------
No person shall have any rights in or to the Trust Fund, or any part
thereof, or under the Plan, except as, and only to the extent,
expressly provided for in the Plan. Neither the establishment of the
Plan, the accrual of benefits under the Plan nor any action of the
Employer or the Committee shall be held or construed to confer upon
any person any right to be continued as an Employee, or, upon
dismissal, any right or interest in the Trust Fund other than as
herein provided. The Employer expressly reserves the right to
discharge any Employee at any time.
(e) Governing Law
-------------
This Plan shall be construed in accordance with applicable federal law
and the laws of the State of Washington, wherein venue shall lie for
any dispute arising hereunder.
37
(f) Disclosure to Participants
--------------------------
Each Participant shall be advised of the general provisions of the
Plan and, upon written request addressed to the Committee, shall be
furnished any information requested regarding the Participant's
status, rights and privileges under the Plan as may be required by
law.
(g) Income Tax Withholding Requirements
-----------------------------------
Any retirement benefit payment made under the Plan shall be subject to
any applicable income tax withholding requirements. For this purpose,
the Committee shall provide the Trustee with any information the
Trustee needs to satisfy such withholding obligations and with any
other information that may be required by regulations promulgated
under the Code.
(h) Severability
------------
If any provision of this Plan shall be held illegal or invalid for any
reason, such determination shall not affect the remaining provisions
of this Plan which shall be construed as if said illegal or invalid
provision had never been included.
(i) Facility of Payment
-------------------
In the event any benefit under this Plan shall be payable to a person
who is under legal disability or is in any way incapacitated so as to
be unable to manage his or her financial affairs, the Committee may
direct payment of such benefit to a duly appointed guardian, committee
or other legal representative of such person, or in the absence of a
guardian or legal representative, to a custodian for such person under
a Uniform Gifts to Minors Act or to any relative of such person by
blood or marriage, for such person's benefit. Any payment made in
good faith pursuant to this provision shall fully discharge the
Employer and the Plan of any liability to the extent of such payment.
(j) Correction of Errors
--------------------
Any Employer contribution to the Trust Fund made under a mistake of
fact (or investment proceeds of such contribution if a lesser amount)
shall be returned to the Employer within one year after payment of the
contribution. In the event an incorrect amount is paid to a
Participant or Beneficiary, any remaining payments may be adjusted to
correct the error. The Committee may take such other action it deems
necessary and equitable to correct any such error.
10.9 Domestic Relations Orders
-------------------------
Notwithstanding any Plan provisions to the contrary, benefits under the
Plan may be paid to someone other than the Participant, Beneficiary or
joint annuitant, pursuant to a Qualified Domestic Relations Order, in
accordance with Section 414(p) of the Code. A
38
Qualified Domestic Relations Order is a judgement, decree, or order
("Order") (including approval of a property settlement agreement) that:
(a) relates to the provision of child support, alimony payments or marital
property rights to a spouse, former spouse, child or other dependent
of a Participant;
(b) is made pursuant to a state domestic relations law (including a
community property law);
(c) 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 to a Participant under the Plan;
(d) specifies the name and last known address of the Participant and each
alternate payee;
(e) specifies the amount or method of determining the amount of benefit
payable to an alternate payee;
(f) specifies the number of payments or period during which payments are
to be made;
(g) names each plan to which the order applies;
(h) does not require any form, type or amount of benefit not otherwise
provided under the Plan; and
(i) does not conflict with a prior Domestic Relations Order that meets the
requirements of this section.
Payments to an alternate payee pursuant to a Qualified Domestic Relations
Order may commence after the Participant becomes vested and on or after the
earlier of (a) the date the Participant attains age 55, or (b) the date the
Participant is eligible to elect to receive a Vested Termination Benefit.
The Alternate Payee may elect any form of payment available under the Plan
at the time benefit payments commence other than a joint and survivor
annuity, provided that a lump sum form of payment is available only if the
Alternate Payee's benefit does not exceed $10,000.
The Committee shall determine whether an order meets the requirements of
this section within a reasonable period after receiving an order. The
Committee shall notify the Participant and any alternate payee that an
order has been received and with respect to benefits which are in pay
status shall establish a separate account under the Plan for any alternate
payee pending determination that an order meets the requirements of this
section. If within eighteen months after such separate account is
established the order has not been determined to be a qualified Order, the
amount in the separate account shall be distributed to the individual who
would have been entitled to such amount if there had been no order.
39
10.10 Plan Qualification
------------------
Any modification or amendment of the Plan may be made retroactive, as
necessary or appropriate, to establish and maintain a "qualified plan"
pursuant to Section 401 of the Code, and ERISA and regulations
thereunder and the exempt status of the Trust Fund under Section 501 of
the Code.
10.11 Deductible Contribution
-----------------------
Notwithstanding anything herein to the contrary, any contribution by
the Employer to the Trust Fund is conditioned upon the deductibility of
the contribution by the Employer under the Code and, to the extent any
such deduction is disallowed, the Employer may within one year following
a final determination of the disallowance, demand repayment of such
disallowed contribution and the Trustee shall return such contribution
less any losses attributable thereto to the Employer within one year
following the disallowance.
10.12 Payment of Benefits Through Purchase of Annuity Contract
--------------------------------------------------------
In lieu of paying benefits directly from the Trust Fund to a Participant
or his Beneficiary, the Trustee may purchase, with Trust Fund assets, an
individual annuity contract from an insurance company rated A+ by A.M.
Best Company, Inc. which, as far as possible, provides benefits equal
to (or Actuarially Equivalent to) those provided in the Plan for such
Participant or Beneficiary, but provides no optional form of retirement
income or benefit which would not be permitted under the Plan,
whereupon the liability of the Trust Fund and of the Plan will cease and
terminate with respect to such benefits that are so purchased and for
which the premiums are duly paid. Such an individual annuity contract
may be purchased by the Trustee on a single-premium basis or on the
basis of annual premiums Payable over a period of years and may be
purchased at any time on or after the Participant's Vested Termination
Date, Retirement Date or death to provide the benefits due under the
Plan to the Participant or Beneficiary on or after the date of such
purchase.
Any annuity contract distributed by the Trustee to a Participant or
Beneficiary under the provisions of the Plan shall bear on the face
thereof the designation "NOT TRANSFERABLE", and such contract shall
contain a provision to the effect that the contract may not be sold,
assigned, discounted or pledged as collateral for a loan or as security
for the performance of an obligation or for any other purpose to any
person other than the issuer thereof.
40
SECTION 11
AMENDMENT AND TERMINATION
11.1 Amendment General
-----------------
The Employer shall have the right to amend, terminate, or partially
terminate this Plan by action of its Board of Directors at any time subject
to any advance notice or other requirements of ERISA.
11.2 Amendment - Consolidation or Merger
-----------------------------------
In the event the Plan's assets and liabilities are merged into, transferred
to or otherwise consolidated with any other retirement plan, then such must
be accomplished so as to ensure that each Participant would (if the other
retirement plan then terminated) receive a benefit immediately after the
merger, transfer or consolidation, which is equal to or greater than the
benefit the Participant would have been entitled to receive immediately
before the merger, transfer or consolidation (as if the Plan had then
terminated). This provision shall not be construed as limiting the powers
of the Employer to appoint a successor Trustee.
11.3 Termination of the Plan
-----------------------
The termination of the Plan shall not cause or permit any part of the Trust
Fund to be diverted to purposes other than for the exclusive benefit of the
Participants, or cause or permit any portion of the Trust Fund to revert to
or become the property of the Employer at any time prior to the
satisfaction of all liabilities with respect to the Participants.
Upon termination of this Plan, the Committee shall continue to act for the
purpose of complying with the preceding paragraph and shall have all power
necessary or convenient to the winding up and dissolution of the Plan as
herein provided. While so acting, the Committee shall be in the same
status and position with respect to other persons as if the Plan remained
in existence.
11.4 Allocation of the Trust Fund on Termination of Plan
---------------------------------------------------
In the event of a complete Plan termination, the right of each Participant
to benefits accrued to the date of such termination that would be vested
under the provisions of the Plan in the absence of such termination shall
continue to be vested and nonforfeitable; and the right of each Participant
to any other benefits accrued to the date of termination shall be fully
vested and nonforfeitable to the extent then funded under the priority
rules set forth in Section 4044 of ERISA. In any event, a Participant or a
Beneficiary shall have recourse only against Plan assets for the payment of
benefits thereunder, subject to any applicable guarantee provisions of
Title IV of ERISA. The Committee shall direct the Trustee to allocate
Trust assets to those affected Participants to the extent and in the order
of preference set forth in Section 4044 of ERISA. The assets so allocated
shall be
41
distributed, as determined by the Committee, either wholly or in part by
purchase of nontransferable annuity contracts or lump-sum payments. If
Trust Fund assets as of the date of Plan termination exceed the amounts
required under the priority rules set forth in Section 4044 of ERISA, such
excess shall, after all liabilities of the Plan have been satisfied, revert
to the Employer to the extent permitted by applicable law.
If at any time the Plan is terminated with respect to any group of
Participants under such circumstances as to constitute a partial Plan
termination within the meaning of Section 411(d)(3) of the Code, each
affected Participant's right to benefits that have accrued to the date of
partial termination that would be vested under the provisions of the Plan
in the absence of such termination shall continue to be so vested; and the
right of each affected Participant to any other benefits accrued to the
date of such termination shall be vested to the extent assets would be
allocable to such benefits under the priority rules set forth in Section
4044 of ERISA in the event of a complete Plan termination. In any event,
affected Participants shall have recourse only against Plan assets for
payment of benefits thereunder, subject to any applicable guarantee
provisions of Title IV of ERISA. Subject to the foregoing, the vested
benefits of such Participants shall be payable as though such termination
had not occurred; provided, however, that the Committee, in its discretion,
subject to any necessary governmental approval, may direct that the amounts
held in the Trust Fund that are allocable to the Participants as to whom
such termination occurred be segregated by the Trustee as a separate plan.
The assets thus allocated to such separate plan shall be applied for the
benefit of such Participants in the manner described in the preceding
paragraph.
42
SECTION 12
FUNDING
12.1 Contributions to the Trust
--------------------------
As a part of this Plan the Employer shall maintain a Trust. From time to
time, the Employer shall make such contributions to the Trust as the
Committee determines, with the advice of its actuary, are required to
maintain the Plan on a sound actuarial basis.
12.2 Trust Fund for Exclusive Benefit of Participants
------------------------------------------------
The Trust is for the exclusive benefit of Participants. Except as provided
in Sections 10.7(j) (Correction of Errors), 10.9 (Domestic Relations
Orders) and 10.11 (Deductible Contributions), no portion of the Trust shall
be diverted to purposes other than this or revert to or become the property
of the Employer at any time prior to the satisfaction of all liabilities
with respect to the Participants.
12.3 Disposition of Credits and Forfeitures
--------------------------------------
In no event shall any credits or forfeitures which may arise under the Plan
be used to increase benefits under the Plan.
12.4 Trustee
-------
As a part of this Plan, the Employer has entered into a trust agreement
with a Trustee. The Employer has the power and duty to appoint the Trustee
and it shall have the power to remove the Trustee and appoint successors at
any time. As a condition to exercising its power to remove any Trustee
hereunder, the Employer must first enter into an agreement with a successor
Trustee.
12.5 Investment Manager
------------------
The Employer has the power to appoint, remove or change from time to time
an Investment Manager to direct the investment of all or a portion of the
Trust Fund held by the Trustee. For purposes of this section "Investment
Manager" shall mean any fiduciary (other than the Trustee) who:
(a) has the power to manage, acquire, or dispose of any asset of the Plan;
(b) is either
(i) registered as an investment adviser under the Investment Advisers
Act of 1940, or
(ii) is a bank, or
43
(iii) is an insurance company qualified under the laws of more than
one state to perform the services described in subparagraph
(a); and
(c) has acknowledged in writing that he, she or it is a fiduciary with
respect to the plan.
44
SECTION 13
FIDUCIARIES
13.1 Limitation of Liability of the Employer and Others
--------------------------------------------------
No Participant shall have any claim against the Employer, or the Committee,
or against their directors, officers, members, agents or representatives,
for any benefits under the Plan, and such benefits shall be payable solely
from the Trust; nor, to the extent permitted by law, shall the Employer,
the Committee or their directors, officers, members, agents or
representatives incur any liability to any person for any action taken or
suffered or omitted to be taken by them under the Plan in good faith.
13.2 Indemnification of Fiduciaries
------------------------------
In order to facilitate the recruitment of competent fiduciaries, the
Employer adopting this Plan agrees to provide the indemnification as
described herein. This provision shall apply to Employees who are
considered Plan fiduciaries including without limitation, Committee
members, any agent of the Committee, or any other officers, directors or
Employees. Notwithstanding the preceding, this provision shall not apply
and indemnification will not be provided for any Trustee or Investment
Manager appointed as provided in this Plan.
13.3 Scope of Indemnification
------------------------
The Employer agrees to indemnify an Employee fiduciary as described above
for all acts taken in good faith in carrying out his or her
responsibilities under the terms of this Plan or other responsibilities
imposed upon such fiduciary by ERISA. This indemnification for all acts is
intentionally broad but shall not provide indemnification for embezzlement
or diversion of Plan assets for the benefit of the Employee fiduciary. The
Employer agrees to indemnify Employee fiduciaries described herein for all
expenses of defending an action by a Participant, Beneficiary or government
entity, including all legal fees for counsel selected with the consent of
the Employer and other costs of such defense. The Employer will also
reimburse an Employee fiduciary for any monetary recovery in any court or
arbitration proceeding. In addition, if the claim is settled out of court
with the concurrence of the Employer, the Employer will indemnify an
Employee fiduciary for any monetary liability under said settlement. The
Employer shall have the right, but not the obligation, to conduct the
defense of such persons in any proceeding to which this Section 13.3
applies. The Employer may satisfy its obligations under this Section 13.3
in whole or in part through the purchase of a policy or policies of
insurance providing equivalent protection.
45
The Advanced Technology Laboratories, Inc. Retirement Plan is adopted by
Advanced Technology Laboratories, Inc.
IN WITNESS WHEREOF, the Employer has caused this Plan to be duly executed on
this 5 th day of May , 1994 .
------------ ----------------------- ---
FOR ADVANCED TECHNOLOGY
LABORATORIES, INC.
/s/ W. Brinton Yorks, Jr. /s/ Harvey N. Gillis
-------------------------- --------------------------------
Witness Authorized Officer
Chief Financial Officer
--------------------------------
Title
46
APPENDIX I
TO THE
ADVANCED TECHNOLOGY LABORATORIES, INC.
RETIREMENT PLAN
"Employer" as defined in Section 1.15 of the Advanced Technology Laboratories,
Inc. Retirement Plan shall also include the following companies during the
specified period of time.
Company Beginning Ending
------- --------- ------
1. Advanced Technology Laboratories, 1/1/81
Inc. (Washington)
ACKNOWLEDGED AND ACCEPTED:
By:________________________
Title:_____________________
Date:______________________
47