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EXHIBIT 10.25
RAYTHEON SAVINGS AND INVESTMENT PLAN
As Amended and Restated Effective January 1, 1999
ARTICLE I
Adoption of the Plan
1.1 Amendment and Restatement.
(a) Raytheon Company, a corporation organized under the laws of the
state of Delaware, originally established the Raytheon Savings and Investment
Plan (the "Plan") effective January 1, 1984. Raytheon Company desires to amend
and restate the Plan in its entirety effective January 1, 1999. The amended and
restated Plan shall consist of three portions - (1) a profit sharing plan that
includes a cash or deferred arrangement under section 401(k) of the Code
("401(k) Portion"), (2) a stock bonus plan ("Stock Bonus Portion"), and (3) a
stock bonus plan that constitutes an employee stock ownership plan within the
meaning of section 4975(e)(7) of the Code ("ESOP Portion"). Except as otherwise
provided herein, the provisions of the Plan shall apply in the same manner to
the 401(k), Stock Bonus and ESOP Portions of the Plan.
(b) In accordance with sections 4.5(a) and 15.1 of the Plan, effective
January 1, 1999 (except as otherwise indicated below), all or a portion of the
following qualified retirement plans shall merge into and become part of the
Plan:
Raytheon Savings and Investment Plan for Specified Hourly Employees
Raytheon Salaried Savings and Investment Plan (10011) Raytheon California Hourly
Savings and Investment Plan (10012) Raytheon TI Systems Savings Plan E-Systems,
Inc. Employee Savings Plan (merger effective January 14, 1999) Serv-Air, Inc.
Savings and Retirement Plan (merger effective January 14, 1999) Hughes STX
Corporation 401(k) Retirement Plan (merger effective February 11, 1999) Standard
Missile 401(k) Plan (merger effective in the first quarter of 1999) Raytheon
Stock Ownership Plan Raytheon Stock Ownership Plan for Specified Hourly
Employees.
(c) The Plan is intended to comply with all of the applicable
requirements under sections 401(a), 401(k) and 4975(e)(7) of the Code and the
terms of the Plan shall be interpreted consistent therewith.
1.2 Trust. The Trust shall be the sole source of benefits under the Plan
and the Adopting Employers or any Affiliate shall not have any liability for the
adequacy of the benefits provided under the Plan.
1.3 Effective Date.
(a) General Effective Date: The amended and restated Plan shall be
effective as of January 1, 1999, or such other dates as may be specifically
provided herein or as otherwise required by law for the Plan to satisfy the
requirements of section 401(a) of the Code.
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(b) Special Effective Dates: The following special effective dates
apply with respect to the Plan, including the separate plans merged into the
Plan effective January 1, 1999 and identified in section 1.1(b):
(1) Section 3.6 shall be effective on and after December 12,
1994, in accordance with the requirements of section 414(u) of the Code.
(2) For Plan Years beginning after December 31, 1997 and before
January 1, 1999, the definition of compensation used to apply the limitations
on contributions and benefits under section 415 of the Code shall include any
elective deferral (as defined in section 402(g)(3)), and any amount which is
contributed or deferred by the Employer at the election of a Participant and
which is not includible in the gross income of the Participant by reason of
section 125 or 457 of the Code.
(3) Section 2.29 shall be effective for Plan Years beginning
after December 31, 1996.
(4) Section 8.2(f) shall be effective for Plan Years beginning
after December 31, 1996.
(5) For Plan Years beginning after December 31, 1996, the family
aggregation rules prescribed in sections 414(q) and 401(a)(17) of the Code shall
no longer apply.
(6) Sections 8.2(b) and (c) shall apply with respect to
distributions made on or after the first Pay Period commencing on or after
September 25, 1998.
(7) Section 2.32 shall be effective for Plan Years beginning
after December 31, 1996.
(8) For Plan Years beginning after December 31, 1996 and before
January 1, 1999, for purposes of satisfying the nondiscrimination requirements
prescribed in sections 401(k) and 401(m) of the Code, except as otherwise
provided in Exhibit C to this Plan, the actual deferral percentage and the
actual contribution percentage of the nonhighly compensated employees for the
current Plan Year shall be taken into account.
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(9) For Plan Years beginning after December 31, 1996 and before
January 1, 1999, for purposes of allocating excess contributions or excess
aggregate contributions, as applicable, to the Highly Compensated Employees,
such excess contributions and excess aggregate contributions, as applicable,
shall be allocated to the Highly Compensated Employees on the basis of the
amount of contributions by, or on behalf of, each such Highly Compensated
Employee in accordance with sections 401(k)(8)(C) and 401(m)(6)(C) of the Code.
1.4 Adoption of Plan. With the prior approval of the Senior Vice President
of Human Resources of the Company or other officer to whom authority to approve
participation by an entity is delegated by the Board of Directors, the Plan and
Trust may be adopted by any corporation or other entity (hereinafter referred to
as an Adopting Employer). Such adoption shall be made by the Adopting Employer
taking the actions designated by the Administrator as appropriate to the proper
adoption and operation of the Plan and Trust. In the event of the adoption of
the Plan and Trust by an Adopting Employer, the Plan and Trust shall be
interpreted in a manner consistent with such adoption. The Adopting Employers
shall be listed in Exhibit A attached to this Plan.
1.5 Withdrawal of Adopting Employer.
(a) An Adopting Employer's participation in this Plan may be
terminated, voluntarily or involuntarily, at any time, as provided in this
section.
(b) An Adopting Employer shall withdraw from the Plan and Trust if the
Plan and Trust, with respect to that Adopting Employer, fail to qualify under
sections 401(a) and 501(a) of the Code (or, in the opinion of the Administrator,
they may fail to so qualify) and the continued sponsorship of that Adopting
Employer may jeopardize the status with respect to the Company or the remaining
Adopting Employers, of the Plan and Trust under sections 401(a) and 501(a) of
the Code. The Adopting Employer shall receive at least thirty (30) days prior
written notice of a withdrawal under this subsection, unless a shorter period is
agreed to.
(c) An Adopting Employer may voluntarily withdraw from the Plan and
Trust for any reason. Such withdrawal requires at least thirty (30) days written
notice to the Administrator and the Trustee, unless a shorter period is agreed
to.
(d) Upon withdrawal, the Trustee shall segregate the assets
attributable to Employees of the withdrawn Adopting Employer, the amount thereof
to be determined by the Administrator and the Trustee. The segregated assets
shall be held, paid to another trust, distributed or otherwise disposed of as is
appropriate under the circumstances; provided, however, that any transfer shall
be for the exclusive benefit of Participants and their Beneficiaries. A
withdrawal of an Adopting Employer from the Plan is not necessarily a
termination under ARTICLE XIV. If the withdrawal is a termination, then the
provisions of ARTICLE XIV shall also be applicable.
ARTICLE II
Definitions
The following terms have the meaning specified below unless the context
indicates otherwise:
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2.1 Account. The entire interest of a Participant in the Trust Fund. A
Participant's Account shall consist of the following subaccounts: an Elective
Deferral Account, an Employee After-Tax Contribution Account, a Matching
Contribution Account, an ESOP Contribution Account and, where applicable, a
Rollover Contribution Account and a Qualified Nonelective Contribution Account.
The Administrator may set up such additional subaccounts as it deems necessary
for the proper administration of the Plan.
2.2 Acquisition Loan. A loan or other extension of credit used by the
Trustee to finance the acquisition of Common Stock with respect to the ESOP
Portion of the Plan, which loan may constitute an extension of credit to the
Trust from a party in interest (as defined in ERISA).
2.3 Administrator. The person, persons, corporation, committee, group or
organization designated to be the Administrator of the Plan and to perform the
duties of the Administrator. Until and unless otherwise designated, the
Administrator shall be the Company.
2.4 Adopting Employers. Any corporation or other entity that elects to
participate in the Plan on account of some or all of its Employees, provided
that participation in the Plan by such entity is approved by the Senior Vice
President of Human Resources of the Company, or other officer to whom authority
to approve participation by an entity is delegated by the Board of Directors.
The Adopting Employers, and if applicable, the divisions, operations or similar
cohesive groups of the Adopting Employers that participate in the Plan shall be
listed in Exhibit A to this Plan. If an adopting entity does not participate in
the Plan with respect to all of its Eligible Employees, the term "Adopting
Employer" shall include only those divisions, operations or similar cohesive
groups of such entity that participate in the Plan.
2.5 Affiliate. A trade or business that, together with an Adopting
Employer is a member of (i) a controlled group of corporations within the
meaning of section 414(b) of the Code; (ii) a group of trades or businesses
(whether or not incorporated) under common control as defined in section 414(c)
of the Code, or (iii) an affiliated service group as defined in section 414(m)
of the Code, or which is an entity otherwise required to be aggregated with the
Adopting Employer pursuant to section 414(o) of the Code. For purposes of
ARTICLE X, the determination of controlled groups of corporations and trades or
businesses under common control shall be made after taking into account the
modification required under section 415(h) of the Code. All such entities,
whether or not incorporated, shall be treated as a single employer to the extent
required by the Code.
2.6 Authorized Leave of Absence. An absence approved by an Adopting
Employer on a uniform and nondiscriminatory basis not exceeding one (1) year for
any of the following reasons: illness of an Employee or a relative, the death of
a relative, education of the Employee, or personal or family business of an
extraordinary nature, provided in each case that the Employee returns to the
service of the Adopting Employer within the time period specified by the
Adopting Employer.
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2.7 Beneficiary. The person or persons (including a trust or trusts) who
are entitled to receive benefits from a deceased Participant's Account after
such Participant's death (whether or not such person or persons are expressly so
designated by the Participant).
2.8 Board of Directors. The Board of Directors of Raytheon Company.
2.9 Code. The Internal Revenue Code of 1986, as amended.
2.10 Common Stock. Raytheon Company Class B common stock.
2.11 Company. Raytheon Company.
2.12 Compensation.
(a)(1) Except as otherwise provided herein, the total wages, salaries,
and fees for professional services and other amounts received (without regard to
whether or not an amount is paid in cash) for personal services actually
rendered in the course of employment with the Employer to the extent that the
amounts are includible in gross income, including, but not limited to (A)
commissions paid salesmen, (B) compensation for services on the basis of a
percentage of profits, (C) commissions on insurance premiums, (D) tips, (E)
bonuses, (F) fringe benefits, (G) reimbursements or other expense allowances
under a nonaccountable plan (as described in Treas. Reg. section 1.62-2(c)), (8)
amounts described in sections 104(a)(3), 105(h) of the Code, but only to the
extent that these amounts are includible in the gross income of the Employee,
(H) the value of a nonqualified stock option granted to an Employee by the
Employer, but only to the extent that the value of the option is includible in
the gross income of the Employee for the taxable year in which granted, and (I)
the amount includible in the gross income of an Employee upon making the
election described in section 83(b) of the Code.
(2) Notwithstanding the foregoing, Compensation shall not include:
(A) Employer contributions to a plan of deferred compensation which are not
includible in the Employee's gross income for the taxable year in which
contributed, or any distributions from a plan of deferred compensation
(regardless of whether such amounts are includible in the gross income of the
Employee when distributed); (B) amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or becomes no longer subject to a
substantial risk of forfeiture; (C) amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock option; and (D)
other amounts which received special tax benefits, such as premiums for
group-term life insurance to the extent that the premiums are not includible in
the gross income of the Employee.
(3) To the extent not otherwise excluded by subsection (a)(2),
Compensation also shall not include: (A) reimbursements or other expense
allowances, (B) fringe benefits (cash and noncash), (C) moving expenses, (D)
deferred compensation, and (E) welfare benefits.
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(4) In all cases, however, notwithstanding any exclusions above,
Compensation shall include any amount which would otherwise be deemed
Compensation under this subsection 2.13(a) but for the fact that it is deferred
pursuant to a salary reduction agreement under this Plan or under any plan
described in section 401(k) or 125 of the Code.
(b) The Compensation of each Participant for any year shall not exceed
one hundred fifty thousand dollars ($150,000), as adjusted for increases in the
cost-of-living in accordance with section 401(a)(17)(B) of the Code.
(c) Unless otherwise indicated herein, Compensation shall be
determined only on the basis of amounts paid during the Plan Year, including any
Plan Year with a duration of fewer than twelve (12) months.
(d) The Compensation of a person who becomes a Participant during
the Plan Year shall only include amounts paid after the date on which such
person was admitted as a Participant.
2.13 Current Market Value. The closing price of the Common Stock on
the New York Stock Exchange on the Trade Day immediately preceding the Trade Day
on which the Common Stock is allocated to the Participants' Accounts in
accordance with the terms of the Plan.
2.14 Disability. A Participant who is totally and permanently disabled by
bodily injury or disease so as to be prevented from engaging in any occupation
for compensation or profit. The determination of Disability shall be made by the
Administrator with the aid of competent medical advice. It shall be based on
such evidence as the Administrator deems necessary to establish Disability or
the continuation thereof.
2.15 Effective Date. The effective date of this amendment and restatement
of the Plan shall be January 1, 1999, or such other dates as may be specifically
provided in section 1.3 or as otherwise required by law for the Plan to satisfy
the requirements of section 401(a) of the Code.
2.16 Elective Deferral. A voluntary reduction of a Participant's
Compensation in accordance with section 4.1(a) hereof that qualifies for
treatment under section 402(e)(3) of the Code. A Participant's election to make
Elective Deferrals may be made only with respect to an amount that the
Participant could otherwise elect to receive in cash and that is not currently
available to the Participant.
2.17 Elective Deferral Account. That portion of a Participant's Account
which is attributable to Elective Deferrals, adjusted for withdrawals and
distributions, and the earnings and losses attributable thereto.
2.18 Eligible Employee. A person who is an Employee of an Adopting
Employer who:
(a) is on a United States-Based Payroll;
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(b) is not employed in a position or classification within a bargaining
unit which is covered by a collective bargaining agreement with respect to which
retirement benefits were the subject of good faith bargaining (unless such
agreement provides for coverage hereunder of Employees of such unit);
(c) is not assigned on the books and records of the Employer to any
division, operation or similar cohesive group of an Adopting Employer that is
excluded from participation in the Plan by the Board of Directors or a duly
authorized officer;
(d) is not employed in a position covered by the Service Contract Act;
(e) is not eligible to participate in the Raytheon Employee Savings and
Investment Plan or the Raytheon Savings and Investment Plan for Employees in
Puerto Rico; and
(f) is not a Leased Employee or any other person who performs services
for an Adopting Employer other than as an Employee.
2.19 Employee. Except to the extent otherwise provided herein, any person
employed by an Employer who is expressly so designated as an employee on the
books and records of the Employer and who is treated as such by the Employer for
federal employment tax purposes. Any person who, after the close of a Plan Year,
is retroactively treated by the Employer or any other party as an employee for
such prior Plan Year shall not, for purposes of the Plan, be considered an
Employee for such prior Plan Year unless expressly so treated as such by the
Employer.
2.20 Employee After-Tax Contributions. Voluntary contributions made by
Participants on an after-tax basis in accordance with section 4.1(b)of the Plan.
2.21 Employee After-Tax Contribution Account. That portion of a
Participant's Account which is attributable to Employee After-Tax Contributions,
adjustments for withdrawals and distributions, and the earnings and losses
attributable thereto.
2.22 Employer. An Adopting Employer and any Affiliate thereof (whether or
not such Affiliate participates in the Plan).
2.23 Employment Commencement Date. The date on which an individual first
performs an Hour of Service with the Employer.
2.24 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
2.25 ESOP Contributions. Any contribution by the Adopting Employers to the
Trust pursuant to section 4.3(a).
2.26 ESOP Contribution Account. That portion of a Participant's Account
which is attributable to ESOP Contributions received pursuant to section 4.3(a)
adjusted for withdrawals and distributions, and the earnings and losses
attributable thereto.
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2.27 Fiduciary. Any person who exercises any discretionary authority or
discretionary control over the management of the Plan, or exercises any
authority or control respecting management or disposition of Plan assets; who
renders investment advice for a fee or other compensation, direct or indirect,
as to assets held under the Plan, or has any authority or discretionary
responsibility in the administration of the Plan. This definition shall be
interpreted in accordance with section 3(21) of ERISA.
2.28 Financed Shares. Shares of Common Stock acquired by the Trust with
the proceeds of an Acquisition Loan.
2.29 Highly Compensated Employee.
(a) Any Employee who:
(1) is a five percent (5%) owner at any time during the Plan Year
or the preceding Plan Year; or
(2) for the preceding Plan Year received Compensation in excess
of the amount specified in section 414(q)(1)(B)(i) of the Code.
(b) A former Employee will be treated as a Highly Compensated
Employee if the former Employee was a Highly Compensated Employee at the time of
his or her separation from service or the former Employee was a Highly
Compensated Employee at any time after attaining age fifty-five (55).
(c) The dollar amount incorporated under subsection (a)(2) shall be
adjusted as provided in section 414(q)(1) of the Code.
(d) This section shall be interpreted in a manner consistent
with section 414(q) of the Code and the regulations thereunder and shall be
interpreted to permit any elections permitted by such regulations to be made.
2.30 Hour of Service.
(a) Any hour for which any person is directly or indirectly paid (or
entitled to payment) by the Employer for the performance of duties as an
Employee, as determined from the appropriate records of the Employer.
(b) In computing Hours of Service, a person shall also be credited
with Hours of Service based on the person's previous customary service with the
Employer (not exceeding either eight (8) hours per day or forty (40) hours per
week), for the following periods:
(1) periods (limited to a maximum of five hundred one (501) hours
for any single, continuous period) for which the person is directly or
indirectly paid for reasons other than the performance of duties, such as
vacation, holiday, sickness, disability, layoff, jury duty or military duty;
(2) periods for which any federal law requires that credit for
service be given; and
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(3) periods for which back pay (irrespective of mitigation of
damages) is either awarded or agreed to by the Employer.
(c) Hours of Service shall also include each hour for which an
Employee is entitled to credit under subsection (a) as a result of employment
with:
(1) a predecessor company substantially all the assets of which
have been acquired by the Company, provided that where only a portion of the
operations of a company has been acquired, only service with said acquired
portion prior to the acquisition will be included and that the Employee was
employed by said predecessor company at the time of acquisition; or
(2) a division, operation or similar cohesive group of the
Employer excluded from participation in the Plan.
(d) The provisions of subsection (b) shall be further limited to
prevent duplication by only permitting a person to receive credit for one (1)
Hour of Service for any given hour.
(e) Hours of Service shall be computed and credited in accordance with
the Department of Labor regulations under section 2530.200b.
2.31 Layoff. An involuntary interruption of service due to reduction of
work force with the possibility of recall to employment when conditions warrant.
2.32 Leased Employee. Any person (other than an Employee) who, pursuant to
an agreement between the Employer and any other person, has performed services
for the Employer (or any related person as provided in section 414(n)(6) of the
Code) on a substantially full-time basis for a period of at least one (1) year
and such services are performed under primary direction or control of the
Employer. Leased Employees are not eligible to participate in the Plan.
2.33 Matching Contributions. Contributions made to the Trust in accordance
with section 4.2(a) hereof.
2.34 Matching Contribution Account. That portion of a Participant's
Account which is attributable to Matching Contributions received pursuant to
section 4.2(a), adjusted for withdrawals and distributions, and the earnings and
losses attributable thereto.
2.35 Normal Retirement Age. The Participant's sixty-fifth (65th)
birthday.
2.36 Participant. An individual who is enrolled in the Plan pursuant to
ARTICLE III and has not received a distribution of all of the funds credited to
his or her Account (or had such funds fully forfeited). In the case of an
Eligible Employee who makes a Rollover Contribution to the Plan under section
4.4(a)(3) prior to enrollment under ARTICLE III, such Eligible Employee shall,
until he or she enrolls under ARTICLE III, be considered a Participant for the
limited purposes of maintaining and receiving his or her Rollover Contribution
Account under the terms of the Plan.
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2.37 Pay Period. A period scheduled by an Adopting Employer for payment of
wages or salaries.
2.38 Period of Participation. That portion of a Period of Service during
which an Eligible Employee was a Participant and had an Elective Deferral
Account in the Plan or another plan merged into this Plan and identified in
section 1.1(b) (with no more than five (5) years of participation credited with
respect to such merged plans).
2.39 Period of Service. The period of time beginning on the Employee's
Employment Commencement Date or Reemployment Commencement Date, whichever is
applicable, and ending on the Employee's Severance from Service Date.
2.40 Period of Severance. The period of time beginning on the Employee's
Severance from Service Date and ending on the Employee's Reemployment
Commencement Date.
2.41 Plan. The Raytheon Savings and Investment Plan as amended from time to
time.
2.42 Plan Year. The annual twelve- (12) month period beginning on January 1
of each year and ending on December 31 of each year.
2.43 Qualified Military Service. Any period of duty on a voluntary or
involuntary basis in the United States Armed Forces, the Army National Guard and
the Air National Guard when engaged in active duty for training, inactive duty
for training or full-time National Guard duty, the commissioned corps of the
Public Health Service and any other category of persons designated by the
President of the United States in time of war or emergency. Such periods of duty
shall include active duty, active duty for training, initial active duty for
training, inactive duty training, full-time National Guard duty and absence from
employment for an examination to determine fitness for such duty.
2.44 Qualified Nonelective Contributions. Any contributions by the Adopting
Employers to the Trust pursuant to section 4.1(c). Qualified Nonelective
Contributions are one hundred percent (100%) vested when made and are subject to
the special distribution restrictions prescribed in section 8.2(e).
2.45 Qualified Nonelective Contribution Account. That portion of a
Participant's Account that is attributable to Qualified Nonelective
Contributions received pursuant to section 4.1(c), adjusted for withdrawals and
distributions, and the earnings and losses attributable thereto.
2.46 Recordkeeper. The organization designated by the Administrator to
be the recordkeeper for the Plan. Until and unless otherwise designated, the
Recordkeeper shall be Fidelity Investments.
2.47 Reemployment Commencement Date. The first date on which the Employee
performs an Hour of Service following a Period of Severance that is excluded
under section 6.4 in determining whether a Participant has a nonforfeitable
right to his or her Matching Contribution and ESOP Contribution Accounts.
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2.48 Retirement. A termination of employment that occurs after a
Participant has either attained age 55 and completed a Period of Service of at
least ten (10) years or has attained Normal Retirement Age.
2.49 Rollover Contributions. A transfer that qualifies under either
section 402(c) or 403(a)(4) of the Code.
2.50 Rollover Contribution Account. That portion of a Participant's
Account which is attributable to Rollover Contributions received pursuant to
section 4.4, adjusted for withdrawals and distributions, and the earnings and
losses attributable thereto.
2.51 Severance from Service. The termination of employment by reason of
quit, Retirement, discharge, Layoff or death; or the failure to return from
Authorized Leave of Absence, Qualified Military Service or Disability.
2.52 Severance from Service Date. The earliest of:
(a) the date on which an Employee resigns, retires, is discharged
or dies; or
(b) except as provided in paragraphs (c), d), (e) and (f) hereof,
the first anniversary of the first date of a period during which an Employee is
absent for any reason other than resignation, retirement, discharge or death,
provided that, on an equitable and uniform basis, the Administrator may
determine that, in the case of a Layoff as the result of a permanent plant
closing, the Administrator may designate the date of Layoff or other appropriate
date before the first anniversary of the first date of absence as the Severance
from Service Date; or
(c) in the case of a Qualified Military Service leave of absence
from which the Employee does not return before expiration of recall rights,
Severance from Service Date means the first day of absence because of the leave;
or
(d) in the case of an absence due to Disability, Severance from
Service Date means the earlier of the first anniversary of the first day of
absence because of the Disability or the date of termination of the Disability;
or
(e) in the case of an Employee who is discharged or resigns (i) by
reason of the pregnancy of the Employee, (ii) by reason of the birth of a child
to the Employee, (iii) by reason of the placement of a child with the Employee
in connection with the adoption of such child by the Employee or (iv) for
purposes of caring for such child for a period beginning immediately following
such birth or placement, "Severance from Service Date, for the sole purpose of
determining the length of a Period of Service, shall mean the first anniversary
of the resignation or discharge; or
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(f) in the case of an Employee who is absent from service beyond the
first anniversary of the first day of absence (i) by reason of the pregnancy of
the Employee, (ii) by reason of the birth of a child to the Employee, (iii) by
reason of the placement of a child with the Employee in connection with the
adoption of such child by the Employee or (iv) for purposes of caring for such
child for a period beginning immediately following such birth or placement, the
Severance from Service Date shall be the second anniversary of the first day of
such absence. The period between the first and second anniversaries of the first
day of absence is neither a Period of Service nor a Period of Severance.
2.53 Surviving Spouse. A person who was legally married to the Participant
immediately before the Participant's death.
2.54 Trade Day. Days on which the Recordkeeper is able to make transfers of
Plan assets.
2.55 Trust. The Raytheon Company Master Trust for Defined Contribution
Plans and any successor agreement made and entered into for the establishment of
a trust fund of all contributions which may be made to the Trustee under the
Plan.
2.56 Trustee. The Trustee and any successor trustees under the Trust.
2.57 Trust Fund. The cash, securities, and other property held by the
Trustee for the purposes of the Plan.
2.58 United States-Based Payroll. A payroll maintained by the Company or an
Adopting Employer that is designated as a United States payroll on the books and
records of the Company or Adopting Employer and that is subject to United States
wage withholding and reporting laws.
2.59 Valuation Date. Any day that the New York Stock Exchange is open for
trading.
ARTICLE III
Eligibility
3.1 Eligibility Requirements. Each Eligible Employee who is a Participant
in the Plan (or a plan that merged into the Plan and that is identified in
Section 1.1(b)) on the Effective Date (or, if later, the date of plan merger)
shall continue to participate in the Plan, in accordance with the terms and
conditions of the Plan as amended and restated herein. Each other Eligible
Employee and any person who subsequently becomes an Eligible Employee may join
the Plan immediately following his or her Employment Commencement Date (or, if
later, the date an Employee becomes an Eligible Employee).
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3.2 Procedure for Joining the Plan. Each Eligible Employee may join the
Plan by communicating with the Recordkeeper in accordance with the instructions
that will be made available to each Eligible Employee. An enrollment in the Plan
shall not be deemed to have been completed until the Eligible Employee has
designated: (i) a percentage by which his or her Compensation shall be reduced
as an Elective Deferral in accordance with the requirements of section 4.1(a);
(ii) election of investment funds in accordance with ARTICLE V; (iii) one or
more Beneficiaries; and (iv) such other information as specified by the
Recordkeeper. Enrollment will be effective as of the first Pay Period following
completion of enrollment for which it is administratively feasible to carry out
such enrollment. The Administrator, in its discretion, may from time to time
make exceptions and adjustments in the foregoing procedures on a uniform and
nondiscriminatory basis.
3.3 Transfer Between Adopting Employers to Position Covered by Plan. A
Participant who is transferred to a position with another Adopting Employer in
which the Participant remains an Eligible Employee will continue as an active
Participant of the Plan.
3.4 Transfer to Position Not Covered by Plan. If a Participant is
transferred to a position with an Employer in which the Participant is no longer
an Eligible Employee, the Participant will remain a Participant of the Plan with
respect to contributions previously made but shall no longer be eligible to have
Elective Deferrals made to the Plan on his or her behalf until he or she again
becomes an Eligible Employee. In the event the Participant is subsequently
transferred to a position in which he or she again becomes an Eligible Employee,
the Participant may renew Elective Deferrals by communicating with the
Recordkeeper and providing all of the information requested by the Recordkeeper.
The renewal of Elective Deferrals will be effective as of the first Pay Period
following receipt by the Recordkeeper of the requested information for which it
is administratively feasible to re-enroll such Participant.
3.5 Transfer to Position Covered by Plan. If an Employee who is not
eligible to participate in the Plan by reason of his or her position with an
Employer is transferred to a position that is eligible to participate in the
Plan, such Employee may join the plan immediately following the effective date
of the new position in accordance with the procedures prescribed Section 3.2.
3.6 Treatment of Qualified Military Service. Notwithstanding any
provision of this Plan to the contrary, contributions, benefits and service
credit with respect to Qualified Military Service will be provided in accordance
with section 414(u) of the Code.
ARTICLE IV
Contributions
4.1 401(k) Portion of the Plan.
14
(a) (1) Elective Deferrals: Subject to the limitations otherwise
prescribed herein, a Participant may authorize an Adopting Employer to reduce
his or her Compensation on a pre-tax basis by an amount equal to any whole
percentage of Compensation that does not exceed twenty percent (20%) and to have
such amount contributed to the Plan as an Elective Deferral. Notwithstanding the
preceding sentence, a Participant who is participating in the contributory
portion of either the Raytheon Bargaining Retirement Plan or the Raytheon
Non-Bargaining Retirement Plan (Exhibit A to each plan) may not make Elective
Deferrals that exceed seventeen percent (17%) of his or her Compensation.
(2) A Participant shall not be permitted to make Elective Deferrals
during any calendar year in excess of seven thousand dollars ($7,000), as
adjusted for increases in the cost-of-living in accordance with section
402(g)(5) of the Code. A Participant may affirmatively designate that in the
event his or her Elective Deferrals are limited in accordance with this
subsection (a)(2), all future deferrals of Compensation shall be on an after-tax
basis and shall be re-characterized as Employee After-Tax Contributions under
section 4.1(b). This re-characterization shall take effect as of the first Pay
Period by which it is administratively feasible to make such
re-characterization.
(3) The Elective Deferrals and Employee After-Tax Contributions made
on behalf of each Participant shall not in the aggregate exceed twenty percent
(20%) of the Participant's Compensation for any Plan Year. Notwithstanding the
preceding sentence, a Participant who is participating in the contributory
portion of either the Raytheon Bargaining Retirement Plan or the Raytheon
Non-Bargaining Retirement Plan (Exhibit A to each plan) may not make Elective
Deferrals and Employee After-Tax Contributions that in the aggregate exceed
seventeen percent (17%) of his or her Compensation.
(4) A Participant may change his or her Elective Deferral percentage
to increase or decrease said percentage by notifying the Recordkeeper, such
change to take effect as of the first Pay Period by which it is administratively
feasible to make such change.
(5) A Participant may not make Elective Deferrals with respect to
Compensation that has already been made available to the Participant.
(b)(1) Employee After-Tax Contributions: Subject to the
limitations otherwise prescribed herein, a Participant may authorize an Adopting
Employer to reduce his or her Compensation on an after-tax basis by an amount
equal to any whole percentage of Compensation that does not exceed twenty
percent (20%) and to have such amount contributed to the Plan as an Employee
After-Tax Contribution. Notwithstanding the preceding sentence, a Participant
who is participating in the contributory portion of either the Raytheon
Bargaining Retirement Plan or the Raytheon Non-Bargaining Retirement Plan
(Exhibit A to each plan) may not make Employee After-Tax Contributions that
exceed seventeen percent (17%) of his or her Compensation.
15
(2) The Elective Deferrals and Employee After-Tax Contributions
made on behalf of each Participant shall not in the aggregate exceed twenty
percent (20%) of the Participant's Compensation for any Plan Year.
Notwithstanding the preceding sentence, a Participant who is participating in
the contributory portion of either the Raytheon Bargaining Retirement Plan or
the Raytheon Non-Bargaining Retirement Plan (Exhibit A to each plan) may not
make Elective Deferrals and Employee After-Tax Contributions that in the
aggregate exceed seventeen percent (17%) of his or her Compensation.
(3) A Participant may change his or her Employee After-Tax
Contribution percentage to increase or decrease said percentage by notifying the
Recordkeeper, such change to take effect as of the first Pay Period by which it
is administratively feasible to make such change.
(c) Qualified Nonelective Contributions: Each Plan Year the Adopting
Employers may contribute to the Trust such amounts as determined by the Senior
Vice President of Human Resources of the Company or other officer to whom
authority to determine contributions is delegated by the Board of Directors, in
his or her sole discretion. Any amounts contributed under this subsection are to
be designated by the Adopting Employers as Qualified Nonelective Contributions.
4.2 Stock Bonus Portion of the Plan.
(a) Matching Contributions: Subject to the limitations otherwise
prescribed herein, each Adopting Employer shall make Matching Contributions
equal in value to one hundred percent (100%) of the total Elective Deferrals and
Employee After-Tax Contributions made for each Pay Period by each Participant
who is an Eligible Employee of such Adopting Employer, but the total of such
Matching Contributions for any Participant shall not exceed four percent (4%) of
a Participant's Compensation from such Adopting Employer for each such Pay
Period.
(b) The Matching Contribution shall be made in either Common Stock or
cash that is invested in Common Stock. The number of shares of Common Stock
contributed by the Adopting Employer or acquired with Matching Contributions
under this subsection (b) shall be allocated to the Participant's Account by the
Trustee and such allocation shall equal the number of shares of Common Stock
which the Trustee could have purchased for the Participant at the Current Market
Value. Such Matching Contribution shall remain invested in Common Stock in
accordance with section 5.1(b).
(c) Special Matching Contribution for Allied-Signal Participants:
Subject to the limitations otherwise prescribed herein, each Adopting Employer
shall make special Matching Contributions with respect to the Elective Deferrals
and Employee After-Tax Contributions made by Allied-Signal Participants during
the period commencing September 11, 1998 and ending September 10, 1999 (the
"Transition Period"). The special Matching Contributions required under this
subsection (c) shall equal the amount of matching contributions the
Allied-Signal Participants would have received under the AlliedSignal Savings
Plan and the AlliedSignal Thrift Plan (collectively, the "AlliedSignal plans")
if they had continued to participate in the AlliedSignal plans during the
Transition Period, reduced by the amount of Matching Contributions that the
AlliedSignal Participants are entitled to under this Plan with respect to the
16
Elective Deferrals and Employee After-Tax Contributions made during the
Transition Period. The special Matching Contributions under this subsection (c)
shall be made on or after September 11, 1999, shall be considered Matching
Contributions for the 1999 Plan Year, and shall be treated as Matching
Contributions for all other purposes of the Plan. For purposes of this
subsection (c), an "AlliedSignal Participant" shall mean a Participant who
immediately prior to September 10, 1998 was an employee of AlliedSignal and who
on such date became an Employee of the Company or one of its Affiliates in
connection with the Company's acquisition of AlliedSignal's defense
communications business, provided such Employee (1) does not voluntarily
terminate employment with the Company and all of its Affiliates prior to
September 11, 1999; (2) is not terminated from employment with the Company and
all of its Affiliates for cause prior to September 11, 1999; (3) is not an
hourly employee; and (4) is otherwise eligible to participate in this Plan
during the Transition Period.
4.3 ESOP Portion of the Plan.
(a) ESOP Contributions: For each Plan Year, the Adopting Employers
shall make an ESOP Contribution equal to one-half of one percent (0.5%) of the
Participants' Compensation for such Plan Year. The ESOP Contribution may be made
in cash, Common Stock or a combination thereof at the discretion of the Adopting
Employers. Within a reasonable period of time before the allocation to
individual accounts as specified in subsection (b), the Trustee shall use the
ESOP Contribution, to the extent not contributed in Common Stock, to acquire
Common Stock which will be held by the Trustee for the benefit of the
Participants in the Plan.
(b) Allocation of ESOP Contribution: As soon as administratively
feasible after the ESOP Contribution is made to the Plan, the Administrator
shall allocate the ESOP Contribution to the Participants who received
Compensation during such Plan Year. The ESOP Contribution (consisting of Common
Stock and any residual cash) shall be allocated to those eligible Participants
in the same ratio as each such Participant's Compensation for the Plan Year
bears to the Total Compensation of all such eligible Participants for the Plan
Year.
4.4 Rollover Contributions.
(a) Participants may transfer into the Plan Qualifying Rollover Amounts
from other qualified plans or Conduit IRAs, subject to the following terms and
conditions:
(1) the transferred funds are received by the Trustee no later than
sixty (60) days from receipt by the Participant of a distribution from another
qualified plan or, in the event that the funds are transferred from a Conduit
IRA, no later than sixty (60) days from the date that the Participant
receives such funds from the individual retirement account;
(2) the Rollover Contributions transferred pursuant to this section
4.4 (a) shall be credited to the Participant's Rollover Contribution Account and
will be invested upon receipt by the Trustee; and
17
(3) a Rollover Contribution will not be accepted unless (A) the
Employee on whose behalf the Rollover Contribution will be made is either a
Participant or an Eligible Employee who has notified the Administrator that he
or she intends to become a Participant as of the first date on which he or she
is eligible therefor, and (B) all required information, including selection of
specific investment accounts, is provided to the Recordkeeper.
(b) For purposes of this section, the following terms shall have the
meanings specified:
(1) Qualifying Rollover Amounts. Amounts that can be transferred to
the Plan under either section 402(c), 403(a)(4) or 408(d)(3)(A)(ii) of the Code.
(2) Conduit IRA. An individual retirement account described in
section 408(d)(3)(A)(ii) of the Code.
4.5 Direct Transfers.
(a) The Plan shall accept a transfer of assets, including elective
transfers in accordance with Treas. Regs. section 1.411(d)-4 Q&A-3(b) and
transfers in connection with a plan merger, directly from another plan qualified
under section 401(a) of the Code only if the Administrator, in its sole
discretion, agrees to accept such a transfer. In determining whether to accept
such a transfer, the Administrator shall consider the administrative
inconvenience engendered by such a transfer and any risks to the continued
qualification of the Plan under section 401(a) of the Code. Acceptance of any
such transfer shall not preclude the Administrator from refusing any such
subsequent transfers.
(b) Any transfer of assets accepted under this subsection shall be
separately accounted for at all times and shall remain subject to the
provisions of the transferor plan (as it existed at the time of such transfer)
to the extent required by section 411(d)(6) of the Code (including, but not
limited to, any rights to qualified joint and survivor annuities and qualified
preretirement survivor annuities) as if such provisions were part of the Plan.
In all other respects, however, such transferred assets will be subject to the
provisions of this Plan. The Administrator may, but is not required to, describe
in Exhibit B to this Plan the special provisions that must be preserved under
section 411(d)(6) of the Code, if any, following the transfer of assets from
another plan in accordance with this subsection (b).
(c) Assets accepted under this section shall be nonforfeitable.
Notwithstanding the preceding sentence, assets transferred in connection with
the plan mergers identified in section 1.1(b) shall vest in accordance with the
provisions of ARTICLE VI.
18
4.6 Refund of Contributions to the Adopting Employers.
Notwithstanding the provisions of ARTICLE XII, if, or to the extent that, any
Adopting Employer's deductions for contributions made to the Plan are
disallowed, such Adopting Employer will have the right to obtain the return of
any such contributions for a period of one (1) year from the date of
disallowance. For this purpose, all contributions are made, other than Employee
After-Tax Contributions, subject to the condition that they are deductible under
the Code for the taxable year of the Adopting Employers for which the
contributions are made. Furthermore, any contribution made on the basis of a
mistake in fact may be returned to the Adopting Employers within one (1) year
from the date such contribution was made.
4.7 Payment. The Adopting Employers shall pay to the Trustee in
U.S. currency, or by other property acceptable to the Trustee, all contributions
for each Plan Year within the time prescribed by law, including extensions
granted by the Internal Revenue Service, for filing the federal income tax
return of the Company for its taxable year in which such Plan Year ends. Unless
designated by the Adopting Employers as nondeductible, all contributions made,
other than Employee After-Tax Contributions, shall be deemed to be conditioned
on their current deductibility under section 404 of the Code.
4.8 Limits for Highly Compensated.
(a) Elective Deferrals, Employee After-Tax Contributions, Matching
Contributions and Qualified Nonelective Contributions allocable to the Accounts
of Highly Compensated Employees shall not in any Plan Year exceed the limits
specified in this section. The Administrator may make the adjustments authorized
in this section to ensure that the limits of subsection (b) (or any other
applicable limits) are not exceeded, regardless of whether such adjustments
affect some Participants more than others. This section shall be administered
and interpreted in accordance with sections 401(k) and 401(m) of the Code.
(b)(1) The Actual Deferral Percentage of the Highly Compensated
Employees shall not exceed, in any Plan Year, the greater of:
(A) one hundred twenty-five percent (125%) of the Actual
Deferral Percentage for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the Actual
Deferral Percentage for all other Eligible Participants or the Actual Deferral
Percentage for the other Eligible Participants plus two (2) percentage points.
(2) The Actual Contribution Percentage of the Highly Compensated
Employees shall not exceed, in any Plan Year, the greater of:
(A) one hundred twenty five percent (125%) of the Actual
Contribution Percentage for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the Actual
Contribution Percentage for all other Eligible Participants or the Actual
Contribution Percentage for the other Eligible Participants plus two (2)
percentage points.
19
(3) The sum of the Actual Deferral Percentage and the Actual
Contribution Percentage for the Highly Compensated Employees shall not exceed,
in any Plan Year, the sum of:
(A) one hundred twenty-five percent (125%) of the greater of:
(i) the Actual Deferral Percentage of the other Eligible
Participants; or
(ii) the Actual Contribution Percentage of the other
Eligible Participants; and
(B) two plus the lesser of:
(i) the amount in paragraph (3)(A)(i); or
(ii) the amount in paragraph (3)(A)(ii); provided that the
amount in this paragraph (3)(B) shall not exceed two hundred percent (200%) of
the lesser of the amount in paragraph (3)(A)(i) or the amount in paragraph
(3)(A)(ii).
(4) The limitations under section 4.8(b)(3) shall be modified to
reflect any higher limitations provided by the Internal Revenue Service under
regulations, notices or other official statements.
(c) The following terms shall have the meanings specified:
(1) Actual Contribution Percentage. The average of the
ratios for a designated group of Employees (calculated separately for each
Employee in the group) of the sum of the Matching Contributions (other than
those treated as part of the Actual Deferral Percentage), Qualified Nonelective
Contributions (other than those treated as part of the Actual Deferral
Percentage), Employee After-Tax Contributions and Elective Deferrals (other than
those treated as part of the Actual Deferral Percentage) allocated for the
applicable year on behalf of the Participant, divided by the Participant's
Compensation for such applicable year. The "applicable year" for determining the
Actual Contribution Percentage for the group of Highly Compensated Employees
shall be the current Plan Year. For all other Eligible Participants, the
"applicable year" for determining the Actual Contribution Percentage shall be
the current Plan Year, unless, in accordance with the procedures prescribed by
the Internal Revenue Service, the Administrator elects to use the immediately
preceding Plan Year. In the event the Administrator elects to use the
immediately preceding Plan Year for this purpose for any Plan Year, the
Administrator shall so indicate in Exhibit C to this Plan.
(2) Actual Deferral Percentage. The average of the ratios
for a designated group of Employees (calculated separately for each Employee in
the group) of the sum of the Elective Deferrals, Qualified Nonelective
Contributions and Matching Contributions (that the Company elects to have
treated as part of the Actual Deferral Percentage) allocated for the applicable
year on behalf of a Participant, divided by the Participant's Compensation for
20
such applicable year. The "applicable year" for determining the Actual Deferral
Percentage for the group of Highly Compensated Employees shall be the current
Plan Year. For all other Eligible Participants, the "applicable year" for
determining the Actual Deferral Percentage shall be the current Plan Year,
unless in accordance with the procedures prescribed by the Internal Revenue
Service, the Administrator elects to use the immediately preceding Plan Year. In
the event the Administrator elects to use the immediately preceding Plan Year
for this purpose for any Plan Year, the Administrator shall so indicate in
Exhibit C to this Plan.
(3) Compensation. To the extent regulations permit the
definition of Compensation in ARTICLE II to be used, then such definition shall
be applied for purposes of this ARTICLE; provided, however, that to the extent
such definition is not so permitted, then Compensation shall include all
compensation required to be counted under section 414(s) of the Code; provided
further, however, that this definition shall not apply for purposes of the
definition of Highly Compensated Employee in section 2.29.
(4) Eligible Participant. Any Employee of the Company who
is authorized under the terms of the Plan to make Elective Deferrals, Employee
After-Tax Contributions or have Qualified Nonelective Contributions allocated to
his or her Account for the Plan Year.
(d) For purposes of determining whether a plan satisfies the
Actual Contribution Percentage test of section 401(m), all Employee and matching
contributions that are made under two (2) or more plans that are aggregated for
purposes of section 401(a)(4) and 410(b) (other than section 410(b)(2)(A)(ii))
are to be treated as made under a single plan and that if two (2) or more plans
are permissively aggregated for purposes of section 401(m), the aggregated plans
must also satisfy section 401(a)(4) and 410(b) as though they were a single
plan.
(e) In calculating the Actual Contribution Percentage for
purposes of section 401(m), the actual contribution ratio of a Highly
Compensated Employee will be determined by treating all plans subject to section
401(m) under which the Highly Compensated Employee is eligible (other than those
that may not be permissively aggregated) as a single plan.
(f) For purposes of determining whether a plan satisfies the
Actual Deferral Percentage test of section 401(k), all elective contributions
that are made under two (2) or more plans that are aggregated for purposes of
section 401(a)(4) or 410(b) (other than section 410(b)(2)(A)(ii)) are to be
treated as made under a single plan and that if two (2) or more plans are
permissively aggregated for purposes of section 401(k), the aggregated plans
must also satisfy sections 401(a)(4) and 410(b) as though they were a single
plan.
(g) In calculating the Actual Deferral Percentage for purposes
of section 401(k), the actual deferral ratio of a Highly Compensated Employee
will be determined by treating all cash or deferred arrangements under which the
Highly Compensated Employee is eligible (other than those that may not be
permissively aggregated) as a single arrangement.
21
(h) An elective contribution will be taken into account under
the Actual Deferral Percentage test of section 401(k)(3)(A) of the Code for a
Plan Year only if it is allocated to the Employee as of a date within that Plan
Year. For this purpose, an elective contribution is considered allocated as of a
date within a Plan Year if the allocation is not contingent on participation or
performance of services after such date and the elective contribution is
actually paid to the Trust no later than twelve (12) months after the Plan Year
to which the contribution relates.
4.9 Correction of Excess Contributions.
(a) Excess Contributions shall be corrected as provided in
this section. The Administrator may also prevent anticipated Excess
Contributions as provided in this section. The Administrator may use any method
of correction or prevention provided in this section or any combination thereof,
as it determines in its sole discretion. This section shall be administered and
interpreted in accordance with sections 401(k) and 401(m) of the Code.
(b) The Administrator may refuse to accept any or all
prospective Elective Deferrals to be contributed by a Participant.
(c)(1) The Company may, in its sole discretion, elect to
contribute, as provided in section 4.1(c), a Qualified Nonelective Contribution
in an amount necessary to satisfy any or all of the requirements of section 4.8.
(2) Qualified Nonelective Contributions for a Plan Year
shall only be allocated to the Accounts of Participants who are not Highly
Compensated Employees. Qualified Nonelective Contributions shall be allocated
first to the Participant with the lowest Compensation for that Plan Year and any
remaining Qualified Nonelective Contributions thereafter shall be allocated to
the Participant with the next lowest Compensation for that Plan Year. This
allocation method shall continue in ascending order of Compensation until all
such Qualified Nonelective Contributions are allocated. The allocation to any
Participant shall not exceed the limits under section 415 of the Code. If two or
more Participants have identical Compensation, the allocations to them shall be
proportional.
(3) Qualified Nonelective Contributions for a Plan Year
shall be contributed to the Trust within twelve (12) months after the close of
such Plan Year.
(4) Qualified Nonelective Contributions shall only be
allocated to Participants who receive Compensation during the Plan Year for
which such contribution is made.
(d) The Administrator may, during a Plan Year, distribute to a
Participant (or such Participant's Beneficiary if the Participant is deceased),
any or all Excess Contributions or Excess Deferrals (whether Elective Deferrals,
Matching Contributions or Qualified Nonelective Contributions) allocable to that
Participant's Account for that Plan Year, notwithstanding any contrary provision
of the Plan. Such distribution may include earnings or losses (if any)
attributable to such amounts, as determined by the Administrator.
22
(e)(1) The Administrator may recharacterize any or all Excess
Contributions for a Plan Year as Employee contributions in accordance with the
provisions of this subsection. Any Excess Contributions that are so
recharacterized shall be treated as if the Participant had elected to instead
receive cash Compensation on the earliest date that any Elective Deferrals made
on behalf of the Participant during the Plan Year would have been received had
the Participant originally elected to receive such amount in cash and then
contributed such amount as an Employee contribution. To the extent required by
the Internal Revenue Service, however, such recharacterized Excess Contributions
shall continue to be treated as if such amounts were not recharacterized.
(2) The Administrator shall report any recharacterized
Excess Contributions as Employee contributions to the Internal Revenue Service
and to the affected Participants at such times and in accordance with such
procedures as are required by the Internal Revenue Service. The Administrator
shall take such other actions regarding the amounts so recharacterized as may be
required by the Internal Revenue Service.
(3) Excess Contributions may not be recharacterized under
this subsection more than two and one-half (2 1/2) months after the close of the
Plan Year to which the recharacterization relates. Recharacterization is deemed
to occur when the Participant is so notified (as required by the Internal
Revenue Service).
(4) The amount of Excess Contributions to be distributed
or recharacterized shall be reduced by Excess Deferrals previously distributed
for the taxable year ending in the same Plan Year and Excess Deferrals to be
distributed for a taxable year will be reduced by Excess Contributions
previously distributed or recharacterized for the Plan beginning in such taxable
year.
(f)(1) The Administrator may distribute any or all Excess
Contributions for a Plan Year in accordance with the provisions of this
subsection. Such distribution may only occur after the close of such Plan Year
and within twelve (12) months of the close of such Plan Year. In the event of
the termination of the Plan, such distribution shall be made within twelve (12)
months after such termination. Such distribution shall include the income
allocable to the amounts so distributed, as determined under this subsection.
The Administrator may make any special allocations of earnings or losses
necessary to carry out the provisions of this subsection. A distribution of an
Excess Contribution under this subsection may be made without regard to any
notice or consent otherwise required pursuant to sections 411(a)(11) and 417 of
the Code.
(2)(A) The income allocable to Excess Contributions
distributed under this subsection shall equal the allocable gain or loss for the
Plan Year. Income includes all earnings and appreciation, including such items
as interest, dividends, rent, royalties, gains from the sale of property,
appreciation in the value of stock, bonds, annuity and life insurance contracts,
and other property, without regard to whether such appreciation has been
realized.
23
(B) The allocable gain or loss for the Plan Year may be
determined under any reasonable method consistently applied by the
Administrator. Alternatively, the Administrator may, in its discretion,
determine such allocable gain or loss for the Plan Year under the method set
forth in subparagraph (C).
(C) Under this method, the allocable gain or loss for
the Plan Year is determined by multiplying the income for the Plan Year
allocable to Elective Deferrals (and amounts treated as Elective Deferrals) by a
fraction, the numerator of which is the Excess Contributions by the Participant
for the Plan Year and the denominator of which is the total Account balance of
the Participant attributable to Elective Deferrals (and amounts treated as
Elective Deferrals) as of the beginning of the Plan Year, increased by any
Elective Deferrals (and amounts treated as Elective Deferrals) by the
Participant for the Plan Year.
(3) Amounts distributed under this subsection (or other
provisions of this section) shall first be treated as distributions from the
Participant's subaccounts in the following order:
(A) from the Participant's Elective Deferrals Account
(if such Excess Contribution is attributable to Elective Deferrals);
(B) from the Participant's Qualified Nonelective
Contribution Account (if such Excess Contribution is attributable to Qualified
Nonelective Contributions); and
(C) from the Participant's Matching Contribution
Account (if such Excess Contribution is attributable to Matching Contributions).
(g)(1) The term "Excess Contribution" shall mean, with
respect to a Plan Year, the excess of the Elective Deferrals (including any
Qualified Nonelective Contributions and Matching Contributions that are treated
as Elective Deferrals under sections 401(k)(2) and 401(k)(3) of the Code) on
behalf of eligible Highly Compensated Employees for the Plan Year over the
maximum amount of such contributions permitted under sections 401(k)(2) and
401(k)(3) of the Code.
(2) Any distribution of Excess Contributions for a Plan Year
shall be made to Highly Compensated Employees on the basis of the amount of
contributions by, or on behalf of, each such Highly Compensated Employee.
(3) The amount of Excess Contributions to be distributed or
recharacterized shall be reduced by Excess Deferrals previously distributed for
the taxable year ending in the same Plan Year and Excess Deferrals to be
distributed for a taxable year will be reduced by Excess Contributions
previously distributed or recharacterized for the Plan beginning in such taxable
year.
24
4.10 Correction of Excess Deferrals.
(a) Excess Deferrals shall be corrected as provided in this section.
The Administrator may also prevent anticipated Excess Deferrals as provided in
this section. The Administrator may use any method of correction or prevention
provided in this section or any combination thereof, as it determines in its
sole discretion. A distribution of an Excess Deferral under this section may be
made without regard to any notice or consent otherwise required pursuant to
sections 411(a)(11) and 417 of the Code. This section shall be administered and
interpreted in accordance with sections 401(k) and 402(g) of the Code.
(b) The Administrator may refuse to accept any or all prospective
Elective Deferrals to be contributed by a Participant.
(c)(1) The Administrator may distribute any or all Excess Deferrals
to the Participant on whose behalf such Excess Deferrals were made before the
close of the Applicable Taxable Year. Distributions under this subsection
include income allocable to the Excess Distribution so distributed, as
determined under this subsection.
(2) Distribution under this subsection shall only be made if all
the following conditions are satisfied:
(A) the Participant seeking the distribution designates the
distribution as an Excess Deferral;
(B) the distribution is made after the date the Excess Deferral
is received by the Plan; and
(C) the Plan designates the distribution as a distribution of
an Excess Deferral.
(3) The income allocable to the Excess Deferral distributed under
this subsection shall be determined in the same manner as under subsection
(d)(3), except that income shall only be determined for the period from the
beginning of the Applicable Taxable Year to the date on which the distribution
is made.
(d)(1) The Administrator may distribute any or all Excess Deferrals
to the Participant on whose behalf such Excess Deferrals were made after the
close of the Applicable Taxable Year. Distribution under this subsection shall
only be made if the Participant timely provides the notice required under
subsection (d)(2) and such distribution is made after the Applicable Taxable
Year and before the first April 15 following the close of the Applicable Taxable
Year. Distributions under this subsection shall include income allocable to the
Excess Deferrals so distributed, as determined under this subsection.
25
(2) Any Participant seeking a distribution of an Excess Deferral
in accordance with this subsection must notify the Administrator of such request
no later than the first March 15 following the close of the Applicable Taxable
Year. The Administrator may agree to accept notification received after such
date (but before the first April 15 following the close of the Applicable
Taxable Year) if it determines that it would still be administratively
practicable to make such distribution in view of the delayed notification. The
notification required by this subsection shall be deemed made if a Participant's
Elective Deferrals to the Plan in any Plan Year create an Excess Deferral.
(3) The income allocable to the Excess Deferral distributed under
this subsection shall be determined in the same manner as under section
4.9(f)(2), except that the term "Excess Deferrals" shall be substituted for
"Excess Contributions" and the term "Applicable Taxable Year" shall be
substituted for "Plan Year." The Administrator may make any special allocations
of earnings or losses necessary to carry out the provisions of this subsection.
(e) The following terms shall have the meanings specified:
(1) Applicable Taxable Year. The taxable year (for federal income
tax purposes) of the Participant in which an Excess Deferral must be included in
gross income (when made) in accordance with section 402(g) of the Code.
(2) Excess Deferral. A Participant's Elective Deferrals (and other
contributions limited by section 402(g) of the Code), for an Applicable Taxable
Year that are in excess of the limits imposed by section 402(g) of the Code for
such Applicable Taxable Year.
4.11 Correction of Excess Aggregate Contributions.
(a) Excess Aggregate Contributions shall be corrected as provided in
this section. The Administrator may use any method of correction or
prevention provided in this section or any combination thereof, as it determines
in its sole discretion. This section shall be administered and interpreted in
accordance with sections 401(k) and 401(m) of the Code.
(b) The Administrator may refuse to accept any or all prospective
Elective Deferrals to be contributed to a Participant.
(c)(1) The Company may, in its sole discretion, elect to contribute,
as provided in section 4.1(c), a Qualified Nonelective Contribution in an
amount necessary to satisfy any or all of the requirements of section 4.8.
(2) Qualified Nonelective Contributions for a Plan Year shall only
be allocated to the Accounts of Participants who are not Highly Compensated
Employees. Qualified Nonelective Contributions shall be allocated first to the
Participant with the lowest Compensation for that Plan Year and any remaining
Qualified Nonelective Contributions thereafter shall be allocated to the
Participant with the next lowest compensation for that Plan Year. This
allocation method shall continue in ascending order of Compensation until all
such Qualified Nonelective Contributions are allocated. The allocation to any
Participant shall not exceed the limits under section 415 of the Code. If two or
more Participants have identical Compensation, the allocations to them shall be
proportional.
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(3) Qualified Nonelective Contributions for a Plan Year shall be
contributed to the Trust within twelve (12) months after the close of such
Plan Year.
(4) Qualified Nonelective Contributions shall only be allocated to
Participants who receive Compensation during the Plan Year for which such
contribution is made.
(d) The Administrator may, during a Plan Year, distribute to a
Participant (or such Participant's Beneficiary if the Participant is deceased),
any or all Excess Aggregate Contributions allocable to that Participant's
Account for that Plan Year, notwithstanding any contrary provision of the Plan.
Such distribution may include earnings or losses (if any) attributable to such
amounts, as determined by the Administrator.
(e)(1) The Administrator may forfeit any or all Excess Aggregate
Contributions for a Plan Year in accordance with the provisions of this
subsection. The amounts so forfeited shall not include any amounts that are
nonforfeitable under ARTICLE VI.
(2) Any forfeitures under this subsection shall be made in
accordance with the procedures for distributions under subsection (f) except
that such amounts shall be forfeited instead of being distributed.
(f)(1) The Administrator may distribute any or all Excess Aggregate
Contributions for a Plan Year in accordance with the provisions of this
subsection. Such distribution may only occur after the close of such Plan Year
and within twelve (12) months of the close of such Plan Year. Such distributions
shall be specifically designated by the Administrator as a distribution of
Excess Aggregate Contributions. In the event of the complete termination of the
Plan, such distribution shall be made within twelve (12) months after such
termination. Such distribution shall include the income allocable to the amounts
so distributed, as determined under this subsection. The Administrator may make
any special allocations of earnings or losses necessary to carry out the
provisions of this subsection. A distribution of an Excess Aggregate
Contribution under this subsection may be made without regard to any notice or
consent otherwise required pursuant to sections 411(a)(11) and 417 of the Code.
(2)(A) The income allocable to Excess Aggregate Contributions
distributed under this subsection shall equal the allocable gain or loss for the
Plan Year. Income includes all earnings and appreciation, including such items
as interest, dividends, rent, royalties, gains from the sale of property,
appreciation in the value of stock, bonds, annuity and life insurance contracts,
and other property, without regard to whether such appreciation has been
realized.
(B) The allocable gain or loss for the Plan Year may be
determined under any reasonable method consistently applied by the
Administrator. Alternatively, the Administrator may, in its discretion,
determine such allocable gain or loss for the Plan Year under the method set
forth in subparagraph (C).
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(C) Under this method, the allocable gain or loss for the Plan
Year is determined by multiplying the income for the Plan Year allocable to
employee contributions, matching contributions and amounts treated as matching
contributions by a fraction, the numerator of which is the Excess Aggregate
Contributions for the Participant for the Plan Year and the denominator of which
is the total Account balance of the Participant attributable to employee
contributions, matching contributions and amounts treated as matching
contributions as of the beginning of the Plan Year, increased by the employee
contributions, matching contributions and amounts treated as matching
contributions for the Participant for the Plan Year.
(3) Amounts distributed under this subsection (or other provisions
of this section) shall first be treated as distributions from the Participant's
subaccounts in the following order:
(A) from the Participant's Employee After-Tax Contribution
Account (if such Excess Aggregate Contribution is attributable to Employee
After-Tax Contributions);
(B) from the Participant's Qualified Nonelective Contribution
Account (if such Excess Aggregate Contribution is attributable to Qualified
Nonelective Contributions); and
(C) from the Participant's Matching Contribution Account (if
such Excess Aggregate Contribution is attributable to Matching Contributions).
(g)(1) The term "Excess Aggregate Contribution" shall mean, with
respect to a Plan Year, the excess of the aggregate amount of the matching
contributions and employee contributions (including any Qualified Nonelective
Contributions or elective deferrals taken into account in computing the Actual
Contribution Percentage) actually made on behalf of eligible Highly Compensated
Employees for the Plan Year over the maximum amount of such contributions
permitted under section 401(m)(2)(A) of the Code.
(2) The terms "employee contributions" and "matching contributions"
shall, for purposes of this section, have the meanings set forth in Treas. Reg.
ss.1.401(m)-1(f).
(3) Any distribution of Excess Aggregate Contributions for a Plan
Year shall be made to Highly Compensated Employees on the basis of the amount of
contributions by, or on behalf of, each such Highly Compensated Employee.
4.12 Correction of Multiple Use.
(a) If the limitations of Treas. Reg. ss.1.401(m)-2 are exceeded
for any Plan Year, then correction shall be made in accordance with the
provisions of this section. This section shall be administered and interpreted
in accordance with sections 401(k) and 401(m) of the Code.
28
(b) Any correction required by this section shall be calculated
and administered in accordance with the provisions for correcting Excess
Contributions (in section 4.9), Excess Aggregate Contributions (in section 4.11)
or both, as the Administrator determines in its sole discretion. Any correction
required by this section, to the extent possible, shall be made only with
respect to those Highly Compensated Employees who are eligible in both the
arrangement subject to section 401(k) of the Code and the Plan, as subject to
section 401(m) of the Code.
ARTICLE V
Investment of Accounts
5.1 Election of Investment Funds.
(a) Except as otherwise prescribed in subsections (b), (c) and (d)
below, upon enrollment in the Plan, each Participant shall direct that the funds
in the Participant's Account be invested in increments of one percent (1%) in
one or more of the investment options designated by the Administrator, which may
include designated investment funds, specific investments or both. The
investment choices made available shall be sufficient to allow compliance with
section 404(c) of ERISA.
( (b) Matching Contributions made with respect to Plan Years beginning
on and after January 1, 1999 must be invested in Common Stock until the
beginning of the fifth (5th) Plan Year following the Plan Year for which such
contributions are made. Thereafter, a Participant may designate the investment
of the Matching Contribution funds in accordance with the provisions of
subsection (a) above. Notwithstanding anything herein to the contrary, the
five-year restriction prescribed in this subsection (b) shall no longer apply
immediately following a Participant's Severance from Service or on or after
January 1 of the calendar year in which a Participant attains age 55.
(c) Except as otherwise determined by the Administrator, amounts held
in a Participant's ESOP Contribution Account shall be invested in Common Stock.
Notwithstanding the preceding sentence, any Participant who has attained age 55
and completed a Period of Participation of at least ten (10) years shall be
permitted to direct that up to twenty-five percent (25%) of the total number of
shares of Common Stock (rounded to the nearest whole integer) allocated to the
Participant's ESOP Contribution Account as of the December 31 immediately
preceding each Plan Year during the Qualified Election Period may be invested
among the otherwise available investment options under the Plan in accordance
with the provisions of subsection (a) above. With respect to a qualified
Participant's final diversification election, fifty percent (50%) is substituted
for twenty-five percent (25%) in determining the amount subject to the
diversification election. Any direction to diversify hereunder may be made
within 90 days after the close of each Plan Year during the Participant's
Qualified Election Period, as defined below. Any direction made during the
applicable 90-day period following any Plan Year may be revoked or modified at
any time during such 90-day period. The diversification of the ESOP Contribution
Account as provided herein shall be made through the sale by the Trustee of the
29
number of shares of Common Stock directed by the Participant. The amount that
may be invested among the otherwise available investment options under the Plan
shall be equal to the proceeds of such sale. Any such diversification shall be
implemented no later than the 180th day of the Plan Year in which the
Participant's direction is made. All such directions shall be in accordance with
any notice, rulings, or regulations or other guidance issued by the Internal
Revenue Service with respect to section 401(a)(28)(B) of the Code. For the
purposes of this section, the term "Qualified Election Period" shall mean the
six (6) Plan Year period beginning with the later of the Plan Year in which the
Participant attains age 55 or completes a Period of Participation of ten (10)
years.
(d) Notwithstanding subsection (e) below, the Administrator shall
maintain a General Motors Class H Stock Fund ("Fund H") and Raytheon Company
Class A Stock Fund ("Fund I") as investment options under the Plan, subject to
the limitations prescribed in this subsection (d), for four (4) complete Plan
Years following the Effective Date; provided, however, that if at any time prior
to the expiration of such four (4) year period, the aggregate fair market value
of the assets invested in either Fund H or Fund I falls below five percent (5%)
of the highest fair market value of the assets invested in Fund H or Fund I,
respectively, the Administrator may, with six (6) months written notice to
affected Participants, eliminate Fund H or Fund I, as applicable, as investment
options under the Plan. Notwithstanding the foregoing, the Administrator may
eliminate one or both funds at any time if the Administrator determines in good
faith that such elimination is necessary under applicable law (including without
limitation the prudence requirements of ERISA). When Fund H and Fund I are
eliminated in accordance with this section 5.1(d), Participants with assets
invested in Fund H or Fund I, as applicable, shall direct the transfer of such
assets to other funds available under the Plan or, if no such election is made,
the Administrator shall transfer such assets to a low risk fixed income fund as
determined by the Administrator in its discretion. The only assets that may be
invested in Fund H or Fund I are the General Motors Class H Stock Fund and
Raytheon Company Class A Stock Fund, respectively, directly transferred to the
Plan in connection with the mergers identified in Section 1.1(b). A Participant
may not direct that any other funds in the Participant's Account be invested in
Fund H or Fund I.
(e) In its discretion, the Administrator may from time to time
designate new funds and, where appropriate, preclude investment in existing
funds and provide for the transfer of Accounts invested in those funds to other
funds selected by the Participant or, if no such election is made, to a low risk
fixed income fund as determined by the Administrator in its discretion.
(f) Except as otherwise prescribed in subsections (b), (c) and (d)
above, a Participant's investment election will apply to the entire Account of
the Participant.
(g) In establishing rules and procedures under section 5.1, the
following shall apply:
(1) Each Participant, Beneficiary or Alternate Payee shall
affirmatively elect to self-direct the investment of assets in his or her
Account, but such election may provide for default investments in the absence
of specific directions from such Participant, Beneficiary or Alternate Payee.
30
(2) The investment directions of a Participant shall continue to
apply after that Participant's death or incompetence until the Beneficiary (or,
if there is more than one Beneficiary for that Account, all of the
Beneficiaries), guardian or other representatives provide contrary direction.
(3) The Administrator may decline to implement investment
designations if such investment, in the Administrator's judgment:
(A) would result in a prohibited transaction under section
4975 of the Code;
(B) would generate income taxable to the Trust Fund;
(C) would not be in accordance with the Plan and Trust;
(D) would cause a Fiduciary to maintain the indicia of
ownership of any assets of the Trust Fund outside the jurisdiction of the
district courts of the United States other than as permitted by section 404(b)
of ERISA and Labor Reg. ss.2550.404(b)-1;
(E) would jeopardize the Plan's tax qualified status under
the Code;
(F) could result in a loss in excess of the amount credited
to the Account; or
(G) would violate any other requirements of the Code or
ERISA.
(4) Except as otherwise prescribed in subsections (b), (c) and
(d) above, the Administrator may establish reasonable restrictions on the
frequency with which investment directions may be given, consistent with section
404(c) of ERISA.
(5) The Administrator may establish limits on the use of
brokers, investment counsel or other advisors that may be utilized, including
specifying that all investments must be made through a designated broker or
brokers.
(6) The Administrator may establish limits on the types of
investments that are permitted.
(h) Except as otherwise prescribed in subsections (b), (c) and (d)
above, the Administrator shall establish such rules and procedures as may be
advisable or necessary to carry out the provisions of this section, with such
rules and procedures being consistent with section 404(c) of ERISA.
(i) The Administrator shall establish such rules and procedures as
may be advisable or necessary to reasonably ensure that all transactions
involving the investment funds comply with all applicable laws, including the
securities laws.
31
5.2 Change in Investment Allocation of Future Deferrals. Except as
otherwise prescribed in sections 5.1(b), (c) and (d), each Participant may elect
to change the investment allocation of future contributions effective as of the
first Trade Day subsequent to notice to the Recordkeeper by which it is
administratively feasible to make such change. Any changes must be made either
in increments of one percent (1%) of the Participant's Account or in a specified
whole dollar amount and must result in a total investment of one hundred percent
(100%) of the Participant's Account.
5.3 Transfer of Account Balances Between Investment Funds. Except as
otherwise prescribed in sections 5.1(b), (c) and (d), each Participant may elect
to transfer all or a portion of the amount in his or her Account between
investment funds effective as of the first Trade Day following notice to the
Recordkeeper by which it is administratively feasible to carry out such
transfer. In determining the amount of the transfer, the Participant's Account
shall be valued as of the close of business on the Trade Day on which notice is
received; provided, however, that in any case where the notice is received after
4:00 p.m. Eastern Time (daylight or standard, whichever is in effect on the date
of the call), the Account shall be valued as of the close of business on the
next Trade Day. Such transfers must be made in either one percent (1%)
increments of the entire Account or in a specified amount in whole dollars and,
as of the completion of the transfer, must result in investment of one hundred
percent (100%) of the Account. Transfers shall be effected by telephone notice
to the Recordkeeper.
5.4 Ownership Status of Funds. The Trustee shall be the owner of
record of the Plan assets. The Administrator shall have records maintained as of
the Valuation Date for each investment option allocating a portion of the
investment option to each Participant who has elected that his or her Account be
invested in such investment option. The records shall reflect each Participant's
portion of Common Stock, Raytheon Company Class A common stock and General
Motors Class H common stock in cash and unitized shares of stock and shall
reflect each Participant's portion of all other investment options as may be
established by the Administrator in a cash amount.
5.5 Voting Rights. Participants whose Accounts are invested in
Common Stock or Raytheon Company Class A common stock on the last business day
of the second month preceding the record date (the "Voting Eligibility Date")
for any meeting of stockholders have the right to instruct the Trustee as to
voting at such meeting. The number of votes is determined by dividing the value
of the shares in the Participant's Account by the closing price of the
respective classes of stock on the Voting Eligibility Date. If the Trustee has
not received instructions from a Participant as to voting of shares within a
specified time, then the Trustee shall not vote those shares. If a Participant
furnishes the Trustee with a signed vote direction card without indicating a
voting choice thereon, the Trustee shall vote the Participant's shares as
recommended by management. In addition, each Participant shall have the right to
accept or reject any tender or exchange offer for shares of the respective
classes of stock. The Trustee shall vote (or tender or exchange) all combined
fractional shares of the respective classes of stock to the extent possible in
the same proportion as the shares which have been voted (or tendered or
exchanged) by each Participant. Any instructions as to voting (or tender or
exchange) received from an individual Participant shall be held in confidence by
the Trustee and shall not be divulged to the Adopting Employers or to any
officer or employee thereof or to any other person.
32
5.6 Allocation of Earnings.
(a)(1) The Administrator, as of each Valuation Date, shall adjust the
amounts credited to the Accounts (including Accounts for persons who are no
longer Employees) so that the total of such Account balances equals the fair
market value of the Trust Fund assets as of such Valuation Date. Except as
otherwise provided herein, any changes in the fair market value of the Trust
Fund assets since the preceding Valuation Date shall be charged or credited to
each Account in the ratio that the balance in each such Account as of the
preceding Valuation Date bears to the balances in all Accounts as of that
Valuation Date with appropriate adjustments to reflect any distributions,
allocations or similar adjustments to such Account or Accounts since that
Valuation Date.
(2) To the extent that separate investment funds are established (as
provided in section 5.1(a)), the adjustments required by subsection (a)(1) shall
be made by applying subsection (a)(1) separately for each such investment fund
so that any changes in the net worth of each such investment fund are charged or
credited to the portion of each Account invested in such investment fund in the
ratio that the portion of each such Account invested in such investment fund as
of the preceding Valuation Date (reduced by any distributions made from that
portion of such Account since that Valuation Date) bears to the total amount
credited to such investment funds as of that Valuation Date (reduced by
distributions made from such investment fund since that Valuation Date).
(3) Interim valuations, in accordance with the foregoing procedure,
may be made at such time or times as the Administrator directs.
(b) The Administrator may, in its sole discretion, direct the
Trustee to segregate and separately invest any Trust Fund assets. If any assets
are segregated in this fashion, the earnings or losses on such assets shall be
determined apart from other Trust assets and shall be adjusted on each Valuation
Date, or at such other times as the Administrator deems necessary, in accordance
with this section.
ARTICLE VI
Vesting
6.1 Elective Deferral, Employee After-Tax Contribution, Rollover
Contribution, Qualified Nonelective Contribution and ESOP Contribution Accounts.
Each Participant shall have a nonforfeitable right to all amounts in the
Participant's Elective Deferral, Employee After-Tax Contribution, Rollover
Contribution, Qualified Nonelective Contribution and ESOP Contribution Accounts.
6.2 Matching Contribution Account.
(a) Each Participant who performs an Hour of Service on or after
January 1, 1999, shall have a nonforfeitable right to his or her entire
Account, including the Participant's Matching Contribution Account.
33
(b) Each Participant who does not perform an Hour of Service on or
after January 1, 1999 shall have a nonforfeitable right to his or her
Matching Contribution Account in accordance with the terms of the Plan as in
effect before January 1, 1999 (or, if more favorable, under the terms of the
transferee plan in the case of a direct transfer of assets to the Plan in
accordance with sections 1.1(b) and 4.5(c)). For this purpose, before January 1,
1999, the Plan provided that each Participant would have a nonforfeitable right
to his or her Matching Contribution Account upon the earliest of:
(1) the Participant's completion of a Period of Service of five
(5) years;
(2) the Participant's completion of a Period of Participation of
three (3) years;
(3) the Participant's Retirement, death while an Employee,
Disability or attainment of Normal Retirement Age; or
(4) in the case of a Participant who formerly participated in the
Raytheon Salaried Savings and Investment Plan (10011) and the Raytheon
California Hourly Savings and Investment Plan (10012), the Participant's Layoff
or Severance from Service due to Qualified Military Service.
6.3 Forfeitures.
(a) In the event that a Participant incurs a Severance from Service
before attaining a nonforfeitable right to his or her Matching Contributions,
the Matching Contribution Account will be forfeited as of the first day of the
month immediately following the earliest of: (i) the date on which the
Participant incurs a Period of Severance of five (5) consecutive years; (ii)
death; or (iii) the date on which the Participant's Elective Deferral Account is
distributed in accordance with ARTICLE VIII. Forfeitures of Matching
Contributions will be used to reduce future contributions of the Adopting
Employers to the Plan.
(b) If, in connection with his or her Severance from Service,
a Participant received a distribution of his or her Elective Deferral Account
when he or she did not have a nonforfeitable right to his or her Matching
Contribution Account, the Matching Contributions that were forfeited, unadjusted
by any subsequent gains or losses, shall be restored if he or she again becomes
an Employee before incurring a Period of Severance of five (5) consecutive
years.
6.4 Break in Service Rules
(a) Periods of Service. In determining the length of a Period of
Service, the Administrator shall include all Periods of Service, except the
following Periods of Service shall not be taken into account:
(1) in the case of a Participant who has never had a vested account
balance, the Period of Service before any Period of Severance which equals or
exceeds five (5) consecutive years; and
34
(2) in the case of a Participant who has had a vested account
balance and who has incurred a Period of Severance which equals or exceeds five
(5) years, the Period of Service after such Period of Severance shall not be
taken into account for purposes of determining the nonforfeitable interest of
such Participant in the Matching Contributions allocated to his or her Account
before such Period of Severance.
(b) Periods of Severance. In determining the length of a Period of
Service, the Administrator shall include any period of time beginning on an
Employee's Severance from Service Date and ending on the date on which he or she
is next credited with an Hour of Service, provided that such Hour of Service is
credited within the twelve- (12) consecutive month period following such
Severance from Service Date.
(c) Other Periods. In making the determinations described in
subsections (a) and (b) of this section, the second, third, and fourth
consecutive years of a Layoff (from the first anniversary of the last day paid
to the fourth anniversary of the last day paid) and any period in excess of one
(1) year of an Authorized Leave of Absence shall be regarded as neither a Period
of Service nor a Period of Severance.
ARTICLE VII
In-Service Withdrawals
7.1 Elective Deferrals and Qualified Nonelective Contributions.
(a) Subject to the terms and conditions prescribed in section 7.5, a
Participant may withdraw all or a portion of his or her Elective Deferral
Account or Qualified Nonelective Contribution Account either (1) on or after
attainment of age fifty-nine and one-half (59 1/2), or (2) in the event of a
hardship.
(b) In order to be entitled to a hardship withdrawal under this
section, a Participant must satisfy the requirements of both subsection (c) and
subsection (d). Whether a Participant is entitled to a withdrawal under this
section is to be determined by the Administrator in accordance with
nondiscriminatory and objective standards.
(c)(1) A Participant will be deemed to have experienced an immediate
and heavy financial need necessary to satisfy the requirements of this
subsection if the withdrawal is on account of:
(A) medical expenses described in section 213(d) of the Code
incurred by the Participant, the Participant's spouse or any dependents of the
Participant;
(B) the purchase (excluding mortgage payments) of a principal
residence of the Participant;
(C) payment of tuition for the next twelve (12) months of
post-secondary education for the Participant or his or her spouse, children or
dependents; or
35
(D) the need to prevent the eviction of the Participant from his
or her principal residence or the foreclosure on the mortgage of the
Participant's principal residence.
(2) The Administrator may, on the basis of such evidence it deems
relevant, determine that the Participant has experienced an immediate and heavy
financial need for reasons other than those enumerated above in this subsection.
(d)(1) A withdrawal under this subsection will be deemed necessary to
satisfy an immediate and heavy financial need of the Participant if it satisfies
the requirements of this subsection. To the extent the amount of the withdrawal
would be in excess of the amount required to relieve the financial need of the
Participant or to the extent such need may be satisfied from other resources
that are reasonably available to the Participant, such withdrawal shall not
satisfy the requirements of this subsection. For purposes of this subsection, a
Participant's resources shall be deemed to include those assets of his or her
spouse or minor children that are reasonably available to the Participant.
(2) A withdrawal may be treated as necessary to satisfy a financial
need if the Administrator reasonably relies upon the Participant's
representation that the need cannot be relieved:
(A) through reimbursement or compensation by insurance or
otherwise;
(B) by reasonable liquidation of the Participant's assets to
the extent such liquidation would not itself cause an immediate and heavy
financial need;
(C) by cessation of Elective Deferrals under the Plan for at
least twelve (12) months after receipt of the hardship withdrawal; or
(D) by other distributions or nontaxable (at the time of the
loan) loans from plans maintained by the Adopting Employers or by any other
employer or by borrowing from commercial sources on reasonable commercial terms.
(e) If a Participant receives a withdrawal for reasons of financial
hardship, the Participant's Elective Deferrals shall be reduced to four percent
(4%) (or such lower percentage as the Participant shall thereafter designate),
if in excess thereof as of the date of the distribution, and shall not be
increased during the twelve (12) months immediately subsequent to the date of
distribution.
7.2 Employee After-Tax Contributions. Subject to the terms and conditions
prescribed in section 7.5, a Participant may withdraw all or a portion of his
or her Employee After-Tax Contribution Account.
7.3 Matching Contributions. Subject to the terms and conditions
prescribed in section 7.5, after completion of a Period of Participation of five
(5) years or more, a Participant may withdraw all or a portion of his or her
Matching Contribution Account.
36
7.4 Rollover Contributions. Subject to the terms and conditions
prescribed in section 7.5, a Participant may withdraw all or a portion of his or
her Rollover Contribution Account.
7.5 General Terms and Conditions. All in-service withdrawals are subject
to the following terms and conditions:
(a) In-service withdrawals of less than five hundred dollars ($500)
will not be permitted.
(b) In determining the amount of any in-service withdrawal, the
Participant's Account shall be valued as of the close of business on the Trade
Day on which notice is received; provided, however, that in any case where the
notice is received after 4:00 p.m. Eastern Time (daylight or standard, whichever
is in effect on the date of the call), the Account shall be valued as of the
close of business on the next Trade Day.
(c) Payment of the amount withdrawn will be made as soon as
administratively feasible after the effective date of the withdrawal.
(d) In-service withdrawals from a Participant's Account will
generally be made in cash. However, in-service withdrawals from Accounts
invested in Common Stock, General Motors Class H common stock or Raytheon
Company Class A common stock will be made in cash or stock (with cash for
fractional or unissued shares) as elected by the Participant.
(e) Funds for in-service withdrawals will be taken on pro-rata basis
against the Participant's investment balances in his or her Account.
(f) In-service withdrawals may not be redeposited in the Plan.
(g) The Administrator may adopt such other rules and procedures as it
deems necessary, in its sole discretion, to properly administer the in-service
withdrawal provisions in this ARTICLE.
ARTICLE VIII
Distribution of Benefits
8.1 General.
(a) Except as otherwise provided in Exhibit B to this Plan (or
otherwise required by section 4.5(b)), all benefits payable under this Plan
shall be paid in the manner and at the times specified in this ARTICLE.
(b) All payment methods and distributions shall comply with the
requirements of sections 401(a)(4) and 401(a)(9) of the Code and the regulations
thereunder and, if necessary, shall be interpreted to so comply. All
distributions shall comply with the incidental death benefit requirement of
section 401(a)(9)(G) of the Code. Distributions shall comply with the
regulations under section 401(a)(9) of the Code, including Treas. Reg.
ss.1.401(a)(9)-2. The provisions of the Plan reflecting section 401(a)(9) of the
Code override any distribution provisions in the Plan inconsistent with section
401(a)(9) of the Code.
37
8.2 Commencement of Benefits.
(a) A Participant (or Beneficiary) shall be entitled to a distribution
of the nonforfeitable portion of his or her Account upon Severance from Service
(or if earlier, an event described in subsections (e)(3), (4) and (5)).
(b) Except as otherwise provided in this section 8.2, payment of
benefits to a Participant (or Beneficiary) shall commence within a reasonable
period of time following the Participant's Severance from Service (or if
earlier, an event described in subsections (e)(3), (4) and (5)).
(c) If the value of the nonforfeitable portion of the Participant's
Account exceeds the maximum amount prescribed in section 411(a)(11) of the Code,
then payment to the Participant shall not commence without the Participant's
written consent, except as otherwise required by Section 8.2(f). Such written
consent must be obtained no more than ninety (90) days before the commencement
of the distribution. Notwithstanding the preceding provisions of this subsection
(c), all distributions to a Participant's Beneficiary shall commence within a
reasonable period of time following the Participant's death (no consent of the
Beneficiary is required).
(d) Unless a Participant elects otherwise, distribution to the
Participant shall commence no later than sixty (60) days after the close of the
Plan Year in which the latest of the following events occurs:
(1) attainment by the Participant of Normal Retirement Age;
(2) the tenth (10th) anniversary of the date on which Participant
commenced participation in the Plan; or
(3) Participant's Severance from Service.
(e) Distribution of the nonforfeitable portion of a Participant's
Account attributable to Elective Deferrals and Qualified Nonelective
Contributions shall generally commence in accordance with the general provisions
of this section 8.2, but in no event before the earliest of:
(1) the Participant's Severance from Service;
(2) the Participant's attainment of age fifty-nine and one-half
(59 1/2);
(3) the termination of the Plan without establishment or
maintenance of another defined contribution plan (other than an employee stock
ownership plan);
(4) the disposition of substantially all of the assets used by the
Employer in a trade or business of the Employer but only with respect to an
Employee who continues employment with the entity acquiring such assets;
(5) the disposition of the Employer's interest in a subsidiary, but
only with respect to an Employee who continues employment with such subsidiary.
38
(f) A Participant who has attained age seventy and one-half (70 1/2)
and is subject to the mandatory distribution requirements of section 401(a)(9)
of the Code shall receive a lump sum distribution of his or her entire Account
at the time distributions must commence in order to comply with such
requirements. If additional amounts are allocated to such Participant's Account
following such lump sum distribution, additional lump sum distributions of his
or her entire Account shall be made at such times any mandatory distributions
are required to comply with section 401(a)(9) of the Code. Such payments shall
be made notwithstanding any contrary provisions of the Plan or election made by
such Participant.
(g) If a Participant dies before the time when distribution is
considered to have commenced in accordance with applicable regulations, then any
remaining nonforfeitable portion of the Participant's Account shall be
distributed within five (5) years after the Participant's death. If a
distribution is considered to have commenced in accordance with the applicable
regulations before the Participant's death, the remaining nonforfeitable portion
of the Participant's Account shall be distributed at least as rapidly as under
the method of distribution being used as of the date of the Participant's death.
8.3 Form of Distribution.
(a) Distributions under the Plan shall be made only in the form of a
single, lump-sum payment of the entire nonforfeitable portion of the
Participant's Account.
(b) Distribution of the nonforfeitable portion of the Participant's
Account that is invested in Common Stock, Raytheon Company Class A common stock
(if any) or General Motors Class H common stock (if any) shall be made in cash
or in-kind, at the election of the Participant (or Beneficiary). All other
distributions under the Plan shall be made in cash (or cash equivalent).
8.4 Determination of Amount of Distribution. In determining the amount of
any distribution hereunder, the nonforfeitable portion of a Participant's
Account shall be valued as of the close of business on the Trade Day on which
notice is received; provided, however, that in any case where the telephone
notice is received after 4:00 p.m. Eastern Time (daylight or standard, whichever
is in effect on the date of the call), the Account shall be valued as of the
close of business on the next Trade Day.
8.5 Direct Rollovers.
(a) A Participant may elect that all or any portion of a distribution
that would otherwise be paid as an Eligible Rollover Distribution shall instead
be transferred as a Direct Rollover.
(b) The Administrator shall determine and apply rules and procedures as
it deems reasonable with respect to Direct Rollovers. The Administrator may
change such rules and procedures from time to time and shall not be bound by any
previous rules and procedures it has applied.
(c) The following terms shall have the meanings specified:
39
(1) Direct Rollover. An available distribution that is paid
directly to an Eligible Retirement Plan for the benefit of the distributee.
(2) Distributee. A Participant or former Participant. In addition,
the Participant's or former Participant's Surviving Spouse or former spouse who
is the Alternate Payee under a Qualified Domestic Relations Order, as defined in
section 414(p) of the Code, are Distributees with regard to the interest of the
spouse or former spouse.
(3) Eligible Retirement Plan. An individual retirement account
described in section 408(a) of the Code, an individual retirement annuity (other
than an endowment contract) described in section 408(b) of the Code, a qualified
trust described in section 401(a) of the Code if such qualified trust is part of
a plan that permits acceptance of Direct Rollovers or an annuity plan described
in section 403(a) of the Code. In the case of a Direct Rollover for the benefit
of the spouse or former spouse of a Participant, the term "Eligible Retirement
Plan" shall only include an individual retirement account described in section
408(a) of the Code and an individual retirement annuity (other than an endowment
contract) described in section 408(b) of the Code.
(4) Eligible Rollover Distribution. Any distribution under the Plan
to a Participant, a Participant's spouse or a Participant's former spouse,
except for the following:
(A) Any distribution to the extent the distribution is required
under section 401(a)(9) of the Code.
(B) The portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net unrealized
appreciation described in section 402(e)(4) of the Code).
(C) Returns of elective deferrals described in Treas. Reg.
ss.1.415-6(b)(6)(iv) that are returned as a result of the limitations under
section 415 of the Code.
(D) Corrective distributions of excess contributions and excess
deferrals under qualified cash or deferred arrangements as described in Treas.
Reg. ss.1.401(k)-1(f)(4) and ss.1.402(g)-1(e)(3), respectively, and corrective
distributions of excess aggregate contributions as described in Treas. Reg.
ss.1.401(m)-1(e)(3), together with the income allocable to these corrective
distributions.
(E) Loans treated as distributions under section 72(p) of the
Code and not excepted by section 72(p)(2) of the Code.
(F) Loans in default that are deemed distributions.
(G) Dividends paid on employer securities as described in
section 404(k) of the Code.
(H) The costs of life insurance coverage.
40
(I) Similar items designated by the Internal Revenue Service in
revenue rulings, notices, and other guidance of general applicability.
8.6 Notice and Payment Elections.
(a) The Administrator shall provide Participants or other Distributees
of Eligible Rollover Distributions with a written notice designed to comply with
the requirements of section 402(f) of the Code. Such notice shall be provided
within a reasonable period of time before making an Eligible Rollover
Distribution.
(b) Any elections concerning the payment of benefits under this
ARTICLE shall be made on a form prescribed by the Administrator. The Participant
or other Distributee shall submit a completed form to the Administrator at least
thirty (30) days before payment is scheduled to commence, unless the
Administrator agrees to a shorter time period. Any election made under this
section shall be revocable until thirty (30) days before payment is scheduled
to commence.
(c) An election to have payment made in a Direct Rollover shall only
be valid if the Participant or other Distributee provides adequate
information to the Administrator for the implementation of such Direct Rollover
and such reasonable verification as the Administrator may require that the
transferee is an Eligible Retirement Plan.
8.7 Qualified Domestic Relations Orders.
(a) Notwithstanding any contrary provision of the Plan, payments shall
be made in accordance with any judgment, decree or order determined to be a
Qualified Domestic Relations Order.
(b)(1) If the Plan receives a Domestic Relations Order, the
Administrator shall promptly notify the Participant and each Alternate Payee of
the receipt of such order and of the Plan's procedures for determining whether
such order is a Qualified Domestic Relations Order. The Administrator shall,
within a reasonable period after receipt of such order, determine whether it is
a Qualified Domestic Relations Order and notify the Participant and each
Alternate Payee of that determination.
(2) During any period in which the issue of whether a Domestic
Relations Order is a Qualified Domestic Relations Order is being determined, the
Administrator shall separately account for the amounts that would have been
payable to the Alternate Payee during such period if the order had been
determined to be a Qualified Domestic Relations Order.
(c)(1) A Domestic Relations Order meets the requirements of this
subsection only if such order clearly specifies the following:
(A) the name and last known mailing address (if any) f the
Participant and the name and mailing address of each Alternate Payee covered by
the order;
41
(B) the amount or the percentage of the Participant's benefits to
be paid by the Plan to each such Alternate Payee or the manner in which such
amount or percentage is to be determined;
(C) the number of payments or period to which such order applies;
and
(D) each plan to which such order applies.
(2) A Domestic Relations Order meets the requirements of this
subsection only if such order does not:
(A) require the Plan to provide any type or form of benefit or
any option not otherwise provided under the Plan;
(B) require the Plan to provide increased benefits (determined on
the basis of actuarial value); and
(C) does not require the payment of benefits to an Alternate
Payee that is required to be paid to another Alternate Payee under another order
previously determined to be a Qualified Domestic Relations Order.
(d) A domestic relations order shall not be treated as failing to meet
the requirements of section 8.7(c)(2)(A) solely because such order requires that
payment of benefits be made to an Alternate Payee:
(1) in the case of any payment before a Participant has separated
from service, on or after the date on which the Participant attains (or would
have attained) the Earliest Retirement Date;
(2) as if the Participant had retired on the date on which such
payment is to begin under such order (but taking into account only the present
value of the benefits actually accrued and not taking into account the present
value of any employer subsidy for early retirement); and
(3) in any form in which such benefits may be paid under the Plan
to the Participant (other than in the form of a qualified joint and survivor
annuity with respect to the Alternate Payee and his or her subsequent spouse).
(e) A domestic relations order shall not be treated as failing to meet
the requirements of section 8.7(c)(2)(A) solely because such order requires that
payment of benefits be made to an Alternate Payee at a date before the
Participant is entitled to receive a distribution. Such distribution shall be
made to such Alternate Payee notwithstanding any contrary provision of the Plan.
(f) The following terms shall have the meanings specified:
(1) Alternate Payee. Any spouse, former spouse, child or other
dependent of a Participant who is recognized by a Domestic Relations Order as
having a right to benefits under the Plan with respect to such Participant.
(2) Domestic Relations Order. A judgment, decree or order relating
to child support, alimony or marital property rights, as defined in section
414(p)(1)(B) of the Code.
(3) Earliest Retirement Date. The earlier of:
(A) the date on which the Participant is entitled to a
distribution under the Plan; or
(B) the later of:
(i) the date the Participant attains age fifty (50); or
42
(ii) the earliest date on which the Participant could begin
receiving benefits under the Plan if the Participant separated from service.
(4) Qualified Domestic Relations Order. A Domestic Relations Order
that satisfies the requirements of subsection (c) and section 414(p)(1)(A) of
the Code.
(g) If an Alternate Payee entitled to payment under this section is
the spouse or former spouse of a Participant and payment will otherwise be made
in an Eligible Rollover Distribution, then such spouse or former spouse may
elect that all, or any portion, of such payment shall instead be transferred as
a Direct Rollover. Such Direct Rollover shall be governed by the requirements of
section 8.5.
(h) If a Domestic Relations Order directs that payment be made to an
Alternate Payee before the Participant's Earliest Retirement Date and such
Domestic Relations Order otherwise qualifies as a Qualified Domestic Relations
Order, then the Domestic Relations Order shall be treated as a Qualified
Domestic Relations Order and such payment shall be made to the Alternate Payee,
even though the Participant is not entitled to receive a distribution under the
Plan because he or she continues to be an Employee of the Employer.
(i) This section shall be interpreted and administered in
accordance with section 414(p) of the Code.
8.8 Designation of Beneficiary.
(a) A Participant may designate a Beneficiary (including successive or
contingent Beneficiaries) in accordance with this section 8.8. Such designation
shall be on a form prescribed by the Administrator, may include successive or
contingent Beneficiaries, shall be effective upon receipt by the Administrator
and shall comply with such additional conditions and requirements as the
Administrator shall prescribe. The interest of any person as Beneficiary shall
automatically cease on his or her death and any further payments from the Plan
shall be made to the next successive or contingent Beneficiary.
(b) A Participant may change his or her Beneficiary designation from
time to time, without the consent or knowledge of any previously designated
Beneficiary, by filing a new Beneficiary designation form with the Administrator
in accordance with subsection (a).
(c) If a Participant dies without a designated Beneficiary surviving,
the person or persons in the following class of successive beneficiaries
surviving, any testamentary devise or bequest to the contrary notwithstanding,
shall be deemed to be the Participant's Beneficiary: the Participant's (1)
spouse, (2) children and issue of deceased children by right of representation,
(3) parents, (4) brothers and sisters and issue of deceased brothers and sisters
by right of representation, or (5) executors or administrators. If no
Beneficiary can be located during a period of seven (7) years from the date of
death, the Participant's Account shall be treated in the same manner as a
forfeiture under section 6.3(a).
43
(d) Notwithstanding the foregoing provisions of this section,
if a Participant is married at the time of his or her death, such Participant
shall be deemed to have designated his or her surviving spouse as Beneficiary,
unless such Participant has filed a Beneficiary designation under subsection (a)
and such spouse has consented in writing to the election (acknowledging the
effect of the election and specifically acknowledging the nonspouse Beneficiary)
and such consent was witnessed by either the Administrator (or its delegate) or
a notary public. Such consent shall not be required if the Participant does not
have a spouse or the spouse cannot be located. Such consent shall not be
required if the Participant is legally separated from his or her spouse or the
Participant has been abandoned (under applicable local law) and the Participant
has a court order to such effect, unless a Qualified Domestic Relations Order
provides otherwise. If the Participant's spouse is legally incompetent to give
consent, the spouse's legal guardian (even if the guardian is the Participant)
may give consent.
8.9 Lost Participant or Beneficiary.
(a) All Participants and Beneficiaries shall have the obligation to keep
the Administrator informed of their current address until such time as all
benefits due have been paid.
(b) If any amount is payable to a Participant or Beneficiary who cannot
be located to receive such payment, such amount may, at the discretion of the
Administrator, be forfeited; provided, however, that if such Participant or
Beneficiary subsequently claims the forfeited amount, it shall be reinstated and
paid to such Participant or Beneficiary. Such reinstatement may, in the
Administrator's sole discretion, be made from contributions by one or more
Adopting Employers, forfeitures or Trust earnings, and shall be treated as a
special allocation that supersedes the normal allocation rules.
(c) If the Administrator has not, after due diligence, located a
Participant or Beneficiary who is entitled to payment within three (3) years
after the Participant's Severance from Service, then, at the discretion of the
Administrator, such person may be presumed deceased for purposes of this Plan.
Any such presumption of death shall be final, conclusive and binding on all
parties.
8.10 Payments to Incompetents. If a Participant or Beneficiary
entitled to receive any benefits hereunder is adjudicated to be legally
incapable of giving valid receipt and discharge for such benefits, the benefits
may be paid to the duly authorized personal representative of such Participant
or Beneficiary.
8.11 Offsets. Any transfers or payments made from a Participant's
Account to a person other than the Participant pursuant to the provisions of
this Plan shall reduce the Participant's Account and offset any amounts
otherwise due to such Participant. Such transfers or payments shall not be
considered a forfeiture for purposes of the Plan.
8.12 Income Tax Withholding. To the extent required by section 3405 of the
Code, distributions and withdrawals from the Plan shall be subject to federal
income tax withholding.
44
ARTICLE IX
Loans
9.1 Availability of Loans. Participants may borrow against all or a portion
of the nonforfeitable balance in the Participant's Account, subject to the
limitations set forth in this ARTICLE. Participants who have incurred a
Severance from Service will not be eligible for a Plan loan.
9.2 Minimum Amount of Loan. No loan of less than five hundred dollars
($500) will be permitted.
9.3 Maximum Amount of Loan. No loan in excess of fifty percent (50%) of the
Participant's nonforfeitable Account balance will be permitted. In addition,
limits imposed by the Internal Revenue Code and any other requirements of
applicable statute or regulation will be applied. Under the current requirements
of the Internal Revenue Code, a loan cannot exceed the lesser of one-half (1/2)
of the value of the Participant's nonforfeitable Account balance or fifty
thousand dollars ($50,000) reduced by the excess of (a) the highest outstanding
balance of loans from the Plan during the one-year period ending on the day
before the date on which such loan was made over (b) the outstanding balance of
loans from the Plan on the date on which such loan was made.
9.4 Effective Date of Loans. Loans will be effective as specified in the
Administrator's rules then in effect.
9.5 Repayment Schedule. The Participant may select a repayment schedule of
one, two, three, four or five (1, 2, 3, 4 or 5) years. If the loan is used to
acquire any dwelling which, within a reasonable time is to be used (determined
at the time the loan is made) as the principal residence of the Participant, the
repayment period may be extended up to fifteen (15) years at the election of the
Participant. All repayments will be made through payroll deductions in
accordance with the loan agreement executed at the time the loan is made, except
that, in the event of the sale of all or a portion of the business of the
Employer or one of the Adopting Employers, or other unusual circumstances, the
Administrator, through uniform and equitable rules, may establish other means of
repayment. The loan agreement will permit repayment of the entire outstanding
balance in one lump-sum and the repayment of any portion of the outstanding
balance at any time (with appropriate adjustment to the remaining payment
schedule as determined by the Administrator, in its sole discretion, on a
uniform and nondiscriminatory basis). The repayment schedule shall provide for
substantially level amortization of the loan. Loan repayments will be suspended
under this Plan as permitted under section 414(u) of the Code.
9.6 Limit on Number of Loans. Except as otherwise provided herein,
no more than two (2) loans may be outstanding at any time. If a Participant has
more than two (2) loans outstanding on January 1, 1999, or thereafter on account
of a transfer of assets from another plan in accordance with section 4.5, the
Participant may not obtain a new loan until he or she has less than two (2)
loans outstanding.
45
9.7 Interest Rate. The interest rate for a loan pursuant to this
ARTICLE will be equal to the prime rate published in The Wall Street Journal on
the first business day in December, March, June and September of each year. The
rate published on the first business day in December will apply to loans which
are made at any time during the period January 1 through March 31; the rate
published on the first business day of March will apply to loans which are made
at any time during the period April 1 through June 30; the rate published on the
first business day in June will apply to loans which are made at anytime during
the period July 1 through September 30; and the rate published on the first
business day in September will apply to loans which are made at any time during
the period October 1 through December 31. For purposes of this section 9.7, a
loan is considered to be made when the loan proceeds are made available to the
Participant.
9.8 Effect Upon Participant's Account. Upon the granting of a loan
to a Participant by the Administrator, the allocations in the Participant's
Account to the respective investment funds will be reduced on a pro rata basis
and replaced by the loan balance which will be designated as an asset in the
Account. Such reduction shall be effected by reducing the Participant's Account
in the following sequence, with no reduction of the succeeding Accounts until
prior Accounts have been exhausted by the loan: Matching Contribution Account;
Elective Deferral Account; ESOP Contribution Account, Rollover Contribution
Account; and Employee After-Tax Contribution Account. Upon repayment of the
principal and interest, the loan balance will be reduced, the Participant
Accounts will be increased in the reverse order in which they were exhausted by
the loan, and the loan payments will be allocated to the respective investment
funds in accordance with the investment election then in effect.
9.9 Effect of Severance From Service and Nonpayment. In the event
that a loan remains outstanding upon the Severance from Service of a
Participant, the Participant will be given the option of continuing to repay the
outstanding loan. In any case where payments on the outstanding loan are not
made within ninety (90) days of the Participant's Severance from Service Date,
the amount of any unpaid principal will be deducted from the Participant's
account and reported as a distribution. If, as a result of layoff or Authorized
Leave of Absence, a Participant, although still in a Period of Service, is not
being compensated through the Employer's payroll system, loan payments will be
suspended until the earliest of the first pay date after the Participant returns
to active employment with the Employer, the Participant's Severance from Service
Date, or the expiration of twelve (12) months from the date of the suspension.
In the event the Participant does not return to active employment with the
Employer, the Participant will be given the option of continuing to repay the
outstanding loan. If the Participant fails to resume payments on the loan, the
outstanding loan will be reported as a taxable distribution. In no event,
however, shall the loan be deducted from the Participant's Account earlier than
the date on which the Participant (i) incurs a Severance from Service, or (ii)
attains age fifty-nine and one-half (59 1/2).
46
ARTICLE X
Contribution and Benefit Limitations
10.1 Contribution Limits.
(a) The Annual Additions that may be allocated to a Participant's
Account for any Limitation Year shall not exceed the lesser of:
(1) thirty thousand dollars ($30,000); or
(2) twenty-five percent (25%) of the Participant's Compensation
for that Limitation Year.
(b) If the Employer maintains any other Defined Contribution Plans
then the limitations in subsection (a) shall be computed with reference to the
aggregate Annual Additions for each Participant from all such Defined
Contribution Plans.
(c) If the Annual Additions for a Participant would exceed the limits
specified in this section, then the Annual Additions under this Plan for that
Participant shall be reduced to the extent necessary to prevent such limits from
being exceeded. Such reduction shall be made in accordance with section 10.4.
10.2 Overall Limits.
(a) With respect to Limitation Years beginning before January 1, 2000,
if a Participant is participating in both a Defined Contribution Plan and a
Defined Benefit Plan of the Employer, then the sum of the Defined Contribution
Fraction and the Defined Benefit Fraction for any Limitation Year shall not
exceed 1.0.
(b) If the sum of the Defined Contribution Fraction and the Defined
Benefit Fraction would exceed 1.0, then the annual benefits under the Defined
Benefit Plan shall be reduced to the extent necessary so that the sum of such
fractions does not exceed 1.0.
10.3 Annual Adjustments to Limits. The dollar limits for Annual
Additions and the dollar limits in the Defined Benefit Fraction and Defined
Contribution Fraction shall be adjusted for cost-of-living to the extent
permitted under section 415 of the Code.
10.4 Excess Amounts.
(a) The foregoing limits shall be limits on the allocation that may be
made to a Participant's Account in any Limitation Year. If an excess Annual
Addition would otherwise result from allocation of forfeitures, reasonable
errors in determining Compensation or other comparable reasons, then the
Administrator may take any (or all) of the following steps to prevent the excess
Annual Additions from being allocated:
(1) return any contributions from the Participant, as long as such
return is nondiscriminatory;
47
(2) hold the excess amounts unallocated in a suspense account and
apply the balance of the suspense account against Matching or ESOP Contributions
for that Participant made in succeeding years;
(3) hold the excess amounts unallocated n a suspense account and
apply the balance of the suspense account against succeeding year Matching or
ESOP Contributions;
(4) reallocate the excess amounts to other Participants.
(b) Any suspense account established under this section shall not be
credited with income or loss unless otherwise directed by the Administrator. If
a suspense account under this section is to be applied in a subsequent
Limitation Year, then the amounts in the suspense account shall be applied
before any Annual Additions (other than forfeitures) are made for such
Limitation Year.
10.5 Definitions.
(a) The following terms shall have the meanings specified:
(1) Annual Addition. The sum for any Limitation Year of additions
(not including Rollover Contributions) to a Participant's Account as a result
of:
(A) Employer contributions (including Matching Contributions,
ESOP Contributions, Qualified Nonelective Contributions and Elective Deferrals);
(B) Employee contributions;
(C) forfeitures; and
(D) amounts described in Code sections 415(l)(1) and
419A(d)(2).
(2)(A) Defined Benefit Fraction. A fraction, the numerator of
which is the Projected Annual Benefit of the Participant under all Defined
Benefit Plans of the Employer (determined as of the close of the Limitation
Year) and the denominator of which is the Projected Annual Benefit the
Participant would have under such plans (determined as of the close of the
Limitation Year) if such plans provided an annual benefit equal to the lesser
of:
(i) the product of 1.25 multiplied by ninety thousand
dollars ($90,000); or
(ii) the product of 1.4 multiplied by one hundred percent
(100%) of the Participant's average Compensation for the Participant's three (3)
consecutive Years of Service that produce the highest average Compensation.
48
(B) For purposes of determining the Defined Benefit Fraction of
a Participant (i) who was employed by an Adopting Employer on December 18, 1997
and immediately prior thereto was employed by General Motors Corporation or one
of its affiliates or (ii) who transferred to an Adopting Company from General
Motors Corporation or one of its affiliates after such date and before December
1, 1998, service for and Compensation received from General Motors Corporation
and its affiliates, if any, shall be taken into account, and the Projected
Annual Benefit under any Defined Benefit Plan of the Employer shall not be
reduced as a result of the transfer of any assets or liabilities from a Defined
Benefit Plan maintained by General Motors Corporation and its affiliates.
(3) Defined Benefit Plan. Any plan qualified under section 401(a)
of the Code that is not a Defined Contribution Plan.
(4)(A) Defined Contribution Fraction. A fraction, the numerator
of which is the sum of the Annual Additions to the Participant's Accounts as of
the close of the Limitation Year, and the denominator of which is equal to the
sum of the lesser of the following amounts determined for such Limitation Year
and for each prior year of service with the Employer:
(i) the product of 1.25 multiplied by thirty thousand
dollars ($30,000); or
(ii) the product of 1.4 multiplied by twenty-five percent
(25%) of the Participant's Compensation.
(B) For purposes of determining the Defined Contribution
Fraction of a Participant, services performed for, Compensation paid by and
Annual Additions made by General Motors Corporation or any of its affiliates
shall not be taken into account.
(5) Defined Contribution Plan. A plan qualified under section
401(a) of the Code that provides an individual account for each Participant and
benefits based solely on the amount contributed to the Participant's Account,
plus any income, expenses, gains and losses, and forfeitures of other
Participants which may be allocated to such Participant's account.
(6) Limitation Year. The Plan Year, until the Employer adopts a
different Limitation Year.
(7) Projected Annual Benefit. The annual benefit to which a
Participant would be entitled, assuming:
(A) the Participant continues in employment until Normal
Retirement Age under the Plan;
(B) the Participant's Compensation for the Limitation Year
remains the same until such Normal Retirement Age; and
(C) all other relevant factors under the Plan for the
Limitation Year will remain constant.
49
ARTICLE XI
Top-Heavy Rules
11.1 General. This ARTICLE shall only be applicable if the Plan
becomes a Top-Heavy Plan under section 416 of the Code. If the Plan does not
become a Top-Heavy Plan, then none of the provisions of this ARTICLE shall be
operative. The provisions of this ARTICLE shall be interpreted and applied in a
manner consistent with the requirements of section 416 of the Code and the
regulations thereunder.
11.2 Vesting.
(a) If the Plan becomes a Top-Heavy Plan, then amounts in a
Participant's Account attributable to Matching and ESOP Contributions shall be
vested in accordance with this section, in lieu of ARTICLE VI, to the extent
this section produces a greater degree of vesting. This section shall only apply
to Participants who have at least an Hour of Service after the Plan becomes a
Top-Heavy Plan.
(b) If applicable, amounts in a Participant's Account attributable
to Matching and ESOP Contributions shall vest as follows:
Years of
Top Heavy Service Vested Percentage
Fewer than 3 0%
3 or more 100%
(c) If the Plan ceases to be a Top-Heavy Plan then subsection (b)
shall no longer be applicable; provided, however, that in no event shall the
vested percentage of any Participant be reduced by reason of the Plan ceasing to
be a Top-Heavy Plan. Subsection (b) shall nevertheless continue to apply for any
Participant who was previously covered by it and who has at least three (3)
Years of Top-Heavy Service.
11.3 Minimum Contribution.
(a) For each Plan Year that the Plan is a Top-Heavy Plan, the Adopting
Employers shall make a contribution to be allocated directly to the Account of
each Non-Key Employee.
(b) The amount of the contribution (and forfeitures) required
to be contributed and allocated for a Plan Year by this section is three percent
(3%) of the Top-Heavy Compensation for that Plan Year of each Non-Key Employee
who is both a Participant and an Employee on the last day of the Plan Year for
which the contribution is made, with adjustments as provided herein. If the
contributions (other than Rollover Contributions) allocated to the Accounts of
each Key Employee for a Plan Year are less than three percent (3%) of his or her
Top-Heavy Compensation, then the contribution required by the preceding sentence
shall be reduced for that Plan Year to the same percentage of Top-Heavy
Compensation that was allocated to the Account of the Key Employee whose Account
received the greatest allocation of contributions (other than Rollover
Contributions) for that Plan Year, when computed as a percentage of Top-Heavy
Compensation.
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(c) The contribution required by this section shall be reduced
for a Plan Year to the extent of any ESOP or Qualified Nonelective Contributions
made and allocated under this Plan or any other contributions (as permitted
under section 416 of the Code and the regulations thereunder) from the Adopting
Employers made and allocated under any other Aggregated Plans.
11.4 Definitions.
(a) The following terms shall have the meanings specified herein:
(1) Aggregated Plans.
(A) The Plan, any plan that is part of a "required aggregation
group" and any plan that is part of a "permissive aggregation group" that the
Adopting Employers treat as an Aggregated Plan.
(B) The "required aggregation group" consists of each plan of
the Adopting Employers in which a Key Employee participates (in the Plan Year
containing the Determination Date or any of the four (4) preceding Plan Years)
and each other plan of the Adopting Employers which enables any plan of the
Adopting Employers in which a Key Employee participates to meet the requirements
of section 401(a)(4) or section 410(b) of the Code. Also included in the
required aggregation group shall be any terminated plan that covered a Key
Employee and was maintained within the five (5) year period ending on the
Determination Date.
(C) The "permissive aggregation group" consists of any plan not
included in the "required aggregation group" if the Aggregated Plan described in
subparagraph (A) above would continue to meet the requirements of section
401(a)(4) and 410 of the Code with such additional plan being taken into
account.
(2) Determination Date. The last day of the preceding Plan Year, or,
in the case of the first plan year of any plan, the last day of such plan year.
The computations made on the Determination Date shall utilize information from
the immediately preceding Valuation Date.
(3) Key Employee.
(A) An Employee (or former Employee) who, at any time during the
Plan Year containing the Determination Date or any of the four (4) preceding
Plan Years, is:
(i) An officer of one of the Adopting Employers with annual
Top-Heavy Compensation for the Plan Year greater than fifty percent (50%) of the
amount in effect under section 415(c)(1)(A) of the Code for the calendar year in
which that Plan Year ends;
(ii) one of the ten (10) Employees owning (or considered as
owning under section 318 of the Code) the largest interest in one of the
Adopting Employers, who has more than one-half of one percent (.5%) interest in
such Adopting Employer, and who has annual Top-Heavy Compensation for the Plan
Year at least equal to the maximum dollar limitation under section 415(c)(1)(A)
of the Code for the calendar year in which that Plan Year ends;
51
(iii) a five percent (5%) or greater shareholder in one of the
Adopting Employers; or
(iv) a one percent (1%) shareholder in one of the Adopting
Employers with annual Top-Heavy Compensation from the Adopting Employer of more
than one hundred fifty thousand dollars ($150,000).
(B) For purposes of paragraphs (3)(A)(iii) and (3)(A)(iv), the
rules of section 414(b), (c) and (m) of the Code shall not apply. Beneficiaries
of an Employee shall acquire the character of such Employee and inherited
benefits will retain the character of the benefits of the Employee who performed
services.
(4) Non-Key Employee. Any Employee who is not a Key Employee.
(5) Super Top-Heavy Plan. A Top-Heavy Plan in which the sum of the
present value of the cumulative accrued benefits and accounts for Key Employees
exceeds ninety percent (90%) of the comparable sum determined for all Employees.
The foregoing determination shall be made in the same manner as the
determination of a Top-Heavy Plan under this section.
(6) Top-Heavy Compensation. The term Top-Heavy Compensation shall
have the same meaning as the term Compensation has under section 2.13.
(7) Top-Heavy Plan. The Plan is a Top-Heavy Plan for a Plan Year
if, as of the Determination Date for that Plan Year, the sum of (i) the present
value of the cumulative accrued benefits for Key Employees under all Defined
Benefit Plans that are Aggregated Plans and (ii) the aggregate of the accounts
of Key Employees under all Defined Contribution Plans that are Aggregated Plans
exceeds sixty percent (60%) of the comparable sum determined for all Employees.
.. (8) Years of Top-Heavy Service. The number of Years of Service with
the Adopting Employers that might be counted under section 411(a) of the Code,
disregarding all service that may be disregarded under section 411(a)(4) of the
Code.
(b) The definitions in this section and the provisions of this ARTICLE
shall be interpreted in a manner consistent with section 416 of the Code.
11.5 Special Rules.
(a) For purposes of determining the present value of the
cumulative accrued benefit for any Participant or the amount of the Account of
any Participant, such present value or amount shall be increased by the
aggregate distributions made with respect to such Participant under the Plan
during the Plan Year that includes the Determination Date and the four (4)
preceding Plan Years (if such amounts would otherwise have been omitted).
52
(b)(1) In the case of unrelated rollovers and transfers, (i)
the plan making the distribution or transfer is to count the distribution as a
distribution under section 416(g)(3) of the Code, and (ii) the plan accepting
the rollover or transfer is not to consider the rollover or transfer as part of
the accrued benefit if such rollover or transfer was accepted after December 31,
1983, but is to consider it as part of the accrued benefit if such rollover or
transfer was accepted before January 1, 1984. For this purpose, rollovers and
transfers are to be considered unrelated if they are both initiated by the
Employee and made from a plan maintained by one employer to a plan maintained by
another employer.
(2) In the case of related rollovers and transfers, the plan making
the distribution or transfer is not to count the distribution or transfer under
section 416(g)(3) of the Code, and the plan accepting the rollover or transfer
counts the rollover or transfer in the present value of the accrued benefits.
For this purpose, rollovers and transfers are to be considered related if they
are not unrelated under subsection (b)(1).
(c) If any individual is a Non-Key Employee with respect to
any plan for any Plan Year, but such individual was a Key Employee with respect
to such plan for any prior Plan Year, any accrued benefit for such Employee (and
the account of such Employee) shall not be taken into account.
(d) Beneficiaries of Key Employees and former Key Employees are
considered to be Key Employees and Beneficiaries of Non-Key Employees and former
Non-Key Employees are considered to be Non-Key Employees.
(e) The accrued benefit of an Employee who has not performed any
service for the Adopting Employer maintaining the Plan at any time during the
five (5) year period ending on the Determination Date is excluded from the
calculation to determine top-heaviness. However, if an Employee performs no
services, such Employee's total accrued benefit is included in the calculation
for top-heaviness.
11.6 Adjustment of Limitations.
(a) If this section is applicable, then the contribution and benefit
limitations in section 10.5 shall be reduced. Such reduction shall be made by
modifying section 10.5(a)(2)(A) of the definition of Defined Benefit Fraction to
instead be "(i) the product of 1.0 multiplied by ninety thousand dollars
($90,000), or" and by modifying section 10.5(a)(4)(A) of the definition of
Defined Contribution Fraction to instead be "(i) the product of 1.0 multiplied
by thirty thousand dollars ($30,000), or"
(b) This section shall be applicable for any Plan Year in which either:
(1) the Plan is a Super Top-Heavy Plan, or
(2) the Plan both is a Top-Heavy Plan (but not a Super Top-Heavy
Plan) and provides contributions (other than Rollover Contributions and
forfeitures to the Account of any Non-Key Employee in an amount less than four
percent (4%) of such Participant's Top-Heavy Compensation, as determined in
accordance with section 11.3(b).
53
ARTICLE XII
The Trust Fund
12.1 Trust. During the period in which this Plan remains in
existence, the Company or any successor thereto shall maintain in effect a Trust
with a corporation and/or an individual(s) as Trustee, to hold, invest, and
distribute the Trust Fund in accordance with the terms of such Trust.
12.2 Investment of Accounts. The Trustee shall invest and reinvest
the Participant's accounts in the investment options available under the Plan in
accordance with ARTICLE V, as directed by the Administrator or its delegate. The
Administrator shall issue such directions in accordance with the investment
options selected by the Participants which shall remain in force until altered
in accordance with Article V.
12.3 Expenses. Expenses of the Plan and Trust shall be paid from the
Trust.
12.4 Acquisition Loans. With respect to the ESOP Portion of the
Plan, the Administrator may direct the Trustee to incur Acquisition Loans from
time to time to finance the acquisition of Common Stock or to repay a prior
Acquisition Loan. An Acquisition Loan shall be for a specific term, shall bear a
reasonable rate of interest, and shall not be payable on demand except in the
event of default. Acquisition loans may be secured by the pledge of the Financed
Shares so acquired (or acquired with the proceeds of a prior Acquisition Loan
which is being refinanced). No other Trust assets may be pledged as collateral
for an Acquisition Loan, and no lender shall have recourse against Trust assets
other than any Financed Shares remaining subject to pledge. If the lender is a
party in interest (as defined in ERISA), the Acquisition Loan must provide for a
transfer of Trust assets on default only upon and to the extent of the failure
of the Trust to meet the payment schedule of the Acquisition Loan. Any pledge of
Financed Shares must provide for the release of the shares so pledged as
payments on the Acquisition Loan are made by the Trustee, and such Financed
Shares are allocated to Participants' ESOP Contribution Accounts under Article
IV. Payments of principal and/or interest on an Acquisition Loan shall be made
by the Trustee (as directed by the Administrator) only from Employer
contributions paid in cash to enable the Trust to repay such Acquisition Loan,
from earnings attributable to such Employer contributions, and from any cash
dividends received by the Trust on such Financed Shares. Except as required by
section 409(h) of the Code and by Treasury Regulations sections 54.4975(b)(9),
(10), or as otherwise required by applicable law, no Financed Shares may be
subject to a put, call or other option, or a buy-sell or similar arrangement
while held by, or distributed from, the Plan, whether or not the ESOP Portion of
the Plan is an employee stock ownership plan, within the meaning of section
4975(e)(7) of the Code at the time.
54
12.5 Sale of Common Stock. With respect to the ESOP Portion of the
Plan, subject to the approval of the Senior Vice President of Human Resources of
the Company or other officer authorized by the Board of Directors to give such
approval, the Administrator may direct the Trustee to sell shares of Common
Stock to any person, including the Company and any Affiliates, provided such
sale must be made at a price not less favorable to the Plan than fair market
value. In the event that the Trustee is unable to make payments of principal
and/or interest on an Acquisition Loan when due, the Administrator may direct
the Trustee to sell any Financed Shares that have not yet been allocated to
Participants' ESOP Contribution Accounts or to obtain an Acquisition Loan in an
amount sufficient to make such payments.
ARTICLE XIII
Administration of The Plan
13.1 General Administration. The general administration of the Plan
shall be the responsibility of the Company (or any successor thereto) which
shall be the Administrator and named Fiduciary for purposes of ERISA. The
Company shall have the authority, in its sole discretion, to construe the terms
of the Plan and to make determinations as to eligibility for benefits and as to
other issues within the "Responsibilities of the Administrator" described in
this ARTICLE. All such determinations of the Company shall be conclusive and
binding on all persons.
13.2 Responsibilities of the Administrator. Except as otherwise
provided in ERISA, the Administrator (and any other named Fiduciaries) may
allocate any duties and responsibilities under the Plan and Trust among
themselves in any mutually agreed upon manner. Such allocation shall be in a
written document signed by the Administrator (and any other named Fiduciaries)
and shall specifically set forth this allocation of duties and responsibilities,
which may include the following:
(a) Determination of all questions which may arise under the
Plan with respect to questions of fact and law, including without limitation
eligibility for participation, administration of Accounts, membership, vesting,
loans, withdrawals, accounting, status of Accounts, stock ownership and voting
rights, and any other issue requiring interpretation or application of the Plan.
(b) Establishment of procedures required by the Plan, such as
notification to Employees as to joining the Plan, selecting and changing
investment options, suspending deferrals, exercising voting rights in stock,
withdrawing and borrowing Account balances, designation of Beneficiaries,
election of method of distribution, and any other matters requiring a uniform
procedure.
(c) Submission of necessary amendments to supplement omissions from the
Plan or reconcile any inconsistency therein.
(d) Filing appropriate reports with the government as required by law.
55
(e) Appointment of a Trustee or Trustees, Recordkeepers, and
investment managers.
(f) Review at appropriate intervals of the performance of the Trustee
and such investment managers as may have been designated.
(g) Appointment of such additional Fiduciaries as deemed necessary for
the effective administration of the Plan, such appointments to be by written
instrument.
13.3 Liability for Acts of Other Fiduciaries. Each Fiduciary shall
be responsible only for the duties allocated or delegated to said Fiduciary, and
other Fiduciaries shall not be liable for any breach of fiduciary responsibility
with respect to any act or omission of any other Fiduciary unless:
(a) The Fiduciary knowingly participates in or knowingly attempts to
conceal the act or omission of such other Fiduciary and knows that such act or
omission constitutes a breach of fiduciary responsibility by the other
Fiduciary;
(b) The Fiduciary has knowledge of a breach of fiduciary
responsibility by the other Fiduciary and has not made reasonable efforts under
the circumstances to remedy the breach; or
(c) The Fiduciary's own breach of his or her specific fiduciary
responsibilities has enabled another Fiduciary to commit a breach. No Fiduciary
shall be liable for any acts or omissions which occur prior to his or her
assumption of Fiduciary status or after his or her termination from such status.
13.4 Employment by Fiduciaries. Any Fiduciary hereunder may employ,
with the written approval of the Administrator, one or more persons to render
service with regard to any responsibility which has been assigned to such
Fiduciary under the terms of the Plan including legal, tax, or investment
counsel and may delegate to one or more persons any administrative duties
(clerical or otherwise) hereunder.
13.5 Recordkeeping. The Administrator shall keep or cause to be
kept any necessary data required for determining the Account status of each
Participant. In compiling such information, the Administrator may rely upon its
employment records, including representations made by the Participant in the
employment application and subsequent documents submitted by the Participant to
the Employer. The Trustee shall be entitled to rely upon such information when
furnished by the Administrator or its delegate. Each Employee shall be required
to furnish the Administrator upon request and in such form as prescribed by the
Administrator, such personal information, affidavits and authorizations to
obtain information as the Administrator may deem appropriate for the proper
administration of the Plan, including but not limited to proof of the Employee's
date of birth and the date of birth of any person designated by a Participant as
a Beneficiary.
56
13.6 Claims Review Procedure.
(a) Except as otherwise provided in this section 13.6, the
Administrator shall make all determinations as to the right of any person to
Accounts under the Plan. Any such determination shall be made pursuant to the
following procedures, which shall be conducted in a manner designed to comply
with section 503 of ERISA:
(1) Step 1. Claims with respect to an Account should be filed by
a claimant as soon as practicable after the claimant knows or should know that a
dispute has arisen with respect to an Account, but at least thirty (30) days
prior to the claimant's actual retirement date or, if applicable, within sixty
(60) days after the death, Disability or Severance from Service of the
Participant whose Account is at issue, by mailing a copy of the claim to the
Benefits and Services Department, Raytheon Company, 141 Spring Street,
Lexington, Massachusetts 02421.
(2) Step 2. In the event that a claim with respect to an Account is
wholly or partially denied by the Administrator, the Administrator shall, within
ninety (90) days following receipt of the claim, so advise the claimant in
writing setting forth: the specific reason or reasons for the denial; specific
reference to pertinent Plan provisions on which the denial is based; a
description of any additional material or information necessary for the claimant
to perfect the claim; an explanation as to why such material or information is
necessary; and an explanation of the Plan's claim review procedure.
(3) Step 3. Within sixty (60) days following receipt of the denial
of a claim with respect to an Account, a claimant desiring to have the denial
appealed shall file a request for review by an officer of the Company or a
claims review committee, as designated by the Company, by mailing a copy thereof
to the address shown in subsection (a)(1); provided, however, that such officer
or any member of such claims review committee, as applicable, may not be the
person who made the initial adverse benefits determination nor a subordinate of
such person.
(4) Step 4. Within thirty (30) days following receipt of a request
for review, the designated officer or claims review committee shall provide the
claimant a further opportunity to present his or her position. At the designated
officer or claims review committee's discretion, such presentation may be
through an oral or written presentation. Prior to such presentation, the
claimant shall be permitted the opportunity to review pertinent documents and to
submit issues and comments in writing. Within a reasonable time following
presentation of the claimant's position, which usually should not exceed thirty
(30) days, the designated officer or claims review committee shall inform the
claimant in writing of the decision on review setting forth the reasons for such
decision and citing pertinent provisions in the Plan.
(b) Except as otherwise provided in subsection (a), the
Administrator is the Fiduciary to whom the Plan grants full discretion, with the
advice of counsel, to interpret the Plan; to determine whether a claimant is
eligible for benefits; to decide the amount, form and timing of benefits; and to
57
resolve any other matter under the Plan which is raised by a claimant or
identified by the Administrator. All questions arising from or in connection
with the provisions of the Plan and its administration, not herein provided to
be determined by the Board of Directors, shall be determined by the
Administrator, and any determination so made shall be conclusive and binding
upon all persons affected thereby.
13.7 Indemnification of Directors and Employees. The Adopting
Employers shall indemnify any Fiduciary who is a director, officer or Employee
of the Employer, his or her heirs and legal representatives, against all
liability and reasonable expense, including counsel fees, amounts paid in
settlement and amounts of judgments, fines or penalties, incurred or imposed
upon him in connection with any claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of acts or omissions
in his or her capacity as a Fiduciary hereunder, provided that such act or
omission is not the result of gross negligence or willful misconduct. The
Adopting Employers may indemnify other Fiduciaries, their heirs and legal
representatives, under the circumstances, and subject to the limitations set
forth in the preceding sentence, if such indemnification is determined by the
Board of Directors to be in the best interests of the Adopting Employers.
13.8 Immunity from Liability. Except to the extent that section
410(a) of ERISA prohibits the granting of immunity to Fiduciaries from liability
for any responsibility, obligation, or duty imposed under Title I, Subtitle B,
Part 4, of said Act, an officer, Employee, member of the Board of Directors of
the Employer or other person assigned responsibility under this Plan shall be
immune from any liability for any action or failure to act except such action or
failure to act which results from said officer's, Employee's, Participant's or
other person's own gross negligence or willful misconduct.
ARTICLE XIV
Amendment Or Termination Of Plan
14.1 Right to Amend or Terminate Plan. The Company reserves the
right at any time or times, by action of the Board of Directors, to modify,
amend or terminate the Plan in whole or in part, in which event a certified copy
of the resolution of the Board of Directors, authorizing such modification,
amendment or termination shall be delivered to the Trustee and to the other
Adopting Employers whose Employees are covered by this Plan, provided, however,
that no amendment to the Plan shall be made which shall:
(a) reduce any vested right or interest to which any Participant or
Beneficiary is then entitled under this Plan or otherwise reduce the vested
rights of a Participant in violation of section 411(d)(6) of the Code;
(b) vest in the Adopting Employers any interest or control over any
assets of the Trust;
(c) cause any assets of the Trust to be used for, or diverted to,
purposes other than for the exclusive benefit of Participants and their
Beneficiaries; or
(d) change any of the rights, duties or powers of the Trustee without
its written consent.
58
(e) Notwithstanding the foregoing provisions of this section or any
other provisions of this Plan, any modification or amendment of the Plan may be
made retroactively if necessary or appropriate to conform the Plan with, or to
satisfy the conditions of, ERISA, the Code, or any other law, governmental
regulation or ruling. In the alternative, subject to the conditions prescribed
in subsections (a) through (e), the Plan may be amended by an officer of the
Company authorized by the Board of Directors to amend the Plan, provided,
however, that any such amendment does not, in the view of such officer,
materially increase costs of the Plan to the Company or any Adopting Employer.
14.2 Amendment to Vesting Schedule. Any amendment that modifies the vesting
provisions of ARTICLE VI shall either:
(a) provide for a rate of vesting that is at least as rapid for any
Participant as the vesting schedule previously in effect; or
(b) provide that any adversely affected Participant with a
Period of Service of at least three (3) years may elect, in writing, to remain
under the vesting schedule in effect prior to the amendment. Such election must
be made within sixty (60) days after the later of the:
(1) adoption of the amendment;
(2) effective date of the amendment; or
(3) issuance by the Administrator of written notice
of the amendment.
14.3 Maintenance of Plan. The Adopting Employers have established the Plan
with the bona fide intention and expectation that they will be able to make
contributions indefinitely, but the Adopting Employers are not and shall not be
under any obligation or liability whatsoever to continue contributions or to
maintain the Plan for any given length of time.
14.4 Termination of Plan and Trust. The Plan and Trust hereby created shall
terminate upon the occurrence of any of the following events:
(a) Delivery to the Trustee of a notice of termination executed by the
Company specifying the date as of which the Plan and Trust shall terminate; or
(b) Adjudication of the Company as bankrupt or general assignment by
the Company to or for the benefit of creditors or dissolution of the Company.
14.5 Distribution on Termination.
(a)(1) If the Plan is terminated, or contributions permanently
discontinued, an Adopting Employer, at its discretion, may (at that
time or at any later time) direct the Trustee to distribute the amounts in a
Participant's Account in accordance with the distribution provisions of the
Plan. Such distribution shall, notwithstanding any prior provisions of the Plan,
be made in a single lump-sum without the Participant's consent as to the timing
of such distribution. If, however, an Adopting Employer (or an Affiliate)
maintains another defined contribution plan (other than an employee stock
ownership plan), then the preceding sentence shall not apply and the Adopting
Employer, at its discretion, may direct such distributions to be made as a
direct transfer to such other plan without the Participant's consent, if the
Participant does not consent to an immediate distribution.
59
(2) If an Adopting Employer does not direct distribution under
paragraph (1), each Participant's Account shall be maintained until distributed
in accordance with the provisions of the Plan (determined without regard to this
section) as though the Plan had not been terminated or contributions
discontinued.
(b) If the Administrator determines that it is administratively
impracticable to make distributions under this section in cash or that it would
be in the Participant's best interest to make some or all of the distributions
with in-kind property, it shall offer all Participants and Beneficiaries
entitled to a distribution under this section a reasonable opportunity to elect
to receive a distribution of the in-kind property being distributed by the
Trust. Those Participants and Beneficiaries so electing shall receive a
proportionate share of such in-kind property in the form (outright, in trust or
in partnership) that the Administrator determines will provide the most feasible
method of distribution.
(c)(1) Amounts attributable to elective contributions shall only be
distributable by reason of this section if one of the following is applicable:
(A) the Plan is terminated without the establishment or
maintenance of another defined contribution plan (other than an employee stock
ownership plan);
(B) an Adopting Employer has a sale or other disposition to an
unrelated corporation of substantially all of the assets used by the Adopting
Employer in a trade or business of the Adopting Employer with respect to an
Employee who continues employment with the corporation acquiring such assets; or
(C) an Adopting Employer has a sale or other disposition to an
unrelated entity of the Adopting Employer's interest in a subsidiary with
respect to an Employee who continues employment with such subsidiary.
(2) For purposes of this subsection, the term "elective
contributions" means employer contributions made to the Plan that were subject
to a cash or deferred election under a cash or deferred arrangement.
(3) Elective contributions are distributable under subsections
(c)(1)(B) and (C) above only if the Adopting Employers continue to maintain the
Plan after the disposition.
ARTICLE XV
Additional Provisions
15.1 Effect of Merger, Consolidation or Transfer. In the event of
any merger or consolidation with or transfer of assets or liabilities to any
other plan or to this Plan, each Participant of the Plan shall be entitled to a
benefit immediately after the merger, consolidation or transfer, which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan had been
terminated).
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15.2 No Assignment.
(a) Except as provided herein, the right of any Participant or
Beneficiary to any benefit or to any payment hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or levy of any kind.
(b) Subsection (a) shall not apply to any payment or transfer
permitted by the Internal Revenue Service pursuant to regulations issued under
section 401(a)(13) of the Code.
(c) Subsection (a) shall not apply to any payment or transfer
pursuant to a Qualified Domestic Relations Order.
(d) Subsection (a) shall not apply to any payment or transfer
to the Trust in accordance with section 401(a)(13)(C) of the Code to satisfy the
Participant's liabilities to the Plan or Trust in any one or more of the
following circumstances:
(1) the Participant is convicted of a crime involving the Plan;
(2) a civil judgment (or consent order or decree) in an action is
brought against the Participant in connection with an ERISA fiduciary violation;
or
(3) the Participant enters into a settlement agreement with the
Department of Labor or the Pension Benefit Guaranty Corporation over an ERISA
fiduciary violation.
15.3 Limitation of Rights of Employees. This Plan is strictly a
voluntary undertaking on the part of the Adopting Employers and shall not be
deemed to constitute a contract between any of the Adopting Employers and any
Employee, or to be a consideration for, or an inducement to, or a condition of
the employment of any Employee. Nothing contained in the Plan shall be deemed to
give any Employee the right to be retained in the service of any of the Adopting
Employers or shall interfere with the right of any of the Adopting Employers to
discharge or otherwise terminate the employment of any Employee of an Adopting
Employer at any time. No Employee shall be entitled to any right or claim
hereunder except to the extent such right is specifically fixed under the terms
of the Plan.
15.4 Construction. The provisions of this Plan shall be interpreted
and construed in accordance with the requirements of the Code and ERISA. Any
amendment or restatement of the Plan or Trust that would otherwise violate the
requirements of section 411(d)(6) of the Code or otherwise cause the Plan or
Trust to cease to be qualified under section 401(a) of the Code shall be deemed
to be invalid. Capitalized terms shall have meanings as defined herein. Singular
nouns shall be read as plural, masculine pronouns shall be read as feminine and
vice versa, as appropriate. References to "section" or "ARTICLE" shall be read
as references to appropriate provisions of this Plan, unless otherwise
indicated.
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15.5 Company Determinations. Any determinations, actions or
decisions of the Company (including but not limited to, Plan amendments and Plan
termination) shall be made by its Board of Directors in accordance with its
established procedures or by such other individuals, groups or organizations
that have been properly delegated by the Board of Directors to make such
determination or decision.
15.6 Continued Qualification. This Plan is amended and restated
with the intent that it shall continue to qualify under sections 401(a), 401(k)
and 4975(e)(7) of the Code as those sections exist at the time the Plan is
amended and restated. If the Internal Revenue Service determines that the Plan
does not meet those requirements as amended and restated, the Plan shall be
amended retroactively as necessary to correct any such inadequacy. Section 7.2
shall not be effective until the date the Internal Revenue Service issues a
favorable determination letter with respect to the Plan as amended and restated
herein (including section 7.2). Until section 7.2 becomes effective in
accordance with the immediately preceding sentence of this section 15.6, a
Participant may withdraw all or a portion of his or her Employee After-Tax
Contribution Account, subject to the condition that such Participant may not
make any Employee After-Tax Contributions under the Plan for at least six (6)
months after receipt of the in-service withdrawal.
15.7 Governing Law. This Plan shall be governed by, construed and
administered in accordance with ERISA and any other applicable federal law;
provided, however, that to the extent not preempted by federal law, this Plan
shall be governed by, construed and administered under the laws of the
Commonwealth of Massachusetts, other than its laws respecting choice of law.
62
Exhibit A
ADOPTING EMPLOYERS
As of January 1, 1999
(Unless Indicated Otherwise)
I. Raytheon Systems Company; but only with respect to the following divisions,
operations or similar cohesive groups:
Legacy Co Payroll Eligible Division, Operation or
Similar Cohesive Group
(A.) Training and Services
RSC cc05 EX, NE,H. All Non-Union
RSE cc26 EX, NE
HTSC (HAC) EX, NE All Non-Union/Non-SCA
HTI EX, NE All Non-Union/Non-SCA
HSTX EX, NE, H
HTSC H AFCE, Local 1744 (Indianapolis, IN)
(B.) RSC Defense Systems
RES EX, NE, H (PS) Non-Union Hourly/Non-SCA
TI EX, NE, H (PS) Non-Union Hourly/Non-SCA
E-SYS EX, NE, H (PS) Non-Union Hourly/Non-SCA
HAC EX, NE, H (PS) Non-Union Hourly/Non-SCA
STDMIS EX, NE (PS) Non-Union Hourly/Non-SCA
RES H IBEW, Local 1505 (MA)
RES H IAM, Lodge 1836 (MA)
HAC H IAMAW Dist. Lodge 725, IAM Lodge 1125
(San Diego, CA)
HAC H IAM Lodge 830 (Louisville, KY (HMSC))
HHG EX, NE, H HHG
(C.) 12
RES EX, NE, H (PS) Non-Union Hourly/Non-SCA
TI EX, NE, H (PS) Non-Union Hourly/Non-SCA
E-SYS EX, NE, H (PS) Non-Union Hourly/Non-SCA
HAC EX, NE, H (PS) Non-Union Hourly/Non-SCA
E-SYS H (PS) UPGWA, Local 263 (Garland, TX)
E-SYS H (PS) UAW, Local 967 (Greenville, TX)
(D.) 03
RES EX, NE, H (PS) Non-Union Hourly/Non-SCA
TI EX, NE, H (PS) Non-Union Hourly/Non-SCA
E-SYS EX, NE, H (PS) Non-Union Hourly/Non-SCA
HAC EX, NE, H (PS) Non-Union Hourly/Non-SCA
RES H IBEW, Local 1505 (Marlboro, MA)
HAC H UPIU, Local 7254 (Comm Systems--Ft. Wayne, IN)
63
(E.) Sensors
RES EX, NE, H (PS) Non-Union Hourly/Non-SCA
TI EX, NE, H (PS) Non-Union Hourly/Non-SCA
E-SYS EX, NE, H (PS) Non-Union Hourly/Non-SCA
HAC EX, NE, H (PS) Non-Union Hourly/Non-SCA
HAW EX, NE
HAMI EX, NE
HAC H East, Local 1553 (LA, CA area)
HAC H IBEW, Local 2295 (LA, CA area (HAC))
Amber EX, NE Amber
II. Raytheon Corporate; but only with respect to the following divisions,
operations or similar cohesive groups:
Legacy Co Payroll Eligible Division, Operation or
Similar Cohesive Group
EX, NE, H Salaried & Non-Union Hourly
III. Raytheon Microelectronics; but only with respect to the following
divisions, operations or similar cohesive groups:
Legacy Co Payroll Eligible Division, Operation or
Similar Cohesive Group
EX, NE, H Salaried & Non-Union Hourly
H IBEW, Local 1505 (MA)
IV. Raytheon Marine Company; but only with respect to the following divisions,
operations or similar cohesive groups:
Legacy Co Payroll Eligible Division, Operation or
Similar Cohesive Group
EX, NE, H Salaried & Non-Union Hourly
V. Cedar Rapids; but only with respect to the following divisions, operations or
similar cohesive groups:
Legacy Co Payroll Eligible Division, Operation or
Similar Cohesive Group
EX, NE, H Salaried & Non-Union Hourly
VI. Raytheon Aircraft Company; but only with respect to the following divisions,
operations or similar cohesive groups:
Legacy Co Payroll Eligible Division, Operation or
Similar Cohesive Group
64
(A.) Raytheon Aircraft and Raytheon Aerospace
EX, NE, H Salaried & Non-Union Hourly
VII. Raytheon Engineers & Constructors; but only with respect to the following
divisions, operations or similar cohesive groups:
Legacy Co Payroll Eligible Division, Operation or
Similar Cohesive Group
EX, NE, H Salaried & Non-Union Hourly
65
Exhibit B
Special Withdrawal and Distribution Provisions
This Exhibit B describes special withdrawal and distribution provisions
that apply with respect to certain assets transferred directly from other
retirement plans to the Plan in accordance with section 4.5 of the Plan. Except
as otherwise provided herein, the special withdrawal and distribution provisions
apply only with respect to the assets, together with earnings thereon,
transferred from the other plans (hereinafter referred to as the "Transferred
Account Balances").
As of January 1, 1999 (except as otherwise indicated), this Exhibit B
includes special withdrawal and distribution provisions applicable to the
Transferred Account Balances from the following retirement plans:
A. Hughes Section 401(k) Savings Plan
B. Hughes STX Corporation 401(k) Retirement Plan
C. The 401(k) Plan for Employees of MESC Electronic Systems, Inc.
D. The 401(k) Plan for Bargaining Unit Employees of MESC Electronic
Systems, Inc.
E. E-Systems, Inc. Employee Savings Plan (assets transferred on January 14,
1999).
F. Serv-Air, Inc. Savings and Retirement Plan (assets transferred January
14, 1999).
G. Savings and Investment Plan of Standard Missile Company, L.L.C. (assets
transferred in the first quarter of 1999).
A. This paragraph A describes special withdrawal and distribution provisions
applicable to Participants with Transferred Account Balances from the Hughes
Section 401(k) Savings Plan:
(1) Directed Transfer to Account Plan: Notwithstanding section 8.3 of
the Plan, a Participant who meets all of the requirements listed below may elect
in writing on a form provided by the Administrator for this purpose to have his
Transferred Account Balance transferred to the Hughes Personal Retirement
Account Plan ("Account Plan") and applied to the purchase of an immediate
annuity, in accordance with the applicable annuity factors and other provisions
of the Account Plan. The requirements that must be met are:
(a) the Participant has had a Severance from Service;
(b) the Participant, as of the Severance from Service Date, was a
participant in the Account Plan;
(c) the Participant is entitled to an immediate distribution of
his or her accrued benefits under the Account Plan in the form of an annuity or
a lump sum;
66
(d) the Participant has irrevocably elected to receive his accrued
benefit under the Account Plan in the form of an immediate annuity; and
(e) the Participant was not, immediately prior to such Severance
from Service - (i) a union employee whose terms of employment were the subject
of a collective bargaining agreement or the subject of negotiation by a labor
union or other labor organization, or (ii) an employee of CAE Vanguard Inc. or
CAE ScreenPlates, Inc. or any subsidiary thereof.
(2) Special Distribution Rules for March 31, 1990 Account Balances:
This subsection applies to Participants who had an account in the Hughes Section
401(k) Savings Plan on March 31, 1990 (a "3/31/90 Member"). In addition, the
special distribution rules available to 3/31/90 Members apply solely with
respect to the value of such account on the March 31, 1990 valuation date under
the plan (the "3/31/90 Balance").
(a) Additional Methods of Distribution: Notwithstanding section
8.3 of the Plan, a 3/31/90 Member shall have the following additional forms of
distribution elections available with respect to his 3/31/90 Balance:
(i) withdrawal in a single lump sum distribution of the
amount credited to the Participant's 3/31/90 Balance attributable to voluntary
after-tax contributions with or without the deferral of the receipt in a single
lump sum distribution of the Participant's 3/31/90 Balance attributable to
pre-tax contributions and rollover contributions to a date no later than the
April first (1st) following the calendar year during which the Participant
attains age seventy and one-half (70-1/2); or
(ii) purchase of an annuity contract from a life insurance
company under tables based on unisex mortality assumptions with all or any
portion of the Participant's 3/31/90 Balance and taking a single lump sum
distribution with respect to any portion of such 3/31/90 Balance not applied to
the purchase of the annuity.
(b) Special Informational Requirement: Information showing the
Participant the financial effects of the various distribution options available
with respect to the 3/31/90 Balance shall be provided to the Participant at
least ninety (90) days prior to the date the Participant becomes eligible for a
benefit under the Plan.
(c) Special Annuity Contract Requirements: The following rules
shall apply with respect to any 3/31/90 Member who elects the annuity contract
option:
(i) The annuity contract shall provide for periodic annuity
payments for the life of the 3/31/90 Member and the continuation of fifty
percent (50%) of the amount of the periodic annuity payments the 3/31/90 Member
was receiving (or was entitled to receive at his date of death) to the 3/31/90
Member's spouse on the date the annuity payments to the 3/31/90 Member commenced
(or, if earlier, on the date of the 3/31/90 Member's death). The 3/31/90 Member
may revoke such election and elect any other form of benefit; provided, however,
67
that the 3/31/90 Member may not re-elect the forms of distribution specified
above for a reasonable period of time before the purchase of the annuity
contract, as determined by the Administrator. Such annuity contract may not
contain an "interest only option" form of distribution. The revocation of an
election to have benefits paid in the form of an annuity must be made in the
form and manner prescribed by the Administrator and after the Participant shall
have been furnished with a written explanation of (A) the terms and conditions
of the annuity benefit, (B) the Participant's right to revoke an election of an
annuity benefit, (C) the general financial effect of such an election to revoke,
(D) the requirement that the consent of the Participant's spouse, if any, is
required to make a revocation and (E) the rights of the Participant's spouse, if
any. A Participant's election to revoke the annuity benefit shall be effective
only if it is accompanied by the written notarized consent of the Participant's
spouse, if any, and shall specify the other form of benefit and identify the
beneficiary, if any, and shall acknowledge the effect of the election.
(ii) The annuity contract must provide that benefits will commence
no later than the April first (1st) following the calendar year during which the
Participant attains age seventy and one-half (70-1/2) and, if the spouse of the
3/31/90 Member is not the Participant's Beneficiary, payments under any periodic
payment option offered under the annuity contract to such 3/31/90 Member and his
Beneficiary must be completed during a period not exceeding the life expectancy
of the 3/31/90 Member, or the joint life expectancy of such Participant and his
Beneficiary or, if the Beneficiary is not treated as a natural person, five (5)
years. The forms of distribution offered under the annuity contract must
otherwise satisfy the minimum distribution requirements under the Code.
(iii) An annuity contract that does not provide for immediate
payment of benefits must provide for all other forms of distribution then
available to the 3/31/90 Member under the Plan at all times prior to the
commencement of benefit payments under such contract.
(iv) The annuity contract option shall be available to any
3/31/90 Member with respect to any portion of his 3/31/90 Balance that he has
elected to defer.
(v) Any 3/31/90 Member who elects the annuity contract option
shall have the annuity contract distributed to him in lieu of cash or other
property for the portion of his 3/31/90 Balance that was applied to the purchase
of the annuity contract.
(3) In-Service Distributions of Matching Contributions After Age
70-1/2: Notwithstanding section 7.3 of the Plan, with respect to Participants
who attain age seventy and one-half (70-1/2) prior to January 1, 1999, such
Participants may withdraw, after attaining age seventy and one-half and subject
to a minimum withdrawal amount of two hundred fifty dollars ($250), all or a
part of the Participants' Transferred Account Balances attributable to Matching
Contributions, regardless of whether the Participants have completed a Period of
Participation of five (5) years.
B. This paragraph B describes special withdrawal and distribution provisions
applicable to Participants with Transferred Account Balances from the Hughes STX
Corporation 401(k) Retirement Plan:
68
(1) Five (5)-Year Installment Distribution Option: Notwithstanding section
8.3 of the Plan, Participants can elect to receive their Transferred Account
Balances in accordance with one of the following distribution options:
(a) Payment in a single sum; or
(b) Payment in substantially equal annual installments over a period
not to exceed five (5) years.
(2) In-Service Distributions of Matching Contributions After Age 70-1/2:
Notwithstanding section 7.3 of the Plan, with respect to Participants who attain
age seventy and one-half (70-1/2) prior to January 1, 1999, such Participants
may withdraw, after attaining age seventy and one-half and subject to a minimum
withdrawal amount of two hundred fifty dollars ($250), all or a part of the
Participants' Transferred Account Balances attributable to Matching
Contributions, regardless of whether the Participants have completed a Period of
Participation of five (5) years.
C. This paragraph C describes special withdrawal and distribution provisions
applicable to Participants with Transferred Account Balances from The 401(k)
Plan for Employees of MESC Electronic Systems, Inc. or The 401(k) Plan for
Bargaining Unit Employees of MESC Electronic Systems, Inc.:
(1) Special Distribution Provisions for Philips Participants: This
paragraph describes special withdrawal and recordkeeping requirements applicable
to Participants whose Transferred Account Balances include assets transferred
from the North American Philips Corporation Employee Savings Plan effective as
of October 23, 1993 (hereinafter referred to as "Philips Participants" and
"Philips Assets").
(a) Notwithstanding section 7.3 of the Plan to the contrary, with
respect to Matching Contributions attributable to Philips Assets, Philips
Participants may withdraw, subject to a minimum withdrawal amount of two hundred
fifty dollars ($250), all or a portion of such Matching Contributions,
regardless of whether the Participants have completed a Period of Participation
of five (5) years.
(b) The portion of a Philips Participant's Transferred Account
Balance attributable to after-tax contributions under the Philips Plan shall be
maintained in two separate sub-accounts under the Plan - (i) one sub-account for
after-tax contributions made prior to January 1, 1987, together with earnings
thereon, and (ii) a second sub-account for after-tax contributions made after
December 31, 1986, together with earnings thereon.
(2) In-Service Distributions of Matching Contributions After Age 70-1/2:
Notwithstanding section 7.3 of the Plan, with respect to Participants who attain
age seventy and one-half (70-1/2) prior to January 1, 1999, such Participants
may withdraw, after attaining age seventy and one-half and subject to a minimum
withdrawal amount of two hundred fifty dollars ($250), all or a part of the
Participants' Transferred Account Balances attributable to Matching
Contributions, regardless of whether the Participants have completed a Period of
Participation of five (5) years.
69
D. This paragraph D describes special withdrawal and distribution provisions
applicable to Participants with Transferred Account Balances from the E-Systems,
Inc. Employee Savings Plan:
(1) Insured Annuity Distribution Option: Notwithstanding section 8.3 of the
Plan, Participants can elect to receive their Transferred Account Balances in
accordance with one of the following distribution options:
(a) Payment in a single, lump-sum; or
(b) Payment in the form of an annuity contract purchased from an
insurance company. The election of an annuity and the distribution of the
annuity contract shall be subject to the requirements imposed by sections
401(a)(11) and 417 of the Code.
(2) Pre-April 1, 1995 Death Beneficiaries: Notwithstanding section 8.2(c)
of the Plan, Beneficiaries of Participants who died prior to April 1, 1995 can
defer the commencement of distributions in accordance with the provisions of
section 401(a)(9) of the Code.
E. This paragraph E describes special withdrawal and distribution provisions
applicable to Participants with Transferred Account Balances from the Serv-Air,
Inc. Savings and Retirement Plan:
(1) Installment Distribution Option: Notwithstanding section 8.3 of the
Plan, Participants can elect to receive their Transferred Account Balances in
accordance with one of the following distribution options:
(a) Payment in a single, lump-sum; or
(b) Payment in substantially equal installments over a period
certain designated by the Participant, which period shall not exceed the life
expectancy of the Participant or the joint life expectancies of the Participant
and his or her Beneficiary.
F. This paragraph F describes special withdrawal and distribution provisions
applicable to Participants with Transferred Account Balances from the Savings
and Investment Plan of Standard Missile Company, L.L.C.:
(1) Installment Distribution Option: Notwithstanding section 8.3 of the
Plan, Participants can elect to receive their Transferred Account Balances in
accordance with one of the following distribution options:
(a) Payment in a single, lump-sum; or
(b) Payment in substantially equal installments over a period
certain designated by the Participant, which period shall not exceed the life
expectancy of the Participant or the joint life expectancies of the Participant
and his or her Beneficiary.
70
(2) In-Service Distributions of Employer Contributions: Notwithstanding
ARTICLE VII of the Plan, subject to the terms and conditions of section 7.7,
after completing a Period of Participation of five (5) years or more, a
Participant may withdraw all or a portion of his or her Transferred Account
Balance attributable to employer contributions under the Savings and Investment
Plan of Standard Missile Company, L.L.C.
(3) Full Vesting Following Layoff: Notwithstanding ARTICLE VI, a
Participant shall have a nonforfeitable right to all amounts in the
Participant's Transferred Account Balance following a layoff. For this purpose,
the term "layoff" shall mean an involuntary interruption of service due to
reduction of work force with or without the possibility of recall to employment
when conditions warrant.
71
Exhibit C
Designation of Prior Year Method for ADP and ACP Testing (Plan
sections 1.3(b) and 4.8(c)(1) and (2))
Except as otherwise provided below, for Plan Years beginning after
December 31, 1996, the Administrator shall use the "Current Year Method" for
complying with the nondiscrimination requirements in sections 401(k) and (m) of
the Code:
Testing Plan * Plan Year(s)
* The "Testing Plan" can be the entire Plan, or one or more disaggregated
"Testing Plans" as permitted under the applicable regulations or other guidance.